Reverse share split

Learning objectives

• Calculate the restated number of shares and earnings per share after a reverse share split.L2, L3

Normative references

• IAS 33 §27Events concerned: (a) a capitalisation or bonus issue (stock dividend); (b) a bonus element in any other issue, for example a bonus element in a rights issue to existing shareholders; (c) a share split; (d) a reverse share split (consolidation of shares).

Original summaries of the paragraphs (reference register), never a quotation of the standard.

3 questions

• Pasteur SA has {shares_before_event} ordinary shares outstanding throughout the year, until a reverse share split on 1 November: one new share for five old shares. The profit attributable to ordinary equity holders for the year is {earnings_ordinary} (in euros). Calculate the number of shares for the year's calculation, restated for the consolidation, then basic earnings per share. Round earnings per share to two decimals (case convention).L2
• In its financial statements for year N, Lumière SA presents year N-1 as a comparative, for which it had published basic earnings per share of 0.15: profit attributable to ordinary equity holders of {prior_earnings} (in euros) and {prior_shares} shares outstanding throughout the year. During year N the entity carried out a reverse share split of one new share for four old ones. For the N-1 comparative, calculate the restated number of shares and then the restated basic earnings per share. Round earnings per share to two decimals (case convention).L3
• Which of the following transactions on the share capital of Montaigne SA are among the events for which the weighted average number of shares for the period and the periods presented is adjusted because they change the number of shares without a corresponding change in resources? More than one answer is possible.L3