Annual Report and Financial Statements, IBSA (2008)

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Annual Report and financial statements Year ended 31 August 2008

International Bible Students Association International Bible Students Association

Contents of the financial statements For the year ended 31 st August 2008

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 Cash Flow Statement 9

Notes to the Financial Statements 10 to 14 International Bible Students Association

Report of the trustees

For the year ended 31st August 2008

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 2008. 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

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

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

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

Events since the end of the year

Information relating to events since the end of the year is given in the notes to the financial statements.

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 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 above. 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 2008

Structure, governance and management

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

Charities with similar objects exist in many countries around the world. Co-ordination is through the Governing Body of Jehovah's Witnesses, located at their headquarters in the United States.

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

There is an increasing demand for the religious literature we purchase from Watch Tower Society, hence the cost of our providing this has risen. The decision to close our farm operations on economic grounds has been implemented. In this connection having considered the guidance from the Charity Commission, the Trustees' powers in the memorandum of association, the history of the tenancy and the intention of the parties, the probable outcome and the balance of likely advantage to the charity in the light of the legal strength of our claim, the cost of pursuing it and the ability of the other party to pay, it was decided, in the best interests of the charity, not to seek to enforce our potential legal entitlements (1) under the 1989 agreement or (2) to compensation for surrender of subsidies, in the total sum of £52,000.

Grantmaking

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.

Achievement and performance Charitable activities

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 families and individuals receiving instruction in their own homes. It was pleasing to learn that during the year under review, 2,918 individuals made the decision to become baptised members of the congregation, and the result was a net increase of 1% in those actively involved in the evangelising work. A special effort is being made to provide literature and teaching facilities for ones who learn better in another language.

International Bible Students Association

Report of the trustees

For the year ended 31st August 2008

Conventions for Bible education

These summer conventions were again well attended; the total of almost 153,451 was up on last year. 245,000 copies of new Bible study aid "Keep Yourselves in God's Love" were distributed without charge at the conventions.A similar number of the book "Questions Young People Ask - Answers that Work"(volume 2)were likewise distributed,and eagerly received.

Achievement and performance

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 was £1,089,000.

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

The trustees are satisfied with the results for the year. Money is held in first class banks,with the bulk in liquidity funds that are protected or "ring fenced" in the event of bank failure.

Internal factors

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 2008. Approved recommendations were implemented.

Financial review

Reserves policy

The Association has free reserves of approximately 7.9 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 7 months of expenditure (2007:6 months).

Principal funding sources

The charity is funded by donations and legacies. Also payments from Watch Tower Society cover the cost of operating the headquarters complex.

Future developments

We are planning to enhance our office facilities to allow more space for Watch Tower Society to expand its work of translating religious literature.

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 charitable company 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.

International Bible Students Association

Report of the trustees For the year ended 31 st August 2008

Statement of trustees' responsibilities...continued

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 to 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 charitable company'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 charitable company's auditors are aware of that information.

On behalf of the board:

Stephen A Hardy Trustee

Date: January 7,2009 International Bible Students Association

Report of the Independent Auditors to the Members of International Bible Students Association For the year ended 31 st August 2008

We have audited the financial statements of International Bible Students Association for the year ended 31 August 2008 on pages six to fourteen. These financial statements have been prepared under the accounting policies set out therein.

This report is made solely to the charitable company'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 charitable company'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 charitable company and the charitable company'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 page three.

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 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 charitable company 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 charitable company'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 charitable company's affairs as at 31 August 2008 and of its incoming resources and application of resources, including its income and expenditure 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

Calcutt Matthews

Chartered Accountants and Registered Auditors

2nd Floor Cardine House

30 North Street

Ashford

Kent

TN24 8JR

Date: 8 January 2009 International Bible Students Association

Statement of financial activities For the year ended 31 st August 2008

31.8.08

Total funds

£'000

31.8.07

Total funds

£'000

Incoming resources

Incoming resources from generated funds

Voluntary income

7,747

8,789

Investment income

Incoming resources from charitable activities

Provision of working and residential accommodation

3,782

3,916

Other incoming resources

1,474

3,501

Total incoming resources

13,437

16,513

Resources expended

Charitable activities

Provision of literature for Bible education

7,033

6,574

Provision of conventions for Bible education

Donations and aid overseas

1,089

3,945

Provision of working and residential accommodation

3,684

3,819

Governance costs

Total resources expended

12,462

15,012

Net incoming resources

Other recognised gains/losses

1,501

Gains/(losses) on investment assets

Net movement in funds

2,158

Reconciliation of funds

Total funds brought forward

49,467

47,309

Total funds carried forward

50,443

49,467

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 investments of £976,382 (2007: £2,157,995).

International Bible Students Association

Balance sheet

For the year ended 31st August 2008

31.8.08

Total funds

£'000

31.8.07

Total funds

£'000

Fixed assets

Tangible assets

52,671

53,540

Current assets

Stocks

Debtors: amounts falling due within one year

Investments

Cash at bank and in hand

7,801

6,217

8,423

6,701

Creditors

Amounts falling due within one year

(482)

(605)

Net current assets

7,941

6,096

Total assets less current liabilities

60,612

59,636

Creditors

Amounts falling due after more than one year

(10,169)

(10,169)

Net assets

50,443

49,467

Funds

Unrestricted funds

50,443

49,467

Total funds

The financial statements were approved by the Board of Trustees on January 7,2009 and were signed on its behalf by:

Stephen A Hardy Trustee

John Andrews Trustee International Bible Students Association

For the year ended 31st August 2008

Notes

31.8.08

£'000

31.8.07

£'000

Net cash (outflow)/inflow from operating activities

(312)

Returns on investments and servicing of finance

(8674)

Capital expenditure and financial investment

Increase in cash in the period

Reconciliation of net cash flow to movement in net debt

Increase in cash in the period

Cash (outflow)/inflow from increase/(decrease) in liquid resources

(4922)

Cash outflow from decrease in debt

Change in net debt resulting from cash flows

(18)

Movement in net debt in the period

(18)

Net debt at 1 September

Net debt at 31 August

International Bible Students Association

Notes to the cash flow statement For the year ended 31st August 2008

Reconciliation of net incoming resources to net cash (outflow)/inflow from operating activities

31.8.08

£'000

31.8.07

£'000

Net incoming resources

1,501

Depreciation charges

1,141

Surplus on disposal of tangible fixed assets

(1,474)

(3,501)

Interest received

(434)

(307)

(Increase)/Decrease in investments

(188)

4,922

Decrease in stocks

Decrease in debtors

Decrease in creditors

(123)

(135)

Net cash (outflow)/inflow from operating activities

(312)

3,945

Analysis of cash flows for headings netted in the Cash Flow statement

31.8.08

£'000

Returns on investments and servicing of finance

Interest received

Loan repaid

(8,981)

Net cash inflow/(outflow) for returns on investments and servicing of finance

(8,674)

al expenditure and financial investment

Purchase of tangible fixed assets

(757)

(3,614)

Sale of tangible fixed assets

2,218

12,107

Sale of investment property

Net cash inflow for capital expenditure and financial investment

1,462

9,150

Analysis of changes in net debt

At 1.9.07

£'000

At 31.8.08

£'000

Net cash:

Cash at bank and in hand

6,217

1,584

7,801

Liquid resources:

Current asset investments

Total

6,217

1,772

7,989

International Bible Students Association

Notes to the financial statements For the year ended 31st August 2008

Accounting policies

Accounting convention

The financial statements have been prepared under the historical cost convention, 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.

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.

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.

Provision of working and residential accommodation

Service charge income received from a connected charity Watch Tower Bible and Tract Society of Britain (Watch Tower) on a cost basis.Watch Tower occupies the residential accommodation and the printery which is maintained by the charity.

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.

Governance costs

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

Tangible fixed assets

Fixed assets are valued at cost less depreciation. Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

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 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.

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.

Other recognised gains and losses

These comprise unrealised and realised gains and losses on investments.

Voluntary income

31.8.08

31.8.07

£'000

£'000

Cash Donations

7,147

7,586

Legacies

1,203

7,747

8,789

International Bible Students Association

Notes to the financial statements For the year ended 31 st August 2008

Investment income

31.8.08

31.8.07

£'000

£'000

Current asset investment income

Incoming resources from charitable activities

£'000

£'000

Provision of working and residential accommodation

3,782

3,916

Other incoming resources

31.8.08

31.8.07

£'000

£'000

Surplus on disposal of tangible fixed assets

1,474

3,501

During 2008 the charity made a surplus on the sale of flats at Brecon Court of £1,473,806. In 2007 the charity made a surplus of £3,501.321on the sale of Daniel Court and Grenville Place properties. All of these properties had been used to house volunteers.

Charitable activities costs

Direct costs

Totals

£'000

£'000

Provision of literature for Bible education

7,033

7,033

Provision of conventions for Bible education

Donations and aid overseas

1,089

1,089

Provision of working and residential accommodation

3,684

3,684

12,449

12,449

The charity does not incur any support costs.

Governance costs

31.8.08

31.8.07

£'000

£'000

Net incoming/(outgoing) resources

Net resources are state after charging/(crediting):

31.8.08

31.8.07

£'000

£'000

Auditors' remuneration

Other services provided by the external auditors

Depreciation

1,141

Surplus on disposal of tangible fixed assets

(1,474)

(3,501)

International Bible Students Association

Trustees' remuneration and benefits

There were no trustees' remuneration or other benefits for the year ended 31 August 2008 nor for the year ended 31 August 2007.

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 paid by the Watch Tower Bible and Tract Society of Britain (charity registration number 1077961) a connected charity as explained in note 10 above.

Trustees' Expenses

There were no trustees' expenses paid for the year ended 31 August 2008 nor for the year ended 31 August 2007.

Tangible fixed assets

Land&Buildings£'000

Plant and machinery£'000

Motor vehicles£'000

Totals£'000

Cost

At 1 September 2007

61400

63385

Additions

Disposals

(862)

(157)

(102)

(1121)

At 31 August 2008

60855

63021

Depreciation

At 1 September 2007

Charge for year

Eliminated on disposal

(158)

(134)

(85)

(377)

At 31 August 2008

10350

Net book value

At 31 August 2008

51406

52671

At 31 August 2007

52502

53540

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

31.8.08

£'000

31.8.07

£'000

Stocks- Electrical, Maintenance, Home and Farm supplies

International Bible Students Association

Notes to the financial statements For the year ended 31st August 2008

31.8.08

31.8.07

£'000

£'000

Trade debtors

Other debtors

Due from connected charity

13.Current asset investments

£'000

£'000

UK Listed investments at market value

14.Creditors: amounts falling due within one year

31.8.08

31.8.07

£'000

£'000

Trade creditors

Social security and other taxes

Other creditors

Due to connected charity

15.Creditors: amounts falling due after more than one year

31.8.08

31.8.07

£'000

£'000

Loan from connected charity*

10,169

10,169

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.After the year end IBSA repaid $2 million of this 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, they can treat the waived interest element as a donation.

International Bible Students Association

Notes to the financial statements For the year ended 31st August 2008

Movement in funds

At 1.9.07

£'000

Net movement in funds

£'000

At 31.8.08

£'000

Unrestricted funds

General fund

49,467

50,443

Total funds

49,467

50,443

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

Incoming resources£'000

Resources expended£'000

Gains and losses£'000

Movement in funds£'000

Unrestricted fundsGeneral fund

13437

(12462)

Total funds

13437

(12462)

Post balance sheet events

In October 2008 the charity made a £2 million repayment on the loan from Watch Tower (described in note 15)

The trustees are pleased to be able to report that at the date of approving the accounts, none of the charity's bankers have failed. The trustees are very much aware of the global financial crisis and have made an assessment of the charity's current exposure. The trustees believe that the charity will be able to continue to carry out its current projects and meet its obligations in the light of the assessment they have made.

Related party transactions

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.