2024-07-31-accounts

The Edinburgh Merchant Company Education Board

Annual report and financial statements

Charity number SC009747 31 July 2024

The Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Contents
	Page
Reference and administrative details	1
Report of the Board	3
Statement of Education Board’s responsibilities	21
Independent auditors’ report to the members of The Edinburgh Merchant Company	22
Education Board
Statement of financial activities (including income and expenditure account)	25
Balance sheet	26
Statement of cash flows	27
Notes to the financial statements	28

Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Report of the Board

The Edinburgh Merchant Company Education Board presents the annual report and financial statements for the year ended 31 July 2024.

Reference and administrative details

Principal office Merchants’ Hall

22 Hanover Street Edinburgh EH2 2EP

Chief Executive Officer and Secretary

Auditors

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

Bankers

The Royal Bank of Scotland plc 36 St Andrews Square Edinburgh EH2 2YB

Bank of Scotland plc The Mound Edinburgh EH1 1YZ

HSBC UK Bank plc 1 Centenary Square Birmingham B1 1HQ

Solicitors

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

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Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Reference and administrative details (continued)

Investment advisors

Baillie Gifford Carlton Square 1 Greenside Row Edinburgh EH1 3AN

Brooks MacDonald 80 Hanover Street Edinburgh EH2 1EL

Aubrey Capital Management 10 Coates Crescent Edinburgh EH3 7AL

Registered charity number SC009747

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Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Report of the Board

OBJECTIVES AND ACTIVITIES

The Edinburgh Merchant Company Education Board (the “Education Board”) is responsible for The Mary Erskine School and Stewart’s Melville College, including their combined Junior School, (Erskine Stewart’s Melville Schools or ESMS) and George Watson’s College (GWC) (the “Schools”). The Merchant Company Education Board endowments are held and administered for the purposes of the provision of education at the Edinburgh Merchant Company schools, their maintenance and management and the provision of financial assistance to a proportion of their pupils.

In the Schools, academic achievement is consistently high and extra-curricular activities thrive. The Schools help to shape future generations of business and professional people for Edinburgh, Scotland and the wider world. The Schools have evolved from hospitals for orphans and destitute children into day schools which provide high quality education for boys and girls in Edinburgh.

Scotland’s long-term economic prosperity depends on the quality of young people attracted to careers in commerce and industry. The Education Board Schools aim to develop grounded, resilient and accomplished children. For those children to have strong values who go out into the community and the world equipped to lead full and happy lives with strong commitments to sustainability, diversity, inclusivity, with an ambition to be the best they can be.

The Royal Company of Merchants of The City of Edinburgh (the “Merchant Company”) is informally associated with the Education Board and the Schools through a longstanding historical connection and more tangibly through the appointment of the Chair and Vice Chair of the Education Board, the appointment of members from the Master’s Court to the Governing Councils of the Schools; and the use of the Merchant Company livery in the Schools’ crests. The Merchant Company also provides some centralised administrative and secretarial services to the Education Board and administration of a pensions scheme for certain employees.

There has been no change in the purposes since the last report. The activity of the Education Board and its committees comply with the current constitution, The Edinburgh Merchant Company Education Board Scheme 2011 dated 3 November 2011, the standing orders and rules drawn up under the Scheme and current statutory requirements.

Charitable Purposes

The charitable purposes of the Education Board are:

1. The advancement of education, particularly the education and advancement of children and young people.

2. The advancement of the arts, heritage, culture and science.

3. The advancement of public participation in sport.

4. The provision of recreational facilities, or the organisation of recreational activities, with the object of improving the conditions of life for the person for whom the facilities or activities are primarily intended; and

5. The advancement of citizenship or community development.

The central purpose of the Education Board through the Schools is the advancement of education with the broader aim of contributing to the wider community of Edinburgh by enabling participation in a wide range of sporting, recreational and educational activities. The main activity undertaken continues to be the provision of education to children from the ages of 3-18. The Schools offer sector-leading, rounded education, with a broad curriculum, strong academic results, comprehensive pastoral care and a varied and extensive range of cocurricular activities. This all-round approach gives every student the opportunity to excel.

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Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Report of the Board (continued)

The main strategy for meeting this central purpose is to continue to provide excellent high-quality education which allow pupils the opportunity to attain the highest academic qualifications and also provide pupils with a rounded education. In support of the strategy the Schools each have their own stated vision and values which are consistent with the principles of the Education Board.

Pupil numbers at the schools in August 2024 were down by more than 4% at ESMS and more than 2% at GWC on the previous year. The financial strategy of the Schools over the next three to five years is based on promoting our offer more actively, reducing costs, generating more non fee income and, where possible, providing financial support to families unable to afford to pay school fees. The introduction of VAT on private school fees from 1 January 2025 is resulting in a slowdown in pupil recruitment especially in the junior years.

The delivery of the charitable purposes and the Schools’ visions and values are supported through the following school strategies:

Education, development and wellbeing

• Ongoing review of the schools’ academic syllabus and monitoring performance in external public examinations in comparison with national averages and other independent schools.

• Ongoing development of learning and teaching initiatives supported by in-service training and selfevaluations of different parts of the schools based on The Scottish Executive’s “How Good Is Our School” quality indicators and/or other means of self-evaluation.

• Ongoing review of co-curricular provision taking into account feedback from staff, parents and pupils.

• Continuing to promote a culture of support, endeavor and achievement with pupils, parents and staff.

• Wider Community

• Promoting involvement with the wider community with activities and work with challenged and disadvantaged cohorts.

• Promoting a culture of citizenship, active participation in charitable ventures and charitable giving.

• Facilities

• Ongoing maintenance and development of the property and facilities of the Schools.

• Providing the opportunity for members of the community to access the excellent sporting and recreational facilities of the Schools.

Medium to long term aims of the Education Board include:

• To continue to be financially sustainable as the Schools adapt to the new economic reality after the imposition of VAT on school fees.

• To continue to evolve our Schools curriculum and co-curricular activities to provide for the advancement of education, development and wellbeing of our people.

• To continue to deliver an outstanding, well-rounded education, to a diverse group of children and strengthen our Schools development and integration with the community.

• Through continued commitment to grow our public benefit partnerships and initiatives including our bursaries.

The Education Board and the Schools use various criteria for measuring success including academic success, sporting achievements and involvement and participation by pupils and parents in wider school activities and initiatives. In addition there is some monitoring of the number and type of community groups and clubs using the Schools’ facilities. The Schools’ medium to long term development plans and short-term priorities are reviewed annually measuring outcomes against targets set in the previous period.

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Edlnburgh Merchant Company Educaoon Board Annual report and fina￿141 Statements 31 July 2024 Report of the Board (continued) FUTURE PLANS The Education Board is committed to the delivery and development of exceptional. well-rounded, education in the Schools and maintaining the delivery of the charitable purposes. The imposition of VAT on independent school fees from January 2025 and the likely reduction in pupil numbers will have a signnlcant effect on the Schools and is being prioritised by the Education Board and Schools in our combined planning and focus. The strategic targets and plans are being designed lo encompass all our current risks including the VAT risk. alongside the current fijture workstreams, to ensure coherence and to maintain delivery of the charitable purposes into the medium and long term. The Education Board aims to put the Schools on a sounder financing footing for the future. There are a number of external financial pressures that are being imposed on independent schools and so managing costs and growng revenue from both fees and polentialty other sources has been given the highest priority by the Education Board. We have appointed a new Principal of George Watson's College, Lisa Ke￿ previous principal of Gordonstoun. who succeeded Melvyn Roffe in August 2024. The Education Board is looking at developing plans- To develop a new strategic plan. To undertake a comprehensive review of the organisational and govemance structures of the Education Board and the Schools. To expand the activities of the Schools to maximize the relum to the Schools as well as developing other income streams so that the Schools can reduce their dependency on fee income. To eonducl a eomprehensive review of ils cost base and operatk)ns to ensure the Sehools are operating in as eost effective a manner as possible. ESMS announced in October 2024 that its two Senior Schools, The Mary Erskine School and Stewart's Melville College will merge in August 2026, to fomi one co*ducalional Senior School. It wll operate on the Queensferry Road site, and the combined Junior School will operate on the Ravelston site. The school will be renamed Erskine Stewart Mefville. PUBLIC BENEFIT Widening Access The Education Board, through the Schools, provides public benefft by widening acce5S to those who would otherwise not be able lo afford the school fees, and by actNities to promote links lo the local and national communty. Access to the education and faulit￿5 offered by the Schoo15 is not restricted to those who can afford the school fees. In the Schools wider access was achieved through the di%bursement of £3,695,868 (2023.. £4,757,035) in means tested financial assistance lo 357 pupi1512023= 469)- This represented 3.950/012023.. 6.50AI of ESMS and 6.10kn12023.' 6.1%) of GWC of fees receivable. 6.8% of ESMS pupils and 7.1¥0 of GWC pupils in the Schools received means tested financial assistance in the year. Means tested flnanclal asslstance Schools Reimbursement Numbers of Beneficiaries 2024 2023 2024 2023 Erskine Stewart's Melville Schools £1,527.0333 £2,780,0003 181 278 George Watson's College £2,168,835 £1.977.035 176 191 Totals £3,695,868 £4,757,035 357

Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Report of the Board (continued)

1 ESMS’s policy is to provide means-tested bursary funding where practicable. Some means-tested support is funded through the Melville College Trust and Access to Excellence; most of the support is provided from income.

2GWC is in the process of enhancing its Foundation Places programme to widen access further by positively facilitating applications from parts of the community that have not traditionally considered a Watson’s education.

3At ESMS this figure included £165,323 of short-term means-tested financial assistance to 56 pupils from families who had experienced a significant reduction in their income. In addition, the reason for the variance relates to a change in the number of children receiving assistance and the amount of remission per child.

Grant-making policy

Grants are made by the Governing Councils of the Schools to fund scholarships for gifted children and bursaries to widen access to include families from all financial backgrounds so that children have the opportunity to make the most of their intellectual, academic and other abilities. Awards are subject to applicants attaining the schools’ entry standards and the expectation that they will contribute to the wider life of the school. Academic awards are made on the basis of academic assessment and a scholarship examination and music awards are made on the basis of musical aptitude, application and performance. All the awards are subject to annual review of academic and general progress over the school session. Means tested awards are also subject to annual reassessment of parental means.

• The Schools offer means tested bursaries worth up to 100% of the tuition fee are available:

• to children entering any year group in the senior schools; and

• to children entering or currently in Primary 6 and 7 at George Watson’s College Junior School

• The Schools may provide means tested hardship assistance to parents of pupils of all age groups who have suffered a significant reduction in their financial circumstances.

• Additional assistance: At Erskine Stewart’s Melville Schools, grants are awarded from The Access to Excellence Pupils’ Fund to assist parents with the costs of school trips that might otherwise be beyond their means. At George Watson’s College, bursary awards also cover the cost of individual music tuition as well as the cost of curricular residential trips and additional assistance may be provided towards the cost of other trips and activities at the discretion of the Principal.

• At Erskine Stewart’s Melville Schools academic scholarships are offered to pupils entering the senior school.

• Music Scholarships and Music Tuition Awards are also available at both Erskine Stewart’s Melville Schools and George Watson’s College.

There are two separately controlled charities (neither of which is consolidated into these accounts) that support with assistance for pupils to attend the Schools: the Melville College Trust, which provides financial support towards the schools’ bursary programme and grants for projects to support both educational and extracurricular projects and the George Watson’s College Endowment Trust that provides donors with an alternative vehicle for funding Foundation Places.

Progress on initiatives

In addition to the main stated activities of the Schools, the Education Board encourages the Schools being part of the wider communities in which they are eager to participate. The Education Board supports activities to promote links to the local and national community and the Schools have developed and are developing many and varied connections, initiatives and partnerships. Community is a key tenet of both Schools. The benefits of these partnerships are mutual with staff gaining new experiences that extend into their teaching practice and pupils gaining a broader understanding of society.

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Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Report of the Board (continued)

This year the Schools have looked at how they can enhance their community programmes:

• The Erskine Stewart’s Melville Schools have appointed a part-time member of staff as their Community Engagement Lead to provide greater co-ordination and strategic direction for its community and society projects. The aim is that this individual will grow our community and social impact initiatives, strengthening our commitment to supporting and connecting with the local community. At the end of the academic year, external funding has been secured for a two-year fixed term post for a full time Community and Partnerships Manager to further drive this key strategic area. They will oversee the development and implementation of a new cross schools Community Engagement Strategy from academic year 24-25. This will see far greater engagement with local schools in the Craigroyston cluster and close working with charities dedicated to reducing community disadvantage in the Scottish Index of Multiple Deprivation 1&2 areas of North West Edinburgh.

• The schools are also already working with their affiliated sports clubs with an initiative to support disabled children in our community being able to access sporting and active opportunities. George Watson’s College has an Educational and Community Partnerships programme which is now embedded in the operation of the school and is facilitated and co-ordinated by the Education and Community Partnerships Manager. Working in partnership, George Watson’s College aims to ensure that its resources are applied to make an impact where they are most needed. The Community Engagement and Educational Partnerships Policy provides a policy framework for partnership activities undertaken by the programme.

Advancement of arts, heritage, culture and science

The Education Board through a range of activities provided by the Schools promote the advancement of arts, heritage, culture and science. Highlights from the year include the following initiatives:

Arts : The continued availability of the Erskine Stewart’s Melville Schools’ facilities to the wider community for evening, weekend, and school holiday use. Particularly the Tom Fleming Centre for the Performing Arts provides a venue for the practice of music, and drama and dance to the very highest levels. The aim is to make the Tom Fleming Centre accessible to a wide range of potential users who may otherwise not have access to a comparable facility. ESMS was recognised at the Independent School of the Year for Performing Arts, for its contribution to this area. George Watson's College again hosted the free Edinburgh based Caritas Lecture on a subject of Artificial Intelligence .

Heritage: The Archives at ESMS are currently undertaking a complete overhaul of their collection with the aim of creating a first fully comprehensive catalogue, with volunteers and staff involved in a 100% stock check of all items across the eight collections and three sites. The digitisation of the collection is also proceeding at a pace with more photographs and media files being reformatted for a digital audience. A growing digital collection naturally drives the development of a new virtual museum.

There has been a marked increase in visitors to the Archives this past year as more and more former pupils and members of the public have been taking advantage of the heritage services now being advertised to the school community posts. Onsite tours, exhibitions and presentations have all seen an increase in numbers as well as promoting more engagement with the staff and pupils in the classrooms and on school trips. Places on the Civic Trust’s ‘Doors Open Day 2023’ tours in September were booked out on both sites.

Academics and government institutions such as the National Archives and the National Museum of Scotland have also visited the collection for their own research projects and have found valuable primary sources for their study on our shelves. Our School Historian continues to provide extensive and detailed research material for classroom learning, local tours and school trips to the battlefields in Flanders and Holland. His work has inspired the creation of a Young Historians Club who take up the challenge of researching the less well-known aspects of their school’s history and heritage.

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Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Report of the Board (continued)

The heritage collection is now a key component for the Development Office who take full advantage of the material held in the Archives to reacquaint former pupils and staff with their schools. Our extensive community is bound by its shared heritage and sense of place and the Archives continue to strengthen this unique bond.

Heritage : George Watson’s College has a material role leading the educational project within The Eric Liddell 100 initiative which is the national celebration of the 100th anniversary of Eric Liddell’s achievements at the 1924 Paris Olympic Games. The intention is that educational resources will be made freely available to all schools in Scotland and elsewhere. George Watson’s College owns the Stewart Lockhart Collection, an internationally significant collection of Chinese and other East Asian art, artefacts and archival material.

The Swire Chinese Language Centre Edinburgh (SCLCE), a partnership led by James Gillespie’s High School and Boroughmuir High School with George Watson’s College, has been operating since 2016. Funded by the Swire Chinese Language Foundation, the aims of the programme are to increase access to high quality teaching of Mandarin and about 9,000 pupils have been taught to date, 22% of whom live in SIMD 1 or 2 areas. 35 schools have been involved in the programme and teaching provision is sufficiently embedded in a number of schools (from S1-S6) now enabling them to appoint their own teachers of Mandarin. The Centre is responsible for around 25% of all pupils presented for Mandarin National 5 certification in Scotland.

Science : A STEM Partnership initiative has seen George Watson’s College working alongside Castlebrae Community High School, Castleview Primary and Broomhouse Primary to develop Computing Science and the primary school coding curriculum. The initiative has sought to address some key strategic challenges in Computing Science, including the critical shortage of teachers which all schools experience but those in certain more challenged districts are vulnerable to. The fundraising for a three-year Edinburgh Computing Science and Engineering in Schools (ECSES) Programme, reached the point where it was possible to recruit a Computing Science teacher to work with both Castlebrae and GWC and to second a GWC Junior School teacher to work with Leith Primary School to initially support their coding curriculum development. Staff were in place to launch this project in August 2023. George Watson's College also sponsors up to five Arkwright Scholarships for pupils from state funded schools in the Edinburgh area. The Arkwright Scholarship Trust seeks to identify talented and committed 15 or 16 year old students to encourage them into engineering, technology, maths and science. The five scholars funded by George Watson's College have the opportunity to work within the school's flourishing Technology Department to support their aspirations.

Advancement of Public Participation in Sport

The Education Board through the Schools has established significant links within the local communities for the public participation in sport.

Inclusive Sports Initiatives

In collaboration with Stewart’s Melville FP Rugby Club, The Mary Erskine School has provided inclusive sports sessions for children and young adults with learning and physical disabilities in Edinburgh and beyond.

Through our ‘Leadership through Sport’ programme, over 70 Sports Leaders from The Mary Erskine School received training from Scottish Disability Sport on creating fun, adaptable multisport activities suitable for participants with diverse needs, including physical disabilities, learning disabilities, and sensory impairments.

ESMS pupils now run weekly multisport sessions for children from The Yard, Edinburgh. These sessions are pupil-led, with each pupil designing, demonstrating, and leading activities tailored to individual needs. This approach fosters strong bonds and meaningful engagement between pupils and participants, emphasising friendship, learning, and inclusion within a welcoming environment.

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Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Report of the Board (continued)

In partnership with SMRFC, students also organise quarterly disability sport events catering to children with a range of support needs. These events, which adapt traditional sports to accommodate various abilities, bring together children, sports leaders, parents, siblings, and staff. After a morning of inclusive activities, participants gather for a shared lunch, creating a sense of community and celebration.

During this year an extensive number of local sports clubs and groups continued to use the Sports Centres at The Stewart’s Melville College Playing Fields (Ferry Road), The Mary Erskine campus and the Stewart’s Melville College campus. During the year The Mary Erskine Sports Centre had 23,918 hours of community usage a small increase on compared to 23,757 hours in 2022/23.

In addition, George Watson’s College, has since 2021, been designated a Community Sports Hub by SportScotland. The Community Sports Hub brings together a number of sporting partnerships with the aim of improving access to sport and physical activity for the local community, building and linking with Edinburgh City Council’s priorities for physical activity. George Watson’s College provides facilities, coordinates activities and seeks external funding for additional costs, such as coaches. The Community Sports Hub aims to benefit all sections of the local community, not just children and young people. In response to feedback, plans are being developed to set up ‘walking’ or adapted sports to allow older people to continue to play sport and enjoy the social and emotional benefits that this brings.

Advancement of the Provision, and Organisation of Recreational Activities

The provision, and organisation, of recreational activities provides a material link to the people and communities in which the Schools operate and engage. During the year the Schools continued to provide activities which contributed to people and sports through the following key initiatives.

Erskine Stewart’s Melville Schools have continued to work with a number of independent providers to access the facilities during the school holidays to provide activities for young people and the community.

Erskine Stewart’s Melville Schools completed the tenth year of the Partnership Agreement with City of Edinburgh Council, whereby the schools took over the management and maintenance of playing fields located on the Ferry Road (the Stewart’s Melville College Playing Fields) on a 60-year lease, in exchange for the restoration of the previously derelict pavilion and continuing access by local clubs and schools. Under the agreement, Trinity Academy and St Thomas of Aquin’s High School pupils use the playing fields for rugby and football fixtures free of charge on a weekly basis. Inverleith Rugby Club, Holy Cross Cricket Club and Spartans Youth Section also use Arboretum Playing Fields, with letting charges fixed to Edinburgh Leisure rates.

George Watson’s College runs several sports programmes for the benefit of the surrounding Edinburgh schools:

• The Hockey Start programme provides hockey coaching to the cluster primaries of Gracemount High School, Firrhill High School and Leith Academy.

• The Cricket Start programme has a similar model for Firrhill cluster primaries.

• The Rackets Cubed programme is a charity that funds activities that increase access to racket sports. Working closely with Oxgangs Primary School, the programme has three strands: racket sport coaching (in our case squash), classroom based maths input and nutrition.

The Schools have extensive and significant Former Pupils Associations with affiliated sports clubs that promote co-operation between former pupils and staff and support the Schools. The objectives of the Clubs include encouraging engagement and participation in sports and other activities. The clubs are open to all and their members provide coaching to children from other schools as well as our Schools. The Watsonian Club also carries on a Benevolent Fund for the benefit of Watsonians and their dependants. The Watsonian Club has created a Community Choir, a LGBTQ+ Section and an BAME Section, thought to be the only such sections of any former pupils club in the UK.

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Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Report of the Board (continued)

George Watson’s College has received authorisation from the Ministry of Defence to establish a new Combined Cadet Corps in partnership with James Gillespie’s High School and Boroughmuir High School. When fully operational, the South Edinburgh Schools CCF will provide access to cadet activities for pupils from any school in south Edinburgh. This will also aid community cohesion by bringing pupils together from different schools and backgrounds.

Activities to promote links to the local and national community

The Education Board is particularly proud of the fund raising by the Schools and their pupils in support of those in need. Many pupils raise funds on their own initiative. The Schools support an extensive range of local and national charities as well as social initiatives. A huge number of our pupils were involved in community service within and out with the schools. Pupils, staff and parents are encouraged to work together to support school charity partners. Our schools collectively raised £97,496 in the year. Since 2019 George Watson’s College has formalised its approach to fundraising by establishing a Charity Committee and a Charities Policy. Through the Duke of Edinburgh Award Scheme the George Watson’s College pupils put in 5,343 hours of volunteering in the year to 31 March 2024, the social value of which is estimated at £28,209.

Protecting the environment is a key part of our society and at George Watson’s College the Senior School Eco Group has been working tirelessly to bring about a greater awareness of sustainability on the George Watson’s College campus and in the 2023/24 session they undertook many activities:

• They partnered with Another Way, a charity set up by a Cumbrian teenager to help people live more environmentally-friendly lives.

• They have developed and tested the Power of 10 app, providing feedback on the curricular materials that have been developed, as well as helping to improve the user experience to maximise impact. The greatest benefit of the app beside their rich suite of ready-made resources is the community forum aspect which will link pupil-led eco groups across the UK so they can share good practice and impactful action.

• Members of staff have teamed up with parents and friends of George Watson’s College to lead four Bike Bus routes for our Junior School pupils. This is a means to encourage pupils to use active travel, reduce emissions and minimise the number of cars travelling to and from school each day. The scheme has been so well received that we now have four routes operating on different days of the week.

At ESMS, this year marked the launch of our S4 Community Days, with 247 S4 students volunteering 988 hours during the post exam period in June across a range of local charities, including Pilton Youth & Children’s Project, Kids Love Clothes, and The Water of Leith Conservation Trust. Feedback from both students and charities was positive and there are plans in place to increase the scope of this programme in the coming academic year.

ESMS maintained its status as the highest contributor of Duke of Edinburgh Award volunteering hours among independent schools in Scotland. Over 18,000 hours were volunteered, generating a social value estimated by DofE at £42,485.

Since 2005, Stewart’s Melville College and The Mary Erskine School and the ESMS Junior School have built strong, long-term partnerships with schools and charities in Malawi, reinforcing Scotland’s historical ties with the country.

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Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Report of the Board (continued)

Stewart’s Melville College has established links with five primary schools and two secondary schools in the Mulanje region, providing funding for classroom refurbishment, teachers' salaries, solar power, and bursaries for secondary education. Annual student fundraising supports infrastructure projects, educational resources, and sustainability initiatives, such as the planting of 50,000 cedar saplings to combat deforestation. Former pupils continue to engage with Malawi, including through a microfinance initiative set up by a former pupil to support young female entrepreneurs. The school also maintains close links with Open Arms, which cares for vulnerable and orphaned children and works to reintegrate them into their communities. A member of the senior leadership team at Stewart’s Melville College is a director of African Lakes Philanthropy Ltd and a trustee of Open Arms.

The Mary Erskine School continues to play a key role in the development of the Edinburgh Girls’ High School in northern Malawi, supporting its growth into a well-established secondary school with 194 students. MES fundraising has contributed to the construction of classrooms, student hostels, staff housing, science labs, and essential infrastructure such as solar power and a reliable water supply. The schools maintain a strong cultural exchange, including reciprocal visits, and MES students have participated in lessons, development projects, and fundraising initiatives.

The ESMS Junior School also has an active partnership with Ekwendeni Primary School, raising funds to maintain digital learning resources and improve facilities for visually impaired pupils. The Malawi Club continues to support Ekwendeni through fundraising, equipment donations, and links with The Bananabox Trust.

Meanwhile, the Watson’s Malawi Partnership, a SCIO set up and run by a committee of parents, staff and pupils works strategically with partners in Malawi to leverage engagement of the School and wider communities in a spirit of respectful solidarity with people in Malawi. Amongst the most significant recent successes has been the establishment of two high quality netball courts which has encouraged the participation of women and girls in sport and has supported the success of the Malawian national netball squad.

During the year the Schools played a significant role in supporting the training of new teachers in Scotland. They act as centres for the training of student teachers from Moray House teacher training college and Strathclyde University, by providing placements and employing a number of teachers for their probationary year. The Schools also provided a number of members of staff to undertake the SQA roles of markers, setters, vetters, examiners, assessors and appeals assessors. Other colleagues supported course development with Education Scotland/SQA.

Notable external appointments included:

• Over the last three years, the Principal of George Watson’s College, Melvyn Roffe, has served as Chair Elect, Chair and Vice Chair of HMC, the Heads’ Conference. He was also a Director of the Independent Schools’ Council.

• Both Erskine Stewart’s Melville Schools and George Watson’s College are closely involved with the Scottish Council for Independent Schools (SCIS), a charity which supports education in Scotland. The Head of the Junior School of George Watson’s College and the Principal of Erskine Stewart’s Melville Schools, Anthony Simpson both serve on the Governing Board of SCIS.

Volunteers

No members of the Education Board nor any members of the Governing Councils of the Schools received any payment for the work they carried out for the charity in the year to 31 July 2024. In addition, a large number of former pupils, parents and other voluntary helpers assist the schools in supervising sports, school trips and other extra-curricular activities.

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Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Report of the Board (continued)

OPERATIONAL PERFORMANCE

Operational performance of the schools

The principal activity is to provide education for boys and girls from the ages of 3-18 at the Edinburgh Merchant Company schools, namely Erskine Stewart’s Melville Schools (The Mary Erskine School, Stewart’s Melville College and ESMS Junior School), and George Watson’s College. Average pupil numbers for each of the schools are shown below:

	2023/24	2022/23
The Mary Erskine School	767	772
Stewart’s Melville College	776	785
ESMS Junior School	1140	1,126
George Watson’s College	2,466	2,475

Demand for places at the Schools held up well during the year, but has softened since summer 2024, in anticipation of the imposition of VAT on school fees in January 2025. This trend is particularly marked for preschool to P3.

Erskine Stewart’s Melville Schools and George Watson’s College returned to a more familiar SQA examination diet in 2024, with the removal of all modifications put in place over the last few years to mitigate against the disruptions to learning due to COVID.

The results of the Schools against national averages are summarised below:

Examination	GWC A Pass Rate	MES A Pass Rate	SMC A Pass Rate	National A Pass Rate	GWC A - C Pass Rate	MES A-C Pass Rate	SMC A-C Pass Rate	National A - C Pass Rate
S4 National 5	73.00%	85.3%	75.0%	38.0%	95.50%	98.2%	96.2%	77.20%
S5 Higher	63.90%	70.9%	64.9%	30.3%	93.60%	98.0%	93.4%	74.9%
S6 Advanced Higher	54.70%	53.8%	50.0%	30.0%	90.10%	94.4%	89.9%	75.3%

Fundraising performance

At the Erskine Stewart’s Melville Schools, the Access to Excellence bursary fund received £160,080 of income. The capital value of the Access to Excellence bursary fund stood at £4,919,278 at year-end and the capital value of the Historic Endowment fund stood at £833,913. Both funds again made unrealised losses (1%), which are being closely monitored.

The George Watson’s Family Foundation received £1,065,034 of donations including legacy receipts and a further £106,962 of investment income in the year. Donation income also included grants from the Swire Foundation to fund the Swire Chinese Language Centre Edinburgh of £339,437. The total value of reserves of the Foundation, was £6,222,775 at year-end. The Foundation funds are used to provide financial assistance to families who would otherwise not be able to afford the school fees and to assist with the cost of capital development.

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Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Report of the Board (continued)

Investment performance

Investment performance is compared regularly against appropriate benchmark indices. In the year to 31 July 2024:

Erskine Stewart’s Melville Schools investments generated income of £212,697 a return of 3.7% based on the year end value of investments.

George Watson’s College’s investments generated income of £176,430, a return of 3.2% based on the year end value of investments.

FINANCIAL REVIEW

Results for the year

The year to July 2024 was another challenging one for the schools due to the impact of inflation and energy costs which affected expenditure. In the year to 31 July 2024 the Edinburgh Merchant Company Education Board had net expenditure of £480k after investment gains of £779k (2023: net expenditure of £752k after investment losses of £422k). The Schools have continued to reinvest in fixed assets with capital expenditure of £2.8m in the year (2023: £3.2m).

Gross income for the year totalled £85.0m (2023: £76.9m), of which tuition fees accounted for £75.8m (89% of the total) (2023: £68.6m (89%)), catering sales £3.09m (3.6%) (2023: £1.48m (1.9%)), After School Club fees £1.47m (1.7%) (2023: £1.2m (1.5%)) and rents and lettings £1.1m (1.2%) (2023: £1m (1.3%)). Surpluses generated on income and expenditure are applied to fund improvements to the schools’ buildings, facilities and equipment.

The Education Board approves the schools fees for Erskine Stewart’s Melville Schools and George Watson’s College following independent determination of the appropriate fee levels for the schools by their respective Governing Councils. School fees for the 2023/24 academic session rose by 15% at the Erskine Stewart’s Melville Schools and by 9% at George Watson’s College .

The average roll of the schools during the financial year was 5,149 (2023: 5,108). Demand for places at the schools remains high. There has been over-subscription in some year groups and the projection for the coming year is positive with a continuing high level of application for these places.

Reserves policy

The Schools budget to generate surpluses on income and expenditure in each financial year and these surpluses are generally applied to upgrade their property and facilities. At 31 July 2024, the Schools had reserves totalling £56.3m of which £38.9m was unrestricted, £13.9m was restricted and £3.2m was endowed. The balance of unrestricted reserves on the balance sheet does not represent free reserves because all of the value is tied up in property and fixed assets.

The Schools maintain cash balances to cover expenditure over the short term; cash and bank balances at 31 July 2024 totalled £16.5m (2023: £6.7m). The increase in the cash balance was predominantly due to fees being paid in advance.

13

Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Report of the Board (continued)

Investment policy

As at 31 July 2024 a sum of £11.3m (2023: £11.4m) was held in investments. £3.1m of these funds were endowed for the specific purpose of funding bursaries, scholarships and prizes. The management of the portfolio is based on long-term considerations, with policy directed towards achieving an appreciation in capital values, while at the same time aiming to generate a reasonable and growing level of income. This policy is reviewed annually.

Merchant Company defined benefit pension deficit

The trustees resolved on 17 August 1999 to close the defined benefit pension scheme to new entrants because the Merchant Company employers had resolved to offer an alternative money purchase scheme to all new employees and existing employees who had not entered this scheme.

The triennial valuation of the pensions scheme as at 31 July 2021 showed a funding level of 99%. An FRS102 actuarial valuation was carried out as at 31 July 2021 which showed that assets of the scheme covered the liabilities. An asset ceiling adjustment has been made to prevent the Education Board recognising a pension asset as any surplus in the scheme is not recoverable by the employer.

Following a consultation with members, the scheme was closed to future accrual with effect from 1 November 2011. Members were given the option of joining the money purchase scheme currently offered to other employees. The decision to close the scheme was accepted by all members.

Risk Management

The Education Board is responsible for the overall management of risks faced by the Education Board and the Schools. The Audit and Risk Committee of the Education Board reviews the risks faced by the Education Board at least every year. Each of the Schools maintains a separate Risk Register in which significant risks are recorded together with an assessment of the likelihood and impact of each risk on the school and the controls which are in place to mitigate risk. The Governing Councils and Senior Management Teams of the Schools formally review their Risk Registers at least three times each year and decide on any further actions or controls required to manage risk.

The Governing Councils of the Schools are also responsible for the continuing review and development of policies to ensure that the schools are managed with probity and efficiency, and regulations and guidelines for the welfare of pupils and staff are observed. Internal risks are mitigated through the application of these policies and the implementation of procedures for authorisation of all transactions and projects, and to ensure consistent quality of delivery across all elements of the schools’ operation. External risks are controlled or mitigated by a continuous review of the external environment and the on-going adjustment of the schools’ strategies, policies and procedures to anticipate and respond to changing circumstances.

14

Edlnburgh Merchant Company Educaoon Board Annual report and fina￿141 Statements 31 July 2024 Report of the Board (continued) The most signrficant risks faced by the Merchant Company Education Board and the Schools are shown below together with strategies and control measures for managing those risks= Risks Key strategies and con ro measures Significant fall in pupil numbers Strategic plans and fee strategies to keep school fees competitive and affordable folbwing the imposition of VAT on school fees from January 2025. On4Joing inveslrnenl in educational offering and facilities lo r•main competitive and comprehenswe marketing and adm￿$10￿$ strategies including for bursaries and short lerni finawd assistance. Failure to manage higher c03ts Ongoing review of all expenditure and of opportUn￿e8 for generating addthonal incorne and strategies for managing Ihe rnainlenance and upgrade of twilding5 and facilities. Annual budjeting and medium-lemi finanaal ￿annIng 3. Serious damage to the reputation of the Schools Cornprehensive procedures and Oicies for.. Safeguarding and Child Protècti<)n, Disciplinary, codès of eonduct for staff and pupils. Protection of Vulnerable Group5 IPVG) stheme. HeaNh nd Safety and IT security. Trainlng for staff. Fallur& of gov•rnane8 and managem&nt Sèloctlon and reten￿On of qualty staff, govemors and trust&as, comprèhanslvè commlttoè and roporllng strLKturès to provkla overslght, reportlng and accountabllty and rcbust succasslon planning for koy Indlvlduals. Appolntment of prof6ssk)nal, experl&ncod Indfvlduals to Ihè senlor managèmènt téams, sègragafjon of dutlès and authorisatlon rocasses and fflnanclal re rtln rocoss Changa projacts to be comprehansively planned and implemèntad wth project govemanc8 and the project structures and reporting to support agile dacision making Comprehensive management of risks by relevant t8ams and boards, appointment of professional staff to manage and administer change and ￿gaI and prOfe￿onal support and advice Fallur& to manago slgnificant changa The Education Board is satisffied that major risks faced by the Education Board and the Schools have been identrfEd and that adequate controls for those that can be treated are in place to reduce the likelihood andlor impact of each risk. The Education Board recognises that any system of eontrols can onty provide reasonable but not absolute assurance that risks have been adequately managed. STRUCTURE, GOVERNANCE AND MANAGEMENT Goveming Document The Education Board was ￿nStituted as a body corporate under the Edinburgh Merchant Company Endowments Order 1909 and is govemed by the provisicfis of the EdinEyJrgh Merchant Company Educationa Endowments Scheme 1960, as amended. On 3 November 2011, OSCR approved the Merchant Company Education Board's new Constitution. The Education Board is registered as a charity ￿1th the Office of the Scottish Charity Regulator under charity reference numlxr SC009747. 15

Edlnburgh Merchant Company Educaoon Board Annual report and fina￿141 Statements 31 July 2024 Report of the Board (continued) The Merchant Company Education Board is responsible for The Mary Erskine School and Stewart's Melville College. including their combined Junior School, and George Watson's College. The Education Board oversees the administration of their schools which is carried out by kn Goveming Councils, established in 1989, namely the ESMS Goveming Counal and the George Walson's College Governing Council. The Governing Councils are stsnding committees of the Merchant Company EducalK)n Board. The Governing Councils, assisted by their Finance Commlttees, are required to prepare annual accounts for the relevant sch¢)ols giving a true and fair view of the state of affairs. Composition of the Education Board and Committees The members ofthe Educatson Board consist ot. a) The Master and the Treasurer of the Master's Court of the Merchant Company- b) The Chairs of the Governing Councils of each of the Schools- c) Up to seven additional members, selected by the Nominations Committee of the Merchant Company - and d) the Lord Dean of Guild of the Merchant Company may be invited tojoin the Education Board atthe Master's sole discretion. Alembershlp of the Alerchant Company Educatlon Board 8tandlng Commltte8• Namo Appolntad IRgtlrod Educatlon Board May 2024 until January 2025 Until Novembar 2024 Novèmber 2024 November 2024 November 2024 Until November 2024 July 2022 Until Novembar 2024 Septembèr 2022 September 2022 December 2024 Sèptembar 2022 S&ptembar 2023 Aprll 2022 untll February 2024 No Decèmber 2023 From Marth 2025 ￿ X until X Recruitment and Appointment The members of the Education Board are invited to join the board following nomination. Through the Nominations Committee the procedure is in place to identify and recruit suitable individuals to provide strength and balance to the Education Board. They are appointed by the Education Board for a temi of five years. and they ean be re-elected. 16

Edlnburgh Merchant Company Educaoon Board Annual report and fina￿141 Statements 31 July 2024 Report of the Board (continued) In relation to the members of the Schc4)Is' Goveming Councils, they consist ofthe Principal. the Education Board shall appoint lil the Chair of the Governing Counal, {iil the Chair of the Finance Committee, (iii} the Chair of the Buildings Committee and livl up lo three govemors {who have been members of the Merchant Company for at least three years) and the Goveming Council, following nomination by the Chair, shall appoint up to a further eight governors. There is a requirement that there is a majority of Merchant Company members on the Goveming Councils of the Schools to ensure knowledge and experience expected of Merchant Company Schools. Training of Members and Govemors On appointment. all Education Board members are given a copy of The Edinburgh Merchant Company Education Board Scheme 2011 and the Merchant Company Standing Orders made under the Scheme in 2011 as amended. They are also given a copy of all papers already distributed lo members in regard to current issues of signifieanee, provided wth the opportunty to visit the Schools and made aware of all training opportunities that are intimated to the Secretary of the Education Board. Members of the Goveming Council are inducted into the govemance and workings of the schcx)Is by the Chair of the Goveming Council, the Principal and the Bursar. They are invited to join committees dealing with aspeets of the school's work. are variously invited to attend governors, days or conferences or away days with senior staff or to shadow a member of staff or pupil of the school. They are also made aware by the school of any significant issues arising betsyeen meetings of Goveming Council and of all training opportunities that are intimated to the school and in particular, training and seminars held by the Scottish Council of Independent Schools. Organisational management The Education Board is responsible for the strategic direction of the Schools and associated decisions and routinety meets al least ft)urlimes a year. The Education Board is supported from the Schools by their Governing Councils which are standing committees of the Education Board. The Governing Councils are responsible for the overall management and control of each of the schools. The Goveming Councils formally report to the Education Board al least four times each year on achievements and Perf0m￿nCe, signfficant educational and staff developments, financial perfonnance and risk, propety issues and capital development. Strategy, budgets, annual accounts and major caprtal development as well as the appointment of a new Principal are all matters reseNed for the approval of the Education Board. The ESMS Goveming Council is assisted by the following committees.. CoThm Finance Committee Academic Policy Committee Buildings Committee Audit and Risk Committee Safeguarding Committee Joint Consultive Committee Remuneration Committee Wellbeing Policy Committee A Governor attends the Parent Liaison Group Each committee comprises bebNeen one and five Govemors and committee members. most of whom are drawn from the Merchant Company or the Schools, community. The committees meet at least three limes a year prior to each Goveming Council meeting and report at the Goveming Council. 17

Edlnburgh Merchant Company Educaoon Board Annual report and fina￿141 Statements 31 July 2024 Report of the Board (continued) The George Watson's College Goveming Council is assisted by the following committees". GWC Committees Finance Committee Education and Pupil Wellbeing Committee Staff Committee Propety & Facilrties Committee Extemal Relations & Development Committee Audit Committee Health & Safety Committee Compliance Committee Nominations Commrttee A Governor attends the Infomation & Consultation of Employees Commrtiee Each committee comprises between five and seven Govemors and Committee members most of whom are drawn from the Merchant Company or the Sehools. communty. The committees meet at least three times a year prior to each Goveming Council meeting and report at the Goveming Council. At ESMS the Remuneration Committee and at GWC the Staff Committee. periodicalty review the remuneration and temis and condrtions of key management personnel with reference to extemal market data. In October 2024 the number of committees at GWC was reduced in order to fo(xJs on Strateg￿ prior￿e$ and streamline administration. Details of the composition of the Schools Goveming Councils and Committees are as follows- Commltt8•s Namè Appolntèdl R•tlr8d From January 2025 August 2022 Iratirad Novamber 20241 Retired August 2022 1 August 2022 September 2022 September 2022 Nov•mber 2021 Ratlred Septembar 2023 January 2021 January 2019 January 2025 Retired June 2024 Retired June 2023 December 2017 Ratlred Novembor 2022 Septèmber 2023 September 2023 September 2023 18

Edlnburgh Merchant Company Educaoon Board Annual report and fina￿141 Statements 31 July 2024 Report of the Board (continued) Cammltta8S Namè Appolrrtèdl Rètired Juné 2022 From August 2024 Until August 2024 Novèmber 2021 Juna 2022 June 2022 Juty 2023 August 2020 August 2019 August 2020 August 2020 Untll Octobar 2024 Novèmber 2019 June 2022 November 2019 February 2023 No No No No No The day-tfrday management ofthe schools is delegated to the Goveming Councils and Principals supported by their key management personnel: | Ers￿ne Stewarfs Memlle Schools Name polnt•d Principal (Appointed 1 August 2022. Head of Stewart's Melville College until 1 August 20221 Interim Principal (from 1 April 2022 10 1 August 20221 Head olThè Mary Erskine Senior School Head ol Stawart's Malvllle Sonk)r School IAppc4ntgd 1 August 20221 Head of ESMS Junior School Bursar Ikft Decemter 20241 Director of Inforrnalicn Techn￿0￿ Irelir&Y July 20241 Director of Informaticn Techndogy (from August 20241 Director of communicab.ons and Markebng Chiaf OparatirrfJ Offlcar Chlaf Flnandal Offlcar (from Saptambèr 20241 19

Edlnburgh Merchant Company Educaoon Board Annual report and fina￿141 Statements 31 July 2024 Report of the Board (continued) Name Appointed Group Structure and Relationship The Education Board is a charity, and this is the focus for all supporting and subsidiary activities. There are frNQ subsidiaries incorporated through which the schools can undertake commercial activities- ESMS Enterprises Limited, a wholly owned subsidiary Company incorporated in Scotland with company number= SC139534.' and GWC Trading UK Limf(ed Idomiant}. a wholty owned subsidiary company incorporated in Scoland with company number: SC588763. George Watson's Family Foundation is a separate fvnd within the financial statements. 11 provides financial assistanee for pupils who would otheNise be unable to attend GWC, provide support for pupils whose families experience short lem financial difFiculties maintain and develop the property and facilities of GWC. The Family Foundation is a registered eharity with number SC004818. On beha￿ of the Edueation Board.. 20

Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Statement of Edinburgh Merchant Company Education Board’s Responsibilities

The Education Board is responsible for preparing the Report of the Board 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 Education Board 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 Education Board is required to:

• select suitable accounting policies and then apply them consistently;

• observe the methods and principles of the Charities SORP 2019 (FRS 102);

• make judgements and estimates that are reasonable and prudent;

• state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Education Board will continue in operation.

The Education Board has delegated to the Governing Councils of Erskine Stewart's Melville and George Watson's College through their respective finance committees and the Secretary of the Education Board the responsibility 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 (as amended) 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.

Disclosure of information to auditors

In so far as the Members are aware:

• there is no relevant audit information of which the charity’s auditors are unaware; and

• the Members have taken all steps that it ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.

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

21

Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Independent auditors’ report to the members of the Edinburgh Merchant Company Education Board

Opinion

We have audited the financial statements of the Edinburgh Merchant Company Education Board (the 'charity') for the year ended 31 July 2024 which comprise the Statement of Financial Activities, the Balance Sheet, the Statement of Cash flows and the related notes to the financial statements, including a summary of 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:

• give a true and fair view of the state of the charity's affairs as at 31 July 2024 and of incoming resources and application of resources, including its income and expenditure, for the year then ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

• have been prepared in accordance with the requirements of the Charities and Trustee Investment (Scotland) Act 2005 and Regulation 8 of the Charities Accounts (Scotland) Regulations 2006

Basis of 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 trustee's 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 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 Report of the Trustees, other than the financial statements and our auditor’s report thereon. The trustees are responsible for the other information. 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.

22

Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Independent auditors’ report to the members of the Edinburgh Merchant Company Education Board (continued)

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Charity Accounts (Scotland) Regulations 2006 requires us to report to you if, in our opinion:

• the information given in the report of the board is inconsistent in any material respect with the financial statements; or

• proper accounting records have not been kept, or

• the financial statements are not in agreement with the accounting records and returns; or

• we have not received all the information and explanations we require for our audit.

Responsibilities of Trustees

As explained more fully in the Statement of Trustees’ responsibilities, set out on page 21, 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 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 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 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005 and report in accordance with the Act and relevant regulations made or having effect thereunder.

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:

• We enquired of management the systems and controls the charity has in place, the areas of the financial statements that are mostly susceptible to the risk of irregularities and fraud, and whether there was any known, suspected or alleged fraud. Management informed us that there were no instances of known, suspected or alleged fraud;

• We obtained an understanding of the legal and regulatory frameworks applicable to the charity. We determined that the following were most relevant: Health and Safety; employment law (including the Working Time Directive), data protection and charity legislation;

• We considered the incentives and opportunities that exist in the charity, including the extent of management bias, which present a potential for irregularities and fraud to be perpetrated, and tailored our risk assessment accordingly; and

• Using our knowledge of the charity, together with the discussions held with management at the planning stage, we formed a conclusion on the risk of misstatement due to irregularities including fraud and tailored our procedures according to this risk assessment.

23

Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Independent auditors’ report to the members of the Edinburgh Merchant Company Education Board (continued)

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

• Enquiries with management about any known or suspected instances of non-compliance with laws and regulations and fraud;

• Reviewing Board and Governor meeting minutes for discussions of irregularities including fraud;

• Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation to the carrying value of tangible assets, bad debt provisions, accruals and deferred income and final salary pension scheme assumptions;

• Documenting and verifying all significant related party balances and transactions;

• Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness;

• Testing key revenue lines, in particular cut-off, for evidence of management bias; and

• Reviewing the financial statement disclosures and determining whether accounting policies have been appropriately applied.

Owing to the inherent limitations of an audit, there is an 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 directors.

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 (Eligible to act as an auditor in terms of section 1212 of the Companies Act 2006) Level 5, The Stamp Office 10-14 Waterloo Place Edinburgh EH1 3EG

Date: 30 April 2025.

24

Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Statement of financial activities (incorporating the income and expenditure account) for the year ended 31 July 2024

		Unrestricted	Restricted	Endowment	Total	Unrestricted	Restricted	Endowment	Total
	Note	funds	funds	Funds	2024	funds	funds	Funds	2023
		£	£	£	£	£	£	£	£
Income and endowments from:
Donations and legacies	2	1,656	1,247,628	-	1,249,284	905,135	1,769,659	-	2,674,794
Other trading activities	3	1,077,683	-	-	1,077,683	1,026,269	-	-	1,026,269
Investments	4	218,764	430,487	112,869	762,120	55,195	356,355	105,638	517,188
Charitable activities	5	81,570,101	331,750	-	81,901,851	72,303,894	403,743	-	72,707,637
Other	6	2,224	1,000	-	3,224	8,075	-	-	8,075
		____	___	___	____	____	___	___	____
Total income and endowments		82,870,428	2,010,865	112,869	84,994,162	74,298,568	2,529,757	105,538	76,933,963
		____	___	___	____	____	___	___	____
Expenditure on:
Raising funds	7	(415,709)	(46,202)	(4,320)	(466,231)	(338,153)	(34,670)	(4,127)	(376,950)
Charitable activities	8	(84,201,562)	(1,500,786)	(84,399)	(85,786,747)	(74,774,828)	(2,007,690)	(105,229)	(76,887,747)
		____	___	___	____	____	___	___	____
Total expenditure		(84,617,271)	(1,546,988)	(88,719)	(86,252,978)	(75,112,981)	(2,042,360)	(109,356)	(77,264,697)
		____	___	___	____	____	___	___	____
Net income/(expenditure) before gains and losses		(1,746,843)	463,877	24,150	(1,258,816)	(814,413)	487,397	(3,718)	(330,734)
Net gains on investments		-	598,371	180,140	778,511	-	(319,063)	(102,649)	(421,712)
Actuarial gains/losses		-	-	-	-	-	-	-	-
		____	___	___	____	____	___	___	____
Net expenditure		(1,746,843)	1,062,248	204,290	(480,305)	(814,413)	168,334	(106,367)	(752,446)
Transfers between funds	21-23	-	-	-	-	(27,594)	27,594	-	-
		____	___	___	____	____	___	___	____
Net movement in funds		(1,746,843)	1,062,248	204,290	(480,305)	(842,007)	195,928	(106,367)	(752,446)
Fund balances brought forward	21-23	41,058,367	12,810,698	3,217,253	57,086,318	41,900,374	12,614,770	3,323,619	57,838,763
		____	___	___	____	____	___	___	____
Fund balances carried forward	21-23	39,311,524	13,872,946	3,421,543	56,606,013	41,058,367	12,810,698	3,217,253	57,086,318

All operations are continuing.

25

Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Balance sheet at 31 July 2024

Note 2024 2024 2023 £ £ £ Fixed assets Tangible assets 14 59,089,616 Investments 15 11,291,010 _ 70,380,626 Current assets Stocks 16_ 48,671 34,882 Debtors 17 4,015,143 3,549,106 Cash at bank and in hand 16,477,110 6,768,182 ______ _ 20,540,924 10,352,170 Creditors: amounts falling due within one year 18_ (21,302,234) (16,986,867) ______ _ Net current liabilities (761,310) ___ Total assets less current liabilities 69,619,316 Creditors: amounts falling due after more than one year 19_ (13,013,303) Provision for liabilities and charges 20 - ______ Net assets 56,606,013 Funds General (unrestricted) funds 21 39,311,524 Restricted funds 22 13,872,946 Permanent endowment funds 23 3,421,543 ___ Total funds 24 56,606,013

2023 £ 59,543,497 11,046,454 _ 70,589,951 (6,634,697) _ 63,955,254 (6,868,936) - ___ 57,086,318

41,058,367 12,810,698 3,217,253 ___ 57,086,318

The financial statements were approved by the Education Board on 29[th] April 2025 and signed on its behalf by:

Charity number SC009747

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Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Statement of cash flow

for the year ended 31 July 2024

Statement of cash flow or the year ended 31 July 2024
	2024	2023
	£	£
Cash flows from operating activities
Net income	(480,305)	(752,446)
Loss/ (Gains) on investments	(778,511)	421,712
(Increase)/ decrease in stock	(13,789)	46,684
(Increase)/ decrease in debtors	(466,037)	(694,983)
Increase/(decrease) in creditors	14,684,324	3,609,924
Increase/(decrease) in provisions	-	(478,841)
Depreciation charges	3,149,003	3,096,136
(Gain)/ loss on disposal of assets	14,002	1,068
Investment income	(762,120)	(517,188)
Interest paid	1,047,011	884,186
	__	__
Cash provided by operating activities	16,393,578	5,616,352
Cash flows from investing activities
Investment income	762,120	517,188
Interest paid	(1,047,011)	(884,186)
Payments to acquire fixed assets	(2,776,820)	(3,189,660)
Proceeds from the sale of fixed assets	67,696	6,000
Payments to acquire investments	(813,520)	(1,137,432)
Proceeds from the sale of investments	1,400,119	1,080,267
Movement in cash held for re-investment	(52,644)	85,481
	__	__
Cash used in investing activities	(2,460,060)	(3,522,442)
Cash flows from financing activities
Finance leases repaid in the year	(215,470)	(306,280)
Bank loans repaid in the year	(512,441)	(589,846)
	__	__
Cash provided by/(used in) financing activities	(727,911)	(896,126)
	__	__
Net cash movement in the year	13,205,607	1,197,784
Cash and cash equivalents at start of the year	3,271,503	2,073,719
	__	__
Cash and cash equivalents at end of the year	16,477,110	3,271,503
Cash and cash equivalents comprise:
Cash at bank and in hand	16,477,110	6,768,182
Bank overdraft	-	(3,496,679)
	__	__
	16,477,110	3,271,503

27

Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Notes to the financial statements

1 Accounting policies

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

Basis of preparation

The financial statements have been prepared under the historical cost convention with the exception of investments which are included at market value. The charity is a Public Benefit Entity. The financial statements are compliant with the charity’s constitution, the Charities and Trustee Investment (Scotland) Act 2005, the Charities Accounts (Scotland) Regulations 2006 (as amended), the Statement of Recommended Practice (SORP) FRS 102 “Accounting and Reporting by Charities”, in accordance with Financial Reporting Standard 102 (FRS 102), and applicable accounting standards.

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

Going concern

The financial statements have been prepared on a going concern basis. The Finance Committees and Governing Councils of the schools, on behalf of the trustees have considered relevant information, including the business plan, forecast future cash flows and the impact of subsequent events in making their assessment and reported this information to the trustees of the Education Board, on the basis of which the trustees are satisfied that the Edinburgh Merchant Company Education Board is a going concern.

In making these assessments the key scenarios and assumptions are around monitoring pupil numbers and trends, affordability of fee levels. The imposition of VAT on school tuition fees effective from 1 January 2025 has had a huge impact on the affordability of fees. Both schools are reviewing and changing their operating models in order to meet this challenge. Work is on-going to reduce the cost base and to work with parents to enable them to continue educating their children in our schools.

The trustees have concluded that the forecasts prepared taking account of the matters above, allows them to continue to adopt the going concern basis in preparing the financial statements.

Income

Income is recognised when the charity has entitlement to the funds, any performance conditions attached to the item(s) of income have been met, it is probable that the income will be received and the amount can be measured reliably.

For legacies, entitlement is taken as the earlier of the date on which either: the charity is aware that confirmation has been granted, the estate has been finalised and notification has been made by the executor(s) to the trust that a distribution will be made, or when a distribution is received from the estate. Receipt of a legacy, in whole or in part, is only considered probable when the amount can be measured reliably and the charity has been notified of the executor’s intention to make a distribution. Where legacies have been notified to the charity, or the charity is aware of the granting of confirmation, and the criteria for income recognition have not been met, then the legacy is a treated as a contingent asset and disclosed if material.

Fees receivable and charges for services and use of premises are accounted for in the period in which the service is provided. Fees receivable are stated after deducting allowances, scholarships and other remissions granted by the School . Fees consist of charges for pupils attending the Schools. The charges are the amounts due for the year ending 31 July.

Income from Interest and Dividends

Investment income is applied to the restricted, unrestricted and endowed funds on the basis of investments held within each fund. Interest on funds held on deposit is included when receivable and the amount can be measured reliably by the charity; this is normally upon notification of the interest paid or payable by the Bank. Dividends are accrued when the shareholder’s right to receive payment is established. Measurement is at the fair value receivable, which will normally be the transaction value.

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Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Notes (continued)

1 Accounting policies (continued)

Donated goods, facilities and services

Donated goods, services and facilities are recognised as income when the charity has control over the item(s), any conditions attached have been met, the receipt of economic benefit from the use of the item(s) is probable and the economic benefit can be measured reliably. In accordance with Charity SORP, volunteer time is not recognised.

On receipt, donated goods, services and facilities are recognised on the basis of the value of the gift to the charity which is the amount the charity would have had to pay to obtain the equivalent economic benefit on the open market. A corresponding amount is also recognised as expenditure in the period of receipt.

Expenditure and irrecoverable VAT

Expenditure is recognised once there is a legal or constructive obligation to make a payment to a third party, it is probable that settlement will be required and the amount of the obligation can be measured reliably. Expenditure is classified under the following activity headings:

• Expenditure on raising funds income include the costs of raising donations and legacies and investment management costs on the investment portfolio.

• Expenditure on charitable activities include the costs of providing teaching services. In addition teaching costs include supplies of books, stationery, games equipment and sundry materials are charged against revenue in the year in which the expenditure is incurred.

• Other expenditure represents those items not falling into any other heading.

Irrecoverable VAT is charged as a cost against the activity for which the expenditure was incurred.

Redundancy and termination payments are recognised in the year to which they relate.

Allocation of support costs

Support costs are those functions that assist the work of the charity but do not directly undertake charitable activities. Support costs include back office costs, finance, personnel, payroll and governance costs which support the Education Board’s charitable activities. Governance costs are those associated with the constitutional and statutory requirements of the charity.

Expenditure is allocated to expense headings either on a direct cost basis, or apportioned according to time spent.

Fixed assets

Fixed assets are capitalised at cost. Depreciation is provided on all fixed assets in use, other than heritable land, at rates and bases calculated to write off the cost of each asset over its expected useful life, on a straight line basis, as follows:

Heritable buildings	Up to 50 years
Leasehold improvements	Over life of lease
Heating plant & Other plant and equipment	5 - 15 years
Motor vehicles & Computer equipment	4 years

Investments and investment income

Investments are a form of basic financial instrument. The investments are brought into account at fair value. The value applied to listed investment is the middle market price of that investment at the close of business at the year end 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 and gains and losses are recognised in the statement of financial activities in the year in which they arise. Unrealised gains and losses are included in the statement of financial activities on the same basis of investments held within each relevant fund.

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Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Notes (continued)

1 Accounting policies (continued)

Stocks

Stocks are valued at the lower of cost and net realisable value.

Cash and cash equivalents

Cash at bank and in hand includes cash and short term highly liquid investments with a short maturity of three months or less from the date of acquisition or opening of the deposit or similar account.

Debtors

Trade and other debtors are recognised at the settlement amount due after any fee discounts and rebates. Prepayments are valued at the amount prepaid after taking account of any discounts due.

Creditors and provisions

Creditors and provisions are recognised where the charity has a present obligation resulting from a past event that will probably result in the transfer of funds to a third party and the amount due to settle the obligation can be measured or estimated reliably. Creditors and provisions are normally recognised at their settlement amount after allowing for any trade discounts due.

Financial instruments

The charity only 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 their settlement value.

Fund accounting

General funds are unrestricted funds which are available for use at the discretion of the Trustees in furtherance of the general objectives of the charity and which have not been designated for other purposes.

Designated funds comprise unrestricted funds that have been set aside by the Trustees for particular purposes. The aim and use of each designated fund is set out in the notes to the financial statements.

Restricted funds are funds which are to be used in accordance with specific restrictions imposed by donors or which have been raised by the charity for particular purposes. The cost of raising and administering funds are charged against the specific fund.

Endowment funds represent the original endowment of the charity as adjusted for gains and losses arising in investments. The income generated from the investments are used largely in the provision of bursaries to school pupils.

Taxation

The Education Board is registered as a charity and has no liability to corporation tax on surpluses.

Defined benefit pension scheme

The charity operates a pension scheme providing benefits based on final pensionable pay. The assets of the scheme are held separately from those of the Education Board. Pension scheme assets and liabilities are measured by a qualified actuary using the assumptions set out in note 13. The pension scheme surplus (to the extent that it is recoverable) or deficit is recognised in full on the Balance Sheet.

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Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Notes (continued)

1 Accounting policies (continued)

Defined contribution pension scheme

The charity also operates a pension scheme providing benefits based on contributions. Employer contributions are charged to the SOFA in the period to which they relate.

Leased assets

Assets held under finance leases and hire purchase contracts are capitalised in the balance sheet and depreciated over their expected useful lives. The interest element of leasing payments represents a constant proportion of the capital balance outstanding and is charged to the profit and loss account over the period of the lease.

All other leases are regarded as operating leases and the total payments made under them are charged to the profit and loss account on a straight line basis over the lease term.

Judgements in applying accounting policies and key sources of estimation uncertainty

In the application of the charity’s accounting policies, the Trustees are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

In preparing these financial statements, the Trustees have made the following judgements:

• Determine whether leases entered into by the Education Board as a lessee are operating or finance leases. These decisions depend on an assessment of whether the risks and rewards of ownership have been transferred from the lessor to the lessee on a lease by lease basis.

• Tangible fixed assets are depreciated over a period to reflect their estimated useful lives. The applicability of the assumed lives is reviewed annually, taking into account factors such as physical condition, maintenance and obsolescence.

• Fixed assets are also assessed as to whether there are indicators of impairment. This assessment involves consideration of the economic viability of the purpose for which the asset is used.

• Bad debt provisions are based on knowledge of probability of recoverability depending on the debtor’s circumstances.

The following are the group’s key sources of estimation uncertainty:

• The value of the asset/liability in the defined benefit pension fund is determined using an actuarial valuation. The actuarial valuation involves making assumptions about discount rates, mortality rates and future pension increases. Due to the complexity of the valuation, the underlying assumptions and the long-term nature of the liabilities, such estimates are subject to significant uncertainty. In determining the appropriate discount rate, management considers the interest rates of corporate bonds with extrapolated maturities corresponding to the expected duration of the defined benefit obligation. The mortality rate is based on publicly available mortality tables. Future pension increases are based on expected future inflation rates. The pension scheme is in surplus and this has not been reported in the financial statements as the Education Board surplus may not be recoverable by the employer.

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Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Notes (continued)

2 Donations and legacies

Unrestricted 2024 £ Restricted 2024 £ Total 2024 £ Unrestricted 2023 £ Donations 1,656 1,247,628 1,249,284 905,135 3 Other trading activities (unrestricted) Rents and lettings 4 Income from investments Unrestricted 2024 £ Restricted 2024 £ Endowed 2024 £ Investment income - 297,451 99,584 Interest 218,764 133,036 13,285 _ _ _ 218,764 430,487 112,869 2023 total 55,195 356,355 105,638 5 Income from charitable activities Unrestricted 2024 £ Restricted 2024 £ Fees receivable 75,847,244 - Bursaries, scholarships and prizes - 331,750 Registration fees 50,460 - Catering sales 3,088,898 - After school club fees 1,466,734 - Pupils buses 427,894 - Music instrument hire 185,822 - Other 503,049 - _ _____ 81,570,101 331,750 2023 total 72,303,894 403,743	Restricted 2023 £ 1,769,659 Total 2024 £ 1,077,683 _ 1,077,683 Total 2024 £ 397,035 365,085 _ 762,120 517,188 Total 2024 £ 75,847,244 331,750 50,460 3,088,898 1,466,734 427,894 185,822 503,049 ___ 81,901,851 72,707,637	Total 2023 £ 2,674,794 Total 2023 £ 1,026,269 _ 1,026,269 Total 2023 £ 376,429 140,759 _ 517,188 Total 2023 £ 68,610,920 403,743 75,822 1,477,945 1,201,372 414,168 173,019 350,648 ___ 72,707,637

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Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Notes (continued)

6 Other income Unrestricted 2024 £ Restricted 2024 £ Total 2024 £ Gain on sale of assets - - - Miscellaneous income 2,224 1,000 3,224 _ __ _ 2,224 1,000 3,224 2023 total 8,075 - 8,075 7 Expenditure on raising funds Unrestricted 2024 £ Restricted 2024 £ Endowed 2024 £ 2024 £ Wage and salary cost of lettings (note 12) 415,709 - - 415,709 Costs of generating voluntary income - 72 - 72 Investment management fees - 46,130 4,320 50,450 _ _ _ _ 415,709 46,202 4,320 466,231 2023 total 338,153 34,670 4,127 376,950 8 Expenditure on charitable activities Unrestricted 2024 £ Restricted 2024 £ Endowed 2024 £ Total 2024 £ Wages and salaries (note 12) 46,886,002 - - 46,886,002 Foundationers Grants - 373,159 - 373,159 School expenditure - 579,338 - 579,338 Fee reductions 3,532,907 - - 3,532,907 Bursaries, scholarships and prizes 2,714,650 476,704 84,255 3,275,609 Examinations costs 325,792 - - 325,792 Teaching materials 1,057,946 - - 1,057,946 Staff development 128,878 - - 128,878 Transport costs 1,156,237 - - 1,156,237 Educational projects cost 1,366,234 - - 1,366,234 Other educational costs 1,968,097 2,434 - 1,970,531 Catering costs 3,492,868 - - 3,492,868 __ _ _ _ Total direct costs 62,629,611 1,431,635 84,255 64,145,501 Property costs (note 9) 13,266,145 61,951 - 13,328,096 Support costs (note 10) 8,215,817 - 144 8,215,961 Governance Costs (note 11) 89,989 7,200 - 97,189 _ _ _ _ 84,201,562 1,500,786 84,399 85,786,747

_

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Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Notes (continued)

8 Expenditure on charitable activities (continued)

Unrestricted 2023 £ Restricted 2023 £ Endowed 2023 £ 2023 Direct costs 51,377,753 1,940,161 105,085 Property costs 12,492,667 61,951 - Support costs 10,833,258 - 144 Governance costs 71,150 5,578 - _ _ ____ 2023 total 74,774,828 2,007,690 105,229 Property costs 2024 Unrestricted 2024 £ Restricted 2024 £ Total 2024 £ Wages and salaries (note 12) 800,562 - 800,562 Ground maintenance 125,109 - 125,109 Rates 1,668,506 - 1,668,506 Insurance 459,183 - 459,183 Heat and light 4,023,001 - 4,023,001 Cleaning 1,233,291 - 1,233,291 Repairs and maintenance 1,661,271 - 1,661,271 Depreciation 3,087,051 61,951 3,149,002 RAAC Expenditure 208,171 - 208,171 _ _ ______ 13,266,145 61,951 13,328,096 2023 Unrestricted 2023 £ Restricted 2023 £ Total 2023 £ Wages and salaries (note 12) 1,883,031 - 1,883,031 Ground maintenance 101,500 - 101,500 Rates 1,449,904 - 1,449,904 Insurance 441.587 - 441.587 Heat and light 2,908,430 - 2,908,430 Cleaning 1,173,055 - 1,173,055 Repairs and maintenance 1,500,975 - 1,500,975 Depreciation 3,034,185 61,951 3,096,136 _ _ ______ 12,492,667 61,951 12,554,618

Total 2023 £ 53,422,999 12,554,618 10,833,402 76,728 _ 76,887,747 Total 2023 £ 1,883,031 101,500 1,449,904 441.587 2,908,430 1,173,055 1,500,975 3,096,136 - _ 12,554,618

9 Property costs

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Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Notes (continued)

10 Support costs

10 Support costs
Wages and salaries (note 12) Advertising Telephone Stationery, postage, printing and photocopying Subscriptions Marketing Professional fees Computer costs Finance costs Other costs 11 Governance costs Governors’ meetings and professional fees Auditors’ remuneration Other	Total 2024 £ 4,577,853 260,849 72,503 312,547 155,866 171,379 584,451 450,222 1,047,011 583,280 ___ 8,215,961 Total 2024 £ 303 76,942 19,944 _ 97,189	Total 2023 £ 7,422,072 247,580 64,943 348,029 142,835 189,878 407,038 586,835 878,325 545,867 ___ 10,833,402
			Total 2023 £ 1,783 68,245 6,700 _ 76,728

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Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Notes (continued)

12 Staff Costs

taff Costs
	2024	2023
	£	£
Wages and salaries	41,091,963	37,640,079
Social security costs	4,476,201	4,213,666
Pension contributions	7,111,962	6,533,609
Termination payments	-	77,955
	___	___
	52,680,126	48,465,309
Allocated between:
Teaching costs	46,886,002	40,985,949
Property costs	800,562	1,883,032
Support costs	4,577,853	5,258,176
Raising funds	415,709	338,152
	____	____
	52,680,126	48,465,309
The average number of employees during the year was:
	2024	2023
	Number	Number
Teaching	586	555
Ancillary to teaching	324	307
Administration & catering	166	145
Maintenance	44	112
	___	___
	1,120	1,119
The number of employees whose emoluments for the year fall above £60,000 are as follows:
£60,000 - £69,999	79	49
£70,000 - £79,999	19	23
£80,000 - £89,999	23	5
£90,000 - £99,999	7	7
£100,000 - £109,999	4	4
£110,000 - £119,999	4	1
£120,000 - £129,999	1	1
£190,000 - £199,999	-	1
£210,000 - £219,999	1	1
£300,000 - £310,999	1	-

Key management personnel remuneration including employer’s NI totalled £2,301,459 ( 2023: £1,926,063 ).

Amounts payable to pension schemes on behalf of all employees which are included within creditors at the year end are £798,823 ( 2023: £697,455). This represents part of one month’s deductions which are due for payment in August 2024.

No Trustees received reimbursement of travel expenses, remuneration or other payments ( 2023: Nil) .

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Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Notes (continued)

13 Pensions

The Education Board contributes to three separate pension schemes:-

(a) Scottish Teachers’ Superannuation Scheme

Amounts are paid into the Scottish Teachers Superannuation Scheme to provide pensions for teaching staff. The scheme is a defined benefit scheme administered independently of the Education Board. The contributions are determined by a qualified actuary on the basis of five yearly valuations using the prospective benefit valuation method. The employer’s contribution rate was set at 26% from 1 April 2024. Employee contributions are stepped, according to the level of their pensionable pay and rates vary from 7.2% to 11.9%. The results of the next revaluation are expected to be announced in mid-2026 and implemented in April 2027. The pension costs charged in these accounts for this scheme was £6,310,581 ( 2023: £5,916,531) which were the contributions due for the year.

The Scottish Teachers’ Superannuation Scheme is a multi-employer defined benefit scheme, which in common with other Government pension schemes is unfunded. The Schools are unable to identify their share of the underlying liabilities of the scheme and therefore account for the contributions to the scheme as if it were a defined contribution scheme.

(b) The Merchant Company Retirement Benefit Scheme

The Education Board makes pension contributions to the Merchant Company Retirement Benefits Scheme, a defined benefits scheme. The assets of the scheme are held separately from those of the Merchant Company in an independently administered fund. The Schools are unable to identify their share of the underlying liabilities of the scheme and therefore account for the contributions to the scheme as if it were a defined contribution scheme.

During the year, the employer’s deficit contribution was nil ( 2023: £173k ).

The scheme closed to future accrual on 1 November 2011. At this date pensionable service under the scheme ceased for all active members; however members were granted additional benefits equivalent to one year of pensionable service and an increase of 4% in basic salary in compensation for loss of pension benefits. All members were offered the option of joining the existing defined contribution scheme for support staff from 1 November 2011 to provide continuing pension benefits.

Principal Actuarial assumptions for the defined benefit scheme

The following information is based upon an FRS 102 valuation of the fund at 31 July 2024:

	2024	2023
	% p.a.	% p.a.
Price inflation rate (RPI)	3.10	3.10
Price inflation rate (CPI)	2.85	2.80
Salary increase rate	4.10	4.10
Discount rate	5.20	5.20

Life expectancy is based on the CMI Mortality Projections Model 2020 converging to 1.25% p.a. Based on these assumptions, the average future life expectancies at age 65 are summarised below:

37

Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Notes (continued)

13 Pensions (continued)

Current pensioners Future pensioners The net pension (deficit)/asset was: Estimated employer assets Present value of scheme liabilities Effect of asset ceiling Net pension (deficit)/asset	Males 20.7 years 21.9 years 2024 £000 15,477 (9,473) (6,004) _____ -	Females 22.7 years 24.1 years
		2023 £000 14,779 (9,459) (5,320) _____ -

An asset ceiling adjustment has been made to prevent the Education Board recognising a pension asset as any surplus may not be recoverable by the employer.

Reconciliation of fair value of scheme assets:

Opening fair value of scheme assets Contributions by employer not recognised in 2024 Expected return on assets Contributions by employer Actuarial gains/(losses) Admin expenses paid from plan assets Estimated benefits paid Reconciliation of defined benefit obligation: Opening defined benefit obligation Interest cost Actuarial losses/(gains) Estimated benefits paid	2024 £000 2023 £000 14,779 15,994 1 48 749 551 - 173 697 (1,251) (135) - (614) (736) _ 15,477 14,779 2024 £000 2023 £000 9,460 12,041 476 408 151 (2,254) (614) (736) __ _____ 9,473 9,459

(c) Personal Retirement Plan

Since 1999 a new scheme has been entered into for support staff, pension contributions are made to a Personal Retirement Plan. The scheme is a defined contribution scheme and is administered independently of the Education Board. The employer’s contribution is 8% and the scheme minimum employee contribution is 5%. During the year the employer’s contribution was £801,381 ( 2023 - £617,078).

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Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Notes (continued)

14 Tangible fixed assets

Heritable property Leasehold improvements Assets in course of construction Plant and equipment £ £ £ £ Cost At beginning of year 82,764,395 10 737,554 14,424,757 Additions 746,008 - - 2,019,561 Disposals (47,305) - - (226,177) Transfers 535,258 - (535,258) - _ _ _ _ At end of year 83,998,356 10 202,296 16,218,141 _ _ _ _ Depreciation At beginning of year 27,189,726 - - 11,255,891 Charge for year 2,005,599 - - 1,113,976 Disposals (40,898) - - (150,887) _ _ _ _ At end of year 29,154,427 - - 12,218,980 _ _ _ _ Net book value At 31 July 2024 54,843,929 10 202,296 3,999,161 At 31 July 2023 55,574,669 10 737,554 3,168,866

Motor vehicles Total £ £ 286,298 98,213,014 11,251 2,776,819 - (273,482) - - _ _ 297,549 100,716,352 _ _ 223,901 38,669,518 29,428 3,149,003 - (191,785) ______ _ 253,329 41,626,736 _ __ 44,219 59,089,616 62,397 59,543,497

The cost of heritable property at 31 July 2024 and 31 July 2023 includes items brought in at a valuation in 1960 of £2,002,500.

The net book value of assets includes amounts of £163,570 (2023; £297,590) in respect of assets held under hire purchase contracts. The depreciation charge in the year on these assets was £141,419 (2023; £173,129).

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Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Notes (continued)

15 Investments

Market value Equity £ At beginning of year 6,018,489 Additions 459,567 Disposals (1,297,599) Revaluation in year 618,193 Movement in cash for investment - __ At end of year 5,798,650 Historical cost	Fixed interest £ Listed Investments Total £ Cash held for Re- investment £ Investment in Subsidiary £ Total £ 4,955,672 10,974,161 72,193 100 11,046,454 353,953 813,520 - - 813,520 (102,520) (1,400,119) - - (1,400,119) 160,318 778,511 - - 778,511 - - 52,644 - 52,644 _ _ _ _ ___ 5,367,423 11,166,073 124,837 100 11,291,010 2024 £ 2023 £ 9,934,702 10,785,438

The portfolios are managed by Baillie Gifford, Brooks MacDonald & Aubrey Capital Management. 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.

The main risk to the charity from financial instruments lies in the combination of uncertain investment markets and volatility to growth and incomes. The 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 charity manages these investment risks by retaining expert advisors to manage its investment portfolio.

The investment in subsidiary undertakings represents the cost of investments in ESMS Enterprises Limited, a wholly owned subsidiary company incorporated in Scotland with company number: SC139534 & GWC Trading UK Limited a wholly owned subsidiary company incorporated in Scotland with company number: SC588763. The results of ESMS Enterprises Limited and GWC Trading UK Limited in the year, which are not consolidated in these financial statements on grounds of immateriality, are as follows:

Profit/(loss) for the year Gift aid donation to the Education Board Net assets/(liabilities) GWC Trading Limited was dormant in the year and has net assets of £1 (2023; £1).	2024 £ (6,888) - (6,026)	2023 £ 40,013 (40,013) 861

16 Stocks Prospectus, stationery and other	2024 £ 48,671 ______ 48,671	2023 £ 34,882 ______ 34,882

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Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Notes (continued)

17 Debtors

Debtors
	2024	2023
	£	£
School and boarding fees	157,236	159,127
Other debtors	775,438	991,134
Prepayments	3,082,469	2,398,845
	___	___
	4,015,143	3,549,106
Creditors:amounts falling due within one year
	2024	2023
	£	£
Bank loan and overdraft	530,299	3,978,747
Trade creditors	1,846,626	2,707,000
Taxes and social security	1,884,970	2,404,666
Other creditors	530,636	1,226,306
Accruals	4,284,545	3,123,342
Finance leases	177,929	157,082
Deferred Income – note 20	12,047,229	3,389,724
	___	___
	21,302,234	16,986,867
Creditors:amounts falling due after more than one year
	2024	2023
	£	£
Bank loans	6,040,847	6,601,519
Finance leases	-	236,317
Other creditors	53,300	31,100
Deferred Income – note 20	6,919,156	-
	___	___
	13,013,303	6,868,936
Analysis of bank loans due after more than one year	2024	2023
	£	£
Due within 2- 5 years	4,455,021	4,739,916
Due after more than 5 years	1,585,826	1,861,603
	___	___
	6,040,847	6,601,519

18 Creditors: amounts falling due within one year

19 Creditors: amounts falling due after more than one year

The Education Board has three loans with Bank of Scotland, repayable over the periods to May 2031, May 2036 and September 2037 respectively. Two of these loans are made up of an element of loan which is charged at a variable interest rate equal to the Bank of England base rate plus 1.65% and an element of loan which is charged at a fixed interest rate of 2.45% and 3.64%. The third loan has a variable element only, charged at base plus 1.85%.

The Education Board has two term loans with HSBC repayable over the period to November 2034, which attract interest at Base Rate plus 1.4% and a Revolving Credit Facility with HSBC, the rate of interest on which is Base Rate plus 1.6%.

41

Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Notes (continued)

20	Deferred Income
		2024	2023
		£	£
	At beginning of year	3,389,724	2,934,541
	Income released in the year	(3,389,724)	(2,934,541)
	Income deferred in the year	18,966,385	3,389,724
		___	___
	At end of year	18,966,385	3,389,724
Deferred income relates entirely to school fees received in advance
21	General Fund
		2024	2023
		£	£
	At beginning of year	41,058,367	41,900,374
	Income in year	82,870,428	74,298,568
	Expenditure in year	(84,617,271)	(75,112,981)
	Transfers (note 22)	-	(27,594)
		___	___
	At end of year	39,311,524	41,058,367

42

Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Notes (continued)

22 Restricted Funds

2024 GW Family Foundation Sport Scotland grant Access to Excellence Other smaller funds At end of year 2023 GW Family Foundation Sport Scotland grant Access to Excellence Other smaller funds At end of year	At beginning of year £ 5,815,418 1,139,685 5,458,564 397,031 _ 12,810,698 At beginning of year £ 5,404,500 1,201,636 5,598,178 410,456 _ 12,614,770	Income in year Expenditure in year £ £ 1,293,146 (978,415) - (61,951) 455,339 (246,380) 262,380 (260,242) _ _ 2,010,865 (1,546,988) Income in year Expenditure in year £ £ 1,771,598 (1,296,404) - (61,951) 518,645 (431,066) 239,515 (252,940) _ _ 2,529,758 (2,042,361)	Gains/ (losses) £ 204,084 - 394,287 - _ 598,371 Gains/ (losses) £ (91,870) - (227,193) - _ (319,063)	Transfers Total £ £ - 6,334,233 - 1,077,734 - 6,061,810 - 399,169 _ _ - 13,872,946 Transfers Total £ £ 27,594 5,815,418 - 1,139,685 - 5,458,564 - 397,031 ______ __ 27,594 12,810,698

George Watson’s Family Foundation –provides financial assistance for pupils who would otherwise be unable to attend GWC, provide support for pupils whose families experience short term financial difficulties maintain and develop the property and facilities of GWC. The Family Foundation is a registered charity, number SC004818.

Sport Scotland Grant – this was a donation received towards the National Cricket Centre and it is being released in line with the depreciation on the building itself.

Access to Excellence Fund – these are donations received through the Development Office at ESMS which are then invested to produce an annual income to enhance bursary provision

Other small funds – this is a collection of smaller funds with balances less than £50,000 and most relate to donations towards smaller capital items.

43

Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Notes (continued)

23 Permanent Endowment Funds 2024 Bursaries and scholarships £ At beginning of year 1,679,943 Income 58,680 Expenditure (40,567) Gains/losses on investments 101,916 _ At end of year 1,799,972 2023 Bursaries and scholarships £ At beginning of year 1,767,128 Income 79,229 Expenditure (82,017) Gains/losses on investments (84,397) _ At end of year 1,679,943	Prizes and legacies £ 1,537,309 54,189 (48,152) 78,224 _ 1,621,571 Prizes and legacies £ 1,556,491 26,410 (27,339) (18,253) _ 1,537,309	Total £ 3,217,253 112,869 (88,719) 180,140 _ 3,421,543 Total £ 3,323,619 105,639 (109,356) (102,649) _ 3,217,253

24 Net asset reconciliation

2024 Unrestricted Funds £ Tangible fixed assets 58,011,882 Investments 100 Net current (liabilities)/ assets (5,687,155) Long term liabilities (13,013,303) _ 39,311,524 2023 Unrestricted Funds £ Tangible fixed assets 58,403,812 Investments 100 Net current (liabilities)/ assets (10,476,609) Long term liabilities (6,868,936) Provisions - _ 41,058,367

Restricted Funds Endowment Funds Total 2024 Total 2023 £ £ £ £ 1,077,734 - 59,089,616 59,543,497 8,217,589 3,073,321 11,291,010 11,046,454 4,577,623 348,222 (761,310) (6,634,697) - - (13,013,303) (6,868,936) _ _ _ _ 13,872,946 3,421,543 56,606,013 57,086,318 Restricted Funds Endowment Funds Total 2023 Total 2022 £ £ £ £ 1,139,685 - 59,543,497 59,457,268 8,113,162 2,933,192 11,046,454 11,496,164 3,557,851 284,061 (6,634,697) (5,726,452) - - (6,868,936) (6,909,376) - - - (478,841) _ _ _ _ 12,810,698 3,217,253 57,086,318 57,838,763

44

Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Notes (continued)

25	Capital commitments
		2024	2023
		£	£
	Authorised and contracted	1,424,161	479,071
26	Other financial commitments
	At 31 July 2024 the Education Board had total minimum commitments under non-cancellable operating leases as
	follows:
		2024	2023
		£	£
	< 1 year	585,720	593,914
	Within 2-5 years	380,845	863,215
		_	_
		966,565	1,457,129
	Lease payments recognised as an expense	628,434	526,233
27	Financial instruments

Carrying amount of financial assets Assets measured at fair value through profit and loss Carrying amount of financial liabilities Measured at fair value through profit and loss	2024 £ 11,166,073 -	2023 £ 10,974,161 -

Assets measured at fair value through profit and loss represent listed investments.

28 Contingent liability

Notification of claims for unspecified damages have been received in respect of historic allegations. The Education Board are currently investigating whether indemnity insurance was in place covering the dates of the alleged claims and as such, if any claim was successful, it is difficult to determine the financial extent to which the Education Board could be liable or the timings of any possible outflows.

45

Edinburgh Merchant Company Education Board Annual report and financial statements 31 July 2024

Notes (continued)

29 Analysis of changes in net debt

	As at 1	Non-cash		As at 31 July
	August 2023	movements	Cashflows	2024
	£	£	£	£
Cash in hand and at bank less overdrafts	3,271,503	-	13,205,607	16,477,110
Loans	(7,083,587)	-	512,441	(6,571,146)
Finance leases	(393,399)	-	215,470	(177,929)
	_	_	_	_
	(4,205,483)	-	13,933,518	9,728,035
	As at 1	Non-cash		As at 31 July
	August 2022	movements	Cashflows	2023
	£	£	£	£
Cash in hand and at bank	2,073,719	-	1,197,784	3,271,503
Loans	(7,673,433)	-	589,846	(7,083,587)
Finance leases	(699,679)	-	306,280	(393,399)
	_	_	_	_
	(6,299,393)	-	2,093,910	(4,205,483)

30 Related parties

One member of the Merchant Company Education Board, five Governors of GWC, two members of key management of GWC, one Governor of ESMS and one member of key management personnel of ESMS have children who attend the schools.

One member of the Merchant Company Education Board was the Chairman of Scottish Council for Independent Schools and one member of key management of GWC was also a director in the year. During the year, membership fees totalling £54,420 (2023: £51,311) were paid to Scottish Council for Independent Schools. No amounts were outstanding at the year end.

One Governor at GWC was a director at Spktral Limited and in the year £4,680 (2023: £4,680) was paid to Spktral Limited in the year for pay gap analysis. No amounts were outstanding at the year end.

One Governor of ESMS was a director of Multiply UK Limited and in the year consultancy fees of £7,200 (2023: nil) was paid to Multiply UK Limited. No amounts were outstanding at the year end.

One of the Governors of ESMS was also a Partner of Shepherd and Wedderburn LLP. During the year £59,402 (2023: nil) was paid to Shepherd and Wedderburn LLP for legal services in the year. No amounts were outstanding at the year end.

One of the Governors of ESMS was also a Trustee of Social Bite Fund. During the year purchases of £2,988 (2023: nil) were made from Social Bite Fund. No amounts were outstanding at the year end.

31 Post balance sheet events

Subsequent to the reporting period date, reinforced autoclaved aerated concrete (RAAC) was discovered in areas of George Watson’s College. In line with guidance, all affected areas have been closed off and temporary classrooms are being used until the issue is resolved. The estimated cost of dealing with the RAAC issue is expected to be around £2.2m.

46