Duncan Ltd. has 750,000 ordinary shares of $4 each in issue throughout its financial year ended 31 December 2013. The following are the other particulars in 2014:

• 1 April 2014: New issue of 250,000 ordinary shares at full market price of $4;
• 1 September 2014: Bonus issue made of 3 for 5
• 1 November 2014: Rights Issue 1:5, exercise price $5.5; the market price before rights issue $6.50.
• 70,000 8.5% convertible preference shares of $10 each in issue from 01 August 2013. Each preference share is convertible into 2 ordinary shares.
• $4,000,000 10% convertible loan notes were in issue from 01 April 2013. Each $5 loan note is convertible into two ordinary shares.
• Options granted on 1 October 2013 to the company’s senior management giving them the right to subscribe for 600,000 ordinary shares at a cost of $6.5 each.

The statement of comprehensive income of Duncan for the year ended 31 December 2014 reports a net profit after tax of $928,500. Net profit after tax for 2013 is $750,000. Tax on profits is 30%. The average market price of Duncan’s ordinary shares was:

$8.5 for the year ended 31 December 2013.

$7.5 from January to September 2013

$7.0 from October to December 2013

$8 for the year ended 31 December 2014.

$8.5 from January to September 2014

$7.5 from October to December 2014

Required:

Calculate Duncan’s actual and restated basic and diluted earnings per share as would appear on the Income Statement for the year ended 31 December 2014.

Please show working out.

Answer rating: 100% (QA)

Answer Basic earnings per shares earnings available for equity shareholders weighted no of shares Ea... View the full answer