Glossary

Allocation

If in a public offering demand is higher than the supply of newly issued shares, what means that not all subscriptions can be completely fulfilled, subscriptions will be shortened and investors will be informed about their final share allocations after the end of the subscription period.

Ad hoc publicity

Obligation of issuers of securities to immediately report and publish any inside information that directly affects him.The regulations pertaining to the disclosure requirement are contained in article 15 of the German Securities Trading Act, which states that issuers of securities admitted to the Regulated Market or Unofficial Regulated Market on a German stock exchange are obliged to report all inside information that concerns financial instruments issued by the emitter. The obligation to release such inside information without delay is intended to avoid the abuse of inside information and enhance market transparency. A violation of the disclosure requirement is punishable with a fine.

Annual General Meetings (AGM)

The AGM is the institution where shareholders can exercise their rights from their shareholding. An AGM takes place regularly and at least once a year. The AGM is inter alia responsible for: the appointment and dismissal of the members of the Supervisory Board (but not of the employee representatives); decides on the use of profits; discharge of Management Board and Supervisory Board; amendments of the company's statutes; capital increases, and actions that will significantly change the organizational structure of the company.

Balance sheet

A balance sheet lists the total assets as well as the equity and debt (liabilities) as of the balance sheet date. A public limited company publishes a balance sheet at the end of the fiscal year and thus outlines its financial circumstances.

Banking Syndicate (Global Coordinators)

For the purpose of doing a going public several banks join forces in order to form a consortium. The banks involved normally form a syndicate up to the time at which the IPO has been completed. Global Coordinators lead this consortium.

Bearer share

Bearer shares are not registered in ones name, but grant the possessor of the share all shareholder rights. Therefore they can be bought or sold without any formal process.

Book-building

Procedure for determining the offering price. By choosing this method an issue price that is determined by supply and demand is ensured. The book-building takes place in several steps. First a price range is determined and published. Purchase requests can be made only within this range. During the book-building period investors submit their purchase requests specifying how many shares they would like to buy and at which price. All subscriptions are collected and provide a concrete basis for determining the issue price.

Cash flow

Indicator of a company's liquidity. Overall liquidity consists of the sums of operativing cash flow, cash flow resulting from financing activities and cash flow from investment activities. The operativing cash flow is a good indicator of the company's ability to invest, repay debt and to pay dividends.

Dividend

The dividend is the proportion of the profit paid out for each share owned. The Annual General Meeting decides on the amount of dividend.

Free float

The float refers to shares that are not owned by major shareholders, and can therefore be acquired and traded by the general public. As a rule, the larger the free float, the easier it is for investors to buy and sell the stock. Since June 2002, the stocks in Deutsche Börse's share indices have been weighted according to trading volume and market capitalization based on the number of shares in free float.

Greenshoe

Green shoe is an option for the consortium to issue additional shares if, in conjunction with a new placement, demand exceeds supply: if a new issue is oversubscribed, the green shoe can be used to satisfy excess demand or to stabilize the trading price. The issuing company gives the lead bank an option for more shares under the original terms. In this way, the bank can ultimately allocate more shares than originally planned. The issuer and syndicate banks determine the green shoe amount before the IPO. The term greenshoe comes from the US company Green Shoe Manufacturing, which was the first to utilize the method.

Insider information

Insider information is defined as any concrete information about any circumstances or events in connection with an issuer of insider securities as or with insider securities themselves such as shares as well as options or trading in futures in connection with such shares that are not known to the public and that could, in case of becoming publically known, significantly influence the stock exchange price or the market value of such insider securities.

Institutional investor

Institutional investors are capital collectors. Among them are banks, insurers, and asset management companies, but also companies investing their retirement contributions in securities.

Investor Relations

Department in charge of communication with shareholders, investors, analysts and financial media. The objective is to provide information that is necessary to evaluate the development of the company.

IPO

Abbreviation for Initial Public Offering.Expression used to describe the process during which a company offers its shares for the first time to the public on the regulated capital market.

ISIN Number

The International Securities Identification Number (ISIN) serves to clearly identify securities on a world-wide basis and has in the meantime replaced the national securities identification number (WKN).

Issue

Issue of securities by means of a public offer; usually happens as a result of a group of financial institutions acting as mediators (banking syndicate).

Issuer

Company or public body issuing securities.

Managing Board

The management board is responsible for the management of the company and its representation. It is appointed by the Supervisory Board for a maximum of 5 years. Members may be reappointed or their term may be extended for a maximum of five years in each case.

No-par value share

No-par value shares have no nominal value. All issued no-par value shares must represent the same portion ot the equity of a publicly listed company.

Ordinary Share

Share carrying all standard rights (please refer to “share in this glossary),  especially voting rights.

Preference Shares

Shares that normally do not carry voting rights but are endowed with additional rights such as higher or preferential dividend pay-outs.

Price Range

In an issuance the offer price is not determined in advance, but a range is given within which investors interested in a subscription can make their purchase offers.

Prime Standard

The Prime Standard is an EU-regulated segment and the listing segment for companies that target not only German investors, but also international investors.

In addition to the requirements for admission in the General Standard, which imposes the statutory requirements of the regulated market, admission to Prime Standard requires the fulfillment of further transparency criteria. The most important transparency criteria are:

• quarterly reports in German and English language;
• Publication of a company calendar in German and English language;
• at least one analyst conference per year;
• ad-hoc messages additionally in English.

Being listed in Prime Standard is a prerequisite for a company to be included in the selection indices (DAX, MDAX, SDAX, TecDAX) of FWB Frankfurter Wertpapierbörse (the Frankfurt Stock Exchange).

Registered share

A type of stock registered on the name of the owner, who is also recorded in the stock register of the company. The stock register enables the company to gain a better understanding of its shareholder structure.

Regulated Market

The regulated market is a market segment with strict entry requirements and follow-up requirements.

As of November 1, 2007, the subdivision of the Official and the Regulated Markets no longer exists. Securities entered into these markets on or since this date are now listed only on the regulated market.The admission and follow-up requirements of the former Official Market (Amtlicher Markt) apply for the Regulated Market. This also applies to the entry requirements, which previously differed in the two markets: The company must have existed for at least three years; the estimated market value of the shares, or, in the case that an estimate cannot be made, the capital of the company itself must be at least 1,25 million Euros, 25 percent of which must be free float, whereas some exceptions are allowed by the listing act.

The Regulated Market is an organized market in accordance with article 2, paragraph 5 of the Securities Trading Act. This means that the admission and follow-up requirements for the participants and the organization of trading are legally regulated.

Before being admitted to trading, issuers are required to undergo an approval process as stipulated by public law: Together with at least one bank, a financial service institution, or a company that does business under the provisions of article 53, paragraph 1, no. 1, or article 53b, paragraph 1, no. 1 of the Banking Act, prospective participants must submit an application to the Admissions Board of the respective exchange. In addition to the admission requirements, issuers on the Frankfurt Stock Exchange opt for a transparency standard. Issuers in the regulated market can choose either the general or the prime standard. Issuers in the open market choose the admission standard. This choice determines the follow-up requirements.

Roadshow

In the context of an IPO, institutional investors in major financial centers will want to meet the management of the company. The company will introduce itself to the international investment community by presenting its strategy, goals and particular strengths. The roadshow is an important investor relations measure to stimulate interest in the company and help marketing the share.

Share

Security representing a part of a company's overall equity capital. German stock corporation law differentiates between nominal value shares and no-par value shares. Owning a share entitles the shareholder among others to participate in Annual General Meetings; to vote at Annual General Meetings; to receive dividends, and to subscribe for "new" shares in case of a capital increase. Some of these rights can be limited or excluded under certain circumstances.

Subscription

When subscribing for shares the investor commits himself to buy a certain amount of newly issued securities and to pay the issue price.

Subscription period

Within the subscription period, investors can subscribe for new shares. This is done by declaring one's commitment to purchase a determined amount of shares.

Supervisory Board

Mandatory control body which controls the Managing Board, regulated in the German Stock Corporation Act. The members of the Supervisory Board are elected by the Annual General Meeting, if they are not sent into the Supervisory Board or voted by the employees under the German Co-determination Act. Members can only be elected for a time period ending at the Annual General Meeting that decides on the discharge of the respective Supervisory Board member in the fourth year after the start of the mandate.The most important functions of the Supervisory Board are the appointment and dismissal of the Managing Board as well as the control of its management.

Voting right

The shareholder is entitled to vote resolutions that are proposed at the Annual General Meeting of the company he or she is a shareholder of. The weight of his or her vote depends on the amount of shares held