Case Study: Optic Glyndŵr Ltd
Starting point:
Optic Glyndŵr Ltd (OGL) was acquired by Glyndŵr University on 1st March 2009. Glyndŵr University took the opportunity to acquire the business and grow it as an independent entity as part of their economic development strategy for North East Wales. Prior to acquisition the business was run on behalf of the Welsh Assembly Government under a management contract as a company limited by guarantee. OGL has three lines of business: Business Centre, Incubation Centre and Technology Centre. The revenue, risk and opportunity were dominated by one €5m project, a major contract for making prototype mirror segments for the world‘s largest telescope (ELT) for European Southern Observatory (ESO). At the point of acquisition the business was close to failure:
-Imminent failure of ELT project for lack of cash resources to deliver the project. ESO were on the point of cancelling the contract;
-Projected losses of £650k for the period Mar 2009 to July 2009;
-Uncertain cash position;
-Sales pipeline was virtually empty;
-Its industry and academic partners had lost confidence in OGL
Key requirement:
For Glyndŵr University to achieve their objective OGL had to be turned into profit quickly and effectively whilst retaining the support of its partners and delivering the ESO contract. Stephen Roe was appointed as interim Managing Director to:
-turn the business round
-rescue the ESO project
-create a business plan that gets the business into profit
-recruit his successor.
Results:
Within two days the cash position was assessed as stable but there were many informal commercial arrangements that needed to be clarified and settled before the final cash position could be formalized. ESO project was assessed and the case was made to the University to support the project. Within two weeks the project was underwritten by the University and commitments made to procure critical items. This action allowed ESO to continue to support the contract. It has now delivered on several major milestones and been paid €1.5m. ESO project budget was rescued from failure and turned round from losing more than £0.5m to break even. The project can now succeed and provide substantial impact for North East Wales. The turnaround plan was developed and submitted to the University within 8 weeks. The Board of Governors approved the plan and implementation was started.
The plan took the business to close to breakeven in year one and 2% return on sales in year 2. Successor recruited and handover completed within 5 months of start.
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