Reference no: EM132966130

Question - Company X has a complex capital structure. The following information relates to the company for the year ending 31 May 20x4:

i) The net profit of the company for the period attributable to the preference and ordinary shareholders of the company was $14.6million. Of this amount the net profit attributable to discontinued operations was $3.3 million.

ii) The following details relate to the capital of the company:

Ordinary shares of $ 1 in issue at 1 June 20x3: 6million

Ordinary shares of $ 1 issued I September 20x3 at full market price: 1.2 million.

The average market price of the shares for the years ending 31 may 20x4 was $10 and the closing market price of the shares on 31 May 20x4 was $11. On 1 January 20x4, 300,000 partly paid ordinary shares of $1 were issued. They were issued at $8 per share with $4 payable on 1 January 20x4 and $4 payable on January 20x5. Dividend participation was 50 per cent until fully paid.

iii) Convertible loan stock of $20 million at an interest rate of 5% per annum was issued at par on 1 April 20x3. Half a year's interest is payable on 30 September and 31 March each year. Each $1.000 of loans stock is convertible at the holder's option into 30 ordinary shares at any time.

$5 million of loans stock was converted on 1 April 20x4 when the market price of the shares was $34 per share.

iv) $1 million of convertible preference shares of $1 were issued in the year to 31 May 20x1. Dividends are paid half yearly on 30 November and 31 May at a rate of 6% per annum. The preference shares are convertible into ordinary share at the option of the preference shareholder on the basis of two preferences shares for each ordinary share issued. Holders of 600,000 preference shares converted them into ordinary shares on 1 December 20x3.

v) Warrants to buy 600,000 ordinary shares at $6.60 per shares were issued on 1 January 20x4. The warrant expires in five years time. All five years were approved on 1 August 20x4. vi) The rate of taxation is to taken as 30%.

Required - Calculate the basic and diluted earnings per share for x for the year ended 31 may 20x4 in accordance with IAS 33 Earnings per share.