Accounting Standard (AS) 20

Earnings Per Share

Contents
OBJECTIVE SCOPE "E#I$ITIO$S P'ESE$TATIO$ *EAS+'E*E$T Basic Earnings Per Share Earnings-Basic Per Share-Basic "i,uted Earnings Per Share Earnings-Diluted Per Share-Diluted Dilutive Potential E uit! Shares 'ESTATE*E$T "ISC-OS+'E I--+ST'ATIO$S Paragraphs 1 ! %& () 10 %! 10-25 11-14 15-25 26-43 29-31 32-38 39-43 %% %& %( .1

Earnings Per Share

(This Accounting Standard inc,udes paragraphs set in /o,d ita,ic t0pe and p,ain t0pe1 2hich ha3e e4ua, authorit05 Paragraphs in /o,d ita,ic t0pe indicate the 6ain princip,es5 This Accounting Standard shou,d /e read in the conte7t o8 its o/9ecti3e and the :enera, Instructions contained in part A o8 the Anne7ure to the $oti8ication5) "his #ccounting Standard is $andator! %or all co$&anies' (o)ever* disclosure o% diluted earnings &er share +,oth including and e-cluding e-traordinar! ite$s. is not $andator! %or S$all and /ediu$ Si0ed 1o$&anies* as de%ined in the 2oti%ication' Such co$&anies are ho)ever encouraged to $a3e these disclosures'

O/9ecti3e
"he o,4ective o% this Standard is to &rescri,e &rinci&les %or the deter$ination and &resentation o% earnings &er share )hich )ill i$&rove co$&arison o% &er%or$ance a$ong di%%erent enter&rises %or the sa$e &eriod and a$ong di%%erent accounting &eriods %or the sa$e enter&rise' "he %ocus o% this Standard is on the deno$inator o% the earnings &er share calculation' Even though earnings &er share data has li$itations ,ecause o% di%%erent accounting &olicies used %or deter$ining 5earnings6* a consistentl! deter$ined deno$inator enhances the ualit! o% %inancial re&orting'

Scope
15 This Standard shou,d /e app,ied /0 a,, co6panies5 ;o2e3er1 a S6a,, and *ediu6 Si<ed Co6pan01 as de8ined in the $oti8ication1 6a0 not disc,ose di,uted earnings per share (/oth inc,uding and e7c,uding e7traordinar0 ite6s)5 25 In conso,idated 8inancia, state6ents1 the in8or6ation re4uired /0 this State6ent shou,d /e presented on the /asis o8 conso,idated in8or6ation51
#ccounting Standard +#S. 21* 71onsolidated 8inancial State$ents7* s&eci%ies the re uire$ents relating to consolidated %inancial state$ents'
1

3' 9n the case o% a &arent +holding enter&rise.* users o% %inancial state$ents are usuall! concerned )ith* and need to ,e in%or$ed a,out* the results o% o&erations o% ,oth the enter&rise itsel% as )ell as o% the grou& as a )hole' #ccordingl!* in the case o% such enter&rises* this Standard re uires the &resentation o% earnings &er share in%or$ation on the ,asis o% consolidated %inancial state$ents as )ell as individual %inancial state$ents o% the &arent' 9n consolidated %inancial state$ents* such in%or$ation is &resented on the ,asis o% consolidated in%or$ation'

"e8initions
%5 #or the purpose o8 this Standard1 the 8o,,o2ing ter6s are used 2ith the 6eanings speci8ied= %51 An e4uit0 share is a share other than a pre8erence share5

%52 A pre8erence share is a share carr0ing pre8erentia, rights to di3idends and repa06ent o8 capita,5 %5! A 8inancia, instru6ent is an0 contract that gi3es rise to /oth a 8inancia, asset o8 one enterprise and a 8inancia, ,ia/i,it0 or e4uit0 shares o8 another enterprise5 %5% A potentia, e4uit0 share is a 8inancia, instru6ent or other contract that entit,es1 or 6a0 entit,e1 its ho,der to e4uit0 shares5 %5. Share 2arrants or options are 8inancia, instru6ents that gi3e the ho,der the right to ac4uire e4uit0 shares5 %5> #air 3a,ue is the a6ount 8or 2hich an asset cou,d /e e7changed1 or a ,ia/i,it0 sett,ed1 /et2een ?no2,edgea/,e1 2i,,ing parties in an ar6@s ,ength transaction5 5' E uit! shares &artici&ate in the net &ro%it %or the &eriod onl! a%ter &re%erence shares' #n enter&rise $a! have $ore than one class o% e uit! shares' E uit! shares o% the sa$e class have the sa$e rights to receive dividends' 6' # %inancial instru$ent is an! contract that gives rise to ,oth a %inancial asset o% one enter&rise and a %inancial lia,ilit! or e uit! shares o% another enter&rise' 8or this &ur&ose* a %inancial asset is an! asset that is

+,. a contractual right to receive cash or another %inancial asset %ro$ another enter&rise: +c. a contractual right to e-change %inancial instru$ents )ith another enter&rise under conditions that are &otentiall! %avoura,le: or +d. an e uit! share o% another enter&rise' # %inancial lia,ilit! is an! lia,ilit! that is a contractual o,ligation to deliver cash or another %inancial asset to another enter&rise or to e-change %inancial instru$ents )ith another enter&rise under conditions that are &otentiall! un%avoura,le' ;' E-a$&les o% &otential e uit! shares are< +a. de,t instru$ents or &re%erence shares* that are converti,le into e uit! shares:

+,. share )arrants: +c. o&tions including e$&lo!ee stoc3 o&tion &lans under )hich e$&lo!ees o% an enter&rise are entitled to receive e uit! shares as &art o% their re$uneration and other si$ilar &lans: and

+d. shares )hich )ould ,e issued u&on the satis%action o% certain conditions resulting %ro$ contractual arrange$ents +contingentl! issua,le shares.* such as the ac uisition o% a ,usiness or other assets* or shares issua,le under a loan contract u&on de%ault o% &a!$ent o% &rinci&al or interest* i% the contract so &rovides'

Presentation
(5 An enterprise shou,d present /asic and di,uted earnings per share on the 8ace o8 the state6ent o8 pro8it and ,oss 8or each c,ass o8 e4uit0 shares that has a di88erent right to share in the net pro8it 8or the period5 An enterprise shou,d present /asic and di,uted earnings per share 2ith e4ua, pro6inence 8or a,, periods presented5 )5 This Standard re4uires an enterprise to present /asic and di,uted earnings per share1 e3en i8 the a6ounts disc,osed are negati3e (a ,oss per share)5

*easure6ent
Basic Earnings Per Share
105 Basic earnings per share shou,d /e ca,cu,ated /0 di3iding the net pro8it or ,oss 8or the period attri/uta/,e to e4uit0 shareho,ders /0 the 2eighted a3erage nu6/er o8 e4uit0 shares outstanding during the period5 Earnings Basic 115 #or the purpose o8 ca,cu,ating /asic earnings per share1 the net pro8it or ,oss 8or the period attri/uta/,e to e4uit0 shareho,ders shou,d /e the net pro8it or ,oss 8or the period a8ter deducting pre8erence di3idends and an0 attri/uta/,e ta7 thereto 8or the period5 12' #ll ite$s o% inco$e and e-&ense )hich are recognised in a &eriod* including ta- e-&ense and e-traordinar! ite$s* are included in the deter$ination o% the net &ro%it or loss %or the &eriod unless an #ccounting Standard re uires or &er$its other)ise (see Accounting Standard (AS) .1 $et Pro8it or -oss 8or the Period1 Prior Period Ite6s and Changes in Accounting Po,icies)5 "he a$ount o% &re%erence dividends and an! attri,uta,le ta- thereto %or the &eriod is deducted %ro$ the net &ro%it %or the &eriod +or added to the net loss %or the &eriod. in order to calculate the net &ro%it or loss %or the &eriod attri,uta,le to e uit! shareholders' 13' "he a$ount o% &re%erence dividends %or the &eriod that is deducted %ro$ the net &ro%it %or the &eriod is< +a. the a$ount o% an! &re%erence dividends on non-cu$ulative &re%erence shares &rovided %or in res&ect o% the &eriod: and

+,. the %ull a$ount o% the re uired &re%erence dividends %or cu$ulative &re%erence shares %or the &eriod* )hether or not the dividends have ,een &rovided %or' "he a$ount o% &re%erence dividends %or the &eriod does not include the a$ount o% an! &re%erence dividends %or cu$ulative &re%erence shares &aid or declared during the current &eriod in res&ect o% &revious &eriods' 14' 9% an enter&rise has $ore than one class o% e uit! shares* net &ro%it or loss %or the &eriod is a&&ortioned over the di%%erent classes o% shares in accordance )ith their dividend rights'

Per Share

Basic

1.5 #or the purpose o8 ca,cu,ating /asic earnings per share1 the nu6/er o8 e4uit0 shares shou,d /e the 2eighted a3erage nu6/er o8 e4uit0 shares outstanding during the period5 16' "he )eighted average nu$,er o% e uit! shares outstanding during the &eriod re%lects the %act that the a$ount o% shareholders6 ca&ital $a! have varied during the &eriod as a result o% a larger or lesser nu$,er o% shares outstanding at an! ti$e' 9t is the nu$,er o% e uit! shares outstanding at the ,eginning o% the &eriod* ad4usted ,! the nu$,er o% e uit! shares ,ought ,ac3 or issued during the &eriod $ulti&lied ,! the ti$e-)eighting %actor' "he ti$e-)eighting %actor is the nu$,er o% da!s %or )hich the s&eci%ic shares are outstanding as a &ro&ortion o% the total nu$,er o% da!s in the &eriod: a reasona,le a&&ro-i$ation o% the )eighted average is ade uate in $an! 9llustration 9 attached to the Standard illustrates the co$&utation o% )eighted average nu$,er o% shares' 1;' 9n $ost cases* shares are included in the )eighted average nu$,er o% shares %ro$ the date the consideration is receiva,le* %or e-a$&le< +a. e uit! shares issued in e-change %or cash are included )hen cash is receiva,le: +,. e uit! shares issued as a result o% the conversion o% a de,t instru$ent to e uit! shares are included as o% the date o% conversion: +c. e uit! shares issued in lieu o% interest or &rinci&al on other %inancial instru$ents are included as o% the date interest ceases to accrue: +d. e uit! shares issued in e-change %or the settle$ent o% a lia,ilit! o% the enter&rise are included as o% the date the settle$ent ,eco$es e%%ective: +e. e uit! shares issued as consideration %or the ac uisition o% an asset other than cash are included as o% the date on )hich the ac uisition is recognised: and +%. e uit! shares issued %or the rendering o% services to the enter&rise are included as the services are rendered'

9n these and other cases* the ti$ing o% the inclusion o% e uit! shares is deter$ined ,! the s&eci%ic ter$s and conditions attaching to their issue' Due consideration should ,e given to the su,stance o% an! contract associated )ith the issue' 18' E uit! shares issued as &art o% the consideration in an a$alga$ation in the nature o% &urchase are included in the )eighted average nu$,er o% shares as o% the date o% the ac uisition ,ecause the trans%eree incor&orates the results o% the o&erations o% the trans%eror into its state$ent o% &ro%it and loss as %ro$ the date o% ac uisition' E uit! shares issued during the re&orting &eriod as &art o% the consideration in an a$alga$ation in the nature o% $erger are included in the calculation o% the )eighted average nu$,er o% shares %ro$ the ,eginning o% the re&orting &eriod ,ecause the %inancial state$ents o% the co$,ined enter&rise %or the re&orting &eriod are &re&ared as i% the co$,ined entit! had e-isted %ro$ the ,eginning o% the re&orting &eriod' "here%ore* the nu$,er o% e uit! shares used %or the calculation o% ,asic earnings &er share in an a$alga$ation in the nature o% $erger is the aggregate o% the )eighted average nu$,er o% shares o% the co$,ined enter&rises* ad4usted to e uivalent shares o% the enter&rise )hose shares are outstanding 19' Partl! &aid e uit! shares are treated as a %raction o% an e uit! share to the e-tent that the! )ere entitled to &artici&ate in dividends relative to a %ull! &aid e uit! share during the re&orting &eriod' 9llustration 99 attached to the Standard illustrates the co$&utations in res&ect o% &artl! &aid e uit! shares' 20' =here an enter&rise has e uit! shares o% di%%erent no$inal values ,ut )ith the sa$e dividend rights* the nu$,er o% e uit! shares is calculated ,! converting all such e uit! shares into e uivalent nu$,er o% shares o% the sa$e no$inal value' 21' E uit! shares )hich are issua,le u&on the satis%action o% certain conditions resulting %ro$ contractual arrange$ents +contingentl! issua,le shares. are considered outstanding* and included in the co$&utation o% ,asic earnings &er share %ro$ the date )hen all necessar! conditions under the contract have ,een satis%ied' 225 The 2eighted a3erage nu6/er o8 e4uit0 shares outstanding during the period and 8or a,, periods presented shou,d /e ad9usted 8or e3ents1 other than the con3ersion o8 potentia, e4uit0 shares1 that ha3e changed

the nu6/er o8 e4uit0 shares outstanding1 corresponding change in resources5

2ithout

23' E uit! shares $a! ,e issued* or the nu$,er o% shares outstanding $a! ,e reduced* )ithout a corres&onding change in resources' E-a$&les include< +a. a ,onus issue: +,. a ,onus ele$ent in an! other issue* %or e-a$&le a ,onus ele$ent in a rights issue to e-isting shareholders: +c. a share s&lit: and +d. a reverse share s&lit +consolidation o% shares.' 24' 9n case o% a ,onus issue or a share s&lit* e uit! shares are issued to e-isting shareholders %or no additional consideration' "here%ore* the nu$,er o% e uit! shares outstanding is increased )ithout an increase in resources' "he nu$,er o% e uit! shares outstanding ,e%ore the event is ad4usted %or the &ro&ortionate change in the nu$,er o% e uit! shares outstanding as i% the event had occurred at the ,eginning o% the earliest &eriod re&orted' 8or e-a$&le* u&on a t)o-%or-one ,onus issue* the nu$,er o% shares outstanding &rior to the issue is $ulti&lied ,! a %actor o% three to o,tain the ne) total nu$,er o% shares* or ,! a %actor o% t)o to o,tain the nu$,er o% additional shares' 9llustration 999 attached to the Standard illustrates the co$&utation o% )eighted average nu$,er o% e uit! shares in case o% a ,onus issue during the &eriod' 25' "he issue o% e uit! shares at the ti$e o% e-ercise or conversion o% &otential e uit! shares )ill not usuall! give rise to a ,onus ele$ent* since the &otential e uit! shares )ill usuall! have ,een issued %or %ull value* resulting in a &ro&ortionate change in the resources availa,le to the enter&rise' 9n a rights issue* on the other hand* the e-ercise &rice is o%ten less than the %air value o% the shares' "here%ore* a rights issue usuall! includes a ,onus ele$ent' "he nu$,er o% e uit! shares to ,e used in calculating ,asic earnings &er share %or all &eriods &rior to the rights issue is the nu$,er o% e uit! shares outstanding &rior to the issue* $ulti&lied ,! the %ollo)ing %actor< 8air value &er share i$$ediatel! &rior to the e-ercise o% rights "heoretical e--rights %air value &er share

"he theoretical e--rights %air value &er share is calculated ,! adding the aggregate %air value o% the shares i$$ediatel! &rior to the e-ercise o% the rights to the &roceeds %ro$ the e-ercise o% the rights* and dividing ,! the nu$,er o% shares outstanding a%ter the e-ercise o% the rights' =here the rights the$selves are to ,e &u,licl! traded se&aratel! %ro$ the shares &rior to the e-ercise date* %air value %or the &ur&oses o% this calculation is esta,lished at the close o% the last da! on )hich the shares are traded 9llustration 9> attached to the Standard illustrates the co$&utation o% )eighted average nu$,er o% e uit! shares in case o% a rights issue during the &eriod'

"i,uted Earnings Per Share

2>5 #or the purpose o8 ca,cu,ating di,uted earnings per share1 the net pro8it or ,oss 8or the period attri/uta/,e to e4uit0 shareho,ders and the 2eighted a3erage nu6/er o8 shares outstanding during the period shou,d /e ad9usted 8or the e88ects o8 a,, di,uti3e potentia, e4uit0 shares5 2;' 9n calculating diluted earnings &er share* e%%ect is given to all dilutive &otential e uit! shares that )ere outstanding during the &eriod* that is< +a. the net &ro%it %or the &eriod attri,uta,le to e uit! shares is< +i. increased ,! the a$ount o% dividends recognised in the &eriod in res&ect o% the dilutive &otential e uit! shares as ad4usted %or an! attri,uta,le change in ta- e-&ense %or the &eriod: +ii. increased ,! the a$ount o% interest recognised in the &eriod in res&ect o% the dilutive &otential e uit! shares as ad4usted %or an! attri,uta,le change in ta- e-&ense %or the &eriod: and +iii. ad4usted %or the a%ter-ta- a$ount o% an! other changes in e-&enses or inco$e that )ould result %ro$ the conversion o% the dilutive &otential e uit! shares' +,. the )eighted average nu$,er o% e uit! shares outstanding during the &eriod is increased ,! the )eighted average nu$,er o% additional e uit! shares )hich )ould have ,een outstanding assu$ing the conversion o% all dilutive &otential e uit! shares' 28' 8or the &ur&ose o% this Standard* share a&&lication $one! &ending

allot$ent or an! advance share a&&lication $one! as at the ,alance sheet date* )hich is not statutoril! re uired to ,e 3e&t se&aratel! and is ,eing utilised in the ,usiness o% the enter&rise* is treated in the sa$e $anner as dilutive &otential e uit! shares %or the &ur&ose o% calculation o% diluted earnings &er share' Earnings "i,uted

2)5 #or the purpose o8 ca,cu,ating di,uted earnings per share1 the a6ount o8 net pro8it or ,oss 8or the period attri/uta/,e to e4uit0 shareho,ders1 as ca,cu,ated in accordance 2ith paragraph 111 shou,d /e ad9usted /0 the 8o,,o2ing1 a8ter ta?ing into account an0 attri/uta/,e change in ta7 e7pense 8or the period= (a) an0 di3idends on di,uti3e potentia, e4uit0 shares 2hich ha3e /een deducted in arri3ing at the net pro8it attri/uta/,e to e4uit0 shareho,ders as ca,cu,ated in accordance 2ith paragraph 11A (/) interest recognised in the period 8or the di,uti3e potentia, e4uit0 sharesA and (c) an0 other changes in e7penses or inco6e that 2ou,d resu,t 8ro6 the con3ersion o8 the di,uti3e potentia, e4uit0 shares5 30' #%ter the &otential e uit! shares are converted into e uit! shares* the dividends* interest and other e-&enses or inco$e associated )ith those &otential e uit! shares )ill no longer ,e incurred +or earned.' 9nstead* the ne) e uit! shares )ill ,e entitled to &artici&ate in the net &ro%it attri,uta,le to e uit! shareholders' "here%ore* the net &ro%it %or the &eriod attri,uta,le to e uit! shareholders calculated in accordance )ith &aragra&h 11 is increased ,! the a$ount o% dividends* interest and other e-&enses that )ill ,e saved* and reduced ,! the a$ount o% inco$e that )ill cease to accrue* on the conversion o% the dilutive &otential e uit! shares into e uit! shares' "he a$ounts o% dividends* interest and other e-&enses or inco$e are ad4usted %or an! attri,uta,le ta-es' 9llustration > attached to the Standard illustrates the co$&utation o% diluted earnings in case o% converti,le de,entures' 31' "he conversion o% so$e &otential e uit! shares $a! lead to conse uential changes in other ite$s o% inco$e or e-&ense' 8or e-a$&le* the reduction o% interest e-&ense related to &otential e uit! shares and the

resulting increase in net &ro%it %or the &eriod $a! lead to an increase in the e-&ense relating to a non-discretionar! e$&lo!ee &ro%it sharing &lan' 8or the &ur&ose o% calculating diluted earnings &er share* the net &ro%it or loss %or the &eriod is ad4usted %or an! such conse uential changes in inco$e or e-&enses' Per Share "i,uted

!25 #or the purpose o8 ca,cu,ating di,uted earnings per share1 the nu6/er o8 e4uit0 shares shou,d /e the aggregate o8 the 2eighted a3erage nu6/er o8 e4uit0 shares ca,cu,ated in accordance 2ith paragraphs 1. and 221 and the 2eighted a3erage nu6/er o8 e4uit0 shares 2hich 2ou,d /e issued on the con3ersion o8 a,, the di,uti3e potentia, e4uit0 shares into e4uit0 shares5 "i,uti3e potentia, e4uit0 shares shou,d /e dee6ed to ha3e /een con3erted into e4uit0 shares at the /eginning o8 the period or1 i8 issued ,ater1 the date o8 the issue o8 the potentia, e4uit0 shares5 33' "he nu$,er o% e uit! shares )hich )ould ,e issued on the conversion o% dilutive &otential e uit! shares is deter$ined %ro$ the ter$s o% the &otential e uit! shares' "he co$&utation assu$es the $ost advantageous conversion rate or e-ercise &rice %ro$ the stand&oint o% the holder o% the &otential e uit! shares' 34' E uit! shares )hich are issua,le u&on the satis%action o% certain conditions resulting %ro$ contractual arrange$ents +contingentl! issua,le shares. are considered outstanding and included in the co$&utation o% ,oth the ,asic earnings &er share and diluted earnings &er share %ro$ the date )hen the conditions under a contract are $et' 9% the conditions have not ,een $et* %or co$&uting the diluted earnings &er share* contingentl! issua,le shares are included as o% the ,eginning o% the &eriod +or as o% the date o% the contingent share agree$ent* i% later.' "he nu$,er o% contingentl! issua,le shares included in this case in co$&uting the diluted earnings &er share is ,ased on the nu$,er o% shares that )ould ,e issua,le i% the end o% the re&orting &eriod )as the end o% the contingenc! &eriod' ?estate$ent is not &er$itted i% the conditions are not $et )hen the contingenc! &eriod actuall! e-&ires su,se uent to the end o% the re&orting &eriod' "he &rovisions o% this &aragra&h a&&l! e uall! to &otential e uit! shares that are issua,le u&on the satis%action o% certain conditions +contingentl! issua,le &otential e uit! shares.' !.5 #or the purpose o8 ca,cu,ating di,uted earnings per share1 an enterprise shou,d assu6e the e7ercise o8 di,uti3e options and other di,uti3e potentia, e4uit0 shares o8 the enterprise5 The assu6ed proceeds 8ro6 these

issues shou,d /e considered to ha3e /een recei3ed 8ro6 the issue o8 shares at 8air 3a,ue5 The di88erence /et2een the nu6/er o8 shares issua/,e and the nu6/er o8 shares that 2ou,d ha3e /een issued at 8air 3a,ue shou,d /e treated as an issue o8 e4uit0 shares 8or no consideration5 36' 8air value %or this &ur&ose is the average &rice o% the e uit! shares during the &eriod' "heoreticall!* ever! $ar3et transaction %or an enter&rise6s e uit! shares could ,e included in deter$ining the average &rice' #s a &ractical $atter* ho)ever* a si$&le average o% last si- $onths )ee3l! closing &rices are usuall! ade uate %or use in co$&uting the average &rice' 3;' @&tions and other share &urchase arrange$ents are dilutive )hen the! )ould result in the issue o% e uit! shares %or less than %air value' "he a$ount o% the dilution is %air value less the issue &rice' "here%ore* in order to calculate diluted earnings &er share* each such arrange$ent is treated as consisting o%< +a. a contract to issue a certain nu$,er o% e uit! shares at their average %air value during the &eriod' "he shares to ,e so issued are %airl! &riced and are assu$ed to ,e neither dilutive nor anti-dilutive' "he! are ignored in the co$&utation o% diluted earnings &er share: and +,. a contract to issue the re$aining e uit! shares %or no consideration' Such e uit! shares generate no &roceeds and have no e%%ect on the net &ro%it attri,uta,le to e uit! shares outstanding' "here%ore* such shares are dilutive and are added to the nu$,er o% e uit! shares outstanding in the co$&utation o% diluted earnings &er share' 9llustration >9 attached to the Standard illustrates the e%%ects o% share o&tions on diluted earnings &er share' 38' "o the e-tent that &artl! &aid shares are not entitled to &artici&ate in dividends during the re&orting &eriod the! are considered the e uivalent o% )arrants or o&tions' "i,uti3e Potentia, E4uit0 Shares !)5 Potentia, e4uit0 shares shou,d /e treated as di,uti3e 2hen1 and on,0 2hen1 their con3ersion to e4uit0 shares 2ou,d decrease net pro8it per share 8ro6 continuing ordinar0 operations5

40' #n enter&rise uses net &ro%it %ro$ continuing ordinar! activities as Athe control %igureB that is used to esta,lish )hether &otential e uit! shares are dilutive or anti-dilutive' "he net &ro%it %ro$ continuing ordinar! activities is the net &ro%it %ro$ ordinar! activities +as de%ined in #S 5. a%ter deducting &re%erence dividends and an! attri,uta,le ta- thereto and a%ter e-cluding ite$s relating to discontinued o&erations2' 41' Potential e uit! shares are anti-dilutive )hen their conversion to e uit! shares )ould increase earnings &er share %ro$ continuing ordinar! activities or decrease loss &er share %ro$ continuing ordinar! activities' "he e%%ects o% anti-dilutive &otential e uit! shares are ignored in calculating diluted earnings &er share' 42' 9n considering )hether &otential e uit! shares are dilutive or antidilutive* each issue or series o% &otential e uit! shares is considered se&aratel! rather than in aggregate' "he se uence in )hich &otential e uit! shares are considered $a! a%%ect )hether or not the! are dilutive' "here%ore* in order to $a-i$ise the dilution o% ,asic earnings &er share* each issue or series o% &otential e uit! shares is considered in se uence %ro$ the $ost dilutive to the least dilutive' 8or the &ur&ose o% deter$ining the se uence %ro$ $ost dilutive to least dilutive &otential e uit! shares* the earnings &er incre$ental &otential e uit! share is calculated' =here the earnings &er incre$ental share is the least* the &otential e uit! share is considered $ost dilutive and vice-versa' 9llustration >99 attached to the Standard illustrates the $anner o% deter$ining the order in )hich dilutive securities should ,e included in the co$&utation o% )eighted average nu$,er o% shares' 43' Potential e uit! shares are )eighted %or the &eriod the! )ere outstanding' Potential e uit! shares that )ere cancelled or allo)ed to la&se during the re&orting &eriod are included in the co$&utation o% diluted earnings &er share onl! %or the &ortion o% the &eriod during )hich the! )ere outstanding' Potential e uit! shares that have ,een converted into e uit! shares during the re&orting &eriod are included in the calculation o% diluted earnings &er share %ro$ the ,eginning o% the &eriod to the date o% conversion: %ro$ the date o% conversion* the resulting e uit! shares are included in co$&uting ,oth ,asic and diluted earnings &er share'
'

'estate6ent
%%5 I8 the nu6/er o8 e4uit0 or potentia, e4uit0 shares outstanding increases as a resu,t o8 a /onus issue or share sp,it or decreases as a resu,t o8 a re3erse share sp,it (conso,idation o8 shares)1 the ca,cu,ation o8 /asic and di,uted earnings per share shou,d /e ad9usted 8or a,, the periods presented5 I8 these changes occur a8ter the /a,ance sheet date /ut /e8ore the date on 2hich the 8inancia, state6ents are appro3ed /0 the /oard o8 directors1 the per share ca,cu,ations 8or those 8inancia, state6ents and an0 prior period 8inancia, state6ents presented shou,d /e /ased on the ne2 nu6/er o8 shares5 Bhen per share ca,cu,ations re8,ect such changes in the nu6/er o8 shares1 that 8act shou,d /e disc,osed5 45' #n enter&rise does not restate diluted earnings &er share o% an! &rior &eriod &resented %or changes in the assu$&tions used or %or the conversion o% &otential e uit! shares into e uit! shares outstanding' 46' #n enter&rise is encouraged to &rovide a descri&tion o% e uit! share transactions or &otential e uit! share transactions* other than ,onus issues* share s&lits and reverse share s&lits +consolidation o% shares. )hich occur a%ter the ,alance sheet date )hen the! are o% such i$&ortance that non-disclosure )ould a%%ect the a,ilit! o% the users o% the %inancial state$ents to $a3e &ro&er evaluations and decisions' E-a$&les o% such transactions include< +a. the issue o% shares %or cash: +,. the issue o% shares )hen the &roceeds are used to re&a! de,t or &re%erence shares outstanding at the ,alance sheet date: +c. the cancellation o% e uit! shares outstanding at the ,alance sheet date: +d. the conversion or e-ercise o% &otential e uit! shares* outstanding at the ,alance sheet date* into e uit! shares: +e. the issue o% )arrants* o&tions or converti,le securities: and +%. the satis%action o% conditions that )ould result in the issue o% contingentl! issua,le shares' 4;' Earnings &er share a$ounts are not ad4usted %or such transactions

occurring a%ter the ,alance sheet date ,ecause such transactions do not a%%ect the a$ount o% ca&ital used to &roduce the net &ro%it or loss %or the &eriod'

"isc,osure
%(5 In addition to disc,osures as re4uired /0 paragraphs (1 ) and %% o8 this Standard1 an enterprise shou,d disc,ose the 8o,,o2ing= (i) 2here the state6ent o8 pro8it and ,oss inc,udes e7traordinar0 ite6s (2ithin the 6eaning o8 AS .1 $et Pro8it or -oss 8or the Period1 Prior Period Ite6s and Changes in Accounting Po,icies)1 the enterprise shou,d disc,ose /asic and di,uted earnings per share co6puted on the /asis o8 earnings e7c,uding e7traordinar0 ite6s (net o8 ta7 e7pense)A and (ii) (a) the a6ounts used as the nu6erators in ca,cu,ating /asic and di,uted earnings per share1 and a reconci,iation o8 those a6ounts to the net pro8it or ,oss 8or the periodA (/) the 2eighted a3erage nu6/er o8 e4uit0 shares used as the deno6inator in ca,cu,ating /asic and di,uted earnings per share1 and a reconci,iation o8 these deno6inators to each otherA and (c) the no6ina, 3a,ue o8 shares a,ong 2ith the earnings per share 8igures5 49' 1ontracts generating &otential e uit! shares $a! incor&orate ter$s and conditions )hich a%%ect the $easure$ent o% ,asic and diluted earnings &er share' "hese ter$s and conditions $a! deter$ine )hether or not an! &otential e uit! shares are dilutive and* i% so* the e%%ect on the )eighted average nu$,er o% shares outstanding and an! conse uent ad4ust$ents to the net &ro%it attri,uta,le to e uit! shareholders' Disclosure o% the ter$s and conditions o% such contracts is encouraged ,! this Standard' .05 I8 an enterprise disc,oses1 in addition to /asic and di,uted earnings per share1 per share a6ounts using a reported co6ponent o8 net pro8it other than net pro8it or ,oss 8or the period attri/uta/,e

to e4uit0 shareho,ders1 such a6ounts shou,d /e ca,cu,ated using the 2eighted a3erage nu6/er o8 e4uit0 shares deter6ined in accordance

Standard5 I8 a co6ponent o8 net pro8it is used 2hich is not reported as a ,ine ite6 in the state6ent o8 pro8it and ,oss1 a reconci,iation shou,d /e pro3ided /et2een the co6ponent used and a ,ine ite6 2hich is reported in the state6ent o8 pro8it and ,oss5 Basic and di,uted per share a6ounts shou,d /e disc,osed 2ith e4ua, pro6inence5 51' #n enter&rise $a! )ish to disclose $ore in%or$ation than this Standard re uires' Such in%or$ation $a! hel& the users to evaluate the &er%or$ance o% the enter&rise and $a! ta3e the %or$ o% &er share a$ounts %or various co$&onents o% net &ro%it' Such disclosures are encouraged' (o)ever* )hen such a$ounts are disclosed* the deno$inators need to ,e calculated in accordance )ith this Standard in order to ensure the co$&ara,ilit! o% the &er share a$ounts disclosed'

I,,ustrations
$ote= These i,,ustrations do not 8or6 part o8 the Accounting Standard5 Their purpose is to i,,ustrate the app,ication o8 the Accounting Standard5
I,,ustration I E7a6p,e Beighted A3erage $u6/er o8 Shares (Accounting year 01-01-20X1 to 31-12-20X1) $o5 o8 Shares $o5 o8 Shares $o5 o8 Issued Bought Bac? Shares Outstanding 1st January, 20X1 31st May, 20X1 1st #o$%, 20X1 31st 'ec%, 20X1 Balance at beginning of year Issue of s"ares for cas" Buy Bac& of s"ares Balance at en( of year 1,800 1,800

00

2,!00

2,!00

300 300

2,100 2,100

)o*+utation of ,eig"te( A$erage(1,800 . /012) 1 (2,!00 . /012) 1 (2,100 . 2012) 2 2,100 s"ares% 3"e 4eig"te( a$erage nu*ber of s"ares can alternati$ely be co*+ute( as follo4s(1,800 .12012) 1 ( 00 . 5012) - (300 . 2012) 2 2,100 s"ares

Earnings Per Share !2! I,,ustration II E7a6p,e Part,0 paid shares (Accounting year 01-01-20X1 to 31-12-20X1) $o5 o8 shares $o6ina, 3a,ue issued o8 shares 1st January, 20X1 31st 7ctober, 20X1 Balance at beginning of year Issue of 8"ares 1,800 6s% 10 A6ount paid 6s% 10

00

6s% 10

6s% /

Assu*ing t"at +artly +ai( s"ares are entitle( to +artici+ate in t"e (i$i(en( to t"e e.tent of a*ount +ai(, nu*ber of +artly +ai( e9uity s"ares 4oul( be ta&en as 300 for t"e +ur+ose of calculation of earnings +er s"are% )o*+utation of 4eig"te( a$erage 4oul( be as follo4s(1,800.12012) 1 (300.2012) 2 1,8/0 s"ares%

I,,ustration III E7a6p,e Bonus Issue (Accounting year 01-01-20XX to 31-12-20XX) #et +rofit for t"e year 20X0 #et +rofit for t"e year 20X1 #o% of e9uity s"ares outstan(ing until 30t" 8e+te*ber 20X1 Bonus issue 1st 7ctober 20X1 6s% 18,00,000 6s% 0,00,000 20,00,000

2 e9uity s"ares for eac" e9uity s"are outstan(ing at 30t" 8e+te*ber, 20X1 20,00,000 . 2 2 !0,00,000 6s% 0,00,000 ( 20,00,000 1 !0,00,000 ) 6s% 18,00,000 (20,00,000 1 !0,00,000)

:arnings +er s"are for t"e year 20X1 A(;uste( earnings +er s"are for t"e year 20X0

2 6e% 1%00 2 6e% 0%30

8ince t"e bonus issue is an issue 4it"out consi(eration, t"e issue is treate( as if it "a( occurre( +rior to t"e beginning of t"e year 20X0, t"e earliest +erio( re+orte(%

Earnings Per Share !2. I,,ustration IV E7a6p,e 'ights Issue (Accounting year 01-01-20XX to 31-12-20XX) #et +rofit #o% of s"ares outstan(ing +rior to rig"ts issue 6ig"ts issue <ear <ear 20X0 20X1 6s% 11,00,000 6s% 1/,00,000

/,00,000 s"ares 7ne ne4 s"are for eac" fi$e outstan(ing (i%e% 1,00,000 ne4 s"ares) 6ig"ts issue +rice - 6s% 1/%00 =ast (ate to e.ercise rig"ts1st Marc" 20X1

>air $alue of one e9uity s"are i**e(iately +rior to e.ercise of rig"ts on 1st Marc" 20X1

6s% 21%00

Co6putation o8 theoretica, e7 rights 8air 3a,ue per share >air $alue of all outstan(ing s"ares i**e(iately +rior to e.ercise of rig"ts1total a*ount recei$e( fro* e.ercise #u*ber of s"ares outstan(ing +rior to e.ercise 1 nu*ber of s"ares issue( in t"e e.ercise (6s% 21%00 . /,00,000 s"ares) 1 (6s% 1/%00 . 1,00,000 s"ares) /,00,000 s"ares 1 1,00,000 s"ares 3"eoretical e.-rig"ts fair $alue +er s"are 2 6s% 20%00 Co6putation o8 ad9ust6ent 8actor >air $alue +er s"are +rior to e.ercise of rig"ts 3"eoretical e.-rig"ts $alue +er s"are Co6putation o8 earnings per share Cear 20D0 Cear 20D1 :?8 for t"e year 20X0 as originally re+orte(6s%11,00,0000/,00,000 s"ares 6s% (21%00) 2 1%0/ 6s% (20%00)

6s% 2%20

!2>

AS 20 6s% 2%10

:?8 for t"e year 20X0 restate( for rig"ts issue- 6s%11,00,0000 (/,00,000 s"ares . 1%0/) :?8 for t"e year 20X1 inclu(ing effects of rig"ts issue 6s% 1/,00,000 @ (/,00,000 . 1%0/ . 2012)1 ( ,00,000 . 10012)

6s% 2%//

Earnings Per Share !2& I,,ustration V E7a6p,e Con3erti/,e "e/entures (Accounting year 01-01-20XX to 31-12-20XX) #et +rofit for t"e current year #o% of e9uity s"ares outstan(ing Basic earnings +er s"are #o% of 12A con$ertible (ebentures of 6s% 100 eac" :ac" (ebenture is con$ertible into 10 e9uity s"ares Interest e.+ense for t"e current year 3a. relating to interest e.+ense (30A) A(;uste( net +rofit for t"e current year #o% of e9uity s"ares resulting fro* con$ersion of (ebentures #o% of e9uity s"ares use( to co*+ute (ilute( earnings +er s"are 'ilute( earnings +er s"are 6s% 12,00,000 6s% 3, 0,000 6s% (1,00,00,000 1 12,00,000 3, 0,000) 2 6s% 1,08,!0,000 10,00,000 /0,00,000 1 10,00,000 2 0,00,000 1,08,!0,0000 0,00,000 6e% 1%81 2 6s% 1,00,00,000 /0,00,000 6s% 2%00 1,00,000

!2(

AS 20 I,,ustration VI

E7a6p,e E88ects o8 Share Options on "i,uted Earnings Per Share (Accounting year 01-01-20XX to 31-12-20XX) #et +rofit for t"e year 20X1 ,eig"te( a$erage nu*ber of e9uity s"ares outstan(ing (uring t"e year 20X1 A$erage fair $alue of one e9uity s"are (uring t"e year 20X1 ,eig"te( a$erage nu*ber of s"ares un(er o+tion (uring t"e year 20X1 :.ercise +rice for s"ares un(er o+tion (uring t"e year 20X1 6s% 12,00,000 /,00,000 s"ares 6s% 20%00 1,00,000 s"ares 6s% 1/%00

Co6putation o8 earnings per share Earnings #et +rofit for t"e year 20X1 ,eig"te( a$erage nu*ber of s"ares outstan(ing (uring year 20X1 Basic earnings per share #u*ber of s"ares un(er o+tion #u*ber of s"ares t"at 4oul( "a$e been issue( at fair $alue(100,000 . 1/%00)020%00 "i,uted earnings per share B 1,00,000 (5/,000) 6s% 12,00,000 /,00,000 Shares Earnings per share

6s% 2%!0

6s% 12,00,000

/,2/,000

6s% 2%2C

EThe earnings ha3e not /een increased as the tota, nu6/er o8 shares has /een increased on,0 /0 the nu6/er o8 shares (2.1000) dee6ed 8or the purpose o8 the co6putation to ha3e /een issued 8or no consideration Fsee para !&(/)G

Earnings Per Share !2) I,,ustration VII E7a6p,e "eter6ining the Order in Bhich to Inc,ude "i,uti3e Securities in the Co6putation o8 Beighted A3erage $u6/er o8 Shares (Accounting year 01-01-20XX to 31-12-20XX) :arnings, i%e%, #et +rofit attributable to e9uity s"are"ol(ers #o% of e9uity s"ares outstan(ing A$erage fair $alue of one e9uity s"are (uring t"e year Potentia, E4uit0 Shares 7+tions )on$ertible ?reference 8"ares 1,00,000 4it" e.ercise +rice of 6s% 0 8,00,000 s"ares entitle( to a cu*ulati$e (i$i(en( of 6s% 8 +er s"are% :ac" +reference s"are is con$ertible into 2 e9uity s"ares% 10A #o*inal a*ount 6s% 10,00,00,000% :ac" (ebenture is con$ertible into ! e9uity s"ares% 30A 6s% 1,00,00,000

20,00,000

6s% 5/%00

Attributable ta., e%g%, cor+orate (i$i(en( ta. 12A )on$ertible 'ebentures of 6s% 100 eac" 3a. rate

Increase in Earnings Attri/uta/,e to E4uit0 Shareho,ders on Con3ersion o8 Potentia, E4uit0 Shares Increase in Earnings Options Increase in earnings #o% of incre*ental s"ares issue( for no consi(eration D1,00,000 . (5/ - 0) 0 5/E Con3erti/,e Pre8erence Shares Increase in net +rofit attributable to e9uity s"are"ol(ers as a(;uste( by attributable ta. F(6s%8 . 8,00,000)1 10A(8 . 8,00,000)G #o% of incre*ental s"ares D2 . 8,00,000E 12H Con3erti/,e "e/entures Increase in net +rofit D6s% 10,00,00,000 . 0%12 . ( 1 - 0%30)E #o% of incre*ental s"ares D10,00,000 . !E 6s% 8!,00,000 6s% 50,!0,000 #il Increase in Earnings per no5 o8 Incre6enta, E4uit0 Shares Share

20,000

#il

1 ,00,000

6s% !%!0

!0,00,000

6s% 2%10

It *ay be note( fro* t"e abo$e t"at o+tions are *ost (iluti$e as t"eir earnings +er incre*ental s"are is nil% Hence, for t"e +ur+ose of co*+utation of (ilute( earnings +er s"are, o+tions 4ill be consi(ere( first% 12A con$ertible (ebentures being secon( *ost (iluti$e 4ill be consi(ere( ne.t an( t"ereafter con$ertible +reference s"ares 4ill be consi(ere( (see +ara !2)%

Earnings Per Share !!1 Co6putation o8 "i,uted Earnings Per Share $et Pro8it $o5 o8 E4uit0 $et pro8it Attri/uta/,e Shares attri/uta/,e ('s5) Per Share ('s5) As reported Options 1,00,00,000 12H Con3erti/,e "e/entures 8!,00,000 1,8!,00,000 Con3erti/,e Pre8erence Shares 50,!0,000 1,00,00,000 20,00,000 20,000 20,20,000 !0,00,000 0,20,000 1 ,00,000 3%0 'iluti$e !%C/ 'iluti$e /%00

2,/!,!0,000

5 ,20,000

3%3!

Anti'iluti$e

8ince (ilute( earnings +er s"are is increase( 4"en ta&ing t"e con$ertible +reference s"ares into account (fro* 6s% 3%0 to 6s 3%3!), t"e con$ertible +reference s"ares are anti-(iluti$e an( are ignore( in t"e calculation of (ilute( earnings +er s"are% 3"erefore, (ilute( earnings +er s"are is 6s% 3%0 %