The following information relates to Simrin plc for the year ended 31 December 20X0:
|
£ |
|
|
Turnover |
700,000 |
|
Operating costs |
476,000 |
|
Trading profit |
224000 |
|
Net interest payable |
2,000 |
|
222,000 |
|
|
Exceptional charges |
77,000 |
|
145,000 |
|
|
Tax on ordinar y activities |
66,000 |
|
Profit after tax |
79,000 |
Simrin plc had 100,000 ordinar y shares of £1 each in issue throughout the year. Simrin plc has in issue warrants entitling the holders to subscribe for a total of 50,000 shares in the company. The warrants may be exercised after 31 December 20X5 at a price of £1.10 per share. The average fair value of shares was £1.28. The company had paid an ordinar y dividend of £15,000 and a preference dividend of £9,000.
Required:
(a) Calculate the basic EPS for Simrin plc for the year ended 31 December 20X0, in accordance with best accounting practice.
(b) Calculate the diluted EPS figure, to be disclosed in the statutory accounts of Simrin plc in respect of the year ended 31 December 20X0.
(c) Briefly comment on the need to disclose a diluted EPS figure and on the relevance of this figure to the shareholders.
(d) In the past, the single most important indicator of financial performance has been earnings per share. In what way has the profession attempted to destroy any reliance on a single figure to measure and predict a company”s earnings, and how successful has this attempt been?