**Company Number: 615259 Charity Number: 206504** 

## **THE INTERNATIONAL INSTITUTE FOR STRATEGIC STUDIES** 

**ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 SEPTEMBER 2020** 



**The International Institute for Strategic Studies** 

## **Annual Report and Financial Statements for the year ended 30[th] September 2020** 

## **CONTENTS** 

## **Annual Report and Financial Statements** 

- 1 Strategic Report and the Report of the Trustees 

- 17 Independent Auditor’s Report to the Members of The International Institute for Strategic Studies 

- 22 Consolidated Statement of Financial Activities 

- 23 Consolidated Balance Sheet 

- 24 Charity Balance Sheet 

- 25 Consolidated Cash Flow Statement 

- 26 Notes to the Financial Statements 



**The International Institute for Strategic Studies** 

**Annual Report and Financial Statements for the year ended 30[th] September 2020** 

## **STRATEGIC REPORT AND THE REPORT OF THE TRUSTEES** 

The Trustees present their report for the year ended 30[th] September 2020. This incorporates the Directors’ report, which has been prepared in accordance with the Companies Act 2006 and FRS102, and the Strategic Report. The accounts comply with current statutory requirements, the Memorandum and Articles of Association and the Statement of Recommended Practice ‘Accounting and Reporting by Charities’ (SORP). 

The primary role of the International Institute for Strategic Studies (referred to as ‘IISS’ or ‘the Institute’) is to enhance public understanding of questions of international security, help to provide policy makers with facts and analysis to inform and advise their decision-making, and contribute to improved defence diplomacy and conflict resolution. 

During the year ended 30 September 2020, Institute activities were impacted by the COVID-19 pandemic, notably due to restrictions forcing the closure of IISS offices and the postponement or cancellation of in-person events.  The Institute adapted to these restrictions by improving its virtual capabilities and providing staff with necessary equipment to ensure they could successfully deliver their roles from home during lockdowns, thus minimising any disruption to productivity. COVID-19 safety measures were introduced across all offices to ensure a safe working environment was provided for those staff who needed to attend the office. Where possible, and in close consultation with funders, conferences and workshops were converted into online webinars or hybrid events to ensure the Institute was still able to retain its convening power. Where virtual events were not feasible, alternative activities were agreed with funders to ensure project deliverables were achieved. During this period, the IISS took no COVID related government support, furloughed no staff and made no COVID-related redundancies. The Trustees have expressed gratitude for the way in which the COVID-19 restrictions have been handled by IISS management to reduce disruption to Institute activities, ensure staff safety and minimise any financial loss. 

Despite these challenges, the Institute achieved the main objectives set by the Trustees for the year, which included the expansion of its research output, convening activity and dissemination of its publications, enhanced digital content, and widening the Institute’s international network and global coverage. More details can be found in the _Achievements and Performance_ section on pages 3 to 8. 

## **Research, Dissemination and Digital Content** 

In 2020, the Institute produced over 100 publications distributed to universities, governments, business, policy makers and research institutions across 92 countries in a wide range of digital and print formats. There were over 450,000 full-text downloads of IISS publications. In addition, the Institute posted over 231 blogs and reports on the iiss.org website. 

The IISS continues to update and expand its digital channels. The new podcast series, _Sounds Strategic_ , has attracted over 45,000 listeners since January 2020, while the IISS website audience continues to grow, with 58% user growth year on year (January-November)—this led to a record high for the Institute of one million users during the year. Over the past year, the Institute's social media audience increased from around 225,000 to more than 275,000. The IISS's Twitter following has grown by 1,000–2,500 each month to reach 136,000. The Institute's Instagram channel, which was launched for the 2019 Manama Dialogue, has almost reached 1,500 followers. 

The trend over the last few years has been for media coverage to peak around the IISS Manama and Shangri-La Dialogues. This trend changed in 2020, partly due to the postponement of the Shangri-La Dialogue and partly reflecting the expansion of the breadth of coverage throughout the year. This means that, although the Shangri-La Dialogue did not take place in 2020, the Institute exceeded the total reach (people who read, heard or saw coverage) in English language media achieved in 2019. Highlights included IISS analysis and comment following Iranian General Qasem Soleimani’s assassination in January, reaching over 10 million people in top tier outlets internationally, with similar coverage by the IISS of the Burkina Faso conflict between April and June. Media citation during the year of data and analysis from the Institute’s flagship _The Military Balance_ publication reached over 

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**The International Institute for Strategic Studies** 

## **Annual Report and Financial Statements for the year ended 30[th] September 2020** 

56 million people and that of our nuclear weapons and proliferation analysis reached 44 million. IISS commentary on Southeast Asia reached 57 million people, while our analysis of the Middle East reached 37 million. 

## **Convening power** 

The Institute continued to extend its platforms for intergovernmental consultation and dialogue in both private and public settings to improve defence diplomacy and conflict resolution. In all cases, the Institute was able to create informed debate, develop new networks of contacts and engage governments, the private sector, the international expert and opinion-forming community, and IISS members in both open debates and confidential discussions to improve mutual understanding of differing positions and promote new policy approaches. 

Over the year, the Institute convened 163 events in seven countries with 10,267 attendees from over 100 countries. 

The Institute also continued to deploy its convening power and analytical excellence informally via meetings between senior research staff and leading government figures and policy makers from a range of countries. At these meetings the Institute is able to leverage its global reach and data-based approach to analysis to provide information on which strategically important policy decisions can be made at the highest level. 

## **Global coverage and international strategic network** 

Investment in analytical expertise and in enhancing the role of its four international offices has been a core focus of the Institute in recent years in order to bring a powerful global perspective to all of its work, as well as engendering the widest possible engagement on issues of international security. 

Details about the activities of the international offices can be found on pages 14-15. 

## **Strategy** 

The Institute’s medium- to long-term strategy comprises four elements as follows: 

1.  to provide facts and analysis on the sources of conflict, however caused, which may provoke the use of organised military force, and to examine the changing nature and use of organised force in international affairs; 

2.  to provide facts and analysis on the nature of political, geopolitical and geo-economic risk and advise governments and the private sector on measures that can be taken to mitigate that risk; 

3.  to provide an independent platform for intergovernmental consultations on geopolitical and geoeconomic issues in private and public settings, supported by the facts and analyses developed by the Institute; and 

4.  to sustain a network of experts in these matters on the permanent staff, on a part-time consulting basis and also generally among an engaged cohort of the individual membership. 

The Institute measures the success of this strategy in the following ways: 

- expressions of interest in the Institute's advice, and attendance at its dialogues and conferences by government officials, international business and media representatives from around the world. 

- evidence that the Institute has contributed to improved defence diplomacy and conflict resolution, as demonstrated by authoritative statements to the IISS from around the world; 

- obtaining funding from a variety of international charitable, governmental, corporate and individual sources to maintain a significant body of research across a broad range of thematic and regional programmes; 

- citations of the Institute’s research in respected media; and 

- worldwide demand for its publications and databases. 

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**The International Institute for Strategic Studies** 

**Annual Report and Financial Statements for the year ended 30[th] September 2020** 

## **OBJECTIVES AND PRINCIPAL ACTIVITIES** 

The Institute’s declared objects are ‘ _to promote on a non-party basis the study and discussion of and the exchange of information upon any major international security issues including without limitation those of a political, strategic, economic, social or ecological nature, and to promote conflict resolution by facilitating discussion and dialogue and publishing analysis on major international security issues to assist and promote the resolution of conflicts between or within nations’_ . 

The Institute aims to achieve these objects by providing to IISS members, governments, international organisations and the wider public the best possible objective information on military and political developments relevant to the prospects, course and consequences of conflict having an important military dimension.  In furtherance of its objectives, the Institute: 

- delivers a comprehensive research programme committed to advancing wider understanding of constantly evolving global security issues; 

- convenes government officials, independent analysts, business people and journalists to advance understanding of political, military, economic, environmental and societal trends in the subjects addressed by the Institute's work; 

- continues to enhance the online content offered through iiss.org to maximise global access to its research and analysis; and 

- maintains an international network of influential and knowledgeable individuals, corporate entities, governments and others as an audience for its research and publications. 

The Institute’s achievements against its objectives are discussed under the heading ‘ _Achievements and Performance’_ below. 

The Institute’s ‘statement of values’ and ‘policy on financial transparency confidentiality and effectiveness,’ published on the IISS website, reaffirm the IISS’s commitment to full independence and excellence in the conduct of all of its activities, along with the Trustees’ determination that fundraising is maintained with the twin aims of guaranteeing the Institute’s independence of thought and analysis, as well as maintaining the Institute’s effectiveness as a strategic actor in a complex international environment. 

The charity had no fundraising activities requiring disclosure under provisions of section 13 of the Charities (Protection and Social Investment) Act 2016. 

## **ACHIEVEMENTS AND PERFORMANCE** 

## **Research Programmes** 

As an independent, non-partisan and international policy institute, the IISS is committed to advancing wider understanding of the critical security issues of the 21[st] century and their potential trends or resolution. A comprehensive research programme covers these challenges and responds to them both thematically and regionally. The 20-member IISS Advisory Council, composed of distinguished members from around the world, assists the Institute on the intellectual direction of its activities. The programme has been defined under the broad categories of War, Power and Rules covering five thematic and seven regional concentrations: 

- Defence and Military Analysis 

- Geo-Economics, Geopolitics and Strategy 

- Non-Proliferation and Nuclear Policy 

- Cyber, Space and Future Conflict 

- Conflict, Security and Development 

- Africa 

- Asia-Pacific 

- Europe 

- Middle East and the Gulf 

- Japan Chair programme 

- South Asia 

- US Foreign Policy and Transatlantic Affairs 

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**The International Institute for Strategic Studies** 

## **Annual Report and Financial Statements for the year ended 30[th] September 2020** 

IISS research programmes actively contribute to a range of government and corporate briefings, convening external and IISS member events, delivering podcasts and producing research and analysis for the wide range of IISS publications. In recent years, the Institute has paid increasing attention not only to international security, but also to facilitating dialogue and conflict-resolution. This is achieved by bringing together parties under dispute in ‘track-two’ meetings around the world, to discuss differences and consider how common interests can be advanced. 

In the period under review, IISS research and research-related activities achieved notable impact on a number of fronts. The following is a list of key examples. 

- In September 2020, the Defence and Military Analysis Programme (DMAP) published the IISS Strategic Dossier “ _Russia’s Military Modernisation: An Assessment_ ” (as referenced below). Throughout the year, DMAP implemented the Missile Dialogue Initiative project, convening a number of meetings and publishing several research papers in this framework, and worked on issues including European defence in the age of great power competition; China’s defence modernisation and Beijing’s views on arms control; as well as the geopolitical implications of the COVID-19 pandemic. 

- The Non-Proliferation and Nuclear Policy (NPNP) Programme was awarded grant funding from the United Kingdom’s Foreign, Commonwealth and Development Office to produce an evidencebased assessment report on Iran’s missile capabilities and proliferation activities. The Programme convened two workshops to identify the overarching verification framework needed to validate North Korea’s compliance with a range of nuclear-disarmament scenarios, sharing workshop findings with the US Special Representative for North Korea.  The Institute also organised unique para-diplomatic talks that discreetly brought together experts from Iran and major Arab states to explore solutions to their differing security perspectives, resulting in published reports. 

- This year’s Geo-economics, Geopolitics and Strategy Programme published major reports on ‘China’s Belt and Road Initiative (BRI), _Beyond the Myths – Towards a Realistic Assessment of China’s Belt and Road Initiative: The Development-Finance Dimension_ and _China’s BRI: The security dimension_ . The Programme also worked on two major publications due in the first half of 2021: a BRI Strategic Dossier and an Adelphi volume on the Digital Silk Road (DSR). The Programme has also produced an interactive map, _China Connects_ , detailing the global reach of the DSR. 

- The appointment of a Senior Fellow for Japanese Security Studies in December 2019—Robert Ward—has enabled the expansion of the Institute’s work on Japan’s foreign, international security and defence policies.  A highlight of the new Japan Chair Programme this year was its contribution to a major report on missile defence options for Japan, prepared for Japan’s thenDefence Minister, Kono Taro. The Programme has also started to develop strong expertise in Japan’s economic statecraft as well as (and, relatedly) its cyber and technology policy. 

- A substantial research effort of the Cyber, Space and Future Conflict programme in the past year has been the 100,000 word, ground-breaking report on _Cyber Capabilities and National Power: Methodology and Net Assessment_ , due for publication in early 2021. Through this project, the IISS engaged with leading officials and specialists around the world to develop individual studies on 15 countries and offer a novel approach to understanding national cyber power. Building on earlier IISS work on China’s cyber power, the Institute has conducted new research on China’s cyber defences, its reform efforts on cyber-security education, and the prospects for a US-China technological decoupling. 

- The Asia-Pacific research programme has benefited from the recruitment of new research staff and has continued to develop its work on important new areas of interest to the Institute's main constituencies. In early 2020, two new Shangri-La Dialogue Senior Fellows for Asia-Pacific Security - Dr Lynn Kuok and Dr Euan Graham - were appointed in the IISS-Asia office. They are continuing to expand the programme's work on major power relations, the South China Sea dispute, and medium powers' security and defence policies in the region. Dr Samir Puri, 

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## **Annual Report and Financial Statements for the year ended 30[th] September 2020** 

appointed as Senior Fellow for Urban Security and Hybrid Warfare at IISS-Asia in September 2020, will further reinforce the programme's range of expertise. A major published output from the programme was the 2020 IISS Asia-Pacific Regional Security Assessment (as referenced below). 

- The Middle East Research Programme widely disseminated the findings of the IISS Strategic Dossier on _Iran's Networks of Influence in the Middle East_ , briefing Western and Middle Eastern military, intelligence, diplomatic and non-government audiences and receiving significant media coverage. In addition to contributing to regular IISS publications, the research team also produced papers feeding into IISS research on Chinese global and digital outreach. A special publication was released at the 2020 Manama Dialogue that examined the strategic and geo-economic repercussions of the COVID-19 pandemic for global and Middle Eastern politics. 

- The South Asia programme held an IISS-Pakistan track-1.5 dialogue on nuclear doctrine and deterrence in London in February 2020. Speakers and participants included a senior advisor to Pakistan’s National Command Authority (who made a rare public presentation), senior military officers of Pakistan’s Strategic Plans Division and top UK academics, experts and UK government officials. In March 2020, the programme hosted Dr Moeed Yusuf, Special Assistant to the Prime Minister of Pakistan on National Security Division and Strategic Policy Planning (with the rank of Federal Minister of State) for an informal discussion at Arundel House. 

- The Conflict, Security and Development programme (CSDP) activities included the publication of the _Armed Conflict Survey_ (as referenced below) and the successful conclusion of the UK’s Department for International Development-funded project on 'Urban Drivers of Political Violence.' This project set out to help policy makers understand the specific challenges related to political conflict and violence in urban areas. 

## **Publications** 

Despite the challenging circumstances, IISS publications maintained a high tempo throughout the year. _Strategic Comments_ provided timely briefings on questions of international security and high politics. Topics included Ethiopia’s economic boom; political unrest in Chile; NATO’s China strategy; COVID-19 and the US military; Hong Kong’s security law; the Kosovo-Serbia dispute; India’s nonalignment in the telecommunication sector; and Turkey’s increasingly assertive foreign policy. 

_Strategic Survey: The Annual Assessment of Geopolitics_ was published in November 2020, analysing the global and regional shifts in geopolitics and security systems. The publication’s region-by-region analytical review of the previous year is complemented with forward-looking essays on topical questions. Its 34 essays address the impact and management of the common challenges of COVID19 and climate change. The essays explore major geopolitical developments, such as the decline of US-China and EU-China relations, conflict in Jammu and Kashmir, the crisis in arms control and key gaps in international law. They also assess the progress of three ambitious presidents: Cyril Ramaphosa, Volodymyr Zelensky and Andrés Manuel López Obrador; and the foreign-policy legacies of two veteran leaders: Angela Merkel and Abe Shinzo. They analyse issues of rising strategic importance, such as the new geopolitics of the Red Sea, the regional implications of Ethiopia’s new mega-dam, and the international spread of Brazilian organised crime. 

In February 2020, the IISS launched the 61st edition of _The Military Balance_ at the Munich Security Conference, providing data and capability assessments for the armed forces of 171 countries. The 2020 edition charted the further erosion of the technological advantage enjoyed by Western states in the face of China’s military modernisation and the introduction of new equipment into Russia’s armed forces. Essays included reflections on the concepts of ‘informatisation’ and ‘intelligentisation’ in China’s armed forces; the military use of the electromagnetic spectrum for electronic warfare purposes; and the space domain as a realm of conflict. The accompanying wallchart provided an assessment of the global distribution of land attack cruise missiles in national inventories. 

The _Military Balance Plus_ database combines multiple years of data and qualitative assessments from The Military Balance with advanced search and graphical capability. During 2020, data holdings 

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in the _Military Balance Plus_ database expanded further and the IISS introduced a defence spending forecast tool, allowing for 10-year spending projections for a number of countries around the world. The database presents a step change in defence analysis for the Institute and its core audiences in government, the military and the private sector. 

The Institute’s journal, _Survival: Global Politics and Strategy_ , published six times per year, provides a platform for many of the leading thinkers in the field of international affairs to analyse and debate strategic questions. In 2020 these included a piece on climate change and the state, how COVID-19 will reshape geopolitics, the UK’s response to the COVID-19 outbreak, and a relatively positive piece on the international scientific mobilisation in response to COVID-19. There were further articles on John Bolton’s obsession with Iran and the strategic significance of China’s port investments under the BRI. _Survival_ remains the Institute’s most-read publication and is the second most popular social science journal within the vast portfolio of our publishing partner, Taylor & Francis. 

The annual _Armed Conflict Survey_ was published in May and featured analysis of 33 active armed conflicts, up-to date information on conflict parties, analysis of the underlying drivers and historical roots of conflicts, key political and military developments in 2019 and their impact, conflict specific and regional trends, and full-colour maps, tables and infographics. The book also contains four thematic essays on: ISIS foreign fighters after the fall of the Caliphate; the use of uninhabited weaponry by non-state actors; the origins and consequences of armed group proliferation; and human trafficking in conflict. 

The _Adelphi_ book series is the Institute’s principal contribution to policy-relevant, original academic research. In February the IISS published _A historical sensibility: Sir Michael Howard and the IISS, 1958–2019_ , a commemorative collection of Sir Michael’s works for the Institute. Lucie BéraudSudreau’s book on _French arms exports: the business of sovereignty_ was published in March, and considers how France has responded to changing political and market circumstances in the way that it promotes and controls the export of weapons. 

In addition to these established publications, which are disseminated to universities, governments, militaries and think tanks around the world, the IISS released various reports and dossiers. Principal among these was the _Asia Pacific Regional Security Assessment 2020,_ published in June, which comprises ten chapters concerning the regional strategies of major resident powers, as well as topical security issues. 

Two IISS Strategic Dossiers were published in November 2019. _Iran’s Networks of Influence in the Middle East_ examines Iran’s use of proxies and third parties in the Middle East. This dossier provides an understanding of how Iran builds, operates and uses its sovereign capability to fight by, with and through third parties in foreign jurisdictions. The second dossier, _ISR and the Gulf: An Assessment_ , considers the meaning of and requirement for intelligence, surveillance and reconnaissance in the context of the region. It examines the military needs and industrial aspirations of the Gulf Arab states regarding ISR. The report is a companion work to the Institute’s 2016 dossier on _Missile-Defence Cooperation in the Gulf_ , to provide a basis for informed decision-making to support improved security in the region. 

The Strategic Dossier, _Russia’s Military Modernisation: An Assessment_ , published in September 2020, examines the development of Moscow’s armed forces and military capabilities. It analyses the aspirations underpinning Russia’s military reform programme and its successes as well as its failures. The dossier also provides insights into Russia’s operational use of its armed forces, including in the intervention in Syria, the goals and results of recent state armament programmes, and the trajectory of future developments. 

## **Dialogues, Lecture Series and Conferences** 

The Institute’s international dialogues bring government officials together in a combination of formats, and to address subjects, that they might not be able to coordinate themselves. Under the international auspices of the Institute, it is often easier to arrange for discreet contacts to take place between 

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government officials who wish to meet, but to do so unofficially and away from the public eye. In addition, the Institute organises lecture series and specialist conferences around the globe. 

## **1. The Shangri-La Dialogue** 

Initiated in 2002, the Annual Asia Security Summit (IISS Shangri-La Dialogue) is the most important regular gathering of defence professionals in the region. Governments, the expert community and the media have increasingly viewed the substance and tone of exchanges at the Dialogue as important indicators of the state of the region’s security. The Shangri-La Dialogue will be staged in Singapore with the government’s support until at least 2024. 

In light of the serious challenges posed by the global COVID-19 pandemic, the IISS decided in close consultation with the Government of Singapore not to convene the 2020 Shangri-La Dialogue, which was scheduled for 5–7 June 2020.  The Institute plans to convene an exceptionally strong IISS Shangri-La Dialogue in 2021, to be held on 4–6 June. 

The Shangri-La Dialogue provides a platform, which participant countries’ defence ministers and other principals have used to elaborate and clarify their countries’ positions on the most important regional security topics of the day. The Dialogue has also been a venue for proposing and advancing defence initiatives and multiple government bilateral and multilateral meetings are held around the Dialogue. 

## **2. The Manama Dialogue** 

The 15th IISS Regional Security Summit: The IISS Manama Dialogue was held 22–24 November 2019.  Since its inception in 2004, the Dialogue has become a central element in the Middle East’s security architecture. National leaders and ministers from the Middle East, North America, Europe, Asia and Africa make major policy statements and are offered a bespoke occasion to consult bilaterally and multilaterally on the most pressing security and foreign-policy challenges. 

More than 525 delegates from 53 countries took part in the 2019 event. There were 45 government delegations bringing 20 ministers, 5 armed-forces and 12 intelligence chiefs to Bahrain. Two-thirds of the delegates were government officials, demonstrating the continuing interest of governments in attending and contributing to important policy discussions facilitated by the IISS. Nearly 30 senior journalists attended, and a press corps of more than 100, underlining the importance of government– media interaction and the value of independent discussion in the heart of the Middle East. 

The IISS Manama Dialogue 2019 provided an opportunity to reflect on how countries and corporations can navigate competition and conflict in the Middle East. Given deep political fault lines running through the region, the weakness of formal institutions and uncertainty over the US’s strategic involvement with the region, informal mechanisms such as the Dialogue become important fora for shaping collective purpose. The most debated issue at the Dialogue was whether the US policy of maximum pressure would rein in Iranian behaviour or would fuel further regional escalation. Local actors, meanwhile, focused their remarks on regional rivalries, attributing the Middle East’s problems variously to Iran, Israel and Turkey. 

A new programme initiative for the 2019 Dialogue was the Manama Dialogue Young Leaders’ Programme (MDYLP). The MDYLP brought some of the Middle East’s brightest young strategic thinkers and leaders to the IISS Manama Dialogue to involve them in high-level debate about the current strategic and security challenges facing the region. 

## **3. Lecture Series** 

The Fullerton Lecture Series brings together major figures in Asia-Pacific and international affairs to speak in Singapore. Due to COVID-19 pandemic restrictions, the IISS was only able to hold one lecture in the last financial year.  In November 2019, the Secretary of Foreign Affairs of the Republic of the Philippines, Teodoro Locsin Jr, discussed the Philippines’ new role as coordinator for the Association of Southeast Asian Nation (ASEAN)’s relations with China and how growing major power rivalry is affecting its relations with China and the United States. 

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**Annual Report and Financial Statements for the year ended 30[th] September 2020** 

## **4. IISS Alastair Buchan Lecture and Annual Dinner 2019** 

The IISS hosted Dr Yoichi Funabashi, Chairman of the Asia Pacific Initiative, as he delivered the Alastair Buchan Lecture at its Annual Dinner on 13 November 2019, attended by policy makers, business people and members of the press. Dr Funabashi spoke on the Japan–US relationship, its importance to regional security and the challenges that have emerged during the Trump presidency. He concluded by saying that Japan played a key role as a stabilising force in the region and, along with like-minded nations, had a duty to champion the rights and freedoms of smaller nations. 

## **Membership** 

The IISS retains a strong global membership base which comprises a broad spectrum of leading analysts, academics and military and government officials, and international companies. Members are actively connected to international and strategic affairs through the Institute’s research programmes and have access to its opinion-shaping analysis through publications, events, member briefings and international conferences. Individual members are part of a unique global network supporting the work of the IISS and extending the Institute’s reach in the world of international affairs, whilst IISS Corporate Membership is designed to enable corporations and institutions to stay on top of world events by giving them a thorough understanding of international affairs, security issues and geopolitical and military conflicts, and to aid their strategic decision-making. The Institute invites its membership to participate in events held in its offices as well as international conferences held annually. 

The Institute holds a large number of discussion meetings each year for its members at its London headquarters and overseas offices in Washington DC, Bahrain and Singapore, featuring IISS and guest speakers. During this past year, in response to the restrictions introduced in response to the COVID-19 pandemic, the Institute increased the number of webinars held which has in turn expanded its global audience. Events that attracted notable interest over the past year included: 

In a wide-ranging discussion, US Secretary of Defense Dr Mark Esper outlined the US vision for how to advance security and prosperity in the Indo-Pacific. He explained the initiatives and military developments that it is working on as part of the three pillars of its Indo-Pacific Strategy, which are based on preparedness, strengthening partnerships and promoting a more networked region. 

Kanehara Nobukatsu, IISS Japan Chair Robert Ward and Yuka Koshino discussed what Japan’s grand strategy should be to navigate the significant security and economic challenges it faces as it enters the Reiwa era. Kanehara Nobukatsu is Professor of Doshisha University’s Faculty of Law and served as Assistant Chief Cabinet Secretary to Prime Minister Abe Shinzo from 2012 to 2019. 

Alongside IISS researchers from the Cyber, Space and Future Conflict programme, Professor Richard Harknett, Chair of the Center for Cyber Strategy and Policy, and Dr Max Smeets of the Center for Security Studies, examined strategic cyber competition and explained how the adoption of a different approach can pivot both explanation and policy prescription. They argued that great powers (China and Russia) believe they can change the strategic balance of power through their cyber campaigns. 

A webinar, hosted in association with the Royal Navy Strategic Studies Centre, which considered how the UK is on the cusp of a step change in its maritime air power capabilities. Vice Admiral Jerry Kyd and Air Marshal Gerry Mayhew discussed how the role of these capabilities will develop in light of unfolding global strategic dynamics and challenges, and against the backdrop of the UK government’s ambitions for its integrated review into security, defence, development and foreign policy. 

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**The International Institute for Strategic Studies** 

**Annual Report and Financial Statements for the year ended 30[th] September 2020** 

## **FINANCIAL REVIEW AND RESULTS FOR THE YEAR** 

For the year ended 30[th] September 2020, total incoming resources were £17,016,000 (2019: £24,537,000). The primary reason for the higher income reported in 2019 was the receipt of expendable endowment funding of £6,015,000 in support of a Japan Chair, in addition to reduced income recognised in 2020 with only one Dialogue convened this year and fewer research workshops and lectures held during the year due to the COVID-19 pandemic restrictions. Funded research events have either been converted into alternative project deliverables or rescheduled until next financial year. 

Total resources expended for the year were £16,609,000, compared to £18,617,000 in 2019, which reflected the reduced conference and workshop activity as a result of the COVID-19 pandemic. 

After accounting for net losses on investment assets of £53,000 (2019: £81,000 gains); foreign exchange losses of £34,000 (2019: £48,000 gains); and actuarial losses on the defined benefit pension scheme of £56,000 (2019: £532,000); the net movement in funds for the year was a surplus of £264,000 (2019: £5,517,000). 

As at 30[th] September 2020, there was a liability on the defined benefit pension scheme of £741,000 (2019: £716,000). The IISS remains committed to reducing the pension liability through deficit funding plan payments of £48,000 per year. 

Net cash outflow totalled £1,207,000 for the year (2019: £5,101,000 inflow), leaving total cash balances, including portfolio cash, of £6,147,000 at the year-end (2019: £7,354,000). 

The group reported an improved net current asset position of £748,000 (2019: £235,000).  Total net assets as at 30[th] September 2020 increased to £23,974,000 (2019: £23,710,000). 

## **Reserves** 

‘Free reserves’ are defined as unrestricted funds excluding designated funds and funds represented by tangible fixed assets, other than those financed by external loans. 

The Institute’s reserves policy has been determined by the Trustees after considering current and projected income streams and the Institute’s expenditure profile. To ensure that the Institute is able to successfully meet its objects, the Trustees aim to hold free reserves equivalent to between 3 and 6 months operating expenditure. This target level of reserves will mitigate the risk of income fluctuations causing delays or cancellations to any expenditure commitments and ensure that planned activities can be completed. Furthermore, in the event of a significant drop in income levels there will be sufficient reserves in place to implement any necessary organisational changes. 

As at 30[th] September 2020, the Institute held free reserves of £5,305,000 (2019: £4,822,000) which equated to approximately 5 months (2019: 4 months) of operating expenditure associated with unrestricted funds. Free reserves comprise IISS unrestricted general funds of £18,212,000, less tangible and intangible fixed assets of £13,648,000 and excluding the pension liability of £741,000.  At 30[th] September 2020, IISS restricted funds totalled £71,000 (2019: £17,000) and endowment funds totalled £5,691,000 (2019: £5,898,000). The Trustees continue to review the reserves policy in line with the Institute’s financial resources. 

## **Investment Policy and Performance** 

Cazenove Capital Management Ltd. manages the Institute’s investment portfolio. As at 30[th] September 2020, the market value of the main portfolio was £4,629,000 (2019: £4,594,000) and the asset allocation was: UK equity funds, 13% (2019: 16%); UK fixed-interest funds, 7% (2019: 7%); International fixed-interest funds, 5% (2019: 4%); International equity funds, 46% (2019: 41%); Portfolio funds 28% (2019: 28%) and Cash 1% (2019: 3%). Investment income for the year to 30[th] September 2020 from this portfolio amounted to £84,000 (2019: £96,000). 

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**The International Institute for Strategic Studies** 

## **Annual Report and Financial Statements for the year ended 30[th] September 2020** 

The overall investment objective is to maximise the total return on the portfolio to achieve several percentage points above inflation, in line with constraints over risk . Portfolio performance and asset allocation are closely monitored by the Investment Committee in conjunction with the portfolio managers. The Institute considers the portfolio to be a long-term investment fund and operational cash flow demands are met by alternative funding sources. The Investment Committee has adopted a diversified asset allocation strategy in keeping with its appetite for moderate risk. At 30[th] September 2020, portfolio returns over the previous year, three years, and five years as compared to benchmark, which was recently agreed as 100% UK CPI +4%, and the FTSE All Share were as follows: 

|**Total Returns**|**1year %**|**3 years p.a. %**|**5 years p.a. %**|
|---|---|---|---|
|Portfolio|0.7|3.0|6.4|
|Benchmark|4.3|5.6|5.8|
|FTSE All Share|-16.6|-3.3|3.4|



In June 2019, the Institute invested £5.9m in a new expendable endowment fund managed by Cazenove, a Charity Multi-Asset Fund (CMAF). The CMAF generates an annual pay-out of 4% and enables the Institute to drawdown the approved funds required to meet all costs associated with the Japan Chair research position. As at 30[th] September 2020, the market value of the Japan Endowment Fund was £5,691,000 (2019: £5,907,000) and the asset allocation was Charity Multi-Asset Fund (CMAF) 100% (2019: 48%), of which 68% was equities (2019: 63%), and Cash 0% (2019: 52%). 

## **The IISS and the Economic Climate** 

The Institute’s Dialogue activities and publications are protected by multi-year agreements that provide guaranteed levels of income. 

As referenced above, the Institute has received expendable endowment funding in support of a Japan Chair providing guaranteed financial support for a senior research post. 

The Institute’s commercial trading subsidiary, Arundel House Enterprises Limited (AHEL), experienced difficult commercial trading conditions as a result of the COVID-19 pandemic restrictions but minimised any losses with a low fixed cost base. 

The impact of the COVID-19 pandemic and political events such as Brexit uncertainty on financial and currency market instability resulted in a more moderate performance by the investment portfolio. The Investment Committee continues to monitor closely its diverse portfolio of investment funds that includes non-sterling denominated exposure in equities and bonds. 

The Institute naturally hedges its foreign currency transactions, minimising conversion as far as possible to avoid exchange rate losses. The IISS continues to benefit from consistently low interest rates which determine the cost of borrowing for the Institute’s short-term money market funding. 

## **Financial health** 

As outlined in the Financial Review, the Trustees consider the Institute’s financial health to be sound. As at 30[th] September 2020, the Institute held investment assets totalling £10.3 million and cash on the balance sheet of £6.1m with no loan liabilities, compared to investment assets of £5.5 million, £1.5m of cash and a building loan liability of £5.5 million in 2010, demonstrating a clear strengthening in the Institute’s financial position over the past 10 years. 

As a result of the income security provided by the diverse revenue sources and multi-year funding arrangements outlined above, and considering budgets and forecasts covering the period to 30[th] September 2023, the Trustees are confident that the Institute can be considered a going concern for the foreseeable future. Accordingly there are no material uncertainties surrounding the preparation of the financial statements on a going concern basis. The global nature of IISS operations and funding sources has also contributed towards further income diversity that has helped to mitigate risk during this time of continued economic uncertainty. 

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**The International Institute for Strategic Studies** 

**Annual Report and Financial Statements for the year ended 30[th] September 2020** 

## **PRINCIPAL RISKS AND UNCERTAINTIES** 

The Trustees have assessed the major risks to which the charity is exposed, in particular those related to the operations and finances of the Institute, and are satisfied that systems are in place to manage exposure to the major risks. The COVID-19 pandemic has been specifically considered and measures to mitigate against its impact on IISS activities and finances are detailed below. The Trustees are satisfied that, as a result of the Institute’s response to the pandemic, there has not been any material financial loss arising from COVID-19 and the risk of such a loss in 2021 is low. 

The most significant potential risks, as identified by the Institute’s Risk Register, are actively managed in the following manner: 

|Damage to the<br>Institute’s<br>reputation|As reiterated in the Institute’s ‘Statement of Values’ and ‘Policy on financial<br>transparency confidentiality and effectiveness’, the IISS firmly states and<br>demonstrates its commitment to independence and excellence when conducting<br>all activities. Staff training in place to ensure awareness and understanding of<br>the Institute’s policy. Trustee oversight over potential donors and funding<br>sources. Despite COVID-19 restrictions, IISS has continued to meet contractual<br>obligations and funder expectations by successfully converting activities into<br>hybrid and virtual events or agreeing alternative deliverables.|
|---|---|
|A material<br>weakening in the<br>Institute’s<br>financial position<br>and funding<br>levels|Continued efforts to diversify revenue streams to ensure no over-reliance on one<br>source of income. Multi-year agreements in place for key funders. Ability to<br>adapt project deliverables in COVID-19 environment to ensure agreement terms<br>can be fulfilled and funding retained. Liquidity and foreign exchange positions<br>are monitored regularly through weekly cash flow forecasts and external<br>currency specialists. A well-diversified investment portfolio mitigates risk in the<br>event of poor performance of any one asset class. A three-year forecasting and<br>response-planning model is updated regularly and monitored by the Trustees.|
|A major failure of<br>the Institute’s IT<br>systems caused<br>by internal or<br>external factors|Principal systems, architecture and software (including cloud servers, fail-over,<br>disaster recovery, and protective programmes) have been designed drawing on<br>external professional advice to provide best practice stability and security. In<br>recognition of the increasing cyber threat, additional security measures have<br>been introduced to detect and counter attacks.|
|Failure to<br>maintain the<br>existing high level<br>of Institute staff<br>expertise|Retention measures in place including competitive pay, benefits and working<br>conditions. Competency framework ensures well-structured performance and<br>development reviews. Consulting Fellows and membership base to draw on<br>when in-house expertise not available. Adapted working practices to enable staff<br>to work from home and introduced COVID-19 safety measures across all offices.|



In addition to the review of the risk register by senior management, the Audit Committee and the Trustees, financial performance is evaluated at the Trustee meetings held four times each year. The Institute’s investments and financial resources are monitored by the Investment Committee, which meets four times a year. Ongoing internal controls over these risks, as well as measures to mitigate exposures and financial loss, are exercised on a daily basis by the Institute’s Directing staff. 

## **FUTURE PLANS** 

Looking ahead, the IISS remains focused on its mission to shape and enable strategic discussion and inter-governmental dialogue, and to provide impartial analysis on major international security issues as a means of informing the public debate and assisting conflict resolution and prevention. The Institute will continue to fulfil this mission through its primary activities of research, dialogues, conferences, lectures, publications, online databases and outreach to governments, the private sector 

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**The International Institute for Strategic Studies** 

## **Annual Report and Financial Statements for the year ended 30[th] September 2020** 

and the expert and opinion-forming communities. The main objectives for the forthcoming year ending 30th September 2021 are: 

- **Research** – the Institute will continue to produce new research and analysis under the rubrics of War, Power and Rules. Under War, the IISS will address the changing shape of conflict, cyber and space warfare, and the security-development nexus, as well as refining the state of the art of defence economics and conflict monitoring. The Power stream will include geo-economics and strategy, the strategic consequences of China’s Belt and Road Initiative, economic and financial sanctions in a multipolar system, changing regional alliances, and the use of influence networks by challenger states such as Iran and Russia. The Rules stream will address the role of international law in a post-Western world, especially with regard to refugees, asylum seekers and armed conflict. It will also consider arms control and non-proliferation in the fields of AI, robotics and unmanned vehicles, and international action to combat and mitigate the effects of climate change. 

- **Digital content -** The central goal for 2021 is to build upon the Military Balance Plus database sales success to date and continue to grow the wide range of customers in government, the private sector, and the analytical community in order to generate a strong revenue stream to support IISS research and the Institute’s overall mission.  Additionally, the Institute will continue to develop other forms of digital content, such as interactive maps, as alternative means to present the Institute’s research and analysis and engage more widely with IISS stakeholders. 

- **Overseas offices** – Investment in its international offices and staff remains a priority to ensure that all research activity is infused with both local and regional expertise yet blended with an international perspective, while also reaching the widest possible audience and engaging a new generation of young analysts internationally. During next year, the priority will be the establishment of a professionally staffed office in Berlin and the successful delivery of an extensive programme of research from that office which will deepen IISS engagement with European powers, expand the IISS analytical footprint in Berlin, and play an active part in shaping the security and defence debate in Germany and the EU. 

- **Fundraising –** During 2021, the Institute will continue in its efforts to identify opportunities for major annual gifts or for the establishment of expendable research endowments at the IISS to support pertinent research positions. 

## **STRUCTURE, GOVERNANCE AND MANAGEMENT** 

The Institute is governed by Articles of Association lodged with the Registrar of Companies and the Charity Commission for England and Wales. 

The Institute’s Articles of Association reflect current best practices and the requirements of the Companies Act 2006 and recognise the fiduciary responsibilities carried by the Institute’s Trustees. Revised Articles of Association were formally adopted by the Board of the Trustees on 9[th] April 2019, and lodged with the Charity Commission on 2[nd] May 2019. 

The Trustees constitute Directors for the purposes of the Companies Act, and act as Trustees for the purposes of the Charities Act. As required by the Articles of Association, all are Members of the Institute. They receive no remuneration for their services. Upon appointment new Trustees are provided with an induction pack, which includes copies of the Institute’s governing documents as well as information about the Institute’s activities and finances. Training is available for all Trustees at any time as required. 

In accordance with the Articles of Association, a Trustee can be elected by ordinary resolution or by a decision of the Trustees. A new Trustee may be proposed and considered for election by existing Trustees. The Trustees delegate the exercise of certain powers in connection with the administration of the Institute as set out below. 

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**The International Institute for Strategic Studies** 

## **Annual Report and Financial Statements for the year ended 30[th] September 2020** 

The Trustees are aware of the Charity Governance Code published in 2017 which sets out the principles and recommended practice for good governance within the sector. The Institute has reviewed its current governance arrangements against the principles within the code and addressed any issues raised where required. 

## **Audit Committee** 

The task of monitoring the Institute’s financial control systems and the management of major risk is delegated to the IISS Audit Committee. The current membership of the Audit Committee is: 

Chris Jones (Chair of Committee & Honorary Treasurer) Catherine Roe Jens Tholstrup Matt Symonds 

## **Investment Committee** 

The IISS Investment Committee is empowered to receive advice from the Investment Managers and to vary the investment policy at any time. The current membership of the Investment Committee is: 

Chris Jones (Chairman of Committee & Honorary Treasurer) Grace Skaugen Jens Tholstrup Matt Symonds 

## **Trustee Remuneration and Employment Committee** 

The IISS Remuneration Committee is responsible for the annual review of the Director-General and Chief Executive’s remuneration package, with oversight of the Institute’s overall human resources policies. The current membership of the Remuneration Committee is: 

Bill Emmott (Chair of Committee and Chair of the IISS Trustees) Chung Min Lee (Vice-Chair of the IISS Trustees) Chris Jones (Honorary Treasurer) Caroline Atkinson 

## **Donation Acceptance Committee** 

The IISS Donation Acceptance Committee was formed in 2018 to assist the Trustees in fulfilling their responsibilities for the financial health, ethical standards and global reputation of the IISS when considering the acceptance of philanthropic donations. The membership of the Committee at yearend was: 

Catherine Roe 

Dr John Hobart (Director of Operations) Sally Taylor (Director of Finance) 

Subsequent to the year-end, it was agreed that the review of philanthropic donations should be aligned with existing review processes for all other IISS funding sources, and would fall to all Trustee members. The Committee was disbanded with effect from January 2021. 

## **Director-General and Chief Executive** 

The Director-General and Chief Executive is responsible for the day-to-day management of the Institute’s affairs and for implementing policies agreed by the Trustees. The Director-General and Chief Executive is assisted by senior management. 

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**The International Institute for Strategic Studies** 

**Annual Report and Financial Statements for the year ended 30[th] September 2020** 

## **Remuneration Policy** 

The IISS’s remuneration policy and practices reflect the Institute’s objectives of good governance combined with the need to attract and retain the best talent internationally. This policy aims to support the sustained growth and development of the Institute and its employees and to ensure that the Institute is able effectively to carry out its mission to provide objective information and analysis on geopolitical change as well as facilitate conflict resolution and the maintenance of international peace and security. 

The Institute’s Staff Remuneration Committee, which consists of the Director-General and Chief Executive; the Director of Finance; and the Director of Human Resources, carries out an annual salary review with increases awarded for individual performance linked to a ‘competency framework’. This review incorporates IISS key management personnel, with the exception of the Director-General and Chief Executive. Salaries are positioned between the upper end of the charitable sector and middle of the corporate sector. A review of market rates with reference to available salary surveys is undertaken regularly. 

As referenced above, the IISS Trustee Remuneration and Employment Committee annually reviews the remuneration package of the Director-General and Chief Executive and the Institute’s overall human resources policies, including salary rates and staff benefits. 

Remuneration packages may consist of fixed elements such as salary, pension, life assurance and private medical insurance; and a variable element of a discretionary performance-based bonus payment. Employee benefits are reviewed annually. 

The Trustees are invited to approve annually the staffing and salary budget and forecast for the year. This includes senior management. No Trustees are remunerated but travel expenses are reimbursed. 

## **Public Benefit** 

The Trustees have given due consideration to the Charity’s Commission’s published guidance on the Public Benefit Requirement under the Charities Act 2011. 

The beneficiaries of the Institute include individuals and organisations within the political, diplomatic, defence and academic fields, the public in general, international agencies and governments worldwide. The interests and concerns of these groups are constantly evolving and the charity's development is influenced by the need to continue to address their current interests and concerns. As clearly evidenced in this report, the Institute has successfully reached these audiences during the year under review. 

In the UK, the Institute’s staff has regularly provided facts and evidence-based analysis on geostrategic and geo-economic trends to key members of the expert media, parliamentarians, civil servants and ministers. Internationally, the Institute has provided unique defence diplomatic platforms in the Middle East and Asia that have facilitated high level consultations on defence issues and conflict resolution that has also engaged Europeans and North Americans. It has published evidencebased research that numerous governments have found added value to their internal assessments. The Institute has also briefed various inter-governmental organisations, including NATO and the EU, on important issues of public policy. It continues to put into the public domain the best available information on a wide range of international issues to ensure a more informed public debate. 

## **Group Structure** 

## _**IISS Middle East**_ 

The IISS Middle East branch office in Manama, Bahrain was established as a base for the Institute’s many research programmes and activities throughout the region and serves to connect IISS activities in Europe, North America and Asia with those in the Middle East. Since its foundation in May 2010, 

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**The International Institute for Strategic Studies** 

**Annual Report and Financial Statements for the year ended 30[th] September 2020** 

the office has built a strong cohort of experts and administrative staff who work closely with the entire IISS global network to provide not just first class information and analysis on Middle East and broader international strategic issues, but also strengthen links between the strategic community in the Middle East and those in other parts of the world. 

Since 2004 the IISS has held annually the IISS Regional Security Summit: The Manama Dialogue in Bahrain. Full details of the Dialogue can be found on page 7. 

## _**The International Institute for Strategic Studies - US (IISS-Americas)**_ 

IISS-Americas is a branch of the IISS located in Washington DC. During the year, IISS-Americas continued its efforts to engage and expand the IISS membership base in the region, promote IISS activities and research to a North American audience of government leaders and policy shapers, and cultivate relationships with US policy makers to ensure strong US representation at the Dialogues. IISS-Americas held a number of well-attended speaker and discussion events in Washington DC and New York, prior to pandemic restrictions, and responded to the new environment with a series of wellsupported webinars on diverse topics leveraging international IISS researcher expertise and reaching a global audience. This has served to build on the previous reputation of IISS-Americas as representing a vibrant, international, intellectual community. 

## _**Arundel House Enterprises Limited (AHEL)**_ 

AHEL is a wholly-owned trading company with revenue arising from the letting of facilities and provision of event catering at Arundel House and Bloomsbury House, prior its lease ending in March 2020, and the provision of Consultancy services. The company reported a small loss for the year of £430 (2019: £11,000 profit). 

## _**The International Institute for Strategic Studies (Asia) Limited (IISS-Asia) and the Strategic Studies Fund (SSF)**_ 

IISS-Asia is a company limited by guarantee registered in Singapore. In January 2020, IISS-Asia again convened the IISS Fullerton Forum: Shangri-La Dialogue Sherpa Meeting, an important intersessional activity of the Shangri-La Dialogue process. As detailed on pages 6-7, the Institute was unfortunately unable to convene the Shangri-La Dialogue this year due to the COVID-19 pandemic and was only able to host one Fullerton Lecture. However, despite the restrictions resulting from the pandemic, IISS-Asia continued most of its other activities as normal.  Notably, IISS-Asia research staff edited the annual _Asia-Pacific Regional Security Assessment_ and organised and participated in IISS webinars on Asia-Pacific security. IISS-Asia also took the lead in recruiting and servicing IISS corporate and individual members in Singapore, Southeast Asia and the wider Asia-Pacific region. 

The SSF is a trust fund established in Singapore for the purpose of raising funds to be applied in Singapore towards activities relevant to the objectives of the Institute and of benefit to the Singapore community. The results for IISS-Asia and the SSF are consolidated on the basis that the Institute holds a majority of the voting rights in IISS-Asia and has ultimate discretion over the disbursement of SSF funds and over its activities. 

## _**IISS India Organisation – (IISS-India)**_ 

IISS-India is a non-profit subsidiary of IISS with its registered office in New Delhi. It was established in August 2014 to assist in the expansion of IISS activities and reach in India and the South Asia region. 

## _**IISS Europe gemeinnützige GmbH (IISS-Europe)**_ 

On 4[th] November 2019, IISS-Europe was incorporated as a non-profit subsidiary of IISS with its registered office in Berlin, established to deepen IISS engagement with European powers, expand its analytical footprint in Berlin and play an active part in shaping the security and defence debate in Germany and the EU. During 2021, the IISS-Europe office presence will be expanded to include 

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**The International Institute for Strategic Studies** 

**Annual Report and Financial Statements for the year ended 30[th] September 2020** 

research and operational staff in support of a broad five year research programme on Power shifts and the evolving international order: Strategic challenges for Germany and Europe. 

## **Statement of Trustees’ Responsibilities** 

The Trustees (who are also directors of The International Institute for Strategic Studies 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 accounting standards (FRS102). 

Company law requires the Trustees to prepare financial statements for each financial year. Under company law the Trustees must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the charitable company and the group and of the incoming resources and application of resources, including the income and expenditure, of the group for that period. In preparing these financial statements, the Trustees are required to: 

- select suitable accounting policies and then apply them consistently; 

- observe the methods and principles in the Charities SORP; 

- make judgments and estimates that are reasonable and prudent; 

- state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and 

- 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 adequate accounting records that are sufficient to show and explain the charitable company’s transactions, disclose with reasonable accuracy at any time the financial position of the charitable company and enable them to ensure that the financial statements comply with the Companies Act and the provisions of the charity’s constitution. They are also responsible for safeguarding the assets of the charity and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. 

So far as each of the Trustees at the date of this report is aware, there is no relevant audit information of which the charity’s auditor is unaware. Each Trustee has taken all the steps that he/she ought to have taken as a trustee in order to make himself/herself aware of any relevant audit information and to establish that the charity’s auditor is aware of that information. 

## **Corporate Governance** 

Processes are in place to ensure that performance is monitored and that appropriate management information is prepared and reviewed regularly by both the executive management and the Trustees. 

The systems of internal control are designed to provide reasonable, but not absolute, assurance against material misstatement or loss. They include: 

- an annual budget approved by the Trustees; 

- regular consideration by the Trustees of both financial and non-financial results; and 

- delegation of day-to-day management authority and segregation of duties. 

## **Auditors** 

Crowe U.K. LLP has indicated its willingness to be reappointed as statutory auditor. The Strategic Report and Report of the Trustees was approved by the Trustees in their capacity as Company Directors on 17 February 2021 and signed on their behalf by: 

Bill Emmott Chair of the Trustees 

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**The International Institute for Strategic Studies** 

**Annual Report and Financial Statements for the year ended 30[th] September 2020** 

## **Independent Auditor’s Report to the Members of The International Institute for Strategic Studies** 

## **Opinion** 

We have audited the financial statements of The International Institute for Strategic Studies for the year ended 30 September 2020 which comprise the Statement of Financial Activities, Consolidated and Charity Balance sheets, Consolidated Cash Flow Statement and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). 

In our opinion the financial statements: 

- give a true and fair view of the state of the group’s and the charitable company’s affairs as at 30 September 2020 and of the group’s 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. 

## **Basis for opinion** 

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 

## **Conclusions relating to going concern** 

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where: 

- the Trustees’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or 

- the Trustees have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group’s or the charitable company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue. 

## **Other information** 

The Trustees are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. 

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**The International Institute for Strategic Studies** 

## **Annual Report and Financial Statements for the year ended 30[th] September 2020** 

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. 

We have nothing to report in this regard. 

## **Opinions on other matters prescribed by the Companies Act 2006** 

In our opinion based on the work undertaken in the course of our audit 

- the information given in the Trustees’ report, which includes the directors’ report and the strategic report prepared for the purposes of company law, for the financial year for which the financial statements are prepared is consistent with the financial statements; and 

- the strategic report and the directors’ report included within the Trustees’ report have been prepared in accordance with applicable legal requirements. 

## **Matters on which we are required to report by exception** 

In light of the knowledge and understanding of the group and the charitable company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report included within the Trustees’ report. 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: 

- the parent company has not kept adequate accounting records; or 

- the parent company 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. 

## **Responsibilities of Trustees** 

As explained more fully in the Trustees’ responsibilities statements, 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, and for such internal control as the Trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. 

In preparing the financial statements, the Trustees are responsible for assessing the group’s or the charitable company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Trustees either intend to liquidate the charitable company or to cease operations, or have no realistic alternative but to do so. 

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**The International Institute for Strategic Studies** 

**Annual Report and Financial Statements for the year ended 30[th] September 2020** 

## **Auditor’s responsibilities for the audit of the financial statements** 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. 

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. 

## **Use of our report** 

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 auditor’s 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. 


Tim Redwood Senior Statutory Auditor For and on behalf of **Crowe U.K. LLP** Statutory Auditor London 

9 March 2021 

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**The International Institute for Strategic Studies** 

**Annual Report and Financial Statements for the year ended 30[th] September 2020** 

## **REFERENCE AND ADMINISTRATIVE DETAILS** 

**The International Institute for Strategic Studies** , also known as the IISS, is a registered charity and a company limited by guarantee. The liability of each Board of Trustees member under the guarantee does not exceed the sum of £1. 

**Registered Office** Arundel House 6 Temple Place London WC2R 2PG **Company Number** 615259 **Charity Number** 206504 **Trustees** _**Chair**_ Bill Emmott _**Vice-Chair**_ Chung Min Lee _**Hon Treasurer**_ Chris Jones Professor Dr Kurt Lauk Jens Tholstrup Catherine Roe Matt Symonds Matthew J Symonds Caroline Atkinson Dr Grace Skaugen 

During the year under review, there were no Trustee changes. 

For clarification purposes, the Institute has appointed two Trustees with the name Matthew (Matt) J Symonds. 

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**The International Institute for Strategic Studies** 

**Annual Report and Financial Statements for the year ended 30[th] September 2020** 

## **Executive Directing Staff** 

_**Director-General and Chief Executive Deputy Director-General Director of Editorial Director of Geo-Economics; Japan Chair Director of Defence and Military Analysis Director of Finance Director of Operations Director of HR Executive Director, IISS-Asia Executive Director, IISS-Middle East Executive Director, IISS-Americas**_ 

Dr John Chipman Dr Kori Schake (resigned 23[rd] January 2020) Dr Nicholas Redman (resigned 1[st] November 2019) Dr Robert Ward (appointed 1[st] December 2019) Dr Bastian Giegerich Sally Taylor Dr John Hobart Jane Graham Dr Tim Huxley Sir Thomas Beckett Ernest J Herold (appointed 1[st] July 2020) 

## **Agents and Advisers** 

_**Legal Advisers**_ 

_**Bankers**_ 

_**Investment Managers**_ 

_**Pension Fund Managers**_ 

_**Pension Consultants**_ 

Stone King Sewell LLP, 13 Queen Square, Bath BA1 2HJ 

HSBC Bank plc, 60 Queen Victoria Street, London EC4N 4TR 

Cazenove Capital Management (part of Schroder & Co. Limited), 12 Moorgate, London EC2R 6DA 

Mobius Life, 7th Floor, 20 Gresham Street, London EC2V 7JE 

JLT Benefit Solutions, 

The St Botolph Building, 138 Houndsditch, London EC3A 7AW 

_**Auditors**_ 

Crowe U.K. LLP, 2[nd] Floor, 55 Ludgate Hill, London EC4M 7JW 

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**The International Institute for Strategic Studies** 

## **Annual Report and Financial Statements for the year ended 30[th] September 2020** 

## **CONSOLIDATED STATEMENT OF FINANCIAL ACTIVITIES** 

## **(incorporating an income and expenditure account)** 

|**Year ended 30th September**<br>Unrestricted<br>Funds<br>Notes<br>£'000<br>**Income from:**<br>_Donations_<br>2<br>2,941<br>_Charitable activities_<br>Dialogues, conferences and lecture series<br>3<br>5,880<br>Research programmes<br>3<br>802<br>Publications<br>1,445<br>Membership<br>1,593<br>_Other trading activities_<br>396<br>_Investments_<br>84<br>_Capital applied to income_<br>-<br>_Other income_<br>25<br>**Total**<br>13,166<br>**Expenditure on:**<br>_Raising funds_<br>138<br>_Charitable activities_<br>Dialogues, conferences and lecture series<br>4<br>4,884<br>Research programmes<br>4<br>3,821<br>Publications<br>4<br>2,823<br>Membership<br>4<br>564<br>_Other trading activities_<br>396<br>**Total**<br>12,626<br>Net (losses)/ gains on investments<br>17<br>(33)<br>**Net income/ (expenditure)**<br>507<br>**Transfers between funds**<br>12<br>-<br>**Other recognised gains/(losses):**<br>Foreign exchange (losses)/ gains<br>(34)<br>Actuarial (losses) on defined benefit pension schemes<br>14<br>(56)<br>**Net movement in funds**<br>417<br>Funds brought forward at 1 October 2019<br>12<br>17,795<br>Funds carried forward at 30 September 2020<br>12,13<br>18,212|Restricted<br>Funds<br>£'000<br>-<br>-<br>3,677<br>-<br>-<br>-<br>173<br>187<br>-|Endowed<br>Funds<br>£'000<br>-<br>-<br>-<br>-<br>-<br>-<br>-<br>(187)<br>-<br>(187)<br>-<br>-<br>-<br>-<br>-<br>-<br>-<br>(20)<br>(207)<br>-<br>-<br>-<br>(207)<br>5,898<br>5,691|**Total Funds**<br>**2020**<br>**£'000**<br>**2,941**<br>**5,880**<br>**4,479**<br>**1,445**<br>**1,593**<br>**396**<br>**257**<br>**-**<br>**25**<br>**17,016**<br>**138**<br>**4,884**<br>**7,804**<br>**2,823**<br>**564**<br>**396**<br>**16,609**<br>**(53)**<br>**354**<br>**-**<br>**(34)**<br>**(56)**<br>**264**<br>**23,710**<br>**23,974**|Total Funds<br>2019<br>£'000<br>9,036<br>7,560<br>4,463<br>1,282<br>1,422<br>527<br>99<br>-<br>148|
|---|---|---|---|---|
||4,037|||24,537|
||-<br>-<br>3,983<br>-<br>-<br>-|||201<br>5,371<br>7,919<br>3,883<br>726<br>517|
||3,983<br>-|||18,617<br>81|
||54<br>-<br>-<br>-|||6,001<br>-<br>48<br>(532)|
||54<br>17|||5,517<br>18,193|
||71|||23,710|



All amounts relate to continuing operations and, as all gains and losses are included, a separate statement of total recognised gains and losses has not been presented. 

The notes on pages 26 to 46 form part of these accounts 

22 



**The International Institute for Strategic Studies** 

**Annual Report and Financial Statements for the year ended 30th September 2020** 

## **CONSOLIDATED BALANCE SHEET (Company Number 615259)** 

|**As at 30th September**<br>**2020**<br>Notes<br>**£'000**<br>**Fixed assets**<br>Intangible assets<br>6<br>**423**<br>Tangible assets<br>7<br>**13,225**<br>Investments<br>8<br>**10,319**<br>**Total Fixed assets**<br>**23,967**<br>**Current assets:**<br>Debtors<br>9<br>**2,170**<br>Cash at bank and in hand<br>**6,098**<br>**Total Current assets**<br>**8,268**<br>**Liabilities:**<br>Creditors: Amounts falling due within one year<br>10<br>**(7,520)**<br>**_Net current assets / (liabilities)_**<br>**_748_**<br>**_Total assets less current liabilities_**<br>**_24,715_**<br>**_Net assets excluding pension liability_**<br>**_24,715_**<br>Defined benefit pension liability<br>14<br>**(741)**<br>**Total net assets**<br>13<br>**23,974**<br>**The Funds of the charity**<br>Expendable endowment funds<br>12<br>**5,691**<br>Restricted income funds<br>12<br>**71**<br>Unrestricted income funds<br>12<br>**18,953**<br>Pensions reserve<br>12<br>**(741)**<br>Total unrestricted funds<br>13<br>**18,212**<br>**Total charity funds**<br>13<br>**23,974**|2019<br>£'000<br>611<br>13,078<br>10,502|
|---|---|
||24,191|
||2,017<br>4,322|
||6,339|
||(6,104)|
||_235_<br>_24,426_|
||_24,426_<br>(716)|
||23,710|
||5,898.00<br>17<br>18,511<br>(716)|
||17,795|
||23,710|



The consolidated balance sheet includes the assets, liabilities and funds of The International Institute for Strategic Studies (Asia) Limited, Arundel House Enterprises Limited, IISS India Organisation, IISS Europe gemeinnützige GmbH, and the Strategic Studies Fund. 

The accounts were approved and authorised for issue by the Trustees on 17 February 2021 and signed on their behalf by: 


Bill Emmott Chair of the Trustees 

The notes on pages 26 to 46 form part of these accounts 

23 



**The International Institute for Strategic Studies** 

**Annual Report and Financial Statements for the year ended 30th September 2020** 

## **CHARITY BALANCE SHEET (Company Number 615259)** 

## **As at 30[th] September** 

|**2020**<br>Notes<br>**£'000**<br>**Fixed assets**<br>Intangible assets<br>6<br>**423**<br>Tangible assets<br>7<br>**13,184**<br>Investments<br>8<br>**10,319**<br>**Total Fixed assets**<br>**23,926**<br>**Current assets:**<br>Debtors<br>9<br>**1,530**<br>Cash at bank and in hand<br>**2,895**<br>**Total Current assets:**<br>**4,425**<br>**Liabilities**<br>Creditors: amounts falling due within one year<br>10<br>**(4,807)**<br>**_Net current liabilities_**<br>**(382)**<br>**_Total assets less current liabilities_**<br>**23,544**<br>**_Net assets excluding pension liability_**<br>**23,544**<br>Defined benefit pension liability<br>14<br>**(741)**<br>**Total net assets**<br>**22,803**<br>**The Funds of the charity**<br>Expendable endowment funds<br>12<br>**5,691**<br>Restricted income funds<br>12<br>**75**<br>Unrestricted funds<br>12<br>**17,778**<br>Pensions reserve<br>12<br>**(741)**<br>Total unrestricted funds<br>13<br>**17,037**<br>**Total funds including pensions reserve**<br>13<br>**22,803**|2019<br>£'000<br>611<br>13,042<br>10,502|
|---|---|
||24,155|
||1,887<br>2,744|
||4,631|
||(4,865)|
||(234)<br>23,921|
||23,921<br>(716)|
||23,205|
||5,898<br>21<br>18,002<br>(716)|
||17,286|
||23,205|



The unconsolidated deficit incurred by the Charity in 2020, after taking into account foreign exchange and actuarial gains and losses, was £402,000 (2019: surplus of £5,649,000) 

The accounts were approved and authorised for issue by the Trustees on 17 February 2021 and signed on their behalf by: 


Bill Emmott Chair of the Trustees 

The notes on pages 26 to 46 form part of these accounts 

24 



**The International Institute for Strategic Studies** 

## **Annual Report and Financial Statements for the year ended 30th September 2020** 

## **CONSOLIDATED CASH FLOW STATEMENT** 

|**CONSOLIDATED CASH FLOW STATEMENT**|||||
|---|---|---|---|---|
|**Year ended 30th September**<br>Notes<br>**Cash flows from operating activities:**<br>**_Net cash (used in) / provided by operating activities_**<br>17<br>**Cash flows from investing activities:**<br>Dividends, interest and rents from investments<br>Purchase of property, plant and equipment<br>Proceeds from sales of property, plant and equipment<br>Purchase of software and website costs<br>Purchase of investments<br>Proceeds from sales of investments<br>**_Net cash (used in) provided by investing activities_**<br>**Cash flows from financing activities:**<br>Endowment funds<br>**_Net cash provided by (used in) financing activities_**<br>**_Change in cash, cash equivalents and net debt in the year_**<br>**_Cash, cash equivalents and net debt at the beginning of the reporting period_**<br>**_Cash, cash equivalents and net debt at the end of the reporting period_**<br>18|**2020**<br>**£'000**<br>**257**<br>**(577)**<br>**-**<br>**(222)**<br>**(3,404)**<br>**551**<br>**-**|**2020**<br>**£'000**<br>**2,188**<br>**(3,395)**<br>**-**<br>**(1,207)**<br>**7,354**<br>**6,147**|2019<br>£'000<br>99<br>(256)<br>-<br>(140)<br>(3,644)<br>653<br>6,015|2019<br>£'000<br>2,374<br>(3,288)<br>6,015|
|||||5,101<br>2,253|
|||||7,354|



The notes on pages 26 to 46 form part of these accounts 

25 



**The International Institute for Strategic Studies** 

**Annual Report and Financial Statements for the year ended 30th September 2020** 

## **NOTES TO THE FINANCIAL STATEMENTS** 

## **1 Accounting policies** 

## **a) Status** 

The Institute is a registered charity and a company limited by guarantee, incorporated in England and Wales.  Its registered office address is Arundel House, 6 Temple Place, London WC2R 2PG. The Trustees constitute Directors for the purposes of the Companies Act and act as Trustees for the purposes of the Charities Act.  The charity is a Public Benefit Entity. 

## **b) Accounting convention** 

The accounts of the Charity and the Group have been prepared under the historical cost convention as modified by the revaluation of investments and in accordance with FRS102. The accounts are prepared in accordance with the Companies Act, and the current Statement of Recommended Practice: ‘Accounting and Reporting by Charities’ (SORP). The functional and reporting currency of the Group is GBP. 

## _**Basis of consolidation**_ 

The accounts include the assets, liabilities and funds, and the statement of financial activities of the charity and its subsidiary undertakings. Subsidiaries' activities are consolidated on a line by line basis. A separate statement of financial activities has not been prepared for the Charity alone as permitted by Section 408 of the Companies Act 2006. 

## _**Financial health**_ 

As outlined in the Financial Review, the Trustees consider the Institute’s financial health to be sound. As at 30th September 2020, the Institute held investment assets totalling £10.3 million and cash on the balance sheet of £6.1m with no loan liabilities, compared to investment assets of £5.5 million, £1.5m of cash and a building loan liability of354 £5.5 million in 2010, demonstrating a clear strengthening in the Institute’s financial position over the past 10 years. 

As a result of the income security provided by the diverse revenue sources and multi-year funding arrangements outlined above and considering budgets and forecasts covering the period to 30 September 2023, the Trustees are confident that the Institute can be considered a going concern for the foreseeable future. Accordingly there are no material uncertainties surrounding the preparation of the financial statements on a going concern basis. The global nature of IISS operations and funding sources has also contributed towards further income diversity that has helped to mitigate risk during this time of continued economic uncertainty. 

## _**Critical accounting judgements and key sources of estimation uncertainty**_ 

In the application of the group’s accounting policies, which are described in this note, trustees are required to make judgements, estimates and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects the current and future periods. 6146.645 

Significant areas of estimate and judgement include provisions, income recognition, and assumptions used to value the defined benefit pension scheme and the remaining useful life of assets. Related accounting policies for these items are noted below. The principal accounting policies adopted, judgements and key sources of estimation uncertainty in the presentation of the financial statements are as follows: 

## **c) Investments** 

All investments are valued at their mid-market value at the balance sheet date, which gives rise to unrealised gains and losses. The differences between the carrying value (or cost if acquired during the year) and the proceeds of liquidated investments are identified as realised investment gains or losses. Realised and unrealised gains and losses are presented net in the Statement of Financial Activities. 

Investment income and related tax credits are accounted for when received. 

## **d) Restricted funds** 

Restricted funds are funds subject to specific restrictive conditions imposed by donors or by the purpose of the funds raised. 

## **e) Expendable Endowment funds** 

The expendable endowment fund is treated as capital until the right to transfer funds to income and expend in accordance with the donor conditions has been granted. 

26 



**The International Institute for Strategic Studies** 

## **Annual Report and Financial Statements for the year ended 30th September 2020** 

## **f) Tangible fixed assets and depreciation** 

Furniture, fittings and equipment acquisitions are stated at cost. Freehold buildings are stated at cost.  Depreciation is charged when assets are brought into use. The following depreciation policies are applied consistently across the group over the useful economic lives of the assets on a straight line basis: 

i) Computers, printers and other electronic equipment with functional unit costs in excess of £1,000 are depreciated over a period of three years. 

ii) Furniture, fittings and equipment of a non-electronic nature with unit costs in excess of £250 are depreciated over a period of five years. 

iii) Plant and machinery items with unit costs in excess of £1,000 are depreciated over a period of ten years. iv) Leasehold improvements with unit costs in excess of £1,000 are depreciated over the life of the lease. v) Freehold Building improvements with unit costs in excess of £1,000 are depreciated over a period of fifteen years. vi) Freehold building depreciation is charged at 1% using the straight line basis. 

No depreciation is charged on freehold land or on assets in the course of construction. 

## **g) Intangible fixed assets and amortisation** 

Website costs and software acquisitions are stated at cost. Amortisation is charged when assets are brought into use. The following amortisation policy is applied consistently across the group: 

i) Software and website costs in excess of £1,000 are depreciated over their useful economic lives on a straight line basis over a period of three years. 

No amortisation is charged on assets in the course of development. 

## **h) Debtors** 

Debtors are stated in the balance sheet at estimated net realisable value, being the invoiced amount less any provision for bad and doubtful debtors. Provisions are made specifically against debtors where there is evidence of a dispute or an inability to pay. An additional provision is made against older balances. 

## **i) Cash at bank and in hand** 

Cash includes cash-in-hand, cash-at-bank and bank overdrafts.  Bank loans are included within Creditors. 

## **j) Creditors** 

Trade and other creditors: Trade and other creditors are stated at cost. 

## **k) Foreign currency** 

Assets and liabilities denominated in foreign currencies are translated into sterling at the rate of exchange ruling at the balance sheet date.  Transactions in foreign currencies are translated into sterling at the rate ruling at the date of the transaction.  Exchange differences are taken to the Statement of Financial Activities. Foreign currency subsidiaries are translated into UK£ Sterling on the following basis: 

- assets and liabilities are translated at the closing rate at the balance sheet date; 

- income and expenses are translated at average exchange rates for the financial year; and 

- all resulting exchange differences are taken to the Statement of Financial Activities. 

## **l) Publications and membership income** 

Publications revenue advanced to the Institute under agreement with the publishers is recognised during the financial year in which the sale arises. An estimate of additional royalty income due up to 30 September 2020, to be received in early 2021, has been made in these financial statements. 

Membership income is recognised on the subscription period start date. Any income invoiced in advance of the subscription period start date is deferred and recognised in the relevant accounting year. 

## **m) Grants** 

Research grants are credited to the Statement of Financial Activities in accordance with the progress and performance of the grant programme activities. Income for Dialogues is recognised to the extent that the event has been planned and progress work completed in line with the contract. 

When donors specify that grants are for particular restricted purposes, this income is included in incoming resources of restricted funds. 

## **n) Deferred income** 

Income is deferred to future periods where the donor has placed an external restriction that the income should be used in those future periods or where the Institute has not fully earnt entitlement to that income. 

27 



**The International Institute for Strategic Studies** 

**Annual Report and Financial Statements for the year ended 30th September 2020** 

## **o) Expenditure** 

Expenditure is classified under the principal categories of Raising Funds, Charitable Activities, Commercial Activities Operating Expenditure and Financing Costs. 

Charitable activities costs comprise all expenditure directly related to the objects of the Institute including direct staff costs attributable to each activity, together with a corresponding apportionment of central support costs. 

Support costs are apportioned to charitable activities by a method based on the average headcount of employees allocated to each activity for the financial year. 

Knowledge and Information expenses are included within support costs. 

Financing Costs comprise those costs directly attributable to investment managers' fees/commissions and borrowing costs incurred in relation to financing. 

Raising Funds comprise those costs directly attributable to fundraising activities. 

Other Trading Activities Operating Expenditure comprise all costs incurred by Arundel House Enterprises Limited in delivering its catering, event and consultancy activities. 

Expenditure is accounted for on an accruals basis. 

The trustees have considered the policy adopted for accruing bonuses during the year and have concluded that a constructive obligation will only be deemed to exist when a bonus has been approved by the Remuneration Committee and communicated to the recipient. The previous policy deemed that the IISS’s past practice created a constructive obligation. The impact on the prior year Statement of Financial Activities and Balance Sheet is not material but the prior year bandings in note 5 have been restated to reflect the change in policy. 

## **p) Leasing** 

Rental costs under operating leases are charged to the Statement of Financial Activities in equal amounts over the period of the leases. 

## **q) Pension costs** 

The Institute maintains a contributory defined benefit pension scheme which was closed to new entrants in 2001. The assets of the scheme are held separately from those of the Institute being invested in managed funds. The pension scheme is accounted for in accordance with FRS102 Retirement Benefits. 

The Institute has defined contribution pension schemes which are open to all employees and also contributes to the personal pensions of some employees. Contributions to the scheme are accounted for when payable.  Further details of all pension schemes can be found in Note 14. 

## **r) Redundancy and termination payments** 

Redundancy and termination payments only occur when absolutely necessary as the Institute seeks to minimise organisational change. When redundancy or termination payments do arise, they are charged on an accruals basis and included with Staff Costs. 

## **s) Knowledge and Information Services** 

The Knowledge and Information Services (formerly the Library) holds a comprehensive collection of books, journals, pamphlets and online resources covering a broad range of current international relations, security and defence topics. The collection is regularly updated for continued use by IISS research staff. New publications are expensed through the SoFA and the library does not hold any valuable publications which may require inclusion on the Balance Sheet. 

28 



**The International Institute for Strategic Studies** 

**Annual Report and Financial Statements for the year ended 30th September 2020** 

## **2 Donations** 

|Donation in support of the IISS-Middle East office and related research activities<br>Endowment in support of establishing a Chair in Japanese Security Studies<br>Other|**2020**<br>**£'000**<br>**2,911**<br>**-**<br>**30**<br>**2,941**|2019<br>£'000<br>2,909<br>6,015<br>112|
|---|---|---|
|||9,036|



## **3 i) Dialogues, conferences and lecture series** 

|Manama Dialogue<br>Shangri-La Dialogue<br>Geo-Economics and Strategy Programme<br>EU Non-proliferation and disarmament conference<br>Lecture series|**2020**<br>**£'000**<br>**3,943**<br>**1,899**<br>**-**<br>**-**<br>**38**<br>**5,880**|2019<br>£'000<br>3,618<br>3,615<br>34<br>64<br>229|
|---|---|---|
|||7,560|



Funding for dialogues, conferences and lecture series received during the year from UK and international Governments totalled £5,832,000 (2019: £6,203,000). 

## **3 ii) Research programmes** 

|South Asia Programme<br>Non-Proliferation and Nuclear Policy<br>Defence & Military Analysis Programme<br>Conflict, Security & Development Programme<br>Geo-Economics & Energy Security Programme<br>Middle East Research Programme<br>Asia-Pacific Research Programme<br>Future Conflict and Cyber Security Programme<br>Japan Programme<br>Other Research Programmes|**2020**<br>**£'000**<br>**828**<br>**416**<br>**897**<br>**159**<br>**358**<br>**68**<br>**998**<br>**549**<br>**58**<br>**148**<br>**4,479**|2019<br>£'000<br>932<br>514<br>582<br>42<br>282<br>212<br>1,374<br>519<br>-<br>6|
|---|---|---|
|||4,463|



Funding for research projects received during the year from UK and international Governments totalled £2,734,000 (2019: £2,726,000) 

29 



## **The International Institute for Strategic Studies** 

## **Annual Report and Financial Statements for the year ended 30th September 2020** 

## **4 i) Analysis of expenditure - charitable activities and governance** 

Group 

|**Charitable activities**<br>_Primary costs_<br>Dialogues and conferences<br>Research programmes<br>Publications<br>Membership<br>_Support costs_<br>Support operations<br>**Total 2020**<br>Total 2019|Staff<br>costs<br>£'000<br>1,023<br>3,497<br>1,085<br>232<br>3,771<br>**9,608**<br>9,523|Other direct<br>costs<br>£'000<br>2,305<br>1,278<br>201<br>20<br>1,862<br>**5,666**<br>7,329|Depreciation<br>charges<br>£'000<br>-<br>-<br>74<br>-<br>720<br>**794**<br>990|Exchange<br>(gains) /losses<br>£'000<br>-<br>-<br>-<br>-<br>7<br>**7**<br>57|Allocation of<br>support costs<br>£'000<br>1,556<br>3,029<br>1,463<br>312<br>(6,360)<br>**-**<br>-|**Total**<br>**2020**<br>**£'000**<br>**4,884**<br>**7,804**<br>**2,823**<br>**564**<br>**-**<br>**16,075**|Total<br>2019<br>£'000<br>5,371<br>7,919<br>3,883<br>726<br>-|
|---|---|---|---|---|---|---|---|
||||||||17,899<br>17,899|



The above table analyses by expense category the costs related to the charitable ac ~~tivities and the governance~~ of the Institute. Charitable activities costs include both primary costs, which are directly attributable to specific charitable activities, and centrally incurred support costs. The total support costs are then apportioned across the specific activities in accordance with the average headcount of employees allocated to each activity for the financial year. Costs relating to commercial activities are not included in the above table. 

Included in support costs for 2020 are governance costs of £76,000 (2019: £111,000). Governance costs include staff costs, trustee travel to board meetings and audit fees. 

Staff costs include amounts paid to consulting fellows and other consulting associates not on the payroll, so will be higher than salaries and wages costs included in Note 5. 

30 



**The International Institute for Strategic Studies** 

## **Annual Report and Financial Statements for the year ended 30th September 2020** 

## **4 ii) Net Income/ Expenditure** 

|**Net Income/ Expenditure**|||
|---|---|---|
||**2020**|2019|
|Net income/ expenditure is stated after charging:|**£'000**|£'000|
|Depreciation|**425**|445|
|Amortisation|**372**|547|
|Auditors' remuneration|||
|- Audit fees|**27**|26|
|- Tax advisory and other services|**19**|13|
|Operating leases|||
|- Land and buildings|**806**|921|
|Trustees' professional indemnity insurance|**11**|8|



## **5 Staff costs** 

|Wages and salaries<br>Social security costs<br>Employers' contribution to defined contribution pension schemes<br>Operating costs of defined benefit pension schemes (excluding finance costs)<br>Other forms of employee benefits|**2020**<br>**£'000**<br>**7,536**<br>**705**<br>**416**<br>**32**<br>**435**<br>**9,124**|2019<br>£'000<br>7,426<br>673<br>416<br>32<br>378|
|---|---|---|
|||8,925|



Costs of Consulting Fellows and other sub-contractors totalling £718,000 (2019: £880,000) are not included in the figures above. 

Wages and salaries include £2,071,000 (2019: £1,598,000) in respect of restricted grant funded staff salaries. 

Remuneration of key management personnel totalled £1,968,000 during the year (2019: £2,143,000) 

Redundancy payments of £2,000 were paid during the year (2019: £24,000) 

## **The average number of employees (headcount) during the year** 

|Dialogues and conferences<br>Research programmes<br>Publications<br>Commercial Activities<br>Membership<br>Support<br>**Number of employees whose emoluments were over £60,000**<br>£610,001 to £620,000<br>£540,001 to £550,000<br>£270,001 to £280,000<br>£210,001 to £220,000<br>£190,001 to £200,000<br>£170,001 to £180,000<br>£150,001 to £160,000<br>£130,001 to £140,000<br>£120,001 to £130,000<br>£110,001 to £120,000<br>£100,001 to £110,000<br>£90,001 to £100,000<br>£80,001 to £90,000<br>£70,001 to £80,000<br>£60,001 to £70,000|**No.**<br>**12**<br>**41**<br>**26**<br>**2**<br>**6**<br>**46**<br>**133**<br>**No.**<br>1<br>-<br>-<br>1<br>1<br>-<br>2<br>2<br>1<br>5<br>3<br>1<br>8<br>3<br>6<br>**34**|No.<br>11<br>31<br>31<br>2<br>6<br>47|
|---|---|---|
|||128|
|||No.<br>-<br>1<br>1<br>1<br>-<br>1<br>-<br>3<br>2<br>3<br>5<br>3<br>3<br>9<br>-|
|||32|



Due to the change in the accounting policy on bonus accruals, the bandings for the prior year have been restated. The differences are due to the timing of payments. 

None of the above employees (2019: none) are accruing retirement benefits under the defined benefit scheme. 28 of the above employees (2019: 26) are accruing retirement benefits under money purchase schemes and contributions on their behalf amounted to £239,000 (2019: £244,000 ). 

For staff who are directly attributable to specific charitable activities (including both restricted and unrestricted funds), the pension costs are allocated on the same apportionment basis as their staff time/salaries. Support staff pension costs are apportioned on a headcount basis, outlined in note 4.i. 

31 



## **The International Institute for Strategic Studies** 

## **Annual Report and Financial Statements for the year ended 30th September 2020** 

## **6 Intangible fixed assets** 

|**Group**<br>Cost<br>At 1 October 2019<br>Exchange differences on consolidation<br>Disposals<br>Additions<br>**At 30 September 2020**<br>Amortisation<br>At 1 October 2019<br>Exchange differences on consolidation<br>Eliminated on disposals<br>Charge for the year<br>**At 30 September 2020**<br>Net book value<br>**At 30 September 2020**<br>At 30 September 2019|Software and<br>Website costs<br>£'000<br>2,039<br>(2)<br>(68)<br>222<br>**2,191**<br>1,428<br>(2)<br>(30)<br>372<br>**1,768**<br>**423**<br>611|Total<br>£'000<br>2,039<br>(2)<br>(68)<br>222|
|---|---|---|
|||**2,191**|
|||1,428<br>(2)<br>(30)<br>372|
|||**1,768**|
|||**423**|
|||611|



Projects under development total £7,000 (2019 £32,000) in relation to database development costs. 

|**Charity**<br>Cost<br>At 1 October 2019<br>Exchange differences arising in branches<br>Disposals<br>Additions<br>**At 30 September 2020**<br>Amortisation<br>At 1 October 2019<br>Exchange differences arising in branches<br>Eliminated on disposals<br>Charge for the year<br>**At 30 September 2020**<br>Net book value<br>**At 30 September 2020**<br>At 30 September 2019|Software and<br>Website costs<br>£'000<br>2,017<br>(2)<br>(68)<br>222<br>**2,169**<br>1,406<br>(2)<br>(30)<br>372<br>**1,746**<br>**423**<br>611|Total<br>£'000<br>2,017<br>(2)<br>(68)<br>222|
|---|---|---|
|||**2,169**|
|||1,406<br>(2)<br>(30)<br>372|
|||**1,746**|
|||**423**|
|||611|



Projects under development total £7,000 (2019 £32,000) in relation to database development costs. 

32 



**The International Institute for Strategic Studies** 

## **Annual Report and Financial Statements for the year ended 30th September 2020** 

## **7 Tangible fixed assets** 

|**Group**<br>Cost<br>At 1 October 2019<br>Exchange differences on consolidation<br>Disposals<br>Additions<br>**At 30 September 2020**<br>Depreciation<br>At 1 October 2019<br>Exchange differences on consolidation<br>Eliminated on disposals<br>Charge for the year<br>**At 30 September 2020**<br>Net book value<br>**At 30 September 2020**<br>At 30 September 2019|Freehold<br>land<br>£'000<br>3,000<br>-<br>-<br>-<br>**3,000**<br>-<br>-<br>-<br>-<br>**-**<br>**3,000**<br>3,000|Freehold<br>buildings<br>£'000<br>11,456<br>-<br>-<br>-<br>**11,456**<br>2,408<br>-<br>-<br>115<br>**2,523**<br>**8,933**<br>9,048|Furniture, fittings,<br>plant & machinery,<br>equipment, building<br>improvements &<br>motor vehicles<br>£'000<br>7,193<br>(127)<br>(154)<br>577<br>**7,489**<br>6,163<br>(123)<br>(153)<br>310<br>**6,197**<br>**1,292**<br>1,030|Total<br>£'000<br>21,649<br>(127)<br>(154)<br>577|
|---|---|---|---|---|
|||||**21,945**|
|||||8,571<br>(123)<br>(153)<br>425|
|||||**8,720**|
|||||**13,225**|
|||||13,078|



Furniture, fittings, plant & machinery, equipment, building improvements and motor vehicles contain assets in the course of construction of £26,000 (2019: £NIL). 

|**Charity**<br>Cost<br>At 1 October 2019<br>Exchange differences arising in branches<br>Disposals<br>Additions<br>**At 30 September 2020**<br>Depreciation<br>At 1 October 2019<br>Exchange differences arising in branches<br>Eliminated on disposals<br>Charge for the year<br>**At 30 September 2020**<br>Net book value<br>**At 30 September 2020**<br>At 30 September 2019|Freehold<br>land<br>£'000<br>3,000<br>-<br>-<br>-<br>**3,000**<br>-<br>-<br>-<br>-<br>**-**<br>**3,000**<br>3,000|Freehold<br>buildings<br>£'000<br>11,456<br>-<br>-<br>-<br>**11,456**<br>2,408<br>-<br>-<br>115<br>**2,523**<br>**8,933**<br>9,048|Furniture, fittings,<br>plant & machinery,<br>equipment, building<br>improvements &<br>motor vehicles<br>£'000<br>6,565<br>(107)<br>(150)<br>557<br>**6,865**<br>5,571<br>(104)<br>(150)<br>297<br>**5,614**<br>**1,251**<br>994|Total<br>£'000<br>21,021<br>(107)<br>(150)<br>557|
|---|---|---|---|---|
|||||**21,321**|
|||||7,979<br>(104)<br>(150)<br>412|
|||||**8,137**|
|||||**13,184**|
|||||13,042|



Furniture, fittings, plant & machinery, equipment, building improvements and motor vehicles contain assets in the course of construction of £26,000 (2019: £NIL). 

33 



**The International Institute for Strategic Studies** 

**Annual Report and Financial Statements for the year ended 30th September 2020** 

## **8 Fixed asset investments** 

|Group and charity<br>**Quoted**<br>Hedge Funds<br>Property Fund<br>Portfolio Funds<br>UK Fixed Interest Funds<br>International Fixed Interest Funds<br>UK Equity Funds<br>International Equity Funds<br>**Total Quoted investments**<br>**Portfolio cash**<br>**Total market value at 30 September**<br>**Total historical cost at 30 September**<br>Reconciliation of opening and closing market values<br>Opening market value at 1 October<br>Additions at cost<br>Disposals at opening market value<br>Net (loss)/gain on revaluation<br>**Closing market value at 30 September**<br>**Portfolio cash at 30 September**<br>**Total market value at 30 September**|**2020**<br>**£'000**<br>**402**<br>**690**<br>**5,891**<br>**330**<br>**214**<br>**605**<br>**2,138**<br>**10,270**<br>**49**<br>**10,319**<br>**9,496**<br>**7,470**<br>**3,404**<br>**(561)**<br>**(43)**<br>**10,270**<br>**49**<br>**10,319**|2019<br>£'000<br>263<br>733<br>3,310<br>330<br>205<br>742<br>1,887|
|---|---|---|
|||7,470<br>3,032|
|||10,502|
|||9,569|
|||4,398<br>3,644<br>(642)<br>70|
|||7,470<br>3,032|
|||10,502|



## **9 Debtors** 

|Group<br>Trade debtors<br>Other debtors<br>Prepayments and accrued income<br>Charity<br>Trade debtors<br>Other debtors<br>Amounts owed by group and associated undertakings<br>Prepayments and accrued income|**2020**<br>**£'000**<br>**486**<br>**641**<br>**1,043**<br>**2,170**<br>**2020**<br>**£'000**<br>**445**<br>**288**<br>**144**<br>**653**<br>**1,530**|2019<br>£'000<br>474<br>453<br>1,090|
|---|---|---|
|||2,017|
|||2019<br>£'000<br>301<br>350<br>222<br>1,014|
|||1,887|



34 



**The International Institute for Strategic Studies** 

## **Annual Report and Financial Statements for the year ended 30th September 2020** 

## **10 Creditors: amounts falling due within one year** 

|**Creditors: amounts falling due within one year**|||
|---|---|---|
|Group<br>Trade creditors<br>Other creditors<br>Taxation and social security<br>Accruals<br>Deferred income (note 11)|**2020**<br>**£'000**<br>**173**<br>**73**<br>**176**<br>**570**<br>**6,528**<br>**7,520**|2019<br>£'000<br>401<br>90<br>167<br>602<br>4,844|
|||6,104|



|Charity<br>Trade creditors<br>Other creditors<br>Taxation and social security<br>Accruals<br>Deferred income (note 11)|**2020**<br>**£'000**<br>**195**<br>**67**<br>**176**<br>**497**<br>**3,872**<br>**4,807**|2019<br>£'000<br>363<br>90<br>167<br>535<br>3,710|
|---|---|---|
|||4,865|



## **11 Deferred income** 

|Group<br>Brought forward at 1 October 2019<br>Received in the year<br>Expended in the year<br>Carried forward at 30 September 2020<br>Charity<br>Brought forward at 1 October 2019<br>Received in the year<br>Expended in the year<br>Carried forward at 30 September 2020|**2020**<br>**£'000**<br>**4,844**<br>**6,529**<br>**(4,845)**<br>**6,528**<br>**2020**<br>**£'000**<br>**3,710**<br>**3,265**<br>**(3,103)**<br>**3,872**|2019<br>£'000<br>4,103<br>7,626<br>(6,885)|
|---|---|---|
|||4,844|
|||2019<br>£'000<br>3,317<br>5,402<br>(5,009)|
|||3,710|



35 



**The International Institute for Strategic Studies** 

**Annual Report and Financial Statements for the year ended 30th September 2020** 

## **12 Movement in funds** 

## **Group** 

|**Expendable endowment**<br>**Restricted**<br>Gerald Segal Memorial Fund<br>Research Grants<br>**Unrestricted**<br>General fund<br>Pensions reserve<br>**Total funds**<br>**Charity**|Balances<br>b/fwd<br>£'000<br>5,898|Income<br>(including<br>capital applied<br>to income)<br>£'000<br>(187)|Expenditure<br>£'000<br>-|Transfers<br>£'000|Gains/<br>(losses)<br>£'000<br>20<br>-|**Balances**<br>**c/fwd**<br>**£'000**<br>**5,691**|
|---|---|---|---|---|---|---|
||26<br>(9)|-<br>4,037|(2)<br>(3,981)|||**24**<br>**47**|
||17|4,037|(3,983)|-|-|**71**|
||18,511<br>(716)|13,166|(12,626)|(31)<br>31|67<br>-<br>(56)|**18,953**<br>**(741)**|
||17,795|13,166|(12,626)|-|(123)|**18,212**|
||23,710|17,016|(16,609)|-|(143)|**23,974**|
||||||||



|**Expendable endowment**<br>**Restricted**<br>Gerald Segal Memorial Fund<br>Research Grants<br>**Unrestricted**<br>General fund<br>Pensions reserve<br>**Total funds**|Balances<br>b/fwd<br>£'000<br>5,898|Income<br>(including<br>capital applied<br>to income)<br>£'000<br>(187)|Expenditure<br>£'000<br>-|Transfers<br>£'000|Gains/<br>(losses)<br>£'000<br>(20)|**Balances**<br>**c/fwd**<br>**£'000**<br>**5,691**|
|---|---|---|---|---|---|---|
||26<br>(5)|3,247|(2)<br>(3,191)|||**24**<br>**51**|
||21|3,247|(3,193)|-|-|**75**|
||18,002<br>(716)|10,024|(10,164)|(31)<br>31|(53)<br>(56)|**17,778**<br>**(741)**|
||17,286|10,024|(10,164)|-|(109)|**17,037**|
||23,205|13,084|(13,357)|-|(129)|**22,803**|



Expendable endowment - restricted to fund a Chair in Japanese Security Studies at the IISS Gerald Segal Memorial Fund - to fund study on Asian issues. Restricted Grants - for research projects and specific non-research projects in strategic studies. Pensions reserve - represents the FRS102 pension liability. 

## **13 Analysis of net assets by fund** 

|**Group**<br>Tangible assets<br>Intangible assets<br>Investments<br>Net current assets/ (liabilities)<br>Pension liability<br>**Charity**<br>Tangible assets<br>Intangible assets<br>Investments<br>Net current assets/ (liabilities)<br>Pension liability|Expendable<br>Endowment<br>£'000<br>-<br>-<br>5,691<br>-<br>-|Restricted<br>Funds<br>£'000<br>-<br>-<br>-<br>71<br>-|Unrestricted<br>Funds<br>£'000<br>13,225<br>423<br>4,628<br>677<br>(741)|**Total**<br>**Funds**<br>**£'000**<br>**13,225**<br>**423**<br>**10,319**<br>**748**<br>**(741)**|
|---|---|---|---|---|
||5,691|71|18,212|**23,974**|
||Expendable<br>Endowment<br>£'000<br>-<br>-<br>5,691<br>-<br>-|Restricted<br>Funds<br>£'000<br>-<br>-<br>-<br>75<br>-|Unrestricted<br>Funds<br>£'000<br>13,184<br>423<br>4,628<br>(457)<br>(741)|**Total**<br>**Funds**<br>**£'000**<br>**13,184**<br>**423**<br>**10,319**<br>**(382)**<br>**(741)**|
||5,691|75|17,037|**22,803**|



36 



**The International Institute for Strategic Studies** 

**Annual Report and Financial Statements for the year ended 30th September 2020** 

## **14 Pension schemes** 

The disclosures set out below relate to pension schemes to which contributions are made by the charity – a defined benefit scheme, individual personal pension schemes and a defined contribution scheme. 

## **a Defined benefit scheme** 

The Institute sponsors the International Institute for Strategic Studies Staff Superannuation Scheme which is a defined benefit arrangement. The last completed full actuarial valuation of this scheme was carried out by a qualified independent actuary as at 1 March 2018. The scheme is closed to new entrants and no contributions were made during the year. 

During the year, the Institute has made payments of £44,000 to reduce the overall scheme deficit as identified in the triennial actuarial valuation of the scheme as at 1 March 2018. 

## **i) The amounts recognised in the balance sheet are as follows:** 

|Present value of funded obligations<br>Fair value of plan assets<br>**Deficit**<br>Amounts in the balance sheet:<br>Liabilities<br>Assets<br>**Net liability**|**2020**<br>**£'000**<br>**(3,418)**<br>**2,677**<br>**(741)**<br>**(741)**<br>**-**<br>**(741)**|2019<br>£'000<br>(3,385)<br>2,669|
|---|---|---|
|||(716)|
|||(716)<br>-|
|||(716)|



## **ii) Changes in the present value of the defined benefit obligation are as follows:** 

|Defined benefit obligation at start of year<br>Interest expense<br>Actuarial losses / (gains)<br>Benefits paid and expenses<br>**Defined benefit obligation at end of year**|**2020**<br>**£'000**<br>**3,385**<br>**61**<br>**(4)**<br>**(24)**<br>**3,418**|2019<br>£'000<br>2,694<br>75<br>676<br>(60)|
|---|---|---|
|||3,385|



## **iii) Changes in the fair value of the scheme assets are as follows:** 

|Opening fair value of scheme assets<br>Interest Income<br>Actuarial gains / (losses)<br>Contributions by the company<br>Benefits paid and expenses<br>**Fair value of scheme assets at the year end**<br>The actual return on the plan assets in the year|**2020**<br>**£'000**<br>**2,669**<br>**48**<br>**(60)**<br>**44**<br>**(24)**<br>**2,677**<br>**2020**<br>**£'000**<br>**(12)**|2019<br>£'000<br>2,464<br>69<br>144<br>52<br>(60)|
|---|---|---|
|||2,669|
|||2019<br>£'000<br>213|



37 



**The International Institute for Strategic Studies** 

## **Annual Report and Financial Statements for the year ended 30th September 2020** 

## **14 Pension scheme (continued)** 

- **iv) The defined benefit costs recognised within the Statement of Financial Activities are as follows:** 

|Net interest cost<br>**Total amount charged to the Statement of Financial Activities**|**2020**<br>**£'000**<br>**13**<br>**13**|2019<br>£'000<br>6|
|---|---|---|
|||6|



The International Institute for Strategic Studies expects to contribute £48,000 to its defined benefit pension scheme in the year ending 30 September 2021. 

## **v) Defined benefit costs included in other recognised gains and losses** 

|Return on plan assets (excluding amounts included in net interest cost)<br>gain / (loss)<br>Experience gains / (losses) arising on the plan liabilities<br>Effects of changes in the demographic and financial assumptions<br>underlying the present value of the plan liabilities - gain / (loss)<br>**Total losses included in other recognised gains and losses**|**2020**<br>**£'000**<br>-<br>**(60)**<br>**24**<br>**(20)**<br>**(56)**|2019<br>£'000<br>144<br>(198)<br>(478)|
|---|---|---|
|||(532)|



## **vi) The major categories of scheme assets are as follows:** 

|UK Equities<br>Overseas Equities<br>Fixed Interest<br>Corporate Bonds<br>Diversified Growth<br>Property<br>Cash and other<br>Total Assets|**2020**<br>**£'000**<br>**113**<br>**462**<br>**603**<br>**792**<br>**506**<br>**181**<br>**20**<br>**2,677**|2019<br>£'000<br>137<br>440<br>590<br>790<br>498<br>198<br>16|
|---|---|---|
|||2,669|



## **vii) Principal assumptions at the balance sheet date (expressed as weighted averages)** 

||**2020**|2019|
|---|---|---|
|Discount rate at 30 September|**1.70%**|1.80%|
|Inflation (RPI)|**3.20%**|3.30%|
|Inflation (CPI)|**2.40%**|2.50%|
|Allowance for revaluation of deferred pensions of CPI or 5% p.a. if less|**2.40%**|2.50%|
|Allowance for pension in payment increases of RPI or 5% p.a. if less|**3.10%**|3.20%|
|Allowance for pension in payment increases of RPI or 2.5% p.a. if less|**2.50%**|2.50%|
|Allowance for commutation of pension for cash at retirement|50% of Post A Day|50% of Post A Day|



|**viii)**|**The mortality assumptions adopted at 30 September 2020 imply the  following**|**Years**|
|---|---|---|
||**life expectancies at age 65:**||
||Male retiring in 2020|**22.60**|
||Female retiring in 2020|**24.50**|
||Male retiring in 2040|**23.90**|
||Female retiring in 2040|**26.00**|



38 



**The International Institute for Strategic Studies** 

**Annual Report and Financial Statements for the year ended 30th September 2020** 

## **14 Pension scheme (continued)** 

## **b Personal pension plans** 

The Institute also contributes to the personal pension schemes of some employees. The contributions are charged to the Statement of Financial Activities when due and the cost for the financial year ended 30 September 2020 was £60,000 (2019: £59,000). 

## **c Defined contribution scheme** 

The Institute has a defined contribution pension scheme which is open to all employees. The contributions made in the year ended 30 September 2020 were £341,000 (2019: £346,000). Contributions outstanding at the year end amounted to £58,000 (2019: £54,000). 

## **d IISS-US pension scheme** 

The Institute contributes to a United States 401(k) defined contribution pension scheme which is open to employees at the IISS-US office. The contributions paid in the year ended 30 September 2020 were £14,000 (2019: £9,000). Contributions accrued at the year end amounted to £2,000 (2019: £2,000). 

## **15 Leasing commitments** 

The future total minimum payments to which the Group is committed as at 30 September 2020 under operating lease agreements are as follows: 

|**Office premises**<br>Net present value of total lease commitments due:<br>Within one year<br>Between one and two years<br>Between two and five years<br>Over five years|**2020**<br>**£'000**<br>**756**<br>**1,015**<br>**2,473**<br>**2,009**|2019<br>£'000<br>824<br>724<br>634<br>-|
|---|---|---|



## **16 Capital commitments** 

As at 30 September 2020, there were capital commitments contracted but not provided for of £367,000; for fitting out the new offices in Singapore and Washington, replacement of the goods lift in Arundel House, and for software development (2019: £324,000). 

## **17 Reconciliation of net incoming resources to net cash inflow from operating activities** 

|**Net income for the reporting period (as per the statement of financial activities)**<br>**Adjustments for:**<br>Dividends and interest from investments<br>Depreciation charges<br>Amortisation charges<br>Endowment funding<br>Pension reserve deficit funding<br>Losses/ (Gains) on investments<br>Exchange losses/ (gains) on fixed assets<br>Change in cash and cash equivalents due to exchange rate movements<br>Loss on sale of fixed assets<br>(Increase)/ Decrease in debtors<br>Increase in creditors<br>**Net cash provided by (used in) operating activities**|**2020**<br>**£'000**<br>**354**<br>**(257)**<br>**425**<br>**372**<br>**-**<br>**(31)**<br>**53**<br>**4**<br>**(34)**<br>**39**<br>**(153)**<br>**1,416**<br>**2,188**|2019<br>£'000<br>6,001<br>(99)<br>445<br>547<br>(6,015)<br>(47)<br>(81)<br>(6)<br>48<br>1<br>801<br>779|
|---|---|---|
|||2,374|



39 



**The International Institute for Strategic Studies** 

## **Annual Report and Financial Statements for the year ended 30th September 2020** 

## **18 Analysis of cash and cash equivalents** 

|Cash at bank and in hand<br>Portfolio cash|**2020**<br>**£'000**<br>**6,098**<br>**49**<br>**6,147**|2019<br>£'000<br>4,322<br>3,032|
|---|---|---|
|||7,354|



## **19 Related Parties** 

## **a Trustees or connected persons** 

The Trustees did not receive any remuneration during the current or previous year. 

No transactions, contracts or other arrangements (including grants) with any Trustees were entered into by the Institute during the year ended 30 September 2020 (2019: Nil), other than two honoraria payments totalling £1,766 were made to Chung Min Lee during the year, for contributions to IISS publications. 

Travel expenses for both governance and attending Institute dialogues and other activities were paid or reimbursed in respect of 5 trustees (2019: 8) and the total amount was £5,000 (2019: £33,000). 

## **b Other related parties** 

The ultimate parent undertaking (Parent Charity) includes IISS-UK, and its two branches, IISS-US and IISS-Middle East. 

## **I Arundel House Enterprises Ltd** 

Related party transactions of the ultimate parent undertaking with Arundel House Enterprises Ltd were as follows: 

|Balance at beginning of year<br>Expenses paid on behalf of Parent<br>Expenses paid on behalf of related party<br>Amounts paid in during the year<br>Foreign currency movement<br>Balance at end of year|**2020**<br>**£'000**<br>**139**<br>**(205)**<br>**419**<br>**(370)**<br>**20**<br>**3**|2019<br>£'000<br>123<br>(226)<br>585<br>(319)<br>(24)|
|---|---|---|
|||139|



## **II International Institute for Strategic Studies (Asia) Ltd** 

Related party transactions of the ultimate parent undertaking with IISS-Asia Ltd were as follows: 

|Balance at beginning of year<br>Expenses paid on behalf of Parent<br>Expenses paid on behalf of related party<br>Amounts paid out during the year<br>Amounts paid in during the year<br>Foreign currency movement<br>Balance forgiven on behalf of Parent<br>Balance at end of year|**2020**<br>**£'000**<br>**-**<br>**(19)**<br>**1,958**<br>**9**<br>**(1,492)**<br>**3**<br>**(459)**<br>**-**|2019<br>£'000<br>-<br>(128)<br>1,558<br>-<br>(3,190)<br>(55)<br>1,815|
|---|---|---|
|||-|



40 



**The International Institute for Strategic Studies** 

## **Annual Report and Financial Statements for the year ended 30th September 2020** 

## **III Strategic Studies Fund** 

There were no related party transactions of the ultimate parent undertaking with the Strategic Studies Fund during 2020 (2019: Nil). 

Related party transactions of IISS-Asia with the Strategic Studies Fund were as follows: 

|Balance at beginning of year<br>Expenses paid on behalf of Parent (IISS-Asia)<br>Expenses paid on behalf of related party<br>Foreign currency movement<br>Balance at end of year|**2020**<br>**£'000**<br>**(316)**<br>**(378)**<br>**199**<br>**-**<br>**(495)**|2019<br>£'000<br>(348)<br>(339)<br>358<br>13|
|---|---|---|
|||(316)|



## **IV IISS India Organisation** 

Related party transactions of the ultimate parent undertaking with IISS India Organisation were as follows: 

|Balance at beginning of year<br>Expenses paid on behalf of Parent<br>Expenses paid on behalf of related party<br>Foreign currency movement<br>Balance at end of year|**2020**<br>**£'000**<br>**83**<br>**-**<br>**-**<br>**(7)**<br>**76**|2019<br>£'000<br>77<br>-<br>-<br>6|
|---|---|---|
|||83|



## **V IISS Europe gemeinnützige GmbH** 

Related party transactions of the ultimate parent undertaking with IISS Europe gemeinnützige GmbH were as follows: 

|Balance at beginning of year<br>Expenses paid on behalf of related party<br>Amounts paid out during the year<br>Foreign currency movement<br>Balance at end of year|**2020**<br>**£'000**<br>**-**<br>**47**<br>**18**<br>**-**<br>**65**|2019<br>£'000<br>-<br>-<br>-<br>-|
|---|---|---|
|||-|



41 



**The International Institute for Strategic Studies** 

**Annual Report and Financial Statements for the year ended 30th September 2020** 

## **20 Subsidiary undertakings** 

## **I Arundel House Enterprises Ltd** 

Registered office : Arundel House, 6 Temple Place, London, WC2R 2PG Registered number : 3720258 

- **a** The charity beneficially owns the entire share capital of Arundel House Enterprises Limited, a company incorporated in England and Wales under registration number 3720258, which manages the conference facilities of Arundel House and Bloomsbury House. The results for Arundel House Enterprises Limited have been consolidated into the group financial statements. 

## **b Summary of profit and loss account for Arundel House Enterprises Ltd** 

|Turnover<br>Cost of sales<br>Gross profit<br>Other expenses<br>Net profit before taxation<br>Gift Aid to IISS<br>Profit after taxation|**2020**<br>**£'000**<br>**416**<br>**(36)**<br>**380**<br>**(380)**<br>**-**<br>**-**<br>**-**|2019<br>£'000<br>579<br>(98)|
|---|---|---|
|||481<br>(470)|
|||11<br>(11)|
|||-|



## **c Summary of balance sheet for Arundel House Enterprises Ltd** 

|Tangible fixed assets<br>Debtors<br>Cash at bank and in hand<br>Current assets<br>Creditors<br>Net assets<br>Aggregate capital and reserves|**2020**<br>**£'000**<br>**-**<br>**94**<br>**19**<br>**113**<br>**(102)**<br>**11**<br>**11**|2019<br>£'000<br>2<br>110<br>182|
|---|---|---|
|||292<br>(283)<br>11|
|||11|



## **II International Institute for Strategic Studies (Asia) Ltd** 

Registered office : 9 Raffles Place, #51-01 Republic Plaza, Singapore 048619 Registration number : 200106226Z 

- **a** The charity holds a majority of the voting rights of The International Institute for Strategic Studies (Asia) Limited, a company limited by guarantee and incorporated in Singapore under company number 200106226Z. The financial statements are audited in local currency and converted into UK£ Sterling at the appropriate exchange rate for consolidation purposes. 

## **b Summary of income statement for International Institute for Strategic Studies (Asia) Ltd** 

|Dialogue and Lecture Series<br>Research programmes<br>Other<br>Total income<br>Dialogue and Lecture Series<br>Research programmes<br>Total expenses<br>Surplus/(deficit) for the year|**2020**<br>**£'000**<br>**1,899**<br>**1,371**<br>**16**<br>**3,286**<br>**(1,675)**<br>**(939)**<br>**(2,614)**<br>**672**|**2019**<br>**£'000**<br>**3,615**<br>**1,711**<br>**9**<br>**5,335**<br>**(2,008)**<br>**(3,506)**<br>**(5,514)**<br>**(179)**<br>42|
|---|---|---|





**The International Institute for Strategic Studies** 

## **Annual Report and Financial Statements for the year ended 30th September 2020** 

## **c Summary of balance sheet for International Institute for Strategic Studies (Asia) Ltd** 

|Tangible fixed assets<br>Debtors<br>Cash at bank and in hand<br>Current assets<br>Creditors<br>Net assets<br>Aggregate capital and reserves|**2020**<br>**£'000**<br>**42**<br>**799**<br>**3,137**<br>**3,936**<br>**(2,799)**<br>**1,179**<br>**1,179**|2019<br>£'000<br>35<br>254<br>1,379|
|---|---|---|
|||1,633<br>(1,144)|
|||525|
|||525|



## **III Strategic Studies Fund** 

Registered office : 9 Raffles Place, #51-01 Republic Plaza, Singapore 048619 IPC Registration number : 1798 

- **a** The charity is a trustee of the Strategic Studies Fund (SSF), a trust established in Singapore under Charity number 1798, and has ultimate discretion over the disbursement of SSF funds. The financial statements are audited in local currency and converted into UK£ Sterling at the appropriate exchange rate for consolidation purposes. 

## **b Summary of income statement for Strategic Studies Fund** 

|Donations<br>Lectures Series<br>Research<br>Total income<br>Lectures Series<br>Research<br>Other expenses<br>Total expenses<br>Surplus for the year|**2020**<br>**£'000**<br>**-**<br>**38**<br>**177**<br>**215**<br>**(23)**<br>**(168)**<br>**-**<br>**(191)**<br>**24**|2019<br>£'000<br>-<br>229<br>156|
|---|---|---|
|||385|
|||(170)<br>(152)<br>(37)|
|||(359)|
|||26|



## **c Summary of balance sheet for Strategic Studies Fund** 

|Debtors<br>Creditors<br>Net assets<br>Reserves|**2020**<br>**£'000**<br>**495**<br>**(440)**<br>**55**<br>**55**|2019<br>£'000<br>554<br>(522)|
|---|---|---|
|||32|
|||32|



## **IV IISS India Organisation** 

Registered office: E-301, East of Kailash, New Delhi-110065, India Incorporated in India with limited liability under number U80903DL2014NPL270367 

- **a** The charity holds a majority share-holding (99.9%) in IISS India Organisation, a limited not for profit company incorporated in India. The financial statements are audited in local currency and converted into UK£ Sterling at the appropriate exchange rate for consolidation purposes. 

43 



## **The International Institute for Strategic Studies** 

## **Annual Report and Financial Statements for the year ended 30th September 2020** 

## **b Summary of income statement for IISS India Organisation** 

|Other Income<br>Total income<br>Dialogue and Lecture Series<br>Other expenses<br>Total expenses<br>Surplus/(Deficit) for the year|**2020**<br>**£'000**<br>**15**<br>**15**<br>**(12)**<br>**-**<br>**(12)**<br>**3**|2019<br>£'000<br>10|
|---|---|---|
|||10|
|||(12)<br>-|
|||(12)|
|||(2)|



## **c Summary of balance sheet for IISS India Organisation** 

|Debtors<br>Cash at bank and in hand<br>Current assets<br>Creditors<br>Net assets<br>Aggregate capital and reserves|**2020**<br>**£'000**<br>**7**<br>**22**<br>**29**<br>**(83)**<br>**(54)**<br>**(54)**|2019<br>£'000<br>**8**<br>**17**|
|---|---|---|
|||**25**<br>**(87)**|
|||**(62)**|
|||**(62)**|



## **V IISS Europe gemeinnützige GmbH** 

Registered office: Potsdamer Platz 10, Haus 2, 10785 Berlin, Deutschland 

- **a** The charity holds a 100% share in IISS Europe gemeinnützige GmbH, a not for profit company incorporated in Germany on 28 May 2019. The financial statements are audited in local currency and converted into UK£ Sterling at the appropriate exchange rate for consolidation purposes. 

## **b Summary of income statement for IISS-Europe** 

|Other Income<br>Total income<br>Dialogue and Lecture Series<br>Other expenses<br>Total expenses<br>Surplus/(Deficit) for the year|**2020**<br>**£'000**<br>**34**<br>**34**<br>**-**<br>**(54)**<br>**(54)**<br>**(20)**|2019<br>£'000<br>-|
|---|---|---|
|||-|
|||-<br>-|
|||-|
|||-|



## **c Summary of balance sheet for IISS-Europe** 

|**Summary of balance sheet for IISS-Europe**|||
|---|---|---|
|Debtors<br>Cash at bank and in hand<br>Current assets<br>Creditors<br>Net assets<br>Aggregate capital and reserves|**2020**<br>**£'000**<br>**-**<br>**24**<br>**24**<br>**(44)**<br>**(20)**<br>**(20)**|2019<br>£'000<br>**-**<br>**-**|
|||**-**<br>**-**|
|||**-**|
|||**-**|



44 



**The International Institute for Strategic Studies** 

## **Annual Report and Financial Statements for the year ended 30[th] September 2020** 

## **21 Comparative Information** 

## **i) Consolidated Statement of Financial Activities (incorporating an income and expenditure account)** 

**Year ended 30[th] September 2019** 

|Unrestricted<br>Funds<br>Notes<br>£'000<br>**Income from:**<br>_Donations_<br>2<br>3,017<br>_Charitable activities_<br>Dialogues, conferences and lecture series<br>3<br>7,496<br>Research programmes<br>3<br>763<br>Publications<br>1,282<br>Membership<br>1,422<br>Other trading activities<br>527<br>_Investments_<br>96<br>_Capital applied to income_<br>-<br>_Other income_<br>13<br>**Total**<br>14,616<br>**Expenditure on:**<br>_Raising funds_<br>201<br>_Charitable activities_<br>Dialogues, conferences and lecture series<br>4<br>5,307<br>Research programmes<br>4<br>3,889<br>Publications<br>4<br>3,883<br>Membership<br>4<br>726<br>Other<br>4<br>-<br>_Other trading activities_<br>517<br>**Total**<br>14,523<br>Net gains on investments<br>17<br>52<br>**Net income/ (expenditure)**<br>145<br>**Transfers between funds**<br>12<br>-<br>**Other recognised gains/(losses):**<br>Foreign exchange gains<br>48<br>Actuarial (losses)/ gains on defined benefit pension schemes<br>14<br>(532)<br>**Net movement in funds**<br>(339)<br>Funds brought forward at 1 October 2018<br>12<br>18,134<br>Funds carried forward at 30 September 2019<br>12,13<br>17,795|Restricted<br>Funds<br>£'000<br>4<br>64<br>3,700<br>-<br>-<br>-<br>3<br>273<br>8<br>4,052<br>-<br>64<br>4,030<br>-<br>-<br>-<br>-<br>4,094<br>-<br>(42)<br>-<br>-<br>-<br>(42)<br>59<br>17|Endowed<br>Funds<br>£'000<br>6,015<br>-<br>-<br>-<br>-<br>-<br>-<br>(273)<br>127<br>5,869<br>-<br>-<br>-<br>-<br>-<br>-<br>-<br>-<br>29<br>5,898<br>-<br>-<br>-<br>5,898<br>-<br>5,898|**Total Funds**<br>**2019**<br>**£'000**<br>**9,036**<br>**7,560**<br>**4,463**<br>**1,282**<br>**1,422**<br>**527**<br>**99**<br>**-**<br>**148**<br>**24,537**<br>**201**<br>**5,371**<br>**7,919**<br>**3,883**<br>**726**<br>**-**<br>**517**<br>**18,617**<br>**81**<br>**6,001**<br>**-**<br>**48**<br>**(532)**<br>**5,517**<br>**18,193**<br>**23,710**|Total Funds<br>2018<br>£'000<br>2,474<br>7,923<br>3,212<br>1,137<br>1,504<br>781<br>93<br>-<br>7|
|---|---|---|---|---|
|||||17,131|
|||||135<br>5,095<br>6,299<br>3,771<br>988<br>-<br>739|
|||||17,027<br>154|
|||||258<br>-<br>15<br>266|
|||||539<br>17,654|
|||||18,193|



All amounts relate to continuing operations and, as all gains and losses are included, a separate statement of total recognised gains and losses has not been presented. 

45 



**The International Institute for Strategic Studies** 

**Annual Report and Financial Statements for the year ended 30th September 2020** 

**ii) Comparative movement in funds** 

**For the year ended 30 September 2019** 

|**Group**<br>**Expendable endowment**<br>**Restricted**<br>Gerald Segal Memorial Fund<br>Research Grants<br>**Unrestricted**<br>General fund<br>Pensions reserve<br>**Total funds**<br>**Charity**<br>**Expendable endowment**<br>**Restricted**<br>Gerald Segal Memorial Fund<br>Research Grants<br>**Unrestricted**<br>General fund<br>Pensions reserve<br>**Total funds**|Balances<br>b/fwd<br>£'000<br>-|Income<br>£'000<br>5,869|Expenditure<br>£'000<br>-|Transfers<br>£'000|Gains/<br>(losses)<br>£'000<br>29|**Balances**<br>**c/fwd**<br>**£'000**<br>**5,898**|
|---|---|---|---|---|---|---|
||30<br>29|-<br>4,052|(4)<br>(4,090)|||**26**<br>**(9)**|
||59|4,052|(4,094)|-|-|**17**|
||18,364<br>(230)|14,616|(14,523)|(46)<br>46|100<br>(532)|**18,511**<br>**(716)**|
||18,134|14,616|(14,523)|-|(432)|**17,795**|
||18,193|24,537|(18,617)|-|(403)|**23,710**|
||Balances<br>b/fwd<br>£'000<br>-|Income<br>£'000<br>5,869|Expenditure<br>£'000<br>-|Transfers<br>£'000|Gains/<br>(losses)<br>£'000<br>29|**Balances**<br>**c/fwd**<br>**£'000**<br>**5,898**|
||30<br>33|2,929|(4)<br>(2,967)|||**26**<br>**(5)**|
||63|2,929|(2,971)|-|-|**21**|
||17,723<br>(230)|9,503|(9,255)|(46)<br>46|77<br>(532)|**18,002**<br>**(716)**|
||17,493|9,503|(9,255)|-|(455)|**17,286**|
||17,556|18,301|(12,226)|-|(426)|**23,205**|



Expendable endowment - restricted to fund a Chair in Japanese Security Studies at the IISS Gerald Segal Memorial Fund - to fund study on Asian issues. Restricted Grants - for research projects and specific non-research projects in strategic studies. Pensions reserve - represents the FRS102 pension liability. 

## **iii) Comparative Analysis of net assets by fund** 

## **For the year ended 30 September 2019** 

|**Group**<br>Tangible assets<br>Intangible assets<br>Investments<br>Net current assets/ (liabilities)<br>Pension liability<br>**Charity**<br>Tangible assets<br>Intangible assets<br>Investments<br>Net current assets/ (liabilities)<br>Pension liability|Expendable<br>Endowment<br>£'000<br>-<br>-<br>5,907<br>(9)<br>-|Restricted<br>Funds<br>£'000<br>-<br>-<br>-<br>17<br>-|Unrestricted<br>Funds<br>£'000<br>13,078<br>611<br>4,595<br>227<br>(716)|**Total**<br>**Funds**<br>**£'000**<br>**13,078**<br>**611**<br>**10,502**<br>**235**<br>**(716)**|
|---|---|---|---|---|
||5,898|17|17,795|**23,710**|
||Expendable<br>Endowment<br>£'000<br>-<br>-<br>5,907<br>(9)<br>-|Restricted<br>Funds<br>£'000<br>-<br>-<br>-<br>21<br>-|Unrestricted<br>Funds<br>£'000<br>13,042<br>611<br>4,595<br>(246)<br>(716)|**Total**<br>**Funds**<br>**£'000**<br>**13,042**<br>**611**<br>**10,502**<br>**(234)**<br>**(716)**|
||5,898|21|17,286|**23,205**|



46 



**The International Institute for Strategic Studies** 

## **FOR INFORMATION ONLY: CHARITY SOFA DOES NOT FORM PART OF AUDITED FINANCIAL STATEMENTS** 

## **YEAR ENDED 30TH SEPTEMBER 2020** 

|**Income from:**<br>_Donations_<br>_Charitable activities_<br>Dialogues, conferences and lecture series<br>Research programmes<br>Publications<br>Membership<br>_Investments_<br>_Capital applied to income_<br>_Other incoming resources_<br>**Total**<br>**Expenditure on:**<br>_Raising funds_<br>_Charitable activities_<br>Dialogues, conferences and lecture series<br>Research programmes<br>Publications<br>Membership<br>**Total**<br>Net (losses)/ gains on investments<br>**Net income/ (expenditure)**<br>**Transfers between funds**<br>**Other recognised gains/(losses):**<br>Foreign exchange (losses)/ gains<br>Actuarial gains/ (losses) on defined benefit pension schemes<br>**Net movement in funds**<br>Funds brought forward at 1 October 2019<br>Funds carried forward at 30 September 2020|Unrestricted<br>Funds<br>£'000<br>2,941<br>3,943<br>9<br>1,445<br>1,593<br>84<br>-<br>9<br>10,024<br>138<br>3,189<br>3,450<br>2,823<br>564<br>10,164<br>(33)<br>(173)<br>-<br>(20)<br>(56)<br>(249)<br>17,286<br>17,037|Restricted<br>Funds<br>£'000<br>-<br>-<br>2,887<br>-<br>-<br>173<br>187<br>-|Endowed<br>Funds<br>£'000<br>-<br>-<br>-<br>-<br>-<br>-<br>(187)<br>-<br>(187)<br>-<br>(20)<br>(207)<br>-<br>(207)<br>5,898<br>5,691|**Total Funds**<br>**2020**<br>**£'000**<br>**2,941**<br>**3,943**<br>**2,896**<br>**1,445**<br>**1,593**<br>**257**<br>**-**<br>**9**<br>**13,084**<br>**138**<br>**3,189**<br>**6,643**<br>**2,823**<br>**564**<br>**13,357**<br>**(53)**<br>**(326)**<br>**-**<br>**(20)**<br>**(56)**<br>**(402)**<br>**23,205**<br>**22,803**|Total Funds<br>2019<br>£'000<br>9,047<br>3,716<br>2,597<br>1,282<br>1,422<br>99<br>-<br>138|
|---|---|---|---|---|---|
|||3,247|||18,301|
|||-<br>3,193|||163<br>3,191<br>4,263<br>3,883<br>726|
|||3,193<br>-|||12,226<br>81|
|||54<br>-|||6,156<br>-<br>25<br>(532)|
|||54<br>21|||5,649<br>17,556|
|||75|||**23,205**|



47