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2021-12-31-accounts

Annual Report & Accounts For the year ended 31 December 2021

Highlights

Care awards

We are delighted to have received recognition from across the care sector, allowing us to share our work with others.

Our dementia care was recognised by the Alzheimer’s Society when we won the Professional Excellence category in their Dementia Hero Awards. Our High Wycombe Home was a fi nalist in the Care Home Awards’ New Care Home category. We received glowing feedback from relatives on carehome.co.uk’s independent review platform. This resulted in us being named twice in its Top 20 Awards, securing a place in the nationwide ‘Small Care Home Groups’ category, while our Surbiton Home featured in its London Top 20.

Family Connections

We have developed a website exclusively for relatives to use, which features photos, stories, activities and menus from the Homes.

This provides an insight into the daily lives of our residents, which relatives love to see, especially when visiting has been limited due to the pandemic or because of distance. Relatives tell us they fi nd it especially helpful to support conversations where a resident may not recall what they have been doing.

Family Connections has been supported by the Armed Forces Covenant Fund Trust through their Removing Barriers to Family Life programme.

Wellbeing Programme

We launched a new, bespoke programme in our Homes which off ers meaningful activities and exercise to support our residents.

The person-centred activities, outings and exercise are available seven days a week. Our Wellbeing Team works together to enhance the mental, physical and emotional wellbeing of everyone we care for, creating activities that match a person’s interests and abilities.

Through this enhanced programme, we are able to increase mobility, build confi dence and nurture both independence and companionship.

We provide loving, compassionate care to veterans and their partners living with disability or dementia.

Contents

Chair’s Lett er ............................................................................................................................... 1 Governors’ Report .......................................................................................................................3 Independent Auditor’s Report ..................................................................................................17 Consolidated Statement of Financial Activities ...................................................................21 Balance Sheets ...........................................................................................................................22 Consolidated Statement of Cash Flows .................................................................................23 Notes to the Consolidated Accounts ......................................................................................24 Legal and Administrative Information ..................................................................................37

As a family

Our values sit at the heart of our care.

We work and live as one team, one family, one community.

Living positively

With love

We are optimistic in everything we do, supporting veterans and their partners in leading happy, fulfi lled lives.

We carry out our work with love, care and compassion.

Standing in their shoes

Take courage

We show admiration and respect for people and never forget what they have done.

We are not afraid to do what is right and what is needed.

Chair’s Letter

Every day we focus on providing outstanding, compassionate and loving care to those who have had the courage to serve their country. We are proud to support veterans and their partners who have given so much and who are living with disability or dementia, as well as to lead the field in both the quality of our care and the scope of our innovation.

2021 has been another hugely challenging year for us all. The effect of the coronavirus pandemic on our residents, their families, our staff and volunteers has continued to be enormously impactful. Our teams have a relentless approach to keeping everyone as safe as possible while maintaining a lively atmosphere in each of our Homes.

The national vaccination programme has made a huge difference. With all our residents and staff fully vaccinated, we are so grateful that no one in the Royal Star & Garter family has died of coronavirus all year, despite experiencing a number of outbreaks in our Homes. However, residents and their families endured significant restrictions and long periods of separation.

I am hugely proud of how everyone has risen to the challenge yet again. I especially want to thank our residents and their families for their resilience, good humour and kindness.

2021 also marked many achievements, including winning the Professional Excellence category at the Alzheimer’s Society’s Dementia Hero Awards and the purchase of a new site in High Wycombe, where we intend to develop services for working-age veterans.

Our strategy sets out a bold vision: to push further the boundaries of the quality of our services, while at least doubling the number of veterans we support. Coronavirus has delayed our plans, but not stopped them. We will redouble our efforts when the pandemic is no longer our overriding focus.

I would like to record my thanks to all our teams - whether working on the frontline or providing vital support. Collectively they make our Homes so special. I would also like to thank our volunteers and Governors for their commitment and support.

Major General Tim Tyler CB Chair, Governing Body

29 June 2022

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2021

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218
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residents supported

119 99 women men

52,984 days of care provided

500 days of short-break care

28 Royal Navy & Royal Marines veterans

114

Army veterans

76 RAF veterans

44,760 Covid tests for staff

8,356

physiotherapy opportunities offered

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Governors’ Report Royal Star & Garter

Governors' Report

Our mission is to provide compassionate, loving care to ex-Service men and women and their partners living with disability and dementia - ensuring they are able to live life to the full.

Royal Star & Garter was established in 1916 to care for soldiers and sailors who had been disabled during the First World War. We are registered with the Charity Commission (number 210119) and our activities are governed by Royal Charter dated 21 September 1990 as amended on 13 June 2007*.

The Governors present their annual report and audited financial statements for the year ended 31 December 2021, and confirm they comply with the requirements of the Charities Act 2011, our governing document and the relevant Statement of Recommended Practice (Charities SORP).

Ever more Service men and women are surviving injury and illness into older age. However, the veteran community is more likely to experience long-term physical health conditions, and the proportion of veterans over the age of 90 is expected to double in the next decade. 1.6 million UK Armed Forces veterans will be living in Great Britain in 2028, with 37% of veterans aged over 75, and 12% over 90 (Ministry of Defence, January 2019). We have also seen a significant increase in the number of individuals requiring specialist dementia care. One in 14 people over 65 years will develop dementia, and the proportion rises to 1 in 6 for those aged over 80 (Alzheimer's Society, 2021). By 2028, we estimate that around 65,000 veterans will have developed dementia. We continue to provide and expand our distinctive care because we believe that many veterans would otherwise not be able to obtain the specialist care and support which they need. This is why the work of Royal Star & Garter remains so vitally important.

We provide high quality services for those in greatest need and our innovative work is widely shared with other Service organisations, charities and the wider civilian community.

More than a century since our first residents returned from the First World War, we continue to support veterans and their partners from all backgrounds, ranks and services. We know that the veteran community will continue to require high levels of care well into the future.

The impact of Covid-19

The global Covid-19 pandemic in 2020 and 2021 has had a significant impact on care and health services worldwide, as well as financial markets. We have had to take challenging decisions in order to protect our residents who are all extremely vulnerable, particularly at the start of 2021 during the second wave of the pandemic. Each of our Homes has had periods where they have been classified as being in ‘outbreak’ by local health protection teams – with two or more cases of Covid among the staff or residents. However, we are extremely grateful that no residents have died of, or been hospitalised with, Covid this year.

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Since the government announced the first national stay-at-home order, we have committed significant resources to protect residents and staff, maintain our quality of care and help residents live their lives to the full despite the restrictions. Significant steps we have taken in 2021 include:

Our strategy

Despite significant challenges resulting from the Covid pandemic, we have moved forward with our long-term strategy which focuses on three critical areas.

1. Outstanding care for veterans and their partners living with disability or dementia

Our three purpose-built Homes enable us to provide the highest quality of care for 197 residents with state-of-the-art facilities. The average age of our residents is 90, although ages ranged from 34 to 103 during 2021. Residents are living with either a physical disability or dementia and a wide range of conditions, such as osteoarthritis, osteoporosis and stroke. Many residents experience a complex combination of these conditions and the majority require the use of a wheelchair.

Exceptional care is holistic care. Each resident's physical, emotional, psychological and social needs are met with love, respect and friendship.

The demand for specialist dementia care continues to grow. The 15 rooms converted to dementia care in our Solihull Home last year are now fully occupied. The 86 residents we can care for in specially-designed dementia communities represents a third of the total dedicated residential care capacity for veterans living with dementia in England.

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During the year, we recruited 18 staff as we built capacity in our High Wycombe Home. Our High Wycombe Home opened in April 2019 and the last remaining rooms will welcome new residents in 2022.

Food, nutrition and mixing with friends are really important components of high quality care and we measure our residents' experience at mealtimes and the impact this has on wellbeing. Our most recent survey showed:

We assist residents in maintaining and enhancing mobility and encourage involvement in activities and personal interests which improve confidence, enhance independence, and create a vibrant sense of friendship and community.

We employ a wide range of professional care staff including nurses and care assistants, together with physiotherapy, speech and language therapy. This year we launched a new Wellbeing Programme in each of our Homes to better integrate our activities, physiotherapy and exercise groups, and to now provide support for residents seven days a week. We work hard to ensure that each resident lives life to the full and enjoys activities that reflect their needs, interests and abilities. Our new Wellbeing Programme offers the events that residents want, helping to boost their self-esteem and sense of achievement.

To offer this level of support requires investment in our staffing levels, training and activities, which are all hallmarks of our care. During the year, we have significantly reduced reliance on the use of agency staffing (only 3% of total hours worked in 2021, compared to 7% in 2020). Our cost of care is higher than in some care homes. However, our fees for residents are lower than the actual cost of care - which means that we provide substantial financial support to all our residents.

We maintain strong links with the Armed Forces, which our residents value so highly. We reinforce these links with the presence of military student nurses completing clinical placements, encouraging visits and events arranged by Service organisations, and with a presence at key ceremonial events during the year.

2. Meeting the needs of the next generation of veterans

Although residential care remains at the heart of what we do, in recent years we developed a very well supported day care service in High Wycombe and Solihull. It was with great regret that our day care services were closed in February 2020 due to the Covid pandemic and we have not yet been able to reopen them. Our plans to launch a day care service in Surbiton have also been postponed because of the pandemic. Independent evaluation of our day care programme shows that 88% of individuals agreed or strongly agreed that their health and

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wellbeing had improved as a result of attending, and we look forward to reopening this important service as soon as possible in 2022.

We have set ourselves a challenging target of at least doubling the number of veterans we support by 2025. In order to achieve this, we are developing two further new services:

Our new outreach service is designed to provide caring and companionship support to veterans and their families in their own homes in the local community. After some delays due to the pandemic, this initiative is to be trialled initially in the Solihull area in 2022. If the evaluation of the project is positive, then we intend to provide this as a support service to each of our Homes.

Our three modern Homes mean that we are once again able to play our part in supporting younger veterans if they become disabled. We are particularly proud to have been able to meet the care needs of three young Servicemen with severe injuries or disabilities during 2021. This role takes us back to our roots during the First World War.

We are investing significant resources to enable us to achieve this objective. We have invested £1.9m in purchasing a plot of land close to our High Wycombe Home where we plan to create adapted residential accommodation for younger veterans, including facilities which can be used by the wider veteran community. We commissioned a wide-ranging consultation to explore the potential needs of future generations of veterans at the end of 2021, which will inform these plans.

We have designated a further £12m to develop these new services.

3. Raising the standard of care for veterans

As an outstanding provider of care, we actively embrace our responsibility to the wider communities around our Homes and to all veterans in the country. We help to fulfil our charitable objectives not only through delivering our own care, but by helping others to reach the highest standards too. To that end we are involved in a range of innovative projects.

The creation of the Nurse Associate role in England is transforming the way social care services are provided, and we have been involved in the development of this role from the earliest stages. Six of our carers were among the very first cohort of trainees: three qualified in 2021 and are successfully working in the Surbiton Home, and a further three are scheduled to qualify in 2022. It is always a pleasure to welcome students who are keen to learn into our Homes, and we are committed to support tri-Service military nursing students as well as civilian students in our Homes. Regrettably, the pandemic prevented these placements during 2021, but we are re-starting the programme in 2022.

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Our staff team continues to be heavily involved in the National Care Forum, the leading association of not-for-profit care providers and the Confederation of Service Charities (Cobseo). Our Chief Executive became chair of the National Care Forum from May 2021, and was also seconded part time from December 2020 to May 2021 to support the Department of Health & Social Care's Covid response work with the adult social care sector. Our Director of Care is a member of the Chief Nursing Officer's committee on adult social care nursing, and a member of a Buckinghamshire Health & Social Care Academy committee aiming to link providers and community volunteer schemes to combat social isolation and improve public health.

We are committed to driving best practice in all that we do, sharing this openly with other care providers. We have engaged in several national research projects to develop and promote best practice in care. Our Director of Care is a member of the steering committee for the national 'CONTACT' research study to explore the implementation of contact tracing in care homes using a wearable device. This project is being led by the University of Leeds and funded by the National Institute for Health Research. We are also involved in a research project with University College London looking into the use of Cognitive Stimulation Therapy in care homes for supporting people living with dementia.

Communicating and meeting residents' needs

We are committed to finding out, and meeting, the needs of our residents and potential beneficiaries and use informal and structured approaches to obtain feedback from residents and their families about the services we provide.

We are also committed to providing an environment that is free from discrimination on any grounds including age, race, religion, gender, sexual orientation and disability, and have a policy of making reasonable adjustments to accommodate the needs of staff or residents who are, or who become, disabled.

The essential role of volunteers

We have benefited over many years from the services of active volunteers who are generous with their time. Volunteers have supported a wide range of care and welfare activities with residents and provided invaluable assistance to our fundraising.

At the start of the first national lockdown, we took the difficult decision to stand down all our volunteers from their usual roles. We are very grateful for the many creative ways that our volunteers and others in local communities have continued to support us, often virtually, and for those who have been able to return to our Homes in late 2021. The Governors wish to record their thanks to all our volunteers for their support over many years.

Financial review

We rely heavily on legacies and public donations to finance the care we provide. We are very grateful for the tremendous support we receive from a wide range of individuals and organisations. This income is critical and allows us to continue to meet the changing needs of the veterans' community and to invest in new services.

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Even in normal times we face significant challenges, which include the current level of funding for the provision of social care, future government policy on care costs, and changes in fundraising regulations. All care organisations have continued to be severely challenged in 2021 because of Covid-19. We are in the fortunate position of having been able to weather the storm both operationally and financially. However, it has had a significant impact on our residents and staff (page 3) and on our finances (page 9).

Details of our results for 2021 are set out in the Consolidated Statement of Financial Activities (page 21). In setting objectives and planning activities, Governors consider the Charity Commission's guidance on public benefit and fee-charging.

Summary of income and expenditure

We rely on public support for everything that we do. Like all charities, we must spend money in order to raise valuable funds and ensure we are well run. The following is a summary of our income and expenditure in 2021.

The cost of providing care to residents has remained at £22m in 2021 (2020: £22m). This reflects the impact of three significant factors: increased staff numbers in our High Wycombe Home as we welcomed new residents, continued expenditure on protecting residents from Covid, and a welcome reduction in the need to use agency staff. In High Wycombe, our

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overriding priority continues to be to always maintain the highest quality of care, and so we build our team in stages and apply a phased resident admissions programme.

We received fee income from residents and funding organisations (local authorities and the NHS) totalling £10.8m during 2021 (2020: £10m). The increase was principally the result of more residents in our High Wycombe Home (£0.7m). We also received support from local authorities and government totalling £0.6m during the year towards the increased cost of working during the Covid pandemic (2020: £0.4m).

The cost of care for each resident is supported by the charity from our fundraising income. This support amounted to £11m in 2021 (2020: £12m).

Our care services

We set demanding occupancy targets at 95% for each of our Homes to maximise the number of beneficiaries we care for each year. As with many care providers, we found that resident applications were lower than we would expect. 2021 has been a challenging year, with long periods when residents were unable to move in. This meant that average occupancy in the Homes fell to 82% in 2021 and particularly affected our plans for building occupancy in our High Wycombe Home. By December 2021, we had increased resident numbers in High Wycombe to 44 (full capacity is 74). We are making significant efforts to welcome new residents in 2022 and opened our remaining rooms in May 2022.

Overall, we provided care to a total of 218 long term or short-break residents in 2021 (2020: 198).

When setting our fees, we seek to achieve a balance between affordability, a level which is consistent with the first-class care and accommodation we provide, and our desire not to exclude any beneficiary on the grounds of financial hardship. This means that we welcome residents whose care is funded from a variety of sources, and provide care for residents drawn from a wide geographical area. During the year, our Surbiton Home provided care for residents funded by seven public sector bodies (local authorities or the NHS); High Wycombe: four; and our Solihull Home: three.

Our fundraising

Despite the pandemic, we were able to maintain active programmes to encourage individuals and organisations to support our work. The Governors gratefully acknowledge the financial support given by so many generous donors. We use a range of fundraising approaches, but always aim to achieve best practice in our donor communications and data management.

We are conscious of the pressures people might feel as a result of receiving a donor mailing. We take great care when asking supporters to consider making a gift, at the same time ensuring the accuracy of our data. We remain fully compliant with the Fundraising Preference Service and any donor request to suppress their data is acted on within 24 hours of reaching us.

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We are aware of the risks of fundraising from older potentially vulnerable supporters and where we know (or suspect) someone falls into this category we won't actively contact them unless they have a known association with Royal Star & Garter. Our main donor recruitment campaign in 2021 made use of our own compliant data based on a Legitimate Interest Assessment. In accordance with the General Data Protection Regulation (GDPR), all donors were provided with an opt out from further communications and this was recorded on our database.

In 2021, we received only ten formal complaints in response to mailings or information (on and off line) sent to donors (five in 2020). These represent an extremely small proportion of our donor database and communications, however each one was reviewed by a senior member of staff and was treated as an opportunity to improve our service. Although the current environment for fundraising remains challenging due to the impact of Covid, we are extremely grateful to the many loyal donors who continue to support us despite their own personal situation. We benefited from the considerable generosity of legacy donors and received income totalling £6.7m (£4.4m in 2020).

We are registered with the Fundraising Regulator and adhere to the Fundraising Codes. We apply best practice to protect our supporter data, never swap or sell data and only use information that is compliant with the GDPR.

We manage the majority of our own fundraising activities. In 2021, we retained Woods Group Limited to administer our raffle and online lottery, and Impress Publishing Limited for the sale of Christmas cards. One of the important selection criteria for these firms was the professional approach they take to engaging with potential donors. We take seriously the need to achieve the highest standards and we are not aware of any failure on our part, or the firms which support us, to comply with fundraising standards.

We focus on building long-term relationships with donors. We received donations and gifts from individuals, trusts and other supporters totalling £1.6m during 2021 (£1.9m 2020). This was 36% higher than our target (£1.17m). We are very grateful for all donations from continuing and new funders - many providing invaluable support in response to the pandemic. This included: the Monday Charitable Trust (£500k), the Armed Forces Covenant Fund Trust (£105k), ABF The Soldiers' Charity (£50k) and the Kishinchand Chellaram Foundation (£25k).

Overall, we spent just 11p on fundraising for every £1 we raised in 2021 (16p in 2020).

Reserves Policy

Governors review our reserves policy annually. We have a policy of designating assets to meet specific strategic objectives, which include the retention of sufficient resources to protect the charity against unforeseen adverse developments. A brief explanation of how we have allocated assets for specific purposes is set out below. Further details are set out in Note 13, and the allocation of net assets between funds is set out in Note 14.

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Over the past 15 years we have invested heavily in building three wonderful Homes for our residents. At 31 December 2021, our investment in buildings amounted to £75.8m including funds set aside for upkeep, refurbishment and eventual replacement. This means that 48% of our assets are bound up in buildings which are essential for delivering our care services. The following is a brief summary of how we are using our overall net assets (£159.5m) for specific purposes:

The actual level of reserves is reviewed regularly, and Governors consider that the current level of free reserves is sufficient in view of the scale and scope of our operations, and their assessment of our risk profile. The Covid pandemic has demonstrated the vital need for our current level of free reserves and investment funds to support care services and enable us to protect residents and staff.

Investment Policy

Investment markets were highly volatile during 2021. We engage with our investment managers on a regular basis and were fortunate that our portfolios delivered a net gain of £6.3m during the year. By way of contrast, at 28 February 2021 our investment portfolio had suffered capital losses of £1.4m. This volatility is a key reason that we hold sufficient funds to enable us to continue providing outstanding care even when times get tough. Our investments are managed by three experienced firms which adopt different strategies in order to provide growth and enable us to respond to short-term needs as they arise.

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At 31 December 2021, our investments were valued at £103.9m (2020: £97.4m), as set out in Note 10. We retained a proportion of our bank deposits as a long-term investment (2020 and 2021: £8m) and held current assets (2021: £4.7m) to cover our expected deficit in 2022, expected expenditure to develop our new site in High Wycombe and other obligations (2020: £7.5m). The overall performance of our quoted investments is consistent with movements in world stock markets, and Governors consider that the investment strategies employed by each of the investment managers remain sound. Governors will continue to monitor the performance of the investment portfolios in the light of external developments during 2022.

Although we do not know what the final impact of the Covid crisis will be, we have no doubts about our ability to continue operating even if we continue to suffer from investment market volatility.

Pension Schemes

During the year, we provided access to two money purchase pension schemes. If an employee contributes 5% or more of pensionable salary into one of these schemes, then we will contribute 7.5% on their behalf (10% for Directors).

Our defined benefit pension scheme was closed to future accrual on 30 April 2007. A triennial actuarial valuation by a qualified independent actuary indicated that a deficit of £1.3m existed at 31 December 2019. We have agreed a Schedule of Contributions with the trustees of the pension scheme which is designed to eliminate this deficit over the period to 31 March 2024. We have also agreed in principle to the transfer of pension obligations to a reputable insurance company over the next 2 to 3 years, and allocated funds to cover the estimated cost of implementing this transfer (£3.7m).

A qualified independent actuary has also prepared a valuation of the pension scheme for these accounts in accordance with Financial Reporting Standard 102 ('FRS 102'). This valuation indicated that a surplus of £1.8m existed at 31 December 2021 (2020: £80k surplus). This surplus has not been recognised in these accounts as we do not consider that the amount will be realisable in the foreseeable future. Further details of the FRS 102 valuation are set out in Note 15.2.

Subsidiary Companies

We had two wholly owned subsidiary companies during 2021:

Further information about these companies is set out in Note 9.

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Risk

Governors considered that the key underlying risks and uncertainties facing the charity and the plans which were in place for managing these at 31 December 2021 were as follows:

Risk and uncertainty:

Management plans:

The Executive team maintains strategic and operational risk registers which are updated regularly as part of a formal risk management process. This involves examining the types of risk we face and prioritising them in terms of likelihood of occurrence and consequence. The Finance Committee, Care Committee and Governors review potential risks and the strategic risk register twice a year and consider that we have a clear plan to continue providing the highest quality of care for beneficiaries.

In 2021, we have invested significant resources to address the ongoing impact of the Covid pandemic and believe our risk-based approach is helping us to deal with this crisis as described on page 3.

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Governance

Strong governance is critical to our long-term success. Our Governors are responsible for ensuring that we are run effectively and responsibly in line with our Royal Charter and all appropriate laws and regulation. Governors ensure that we have a clear strategy, use our resources to deliver the highest quality of care to beneficiaries, and safeguard our finances and property. All Governors, who are the charity's trustees, give their time freely and no remuneration was paid to Governors in the year (2020: £Nil).

We review our governance arrangements and underlying procedures on a regular basis. We support the Governance Code ('the Code') which is endorsed by the Charity Commission and leading charity sector bodies, and which asks charities to either apply the Code or explain why they have taken a decision to adopt a different approach. While Royal Star & Garter is broadly compliant with the Code, Governors have taken a decision to adopt a different approach in the following areas:

We commissioned an external review of our governance arrangements in 2019. This review concluded that our approach to governance was good and identified "many examples of good governance practice". The recommendations from the review have been adopted by Governors.

We undertook a review of the updated Governance Code published in December 2020, and used this to further inform the development of our governance arrangements.

A review of our Royal Charter was completed in March 2022, and will be submitted for approval to the Charity Commission and Privy Council later in the year.

Details of our Patron, President, Vice-Presidents and Governors are set out on page 37. The names of the executive team and external advisers are set out on page 38.

Our Governors

Governors are selected based on their skills, knowledge and experience, and we maintain strong links with the military through appointing serving and retired members from all three Services. We seek to ensure that Governors retain a wide range of professional and other skills. New Governors receive a handbook outlining our work and meet members of the executive team, other staff and residents in order to familiarise themselves with our operations.

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The Governors meet four times each year and receive reports on all aspects of the charity's affairs. Governors are encouraged to attend relevant external training courses where appropriate. The Governors delegate certain powers in connection with the management and administration of the charity to sub-committees:

Since the start of the pandemic, we have successfully held all Governor meetings using video-conferencing technology. Attendance at Governor meetings was 94% in 2021 (2020: 94%). We have now successfully adopted a mix of face to face, remote and hybrid approaches to board and committee meetings.

Key management personnel

The Chief Executive is responsible for our day-to-day management and for implementing policies agreed by the Governors. The Chief Executive is assisted by an Executive Team of five directors and other managers.

Staff pay

The Remuneration Committee, a sub-committee of our Governors (the unpaid trustees of the charity), commissioned an independent review of the salary and benefits of the Chief Executive and directors in 2021. This review confirmed that remuneration of senior staff was at an appropriate level to ensure good governance in delivering complex, highly regulated services. The Committee also reviews all executive salaries annually, informed by local and national data in line with our remuneration policy.

We completed our fifth gender pay gap analysis in 2021. Our median gender pay gap has reduced from 1.6% in 2020 to 1.5%, which remains significantly below the national median and the median for charities.

As a matter of policy, we pay at Foundation Living Wage rates and pay the same salary to anyone doing the same job. Our pay gap reflects the relatively high proportion of female staff we employ in all salary bands (as defined by the Government). We are actively seeking to attract men to work in the care sector, focusing on the creation of opportunities such as apprenticeships to attract those seeking a career change.

Corporate governance

We operate systems of internal control which are designed to provide reasonable assurance against material misstatement or loss. They include:

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Processes are in place to ensure that performance is monitored and that appropriate management information is reviewed regularly by both the executive team and the Governors.

Statement of Governors' responsibilities

The Governors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Charity law requires the Governors to prepare financial statements for each financial year in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards) and applicable law.

Under charity law the Governors must not approve the financial statements unless they are satisfied that they give a true and fair view of our state of affairs and of the net income or expenditure for that period. In preparing these financial statements, the Governors are required to:

The Governors are responsible for keeping proper accounting records that are sufficient to show and explain our transactions and disclose with reasonable accuracy at any time our financial position and enable them to ensure that the financial statements comply with the Charities Act 2011. They are also responsible for safeguarding our assets and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Governors' Report was approved by the Body of Governors and signed on its behalf by:

Chair

29 June 2022

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Independent Auditor’s Report Royal Star & Garter

Independent Auditor’s Report to the Governors of The Royal Star & Garter Homes

Opinion

We have audited the financial statements of The Royal Star & Garter Homes for the year ended 31 December 2021 which comprise the Consolidated Statement of Financial Activities, the Consolidated and Parent Charity Balance Sheets, Consolidated Statement of Cash Flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 ‘The Financial Reporting Standard Applicable in the UK and Republic of Ireland’ (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the audit of the financial statements section of our report. We are independent of the charity in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Governors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group’s and parent charity’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the Governors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The Governors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

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Independent Auditor’s Report Royal Star & Garter

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Charities Act 2011 requires us to report to you if, in our opinion:

Responsibilities of Governors

As explained more fully in the Governors’ responsibilities statement set out on page 16, the Governors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Governors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Governors are responsible for assessing the group’s and parent charity’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Governors either intend to liquidate the group or parent charity or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

We have been appointed as auditor under section 144 of the Charities Act 2011 and report in accordance with regulations made under section 154 of that Act.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

18

Governors’ Report The Royal Star & Garter H

Independent Auditor’s Report Royal Star & Garter

as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.

The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the charity.

Our approach was as follows:

19

Governors’ Report The Royal Star & Garter H

Independent Auditor’s Report Royal Star & Garter

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

Use of our report

This report is made solely to the charity's Governors, as a body, in accordance with Chapter 3 of Part 8 of the Charities Act 2011. Our audit work has been undertaken so that we might state to the charity’s Governors those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to any party other than the charity and charity's Governors as a body, for our audit work, for this report, or for the opinion we have formed.

Moore Kingston Smith, Statutory Auditor Date: 29 June 2022

9 Appold Street London EC2A 2AP

Moore Kingston Smith LLP is eligible to act as auditor in terms of Section 1212 of the Companies Act 2006.

20

Royal Star & Garter

CONSOLIDATED STATEMENT OF FINANCIAL ACTIVITIES For the year ended 31 December 2021

Note Unrestricted
Funds
(Note 13)
£000
Restricted
Funds
(Note 13)
£000
Permanent
Endowment
(Note 13)
£000
Total
Funds
2021
£000
Total
Funds
2020
£000
Income and endowments from:
Charitable activities
2c
Donations and gifts
2c
Legacies
2c
Investments
Other trading activities
Other income
TOTAL
Expenditure on:
Charitable activities
3
Raising funds
3
TOTAL
3
NET
(DEFICIT)/
INCOME
BEFORE
INVESTMENT GAIN
Net gain on investments
10
NET INCOME
OTHER RECOGNISED GAINS/ (LOSSES)
Actuarial (loss)/ gain on defined benefit
pension scheme
15e
NET MOVEMENT IN FUNDS
Total funds brought forward
TOTAL FUNDS CARRIED FORWARD		 10,792
-
-
10,792
9,988
871
693
-
1,564
1,927
6,714
17
-
6,731
4,359
2,597
-
-
2,597
2,420
60
-
-
60
81
28
556
-
584
457
21,062
1,266
-
22,328
19,232
20,593
1,169
-
21,762
22,012
1,501
-
-
1,501
1,530
22,094
1,169
-
23,263
23,542
(1,032)
97
-
(935)
(4,310)

6,248
-
6
6,254
5,079
5,216
97
6
5,319
769
(266)
-
-
(266)
1,254
4,950
97
6
5,053
2,023
153,821
607
61
154,489
152,466
158,771
704
67
159,542
154,489

A comparative statement of financial activities has not been prepared on the basis that all comparative amounts relate to unrestricted funds, with the exception of £1,514k of Donations and £767k expenditure on Charitable Activities.

21

Royal Star & Garter

BALANCE SHEETS

At 31 December 2021

Group
Charity
Note 2021
£000
2020
£000
2021
£000
2020
£000
FIXED ASSETS
Tangible fixed assets
8
Investments
9, 10
CURRENT ASSETS
Stocks
Debtors: amounts receivable within one year
11
Cash at bank and in hand
LIABILITIES
Creditors: amounts falling due within one year
12
NET CURRENT ASSETS
TOTAL NET ASSETS
THE FUNDS OF THE CHARITY:
Unrestricted funds:
General fund
13
Fixed asset funds
13
Designated funds
Total unrestricted funds
13
Permanent endowment fund
13
Restricted funds
13
TOTAL CHARITY FUNDS
13		 51,727
52,083
51,727
53,173
103,950
97,439
103,950
97,439
155,677
149,522
155,677
150,612
2
1
2
1
1,063
777
1,126
800
4,739
7,498
4,680
7,384
5,804
8,276
5,808
8,185
(1,939)
(3,309)
(1,943)
(3,264)
3,865
4,967
3,865
4,921
159,542
154,489
159,542
155,533
17,400
17,400
17,400
17,400
51,727
52,083
51,727
53,173
89,644
84,338
89,644
84,292
158,771
153,821
158,771
154,865
67
61
67
61
704
607
704
607
159,542
154,489
159,542
155,533

Approved and authorised for issue by the Governors on 29 June 2022 and signed on their behalf by

Amanda Francis DSS BSc ACA Treasurer

22

Royal Star & Garter

CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 December 2021

Note 2021
£000
2020
£000
Cash flows from operating activities:
Net cash used in operating activities
A
Cash flows from investing activities:
Investment income and interest received
Purchase of tangible fixed assets
8
Proceeds from the sale of fixed assets
(Purchase)/ Sale of investments
Net cash provided by investing activities
Change in cash and cash equivalents during the year
B
(A) Reconciliation of cash flows from operating activities		 (3,472)
(3,080)
2,597
2,420
(1,627)
(1,924)
-
3
(257)
1,957
713
2,456
(2,759)
(624)
2021
£000
2020
£000
Net (deficit) for the year
Adjustments for:
Investment income and interest receivable
Depreciation
Loss/(Gain) on disposal of fixed assets
(Increase)/ Decrease in stocks
(Increase)/ Decrease in debtors receivable within one year
(Decrease)/ Increase in creditors
Pension expense
Net cash used in operating activities		 (935)
(4,310)
(2,597)
(2,420)
1,968
2,055
15
(2)
(1)
2
(286)
200
(1,370)
1,593
(266)
(198)
(3,472)
(3,080)

(B) Analysis of changes in cash and cash equivalents during the year


2020
£000
Change
In Year
£000
2021
£000
Cash at bank and in hand
Cash on deposit held as investments
Total cash and cash equivalents		 7,498
(2,759)
4,739
8,000
-
8,000
15,498
(2,759)
12,739

23

Notes to the Consolidated Accounts Royal Star & Garter

1. Charity Information

The Royal Star & Garter Homes (trading as Royal Star & Garter) is a company incorporated by Royal Charter (Company No. RC000713) and registered with the Charity Commission in England and Wales (Charity No. 210119). The registered office is 15 Castle Mews, Hampton, Middlesex TW12 2NP.

2. Principal Accounting Policies

2a Basis of Preparation

The financial statements have been prepared in accordance with the Charities SORP (Financial Reporting Standard 102 (‘FRS 102’)), the Charities Act 2011 and UK Generally Accepted Accounting Practice. The consolidated accounts include the trading activities, assets and liabilities of Star & Garter Property Limited consolidated on a line-by-line basis.

The financial statements have been prepared to give a ‘true and fair’ view and have departed from the Charities (Accounts and Reports) Regulations 2008 only to the extent required to provide a ‘true and fair view’. This departure has involved following Accounting and Reporting by Charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) issued on 16 July 2014.

The charity constitutes a public benefit entity as defined by FRS 102. In the view of the Governors, there are no material uncertainties casting doubt on the ability of the charity to continue providing care for beneficiaries in the foreseeable future.

2b Going Concern

Governors have prepared these accounts on the going concern basis having reviewed forecasts for a period of at least twelve months from the date the accounts were approved for the group and parent charity and made enquiries of management.

While Covid-19 has impacted the charity’s operations and investments, it is expected that performance will recover and the charity is planning to increase the range of activities to support beneficiaries in the near future. The charity incurred costs totalling £1.3m in order to protect residents from the impact of Covid-19 during 2021 (2020: £1.2m).

2c Income

Fee income represents charges for accommodation, nursing and care of residents and is accounted for in the year care was provided.

Donations are accounted for on receipt. Grant income is recognised when receivable. Legacies are accounted for at the earlier of receipt of the legacy, authorisation by the executors of an interim distribution or the point at which the final accounts of the estate are agreed by the charity.

2d Expenditure and the Allocation of Costs

The costs of the charity are allocated to the activity to which they relate as follows:

The charity allocates support costs, which relate to central services including human resources, information technology and the finance team, based on an estimate of the costs incurred in supporting each activity, generally by reference to headcount. Depreciation is allocated on the basis of the use of the assets concerned.

All expenses are accounted for on an accruals basis and the irrecoverable element of VAT is included with the item of expense to which it relates.

24

Notes to the Consolidated Accounts Royal Star & Garter

2e Employee Benefits

The cost of unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised as an expense when the charity has committed to terminate the employment of an employee.

2f Fixed Assets – Valuation and Depreciation

Depreciation is provided to write off the cost, less estimated residual value, of each asset on a straight line basis over its expected useful life as follows:

Freehold land - Not depreciated Leasehold land - 0.4% (250 year lease) Buildings - 2% - 5% Temporary buildings - 25% - 33% Plant and equipment - 4% - 33% Motor vehicles - 20%

The carrying values of tangible fixed assets are reviewed for impairment periodically when events or changes in circumstances indicate that the carrying value may not be recoverable.

Items costing less than £5,000, and expenditure on buildings where the cost is below £10,000 are written off as an expense when incurred.

2g Financial instruments

The charity has financial assets and financial liabilities of a kind that qualify as basic financial instruments. Basic financial instruments are initially recognised at transaction value and subsequently measured at amortised cost using the effective interest method. Investments which form part of an investment portfolio are held at the Balance Sheet date at fair value of £95.9m (2020: £89.4m) (Note 10), with gains and losses recognised within income and expenditure.

2h Stock

Stock is valued at the lower of cost and net realisable value. Net realisable value is based on estimated selling price less cost of disposal.

2i Pensions

The charity operates two defined contribution pension schemes. Contributions are charged to the Statement of Financial Activities (‘SOFA’) as they become payable in accordance with the rules of the schemes.

The charity also operates a defined benefit pension scheme which closed to future accrual on 30 April 2007. The defined benefit pension scheme current service costs together with the scheme interest cost less the expected return on the scheme assets for the year are charged to the SOFA within expenditure. The scheme actuarial gains and losses are recognised immediately as other recognised gains and losses.

The defined benefit scheme assets are measured at fair value at the balance sheet date. Scheme liabilities are measured on an actuarial basis at the balance sheet date using the projected unit method and discounted at a rate equivalent to the current rate of return on a high quality corporate bond of equivalent term to the scheme liabilities. The resulting defined benefit asset or liability is presented separately after other net assets on the face of the balance sheet.

2j Funds

Endowment funds comprise investment assets which are held as capital by the charity and whose income is applied for charitable purposes.

Restricted funds are accounted for in accordance with the particular terms of trust arising from the express or implied wishes of donors in so far as these are intended to be binding on the Governors. Designated funds are set aside by the Governors out of unrestricted funds.

General funds are available for use by the charity in accordance with its charitable objects.

25

Notes to the Consolidated Accounts Royal Star & Garter

2k Critical accounting judgements and key sources of estimation uncertainty

In the application of the charity’s accounting policies, which are described in Note 2, Governors are required to make judgements, estimates and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. In the view of the Governors no assumptions concerning the future or estimation uncertainty affecting assets and liabilities at the balance sheet date are likely to result in a material adjustment to their carrying amounts in the next financial year, other than in respect of the actuarial valuation of the defined benefit pension scheme – further details are set out in Note 15.2.

3. Analysis of Total Expenditure

Staff
costs
£000
Depreciation
£000
Other
£000
Total
2021
£000
Total
2020
£000
Charitable activities: care costs
Raising funds
TOTAL EXPENDITURE		 13,644
1,891
6,227
21,762
22,012
620
77
804
1,501
1,530
14,264
1,968
7,031
23,263
23,542

Care costs include support costs £2.5m (2020: £2.7m) and development costs £0.1m (2020: £0.1m). Support costs include staff costs £1.5m (2020: £1.5m), depreciation £0.1m (2020: £0.1m) and other costs £0.9m (2020: £1.1m) relating to the human resources, finance, information technology, pension administration and other central service teams. Other support costs include building maintenance for the administration office together with pension administration, computer services and other central service costs.

The cost of raising funds includes support costs totalling £186k (2020: £193k) and investment management fees totalling £482k (2020: £401k). Support costs include staff costs £71k (2020: £69k) and other costs £115k (2020: £124k).

Support costs include governance costs totalling £114k (2020: £117k).

Total expenditure in 2021 includes £1.3m (2020: £1.2m) in respect of measures to protect residents and staff during the Covid-19 pandemic.

26

Notes to the Consolidated Accounts Royal Star & Garter

4. Auditor’s Remuneration

The amount of remuneration payable to the auditor was as follows:

2021
£000
2020
£000
In respect of audit services:
Charity
Group companies
In respect of taxation and other advice and services
28
22
3
3
10
14
41
39

5. Legacies

The charity has received notification of a number of residuary legacies which have not been included in these accounts because they did not meet the criteria for recognition of income. The estimated total value of this potential income is £5.1m at 31 December 2021 (2020: £5.2m).

6. Governors’ Remuneration

No Governor received any remuneration during the years ended 31 December 2021 or 2020. During the year, two Governors (2020: five) received reimbursement of personal travel and subsistence expenditure amounting to £362 (2020: £776).

There were no other related party transactions that require disclosure in the year (2020: None).

7. Emoluments & Numbers of Employees

The total emoluments of employees for the year comprised:

2021
2020
£000
£000
Wages and salaries
Employer National Insurance costs
Contributions to defined contribution pension scheme
Other staff costs
Total staff costs		 11,779
11,388
1,117
1,086
735
695
13,631
13,169
633
1,262
14,264
14,431

During the year, staff from commercial agencies provided cover for nurses, health care assistants and clerical services at a total cost of £0.6m (2020: £1.2m). This is included within other staff costs above.

The average monthly number of staff employed during the year was as follows:

2021
2020
Nursing and care
Domestic, catering and other Home based staff
Fundraising
Management and administration		 283
275
52
53
19
19
25
20
379
367

27

Notes to the Consolidated Accounts Royal Star & Garter

The number of employees who received more than £60,000 in the year was as follows:

Emoluments : 2021 2020
£60,001 - £70,000 3 2
£80,001 - £90,000 6 6
£90,001 - £100,000 - 1
£100,001 - £110,000 1 1
£130,001 - £140,000 1 1

The total employment benefits (including employers’ national insurance contributions) of the above employees, who are our senior management team (SMT), amounted to £1.1m in 2021 (11 employees). In 2020, our SMT included 11 members who received employment benefits totalling £1.2m.

During the year the charity paid £123k in connection with redundancies (2020: £23k).

The salary of our Chief Executive during 2021 was £133,474 (2020: £138,502).

8. Tangible Fixed Assets - Group

Freehold Land
& Buildings
Leasehold Land
& Buildings
Plant &
Equipment
Motor
Vehicles
Total
£000
£000
£000
£000		 £000
Cost :
At 1 January 2021
38,255
15,204
10,617
371
Additions
1,414
49
164
-
Adjustment ()
6()
-
-
(21) ()
At 31 December 2021
39,675
15,253
10,781
350
Accumulated depreciation :
At 1 January 2021
3,775
2,759
5,740
90
Charge for year
763
308
834
63
At 31 December 2021
4,538
3,067
6,574
153
Net book value at 31 December 2021
35,137
12,186
4,207
197
Net book value at 31 December 2020
34,480
12,445
4,877
281
The net book value of tangible fixed assets owned by the charity is as follows:
Net book value at 31 December 2021
35,137()*
12,186
4,207
197
Net book value at 31 December 2020
35,570(*)
12,445
4,877
281		 38,255
15,204
10,617
371
1,414
49
164
-
6()
-
-
(21) (*)		 64,447
1,627
(15)
39,675
15,253
10,781
350		 66,059
3,775
2,759
5,740
90
763
308
834
63		 12,364
1,968
4,538
3,067
6,574
153		 14,332
35,137
12,186
4,207
197		 51,727
34,480
12,445
4,877
281		 52,083
51,727
35,570(***)
12,445
4,877
281		 53,173

(*) Adjustment to accrual at 31 December 2020.

The charity had contracted capital commitments totalling £0.1m at 31 December 2021 (2020: £1.5m).

28

Notes to the Consolidated Accounts Royal Star & Garter

9. Investments: Subsidiary Undertakings

The charity holds 100% of the share capital in the following subsidiary companies, whose results are included in the consolidation:

The value attributed to the investment in subsidiaries in the charity’s balance sheet comprises:

2021
£
2020
£
Shares in Star & Garter Promotions Limited
Shares in Star & Garter Property Limited
Total		 2
2
1
1
3
3

Net income from the trading activities of Star & Garter Property Limited was as follows:

2021
£000
2020
£000
Turnover
Operating costs
Contribution to The Royal Star & Garter Homes: Gift aid payment
Net profit before taxation
Corporation tax
Retained in subsidiary		 1,496
267
(1,452)
(259)
44
8
(44)
(8)
-
-
-
-
-
-

Turnover represents charges for construction services relating to the provision of Care Homes to the charity. Apart from this, and the payment of Gift Aid, there were no other related party transactions with subsidiaries.

The Net Assets of Star & Garter Property Limited at 31 December 2021 were as follows:

2021
£000
2020
£000
Total Assets
Total Liabilities
Net Assets		 178
1,725
(178)
(1,725)
-
-

29

Notes to the Consolidated Accounts Royal Star & Garter

10. Investments: Other Investments

2021
2020
£000
£000
Market value at 1 January
Net investment/ (withdrawal) of capital
Net realised and unrealised gain during the year
Market value at 31 December
Historic cost at 31 December		 97,439
94,317
257
(1,957)
6,254
5,079
103,950
97,439
80,348
78,689
Analysis of Investments: 2021
2020
£000
£000
Bank deposits
Investment portfolio managed by Smith & Williamson Investment Management LLP
Ruffer LLP: Ruffer Absolute Return Fund
Investment portfolio managed by Sarasin & Partners LLP:
The Alpha Common Investment Fund for Endowments		 8,000
8,000
39,508
37,110
6,122
5,574
50,320
46,755
103,950
97,439

The investment portfolio managed by Smith & Williamson included listed investments £29.5m (2020: £35.5m) and cash or cash equivalents £2.5m at 31 December 2021 (2020: £1.6m).

11. Debtors

Amounts falling due within one year:

Group
2021
£000
Group
2020
£000
Charity
2021
£000
Charity
2020
£000
194
141
194
141
-
-
74
53
59
145
59
145
396
180
396
180
343
185
343
185
71
126
60
96

12. Creditors

Group
2021
£000
Group
2020
£000
Charity
2021
£000
Charity
2020
£000
Trade creditors
Accruals
Amounts due to subsidiary companies
Other taxation and social security
Other creditors		 366
509
366
389
1,129
2,327
1,126
2,337
-
-
8
65
296
309
295
309
148
164
148
164
1,939
3,309
1,943
3,264

30

Notes to the Consolidated Accounts Royal Star & Garter

13a. Statement of Funds - 2021

At
1 Jan 21
£000
Income
£000
Expenditure
£000
Capital
expenditure
£000
Other
transfers
£000
Other gains/
(losses)
£000
At
31 Dec 21
£000
UNRESTRICTED FUNDS:
Fixed Asset Funds:
Solihull Home Fund
Surbiton Home Fund
High Wycombe Home Fund
Younger Veterans Project
Administration Office Fund
Coaches Fund
Designated and General Funds:
High Wycombe Designated Fund
Building Replacement Fund
Property Refurbishment Fund
Strategic Development Fund
Transitional Support Fund
Care Support Fund
Pension Deficit Fund
General Fund
Total Unrestricted Funds
Permanent Endowment Fund
Restricted Funds
TOTAL FUNDS		 12,762
-
(399)
112
-
-
12,475
12,650
-
(417)
81
-
-
12,314
24,130
-
(922)
(480)*
6
-
22,734
-
-
-
1,908
-
-
1,908
2,260
-
(167)
6
-
-
2,099
281
-
(63)
-
(21)
-
197
52,083
-
(1,968)
1,627
(15)
-
51,727
492
-
-
(492)
-
-
13,500
-
-
-
1,000
-
14,500
9,656
290
(337)
-
-
-
9,609
12,000
-
-
-
-
-
12,000
1,240
-
(620)
-
-
-
620
46,394
-
-
-
2,821
-
49,215
1,056
-
-
-
2,644
-
3,700
17,400
20,772
(19,169)
(1,627)
(5,958)
5,982
17,400
153,821
21,062
(22,094)
-
-
5,982
158,771
61
-
-
-
-
6
67
607
1,266
(1,169)
-
-
-
704
154,489
22,328
(23,263)
-
-
5,988
159,542

Unrestricted Funds:

The Fixed Asset Funds represent the book value of the charity’s assets. (*) Adjustment to eliminate professional fees relating to a dispute which was settled in the year.

The High Wycombe Designated Fund was held to cover the expected cost to complete the Home.

The Building Replacement Fund is being built up gradually to finance the replacement of the charity’s Homes and administration office when they reach the end of their expected useful lives. The value of the fund takes account of the investment the charity makes to ensure the buildings are maintained to the highest level.

The income from the Property Refurbishment Fund (estimated at 3% pa) is used to finance the refurbishment of the charity’s Homes and administration office to ensure they continue to provide the outstanding environment which our residents deserve.

The Strategic Development Fund provides capital to develop our new day care service, outreach and younger veterans’ homes where we can provide much needed support for a significant number of beneficiaries. As explained in the Governors’ Report, we have purchased a site in High Wycombe for our Younger Veterans Programme and are developing plans so this can be used to support a wide range of beneficiaries. In other respects our plans for developing these new services have been delayed as a result of the Covid-19 pandemic.

The Transitional Support Fund supports the cost of opening the High Wycombe Home until fully mobilised.

The Care Support Fund provides income and capital to secure the future of dependent beneficiaries in case income from legacies, investments and individuals declines. It also provides resources to enable the charity to continue providing the highest quality of care during the Covid-19 pandemic. The charity expects income to reduce, investments to suffer losses, and costs to increase significantly as a result of the Covid-19 pandemic, the invasion of

31

Notes to the Consolidated Accounts Royal Star & Garter

Ukraine and other factors. We also consider it likely that fundraising income will fall significantly from historic levels. We do not know when we will need to make use of this fund, but believe it is necessary because of our commitment to providing high quality long-term care for residents.

The Pension Deficit Fund represents the estimated cost of implementing a buyout of the charity’s defined benefit pension scheme.

The General Fund is designed to enable the charity to cope with unforeseen expenditure or loss of income.

Permanent Endowment Fund:

The income from the Central Regimental Institutes Fund is available for the charity’s general purposes.

Restricted Funds:

The movements on the Restricted Funds during the year have been as follows:

At
1 Jan 21
£000
Income
£000
Expenditure/
Transfers
£000
At
31 Dec 21
£000
Covid-19 emergency support
Care services and development
RESTRICTED FUNDS		 -
556
(556)
-
607
710
(613)
704
607
1,266
(1,169)
704

We expect to spend the Restricted Funds on care services in 2022 and 2023.

13b. Statement of Funds – 2020

At
1 Jan 20
£000
Income
£000
Expenditure
£000
Capital
expenditure
£000
Other
transfers
£000
Other gains/
(losses)
£000
At
31 Dec 20
£000
UNRESTRICTED FUNDS:
Fixed Asset Funds:
Solihull Home Fund
Surbiton Home Fund
High Wycombe Home Fund
Administration Office Fund
Coaches Fund
Designated and General Funds:
High Wycombe Designated Fund
Building Replacement Fund
Property Refurbishment Fund
Strategic Development Fund
Transitional Support Fund
Care Support Fund
Pension Deficit Fund
General Fund
Total Unrestricted Funds
Permanent Endowment Fund
Restricted Funds
TOTAL FUNDS		 12,887
-
(380)
255
-
-
12,762
13,047
-
(498)
101
-
-
12,650
23,547
-
(937)
1,521
(1)
-
24,130
2,379
-
(166)
47
-
-
2,260
355
-
(74)
-
-
-
281
52,215
-
(2,055)
1,924
(1)
-
52,083
2,750
-
-
(1,521)
(737)
-
492
12,500
-
-
-
1,000
-
13,500
9,588
288
-
(220)
-
-
9,656
12,000
-
-
-
-
-
12,000
2,480
-
-
-
(1,240)
-
1,240
41,431
-
-
-
4,963
-
46,394
2,000
-
-
-
(944)
-
1,056
17,400
17,427
(20,717)
-
(3,041)
6,331
17,400
152,364
17,715
(22,772)
183
-
6,331
153,821
59
3
(3)
-
-
2
61
43
1,514
(767)
(183)
-
-
607
152,466
19,232
(23,542)
-
-
6,333
154,489

32

Notes to the Consolidated Accounts Royal Star & Garter

Restricted Funds:

The movements on the Restricted Funds during 2020 were as follows:

At
1 Jan 20
£000
Income
£000
Capital
expenditure
£000
Other Expenditure/
Transfers
£000
At
31 Dec 20
£000
High Wycombe Home
Resident transport
Covid-19 emergency support
Care services and development
RESTRICTED FUNDS		 -
26
(26)
-
-
-
40
(40)
-
-
-
751
(111)
(640)
-
43
697
(6)
(127)
607
43
1,514
(183)
(767)
607

14a. Analysis of Group Net Assets between Funds - 2021

Tangible
Fixed Assets
£000
Investments
£000
Current
Assets
£000
Current
Liabilities
£000
Total
£000
Unrestricted Funds:
Fixed Asset Funds:
Solihull Home Fund
Surbiton Home Fund
High Wycombe Home Fund
Younger Veterans Project
Administration Office Fund
Coaches Fund
Designated and General Funds:
Building Replacement Fund
Property Refurbishment Fund
Strategic Development Fund
Transitional Support Fund
Care Support Fund
Pension Deficit Fund
General Fund
Total Unrestricted Funds
Permanent Endowment Fund
Restricted Funds
Total Net Assets		 12,475
-
-
-
12,475
12,314
-
-
-
12,314
22,734
-
-
-
22,734
1,908
1,908
2,099
-
-
-
2,099
197
-
-
-
197
51,727
-
-
-
51,727
-
14,500
-
-
14,500
-
9,000
609
9,609
-
10,000
2,000
-
12,000
-
-
620
-
620
-
49,215
-
-
49,215
-
3,700
-
-
3,700
-
17,468
1,871
(1,939)
17,400
51,727
103,883
5,100
(1,939)
158,771
-
67
-
-
67
-
-
704
-
704
51,727
103,950
5,804
(1,939)
159,542

33

Notes to the Consolidated Accounts Royal Star & Garter

14b. Analysis of Group Net Assets between Funds – 2020

Tangible
Fixed Assets
£000
Investments
£000
Current
Assets
£000
Current
Liabilities
£000
Total
£000
Unrestricted Funds:
Fixed Asset Funds:
Solihull Home Fund
Surbiton Home Fund
High Wycombe Home Fund
Administration Office Fund
Coaches Fund
Designated and General Funds:
High Wycombe Designated Fund
Building Replacement Fund
Property Refurbishment Fund
Strategic Development Fund
Transitional Support Fund
Care Support Fund
Pension Deficit Fund
General Fund
Total Unrestricted Funds
Permanent Endowment Fund
Restricted Funds
Total Net Assets		 12,762
-
-
-
12,762
12,650
-
-
-
12,650
24,130
-
-
-
24,130
2,260
-
-
-
2,260
281
-
-
-
281
52,083
-
-
-
52,083
-
-
2,008
(1,516)
492
-
13,500
-
-
13,500
-
9,000
656
-
9,656
-
10,000
2,000
-
12,000
-
-
1,240
-
1,240
-
46,394
-
-
46,394
-
1,056
-
-
1,056
-
17,428
1,765
(1,793)
17,400
52,083
97,378
7,669
(3,309)
153,821
-
61
-
-
61
-
-
607
-
607
52,083
97,439
8,276
(3,309)
154,489

15. Pension Schemes

15.1 Defined Contribution Schemes

During the year, the charity provided access to two money purchase pension schemes for employees. If an employee makes a contribution of 5% or more of pensionable salary into one of these schemes, then the charity also contributes 7.5% on their behalf (10% for directors). The charity made contributions amounting to £735k (2020: £695k) into the defined contribution pension schemes during the year. The value of outstanding contributions at 31 December 2021 was £97k (2020: £101k).

15.2 Defined Benefit Pension Scheme

The charity also contributed to a defined benefit pension scheme for some of the charity’s staff during the year. This pension scheme was closed to future accrual on 30 April 2007. The pension scheme’s assets are held in a separate Trustee-administered fund to meet long-term pension liabilities to past and present employees. The Trustees of the pension scheme are required to act in the best interests of the scheme’s beneficiaries. Trustees include representatives of the Governors and members of the pension scheme. Trustees are appointed in accordance with the scheme’s trust documentation.

The pension scheme is administered by an external firm and its financial and other records are kept separately from those of the charity. It operates in compliance with the Pensions Acts of 1995 and 2004 and the regulations of the appropriate pensions and financial sector regulators.

The disclosures set out below are based on calculations carried out as at 31 December 2021 by a qualified independent actuary in accordance with FRS102. The liabilities of the defined benefit pension scheme are measured by discounting the best estimate of future cash flows to be paid out of the scheme using the projected unit method. This amount is reflected in the asset or deficit recorded in the balance sheet.

34

Notes to the Consolidated Accounts Royal Star & Garter

The actuarial valuation indicated that a surplus of £1.8m existed at 31 December 2021 (2020: £48k surplus). This amount has not been recognised as an asset in these accounts as the charity does not consider that the amount will be realisable in the foreseeable future. Governors and Pension Trustees have agreed to take the necessary steps so that pension obligations can be transferred to an insurance company in the next couple of years provided conditions are appropriate. The charity has established a Pension Reserve with a value of £3.7m to cover the expected contributions and cost of implementing this transfer.

As at 31 December 2021, contributions are payable to the pension scheme by the charity at the rates set out in the Schedule of Contributions dated 16 October 2020, which is based on the results of the most recent full triennial actuarial valuation as at 31 December 2019. The Employer contribution expected to be made in the year commencing 1 January 2022 is £264k.

(A) Principal assumptions

The principal actuarial assumptions at the balance sheet date were:

2021 2020
Discount rate 1.80% 1.20%
RPI Inflation 3.80% 3.30%
CPI Inflation 3.30% 2.80%
Rate of increase in salaries N/A N/A
Rate of increase in pensions in payment (lower of RPI or 5%) 3.40% 3.00%
Pensioner and non-pensioner mortality (pre and post retirement) Note 1 Note 1
Cash commutation Note 2 Note 2

  1. Based on S3PA table using CMI 2019 projections and an assumed 1.6% long term rate of mortality improvement.

  2. Members assumed to take 50% of maximum cash available.

(B) Asset Breakdown

The major categories of scheme assets as a percentage of total scheme assets are as follows:

2021
2020
Gilts/Corporate Bonds
Investment portfolio
Cash
Insured assets
Total		 46.4%
49.4%
51.7%
49.0%
1.7%
1.4%
0.2%
0.2%
100%
100%

(C) Employee benefit obligations

The amounts recognised in the balance sheet are as follows:

2021
£000
2020
£000
Present value of funded obligations
Fair value of scheme assets
Surplus
Restriction applied to irrecoverable surplus
Net asset recognised in the balance sheet		 (27,257)
(28,298)
29,072
28,346
1,815
48
(1,815)
(48)
-
-

The impact of deferred taxation has not been calculated as the charity is not chargeable to corporation tax.

35

Notes to the Consolidated Accounts Royal Star & Garter

(D) The total (income)/ expense recognised in the Statement of Financial Activities:

2021
£000
2020
£000
Interest on liabilities
Expected return on pension scheme assets
Past service costs
Total – included within (Other income)/ Total resources expended		 334
532
(336)
(506)
-
8
(2)
34

(E) Statement of Total Recognised Gains and Losses (STRGL) in Statement of Financial Activities:

2021
£000
2020
£000
Impact of adjustments and assumptions on scheme liabilities
Experience adjustments on scheme assets
Actuarial gain recognised in Statement of Financial Activities (*)
Cumulative amount of actuarial gain/(loss) recognised in the STRGL		 488
(1,617)
1,013
2,871
1,501
1,254
851
(650)

(F) Changes in the present value of the defined benefit obligation:

2021
£000
2020
£000
Opening defined benefit obligation
Interest cost
Impact of adjustments and assumptions on scheme liabilities
Past service costs
Benefits paid
Closing defined benefit obligation		 28,298
27,098
334
532
(488)
1,617
-
8
(887)
(957)
27,257
28,298

(G) Changes in the fair value of scheme assets are as follows

2021
£000
2020
£000
Opening fair value of scheme assets
Actual return on scheme assets ()
Contributions by employer
Benefits paid
Closing fair value of scheme assets
() Calculation of actual return on scheme assets:
Expected return
Experience adjustments on scheme assets
Actual return on scheme assets**		 28,346
25,646
1,349
3,377
264
280
(887)
(957)
29,072
28,346
336
506
1,013
2,871
1,349
3,377

36

Legal and Administrative information Royal Star & Garter

FULL NAME

The Royal Star & Garter Homes (trading as Royal Star & Garter) Registered Charity No. 210119

Incorporated by Royal Charter in England: Company No. RC000713

OFFICE BEARERS

Patron

Her Majesty The Queen

President

HRH Princess Alexandra, the Hon. Lady Ogilvy, KG, GCVO

Vice Presidents

Vice Admiral Sir John Dunt KCB

Malcolm Chapple BSc, Barrister at Law, FCIArb

The Mayor of the London Borough of Richmond upon Thames The Mayor of the Royal Borough of Kingston upon Thames The Mayor of Solihull

Governors

Medical Representative from the Armed Services – Ex Officio Governor

Appointee of The British Red Cross Society

Amanda Nicholson JP DL BA MA

Committee membership as at 31 December 2021

37

Legal and Administrative information Royal Star & Garter

EXECUTIVE

Andy Cole OBE MA MBA Caley Eldred BA Martin Goldman AIOSH Malcolm Munro-Faure BSc ACA Pauline Shaw OBE BHSc MSc RGN PGDipArts (Nursing) Kate Silver BSc FCIPD

REGISTERED OFFICE

15 Castle Mews Hampton TW12 2NP info@starandgarter.org

SOLIHULL HOME

Tudor Coppice Solihull B91 3DE

BANKS

National Westminster Bank plc Lloyds Bank plc Barclays Bank PLC

Chief Executive Director of Supporter Engagement Director of Operations Director of Finance Director of Care Director of People

SURBITON HOME

Upper Brighton Road Surbiton KT6 6JY

HIGH WYCOMBE HOME

Hughenden Avenue High Wycombe Buckinghamshire HP13 5GG

SOLICITOR

Trowers & Hamlins LLP 3 Bunhill Row London EC1Y 8YZ

INVESTMENT MANAGERS

Sarasin & Partners LLP Juxon House 100 St Paul’s Churchyard London EC4M 8BU

Smith & Williamson Investment Management LLP 25 Moorgate London EC2R 6AY

Ruffer LLP 80 Victoria Street London SW1E 5JL

AUDITOR

Moore Kingston Smith LLP 9 Appold Street London EC2A 2AP

38

~~info@starand~~ garter.org 020 8481 7676

www.starandgarter.org

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@starandgarter Royal Star & Garter Royal Star & Garter starandgarter royalstarandgarter

The Royal Star & Garter Homes trading as Royal Star & Garter

Registered Charity No. 210119 Registered office: 15 Castle Mews Hampton TW12 2NP