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2022-12-31-accounts

Annual Report & Accounts For the year ended 31 December 2022

Key events

Death of Her Majesty The Queen

In September, the nation was brought together by the death of our Patron, Queen Elizabeth II. Our residents, staff and families shared this time of refl ection and thanksgiving for the late Queen’s long life of dedicated service.

Our Chair, Major General Tim Tyler, paid tribute, saying: ‘Her Majesty The Queen’s role as our Patron was just one aspect of a reign characterised by support for good causes and devotion to public service. Always a proud advocate of the Armed Forces community, the late Queen’s support for Royal Star & Garter never wavered. It was an honour and privilege to have had Her Majesty’s patronage.’

Outstanding CQC at High Wycombe

Our High Wycombe Home was rated Outstanding following its fi rst Care Quality Commission (CQC) inspection. It was judged to be Outstanding in four of the fi ve domains tested.

Hazel Roberts, CQC Head of Inspection for Adult Social Care, commented: “Other services can look to this as an example of the high standards of care people should expect.” The Outstanding rating places the Home in the top 4% of providers in England, according to CQC fi gures, with the highest rates in the county. Our Surbiton Home was also visited by the CQC at the beginning of 2023 and inspected in two of the fi ve domains, retaining its Good ratings in both.

Press highlights

Our residents’ amazing lives resonate with the public and the national media has once again been keen to share their stories.

Highlights included the recollections of resident and Grenadier Guard John Walmsley (left ), who served at King George VI’s funeral and the late Queen’s Coronation, with his stories covered by The Mirror. Reporters visited our Homes for The Queen’s funeral, resulting in stories on the BBC and in national newspapers, with a reach of over 2bn.

Amongst the many stories coming from the Homes was that of resident Ken, a former fitness instructor, who ran exercise classes for fellow residents in our Surbiton Home. His story was featured by ITV London.

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 ..................................................................................................18 Consolidated Statement of Financial Activities ...................................................................22 Balance Sheets ...........................................................................................................................23 Consolidated Statement of Cash Flows .................................................................................24 Notes to the Consolidated Accounts ......................................................................................25 Legal and Administrative Information ..................................................................................38

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 strive to provide outstanding, compassionate and loving care to those who have had the courage to serve their country. We are proud to support Armed Forces veterans and their partners who have given so much and who are now living with disability or dementia.

Throughout 2022, our teams have been able to reduce the Covid-19 restrictions that have been in place since early 2020, open up our Homes again and restore the emphasis we give to enabling our residents to live as full a life as possible. I am hugely proud of how everyone has continued to demonstrate our values, while keeping everyone as safe as possible. I want to thank our residents and their families for all their consideration and support.

This year was of course marked by the death of our Patron, Queen Elizabeth II. As a veteran herself, Queen Elizabeth II had a natural affinity with our residents. Queen Elizabeth’s support of our work and our residents

never wavered over almost 70 years, and it was an honour and privilege to have enjoyed her patronage. This year we were named a Top 20 care provider in the national carehome.co.uk awards and we recorded a further ‘Outstanding’ CQC rating – this for our newest Home at High Wycombe. Achieving Outstanding on a first inspection is a significant achievement for the whole team, which we are extremely proud of.

Our strategy sets out a bold vision: to push further the boundaries of the quality of our services, while doubling the number of veterans we support. Covid-19 has delayed our plans, but we have now redoubled our efforts to achieve the launching of new services. This commenced with a new Telephone Friendship Service that started in Solihull at the end of 2022, with more services to follow in 2023.

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

Major General Tim Tyler CB Chair, Governing Body

28 June 2023

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2022

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254
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residents supported

152 102 women men

60,100 days of care provided

39 short-break residents

40 Royal Navy & Royal Marines veterans

133 Army veterans

81

RAF veterans

27,451 days of dementia care

3,979

physiotherapy opportunities offered

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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 15 February 2023.

The Governors present their annual report and audited financial statements for the year ended 31 December 2022, 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, with a particular prevalence of muscular-skeletal issues. 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). Data from the University of Northumbria indicates that there are 39,500 veterans over the age of 80 already living in residential social care in the UK.

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. There is also a growing body of research evidence linking early trauma and PTSD, such as would be experienced by some of the Armed Forces community, with the onset of 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 our work 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 death of our Patron, Queen Elizabeth II

We were deeply saddened to learn of the death of our Patron in September. Queen Elizabeth II became the charity’s Patron in 1953 and her support for Royal Star & Garter never wavered during almost seven decades.

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Queen Elizabeth II made several visits to our old Richmond Home, demonstrating genuine support and enthusiasm for the veteran community and our important work. As a veteran herself, Queen Elizabeth II had a natural affinity with our residents.

It was a privilege that Queen Elizabeth II was our Patron, and it was a huge honour that our Chair, Major General Tim Tyler, was invited to represent the charity at the late Queen’s funeral.

The impact of Covid-19

The global Covid-19 pandemic has continued to have a significant impact on care and health services worldwide. We have had to take challenging decisions in order to protect our residents who are all extremely vulnerable while staying focused on keeping the Homes as open and non-clinical as possible. 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.

Steps we have taken in 2022 include:

Our strategy

Despite the ongoing challenges resulting from the 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 35 to 102 during 2022. Residents are living with either a physical disability or dementia and a wide range of conditions, such as osteoarthritis, osteoporosis and the impact of stroke. Many residents experience a complex combination of conditions and the majority require the use of a wheelchair or mobility aid.

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Exceptional care is personalised care. Each resident's physical, wellbeing and social needs are met with love, respect and friendship.

The demand for specialist dementia care continues to grow. The 86 residents we can care for in specially designed dementia communities represent a third of the total dedicated residential care capacity for veterans living with dementia in England. We are also planning to convert a floor in each of our Surbiton and High Wycombe Homes so we can care for a further 20 residents living with dementia next year.

We were nominated for six national awards for our care during the year, including the National Care Awards, Laing Buisson Awards and Student Nursing Times Awards. We also received two Top 20 Awards from carehome.co.uk - the leading online review platform - in the Best Small Care Home group category and for our High Wycombe Home as a Top 20 home in the south-east region.

We were delighted to welcome our President, HRH Princess Alexandra, back to a Home for the first time since the pandemic started. Her Royal Highness’s visit to Surbiton in November was to reopen the garden which had been fully refurbished, with the addition of a new garden room and woodland walk.

As visiting restrictions relaxed through the year, we were also pleased to welcome Professor Deborah Sturdy CBE, the Chief Nurse for Adult Social Care, to our High Wycombe Home to meet residents and staff. During her visit, she spoke to several team members who were studying Nursing courses. Professor Sturdy said: “I recognised a commitment at the top to grow their own staff and to invest in individuals.”

At the end of 2022, our High Wycombe Home had its first inspection by the Care Quality Commission. The CQC rated the Home as Outstanding overall, with four of the five domains recognised as Outstanding. This is a notable achievement for a new home, and places Royal Star & Garter High Wycombe as the highest rated nursing home in the county. Our Surbiton Home also had a partial inspection in January 2023, and retained its rating of Good.

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. We also 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 utilise a wide range of professional care staff including nurses and care assistants, together with physiotherapy and speech and language therapy as part of our integrated Wellbeing Programme. Our Wellbeing teams integrate our activities, physiotherapy and exercise groups to provide support for residents seven days a week. We have worked hard to ensure that each resident lives life to the full and enjoys activities that reflect their needs, interests and abilities.

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To offer this level of support requires continual investment in our staffing levels, training and activities, which are all hallmarks of our care. Our staff turnover averaged 8% this year, well below the sector average of 29% (Skills for Care: 2022). We have been championing the development of Nursing Associates in the social care workforce for a number of years and have supported many of our carers to develop new skills. During 2022, four Nurse Associates graduated, and two new Student Nurse Associates commenced their training, joining two that we were already supporting. Next year, a further six of our staff will commence Nurse Associate training and one will commence their top-up programme to achieve a full Registered Nurse qualification.

As part of our focus on improving the quality of care, we have committed to a major update to a number of our clinical systems. In 2022, we commenced the transition to a new care planning software which integrates with other systems, including medication management.

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 - Solihull welcomed nursing students from the Defence School of Healthcare Education at Birmingham City University - and with a presence at key ceremonial events during the year. Royal Star & Garter was also awarded the Defence Employer Recognition Bronze Award to recognise our support for the veterans we employ, and we are committed to reach the Silver award next year. We were also pleased to welcome Wing Commander Jenny Dennis, the Station Commander of RAF High Wycombe, who spoke to residents including Air Vice-Marshal Neville. She said: “I’m speechless with what I’ve seen and really impressed with the support that veterans have.”

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 have developed supported day care services in High Wycombe and Solihull. It was with great regret that we had to close our day care services in February 2020 as a result of the Covid-19 pandemic and we have not been able to reopen them yet. Our plans to launch a day care service in Surbiton were also postponed. Independent evaluation of our day care programme shows that 88% of individuals agreed or strongly agreed that their health and wellbeing had improved as a result of attending, and we look forward to reopening this important service as soon as possible in 2023.

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. This initiative was trialled in the Solihull area at the end of 2022, with extremely positive feedback. We intend to develop this service so we can support communities around each of our Homes.

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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 2022. This role takes us back to our roots during the First World War. We are seeking to build on this expertise and are investing significant resources to develop plans for accommodation for younger veterans on a plot of land close to our High Wycombe Home.

We have designated £12m to develop the new services outlined above.

We take our wider responsibilities as a charity extremely seriously and have committed to be net carbon zero across the whole of our operations by 2030. To deliver on this important goal, we switched our electricity to a low carbon tariff in 2022. We will also be installing solar panels in 2023 (initially in Surbiton) with the aim of being able to generate at least a quarter of our own power. Significant programmes are also underway to reduce power use, minimise food waste and improve levels of recycling.

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.

This year, all three of our Homes were accredited to be ‘Veteran Aware’ by the NHS Veteran Covenant Healthcare Alliance (VCHA), becoming the first care homes in the UK to be recognised. This has led to a new partnership with the VCHA and the Royal British Legion to develop a national Veteran Friendly Framework for care homes, part funded by the Armed Forces Covenant Fund Trust. This initiative will launch in late 2023 and allow all care homes in the country to better understand and access the range of statutory and charitable support available for those who served in the Armed Forces.

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 is the Chair of the National Care Forum and 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 whose aim is 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, and share our experience openly with other care providers and veteran charities. 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

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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. We currently have 21 active volunteers supporting the Homes.

The Governors wish to record their thanks to all our volunteers for their support over many years.

Financial review

Our cost of care is higher than in some care homes as a higher ratio of staff to residents enables us to provide high quality, person-centred care. 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 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.

Even in normal times we face significant challenges which include the level of funding for social care, the complex regulatory environment and changes in fundraising regulations. All care organisations continue to be challenged because of Covid-19, economic turbulence and the cost-of-living crisis. 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 4) and on our finances (Note 3).

Details of our results for 2022 are set out in the Consolidated Statement of Financial Activities (page 22). In setting objectives and planning activities, Governors consider the Charity Commission’s guidance on public benefit and fee-charging.

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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 2022.

The cost of providing care to residents increased to £23m in 2022 as the result of increasing staff numbers in our High Wycombe Home and the impact of inflation during the year (2021: £22m). Our overriding priority is always to maintain the highest quality of care, and so we are building our team in stages in High Wycombe in line with the phased resident admissions programme.

We received fee income from residents and funding organisations (local authorities and the NHS) totalling £13.2m during 2022 (2021: £10.8m). The increase was principally the result of increased occupancy in our High Wycombe Home (£1.5m). We also received support from local authorities and government totalling £0.2m during the year towards the increased cost of working during the Covid pandemic (2021: £0.6m).

The cost of care for each resident is supported by the charity from our fundraising income. This support amounted to £10m in 2022 (2021: £11m).

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. 2022 has been a challenging year,

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with numerous periods when residents were unable to move in. This meant that average occupancy in the Homes only rose to 84% in 2022.

Overall, we provided care to a total of 254 long term or short-break residents in 2022 (2021: 218).

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 four public sector bodies (local authorities or the NHS); High Wycombe: three; and our Solihull Home: two.

Our fundraising

We have continued 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.

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. We have also implemented a policy and procedure for the management of any gifts from anyone who we consider may be vulnerable.

Our main donor recruitment campaign in 2022 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 2022, we received only 13 formal complaints in response to mailings or information (on and off line) sent to donors (2021:10). These represent an extremely small proportion of our donor database and communications, however each one was reviewed by a senior member of staff and treated as an opportunity to improve our service. Although the current environment for fundraising remains challenging due to the impact of the cost-of-living crisis, 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 £5.5m in 2022 (2021: £6.7m).

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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 2022, we retained Woods Group Limited to administer our raffle, 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 £1.3m in 2022 (2021: £1.6m). We are very grateful for all donations from continuing and new funders. This included: ABF The Soldiers' Charity (£120k), the Armed Forces Covenant Fund Trust (£79k), The Royal Navy & Royal Marines Charity (£16.7k) and The Veterans’ Foundation (£20k).

Overall, we spent just 14p on fundraising for every £1 we raised in 2022 (11p in 2021).

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.

Over the past 16 years we have invested heavily in building three wonderful Homes for our residents. At 31 December 2022, our investment in buildings amounted to £74.3m including funds set aside for upkeep, refurbishment and eventual replacement. This means that 50% 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 (£147.7m) for specific purposes:

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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 and recent economic instability have 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

Our investments are managed by three experienced firms which adopt different strategies in order to provide growth over the medium term and enable us to respond to short-term needs as they arise. We engage with our investment managers on a regular basis. Investment markets were very volatile and produced significant negative returns during 2022 as a consequence of global pressures. Our portfolios suffered a net loss of £9.4m during the year. This volatility is a key reason that we hold sufficient funds to enable us to continue providing outstanding care even when times get tough.

At 31 December 2022, our investments were valued at £94.5m (2021: £103.9m), as set out in Note 10. We retained a proportion of our bank deposits as a long-term investment (2021 and 2022: £8m) and held current assets (2022: £4.1m) to cover our expected deficit in 2023, expected expenditure to develop our new site in High Wycombe and other obligations (2021: £4.7m). 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 2023.

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Although we do not know what the final impact of the world economic 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 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 £0.85m existed at 31 December 2022 (2021: £1.8m 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 2022:

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

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 2022 were as follows:

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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.

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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 (2021: £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 our revised Charter was approved by the Charity Commission and Privy Council in February 2023.

Details of our Patron, President, Vice-Presidents and Governors are set out on page 38. The names of the Executive team and external advisers are set out on page 39.

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:

Attendance at Governors’ meetings was 82% in 2022 (2021: 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 sixth gender pay gap analysis in 2022. Our median gender pay gap has increased very slightly from 1.5% in 2021 to 1.65%, which remains significantly below the national median and the median for charities. We remain confident that our gender pay gap does not stem from paying women and men differently for the same or equivalent work.

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

28 June 2023

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Independent Auditor’s Report Royal Star & Garter

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

Opinion

We have audited the financial statements of Royal Star & Garter for the year ended 31 December 2022 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.

18

Governors’ Report The Royal Star & Garter H

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 17, 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:

19

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:

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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: 28 June 2023

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.

21

Royal Star & Garter

CONSOLIDATED STATEMENT OF FINANCIAL ACTIVITIES For the year ended 31 December 2022

Note Unrestricted
Funds
(Note 13)
£000
Restricted
Funds
(Note 13)
£000
Permanent
Endowment
(Note 13)
£000
Total
Funds
2022
£000
Total
Funds
2021
£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 (LOSS)/ GAIN
Net (loss)/ gain on investments
10
NET (DEFICIT)/ INCOME
Transfer between funds
OTHER RECOGNISED LOSSES
Actuarial loss on defined benefit pension
scheme
15.2
NET MOVEMENT IN FUNDS
Total funds brought forward
TOTAL FUNDS CARRIED FORWARD		 13,181
-
-
13,181
10,792
858
418
-
1,276
1,564
4,859
644
-
5,503
6,731
2,205
-
1
2,206
2,597
52
-
-
52
60
35
239
-
274
584
21,190
1,301
1
22,492
22,328
21,890
1,325
-
23,215
21,762
1,464
-
-
1,464
1,501
23,354
1,325
-
24,679
23,263
(2,164)
(24)
1
(2,187)
(935)

(9,384)
-
(9)
(9,393)
6,254
(11,548)
(24)
(8)
(11,580)
5,319
25
(25)
-
-
-
(299)
-
-
(299)
(266)
(11,822)
(49)
(8)
(11,879)
5,053
158,771
704
67
159,542
154,489
146,949
655
59
147,663
159,542

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 £1,266k of Donations and £1,169k expenditure on Charitable Activities.

22

Royal Star & Garter

BALANCE SHEETS

At 31 December 2022

Group
Charity
Note 2022
£000
2021
£000
2022
£000
2021
£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		 50,150
51,727
50,150
51,727
94,486
103,950
94,486
103,950
144,636
155,677
144,636
155,677
1
2
1
2
874
1,063
879
1,126
4,109
4,739
4,109
4,680
4,984
5,804
4,989
5,808
(1,957)
(1,939)
(1,962)
(1,943)
3,027
3,865
3,027
3,865
147,663
159,542
147,663
159,542
17,400
17,400
17,400
17,400
50,150
51,727
50,150
51,727
79,399
89,644
79,399
89,644
146,949
158,771
146,949
158,771
59
67
59
67
655
704
655
704
147,663
159,542
147,663
159,542

Approved and authorised for issue by the Governors on 28 June 2023 and signed on their behalf by

Amanda Francis DSS BSc ACA Treasurer

23

Royal Star & Garter

CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 December 2022

Note 2022
£000
2021
£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
Sale/(Purchase) of investments
Net cash provided by investing activities
Change in cash and cash equivalents during the year
B		 (2,339)
(3,472)
2,206
2,597
(568)
(1,627)
71
(257)
1,709
713
(630)
(2,759)

(A) Reconciliation of cash flows from operating activities

2022
£000
2021
£000
Net (deficit) for the year
Adjustments for:
Investment income and interest receivable
Depreciation
Loss on disposal of fixed assets
Decrease/(Increase) in stocks
Decrease/(Increase) in debtors receivable within one year
Increase/(Decrease) in creditors
Pension expense
Net cash used in operating activities		 (2,187)
(935)
(2,206)
(2,597)
2,145
1,968
-
15
1
(1)
189
(286)
18
(1,370)
(299)
(266)
(2,339)
(3,472)

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


2021
£000
Change
In Year
£000
2022
£000
Cash at bank and in hand
Cash on deposit held as investments
Total cash and cash equivalents		 4,739
(630)
4,109
8,000
-
8,000
12,739
(630)
12,109

24

Notes to the Consolidated Accounts Royal Star & Garter

1. Charity Information

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 estimated at £0.7m in order to protect residents from the impact of Covid-19 during 2022 (2021: £1.3m).

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.

25

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 £86.5m (2021: £95.9m) (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 a defined contribution pension scheme. Contributions are charged to the Statement of Financial Activities (‘SOFA’) as they become payable in accordance with the rules of the scheme.

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.

26

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
2022
£000
Total
2021
£000
Charitable activities: care costs
Raising funds
TOTAL EXPENDITURE		 15,409
2,066
5,740
23,215
21,762
624
79
761
1,464
1,501
16,033
2,145
6,501
24,679
23,263

Care costs include support costs £2.6m (2021: £2.5m) and development costs £0.1m (2021: £0.1m). Support costs include staff costs £1.7m (2021: £1.5m), depreciation £0.1m (2021: £0.1m) and other costs £0.9m (2021: £0.9m) 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 £197k (2021: £186k) and investment management fees totalling £443k (2021: £482k). Support costs include staff costs £75k (2021: £71k) and other costs £122k (2021: £115k).

Support costs include governance costs totalling £133k (2021: £114k).

Total expenditure in 2022 includes an estimated £0.7m (2021: £1.3m) in respect of measures to protect residents and staff during the Covid-19 pandemic.

OPERATING LEASE

OPERATING LEASE
2022 2021
£000 £000
Lease payments in the year 11 -
Lease commitments within one year 11 -
Lease commitments between 2 and 5 years 11 -

27

Notes to the Consolidated Accounts Royal Star & Garter

4. Auditor’s Remuneration

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

2022
£000
2021
£000
In respect of audit services:
Charity
Group companies
In respect of taxation and other advice and services
31
28
3
3
3
10
37
41

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 £4.7m at 31 December 2022 (2021: £5.1m).

6. Governors’ Remuneration

No Governor received any remuneration during the years ended 31 December 2022 or 2021. During the year, three Governors (2021: two) received reimbursement of personal travel and subsistence expenditure amounting to £221 (2021: £362).

There were no other related party transactions that require disclosure in the year (2021: None).

7. Emoluments & Numbers of Employees

The total emoluments of employees for the year comprised:

2022
2021
£000
£000
Wages and salaries
Employer National Insurance costs
Contributions to defined contribution pension scheme
Other staff costs
Total staff costs		 11,822
11,779
1,191
1,117
744
735
13,757
13,631
2,276
633
16,033
14,264

During the year, staff from commercial agencies provided cover for nurses, health care assistants and clerical services at a total cost of £2.2m (2021: £0.6m). This is included within other staff costs above.

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

2022
2021
Nursing and care
Domestic, catering and other Home-based staff
Fundraising
Management and administration		 264
283
49
52
19
19
27
25
359
379

28

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 : 2022 2021
£60,001 - £70,000 2 3
£70,001 - £80,000 3 -
£80,001 - £90,000 2 6
£90,001 - £100,000 2 -
£100,001 - £110,000 - 1
£110,001 - £120,000 1 -
£130,001 - £140,000 - 1
£140,001 - £150,000 1 -

The total employment benefits (including employers’ national insurance contributions) of the above employees, who are our senior management team (SMT), amounted to £1.2m in 2022 (11 employees). In 2021, our SMT included 11 members who received employment benefits totalling £1.1m.

During the year the charity paid £Nil in connection with redundancies (2021: £123k).

The salary of our Chief Executive during 2022 was £142,534 (2021: £133,474).

8. Tangible Fixed Assets – Group and Charity

Freehold Land
& Buildings
Leasehold Land
& Buildings
Plant &
Equipment
Motor
Vehicles
Total
£000
£000
£000
£000		 £000
Cost :
At 1 January 2022
Additions
At 31 December 2022
Accumulated depreciation :
At 1 January 2022
Charge for year
At 31 December 2022
Net book value at 31 December 2022
Net book value at 31 December 2021		 39,675
15,253
10,781
350
339
67
162
-		 66,059
568
40,014
15,320
10,943
350		 66,627
4,538
3,067
6,574
153
925
308
841
71		 14,332
2,145
5,463
3,375
7,415
224		 16,477
34,551
11,945
3,528
126		 50,150

35,137
12,186
4,207
197		 51,727

The charity had contracted capital commitments totalling £0.1m at 31 December 2022 (2021: £0.1m).

29

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:

2022
£
2021
£
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:

2022
£000
2021
£000
Turnover
Operating costs
Contribution to Royal Star & Garter: Gift aid payment
Net profit before taxation
Corporation tax
Retained in subsidiary		 7
1,496
(7)
(1,452)
-
44
-
(44)
-
-
-
-
-
-

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 2022 were as follows:

2022
£000
2021
£000
Total Assets
Total Liabilities
Net Assets		 106
178
(106)
(178)
-
-

30

Notes to the Consolidated Accounts Royal Star & Garter

10. Investments: Other Investments

2022
2021
£000
£000
Market value at 1 January
Net (withdrawal)/investment of capital
Net realised and unrealised (loss)/ gain during the year
Market value at 31 December
Historic cost at 31 December		 103,950
97,439
(71)
257
(9,393)
6,254
94,486
103,950
80,758
80,348
Analysis of Investments: 2022
2021
£000
£000
Bank deposits
Investment portfolio managed by Evelyn Partners 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
35,723
39,508
6,526
6,122
44,237
50,320
94,486
103,950

The investment portfolio managed by Evelyn Partners included listed investments £29.9m (2021: £29.5m) and cash or cash equivalents £0.1m at 31 December 2022 (2021: £2.5m).

11. Debtors

Amounts falling due within one year:

Group
2022
£000
Group
2021
£000
Charity
2022
£000
Charity
2021
£000
155
194
155
194
-
-
5
74
53
59
53
59
408
396
408
396
224
343
224
343
34
71
34
60

12. Creditors

Group
2022
£000
Group
2021
£000
Charity
2022
£000
Charity
2021
£000
Trade creditors
Accruals
Amounts due to subsidiary companies
Other taxation and social security
Other creditors		 346
366
346
366
1,141
1,129
1,141
1,126
-
-
5
8
296
296
296
295
174
148
174
148
1,957
1,939
1,962
1,943

31

Notes to the Consolidated Accounts Royal Star & Garter

13a. Statement of Funds - 2022

At
1 Jan 22
£000
Income
£000
Expenditure
£000
Capital
expenditure
£000
Other
transfers
£000
Other gains/
(losses)
£000
At
31 Dec 22
£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 FUNDS		 12,475
-
(402)
118
-
-
12,191
12,314
-
(554)
419
-
-
12,179
22,734
-
(951)
31
-
21,814
1,908
-
-
-
-
1,908
2,099
-
(167)
-
-
1,932
197
-
(71)
-
-
126
51,727
-
(2,145)
568
-
50,150
14,500
-
-
-
-
-
14,500
9,609
288
(254)
-
-
-
9,643
12,000
-
-
-
-
-
12,000
620
-
(620)
-
-
-
-
49,215
-
-
-
24
(9,683)
39,556
3,700
-
-
-
-
-
3,700
17,400
20,902
(20,335)
(543)
(24)
-
17,400
158,771
21,190
(23,354)
25
-
(9,683)
146,949
67
1
-
-
-
(9)
59
704
1,301
(1,325)
(25)
-
-
655
159,542
22,492
(24,679)
-
-
(9,692)
147,663

Unrestricted Funds:

The Fixed Asset Funds represent the book value of the charity’s assets.

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 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 care services, day care, outreach and younger veterans’ homes including investment in properties and reorganising services so we can increase the number of beneficiaries.

The Transitional Support Fund was used to finance costs involved in opening the High Wycombe Home.

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 provided resources to enable the charity to continue providing the highest quality of care during challenging times which included the Covid-19 pandemic. The charity expects income to reduce, investments to suffer losses and costs to increase. We have made significant use of this fund during 2022 and believe it continues to be necessary because of our commitment to providing 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.

32

Notes to the Consolidated Accounts Royal Star & Garter

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 22
£000
Income
£000
Expenditure/
Transfers
£000
At
31 Dec 22
£000
Covid-19 emergency support
Care services and development
RESTRICTED FUNDS		 -
238(*)
(231)
7
704
1,063
(1,119)
648
704
1,301
(1,350)
655

We expect to spend the Restricted Funds on care services in 2023 and 2024.

13b. 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

33

Notes to the Consolidated Accounts Royal Star & Garter

Restricted Funds:

The movements on the Restricted Funds during 2021 were 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

14a. Analysis of Group Net Assets between Funds - 2022

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
Care Support Fund
Pension Deficit Fund
General Fund
Total Unrestricted Funds
Permanent Endowment Fund
Restricted Funds
Total Net Assets		 12,191
-
-
-
12,191
12,179
-
-
-
12,179
21,814
-
-
-
21,814
1,908
-
-
-
1,908
1,932
-
-
-
1,932
126
-
-
-
126
50,150
-
-
-
50,150
-
14,500
-
-
14,500
-
9,643
-
-
9,643
-
12,000
-
-
12,000
-
39,556
-
-
39,556
-
3,700
-
-
3,700
-
15,028
4,329
(1,957)
17,400
50,150
94,427
4,329
(1,957)
146,949
-
59
-
-
59
-
-
655
-
655
50,150
94,486
4,984
(1,957)
147,663

34

Notes to the Consolidated Accounts Royal Star & Garter

14b. 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

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 £744k (2021: £735k) into the defined contribution pension schemes during the year. The value of outstanding contributions at 31 December 2022 was £99k (2021: £97k).

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 2022 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.

35

Notes to the Consolidated Accounts Royal Star & Garter

The actuarial valuation indicated that a surplus of £0.85m existed at 31 December 2022 (2021: £1.8m 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 (2021: £3.7m).

As at 31 December 2022, 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 2023 is £264k.

(A) Principal assumptions

The principal actuarial assumptions at the balance sheet date were:

2022 2021
Discount rate 4.75% 1.80%
RPI Inflation 3.30% 3.80%
CPI Inflation 2.90% 3.30%
Rate of increase in salaries N/A N/A
Rate of increase in pensions in payment (lower of RPI or 5%) 3.00% 3.40%
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:

2022
2021
Gilts/Corporate Bonds
Investment portfolio
Cash
Insured assets
Total		 85.5%
46.4%
11.9%
51.7%
2.4%
1.7%
0.2%
0.2%
100%
100%

(C) Employee benefit obligations

The amounts recognised in the balance sheet are as follows:

2022
£000
2021
£000
Present value of funded obligations
Fair value of scheme assets
Surplus
Restriction applied to irrecoverable surplus
Net asset recognised in the balance sheet		 (17,535)
(27,257)
18,388
29,072
853
1,815
(853)
(1,815)
-
-

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

36

Notes to the Consolidated Accounts Royal Star & Garter

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

2022
£000
2021
£000
Interest on liabilities
Expected return on pension scheme assets
Total – included within Total resources expended		 482
334
(517)
(336)
(35)
(2)

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

2022
£000
2021
£000
Impact of adjustments and assumptions on scheme liabilities
Experience adjustments on scheme assets
Actuarial (loss)/ gain recognised in Statement of Financial Activities (*)
Cumulative amount of actuarial (loss)/ gain recognised in the STRGL		 9,236
488
(10,497)
1,013
(1,261)
1,501
(410)
851

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

2022
£000
2021
£000
Opening defined benefit obligation
Interest cost
Impact of adjustments and assumptions on scheme liabilities
Benefits paid
Closing defined benefit obligation		 27,257
28,298
482
334
(9,236)
(488)
(968)
(887)
17,535
27,257

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

2022
£000
2021
£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**		 29,072
28,346
(9,980)
1,349
264
264
(968)
(887)
18,388
29,072
517
336
(10,497)
1,013
(9,980)
1,349

37

Legal and Administrative information Royal Star & Garter

FULL NAME

Royal Star & Garter Registered Charity No. 210119

Incorporated by Royal Charter in England: Company No. RC000713

OFFICE BEARERS

Former Patron

Her Majesty Queen Elizabeth II

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

Stephen Crookbain BA (from 1 March 2023)

Sapandeep Singh Maini-Thompson BA (Oxon) MSc LLM (from 1 March 2023)

Brigadier (Ret’d) Christopher Sexton MA FInstRE FCQI (from 1 March 2023)

Sarah Warden CMgr MCMI CIWFM (from 1 March 2023)

Medical Representative from the Armed Services – Ex Officio Governor

Appointee of The British Red Cross Society

Amanda Nicholson JP DL BA MA (to 8 March 2023)

Committee membership as at 31 December 2022

38

Legal and Administrative information Royal Star & Garter

EXECUTIVE

Andy Cole OBE MA MBA Caley Eldred BA Martin Goldman TechIOSH 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

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

Evelyn Partners Investment Management LLP 45 Gresham Street London EC2V 7BG

Ruffer LLP 80 Victoria Street London SW1E 5JL

AUDITOR

Moore Kingston Smith LLP 9 Appold Street London EC2A 2AP

39

info@starandgarter.org

020 8481 7676

www.starandgarter.org

Follow us:

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Royal Star & Garter

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