FTSE 100 giants increase cash pile to £53.5bn

Tim Wallace
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THE BIGGEST British businesses added another £15.6bn to their cash piles in the last 12 months, Capita Asset Services said today.

It brings net cash positions to £53.5bn, and their gross cash position to £138bn.

Although the figure indicates the FTSE 100 businesses are raking in profits, it also underlines a lack of investment opportunities for the businesses to use the money productively.

Firms have paid down short-term debts by 18 per cent and long-term debts by two per cent.

But despite paying off the bills and hiking dividend payouts to £70bn, they are still accumulating cash – indicating the corporate giants are low on investment opportunities.

“A sharp rise in net cash, com­bined with a small drop in long-term debt, demonstrates a desire to keep borrowing levels low, and a lack of alternative uses for their shareholders’ money,” said Capita Asset Services’ Justin Damers.

“Continuing to hoard cash, even as the economy has gone up through the gears, will prove unpopular with investors, who resent companies sitting on huge cash piles earning low returns.”

If firms returned the gross cash piles to shareholders this year, dividends would come in at £236.5bn, more than double to £98.5bn currently forecast by Capita.

Companies had increased their cash positions and paid down some debts since the credit crisis to bolster their financial position against any unforseen problems.

But shareholders are increasingly concerned the positions are too strong, and so represent a waste of valuable resources.