Question 2
Lacasa Plc have a convertible loan note of £4,000,000. The loan note carries an effective interest rate of 5%. As at 31 March 2018 there have been no further issue of shares or loan notes. Each £100 nominal of the loan note will be convertible in 2019 and 2020 at the following rates:
• 31 March 2019 30 Shares
• 31 March 2020 25 Shares
Relevant information
• 12,000,000 ordinary shares in issue
• Tax is payable at a rate of 30% on profits
Trading results for the years, ended 31 March are as follows:-
|
|
2018 |
2017 |
|
|
£ |
£ |
|
Profit after tax |
3,600,000 |
3,300,000 |
Required:
With reference to IAS 33, Earnings per Share (EPS):
a) State the formula for Earnings per Share.
b) Calculate the basic EPS and diluted EPS for 2018 and the comparative figures for 2017.
c) Prepare a report to the management board of Lacasa Plc explaining the differences between basic and diluted earnings per share and where they are presented within the financial statements.
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