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Knowledge Centre · IFRS

IAS 33

Earnings per Share

IAS 33 prescribes principles for determining and presenting basic and diluted earnings per share, so that performance can be compared between different entities in the same period and between different periods for the same entity. [S1]

Effective 2005-01-01Related: IAS 1 · IFRS 2 · IAS 32 · IAS 34

Overview

Basic earnings per share (EPS) is calculated by dividing profit or loss attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period. [S1] Diluted EPS adjusts both the numerator and denominator for the effects of all dilutive potential ordinary shares (convertible instruments, options, warrants, and contingently issuable shares), showing the EPS that would result if all such instruments had been converted into ordinary shares, provided the effect is dilutive (reduces EPS or increases loss per share) rather than anti-dilutive. [S2] Only instruments whose conversion would decrease EPS are included in the diluted calculation; anti-dilutive potential ordinary shares are ignored.

Why it matters

EPS is one of the most widely quoted, closely watched performance metrics for any company with publicly traded shares, directly feeding into price-earnings ratios and investment decisions. Because the calculation involves judgement-heavy adjustments (identifying dilutive versus anti-dilutive instruments, weighting share movements during the period, adjusting for bonus issues and rights issues), a mechanically correct but conceptually mishandled EPS figure can materially mislead investors about underlying per-share value creation, which is precisely the comparability problem IAS 33 exists to prevent.

Scope

Applies to entities whose ordinary shares or potential ordinary shares are publicly traded, or that are in the process of issuing ordinary shares or potential ordinary shares in a public market; other entities choosing to present EPS must also comply with IAS 33. Where an entity presents both consolidated and separate financial statements, EPS disclosures are required only for the consolidated information (separate financial statement EPS may be presented in the notes but is not required on the face of those separate statements).

Key definitions

term
Ordinary share
definition
An equity instrument that is subordinate to all other classes of equity instruments.
term
Potential ordinary share
definition
A financial instrument or other contract that may entitle its holder to ordinary shares, such as convertible debt, convertible preference shares, options and warrants.
term
Basic earnings per share
definition
Profit or loss attributable to ordinary equity holders of the parent entity divided by the weighted average number of ordinary shares outstanding during the period.
term
Diluted earnings per share
definition
Basic EPS adjusted for the effects of all dilutive potential ordinary shares.
term
Dilution
definition
A reduction in earnings per share or an increase in loss per share resulting from the assumption that convertible instruments are converted, options or warrants are exercised, or ordinary shares are issued on the satisfaction of specified conditions.
term
Antidilution
definition
An increase in earnings per share or a reduction in loss per share resulting from the assumption that convertible instruments are converted, options or warrants are exercised, or ordinary shares are issued on the satisfaction of specified conditions; antidilutive potential ordinary shares are excluded from the diluted EPS calculation.

Recognition

IAS 33 does not govern recognition of income, expenses, assets or liabilities; it prescribes how the profit or loss already recognised and reported (under other Standards) is divided by an appropriately calculated share count to produce the EPS figures presented alongside the statement of profit or loss. The weighted average number of ordinary shares reflects the fact that share capital may change during the period (new issues, buybacks); it is time-weighted for the portion of the period the shares were actually outstanding, except for changes arising from a bonus issue, share split, or similar transaction that changes the number of shares outstanding without a corresponding change in resources, which are applied retrospectively as if they had occurred at the beginning of the earliest period presented.

Initial measurement

Basic EPS numerator: profit or loss attributable to ordinary equity holders of the parent, after deducting profit or loss attributable to non-controlling interests and any preference dividends (whether or not declared) on non-cumulative preference shares, or the full period's cumulative preference dividend entitlement for cumulative preference shares, whether or not declared. Diluted EPS numerator: basic EPS numerator adjusted for the after-tax effect of dividends and interest recognised on dilutive potential ordinary shares, and any other changes in income or expense that would result from the conversion of those dilutive potential ordinary shares.

Subsequent measurement

EPS figures are recalculated each reporting period based on that period's profit or loss attributable to ordinary equity holders and the weighted average (and, for diluted EPS, adjusted) number of shares; basic and diluted EPS for all periods presented are restated for the effects of errors, adjustments from accounting policy changes applied retrospectively (under IAS 8), and for share consolidations, bonus issues, and similar transactions that occur after the reporting period but before the financial statements are authorised for issue.

Presentation

Basic and diluted EPS are presented with equal prominence on the face of the statement of profit or loss (or the statement of profit or loss and other comprehensive income), for profit or loss from continuing operations and, separately, for profit or loss overall (including discontinued operations), for every period for which a statement of profit or loss is presented; where diluted EPS is reported for at least one period, it is reported for all periods presented, even if it equals basic EPS.

Disclosure checklist

  • The amounts used as the numerators in calculating basic and diluted EPS, and a reconciliation of those amounts to the entity's profit or loss attributable to the parent for the period.
  • The weighted average number of ordinary shares used as the denominator in calculating basic and diluted EPS, and a reconciliation of these denominators to each other.
  • Instruments that could potentially dilute basic EPS in the future but were not included in the diluted EPS calculation because they were antidilutive for the period(s) presented.
  • A description of ordinary share transactions or potential ordinary share transactions, other than those already recognised, that occur after the reporting period and would have changed significantly the number of ordinary shares or potential ordinary shares outstanding at the end of the period if they had occurred before the end of the period.
  • If an entity discloses, in addition to basic and diluted EPS, an amount per share using a reported component of the statement of profit or loss other than one required by IAS 33, that amount must be calculated using the same weighted average number of shares, disclosed with equal prominence, and reconciled to a reported line item.

Practical treatment

The practical discipline for Nigerian issuers is treating the weighted average share count calculation with the same rigour as the profit figure itself: tracking the exact dates of any share issues, buybacks, or capital reorganisations during the year, and applying retrospective adjustment consistently for bonus issues, share splits, and rights issues (which include a bonus element requiring an adjustment factor applied to shares outstanding before the rights issue). Identifying genuinely dilutive potential ordinary shares (convertible instruments, employee share options under IFRS 2) requires testing each instrument's dilutive effect individually, from the most dilutive to the least, rather than combining them all indiscriminately, since some instruments that appear dilutive in isolation can be antidilutive once combined with others. See nigeria_notes for the Nigerian capital markets context in which EPS is most prominently used.

Common mistakes

  • Using the year-end (rather than weighted average) number of ordinary shares outstanding for basic EPS.
  • Failing to apply retrospective adjustment for a bonus issue, share split, or the bonus element of a rights issue to the weighted average share count for all periods presented.
  • Including antidilutive potential ordinary shares in the diluted EPS calculation, which should only ever decrease EPS (or increase loss per share), never the reverse.
  • Testing potential ordinary shares for dilution in aggregate rather than individually, in the correct sequence from most to least dilutive, potentially missing antidilutive instruments that should be excluded.
  • Presenting only basic EPS without diluted EPS when dilutive potential ordinary shares exist, or presenting diluted EPS for only some periods rather than consistently for all periods presented.
  • Deducting preference dividends from the EPS numerator inconsistently (e.g. omitting undeclared cumulative preference dividends that must still be deducted).

CFO checklist

  • Maintain a precise log of all ordinary share issuances, buybacks and capital reorganisations, with exact dates, to support the weighted average share count calculation.
  • Apply retrospective adjustment consistently for bonus issues, share splits, and the bonus element of rights issues across all periods presented.
  • Test each potential ordinary share instrument for dilution individually, in the correct sequence, before combining them into the overall diluted EPS calculation.
  • Confirm preference dividend deductions from the EPS numerator are complete and consistent, including undeclared cumulative preference dividends.
  • Present basic and diluted EPS with equal prominence for all periods presented, for both continuing operations and total profit or loss.
  • Disclose post-year-end share transactions that would materially change the share count, even though they do not affect the reporting period's EPS calculation itself.

FAQs

q
We issued a bonus issue of shares after the year-end but before our financial statements were authorised for issue — does this affect our EPS for the year just ended?
a
Yes. IAS 33 requires the weighted average number of ordinary shares for all periods presented (including the period just ended) to be adjusted retrospectively for a bonus issue occurring after the reporting period but before the financial statements are authorised for issue, since a bonus issue does not change resources, only the number of shares outstanding.
q
Do we always need to present diluted EPS?
a
Diluted EPS is required whenever the entity has outstanding potential ordinary shares (convertible instruments, options, warrants, contingently issuable shares) that could dilute basic EPS; if diluted EPS is reported for any period presented, it must be reported with equal prominence for all periods presented, even if it equals basic EPS in some of those periods.
q
Our convertible bond would increase EPS if converted, not decrease it — do we include it in diluted EPS?
a
No. An instrument whose conversion would increase EPS (or decrease loss per share) is antidilutive and must be excluded from the diluted EPS calculation, though it should still be disclosed as a potential ordinary share that could dilute EPS in the future.

Nigeria application notes

Regulatory overlay

IAS 33 applies in full to Nigerian public interest entities whose ordinary shares or potential ordinary shares are publicly traded under the FRCN Act 2011 mandate. [S3] EPS is one of the core per-share metrics NGX-listed companies disclose in their periodic (quarterly, semi-annual and annual) financial statements under NGX's continuing disclosure obligations, and is closely tracked by Nigerian capital market analysts and investors as a headline performance indicator alongside dividend per share. [S4] The number and class of ordinary shares used in the EPS denominator is itself governed by CAMA 2020's share capital framework, including how dividends are declared and any bonus issues or share capital reorganisations are effected. [S5]

Tax interaction (Nigeria)

IAS 33 EPS calculations have no direct effect on a Nigerian entity's own companies income tax computation, since CIT is assessed on taxable profit at the standard illustrative rate of 30% (subject to the small-company exemption and other qualifying conditions) under the Nigeria Tax Act 2025, independent of the per-share EPS presentation; however, dividends ultimately paid out of the profits reflected in EPS are subject to Nigerian withholding tax on dividends (generally at 10%), which is a distinct consideration for shareholders receiving those distributions. [S6][S_TAX1] Nigerian rates, thresholds, exemptions, incentives and filing rules referenced in this file (including CIT, VAT, withholding tax categories, and the small-company threshold) should be independently verified against the Nigeria Tax Act 2025, the Nigeria Tax Administration Act 2025, CAC/CAMA/SEC/NGX requirements, and current NRS practice at the reporting or filing date, since thresholds, rates and reliefs are subject to periodic revision and to sector- or entity-specific qualifying conditions. This file does not constitute legal or tax advice. [S_TAX1][S_TAX2]

FX considerations

For Nigerian entities that present EPS in naira but have material foreign-currency-denominated convertible instruments (a source of potential ordinary shares), the after-tax effect of interest or dividends on those instruments (used to adjust the diluted EPS numerator) should be translated consistently with how the underlying instrument's interest expense is recognised in profit or loss, so that naira volatility affecting that foreign-currency interest expense is reflected consistently in both the basic profit figure and the diluted EPS adjustment.

SME practical note

IAS 33 applies only to entities with publicly traded (or soon to be publicly traded) shares, so most Outliers privately held SME clients are not required to present EPS; however, Outliers recommends that any client planning an eventual NGX listing begin tracking share issuances, buybacks and potential dilutive instruments (founder options, convertible notes) with EPS calculation in mind well before a listing process begins, since reconstructing an accurate weighted average share history retrospectively can be difficult.

Common Nigerian pitfalls

  • Presenting only a simple profit-divided-by-year-end-shares calculation rather than a properly weighted average share count.
  • Failing to retrospectively adjust the share count for a bonus issue or rights issue bonus element when comparing EPS across periods.
  • Overlooking dilutive potential ordinary shares arising from founder or employee share option schemes common in Nigerian growth-stage companies preparing for a future listing.
  • Confusing the EPS calculation with dividend per share, which is a related but conceptually distinct metric based on actual distributions rather than earnings.

FRC pronouncements

No FRCN pronouncement specific to IAS 33 has been identified; the relevant Nigerian regulatory context is primarily NGX/SEC continuing disclosure obligations for listed companies, operating alongside FRCN's general IFRS compliance mandate. [S3][S4]

Worked examples

Basic EPS with a mid-year share issue

A Nigerian listed company has profit attributable to ordinary equity holders of ₦450,000,000 for the year. It had 100,000,000 ordinary shares outstanding at the start of the year, and issued a further 20,000,000 new shares for cash on 1 October (three months before the year-end of 31 December).

Facts

Workings

Weighted average shares: 100,000,000 shares for 9/12 of the year, plus 120,000,000 shares (100,000,000 + 20,000,000) for 3/12 of the year.

Weighted average calculation: (100,000,000 x 9/12) + (120,000,000 x 3/12) = 75,000,000 + 30,000,000 = 105,000,000 weighted average shares.

Basic EPS: 450,000,000 / 105,000,000 = ₦4.29 per share (rounded to two decimal places).

Diluted EPS with convertible bonds

Continuing the above company, it also has outstanding convertible bonds that would convert into 15,000,000 additional ordinary shares if converted. After-tax interest expense on the bonds for the year, which would be avoided if the bonds were converted at the start of the year, is ₦18,000,000.

Facts

Workings

Diluted EPS numerator: 450,000,000 + 18,000,000 (after-tax interest added back, since it would not be incurred if the bonds were converted) = 468,000,000

Diluted EPS denominator: 105,000,000 + 15,000,000 (assumed conversion shares) = 120,000,000

Diluted EPS: 468,000,000 / 120,000,000 = ₦3.90 per share (rounded)

Test for dilution: diluted EPS of 3.90 is lower than basic EPS of 4.29, confirming the convertible bond is dilutive and correctly included in the diluted EPS calculation.

Sources & citations

  1. [S1]IAS 33 Earnings per Share — IFRS Foundationaccessed 2026-07-18
  2. [S2]IAS 33 Earnings Per Share — IFRS in Brief — Moore Globalaccessed 2026-07-18
  3. [S3]IFRS - Use of IFRS Standards by jurisdiction: Nigeria — IFRS Foundationaccessed 2026-07-18
  4. [S4]NGX's Rules on the Authority of The Exchange — Nigerian Exchange Limited (NGX)accessed 2026-07-18
  5. [S5]Highlights of the provisions relating to financial statements, audit and annual returns in CAMA 2020 — Dentons ACAS-Lawaccessed 2026-07-18
  6. [S6]Nigeria - Corporate - Withholding taxes — PwC Worldwide Tax Summariesaccessed 2026-07-18
  7. [S_TAX1]Nigeria Tax Act, 2025 has been signed – highlights — EY Globalaccessed 2026-07-18
  8. [S_TAX2]Nigeria's 2025 Tax Reform Acts Explained: Key Changes — Baker Tilly Nigeriaaccessed 2026-07-18
Last reviewed 2026-07-18 · Reviewer: Rafiu Olawuyi, FCA (Author / Technical Reviewer)