Glossary

Share capital

All the different types of shares issued by the company

Capital shares

Shares that get the left over assets on a winding up but do not get a dividend.

Core capital or Tier 1 capital is the reserves that a bank has to back its business activities. It composed of disclosed reserves and common stock/ordinary shares. It can also include non-cumulative, non-redeemable preferred stock. As well as core capital, banks also use instruments to accumulate Tier 1 capital, such as preference shares and CoCos. […]

ZDP cover ratio / Zero Dividend Preference share cover ratio

The ZDP cover ratio / Zero Dividend Preference share cover ratio is an indicator of the likelihood of a split capital company being able to repay its zero dividend preference shares (ZDPs) when they fall due. The method of calculation varies from firm to firm but, for the purposes of producing our monthly sheet on […]

Capital return

The capital return reflects the return generated by the move in the share price or net asset value excluding dividends or income. Performance is often quotes on a “Total Return” basis, where the dividend is included with the capital return.

Split capital investment companies

Investment companies with more than one type of share capital also called a split capital investment trust. Each type of share capital will have a different share. For example, all the dividends of an investment trust may be paid by the Income shares.

Market capitalisation

The value of all the shares in issue of a company, calculated by multiplying the share price by the number of shares in issue.

Treasury shares

Shares bought back by a company and held on its balance sheet rather than being cancelled. Treasury shares are not included in calculations of net asset value and market capitalisation.

Concert party

The Takeover Code has a concept called ‘acting in concert’. Persons acting in concert form a ‘concert party’. The technical definition (from the Takeover Panel’s website) is given below, but basically it means people or businesses that are acting together to control a company or block a takeover attempt. Acting in concert This definition has […]

American Depositary Receipt (ADR)

The term American depositary receipt (ADR) refers to a negotiable certificate issued by a U.S. depositary bank representing a specified number of shares—usually one share—of a foreign company’s stock. The ADR trades on U.S. stock markets as any domestic shares would. ADRs offer U.S. investors a way to purchase stock in overseas companies that would not otherwise be […]

Growth investing

Growth investing – Investing in companies that are growing by more than the market appreciates A growth company is anticipated to grow at a rate equal to or greater than the average for the market. These companies generally pay little or no dividends, as the companies usually want to reinvest any earnings in order to accelerate […]

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Glossary

Share capital