Below is an extract from the Statement of Financial Position of Tennis Cruise Liners plc at 31 December 2017. Additional information: 1. The company reported an operating profit of 982,000. 2. The nominal value of an ordinary share is 1 and the average market value is 2.60. 3. The employees hold 520,000 share options, which have an exercise price of 2.00. 4. A dividend of 7% is payable on the convertible preference shares and the conversion terms are one ordinary share for every four preferences shares hold. 5. The conversion terms for the convertible bonds are 2,000 ordinary shares for each 2,500 of convertible bonds. 6. Tennis Cruise Liners plc pays tax at a rate of 12.5%. (b) A trainee accountant of a subsidiary company of Tennis Cruise Liners plc is seeking advice on how to account for a rights issue per IAS 33 Earnings per Share. On 31 December 2016 and 2017 Souvenirs Galore plc had a capital structure consisting of: - 700,0001 ordinary shares; and - 86,00013% preference shares. Net profit for year ended 31 December 2017 was 3,500,000. Net profit for year ended 31 December 2016 was 2,754,000. On 31 March 2017, Souvenirs Galore plc announced a rights issue with the following details: Rights: 3 new shares for each 5 held Issue price: 2.20 The market value of one share in Souvenirs Galore plc immediately prior to the rights issue was 4.10 Required (i) Explain, using calculations how the basic earnings per share of Souvenirs Galore plc will be calculated. (8 marks) (ii) Discuss the advantages and disadvantages of earnings per share as a measure of corporate performance. (3 marks) (iii) Explain the usefulness of disclosing a company's diluted earnings per share. (2 marks)