The following information is available for X Ltd for the year ended 31 May 20X1:
| Net profit after tax and minority interest | £18,160,000 |
| Ordinar y shares of £1 (fully paid) | £40,000,000 |
| Average fair value for year of ordinar y shares | £1.50 |
1 Share options have been granted to directors giving them the right to subscribe for ordinary shares between 20X1 and 20X3 at £1.20 per share. The options outstanding at 31 May 20X1 were 2,000,000 in number.
2 The company has £20 million of 6% conver tible loan stock in issue. The terms of conversion of the loan stock per £200 nominal value of loan stock at the date of issue were:
| Conversion date | No. of shares |
| 31 May 20X0 | 24 |
| 31 May 20X1 | 23 |
| 31 May 20X2 | 22 |
No loan stock has as yet been conver ted. The loan stock had been issued at a discount of 1%.
3 There are 1,600,000 conver tible preference shares in issue. The cumulative dividend is 10p per share and each preference share can conver t into two ordinar y shares. The preference shares can be converted in 20X2.
4 Assume a corporation tax rate of 33% when calculating the effect on income of conver ting the convertible loan stock.
Required:
(a) Calculate the diluted EPS according to IAS 33.
(b) Discuss why there is a need to disclose diluted earnings per share.
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