CLASSICAL plc (CLASSICAL) had one million ordinary €1 shares in issue on 1 January 2004. On 1 July 2004, CLASSICAL made a rights issue of one ordinary share for every two previously held, at a price of €6 per share. The fair value of one ordinary share was

€9 throughout the year ended 31 December 2004. During the year ended 31 December 2004, the following potential ordinary shares were outstanding:

(a) 3,000,000 share options with an exercise price of €6 per share;

(b) 50,000 convertible preference shares entitled to a dividend of €5 per share. Each preference share is convertible into two ordinary shares; and

(c) 6,000,000 nominal 2% convertible bonds, convertible into 300 shares per each 6 oo bond held.
The reported basic EPS in 2003 was 36 cent. After deducting dividends and other appropriations of profit in respect of non-equity shares, CLASSICAL reported a net profit of €500,000 for the year ended 31 December 2004. CLASSICAL pays corporation tax at 25%.
Requirement

(a) Compute the basic EPS figure, including comparatives, to be reported in the financial statements of CLASSICAL for the year ended 31 December 2004 in accordance with IAS 33 Earnings per Share.

(b) Compute the diluted EPS of CLASSICAL for the year ended 31 December 2004 in accordance with IAS 33 Earnings per Share. (Comparative figures are not required.)