Question

XYZ Ltd is finalising the calculation of its basic earnings per share. The entity has a...

XYZ Ltd is finalising the calculation of its basic earnings per share. The entity has a profit before tax of $20,000,000 and a profit after tax of $14,000,000. It paid a dividend of $1000,000 to preference shareholders out of this profit. The preference shares are classified as equity.

XYZ Ltd provides the following details:

  • At 1 July 2019 XYZ Ltd had a total of 5,000,000 ordinary shares on issue.
  • On 1st September 2019, XYZ Ltd issued a further fully paid shares on the basis of a one-for-four (1:4) rights issue at a price of $3.50 per share. The share price immediately prior to the rights issue was $5.10. All shareholders took up the rights issue.
  • The basic EPS for the year ending 30 June 2019 was 245 cents.

Required

  1. Calculate the theoretical ex-right price and adjustment factor.
  2. Compute the basic Earnings per Share (EPS) amount in cents for 30th June 2020.
  3. Compute the adjusted comparative EPS for year ended 30th June 2019
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