2022-09-30-accounts

Company Number: 615259 Charity Number: 206504

THE INTERNATIONAL INSTITUTE FOR STRATEGIC STUDIES

ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 SEPTEMBER 2022

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30[th] September 2022

CONTENTS

Annual Report and Financial Statements

• 1 Strategic Report and the Report of the Trustees

• 19 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 2022

STRATEGIC REPORT AND THE REPORT OF THE TRUSTEES

The Trustees present their report for the year ended 30[th] September 2022. 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.

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:

• evidence of senior government leaders internationally seeking IISS independent analysis

• • 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 confirmed to IISS by government officials

• continued diversification of funding from governments, the private sector, charitable foundations and individuals to maintain a significant body of research across a broad range of thematic and regional programmes

• worldwide demand for its publications and databases.

During the first quarter of the financial year under review, Institute activities remained affected by the COVID-19 pandemic, with restrictions limiting in-person participant numbers. Where possible, and in close consultation with funders, conferences and workshops were converted into online webinars or hybrid events to ensure the Institute retained its convening power. With excellent virtual capabilities, the necessary equipment enabling staff to successfully deliver their roles from home, and COVID-19 safety measures in place across all offices, COVID-19 restrictions caused minimal disruption to IISS productivity and enabled the Institute to introduce a hybrid model of office and home-based working. The Trustees have expressed gratitude for the way in which IISS management reduced disruption to Institute activities, ensured staff safety and minimised any financial loss.

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.

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The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30[th] September 2022

Research, Dissemination and Digital Content

The IISS has continued to develop its digital channels this year. Central to this development is the website project, due to complete its first phase in February 2023, which aims to provide an enhanced user experience and make it easier for internal teams to manage and update content on the site. The enhanced website will showcase more prominently and improve accessibility to IISS content, convey a more dynamic image of the Institute, and make IISS research priorities clearer to external audiences. The website will be future-proofed to allow for greater digitalisation of IISS output as the Institute’s digital strategy is developed.

The Sounds Strategic and the new Japan Memo podcasts were downloaded over 46,000 times during the past year by audiences across our top territories of US, UK, Australia, Germany and Japan, an increase of lifetime downloads (from the start of the series) of +38%. The Institute’s website audience continues to grow, with over 1.6 million users and increasing engagement with webinars, blogs and research reports, as well as flagship publications and events.

Over the past year the Institute’s social media following has grown substantially, including a 17% annual increase on Twitter and a 32% increase on LinkedIn. IISS digital content activities generated over 4 million pageviews (+7.5%) and audiences engaged notably with video content on both website and YouTube channels, resulting in over 588,000 views of event recordings and livestreams (+112%). This increase can be linked to interest in IISS commentary and insights relating to the war in Ukraine, as well as expertise in the Asia-Pacific region.

The IISS has also increased its media profile over the last 12 months. There has been a greater awareness of global security and defence issues from the media which has led to an increase in coverage, principally but not exclusively revolving around Russia’s invasion of Ukraine. The initial demand for analysis and input from IISS experts in the early weeks of the invasion was particularly high and interest has largely crowded out other foreign policy issues in the media. Several Fellows have enjoyed a strong and regular media profile in Tier 1 outlets as well as further afield.

Other projects and products have achieved a wide popularity within the media. An example is China Connects where a number of briefings, including a roundtable to Tier 1 media, have established the project as a go-to source for China specialists and Far East correspondents more widely.

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. During the year, the Institute convened 143 events in 8 countries with 8,620 attendees from over 89 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 leverages its global reach and data-based approach to analysis to provide information on strategically important policy decisions being made at the highest levels.

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 to 15.

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The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30[th] September 2022

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 all 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 21st century and their potential trends or resolution. A comprehensive research programme, which was reviewed and revised in 2022, covers these challenges and responds to them both thematically and regionally. The 30-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 strategic themes and nine regional concentrations:

• Defence and Military Analysis

• Geo-Economics and Strategy

• Strategy, Technology and Arms Control

• Cyber Power and Future Conflict

• Conflict, Security and Development

• China

• European Security and Defence

• Indo-Pacific Defence and Strategy

• Japan Chair

• Latin America

• Middle East

• Russia and Eurasia

• South and Central Asian Defence, Strategy and Diplomacy

• Southeast Asian Politics and Foreign Policy

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Annual Report and Financial Statements for the year ended 30[th] September 2022

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. The Institute has paid increasing attention to facilitating dialogue and conflict-resolution. This is achieved by bringing together parties under dispute in ‘track-two’ meetings, 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.

• The Defence and Military Analysis Programme (DMAP) published reports on European Combat Air Power and Missile Identification and Assessment techniques in early 2022. This was followed by papers on the Greenland-Iceland-United Kingdom Gap, The Defence Policy and Economics of the Middle East and North Africa, and The UK Indo-Pacific Tilt: Defence and Military Implications. Throughout the year, DMAP implemented the Missile Dialogue Initiative project, convening a series of meetings and publishing several research papers in this framework while also working on an IISS Strategic Dossier on arms control and missile technology questions.

• The Strategy, Technology and Arms Control (STAC) programme had a productive year, with grant awards from US European Command, the Carnegie Corporation, the UK’s FCDO, and the EU. The programme delivered three major reports: defining threats posed by non-nuclear strategic weapons, analysis on strengthening the Missile Technology Control Regime, and a study of Russia’s non-strategic nuclear weapons capabilities, posture, and use scenarios. In-person workshops brought together experts and officials from the US, Europe, Asia-Pacific and Arab countries to explore questions such as the Gulf order post-JCPOA, how to reduce risks of outer space operations, the risks of nuclear escalation in Ukraine, and the role of non-nuclear strategic weapons in 21st Century warfare. Workshops were convened, and Survival articles published, on the changes to European security by the impending NATO membership of Sweden and Finland.

• The Russia and Eurasia Programme published a stream of analysis across IISS publications and in the media on the background to the Russia-Ukraine war (predicting its outbreak), and on subsequent political and diplomatic developments. The Programme has engaged extensively with UK and US governments on the war and delivered a series of workshops for the UK MoD on Russia's foreign and security policy. The Programme has also worked on a grant-funded study of Western economic statecraft and Russia, to be published in 2023.

• The Geo-economics and Strategy Programme launched a strategic dossier on China’s Belt and Road Initiative (BRI) at the 2022 Manama Dialogue and, in December, published an Adelphi on China’s global Digital Silk Road (DSR) activity. During the year, the team further developed the China Connects database of BRI, BRI-like and DSR projects globally. A programme on sanctions and standards was launched in 2022 with the appointment of a new Research Fellow whose immediate focus has been analysis of sanctions against Russia following its invasion of Ukraine.

• The Japan Chair Programme published an Adelphi on Japan’s effectiveness as a geo-economic actor in early 2022 with a Japanese version due for publication in 2023. The Programme has also held workshops and webinars on economic security, including one webinar in Tokyo with Japan’s economic security minister, Kobayashi Takayuki. The team has continued to build on the Japan Memo podcast series, expanding the Institute’s reach with its key audiences.

• The Cyber Power and Future Conflict Programme continued to expand its influence and reach through two Cyber Power Workshops that included heads or deputy heads of cyber intelligence and military cyber agencies for the Five Eyes and like-minded countries. An inaugural Advanced Technology Workshop in Singapore was launched for defence organisations of 15 countries (at one-star level). Notable publications milestones included work on cyber aspects of the Ukraine war, space ambitions, and a lengthy assessment of offensive cyber operations by Russia, China and the US that attracted considerable attention since it was launched on the day of the Russian invasion of Ukraine.

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• In 2022, the IISS established a new Indo-Pacific Defence and Strategy Research Programme, focussing on questions of inter-state competition, deterrence and conflict across the wider IndoPacific region. The programme will examine US–China competition, both in terms of China’s military modernisation but also how Australia, India, Japan, Taiwan, the United States and other Southeast Asian countries are responding to China’s challenge. It will also look specifically at the developing dynamics of long-range strike capabilities in the region.

• The Southeast Asian Politics and Foreign Policy Programme analyses the connections between the politics and international relations of the region, with a focus on the consequences for conflict and diplomacy. The programme’s activities, which have recently included a focus on the conflict in Myanmar, advance understanding on the major policy challenges facing Southeast Asian experts and officials and their counterparts in North America, Europe, and elsewhere in Asia.

• The Middle East research programme continued to provide policy-relevant insights on the geopolitics of the Middle East. It examined the drivers and prospects of the ongoing regional deescalation, the repercussions of the Russian invasion of Ukraine on the region, and the geopolitical and geoeconomic statecraft of the Gulf states. A report on the future of alliances in the Middle East was also published as part of an Institute-wide study.

• Top Indian and Pakistani intelligence officials uniquely participated in the South Asia research programme’s regional conferences in Bahrain and Oman. A successful engagement with the new Taliban leadership in Afghanistan on counterterrorism took place through virtual meetings. A new ‘‘3+3’ India-Pakistan Crisis Management Dialogue’ and a new ‘Western Indo-Pacific Security’ workshop were held in London. Regular policy briefings to the FCDO led towards to the first ‘track 1.5’ dialogue on UK-India defence and security cooperation. A report on nuclear deterrence and stability in South Asia was launched in Islamabad with a launch scheduled in India.

• The Conflict, Security and Development Programme (CSDP) activities included the publication of the Armed Conflict Survey (ACS) 2022 (as referenced below) and of ‘The Latin America Instability Matrix: Mapping Risks in the Region’, a unique methodological framework to assess political, socioeconomic and security risks. Work around climate security, aftermath of war, and conflict monitoring continued, which included research articles and blogs and a programme of events.

Publications

A lifting of global lockdown restrictions meant events and book launches were able to take place in person again this year. The IISS saw a surge in demand for print and online publications, particularly content focusing on the Russia-Ukraine war, with a 12% increase in print sales led by The Adelphi Series and The Military Balance , and a healthy increase in online downloads driven by Survival .

Strategic Comments covered a range of international security and political-military topics in 2022. With both paid offerings through Taylor and Francis, and selected editions offered for free via the IISS website. Topics published included China's orbital-weapon tests, France's presidential election, the International Criminal Court's investigation in Ukraine, Russia and sanctions evasion, economic trouble in five non-oil Arab countries, and China-Russia gas cooperation.

Strategic Survey 2022: The Annual Assessment of Geopolitics was published in early December, providing a comprehensive annual review of world affairs. Featuring 33 essays analysing geopolitical developments in every region as well as major cross-cutting strategic themes, topics included: the military and strategic lessons of the Russia–Ukraine war; the West’s withdrawal from Afghanistan; China’s military modernisation; Saudi Arabia’s and India’s foreign-policy choices; the origins and implications of AUKUS; the polarisation of American politics; the future of the Chinese Communist Party; and the spread of Islamic insurgency in sub-Saharan Africa.

The 63rd The Military Balance was launched in February, providing data and capability assessments for the armed forces of 171 countries. This edition included essays on Defence Intelligence: Maintaining relevance in the open-source environment; Simulation and defence: Training benefits and

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trends; and on Military adaptation to climate change: Reducing emissions and maintaining military effectiveness. The wallchart provided an assessment of the security dynamics in the Arctic.

The Military Balance Plus database combines multiple years of data and qualitative assessments from The Military Balance with advanced search and graphical capability. During 2022, data holdings in the database expanded further in the procurement data module which also features new visualisation elements on international defence supply chain questions. Furthermore, the IISS developed a series of platform capability assessments, also integrated into the database, giving users a sense of the modernity of a country’s inventory. The database represents a step change in defence analysis for the Institute and its core audiences in government, the military, and 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. The June–July 2022 issue devoted considerable space to the Ukraine war and its ramifications, featuring related articles by Robert Dalsjö, Michael Jonsson and Johan Norberg on Russia’s military capability which is already one of the most downloaded Survival articles. Also appearing were assessments of the cyber-war implications of the Russia-Ukraine war, Algeria's reemergence, the geopolitics of greenflation and the American 'coup that wasn't' in 1979 Iran.

The annual Armed Conflict Survey launched at the 2022 Manama Dialogue, featured analysis of 33 active armed conflicts, including the humanitarian, social and economic impacts. This year included essays on trends of relevance for each region, ranging from de-escalation in the Middle East and geopolitical dimensions of conflicts in sub-Saharan Africa to the regional repercussions of the Russia– Ukraine war in Eurasia, the geopolitics of fentanyl in the Americas and China’s intervention in Asia’s conflicts. The Chart of Armed Conflict mapped violent events with the ACGRI’s human-impact pillar and indicators of climate vulnerability and sustainability, food risk and food inflation.

The Adelphi series is the Institute’s principal contribution to policy-relevant, original academic research. March saw the publication of Japan's Effectiveness as a Geo-Economic Actor , authored by Robert Ward and Yuka Koshino, selling 180 copies in its first two months. The second, Overseas Bases and US Strategy , by Jonathan Stevenson, examined US basing arrangements in the context of changing technologies and capabilities, the likely direction of US policy and the political and military priorities of host countries and key regional actors. The third title, The Digital Silk Road: China’s Technological Rise and the Geopolitics of Cyberspace edited by Meia Nouwens and David Gordon, published in November illuminates the complex phenomenon that is China’s Digital Silk Road.

In June, as part of the Shangri-La Dialogue re-launch a new-look Asia-Pacific Regional Security Assessment was published, covering topics from US military posture in Asia and China’s regional policies to Taiwan's future status and the security risks of climate change. The 2022 publication included a new “digital first” web presence, making the dossier free to read for the first time and launching a simple and easy-to-navigate home page that allows users to read chapters online. Both online readership and social media commentary on the dossier increased as a result.

As well as the regular publications, the IISS continued to release publications in various formats that are disseminated to governments, businesses, think tanks and important thought leaders. In addition to the well-received report The Defence Policy and Economics of the Middle East and North Africa , written as part of the Riyadh Defense Forum, the IISS published reports on French defense exports to Europe, Gulf bailout diplomacy, Strategic settings for 6G, and the Indo-Pacific Tilt.

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 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.

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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 provides a platform for participant countries’ defence ministers and other principals to elaborate and clarify their countries’ positions on important regional security topics. The Dialogue also allows senior regional defence leaders to develop and enhance cooperation with one another, notably through the hundreds of meetings which occur on the Dialogue’s sidelines, aiming to develop a sense of common community and focus in the hope this might facilitate a move towards solutions to the many regional challenges.

The IISS held its 19th annual Shangri-La Dialogue (SLD) in Singapore from 10 to 12 June 2022 after a two-year hiatus. The strategic dynamic in the Asia-Pacific region naturally shaped the agenda of this year’s Dialogue, which opened with a keynote address by Japanese Prime Minister Kishida Fumio. This year’s Dialogue reflected a range of regional and global security concerns and was set against the backdrop of Russia’s invasion of Ukraine, a topic addressed most directly in a special address that Ukrainian President Volodymyr Zelenskyy gave virtually from Kyiv.

The 2022 Dialogue involved 553 delegates, around half of whom were from governments or armed forces. A total of 37 national delegations attended, with 32 defence ministers present. The IISS facilitated over 100 bilateral and other meetings among government delegates which included the first bilateral meeting between US Defense Secretary Lloyd Austin and Chinese Ministry of National Defence Minister Wei Fenghe. The Institute also organised the important SEAYLP which provided an opportunity for 41 young leaders from around the region to discuss pressing security questions in specially organised sessions, as well as playing a full part in the Dialogue’s broader debates.

2. The Manama Dialogue

Since its inception in 2004, the IISS Manama Dialogue has become a central element in the Middle East’s security architecture, where national leaders and ministers from the Middle East, North America, Europe, Asia and Africa make major policy statements. Moreover, supported by senior officials, they are offered a bespoke occasion to consult bilaterally and multilaterally on the most pressing security and foreign-policy challenges.

Owing to circumstances necessitated by COVID-19, the 17th IISS Manama Dialogue was conducted as a hybrid event in November 2021, with participants attending in person and online. Strict health and safety measures ensured a safe environment for those who attended proceedings in Manama. More than 300 delegates from 34 countries participated in person, including 30 government delegations, 16 ministers, three chiefs of defence, and 11 chiefs of intelligence. Despite travel limitations, a sizeable press corps attended, including 19 senior journalists representing major regional and global outlets. The Manama Dialogue Young Leaders’ Programme was convened for the third time, with 16 young leaders from the region attending.

The 17th IISS Manama Dialogue provided an opportunity to reflect on changing security and geopolitical dynamics, including the onset of intervention fatigue, the evolution of multilateralism and the growth in minilateralism in the region, as well as the rising importance of the Indo-Pacific region to the Middle East. Indonesian Defense Minister Prabowo Subianto’s opening speech highlighted how Indonesia’s security is interconnected with stability in the Middle East. US Defense Secretary Lloyd Austin addressed the realignment of overseas deployments by US forces while emphasising the United States’ continued commitment to the security of its partners in the Middle East.

3. Riyadh Defense Forum

On 5 March 2022, the Middle East Programme, in cooperation with the Defence and Military Analysis Programme, convened the first-ever Riyadh Defense Forum (RDF), a conference aimed at ministers of defence procurement, chiefs of defence, defence-procurement senior officers and officials, and global business leaders from over 20 countries. The conference featured high-level speakers from

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Saudi Arabia, the US, South Korea and the UK, whilst offering many opportunities for bilateral and multilateral meetings, both public and private, on national defence policies, structures and capabilities. Held just before the World Defense Show, the conference allowed the IISS to present the results of rigorous research conducted by IISS analysts on regional defence decision making and economics.

4. Lecture Series

The IISS Fullerton Lecture Series brings major figures in Asia-Pacific and international affairs to speak in Singapore and concluded with two lectures in this financial year. On 9 November 2021, Singapore’s Minister for Education, Chan Chun Sing, explored Singapore’s perceptions of US–China rivalry and its implications. On 21 December 2021, Germany's Chief of Navy Vice Admiral Kay-Achim Schönbach outlined Germany's vision for the future of regional maritime security and discussed how both Germany and Europe would develop their own Indo-Pacific strategies in the future.

An IISS Special Lecture with Australia’s Minister for Foreign Affairs, Senator Penny Wong took place on 6 July 2022. In her first major foreign-policy speech in Southeast Asia, Senator Wong explained Australia’s approach to foreign policy and how the new government in Canberra plans to engage with ASEAN and Southeast Asia.

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 annual international conferences.

The Institute holds many discussion meetings each year at its London headquarters and overseas offices in Washington DC, Manama, Singapore, and Berlin, featuring IISS and guest speakers. With COVID-19 restrictions being relaxed, the Institute delivered both in-person events and webinars. Events that attracted notable interest over the past year included:

• Hosted by IISS in association with the Naval Staff, the First Sea Lord’s Sea Power Conference brings together leading UK and international decision-makers, academics, representatives from the private sector, and future maritime strategists. With a refocusing on great-power competition, and against the backdrop of major war in Europe, this year’s conference held on 5 May at Arundel House placed these themes in a global context and examined the challenges of resetting naval and maritime capabilities to deal with complex operations. Another central theme was the implications of climate change in the maritime arena. James Heappey MP, Parliamentary Under Secretary of State (Minister for the Armed Forces) delivered the ministerial keynote address.

• In this webinar held on 12 May, the IISS Japan Chair hosted Japan’s Minister of Economic Security His Excellency Kobayashi Takayuki to discuss where Japan’s economic security strategy is headed and what it should be to navigate the era of strategic competition. Bill Emmott, Chairman of the IISS Trustees, was the discussant, and Robert Ward, Japan Chair of the IISS, was the moderator of this webinar. This webinar took place in both English and Japanese.

• On 30 November 2021 at Arundel House, Richard Moore, Chief of the UK Secret Intelligence Service (MI6), made his first public speech since taking up his role in October 2020. He talked about the seismic changes he sees in the world, specifically in the espionage environment. He discussed China, Russia and Iran, three of the ‘Big Four’ priorities for the intelligence world and explained what the UK is doing to address the fourth priority, international terrorism.

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FINANCIAL REVIEW AND RESULTS FOR THE YEAR

For the year ended 30[th] September 2022, total income was £24,539,000 (2021: £18,396,000). The primary reason for this variance was the addition of the Riyadh Defense Forum and associated research programme in 2022, along with a notable increase in research activities across most programmes.

Total expenditure for the year was £23,957,000, compared to £17,583,000 in 2021, which reflected the increased conference costs arising from the Riyadh Defense Forum and additional research activity, along with increased staff numbers.

After accounting for net losses on investment assets of £729,000 (2021: £1,196,000 gains); foreign exchange gains of £343,000 (2021: £70,000); and actuarial gains on the defined benefit pension scheme of £514,000 (2021: £149,000); the net movement in funds for the year was a surplus of £710,000 (2021: £2,088,000).

As at 30[th] September 2022, there was no liability on the defined benefit pension scheme (2021: £556,000 deficit). Under the recent actuarial valuation funding plan, the IISS had committed to reducing the pension liability through deficit funding payments of £60,000 per year.

Net cash inflow totalled £196,000 for the year (2021: £66,000), leaving total cash balances, including portfolio cash, of £6,409,000 at the year-end (2021: £6,213,000).

The group reported an improved net current asset position of £2,129,000 (2021: £1,130,000). Total net assets as at 30[th] September 2022 increased to £26,772,000 (2021: £26,062,000).

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 2022, the Institute held free reserves of £7,090,000 (2021: £6,218,000) which equated to approximately 5 months (2021: 5.5 months) of operating expenditure associated with unrestricted funds. Free reserves comprise IISS unrestricted general funds of £21,174,000, less tangible and intangible fixed assets of £14,119,000. At 30[th] September 2022, IISS restricted funds totalled £140,000 (2021: £202,000) and endowment funds totalled £5,458,000 (2021: £6,144,000). 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 two investment portfolios. As at 30[th] September 2022, the market value of the main portfolio was £5,031,000 (2021: £5,300,000) and the asset allocation was: UK equity funds, 12% (2021: 13%); UK fixed-interest funds, 11% (2021: 5%); International fixed-interest funds, 0% (2021: 6%); International equity funds, 51% (2021: 54%); Portfolio funds 8% (2021: 21%) and Cash 2% (2021: 1%). Investment income for the year to 30[th] September 2022 from this portfolio amounted to £80,000 (2021: £74,000).

The overall investment objective of the main portfolio is to maximise its total return by achieving several percentage points above inflation, in line with constraints over risk. Portfolio performance and

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asset allocation are closely monitored by the Investment Committee in conjunction with the portfolio managers. The Institute considers this portfolio to be a long-term investment fund and operational cash flow demands are met through operational surpluses. The Investment Committee has adopted a diversified asset allocation strategy in keeping with its appetite for moderate risk. At 30[th] September 2022, portfolio returns over the previous year, three years, and five years as compared to benchmark (set as 100% UK CPI +4%), and the FTSE All Share were as follows:

Total Returns	1 year %	3 years p.a. %	5 years p.a. %
Portfolio	-5.1	3.1	3.5
Benchmark	14.1	8.6	7.7
FTSE All Share	-4.0	0.8	2.1

The Institute’s second portfolio is an expendable endowment fund, invested in 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 2022, the market value of the Japan Endowment Fund was £5,497,000 (2021: £6,134,000) and the asset allocation was Charity Multi-Asset Fund (CMAF) 100% (2021: 100%), of which 70% was equities (2021: 71%).

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 due to the slow return from COVID-19 restrictions but minimised any losses on its catering and event activities with a low fixed cost base.

With the continued financial and currency market instability arising from the COVID-19 pandemic and political events such as the Ukraine-Russia conflict, the IISS investment portfolio was impacted by poor equity market performance during 2022. 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.

Financial health

As outlined in the Financial Review, the Trustees consider the Institute’s financial health to be sound. As at 30[th] September 2022, the Institute held investment assets totalling £10.5 million and cash on the balance sheet of £6.3m with no loan liabilities, compared to investment assets of £4.7 million, £1.7m of cash and a building loan liability of £4.65 million in 2011, 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 in considering budgets and forecasts covering the period to 30[th] September 2025, 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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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 Trustees remain 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.

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

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

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 and the expert and opinion-forming communities. The main objectives for the forthcoming year ending 30th September 2023 are:

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• Research – the Institute will continue to produce new research and analysis under the rubrics of War, Power and Rules. Following a review of its research programmes in 2022, the IISS has established new programme areas to focus on China; European Security and Defence; IndoPacific Defence and Strategy; Latin America; and Southeast Asian Politics and Foreign Policy. Some legacy research programmes were discontinued whereas others were refocused and renamed. Under War, the IISS will address the changing shape of conflict, cyber power, and the security-development nexus, as well as refining the state of the art of defence economics and examining aspects of software defined defence. The Power stream will include geo-economics and strategy, economic and financial sanctions in a multipolar system, and regional security dynamics in the Eastern Mediterranean. The Rules stream will address the changing nature of international law, the impact of legal diplomacy exercised by major powers, and the requirement to continue to modernise the rules-based order. It will also consider arms control in the fields of AI, robotics and unmanned vehicles, as well as how technical standards and commercial regulations are increasingly wielded as instruments of international statecraft.

• Digital content - In 2023 the IISS will aim to continue to grow its Military Balance Plus customers in government, the private sector, and the analytical community to generate a strong revenue stream to support IISS research and the Institute’s overall mission. 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. This objective will be aided by the website development project, due to complete its first phase by March 2023, which aims to provide an enhanced user experience and make it easier for internal teams to manage and update content onto the site. The enhanced website will showcase more prominently and improve accessibility to IISS content, convey a more dynamic image of the Institute and make IISS research priorities clearer to external audiences.

• 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. Next year, the priority will be to continue deepening IISS engagement with European powers, expanding the IISS analytical footprint in Berlin through the IISS Europe office, and diversifying the Institute’s funding base across all regions. The IISS Asia office in Singapore will be adding staff in Cyber and Indo-Pacific Strategy and developing strategies to raise further funds in the Asia-Pacific region.

• Fundraising – During 2023, 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 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 the existing

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Trustees. The Trustees delegate the exercise of certain powers in connection with the administration of the Institute as set out below.

The Trustees are aware of the Charity Governance Code published in 2020 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)

Jens Tholstrup Matt Symonds Matthew 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) Chris Jones (Honorary Treasurer) Caroline Atkinson Neha Aviral

Nominations Committee

The IISS Nominations Committee is responsible for proposing new Trustees to the Board. The current membership of the Nominations Committee is:

Bill Emmott (Chair of Committee and Chair of the IISS Trustees) Matthew Symonds

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.

Working closely with the Director-General and Chief Executive (DG and CE), the Board of Trustees have developed a succession strategy. The Institute expects to appoint a successor as DG and CE to take office on 1 October 2023 the start of the next fiscal year and the 30th anniversary of the present DG and CE’s tenure. The present DG and CE, Dr John Chipman, will move to a part time role as Executive Chairman, an appointment that has assured key funders and other stakeholders of continuity in our most important relationships.

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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 to ensure the Institute can compete globally in recruiting and retaining talent from the private sector, governments, and the international expert community. 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 have 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 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. As pandemic restrictions eased, the office resumed live events and utilised its capacity to hold hybrid events to continue outreach to a global audience. This has served to reinforce the reputation of IISSAmericas 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 the provision of Consultancy services. The company reported a profit for the year of £197,000 before gift aid (2021: £69,000).

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 2022, 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 7-8, the Shangri-La Dialogue was held from 10 to 12 June 2022 after a two-year hiatus and IISS-Asia was able to host a series of lectures with prominent speakers.

With the lifting of pandemic restrictions, IISS-Asia activities resumed 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 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 Germany and play an active part in shaping the security and defence debate in Germany and the EU. The IISS-Europe office includes 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’.

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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 22 February 2023 and signed on their behalf by:

Bill Emmott Chair of the Trustees

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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 (resigned 13 July 2022) Matt Symonds Matthew J Symonds Caroline Atkinson Dr Grace Skaugen John Brennan (appointed 22 February 2022) Neha Aviral (appointed 22 February 2022)

During the year under review, John Brennan and Neha Aviral were appointed to the Board on 22 February 2022, whilst Catherine Roe resigned on 13 July 2022.

For clarification purposes, there are two Trustees with the name Matthew (Matt) J Symonds.

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Executive Directing Staff

Director-General and Chief Executive Dr John Chipman Director of Geo-Economics; Japan Chair Dr Robert Ward Director of Defence and Military Analysis Dr Bastian Giegerich Director of Finance Sally Taylor Director of Operations Dr John Hobart Director of HR Jane Graham Director of Editorial Services and Digital Strategy David Tomchak (appointed 9 January 2023) Executive Director, IISS-Asia James Crabtree Executive Director, IISS-Middle East Sir Thomas Beckett Executive Director, IISS-Europe Dr Ben Schreer Executive Director, IISS-Americas Ernest J Herold (resigned 31 December 2022)

Agents and Advisers

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

Bankers

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

Investment Managers

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

Pension Fund Managers

Pension Consultants

Mobius Life, 7th Floor, 20 Gresham Street, London EC2V 7JE Mercer (formerly 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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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 (‘the charitable company’) and its subsidiary (‘the group’) for the year ended 30 September 2022 which comprise the Consolidated Statement of Financial Activities, Consolidated and Charity Balance Sheets, Consolidated Cash Flow Statement and notes to the financial statements, including 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 2021 and of the group’s income and receipts of endowments 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

In auditing the financial statements, we have concluded that the Trustee's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the charitable company's or the group’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the Trustees with respect to going concern are described in the relevant sections of this report.

Other information

The Trustees are responsible for the other information contained within the annual report. 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.

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 this gives rise to a material misstatement in the financial statements themselves. 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.

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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 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:

• adequate and proper accounting records have not been kept; or

• the financial statements are not in agreement with the accounting records and returns; or

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

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

Responsibilities of trustees

As explained more fully in the Trustees’ responsibilities statement, 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 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.

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.

Details of the extent to which the audit was considered capable of detecting irregularities, including fraud and non-compliance with laws and regulations are set out below.

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.

Extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of noncompliance with laws and regulations. We identified and assessed the risks of material misstatement of the financial statements from irregularities,

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whether due to fraud or error, and discussed these between our audit team members. We then designed and performed audit procedures responsive to those risks, including obtaining audit evidence sufficient and appropriate to provide a basis for our opinion.

We obtained an understanding of the legal and regulatory frameworks within which the charity and group operates, focusing on those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements. The laws and regulations we considered in this context were the Companies Act 2006, taxation legislation, employment legislation and general data protection legislation, together with the Charities SORP (FRS 102). We assessed the required compliance with these laws and regulations as part of our audit procedures on the related financial statement items.

In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which might be fundamental to the charity’s and group’s ability to operate or to avoid a material penalty. We also considered the opportunities and incentives that may exist within the charity and the group for fraud. The laws and regulations we considered in this context for the UK operations were taxation legislation, employment legislation and General Data Protection Regulation (GDPR). We also considered compliance with local legislation for the group’s overseas operating segments.

Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the Trustees and other management and inspection of regulatory and legal correspondence, if any.

We identified the greatest risk of material impact on the financial statements from irregularities, including fraud, to be within the timing surrounding recognition income and the override of controls by management. Our audit procedures to respond to these risks included enquiries of management, internal audit and the audit committee about their own identification and assessment of the risks of irregularities, sample testing on the posting of journals, reviewing accounting estimates for biases, reviewing regulatory correspondence and reading minutes of meetings of those charged with governance.

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of nondetection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing noncompliance and cannot be expected to detect non-compliance with all laws and regulations.

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

21 March 2023

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CONSOLIDATED STATEMENT OF FINANCIAL ACTIVITIES

(incorporating an income and expenditure account)

Year ended 30[th] September 2022

Unrestricted Funds Notes £'000 Income from: Donations 2 2,951 Charitable activities Dialogues, conferences and lecture series 3 9,690 Research programmes 3 1,997 Publications 1,297 Membership 1,442 Other trading activities 346 Investments 80 Capital applied to income Other income 26 Total 17,829 Expenditure on: Raising funds 114 Charitable activities Dialogues, conferences and lecture series 4 7,999 Research programmes 4 4,282 Publications 4 3,924 Membership 4 426 Other trading activities 148 Total 16,893 Net (losses)/ gains on investments 17 (335) Net (expenditure) /income 601 Transfers between funds 12 - Other recognised gains/(losses): Foreign exchange gains/ (losses) 343 Actuarial gains on defined benefit pension schemes 14 514 Net movement in funds 1,458 Funds brought forward at 1 October 2021 12 19,716 Funds carried forward at 30 September 2022 12,13 21,174	Restricted Funds £'000 - - 6,475 - - - 235 292 -	Endowed Funds £'000 - - - - - - - (292) - (292) - - - - - - - (394) (686) - - - (686) 6,144 5,458	Total Funds 2022 £'000 2,951 9,690 8,472 1,297 1,442 346 315 - 26 24,539 114 7,999 11,346 3,924 426 148 23,957 (729) (147) - 343 514 710 26,062 26,772	Total Funds 2021 £'000 2,812 7,362 4,865 1,319 1,450 268 295 - 25
	7,002			18,396
	- - 7,064 - - -			153 6,034 7,733 2,994 471 198
	7,064 -			17,583 1,196
	(62) - - -			2,009 - (70) 149
	(62) 202			2,088 23,974
	140			26,062

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 47 form part of these accounts

22

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2022

CONSOLIDATED BALANCE SHEET (Company Number 615259)

As at 30th September 2022 2022 Notes £'000 Fixed assets Intangible assets 6 462 Tangible assets 7 13,657 Investments 8 10,524 Total Fixed assets 24,643 Current assets: Debtors 9 3,741 Cash at bank and in hand 6,301 Total Current assets 10,042 Liabilities: Creditors: Amounts falling due within one year 10 (7,913) Net current assets / (liabilities) 2,129 Total assets less current liabilities 26,772 Net assets excluding pension liability 26,772 Defined benefit pension liability 14 - Total net assets 13 26,772 The Funds of the charity Expendable endowment funds 12 5,458 Restricted income funds 12 140 Unrestricted income funds 12 21,174 Pensions reserve 12 0 Total unrestricted funds 13 21,174 Total charity funds 13 26,772	2021 £'000 230 13,774 11,434
	25,438
	3,060 6,178
	9,238
	(8,058)
	1,180 26,618
	26,618 (556)
	26,062
	6,144 202 20,272 (556)
	19,716
	26,062

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 on22 February 2023 and signed on their behalf by:

Bill Emmott Chair of the Trustees

The notes on pages 26 to 47 form part of these accounts

23

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2022

CHARITY BALANCE SHEET (Company Number 615259)

As at 30[th] September 2022

2022 Notes £'000 Fixed assets Intangible assets 6 463 Tangible assets 7 13,227 Investments 8 10,524 Total Fixed assets 24,214 Current assets: Debtors 9 3,767 Cash at bank and in hand 3,733 Total Current assets: 7,500 Liabilities Creditors: amounts falling due within one year 10 (5,496) Net current liabilities 2,004 Total assets less current liabilities 26,218 Net assets excluding pension liability 26,218 Defined benefit pension liability 14 0 Total net assets 26,218 The Funds of the charity Expendable endowment funds 12 5,458 Restricted income funds 12 76 Unrestricted funds 12 20,684 Pensions reserve 12 0 Total unrestricted funds 13 20,684 Total funds including pensions reserve 13 26,218	2021 £'000 230 13,284 11,434
	24,948
	3,039 1,424
	4,463
	(5,436)
	(973) 23,975
	23,975 (556)
	23,419
	6,144 84 17,747 (556)
	17,191
	23,419

The unconsolidated surplus incurred by the Charity in 2022 was £1,732,000 (2021: £498,000)

The accounts were approved and authorised for issue by the Trustees on 22 February 2023 and signed on their behalf by:

Bill Emmott Chair of the Trustees

The notes on pages 26 to 47 form part of these accounts

24

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2022

CONSOLIDATED STATEMENT OF CASH FLOW

CONSOLIDATED STATEMENT OF CASH FLOW
Year ended 30th September 2022 Notes Cash flows from operating activities: Net cash (used in) / provided by operating activities 17 Cash flows from investing activities: Dividends, interest and rents from investments Purchase of property, plant and equipment Proceeds from sales of property, plant and equipment Purchase of software and website costs Purchase of investments Proceeds from sales of investments Net cash (used in) provided by investing activities Net cash provided by (used in) financing activities Change in cash and cash equivalents in the year Cash and cash equivalents at the beginning of the reporting period Cash and cash equivalents at the end of the reporting period 18	2022 £'000 315 (473) - (368) (1,179) 1,360	2022 £'000 388 (345) - 43 6,366 6,409	2021 £'000 295 (1,111) - (89) (2,028) 2,098	2021 £'000 904 (835) 150
				219 6,147
				6,366

The notes on pages 26 to 47 form part of these accounts

25

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2022

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.

Going concern

After making enquiries, the Trustees have reasonable expectation that the charity has adequate resources to continue its activities for the foreseeable future, and are satisfied that there are no material uncertainties surrounding the ability of the group to continue as a going concern. Accordingly, they continue to adopt the going-147.1244concern basis in preparing the financial statements as outlined in the Trustees' Report above.

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.

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

6409

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.

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.

26

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2022

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 2022, to be received in early 2023, 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.

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.

27

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2022

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 2022

2 Donations

Donation in support of the IISS-Middle East office and related research activities Other	2022 £'000 2,901 50 2,951	2021 £'000 2,713 99
		2,812

3 i) Dialogues, conferences and lecture series

Manama Dialogue Shangri-La Dialogue Riyadh Defense Forum Lecture series	2022 £'000 3,728 4,055 1,818 89 9,690	2021 £'000 3,699 3,506 121 36
		7,362

Funding for dialogues, conferences and lecture series received during the year from UK and international Governments totalled £9,561,000 (2021: £7,251,000).

3 ii) Research programmes

South and Central Asian Defence, Strategy and Diplomacy Strategy, Technology and Arms Control Europe US Foreign policy and transatlantic affairs Defence & Military Analysis Conflict, Security & Development Geo-Economics & Strategy Middle East Southeast Asian Politics and Foreign Policy Cyber Power and Future Conflict Japan Chair Other Research Programmes	2022 £'000 1,033 529 447 209 1,897 - 419 1,111 1,546 1,144 92 45 8,472	2021 £'000 601 361 167 168 1,078 50 462 253 1,014 630 73 8
		4,865

Funding for research projects received during the year from UK and international Governments totalled £4,624,000 (2021: £3,637,000)

29

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2022

4 i) Analysis of expenditure - charitable activities and governance

Group

Charitable activities Primary costs Dialogues and conferences Research programmes Publications Membership Support costs Support operations Total 2022 Total 2021	Staff costs £'000 1,416 4,928 1,539 114 4,871 12,868 10,611	Other direct costs £'000 4,897 2,942 249 30 1,667 9,785 5,838	Depreciation charges £'000 - 63 43 - 660 766 811	Exchange (gains) /losses £'000 38 - - - 238 276 (29)	Allocation of support costs £'000 1,648 3,413 2,093 282 (7,436) - -	Total 2022 £'000 7,999 11,346 3,924 426 - 23,695	Total 2021 £'000 6,034 7,734 2,993 470 -
							17,231 17,231

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 2022 are governance costs of £116,000 (2021: £77,000). 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 2022

4 ii) Net Income/ Expenditure

Net income/ expenditure is stated after charging: Depreciation Amortisation Auditors' remuneration - Audit fees - Tax advisory and other services Operating leases - Land and buildings Trustees' professional indemnity insurance Staff costs Wages and salaries Social security costs Employers' contribution to defined contribution pension schemes Operating costs of defined benefit pension schemes (excluding finance costs) Other forms of employee benefits	2022 £'000 685 136 28 19 821 11 2022 £'000 10,064 1,023 457 35 616 12,195	2021 £'000 547 281 28 19 821 11 2021 £'000 8,427 810 417 33 565
		10,251

5 Staff costs

Costs of Consulting Fellows and other sub-contractors totalling £898,000 (2021: £634,000) are not included in the figures above.

Wages and salaries include £4,833,000 (2021: £2,781,000) in respect of restricted grant funded staff salaries.

Remuneration of key management personnel totalled £2,505,000 during the year (2021: £2,333,000).

Redundancy payments of £57,000 were paid during the year (2021: £7,000).

The average number of employees (headcount) during the year

Dialogues and conferences Research programmes Publications Commercial Activities Membership Support Number of employees whose emoluments were over £60,000 £640,001 to £650,001 £220,001 to £230,000 £210,001 to £220,000 £200,001 to £210,000 £190,001 to £200,000 £180,001 to £190,000 £160,001 to £170,000 £150,001 to £160,000 £140,001 to £150,000 £130,001 to £140,000 £120,001 to £130,000 £110,001 to £120,000 £100,001 to £110,000 £90,001 to £100,000 £80,001 to £90,000 £70,001 to £80,000 £60,001 to £70,000	No. 14 53 32 2 4 53 158 No. 1 2 - 2 1 - 1 - 1 3 2 5 3 7 7 5 11 51	No. 13 45 29 2 5 47
		141
		No. 1 - 1 - 2 1 - 1 - 3 4 4 4 2 8 2 7
		40

None of the above employees (2021: none) are accruing retirement benefits under the defined benefit scheme.

40 of the above employees (2021:33) are accruing retirement benefits under money purchase schemes, and contributions on their behalf amounted to £308,000 (2021: £259,000).

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 2022

6 Intangible fixed assets

Group Cost At 1 October 2021 Exchange differences on consolidation Disposals Additions At 30 September 2022 Amortisation At 1 October 2021 Exchange differences on consolidation Eliminated on disposals Charge for the year At 30 September 2022 Net book value At 30 September 2022 At 30 September 2021	Software and Website costs £'000 2,278 7 - 368 2,653 2,048 7 - 136 2,191 462 230	Total £'000 2,278 7 - 368
		2,653
		2,048 7 - 136
		2,191
		462
		230

Projects under development total £255,000 (2021 £Nil) in relation to database development costs. These are treated as Assets under construction and are not amortised until they are in use. We expect these assets to come into use February 2023.

Charity Cost At 1 October 2021 Exchange differences on consolidation Disposals Additions At 30 September 2022 Amortisation At 1 October 2021 Exchange differences on consolidation Eliminated on disposals Charge for the year At 30 September 2022 Net book value At 30 September 2022 At 30 September 2021	Software and Website costs £'000 2,259 6 - 368 2,633 2,028 6 - 136 2,170 463 231	Total £'000 2,259 6 - 368
		2,633
		2,028 6 - 136
		2,170
		463
		231

Projects under development total £255,000 (2021 £Nil) in relation to database development costs. These are treated as Assets under construction and are not amortised until they are in use. We expect these assets to come into use February 2023.

32

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2022

7 Tangible fixed assets

Group Cost At 1 October 2021 Exchange differences on consolidation Disposals Additions At 30 September 2022 Depreciation At 1 October 202 Exchange differences on consolidation Eliminated on disposals Charge for the year At 30 September 2022 Net book value At 30 September 2022 At 30 September 2021	Freehold land £'000 3,000 - - - 3,000 - - - - - 3,000 3,000	Freehold buildings £'000 11,456 - - - 11,456 2,638 - - 115 2,753 8,703 8,818	Furniture, fittings, plant & machinery, equipment, building improvements & motor vehicles £'000 7,930 701 (73) 473 9,031 5,974 606 (73) 570 7,077 1,954 1,956	Total £'000 22,386 701 (73) 473
				23,487
				8,612 606 (73) 685
				9,830
				13,657
				13,774

Furniture, fittings, plant & machinery, equipment, building improvements and motor vehicles contain assets in the course of construction of £60,000 (2021: £114,000).

Charity Cost At 1 October 2021 Exchange differences on consolidation Disposals Additions At 30 September 2022 Depreciation At 1 October 202 Exchange differences on consolidation Eliminated on disposals Charge for the year At 30 September 2022 Net book value At 30 September 2022 At 30 September 2021	Freehold land £'000 3,000 - - - 3,000 - - - - - 3,000 3,000	Freehold buildings £'000 11,456 - - - 11,456 2,638 - - 115 2,753 8,703 8,818	Furniture, fittings, plant & machinery, equipment, building improvements & motor vehicles £'000 6,792 469 (73) 407 7,595 5,326 416 (73) 402 6,071 1,524 1,466	Total £'000 21,248 469 (73) 407
				22,051
				7,964 416 (73) 517
				8,824
				13,227
				13,284

Furniture, fittings, plant & machinery, equipment, building improvements and motor vehicles contain assets in the course of construction of £60,000 (2021: £114,000).

33

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2022

8 Fixed asset investments

Group and charity

Quoted Hedge Funds Property Fund Portfolio Funds UK Fixed Interest Funds International Fixed Interest Funds UK Equity Funds International Equity Funds Total Quoted investments Portfolio cash Total market value at 30 September Total historical cost at 30 September Reconciliation of opening and closing market values Opening market value at 1 October Additions at cost Disposals at opening market value Net (loss)/gain on revaluation Closing market value at 30 September Portfolio cash at 30 September Total market value at 30 September	2022 £'000 411 606 5,683 530 0 628 2,558 10,416 108 10,524 9,579 11,399 1,179 (1,360) (802) 10,416 108 10,524	2021 £'000 392 542 6,321 271 336 701 2,836
		11,399 35
		11,434
		9,758
		10,270 2,028 (2,070) 1,171
		11,399 35
		11,434

9 Debtors

Group Trade debtors Other debtors Prepayments and accrued income Charity Trade debtors Other debtors Amounts owed by group and associated undertakings Prepayments and accrued income	2022 £'000 833 715 2,193 3,741 2022 £'000 586 463 672 2,046 3,767	2021 £'000 901 739 1,420
		3,060
		2021 £'000 856 404 607 1,172
		3,039

34

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2022

10 Creditors: amounts falling due within one year

Creditors: amounts falling due within one year
Group Trade creditors Other creditors Taxation and social security Accruals Deferred income (note 11)	2022 £'000 644 203 228 860 5,978 7,913	2021 £'000 680 151 200 586 6,441
		8,058

Charity Trade creditors Other creditors Taxation and social security Accruals Deferred income (note 11)	2022 £'000 615 88 212 776 3,805 5,496	2021 £'000 638 89 184 514 4,011
		5,436

11 Deferred income

Group Brought forward at 1 October 2021 Received in the year Expended in the year Carried forward at 30 September 2022 Charity Brought forward at 1 October 2021 Received in the year Expended in the year Carried forward at 30 September 2022	2022 £'000 6,441 14,796 (15,261) 5,976 2022 £'000 4,011 6,679 (6,885) 3,805	2021 £'000 6,528 12,661 (12,748)
		6,441
		2021 £'000 3,873 6,757 (6,619)
		4,011

35

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2022

12 Movement in funds

Group Expendable endowment Restricted Gerald Segal Memorial Fund Research Grants Unrestricted General fund Pensions reserve Total funds Charity Expendable endowment Restricted Gerald Segal Memorial Fund Research Grants Unrestricted General fund Pensions reserve Total funds	Balances b/fwd £'000 6,144	Income £'000 (292) - 7,002 7,002 17,829 17,829 24,539 Income £'000 (292) 4,217 4,217 12,618 12,618 16,543	Expenditure £'000 - - (7,064) (7,064) (16,893) (16,893) (23,957) Expenditure £'000 - - (4,225) (4,225) (9,471) (9,471) (13,696)	Transfers £'000 - - - - (42) 42 - - Transfers £'000 - - - - (42) 42 - -	Gains/ (losses) £'000 (394) - - - 8 514 522 128 Gains/ (losses) £'000 (394) - - - (168) 514 346 (48)	Balances c/fwd £'000 5,458
	22 180					22 118
	202					140
	20,272 (556)					21,174 -
	19,716					21,174
	26,062					26,772
	Balances b/fwd £'000 6,144					Balances c/fwd £'000 5,458
	22 62					22 54
	84					76
	17,747 (556)					20,684 -
	17,191					20,684
	23,419					26,218

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

Tangible assets Intangible assets Investments Net current assets/ (liabilities) Pension liability Charity Tangible assets Intangible assets Investments Net current assets/ (liabilities) Pension liability	Expendable Endowment £'000 - - 5,458 - -	Restricted Funds £'000 - - - 140 - 140 Restricted Funds £'000 - - - 76 - 76	Unrestricted Funds £'000 13,657 462 5,066 1,989 - 21,174 Unrestricted Funds £'000 13,227 463 5,066 1,928 - 20,684	Total Funds £'000 13,657 462 10,524 2,129 -
	5,458			26,772
	Expendable Endowment £'000 - - 5,458 - -			Total Funds £'000 13,227 463 10,524 2,004 -
	5,458			26,218

36

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2022

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 £48,000 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 Fair value of plan assets Asset/(deficit) Effect of asset ceiling Net defined benefit asset/(liability) Amounts in the balance sheet: Liabilities Assets Net liability	2022 £'000 (2,184) 2,345 161 (161) - - - -	2021 £'000 (3,363) 2,807
		(556)
		-
		(556)
		(556) -
		(556)

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

Defined benefit obligation at start of year Interest expense Actuarial losses / (gains) Benefits paid and expenses Defined benefit obligation at end of year Changes in the fair value of the scheme assets are as follows: Opening fair value of scheme assets Interest Income Actuarial gains / (losses) Contributions by the company Benefits paid and expenses Fair value of scheme assets at the year end The actual return on the plan assets in the year	2022 £'000 3,363 66 (1,177) (68) 2,184 2022 £'000 2,807 56 (502) 52 (68) 2,345 2022 £'000 (446)	2021 £'000 3,418 58 (61) (52)
		3,363
		2021 £'000 2,677 46 88 48 (52)
		2,807
		2021 £'000 134

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

37

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2022

14 Pension scheme (continued)

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

Net interest cost Total amount charged to the Statement of Financial Activities	2022 £'000 10 10	2021 £'000 12
		12

The International Institute for Strategic Studies expects to contribute £60,000 to its defined benefit pension scheme in the year ending 30 September 2023.

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

Return on plan assets (excluding amounts included in net interest cost) gain / (loss) Experience gains / (losses) arising on the plan liabilities Effects of changes in the demographic and financial assumptions underlying the present value of the plan liabilities - gain / (loss) Chnages in asset ceiling Total losses included in other recognised gains and losses	2022 £'000 - (502) (194) 1,371 (161) 514	2021 £'000 88 60 1 -
		149

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

Equities Fixed Interest Diversified Growth Property Cash and other Total Assets	2022 £'000 907 680 484 204 70 2,345	2021 £'000 975 1,028 566 178 60
		2,807

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

Principal assumptions at the balance sheet date (expressed as weighted averages)
	2022	2021
Discount rate at 30 September	5.26%	2.00%
Inflation (RPI)	3.90%	3.70%
Inflation (CPI)	2.95%	2.90%
Allowance for revaluation of deferred pensions of CPI or 5% p.a. if less	2.95%	2.90%
Allowance for pension in payment increases of RPI or 5% p.a. if less	3.60%	3.60%
Allowance for pension in payment increases of RPI or 2.5% p.a. if less	2.20%	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 2022 imply the following	Years
	life expectancies at age 65:
	Male retiring in 2022	22.20
	Female retiring in 2022	23.90
	Male retiring in 2042	23.50
	Female retiring in 2042	25.40

38

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2022

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 2022 was £64,000 (2021: £62,000).

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 2022 were £387,000 (2021: £349,000). Contributions outstanding at the year end amounted to £76,000 (2021: £60,000).

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 2022 were £29,000 (2021: £22,000). Contributions accrued at the year end amounted to £5,200 (2021: £5,000).

15 Leasing commitments

The future total minimum payments to which the Group is committed as at 30 September 2022 under operating lease agreements are as follows:

Office premises Net present value of total lease commitments due: Within one year Between one and two years Between two and five years Over five years	2022 £'000 1,277 1,133 1,390 1,497	2021 £'000 1,039 1,050 2,108 1,639

16 Capital commitments

As at 30 September 2022, there were capital commitments contracted but not provided for of £371,000; for website development (2021: £190,000).

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) Adjustments for: Dividends and interest from investments Depreciation charges Amortisation charges Pension reserve deficit funding Losses/ (Gains) on investments Exchange losses/ (gains) on fixed assets Change in cash and cash equivalents due to exchange rate movements (Gain)/Loss on disposal of fixed assets (Increase)/ Decrease in debtors Increase in creditors Net cash provided by (used in) operating activities	2022 £'000 (147) (315) 685 136 (42) 729 (95) 343 (29) (732) (145) 388	2021 £'000 2,009 (295) 547 281 (36) (1,196) 6 (70) 10 (890) 538
		904

39

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2022

18 Analysis of cash and cash equivalents

Cash at bank and in hand Portfolio cash	2022 £'000 6,301 108 6,409	2021 £'000 6,178 35
		6,213

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 2022 (2021: Nil).

Travel expenses for both governance and attending Institute dialogues and other activities were paid or reimbursed in respect of 7 trustee (2021: 1) and the total amount was £14,000 (2021: £3,000).

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 Expenses paid on behalf of Parent Expenses paid on behalf of related party Amounts paid in during the year Foreign currency movement Balance at end of year	2022 £'000 (20) (773) 991 (280) (150) (232)	2021 £'000 3 (134) 282 (269) 27
		(91)

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 Expenses paid on behalf of Parent Expenses paid on behalf of related party Amounts paid out during the year Amounts paid in during the year Foreign currency movement Balance forgiven on behalf of Parent Balance at end of year	2022 £'000 - (14) 2,337 (4,472) (266) 2,415 -	2021 £'000 - (11) 2,360 (1,146) 2 (1,205)
		-

40

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2022

III Strategic Studies Fund

There were no related party transactions of the ultimate parent undertaking with the Strategic Studies Fund during 2022 (2021: Nil).

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

Balance at beginning of year Expenses paid on behalf of Parent (IISS-Asia) Expenses paid on behalf of related party Amounts paid in during the year Foreign currency movement Balance at end of year	2022 £'000 (421) - 220 14 (59) (246)	2021 £'000 (495) - 168 (98) 4
		(421)

IV IISS India Organisation

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

Balance at beginning of year Expenses paid on behalf of Parent Expenses paid on behalf of related party Foreign currency movement Balance at end of year	2022 £'000 72 7 79	2021 £'000 76 - - (4)
		72

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 Expenses paid on behalf of related party Amounts paid out during the year Foreign currency movement Balance at end of year	2022 £'000 555 243 (230) 5 573	2021 £'000 65 251 240 (1)
		555

41

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2022

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 Cost of sales Gross profit Other expenses Net profit before taxation Gift Aid to IISS Loss after taxation	2022 £'000 440 (42) 398 (199) 199 (199) -	2021 £'000 300 (25)
		275 (205)
		70 (71)
		(1)

c Summary of balance sheet for Arundel House Enterprises Ltd

Tangible fixed assets Debtors Cash at bank and in hand Current assets Creditors Net assets Aggregate capital and reserves	2022 £'000 - 145 18 163 (153) 10 10	2021 £'000 - 55 16
		71 (61) 10
		10

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 Research programmes Other Total income Dialogue and Lecture Series Research programmes Total expenses Surplus for the year	2022 £'000 4,055 2,279 14 6,348 (3,445) (4,858) (8,303) (1,955)	2021 £'000 3,506 1,425 22
		4,953
		(3,140) (350)
		(3,490)
		1,463

42

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2022

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

Tangible fixed assets Debtors Cash at bank and in hand Current assets Creditors Net assets Aggregate capital and reserves	2022 £'000 292 50 1,990 2,040 (1,500) 832 832	2021 £'000 355 80 4,160
		4,240 (1,991)
		2,604
		2,604

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

Lectures Series Research Total income Lectures Series Research Other expenses Total expenses Surplus for the year	2022 £'000 89 100 189 (91) (123) - (214) (25)	2021 £'000 36 128
		164
		(36) (125) -
		(161)
		3

c Summary of balance sheet for Strategic Studies Fund

Debtors Creditors Net assets Reserves	2022 £'000 247 (211) 36 36	2021 £'000 421 (365)
		56
		56

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 2022

b Summary of income statement for IISS India Organisation

Other Income Total income Other expenses Total expenses Deficit for the year	2022 £'000 - - 17 17 (17)	2021 £'000 -
		-
		-
		-
		-

c Summary of balance sheet for IISS India Organisation

Debtors Cash at bank and in hand Current assets Creditors Net assets Aggregate capital and reserves	2022 £'000 8 1 9 (83) (74) (74)	2021 £'000 7 17
		24 (75)
		(51)
		(51)

V IISS Europe gemeinnützige GmbH

Registered office: Palais am Pariser Platz, Pariser Platz 6A, 10117 Berlin, Germany

• 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

Research Other Income Total income Research Total expenses Surplus/(Deficit) for the year	2022 £'000 1,310 - 1,310 (1,577) (1,577) (267)	2021 £'000 682 11
		693
		(645)
		(645)
		48

c Summary of balance sheet for IISS-Europe

Tangible fixed assets Debtors Cash at bank and in hand Current assets Creditors Net assets Aggregate capital and reserves	2022 £'000 136 201 559 760 (1,146) (250) (250)	2021 £'000 135 87 561
		648 (757)
		26
		26

44

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30[th] September 2022

21 Comparative Information

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

Year ended 30[th] September 2021

Unrestricted Funds Notes £'000 Income from: Donations 2 2,812 Charitable activities Dialogues, conferences and lecture series 3 7,362 Research programmes 3 1,007 Publications 1,319 Membership 1,450 Other trading activities 268 Investments 74 Capital applied to income Other income 25 Total 14,317 Expenditure on: Raising funds 153 Charitable activities Dialogues, conferences and lecture series 4 6,034 Research programmes 4 3,654 Publications 4 2,994 Membership 4 471 Other trading activities 198 Total 13,504 Net gains on investments 17 612 Net income/ (expenditure) 1,425 Transfers between funds 12 - Other recognised gains/(losses): Foreign exchange gains (70) Actuarial losses on defined benefit pension schemes 14 149 Net movement in funds 1,504 Funds brought forward at 1 October 2020 12 18,212 Funds carried forward at 30 September 2021 12,13 19,716	Restricted Funds £'000 - - 3,858 - - - 221 131 - 4,210 - - 4,079 - - - 4,079 - 131 - - - 131 71 202	Endowed Funds £'000 - - - - - - - (131) - (131) - - - - - - - 584 453 - - - 453 5,691 6,144	Total Funds 2021 £'000 2,812 7,362 4,865 1,319 1,450 268 295 - 25 18,396 153 6,034 7,733 2,994 471 198 17,583 1,196 2,009 - (70) 149 2,088 23,974 26,062	Total Funds 2020 £'000 2,941 5,880 4,479 1,445 1,593 396 257 - 25
				17,016
				138 4,884 7,804 2,823 564 396
				16,609 (53)
				354 - (34) (56)
				264 23,710
				23,974

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 2022

ii) Comparative movement in funds

For the year ended 30 September 2021

Group Expendable endowment Restricted Gerald Segal Memorial Fund Research Grants Unrestricted General fund Pensions reserve Total funds Charity Expendable endowment Restricted Gerald Segal Memorial Fund Research Grants Unrestricted General fund Pensions reserve Total funds	Balances b/fwd £'000 5,691	Income £'000 131 -	Expenditure £'000 -	Transfers £'000	Gains/ (losses) £'000 584	Balances c/fwd £'000 6,144
	24 47	- 4,210	(2) (4,077)			22 180
	71	4,210	(4,079)	-	-	202
	18,953 (741)	14,317	(13,504)	(36) 36	542 149	20,272 (556)
	18,212	14,317	(13,504)	-	691	19,716
	23,974	18,396	(17,583)	-	1,275	26,062
	Balances b/fwd £'000 5,691	Income £'000 131 -	Expenditure £'000 -	Transfers £'000	Gains/ (losses) £'000 584	Balances c/fwd £'000 6,144
	24 51	2,769	(2) (2,758)			22 62
	75	2,769	(2,760)	-	-	84
	17,778 (741)	9,752	(10,328)	(36) 36	581 149	17,747 (556)
	17,037	9,752	(10,328)	-	730	17,191
	22,803	12,390	(13,088)	-	1,314	23,419

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 2021

Group Tangible assets Intangible assets Investments Net current assets/ (liabilities) Pension liability Charity Tangible assets Intangible assets Investments Net current assets/ (liabilities) Pension liability	Expendable Endowment £'000 - - 6,134 - -	Restricted Funds £'000 - - - 202 -	Unrestricted Funds £'000 13,774 230 5,300 978 (556)	Total Funds £'000 13,774 230 11,434 1,180 (556)
	6,134	202	19,726	26,062
	Expendable Endowment £'000 - - 6,134 - -	Restricted Funds £'000 - - - 84 -	Unrestricted Funds £'000 13,284 230 5,300 (1,057) (556)	Total Funds £'000 13,284 230 11,434 (973) (556)
	6,134	84	17,201	23,419

46

The International Institute for Strategic Studies

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

YEAR ENDED 30TH SEPTEMBER 2022

Income from: Donations Charitable activities Dialogues, conferences and lecture series Research programmes Publications Membership Investments Capital applied to income Other incoming resources Total Expenditure on: Raising funds Charitable activities Dialogues, conferences and lecture series Research programmes Publications Membership Total Net (losses)/ gains on investments Net income/ (expenditure) Transfers between funds Other recognised gains/(losses): Foreign exchange (losses)/ gains Actuarial gains/ (losses) on defined benefit pension schemes Net movement in funds Funds brought forward at 1 October 2021 Funds carried forward at 30 September 2022	Unrestricted Funds £'000 3,150 5,547 1,089 1,297 1,442 80 - 13 12,618 114 4,446 573 3,911 427 9,471 (335) 2,812 - 167 514 3,493 17,191 20,684	Restricted Funds £'000 - - 3,690 - - 235 292 -	Endowed Funds £'000 - - - - - - (292) - (292) - - - - - - (394) (686) - - (686) 6,144 5,458	Total Funds 2022 £'000 3,150 5,547 4,779 1,297 1,442 315 - 13 16,543 114 4,446 4,798 3,911 427 13,696 (729) 2,118 - 167 514 2,799 23,419 26,218	Total Funds 2021 £'000 2,872 3,820 2,631 1,319 1,450 295 - 3
		4,217			12,390
		- - 4,225 - -			153 2,859 6,611 2,994 471
		4,225			13,088 1,196
		(8) - -			498 - (31) 149
		(8) 84			616 22,803
		76			23,419

47