Annual Report and Financial Statements, IBSA (2007)

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Annual Report and financial statements Year ended 31 August 2007

International Bible Students Association International Bible Students Association

Contents of the financial statements For the year ended 31 st August 2007

Page

Report of the Trustees 1 to 4

Report of the Independent Auditors 5

Statement of Financial Activities 6

Balance Sheet 7

Cash Flow Statement 8

Notes to the Financial Statements 9 to 13 International Bible Students Association

Report of the trustees For the year ended 31 st August 2007

The trustees who are also directors of the charity for the purposes of the Companies Act 1985, present their report with the financial statements of the charity for the year ended 31 August 2007. The trustees have adopted the provisions of the Statement of Recommended Practice (SORP) 'Accounting and Reporting by Charities' issued in March 2005.

Reference and administrative details

Registered Company number 136726

Registered Charity number 216647

Registered office IBSA House The Ridgeway London NW7 1RN

Trustees S A Hardy J S Andrews J D Dutton P P Bell S Papps

appointed 22.8.07

Company Secretary S D Smith

Auditors Calcutt Matthews Chartered Accountants and Registered Auditors 2nd Floor Cardine House 30 North Street Ashford Kent TN24 8JR

Bankers Barclays Bank plc PO Box 12820 London BX3 2BB

Investment Advisers

Investment Advisers Merrill Lynch International Bank Ltd 2 King Edward Street London EC1A 1HQ

Structure, governance and management

Governing document

The charity was incorporated on 30th June 1914 and is governed by the Memorandum and Articles of Association of that date as amended by special resolutions on 20th April 1951, 10th January 1958 and 28th November 2005 and the 4th January 2006.

Recruitment and appointment of new trustees

The Trustees of the Association who held office during the year, and at the date of this report, are set out on page 1. These trustees have key managerial roles at the charity's headquarters. They meet weekly and are in regular contact from day to day. Trustees are elected annually by a simple majority of the members present at the AGM.

The recruitment and induction of new Trustees is arranged as follows. On an annual basis the Trustees review potential candidates. These are required to be appointed as elders in congregations of Jehovah's Witnesses. Their abilities are evaluated by means of the Trustees' personal knowledge of the candidates or by a "personal qualifications report" provided by elders with knowledge of the individuals. Training is arranged as part of the meetings of the Trustees when the charity's policies are discussed. This is supplemented by an annual training session provided by the auditors.

International Bible Students Association

Report of the trustees

For the year ended 31st August 2007

Structure, governance and management...continued

Induction and training of new trustees

Trustees are given Charity Commission publications and are sent on a two month course which includes training in legal and financial matters.

Organisational structure

The charity is constituted as a company limited by guarantee.

The trustees organise the running of the charity through a number of departments. Each department is headed up by a trained and experience department overseer who will make regular reports to the Trustees.

Wider network

The charity is responsible for the spiritual welfare of Jehovah's Witnesses in Britain and those studying the Christian faith. Similar charities exist in many countries around the world. Co-ordination of spiritual affairs is through the World Headquarters in the U.S.A.

Related parties

The Association works closely with Watch Tower Bible and Tract Society of Britain (Watch Tower). It provides volunteers for Watch Tower to use in its activities. It permits Watch Tower to use its facilities for the Watch Tower's charitable work and provides accommodation for the volunteers. A service and maintenance charge is made which includes the cost of the volunteers. The Association purchases religious material from Watch Tower and donates this to congregations of Jehovah's Witnesses.

Risk management

The major risks to which the charity is exposed have been formally reviewed, with particular focus on events that would seriously impede the operations of the charity. Strategies and safeguards are in place to reduce, as far as possible, the impact of those risks. The risk register was updated most recently in August 2007. The principal risks addressed were Disaster recovery and planning; Failure to comply with legal requirements on health and safety, fire, environment, waste; Construction projects; Contamination of food.

Objectives and activities

Objectives and aims

The object of the Association is to promote the Christian religion by supporting congregations of Jehovah's Witnesses and others in connection with their spiritual and material welfare in Britain and abroad within the charitable purposes of the Association. This is achieved mainly by the provision of facilities for the printing and distribution of Bibles and Bible based literature and the housing of the volunteers engaged in this activity. In addition, religious literature is purchased and distributed free of charge. Conventions for Christian education are arranged on an annual basis.

Significant activities

Since the completion of our major building projects, it has been possible to sell off some of the residential properties used to house volunteers engaged on those projects and repay a substantial part of a loan made to us by Watch Tower Society. At the same time, a review of the operating costs of our farm led to the decision to close that leased facility on economic grounds, and this will be implemented by October 2008. There is a consistent demand for the religious literature we purchase from Watch Tower Society, and the cost of our providing this has increased.

Grant making

Our grant making policy is as follows. From time to time we are asked by the Governing Body of Jehovah's Witnesses to consider helping Jehovah's Witnesses in countries where a need exists. We first consider whether the budget permits. If this is the case we satisfy ourselves that the expenditure will further the religious work of Jehovah's Witnesses and we then send the money to the organisation caring for Jehovah's Witnesses in that country. Finally, we obtain reports to confirm the money was properly used.

Volunteers

The charity is run entirely by trained, unpaid volunteers and it is appropriate that we here express appreciation for their tireless efforts, resulting in a significant financial benefit to the charity. The basis for the care of their material needs is explained in note 9 of the accounts.

International Bible Students Association

Report of the trustees

For the year ended 31st August 2007

Achievement and performance

Charitable activities

Provision of literature for Bible education

The literature we donate to congregations of Jehovah's Witnesses plays a pivotal role in their Bible teaching activity. This activity reached out to the communities in the area covered by the congregations resulting in 52,032 families and individuals receiving instruction in their own homes. 1,200 tonnes of Bible literature were donated to congregations in the UK. Campaigns were mounted to invite the general public to important annual events. A total of 112 million invitations were distributed to congregations in the UK and overseas. A special effort is being made to provide literature and teaching facilities for ones who learn better in another language.

Conventions for Bible education

These summer conventions were again well attended; the total of almost 154,000 was up on last year. Conventions were held in three additional languages. The delegates at the British Sign Language convention were delighted to receive three new Bible drama DVDs in BSL that we had purchased for them from Watch Tower Society.

Overseas aid

We had adequate funds to be able to respond to all of the requests received from the Governing Body of Jehovah's Witnesses, in connection with lands where the economy is poor. The total of £3,945,000 included our donating property worth 2.14 million to Jehovah's Witnesses in Uganda.

Fundraising activities

Because of the consistent support we enjoy from congregations of Jehovah's Witnesses, we do not engage in fundraising activities as such. We include a reminder about methods of donating, either in our monthly letter of thanks to congregations, or in our internal newsletter prior to the annual conventions. We find this to be adequate. We do make an "at-cost" charge to Watch Tower Society for giving them printery, warehouse and domestic accommodation, which does generate funds of course.

Investment performance

Just before the year end the charity made the decision to sell off its investments to help clear loan obligations. The trustees are satisfied with the results for the year.

Internal Controls

These controls ensure that the monthly financial reports accurately represent all transactions, provide reasonable assurance that finances are being used for their intended purpose and verify that proper controls and procedures are in place and adhered to, so that the figures are recorded accurately and accounts are in balance. The internal audit programme has been achieved. The internal auditor and his assistant, both drawn from the volunteer workforce, have a set agenda to pursue through the year and reported again in writing to the Trustees in October 2007. Approved recommendations were implemented.

Financial review

Reserves policy

The Association has free reserves of approximately £6 million. The Association has a reliable donation base, being primarily the 1,517 congregations of Jehovah's Witnesses in the UK. Hence, we can plan confidently with relatively small reserves, having in mind that we charge Watch Tower Society for the cost of running the HQ complex and we respond to the needs for funds overseas only after filling our domestic requirements. Our established policy is to ensure that we have on hand in liquid funds at least three months' working expenditure. At the year end, liquid assets on hand equate to 6 months of expenditure (2006:7 months).

Principal funding sources

The charity is funded by donations, legacies and payment from Watch Tower Society; the latter covers the cost of operating the headquarters complex.

Future developments

The workload of Watch Tower Society continues to increase, and we are prepared to provide whatever facilities they need to care for their work. There is a growing demand for funds in the less-developed parts of the world, and we aim to be able to respond to anticipated further requests from the Governing Body of Jehovah's Witnesses.

The upcoming London Emissions Zone legislation comes into effect in February 2008. This requires us to replace some vehicles to meet the Euro 4 specification, involving a possible outlay of £60,000.

International Bible Students Association

Report of the trustees

For the year ended 31st August 2007

Statement of trustees responsibilities

The trustees are responsible for preparing the financial statements in accordance with applicable law and United Kingdom Generally Accepted Accounting Practice.

Company law requires the trustees to prepare financial statements for each financial year. Under that law the trustees have elected to prepare the financial statements in accordance with the United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The financial statements are required by law to give a true and fair view of the state of affairs of the Association and of the surplus or deficit of the charitable company for that period. In preparing those financial statements, the trustees are required to

select suitable accounting policies and then apply them consistently;

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;

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the charitable company will continue in business.

The trustees are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the charitable company and enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the charitable company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Statement as to disclosure of information to auditors

So far as the trustees are aware, there is no relevant information (as defined by Section 234ZA of the Companies Act 1985) of which the Association's auditors are unaware, and each trustee has taken all the steps that they ought to have taken as a trustee in order to make them aware of any audit information and to establish that the Association's auditors are aware of that information.

Auditors

The auditors, Calcutt Matthews, will be proposed for re-appointment in accordance with Section 385 of the Companies Act 1985.

On behalf of the board:

John Andrews

Trustee

Date: 2 n d January 2008 International Bible Students Association

Report of the independent auditors to the members of International Bible Students Association

For the year ended 31st August 2007

We have audited the financial statements of International Bible Students Association for the year ended 31 August 2007 which comprise the Statement of Financial Activities, the Balance Sheet, the Charity Cash Flow Statement and the notes 1 to 20 on pages six to thirteen.

This report is made solely to the Association's members, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the Association's trustees those matters we are required to state to them in an auditors' 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 Association and the Association's trustees as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of trustees and auditors

The trustees' responsibilities for preparing the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out on pages one to four.

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true and fair view in accordance with the relevant financial reporting framework and are properly prepared in accordance with the Companies Act 1985. We also report to you whether in our opinion the information given in the Report of the Trustees is consistent with the financial statements.

In addition, we report to you if, in our opinion, the Association has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding trustees' remuneration and other transactions is not disclosed.

We read the Report of the Trustees and consider the implications for our report if we become aware of any apparent misstatements within it.

Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the trustees in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Association's circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error.

In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.

Opinion

In our opinion:

the financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting

Practice, of the state of the Association's affairs as at 31 August 2007 and of its surplus for the year then ended;

the financial statements have been properly prepared in accordance with the Companies Act 1985; and

the information given in the Report of the Trustees is consistent with the financial statements.

Calcutt Matthews

Chartered Accountants and Registered Auditors

2nd Floor Cardine House

30 North Street

Ashford

Kent

TN24 8JR

Date: 3 rd January 2008 International Bible Students Association

Statement of financial activities For the year ended 31 st August 2007

31.8.07

Unrestricted

funds

31.8.06

Total

funds

Notes

£'000

£'000

Incoming resources

Incoming resources from generated funds

Voluntary income

Activities for generating funds

Investment income

Total incoming resources

13012

14079

Resources expended

Costs of generating funds

Cost of generating funds

Charitable activities

Provision of literature for Bible education

Provision of conventions for Bible education

Donations and aid overseas

Governance costs

Total resources expended

15012

11505

Net (outgoing)/incoming resources

(2000)

Other recognised gains/losses

Gains on sale of tangible fixed assets and investments

Net movement in funds

Reconciliation of funds

Total funds brought forward

47309

43811

Total funds carried forward

49467

47309

Continuing operations

All incoming resources and resources expended arise from continuing activities.

None of the charity's activities were acquired or discontinued during the current and previous years. All gains and losses recognised in the year are included above. The surplus for the year for Companies Act purposes comprises the net incoming resources for the year together with the realised gains on sales of tangible fixed assets and investments of £2,157,995 (2006: £3,307,690).

International Bible Students Association

Balance sheet

For the year ended 31st August 2007

31.8.07

Unrestricted funds

£'000

31.8.06

Total funds

£'000

Fixed assets

Tangible assets

53,540

59,673

Current assets

Stocks

Debtors: amounts falling due within one year

Investments

4,922

Cash at bank and in hand

6,217

1,796

6,701

7,526

Creditors

Amounts falling due within one year

(605)

(740)

Net current assets

6,096

6,786

Total assets less current liabilities

Creditors

Amounts falling due after more than one year

(10,169)

(19,150)

Net assets

49,467

47,309

Funds

Unrestricted funds

49,467

47,309

Total funds

The financial statements were approved by the Board of Trustees on 2nd January 2008 and were signed on its behalf by:

J D Dutton Trustee

John Andrews Trustee International Bible Students Association

Cash flow statement

For the year ended 31st August 2007

Notes

£000

£000

Net cash (outflow)/inflow from operating activities

(13)

Returns on investments and servicing of finance

(700)

Capital expenditure&financial investment

(488)

(3346)

Increase in cash in the period

Reconciliation Of Net Cash Flow To Movement In Net Funds

Increase in cash in the period

Movement In Net Funds In The Period

Net Funds At 1st September 2006

Net Funds At 31st August 2007

Increase in cash in the period

International Bible Students Association

Notes to the financial statements

For the year ended 31 st August 2007

Accounting policies

Accounting convention

The financial statements have been prepared under the historical cost convention with the exception of current asset investments which were held at market value, and in accordance with applicable accounting standards the Companies Act 1985 and the requirements of the Statement of Recommended Practice, Accounting and Reporting by Charities with the exception of current assets which were held at market value.

Donations receivable

All incoming resources are included on the Statement of Financial Activities when the charity is legally entitled to the income and the amount can be quantified with reasonable accuracy. No income is deferred. Donations are from the public, congregations and other connected charities.

Activities for Generating funds

Service charge income received from a connected charity is paid by Watch Tower Bible and Tract Society of Britain on a cost basis.

Legacies

The value of legacies is brought into the accounts at the earlier of the charity being notified of an impending distribution or the legacy being received.

Resources expended

Expenditure is accounted for on an accruals basis and has been classified under headings that aggregate all cost related to the category. Where costs cannot be directly attributed to particular headings they have been allocated to activities on a basis consistent with the use of resources.

Cost of generating funds

Costs of generating funds comprises the costs of providing and maintaining accommodation and associated support costs for the purpose of the charge referred to in the Activities for Generating funds policy above.

Grant Making

Our grant making policy (donations) is as follows. From time to time the charity is asked by the Governing Body of Jehovah's Witnesses to consider helping Jehovah's Witnesses in countries where a need exists. The charity first considers whether sufficient funds are available to proceed with the request from the Governing Body. Grants payable are recognised in the accounts at the date at which the trustees approve the expenditure.

From time to time the trustees review whether properties held overseas might better be transferred to a local branch.

Support costs

The charity runs IT, legal and treasury departments. The Support cost are allocated to the relevant Charitable activity by computer usage.

Governance costs

Governance costs comprise external audit fees and other fees from Consultants. All other administrative costs are re-charged.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life. Items are capitalised when the cost is greater than £1,000.

Land & Buildings -2% on cost

Plant and machinery -10% on cost

Motor vehicles -25% on reducing balance

Stocks

Stocks comprise Electrical, Maintenance, Home and Farm supplies .and are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Taxation

The charity is exempt from corporation tax on its charitable activities. The charity is registered for VAT.

Fund accounting

Unrestricted funds can be used in accordance with the charitable objectives at the discretion of the trustees.

The charity has no restricted funds.

International Bible Students Association

Notes to the financial statements - Continued For the year ended 31st August 2007

Voluntary income

31.8.07

31.8.06

£'000

£'000

Cash Donations

7,586

7,217

Freehold property donated

1,838

Legacies

1,203

8,789

9,996

Activities for generating funds

31.8.07

31.8.06

£'000

£'000

Service charge income

3,916

3,898

Investment income

31.8.07

31.8.06

£'000

£'000

Interest&dividends receivable

Cost of generating funds

31.8.07

31.8.06

£'000

£'000

Cost of accommodation and housing volunteers

3,819

3,830

The charity housed 581 (2006:587) volunteers engaged full time in the year.

Charitable activities costs

31.08.07

31.08.06

£'000

£'000

Provision of literature for Bible education

6,574

5,576

Provision of conventions for Bible education

Donations and aid overseas*

3,945

1,438

11,172

7,656

*In 2007 this includes the donation of freehold property that had been owned by the charity to Uganda branch of Jehovah's Witnesses.

Governance costs

31.8.07

31.8.06

£'000

£'000

Other professional fees

Auditors' remuneration

Net incoming/(outgoing) resources

Net resources are stated after charging/(crediting):

31.8.07

31.8.06

Auditors' remuneration

Depreciation - owned assets

1,141

1,113

International Bible Students Association

Notes to the financial statements - Continued

For the year ended 31st August 2007

Trustees' remuneration and benefits

There were no trustees' remuneration or other benefits for the year ended 31 August 2007 nor for the year ended 31 August 2006.

The trustees confirm that they have not been involved with any transactions of the charity. The Association has close connections with Watch Tower Bible & Tract Society of Britain, referred to as "Watch Tower" , which prints Bible based literature and which is a registered charity with similar objects. This charity also has the same registered office as that of the Association.

The trustees of IBSA receive no payments or reimbursements in their capacity as trustees. The trustees are also volunteer workers at the Association's premises, they receive personal expense allowances of 82 per month and a personal expense gift of 300 per year with free board and lodging as indeed do all volunteers. These expenses are charged on to the Watch Tower Bible and Tract Society of Britain (charity registration number 1077961) a connected charity as explained in the Trustees' Report.

Trustees' Expenses

There were no trustees' expenses paid neither for the year ended 31 August 2007 nor for the year ended 31 August 2006.

Tangible fixed assets

Tangible fixed assets

Land&Buildings£'000

Plant and machinery£'000

Motor vehicles£'000

Totals£'000

Cost

At 1 September 2006

67,511

1,058

69,025

Additions

3,037

3,614

Disposals

(9,148)

(33)

(73)

(9,254)

At 31 August 2007

61,400

1,602

63,385

Depreciation

At 1 September 2006

8,550

9,352

Charge for year

1,141

Eliminated on disposal

(561)

(35)

(52)

(648)

At 31 August 2007

8,899

9,845

Net book value

At 31 August 2007

52,501

53,540

At 31 August 2006

58,961

59,673

The trustees are of the opinion that the market value of land and building was in the order 76.6 million. This figure is based on the trustees knowledge of the value of comparative properties held locally.

Stocks

31.8.07

£'000

31.8.06

£'000

Stocks- Electrical, Maintenance, Home and Farm supplies

International Bible Students Association

Notes to the financial statements - Continued For the year ended 31st August 2007

Debtors: amounts falling due within one year

31.8.07

31.8.06

£'000

£'000

Trade debtors

Other debtors

Due from connected charity

Current asset investments

£'000

£'000

Listed investments at market value

At the 31st August 2007 the charity transferred its investments to Watch Tower Society at market value, as part-payment of the loan owed to Watch Tower Society.

Creditors: amounts falling due within one year

31.8.07

31.8.06

£'000

£'000

Trade creditors

Social security and other taxes

Other creditors

Due to connected charity

Creditors: amounts falling due after more than one year

31.8.07

31.8.06

£'000

£'000

Other loans(see note 16)

Loan from connected charity*

10,169

18,668

10,169

19,150

The loan is from Watch Tower, a connected charity identified in note 9. The loan was made to assist the charity with the purchase of buildings. During the year IBSA sold buildings it no longer required and therefore repaid a significant element of the loan.

The trustees wish to express their indebtedness to Watch Tower trustees for providing the loan interest free. The trustees of Watch Tower are of the opinion that in view of the fact that the objectives of Watch Tower are similar to those of IBSA that they can treat the interest element as a donation.

Loans

An analysis of the maturity of loans is given below:

31.8.07

31.8.06

£'000

£'000

Amounts falling between one and two years:

Merrill Lynch-1-2 years

International Bible Students Association

Notes to the financial statements - Continued For the year ended 31 st August 2007

Movement in funds

Net movement

At 1.9.06£'000

in funds£'000

At 31.8.07£'000

Unrestricted fundsGeneral fund

47,309

2,158

49,467

Total funds

47,309

2,158

49,467

Net movement in funds, included in the above are as follows:

Incoming resources

Resources expended

Gains and losses

Movement in funds

£'000

£'000

£'000

£'000

Unrestricted funds

General fund

13,012

(15,012)

4,158

2,158

Total funds

13,012

(15,012)

4,158

2,158

Net cash (outflow)/inflow from operating activities

31.08.07

£000

Net incoming resources and investment gains

2,158

3,308

Decrease in stocks

Decrease in debtors

(Decrease)/Increase in creditors

(135)

(735)

Loss/(Profit) on sale of assets

(3,501)

Depreciation

1,141

1,112

£(13)

£4,081

Returns on investments and servicing of finance

31.08.07

£000

Sale/(Purchase)of investments

4,922

(700)

Capital expenditure and financial investment

31.08.07

£000

Purchase of tangible fixed assets

(3,614)

(2,827)

Sale proceeds of tangible fixed assets

12,107

Loan repaid

(8,981)

(2,369)

Loan advances

1,700