(Summary) Ind AS 33

Earnings Per Share

This standard prescribes the principles for determination and presentation of EPS. If an entity discloses the EPS, then it should be calculated in accordance with this standard. If an entity presents both CFS and SFS then EPS shall be presented in both FS.

An entity that discloses earnings per share shall calculate and disclose earnings per share in accordance with this Standard

  1. Antidilution
  2. Dilution
  3. Contingent Share Agreement
  4. Contingently issuable ordinary shares
  5. Ordinary Share
  6. Potential Ordinary Share
  7. Options, warrants and their equivalents
  8. Put options

Antidilution is an increase in earnings per share or a reduction in loss per share resulting from the assumption that convertible instruments are converted, that options or warrants are exercised, or that ordinary shares are issued upon the satisfaction of specified conditions.

Dilution is a reduction in earnings per share or an increase in loss per share resulting from the assumption that convertible instruments are converted, that options or warrants are exercised, or that ordinary shares are issued upon the satisfaction of specified conditions.

A. Basic Earnings Per Share

B. Diluted Earnings Per Share

        EPS =  

Profit or loss attributable to ordinary equity holders of the parent entity


Weighted average number of ordinary shares outstanding during the period

 

Earnings:

  • Where any item of income or expense which is otherwise required to be recognised in profit or loss in accordance with Ind AS is debited or credited to securities premium account/other reserves, the amount in respect thereof shall be deducted from profit/ loss from continuing operations for the purpose of calculating basic EPS.
  • After tax amount of preference dividend on cumulative preference shares should be deducted irrespective of declaration of dividend.
  • Any original issue discount or premium on increasing rate preference shares is amortised to retained earnings using the effective interest method and treated as a preference dividend for the purposes of calculating earnings per share

Shares:

  • For the purpose of calculating basic earnings per share, the number of ordinary shares shall be the weighted average number of ordinary shares outstanding during the period.
  • Contingently issuable shares are treated as outstanding and are included in the calculation of basic earnings per share only from the date when all necessary conditions are satisfied.
  • The weighted average number of ordinary shares outstanding during the period and for all periods presented shall be adjusted for events, other than the conversion of potential ordinary shares, that have changed the number of ordinary shares outstanding without a corresponding change in resources.
  • In a capitalisation or bonus issue or a share split, ordinary shares are issued to existing shareholders for no additional consideration. Therefore, the number of ordinary shares outstanding is increased without an increase in resources. The number of ordinary shares outstanding before the event is adjusted for the proportionate change in the number of ordinary shares outstanding as if the event had occurred at the beginning of the earliest period presented.
  • OCI result will not be used to calculate EPS.
  • Adjust profit or loss attributable to ordinary equity holders of the parent entity
  • Profit or loss is increased by the after-tax amount of dividends and interest recognised in the period in respect of the dilutive potential ordinary shares and is adjusted for any other changes in income or expense that would result from the conversion of the dilutive potential ordinary shares
  • The weighted average number of ordinary shares outstanding is increased by the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.

Earnings:

  • Adjust after tax effect of potential ordinary shares of dividend, interest, other changes in income and expenses
  • The conversion of potential ordinary shares may lead to consequential changes in income or expenses.

Shares:

  • The number of ordinary shares shall be the weighted average number of ordinary shares plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

Dilutive potential ordinary share:

  • Potential ordinary shares shall be treated as dilutive when, and only when, their conversion to ordinary shares would decrease earnings per share or increase loss per share from continuing operations
  • For the purpose of calculating diluted earnings per share, an entity shall assume the exercise of dilutive options and warrants of the entity. The assumed proceeds from these instruments shall be regarded as having been received from the issue of ordinary shares at the average market price of ordinary shares during the period.
  • The dilutive effect of convertible instruments shall be reflected in diluted EPS.
  • As in the calculation of basic earnings per share, contingently issuable ordinary shares are treated as outstanding and included in the calculation of diluted earnings per share if the conditions are satisfied.
  • When an entity has issued a contract that may be settled in ordinary shares or cash at the entity’s option, the entity shall presume that the contract will be settled in ordinary shares, and the resulting potential ordinary shares shall be included in diluted earnings per share if the effect is dilutive.
  • For contracts that may be settled in ordinary shares or cash at the holder’s option, the more dilutive of cash settlement and share settlement shall be used in calculating diluted earnings per share.
  • Contracts such as purchased put options and purchased call options (ie options held by the entity on its own ordinary shares) are not included in the calculation of diluted earnings per share because including them would be antidilutive.
  • Contracts that require the entity to repurchase its own shares, such as written put options and forward purchase contracts, are reflected in the calculation of diluted earnings per share if the effect is dilutive.

If the number of ordinary or potential ordinary shares outstanding increases as a result of a capitalisation, bonus issue or share split, or decreases as a result of a reverse share split, the calculation of basic and diluted earnings per share for all periods presented shall be adjusted retrospectively.

  • An entity shall present basic and diluted earnings per share with equal prominence for all periods presented.
  • An entity shall present basic and diluted earnings per share, even if the amounts are negative.
  • The amounts used as the numerators in calculating basic and diluted earnings per share.
  • The weighted average number of ordinary shares used as the denominator in calculating basic and diluted earnings per share.
  • Instruments (including contingently issuable shares) that could potentially dilute basic earnings per share in the future, but were not included in the calculation of diluted earnings per share because they are antidilutive for the period(s) presented.

 

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