BusinessPeople In BusinessProfile: Mike Russell, FD of the Zoological Society of London

Profile: Mike Russell, FD of the Zoological Society of London

The FD of London and whipsnade Zoos may work for a charity, but it is his commercial skills that are most valued at an organisation that is up against the capital’s top attractions

Mike Russell’s favourite animals are elephants. “It’s their charisma,” he says.

Unfortunately for the FD of the Zoological Society of London (that’s London Zoo and Whipsnade as far as the general public is concerned), London Zoo doesn’t have any elephants for him to be snapped with, and it would be pretty difficult to get a close profile picture with both in the frame anyway.

Instead, Russell opts for a close encounter with a Lemur. And proximity to the animals has become a key part of Russell’s working life.

As with any FD, he can be chained to the desk for long periods, but other FDs don’t have London Zoo just a lemur’s leap away across the outer circle of Regents Park.

“When you’re stuck behind the computer and the numbers get a bit much, to be able to get up and walk out there, wander about and see visitors milling around and kids laughing, it’s a wonderful break from the day-to-day stuff. That’s very much what it’s about,” says Russell.

And heading out to the enclosures is more than just a ten-minute break from the screen, it’s a formal part of his day job.

“It’s about understanding the business. One of the things we do as a management team is a role called ‘visitor experience manager’ – which means all the managers are allocated 15 or so days a year where we’re out and about in the zoo,” explains Russell.

This duty manager role focuses senior staff and directors on making sure the zoo is delivering.
Russell’s role seems almost idyllic. And when he runs through the pros of the job he does little to suggest otherwise.

There is the satisfaction of running a relatively small business that provides a fun and informative product to children and adults alike. It also has a strong social responsibility focus around animal conservation, with its funding projects overseas. And, for the sake of Russell’s CV, even as a charity ZSL is primarily a commercial venture. In fact, 80% of its £40m annual income comes through the zoos’ gates.

Despite ZSL’s charity status, the society searched for a commercial FD, in line with its reliance on footfall.

“The match for ZSL was they didn’t want someone from a charity background, they wanted commercial experience to step up that side of the business, while keeping a firm hand on the financial wheel,” he explains.

Working for a zoo of course sounds fun. But once you get past working with animals, what enticed him? It wasn’t exactly a lifelong ambition or part of a carefully planned career path. Instead he believes that a two-year spell working in Clearwater, Florida, may have unintentionally lured him to ZSL.

CIMA-qualified Russell spent a large part of his career in the medical equipment business. During a couple of years in the 1980s, as VP finance at Oxford Medical Inc, he was based on the US east coast. Here, his two children were kept well occupied by the plethora of theme parks and attractions that the area is world-famous for.

“I think that sort of sowed a seed that didn’t appear until later – actually this is something I’d like to get involved in. When the opportunity came up for this job I sent my CV in and thought ‘nothing would come of it’, but it did.”

Survival of the fittest

It’s been a tough few years for zoos in general. London attractions were only just recovering from the drop in numbers following the 2005 bombings, when recession hit. Its income for year ending December 2008 fell a few hundred thousands pounds below 2007’s peak. Visitor numbers decreased by more than 6% and ZSL reported an operating loss of £0.3m.

Competition in London is tough, particularly when strong rivals, the museums, have free entry.
“We’re not specifically in great competition with other zoos such as Chester… rather it’s with the Natural History Museum, London Eye, Merlin attractions such as Madame Tussauds… so we have to have a commercial offering in the same way they do, or we’ll lose out,” says Russell.

But complicating matters is the balancing act of funding the conservation side of the charity, while investing capital into maintaining and growing the commercial side, such as last year’s introduction of a £750,000 new customer relationship management system.

“The commerciality of it as a visitor attraction is important but given our ethical and mission-type background, for conservation and science, we have to be careful not to go too far down that commercial road – you won’t find rollercoasters here. Conservation and science must be at the heart of everything we do. We have 1.5 million visitors a year, half a million of those are children.”
the nature of audit There have been plenty of other tough decisions for Russell to deal with at ZSL, including changing its auditors. Previously Ernst & Young, Russell decided to opt instead for Baker Tilly.

Russell felt that he needed support early on his tenure from a firm known for its expertise in the charity sector, to help him get to grips with the accounting and finance particulars of what was unknown territory for him.

“In charity terms they are probably the top charity auditor, but also very good from a business direction. I felt we needed a different emphasis, support in that direction to make sure we were going the right way with [charity accounting standards].

“E&Y are clearly a great across-the-board auditor – but we weren’t dealt with by their charity arm and I didn’t feel they had the right detailed charity background to ensure the sort of rigour and support that I really wanted. They had a great relationship with people here – it was a tough decision. And they still do the odd bit of work for us.

“If you think about the Big Four, from a client perspective we were a relatively small fish in a big pond – with Baker Tilly we’re a bigger fish.”

While Russell maintains tight control over funds in the UK, inevitably, where money is spent on charitable causes overseas, it becomes less easy to maintain.

Overseas efforts have included multiple projects in Nigeria and Liberia, encouraging as diverse tasks as protecting pygmy hippos to promoting ecotourism. Throw in a seahorse preservation project in the Philippines and Caribbean amphibian protection, and its £7.5m spend on science, research and conservation across the reaches of the Earth makes it difficult to account for every penny.

On this, Russell is fairly philosophical. “It is a difficult one as you’re putting money in overseas’ hands. We obviously have appropriate signoff procedures but, at the end of the day, it ends up in a bank account in wherever, with local people having the authority to draw it down – while reporting back to us – and clearly there’s a certain amount of trust you have to take for granted.

“People like that aren’t always the best at the paperwork,” he says wryly, “…when you’re saying ‘what was it spent on? I want receipts, etc’.”

One area where ZSL does need to step up is in its speed of movement to update the charity’s business systems.

As Russell points out, the charity is 183 years old and “it can be difficult for this sort of organisation to move so quickly”.

“It’s steeped in history, and a little bit slow to change. But still, we’re significantly more robust, and it’s a day-to-day [process].”

He concedes that running the back office with its current technology and processes takes much more effort than it needs to be, so automation is key for the future to free up staff to provide more valuable services to ZSL.

Its debt free status is also part of ZSL’s culture, borne out of its “rather conservative nature”. But, with animals, anything can happen, and running with reserves is key.

“Keeping reserves for a rainy day… no debt, it’s how we run. We tend to be rather conservative, there’s nothing commercially planned but there isn’t a bar.

“With animals, things are outside your control.”

When FDs attack

ZSL hit the finance pages back in 2002 when the society fought the taxman, and won, in what was a landmark £30m tax case over the charging of VAT on admission to charitable zoos.

The six-year battle clarified that cultural services were exempt from VAT under certain criteria. The issue was whether ZSL employing salaried staff stopped them from claiming the exemption, with the European Court of Justice ruling in favour of ZSL.

FD at the time, Mike Bird, headed up the fight but, for current FD Mike Russell, niggles and issues with the taxman still occur, but on different points.

In a complex ruling, VAT officers have removed the 40% VAT recovery rate from zoos on expenditure linked with the animals, such as building or maintaining exhibits – because their admissions income is exempt.

Another zoo is taking that discussion on, which could be worth £1m to ZSL alone, but Russell is pessimistic about a quick resolution.

“Discussions with the Revenue don’t appear to be going very far, I’m sure it’ll end up in a tribunal,” he says.


Monkey business

ZSL finance director Mike Russell doesn’t limit himself to appreciating the wonders of London Zoo’s Kimodo Dragons or Blackfooted penguins.

His role has seen him visit Gabon on a gorilla conservation project.

“I tracked through the forest with the team and saw a gorilla, more than anyone else had done for several weeks. That puts thing into context – what ZSL’s about, what people have to do and why they need the money. When we have debates about where the money should go – it helps to have done a couple of those trips,” says Russell.

ZSL cares for a grand total of 21,000 animals across 862 species in its zoos.

Current conservation projects include a breeding programme in Polynesia for 25 species of Partula snails and, closer to home, research projects around eels and invasive species in the Thames Estuary.

Related Articles

Women in Finance ranking 2018

People Business Women in Finance ranking 2018

3m Alia Shoaib, Reporter
Shortlist announced for British Accountancy Awards 2017

Accounting Firms Shortlist announced for British Accountancy Awards 2017

9m Emma Smith, Managing Editor
Pimlico Plumbers to take employment case appeal to Supreme Court

Legal Pimlico Plumbers to take employment case appeal to Supreme Court

10m Alia Shoaib, Reporter
HMRC appoints new director generals

HMRC HMRC appoints new director generals

10m Alia Shoaib, Reporter
Submit your entry for the British Accountancy Awards!

People Business Submit your entry for the British Accountancy Awards!

11m Emma Smith, Managing Editor
BDO appoints two non-executive directors as advisers to leadership team

Accounting Firms BDO appoints two non-executive directors as advisers to leadership team

11m Emma Smith, Managing Editor
Ex-HMRC chief to join ICAS council

HMRC Ex-HMRC chief to join ICAS council

1y Emma Smith, Managing Editor
Tyrie on Finance Bill 2017: ‘Making Tax Policy Better’

Consulting Tyrie on Finance Bill 2017: ‘Making Tax Policy Better’

1y Stephanie Wix, Writer