Some of Britain's top companies are sitting on £130bn while the country's economy is starved of investment. We find out why

FTSE's bulging wallets

Here are the top 20 FTSE 100 companies, excluding banks and those in financial services, ranked by the amount of cash they are holding.

Thomson Reuters Datastream compiled the figures from each company's most recent annual report. The cash pile totals include cash equivalents, short-term investments and financial derivative products. In some cases, the latter two items outweigh the amount of actual cash on the balance sheet.

Companies reporting in overseas currencies have had their totals converted into sterling using the exchange rate at the time of the company's financial year-end.

If the whole of the FTSE 100 were included, banks and insurers would take the first six places, with BP ranked seventh. Barclays would be first with £99 billion, followed by HSBC, Royal Bank of Scotland, Lloyds Banking Group, Standard Chartered and Aviva.

Britain is not the only country where companies are being cautious about spending their cash.

A report published last week by JP Morgan Chase suggested the situation in America is the same. It found that the companies that make up the S&P 500 index could be sitting on as much as $2 trillion (£1.3 trillion) of cash.

Like their counterparts on this side of the Atlantic, big American companies have preferred to use their resources to fund share buybacks and big dividend payments rather than make large acquisitions.

David Fuller's view A point Fullermoney has often emphasised is that while stock market commentators so often talk about the economy, investors buy shares. Company balance sheets are often considerably stronger than those of the countries in which they are listed. This latter contrast has seldom been more pronounced than today.

In difficult economic climates countries see their tax revenues decline at a time when they are under pressure to increase public spending, not least on social welfare as unemployment increases. Inevitably, public sector debt increases. In contrast, corporations mainly answerable to their shareholders will cut overheads, reduce debt where possible and increase their cash holdings.

Here is a review of Britain's top-10 listed non financial companies in terms of their cash holdings, according to Thompson Reuters Datastream:

BP (BP/) (monthly, weekly & daily) has £15.8 billion but much of this will have to be paid in damages arising from the Gulf of Mexico oil spill in 2010. Nevertheless, BP has almost certainly raised more cash than the trial commencing next month will require it to pay out in damages. The share shows evidence of support building since last August when it steadied well above its June 2010 trough. It is back above its 200-day MA which is also rising once again. Consequently, a break in the progression of higher reactions lows, with the last seen just above 430p in mid-December would be required to question scope for a further ranging recovery. BP should be able to announce a dividend following its settlements.

Royal Dutch Shell (B) (monthly, weekly & daily) holds £8.5bn in cash. Having risen during the previous four months RDSB is slightly overextended in the short term and therefore susceptible to some consolidation of recent gains. Perhaps more importantly, RDSB has broken up out of its trading range of the last decade, reaffirming an overall upward trend. It currently yields 4.23% and is certainly in a position to increase this dividend on an incremental basis. For full disclosure, RDSB is the second largest position in my personal long-term investment account.

AstraZeneca (AZN) (monthly, weekly & daily) holds £8.1bn in cash. It has been rangebound for even longer than Royal Dutch Shell above and has frequently found support above £17.50 during this period. Interestingly, AZN found support above £24.50 during the last cyclical bear's climactic sell-off in August. Today, it is back above its MA following a period of support building and now appears capable of breaking the medium-term downtrend and a close beneath the mid-December low just above £27.00 would be required to delay significantly this prospect. AZN currently yields 3.83%.

Vodafone (VOD) (monthly, weekly & daily) holds £6.9bn in cash. It is still more than 50% below its TMT bubble peak in 2000, during what has been a secular valuation contraction for western stock markets, periodically mentioned by Fullermoney over the last twelve years. Nevertheless, VOD is back above its MA which is also rising once again as it tests former resistance above 180p. The pattern also shows a build-up of underlying support and a decline beneath the December reaction lows just above 170p would be required to delay significantly a further test of overhead resistance in coming months. VOD currently yields 5.71%.

Rio Tinto (RIO) (monthly, weekly & daily), BHP Billiton (BLT) (monthly, weekly & daily), Glencore International (GLEN) (weekly & daily) and Anglo American (AAL) (monthly, weekly & daily) were all reviewed by Eoin last Wednesday. Therefore, aside from saying watch the mid-December reaction lows as they are currently the first point of technical support, I will just add their cash levels and current dividends which these companies certainly have the capital to increase: RIO £6.7bn, 2.2%; BLT £6.4bn, 3.59%; GLEN £4.8bn, 0.79% forecast; AAL £4.3bn, 0.77%. Both RIO and BLT are in my personal long-term portfolio.


GlaxoSmithKline (GSK) (monthly, weekly & daily) has 6.3bn in cash. It has gradually ranged higher in a somewhat choppy fashion and failed to maintain the latest upward break following disappointing test data for its new Relovair respiratory drug. GKN yields 3.79%.

Vedanta Resources (VED) (monthly, weekly & daily) has 4.9bn in cash. It has been a weak performer since its 2010 highs and although it shows a loss of downward momentum since October, it currently needs to break the long progression of lower rally highs to confirm support building and scope for at least a recovery rally towards the declining MA. With all that cash VED is presumably a takeover candidate. It sells at a P/B of 0.9 and yields 3.75%. I have a small holding in VED in my personal long-term investment account.

Subscribers can view charts of the other cash-rich companies mentioned in the Sunday Times article above in the Library and some of them have also been reviewed by Eoin in recent months.