Report of the Trustees and Financial Statements, IBSA (2012)

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REGISTERED COMPANY NUMBER: 00136726 (England and Wales) REGISTERED CHARITY NUMBER: 216647

Report of the Trustees and Financial Statements For The Year Ended 31st August 2012 for International Bible Students Association Contents of the Financial Statements for the Year Ended 31st August 2012

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 18 The trustees who are also directors of the charity for the purposes of the Companies Act 2006, present their report with the financial statements of the charity for the year ended 31st August 2012.

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

00136726 (England and Wales)

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

resigned 2.11.11

S Papps

P S Gillies

appointed 2.11.11

Auditors

Calcutt Matthews Ltd

Chartered Accountants and Statutory Auditor

19 North Street

Ashford

Kent

TN24 8LF

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, 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. When necessary, 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 a periodic training session provided by the auditors, whenever there is significant new legislation affecting the charity.

Trustees are given Charity Commission publications and are sent on a two month course which includes training in legal and financial matters STRUCTURE, GOVERNANCE AND MANAGEMENT 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 experienced department overseer who will make regular reports to the Trustees.

Wider network

Charities with similar objects exist in many countries around the world. Coordination 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 serviced facilities for Watch Tower to use in its charitable activities. The Association purchases religious material from Watch Tower and donates this to congregations of Jehovah's Witnesses. The coordinating role of the Governing Body of Jehovah's Witnesses means we have ready access to surplus funds held by Jehovah's Witnesses in other countries.

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 reviewed and updated most recently on October 26, 2011. 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. The Trustees reviewed the risk register again and concluded that it remains appropriate.

Public Benefit

The Trustees confirm that they have taken into consideration Charity Commission guidance on public benefit in exercising their powers and duties, and this is amply demonstrated in the report that follows, in particular:

Bible literature we have supplied without charge to congregations of Jehovah's Witnesses in the UK, has been distributed, gratis, by those congregations, to interested members of the public in their local communities, in the following quantities: 22,603,000 copies of Watchtower and Awake! and 409,000 Bibles and Bible study aids.

Our conventions for Bible education were widely advertised by personal invitations delivered to the public nationwide; admission is free.

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 by:

The purchase and distribution of religious literature, free of charge.

The provision of serviced facilities for the printing of religious literature and the housing of workers engaged in this and in related activities.

The arranging of conventions for Bible education.

Significant activities

There continues to be an increasing demand for the religious literature we purchase from Watch Tower, hence the cost of our providing this has risen. At the same time, the scope of Watch Tower's printing for international distribution continues to widen. More translation of the Bible and related publications is being done in London. Hence, we are embarking on projects to provide more living accommodation for the workers engaged in these activities. Land was bought to build more flats, and these are now nearing completion.

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.

Report of the Trustees

for the Year Ended 31st August 2012

OBJECTIVES AND ACTIVITIES

Workers

All who care for the work of the charity are religious ministers who are members of the Worldwide Order of Special-full-time Servants of Jehovah's Witnesses. The basis for the care of their material needs is explained in note 9 of the accounts.

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 families and individuals receiving free instruction in their own homes. An average of over 57,000 home Bible study courses were provided each month. It was pleasing to learn that during the year under review, 2,556 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.

Conventions for Bible education

These summer conventions were again well attended; the total of 160,554 was gratifying. All sessions are open to the public, and there is no charge for admission. 325,000 copies of a new brochure to be used in the public ministry to start Bible study courses, "Good News From God", along with 318,000 copies of a new brochure explaining the work of Jehovah's Witnesses, "Who Are Doing Jehovah's Will Today?" were given out for immediate use in the community. In addition, two new DVD presentations, "Listen, Obey and be Blessed" and "Walk by Faith not by Sight", 105,350 and 105,200 copies respectively, were made available without charge. These Bible teaching aids were eagerly received.

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, and this was made possible by our receiving support from pooled resources in Germany. In addition we donated property owned by us in several countries, for the use of Jehovah's Witnesses. The total was £9,541,000.

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. It is good to see that in spite of the recession, voluntary income increased again. To fund the property developments described elsewhere in this report, we sought and received grants provided by Jehovah's Witnesses in other countries. We do make a charge to Watch Tower for providing serviced facilities for its use.

Investment performance

The trustees are satisfied with the results for the year, taking into account interest rates generally. Money is held in first class banks.

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 November 2012. All was found to be in order.

Report of the Trustees

for the Year Ended 31st August 2012

FINANCIAL REVIEW

Net Movement in Funds

There was a reduction of £2 million in cash during the year. Our reserves remained adequate, permitting us to respond to requests for overseas funding for Jehovah's Witnesses.

Reserves policy

The Association has a reliable donation base, being primarily the resources of Jehovah's Witnesses, pooled in Germany, and the 1,537 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 for the provision of serviced facilities and we respond to the needs for funds overseas only after filling our domestic requirements.

Principal funding sources

The charity is funded by donations and legacies. Also, grants are received from Jehovah's Witnesses in other countries. £6.7 million was received by way of grants, through a related charity operated by Jehovah's Witnesses in Germany. Also sizeable payments are received from Watch Tower for providing it with serviced facilities.

FUTURE DEVELOPMENTS

We anticipate an even greater demand for Bible literature in the year ahead, for Jehovah's Witnesses and their public ministry, and we are planning our financial resources accordingly.

STATEMENT OF TRUSTEES RESPONSIBILITIES

The trustees (who are also the directors of International Bible Students Association for the purposes of company law) are responsible for preparing the Report of the Trustees and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Company law 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 charitable company and of the incoming resources and application of resources, including the income and expenditure, 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;

observe the methods and principles in the Charity SORP;

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 to enable them to ensure that the financial statements comply with the Companies Act 2006. 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.

In so far as the trustees are aware:

there is no relevant audit information of which the charitable company's auditors are unaware; and

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

ON BEHALF OF THE BOARD:

Stephen A. Hardy

Trustee

Date: 14 February 2013 Report of the Independent Auditors to the Members of

International Bible Students Association

We have audited the financial statements of International Bible Students Association for the year ended 31st August 2012 on pages six to eighteen. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

This report is made solely to the charitable company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the charitable company's members 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 members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of trustees and auditors

As explained more fully in the Statement of Trustees' Responsibilities, the trustees (who are also the directors of the charitable company for the purposes of company law) are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.

Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the charitable company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the trustees; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Report of the Trustees to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion the financial statements:

give a true and fair view of the state of the charitable company's affairs as at 31st August 2012 and of its 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 Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Report of the Trustees for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 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 agreement with the accounting records and returns; or

certain disclosures of trustees' remuneration specified by law are not made; or

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

Nicholas Hume

Nicholas Hume FCA (Senior Statutory Auditor)

for and on behalf of Calcutt Matthews Ltd

Chartered Accountants and Statutory Auditor

19 North Street

Ashford

Kent

TN24 8LF

Date: 14 February 2013 Statement of Financial Activities (Incorporating an Income and Expenditure Account) for the Year Ended 31st August 2012

Notes

Unrestricted funds£

Restricted funds£

2012 Total funds£

2011 Total funds£

INCOMING RESOURCES

Incoming resources from generated funds

Voluntary income

15,672,699

15,672,699

28,803,359

Investment income

19,898

19,898

20,844

Incoming resources from charitable activities

Provision of serviced facilities

4,664,444

4,664,444

4,425,669

Other incoming resources

15,699

15,699

7,970

Total incoming resources

20,372,740

20,372,740

33,257,842

RESOURCES EXPENDED

Charitable activities

Provision of literature for Bible education

11,853,989

11,853,989

11,742,371

Provision of conventions for Bible education

1,321,071

1,321,071

844,529

Donations and aid overseas

9,541,357

9,541,357

956,308

Provision of serviced facilities

4,680,753

4,680,753

4,428,675

Governance costs

9,534

9,534

7,365

Other resources expended

112,000

Total resources expended

27,406,704

27,406,704

18,091,248

NET INCOMING/(OUTGOING) RESOURCES

(7,033,964)

(7,033,964)

15,166,594

Other recognised gains/losses

(288)

Gains/losses on fixed asset investments

3,100

3,100

3,464

Unrealised gains/(losses) on investment assets

(7,030,864)

(7,030,864)

15,169,770

Net movement in funds

(7,030,864)

(7,030,864)

15,169,770

RECONCILIATION OF FUNDS

Total funds brought forward

71,689,675

71,689,675

56,519,905

TOTAL FUNDS CARRIED FORWARD

64,658,811

64,658,811

71,689,675

CONTINUING OPERATIONS

All incoming resources and resources expended arise from continuing activities.

International Bible Students Association

Notes

Unrestricted funds£

Restricted funds£

2012 Total funds£

2011 Total funds£

FIXED ASSETS

Tangible assets

64,602,180

64,602,180

69,213,857

CURRENT ASSETS

Stocks

117,821

117,821

136,521

Debtors: amounts falling due within one year

512,516

512,516

509,289

Investments

59,965

59,965

54,078

Cash at bank

1,298,402

1,298,402

3,213,935

1,988,704

1,988,704

3,913,823

CREDITORS

Amounts falling due within one year

(1,932,073)

(1,932,073)

(1,438,005)

NET CURRENT ASSETS

56,631

56,631

2,475,818

TOTAL ASSETS LESS CURRENT LIABILITIES

64,658,811

64,658,811

71,689,675

NET ASSETS

64,658,811

64,658,811

71,689,675

FUNDS

Unrestricted funds

64,658,811

71,689,675

Restricted funds

TOTAL FUNDS

The financial statements were approved by the Board of Trustees on 14 February 2013 and were signed on its behalf by:

Stephen A. Hardy Trustee

Stephen Papps Trustee International Bible Students Association

Cash Flow Statement for the Year Ended 31st August 2012

Notes

2012£

2011£

Net cash inflow from operating activities

1709016

12862452

Returns on investments and servicing of finance

20335

20844

Capital expenditure and financial investment

(3644884)

(6275549)

(1915533)

6607747

Management of liquid resources

Financing

(6125000)

(Decrease)/increase in cash in the period

(1915533)

485244

Reconciliation of net cash flow to movement in net debt

(Decrease)/increase in cash in the period

(1915533)

485244

Cash outflow from increase in liquid resources

Cash outflow from decrease in debt and lease financing

6125000

Change in net debt resulting from cash flows

(1915533)

6617612

Non-cash change in current asset investment

Revaluation of current asset

Movement in net debt in the period

(1909646)

6625575

Net debt at 1st September

3268013

(3347794)

Net debt at 31st August

1358367

3277781

Notes to the Financial Statements for the Year Ended 31st August 2012

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 2006 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. Donations in the form of assets are included at the market value on the date of the gift.

Grants receivable

Unrestricted grants receivable are recognised when they are received. They represent amounts received to contribute towards the running expenses of IBSA and to assist in repaying the loan owed to Watch Tower.

Restricted grants receivable represent amounts received to finance the purchase of fixed assets. They have been recognised when received. The purchase of fixed assets discharges the restriction on these funds, therefore a transfer to unrestricted funds has been made as and when fixed assets have been purchased.

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

Income from the provision of working and residential accommodation is 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, the printery and the offices that are 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. Grants offered subject to conditions which have not been met at the year end date are noted as a commitment but not accrued as expenditure.

Governance costs

Governance costs comprise external audit fees and other fees from consultants.

Tangible fixed assets

Fixed assets are valued at cost less depreciation. Assets costing less than £1,000 are not capitalised. Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life:

Freehold Land - Not depreciated

Buildings - 2% on cost

Plant and machinery - 10% on cost

Motor vehicles - 25 % on reducing balance

Assets in the course of construction - Not depreciated

Impairment reviews are carried out on individual assets when there is some indication that the recoverable amount of a fixed asset is below its net book value.

Stocks

Stocks comprise Electrical, Maintenance and Home 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.

Notes to the Financial Statements - continued for the Year Ended 31st August 2012

ACCOUNTING POLICIES - continued

Fund accounting

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

The charity has received capital grants this year that comprise a restricted fund. Please see the "grants receivable" policy above for information about how this fund has arisen and been discharged.

Foreign currencies

Foreign currency balances have been translated at the prevailing rate on the balance sheet date. Income and expenditures during the year have been translated at the prevailing rate on the day of the transaction.

Operating leases

Rentals paid under operating leases are charged to the statement of financial activities on a straight line basis over the period of the lease.

Investments

Investments are included in the balance sheet at market value.

Other recognised gains and losses

These comprise unrealised and realised gains and losses on investments. Unrealised gains and losses represent the difference between the market value brought forward (or cost, for assets bought within this financial year) and the market value at the balance sheet date. Realised gains and losses represent the difference between sales proceeds and market value brought forward (or cost, for assets bought within this financial year.)

Grants payable

Grants payable to other institutions are recognised at the point when their payment has been approved by the trustees.

Beneficial loans

The charity has benefited from an interest free loan from Watch Tower, which is a related party. The estimated interest that the charity would have paid on the open market for such a loan has been included as income and deducted as an expense.

Irrecoverable VAT

Irrecoverable VAT is included in the relevant cost headings on the face of the Statement of Financial Activities and is not shown as a separate item.

VOLUNTARY INCOME

£

£

Legacies

1,489,986

945,259

Grants

6,700,000

15,230,779

Assets donated

4,997,786

Cash donations

7,482,713

7,517,535

Interest waived on beneficial loan

112,000

15,672,699

28,803,359

International Bible Students Association

Notes to the Financial Statements - continued for the Year Ended 31st August 2012

INVESTMENT INCOME

£

£

Deposit account interest

17866

19556

Current asset investment income

19898

20844

INCOMING RESOURCES FROM CHARITABLE ACTIVITIES

Activity

£

£

Provision of serviced facilities

Provision of serviced facilities

466444

4425669

CHARITABLE ACTIVITIES COSTS

Direct costs

Grant funding of activities(See note 6)

Totals

£

£

£

Provision of conventions for Bible education

1321071

1321071

Donations and aid overseas

141142

9400215

9541357

Provision of serviced facilities

4680753

4680753

Provision of literature for Bible education

11853989

11853989

6142966

21254204

27397170

As all of the charity's general running costs are reimbursed completely by Watch Tower, all such costs are, in effect, direct costs. All human resources, IT, finance and management costs are included in the "provision of working and residential accommodation" above or in "governance costs". These have been fully reimbursed by Watch Tower.

GRANTS PAYABLE

£

£

Provision of literature for Bible education

11,853,989

11,742,371

Donations and aid overseas

9,400,215

651,302

21,254,204

12,393,673

Notes to the Financial Statements - continued for the Year Ended 31st August 2012

GRANTS PAYABLE - continued

During the year, grants paid to institutions with congruous objectives can be analysed as follows:

By continent:

Cash£

Goods£

Literature£

Totals£

Europe

151,657

21,596

11,852,489

12,025,742

Asia

107,578

789,588

19,148

916,314

Africa

247,285

247,285

Americas

2,449,894

2,449,894

Other

5,614,969

5,614,969

259,235

9,123,332

11,871,637

21,254,204

By activity:

Cash£

Goods£

Literature£

Totals£

Distribution of Bibles and Bible-based literature

11871637

11871637

Supporting regional headquarters in their administration of Christian missionary work

259235

9123332

9382567

259235

9123332

11871637

21254204

Material grants (in the context of grant-making) were made to the following institutions:

Watch Tower Bible and Tract Society (Barbados)

Watch Tower Bible and Tract Society of Canada (Canada)

International Bible Students Association (Papua New Guinea)

The equivalent figures for the 2011 year end were as follows:

By continent:

Cash£

Goods£

Literature£

Totals£

Europe

140,441

202,376

11,727,743

12,070,560

Asia

260,934

30,951

292,464

Africa

2,859

3,050

Americas

11,190

11,933

Other

15,666

15,666

401,375

249,927

11,742,371

12,393,673

International Bible Students Association

Notes to the Financial Statements - continued for the Year Ended 31st August 2012

GRANTS PAYABLE - continued

By activity:

Cash£

Goods£

Literature£

Totals£

Distribution of Bibles and Bible-based literature

11742371

11742371

Supporting regional headquarters in their administration of Christian missionary work

401375

249927

651302

401375

249927

11742371

12393673

GOVERNANCE COSTS

£

£

Auditors' remuneration

9,534

7,365

NET INCOMING/(OUTGOING) RESOURCES

Net resources are stated after charging/(crediting):

£

£

Auditors' remuneration

9,534

7,365

Depreciation-owned assets

1,166,106

1,240,701

Other operating leases

856,857

757,490

Surplus on disposal of fixed asset

(4,400)

(464)

Fixed assets donated overseas

15,666

TRUSTEES' REMUNERATION AND BENEFITS

There were no trustees' remuneration or other benefits for the year ended 31st August 2012 nor for the year ended 31st August 2011.

The trustees confirm that they have not been involved with any transactions of the charity. The Association has close connections with 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 salary in their capacity as trustees. The trustees are also workers and they receive a fixed allowance for personal expenses of 96 per month and a personal expense gift of 300 per year with free board and lodging as indeed do all workers, including any close family members.where they are also working for the charity.

Trustees' Expenses

There were no trustees' expenses paid for the year ended 31st August 2012 nor for the year ended 31st August 2011.

Notes to the Financial Statements - continued for the Year Ended 31st August 2012

TANGIBLE FIXED ASSETS

Freehold property£

Assets in the course of construction£

Plant and machinery£

COST

At 1st September 2011

79,823,389

415,135

1,688,046

Additions

228,648

3,280,871

280,504

Disposals

(8,837,827)

(164,412)

Reclassification

209,147

(209,147)

At 31st August 2012

71,423,357

3,486,859

1,804,138

DEPRECIATION

At 1st September 2011

12,085,173

929,963

Charge for year

915,362

173,737

Eliminated on disposal

(1,542,973)

(155,739)

At 31st August 2012

11,457,562

947,961

NET BOOK VALUE

At 31st August 2012

59,965,795

3,486,859

856,177

At 31st August 2011

67,738,216

415,135

758,083

Fixtures and fittings£

Motor vehicles£

Totals£

COST

At 1st September 2011

11,347

596,240

82,534,157

Additions

5,325

74,430

3,869,778

Disposals

(108,500)

(9,110,739)

Reclassification

At 31st August 2012

16,672

562,170

77,293,196

DEPRECIATION

At 1st September 2011

9,394

295,770

13,320,300

Charge for year

76,426

1,166,106

Eliminated on disposal

(96,678)

(1,795,390)

At 31st August 2012

9,975

275,518

12,691,016

NET BOOK VALUE

At 31st August 2012

6,697

286,652

64,602,180

At 31st August 2011

1,953

300,470

69,213,857

Notes to the Financial Statements - continued for the Year Ended 31st August 2012

STOCKS

£

£

Stocks- Electrical, Maintenance and Home supplies

117,821

136,521

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

£

£

Trade debtors

1,213

Other debtors

104,633

112,708

Due from associated charities

406,670

395,291

Prepayments and accrued income

512,516

509,289

CURRENT ASSET INVESTMENTS

£

£

Listed investments

59,965

54,078

Market value at 31 August 2011

54,078

Historical cost at 31st August 2011

66,831

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

£

£

Trade creditors

1,439,172

991,582

Other creditors

484,401

437,473

Accrued expenses

8,500

8,950

1,932,073

1,438,005

MOVEMENT IN FUNDS

At 1.9.11£

Net movementin funds£

At31.8.12£

Unrestricted fundsGeneral fund

71,689,675

(7,030,864)

64,658,811

TOTAL FUNDS

71,689,675

(7,030,864)

64,658,811

Notes to the Financial Statements - continued for the Year Ended 31st August 2012

MOVEMENT IN FUNDS - continued

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

Incoming resources£

Resources expended£

Gains and losses£

Movement in funds£

Unrestricted fundsGeneral fund

20372740

(27406704)

(7030864)

TOTAL FUNDS

20372740

(27406704)

(7030864)

Capital grants fund

This has arisen due to capital grants being received this year to enable the purchase of certain new fixed assets. As the purchase of fixed assets discharges the restriction on these funds, a transfer to unrestricted funds is made as new fixed assets are bought.

RELATED PARTY DISCLOSURES

The Association has close connections with Watch Tower Bible and Tract Society of Britain ("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.

During the year, the Association purchased literature from Watch Tower amounting to £11,853,989 (2011: \textcircled{1} 11,742,371 ). At the year end, IBSA owed Watch Tower \textcircled{2} 871,716 (2011: \textcircled{3} 867,883 ), being the invoice for August 2012.

As an integral part of the charitable activities of IBSA, it provided Watch Tower with serviced facilities to enable Watch Tower to carry out its charitable activities. During the year, the Association charged Watch Tower 4,664,444 (2011: £4,425,669) for these services.At the year end,Watch Tower owed the Association \textcircled{2} 403,242 (2011: \textcircled{3} 387,404) in respect of these transactions.

GOING CONCERN

In view of current economic uncertainties, the trustees have carried out a review of the stability of assets held with banks and other financial institutions at the year end. They are satisfied that assets are held in institutions with only the highest ratings, and no provisions other than those made in the accounts are required.

The trustees are satisfied that they have sufficient liquid funds to run the charity for the foreseeable future.

RECONCILIATION OF NET (OUTGOING)\INCOMING RESOURCES TO NET CASH INFLOW FROM OPERATING ACTIVITIES

2012£

2011£

Net (outgoing)\incoming resources

(7,033,964)

15,166,594

Depreciation charges

1,166,107

1,240,702

Profit on disposal of fixed assets

(4,400)

(464)

Interest received

(19,591)

(19,556)

Dividends received

(744)

(1,288)

Donated fixed assets received

(200,000)

(4,997,786)

Donated fixed assets

7,294,855

15,666

Investments received

(2,788)

(4,884)

Decrease/(increase) in stocks

18,700

(24,918)

Carried forward

1,218,175

11,374,066

Notes to the Financial Statements - continued for the Year Ended 31st August 2012

RECONCILIATION OF NET (OUTGOING)\INCOMING RESOURCES TO NET CASH INFLOW FROM OPERATING ACTIVITIES - continued

£

£

Brought forward

1,218,175

11,374,066

(Increase)/decrease in debtors

(3,227)

1,722,764

Increase/(decrease) in creditors

494,068

(234,378)

Net cash inflow from operating activities

1,709,016

12,862,452

ANALYSIS OF CASH FLOWS FOR HEADINGS NETTED IN THE CASH FLOW STATEMENT

£

£

Returns on investments and servicing of finance

Interest received

19591

19556

Dividends received

Net cash inflow for returns on investments and servicing of finance

20335

20844

Capital expenditure and financial investment

Purchase of tangible fixed assets

(3669778)

(6277329)

Sale of tangible fixed assets

24894

Net cash outflow for capital expenditure and financial investment

(3644884)

(6275549)

Management of liquid resources

Cash inflows from disposal of investment

Net cash inflow from management of liquid resources

Financing

New loans in year

3000000

Loan repayments in year

(9125000)

Net cash outflow from financing

(6125000)

Notes to the Financial Statements - continued for the Year Ended 31st August 2012

ANALYSIS OF CHANGES IN NET DEBT

At 1.9.11

£

Cash flow

£

Revaluation

£

Other non-cash changes

£

At 31.8.12

£

Net cash:

Cash at bank

3213935

(1915533)

1298402

Liquid resources:

Current asset investments

54078

59965

Total

3268013

(1915533)

1358367