1. Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning

2. Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning ISSUE OF SHARES Ordinary shares/equity shares Nominal value, e.g. 50p, £1 Market value (quoted shares) Market capitalisation (market value x number of shares in issue)

3. Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning Equity shareholders entitled to vote at Annual General Meeting (AGM) Right to receive dividends Interim dividend Final dividend Dividend determined by directors

4. Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning Liability of shareholders is limited Ownership can be widely spread Ownership of large companies likely to be very widely spread Possibility of raising finance by obtaining a listing

5. Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning Trades in the shares of quoted companies, government bonds and company bonds (loan stock/debentures) London Stock Exchange (LSE) –Primary market –Secondary market

6. Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning The main market The Alternative Investment Market (AIM) –deals in shares of smaller/newer companies –investment in AIM companies may be potentially riskier

7. Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning Listed companies regulated by Financial Services Authority (FSA) Examples of listed company regulation: –Interim financial statements (half-yearly) –Inclusion of chairman’s statement in annual report –Notification to market of significant events

8. Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning FTSE = Financial Times Stock Exchange FTSE 100 = top 100 listed companies FTSE 250 = 250 companies next in size FTSE 350 = FTSE 100 + FTSE 250 FTSE All-Share = FTSE 100 + FTSE 250 + FTSE Small Cap FTSE Fledgling = Smaller companies below Small Cap size FTSE TechMark = separate market category for high tech companies

9. Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning Floating a company –Between 200 and 300 companies each year –Placing of shares, or –Offer for sale Prospectus required

10. Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning Other types of share issue New issues Rights issues Offer to existing shareholders Allows retention of same percentage shareholding: ownership is not diluted if rights are taken up

11. Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning ADVANTAGES OF LISTING Company raises more finance Increase profile and credibility Company founders can liquidate their shares Can increase pool of investors and value of the company

12. Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning DRAWBACKS OF LISTING Company in public spotlight May become target for takeover Increased pressure on management Expensive to obtain listing Additional regulation Fluctuations in share value

13. Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning Published financial statements The financial press Company websites containing e.g. –Information about company activities –Latest financial reports + archive –E-mail contact details –Constantly updated share price