Question 2 The following information is extracted from the financial statements of Halifax Group (Halifax) for the year ended 31 December 2017: $000 $000 Profit before tax 4,131 Tax (1,629) Net profit 2.502 Profit attributable to: Shareholders of Halifax Non-controlling interest 2,412 90 2.502 5,268 2,412 Retained profits at 1 January 2017 Profit for the year Dividends: Preference dividends (45) Ordinary dividends (669) (714) Retained profits at 31 December 2017 6.966 From 1 January 2017 until 31 March 2017 the share capital of Halifax consisted of 12 million ordinary shares and 900,000 $0.5 preference shares. On 1 April 2017 Halifax made a 1 for 4 rights issue of ordinary shares at $1. The market price of an ordinary share of Halifax Ltd on the last day of quotation cum rights was $1.50. On 1 September 2017 warrants were issued to existing shareholders on a 1 to 1 basis. Every warrant gave the right to subscribe for 1 ordinary share on 31 December 2019 at a price of $1 for each share. The average market price of the Halifax's share was $2.0 for 2017. Required: (a) Determine the basic earnings per share of Halifax for the year ended 31 December 2017. (9 marks) (b) Determine the diluted earnings per share of Halifax for the year ended 31 December 2017 (6 marks) (c) Identify the limitations of earnings per share as a profitability measure. (5 marks) (Total 20 marks)