IAS 33 Earnings Per Share: A Practical Guide
How basic and diluted EPS are calculated under IAS 33 — weighted average shares, dilutive instruments, and disclosure requirements.
Why EPS Matters
Earnings per share (EPS) is one of the most widely used metrics by equity investors and analysts. IAS 33 Earnings Per Share standardises how EPS is calculated and presented in IFRS financial statements, ensuring comparability across companies. Listed entities are required to disclose EPS on the face of the income statement; unlisted entities are encouraged but not required to present it.
Basic EPS
Basic EPS = Profit or loss attributable to ordinary equity holders / Weighted average number of ordinary shares outstanding during the period. The profit figure is after tax and after deducting dividends on preference shares (which are not ordinary equity). The weighted average share count adjusts for shares issued or repurchased during the year — a share issued on 1 July counts as half a share for the full-year calculation. Bonus issues (scrip dividends, stock splits) are treated as if they occurred at the beginning of the earliest period presented.
Diluted EPS
Diluted EPS assumes all potentially dilutive instruments are exercised or converted — giving the worst case for existing shareholders. Dilutive instruments include: share options and warrants (included using the treasury stock method — only the "free" shares, i.e. shares not covered by the exercise proceeds, are added to the denominator), convertible bonds (interest saved on conversion added to numerator; shares issued on conversion added to denominator), and contingently issuable shares. An instrument is only dilutive if including it reduces EPS — anti-dilutive instruments are excluded.
Adjusted EPS
IAS 33 does not define adjusted EPS — but companies commonly disclose underlying or adjusted EPS excluding exceptional items. These are non-GAAP measures and must be clearly labelled and reconciled to the IAS 33 basic EPS figure. Investors use adjusted EPS for valuation but regulators (FCA, ESMA) scrutinise whether adjustments are genuinely exceptional.
Further Reading
Study with Learnsignal: Financial reporting CPD for qualified accountants. Browse CPD.
This page was last updated:
Learnsignal Education Team
Expert Tutor at Learnsignal
Qualified professional with years of experience in teaching and helping students achieve their accounting qualifications.
View all posts by Learnsignal Education Team
