the times | Wednesday February 16 2022 35Business
be “right-sized” for the coming summer
season, with budget carriers such as
Ryanair and Wizz Air unveiling the
most aggressive expansion plans.
BA has told staff it plans to offer them
a one-off payment, which does not
increase their annual salary, nor pen-
sionable income, of 5 per cent of their
annual pay next month, and another
5 per cent equivalent next autumn.
The airline says it has made the offer
in “good faith”, but has warned that
payments are dependent on its finan-
cial performance.
The offer is believed to be designed to
ward off potential industrial disputes as
British workers grapple with a cost-of-
living crunch, soaring energy and fuel
prices and inflation galloping away at
7 per cent.
The offer covers cabin crew, staff at
check-in, baggage handlers, engineers,
call centre workers and admin staff. BA
pilots are getting a 5 per cent increase in
their salaries.
A BA spokesman said: “As we rebuild
our airline, we’re committed to putting
our people at the heart of our business
and this proposal is a gesture of thanks
for colleagues’ hard work during the
pandemic.”Electric car start-up plans to
lighten its load with research
Robert LeaPolestar, the nearest thing that Europe
has to an electric premium car start-up
such as Tesla, is to increase investment
in its British operations.
The zero-emission car spin-out from
Volvo that has been bankrolled by
Geely, the Chinese automotive group, is
to increase its research and develop-
ment division near Coventry in the
West Midlands from 280 engineers to
500 as it strives to make its car’s chassis
as lightweight as possible to compen-
sate for the heavy weight of the car’s
batteries.
Polestar’s R&D facility is based at
Ansty, where Geely manufactures the
LEVC hybrid black cabs for the London
taxi market. Geely also owns Lotus, the
British sports car manufacturer, which
is converting itself to an all-electric
future.
The engineers at Ansty, many of
whom are from Formula One or otherniche sports car backgrounds, have
been given the task of coming up with a
commercial means of producing non-
welded bonded aluminium car bodies
at volume.
Ansty has been charged with bring-
ing the new Polestar 5 model from
concept to reality. Due to be in pro-
duction from 2024, the Polestar 5 will
be aimed at the same market as the
Model S, Tesla’s second most expensive
model.
Thomas Ingenlath, Polestar’s chief
executive, said: “Our UK R&D team is
one of Polestar’s greatest assets. Their
mix of engineering and technological
expertise will set Polestar apart in the
years to come.”
Polestar is due to float on the New
York Stock Exchange via a reverse into
a so-called blank-cheque company,
which has been set up by Alec Gores,
one of the leaders in the fashion for
such “special purpose acquisition com-
panies”, or Spacs.Digging deep for a
culture change
C
opper, zinc, cobalt, nickel,
coal. There’s no shortage
of stuff to dig up at
Glencore. So you have to
hand it to the miner that,
for a few years now, one of the main
commodities to surface has been
tons of bribery investigations.
Up they’ve popped to detract from
the commodity boom, not to
mention the swansong of former
boss Ivan Glasenberg: the man who
bowed out last year after two
decades at the rock face. How were
investors meant to focus on soaring
minerals prices when America’s
Commodity Futures Trading
Commission, for example, was
poking around Glencore’s exploits in
Nigeria, Venezuela and the
Democratic Republic of Congo? Plus
investigating the company’s links to
Dan Gertler: the businessman
sanctioned by the US for his “opaque
and corrupt mining and oil deals” in
the DRC?
Glencore kept producing far too
much shock and ore, with investors
left guessing over the damage from
inquiries in five countries. So it’s a
fillip for new boss Gary Nagle, who
took charge last July, that he’s
bottomed out a big chunk of the
problem: a full-year provision of
$1.5 billion that’s half of analyst
forecasts. True, it only covers the US,
UK and Brazilian investigations that
Glencore “expects to resolve” this
year. But the other two, from the
group’s Swiss home and the
Netherlands, are into the same stuff.
Investors finally have a grip on the
costs: a key reason, alongside the
$4 billion cash return, that the shares
rose 1 per cent to 427p.
It’s all part of what Nagle calls
“changing the culture” at Glencore.
Yes, the group’s hard-charging,
entrepreneurial style may well be
one of its strengths — and key to its
commodities trading wing. But the
shares have never topped 2011’s 530p
float price. As Nagle knows,
Glencore would be better rated if it
knew when not to cross the line.
Take out the bribery stuff and it’s
riding a commodity wave: the result
of the collision between post-Covid
global recovery and shortages for
key minerals, exacerbated by supply
chain logjams. Realised prices per
tonne have rocketed: copper, up
49 per cent; zinc, 33 per cent; nickel,
36 per cent; and polluting thermal
coal, 82 per cent. Production fell
slightly. But adjusted mining ebitda
jumped 118 per cent to a record
$17.1 billion — $11.1 billion from price
rises. The trading wing also had a
record year, maxing out on the
“volatility” that comes with “tight
physical commodity markets”. Its
operating profit rose 11 per cent to
$3.7 billion.
To boot, aside from coal, which
Glencore is running down, it’s in the
right commodities for the big
decarbonisation trend, with the likes
of copper, nickel and cobalt key to
electric cars and battery power: a
point driven home by its backing for
the Britishvolt battery gigafactory.
Nagle has brought clarity, too, over
investor returns: handing back the
surplus above a $10 billion debt cap.
Still, there’s one vital area for
improvement: the fatality rate
among Glencore’s 135,000 workers.
It halved last year to four: the bestfigure since the float after 17 deaths
in 2019, 13 in 2018, nine in 2017 and
16 in 2016. Yet Nagle knows only
zero is acceptable. Delivering that
will be the strongest sign of overdue
cultural change.This bid won’t fly
C
hocks away. International
travel is back. So what better
time for National Aviation
Services to be flying in from Kuwait
with a £469 million mooted bid for
Edinburgh-based John Menzies? The
Gulf raider is dangling 510p a share: a
“full and fair value”, it reckons, to
take out its European rival for
ground handling, refuelling and air
cargo services (report, page 41).
On the face of it, too, a 76 per cent
premium looks decent enough.
Philipp Joeinig, Menzies’ chairman
and chief executive, has been in
charge since July 2019, but is yet to
pilot the shares to the proposed bid
price. And while the tilt from NAS
could look as “opportunistic” as he
claims, the post-Covid aviation
recovery will largely star cash-
strapped airlines keen to screw down
air servicing costs.
Even so, Menzies shares stood at
475p in January 2020. And Joeinig
has used the pandemic to take out
£25 million of costs. Adjust for that,
he reckons, and NAS’s bid multiple is
6.4 times 2019 ebitda, not the 9.5
times it claims. He also thinks he’s
spotted opportunities to deliver up to
£280 million of extra annual sales,
even if seeing is believing when part
of it’s coming from “higher-margin”
work in Iraq, Pakistan, Costa Rica,
Guatemala and El Salvador.
The Kuwaitis are quibbling with
his maths, claiming he’s also failed to
adjust for £7.6 million interest on
lease liabilities. But that’s not the key
point. It’s that Menzies shares, up 3
per cent at 477p, are suggesting the
bid fails at this price. And not least
because the two top investors,
Sterling Strategic Value and Mithaq
Capital, together with almost 14 per
cent — plus SVM Asset
Management, with 1.7 per cent —
don’t think it’s enough. Yes, the
shares may crash land if NAS walks.
But the Kuwaitis need to top up the
price if they want their bid to fly.MySale goes cheap
D
on’t follow Mike Ashley or Sir
Philip “Effing” Green into
online shopping stocks. On
Monday, Studio Retail collapsed,
taking the Sports Direct founder’s
28.9 per cent stake with it. And now?
A fashion faux pas from MySale: the
Aussie outfit 15 per cent-owned by
Shelton Capital, the vehicle
controlled by the Monaco-based
yacht decorator Lady Green.
MySale’s ended up with A$6.1 million
of stock it can’t shift: news that sent
the shares down 34.5 per cent to
2.16p, where it’s valued at a princely
£20.5 million (report, page 41). Green
bought the stake for his wife at June
2014’s float, where broker Macquarie
got a dressing down for pricing up
the shares at 2.26p — instead of
226p. Turns out it was too optimistic.[email protected]business commentary Alistair Osborne
world it has changed
and a newly disclosed inquiry by Dutch
authorities into potential corruption in
the Democratic Republic of Congo.
Despite this, for investors the update
marks a welcome sign of progress. “A
resolution of ongoing regulatory
investigations, including the DoJ,
would be a market-clearing event,”
analysts at Jefferies wrote, adding the
$1.5 billion was less than the $2-$4 bil-
lion the market expected.
Moving on from these investigationswill require Glencore not only to settle
on acceptable financial terms but also
to convince investors and the wider
world that the conditions that gave rise
to the misconduct no longer exist.
Nagle has sought to get on the front
foot here, setting out last summer how
Glencore had instilled a new compli-
ance regime and had largely eliminated
the use of intermediary agents such as
those referenced by Stimler.
“We are changing the culture,” Naglesaid. “We want to run a responsible and
ethical business and there were pockets
of misconduct that happened in this
business historically. We will not put up
with that in this business, there is no
place for that in Glencore. And we will
ensure that our world-class ethics and
compliance programme continues to
evolve to ensure that we run a business
that is responsible and ethical so we
won’t see that ever again.”Mining giant
stands behind
gigafactory
Robert Lea Industrial EditorGlencore has emerged as a
cornerstone investor in Britishvolt,
the giant “gigafactory” under
construction at Blyth.
The giant mining and
commodities grooup had already
taken a financial interest in
Britishvolt in return for the supply
of cobalt and nickel that the plant in
Northumberland will need. By 2027,
Britishvolt plans to make enough
batteries each year to power
300,000 electric cars. The battery
company is one third-controlled by
Orral Nadjari, 39, its Emirates-based
founder.
Now, in a third private
fundraising, Glencore has signed up
to invest £40 million of the
£200 million that Britishvolt hopes
to bring in from private investors.
This is on top of £100 million
previously raised.
The ability to raise private funds
to finance research, development
and commercialisation is likely to
mean that Britishvolt will take its
time on the road to its ultimate goal
of listing on the stock exchange.
Last month the business secured
£1.7 billion of project finance for the
complex construction of the
gigafactory from abrdn, the
investment house. The taxpayer has
also ploughed £100 million into the
venture in grants for a project that
ministers hope will help to create
3,000 jobs.Glencore has
instilled a new
ethics and
compliance
programmePIUS UTOMI EKPEI/AFP/GETTY IMAGESRich seam for investors, Tempus, page 42