Hill Care 1 Limited

The directors present their strategic report of the company for the year ended 31 March 2023. Review of the business The principal activity of the company during the year was the provision of residential and nursing care to the elderly. The company owns a 100% subsidiary, Spring Healthcare Support Services Limited. Spring Healthcare Support Services Limited's principal activity is the management of The Maples neurological unit under a PFI contract. Results and performance The directors are satisfied with the performance of the company during the year. The company monitors direct costs on an ongoing basis whilst striving to deliver a high quality of care to its residents. The company has performed well despite a challenging environment and continues its aim of returning trading performance to pre-pandemic levels. Key performance indicators The directors monitor the progress of the company by reference to key performance indicators. The key performance indicators are those that communicate the financial performance of the company, being turnover, gross profit and staff costs as a proportion of fees. The company has experienced an increase in resident fee income of 10.1% (2022: 5.6%) this year. Occupancy has started to increase and average fees have also increased in the year. The company has continued to receive a small amount of government grant funding during the year as a result of the COVID-19 pandemic. With a nationwide shortage in nurses and healthcare staff, the company has remained reliant on agency staff during the year. The company has maintained a tight control over direct costs as far as possible under the current circumstances, which has assisted the company in achieving a gross profit margin for the year of 24.1% (2022: 26.7%). Staff costs as a proportion of fees were 71.6% (2022: 69.6%). The company hopes to build on these results in the coming year by further increasing occupancy and reducing its cost base whilst still maintaining a high quality of care. Principal risks and uncertainties The senior management team meet regularly to consider the risks that face the company and how established processes and controls are used to manage these risks. Key risks and uncertainties are outlined below: Market risk The market in which the company operates is highly competitive. As a result, there is constant pressure on margins, amplified by increases in UK inflation. The sector uses a significant amount of food, energy and labour all of which saw high price growth particularly as a result of the increases in the National Living Wage. Recruitment and retention of competent and qualified personnel remains challenging. Legislative and regulatory risk The company's operations are subject to a high level of regulation by various regulators in the UK. Inspections at our care homes are frequent and primarily unannounced. The results of such inspections are crucial in determining the operational capability of a home and compliance with regulatory standards. Failure to comply with the appropriate standards set down by the regulators can result in either temporary, or in the worst-case scenario, permanent closure. To mitigate the risk, the group has invested in quality and compliance personnel who regularly visit the homes to ensure that the appropriate standards of care are being delivered. Reputational risk The company provides care to elderly people. Any serious breach in the standard of care provided could result in negative publicity and increased scrutiny from regulators, residents and families. To mitigate this risk, the company devotes a considerable amount of time to delivering comprehensive and mandatory clinical training to employees. All employees are checked prior to being offered employment. Financial risks The company and wider group has bank loans. The current economic environment and the increases in the Bank of England base rate are a risk to the company and wider group. The group prepares cash flow forecasts and applies sensitivities as applicable to ensure they are well placed to be able to meet capital and interest repayments as they fall due. The group has an open relationship with the bank and provides monthly, quarterly and annual financial and operating information to them and is currently covenant compliant.