Publishing Details
HARRIMAN HOUSE LTD
3A Penns Road
Petersfield
Hampshire
GU32 2EW
GREAT BRITAIN
Tel: +44 (0)1730 233870
Fax: +44 (0)1730 233880
Email: [email protected]
Website: www.harriman-house.com
First published in Great Britain in 2010
Copyright © Harriman House Ltd
The right of Rodney Hobson to be identified as Author has been asserted in accordance with the Copyright, Design and Patents Act 1988.
ISBN: 978-0-85719-132-8
British Library Cataloguing in Publication Data
A CIP catalogue record for this book can be obtained from the British Library.
All rights reserved; no part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without the prior written permission of the Publisher. This book may not be lent, resold, hired out or otherwise disposed of by way of trade in any form of binding or cover other than that in which it is published without the prior written consent of the Publisher.
Photo of Rodney Hobson by Jamil Shehadeh
No responsibility for loss occasioned to any person or corporate body acting or refraining to act as a result of reading material in this book can be accepted by the Publisher or by the Author.
Disclaimer
All the many examples quoted in this book are genuine company announcements issued through the London Stock Exchange. Most have been edited down to pick out the salient points, but in no cases has the wording or the message behind the announcements been changed.
However, they represent the situation at each company at a given moment in time. Circumstances change and issues raised at one juncture may be resolved or superseded. Similarly, new challenges arise over time.
Therefore, nothing in this book constitutes a recommendation to buy or sell shares in any specific company or sector. Investors must exercise their own judgement.
Readers interested in finding out more about a particular company should read the latest stock market announcements. This book explains how to find them and understand them.
About The Author
Rodney Hobson is an experienced financial journalist who has held senior editorial positions with publications in the UK and Asia. Among posts he has held are News Editor for the Business section of The Times, Editor of Shares magazine, Business Editor of the Singapore Monitor and Deputy Business Editor of the Far Eastern Economic Review.
He has also contributed to the City pages of the Daily Mail, The Independent and The Independent on Sunday.
Rodney was at the forefront in the setting up of financial websites, firstly as Head of News for the launch of Citywire and more recently as Editor of Hemscott, for whom he continues to write a weekly investment email. He has appeared on BBC TV and radio and on CNBC, as well as appearing as a guest speaker at conferences such as the World Money Show.
He is the author of Shares Made Simple, the authoritative beginner’s guide to the stock market, and Small Companies, Big Profits, a guide to investing in smaller quoted companies. Both are published by Harriman House.
Rodney is registered as a Representative with the Financial Services Authority. He is married with one daughter.
Preface
What the book covers
This book covers announcements issued through the London Stock Exchange by companies with a full stock market listing or whose shares are quoted on the Alternative Investment Market, which is also part of the LSE.
Almost all these announcements, such as annual results, share buying by directors, profit warnings and updates on current trading are required under stock exchange rules or European Union directives. Foreign-based companies that have chosen to have their shares traded in London must abide by the same rules.
While this book is specifically targeted at the UK market, the general principles discussed apply also to overseas stock markets. However, the legal requirements covering what companies must tell shareholders may vary from country to country.
Structure of the book
The book is divided into three sections that help investors to progress easily and logically in understanding what companies tell them.
Section A looks at what the rules are, why they have been imposed and how they have evolved to give private investors a much fairer opportunity to compete with professional investors.
Section B lists and explains the routine statements that all companies issue on a regular basis: trading statements and profit figures. It tells investors what to look for, explains company jargon and shows how to read between the lines when all is not as well as it seems.
Section C considers important announcements, such as profit warnings and directors’ share dealings that are issued on an irregular basis as they arise. It explains which announcements are likely to affect the share price and why.
The book is packed full of actual stock market announcements illustrating each point. While these have had to be edited down for reasons of space, the wording is as it appeared and the sense of each announcement has been carefully retained.
Who this book is for
All those baffled shareholders who throw communications from their companies straight into the bin unread desperately need this book. So, too, do investors who read company pronouncements but naively take everything they see at face value.
While this book assumes some basic knowledge of investing and how the stock market works, rank beginners and less sophisticated investors, as well as those who want to widen their knowledge, will benefit from this comprehensive guide to the information that is available, without charge, to private investors on an equal footing with City professionals.
The book is also an invaluable tool for students on business courses and anyone who needs to professionally know about the stock market, such as financial advisers, public relations departments and consultants, company solicitors and stockbrokers. In short, anyone who wants or needs to know about communication between companies and the investment world, including what information companies must release and when, will benefit from reading this book.
In particular, those who have read my beginner’s guide to the stock market, Shares Made Simple, will progress naturally to this exposition of what companies tell the public.
Supporting websites
The accompanying website for the book can be found at:
www.harriman-house.com/understandingcompanynews
Rodney Hobson’s personal website is www.rodneyhobson.co.uk.
Introduction
The figures from Arm Holdings looked disappointing: sales down 8%, profits down 2%. Sure enough, the shares were 1% lower within an hour of trading after the results