News

Top-250 Christian charity to close

Finance | Tania Mason | 18 Nov 2009

Christian book and bible charity IBS-STL UK is looking to sell off its operations and wind itself up after the implementation of a new IT system went badly wrong and capped off a succession of financial problems.

It is the first time in recent history that a top-250 charity has chosen to wind up.

IBS-STL UK’s operations include trade book publisher Authentic Media, retailer Wesley Owen Books & Music, with 40 UK shops, and Christian resource distributor STL Distribution. The charity has now appointed Baker Tilly Corporate Finance LLP to find buyers for these entities.

The move has been prompted by a catalogue of financial problems, but mainly the failed implementation of a new IT system from SAP.

David Young, the charity's UK general manager, said the charity had been struggling financially for some time but the failed attempt to install an Enterprise Resource Planning (ERP) system in October 2008, that should have integrated all its warehousing, sales and customer services, was the nail in the coffin.

"We installed the accounting software a year earlier and on its own it worked fine, but the implementation of the ERP caused all kinds of problems with inventory and it was just as the recession hit. Those two things together gave us serious problems."

They resulted in significant cashflow pressures, excess stock, and supply chain and service difficulties in the charity’s distribution and retail units.

Despite engaging restructuring and business process consultants in an attempt to resolve the systems and financial challenges, the trustees became convinced that the best action to take is to exit the business.

IBS-STL UK is part of Biblica, a global Bible translation, publishing, distribution and outreach ministry serving more than 100 countries with books, Bibles and other Christian resources.

IBS-STL UK had convened an emergency taskforce led by global president of Biblica and former CEO of STL, Keith Danby (pictured), which has been in constant dialogue with suppliers and bankers.

490 jobs under threat

Danby said: “Given the severe financial and operational strains we have experienced, the board of trustees and management team believe a sale or exit from all or parts of certain operations is a prudent and necessary step.

“Whilst a difficult decision, we are focused on finding a solution to continue the important work of IBS-STL UK, to secure the jobs of the 490 people employed in our ministry, and to fulfill our financial obligations to our suppliers and creditors. We are working diligently and praying vigilantly for a successful outcome.”

The corporate finance division of Baker Tilly is marketing the operations of the charity to a number of interested parties and hopes to complete negotiations for the sales or potential closures within the next few weeks. Young said that if buyers are not found for all parts of the business, Biblica may step in and buy the rest, but "ultimately IBS-STL UK will be wound up".

IBS-STL UK was founded as Send the Light in 1962 and merged with the International Bible Society (IBS) in 2007. According to the latest Charity 250 Index, which averages charities’ financial records over three years, IBS-STL had income of £38.2m.

Biblica said the planned sale of the UK operations will not impact its other global operations. Biblica owns the copyright to the world's most popular Bible, the New International Version.

'Power of God's word'

Michael Fitch, chairman of the IBS-STL UK board of trustees, added: “We continue to believe strongly in the power of God’s word and Christian resources to change peoples’ lives. We are praying that we can pass the torch on to other likeminded organisations so that our UK staff, suppliers and ministry partners can carry our work forward.”

SAP is yet to respond to IBS-STL UK's criticism of its ERP system. A spokeswoman told Civil Society: "They are still talking about and trying to get to grips with the problem."