Example 2 – Multiple share issues and prior year comparatives

Example 2 – Multiple share issues and prior year comparatives
Ernie had earnings of $750,000 for the year-ended 31 March 2019. There were 2,000,000 $1 equity shares in
issue on 1 April 2018, and a new issue of 3,000,000 shares at full market price was carried out on 30
September 2018. A bonus issue of one new share for every two shares held was issued on 1 December 2018.
The EPS figure reported for the year-ended 31 March 2018 was 15.5c.
Calculate the basic EPS for Ernie for the year-ended 31 March 2019, and restate the comparative
figure for 31 March 2018.

Answer to example 2 – Multiple share issues and prior year comparatives
EPS (31 March 2019) = $750,000 = 14.29c 5,250,000(W)
EPS (31 March 2018 – restated) = 15.5 x 2/3 = 10.33c
(W)
Date No. shares in
issue
Weighting (#
months) Fraction Weighted average
no. shares
1.4.18 – 30.9.18 2,000,000 6/12 3/2 1,500,000
New issue 3,000,000
1.10.18 – 30.11.18 5,000,000 2/12 3/2 1,250,000
Bonus issue 2,500,000
1.12.18 – 31.3.19 7,500,000 4/12 2,500,000
WANS =5,250,000
Bonus fraction = No. shares in issue after = 3
(1-for-2) No. shares in issue after 2

EPS (31 March 2018 – restated) = 15.5 x 2/3 = 10.33c, why have we multiplied it by 2/3

This question is quite different from example 1 in the lectures , here we have multiple shares in issue , Can you go through this question if you have time or just a quick answer for why multiplied previous figure with 2/3

thank you