CKI AR1996 No. of shares reported in dividends and EPS are different

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DANIEL ONG asked 1 month ago

Hi Rusmin, I'm looking at CKI to practice what I've learnt and found something which puzzles me. In its AR1996 (IPO in July 1996) page 78, it indicated under Notes 7 DIVIDENDS that a final dividend of HKD0.16 per share was proposed and payable on 2,265,209,945 shares in issue. Under Notes 8 EPS, it indicated that the EPS is calculated based on the profit attributable to shareholders of HKD886 million and on weighted average number of 1,184,977,077 shares. Under page 53, CKI has acquired Hongkong Electric in March 1997 and thus issued 886,209,945 shares to Hutchison Whampoa, thus increased the no. of shares from 1,368,000,000 to 2,254,209,945. Questions:

Why does companies use weighted average no. of shares for the year (which I've noticed all companies do so) instead of the final no. of shares at the end of the financial year to calculate EPS?
Since dividends approved will be in 2017 and usually there is a cut off date (Ex-Dividend date), the no. of shares by then is higher at 2,254,209,945 (assuming the ex-dividend date is after the issuance of new shares to Hutchison Whampoa. Is that why DPS is using 2,254,209,945 shares to caculate?
For the purpose of using spreadsheet to trace historical performance, I should use DPS indicated under the Chairman's Letter section. Am I correct?
Should I check the next year report to confirm that there is no change in the previous year's declared DPS since the approval might have only happened after the current year's declared DPS?
For EPS, I should use the spreadsheet to adjust for any extraordinary items for the earnings attributable to shareholders and the weighted average no. of shares. Am I correct?

1 Answers

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Victor Chng Staff answered 1 month ago

Hi Daniel,

1. The dividend is HKD$0.16, and the outstanding shares for Pre-IPO are 1185m. After the IPO, the share outstanding is 2254.2m. You can take 2254.2m. Note that you should collect all the data in millions.

2. The weighted average number of shares takes into account any changes in the number of shares outstanding throughout a reporting period, such as a quarter or year. If there is no increase or decrease in the number of shares in that particular year, the weighted average number of shares equals the shares outstanding.

3.If the dividend is for FY2017, then you have to use FY2017 share outstanding.

4. Yes, you are correct if the company has not conducted any share split or bonus share issue before. In the event where the company has undertaken a share split or bonus share issue, you need to adjust the dividend per share accordingly.

5. Yes you are correct. Use adjusted earnings with weighted average number of shares.