The week ahead
This week will be more subdued on the corporate earnings front, but there are still a few favoured numbers to get your teeth stuck into.
For those who like a tipple, Marston's steps into the spotlight on Wednesday. Much like the rest of the pub industry, the group has suffered, but after notching up a successful rights issue and a reasonable Christmas trading period under its belt, investors will be keen to see signs that it is now firmly on the road to recovery.
Looking ahead, the group may benefit from the World Cup which could result in an increase in sales, helping to entice investors on board.
Chloride Group will also offer up its trading statement on Wednesday and, thanks to its frequent updates, has enjoyed a steady rise in share price.
The group's order book remains firm and investors are expecting profits to meet company expectations.
On Thursday, high street stalwart Marks & Spencer is set to rustle up its fourth quarter trading statement which should show yet further improvement for the fifth quarter in succession.
However, the store, which will soon welcome Marc Bolland on board as chief executive, is bound to issue a cautious outlook as has befitted its rivals of late.
Analyst Andrew Wade of Numis says: "Having been on an improving trend for the last four quarters, we expect like-for-likes to move ahead again from the third quarter. We look for general merchandise like-for-likes of +2% (third quarter was +1.2%) and food +0.5% (third quarter +0.4%) and would not be surprised to hear some negative commentary on the food gross margin.
"More broadly, we anticipate a cautious outlook statement and do not expect consensus PBT forecasts to move far. On circa 12 times March 2011 forecasts, the business looks fair value given the macro uncertainties."
For those with their finger on the mining pulse, FTSE 100-listed major Vedanta Resources will offer its production results on Thursday.
The copper producer found favour with investors last week after it increased its share repurchase programme from $500 million to $825 million. To date, Vedanta has bought back 21.1 million ordinary shares as it seeks to "enhance value for all Vedanta shareholders".
Investors will be hoping its production figures will be equally value-enhancing.
Finally, UK recruitment agency Michael Page will bring the week to a close with its trading statement on Friday.
Shares in the firm have more than doubled since the end of 2008 and the expectation is that its fourth quarter results are likely to offer yet more positive news to the mix.
Steve Woolf, analyst at Numis, says: "Following a strong fourth-quarter trading period, we look for a continuation of the trend in early 2010 driven by the financial sector. We look for net fees of £89.6 million, down 5 per cent year-on-year on a like-for-like basis, with a return to growth forecast for the second quarter as comparatives reach their easiest point.
"Page remains a key recovery play in the sector, but trading on 27 times full-year 2011 earnings, the shares appear up with events for now."
On the economic front, Wednesday and Thursday are shaping up to be the days to keep an eye on.
Nationwide's Consumer Confidence Index for March and CIPS Services purchasing managers' index for March are both set to hit the public domain on Wednesday.
The services sector purchasing managers' index is forecast to show a slight improvement in activity in March after rebounding in March from January's weather-inflicted slowdown. Business activity is expected to edge up to 58.5, after hitting a three-year high of 58.4 in February.
More important will be the Bank of England's interest rate decision on Thursday. Given the unanimous decision to leave interest rates steady in March, there is little expectation of a rise in April.
Howard Archer, chief UK and European economist at IHS Global Insight, says: "All nine members voted in favour of unchanged interest rates and quantitative easing at the March meeting and developments since then suggest there is no need to change tack.
"Consequently, it looks a racing certainty that the Monetary Policy Committee (MPC) will decide on Thursday to keep interest rates down at 0.5% and will not add to the £200 billion already spent on quantitative easing. Indeed, it currently looks highly likely that the MPC will be sitting on their hands for many more months to come."
TUESDAY 6 APRIL
(Finals) Brightside (Interims) Candover Investments
Just Car Clinics Group, Xploite
Dividend payment date
(Interim) Carclo, Diageo, Phoenix IT Group
WEDNESDAY 7 APRIL
(Finals) Shed Media, Speymill Group (Interims) Marston's
British Airways, Chloride Group, Highcroft Investment, Hydro International, Prudential
IG Group Holdings
Dividend payment date
(Final) Electronic Data Processing (Interim) Pennon Group
THURSDAY 8 APRIL
(Finals) International Public Partnerships, Rotala (Interim) Hays, Misys, Robert Walters, ClearStream Technologies Group, Matchtech
Balfour Beatty, easyJet, Marks & Spencer Group, Victrex, Vedanta Resources
Dividend payment date
(Final) Thomas Cook Group (Interim) JPMorgan Mid Cap Inv Trust, Oxford Instruments (Quarterly) GlaxoSmithKline
FRIDAY 9 APRIL
(Interims) Michael Page International
John Menzies, Michael Page International, X5 Retail Group
Vatukoula Gold Mines
Dividend payment date
(Final) Foresight 2 VCT (Interim) Cassidy Brothers
Lower interest rates encourage people to spend, not save. But when interest rates can go no lower and there is a sharp drop in consumer and business spending, a central bank’s only option to stimulate demand is to pump money into the economy directly. This is quantitative easing. The Bank of England purchases assets (usually government bonds, or gilts) from private sector businesses such as insurance companies, banks and pension funds financed by new money the Bank creates electronically (it doesn’t physically print the banknotes). The sellers use the money to switch into other assets, such as shares or corporate bonds or else use it to lend to consumers and businesses, which pushes up demand and stimulates the economy.
A way a company can raise capital by creating new shares and invite existing shareholders in the company to buy these additional shares in proportion to their existing holding to avoid a dilution of value, which means keeping a proportionate ownership in the expanded company, so that (for example) a 10% stake before the rights issue remains a 10% stake after it. As an added incentive, the new shares are usually offered below the market price of the existing shares, which are normally a tradeable security (a type of short-dated warrant) and this allows shareholders who do not wish to purchase new shares to sell the rights to someone who does.
Venture Capital Trusts were introduced in 1995 to encourage private investments in the small-company sector by offering tax relief in return for a minimum investment commitment of five years. A VCT is a company, run by a fund manager, which invests in other companies with assets of no more than £7m that are unlisted (not quoted on a recognised stock exchange) but may be listed on the Alternative Investment Market (AIM) or plus with the aim of growing the companies and selling them or launching them on the stock market. Investors in new VCTs are offered desirable tax advantages and VCTs themselves are listed on the London Stock Exchange, with strict limits laid down by HM Revenue and Customs on what they can invest in and how much they can invest.
Monetary Policy Committee
A committee designated by the Bank of England to regulate interest rates for the UK. The MPC attempts to keep the economy stable, and maintain the inflation target set by the government and aims to set rates with a view to keeping inflation at a certain level, and avoiding deflation. The MPC meets on the first Thursday of each month and discusses a variety of economics issues and constitutes nine members: the governor, the two deputy governors, the Bank’s chief economist, the executive director for markets and four external members appointed directly by the Chancellor.
Investment trusts are companies that invest money in other companies and whose shares are listed on the London Stock Exchange. As with unit trusts, private investors buying shares in an investment trust are buying into a diversified portfolio of assets (to reduce risk), which is managed by a professional fund manager. Investment trusts differ from unit trusts in two important ways: they are listed on the stockmarket and so are owned by their shareholders and are closed-ended funds with a finite number of shares in issue. This means the share price of investment trusts might not reflect the true value of the assets in the company (known as the net asset value, or NAV) and if the NAV value of a share is £1 and the share price in the market is 90p, the trust is said to be running a discount of 10% to NAV. But this means the investor is paying 90p to gain exposure to £1 of assets. Investment trusts can also borrow money and use this money to buy investments. This is known as gearing and a geared trust is thought to be more of an investment risk than an ungeared one.
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.
A market-weighted index of the 100 biggest companies by market capitalisation listed on the London Stock Exchange. It is often referred to as “The Footsie”. The index began on 3 January 1984 with a base level of 1000; the highest value reached to date is 6950.6, on 30 December 1999. The index is “weighted” by how the movements of each of the 100 constituents affect the index, so larger companies make more of a difference to the index than smaller ones. To ensure it is a true and accurate representation of the most highly capitalised companies in the UK, just like football’s Premier League, every three months the FTSE 100 “relegates” the bottom three companies in the 100 whose market capitalisation has fallen and “promotes” to the index the three companies whose market capitalisation has grown sufficiently to warrant inclusion. Around 80% of the companies listed on the London Stock Exchange are included in the FTSE 100.
If you own shares in a company, you’re entitled to a slice of the profits and these are paid as dividends on top of any capital growth in the shares’ value. The amount of the dividend is down to the board of directors (who can decide not to pay a dividend and reinvest any profits in the company) and they will be paid twice yearly (announced at the AGM and six months later as an interim). Dividends are always declared as a sum of money rather than a percentage of the share’s price. Although dividends automatically receive a 10% tax credit from HM Revenue & Customs (HMRC), which takes the company having already paid corporation tax on its profits into account. Dividends are classed as income and, as such, are liable for personal taxation and so shareholders have to declare them to HMRC.