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Earnings Per Share
Diluted Earnings Per Share
• The effects of potential anti-dilutive ordinary shares
are ignored in calculating diluted earnings per share.
The reason for this is that the objective is to determine
the maximum possible dilution; if the increase in
earnings per share is included, then an average dilution
will be determined.
• The sequence in which potential ordinary shares are
considered may affect whether or not they are dilutive.
In order to maximise the dilution of basic earnings per
share, each issue or series of issues of potential
ordinary shares must be considered in sequence. This
will result in the most dilutive effect.
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