BUSINESS LIVE: Capita cyber incident to cost £25m

Just before close, the FTSE 100 was 0.40% up at 7,559.08.

Meanwhile, the FTSE 250 was 0.51% higher at 18,930.12.

Card chain Clintons is considering plans to shut 38 shops in a bid to avoid insolvency, according to reports.

It is understood the high street retailer has appointed restructuring experts from FRP Advisory as it seeks to secure its future.

The business is looking at a move which could see the firm swap its debt for equity and shut about a fifth of its estate of 179 shops, according to the Times.

The newspaper reported that the business had considered a merger deal with rival Paperchase earlier this year.

However, Paperchase saw its brand and intellectual property bought by Tesco in January after it entered administration, and its stores ultimately closed for good.

Clintons is among retailers to have been affected by depressed high street footfall and competition from online rivals.

The reports quoted documents over the restructuring plan being proposed to creditors, which said Clintons ‘will have no option but to commence formal insolvency proceedings’ if it does not secure a deal.

It comes a day after budget retailer Wilko confirmed it filed a notice of intent to appoint administrators, putting the future of its 400 stores and roughly 12,000 staff at risk.

Spanish authorities are set to fine low-cost airlines for charging passengers extra for hand luggage and for choosing where they sit.

Budget airlines including Ryanair, Vueling, Easyjet and Volotea will come under fire for forcing customers to pay extra for bags or to sit with the rest of their party.

It could have been worse for the AIM All-Share Index this week, given we saw an interest rate hike from the Bank of England and a surprise Fitch rating downgrade for US government debt.

The latter caused a ripple effect across global equities, with the FTSE 100 blue-chip index falling close to 2.5 per cent this week.

Banknote printer De La Rue has appointed non-executive director Dean Moore as its interim chief financial officer.

Moore will replace Charles Andrews, who has been serving in the role on an interim basis since April after Rob Harding stepped down in January to join PayPoint.

Moore, 65, was appointed as a non-executive director of De La Rue in June, and has served as the finance chief of funeral services firm Dignity and theatre operator Cineworld previously.

Liontrust has prolonged the deadline for its proposed takeover of Gam for the third time, a day after the Swiss fund manager urged investors to back the bid.

Having been due to conclude today, the main offer period is now set to close at 4pm on 23 August, almost a month after the original deadline of 25 July and following two previous extensions.

UK car sales have now risen for 12 months in a row, despite the ongoing consumer squeeze, with demand for electric vehicles gathering pace, industry figures show.

Some 143,921 new vehicles were registered last month, up 28.3 per cent on a year ago, marking the best July since 2020, when sales spiked after three months of lockdown.

British Airways workers have secured a 13.1 per cent pay increase, trade union Unite has said.

Staff at the airline will receive the pay increase over an 18-month period, as well as a £1,000 one off payment.

The pay offer was ‘overwhelmingly’ accepted by Unite members after a ballot was held, the trade union added.

Unite general secretary Sharon Graham said:

This is a sizable pay increase which has been achieved by the hard work and dedication of the union’s reps and officers, hammered out in detailed negotiations.

The fact that Unite has reversed the fire and rehire cuts while also securing a large increase in pay, underlines how the union’s relentless focus on the jobs, pay and conditions of members, is delivering for workers financially.

David Henry, investment manager at Quilter Cheviot, comments on the US jobs numbers:

While the labour market is slowly cooling as rate rises have some impact, at the moment there still seems to be enough momentum in the economy to avoid recession. Whisper it, but the fabled ‘soft landing’ may just be achieved, although a lot can still happen before the Fed declares “job done”.

The economy’s robustness may mean that the Fed feels comfortable continuing to raise rates, but it has repeatedly stated that these decisions will remain dependant on the data and there are a number of data points due before the next meeting – not least next week’s inflation number.

The US remains the powerhouse of the global economy, with significant opportunities for investors. With labour market growth slowing but still strong, economic growth holding up and consumer spending still high, the region remains very attractive.

Richard Flynn, Managing Director at Charles Schwab UK, comments on the latest US jobs figures:

Today’s jobs report is slightly weaker than expected. Last month’s results offered evidence that employment growth had begun to slow, and today’s numbers indicate that a downward trend may be in motion.

While this should be encouraging for policymakers as they continue to battle sticky inflation, the Fed would likely prefer to see wage gains closer to 3%. Growth in the 4% region may not be enough to convince bankers that monetary policy is working, so further interest rate hikes may be around the corner.”

Capita shares have tumbled more than 15 per cent after the outsourcing group reported a loss, which it partly attributed to costs relating to a cyber attack earlier this year.

WPP shares have also fallen 7 per cent after the advertising giant warned of slower growth due to a decline in marketing spend by big US tech clients.

The FTSE 100 is down 0.4 per cent to 7503 and is on track to end the week sharply lower.

Apple has hit a staggering 1 billion paid subscribers, even as its sales declined, CEO Tim Cook announced on Thursday.

The tech giant’s services business — which includes Apple TV+, Apple Music, Apple Arcade, Apple News and iCloud+ — earned $21.2billion in the second quarter of 2023, up from $19.6billion a year before.

More New Look stores are set to close their doors for the final time this month, after several closures this year.

The fashion chain is said to be closing the doors of three of its branches in August.

Home REIT has sold 40 properties at a hefty loss as the beleaguered homeless landlord scrambles to pay off debts and raise cash needed for day-to-day operations.

That means Home REIT made an average loss of around 61 per cent on the sale of the properties, which represent 1.6 per cent of its whole portfolio.

(PA) – One new battery electric vehicle was registered every 60 seconds in July, as the UK’s new car market recorded a full year of growth.

Registrations of new cars were up more than a quarter (28.3%) in July compared with the same month last year, according to figures from the Society of Motor Manufacturers and Traders (SMMT).

That represented the 12th consecutive monthly year-on-year increase, as global supply shortages continue to ease.

In total, 143,921 new vehicles were registered in July.

New battery electric vehicles (BEVs) took a 16% market share in July.

The SMMT anticipates the figure will rise to nearly 23% across the whole of next year.

Electrified vehicles, including hybrids, plug-in hybrids and battery electric vehicles, accounted for 35.4% of the market in total.

This was the best July performance for new car sales since 2020, when demand for new cars spiked after three months of lockdown during the pandemic.

Despite this year’s continuous growth, the overall market remains below pre-pandemic levels, the SMMT said.

An Australian safety equipment manufacturer has become the latest company to be acquired by London-listed Halma.

Based in the Western Australian capital of Perth, Lazer Safe supplies hardware designed to protect workers when operating industrial press brakes.

Capita shares slumped after the outsourcing group swung to a first-half loss and said March’s cyber attack would cost it more than previously expected.

The group, which has £6.5billion of public sector contracts including with the NHS, expects to incur costs of £20million to £25million as a result of the attack that left staff unable to access IT systems and disrupted services.

UK housebuilding suffered another sharp contraction in July as rising borrowing costs hit demand for new homes, according to a closely-wacthed survey.

The S&P Global/CIPS construction Purchasing Managers’ Index (PMI) shows the whole construction sector returned to growth last month, but housebuilding suffered.

The index showed a reading of 51.7, its highest level since February and up from June’s five-month low of 48.9, where a reading above 50 indicates growth, helped by growth in civil engineering and commercial construction projects.

However, housebuilding slumped, with a reading of 43, only marginally higher than June’s 39.6, which was the lowest since the first coronavirus lockdown in May 2020.

S&P Global said construction companies reported that rising borrowing costs had led to fewer sales enquiries and slower decision-making among clients in July.

Tim Moore, economics director at S&P Global Market Intelligence, said:

Another steep reduction in house building acted as a severe constraint on construction growth.

Around 35% of the survey panel reported a decline in residential work during July, while only 18% signalled a rise.

Lower volumes of housing activity have been recorded in each month since December 2022, with construction companies widely reporting subdued sales due to rising interest rates and worries about the economic outlook.

WPP has lowered its revenue guidance after US tech clients cut spending on advertising and growth in China was slower than expected in the last quarter.

The group told shareholders it now expects like-for-like revenue of 1.5 to 3 per cent in 2023, down from previous guidance of 3 to 5 per cent growth.

Beleaguered homeless landlord Home REIT said it has sold 40 properties for £4.8million in a bid to reduce its debt pile and to provide working capital.

The group sold them for an average 39 per cent of their purchase price, reflecting the ‘vacant status of the majority of the properties and their condition’.

It comes as earlier this week, Home REIT said two more of its tenants collapsed into liquidation.

The property firm has been in crisis since last year when questions were raised about its finances and business model.

Markets are pricing in two more interest rate hikes this year in yet more misery for struggling mortgage borrowers.

The Bank of England raised rates by a widely expected 0.25 percentage points yesterday, with some observers thinking there might be another ‘shock and awe’ 0.5 per cent increase.

While the Bank of England battles rising costs, Turkey is being ravaged by inflation.

Inflation almost touched 50 per cent in July as an overheating economy put consumers under strain, according to the Turkish Statistical Institute.

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown:

‘Technology spending, especially in the US, has slowed, leading to a dent in performance from the group’s substantial integrated creative agencies.

‘This outcome is unwelcome but not wholly surprising, given that corporations are in wait-and-see mode when it comes to splashing the cash and handing margin over, at a time when demand is very tough to profile.

‘While demand for WPP’s suite of services hasn’t been totally washed out, it has faded this half, and investors will be wanting to see a clear path to return to full colour. Harnessing AI correctly, and swiftly, could be one way to propel large amounts of growth, but change of this magnitude always comes with risk.’

WPP, the world’s biggest advertising group, has downgraded its full-year like-for-like growth forecast to 1.5 to 3 per cent from 3 to 5 per cent, after lower spending from tech clients caused its revenue in North America to decline in the second quarter.

Mark Read, chief executive:

‘Our performance in the first half has been resilient with Q2 growth accelerating in all regions except the USA, which was impacted in the second quarter by lower spending from technology clients and some delays in technology-related projects. This was felt primarily in our integrated creative agencies.

‘China returned to growth in the second quarter albeit more slowly than expected. In the near term, we expect the pattern of activity in the first half to continue into the second half of the year.’

Shares in online shopping giant Amazon surged last night after it became the latest tech giant to smash Wall Street forecasts.

The world’s biggest online retailer posted sales of £106billion for the three months to June, 11 per cent higher than in 2022 and above the £103billion predicted by analysts.

It made a £5.3billion quarterly profit, after a £1.6billion loss in the same period of 2022 as its dominance of online shopping staved off declines caused by a downturn in consumer sentiment amid the cost of living squeeze.

Capita expects net exceptional costs of £20million to £25million related to the cyber incident which rocked the British outsourcing firm in March.

The group, however, has retained its full-year earnings outlook.

‘I am pleased with the good progress we continued to make at Capita during the first half of the year as we accelerate our financial performance.

‘Our strategy, focused on two core, growing markets is working. We have delivered increased adjusted revenue growth for the fourth successive reporting period, improving profitability, winning an increasing amount of work with new clients, and remain on track to deliver on our full-year expectations.

‘We have seen an improvement in our employee net promoter score alongside reduced levels of attrition; and I would like to thank all our people for their continued hard work, commitment and professionalism.

‘Our strong client relationships, long-term contracts, increasingly competitive and digitised solutions, engaged colleagues and reputation for delivery mean we have a resilient business, well positioned for further growth.’