BUSINESS LIVE: Capita cyber incident to cost £25m

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.’