Report of the Trustees and Financial Statements, WTBTS of Britain (2010)

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Report of the trustees and financial statements Year Ended 31 August 2010

Watch Tower Bible and Tract Society of Britain Watch Tower Bible and Tract Society of Britain Contents of the Financial Statements For the Year Ended 31 st August 2010

Page

Trustees' Report 3 to 7

Independent Auditors' Report 8

Statement of Financial Activities 9

Balance Sheet 10

Cash Flow Statement 11

Notes to the Financial Statements 12 to 22 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 31 August 2010.

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 3858051 (England and Wales)

Registered Charity number 1077961

Registered office IBSA House The Ridgeway London NW7 1RN

Trustees

R Drage

J Dowson

P Ellis

B Vigo

P S Gillies

Statutory Auditors Calcutt Matthews Chartered Accountants and Registered Auditors 2nd Floor Cardine House 30 North Street Ashford 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

Structure, governance and management Governing document The charity is controlled by its governing document,the memorandum and articles of the company dated 25th October 1999.

Recruitment and appointment, induction and training of trustees

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. Trustees are given appropriate Charity Commission publications and training is arranged as part of the meetings of the trustees when the charity's policies are discussed. This is supplemented by periodic training provided by Calcutt Matthews when new legislation affecting the charity is introduced. Additionally, arrangements are made for new trustees to attend a comprehensive course that includes training in legal, organisational, and financial matters.

The trustees of the charity also have key managerial roles at the charity headquarters. They meet several times each month, and are in regular contact from day to day. Trustees are elected annually, by a simple majority of the members present at the AGM.

Watch Tower Bible and Tract Society of Britain Trustees' Report For the Year Ended 31 st August 2010

Structure, governance and management

Organisational structure

The charity is a UK company limited by guarantee.

The trustees organise the charity into a number of departments. Each department has an experienced, trained overseer who makes 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

Watch Tower Bible and Tract Society of Britain (the Society) works closely with International Bible Students Association (IBSA), which permits the Society to use its facilities for the Society's charitable activities, and provides accommodation for volunteers. IBSA makes a monthly service and maintenance charge to the Society for the facilities it uses and for providing accommodation for volunteers connected with the Society's activities. The Society passes to IBSA the cost incurred in printing and distributing the Bible-based religious literature manufactured and delivered to destinations on its behalf, and all other overhead costs.

Risk management

The major risks to which the charity is exposed were reviewed by the trustees in February 2010, with particular focus on events that would seriously impede the operations of the charity. Serious risks include catastrophic loss and failure of internal controls. Strategies and safeguards are in place to reduce, as far as possible, the impact of those risks.

Objectives and activities

Objectives and aims

The objects of the Society, contained in its Memorandum and Governing document, are to advance the Christian religion as practiced by the body of Christians known as Jehovah's Witnesses. This is accomplished by the following specific sub-objects:

a. promoting the preaching of the gospel of God's Kingdom under Jesus Christ in all nations as a witness to the name, word and supremacy of the Almighty God, JEHOVAH;

b. producing and distributing Bibles and other religious literature, in any medium, and educating the public in respect thereof;

c. promoting religious worship;

d. promoting Christian missionary work;

e. advancing religious education;

f. maintaining one or more religious orders or communities of special ministers of Jehovah's Witnesses.

The major areas of activities for the year in question have been:

printing and distributing Bibles and Bible-based literature in several languages, which has served to advance religious education and educate the general public in spiritual and moral values.

supporting congregations of Jehovah's Witnesses and others in Britain with their spiritual and material welfare, by advancing the Christian missionary work, which has promoted religious worship in local communities.

supporting congregations of Jehovah's Witnesses and others abroad, primarily in developing countries, with their spiritual and material welfare, by making donations to local associations of Jehovah's Witnesses. The donations have been in the form of literature, goods, and services, as well as of funding for the construction of places of worship. All such donations have promoted religious education overseas.

Grantmaking

The charity's grant making policy 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 satisfies itself that the expenditure will further the religious work of Jehovah's Witnesses, and after confirming that sufficient funds are available, it then sends the money to the organisation caring for Jehovah's Witnesses in that country. Finally, reports are obtained to confirm the money was properly used.

Volunteers

The charity is run entirely by volunteers kindly provided by IBSA.

Programme related investments

Note 12 to the financial statements explains that at 31 August 2010, \textcircled{1} 10.7m (2009 \textcircled{1} 14.3m ) had been lent to a connected charity and to congregations of Jehovah's Witnesses in Britain. These interest free loans have been advanced because the objects these charities are supporting accord with the objects of the Society, as shown above.

Watch Tower Bible and Tract Society of Britain Trustees' Report For the Year Ended 31 st August 2010

Achievement and performance

Charitable activities - Producing and distributing Bible literature

The charity's rotary presses have continued to produce The Watchtower and Awake! magazines, as well as other items of Bible-based literature. In the year, over 350 million publications were printed. These included 157 million copies of The Watchtower and Awake! magazines, which were printed in 27 and 15 languages respectively. In total, the charity has sent Bible-based literature to 97 countries in 232 languages. All of the literature produced is used to advance religious education and educate the general public in spiritual and moral values.

We continue to be committed to complying with relevant legal requirements to reduce as far as possible any impacts on the environment from our operations. On August 18, 2010, the printworks was inspected under the "Environmental Permitting (England and Wales) Regulations 2010." The inspector's risk assessment for Local Air Pollution Control reported that "Emissions control exceeds BATNEEC Requirements." In a follow-up letter the inspector wrote: "All of your permit conditions are being complied with. . . .The printworks is obviously well managed with respect to its environmental impact." The Risk Assessment Score Sheet shows that the printworks continues to retain its "low risk category."

Charitable activities - Promoting Christian Missionary work

In assisting congregations of Jehovah's Witnesses and others in Britain with their spiritual and material welfare, the charity supports over 80 travelling ministers. These visit the congregations on a regular basis, usually twice a year, during which they provide pastoral care. One of the primary objectives of these visits is for the travelling minister to promote the Christian missionary work by providing leadership in the public ministry of Jehovah's Witnesses. Additionally, the charity supports 140 full-time ministers who assist congregations to which the charity has assigned them. The assistance provided by these ministers enables local congregations of Jehovah's Witnesses to share fully in promoting and preaching the good news of God's Kingdom and teaching principles of Christian living. Such principles include respect for secular authority, persons, and property, and the maintenance of personal morality and family values and other facets of Christianity.

The charity also runs a training school for qualified ministers to better equip them to render spiritual and pastoral care in the community. This school, the Ministerial Training School, gives instruction in Bible teachings and in organisational matters. As a result of such training, some are assigned to serve where there is a need for ministers here in Britain, whereas others receive assignments in foreign countries. During the year there were three classes held from which 70 students graduated. Since the school was inaugurated, 937 students from over 30 countries have graduated.

Charitable activities - Making donations to further religious education overseas

During the year the charity continued to support the construction of places of worship in Europe through making grants totalling over £111,000. The completed places of worship will be centres for both local congregations of Jehovah's Witnesses and members of the local community who wish to benefit from the practical values contained in the Holy Bible, which promotes both the moral and spiritual edification of mankind.

The charity also provided material and financial assistance to Associations of Jehovah's Witnesses in several developing countries, who are responsible for the general oversight of the activities of Jehovah's Witnesses in that country. The funds, over 6.8m in total, were given to promote missionary activity, to support general oversight costs of the local Association, and to assist in the operation of local congregations of Jehovah's Witnesses. Additionally, literature with a value of over 4.9m was donated overseas, mainly to Africa, for use in advancing religious education.

Humanitarian aid of £32,000 was provided by the charity to assist those affected by the earthquake that struck Haiti. These funds were used towards the provision of meals and tents, the building of provisional housing units, and the operation of a temporary hospital, complete with a portable operating room.

Public benefit

As evidenced above, much has been accomplished by the charity in the year to advance its objects for the public benefit. Literature has been produced to educate the general public in spiritual and moral values. Ministers have been supported in aiding others to develop personal morality and family values. Places of worship have been financed which are open to all who wish to benefit from the practical values contained in the Holy Bible. These activities bear out that the work of the charity continues to benefit both Jehovah's Witnesses and members of the community. The trustees confirm that they have taken into consideration Charity Commission guidance on public benefit in exercising their powers or duties.

Internal controls

To ensure the charity is able to achieve its objectives, appropriate internal controls have been established. These 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 figures are recorded accurately and the accounts are in balance.

The internal audit programme has been achieved. The internal auditor and his assistant, both drawn from the volunteer work force, have a set agenda to pursue throughout the year, and reported in writing to the trustees in October 2010. Approved recommendations were implemented.

Watch Tower Bible and Tract Society of Britain Trustees' Report For the Year Ended 31 st August 2010

Financial review

Impact of increase in work

The charity's workload continues to increase. The trustees have considered the financial and non-financial impact of this increase, and have taken appropriate action to ensure the charity can continue to operate successfully.

Reserves policy

Although the charity has a consistent income base, in light of economic conditions, the trustees reviewed the reserves policy last year and increased the required level of reserves to be held to the equivalent of 6 months expenditure. At the year-end, free reserves stood at £20,068,000, which represented 10 months of expenditure (2009: £14,815,000 and 9 months).

Principal funding sources

The primary funding activity is the manufacture and distribution of Bible-based religious literature on behalf of IBSA, the cost of which is passed on. The charity also relies to a large extent on voluntary donations to support its work, and has a consistent income base through Gift Aid. In addition, the charity has an active treasury management department to handle investments it has been bequeathed or converted.

Investment policy and objectives

Paragraphs 4.18 and 4.19 of the Memorandum and Articles, give power to invest funds in any lawful manner having full regard to the suitability of the investments, the need for diversification, and to be a socially responsible investor having due consideration to the beliefs of Jehovah's Witnesses. The objective is to preserve capital and achieve a real return of 4% plus inflation. The portfolio achieved a return on August 31,2010 of 5.00%. The UK Retail Price Index which is an overall measure of inflation showed a YOY rate of 3.1% representing an upward move during the period of 1.5%. Global Consumer Prices index of leading industrial nations compiled by the IMF shows global inflation for the period as 1.31%. The portfolio did not achieve the target of 4% above inflation. However, the period in question continued to be very volatile, with central governments endeavouring to stimulate their economies using various fiscal and economic initiatives. The effect was to make it difficult to determine which investment strategies would result in modest gains while preserving the overall portfolio value. As a result, during the period, only investments which had liquidity were purchased. This allowed for investments to be sold if required quickly and held as cash. To end the period with a real return (above inflation) continues to reinforce the foresight of the trustees to diversify the portfolio into several asset classes globally and to take a very conservative stance, holding cash instruments when deemed necessary rather than investing in other asset classes. The return compares favourably with the market in general.

Since the end of the financial year, global financial markets are increasingly becoming positive. However, to protect the value of the portfolio the trustees continue to adopt a cautious approach to investing, until they see a genuine financial recovery in place.

Future developments

The charity anticipates being able to continue to have a full share in funding the activities of Jehovah's Witnesses in developing countries and sharing in the construction of much needed places of worship in these countries. For example, it is anticipated that further funds and construction supplies will be donated to assist with the expansion of the administrative facilities of Jehovah's Witnesses in Nigeria next year. It is also expected that the production of Bible-based publications will continue to increase. Additionally, the charity is increasingly involved in providing technical assistance to similar charities overseas.

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.

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.

Statement as to disclosure of information to auditors

So far as the trustees are aware, there is no relevant information 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 themselves aware of any audit information and to establish that the charitable company's auditors are aware of that information.

On behalf of the board:

J. Dowson Trustee

Date: 16 February 2011 Independent Auditors' Report to the Members of Watch Tower Bible and Tract Society of Britain For the Year Ended 31 st August 2010

We have audited the financial statements of Watch Tower Bible and Tract Society of Britain for the year ended 31 August 2010, which comprise the Statement of Financial Activities, the Summary Income and Expenditure Account, the Balance Sheet, the Cash Flow Statement and related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards.

Respective responsibilities of trustees and auditors

As explained more fully in the Trustees' Responsibilities Statement set out on page 6, 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 (APB'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.

Opinion

In our opinion the financial statements:

give a true and fair view of the state of the charitable company's affairs as at 31 August 2010 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 Trustees' Annual Report 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.

N. M. Hume

N M Hume

Senior Statutory Auditor

For and on behalf of Calcutt Matthews, Statutory Auditors

Chartered Accountants and Registered Auditors

2nd Floor Cardine House

30 North Street

Ashford

Kent

TN24 8JR

Date: 3 March 2011 Watch Tower Bible and Tract Society of Britain Statement of Financial Activities (incorporating an income and expenditure account) For the Year Ended 31 st August 2010

Notes

Unrestricted funds£'000

Restricted funds£'000

2010 Total funds£'000

2009 Total funds£'000(As restated)

Incoming resources

Incoming resources from generated funds

Voluntary income

9,658

1,958

11,616

12,228

Investment income

1,239

Incoming resources from charitable activities

Producing and distributing Bible literature

11,341

11,341

8,037

Other incoming resources

1,711

Total incoming resources

22,438

2,000

24,438

23,215

Resources expended

Costs of generating funds

Investment management costs

Charitable activities

Producing and distributing Bible literature

10,382

10,382

9,630

Promoting Christian missionary work

Making donations to further religious education overseas

11,764

11,907

9,218

Governance costs

Total resources expended

23,155

23,606

19,848

Net incoming/(outgoing) resources before transfers

(717)

1,549

3,367

Transfers

Gross transfers between funds

(238)

Net incoming/(outgoing) resources before other recognised gains and losses

(479)

1,311

3,367

Other recognised gains/losses

Realised losses on investment assets

(675)

(675)

(899)

Unrealised gains/(losses) on investment assets

2,244

2,244

(1,844)

Net movement in funds

1,090

1,311

2,401

Reconciliation of funds

Total funds brought forward

35,539

12,224

47,763

47,139

Total funds carried forward

36,629

13,535

50,164

47,763

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, comprising the net incoming resources for the year together with the realised losses on investments, was £157,094 (2009:f 2,469,148).

Watch Tower Bible and Tract Society of Britain Balance Sheet As at 31 st August 2010

Notes

Unrestricted funds£'000

Restricted funds£'000

2010 Total funds£'000

2009 Total funds£'000(as restated)

Fixed assets

Tangible assets

4,535

4,945

5,436

Investments:

Investments

52,702

7,000

59,702

47,086

Programme related investments

6,125

4,534

10,659

14,326

63,362

11,944

75,306

66,848

Current assets

Stocks

1,148

1,148

1,024

Debtors: amounts falling due within one year

1,985

1,985

1,456

Cash at bank

2,980

1,591

4,571

8,781

6,113

1,591

7,704

11,261

Creditors

Amounts falling due within one year

(5,454)

(5,454)

(3,315)

Net current assets

1,591

2,250

7,946

Total assets less current liabilities

64,021

13,535

77,556

74,794

Creditors

Amounts falling due after more than one year

(26,244)

(26,244)

(26,171)

Provisions for liabilities and charges

(1,148)

(1,148)

(860)

Net assets

36,629

13,535

50,164

47,763

Funds

Unrestricted funds

36,629

35,539

Restricted funds

13,535

12,224

Total funds

The financial statements were approved by the Board of Trustees on 16 February 2011 and were signed on its behalf by:

P. Ellis Trustee

B. Vigo Trustee Watch Tower Bible and Tract Society of Britain Cash Flow Statement For the Year Ended 31 st August 2010

Notes

2010£'000

2009£'000

Net cash inflow from operating activities

Returns on investments and servicing of finance

Capital expenditure and financial investment

(6754)

(9127)

Management of liquid resources

Financing

(Decrease)/increase in cash in the period

(4210)

Reconciliation of net cash flow to movement in net debt

(Decrease)/Increase in cash in the period

(4,210)

2,937

Cash flow from decrease in liquid resources

(3,845)

Cash flow from increase in financing

(362)

(7,582)

Other non-cash change to financing

Change in net debt

(4,291)

(8,488)

Net debt at 1 September 2009

(20,298)

(11,810)

Net debt at 31 August 2010

(24,589)

(20,298)

Watch Tower Bible and Tract Society of Britain Notes to the Financial Statements For the Year Ended 31 st August 2010

Accounting policies

Accounting convention

The financial statements have been prepared under the historical cost convention, with the exception of investments which are included at market value, 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", revised 2005.

Donations receivable

All incoming resources are included in the Statement of Financial Activities (SOFA) 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.

Income from Bible literature

Income from literature arises from literature sold to International Bible Students Association (IBSA), a connected charity, on a cost basis, in line with the charity's objects.

Legacies

Legacies are recognised at the earlier of the date of notification or being received.

Resources expended

All expenditure is accounted for on an accruals basis and has been classified under the headings with all aggregate costs related to that category. The trustees are of the opinion that support costs are best allocated to the cost of producing literature.

Governance costs

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

Costs of Generating Funds

These are comprised of investment management costs incurred during the year. The charity does not engage in fund raising.

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:

Land - Not depreciated

Buildings - 2% on cost

Plant and machinery - 10% on cost

Motor vehicles - 25% on reducing balance

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 are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Investments

Investments are valued at market value. All investments listed on a recognised stock exchange are carried at this value. Unlisted investments are valued using the latest valuation information received from the financial institutions managing the funds.

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.

Restricted funds can only be used for particular restricted purposes within the objects of the charity. Restrictions arise when specified by the donor or when funds are raised for particular restricted purposes. Where a restricted fund has fulfilled its purpose and excess funds remain, the balance will be transferred into unrestricted funds, provided that this was understood by the donors at the time of their donation.

Further explanation of the nature and purpose of each fund is included in the notes to the financial statements.

Watch Tower Bible and Tract Society of Britain Notes to the Financial Statements For the Year Ended 31 st August 2010

Deposits

The Society has an arrangement whereby individuals or congregations of Jehovah's Witnesses can deposit funds so that the Society can benefit, on the understanding that these funds can be requested back whenever the depositor wishes. Experience shows that only a small percentage of deposits (approximately 10%) will be called upon in any one year. In addition, much of the cash received has been moved into fixed asset investments. To show the total amount of deposits as short-term liabilities would indicate that the charity did not have sufficient liquid assets to meet its short-term liabilities, which is not the case. The trustees therefore feel it appropriate to reclassify these as falling due after more than one year. 10% of the total amount on deposit is classed as a short term creditor.

Conditional Donations

The charity receives some donations where the donor reserves the right to receive the funds back. Experience has shown that only a small percentage is returned, but prudently the charity provides for fifty percent.

Connected charities

Transactions are on an arms length and accruals basis. Note 19 sets out the relationship with IBSA. Most other countries have a branch office of Jehovah's Witnesses.

Grants payable

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

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.)

Foreign exchange gains and losses

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. Gains and losses arise when foreign currency assets change in value between their purchase and the balance sheet date.

Donated literature received

Literature received is recognised as a donation when it is received, valued at the equivalent of production cost. It is then held in stock until it is sold.

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

£'000

£'000

Donations of cash and goods

Donations of literature

Legacies

11616

12228

Investment income

£'000

£'000

(as restated)

Investments listed on a recognised stock exchange

Other unlisted securities

Interest from bank deposits

Watch Tower Bible and Tract Society of Britain Notes to the Financial Statements For the Year Ended 31 st August 2010

Incoming resources from charitable activities

£'000

£'000

Activity

Income from literature sold to IBSA

Producing and distributing Bible literature

11,341

8,037

Other incoming resources

£'000

£'000

Foreign currency gains

1,671

Income from recycling

Rental

1,711

Charitable activities costs

Direct costs

Support costs

Totals

Producing and distributing Bible literature

10382

Promoting Christian missionary work

Making donations to further religious education overseas

11907

11907

20276

23282

Support costs of £3,006,000 (2009: £4,616,000) have been allocated to producing and distributing Bible literature.

The equivalent figures for the 2009 year end were as follows (as restated):

Direct costs

Support costs

Totals

Producing and distributing Bible literature

Promoting Christian missionary work

Making donations to further religious education overseas

15179

19795

Analysis of costs of producing and distributing Bible literature

£'000

£'000

Total cost of all literature for distribution

15345

13537

Of which, donated overseas(see note 7)

(4963)

(3907)

Net cost of goods sold

10382

Watch Tower Bible and Tract Society of Britain Notes to the Financial Statements For the Year Ended 31 st August 2010

Grants

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

By continent:

Cash£'000

Goods£'000

Literature£'000

Totals£'000

Europe

Africa

10356

Asia

Americas

Other

11907

By activity:

Cash£'000

Goods£'000

Literature£'000

Totals£'000

Promoting Christian missionary work via the construction of places for worship

Promoting Christian missionary work via the construction of regional headquarters

Distribution of Bibles and Bible-based literature

Supporting regional headquarters in their administration of Christian missionary work

11907

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

Watch Tower Bible & Tract Society of South Africa

Watch Tower Society of Jehovah's Witnesses, Nigeria

Association Les Temoins de Jehovah, Democratic Republic of Congo

The equivalent figures for the 2009 year end were as follows:

By continent:

Cash£'000

Goods£'000

Literature£'000

Totals£'000

Europe

Africa

2,558

3,712

6,348

Asia

2,000

2,107

Americas

Other

2,409

2,902

3,907

9,218

Cash£'000

Goods£'000

Literature£'000

Totals£'000

Promoting Christian missionary work via the construction of places for worship

Promoting Christian missionary work via the construction of regional headquarters

Distribution of Bibles and Bible-based literature

Supporting regional headquarters in their administration of Christian missionary work

Watch Tower Bible and Tract Society of Britain Notes to the Financial Statements For the Year Ended 31 st August 2010

Governance costs

£'000

£'000

Legal fees

Auditors' remuneration

Net incoming resources

Net incoming resources are stated after charging:

Auditors' remuneration

Other services provided by external auditors

Loss on disposal of fixed assets

Depreciation

Trustees' remuneration and benefits

There were no trustees' remuneration or other benefits for the year ended 31 August 2010 nor for the year ended 31 August 2009.

The trustees confirm that they have not been involved with any transactions of the charity.

The trustees of the Society receive no payments or reimbursements in their capacity as trustees. The trustees are also volunteer workers for IBSA, and as such they receive personal expense allowances of 95 per month and a personal expense gift of 300 per year with free board and lodging from IBSA as indeed do all volunteers.

Trustees' expenses

There were no trustees' expenses paid for the year ended 31 August 2010 nor for the year ended 31 August 2009.

Tangible fixed assets

Land&Buildings£'000

Plant&machinery£'000

Motorvehicles£'000

Totals£'000

Cost

At 1 September 2009

10625

Additions

Disposals

(134)

(6)

(140)

At 31 August 2010

10807

Depreciation

At 1 September 2009

Charge for year

Eliminated on disposal

(92)

(4)

(96)

At 31 August 2010

Net book value

At 31 August 2010

At 31 August 2009

Watch Tower Bible and Tract Society of Britain Notes to the Financial Statements For the Year Ended $31^{\mathrm{st}}$ August 2010

Fixed asset investments

£'000

£'000

a. Programme related investments

10,659

14,326

b. UK and overseas investments at market value

59,702

47,086

70,361

61,412

Loan to IBSA

These investments comprise monies advanced as a loan to a connected charity, IBSA, to assist in the purchase of buildings, thus helping IBSA in achieving its objective of 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. The trustees have made no interest charge to IBSA on the loan, on the basis that both charities have similar objects.

Congregation loans

These investments comprise funds loaned to congregations of Jehovah's Witnesses in Britain for the purpose of purchasing, constructing or renovating buildings as places of worship. The ability of the congregation to repay such monies is assessed prior to the funds being extended. All such loans are on an interest free basis. These loans enable the Society to further its aims of promoting religious education and worship.

Loan to IBSA

Congregation loans

Total

£'000

£'000

£'000

At 1 September 2009

10869

14326

Advanced

Repaid

(4744)

(1142)

(5886)

At 31 August 2010

10659

b. UK and overseas investments at market value:

Total market values of investment assets held at 31 August 2010 are analysed as follows:

Cash and liquid assets

Listed investments

Unlisted investments

Total

£'000

£'000

£'000

£'000

Investment assets in the UK

11,000

11,000

Investment assets outside the UK

8,684

29,474

10,544

48,702

Market value at 31 August 2010

19,684

29,474

10,544

59,702

Unlisted investments are comprised of various funds and derivatives managed by professional firms and banks. The valuations are based on the external fund managers' estimates of the underlying assets of the investment vehicle.

Movements on investment assets were as follows:

£'000

Market value at 1st September 2009

47,086

Additions

26,805

Disposals

(16,444)

Net gain on revaluation

2,255

At 31st August 2010

59,702

Stocks

£'000

£'000

Bibles and other literature

1,020

Raw materials

Motor vehicle spares and consumables

1,148

1,024

Watch Tower Bible and Tract Society of Britain Notes to the Financial Statements For the Year Ended 31 st August 2010

Debtors: amounts falling due within one year

£'000

£'000

Trade debtors

1,206

Other debtors

1,062

Prepayments and accrued income

1,985

1,456

Creditors: amounts falling due within one year

£'000

£'000(as restated)

Trade creditors

2,184

Other creditors

Deposits- due within 1 year(note 16)

2,916

2,908

Accrued expenses

5,454

3,315

Creditors: amounts falling due after more than one year

£'000

£'000(as restated)

Deposits- due between 1 and 5 years

29,160

29,079

Less- 10% transferred to short term creditors

(2,916)

(2,908)

26,244

26,171

Deposits comprise monies received from individuals, circuits and congregations and held with the Society until they have a need. Based on previous experience, it is considered highly unlikely that the entire balance of deposits will be demanded within the next financial year.

The deposits are given on the understanding that the Society will repay them on demand. This would normally lead to them being classified as current liabilities. If all of the cash received in respect of these loans was held as a current asset, then this would be the accounting policy adopted. However, as cash accumulates (from all sources, including deposits received) the trustees consider it prudent and cost effective to make transfers into fixed asset investments, both to improve security of principal and return on investment.

The trustees believe that it would be prejudicial to the charity's liquidity to show a current liability for the creditor (for which no repayment date is known) and to show most of the resultant asset as a fixed asset investment. The trustees have therefore classified the deposits as long-term creditors in order to show a true and fair view.

Based on requests for repayment over recent financial years, it is anticipated that approximately 10% of deposits held will be requested back in the next 12 months. The trustees therefore consider it prudent to class 10% of the balance of deposits as short term creditors.

In the 4 months post year end, a total of £1.2 million has been requested back, and an additional £3 million has been deposited.

Watch Tower Bible and Tract Society of Britain Notes to the Financial Statements For the Year Ended 31 st August 2010

Provisions for liabilities and charges and contingent liabilities

Conditional donations

£'000

Provision at 1 September 2009

Provision on new conditional donations received

Provision released on conditional donations converted into donations

(57)

Provision released on conditional donations repaid

(4)

Provision at 31 August 2010

1,148

Conditional donations are donations made by individuals on the understanding that they may be recalled should the donor require such funds in the future. The donor retains an option over their donation until they die or write to convert it into an outright donation. While it is considered probable that some of these conditional donations will need to be repaid, it is unknown when this liability will crystallise or how large it will be. The trustees have therefore prudently made a provision for 50% of the balance of conditional donations as shown above. \textcircled{1} 8,000 was requested back in 2010 (2009: \textcircled{1} 37,500). The remaining \textcircled{1} 1.1million is a contingent liability.

Movement in funds

At 1.9.09

Net movement in funds

At 31.8.10

£'000

£'000

£'000

Unrestricted funds

General fund

35,539

1,090

36,629

Restricted funds

Travelling Overseers Assistance Arrangement

Kingdom Hall Assistance Arrangement

4,427

4,705

The Society Kingdom Hall Fund

6,728

1,059

7,787

Relief Fund

Missionary Convention Travel

(238)

12,224

1,311

13,535

Total funds

47,763

2,401

50,164

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

Incoming resources£'000

Resources expended£'000

Gains and losses£'000

Transfers£'000

Movement in funds£'000

Unrestricted funds

General fund

22,438

(23,155)

1,569

1,090

Restricted funds

Travelling Overseers Assistance Arrangement

(193)

Kingdom Hall Assistance Arrangement

(115)

The Society Kingdom Hall Fund

1,170

(111)

1,059

Relief Fund

(32)

Missionary Convention Travel

(238)

(238)

2,000

(451)

(238)

1,311

Total funds

24,438

(23,606)

1,569

2,401

This fund was formerly named the Ministers car fund and was set up for the provision of motor vehicles for travelling ministers in the British field.

Watch Tower Bible and Tract Society of Britain Notes to the Financial Statements For the Year Ended 31 st August 2010

Kingdom Hall Assistance Arrangement

The Kingdom Hall upkeep and Assistance Arrangement (KHAA) exists to give aid where losses and damages have been suffered by congregations or individuals. Many congregations and certain individuals pay into this fund on the understanding that the Society will give them financial assistance in the event of loss or damage to their property. This fund operates world wide, so that if any one local branch office of Jehovah's Witnesses is unable to meet the demands on its Kingdom Hall Assistance Arrangement, it can request other branches to contribute from their own KHAA funds. This creates a contingent liability within the Society's accounts, limited to the value of the fund locally, currently £4.7 million.

The Society Kingdom Hall fund was set up to provide monies to assist with the purchase of places of worship.

Relief Fund

This fund exists for the purpose of giving support to areas experiencing distress or natural disaster.

Missionary Convention Travel

This fund was set up to assist missionaries and others serving in foreign lands to travel to conventions that were held in 2009. All donations to this fund were made on the understanding that any excess remaining in the fund once all expenses had been cared for may be transferred to the "Worldwide work"-the unrestricted funds of the charity. As all costs had been cared for prior to the start of this financial year, the fund has been closed down and the balance held transferred to unrestricted reserves.

Related parties

The charity has close connections with IBSA, which provides accommodation for volunteers of Watch Tower and is a registered charity with similar objects. IBSA also has the same registered office as that of Watch Tower.

During the year, IBSA purchased literature from Watch Tower amounting to £11,340,917 (2009:f8,037,143). At the year end, IBSA owed Watch Tower \textcircled{1} 1,204,150 (2009: f 271,541), being the invoice for August 2010. Post year end, it was discovered that Watch Tower had overcharged IBSA for literature by approximately f1.4 million over the past two years. A creditor of this amount has been provided for in the current year.

As an integral part of the charitable activities of IBSA, it allowed Watch Tower to use IBSA's fixed assets and supplied volunteer workers to enable Watch Tower to carry out its charitable activities. All services were provided at cost. During the year, IBSA charged Watch Tower £4,330,053 (2009:f4,176,521) for these services.At the year end,Watch Tower owed IBSA f391,556 (2009:nil) in respect of the above transactions.

During the prior year, IBSA carried out work on a property on behalf of Watch Tower, with costs amounting to £141,526. The costs were paid in full by Watch Tower to IBSA. No balance was outstanding at the year end in respect of this transaction.

IBSA also has a beneficial loan from Watch Tower to assist it in achieving its objectives. At the year end the balance stood at £6,125,000 (2009:£10,869,474). This loan is on an interest free basis, with no pay back date. The interest that would be due under normal, commercial rates has been estimated at £400,000 (2009: £400,000).

Watch Tower Bible and Tract Society of Britain Notes to the Financial Statements For the Year Ended 31 st August 2010

Reconciliation of net incoming resources to net cash inflow from operating activities

Net incoming resources

Currency translation gains relating to investments

(687)

(1629)

Depreciation charges

Loss on disposal of fixed assets

Fixed assets donated to cooperating societies at net book value

Interest received

(735)

(1239)

Interest paid

(Increase)/Decrease in stocks

(124)

(42)

(Increase)/Decrease in debtors

(529)

(526)

(Decrease)/Increase in creditors

(367)

Movement in short term creditors provision

(8)

Increase in provisions

(288)

(40)

Donations received in the form of fixed assets

(2)

Other non-cash donations received

(240)

(221)

Expenses paid from fixed asset investments rather than cash

Decrease in interest accrual related to investment assets

(12)

(56)

Conditional donations advanced

Conditional donations repaid

(8)

(38)

Net cash (outflow)/inflow from operating activities

Analysis of cash flows for headings netted in the cash flow statement

Returns on investments and servicing of finance

Interest received

Net cash inflow for returns on investments and servicing of finance

Capital expenditure and financial investment

Purchase of tangible fixed assets

(322)

(309)

Transferred to long term investments

(10,000)

(6,000)

Programme related investments advanced- congregations

(2,220)

(1,237)

IBSA

(2,699)

Programme related investments repaid

5,787

1,006

Sale of tangible fixed assets

Net cash inflow/(outflow) for capital expenditure and financial investment

(6,754)

(9,127)

Management of liquid resources

Cash inflows from the disposal or redemption of investments

3,845

Net cash inflow for returns on investments and servicing of finance

3,845

Financing

Loans advanced by depositors

4,095

11,055

Loans repaid to depositors on demand

(3,733)

(3,473)

Net cash inflow for financing

7,582

Watch Tower Bible and Tract Society of Britain Notes to the Financial Statements For the Year Ended 31 st August 2010

Analysis of changes in net debt

At 1.9.09

£'000

Cash flow

£'000

Other changes

£'000

At 31.8.10

£'000

Net cash:

Cash at bank

8,781

(4,210)

4,571

Financing:

Debts falling due within one year

(2,908)

(8)

(2,916)

Debts falling due after one year

(26,171)

(362)

(26,244)

(20,298)

(4,572)

24,589

Going concern

Following the banking crisis in 2008, 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.

Prior year adjustment

Long term creditors

The charity has adopted a policy of showing a proportion of funds on deposit as current liabilities, this being the amount that is expected to be repaid in the course of the next financial year (see note 16). This policy has also been applied to the prior year. There is no change to the surplus for the year due to this policy being applied.