NAS 33

Nepal Accounting Standard 33

Earnings per Share

Objective

1 The objective of this Standard is to prescribe principles for the determination and presentation of earnings
per share, so as to improve performance comparisons between different entities in the same reporting period
and between different reporting periods for the same entity. Even though earnings per share data have
limitations because of the different accounting policies that may be used for determining ‘earnings’, a
consistently determined denominator enhances financial reporting. The focus of this Standard is on the
denominator of the earnings per share calculation.

Scope

2 This Standard shall apply to

(a) the separate or individual financial statements of an entity:
(i) whose ordinary shares or potential ordinary shares are traded in a public market
(a domestic or foreign stock exchange or an over-the-counter market, including
local and regional markets) or
(ii) that files, or is in the process of filing, its financial statements with a securities
commission or other regulatory organisation for the purpose of issuing ordinary
shares in a public market; and
(b) the consolidated financial statements of a group with a parent:
(i) whose ordinary shares or potential ordinary shares are traded in a public market
(a domestic or foreign stock exchange or an over-the-counter market, including
local and regional markets) or
(ii) that files, or is in the process of filing, its financial statements with a securities
commission or other regulatory organisation for the purpose of issuing ordinary
shares in a public market.
3 An entity that discloses earnings per share shall calculate and disclose earnings per share in
accordance with this Standard.
4 When an entity presents both consolidated financial statements and separate financial statements
prepared in accordance with NFRS 10 Consolidated Financial Statements and NAS 27 Separate
Financial Statements respectively, the disclosures required by this Standard need be presented only on
the basis of the consolidated information. An entity that chooses to disclose earnings per share based
on its separate financial statements shall present such earnings per share information only in its
statement of comprehensive income. An entity shall not present such earnings per share information
in the consolidated financial statements.
4A If an entity presents items of profit or loss in a separate statement as described in paragraph 10A of
NAS 1 Presentation of Financial Statements, it presents earnings per share only in that separate
statement.

Definitions

5 The following terms are used in this Standard with the meanings specified:
Antidilution is an increase in earnings per share or a reduction in loss per share resulting from the
assumption that convertible instruments are converted, that options or warrants are exercised, or
that ordinary shares are issued upon the satisfaction of specified conditions.

A contingent share agreement is an agreement to issue shares that is dependent on the satisfaction of
specified conditions.

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Contingently issuable ordinary shares are ordinary shares issuable for little or no cash or other
consideration upon the satisfaction of specified conditions in a contingent share agreement.

Dilution is a reduction in earnings per share or an increase in loss per share resulting from the
assumption that convertible instruments are converted, that options or warrants are exercised, or
that ordinary shares are issued upon the satisfaction of specified conditions.

Options, warrants and their equivalents are financial instruments that give the holder the right to
purchase ordinary shares.

A n ordinary share is an equity instrument that is subordinate to all other classes of equity
instruments.

A potential ordinary share is a financial instrument or other contract that may entitle its holder to
ordinary shares.

Put options on ordinary shares are contracts that give the holder the right to sell ordinary shares at a
specified price for a given period.

6 Ordinary shares participate in profit for the period only after other types of shares such as preference shares
have participated. An entity may have more than one class of ordinary shares. Ordinary shares of the same
class have the same rights to receive dividends.
7 Examples of potential ordinary shares are:
(a) financial liabilities or equity instruments, including preference shares, that are convertible into
ordinary shares;
(b) options and warrants;
(c) shares that would be issued upon the satisfaction of conditions resulting from contractual
arrangements, such as the purchase of a business or other assets.
8 Terms defined in NAS 32 Financial Instruments: Presentation are used in this Standard with the meanings
specified in paragraph 11 of NAS 32, unless otherwise noted. NAS 32 defines financial instrument,
financial asset, financial liability and equity instrument, and provides guidance on applying those
definitions. NFRS 13 Fair Value Measurement defines fair value and sets out requirements for applying that
definition.

Measurement

Basic earnings per share

9 An entity shall calculate basic earnings per share amounts for profit or loss attributable to ordinary
equity holders of the parent entity and, if presented, profit or loss from continuing operations
attributable to those equity holders.
10 Basic earnings per share shall be calculated by dividing profit or loss attributable to ordinary equity
holders of the parent entity (the numerator) by the weighted average number of ordinary shares
outstanding (the denominator) during the period.
11 The objective of basic earnings per share information is to provide a measure of the interests of each
ordinary share of a parent entity in the performance of the entity over the reporting period.

Earnings

12 For the purpose of calculating basic earnings per share, the amounts attributable to ordinary equity
holders of the parent entity in respect of:
(a) profit or loss from continuing operations attributable to the parent entity; and
(b) profit or loss attributable to the parent entity
shall be the amounts in (a) and (b) adjusted for the after-tax amounts of preference dividends,
differences arising on the settlement of preference shares, and other similar effects of preference
shares classified as equity.

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13 All items of income and expense attributable to ordinary equity holders of the parent entity that are
recognised in a period, including tax expense and dividends on preference shares classified as liabilities are
included in the determination of profit or loss for the period attributable to ordinary equity holders of the
parent entity (see NAS 1).
14 The after-tax amount of preference dividends that is deducted from profit or loss is:
(a) the after-tax amount of any preference dividends on non-cumulative preference shares declared in
respect of the period; and
(b) the after-tax amount of the preference dividends for cumulative preference shares required for the
period, whether or not the dividends have been declared. The amount of preference dividends for
the period does not include the amount of any preference dividends for cumulative preference
shares paid or declared during the current period in respect of previous periods.
15 Preference shares that provide for a low initial dividend to compensate an entity for selling the preference
shares at a discount, or an above-market dividend in later periods to compensate investors for purchasing
preference shares at a premium, are sometimes referred to as increasing rate preference shares. Any original
issue discount or premium on increasing rate preference shares is amortised to retained earnings using the
effective interest method and treated as a preference dividend for the purposes of calculating earnings per
share.
16 Preference shares may be repurchased under an entity’s tender offer to the holders. The excess of the fair
value of the consideration paid to the preference shareholders over the carrying amount of the preference
shares represents a return to the holders of the preference shares and a charge to retained earnings for the
entity. This amount is deducted in calculating profit or loss attributable to ordinary equity holders of the
parent entity.
17 Early conversion of convertible preference shares may be induced by an entity through favourable changes
to the original conversion terms or the payment of additional consideration. The excess of the fair value of
the ordinary shares or other consideration paid over the fair value of the ordinary shares issuable under the
original conversion terms is a return to the preference shareholders, and is deducted in calculating profit or
loss attributable to ordinary equity holders of the parent entity.
18 Any excess of the carrying amount of preference shares over the fair value of the consideration paid to settle
them is added in calculating profit or loss attributable to ordinary equity holders of the parent entity.

Shares

19 For the purpose of calculating basic earnings per share, the number of ordinary shares shall be the
weighted average number of ordinary shares outstanding during the period.
20 Using the weighted average number of ordinary shares outstanding during the period reflects the possibility
that the amount of shareholders’ capital varied during the period as a result of a larger or smaller number of
shares being outstanding at any time. The weighted average number of ordinary shares outstanding during
the period is the number of ordinary shares outstanding at the beginning of the period, adjusted by the
number of ordinary shares bought back or issued during the period multiplied by a time-weighting factor.
The time-weighting factor is the number of days that the shares are outstanding as a proportion of the total
number of days in the period; a reasonable approximation of the weighted average is adequate in many
circumstances.
21 Shares are usually included in the weighted average number of shares from the date consideration is
receivable (which is generally the date of their issue), for example:
(a) ordinary shares issued in exchange for cash are included when cash is receivable;
(b) ordinary shares issued on the voluntary reinvestment of dividends on ordinary or preference
shares are included when dividends are reinvested;
(c) ordinary shares issued as a result of the conversion of a debt instrument to ordinary shares are
included from the date that interest ceases to accrue;
(d) ordinary shares issued in place of interest or principal on other financial instruments are included
from the date that interest ceases to accrue;
(e) ordinary shares issued in exchange for the settlement of a liability of the entity are included from
the settlement date;
(f) ordinary shares issued as consideration for the acquisition of an asset other than cash are included
as of the date on which the acquisition is recognised; and

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(g) ordinary shares issued for the rendering of services to the entity are included as the services are
rendered.
The timing of the inclusion of ordinary shares is determined by the terms and conditions attaching to their
issue. Due consideration is given to the substance of any contract associated with the issue.

22 Ordinary shares issued as part of the consideration transferred in a business combination are included in the
weighted average number of shares from the acquisition date. This is because the acquirer incorporates into
its statement of comprehensive income the acquiree’s profits and losses from that date.
23 Ordinary shares that will be issued upon the conversion of a mandatorily convertible instrument are
included in the calculation of basic earnings per share from the date the contract is entered into.
24 Contingently issuable shares are treated as outstanding and are included in the calculation of basic earnings
per share only from the date when all necessary conditions are satisfied (ie the events have occurred).
Shares that are issuable solely after the passage of time are not contingently issuable shares, because the
passage of time is a certainty. Outstanding ordinary shares that are contingently returnable (ie subject to
recall) are not treated as outstanding and are excluded from the calculation of basic earnings per share until
the date the shares are no longer subject to recall.
25 [Deleted]
26 The weighted average number of ordinary shares outstanding during the period and for all periods
presented shall be adjusted for events, other than the conversion of potential ordinary shares, that
have changed the number of ordinary shares outstanding without a corresponding change in
resources.
27 Ordinary shares may be issued, or the number of ordinary shares outstanding may be reduced, without a
corresponding change in resources. Examples include:
(a) a capitalisation or bonus issue (sometimes referred to as a stock dividend);
(b) a bonus element in any other issue, for example a bonus element in a rights issue to existing
shareholders;
(c) a share split; and
(d) a reverse share split (consolidation of shares).
28 In a capitalisation or bonus issue or a share split, ordinary shares are issued to existing shareholders for no
additional consideration. Therefore, the number of ordinary shares outstanding is increased without an
increase in resources. The number of ordinary shares outstanding before the event is adjusted for the
proportionate change in the number of ordinary shares outstanding as if the event had occurred at the
beginning of the earliest period presented. For example, on a two-for-one bonus issue, the number of
ordinary shares outstanding before the issue is multiplied by three to obtain the new total number of
ordinary shares, or by two to obtain the number of additional ordinary shares.
29 A consolidation of ordinary shares generally reduces the number of ordinary shares outstanding without a
corresponding reduction in resources. However, when the overall effect is a share repurchase at fair value,
the reduction in the number of ordinary shares outstanding is the result of a corresponding reduction in
resources. An example is a share consolidation combined with a special dividend. The weighted average
number of ordinary shares outstanding for the period in which the combined transaction takes place is
adjusted for the reduction in the number of ordinary shares from the date the special dividend is recognised.

Diluted earnings per share

30 An entity shall calculate diluted earnings per share amounts for profit or loss attributable to ordinary
equity holders of the parent entity and, if presented, profit or loss from continuing operations
attributable to those equity holders.
31 For the purpose of calculating diluted earnings per share, an entity shall adjust profit or loss
attributable to ordinary equity holders of the parent entity, and the weighted average number of
shares outstanding, for the effects of all dilutive potential ordinary shares.
32 The objective of diluted earnings per share is consistent with that of basic earnings per share—to provide a
measure of the interest of each ordinary share in the performance of an entity—while giving effect to all
dilutive potential ordinary shares outstanding during the period. As a result:
(a) profit or loss attributable to ordinary equity holders of the parent entity is increased by the after-
tax amount of dividends and interest recognised in the period in respect of the dilutive potential

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ordinary shares and is adjusted for any other changes in income or expense that would result from
the conversion of the dilutive potential ordinary shares; and
(b) the weighted average number of ordinary shares outstanding is increased by the weighted average
number of additional ordinary shares that would have been outstanding assuming the conversion
of all dilutive potential ordinary shares.

Earnings

33 For the purpose of calculating diluted earnings per share, an entity shall adjust profit or loss
attributable to ordinary equity holders of the parent entity, as calculated in accordance with
paragraph 12, by the after-tax effect of:
(a) any dividends or other items related to dilutive potential ordinary shares deducted in
arriving at profit or loss attributable to ordinary equity holders of the parent entity as
calculated in accordance with paragraph 12;
(b) any interest recognised in the period related to dilutive potential ordinary shares; and
(c) any other changes in income or expense that would result from the conversion of the
dilutive potential ordinary shares.
34 After the potential ordinary shares are converted into ordinary shares, the items identified in paragraph
33(a)–(c) no longer arise. Instead, the new ordinary shares are entitled to participate in profit or loss
attributable to ordinary equity holders of the parent entity. Therefore, profit or loss attributable to ordinary
equity holders of the parent entity calculated in accordance with paragraph 12 is adjusted for the items
identified in paragraph 33(a)–(c) and any related taxes. The expenses associated with potential ordinary
shares include transaction costs and discounts accounted for in accordance with the effective interest
method (see NFRS 9).
35 The conversion of potential ordinary shares may lead to consequential changes in income or expenses. For
example, the reduction of interest expense related to potential ordinary shares and the resulting increase in
profit or reduction in loss may lead to an increase in the expense related to a non-discretionary employee
profit-sharing plan. For the purpose of calculating diluted earnings per share, profit or loss attributable to
ordinary equity holders of the parent entity is adjusted for any such consequential changes in income or
expense.

Shares

36 For the purpose of calculating diluted earnings per share, the number of ordinary shares shall be the
weighted average number of ordinary shares calculated in accordance with paragraphs 19 and 26,
plus the weighted average number of ordinary shares that would be issued on the conversion of all the
dilutive potential ordinary shares into ordinary shares. Dilutive potential ordinary shares shall be
deemed to have been converted into ordinary shares at the beginning of the period or, if later, the date
of the issue of the potential ordinary shares.
37 Dilutive potential ordinary shares shall be determined independently for each period presented. The number
of dilutive potential ordinary shares included in the year-to-date period is not a weighted average of the
dilutive potential ordinary shares included in each interim computation.
38 Potential ordinary shares are weighted for the period they are outstanding. Potential ordinary shares that are
cancelled or allowed to lapse during the period are included in the calculation of diluted earnings per share
only for the portion of the period during which they are outstanding. Potential ordinary shares that are
converted into ordinary shares during the period are included in the calculation of diluted earnings per share
from the beginning of the period to the date of conversion; from the date of conversion, the resulting
ordinary shares are included in both basic and diluted earnings per share.
39 The number of ordinary shares that would be issued on conversion of dilutive potential ordinary shares is
determined from the terms of the potential ordinary shares. When more than one basis of conversion exists,
the calculation assumes the most advantageous conversion rate or exercise price from the standpoint of the
holder of the potential ordinary shares.
40 A subsidiary, joint venture or associate may issue to parties other than the parent or investors with joint
control of, or significant influence over, the investee potential ordinary shares that are convertible into either
ordinary shares of the subsidiary, joint venture or associate, or ordinary shares of the parent or investors
with joint control of, or significant influence (the reporting entity) over, the investee. If these potential

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ordinary shares of the subsidiary, joint venture or associate have a dilutive effect on the basic earnings per
share of the reporting entity, they are included in the calculation of diluted earnings per share.

Dilutive potential ordinary shares

41 Potential ordinary shares shall be treated as dilutive when, and only when, their conversion to
ordinary shares would decrease earnings per share or increase loss per share from continuing
operations.
42 An entity uses profit or loss from continuing operations attributable to the parent entity as the control
number to establish whether potential ordinary shares are dilutive or antidilutive. Profit or loss from
continuing operations attributable to the parent entity is adjusted in accordance with paragraph 12 and
excludes items relating to discontinued operations.
43 Potential ordinary shares are antidilutive when their conversion to ordinary shares would increase earnings
per share or decrease loss per share from continuing operations. The calculation of diluted earnings per
share does not assume conversion, exercise, or other issue of potential ordinary shares that would have an
antidilutive effect on earnings per share.
44 In determining whether potential ordinary shares are dilutive or antidilutive, each issue or series of potential
ordinary shares is considered separately rather than in aggregate. The sequence in which potential ordinary
shares are considered may affect whether they are dilutive. Therefore, to maximise the dilution of basic
earnings per share, each issue or series of potential ordinary shares is considered in sequence from the most
dilutive to the least dilutive, ie dilutive potential ordinary shares with the lowest ‘earnings per incremental
share’ are included in the diluted earnings per share calculation before those with a higher earnings per
incremental share. Options and warrants are generally included first because they do not affect the
numerator of the calculation.

Options, warrants and their equivalents

45 For the purpose of calculating diluted earnings per share, an entity shall assume the exercise of
dilutive options and warrants of the entity. The assumed proceeds from these instruments shall be
regarded as having been received from the issue of ordinary shares at the average market price of
ordinary shares during the period. The difference between the number of ordinary shares issued and
the number of ordinary shares that would have been issued at the average market price of ordinary
shares during the period shall be treated as an issue of ordinary shares for no consideration.
46 Options and warrants are dilutive when they would result in the issue of ordinary shares for less than the
average market price of ordinary shares during the period. The amount of the dilution is the average market
price of ordinary shares during the period minus the issue price. Therefore, to calculate diluted earnings per
share, potential ordinary shares are treated as consisting of both the following:
(a) a contract to issue a certain number of the ordinary shares at their average market price during the
period. Such ordinary shares are assumed to be fairly priced and to be neither dilutive nor
antidilutive. They are ignored in the calculation of diluted earnings per share.
(b) a contract to issue the remaining ordinary shares for no consideration. Such ordinary shares
generate no proceeds and have no effect on profit or loss attributable to ordinary shares
outstanding. Therefore, such shares are dilutive and are added to the number of ordinary shares
outstanding in the calculation of diluted earnings per share.
47 Options and warrants have a dilutive effect only when the average market price of ordinary shares during
the period exceeds the exercise price of the options or warrants (ie they are ‘in the money’). Previously
reported earnings per share are not retroactively adjusted to reflect changes in prices of ordinary shares.
47A For share options and other share-based payment arrangements to which NFRS 2 Share-based Payment
applies, the issue price referred to in paragraph 46 and the exercise price referred to in paragraph 47 shall
include the fair value (measured in accordance with NFRS 2) of any goods or services to be supplied to the
entity in the future under the share option or other share-based payment arrangement.
48 Employee share options with fixed or determinable terms and non-vested ordinary shares are treated as
options in the calculation of diluted earnings per share, even though they may be contingent on vesting.
They are treated as outstanding on the grant date. Performance-based employee share options are treated as
contingently issuable shares because their issue is contingent upon satisfying specified conditions in
addition to the passage of time.

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Convertible instruments

49 The dilutive effect of convertible instruments shall be reflected in diluted earnings per share in accordance
with paragraphs 33 and 36.
50 Convertible preference shares are antidilutive whenever the amount of the dividend on such shares declared
in or accumulated for the current period per ordinary share obtainable on conversion exceeds basic earnings
per share. Similarly, convertible debt is antidilutive whenever its interest (net of tax and other changes in
income or expense) per ordinary share obtainable on conversion exceeds basic earnings per share.
51 The redemption or induced conversion of convertible preference shares may affect only a portion of the
previously outstanding convertible preference shares. In such cases, any excess consideration referred to in
paragraph 17 is attributed to those shares that are redeemed or converted for the purpose of determining
whether the remaining outstanding preference shares are dilutive. The shares redeemed or converted are
considered separately from those shares that are not redeemed or converted.

Contingently issuable shares

52 As in the calculation of basic earnings per share, contingently issuable ordinary shares are treated as
outstanding and included in the calculation of diluted earnings per share if the conditions are satisfied (ie
the events have occurred). Contingently issuable shares are included from the beginning of the period (or
from the date of the contingent share agreement, if later). If the conditions are not satisfied, the number of
contingently issuable shares included in the diluted earnings per share calculation is based on the number of
shares that would be issuable if the end of the period were the end of the contingency period. Restatement is
not permitted if the conditions are not met when the contingency period expires.
53 If attainment or maintenance of a specified amount of earnings for a period is the condition for contingent
issue and if that amount has been attained at the end of the reporting period but must be maintained beyond
the end of the reporting period for an additional period, then the additional ordinary shares are treated as
outstanding, if the effect is dilutive, when calculating diluted earnings per share. In that case, the calculation
of diluted earnings per share is based on the number of ordinary shares that would be issued if the amount
of earnings at the end of the reporting period were the amount of earnings at the end of the contingency
period. Because earnings may change in a future period, the calculation of basic earnings per share does not
include such contingently issuable ordinary shares until the end of the contingency period because not all
necessary conditions have been satisfied.
54 The number of ordinary shares contingently issuable may depend on the future market price of the ordinary
shares. In that case, if the effect is dilutive, the calculation of diluted earnings per share is based on the
number of ordinary shares that would be issued if the market price at the end of the reporting period were
the market price at the end of the contingency period. If the condition is based on an average of market
prices over a period of time that extends beyond the end of the reporting period, the average for the period
of time that has lapsed is used. Because the market price may change in a future period, the calculation of
basic earnings per share does not include such contingently issuable ordinary shares until the end of the
contingency period because not all necessary conditions have been satisfied.
55 The number of ordinary shares contingently issuable may depend on future earnings and future prices of the
ordinary shares. In such cases, the number of ordinary shares included in the diluted earnings per share
calculation is based on both conditions (ie earnings to date and the current market price at the end of the
reporting period). Contingently issuable ordinary shares are not included in the diluted earnings per share
calculation unless both conditions are met.
56 In other cases, the number of ordinary shares contingently issuable depends on a condition other than
earnings or market price (for example, the opening of a specific number of retail stores). In such cases,
assuming that the present status of the condition remains unchanged until the end of the contingency period,
the contingently issuable ordinary shares are included in the calculation of diluted earnings per share
according to the status at the end of the reporting period.
57 Contingently issuable potential ordinary shares (other than those covered by a contingent share agreement,
such as contingently issuable convertible instruments) are included in the diluted earnings per share
calculation as follows:
(a) an entity determines whether the potential ordinary shares may be assumed to be issuable on the
basis of the conditions specified for their issue in accordance with the contingent ordinary share
provisions in paragraphs 52–56; and
(b) if those potential ordinary shares should be reflected in diluted earnings per share, an entity
determines their impact on the calculation of diluted earnings per share by following the

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provisions for options and warrants in paragraphs 45–48, the provisions for convertible
instruments in paragraphs 49–51, the provisions for contracts that may be settled in ordinary
shares or cash in paragraphs 58–61, or other provisions, as appropriate.
However, exercise or conversion is not assumed for the purpose of calculating diluted earnings per share
unless exercise or conversion of similar outstanding potential ordinary shares that are not contingently
issuable is assumed.

Contracts that may be settled in ordinary shares or cash

58 When an entity has issued a contract that may be settled in ordinary shares or cash at the entity’s
option, the entity shall presume that the contract will be settled in ordinary shares, and the resulting
potential ordinary shares shall be included in diluted earnings per share if the effect is dilutive.
59 When such a contract is presented for accounting purposes as an asset or a liability, or has an equity
component and a liability component, the entity shall adjust the numerator for any changes in profit or loss
that would have resulted during the period if the contract had been classified wholly as an equity
instrument. That adjustment is similar to the adjustments required in paragraph 33.
60 For contracts that may be settled in ordinary shares or cash at the holder’s option, the more dilutive
of cash settlement and share settlement shall be used in calculating diluted earnings per share.
61 An example of a contract that may be settled in ordinary shares or cash is a debt instrument that, on
maturity, gives the entity the unrestricted right to settle the principal amount in cash or in its own ordinary
shares. Another example is a written put option that gives the holder a choice of settling in ordinary shares
or cash.

Purchased options

62 Contracts such as purchased put options and purchased call options (ie options held by the entity on its own
ordinary shares) are not included in the calculation of diluted earnings per share because including them
would be antidilutive. The put option would be exercised only if the exercise price were higher than the
market price and the call option would be exercised only if the exercise price were lower than the market
price.

Written put options

63 Contracts that require the entity to repurchase its own shares, such as written put options and
forward purchase contracts, are reflected in the calculation of diluted earnings per share if the effect
is dilutive. If these contracts are ‘in the money’ during the period (ie the exercise or settlement price is
above the average market price for that period), the potential dilutive effect on earnings per share
shall be calculated as follows:
(a) it shall be assumed that at the beginning of the period sufficient ordinary shares will be
issued (at the average market price during the period) to raise proceeds to satisfy the
contract;
(b) it shall be assumed that the proceeds from the issue are used to satisfy the contract (ie to
buy back ordinary shares); and
(c) the incremental ordinary shares (the difference between the number of ordinary shares
assumed issued and the number of ordinary shares received from satisfying the contract)
shall be included in the calculation of diluted earnings per share.

Retrospective adjustments

64 If the number of ordinary or potential ordinary shares outstanding increases as a result of a

capitalisation, bonus issue or share split, or decreases as a result of a reverse share split, the
calculation of basic and diluted earnings per share for all periods presented shall be adjusted
retrospectively. If these changes occur after the reporting period but before the financial statements
are authorised for issue, the per share calculations for those and any prior period financial statements
presented shall be based on the new number of shares. The fact that per share calculations reflect

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such changes in the number of shares shall be disclosed. In addition, basic and diluted earnings per
share of all periods presented shall be adjusted for the effects of errors and adjustments resulting
from changes in accounting policies accounted for retrospectively.
65 An entity does not restate diluted earnings per share of any prior period presented for changes in the
assumptions used in earnings per share calculations or for the conversion of potential ordinary shares into
ordinary shares.

Presentation

66 An entity shall present in the statement of comprehensive income basic and diluted earnings per
share for profit or loss from continuing operations attributable to the ordinary equity holders of the
parent entity and for profit or loss attributable to the ordinary equity holders of the parent entity for
the period for each class of ordinary shares that has a different right to share in profit for the period.
An entity shall present basic and diluted earnings per share with equal prominence for all periods
presented.
67 Earnings per share is presented for every period for which a statement of comprehensive income is
presented. If diluted earnings per share is reported for at least one period, it shall be reported for all periods
presented, even if it equals basic earnings per share. If basic and diluted earnings per share are equal, dual
presentation can be accomplished in one line in the statement of comprehensive income.
67A If an entity presents items of profit or loss in a separate statement as described in paragraph 10A of NAS 1 ,
it presents basic and diluted earnings per share, as required in paragraphs 66 and 67, in that separate
statement.
68 An entity that reports a discontinued operation shall disclose the basic and diluted amounts per share
for the discontinued operation either in the statement of comprehensive income or in the notes.
68A If an entity presents items of profit or loss in a separate statement as described in paragraph 10A of NAS 1 ,
it presents basic and diluted earnings per share for the discontinued operation, as required in paragraph 68,
in that separate statement or in the notes.
69 An entity shall present basic and diluted earnings per share, even if the amounts are negative (ie a
loss per share).

Disclosure

70 An entity shall disclose the following:

(a) the amounts used as the numerators in calculating basic and diluted earnings per share, and
a reconciliation of those amounts to profit or loss attributable to the parent entity for the
period. The reconciliation shall include the individual effect of each class of instruments
that affects earnings per share.
(b) the weighted average number of ordinary shares used as the denominator in calculating
basic and diluted earnings per share, and a reconciliation of these denominators to each
other. The reconciliation shall include the individual effect of each class of instruments that
affects earnings per share.
(c) instruments (including contingently issuable shares) that could potentially dilute basic
earnings per share in the future, but were not included in the calculation of diluted earnings
per share because they are antidilutive for the period(s) presented.
(d) a description of ordinary share transactions or potential ordinary share transactions, other
than those accounted for in accordance with paragraph 64, that occur after the reporting
period and that would have changed significantly the number of ordinary shares or
potential ordinary shares outstanding at the end of the period if those transactions had
occurred before the end of the reporting period.
71 Examples of transactions in paragraph 70(d) include:
(a) an issue of shares for cash;
(b) an issue of shares when the proceeds are used to repay debt or preference shares outstanding at
the end of the reporting period;
(c) the redemption of ordinary shares outstanding;

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(d) the conversion or exercise of potential ordinary shares outstanding at the end of the reporting
period into ordinary shares;
(e) an issue of options, warrants, or convertible instruments; and
(f) the achievement of conditions that would result in the issue of contingently issuable shares.
Earnings per share amounts are not adjusted for such transactions occurring after the reporting period
because such transactions do not affect the amount of capital used to produce profit or loss for the period.

72 Financial instruments and other contracts generating potential ordinary shares may incorporate terms and
conditions that affect the measurement of basic and diluted earnings per share. These terms and conditions
may determine whether any potential ordinary shares are dilutive and, if so, the effect on the weighted
average number of shares outstanding and any consequent adjustments to profit or loss attributable to
ordinary equity holders. The disclosure of the terms and conditions of such financial instruments and other
contracts is encouraged, if not otherwise required (see NFRS 7 Financial Instruments: Disclosures).
73 If an entity discloses, in addition to basic and diluted earnings per share, amounts per share using a
reported component of the statement of comprehensive income other than one required by this
Standard, such amounts shall be calculated using the weighted average number of ordinary shares
determined in accordance with this Standard. Basic and diluted amounts per share relating to such a
component shall be disclosed with equal prominence and presented in the notes. An entity shall
indicate the basis on which the numerator(s) is (are) determined, including whether amounts per
share are before tax or after tax. If a component of the statement of comprehensive income is used
that is not reported as a line item in the statement of comprehensive income, a reconciliation shall be
provided between the component used and a line item that is reported in the statement of
comprehensive income.
73A Paragraph 73 applies also to an entity that discloses, in addition to basic and diluted earnings per
share, amounts per share using a reported item of profit or loss, other than one required by this
Standard.

Effective date

74 An entity shall apply this Standard for annual periods beginning on or after July 17, 2019. Earlier
application is encouraged. If an entity applies the Standard for a period beginning before July 17, 2019, it
shall disclose that fact.
Any consequential effect arising from the application of other related Standards becoming effective on the
later date, shall be applied only when those Standards come into effect.
74A [Deleted]
74B [Deleted]
74C [Deleted]
74D [Deleted]
74E [Deleted]

Withdrawal of other pronouncements

75 This Standard supersedes earlier NAS 33 Earnings Per Share (2013).

76 [Deleted]

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Appendix A
Application guidance

This appendix is an integral part of the Standard.

Profit or loss attributable to the parent entity

A1 For the purpose of calculating earnings per share based on the consolidated financial statements, profit or
loss attributable to the parent entity refers to profit or loss of the consolidated entity after adjusting for non-
controlling interests.

Rights issues

A2 The issue of ordinary shares at the time of exercise or conversion of potential ordinary shares does not
usually give rise to a bonus element. This is because the potential ordinary shares are usually issued for fair
value, resulting in a proportionate change in the resources available to the entity. In a rights issue, however,
the exercise price is often less than the fair value of the shares. Therefore, as noted in paragraph 27(b), such
a rights issue includes a bonus element. If a rights issue is offered to all existing shareholders, the number of
ordinary shares to be used in calculating basic and diluted earnings per share for all periods before the rights
issue is the number of ordinary shares outstanding before the issue, multiplied by the following factor:

Fair value per share immediately before the exercise of rights

Theoretical ex-rights fair value per share

The theoretical ex-rights fair value per share is calculated by adding the aggregate fair value of the shares
immediately before the exercise of the rights to the proceeds from the exercise of the rights, and dividing by
the number of shares outstanding after the exercise of the rights. Where the rights are to be publicly traded
separately from the shares before the exercise date, fair value is measured at the close of the last day on
which the shares are traded together with the rights.

Control number

A3 To illustrate the application of the control number notion described in paragraphs 42 and 43, assume that an
entity has profit from continuing operations attributable to the parent entity of CU4,800, 1 a loss from
discontinued operations attributable to the parent entity of (CU7,200), a loss attributable to the parent entity
of (CU2,400), and 2,000 ordinary shares and 400 potential ordinary shares outstanding. The entity’s basic
earnings per share is CU2.40 for continuing operations, (CU3.60) for discontinued operations and (CU1.20)
for the loss. The 400 potential ordinary shares are included in the diluted earnings per share calculation
because the resulting CU2.00 earnings per share for continuing operations is dilutive, assuming no profit or
loss impact of those 400 potential ordinary shares. Because profit from continuing operations attributable to
the parent entity is the control number, the entity also includes those 400 potential ordinary shares in the
calculation of the other earnings per share amounts, even though the resulting earnings per share amounts
are antidilutive to their comparable basic earnings per share amounts, ie the loss per share is less [(CU3.00)
per share for the loss from discontinued operations and (CU1.00) per share for the loss].

Average market price of ordinary shares

A4 For the purpose of calculating diluted earnings per share, the average market price of ordinary shares
assumed to be issued is calculated on the basis of the average market price of the ordinary shares during the
period. Theoretically, every market transaction for an entity’s ordinary shares could be included in the
determination of the average market price. As a practical matter, however, a simple average of weekly or
monthly prices is usually adequate.

1In this guidance, monetary amounts are denominated in ‘currency units (CU)’.

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A5 Generally, closing market prices are adequate for calculating the average market price. When prices
fluctuate widely, however, an average of the high and low prices usually produces a more representative
price. The method used to calculate the average market price is used consistently unless it is no longer
representative because of changed conditions. For example, an entity that uses closing market prices to
calculate the average market price for several years of relatively stable prices might change to an average of
high and low prices if prices start fluctuating greatly and the closing market prices no longer produce a
representative average price.

Options, warrants and their equivalents

A6 Options or warrants to purchase convertible instruments are assumed to be exercised to purchase the
convertible instrument whenever the average prices of both the convertible instrument and the ordinary
shares obtainable upon conversion are above the exercise price of the options or warrants. However,
exercise is not assumed unless conversion of similar outstanding convertible instruments, if any, is also
assumed.
A7 Options or warrants may permit or require the tendering of debt or other instruments of the entity (or its
parent or a subsidiary) in payment of all or a portion of the exercise price. In the calculation of diluted
earnings per share, those options or warrants have a dilutive effect if (a) the average market price of the
related ordinary shares for the period exceeds the exercise price or (b) the selling price of the instrument to
be tendered is below that at which the instrument may be tendered under the option or warrant agreement
and the resulting discount establishes an effective exercise price below the market price of the ordinary
shares obtainable upon exercise. In the calculation of diluted earnings per share, those options or warrants
are assumed to be exercised and the debt or other instruments are assumed to be tendered. If tendering cash
is more advantageous to the option or warrant holder and the contract permits tendering cash, tendering of
cash is assumed. Interest (net of tax) on any debt assumed to be tendered is added back as an adjustment to
the numerator.
A8 Similar treatment is given to preference shares that have similar provisions or to other instruments that have
conversion options that permit the investor to pay cash for a more favourable conversion rate.
A9 The underlying terms of certain options or warrants may require the proceeds received from the exercise of
those instruments to be applied to redeem debt or other instruments of the entity (or its parent or a
subsidiary). In the calculation of diluted earnings per share, those options or warrants are assumed to be
exercised and the proceeds applied to purchase the debt at its average market price rather than to purchase
ordinary shares. However, the excess proceeds received from the assumed exercise over the amount used
for the assumed purchase of debt are considered (ie assumed to be used to buy back ordinary shares) in the
diluted earnings per share calculation. Interest (net of tax) on any debt assumed to be purchased is added
back as an adjustment to the numerator.

Written put options

A10 To illustrate the application of paragraph 63, assume that an entity has outstanding 120 written put options
on its ordinary shares with an exercise price of CU35. The average market price of its ordinary shares for
the period is CU28. In calculating diluted earnings per share, the entity assumes that it issued 150 shares at
CU28 per share at the beginning of the period to satisfy its put obligation of CU4,200. The difference
between the 150 ordinary shares issued and the 120 ordinary shares received from satisfying the put option
(30 incremental ordinary shares) is added to the denominator in calculating diluted earnings per share.

Instruments of subsidiaries, joint ventures or associates

A11 Potential ordinary shares of a subsidiary, joint venture or associate convertible into either ordinary shares of
the subsidiary, joint venture or associate, or ordinary shares of the parent or investors with joint control of,
or significant influence (the reporting entity) over, the investee are included in the calculation of diluted
earnings per share as follows:
(a) instruments issued by a subsidiary, joint venture or associate that enable their holders to obtain
ordinary shares of the subsidiary, joint venture or associate are included in calculating the diluted
earnings per share data of the subsidiary, joint venture or associate. Those earnings per share are
then included in the reporting entity’s earnings per share calculations based on the reporting
entity’s holding of the instruments of the subsidiary, joint venture or associate.

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(b) instruments of a subsidiary, joint venture or associate that are convertible into the reporting
entity’s ordinary shares are considered among the potential ordinary shares of the reporting entity
for the purpose of calculating diluted earnings per share. Likewise, options or warrants issued by
a subsidiary, joint venture or associate to purchase ordinary shares of the reporting entity are
considered among the potential ordinary shares of the reporting entity in the calculation of
consolidated diluted earnings per share.
A12 For the purpose of determining the earnings per share effect of instruments issued by a reporting entity that
are convertible into ordinary shares of a subsidiary, joint venture or associate, the instruments are assumed
to be converted and the numerator (profit or loss attributable to ordinary equity holders of the parent entity)
adjusted as necessary in accordance with paragraph 33. In addition to those adjustments, the numerator is
adjusted for any change in the profit or loss recorded by the reporting entity (such as dividend income or
equity method income) that is attributable to the increase in the number of ordinary shares of the subsidiary,
joint venture or associate outstanding as a result of the assumed conversion. The denominator of the diluted
earnings per share calculation is not affected because the number of ordinary shares of the reporting entity
outstanding would not change upon assumed conversion.

Participating equity instruments and two-class ordinary shares

A13 The equity of some entities includes:

(a) instruments that participate in dividends with ordinary shares according to a predetermined
formula (for example, two for one) with, at times, an upper limit on the extent of participation
(for example, up to, but not beyond, a specified amount per share).
(b) a class of ordinary shares with a different dividend rate from that of another class of ordinary
shares but without prior or senior rights.
A14 For the purpose of calculating diluted earnings per share, conversion is assumed for those instruments
described in paragraph A13 that are convertible into ordinary shares if the effect is dilutive. For those
instruments that are not convertible into a class of ordinary shares, profit or loss for the period is allocated
to the different classes of shares and participating equity instruments in accordance with their dividend
rights or other rights to participate in undistributed earnings. To calculate basic and diluted earnings per
share:
(a) profit or loss attributable to ordinary equity holders of the parent entity is adjusted (a profit
reduced and a loss increased) by the amount of dividends declared in the period for each class of
shares and by the contractual amount of dividends (or interest on participating bonds) that must
be paid for the period (for example, unpaid cumulative dividends).
(b) the remaining profit or loss is allocated to ordinary shares and participating equity instruments to
the extent that each instrument shares in earnings as if all of the profit or loss for the period had
been distributed. The total profit or loss allocated to each class of equity instrument is determined
by adding together the amount allocated for dividends and the amount allocated for a
participation feature.
(c) the total amount of profit or loss allocated to each class of equity instrument is divided by the
number of outstanding instruments to which the earnings are allocated to determine the earnings
per share for the instrument.
For the calculation of diluted earnings per share, all potential ordinary shares assumed to have been issued
are included in outstanding ordinary shares.

Partly paid shares

A15 Where ordinary shares are issued but not fully paid, they are treated in the calculation of basic earnings per
share as a fraction of an ordinary share to the extent that they were entitled to participate in dividends
during the period relative to a fully paid ordinary share.
A16 To the extent that partly paid shares are not entitled to participate in dividends during the period they are
treated as the equivalent of warrants or options in the calculation of diluted earnings per share. The unpaid
balance is assumed to represent proceeds used to purchase ordinary shares. The number of shares included
in diluted earnings per share is the difference between the number of shares subscribed and the number of
shares assumed to be purchased.

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