The following information relates to two companies, Ruslan plc and Lyudmila plc. The
financial year of each company ends on 31st October each year.
Ruslan plc
Ruslan plc had 18 million ordinary shares in issue on 1st November 2006. Earnings
attributable to the ordinary shares for Ruslan for the year ended 31st October 2007
were £6,900,000.
On 1st February 2007 Ruslan plc made a bonus issue of one share for every six shares
held.
On 1st August 2007 the company made an issue of 9 million shares at the full market
price of £2.20 per share. The issue was fully subscribed and paid.
Ruslan plc’s reported earnings per share for the year ended 31st October 2006 were
25 pence.
Lyudmila plc
Lyudmila plc’s reported earnings per share for the year ended 31st October 2006 were
25 pence.
On 1st February 2007 Lyudmila plc made a rights issue of one share for every six
shares held. The price per share of this rights issue was £2.10. The market price of
the shares prior to the rights issue was £2.36. The rights issue was fully subscribed
and paid
On 1st November 2006 Lyudmila plc had 18 ordinary million shares in issue. Earnings
attributable to the ordinary shares for the year ended 31st October 2007 were
£6,900,000.
Required
a. Calculate the earnings per share figures for the year ended 31 October 2007
and 31 October 2006 that should be disclosed in the financial statements for
the year ended 31 October 2007 calculated in accordance with IAS33
Earnings per share for:
I. Ruslan plc
(6 marks)
II. Lyudmilla plc 

To calculate the earnings per share (EPS) for both Ruslan plc and Lyudmila plc for the years ended 31 October 2007 and 31 October 2006, we will follow these steps:

1. **Determine the number of shares outstanding at the end of each financial year.**
2. **Calculate the EPS using the formula:**
   \[
   \text{EPS} = \frac{\text{Earnings attributable to ordinary shares}}{\text{Weighted average number of shares outstanding}}
   \]

### I. Ruslan plc

**1. Shares Outstanding:**
- **As of 1 November 2006:** 18 million shares
- **Bonus issue (1 for 6) on 1 February 2007:**
  - New shares = \( \frac{18,000,000}{6} = 3,000,000 \)
  - Total shares after bonus issue = \( 18,000,000 + 3,000,000 = 21,000,000 \)

- **Issue of 9 million shares on 1 August 2007:**
  - Total shares after new issue = \( 21,000,000 + 9,000,000 = 30,000,000 \)

**2. Calculate Weighted Average Number of Shares:**
- Shares from 1 November 2006 to 1 February 2007 (3 months): 18 million
- Shares from 1 February 2007 to 1 August 2007 (6 months): 21 million
- Shares from 1 August 2007 to 31 October 2007 (3 months): 30 million

\[
\text{Weighted average} = \left( \frac{18,000,000 \times 3}{12} + \frac{21,000,000 \times 6}{12} + \frac{30,000,000 \times 3}{12} \right)
\]
\[
= 4,500,000 + 10,500,000 + 7,500,000 = 22,500,000
\]

**3. Calculate EPS for 2007:**
\[
\text{EPS} = \frac{£6,900,000}{22,500,000} = £0.30667 \text{ or } 30.67 \text{ pence}
\]

**4. EPS for 2006:**
The reported EPS for 2006 was given as 25 pence.

### II. Lyudmila plc

**1. Shares Outstanding:**
- **As of 1 November 2006:** 18 million shares
- **Rights issue (1 for 6) on 1 February 2007:**
  - New shares = \( \frac{18,000,000}{6} = 3,000,000 \)
  - Total shares after rights issue = \( 18,000,000 + 3,000,000 = 21,000,000 \)

**2. Calculate Weighted Average Number of Shares:**
- Shares from 1 November 2006 to 1 February 2007 (3 months): 18 million
- Shares from 1 February 2007 to 31 October 2007 (8 months): 21 million

\[
\text{Weighted average} = \left( \frac{18,000,000 \times 3}{12} + \frac{21,000,000 \times 8}{12} \right)
\]
\[
= 4,500,000 + 14,000,000 = 18,500,000
\]

**3. Calculate EPS for 2007:**
\[
\text{EPS} = \frac{£6,900,000}{18,500,000} = £0.37301 \text{ or } 37.30 \text{ pence}
\]

**4. EPS for 2006:**
The reported EPS for 2006 was given as 25 pence.

### Summary of EPS Figures:
- **Ruslan plc:**
  - EPS for 2006: 25 pence
  - EPS for 2007: 30.67 pence
- **Lyudmila plc:**
  - EPS for 2006: 25 pence
  - EPS for 2007: 37.30 pence

Would you like more details or explanations on any part of this calculation? Here are some related questions you might consider:

1. How does the bonus issue affect the EPS calculation?
2. What are the implications of rights issues on shareholder equity?
3. How would changes in earnings impact EPS?
4. What other financial metrics are important for assessing company performance?
5. How does IAS 33 define the treatment of dilutive shares?

**Tip:** Always check the changes in the number of shares when there are issues or bonuses, as they can significantly impact EPS calculations.

Calculate the earnings per share figures for the year ended 31 October 2007 and 31 October 2006 for Ruslan plc and Lyudmila plc.

Explore the detailed calculations for earnings per share (EPS) for Ruslan plc and Lyudmila plc for the years ending 31 October 2006 and 2007. This analysis covers share issues, bonus shares, and the resulting EPS figures.

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