The capital structure of Chavboro, a quoted company, during the years ended 31 October 2005 and 2006 was as follows:
$
6,000,000 ordinary shares of 50 cents ... 3,000,000
10% preferred shares of $1 ......... 200,000
300,000 deferred ordinary shares of $1 ... 300,000
12% convertible loan stock ........ 250,000
The company has an executive share option scheme which gives the company’s directors the option to purchase a total of 100,000 ordinary shares for $2.10 each. During the year ended 31 October 2006 no shares were issued in accordance with the share incentive scheme and the company’s obligations under the scheme remained unchanged.
On 31 August 2006 Chavboro plc made a 1 for 6 rights issue at $2.50 per share. The cum-rights price on the last day of quotation cum rights was $2.85 per share. The shares issued in the rights issue are not included in the figure for ordinary shares given above.
The deferred ordinary shares will not rank for dividends until 1 November 2010 when they will each be divided into two 50 cents ordinary shares ranking pari passu with the other ordinary shares then in issue.
The 12% loan stock is convertible into 50 cents ordinary shares on the following terms:
(i) If the option is exercised on 1 November 2007 each $100 of loan stock can be converted into 40 ordinary shares;
(ii) If the option is exercised on 1 November 2008 each $100 of loan stock can be converted into 35 ordinary shares.
The following information comes from the statement of comprehensive income of the company for the year ended 31 October 2006:
$
Profit before interest and tax ..... 1,253,000
Less Interest ............. 30,000
1,223,000
Less Income tax, at 30% ........ 366,900
Profit attributable to shareholders ...... 856,100
You may assume that the yield on 2.5% government consolidated stock was 7.5% on 1 November 2005 and 6% on 1 November 2006, and that the rate of income tax is 30% throughout. Chavboro plc’s reported earnings per share for the year ended 31 October 2005 were 10 cents.

Required:
(a) Calculate Chavboro plc’s basic earnings per share in cents for the year ended 31 October 2006.
(b) Calculate Chavboro plc’s restated earnings per share in cents for the year ended 31 October 2005.
(c) Calculate Chavboro plc’s fully diluted earnings per share in cents for the year ended 31 October 2006.
(d) Calculate Chavboro plc’s fully diluted earnings per share in cents for the year ended 31 October 2005.
(e) How can an investor evaluate the quality of the earnings per share figure published in a company’s financial statements?