THREE HUNDRED AND FORTY-NINTH MEETING OF
THE TRUSTEES OF THE NATIONAL MARITIME MUSEUM
14:45 THURSDAY 22 SEPTEMBER 2016
IN THE BOARDROOM
PARK ROW WING
NATIONAL MARITIME MUSEUM
MINUTES
Trustees present:
Sir Charles Dunstone, Chairman
Professor Alison Bashford
Eleanor Boddington
Joyce Bridges
Aminul Hoque
Professor Chris Lintott
Carol Marlow
Jeremy Penn
Eric Reynolds
Gerald Russell
In attendance:
Kevin Fewster Director
Andy Bodle Director, Operations and HR
Anupam Ganguli Director, Finance
Mike Sarna Director, Collections and Public Engagement
Kate Seeckts Director, Development
Richard Wilkinson Director, Enterprises
Christopher Gray Museum Secretary
~Prior to the meeting~
On behalf of the Board and the Executive the Chairman presented the 2016 Callender Award to Christine Riding, Head of Art and Curator of the Queens House, for her leading role in acquiring the Elizabeth I "Armada" portrait
~Governance Session~
i Board matters
The Chairman reported that Denise Larnder, a local patron of the Museum and partner at EY would be joining the Audit Committee as an independent member.
The Board was pleased to hear that Sir Robert Crawford and Dr Stephen Deuchar would be made Honorary Commodores at a brief ceremony at the next meeting date of 24 November 2016.
1. Apologies
Received from: Jonathan Ofer and Admiral Sir Mark Stanhope.
2. Declaration of relevant interests related to this meeting
None other than those previously registered.
3. Draft Minutes of the previous meeting: 348 of 23 June 2016
The Board agreed the minutes to be a true record of the meeting and the Chairman of the Board certified the minutes accordingly.
There were no matters arising.
4. Director’s Report for July to September 2016 and Q1 2016–17 KPIs
The Director drew particular attention to:
· the good progress being made by the contractor at Kidbrooke – the period of risk while construction was below ground had now been overcome
· the risk of over-budget tenders for the basebuild of the four galleries had not materialised
· the acquisition of the Armada portrait - upon which Trustees congratulated the Director and team involved
· the terms of reference of the DCMS Museum Review were now published – free admission to the national collection had been reaffirmed and there was nothing unexpected to draw to Trustees attention
· it was likely that the new Minister for Culture and Digital would be attending the Queen's House reopening event
· visitor figures to all sites had been improving since the slow start to the year
· the annual report from the National Historic Ships UK unit would be delivered to Trustees at their November meeting. The Director stated that the use of the Cutty Sark for skills training exemplified the good and constructive relationship that existed between the Museum and the NHS-UK.
Finally the Director reported that it was hoped that Her Majesty The Queen would honour the Museum by sending a brief note to mark the occasion of the reopening of the Queen's House.
Trustees were grateful for and noted the Director's Report.
5. Director of Finance Report
5.1 Finance report at Q1 2016-17 and Executive expenses
The Director, Finance reported on the Museum’s management accounts for the first three months of the current financial year adding that the Q1 forecast was based on those numbers.
It was reported that the overall revenue surplus is £22k compared to a budgeted deficit of £231k. The total variance of £255k comprised £78k for the Museum and £177k for the Cutty Sark.
Taking the Museum first the Director, Finance stated that on the income side there were three key matters to note:
1. Adverse variances on Events were caused by cancelled bookings for Neptune Court and reduced events income at the ROG because of Observatory Life overrunning
2. Travel trade and third party income being less than budgeted for the Museum but exceeding budget for the Cutty Sark
3. The disappointing admissions revenue performance of Above and Beyond.
There were significant cost variances in the Museum but at this early stage in the year it was difficult to estimate with certainty if these were likely to be permanent or not.
Cutty Sark's operating result were £177k better than budget - Travel Trade and third party income is better than budget because of London Pass and other promotions and Events were doing well because of improved conversion rates.
There were timing differences on expenditure on the ship and its annual insurance premium was lower than the previous year.
Regarding capital, overall the deficit was £865k against a budget of £1.3m and this had arisen due to delays on capital expenditure.
Trustees were grateful for the report, there were no matters arising and the Board then noted the Management Accounts for the Quarter to 30 June 2016 and the Directors' expenses.
5.2 Income update for the five months to 30 August 2016
The Director, Finance tabled the draft income figures for the first five months of the 2016–17 financial year.
The total income of £9.987m is £107k lower than the Q1 Forecast of which the key variances were:
In the Museum:
· Events are £57k under budget as some bookings for Neptune Court were cancelled (which also adversely affected commission) and there was no events revenue at the ROG due to the overrun of the Observatory Life works
· Travel Trade and other groups are on budget. Planetarium visitor numbers are 6% above budget and therefore the admissions income from the Planetarium was being affected by yield via the visitor mix
· Other income showed a positive variance of £50k: this includes a £15k fee rebate from the Museum's pension provider, Scottish Widows, and various timing differences on conference income and conservation recharges.
Cutty Sark:
Overall admissions income is on target but the increase in income from Travel Trade / 3rd Party (due to promotions like London Pass) is offset by an adverse variance on general full price admissions which impacts the donations i.e. the figure of the donated element of the ticket.
Taking into account all of the above the Trustees concluded that commercial income was not growing as the Museum needed.
5.3 Forecast at Q1 2016-17
The Director, Finance took the Board through the forecast at Q1 (based on the first quarter performance and other known changes) stating that overall the revenue surplus reduces from £649k to £324k.
The main income reductions had been that Sponsorship had reduced by £150k as the budget included unconfirmed amounts for Emma and the Queen’s House. Visitors to Above and Beyond were approximately 16,000 less than budget but the resultant reduction in admissions income of £153k is offset by savings in expenditure of £50k.
Other income reductions were:
· National Historic Ships where the income which was budgeted for in the current financial year came in before year-end
· Events income from the ROG because of the late running of Flamsteed House works
· income from the Meridian Line certificate machine included in budget has now been taken out.
On the costs side, various additional bids which totalled £250k had been made but offsetting these are significant savings in Cutty Sark – rates of £142k (£108k of which relates to prior years) and the insurance premium being £47k lower.
Regarding the Capital forecast the Director, Finance reported that for recurring operations there was a £39k shortfall in the fundraising for the Richard Wright commission, additional lighting costs for the Queen’s House, and £25k of expenditure for additional staging and seating for the Cutty Sark theatre space.
In expenditure on galleries, £140k of budgeted donation income for the Tulip Stairs and Kings Presence Chamber has now been taken out.
Finally the Director, Finance explained that the Kidbrooke £600k underspend was from the previous year – it will be a reserves adjustment and is not an increase to this year’s capital budget or the total budget for Kidbrooke.
Trustees noted and approved the forecast. However, the Board also noted the disappointing commercial shortfall. Though Trustees considered that the Museum may have been over-optimistic with its retail budgeting they hoped that the Emma retail offer and conversion would improve the overall picture.
6. Strategic Risk Register at September 2016
The Director, Finance introduced the September iteration of the register highlighting the risks, and opportunities, which may flow from Brexit.
The Brexit risks identified by the Executive were:
1. a cut to GIA as a consequence of poor national economic performance
2. the corporate sector not committing to sponsorship /membership because of economic uncertainty
3. the devaluation of the sterling impacting on overseas purchases such as the showcases (mostly manufactured in the EU) for the new galleries
4. loss of EU funding opportunities meaning that organisations which previously had EU funding will be competing for non-EU sources of income.
The opportunities identified by the Executive were:
1. an increase in overseas visitors as the sterling becomes ”cheaper” because of devaluation
2. an increase in UK “staycation” visitors as a result of overseas holidays becoming more expensive because of the devaluation of sterling.
Trustees enquired how many staff were involved and were told that the Museum employed some 70 European nationals. The meeting agreed that there could be risks associated with this but that at this stage in the process there was little certainty as to how these matters may resolve.
The Director, Finance also drew the Board's attention to the risk that an overheated construction industry could prevent the Museum from getting quality contractors at the right price for the Endeavour base-build and gallery fit-out. It was reported that this risk had just now been partially mitigated as the base build tenders have come in on budget. However, there is still the risk that the tenders for the fit-out, which are expected to be received in December 2016, are over budget.
The Board then approved the Strategic Risk Register at September 2016.
7. Endeavour project
7.1 Progress report
The Director reported that the accommodation element at the main Museum was now complete with staff satisfaction being high and with the new layouts and furniture providing a much more effective and up to date environment and working culture.
The Director then took the Board through the costs and fundraising table on the last page of the report drawing attention to the outstanding element being the naming rights to the classroom in the Prince Philip Maritime Collections Centre and the four new galleries.
Trustees noted that of the total Endeavour project cost of £26.9m, £22.53m had been sourced to date and that the outstanding funding stands at £4.37m - of which £0.5m is for the classroom and £3.87m is for the galleries. The Director stressed that the four galleries are the big opportunity to attract funds from philanthropists, trusts and foundations and that therefore the strategic fundraising aim is to raise all the money for the Endeavour galleries externally. This would mean that RMG Foundation funds can be left to support less easily funded projects.
However, the Director also reported that the potential call on RMGF was revised to £4.5m post the Trustee meeting of Feb 2016. Of this, £2.1m had already been allocated to Endeavour projects as secured funds leaving £ 2.4m still to request on the revised call of £4.5m. If the total £4.5m was granted by RMGF this would leave £1.3m in the Foundation at the end of the project.
Trustees asked the Executive whether they were confident about fundraising and the response was that there was a good list of on-going opportunities which were all being explored and worked hard upon.
Trustees then drew attention to the American model of securing naming rights to virtually every door, stair and room in a building project. Trustees considered that this model could also be effectively applied to the Queen's House.
7.2 Agreement of UKPN lease
The Board noted for the record the agreement and signing of the UKPN lease as approved by Trustees by their emails dated 28th July 2016 and that DCMS approval, required by statute, to the lease had been received.
7.3 Sale of LTE Lease
The Board noted that the Museum had taken advice on this matter, had gained approval from the Secretary of State for Culture, Media and Sport and HM Treasury, and that the Audit Committee had reviewed the Heads of Terms of the sale contract.
The Board then approved the sale of the LTE lease.
7.4 Galleries base-build contract
Trustees noted that DCMS had given its approval to the base-build business case – though its approval of the business case for galleries fit-out could only be sought after the tenders, not due until December, had been reviewed and a likely contract sum was known.
The Board then approved the award of the Endeavour Galleries base build works contract to Concept Building Services (Southern) Ltd at a value of £3.257m against a cost estimate of £3.402m.
~Strategy Session~
8. Queen's House – update on opening and commerce
The Director, Enterprises took Trustees through the paper thanking the Estates team for their work in making the three recent events possible.
Trustees noted that targets for future Events business were ambitious. Nevertheless £90,000 of wedding business for 2017-18 (15 weddings) had already been confirmed and the target is to increase this to 25 weddings in the year.
The Director confirmed to Trustees that the Queen's House would not be closed during events because, for example, events focussed on the Great Hall mean that the rest of the House can be kept open.
Trustees were grateful for and noted the update. Trustees also considered more could be made of the stories around the conservation of the House itself and the Armada portrait.
9. NMM Enrichment
The Director, Collections and Public Engagement introduced Gail Symington, Head of Exhibitions and Design to the Board who then gave the meeting a presentation on the potential scope and benefits of "NMM Enrichment".
The overall aim was to provide visitors with a consistency of high-quality offer both in the visual sense and to improve their orientation prior to their exploration of the galleries, exhibitions and commercial spaces.