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Brian yap

on 2 August 2016

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Transcript of MFRS 133 EPS

Company: Bursa Malaysia
Bursa Malaysia comply with MFRS 133
Recommendation on how to improve Financial Reporting Quality
Brian Yap Jun Yew
Cheong Jiun Jun
Kee Seow Pei
Lee Jiun Yeong
Matthew Chong Hon-Chung
Ng Chow Meng


Formed in November 2011 by MASB and applicable on and after 1 January 2012
Equal to IAS 33; entities complying with MFRS 133 automatically comply with IAS 33
IAS 33 was incorporated in April 2001 by IASB and was revised in December 2003 where the title was switched to Earnings per Share.
determine and set principles for the measurements and presentation of earnings per share (EPS)
Why? To refine the comparisons of performances between distinct entities in the same reporting time period as well as between different reporting time periods for the same entity
Emphasizes on the calculation of the denominator of EPS
The standard is applicable to the following:
a) An
entity's financial statements
regardless of being separate or individual
Where the entity trades
ordinary or potential ordinary shares in a public market
(a local or foreign stock exchange or an
over-the-counter market
, including domestic and regional markets) or
archives or performs
the process of archiving the financial statement of the entity w
ith a securities commission or some other regulatory body
with the aim to issue ordinary shares in the public market;
b) The consolidated financial statements of a

group that has a parent
Where the entity trades
ordinary or potential ordinary shares in a public market
( a local or foreign stock exchange or an
over-the-counter market
, including domestic and regional markets) or
archives or performs
the process of archiving the financial statement of the entity
with a securities commission or some other regulatory body
with the aim to issue ordinary shares in the public market..
Any entity disclosing EPS shall compute and reveal EPS according to this standard
If an entity discloses both consolidated and separated financial statements, then only disclose based on the consolidate data.
If an entity only discloses separated financial statements, then EPS information is revealed in the statement of comprehensive income only.
If an entity discloses items of profit or loss in a separate statement, then EPS information is revealed in the separate statement only.
How MFRS 133 EPS should be recognized and reported in the FS
Statement 66:

Basic and diluted EPS
for profit or loss from continuing operations are disclosed (even if amount is negative) on the face of the statement of comprehensive income.
Statement 68:
discontinued operations
are reported, basic and diluted EPS for the discontinued operation should be presented either on the statement of comprehensive income or in the notes.
An entity should disclose the following in notes to financial statement
(Statement 70 from MFRS)
Amount used in both numerators and denominator in calculating basic and diluted EPS
Reconciliation of both numerators and denominators value for basic and diluted EPS calculation for income before discontinued operation
Potentially dilute basic earnings per share that were not included in the calculation of EPS because they were anti-dilutive
Description of common share transactions after reporting period that could have impacted EPS numbers
Basic EPS
The amount of
preference dividend
Dividends declared for the period
non-cumulative preferences
Statement 14 (a):
Statement 14 (b):
Dividends for the period for
cumulative preference shares
, whether or not dividends have been declared
WA Number of OS
Should reflects number of shares outstanding at the end of the financial period
The weighting of the average is on
time basis
Timing for inclusion of
new issue of shares
- From the date the consideration is receivable
Contingently issuable shares:
- Included in WANOS when all necessary conditions are satisfied
Changes in shares outstanding not affecting resources.
Diluted EPS
Potential Ordinary Share (POS) refers to
a company may have issued certain types of financial instrument that gave rights to OS at a future date. For example:
a) Convertible preferences share
b) Share warrants and options
c) Right granted under employee share scheme
d) Contingently issuable
Diluted EPS
is the reduction EPS.
Statement 42:
When the effect of the POS is an increase in EPS or a reduction in loss per share:
Known as
POS are excluded
in the calculation of diluted EPS.
Statement 44:
POS must be considered separately to determine their dilutive effect:
considered in sequence from the most dilutive to the least dilutive.
Most dilutive
- POS which will result in the
earnings per incremental share.
Least dilutive
- shares will be result in the
earnings per incremental share.
May have effect on calculation of EPS as follows:
Convertible Financial instruments:
1. Profits
Convertible debts
- interest savings
Convertible preference dividend
- saving of preference dividend
2. The number of shares:
Number of shares will increase
If there are choice of rates for conversion - choose the
Board of Director
Tun Mohamed Dzaiddin Haji Abdullah (2011-2014)
Tan Sri Amirsham A Aziz (2015)
Non-Executive Director
Tun Mohamed Dzaiddin Haji Abdullah (2011-2014)
Tan Sri Amirsham A Aziz (2015)
Datuk Seri Tajuddin Atan (2011-2015)
Datuk DR. MD TAP Salled (2011-2015)
Dato' Saiful Bahri Zainuddin (2011-2015)
Dato' Zuraidah Atan (2014-2015)
Dato' Eshah Meor Suleiman (2014-2015)
Independent Non Executive Director
Datuk DR. Syed Muhamad Bin Syed Abdul Kadir (2011-2013)
Datuk Karownakaran (2013-2015)
Datuk Chay Wai Leong (2014-2015)
Dato' Dr. Thilainathan a/l Ramasamy (2011-2012)
ISham Bin Yusoff (2011-2012)
Datuk Wong Puan Wah (2011-2012)
Cheah Tek Kuang (2011-2012)
Dato Saiful Bahri bin Zainuddin (2011-2012)
Tan Ong Leong Huat (2011-2014)
Tan Sri Datuk Dr. Abdul Samad bin Haji Alias (2011-2013)
Public Interest Director
Datuk DR. MD TAP Salleh (2011-2015)
Datuk Seri Tjuddin Atan (2011-2013)
Tun Mohamed Dzaiddin Haji Adbullah (2011-2013)
Dato' Zuraidah Atan (2014-2015)
Dato' Eshah Meor Suleiman (2014-2015)
Nature of Business
Bursa Malaysia is authorized under s.15 of Capital Markets and Service Act 2007.
It operated an integrated exchange and offering exchange related services
Bursa Malaysia offers stock market which investors can participate and selling of shares. There are Main Market and ACE Market.
1. Main Market and ACE Market
Consists of 794 and 109 companies respectively
18 sectors cover 60 economic activities
Total market capitalization: RM1.7 trillion
Commodity, equity, financial futures and options
Comprises of 12 derivatives products
Islamic capital market, offering diverse Shariah-compliant products
22 Sukuk listings valued of USD34.6 billion.
Operate the Labuan International Financial Exchange
Issuers can list their non-ringgit denominated securities
Total market capitalization: USD 27.3billion
Product of Bursa Malaysia
644 Structured Warrants, 57 Warrants, 16 REITs, 10 Foreign Listings, 8 Exchange Traded Fund, 4 Special Purpose Acquisition Company, 1 Stapled Securities, 1 Closed-End Fund
5 commodity futures: Crude Palm Oil Futures, USD Crude Palm Oil Futures, Crude Palm Kernel Oil Futures, Gold Futures, USD Plam Oein Futures
2 Equity Futures: FTSE Bursa Malaysia Kuala Lumpur Composite Index futures, Single Stocks Futures
1 commodity option: Palm Oil Option
1 equity option: KLCI Index Option
Management Committee
Dato' Tajuddin bin Atan (2011-2015)
Chief Executive Officer
Nadzirah Binti Abdul Rashid (2011-2015)
Chief Financial Officer
Selvarany Rasiah (2011-2015)
Chief Regulatory Officer
Chong Kim Seng (2011-2015)
Chief Executive Officer
Jamaluddin Nor Mohamad (2011-2015)
Director, Islamic and Alternative Markets
Chuah Kong Khai (2011)
Chief Market Operation Officer
Tina Choo Wun Hooi (2012-2015)
Chief Market Operation Officer
Datin Azalina binti Adham (2011-2012)
Head Strategy and Transformation
Uday Jyaram (2011)
Global Head of Security Market
Siti Zalena binti Sulaiman (2012-2015)
Head Corporate Risk Management
Leong Chai Kin (2011)
Chief Informati Officer
Yong Hazadurah binti Md Hashim (2012-2015)
Chief Information Officer
Basic EPS
Bursa Malaysia has complied with these statements for basic EPS in MFRS 133:
Statement 9:
An entity is required to calculate basic EPS amounts for
(from continuing operations)
attributable to ordinary shareholders.
Statement 10 & 19:
It should be divided by
weighted average number
of ordinary shares outstanding (denominator) during the period.
Diluted EPS
Bursa Malaysia has complied with these statements for diluted EPS in MFRS 133:
Statement 31 & 36:
An entity should
make adjustments
on P&L attributable to ordinary shareholders and weighted average no. of shares outstanding for the
effects of all dilutive potential ordinary shares.
Statement 41:
Potential ordinary shares are only treated as dilutive
when it decrease EPS
decreases from 37.2sen to 37.0
sen when added in the effect of share grant.
Statement 48:
There is only one type of dilutive potential ordinary share for the company:
Share Grant Plan
(Share options/ Share based payments) implemented by the Board of Directors
Performance-based employee share options are treated as
contingently issuable shares
. Employees share options with
non-vested ordinary shares
are treated as options in calculating diluted EPS.
Statement 57:
Contingently issuable potential ordinary shares are included in the diluted EPS calculation
Presentation and
Bursa Malaysia has complied with MFRS 133 under presentation and disclosures of EPS:
Statement 66:
An entity should present basic and diluted EPS in its
Statement of Comprehensive Income
Statement 70:
Disclosures of the

amounts of numerators and denominators
for calculating EPS.
Do not have any descriptions on
Statement 70 (c) and (d)
In my opinion, compliance with MFRS133

benefits the user of financial statement
- shareholders, Prospective Investors & Financial Institutions
1. Income calculation for users
2. Financial performance measurement
3. Indicator of the investor's for investment purpose
4. Used to estimate future growth
1. Income calculation for users
Calculate how much the company earned on users' behalf
(EPS X number of stocks)
It makes other measures irrelevant
(size of the business)
2. Financial performance measurement
kes charting the performance of management over time easi
(time series / trend)
However, users should analyze the trend of the reported EPS in relation to the industry trend
(decreased EPS may due to cyclical causes)
3. Indicator of the users' long-term income
The company board of directors will decide whether some or all of these earnings to be paid or reinvested into business
(Earnings vs. Dividends)
Over the long-term, the money will end up in the hands of shareholders
(long-term income calculation)
4. Used to estimate future growth
One of the most important factors that affects a company's share price
(determination of a company's intrinsic value)
Analyst estimation vs. user's estimation
- (Historical EPS growth)
- (ROE as growth rate)
- (Sustainable growth rate)
- (Realistic growth rate)
Provide primary and material financial information
Should not only comply with GAAP as minimum level
Should adopt IFRS
Improve corporate governance
1. Provide primary and material Financial Information in FS
provide limited information
information overload - obstruct useful information
clear, concise and effective
Adv: direct users
- accurate information, assess management stewardship
- assess future net cash flows
2. Should not only comply with GAAP as minimum level
Requirement of GAAP - cannot adequately show the performance of a company
Incomplete information
higher rate of return
Higher cost of capital,
Reducing the economy
Voluntarily expand - scope and quality
Provide Primary and Material Financial Information (point 1)
3. Should adopt IFRS, but not only MFRS and FRS
Boost foreigners confidence
Costly, complex and burdensome - high level of disclosure
4. Improve CG in Firms
CG - right and responsibilities
= BOD - financial reporting process (Yatim, Kent & Clarkson, 2006)
= Auditors - review, follow ISA
Should act on their responsibilities, best interest for company
Example failure CG,
Transmile Group Berhad
RM522 mil revenue overstate
RM341 mil PPE is fake
Lim Guan Eng - press release, poor corporate governance
How to estimate future EPS growth rates. (2012, December 22). Retrieved from stockodo.com/2012/12/22/

Hunkar Ozyasar. (n.d.). The Advantages of Earnings Per Common Shares | Finance - Zacks. Retrieved from

Morni Hayati, & Rahizah, (2012). The Benefits and Challenges of Financial Reporting Standards in Malaysia:
Accounting Practitioners’ Perceptions. Australian Journal of Basic and Applied Sciences, 6(7), 98-108.

Nick Kraakman. (2014, August 12). How to Determine a Realistic Growth Rate for a Company. Retrieved
from https://www.valuespreadsheet.com/value-investing-blog/how-to-determine-a-realistic-growth-rate-for-a-company

Norlia Mat Norwani, Zam Zuriyati M., & Ibrahim Tamby Chek, (2011). Corporate Governance failure and its
impact on Financial Reporting within selected companies. International Journal of Business and Social Science, 2(21), 205-213.

Paul, B.W. Miller, (2002). Quality Financial Reporting. Journal of Accountancy.

Quality financial reporting – how to improve Financial Statements, 2014. pp. 4-5

Rick Wayman. (n.d.). How To Evaluate The Quality Of EPS | Investopedia. Retrieved from http://

disclose only primary and material information
Able to compete with others
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