Glossary

Adjusted net earnings
This is a measure which is not strictly an accounting term and is used to indicate the operational and financial performance of a company. For Vivendi, adjusted net earnings exclude most non-operational and non-recurring items.

Dividend
This is the portion of a company’s profits that is distributed to shareholders.

Earnings Before Interest, Taxes and Amortization (EBITA)
Vivendi uses EBITA instead of operating income because the former offers a better measurement of the operational performance of the group’s business units. The difference between EBITA and operating income lies in the amortization of intangible assets connected to acquisitions.

Euroclear
Euroclear is a worldwide system of settlement and delivery for international and domestic stock, bond and mutual fund transactions. Euroclear serves as the central depository for Belgian, British, Dutch, French and Irish securities.

Euronext Paris
This company establishes the rules for the French market, announces securities listings, decides on membership, manages the computerized quotation systems, and ensures that negotiations and market information are made public.

French Financial Markets Authority (Autorité des marchés financiers – AMF) www.amf-france.org
The AMF is an independent French public institution whose role is to ensure:

  • the protection of savings invested in financial instruments and any other investment resulting in a public equity offering,
  • investor information,
  • the proper operation of the financial markets.

Indexes
Stock market indexes have become fundamental in portfolio management. They may be global, national, by sector or international in scope. They are representative of:

  • a market: the CAC 40 index reflects the trends of the largest French companies, or
  • a particular sector of activity: the automotive sector index, for example, includes only automobile manufacturers and equipment suppliers.

CAC 40
This is the flagship index of the Paris stock exchange and the main indicator of French stock movements.
The CAC 40 is a weighted average of the share prices of 40 of the 100 largest market capitalizations on the Paris exchange.

Dow Jones Euro Stoxx 50
A market index of 50 industrial, commercial and financial securities in the euro zone.

Dow Jones Euro Stoxx Media
A stock index composed of 18 media companies in the euro zone.

ISIN code (International Securities Identification Number)
This is a specific identification code for each financial instrument (stock, bond, mutual fund, etc.) used when it is traded on the market.

Market capitalization
Market capitalization is the value of a company on the stock market.
It is calculated by multiplying the number of shares that make up the company’s capital stock by the current share price on the stock market.

Net earnings
Net earnings are the balance remaining to a company after taking into account various types of income and revenues and subtracting various expenses.
Net earnings may be entirely or partly distributed to shareholders, in the form of dividends, or held in reserves on a company’s balance sheet.

Order
To buy shares, it is necessary to send one’s broker or other financial intermediary an order that includes:
the name of the stock, its identification code (ISIN code), the type of transaction (buy/sell), the number of units, the duration of the order (day, month, etc.), the type of order (limit order, market order, etc.), and (if desired) the SRD status (see definition below).
The main types of orders that can be sent through Euronext Paris for buying stocks are the following:

  • Limit orders are made for a minimum sell price or a maximum buy price. They allow one to control the price of the trade, but the order may be executed only partially.
  • Market orders place no limit on price of the trade, but they are executed in full. Market orders take priority over all other orders. When the market opens, they are executed at the opening price. During the trading session, they rise or fall to any price necessary until they are fully executed.
  • Best limit orders are given without a price fixed by the trader, who has no control over the execution price. When a best limit order arrives on the market, the central computer changes it into a limit order for either the opening price (when the market opens) or the best offer available (during the session).

Per share value
The par value (or nominal value) of a share is the portion of the capital stock represented by that share, or the total capital stock divided by the number of shares in circulation.

Price to Earnings Ratio (P/E Ratio)
The P/E ratio is the ratio of a share’s price to the earnings per share of the company. It indicates the number of years the investor needs to recover the original investment through the profits generated by the company.

Securities exchange
Securities exchanges, or financial markets, are the places where financial products are traded. The best-known such products are stocks and bonds.

Share
A share is a fraction of a company’s capital stock. Since 1984, shares are dematerialized and take the form of a book entry. A share gives rights to its holder, including the right to vote, the right to information and the right to a dividend (if the company distributes a dividend).

Share price
Once a company is listed on the stock market, its share is subject to the prices proposed by buyers and sellers. The resulting equilibrium price represents the value of a share at a given moment.

Fractional rights
Part of the shares that cannot be distributed during a bonus share allotment operation if the number of shares owned by the shareholder does not match the parity of the allotment operation. For example, in a bonus allocation of 1 new share for 30 old shares, a shareholder owning 35 shares will be allotted 1 new share and 5 fractional rights. 

Shareholders’ Meeting
There are several types of Shareholders’ Meetings:

  • The Ordinary Shareholders’ Meeting , which takes place at least once per year. It votes on resolutions concerning the company’s financial statements, dividend distribution, the appointment or renewal of directors, the presentation of the annual report, etc.
  • An Extraordinary Shareholders’ Meeting is held so that the company’s shareholders can express their views on every change in the by-laws (capital increases, change of name…).
  • The company can summon its shareholders to a Combined Shareholders’ Meeting by submitting for their approval resolutions appropriate to an Ordinary Shareholders’ Meeting, along with others that are suited to an Extraordinary Shareholders’ Meeting.

SRD (Service à Règlement Différé- deferred settlement service) : Securities listed on Euronext Paris are traded for cash.
Brokers can, however, allow the shareholder to postpone settlement of the transaction to the end of the trading month. This service is called the deferred settlement service (service à règlement différé – SRD) and applies only to instruments on Euronext Paris’ list of eligible securities.
Note: This service is not authorized for personal stock savings plan transactions. Moreover, a commission is charged at the discretion of the broker involved.

Trade notification
This is a slip returned by the broker to the client to verify that a buy or sell order has been executed. This trade notification contains information on the type of order executed, its amount, the date, and the costs involved (brokerage commission, taxes, etc.).

Transaction volume
The number of securities exchanged during a given period.