Charity registration number: SC016809 The Kincarrathie Trust Annual Report and Financial Statements for the Year Ended 31 March 2025 The Kincarrathie Trust Contents Reference and Administrative Details Trustees, Report 2tolO Statement of Trustees, Responsibilities 11 Independent Auditors, ReFQrt 12to15 ststement of Financial Attivities 16to17 Balan￿ Sheet 18 Cash Flow Statement 19 Notes to the Financial Ststements 20to39 The Kincarrathie Trust Reference and Administrative Details Trustees Senior Management Team Prfnclpal Offlce Kincarrathie House Pitcullen Crescent PERTH PH2 7HX Charlty RegistratSon Number SC016809 Investment Advlsors RBC Brewin Dolphin Sixth Floor Atria One 144 Morrison Street EDINBURGH EH3 8BR Audltors Morris & Young, Statutory Auditor Chartered Accountants 6 Atholl CreS￿nt PERTH PHI 5JN Sollcitors Messrs Mccash & Hunter PO Box 17 25 South Methven Street PERTh PHI SES Page I The Kincarrathie Trust Trustees, Report The trustees present the annual repjrt together y￿th the financial statements of the charity for the year ended 31 March 2025. Summary The Care Settor continues to fa￿ the ever-present challenges of sustainability due to continual underfunding of the Sector. This past year has a number of Care Home closures across the sector due to increased running expenses, higher Stsffing costs and the impact of high inflation. This gap between true cost of care and recoverable cost for Lcral Authority funded residents continues to present a significant long term organisational risk and presents a dilemma for the Trustees when comparing the gap tetw*n income from Private residents and those funded by the L¢xal Authority. As has been the case with the rest of the Care Horre sector, these increasing financial pressures have had a significant impact on every asFect of the running of Kincarrathie House. With this in mind the Trustees have monitored closely the income and expenditure budgets as part of our ongoing governan￿ of the organisation. The challenges that The Twst has had to navigate have included: Attempting to limit aLM)ve inflationary cost increases on private rcM)m rate fees wherever possible. The Scottish Government has further legislated on minimum wage rates for workers in the care sertor and at the same ts'me, it has failed to provide adequate inflationary rises to the room rates paid by the Local Authority for funded residents govemed by the Scottish National Care Home Contract, despite a higher than nomial increase in f* rates. Fee rates have increased by a further 6.9% for the year ahead by the Scottish Government for our Council funded residents which will help to cushion the increase in room rates for the forthcoming year. The Trustees would like to record their thanks and appreciation to the staff, and management team, who strive ever day to make Kincarrathie a home from home for all the residents we care for. Page 2 The Kincarrathie Trust Trustees, Report Objectives and activities Objects and aims The Trust's objects are, very generally, instituting or supporting, or both, all manner of work which would in any way be incidental or conducive to the welfare of older people of limited means in and around Perth. To date, the Trustees have decided to concentrate solely on maintaining Kincarrathie House as a Care Home for older people to the highest stsndard possible. The Management and Stsff of Kincarrathie House are committed to ensuring that all residents of Kincarrathie House are treated with dignity and respEtt, whose rights as citizens are in no way diminished (except where the law so prescribes), and who are entitled to live as full and active lives as they desire. The aim of Kincarrathie House is to enable residents to achieve their potential in all aspects of daily life within a congenial and comfortable environment. It is the aim of the Trustees that residents should regard Kincarrathie House as home in every sense of the word. Page 3 The Kincarrathie Trust Trustees, Report Objectives strategies andactivities As an indication of performan￿, the Care Inspectorate system of grading provides a measure of perfomiance. The most recent unannounced visit from the Care Inspectorate took pla￿ on the 12th February 2025 and was a following up inspection. The report highlights that b3th relatives and residents We￿ highty complementsry ab)ut the management and staff. The inspection covered one of the quality indicators.. - l)"How well do we support Feople's wellbeing" We have received a grade of 4 (g￿￿). The Trustees recognise the progress reflected in this improvement and commend the dedication and teamwork demonstrated by all staff that makes Kincarrathie unique. While acknowledging that furtlEr prcgress is Possible the Management team will be working towards this goal over the next 12 months. To that end the Trustees will continue to strengthen our strategic planning/risk management process to tske account of the following:" a) the changing population needs b) staffing levels and training requirements c) increased use of information technology d) increasing financial pressures e) any other identifiable business risks Stsffing levels are assessed on a regular basis and we have increased the number of staff during the year to meet the higher dependenq levels of our ￿idents, this is to ensure safe staffing at all times. A great deal of impM)rtance is attach&J to staff trainingi and staff have the opFortunity to achieve their SVQ qualifications following the completion of a successful probationary pericrfj. We have introduced a trainee F()sition to encourage those new to care as a chosen Car￿r. The performance of staff is regularly reviewed through a formal appraisal pro￿sS, and we have made significant improvements to recruitment and retention by Inc￿sing care workers pay at Kincarrathie House to a rate generou51y atx)ve market average. Page 4 The Kincarrathie Trust Trustees, Report Throughout the year there was significant investment in the ongoing programme of maintenance and improvements which included the redecoration of the West Wing hallwayi lower corridor off reception, the Home Manager and Care Offices, along with ten resident rooms décor and flooring upgrades. Legislative changes to water compliance Spend this year was £6.3k with the same expected next year to complete these upgrade works. Our three yearly Electric Inspection was completed along with the renewal of our Energy Performance Certification and associated Attion Plan. Great care is tsken to ensure the food is not only nutritious but appetizing. A varied diet is provided with fresh vegetables and soft fruit given a high priority with some of it grown in our own walled garden. Menus are varied with appropriate meals provided for special occasions. Due regard is paid to the likes and dislikes of residents, and to the specific dietary requirements of individuals. For the year to the end of March 2025 a wide variety of activities and entertainment was available for residents to maintain a healthy interest in the social aspects of life. Residents have enjoyed a number of activities including music, dance, theatre, guest speakers, talks, in-house exercise sessions, animal visits, and intergenerational events with the local nursery & school children. Participation in our popular Cheese & Wine and Beer & a Pint evenings have reached record levels and is a welcome sight. One of the highlights of the year is our annual garden party which was held in September. This provides an opportunity for ￿SIdents/famIlY and friends to join the Trustees and staff for an afternoon of relaxation and entertainment. Open communication with residents and families of residents is something we value highly, and this IS encouraged in a variety of ways both formal and informal. We are very fortunate to have a strong Senior Management Team and Stsff, who are totally dedicated and committed to putting their skills and time into the running of the Home. Page 5 The Kincarrathie Trust Trustees. Report Financial review The Trust's totsl unrestrthd expendilMre excee&d income this year resulting in an unrestrirted fund deficit of £103,742 (2024 £95,744 Sur￿uS). This figure refletts the increase in value of investments (see bebw) and the depreciation wh'cy adopted in respect of the lease of the property from The Ganncchy Trust. Setting aside the increase in the value of investments (£18,502) and the depreci2tion on lease value & discounted rent value (£47,610) income generated was exceeded by all routine expenditure by just over £74,000 this year. This r&lects a more difficult trading year where occupancy rates fell to 91.790/0 compared to 99.73 % last year. Included in inc¢Jne from donations and legaaes are funds r£reived from the Farquharson Bequest. This bequest, the mair urpose of whith is to provKle funds for The Kincarrathie Trust, was established by and requires to be administered by The Gannochy Trust. Funds are invested by Isio Investment servi￿ Limited and income is generated from dividends and interest from the investments. The objective of the investment pJrtfolMJ is to maintain the ￿31 spending power of the capitsl whilst also generating a reasonable level of income for the Trust, It is predominantly invested in p(K)led funds and the target retum for the portfolio is UK CPI inflation Also induded in income is "investrnent income". This is income generated from the investments managed on behalf of the Trust by RBC Brewin Dolphin. The capital with RBC Brewin Dolphin is primarily the fund5 received from The Gannochy Trust as part of the sale & leaseback agreement (£1.6m) with the balance coming from excess cash held. As at 31st March 2025 the market value of the investment funds had increased by £7,001 (2024 - an increase of £138,478) which demonstrated a continuiThJ small recovery of global financial markets following a reduction in the continuing effects of the war in Ukraine, and a stabilisng of eneryy costs, albeit the cost of living crisis still carries on. Policy on reserves It is the pdicy of the Trust that unrestricted funds, which have not designated for a specffic use, should be maintained at a level to provide sufficient income to allow the Trust to pursue its objettives. Unrestricted funds at the yearend were £3,702,815 (2024 - £3,806,557). Despite the higher adjusted deficit suffered at the year end, the Trust has IEen able to continue to maintain its overall provisDn of care and has maintained its ability to m￿t future rnaIntenan￿ expenditure. Pnnapal funding sources The main funding Sour￿ of the Trust is that of Residents, B)ard incorne. This incorne enab￿ the Trust to fulfil its objects and aims to operate a Care Home for older people to a high standard. Secondary sources of funds are two separate investment incomes from portfolios managed by RBC Brewin Dolphin and Isio Investrnent Services (see Financial review above). Page 6 The Kincarrathie Trust Trustees, Report Investmentpoliry and objectives The general investment p)wers of the Trust are governed by the Tru5Vs founding document. The Trust engaged RBC Brewin Dolphin as investment managers, on a discretionary management basis. The benchmark policy is to adopt a Risk Category 5 investment strategy based on obtsining a balanced return from income and capital. The market value of securities has improved this year as world-wide stock markets recovered to some extent as described above in the Financial Review. The overall gains on investment assets this year of £18,502 (2024 - £149,231 gains) comprise a realised gain on securities sold of £13,418 and an unrealised gain on securities of £5,084 (2024 £4,142 realised loss and £153,373 unrealised gain). Plans for future periods Ainjs and key objectives for future periods The Trustees, strategy for achieving the aims of the Trust is to continue to te sensitive to and to recognise the pjtential in each resident and in particular by understanding that their needs may change over a period of time. A key element linked to this is a continual pro3ramme of staff training. This is reinforced by monthly assessments of the needs and p)tential of each resident by the Manager in conjunction with the resident's Key Worker. Activities planned to achieve aims A continuing programme of maintenance of the building and grounds is in force to ensure that the propety, l)oth internal and external, is maintsined to a high standard. Page 7 The Kincarrathie Trust Trustees, Report Structurei governance and management Jvature ofgoverning docUn￿￿t The Trust was thblished by a Deed of Trust in 1961 by partEs who, at that tirne, were Trustees of The Ganncchy Trust, P￿th whith was set up in 1937 by Arthur Klnmond eell, whisky distiiier, Perth who livej at Kin(arrathie House, Pwth. Oryani&7tional stnKtu The organisatK)nal structure of the Trust coffprises three Trustees (one of Wr￿M is aprointed Chairperson for an indefinite perDd), all of whom are unpaid. The Trust￿5 who serrfed during the year and were apFointed by thar P￿eCess0rs were: Recmitment and appwntment of trustees Trustees *rve until ￿IgnatI.On, death or removal. Ne*V Trustees ae assumed by the rernaining Trust￿ or Trustees, ensuring that not more than ttree Trustees act at any given time. Inductson and traininq of tmstees An infomiatiiM pack is provided to neN Trust￿ which indudes copies of the founding 1961 fked of Trus( Minutes cf NeetiThJs of the Trustees for the previous year and the latest brochure for the Home contsining a Ststement of Purp)se, copies of recent Care Ir5￿￿torate InspectK)n Reports, current charges and servi￿$ and other relevant inforrnab'on. In addition, copies of the Trust's last three years, annual reports and accounts are made available, together with a copy of the offi￿ of the Scottish Charty RegukHtor's (OSCR) publKation 'Gu￿an￿ and Gcod Practi￿ for Charity Trustees" Trustee"away days" and trainin9 sesgons on specific subjects are arranged on a regular basis. Arrangements for setting key nMnagenientpern?nnel remuneration is the Fbrne ManaJer and ￿ is the Finan￿ and Business Manager. have responsibilty for the day-ttrday administration of the operation of the Home in accordan￿ with instrurt1(￿S prov￿￿1 by the Trustees, vtho have fomial meetings with them, on a qLkArterky basis. salaries of the Care Home Manager Finan￿ & Business Manager are reviewed on an annual basis by the Trust￿5. Page 8 The Kincarrathie Trust Trustees, Report Financial instruments Objertives andpolia.es The Charity's activities expose it to a number of financial risks including credit risk, cash flow risk and liquidity risk. The Trustees have assessed the major risks to which the Trust is exposed and are satisfied that systems are in place to mitigate its exposure to major risks including arrangements to review the risks on a regular basis. In this connection, the Board consider and, whe￿, necessary amend, the Trust's Risk Matrix at every formal meeting of Trustees. Cash flow nsk The Trustees have retained adequate cash resources to meet the immediate requirements of the Trust. Credlt rfsk The Charity's principal financial assets are bank balances, residents, board income, and cash and other regulated investments on which, and as explained elsewhere in this Report, the Trustees receive appropriate professional advice. The Charity's credit risk is primarily attributable to its residents, board income. The amounts presented in the balance sheet are net of allowances for doubtful receivables. An allowance for impairment is made where there is an identified loss event which, based on previous experien￿, is evidence of a reduction in the recoverability of the cash flows. The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. The Charity has no significant concentration of credit risk, with exposure spread over a number of counterparties and customers. Liquidity rlsk In order to maintsin liquidity to ensure that sufficient funds are available for ongoing operations and future developments, the Trust's liquid funds are kept in a combination of a non-interest-bearing and interest-bearing banklbuilding society accounts for seNicing the Trust's everyday financial needs. Disclosure of information to auditor Each trustee has taken steps that they ought to have taken as a trustee in order to make themselves aware of any ￿levant audit information and to establish that the charity's auditor is aware of that information. The trust*s confirm that there is no relevant information that they know of and of which they know the auditor is unaware. Page 9 The lQncarrnthSe Trust Trustees, Report The annual report was approved ty the trustees of d)arity on 12 AUg￿t 2025 and signed ￿ its behalf by: Page io The Kincarrathie Trust ststement of Trustses, Responsibilities The trust*s are responsible for preparing the Tru5tees' Annual Report and the financial Statements in accordance with the United Kingdom Accounting Stsndards (United Kingdom Generally Accepted Accounting Practice) and applicable law and regulations. The law applicable to charities requires the trustees to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the charity and of the incoming resources and application of resources of the charity for that pericxl. In preparing these financial ststements,the trUSt￿S are required to: select suitable accounting px)licies and then apply them consistently; observe the methods and principles in the Charities SORP; make judgements and estimates that are reasonable and prudent; state whether applicable accounting stsndards have b*n followed, subject to any material departU￿S disclosed and explained in the financial ststements; and prepare the financial statements on the going con￿rn basis unless it is inappropriate to presume that the charity will conts'nue in business. The trust*s are responsible for k&ping proper accounting records that disclose with reasonable accuracy at any time the financial wsiti'on 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 Trust Deed. The trustees are also resFK)nsible for safeguarding the assets of the charity and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Page 11 The Kincarrathie Trust Independent Auditor's Report to the Members of The Kincarrathie Trust Opinion We have audited the financial statements of The Kincarrathie Trust (the 'charity') for the year ended 31 March 2025, which comprise the Statement of Financial Activities, Balance Sheet, Cash Flow Statement, and 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 Stsndards, comprising Charities SORP (FRS 102) and The Financial Reporting Stsndard applicable in the UK and Republic of Ireland, (FRS 102) (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 March 2025 and of its results for the year then ended. have been properly prepared in accordan￿ with United Kingdom Generally Accepted Accounting Prattl￿. and have been prepared in accordan￿ with the requirements of the Charities and Trust￿ Investment (Scotland) Act 2005 and regulation 8 of the Charities Accounts (Scotland) Regulations 2006 (as amended). Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAS (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditorfs 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 t￿lieVe that the audit eviden￿ we have obtsined is sufficient and appropriate to provide a basis for our opinion. Conclusions relating to going con￿rn In auditing the financial statements, we have concluded that the Trustees, use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Based on the work we have performed, we have not identified any material Un￿rtaIntieS relating to events or conditions that, individually or collertivelyi 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 reswnsibilities of the Trustees with respect to going con￿rn are described in the relevant sertions of this report. Other information The trustees are responsible ft)r the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements doe5 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. Page 12 The Kincarrathie Trust Independent Auditor's Report to the Members of The Kincarrathie Trust In connection with our audit of the financial statements, our reswnsibility 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 obtsined in the audit or otheNise appears to be materially misststed. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial ststements or a material misststement of the other infomiation. 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 repM)rt in this regard. Matters on which we are required to report by exception In the light of our knowledge and understanding of the charity and its environment obtsined in the course of the audit, we have not identified material misstatements in the Trustees, Report. We have nothing to report in respect of the following matters where the Charities Accounts (Scotland) Regulations 2006 (as amended) requires us to report to you if, in our opinion: adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or the financial statements are not in agr￿ment with the accounting records and returns. or rtain disclosures of trustees remuneration specified by law are not made; or we have not received all the information and explanation5 we require for our audit. Responsibilities of trustees As explained more fully in the Ststement of Trustees, Responsibilities (set out on page 11), 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 detemine 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 con￿rn and using the going con￿rn basis of accounting unless the trustees either intend to liquidate the charity or to cease operations, or have no realistic alternative but to do so. Auditor's responsibilities for the audit of the financial statements Our objectives are to obtsin reasonable assuran￿ alx)ut 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 assuran￿ is a high level of assuran￿, but is not a guarantee that an audit conducted in accordan￿ 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 ststements. Extent to which the audit was considered capable of detecting irregularities, including fraud We identify and assess the risks of material misststement of the financial statements, whether due to fraud or error, and then design and perform audit prccedures responsive to those risks, including obtaining audit eviden￿ that IS sufficient and appropriate to provide a basis for our opinion. Page 13 The Kincarrathie Trust Independent Auditor's Report to the Members of The Kincarrathie Trust Identifylng and assessing potential risks related to irregularitses Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our ￿ponsibIlItieS, Outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our prcKedures are capable of detecting irregularities, including fraud is detailed below: the nature of the regulated sector, control environment arKI understsnding of the entity includingi but not restricted to, the understsnding that the trustees a￿ rKJt remunerated, and the prevalence of fraud in the sector especially in the current un￿rtain ecor￿MiC environment. results of our enquiries of trustees a￿ut their own identification and assessment of the risks of irregularities. any matters we identified having obtained and reviewed the Charity's d￿umentatIon of their policies and prcKedures relating to: identifying, evaluating and complying with laws and regulations and whether they We￿ aware of any instsn￿ of non-complian￿. detecting and responding to the risks of fraud and wPthr they have knowledge of any actual, suspected or alleged fraud; the internal controls estsblished to Mitigate risks of fraud or non-complian￿ with laws and regulations; the matters discussed among the audlt engagement team regardlng how and where fraud might occur in the financial ststernents and any potential indicators of fraud. As a result of these pr(xedures, we consKlered the opry)rtunities that may exlst wlthln the organlsation for fraud and identified the greatest w)tential for fraud in relation to revenue recognition. In common wlth all audits under ISAS (UK), we a￿ also required to perform specific proCedU￿S to respond to the risk of management override. We also obtained an understsnding of the legal and regulatory frameworks that the Charity operates In, focusing on provisions of those laws and regukitions that had a direct effect on the determination of materlal amounts and disclosu￿ In the financial statements. The key laws and regulations we considered in this context included the charrt￿S own Deed of Trust, and various charity-specific legislation, including The Charities and Trustee Investment (ScotlarKI) Act 2005. Our procedures to respond to risks identified irKluded the following: reviewing the financial ststement disclosures and testing to supporting documentation to assess compliance with provisions of rele4ant laws and regulations described as having a direct effect on the financial ststements; enquiring of Trustees and legal advisors Con￿MIng actual and k￿ntial litigation and claims; perfoming analytical pr£￿edU￿ to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fra￿￿. reading minutes of meetirKJs of those charged with governan￿. proof in totsl of Residenys Board and investment income was conducted, and consideration given to revenue recognition accounting policies. Also revie4ved the minutes of meetings for completeness of income; Page 14 The Kincarrathie Trust Independent Auditorfs Report to the Members of The Kincarrathie Trust in addressing the risk of fraud through management override of controls, testing the appropriateness of joumal entries and other adjustsnents; assessirvj whetfrer the judgements made in making accounts'ng estimates are indicats've of a ￿tents.31 bias. and evaluating the business rationale of any ￿gnificant transactions that are unusual or outsKk the normal course of business. We also communicated relevant thntified laws and regulations and wtentlal fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations thr