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Intertek is just the kind of business one would expect to see flourishing in the wake of COVID-19.

One of the lesser-known companies in the FTSE 100, in spite of having a stock market valuation of £9bn, it is the world’s biggest provider of quality assurance.

It employs nearly 44,000 people around the world in more than 1,000 offices and laboratories, providing assurance, testing, inspection and certification services to clients in sectors as wide-ranging as chemicals, food, healthcare, transportation, energy and construction.

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The firm went public in 2002 and joined the top-flight index in 2009

On Friday morning it reported a 23% rise in pre-tax profits, to £186.3m, for the six months to the end of June.

However, despite what appeared to be a confident trading update, the company’s share price plunged by more than 9% at one point – wiping £849m from its stock market value.

So what went wrong?

In a word, it seems that expectations were just a little too high.

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According to Oscar Val Mas, analyst at investment bank JP Morgan Cazenove, underlying earnings came in 7% lower than the market had been expecting and noted that the company had not changed its guidance to investors on profit margins for the year.

Steve Clayton, manager of the HL Select UK Growth Shares fund, which owns shares in Intertek, added: “These interim (results) were always going to be a tough act for Intertek to pull off.

“Demand has been highly volatile and only relatively recently translated into robust growth.

“But expectations for Intertek’s ability to translate any recovery into higher (profit) margins were high.

“So far, the group is lagging a little on the margin front, even though pretty much all parts of the business are now seeing demand bouncing back.

“Full year forecasts are likely to edge down, so no surprise to see the market pushing the stock lower.”

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Expectations were too high and the market pushed stock lower

It is a rare setback for a company which, since going public in 2002 and joining the Footsie in 2009, has been a stock market darling.

It has a strong track record of growing both via takeovers and organically and also of predicting accurately what its customers will be demanding next.

Yet Andre Lacroix, the chief executive, insisted today he was confident demand will keep growing and said the company had “exciting growth opportunities” in the post-COVID-19 environment.

He told analysts today: “The total value of the global product assurance market is $250bn.

“Only $50bn of this is outsourced.

“Given the increased complexity in global corporations, we expect companies to continue to invest in new quality assurance areas to mitigate risk in the supply chain.

“These are what we call untapped quality assurance opportunities. And, indeed, COVID-19 has demonstrated there were major risks in the operations of our clients, which were not all mitigated.

“We expect the increased focus on quality assurance essentially in three areas moving forward – safer supply chain, better personal safety and sustainability.

“And this is why the industry is expected to grow faster post-COVID-19.”

Andre Lacroix
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Intertek boss Andre Lacroix is a former chairman and chief executive of Euro Disney

Mr Lacroix, who joined in May 2015 from Inchcape – coincidentally the company from which Intertek was spun out of 25 years ago – said a recent survey of customers had revealed that 87% of them were planning to invest in the next two years to strengthen their supply chains.

He said that recent shortages in supply around the world – a good example currently being how shortage in chips is hampering car production around the world – had highlighted the need for supply chains to be more resilient.

He went on: “We need to ensure health, safety and well-being for employees and consumers. COVID-19 has raised the bar for health and safety in public and factories and workplaces forever.

“And they all face higher operational complexity, which is driven by the explosion of e-commerce and, of course, the ever-faster innovation cycle.”

One area where investors appear to be concerned, in the immediate term, is inflation.

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As firms put net zero plans in place, Intertek will have a vital role to play, say experts

Intertek employs a lot of specialist and highly-qualified people, such as scientists with PhDs, while it also has a policy of giving employees pay rises every year.

The expectation is that it will be seeing a high level of wage inflation.

Mr Lacroix insisted that this was not the case – pointing out that, when lots of businesses were undergoing large restructurings with a lot of redundancies during the pandemic, Intertek had deliberately not gone down that road.

He went on: “To basically reduce our capability and then start hiring again was going to be very costly and not the right thing from a customer service standpoint.

“So we are not seeing any issues with shortages of labour. We have to hire, we do it all the time, but we don’t have a huge gap in our capability.”

He said the company would be quite capable of returning to its pre-pandemic productivity level without having to take on more employees.

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And there could be another big growth opportunity in coming years, too.

As Mr Clayton put it: “There is a quiet revolution going on in business, as firms start to put net zero plans into place.

“Intertek has a vital role to play here, with its ability to provide quality assurance of supply chains and audits of key environmental performance data.

“In short, there are whole new markets opening up for the business and the shares should increasingly recognise the potential of these opportunities, as well as the issues the existing business faces day to day.”

So, a tough day for Mr Lacroix, a former chairman and chief executive of Euro Disney.

But, once the dust has settled, he has plenty of opportunities to prove to sceptics that his company’s prospects are anything but Mickey Mouse.

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Blackstone swoops for stake in Theatreland giant ATG

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Blackstone swoops for stake in Theatreland giant ATG

Blackstone, one of the world’s biggest private equity firms, is in advanced talks to buy a stake in Ambassador Theatre Group (ATG), the owner of some of the most famous playhouses in London’s West End.

Sky News has learnt that Blackstone, which manages more than $1trn (£790bn) in assets, is close to snapping up a minority interest in the owner of the Duke of York’s and Lyceum theatres.

If completed, it will be a significant corporate transaction for a company which has staged productions of Harry Potter and the Cursed Child, Hamilton and The Book of Mormon.

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City sources said that Blackstone was expected to acquire the shareholding from TEG, an Australian live entertainment and ticketing company which bought into ATG during the pandemic.

One added that the deal would involve a stake of between 10% and 15% changing hands.

ATG has been majority-owned by Providence Equity Partners since 2013, making it a lengthy ownership period by private equity industry standards.

Providence did consider running a sale process several years ago but was stymied by the pandemic, which forced the closure of theatres and other live entertainment venues for months during a succession of lockdowns.

ATG operates dozens of theatres in the UK, with its other prominent venues including the Harold Pinter Theatre, as well as the Empire in Liverpool and the Lyric and Hudson on Manhattan’s Broadway.

In total, it owns roughly 60 theatres, having struck a deal in 2021 to buy the Golden Gate Theatre and Orpheum Theatre in San Francisco, and the Fisher Theatre in Detroit – both of which are key cities for touring Broadway productions.

Empire Theatre, Liverpool. Pic: iStock
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The group operates dozens of theatres in the UK. Pic: iStock

Pic: Geoff Moore/Shutterstock
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Pic: Geoff Moore/Shutterstock

Last year, it announced that it was combining its US operations with Jujamcyn Theaters to strengthen its position in that market.

The company competes with rivals including Lord Lloyd Webber’s Really Useful Group and the billionaire Sir Leonard Blavatnik, who owns the Theatre Royal Haymarket.

The valuation of ATG in the deal with Blackstone was unclear this weekend.

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Providence acquired the company for £350m over a decade ago.

In 2022, it was reported to be seeking to refinance roughly £1.2bn of debt.

ATG has a workforce of more than 4,000 full-time equivalent employees, and its venues have played host to some of the world’s most successful plays and musicals, including The Lion King, Les Miserables and Wicked.

The company was founded in the 1990s by the husband-and-wife team Sir Howard Panter and Dame Rosemary Squire, who subsequently went on to set up a rival theatrical group.

It is now run by Ted Stimpson, a leisure industry veteran who replaced Mark Cornell last year.

A renewed sale process for ATG is said to be unlikely to take place for some time.

Accounts for International Entertainment Holdings, ATG’s parent company, show it made a record operating profit in the year to 25 March 2023 of £120.5m.

It said that advance ticket sales were exceeding pre-COVID levels.

Blackstone and Providence both declined to comment.

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Tata Steel workers to hold ‘all-out indefinite strike’ in July, Unite says

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Tata Steel workers to hold  'all-out indefinite strike' in July, Unite says

Around 1,500 workers at Tata Steel will hold an “all-out indefinite strike” next month, a union has announced.

The industrial action at the company’s sites in Port Talbot and Llanwern, Newport, will begin on 8 July, Unite said.

The union said the walkout would “severely impact” the company’s UK operations.

It comes in response to plans to close Tata Steel’s blast furnaces in South Wales, putting 2,800 jobs at risk.

The union said it would be the first time in more than 40 years that steel workers in the UK have gone on strike.

Members voted in favour of the move in April.

Industrial action short of a walkout, including staff working to rule and a ban on overtime, began earlier this week.

The union’s general secretary Sharon Graham said: “Tata’s workers are not just fighting for their jobs – they are fighting for the future of their communities and the future of steel in Wales.

“Our members will not stand by while this immensely wealthy conglomerate tries to throw Port Talbot and Llanwern on the scrap heap so it can boost its operations abroad.”

She added: “The strikes will go on until Tata halts its disastrous plans.

“Unite is backing Tata’s workers to the hilt in their historic battle to save the Welsh steel industry and give it the bright future it deserves.”

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Tata Steel previously said it was losing £1m a day at Port Talbot and warned the situation was unsustainable.

The company said its plans, which include the building of an electric arc furnace, would mark the beginning of a new way of “competitive and greener” steelmaking.

The proposals were officially confirmed in January, with its boss TV Narendran telling MPs the decision was “pretty much” a done deal.

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Sky News first exclusively revealed details of the plans in September 2023.

Tata Steel initially offered an enhanced redundancy package to workers affected by the proposals, but this was reduced after the industrial action short of a strike began earlier this week.

Unions, including Unite, expect Labour to hold emergency talks with the company if the party wins the upcoming general election.

Alun Davies, national officer for steel at the Community union, which says it represents the “vast majority” of affected Tata workers, said it had decided with the GMB union not to take part in any industrial action for now.

He added: “If the Labour Party wins the general election it has said that it will hold emergency talks with Tata…

“We welcome this, and now feel it is important to wait for the completion of that process before initiating any significant course of action.”

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Former union boss George Thomson denies being ‘too close’ to Post Office as he gives evidence at inquiry

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Former union boss George Thomson denies being 'too close' to Post Office as he gives evidence at inquiry

The former head of a union for sub-postmasters has denied it became “too close” to the Post Office and was “flush with money”.

George Thomson, formerly of the National Federation of SubPostmasters (NFSP), also denied lacking sympathy for those who were wrongfully convicted during the Post Office scandal, which occurred following faults in the organisation’s Horizon IT system.

It comes after the TUC claimed earlier this year that the Communication Workers Union (CWU) had been blocked from effectively organising at the Post Office, and alleged the NFSP was given funds by the Post Office.

Mr Thomson, who served as its general secretary between 2007 and 2018, gave evidence at the Post Office inquiry on Friday.

When asked by inquiry counsel Julian Blake if he became “too close” to the Post Office, he replied: “No, I wasn’t.”

Mr Thomson later added: “We worked closely with the Post Office because we both needed to have a successful franchise – that’s the reality.”

The inquiry was shown an email sent on behalf of Mr Thomson in August 2013 which outlined plans for the Post Office and NFSP to sign a 15-year contract to represent all Post Office operators.

It included annual payments starting at £500,000 in 2013/14 and reaching £2.5m from 2017 to 2028.

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Mr Thomson said it had taken “a lot of badgering” of the then Post Office chief executive Paula Vennells to agree to the deal. He also claimed her team “would have preferred the NFSP withered on the vine”.

Put to him by Mr Blake that they were significant figures, Mr Thomson told the inquiry the NFSP “took on new functions” as part of the deal.

When asked if the NFSP was financially dependent on the Post Office at the time when issues with Horizon were ongoing, Mr Thomson said the federation had lost 8,500 sub-postmasters in the previous 12 or 13 years, and that the money was “replacing what used to be membership money”.

He added: “It was never ever tied to Horizon.”

The inquiry was also shown a Computer Weekly article from May 2009 which detailed the cases of several high-profile sub-postmasters, including Sir Alan Bates.

The sub-postmasters told the magazine their union had “refused to help them investigate their concerns”.

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‘Did the mask slip in this email, Ms Vennells?’

Asked by Mr Blake why the NFSP did not help them, Mr Thomson said the federation had to seek permission from the Post Office first.

He said: “We did fight their cases but we asked the Post Office, ‘What are we to do as an organisation?’

“Every case that was brought to us, we took it up with the Post Office.

“You’re trying to make out that somehow we were flush with money… That’s not correct.”

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Mr Thomson said he had investigated 20 or 30 cases at the “highest level” during his time as general secretary, and would have tried to employ a computer expert had he known more about the issues with Horizon.

He said: “I’ve been around a long time – suspensions have always taken place, prosecutions have always taken place, under the manual system as well.

“We had a franchise that was in crisis and we always tried to help people.”

Mr Thomson described Horizon as “a strong system”. He added: “It’s a well-used system, and I still support it systemically as being very robust.”

However, some former sub-postmasters reacted with anger to his testimony on Friday.

They included Christopher Head, who wrote on X: “[Mr Thomson] and his organisation failed it is main overarching duty to protect its members. They are a disgrace and have no place today to be trying to represent the interests of current Postmasters, they are a sham…

“The NFSP should be completely disbanded.”

More than 700 sub-postmasters were convicted between 1999 and 2015 after errors in the Post Office’s Horizon IT system meant money appeared to be missing from many branch accounts when, in fact, it was not.

It has been branded the biggest miscarriage of justice in British legal history.

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