Page 3 - Stakis B Case Study

Case ‘B’ – The company doctor and the turn

around

In Andros Stakis' last full year as Chief Executive the

company reported pre-tax profits of £30 million. It was clear

that the City and financial press were not impressed by this

performance which they saw, given the trading figures, as

wholly inadequate for a company with over £200 million of
debt.

In May 1991 a survival package was announced. Sir Lewis
identified problems arising from the ambitious

development programmes which "in themselves not

unsound" but which reached a peak in terms of cash
demand at a time when demand was sluggish, interest rates

were stubbornly high and asset sales difficult to achieve.

Sir Lewis immediately planned asset sales and write-offs.
One of his first steps was to axe a third of the head-office

staff and to move the remainder to new headquarters. Out

of the 360 staff in the divisional and group head offices, 111

were dismissed, of whom 71 were made compulsorily
redundant. As part of this cutting, the head office functions

of all the operating divisions were to be centralised at one

site at East Kilbride. Before this, the individual divisions,
Hotels, Leisure, Property and Nursing Homes, all had their

own personnel, finance and purchasing functions. The

centralisation was estimated to bring savings of £2 million

per year. It was said that the jobs review had been initiated