- 5 Marks
Question
d) A parent company had 6 million, GH¢1 fully paid ordinary shares outstanding on 1 January 2018. On 1 April 2018, the company made a consolidation of existing shares in issue (i.e., a reverse share split) at nominal value, on a 2 for 3 basis. There was no special dividend, share repurchase, or other outflow of resources.
Having completed the consolidation of shares, a new share issue for 600,000 shares was made through an offer for sale at the market price of GH¢1.55 per share. The allotment was made on 1 September 2018 and the proceeds were due on 1 October 2018. The company’s (summarised) statement of profit or loss for the year ended 31 December 2018 as published showed:
| Item | GH¢’000 |
|---|---|
| Revenue | 15,740 |
| Cost of sales and expenses | (16,060) |
| Loss before interest and tax | (320) |
| Finance costs | (68) |
| Taxation | (60) |
| Loss for the year | (448) |
| Profit/(loss) attributable to: | GH¢’000 |
|---|---|
| Owners of the parent | (478) |
| Non-controlling interests | 30 |
| Total | (448) |
The company also had in issue GH¢500,000 of 5% cumulative redeemable preference shares throughout the year ended 31 December 2018.
Required:
In accordance with IAS 33: Earnings per Share, calculate the basic earnings per share figure for the year ended 31 December 2018. (5 marks)
Answer
Basic Earnings Per Share (EPS):
- Profit attributable to ordinary shareholders = GH¢(478,000)
- Weighted average number of shares = 4,650,000
- Basic EPS = (GH¢478,000) / 4,150,000 = GH¢11.5 pesewas per share loss.
- Tags: Cumulative Preference Shares, Earnings Per Share, IAS 33, Share Consolidation
- Level: Level 3
- Topic: IAS 33 - Earnings Per Share
- Series: NOV 2019
- Uploader: Dotse