ISIS Stunner: Terrorist Organization's Annual Reports Unveiled; Reveal Full "Investment Highlights"

In a day and age in which corporations rule the world, the brutal Al-Qaeda spin off known as ISIS is learning from the best, and as part of its credentialising and image-building has done something only major corporations do at the end of every year: it has issued annual reports for the past 2 years (unaudited, unless Ernst & Young has quietly upgraded from "massaging" the books for Lehman's Repo 105 and, of course, the New York Fed, without our knowledge).

That's right: as the FT reported earlier, "Since 2012 the Islamic State of Iraq and the Levant, (known as Isis) has issued annual reports, outlining in numerical and geographical detail its operations – the number of bombings, assassinations, checkpoints, suicide missions, cities taken over and even “apostates” converted to the Isis cause."

But while publicly traded corporations focus more on revenues, margins, and profits, ISIS has other key considerations:

In 2013 alone, the group’s report claimed nearly 10,000 operations in Iraq: 1,000 assassinations, 4,000 improvised explosive devices planted and hundreds of radical prisoners freed. In the same year it claimed hundreds of “apostates” had been turned.

Wait... are you serious?

Why yes: below are the "investment highlights" pages from ISIS' 2012 and 2013 annual reports:

And to think how many more assassinations and bombings ISIS would have achieved if only it wasn't for the damn "polar vortex"...

But why is ISIS not only documenting its every single act, but boasting about all of its terrorist achievements? According to the FT the purpose of releasing 410 pages full to the brim with the terrorist group's exploits, is simple: "Isis’s aim appears to be to demonstrate its record to potential donors." Which means that the glossy excerpted pages shown above are indeed nothing more than investment highlights!

The reports paint a picture of an organisation that analysts say is not so much the ragtag terrorist band depicted by Iraqi officials but more of an organised military structure with a clear political strategy to set up a Sunni sectarian state – and one with several of the hallmarks of a corporate entity.


“The reports provide measures of performance in the way you roll out details for donors,” said Jessica Lewis, director of research at the Institute for the Study of War. “They affirm that the organisation operates like an army and that it has state-building ambitions.”

Virtually every aspect of a conventional annual review is included: Nigel Inkster, former assistant chief of UK intelligence service MI6, and now director of transnational threats at the International Institute for Strategic Studies, said: "They produce [them] almost like a company, with details of martyrdom operations and targets. You have a clear overlay of structure, planning and strategy to the organisation."

One wonders: how does one differentiate between suicide missions and successful assassiantion attempts on a GAAP vs non-GAAP basis? The answer is unclear, but what is clear is that the modus operandi of terrorist organizations has changed drastically from the days of Osama bin Laden living in caves in Afghanistan.

Isis is the successor to the group that was known as al-Qaeda in Iraq and was so brutal in its methods that it drove Sunni tribes, with help and financial incentives from the US military, to turn against it in 2006. Isis learnt a lesson. “Isis decided the solution was better military power and that it should be a harder version of al-Qaeda,” said Ms Lewis.


And yet the group has adapted to new modern methods of spreading its message. Deft use of social media has been at the forefront of its campaigning tactics in Syria and Iraq. When it comes to using platforms such as Twitter, Isis is “probably more sophisticated than most US companies,” says Aaron Zelin, an expert on jihadis and fellow at the Washington Institute.


Isis’s use of social media has been one of the main reasons why it has become the single most popular organisation for fighters from foreign countries – including an estimated 2,000 from Europe, according to estimates from western intelligence agencies.

So ISIS is great at creating real (and probably fake, purchased in Bangladesh) Twitter followers, but what really matters at the end of the day, just like with every self-respecting corporation, is whether ISIS has the funds and can generate the income the sustain its terrorist operation.

And it is here that ISIS truly excels. As we reported last week, ISIS is now the richest terror group ever after it looted over $400 million from the central bank of the Iraqi city of Mosul - the first town it overran with virtually no resistance as part of its Blitz offensive.

"In financial terms, 2014 has been dramatically successful for the group, after fighters looted hundreds of millions of dollars from Mosul banks. According to the Council on Foreign Relations, Isis was already extorting taxes from businesses in Mosul before its takeover, netting perhaps as much as $8m a month.

While these achievements will be revealed in the upcoming ISIS' 2014 anual report, we wonder: will they be classified as recurring, or as all those GM recalls and JPM lawsuits, be deemed "One-time", "non-recurring."

In conclusion: ISIS has the balance sheet, it also has the cash flow, it has the weapons inventory, the property, refinery plants and bomb equipment, and the terrorist churn. It also has a glossy 410 page annual report for the Terrorist Fiscal Year Ended 2013 (which at more than double the pages of the 2012 report means business has never been better).

All that is missing is an IPO and a Conviction Buy rating from Goldman Sachs.

The full 2013 report can be found below (pdf)