Weighted average number of shares

Learning objectives

• Calculate the weighted average number of shares from dated issues and buy-backs (time-weighting factor).L1, L2, L3
• Determine the date from which issued shares are included in the calculation (the date consideration is receivable).L1, L2

Normative references

• IAS 33 §19For basic earnings per share, the number of ordinary shares is the weighted average number of ordinary shares outstanding during the period.
• IAS 33 §20The weighted average number reflects the possibility that the amount of share capital varied during the period: the number of shares outstanding at the beginning is adjusted by the number of shares bought back or issued, multiplied by a time-weighting factor (number of days the shares are outstanding as a proportion of the total number of days in the period); a reasonable approximation is often adequate.
• IAS 33 §21Shares are usually included in the weighted average from the date consideration is receivable (generally the date of issue); examples: shares issued for cash (when the cash is receivable), on the voluntary reinvestment of dividends, on conversion of a debt instrument, or in place of interest or principal (from the date interest ceases to accrue); the terms of each issue determine the timing.
• IAS 33 §22Ordinary shares issued as part of the consideration transferred in a business combination are included in the weighted average from the acquisition date, the date from which the acquirer incorporates the acquiree's profits and losses.

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

8 questions

• At 1 January, Aubrac SA has {opening_shares} ordinary shares outstanding. On 1 April it issues {issued_shares} shares for cash, received on that date: these shares are outstanding for {months_outstanding} months of the year (weighting in months, an approximation of the day-based time factor adopted for the case). The profit attributable to ordinary equity holders for the year ended 31 December is {earnings_ordinary} (in euros). Calculate the weighted average number of ordinary shares, then basic earnings per share. Round earnings per share to two decimals (case convention).L3
• Ordinary shares issued for cash are generally included in the weighted average number from the date on which the consideration is receivable, which is generally the date of issue.L1
• At 1 January, Solène SA has {opening_shares} ordinary shares outstanding. On 1 March it issues {issued_shares} shares for cash received on that date: they are outstanding for {issue_months} months. On 1 November it buys back {repurchased_shares} of its shares, which leave circulation for the last {repurchase_months} months of the year ended 31 December (weighting in months, an approximation of the day-based time factor adopted for the case). Calculate the weighted average number of ordinary shares for the year.L2
• At 1 January, Tarnos SA has {opening_shares} ordinary shares outstanding. On 1 February it issues {conversion_shares} shares on the conversion of a debt: these shares are outstanding {conversion_months} months. On 1 July it issues {dividend_shares} shares in place of a reinvested dividend: {dividend_months} months. On 1 December it buys back {buyback_shares} shares, withdrawn for {buyback_months} month. The dates used are those of each issue, according to its terms (case convention), with weighting in months. The profit attributable to ordinary equity holders is {earnings_ordinary} (in euros). Calculate the weighted average number of shares and then basic earnings per share. Round earnings per share to two decimals (case convention).L3
• On 1 October, Brenne SA enters into a contract for a mandatorily convertible instrument: it will be converted on 30 June of the following year into 400,000 ordinary shares. The year ends on 31 December (weighting in months for the case). How many shares under the contract enter the weighted average number for basic earnings per share for the year?L3
• Hauteville SA has {opening_shares} ordinary shares outstanding throughout the year. An agreement requires it to issue {contingent_shares} additional shares for little or no consideration if a revenue target is met; the target and the other conditions are met on 1 October, {months_since_conditions} months before the reporting date of 31 December (weighting in months). Calculate the weighted contingent shares included in basic earnings, then the weighted average number of ordinary shares.L3
• Under a takeover contract, Valmy SA must issue two tranches of ordinary shares for little or no consideration, under separate conditions. The first tranche, of {tranche1_shares} shares, vests on 1 March: all its conditions have been met for {tranche1_months} months at 31 December. The second, of {tranche2_shares} shares, depends on a condition that is not met at the reporting date. Valmy has {opening_shares} ordinary shares outstanding throughout the year and a profit attributable to ordinary equity holders of {earnings_ordinary} (in euros). Calculate the weighted average number of shares for basic earnings and then earnings per share. Round earnings per share to two decimals (case convention).L3
• Bréval SA has {opening_shares} ordinary shares at 1 January. On 1 April it issues {cash_issue_shares} shares for cash, outstanding {cash_issue_months} months until 31 December. On 1 October it makes a bonus issue of one new share for two held, with no new resources. The profit attributable to ordinary equity holders for the year is {earnings_ordinary} (in euros). Calculate the weighted average number of shares for the year, restated for the bonus issue (weighting in months), then basic earnings per share. Round earnings per share to two decimals (case convention).L3