24 June 2021

Chief Executive’s review

Dominated by COVID-19, this past year has continued to test our individual and collective resilience.

Alongside the ongoing challenges of managing the pandemic, COVID-19 has accelerated or thrown into sharper focus longer-term trends, including technological disruption, accelerating consumer demand, innovation, socio-economic inequality and climate change. It is clear that an increased level of uncertainty and instability is here to stay.

“I hope that when we look back at this time it will be seen as a pivotal moment. One where we took the time and care to understand the needs of the world around us and the unique contribution we could make.”

The health, safety and wellbeing of people has continued to be at the heart of our COVID-19 response. Alongside this, supporting our customers – especially in retail, leisure and dining – who have experienced severe operational and economic challenges, has been another key focus of the year.

For the financial year 2020/21, we made a net revenue profit of £269.3 million which, as expected, represents a 21.9% decline on 2019/20. This means our average growth on a three year rolling basis has declined by 6.5%, 10.5 percentage points below our target of 4% growth.

We announced the outcome of the Offshore Wind Leasing Round 4 (Round 4) bidding process earlier this year and have attributed a value to Round 4 for the first time, which has caused our capital value to increase at a time when commercial property values have been falling.

The value of our total portfolio has increased from £13.4 billion to £14.4 billion, a 7.5% increase. Our 12-month total return is 11.9%, outperforming our annual MSCI bespoke total return of -2.9%. On a three-year rolling basis, it is 6.0% against our MSCI bespoke benchmark of 0.3%. If we exclude the impact of Round 4 our 12-month total return would have been -3.2%, 0.3 percentage points below the annual MSCI bespoke benchmark.

At the beginning of 2020 we began a deep review of our purpose and strategy to respond to the longer-term trends impacting our business and ensure that we could better adapt to ongoing change. Our new purpose, ‘to create lasting and shared prosperity for the nation’, will be our ‘north star’ for the years to come and is guiding our ambitious new strategy which will continue to evolve as required and see us drive fundamental change in the way we operate.

In December 2020, we outlined our commitment to become a net zero business by aligning to the 1.5°C goal of the Paris Climate Agreement, with a target to become a net zero carbon business by 2030, and climate positive thereafter. While this will be far from easy, we are holding ourselves to account to ensure we turn over every stone and relentlessly use our business and influence to give ourselves the best possible chance to achieve this ambitious target.

As we move forward aligned to our new purpose, we take strength from our deep foundations rooted in a rich history, backed up by a diverse portfolio, strong capital base and wealth of talent across the business and wide-ranging community of stakeholders we have the opportunity to work with. This position of strength is both a privilege and a huge opportunity. It is our duty to seize this and play our part in creating lasting and shared prosperity for our customers, the nation and future generations.

Dan Labbad
Chief Executive

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