Group statement of financial activities and income and expenditure account for the year ended 31 December 2019
Group and charity balance sheets as at 31 December 2019
Islamic Relief Worldwide (company number 2365572) uses the exemption conferred by section 408 of the Companies Act 2006 in not preparing a separate Income and Expenditure Account for Islamic Relief Worldwide alone as a separate entity. Islamic Relief Worldwide as a charity’s net surplus was £3.0m (2018 net deficit £0.6m) for the year ended 31 December 2019.
The financial statements on pages 68 to 70 were approved by the board and signed on its behalf by
4 August 2020
The notes to the accounts on pages 71 to 91 form part of these financial statements.
Group cash flow statement for the year ended 31 December 2019
Notes To The Financial Statements
Islamic Relief Worldwide is a charitable company limited by guarantee, without share capital and governed by its Memorandum and Articles originally dated 14 March 1989 and amended as a Memorandum of Association on 9 August 2010 and the Objects amended on 16 March 2020. The company was registered as a charity with the Charity Commission on 6 April 1989. The Principal Address and Registered Office is 19 Rea Street South, Birmingham, B5 6LB. Islamic Relief Worldwide is considered to be a public benefit entity.
1. Principal accounting policies
a. Basis of preparation
The accounts (financial statements) have been prepared in accordance with the Charities SORP FRS 102 applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102), and the Companies Act 2006 and the Charities and Trustee Investment (Scotland) Act 2005 and the Charities Accounts (Scotland) Regulations 2006 (as amended 2014).
b. Going concern
The Trustees consider that there are no material uncertainties about the charitable company’s ability to continue as a going concern. Accordingly, they continue to adopt the going concern basis in preparing the financial statements as outlined in the Financial Review.
c. Consolidation and group financial statements
The group financial statements consolidate those of Islamic Relief Worldwide, its trading subsidiary TIC International Limited, registered in England and Wales (company registration number: 2796175, 100 per cent shareholding) and the charity International Waqf Fund, a limited company by guarantee (company registration number: 8612172, registered charity number: 1162805). The results of TIC International Limited and International Waqf Fund have been incorporated on a line-by-line basis, in accordance with current legislation.
Islamic Relief Worldwide also controls Islamic Relief UK (company registration number: 5483053). It is registered in England and Wales and during the year the company remained dormant. Islamic Relief Worldwide has taken advantage of section 408 of the Companies Act 2006 and has not included its own income and expenditure account in the financial statements. Note 7 gives the full details of the income and expenditure of the trading subsidiaries.
d. Fund accounting
Unrestricted funds: All donations are considered unrestricted unless specifically stated by the donor. Unrestricted funds comprise the accumulated surplus or deficit on the statement of financial activities which are available for use at the discretion of the trustees of Islamic Relief Worldwide in furtherance of the objectives of the charity.
Restricted funds: These are assigned by the donor, or the terms of the appeal, specified by a particular country or project. The donation and income deriving from them will be used in accordance with the specific purposes.
Endowment (Waqf) funds: These are funds that have been given to Islamic Relief Worldwide subject to the restriction that they are to be held as capital or spent on a long-term charitable asset. Waqf is employed to generate a return while the original investment remains intact. Waqf returns are used to cater for long-term projects. Waqf is the Islamic equivalent of endowments.
e. Incoming resources and investment income
Income is recognized when the charity has entitlement to the funds, it is probable that the income will be received and that the amount can be measured reliably.
Donations: This comprises all incoming resources from donations and income from fundraising partners on the basis of that which is remitted to Islamic Relief Worldwide in the UK.
Charitable income: Where related to performance and specific deliverables these are accounted for as the charity earns the right to consideration by its performance.
Other trading activities: This comprises income generated by TIC International Limited from its trading activities, its charity shops and the sale of merchandise.
Investment income: This comprises income generated by Waqf investment and rents receivable Income generated from Waqf
f. Resources expended
All expenditure is accounted for on an accruals basis and is recognized where there is a legal or constructive obligation to pay. Expenditure has been classified under headings that aggregate all costs related to that category.
Costs of generating funds: These are costs incurred in attracting voluntary income and those as stated below under the headings ‘Costs of generating voluntary income’ and ‘Fundraising trading’.
Costs of generating voluntary income: The costs incurred in seeking voluntary contributions.
Fundraising trading: This comprises the group’s trading activities, namely the costs associated with the trading activities of TIC International Limited.
Charitable activities: These are costs associated with the provision of humanitarian relief and development programs as elaborated on in the trustees’ report section, ‘Our global reach.’ These include both the direct costs and support costs relating to these activities.
Governance costs: These are costs associated with the governance arrangements of Islamic Relief Worldwide. Included within this category are strategic costs as opposed to the day-to-day management of Islamic Relief Worldwide’s activities.
Support costs: Support costs for a single activity are allocated directly to that activity. Where support costs relate to several activities, support costs have been allocated to each of the activities (stated in Note 10) on the basis of the number of direct staff supported during the period in the relevant activity. Governance support costs are allocated on the basis of support activities provided on clearly interpreted governance matters.
Investment management cost: This incorporates costs related to the administration of Waqf and costs relating to the promotion of the concept of Waqf from unrestricted funds; therefore, this element is not charged to capital.
g. Operating leases
Rentals paid under operating leases are charged to income as incurred.
h. Foreign currencies
Transactions in foreign currencies are recorded at the rate of exchange ruling at the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate ruling at the balance sheet date, and the gains or losses are included in the income and expenditure account. Foreign exchange gains and losses incurred in respect of humanitarian projects overseas are included in the charitable activities expenditure. The company’s functional and presentational currency is GBP.
i. Fixed assets and depreciation
Except for items costing below £500, which are expensed on acquisition, all expenditure of a capital nature is capitalised. Depreciation is calculated to write off the cost of tangible fixed assets, less their residual values, over their expected useful lives using the straight-line basis.
The expected useful lives of the assets to the business are reassessed periodically in the light of experience.
- Freehold buildings over 50 years straight-line basis
- Fixtures and fittings over four years straight-line basis
- Office equipment over four years straight- line basis
- Motor vehicles over five years straight-line basis
- Plant and machinery over eight years straight-line basis
Intangible assets represent the organization’s registered trademarks. They are stated at cost, less any impairment loss. The useful life of the trademark is estimated to be 10 years. They are amortized and tested for impairment annually where indicators of impairment are identified.
Stocks and work in progress are stated at the lower of cost and net realizable value. Net realisable value is based upon estimated selling prices less further costs expected to be incurred for completion and disposal.
Investments consist of unlisted investments, subsidiary undertakings and property. Investments are measured at cost less impairment.
m. Financial instruments
The charity only has financial assets and financial liabilities of a kind that qualify as basic financial instruments. Basic financial instruments are initially recognised at transaction value.
Debtors are measured at the settlement amount after any trade discount offered.
o. Creditors and provisions
Creditors and provisions are recognised where the charity has a present obligation resulting from a past event that will probably result in the transfer of funds to a third party, and the amount due to settle the obligation can be measured or estimated reliably. Creditors and provisions are normally recognized at their settlement amount after allowing for any trade discounts due.
As a registered charity, the company is exempt from taxation of its income and gains to the extent they fall within the charity exemptions in the Corporation Taxes Act 2010 or Section 256 Taxation of Chargeable Gains Act 1992.
The company is unable to recover Value Added Taxation charged on its purchases which is included in the related expense or asset in the accounts.
Islamic Relief Worldwide appreciates the hard work and dedication of its volunteers across the world. Almost 1,000 volunteers engaged in a number of activities including campaigning and domestic programmes.
r. Judgements in applying accounting policies and key sources of estimation uncertainty
Preparation of the financial statements requires management to make significant judgements and estimates.
Significant judgements: There are no significant judgements having a material effect on the financial statements.
Significant estimates: There are no significant estimates having a material effect on the financial statements.
2. Donations and legacies
* Figure includes:
£1,130,138 of Aid Match funding from the Department for International Development (DFID) towards an integrated development project in Sudan. The project aims to reduce hunger and vulnerability through the redevelopment of rural villages in Blue Nile and Greater Kordofan, providing water and sanitation, healthcare, education and livelihoods.
Gift Aid tax recovered on donations made by UK taxpayers which, although accounted for within unrestricted funds, is utilised for both unrestricted and restricted purposes.
** International fundraising includes countries in the Middle East and Emerging Markets in which Islamic Relief does not have a permanent presence.
***The Disasters Emergency Committee (DEC) is an umbrella organization of 14 humanitarian aid agencies, including Islamic Relief, that work together in times of crisis. For further information, visit: www.dec.org.uk
3. Other trading activities
5a. Charitable income by institution – non Middle East and Emerging Markets
5b. Charitable income by institution – Middle East and Emerging Markets
6. Donations disclosure by partner
All partners are separate legal entities reporting locally in their respective countries. These amounts represent those transmitted to Islamic Relief Worldwide to be applied to Islamic Relief Worldwide projects.
* Licence agreement not signed
** Islamic Relief Mauritius is incorporated as a branch of Islamic Relief Worldwide with local directors appointed to oversee operations, and its transactions and balances are included within the accounts of Islamic Relief Worldwide.
7. Results from trading subsidiaries
In 2019 a Gift Aid payment of £144,181 (2018: £36,049) was received from TIC International Ltd representing the taxable profits generated by the Company in 2018.
SIF Invest was a subsidiary of Islamic Relief Worldwide but was sold in 2018 and is no longer part of the Group. In 2018 SIF Invest generated losses of £11,000 and had total net assets of £171,000. In 2019 on the results of TIC International Limited have been consolidated.
9. Trustees’ remuneration
Apart from expenses, trustees are not remunerated. Neither the trustees, nor any persons connected with them, have received any remuneration, either in the current year or the prior year.
10a. Total resources expended
10b. Support costs
Support costs have been allocated to each of the above activities on the basis of the number of direct staff supported during the period in the relevant activity. Governance support costs are allocated on the basis of support activities provided on clearly interpreted governance matters.
11. Net incoming resources
12. Staff costs and emoluments
Employee numbers do not include trustees as they are not paid employees, and also do not include staff employed by Islamic Relief independent implementing partners.
Total redundancies for the year ended 31 December 2019: £8,178 (2018: £59,204)
Key management remuneration
Executive management team remuneration during the year totaled £797,716 (2018: £710,371).
Aggregate pension contribution included in total remuneration figure £42,016 (2018: £10,805).
* The individual remunerated in the £100-110k band in this report for 2019, and previously in the £90-100k band in our Annual Report and Accounts for 2018, was a specialist financial consultant engaged on an interim basis who has now left the organization.
13. Intangible assets: Group and Charity
Trademarks are depreciated over their economic life of 10 years.
14. Group tangible assets
Freehold property is valued at historical cost and depreciated. Freehold properties include properties held by Islamic Relief Worldwide for its own use and that of its trading subsidiary.
15. Charity tangible assets
All assets are used for charitable purposes and there are no inalienable or heritage assets.
In September 2019 Islamic Relief Worldwide sold the 99 per cent of share capital it held in SIF Invest, a company incorporated in France for €1,132,757, equivalent of £1,002,059. The above note includes the following remaining significant investments:
An investment in Islamic Relief Worldwide’s subsidiary TIC International Limited (£860,309), which provides
clothes recycling services. TIC International Limited is incorporated in the United Kingdom.
An investment property located in Bradford, UK which was kindly gifted to Islamic Relief. The property’s value is included in the valuation at the time of the donation (£62,000). The trustees are satisfied that the current value of the Bradford property represents market value.
An investment property located in Arbroath, UK which was kindly gifted to Islamic Relief. The property’s value is included in the valuation at the time of the donation (£55,000). The trustees are satisfied that the current value of the Arbroath property represents market value.
17. Stocks and work in progress
Other debtors include a £0.75 million Gift Aid claim and amounts owed by partners for costs incurred on their behalf for operational matters.
*Deferred income comprises income received in advance that the donor has specified must be used in future accounting periods.
**Other creditors represents amounts due to Islamic Relief independent implementing partners for projects committed to and implemented during 2019.
*** This is a Shariah compliant ‘murabaha’ facility with Al-Rayan Bank. As security for its obligations to the Bank under the terms of the facility, Islamic Relief Worldwide has provided a charge over its offices at 16 Lower Marsh St, London.
20. Financial instruments
As at 31 December 2019, the group had no capital commitments (2018: £nil).
22. Pension costs
The charity operates a group personal pension scheme. As of 2014 it became a statutory requirement for all employees to be made a part of the pension scheme and the charity makes a contribution to this. Employees can opt out of the scheme if they choose.
23. Analysis of assets and liabilities representing funds
24. Unrestricted funds
*This is a movement of the returns generated to unrestricted funds for humanitarian projects.
25. Restricted income funds
Restricted funds are funds subject to specific trusts, which have been declared by the donors at the time of donation or created through legal process. All restricted funds of Islamic Relief Worldwide have been used to implement specific humanitarian projects in particular areas of the relief stated above.
Zakat funds (annual religious payments by able Muslims to help the poor) have been used to cover shortfalls in zakat-eligible emergency, health, sustainable livelihood and water and sanitation projects implemented in various countries. Further shortfalls were covered using unrestricted funds.
26. Endowment funds
Waqf funds are permanent endowment funds that are held within the charity to generate further funds. These are currently invested in the properties of Islamic Relief Worldwide.
Waqf investments give a seven per cent (notional and internally allocated) annual return on capital, from which projects are implemented for the purpose of Waqf shares. A proportion of the return is also added back to the capital to ensure growth for reinvestment in future years.
In 2019, income from these Waqf investments amounting to £479,236 will finance future long-term sustainable humanitarian development projects. Of this, £383,389 has been transferred to unrestricted funds to finance future humanitarian development projects.
27. Related parties
Some of the Trustees of Islamic Relief Worldwide were also Trustees of the following Islamic Relief Partners in the period; Islamic Relief Australia, Islamic Relief Germany, Islamic Relief Malaysia, Islamic Relief South Africa and Islamic Relief Sweden. The income from these related parties in 2019 is given in note 6. The amounts due from these related parties as at 31 December 2019 were as follows – Islamic Relief Australia £306,505, Islamic Relief Germany £573,530, Islamic Relief Malaysia £174,085, Islamic Relief South Africa £313,850 and Islamic Relief Sweden £820,765.
In 2019 a Gift Aid payment of £144,181 (2018: £36,049) was received from TIC International Ltd representing the taxable profits generated by the Company in 2018.