REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER 2016 FITZMAURICE HOUSE LIMITED AND SUBSIDIARY (A company limited by guarantee) REGISTERED NO: 00711350 Registered number: 00711350 FITZMAURICE HOUSE LIMITED (A Company Limited by Guarantee) ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016 FITZMAURICE HOUSE LIMITED (A Company Limited by Guarantee) COMPANY INFORMATION Directors David Whitehouse Geraldine Dooley Stephen Cooney Richard Parry Charles Perrett Samantha Reed Michael Dixon (appointed 1 July 2016) Roger Hepher (appointed 1 July 2016) Sophie Morrison (appointed 1 July 2016) Malcolm James North (appointed 1 July 2016) Company secretary Timothy Cagney Registered number 00711350 Registered office 9 Fitzmaurice Place Berkeley Square London W1J 5JD Independent auditors haysmacintyre 26 Red Lion Square London WC1R 4AG Bankers Allied Irish Bank 10 Berkeley Square London W1J6AA Solicitors Bates Wells Braithwaite 10 Queen Street Place London EC4R 1BE FITZMAURICE HOUSE LIMITED (A Company Limited by Guarantee) CONTENTS Page Group Strategic Report 1 - 5 Directors' Report 6 - 10 Independent Auditors' Report 11 - 12 Consolidated Statement of Comprehensive Income 13 Consolidated Statement of Financial Position 14 Company Statement of Financial Position 15 Consolidated Statement of Changes in Equity 16 Company Statement of Changes in Equity 17 Consolidated Statement of Cash Flows 18 Notes to the Financial Statements 19 - 30 FITZMAURICE HOUSE LIMITED (A Company Limited by Guarantee) GROUP STRATEGIC REPORT FOR THE YEAR ENDED 31 DECEMBER 2016 Chairman’s Statement As is customary I wish to thank all those who work so hard for the benefit of the Club. This includes the Council, the Commissioners, the Members of the sub-committees of Council and the voluntary organisers of many of the groups and events for Members. Equal thanks go to the Secretary and all his staff whether they be in housekeeping, catering, administration, reception, sports or maintenance. The Members appreciate the cheerfulness and huge efforts of the staff. During 2016 Penny Dussek and Marc Corbett left the Council and we thank them for their many contributions to its work. During that year we welcomed Michael Dixon, Andrew Robinson, Roger Hepher and James North as new members to the Council. The Brexit vote has led to some uncertainties for clubs. The drop in the value of the pound has had an impact on the prices of food and beverages. Many of our staff are from EU countries and I am pleased to report that there has been a reduction in staff turnover in spite of the concerns about their status. This is very much to the credit of the managers of the Club and it is helped by us trying to pay staff appropriately and improve working conditions. However, ongoing increases in the London Living Wage do present another challenge for us. We made efforts in 2016 to move our bedroom modernisation/refurbishment programme on to a stronger footing. We are trying to provide good and attractive accommodation at a cost that people can afford but the prices have to reflect our expenditure on the rooms and our expensive central London location. Our sports provision continues to flourish and many of our sportsmen and sportswomen have been very successful in competitions. During 2016 we spent much time planning improvements to be undertaken in the pool area which would be carried out in 2017. It is worth noting that the Council, committees and staff devote large amounts of time to working out the logistics of our improvements and developments. Similar efforts are devoted to developing, advertising and running our many social events, some of which are one-offs and others which occur every month. The Lansdowne is like a swan which glides along but with a great deal of paddling going on below the surface. Our financial results are detailed and commented upon elsewhere so I will restrict myself to a few comments. Our turnover and gross profits have increased but costs are rising so we inevitably have to increase prices and subscriptions. We try to reduce the impact of those increases as far as we can by careful budgeting. Members will have read of increases in business rates and although subject to appeal, we know we will be hit hard by this as will many other London businesses. We are in better shape than some organisations to deal with these challenges but we will have to be ready to adapt to continue to flourish. We are an unusual Club in our mixed membership in terms of age, gender, profession, country, overseas and town Members and this means we will continue to offer a wide range of services and events. So support your Club, make good use of it and enjoy. David Whitehouse Club Chairman Page 1 FITZMAURICE HOUSE LIMITED (A Company Limited by Guarantee) GROUP STRATEGIC REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016 Treasurer’s Statement The Club had a successful year from a financial perspective in 2016 and met its budgetary aims. Key performance indicators that the Club tracks are turnover by category, operating surplus before depreciation, interest and tax, cash in hand and capital spending. Turnover levels in 2016 increased by £0.30m (3.4%) versus the prior year from £9.04m to £9.34m This growth was driven by an increase in catering income which was £0.32m (12.7%) higher than the prior year due to the successful opening of the refurbished Dining Room in May 2016 and banqueting kitchen in October 2016. The new kitchen has allowed the Club to host concurrent events in the function rooms and Ballroom, whilst allowing the Dining Room kitchen to operate without service interruption. This was a key project in 2016 and has addressed the main source of historical Dining Room complaints. Since reopening, the Dining Room has experienced a 62% rise in covers and 58% rise in turnover. Accommodation revenue decreased £0.11m (4.0%) versus the prior year as a result of lower occupancy levels due to the refurbishment programme lowering the number of available rooms. This was anticipated and occupancy levels were in line with budget at 81%. The weekend discounted rate of £125 per room including breakfast continues to be popular and successfully drives members to use their club over weekends, a key aim of the Council. In other revenue categories there was limited growth in 2016. Subscription income was £0.05m and sports income was £0.04m higher than 2015. Overall at the end of 2016 the membership was 8,487. Costs also increased during 2016. Combined direct costs and overheads excluding depreciation increased by £0.19m (2.5%) versus the prior year from £7.62m to £7.81m. This was driven by total payroll costs which increased by £0.11m (2.7%) in 2016. The Club increased the lowest paid staff’s salaries to help reflect the London Living Wage increase in November 2015 to £9.40 per hour. However, the impact of this was mitigated through savings in back office functions. These included the Administration and Subscriptions departments being streamlined and several vacancies not being filled. Total staff at year end was 122. Food and beverage and other variable catering costs were £0.12m (9.2%) higher versus the prior year. In part this was driven by the adverse £:€ exchange rate movement following the June 2016 decision to exit Europe. However careful management of food menus resulted in the catering department increasing contribution levels versus the prior year. Operating surplus before depreciation, interest and tax increased by £0.09m (6.1%) versus the prior year from £1.48 to £1.53m. Capital spending in 2016 was £2.8m, £1.3m higher than the previous year. Major projects completed included the refurbishment of the second floor Dining Room, Piano Bar and toilets, the banqueting kitchen, a new ground floor cloakroom, refurbishments to the Shelburne and Findlay rooms and ongoing bedroom upgrades. Following professional advice from structural engineers, the Council decided not to pursue a project to create additional 6th floor bedrooms. The disruption to members as a result of closing the Courtyard and sports area for up to 20 weeks to strengthen structural steel beams across the swimming pool was viewed by Council as too great. At the end of the year the Club had a healthy cash balance of £1.49m and no bank debt. This positive cash flow and continued generation of an operating surplus allows the Club to reinvest in the building, replace worn out assets and develop and renew existing areas. Risks and uncertainties Management and staff – The Club’s performance depends to a large extent on its managers and staff. Resignations from key members of staff could adversely impact the Club's performance. To mitigate this the Club has a staff fund and management bonus scheme in place to attract and retain the key staff members. Page 2 FITZMAURICE HOUSE LIMITED (A Company Limited by Guarantee) GROUP STRATEGIC REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016 Service levels – Maintaining service levels to Members is essential to preserve their regular usage of the Club and minimise member resignation levels. To mitigate these risks the Club invests in training programmes for staff members, employs a third party organisation to carry out ‘mystery shopper reviews’ and seeks regular feedback from Members to review and address any performance issues. Membership levels – The Club continues to experience a slight decline in female membership and the decision to exit the European Union has generated uncertainty for jobs in the financial services sector and the Club's European members who live in the UK. To mitigate this we will continue to offer exceptional value for our Members and offer an exciting events programme to attract new Members to account for any resignations.