Company Number: 615259 Charity Number: 206504 THE INTERNATIONAL INSTITUTE FOR STRATEGIC STUDIES ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 SEPTEMBER 2015 The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30' September 2015 CONTENTS Annual Report and Financial Statements t Report of the Trustees 7 Strategic Report 17 independent tg Consolidated Statement of Financial Activities 20 Consolidated Balance Sheet 21 Charity Balance 22 Consolidated 23 Notes to the Financial Statements Auditor's Report to the Members of The institute for Strategic Studies Sheet Cash Flow Statement The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30'" September 2015 REPORT OF THE TRUSTEES The Trustees present their report for the year ended 30'" September 2015. This incorporates the Directors' report which has been prepared in accordance with the Companies Act 2006. The accounts and Articles of Association and the comply with current statutory requirements, the Memorandum Statement of Recommended Practice 'Accounting and Reporting by Charities' (SORP 2005). REFERENCE AND ADMINISTRATIVE DETAILS Institute for Strategic Studies, also known as the IISS, is a registered charity and The liability of each Board of Trustees member under the guarantee does not exceed the sum of 61. The International a company limited by guarantee. Registered Office House Arundel 13-15 Arundel Street London WC2R 3DX Company Number 615259 Charity Number 206504 Trustees Chairman Ms Fleur de Villiers Vice-Chairman Professor Francois Heisbourg Hon Treasurer Mr Thomas Seaman Emmott (resigned 9' July 2015) Professor Dr Peter Forstmoser (resigned 18n November 2015) Professor Dr Kurt Leuk Mr William Mr Chris Jones Lord Charles Powell of Bayswater Mr Jens Tholstrup Mr Risto Penttila Mr Nigel Newton Ms Sophie-Caroline de Margerie During the year under review, Mr William Emmott resigned as a Trustee. Subsequent to the year end, Professor Dr Peter Forstmoser resigned as a Trustee. All other Trustees noted above served for the whole of the period from 1 October 2014 to the date of this report. The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30' September 2015 Executive Staff Director-General and Chief Executive Director of Studies Director of Editorial Director of Future Conflict and Cyber Security Director of Defence and Military Analysis Director of Finance Director of Operations Director of Communications Executive Director, IISS-US Executive Director, IISS-Middle East Executive Director, IISS-Asia Dr John Chipman Adam Ward Dr Nicholas Redman Nigel Inkster Bastian Giegerich Sally Taylor Ben Carey (from 4 January 2016) Carol Reed (from 1 February 2016) Mark Fitzpatrick (from 1 December 2015) Sir John Jenkins Dr Tim Huxley Agents and Advisers Legal Advisers Stone King Sewell LLP, 13 Queen Square, Bath BA1 2HJ Farrer & Co. LLP, 66 Lincoln's inn Fields, London, WC2A 3LH Bankers HSBC Bank pic, 60 Queen Victoria Street, London EC4N 4TR Investment Managers Cazenove Capital Management (part of Schroder & Co. Limited), 12 Moorgate, London EC2R 6DA Pension Fund Nlanagers Pension Consultants Auditors AEGON, Edinburgh Park, Edinburgh JLT Benefit Solutions, The St Botolph Building, EC3A 7AW EH12 9SE 138 Houndsditch, Crowe Clark Whitehill I LP, St Bride's House, 10 Salisbury Square, London EC4Y 8EH London Institute for Strategic Studies The International Annual Report and Financial Statements for the year ended 30' September 2015 STRUCTURE, GOVERNANCE AND MANAGEMENT The Institute is governed by a Memorandum and 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. A revised Memorandum and Articles of Association were formally adopted at an Extraordinary General Meeting on 19 February 2008, and lodged with the Charity Commission on 7 March 2008. 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 Memorandum and 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. The Trustees delegate the exercise of certain powers in connection with the administration of the Institute as set out below. Audit Committee Committee has been established to which the task of monitoring the Institute's financial control systems and the management of major risk is delegated. The current membership of the Audit Committee is: An Audit Mr Thomas Seaman (Chairman of Committee & Honorary Mr Jens Tholstrup Mr William Emmott (resigned 9' July 2015) Mr Chris Jones (appointed 18'" November 2015) Investment Treasurer) Committee Investment Committee has been established which 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: An Mr Thomas Seaman (Chairman of Committee Mr William Emmott (resigned 9' July 2015) & Honorary Treasurer) Professor Dr Peter Forstmoser (resigned 18' November 2015) Mr Chris Jones (appointed 18' November 2015) Mr Jens Tholstrup (appointed 12" February 2015) Director-General and Chief Executive of the and Chief Executive is responsible for the day-to-day management Institute's affairs and for implementing policies agreed by the Trustees. The Director-General and Chief Executive is assisted by the Directing Staff and senior management. The Director-General The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30' September 2015 Group Structure Arundel House Enterprises Limited (AHEL) AHEL is a wholly-owned trading company and the majority of its revenue arises from the letting of facilities and provision of event catering at Arundel House and Bloomsbury House. The company reported a profit for the year of Bt 1 7, 000 which was fully awarded to the IISS as a gift aid donation (201 4; Et 70, 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 that is registered in Singapore. During the year ending 30' September 2015, supporting the Shangri-La Dialogue remained a key activity for IISS-Asia and the 14th Dialogue in the series held from 29'"-31" May 2015 proved a great success, with a keynote speech by Lee Hsien Loong the Prime Minister of Singapore. During the year under review IISS-Asia continued to deliver prominent speakers as part of the IISS Fullerton Lecture series and to convene the IISS Fullerton Forum, which constitutes an inter-sessional activity of the Shangri-La Dialogue process. IISS-Asia has also assisted in expanding the Institute's corporate and individual membership to in Singapore and the Asia-Pacific region. In addition, staff from IISS-Asia contribute substantially the IISS research and publication programmes. The SSF is a trust fund established in Singapore with the purpose of raising funds to be applied towards the objectives of the Institute. 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 funds from the SSF. gSS 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 IISS Middle East 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 Manama Dialogue in the Kingdom of Bahrain and the 10th IISS Regional Security Summit: The Manama Dialogue was held from 5'"-7'" December 2014. The International Institute for Strategic Studies - US (IISS-US) The IISS-US is a branch of IISS located in Washington DC. During the year, IISS-US continued its efforts to support and expand the IISS membership base, conduct and develop its research on foreign policy issues of particular interest to US audiences, and promote IISS activities in the US. IISS India Organisation —(gSS India) IISS India was established in order to expand IISS activities and reach in India and the South Asia region. In November 2014 IISS India assisted in the organisation of the India Global Forum. The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30w September 2015 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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards). 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 ~ 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 that the charitable company will continue in business. in the Charities SORP; it is inappropriate to presume 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 information in place to ensure that performance is prepared is monitored and that appropriate management and reviewed regularly by both the executive management and the Trustees. The systems of internal control are designed to provide reasonable, against material misstatement or loss. They include: ~ ~ ~ but not absolute, assurance 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 Clark Whitehill LLP has indicated its willingness to be reappointed as statutory auditor. The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30' September 2015 OBJECTS, OBJ EC'TIVES AND PRINCIPAL ACTIVITIES The Trustees have had due regard to the Charity Commission's considering the Institute's objectives and activities. guidance on public benefit when The Institute's declared objects are 'to promote on a non-pariy 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 eco/ogical nature, and fo promote conflict reso/ution by facilitating discussion and dialogue and publishing analysis on major international security issues to assist and promote the resolution oi conflicts between or within nations'. The Institute aims to achieve these objects by providing, from an international perspective, to IISS members, governments, international organisations and the wider public the best possible objective course and relevant to the prospects, information on military and political developments consequences of conflict having an important military dimension. The principal activities undertaken in meetings, professional pursuit of this object are the promotion and conduct of intergovernmental dialogues and conferences, research programmes, publications, membership and the Institute's library. The objectives of these activities for the year under review, and the Institute's achievements against them, are discussed under the heading of Achievements and Performance below. In ~ ~ furtherance of its objectives, the Institute: convenes government officials, independent analysts, business people and journalists to advance of political, military, economic, environmental and religious trends in the subjects understanding addressed by the Institute's work; maintains an international network of influential and knowledgeable individuals, corporate entities, governments and others to ensure the effective dissemination of its publications. 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. The Institute's medium to long-term strategy is composed of the following four key elements: 1. To provide facts and analysis on the sources of conflict, however caused, that may inspire the use of organised military force, and to examine the changing nature and use of organised force and technologies in international affairs. 2. To provide facts and analysis governments on the nature of political and geo-economic risk and advise and the private sector on measures that can be taken to eliminate or mitigate that risk. 3. To provide an independent plafform for intergovernmental consultations on geo-political and geoeconomic issues in private and more public settings, supported by the facts and analyses developed by the Institute. 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 proportion of the individual membership. The Institute measures the success of this strategy in the following ways: in the Institute's advice and attendance at its dialogues and conferences by government officials from around the world, international business and the media; evidence that the Institute has contributed to improved defence diplomacy and conflict resolution, as demonstrated by government statements to IISS from around the world; funding by a variety of international charitable, governmental, corporate and individual sources to maintain a significant body of research across a broad range of thematic and regional expressions of interest programmes; citations of the Institute's research worldwide demand for publications respected media; and and membership. in The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30 September 2015 STRATEGIC REPORT As detailed later in the Trustees report, the Institute performed well during the jIear under review across its varied activities and offices. Its main objectives for the year ending 30' September 2015 were achieved as follows: ~ ~ ~ Dialogue and conference activities: the Manama, Shangri-La, and Cartagena Dialogues were successfully convened, addressing regional security issues. This is the first time that the IISS has successfully convened three major Dialogues all in one year. Research programmes and publications activities: extensive research and analysis dealing with and widely was published current international security issues and conflict resolution disseminated to members and interested parties. The IISS also expanded its range of published electronic content, improving the Institute's global reach. Membership and library activities: a series of speaker events were held at IISS offices for members during the year. The Trustees consider the Institute's financial health to be sound. As at 30" September 2015, the Institute's loan liability totalled f2.4 million and investment assets were 64.6 million, compared to a a clear liability of 67.5 million and investment assets of 64.5 million in 2009, demonstrating strengthening in the Institute's financial position over the past 6 years. Subsequent to the year-end, a further 60.5 million loan repayment was made reducing the loan balance to 61 .9 million, The Trustees are satisfied with the Institute's performance in what remains a challenging economic climate. Total incoming resources increased to 616.8 million due primarily to the growth in income from the additional dialogues and conferences undertaken during the year which more than covered the fall in the research income during the year. Risk Management 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. As in the previous year, the five most significant potential risks, as identified by the institute's Risk Register, are: ~ ~ ~ ~ ~ damage to the Institute's reputation; the loss of any or all of the Institute's major income streams; a major failure of the Institute's IT systems; failure to maintain the existing high level of Institute staff expertise; and a material weakening in the institute's financial position. In addition to the annual review of the risk register, financial performance is evaluated at the Trustee meetings held four times each year. The Institute's investments and financial reserves are also evaluated by the Investment Committee which meets throughout the 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. The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30'" September 2015 ACHIEVEMENTS AND PERFORMANCE Research Programme non-partisan and international research institution, the IISS is committed to As an independent, of the critical security issues of the twenty-first century and their advancing wider understanding potential trends or resolution. A comprehensive research programme under the Institute's Director of Studies covers these challenges and responds to them both thematically and regionally. The Institute Council, composed of is advised on the intellectual direction of its activities by an international distinguished members from around the world. The programme ~ ~ ~ ~ ~ ~ ~ Armed Conflict Future Conflict and Cyber Security Defence and Military Analysis Geo-Economics and Strategy Non-Proliferation and Nuclear Policy Security and Development Economic and Energy Security The programme ~ Asia-Pacific ~ Middle ~ ~ ~ covers seven broad themes: includes five regional concentrations: East and Gulf Russia and Eurasia South Asia (including Afghanistan) US Foreign Policy and Transatlantic Research is manifested in written Affairs publications, online databases, conferences, lectures and working groups. In recent years the IISS has paid increasing attention not only to the study of conflict but to conflictresolution. Such work is carried out by a number of IISS research programmes that bring together parties to disputes in 'track-two' meetings around the world to discuss differences as well as how common interests can be advanced. Most notably, the series of annual IISS Dialogues in Asia and the Gulf involve very strong ministerial delegations and draw countries afflicted by security challenges together in combinations and ways they cannot arrange for themselves. The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30'" September 2015 Publications The 2015 edition of The Military Balance, the Institute's annual assessment of the military capabilities and defence economics of over 171 countries worldwide, was launched on 11'" February. It featured new country analyses of China, Colombia, France, Israel and Japan; thematic essays on hybrid warfare, directed-energy weapons and US space systems; enhanced equipment-focused graphics; and a new section detailing 'observed equipment' for selected non-state armed groups. In May 2015, the IISS launched a new annual publication, the Armed Conflict Survey featuring essays on aspects of armed conflict, including hybrid warfare, the evolution of jihadism and R2P; and key data and analysis on 40 armed conflicts around the world. The new publication complements the existing Armed Conflict Database (ACD) which remains an authoritative online source of data and provides independent analysis on current and recent conflicts. The ACD monitors armed conflicts worldwide, focusing on political, military and humanitarian trends in current conflicts. The 2015 edition of Strategic Survey, the Institute's annual review of world affairs, was published in September 2015, with essays on the modernisation oi Russia's military, the dramatic turn in the oil price and its strategic implications, and climate change. The maps and graphics section include entries on the changing economic dimension of US-Cuban relations, NATO's very high readiness joint task force, Mediterranean migrants, changes in ISIS's territorial holdings, Ebola, and China's new Silk Road. The Institute has also published more than 35 Strategic Comments this year, providing concise analysis on international security and politico-military issues. The Institute's journal, Survival: G/obal Politics and Strategy, continues to be a leading forum for analysis and debate of international and strategic affairs. Five issues have been published this year: 57/1 on the theme of global and European disorder; 57/2 featuring Gilley and Kinsella's cover article on climate change and coercion; 57/3 with the cover article by James Fromson and Steve Simon on the state of Islamic State; 57/4 featuring essays on nuclear deterrence, nuclear restraint and the US approach to cyber warfare; and 57/5 with cover articles on the Iranian nuclear deal. The Adeiphi book series is the Institute's principal contribution to policy-relevant, original academic research. Four books were published during the year under review: Peter Nadin, Patrick Cammaert and Vesselin Popovski's Spoi/er Groups and UN Peacekeeping; Sanjaya Baru and Suvi Dogra's edited volume Power Shifts and New B/ocs in the Global Trading System; Mathieu Duchatel and Jones Parello-Plesner's China's Strong Arm: Protecting Citizens and Assets Abroad; and Ben Fishman's edited volume, North Africa in Transition: the Struggle for Democracies and Institutions. In addition to these core publications, the IISS published the second Shangri-La Dialogue dossier, the Regional Security Assessment 2015, which includes chapters on China's regional grand strategy, new regional leaders and humanitarian assistance and disaster relief (HADR) capabilities in the wake of recent disasters and MH17. publications included conference reports for the 2014 India Global Forum; the Cartagena Dialogue and the 2014 Manama Dialogue. Additional Publications activity since year-end On 1" December 2015 a strategic dossier on Cyber Power was launched presenting an analysis of the evolution of computer networking technology from its origins after the Second World War, to the present. A dossier on Ballistic Missile Defence in the Persian Gulf will be published in spring 2016 considering the threat facing the GCC states in the form of Iran's ballistic-missile capability. Adelphi books planned for publication between the date of this report and spring 2016 include: Egypt After the Spring: Revo/t and Reaction, edited by Emile Hokayem; Asia's latent nuclear powers: Japan, South Korea and Taiwan by Mark Fitzpatrick; Fighting and Negotiating with Armed Groups by Samir Puri; China's Cyber Power by Nigel Inkster; and Business and Conflict in Fragi/e States by Achim Wennmann and Brian Ganson. The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30w September 2015 Dialogues, Conferences and Lecture Series The Institute continues to manage and run many international conferences across the globe. In doing so, it seeks wherever possible to bring government officials together in a format, on subjects, and in a combination that they might not be able to manage for 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. Sometimes these meetings can be organised between just two countries on a specific subject, in private. At other times they can involve many different countries, with a variety of officials convening both in circumstances where press are present, and more privately. The on-the-record plenary sessions provide a platform for ministers and national security advisers to clarify and expand on government policy, and to be challenged by an expert group on policies and assumptions. The offthe-record break-out groups, which can also involve senior officials, provide a private opportunity for professional discussions to analyse more deeply pertinent strategic issues and to advance policy aims. In all cases, the Institute looks to spur discussions in an informal manner, help to create new networks of contacts and assist governments to gain a better understanding of the positions of others in an intellectually invigorating environment. The Institute's main objective for the year under review was to convene three major international dialogues dealing with regional security issues. The Shangri-La Dialogue The 14'" Annual Asia Security Summit (the Shangri-La Dialogue) took place between Friday 29' May and Sunday 31" May 2015, and was a weekend of highly successful bilateral meetings, addresses, plenary sessions, break-out groups and press conferences. The Shangri-La Dialogue is recognised as a key event for defence and security diplomacy for the region and will be staged in Singapore with the government's support until at least 2019. The keynote address this year was given by the Prime Minister of Singapore, Lee Hsien Loong. Initiated in 2002 in response to the clear need for a forum where the Asia-Pacific's defence ministers could engage in dialogue aimed at building confidence and fostering practical security cooperation, the Asia Security Summit — or IISS Shangri-La Dialogue as it has come to be known — has established itself as a key element of the emerging regional security architecture. It is the most important regular gathering of defence professionals in the region and has become a vital annual fixture in the diaries of Asia-Pacific defence ministers and their civilian and military chiefs of staff. By catering for their specific interests and needs, and by facilitating easy communication and fruitful contact among them, the Shangri-La Dialogue has helped to engender a sense of community among the most important policy-makers in the defence and security establishments of regional states and of major powers with significant stakes in Asia-Pacific security. The Dialogue's format, modified the Dialogue's simultaneous break-out greater variety of critical agenda, and cohort of delegates have evolved incrementally. The IISS structure —originally based simply on plenary sessions —to include several groups during one half-day of the summit, allowing in-depth discussion of a regional security topics. Because the states of the Asia-Pacific, majority of the world's population, face the IISS has intentionally formulated a The Dialogue's agenda also recognises an extraordinarily large and diverse region encompassing the an extremely wide range of defence and security challenges, wide-ranging agenda for the Shangri-La Dialogue each year. emerging as well as established regional security concerns. The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30' September 2015 stage, the ffSS strengthened official participation in the Shangri-La Dialogue by inviting chiefs of defence staff and permanent heads of defence ministries as well as ministers. Additional states within the region and, in one case, from outside the region were invited to participate. After the 2006 summit, the ffSS set itself the target of ensuring participation at the highest level from the very delegates. The IISS, together with few regional states that had not hitherto sent ministerial-level needed to be rectified. In 2007, longparticipant states, particularly felt China's under-representation standing IISS efforts to encourage appropriate Chinese participation bore fruit when LieutenantGeneral Zhang Qinsheng, Deputy Chief of the General Staff of the People's Liberation Army (with vice-ministerial status) led Beijing's delegation. At an early Debate at the Dialogue has become increasingly open and fruitful, and there is tangible evidence that it has advanced substantive cooperation on vital security issues. In the maritime security sphere, for example, discussions at the Dialogue led to a consensus on common principles relating to the roles of littoral states and concerned non-Southeast Asian powers in relation to the Malacca Strait. Over time, official delegations have made increasingly intensive and effective use of the Dialogue as a venue for bilateral and multilateral meetings with security partners. While the precise content of these private resulted in publicised has usually remained confidential, meetings they have sometimes understandings on defence and security cooperation. The Manama Dialogue Since 2004 the ffSS has held annually the Manama Dialogue in the Kingdom of Bahrain, bringing together heads of state, prime ministers, foreign and defence ministers, national security advisers and armed forces chiefs, plus strategists and commentators from some 22 countries to engage in highlevel international defence diplomacy on regional security issues. The Dialogue is recognised as the regional security summit and an essential part of the regional security key inter-governmental infrastructure. The 10th ffSS Regional Security Summit: The Manama Dialogue was held from 5'-7' December 2014. The 2014 conference celebrated a decade of Manama Dialogues, in which senior policymakers have assembled for high-level discussions on Middle East security affairs. The annually unprecedented series of security threats facing the region —indeed the world —as the 2014 summit convened only served to underline the essential role the Manama Dialogue plays in encouraging and hosting candid and free-flowing debate on regional issues. The rise of the Islamic State of Iraq and al-Sham (ISIS) terrorist grouping, the three-year civil war in Syria and continued international negotiations over Iran's controversial nuclear programme were three intertwined topics dominating much of the discussion among participants. Delegates from 35 — including senior officials, international ministers, countries and three organisations leaders and military and intelligence chiefs —highlighted the necessity of parliamentary/congressional regional and international cooperation in responding to the threat posed by ISIS (despite competing views on the role to be played by Iran and Syria). of mounting complexity, faced by transnational challenges, an inclusive regional In an environment forum is a vital component of organised regional security diplomacy. Indeed, the Manama Dialogue is now sufficiently established to serve as an instrument of regional security. There was a powerful demonstration of this when on the sidelines of the Manama Dialogue 2014 the United Kingdom signed a landmark agreement with the Kingdom of Bahrain to expand and reinforce its naval presence in the Gulf. The deal will establish the first permanent British base 'east of Suez' for nearly half a century. To mark the 10th Manama Dialogue, the ffSS also released an Adelphi book examining security issues in the Gulf and the wider Middle East. Entitled Middle East Security, the US Pivot and the Rise of iS/S, this volume featured essays by nine ffSS analysts and capped a series of seminars held in Manama as part of the Middle East Research Agenda. 11 The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30' September 2015 The Cartagena Dialogue IISS successfully held its first major Dialogue in South America. 0SS Cartagena Dialogue: The TransPacific Summit was held from 6vu8'" March 2015 in Cartagena, Columbia. The focus of the summit was the developing relations between the Latin American states of the Pacific Alliance and key countries from the Asia-Pacific. The summit had a geo-economic focus with a strong security and stability component. The four founding states of the Pacific Alliance —Chile, Colombia, Mexico and Peru — have a combined GDP close to that of Brazil and have growing relations with Asia. A number of countries in Asia, especially China, Japan, South Korea, and increasingly others, have economic and political interests in the Pacific Alliance states. The summit strengthening explored the growing links between the two sides of the Pacific and encouraged of political, diplomatic, economic and commercial links. the brought together ministers and CEOs from Chile, Colombia, Mexico and Peru, with additional participation from Panama, the Inter-American Development Bank and the IMF together with Brazil, China, Germany, Indonesia, Japan, Korea, Malaysia, Philippines, Singapore, the UK, and the United States. Further government and private-sector participants came from Argentina, Australia, Bahrain, Costa Rica, Ecuador, France, Honduras, India, the Netherlands, New Zealand, Russia and Spain, contributing their expertise and perspectives to the 'trans-Pacific' debate. The summit Lecture Series Since last year's report, the ffSS has held four lectures in the Fullerton Lecture Series bringing together major figures in Asia-Pacific and international affairs to speak in Singapore. The speakers were Eric Li, Managing Director, Chengwei Capital, Shanghai; Dr S Jaishankar, Foreign Secretary, Ministry of External Affairs, India; Madam Fu Ying, Chairperson of the Foreign Affairs Committee, National People's Congress for China; and former Australian Prime Minister, Tony Abbott. In spring 2016, the ffSS also plans to launch a publication lectures, under the theme of global leadership. that brings together the first 25 Fullerton Lecture was held on 15'" October 2015. The lecture is delivered annually by an outstanding leader from sub-Saharan Africa. In the tenth anniversary year of this prestigious event, Advocate Thuli Madonsela, Public Protector of South Africa, examined the role of justice and good governance in regional and international peace. The 2015 IISS Oppenheimer On 1" December 2015, Toomas lives, President of Estonia, delivered Memorial Lecture at Arundel House. His theme was the 'transformational the annual Alastair Buchan crisis' facing Europe. 12 The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30' September 2015 Membership The IISS has established a strong global membership base comprising a broad spectrum of leading analysts, academics and military and government officials. Members are actively connected to international and strategic affairs through the Institute's research programmes and have access to its opinion-shaping analysis through publications, exclusive events, member briefings and international conferences. Individual members are part of a unique and exclusive global network supporting the work of the IISS and extending the Institute's reach in the world of international affairs, whilst IISS Corporate Membership is designed to enable corporations and institutions to stay on top of world events by giving them a thorough understanding of international affairs, security issues and geopolitical and military conflicts, and to aid them in their strategic decision-making. The Institute draws heavily on its exclusive membership as well as international conferences held annually. to participate in events held in its four offices The Institute holds a large number of discussion meetings each year for its Members at its London headquarters and overseas offices in Washington D. C. , Bahrain and Singapore, at which guest speakers introduce a discussion on an issue of current concern. In addition to the series of lectures detailed above, notable speakers since the last annual report included: Lieutenant General H. R. McMaster, Director, Army Capabilities Integration Center and Deputy Commanding General, Futures, US Army Training and Doctrine Command; Dr. Gregory Treverton, Chairman of the National Intelligence Council; Ambassador Asoke Kumar Mukerji, Permanent Representative of India to the United Nations; Cheng I ei, Deputy Consul General of the People' s Republic of China in New York; General John Kelly, Commander, United States Southern Command; Chaudhry Nisar Ali Khan Federal Minister for Interior & Narcotics Control, Pakistan; Dr Angel Rabasa, Senior Political Scientist, RAND Corporation; Dr Mitsuaki Furukawa, Chief Representative, South Sudan Office, Japan International Cooperation Agency (JICA); Brigadier Steve McMahon Commander 104th Logistic Support Brigade, British Army; Thomas Countryman US Assistant Secretary of State for International Security and Non-proliferation; Dr Jamie Shea Deputy Assistant Secretary General for Emerging Security Challenges, NATO; Ambassador Kanwal Sibab Former Indian foreign secretary; Rachel Briggs OBE Senior Fellow, The Institute for Strategic Dialogue (ISD); Joana Cook Research Affiliate, Public Safety Canada — Securite Publique Canada; Ambassador Marina Kaljur and Undersecretary of Political Affairs, Estonia; Matthew Kroenig Senior Fellow, Brent Scowcroft Center on International Security, Atlantic Council; Jeremy Shapiro Fellow, Foreign Policy Program, Brookings Institution Professor; Christine Chinkin Director of the Centre on Women, Peace and Security, London School of Economics and Political Science; Charles Parton, European External Action Service, Beijing Delegation; Emma Sky Senior Fellow, Jackson Institute for International Canadian Affairs, Yale University; Brigadier-General Michael Rouleau Commander, Special Operations Forces Command; Dr Liam Fox MP for North Somerset; former UK Defence Secretary 2010-11.General the Lord David Richards of Herstmonceux Senior Advisor, IISS, former UK Chief of Defence Staff 2011— 2004; 14; Lord Robertson of Port Ellen, former NATO Secretary General, 1999— Rt Hon. Lord Garel-Jones, Former Minister of State, Foreign and Commonwealth Office, Managing Director, UBS; Cheng Lei, Deputy Consul General of the People's Republic of China in New York; and John C. Mallery, Research Scientist, MIT Computer Science and Artificial Intelligence Laboratory. Knowledge and Information Services The Library has been at the heart of the Institute since it was founded in 1958. It has built up a comprehensive collection of books, journals, pamphlets and online resources covering a broad range of current international relations, security and defence topics. During the year under review, the Library continued to maintain its collection and to provide a range of services for Members. The Institute has also undertaken a review of the services offered by the Library and has decided to evolve these services around a new Knowledge & Information Services offering that will incorporate the Library. 13 The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30' September 2015 FINANCIAL REVIEW AND RESULTS FOR THE YEAR For the year ended 30' September 2015, total incoming resources were 216,869, 000 (2014: 216,212, 000). This increase was primarily due to the a third Dialogue being convened in Cartagena during the year, in addition to increased membership fee income which more than compensated for the lower research grant income reported. Research income recognised was lower than anticipated due to the delayed scheduling of programme activities. expended for the year were 616,807, 000 agains1 616,005,000 in 2014, increase primarily due to the expenditure incurred in running the Cartagena Dialogue. Total resources with The net movement in funds for the year was a 2123,000 surplus (2014: 6183,000 surplus), includes both realised gains of 224, 000 (2014: 618,000) and unrealised losses of 268, 000 6125,000 gains) on investment assets, foreign exchange gains for the year of 2217, 000 657, 000 losses), and actuarial losses on the defined benefit pension scheme of 21 12,000 F110,000). the which (2014: (2014: (2014: The net cash inflow totalled 9374, 000 for the year (2014: 2798, 000), leaving total cash balances, including porffolio cash, of 65,351,000 at the year-end (2014: F4, 977, 000). Overall net cash, comprising total cash balances less the loan liability, was 22, 951,000 as at 30 September 2015 (2014: net cash 22, 577, 000). Group fixed assets have fallen in value by 2481, 000 over the year primarily as a result of depreciation for the year totalling 2934, 000 compared to additions of only 6451,000. A full analysis of fixed asset movements can be found in Note 6. The group net current asset position improved by 2596, 000 over the year from being a net current asset position of 9377,000 at the end of 2014 to a net current asset position of 2973, 000 at the end of 2015 due primarily to the retention of cash. Reserves 'Free reserves' are defined as unrestricted funds excluding designated assets, other than those financed by external loans. funds and funds represented by tangible fixed 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 September 2015, the Institute held free reserves of 25, 595, 000 (2014: 24, 819,000) which equated to approximately 4.6 months (2014: 4. 1 months) of operating expenditure associated with unrestricted funds. Free reserves comprise IISS unrestricted general funds, exclusive of group fixed assets and the loan liability. The Trustees continue to review the reserves policy in line with the Institute's financial resources. 14 The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30'" September 2015 Investment Policy and Performance is managed by Cazenove Capital Management Ltd. As at 30 of the porffolio was 24, 570, 000 (2014: 24, 515,000) and the asset 23% (2014: 27%); UK fixed-interest funds, 18% (2014: 17%); 10% (2014: 6%); International equity funds, 26% (2014: 25%(; Porffolio funds 15% (2014: 7%) and Cash 8% (2014: 18%). Investment income for the year to 30 September 2015 amounted to Et 08, 000 (2014: Et 04, 000). The Institute's investment portfolio September 2015, the market value allocation was: UK equity funds, International fixed-interest funds, The overall investment objective is to maintain a balance of income and capital growth in the porffolio a medium attitude to risk. Portfolio performance and asset allocation are closely monitored by the Investment Committee in conjunction with the asset managers. The Institute considers the portfolio to be a long-term investment whereby operational cash flow demands are met by alternative funding sources. The Investment Committee has adopted an asset allocation strategy which reflects its appetite for moderate risk in the investment porffolio. As at 30' September 2015, porffolio returns over the previous year, 3 years, and 5 years as compared to the benchmark set by the Investment Committee were as follows. with Total Returns Porffolio Benchmark GBP 3 ears .a. % 12 months% 1.2 5 ears 5.6 5.2 1.9 % 5.7 5.6 .a. The IISS and the Economic Climate Despite the challenging suffered. economic environment, the Institute's principal revenue streams have not The Institute's Dialogue activities and publications are largely protected by multi-year agreements provide guaranteed levels of income. The agreement to convene annually the Manama Dialogue was renewed until 2016 in September 2011 whilst the agreement to annually convene the Shangri-La Dialogue was renewed until 2019 in July 2012. which AHEL experienced good commercial quality event facilities in London. trading activities in 2015 with a continued demand for high Financial markets fluctuated during the year under review but the investment portfolio performed well an appropriate asset allocation strategy agreed by the Investment Committee. Sterling has continued to experience volatility such that the monthly revaluation of currency receivable/payable balances has resulted in some significant movements in unrealised gains and losses. with During the current financial year, the IISS continued to benefit from consistently low interest rates, which determine the cost of borrowing for part of the Institute's loan and short-term money market funding. a result of arrangements concern. The further income As the income security provided by the diverse revenue sources and multi-year funding outlined above, the Trustees are confident that the Institute can be considered a going global nature of IISS operations and funding sources has also contributed towards diversity which has helped to mitigate risk during this time of economic uncertainty. 15 The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30' September 2015 FUTURE PLANS The Trustees believe that continued diversification ot income streams and a close monitoring of costs provide an effective foundation for the future. The Institute will continue to aim to fulfil its objects through the activities of dialogues and conferences, research programmes, publications, membership and the library. The main objectives for the year ending 30a September 2016 are listed below. Research - after conducting ~ a thorough review of its research agenda this year, the IISS has revised its research priorities. New priorities include a major initiative on 'China's Strategic Arrival' and several strands of research that leverage the Institute's increasing analytical strengths in the Middle East and Gulf, covering such topics as political Islam, regional conflicts and the regional role of Iran. The Future Conflict and Cyber Security Programme will tackle how artificial intelligence and autonomous systems, as well as cyber capabilities, will shape conflict in coming years. The Non-proliferation and Nuclear Policy Programme will span classical but once more salient questions of deterrence and disarmament, and also more modern challenges such as nuclear safety and security. The ffSS will focus on its strengths in global conflict and defence and military analysis, enhance its work on European security and defence, and infuse all research where relevant with a geo-economic dimension. Funding sources will be identified to support all research priorities. ~ Donations - identifying opportunities for major annual gifts or for the establishment of expendable endowments at the IISS. A major donor and capital gifts campaign will be launched in advance of the Institute's 60' anniversary in 2018. ~ Digital content - developing the Military Balance Plus, a database version of the Institute's flagship product, The Military Balance, with a view to its launch in late 2016. The database will include all qualitative and quantitative material from The Military Balance, including a level of historical content. Users will benefit from a powerful search functionality and be able to take advantage of frequent data updates, not available in hardcopy. A custom-built Military Balance Plus will generate new revenue streams to support IISS research and the Institute's overall mission. ~ Overseas offices —enhancing the profile of the IISS overseas offices. This will include a more unified approach across all offices to ensure a wider distribution of publications, research and policy analysis. This will assist in enabling the Institute to reach the widest possible audience, to include government officials, private sector and experts. The Trustees Report and Strategic Report was approved by the Trustees Company Directors on [(February 2016 and signed on their behalf by: in their capacity as Ms Fleur de Villiers Chairman of the Trustees 16 The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30'" September 2015 Independent Auditor's Report to the Members of The International Institute for Strategic Studies We have audited the financial statements of The International Institute for Strategic Studies for the year ended 30 September 2015 which comprise the Consolidated Statement of Financial Activities, the Consolidated and Company Balance Sheets, the Consolidated Cash Flow Statement and the related notes numbered 1 to 20. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). 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 company's members as a body, for our audit work, tor this report, or for the opinions we have formed. Respective responsibilities of trustees and auditor As explained more tully in the Statement of Trustees' Responsibilities, the trustees (who are also the directors of the charitable company for the purpose of company law) are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors. Scope of the audit of the financial statements obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the charitable company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the trustees; and the overall presentation of the financial statements. An audit involves In addition, we read all the financial and non-financial information in the Report of the Trustees and the Strategic Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on financial statements In our opinion the financial statements: ~ a true and fair view of the state of the group's and the charitable company's affairs as at 30 September 2015 and of the group's incoming resources and application of resources, give including its income and expenditure, ~ have been properly prepared Accounting Practice; and ~ have been prepared in in accordance for the year then ended; accordance with United with the requirements Kingdom Generally of the Companies Act Accepted 2006. Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Report of the Trustees and the Strategic Report for the financial year for which the financial statements are prepared is consistent with the financial statements. 17 The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30' September 2015 Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: ~ the parent charitable company has not kept adequate accounting records, or returns adequate for our audit have not been received from branches not visited by us; or ~ the parent charitable company financial statements records and returns; or ~ certain disclosures of trustees' remuneration ~ we have not received all the information Mike Hi Senior Statutory Auditor For and on behalf of Crowe Clark Whitehill LLP Statutory Auditor London are not in agreement with the accounting specified by law are not made; or and explanations we require for our audit. The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30 September 2015 CONSOLIDATED STATEMENT OF FINANCIAL ACTIVITIES (incorporating an income and expenditure account) Year ended 30 September Notes Unrestricted Restricted Totals Totals Funds Funds 2015 C000 C000 e000 2014 C000 Incoming resources Incoming resources from generated funds Voluntary income Donarbns Activities for generating Commercial trading income Investment 2, 168 2, 168 2, 037 781 214 781 214 759 208 funds income Incoming resources fiom charreb/e acfivilies Dialogues, conferences and lecture sensa' 7, 819 1,484 Publications 821 7, 819 3,426 821 Membership 1,639 1,639 1,395 1 2 942 16,869 16,212 23 52 664 72 55 588 76 765 23 788 719 5, 855 3,807 3,160 5,855 5,729 3,160 4, 887 1,922 810 377 710 449 15,931 15,209 88 77 16 807 16 005 Research programmes 1,942 Llbmry Total Incoming resources 14 927 1 6, 751 4, 126 934 Resources expended Costs ofgenerating funds costs Fundraising 29 664 Commercial activities operating expenditure Financing costs 72 Charitable activities Dialogues, conferences and lecture series' 4 Research programmes 3, 4 4 4 Publications Membership 4 Library Total chan'tab/e 4 Governance costs Total resources expended Transfers between funds 1,922 88 14,862 resources before other gains/losses 1,945 2, 738 65 (3) 62 207 65 (3) 62 207 12 resources before other gains/losses Net incoming/(outgoing) 377 14,009 acf/vities Net incoming/(outgmng) 810 6, 425 Other recognised gains/(losses) Realised gains on investment assets Net surplus/(deficit), 24 being net income/(expenditure) Unrealised (losses)/ gains on investment assets Foreign exchange gains /(losses) Actuanal losses on defined benefit pension schemes Net movemenl for the year 89 7 14 Funds canied forward at 30 September 2015 (3) (68) 217 ~tt2 86 225 (68) 125 ~tt2 ~110 217 (57) 126 (3) 123 183 12 16 172 73 16 245 16 062 12, 13 16,298 70 16,368 16,245 in funds Funds brought forward at 1 October 2014 18 amounts relate to continuing operations and, as ag gains and losses are included, a separate statement of total recognised gains and losses has not been presented. All The notes on pages 23 to 40 form part of these accounts ta The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30th September 2015 CONSOLIDATED BALANCE SHEET As at 30 September Notes 2015 2014 0000 0000 Fixed assets Tangible assets 6 Investment assets 7 13,550 4,570 14,031 18,120 18,546 1,462 5,001 1,262 4, 176 6,463 5,438 4, 515 Current assets Debtors 8 Cash at bank and in hand Creditors Amounts falling due within one year Net current 9 Creditors Amounts falling due aher one year 11 assets excluding pension liability Defined benefit pension liability assets including pension Net 490 5, 061 973 377 19,093 18,923 assets Total assets less current liabilities Net ~5, liability ~2, 400 16,693 16,523 14 ~325 278 13 16,366 16,245 12 70 73 12 16,623 16,450 16,693 16,523 Funds Restricted income funds Unrestricted income funds General fund Totalfunds excluding pensions reserve Pensions reserve 12 Total funds including pensions reserve 13 ~(325 ~278 16,368 16,245 The consolidated balance sheet includes the assets, liabilities and funds of The International Institute for Strategic Studies (Asia) limited, Arundel House Enterprises Limited, RSS India Organisation and the Strategic Studies Fund. The accounts were approved and authorised for issue by the Trustees on 18 Februanr 201 6 and signed on their behalf by: Ms Fleur de Vigiers Chairman ofthe Trustees The notes on pages 23 to 40 form part ofthese accounts 20 The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30th September CHARITY BALANCE SHEET As at 30m September 2015 Notes 2014 E'000 E'000 Fixed assets 6 7 Tangible assets Investment assets Current assets Debtors 8 Cash at bank and in hand 13,463 4,570 13,872 4,515 18,033 18,387 1,951 3,887 3,460 1,315 4, 775 Creditors 9 amounts falling due within one year Net current Creditors 11 amounts falling due after one year assets excluding pension Net assets 123 18,659 18,510 ~2, 400 16,259 ~25 16, 110 15,934 15,832 12 70 73 12 16,189 16,037 16,259 16, 1 10 15,934 15,832 liability 14 Defined benefit pension liability 4, 652 626 assets Total assets less current liabilities Net ~5/12 including pension liability 278 Funds Restricted income funds Unrestricted income funds General fund Totalfunds excluding pensions reserve Pensions reserve 12 Totalfunds including pensions reserve 13 ~325 ~278 The acmunts were approved and authorised for issue by the Trustees on 18 Februanr 2016 and signed on their behalf by. Ms Fleur Chairman de Vltiers of the Trustees The notes on pages 23 to 40 form part of these accounts 2015 The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30th September 2015 CONSOLIDATED CASH FLOW STATEMENT Year ended 30' September Notes on investments Investment and servicing of finance 2015 6'000 ~2 Loan interest paid 2014 E'000 1,438 ~76 214 income 2014 E'000 1,040 17 Net cash inflow from operating activities Returns 2015 6'000 208 Net cash inflow from returns on investments 132 142 and serviong of finance Capital expenditure and financial investment Purchase of tangible fixed assets (451) (848) 274 Payments to acquire investmenls Receipts from sales of investments (291) (139) 315 1,025 Net cash outflow from capital expenditum 157 Net cash inflow before financing 1,455 Financing Capital repayment 600 of building loan Net cash outlow from financing Foreign exchange gains I (losses) on translation Increase in cash in the year (600) of subsidiary underlaldngs 18 The notes on pages 23 to 40 form part of these accounts 217 (57) 374 798 The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30th September 2015 NOTES TO THE FINANCIAL STATEMENTS 1 Accounting policies a) Status The Institute is a registered charity and a company limited by guarantee and as such has no share capital. The Trustees constitute Directors for the purposes of the Companies Act and act as Trustees for the purposes of the Charities Act. b) Accounting convention The accounts of the Charity and the Group have been prepared under the histoncal cost convention as modified by the revaluation of investments and in accordance with applicable accounting standards. The accounts are prepared in accordance with the Companies Act, and the current Statement of Recommended Practice: 'Accounting and Reporting by Chanties' (SORP 2005). Basis of consolidation The accounts indude 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, or income and expenditure account, is not prepared for the Charity itself because advantage has been taken of the exemptions provided by paragraph 397 of SORP 2005. The Charity's net surplus for the year was 49, 000 (2014: Surplus 5353,000). f Going concern After making enquiries, the trustees have reasonable expectation that the charity has adequate resources to continue its activities for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements as outlined in the Trustees' Report above. c) Investments investments are valued at their mid-market value at the balance sheet date, which gives rise to unreaiised gains and tosses, which are included in the Statement of Financial Activities. Investment income and related tax credits are accounted for when received. The differences between the carrying value (or cost if acquired during the year) and the proceeds of liquidated investments are separately identified as realised investment gains or losses in the Statement of Financial Activities. All d) Restricted funds Restricted funds are funds subject to specific restrictive conditions imposed by donors or by the purpose of the funds raised. e) Tangible fixed assets and depreciation Furniture, fittings and equipment acquisitions are stated at cost. Freehold buildings Depreciation is charged when assets are brought into use. The following depreciation consistently across the group: are stated at cost. policies are applied i) Computers, printers and other electronic equipment with funcbonal unit costs in excess of F1,000 are depreciated over a period of three years. furniture, fittings and equipment of a non-electronic nature with unit costs in ii) Leasehold improvements, excess of 5250 are depreciated over a period of five years. iii) 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. 1) Foreign currency Assets and liabilities denominated in foreign currencies are translated into sterling at the rate of exchange 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. ruling Foreign currency subsidiaries are translated into UKE 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 23 The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30th September 2015 g) Publications and membership income Publications income is recorded on an accruals basis. Revenue advanced to the Institute under agreement with the publishers is recognised during the financial year in which it is received. An estimate of additional royalty income due up to 30 September 2015, to be received in early 2016, has been made in these financial statements. Membership income is recorded when invoiced. Any income invoiced in advance of the subscription start date is deferred and recognised in the relevant accounting year. period h) Grants Research grants are credited to the Statement of Financial Activities in accordance with the progress and performance of the grant programme activities. Grant 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 resources of restricted funds. i) Deferred restricted purposes, this income is induded in incoming income Grant 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. j) Resources Expended Expenditure is classified under the principal categories of Costs of Generating Governance Costs. Costs of generating funds manager's fees/commissions comprise those costs directly attributable and costs incurred in relation to financing. Funds, Charitable Activities and to recruiting members, investment Charitable activities costs compdise all expenditure directly related to the objects of the Institute induding 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 number of full time equivalent employees allocated to each activity for the financial year. Governance costs are those incurred constitutional and statutory requirements. Expenditure in connection with the governance is accounted for on an accruals basis. Irrecoverable of the Institute and compliance wilh MAT is included with the item of expense to which it relates. k) Leasing Rental costs under operating leases are charged to the Statement of Financial Activities the period of the leases. in equal amounts over I) Pension costs The Insktute operates 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 wihh FRSt 7 Retirement Benefits. The Institute has defined contribution pension schemes which are open to all employees and also contdibutes to the personal pensions of some employees. Contributions to the scheme are accounted for when payable. Further details of afi pension schemes can be found in Note 14. m) Library The well regarded Institute 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 Library regularly updates its collection for continued use by IISS members and 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. 24 Institute for Strategic Studies The International Annual Report and Financial Statements for the year ended 30th September 2015 2 Dialogues, conferences and lecture series' Manama Dialogue and regional secunty seminars Shangn-La Dialogue Global Strategic Review Cartagena Dialogue India Global Forum Lecture sensa' 2015 2014 E'000 E'000 3,548 2,080 60 1,395 542 185 3,341 1,816 1, 150 194 7,019 0, 751 79 171 3 Research programmes 2015 Expenses 2015 E'000 E'000 Income Restricted grant funds Bahrain Defence Force - GCC Strategic Cyber Programme 10 (10) Navy workshop 8 (8) - Iran Nuclear Dialogue - RussialEurasia Programme 127 40 194 36 A Brazilian Navy-Royal DIFD - Changing Character of Conflict 0 Fragildy EU - Non-Proliferabon Consortium Group 21 59 (127) (40) (194) (36) (21) (59) FCO- Foreign Policy Dialogue FCO- India Cnsis Management 53 (53) 65 (65) Carnegie Carnegie Cabinet Oflice - Cyber Security Workshops (LondonlBeijing) Canadian Sancgons Workshop (New Delhi) FCO I Swrss FM- Defence Doctnnes (India & Pakistan) FCO- UN Sancbons on North Korea FCO - Assessing Gulf and Levant views on Iran FCO- China Nuclear Security FCO- Nigeria Maritime Security Federal Ministry of Defence, Germany (MOD) - Hybrid Warfare Forum for Arctic Climate Change and Security James Foundation - US-Israel Relations James Foundatron - Adelphi book Japanese MOD 'Will In NE Asia MacArthur - China Nuclear Security NATO- NATO 2014 Summit: themes and actions (co funded FCO/MOD) Navt Secumy and Seaborne Energy Trade in the Indo-Pacific Region NPEC Conference NE &SACSS / FCO - Oman Conference OSI- Middle East (co-funded (40) (24) (29) (23) Other restncted funding (90) (49) (140) 361 19 8 26 80 (361) (19) 9 24 (9) (24) 37 47 (37) (47) (8) (26) (80) 115 (1 15) (57) (93) (4) (463) 113 66 (113) 57 335 (335) (25) (1 37) 25 5 42 151 (8) (22) 24 (24) (11) 5 (5) (1,942) 1,725 (1,725) (2, 049) 2,401 93 4 137 8 22 11 1,942 Unrestricted funds Unrestricted research acbvity Apportionment of central support costs 90 49 140 (33) Drugs Adelphi (and Latin Amencan launch 2013) US Navy - Iran's evoung Ballistic Missile Doctnne US Fnends NYC Fundraising Programme (69) (21 0) FCO) Strategy Energy Policy Decisions in SE Asia (Various) Sultan of Brunei - Economic & Secuniy Fellowship 69 23 33 210 403 with 2014 E'000 (44) Japan, ROK or Taiwan go nuclear?' Korean Foundation- Milrery end Security Development Lockheed Martin - Missis Defence OPCW- CWC and the 44 40 24 Expenses 2014 E'000 Income 1,484 1 404 3,426 ~1750 ~3, 807 2 401 (5,749) 4, 126 (66) (5) (42) (151) (2,797) ~1928 ~4, 725) (6, 450) 25 D O 0 O o I —N Cn la NA «I «I r fo N 0 cr cr cn I r N ttl 0 com5 00 e 'N N Dl D D I «I N ln ca I cCI «I A nl «I D Ch D 0D 'N t« 0 8 0D D OD cr o aa 44 «I A \ N 0 I D 8 CO 0 ta 0 ai fa 8:= 0& 0 ta Q E e ta Cl I 40 Cl 0Ol N A Cr 0Ol 0 ta O «I 0 Cl DO CL N 0 0 0 coe a0 ta E 0 4 0 Cl Dmo No CI NI o UJ CO — N 80 la Je ae ttl O' nl nl 00 0 cl 0 — 0 — 0e 0ta 0. 0 0 Ol Cl rn Cl 0 '0 Cl '0 m g ttl A o po mo CI 4! «I el '0 4l c 0 Cl C lll CO I 0 0 N A V o cIa 0 E 0 lll IO CO 55 te Cl C 8 D ill '0 C te ? 0 0 0C 0. Ol 0 K ill 0 I- C C «I nt I cn CD n 0 N m 0 0 la 4I 0 0 O. 08 ' 0 0 ta CI «C SO g CC g CD N N 0 O I 0 Iric taCl 0 coN0 END0 I A D A C N I 80 0 0N c 00 e c 0 al & Ia ta V 4I E a0 00 E N CL Ol X al N N nl c cl 'Cl N N &' 5 '0 0III E E e 4I '6 0 0 N F„ he L 5 V OI (3 E 0 p 0 c E—0 Zl a CC 0 NV nl N 4! trl nl 0 ni MV V aX fh Cl ta t5 N ttl N CO CO 0 Cl ta Ol 4I 4I V ta ta 4I al al Cl nl CE Nyco 00 Cl LL «« «I fh EO CO fh Cl nl 15 00 0 0 C« 0Ol '0 OI A N N I 0la Cl iO 0 cr 4I 5 el 0l 0 dl 4I 000 c0 la C lll I lll 0 0 E e 5 hl 8 0 0Q n0 O. 0. CD CD lfl 0 04 0 fa 0D —n! ai N 0 E cc 4I 008 cao fo 4 fh Cl I — E —0 nl 4'e D N 0 .0 IO 0 fh 3 8 C5 0 Cl 00 ta '0 '0 ta 13 0 N 00 0000 nl .—ol cl nl O fll m em E 0E cc 0 5-UEc III Ila The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30th September 4 ii) Net Incomingf Outgoing Net incoming/ 2015 resources outgoing resources are stated after charging: 2015 2014 E'000 g000 1, 142 Depreciation Auditors' remuneration - Audit fees - Other 24 Operating leases - Land and buildings Trustees' professional indemnity 5 insurance 8 23 6 779 8 702 8 Staff costs 2015 2014 6'000 E'000 Wages and salaries Othercosts Social security coals Pension costs 6,312 306 6,618 537 379 5, 808 274 6, 082 508 321 7,534 6, 911 Wages and salaries include E864, 000 (2014: 6759,000) in respect of grant funded staff satanas. The average number (fug time equivalents) of employees during the year No. No. Dialogues and conferences Research prog rammes Publications Commercial Activities Membership Ltbmry Support Number 12 28 28 2 11 29 23 7 6 1 3 3 30 28 110 101 of employees whose emoluments were over 660,000 No. No. F 590,001 to 6600,000 F530,001 to E540,000 6170,001 to E180,000 E160,001 to E170,000 6150,001 to E160,000 E'130,001 to E140,000 6120,001 to E130,000 6110,001 to 6120,000 6100,001 to 6110,000 E90,001 to F100,000 E80, 001 to E90,000 E70, 001 to E80, 000 E60, 001 to E70, 000 29 31 None of the above employees (2014: none) are accruing retirement benefits under the defined benefit scheme. 21 of the above employees (2014: 24) are accruing retirement benefits under money purchase schemes and contnbutions on their behalf amounted to E21 5, 000 (2014: 6215, 000) As the result of an administrative error by the company an individual who was contractually entitled to a benefit was unable to access it, resulting in costs of 639k being met by the company on their behalf. As this was the correction of an error it has been omitted from the bandings above. 27 The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30th September 2015 6 Tangible fixed assets Group Furniture, Freehold Freehold land buildings E'000 fisngs, 8 equipment E'000 motor vehicles Total C000 E'000 Cost At 1 October 3,000 201 4 7,434 108 (262) 451 21,890 11,456 7 731 22, 187 1,833 6, 026 7, 859 11,456 Exchange differences on consolidation Disposals Additions 3,000 2015 At 30 September 108 (262) 451 Depreciation At 1 October 2014 Exchange differences on consolida8on Eliminated 103 (259) 115 819 (259) 934 1,948 6,689 8, 637 3,000 9,508 1,042 13,550 3,000 9,623 1,408 14,031 on disposals Charge for the year 2015 At 30 September 103 Net book value 2015 At 30 September At30 September2014 Furniture, fittings, equipment and motor vehicles does not contain any assets in the course of construction (2014: ENil). Charity Furniture, fittings Freehold Freehold land buildings motor vehicles Total E'000 E'000 E'000 E'000 equipment & Cost At 1 3,000 October 2014 11,456 6,850 127 (233) 440 21,306 11,456 7, 184 21,640 1,833 5, 601 7,434 Exchange dÃerences Disposals Addrilons At 3,000 30 September 201 5 127 (233) 440 Depreciation At 1 October 2014 116 (233) 745 Exchange dserences Eliminated on disposals 115 Charge for the year 116 (233) 860 1,948 6,229 8,177 3,000 9,508 955 13,463 3,000 9,623 1,249 13,872 At 30 September 201 5 Net book value At 30 September 2015 A130 September2014 Furniture, fittings 6 equipment does not contain any assets in the course of construction (2014: ENil). xa The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30th September 7 Fixed asset investments Group and charity 2015 2014 0000 0000 Quoted 507 171 806 470 1,060 tvf06 135 167 790 263 1,214 1, 145 4/20 350 3,714 801 Total market value at 30 September 4, 570 4, 515 Total historical cost at 30 September 2,905 2, 905 3,714 848 3,770 139 (315) 120 Hedge Funds Portfolio Funds UK Fixed Interest Funds Fixed Interest Funds International UK Equity Funds Equity Funds International Total Quoted investments Portfolio cash Reconciliation of opening and closing market values Opening market value at I October Additions at cost Disposals at opening market value Net gain on revaluation Closing market value at 30 September Porffogo cash at 30 September Total market value at 30 September 8 ~60 1274) 4,220 3,714 350 801 4,570 4, 515 Debtors Group 2015 6'000 Trade debtors Other debtors Prepayments and accrued income 2014 6'000 238 366 858 222 1,462 1,262 375 665 Charity 2015 6'000 Trade debtors Otherdebtom Amounts due from subsidiary undertakings Prepayments and accrued income 2014 0000 163 61 280 779 831 281 264 1,951 1,315 607 2015 The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30th September 9 2015 Creditors: amounts falling due within one year Group 2015 2014 R' OM R'000 643 Other creditors 582 Loan Accruals Deferred income (note 10) 522 589 4,325 3,890 5,490 5, 061 Charity Amount due to subsidiary undertakings Other creditors Accruals Deferred income (note 10) 2015 2014 0000 R'000 316 563 443 568 467 3,734 3,228 5,212 4,652 545 10 Deferred income Group 2015 aoM Brought foneard at Received in 1 October 2014 907 3,708 7, 680 (7, 498) 4,325 3,890 3,NO 7, 342 ~6, the year Expended in the year Carried forward at 30 September 2015. 2014 R'000 Charity Brought forward at Received Expended in rn 1 October 2014 the year the year Carried forward at 30 September 2015 2015 2014 R'000 R'000 3,228 6,553 047 ~6, 3,734 3,036 6, 592 400 ~(6, 3,228 30 The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30th September 2015 11 Creditors: amounts falling due after one year Group and Charity 2015 B000 Loan 2014 5'000 2,400 2,400 2,400 2,400 2,400 2,400 Repayable as follows: between one aod two years between two aod five years Subsequent to the year ended 30 September 2015, the Institute made a capital repayment of f 500,000 on the loan (2014: f 600, 000). The loan with HSBC Bank Pic was renewed in July 2012 over a five year period ending 30 June 2017. The loan bears interest at a variable rate at 2.5% above the base rate and is secured by way of a legal charge over Arundel House. . 31 The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30th September 2015 12 Movement in funds Group Balances Incoming b/fwd resources E'000 E'000 Resources expended E'000 Transfers E'000 Gains/ Balances (losses) E'000 dfwd E'000 Restricted 73 1,942 ~945 16,450 14,927 - (14,862) - 2 14927 ~(4862) 61 16,298 16,245 16,869 (16,807) 61 16,368 (278) (6( Totalfunds 33 37 1,942 Research Grants Unrestricted General fund Pensions reserve (2) (1,943) 35 38 Gerald Segal Memorial Fund 70 (65) 173 65 (112) 16,623 ~325 Charity Balances Incoming Resources b/fwd resources E'000 expended E'000 E'000 Transfers 5" 000 Gains/ Balances (losses) E'000 dfwd B000 Restricted Gerald Segal Memorial Fund Research Grants 35 38 1,675 73 1,675 16,037 11,710 Unrestricted General fund Pensions reserve Totalfunds ~278 ~(676, ~L8 (2) 33 37 8 70 (11,683) (65) 65 16,189 190 (112) ~325 15,759 11,710 (11,683) 78 15,864 15,832 13,385 (13,361) 78 15,934 Gerald Segal Memorial Fund - to fund study on Asian issues. Research Grants - for research projects and specific non-research projects in strategic studies. Pens(ons reserve - represents the FRS17 pension liability. 32 The International Institute for Strategic Studies 2015 Annual Report and Financial Statements for the year ended 30th September 13 Analysis of net assets by fund Group Restricted Unrestricted Funds Funds Total Funds g000 0000 K'000 Fixed assets Investments 70 Net current assets/ (liabilities) Creditors falling due after one year 13,550 4, 570 903 (2,400) 13,550 16,298 16,366 4, 570 973 (2,400) ~325 ~325 Pension liability 70 Charity Restricted Unrestricted Funds Funds Total Funds 0000 D000 0000 Fixed assets Investments Net current assets/ (liabilities) 70 Creditors falling due after one year 13,463 4, 570 556 (2, 400) 13,463 15,864 15,934 4,570 626 (2,400) ~325 ~325 Pension liability 70 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 contnbution scheme. a Defined benefit scheme The Institute sponsors the International Institute for Strategic Studies Staff Superannuation Scheme The last completed full actuarial valuation of this scheme was which is a defined benefit arrangement. carried out by a qualified independent actuary as at 1 March 2012 and updated, for FRS17 purposes, on an approximate basis to 30 September 2015. The scheme is closed to new entrants and no contributions were made dunng the year. During the year, the institute has made payments of 648,400 in the year to reduce the overall scheme deficit as identified in the triennial actuarial valuation of the scheme as at 1 March 2012. This contribution rate will continue until the results of the next triennial valuation of the scheme which commenced on 1 March 2015 are issued. i) The amounts recognised in the balance sheet are as follows: 2015 0000 Present value of funded obligations Fair value of plan assets Deficit (2,275) 1,950 2014 6'000 (2, 178) 1,900 ~32 ~278 Amounts in the balance sheet: Liabilities Assets Net liability (325) (278) ~325 ~278 33 The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30th September 2015 14 Pension scheme (continued) ii) Changes in the present value of the defined benefit obligation are as follows: Opening defined benefit obligation E'000 2, 178 2, 223 Service cost 5 91 Interest cost I Employee contributions ~29 42 Actuarial loss Benefits paid Defined benerd obligarion at end of year iii) 2,275 154 ~296 2, 178 Changes in the fair value of the scheme assets are as follows: 2015 Opening fair value of scheme Expected assets E'000 2014 E'000 1,900 2, 000 114 return P0) Actuarial gain Employer contributions Employee contributions Benefits paid Fair value of scheme assets at the year end iv) 2014 201 5 E'000 ~29 1,950 34 47 I ~296 1,900 The amounts included within the Statement of Financial Activities are as follows: 2015 2014 E'000 0000 99 114 15 18 15 18 Current servim cost (5) Expected return on scheme assets Interest on pension liabilities Total amount charged within net outgoing resources (losses) Total amount charged to the Statement of Financial Acfivifies Actuarial gains ~84 ~91 / The International Institute for Strategic Studies expects to contribute F47, 200 to its defined benefit pension scheme in the year ending 30 September 2016. v) Statement of total recognised gains and losses is as follows: 2015 2014 E'000 E'000 Difference between expected and actual return on scheme assets (70) 34 Expenence gains arisrng on the scheme liabilities Effects of changes in the demographic and financial assumptions underlying the present value of the scheme liabilities - loss (14) (28) (144) (112) (110) (112) (110) Total actuarial gains / (losses) before restriction due to some of the surplus not being recognisable Total gain I (loss) recognised in statement of total recognised gains and losses 34 Institute for Strategic Studies The International Annual Report and Financial Statements for the year ended 30th September 201 5 14 Pension scheme (continued) vi) The major categories of scheme assets as a percentage of total Scheme assets are as follows: 2015 2014 Equities 27' 27% Diversified Growth 28'% Bonds 44% 1'/o 30% 42% 1% 2015 6'000 E'000 29 148 Cash The actual return on the scheme assets in the year The overall expected rate of return on the scheme assets is determined assumptions listed below. vii) Principal assumptions 2014 based on the principal actuarial at the balance sheet date (expressed as weighted averages) Discount rate at 30 September Inlfation (RPI) Inflation (CPI) Rate of increase in salaries Allowance for pension in payment increases of mflation or 5% p. a. if less Allowance for pension in payment increases ol inflation or 2.5% p.a. Rate of increase of pensions in viii) The mortality assumptions Male retiring in Female retiring Male retiring in Female retiring less 2014 3.90% 3.30'/ 2 50% 4.20% 2.50% 2 50% 2 75% 50% of maximum 50% of maximum of pension for cash at retirement Allowance for commutation life expectancies at age if deferment 2015 3.70'/ 3.(go/r 2.30'/ 4.00'/ 2.30% 3.00r/r 2.50'/ adopted at 30 September 2015 imply the following years 65: 23.00 25.40 24.40 26.90 2015 in 2015 2035 in 2035 viii) The expected long term rates of return applicable to each period are as 2015 2014 6.50'Y 3.00'/e 3 90'Yo follows: Diversified Growth 0 50% 6.50% Overall for scheme 521'Yo 6.80% 3 30% 4 40% 0 50% 6.80% 6.11% 2014 D000 2013 2012 2011 E'000 E'000 0000 (2, 178) 1,900 (2, 223) 2, 000 (2, 035) 1,758 (1,749) 1,511 (278) (223) (238) 34 115 (277) 19 99 Equity Fixed Interest Corporate Bonds Cash and other ix) The amounts for the current and previous periods are as follows: 2015 6'000 (2,275) Defined benefit obligation 1,950 025) Scheme assets (Deficit) Expenence adiustments on scheme liabilities Experience adjustments on scheme assets (14) (70) (123) 35 Institute for Strategic Studies The International 2015 Annual Report and Financial Statements for the year ended 30th September 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 2015 was F 53,000 (2014 E63, 000). c The Institute contributions Contributions d scheme Defined contribution has a defined contribution pension scheme which is open to all employees. The made in the year ended 30 September 2015 were F311,000 (2014: 6222, 000). outstanding at the year end amounted to f43, 000 (2014: F39,000). 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 2015 were f12, 000 (2014. F13,000). Contributions accrued at the year end amounted to ENIL (2014 614,000). 15 Leasing commitments The future annual minimum payments to which the Group is committed as at 30 September 2015 under operating lease agreements are as follows: 2014 2015 8'009 COOO Office premises Nst annual ob/igations expiring. one year Between one and two years 21 Between two and five years 502 257 Within Over five years 226 274 246 16 Capital commitments As at 30 September 2015, there were no capital commitments for (2014: 592, 000). contracted but not provided 17 Reconciliation of net incoming resources to net cash inflow from operating activities 2014 2015 8'009 Net incoming/(outgoing) Investment incoming resources before other gains and losses income Depreciation Exchange (gain) / loss on fixed assets Loss on disposal of fixed assets (Increase)/ Decrease in debtors Increase/(Decrease) in creditors Pension reserve funding deficit Loan interest paid Nst cash inflow from opemtisg activities O'000 62 207 (214) (208) 1,142 16 5 284 934 (5) 3 (200) 429 (41) 72 1,040 (52) (32) 76 1,438 38 The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30th September 2015 18 Reconciliation of net cash flow to movement Increase Decrease cash in in in in net funds 2015 2014 E'000 E'000 the year 374 797 600 loan 374 1,397 Net debt at 1 October 2,577 1, 180 Net debt at 30 September 2,951 2, 577 Movement in net debt during the year Analysis of changes in net cash/(debt) 2014 000 Cash flows 0000 E" Cash at bank Portfolio cash 4, 176 801 4, 977 Loan 825 5,001 350 374 5,351 ~451) ~2400 2 400 ~2, 2,400 2,577 2015 E000 400 374 2,951 19 Trustees or connected persons The Trustees did not receive any remuneration during the current or previous year. No transactions, contracts, honoraria payments or other arrangements (induding grants) with any Trustees were entered into by the Institute during the year ended 30 September 2015 (2014: Nil). Travel expenses for both governance and attending Institute dialogues and other activities were paid or reimbursed in respect of 8 trustees (2014: 7) and the total amount was 6 31,000 (2014: 749, 000). 37 The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30th September 20 Subsidiary undertakings The Institute has taken advantage group transactions. Arundel House Enterprises a 2015 of the PRS 8 exemption from disdosure of certain intra Ltd The charity beneficially owns the entire share capital of Arundel House Enterprises Limited, a company incorporated in England and Wales, 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. Summary of profit and loss account for Arundel House Enterprises Ltd 201 5 6'000 Turnover 2014 E000 781 759 663 637 ~ttfi ~122 Cost of sales Gross profit Other expenses (467) 117 Net profit before taxation Gift Aid to I ~123 ~177) ISS Profit after taxation c 170 (6) (7) Summary of balance sheet for Arundel House Enterprises Ltd 2015 E000 2014 E000 Tangible fixed assets 10 Debtors Cash at bank and in hand Current assets assets Aggregate capital and reserves International a 102 14 240 116 ~230 ~106 Creditors Net 180 60 14 20 14 20 Institute for Strategic Studies (Asia) Ltd 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. The financial statements are audited in local currency and converted into UKf Sterling at the appropriate exchange rate. Summary of income statement for International Institute for Strategic Studies (Asia) Ltd 2015 2014 E000 Csss Research prcgrammes 2256 1,022 1,991 863 Total income 3,278 2, 854 Dialogue and Lecture Series Dialogue and Lecture Series Research prcgrammes Publications Other Expenses Totalexpenses Surplus/ (deficit) for the year (1,966) (1,066) (191) (1,949) (914) ~2 ~9 ~3, ~2, 225 53 (98) 970 ~ttfi 36 The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30th September c Summary of balance sheet for International Institute for Strategic Studies (Asia) Ltd 2015 2014 f.'000 g000 61 149 556 974 427 702 1,530 1,129 178 ~881 433 397 433 397 Tangible fixed assets Debtors Cash at bank and in hand Current assets ~(, Creditors Net 2015 assets Aggregate capital snd reserves Ig Strategic Studies Fund a The charity has ultimate discretion over the disbursement of funds from the Strategic Studies Fund, a trust established in Singapore. The finanaal statements are audited in local currency. For this reason the appropriate exchange rate has been applied at the balance sheet date to produce the results below. b Summary of income statement for Strategic Studies Fund 2015 2014 6'000 g000 Total income 192 192 Disbursements (192) Duns(ious Other expenses ~192 Total expenses Surplus/(defiut) c for the year Summary of balance sheet for Strategic Studies Fund 2015 P000 Debtors Creditors 2014 g000 105 ~104 Net assets Reserves 39 The International Institute for Strategic Studies Annual Report and Financial Statements for the year ended 30th September 2015 IV SSS India Organisation a The charity holds a majority share-holding in IISS India Organisation, a limited not for profit company incorporated in India. The financial statements are audited in local currency and converted into UKE Sterling at the appropriate exchange rate. b Summary of income statement for SSS India Organisation 2015 2014 D000 f.'000 198 Dialogue and Lecture Series Research programmes Total income 198 Dialogue and Lecture Series Research programmes 194 12 Total expenses 206 Surplus/ (deficit) for the year c Summary of balance sheet for SSS India Organisation 2015 2014 f'000 a000 Tangible fixed assets Debtom Cash at bank and in hand Current assets Creditors 6 80 ~93 Net assets Aggregate capital and reserves 40 IISS FOR INFORMATION ONLY: CHARITY SOFA DOES NOT FORM PART OF AUDITED FINANCIAL STATEMENTS YEAR ENDED 30TH SEPTEMBER 2015 Unrestricted Funds Totals 2015 E'000 Restricted Funds 0000 E'000 Totals 2014 COOO Incoming resources /ncoming resowcss hom generated funds Voluntary income Donations Activities for generating funds Gift aid donation from subsidiary Investment income /ncomrng resowces from generated funds 2, 168 2, 168 2, 037 123 208 123 208 178 208 6,021 2,404 5, 413 3,263 6, 021 729 Dialogues and conferences Grants for research programmes Publications 1,675 821 821 934 Membership Library Other /ncoming resources 1,639 I 1,639 1,395 1 2 Total incoming resources 11,710 1,675 13,385 13,430 26 72 23 49 72 51 76 98 23 121 127 1,655 4,349 4, 650 2,968 3,588 5, 509 2, 641 810 377 711 449 13,154 12,898 Resources expended Costs of generahng Fundraising costs Finanmng costs Funds Costs deductible activities Dialogues and conferences Research programmes Pubiicetioiis Membership Charrtab/e 4, 349 2, 995 2, 968 810 377 Library 11,499 ac//vities To/a/ chariiab/e 1,655 70 86 Governance costs Total resources expended Net (outgoing)/ mcoming resources before transfers 11,683 1,678 13,361 13,095 27 (3) 24 335 27 (3) 24 335 24 18 Transfers between funds Net incoming/(outgoing) resources before other gains/losses Other recognised gains/(losses) Realised gains less losses on mvestment assets Net (deficit)/ surplus for the year Unrealised (losses)/ gains on investment assets Foreign exchange gains/ (losses) Actuanal losses on defined benefit pension schemes 24 51 353 (3) (68) 234 (68) 234 125 (47) 105 (3) 102 321 Funds brought forward at I October 2014 15,759 73 15,832 15,511 Funds cerned forward at 30 September 2015 15,864 70 15,934 15,832 Net movement in funds