FTSE 100: this year's top five winners
The FTSE 100 has endured the rockiest of rides, starting the year just above 6000 before plunging to below 5600 in mid-March. The rollercoaster ride continued until the end of June, with the index flirting with th 6100 mark before sliding to around 5650, and then launching a last-ditch rally which continued into the second half.
** TOP FIVE WINNERS **
ARM HOLDINGS (38.91% rise in the first six months)
The top-performing stock in the FTSE 100 for the first half of the year was technology firm ARM Holdings, with its share price up more than 38% at around 605p.
The company kick-started the year when it announced on 6 January it had gained support from tech giant Microsoft for its system on a chip architectures for the next version of Windows.
ARM's fourth-quarter results for 2010, which it reported in February, showed pre-tax profit up by almost 50% at £47.6 million. And for the full year it announced its highest ever pre-tax profit, up a whopping 73% from the year before at £167.4 million, compared to £96.8 million.
Warren East, chief executive officer for the company, said: "ARM continues to sign licences with influential market leaders in an increasingly digital world, and as the industry chooses ARM technology in a broadening range of electronic products, it further drives our long-term royalty opportunity."
In the first quarter of 2011, the Cambridge-based firm didn't falter either.
Pre-tax profit was up 35% at £50.8 million, from £37.6 million in 2010, and Broadcom and LG Electronics were the latest companies said to have signed subscription licences for ARM's technology.
The company's outlook for the year, notwithstanding uncertainty surrounding the economic impact of the Japanese earthquake on the semiconductor industry supply chain, is for dollar revenues to be at least in line with current market expectations.
Temporary power supplier Aggreko took silver medal for first-half performance, as it carried momentum from the end of 2010 into the new year.
In fact, things just got better and better for the firm, which noted "the rate of underlying growth seen in the first quarter has accelerated in the second quarter" in a 20 June update, having reported a 24.6% rise in full-year pre-tax profit for the 12 months to end-December.
A pair of contract wins and a New Zealand-based acquisition helped Aggreko into second spot, even overcoming a dip in its share price towards the end of the period.
Luxury fashion brand Burberry shook off concerns at the start of the year that it would be adversely affected by a slump in demand in its significant Japanese market and welcomed a 29% increase in its share price in the six months to 30 June.
A trading update in January informed investors that sales at the tail end of 2010 were strong for both retail and wholesale and across every product division and region. As a result, the company predicted pre-tax profit for the 2010/11 financial year to be at the top end of expectations.
Following the earthquake and tsunami in Japan, shares in Burberry suffered a momentary blip, down 4% on the first trading day after the quake. This is because Japan is the third-largest market for luxury goods globally, after the US and China.
But fears for the firm were short-lived and in April it updated investors on its trading for the six months to 31 March. Total revenue for the period was up 30% at £860 million, with growth in China spearheading the positive performance.
The company is due to report first-quarter 2011/12 results on 13 January and analysts are predicting further sales growth, but add the first quarter will be the poorest of the year. Most have also taken a 'hold' stance ahead of the results as they believe most of the positive expectations are already priced into the stock.
Eduard Crowley, analyst for Exane BNP Paribas, said: "We praise Burberry's strong track record and believe the 20% earnings per share compound annual growth rate story is a unique feature in the luxury space at this time in the cycle, somewhat justifying a premium. We, however, believe this is more than priced in, with the stock trading on a 2011 equivalent calendarised EBITDA of 18 times versus 13.3 times for the sector."
Citigroup and UBS also set Burberry as a hold, with target prices of 1,300p and 1,255p respectively.
LAND SECURITIES (26.48%)
Shares in Land Securities notched up the best gains in the real estate sector since the turn of the year, slipping briefly from 685p in February before staying on a fairly consistent upward trajectory until June.
Having entered 2011 "with a clear plan", the firm's January interim management statement disappointed somewhat, before full-year results in mid-May really put the cat amongst the Trafalgar Square pigeons, as it benefited from a recovery in Central London.
Rises across the board in pre-tax profit, NAV per share, earnings per share and dividend all triggered a stellar second quarter, with shares going from around the 750p mark to end June - and the first half - at just below 850p.
Indeed, following those results, analysts at Collins Stewart heralded them "excellent figures", adding that they expected shares to "improve significantly" as a result. Its forecasts were lifted from 773p to 826p for the actual NAV and from 5.9% uplift to 9.7% for the overall portfolio.
SHIRE PHARMACEUTICALS (26.05%)
Pharmaceutical company Shire Pharmaceuticals has also had a strong first half of the year. In the last six months its shares have ticked up more than 26% to sit at around 1,998p.
At the start of the year the company announced product sales up 16% at $3.12 billion (£1.96 billion) and total revenue up 15% at $3.47 million.
Angus Russell, chief executive officer for the firm, said at the time: "2010 was an outstanding year for Shire with the business performing exceptionally well on all fronts. Both our speciality pharmaceuticals and human genetic therapies business showed excellent growth."
In April, results for the three months to 31 March showed products sales up by 24% to $889 million, while total revenue for the period was $972 million, 19% up on the same period last year.
Sales of Attention Deficit Hyperactive Disorder (ADHD) treatments Intuniv, Vyvanse and Adderall XR were all up and the firm said the ADHD market in the US as a whole showed good growth. Rare disease treatments also continued their strong performance, representing 30% of total product sales.
The company is working on gaining regulatory approval in both the US and Europe for some of its drugs and is researching new uses for some of its other products. It completed a couple of acquisitions during the period too, which demonstrates a desire to grow through both organic and expansionary means.
But a cloud on the horizon is the number of lawsuits the firm currently has ongoing, relating to alleged patent infringements by other companies on its medicine Vyvanse. The marketing exclusivity of Vyvanse runs out in 2012 and if Shire doesn't win the patents battles, generic versions of the drug are likely to be produced and could sap some of the company's revenue in the process.
This article was taken from our sister website, Interactive Investor.
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.
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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.
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