Dilution
These are related but different measures. An actual share issue can reduce a shareholder’s ownership percentage even if their number of shares does not change. IAS 33 assesses dilutive potential ordinary shares by their effect on earnings per share from continuing operations; anti-dilutive instruments are excluded from diluted EPS.
Worked example
A shareholder owns 100 of 1,000 ordinary shares, or 10%. If the company issues 250 new shares to others, the holder owns 100 / 1,250 = 8%. This ownership dilution is not itself a diluted EPS calculation.
Common mistake
Using the ownership percentage change as the diluted EPS adjustment, or assuming all potential ordinary shares must be included even when anti-dilutive.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |