Digital Transformation » Systems & Software » THE FINANCIAL DIRECTOR INTERVIEW – Le Poidevin’s changing fortunes

It was another grey wintry day in New York. Staring out of his 34th floor office window, Andrew Le Poidevin became conscious of being at a pivotal point in his life. As he watched the traffic creep across the Brooklyn Bridge, Le Poidevin was struck in a single moment by the intensity of his dissatisfaction with investment banking, the career he had pursued since graduating from Oxford 11 years earlier. The decision was made in that instant.

At 33, Le Poidevin was ready to give up New York and the cut and thrust of life as an investment banker with one of the US’s biggest securities houses to become finance director of an ailing mini-conglomerate in the UK. He was young, with no direct experience in industry and no accounting qualifications. Some of his friends must have thought him a little mad to abandon a successful career to run the finances of Sale Tilney, a company with a poor prognosis, but Le Poidevin felt otherwise. After years of advising a procession of clients, he wanted to be the one making the decisions, taking the long-term view. Within two years he was to become group finance director of Queens Moat Houses, one of the UK’s highest profile companies of the time – albeit for the reason it was fighting to stay alive.

That Andrew Le Poidevin is able to identify the precise moment he decided to forsake a career in investment banking for industry would not surprise those who know him well. To colleagues he is a master of the minutiae, the kind of person who can readily recall the smallest details of the lengthiest documents or immediately assess the repercussions of one altered figure on the rest of a complex deal.

Nor is Le Poidevin one for letting opportunities slip. “Carpe diem – seize the day,” is a guiding maxim in his career.

In truth, the young Le Poidevin had fancied the idea of going into accounting and possibly becoming a finance director. Born in Manchester and educated at Stockport Grammar School, Le Poidevin emerged from university with a first class honours degree in philosophy, politics, economics.

At Oxford he was surprised by the extent to which he enjoyed the philosophy component of the degree. Brutally ruthless and unsentimental, the concepts of philosophy gave him the intellectual framework to think laterally, he says, and the confidence in his own ability to rationalise and solve problems.

There were offers from the big accounting firms but the one that proved irresistible came from merchant bank Morgan Grenfell. Perhaps he felt the banking environment would be more intellectually stimulating. It was during this time Le Poidevin was to meet and work with Andrew Coppel, another investment banker turned finance director who was to help shape his later career.

Le Poidevin spent much of his early years at Morgan Grenfell working on merger and acquisition projects and, in 1984, was seconded to Morgan Grenfell’s New York M&A team. Many of his peers would have seen the US job as something of a poisoned chalice. In a bank which considered the City the centre of the universe, an overseas posting, even to New York, must have been considered a galling prospect for the ambitious. But Le Poidevin saw things differently and he grasped the opportunity gladly.

A former US colleague recalls that Le Poidevin slotted into the new job with ease. “You must remember that from a Yank’s point of view, it is New York which is the centre of the known world. If Andrew hadn’t had such a good sense of humour and such strong abilities he would have been seen as a spy from London and would have been ostracised for it.

“Fitting into a new culture is difficult and if you get it wrong you are lost. Andrew was able to find the balance between the two cultures.”

By 1987 things were not going well for Morgan Grenfell in the UK. Advising Guinness on its takeover bid for Distillers, the bank attracted criticism when it won MMC approval to purchase certain of its client’s assets which duplicated those of the takeover target, and in so doing removed the main regulatory obstacle to the bid.

The reverberations were felt in New York. Fearing the difficulties in the UK were making the bank less aggressive than it needed to be, many Morgan Grenfell employees defected to competitors such as Merrill Lynch and Drexel Burnham Lambert. Le Poidevin was one of the “gang of four” who moved across to Prudential Securities. He was to stay at Prudential for the next three years.

Le Poidevin is reluctant to single out personal achievements during his investment banking years, insisting “there are no specific deals I can claim as my own”. But colleagues say that, among other deals, he was instrumental in the purchase by US company General Cinema of an 18% stake in Cadbury Schweppes.

“It was a very delicate situation,” a colleague recalls. “And to this day I know people at General Cinema have strong positive memories of Andrew’s contribution.”

Le Poidevin was able to help the US client understand the regulatory, investment and takeover cultures of the UK. “He was tremendously effective – a sort of Henry James comes to investment banking.”

Despite his success in the banking environment, Le Poidevin’s decision to take a new career path caused only mild surprise. His organisational and administrative skills were wasted in an environment where there was no sense of routine and he was growing frustrated by the short-termism of the work.

“The job just wasn’t exciting me anymore,” says Le Poidevin. “I was busy but not in a manner I found fulfilling. I was attracted by the idea of the chief financial officer role, having the opportunity of seeing the business as a whole.”

Andrew Coppel, who had left jewellery retailer Ratners to take over as chief executive of Sale Tilney in October 1990, wanted Le Poidevin on his team.

According to Coppel, the company was suffering from the historical misstatement of assets and liabilities and one of the more serious problems was the issue of the insurance liabilities of its Isle of Man underwriting subsidiary.

“Bear in mind that this was around the time when the Lloyd’s of London problems were coming to a peak,” says Coppel. Despite not having any prior expertise in the insurance market Le Poidevin was able to get to the bottom of the problem quickly. “He has that type of mind, he can resolve the issues. Frankly, the ability he showed in that area would have benefited Lloyd’s.

“By comparison, our predecessors were children playing with fireworks.”

But the best efforts of the Sale Tilney management team could not save the company. In 1993 it was forced into liquidation when one of its 12 banks refused to back a refinancing package. It was a devastating blow but Le Poidevin has no sense of personal failure.

“At the end of the day we took the company as far as we could given the magnitude of the problems.” Eleven of the twelve banks agreed to the restructuring proposal but the 12th wanted the businesses sold so it could get an immediate return and it was at liberty to do that, he says.

Certainly, Andrew Coppel was impressed by the clarity of mind Le Poidevin had brought to the task. When Coppel was appointed as a consultant by the bankers of Queens Moat Houses, he did not hesitate to bring in Le Poidevin.

The company had hit rock bottom. The shares were suspended on 31 March 1993, and there were many who believed Queens Moat Houses (QMH) was beyond resurrection. The accounts for the 1992 calendar year were soon to become the subject of a Department of Trade and Industry inquiry (the conclusions of which have yet to be announced).

“The backdrop is that the company should probably have been allowed to go bust but for all sorts of reasons it wasn’t,” says Mark Finnie, hotels analyst at NatWest Securities. “It was an absolute nightmare scenario when Andrew Le Poidevin first joined, there were no books and no records.

“If any of us had been asked at the time we would not have said it could have lasted as well as it has,” Finnie says.

“We were faced with having to build a base from financial information that didn’t exist,” agrees Coppel.

“It was a question of understanding detailed and complex leases, banking agreements and all sorts of financial agreements the company had entered into previously.”

Among the problems that required attention was the system of incentive agreements put in place with hotel managers by the previous QMH management.

In essence, the hotel managers had contracted to meet a pre-agreed sales target. If turnover exceeded the agreed amount, the managers were rewarded with the difference but should turnover fall short of the target, the managers were expected to make up the difference from their own resources.

It was an extraordinary arrangement that proved disastrous for the company when the recession and the Gulf War caused an unexpectedly sharp downturn in room occupancy rates. The shortfalls in sales were simply too great for managers to meet and the company was unlikely to achieve much by suing its own employees for money they didn’t have.

Le Poidevin was conscious of there being initial doubts about his suitability for the finance role at Queens Moat Houses. Through past experience he had acquired knowledge about aircraft leasing, the recording business, the construction and financial services sectors and he had even sold a winery in California but the hotel sector was alien to him.

But Le Poidevin insists his lack of hotel experience worked to his advantage.

“I think one of the reasons the business was saved was that it had a finance director who was not sentimental about certain aspects of the hotel business.”

Nor did Le Poidevin consider his lack of accounting qualifications a handicap.

“I read somewhere that 25% of FTSE 100 finance directors do not have accounting backgrounds and I’m quite happy to be part of that 25%.

“I don’t think any accountant who comes up against me has any doubts about my ability to do the job.”

Tony Humphrey, a partner in QMH’s legal advisers Allen & Overy, agrees.

“I didn’t actually know he didn’t have that qualification for some while,” he says. “It has never been a problem. He is clearly very intelligent with a superb grasp of the numbers.”

When Le Poidevin was invited to help restore financial stability and confidence at the hotels group, “the banks were in shock and the board was in shock”.

“In such circumstances you need a person with experience in dealing with banks, experience of dealing in an environment where information is limited and the experience of managing a business in a very tight cash situation.”

Over the spring and summer of 1993, Le Poidevin concentrated on establishing some basic management systems. “When most finance directors move to a new company they may find the systems not to their liking and have to make some changes – a bit like fine tuning a car. But we were having to build the car from scratch.”

Another priority was restoring confidence with the company’s 80 banks, which included about 30 headquartered in Europe. From his experience at Sale Tilney, Le Poidevin would have been acutely aware that the decision of just one bank to recall its loan would have caused all the dominoes to tumble. He also had to convince the banks of the need for a continuing programme of capital expenditure investment in existing hotels.

Le Poidevin looks back on the first six months as an “extremely breathless experience”. “I am normally pretty hard working but that was an especially tense time. There was the frequent risk that the whole thing would fall down.

“Having said that it was also a very, very fulfilling period. There was the realisation that the things we were doing were making a difference.

“I would not be doing what I am doing unless I was fulfilled, unless I felt that I was contributing something.”

Le Poidevin believes individuals are capable of achieving greater things under pressure. “I would not want this to sound arrogant but I do believe the survival instinct comes to the fore in such circumstances, you begin to believe in your own ability to make things happen.

“I have never had experience in battle but I sense it is the same sort of thing. If you accept the pressure, if you accept that everyone is looking at you, you actually begin to expect to survive. You get into a mode of being supremely confident about dealing with whatever problems are thrown at you.”

Although the company was to survive to relist on the Stock Exchange in May 1995, Le Poidevin and his colleagues were subjected to media criticism for awarding themselves bonuses of u100,000 each for the successful completion of the financial restructuring at a time when the company’s debt stood in excess of #1bn.

The media’s avid interest in boardroom salaries and bonuses is a source of frustration to Le Poidevin. “We faced a difficult assignment which required highly specialist skills and 110% commitment,” he says. “We were really doing two jobs: we were company directors and we were restructuring the company. Then there is the issue of personal risk both in the sense of career risk and the legal liability if we did not do things properly,” he says.

QMH is not out of the water. The company remains technically insolvent with net liabilities of #198.5m. “QMH is now designed to break even for the next few years,” says Finnie of NatWest Securities.

“But at some point in the future there will have to be a re-capitalisation of Queens Moat that will essentially involve the disposal of a substantial chunk of the asset base – perhaps some of its overseas hotels. There will also have to be an equity raising exercise in the UK.”

Although the company is planning the sale of up to 27 hotels – its Royal Crescent Hotel in Bath was sold to Cliveden last month – Le Poidevin doesn’t like the disposal programme to be regarded as a massive sell-off.

“What we are doing is selling the smaller properties to concentrate our resources on core hotels,” he says.

“We are doing what we were asked to do: build the profitability of the business. We are interested in securing the long-term future of the group.

We are not going to be persuaded into a premature refinancing that would undermine the value we have created.”

Colleagues say Le Poidevin can come across as being a little stiff, shy or intellectually arrogant on first contact, but beyond that facade is a man of great warmth, perception and “Oscar Wildean repartee”.

“Andrew’s greatest strength is he is a very organised and very focused man,” a former merchant banking colleague says. “He is John Redwood without the sharp corners.”

Humphrey describes him as a man with great stamina, a lively and creative mind and a strong, uncompromising commitment to the job. “Occasionally, people on the other side might feel they would like to deal with someone who will more easily come to a compromise,” he says. “Quite correctly, Andrew will stick to his guns.”

Coppel’s admiration for Le Poidevin is exemplified by his willingness to be interviewed for this article while convalescing after a heart by-pass operation. When asked about his finance director’s faults, Coppel is anxious his words are quoted correctly. “Initially, because of his high level of intellect he came across, rather unfairly, as a touch arrogant with his colleagues. But over the last two to three years he has become a very good team manager.”

Le Poidevin has not once regretted the decision made in New York five years ago.

“This job gives me the opportunity to plan my life in terms of getting the right balance between routine elements of reporting and other important operating events. I undoubtedly take more decisions in a single day than I ever, ever did as an investment banker.”

And as for the future? “I see myself in a challenging position. I quite like being finance director, I am still testing myself and I believe I have a lot more to contribute.”

While he claims to have no wild aspirations to become a chief executive just yet, one cannot help but suspect that should the right opportunity come along, Andrew Le Poidevin would seize the day. Carpe diem.

Le Poidevin on Le Poidevin:

“If I contrast my work as a finance director to 11 years as an investment banker, I would say at the end of day I have contributed more at QMH.

“I would not like to be characterised as radical or whacky. I can be ingenious, I can come up with clever responses but it’s not mad scientist stuff.

“My job gives me the opportunity to plan my life in terms of getting the right balance between routine elements of reporting and other important operating events. I undoubtedly take more decisions in a single day than I ever, ever did as an investment banker.

“I have very broad shoulders and I can share responsibility but I do expect my staff to do a lot of their own thinking.”

Colleagues on Le Poidevin:

“Andrew’s greatest strength is he is a very focused and very organised man. He is John Redwood without the sharp corners.”

“I see all sorts of different people and I can spot someone who really wants to get things right, to get into the detail and who is also willing to make hard decisions and take risks.

That is the sort of person I regard as a professional and Andrew certainly has that.”

“Andrew has a good sense of humour and high integrity. I have never seen him puff himself up as something he is not.”

“He has that type of mind, he is capable of getting to the real bases of a problem.”