IAS 33

IAS 33, titled Earnings Per Share, is an International Accounting Standard issued by the International Accounting Standards Board (IASB). It prescribes principles for the determination and presentation of earnings per share (EPS) to improve performance comparisons between different entities and different reporting periods.^[1]

Scope

IAS 33 applies to entities whose ordinary shares or potential ordinary shares are publicly traded, or entities in the process of issuing such shares.^[2] When an entity presents both consolidated and separate financial statements, the EPS disclosures are required only on the basis of the consolidated information.^[3]

Basic earnings per share

The objective of basic EPS is to provide a measure of the interest of each ordinary share in the performance of the entity.^[4]

Calculation

Basic EPS is calculated by dividing the profit or loss attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the period.^[5]

Basic EPS =	Profit or Loss attributable to ordinary equity holders
	Weighted average number of ordinary shares outstanding

• Numerator adjustments: The profit or loss is adjusted by deducting the after-tax amount of preference dividends.^[6]
• Denominator adjustments: The number of shares is weighted by the proportion of time they were outstanding during the period.^[7]

Diluted earnings per share

The objective of diluted EPS is to show the potential "worst-case" dilution by assuming all dilutive potential ordinary shares were converted into ordinary shares.^[8]

Calculation

For diluted EPS, both the numerator and denominator are adjusted for the effects of all dilutive potential ordinary shares (such as convertible bonds or options):^[9]

Diluted EPS =	Adjusted Profit (Basic Profit + Interest Saved net of tax)
	Weighted average shares + Potential dilutive shares

Dilutive vs. Antidilutive

Potential ordinary shares are treated as dilutive only when their conversion would decrease earnings per share or increase loss per share. If the conversion improves the EPS, the shares are antidilutive and must be excluded from the calculation.^[10]

Adjustments for share changes

When the number of shares changes without a corresponding change in resources (e.g., a bonus issue, share split, or reverse split), the basic and diluted EPS for all periods presented must be adjusted retrospectively.^[11]

Presentation

An entity must present basic and diluted EPS with equal prominence on the face of the statement of comprehensive income. Even if the amounts are negative (a loss per share), the disclosure remains mandatory.^[12]