Taking our lead from His Royal Highness The Prince of Wales, sustainability has long been at the heart of how the Duchy operates.
This 2015/16 Annual Report, published today and available here extends work begun last year on integrated reporting, through which we describe more clearly what sustainable stewardship in all its forms means to the Duchy. This year, we have commissioned a major piece of work on natural capital within the Duchy (see page 14) to guide current and future projects. We continue to investigate material key performance indicators to support all this work.
The state of the rural economy remains an important issue for the Duchy and in particular our agricultural tenants. We pride ourselves in having a close relationship with our farm tenants and this proves to be especially valuable when some are facing difficulties.
Last year I reported on the significant purchase of the Port Eliot estate in Cornwall, our most substantial purchase of farmland in Cornwall since His Royal Highness The Prince of Wales became The Duke of Cornwall in 1952. I also said that we hoped to make an additional strategic investment in commercial property, and this year we achieved this aim with the purchase of a commercial warehouse in Milton Keynes, let to B&Q. The property is valued at £35million and was predominantly funded by an increased borrowing facility. It follows the purchase of a distribution unit nearby in 2011. These acquisitions reflect the Duchy’s strategy to keep under consideration the balance within its overall property portfolio.
The Duchy has successfully recruited for several positions this year to meet succession plans, to ensure continuity of staffing and to reduce the use of external consultancies. The staff consultative committee established last year is proving to be a very effective forum.
We have welcomed Clive Alderton to The Prince’s Council. Clive is the new Principal Private Secretary to TRH The Prince of Wales and The Duchess of Cornwall. He joined The Royal Household in 2015, having previously served as Her Majesty The Queen’s Ambassador to the Kingdom of Morocco. During the year, Andrew Ratcliffe retired as Duchy auditor and has been succeeded by James Chalmers. James is a partner at PwC.
Following lettings in 2013/14 and 2014/15, the Duchy has again been able to let farms to new tenants during the year. These include a 200 acre sheep farm in Devon, an 80 acre starter unit with farmhouse, again in Devon, a significant area of moorland grazing let to a Dartmoor young farmer, and the letting to a young family from Cornwall of 40 acres forming the only farm on the island of Bryher in the Scilly Isles.
The Duchy continues to meet its main function of providing an income to the heir to the throne, while ensuring the capital value of the estate is maintained for future beneficiaries. There is a balance to be struck in the investment decisions made, in both the short and the long term. This year has been no exception: the distributable surplus has risen by 3.1% and capital values by 1.3%, in line with performance over the last two decades, which have seen sustainable growth in both revenue and capital values.
Investment in the estate has continued to grow. The record £15.1million investment in the estate in 2014/15 was surpassed this year with £23.8million being invested, excluding new property purchases.
The Duchy aims to increase the revenue surplus at least in line with inflation, to continue to fund the public, charitable and private activities of The Prince of Wales. There are ongoing demands from within the estate for the capital funds we generate, with the consequence that growing the revenue surplus above inflation will be challenging. We will therefore continue to seek additional diversification opportunities within the portfolio where possible, although no material property acquisitions are anticipated over the next few years.
Our budgeting process indicates that the record capital investment in 2015/16 will be exceeded in 2016/17 as the development projects at Poundbury and Nansledan expand further. Both sites will deliver significant social and economic benefits to their regions. Work has begun to understand better the impact of our tenants’ activities on the natural capital within their care, particularly soil and water. A new soil group has been established, and we are now working with Natural England on how we can help improve habitats for wild pollinators. Over the coming year we intend to survey tenants so that the Duchy can further develop the service and support it gives.
Once again I thank all the staff who have contributed so much to the Duchy’s success this year in so many areas. The traditions and ethos of the Duchy, set out in this Report, allow us to maintain our strong position.
Alastair Martin Secretary and Keeper of the Records
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