# **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**
- 1 Strategic Report and the Report of the Trustees
- 19 Independent Auditor’s Report to the Members of The International Institute for Strategic Studies
- 22 Consolidated Statement of Financial Activities
- 23 Consolidated Balance Sheet
- 24 Charity Balance Sheet
- 25 Consolidated Cash Flow Statement
- 26 Notes to the Financial Statements
**The International Institute for Strategic Studies**
**Annual Report and Financial Statements for the year ended 30 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:
- evidence of senior government leaders internationally seeking IISS independent analysis;
- attendance at its dialogues and conferences by government officials, international business and media representatives from around the world;
- evidence that the Institute has contributed to improved defence diplomacy and conflict resolution, as confirmed to IISS by government officials;
- continued diversification of funding from governments, the private sector, charitable foundations and individuals to maintain a significant body of research across a broad range of thematic and regional programmes;
- worldwide demand for its publications and databases.
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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**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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**The International Institute for Strategic Studies**
## **Annual Report and Financial Statements for the year ended 30 September 2023**
- delivers a comprehensive research programme committed to advancing wider understanding of constantly evolving global security issues;
- convenes government officials, independent analysts, business leaders and journalists to advance understanding of political, military, economic, environmental and societal trends in the subjects addressed by the Institute's work;
- continues to enhance the online content offered through the iiss.org website to maximise global access to its research and analysis; and
- maintains an international network of influential and knowledgeable individuals, corporate entities, governments and others as an audience for its research and publications.
The Institute’s achievements against its objectives are discussed under the heading ‘ _Achievements and Performance’_ below.
The Institute’s ‘statement of values’ and ‘policy on financial transparency confidentiality and effectiveness’, published on the IISS website, reaffirm the IISS’s commitment to full independence and excellence in all activities, along with the Trustees’ determination that fundraising is maintained with the twin aims of guaranteeing the Institute’s independence of thought and analysis, as well as maintaining the Institute’s effectiveness as a strategic actor in a complex international environment.
The charity had no fundraising activities requiring disclosure under provisions of section 13 of the Charities (Protection and Social Investment) Act 2016.
## **ACHIEVEMENTS AND PERFORMANCE**
## **Research Programmes**
As an independent, non-partisan and international policy institute, the IISS is committed to advancing wider understanding of the critical security issues of the 21st century and their potential trends or resolution. A comprehensive research programme, which was reviewed and revised in 2022, covers these challenges and responds to them both thematically and regionally. The 30-member IISS Advisory Council, composed of distinguished members from around the world, assists the Institute on the intellectual direction of its activities. The programme has been defined under the broad categories of War, Power and Rules covering five strategic themes and nine regional concentrations:
- Defence and Military Analysis
- Geo-Economics and Strategy
- Strategy, Technology and Arms Control
- Cyber Power and Future Conflict
- Conflict, Security and Development
- China
- European Security and Defence
- Indo-Pacific Defence and Strategy
- Japan Chair
- Latin America
- Middle East
- Russia and Eurasia
- South and Central Asian Defence, Strategy and Diplomacy
- Southeast Asian Politics and Foreign Policy
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.
- The Defence and Military Analysis Programme (DMAP) in 2023 published reports on The Future of European Land Forces, Digitalisation of Defence in NATO and the EU, Software Defined Defence and, in conjunction with other IISS colleagues, Deterrence Failure in a Cross-Strait Conflict. DMAP
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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.
- The Strategy, Technology and Arms Control (STAC) programme had a productive year, with grant awards from US European Command (USEUCOM), the Carnegie Corporation of New York (CCNY), the UK FCDO and the EU. The programme delivered two major reports: a report in tandem with IISSMiddle East researchers on mitigating the risks of an unconstrained Iranian nuclear programme and a report on Russian doctrine and military thought related to non-strategic nuclear weapons (NSNW). Three in-person workshops in Manama, Vienna and Prague brought together experts and officials from the US, Europe, Asia-Pacific and Arab countries to explore questions such as the Gulf order post-JCPOA and to discuss findings from both the CCNY and FCDO projects. Two hybrid workshops were convened with experts on Russian thinking and NSNW doctrine. Additional analyses on these topics included ballistic and cruise trajectories in Russia’s War in Ukraine, and the expiry of UN limitations on Iran’s missile exports. The programme has been delivering podcast episodes with arms control experts which continue to draw interest from participants and listeners.
- The Russia and Eurasia Programme published analysis across IISS publications on the politics, economics and diplomacy of the Russia-Ukraine war. It also addressed the crisis in the South Caucasus and major developments in Central Asia. The Programme maintained a high media profile (including op-eds in the New York Times and Financial Times, and frequent appearances on CNN). The Programme's grant-funded study of Western economic statecraft and Russia delivered two successful Roundtables in London and DC, with the latter cited in Congress the next day. These have influenced policy debates, especially on the issue of seizing Russian Central Bank assets in Western financial systems.
- The Geo-economics and Strategy Programme began work on two major Adelphi books in 2023 on various aspects of economic statecraft, including the evolution of Western sanctions policy, following Russia’s invasion of Ukraine. The Programme has also hosted workshops looking at issues including the seizure of Russian central bank assets. The Programme has been active in providing analytical input at high level to governments and companies.
- The Japan Chair Programme published its second _Adelphi_ in December 2023. The book is a compilation of the best articles and speeches written and delivered by Japanese scholars, secondees from Japan’s Ministry of Foreign Affairs and leaders since the 1960s. The Programme also hosted a number of events, both in-person and virtual, including a speech at the IISS’s London headquarters by Japan’s Minister of Economy, Trade and Industry, Nishimura Yasutoshi. The team has continued to build on the _Japan Memo_ podcast series, expanding the Institute’s reach with its key audiences.
- The Cyber Power and Future Conflict Programme continued to expand its influence and reach through the 3rd Cyber Power Workshop that included heads or deputy heads of cyber intelligence and military cyber agencies for the Five Eyes and like-minded countries. The programme also hosted the 2nd Advanced Technology Workshop in Singapore for defence organisations from 15 countries. Notable publication milestones included work on cyber aspects of the Ukraine war and the second iteration of the Cyber Capabilities Net Assessment that included another 10 countries bringing the total countries assessed by the programme to 25.
- In 2023, the newly formed Indo-Pacific Defence and Strategy programme grew to compose two fulltime research staff to help with research, project fundraising, and building the IISS-Asia office’s profile as a leading hub for cutting-edge analysis on security, defence and foreign policy in the AsiaPacific. New project funding was recently secured on South and Southeast Asian perspectives on nuclear escalation dynamics in the Asia-Pacific.
- The Southeast Asian Politics and Foreign Policy Programme analyses the connections between the politics and international relations of the region, with a focus on the consequences for conflict and diplomacy. The programme’s Myanmar Conflict Map is the leading site for analysis of Southeast
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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.
- The Middle East programme had a productive year. It produced two major research papers entitled _Mitigating the risks of an unconstrained Iranian nuclear programme_ and _New Ambitions at Sea: Naval Modernisation in the Gulf States_ , released a major multi-year study entitled _Gulf Bailout Diplomacy: Aid as Economic Statecraft in a Turbulent Region_ as well as developing a database and an interactive website which provided context and analysis about major geopolitical developments, including the enlargement of the BRICS to include Middle Eastern states, the conflict in Syria, the deescalation among major regional powers and defence modernisation in the region. Programme analysts also delivered numerous briefings to governments and private sector companies.
- Two new series of ‘track 1.5’ workshops, which involve both official government participation and non-governmental representatives, were added to the portfolio of the South Asia research programme. The first, on India-China tensions, was held in Singapore in April 2023 and brought Indian and Chinese policy communities ‘face-to-face’ for the first time in three years, following the Covid pandemic and their border clash. The second, facilitating policy-relevant discussions to further India-UK defence technological and industrial cooperation, brought together top UK and Indian officials, quasi-officials and experts in July 2023 at Arundel House. In June 2023, a report on nuclear deterrence and stability in South Asia was launched in New Delhi during an IISS team visit for a ‘track 1.5’ nuclear deterrence and doctrine workshop as well as discussions with top national security officials. A new engagement with the Taliban leadership is being planned. Top foreign policy and security officials participated in the South Asia research programme’s regional conferences in Bahrain and Oman. Regular policy briefings to the FCDO took place.
- The Conflict, Security and Development Programme (CSDP) activities included the publication of the Armed Conflict Survey (ACS) 2023 (as referenced below). Work around climate security, non-state armed groups, political risks, and interventions in the aftermath of war, as well as conflict monitoring continued, with the production of online analyses, articles, chapters for the ACS and events.
## **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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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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## **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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**The International Institute for Strategic Studies**
## **Annual Report and Financial Statements for the year ended 30 September 2023**
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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**Annual Report and Financial Statements for the year ended 30 September 2023**
## **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:
- **Research** – the Institute will continue to produce new research and analysis under the rubrics of War, Power and Rules. Under War, the IISS will address the changing shape of conflict, including
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## **Annual Report and Financial Statements for the year ended 30 September 2023**
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.
- **Digital content** – In 2024 the IISS will aim to continue to grow its _Military Balance Plus_ customers in government, the private sector and the analytical community to generate a strong revenue stream to support IISS research and the Institute’s overall mission. The Institute will continue to develop other forms of digital content, such as interactive maps, as alternative means to present the Institute’s research and analysis and engage more widely with IISS stakeholders. Following a successful website development project, the website showcases IISS content more prominently and with improved accessibility. The web presence now conveys a more dynamic image of the Institute and makes IISS research priorities clearer to external audiences. In 2024, the IISS will invest in technology and skills to help develop new solutions for research supply and demand at the Institute.
- **Overseas offices** – Investment in its international offices and staff remains a priority to ensure that all research activity is infused with both local and regional expertise yet blended with an international perspective, while also reaching the widest possible audience and engaging a new generation of young analysts internationally. In 2024, the priority of the newest overseas IISS office in Berlin will be to continue deepening IISS engagement with European powers, expanding the IISS analytical footprint in Berlin and extend IISS convening activity in other European countries. The IISS Asia office in Singapore, the IISS Middle East office in Bahrain and the IISS Americas office in Washington, DC will continue to develop strategies to raise further funds and diversify the Institute’s funding base in their respective regions.
- **Fundraising** – During 2024, the Institute will continue its efforts to identify opportunities for major annual gifts or for the establishment of research endowments at the IISS to support pertinent research positions.
## **STRUCTURE, GOVERNANCE AND MANAGEMENT**
The Institute is governed by Articles of Association lodged with the Registrar of Companies and the Charity Commission for England and Wales.
The Institute’s Articles of Association reflect current best practices and the requirements of the Companies Act 2006 and recognise the fiduciary responsibilities carried by the Institute’s Trustees. Revised Articles of Association were formally lodged with the Charity Commission on 2[nd] May 2019.
The Trustees constitute Directors for the purposes of the Companies Act, and act as Trustees for the purposes of the Charities Act. As required by the Articles of Association, all are Members of the Institute. They receive no remuneration for their services. Upon appointment new Trustees are provided with an induction pack, which includes copies of the Institute’s governing documents as well as information about the Institute’s activities and finances. Training is available for all Trustees at any time as required.
In accordance with the Articles of Association, a Trustee can be elected by ordinary resolution or by a decision of the Trustees. A new Trustee may be proposed and considered for election by the existing 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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**Annual Report and Financial Statements for the year ended 30 September 2023**
## **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:
- select suitable accounting policies and then apply them consistently;
- observe the methods and principles in the Charities SORP;
- make judgments and estimates that are reasonable and prudent;
- state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the charitable company will continue in business.
The Trustees are responsible for keeping adequate accounting records that are sufficient to show and explain the charitable company’s transactions, disclose with reasonable accuracy at any time the financial position of the charitable company and enable them to ensure that the financial statements comply with the Companies Act and the provisions of the charity’s constitution. They are also responsible for safeguarding the assets of the charity and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
So far as each of the Trustees at the date of this report is aware, there is no relevant audit information of which the charity’s auditor is unaware. Each Trustee has taken all the steps that he/she ought to have taken as a Trustee in order to make himself/herself aware of any relevant audit information and to establish that the charity’s auditor is aware of that information.
## **Corporate Governance**
Processes are in place to ensure that performance is monitored and that appropriate management information is prepared and reviewed regularly by both the executive management and the Trustees.
The systems of internal control are designed to provide reasonable, but not absolute, assurance against material misstatement or loss. They include:
- an annual budget approved by the Trustees;
- regular consideration by the Trustees of both financial and non-financial results; and
- delegation of day-to-day management authority and segregation of duties.
## **Auditors**
Crowe U.K. LLP has indicated its willingness to be reappointed as statutory auditor.
The Strategic Report and Report of the Trustees was approved by the Trustees in their capacity as Company Directors on 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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**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:
- give a true and fair view of the state of the group’s and the charitable company’s affairs as at 30 September 2023 and of the group’s income and receipts of endowments and expenditure, for the year then ended;
- have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
- have been prepared in accordance with the requirements of the Companies Act 2006.
## **Basis for opinion**
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
## **Conclusions relating to going concern**
In auditing the financial statements, we have concluded that the Trustee's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the charitable company's or the group’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Trustees with respect to going concern are described in the relevant sections of this report.
## **Other information**
The Trustees are responsible for the other information contained within the annual report. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
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**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
- the information given in the Trustees’ report, which includes the directors’ report and the strategic report prepared for the purposes of company law, for the financial year for which the financial statements are prepared is consistent with the financial statements; and
- the strategic report and the directors’ report included within the Trustees’ report have been prepared in accordance with applicable legal requirements.
## **Matters on which we are required to report by exception**
In light of the knowledge and understanding of the group and charitable company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report included within the Trustees’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
- adequate and proper accounting records have not been kept; or
- the financial statements are not in agreement with the accounting records and returns; or
- certain disclosures of trustees' remuneration specified by law are not made; or
- we have not received all the information and explanations we require for our audit.
## **Responsibilities of trustees**
As explained more fully in the Trustees’ responsibilities statement, the Trustees (who are also the directors of the charitable company for the purposes of company law) are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Trustees are responsible for assessing the charitable company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Trustees either intend to liquidate the charitable company or to cease operations, or have no realistic alternative but to do so.
## **Auditor’s responsibilities for the audit of the financial statements**
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Details of the extent to which the audit was considered capable of detecting irregularities, including fraud and non-compliance with laws and regulations are set out below.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
## **Extent to which the audit was considered capable of detecting irregularities, including fraud**
Irregularities, including fraud, are instances of noncompliance with laws and regulations. We identified and assessed the risks of material misstatement of the financial statements from irregularities, whether
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**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
21
**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
22
**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
23
**The International Institute for Strategic Studies**
**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
24
**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
25
**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:
- i) Computers, printers and other electronic equipment with functional unit costs in excess of £1,000 are depreciated over a period of three years.
- ii) Furniture, fittings and equipment of a non-electronic nature with unit costs in excess of £250 are depreciated over a period of five years. iii) Plant and machinery items with unit costs in excess of £1,000 are depreciated over a period of ten years. iv) Leasehold improvements with unit costs in excess of £1,000 are depreciated over the life of the lease.
- v) Freehold Building improvements with unit costs in excess of £1,000 are depreciated over a period of fifteen years.
vi) Freehold building depreciation is charged at 1% using the straight line basis.
No depreciation is charged on freehold land or on assets in the course of construction.
26
## **The International Institute for Strategic Studies**
## **Annual Report and Financial Statements for the year ended 30th September 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:
- assets and liabilities are translated at the closing rate at the balance sheet date;
- income and expenses are translated at average exchange rates for the financial year; and
- all resulting exchange differences are taken to the Statement of Financial Activities.
## **l) Publications and membership income**
Publications revenue advanced to the Institute under agreement with the publishers is recognised during the financial year in which the sale arises. An estimate of additional royalty income due up to 30 September 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)**
- **iv) The defined benefit costs recognised within the Statement of Financial Activities are as follows:**
|Net interest cost
**Total amount charged to the Statement of Financial Activities**|**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
- **a** The charity beneficially owns the entire share capital of Arundel House Enterprises Limited, a company incorporated in England and Wales under registration number 3720258, which manages the conference facilities of Arundel House and Bloomsbury House. The results for Arundel House Enterprises Limited have been consolidated into the group financial statements.
## **b Summary of profit and loss account for Arundel House Enterprises Ltd**
|Turnover
Cost of sales
Gross profit
Other expenses
Net profit before taxation
Gift Aid to IISS
Loss after taxation|**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
- **a** The charity holds a majority of the voting rights of The International Institute for Strategic Studies (Asia) Limited, a company limited by guarantee and incorporated in Singapore under company number 200106226Z. The financial statements are audited in local currency and converted into UK£ Sterling at the appropriate exchange rate for consolidation purposes.
## **b Summary of income statement for International Institute for Strategic Studies (Asia) Ltd**
|Dialogue and Lecture Series
Research programmes
Other
Total income
Dialogue and Lecture Series
Research programmes
Total expenses
Surplus for the year|**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
- **a** The charity is a trustee of the Strategic Studies Fund (SSF), a trust established in Singapore under Charity number 1798, and has ultimate discretion over the disbursement of SSF funds. The financial statements are audited in local currency and converted into UK£ Sterling at the appropriate exchange rate for consolidation purposes.
## **b Summary of income statement for Strategic Studies Fund**
|Lectures Series
Research
Total income
Lectures Series
Research
Other expenses
Total expenses
Surplus for the year|**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
- **a** The charity holds a majority share-holding (99.9%) in IISS India Organisation, a limited not for profit company incorporated in India. The financial statements are audited in local currency and converted into UK£ Sterling at the appropriate exchange rate for consolidation purposes.
43
**The International Institute for Strategic Studies**
**Annual Report and Financial Statements for the year ended 30th September 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
- **a** The charity holds a 100% share in IISS Europe gemeinnützige GmbH, a not for profit company incorporated in Germany on 28 May 2019. The financial statements are audited in local currency and converted into UK£ Sterling at the appropriate exchange rate for consolidation purposes.
## **b Summary of income statement for IISS-Europe**
|Research
Other Income
Total income
Research
Total expenses
Surplus/(Deficit) for the year|**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