Mark Lumsdon-Taylor never thought his job would someday include the oddity of standing in a barn ­ in loafers, tailored coat and leather gloves ­ having discussions about why cows are not falling pregnant.

The finance director of Hadlow College, a land and agricultural school, can’t stop himself grinning as he recalls the incident: ‘I went down to investigate and listened to the herding manager tell me all about how they had been defrosting semen by boiling it.

‘They were killing it before it even went in ­ no wonder there were no pregnancies.’
The public sector is usually criticised for its shoddy approach and a lack of delivery - but Lumsdon-Taylor defies this. He turned a 100-year-old land college on the brink of ruin into a profitable entity, which earned him the Public Sector FD gong at the 2007 Accountancy Age Awards.

Only four years ago the college was lurching from one disaster to another. Then Taylor stepped in and moved Hadlow from annual losses of £500,000, into £400,000 profits, transforming the culture and focus of the organisation into one with annual growth of 25%.

His move into the FD role at Hadlow was a natural progression from his days as audit manager at MacIntyre Hudson, where his remit included the growing of client portfolio, of which Hadlow was a part. But among audit personnel at MH the college became something of a standing joke, with a reputation for being one of the worst clients in the sector.

‘When we met to do the audit, we would ask for the accounts, as you would normally do. Their response was along the lines of “We thought you were supposed to do it.”’
‘We had to build the accounts from scratch, and had to call in another team to do so, before we could do the audit,’ he said.

It was clear the financial management was a disaster, falling apart in 2002 when the college went into administration and the principal was removed because of financial irregularities. The local press tore into the college, carrying stories about it as administrators were put in place. MH was called in to effect the change and the acting principal wanted Lumsdon-Taylor to step in to support the finance function.

Taylor found a college that had not invested in core assets such as land, buildings and facilities since 2002. ‘Teaching and learning was good but it was in a sense an operational disaster, to the extent that the college had no budget left. The board seemed to have been misled by the principal but wanted to put this right,’ he says.

There was clearly a case of financial bungling at the top. ‘The college did not have a budget system that worked properly and the actual accounting system was just not working. Heads of departments were never told how the business was run… it was as though nobody had been interested before,’ Lumsdon-Taylor says.

There were other serious problems, including a lack of a day-to-day management structure: ‘The IT system was also a shambles and needed fixing. The PCs were archaic, there was no intranet, and the fruit lecturer had previously been in charge of IT.’

By this time the Learning and Skills Council, which funds the higher education sector, had extremely serious concerns about the future of the college. ‘We knew we had to act quickly,’ Lumsdon-Taylor recalls.

The college shed 60 staff and re-launched internally by February 2003. The entire mid-management team was new with the exception of a few former staff who had moved into new positions and with higher management also replaced, MH’s brief was concluded.

But the efforts of the then 27-year-old Lumsdon-Taylor were rewarded with an offer from Hadlow’s board. They wanted him to lead the college further, through the role of head of finance, registry (operations) and IT. It was the right time to move out of practice.

‘I knew I wouldn’t make partner until I was 28. At the time, I was a manager at MH but also leading external audits for several further education and development public sector bodies. It was April 2003, I felt ready for something different, so Hadlow was a logical progression.’

Holiday’s over

A holiday was needed to celebrate it all and take things in ­ but the heady excitement quickly faded on his first day at Hadlow as he was thrown in the deep end, with news of cash-flow problems.

This surprised Lumsdon-Taylor, who had last left the college with £1m in its coffers while he served at MH. He discovered that although the college kept to its plans to invest, it had not taken crucial costs into account.

‘There was an agreement that money would be spent on investment, but the cost of VAT and professional fees had been forgotten. The college had been in negative reserves for years and prior to this it had been asset stripping itself since nobody had structured the business to get optimal returns.’

To add more pressure, the LSC decided to claw all the funds back from the college ­ which had underperformed drastically in former years ­ in one go. In the words of the new FD, ‘the balance sheet went into free-fall’.

Several audit teams quizzed Lumsdon-Taylor in his first days at the college. He also had to earn the respect of the staff, most of whom were older than him.

‘I knew it was going to be bloody tough. I felt in a way people would question the 27-year-old city boy who came along and told them how things were going to work.’

On the financial juggling front, he was faced with the choice between clipping the college’s wings or continuing investment. ‘I played the odds by continuing to invest and manage the cash flow. I remember clearly, sitting with the weekly cheque flow and deciding which ones to pay and which ones to hold off on.

‘I guess the darkest moments were around questions of whether we could afford to pay staff salaries ­ but I never let them know that, and they never went without.’
Things began to turn around. Barclays lent the college £1.5m to keep it going.

But the hardest work began in January of 2004, when Lumsdon-Taylor and his team slogged through 60-hour weeks to ‘improve and consolidate’ the college’s affairs.

The Hadlow College branding was re-focused on its role as a specialist institution, and was run like a business, with the student the focus as the primary customer. At the same time the LSC dropped a bombshell by announcing it wanted Hadlow to merge with another college. But Lumsdon-Taylor and the rest of the college’s staff dedicated themselves to keep the college as a separate entity.

He drew on his own hard-ball nature and brought millions into the college by obtaining grants and then generating surpluses. By 2005, the college was re-graded and went from a Grade four (poor) to a Grade two ­ defeating the merger and saving the institution. The areas of financial frameworks and financial effectiveness were also graded at two.

The proof of the turnaround is in the reputation of the college today: ‘At its lowest ebb, I would pick up the phone and nobody wanted to deal with Hadlow College. Now people are delighted. Its proof that you can turn something around which has previously been in the worst position,’ says Lumsdon-Taylor. He’s quite certain he’d do it all again, in the same way.

Learning curve

Hadlow College isn't the only training provider to face financial difficulties. Only last week administrators were called in by Carter & Carter, after banks rejected its last-ditch restructuring plans.

The manufacturing training business had been locked in talks with its lenders regarding a consensual restructuring, but the banks told the company that such a move was no longer a viable option. 'The company has today instructed its lawyers to file a notice of intention to appoint administrators over the company,' a statement by the company said.

The business was severely affected by a revenue recognition issues last year. These problems saw the company's shares suspended, and PricewaterhouseCoopers called in to conduct a review of its accounting policies. As a result of its problems its annual report to 31 July 2007 has still not been published. The future of 2,000 staff at Carter & Carter will now be in the hands of the accountants selected for the task.