# IAS 33 Earnings per Share: Basic and Diluted Examples

> Calculate IAS 33 earnings per share with worked SAR examples. Check weighted shares, option dilution, common mistakes and a practical review of your workings.

- Canonical page: https://accountery.app/learn/ias-33-earnings-per-share
- Language: English (en)
- Category: financial-statements
- Estimated reading time: 12 minutes
- Published: 2026-09-22
- Updated: 2026-09-22

## What does IAS 33 earnings per share tell you?

IAS 33 earnings per share connects a period's profit with the ordinary shares that participated in that period. The useful work happens before the final division: identify whose earnings you are measuring, reconstruct how long shares were outstanding, and assess contracts that could add more shares.

Imagine reviewing a company's annual report after a share issue in July. Its closing share count describes one date. Its annual profit covers twelve months. Dividing those two figures without a timeline can give an answer that looks precise while using an inconsistent denominator.

Start with the [income statement](/glossary#income-statement) and the share register. Keep amounts of money and numbers of shares in separate columns. The resulting measure is currency per share, so a result of SAR 2.40 describes earnings attributable to each weighted share. It does not establish a cash dividend or an investment return.

The [IFRS Foundation's IAS 33 overview](https://www.ifrs.org/issued-standards/list-of-standards/ias-33-earnings-per-share/) sets out the standard's scope and the distinction between basic and diluted earnings per share. It covers entities with publicly traded ordinary or potential ordinary shares and entities filing to issue ordinary shares publicly. An entity voluntarily disclosing earnings per share must follow IAS 33.

The examples below are fictional Saudi businesses assumed to fall within that scope. Both use one ordinary share class, a calendar year, continuing operations only, and final earnings after all relevant expenses. Their figures are teaching assumptions, not company results. If identifying the profit figure is still unfamiliar, review the [income statement explanation](/learn/income-statement-explained) first.

## How do you choose earnings for IAS 33 earnings per share?

Write the numerator in words before entering a number: **profit attributable to ordinary equity holders of the parent**. In a group, begin with the result attributable to the parent. The portion attributable to [non-controlling interest](/glossary#non-controlling-interest) belongs to other owners and does not support the parent's ordinary earnings per share.

Trace that allocation through the consolidated results. The [consolidation guide](/learn/consolidation-ifrs-10-basics) explains the reporting boundary. If the starting line already excludes other owners, subtracting their share again understates the numerator. Label the source line clearly enough that a reviewer can see which adjustments have already happened.

Preference shares need a separate review. IAS 33 paragraphs 12–14 address the after-tax effect of preference dividends on instruments classified as equity. For cumulative preference shares, use the amount required for the current period even if undeclared. For non-cumulative shares, the relevant deduction concerns dividends declared in respect of the period. Read the contractual terms before choosing the adjustment.

Amounts already recognised as expenses on liability-classified preference instruments remain in reported profit; avoid a second deduction. Ordinary dividends are a distribution of earnings and are not deducted to calculate basic earnings per share. Neither the cash payment date nor the size of a proposed ordinary dividend replaces the profit calculation.

For Saudi reporting, the [official Arabic IAS 33 text published by SOCPA](https://socpa.org.sa/getattachment/Socpa/Professional-standards/Accounting-standards/Endorsed/36-IAS-33-2025.pdf.aspx?lang=ar-SA) expressly includes zakat expense in its paragraph 13 addition. Our cases supply the final attributable earnings after applicable expenses, so no tax or zakat rate needs to be invented. Keep that assumption on the worksheet beside the numerator.

## How do you build the weighted share timeline?

Create one row whenever ordinary shares outstanding change. Your columns should show the effective date, the reason for the movement, the shares outstanding after that movement, the fraction of the year, and the weighted contribution. First reconcile opening shares plus issues less repurchases to closing shares. Then calculate the annual weighted average.

IAS 33 paragraph 20 uses a time factor based on days outstanding and permits a reasonable approximation in many circumstances. The first case uses monthly weighting as an explicitly assumed reasonable approximation. A real calculation should check whether exact dates, uneven movements or material differences require daily weighting.

For a normal cash issue, paragraph 21 generally includes shares when cash is receivable. Read the subscription evidence and terms; a board announcement alone may not be the relevant date. For repurchases, use the supported date when shares cease being outstanding. Shares held in treasury are excluded while held by the entity.

Check the type of movement before applying the timeline. A full-value cash issue brings additional resources into the company. A bonus issue or share split changes the number of units representing those resources. IAS 33 paragraphs 26–28 require adjustment for changes without a corresponding resource change, including a bonus element in a rights issue.

The [equivalent IAS 33 paragraphs published by New Zealand's XRB](https://standards.xrb.govt.nz/standards-navigator/nz-ias-33/) provide the detailed calculation rules. The local New Zealand concessions are outside our assumptions. On your own worksheet, keep a brief explanation next to every movement: what changed, which date applies, and whether earlier share counts need adjustment. That small note makes a later correction much easier to follow.

## Worked example 1: Rimal issues shares and later buys some back

Rimal Components in Riyadh has 1,000,000 ordinary shares outstanding on 1 January. On 1 July it issues 400,000 additional shares for full-value cash consideration, receivable that day. On 1 October it repurchases 200,000 shares, which remain in treasury through year-end. There are no bonus elements, preference shares or potential ordinary shares.

Final profit attributable to ordinary shareholders is SAR 2,760,000. Assume monthly weighting reasonably approximates the actual dates for this teaching case. Use the number outstanding within each interval, with all share quantities shown as numbers of shares:

| Period | Shares outstanding | Weight | Weighted shares |
|---|---|---|---|
| January to June | 1,000,000 | 6/12 | 500,000 |
| July to September | 1,400,000 | 3/12 | 350,000 |
| October to December | 1,200,000 | 3/12 | 300,000 |
| Annual weighted average | | | 1,150,000 |

The ordinary share register closes at 1,200,000 outstanding: 1,000,000 opening shares plus 400,000 issued less 200,000 repurchased. The weighted average is 1,150,000 because the larger share counts applied for only part of the year. These are two useful totals, each answering a different question.

Basic earnings per share is SAR 2,760,000 divided by 1,150,000 shares, giving **SAR 2.40 per share**. With no potential ordinary shares, diluted earnings per share is also SAR 2.40. Preserve the unrounded workings even when the final presentation uses two decimal places.

Check the denominator another way: 1,000,000 for the whole year, plus 400,000 multiplied by 6/12, less 200,000 multiplied by 3/12. That gives the same 1,150,000. This second calculation is an independent arithmetic check of the interval table, rather than another adjustment to it.

A closing-count shortcut would produce SAR 2.30: SAR 2,760,000 divided by 1,200,000. Investigating that difference takes you straight to the dates. It does not require changing the company's profit. Keep earnings constant while fixing the share timeline, so the correction remains traceable.

## Worked example 2: Nakhil calculates dilution from options

Nakhil Packaging in Jeddah has 1,200,000 ordinary shares outstanding throughout the year and profit attributable to ordinary shareholders of SAR 3,000,000. It also has options over 200,000 shares outstanding for the full year. The exercise price is SAR 18 per share, and the supported average market price for the year is SAR 30.

Assume the options are fully vested, equity-settled and unexercised throughout the year. There are no future services to include in assumed proceeds, no cash-settlement alternative, no other potential ordinary shares and no numerator adjustment. These assumptions isolate the option calculation; different contract terms require further analysis.

Basic earnings per share is SAR 3,000,000 divided by 1,200,000, or SAR 2.50. For diluted earnings per share, paragraphs 45–47 compare the option shares with the shares represented by assumed proceeds at the average market price. The difference is the additional share count without corresponding consideration.

| Calculation step | Working | Result |
|---|---|---|
| Assumed option proceeds, SAR | 200,000 × 18 | 3,600,000 |
| Shares represented by proceeds | 3,600,000 ÷ 30 | 120,000 |
| Incremental shares | 200,000 − 120,000 | 80,000 |
| Diluted weighted shares | 1,200,000 + 80,000 | 1,280,000 |
| Diluted earnings per share, SAR | 3,000,000 ÷ 1,280,000 | 2.34375 |

Presented to two decimals, diluted earnings per share is **SAR 2.34**. The numerator stays at SAR 3,000,000 under these assumptions. Adding every option share would overstate dilution because it would ignore the consideration assumed to accompany exercise.

The proceeds calculation is a hypothetical step within the earnings-per-share working. It does not mean Nakhil received SAR 3,600,000 or actually bought 120,000 shares. A [journal entry](/glossary#journal-entry) records an accounting event; this assumed exercise does not create a cash entry. The basic share register still shows 1,200,000 shares outstanding.

Now consider an independent loss variation. Replace the profit with a continuing-operation loss of SAR 600,000 and keep every other fact. Basic loss per share is SAR 0.50. Including 80,000 shares would reduce that loss per share to SAR 0.46875, an antidilutive result. Exclude the options, so diluted loss per share remains SAR 0.50. Paragraphs 41–43 use continuing operations as the control for that decision.

## What should the final reconciliation and presentation show?

Give the reviewer two bridges: reported profit to the earnings numerator, and basic weighted shares to diluted weighted shares. IAS 33 paragraph 70 requires reconciliations of those amounts, including effects of instrument classes. Keep excluded potentially dilutive instruments and relevant significant subsequent share transactions in the disclosure review.

For Nakhil's profitable case, the profit bridge has no adjustment: SAR 3,000,000 supports both measures. Its share bridge starts with 1,200,000 and adds 80,000 to reach 1,280,000. Label those quantities as shares. The final SAR 2.50 and SAR 2.34 are amounts per share, not amounts of company profit.

Basic and diluted figures receive equal prominence. IAS 33 requires amounts for continuing operations and total profit attributable to ordinary equity holders of the parent, with separate treatment for discontinued-operation amounts. Our cases contain only continuing operations, so their total and continuing-operation calculations coincide. Negative amounts are still presented.

Review share changes after year-end. Under paragraph 64, a bonus issue or split before financial statements are authorised can require retrospective adjustment of the presented per-share figures. A later ordinary cash issue generally belongs in the significant subsequent-transaction disclosure assessment rather than the previous year's weighted shares. Record which event occurred before deciding how to respond.

The [IFRS Foundation's IFRS 18 page](https://www.ifrs.org/issued-standards/list-of-standards/ifrs-18-presentation-and-disclosure-in-financial-statements/) confirms application for annual periods beginning on or after 1 January 2027, with early application permitted. This guide assumes a 2026 period without early adoption and focuses on required basic and diluted figures. Check the applicable edition before extending the working to additional management-defined per-share measures.

## Which common mistakes change the answer?

**Mixing periods.** Rimal's closing share register and annual weighted average should both reconcile, but they need not match. Put dates beside the share quantities and repeat the calculation using opening shares plus weighted movements. A disagreement between the two calculation methods points to a missing interval or movement.

**Deducting the same amount twice.** When profit already belongs to the parent's ordinary shareholders, a second non-controlling-interest or preference adjustment creates an error. Read the actual label and trace the figure to its supporting note. An attractive round number is not evidence that it is the right numerator.

**Treating bonus shares like a cash issue.** Identify whether resources increased before time-weighting a movement. ACCA's [March/June 2023 Financial Reporting examiner report](https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/f7/examinersreports/fr-mj23-examiner%27s%20report-final.pdf) discusses errors involving bonus adjustments and subsequent cash issues. It is historical teaching evidence, not a statement about a current exam's format or syllabus.

**Using the year-end market price for options.** Nakhil uses the supported average market price for the relevant period. Keep the price source and averaging calculation with the option terms. For arrangements involving future services, paragraph 47A can change assumed proceeds; the simplified case deliberately assumes none.

**Including every potential share automatically.** Test dilution against continuing operations. Convertible debt may change both earnings and shares, while the simple options here change only shares. Multiple instrument series require separate testing in the appropriate sequence. Do not apply the option table unchanged to a convertible loan.

**Rounding before completing the working.** Keep precise averages and calculations until final presentation. Label currency amounts, share counts and currency-per-share outputs distinctly. That discipline also prevents a spreadsheet in thousands of riyals from being divided by an unscaled number of shares.

## How can you practise the calculation and review your mistakes?

Rebuild Rimal's timeline on a blank sheet. Write the opening shares, the two movement dates and closing outstanding shares before calculating any weighted contribution. Then explain why SAR 2.40 is consistent with those dates. Compare your interval method with the opening-plus-movements method and investigate any difference before checking the final answer.

Try an independent bonus variation: after all the original movements, Rimal makes a one-for-four bonus issue on 31 December. All earlier share quantities are adjusted by 1.25, so the weighted average becomes 1,437,500. Earnings remain SAR 2,760,000 and basic earnings per share becomes SAR 1.92. The resulting closing outstanding count is 1,500,000. Apply the relevant retrospective adjustment to comparative per-share information as well; the variation changes share units, not the underlying profit.

For a separate Nakhil variation, replace the annual average market price with SAR 15 while keeping the exercise price at SAR 18. The options contribute no dilutive shares. Basic and diluted earnings per share both remain SAR 2.50 in the profitable case. Record zero incremental shares instead of inserting a negative number into the denominator.

After each attempt, classify the correction: numerator, effective date, bonus adjustment, option proceeds, antidilution or presentation. Write one sentence explaining the corrected decision. Then change one fact and solve again. Keep these original article cases as your own worksheet alongside the [journal-entry practice approach in Accountery](/learn/how-to-record-journal-entries), where you can also work on the recorded transactions underlying financial statements.

If you are choosing a professional assessment to prepare for, use the [certification comparison](/prep/which-certification) to connect that choice with an appropriate study plan. Finish today's practice by explaining both cases without looking at the table: where earnings came from, which shares counted, and why the diluted result changed.

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