Reference no: EM132948100
Question - The following information relates to AstroChem plc for the year ended 31st December 2020:
£
Turnover 700,000
Operating costs 476,000
Trading profit 224,000
Net interest payable 2,000
222,000
Exceptional charges 77,000
145,000
Tax on ordinary activities 66,000
Profit after tax 79,000
AstroChem had 100,000 ordinary shares of £1 each in issue throughout the year.
AstroChem has in issue warrants entitling holders to subscribe for a total of 50,000 ordinary shares in the company. The warrants may be exercised after 31st December 2025 at a price of £1.10 per share.
During 2020, the average fair value of a share was £1.28.
During 2020, AstroChem paid a dividend of £15,000 on their ordinary shares, and a dividend of £9,000 on their preference shares.
Required -
a) Calculate AstroChem's basic EPS (earnings per share) for the year ended 31st December 2020.
b) Calculate AstroChem's diluted EPS for the year ended 31st December 2020. Where necessary, round numbers to the nearest whole number.
c) Explain why AstroChem needs to disclose both the basic EPS and diluted EPS. How is this of relevance to their shareholders?
d) Explain what is meant by antidilution and how it can occur.
e) How are shares issued at full market value treated differently from rights issues? Why is this?
f) Discuss the limitations of an IAS33 calculated EPS figure for performance reporting.