The issued ordinary share capital of WELLER plc (WELLER) at 1 January 2002 was 6,000,000 ordinary shares of €0.50 each. On 30 June 2003, WELLER made a fully subscribed one for three rights issue at €1 per share, when the average price of one ordinary share was €1.50. There were no other changes to WELLER’s ordinary share capital in 2002 and 2003. The average market price of one ordinary share in WELLER during 2002 and 2003 was €1.20 and €1.60 respectively. At 31 December 2002 and 2003, WELLER had a 5% loan of €1,000,000, which was convertible into 500,000 ordinary shares of €0.50 each. WELLER pays corporation tax at 25%, The following information is available with respect to the statement of comprehensive income of WELLER for the years ended 31 December 2002 and 2003. 

Requirement

(a) Calculate, in accordance with IAS 33 Earnings per Share:
(i) WELLER’s basic EPS for the year ended 31 December 2002;
(ii) WELLER’s fully diluted EPS for the year ended 31 December 2002;
(iii) WELLER’s basic EPS for the year ended 31 December 2003;
(iv) WELLER’s adjusted EPS for the year ended 31 December 2002 to be included as a comparative figure in WELLER’s financial statements for the year ended 31 December 2003.

(b) Outline why it is considered important to measure EPS.

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Year ended 31 December 2003 2002 '000 '000 '000 '000 Operating profit 1,900 1,300 Exceptional gain/(loss) (200) 100 Interest payable (60) (50) Profit before tax 1,640 1,350