Taking our lead from His Royal Highness The Prince of Wales, sustainability has always been at the heart of how we operate. Our 2017/18 Integrated Annual Report, published today and available here
, sets out the great importance we place on achieving a sustainable balance between financial results, supporting our communities and enhancing the natural environment on which we all depend.
How we create value over the longer term is affected by macroeconomic and political trends, some of which are reviewed in the Report. These create uncertainty for those who run businesses or live on the estate. Examples of how we try to support our tenants through these uncertainties include farm tenant seminars on Brexit and our natural capitals project, which aims to protect and enhance natural resources across the estate.
The Duchy actively encourages knowledge sharing and regularly hosts groups who can bring new insights or with whom we can share what we are doing. Over the past year, we’ve welcomed university groups, business leaders, charities, architects and developers as well as local and national government representatives including the Secretary of State for Environment, Food and Rural Affairs, who met with farming tenants and attended a seminar on the future of food production.
As always, The Prince of Wales undertook a number of public and private visits across the estate. A particular highlight for me this year was the official opening of the new Damers First School in the heart of the community at Poundbury, part-funded by the Duchy and now attended by 450 children.
Following on from the very useful residential tenants’ survey last year, we commissioned a similar exercise for our rural commercial property tenants. These are typically tenanted by small businesses, start-ups to established enterprises, ranging from chocolatiers to IT companies, architects to stained glass specialists. Some are live-work units. As with the residential tenants’ survey, the results were very encouraging: tenants find our staff friendly and approachable, and rate communication very highly, but there are issues with heating systems and broadband speeds. There is more detail about the results of the survey on page 25 of the Report.
We continue to make significant investment in our existing properties, both through substantial projects such as the complete renovation of the former royal bungalow on St Mary’s, Isles of Scilly, which will join our very successful holiday let portfolio, to the routine but important round of regular overhauls and modernisations. Our internal team of nine building surveyors, who all understand very well The Prince’s passion for the built environment, manage these works and the often complex issues arising from them.
Compared to recent years, there has been little movement in our asset portfolio, with no significant acquisitions. A farm in Shropshire was sold, part of an outlying estate that was purchased in 2000.
We were pleased to sell to the tenant and to Harper Adams University, which specialises in agricultural and rural education and already owns adjoining land. Two small commercial units in the Midlands with a combined value of around £6million were sold early in the year, as we re-focus our urban commercial portfolio on higher-quality property.
There have been no changes to membership of The Prince’s Council this year. The group is drawn from recognised leaders in agriculture, commercial property, estate management, investment management, law and finance. Along with HRH The Prince of Wales, they provide vital oversight, governance and guidance, and I am very grateful for all they do for the Duchy.
As with many organisations, we have been preparing for the new General Data Protection Regulation, as well as other changes to legal requirements that impact on the management of a landed estate.
This year we have developed disclosure around our key performance indicators. We now have a complete set of targets, and many have at least two years’ data. You can read more on pages 16–17 of the Report. The significant growth in the Revenue account distributable surplus that was achieved this year, up £1m to £21.7m, results from a number of factors that are unlikely to be repeated in future years. Indeed, there is likely to be little if any growth next year. These factors included a material contribution from the restructuring of the loan portfolio, taking advantage of historically low interest rates. Balance sheet gearing remains very low. We have revised our five-year forecast: even a modest growth in the Revenue account surplus is dependent on the careful reinvestment of capital cash flows arising from development sales.
We look forward to celebrating His Royal Highness’s 70th birthday later in 2018. Events with tenants and staff are planned, and the Duke of Cornwall avenues, planted in Herefordshire, Somerset and Cornwall, are coming into leaf. I thank all staff, from those who retire this year – one of whom has worked at the Duchy for 48 years – to our latest recruits. It has been another memorable year of which we should all feel proud.
Alastair Martin, Secretary and Keeper of the Records