QUESTION 4

a. The following information is extracted from the financial statements of Kubua Plc. for
the year ended 30 September, 2014.

N’000
Ordinary Share Capital (fully paid at 1.25 kobo each) 20,000
Operating profit before tax 4,000
Other relevant information:
(i) The companies income tax rate is 30%
(ii) The average fair value of one ordinary share during the year was N5.00.
(iii) During the year, the company issued share options of 2.5million ordinary
shares to existing shareholders at an exercise price of N4.00.

Required:

Calculate the basic and diluted Earnings Per Share for the year ended 30
September, 2014. Show all workings (5 Marks)

b. Extract from the Statements of Profit or Loss and Other Comprehensive Income
of Bajulaye Plc. for the years ended:
30/09/2014 30/09/2013
N‘000 N‘000
Revenue 5,000 2,800
Profit Before Interest and Taxes (PBIT) 2,500 1,200
Extract from the Statements of Financial Position as at
30/9/2014 30/9/2013
Issued Share Capital: N’000 N’000
Ordinary Shares at 50k each 3,000 3,000
12% Redeemable Preference Shares 1,500 1,500
Total Equity 4,500 4,500
Other relevant information:
- On 1 January, 2013 the entity issued convertible loan notes of
N2,000,000 with effective interest rate of 10% per annum.
- The loan notes are convertible at nominal values of N100 each into the
following number of ordinary shares:

SKILLS LEVEL EXAMINATIONS – MAY 2015

7