Calculate from the following information:
(a) The basic EPS
(b) The fully diluted EPS.
The capital of the company is as follows:
• £500 000 in 7% preference shares of £1 each
• £1 000 000 in ordinary shares of 25p each
• £1 250 000 in 8% convertible unsecured loan stock carrying conversion rights into ordinary shares as follows: on 31 December 120 shares for each £100 nominal of loan stock.
The P&L account for the year ended 31 December showed:
(a) Profit after all expenses, but before extraordinary items, loan interest and corporation tax £1 200 000. Extraordinary items £100 000 (expense)
(b) Corporation tax is to be taken as 35% of the profits shown in the accounts after all expenses and after loan interest.