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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.