||I am pleased to announce, in my last report as Chairman, that we achieved a total profit before tax of £508.7m.
I will retire from the Board on 1st May after 33 years’ responsibility for this business and can look back on big changes in markets and circumstances, to which we have responded with a balance of care and ambition. We are a much larger and more relevant business than we were in 1974. We have become more outward-facing and conscious that our success stems ultimately from our ability to meet the expectations of the occupiers of our properties.
We watched inflation bring booms and spectacular busts during the 1970s and 1980s. Inflation was never “good for property” (as some pundits still like to suggest) and since it passed we have enjoyed a long upswing in property values.
Undoubtedly, the change with the greatest impact has been the institutional involvement in real estate: beginning in the mid-1970s, the activities of pension funds and insurance companies have shaped markets and practices worldwide. Our business in North America grew rapidly through the 1980s as we assisted many UK pension funds with their new investments there after the removal of exchange controls by the British Government in 1979.
More recently, we have witnessed the ‘globalisation’ of the property industry. This has followed well behind general financial and industrial globalisation but, now established, it is surely here to stay. Our own business broadened from the UK, North America and Australia during the 1990s to include Continental Europe and the Asia Pacific region.
For me, the most gratifying change has been the emergence of more enlightened attitudes to the development of buildings and public spaces over the last 10 years, allowing more imagination in design. The 1970s and 1980s, when the influence of architecture waned and planning increased, now feel like a sterile period for the evolution of cities. Today, the idea of ‘mixed use development’ – which Grosvenor undertook alongside others in the 18th and 19th centuries – is back in favour. Owners should be trusted to exercise responsibility for their contributions to the built environment; planners rightly control the use of buildings and density of development, but the more ‘the state’ is involved in design and aesthetics the more ordinary will be the result. I am pleased that our generation is recovering the chance to create glorious architecture and places to match those which nearly every city boasts from its past.
I believe strongly in the benefits of continuity of management and, with my fellow Directors, have pursued this as deliberate policy. Ours is a long term business and consistency of leadership and strategy is very important. The great advantage we have as a private business is that we can take the time needed to do things right, rather than working to a timescale which might suit an impatient stock market. It is nonsense to suggest, nowadays, that there is insufficient pressure on a private company: I expect our management team to create challenging plans as the basis for success in a very competitive marketplace.
Employing the right people is important. Staff numbers have grown since 1974 from around 100 to around 500. My views about the type of people we want and the way we work may seem old fashioned, but I believe they represent timeless virtues and are the hallmark of an enduring business. We seek people who are ambitious and who also respect and understand the business, its history and the markets we are in; people who support each other and are loyal to their colleagues and to the organisation. The result is a noticeably positive atmosphere and a business style which is focused on long term value and which is creative and friendly. So many wonderful people have contributed to the Grosvenor story over the last 33 years and I would like to thank each and every one for their hard work, for their inspiration and for making this such a distinguished organisation.
||One option has never been open to us and that is to put the whole business at risk: as a business owned on behalf of future generations, we are caretakers of an historic legacy. We will not jeopardise the whole, but we are of a size whereby we can tackle large and complex schemes like Liverpool One, which will be very successful and influential in the City of Liverpool. The need to make a financial provision on this project is disappointing, but it does not detract from my pride in the way we have met a new challenge and opened up new ideas for the regeneration of city centres. The current stage of the scheme, when the myriad parts are finally coming together and its physical appearance is taking shape, is very exciting.
I am delighted that David Home is to succeed me as Chairman. David has been a Trustee of the Grosvenor Estate for 14 years and is very well known to management and staff. His understanding of our strategy, people and issues will ensure continuity. In November Eddie George will also step down as a Director. We have been extremely fortunate to have had the benefit of his steady advice since he retired as Governor of the Bank of England four years ago. He has the great skill of seeing past the ‘theory of the day’ about the worldwide economy, pinpointing in the process the matters important to a long term business such as ours. I thank him for the time he has dedicated to our cause. Another significant forthcoming change among our great cadre of Non-Executives arises in North America. Carmine Guerro will retire as Chairman of Grosvenor Americas in August, to be succeeded by Ralph Severson. Carmine has epitomised the way we want a Chairman of a devolved business to operate, taking full responsibility for the Board and the Company’s activities within the framework of the Grosvenor culture.
I believe our business has a bright future, as we continue to grow five interconnected but different property companies inside the Grosvenor Group – each operating in a sector or part of the world with unique challenges and opportunities for a committed long term participant in the evolution of urban places.
The Duke of Westminster KG OBE TD DL
15 March 2007