Supercar maker McLaren hit by £375m impairment charge

Published

1 year ago

April 25, 2024

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McLaren Group, the British supercar maker and Formula One team-backer, has given lenders signs of an improvement in its financial performance even after a £375m impairment charge propelled it to a record loss last year.

Sky News has learnt that McLaren has told bondholders that it made losses of £873m in the 12 months ending 31 December.

The Woking-based company’s financial travails reflected an ongoing financial restructuring that was completed earlier this year.

Mumtalakat, Bahrain’s sovereign wealth fund, has taken full ownership of the group, and is now engaged in talks about technology partnerships which could lead to the sale of a minority equity stake in McLaren.

According to the results, which have not yet been released publicly, it recorded a £375m non-cash impairment charge to reflect asset writedowns relating to production problems.

In the first quarter of the 2024 financial year, however, McLaren reported its best quarter for nearly five years, with an underlying profit of £3m on revenues which rose by 52%.

Responding to an enquiry from Sky News, McLaren said its start to the year reflected a 28% increase in wholesale volumes with its 750S model sold out into 2025 and orders for the GTS ahead of expectations.

Paul Walsh, McLaren’s executive chairman, said: “These results demonstrate the strong fundamentals in our business, where demand for our iconic high-performance luxury sports cars exceeds supply, and where our outlook is improving following major transformation actions over the past year.

“We can look forward to a bright future with a simplified shareholder structure, a clean balance sheet and significant opportunities to forge partnerships to drive future growth.”

In an attempt to drive sales growth, McLaren has expanded its retail network with the opening dealerships in Australia, Japan and the brand’s largest showroom in Dubai.

McLaren, whose road car models also include the Artura Spider, P1 and Senna, has seen some of its former shareholders taking warrants which would benefit from a future ‘liquidity event’ such as an initial public offering or sale of the company.

McLaren Racing, the division which directly houses the F1 and other racing operations, has its own external shareholders following a deal struck during the pandemic.

Simplifying its structure should pave the way for a technology partnership with an automotive original equipment manufacturer (OEM) in the coming years as McLaren transitions towards becoming a hybrid and electric vehicle company.

During the COVID-19 pandemic, the company was forced into a far-reaching restructuring that saw hundreds of jobs axed and substantial sums raised in equity and debt to repair its balance sheet.

Its finances became so strained that it repeatedly tapped Mumtalakat for new funding, as well as striking a sale-and-leaseback deal for its spectacular Surrey headquarters.

In 2021, it also sold McLaren Applied Technologies, which generates revenue from sales to corporate customers.

Founded in 1963 by Bruce McLaren, the group’s name is among the most famous in British motorsport.

During half a century of competing in F1, it has won the constructors’ championship eight times, while its drivers have included the likes of Mika Hakkinen, Lewis Hamilton, Alain Prost and Ayrton Senna.

In total, the team has 180 Grand Prix wins, three Indianapolis 500s and won the Le Mans 24 Hours on its debut.

The company saw its separate divisions reunited following the departure in 2017 of Ron Dennis, the veteran McLaren boss who had steered its F1 team through the most successful period in its history.

Mr Dennis offloaded his stake in a £275m deal following a bitter dispute with fellow shareholders.

Business

UK growth slows as economy feels effect of higher business costs

Published

33 mins ago

August 14, 2025

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UK growth slows as economy feels effect of higher business costs

UK economic growth slowed as US President Donald Trump’s tariffs hit and businesses grappled with higher costs, official figures show.

A measure of everything produced in the economy, gross domestic product (GDP), expanded just 0.3% in the three months to June, according to the Office for National Statistics (ONS).

It’s a slowdown from the first three months of the year when businesses rushed to prepare for Mr Trump’s taxes on imports, and GDP rose 0.7%.

Caution from customers and higher costs for employers led to the latest lower growth reading.

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Business

Claire’s to appoint administrators for UK and Ireland business – putting thousands of jobs at risk

Published

15 hours ago

August 13, 2025

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Fashion accessories chain Claire’s is set to appoint administrators for its UK and Ireland business – putting around 2,150 jobs at risk.

The move will raise fears over the future of 306 stores, with 278 of those in the UK and 28 in Ireland.

Sky News’ City editor Mark Kleinman reported last week that the US-based Claire’s group had been struggling to find a buyer for its British high street operations.

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Prospective bidders for Claire’s British arm, including the Lakeland owner Hilco Capital, backed away from making offers in recent weeks as the scale of the chain’s challenges became clear, a senior insolvency practitioner said.

Claire’s has now filed a formal notice to administrators from advisory firm Interpath.

Administrators are set to seek a potential rescue deal for the chain, which has seen sales tumble in the face of recent weak consumer demand.

Claire’s UK branches will remain open as usual and store staff will stay in their positions once administrators are appointed, the company said.

Will Wright, UK chief executive at Interpath, said: “Claire’s has long been a popular brand across the UK, known not only for its trend-led accessories but also as the go-to destination for ear piercing.

“Over the coming weeks, we will endeavour to continue to operate all stores as a going concern for as long as we can, while we assess options for the company.

“This includes exploring the possibility of a sale which would secure a future for this well-loved brand.”

The development comes after the Claire’s group filed for Chapter 11 bankruptcy in a court in Delaware last week.

It is the second time the group has declared bankruptcy, after first filing for the process in 2018.

Chris Cramer, chief executive of Claire’s, said: “This decision, while difficult, is part of our broader effort to protect the long-term value of Claire’s across all markets.

“In the UK, taking this step will allow us to continue to trade the business while we explore the best possible path forward. We are deeply grateful to our employees, partners and our customers during this challenging period.”

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “Claire’s attraction has waned, with its high street stores failing to pull in the business they used to.

“While they may still be a beacon for younger girls, families aren’t heading out on so many shopping trips, with footfall in retail centres falling.

“The chain is now faced with stiff competition from TikTok and Insta shops, and by cheap accessories sold by fast fashion giants like Shein and Temu.”

Claire’s has been a fixture in British shopping centres and on high streets for decades, and is particularly popular among teenage shoppers.

Founded in 1961, it is reported to trade from 2,750 stores globally.

The company is owned by former creditors Elliott Management and Monarch Alternative Capital following a previous financial restructuring.

Business

Typical two-year mortgage deal at near three-year low – below 5% since mini-budget

Published

16 hours ago

August 13, 2025

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Typical two-year mortgage deal at near three-year low - below 5% since mini-budget

The average two-year mortgage rate has fallen below 5% for the first time since the Liz Truss mini-budget.

The interest rate charged on a typical two-year fixed mortgage deal is now 4.99%, according to financial information company Moneyfacts.

It means there are more expensive and also cheaper two-year mortgage products on the market, but the average has fallen to a near three-year low.

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Not since September 2022 has the average been at this level, before former prime minister Liz Truss announced her so-called mini-budget.

The programme of unfunded spending and tax cuts, done without the commentary of independent watchdog the Office for Budget Responsibility, led to a steep rise in the cost of government borrowing and necessitated an intervention by monetary regulator the Bank of England to prevent a collapse of pension funds.

It was also a key reason mortgage costs rose as high as they did – up to 6% for a typical two-year deal in the weeks after the mini-budget.

Why?

The mortgage borrowing rate dropped on Wednesday as the base interest rate – set by the Bank of England – was cut last week to 4%. The reduction made borrowing less expensive, as signs of a struggling economy were evident to the rate-setting central bankers and despite inflation forecast to rise further.

It’s that expectation of elevated price rises that has stopped mortgage rates from falling further. The Bank had raised interest rates and has kept them comparatively high as inflation is anticipated to rise faster due to poor harvests and increased employer costs, making goods more expensive.

The group behind the figures, Moneyfacts, said “While the cost of borrowing is still well above the rock-bottom rates of the years immediately preceding that fiscal event, this milestone shows lenders are competing more aggressively for business.”

In turn, mortgage providers are reluctant to offer cheaper products.

A further cut to the base interest rate is expected before the end of 2025, according to London Stock Exchange Group (LSEG) data. Traders currently bet the rate will be brought to 3.75% in December.

This expectation can influence what rates lenders offer.