Berlin • Washington • Beijing
JOHN P. WESTONChairman of the International Advisory Board of ASPIDE
NON EXECUTIVE CHAIRMANSHIPS
OTHER NON EXECUTIVE APPOINTMENTS
John became chairman of ISOFT PLC in October 2005. It was formed in 1998, following a management buyout from KPMG, and was first listed in July 2000. It is strong in the UK market, has subsidiaries in Holland, Germany, Spain and Australia/NZ. In the year to April 2005 they generated sales of £250mio and profits of £44.5mio.
Two months after John’s appointment it became apparent that the company was experiencing significant difficulty with its contracts on the UK National Programme for IT. As a result the company was unable to generate cash, or trade revenue, on the programme that was budgeted to make up more than half its revenue for 2006. Costs had been escalating at a rapid rate and had reached a burn rate of £210mio per annum at the end of 2005. After profit warnings in January and April, John took over as CEO as well as Chairman in July 2006.
The city had been having some difficulty in following the company, and was unhappy about the degree of transparency of the accounts. On examination it had become apparent that this was due to a growing misalignment between the company’s revenue recognition policy and the nature of its business. It was therefore decided to change the policy and in order to report on the revised basis it was necessary to re-examine historical contracts and re-distribute the revenue according to the new policy.
During the audit of the company’s accounts it became apparent that there were some irregularities in the way revenues had been booked on some historic contracts, and cash transfers made to support the mis-booked revenues. A forensic accounting examination confirmed this and a dossier was passed to the FSA, which is the subject of an ongoing investigation.
The previous management had also used factoring and project financing arrangements to bring forward revenue and cash. The unwinding of the working capital effects of this meant that there was an emerging working capital hole of around £140 million to be dealt with.
The company was at that point also in danger of breaching its banking covenants and the banking consortium transferred the management of the debt to their recovery specialists.
The company’s development centre was located in Chennai, and had grown from 300 to 1800 staff in 2 years. This meant that the company was under-resourced in middle management, and although nominally had some processes in place, these were inadequate to manage the complexity of scale of the software programmes being undertaken.
Urgent action was taken to:
The business was restored once again to profitability. The board decided to solve the working capital hole by putting the business up for sale and Compugroup of Germany and IBA Health of Australia put bids on the table. The auction was won by iBA Health with a cash offer of 69p per share which completed in October 2007. This compares with a low point of 32p per share. The banking recovery teams had taken the debt over from their colleagues in mid 2006 at 50p in the pound, and realised 130p in the pound in October 2007
This represents a successful turn-round in 15 months, with all key issues addressed.
ACRA CONTROLS LTD, DUBLIN
John became Chairman of Acra in May 2003. The company manufactures digital data collection devices for test instrumentation systems, mainly in the aerospace sector. The company has annual sales of €15mio, (up from €10mio when John joined the board) and is growing strongly with an international customer base, particularly in Europe and the Far East, but also breaking new ground in the USA. Customers include Airbus, BAE SYSTEMS, Northrop, Boeing and Eurocopter.
University for Industry
Join joined the board of the University for industry (perhaps better known under its brand name of Learn-Direct) in 2003, becoming Deputy Chairman at the end of 2003, and Chairman at the end of June 2004. Ufi is a government initiative for providing on-line learning particularly targeted at adults who have not reached a level 2 qualification and employees of SMEs. It offers around 400,000 courses and has more than three million students have enrolled to do at least one course. The organisation has a budget of around £200mio per annum. The sponsoring government department is the DIUS and it is set up as a charitable trust.
Following the maturing of the organisation, Ufi has had to find its niche in the adult learning market, and has had to adjust to a change in policy objectives, as the government and the Learning and Skills Council placed increasing emphasis on level two and national vocational qualifications. Following the appointment of a new CEO the organisation has made savings of the order of 30% in its operating expenses, now making it the most cost effective provider, as well as the largest provider of services to the LSC. The network of learning centres and the system for controlling them has been completely overhauled.
As Chairman John has manages a diverse board spanning further education, small and large businesses, trade unions and politics. The job entails working at senior level with Ministers and the Department for Innovation, Universities and Skills, and other government departments.
Insensys is a start up company involved in optical strain gauging for the oil and gas, wind energy and aerospace industries. The oil and gas sector is mainly an engineering application business, whereas the wind energy, and the aerospace business which is at a more formative stage, are more equipment production oriented. The oil and gas business was sold to Slumberger, allowing the management to concentrate on developing the wind energy and aerospace businesses. The company is based in Hamble. John joined as Chairman with a flotation of the company on AIM as the short term objective. It was decided that the timing was not right to do this, and that the company should be further split into the Wind Energy and Aerospace components, therefore John resigned in November 2008.
John became Chairman of Spirent in November. Spirent PLC was involved in the manufacture of telecommunications test equipment. Turnover was around £650mio per year and the company employed around 5,000 employees. Some two-thirds of the company’s activities were in the US. The board was international in composition.
On appointment the company had just suffered the consequences of the telecoms sector collapse. The share price had fallen to around 12p, was about to breach its banking covenants and had a very nervous set of bond holders. Management had little experience of managing a business in a downturn and there were significant management issues in the business.
Following John’s appointment the company sold some of its businesses, reduced debt, negotiated alleviations to its banking covenants, and conducted a strategic review of the business. A new CEO was appointed and Management of the high tech sector in the US was re-focused to managing in a downturn, whilst maintaining R&D in new products to drive the upturn.
The injection moulding business was sold and the proceeds used to pay off the remaining debt, top up the pension fund and for some niche acquisitions to expand the core telecommunications business.
John left the business in December 2006 after a proxy battle for control of the company resulted in a victory for Sherborne investors in a close 55% to 45% vote.
The share price had increased by 400% during his tenure as Chairman. Two years later the share price was at about the same level as at the time of the proxy battle
John became Chairman of Inbis PLC in January 2004. Inbis is a design engineering consultancy operating mainly in aerospace and the nuclear field. Turnover was around £60mio per year. The business was owned by Barclays Private Equity, 3i, and the management. In April 2005 a successful exit was achieved with a sale to Assystem-Brime. The achieved sale was at around 3 times the valuation at the end of 2003.
MB Aerospace is primarily a supplier of machined components to the aero-engine industry, and is building a position as a key part of the supply chain for Rolls Royce’s legacy products. It also has a design engineering business working in the aerospace and nuclear sectors. The company has annual sales of around £20mio. The private equity backer is LDC.
AWS manufactures circuit boards and wiring harnesses for the defence and aerospace businesses, and does some high cost, low volume electronics for the commercial electronics sector. The Group operates through four UK based centres of excellence,
During his tenure as Chief Executive, British Aerospace was transformed into the new BAE SYSTEMS company. This took it from an organisation with sales of around £7.5 billion and 55,000 employees, located mainly in the UK, to an international group which handles sales of £12.5 billion, and 120,000 employees. The group ranges from its participation in the civil aircraft market through the 20% stake held in the Airbus consortium, to a range of defence interests including fighter aircraft, guided weapons, naval systems, software and electronic businesses.
BAE SYSTEMS is probably one of the most complex companies in the FTSE 100. It ranges from high-technology systems integration development programmes, such as fighter aircraft and nuclear submarines, to a range of high-technology manufacturing activities, from heavy engineering to electronics manufacture,. It also encompasses major construction programmes, and an extensive international service business. The shareholder base spans the UK, the US, Europe, the Middle East and the far East. The non-UK shareholder base increased from around 25% to nearly 50% during this period, particularly noteworthy was the increase in the US. Shareholder communications were conducted by the Chief Executive and the Finance Director, both of whom developed an excellent reputation with the investor community.
The key achievements of this period were:
As the line manager responsible for all the British Aerospace defence activities, John was responsible for the P&L of a portfolio of businesses making up 75% of the parent company's operations. These included Military Aircraft, Guided Weapons, Ordnance, Electronics and Systems. This was a difficult period for the defence business, following on from the end of the Cold War, and major restructuring was necessary in all areas, in businesses which had previously enjoyed a "job for life" culture. Despite the challenging market conditions, substantial sales growth was achieved, against the background of 30% reductions in the cost base, and an increase of 70% in profitability. This enabled the sector to make the contribution to corporate profitability necessary for the recovery of the corporation from the civil aircraft difficulties of the early 1990s.
As chairman of each of the operating companies, the businesses had to be driven through the strategic planning, business review and board meeting processes. The military aircraft business represents a unique level of complexity, developing very stretching high-technology systems, on an international collaborative basis. The Eurofighter Typhoon programme for example requires the prime contractor to operate as an international team, managing an integration programme with activities spanning some 300 companies spread over four countries. Every one of these pushing back the frontiers of technology in their respective areas, and any one of which encountering a significant problem could hold up in the entire programme with all the consequential cost flowing from it.
The guided weapons business was also very challenging strategically. Following several years of retrenchment, the business was experiencing acute competition in its home market from American companies, with their research and development bills paid by the US government. However, the dependence of the military aircraft business on guided weapons limited the options for sale or closure. The eventual solution required the completion of a complex deal with MATRA in France and the winning of two crucial large UK and French programmes.
The challenges of the ordnance business could not be solved by acquisition or international joint venturing, and had to be addressed by stringent cost-cutting and restructuring.
Through a series of acquisitions of software and systems companies, it was possible to open up some major new lines of business for the company in the naval systems arena.
In 1993 John was appointed to the main board, and was given responsibilities for engineering and information technology throughout the group.
Key achievements from the period included:
He took over the Military Aircraft Division immediately following the end of the Cold War. The division then employed 27, 000 employees, and had handled sales of £3.5 billion. In order to maintain profitability, a major rationalisation programme was required. This had to be carried through in a way which enabled the key programmes to continue to deliver, and when extensive export contracts were still required. This involved significant change programme activity whilst going through a painful restructuring process.
Initially as project director and subsequently in charge of all the Saudi Arabian operations, he was heavily involved in the multi-billion pound programme for the supply of aircraft, guided weapons and ships to the kingdom of Saudi Arabia. This involved in country support programmes with a workforce rising to 5,500, several billion pounds worth of construction programmes in country, management of the finance of the programme which was funded through an oil barter arrangement, and the more conventional challenges of a major capital equipment export programme. The government to government nature of the front-end contract also had some interesting management challenges with respect to the way in which the company had to work with HMG. This programme was a major factor in enabling the company to withstand the financial shocks of the withdrawal from regional aircraft and went on to provide around £30 billion of revenues to the company.
John joined the British Aircraft Corporation in January 1970, as an undergraduate apprentice. Following graduation he worked as a dynamics engineer, a sales engineer specialising in electronic systems, various marketing roles, including 7 years in Germany on an international programme, and a period on secondment to the UK MoD.