This glossary has been prepared to assist our shareholders' understanding of the most common acronyms and technical terms in the quoted companies and telecommunications sectors.
Active customer
A registered customer who has made or received a chargeable event in the last three months or, where information on incoming events is not available, a customer who has made a chargeable event in the last three months.
ADRs
American Depositary Receipts. Certificate issued by US banks to facilitate trading for US shareholders in the shares of non-US companies. Vodafone ADRs are traded on the New York Stock Exchange under the symbol VOD.
ADSs
American Depositary Shares. Each of Vodafone's ADS represents ten Vodafone Group Plc ordinary shares, which in turn is represented by one ADR.
AGM
Annual General Meeting. A meeting of shareholders that must be held once a year to approve the report and accounts and the final dividend per share, and to vote on any other resolutions (such as the election of directors and re-election of auditors).
ARPU
Average revenue per customer in a specified period (e.g. monthly, quarterly or annually). This includes all usage and access fees, but excludes one-off revenues such as from handset sales or connection fees.
Assets
Assets are rights or other access to future economic benefits controlled by an entity as a result of past transactions or events. In most financial statements, assets are divided into two categories - current and long-term (or liquid and fixed). Current assets are expected to be converted into cash or used up within one year. For Vodafone, these are principally amounts which we have billed our customers but not yet received, and short-term investments. Long-term or fixed assets include property, plant and equipment, long-term investments and intangible assets, such as goodwill and licences. They are not acquired with the intent to resell them; rather, they provide the capacity to earn revenue. For Vodafone, this is mainly exchange and network equipment, property and similar items which we own and use to run our business and investments in our ventures.
Auditor
A firm of accountants who examine ('audit') amounts and disclosures in a company's financial statements. The auditors for Vodafone are Deloitte & Touche.
Blue chip
A description usually applied to the biggest and most highly regarded companies quoted on the stock market, shares in whom are considered a reliable and profitable investment.
Bluetooth
A short-range wireless technology designed to allow connection of portable devices in a wire-free manner. For example connection of a wireless hands-free kit.
Bond
Technically a certificate of debt issued to raise funds, often with a fixed rate of interest and fixed repayment date. An example is gilt-edged securities ('gilts') issued by a government to borrow from investors via the stock market (also known as fixed interest securities). The term 'bond' can also refer to an investment product issued by a company.
Bond Ratings
Grading by debt rating agencies such as Standard & Poor, Moody's Investors Services or Fitch Investors Services Inc. to classify the investment-worthiness of a company's debt.
Bonus Issue
The issue of new shares to an existing shareholder at no extra cost to the shareholder.
Broadband
High speed connectivity - wireless transmission in Vodafone's case. Typically allowing the fast transmission of multimedia content.
Buyback
A company empowered by a shareholders' resolution can offer to buyback shares from shareholders. Usually used as a means to return capital to shareholders.
Capital gain
The profit made between the buying and selling price of assets, such as shares or property.
Capital Gains Tax
A charge to capital gains tax (CGT) may arise when you dispose of an asset which is worth more than it was when you acquired it. If you make a loss this can reduce any CGT you have to pay on sales of other assets. You are liable to pay tax on the total chargeable gains arising on disposals you make in any one tax year (after various reliefs have been given) in excess of the annual exemption limit.
Capital growth
The rise in the value of an initial investment.
CDMA
Code Division Multiple Access - a generic term for a type of digital mobile telephony technology which supports a number of mobile connections. This technique is used by some alternative systems to GSM. See also W-CDMA.
Churn
Customers disconnecting from mobile telephone networks. The 'churn rate' is the number of customers who disconnect from a network in a given period, divided by the average number of customers in that same period.
Close period
The period (normally about two months) prior to the company's release of its Interim or Preliminary results, during which the directors are not permitted to buy or sell the company's shares.
Contract Customer
A subscriber with whom Vodafone has a formal contractual agreement with the customer billed on a monthly basis for access fees and any additional airtime or data used. Vodafone contract tariffs all have an amount of airtime included in the monthly charge. See Prepay Customer.
CREST
CREST is an electronic system for settling the sale and purchase of shares. Membership is voluntary and is typically used by institutions and by individual investors who have a large portfolio or who buy and sell shares frequently. It enables shareholders to hold and transfer their shareholdings in electronic form rather than on paper. Because CREST is voluntary, shareholders who wish to retain their certificates can do so. There are costs associated with holding shares through CREST. For further information on the basic principles of CREST please write to:
CRESTCo Limited
Trinity Tower
9 Thomas More Street
London
E1 9YN
England
CREST transfer form
The form signed by the seller of a share via a market transaction to authorise the removal of his/her name from the register of members and the substitution of the buyer's name.
Cum dividend (cum cap, cum rights, cum all (see ex dividend))
Purchase of share cum dividend means that the buyer of a share is entitled to the next dividend payment; cum rights means that the purchaser is entitled to shares from a forthcoming rights issue; cum cap means that the purchaser is entitled to a scrip issue; cum all means that the purchaser is entitled to all of these. Opposite of ex dividend.
Data products
Data products are those products and services that use the Vodafone network but are not voice. They include basic text messages (SMS), multimedia messaging (MMS), Internet browsing and downloads such as ring tones and games.
Debenture
Fixed interest securities issued by a company or government agency, usually secured on its assets, with a long-term redemption date between 10 and 40 years ahead.
Depreciation and Amortisation
Depreciation and Amortisation are means to spread the cost of fixed assets over the periods they are expected to benefit. Amortisation is the writing off of an intangible asset over the projected life of that asset. Depreciation is a measure of the cost of the benefits of a fixed asset that have been consumed during the period.
Dividend
The proportion of a company's profit that it pays to its shareholders, usually declared as a dividend per share. Vodafone dividends are usually paid twice a year: interim dividends based on half-year results and final dividends based on full-year results.
Dividend cover
The number of times a company could pay its most recent net dividend out of its net profit (profits after tax).
Dividend yield
The dividend paid by a company as a percentage of the share price.
Earnings
Profit available to ordinary shareholders, after all operating expenses (including goodwill, amortisation and exceptional items), interest charges, taxes, minority interests and preference dividends have been deducted.
Earnings per share (EPS)
Earnings divided by the number of ordinary shares issued. EPS are a guide to how well a company is performing.
EBITDA
Earnings Before Interest, Tax, Depreciation and Amortisation.
EDGE
Enhanced Data rate for GSM Evolution - a development of GSM which allows for the faster delivery of advance mobile services such as full multimedia messaging.
EGM
Extraordinary General Meeting. Any meeting of a company's shareholders other than its AGM. EGMs are held to enable shareholders to approve special transactions such as large acquisitions, mergers and disposals.
Equity
The voting capital in the company, represented by the ordinary shares.
Exceptional items
Material (or large) costs or profits that need to be disclosed by virtue of their size or incidence if the financial statements are to give a true and fair view.
Ex dividend date
To receive the dividend you must own the shares before it goes ex dividend. For a period before the dividend is paid, usually about six weeks, the share price is quoted as 'ex dividend' or 'xd'. If you sell your shares in this period you will still be entitled to the dividend payment, but the buyer will not. The ex dividend date is usually a few days before the Record Date.
Ex dividend (ex rights, ex cap, ex all)
Purchase of a share ex dividend (xd) means that the buyer of a share is not entitled to the next dividend payment; ex rights means that the purchaser is not entitled to shares from a forthcoming rights issue; ex cap means that the purchaser is not entitled to a scrip issue; ex all means not entitled to any of these. Opposite of cum dividend.
Execution only
A service provided to a customer who wishes to buy or sell shares but does not involve the provision of financial advice.
Final dividend
The dividend recommended by the directors for shareholders' approval at the AGM for payment after the meeting. Together with the interim dividend gives the total dividend for the year.
Financial Services Authority (FSA)
The Financial Services Authority (FSA) is an independent non-governmental body in the UK, given statutory powers by the Financial Services and Markets Act 2000. The FSA is the independent watchdog that regulates financial services and protect investors' rights. It is a private company limited by guarantee and funded by fees paid by those it regulates.
Financial year
A company's accounting period, also known as the company's fiscal year. Vodafone's financial year is from 1 April to 31 March.
Fixed interest
A guaranteed rate of interest paid for the term of an investment usually associated with preference shares, bonds or debentures.
Fixed line
Telecommunications lines that are not wirefree but connected to physical points.
2G
Second generation technology. A term used to describe the digital cellular networks such as GSM which were introduced as a replacement for analogue cellular networks.
2.5G
Technological upgrades to standard GSM mobile networks which increase data transmission speeds and efficiency. The term encompasses HSCSD, GPRS and EDGE. Seen as an intermediate technology between 2G and 3G.
3G
Third generation (UMTS) technology using new data transmission standards and operating at a different part of the spectrum range to second generation networks. Licences have been issued by European governments to cover the UMTS spectrum around the 2GHz level.
Goodwill
An intangible asset which provides a competitive advantage, such as a strong brand, reputation, patents, royalties and trademarks. In an acquisition, goodwill appears on the balance sheet of the acquirer and is the amount by which the purchase price exceeds the aggregate of the fair values of the identifiable assets and liabilities acquired.
GPRS
General Packet Radio Service. An enhancement to the GSM mobile communications system that supports data packets. It enables a continuous flow of data packets over the system for applications that support web browsing and file transfer for example. With GPRS, your phone is always connected to WAP and other data services, so you don't need to dial in each time you want to access data services.
Gross
Amount before tax or other items have been deducted. After the deductions, the amount is described as 'net'.
GSM
Global System for Mobile Communication - an open, non-proprietary digital wireless technology platform.
Hertz (Hz)
Measure of frequency or cycles per second. Usually measured in millions as Megahertz (MHz) or in billions as Gigahertz (GHz).
HTML
Hypertext Mark-up Language - the language used to create web documents.
HSCSD
High Speed Circuit Switched Data. Circuit-switched wireless data transmission for mobile users at data rates of 28.8 Kbytes per second or higher, compared to a maximum of only 9.6 Kbytes per second using traditional GSM networks.
IEEE
The Institute of Electrical and Electronics Engineers is a US based organisation providing expertise across a wide range of engineering fields. One of its main areas of activity is the development of industry standards.
Inheritance tax
A tax paid in the UK on wealth (money, property, etc.) passed from one person to another during their lifetime or as part of their estate after death.
Institutional investor or shareholder
Large financial organisations, such as a bank, insurance company, pension fund or investment trust that hold stock and shares in other companies.
Interim dividend
A dividend declared part way through a company's financial year, based on the half year results.
Interim results
Unaudited figures for the first six months trading of any financial year that provide an indication of the company's trading and profit performance since the last full year accounting period. Vodafone usually announces its interim results in November.
Liabilities
Liabilities are obligations to pay or convey assets or provide other economic benefits in the future, based on past transactions. Liabilities are divided into current and long-term. Current liabilities are those obligations that will be satisfied within one year; long-term liabilities are those expected to be satisfied after one year of the balance sheet date.
Liquidity
The proportion of cash or cash equivalents in a company's assets. Sometimes used as a measure of the near term financial health of a company. Also used as a measure of the volume of shares being traded, which may affect the ability of buyers or sellers to build/unwind large holdings without a substantial impact on the price.
Listing Rules
The listing rules which are made by competent authority for the purposes of Part VI of the Financial Services and Markets Act 2000. With effect from 1 May 2000, the Listing Rules of the LSE (the old Yellow Book) were replaced in their entirety by the FSA Listing Rules (The Purple Book).
London Stock Exchange (LSE)
Technically the International Stock Exchange of the United Kingdom and Ireland. Can trace its roots back to trading activities at New Jonathan's Coffee House in the 18th Century.
Market capitalisation
Value at current market prices of a company's equity capital. It is calculated by multiplying the current share price by the number of shares outstanding.
Market price
The price at which a share can currently be traded in the market.
Merger
The joining of two companies.
Minority interests
The rights of outside shareholders of subsidiary companies of the group to a proportion of the group's profits or assets.
MMS
Multimedia Messaging Service (MMS) is a 'store and forward' messaging service which allows mobile subscribers to exchange multimedia messages with other mobile subscribers. MMS supports the transmission of additional media types: text, picture, audio, video or a combination of these.
Multi-access portal
A service that provides Web access from a range of different devices such as mobile, fixed and cable television devices.
Net
The amount that is left after tax or other items has been deducted from the 'gross' amount.
Net assets
The assets that remain at a given point in time after all the liabilities have been deducted.
New York Stock Exchange (NYSE)
The NYSE is the leading self-regulatory organisation in the U.S. securities industry. It traces its origins to a founding agreement in 1792. The NYSE registered as a national securities exchange with the U.S. Securities and Exchange Commission on October 1, 1934. One of the most significant reasons non-U.S. companies list on the NYSE is to expand their reach worldwide by obtaining greater visibility and improved access to international investors.
OFTEL
Office of Telecommunications, the UK regulator for the telecommunications industry.
Operating profit
The difference between turnover (or revenue) and total operating expenses, but before interest and taxation have been taken into account.
Option
The right (without an obligation) to buy or sell securities at a given price (exercise or strike price) before a given date (expiry date).
Ordinary Shares
Security that confers ownership in a company. They entitle the owner to a distribution of the profits (known as dividends) and the right to vote at company meetings. Ordinary shares rank after preference shares and debentures in priority for the payment of dividends or in a winding up.
PDA
Personal Digital Assistant - devices such as personal organisers (e.g. Palm and iPAQ).
Portal
A gateway or entry point to the Internet incorporating significant functionality such as search engines, news alerts and personal preferences that enable users to access the data they want from the Web from a central point.
Preference shares
Shares with a fixed dividend. The holders of preference shares are entitled to their dividend before ordinary shareholders and rank above ordinary shareholders should the company be wound up. Preference shares are share capital but not equity share capital. They do not have priority over debentures, loan stocks and company creditors.
Preliminary results announcement
The first release of a company's unaudited full year results for the financial year to the Stock Exchange, declared as a prelude to the publication of the annual report and accounts.
Prepay customer
A customer who does not have a written contract and buys his/her talk time in advance, by purchasing vouchers from retail outlets for example. See Contract Customer.
Pre-tax profit (or loss)
All profit (or loss) before tax in a period.
Price/earnings ratio (P/E ratio)
Share price divided by earnings per share over the latest 12-month period. The result offers investors a way of comparing companies' prospects - a high P/E ratio suggests a company has strong growth potential.
Profit and loss account
An account compiled at the end of the financial year showing that year's turnover and expense items.
Proportionate customers
The number of customers in the Vodafone group related to the percentage ownership of Vodafone in the individual operators. For example, if Vodafone has an 80% stake in an operator then the proportionate customers attributed to Vodafone from that operator would be 80% of its total customers.
Proxy form
A form by which a shareholder votes without needing to attend an annual or extraordinary general meeting by appointing someone else to vote on his/her behalf.
Public limited company (plc/PLC/Plc)
A company whose shares are capable of being offered to members of the public. It must have at least £50,000 in authorised share capital with a minimum of £12,500 paid up. Not all Plc's are listed and not all listed or quoted companies are Plc's.
Quote
If a company has a quote (or is 'quoted'), its shares can be bought and sold on a stock market. Means the same as listed.
Real-time quote
This is the actual price of an investment at that moment. However, most share prices displayed on websites are delayed by at least 15-20 minutes.
Record date
The date determined by a company's Board of Directors on which an investor must be recorded as an owner of shares to qualify for a forthcoming dividend or share distribution.
Registrar (or Share Registrar or Transfer Agent)
Organisation that keeps a record of individual shareholders and information such as dividend payment dates. The registrars for Vodafone are (for ordinary shareholders) Computershare Investor Services PLC and (for ADS holders) The Bank of New York.
Regulatory Information Service (RIS)
Since 15th April 2002 listed companies have had a choice of RIS through which they can release their regulatory announcements. This choice brings an end to the LSE's monopoly of release of such information through its RNS.
The RNS has continued to operate but has faced competition from other Primary Information Providers (PIPs) who have been approved by the FSA to act as regulatory information services for the distribution of regulatory information on behalf of listed companies. The PIPs currently include the RNS provided by London Stock Exchange, Business Wire Regulatory Disclosure provided by Business Wire, PR Newswire Disclose provided by PR Newswire, Newslink Financial provided by Newslink and PimsWire provided by Pims, FirstSight and Hugin Announce.
Regulatory news service (RNS)
The regulatory information service which was and still is operated by the LSE for regulatory announcements, was not part of the listing authority function and remained with the LSE post transfer of the competent authority for listing.
Retained profit
The remaining profit retained by the company after all deductions have been made, including tax, interest, minority interests and dividends.
Rights issue
Offer of shares to existing shareholders (usually in proportion to their existing shareholdings) to raise money.
Roaming
The facility for a subscriber to use his/ her mobile for both outgoing and incoming calls on any other network, in the same or another country, that has entered into a commercial roaming agreement with the subscriber's home network.
Scrip issue
An issue of shares to existing shareholders that does not affect the value of the shareholders interest or raise any money for the company; it is a means for a company to transfer money from reserves into permanent capital. Can also be known as a capitalisation issue or bonus issue.
SEAQ
Stock Exchange Automated Quotation system. The computer trading system for UK stocks and shares used as a price reference point for telephone execution between market participants and registered market makers.
Securities
General term for certificates or bearer warrants representing ownership of stock, shares or bonds issued by companies to investors.
Securities and Exchange Commission (SEC)
Statutory body responsible for the regulation of the securities industry and investor protection in the United States.
SETS
Stock Exchange Electronic Trading Service - an electronic limit order book used to trade blue chip stocks, including all FTSE-100 stocks on the London Stock Exchange.
Share
Common term for equity.
Share capital
The total amount of shares issued, the most common of which are ordinary shares.
Share Certificate
A certificate conferring ownership rights in a company.
Share option
See Option.
Short code access
Codes to enable users to access services such as answerphones without having to dial a full number.
SMS or text messaging
Short Message Service. A service which enables mobile telephone users to send and receive text messages on their handsets.
Spectrum
A specific frequency range.
Stamp duty
The UK tax on the buying of shares and other assets, such as houses.
Stockbroker
Person or firm that arranges the sale or purchase of shares or other securities.
Stock Exchange Official List
Historically companies on the Official List have been vetted by the London Stock Exchange quotations department and are subject to the listing rules in the Listing Rules of the old Yellow Book. The first issues date back to 1698. Following the transfer of the competent authority for listing to the FSA, being listed on the LSE no longer means the same as being 'officially listed'. Instead, there is a distinction between being admitted to listing and admitted to trading. As a result of this separation, issuers who want their securities admitted to the LSE's markets for listed securities must follow a two-stage process:
- The company's securities need to be admitted to the Official List by the UKLA.
- The company's securities need to be admitted to trading by the LSE.
Only when both of these processes have been completed will the securities be officially listed on the LSE.
Stock transfer form
The form signed by the seller of a share authorising the company to remove his/her name from the register of members and substitute that of the buyer. Normally used for off-market transactions.
TDMA
Time Division Multiple Access - a generic term for a type of digital mobile telephony technology including GSM.
Total Shareholder Return (TSR)
The measure of the returns that a company has provided for its shareholders - the product of the share price movements plus dividends reinvested over a stated period. It is an indicator of a company's overall performance.
Total turnover
Products and services sold to customers by a company during a specified period. For Vodafone, our total turnover includes the turnover of overseas operating companies controlled by the group.
UMTS
Universal Mobile Telecommunications System. Also known as 3G, the third generation digital standard for mobile telecommunications.
United Kingdom Listing Authority (UKLA)
On 1st May 2000, the LSE function as the competent authority for listing was transferred to the UKLA. The UKLA operates as part of the FSA and issues the Listing Rules that must be followed by companies that are listed on the London Stock Exchange.
Volatility
In relation to the share price, used to indicate the relative amount or percentage by which it rises and falls during a period of time.
Volume
In relation to shares, the total number of traded (bought and sold) in a given period.
WAP
Wireless Application Protocol. A global, open standard for providing mobile phones, pagers and other handheld devices with secure access to e-mail and simple webpages. WAP allows you to access information through your phone.
W-CDMA
Wideband CDMA - a radio interface technology which has been developed as an open standard in the 3GPP standards development organisation.
Wireless
Communications that are not dependent on a fixed line connection.
Wi-Fi
This refers to WLAN products built to the IEEE 802.11 standard, which have been certified for interoperability by the Wi-Fi Alliance.
Withholding tax
Tax deducted in some countries from dividends paid to non-residents of those countries. Individuals may be able to claim it back under certain conditions.
WLAN
Wireless Local Area Network. A subscriber can connect to a local area network of computers, for example, via a wireless radio connection. The IEEE 802.11 standards are examples of WLAN systems.
WML
Wireless Mark-up Language - the language behind WAP.