Some items, such as research or hedging, may not be relevant and need not be included.
As with the half yearly statement, directors must guarantee that the financial statement is drawn up to accepted accounting standards and give a true and fair view of the position the business is in.
Chapter 3. News Sources
The London Stock Exchange has gone from being a cosy little club meeting in coffee houses to a shares market attracting investors from across the globe, distributing information instantaneously worldwide.
It has taken over 300 years but the momentum has really come in the past 20 years, particularly with the growth of computer technology.
Originally, stock exchange members met to issue a list of stock and commodity prices, at first in the Royal Exchange, where other commodities were traded, and then in coffee houses (because the other traders could not stand the rowdy behaviour of stock brokers). This meant that such information as was available was shared by a small elite. Even they had limited knowledge of how well the companies they were trading in were faring.
The first stock exchange premises were established in 1761, so at least there was a place for information to be distributed, albeit to the favoured few. Formal membership followed in 1801, and in 1822 a rule book established the tentative beginnings of some semblance of fair play.
Subsequently news agencies such as Reuters and Extel distributed stock market news and prices for newspapers to pass on to the general public.
Effectively, however, instant information was the prerogative of City professionals until well after the Second World War. Company results and closing share prices were posted up on the bulletin board at the London Stock Exchange’s octangular premises in Old Broad Street.
The modern exchange
It was Big Bang, the deregulation of the stock market in 1986, that began the transformation. Although this was primarily a shake-up of the way that shares were traded, the sweeping away of restrictive practices spelt the beginning of the end for the cosy club trading at an advantage over everyone else.
As trading became electronic, so did the availability of information. At first the stock exchange insisted that all news should be published through the exchange. Computerisation and the dawn of the internet speeded up the spread of information but the exchange at first struggled to process the sheer volume of announcements issued at the start of trading each day.
Companies emailed their announcements to the fledgling financial news websites as well as to the exchange and sometimes results were published on these sites a few minutes before they were issued by the LSE.
The exchange quickly asserted its rights, but the thin end of the wedge was being driven ever deeper. Although the LSE constantly updated its technology, so that all announcements lodged overnight were issued simultaneously at 7am, the exchange eventually volunteered to give up its monopoly on information.
Official news distributors
While the overwhelming majority of announcements still come through the exchange’s Regulatory News Service (RNS), other news distributors approved by the Financial Services Authority are allowed to compete provided they make the information widely available to newspapers, news services such as the Press Association and to financial news websites.
These are known as regulatory information services. Several have met the FSA’s criteria but the two most widely used, apart from the RNS, are:
PRNewswire (part of United Business Media), and
Hugin (a European corporate communications specialist).
The initials PRN or HUG on an announcement indicates these two respectively as the source.
Other initials you may see are BZN (Business Wire, part of Warren Buffet’s Berkshire Hathaway empire) and CIS (Cision, an international public relations and marketing group).
The FSA has also approved news distribution service Marketwire and German-based information distributor EquityStory.
These alternative services set their own charges and can thus compete with RNS on price if they wish. They are equally efficient and reliable. So far they tend to be used by foreign companies with London listings.
Simultaneously, companies quoted on the stock exchange have come under increased pressure not to leak information to selected newspapers and favoured financial journalists. Remarkably well-informed speculation of impending news had a habit of appearing in the press, particularly the Sunday and Monday papers, to be followed by official confirmation as soon as the stock market reopened.
For the general public, this information is most readily available on financial news websites. It does not matter whether the news is issued through RNS or a rival, it appears on websites at the same moment that it is available to any market trader who subscribes to receive the information direct from the London Stock Exchange onto a trading office computer.
The Internet
The best source of company announcements is the internet, where a variety of websites carry the current day’s pronouncements with the most recent at the top, running down the list in chronological order.
In some cases, access to previous statements over several years is possible although you may have to pay for the privilege of seeing past announcements.
If you do not have internet access then, frankly, you are at a severe disadvantage in buying and selling shares. There is no other ready source of instant information for the private investor.
Shareholders are entitled to annual and half-yearly results from the company, plus details of any issues that they are required to vote on, such as a rights issue or a takeover, but paper-based information comes by second class post.
The great thing about the internet is that you can see announcements in full and at the same moment that City traders gain access to them. It is also possible to set up filters so that announcements from companies you specify ping up on your computer.
Websites for investors
InvestEgate
Possibly the best site, in terms of the amount of information available and easy access to it, is InvestEgate (website www.investegate.co.uk). Log on and you go straight to the current day’s announcements. A search facility on the same page allows you to call up past announcements and the archive goes back further than most alternative sites. You can see announcements for any day since 1 January 2002.
Hemscott
Hemscott (www.hemscott.com) has the current day’s announcements in full. You will have to register but the service is free on its company news section. However, you need to subscribe to its Premium service to gain access to past announcements.
One mixed blessing on Hemscott is that the list of announcements is liberally interspersed with Dow Jones reports, foreign exchange data and much else, including sport headlines! You get some comment and interpretation of the announcements, with the key points picked out for you.
This is not a complete substitute for you reading the announcements yourself and making your own judgements but it does help the less experienced investor to understand what companies are saying and to highlight those companies that may be of interest.
The Dow Jones reports provide useful interpretation of the day’s announcements but there will be several write-ups on each announcement so it can be quite a trawl to get what you want.
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