1. 1 1 An introduction to IET Strategy & Finance Last updated: 3 March 2016 Ed Almond Director of Finance & Planning

2. 2 2 2 Strategy & Planning Framework Royal Charter, Vision And Mission IET Strategy (including 10 and 3 year strategies) The IET Plan & Strategic KPIs Directorate & Business Unit Plans & Operating Metrics Projects Portfolio

3. 3 3 3 The Planning Process Jan 14 Dec 14 May 14 Board of Trustees Strategy Update June 14 Planning templates presented to Main Boards June – Oct 14 Main Boards and Staff develop plans Sept 14 Executive Team reviews first drafts of all plans Nov 14 Board of Trustees Review IET Plan, Financial Plan and underlying plans Input from Main Boards, Council & Working Party

4. 4 4 Working to engineer a better world Inspire Influence Inform Public relevance Engagement Students & Young Professionals Knowledge Promoting Professionalism Integrity Excellence Teamwork for Society, Members and the Profession Our Vision Our Strategy Our Values

5. 5 5 5 Strategic KPIs 2016-2018 Strategic PriorityKey Performance Indicators 2015 201620172018 PlanQ3 ForecastPlan Demonstrating public relevance in the 21st Century Quality coverage7,2547,7038,2008,9459,000 Engagement with members and the professional community Number of event attendees Average number of unique IET.tv visitors per month 114,050 n/a 113,843 3,353 114,250 3,500 115,500 4,000 116,350 5,000 Students & Young Professionals - Relevant offerings to increase recruitment and retention Number of non student and apprentice members below the age of 40 years 36,68037,20236,97837,58638,150 Essential engineering intelligence and solutions Number of papers published (journals and events)6,4506,2167,2807,8457,945 Average journal impact factor (3 year target)n/a1.081n/a1.100 Promoting professionalism - working with Academia, Industry & Government Number of new registered members2,100 2,2502,4002,500 IET Values % of volunteers agreeing that “volunteers and staff work effectively as one team, with shared values, towards common goals” (3 year target) n/aActual TBCn/aTBC Membership value rating (scale of 1-5) (3 year target) n/a 3.5n/a Number of unique IET website visitors per month (rolling 12 month, monthly average) 620,000 640,000670,000700,000 Agreed IET surplus/deficit£1.9m£3.0m£(1.7)m£(1.6)mTBC

6. 6 6 What makes charity finance different Charity Commission regulates sector, HMRC polices tax compliance Tax exemptions dependant on charity compliance Higher level of accountability in reporting Objectives, strategy, public benefit outcomes IET’s primary objectives are not financial, but finance is a key enabler

7. 7 7 Non-charity trading Charity Primary purpose trading Educational publishing Ancillary trading Drinks for an event Trading subsidiary Non-primary purpose Venue services Advertising Mixed trade Sponsorship Event General principles Visible to charity governance & fully controlled Arms length transactions Careful allocation of activities & costs Gift aid to reduce tax Other uses of subsidiaries Risk management (limited liability) International compliance

8. 8 8 Trading subsidiaries IET (India) s25 USA, Canada, Caribbean… IET IET Services Ltd IEE Conventions Ltd IET USA Inc IET Services (India) IET (Beijing) Magazines Advertising Venues Event management International Broadcasting Convention partnership Inspec customer support Direct sales Membership Events Publishing support As required by compliance

9. 9 9 Charity reporting – Fund accounting Cover for pension liabilities, investment volatility & business continuity Restricted Funds Legacies & grants Unrestricted Funds Available for general purposes of the charity Designated funds Set aside for specific purposes General funds (reserves) Not allocated Operational fixed assets New initiatives Sinking funds for buildings Scholarships Research prizes Subsidiary charities £125.2m £12m

10. 10 IET: a charity run in a business-like way Professional Home for Life ® for Engineers and Technicians 10 Clear objectives Member & customer focus Strategies to grow impact Business skills Understanding risk Leveraging brand & collaboration Performance management Value optimisation Pricing strategy Market research KPIs Investment strategy Business cases Due diligence Product development Budget management

11. 11 IET Financial Framework Financial objectivesFinancial framework Sustainable operating budgets over IET’s financial cycle Target breakeven over Wiring Regulations cycle Adequate investment in infrastructure/ product development Separate projects allowance deployed against development priorities Sufficient reserves for identified needs Targets based on risks faced by the IET

12. 12 Forecast sustainability

13. 13 Balancing net contribution and net cost activities 13 Library ACADEMIC PUBLISHING PRACTITIONER PUBLISHING MPD TRADING IBC Events Venues Communities Education Policy IET.tv International Other 13

14. 14 Projects/ Investments Extend reach Enhance offeringConsolidate & protect Innovate & speculate Market expansion Innovation 1 Inspec 2 2 Know Your Customer A A 5 5 6 6 9 9 8 8 B B 1 1 3 3 C C Major projects in budgets: Potential proposals to draw down reserves: A Platform Convergence B IET Learning Academy C China professional registration 2 2 7 7 3 MyCommunity (annual) 4 IET.tv 5 New Standards (annual) 6 India (annual) 7 China (annual) 8 Open Access (annual) 9 E&T Reference (annual) Ongoing opex investment: 4 4