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← The Merchant Company Endowments Trust

2025-07-31-accounts

THE MERCHANT COMPANY ENDOWMENTS TRUST Charity No: SC002002

Trustees’ Annual Report and Financial Statements

For the year ended 31 July 2025

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THE MERCHANT COMPANY ENDOWMENTS TRUST

Trustees’ Annual Report and Financial Statements

Contents

Report of the Trustees to The Merchant Company Endowments Trust 1-6
Independent Auditor’s Report to the members of The Merchant Company Endowments Trust 7-9
Group and Trust Statements of Financial Activities 10
(incorporating income and expenditure account)
Group and Trust Balance Sheets 11
Group and Trust Statement of Cashflows 12
Notes to the Financial Statements 13-24

Reference and administrative details

Principal Office

The Merchants’ Hall 22 Hanover Street Edinburgh EH2 2EP

Chief Executive Officer

Guy Cartwright

Auditors

Henderson Loggie LLP The Stamp Office, Level 5 10-14 Waterloo Place Edinburgh EH1 3EG

Investment Managers

Cazenove Capital Management Limited 24-25 Charlotte Square Edinburgh EH2 4ET

Bankers

The Royal Bank of Scotland plc 36 St. Andrew Square Edinburgh EH2 2AD

Solicitors

Morton Fraser MacRoberts LLP Quartermile Two 2 Lister Square Edinburgh EH3 9GL

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THE MERCHANT COMPANY ENDOWMENTS TRUST

The Trustees’ Annual Report

For the year ended 31 July 2025

The Trustees during the period were:-

Grant Macrae Master of the Company From November 2024
Grant Macrae Treasurer of the Company Until November 2024
Katie Ridland Treasurer of the Company From November 2024
Joe Goldblatt From November 2025
Hew Mathewson CBE From November 2025
Callum Seale From November 2025
Grahame Walker From November 2025
Josh Miller Until November 2024
Graham Harper Until November 2024
Marcella Macdonald Until November 2024
Maidie Cahill Until November 2024
Robert Armour From November 2022
Brian McGhee Until November 2025
Irené Archer Until November 2025
Frank Ross Until November 2025
Liz Flockhart From November 2023
Hilary Turnbull From November 2023
Hamish Wilson From November 2023
Mary Macintosh From November 2023
Andrew Swann From November 2024
Les Banks From November 2024
Mark Quinn From November 2024
Alex Lamley From November 2024
Cllr Euan Davidson From November 2022
Cllr Max Mitchell From November 2022
Cllr Tom Pogson From November 2022
Cllr Steve Burgess Until August 2024
Cllr Alex Staniforth From November 2024
Cllr David Key From November 2023
Alasdair Seale Until August 2024
Duncan Thomson Until November 2025
Iain Murray From November 2020
Russell Duncan From January 2025
Kenneth Ramage From November 2025
June Lumsden Until March 2025

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THE MERCHANT COMPANY ENDOWMENTS TRUST

The Trustees’ Annual Report (continued)

For the year ended 31 July 2025

Structure, governance and management

Nature of governing document

The trust is a body corporate of charitable status. The constitution of the trust is contained in the Edinburgh Merchant Company Order Confirmation Act 1996 (Part IV). The constitution is available on the website www.mcoe.org.uk.

Appointment of trustees

The Endowments Trust members are as follows:

The election of the elected members of the Endowments Trust shall take place annually at any General Meeting of the Company of Merchants of the City of Edinburgh in November.

Any member of the Endowments Trust, upon the expiry of his/her term of office, shall be eligible for re-election unless otherwise disqualified under the Edinburgh Merchant Company Order Confirmation Act 1996.

The Chairman of the Endowments Trust is the Master of the Royal Company of Merchants of the City of Edinburgh or in his or her absence, the Treasurer.

There were no transactions with connected parties except in the ordinary course of business.

Policies and procedures for induction and training of Trustees

All new Trustees are given a full induction into the charity so that they understand their role and responsibilities and the objectives of the charity. Training is offered to all Trustees some of which is provided through a variety of training opportunities through our professional advisors.

Decision-making structure

Policies and strategy are agreed by the Trustees at their regular meetings. The charitable work of the Trust is carried out by the Royal Company of Merchant Charities Committee, chaired by one of the Trustees. The administration of the Trust is carried out by the CEO and the Assistant Clerk of the Royal Company of Merchants of the City of Edinburgh.

Risk Management

The Trustees recognise their responsibility to regularly assess main risks and aim to mitigate exposure to these risks.

Principal significant risks are major repairs and vacancies in the property portfolio and fluctuations in the value and dividends in the investment portfolio.

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THE MERCHANT COMPANY ENDOWMENTS TRUST

The Trustees’ Annual Report (continued)

For the year ended 31 July 2025

Objectives and activities

Endowment Trust

The objective of the Trust is to provide assistance to decent, peaceable men and women aged at least 55 on 1 July in the year of their election, unless, at a younger age they are certified on medical grounds as being unable to earn their living. Beneficiaries must be persons who have lived or worked in the City of Edinburgh or the County of Midlothian. Assistance may be given by way of cash grant, pension, gift of appliances, provision of accommodation and other support. The Trust funds an Almoner to give personal contact and further finance and care to beneficiaries where needed. The Trust consists of general funds which are also applied in connection with running the Sir William Fraser Homes (The Fraser Trust). There are also two funds which are administered separately by the Trust; The Russell and Foster Endowment and The Sir John Foster Fraser Bequest. The Trust owns two groups of flats which are rented at social housing and mixed rent rates to frail and elderly people and managed by the Wheatley Group.

The Fraser Trust (Sir William Fraser Homes)

The Fraser Trust was wound up in 1997 but the Endowments Trust continues to maintain the homes in terms of Section 114 of the Constitution, either by providing them to poor persons resident in the City of Edinburgh or Midlothian with preference given to authors and artists, or by letting to tenants on a commercial basis with the rents received, after payment of the costs incurred in maintaining the properties, being directed towards providing accommodation for needy citizens of Edinburgh.

The Russell and Foster Endowment

The Russell and Foster Endowment was formed from the estate of the late Henry W Russell in 1954. It is required that the fund is administered by the Endowments Trust as a separate fund. The free income is applied by the Trust in payment of annual pensions to respectable indigent Protestant men and women at a rate of £600 per annum. In the year no grants were made (2024 – £nil). The fund value at 31 July 2025 was £538,356 (2024 - £509,055).

The Sir John Foster Fraser Bequest

The Foster Fraser Bequest was formed from a bequest by the late Sir John Foster Fraser in 1961. It is required to be administered as a separate fund by the Endowments Trust who must have regard to applying funds towards helping people “engaged in the literary profession, scientists, artists, musicians, educationalists and other cultural Scottish people who have fallen on hard times.” In the year, no grants were made (2024- £nil) and the fund value at 31 July 2025 was £177,342 (2024 - £168,085).

Grant making policy

Grants are paid in accordance with the objectives set out in the Trust purposes above. The Almoner makes an assessment and reports to the Charity Committee, to enable decisions on which Grants should be made.

Following discussions among the trustees it was concluded that the current rules governing the Endowments Trust restricted the ways in which assistance could be given to deserving and qualified causes. At a meeting of the Members on 8 December 2021 the Members resolved to make an application to OSCR for a charity reorganisation scheme for variation of the Constitution so as to:-

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THE MERCHANT COMPANY ENDOWMENTS TRUST

The Trustees’ Annual Report (continued)

For the year ended 31 July 2025

Objectives and activities (continued)

An application to change the constitution was submitted to OSCR in April 2024. The application was approved in December 2024 and the principal impact is to :

Financial review

The group’s net income after gains and losses for the year was £298,604 compared with the previous year’s net expenditure of £104,122. This was after realised and unrealised gains on listed investments of £136,586 (2024: gains of £187,494) and a loss on revaluation of investment property of £nil (2024: £130,000).

It is the policy of the Trustees that any realised gains on investments are re-invested within the portfolio. It is the policy of the Trustees to keep and maintain their properties.

The financial statements have been prepared in accordance with the statutory requirements of the Trust Constitution (Edinburgh Merchant Company Order Confirmation Act 1996, Part VI Sections 92 to 127).

The Trust’s income is derived mainly from heritable investments and quoted investments. The wholly owned subsidiary company MCET Ltd donates its profits to the Trust under the Gift Aid Scheme and this has enabled the Trustees to increase the level of reserves in order to fund the project outlined under “Achievements and performance.”

The Royal Company of Merchants of the City of Edinburgh provides administration and accounting services for the Trust. During the year under review the Endowments Trust group paid costs totalling £144,598 (2024: £130,475) which were recharged by the Royal Company of Merchants of the City of Edinburgh.

Investment policy

It is the Trustees’ policy to invest in such a way that both investment growth and regular investment income is available to meet the needs of the Trust. This has been achieved by keeping the portfolio of both properties and listed investments under regular review.

(a) Listed investments

The portfolio is managed by Cazenove Capital Management Limited. Details of the portfolio are shown in Note 9.

(b) Properties

The Trust owns a parade of shops at Drumsheugh in Edinburgh plus a private car park. The Trust has appointed Ben Property Management Limited as the factor for these properties. The factor’s responsibility includes carrying out the scheduled rent reviews, negotiation and settlement, the collection of rents and the maintenance of the car park.

The Trust owns the entire share capital of MCET Ltd, a company which owns a domestic let property in Hillside Street, Edinburgh.

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THE MERCHANT COMPANY ENDOWMENTS TRUST

The Trustees’ Annual Report (continued)

For the year ended 31 July 2025

Reserves policy

It is the Trustees’ policy to maintain a level of endowed reserves that will provide sufficient income to cover the Trust’s regular commitments. Reserves in excess of this are available for disbursement.

The total reserves for the group at 31 July 2025 were £21,349,313 (2024: £21,050,709) and include general funds of £20,633,615 (2024: £20,373,569) and restricted funds of £715,698 (2024: £677,140). This generated net income before investment gains and losses of £133,329, which was sufficient to cover disbursement of charitable funds and cover the finance of the expansion of the Trust’s property used for charitable purposes, thus fitting the reserves policy.

Achievements and performance

Beneficiaries

During the year, The Endowments Trust paid annuities to 199 beneficiaries. £330 each was paid on 31 December 2024 and 30 June 2025. In addition, a Christmas gift of £50 each was paid in December 2024.

A number of other beneficiaries received gift vouchers or white goods during the year.

Investment performance

The investment performance is compared with industry benchmarks regularly and the income generated was considered to be in accordance with the investment policy. Performance is kept under review with regular meetings with the investment managers.

Plans for future periods

The Trustees have considered the future strategy of the Trust, and have received approval from OSCR to widen the scope of charitable giving while remaining within the original parameters of the various Trusts to increase the amount of grants which are given each year.

Statement of Trustees’ Responsibilities

The trustees are responsible for preparing the Trustees’ Annual Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

The law applicable to charities in Scotland requires the trustees to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the charity and of the incoming resources and application of resources of the charity for that period. In preparing these financial statements, the trustees are required to:

The trustees are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the charity and enable them to ensure that the financial statements comply with the Charities and Trustee Investment (Scotland) Act 2005, the Charities Accounts (Scotland) Regulations 2006 and the provisions of the charity’s constitution. They are also responsible for safeguarding the assets of the charity and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

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THE MERCHANT COMPANY ENDOWMENTS TRUST

The Trustees’ Annual Report (continued)

For the year ended 31 July 2025

Statement of disclosure to auditor

In so far as the trustees are aware:

The trustees are responsible for the maintenance and integrity of the charity and financial information included on the charity’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

On behalf of the Trust:

| Grant Macrae - 2026-01-05, 11:48:46 UTC Grant Macrae

……………………………………………………. 2025

Grant Macrae Master

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THE MERCHANT COMPANY ENDOWMENTS TRUST

Independent Auditor’s Report to the Trustees

For the Year Ended 31 July 2025

Opinion

We have audited the financial statements of The Merchant Company Endowments Trust (the ‘parent charity’) and its subsidiaries (the 'group') for the year ended 31 July 2025 which comprise the group and charity Statement of Financial Activities, the group and charity Balance Sheet, the group and charity Statement of Cash Flows and the related 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 Financial Reporting Standard 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 responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent 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 trustees’ 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 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 trustees 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 trustees 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.

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 this gives rise to 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.

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THE MERCHANT COMPANY ENDOWMENTS TRUST

Independent Auditor’s Report to the Trustees (continued)

For the Year Ended 31 July 2025

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters in relation to which the Charities Accounts (Scotland) Regulations 2006 require us to report to you if, in our opinion:

Responsibilities of trustees

As explained more fully in the trustees’ responsibilities statement set out on page 5, the trustees 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 trustees 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 trustees are responsible for assessing the group 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 trustees either intend to liquidate the group or parent charity or to cease operations, or have no realistic alternative but to do so.

Auditor responsibilities for the audit of the financial statements

We have been appointed as auditor under section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005 and report in accordance with regulations made under 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 the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud, is detailed below.

As part of our planning process:

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THE MERCHANT COMPANY ENDOWMENTS TRUST

Independent Auditor’s Report to the Trustees (continued)

For the Year Ended 31 July 2025

The key procedures we undertook to detect irregularities including fraud during the course of the audit included:

Owing to the inherent limitations of an audit, there is unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognise the non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. The primary responsibility for the prevention and detection of irregularities and fraud rests with the members.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report

This report is made solely to the charity’s trustees, as a body, in accordance with Regulation 10 of the Charities Accounts (Scotland) Regulations 2006. Our audit work has been undertaken so that we might state to the charity’s trustees 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 anyone other than the charity and the charity’s trustees as a body, for our audit work, for this report, or for the opinions we have formed.

…………………………………………

Henderson Loggie LLP

Chartered Accountants Statutory Auditor

Henderson Loggie LLP is eligible to act as auditor in terms of section 1212 of the Companies Act 2006.

The Stamp Office, Level 5 10-14 Waterloo Place Edinburgh EH1 3EG

…………………………..….. 2025

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THE MERCHANT COMPANY ENDOWMENTS TRUST Group and Trust Statements of Financial Activities (incorporating an Income and Expenditure Account) For the year ended 31 July 2025

Endowments Trust Endowments Trust Group
Restricted Funds
2025 2024 2025 2024
Notes Unrestricted
Funds		 Foster
Fraser		 Russell &
Foster		 Endowments
Trust Total		 Total Total Total
£ £ £ £ £ £ £
Income:
Income from investments 3 558,349 3,961 7,688 569,998 684,995 618,913 566,895
Income from Charitable Activities 4 352,037 - - 352,037 328,116 352,037 328,116
Total income and endowments 910,386 3,961 7,688 922,035 1,013,111 970,950 895,011
Expenditure on:
Raising funds 5 (195,570) (2,556) (118) (198,244) (276,992) (202,932) (273,900)
Charitable activities 6 (590,462) - - (590,462) (723,795) (605,999) (798,282)
Total expenditure (786,032) (2,556) (118) (788,706) (1,000,787) (808,931) (1,072,182)
Net income before gains and losses 124,354 1,405 7,570 133,329 12,324 162,019 (177,171)
Realised (losses)/gains on investments 9b (432) - (1,600) (2,032) 10,597 (2,032) 10,597
Unrealised gains on investments 9b 107,435 7,852 23,331 138,618 176,897 138,618 176,897
Revaluation of investment properties 9a - - - - (130,000) - (130,000)
Realised gain on investment properties 9a - - - - - - 15,555
Fair value movement in subsidiary 9c 28,689 - - 28,689 (173,940) - -
Net (expenditure)/income 260,046 9,257 29,301 298,604 (104,122) 298,604 (104,122)
Reconciliation of funds:
Total funds brought forward 20,373,569 168,085 509,055 21,050,709 21,154,831 21,050,709 21,154,831
Total funds carried forward 20,633,615 177,342 538,356 21,349,313 21,050,709 21,349,313 21,050,709

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THE MERCHANT COMPANY ENDOWMENTS TRUST Group and Trust Balance Sheets as at 31 July 2025

Endowments Trust Endowments Trust Endowments Trust Group
Restricted Funds Restricted Funds 2025 2024 2025 2024
Notes Unrestricted Foster Russell & Foster Russell & Foster Endowments Trust Total Endowments Trust Total Total Total
Funds Fraser
£ £ £ £ £ £ £
Fixed Assets
Tangible Fixed Asset 8 5,480,422 - - 5,480,422 5,628,112 5,480,422 5,628,112
Investments
Property 9(a) 5,490,001 - - 5,490,001 5,490,001 5,730,001 5,730,001
Listed investments 9(b) 1,976,846 102,572 414,242 2,493,660 2,517,049 2,493,660 2,517,049
Investment in MCET Ltd 9(c) 5,488,139 - - 5,488,139 5,459,450 - -
Total Fixed Assets 18,435,408 102,572 414,242 18,952,222 19,094,612 13,704,083 13,875,162
Current Assets
Debtors 10 50,956 - - 50,956 162,098 50,956 169,488
Inter-company control account MCET 10 100,528 - - 100,528 100,528 - -
Cash at bank and in hand 2,112,116 74,770 124,114 2,311,000 2,356,253 7,698,611 7,712,646
Total Current Assets 2,263,600 74,770 124,114 2,462,484 2,618,879 7,749,567 7,882,134
Liabilities
Creditors: Amounts falling due within one year 11 (65,393) - - (65,393) (328,049) (77,213) (344,731)
Net current assets 2,198,207 74,770 124,114 2,397,091 2,290,830 7,672,354 7,537,403
Total assets less current liabilities assets 20,633,615 177,342 538,356 21,349,313 21,385,442 21,376,437 21,412,565
Creditors due after more than one year 12 - - - - (334,732) - (334,732)
Provisions for liabilities and charges 13 - - - - - (27,124) (27,124)
Total net assets 20,633,615 177,342 538,356 21,349,313 21,050,709 21,349,313 21,050,709
The funds of the charity
Non distributable investment property reserve 14 5,373,412 - - 5,373,412 5,373,412 6,186,371 6,186,371
Revenue reserve 14 9,155,727 57,122 72,587 9,285,436 9,123,418 8,472,477 8,310,460
Endowed Reserve 14 6,104,476 120,220 465,769 6,690,465 6,553,879 6,690,465 6,553,879
Total charity funds 20,633,615 177,342 538,356 21,349,313 21,050,709 21,349,313 21,050,709

Approved and authorised for issue on behalf of the Trustees on

……………. 2025

Grant Macrae (Chairman) Grant Macrae - 2026-01-05, 11:48:46 UTC

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THE MERCHANT COMPANY ENDOWMENTS TRUST Group and Trust Statement of Cash Flows At as 31 July 2025

Trust Trust Group Group
2025 2024 2025 2024
£ £ £ £
Cash flows from operating activities
Net income/(expenditure) 298,604 (104,122) 298,604 (104,122)
Gains on investments (136,586) (187,494) (136,586) (187,494)
FV movement in subsidiary (28,689) 173,940 - -
FV Movement in properties - 130,000 - 130,000
Decrease/(increase) in debtors 111,142 (20,547) 118,532 70,582
(Decrease)/increase in creditors (196,825) 127,802 (201,686) 83,717
Depreciation charges 147,690 147,688 147,690 147,688
Gains on sale of current asset investments - - - (15,555)
Dividends and interest (101,850) (99,247) (208,075) (131,943)
__ __ __ __
Cash provided by/(used in) operating activities 93,486 168,020 18,479 (7,127)
Cash flows from investing activities
Dividends and interest 101,850 99,247 208,075 131,943
Proceeds from sale of current asset investments - - - 5,015,555
Payments to acquire investments (1,256,063) (539,422) (1,256,063) (539,422)
Proceeds from the sale of investments 1,365,809 512,966 1,365,809 512,966
__ __ __ __
Cash provided by /(used in) investing activities 211,596 72,791 317,821 5,121,042
Cash flows from financing activities
Repayment of bank loans (400,561) (65,832) (400,561) (65,832)
__ __ __ __
Cash used in financing activities (400,561) (65,832) (400,561) (65,832)
__ __ __ __
Net cash movement in the year (95,479) 174,979 (64,261) 5,048,083
Cash and cash equivalents at start of the year
Cash at bank and in hand 2,356,253 2,140,035 7,712,646 2,623,324
Cash held in investment portfolio 195,828 237,067 195,828 237,067
__ __ __ __
2,552,081 2,377,102 7,908,474 2,860,391
__ __ __ __
Cash and cash equivalents at end of the year
Cash at bank and in hand 2,311,000 2,356,253 7,698,611 7,712,646
Cash held in investment portfolio 145,602 195,828 145,602 195,828
__ __ __ __
2,456,602 2,552,081 7,844,213 7,908,474

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THE MERCHANT COMPANY ENDOWMENTS TRUST Notes to the Financial Statements For the year ended 31 July 2025

1 Accounting Policies

The following accounting policies have been applied consistently in dealing with the items which are considered material in relation to the charity’s financial statements.

a) Basis of preparation

The financial statements have been prepared under the historical cost accounting rules, and in accordance with applicable accounting standards, as modified by the revaluation of UK listed investments and investment properties. The charity is a Public Benefit Entity and the financial statements comply with the charity’s Constitution, the Statement of Recommended Practice (SORP) FRS 102 Accounting and Reporting by Charities, the Charities and Trustee Investment (Scotland) Act 2005 and the Charities Accounts (Scotland) Regulations 2006.

The financial statements are prepared in sterling, which is the functional currency of the entity. Monetary amounts in these financial statements are rounded to the nearest £.

b) Basis of consolidation

The consolidated financial statements include the financial statements of the trust and of its subsidiary undertaking. The acquisition method of accounting has been adopted. Under this method the results of subsidiary undertakings acquired or disposed of in year are included in the consolidated statement of financial activities from the date of acquisition or up to the date of disposal.

c) Going concern

As recommended by the Financial Reporting Council, the trustees have prepared detailed budgets setting out the charity’s expected performance over 12 months from approval of the financial statements. On the basis of these projections and having considered the charity’s reserves and cash position, the trustees believe it is appropriate to prepare the financial statements on a going concern basis.

d) Income

Income is recognised when the charity has entitlement to the funds, when it is probable that the income will be received and the amount can be measured reliably. Donations and similar incoming resources are recognised when the charity is entitled to it, usually on receipt. Income from investments is accounted for when the charity is entitled to the income based on rental agreements in place.

e) Expenditure

All expenditure is included on an accruals basis and is recognised when there is a legal or constructive obligation to pay for the expenditure. The charity is not registered for VAT and accordingly costs are shown gross of irrecoverable VAT. Where directly attributable, expenditure is allocated to the relevant functional category.

Expenditure on raising funds includes the cost of investment management services and letting agency fees. Expenditure on charitable activities includes costs incurred by the charity in the letting of operational assets to the charity’s beneficiaries. It includes both direct costs and the indirect costs necessary to support these activities.

Support costs are allocated between governance costs and other support costs. Governance costs comprise those costs involving the public accountability of the charity and its compliance with regulations and best practice. They therefore include the costs of statutory audit. Other support costs relate to the administrative costs of running the charity and are allocated to charitable activities accordingly.

f) Taxation

The Trust is a recognised charity and has no liability to taxation. Deferred taxation (arising within the subsidiary) is provided in full in respect of taxation deferred by timing differences between the treatment of certain items for taxation and accounting purposes. The deferred tax balance has not been discounted.

g) Fixed assets

Properties classified as investment properties are not depreciated. Properties used as social housing for public benefit are not classified as investment properties but as fixed assets and are depreciated.

Depreciation is provided on all fixed assets on book cost at rates and bases calculated to write off the cost of each asset over its expected useful life as follows:

Heritable Property 2% Fixtures and Fittings 10%

Computer Equipment 33%

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THE MERCHANT COMPANY ENDOWMENTS TRUST Notes to the Financial Statements (continued) For the year ended 31 July 2025

1 Accounting Policies (continued)

h) Investment properties

Investment property is carried at fair value determined annually and derived from the current market rents and investment property yields for comparable properties, adjusted if necessary for any difference in the nature, location or condition of the specific asset. No depreciation is provided. Changes in fair value are recognised in the income and expenditure account.

Investments are a form of basic financial instrument and are initially recognised at their transaction value and subsequently measured at their fair value at the balance sheet date by reference to the Stock Exchange mid prices. Realised and unrealised gains and losses are charged or credited in the statement of financial activities. The charity has no complex financial instruments. The main form of financial risk faced by the charity is that of volatility in the investment markets due to wider economic conditions. Investment income is recognised when receipt is probable.

Cash comprises cash at bank and in hand and short-term liquid investments with a short-term maturity date.

The Trust has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the Trust's balance sheet when the Fund becomes party to the contractual provisions of the instrument.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are measured at transaction price including transaction costs.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Trust after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors that are classified as debt, are recognised at transaction price. Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current

The Trust contributes to a defined benefit pension scheme, details of which are held in note 15 to the financial statements.

m) Reserves

General reserve - The general reserve is held for meeting the objectives of the Trust. Any year end surplus or deficit is applied to the general reserve.

Endowment reserve - Investments are held within an endowment reserve, income from which is used in furtherance of the Trust’s activities. Unrealised gains and losses on investments are applied to each fund within the endowment reserves on the same proportion of investments held.

2 Purpose of the Trust Fund

In terms of the Merchant Company Order Act 1996 (Part VI) the free income of the Trust shall, after expenses of management and pensions of employees, be applied to the payment of annual ex gratia pensions or gifts of money and in providing lodging, clothing, food, fuel, furnishings and other benefits to qualifying persons.

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THE MERCHANT COMPANY ENDOWMENTS TRUST Notes to the Financial Statements (continued)

For the year ended 31 July 2025

3 Income from investments

3 Income from investments
Trust Trust Group Group
2025 2024 2025 2024
£ £ £ £
Dividends 49,005 43,176 49,005 43,176
Distribution from subsidiary 164,581 338,520 - -
Interest 52,844 56,071 257,080 88,767
Commercial letting income 303,568 247,228 312,828 434,953
__ __ __ __
569,998 684,995 618,913 566,895
======== ======== ======== ========
4 Income from charitable activities
Trust Trust Group Group
2025 2024 2025 2024
£ £ £ £
Domestic letting income 352,037 328,116 352,037 328,116
======= ======== ======= ======
5 Expenditure on raising funds
Trust Trust Group Group
2025 2024 2025 2024
£ £ £ £
Professional fees for letting 14,429 36,746 14,429 36,746
Other costs of letting 130,457 169,124 132,301 171,276
_ _ _ _
Total direct costs 144,886 205,870 146,730 208,022
Support costs (note 7) 38,558 57,121 41,402 51,877
_ _ _ _
Total letting costs 183,444 262,991 188,132 259,899
Investment management fee 14,800 14,001 14,800 14,001
_ _ _ _
198,244 276,992 202,932 273,900
======= ======= ======= ======
6 Expenditure on charitable activities
Trust Trust Group Group
2025 2024 2025 2024
£ £ £ £
Professional fees – Cyrenians 47,753 47,341 47,753 47,341
Other professional fees 6,107 23,212 6,142 71,863
Direct support costs – JMH & Little Road 53,294 43,197 46,798 43,351
Depreciation 147,688 147,688 147,688 147,688
Grants to beneficiaries 210,456 359,717 210,456 359,717
__ __ __ __
Total direct costs 465,298 621,155 458,837 669,960
Support costs (note 7) 107,344 90,190 115,263 106,342
Governance costs – audit fee 10,980 9,450 20,180 16,785
Governance costs – non-audit fees 6,840 3,000 11,719 5,195
__ __ __ __
590,462 723,795 605,999 798,282
======= ======== ======= =======

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THE MERCHANT COMPANY ENDOWMENTS TRUST

Notes to the Financial Statements (continued) For the year ended 31 July 2025

7 Support costs

Support costs
Trust Trust Group Group
2025 2024 2025 2024
£ £ £ £
Costs recharged by the Merchant Company Costs recharged by the Merchant Company 133,888 119,765 144,598 130,475
Bank charges 343 404 396 602
Loan interest 11,671 27,142 11,671 27,142
__ __ __ __
Total support costs 145,902 147,311 156,665 158,219
======== ======== ======== ========
Allocated on a pro rata basis as follows; Allocated on a pro rata basis as follows; Allocated on a pro rata basis as follows;
Raising funds 38,558 57,121 41,402 51,877
Charitable activities 107,344 90,190 115,263 106,342
__ __ __ __
145,902 147,311 156,665 158,219
======== ======== ======== =======
Fixed assets
JMH JMH Little Road,
Heritable Furniture Liberton, Trust Group
Property and Phase 1&2 2025 2025
Fittings Heritable Computer Computer
Property Equipment Equipment
£ £ £ £ £ £ £
Cost
At 31 July 2024 3,499,038 5,748 3,885,349 1,331 1,331 7,391,466 7,391,466
Additions - - - - - - -
__ __ __ __ __ __ ___
At 31 July 2025 3,499,038 5,748 3,885,349 1,331 1,331 7,391,466 7,391,466
__ __ __ __ __ __
Depreciation
At 31 July 2024 979,732 5,748 776,543 1,331 1,331 1,763,354 1,763,354
Charge for the year 69,981 - 77,707 - - 147,688 147,688
__ __ __ __ __ __
At 31 July 2025 1,049,712 5,748 854,253 1,331 1,331 1,911,044 1,911,044
__ __ __ __ __ __
Net book value
At 31 July 2025 2,449,326 - 3,031,096 - - 5,480,422 5,480,422
======== ======= ======== ======= ======= =======
At 31 July 2024 2,519,306 - 3,108,806 - - 5,628,112 5,628,112
======== ======= ======= ======= ======= ======= =======

8 Fixed assets

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THE MERCHANT COMPANY ENDOWMENTS TRUST Notes to the Financial Statements (continued) For the year ended 31 July 2025

9 Investments

Investment properties Trust Trust Group Group
2025 2024 2025 2024
£ £ £ £
Fair value
Sir William Fraser Homes 2,940,000 2,940,000 2,940,000 2,940,000
Drumsheugh shops and car park 2,550,000 2,550,000 2,550,000 2,550,000
Feu 1 1 1 1
Hillside Street - - 240,000 240,000
___ ___ ___ ___
5,490,001 5,490,001 5,730,001 5,730,001
======== ======== ======== ========
Costs
Sir William Fraser Homes 74,283 74,283 74,283 74,283
Drumsheugh shops and car park 188,155 188,155 188,155 188,155
Feu 1 1 1 1
Hillside Street - - 82,500 82,500
__ __ ___ ___
262,439 262,439 344,939 344,939
======== ======== ======== ========

The market value is determined by the Master’s Court on the advice of property professionals.

Group & Group &
Investments held on recognised Trust Trust
Stock Exchange – held in the UK Investments Cash 2025 2024
£ £ £ £
Value of portfolio at 31 July 2024 2,321,220 195,828 2,517,049 2,344,339
Purchases 1,256,063 (1,256,063) - -
Disposal proceeds (1,376,987) 1,376,987 - -
Realised gains/(losses) (2,032) - (2,032) 10,597
Unrealised gains/(losses) 138,618 - 138,618 176,897
Management fee - (14,800) (14,800) (14,001)
Dividend movement - 45,503 45,503 50,760
Cash movement 11,176 (201,853) (190,677) (51,541)
___ ___ ___ ___
Value of portfolio at 31 July 2025 2,348,058 145,602 2,493,660 2,517,049
========= ========= ========= =========

The portfolio has been managed by Cazenove Capital Management Limited and they are invested in accordance with the objectives agreed by the Trustees. All investments are carried at their fair value. Investments in equities and bonds are traded in quoted public markets. Holdings in multi-asset funds are at bid price. The basis of fair value for quoted investments is equivalent to market value, using the bid price. Asset sales and purchases are recognised at the date of trade at their transaction value.

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THE MERCHANT COMPANY ENDOWMENTS TRUST

Notes to the Financial Statements (continued)

For the year ended 31 July 2025

9 Investments (continued)

The main risk to the trust from financial instruments lies in the combination of uncertain investment markets and volatility to growth and incomes. The Trust’s investment strategy is to maximise income and ensure capital growth of funds in excess of inflation each year and as such the portfolio is invested in medium to high risk stocks. Liquidity risk is anticipated to be low as all assets are traded in markets with good liquidity and high trading volumes and this is expected to continue. The Trust manages these investment risks by retaining expert advisors to manage its investment portfolio. The investment policy is reviewed annually to ensure the protection of the real value of the portfolio in the longer term.

2025 2024
The portfolio is invested in:
Equities and bonds 94.5% 93.4%
Cash 5.5% 6.6%
_ _
100% 100.00%
======= ======

(c) Investment in subsidiary

MCET Ltd (SC215839) is a wholly owned subsidiary which owns property at Hillside Street, Edinburgh. The profit generated by the company, will be used in accordance with the policy of the Endowments Trust. The results of MCET Limited included within the group results for the year are summarised below:

2025 2024
£ £
Turnover 213,495 187,725
======= =======
Profit/(loss) for the year 193,270 164,581
Donation to parent company (164,581) (338,520)
__ __
28,689 (173,939)
__ __
Net assets 5,488,139 5,459,450
======== ========
2025 2024
£ £
Investment properties 240,000 240,000
Net current assets 5,275,263 5,246,574
Provisions for liabilities (27,124) (27,124)
__ __
Net assets 5,488,139 5,459,450
======== ========
Represented by:
Share capital 4,129,207 4,129,207
Distributable reserve 1,358,932 1,330,243
___ ___
Total shareholders’ funds 5,488,139 5,459,450
============ =======

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THE MERCHANT COMPANY ENDOWMENTS TRUST Notes to the Financial Statements (continued) For the year ended 31 July 2025

10 Debtors

Trust Trust Group Group
2025 2024 2025 2024
£ £ £ £
Sundry debtors 50,956 162,098 50,956 169,488
Amounts due from subsidiary 100,528 100,528 - -
__ __ _ _
151,484 262,626 50,956 169,488
======== ======== ======== ========
11 Creditors: amounts falling due within one year
Trust Trust Group Group
2025 2024 2025 2024
£ £ £ £
Deferred income - 62,325 - 62,325
Audit fee accrual 11,520 9,450 23,340 18,645
Sundry creditors 53,873 190,445 53,873 197,932
Loan due to Royal Bank of Scotland - 65,829 - 65,829
_ _ _ _
65,393 328,049 77,213 344,731
======= ======== ====== ========
Trust Trust Group Group
2025 2024 2025 2024
Deferred income £ £ £ £
Deferred income at 1 August 2024 62,325 57,708 62,325 57,708
Resources deferred during the year - 62,325 - 62,325
Amounts released from previous year (62,325) (57,708) (62,325) (57,708)
__ __ __ __
- 62,325 - 62,325
======== ======== ======= ========
12 Creditors: due after more than one year 12 Creditors: due after more than one year
Group & Trust Group & Trust Group & Trust
2025 2024
£ £
RBS -Bank loan - 334,732
========= ========

In the financial year to 31 July 2009 the Endowments Trust borrowed £1.3m from the Royal Bank of Scotland, to assist with the development of sheltered housing flats (Jack Martin House) for the Frail and Elderly at Brandfield Street, Edinburgh. The loan was repayable in 240 monthly instalments starting September 2010, the last of which was due in August 2030. The loan was wholly repaid in February 2025.

Analysis of debt Group & Trust Group & Trust
2025 2024
£ £
Due within 1 year - 65,829
Due between 1 and 2 years - 65,832
Due between 2 and 5 years - 197,496
Due after 5 years - 71,404
__ __
- 400,561
======== ========

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THE MERCHANT COMPANY ENDOWMENTS TRUST Notes to the Financial Statements (continued) For the year ended 31 July 2025

13 Provision for liabilities and charges

13 Provision for liabilities and charges 13 Provision for liabilities and charges
Trust Trust Trust
Group		 Group
Group
2025 2024 2025 2024
Movement on deferred tax provision
At 1 August 2024 - - -
27,124		 27,124
Movement in year - - -
-		 -
__ __ _
_		 __
At 31 July 2025 - - -
27,124		 27,124
======== ======== ======== ========
14 14
Funds
 Unrestricted
 Restricted
General Fund General Fund
Foster		 Russell Endowments Group
Fraser & Foster Trust Total Total
2025 2025
2025		 2025 2025 2025
£ £
£		 £ £ £
Non-distributable property
reserve
At beginning of year 5,373,412 5,373,412
-		 - 5,373,412 6,186,371
__ __
__		 __ __ __
At end of year 5,373,412 5,373,412
-		 - 5,373,412 6,186,371
======= =======
======		 ====== ====== ======
Revenue Reserve
At beginning of year 9,002,684 9,002,684
55,717		 65,017 9,123,418 8,310,460
Incoming resources 910,386 910,386
3,961		 7,688 922,035 970,950
Outgoing resources (786,032) (786,032)
(2,556)		 (118) (788,706) (808,931)
Profit on investment in subsidiary 28,689 28,689
-		 - 28,689 -
__ __
__		 __ __ __
At end of year 9,155,727 9,155,727
57,122		 72,587 9,285,436 8,472,477
====== ======
======		 ====== ====== ======
Endowed reserve
At beginning of year 5,997,472 5,997,472
112,368		 444,038 6,553,878 6,553,878
Movement in year 107,003 107,003
7,852		 21,731 136,586 136,586
__ __
__		 __ __ _
At end of year 6,104,476 6,104,476
120,220		 465,769 6,690,465 6,690,465
====== ======
======		 ====== ====== ======
Total funds at end of year 2025 20,633,615 20,633,615
177,342		 538,356 21,349,313 21,349,313
======== ========
======		 ====== ======== ======

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THE MERCHANT COMPANY ENDOWMENTS TRUST Notes to the Financial Statements (continued) For the year ended 31 July 2025

14
Funds(continued)
General Fund Foster Russell & Endowments Group
Fraser Foster Trust Total Total
2024 2024 2024 2024 2024
Non-distributable property reserve
At beginning of year 5,503,412 - -
-		 5,503,512 6,300,816
Revaluation of properties in year (130,000) - -
-		 (130,000) (130,000)
Net gains/(losses) on investment - - -
-		 - 15,555
properties
__ __ _
_		 __ __
At end of year 5,373,412 - -
-		 5,373,412 6,186,371
======= ====== ======
======		 ====== ======
Revenue Reserve
At beginning of year 9,173,084 52,837 52,837
59,114		 9,285,035 8,487,631
Incoming resources 1,001,807 2,991 2,991
8,313		 1,013,111 895,011
Outgoing resources (998,267) (111) (111)
(2,410)		 (1,000,788) (1,072,182)
Loss on investment in subsidiary (173,940) - -
-		 (173,940) -
__ __ _
_		 __ __
At end of year 9,002,684 55,717 55,717
65,017		 9,123,418 8,310,460
====== ====== ======
======		 ====== ======
Endowed reserve
At beginning of year 5,846,738 107,331 107,331
412,315		 6,366,384 6,366,384
Movement in year 150,734 5,037 5,037
31,723		 187,494 187,494
__ __ _
_		 __ _
At end of year 5,997,472 112,368 112,368
444,038		 6,553,878 6,553,878
====== ====== ======
======		 ====== ======
Total funds at end of year 2024 20,373,569 168,085 168,085
509,055		 21,050,709 21,050,709
====== ====== ======
======		 ====== ======

General Funds

These funds are used to provide assistance by way of cash grant, pension, gift of appliances, provision of accommodation and other support to qualifying persons who have lived or worked in the City of Edinburgh or the County of Midlothian. These include running the Sir William Fraser Homes (The Fraser Trust), Spylaw Street Cottages and Jack Martin House.

The Russell and Foster Endowment

The Russell and Foster Endowment was formed from the estate of the late Henry W Russell in 1954. It is required that the fund is administered by the Endowments Trust as a separate fund. The free income is applied by the Trust in payment of annual pensions to respectable indigent Protestant men and women.

The Sir John Foster Fraser Bequest

The Foster Fraser Bequest is required to be administered as a separate fund by the Endowments Trust. No payments were made during the year. The free income is applied in helping people “engaged in the literary profession, scientists, artists, musicians, educationalists and other cultural Scottish people who have fallen on hard times.”

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THE MERCHANT COMPANY ENDOWMENTS TRUST Notes to the Financial Statements (continued)

For the year ended 31 July 2025

15 Pensions

The Endowments Trust has no active members of the Merchant Company Retirement Benefits Scheme, a defined benefits scheme. The assets of the scheme are held separately from those of the Royal Company of Merchants of the City of Edinburgh in an independent administered fund. The scheme is funded and at the last FRS 102 valuation by Mercer, as at 31 July 2025 shows a surplus. At the triennial valuation, as at 31 July 2024, a funding level of 99% was confirmed. During the year, the Trust made a contribution towards the past service deficit of £nil (2024 £nil). On the 31 October 2011, the scheme was closed to future accrual.

The following information is based on the FRS 102 valuation of the fund at 31 July 2025:-

2025 2024
% p.a % p.a
Price Inflation rate (RPI) 2.90 3.10
Price Inflation rate (CPI) 2.65 2.85
Salay increase rate 3.90 4.10
Discount rate 5.70 4.90

Life expectancy is based on the CMI Mortality Projections Model 2022 converging to 1.25% p.a. Based on these assumptions, the average future life expectancies at age 65 are summarised below:

Males Females
Current pensioners 20.2 23.1
Future pensioners 21.6 24.6
The net pension (deficit)/asset was:
2025 2024
£000 £000
Estimated employer assets 1,126 1,206
Present value of scheme liabilities (687) (738)
Effect of asset ceiling (439) (468)
Net pension (deficit)/asset - -
========= ========

An asset ceiling adjustment has been made to prevent the Company recognising a pension asset as any surplus in the scheme belongs to the members.

22

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THE MERCHANT COMPANY ENDOWMENTS TRUST Notes to the Financial Statements (continued) For the year ended 31 July 2025

15 Pensions (continued)

Reconciliation of fair value of scheme assets:

2025 2024 2024
£000 £000
Opening fair value of scheme assets 1,206 1,153
Expected return on assets 57 58
Contributions by employer - -
Actuarial gains/(losses) (66) 54
Estimated benefits paid (61) (48)
Administration expenses paid from assets (10) (10)
1,126 1,206
========= ========
Reconciliationof defined benefit obligation:
2025 2024
£000 £000
Opening defined fair value obligation 738 738
Interest cost 37 37
Actuarial gains/(losses) 12 12
Estimated benefits paid (48) (48)
687 738
========= ========
16 Financial instruments
Trust Trust Group Group
2025 2024 2025 2024
Carrying amount of financial assets
Assets measured at fair value through profit and 7,983,663 8,007,050 8,223,663 8,247,050
loss
======== ======== ======== ========

Financial assets measured at fair value through profit and loss represent listed investments and investment properties

17 Related party transactions .

Some staff and overhead expenses of the Trust are met by the Royal Company of Merchants of the City of Edinburgh and are recharged. The value of the recharge during the year was £133,888 (2024: £103,423). At the year end the balance due to the Royal Company of Merchants of the City of Edinburgh was £720 (2024: £720).

The Trust’s subsidiary, MCET Limited, donated funds of £164,581 (2024: £338,520) during the year. The amount due to the Trust at the year end and included within debtors was £nil (2024: £100,528).

During the year no trustees received any remuneration (2024: £nil) or any reimbursement of expenses (2024: £nil).

18 Ultimate controlling party

The charity is constituted under the Edinburgh Merchant Company Order Confirmation Act 1996 (Part IV) and is controlled by its elected trustees.

23

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THE MERCHANT COMPANY ENDOWMENTS TRUST Notes to the Financial Statements (continued) For the year ended 31 July 2025

19 Commitments

Operating lease - rental income

Future minimum rents receivable under non-cancellable operating leases are as follows

Trust Trust Group Group
2025 2024 2025 2024
Within 1 year 597,442 462,010 598,137 462,705
Within 2-5 years 1,771,954 1,894,619 1,771,954 1,894,619
Later that 5 years 3,890,803 3,381,417 3,890,803 3,381,417
___ ___ ___ ___
6,260,199 5,738,045 6,260,894 5,738,740
======== ======== ======== ========

24

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