the times | Thursday November 25 2021 2GM 47
Business
The government has set aside up to
£1.7 billion to fund the continued opera-
tion of Bulb after the energy supplier
collapsed into administration.
A court appointed special adminis-
trators from Teneo yesterday to keep
running Britain’s seventh-largest
energy utility so supplies and customer
services to its 1.6 million household
customers should continue unaffected.
A £1.69 billion loan from the taxpayer
will fund the work. The administrators
say it will cost about £2.1 billion to keep
Bulb trading until the end of April.
They will need to buy significant vol-
umes of wholesale gas and electricity to
meet customers’ needs in the winter.
Kwasi Kwarteng, the business secre-
tary, can free up more taxpayers’
money for the company if needed.
Bulb, which was founded in 2015, was
unable to withstand rising wholesale
prices that have also precipitated the
demise of more than 20 other smaller
suppliers since August.
The two million customers of these
other failed suppliers have been moved
to solvent companies who were ap-
pointed as the “supplier of last resort”.
Consumers are already facing a huge
All signs pointing
to a bumpy road
T
hat’s the thing with
handbrake turns. It’s not
always clear if you’re back
on a better road. A
£314 million write-off for
pulling the plug on its electric car
battery technology looks the least of
Johnson Matthey’s problems. The
bigger issue is the strategic fog it’s
driven into and whether the
chemicals group hasn’t turned itself
into a takeover target.
The half-year figures, complete
with £9 million pre-tax loss, brought
some clarity, but not enough.
Investors already knew that chief
executive Robert MacLeod was
stepping down next year: news that
came with the battery howitzer a
fortnight ago. Now they’ve learnt
that Joan Braca is also off at the end
of the year after missing out on the
top job. Who she? The head of its
catalytic converter wing, responsible
for around 60 per cent of sales.
Lob in the £178 million sale of the
group’s specialist glass wing and
the looming disposal of its health
division and you can see why Stifel
analysts note, with some concern,
that “Johnson Matthey is
undergoing a great deal of change at
the moment”. To spot only a “degree
of uncertainty” is putting it mildly,
too. How long will it take Liam
Condon, the new boss from Bayer,
to bring some certainty back?
He arrives in March, promising a
strategic review. But a quick fix
looks tricky. MacLeod points to
three growth areas: hydrogen
technologies, where he reckons fuel
cells alone can achieve £200 million
of annual sales by 2025; helping
companies decarbonise, using the
group’s chemicals skills from
catalytic converters; and recycling
platinum group metals. All three, he
insists, have a “capital intensity”
that’s a “magnitude” lower than the
battery tech that the group has
failed to commercialise. As he puts
it: “We are much more confident
that we can execute on those areas.”
Yet, there’s another way of
looking at Johnson Matthey. And
one you doubt private equity — or
even the likes of Melrose Industries
— has missed, not that that’s to
suggest any looming bid. Thanks to
electric cars, the catalytic converter
business is on a one-way road to
oblivion. But the journey will still be
long and highly cash generative. As
the company says itself, this “clean
air” wing is “on track to deliver at
least £4 billion of cash over the
coming ten years”. Or roughly the
group’s £4.1 billion market value, on
shares down 2 per cent to £21.35.
To boot, the group is lightly
enough geared to be starting a
£200 million share buyback. Net
debt is about £700 million, with a
net debt to ebitda ratio of 0.9 times.
Couldn’t a bidder gear up Johnson
Matthey, run down catalytic
converters for cash and sell the
group’s “growth” businesses to
companies with more clout to
develop them? It could even
re-badge them as go-go green tech.
True, as MacLeod points out:
“There are quite a lot of synergies
across the group.” And managing
working capital is no joyride. But if
Condon can’t swiftly show where
Johnson Matthey is heading, the
chances are someone else will.JP Morgan sees red
N
ot more “regrets” from Jamie
Dimon. It was only in April
that the JP Morgan boss, or
at least the bank he runs, was sort of
apologising for offending tens of
millions of people: football fans irate
at the bank’s $4.2 billion backing for
the 12-strong European Super
League. “We clearly misjudged how
this deal would be viewed,” JP
Morgan declared, promising: “We
will learn from this.”
And, who knows, maybe Dimon
did learn something from that
farrago, because this time he’s
merely offended the whole of China.
He said he’d “make a bet” the bank
would “last longer” than the ruling
Communist Party — something he
later referred to as a “joke”. True, it
wasn’t exactly a side-splitter, even if
it was improved by the line: “I can’t
say that in China. They are probably
listening anyway.”
Whatever, Dimon swiftly issued
two statements of “regret”, which is
a bit much on the football fans who
got only one. And, yes, his remarks
do seem a bit crass. The bank’s been
operating in China since 1921 — the
same year the Communist Party
was founded — with a “network”
that takes in the likes of Beijing,
Shanghai and Guangzhou.
Tiptoeing around Sino politics is
what’s expected of banks, too, even
if that seems beyond HSBC, whose
“corporate kowtow”, as America put
it, involved signing up to the brutal
security law for Hong Kong.
Even so, let’s not overlook the
context for Dimon’s comments. It
was that, like the Communist Party,
JP Morgan’s China business was
“celebrating its 100th year”. And
that he’d happily bet that the bank
would last longer. On top, he’s
personally worth $2 billion, on
Forbes’s figures. So, instead of taking
things out on the bank, how about
Beijing accepting his bet — a fitting
$100 million, say, of his own money?
His heirs may have to inherit it, of
course. But, for a hard-nosed
banker, it’d make things a lot more
real than all his soppy “regrets”.Divisive deal
M
ore proof of soaring
inflation. Look what
£43 million buys you
nowadays — nothing flashier than
the demutualisation of LV=. Imagine
explaining that to the other half:
sorry, luv, all the money’s gone on
snuffing out 178 years of mutuality
at a two-bit life insurer. In a normal
world, it’s the sort of thing to get
you sectioned — or divorced.
Still, that’s the bill run up by LV=
chairman Alan Cook and chief
executive Mark Hartigan for
flogging the business to private
equity outfit Bain for £530 million: a
sum that works out at £37 per
member. LV= says it’s the going rate
for all the lawyers, bankers, PR
spinners and forest-razing
paperwork required to properly do
in all vestiges of mutuality. Still, it’s
hardly likely to make the Bain deal
any less divisive.[email protected]business commentary Alistair Osborne
Taxpayer provides £1.7bn loan to
support Bulb Energy through crisis
Emily Gosden Energy Editor bill expected to run to billions of
pounds to reimburse suppliers for the
costs they incur through taking on cus-
tomers from failed suppliers.
However, this process was deemed
unworkable for Bulb because of its size,
so it has instead gone into the special
administration regime that has never
before been used in the energy sector.
The eventual bill for Bulb’s demise is
unclear since special administrators
will seek to minimise and recoup costs
where possible. They are expected to
look to sell off Bulb’s customers and as-
sets, potentially in a more benign
wholesale price environment next year.
Several companies had expressed in-
terest in buying Bulb before it collapsed
but balked at its liabilities. Earlier,
Kwarteng said: “We do not want this
company to be in this temporary state
longer than is absolutely necessary.”
At a hearing in the High Court inLondon, Justice Adam Johnson said
that the administration was designed
“to keep the energy supply company
going with a view to it being rescued if
that is possible”. Appointing a supplier
of last resort was “thought to be im-
practical here given the size and im-
portance of Bulb as a supplier”, he said.
The judge added that the £1.7 billion
would be “of existential importance to
Bulb”; court documents show that Bulb
would otherwise have been unable to
keep operating beyond mid-December.
Greg Hands, energy minister, said:
“The administrators will take tempo-
rary charge of operating Bulb and that
includes ensuring, if a new owner can-
not be found, that customers are safely
moved to another supplier.” It was re-
ported last night that Interpath had
been appointed as administrator to the
parent company of Bulb at the behest of
the supplier’s largest lender.
Sequoia Economic Infrastructure In-
come Fund, a FTSE 250 fund, is owed
£55 million by Bulb. The loan is guaran-
teed by Simple Energy, Bulb’s parent
company. Sky News reported that Se-
quoia had pushed for Interpath to be
appointed as administrators to Simple
in preference to AlixPartners as it seeks
to safeguard its interests.Short-term visas no solution, says Lidl chief
Continued from page 45
helped suppliers “a little bit” with
labour to process turkeys.
Lidl’s UK revenue rose 12 per cent to
£7.7 billion in the year to the end of Feb-
ruary 2021. It made a pre-tax profit of
£9.8 million, up from a loss of £25.2 mil-
lion in the prior year. The company in-
vested £498 million in the UK business
in the last financial year.
Härtnagel said that despite the in-
creased demand for online deliveries
during the pandemic, Lidl’s store open-
£100 million of business rates amid an-
ger that taxpayer support was being
used by so-called lockdown winners.
The company said its UK business
was impacted last year by post-Brexit
custom duties and import costs, as well
as increased administration for trading
into and out of the UK.
However, it said that it “has been able
to successfully adapt its processes” to
“ensure operational and financial im-
pacts resulting from Brexit risks are
minimised”.ings in the past 15 months had been “ex-
tremely successful” and demand for on-
line grocery deliveries was falling.
Lidl is owned by Germany’s Schwarz
Group, which reported a turnover of
€125.3 billion in 2020. It arrived in the
UK in 1994 and has remained staunch-
ly opposed to selling groceries online,
putting it at odds with every other food
retailer — even its discount rival Aldi
has a partnership with Deliveroo.
Lidl followed other supermarkets in
December with a pledge to pay backM&S facing
backlash
over rebuild
Louisa Clarence-SmithMarks & Spencer is facing a backlash
for preaching about its sustainability
values while opting to redevelop its
Oxford Street store instead of under-
taking a climate-friendly retrofit.
Westminster city council planners
have approved its plans to demolish its
90-year-old department store at the
Marble Arch end of the street and re-
place it with a nine-storey building with
a mix of retail and office space.
The development will contain 39,500
tonnes of carbon, which would need
2.4 million trees to offset. Create
Streets, the social enterprise founded
by Nicholas Boys Smith, said the rede-
velopment was “a waste of embodied
carbon” and “ugly spreadsheet archi-
tecture”. Jacob Loftus, chief executive
of General Projects, an office develop-
er, wrote on social media: “How can this
be justified in the context of a climate
emergency!”
The company has said 90 per cent of
the materials from the site will be re-
used in the construction of the new
building. Sacha Berendji, property di-
rector at M&S, said it “positively con-
tributes to our net-zero targets over the
long term”.TIMES PHOTOGRAPHER JACK HILL
Mulberry bags are an
accessory for many
top models including
Carla DelavigneThe company said
over the next six
months it will spend
more from its
“substantial cash
reserves” on marketing
to build brand
awareness around the
world. China is a target
earmarked for the
“most potential front
of house growth”,
according to Andretta.
The company said its
British factories and
careful planning has
helped it navigate
supply chain issues.
Retail revenue in the
eight weeks to
November 20 rose
35 per cent compared
with last year.
UK retail sales
rose by 36 per cent
to £38 million,
£10 million more than
last year. International
retail sales made up 40
per cent of group
revenue. Digital
sales were
£19.1 million, a
19 per cent fall on
last year when shops
were closed, but this
was made up for by
the 87 per cent
growth in stores,
which produced
£36.5 million of
revenue.is completely different,
customers want to
compare or ask
questions”, he said.
Andretta said that
Mulberry has resisted
slashing prices and the
margin is 69 per cent.
Founded in Somerset
in 1971, Mulberry has
40 UK stores and a
strong presence in
South Korea, Japan
and China. It employs
about 1,200 people.£2.1bn
Estimated cost of keeping Bulb trading
until the end of next April