“I am confident that in the year ahead, our innovative investment strategy will continue to deliver strong financial performance and that our investment in customer service will mean we retain our competitive position.”

Roger Bright
Chief Executive and
Second Commissioner

The last year has been an exciting one for The Crown Estate, as we continue to make progress in our evolution as a contemporary, customer-focused, efficient property business.

Our commitment to change has been exemplified by our move to a new corporate headquarters at 16 New Burlington Place, on Regent Street. This elegant, but contemporary new building, constructed behind the retained Regent Street façade, provides us with flexible open-plan office space and excellent information technology facilities. It has already improved the way we work as a business and is a physical embodiment of the type of business we strive to be: modern and efficient, but celebrating our history and commitment to good corporate responsibility.

The Crown Estate’s enormous diversity, combining urban, rural and marine investments and Windsor Great Park, provides both a source of strength and a permanent challenge. We aim for excellent financial performance, as our revenue surplus is paid to the Treasury for the benefit of taxpayers, but we have to balance this commercial imperative with long-term stewardship obligations. I am proud of the way my colleagues and our managing agents work hard to preserve this balance, utilising their knowledge and experience to the best interests of The Crown Estate as a national asset. But there is no room for complacency as markets and expectations are constantly and rapidly changing.

Our financial performance in 2005/06 has been satisfying. An increase in revenue surplus of 3.2% to £190.8 million represents a strong performance and demonstrates good returns across The Crown Estate. Our capital value has increased by £847 million to a little under £6 billion and the total property value increased by £873 million to £5.7 billion.

Our investment strategy is now well underway. It has led to some notable acquisitions and disposals throughout the year, as we seek to position the portfolio for successful and sustained financial performance in the medium to long-term. Acquisitions have included a substantial vehicle distribution centre at Avonmouth near Bristol, prime retail space on New Street in Birmingham and a mixed-use agricultural estate at Ashby St Ledgers in Northamptonshire. Disposals from our office portfolio have included our holding in Bedford Square in London, Meudon House in Farnborough, and a number of smaller properties in central London.

We continue to invest substantially in our existing holdings. On our urban estate this has included further work on our Regent Street investment programme. In addition to the development of our own new offices which also incorporates space for retail and a restaurant, 132-154 Regent Street has been completed, with the 70,000 sq ft of office space let to property consultants King Sturge as their new London headquarters. The retail space is currently being fitted out for occupation. More development activity is taking place at 83-97 Regent Street – the west side of The Quadrant – where a mixed-use scheme in conjunction with City and West End is scheduled for completion in 2008. And longer term plans for the east side of The Quadrant are being developed in discussion with English Heritage, Westminster City Council and other stakeholders.

Our marine estate presents particular challenges as we seek to balance commercial and environmental pressures, but at £34.1 million its gross revenue contribution represents a good return. This year, we have appointed a new Director of the Marine Estate, Rob Hastings, who joins us from Shell UK Renewables. Rob’s appointment follows the retirement of Frank Parrish, who had been Director of the Marine Estate for 20 years, in which role he made a major contribution to the work of The Crown Estate.

Our rural estate delivered a gross revenue contribution of £16.1 million, a real terms increase on the previous year. This is a creditable performance given that the rural economy has faced a year of depressed commodity prices and high input costs, especially fuel. The significant delays in implementing the Single Farm Payment have exacerbated the problems for a number of our farming tenants. The problems have been offset to some extent by the imaginative approach our tenants have taken, supported by our rural estate team and managing agents, to promote diversified income streams in their businesses. We have also sought to take a flexible and sympathetic position in cases of particular hardship.

In Scotland, our rural and marine estates performed well. On both estates, we have worked with local communities to introduce stewardship initiatives, such as our support for the protection of Scottish native oysters and the planting of woodland in Glenlivet to celebrate the 200th anniversary of the battle of Trafalgar.

On our Windsor estate, together with our work in maintaining the important amenity which is the Great Park, there has been substantial progress on two major projects: the new Savill Garden visitor centre, and the new grandstand at Ascot Racecourse. Both are scheduled for completion in the summer of 2006 and will provide, in their very different ways, superb landmark buildings and facilities.

This year we have incorporated our corporate responsibility report into our annual report, illustrating how integral it is to the way we operate as a business. We report on the progress we have made during the year against our targets and highlight examples of good practice across our diverse estate.

A great deal has been achieved in the last year. We continue to strengthen and invest in our staff and supporting agents and professional advisers, all with a view to improving the service we provide for our customers. Our financial performance remains strong and this has been delivered in conjunction with continued success in our corporate responsibility targets. I am confident that in the year ahead, our innovative investment strategy will continue to deliver strong financial performance and that our investment in customer service will mean we retain our competitive position.

Roger Bright
Chief Executive and Second Commissioner