Table Of Content“The Blog in general provides an excellent R “As a BA (Hons) Business Studies student it is
e
additional resource. It is an excellent complement “An excellent learning tool, bringing real-world examples to a very wide range of key useful to read the Financial Times. This can be
a
Reading and Understanding the
for someone studying independently, for example financial concepts, the book brings financial theory to life and makes the FT articles d very daunting, but the textbook Reading and
i
a distance-learning student. It would also be very accessible to everyone. Very clear explanation of what really happens in financial n Understanding the Financial Times helps to
g
useful for part-time students.” markets – an excellent practical introduction to corporate finance.” a FINANCIAL TIMES explain it and make it a lot more accessible.”
n
John Gannon, University of Northampton Eoghan Harrington, Investment Banker Micha Bailey, South East Essex College
d
U
n
“This book is an excellent choice for finance professionals or those who just enjoy reading d
“This book has a unique approach to delivering e “Reading and Understanding the Financial Times
the finance section of the paper to get an understanding and engage in some of the more r
key finance content for teaching purposes. It s gave me an easier way to make sense of those
topical and complex financial issues. The use of current events as a learning tool sets it t
strongly links ‘key terms’ in finance to real life, a articles, which were hard for me to understand.
Updated for 2010–2011
apart from other books and puts you in the middle of a discussion on financial theory.” n
which is especially helpful for students with d It shows a great organisation with realistic
a strong desire to know more about the ‘real’ Brian Shaw, Finance Director, LEGOLAND, California in examples and analysis to these cases. I will
g
corporate finance world and to pursue a career highly recommend this book to those who begin
t
in this area.” h their study in finance and business subjects! It’s
e
Dr Liang Han, University of Hull Updated for 2010–2011 really amazing!”
F
Biyu Chen, Edinburgh Napier University
I
Do you want to read and understand the FT with confidence? N
“If you have ever opened up the Financial Times Do you work in Finance? Do you want a career in Finance? A
and felt overwhelmed by all the jargon then “This book played an instrumental roll in
Then this is the book for you! N
this book is for you. Knowledge gleaned from landing me various placements at international
C
reading this book would also prove very useful Reading and Understanding the Financial Times analyses a selection of topical FT articles with law firms. I would definitely recommend this
to students applying for jobs in the city.” recurrent themes relating to some of the most important issues in the world of corporate finance, IA book to anyone who needs to learn about the
Jack Kinsella, Director, Hermes Technologies leaving you ready to conduct your own analysis the next time you read the FT for business or pleasure. corporate world. Fantastic!”
L
Limited Ramandeep Kaur, Oxford Law Graduate
T
NEW! Eight new articles ranging from Woolworth’s unsuccessful fight for survival I
M
“There are so many books covering the same to high profile companies issuing stark profit warnings, investors exercising their rights “As a BA Accounting and Finance student, this
topics in too much detail from an academic and the UK and US governments’ responses to the banking crisis. E book is amazing and has helped me revise for my
perspective. Reading and Understanding the NEW! Enhanced topic introductions explain in simple steps the financial theory S finance module with much ease. This book is ideal
Financial Times does not pretend that it is yet for any student who is currently studying Finance
behind the articles and analysis.
another book on corporate finance. Its different 2U or someone who works in Finance.”
approach and writing style – practical and NEW! Extended research sections provide more suggestions for further reading. 01pd Amy Shidu, London
hands on, woven around FT articles – is its NEW! The secret places inside the Financial Times. Unfold the section in the front 0a
–
principle strength.” of the book to reveal the importance of six key features in the FT. Understand what to 2te
0d
Martin Silberstein, Leeds Metropolitan University look for and unravel the mystery of the data once and for all. 1
1fo
r
Kevin’s blog
Visit www.pearsoned.co.uk/boakes for the author’s regularly updated blog with B
his take on the day’s business news as it unfolds. Download podcasts to listen to o
a
at your leisure.
k
e
s
Visit our website at
www.pearson-books.com
Cover image:
www.pearson-books.com Kevin Boakes
© Getty Images
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Think big
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Weworkwithleadingauthorstodevelopthe
strongesteducationalmaterialsinbusiness,
financeandmarketingbringingcutting-edge
thinkingandbestlearningpracticetoaglobalmarket.
Underarangeofwell-knownimprints,including
FinancialTimesPrenticeHall,wecrafthigh-quality
printandelectronicpublicationswhichhelpreaders
tounderstandandapplytheircontent,whetherstudying
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Tofindoutmoreaboutthecompleterangeofour
publishing,pleasevisitusontheWorldWideWebat:
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A01_BOAK1818_02_SE_FM.QXP:M00_BOAK1818_02_SE_C00 3/11/09 08:16 Page iii
Reading and Understanding the
FINANCIAL TIMES
Updated for 2010–2011
Kevin Boakes
A01_BOAK1818_02_SE_FM.QXP:M00_BOAK1818_02_SE_C00 3/11/09 08:16 Page iv
PearsonEducationLimited
EdinburghGate
Harlow
EssexCM202JE
England
andAssociatedCompaniesthroughouttheworld
VisitusontheWorldWideWebat:
www.pearsoned.co.uk
Firstpublished2008
Secondeditionpublished2010
©PearsonEducationLimited2008,2010
TherightofKevinBoakestobeidentifiedasauthorofthisworkhasbeenassertedbyhiminaccordance
withtheCopyright,DesignsandPatentsAct1988.
Allrightsreserved.Nopartofthispublicationmaybereproduced,storedinaretrievalsystem,or
transmittedinanyformorbyanymeans,electronic,mechanical,photocopying,recordingor
otherwise,withouteitherthepriorwrittenpermissionofthepublisheroralicencepermittingrestricted
copyingintheUnitedKingdomissuedbytheCopyrightLicensingAgencyLtd,SaffronHouse,6–10
KirbyStreet,LondonEC1N8TS.
Alltrademarksusedthereinarethepropertyoftheirrespectiveowners.Theuseofanytrademarkinthis
textdoesnotvestintheauthororpublisheranytrademarkownershiprightsinsuchtrademarks,nor
doestheuseofsuchtrademarksimplyanyaffiliationwithorendorsementofthisbookbysuchowners.
ISBN978–0–273–73181–8
BritishLibraryCataloguing-in-PublicationData
AcataloguerecordforthisbookisavailablefromtheBritishLibrary
LibraryofCongressCataloging-in-PublicationData
Boakes,Kevin.
ReadingandunderstandingtheFinancialtimes/KevinBoakes.—2nded.
p.cm.
ISBN978-0-273-73181-8(pbk.)
1. Corporations—Finance. I.Financialtimes(London,England)II.Title.
HG4026.B5962010
338.4’3—dc22
2009039558
10 9 8 7 6 5 4 3 2 1
13 12 11 10 09
Typesetin9/13pt2StoneSansby3
PrintedinGreatBritainbyHenryLingLtd.,attheDorsetPress,Dorchester,Dorset
Thepublisher’spolicyistousepapermanufacturedfromsustainableforests.
A01_BOAK1818_02_SE_FM.QXP:M00_BOAK1818_02_SE_C00 3/11/09 08:16 Page v
To my Mum and Dad with thanks for all their support.
A01_BOAK1818_02_SE_FM.QXP:M00_BOAK1818_02_SE_C00 3/11/09 08:16 Page vi
A01_BOAK1818_02_SE_FM.QXP:M00_BOAK1818_02_SE_C00 3/11/09 08:16 Page vii
Contents
Abouttheauthor xiii
Preface xiv
Onlinewebcontent xvi
Thepodcasts xvii
Amessagetoreaders... xviii
Amessagetoteachers... xix
Acknowledgements xx
Publisher’sacknowledgements xxi
Topic 1
Introduction to corporate finance 1
Poor communications puts Sports Direct off track
Article1 SportsDirectwarningstumpsinvestors 5
LucyKillgrenandDavidBlackwell
FinancialTimes,27April2007
Activist shareholders demand change at Logica
Article2 Logica’schiefquitsinwakeofwarning 9
RogerBlitz
FinancialTimes,28May2007
Article3 InvestorsexpectingchangeatLogicaCMG 10
MaijaPalmer
FinancialTimes,30May2007
Not so easy for Sir Stelios!
Article4 SirSteliosspellsoutfearsforeasyJet 15
NEW! KevinDone
FinancialTimes,24November2008
Topic 2
Financial institutions featuring investment banks 21
Financial markets watch the new Fed chairman
Article5 BernanketogiveatasteofmoretransparentFed 24
AndrewBalls
FinancialTimes,14February2006
vii
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Contents
The roller-coaster life of an investment banker
Article6 Howlongcanthegoodtimeslast?Bankerscautiousdespitebids
andbumperbonuses 32
PeterThalLarsen
FinancialTimes,27November2006
Article7 JPMorgantocutproptradingdesk 36
NEW! FrancescoGuerrera,JustinBaerandJeremyGrant
FinancialTimes,4November2008
More transparency needed at the Bank of England
Article8 Banktogivebetterguidanceoverrates 40
ChrisGilesandScheherazadeDaneshkhu
FinancialTimes,3May2007
Topic 3
Financial markets 47
At 1.30 p.m. in London all eyes are on the screens
Article9 SurprisingUSjobcreationdatarallystockmarketsanddollar 49
FTreporters
FinancialTimes,2–3June2007
Financial markets standing at a crossroads
Article10 Bondyieldssparkcreditconcerns 54
MichaelMackenzie,RichardBealesandJoannaChung
FinancialTimes,8June2007
Article11 Bondmarketsell-off 55
Lexcolumn
FinancialTimes,8June2007
Topic 4
Debt finance 61
Greek government launches new bond issue
Article12 Athensprepares50-yearbondissueworth€500m–€1bn 64
KerinHope
FinancialTimes,18January2007
Japanese convertibles back in fashion
Article13 Convertiblesstageareturntofashion 70
DavidTurner
FinancialTimes,8February2007
viii
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Contents
Bulldog, Yankee and samurai bonds ...
Article14 RecordsamuraidealbyCitigroup 75
MarikoSanchanta
FinancialTimes,6September2005
European bond markets start to diverge
Article15 FlighttoliquiditypushesEurozonebondyieldsapart 79
NEW! JoannaChung
FinancialTimes,27February2008
Topic 5
Capital structure 87
MyTravel on the brink
Article16 MyTravelshareholdersoffered4%in£800mdebt-to-equity
restructuring 90
MatthewGarrahan
FinancialTimes,14October2004
Blacks Leisure hit by global warming
Article17 BlacksLeisurefallsintothered 94
TomBraithwaiteandMaggieUrry
FinancialTimes,4May2007
Looking for the ‘right’ way forward
Article18 UKinvestorsdiginoverpre-emptionrights 98
NEW! KateBurgess
FinancialTimes,22October2007
Topic 6
Equity finance 105
Hargreaves’ founders float all the way to the bank
Article19 IPOvaluesHargreavesat£750m 109
SarahSpikesandLinaSaigol
FinancialTimes,12May2007
Article20 HargreavesLansdownsoarsondebut 110
SarahSpikes
FinancialTimes,16May2007
Good value at Sainsbury’s?
Article21 ValuingSainsbury’s 114
Lexcolumn
FinancialTimes,17May2007
ix
