SUSTAINABILITY SHAPES OUR FUTURE Annual Report 2010 Page 1 The Crown Estate Annual Report 2010 Overview 2 Understanding The Crown Estate Sustainability lies at the heart of 4 Chairman’s statement The Crown Estate. Although Parliament 6 Chief executive’s overview 8 Progress on our ‘Going for Gold’ targets decrees that we operate as a commercial Performance organisation, we combine the commercial 10 Urban estate 16 Marine estate imperative with an equally firm 22 Rural estate 28 Windsor estate commitment to integrity and stewardship. 32 Financial review 40 Sustainability Our commitment to stewardship reflects Governance 52 The Board our ability to take the long-term view, 54 Governance report pursuing good environmental practice. 65 Remuneration report Financials In addition to our principal financial 67 The Certificate and Report of the duty we manage the assets in our care Comptroller and Auditor General to the Houses of Parliament for the sustainable, long-term benefit 68 Statement of income and expenditure 68 Statement of comprehensive income of our tenants and other customers; 69 Balance sheet their businesses; the communities they 70 Cash flow statement 71 Statement of changes in represent; and for the environment. capital and reserves 72 Notes to the financial statements 90 Ten-year record (unaudited) Available online % www.thecrownestate.co.uk/annual_report Other publications available 5 Scotland Report 2010 Wales Financial Highlights 2010 Northern Ireland Financial Highlights 2010 Page 2 The Crown Estate Annual Report 2010 Commercialism. Integrity. Stewardship. THE FABRIC OF BRITAIN Understanding The Crown Estate Who we are and what we do: Revenue by estate 2010 £million (excluding service charges) • T he Crown Estate is the organisation, established A Urban estate – 221.4 by Parliament, to manage the hereditary estates B Marine estate – 46.6 of the Crown on behalf of the nation C Rural estate – 25.1 D Windsor estate – 6.6 • T he Crown Estate manages a diverse property D portfolio which includes office, retail and C industrial premises; housing; farmland, forestry and minerals; parkland; and over half the B foreshore and almost all the seabed around the UK • t he responsibilities of The Crown Estate are to A maintain and enhance the value of the estate and its income over the long term and to do this having regard to good management Property valuation including • t he profit earned by The Crown Estate is paid indirect investments to the Treasury for the benefit of the nation £million A Urban estate – 4,639 B Marine estate – 444 • t he responsibilities of the Board members of C Rural estate – 972 The Crown Estate are therefore similar to the D Windsor estate – 177 responsibilities of trustees of a trust fund D • o ver the last ten years, the capital value of C The Crown Estate has increased by £2.6 billion and The Crown Estate has paid a total of B £1.9 billion to the Treasury • w e work constructively with the grain A of government at every level • i n summary, The Crown Estate is a successful business organisation guided by our core values – commercialism, integrity, stewardship Page 3 The Crown Estate Annual Report 2010 You are here 8 Overview Performance Sustainability Governance Financials Urban estate Marine estate The urban estate consists principally of The marine estate includes around half of the major commercial holdings concentrated UK’s foreshore, the beds of tidal rivers and in London’s West End and major towns estuaries and almost all of the seabed out to and cities around the country, as well the 12 nautical-mile territorial limit around as a number of residential ownerships the UK. It also includes the rights to explore around London. and utilise the natural resource (excluding hydrocarbons) of the UK continental shelf. 5 See pages 10–15 5 See pages 16–21 Rural estate Windsor estate The rural estate is one of the largest in The Windsor estate covers around 6,300 the UK with almost 146,000 hectares hectares (15,600 acres) and includes (360,000 acres) of agricultural land, forests, Windsor Great Park, Home Park, The Royal minerals and residential and commercial Landscape, forestry, residential properties property in England, Scotland and Wales and some commercial properties including (excluding the Windsor estate). Berkshire and Swinley Forest golf clubs and Ascot Racecourse. 5 See pages 22–27 5 See pages 28–31 Page 4 The Crown Estate Annual Report 2010 Commercialism. Integrity. Stewardship. PROGRESS IN CHALLENGING TIMES Chairman’s statement As we anticipated, 2009/10 was an extremely All four estates have recorded pleasing challenging year. It has been a period when financial results. On the urban estate, the we have drawn on all the expertise and team faces an undeniably tricky market, experience of our people to record a set of but we’ve seen opportunity in these weak results which stand up well in the context of conditions and have been able to secure both the economic downturn. We have returned sale and purchase deals which will enhance £210.7 million to the Treasury, in the form of our assets over the long term. It’s also been our net income surplus (profit) – a significant a good time to be building, and we’re seeing sum, albeit a decrease of £15.8 million on good progress with The Quadrant scheme the previous year. Capital values rose by in central London which is heading towards £625 million during the year. completion at a time when we expect more favourable letting conditions. Since taking up my post as chairman, I’ve been enormously impressed by the skills The rural estate continues to benefit from and spirit evidenced throughout The Crown a greater national interest in food security, Estate. The three core values of commercialism, and we’ve again worked closely with tenants integrity and stewardship aren’t just a brass and businesses to enable them to pursue plate on the door of our offices; they provide opportunities to increase their profitability a constant guide to our approach to all aspects and to improve their communities. We value of our business. The test of an organisation’s the initiative of our tenants, and we recognise values always comes when markets are under the part we can play in supporting them as a stress, and not only have we remained true to proactive and forward-thinking landlord. our aims, but we’ve also taken full advantage of our ability and willingness to adopt a long-term view when other businesses are forced to focus on short-term profitability and delivery targets. Net income surplus (profit) Income from indirect investments Capital value £million £million £million 2010 210.7 2010 9.2 2010 6,640 2009 226.5 2009 10.2 2009 6,015 2008 213.4 2008 10.1 2008 7,334 2007 200.1 2007 0.9 2007 7,091 2006 190.8 2006 – 2006 5,937 Property valuation (directly held) Revenue (excluding service Value of indirect investments £million charge income) £million £million 2010 5,989 2010 299.7 2010 243 2009 5,513 2009 285.8 2009 213 2008 6,584 2008 266.8 2008 242 2007 6,572 2007 262.2 2007 42 2006 5,685 2006 252.3 2006 – Page 5 The Crown Estate Annual Report 2010 You are here 8 Overview On the Windsor estate, our team takes justified development and trading, rural land-holdings, Performance pride in the pleasure given to the huge numbers coastal activities such as marinas, aggregates Sustainability of visitors who visit the Great Park and the extraction, aquaculture, licensing of cables and gardens of the Royal Landscape. There’s been pipes, and to an increasing extent the major Governance a keen sense of cost control through the year, wind, wave and tidal generation schemes Financials usefully supplemented by an increase in referred to above. Looking ahead to the revenue as a result of the Park being selected potential future significance for The Crown as the location for two major feature films. Estate of offshore renewable energy operations, the Board will clearly need expertise in this The marine estate saw a tremendous level of sector. We have ambitions to increase the size activity as we enabled developers to realise of the Board to 10 members in time, but this the potential of our coastal resources to would require legislation. In the short term generate renewable energy from wind, wave therefore we shall be looking to replace the and tide. The Government has set its targets two Board members who are due to stand for achieving energy security and reducing down after two terms at the end of the year carbon emissions, and The Crown Estate will with appointments bringing specific expertise play a full and active part in bringing these in renewable energy development, but in order ambitious plans to fruition. not to lose the balance of experience at the Board Undoubtedly an area like renewables table, I’m delighted that Martin Moore and requires a long-term view, and we can see a Dinah Nichols have agreed to continue to work time when the income from our engagement with The Crown Estate as advisers to the Board. in this area will bring a significant benefit in Finally, I would like to place on record my sincere the sums we’re able to transfer to the Treasury. thanks to Sir Ian Grant, my predecessor, who In the meantime, however, we’re recognising through the seven years of his Chairmanship the distinctive part we can play in making laid firm foundations for strong, open and these huge schemes happen by applying transparent working at The Crown Estate and the experience gained in the first rounds of who assembled the accomplished management offshore wind farms in order to help bring team with which it is now my pleasure to work.