Also referred to as the ‘All Ords’, the All Ordinaries is an ASX share market price index.

The index is based on the market prices of the ordinary shares in approximately 500 Australian listed companies.

The index’s purpose is to represent the entire Australian market.

An announcement is information provided by a company (or other issuer of a share) to the sharemarket.

An announcement can take any form and be on any subject that would be relevant to the investor. Most announcements are driven by exchange requirements to disclose information. Examples include: a profit report, significant shareholder notice, or takeover offer.

This is the notice issued when the writer of an option will have to exercise the option. It obliges him or her to sell (in the case of a call) or purchase (in the case of a put) the underlying security at the price specified in the option.

An abbreviation indicating Australian Dollars, e.g. AUD$4.20.

The company that runs the ASX.

The highest price any buyer in the market is willing to pay for the share.
Also known as the Buy Quote.

A certificate of debt that a corporation, government, or local body issues and investors can buy and trade.

Bondholders receive their principal back on a specified date, in addition to fixed interest payments. They have a number of different forms and structures.

The bond is generally a promise to repay the loan (principal) plus interest at a certain point in time (the maturity date).

Free shares issued to shareholders in proportion to their current shareholdings.

These can be in addition to, or in place of, dividends.

It is effectively a share split and does not affect the proportion of a company held or the underlying value of the parcel of shares, and usually reflects the improved value of company’s assets in a different way (increasing the number of the shares rather than the value of shares currently held).

Charges made by a broker acting as an agent in the buying and selling of shares, usually based on the value of the transaction.

The highest price any buyer in the market is willing to pay for the share.

Also known as the Bid / Bid Price.

An equity option contract that gives the holder the right to buy the underlying security at a specified price for a certain, fixed period of time.

A warrant, like an option, gives the holder the right to buy the underlying instrument from the warrant issuer at a particular price on or before a particular date.

Often applied to contracts giving you the right to buy an option.

A share cancellation reduces the number of shares held, however unlike a consolidation, compensation is offered for the reduction in shares.

Assuming that compensation offered is at the market rate for the share, the share price would not be expected to change.

This is an historically adjusted share price, adjusted to reflect actual changes in shareholder value. For example, it could be used in an analyst’s report to illustrate a share price had dividends not been paid, or if capital structure had not been changed.

Securities paying a fixed dividend issued by a company.

The holder receives payments quoted as a percentage of the face value, usually paid in semi-annual instalments.

Also know as Corporate Bonds.

A privilege granted to existing shareholders to buy new shares in the same company, at a specific price (usually below the prevailing market price) and by a specific date.

Rights are issued pro rata to existing shareholdings (e.g. the right to buy one new share for every five held) and may be either renounceable or non-renounceable.

Renounceable rights can be traded on the exchange in the same way as shares but only during a limited period governed by the terms of the issue.

Also known as a Rights Issue.

The last actual sale price of a share on a particular day.

This is a unique shareholder number that is common to all NZ Share Registries for all NZ company listed securities.

This number is the way the registry identifies your holding as separate from any other holder.

The process of combining a company’s shares into a smaller number of shares, each with a corresponding higher market value.

It is the opposite of share split.

The total value of any investor’s holdings is not affected by the consolidation.

These are shares that have only been partly paid for.

At a future date the shareholder will be required to pay the balance outstanding, unless the company is a no liability company in which case shares can be forfeited instead.

They may or may not have entitlements such as dividends attached to them.

A loan made to a company where the note holders are usually paid a prescribed interest payment over a prescribed term.

The terms may allow note holders to convert to ordinary shares, at either prescribed times or any time during the term of the note’s issue, or at the expiry of the note issue.

Preference shares are convertible to ordinary shares in a specified ratio on a certain date (or within a certain period) either compulsorily or more commonly at the option of the holder. This class of preference share usually participates in bonus and rights issues, unlike most other preference shares.

A fixed cashflow security issued by a company.

The holder receives coupon payments quoted as a percentage of the Face value, usually paid in semi-annual instalments.

Also known as Capital Notes

An interest payment. Depending on the terms of the contract, it will be paid annually, half-yearly or quarterly.

Cum dividend means that the share being sold will have a dividend paid on it. ‘Cum’ means simply ‘with’, so the item comes with whatever attachment is in question – in this case, a dividend.

Process of removing a company’s shares from an exchange -usually because the company did not abide by some regulation of the share market or nor longer meets certain financial ratios or sales levels. This may also occur where a company has been the subject of a takeover bid, and all the shares are now owned by the buyer.

The income you may receive as a shareholder from a company, as a distribution of part of a company’s net profit to shareholders.

It is usually expressed as a number of cents per share for ordinary shares.

It is common practice to pay both an interim and a final dividend.

The number of times that the profit after tax of a company covers the dividend amount.
Dividend Cover ratio = net profit / dividend paid

The annual dividend expressed in cents per share.

Dividends per share represent the cash payment or distribution made by a company to shareholders on a per share basis.

Calculated by adding the interim dividend to final dividend to obtain the total dividend per share annually. DPS is usually expressed as cents per share.

Dividend per Share = Total Dividends for the year / Number of Ordinary Shares

Also known as the Dividend Rate.

The annual dividend shown as a percentage of the last sale price for the shares.

The dividend yield is the total dividend per share divided by the share price.

Dividend Yield = Dividend per Share / Share Price x 100

For example, if a company declares an interim dividend of 7 cents per share, and a final dividend of 9 cents per share, the total (16 cents) divided by the share price (let’s say $1.10) gives a dividend yield of 14.5%.
This can act as a simplified rate of return on an investment as it tells you how much your shares would earn over a year, expressed as a percentage.

The dividend yield changes as the share price varies, meaning it rises as the price falls and vice versa.

Also known as the Yield.

Consolidated net operating profit – or the amount of money a company makes after paying all expenses and costs.

Also stated as revenues minus cost of sales, operating expenses, and taxes, over a given period of time.

Represents the portion of earnings attributable to each ordinary share.

Calculated by taking the total dollars earned divided by the number of shares outstanding.

Earnings per Share = Net Earnings after Tax / Number of Ordinary Shares

For example, if a company makes $10 million dollars in profits in one year and they have issued one million shares of stock, the earnings per share is $10.

The return from an investment in ordinary shares if all earnings (net of preference dividends) were paid out as ordinary dividends.

It is calculated by dividing a company’s earnings (in cents per share) by the current market price (also expressed in cents) and multiplying by 100.

See also: Price Earnings Ratio.

ETFs are listed unit trusts that combine some of the features of investing in shares with the features of investing in managed funds.

ETFs provide investors with the ability to gain exposure to a number of companies listed on an exchange as easily as buying the shares in the individual companies.

The first day of a security being quoted ex dividend. The next business day following the record date.
See also: Ex Dividend

Dividend announcements involve the ‘books closing date’ (which determines who are the share holders on the company’s register) and a ‘dividend payable date’ (the day when the payments are actioned).

Five working days before the ‘books closing date’ the stocks go ‘ex dividend’, which means that the sellers of shares rather than purchasers become entitled to the payment.

To implement the right under which the holder of an option is entitled to buy (in the case of a call) or sell (in the case of a put) the underlying security.

The price a put or call option must be exercised at when exercising an exchange traded option.

For a company option, it is the cost of converting the option to a fully paid share.

The day on which an option contract becomes void. All holders of options must indicate their desire to exercise, if they wish to do so, by this date.

The amount at which shares are issued.

An investment involving a defined and guaranteed periodical return, as distinct from shares, which involve variable and performance-based returns.

Examples include bonds, debentures, notes, deposits, mortgages and most preference shares.

A dividend paid by a company out of profits on which the company has already paid tax.

The investor is entitled to an franking credit, or reduction in the amount of income tax that must be paid, up to the amount of tax already paid by the company.

Known as an Imputed Dividend in New Zealand.

This is a collective term for the market indices which are adjusted to account for dividends paid out by the companies included in the index, as well as changes in their share price.

The system under which shareholders receive credit for the income tax paid by companies.

Dividends paid out of profits that have borne company tax are known as “franked dividends” and carry with them an associated “imputation credit”.

The tax credits passed on to a shareholder who receives an imputed dividend.

When a company has paid tax on its profits, the dividends of that company will carry a tax credit (imputation credit), which entitles shareholders to a rebate or reduction in the net amount of tax to pay.

When a company attaches imputation credits, the dividends are referred to as being imputed. Depending on the tax status of the company, dividends are either fully imputed, partially or not imputed.

Statistical measure of the markets as a whole, or of particular segments of the market, based on representative shares.

Unlike averages, indexes can be complex calculations that include weighting for various factors.
An example of an index is the NZX50.

A first offering to the public of a company’s shares.

These are shares that have only been partly paid for.

At a future date the shareholder will be required to pay the balance outstanding, unless the company is a no liability company, in which case shares can be forfeited instead.

They may or may not have entitlements such as dividends attached to them.

A dividend paid during the year as distinct from one paid at the end.

More profitable companies tend to pay dividends twice a year.

A measure of the worth of a company (or a group of companies) as set by the share market. It is calculated by multiplying the number of shares on issue by the price per share.

The prevailing price of shares traded on a market.

May be the last price at which the shares traded, or the most recent price offered or bid for the shares.

This figure indicates the net asset backing of a company (i.e. if the company ceased trading, this is how much it may be worth on a per share basis) and is a measure of the net worth of a share – the theoretical value of the net assets attributable to each ordinary share on issue.

It is calculated as the total value of assets after liabilities and intangibles have been deducted divided by the number of shares on issue.

Net tangible asset backing = (shareholders’ equity – intangibles) / ordinary shares.

Securities issued which cannot be traded on a secondary market.

Non-Resident withholding tax is a tax deducted from foreign investment income by a foreign tax authority before the investor receives it.

In the case of Australian dividends, Non-Resident Witholding Tax is deducted at the rate of 15% unless offset by Franking Credits (the Australian equivalent of (Imputation Credits).

New Zealand Stock Exchange.

A security which gives its holder the right, but not the obligation, to acquire (or sell) shares in a company at a specified price (called the exercise price) on a stipulated date (called the exercise date) or, sometimes, at any time up to a maximum date.

An option that is not exercised by the latest possible exercise date lapses and becomes worthless.
Options are usually transferable and can themselves be traded.

This ratio indicates the underlying value of a company and is one of the most common methods of determining how expensive or cheap a particular stock price is at a certain point in time.

It is calculated by dividing the current market price of the share by earnings per share.

Price Earnings Ratio = Current Share Price / Earnings per Share

In its most simple form, the PE indicates how many years it will take for the earnings from the shares to equal to the share price. The PE ratio shows the number of times the market price covers earnings and is a valuable tool for comparing profit performance relative to price.

Shares with a fixed rate of return and with priority over ordinary shares in regard to dividends and the company’s assets in the event of a wind-up.

They can take various forms – for example, with or without participating or partial participating rights.

They can be redeemable or irredeemable; convertible or non-convertible; voting or non-voting.

This is the day on which all shareholders on the register on that day will receive the applicable entitlement (e.g. dividend or rights issue).

Resident withholding tax is a tax deducted from investment income before the investor receives it.

Resident Witholding Tax is deducted from most new Zealand dividends at the rate of 15% unless offset by Imputation Credits.

A privilege granted to existing shareholders to buy new shares in the same company, at a specific price (usually below the prevailing market price) and by a specific date.

Rights are issued pro rata to existing shareholdings (e.g. the right to buy one new share for every five held) and may be either renounceable or non-renounceable.

Renounceable rights can be traded on the exchange in the same way as shares but only during a limited period governed by the terms of the issue.

One of the parts into which a company’s share capital is divided, entitling each holder, as a part owner of the enterprise, to a proportion of the profits and to a proportion of the net assets after satisfying the creditors in the event of a wind up.

The shareholders collectively control the company.

All the shares in any one class of shares rank equally. They can be ordinary shares, preference shares or partly-paid (contributing) shares. Most shares are either ordinary or preference.

The process of dividing a company’s shares into a larger number of shares, each with a correspondingly lower market value.

It is the opposite of consolidation.

The total value of any investor’s holdings is not affected by the split.

Registry number which is unique to each holder on the register.

The annualised return to shareholders, including all price changes and reinvestment of dividends. It includes the effect of bonus issues and splits.

It measures the percentage increase in the value of a shareholder’s investment in the company’s shares.

It is calculated on a pre-tax basis.

ETFs are listed unit trusts that combine some of the features of investing in shares with the features of investing in managed funds.

ETFs provide investors with the ability to gain exposure to a number of companies listed on an exchange as easily as buying the shares in the individual.

Also known as Exchange Traded Funds (ETFs).

A warrant is a type of option usually issued by an investment bank or body other than the underlying company.

Warrants may be issued over securities such as shares in a company, a currency, an index or a commodity.
Typically they are used as an enticement to invest in some other security, and give the right to buy a specified number of shares at a specified price for a specified period of time.

Unlike subscription rights, warrants usually do not expire for years (or never expire) and specify a price that is higher than the current price.

Warrants trade in the same market as the issuing company’s common stock.

The conversion ratio is the number of warrants that must be exercised to require the transfer of the underlying instrument.

The annual dividend shown as a percentage of the last sale price for the shares.

This can act as a simplified rate of return on an investment as it tells you how much your shares would earn over a year, expressed as a percentage.

The dividend yield changes as the share price varies, meaning it rises as the price falls and vice versa.