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2023-09-30-accounts

Company Number: 615259 Charity Number: 206504

THE INTERNATIONAL INSTITUTE FOR STRATEGIC STUDIES

ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 SEPTEMBER 2023

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30 September 2023

CONTENTS

Annual Report and Financial Statements

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30 September 2023

STRATEGIC REPORT AND THE REPORT OF THE TRUSTEES

The Trustees present their report for the year ended 30 September 2023. 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:

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

Research, Dissemination and Digital Content

The IISS has continued to develop its digital channels this year and celebrated the successful launch of the Institute’s refreshed website and new Content Management System. The enhanced website improves accessibility to IISS content, conveys a more dynamic image of the Institute and makes IISS research priorities clearer to external audiences. In collaboration with the Research, Design, Events, Communications and Editorial teams, the IISS has implemented more user-friendly navigation tools showcasing our Institute’s expertise and convening power. With the ongoing Russia/Ukraine conflict and recent Israel/Hamas war, external demand for IISS analysis and experts’ views has increased. To help

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The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30 September 2023

accommodate this increased demand and facilitate external access, a new area of the website has been created to host information for key events in one place.

The Institute’s website audience continues to grow, with over 1.8 million users this year and increasing engagement with webinars, blogs, research reports, IISS flagship publications and events. Over the past year the Institute’s social media following has grown significantly, including a 26% annual increase on LinkedIn, which now has over 170,000 followers. This follows an increased focus on content and use of images and graphics to improve engagement on LinkedIn. Since the last report, IISS digital content activities have generated over 3 million pageviews. Audiences have engaged notably with video content on both website and YouTube channels, resulting in over 481,000 views of event recordings and livestreams.

The Sounds Strategic and Japan Memo podcasts were downloaded over 44,000 times during the past year by audiences across our top territories of US, UK, Australia, Germany, and Japan. As the Japan Memo podcast series enter its second year of publication, we have seen an increase of lifetime downloads (from the start of the series) of 9%.

Alongside the usual media engagement, the Institute organised media roundtables so that IISS experts could brief journalists and respond to questions. IISS experts were in high demand for their analysis and comment on both the Russia/Ukraine and Israel/Hamas wars.

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 140 events in eight countries with 7,484 attendees participating from over 88 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.

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:

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Annual Report and Financial Statements for the year ended 30 September 2023

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:

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 in ‘track-two’ meetings, involving non-governmental experts, 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.

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continued to implement the Missile Dialogue Initiative project, convening a series of meetings and publishing several research papers in this framework, including on Missiles, Deterrence and Arms Control, Beyond New START and on Russia’s use of Ballistic and Cruise Missiles in its war in Ukraine. The DMAP team publish a weekly blog post on important defence developments.

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Asia's most violent conflict since the end of the Cold War. It also hosts the annual Singapore Simulation, which is designed to test regional diplomatic responses to three geopolitical crises.

Publications

This year the IISS has seen greater demand for print and online publications, particularly content focusing on the Russia/Ukraine conflict, with a 7% increase in print sales led by The Adelphi series and The Military Balance , and a 4% increase in online downloads driven by Survival.

Strategic Comments covered a range of international security and political-military topics in 2023. With both paid offerings through publisher Taylor and Francis, and selected editions offered free via the IISS website, topics published included Slovakia’s populist new government, the surge of activity in relations between North Korea and Russia, the coup in Niger, sanctions on Russia’s central bank, the domestic political climate in Iran, and the state of China-Russia cooperation over natural gas.

The Military Balance 2023 was launched in February, providing data and capability assessments for the armed forces of 173 countries. This edition included an assessment of key defence developments arising from the war in Ukraine as well as a range of regional and national policy and capability assessments, coming on top of the defence data relating to national armed forces and their inventories, and defence economics and procurement assessments, for which the book is well known. The wallchart provided an assessment of the military space assets of China, Russia and the United States.

The Military Balance Plus database combines multiple years of data and qualitative assessments with advanced search and graphical capability. During 2023, data holdings expanded further in the procurement data module, and in the equipment module with the addition of data relating to uninhabited maritime vehicles. IISS staff continue to develop new platform capability assessments in the database, giving users an assessment of the modernity of a country’s inventory. The latest dataset relates to missile capabilities. The database represents a step change in defence analysis for the Institute and its core audiences in government, the armed forces, and private sector.

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Annual Report and Financial Statements for the year ended 30 September 2023

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 April-May 2023 issue devoted considerable space to the Ukraine war one year later, featuring related articles by Nigel Gould-Davies, Maria Shagina and Franz-Stefan Gady and Michael Kofman’s article on Ukraine’s Strategy of Attrition became one of the most downloaded Survival articles at 14,194 in its first month of release. Also appearing were assessments of Asia’s Ukraine problem, Biden’s National Security Strategy, Assessing proliferation risks in the Middle East and The trouble with nuclear assurance in the US and South Korea.

The annual Armed Conflict Survey launches on 6 December, providing a review of the political, military and humanitarian dimensions of active armed conflicts globally in the period from 1 May 2022 to 30 June 2023. This edition’s regional-focused approach also contains Regional Spotlight chapters on selected key conflict trends of regional and global importance, such as the centrality of security guarantees in Ukraine’s future reconstruction efforts and the changing nature of jihadism in Sub-Saharan Africa. The Chart of Armed Conflict depicts the global conflict landscape’s complexity through data referring to the proliferation and influence of non-state armed groups, as well as third-party involvement.

The Adelphi series is the Institute’s principal contribution to policy-relevant, original academic research. March saw the publication of Australia’s Security in China’s Shadow , authored by Euan Graham. The book presents an analysis of the crucial Australia–China relationship, analysing the multifarious challenges that China poses to Australia’s security and assessing the efficacy of Canberra’s policy responses. The second Adelphi of the year, Changing the Narrative: Information Campaigns, Strategy and Crisis Escalation in the Digital Age by Lawrence Freedman and Heather Williams, provides a timely assessment of the extent to which the digital information environment has affected crisis dynamics and efforts by states to shape the narratives which frame international conflicts. November saw the publication of Planning for Protraction: A Historically Informed Approach to Great-power War and SinoUS Competition by Iskander Rehman, which analyses protracted great-power war throughout history to distil the key determinants of strategic performance. Rehman applies these insights to a possible conflict between China and the United States which would assume a more attritional character than many observers believe. In December, the Japan Chair team, Robert Ward and Yuka Koshino, published Japan and the IISS: Connecting Western and Japanese Strategic Thought from the Cold War to the War on Ukraine . This Adelphi helps the reader to understand the evolution of Japanese strategic thought from the 1960s until today and shines a light on the continuities and changes in this thinking.

In June, a new-look Asia-Pacific Regional Security Assessment was published, covering topics including US military posture in Asia, Japan’s defence reforms, China’s Belt and Road Initiative in the region, security threats to Taiwan and the security risks of climate change. The 2023 publication included a “digital first” web presence, making the dossier free to read 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 these well-received reports a preview of the forthcoming 2024 Dossier Turbulence in the Eastern Mediterranean was presented at the Manama Dialogue 2023, along with the report on Gulf Bailout Diplomacy: Aid as Economic Statecraft in Turbulent Region which examines how the Gulf states have pursued bailout diplomacy to cultivate influence and shape their wider region. The IISS also published reports on cyber capabilities and national power, the future of NATO’s European land forces, watching Iran: the ISR Gulf, and ballistic and cruise trajectories in Russia’s war in Ukraine.

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 20th annual Shangri-La Dialogue (SLD) in Singapore from 2 to 4 June 2023. To mark the Dialogue’s 20th anniversary, the IISS designed the most comprehensive and diverse agenda in the summit’s history. This included an expanded programme of six special sessions, providing delegates with a more intimate setting to discuss issues in greater depth in a roundtable format. The strategic dynamic in the Asia-Pacific region naturally shaped the agenda of this year’s Dialogue, which opened with a keynote address by Australian Prime Minister Anthony Albanese who noted the importance of communication and dialogue in times of rising tensions. Growing tensions between China and the United States, and the ongoing war in Ukraine were also major themes with Ukraine’s defence minister Oleksii Reznikov attending the SLD for the first time.

The 2023 Dialogue welcomed 571 delegates, more than half of whom were from governments or the armed forces. Forty national delegations attended, with 42 government ministers present. On the sidelines of the summit, there were hundreds of meetings involving government delegations, with IISS facilitating over 120 of them. The Institute also organised the annual Southeast Asian Young Leaders’ Programme (SEAYLP), where 37 young leaders from around the region and beyond discussed pressing security questions with senior officials and played a full part in the Dialogue’s debates. The 2022 IISS Shangri-La Dialogue was delighted to be awarded ‘Meeting/Conference of the Year’ at the Singapore MICE Forum.

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. The Dialogue also offers government delegations a bespoke occasion to consult bilaterally and multilaterally on the most pressing security and foreignpolicy challenges.

The 18th IISS Manama Dialogue was convened from 18 to 20 November 2022. This Dialogue’s theme was ‘Rules and competition in the Middle East’, providing an opportunity to reflect on the effects of the coronavirus pandemic, the disruption of energy markets and global supply chains, and the Russian invasion of Ukraine’s challenge to the rules-based order. Director-General and CEO John Chipman opened the Dialogue with a discussion of strategic hedging and the interdependence of Europe, the Middle East, and the Indo-Pacific as ‘theatres of geo-political competition’. The keynote address by European Commission President Ursula von der Leyen expanded on this, discussing the importance of increased cooperation between the European Union and Arab Gulf states in the fields of economy and maritime security, and highlighting the need for a coordinated approach to Iran. President von der Leyen also underscored European threat perceptions and the need to protect the international order following the Russian invasion of Ukraine and the proliferation of weapons in the Middle East, themes which arose throughout the course of the Dialogue.

The 2022 Dialogue welcomed more than 500 delegates from 46 countries in person, including dozens of ministers. In line with the IISS Manama Dialogue’s goal of facilitating military and economic cooperation, 62 bilateral meetings were hosted on the sidelines of the event. Also attending were 20 senior journalists representing major regional and global outlets, alongside a press corps of over 50, providing important coverage and scrutiny. The IISS Manama Dialogue Young Leaders’ Programme was also convened for the fourth time, with 26 carefully selected regional young leaders attending in person.

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Annual Report and Financial Statements for the year ended 30 September 2023

3. Lecture Series

The IISS Raffles Lecture series invites major figures in Asian and global affairs to speak on matters of international significance. Established in 2023, the series comprises around four lectures each year on questions of defence, international affairs, geo-economics and foreign policy, as well as issues ranging from energy policy, climate change and conflict resolution to domestic political change. The first IISS Raffles Lecture was given by the Qatari Prime Minister and Minister of Foreign Affairs, His Excellency Sheikh Mohammed, on 25 August 2023 who discussed the diplomatic role that small states can play in an era of rising geo-strategic competition, while also outlining Qatar’s approach to deepening engagement in the Asia-Pacific region and beyond.

An IISS Special Lecture took place on 16 March 2023 with Admiral John C Aquilino, Commander of the US Indo-Pacific Command, who described how the rivalry between the US and China was impacting the regional security landscape.

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 access to the Institute’s publicly available research and analysis disseminated via its publications, speaker events, member briefings and international conferences. Individual members are not directly involved in IISS governance, but form part of a unique global network supporting the work of the Institute and extending the Institute’s reach in the world of international affairs. 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 discussion meetings at its London headquarters and overseas offices in Washington DC, Manama, Singapore, and Berlin, featuring IISS and guest speakers. Examples of the diverse range of in-person events and webinars held over the past year included:

On 27 October 2022, in a webinar on ‘The rise of criminal states and implications for global security’ , experts Dr Louise Shelley from George Mason University, award-winning investigative reporter Paul Radu, Director of Risk for Thomson Reuters Mark Nuttall, IISS Associate Fellow Stefano Betti and IISS’s Dr Irene Mia discussed the phenomenon of criminal states, its drivers and manifestations, emerging hotspots or trends to keep on the radar, and considered possible approaches to tackle the issue.

On 21 February 2023, the IISS Japan Chair held a webinar with experts from inside and outside Japan to discuss Japan’s likely priorities for the G7 Hiroshima Summit in May as well as those of its G7 partners. Issues considered ranged from the sustainability of G7 sanctions against Russia, to energy and economic security and ways in which the G7 can support security in the Indo-Pacific and beyond.

On 9 March 2023, the IISS held an event, ‘ China’s economy: Potential and constraints’ , in New York to examine China’s domestic economy and the impact on Beijing's global activities. Panellists, Hunter Clark and Jeffrey Dawson from the Monetary Policy Research Division discussed China's underlying economic problems and their impact on policy, while Dr David Gordon discussed economic factors impacting China’s global activities such as the Belt and Road Initiative.

On 22 June 2023, the IISS hosted a webinar with Dr Tobias Lindner, Minister of State at the Federal Foreign Office of Germany, who has played a key role in creating Germany’s first National Security Strategy. Dr Lindner was joined by Dr Bastian Giegerich to discuss the Strategy, and its implications, with experts at the IISS and a global audience.

On 6 September 2023, the IISS Japan Chair hosted a dialogue, ‘A New Japan–UK Alliance for Evolution’, with Japan’s Minister of Economy, Trade and Industry, His Excellency Nishimura Yasutoshi, to discuss how Japan and the UK can develop their partnership in the current complex global geopolitical environment. Bill Emmott, Chairman of the IISS Trustees, was the moderator.

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Annual Report and Financial Statements for the year ended 30 September 2023

FINANCIAL REVIEW AND RESULTS FOR THE YEAR

For the year ended 30 September 2023, total income was £25,030,000 (2022: £24,539,000). The primary reason for this variance was the increased support for the Shangri-La Dialogue in 2023, offset by funding for the Riyadh Defense Forum and associated research programme in 2022.

Total expenditure for the year rose to £25,239,000, compared to £23,957,000 in 2022, which reflected the impact of high inflation across most operational costs, along with increased staff numbers.

After accounting for net losses on investment assets of £110,000 (2022: £729,000); foreign exchange losses of £111,000 (2022: £343,000 gains); and actuarial losses on the defined benefit pension scheme of £70,000 (2022: £514,000 gains); the net movement in funds for the year was a deficit of £500,000 (2022: £710,000 surplus).

As at 30[th] September 2023 and 2022, there was no liability on the defined benefit pension. Under the most 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 £53,000 for the year (2022: £196,000), leaving total cash balances, including portfolio cash, of £6,462,000 at the year-end (2022: £6,409,000).

The group reported an improved net current asset position of £2,329,000 (2022: £2,129,000). Total net assets as at 30[th] September 2023 reduced to £26,272,000 (2022: £26,772,000).

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 2023, the Institute held free reserves of £7,370,000 (2022: £7,017,000) which equated to approximately 5 months (2022: 5 months) of operating expenditure associated with unrestricted funds. Free reserves comprise IISS unrestricted general funds of £21,134,000, less tangible and intangible fixed assets of £13,764,000. At 30[th] September 2023, IISS restricted funds totalled £171,000 (2022: £140,000) and endowment funds totalled £4,967,000 (2022: £5,458,000). 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 2023 the market value of the main portfolio was £5,231,000 (2022: £5,031,000) and the asset allocation was: UK equity funds, 10% (2022: 12%); UK fixed-interest funds, 13% (2022: 11%); International fixed-interest funds, 1% (2022: 0%); International equity funds, 56% (2022: 51%); Portfolio funds 18% (2022: 24%) and Cash 2% (2022: 2%). Investment income for the year to 30[th] September 2023 from this portfolio amounted to £109,000 (2022: £80,000).

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 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

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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 2023, portfolio returns over the previous year, three years, and five years as compared to UK CPI +4% and the ARC Steady Growth PCI (peer group comparator) were as follows:

Total Returns 1 year % 3 years p.a. % 5 years p.a. %
Portfolio 4.0 4.2 3.2
CPI+4% 10.9 10.8 8.5
ARC (peer group) 4.8 2.7 2.4

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 2023, the market value of the Japan Endowment Fund was £4,996,000 (2022: £5,497,000) and the asset allocation was Charity Multi-Asset Fund (CMAF) 100% (2022: 100%), of which 65% was equities (2022: 70%).

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 disruption from rail strike but minimised any losses on its catering and event activities with a low fixed cost base.

With the continued financial and currency market instability, the strong equity market performance in the IISS investment portfolio was offset by poor performance of alternative funds, notably property, during 2023. 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 2023, the Institute held investment assets totalling £10.2 million and cash on the balance sheet of £6.3m with no loan liabilities, compared to investment assets of £4.9 million, £3m of cash and a building loan liability of £3million in 2013, 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 2026, 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 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 ultimate oversight over potential donors
and funding sources.
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 required, 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 2024 are:

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state-on-state warfare, cyber power, and the security-development nexus, as well as refining the state of the art of defence economics and examining the military implications of advanced technologies. 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 approaches to arms control in the fields of AI, robotics and unmanned vehicles.

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 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.

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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) Matthew Symonds Florence Parly (appointed 8 January 2024)

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 Matthew 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 Grace Skaugen

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.

The Board of Trustees appointed Dr Bastian Giegerich as successor to Sir John Chipman as DirectorGeneral and Chief Executive from 1 October 2023. Sir John Chipman moved into a part time role as Executive Chairman, an appointment that has assured key funders and other stakeholders of continuity in our most important relationships.

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 promotion decisions and an annual salary review with increases awarded for individual performance linked to a

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Annual Report and Financial Statements for the year ended 30 September 2023

‘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 geo-strategic 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 evidence-based 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 and has provided evidence to a number of parliamentary enquiries. 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, 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.

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Annual Report and Financial Statements for the year ended 30 September 2023

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. The office held both 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 IISS-Americas as representing a vibrant, international, intellectual community.

Arundel House Enterprises Limited (AHEL)

AHEL is a wholly owned trading company with revenue arising from the letting of facilities and provision of event catering at Arundel House and the provision of Consultancy services. The company reported a profit for the year of £155,000 before gift aid (2022: £199,000).

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 2023, IISS-Asia again convened the IISS Shangri-La Dialogue Sherpa Meeting, an important inter-sessional activity of the Shangri-La Dialogue process. As detailed on page 7, the Shangri-La Dialogue was held from 2 - 4 June 2023, whilst the inaugural Raffles Lecture was held in August 2023.

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 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)

IISS-Europe was incorporated as a non-profit subsidiary of IISS on 4 November 2019, 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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The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30 September 2023

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:

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:

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 28 February 2024 and signed on their behalf by:

Bill Emmott Chair of the Trustees

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The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30 September 2023

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 (resigned 7 November 2023)
Jens Tholstrup (resigned 7 November 2023)
Matt Symonds (resigned 22 February 2023)
Matthew J Symonds
Caroline Atkinson
Dr Grace Skaugen
John Brennan
Neha Aviral
Hakeem Belo-Osagie (appointed 22 February 2023)
Florence Parly (appointed 11 July 2023)

During the year under review, Hakeem Belo-Osagie was appointed to the Board on 22 February 2023, Florence Parly was appointed to the Board on 11 July 2023, whilst Matt Symonds resigned on 22 February 2023, and Jens Tholstrup and Professor Dr Kurt Lauk resigned on 7 November 2023.

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The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30 September 2023

Executive Directing Staff

Director-General and Chief Executive Sir John Chipman (resigned 1 October 2023) Dr Bastian Giegerich (appointed 1 October 2023) Director of Geo-Economics; Japan Chair Robert Ward Director of Regional Security Emile Hokayem (appointed 18 October 2022) Director of Defence and Military Analysis Dr Bastian Giegerich (resigned 1 October 2023) 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 (resigned 5 December 2023) 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

Bankers

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

Auditor

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

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The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30 September 2023

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 2023 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:

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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The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30 September 2023

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

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:

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, whether

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The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30 September 2023

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, the Charities Act 2011, 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 noncompliance 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 non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance 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.

Nicola May

Senior Statutory Auditor For and on behalf of Crowe U.K. LLP Statutory Auditor

London

Date: 18 March 2024

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The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30[th] September 2023

CONSOLIDATED STATEMENT OF FINANCIAL ACTIVITIES (incorporating an income and expenditure account)

Year ended 30[th] September 2023

Notes
Income from:
Donations
2
Charitable activities
Dialogues, conferences and lecture series
3
Research programmes
3
Publications
Membership
Other trading activities
Investments
Capital applied to income
Other income
Total
Expenditure on:
Raising funds
Charitable activities
Dialogues, conferences and lecture series
4
Research programmes
4
Publications
4
Membership
4
Other trading activities
Total
Net (losses)/ gains on investments
17
Net (expenditure) /income
Transfers between funds
12
Other recognised gains/(losses):
Foreign exchange (losses) / gains
Actuarial (losses)/ gains on defined benefit pension schemes
14
Net movement in funds
Funds brought forward at 1 October 2022
12
Funds carried forward at 30 September 2023
12,13		 Unrestricted
Funds
£'000
3,053
9,930
1,090
1,480
1,890
515
109
140
18,207
86
7,366
5,055
4,700
554
359
18,120
54
141
-
(111)
(70)
(40)
21,174
21,134		 Restricted
Funds
£'000
-
-
6,589
-
-
-
234
327
-
7,150
-
-
7,119
-
-
-
7,119
-
31
-
-
-
31
140
171		 Endowed
Funds
£'000
-
-
-
-
-
-
-
(327)
-
(327)
-
-
-
-
-
-
-
(164)
(491)
-
-
-
(491)
5,458
4,967		 Total Funds
2023
£'000
3,053
9,930
7,679
1,480
1,890
515
343
-
140
25,030
86
7,366
12,174
4,700
554
359
25,239
(110)
(319)
-
(111)
(70)
(500)
26,772
26,272		 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

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

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The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2023

CONSOLIDATED BALANCE SHEET (Company Number 615259)

As at 30[th] September 2023

As at 30[th] September 2023
2023 2022
Notes £'000 £'000
Fixed assets
Intangible assets 6 583 462
Tangible assets 7 13,132 13,657
Investments 8 10,228 10,524
Total Fixed assets 23,943 24,643
Current assets:
Debtors 9 5,023 3,741
Cash at bank and in hand 6,335 6,301
Total Current assets 11,358 10,042
Liabilities:
Creditors: Amounts falling due within one year 10 (9,029) (7,913)
Net current assets / (liabilities) 2,329 2,129
Total assets less current liabilities 26,272 26,772
Net assets excluding pension liability 26,272 26,772
Defined benefit pension liability 14 - -
Total net assets 13 26,272 26,772
The Funds of the charity
Expendable endowment funds 12 4,967 5,458
Restricted income funds 12 171 140
Unrestricted income funds 12 21,134 21,174
Pensions reserve 12 - -
Total unrestricted funds 13 21,134 21,174
Total charity funds 13 26,272 26,772

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

The accounts were approved and authorised for issue by the Trustees on 28 February 2024 and signed on their behalf by:

Bill Emmott Chair of the Trustees

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

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Annual Report and Financial Statements for the year ended 30th September 2023

CHARITY BALANCE SHEET (Company Number 615259)

As at 30th September 2023

As at 30th September 2023
2023 2022
Notes £'000 £'000
Fixed assets
Intangible assets 6 584 463
Tangible assets 7 12,884 13,227
Investments 8 10,228 10,524
Total Fixed assets 23,696 24,214
Current assets:
Debtors 9 3,921 3,767
Cash at bank and in hand 2,623 3,733
Total Current assets: 6,544 7,500
Liabilities
Creditors: amounts falling due within one year 10 (5,846) (5,496)
Net current liabilities 698 2,004
Total assets less current liabilities 24,394 26,218
Net assets excluding pension liability 24,394 26,218
Defined benefit pension liability 14 - -
Total net assets 24,394 26,218
The Funds of the charity
Expendable endowment funds 12 4,967 5,458
Restricted income funds 12 128 76
Unrestricted funds 12 19,299 20,684
Pensions reserve 12 - -
Total unrestricted funds 13 19,299 20,684
Total funds including pensions reserve 13 24,394 26,218

The unconsolidated deficit incurred by the Charity in 2023 was £1,830,000 (2022: surplus £2,118,000)

The accounts were approved and authorised for issue by the Trustees on 28 February 2024 and signed on their behalf by:

Bill Emmott Chair of the Trustees

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

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The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2023

CONSOLIDATED STATEMENT OF CASH FLOW

Year ended 30[th] September 2023

Year ended 30th September 2023
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		 2023
£'000
343
(235)
-
(356)
(1,330)
**1,592 **		 2023
2022
£'000
£'000
39
315
(473)
-
(368)
(1,179)
1,360
14
-
53
6,409
6,462		 2022
£'000
541
(345)
-
196
6,213
6,409

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

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The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2023

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-319.024 surrounding the ability of the group to continue as a going concern. Accordingly, they continue to adopt the going concern 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:

6462.322

c) Investments

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

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

d) Restricted funds

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

e) Expendable Endowment funds

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

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:

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 2023

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:

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 2023, to be received in early 2024, 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 2023

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 2023

2 Donations

Donation in support of the IISS-Middle East office and related research activities
Other		 2023
2022
£'000
£'000
3,053
2,901
-
50
3,053
2,951

3 i) Dialogues, conferences and lecture series

Manama Dialogue
Shangri-La Dialogue
Riyadh Defense Forum
Lecture series		 2023
2022
£'000
£'000
4,211
3,728
5,521
4,055
-
1,818
198
89
9,930
9,690

Funding for dialogues, conferences and lecture series received during the year from UK and international Governments totalled ££9,493,000 (2022: £9,561,000).

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
China
Other Research Programmes		 2023
2022
£'000
£'000
1,146
1,033
1,410
529
85
447
-
209
2,009
1,897
-
-
190
419
120
1,111
1,615
1,546
898
1,144
72
92
94
-
40
45
7,679
8,472

Funding for research projects received during the year from UK and international Governments totalled £4,362,000 (2022: £4,624,000)

29

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2023

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 2023
Total 2022		 Staff
costs
£'000
1,455
4,932
1,979
104
5,205
13,676
12,868		 Other direct
costs
£'000
3,962
3,183
167
44
2,826
10,182
9,785		 Depreciation
charges
£'000
-
62
35
-
835
932
766		 Exchange
(gains) /losses
£'000
-
-
1
(2)
5
4
276		 Allocation of
support costs
£'000
1,949
3,998
2,517
407
(8,871)
-
-		 Total
2023
£'000
7,366
12,174
4,700
554
-
24,794		 Total
2022
£'000
7,999
11,346
3,924
426
-
23,695
23,695

The above table analyses by expense category the costs related to the charit ~~able activitie~~ s ~~and the go~~ vernance 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 2023 are governance costs of £198,000 (2022: £116,000). 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 2023

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
5
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		 2023
2022
£'000
£'000
729

685
241
136
35
30
2

3
1,383

1,290
30
26
2023
2022
£'000
£'000
10,519

10,064
1,103

1,023
458

457
26
35
821
616
12,927
12,195

Costs of Consulting Fellows and other sub-contractors totalling £1,036,000 (2022: £898,000) are not included in the figures above.

Wages and salaries include £4,732,000 (2022: £4,833,000) in respect of restricted grant funded staff salaries.

Remuneration of key management personnel totalled £2,832,000 during the year (2022: £2,505,000).

No Redundancy payments were paid during the year (2022: £57,000).

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
£690,001 to £700,000
£220,001 to £230,000
£210,001 to £220,000
£200,001 to £210,000
£190,001 to £200,000
£160,001 to £170,000
£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
50
37
2
6
54
163
No.
1
-
2
1

1
-

4
2
5
2
3
8
7
4
10
51		 No.
14
53
32
2
4
53
158
No.
-
2
-
2
1
1
1
3
2
5
3
7
7
5
11
51

None of the above employees (2022: none) are accruing retirement benefits under the defined benefit scheme.

41 of the above employees (2022:40) are accruing retirement benefits under money purchase schemes, and contributions on their behalf amounted to £336,000 (2022: £308,000).

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 2023

6 Intangible fixed assets

Group
Cost
At 1 October 2022
Exchange differences on consolidation
Disposals
Additions
At 30 September 2023
Amortisation
At 1 October 2022
Exchange differences on consolidation
Eliminated on disposals
Charge for the year
At 30 September 2023
Net book value
At 30 September 2023
At 30 September 2022		 Software and
Website costs
£'000
2,632
0
(773)
356
2,215
2,170
(6)
(773)
241
1,632
583
462		 Total
£'000
2,632
0
(773)
356
2,215
2,170
(6)
(773)
241
1,632
583
462

Projects under development total £17,000 (2022 £255,000) in relation to migration of Windows devices 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 by January 2024.

Charity
Cost
At 1 October 2022
Exchange differences on consolidation
Disposals
Additions
At 30 September 2023
Amortisation
At 1 October 2022
Exchange differences on consolidation
Eliminated on disposals
Charge for the year
At 30 September 2023
Net book value
At 30 September 2023
At 30 September 2022		 Software and
Website costs
£'000
2,633
(21)
(773)
356
2,195
2,170
(4)
(773)
217
1,610
584
463		 Total
£'000
2,633
(21)
(773)
356
2,195
2,170
(4)
(773)
217
1,610
584
463

Projects under development total £17,000 (2022 £255,000) in relation to migration of Windows devices 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 by January 2024.

32

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2023

7 Tangible fixed assets

Group
Cost
At 1 October 2022
Exchange differences on consolidation
Disposals
Additions
At 30 September 2023
Depreciation
At 1 October 2022
Exchange differences on consolidation
Eliminated on disposals
Charge for the year
At 30 September 2023
Net book value
At 30 September 2023
At 30 September 2022		 Freehold
land
£'000
3,000
-
-
-
3,000
-
-
-
-
-
3,000
3,000		 Freehold
buildings
£'000
11,456
-
-
-
11,456
2,753
-
-
115
2,868
8,588
8,703		 Furniture, fittings,
plant & machinery,
equipment, building
improvements &
motor vehicles
£'000
9,031
(332)
(890)
235
8,044
7,077
(301)
(890)
614
6,500
1,544
1,954		 Total
£'000
23,487
(332)
(890)
235
22,500
9,830
(301)
(890)
729
9,368
13,132
13,657

Furniture, fittings, plant & machinery, equipment, building improvements and motor vehicles contain assets in the course of construction nil (2022: £60,000).

Charity
Cost
At 1 October 2022
Exchange differences on consolidation
Disposals
Additions
At 30 September 2023
Depreciation
At 1 October 2022
Exchange differences on consolidation
Eliminated on disposals
Charge for the year
At 30 September 2023
Net book value
At 30 September 2023
At 30 September 2022		 Freehold
land
£'000
3,000
-
-
-
3,000
-
-
-
-
-
3,000
3,000		 Freehold
buildings
£'000
11,456
-
-
-
11,456
2,753
-
-
115
2,868
8,588
8,703		 Furniture, fittings,
plant & machinery,
equipment, building
improvements &
motor vehicles
£'000
7,595
(299)
(890)
221
6,627
6,071
(266)
(890)
416
5,331
1,296
1,524		 Total
£'000
22,051
(299)
(890)
221
21,083
8,824
(266)
(890)
531
8,199
12,884
13,227

Furniture, fittings, plant & machinery, equipment, building improvements and motor vehicles contain assets in the course of construction nil (2022: £60,000).

33

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2023

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 on revaluation
Closing market value at 30 September
Portfolio cash at 30 September
Total market value at 30 September		 2023
£'000
3,450
730
5,067
854
0
0
0
10,101
127
10,228
9,457
10,416
1,330
(1,591)
(54)
10,101
127
10,228		 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

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		 2023
£'000
2,220
548
2,255
5,023
2023
£'000
1,090
328
565
1,938
3,921		 2022
£'000
833
715
2,193
3,741
2022
£'000
586
463
672
2,046
3,767

34

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2023

10 Creditors: amounts falling due within one year

Group

Creditors: amounts falling due within one year
Group
Trade creditors
Other creditors
Taxation and social security
Accruals
Deferred income (note 11)		 2023
£'000
1,112
197
235
694
6,791
9,029		 2022
£'000
644
203
228
860
5,978
7,913

Charity

Trade creditors
Other creditors
Taxation and social security
Accruals
Deferred income (note 11)		 2023
£'000
1,112
137
220
562
3,815
5,846		 2022
£'000
615
88
212
776
3,805
5,496

11 Deferred income

Group

Brought forward at 1 October 2022
Received in the year
Expended in the year
Carried forward at 30 September 2023
Charity
Brought forward at 1 October 2022
Received in the year
Expended in the year
Carried forward at 30 September 2023		 2023
£'000
5,976
17,699
(16,884)
6,791
2023
£'000
3,805
7,118
(7,108)
3,815		 2022
£'000
6,441
14,796
(15,261)
5,976
2022
£'000
4,011
6,679
(6,885)
3,805

35

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2023

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
5,458
22
118
202
21,174
-
21,174
26,062
Balances
b/fwd
£'000
5,458
22
54
76
20,684
-
20,684
26,218		 Income
£'000
(327)
-
7,150
7,150
18,207
18,207
25,030
Income
£'000
(327)
4,385
4,385
11,101
11,101
15,159		 Expenditure
£'000
-
-
(7,119)
(7,119)
(18,120)
(18,120)
(25,239)
Expenditure
£'000
-
-
(4,333)
(4,333)
(12,390)
(12,390)
(16,723)		 Transfers
£'000
-
-
-
-
(70)
70
-
-
Transfers
£'000
-
-
-
-
(70)
70
-
-		 Gains/
(losses)
£'000
(164)
-
-
-
(57)
(70)
(127)
(291)
Gains/
(losses)
£'000
(164)
-
-
-
(26)
(70)
(96)
(260)		 Balances
c/fwd
£'000
4,967
22
149
171
21,134
-
21,134
26,272
Balances
c/fwd
£'000
4,967
22
106
128
19,299
-
19,299
24,394

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
arity
Tangible assets
Intangible assets
Investments
Net current assets/ (liabilities)
Pension liability		 Expendable
Endowment
£'000
-
-
6,134
-
-
6,134
Expendable
Endowment
£'000
-
-
6,134
-
-
6,134		 Restricted
Funds
£'000
-
-
-
171
-
171
Restricted
Funds
£'000
-
-
-
128
-
128		 Unrestricted
Funds
£'000
13,132
583
4,094
2,158
-
19,967
Unrestricted
Funds
£'000
12,884
584
4,094
570
-
18,132		 Total
Funds
£'000
13,132
583
10,228
2,329
-
26,272
Total
Funds
£'000
12,884
584
10,228
698
-
24,394

Charity

36

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2023

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 £60,000 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
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		 2023
2022
£'000
£'000
(2,136)
(2,184)
2,279
2,345
143
161
(143)
(161)
-
-
-
-
-
-
-
-

2023
2022
£'000
£'000
2,184
3,363
114
66
(120)
(1,177)
(42)
(68)
2,136
2,184

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

iii) 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		 2023
2022
£'000
£'000
2,345
2,807
124
56
(208)
(502)
60
52
(42)
(68)
2,279
2,345
2023
2022
£'000
£'000
(84)
(446)

37

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2023

14 Pension scheme (continued)

Net interest cost
Total amount charged to the Statement of Financial Activities		 2023
£'000
(10)
(10)		 2022
£'000
10
10

The International Institute for Strategic Studies expects to contribute £60,000 to its defined benefit pension scheme in the year ending 30 September 2024.

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)
Changes in asset ceiling
Total losses included in other recognised gains and losses		 2023
£'000
(208)
(73)
193
(143)
(231)		 2022
£'000
(502)
(194)
1,371
(161)
149

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

Equities
Fixed Interest
Diversified Growth
Property
Cash and other
Total Assets		 2023
£'000
479
1,163
449
141
47
2,279		 2022
£'000
907
680
484
204
70
2,345

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


averages)
2023 2022
Discount rate at 30 September 5.65% 5.26%
Inflation (RPI) 3.53% 3.90%
Inflation (CPI) 2.58% 2.95%
Allowance for revaluation of deferred pensions of CPI or 5% p.a. if less 2.58% 2.95%
Allowance for pension in payment increases of RPI or 5% p.a. if less 3.24% 3.60%
Allowance for pension in payment increases of RPI or 2.5% p.a. if less 2.10% 2.20%
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 2023 imply the following Years
life expectancies at age 65:
Male retiring in 2022 21.50
Female retiring in 2022 23.40
Male retiring in 2042 22.80
Female retiring in 2042 24.90

38

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2023

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 £63,000 (2022: £64,000).

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 2023 were £392,000 (2022: £387,000). Contributions outstanding at the year end amounted to £87,000 (2022: £76,000).

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 2023 were £22,000 (2022: £29,000). Contributions accrued at the year end amounted to £4,000 (2022: £5,200).

15 Leasing commitments

The future total minimum payments to which the Group is committed as at 30 September 2023 under operating lease agreements are as follows:


agreements are as follows:
2023 2022
£'000 £'000
Office premises
Net present value of total lease commitments due:
Within one year 1,197 1,277
Between one and two years 757 1,133
Between two and five years 954 1,390
Over five years 1,290 1,497

16 Capital commitments

As at 30 September 2023, there were capital commitments contracted but not provided for of £17,000; for website development (2022: £371,000).

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		 2023
2022
£'000
£'000
(319)
(147)
(343)
(315)
729
685
241
136
(70)
(42)
110
729
24
(95)
(111)
343
-
(29)
(1,340)
(579)
1,118
(145)
39
541

39

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2023

18 Analysis of cash and cash equivalents

Cash at bank and in hand
Portfolio cash		 2023
2022
£'000
£'000
6,335
6,301
127
108
6,462
6,409

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 2023 (2022: Nil).

Travel expenses for both governance and attending Institute dialogues and other activities were paid or reimbursed in respect of 6 trustee (2022: 7) and the total amount was £12,000 (2022: £14,000).

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		 2023
2022
£'000
£'000
13
(20)
(140)
(773)
391
991
(520)
(280)
49
(150)
(207)
(232)

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		 2023
£'000
-
(524)
2,761
(2,044)
(13)
(180)
-		 2022
£'000
-
(14)
2,337
(4,472)
(266)
2,415
-

40

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2023

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		 2023
2022
£'000
£'000
(246)
(421)
-
-
74
220
-
14
8
(59)
(164)
(246)

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		 2023
£'000
79
(8)
71		 2022
£'000
72
7
79

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 Parent
Expenses paid on behalf of related party
Amounts paid out during the year
Foreign currency movement
Balance at end of year		 2023
2022
£'000
£'000
573
555
(274)
-
493
243
(246)
(230)
(4)
5
542
573

41

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2023

20 Subsidiary undertakings

I Arundel House Enterprises Ltd

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

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		 2023
£'000
549
(33)
516
(361)
155
(155)
-		 2022
£'000
440
(42)
398
(199)
199
(199)
-

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		 2023
£'000
-
148
34
182
(172)
10
10		 2022
£'000
-
145
18
163
(153)
10
10

II International Institute for Strategic Studies (Asia) Ltd

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

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		 2023
£'000
5,707
2,213
41
7,961
(3,766)
(2,537)
(6,303)
1,658		 2022
£'000
4,055
2,279
14
6,348
(3,445)
(4,858)
(8,303)
(1,955)

42

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2023

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		 2023
£'000
158
1,177
3,511
4,688
(2,395)
2,451
2,451		 2022
£'000
292
50
1,990
2,040
(1,500)
832
832

III Strategic Studies Fund

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

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		 2023
2022
£'000
£'000
12
89
52
100
64
189
(14)
(91)
(65)
(123)
-
-
(79)
(214)
(15)
(25)

c Summary of balance sheet for Strategic Studies Fund

Debtors
Creditors
Net assets
Reserves		 2023
£'000
162
(142)
20
20		 2022
£'000
247
(211)
36
36

IV IISS India Organisation

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

43

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2023

b Summary of income statement for IISS India Organisation

Other Income
Total income
Other expenses
Total expenses
Deficit for the year		 2023
£'000
-
-
-
-
-		 2022
£'000
-
-
17
17
(17)

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		 2023
£'000
5
-
5
(72)
(67)
(67)		 2022
£'000
8
1
9
(83)
(74)
(74)

V IISS Europe gemeinnützige GmbH

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

b Summary of income statement for IISS-Europe

Research
Other Income
Total income
Research
Total expenses
Surplus/(Deficit) for the year		 2023
£'000
1,486
-
1,486
(1,776)
(1,776)
(290)		 2022
£'000
1,310
-
1,310
(1,577)
(1,577)
(267)

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		 2023
£'000
89
304
167
471
(1,096)
(536)
(536)		 2022
£'000
136
201
559
760
(1,146)
(250)
(250)

44

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2023

21 Comparative Information

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

Year ended 30[th] September 2022

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

45

The International Institute for Strategic Studies

Annual Report and Financial Statements for the year ended 30th September 2023

ii) Comparative movement in funds

For the year ended 30 September 2022

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
22
180
202
20,272
(556)
19,716
26,062
Balances
b/fwd
£'000
6,144
22
62
84
17,747
(556)
17,191
23,419		 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
118
140
21,174
-
21,174
26,772
Balances
c/fwd
£'000
5,458
22
54
76
20,684
-
20,684
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.

iii) Comparative Analysis of net assets by fund

For the year ended 30 September 2022

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
-
-
6,134
Expendable
Endowment
£'000
-
-
6,134
-
-
6,134		 Restricted
Funds
£'000
-
-
-
140
-
140
Restricted
Funds
£'000
-
-
-
76
-
76		 Unrestricted
Funds
£'000
13,657
462
4,390
1,989
-
20,498
Unrestricted
Funds
£'000
13,227
463
4,390
1,928
-
20,008		 Total
Funds
£'000
13,657
462
10,524
2,129
-
26,772
Total
Funds
£'000
13,227
463
10,524
2,004
-
26,218

46

The International Institute for Strategic Studies

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

YEAR ENDED 30TH SEPTEMBER 2023

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 2022
Funds carried forward at 30 September 2023		 Unrestricted
Funds
£'000
3,208
4,211
104
1,480
1,890
109
-
99
11,101
86
3,586
3,511
4,652
554
12,389
54
(1,234)
-
(80)
(70)
(1,384)
20,684
19,300		 Restricted
Funds
£'000
-
-
3,824
-
-
234
327
-
4,385
-
-
4,333
-
-
4,333
52
-
-
52
111
163		 Endowed
Funds
£'000
-
-
-
-
-
-
(327)
-
(327)
-
-
-
-
-
-
(164)
(491)
-
-
(491)
5,423
4,932		 Total Funds
Total Funds
2023
2022
£'000
£'000
3,208
3,150
4,211
5,547
3,928
4,779
1,480
1,297
1,890
1,442
343
315
-
-
99
13
15,159
16,543
86
114
3,586
4,446
7,844
4,798
4,652
3,911
554
427
16,722
13,696
(110)
(729)
(1,673)
2,118
-
-
(80)
167
(70)
514
(1,823)
2,799
26,218
23,419
24,395
26,218

47