If you are running a Charity or Not-for-profit which is making a loss or deficit what are the odds of turning it around in less than 6 months? Are the odds better or worse than corporate recovery in the commercial sector. What are the key ingredients to success?

1. Charles Darley
A 16 year track record of organisational transformation
investing in growth at the same time as cutting costs
“Delivering growth driven turnarounds demands the same skills whether it is for large
complex Plcs or smaller not-for-profit entities or Commercial entities…read on”

2. 16 years of rebuilding sustainable
organisations
• Few sustainable turnarounds are achieved by just cutting costs
• Turnarounds require a vision and strategy for investing in growth
• Only then will stakeholder buy-in be achieved to the difficult cost cutting
program that will be required
• By redeploying much of the savings stakeholder buy-in is created
stakeholder buy-in to the challenging aspects of the change programs is
accelerated
• 14 organisational transformations in which Charles Darley was engaged
from FTSE 100 Plcs to modest sized local charities
• Only one failed (NPW slide 14) you can see why it failed – the growth plan
was junked, the losses/deficit has gone from bad to worse

3. Church of England in Suffolk (Diocese DBF)
Darley engaged
Mid 2016
• Loss reduced from £1m in 2015 to
a modest surplus planned in 2017
• Invested in 4 major change &
modernisations projects
• Reduced staff FTE cost by £225k
and clergy FTE by £200k.
• Reduced staff pension costs by
£210k
• Reduced supplier costs by £150k
• Increased Parish income by £260k
(4%)
• Secured grant of £470k from
Church Commissioners to cover all
restructuring costs
-2
0
2
4
6
8
10
2015 2016 2017
Millions
Diocese of St. Edmundsbury and Ipswich - 248919
Income Costs Deficit/surplus

4. National Centre for Social Research (NatCen)
Darley engaged
Mid 2015
• Loss reduced from £4m in 2014 to
surplus of £1m in 2016
• Surplus forecast at £1.7m in 2017
• Won tenders worth £25m (over 4
years) to reverse the income
decline
• Raised £3m investment from
pension fund secured against
property assets to invest in 4
major modernisation projects
• Secured £750k bank overdraft
-10
-5
0
5
10
15
20
25
30
35
40
45
2014 2015 2016
Millions
NatCen -1091768
Income Costs Deficit/surplus

5. Praxis Community Projects (Refugee)
Darley engaged
Late 2014
• Increased sales for the language
school to the point where breakeven
was achievable within 2 years
• Sourced external investors and grants
to replace the charities sunk costs and
liabilities
• Minimised impact of possible closure
to PCP in case of business failure
• Found trade purchasers for sale and
exit
• Handed over to long term Managing
Director
-500000
0
500000
1000000
1500000
2000000
2014 2015 2016
Praxis Community Projects - 1078945
Income Costs Pre-tax losses

6. Newham Partnership Working
Darley engaged late 2014
Exited early 2015
• Proposed 3 major change projects
• Exit 2 of senior management team
reduction in staff costs by £400k
• Reduce strategic dependence on HR
service profit margins
• Develop profitable building
management & School business
management/book-keeping services
• Pace of change proposed was rejected by
CEO as ‘too much too fast’ so CD exited
after 12 weeks, Chair also simultaneously
resigned and offered CD a role as Non-
Executive Director on another Board
-2
-1
0
1
2
3
4
5
6
7
8
9
2014 2015 2016
Millions
NPW
Income Costs Pre-tax losses

7. Federation of Small Businesses (Membership)
0
5000
10000
15000
20000
25000
30000
2012 2013 2014
FSB Ltd 1263540
Subscription Income £'000s Shareholder funds
Darley engaged
Early 2014
• Invested in 3 major change
projects
• Membership numbers increase for
the first time in 5 years from
184,000 to 202,000
• Subscription income increases by
£1m (versus £0.46m in previous
year).
• Shareholder funds increase by
£400k

8. ALARM (Professional Body – Membership)
-200
-100
0
100
200
300
400
500
600
700
800
2011 2012 2013 2014
Association of Local Authority Risk Managers
Income £'000s Costs £'000s Surplus/Deficit
Darley engaged
end 2013
• Losses of £44k to surplus of £28k
• Income no longer declining
• Costs down by 12%

9. Age UK Norfolk (Services for elderly - charity)
-500
0
500
1000
1500
2000
2500
3000
3500
2011 2012 2013 2014
Age Concern Norfolk - 1077097
Income £'000s Costs £'000s Surplus/Deficit
Darley engaged
mid 2013
• Losses of £26k to surplus of £706k
• Income up by 15%
• Costs down by 11%

10. Jubilee Sailing Trust (Disability – charity)
-500
0
500
1000
1500
2000
2500
3000
3500
4000
4500
2011 2012 2013 2014
The Jubilee Sailing Trust Turnaround - 277810
Income £'000s
Darley engaged
mid 2013
• Losses of £251k to surplus of £174k
• income up by 58%

11. Petans (Offshore safety – charity)
Darley engaged
early 2013
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2011 2012 2013 2014
Petans - 290458
Income £'000s Costs £'000s Surplus/Deficit
• Surplus of £336k to surplus of £997k
• income up by 37%

12. Julian Support (mental health - charity)
-1000
0
1000
2000
3000
4000
5000
6000
2010 2011 2012 2013
Julian Support - 1067883
Income £'000s Costs £'000s Surplus/Deficit
Darley engaged
late 2012
• Surplus of £27k to surplus of £250k
• income up by 86%

13. EV offshore (VC funded Global Oil Services)
-5000
0
5000
10000
15000
20000
25000
2012 2013 2014
EV Offshore
Income £'000s Costs £'000s Surplus/Deficit
Darley engaged
late 2012
• Losses of £1.2m turn to profits of £6.7m
• Income up from £6.6m to £19.7m

14. Fitness First UK (Ltd)
Darley engaged
Early 2003
• Membership increased by 100,000 (20%
year on year)
• Profits increased from £9m to £16m
• Income up from £150m to £240m
• Market Cap up from £150m to £500m
0
50
100
150
200
250
300
2003 2004 2005
Millions
Fitness First UK
Income Costs Pre tax profit

15. Royal Mail Group
(part of Royal Mail Holdings Plc).
Darley engaged early 2000 to
deliver 4 year turnaround
• Restructured 7,000 sales, customer
service and marketing staff reduced call
centre staff by 1000 (15%) generating
savings of £20m a year
• Created national sales force and
national customer service based on
industry sector structure. Increased
revenue by £290m from 2002 and 2003
• project delivered a £254m increase in
pre-tax profits contributing to nearly
half of the turnaround result which
reversed losses of £318m in 2002 to
deliver profits of £220m in 2003
• Profits grew to £537m in 2004 due to
staff cuts of 10,0000 in operations
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2001 2002 2003 2004
Millions
Royal Mail Group
income costs pre-tax profit

16. Royal Mail National
(part of Royal Mail Holdings Plc).
Darley engaged
Early 1996 -1999
• Reversed previous decline in mail by
restructuring the strategy to focus on
growing Direct Mail as a media
• Profits increased from £409m to £450m
• Income up from £2552m to £2940m
• This was the only profitable division
within the whole Royal Mail Group
0
500
1,000
1,500
2,000
2,500
3,000
3,500
1996 1997 1998 1999
Millions
Royal Mail National – UK (consumer and SME)
Income costs Pre tax profit

17. Does your organisation need some
transformative development?
• It might;-
• be running a deficit or a loss
• have a lot of strategic risks that you need to prepare to plan to address
• just benefit from a review of the growth opportunities
• be considering an acquisition or merger
• be threatened by a potential acquisitive competitor
• have run down the reserves thinking that the recession was over
• Or have simply been under-invested in and become inefficient over recent years
• Whatever the thinking take heart from the fact that all of the above
organisations are now in rude health

18. Thank you for reading this far!
Do call if this has caused you to think – do you want a Finance Director
leading your restructuring and salami slicing your cost base or do you want a
growth focussed specialist Turnaround Director and COO/CEO leading your
organisation’s re-structuring strategy?
No matter whether you are on the board of a commercial operation or a not-
for–profit the issues are similar the only difference is the stakeholders
(shareholders and trustees) differ in their core drivers to get the organisation
back into good health,
Charles Darley
Charles.darley@bgd-group.co.uk or 07802 907631