Taking our lead from His Royal Highness The Prince of Wales, sustainability has always been central to how we operate. Our 2018/19 Integrated Annual Report, published today and available here , sets out the great importance we place on achieving a balance between financial results, protecting the natural environment on which we all depend and supporting our communities, which has been at the heart of the Duchy ethos for many years.
The Framework of the International Integrated Reporting Council (IIRC) helps us explain how we create value in the short, medium and long term, for a range of stakeholders. This year we have undertaken a thorough review of what matters to these stakeholders. The results of this work are described in the report and are being incorporated into our strategy, objectives and governance.
Examples of how we are progressing on our strategic objectives are shown, grouped around each objective. I was particularly pleased to see how we are performing with community support and engagement. Feedback from tenants shows our customer service is rated very highly. We continue to be well ahead of our target of creating at least one new job for every house sold at our major development sites. Our Farm Business Tenancies for equipped farms are 21 years long on average, well in excess of industry standards, giving our tenants the long-term security they need to grow successful enterprises and put down roots in their communities.
The Prince of Wales again undertook a large number of public and private visits across the estate during the year. A particular highlight for me was the triennial visit of Their Royal Highnesses to the Isles of Scilly in July. On a visit to some of the small businesses on St Martin’s, we learned about the provenance of Adam’s Fish and Chip Shop’s freshly caught fish and home-grown potatoes, visited the post office and stores, tearooms, art gallery, shoe shop, island hall, doctor’s surgery and emergency services building, and Scilly Flowers. The Prince of Wales was particularly interested in the Smart Islands Partnership Programme, where the Duchy, the local council and many other partners are trying to address some of the Isles of Scilly’s utility and infrastructure needs in an affordable and sustainable way. Their Royal Highnesses met many, perhaps most, of this vibrant island community which has been part of the estate since the Duchy was established in 1337.
In previous years, we have undertaken very useful surveys of residential and commercial tenants. This year we completed this process by seeking the views of our agricultural tenants across all districts. Agricultural property, which forms the heart of the traditional landed estate, ranges from small flower farms on the Isles of Scilly, to traditional dairy farms in Devon and Somerset, to large arable enterprises in Herefordshire. Many have diversified business streams, such as farm shops or bed and breakfasts. I was particularly pleased to see that, as with previous surveys, over 90% of tenants either agreed or strongly agreed that the Duchy had friendly and approachable staff. Overall satisfaction ratings were high although we will reflect on how we can improve on our perceived deficiencies such as being quicker in completing repairs.
Major investment in the existing estate has continued this year, along with the annual round of overhauls and repairs. Significant projects include an extension to a small farmhouse to support the new tenants and their growing family, a substantial renovation on St Agnes to upgrade a much- needed home on the island, a new farmstead in Cornwall, works to listed farm barns and the construction, using Duchy timber, of a new community facility in rural Herefordshire.
There has been significant progress at our major development sites at Poundbury and Nansledan. This year has also seen the substantial completion of the smaller community project at Bletchingdon in Oxfordshire, which includes a school, community hall and affordable housing.
There were no material acquisitions during the year. Two farms in Kent, part of an estate purchased in 2000, were sold during the year, continuing the programme of disposals from this off-lying area.
The Prince’s Council is drawn from recognised leaders in agriculture, commercial property, estate management, investment management, law and finance. There were no changes to membership during the year. Along with HRH The Prince of Wales, the Council provides vital oversight, governance and guidance, and I remain very grateful for all it does for the Duchy. For example, this year, as in previous years, Lady Arran and Mark Thomas have given a great deal of time meeting potential candidates for farms which the Duchy has been letting.
During the year, following discussions between members of The Prince’s Council, The Prince of Wales and The Duke of Cambridge, we continued the restructuring of our loan portfolio. Taking advantage of historically low interest rates, we reissued debt via fixed-rate loan notes of between 40 and 50 years, achieving a very competitive rate. This secures our modest gearing and allows us to continue to take long-term decisions in the best interests of all stakeholders. The interest cost saving will underpin Revenue Account surplus growth next year.
We continue to enhance disclosure around our key performance indicators. This year we have developed some indicators that focus on impact rather than input. The significant growth in the Revenue Account distributable surplus that was achieved last year – up £1million to £21.7million – resulted from a number of one-off factors that we knew would not be repeated. Last year I said that there would be little if any growth this year, and this has indeed been the case: the surplus, at £21.6million, is in line with our budget. We expect a return to revenue surplus growth in 2019/20.
We continue to look further forward with a rolling five-year forecast and are acutely aware that even a modest growth in the Revenue Account surplus is dependent on the careful reinvestment of capital cash flows arising from development sales. By and large, the existing portfolio is fully rented and there is little room for organic growth.
Having celebrated His Royal Highness’s 70th birthday in 2018, this year we will be marking 50 years since HRH assumed his position as Chairman of The Prince’s Council.
Thank you to everyone who has worked so hard to ensure another successful year.
The Duke and Duchess of Cornwall have carried out their annual visit to Devon and CornwallRead more