This presentation gives 10 invaluable tips for anyone getting into the Turnaround Industry or a regular manager who takes on a loss making company as part of their responsibilities

1. 10 Top Tips for faultless
turnarounds
”Charles Darley has a 30 year track record of taking loss making brands and
organisations and making them profitable. With experience of more than 20
turnarounds he has a unique perspective derived from a blend of delivering tough
financial cost cutting combined with making investments in strategic growth focussed
transformation.”

2. Tip 1 – Focus
everyone on
growth
• Turnarounds require a vision and strategy for
investing in growth, no sustainable turnarounds
are achieved just by cutting costs
• Only with a Vision for Growth will employees
engage in defining any cost cutting program
that will be required to fund that growth
• By planning to redeploy the savings, employees
will see that you are committed to growing the
company not just temporarily patching over the
losses

3. Tip 2 – 70% of
the
turnaround
ideas
commonly
come from
existing staff
• After the first cost cutting has been delivered by
Finance and HR – folk throughout the
organisation will often feel bruised, cynical and
defeated.
• The best turnaround ideas will not always come
from the Directors or senior managers – some
will, but also engage their direct reports.
• You will need to engage all your emotional
intelligence to re-invigorate the optimists and
innovators and give them a chance to shine
building the future

4. Tip 3 – Create
some quick
wins
• Investors and shareholders will need their faith
re-built. They will have been promised ‘jam
tomorrow’ before – but delivering losses
quarter after quarter and even year after year
will challenge their trust in any plan!
• Employees will need their faith restored that
the business really can be turned around – or
they will simply leave and that can make
matters much worse
• Ensure there are quick wins that everyone can
experience, see and celebrate!

5. Tip 4 –
Prioritise hard
on 2-3 change
programs (and
no more)
• Employees will very possibly already have
suffered ‘initiative exhaustion’
• Even if you have several tasks or deliverables
within each ‘Program of change’ keep the
number of programs down a to a minimum.
• Brand them well – define them tightly,
especially define what is out of scope and make
them time bound

6. Tip 5 – Do not
dwell on the
past ‘mistakes’
• Hindsight is a privileged position, focussing on
what you might consider previous ‘errors of
judgement’ creates a blame culture that will not
assist a rapid turnaround.
• Don’t ignore any systemic issues like a lack of
risk management and mitigation – but even
great businesses have organisational
weaknesses. Tread lightly.
• Many folk will have shaped and bought into the
situation that led the organisation to its current
demise. They will have been trying to do their
best – but may be limited by their experience.

7. Tip 6 –
Regularly
monitor the
senior
employees
engagement
with change
• Categorise employees into:-
• ‘Green’= fully engaged, contributing and on board for
change
• ‘Orange’ = publicly supportive – but in private cynical
• ‘Red’ = plainly fighting the changes
• Action:-
• ‘Green’; praise and reward these folk you will need
them
• ‘Orange’; try to win them over but if after 10-12
weeks they are still not then make it clear they now
need to be ‘in’ or ‘out’
• Exit the ‘Reds’ as soon as you can but ensure almost
everyone who is ‘green’ and ‘orange’ also sees them
as ‘red’. These folk can critically delay the turnaround
– but if you act before other folk see this you can
create a culture of generalised fear.

8. Tip 7 – Deliver
the
turnaround
only at the
pace at which
the Board feel
comfortable
• Check the boards view on the pace of the change
• Ask them for constant feedback
• Always accept that with ‘rapid’ pace comes ‘higher’ risk –
ensure they accept that balance of risk versus pace
• Unless the threat of insolvency is driving the pace – keep
checking in and keeping them aware of the risks so they are
braced for some road bumps
• What is the right pace?
• That all depends on the balance of risks – and your skills in
anticipating them well in advance and your skill at preparing
excellent risk mitigation plans
• The more experience in delivering turnarounds you have the
faster you can safely move without crystalizing the risks

9. Tip 8 – set the
KPIs that really
matter at
every level
• Bear in mind staff will have been culturally accustomed to missing
all targets – so they will be disenfranchised from the whole process
• Set the KPIs that really drive results – ensure they are outcome
based measures, not input measures
• If you create outcome measures this improves staff morale as they
will have a higher sense of autonomy and can respond
appropriately to changing circumstances
• Link the personal rewards to personal targets as well as corporate
targets.
• Make them achievable……….

10. Tip 9 – Ensure
that you have
embedded a
culture of
excellence in
operational
delivery
• Your best legacy is not just saving a company from going into
insolvency this year.
• It is ensuring that it is well prepared to anticipate and respond to
every future road bump and will thrive in 3-5 years.
• Strategic reviews are quickly done and can even be ‘bought in’ but
the difference between corporate success and failure is establishing
a culture of faultless project delivery, risk management & mitigation
• Ensure the performance culture of monitoring and reviewing the
KPIs is firmly embedded before you leave

11. Tip 10 – Be
involved in
choosing your
permanent
successor and
do it carefully
• Recognise that you have a ‘shelf life’, you are an impact player, you
will have been asking other managers to act at ‘rescue and
recovery’ pace. This is not sustainable for more than 10-12 months
it will exhaust many good employees who want a work life balance
that is different from you!
• You are also relatively costly – once the turnaround plan and the
initial deliverables are safely secured. The premium that you are
being paid versus a permanent employee is not justifiable.
• But you have a duty to ensure that the permanent replacement will
not throw all the balls in the air again and try to come up with their
‘own new’ plan. If they do this they will fail to deliver the agreed
plan, there will be wheelspin in the handover and the staff will
pause all deliverables and endanger the business once more in the
process.
• Make it clear in the recruitment process – the first 12 months of the
job is about steady and determined delivery of the agreed plan and
they should not be expecting to revisit that plan for 6-10 months.

12. What is a good track record in turnaround?
• It depends how early you are brought in!
• Many Private Equity funds expect 40% of early stage investments to fail, so if they
bring in turnaround experts they are often very late and closer to being
‘undertakers’, you may only have 3-5 months maximum to deliver the refinance and
rescue. So 30% success is a good result.
• If you are a larger business £50m+ then the PE investors and banks should be aware
of the strategic issues at least 12 months in advance unless management has been
complicit in concealing the risks. So 50% success is a fair expectation.
• Not for profit sector should hold 6 month operating costs as reserves and often hold
property assets to access finance. So 75% success is a fair expectation.
• Listed businesses should have an experienced enough board to see the future issues
and raise the money to address them well in advance.
• Below you can see the reality of what has been achieved by Charles Darley

13. IMechE Professional Engineering Projects Ltd
Darley engaged
Q2 2017
• Invested in new sales staff & digital
marketing in 3 business units
• Invested in manufacturing planning
software in the 4th business
• Won key contracts in UK, USA and
EMEA and increased revenue from
£4.6m to £7.3m (by £2.7m or 59%).
• Reduced losses from £853k in 2016, to
deliver a modest profit in 2017 and
£816k profits in 2018.
• Exited 4 Directors and senior
managers responsible for the badly
executed downsizing strategy in 2016.
-2
0
2
4
6
8
10
2015 2016 2017 2018
MILLIONS
Professional Engineering Projects Ltd
Income Costs Operating Profit

14. 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

15. 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

16. Freedom From Torture
Darley engaged
Mid 2015
• Loss reduced from £0.5m in 2015
to surplus of £0.2m in 2016
• Income grown by £0.54m due to
new income streams from the NHS
contracts
• Costs reduced by £0.16m

17. 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
-0.5
0
0.5
1
1.5
2
2014 2015 2016
MILLIONS
Praxis Community Projects - 1078945
Income Costs Pre-tax losses

18. 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

19. Federation of Small Businesses (Membership)
0
5
10
15
20
25
30
2012 2013 2014
MILLIONS
FSB Ltd 1263540
Subscription Income £s 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

20. 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%

21. Age UK Norfolk (Services for elderly - charity)
-1
0
1
2
3
4
2011 2012 2013 2014
MILLIONS
Age Concern Norfolk - 1077097
Income £s Costs £'000s Surplus/Deficit
Darley engaged
Q1 2013
• Losses of £26k to surplus of £706k
• Costs reduced by 11% (2014)
• Income up by;-
• 7.5% (2013)
• 10.3% (2014)

22. Jubilee Sailing Trust (Disability – charity)
-1
0
1
2
3
4
5
2011 2012 2013 2014
MILLIONS
The Jubilee Sailing Trust - 277810
Income £s Costs £s Surplus/Deficit
Darley engaged
mid 2013
• Losses of £251k to surplus of £174k
• income up by 58%

23. Petans (Offshore safety – charity)
Darley engaged
early 2013
0
1
2
3
4
5
2012 2013 2014
MILLIONS
Petans - 290458
Income £Ms Costs £Ms Surplus/Deficit
• Surplus of £336k to surplus of £997k
• income up by 20%

24. Julian Support (mental health - charity)
-1
0
1
2
3
4
5
6
2010 2011 2012 2013
MILLIONS
Julian Support - 1067883
Income £Ms Costs £Ms Surplus/Deficit
Darley engaged
late 2012
• Surplus of £27k to surplus of £250k
• income up by 86%

25. EV offshore (VC funded Global Oil Services)
-5
0
5
10
15
20
25
2012 2013 2014
MILLIONS
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

26. BGD UK (Ltd)
Darley launched
in 2005
• Started and won Bowater group via
Barclays VC in 2005
• Won Aviva & Lotus Cars in 2006.
• Won Nissan UK & Harley Davidson in
2007.
• Won Nissan Europe in 2008.
• Won Vodafone UK in 2009.
• Sold in 2010.
0
1
1
2
2
3
3
4
2005 2006 2007 2008 2009 2010
MILLIONS
BGD UK
Income Costs Pre tax profit

27. 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

28. 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

29. 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

30. Does your organisation need some
transformative development?
• It might;-
• be running a loss
• become inefficient over recent years versus your competitors
• be in need of a digital transformation plan to grow whilst making savings
• have a lot of strategic risks that you need to addressing and mitigating
• benefit from a review of the growth, M&A or disposal opportunities
• be considered as a disposal but you want to maximise the value prior to sale
• Whatever your needs take heart from the fact that all of the above
organisations are now in rude health and worth a lot more now than
they were when I was commissioned.

31. Thank you for reading this far!
Charles Darley
Charles.darley@bgd-group.co.uk or 07802 907631