I
W
G
p
l
c
A
n
n
u
a
l
R
e
p
o
r
t
a
n
d
A
c
c
o
u
n
t
s
2
0
2
1
ANNUAL REPORT AND ACCOUNTS 2021
Contents
Strategic report
Hybrid is happening
At a glance
Our purpose
Our brands
Chairman’s statement
Chief Executive Officer’s review
Our strategy
Our business model
Market review
Key performance indicators
Stakeholder engagement
Chief Financial Officer’s review
Introduction to ESG
Environment
Task force on climate-related
financial disclosures
Social
Community engagement
Corporate governance
Risk management
and principal risks
Governance
Board of Directors
Corporate governance
Nomination Committee report
Audit Committee report
Directors’ Remuneration report
Directors’ report
Directors’ statements
Financial statements
Independent auditor’s report to
the members of IWG plc
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated statement
of changes in equity
Consolidated balance sheet
Consolidated statement
of cash flows
Notes to the accounts
Parent company accounts
Pre-IFRS 16 pro forma statements
Segmental analysis
Post-tax cash return on
net investment
Five-year summary
Glossary
Shareholder information
1
10
12
14
22
24
31
38
40
42
44
46
52
53
58
60
62
65
66
76
78
86
90
94
109
111
112
117
118
119
120
121
122
163
164
168
170
172
173
175
2021 Performance highlights
Revenue from continuing operations (£m)
£2,227.9m
2021
2020
2019
2018
2,227.9
2,431.9
2,594.3
2,354.7
Overheads as percentage
of revenue (%)¨
13.2%
2021
2020
2019
2018
13.2
13.3
10.7
10.5
Adjusted EBITDA development¨
£79.6m
2021
79.6
133.8
2020
2019
2018
Network (locations)
3,314
2021
2020
2019
2018
428.3
389.9
3,314
3,313
3,388
3,306
Net growth capital investment¨
£111.8m
111.8
250.9
2021
2020
2019
2018
389.0
332.0
A glossary is included on page 173 which defines various alternative
measures used to provide useful and relevant information.
† The comparative information has been restated to reflect the impact
of discontinued operations.
¨ Results presented on a pre-IFRS 16 basis (as defined in the glossary
on page 174).
…and we are making it possible
for everyone everywhere.
…for people
At IWG we’ve always recognised the
demand for a balanced work life, now
the world is embracing the hybrid model.
It gives us a future where companies can
attract and retain the best talent, where
carbon emissions will fall and where
people and communities will thrive
as investment soars.
We’re expanding our network to bring new levels
of flexibility for people’s working lives.
…for the planet
Alongside our employees, customers and partners,
we’re welcoming a greener, more sustainable way
of working through an increasingly hybrid and
digital world.
…for better performance
We’re supporting companies to adopt the hybrid
model, leveraging business advantages such
as increased productivity and reduced costs.
With over 30 years as the leading enabler, we are
in the right place at the right time with the right
technology to meet this demand.
Corporate HQ
Work space
Home
At IWG, we are doing more than anybody else to bring people across the world the opportunity to
work in a more balanced ‘hybrid’ way. Hybrid working – when employees split their time between
home, a local office and a corporate HQ – is increasingly what employees are requesting.
Visit our website: iwgplc.com
iwgplc.com
1
Hybrid is happening…STRATEGIC REPORT HYBRID IS HAPPENING
The blended
work approach
Hybrid is more than just happening. It’s
flourishing. And the multiple drivers of
change underway are headed by an
enormously powerful motivating factor:
the fear among corporations across the
world that they will lose their best
people if they don’t provide them with
the flexible working conditions they’re
asking for.
MONDAY
Responding to emails over
breakfast at home
TUESDAY
Working close to home
at a flexspace
90%
of business leaders believe
splitting the working
week between the home,
HQ and a local workspace
will help attract the
best talent(1)
1. Source: IWG FTSE 350 Research, 2021
2
IWG plc Annual Report and Accounts 2021
STRATEGIC REPORT
Recent IWG research reveals, in fact, that
a full 90% of FTSE 100 and FTSE 250(1)
business leaders believe their key talent
would leave for the competition if they
didn’t have the ability to split their
working time between the office, home
and workspaces close to where they live.
The fear is well-founded, with the same
research showing that half of all office
workers would resign rather than return
to the office full time. Considerably more
than half (58%) meanwhile believe the
pandemic has changed working practices
for the better.
For those companies already operating
the hybrid-working model, the benefits
extend far beyond the retention of talent.
Empowering people to collaborate in
the way that suits them and their
circumstances – remotely, face-to-face or
using a blend of the two – is benefiting
everybody involved in the form of
greater flexibility, enhanced safety,
better mental health and reduced
burnout and disaffection.
It is also demonstrably improving
companies’ efficiency, cost-effectiveness
and productivity by enabling people to
make and act on decisions
collaboratively, regardless of their
physical location. And it’s enabling easier
access to the best talent, no matter
where it is: barriers between countries
and even continents are irrelevant in the
hybrid world.
At the same moment, by freeing people
up to spend more time at or close to
home, the hybrid model is invigorating
local economies and enriching
communities that used to be stripped
every day of their most energetic and
economically active members. And,
by reducing the need for millions to
commute to work and back five times a
week, it’s having a tremendous impact on
the single biggest contributor to many
companies’ carbon footprint.
At IWG, we are proud to be a global force
powering this revolution, which is freeing
people to live and work in the ways that
suit them best. By providing the world’s
largest workspace network and leading
technologies, supported by a customer-
focused culture and proven strategy for
growth, we aim to enable essential
benefits every day, not just for the profits
and performance of the companies we
work with but also for our planet and all
its people.
Source: IWG FTSE 350 Research, 2021
1. Source: IWG FTSE 350 Research, 2021
WEDNESDAY
Project meetings at the HQ
THURSDAY
Collaborating with colleagues
at a local flexspace
FRIDAY
Preparing presentations at home
followed by a lunchtime run
iwgplc.com
3
HYBRID IS HAPPENING – FOR PEOPLE
New levels of flexibility
for people
Based on our unique capital-
light growth model, the rapid
expansion of our global
workspace network is
bringing new levels of
flexibility to millions of
workers’ daily lives in more
than 120 countries across
the world.
The increasingly widespread adoption by
businesses everywhere of the hybrid-
working model is far more than a
knee-jerk reaction to the global
pandemic. Already underway for much of
the 21st century, it is clear evidence that
taking a ‘people first’ approach is at the
heart of many corporations’ talent-
attraction and retention strategies.
Realistically, they have little choice in the
matter. Research we carried out during
2021 showed that half of all workers
1. Source: IWG Research, 2021
2. Source: IWG FTSE 350 Research, 2021
3. Source: IWG Hybrid Happiness Survey, 2021
would look for another job if they were
asked to return to the office for five days
a week(1). More than 80% see not having
to travel to work every day as a key
benefit of hybrid working(2), and just one
in five of respondents we spoke to in the
United States would be willing to
commute for more than 30 minutes(3).
Close to three-quarters (72%), meanwhile,
told us they value the long-term ability to
work flexibly more highly than they would
a 10% pay increase for returning to the
office full time(1).
The reasons for hating the commute –
stress, expense, lost time among them
– are not hard to find. And neither are the
reasons for workers to love working at or
closer to home: more time with friends
and family, the opportunity to get more
involved with the community, more
scope for personal interests and projects.
It all adds up to better mental and
physical wellbeing.
But the benefits go deeper yet, bringing
to life the ‘15-minute city’ concept, in
which work, home, shops, entertainment,
education and healthcare are all
available on foot or by bicycle within the
average time commuters might spend
waiting on a station platform.
This ideal is already supercharging local
economies across the world, creating
opportunities for local people in former
‘dormitory’ communities that used to be
sucked dry of energy by the magnetic
pull of the city.
We are working hard to accelerate this
phenomenon, not only by rapidly
increasing the number of buildings we
have in suburban and rural locations, but
also by opening centres in retail and
hospitality venues to provide an array of
facilities at our customers’ fingertips.
It all makes perfect sense. After all, why
should workers go to the effort and
expense of dragging themselves into
work to spend the day working on a
device they brought with them and will
take home again at the end of the day?
Quite simply, they don’t have to any more.
1. Please add reference
4
IWG plc Annual Report and Accounts 2021
92%
of workers
would prefer to
commute less
Source: IWG Research, 2021
87%
of workers prefer
this way of working –
hybrid keeps
them happier
Source: PwC Remote Work Study, 2021
55%
of workers want
a mixture of home
and office working
Source: Institute for Economic Policy Research
86%
of workers feel working
remotely reduces stress
Source: FlexJobs 2018 Annual Survey
iwgplc.com
5
STRATEGIC REPORT HYBRID IS HAPPENING – FOR THE PLANET
A more sustainable way of
working together for the planet
The office is no longer a
defined physical space
where people have to go, in
a city centre at the end of a
motorway or a railway line.
Rather, it is a digital construct that people
can enter or leave at will, using
technology to create, deliver, store,
retrieve and amend their work, no matter
where they are.
As a result, we are beginning to see
and better understand the multiple
environmental benefits of our
increasingly hybrid and digital ways of
working, where the long daily commute
is becoming an anachronistic legacy of
a world that no longer exists.
That alone is a massive step forward for
our planet and for the legacy we are
leaving to future generations. By helping
to begin the end of the daily commute,
we are today starting to remove what the
American Center for Climate and Energy
Solutions defines as the USA’s biggest
single source of carbon emissions(1).
And, by reducing the need to travel,
we are helping to cut the journeys made
by car that today are equivalent to an
average annual carbon footprint of
3.2 tonnes of CO2 per person per year(2).
Companies across the world are
extremely familiar with the issues
involved, placing ESG concerns at the
heart of the boardroom conversations
as they increasingly prioritise and
accelerate their progress to net zero.
We are increasingly reducing carbon
emissions and energy usage by
continuously upgrading the
environmental performance of our
estate, recycling and the re-use of
materials. And we are also well-placed
to ensure businesses in our supply
chain also take every action to reduce
their carbon footprint too.
Our suppliers, across more than 120
countries and serving close to 3,500
buildings, are from disparate cultures
and a very wide range of operational
backgrounds. IWG is what links them,
placing great responsibility in our hands.
We strive to live up to this, assessing
their performance and giving them the
examples and guidance they need to
help them conform with environmental
best practice.
1. Source: Center for Climate and Energy Solutions: 2021
2. Source: IWG White Paper, 2021, Hybrid World: Sustainable World
6
IWG plc Annual Report and Accounts 2021
73%
of employees would
like the work place
to improve
sustainability efforts
Source: HR News: 2019
77%
potential reduction
in net emissions with
home or local working
Source: IWG White Paper, 2021,
Hybrid World: Sustainable World
6
UN Sustainable Development
Goals are supported by
the hybrid model
15 mins
the rise of the
15 minute commute
iwgplc.com
7
STRATEGIC REPORT HYBRID IS HAPPENING – FOR BETTER PERFORMANCE
Improved productivity and
reduced costs for better
performance
Companies across the world
are coming to recognise that
the hybrid-working model,
using IWG as a partner, is not
only good for their people
and the planet – it’s also
a positive force for
operational efficiency
and the bottom line.
Naturally, advantages include the
flexibility to increase or reduce their
workspace spend as the changing
requirements of the business dictate.
In addition, the need for less city-centre
space for many will also cut their
exposure to high rents and
associated property costs.
For many, these pure finance-related
gains and the greater operational
flexibility they can achieve are equally
important. In fact, as disparate teams
became the norm for many in the early
days of the pandemic, there were major
concerns about the impact of remote
working on efficiency and productivity.
These quickly proved to be baseless.
Thanks to the significant cost savings
associated with a smaller real estate
footprint, along with other factors
including boosted productivity,
companies using the hybrid model are
today saving an average of US$11,000
every year on every employee(1).
Today, companies can work with us
to devise and deliver the real-estate
strategies that best serve their needs,
from space on demand to cope with
peaks in activity, to hub-and-spoke
solutions for countries and entire
regions. And they can leverage the
power of our continuous investments
in research and development, to benefit
from our wide-ranging tech solutions
that make operating a disparate,
flexible workforce seamless,
efficient and effective.
1. Source: Global Workplace Analytics
2. Source: IWG FTSE 350 Research, 2021
Above all, our hybrid-working model
defuses one of the greatest concerns
for the leaders of FTSE 100 and 250
businesses: our research shows that a full
90% of this group fears losing essential
talent to their competitors if they do not
offer flexible-working options(2). Working
with IWG can defuse this risk at a stroke.
When it comes to workforce dynamics,
however, giving the best workers no
reason to leave is only one advantage
of adopting the hybrid model. Doing so
also opens up a planet-wide pool of
talent, meaning any business with the
right offer can employ the very best
people, regardless of where they are
based. Whether they are in another
country or another continent is entirely
irrelevant. In fact, when 24/7 service is
essential, having a dispersed team that
can take advantage of different time
zones is a major asset.
8
IWG plc Annual Report and Accounts 2021
Design / images – TBC
63%
of high growth
companies work
the hybrid way
Source: Accenture Future
of Work Study, 2021
50%
of workers would quit if
forced to return to the
office five days a week
Source: IWG Research, 2021
50%
on savings –
significant cost
efficiencies
Source: Global Workplace Analytics
Happier
employees
are more productive
iwgplc.com
9
STRATEGIC REPORT AT A GLANCE
Delivering a great day at work
As the global workforce is
increasingly freed from the
limitations of a fixed
physical office, IWG is
helping to create a better
future for employees and
employers across the planet.
– Global market leader in the fast-
growing hybrid-working sector
– The world’s largest network of
flexible workspaces
– IWG is the global leader with four
times the number of locations
compared to the nearest competitor
– 20 brands covering every segment
of the market
– A proven, profitable business with
the industry’s most cost-efficient
and scalable business model
– Best-in-class global technology and
infrastructure platform
– Partnering for capital-light expansion
Our strategic pillars
Network
Franchise partnerships
Platform (technology)
See pages 32-33
See pages 34-35
See pages 36-37
Supported by a diverse portfolio of brands
8m+
people use IWG’s network
& associated services
3,314
locations*
(* at 31 December 2021)
See pages 14-21 for more information on all of our brands
10
IWG plc Annual Report and Accounts 2021
for everybody, everywhere
IWG worldwide coverage
See pages 32-33
See pages 34-35
See pages 36-37
201+ locations
101–200 locations
51–100 locations
11–50 locations
1–10 locations
1,135
towns & cities*
(* at 31 December 2021)
4.1m
total square ft
added in 2021
120+
146
countries
new openings in 2021
10,000+
employees, supporting
customers: at home, in local
offices and corporate HQs
20
different
brands
iwgplc.com
11
STRATEGIC REPORT OUR PURPOSE
Our purpose
Our business model
Our strategy
Our people and
culture
Governance and
risk management
Our purpose,
culture and values
We all deserve a great day at
work. For us, this means not
just working productively,
but also leading better-
balanced lives: greener,
with more time for friends,
family and community.
Our ability to deliver against this purpose
is empowered by our uniquely diverse,
truly global culture, which is the result of
working in more than 120 countries
across the world. We recognise the
critical importance of the value that this
diverse and passionate global workforce
brings to our business.
Our people are therefore at the heart
of our culture, which is based on our
pioneering spirit, mutual empowerment,
shared leadership, unified global
network and commitment to placing the
customer at the heart of our thinking. At
IWG, these essential properties are united
by our trust in one another and driven by
the shared values of diversity,
flexibility and balance.
As we understand and harness the
major forces bringing about radical
change in how people want to shape
their working lives, these values are
central to our role at the forefront of
the hybrid-working revolution. Already
driven by powerful megatrends such
as growing environmental awareness,
societal pressures and technological
advancement, change to the way we
work has been radically accelerated
by the COVID-19 pandemic over the
last two years.
As a result, the shift towards hybrid
working fast gained traction among
greatly increased numbers of businesses
across the planet. Only we have the
global coverage and service portfolio
to respond to this level of demand.
And, with our unique capital-light
expansion model, we alone have the
capability to grow our offering in
the suburbs, towns and even rural
communities where people wish
to live and work.
12
IWG plc Annual Report and Accounts 2021
Our value creation framework
The unique way in which we are structured, our highly efficient platform,
our global reach, brands, service portfolio, technologies and outstanding
people enable us to meet the needs of all stakeholders: customers,
partners, employees, communities and shareholders.
We help millions of people to be more productive every day,
supporting them to lead more balanced and rewarding lives.
For more than three decades, we have successfully developed and refined our business
model to deliver excellent customer value and strong financial returns. Today, with our
unmatched scale, multi-brand approach and highly efficient platform that delivers
everything our partners and customers need, we are uniquely placed to meet the
accelerating global demand for hybrid-working solutions.
See pages 38-39
Network
Franchise partnerships
Platform (technology)
Our three strategic priorities enable sustainable
growth to achieve our purpose.
See pages 31-37
We recognise the critical importance of the value our diverse and passionate global
workforce brings to our business. Our people are at the heart of our culture, which is
based on our pioneering spirit, mutual empowerment, shared leadership and unified
global network and is united by trust in one another.
See pages 60-64
Our operating model is underpinned and supported by strong and robust governance
and a rigorous risk management model that ensures our business is always managed
prudently, with all risks understood and appropriately assessed.
See pages 65-75
iwgplc.com
13
STRATEGIC REPORT
OUR BRANDS
Creating value through
our brands
At IWG, we believe that
business success is
underpinned by the
effectiveness and happiness
of people. So, we’ve made it
our mission to help millions
of people have a great day at
work – every day. Here, we
describe the brands that
help to make this possible.
IWG provides a world-leading
commercial real-estate platform, drawing
on our 33 year track record of delivering
the best flexible real-estate solutions for
businesses worldwide. IWG’s hybrid
workspace options reduce the risk for
our customers, with zero balance-sheet
impact and solutions designed with
people’s productivity in mind.
Our products are simple to use, with a
full suite of business support services
that enable people to focus on their core
business and enjoy a great day at work.
IWG covers a wider breadth of sectors
and locations than any competitor,
offering unparalleled choice to
customers through our unique portfolio
of global operating brands, including
Regus, Spaces, HQ and Signature. Our
diverse operational portfolio provides
businesses with a variation of design,
fit-out, location, building and customer
base, enabling them to choose a style
which meets their unique needs. For
individuals, IWG offers the ability to
work in practically every country, town,
city and transport hub in the world.
Enterprise clients can opt for a presence
wherever they need to be, choosing an
operating brand that closely matches the
needs of their organisation and the
people working within it.
20
brands
3,314
locations
8m+
users
THE OFFICE OPERATORS
14
IWG plc Annual Report and Accounts 2021
WORK YOUR WAY
Regus was founded in 1989 and is the world’s largest
provider of flexible workspace solutions. Regus helps
businesses find and create the right workplace for
their people, offering choice, flexibility, community,
custom workspaces and consistently professional
locations all over the world.
iwgplc.com
15
STRATEGIC REPORT OUR BRANDS CONTINUED
A unique entrepreneurial spirit
Spaces was founded in 2006 in Amsterdam. It creates an environment
where people have freedom to do their jobs however they want to do
them. Each Spaces is designed to offer a professional and inspirational
working environment full of timeless design classics, inspiring art and
accessories combined with a strong community programme of
partnerships, professional events and hospitality services.
16
IWG plc Annual Report and Accounts 2021
Where real work gets done
HQ provides efficient, functional space, offering
practical places with all the essentials businesses
need, set up and ready-to-go. HQ appeals to
businesses of all shapes and sizes, from large
corporates to individual freelancers – everyone
is welcome.
iwgplc.com
17
STRATEGIC REPORT OUR BRANDS CONTINUED
Your key to the world’s ultimate
business locations
Signature represents an exclusive selection of landmark
buildings in the most sought-after locations in the world.
Signature provides a premium working environment, with
custom designs reflecting the quality and nature of the
building. It provides businesses with ultimate prestige,
offering an exclusive address and place to work that truly
enhances their reputation.
18
IWG plc Annual Report and Accounts 2021
Our domestic office and
coworking brands
In addition to our global brands, we also
operate domestic office and coworking
brands, providing a unique service in
key markets around the world.
Basepoint Business Centres
comprises a network of locations
across England and Wales,
providing multifunctional
workspace to start-ups and SMEs.
In addition to office space, virtual
offices and meeting rooms,
Basepoint offers practical business
units which are ideally suited as
studio or workshop space.
Stop & Work is a flexible working
brand operating in France.
Throughout its locations, it
provides a drop-in service and
professional environment for
telecommuters to use open-plan
or private workspaces and meeting
rooms. Customers can access the
locations by the hour, day or
longer as required.
THE OFFICE OPERATORS
The Office Operators is based in
the Netherlands and Belgium,
specialising in flexible office space,
reception services and conference
products. As an organisation, it
aims to unburden its customers as
much as possible in all facility
and operational matters.
The Clubhouse is a leading
business club in London, providing
offices, lounge and meeting space.
Designed to meet the requirements
of growing businesses, The
Clubhouse provides a luxurious,
professional space where
customers can meet and work
in an inspiring and productive
environment.
More than just a desk, BizDojo
is a coworking and collaboration
network operating in New Zealand.
It is passionate about supporting
its diverse community with an
active and collaborative culture
of events, projects, programmes
and networking.
This flexible workspace brand has
locations exclusively in Japan and
South Korea. OpenOffice provides
office space, virtual offices and
meeting rooms in a productive,
self-service office environment.
No18 is a blend of curated
business club environments
in the best locations, with
first-class service and expansive
member benefits. It’s a
workplace where people
do business and socialise,
moving from premium
offices to restaurants and
collaborative workspaces.
Central Working provides flexible
and scalable spaces, fully tailored
to match customer needs. More
than just an office space, it
helps advance business by
providing access to training,
networking events and a
supportive community.
The Wing is a community of
professionals, entrepreneurs and
leaders from across the globe, who
find sanctuary and productivity in
our beautiful work and community
spaces designed for women,
meaningful connections through
our networking opportunities,
career growth through our job
platform and perhaps most
importantly, support and
camaraderie through sharing
strategies and resources.
Copernico provides smart working
environments across Italy. Set out
to change the way work is done,
it has created an ecosystem that
accommodates businesses of any
size with solutions ranging from
coworking to office lounges. It also
provides users with events,
workshops and informal meetings,
fostering new knowledge and
local excellence.
iwgplc.com
19
STRATEGIC REPORT OUR BRANDS CONTINUED
Our digital businesses
IWG also operates several
digital businesses, making it
easy for our customers to find
and book workspace online.
Your app containing every hybrid
work solution
Worka brings together every type of IWG workspace in one
easy-to-use app. Users are able to search and compare
thousands of global locations and instantly book office space,
coworking and meeting rooms. With the possibility to see
real-time availability, Worka is the ideal choice for hybrid
workers all around the world.
20
IWG plc Annual Report and Accounts 2021
EasyOffices is an online broker that
makes it easier for people to find great
places to work. It provides a powerful
online search and comparison tool
to help people find their perfect
workspace. Customers can also contact
the team directly for impartial advice
and support.
HomeToWork improves the
homeworking experience by providing
everything needed to stay connected
and productive and enjoy working from
home. Our leading homeworker
platform provides access to useful daily
content, a carefully curated programme
of events and resources, and valuable
benefits from industry-leading
companies. HomeToWork provides an
immersive experience which enables
members to make home a great place
to work.
Rovva is an online toolkit which
provides a range of products and
services to help people take their
businesses further – whether they’re
just getting started, trying to improve
efficiency or exploring new markets.
From virtual offices to telephone
answering, Rovva makes it easy
for people to do better business.
Meetingo is a digital platform that
offers everything customers need for
a successful meeting, all in one place.
With thousands of meeting rooms to
choose from, Meetingo provides the
right space, in the right place and at the
right price. There’s a location for every
need, from team trainings to five-star
board meetings, from city centres to
business parks. Customers can compare
features, locations, pricing and style of
meeting rooms, and can book and pay
in moments.
Our managed conventional
office space
Whether it’s a new workspace brief
or an adaptation to an existing office,
IWG’s Managed Office Solutions (MOS)
can provide customised workspaces
designed to match any client’s unique
requirements. MOS can provide
additional revenue opportunities
for businesses’ surplus space with
the flexibility to re-occupy that
space in the future.
iwgplc.com
21
STRATEGIC REPORT CHAIRMAN’S STATEMENT
Strong finish despite
the challenges
The last year has proven
beyond all doubt that people
around the world wish to work
flexibly. With the widespread
and accelerating adoption of
hybrid working, the structural
growth opportunity is clearly
defining the runway that lies
ahead of us. IWG is a business
in the right place at the
right time.
In last year’s Annual Report, I wrote about
how a year that started with enormous
promise rapidly became one of the most
difficult and challenging in IWG’s history.
This year, our experience was the virtual
opposite. 2021 was a year that started
with a pandemic induced decline in
demand across our global footprint as
governments imposed unprecedented
curbs on travel and work practices,
yet ended with a significant uplift
to our business as more and more
companies across the world took
action to gain the benefits inherent
in the hybrid-working model.
The Delta and Omicron variants
introduced new challenges during the
year, but with focused sales efforts and
building on the benefits of our efforts to
reduce operating costs, we have now
delivered a meaningful transition to
revenue and EBITDA growth during the
second half of the year.
As a result, we ended 2021 with a
sustained uplift to our business,
including the strongest period for sales
in our history. This positive development
shows every sign of continuing as we
support our customers’ safe return to the
office. Our improving financial results
provide a powerful springboard for
accelerating our growth strategy in 2022.
ESG journey
As described further in this report, we
are committed to our ESG journey and
during 2021 we continued to deliver
against the objectives we have identified
across our Environmental, Social and
Governance pillars. We are proud to be
Douglas Sutherland
Chairman
22
IWG plc Annual Report and Accounts 2021
a global organisation that is doing so
much to promote and enable the uptake
of the hybrid-working model, which is at
the forefront of efforts to reduce the
global impact of the daily commute.
The transition to hybrid working not only
allows corporations to more efficiently
provide office space, reducing their
overall property footprint by up to
50%, it also enables workers to
eliminate the commute, reducing both
the environmental impact and personal
time loss associated with travel.
I would like to highlight here the progress
we are making on our commitment to
achieving net-zero emissions. We are
working hard on multiple fronts to reduce
our own carbon footprint through
initiatives to switch to renewable energy
sources and reduce energy consumption.
Colleague-led initiatives are underway
across the business to reduce waste and
promote recycling. After the benefits
from our efforts to continuously reduce
our carbon footprint, we will be investing
in carbon offset projects to eliminate the
remaining net effect of IWG’s operating
activities. As a result of these collective
efforts, we are bringing forward our
objective to achieve being carbon
neutral during 2023.
Strategic review
Companies are being driven by the need
to reduce their real-estate costs and
carbon footprint while attracting and
retaining talent. Employees want the
choice to work in a metropolitan
headquarters, at home, or to collaborate
with colleagues in a suburban location
closer to their home. We had begun
planning for this shift at IWG well before
the pandemic and, with the continued
development of our capital-light
expansion model through franchising
and management agreements, are
well placed to take the next major
steps forward in our growth story.
We understand our success depends
on executing against a strategy
which provides value for all of our
stakeholders, including customers,
partners, employees and communities,
as well as shareholders. For our
customers we are committed to ensuring
that our products and services continue
to empower them to attract and retain
the best talent and manage their real
estate efficiently and sustainably. We
are developing new ways of working
with our partners to maximise and share
the opportunities being created by the
shift to hybrid working. For our
shareholders, we are working to realise
the full potential of their investment
through improving our operating results
and the implementation of our strategy.
As previously announced, we conducted
a strategic review to address and capture
the opportunities being created by the
rapid shift to hybrid working. We believe
the value of our industry-leading digital
and technology assets, services, and
network of physical locations will be
better recognised through their being
separately organised for focused
management and development. In this
regard, we are pleased to announce the
transfer of certain of our digital assets
into a business to be merged with and
operated by The Instant Group to create
the world’s leading fully integrated
independent workspace platform.
Our people
For our people, we aim to provide every
opportunity to build a great career with us,
developing their talent and capabilities in
a diverse and inclusive environment and
representing IWG as a progressive force in
the countries where we operate. I would
like to take this opportunity to extend my
personal thanks to everybody who has
been responsible for IWG’s outstanding
achievements during the year. I would
especially like to thank all those team
members at every level who have
continued to represent the Company so
brilliantly in all our markets across the
world. Despite the many challenges they
have faced during the pandemic, they
have shown great resolve to continuing to
provide great service to our customers to
maintain the IWG difference and our
position at the forefront of one of the
world’s most exciting business sectors.
Our Board
I am immensely grateful to my Board
colleagues for their continued
dedication to fulfilling the IWG vision
and the outstanding quality of advice
that they have brought to the business
during another very active year. The
recommendations of the external
evaluation of Board performance
conducted during the year have been
incorporated into our plans and we
continue to have full confidence in
the Board members and processes.
Succession planning at Board level
will remain a key focus area for 2022.
We are committed to increasing the
ethnic diversity of the board and are
pleased to announce that Tarun Lal will
be joining the Board as a Non-Executive
Director with effect from 10 May 2022,
subject to applicable law including
shareholder approval at the Company’s
upcoming annual general meeting. Tarun
will bring extensive franchising expertise
to the Board from his over 20 years of
experience with Yum! Restaurants where
he has held executive roles including
Global Chief Operating Officer KFC and
his current role as Managing Director,
Middle East, Turkey, Africa and India.
Looking ahead
The case for hybrid has been accelerated
to the forefront of employer and employee
thinking across the world by the pandemic.
As hybrid working becomes the operational
model for many organisations, we are
confident about the continuing structural
growth drivers at play in our industry.
For many businesses embracing these
changes, IWG is the automatic first port
of call due to the advantages offered by
the geographic coverage of our network,
our differentiated technology platform
and the experience of our people.
We are all watching with great concern
the increasing geopolitical uncertainties
and devastating humanitarian crises
arising from the conflict in Ukraine,
where our thoughts are with those
directly impacted, including our own
colleagues and customers.
IWG has strong momentum as we prepare
to address the challenges and capture
the opportunities in 2022 and beyond.
Our ability to address new challenges
has been demonstrated repeatedly
during the pandemic. We look forward to
the opportunity to further strengthen both
our lead and role as a facilitator of positive
change and improvement for employers
and employees as we deliver on our
mission to provide a great day at work.
Douglas Sutherland
Chairman
8 March 2022
iwgplc.com
23
STRATEGIC REPORT CHIEF EXECUTIVE OFFICER’S REVIEW
Right business, right place,
right time
As more people around the
world want to work flexibly,
IWG is a business in the right
place at the right time.
The rapid global rise in the adoption
of the hybrid-working model, where
companies use technology to give their
employees effective remote access and
home working, in combination with
easy-to-access local centres and
traditional head-office sites, is here to
stay. These structural changes in the
way that people across the world
work are driving an irreversible
change in the office market. As a
result, opportunities to grow our
business are accelerating strongly.
The global pandemic presented IWG
with many challenges throughout 2020
and the first half of 2021. However,
these proved to be short-term issues,
and during the second half of 2021 we
made a rapid return to business growth,
which is continuing strongly into 2022.
Today, we are enhancing our strategy
to enable us to deliver against our full
potential by leveraging our global
leadership position in two key areas.
The first of these is our focus on growing
our network through the increasing use
of capital-light expansion methods such
as franchising, management agreements
and partnering deals. The second is our
parallel focus on developing and
deploying our digital assets to create
an improved customer experience and
build strong long-term growth with
recurring revenues.
As we enter 2022, our focus is sharper
than ever. Our goals are clear. I believe
that with 3,314 centres, we are operating
at only a fraction of our underlying
potential of 30,000 centres. I also
believe that the optimal proportion of
IWG-owned centres in the future will be
at 10% at most. Today, conventional
leases represent approximately 65% of
our global portfolio, we expect to end
the year with franchises, partnerships
and management agreements reaching
close to 50%.
During 2021, we entered into many
attractive new franchising and
management agreements. These
Mark Dixon
Chief Executive Officer
24
IWG plc Annual Report and Accounts 2021
included the sale of existing units to
franchise partners, as well as entering
new relationships with new partners
on new properties. These actions
significantly improved the quality and
diversity of our global portfolio and are
designed to accelerate our activities in
this area throughout 2022 and the years
ahead as we drive IWG towards
achieving its full potential.
Our business performance
in 2021
Throughout 2021, a period once again
dominated by the global impact of the
COVID-19 pandemic, we have shown
that we are well-positioned to meet the
needs of individuals and organisations
who wish to change the way they work.
This was a year of two halves that
culminated in a period of significant
positive change. In a matter of a few
months, we moved from one of the
most challenging moments in our
Company’s history at the beginning of
2021 when we experienced the highest
concentration of lockdowns, which
contributed to the losses reported for
the year ended 31 December 2021, to
the point where sales growth is now
ahead of pre-pandemic levels.
In fact, we experienced the best-selling
months in our more than 30-year history
in the year’s fourth quarter. Our global
membership continues to grow and over
the year we added 2 million new
network users. This was complemented
with a major inflection in profitability
and a cash positive performance that
gathered strength as the year went on.
in this area during 2021 (see page 14
for details of our full brand portfolio).
We delivered our first franchise deals
in new countries such as the USA, India,
Malaysia, Poland, Brazil, Spain and
Scotland. We have good momentum in
the pipeline providing a positive outlook.
We also continued to invest in capital-
light network growth during 2021,
adding 146 new centres to our global
network at a cost of £142.5m (£111.8m
on a pre-IFRS 16 basis). We used an
approach based on our franchise and
management-agreement model for 80
of these new centre openings.
This accelerating growth in our
franchise footprint is highly significant.
Scale is essential for us to offer the
convenience that employers and
employees everywhere are looking
for, and the fast-increasing coverage
provided by our global network is a key
competitive advantage. Working with
new and existing franchise partners
will therefore continue to be at the
heart of our growth.
Expansion through partnership rather
than investment delivers the capital-
light growth that we and our
shareholders are looking for, enabling us
to invest in the brands, technologies and
people that are our true differentiators.
It also empowers us to add higher-
quality centres to our network, with the
full engagement of owners who retain
a powerful interest in making our
franchise partnerships, management
agreements and partnership deals work.
As a result of this expansion in 2021, we
have significantly improved the quality
of our portfolio overall and will continue
to do so throughout 2022 and beyond as
we grow our global network.
In addition, to underscore the relevance
of our network to new and existing users
across the world, we have progressively
rebased our portfolio to deliver more
choice and supply to commuter towns
and rural areas. In this way, we continue
to bring the workplace closer to home,
helping to reduce the need for
commuting and all the environmental
and wellbeing challenges it brings.
Recognising that it is essential for us
to offer customers brands that cater
to everybody’s working style, we also
further developed our market leadership
The new brands in our portfolio include
The Wing in the US and the Italian-based
Copernico, both of which have ambitious
expansion plans. The Wing, for example,
is a female-focused co-working business
and its acquisition gives us an exciting
opportunity to expand its offer to
women during a time of growing demand
for alternative work environments.
We also launched a new retail-based
office-space concept: ‘OpenDesks’
with a more open plan environment.
In addition, we continued to invest in
industry-leading technology and focused
on ensuring that our people have the
opportunity to fulfil their talent with us.
Ultimately, IWG creates value by
enabling our customers to operate more
cost-effectively and efficiently. We also
maximise our own success by ensuring
we have the skills and resources needed
at every level to minimise the
unnecessary use of resources, both
physical and in terms of time and effort.
Our unique technology platform has
evolved over many years to ensure our
customers have access to some of the
world’s most innovative and effective
tools to streamline and simplify the
working day. We made significant
investments in our platform during the
year, recording a total IT spend of £50m.
Innovations we introduced during the
year include solutions supporting very
large enterprise customers with tens of
thousands of employees in multiple
locations, to apps that help the smallest
SMEs comply with local legislation. We
have also continued to develop our
solutions supporting hybrid working,
cloud telephony and cloud printing
around the world. We have invested to
further support home working through
our virtual products including
HomeToWork, our leading platform
providing access to useful daily content,
a carefully curated programme of events
and resources, and valuable benefits
from industry-leading companies.
HomeToWork enables members to make
home a great place to work. We also
invested in our own systems and
processes, including new enterprise
ERP systems, leadership succession, and
redesigned processes for forecasting
and business review.
iwgplc.com
25
STRATEGIC REPORT CHIEF EXECUTIVE OFFICER’S REVIEW CONTINUED
In addition, we took the opportunity
to improve efficiency by reducing our
discretionary expenditure, with a
notable reduction in our overheads
while investing in technology, brand
and growth.
Success on this scale is very exciting,
and it continues to fuel our ambition
to create the global coverage that
will enable people to work anywhere
and everywhere, no matter where
they are located.
As a result, as we enter 2022, the
company is clearly very well positioned
for the future. Our network coverage is
already four times the size of our nearest
competitor’s, and now we are on a
powerful trajectory of business wins,
new partnerships and capital-light
network expansion.
Our financial performance
in 2021
My greatest thanks go to all our
team members, who were the
driving force behind our success in
achieving excellent results in very
difficult circumstances.
The first half of 2021 was challenging,
with a revenue† decline of 15.3% at
constant currency and a significant
impact on our EBITDA and cashflow.
However, this gave way to a strong
second half, with a return to trading
profit, reduced overheads and clear
visibility into 2022. We saw an increase
in sales in every quarter from March
onwards, with progressive increases in
occupancy and price, giving excellent
momentum for further improvement in
the year ahead. With the improvement
in occupancy and price, a recovery in
service revenues has followed, with
further improvement expected in 2022.
During 2021, we saw a significant
recovery in the profitability of our
existing company-owned assets.
Encouragingly, we are witnessing this
strength of performance in multiple
markets across the world, driven in part
by the strong performance of our new
centres which have improved the overall
quality of our estate.
To take maximum advantage, we
amended our financing facilities in early
2022, further securing our liquidity and
strengthening our borrowing capacity for
the medium term.
Overall, these achievements and trends
are delivering tangible evidence that we
have entered 2022 as a much stronger
business than we entered 2021.
Group income statement
£m
Revenue
Gross profit/(loss) centre contribution
Overheads
Operating loss(1)
Operating (loss)/profit before adjusting items(1)
Loss before tax from continuing operations
Taxation
Effective tax rate
Loss after tax from continuing operations
Adjusted EBITDA(1)
1. Including joint ventures
2021
(As reported)
IFRS 16
Impact
2021
(Pre-IFRS 16)
2020†
(Pre-IFRS 16)
IFRS 16
Impact
2020†
(As reported)
2,227.9
242.6
(327.8)
(87.4)
(56.0)
(259.4)
(10.3)
(4.0)%
(269.7)
1,057.7
–
161.3
(0.7)
160.6
170.9
(6.3)
2.1
(4.2)
2,227.9
2,431.9
81.3
(173.7)
(327.1)
(379.2)
(248.0)
(555.5)
(226.9)
(176.0)
(253.1)
(566.3)
(12.4)
(43.0)
(4.9)% (7.6)%
(265.5)
(609.3)
79.6
133.8
–
193.8
11.7
205.5
215.8
(47.0)
11.0
(36.0)
2,431.9
20.1
(367.5)
(350.0)
39.8
(613.3)
(32.0)
(5.2)%
(645.3)
1,233.9
% Change
(constant
currency)
(Pre-IFRS 16)
% Change
(actual
currency)
(Pre-IFRS 16)
(4.7)% (8.4)%
(11)%
(14)%
(39)%
(41)%
Revenue and gross margin by maturity
Revenue
Gross margin % (Pre-IFRS 16)
Continuing
2018 Aggregation
New 19
Pre-2020
New 2020
New 2021
Open centre revenue
Closures
Group
2021
1,808.6
219.4
2,028.0
120.4
31.7
2,180.1
47.8
2,227.9
2020†
2,002.6
207.5
2,210.1
44.2
–
2,254.3
177.6
2,431.9
% Change
(constant
currency)
(6.0)%
9.5%
(4.6)%
179.6%
–
0.6%
(72.2)%
(4.7)%
% Change
(actual
currency)
(9.7)%
5.7%
(8.2)%
172.4%
–
(3.3)%
(73.1)%
(8.4)%
2021
8.5%
13.4%
9.0%
(6.0)%
–
6.7%
(133.9)%
3.6%
2021
Adjusted
2020†
9.9%
(7.0)%
8.1%
6.2%
(54.0)%
0.5%
(20.8)% (176.0)%
–
(3.0)%
(60.3)%
(7.1)%
–
5.2%
(92.7)%
3.1%
26
IWG plc Annual Report and Accounts 2021
Open centre revenue performance by region
On a regional basis, open centre revenue performance can be analysed as follows:
£m
Americas
EMEA
Asia Pacific
UK
Other
Total
FY 2021
911.1
692.3
228.4
342.4
5.9
2,180.1
FY 2020
1,005.3
662.3
228.4†
352.7
5.6
2,254.3
% Change
(constant currency)
% Change
(actual currency)
(3.7)%
8.0%
2.2%
(2.1)%
–
0.6%
(9.3)%
4.5%
(0.1)%
(2.1)%
–
(3.3)%
Americas
The Americas, our largest region, was significantly impacted by the pandemic reaching its trough occupancy in February 2021 and
has recovered strongly since then. The recovery in performance is mainly being driven by the US and the business in Canada also
showed good recovery momentum in the second half of the year.
£m
Total revenue
Open centre revenue
Pre-2020 revenue
Pre-2020 occupancy – Square feet
Number of centres
FY 2021
923.6
911.1
866.1
70.9%
1,257
FY 2020
1,066.5
1,005.3
994.3
73.9%
1,271
% Change
(constant currency)
% Change
(actual currency)
(8.0)%
(3.7)%
(7.4)%
–
–
(13.4)%
(9.3)%
(12.9)%
(300) bps
–
Major Central Business Districts (CBDs) were challenged most in early 2021 but recovered well in the second half of the year
which bodes well for a continuing trend in 2022. Regional districts achieved a higher level of occupancy and customer activity in
the centres. In line with increasing occupancies, promotions were removed, and discounts tightened which will result in improved
pricing in 2022. Sales in the Americas continued its positive trend into 2022.
According to IWG research, 6 in 10 Americans want to work in the hybrid model and since the onset of the pandemic only 1 in 5
are now willing to commute for more than 30 minutes.
Revenue from open centres declined 3.7% at constant currency to £911.1m. In the fourth quarter open centre revenue grew
strongly by 25.0% at constant currency. It was a similar positive trend in Q4 in the pre-2020 estate with revenue growth of 18.4%
at constant currency, while full year revenue decreased 7.4% at constant currency to £866.1m.
Average occupancy for the region in the pre-2020 business was 70.9% (FY 2020: 73.9%), with strong occupancy recovery in the
second half. Pre-2020 occupancy reached 74.7% in Q4 2021, being 555 bps higher compared to Q4 2020.
Meeting room and day office revenues in the Americas improved strongly throughout the second half of 2021. The recovery of
occupancy in LATAM improved in the fourth quarter with strong occupancy improvements in markets like Brazil, Peru and Chile.
There were 25 new locations added in the region in 2021 and 39 locations were rationalised. After these movements, the total
number of locations in the region was 1,257 at 31 December 2021.
EMEA
Our EMEA business has seen a clear turnaround in performance since February 2021, with turnover and occupancy improving
strongly, especially in the second half of the year. The momentum of occupancy recovery improved in the second half of the year
in all EMEA countries. Similarly, increased customer activity in centres led to improved ancillary service revenues with the fourth
quarter being the strongest of the year.
Open centre revenue increased by 8.0% at constant currency, with strong year-on-year growth of 25.6% in Q4. Pre-2020 revenue
improved by 0.4%, while occupancy increased to 72.1% (FY 2020: 71.5%). Pre-2020 occupancy reached 76.8% in Q4 2021,
being 775 bps higher compared to Q4 2020.
£m
Total revenue
Open centre revenue
Pre-2020 revenue
Pre-2020 occupancy – Square feet
Number of centres
iwgplc.com
FY 2021
707.1
692.3
624.6
72.1%
1,128
FY 2020
715.1
662.3
642.2
71.5%
1,093
% Change
(constant currency)
% Change
(actual currency)
2.2%
8.0%
0.4%
–
–
(1.1)%
4.5%
(2.7)%
56 bps
–
27
STRATEGIC REPORT CHIEF EXECUTIVE OFFICER’S REVIEW CONTINUED
COVID-19 restrictions in EMEA have been diverse across countries with respective impacts on our business, but the recovery in
the second half of the year was across all markets. Our major markets like France, Germany, Italy and Spain all gained momentum
in the recovery of occupancy in the second half of the year. Occupancy recovery was also strong in smaller countries, especially in
markets like Ireland, Luxembourg, Norway and Portugal.
Growth of our network in EMEA is progressively accelerating with the benefit of new franchise locations, management agreements
and acquisitions. A total of 84 new locations were added across this region in 2021. After these additions and the rationalisation of
49 locations, the total locations in the region were 1,128 at 31 December 2021.
Asia Pacific
The impact of COVID-19 on our business in Asia Pacific was quite diverse. Revenue from all open centres increased 2.2% at
constant currency to £228.4m. Revenue growth improved throughout the second half of the year. Pre-2020 revenue was down
2.2% to £214.5m (FY 2020†: £223.9m) and pre-2020 occupancy decreased to 67.3% (FY 2020†: 69.5%). Q4 occupancy was at
67.8%, up 144 bps compared to Q4 2020.
£m
Total revenue
Open centre revenue
Pre-2020 revenue
Pre-2020 occupancy – Square feet
Number of centres
FY 2021
237.1
228.4
214.5
67.3%
644
FY 2020†
255.9
228.4
223.9
69.5%
645
% Change
(constant currency)
% Change
(actual currency)
(5.4)%
2.2%
(2.2)%
–
–
(7.4)%
(0.1)%
(4.3)%
(222) bps
–
Trading in the second half of the year improved in major countries like Australia, China, Hong Kong, India, Singapore and Pakistan.
In other markets the business environment remained challenging with recoveries anticipated in 2022.
A total of 32 new locations were added and 33 were rationalised in the region in 2021. We are seeing a clear acceleration in
variable rent and management agreement deals in the region. At 31 December 2021 we had a total of 644 centres in the region.
Good progress is being made on franchising in the region. During the year we entered into a 50:50 joint venture with Hysan
Development Company Limited to operate a flexible workspace business across Hong Kong, Macau and Guangdong (“the Greater
Bay Area” (“GBA”)).
UK
Lockdown restrictions had a significant impact on the UK business, with lower demand throughout the CBD of London. Outside
of London our business has been more robust. Since the announcement of easing restrictions in March 2021, demand for more
distributed working has further increased sales in many of the satellite towns and cities outside of London, and since summer,
also in CBD of London. As a result, pre-2020 occupancy improved from March to exit the year at 70.8%. Pre-2020 occupancy
for the period averaged 69.2% (FY 2020: 72.6%).
Enquiries are good and sales conversion is improving. Lower discounting and the removal of COVID-19 promotions is helping
pricing on new sales. Retention is improving and is now at its highest level since the start of the pandemic. Renewal pricing is
also strengthening. Meeting room demand came back strongly in June and revenue from other services is recovering with
footfall improvement.
£m
Total revenue
Open centre revenue
Pre-2020 revenue
Pre-2020 occupancy – Square feet
Number of centres
FY 2021
354.2
342.4
316.9
69.2%
285
FY 2020
388.8
352.7
344.1
72.6%
304
% Change
(actual currency)
(8.9)%
(2.1)%
(7.9)%
(336) bps
–
Revenue from open centres reduced by 2.1% to £342.4m, with the growth rate improving to 20.1% in Q4 year-on-year. Pre-2020
revenue declined by 7.9% to £316.9m (FY 2020: £344.1m), with the rate of growth improving in Q4 to 11.5%.
Five new locations were added and 24 rationalised in the UK in 2021. The net of these additions and the network rationalisation
led to an overall reduction of locations in the region to 285 at 31 December 2021.
28
IWG plc Annual Report and Accounts 2021
Strategic review
The case for hybrid working has never
been clearer.
At its simplest, employers wish to
reduce their real-estate costs and
minimise their carbon footprint while
successfully attracting the best available
talent to help them compete as
effectively as possible.
Hybrid working is projected to save
organisations an average of $11,000
every year for every person who works
remotely for half of the week. The
estimated savings have been calculated
based on conservative assumptions
by Global Workplace Analytics. The
research-based consulting firm had
noted that the primary savings will
come from increased productivity,
lower real-estate costs, reduced
absenteeism and turnover and
better disaster preparedness.
Employees, meanwhile, want the
freedom to choose to work in a
metropolitan headquarters or at home,
and to collaborate with colleagues in a
rural or suburban centre close to where
they live. Research commissioned by
IWG shows that 70% of job candidates
are insisting that companies have a
hybrid work policy and half of existing
employees would quit their job if forced
back to the office five days a week.
Enabling companies and individuals
alike to gain from all these benefits
takes more than just a global network
of high-quality business centres.
Technology also plays an essential role,
and IWG is unique in having a true
platform strategy that enables us to
bring together the users of hybrid
space and the owners of real estate
across the world.
In a very important strategic review of
our organisational structure, we set in
motion a major programme of work in
2021 that will shape our future direction,
not only throughout 2022 but for many
years to come. Following the review in
July, the Board determined that
customers and shareholders would
benefit from a structural separation of
some of the Group’s operating assets
and capabilities.
We have subsequently completed the
separation of certain of our digital assets
and, as separately announced today,
these digital assets will be merged with
The Instant Group to create the world’s
leading fully integrated independent
workspace platform. The merged
business will be run by Instant’s current
management, led by CEO Tim Rodber,
who have achieved c. 31% Compound
Average Growth Rate in EBITDA over the
period 2019 - 2021. The transaction
comprises a net cash investment of
£270m, provided by a fully underwritten
debt facility, to acquire the shares of
selling shareholders and provide capital
for growth with Instant management
investing a further £50m into the
merged business. The merger underpins
the new company’s independent
leadership position in the flexible
workspace market and creates a
preferred platform for the booking of
flexible office space, services and
inventory management, similar to
models already operating in the travel
and hospitality sectors. The merged
business creates the largest digital
platform, accessing over 30,000
buildings in more than 175 countries,
served 24/7 through an integrated
platform operating in more than 40
languages. The next step anticipated
is a formal separation from the Group
via a listing on the US or UK markets
within the next two years.
In a separate strategic strand, the
Group continues to review the
potential separation of the property
investing activities.
With these clear strategic objectives in
place, the Group is in a strong position
to generate enhanced free cash flow.
Focusing on what matters
most to IWG
During the pandemic, I believe our
purpose – creating a better day at work
– became stronger, more clearly defined,
and more relevant for our stakeholders
than ever before.
This new strength has manifested itself
in several ways over the last year,
enabling us to articulate what matters
most to us. For our customers, we aim
always to ensure that our offering
enables them to create value and
flexibility in their working days, helps
them to attract the best talent, and
supports them with the sustainable
management of their real estate.
iwgplc.com
29
STRATEGIC REPORT CHIEF EXECUTIVE OFFICER’S REVIEW CONTINUED
For our people, we continuously
invest in our teams, ensuring diversity
and equal opportunities in all the
communities across over 120 countries
where we operate.
For the environment, we are empowering
thousands of businesses and millions of
people to reduce their carbon footprint.
We achieve this simply by growing our
network of centres to bring more and
more workspaces into the local
communities, small towns and suburbs
where people actually live, raise their
families and socialise with their friends.
Over the last two years, market demand
has led us to open almost all our new
centres in non-city centre environments.
This approach is having three important
positive results. First, by driving down
the need to commute, it is significantly
reducing the carbon footprint of millions
of workers across the world. Second, it is
enabling companies to play more than
lip service to the concept of work-life
balance by giving people more of their
own time by enabling them to work
close to where they live. And third, it is
supporting local economies and small
businesses by encouraging people to
spend more in local communities, once
again making them vibrant places to live
and work.
In short, it is making the much-vaunted
concept of the 15-minute city a reality
for millions by providing all the facilities
required for hybrid working in self-
sustaining local neighbourhoods.
In our 2020 Annual Report, I announced
our commitment to being a carbon-
neutral organisation by 2025.
Throughout 2021, we have refined
further our carbon-neutral programme.
We accelerated our activities around
minimising carbon emissions that arise
from our supply chain and will be
investing in carbon offset projects.
As a result, we are bringing forward our
ambition of becoming carbon-neutral
during 2023.
Looking forward to 2022
and beyond
I believe that today IWG is uniquely
well-positioned to continue to grow
strongly in 2022, benefiting from the
trends I have already described. We
have a clear strategy and are capitalising
on continuing structural tailwinds. As
a result, our scale, our history, our profile
and our franchise offer make us the
obvious partner for property owners
everywhere.
Our presence in markets across the
world, long-established in urban centres
and growing fast in suburban and rural
communities, make us globally the
most visible, the most reputable and
the most experienced provider of
high-quality hybrid and flexible
office accommodation, membership
and home-work products and
associated services.
Looking to 2022 and beyond, I firmly
believe that these advantages will drive
our success and further strengthen our
leadership position. We are committed
to further improvement as accelerating
capital-light growth, enabled by an
expanding base of franchise and
property partners, helps us serve
the fast-increasing demand we
are witnessing.
We already have a strong balance sheet,
a superior and differentiated technology
offering and a strong team. More
innovation, an ever-better platform and
even stronger brands will improve our
market-leading position yet further. This
will enable us to bring new employment
opportunities, a reduced carbon
footprint, better work-life balance and
heightened efficiency to businesses,
workers and communities everywhere.
We have all been watching with horror
the devastating humanitarian crisis
unfolding in Ukraine, where our thoughts
are with those impacted, including some
of our own people. Our commitment to
our colleagues and customers in Ukraine
is unwavering and we are supporting
humanitarian relief efforts. Our centres
in neighbouring countries are organising
collections of essential supplies
including clothing and food for the
Ukrainian people displaced by the
conflict. Additionally, a fund in aid of
UNICEF has also been created.
Notwithstanding geopolitical
uncertainties, I am confident that IWG
has the energy, agility and momentum
required for the significant opportunities
ahead. Our trading momentum and
forward order book are giving us clear
visibility for strong growth in 2022 and
an increasingly positive future, which
confirms we are in the right place
at the right time as businesses continue
to embrace hybrid working.
Mark Dixon
Founder and CEO
8 March 2022
30
IWG plc Annual Report and Accounts 2021
OUR STRATEGY
A strategy to extend our global
market lead
Our unique, capital-light and highly cash-generative strategy for growth is based
on three essential pillars that are enabling us to simultaneously expand our
market-leading global presence, drive significant month-on-month increases in
fee income, and create ever-closer customer relationships.
Delivering growth through our three strategic pillars
Network
Franchise partnerships
Platform (technology)
Our fast-growing global
network, providing high-
quality workspace wherever it
is required, under a multiplicity
of leading brands and in
increasingly advanced
buildings in cities, towns,
suburbs and rural locations
across the world.
See pages 32-33
For more on our locations
Our unique approach to
franchising and partnering
with building owners, creating
close, mutually beneficial
relationships and driving
significant month-on-month
revenue increases, now and
into the future.
Our continuous-improvement
approach to technological
development, bringing our
customers ever-better
solutions that maximise
workforce efficiency, flexibility
and loyalty, no matter where
their employees actually work.
See pages 34-35
See pages 36-37
For more on our franchising
For more on our technology
and partnering
Market opportunity
iwgplc.com
31
STRATEGIC REPORT STRATEGY IN ACTION – NETWORK
Our global network:
world-leading, fast-growing
and worker-focused
The worldwide hybrid-
working market is growing
fast. We are seeking to grow
our global network ahead of
the curve to attract an ever-
increasing share of the
world’s employers and their
employees.
With close to 3,400 high-quality centres
serving more than 8 million customers
every day via 20 brands in over 120
countries worldwide, IWG is already the
dominant force in the flexible workspace
market globally.
And, by accelerating our expansion
programme, we are continuously
extending our lead, particularly in those
local suburban and rural environments
where people, freed and empowered by
advanced hybrid-working technologies,
increasingly want to work.
Quite simply, it’s a strategy of enabling
employers and employees to work in the
way they want by providing the solutions
they want, wherever and however they
want them.
20 brands
2 new brands added in 2021
8m
customers
2m added in 2021
32
IWG plc Annual Report and Accounts 2021
Any building,
Any space,
Any location
Multiple buildings
Entire buildings
Floors
Delivering through our
network in over 1,100
towns and cities across
more than 120 countries
CBDs
Suburbs
Towns
Rural
Business
parks
Transport
hubs
iwgplc.com
33
STRATEGIC REPORT STRATEGY IN ACTION – PARTNERSHIPS
Partnering for shared success:
mutual benefits and
accelerating fee income
Partnering with franchisees
and property owners across
the world is an essential
component of our strategy
for capital-light growth.
IWG has always partnered with
property owners across the world.
But over recent years, more franchise
investors and operators than ever
before are recognising the opportunities
that working with us present as hybrid
working rapidly becomes the norm
for millions.
The hybrid-working segment is the area
of the global workspace market that’s
in most vibrant growth, following some
years of steady expansion before the
revolutionising impact of the COVID-19
pandemic. And, as the global market
leader, we are well-positioned to help
ambitious businesses diversify into this
burgeoning new sector of the franchise
landscape, supported by over three
decades of experience and our deep
understanding of more than 120
national markets across the world.
The reasons for this growing popularity
among franchisees are clear, including:
– the desire for flexible workspace
solutions that allow employers to
scale up or down rapidly in the face
of market change;
– the need to provide flexible working
to attract and retain their key talent;
– the ability to drive efficiency and
productivity improvements; and
– the increasingly urgent need for
companies to reduce their
carbon footprint.
34
IWG plc Annual Report and Accounts 2021
So, for our franchise partners, the
opportunity to work with us on
developing a dynamic new business
is highly attractive. For us, the sheer
speed at which it enables us to grow
our network, in partnership with highly
commercial and engaged franchise
partners, is equally compelling.
This is what we mean by capital-light
expansion.
Network mix – December 2021
65%
35%
Conventional
Franchises, partnerships and
management contracts
iwgplc.com
35
STRATEGIC REPORT STRATEGY IN ACTION – PLATFORM (TECHNOLOGY)
The technology gain:
seamless end-to-end
customer journeys
The way we develop and
implement our technology
offer is an essential
component of our strategy
to outperform our market.
By ascertaining that
customers get the tools they
need from us to fulfil their
business goals, we ensure
their growth and ours are
seamlessly interconnected,
maximising loyalty for
long-term relationships.
With our global footprint across 124
countries, the demands placed on the
technology we use to support our
customers are virtually unique. It has to
meet needs at every touchpoint, every
day for 8 million people working in
multiple languages and in multiple
places – in the office, at home and
on the move.
As a result, during 2021 we invested
more than £50m in developing systems,
automation and apps across many areas.
These ranged from solutions supporting
very large enterprise customers with
tens of thousands of employees in
multiple locations in many countries, to
apps that help the smallest SMEs comply
with local legislation.
Every country where we operate
has a unique cultural and operating
environment, and our ability to localise
effectively is a key source of competitive
advantage for us. We therefore integrate
our detailed knowledge of the local
requirements in all our markets into
our digital operating platform, helping
businesses operate safely and
seamlessly, no matter where they are.
We have also continued to develop our
solutions supporting hybrid working as
it continues to become the normal way
of working for millions. From cloud
telephony and cloud printing to
zero-touch internet around the world,
we have continued to broaden and
extend the services people need to
work without barriers to productivity,
wherever they are.
As part of this programme, we recently
introduced enterprise employee
solutions, which help large companies
support their employees in every aspect
of hybrid and flexible working.
Maximising space utilisation
Our customers often need to respond
quickly to fast-changing space
requirements, especially at a time of
global uncertainty. IWG therefore started
to build a full digital representation of its
global estate in 2021, to help businesses
adopt flexible planning strategies for the
future. This will enable real-time metrics
from our existing IoT platform to be
blended with AI-driven planning tools
and demand forecasts, enabling us and
our customers to plan the most efficient
use of space at any point in time.
Optimising office locations
Our many decades of experience have
given us a wealth of data on the key
factors that underpin the successful
location and design of our centres,
including detailed information on sales,
operating costs and space utilisation.
Combined with an active feedback
loop, this enormously powerful resource
for training machine-learning algorithms
will give us accurate projections of
demand and profitability for optimised
location selection as we extend our
global network.
Blending the customer
experience
We are bringing our customers’ physical
and digital worlds together to deliver a
holistic working experience, whether in
the office or online. By merging their
physical and digital profiles, we can
ensure all users’ experience in both
worlds precisely meets their needs
thanks to the frictionless delivery of
the right service, delivered in the
right way and at the right moment.
Commercialising our
technology platform
We have developed and refined our
comprehensive everywhere technology
platform over many years and for tens of
thousands of customers. And now we are
commercialising it, making its benefits
available to any company, workspace
operator or property owner that wishes
to use a true best-of-breed solution to
streamline their own locations. We are
confident there is a receptive market.
Our ability to blend people, workspace
and technology with local knowledge,
enterprise experience and global scale
presents a value proposition that we
believe will persuade many companies
to outsource to us.
36
IWG plc Annual Report and Accounts 2021
iwgplc.com
37
STRATEGIC REPORT BUSINESS MODEL
Our business model
For over three decades, we have successfully developed our business model to deliver
strong returns. Today, with our unmatched scale, unique multi-brand approach and highly
efficient platform, IWG is poised for unprecedented growth.
What we do
How we do it
We partner with franchisees and
property owners across the world to
provide the largest network of flexible
workspace for businesses of every type
and size. Through our unique global
infrastructure, we deliver a
comprehensive service that ensures our
partners and end customers have a
great day at work.
Key inputs
Our partner relationships
Our success depends on the success of our
partners, so we use all our experience and
expertise to deliver the service and support
they need.
Our people
We employ great people and help them to
achieve their full potential, so they can drive
our and our partners’ success.
Our networks
It is our vision to have a centre serving
every community, so we and our partners
can empower businesses and individuals
to work flexibly and productively anywhere
in the world.
Our brands
With a growing stable of global and local
brands, we can segment the markets where
we operate to maximise uptake and create a
unique growth opportunity.
Our formats
Versatile, inspiring and practical, our formats
drive worker satisfaction and productivity.
Our platform
Our flexible platform features world-class,
easy-to-use infrastructure that delivers
simple points of access and a great user
experience.
Creating
access to
the flexible
workspace
market
Property owners
Our unique portfolio of brands and formats lets building
owners select the flexible workspace solution that will add
the most value by meeting the needs of the local business
community. Our platform and associated centralised support
functions make implementation straightforward.
Our competitive
operating
model
Operational
efficiency
We continuously optimise
the performance and
effectiveness of our
locations. Combined with a
disciplined approach to
costs, this enables us to
deliver long-term value.
Our scaled platform and
centralised support
functions underpin IWG’s
operational efficiency
across the world.
Centralised
support functions
Centralised support
functions maximise value
for our partners, customers
and shareholders.
From procurement to
marketing, we benefit from
economies of scale and
global reach to provide
consistent support and
service to the business.
Our three strategic priorities enable sustainable
growth to achieve our purpose.
Our strategic
pillars
See pages 31-37
to read more about
our strategic priorities
Strong
governance and
risk management
system
Robust governance and a rigorous risk-management
model underpin our operating model to ensure the
business is managed prudently and risks are assessed
appropriately.
38
IWG plc Annual Report and Accounts 2021
Franchise partners
Our franchise partners find it easy to activate our business
model, brands and marketing appeal. Building on years of
experience and optimisation, we make it easy for our partners
to scale up their operations and earn attractive returns.
Scaled
platform
IWG’s different brands
operate from a single,
scaled and highly efficient
global platform, enabling us
to provide workplace
solutions across the world
that meet every customer’s
requirements.
Multi-
branded
We recognise there
is no ‘one size fits all’
solution, so we provide
a choice of workspace
formats through our
different brands, formats
and workspaces to
accommodate our
customers’ varied needs
and enable them to have a
great day at work.
Value created
Customers
We help businesses perform better,
with more flexibility and agility,
staffed by more fulfilled, effective
and loyal people.
Partners
We offer an exciting, sustainable
business opportunity powered by
our global leadership, unique
experience and unrivalled
operating platform.
Employees
We recognise the talents of our
diverse and passionate workforce
across the world, enabling our
people to contribute to society
while driving successful careers.
Communities
We bring employment
opportunities to the heart of
communities, attracting jobs,
reducing unnecessary travel and
encouraging social connection.
Shareholders
We deliver sustainable returns via a
progressive dividend policy that’s
enabled by our prudent approach
to investment.
1
Network
2
Franchise partnerships
3
Platform (technology)
Importantly, our operating model ensures that we benefit from an entrepreneurial
spirit and can strive for our ambitions for future growth.
See pages 65-75 for more on our approach to risk and governance
iwgplc.com
39
STRATEGIC REPORT MARKET REVIEW
The growing flexible
workspace market
Right across the world, significant forces
are influencing the future development
of the flexible workspace market. In
2020, the COVID-19 pandemic made
these all the stronger. Here we reflect on
how the ways we react to change are
enabling us to strengthen our position
as a global market leader.
Concern about the environment
Continuing to support people working at or near home
following the pandemic is the single biggest
contribution organisations can make to reduce their
carbon footprint. Taking positive action attracts talent
who share an increasing sense of shared responsibility
and global citizenship.
Societal change
The global COVID-19 pandemic has significantly
accelerated the uptake of hybrid-working patterns.
Research from 2021 shows that half of all workers
would seek another job if asked to make a full time
return to the office(1). SME demand for high-quality
accommodation and services in local markets continues
to accelerate.
1. Source: IWG Research, 2021
Evolving global economy
Companies across the world are aiming to reflect their
business priorities in their real-estate strategies. For
many, this includes increasing operational flexibility
while driving down overall costs, and seeking new ways
of maintaining closer relationships with customers and
suppliers alike.
Rapidly advancing technology
Smart technology and universal connectivity are
enabling people to choose how, when and where they
work. With the pandemic having made remote
communications the norm, billions are now connecting
globally via the latest in video communications and
virtual reality platforms – a shift that’s being 100%
enabled by major improvements in technology.
Demand for more agile
property models
Companies increasingly need to be poised for rapid
reinvention in an ever-more complex and competitive
environment. To support rapid shifts in strategy, scale
and location, businesses are increasingly demanding
highly efficient, intelligent buildings, high-quality
services and portfolio solutions that extend far beyond
single offices.
40
IWG plc Annual Report and Accounts 2021
Impact on our industry
How we are responding
– Need to satisfy growing consumer, shareholder,
employee, legislative and societal demand for
reduced environmental impact.
– Increased demand for flexible workspace solutions,
close to and in the communities where people want
and can afford to live.
– Growing requirement for advanced tech solutions to
support home working as individuals seek to enhance
their lifestyles and reduce their carbon footprints.
– Investing in highly efficient, intelligent buildings,
continuously upgrading our estate and enabling
reduced commuting by opening more locations
outside city centres.
– Upgrading or closing inefficient centres to improve
environmental performance across our portfolio.
– Supporting new ways of working that allow people
everywhere to contribute to the carbon-reduction
agenda.
– To attract and retain the best talent, employers are
– Our network growth is focused on local markets,
seeking partners who can provide flexible space and
services.
– Workspace providers without diverse portfolios are
struggling to meet emerging customer needs and
remain competitive.
– Communities that cannot provide high-quality
workspace are finding it hard to meet the evolving
needs of local employers.
enabled and accelerated by our franchising strategy
that is driving our global presence towards our goal
of reaching 50,000 centres.
– We ensure our customers gain from our scale, brand
portfolio and service levels at every stage of their
development.
– We enable our customers to participate in our local
social investment programmes across the world.
– Companies are increasingly taking a portfolio
– We provide ‘hub-and-spoke’ infrastructure to meet
approach to real estate, taking on a hierarchy of sites
from headquarters to local offices.
– They are seeking new ways of building dispersed
customer relationships while delivering a
personalised service.
– The need is growing for customers to understand and
influence supplier behaviour in local markets.
national and regional development plans.
– Our sophisticated global platform allows immediate
personalised support to meet emerging customer
needs.
– Our global network supports a worldwide, regional
and local presence wherever required,
allowing customers to make rapid shifts in location,
scale, strategy and customer focus.
– The ability to offer, refresh, expand and manage an
– We leverage our unmatched insight into the tech
appropriate range of digital offerings is a key
differentiator.
– Companies are focusing their attention on identifying
the right tech investments to make the moment they
are required.
– The need to maintain service provision is mission-
critical, driving the often expensive requirement to
keep pace with advances.
needs and expectations of businesses, delivered by
millions of individuals who use our services
every day.
– We continually invest in world-class, resilient IT
infrastructure, innovative digital offerings and
services at all our centres.
– With 3,314 centres worldwide, we provide the
resilience and global infrastructure to meet every
flexible-working need.
– Fast-changing business needs mean that customer
– We can respond fast and fluidly to rapidly changing
requirements are continuously evolving.
– Companies are seeking partners
who can meet increasingly rigorous and mission-
critical demands, fast and efficiently.
– Growing complexity is increasing the need for
enterprise companies to have a single point of
contact for their property requirements.
needs and demands by developing bespoke
solutions that can be rapidly engineered for global
uptake.
– We have the experience, scale and investment
power to deliver and continuously upgrade in line
with individual expectations.
– Our network comprises a wide variety of building
types able to serve even complex business needs.
iwgplc.com
41
STRATEGIC REPORT KEY PERFORMANCE INDICATORS
Key drivers for sustainable growth
We aim to deliver
sustainable profitable
growth for our
investors through
providing customers
globally with an
unrivalled choice of
convenient work
environments that suit
the full range of
workspace and service
needs.
1
Industry-leading
profitable growth
2
Best-in-class
cost leadership
Pre-2020 Adjusted EBITDA
development (£m) ¨*
£167.8m
2021 - Pre-2020
167.8
2020 - Pre-2019
2019 - Pre-2018
2018 - Pre-2017
244.6
425.9
351.3
Adjusted overhead as percentage
of revenue (%)(1) ¨*
13.2%
2021
2020
2019
2018
13.2
13.3
10.7
10.5
1. pre-IFRS 16 for continuing operations
3
Global multi-brand
network
Network (locations)
3,314
4
Capital-light
growth
5
Shareholder
returns
2021
2020
2019
2018
3,314
3,313
3,388
3,306
Net growth capital investment (£m)¨
£111.8m
111.8
250.9
2021
2020
2019
2018
389.0
332.0
Total shareholder returns (£m)
nil
2021
nil
2020
2019
2018
43.7
107.7
93.9
* Including only those operations that
were open throughout the period,
pre COVID-19 related adjusting
items and pre-IFRS 16
42
IWG plc Annual Report and Accounts 2021
Overview
Future ambitions and risks
Pre-2020 Adjusted EBITDA* down from £185.2m for
2020 to £167.8m for 2021, reflecting the prolonged
impact of COVID-19.
COVID-19 made 2021 another very challenging year in our
history. Notwithstanding this, our revenue performance was
resilient, which, together with the swift, comprehensive
actions taken to reduce costs, delivered pre-2020 EBITDA¨
of £167.8m before COVID-19 related adjusting items.
The continued impact on market conditions of COVID-19
and the possible appearance of new variants cannot be
dismissed. However, the momentum we have seen build in
our business, particularly in the second half of 2021 and
into 2022, provides a basis to anticipate an improved
performance in 2022.
Overheads as a % of revenue before adjusting items
were well controlled at 13.2%.
Group overheads¨ for 2021, excluding adjusting items of
£33.1m related to COVID-19, decreased 6.2% at constant
currency to £294.0m (2020†: £322.8m). Excluding these
non-recurring costs, Group overheads¨ represented
13.2% of the Group’s lower revenue reported for 2021
(2020†: 13.3%). Although overheads have reduced, the Group
has invested in the continued development of enterprise
accounts, the pivot to a capital-light growth model
and a scaled platform of services.
We continue to add quality, convenience and choice
to our network in a carefully controlled and risk-
managed way.
In direct response to the pandemic, decisions were taken to
rationalise underperforming centres to ensure we emerge a
stronger business post COVID-19. Overall, 145 locations were
rationalised, mostly directly COVID-19 related. During 2021
we added 146 new high-quality locations to maintain the
largest global and most widely distributed network.
During 2021 net growth capital expenditure reduced
to £111.8m.
During 2021 we made further progress on our strategy of
more capital-light growth. Franchising and partnering reduces
the capital deployed and speeds up the rate of growth. We
invested more resource into our franchise and partnering
teams during 2021. The benefit of this is already being seen,
as the investment required per sq. ft. of flexible space more
than halved in 2021.
We will continue to focus on controlling overheads to deliver
operational efficiency. This will be balanced with further
planned investment in overhead to improve the performance
of our well-invested operating platform, processes and
people and delivery of the Group’s franchise strategy.
Macro and geopolitical uncertainties are likely to persist
in many regions in 2022, which may lead to further
rationalisation of the network. However, we remain clearly
focused on accelerating growth through our franchising
and partnering strategy. Simultaneously we will continue
to develop our brands to enhance the choice available to
more customers.
We have a pipeline in excess of 250 new franchise and
partner deals for 2022 which will further improve the network
mix and deliver an acceleration of growth.
Continued to preserve cash in direct response to
COVID-19.
Given the prolonged uncertainty caused by COVID-19, we
believe it was prudent to protect our liquidity and as a result
there was no cash distribution to shareholders in 2021.
Our capital allocation policy remains in place, prioritising
investment in the long-term development of our business and
distributions to shareholders. We intend the earliest possible
return to continuing to provide attractive returns to
shareholders with the continuation of a progressive dividend
distribution and share repurchase programme.
iwgplc.com
43
STRATEGIC REPORT STAKEHOLDER ENGAGEMENT
Adding value for our
stakeholders
At IWG, we have a strong record of delivering value to
our key stakeholders, comprising the five groups that
mean most to us: customers, partners, employees,
communities and shareholders.
Partners
Customers
Franchisees seeking opportunities
to diversify into an exciting and
fast-growing market, and building
owners and developers wishing
to drive the best possible return
on investment
Businesses of all sizes across the
world are seeking flexibility,
quality and value from their
workspace to boost their agility,
competitiveness and the
commitment of their people
Why are they important to us?
They not only own or manage the
buildings where our customers work,
they also bring us the benefits of
their experience across a range of
niche and local markets to deepen
our understanding of specific
customer needs.
What do they want from us?
Our partners need flexible, bespoke
relationships based on shared trust,
enabling them to maximise the benefits
of our proven business model, our
experience, the power of our brands
and our global leadership position.
How do we engage with them?
We provide established international
sales and marketing channels and
comprehensive training from the outset,
as well as ongoing support and training
from an experienced global team.
Why are they important to us?
IWG exists to serve its customers. By paying for
our services, they enable us to consistently improve
our global offering with ever-better property
models, working environments, value, service and
business solutions that collectively add up to a
great day at work.
What do they want from us?
Our customers need us to understand their
changing needs, responding fast and with precision.
This means giving them the flexibility to achieve
rapid shifts on cost, location and scale, while
providing the great working environments,
world-class IT and admin support they need
to achieve their business goals.
How do we engage with them?
We empower our customers to choose from a wide
range of leading brands, so they can find the
precise solution that works best for their business.
We also give them and their people all the support
they need, wherever they are: in the office, at home
and on the move.
44
IWG plc Annual Report and Accounts 2021
Employees
Communities
Shareholders
The heart of our business: the
people who – in growing numbers
of neighbourhoods across the
world – do most to ensure our
customers have a great day at work
The places where our centres are
based, increasingly home to where
our own people and customers’
employees live and wish to work
The individuals and institutions
who own our shares and provide
the support we need to deliver
sustainable stakeholder value
Why are they important to us?
They are the public face of IWG.
They ensure we deliver customer
value and drive our growth, attract
new business and deliver the
returns our shareholders want.
What do they want from us?
Like everybody else, they want a
great day at work, based on mutual
loyalty, exciting rewards, effective
development opportunities and the
benefits associated with working
for a global leader.
How do we engage with them?
Our People Promise commits us to
delivering interesting and achievable
work, together with sensitive
management, a company that cares,
and the opportunity to advance and
develop their careers with us.
Why are they important to us?
They are increasingly the source
not only of our employees but our
customers too, enabling us to grow
at scale in multiple local markets
across the world.
What do they want from us?
They want us to help them thrive,
attracting new employment and
enabling local people to work
closer to home.
How do we engage with them?
We are a part of the community, and
are heavily involved in community
projects from education to health-
related and other initiatives.
Why are they important to us?
They give us the financial support and
authorisation we need to continue our
unique strategy for growth and
strengthen our leadership position in
the global flexible-workspace sector.
What do they want from us?
Our investors want us to continue
articulating and following our successful
strategy, communicating with them
clearly and regularly, and giving them
the opportunity to comment on our
progress. Above all, they want us to
grow the value of our shares and
operate a progressive dividend policy.
How do we engage with them?
In 2021, our Investor Relations function
held more than 400 meetings with
investors and analysts. These meetings
were predominantly held virtually in
view of COVID-19 considerations.
iwgplc.com
45
STRATEGIC REPORT CHIEF FINANCIAL OFFICER’S REVIEW
2021 dominated by COVID-19,
but good progress achieved
COVID-19 continued to
present challenges globally,
but it has also increased
awareness and adoption of
hybrid working. This, together
with the swift actions the
Group has taken since the
onset of the pandemic, has
delivered a sequentially
improving financial
performance commencing in
the second quarter.
Financial performance
The review below highlights the reported
results in accordance with IFRS. Under
IFRS 16, while total lease-related
charges over the life of a lease remain
unchanged, the lease charges are
characterised as depreciation and
financing expenses with higher total
expense in the early periods of a lease
and lower total expense in the later
periods of the lease.
The Group also presents the results in
accordance with pre-IFRS 16 accounting
standards as it provides useful information
to stakeholders on how the Group is
managed, operating performance targets
are measured, and reporting for bank
covenants and certain lease agreements
are prepared.
Adjusting items
The continuation of COVID-19 in most of
the Group’s markets had a significant
impact on our business in early 2021
which initially slowed the pace of
recovery and directly contributed to the
reduced revenue reported in 2021 (when
compared to 2020) and the net losses.
Consequently, the Group in 2021
continued to take measures to build
greater resilience into the business and
future-proof it for the long-term structural
growth opportunity. The success of these
measures became evident in the
momentum that built in the business
during the remainder of 2021. These
actions, together with the slower than
originally anticipated recovery caused
Glyn Hughes
Chief Financial Officer
46
IWG plc Annual Report and Accounts 2021
Group income statement
£m
System-wide revenue
Revenue
Gross profit/(loss) (centre
contribution)
Gross profit before adjusting items(1)
Overheads(2)
Joint ventures
Operating loss
Operating (loss)/profit before
adjusting items(1)
Net finance costs
Loss before tax from
continuing operations
Taxation
Effective tax rate
Loss after tax from continuing
operations
Profit/(loss) after tax from
discontinued operations
(Loss)/profit for the period
Basic EPS (p)
– From continuing operations before
adjusting items(1)
– Attributable to shareholders
Depreciation & amortisation
Adjusted(1) EBITDA
2021
(As reported)
2,498.5
2,227.9
242.6
240.9
(327.8)
(2.2)
(87.4)
(56.0)
(172.0)
(259.4)
(10.3)
(4.0)%
(269.7)
59.3
(210.4)
(17.2)
(20.3)
1,109.4
1,057.7
IFRS 16 impact
2021
(Pre-IFRS 16)
2020†
(Pre-IFRS 16)
IFRS 16 impact
–
–
161.3
171.6
(0.7)
–
160.6
170.9
(166.9)
(6.3)
2.1
(4.2)
9.9
5.7
2,498.5
2,227.9
81.3
69.3
(327.1)
(2.2)
(248.0)
(226.9)
(5.1)
(253.1)
(12.4)
(4.9)%
(265.5)
2,721.9
2,431.9
(173.7)
149.4
(379.2)
(2.6)
(555.5)
(176.0)
(10.8)
(566.3)
(43.0)
(7.6)%
(609.3)
49.4
4.9
–
–
193.8
204.1
11.7
–
205.5
215.8
(252.5)
(47.0)
11.0
(36.0)
(6.4)
2020†
(As reported)
2,721.9
2,431.9
20.1
353.5
(367.5)
(2.6)
(350.0)
39.8
(263.3)
(613.3)
(32.0)
(5.2)%
(645.3)
(1.5)
(216.1)
604.4
(42.4)
(646.8)
(23.7)
(20.9)
305.6
79.6
(24.2)
(63.5)
307.3
133.8
(26.4)
(67.9)
1,195.0
1,233.9
1. Adjusting items relate to income and costs arising specifically from the impact of COVID-19.
2. Overheads for 2021 include COVID-19 non-recurring items of £33.1m (2020†: £56.4m).
directly by COVID-19, have resulted in
further charges. These adjusting items
totalled £31.4m (2020: £389.8m), £8.4m
of which are non-cash items.
On a pre-IFRS 16 basis these adjusting
items totalled £21.1m (2020: £379.5m),
of which a net benefit of £1.9m was
non-cash. These adjusting items
primarily reflect network rationalisation,
Group restructuring costs and provision
for expected credit losses.
Network rationalisation
With the uncertainty caused directly by
COVID-19 persisting through 2021, further
marginal centres were eliminated from
the network. This led to a charge of £83.1m
(2020: £58.5m). This charge was offset
by a £125.2m reversal of impairment of
property, plant and equipment (2020:
impairment of £244.8m).
Under pre-IFRS 16, COVID-19 related
rationalisation of the network led to a
charge of £59.8m which was more than
fully offset by utilising £124.6m of the
previously established provision,
resulting in a net benefit of £64.8m
(2020: net charge of £312.0m).
Restructuring costs
A charge of £32.6m (2020: £43.3m) is
included within adjusting items to cover
legal and other professional costs,
including costs associated with the
significant number of individual centre
renegotiations undertaken during 2021.
Provision for expected credit losses
The prolonged impact of COVID-19 and
the emergence of new variants of the
virus in some markets continued to
present an unprecedented challenge to
many customers who may struggle to
navigate through these challenges. The
Group has therefore further reviewed
the recoverability of its debtor profile
and recognised an additional £53.5m
(2020: £17.5m) in credit losses. The
increase is low compared to the overall
debtor profile as the Group has not
historically incurred significant credit
losses and continues to maintain
customer deposits as additional security
in the event of non-performance of
customer contracts.
Other one-off items
During the year the Group incurred
£0.5m of transaction costs in respect
of aborted transactions that did not
complete due to COVID-19 (2020:
£8.2m). In addition, during the year,
the Group received a total of £0.7m
(2020: £6.4m) in respect of
worldwide support schemes.
Cost benefit
The swift actions taken to mitigate the
impact of the global pandemic on the
business, together with the ongoing
sharp focus on all costs, has resulted in
significant savings in overheads and
centre-related costs, despite the
operating losses incurred in 2021.
Overall, the cost optimisation programme
has delivered an annualised run rate cost
reduction of approximately £324m.
iwgplc.com
47
STRATEGIC REPORT CHIEF FINANCIAL OFFICER’S REVIEW CONTINUED
These cost savings exclude the c. £129m
of cost investment in new centres. After
the new centre investment, the net cost
benefit in 2021 was c. £148m.
Revenue
System-wide revenue† decreased from
£2,721.9m to £2,498.5m, a 4.2% decline
at constant currency. This is a new
additional performance measurement
for the Group and one we consider
provides a better reflection of the scale
of the business, which will become
increasingly relevant as we progress our
strategy of faster, capital-light growth,
with the resultant increased emphasis on
franchising, management agreements
and other partnering arrangements.
On a reported basis, total Group
revenue† decreased from £2,431.9m
to £2,227.9m, a 4.7% decline when
compared at constant currency. This
is a good outcome given the on-going
impact of the pandemic and one that
demonstrates the growing sequential
momentum achieved from the second
quarter onwards. The reported decline in
Group revenue† in Q1 was 20.9%, down
15.3% for the first half and down 9.9%
for the nine months to 30 September, all
at constant currency. Full year revenue†
declined 4.7% reflecting the first half
decline of 15.3% being offset by
year-on-year growth in the second
half of 7.3%.
This improving momentum in the
business from March 2021 was similarly
reflected in the revenue from open
centres and the like-for-like pre-2020
estate. Open centre revenue† declined
10.4% in H1 but increased 12.6% in
H2 year-on-year, delivering a 0.6%
increase at constant currency to
£2,180.1m (2020: £2,254.3m).
Pre-2020 revenue† increased by 7.1%
in H2 which, after a H1 decline of
15.0%, resulted in a revenue† decline
of 4.6% at constant currency to
£2,028.0m (2020: £2,210.1m).
Occupancy in the pre-2020 estate for
2021 was 70.6% (2020: 72.5%), with
momentum improving during the year.
Fourth quarter occupancy was 270 bps
higher than the third quarter at 71.2%,
with a December exit rate of 74.5%.
Encouragingly, this performance has
continued into the start of 2022, with
most major markets contributing. The
breadth of our coverage in satellite
towns and suburban locations continues
to be beneficial.
The continued maturation of the locations
opened in 2019 and 2020 has been
good. Revenue from centres opened in
2019† increased by 9.5% at constant
currency. The new locations opened in
2020 have performed strongly, with
occupancy increasing from 33.9% to
54.2%. The initial revenue contribution
from the new 2021 openings has also
been strong with exit occupancy in
December 2021 of 44.5%.
Gross profit
(before adjusting items)
The adjusted gross profit† reported for the
period was £240.9m, which compares to
£353.5m for 2020. Reported gross profit†
including the adjusting items was
£242.6m (2020: £20.1m).
Under pre-IFRS 16 the adjusted gross
profit† was £69.3m (2020: £149.4m).
With a loss† of £15.1m reported for the
first half of 2021, this full year gross
profit illustrates the improved
profitability of the business in the
second half. Adjusting for the negative
contribution from closures of £44.3m
and the contribution drag of £50.9m
from the new centres added in 2020 and
2021, the gross profit† generated by the
pre-2020 estate was £164.5m (2020:
£211.6m).
2021 performance, £m
Revenue
Cost of sales
Gross profit/(loss) (centre contribution)
Gross margin
Cost of sales(1)
Gross profit/(loss) (centre contribution)(1)
Gross margin (1)
2020 performance, £m†
Revenue
Cost of sales
Gross profit/(loss) (centre contribution)
Gross margin
Cost of sales(1)
Gross profit/(loss) (centre contribution)(1)
Gross margin (1)
Pre-2020
centres
2,028.0
(1,751.1)
276.9
13.7%
(1,863.5)
164.5
8.1%
Pre-2020
centres
2,210.1
(1,821.0)
389.1
17.6%
(1,998.5)
211.6
9.6%
New
centres
152.1
(189.0)
(36.9)
(203.0)
(50.9)
New
centres
44.2
(78.9)
(34.7)
(77.0)
(32.8)
Closed
centres
47.8
(46.8)
1.0
(92.1)
(44.3)
Closed
centres
177.6
(178.5)
(0.9)
(207.0)
(29.4)
Total
centres
2,227.9
(1,987.0)
240.9
10.8%
(2,158.6)
69.3
3.1%
Total
centres
2,431.9
(2,078.4)
353.5
14.5%
(2,282.5)
149.4
6.1%
1. Results presented in accordance with pre-IFRS 16 accounting standards and before adjusting items.
48
IWG plc Annual Report and Accounts 2021
EBITDA
Adjusted EBITDA† as reported reduced to
£1,057.7m (2020: £1,233.9m), due to
the continued impact of COVID-19 on
our business performance. Reported
EBITDA including the adjusting items†
was £1,026.3m (2020: £844.1m).
Under pre-IFRS 16, adjusted EBITDA†
declined from £133.8m to £79.6m.
Adjusted EBITDA† reflects the significant
drag from the investment in growth, which
in 2021 was £50.1m (2020: £36.0m), and
a further £42.6m in respect of closed
centres (2020: £23.3m).
Pre-IFRS 16 EBITDA including the
adjusting items† was £58.5m
(2020: a loss of £245.7m).
Overhead investment
Reported Group overheads†, excluding
adjusting items of £33.1m, decreased
2.4% at constant currency to £294.7m
(2020: £311.1m).
Under pre-IFRS 16, Group overheads
excluding adjusting items† reduced by
6.2% at constant currency to £294.0m
(2020: £322.8m). This is another good
performance, building on the decisive
actions which commenced in 2020.
As a percentage of Group revenue,
overheads† were 13.2% which is 10 bps
lower than the 13.3% of revenue they
represented in 2020, notwithstanding
the £204.0m reduction in Group revenue
from 2020. We also invested in building
our in-country sales teams and our
marketing to support our pivot to
capital-light growth.
Operating loss – continuing
operations
Adjusted operating loss† as reported
was £56.0m (2020: profit of £39.8m).
Including the adjusting items, the
operating loss† was £87.4m compared
to a loss of £350.0m in 2020.
Under pre-IFRS 16, the adjusted
operating loss† for the year was £226.9m
(2020: loss of £176.0m). The operating
profit continues to reflect the drag from
growth investment of £83.8m (2020:
£51.0m) as well as losses of £49.4m
from centres closed during 2021 (2020:
£49.4m from closures in 2021 and
2020). Including the adjusting items of
£21.1m, the operating loss† was
£248.0m (2020: loss of £555.5m).
Net finance costs
The Group has reported net finance
costs† under IFRS 16 for the year of
£172.0m (2020: £263.3m), including
interest on the Group’s lease liabilities.
Under pre-IFRS 16, the Group reported
a net finance expense† for the year of
£5.1m (2020: £10.8m). The reduction in
the net finance expense primarily reflects
the significant gain on the mark-to-market
of the option element of the convertible
bond, resulting in a gain of £22.5m
(2020: £2.4m gain). Excluding the
mark-to-market of the convertible bond
and a small foreign exchange translation
gain of £0.1m (2020: £3.2m gain), the
total net financial expense was £27.7m
(2020: £16.4m).
Taxation
The reported effective tax rate for 2021
is (4.0)% (2020: (5.2)%) on continuing
operations. The effective tax rate on
continuing operations under pre-IFRS 16
is (4.9)% (2020: (7.6)%). Despite
reporting a loss for the year, the Group
incurred a tax charge due to the continuing
profitability of certain countries and
entities within the overall Group.
Looking forward, factors that may
potentially influence the effective tax rate
include the shape of the recovery in the
Group’s trading performance,
the availability of tax losses and the
continuing ownership of specific countries
or regions which may change due to future
potential franchise agreements.
Earnings per share
Reported basic earnings per share† for
the year was a loss of 20.3p (2020: loss
of 67.9p). The loss per share from
continuing operations before adjusting
items was 17.2p (2020: loss of 26.4p).
Under pre-IFRS 16, earnings per share†
improved in the year from a loss of
63.5p to a loss of 20.9p. Earnings per
share from continuing operations† was a
loss of 25.8p compared to a loss of
64.0p in 2020. Excluding the adjusting
items, the loss per share† was 23.7p
(2020: loss of 24.2p).
Diluted earnings per share† for the year
was a loss of 20.9p (2020: loss of 63.5p).
Diluted earnings per share on a
continuing basis before adjusting
items for the year was a loss of 23.7p
(2020: loss of 24.2p).
The weighted average number of shares
in issue for the year was 1,007,214,854
(2020: 951,890,712). The weighted
average number of shares for diluted
earnings per share was 1,102,442,649
(2020: 1,045,771,886). No shares were
acquired during 2021 to be held in
treasury. The Group reissued 844,559
shares from treasury to satisfy exercises
under various Group long-term incentive
schemes during 2021.
Cash flow
The Group reported cash inflow for the
year of £111.1m before net investment
in growth capital expenditure (2020:
£74.4m), which is a strong improvement
on the cash outflow of £230m in the six
months to 30 June 2021. This reflects
the inflection of our trading performance
and an improvement in working capital
after the payment of deferred rents in
H1 which were retained in 2020.
Overall, the Group reported a reduction
in net debt for the year of £391.4m. This
was after the investment in net growth
capital expenditure of £142.5m (2020:
£203.8m), purchase of investments in
joint ventures £33.4m, proceeds from
franchise agreements of £52.3m, the
return from an aborted potential
acquisition of £283.7m and a currency
translation benefit of £119.6m. Net debt
at 31 December 2021 reduced to
£6,518.2m from £6,909.6m at
31 December 2020.
On a pre-IFRS 16 basis, the Group
experienced a cash flow of £239.1m
before investment in growth compared
to a cash inflow of £140.7m for 2020.
The full year cash outflow reflects an
improvement on the £303.0m outflow
in the six months to 30 June 2021.
The overall increase in net debt on a
pre-IFRS 16 basis was £45.9m, primarily
through the planned reduction in net
growth capital expenditure to £111.8m
(2020: £250.9m) and the £283.7m
return of cash from an aborted potential
acquisition. Net debt at 31 December
2021 was £397.0m (2020: £351.1m).
With the Group generating positive cash
flow in the second half of 2021, the
year-end position is better than the
interim net debt position of £414.6m
at 30 June 2021.
iwgplc.com
49
STRATEGIC REPORT CHIEF FINANCIAL OFFICER’S REVIEW CONTINUED
Cash flow
The table below reflects the Group’s cash flow:
£m
Adjusted EBITDA
Working capital(1)
Growth-related partner contributions
Maintenance capital expenditure
Maintenance-related partner contributions
Tax paid
Finance costs
Finance lease liability arising on
new leases(2)
Proceeds from partner contributions (lease
incentives)
Other items
Cash flow before growth capital expenditure,
investments, share repurchases and dividends
Gross growth capital expenditure
Growth-related partner contributions
Net growth capital expenditure
Cash flow before investments, share repurchases
and dividends
Purchase of shares
Dividend
Corporate financing activities
Net proceeds from the issue of shares
Proceeds on convertible bond
Less: Debt element of convertible bond
Investment-related loan receivable
Net proceeds on transactions
Exchange movement
Decrease/(increase) in net debt
Opening net debt
Closing net debt
2021
(As reported)
IFRS 16 impact
2021
(Pre-IFRS 16)
2020
(Pre-IFRS 16)
IFRS 16 impact
2020
(As reported)
1,057.7
(146.1)
–
(101.1)
5.2
(5.4)
(182.6)
978.1
28.0
50.4
_
_
–
(167.1)
(561.6)
(561.6)
35.9
9.1
111.1
(192.9)
50.4
(142.5)
(31.4)
_
–
0.6
_
_
_
283.7
18.9
119.6
391.4
(6,909.6)
(6,518.2)
35.9
(13.5)
350.2
(30.7)
–
(30.7)
319.5
–
–
–
–
–
–
–
–
117.8
437.3
(6,558.5)
(6,121.2)
79.6
(174.1)
(50.4)
(101.1)
5.2
(5.4)
(15.5)
–
–
22.6
(239.1)
(162.2)
50.4
(111.8)
(350.9)
_
–
0.6
_
_
_
283.7
18.9
1.8
(45.9)
(351.1)
(397.0)
133.8
242.3
(106.6)
(96.9)
15.0
(21.9)
(17.0)
1,100.1
(203.0)
106.6
_
_
–
(249.4)
1,233.9
39.3
–
(96.9)
15.0
(21.9)
(266.4)
–
(917.0)
(917.0)
–
(8.0)
140.7
(357.5)
106.6
(250.9)
(110.2)
(43.7)
–
1.8
313.9
343.2
(291.4)
(276.2)
3.3
2.3
(57.0)
(294.1)
(351.1)
111.0
(14.6)
(66.3)
47.1
–
47.1
(19.2)
–
–
–
–
–
–
–
–
6.7
(12.5)
(6,546.0)
(6,558.5)
111.0
(22.6)
74.4
(310.4)
106.6
(203.8)
(129.4)
(43.7)
–
1.8
313.9
343.2
(291.4)
(276.2)
3.3
9.0
(69.5)
(6,840.1)
(6,909.6)
1. Consists of proceeds from partner contributions of £19.7m (2020: £38.4m), an increase in trade and other receivables of £127.3m (2020: £76.4m) and a
decrease in trade and other payables of £38.5m (2020: increase of £77.3m) as disclosed in the consolidated cash flow statement on page 121.
2. The financial liability arising on new leases consists of the non-cash movements arising on new leases recognised less lease-related finance costs.
Capital investment in the
network
In line with the Group’s expectations,
net growth capital expenditure in 2021
reduced by £61.3m to £142.5m
(2020: £203.8m) whilst adding a similar
number of new locations and space,
representing clear evidence of the
increasing success of our capital-light
growth strategy.
Under pre-IFRS 16, net growth capital
expenditure reduced by £139.1m to
£111.8m (2020: £250.9m).
During 2021 we added 146 new
locations (2020: 141) and rationalised
145 locations (2020: 217), mostly
directly COVID-19 related.
At 31 December 2021, the Group’s
physical network comprised 3,314
locations globally, providing the largest
global and most widely distributed
network. The new locations added 4.1m
sq. ft. of gross space. This, together with
the impact of the rationalisation
programme, resulted in the Group having
64.1m sq. ft. of gross space at 31
December 2021 (2020: 62.9m sq. ft.).
Maintenance capital expenditure, both
as reported and on a pre-IFRS 16 basis,
increased modestly to £101.1m from
£96.9m. After partner contributions
received, net maintenance capital
expenditure increased from £81.9m
to £95.9m.
Strong financial position
Reported net debt at 31 December
2021 reduced to £6,518.2m (2020:
£6,909.6m), representing the
renegotiation of existing leases and
increased success of our capital-light
growth strategy.
Net debt at 31 December 2021 on a
pre-IFRS 16 basis was £397.0m (2020:
£351.1m). This is an improvement on
the net debt position at 30 June 2021
of £414.6m, reflecting positive cash
generation in the second half. The
31 December 2021 net debt position
reflects the previously highlighted return
of the £283.7m investment on an
aborted potential acquisition and the
50
IWG plc Annual Report and Accounts 2021
higher-than-normal cash outflows
resulting from the completion of more
deals with landlords, which triggered the
release of previously deferred rent
payments held over by the Group in 2020.
In February 2022, the Group reduced
the £950m revolving credit facility to
£750m with an unchanged maturity
date in 2025.
In addition, a £330m bridge facility for
The Instant Group acquisition has been
agreed. The bridge facility has a maturity
in September 2023.
Foreign exchange
The Group’s results are exposed to
translation risk from the movement in
currencies. During 2021 key individual
exchange rates have moved, as shown in
the table below. Overall, these exchange
rate movements had a mixed impact on
the Group’s results. Revenue and gross
profit were reduced by £91.1m and
£2.1m respectively, but operating profit
increased by £7.2m, reflecting the
relative contribution to Group profit
from our US business.
Risk management
Effective management of risk is a key
area of focus for the Group and, crucially,
integral to our strategic planning. A
detailed assessment of the principal
risks and uncertainties which could
impact the Group’s long-term
performance and the risk management
structure in place to identify, manage
and mitigate such risks can be found
on pages 66 to 75 of this report.
Related parties
There have been no changes to the type
of related party transactions entered into
by the Group that had a material effect
on the financial statements for the
period ended 31 December 2021.
Details of related party transactions that
have taken place in the period can be
found in note 30.
Dividends and share
repurchase programme
For the purposes of liquidity, we are
ensuring that the Group maintains
sufficient funding especially in a period
of significant centre rationalisation. Our
capital allocation policy remains in place,
prioritising investment in the long-term
Foreign exchange rates
Per £ sterling
US dollar
Euro
At 31 December
Annual year average
2021
1.35
1.19
2020
1.37
1.11
%
(1.5)%
7.2%
2021
1.38
1.16
2020
1.29
1.13
%
7.0%
2.7%
The Directors consider that the Group is
well placed to successfully manage the
actual and potential risks faced by the
organisation including risks related to
COVID-19.
On the basis of their assessment, the
Directors have a reasonable expectation
that the Group has adequate resources
to continue in operational existence
for a period of at least 12 months from
the date of approval of these group
consolidated financial statements and
consider it appropriate to continue
to adopt the going concern basis in
preparing the financial statements
of the Group.
In February 2022, the Group reduced
the £950m revolving credit facility to
£750m with an unchanged maturity
date in 2025. The facility is subject to
financial covenants which include
quarterly or semi-annual EBITDA and
minimum liquidity requirements and/or
interest cover and Net Debt to EBITDA
ratio requirements.
In addition, a £330m bridge facility for
The Instant Group acquisition has been
agreed. The bridge facility has a maturity
in September 2023. This facility is
secured and is subject to interest cover
and net debt to EBITDA covenants.
On the basis of these actions and
assessments, the Directors consider it
appropriate to continue to adopt the
going concern basis in preparing the
financial statements of the Group.
Glyn Hughes
Chief Financial Officer
8 March 2022
development of our business and
dividend distribution to shareholders.
However, given the prolonged
uncertainty caused by COVID-19, we
believe it is prudent to protect our
liquidity and as a result, future dividend
payments and a restart of our share
repurchase programme are placed on
hold for the moment with a clear
intention of the earliest possible return
to our stated shareholder return policy.
Going concern
The Group reported a loss after tax† of
£269.7m (2020: £645.3m) from
continuing operations for the year, while
net cash of £734.8m (2020: £968.9m)
was generated from operations during
the year. Although the Group’s balance
sheet at 31 December 2021 reports a
net current liability position of £1,439.4m
(2020: £1,330.4m), which could indicate
a potential liquidity risk, the Directors
concluded after a comprehensive review
that no liquidity risk exists as:
1. The Group had funding available
under the Group’s £950.0m Revolving
Credit Facility. £530.1m (2020:
£731.3m) was available and undrawn
at 31 December 2021. This facility is
committed until March 2025 with an
option to extend until 2026 (note 24);
and
2. The Group maintained a 12-month
rolling forecast and a three-year
strategic outlook. It also monitored the
covenants in its facilities to manage
the risk of potential breach. The Group
expects to remain within covenants
throughout the forecast period. In
reaching this conclusion, the Directors
have assessed:
– the potential cash generation of the
Group against a range of illustrative
scenarios (including a severe but
plausible outcome); and
– mitigating actions to reduce
operating costs and optimise cash
flows during any ongoing global
restrictions.
iwgplc.com
51
STRATEGIC REPORT ENVIRONMENT, SOCIAL, GOVERNANCE
ESG at the heart of
our business
In last year’s Annual Report, we said that sustainability was at the top of our
agenda. This year, that statement is truer than ever, as we work hard to ensure
that we are open and transparent on the ESG issues that matter most to all
stakeholders.
We aim to be a leading force in this area, evolving
our business and reporting practices to meet all
stakeholders’ expectations in relation to our ethical
and sustainability practices.
We have reviewed the Environmental, Social and
Governance (ESG) issues that were most material
to IWG’s business and determined that these
continued to be key priorities in 2021 (see table
below). We measure and report on the progress
we have made against each one.
Environmental
Material issue
Action
Measurement
Sustainable working model
– Reduced energy consumption
– Waste reduction & recycling
– Reduced water usage
– 2021 Carbon Disclosure Programme
Social
Material issue
Employment opportunities,
health and wellbeing and
recognising talent
Diversity, equity and
inclusion
Corporate social
responsibility
Governance
Action
Measurement
– Talent retention/acquisition
– Training and education
– Health and wellbeing
campaigns/initiatives
– Feedback and recognition
– Performance reward
– Recognising talent in all diverse
offerings
– DE&I training programme
– Affinity/Business Resource
Groups
– Voice Councils programme
– Corporate citizenship
– Proactive local community
support
– Volume of new hires (including
graduates and interns); internal
promotions; courses and training
completed
– Competitiveness of compensation and
reward
– Workforce diversity
– Training programme participation
– Community investment (financial value
generated)
Material issue
Action
Measurement
Corporate governance
– Embed sustainability principles
– Adherence to structure and approach
within business operations
(detailed on pages 78 to 85)
Risk governance
– Principal risk review and
– Risk management structure and
Ethics and compliance
Bribery and corruption
Compliance with local
legislation
mitigation
– Training and education
– Whistleblowing channel
approach (detailed on pages 66 to 75)
– Business Assurance function conducts
risk studies and tests compliance with
internal controls
– Compliance training
– Compliance reporting
52
IWG plc Annual Report and Accounts 2021
ENVIRONMENT
STRATEGIC REPORT
Environment
IWG is committed to
delivering positive
environmental change for
the long term. Through our
business model we provide
two clear, complementary
ways in which we can make
a real difference.
Our core area of expertise, hybrid
working, provides a powerful enabler for
our customers to reduce their carbon
footprint. However, it is not enough for
us to enable the environmental
strategies of our clients and we have an
exciting and positive carbon-reduction
strategy relating to our own business.
We have taken the foundational steps
towards its creation in 2021, which will
allow us to enact a comprehensive
carbon reduction strategy in 2022 with
the objective of achieving carbon
neutrality during 2023.
Hybrid working can help to
build a better future
The majority of corporations, both
domestic and global, are actively
incorporating hybrid working into their
operating models. The environmental
agenda is one of the drivers of this
change. We are increasingly seeing more
businesses signing up to net zero
commitments, with associated
implications for their own core
operations and supporting supply chains.
This is creating a shift in the way
businesses manage their real-estate
portfolio and workspace policies.
– Sustainability is no longer a ‘nice-to-
have’: businesses are positioning
sustainability at the forefront of their
decision-making, including real estate.
– New standards in sustainability:
businesses are demanding new
minimum sustainability standards for
the spaces they occupy, including
energy performance, sustainable
sourcing and responsible
management.
IWG has an unparalleled network of
inner and outer-city locations, presenting
a wide choice of flexible workspaces for
businesses to choose from. By adopting
the hybrid-working model, companies
can optimise the workspace they need
and support people working at or near
home, reducing employee commuting
levels. The compound saving across
these two factors can significantly
reduce office-related carbon intensity.
While reduced emissions at the office
and from commuting have to be
balanced against increased energy use
in the home, most studies show
nonetheless that home or local working
results in a net reduction. One suggests
that carbon reduction can be as high as
77%(1).
1. Source: IWG White Paper, Hybrid World:
Sustainable World, 2021
iwgplc.com
53
ENVIRONMENT CONTINUED
Hybrid working also has the potential to
revitalise communities, as workers spend
more time working at or close to home.
This ‘hub-and-spoke’ model and the
increasing number of flexible
workspaces can also contribute to an
increase in wellbeing, community spirit
and the creation of local supply-chain
networks. This working model is not only
fundamentally and permanently
changing the way our clients work: it is
also transforming how people want to
work for, and partner with, them.
The major role that hybrid working can
play in achieving their ESG goals means
that companies can support six of the
United Nations Sustainable
Development Goals (UN SDGs) for 2030
through its adoption.
United Nations Sustainable
Development Goals:
Good health and wellbeing:
time spent working at home
or at a nearby office that’s
accessible by foot or bike
means fewer stressful
commutes and a generally
healthier lifestyle.
Gender equality: hybrid
working offers a future of
more equal opportunities and
more equitable sharing of
family responsibilities.
Affordable and clean energy
and climate action: hybrid
working can lead to
significant reductions in
greenhouse gas emissions
through fewer car and plane
journeys, while companies
can reduce their carbon
footprints by downsizing
their offices and working
from more advanced
buildings.
Decent work and economic
growth: economic growth
can come from increased
productivity, as workers
choose to work when and
where they’re happiest and
most effective.
Sustainable cities and
communities: hybrid working
revitalises communities, as
more time is spent working at
or close to home. This can
also increase wellbeing and
community spirit.
We are committed to helping all
stakeholders understand more about
how their actions can help reduce the
environmental impact of their business
operations and make their workspaces
more sustainable. During the year, we
published a series of educational white
papers on a range of sustainability-
related subjects, including papers titled
The 15-Minute Commute and Hybrid
World: Sustainable World.
Both of these papers also highlighted
how the hybrid-working model cuts
carbon emissions, reducing the need for
workers to travel long distances to work
thanks to workspaces in or close to the
communities where they live.
In addition, our centre-based teams
regularly engage with their customers
and other stakeholders with advice and
guidance on making their workplaces
and ways of working more
environmentally friendly.
Our carbon-reduction
strategies
In 2021 we took the foundational steps
necessary for us to progress a carbon-
reduction strategy during 2022. Guided
by the Greenhouse Gas (GHG) Protocol,
developed by the World Resources
Institute (WRI) and the World Business
Council for Sustainable Development
(WBCSD), we carried out research during
2021 to determine our carbon-footprint
boundary and began analysing data to
make an accurate carbon calculation. We
used this work to help us identify the
best approach for us to take.
To meet our ambition, we are pursuing
three parallel strategies:
– Investment: actively seeking low
carbon properties and buildings with
low carbon energy suppliers.
– Improvement: driving significant
sustainability impact through the
widespread implementation of
innovative initiatives, including
increased recycling and energy
reduction alongside improved staff
engagement through our sustainable
working model.
– Carbon removal: in combination with
the two strategies above, we aim to
address the emissions we are unable
to reduce by leveraging commercial
offset schemes to accelerate the
trajectory of our carbon-reduction
work. We will progressively replace
the emissions that are being offset
with embedded savings from the
greening of the estate.
Delivery of these three strategies will
enable our ambition of becoming
carbon neutral during 2023. Further
details on the three strategic pathways
are as follows.
54
IWG plc Annual Report and Accounts 2021
iwgplc.com
iwgplc.com
55
STRATEGIC REPORT ENVIRONMENT CONTINUED
1. Investment strategy
Sustainability is of paramount
importance for IWG. During 2021, we
launched an audit into the energy source
and certification status of our centres,
which we aim to finalise in 2022. This
will identify which of our centres are
powered by renewable energy or have
sustainable building certifications in
place, such as Leadership in Energy and
Environmental Design (LEED) or Building
Research Establishment Environmental
Assessment Method (BREEAM).
This work will enable us to prioritise and
continuously upgrade the environmental
performance of our new and existing
estate.
Through a collaborative approach with
our partners we will support them in
embedding environmentally sustainable
practices within their locations.
2. Improvement strategy
We place a strong focus on continually
improving the performance of our
existing operations, specifically in
reducing energy and water consumption,
recycling and reducing waste.
Reducing energy consumption
Our energy-efficiency solutions have
played an essential part in our
environmental strategy and support the
creation of emission savings across our
business operations. We were pleased
for the sixth consecutive year to have
received a strong ‘B’ score for our
climate change submissions to the
Carbon Disclosure Programme (CDP),
higher than the global average and that
of our industry group. We have also
responded more strongly than our
industry peers in our governance of
climate change and emissions-reduction
initiatives, consistently receiving a score
of A- or above.
While this performance is pleasing, we
are confident that we can do even
better. One example of further
improvement is in the UK, where we
have started to roll out an electric-
vehicle (EV) charging infrastructure
across the country, with imminent
delivery across 33 locations. This will
become a global initiative as we aim to
make all our workplaces more
sustainable. We are also developing an
initiative to lease EVs for use by our
employees, so reducing the emissions
caused by their commutes to work, their
business miles and their personal travel.
We continually seek opportunities to
reduce our emissions further and have
implemented energy-management tools
and centre upgrades, procuring green
technologies where possible and
improving office facilities.
Energy-conscious design
Several of our centres are in older buildings
that have been repurposed away from their
former usage to take on a new lease of life
as a sustainable office building. For example,
our Tour & Taxis centre in Brussels was built
between 1902 and 1907 as one of Belgium’s
foremost shipping and customs hubs.
Following extensive refurbishment, its
eco-centric features have now earned this
Spaces centre an Outstanding rating by
BREEAM. It has been refitted with a
sustainable design and augmented with
renewable materials. The centre runs
entirely on geothermal and solar power,
drawing on more than 17,000sqm of solar
panels on its roof. As in many Spaces
centres, rainwater is collected using
water-recycling systems to maintain the
centre’s 10 thematic gardens.
56
IWG plc Annual Report and Accounts 2021
Water usage
Due to the nature of our business, we
do not directly source or withdraw our
water, meaning our impact is considered
to be relatively low.
Nevertheless, we are proud to have
achieved a ‘B’ score for our water-
security submission to the CDP for the
third consecutive year, demonstrating
strong management of water
consumption across our portfolio. We
have again exceeded the performance of
our peers, achieving an ‘A’ score or
above in categories including water
business strategy, risk assessment,
policies and governance.
We also apply water-saving technologies
and awareness initiatives to improve the
water usage at our centres.
Waste reduction and recycling
With almost 3,400 centres in over 100
countries worldwide, we have a large
and highly dispersed supply chain.
The challenges involved in ensuring
all suppliers are compliant with our
requirements are significant, but we
have made considerable progress in
recent years.
For example, IWG operates an effective
Global Recycling Initiative, in which
all centres around the world actively
participate. We are also managing plastic
waste more effectively, thanks to a
programme that includes upgrading
all our coffee machines from those
that use single-service pods to
ethically sourced beans.
In addition, we have launched a
programme to investigate the
sustainability credentials of our
procurement activities, which will give
us the understanding necessary to
manage this area as effectively as
possible in future. This gives us a
clear direction for further evolving
our procurement activities across all
product and services areas, countries
and centres.
3. Carbon-removal strategy
Recognising the urgency required to
address the climate challenge, IWG is
well positioned to accelerate change in
the short term, making tangible
contributions to a range of carbon-
reduction and avoidance projects.
We believe that the transition to carbon
neutrality must be driven by shifting our
portfolio towards climate-conscious
investments and combining our
knowledge and resources to support
climate solutions for clean energy, clean
transport and environmental protection.
We aim to select only those carbon-
offset projects that are robust, verified
by third parties and issued by a carbon
registry. Furthermore, we will assess
each project by reference to its social,
economic and environmental
contributions, prioritising those that
demonstrate synergies with climate
priorities and the United Nations
Sustainable Development Goals. Only
when we are confident of an operation’s
quality and satisfied that it meets our
criteria will we buy credits.
iwgplc.com
57
STRATEGIC REPORT TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES
Task Force on Climate-related Financial
Disclosures (TCFD)
The TCFD framework was
established by the Financial
Stability Board (FSB) in 2015
and aims to improve the
reporting of climate-related
financial information.
The TCFD recommendations have been
structured around four thematic areas
that each represent a fundamental
element of how organisations operate:
governance; strategy; risk management;
and metrics and targets. This is the first
TCFD review we have issued, and we
anticipate we will build upon the
information provided here in future
years as we deepen our understanding
of and response to climate change.
Governance
– Describe the Board’s oversight of
climate-related risks and opportunities
– Describe management’s role in
assessing and managing climate-
related risks and opportunities
The Board takes overall oversight for
climate-related risks and opportunities.
IWG’s CEO is responsible for formulating
IWG’s environmental impact strategy
and its delivery through the Senior
Leadership Team, once agreed by
the Board.
In conjunction with the Board, risks are
reviewed and assessed against severity,
the likelihood of occurrence and the
current strength of the controls in place.
Responsibility for assurance is delegated
to the Audit Committee, while designing,
implementing and maintaining the
necessary systems of internal control are
responsibilities of the Senior Leadership
Team. By orchestrating climate change
initiatives, the CEO can oversee their
implementation and ensure their
effectiveness.
The CFO, Executive Management and
Board assist with strategy and
compliance and have responsibility for
business ethics and good governance.
This includes the assessment of any
climate-related issues, maintaining
oversight of our climate-related financial
activities, reporting and sponsoring the
TCFD programme.
A Non-Executive Board Director oversees
and informs the Board on employee
engagement and the Group’s corporate
responsibility activities, including
community and environmental projects.
Sustainability is firmly at the top of the
Board agenda. The CEO and Board
regularly discuss climate-related issues.
You can find more information on IWG’s
corporate governance on pages 78 to 85.
Strategy
– Describe the climate-related risks and
opportunities the organisation has
identified over the short, medium,
and long term
– Describe the impact of climate-related
risks and opportunities on the
organisation’s businesses, strategy,
and financial planning
– Describe the resilience of the
organisation’s strategy, taking into
consideration different climate-related
scenarios, including a 2°C or lower
scenario
Our business is exposed to both
physical and transitional climate-related
risks and we are committed to assessing
and mitigating the impact they pose
across our businesses, strategy and
financial planning.
Physical risks
We consider extreme weather conditions
within our existing risk management
processes and procedures. To minimise
the financial and operational impact of
these events, IWG provides a business-
continuity and crisis-recovery solution.
Customers and IWG’s internal operations
and staff impacted by these acute
physical conditions can immediately
resume their business operations at
unaffected nearby locations.
Rising mean temperatures have been
identified as a medium-term chronic
physical risk. These are expected to have
a potential financial impact by placing
increased strain on heating, ventilation
and air-conditioning systems and
causing an increase in energy
consumption. To address this, we have
implemented energy-saving intervention
programmes in a number of locations
and are monitoring them to measure
their impact and launch successful
measures at more of our sites.
Assessing risks and opportunities across
future time horizons and climate
scenarios is central to the TCFD
recommendations. IWG will hold its first
climate-related scenario assessment in
2022, drawing on guidance from several
frameworks including the Representative
Concentration Pathways (RCPs) set out
by the Intergovernmental Panel on
Climate Change (IPCC).
Transition risks
As part of our approach to managing
transition risks, in March 2021 we
announced our commitment to
becoming a carbon-neutral business by
2025. We are bringing forward this
ambition and our objective is to achieve
being carbon neutral during 2023.
We recognise the opportunity that our
climate commitments may bring, as they
can lead to an increased demand for our
services and make us more attractive as
an employer.
We continue to evolve our strategy to
address climate-related risks and
opportunities. We make every effort to
ensure we comply with local regulations
(see the Governance section on page 65
for further detail).
58
IWG plc Annual Report and Accounts 2021
The path forward
This is IWG’s first TCFD disclosure, and
we view it as a concrete step forward,
building on our foundation of
environmental disclosure and
transparency.
The Transition Pathway Initiative’s
four-level staircase, a stepped approach
to TCFD in direct alignment with the
London Stock Exchange’s Climate
Governance Score, has provided a clear
framework for communicating our
actions and intentions through
measurable climate-related disclosures.
We have used this framework to assess
our current status and conclude that we
are at level 1: awareness, with every
intention of reaching level 2 in 2022.
Risk management
– Describe the organisation’s processes
for identifying and assessing climate-
related risks
– Describe the organisation’s processes
for managing climate-related risks
– Describe how processes for
identifying, assessing, and managing
climate-related risks are integrated
into the organisation’s overall risk
management
IWG operates an enterprise-wide risk
management process for identifying,
assessing, managing and monitoring key
business and strategic risks, and
understanding the nature, scope and
potential impacts involved. We set out
this comprehensive approach to risk
management in more detail on pages
66 to 75.
IWG ensures that risks associated with
health and safety, environment and
security are dealt with and managed at
appropriate levels. We operate the three
lines of defence to manage risk,
managed by the Board.
– The first line of defence is formed by
managers and staff in the front line
operations who are responsible for
identifying and managing risk in line
with functional objectives.
– The second line of defence consists of
the functions that oversee or
specialise in compliance or the
management of risk. They set the
policies and procedures and monitor
risks and internal controls.
– The third line of defence is provided
by independent assurance. This line of
defence tests the design and
operation of controls in place, and the
procedures implemented by the first
and second line. They assist
management and the Board in
conducting risk studies and test
compliance with internal controls.
More information can be found in
the Risk management section on
pages 66 and 67.
Effective risk management requires
awareness and engagement at all levels
of our organisation and it is incorporated
in the day-to-day management of our
business and in the Group’s core
processes and controls.
We carry out risk assessments
throughout the year as part of IWG’s
business-review process and for every
investment decision. IWG’s annual CDP
disclosure programme also captures the
risk management process and outlines
the updated mitigation measures that
are deployed as risks expand and evolve.
For more information on IWG’s risk
management, please see pages 66 to 75.
Metrics and targets
– Disclose the metrics used by the
organisation to assess climate-related
risks and opportunities in line with its
strategy and risk management process
– Disclose Scope 1, Scope 2 and if
appropriate, Scope 3 greenhouse gas
(GHG) emissions and the related risks
– Describe the targets used by the
organisation to manage climate-
related risks and opportunities and
performance against targets
The adoption of IWG’s greenhouse gas
emission reduction goals and
commitment to achieving carbon
neutrality was formulated by the CEO
and agreed by the Board. IWG is on the
journey to calculating its Scope 1 and 2
greenhouse gas emissions in alignment
with the guidance provided by the
Greenhouse Gas Protocol.
We continue to strive to reduce energy
usage and conserve water across our
portfolio. We will build on our metrics
and targets to guide the implementation
of our commitment to reducing
greenhouse gas emissions.
iwgplc.com
59
STRATEGIC REPORT SOCIAL
Advancing our talent strategy
2021 was a defining year.
We hired more people than
in any other year in our
trading history and trained
our team on the broadest
curriculum to date. We were
recognised as being in the
top 1% of employers from
the Leading Employers group.
Our IWG people promises are to provide:
– interesting and achievable work;
– a manager who cares; and
– an opportunity to advance and
develop.
To give our customers a great day at
work, we first have to ensure our team
members have a great day at work. The
two are inextricably linked, and talent is
therefore always at the forefront of our
global strategy as the cornerstone of
success for IWG and the customers we
are proud to look after.
The key people strategies are:
– building a global HR platform;
– acquisition of talent;
– learning, development and careers;
– diversity, equity and inclusion (DE&I);
– communication and recognition; and
– reward.
The HR platform
As our team grows across the world, we
are providing two key HR tools as part of
the on going simplification and
efficiency programme that will run into
2022, supporting the growth of our
investment partners and IWG.
First, we are building an extensive HR
platform that is accessible to all team
members around the clock. This is a
one-stop shop for everything from
information on local and global policies,
processes and documents to access to
the IWG Learning Academy. Here you
can raise an HR ticket, view data and
much more. The platform provides
employees and line managers with
greater efficiency and real-time
solutions to get their jobs done quickly
and seamlessly.
In addition, all our team members use
TeamHub, a unique app they can access
on any device, day or night. This gives
them a rapid and intuitive way to book
time off, register sickness or any other
sort of absence, raise an IT ticket and see
who is at work or out of office. It also
enables them to check in for work every
day, a vital security and safety feature in
a geographically dispersed business.
Talent acquisition
We continued to recruit new talent
throughout 2021, with a focus on
delivering and deploying innovation,
automation and simplification to give
customers and team members a great
day at work and ensure we can
respond to the needs of the
business over the next decade.
In a record year we hired more than
3,000 new colleagues in a variety of
roles, with a primary emphasis on the
teams who look after our customers.
We also added new opportunities in
product development, country
management, sales, technology
franchising, acquisitions and
project management.
Graduates and interns are always a key
element of our talent strategy, and we
will wherever possible continue to
provide them with employment
opportunities. We took the opportunity
to create a new learning and career
development programme specifically
for this cadre of our workforce, which
we will launch in 2022.
Of course, 2021 was another exceptional
year, pivoting very quickly from a first
half when there was great talent
available to a second half characterised
by a very competitive global landscape
for talent. We responded by revising
our fixed salary bands, city by city
and country by country, to remain
competitive in both retaining our
exceptional people and in hiring
new talent.
We also launched a totally new global
website for the external market, which
better reflects the wealth of opportunity
that is on offer at IWG. We also now have
an easier, faster and fully inclusive
process in place that makes it simple for
all candidates to apply for roles with us.
Diversity, equity and inclusion
(DE&I)
Diversity of talent continues to be a
major focus area for us, and our
recruitment channels and processes
offer opportunity to everybody. In 2021,
for example, we offered freelancers and
home workers a range of opportunities
that can be done on a part-time basis
and entirely from home. This approach is
designed to suit people with priorities
that make it difficult for them to commute
or be based in an office. In addition we
will continue to partner with the Good
Youth Employment scheme giving
opportunity to talent starting off in
their careers.
Diversity statistics
Gender
Male
Female
35.5% 64.5%
Example: North America
In our largest market our ethnicity
reporting is as follows:
American Indian
Asian
Black
Hispanic
Pacific islander
Two or more races
White
Ethnicity
0.8%
5.1%
19.4%
20.2%
1.2%
2.6%
50.7%
We extended our online programme on
DE&I during the year. This included
interactive webinars exploring what
DE&I means in practice, investigating
how we should all interact without bias
with all IWG team members, partners,
customers and other stakeholders.
We also launched a series of ‘Affinity
Groups’ in the US. Made up of team
members, these work with the Company
to make and consider recommendations
on how best to ensure we remain fair
and equitable in our day-to-day business
operations.
We also launched our global ‘Voice
Councils’ programme, an initiative led by
team members to provide a dedicated
forum where relevant senior audiences
can hear their views, with the aim of
establishing greater understanding of
people’s actual needs across the
business. Regional webinars were set up
60
IWG plc Annual Report and Accounts 2021
We held our annual leadership
conference on a virtual platform in 2021,
which included our first virtual global
award ceremony to recognise just some
of our team members’ extraordinary
achievements.
At a local level, team leaders and
managers give out ‘recognition pins’ to
colleagues on the spot for exceptional
behaviours, including team members
who have gone above-and-beyond for
their customers or colleagues. These
are complemented by recognising
extraordinary achievements such as
long service, certificates for exemplary
work and on line badges for training
accreditations that underpin career
development at IWG.
Reward
Reward is a key focus area for us, and we
work hard to ensure that high-potential
people at every level – from intern to the
Executive Committee – are encouraged
to stay with us via short and long-term
incentives.
In the second half of the year, we set
about re-setting fixed pay for our
customer facing team members.
This was complemented by variable-pay
programmes focused on giving
customers a great day at work.
We also cascade short-term incentive
plans throughout the organisation to
ascertain that everyone is rewarded for
ensuring the millions of members and
customers who use our workspaces and
service portfolio receive a consistently
great service.
introduction to local marketing and
technology skills.
We launched a new leadership
programme incorporating 360 feedback
as a starting point with a coaching and
mentoring programme as development
and on going support.
As a result of the People Plan, we
promoted more team members from the
field into Group functional roles than
ever before in 2021. In addition, our
customer facing teams have a defined
career path with multiple opportunities
on offer.
Communication and recognition
Communication and connectivity
continued to be important in 2021 as
hybrid working added complexity to
staying aligned and connected with one
another.
Communications on staying healthy, our
financial progress, new partnerships and
important milestone events played a key
role in our communications programme
for the year.
We also continued to operate our ‘Share
a Great Day at Work’ initiative, which
featured team events including informal
online team meetings and pictures
showing our people running customer
events in our centres. We also
highlighted our charitable activities here,
inspiring us all wherever possible to give
back to individuals and communities.
This programme has been highly
successful: simply sharing special
moments with one another has helped
us remain connected as a team,
delivering an uplifting communication
platform for everybody.
Our usual ‘drum beat’ of business
initiatives such as quarterly leadership
calls, employee newsletters and townhalls
all continue to play an important role in
our communications strategy.
Step up programme
on a quarterly basis with elected
representatives from all countries. The
agenda of each meeting is led by
the participating Voice Council
representatives, who gather questions,
feedback and suggestions in advance
from their colleagues. Answers and
suggestions are captured and distributed
for information to the broader
population, along with progress made
on previous action items.
These meetings have helped to
continuously improve the business in
an orchestrated manner. They have also
increased levels of engagement between
our leadership and those working in the
field. In addition, they are improving our
people’s sense of team work and their
ability to improve situations both for
themselves and for the team members
they represent.
This is a key part to our commitment
to deliver on our promise to give
team members interesting and
achievable work.
We also continue to operate our
confidential ‘Right to Speak’ reporting
helpline for all members of our extended
team across the world. In addition, we
have various programmes in place to
provide employees with confidential
counselling services, 24/7 and for
365 days a year.
Learning, development and careers
The learning and development curriculum
is focused initially on giving our team
members the right start at IWG. It is then
about developing their skills and
knowledge to offer opportunities to
develop to take the next step on their
career ladder.
2021 was another record year for
training and development at IWG. We
filled 24,000 training slots (webinars)
from induction to skills development in
key areas such as customer service, sales
and communication. We also launched
our new first line management
development programme, underpinning
our commitment to our ‘A Manager who
Cares’ programme.
A new development in 2021 was our
‘training-in-a-box’ programme which
gives managers access to training plans
and materials to deliver relevant training
locally with their own team members.
We held interviews with key executive
functional leaders to enable team
members to learn more about global
functions, what they do and whether
they might in future provide a fit for
their interests and skills.
We also continued our core programmes
on important topics including health and
wellbeing, financial compliance, and an
iwgplc.com
61
STRATEGIC REPORT SOCIAL CONTINUED
Community engagement
The continuation of the
COVID-19 pandemic through
the whole of 2021 presented
challenges to the efforts of
our colleagues across the
world to support charitable
and environmental causes
within their communities.
However, yet again they
managed to overcome the
difficulties involved and
have supported numerous
causes with their local
communities. When it comes
to our Group-level social
responsibility programmes,
IWG also provides
concessions to many
charities in the form of
reduced or complimentary
office space or meeting
rooms. We are proud to
announce that at year end,
together with our colleagues
we had contributed £438,036
to charitable organisations.
Our global geographic spread across
more than 120 countries means that CSR
continues to be highly localised. While
we have a global framework in place, our
community engagement takes place at a
local level, allowing our colleagues to
provide support to causes and charitable
organisations that are important to them,
their communities, their customers and
their wider stakeholders. As a result,
every year a broad range of charitable
and environmental giving takes place
across our global footprint, from
fundraising activities to donations of
gifts in kind.
United States: Delivering essentials to
strengthen communities
Our team in California partnered with the
Food Bank of Contra Costa and Solano to
help with their Senior Food Program and
Meals on Wheels. With great enthusiasm,
they put together over 150 bags of food
for seniors and helped Meals on Wheels
deliver over 60 bags of food to those
with mobility issues.
“It felt great to be helping and
giving some of our time to our
community!”
Cindy Lozano,
IWG Community Manager
Elsewhere in the US, our colleagues and
customers in Houston partnered with
BEAR, to donate shoes and back-to-
school supplies to those who need it
most. The support contributes towards
the wider provision of emergency
items as well as various resources
throughout the year for abused,
neglected and at-risk children in the
Greater Houston Area.
Our teams also partnered with Target
Houston to provide direct food
assistance, through canned good
collections, to food-insecure children,
families and seniors who face the risk
of going hungry every day.
“Thanks to our amazing team
members, friends and family
we were able to collect six
dozen pairs of shoes and
enough school supplies to
help more kids than I could
have imagined get back to
school with confidence. We
gave back to the community
as a community.”
Steve Ganji
IWG Community Manager
62
IWG plc Annual Report and Accounts 2021
Mexico: Collecting toys
for smiles
IWG teams across Mexico have been
supporting vulnerable children this year.
Many centres organised toy and clothing
collections to show their support for
different communities, donating where
possible. In Cancun our team worked
with Cancun Center Foundation to provide
support to children from Wayak Community
Centre in Quintana Roo, while in
Queretaro our team collected clothes
and toys for children from the ‘La Llave’
community in Mexico City and Michoacan.
Our Guadalajara Regus team also joined
their chosen collective called Posadas
Urbanas to donate and bring a smile to
children in one of the most vulnerable
areas of the city. By uniting efforts to
provide toys and clothes, our teams were
able to spread generosity and kindness
throughout the festive season.
“What we seek and desire for a
better world will not happen if
good men and women do not
take the initiative to do it. We
are the ones who must make
the change. We are the change
we are looking for. IWG reflects
its social role not through
words, but through the
initiatives of our most valuable
asset: our people.”
Samir Amad, IWG Executive Vice
President, Latin America
United Kingdom: Supporting through sport
Our colleagues have been very active
this year in support of charitable causes
in their areas. In London, they
participated in a charity tournament in
partnership with St. Mungo’s Homeless
Charity. In addition, 12 IWG colleagues
signed up to the British Heart Foundation
Charity/Running challenge, running a
total of 2,692 miles and raising the same
amount. Our HR Manager completed the
Thames Path 100 challenge, running a
100km race to raise funds for Ingane
Yami Children’s Village and raising over
£1,400 for the children.
In another part of the country, our team
in Marlow took part in the ‘pedal power’
challenge together with their customers,
cycling throughout the day to raise
money for the Alzheimer’s Society. The
challenge aimed to raise awareness of
the 7,000 local people suffering from
the disease by walking, running and
cycling 7,000km.
“It is very much our pleasure to
be able to help along with all
the other customers in the
centre. Well done for
organising such a
worthy cause.”
Steve from Emenda,
IWG customer
In addition to these initiatives, IWG
teamed up with KidsOut to put a smile
on each and every child’s face during
the festive season. Children sent
through over 4,000 wishes to IWG,
which were displayed on Christmas
trees in the centres. Our colleagues
and customers were invited to grant
these children’s wishes by donating to
a local refuge home the toys the
children were asking for.
Our colleagues were overwhelmed by
everyone’s generosity as more than
2,000 gifts and £3,339 were donated
to a total value of £30,723.
“Our community team at Marlow
was beyond helpful when it
came to the delivery of our
charity event, facilitating all our
requirements, adding fresh
ideas, and even joining in to
raise funds. They’ve built a
strong network of tenants and I
feel this sense of connection
helped us smash our
fundraising target.”
Jacey Bunker, BWP Business
Director, IWG customer
iwgplc.com
63
STRATEGIC REPORT SOCIAL CONTINUED
Spain: Raising awareness
The Spanish Association Against Cancer
(AECC) has continued in its mission to
fight against cancer. To support its
efforts, our team designed a campaign to
raise awareness and collect donations
for World Cancer Day.
Our colleagues also organised
campaigns to raise awareness of
Multiple Sclerosis (MS). They collected
donations on International MS Day to
support the Madrid Foundation –
Fundación Esclerosis Múltiple (FEM) – in
their quest to improve care for people
affected.
They also celebrated the essential role
of women on International Women’s Day
(8 March), where our team launched a
campaign to raise awareness and
initiate conversations about female
scientists in history.
Additionally, the team also promoted the
Re-Planta Madrid initiative organised by
Madrid Futuro. Their objective was to
repair the damage caused by Storm
Filomena, in which more than 700,000
trees were affected. As well as physically
planting trees, the team’s fundraising
efforts enabled many other people to
get involved.
Australia: Promoting healthy
and sustainable communities
Our team in Australia has been proactive
in supporting their communities. For
example, our franchise partner in
Townsville hosted volunteer groups to
support The Goodbox, a charity that
distributes care boxes containing
essential items for homeless people.
Wider engagements have also seen the
kickstart of a Ladies in Business network
and events for Townville’s Young
Chamber Committee within the area.
The team has also collaborated closely
with Mentally Healthy City Townsville
(MHCT), an organisation with a mission to
create Australia’s first Mentally Healthy
City. This has enabled events such as
High Intensity Interval Training and Yoga
classes to be scheduled at the centre
regularly.
“Our collaboration with
Mentally Healthy City
Townsville was an excellent
opportunity to offer free
Mental Health workshops to
our clients. Mental health is a
significant public health issue
throughout Australia as it is in
many other countries. The
Self-Care mind and body
sessions helped with building
your resilience and wellbeing,
encouraging healthy lifestyle
changes and the uptake of
self-care strategies to
manage stress.”
Rhea Penafiel,
IWG Area Sales Manager
64
IWG plc Annual Report and Accounts 2021
Corporate governance
Good governance helps us
base the decisions we make
on what is right for our
people and shareholders; the
communities where we work;
our customers and their
employees; our partners; and
society at large.
As a result, having good governance
supports entrepreneurial and
commercial management and ensures
the long-term sustainable success of
the business for everybody.
Board sustainability oversight
The Board has oversight of all the
Group’s sustainability initiatives and
receives regular updates from the
Executive Directors and the Senior
Leadership Team. It also has oversight of
ESG reporting through Nina Henderson,
the Non-Executive Director with
oversight of employee engagement and
corporate social responsibility.
Risk governance
The Board defines IWG’s risk appetite
and tolerance and annually reviews
the principal risks the Group faces
and the plans for mitigating them.
The Audit Committee has responsibility
for the Company’s system of internal
control and risk management and for
ensuring the effectiveness of this
system. You can find details of the
system and the Audit Committee’s
review of its effectiveness on pages
90 to 93. We detail key risks and actions
to mitigate these risks in the Risk
management report on pages 66 to 75.
Data security and risk
Information security is a top priority for
IWG and remains a standing agenda item
with the Board. We continue to make
significant investment in this area to
ensure that the IWG Information Security
Management System (ISMS) is
established, implemented, monitored,
reviewed and where necessary improved
so that we always meet the
organisation’s specific security and
business objectives.
IWG’s ISMS takes a holistic, coordinated
and risk-based view of the organisation’s
information security risks. We achieve
information security by implementing
effective controls including policies,
processes, procedures, organisational
structures and software and hardware
functions. These controls ensure that
IWG’s specific security and business
objectives are met. You can find key
components of the ISMS programme
on page 73.
IWG’s data privacy strategy is to process
only the minimum necessary amounts of
personal data, to the extent necessary to
provide a service to our customers and
ensure the appropriate safeguards and
controls are in place to protect this data.
Compliance with local
legislation
We make every effort to take all
reasonable and practical steps to ensure
we comply with local legislation and
regulations in all the countries where we
operate. Compliance reporting is part of
our internal control and risk
management process, and the Audit
Committee receives regular updates.
We also provide compliance training to
all employees and encourage them to
make use of our whistleblowing channel
without fear of repercussions. See
pages 92 and 93 for further details.
Ethics and compliance
The Board is committed to instilling a
culture of doing what’s right, ensuring
that IWG does what is right for the
environment and for our people and
ensuring that our people act fairly and
professionally in all business activities.
To support our culture and values and
ensure compliance with our internal
policies, such as our Code of Conduct,
we provide a suite of training courses on
our global learning platform. Further
information on our global learning
platform can be found on pages 60
and 61. Employees are encouraged
to raise any concerns through the
whistleblowing channel as detailed on
pages 92 and 93.
Diversity
See pages 60 and 61 for information on
IWG’s diversity initiatives. Details of the
Board Diversity Policy can be found in
our Nomination Committee report on
pages 86 to 87.
Bribery and corruption
IWG is committed to carrying out
business in an honest and ethical
manner and has zero tolerance of
bribery and corruption. We give all
employees training on our bribery
and corruption policy, and you can
see our statement of commitment
at https://iwgplc.com/Documents/
IWG-Statement-of-
Commitment-540723792-2.pdf
Modern slavery
IWG has zero tolerance of slavery and
human trafficking. You can read our
statement made in accordance with
the Modern Slavery Act 2015, which
the Board reviews each year, at
https://www.iwgplc.com/en-gb/
sustainability. We give all employees
training through our global learning
platform.
iwgplc.com
65
STRATEGIC REPORT RISK MANAGEMENT AND PRINCIPAL RISKS
Managing risk in
an uncertain world
We recognise the importance of effective enterprise risk management, especially in an ever
changing environment. As such we conduct regular enterprise-wide risk reviews to identify
and consider potential risks to the Group and its strategy. We calculate their possible impact
and create strategies to protect the interests of IWG and all its stakeholders.
Effective risk management requires
awareness and engagement throughout
IWG to provide a top down and bottom
up view of risk. At IWG risk management
is embedded into operational decision-
making and reflected in the Group’s key
processes and controls.
Risk management takes place at various
levels across the business, including;
– monthly performance reviews for all
countries and Group functions;
– individual reviews of every new
location investment and all
acquisitions;
– an annual budgeting and planning
process for all markets and Group
functions;
– a review in each Audit Committee
meeting of the status of our principal
risks; and
– annual review of all risks in our risk
register, updated currently for
significant changes between annual
reviews.
The Board has overall responsibility
for ensuring that IWG has an adequate
risk management framework in place.
This includes approving the risk appetite
for the Group. Our risk appetite outlines
the extent to which we are willing to
take measured risks in pursuit of our
strategic objectives.
Three lines of defence
IWG operates the three lines of defence
to manage risk, managed by the Board.
See diagram on page 67
Three lines of defence
IWG’s risk management framework is
designed to improve the prospect of
meeting our strategic intentions through
disciplined and practical risk
identification, assessment and
mitigation. Through this process, we are
able to fully understand the risks and
opportunities present in our day-to-day
operations and in our business
objectives. Our enterprise-wide risk
management process allows us to
understand the nature, scope and
potential impact of our key business and
strategic risks, enabling us to manage
them effectively. IWG therefore has a
comprehensive approach to risk
management, as set out in more detail
in the Corporate Governance report
on pages 78 to 85.
In 2021, our risk work incorporated
ongoing pandemic impacts, including
economic disruption as well as
considering climate change impact on
our principal risks.
In particular, external risk and those
outside of the Group’s control were
considered in 2021 and included as part
of scenario testing.
Climate change risks and
opportunities
Climate change risk has become a
standalone principal risk to the business
in 2021. It also presents a unique
opportunity for the Group in providing
sustainable office solutions for clients
who may not be able to meet climate
change targets alone.
IWG participates annually in the Carbon
Disclosure Programme and maintained a
stronger rating than the global average
for climate change. The Group has set a
clear target of becoming carbon neutral
during 2023. At its core, IWG embraces
the 15 minute commute and advocates a
hybrid working environment.
Principal risks to the
achievement of our strategy
in 2021
Our principal risks are linked to our key
business objectives and overall strategy
and in 2021 were considered in the
context of the ongoing pandemic,
economic downturn and climate change.
A critical component of the risk
management process is to assess the
impact and likelihood of risks, allowing
determination to be made over the
current level of controls in place versus
future controls and risk status. All our
principal risks are managed in
accordance with our Group risk appetite
and mitigated as far as reasonably
practical. We have zero tolerance of
financial and ethical non-compliance,
and aim to have our health, safety,
environmental and security risks
managed to levels that are as low as
reasonably practicable.
66
IWG plc Annual Report and Accounts 2021
Three lines of defence
Board
Sets the strategy
Defines IWG’s risk appetite
Monitors risk management process
Assesses overall effectiveness of risk management
Audit Committee
Reviews effectiveness of internal controls
Monitors progress against internal and external audit recommendations
Approves the annual internal audit plan
Assurance, risk and internal control reports
1st Line
2nd Line
3rd Line
– Front line business operations
– Strategies, policies, procedures
and controls in day-to-day
activities
– Daily management of risk in line
with functional objectives
– Responsible for compliance with
Group policies, procedures and
internal controls
– Corporate functions
– Sets policies and procedures
– Monitors risks and internal
controls
– Accountable for the design and
implementation of risk
management processes and
controls
– Accountable for the regular
review and appraisal of key risks
– Contributes to the identification
and assessment of key risks
– Independent assurance
– Tests the design and operation
of controls in place including
policies, and procedures
implemented by the 1st and 2nd
lines
– Assists management and the
Board in conducting risk studies
– Advises and guides on policies
and internal controls framework
– Drives implementation of
recommendations in the
business
– Tests compliance with internal
controls
iwgplc.com
67
STRATEGIC REPORT RISK MANAGEMENT AND PRINCIPAL RISKS CONTINUED
Link to KPIs
1 Industry-leading profitable growth
4
Strong cash generation,
enabling investment
2 Best-in-class cost leadership
5 Attractive shareholder returns
3 Global multi-brand network
Link to strategy
Risk status
A Network
Increased
B Franchise and partnering
Same
C Platform (Technology)
Decreased
* New
Strategic risks
Risk description
Growth risk
1
3
5
A
B
IWG continues to undertake
significant growth to
develop local and national
networks.
Mismatches between
network growth and
demand growth could lead
to under or over supply,
which could impact
competitive position,
profitability and cash
generation.
Transformation risk
Execution of programmes
are not delivered on time or
do not meet the desired
outcomes.
3
5
*
A
C
Lease obligations
Mitigation
Change / improvement since 2020
Additional resources were dedicated to network
development teams.
New centres showed strong opening occupancy in
2021 especially when taking COVID-19 restrictions
into account.
COVID-19 impact: Demand was negatively
impacted during 2021 due to extended COVID-19
restrictions. The accelerating adoption of hybrid
working is anticipated to increase demand as
COVID-19 restrictions are reduced and new work
habits adopted.
We have recruited a number of senior roles and
external expertise is called on as and when
required to assist in the delivery of our
transformation.
IWG mitigates this risk as follows:
1. Each investment or acquisition is low risk and
requires a proposal to be reviewed and
approved by the Investment Committee.
2. A robust business planning and forecasting
process is in place to provide timely and reliable
information to address short and mid-term
opportunities and risks to performance.
3. A quarterly review process is in place to monitor
new centre performance against the investment
case to determine if the anticipated returns are
being generated.
As part of the annual planning process, a growth
plan is agreed for each country which clearly sets
out the annual growth objectives.
This risk is mitigated as follows:
1. Governance Committee in place for all
transformation programmes.
2. Project management team is in place to ensure
programmes are monitored and properly
managed.
3. Dedicated resources are recruited to ensure
programme requirements are met. External
expertise utilised where required.
4. A Resource Committee is established to manage
resource requirements needed for the execution
of this.
The Group’s portfolio of
leases gives rise to an
inherent risk in relation to
lease obligations and
associated financial
commitment.
Whilst IWG has
demonstrated consistently
that it has a fundamentally
profitable business model,
the profitability of centres
is affected by movements
in market rents, which, in
turn, impact the price at
which IWG can sell to its
customers.
The life of the Group’s
leases are, on average,
significantly longer than the
average terms of customer
contracts which creates a
potential for mismatch if
revenues fall significantly,
which can impact
profitability and cash flows.
This risk is mitigated in a number of ways:
1. Almost all of our leases are ‘flexible’, meaning
that they are either terminable at our option
within six months and/or located in or assignable
to a standalone legal entity, which is not fully
cross- guaranteed. In this way, individual centres
are sustained by their own profitability and cash
flow. This flexibility has no impact on our
accounting for leases in the scope of IFRS 16.
2. Approximately one third of all our leases are
variable in nature, which means that payments to
landlords vary with the performance of the
relevant centre. In this way the ‘risk’ to
profitability and cash flow of that centre from
fluctuations in market rates is softened by the
consequent adjustment to rental costs.
3. The sheer number of leases and geographic
diversity of our business reduces the overall risk
to our business as the phasing of the business
cycle and the performance of the commercial
property market often varies from country to
country and region to region.
4. Each year a significant number of leases in our
portfolio reach a natural break point.
1
2
5
A
B
68
During 2021, the number of ‘flexible’ leases as a
percentage of the total was 96%. Approximately a
third of the leases we entered into during 2021
were variable in nature.
At the end of 2021, we were operating 3,314
locations in 1,135 towns and cities across 120
countries.
COVID-19 impact: During 2021 more than 1,500
leases were renegotiated or restructured which
resulted in short- or long-term cash benefits.
Reviews and discussions related to leases for
underperforming centres are an ongoing process.
IWG plc Annual Report and Accounts 2021
Strategic risks continued
Risk description
Mitigation
Change / improvement since 2020
Economic downturn
2
5
A
B
Failure to respond to an
economic downturn in key
markets, or changes in
market conditions could
adversely impact our global
market share, operating
revenue and profit
performance.
The Group has taken a number of actions to
mitigate this risk:
1. Approximately one third of all our leases are
variable in nature and our rental payments, if
any, vary with the performance of the centre.
2. Lease contracts include break clauses when
leases can be terminated at our behest.
3. The Group also looks to stagger leases in
locations where we have multiple centres so that
we can manage our overall inventory in those
locations.
4. We review our customer base to assess exposure
to a particular customer or industry group.
5. The geographic spread of the Group’s network
increases the depth and breadth of our business
and provides better protection from an
economic downturn in a single market or region.
The number of ‘flexible’ leases as a percentage of
the total remained at 98%. Our monthly business
performance reviews provide early warning of any
impact on our business performance and allow
management to react with speed. The Board
reviewed the potential impact of an economic
downturn and addressed a range of potential
impacts from COVID-19 when making its annual
viability statement.
COVID-19 impact: There has been sharp focus on
cash generation by reducing cost, renegotiating
rents and rationalising the network. The adoption
of hybrid working is reflected in stronger demand
in suburban locations versus city centres. Reviews
and discussions related to leases for
underperforming centres are an ongoing process.
Disruptive technology and competitive advantage
1
5
c
New disruptive technology
could negatively impact the
Group’s market share.
Failure of the Group to
respond to such
competition and/or
technological
developments could result
in IWG's product offering
being sub-optimal.
Increased competition
1
3
5
A
B
The pandemic has
accelerated the shift from
city and office working to
remote working, hybrid
models, suburban offices
and digital enhancements.
As such, more service office
offerings are likely to
emerge. An inability to
maintain sustainable global
competitive advantage
could result in a loss of
market share and impact on
profitability for the Group.
IWG continually invests in innovation to develop
new products and services to increase its
competitive advantage, protect current revenue
and unlock potential new sources of revenue.
While physical barriers to entry into the flexible
workspace market at a local level are low, the
barriers to establishing a national or international
network are much higher.
IWG also offers a diverse product range under its
different brands to cater to multiple customer
segments, allowing us to capture and maintain
market share across the flexible workspace
market.
We continuously review our portfolio to provide
products and services that are aligned to
customer expectations and requirements and
there are currently active investment programmes
being implemented across our estate.
2021 saw the continued modernisation of the
technology used by IWG. The adoption of the
Microsoft suite of enterprise products underpins a
digital operating platform which supports business
agility and flexibility. The Company remains
focused on using emerging technology to improve
the customer experience and achieve operational
efficiency.
We are continuously looking at every aspect of our
business for opportunities to leverage technology
to automate, simplify and future-proof our
platform. As technology evolves and matures, even
more opportunities arise.
The competitive landscape has continued to shift
in 2021 and has decreased. We continue our
efforts to offer an unrivalled network and varied
product range to suit the different requirements
of our customers. In 2021, we added 20 new
towns and cities.
COVID-19 impact: There is a continuous review at
both Group and country level to identify trends or
activities impacting our business plus new
acquisition opportunities.
Geopolitical Instability Developments
3
*
A
B
Increasing geopolitical
instability and conflicts are
directly impacting some of
our markets. Continued
escalation and sanctions
could lead to broader
economic impacts.
The geographies most directly impacted to date
will not have a material effect on our global
operations or results. Our broader economic
downturn scenario planning considers a range of
economic downturns, irrespective of the cause.
The risk of broader economic impacts from
geopolitical instability, conflict and sanctions is
increasing.
iwgplc.com
69
STRATEGIC REPORT RISK MANAGEMENT AND PRINCIPAL RISKS CONTINUED
Strategic risks continued
Risk discription
Mitigation
Change / improvement since 2020
Business planning and forecasting
The existing forecasting process was enhanced by
creating different scenarios as the economic
environment changes due to the pandemic. The
main focus has been cash generation by reducing
cost, renegotiating rents and rationalising the
network.
COVID-19 impact: There has been focus on cash
flows to provide sufficient liquidity for working
capital requirements and potential acquisitions,
including focus on debt collection, supplier
payments and on underlying profitability of the
business.
The Group has a £350m of convertible bonds at a
fixed rate and the remainder in a Revolving Credit
Facility provided by a group of prime banks, which
is committed and available until 2025 with an
option to extend until 2026.
Effective February 2022, updated financing
arrangements aligned with the Group’s evolving
strategic objectives were put in place, including a
committed RCF to 2025, and a £330m bridge
facility. We expect to remain within the covenant
limitations throughout the forecast period.
1
2
4
5
Business plans, forecasts
and review processes
should provide timely and
reliable information for
short-, mid- and long-term
opportunities and any risks
to performance so that
these can be addressed on
a proactive basis.
The challenges to forecast
come from the constantly
changing and hard to
predict external
environment driven by the
changes in the way people
work due to COVID-19
restrictions and the rapid
uptake of hybrid working.
Funding
4
5
A
The Group relies on
external funding to support
a net debt position of
£397.0m at the end of
2021. Any change to this
support would result in
liquidity risk for the Group.
Franchise
IWG maintains a three-year business plan which is
updated and reviewed on an annual basis. We
also use a 12-month rolling forecast which is
reviewed every month based on actual
performance.
This risk is mitigated in a number of ways:
1. The Group continually monitors its cash flow and
financial headroom development and maintains
a 12-month rolling forecast and a three-year
strategic outlook. The Group also monitors the
relevant financial ratios against the covenants in
its facilities to manage the risk of breach. The
measurement of these covenant ratios is
unaffected by the recognition of lease liabilities
under IFRS 16.
2. The Group also stress tests these forecasts with
downside scenario planning to assess risk and
determine potential action plans.
3. The Board intends to maintain a prudent
approach to the Group’s capital structure.
4. Part of the annual planning process is a debt
strategy and action plan to ensure that the Group
will have sufficient funding in place to achieve
its strategic objectives.
5. The Group also constantly reviews and manages
the maturity profile of its external funding.
1
2
3
4
5
A
B
70
The continued expansion of
our franchising portfolio is
key to the Group’s
capital-light strategy.
Achieving our franchising
objectives will require the
continued development of
our franchising skills,
services and resources.
This risk is mitigated as follows:
1. A Franchise Committee oversees key
programmes connected with the franchising
model and ensures that significant risks are
identified and mitigated.
2. We have regular communications with franchise
partners including sharing best practices to drive
performance and deliver consistent service to
our customers.
In 2021, more countries and partners were added
in our franchise portfolio.
Franchise development and support teams
strengthened with the recruitment of dedicated
franchise development and support personnel in
key markets. Franchise development resources will
be further increased during 2022.
We have implemented hands-on targeted support
for franchise partners with monthly reviews to
drive performance and review of processes to
identify improvement opportunities.
IWG plc Annual Report and Accounts 2021
Financial risks
Risk description
Exchange rates
2
5
A
The Group's global
operations expose it to a
variety of financial risks,
including the effects of
changes in foreign currency
exchange rates. In
particular, the Group’s
substantial US operations
generate revenue in USD
and therefore any currency
volatility can impact
revenue. The Group
does not undertake any
speculative transactions
to manage risk.
Inflation risk
2
5
*
A
Increasing inflationary
pressures may impact the
Group’s costs, including
financing charges,
impacting profitability
and cash flows.
Mitigation
Change / improvement since 2020
Given that transactions generally take place in the
functional currency of Group companies, the
Group’s exposure to transactional foreign
exchange risk is limited.
Where possible, the Group attempts to create
natural hedges against currency exposures
through matching income and expenses, and
assets and liabilities, in the same currency.
Overall, in 2021 the movement in exchange rates
had a mixed impact on results. Revenue and gross
profit were reduced by £91.1m and £2.1m
respectively. Whilst operating profit increased
by £7.2m, reflecting the relative contribution to
Group profit from our US business.
Mitigating actions include:
Inflationary pressures are expected to increase.
Currently pricing trends are keeping up with
inflation.
1. The short-term nature of most customer
contracts allow the possibility for prices to be
adjusted in consideration of the evolution of
costs.
2. The Group’s capital-light strategy includes a
focus on flexible leases and management
contracts which reduce the negative impacts
of inflation.
3. The Group constantly monitors interest rates
exposure and has a fixed rate coupon on its
£350m convertible bond up to 2027.
Operational risks
Risk description
Mitigation
Change / Improvement since 2020
High Level recruiting and succession planning
3
5
A
B
C
To achieve its strategic
objectives the Group needs
to increase its management
capabilities through the
continued development
of existing talent
supplemented by the
hiring of experienced
professionals. This will
support our strategic
execution and enhance
succession planning
throughout the Group.
Mitigating actions include:
1. Resource Committee in place for key resource
positions
2. Succession planning discussions are an integral
part of our business planning and review
process.
3. Part of the annual planning process is the Human
Resources Plan, and performance against this
Plan is reviewed through the year.
4. Regular external and internal evaluation of the
performance of the Board, including succession
planning.
Recruitment channels are constantly under review
to continue offering opportunities to as wide a
population as possible in each market.
The Group has implemented a comprehensive
strategy to address talent resource requirements.
Key hires are planned for 2022 to meet the
growing needs of the business and reinforce
succession planning.
iwgplc.com
71
STRATEGIC REPORT RISK MANAGEMENT AND PRINCIPAL RISKS CONTINUED
Operational risks continued
Risk description
Mitigation
Employee engagement and retention
Change / improvement since 2020
3
5
As a serviced-based
business, the strength and
capabilities of our
geographically diverse
team are critical to
achieving our strategic
objectives, including
delivering outstanding
customer service. The
increased competition for
talent impacts retention at
all levels, from executives
to centre staff.
Ethics and compliance
2
A
B
Ethical misconduct by our
employees or non-
compliance with regulation
either inadvertently,
knowingly or negligently
could lead to financial loss/
penalties, reputational
damage, loss of business
and impact on staff morale.
One of the key items in the Human Resources
Plan is the Global Induction & Training Plan, which
sets out the key objectives for the forthcoming
year. Performance against these objectives is
reviewed through the year.
Strong ESG and a remote working Human
Resources strategy on recruiting and salary
banding, including benchmarking, are in place
across the globe to ensure that salaries and
benefits are competitive.
All new employees are surveyed in the first three
months to ensure they have been trained and are
receiving effective support.
The Group has in place a comprehensive training
programme for all levels and functions. The
significant investment in our Group’s Learning and
Development programme continues to provide a
means to engage with our colleagues through
e-learning, videos, webinars, case studies and
coaching.
Our Management Skills Training Programme and
Sales and Customer Service Training Academy are
carried out virtually throughout the globe to
support continuously giving customers a great day
at work.
We continue to actively monitor and respond to
reports in our ethics hotline.
A robust supplier selection and evaluation
process continues to be in place with a view to
enhance controls to address the risk of fraud.
All projects are monitored and evaluated by a
centralised capex finance team.
A dedicated cost function to review spend across
all categories and detect anomalies or exceptions
is in place.
IWG manages this risk through:
1. Visible ethical leadership.
2. A robust governance framework including a
detailed Code of Conduct and other mandatory
training for all employees (e.g. gifts and
hospitality, anti-bribery and corruption).
3. Centralised procurement contracts with
suppliers for key services and products.
4. Standardised processes to manage and monitor
spend including controls over supplier on-
boarding and payments approval.
5. Regular reviews to monitor effectiveness of
controls.
6. Independent and confidential ethics hotline
available to employees, contractors and third
parties.
7. Independent investigation of fraud incidents and
allegations of misconduct with Board-level
oversight.
72
IWG plc Annual Report and Accounts 2021
Operational risks continued
Risk description
Mitigation
Change / improvement since 2020
Data protection and privacy
5
A
B
C
IWG is required to
comply with legislation
in the jurisdictions in
which it operates
including the General
Data Protection
Regulation (GDPR) and
other local data
privacy laws. Non-
compliance and
breaches could result
in significant financial
penalties and
reputational damage.
IWG mitigates this risk as follows:
1. IWG operates a comprehensive
programme that covers all aspects of
data privacy and data protection.
2. Our strategy is to process minimum
amounts of personal data, which are
kept only to the extent necessary to
provide a service to our customers.
3. We apply the principle of ‘least
access’ privilege and separation of
duties to safeguard our data.
4. All credit card data is stored on PCI
accredited payment service
providers and not on IWG systems.
We continue to remain compliant with data protection and privacy
regulations across the business, continuously monitoring and
enhancing our privacy and security controls, including a project to
remove Personal Identifiable Information (PII). We also continue to
comply with PCI and Swift standards.
In instances where specific countries implement stringent
new cyber security and privacy laws which could threaten our
operations if IWG is found to not be compliant, the Information
Security team works with in-country experts to ensure we
remain compliant.
Cyber security
2
5
A
B
C
The continued
integration of the
digital economy and
use of external cloud
services, combined
with a rise in phishing
attempts and malicious
attacks could result in
additional costs and
damage.
IWG has developed a security roadmap to carry out information
security best practices, strengthen controls and implement security
operations to detect potential incidents.
All critical systems have been migrated to the cloud with high
availability and geo-redundancy for disaster recovery. As part of
this cloud migration, IWG has implemented best practice cloud
security controls. The entire environment is managed by a world-
leading security managed services provider.
Information Security gates have been established for all new
projects which requires conformance to our cloud security
blueprint.
In our application development area, we have implemented a
market-leading static code analysis tool which ensures that all
code developed follows global secure code best practices.
A programme is in place to continuously implement new security
features to improve our processes and controls in this area,
keeping pace with the ever-changing best practices.
In our business centre environment, we have a security blueprint
for all centres. We perform penetration testing in this environment
to ensure that our blueprint remains up to date as either
technology changes, or new risks emerge. All findings from these
penetration tests are used to update the blueprint against which
all centres need to comply.
This risk is mitigated as follows:
1. IWG’s Information Security Steering
Committee reports regularly to the
Board of Directors and has wide
representation from business
operations, risk assurance, legal, IT
and Non-Executive Board members.
2. IWG runs a world-class Information
Security programme with ISO/IEC
27000 adopted as its charter to
establish, operate and monitor its
Information Security Management
System.
3. The programme is delivered in
collaboration with external
specialists across our environments.
4. Using a risk-based approach, IWG
continuously identifies, evaluates
and applies remediation controls to
threats that could impact the
security, confidentiality and integrity
of its assets.
5. IWG transfers residual risk through
its comprehensive cyber insurance
coverage provided by a global leader
in cyber insurance.
6. We have a robust security incident
management process which
facilitates and coordinates our
response in the event of a security
incident.
7. Security awareness training is
mandatory for all employees that
covers Information Security, PCI and
Privacy.
iwgplc.com
73
STRATEGIC REPORT RISK MANAGEMENT AND PRINCIPAL RISKS CONTINUED
Operational risks continued
Risk description
Mitigation
Change / improvement since 2020
Business continuity
2
3
5
A
B
C
Business continuity covering
systems, regional hubs and
operations. Should the data
centres, sales call centres,
regional hubs and centres be
impacted as a result of
circumstances outside the
Group’s control there could be
an adverse impact on the
Group’s operations and
therefore its financial results.
Our cloud migration project has been
completed and all critical systems have disaster
recovery plans in place.
All new systems development includes high
availability and disaster recovery built into the
initial design phase.
For our voice communications platform, we
have built in additional redundancy in countries
where we experience minor disruption due to
external factors.
COVID-19 impact: Many employees continue to
successfully work from home.
We have further implemented a daily process to
ensure critical data is stored securely off-site.
This is data that would be needed to run our
business for several days in the worst case
scenario of both production and DR sites
simultaneously being rendered inaccessible.
IWG manages this risk through:
1. The implementation and regular testing of its
business continuity plans for different parts of
the organisation, which includes business
processes, personnel knowledge of manual
procedures and disaster recovery procedures
for our technology systems. All critical
applications have been migrated to the cloud
with high availability and geo-redundancy,
allowing availability of critical systems and
providing employees access to the systems
from any location, a critical element of our
business continuity plans.
2. A robust managed services and managed
security services agreement in place with
leading vendor.
3. The Group uses a risk-based approach to
determine additional redundancy
requirements across its entire technology
platform, including the global telephony
infrastructure critical for continuity of its sales
and call centre environment.
4. Appropriate business interruption insurance is
in place.
5. Country Business Continuity Plan and Centre
Disaster Recovery Plan are in place and
regularly reviewed.
74
IWG plc Annual Report and Accounts 2021
Viability statement
In accordance with provision C.2.2 of the UK Corporate Governance Code, and considering the Group’s current position and
prospects as outlined in the Strategic Report and its principal risks for a period longer than 12 months as required by the going
concern statement, the Board has a reasonable expectation that the Group will continue to operate and meet its liabilities as they
fall due, for the next three years.
The Board’s consideration of the long-term viability of the Group is an extension of our business planning process which includes
financial forecasting, a robust enterprise-wide risk management programme, regular business performance reviews and scenario
planning.
For the purposes of assessing the Group’s viability, the Board identified that, of the principal risks detailed on pages 68 to 74, the
following are the most important to the assessment of the viability of the Group:
– The following principal risks were modelled to support the viability statement
– revenue shortfall;
– a sterling (£) appreciation;
– a significant cybersecurity or data breach event.
– Two scenarios (likely-case and worst-case) were modelled for sterling appreciation and cybersecurity or data breach event using
assumptions derived from historical data or based on case studies/available market research to determine the impact on
revenue, gross profit, operating profit and EBITDA.
– Since the impact of COVID-19 and related economic conditions is already factored into the three-year plan (base and downside
scenarios), the revenue shortfall scenario is based on these plans.
– The impact on performance was assessed over a three-year period (2022-24) and on account of individual risks as well as a
combination of risks materialising.
The potential impact of each scenario was modelled on the Group’s revenue, gross profit, operating profit, net debt and debt
covenants over the three-year forecast period. The Board subsequently considered the viability of the Group both in the context of
the individual risks listed above and in combination of two or more risks over a range of assumptions. The stress testing showed
that the Group would be able to withstand any of the severe but plausible scenarios by taking management action in the normal
course of business.
iwgplc.com
75
STRATEGIC REPORT BOARD OF DIRECTORS
Board of Directors
N
Douglas Sutherland
Chairman
Mark Dixon
Chief Executive Officer
Glyn Hughes
Chief Financial Officer
Committee
membership key
Appointment*
27 August 2008
Founder
1989
A Audit
R Remuneration
N Nomination
Chairman
Experience
Chief Executive Officer and
founder, Mark is one of Europe’s
best-known entrepreneurs.
Since founding the Regus Group
in Brussels, Belgium in 1989, he
has achieved a formidable
reputation for leadership and
innovation. Prior to Regus and
IWG he established businesses
in the retail and wholesale food
industries. A recipient of several
awards for enterprise, Mark has
revolutionised the way business
approaches its property needs
with his vision of the future
of work.
Experience
Douglas was Chief Financial
Officer of Skype during its
acquisition by eBay. Prior to this,
Douglas was an Arthur Andersen
Partner with international
management responsibilities.
He has served as a director of
companies in multiple
jurisdictions and was the
founding Chairman of the
American Chamber of
Commerce in Luxembourg.
External appointments
Douglas is currently also the
Chairman of Socrates Health
Solutions Inc. and a member of
the board of managers of AI
Monet Parento S.àr.l.
* Independent on appointment
as Chairman on 19 May 2010.
Appointment
25 March 2021
Experience
Prior to joining IWG Glyn was
interim CEO of Mothercare plc,
having previously been the CFO,
where he was instrumental in
driving significant strategic
initiatives to transform its global
franchise business. He spent
more than a decade with the
Jardine Matheson Group in
several senior finance and
executive leadership roles with
significant franchising activities
across various markets. Glyn
spent the early part of his career
in corporate finance and in
commercial-facing and strategic
roles for both Kingfisher plc and
Tesco plc.
76
IWG plc Annual Report and Accounts 2021
A
R
N
A
R
N
N
A
R
N
A
R
N
Laurie Harris
Independent
Non-Executive Director
Nina Henderson
Independent Non-Executive
Director with oversight of
employee engagement
and CSR
François Pauly
Senior Independent
Non-Executive Director
Florence Pierre
Independent
Non-Executive Director
Appointment
14 May 2019
Appointment
20 May 2014
Appointment
19 May 2015
Appointment
21 May 2013
Experience
Laurie was a global engagement
audit partner with
PricewaterhouseCoopers LLP,
where she advised large public
companies, including Fortune 100
financial services companies, in
the United States and
internationally over her 38-year
career. Laurie is the chair of the
Audit Committee as the Board
considers her to have recent and
relevant financial experience.
External appointments
Laurie currently serves as an
Independent Director and Audit
Committee Chair of QBE North
America, an integrated specialist
insurer which is part of QBE
(ASX: QBE); Synchronoss
Technologies, Inc.
(NASAQ: SNCR), a global leader
and innovator in cloud,
messaging and digital
e-platforms and products;
Hagerty Inc (NYSE: HGTY),
an automotive lifestyle
company and the world’s largest
provider of specialty insurance
for enthusiast vehicles; and
Everlake Insurance Company,
a US based insurance company
specialising in life assurance
and annuities which is owned by
the Blackstone Group (NYSE: BX).
Experience
During her 30-year career with
Bestfoods and its predecessor
company CPC International,
Nina held a number of
international and North
American general management
and executive marketing
positions, including Corporate
Vice President of Bestfoods and
President of Bestfoods Grocery.
She has also served as a
director of numerous
companies including AXA
Financial Inc., Royal Dutch Shell
plc, Del Monte Food Company
and Pactiv Corporation
External appointments
Nina is a Non-Executive Director
of Hikma Pharmaceuticals plc,
Director of CNO Financial Inc.
(Bankers Life, Washington,
National and Colonial Penn
insurance companies) and Chair
of their Human Resource
Compensation Committee. Nina is
Vice Chair of Drexel University’s
Board of Trustees. Commissioner
of the Smithsonian National
Portrait Gallery, she is a Director
of the Foreign Policy Association
and the Visiting Nurse Service
of New York. Nina holds a
Bachelor of Science with
honours from Drexel.
Experience
François is CEO of the Edmond
de Rothschild Group in Geneva
and has over 30 years of
management experience in the
banking sector. Until April 2016
François served as Chief
Executive and Chairman of the
Management Board of Banque
Internationale à Luxembourg.
Previous management
experience includes executive
appointments at BIP Investment
Partners S.A., Dexia Group and at
Sal. Oppenheim jr. & Cie. S.C.A.
He was also Senior Advisory
Partner at Castik Capital
Partners.
External appointments
In addition to being CEO of the
Edmond de Rothschild Group in
Geneva, François serves as
Non-Executive Chairman of
Compagnie Financière La
Luxembourgeoise SA and as
Non-Executive Director of
Cobepa SA. François also serves
on the board of several
charitable organisations.
Experience
Florence has over 30 years of
international corporate finance
practice, holding senior
positions at BNP, Financière
Rothschild, Degroof Corporate
Finance, 3i Infrastructure plc
and her own M&A advisory
boutique. Florence has an
international perspective,
having worked in Chicago, New
York, Paris and Brussels. She has
also taught economics and
finance, published a number of
books and articles on valuation,
and has been a member of
several French entrepreneurship
and innovation committees.
External appointments
Florence shares her time between
directorships, private equity
investments in high-growth
companies providing innovative
and digital-based services,
managing her art collection and
mountain trekking.
iwgplc.com
77
GOVERNANCE CORPORATE GOVERNANCE
Introduction to
corporate governance
Attendance (out
of possible
maximum
number of
meetings)
14/14
14/14
5/5
14/14
14/14
9/9
14/14
14/14
Members
Douglas Sutherland,
Chairman
Mark Dixon
Eric Hageman*
Laurie Harris
Nina Henderson
Glyn Hughes**
François Pauly
Florence Pierre
* resigned 24 March 2021
** appointed 25 March 2021
Length of tenure
of Non-Executive
Directors
■ 0-3 years
■ 3-5 years
■ 6-9 years
■ 9+ years
20%
0%
60%
20%
Balance of
Non-Executive and
Executive Directors
■ Executive
■ Non-Executive
29%
71%
Douglas Sutherland
Chairman
Dear Shareholder,
I am pleased to introduce the Corporate
Governance report for 2021. This report
explains our approach to corporate
governance and details the governance
structure we have implemented to
facilitate entrepreneurial management
whilst ensuring the long-term
sustainable success of the Company
for the benefit of our stakeholders.
Sustainability
Sustainability is a key component of
our strategy and we are pleased to be
bringing our objective for achieving
carbon neutrality forward to 2023.
We have also incorporated strategic
objectives including an ESG target into
our annual bonus plan for Executive
Directors. Further information can be
found in our ESG report on pages 52 to
65 and our Remuneration Committee
report on pages 94 to 108.
Board changes
We are committed to increasing the
ethnic diversity of the Board and are
pleased to announce that Tarun Lal will
be joining the Board as a Non-Executive
Director with effect from 10 May 2022,
subject to obtaining shareholder
approval at the Company’s upcoming
annual general meeting.
Tarun brings extensive franchising
industry expertise from over 20 years
with Yum! Restaurants where he has
held executive roles including Global
Chief Operating Officer of KFC and his
current role as Managing Director,
Middle East, Turkey, Africa and India.
In March 2021 we were pleased to
announce the appointment of Glyn
Hughes as Chief Financial Officer. Glyn
has brought franchising expertise to the
Board gained from the senior finance
and executive leadership roles held
with the Jardine Matheson Group and
more recently as the interim CEO of
Mothercare plc.
Further information on all Board changes
can be found in the Nomination
Committee report on pages 86 to 89.
UK Corporate Governance Code
During 2021 we have complied with
the UK Corporate Governance Code
published by the Financial Reporting
Council in July 2018 (the “Code”), with
the exception of my time as Chairman
exceeding nine years from the date of
my first appointment to the Board. This
is regularly reviewed by the Nomination
Committee which, as further explained
on page 87, has concluded that due to
the significant strategic transformations
IWG is undergoing, it remains in the
best interests of the Group that I
currently continue in the Chairman
role, subject to regular review by the
Nomination Committee.
A copy of the Code is available on
www.frc.org.uk.
Annual Report
Your Board and the Audit Committee
have reviewed this Annual Report and
consider that it provides the information
necessary for you to assess the
Company’s position and performance,
business model and strategy.
We consider the Annual Report, taken
as a whole, to be fair, balanced and
understandable and seek your approval
of the Annual Report at the Company’s
annual general meeting which will be
held on 10 May 2022.
Douglas Sutherland
Chairman
78
IWG plc Annual Report and Accounts 2021
“Sustainability remains at
the top of our agenda and at
the top of our stakeholders’
agendas, it underpins our
strategy and is a key
consideration in all Board
decision-making.”
Douglas Sutherland
Chairman
In this section
Corporate governance
Nomination Committee report
Audit Committee report
Directors’ Remuneration report
Directors’ report
Directors’ statements
78
86
90
94
109
111
An effective Board
Board composition
Our Board is made up of seven unique
individuals with a diverse combination
of skills, drive, beliefs, knowledge,
personal attributes and experiences.
Individual biographies can be found
on pages 76 and 77.
The benefits of having a strong and
diverse Board are clear and we believe
the addition of Tarun Lal’s experience
and viewpoints will add another
dimension to those brought by our
existing Board members.
Further information on our Board
Diversity Policy, as well as our annual
performance review, can be found in our
Nomination Committee report on pages
86 to 89.
Board meetings
The Chairman and the Company
Secretary plan an annual schedule of
matters to be considered by the Board,
ensuring all key issues are covered and
that topics are covered at appropriate
times.
Initially seven meetings were scheduled
for 2021 with additional meetings to be
arranged as needed to ensure the Board
was kept abreast of the evolving
COVID-19 pandemic, as well as our
strategic projects and to respond to
business challenges and opportunities in
a timely manner. In total the Board met
14 times during 2021, including a
two-day virtual meeting in February and
a two-day strategy session in September.
When time-sensitive approvals were
anticipated between meetings the Board
delegated its authority to a committee to
be convened as appropriate.
The majority of our meetings were held
in a virtual setting as a result of the
pandemic. For the extended Board
strategy meeting in September 2021 the
Board was able to meet in person. Whilst
we have embraced the benefits of being
able to meet online during the
pandemic, meeting in person reminded
us of the benefits of in-person
interaction and debate and engaging
socially. The end of November 2021
meeting was returned to a virtual setting
due to the onset of the Omicron variant.
The Chairman and the Company
Secretary ensure that our Board
meetings are structured to ensure time
for in-depth discussions on key issues
and to allow time for the Chairman to
meet with Non-Executive Directors
without the Executive Directors present.
They ensure that the Board receives
clear, concise and timely information on
all relevant matters so that discussions
are well-informed.
Board papers are made available in
advance of meetings on a secure Board
portal. This portal is also used to
distribute relevant reference material
and the Board report. Minutes are taken
of all Board discussions and decisions.
In the event that a Director has a concern
about the running of the Company or a
proposed action, such concerns are
recorded in the Board minutes or can be
recorded by Non-Executive Directors
who are resigning, in a written statement
which is circulated to the Board. No such
concerns were raised in 2021.
Matters reserved for the Board
Matters that are considered sufficiently
material that they can only be made by
the Board as a whole and cannot be
delegated include:
– approval of long-term objectives and
commercial strategy;
– approval of the annual budget;
– approval of regulatory announcements
including the interim and annual
financial statements;
– approval of terms of reference and
membership of the Board and its
Committees;
– appointment and removal of the
Company Secretary;
– approval of risk management strategy;
– changes to the Group’s capital structure;
– changes to the Group’s management
and control structure;
– capital expenditure in excess of £5m;
and
– material contracts (with an annual
value in excess of £5m).
Full details of the matters reserved for
the Board are available on:
www.iwgplc.com.
iwgplc.com
79
GOVERNANCE
CORPORATE GOVERNANCE CONTINUED
Development and support
To ensure continuing development and
provide appropriate support, all
Directors have:
– a customised and comprehensive
induction programme prepared by the
Chairman with the support of the
Company Secretary, ensuring they can
quickly and effectively contribute to
discussion and decision-making;
– the opportunity to meet with major
shareholders;
– access to the Company’s operations
and employees;
– access to training which is provided
and reviewed on an ongoing basis to
meet particular needs;
– access to the advice and services of
the Company Secretary; and
– access to independent professional
advice at the Company’s expense.
Conflicts of interest
Directors are required to notify the
Company as soon as they become aware
of a conflict of interest or a potential
conflict of interest. At the start of each
Board meeting the Chairman requires
each Director to confirm that they do not
have a conflict of interest with any of the
matters to be discussed; if a conflict
does arise the Director is excluded from
that discussion.
Time commitment
Directors are required to have sufficient
time to meet their Board responsibilities;
this is considered when making new
appointments. Following their
appointment Directors are required to
seek Board approval before taking on
additional external appointments.
Insurance and indemnity
Appropriate insurance cover is obtained
to protect the Directors in the event of a
claim being brought against them. In
accordance with our articles and to the
extent permitted by law, an indemnity is
provided to Directors of the Company in
respect of liability incurred as a result of
their office.
Purpose and strategy
The Board is responsible for reviewing
and approving the Group’s purpose and
strategy as further detailed in Our value
Induction
The Chairman, supported by the Company Secretary, is
responsible for preparing and coordinating a customised
and comprehensive induction programme for each newly
appointed Director, ensuring they can contribute effectively
to discussion and decision-making. Details of the induction
programme developed for Glyn Hughes are below.
Glyn was appointed as Chief Financial Officer and Director on 25 March 2021.
Glyn joined the Group during 2020 so already had a good network and
understanding of the Group, and his induction therefore focused on the activities
of the Board and the Audit Committee. The following activities were included in
his induction programme:
Activity
Summary
Documentation
Meetings
Relevant documents were made available including recent
Board and Committee minutes, meeting papers and Board
reports, recent Board reviews, policies and procedures, the
Company’s articles of association, Directors’ duties, matters
reserved for the Board, Committee terms of reference, Annual
Report and Accounts, investor presentations, and broker and
analyst reports.
Virtual and in person meetings were held with the Chairman,
Chief Executive Officer, all Non-Executive Directors, the
Company Secretary and certain members of the Senior
Leadership Team. Care was taken to address a broad range of
relevant topics including: strategy; performance monitoring;
culture; stakeholder engagement; remuneration; talent;
succession planning; governance and legal.
Audit Committee Glyn spoke with the Chair, members of the Audit Committee,
and KPMG in order to understand the Audit Committee’s remit
and obtain an overview of key issues, policies and
developments.
creation framework on pages 12 and 13.
Our purpose underpins everything we do
and is closely aligned with our three-
year plan and strategy which is reviewed
annually by the Board.
The two-day Board meeting held in
September allowed the Board to
undertake its deep-dive strategic
assessment. This included a review of
purpose and culture, a talent review, a
review of ESG and presentations from
key areas of the business.
The Board is also responsible for
approving the Group’s operating model
and annual budget, ensuring that the
right structure, talent and resources are
available to implement its strategy and
long-term objectives.
Full details of our approved strategy can
be found in our Strategic Report on
pages 1 to 75.
Culture, values and ethics
Our people are at the heart of our culture
which is based on our pioneering spirit,
mutual empowerment, shared leadership
and unified global network that is united
by trust in one another.
Your Board is committed to doing what is
right, ensuring that we do what is right for
the environment and for our people and
ensuring that our people act ethically and
without bias or discrimination in all our
business activities.
As a Board we are very aware of our
impact on the climate and this year we
have identified climate change as a
principal risk and have focused on how
the Group can reduce its impact on the
environment, including our goal of
achieving carbon neutrality during 2023;
further information on this can be found
80
IWG plc Annual Report and Accounts 2021
in our ESG report on pages 52 to 65.
As a Board we aim to balance the
benefits of meeting in person with our
environmental goals and accordingly
we use commercial flights and avoid
unnecessary air travel.
To support our culture, values and ethics
we provide a global learning and
development platform to all employees.
The platform includes training on our
Code of Conduct, compliance policies
and approach to diversity and inclusion.
Employees are encouraged to speak out
without fear of repercussions, and we
provide a confidential whistleblowing
channel where concerns can be raised
anonymously. During 2021 we received
19 reports through our whistleblowing
channel, nine of which were considered
significant; eight of the significant
reports have been resolved to date
and the remaining report, which was
received in December 2021, is under
investigation.
We also maintain a zero-tolerance policy
both to bribery and corruption and to
slavery and human trafficking. Training
on these is provided to all employees
and our statements on these are
reviewed annually and made available
on www.iwgplc.com.
Performance monitoring
The Board monitors performance
through a regular report covering key
performance indicators, profitability
and cash flow, regional updates, costs,
treasury and investor relations.
Trading and finance updates as well as
updates on strategic projects are
provided at all scheduled Board
meetings, allowing the Board to monitor
and measure performance and to make
decisions on matters reserved to the
Board in order to support the delivery of
its strategy.
The Board is responsible for approving
results, dividends and announcements,
including the going concern basis for
preparing these accounts as detailed on
pages 122 and 144, and reviewing the
stress testing and analysis which
underpins the viability statement as
detailed on page 75.
The Board also reviews the Group’s ESG
reporting, receiving updates on:
– the Group’s carbon footprint;
– the diversity of our workforce;
– the culture of the Group and the
wellbeing of employees;
– the Group’s talent; and
– the initiatives we support in the local
communities in which we operate.
Further information on our people
and ESG reporting can be found on
pages 52 to 65.
Prudent and effective controls
The Board is responsible for assessing
the nature and extent of the principal
risks it is willing to take to achieve its
strategy and long-term objectives, and
also those risks and emerging risks that
threaten its business model, future
performance, solvency or liquidity.
The key risks to the Group and the steps
taken to manage and mitigate them
which were reviewed and approved by
the Board are detailed on pages 68 to 74.
The Board has delegated authority for
overseeing and reviewing its system of
internal controls and risk management
to the Audit Committee, which reports
regularly to the Board. Details of the
system and the Committee’s review of
its effectiveness are reported on pages
91 to 92.
Board decision-making
As a Jersey incorporated Company we
are not required to make a Section
172 Statement under the UK
Companies Act; we do however
maintain the same high standards
when complying with our Director
duties in accordance with Jersey
Company law. Our Directors are
required to act in good faith and in
the best interests of the Company
and in doing this our Directors have
regard, amongst other matters, to the:
– the likely consequences of any
decision in the long term;
– the interests of the Company’s
employees;
– the need to foster the Company’s
business relationships with
suppliers, customers and others;
– the impact of the Company’s
operations on the community and
the environment;
– the desirability of the Company
maintaining a reputation for high
standards of business conduct; and
– the need to act fairly as between
members of the Company.
The following are some of the
decisions taken by the Board during
the year and the consideration given
to the stakeholder interests and
impacts:
Carbon neutrality during 2023
We are committed to achieving
carbon neutrality during 2023. In
reaching this decision the Board took
particular account of the impact of
the Company’s operations on the
environment, the Company’s desire
to position itself as a leader in
sustainability and the views of
our stakeholders, including our
employees, customers, franchise
partners, landlords and shareholders.
Hybrid-working strategy
The Board has approved the Group’s
strategy of promoting hybrid working
and positioning the Company for
growth to meet future demands for
hybrid working.
In our decision-making we considered
how this strategy could promote the
long term success of IWG for our
shareholders and all of our
stakeholders. In particular we listened
to the results of pulse surveys
undertaken with employees and
business leaders on the future of
work and we engaged with our
customers, landlords and franchise
partners to understand their views
and how we could better support
them to deliver hybrid-working
solutions.
Furthermore, we understood that
hybrid working had clear benefits for
the planet and the work-life balance
of the global workforce.
iwgplc.com
81
GOVERNANCE CORPORATE GOVERNANCE CONTINUED
Key activities of
the Board in 2021
Strategy
– Approved the purpose and values
– Approved strategy and objectives
– Approved the three-year plan
– Approved the operating model and
annual budget
– Regular review of forecast, strategy
and objectives
– Monitored and reviewed the Group’s
response to COVID-19
– Approved strategic projects and
monitored implementation
Financing
– Regular review of the Group’s
financial structure and approval of
amendments
– Determined that no dividend should
be declared in respect of the
financial year ended 31 December
2020
Prudent and effective controls
– Assessed the Company’s viability
over a three-year period taking into
consideration the risks and scenarios
that could affect the Group (page 75)
– Reviewed the Group’s key risks and
mitigating actions
– Received updates from the Audit
Committee Chair on key areas
discussed
– Renewed the Group’s insurance
programme
Corporate reporting and
performance monitoring
– Received regular performance
updates at scheduled meetings and
through Board reports
– Received updates from the
Remuneration Committee Chair
on key areas discussed
– Approved the Company’s
year-end and interim results
– Approved Q1 and Q3 trading
statements and trading updates
– Reviewed the Group’s talent
and culture
Stakeholder engagement
– Received policy statements
provided by significant
shareholders
– Received reports from the
Chairman on feedback from
shareholder meetings and
correspondence
– Attended investor presentations
and virtual meetings
– Reviewed monthly updates on
investor relations
– Reviewed updates on our
global franchise partners
– Reviewed updates on employee
engagement initiatives
– Reviewed updates on ESG
reporting and community
initiatives
Governance
– Reviewed and approved the
Notice of annual general
meeting
– Received updates from the
Nomination Committee
Chairman on succession
planning, searches for Board
members and diversity
– Appointment and induction of
Glyn Hughes as Chief Financial
Officer
– Monitored employee
engagement and ESG
– Reviewed the performance of
the Board, its Committees and
all Directors
– Reviewed and approved
statements on anti-slavery and
human trafficking, and anti-
bribery and corruption
Stakeholder engagement
Building and maintaining strong
relationships with our stakeholders is
key to the long-term success of our
business. During 2021 we have worked
closely with our partners and our
decision-making has been informed by
their views and experiences.
Your Board seeks to take the views of
its key stakeholders: our shareholders,
customers, franchise partners, landlord
partners, employees and communities,
into account in its discussions and
decision-making. The Board receives
regular updates from the Chief Executive
Officer on the views of key stakeholders
on the Group’s strategic agenda as well
as receiving insights from other members
of the Board and through the Company’s
stakeholder engagement initiatives.
Key stakeholder engagement initiatives
undertaken by the Company in 2021
included pulse surveys with business
leaders and employees about the
workplace and preferred ways of
working, the employee engagement
programme overseen from the Board by
Nina Henderson, introduction of our
global Voice Councils and initiatives to
engage with the Group’s strategic
franchise partners, many of whom
attended the Company’s virtual
conference held in January 2021.
The Board also seeks to align our
strategy to the needs of our primary
stakeholders. For example by providing
hybrid-working solutions to our
customers we are enabling their people
to work away from city centres, closer
to their homes, families and friends,
potentially improving the work-life
balance for millions and enhancing
employee engagement, loyalty and job
satisfaction.
Further information on how we have
placed our stakeholders at the centre of
our strategy can be found throughout our
Strategic Report and details on how we
create value for our primary stakeholders
can be found on pages 44 and 45.
Your Board is proud of the work
undertaken by our employees
throughout the world to engage with
our communities and reduce our
environmental impact; further details
of this work can be found in our ESG
report on pages 52 to 65.
82
IWG plc Annual Report and Accounts 2021
We did not have a significant number
of votes cast against any resolutions at
our 2021 annual general meeting, but
if this is the case at a future meeting,
the Company will explain, when it
announces the voting, the steps to
be taken to understand the reasons
behind the result.
The 2022 annual general meeting will be
held on Tuesday 10 May 2022. Notice of
the meeting can be found in a separate
document which will be sent out at least
20 working days before the meeting. We
will monitor the situation to see whether
it will be necessary or advisable to hold
the meeting as a closed meeting or
whether shareholder attendance will
be possible. As always, the Directors
will be available on request to respond
to any shareholder queries outside of
the meeting.
Company website
Our website www.iwgplc.com has a
dedicated Investor section which
includes our Annual Reports, results
presentations and our financial calendar.
Senior Independent Director
Our Senior Independent Director,
François Pauly, is available to address
any shareholder concerns that cannot be
resolved through normal channels of
communication.
Employee engagement
The health, safety and emotional
wellbeing of our people is of paramount
importance to us. On behalf of the Board,
Nina Henderson, our Non-Executive
Director with responsibility for employee
engagement has continued to monitor
and report back to the Board on initiatives
in place around the Group to help
support our employees during the
COVID-19 pandemic.
During 2021 Nina continued with her
programme of meeting with our global
workforce. She attended the virtual
leadership conference attended by 300
managers in January 2021 and also met
with smaller groups of employees both
virtually and through visits to IWG sites.
Employees provided Nina with their
reactions to our response to COVID-19,
strategic endeavours, reward plans and
resources available to them to deliver job
performance. Through this role as well as
through other employee surveys and
forums Nina ensures that the Committee
and the Board are aware of the views of
the workforce on a wide range of issues.
On behalf of the Board, Nina supports
IWG’s ongoing efforts focused on
enhancing diversity, equity and inclusion.
In the USA, she is a sponsor of the African
American Affinity Network Group’s
advisory board and participates in their
membership meetings. She is able to
provide the Board with insights from
these interactions.
In 2021 the Board supported the
introduction of our global Voice Councils.
This is a team member-led initiative
providing employees with a dedicated
forum where they can express their views
with the relevant senior audience in order
to establish greater understanding of the
actual needs in the business. Regional
webinars were set up with elected
representatives from all countries on
a quarterly basis. The agenda of each
meeting is led by the Voice Council
representatives who gather questions,
feedback and suggestions from
colleagues to be discussed. Answers and
suggestions are captured and distributed
for information to the broader population
and progress on actions is monitored. We
are pleased that these meetings have not
only served as a way to continuously
improve the business in an orchestrated
manner, but have also increased
engagement between leadership and the
centre teams, providing an improved
sense of team work and empowering our
employees. We believe this is an effective
way to learn from our employees and
forms a key part of our commitment to
deliver on our promise to give team
members interesting and achievable work.
We also continue to operate our
confidential ‘Right to Speak’ reporting
helpline for all members of our extended
team across the world. In addition, we
have various programmes in place to
provide employees with confidential
counselling services, 24/7 and 365
days a year.
We are extremely proud of our diverse
global workforce and further information
on our talent strategy can be found on
pages 60 and 61.
83
Shareholder engagement
Investor meetings
The Board is kept informed of investor
views through the distribution of analyst
and broker briefings and monthly
investor relations updates. In 2021
investor relations held over 400
meetings with investors and analysts,
primarily in an online setting.
The Chairman, Chief Executive Officer
and Chief Financial Officer maintain a
close dialogue with institutional
investors on the Company’s
performance, governance, plans and
objectives. They regularly participate in
investor meetings and make themselves
available for questions, at the time of
major announcements and on request.
The Chairman regularly updates the
Board on the results of these meetings
and the opinions of investors. All
Directors have a standing invitation to
participate in investor meetings.
Committee Chairs engage with
shareholders when there are significant
changes within their areas of
responsibility.
General meetings
The annual general meeting each year is
held in May, save for in exceptional
circumstances, in Switzerland and is
attended by all members of the Board.
In addition to the formal business of the
meeting, there is normally a trading
update and shareholders have the
opportunity to ask questions and to
meet the Directors afterwards.
Due to the COVID-19 pandemic our
2021 annual general meeting was held
as a closed meeting and Directors who
were unable to attend in person
attended by phone. Directors were
available to respond to shareholder
queries outside of the meeting. All
resolutions were passed with at least
93% of votes in favour. All resolutions
were voted on separately by means of a
poll and the final results were published
after the meeting.
iwgplc.com
GOVERNANCE CORPORATE GOVERNANCE CONTINUED
Division of responsibilities
There is a clear separation of responsibilities between the running of the Board and the Executive responsibility
for running the business.
Board
Non-Executive Chairman
Douglas Sutherland
See responsibilities on page 85
Executive Directors
Non-Executive Directors
Mark Dixon
Glyn Hughes
François Pauly
Chief Executive
Chief Financial
Officer
Senior Independent
Director
Laurie Harris,
Nina Henderson,
Florence Pierre
Non-Executive
Directors
See Executive responsibilities
See Non-Executive responsibilities
on page 85
on page 85
Audit
Committee
Laurie Harris
Chair
Remuneration
Committee
Nomination
Committee
Oversight of employee
engagement and CSR
Nina Henderson
François Pauly
Nina Henderson
Chair
Chair
Terms of reference
page 90
Terms of reference
page 100
Terms of reference
Terms of reference
page 88
page 85
y
t
i
l
i
b
a
t
n
u
o
c
c
A
D
e
l
e
g
a
t
i
o
n
o
f
r
e
s
p
o
n
s
i
b
i
l
i
t
y
Senior Leadership Team
Accountable for delivery against the
Group’s strategic and operating objectives
Certain matters are reserved for the Board; these are detailed on page 79
84
IWG plc Annual Report and Accounts 2021
Role of Board members
There is a clear division of
responsibilities at the head of the
Company between the running of the
Board and the running of the Company’s
business. No one individual Director has
unfettered powers of decision-making
and all Directors are required to act in
the best interests of the Company.
The responsibilities of the Chairman, the
Chief Executive Officer and the Senior
Independent Director are available on
www.iwgplc.com.
Douglas Sutherland
Non-Executive Chairman
The Chairman is responsible for the
leadership of the Board, setting its
agenda and monitoring its effectiveness.
He ensures that adequate time is
available for discussion of all agenda
items, in particular strategic issues.
Additionally, he ensures effective
communication with shareholders and
that the Board is aware of the views of
major shareholders and stakeholders. He
facilitates both the contribution of the
Non-Executive Directors and
constructive relations between the
Executive Directors and Non-Executive
Directors, and regularly meets with the
Non-Executive Directors without the
Executive Directors being present.
Mark Dixon
Chief Executive Officer
The Chief Executive Officer is
responsible for formulating strategy and
for its delivery through the Senior
Leadership Team once agreed by the
Board. He creates a framework of
strategy, values and objectives to ensure
the successful delivery of key targets
and allocates decision-making and
responsibilities accordingly.
Glyn Hughes
Chief Financial Officer
Timothy Regan
Company Secretary
The Company Secretary is responsible
for advising the Board, through the
Chairman, on all governance matters and
ensuring that the Board has the policies,
processes, information, time and
resources it needs to function efficiently
and effectively.
Role of Committees
The Board is supported by a number of
Committees to which it has delegated
certain powers. The role of these
Committees is summarised below.
Audit Committee
Responsible for oversight of financial
reporting, audit, internal control,
compliance and risk management.
Nomination Committee
Responsible for Board composition,
appointment of Directors and senior
management and succession planning.
Remuneration Committee
Determines the remuneration of
Executive Directors, the Chairman and
senior management and oversees
remuneration policy for all employees.
The Chief Financial Officer is responsible
for leading the finance and accounting
functions of the Group. He is also
responsible for business ethics, good
governance, assisting with strategy and
compliance.
François Pauly
Senior Independent Director
The Senior Independent Director acts as
a sounding board and confidant for the
Chairman, as an intermediary for other
Directors as required, and leads the
appraisal of the Chairman’s performance.
He is also available to shareholders if
they have concerns that cannot be
resolved through normal channels.
Nina Henderson
Non-Executive Director with oversight of
employee engagement and CSR
Nina is responsible for overseeing and
keeping the Board informed on
engagement with the workforce and the
corporate responsibility activities of the
Group, including community and
environmental projects.
Non-Executive Directors
The independent counsel, character and
judgement of the Non-Executive
Directors enhance the development of
strategy and the overall decision-making
of the Board. The Non-Executive
Directors scrutinise the performance of
management and monitor the reporting
of business performance, satisfying
themselves on the integrity of financial
information and that financial controls
and systems of risk management are
robust and defensible. They are also
responsible for determining appropriate
levels of Executive remuneration.
iwgplc.com
85
GOVERNANCE NOMINATION COMMITTEE REPORT
Nomination Committee
report
Members
François Pauly
Laurie Harris
Nina Henderson
Florence Pierre
Douglas Sutherland
Attendance (out
of possible
maximum
number of
meetings)
4/4
4/4
4/4
4/4
4/4
All members of the Committee are independent.
Length of tenure of
Non-Executive Directors
within the Committee
■ 0-3 years
■ 3-5 years
■ 6-9 years
■ 9+ years
20%
0%
60%
20%
Dear Shareholder,
I am pleased to present to you our
report on the work of the Nomination
Committee (the “Committee”) during
2021.
2021 was an important year for us and
key activities included:
– identifying and recommending the
appointment of Glyn Hughes as Chief
Financial Officer and Director;
– leading the process to increase the
ethnic diversity and skillset of our Board
by identifying and recommending Tarun
Lal for appointment as Non-Executive
Director;
– launching a search for our next
Non-Executive Directors;
– measuring the effectiveness of our
Board through our External Board
Review;
– overseeing changes to the Senior
Leadership Team;
– reviewing our succession plans for the
Board and Senior Leadership Team; and
– measuring progress made in respect of
our diversity objectives and revising
the objectives for 2022.
Board composition
As at the date of this report, your Board
comprised seven members, being: the
Non-Executive Chairman (independent
at the time of appointment); two
Executive Directors; and four
independent Non-Executive Directors.
The biographies of Board members can
be found on pages 76 and 77.
Glyn Hughes joined the Group in 2020
and in March 2021 was appointed as
Chief Financial Officer and Director in
place of Eric Hageman; details of the
Committee’s search and ultimate
nomination of Glyn can be found on
page 88.
François Pauly
Chairman, Nomination Committee
We are pleased that, subject to obtaining
shareholder approval at our 2022 annual
general meeting, Tarun Lal has agreed to
join our Board as a Non-Executive
Director from May 2022. This will
increase the ethnic diversity of our
Board and also make a significant
addition to our franchising expertise.
We believe the addition of Tarun Lal’s
experience and viewpoints will add
another dimension to those brought by
our existing Board members and support
our efforts to maintain an independent
and challenging Board. Further
information on Tarun’s nomination can
be found on page 88.
Diversity Policy and objectives
In our Board Diversity Policy we define
“Diversity” as achieving strength and
sustainability through actively embracing
and being inclusive of all aspects (visible
and invisible) of what makes every
individual unique including education,
personalities, skill sets, experiences,
communication styles, knowledge bases,
social economic backgrounds, age, race,
gender, religious beliefs, physical
abilities and disabilities, ethnicity, sexual
orientation and political beliefs.
Progress made against the Diversity
objectives we set ourselves for 2021
can be found on page 89. Our objectives
for 2022 which will be reported on in
2023 are to:
– maintain a level of at least 35%
female Directors on the IWG plc Board
in the short term rising to 40% in the
medium term (currently 43%, but will
decrease with the appointment of
Tarun Lal);
– assist the development of a pipeline
of high-calibre candidates by
encouraging a broad range of senior
individuals within the business to take
86
IWG plc Annual Report and Accounts 2021
“We define ‘Diversity’ as
achieving strength and
sustainability through
actively embracing and
being inclusive of all
aspects (visible and
invisible) of what makes
every individual unique.”
François Pauly
Chairman, Nomination Committee
on additional roles to gain valuable
Board experience;
– consider candidates for appointment
as Non-Executive Directors from a
wide pool including those with little or
no previous FTSE Board experience;
– ensure Non-Executive Director long
lists have at least 50% of candidates
reflecting diversity including women
and candidates with different racial
and ethnic backgrounds; and
– engage executive search firms who
have signed up to the November 2017
Voluntary Code of Conduct on gender
diversity and best practice.
We are proud of our workforce diversity
at IWG. We are an equal opportunities
employer and are proactively looking to
identify, develop and promote key talent
from within our organisation which will
in turn improve our diversity at senior
levels. Further information on our work
to support diversity and inclusivity
within our workforce can be found on
pages 60 and 61.
External Board Review
The performance of your Board, its
Committees, the Chairman and
individual Directors is conducted
annually and every third year our review
is facilitated externally. In 2021 Condign
Board Consulting were appointed to
facilitate an external review.
The evaluation included a series of
one-to-one discussions between the
reviewer and each Board member and a
review of Board materials. The reviewer
considered that the Board and its
governance had coped well with the
pandemic, assisted greatly by its
settled nature.
The results of the review were discussed
by the Board and the Committee. All
suggestions for improvement are being
incorporated into our ongoing efforts to
continuously improve the processes and
effectiveness of the Board. We continue
to have full confidence in the Board’s
members and processes.
The Committee uses the Board Review
process to monitor effectiveness,
performance, balance, diversity,
independence, leadership and
succession planning, enabling the
Committee to identify strengths and
weaknesses and ensuring that we are
able to identify the capabilities required
for particular Board appointments.
Re-election of the Board
All Directors (unless they are retiring)
submit themselves for re-election by
shareholders annually. Directors
appointed during the period since the
last annual general meeting are required
to seek election at the next annual
general meeting under the Company’s
articles of association. Reasons why
the contribution of Directors offering
themselves for re-election or election
continues to be important to the
long-term success of the Company
are described in the Notice of annual
general meeting.
The Committee reviewed the
independence of all Non-Executive
Directors in 2021; all are independent
and continue to make independent
contributions and effectively challenge
management.
Board appointments
The Committee leads the process for the
appointment of all new Directors and, in
identifying and recommending
candidates to the Board, the Committee
considers candidates on merit against
objective criteria and in accordance with
the Board Diversity Policy.
Nominations are based on the existing
balance of skills, knowledge, diversity
and experience on the Board, on the
merits and capabilities of the nominee
and on the time they are able to give to
the role in order to promote the success
of the Company.
During 2021 the Committee used the
results of its External Board Review to
develop a profile which is being used for
the recruitment of our next Non-
Executive Directors. The profile has been
provided to Audeliss Executive Search
who have been appointed to assist the
Committee in the recruitment process.
Audeliss have no connection with the
Company other than providing
recruitment services and are signed
up to the November 2017 Voluntary
Code of Conduct on gender and
diversity best practice.
Senior Leadership Team
The Committee oversees changes to the
Senior Leadership Team, and supports
initiatives to strengthen the executive
talent pipeline.
Succession planning
We ensure that succession plans are
in place for the orderly succession of
appointments to the Board and senior
positions, so that there is an appropriate
balance of skills, experience and
diversity. Succession planning
discussions and a talent review
process continue to be an integral
priority of the Group’s business
planning and review process, as is
the continued development of both
management capacity and capabilities
within the business.
As previously advised our current
Chairman, Douglas Sutherland, has been
on the Board for more than nine years.
He was appointed as Chairman on 10
May 2010 having been a Non-Executive
Director of the Group since 7 August
2008. His continuation in the role of
Chairman is subject to regular review by
the Committee, without the presence of
the Chairman. After reviewing the
Chairman’s performance and input from
the 2021 External Board Review and in
consideration of the Group’s current
challenges and opportunities, the
Committee considers that it is in the best
interests of the Group for the Chairman
to continue in his role. This is considered
to be a short-term situation and the
Committee is considering plans for the
role in the long term.
iwgplc.com
87
GOVERNANCE NOMINATION COMMITTEE REPORT CONTINUED
Terms of Reference
Below is a summary of the terms of
reference of the Committee:
– Board appointment and composition:
to regularly review the structure, size
and composition of the Board and
make recommendations on the role
and nomination of Directors for
appointment and reappointment to
the Board.
– Board Committees: to make
recommendations to the Board in
relation to the suitability of candidates
for membership of the Audit and
Remuneration Committees.
– Board effectiveness: to review
annually and make appropriate
recommendations.
– Board performance: to assist the
Chairman with the annual performance
review to assess the performance
and effectiveness of the overall
Board and individual Directors.
– Leadership: to remain fully informed
about strategic issues and commercial
matters affecting the Company and to
keep under review the leadership
needs of the organisation to enable it
to compete effectively.
Complete details of the above are
available on the Company’s website
www.iwgplc.com.
François Pauly
Chairman, Nomination Committee
Appointment of Tarun Lal
Appointment of Glyn Hughes
Following a review of the balance
of existing skills, knowledge and
experience on the Board and the
Board’s desire to increase its
ethnic diversity in line with the
findings and objectives of the
Parker Review, the Committee
commenced a search for a
Non-Executive Director with a
different ethnic background.
The Committee used Spencer
Stuart, who provide executive
search consultancy and have no
other connection to the Company,
as well as its industry connections,
professional advisors and
networks, to identify a long list of
candidates. Candidates were
considered on merit against the
criteria set by the Committee. The
shortlisted candidates met with
members of the Committee and
the Chief Executive Officer.
The Committee extensively
discussed the merits of the
candidates and recommended
Tarun Lal be appointed as
Non-Executive Director. The Board
accepted the recommendation of
the Committee and Tarun Lal will
be appointed to the Board on 10
May 2022, subject to his election
at the Company’s 2022 annual
general meeting.
Tarun, who was born and raised
in Delhi, India, brings extensive
franchising expertise to the Board
from over 20 years with Yum!
Restaurants where he has held
executive roles including Global
Chief Operating Officer KFC and
his current role as Managing
Director, Middle East, Turkey,
Africa and India.
Following a review of the balance
of existing skills, knowledge and
experience both on the Board and
within the Senior Leadership Team
and having considered the
strategic plans for the Group, the
Committee commenced a search
for a Chief Financial Officer.
The Committee used its existing
executive search agencies as well
as the Committee’s industry
connections, networks and
advisors, to identify internal and
external candidates from diverse
backgrounds. Candidates were
considered on merit against the
criteria set by the Committee
giving due regard to diversity.
The shortlisted candidates met
with all members of the
Committee, the Chief Executive
Officer and other members of the
Senior Leadership Team. The
Committee extensively discussed
the merits of all the candidates
and recommended the
appointment of Glyn Hughes who
had performed strongly since
joining the Group in 2020 and
brought highly relevant experience
to the role from his previous
positions.
The Board accepted the
recommendation of the Committee
and Glyn Hughes was appointed to
the Board as Chief Financial
Officer with effect from 25 March
2021; his appointment was
subsequently approved at the
2021 annual general meeting.
88
IWG plc Annual Report and Accounts 2021
Nationality split
of the Board
Age split
of the Board
■ American
■ French
■
British
■ Luxembourgish
44%
14%
28%
14%
■ 36-45
■ 46-55
■
56-65
66-75
■
Experience of the Board
Working
Internationally
Rapid Growth
Strategies
Digital
Transformation
Franchising
Enterprise Risk
Management
Outsourcing
Multiple
Industries
Mergers and
Acquisitions
1
0
4
2
5
4
7
7
7
7
6
6
Gender split
of the Board
Gender split
of all employees
Gender split of senior
leadership
■ Male
■ Female
57%
43%
■ Male
■ Female
35%
65%
■ Male
■ Female
75%
25%
Performance against 2021 Diversity objectives
Objective
Performance achieved
Maintain a level of at least 30% female Directors on the IWG
plc Board over the short to medium term (currently 43%).
Throughout 2021 we have had three female Board members, making up 43%
of our Board.
Appoint a Director with a different ethnic background to
the IWG plc Board on or before our May 2022 annual
general meeting.
Tarun Lal will be joining the Board as a Non-Executive Director with effect
from 10 May 2022, subject to the approval of our shareholders at the 2022
annual general meeting.
Assist the development of a pipeline of high-calibre
candidates by encouraging a broad range of senior
individuals within the business to take on additional
roles to gain valuable Board experience.
The Committee supports initiatives aimed at strengthening the executive talent
pipeline and ensuring that high potential people at every level are developed
and retained within the business. Senior individuals are encouraged to gain
Board experience through internal and external Board appointments and are
also invited to present at IWG plc Board meetings. Further information on our
talent strategy can be found on pages 60 and 61.
Consider candidates for appointment as Non-Executive
Directors from a wider pool including those with little or
no previous FTSE Board experience.
Our profile for the recruitment of our next Non-Executive Directors has been
drawn up to allow us to consider a wider pool of talent; FTSE experience is not
a pre-requisite.
Ensure Non-Executive Director long lists have at least 50%
of candidates reflecting diversity including women and
candidates with different racial and ethnic backgrounds.
Our profile for the recruitment of our next Non-Executive Directors has been drawn
up to ensure that long lists reflect our desire to continue to improve the ethnic
diversity of our Board and to ensure that we maintain a level of at least 35% female
Directors in the short term rising to 40% in the long term (currently 43%, but will
decrease with the appointment of Tarun Lal).
Engage executive search firms who have signed up to
the Voluntary Code of Conduct on gender balance,
diversity and best practice.
During 2021 we engaged Audeliss Executive Search and continued to work
with Spencer Stuart, each of whom are signatories to the November 2017
Voluntary Code of Conduct.
iwgplc.com
89
GOVERNANCE
AUDIT COMMITTEE REPORT
Audit Committee report
Members
Laurie Harris
Nina Henderson
François Pauly
Florence Pierre
Attendance (out
of possible
maximum
number of
meetings)
7/7
7/7
7/7
7/7
All members of the Committee are independent.
Length of tenure of
Non-Executive Directors
within the Committee
■ 0-3 years
■ 3-5 years
■ 6-9 years
25%
0%
75%
Laurie Harris
Chair, Audit Committee
Dear Shareholder,
I am pleased to present you with this
report on the work of the Audit
Committee (the “Committee”) during
2021.
This report sets out the role and
responsibilities of the Committee and
our key activities during the year. It
explains how we manage the integrity
of our financial reporting and the
effectiveness of our risk management
and control processes for the benefit
of our stakeholders, including our
shareholders, customers, partners,
employees and communities.
During 2021 the COVID-19 pandemic
and its impact in terms of risk
assessment and financial reporting
remained a key focus of the Committee.
We have also worked hard to support
the Company’s strategy and
sustainability initiatives and have
identified climate change risk as a
principal risk to the Group.
Key objective
Our key objective is to provide effective
governance over the Company’s
financial reporting; this is achieved by
monitoring, reviewing and making
recommendations to the Board on:
– the integrity of financial reporting;
– the systems for internal control, risk
management and compliance; and
– the Company’s external auditors.
Membership and meetings
The Committee consists entirely of
independent Non-Executive Directors.
Seven Committee meetings were held in
the year and where time-sensitive
approvals were needed authority was
delegated to a sub-committee.
At my request, the external auditors,
Executive Directors, the Chairman, the
Company Secretary (as secretary to the
Committee) and the Business Assurance
Director may attend meetings.
At least annually, the Committee meets
independently, without management,
with the Company’s external auditors
and the Business Assurance Director. In
addition I regularly meet with the
external lead audit partner and the
Business Assurance Director outside of
the formal Committee process.
Responsibilities
Below is a summary of the terms of
reference of the Committee (the full text
of which is available on the Company’s
website www.iwgplc.com):
– Financial reporting: monitoring the
integrity of financial reporting for
compliance with applicable statutes
and accounting standards.
– Internal control and risk: reviewing the
effectiveness of internal controls and
risk management systems.
– Internal audit: monitoring the internal
audit programme, reviewing all
findings and making certain that the
function is sufficiently resourced and
free from restrictions.
– External audit: advising on the
appointment, reappointment,
remuneration and removal of the
external auditor.
– Employee concerns: reviewing
whistleblowing arrangements.
I routinely report to the Board on how
the Committee has discharged its
responsibilities, as well as highlighting
any concerns raised.
90
IWG plc Annual Report and Accounts 2021
“Responsible corporate
behaviour is an integral part
of the overall governance
framework and our
management structures and
systems apply equally to
the indentification,
evaluation and control of
our safety, ethical and
environmental risks and
opportunities.”
Laurie Harris
Chair, Audit Committee
Activities of the Audit
Committee during the year
This section summarises the main focus
areas of the Committee during 2021 and
the results of the work undertaken.
Financial reporting
Our main focus was the review of the
half-year results and this Annual Report
together with the formal announcements
relating thereto. Before recommending
these to the Board we determined that
the actions and judgements made by
management were appropriate.
Particular focus was given to:
– critical accounting policies and
practices and changes thereto;
– changes in the control environment;
– control observations identified by the
auditor;
– decisions delegated to and requiring
judgements by management;
– adjustments resulting from the audit;
– clarity of the disclosures made;
– compliance with accounting standards
and relevant financial and governance
reporting requirements; and
– the process surrounding compilation
of the Annual Report and Accounts to
confirm they are fair, balanced and
reasonable.
The Committee formally considers (and
minutes) key audit matters as detailed
on page 92 before recommending the
financial statements to the Board.
The Committee recommends the Annual
Report to the Board. It considers the
Annual Report, taken as a whole, to be
fair, balanced and understandable,
providing the information necessary for
shareholders to assess the Company’s
position and performance, business
model and strategy.
Risk management
The Board is responsible for establishing
the risk appetite for the Group. The
Committee oversees and reviews an
ongoing process for identifying,
evaluating and managing the risks faced
by the Group. Major business risks and
their financial implications are appraised
by the responsible executives as part of
the planning process and are endorsed
by regional management. Key risks are
reported to the Committee, which
reports on them to the Board. The
appropriateness of controls is
considered by the executives, having
regard to cost, benefit, materiality and
the likelihood of risks crystallising. Key
risks and actions to mitigate those risks
were considered by both the Committee
and the Board and were formally
reviewed and approved.
Emerging and principal risks
There are a number of existing and
emerging risks and uncertainties which
could have an impact on the Group’s
long-term performance. The Group has a
risk management structure in place
designed to identify, manage and
mitigate such business risks. Risk
assessment and evaluation are an
integral part of the annual planning
process, as well as the Group’s monthly
review cycle.
The Group’s principal risks, together with
an explanation of how the Group
manages these risks and the impact from
COVID-19, are presented on pages 66 to
74 of this Annual Report.
Internal control
The Committee has a delegated
responsibility for the Company’s system
of internal control and risk management
and for reviewing the effectiveness of
this system. Such a system is designed
to identify, evaluate and control the
significant risks associated with the
Group’s achievement of its business
objectives with a view to safeguarding
shareholders’ investments and the
Group’s assets. Due to the limitations
that are inherent in any system of
internal control, this system is designed
to meet the Group’s particular needs and
the risks to which it is exposed and is
designed to manage rather than
eliminate risk. Accordingly, such a
system can provide reasonable, but not
absolute, assurance against material
misstatement or loss.
In accordance with the FRC’s Guidance
on Risk Management, Internal Control
and Related Financial and Business
Reporting (the “FRC Guidance”), the
Committee confirms there is an ongoing
process for identifying, evaluating and
managing significant risks faced by the
Group.
During 2021, the Committee continued
to revisit its risk identification and
assessment processes, inviting Board
members and senior management to
convene and discuss the Group’s key
risks and mitigating controls.
A risk-based approach has been adopted
in establishing the Group’s system of
internal control and in reviewing its
effectiveness. To identify and manage
key risks:
– Group-wide procedures, policies and
standards have been established;
– a framework for reporting and
escalating significant matters is
maintained;
– reviews of the effectiveness of
management actions in addressing key
Group risks identified by the Board
have been undertaken; and
– a system of regular reports from
management setting out key
performance and risk indicators has
been developed.
This process is designed to provide
assurance by way of cumulative
assessment and is embedded in
operational management and
governance processes.
Key elements of the Group’s system of
internal control which have operated
throughout the year under review
are as follows:
– the risk assessments of all significant
business decisions at the individual
transaction level, and as part of the
annual business planning process;
– a Group-wide risk register is
maintained and updated at least
annually whereby all inherent risks are
identified and assessed, and
appropriate action plans developed to
manage the risk per the risk appetite
iwgplc.com
91
GOVERNANCE AUDIT COMMITTEE REPORT CONTINUED
Significant financial reporting judgements
The Committee discussed and reviewed the following significant issues with KPMG
and management in relation to the financial statements for 2021. For each area,
we discussed with KPMG their procedures to challenge and evaluate management’s
assumptions. The Committee was satisfied with the accounting and disclosures
in the financial statements.
Area of focus
Action taken
Impairment of
leasehold property,
plant and
equipment (“PPE”)
and right-of-use
(“ROU”) assets:
Recognition of
deferred tax assets
associated with the
Group’s intellectual
property in
Switzerland
Goodwill and
intangible assets
The Committee reviewed the process used by management
during 2021 to assess all open, non-franchise business
centres across the Group for indicators of impairment. This
included a review of the new controls implemented during
2021. We challanged key judgements and estimates relating
to the impairment of leasehold PPE and ROU assets and
ultimately concluded that management’s judgements and the
disclosure of these impairments were appropriate. See note 15.
The Committee has reviewed the basis on which management
has recognised and valued deferred tax assets, with particular
focus on the recoverability of deferred tax assets recognised
in Switzerland. The Committee is satisfied that management’s
judgements on the generation of future taxable profits in the
foreseeable future are aligned with the Group’s other business
forecasting processes. The Committee has considered the
presentation and disclosure (in accordance with IAS 1 and IAS 12)
in respect of taxation-related balances and is satisfied that the
Group’s disclosures reflect the risks inherent in accounting for
the deferred taxation balances. See note 8.
The Committee has considered the impairment testing
undertaken and disclosures made in relation to the value of
the Company’s goodwill and intangibles and has challenged the
key assumptions made by management in their valuation
methodology. The Committee considers that an appropriately
cautious approach has been used by management and
is satisfied that no additional impairment of intangibles
and goodwill is required. See notes 13 and 14 for
further information.
of the Group as established by the
Board. The Board reviews the Group’s
principal risks register at least
annually and management periodically
reports on the progress against agreed
actions, enabling the Committee to
monitor how key risks are managed;
– the annual strategic planning process,
which is designed to ensure
consistency with the Company’s
strategic objectives. The final budget
is reviewed and approved by the
Board. Performance is reviewed
against objectives at each Board
meeting;
– comprehensive monthly business
review processes under which
business performance is reviewed at
business centre, area, country, regional
and functional levels. Actual results
are reviewed against targets,
explanations are received for all
material movements, and recovery
plans are agreed where appropriate;
– the documentation of key policies and
control procedures (including finance,
operations, and health and safety)
having Group-wide application. These
are available to all staff via the
Group’s internal platforms;
– formal procedures for the review and
approval of all investment and
acquisition projects. The Group
Investment Committee reviews and
approves all investments. Additionally,
the form and content of routine
investment proposals are standardised
to facilitate the review process;
– the delegation of authority limits with
regard to the approval of transactions;
– the generation of targeted, action-
oriented reports from the Group’s
sales and operating systems on a daily,
weekly and monthly basis, which
provide management at all levels with
performance data for their area of
responsibility, and which help them to
focus on key issues and manage them
more effectively;
– the delivery of a centrally coordinated
assurance programme by the business
assurance department that includes
key business risk areas. The findings
and recommendations of each review
are reported to both management and
the Committee; and
– the maintenance of high standards of
behaviour which are demanded from
staff at all levels in the Group. The
following procedures support this:
– a clearly defined organisation
structure with established
responsibilities;
– an induction process to educate
new team members on the
standards required from them in
their role, including business ethics
and compliance, regulation and
internal policies;
– the availability of Group and country
specific policies, via the Group’s
internal platforms, including the
Company’s Code of Conduct,
detailed guidance on employee
policies and the standards of
behaviour required of staff;
– policies, procedure manuals and
guidelines are readily accessible
through the Group’s internal
platforms and its learning and
development systems;
– operational audit and self-
certification tools which require
individual managers to confirm their
adherence to Group policies and
procedures; and
– a Group-wide policy to recruit and
develop appropriately skilled
employees of high calibre and
integrity and with appropriate
disciplines.
The Committee and the Board regard
responsible corporate behaviour as an
integral part of the overall governance
framework and believe that it should be
fully integrated into management
structures and systems. Therefore, the
risk management policies, procedures
and monitoring methods described
above apply equally to the identification,
evaluation and control of the Company’s
safety, ethical and environmental risks
and opportunities. This approach makes
sure that the Company has the necessary
and adequate information to identify
and assess risks and opportunities
affecting the Company’s long-term value
arising from its handling of corporate
responsibility and corporate governance
matters.
The Committee has completed its annual
review of the effectiveness of the
system of internal control for the year to
31 December 2021 and is satisfied that
it is in accordance with the FRC Guidance
and the Code. The assessment included
consideration of the effectiveness of the
Board’s ongoing process for identifying,
evaluating and managing the risks facing
the Group.
Whistleblowing policy
An externally hosted whistleblowing
channel, which may be used
anonymously, is available to all
employees via email or on the
92
IWG plc Annual Report and Accounts 2021
Company’s internal platforms. The aim of
the policy is to encourage all employees,
regardless of seniority, to bring matters
that cause them concern to the attention
of the Committee. Employees can
monitor the progress of the reports
they have made.
The Business Assurance Director, in
consultation with the Senior Leadership
Team, decides on the appropriate method
and level of investigation. The Committee
is notified of all material discourses made
and receives reports on the results of
investigations and actions taken on a
regular basis. The Committee has the
power to request further information,
conduct its own enquiries or order
additional action as it sees fit.
External audit
KPMG Ireland (“KPMG”) were appointed in
2016 as the auditors of IWG plc. Whilst
IWG plc is a Jersey company, after
consultation with KPMG, the Committee
determined that appointing a Jersey
registered KPMG Ireland audit partner
would best serve the needs of the Group.
The Committee is responsible for
oversight of the external auditor, including
an annual assessment of their
independence and objectivity and the
measures in place to safeguard this.
During the year, KPMG audited the
consolidated financial statements of the
Group for the year ended 31 December
2020 and completed a review of the
half-year results of the Group for the
period to 30 June 2021.
The value of non-audit services provided
by KPMG in 2021 amounted to £282,000
(2020: £1,188,000). Non-audit services
related to – legal advisory services in
China regarding cybersecurity and data
privacy laws and other assurance services
in relation to reports provided to landlords
in the UK, Denmark and Hong Kong
and tax services in relation to statutory
tax certifications.
During the year there were no
circumstances where KPMG were engaged
to provide services which might have led
to a conflict of interest.
The Committee safeguards KPMG’s
independence through its policy on
non-audit related services, which includes
the following measures:
– the external auditor is used for
non-audit related services only where
their use will deliver a demonstrable
benefit as compared with the use of
other potential providers and where
it will not impair their independence
or objectivity;
– all proposals for permitted defined
non-audit services to use the external
auditor must be submitted to, and
authorised by, the Chief Financial
Officer and/or Committee Chair before
any work is performed;
– permitted non-audit services are
reviewed annually by the Committee
and currently include: consultation on
financial accounting and regulatory
reporting matters; reviews of internal
accounting and risk management
controls; reviews of compliance with
policies and procedures; non-statutory
audits (e.g. regarding acquisitions and
disposal of assets and interests in
companies); assurance and advice on
finance-related projects; attestation
reports; due diligence; and tax services
(only where the services will have no
direct effect or will have an immaterial
effect on the audited financial
statements of the Group);
– prohibited non-audit services include:
tax compliance and advisory services;
legal services; book-keeping and other
accounting services; design, provision
and implementation of information
technology services; internal audit
services; valuation services; payroll
services; recruitment services in
relation to key management positions;
HR services relating to the
organisation structure and cost
control; and transaction (acquisitions,
mergers and dispositions) work that
includes investment banking services,
preparation of forecasts or investment
proposals and deal execution services;
and
– KPMG confirm at every Committee
meeting that, since the prior meeting,
there have been no significant issues
affecting their objectivity and
independence arising from the
provision of non-audit services.
KPMG are required to adhere to a
rotation policy requiring rotation of the
lead audit partner at least every five
years. Following an audit partner rotation
after the audit of the 2020 financial
statements a new lead audit partner has
taken responsibility for the audit of the
2021 financial statements.
Our last audit tendering process was
undertaken in 2018.
The breakdown of the fees paid to the
external auditor during the year to 31
December 2021 can be found in note 5.
In assessing the effectiveness of the
external audit process for 2021 the
Committee has considered:
– the audit process as a whole and its
suitability for the challenges facing
the Group;
– the strength and independence of the
external audit team;
– the audit team’s understanding of the
control environment;
– the culture of the external auditor in
seeking continuous improvement and
increased quality;
– the quality and timeliness of
communications and reports received;
and
– the quality of interaction with
management.
Following the Committee’s assessment
of the effectiveness of the external audit
process for 2021 and of KPMG’s
continuing independence, the
Committee has recommended to the
Board that a resolution to reappoint
KPMG as the Company’s auditor in
respect of the financial year ending 31
December 2022 be proposed at the
annual general meeting.
Corporate governance
changes
During 2021 we have also discussed the
consultation paper published by BEIS on
restoring trust in audit and corporate
governance and considered how best to
prepare for the new regulations being
proposed by the UK Government.
Laurie Harris
Chair, Audit Committee
iwgplc.com
93
GOVERNANCE DIRECTORS’ REMUNERATION REPORT
Directors’
Remuneration report
Attendance (out
of possible
maximum
number of
meetings)
Dear Shareholder,
I am pleased to present this Directors’
Remuneration report for 2021.
Members
Nina Henderson
Laurie Harris
François Pauly
Florence Pierre
6/6
6/6
6/6
6/6
All members of the Committee are independent.
Length of tenure of
Non-Executive Directors
within the Committee
■ 0-3 years
■ 3-5 years
■ 6-9 years
25%
0%
75%
The Remuneration Committee (the
“Committee”) is focused on ensuring that
remuneration is designed to promote the
long-term success of the Company by
driving our strategic priorities, while
adhering to our Company’s culture and
values and ensuring our contribution to
environmental and societal principles.
Our people and their talents continue to
be at the centre of our ability to deliver
our workplace solutions no matter where
work is accomplished or conducted. We
are proud of their resilience and
relentless efforts to continue to drive
the business and deliver services to our
customers under difficult conditions.
2021 continued to challenge. All
decisions taken during this
unprecedented period have recognised
the need to reward and incentivise our
team members’ performance at all levels
of the organisation, as well as retain and
attract talent. We also recognised the
need to offer additional health and
wellness support to our team members
as pandemic impacts continued to affect
their lives. All of our decisions have
considered the experience of the
Company and our stakeholders,
including our employees, customers,
investors, landlords, franchisees and
communities.
Nina Henderson
Remuneration Committee Chair
Strategic pivot, refocused
organisation, delivering
momentum
During 2021, management, the Board
and the Committee acted with agility to
ensure our strategy kept pace with the
impacts of the evolving COVID-19
pandemic. At the start of the year, we set
stretching targets for incentive plans
based on our expectations of a then
broadly held view of a continuing return
to normality. As the full impact of the
emerging Delta variant and related
extended lockdowns and restrictions
became clear, it was determined that
initial revenue and profit targets would
not be met, as the Company informed
the market in June 2021.
Management quickly adapted our
business plans, enabling a strategic pivot
to address the new reality. With the
Board’s concurrence, the 2021 employee
incentive schemes were revised to
reward our employees for focusing on
the key tasks, revenue turnaround and
working capital management, to best
navigate through the slower return to
normality and to position the Company
to benefit from the growing adoption of
hybrid working.
94
IWG plc Annual Report and Accounts 2021
“We are focused on
ensuring that remuneration
is designed to promote the
long-term success of the
Company by driving our
strategic priorities, while
adhering to our Company’s
culture and values and
ensuring our contribution to
environmental and societal
principles.”
Nina Henderson
Remuneration Committee Chair
Executive changes
As previously announced, Glyn Hughes
was appointed to the Board as Chief
Financial Officer with effect from 25
March 2021. Upon appointment Glyn’s
remuneration was set fully in line with
our approved Policy. His salary was set
at £440,000 per annum, his maximum
bonus opportunity is 150% of base
salary and maximum PSP opportunity is
250% of salary. No other payments were
made in association with his recruitment.
Upon departure, the Committee
determined an appropriate exit package
for Eric Hageman with due consideration
to shareholders, and specific reference
to the Policy and the Company’s legal
and contractual commitments to him.
Full details are provided on pages 107
to 108.
When the 2021 operating targets for the
broader management team were
adapted, the Committee communicated
to Executive Directors that achievement
of these adapted targets would also be
taken into account when evaluating their
performance. As a result of the strategic
actions taken, a strong second-half
performance has been delivered despite
very challenging circumstances,
including the emergence of the Omicron
variant. Second-half revenue and
working capital performance achieved
the revised stretching targets set at the
mid year point. In fact, during the fourth
quarter IWG experienced the best-
selling months in our more than 30-year
history. In addition, when evaluating
2021 performance of the Executive
Directors, the Committee noted the
significant progress relative to the
Group’s potential strategic and
commercial separation of its digital and
technology assets into separately
identified and constituted businesses.
Annual bonus outcomes
The Company exits a most challenging
2021 in a strong financial position and
with significant momentum to capture
the opportunity arising from the rapid
shift to hybrid working. In order to
recognise the 2021 leadership
achievements of the Executive Directors
as described above, their annual bonus
is awarded for the 50% of the bonus
potential related to operating objectives,
which equals 75% of the CEO/CFO
salaries and will be paid with one-half as
deferred stock over a three-year period,
in accordance with the bonus policy. We
believe this outcome is fair and
appropriate in recognition of the
achievements against-ever changing and
extremely difficult circumstances. This
Executive Director outcome is consistent
with the annual bonus outcomes for the
broader leadership team and other
employees who receive similar
incentives elsewhere in the Group.
Performance Share Plan
(“PSP”)
When considering the appropriate
remuneration outcomes for Executives,
the Committee considered all elements
of remuneration in combination. In
relation to the 2019 PSP, the targets
were set prior to the COVID pandemic,
and the final outcome of 17.1% has
been heavily influenced by the impact of
the pandemic and the restrictions
applied to office working globally. Whilst
noting this, the Committee determined
that there would be no adjustment to the
PSP targets alongside the decisions
taken in relation to the annual bonus and
the desire to maintain PSP outcomes that
are strongly aligned with the interests of
our shareholders.
Therefore, in accordance with the targets
set at the time of the initial award, the
PSP vesting in March 2022 will vest at
17.1%. The Committee reviewed the
three performance metrics and
determined that the threshold targets for
EPS growth and ROI improvement
metrics had not been met; the Company
TSR performance was 3.5% p.a. above
the comparator group median, resulting
in a vesting outcome of 51.3% of the
maximum for this element. All metrics
had a 33.33% weighting and were
measured over a three-year period to 31
December 2021.
The Committee believes variable pay
outcomes should reward sound
performance and align with the
experience of our shareholders and with
our wider stakeholders. The impacts of
the pandemic make decisions in this
regard much more challenging. However,
we believe awarding 50% of the annual
bonus for 2021 based on the strong
second-half performance improvement,
as described above, combined with the
partial vesting of the 2019 PSP
demonstrates such alignment. Also that
our Policy recognises the Company’s
achievements while supporting its
pursuit of strategic objectives to enable
future success.
iwgplc.com
95
GOVERNANCE I provide feedback to the Committee and
the Board on employee perspectives as
a result of these interactions.
Annual general meeting
You will be asked to pass a resolution
approving the Annual Report (and the
Chairman’s annual statement) by way of
an advisory vote at the 2022 annual
general meeting. On behalf of the
Committee, I commend this report to you
and look forward to your support for the
resolution at the annual general meeting.
Nina Henderson
Chair, Remuneration Committee
DIRECTORS’ REMUNERATION REPORT CONTINUED
The year ahead
The Committee was pleased that over
94% of shareholders supported the
Remuneration Policy (the “Policy”) in
2020 and that over 98% approved our
Remuneration report detailing our
application of the Policy in 2020.
Remuneration earned by the Executive
Directors should reflect Company
performance and shareholder return. The
Committee is satisfied that our variable
pay model remains fit for purpose in the
face of the pandemic and the Company’s
continuing strategic transformation. It
ensures alignment between pay and
performance based on targets tied to
strategic delivery. The policy will
continue to be applied during 2022.
The Committee has made the following
decisions for 2022 taking into account
the pay and conditions across the
Group’s workforce, the experiences of
the Company and its stakeholders and
the need to incentivise Executive
performance and support the future
success of the Company:
– No increases to Executive Directors’
salaries for 2022.
– The Company’s continued strategic
transformation is key to unlocking
shareholder value. Results from such
transformative actions are not
conveniently measured by classic
operational performance targets with
annual cut-offs, but should be
reflected in relative TSR performance.
Therefore, during this transformational
period, relative TSR performance
targets will also be a component of
the annual bonus to reflect current
year progress on implementing the
strategy as well as the measurement
of its sustained successful
implementation for the PSP awards.
– IWG has committed to achieving
carbon neutrality during 2023.
– The maximum annual bonus will
remain unchanged at 150% of base
salary for Executive Directors with half
of any bonus paid deferred in share
options which vest after three years.
Performance will be measured against
stretching operating profit and
achievement of strategic objectives,
including ESG and TSR targets.
– Awards of 250% of base salary will be
granted under the PSP in line with the
approved Policy. Awards will vest
subject to a relative TSR target
measured over three financial years,
2022-2024. Any award that vests will
be subject to an additional two-year
holding period.
Workforce engagement
Through my role as Non-Executive
Director with oversight of employee
engagement I have interacted with
employees across the Group in person
and following COVID-19 restrictions in a
socially distanced manner.
I attended the virtual leadership
conference attended by 300 managers
in January 2021. I also met with smaller
groups of employees both virtually and
through visits to IWG sites. Employees
have provided me with their reactions to
our response to COVID-19, strategic
endeavours, reward plans and resources
available to them to deliver job
performance. Through this role as well as
through other employee surveys we
ensure that the Committee and the
Board are aware of the views of the
workforce on a wide range of issues.
Whilst we do not consult directly with
the workforce on Executive pay, the
workforce are able to raise any views
through these forums.
On behalf of the Board, I support IWG’s
ongoing efforts focused on enhancing
diversity, equity and inclusion. In the
USA, I am a sponsor of the African
American Affinity Network Group’s
advisory board and participate in their
membership meetings. They share their
mission, objectives, perspectives and
initiatives to further professional
development and advancement on
behalf of African Americans as well as
community volunteer efforts.
96
IWG plc Annual Report and Accounts 2021
Directors’
Remuneration Policy
This report sets out the Group’s Policy on
remuneration for Executive and Non-
Executive Directors, which was approved
by the Company’s shareholders at the
annual general meeting on 12 May 2020.
The full version of the shareholder-
approved Policy can be found on the
Company’s website at https://investors.
iwgplc.com/reports-and-presentations.
The Committee is satisfied that the
approved Policy operated as intended
in 2021.
The Remuneration Policy will be due for
renewal at the 2023 AGM. During 2022,
the Committee will review the current
Policy to assess the extent to which any
changes are required to remain best
aligned with IWG’s strategy and external
best practice. If any changes are
proposed the Committee intends to
engage with shareholders during the
course of the year.
Overview of Directors’
Remuneration Policy
The Policy considers principles of clarity,
simplicity, risk, predictability,
proportionality and alignment to culture
and has the following objectives:
– to provide a balanced package
between fixed and variable pay, and
long and short-term elements, to align
with the Company’s strategic goals
and time horizons whilst encouraging
prudent risk management;
– to incorporate incentives that are
aligned with and support the Group’s
business strategy and align executives
to the creation of long-term
shareholder value, within a framework
that is sufficiently flexible to adapt as
our strategy evolves;
– to align the interests of the Executive
Directors, senior executives and
employees with the long-term
interests of shareholders and strategic
objectives of the Company;
– to ensure ongoing alignment with the
changes to the UK Corporate
Governance Code of 2018;
– to align management and shareholder
interests through building material
share ownership over time;
– to reflect the remuneration received
by the wider employee group through
considering proportionality;
– to ensure that our remuneration
structures are transparent and easily
understood;
– to ensure that remuneration practices
are consistent with and encourage the
principles of diversity, equality and
inclusion; and
– to reflect the global operating model
of the Group whilst taking account of
governance best practice.
Policy table for Executive Directors
Base salary
Purpose/link to strategy
Operation
Maximum
Performance framework
While there are no performance targets
attached to the payment of salary,
performance is a factor considered in the
annual salary review process.
To provide a
competitive
component of
fixed remuneration
to attract and
retain people of
the highest calibre
and experience
needed to shape
and execute the
Company’s
strategy.
Salaries are set by the Committee. The
Committee reviews all relevant factors such
as: the scope and responsibilities of the role,
the skills, experience and circumstances of the
individual, sustained performance in role, the
level of increase for other roles within the
business, and appropriate market data.
Salaries are normally reviewed annually, and
any changes normally made effective from
1 January.
The base salaries effective 1 January 2022 are
set out on page 100 of the Remuneration
report.
There is no
prescribed
maximum salary.
Salary increases
will normally be in
line with increases
awarded to other
employees in the
business, although
the Committee
retains discretion to
award larger
increases if it
considers it
appropriate (e.g. to
reflect a change in
role, development
and performance in
role, or to align to
market data).
iwgplc.com
97
GOVERNANCE DIRECTORS’ REMUNERATION REPORT CONTINUED
Benefits
Purpose/link to strategy
Operation
Maximum
Performance framework
To provide a
competitive
benefits package.
N/A
Benefit provision is
set at an appropriate
competitive market
rate for the nature and
location of the role.
There is no prescribed
maximum as some
costs may change in
accordance with
market conditions.
Incorporates various cash and non-cash benefits
which may include: a company car (or allowance)
and fuel allowance, private health insurance, life
assurance, and, where necessary, other benefits to
reflect specific individual circumstances, such as
housing or relocation allowances, representation
allowances, reimbursement of school fees, travel
allowances, or other expatriate benefits. Any
reasonable business-related expenses (including tax
thereon) can be reimbursed if determined to be a
taxable benefit.
Executive Directors are eligible for other benefits
which are introduced for the wider workforce on
broadly similar terms. Executive Directors will be
eligible to participate in any all-employee share
plan operated by the Company, on the same terms
as other eligible employees. The maximum level of
participation is subject to limits imposed by
relevant legislation from time to time (or a lower
cap set by the Company).
Pension
Purpose/link to strategy
Operation
Maximum
Performance framework
To provide
retirement
benefits in line
with the overall
Group Policy.
Provided through participation in the Company’s
money purchase (personal pension) scheme, under
which the Company matches individual
contributions up to a maximum of base salary.
The Company may amend the form of an Executive
Director’s pension arrangements in response to
changes in legislation or similar developments.
N/A
7% of base salary for
existing Directors
which is consistent
with provisions
provided to the wider
workforce. The
Committee may set a
higher level for new
executives to reflect
those of the workforce
in their location (up to
a maximum of 15% of
base salary).
Annual bonus
Purpose/link to strategy
Operation
Maximum
Performance framework
To incentivise and
reward annual
performance and
create further
alignment with
shareholders via
the delivery and
retention of
deferred equity.
Provides an opportunity for additional reward (up
to a maximum specified as a % of salary) based on
annual performance against targets set and
assessed by the Committee.
Half of any annual bonus paid will be deferred in
shares which will vest after three years, subject to
continued employment but no further performance
targets. The other half is paid in cash following the
relevant year end. A dividend equivalent provision
allows the Committee to pay dividends, at the
Committee’s discretion, on vested shares at the
time of vesting and may assume the reinvestment
of dividends on a cumulative basis.
Recovery and withholding provisions apply to
bonus awards (see note 1 in the full Policy).
150% of base salary
per annum.
Performance metrics are selected
annually based on the current
business objectives. The majority of
the bonus will be linked to key
financial metrics, of which there will
typically be a significant profit-based
element (see note 3 in the full Policy).
Performance below threshold results
in zero payment. Payments rise from
0% to 100% of the maximum
opportunity levels for performance
between the threshold and maximum
targets.
98
IWG plc Annual Report and Accounts 2021
Performance Share Plan (“PSP”)
Purpose/link to strategy
Operation
Maximum
Performance framework
Motivates and
rewards the
creation of
long-term
shareholder
value.
Aligns
executives’
interests with
those of the
shareholders.
Awards will normally be made annually under
the PSP and will take the form of either nil-cost
options or conditional share awards.
Participation and individual award levels will be
determined at the discretion of the Committee
within the Policy.
Awards vest five years following grant, subject
to performance against pre-determined targets
(measured after three years) which are set and
communicated at the time of grant.
Recovery and withholding provisions apply to
PSP awards (see note 1 in the full Policy).
A dividend equivalent provision allows the
Committee to pay dividends, at the
Committee’s discretion, on vested shares at the
time of vesting and may assume the
reinvestment of dividends on a cumulative
basis.
Shareholding guidelines
Purpose/link to strategy
Operation
To align
Executive
Directors’
interests with
those of our
long-term
shareholders and
other
stakeholders.
Executive Directors are expected to build a
holding in the Company’s shares to a minimum
value of two times their base salary within five
years. This may be built via the retention of
the net-of-tax shares vesting under the
Company’s equity-based share plans. Deferred
shares and shares subject to a holding period
(net-of-tax) can be counted towards the total.
Post-cessation shareholding requirement
Purpose/link to strategy
Operation
Executive Directors are expected to hold, for
up to two years post-cessation, the existing
shareholding requirement or the actual
shareholding at cessation, if lower.
To align
Executive
Directors’
interests with
those of our
long-term
shareholders and
other
stakeholders.
The normal plan
limit is 250% of
base salary.
Awards have a performance period of three
financial years starting at the beginning of
the financial year in which the award is
made. Performance conditions will measure
the long-term success of the Company (see
note 4 in the full Policy). The Committee may
introduce or reweight performance
measures so that they are directly aligned
with the Company’s strategic objectives for
each performance period.
In respect of each performance measure,
performance below the threshold target
results in zero vesting. The starting point for
vesting of each performance element will be
no higher than 25% and rises on a straight-
line basis to 100% for attainment of levels
of performance between the threshold and
maximum targets. There is no opportunity to
re-test.
Maximum
N/A
Performance framework
N/A
Maximum
N/A
Performance framework
N/A
iwgplc.com
99
GOVERNANCE DIRECTORS’ REMUNERATION REPORT CONTINUED
Annual Report on Remuneration
Membership and meetings
All members of the Committee are independent. Committee membership during the year and attendance at the meetings is set out
on page 94. In addition to the designated members of the Committee, the Chairman, Chief Executive Officer and Company
Secretary also attended Committee meetings during the year although none were present during discussions concerning their own
remuneration.
Terms of reference
The Committee’s terms of reference are available on the Company’s website: www.iwgplc.com.
Implementation of the Remuneration Policy for 2022
This Annual Report on Remuneration (and the Committee Chair’s annual statement) will be put to a single advisory shareholder
vote at the 2022 annual general meeting. The information below includes how we intend to operate our Policy in 2022 and the
pay outcomes in respect of the 2021 financial year.
Reporting
The Group continues to use pre-IFRS 16 results for its primary management reporting including performance target-setting and
measuring achievements against those targets. Therefore the figures in this report are presented on a pre-IFRS 16 basis.
Base salaries for the Executive Directors
No base salary increases are proposed for 2022 (consistent with the approach for the rest of the workforce).
The current salaries as at 1 January 2022 (and compared to 2021) are as follows:
Mark Dixon
Glyn Hughes*
* Glyn Hughes was appointed on 25 March 2021
For context, the average base salary increase received by UK employees was 1% in 2021.
Benefits and pension
Benefits and pension provisions will operate in line with the approved Policy.
Annual bonus
Effective
1 Jan 2022
(£’000)
£875.0
£440.0
Effective
1 Jan 2021
(£’000) Percentage change
£875.0
£440.0
0%
0%
For 2022, the maximum bonus potential for both Executive Directors is 150% of salary. The on-target bonus is 90% of salary. Half
of any bonus paid will normally be deferred into shares under the Deferred Share Bonus Plan (“DSBP”), which will vest after three
years subject to continued employment.
The 2022 annual bonus will be based 33.33% on measurement against underlying operating profit targets, 33.33% on relative
TSR performance and 33.33% on strategic targets including ESG. The targets are not being disclosed prospectively as they are
commercially sensitive; however, a description of the performance against targets set will be included in next year’s Annual Report.
100
IWG plc Annual Report and Accounts 2021
Performance Share Plan (“PSP”)
Recognising the substantial increase in opportunity for long-term value to be created for our shareholders through our strategic
transformation including our franchising strategy, PSP share option awards will be made at 250% of current salary (up to the Policy
maximum) to Executive Directors with performance measured over a three-year period ending 31 December 2024. The awards will
be subject to a TSR performance metric as summarised below. The Committee will continue to review the suitability of the TSR
metric and may revert back to a broader selection of metrics on the PSP in the future.
Performance conditions
Threshold vesting
Threshold performance Maximum vesting
Relative TSR versus FTSE 350 excluding
investment trusts (100% weighting)
25%
Median
100%
Maximum performance
10% compound annual
growth above median
Awards will be subject to a holding period of two years following achievement of performance conditions. This requires the
Executive Directors to retain the net-of-tax number of vested shares for a period of two years following vesting.
Chairman and Non-Executive fees
No fee increases are proposed for 2022.
Fees were last reviewed and increased in 2020, as detailed in the 2019 Annual Report on Remuneration which was approved at
the 2020 annual general meeting. The current fees as at 1 January 2022 compared with 2021 are as follows:
Non-Executive Chairman
Basic fee for Non-Executive Director
Additional fees:
Chair of Audit Committee
Chair of Remuneration Committee
Senior Independent Director combined with Chair of Nomination Committee
Oversight of employee engagement and CSR
Variable dislocation allowance for non-Swiss Directors(1)
2022
(£’000)
300
62
15
15
15
15
5 to 10
2021
(£’000)
Percentage
change
300
62
15
15
15
15
5 to 10
0%
0%
0%
0%
0%
–
0%
1. The level of dislocation allowance for non-Swiss Directors is determined according to their country of residence.
Remuneration outcomes for 2021
Single total figure of remuneration table (Audited)
The following table shows the total remuneration in respect of the year ending 31 December 2021, together with the prior year
comparative.
Executive Directors
Salary
Benefits
Pension
Annual bonus
Long Term
Incentive Awards
Total
Total fixed
Total variable
£’000
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
875.0 550.5
Mark Dixon
Glyn Hughes
–
290.6
Eric Hageman 101.7 315.4
–
–
–
– 84.0
– 19.8
8.7
9.6
38.5 656.3
– 218.0
–
41.5
– 343.7 865.0 1,958.9 1,454.0 959.0 589.0 1,000.0 865.0
–
–
–
–
–
366.5 110.4 366.5
218.0
–
528.4
110.4
– 310.4
–
–
–
–
iwgplc.com
101
GOVERNANCE DIRECTORS’ REMUNERATION REPORT CONTINUED
Non-Executive Directors
Fees
Benefits
Pension
Annual bonus
Long Term
Incentive Awards
Total
£’000
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Douglas Sutherland
Laurie Harris
Nina Henderson
Florence Pierre
François Pauly
300.0
84.5
99.5
67.0
82.0
166.7
55.0
55.0
40.5
52.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
300.0
84.5
99.5
67.0
82.0
166.7
55.0
55.0
40.5
52.5
Voluntary waivers – In response to the COVID-19 pandemic Executive Directors and Non-Executive Directors voluntarily agreed to
a 50% reduction in their base salaries from 1 May 2020 to 31 December 2020 and the salary increases reflecting performance,
increased responsibilities and market comparables which were approved at the 2020 annual general meeting were voluntarily
deferred until 1 January 2021. There will be no recovery of the deferred increases or the voluntary reductions.
Annual bonus – The bonus shown is the full award in respect of the relevant financial year. Half of the bonus awarded to Executive
Directors is normally deferred into shares for three years.
Long Term Incentive Awards – Includes the value of awards made to Mark Dixon under the PSP in previous years which vested in
respect of a performance period ending in the relevant financial year. The 2018 PSP award (226,804 shares) vested in March 2021
based on performance until 31 December 2020; the value of this is shown in 2020 and reflects a price on the date of vesting of
381.4p. £315.0k of the 2018 PSP value of £865.0k was attributable to share price increase. The 2019 PSP award (118,054 shares)
vests in March 2022 based on performance until 31 December 2021; the value of this is shown in 2021 and reflects a three-month
average share price ending 31 December 2021 of 291.1p. £61.6k of the 2019 PSP value of £343.7k was attributable to share
price increase.
Glyn Hughes was appointed as Director and Chief Financial Officer on 25 March 2021. Remuneration detailed above reflects time
served in respect of the role during the relevant periods.
Eric Hageman resigned as Director and Chief Financial Officer on 24 March 2021. Remuneration detailed above reflects time
served in respect of the role during the relevant periods.
Determination of 2021 annual bonus (Audited)
The targets originally set for the 2021 bonus at the start of the year were as follows:
Measure
Operating profit (pre-IFRS 16 basis) (50% weighting)
Relative TSR versus FTSE 350 (excluding investment trusts)
(50% weighting)
Threshold
payout
(% of maximum)
33%
Threshold
£84.6m
Target
(60% of
maximum)
£94.0m
Maximum
(100% of award)
£109.0m
Exceeds the
Achieved
£(226.2)(1)
25%
Median
–
median by 10% Below median
1. Reflects the achieved pre-IFRS 16 operating profit after adjusting items and taking into account discontinued operations of £0.7m.
As outlined in the Remuneration Committee Chair’s letter on page 95, as the impact of the COVID-19 pandemic evolved, especially
as a result of the Delta variant, the Committee recognised that the original targets were not appropriate or in line with the
Company’s evolving strategy, as we informed the market in June 2021. Employee incentive schemes were updated below Board
level to reflect the key tasks and priorities given the change in the operating environment. The Committee agreed to review
outcomes at the end of the year taking into consideration the achievements against the updated employee incentive schemes.
As outlined more fully in the Chair’s letter the Committee determined to award a bonus of 50% of maximum opportunity, which
equates to 75% of salary for each Executive.
Director
Mark Dixon
Glyn Hughes(2)
Bonus
maximum
(% of base
salary)
150%
150%
Bonus awarded
(% of award)
Bonus awarded
(£’000)
Cash bonus
(£’000)
50%
50%
656.3
218.0
328.2
109.0
Deferred
shares
(£’000)(1)
328.2
109.0
1. Half of any bonus awarded is normally paid in cash with half deferred in shares which vest after three years.
2. Glyn Hughes was appointed on 25 March 2021. Bonus detailed reflects time served in respect of the role.
102
IWG plc Annual Report and Accounts 2021
0%
0%
100%
Target
Return below
2018
performance
Return to be
equal to 2018
performance
Return to be 300
basis points
above 2018
performance
Return 0.5
% above 2018
performance
0%
PSP awards granted vesting in 2021 (Audited)
The table below summarises the performance conditions and the actual performance against the award made under the PSP in
2019. This award was subject to performance conditions measured over the three financial years ending 31 December 2021.
Relative TSR versus FTSE 350
(excluding investment trusts) (33.3% weighting)
EPS
(33.3% weighting)
Return on investment
(33.3% weighting)
% of each
element vesting
Target
% of each
element vesting
Target
% of each
element vesting
Below threshold
0%
Below median
Threshold
25%
Median
Compound
annual growth of
less than 5%
Compound
annual growth of
5%
0%
0%
10% compound
annual growth
above median
100%
100%
Median
plus 3.5% p.a.
51.3%
17.1% of
maximum
Compound
annual growth of
25%
Compound
annual growth of
(24.3) per share,
– less than 5%
0%
Maximum
Performance achieved
Actual % vesting
Overall vesting
Director
Mark Dixon
2019 award number of
share options
Total vesting
(% of maximum)
No. of share options
to vest
690,377
17.1%
118,054
Award value
(£’000)
343.7
The value of awards reflects a three-month average share price ending 31 December 2021 of 291.1p.
Awards are subject to a post-vesting holding period of two years. This requires the Executive Directors to hold on to the net-of-tax
number of vested shares for a period of two years following vesting.
The Committee believes the above outcome is representative of Company performance and no discretion was applied to the 2019
PSP vesting outcome.
PSP awards vesting in 2023 (Audited)
PSP awards granted to Executive Directors on 26 March 2021 which vest subject to a three-year performance period ending
31 December 2023 were as follows:
Executive
Mark Dixon
Glyn Hughes
Number of
share options
638,128
320,887
% of base salary
250%
250%
Value of award
(£’000)P(1)
£2,187,503
£1,100,001
% of maximum
amount receivable
for threshold vesting
25%
25%
1. Based on a face value grant of 250% of salary and using the share price of 342.8p on 25 March 2021.
The awards are subject to a TSR performance metric as summarised below.
Performance conditions
Threshold vesting Threshold performance
Maximum vesting Maximum performance
Relative TSR versus FTSE 350 excluding investment trusts
(100% weighting)
25%
Median
100%
10% compound
annual growth
above median
The Company’s current share price, including current assumptions regarding the future implementation of the Company’s strategic
transformation referenced in analysts’ reports, has been taken into account when setting stretching relative TSR targets.
Awards are subject to a post-vesting holding period of two years. This requires the Executive Directors to hold on to the net-of-tax
number of vested shares for a period of two years following vesting.
iwgplc.com
103
GOVERNANCE DIRECTORS’ REMUNERATION REPORT CONTINUED
Total pension benefits
During the year under review, the Executive Directors received pension contributions of 7% of salary into defined contribution
arrangements (or cash equivalent) plus any contributions in accordance with standard local practice or employment regulations.
Details of the value of pension contributions received in the year under review are set out in the Pension column of the single
figure of remuneration table.
Statement of share scheme interests and shareholdings (Audited)
Executive Directors are expected to build a holding in the Company’s shares to a minimum value of two times their base salary
within five years of their appointment. This must be built via the retention of the net-of-tax shares vesting under the Company’s
equity-based share plans. The following table sets out, for Directors who served during the year, the total number of shares held
(including the interests of connected persons) as at 31 December 2021 alongside the interests in share schemes for the Executive
Directors. Details for Eric Hageman are as at 24 March 2021 when he resigned as Director and Chief Financial Officer.
Shares held
outright
% of salary
required
Guideline met?
% of salary
attained(1)
Deferred Share
Bonus Plan
options(2)
PSP options
subject to
performance
conditions(3)
PSP options for
which
performance
conditions have
been achieved(4)
Options under the
Share Option Plan
subject to
performance
conditions(5)
Shareholding guidelines
Executive
Directors
Mark Dixon
Glyn Hughes
Eric Hageman
Non-Executive
Directors
Douglas
Sutherland
Laurie Harris
Nina Henderson
François Pauly
Florence Pierre
286,949,493
–
–
200%
200%
200%
Yes
No
No
95,331.2%
–
–
284,368
–
91,923
1,937,837
320,887
674,608
809,843
–
–
–
300,000
300,000
400,000
15,000
30,800
50,000
–
1. Based on a share price of 291p and base salary as at 31 December 2021.
2. Half of any bonus awarded is deferred in share options which vest after three years, subject to continued employment but no further performance targets.
3. Unvested awards under the 2020 and 2021 Performance Share Plan are subject to further performance conditions.
4. Options under the Performance Share Plan for which performance conditions have been achieved are subject to a two-year holding period requirement and
become exercisable on the fifth anniversary of the date of grant and remain exercisable until the day before the tenth anniversary of the date of grant.
5. In December 2018 Eric Hageman was granted unvested conditional options under the Company’s Share Option Plan at an exercise price of 203.1p per share.
In August 2020 Glyn Hughes was granted unvested conditional options under the Company’s Share Option Plan at an exercise price of 222.6p per share.
With the exception of the Directors’ interests disclosed in the table above, no Director had any additional interest in the share
capital of the Company during the year. There has been no movement in Directors’ share interests since year end to the date of
this report.
104
IWG plc Annual Report and Accounts 2021
Supporting Disclosures and additional context
Percentage change in remuneration of Directors compared to employees
All Executive Directors and Non-Executive Directors had a salary freeze / fee freeze between 2020 and 2021. In addition, in response to
the COVID-19 pandemic Executive Directors and Non-Executive Directors voluntarily agreed to a 50% reduction in their base salaries
from 1 May 2020 to 31 December 2020 and the salary increases reflecting performance, increased responsibilities and market
comparables which were approved at the 2020 annual general meeting were voluntarily deferred until 1 January 2021. There will be no
recovery of the deferred increases or the voluntary reductions. The table below reflects the % changes excluding the effect of these
voluntary waivers and deferrals during the height of the COVID-19 pandemic. The percentage change in remuneration of each Director is
compared to our UK employees (determined to be the most representative comparison) on a full-time equivalent basis, between the
year ending 31 December 2019 and the year ending 31 December 2021 on the basis described above.
Executive Directors
Mark Dixon
Glyn Hughes
Eric Hageman
Non-Executive Directors
Douglas Sutherland
Laurie Harris
Nina Henderson
François Pauly
Florence Pierre
Employees
Year-on-year change in Directors’ and Employees’ pay
2021
2020
Base salary
% change
Benefits
% change
Annual bonus
% change
Base salary
% change
Benefits
% change
Annual bonus
% change
0%
–
0%
0%
0%
0%
0%
0%
1%
–
–
–
–
–
–
–
–
–
NM(4)
NM(4)
–
–
–
–
–
–
NM(4)
6%(5)
–
–
20%
12%
33%
12%
9%
3%
–
–
–
–
–
–
–
–
(100)%(1)
–
(100)%(2)
–
–
–
–
–
(100)% (3)
1. No annual bonus was paid to Mark Dixon in respect of 2020, a bonus of £1,237.5k was paid in respect of 2019.
2. No annual bonus was paid to Eric Hageman in respect of 2020, a bonus of £660.0k was paid in respect of 2019.
3. No annual bonuses were paid to UK employees in respect of 2020.
4. The percentage change is not meaningful due to no annual bonuses being paid in respect of 2020.
5. For comparative purposes, the accumulated % change in employees’ base salaries over the period from the last salary increase for Mark Dixon was 9%.
Relative importance of spend on pay
The table below shows total employee remuneration and distributions to shareholders in respect of the years ending
31 December 2021 and 2020 and the percentage changes between years:
Total employee remuneration
Distributions to shareholders via dividends and share buybacks
2021
2020
Change
2020 to 2021
£342.3m £343.7m
£43.7m
£0m
(0.4)%
(100)%
iwgplc.com
105
GOVERNANCE
DIRECTORS’ REMUNERATION REPORT CONTINUED
Chief Executive Officer’s pay ratio
The table below shows our voluntary disclosure of the Chief Executive Officer pay ratio information from 2019 and the required
disclosure for 2021 at the 25th, 50th and 75th percentiles compared to the pay of our UK employees. The ratios have been
calculated based on the single total figure of remuneration for Mark Dixon and the total pay of our employees on a full-time
equivalent basis under calculation methodology A of the regulations, as of 31 December 2021. No element was omitted for the
purpose of the calculation.
The median pay ratio was higher this year as compared with last year largely due to the voluntary reduction in CEO salary during
2020 and no annual bonus being awarded in 2020. Due to the differences in remuneration structure between the CEO and
employees and the higher weighting put on the variable pay elements for the CEO, we expect this ratio to fluctuate year on year.
Overall, the Committee is satisfied that the median ratio is consistent with IWG’s pay, reward and progression policies for all
employees which relate pay levels to performance and market benchmarks. Bonus schemes, participated in by the majority of
employees, and long-term incentives align performance with shareholder experience.
Financial year
2019
2020
2021
2021
Total pay
Base salary
Methodology
Option A
Option A
Option A
Mark Dixon
(£’000)
1,958.9
875.0
P25
(Lower
quartile)
231:1
43:1
74:1
P25
(£’000)
26.4
24.7
P50
(Median)
148:1
35:1
50:1
P50
(£’000)
39.2
35.0
P75
(Upper
quartile)
102:1
20:1
29:1
P75
(£’000)
68.3
61.0
Performance graph and table
The graph below shows the TSR of IWG in the ten-year period to 31 December 2021 against the TSR of the FTSE 350 (excluding
investment trusts). TSR reflects share price growth and assumes dividends are reinvested over the relevant period. The Committee
considers the FTSE 350 (excluding investment trusts) relevant since it is an index of companies of similar size to IWG.
Value (£) (rebased)
700
600
500
400
300
200
100
0
Dec 11
Dec 12
Dec 13
Dec 14
Dec 15
Dec 16
Dec 17
Dec 18
Dec 19
Dec 20
Dec 21
IWG plc
FTSE 350 Index
(excl. investment trusts)
Source: Eikon from Refinitiv
This graph shows the value, by 31 December 2021, of £100 invested in IWG plc on 31 December 2011, compared with the value
of £100 invested in the FTSE 350 (excluding investment trusts) Index on the same date.
106
IWG plc Annual Report and Accounts 2021
Single total figure
of remuneration
Bonus (% of
maximum)
Long-term
incentive vesting
(% of maximum)
2012
2013
2014
2015
2016
2017
2018
2019
2020(1)
2021
£1,773k
£1,854k
£2,770k
£1,968k
£3,035k
£1,132k
£1,451k
£4,181k
1,454k
1,958.9k
100%
79%
100%
100%
93%
0%
43%
100%
0%
50%
11%
35%
86%
97%
91%
11%
2%
100%
33%
17.1%
1. The single total figure of remuneration has been restated to reflect that the share price for the 2018 PSP on the date of vesting is now known.
Service contracts/letters of appointment
Executive Directors have service contracts with the Group which can be terminated by the Company or the Director by giving
12 months’ notice. The Chairman and Non-Executive Directors are appointed for an initial three-year term, which shall continue
unless terminated with six months’ notice on either side, no contractual termination payments being due and subject to retirement
pursuant to the articles of association at the annual general meeting.
The Directors’ service contracts are available for inspection at the Company’s registered office within normal business hours. The
following table sets out the dates that each Director was first appointed by the Group, the expiry date of the current term and the
length of service as of 31 December 2021. All Directors except those retiring will seek re-election at the 2022 annual general
meeting.
Current service contract/appointment agreement
Initial appointment
date as Director within
the Group
Expiry of
current term
Length of service
as Director
with the Group
Executive Directors
Mark Dixon
Glyn Hughes
Appointment agreement – 19 December 2016
Director service agreement – 1 July 2020
Appointment agreement – 24 March 2021
Employment agreement – 24 March 2021
19 December 2016
25 March 2021
Non-Executive
Directors
Douglas Sutherland Appointment agreement – 16 February 2017
19 December 2016
Laurie Harris
Nina Henderson
François Pauly
Florence Pierre
Appointment agreement – 14 May 2019
Appointment agreement – 19 December 2016
Appointment agreement – 19 December 2016
Appointment agreement – 19 December 2016
14 May 2019
19 December 2016
19 December 2016
19 December 2016
–
–
–
–
–
–
–
Founder
9 months
13 years 5 months (11 years
8 months as Chairman)
2 years 8 months
7 years 8 months
6 years 8 months
8 years 8 months
Payments to past directors/payments for loss of office – Eric Hageman (Audited)
Eric Hageman stepped down from the Board on 24 March 2021 and remained an employee of the Group until 31 March 2021. On
cessation of his employment he was paid for his notice period not worked (12 months). This payment was limited to base salary
only and was due to be paid in two instalments in March and August 2021, subject to mitigation. As a result of Eric commencing
employment prior to August, the second instalment was subsequently not awarded. With the exception of minimal costs below our
de minimis limit of £10,000, no other payments for loss of office were made. The total payments were as follows:
Item
Payment in lieu of notice
Amount
£220,000
The Committee determined that Eric would not be eligible to receive a PSP award in 2021, nor would he be eligible to receive a
bonus for 2021.
iwgplc.com
107
GOVERNANCE DIRECTORS’ REMUNERATION REPORT CONTINUED
In relation to unvested equity awards, the Committee determined that Eric was a good leaver, under the terms of the relevant
share plan rules. In line with the Directors’ Remuneration Policy, the Committee sought to find an outcome which is in the best
interests of the Company and its shareholders, taking into account the specific circumstances, contractual obligations and seeking
to pay no more than is warranted.
An award under the Share Option Plan, granted to Eric on 21 December 2018 (prior to joining the Board), was pro-rated for the
portion of the performance period worked until termination of employment, The remaining awards vested on 31 March and will
become exercisable at their usual time, which is in equal tranches on 21 December 2021, 2022 and 2023 respectively.
The PSP award granted on 7 March 2019 was also pro-rated for the portion of the performance worked until termination of
employment. Performance was assessed at the point of departure, with the EPS and ROI measures assessed at 0% outcome and
the TSR measure assessed at 100% outcome. The remaining awards vested on 31 March 2021 and will become exercisable on 7
March 2024, subject to the rules of the PSP.
In its absolute discretion the Committee determined that the PSP award granted on 4 March 2020 will lapse.
The total value of these awards is as follows:
Award
Share Option Plan
2019 PSP
2020 PSP
Total
Original
number of
shares
outstanding
300,000
368,201
306,407
Number of
shares vested
225,000
92,050
–
Value(1)
£766,350
£313,522
–
£1,079,872
1. Based on share price at close of business on 31 March 2021 of 340.6p
All awards remain subject to recovery provisions in line with the relevant Plan rules.
The Deferred Share Bonus Award granted on 4 March 2020 will become exercisable at the normal time on 4 March 2023, subject
to the rules of the Deferred Share Bonus Plan.
Advisors to the Remuneration Committee
The Executive Compensation team within PwC provided independent advice to the Committee during the year. No other services
were provided by PwC during the year. PWC was appointed by the Committee during 2020 in place of Aon, as a result of the senior
advisor moving from Aon to PwC. The fees charged by PWC for the provision of independent advice to the Committee during 2021
were £19,000 (2020: £29,500 (AON) and £9,500 (PWC)). With regard to remuneration advice, the Committee is comfortable that
PWC’s engagement partner and team are objective and independent.
Statement of voting at general meeting
The Committee is directly accountable to shareholders and, in this context, is committed to an open and transparent dialogue
with shareholders on the issue of executive remuneration. The members of the Committee attend the Company’s annual general
meeting and are available to answer shareholders’ questions about Directors’ remuneration. Votes cast by proxy and at the
annual general meetings held on 12 May 2020 and 11 May 2021 in respect of remuneration-related resolutions are shown
in the table below:
Resolution
Approval of Directors’ Remuneration Policy
at the 2020 AGM
Approval of Annual Remuneration Report
for year ending 31 December 2020
Votes for
#
Votes against
%
#
% Total votes cast
Votes withheld
727,136,890
94.33% 43,747,207
5.67% 770,884,097
1,177,273
753,595,588
98.19% 13,920,735
1.81% 767,516,323
4,550
For and on behalf of the Board
Nina Henderson
Chair of the Remuneration Committee
108
IWG plc Annual Report and Accounts 2021
Directors’ report
The Directors of the Company present
their Annual Report and the audited
financial statements of the Company and
its subsidiaries (together the “Group”)
for the year ended 31 December 2021.
– a description of the composition and
operation of the Board and its
Committees (pages 84 and 85); and
– our Board Diversity Policy is set out on
pages 86 and 87.
Directors
The Directors of the Company who held
office during the financial year under
review were:
Executive Directors
– Mark Dixon
– Glyn Hughes (appointed 25 March 2021)
– Eric Hageman (resigned 24 March 2021)
Non-Executive Directors
– Douglas Sutherland (Chairman)
– François Pauly
– Laurie Harris
– Florence Pierre
– Nina Henderson
Biographical details for the current
Directors are shown on pages 76 and 77.
Details of the Directors’ interests and
shareholdings are given in the
Remuneration report on page 104.
Details of the role of the Board can be
found on pages 84 and 85, and the
process for the appointment of Directors
can be found on page 87.
The Corporate Governance report,
Nomination Committee report, Audit
Committee report, Remuneration report
and Directors’ statements on pages 78 to
108 and 111 all form part of this report.
Corporate Governance
Statement
The “Governance” section of this Annual
Report on pages 76 to 111, together
with information contained in the
“Shareholder information” section on
page 175, constitutes our Corporate
Governance Statement. This includes:
– information on how the Company
complies with the Code and where the
Code is publicly available (page 78);
– a description of the main features of
our internal control and risk
management arrangements in relation
to the financial reporting process
(pages 91 to 93);
Principal activity
The Company works with franchise
partners, landlords and property owners
to provide the world’s largest network of
flexible workspace.
Business review
The Directors have presented a Strategic
report on pages 1 to 75 as follows:
The Chief Executive Officer’s review and
Chief Financial Officer’s review on pages
24 to 30 and 46 to 51 respectively address:
– review of the Company’s business
(pages 25 to 31);
– an indication of the likely future
developments in the business (page 31);
– development and performance during
the financial year (pages 46 to 51); and
– position of the business at the end of
the year (pages 49 to 51).
The Risk management and principal risks
report, on pages 66 to 75, includes a
description of the principal risks facing
the Company, including financial risks,
and the steps taken and policies
implemented to mitigate those risks.
The Company’s activities in research and
development are detailed on page 36
and in the Risk management and
principal risks report on page 69.
The ESG report, on pages 52 to 65,
includes the sections in respect of:
– environmental matters including our
climate disclosures;
– social and community issues; and
– employee development and
performance.
The Nomination Committee report on
pages 86 to 89 covers our approach to
diversity and further information on
diversity initiatives can be found on
pages 60 and 61.
The Directors’ statements on page
111 include the statutory statement in
respect of disclosure to the auditor.
The Directors do not consider any
contractual or other relationships with
external parties to be essential to the
business of the Group.
Anti-bribery and
anti-corruption
The Company is committed to carrying
out business in an honest and ethical
manner and has a zero tolerance of bribery
and corruption. All employees receive
training on our bribery and corruption
policy. The Company’s statement of
commitment can be found on the
Company’s website: www.iwgplc.com.
Respect for human rights
The Company has zero tolerance to
slavery and human trafficking and our
statement made in accordance with the
Modern Slavery Act 2015, which is
reviewed by the Board annually, can be
found on the Company’s website: www.
iwgplc.com.
Results and dividends
The loss before taxation for the year was
£259.4m (2020: loss of £613.3m).
No interim dividend has been paid and
the Directors do not recommend a final
dividend in respect of the 2021 financial
year (2020: £nil).
Policy and practice on
payment of creditors
The Group does not follow a universal
code dealing specifically with payments
to suppliers but, where appropriate, our
practice is to:
– agree the terms of payment upfront
with the supplier;
– ensure that suppliers are made aware
of these terms of payment; and
– pay in accordance with contractual
and other legal obligations.
Employees
The Group treats applicants for
employment with disabilities with full
and fair consideration according to their
skills and capabilities.
Should an employee become disabled
during their employment, efforts are
made to retain them in their current
employment or to explore opportunities
for their retraining or redeployment
elsewhere within the Group.
iwgplc.com
109
GOVERNANCE DIRECTORS’ REPORT CONTINUED
All employees are encouraged to
become involved in the Company’s
performance. Employee surveys are
routinely fielded to gather information
on the Company, employee contribution
to performance and other issues and
through our global Voice Councils
employees are provided with a
dedicated forum where they can express
their views to the relevant senior audience.
Political and charitable
donations
It is the Group’s policy not to make political
donations either in the UK or overseas.
The Group made charitable donations of
£438.0k during the year (2020: £430.1k).
Capital structure
The Company’s share capital (including
treasury shares) comprises
1,057,248,651 issued and fully paid up
ordinary shares of 1p nominal value in
IWG plc (2020: 1,057,248,651). All
ordinary shares (excluding treasury
shares) have the same rights to vote at
general meetings of the Company and to
participate in distributions. There are no
securities in issue that carry special
rights in relation to the control of the
Company. The Company’s shares are
traded on the London Stock Exchange.
Details of the Company’s employee
share schemes can be found in note 25
of the notes to the accounts on pages
150 to 156. The Company’s employee
share schemes contain provisions
relating to a change of control of the
Company. The terms, conditions and
discretions for the vesting and exercise
of awards and options may be amended
in the event of a change of control of the
Company.
Power for the Company
to issue shares
At the Company’s annual general meeting
held on 11 May 2021 the shareholders of
the Company approved resolutions giving
authority for the Company to allot ordinary
shares in the Company up to one-third of
the Company’s issued share capital and up
to two-thirds of the Company’s issued
share capital in connection with a rights
issue and to dis-apply pre-emption rights,
in each case, until the earlier of the
Substantial interests
At 4 March 2022, the Company has been notified of the following substantial
interests held in the issued share capital of the Company.
Estorn Limited(1)
Toscafund Asset Management LLP
1. Mark Dixon owns 100% of Estorn Limited.
conclusion of the Company’s next annual
general meeting or 10 August 2022.
On 21 December 2020 the shareholders
of the Company approved resolutions at
a general meeting for the allotment and
issue of new ordinary shares on a
non-pre-emptive basis upon conversion
of £350m unsubordinated unsecured
guaranteed convertible bonds due 2027
which were issued by IWG Group Holdings
S.à.r.l., a subsidiary of the Company (the
“Bonds”) into ordinary shares in IWG plc
in accordance with their terms. Such
authority is limited to the allotment and
issue of new ordinary shares pursuant to
the conversion of the Bonds, with no such
conversion occurring during 2021.
Following a change of control of the
Company, the holder of each Bond may
exercise their conversion right using the
formula set out in the terms of the Bonds
or may require the issuer to redeem that
Bond at its principal amount, together
with accrued and unpaid interest. On 8
October 2021 IWG International
Holdings S.à.r.l., a subsidiary of the
Company, was substituted in place of
IWG Group Holdings S.à.r.l as issuer and
principal debtor under the Bonds.
Power for the Company
to repurchase shares
At the Company’s annual general
meeting held on 11 May 2021 the
shareholders of the Company approved
a resolution giving authority for the
Company to purchase in the market up
to 100,715,763 ordinary shares
representing approximately 10% of the
issued share capital (excluding treasury
shares) as at 6 April 2021. No shares
were repurchased during 2021.
Branches
The Company is incorporated in Jersey
with a head office branch in Switzerland.
Number of
voting rights
286,949,493
146,625,056
% of issued share
capital (excluding
treasury shares)
28.50%
16.80%
Going concern
The Directors, having made appropriate
enquiries, have a reasonable expectation
that the Group and the Company have
adequate resources to continue in
operational existence for a period of
at least 12 months from the date of
approval of the financial statements.
For this reason, they continue to adopt
the going concern basis in preparing the
accounts on pages 117 to 162.
In adopting the going concern basis for
preparing the financial statements, the
Directors have considered the further
information included in the business
activities commentary as set out on
pages 24 to 30, as well as the Group’s
principal risks and uncertainties as set
out on pages 66 to 74.
Further details on the going concern basis
of preparation can be found in note 24 of
the notes to the accounts on page 144.
Post balance sheet events
Subsequent events are detailed in
note 33 of the notes to the accounts
on page 162.
Auditors
In accordance with Jersey law, a
resolution for the reappointment of
KPMG Ireland as auditors of the
Company is to be proposed at the
forthcoming annual general meeting.
Approval
This report was approved by the Board
on 8 March 2022.
On behalf of the Board
Timothy Regan
Company Secretary
8 March 2022
110
IWG plc Annual Report and Accounts 2021
Directors’ statement
Under applicable law and regulations,
the Directors are also responsible for
preparing a Directors’ report, a Strategic
report, a Remuneration report and a
Corporate Governance Statement that
comply with that law and those regulations.
The Directors are responsible for the
maintenance and integrity of the
corporate and financial information
included on the Company’s websites.
Legislation in the UK and Jersey
governing the preparation and
dissemination of financial statements
may differ from legislation in other
jurisdictions.
Statutory statement as
to disclosure to auditor
The Directors who held office at the
date of approval of these Directors’
statements confirm that:
– so far as they are each aware, there is
no relevant audit information of which
the Group’s auditor is unaware; and
– each Director has taken all the steps
that they ought to have taken as a
Director in order to make themselves
aware of any relevant audit
information and to establish that the
Group’s auditor is aware of that
information.
These financial statements have been
approved by the Directors of the
Company. The Directors confirm that the
financial statements have been prepared
in accordance with applicable law and
regulations.
Statement of responsibility
We confirm that to the best of our
knowledge:
– the financial statements prepared in
accordance with the applicable set of
accounting standards, give a true and
fair view of the assets, liabilities,
financial position and profit or loss
of the Group;
– the Directors’ report, including content
contained by reference, includes a fair
review of the development and
performance of the business and the
position of the Group taken as a
whole, together with a description of
the principal risks and uncertainties
that they face; and
– the Annual Report and financial
statements, taken as a whole, is fair,
balanced and understandable and
provides the information necessary for
shareholders to assess the Group’s
position and performance, business
model and strategy.
By order of the Board
Mark Dixon
Chief Executive Officer
8 March 2022
Glyn Hughes
Chief Financial Officer
8 March 2022
Statement of Directors’
responsibilities in respect of
the Annual Report and financial
statements
The Directors are responsible for
preparing the Annual Report and the
Group financial statements in accordance
with applicable law and regulations.
Company law requires the Directors to
prepare the Group financial statements
for each financial year. Under that law,
they are required to prepare the Group
financial statements in accordance with
International Financial Reporting
Standards (“IFRSs”) as adopted by the
EU and applicable law.
Under company law, the Directors 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 Group and its profit or loss for the
period. In preparing each of the Group
financial statements, the Directors are
required to:
– select suitable accounting policies and
then apply them consistently;
– make judgements and estimates that
are reasonable and prudent;
– for the Group financial statements,
state whether they have been
prepared in accordance with IFRSs as
adopted by the EU; and
– prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Group and the parent company will
continue in business.
The Directors are responsible for
keeping adequate accounting records
that are sufficient to show and explain
the Group’s transactions and which
disclose with reasonable accuracy at any
time the financial position of the Group
and to enable them to ensure that its
financial statements comply with the
Companies (Jersey) Law 1991 and IFRS.
They have general responsibility for
taking such steps as are reasonably open
to them to safeguard the assets of the
Group and to prevent and detect fraud
and other irregularities.
iwgplc.com
111
GOVERNANCE INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF IWG PLC
Report on the audit of the financial
statements
Opinion
We have audited the financial
statements of IWG plc and its
consolidated undertakings (‘the Group’)
for the year ended 31 December 2021
set out on pages 117 to 162, which
comprise the consolidated income
statement, consolidated statement of
comprehensive income, consolidated
statement of changes in equity,
consolidated balance sheet,
consolidated statement of cash flows
and related notes, including the
summary of significant accounting
policies set out in note 2. The financial
reporting framework that has been
applied in their preparation is Jersey Law
and International Financial Reporting
Standards (IFRS) as adopted by the
European Union.
In our opinion:
– the financial statements give a true
and fair view of the state of the
Group’s affairs as at 31 December
2021 and of the Group’s loss for the
year then ended;
– the financial statements have been
properly prepared in accordance with
IFRS as adopted by the European
Union; and
– the financial statements have been
prepared in accordance with the
requirements of Companies (Jersey)
Law 1991.
Basis for opinion
We conducted our audit in accordance
with International Standards on Auditing
(UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under those standards
are further described in the Auditor’s
responsibilities for the audit of the
financial statements section of our
report. We believe that the audit
evidence we have obtained is a
sufficient and appropriate basis for our
opinion. Our audit opinion is consistent
with our report to the audit committee.
We were appointed as auditor by the
directors on 21 December 2016. The
period of total uninterrupted
engagement is for the 6 financial years
ended 31 December 2021. We have
fulfilled our ethical responsibilities and
we remain independent of the Group in
accordance with UK ethical
requirements, including the Financial
Reporting Council (FRC)'s Ethical
Standard as applied to listed public
interest entities. No non-audit services
prohibited by that standard were
provided.
Conclusions relating to going concern
The directors have prepared the
financial statements on the going
concern basis as they do not intend to
liquidate the Group or to cease their
operations, and as they have concluded
that the Group’s financial position means
that this is realistic. They have also
concluded that there are no material
uncertainties that could have cast
significant doubt over their ability to
continue as a going concern for at least
a year from the date of approval of the
financial statements (“the going
concern period”).
In auditing the financial statements, we
have concluded that the directors’ use
of the going concern basis of accounting
in the preparation of the financial
statements is appropriate. Our
evaluation of the directors’ assessment
of the Group’s ability to continue to
adopt the going concern basis of
accounting included considering the
strategic risks relevant to the Group’s
business model and analysing how those
risks might affect the Group’s financial
resources or ability to continue
operations for the going concern period.
The sensitivity we considered most likely
to adversely affect the Group’s available
financial resources over the going
concern period was the potential
economic impact of a prolonged
economic downturn impacting the
Group’s ability to generate revenue. We
considered various downside scenarios
which were more pessimistic than those
indicated by the Group’s own forecasts.
A key judgement in the downside
scenarios of the Group is that there is a
reasonable expectation that the existing
committed debt facilities in place are
adequate to cover the Group’s liquidity
requirements in such scenarios. There
were no other risks identified that we
considered were likely to have a material
adverse effect on the Group’s available
financial resources over this period.
Based on the work we have performed,
we have not identified any material
uncertainties relating to events or
conditions that, individually or
collectively, may cast significant doubt
on the Group’s ability to continue as a
going concern for a period of at least
twelve months from the date when the
financial statements are authorised for
issue.
In relation to the Group’s reporting on
how they have applied the UK Corporate
Governance Code, we have nothing
material to add or draw attention to in
relation to the directors’ statement in the
financial statements about whether the
directors considered it appropriate to
adopt the going concern basis of
accounting.
Our responsibilities and the
responsibilities of the directors with
respect to going concern are described
in the relevant sections of this report.
However, as we cannot predict all future
events or conditions and as subsequent
events may result in outcomes that are
inconsistent with judgements that were
reasonable at the time they were made,
the absence of reference to a material
uncertainty in this auditor's report is not
a guarantee that the Group will continue
in operation.
Detecting irregularities
including fraud
We identified areas of laws and
regulations that could reasonably be
expected to have a material effect on
the financial statements and risks of
material misstatement due to fraud,
using our understanding of the entity's
industry, regulatory environment and
other external factors and inquiry with
the directors. In addition, our risk
assessment procedures included:
– Inquiring with the directors and other
management as to the Group’s
policies and procedures regarding
compliance with laws and regulations,
identifying, evaluating and accounting
for litigation and claims, as well as
whether they have knowledge of non-
compliance or instances of litigation
or claims.
– Inquiring of directors as to the Group’s
high-level policies and procedures to
prevent and detect fraud, as well as
whether they have knowledge of any
actual, suspected or alleged fraud.
– Inquiring of directors regarding their
assessment of the risk that the
financial statements may be materially
misstated due to irregularities,
including fraud.
– Reading audit committee, nomination
committee, remuneration committee
and Board meeting minutes.
– Planning and performing analytical
procedures to identify any usual or
unexpected relationships.
112
112
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
We discussed identified laws and
regulations, fraud risk factors and the
need to remain alert among the audit
team. This included communication from
the Group to component audit teams of
relevant laws and regulations and any
fraud risks identified at Group level and
request to component audit teams to
report to the Group audit team any
instances of fraud that could give rise to
a material misstatement at Group level.
Firstly, the Group is subject to laws and
regulations that directly affect the
financial statements including financial
reporting legislation (including related
companies legislation), distributable
profits legislation and taxation
legislation. We assessed the extent of
compliance with these laws and
regulations as part of our procedures on
the related financial statement items,
including assessing the financial
statement disclosures and agreeing
them to supporting documentation when
necessary.
Secondly, the Group is subject to many
other laws and regulations where the
consequences of non-compliance could
have a material effect on amounts or
disclosures in the financial statements,
for instance through the imposition of
fines or litigation or the loss of Group’s
licence to operate. We identified the
following areas as those most likely to
have such an effect: health and safety,
employment law and certain aspects of
company legislation recognising the
nature of the Group’s activities.
Auditing standards limit the required
audit procedures to identify non-
compliance with these non-direct laws
and regulations to inquiry of the
directors and other management and
inspection of regulatory and legal
correspondence, if any. These limited
procedures did not identify actual or
suspected non-compliance.
We assessed events or conditions that
could indicate an incentive or pressure
to commit fraud or provide an
opportunity to commit fraud. As required
by auditing standards, we performed
procedures to address the risk of
management override of controls
and the risk of fraudulent revenue
recognition. We did not identify any
additional fraud risks.
In response to the fraud risks, we also
performed procedures including:
– Identifying journal entries to test
based on specific risk criteria and
comparing the identified entries to
supporting documentation.
– Evaluating the business purpose of
significant unusual transactions, if any.
– Assessing significant accounting
estimates for bias.
As the Group is regulated, our
assessment of risks involved obtaining
an understanding of the legal and
regulatory framework that the Group
operates and gaining an understanding
of the control environment including the
entity’s procedures for complying with
regulatory requirements.
Owing to the inherent limitations of an
audit, there is an unavoidable risk that
we may not have detected some
material misstatements in the financial
statements, even though we have
properly planned and performed our
audit in accordance with auditing
standards. For example, the further
removed non-compliance with laws and
regulations (irregularities) is from the
events and transactions reflected in the
financial statements, the less likely the
inherently limited procedures required
by auditing standards would identify it.
In addition, as with any audit, there
remained a higher risk of non-detection
of irregularities, as these may involve
collusion, forgery, intentional omissions,
misrepresentations, or the override of
internal controls. We are not responsible
for preventing non-compliance and
cannot be expected to detect non-
compliance with all laws and regulations.
Key audit matters: our assessment
of risks of material misstatement
Key audit matters are those matters that,
in our professional judgement, were of
most significance in the audit of the
financial statements and include the
most significant assessed risks of
material misstatement (whether or
not due to fraud) identified by us,
including those which had the greatest
effect on: the overall audit strategy;
the allocation of resources in the
audit; and directing the efforts of the
engagement team. These matters were
addressed in the context of our audit of
the financial statements as a whole, and
in forming our opinion thereon, and we
do not provide a separate opinion on
these matters.
FINANCIAL STATEMENTS
Consistent with our 2020 audit, in
arriving at our audit opinion above, the
key audit matters, in decreasing order
of audit significance, were as follows:
Goodwill and Intangible Assets –
£781.8 million (2020: £748.8
million)
Refer to pages 124 to 125 (accounting
policy) and pages 138 to 139 (financial
disclosures)
The key audit matter
There is a risk that the carrying amounts
of the Group’s goodwill and intangible
assets will be more than the estimated
recoverable amount, if future cash flows
are not sufficient to recover the Group’s
investment. This could occur if
forecasted cash flows decline in certain
markets or where revenue and costs are
subject to significant fluctuations. Key
assumptions include revenue growth,
occupancy rates, discount rates and
terminal values. The recoverability of
goodwill is spread across multiple
geographies and economies as
highlighted in note 13 and is dependent
on individual businesses acquired
achieving or sustaining sufficient
profitability in the future. Goodwill
relating to the US and UK country
operations accounts for 72% of the total
carrying amount.
We assessed the recoverability of
goodwill across a sample of countries
but placed particular focus on the UK
impairment model due to the limited
headroom in the UK operations in the
past, the gross operating loss in the
current year and given its significance
to the Group’s goodwill balance.
We focus on this area due to the
inherent uncertainty involved in
forecasting and discounting future cash
flows, particularly in projected revenue
growth, which forms the basis of the
assessment of recoverability.
How the matter was addressed
in our audit
Our audit procedures in this area
included, but were not limited to, our
assessment of the historical accuracy
of the Group’s forecasts and challenging
management’s profitability forecasts
underlying their impairment model.
We obtained and documented our
understanding of the impairment
testing process and tested the design
and implementation of the relevant
controls therein.
iwgplc.com
iwgplc.com
113
113
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF IWG PLC CONTINUED
We used our own valuation specialists
to assist us in evaluating the key
judgements used by the Group, in
particular those relating to the discount
rates and terminal growth calculations
used to determine the present value of
the cash flow projections.
assets and the related net impairment
charge reversal, the judgements made in
assessing impairment indicators for each
CGU and the key assumptions used to
determine the future cash flows of each
CGU, which are used to determine the
recoverable amount.
We compared the Group’s key
assumptions, where possible, to
externally derived data and performed
our own assessment in relation to key
impairment model inputs. We examined
the sensitivity analysis performed by
Group management and performed our
own sensitivity analysis in relation to key
assumptions including revenue growth,
discount rates, occupancy rates and
terminal values. We also compared the
sum of projected discounted cash flows
to the market capitalisation of the Group
to assess whether the projected cash
flows appear reasonable.
The Group’s impairment model did not
identify any impairments of goodwill or
intangible assets at 31 December 2021.
Based on the procedures we performed,
we found that the key assumptions
underpinning management’s assessment
of the recoverable amount of goodwill
and intangible assets, are reasonable.
Impairment of Leasehold Property,
Plant and Equipment (‘PPE’) and
Right of Use (‘ROU’) assets – £54.2
million net reversal of impairment
(2020: £246 million impairment
charge)
Refer to pages 123 to 124 (accounting
policy) and page 140 (financial
disclosures)
The key audit matter
There is a risk that the carrying value of
the Group’s business centres exceeds
the recoverable amount of each centre
given the continued impact of the
COVID-19 pandemic on the trading
performance of the Group in 2021. In
response to this risk, the Group has
performed an assessment of the Group’s
CGUs (identified as individual business
centres) to identify indicators of
impairment. Management carried out an
impairment analysis for each CGU where
impairment indicators were identified
and impaired the associated Leasehold
Improvements PPE and Right of Use
assets to their estimated recoverable
amount. Management also reviewed
each CGU impaired at 31 December
2020 to determine if previously
recognised impairment losses no longer
existed or had decreased such that the
carrying value of the CGU should be
increased to its recoverable amount at
31 December 2021. We consider this
area to be a key audit matter, in
consideration of the significance of the
The recoverability of the Group’s
Leasehold Improvements PPE and Right
of Use assets and the associated
impairment charge recognised in the
year have been identified as a key
audit matter.
How the matter was addressed
in our audit
The audit procedures we have designed
to respond to this risk include
challenging whether there were
indicators of impairment at the CGU
level, including comparing the
performance of business centres
against expected profitability measures.
We obtained and documented our
understanding of the impairment
testing process and the design and
implementation of the relevant key
controls. We tested the completeness of
management’s identification of business
centres performing below expectations
and accordingly at a greater risk of
impairment. Where centres performed
below expectations, we considered
whether this was an indicator of
impairment given our understanding of
the maturity of the business centre, the
status of rent renegotiations with
landlords and assessment of the current
performance of the business centre.
Where there were indicators of
impairment, or where there were
indicators that previously recognised
impairment should be reversed, we
assessed the Group’s impairment
analysis and challenged the cash flow
forecasts used to determine the
recoverable amount of each CGU.
This included assessing any expected
cash outflows where a business centre
will be closed and analysing the change
in circumstances giving rise to an
impairment reversal.
We performed testing over the
impairment charge and reversal of
impairment to validate the accuracy of
the net credit recorded in the income
statement in the year. We recalculated
the impairment charge and impairment
charge reversal for the year and
validated the mathematical accuracy of
management’s calculation. The Group
recognised a net reversal of impairment
charges of £46.8 million and £7.4 million
related to Right of Use assets and
Leasehold Improvements PPE
respectively in the year ended 31
December 2021. As a result of our
audit procedures, we found that the
identification of indicators of
impairment and impairment reversals
by management was supported by
reasonable judgements. We found the
judgements made by management in
relation to future cash flow forecasts to
assess the recoverability of individual
business centres were supported by
reasonable key assumptions and the
calculation of the impairment charge and
impairment charge reversal recognised
in the year were accurately recorded.
Recognition of Deferred Tax Assets
associated with the Group’s
intellectual property in
Switzerland - £69.7 million
(2020: £69.7 million)
Refer to pages 126 to 127 (accounting
policy) and pages 134 to 135 (financial
disclosures)
The key audit matter
The Group has significant deferred tax
assets in respect of the future benefit of
deductible temporary differences and
accumulated tax losses where it is
considered probable that they would be
utilised or recovered in the foreseeable
future through the generation of future
taxable profits by the relevant Group
entities or by offset against deferred tax
liabilities. In addition, a significant
amount of deferred tax assets were not
recognised at the reporting date due to
the uncertainty of the relevant Group
entities being able to generate future
taxable profits against which the tax
losses may be utilised before they
expire.
We identified the recognition of certain
deferred tax assets as a key audit matter
because of the inherent uncertainty
associated with key assumptions made
by management when forecasting future
taxable profits, which determine the
extent to which deferred tax assets are
or are not recognised. In addition, we
considered the significance of the
recognised deferred tax assets in
assessing this key audit matter. The
estimation uncertainty has continued to
be elevated in 2021 due to the ongoing
strategic developments in the business.
We focused our attention in particular
on the key assumptions applied by
management, including revenue growth,
when assessing the recoverability of
deferred tax assets associated with the
Group’s intellectual property in
Switzerland.
114
114
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
How the matter was addressed
in our audit
relating to Swiss Intellectual property
assets are reasonable.
In this area our audit procedures
included using our work on the Group’s
forecasts described in the goodwill key
audit matter above. We obtained and
documented our understanding of
processes related to management’s
assessment of the recoverability of
deferred tax assets and tested the
design and implementation of the
relevant controls therein. In addition we
used our own tax specialists to assist us
in evaluating and challenging the key
assumptions used by the Group and its
taxation advisors in calculating the
deferred tax assets including assessing
the recoverability of the tax losses
against the forecast future taxable
profits, taking into account the Group’s
tax position, the timing of forecast
taxable profits, and our knowledge
and experience of the application of
relevant tax legislation.
We considered the historical accuracy of
forecasts of future taxable profits made
by management by comparing the actual
taxable profits for the current year with
management’s estimates in the forecasts
made in the previous year and assessing
whether there were any indicators of
management bias in the selection of key
assumptions.
We considered the impact of the
ongoing changes in the Group’s strategy
which places greater focus on external
franchising and the impact of this on
management’s assessment of the
recoverability of the assets recognised.
We challenged management’s key
assumptions in relation to the
recoverability of the deferred tax assets
recognised in Switzerland, arising on the
transfer of the Group’s intellectual
property in 2019, by involving our
taxation specialists to evaluate the
recoverability of the deferred tax asset
in relation to the deductible temporary
differences available. We evaluated
whether management’s judgements on
the generation of future taxable profits
in the foreseeable future were aligned
with the Group’s other business
forecasting processes. We assessed the
presentation and disclosure (in
accordance with IAS 1 and IAS 12) in
respect of taxation related balances and
considered whether the Group’s
disclosures reflected the risks inherent
in the accounting for the taxation
balances.
Our application of materiality
and an overview of the scope
of our audit
The materiality for the consolidated
financial statements as a whole was set
at £9 million (2020: £9 million) which is
0.40% (2020: 0.36%) of total revenues.
In 2021, consistent with 2020, we have
used revenue as the benchmark for
materiality. Consistent with 2020, we
determined that adjusted profit before
tax was not an appropriate benchmark in
2021 given that the Group has recorded
a loss for the year. We have determined,
in our professional judgement, that
revenue is the principal benchmark
within the financial statements relevant
to members of the Group in assessing
financial performance.
We agreed with the audit committee to
report corrected and uncorrected
misstatements we identified through our
audit with a value in excess of £0.45
million (2020: £0.45 million). We also
agreed to report other audit
misstatements below that threshold that
we believe warranted reporting on
qualitative grounds.
We applied materiality to assist us
determine what risks were significant
risks and the appropriate audit
procedures to be performed.
The structure of the Group’s finance
function is such that certain transactions
and balances are accounted for by
central Group finance teams, with the
remainder accounted for in the
operating units. We performed
comprehensive audit procedures,
including those in relation to the key
audit matters, on those transactions and
balances accounted for at Group and
operating unit level. In determining
those components in the Group on
which we perform audit procedures, we
considered the relevant size and risk
profile of the components.
In relation to the Group’s operating
units, audits for Group reporting
purposes were performed at thirteen
identified key reporting components,
augmented by risk focused audit
procedures which were performed for
certain other components. These audits
covered 81% (2020: 81%) of total
Group revenue and 95% (2020: 94%)
of Group total assets.
Based on the audit procedures
performed, we found that the key
assumptions used by management in
calculating the future taxable profits of
the Group for the purpose of assessing
the recoverability of deferred tax assets
The Group audit team instructed
component auditors as to the significant
areas to be covered, including the
relevant risks detailed above and the
information to be reported back.
Planning meetings were held with
FINANCIAL STATEMENTS
component auditors in order to assess
the key audit risks, audit strategy and
work to be undertaken. The Group audit
team approved the materiality of each of
the components, which ranged from
£1.5m to £6m, having regard to the
mix of size and risk profile of the
components. Detailed audit instructions
were sent to the auditors of each of
these identified locations. These
instructions covered the significant audit
areas to be covered by these audits
(which included the relevant risks of
material misstatement detailed above)
and set out the information required to
be reported to the Group audit team.
Senior members of the Group audit
team, including the lead engagement
partner, attended each component audit
closing meeting via video conferencing
facilities, at which the results of
component audits were discussed with
divisional and Group management.
At these meetings, the findings reported
to the Group audit team were discussed
in more detail, and any further work
required by the Group audit team was
then performed by the component
auditor. The Group audit team interacted
with the component teams where
appropriate during various stages of the
audit, inspected key working papers and
were responsible for the scope and
direction of the audit process. This,
together with the additional procedures
performed at Group level, gave us
appropriate evidence for our opinion on
the Group financial statements.
We have nothing to report on the other
information in the annual report
The directors are responsible for the
other information presented in the
annual report together with the financial
statements. The other information
comprises the information included in
the Strategic Report and Governance
sections of the Annual Report, as well as
the unaudited appendices (including the
unaudited IFRS 16 proforma statements,
summarised extract of unaudited
Company balance sheet, the post-tax
cash return on net investment and the
five-year summary and the glossary).
The financial statements and our
auditor’s report thereon do not
comprise part of the other information.
Our opinion on the financial statements
does not cover the other information
and, accordingly, we do not express an
audit opinion or, except as explicitly
stated below, any form of assurance
conclusion thereon.
iwgplc.com
iwgplc.com
115
115
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF IWG PLC CONTINUED
A fuller description of our
responsibilities is provided
on the FRC’s website at
www.frc.org.uk/auditorsresponsibilities.
The purpose of our audit work and to
whom we owe our responsibilities
Our report is made solely to the Group’s
members, as a body, in accordance with
Article 113A of the Companies (Jersey)
Law 1991. Our audit work has been
undertaken so that we might state to the
Group’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 Group and the
Group’s members, as a body, for our
audit work, for this report, or for the
opinions we have formed.
Barrie O’Connell
(Senior statutory auditor)
for and on behalf of KPMG
1 Stokes Place,
St. Stephen’s Green,
Dublin 2,
Ireland
8 March 2022
Our responsibility is to read the other
information and, in doing so, consider
whether, based on our financial
statements audit work, the information
therein is materially misstated or
inconsistent with the financial
statements or our audit knowledge.
Based solely on that work we have not
identified material misstatements in the
other information.
Corporate Governance Statement
The Listing Rules require us to review
the directors' statement in relation to
going concern, longer-term viability and
that part of the Corporate Governance
Statement relating to the Group’s
compliance with the provisions of the
UK Corporate Governance Statement
specified for our review. Based on the
work undertaken as part of our audit,
we have concluded that each of the
following elements of the Corporate
Governance Statement is materially
consistent with the financial statements
or our knowledge obtained during
the audit:
– Directors' statement with regards the
appropriateness of adopting the going
concern basis of accounting and any
material uncertainties identified set
out on page 111;
– Directors’ explanation as to its
assessment of the entity’s prospects,
the period this assessment covers and
why the period is appropriate set out
on page 111;
– Directors' statement on the annual
report and financial statements, taken
as a whole on fair, balanced and
understandable and the information
necessary for shareholders to assess
the Group's position and performance,
business model and strategy set out
on page 111;
– Board’s confirmation that it has carried
out a robust assessment of the
emerging and principal risks and the
disclosures in the annual report that
describe the principal risks and the
procedures in place to identify
emerging risks and explain how they
are being managed or mitigated set
out on pages 66 to 75;
– The section of the annual report that
describes the review of effectiveness
of risk management and internal
control systems set out on page 91;
and
– The section describing the work of the
audit committee set out on pages 90
to 93.
We have nothing to report on the other
matters on which we are required to
report by exception
Under Company (Jersey) Law 1991, we
are required to report to you if, in our
opinion:
– adequate accounting records have not
been kept by the parent company, or
– returns adequate for our audit have
not been received from branches not
visited by us; or
– the financial statements are not in
agreement with the accounting
records and returns; or
– we have not received all the
information and explanations we
require for our audit. We have nothing
to report in respect of the above
responsibilities.
Respective responsibilities and
restrictions on use
Responsibilities of directors for the
financial statements
As explained more fully in the directors’
responsibilities statement set out on
page 111, the directors are responsible
for: the preparation of the financial
statements including being satisfied that
they give a true and fair view; such
internal control as they determine is
necessary to enable the preparation of
financial statements that are free from
material misstatement, whether due to
fraud or error; assessing the Group’s
ability to continue as a going concern,
disclosing, as applicable, matters related
to going concern; and using the going
concern basis of accounting unless they
either intend to liquidate the Group or to
cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit
of the financial statements
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from
material misstatement, whether due to
fraud, other irregularities or error, and to
issue an opinion in an auditor’s report.
Reasonable assurance is a high level of
assurance, but is not a guarantee that an
audit conducted in accordance with ISAs
(UK) will always detect a material
misstatement when it exists.
Misstatements can arise from fraud,
other irregularities or error and are
considered material if, individually or in
the aggregate, they could reasonably be
expected to influence the economic
decisions of users taken on the basis
of these financial statements.
116
116
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
CONSOLIDATED INCOME STATEMENT
FINANCIAL STATEMENTS
£m
Revenue
Total cost of sales
Cost of sales
Adjusting items to cost of sales(2)
Reversal of/(loss) on impairment of property, plant, equipment and right-of-use assets(2)
Expected credit losses on trade receivables(2)
Gross profit (centre contribution)
Total selling, general and administration expenses
Selling, general and administration expenses
Adjusting items to selling, general and administration expenses
Share of loss of equity-accounted investees, net of tax
Operating loss
Finance expense
Finance income
Net finance expense
Loss before tax for the year from continuing operations
Income tax expense
Loss after tax for the year from continuing operations
Profit/(loss) after tax for the period from discontinued operations
Loss for the year
Attributable to equity shareholders of the Group
Attributable to non-controlling interests
Loss per ordinary share (EPS):
Attributable to ordinary shareholders
Basic (p)
Diluted (p)
From continuing operations
Basic (p)
Diluted (p)
Notes
3
Year ended
31 Dec 2021
2,227.9
(1,885.8)
(1,870.0)
Year ended
31 Dec 2020
Restated(1)
2,431.9
(2,377.0)
(2,059.9)
(70.0)
54.2
(99.5)
242.6
(327.8)
(294.7)
(33.1)
(2.2)
(87.4)
(198.0)
26.0
(172.0)
(259.4)
(10.3)
(269.7)
59.3
(210.4)
(204.8)
(5.6)
(20.3)
(20.3)
(26.2)
(26.2)
3,5
5
3
10
21
5
7
7
8
9
27
11
11
11
11
(71.1)
(246.0)
(34.8)
20.1
(367.5)
(311.1)
(56.4)
(2.6)
(350.0)
(266.4)
3.1
(263.3)
(613.3)
(32.0)
(645.3)
(1.5)
(646.8)
(646.8)
–
(67.9)
(67.9)
(67.8)
(67.8)
1. The comparative information has been restated to reflect the impact of discontinued operations (note 9).
2. The net reversal of adjusting items of £1.7m (2020: charge of £333.4m) comprises the following items included in the balances referenced (note 10):
A reversal of the impairment of property, plant and equipment and right-of-use assets of £125.2m (2020: charge of £244.8), the adjusting items to costs of
sales of £70.0m (2020: £71.1m) and £53.5m (2020: £17.5m) of the expected credit losses on trade receivables balances reported.
The above consolidated income statement should be read in conjunction with the accompanying notes.
iwgplc.com
iwgplc.com
117
117
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
£m
Loss for the year
Other comprehensive income/(loss) that is or may be reclassified to profit or loss in subsequent periods:
Cash flow hedges – effective portion of changes in fair value
Foreign exchange recycled to profit or loss from discontinued operations
Foreign currency translation (loss)/gain for foreign operations
Items that are or may be reclassified to profit or loss in subsequent periods
Other comprehensive income that will never be reclassified to profit or loss in
subsequent periods:
Re-measurement of defined benefit liability, net of income tax
Items that will never be reclassified to profit or loss in subsequent periods
Other comprehensive (loss)/profit for the period, net of tax
Total comprehensive loss for the year, net of tax
Attributable to shareholders of the Group
Attributable to non-controlling interests
Notes
Year ended
31 Dec 2021
(210.4)
Year ended
31 Dec 2020
(646.8)
0.2
(0.5)
(20.4)
(20.7)
–
–
–
–
1.3
1.3
–
–
(20.7)
1.3
(231.1)
(225.5)
(5.6)
(645.5)
(645.5)
–
9
26
27
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
118
118
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FINANCIAL STATEMENTS
Issued
share
capital
9.2
Share
premium
Treasury
shares
– (116.9)
Foreign
currency
translation
reserve
34.9
Hedging
reserve
(0.2)
Other
reserves(1)
25.8
Retained
earnings
927.7
Total
equity
attributable to
equity
shareholders
880.5
Non-
controlling
interests
Total
equity
– 880.5
Balance at 31 December 2020
10.5
312.6 (154.1)
36.2
(0.2)
25.8
283.0
Balance at 1 January 2020
Total comprehensive income/(loss)
for the year:
Loss for the year
Other comprehensive income:
Foreign currency translation differences
for foreign operations
Other comprehensive income, net of tax
Total comprehensive income/(loss)
for the year
Transactions with owners of the Company
Share-based payments
Ordinary dividend paid
Proceeds from issue of ordinary shares,
net of costs
–
–
–
–
–
–
–
–
–
–
–
–
1.3
312.6
–
–
–
–
–
–
–
Purchase of shares
Proceeds from exercise of share awards
–
–
–
–
(43.7)
6.5
Total transactions with owners of the Company
1.3
312.6
(37.2)
Total comprehensive income/(loss)
for the year:
Loss for the year
Other comprehensive income/(loss):
Cash flow hedges – effective portion of
changes in fair value
Foreign exchange recycled to profit or
loss from discontinued operations
Foreign currency translation differences
for foreign operations
Other comprehensive income/(loss),
net of tax
Total comprehensive income/(loss)
for the year
Transactions with owners of the Company
Share-based payments
Ordinary dividend paid
Proceeds from issue of ordinary shares,
net of costs
Purchase of shares
Proceeds from exercise of share awards
TToottaall ttrraannssaaccttiioonnss wwiitthh oowwnneerrss ooff tthhee CCoommppaannyy
Acquisition of subsidiary with non-controlling
interests
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2.8
2.8
–
–
1.3
1.3
1.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(646.8)
(646.8)
– (646.8)
–
–
1.3
1.3
–
–
1.3
1.3
(646.8)
(645.5)
– (645.5)
6.4
–
–
–
(4.3)
2.1
6.4
–
313.9
(43.7)
2.2
278.8
513.8
–
–
–
–
–
6.4
–
313.9
(43.7)
2.2
– 278.8
– 513.8
–
–
(0.5)
(20.4)
–
0.2
–
–
(20.9)
0.2
(20.9)
0.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(204.8)
(204.8)
(5.6) (210.4)
–
–
–
–
0.2
(0.5)
(20.4)
(20.7)
–
–
–
–
0.2
(0.5)
(20.4)
(20.7)
(204.8)
(225.5)
(5.6) (231.1)
5.8
5.8
–
–
–
(2.0)
3.8
–
–
–
–
0.8
6.6
–
–
–
–
–
–
–
5.8
–
–
–
0.8
6.6
15.2
15.2
25.8
82.0
294.9
9.6 304.5
Balance at 31 December 2021
10.5
312.6 (151.3)
15.3
1. Other reserves include £10.5m for the restatement of the assets and liabilities of the UK associate, from historic to fair value at the time of the acquisition of
the outstanding 58% interest on 19 April 2006, £37.9m arising from the Scheme of Arrangement undertaken on 14 October 2008, £6.5m relating to merger
reserves and £0.1m to the redemption of preference shares, partly offset by £29.2m arising from the Scheme of Arrangement undertaken in 2003.
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
iwgplc.com
iwgplc.com
119
119
CONSOLIDATED BALANCE SHEET
£m
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Right-of-use assets
Other property, plant and equipment
Deferred tax assets
Other long-term receivables
Investments in joint ventures
Other investments
Total non-current assets
Current assets
Inventory
Trade and other receivables
Corporation tax receivable
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables (incl. customer deposits)
Deferred revenue
Corporation tax payable
Bank and other loans
Lease liabilities
Provisions
Total current liabilities
Non-current liabilities
Other long-term payables
Deferred tax liability
Bank and other loans
Lease liabilities
Derivative financial liabilities
Provisions
Provision for deficit on joint ventures
Retirement benefit obligations
Total non-current liabilities
Total liabilities
Total equity
Issued share capital
Issued share premium
Treasury shares
Foreign currency translation reserve
Hedging reserve
Other reserves
Retained earnings
Total shareholders' equity
Non-controlling interests
Total equity
Total equity and liabilities
Notes
As at
31 Dec 2021
As at
31 Dec 2020
13
14
15
15
15
8
16
21
17
8
23
18
8
19,23
23
20
8
19,23
23
24
20
21
26
22
22
22
27
703.8
78.0
6,376.5
5,254.1
1,122.4
326.6
49.7
44.9
0.3
7,579.8
1.2
734.2
18.5
77.8
831.7
8,411.5
926.6
346.4
35.9
21.5
932.5
8.2
2,271.1
5.6
140.6
453.3
5,188.7
26.9
12.4
6.5
1.9
5,835.9
8,107.0
10.5
312.6
(151.3)
15.3
–
25.8
82.0
294.9
9.6
304.5
8,411.5
695.5
53.3
6,855.9
5,646.9
1,209.0
188.2
55.0
11.3
–
7,859.2
1.3
1,003.7
29.1
71.0
1,105.1
8,964.3
1,007.6
328.9
40.0
21.9
1,019.6
17.5
2,435.5
5.9
0.2
400.2
5,538.9
49.6
13.5
4.6
2.1
6,015.0
8,450.5
10.5
312.6
(154.1)
36.2
(0.2)
25.8
283.0
513.8
–
513.8
8,964.3
The financial statements on pages 117 to 162 were approved by the Board on 8 March 2022
Mark Dixon
Chief Executive Officer
Glyn Hughes
Chief Financial Officer
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
120
120
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
CONSOLIDATED STATEMENT OF CASH FLOWS
FINANCIAL STATEMENTS
£m
Operating activities
Loss for the year from continuing operations
Adjustments for:
Profit/(loss) from discontinued operations
Net finance expense(2)
Share of loss on equity-accounted investees, net of income tax
Depreciation charge
Right-of-use assets
Other property, plant and equipment
Loss on impairment of goodwill
Loss on disposal of property, plant and equipment
Profit on disposal of right-of-use assets and related lease liabilities
Profit on sales of current assets
Loss on disposal of intangible assets
(Reversal)/loss on impairment of property, plant and equipment
(Reversal)/loss on impairment of right-of-use assets
Amortisation of intangible assets
Negative goodwill arising on an acquisition
Loss on disposal of other investments
Tax expense
Expected credit losses on trade receivables
(Decrease)/increase in provisions
Share-based payments
Other non-cash movements
Operating cash flows before movements in working capital
Proceeds from partner contributions (reimbursement of costs)(4)
Increase in trade and other receivables
(Decrease)/increase in trade and other payables
Cash generated from operations
Interest paid and similar charges on bank loans and corporate borrowings
Interest paid on lease liabilities
Tax paid
Net cash inflows from operating activities
Investing activities
Purchase of property, plant and equipment
Payment of initial direct costs related to right-of-use assets
Purchase of subsidiary undertakings, net of cash acquired
Purchase of intangible assets
Purchase of other investments
Proceeds from/(purchase of) other current receivables(3)
Proceeds on the sale of discontinued operations, net of cash disposed of
Proceeds on sale of property, plant and equipment
Interest received
Net cash inflows/(outflows) from investing activities
Financing activities
Proceeds from issue of loans
Repayment of loans
Proceeds from issue of convertible bonds (net of transaction costs)
Payment of lease liabilities
Proceeds from partner contributions (lease incentives)(4)
Proceeds from issue of ordinary shares, net of costs
Purchase of treasury shares
Proceeds from exercise of share awards
Payment of ordinary dividend
Net cash outflows from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of the year
Notes
Year ended
31 Dec 2021
Year ended
31 Dec 2020
Restated(1)
(269.7)
(645.3)
9
7
21
15
15
15
13
5
5, 23
5
5, 15
5, 15
5, 14
27
21
8
5
20
15
23
15
27
14
17
9,21
7
19
23
15
22
22
12
23
4.0
172.0
2.2
1,095.9
892.9
203.0
–
64.2
(41.5)
(1.4)
0.3
(7.4)
(46.8)
13.5
(1.7)
–
10.3
99.5
(14.5)
5.8
(12.3)
1,072.4
19.7
(127.3)
(38.5)
926.3
(19.0)
(167.1)
(5.4)
734.8
(220.5)
(1.3)
10.6
(33.7)
(0.3)
283.7
18.9
1.0
3.5
61.9
983.1
(946.7)
–
(864.8)
35.9
–
–
0.8
–
(791.7)
5.0
71.0
1.8
77.8
(0.9)
263.3
2.6
1,186.3
946.0
240.3
4.9
93.1
(25.7)
–
0.1
82.1
163.9
8.7
–
1.6
32.0
34.8
15.2
6.4
(4.6)
1,218.5
38.4
(76.4)
77.3
1,257.8
(17.6)
(249.4)
(21.9)
968.9
(257.4)
(0.8)
(26.8)
(16.5)
–
(276.2)
3.3
8.2
0.6
(565.6)
876.5
(1,109.8)
343.2
(897.3)
111.0
313.9
(43.7)
2.2
–
(404.0)
(0.7)
66.6
5.1
71.0
1. The comparative information has been restated to reflect the impact of discontinued operations (note 9).
2. The net finance expense includes mark-to-market adjustments of £22.5m (£2.4m).
3. Included in other receivables at 31 December 2020 was mezzanine and senior debt recognised at amortised cost of £276.2m. This receivable balance was
fully repaid to the Group in February 2021, together with the reimbursement of associated costs, resulting in an additional £1.4m gain on settlement.
4. The total proceeds from partner contributions relating to the reimbursement of costs and lease incentives of £55.6m are allocated by estate in the post-tax
cash return on net investment, on page 171.
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
iwgplc.com
iwgplc.com
121
121
NOTES TO THE ACCOUNTS CONTINUED
1. Authorisation of financial statements
IWG plc is a public limited company incorporated in Jersey and registered and domiciled in Switzerland. The Group and Company
financial statements for the year ended 31 December 2021 were authorised for issue by the Board of Directors on 8 March 2022
and the balance sheets were signed on the Board’s behalf by Mark Dixon and Glyn Hughes. The Company’s ordinary shares are
traded on the London Stock Exchange. The audited Group accounts are included from pages 117 to 162.
IWG plc owns, and is a franchise operator of, a network of business centres which are utilised by a variety of business customers.
Information on the Group’s structure is provided in note 31, and information on other related party relationships of the Group is
provided in note 30.
The Group financial statements have been prepared and approved by the Directors in accordance with Companies (Jersey) Law
1991 and International Financial Reporting Standards as adopted by the European Union (‘Adopted IFRSs’).
The Company prepares its parent company annual accounts in accordance with accounting policies based on the Swiss Code of
Obligations; extracts from these unaudited accounts are presented on page 163.
2. Accounting policies
Basis of preparation
The Group financial statements consolidate those of the parent company and its subsidiaries (together referred to as the ‘Group’)
and equity account the Group’s interest in joint ventures. The extract from the parent company annual accounts presents
information about the Company as a separate entity and not about its Group.
The accounting policies set out below have been applied consistently to all periods presented in these Group financial statements.
Amendments to adopted IFRSs issued by the International Accounting Standards Board (IASB) and the International Financial
Reporting Interpretations Committee (IFRIC) with an effective date from 1 January 2021 did not have a material effect on the
Group financial statements, unless otherwise indicated.
The following standards, interpretations and amendments to standards were adopted by the Group for periods commencing on or
after 1 January 2021, with no material impact on the Group:
Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
Judgements made by the Directors in the application of these accounting policies that have significant effect on the consolidated
financial statements and estimates with a significant risk of material adjustment in the next year are discussed in note 32.
The consolidated financial statements are prepared on a historical cost basis, with the exception of certain financial assets and
liabilities that are measured at fair value.
These Group consolidated financial statements are presented in pounds sterling (£), which is IWG plc’s functional currency, and all
values are in million pounds, rounded to one decimal place, except where indicated otherwise.
The attributable results of those companies acquired or disposed of during the year are included for the periods of ownership.
Going concern
The Group reported a loss after tax of £269.7m (2020: £645.3m) from continuing operations for the year, while net cash of
£734.8m (2020: £968.9m) was generated from operations during the year. Although the Group’s balance sheet at 31 December
2021 reports a net current liability position of £1,439.4m (2020: £1,330.4m) which could give rise to a potential liquidity risk, the
Directors concluded after a comprehensive review that no liquidity risk exists as:
1. The Group had funding available under the Group’s £950.0m revolving credit facility. £530.1m (2020: £731.3m) was available and
undrawn at 31 December 2021. This facility was committed until March 2025 with an option to extend until 2026 (note 24); and
2. The Group maintained a 12-month rolling forecast and a three-year strategic outlook. It also monitored the covenants in its
facilities to manage the risk of potential breach. The Group expects to remain within covenants throughout the forecast period.
In reaching this conclusion, the Directors have assessed:
– the potential cash generation of the Group against a range of illustrative scenarios (including a severe but plausible outcome); and
– mitigating actions to reduce operating costs and optimise cash flows during any ongoing global restrictions.
The Directors consider that the Group is well placed to successfully manage the actual and potential risks faced by the
organisation including risks related to COVID-19.
On the basis of their assessment, the Directors have a reasonable expectation that the Group has adequate resources to
continue in operational existence for a period of at least 12 months from the date of approval of these Group consolidated
financial statements and consider it appropriate to continue to adopt the going concern basis in preparing the financial
statements of the Group.
Subsequent events
In February 2022, the £950.0m revolving credit facility was reduced to £750.0m, with an unchanged maturity date in 2025. The
facility is subject to financial covenants which include EBITDA, minimum liquidity, interest cover and net debt to EBITDA ratio.
The Directors performed an updated going concern assessment to reflect the impact of the amended revolving credit facility and
concluded that the facility remains sufficient for the Group to retain sufficient cash reserves to continue as a going concern, for a
period of at least 12 months from the date of approval of these group consolidated financial statements.
In addition, a £330.0m bridge facility for The Instant Group acquisition has been agreed. The bridge facility has a maturity in
September 2023. This facility is secured and is subject to interest cover and net debt to EBITDA covenants.
122
122
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
FINANCIAL STATEMENTS
IFRS not yet effective
The following new or amended standards and interpretations that are mandatory for 2022 annual periods (and future years) are
not expected to have a material impact on the Group financial statements, unless otherwise stated:
Onerous contracts – Cost of Fulfilling a Contract (Amendments to IAS 37)
Annual Improvements to IFRS Standards 2018-2020
Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)
Reference to the Conceptual Framework – Amendments to IFRS 3
Classification of Liabilities as Current or Non-Current (Amendment to IAS 1)
IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts
Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: Definition
of Accounting Estimates
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
1 January 2022
1 January 2022
1 January 2022
1 January 2022
1 January 2023
1 January 2023
1 January 2023
1 January 2023
There are no other IFRS standards or interpretations that are not yet effective that would be expected to have a material impact on
the Group.
The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.
Basis of consolidation
Subsidiaries are entities controlled by the Group. Control exists when the Group controls an entity, when it is exposed to, or has
the rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over
the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control
commences. The results are consolidated until the date control ceases or the subsidiary qualifies as a disposal group, at which
point the assets and liabilities are carried at the lower of fair value less costs to sell and carrying value.
Joint ventures are those entities over whose activities the Group has joint control, whereby the Group has rights to the net assets
of the arrangement, rather than rights to its assets and obligations for its liabilities. The consolidated financial statements include
the Group’s share of the total recognised gains and losses of joint ventures on an equity-accounted basis, from the date that joint
control commences until the date that joint control ceases or the joint venture qualifies as a disposal group, at which point the
investment is carried at the lower of fair value less costs to sell and carrying value. When the Group’s share of losses exceeds its
interest in a joint venture, the Group’s carrying amount is reduced to nil and recognition of further losses is discontinued except to
the extent that the Group has incurred legal or constructive obligations or made payments on behalf of a joint venture.
Leases
The nature of the Group’s leases relates to the rental of commercial office real estate premises globally.
1. Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease. Right-of-use assets are measured at cost, less
any accumulated depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities. The cost of right-
of-use assets includes the amount of lease liabilities recognised and initial direct costs incurred. The recognised right-of-use
assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term.
Right-of-use assets are subject to impairment review on an annual basis.
2. Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments
to be made over the lease term. The lease payments include fixed payments and variable lease payments that depend on an
index or a rate. The variable lease payments that do not depend on an index or a rate are recognised as a rent expense in the
period in which they are incurred.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement
date as the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying
amount of lease liabilities is re-measured if there is a modification, a change in the lease term or a change in the fixed lease
payments.
3. Lease modifications
The carrying amount of lease liabilities is re-measured where there is a modification, a change in the lease term, a change in the
lease payments (e.g. changes to future payments resulting from a change in an index or rate used to determine such lease
payments) or a change in the assessment of an option to purchase the underlying asset. The impact of the modification is
recognised against the carrying amount of the right-of-use assets or is recorded in profit or loss if the carrying amount of the
right-of-use assets has been reduced to zero.
iwgplc.com
iwgplc.com
123
123
NOTES TO THE ACCOUNTS CONTINUED
2. Accounting policies (continued)
4. Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to short-term leases (i.e. those leases that have a lease term of 12
months or less from commencement). It also applies the lease of low-value assets recognition exemption under IFRS 16 to
leases that are considered of low value. Lease payments on short-term leases and leases of low-value assets are recognised as a
rent expense on a straight-line basis over the lease term.
5. Lessor accounting
There are no lessor arrangements in the Group as a result of the contractual arrangements in place with customers which convey
the right to use an identified asset.
6. Partner contributions
Partner contributions are contributions from our business partners (property owners and landlords) towards the initial costs of
opening a business centre, including the fit-out of the property. Partner contributions representing a reimbursement to the
lessee (IWG) are accounted for as agency arrangements, and form part of the lessor’s (landlord’s) assets.
Partner contributions for lease incentives are received at or before the lease commencement date for commercial reasons and,
where the Group retains ownership of the fit-out assets, are accounted for as a lease incentive and recognised by reducing the
right-of-use asset. Any other partner contributions for lease incentives received subsequent to the commencement of the lease
are accounted for as part of the associated lease modification.
7. Lease term
The lease term represents the period from lease inception up to either:
– The earliest point at which the lease could be broken, where break clauses exist;
– The point at which the lease could be extended, but no further, where extension options exist; or
– To the end of the contractual lease term in all other cases.
8. Lease break penalties
Lease break penalties, where the lease term has been determined as the period from inception up to a break clause and when
there are break payments or penalties, have been appropriately included in the measurement of the lease liability.
Dilapidations
A provision is recognised for those potential dilapidation payments when it is probable that an outflow will occur and can be
reliably estimated.
Impairment of non-financial assets
For goodwill, assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable
amount was estimated at 30 September 2021. At each reporting date, the Group reviews the carrying amount of these assets to
determine whether there is an indicator of impairment. If any indicator is identified, then the assets’ recoverable amount is re-
evaluated.
The carrying amount of the Group’s other non-financial assets (other than deferred tax assets and inventory), including right-of-use
assets, is reviewed at the reporting date to determine whether there is an indicator of impairment. If any such indication exists, the
assets’ recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit (CGU) exceeds its
recoverable amount. Impairment losses are recognised in the income statement.
A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from
other assets or groups of assets. The Group has identified individual business centres as the CGU.
The potential impairment of immovable property, plant and equipment and right-of-use assets at the centre (CGU) level are
evaluated where there are indicators of impairment.
Centres (CGUs) are grouped by country of operation for the purposes of carrying out impairment reviews of goodwill as this is the
lowest level at which it can be assessed.
Individual fittings and equipment in centres or elsewhere in the business that become obsolete or are damaged are assessed and
impaired where appropriate.
The recoverable amount of relevant assets is the greater of their fair value less costs to sell and value in use. In assessing value in
use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely
independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.
Goodwill
All business combinations are accounted for using the purchase method. Goodwill is initially measured at fair value, being the
excess of the aggregate of the fair value of the consideration transferred and the amount recognised for non-controlling interests,
and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets
acquired is in excess of the aggregate consideration transferred, the Group reassesses whether it has correctly identified all of the
assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the
acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate
consideration transferred (negative goodwill), then the gain is recognised in profit or loss.
124
124
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
FINANCIAL STATEMENTS
Positive goodwill is stated at cost less any provision for impairment in value. An impairment test is carried out annually and, in addition,
whenever indicators exist that the carrying amount may not be recoverable. Negative goodwill is recognised directly in profit or loss.
Intangible assets
Intangible assets acquired separately from the business are capitalised at cost. Intangible assets acquired as part of an acquisition of a
business are capitalised separately from goodwill if their fair value can be identified and measured reliably on initial recognition.
Intangible assets are amortised on a straight-line basis over the estimated useful life of the assets as follows:
Brand – Regus brand
Brand – Other acquired brands
Computer software
Customer lists
Indefinite life
20 years
Up to 5 years
2 years
Amortisation of intangible assets is expensed through administration expenses in the income statement.
Acquisitions of non-controlling interests
Acquisitions of non-controlling interests are accounted for as transactions with owners in their capacity as owners and therefore
no goodwill is recognised as a result. Adjustments to non-controlling interests arising from transactions that do not involve the loss
of control are based on a proportionate amount of the net assets of the subsidiary.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and any impairment in value. Asset lives and
recoverable amounts are reviewed on an annual basis. Depreciation is calculated on a straight-line basis over the estimated useful
life of the assets as follows:
Right-of-use assets(1)
Buildings
Leasehold improvements(1)
Furniture and equipment
Computer hardware
Over the lease term
50 years
10 years
5 – 10 years
3 – 5 years
1. 10 years represents the average useful economic life across the lease portfolio.
Revenue
The Group’s primary activity and only business segment is the provision of global workspace solutions.
1. Workstations
The Group recognises workstation revenue when it transfers services to a customer. It is measured based on the consideration
specified in a contract with a customer. Services transfer to the customer equally over the contract period based on the time
elapsed. Where discounted periods are granted to customers, service income is spread on a straight-line basis over the duration
of the customer contract. Invoices are generally issued in advance, on a monthly basis with normal credit terms of 15 days, and
initially recognised as deferred revenue.
Workstation revenue is recognised over time as the services are provided. Amounts invoiced in advance are accounted for as
deferred revenue (contract liability) and recognised as revenue upon provision of the service.
2. Management and franchise fees
Fees received for the provision of initial and subsequent services are recognised over time as the services are rendered. Fees
charged for the use of continuing rights granted by the agreement are measured based on the contractually agreed percentage
of revenue, generated by the operation, except where a different basis is determined in the contractual arrangements. Fees
charged for other services provided, during the period of the agreement, are recognised as revenue as the services provided or
the rights used. Invoices are generally issued on a monthly basis with normal credit terms of 30 days.
3. Customer service income
Service income (including the provision of meeting rooms) is recognised over time as the services are delivered or at a point in
time depending on contractual obligations. Invoices are generally issued when the service is provided and subject to immediate
settlement. In circumstances where the Group acts as an agent for the sale and purchase of goods to customers, only the
commission fee earned is recognised as revenue.
4. Membership card income
Revenue from the sale of membership cards is deferred and recognised over time within the period that the benefits of the
membership card are expected to be provided.
5. Customer deposits
Deposits received from customers against non-performance of the contract are held on the balance sheet as a current liability
until they are either returned to the customer at the end of their relationship with the Group, or released to the income
statement.
The Group has concluded that it is the principal in its revenue arrangements, except where noted above.
iwgplc.com
iwgplc.com
125
125
NOTES TO THE ACCOUNTS CONTINUED
2. Accounting policies (continued)
Adjusting items
Significant infrequent transactions not indicative of the underlying performance of the consolidated Group are reported separately
as non-recurring/adjusting items.
Adjusting items are separately disclosed by the Group to provide readers with helpful, additional information on the performance
of the business across periods. Items arising specifically from the impact of the COVID-19 pandemic have been deemed to meet
the definition of adjusting items. Each of these items are considered to be significant in nature and/or size and are also consistent
with items treated as adjusting in prior periods in which significant non-recurring transactions occurred. The exclusion of these
items is consistent with how the business performance is planned by, and reported to, the Board. The profit before tax and
adjusting items measure is not a recognised profit measure under IFRS and may not be directly comparable with adjusted profit
measures used by other companies.
The classification of adjusting items requires significant management judgement after considering the nature and intentions of a
transaction. Adjusting items recognised are based on the actual costs incurred and/or calculated on a basis consistent with the key
judgements and estimates disclosed in note 32. The classification of adjusting items requires management judgement after
considering the nature and intentions of a transaction. Where necessary, this judgement applied is based on a formal
methodology, including the comparison of current centre performance against pre-COVID-19 performance, to determine whether
or not some, or all, of the associated costs are arising in the ordinary course of business.
Employee benefits
The majority of the Group’s pension plans are of the defined contribution type. For these plans the Group’s contribution and other
paid and unpaid benefits earned by the employees are charged to the income statement as incurred.
The cost of providing benefits under the defined benefit plans is determined using the projected unit credit method.
Re-measurements, comprising actuarial gains and losses, the effect of the asset ceiling and the return on plan assets, excluding net
interest, are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through other
comprehensive income in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.
Service costs are recognised in profit or loss, and include current and past service costs as well as gains and losses on curtailments.
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Group recognises the
following changes in the net defined benefit obligation under ‘cost of sales’ and ‘selling, general and administration expenses’ in
the consolidated income statement: service costs comprising current service costs; past service costs; and gains and losses on
curtailments and non-routine settlements.
Settlements of defined benefit schemes are recognised in the period in which the settlement occurs.
Grants that compensate the Group for expenses incurred are recognised in profit or loss on a systematic basis in the periods in
which the expenses are recognised.
Share-based payments
The share awards programme entitles certain directors and employees to acquire shares of the ultimate parent company (IWG plc);
these awards are granted by the ultimate parent company (IWG plc) and are equity-settled.
The fair value of options and awards granted under the Group’s share-based payment plans outlined in note 25 is recognised as an
employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period
during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured
using the Black-Scholes valuation model or the Monte Carlo method, taking into account the terms and conditions upon which the
options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest in
respect of non-market conditions except where forfeiture is due to the expiry of the option.
Taxation
Tax on the profit for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent
that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the
balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. Deferred tax assets and liabilities are not subject to discounting. The
following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets and
liabilities that affect neither accounting nor taxable profit other than in a business combination; and differences relating to
investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax
provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax
rates enacted or substantively enacted at the reporting date.
A deferred tax asset is recognised for unused tax losses only to the extent that it is probable that future taxable profits will be
available against which the asset can be utilised.
126
126
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
FINANCIAL STATEMENTS
The carrying amount of a deferred tax asset or liability may change for reasons other than a change in the temporary difference
itself. Such changes might arise as a result of a change in tax rates or laws, a reassessment of the recoverability of a deferred tax
asset or a change in the expected manner of recovery of an asset or the expected manner of a settlement of a liability. The impact
of these changes is recognised in the income statement or in other comprehensive income depending on where the original
deferred tax balance was recognised.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current
tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Upon adoption of IFRIC Interpretation 23, the Group considered whether it has any uncertain tax positions, particularly those
relating to transfer pricing. The Company’s and the subsidiaries’ tax filings in different jurisdictions include deductions related to
transfer pricing and the taxation authorities may challenge those tax treatments. The Group determined, based on its tax
compliance and transfer pricing studies, that in most jurisdictions it is probable that its tax treatments (including those for the
subsidiaries) will be accepted by the taxation authorities. The Group has, where considered appropriate, provided for the potential
impact of uncertain tax positions where the likelihood of tax authority adjustment is considered to be more likely than not. The
adoption of the interpretation did not have an impact on the consolidated financial statements of the Group.
Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past
event that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Restructuring provisions are made for direct expenditures of a business reorganisation where the plans are sufficiently detailed
and well-advanced and where the appropriate communication to those affected has been undertaken at the reporting date.
Provision is made for closure costs to the extent that the unavoidable costs of meeting the obligations exceed the economic
benefits expected to be delivered.
Equity
Equity instruments issued by the Group are recorded at the value of proceeds received, net of direct issue costs.
When shares recognised as equity are repurchased, the amount of the consideration paid, which includes directly attributable
costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares are classified as treasury shares and are
presented in the treasury share reserve. When treasury shares are sold or re-issued subsequently, the amount received is
recognised as an increase in equity and the resulting surplus or deficit on the transaction is presented within retained earnings.
Inventory
Inventories relate to consumable items which are measured at the lower of cost or net realisable value. The cost of inventories is
based on the first-in, first-out principle.
Net finance expense
Interest charges and income are accounted for in the income statement on an accrual basis. Financing transaction costs that relate
to financial liabilities are charged to interest expense using the effective interest rate method and are recognised within the
carrying value of the related financial liability on the balance sheet. Fees paid for the arrangement of credit facilities are
recognised as an asset and recognised through the finance expense over the term of the facility.
Where assets or liabilities on the Group balance sheet are carried at net present value, the increase in the amount due to
unwinding the discount is recognised as a finance expense or finance income as appropriate.
Costs arising on bank guarantees and letters of credit and foreign exchange gains or losses are included in other finance costs
(note 7).
Interest-bearing borrowings and other financial liabilities
Financial liabilities, including interest-bearing borrowings, are recognised initially at fair value less attributable transaction costs.
Subsequent to initial recognition, financial liabilities are stated at amortised cost with any difference between cost and
redemption value being recognised in the income statement over the period of the borrowings on an effective interest rate
method.
The Group derecognises financial liabilities when the Group’s obligations are discharged, cancelled or expired.
Financial liabilities are classified as financial liabilities at fair value through profit or loss where the liability is either held for
trading or is designated as held at fair value through profit or loss on initial recognition. Financial liabilities at fair value through
profit or loss are stated at fair value with any resultant gain or loss recognised in the income statement.
Compound financial instruments issued by the Group comprise convertible bonds denominated in pounds sterling that can be
converted to ordinary shares at the option of the holder.
The debt component of compound financial instruments is initially recognised at the fair value of a similar liability that does not
have an equity conversion option. The conversion option represents a derivative financial liability and is initially recognised as the
difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component.
Any directly attributable transaction costs are allocated to the debt host.
Subsequent to initial recognition, the debt component of a compound financial instrument is measured at amortised cost using the
effective interest rate method. The derivative component of a compound financial instrument is re-measured at fair value through
profit or loss. Interest related to the debt is recognised as a finance expense in profit or loss.
iwgplc.com
iwgplc.com
127
127
NOTES TO THE ACCOUNTS CONTINUED
2. Accounting policies (continued)
Derivative financial instruments
The Group’s policy on the use of derivative financial instruments can be found in note 24. Derivative financial instruments
are measured initially at fair value and changes in the fair value are recognised through profit or loss unless the derivative
financial instrument has been designated as a cash flow hedge whereby the effective portion of changes in the fair value
are deferred in equity.
Financial assets
Financial assets are classified and subsequently measured at amortised cost, fair value through the profit or loss, or fair value
through other comprehensive income (OCI). The classification depends on the nature and purpose of the financial assets and is
determined on initial recognition.
Financial assets (including trade and other receivables) are measured at amortised cost if both of the following conditions are met:
– The financial asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and
– Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding.
The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life
of the financial instruments to the gross carrying amount of the financial assets.
Financial assets at fair value through profit or loss are measured at fair value and changes therein, including any interest or
dividend income, are recognised in profit or loss.
Financial assets (including trade and other receivables) are measured at fair value through OCI if both of the following conditions
are met:
– The financial asset is held within a business model whose objective is achieved by both collecting cash flows and selling
financial assets; and
– Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding.
IFRS 9 requires the Group to record expected credit losses on all of its financial assets held at amortised cost, either on a 12-
month or lifetime basis. The Group applies the simplified approach to trade receivables and recognises expected credit losses
based on the lifetime expected losses. Provisions for receivables are established based on both expected credit losses and
information available that the Group will not be able to collect all amounts due according to the original terms of the receivables.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and are subject to an insignificant risk of change in value.
Non-controlling interests
Non-controlling interests are measured initially at their proportionate share of the acquiree's identifiable net assets at the date of
acquisitions.
Discontinued operations
A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be clearly
distinguished from the rest of the Group and which:
– represents a separate major line of business or geographic area of operations;
– is part of a single co-ordinated plan to dispose of a separate major line of business or geographic area of operations; or
– is a subsidiary acquired exclusively with a view to resale.
Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified
as held-for-sale. When an operation is classified as a discontinued operation, the comparative statement of profit or loss and OCI is
re-presented as if the operation had been discontinued from the start of the comparative year.
Foreign currency transactions and foreign operations
Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies are translated using the closing rate of exchange at the balance sheet date and
the gains or losses on translation are taken to the income statement. Non-monetary assets and liabilities that are measured in
terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. The results and
cash flows of foreign operations are translated using the average rate for the period. Assets and liabilities, including goodwill and
fair value adjustments, of foreign operations are translated using the closing rate, with all exchange differences arising on
consolidation being recognised in other comprehensive income, and presented in the foreign currency translation reserve in
equity. Exchange differences are reclassified to the income statement on disposal.
Foreign currency translation rates
US dollar
Euro
128
128
At 31 December
Annual average
2021
1.35
1.19
2020
1.37
1.11
2021
1.38
1.16
2020
1.29
1.13
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
FINANCIAL STATEMENTS
3. Segmental analysis
An operating segment is a component of the Group that engages in business activities from which it may earn revenue and incur
expenses. An operating segment’s results are reviewed regularly by the chief operating decision-maker (the Board of Directors of
the Group) on a pre-IFRS 16 basis to make decisions about resources to be allocated to the segment and assess its performance,
and for which distinct financial information is available. The segmental information is presented on the same basis on which the
chief operating decision-maker received reporting during the year. Segmental assets and liabilities continue to be presented in
accordance with IFRS.
The business is run on a worldwide basis but managed through four principal geographical segments (the Group’s operating
segments): the Americas; EMEA (Europe, Middle East and Africa); Asia Pacific; and the United Kingdom. These geographical
segments exclude the Group’s non-trading, holding and corporate management companies, which are included in the “Other”
segment. The results of business centres in each of these regions form the basis for reporting geographical results to the chief
operating decision-maker. All reportable segments are involved in the provision of global workplace solutions.
The Group’s reportable segments operate in different markets and are managed separately because of the different economic
characteristics that exist in each of those markets. Each reportable segment has its own distinct senior management team
responsible for the performance of the segment.
Americas
2021
EMEA
2020
2021
£m
£m
£m
2020
Restated(5)
£m
Asia Pacific
2021
2020
Restated(5)
£m
£m
United Kingdom
Other
Total
2021
2020
2021
2020
2021
£m
£m
£m
£m
£m
2020
Restated(5)
£m
923.6 1,066.5
866.1
994.3
40.2
4.8
12.5
11.0
–
61.2
707.1
624.6
45.8
21.9
14.8
715.1
642.2
20.1
–
52.8
237.1
255.9
214.5
223.9
10.5
3.4
8.7
4.5
–
27.5
354.2
316.9
23.9
1.6
11.8
388.8
344.1
8.6
–
36.1
5.9
5.9
–
–
–
5.6 2,227.9 2,431.9
5.6 2,028.0 2,210.1
–
–
–
120.4
44.2
31.7
47.8
–
177.6
41.1
(101.7)
40.8
23.0
6.9
(17.7)
(5.3)
(80.0)
(2.2)
2.7
81.3
(173.7)
–
–
(1.2)
(0.1)
(0.1)
(0.2)
(0.9)
(2.3)
–
–
(2.2)
(2.6)
(46.6)
(184.6)
(28.7)
(60.4)
(15.3)
(47.0)
(28.2)
(116.7)
(129.2) (146.8)
(248.0)
(555.5)
(31.1)
(13.9)
26.0
3.1
(253.1)
(566.3)
146.7
161.4
65.8
60.9
26.8
27.8
44.8
41.2
17.9
10.6
302.0
301.9
–
–
–
–
–
–
–
–
–
–
–
–
3,364.2 3,460.0 2,480.4 2,542.0
532.1
676.5 1,456.1 1,925.4
578.7 360.4 8,411.5 8,964.3
(3,235.3) (3,334.6) (2,346.0) (2,398.3)
(540.0) (685.3) (1,326.7) (1,562.3)
(659.0) (470.0) (8,107.0) (8,450.5)
128.9
52.8
125.4
288.1
134.4
149.3
143.7
300.8
(7.9)
48.4
(8.8)
129.4
77.2
23.1
363.1
114.6
(80.3) (109.6)
79.6
15.9
304.5
353.2
513.8
796.6
Continuing operations
Revenue from external
customers(1)
Mature(2)
2020 Expansions(2)
2021 Expansions(2)
Closures(2)
Gross profit/(loss)
(centre contribution)
Share of loss of
equity-accounted
investees
Operating loss
Finance expense
Finance income
Loss before tax for
the year
Depreciation and
amortisation
Impairment of assets
Assets(3)
Liabilities(3)
Net assets/(liabilities)
Non-current asset
additions(4)
1. Excludes revenue from discontinued operations (note 9).
2. Revenue has been disaggregated to reflect the basis on which it is reported to the chief operating decision-maker. Further information can be found in the
unaudited “Segmental analysis – management basis” on pages 168 and 169.
3. Presented on a basis consistent with IFRS 16.
4. Excluding deferred taxation.
5. The comparative information has been restated to reflect the impact of discontinued operations.
Operating profit in the “Other” category is generated from services related to the provision of workspace solutions, offset by
corporate overheads.
iwgplc.com
iwgplc.com
129
129
NOTES TO THE ACCOUNTS CONTINUED
3. Segmental analysis (continued)
The operating segment’s results presented on a pre-IFRS 16 basis reconcile to the financial statements as follows:
Americas
EMEA
2021
2020
2021
2020
Asia Pacific
2021
£m
£m
£m
£m
£m
2020
Restated(5)
£m
United Kingdom
Other
Total
2021
2020
2021
2020
2021
£m
£m
£m
£m
£m
2020
Restated(5)
£m
Continuing operations
Gross profit/(loss)
(centre contribution) –
pre-IFRS 16
41.1
(101.7)
40.8
23.0
6.9
(17.7)
(5.3)
(80.0)
Rent
413.8
445.4
316.1
308.4
115.8
126.6
131.8
147.9
Depreciation of
property, plant and
equipment including
right-of-use assets
(317.5)
(339.5) (270.8)
(275.7)
(91.1)
(112.0)
(107.3)
(130.9)
Other
(15.3)
(9.0)
2.3
17.5
(8.3)
8.1
17.5
7.1
(2.2)
4.8
2.7
1.2
81.3
(173.7)
982.3 1,029.5
(4.4)
(0.8)
(1.0) (791.1)
(859.1)
(0.3)
(29.9)
23.4
Gross profit/(loss)
(centre contribution)
Continuing operations
Operating (loss)/profit –
pre-IFRS 16
122.1
(4.8)
88.4
73.2
23.3
5.0
11.4
(55.9)
(2.6)
2.6
242.6
20.1
Americas
EMEA
2021
2020
2021
2020
Asia Pacific
2021
£m
£m
£m
£m
£m
2020
Restated(5)
£m
United Kingdom
Other
Total
2021
2020
2021
2020
2021
£m
£m
£m
£m
£m
2020
Restated(5)
£m
(46.6)
(184.6)
(28.7)
(60.4)
(15.3)
(47.0)
(28.2)
(116.7)
(129.2)
(146.8) (248.0)
(555.5)
Rent
413.8
445.5
316.1
308.4
115.8
126.7
131.8
160.8
5.3
2.2
982.8 1,043.6
Depreciation of
property, plant and
equipment including
right-of-use assets
(317.5)
(339.5) (270.8)
(275.7)
(91.1)
(112.0)
(107.6)
(131.5)
Other
(15.7)
(9.1)
1.9
17.1
Operating profit/(loss)
34.0
(87.7)
18.5
(10.6)
(8.6)
0.8
7.8
(7.8)
7.0
(5.3)
0.3
(2.9) (792.3)
(861.6)
0.7
(29.9)
23.5
(24.5)
(11.8)
80.4 (128.9)
(146.8)
(87.4)
(350.0)
Continuing operations
Depreciation and
amortisation – pre-IFRS
16
Depreciation of
property, plant and
equipment including
right-of-use assets
Depreciation and
amortisation
Continuing operations
Impairment of assets –
pre-IFRS 16
(Reversal)/impairment
of property, plant and
equipment including
right-of-use assets
Americas
EMEA
2021
2020
2021
2020
Asia Pacific
2021
£m
£m
£m
£m
£m
2020
Restated(5)
£m
United Kingdom
Other
Total
2021
2020
2021
2020
2021
£m
£m
£m
£m
£m
2020
Restated(5)
£m
146.7
161.4
65.8
60.9
26.8
27.8
44.8
41.2
17.9
10.6
302.0
301.9
317.5
339.5
270.8
275.7
91.1
112.0
107.6
131.5
5.3
2.9
792.3
861.6
464.2
500.9
336.6
336.6
117.9
139.8
152.4
172.7
23.2
13.5 1,094.3 1,163.5
Americas
EMEA
2021
2020
2021
2020
Asia Pacific
2021
United Kingdom
Other
Total
2021
2020
2021
2020
2021
£m
£m
£m
–
–
–
£m
–
£m
–
2020
Restated(5)
£m
–
£m
–
£m
–
£m
£m
£m
2020
Restated(5)
£m
–
–
–
–
–
–
–
–
(54.2) 246.0
(54.2) 246.0
Impairment of assets
(56.1) 161.3
(56.1) 161.3
0.1
0.1
25.2
25.2
4.7
4.7
14.1
14.1
(2.9)
(2.9)
45.4
45.4
130
130
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
FINANCIAL STATEMENTS
4. Segmental analysis – entity-wide disclosures
The Group’s primary activity and only business segment is the provision of global workplace solutions, therefore all revenue is
attributed to a single group of similar products and services. It is not meaningful to separate this group into further categories of
products. Revenue is recognised where the service is provided.
The Group has a diversified customer base and no single customer contributes a material percentage of the Group’s revenue.
The Group’s revenue from external customers and non-current assets analysed by foreign country are as follows:
£m
Country of tax domicile – Switzerland
United States of America
United Kingdom
All other countries(1)
1. Revenue of £33.8m (2020: £50.2m) is included in discontinued operations (note 9).
2. Excluding deferred tax assets.
5. Operating loss – continuing operations
Operating loss has been arrived at after charging/(crediting):
Revenue
Depreciation on property, plant and equipment(1)
Right-of-use assets
Other property, plant and equipment
Amortisation of intangible assets
Variable property rents payable in respect of leases
Lease expense on low-value assets
Staff costs
Facility and other property costs
Expected credit losses on trade receivables(2)
Loss on disposal of property, plant and equipment
Loss on disposal of right-of-use assets and related lease liabilities
Impairment of goodwill
Loss on disposal of intangible assets
(Reversal of impairment)/impairment of property, plant and equipment(3)
(Reversal of impairment)/impairment of other property, plant and equipment
(Reversal of impairment)/impairment of right-of-use assets
Negative goodwill arising on acquisition
Other costs
Operating loss before equity-accounted investees
Share of loss of equity-accounted investees, net of tax
Operating loss
2021
External
revenue
Non-current
assets(2)
3.5
753.9
354.2
1,116.3
2,227.9
–
2,763.2
1,328.8
3,161.2
7,253.2
2020
External
revenue
3.5
899.7
388.8
1,139.9
2,431.9
Non-current
assets(2)
–
3,140.2
1,613.5
2,917.3
7,671.0
Notes
2021
£m
2,227.9
2020
£m(4)
2,431.9
15
15
15
14
23
23
6
24
13
14
15
13
21
1,080.8
1,154.8
879.8
201.0
13.5
62.8
1.0
342.3
414.4
99.5
64.2
(41.5)
–
0.3
(54.2)
(7.4)
(46.8)
(1.7)
331.7
(85.2)
(2.2)
(87.4)
919.1
235.7
8.7
64.9
3.4
343.7
424.5
34.8
93.1
(25.7)
4.9
0.1
246.0
82.1
163.9
–
426.1
(347.4)
(2.6)
(350.0)
1. Excludes depreciation expenses related to discontinued operations for right-of-use assets of £13.1m (2020: £26.9m) and other property, plant and
equipment of £2.0m (2020: £4.6m).
2. Of the £99.5m (2020: £34.8m) expected credit loss, £53.5m (2020: £17.5m) relates to COVID-19 adjusting items (note 10).
3. The reversal of impairment of £54.2m includes an additional impairment of £96.9m (2020: £246.0m), offset by the reversal of £151.1m (2020: £nil)
previously provided for (note 5).
4. The comparative information has been restated to reflect the impact of discontinued operations.
iwgplc.com
iwgplc.com
131
131
NOTES TO THE ACCOUNTS CONTINUED
5. Operating profit – continuing operations (continued)
Fees payable to the Group’s auditor and its associates for the audit of the Group accounts
Fees payable to the Group’s auditor and its associates for other services:
The audit of the Company’s subsidiaries pursuant to legislation
Other services pursuant to legislation:
Tax services
Other services
Other non-audit services
6. Staff costs
The aggregate payroll costs were as follows:
Wages and salaries(2)
Social security
Pension costs
Share-based payments
1. Excludes staff costs related to discontinued operations of £2.0m (2020: £2.9m).
2. Includes worldwide financial support schemes disclosed in note 10.
The average number of persons employed by the Group (including Executive Directors),
analysed by category and geography, was as follows:
Centre staff
Sales and marketing staff
Finance staff
Other staff
Americas
EMEA
Asia Pacific
United Kingdom
Corporate functions
2021
£m
1.3
3.0
–
0.3
0.3
2020
£m
1.4
2.9
–
0.2
1.2
2021
£m(1)
2020
£m(1)
282.0
49.5
5.0
5.8
282.0
49.7
5.6
6.4
342.3
343.7
2021
Average
full-time
equivalents(1)
2020
Average
full-time
equivalents(1)(2)
6,142
117
640
1,340
8,239
2,518
2,450
998
679
1,594
8,239
6,367
247
631
1,209
8,454
2,431
2,592
1,149
683
1,599
8,454
1. The average full-time equivalents exclude employees for disposals during 2021 of 65 (2020: 100).
2. Following internal restructuring in 2021, the allocation of staff between departments has been amended. The apportionment by department of 2020 staff
numbers has been restated to reflect the revised allocation.
Details of Directors’ emoluments and interests are given on pages 94 to 108 in the Directors’ Remuneration report, with audited
schedules identified where relevant.
7. Net finance expense
Interest payable and similar charges on bank loans and corporate borrowings
Interest payable on lease liabilities(1)
Total interest expense
Other finance costs
Unwinding of discount rates
Total finance expense
Fair value gain on financial liabilities measured at FVTPL (note 19)
Total interest income(2)
Total finance income
Net finance expense
1. Excludes lease liability finance expense related to discontinued operations of £1.4m (2020: £4.8m).
2. Excludes interest income related to discontinued operations of £nil (2020: £0.1m).
3. The comparative information has been restated to reflect the impact of discontinued operations.
2021
£m
(42.1)
(165.7)
(207.8)
9.8
–
2020
£m(3)
(12.8)
(244.6)
(257.4)
(8.9)
(0.1)
(198.0)
(266.4)
22.5
3.5
26.0
2.4
0.7
3.1
(172.0)
(263.3)
132
132
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
FINANCIAL STATEMENTS
8. Taxation
(a) Analysis of charge in the year
Current taxation
Corporate income tax
Previously unrecognised tax losses and temporary differences
Over provision in respect of prior years
Total current taxation
Deferred taxation
Origin and reversal of temporary differences
Total deferred taxation
Tax charge on continuing operations
1. The comparative information has been restated to reflect the impact of discontinued operations.
(b) Reconciliation of taxation charge
Loss before tax from continuing operations
Tax on profit at 11.9% (2020: 11.9%)
Tax effects of:
Expenses not deductible for tax purposes
Items not chargeable for tax purposes
Previously unrecognised temporary differences expected to be used in the future
Current year temporary differences not currently expected to be used
Adjustment to tax charge in respect of previous years
Differences in tax rates on overseas earnings
2021
£m
(23.9)
8.0
4.6
(11.3)
1.0
1.0
(10.3)
2020
£m(1)
(42.4)
8.5
11.0
(22.9)
(9.1)
(9.1)
(32.0)
2020(1)
£m
(613.3)
%
2021
£m
%
(259.4)
30.9
(29.4)
34.1
8.0
(112.9)
4.6
54.4
(10.3)
(11.9)
73.0
(11.9)
11.3
(13.1)
(3.1)
43.5
(1.8)
(21.0)
3.9
(44.9)
155.0
8.5
(452.2)
11.0
217.6
(32.0)
7.3
(25.3)
(1.4)
73.7
(1.8)
(35.5)
5.1
1. The comparative information has been restated to reflect the impact of discontinued operations.
The applicable tax rate is determined based on the tax rate in the canton of Zug in Switzerland, which was the statutory tax rate
applicable in the country of domicile of the parent company of the Group at the end of the financial year.
(c) Factors that may affect the future tax charge
Unrecognised tax losses to carry forward against certain future overseas corporation tax liabilities have the following expiration
dates.
2021
2022
2023
2024
2025
2026
2027
2028
2029 and later
Available indefinitely
Tax losses available to carry forward
Amount of tax losses recognised in deferred tax assets
Total tax losses available to carry forward
2021
£m
–
33.6
41.1
48.2
49.1
69.7
36.5
36.7
1,455.6
1,770.5
1,301.8
3,072.3
125.0
3,197.3
2020
£m
24.9
43.1
45.9
49.3
53.8
38.8
18.5
16.6
1,090.3
1,381.2
919.3
2,300.5
1,029.0
3,329.5
Additional tax losses have been generated in 2021. There is a reduction in total tax losses recognised as deferred tax assets as a
result of the overestimation of losses arising in certain head office entities in 2020 (£486.0m).
iwgplc.com
iwgplc.com
133
133
NOTES TO THE ACCOUNTS CONTINUED
8. Taxation (continued)
The following deferred tax assets have not been recognised due to uncertainties over recoverability.
Intangibles
Accelerated capital allowances
Tax losses
Rent
Leases
Short-term temporary differences
(d) Corporation tax
Corporation tax payable
Corporation tax receivable
(e) Deferred taxation
The movement in deferred tax is analysed below:
2021
£m
390.4
29.8
757.8
49.1
29.7
6.7
2020
£m
420.0
26.4
564.5
48.6
22.7
3.7
1,263.5
1,085.9
2021
£m
(35.9)
18.5
2020
£m
(40.0)
29.1
Deferred tax asset
At 1 January 2020
Current year movement
Prior year movement
Disposals
Transfers
Exchange rate movements
At 31 December 2020
Current year movement
Prior year movement
Disposals
Transfers
Exchange rate movements
At 31 December 2021
Deferred tax liability
At 1 January 2020
Current year movement
Prior year movement
Disposals
Transfers
Exchange rate movements
At 31 December 2020
Current year movement
Prior year movement
Disposals
Transfers
Exchange rate movements
At 31 December 2021
Intangibles
£m
Property,
plant and
equipment
£m
39.4
(19.0)
–
–
(0.2)
1.8
22.0
–
–
47.7
–
69.7
(31.5)
(42.7)
–
–
(4.6)
0.8
(78.0)
1.1
(0.4)
–
77.0
0.3
–
(0.2)
(4.6)
–
–
–
0.2
–
–
–
–
–
4.6
–
–
(3.1)
(5.7)
–
–
(47.7)
–
(50.8)
–
–
(77.0)
(0.3)
(83.0)
Tax losses
£m
115.5
137.6
–
–
4.2
(0.3)
257.0
(17.2)
(198.2)
–
–
–
41.6
4.2
–
–
–
(4.2)
–
–
–
–
–
–
–
–
Rent
£m
54.1
9.6
–
–
0.6
(1.7)
62.6
5.3
–
–
(0.3)
–
67.6
0.6
–
–
–
(0.6)
–
–
(0.3)
–
–
0.3
–
–
Leases
£m
Other temporary
differences
£m
93.6
13.4
–
–
–
(0.1)
106.9
4.0
–
–
0.7
–
111.6
–
(0.2)
–
–
–
–
(0.2)
(4.9)
–
–
(76.1)
(105.6)
–
–
–
(0.6)
(182.3)
17.6
–
–
200.8
–
36.1
–
–
–
–
–
–
–
1.3
198.5
–
Total
£m
195.0
(6.7)
–
–
–
(0.1)
188.2
10.8
(198.6)
–
325.9
0.3
326.6
–
(0.2)
–
–
–
–
(0.2)
(12.7)
198.5
–
(0.7)
(200.8)
(325.9)
–
(5.8)
–
(0.3)
(1.0)
(140.6)
134
134
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
FINANCIAL STATEMENTS
The movements in deferred taxes included above are after the offset of deferred tax assets and deferred tax liabilities where there
is a legally enforceable right to set off and they relate to income taxes levied by the same taxation authority. The closing deferred
tax position above represents the aggregated deferred tax asset or liability position within individual legal entities, with some
companies recognising deferred tax assets and others recognising deferred tax liabilities. The closing position is a net deferred tax
asset of £326.6m and a deferred tax liability of £140.6m.
In 2021 the Group has separately presented deferred tax assets and deferred tax liabilities on a country by country, or entity by
entity basis where available. The transfers line in the table above reflects the adjustment required to the opening balances as at
1 January 2021 to reflect this change in presentation.
In evaluating whether it is probable that taxable profits will be earned in future accounting periods for the purposes of deferred
tax asset recognition, management based their analysis on the Board-approved three-year forecasts prepared for the purposes of
reviewing goodwill for impairment.
Recognised deferred tax assets in respect of tax losses (£41.6m) include losses that have arisen in the United States where despite
recent losses the Group considers it probable that sufficient taxable profits will be available against which these unused tax losses
can be utilised over a period of three years, based on the period corresponding to the Group’s business forecasting processes. The
losses recorded in the United States were incurred during a period of uncertainty as a result of the global COVID-19 pandemic.
Management is confident that the Group will return to profitability in this region within the aforementioned period. No reasonably
possible change in any of the key assumptions would result in a significant reduction in projected tax profits such that the
recognised deferred tax asset would not be realised.
At the balance sheet date, the temporary difference arising from unremitted earnings of overseas subsidiaries was £15.0m
(2020: £11.9m). The only tax that would arise on these reserves if they were remitted would be non-creditable withholding tax.
In 2019 the Group recognised a deferred tax asset of £89.8m, and a corresponding deferred tax credit, in respect of the expected
future value of annual amortisation on the fair market value of IP resulting from a Group restructure, which is deductible for Swiss
corporate income tax purposes. Further restructuring of Group cost allocations in 2020 resulted in a reduction in the recognition of
the deferred tax asset to £69.7m, and a deferred tax debit of £20.1m, based on the updated future value of amortisation
deductions. In 2021 the deferred tax asset remains unchanged at £69.7m and is included as Intangibles in the deferred tax table
above. Recognition of this deferred tax asset is based on the approved three-year forecast.
In October 2021, the OECD published the model rules for part of the second pillar of the proposed two-pillar solution to address
the tax challenges of the digitalisation of the economy. Pillar Two is the so-called Global Anti-Base Erosion (GloBE) rule, which is
designed to ensure that large multinational enterprises pay a minimum level of tax of 15% on the income arising in each
jurisdiction where they operate. The minimum tax will apply to MNEs with revenue above €750.0m and so is expected to apply to
the Group. These changes have not been enacted or substantively enacted and therefore do not have any impact on the tax
reporting position of the Group. IWG will continue to monitor developments in these areas and consider the potential tax impact
for the Group at the relevant time.
9. Discontinued operations
During 2021, the Group completed the sale of various operations through the signing of franchise agreements. The financial
impact of these transactions is treated as discontinued operations in accordance with IFRS 5, however these operations under
franchise will continue to be an important strategic component of the overall Group network. These transactions form part of the
larger change in strategy of the Group towards adopting a franchising model. Fees from franchising activities subsequent to sale
are reflected as franchise revenues in continuing operations.
Disposal of operations
During the year, the Group completed the sale of individually immaterial operations for the consideration of £52.3m (2020:
£3.3m). The results of these operations up to the date of disposal were as follows:
Revenue
Expenses
Profit/(loss) before tax for the year
Income tax (expense)/credit
Loss after tax for the year
Gain on the sale of discontinued operations
Profit/(loss) for the year, net of tax
2021
£m
33.8
(31.3)
2.5
(3.6)
(1.1)
60.4
59.3
2020
£m
50.2
(56.0)
(5.8)
1.5
(4.3)
2.8
(1.5)
iwgplc.com
iwgplc.com
135
135
NOTES TO THE ACCOUNTS CONTINUED
9. Discontinued operations (continued)
The assets and liabilities of these operations at their respective dates of disposal were as follows:
Total assets
Total liabilities
Net (liabilities)/assets
Costs directly associated with the disposal
Foreign exchange recycled to profit and loss
Consideration on disposal (net of cash and debt)(1)
Gain on sale of discontinued operations
1. The consideration recognised includes a non-cash element of £33.4m.
The net cash flows incurred by these operations are as follows:
Operating
Investing
Financing
Net cash inflow/(outflow)
2021
£m
72.6
(81.5)
(8.9)
1.3
(0.5)
(8.1)
52.3
60.4
2021
£m
48.0
(2.1)
(45.8)
0.1
2020
£m
2.9
(2.2)
0.7
(0.2)
–
0.5
3.3
2.8
2020
£m
28.3
(1.3)
(27.3)
(0.3)
10. COVID-19 related adjusting items
Following the declaration by the World Health Organization of the COVID-19 pandemic (COVID-19) and subsequent global
government restrictions, the Group has been unable to operate at full capacity. Given the political and economic uncertainty
resulting from COVID-19, the Group continues to see significant volatility and business disruption, reducing expected performance
in 2021 and potentially 2022.
The impact that COVID-19 has had on underlying trading performance is not recognised within adjusting items.
In order to improve the transparency and usefulness of the financial information presented and improve year-on-year
comparability, the Group has identified net charges of £31.4m (2020: £389.8m) relating to directly attributable charges resulting
from COVID-19. These charges are considered to be adjusting items as they meet the Group's definition, as disclosed in previous
annual reports, of being both significant in nature and value to the results of the Group in the current period. Reversals of £1.7m
(2020: expenses of £333.4m) have been recognised as adjusting items to cost of sales and £33.1m (2020: £56.4m) of these
charges have been recognised as adjusting items to selling, general and administration expenses in the Group’s income statement.
The charges relate to several separately identifiable areas of accounting judgement and estimates as follows:
Impairments of property, plant and equipment (including right-of-use assets)(1) – net of reversals
Impairments of goodwill(2)
Provision for expected credit losses(1)
Network rationalisation(1)
Other one-off items including restructuring(3)
Total adjusting items
Year ended
31 Dec 2021
(125.2)
Year ended
31 Dec 2020
244.8
–
53.5
70.7
32.4
31.4
4.9
17.5
77.5
45.1
389.8
1. Included as an adjusting item in cost of sales.
2. Included as an adjusting item in selling, general and administration.
3. Included as adjusting items in selling, general and administration except for £0.7m (2020: £6.4m) in respect of worldwide financial support schemes which
is included in costs of sales.
– Impairments of property, plant and equipment (including right-of-use assets)
The continuation of COVID-19, including new and extended preventative measures in most of the Group’s markets, is expected
to prolong the impact on our business in 2022. As a result of these measures, management carried out a comprehensive review
exercise for potential impairments across the whole portfolio at a cash-generating units (CGUs) level.
The impairment review formed part of the Group’s rationalisation process undertaken throughout the year due to the impact of
COVID-19. This review compared the value-in-use of CGUs, based on management’s assumptions regarding likely future trading
performance, to the carrying values at 31 December 2021. Following this review, a reversal of £125.2m (2020: charge of
£244.8m) was recognised within net operating expenses. Of this reversal, £38.1m (2020: charge of £80.9m) and £87.1m (2020:
charge of £163.9m) were recognised against property, plant and equipment and right-of-use assets respectively.
– Impairments of goodwill
COVID-19 and linked restrictions have impacted our ability to trade our way to sustainable profitable growth in certain markets.
As a result, the projected cash flows for these markets continue to be evaluated to determine the carrying value of the CGUs,
with no additional impairment taken during 2021 (2020: impairment of £4.9m).
136
136
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
FINANCIAL STATEMENTS
– Provision for expected credit losses
In light of the temporary closure of centres globally, the Group reviewed the recoverability of its trade receivables profile and
incurred further credit losses of £53.5m (2020: £17.5m). This increase reflects the increase in credit default by the Group’s
debtors directly attributable to the impact of COVID-19 and the significant change in the ageing profile of trade receivables as a
direct consequence of COVID-19.
– Network rationalisation
£70.7m (2020: £77.5m) of charges were incurred relating to network rationalisations that occurred in the year, which includes
the write off of the book value of assets and direct closure costs related to these centres. A separate rationalisation charge of
£5.7m (£2020: £15.3m) has also been recorded which is not included as adjusting items.
– Other one-off items including restructuring
During the year, the Group incurred £0.5m (2020: £8.2m) of transaction costs in respect of master franchise agreements that did
not complete due to the outbreak of COVID-19. The Group fully expects to resume its pivot towards a franchising model in due
course.
Other charges of £32.6m (2020: £43.3m) were also incurred, including severance costs and restructurings arising from
mitigating actions taken by the Group in respect of COVID-19, completed by 31 December 2021 as well as claims in respect of
centre closures. In addition, during the year, the Group received a total of £0.7m (2020: £6.4m) in respect of worldwide financial
support schemes to fund staff costs.
Should the estimated charges not prove to be in excess of the amounts required, the release of any amounts provided for at
year-end would be treated as adjusting items.
11. Earnings per ordinary share (basic and diluted)
Basic and diluted loss for the year attributable to shareholders (£m)
Basic loss per share (p)
Diluted loss per share (p)
Basic and diluted loss for the year from continuing operations (£m)
Basic loss per share (p)
Diluted loss per share (p)
Basic and diluted profit for the year from discontinued operations (£m)
Basic earnings per share (p)
Diluted earnings per share (p)
Weighted average number of shares for basic EPS
Weighted average number of shares under option
Weighted average number of shares that would have been issued at average market price
Weighted average number of share awards under the CIP, PSP, DSBP and One-off Award
Weighted average number of shares on convertible bonds
Weighted average number of shares for diluted EPS
2021
(210.4)
(20.3)
(20.3)
(269.7)
(26.2)
(26.2)
59.3
5.9
5.9
2020
(646.8)
(67.9)
(67.9)
(645.3)
(67.8)
(67.8)
(1.5)
(0.1)
(0.1)
1,007,214,854
951,890,712
39,512,057
41,016,473
(22,437,997)
(25,287,994)
1,747,819
1,744,492
76,405,916
76,408,203
1,102,442,649 1,045,771,886
Options are considered dilutive when they would result in the issue of ordinary shares for less than the market price of ordinary
shares in the period. The amount of the dilution is taken to be the average market price of shares during the period minus the
exercise price. There were no material awards considered anti-dilutive at the reporting date.
The Group issued £350.0m of convertible bonds in December 2020. The bond issue creates a potential 76,405,916 shares for
bondholders. This represents a potential 7.1% dilutive impact at time of issue.
The average market price of one share during the year was 321.95p (2020: 296.88p), with a high of 383.60p on 3 March 2021 and
a low of 285.80p on 13 December 2021.
12. Dividends
Dividends per ordinary share proposed
Interim dividends per ordinary share declared and paid during the year
2021
–
–
2020
–
–
Due to the prolonged uncertainty caused by COVID-19, we believe it is prudent to protect our liquidity and as a result, no final
dividend will be paid for the year ended 31 December 2021 (2020: £nil).
Our capital allocation policy remains unchanged, prioritising investment in the long-term growth of our business and dividend
distribution to shareholders. Given the uncertainty caused by COVID-19 and in order to protect our liquidity in the short term,
future dividend payments have been placed on hold with the intention to review the return to our progressive dividend policy
when appropriate.
iwgplc.com
iwgplc.com
137
137
NOTES TO THE ACCOUNTS CONTINUED
13. Goodwill
Cost
At 1 January 2020
Recognised on acquisition of subsidiaries
Goodwill impairment
Exchange rate movements
At 31 December 2020
Recognised on acquisition of subsidiaries(1)
Goodwill on derecognised on sale of subsidiaries
Goodwill impairment
Exchange rate movements
At 31 December 2021
Net book value
At 31 December 2020
At 31 December 2021
£m
674.6
28.7
(4.9)
(2.9)
695.5
15.7
(0.9)
–
(6.5)
703.8
695.5
703.8
1. Net of £3.7m derecognised on the finalisation of the accounting for prior year acquisitions previously reported on a provisional basis.
Cash-generating units (CGUs), defined as individual business centres, are grouped by country of operation for the purposes of
carrying out impairment reviews of goodwill as this is the lowest level at which it can be assessed. Goodwill acquired through
business combinations is held at a country level and is subject to impairment reviews based on the cash flows of the CGUs within
that country.
The goodwill attributable to the reportable business segments is as follows:
Carrying amount of goodwill included within:
Americas
EMEA
Asia Pacific
United Kingdom
2021
£m
311.9
147.3
25.2
219.4
703.8
2020
£m
307.0
142.5
26.6
219.4
695.5
The carrying value of goodwill and indefinite life intangibles allocated to two countries, the USA and the UK, is material relative to
the total carrying value, comprising 73% of the total. The remaining 27% of the carrying value is allocated to a further 38
countries. The goodwill and indefinite life intangibles allocated to the USA and the UK are set out below:
USA
United Kingdom
Other countries
Goodwill
£m
290.3
219.4
194.1
703.8
Intangible
assets(1)
£m
–
11.2
–
11.2
2021
£m
290.3
230.6
194.1
715.0
2020
£m
286.1
230.6
190.0
706.7
1. The indefinite life intangible asset relates to the Regus brand.
The value in use for each country has been determined using a model which derives the present value of the expected future cash
flows for each individual country. Although the model includes budgets and forecasts prepared by management it also reflects
external factors, such as capital market risk pricing as reflected in the market capitalisation of the Group and prevailing tax rates,
which have been used to determine the risk-adjusted discount rate for the Group. Management believes that the projected cash
flows are a reasonable reflection of the likely outcomes over the medium to long term. In the event that trading conditions
deteriorate beyond the assumptions used in the projected cash flows, it is also possible that impairment charges could arise in
future periods.
The following key assumptions have been used in calculating the value in use for each country:
– Future cash flows are based on forecasts prepared by management. The model excludes cost savings and restructurings that are
anticipated but had not been committed to at the date of the determination of the value in use. Thereafter, forecasts have been
prepared by management for 2022, and for a further four years, that follow a budgeting process approved by the Board;
– These forecasts exclude the impact of acquisitive growth expected to take place in future periods;
– Management considers these projections to be a reasonable projection of margins expected at the mid-cycle position.
A terminal value is included in the assessment, reflecting the Group's expectation that it will continue to operate in these
markets and the long-term nature of the business; and
– The Group applies a country-specific pre-tax discount rate to the pre-tax cash flows for each country. The country-specific
discount rate is based on the underlying weighted average cost of capital (WACC) for the Group. The Group WACC is then
adjusted for each country to reflect the assessed market risk specific to that country. The Group pre-tax WACC decreased from
8.2% in 2020 to 7.5% in 2021 (post-tax WACC: 6.1%). The country-specific pre-tax WACC reflecting the respective market risk
adjustment has been set between 7.2% and 9.7% (2020: 7.9% to 10.6%).
138
138
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
FINANCIAL STATEMENTS
The amounts by which the values in use exceed the carrying amounts of goodwill are sufficiently large to enable the Directors to
conclude that a reasonably possible change in the key assumptions would not result in an impairment charge in any of the
countries. Foreseeable events are unlikely to result in a change in the projections of such a significant nature as to result in the
goodwill carrying amount exceeding their recoverable amount. The forecast models used in assessing the impairment of goodwill
are based on the related business centre structure at the end of the year.
The US model assumes an average centre contribution of 24.0% (2020: 11.0%) over the next five years. A terminal value centre
gross margin of 28.0% is adopted from 2026, with a 0.0% long-term growth rate assumed on revenue and costs into perpetuity.
The cash flows have been discounted using a pre-tax discount rate of 8.3% (2020: 10.0%).
The UK model assumes an average centre contribution of 18.0% (2020: 14.0%) over the next five years. A terminal value centre
gross margin of 22.0% is adopted from 2026, with a 0.0% long-term growth rate assumed on revenue and costs into perpetuity.
The cash flows have been discounted using a pre-tax discount rate of 7.5% (2020: 8.3%).
Management has considered the following sensitivities:
– Market growth and WIPOS – Management has considered the impact of a variance in market growth and WIPOS. The value in use
calculation shows that if the long-term growth rate is nil, the recoverable amount of the US and UK would still be greater than
their carrying value.
– Discount rate – Management has considered the impact of an increase in the discount rate applied to the calculation. The value
in use calculation shows that for the recoverable amount to be less than its carrying value, the pre-tax discount rate would have
to be increased to 88.1% (2020: 31.0%) for the US and 25.3% (2020: 18.0%) for the UK.
– Occupancy – Management has considered the impact of a variance in occupancy. The value in use calculation shows that for the
recoverable amount to be less than its carrying value, occupancy in all future years would have to decrease by 23.0% (2020:
13.0%) for the US and 12.0% (2020: 8.0%) for the UK.
14. Other intangible assets
Cost
At 1 January 2020
Additions at cost
Acquisition of subsidiaries
Disposals (including discontinued operations)
Exchange rate movements
At 31 December 2020
Additions at cost
Acquisition of subsidiaries
Disposals (including discontinued operations)
Exchange rate movements
At 31 December 2021
Amortisation
At 1 January 2020
Charge for year
Disposals (including discontinued operations)
Exchange rate movements
At 31 December 2020
Charge for year
Disposals (including discontinued operations)
Exchange rate movements
At 31 December 2021
Net book value
At 1 January 2020
At 31 December 2020
At 31 December 2021
Brand
£m
62.2
–
–
–
2.9
65.1
–
2.2
–
–
67.3
38.8
1.1
–
2.3
42.2
0.7
–
–
42.9
23.4
22.9
24.4
Customer
lists
£m
Software
£m
Total
£m
31.8
–
0.1
(0.6)
(0.6)
30.7
–
1.5
–
((00..22))
32.0
31.6
–
(0.6)
(0.4)
30.6
0.8
–
((00..11))
31.3
0.2
0.1
0.7
77.3
16.5
0.2
(11.2)
0.2
83.0
33.7
1.4
((00..33))
((00..55))
171.3
16.5
0.3
(11.8)
2.5
178.8
33.7
5.1
((00..33))
((00..77))
117.3
216.6
55.9
7.6
(11.1)
0.3
52.7
12.0
–
((00..33))
64.4
21.4
30.3
52.9
126.3
8.7
(11.7)
2.2
125.5
13.5
–
((00..44))
138.6
45.0
53.3
78.0
Included within the brand value is £11.2m relating to the acquisition of the remaining 58% of the UK business in the year ended
31 December 2006. The Regus brand acquired in this transaction is assumed to have an indefinite useful life due to the fact that
the value of the brand is intrinsically linked to the continuing operation of the Group.
As a result of the Regus brand acquired with the UK business having an indefinite useful life no amortisation is charged but the
carrying value is assessed for impairment on an annual basis. The brand was tested at the balance sheet date against the
recoverable amount of the UK business segment at the same time as the goodwill arising on the acquisition of the UK business
(see note 13).
iwgplc.com
iwgplc.com
139
139
NOTES TO THE ACCOUNTS CONTINUED
15. Property, plant and equipment
Right-of-use
assets(1)
£m
Land and
buildings
£m
Leasehold
improvements
£m
Furniture and
equipment
£m
Computer
hardware
£m
Total
£m
Cost
At 1 January 2020
Additions
Modifications(2)
Acquisition of subsidiaries
Disposals(4)
Exchange rate movements
At 31 December 2020
Additions
Modifications(2)
Acquisition of subsidiaries
Disposals(4)
Exchange rate movements
At 31 December 2021
Accumulated depreciation
At 1 January 2020
Charge for the year(3) (6)
Disposals(4) (5)
Impairment
Exchange rate movements
At 31 December 2020
Charge for the year(3) (6)
Disposals(4) (5)
Net reversal of impairment(7)
Exchange rate movements
At 31 December 2021
Net book value
At 1 January 2020
At 31 December 2020
At 31 December 2021
9,439.4
501.4
664.1
3.0
(1,073.5)
(4.5)
9,529.9
176.2
478.9
78.3
(851.8)
(123.2)
9,288.3
3,522.0
946.0
(736.5)
163.9
(12.4)
3,883.0
892.9
(675.1)
(46.8)
(19.8)
4,034.2
156.4
2.2
–
–
(8.7)
–
149.9
10.7
–
–
(0.1)
–
1,469.5
267.3
–
4.1
(193.7)
(26.2)
1,521.0
109.8
–
23.1
(146.4)
(22.8)
160.5
1,484.7
6.8
2.5
(0.7)
–
0.1
8.7
2.6
(0.1)
–
(0.1)
11.1
703.7
173.8
(108.1)
82.1
(16.0)
835.5
134.0
(67.0)
(7.4)
1.9
897.0
765.8
685.5
587.7
749.7
89.5
–
0.9
(54.6)
(10.5)
775.0
73.3
–
1.7
(33.0)
(6.1)
810.9
422.4
54.1
(46.4)
–
(9.3)
420.8
58.1
(23.7)
–
(4.0)
451.2
327.3
354.2
359.7
132.5
11,947.5
9.4
–
0.1
869.8
664.1
8.1
(10.9)
(2.1)
(1,341.4)
(43.3)
129.0
12,104.8
7.0
–
–
(5.4)
(2.3)
377.0
478.9
103.1
(1,036.7)
(154.4)
128.3
11,872.7
101.9
9.9
(10.2)
–
(0.7)
100.9
8.3
(4.5)
–
(2.0)
4,756.8
1,186.3
(901.9)
246.0
(38.3)
5,248.9
1,095.9
(770.4)
(54.2)
(24.0)
102.7
5,496.2
30.6
28.1
25.6
7,190.7
6,855.9
6,376.5
5,917.4
5,646.9
5,254.1
149.6
141.2
149.4
1. Right-of-use assets consist of property related leases.
2. Modifications includes lease modifications and extensions.
3. Includes depreciation expenses related to discontinued operations for right-of-use assets of £13.1m (2020: £26.9m) and other property, plant and
equipment of £2.0m (2020: £4.6m).
4. Includes disposals related to discontinued operations for right-of-use assets of £38.8m (2020: £0.7m) and other property, plant and equipment of £24.4m
(2020: £1.2m).
5. Disposals is net of £18.6m (2020: £nil) in respect of COVID-19 related adjusting items previously provided for (note 10).
6. Depreciation is net of £25.2m (2020: £nil) in respect of COVID-19 related adjusting items previously provided for (note 10).
7. The reversal of impairment of £54.2m includes an additional COVID-19 related impairment of £69.7m (2020: £244.8m), offset by the reversal of £151.1m
(2020: £nil) previously provided for (note 10).
The key assumptions and methodology in calculating right-of-use assets and the corresponding lease liability remain consistent
with those noted in notes 1 and 32.
Impairment tests for property, plant and equipment (including right-of-use assets) are performed on a cash-generating unit basis
when impairment triggers arise. Cash-generating units (CGUs) are defined as individual business centres, being the smallest
identifiable group of assets that generate cash flows that are largely independent of other groups of assets. The Group assesses
whether there is an indication that a CGU may be impaired, including persistent operating losses, net cash outflows and poor
performance against forecasts. During the year, and as a direct result of the challenging economic circumstances arising from
COVID-19, this gave rise to impairment tests in relation to various centres where impairment indicators were identified.
The recoverable amounts of property, plant and equipment are based on the higher of fair value less costs to sell and value in use.
The Group considered both fair value less costs to dispose and value in use in the impairment testing on a centre by centre level,
on a basis consistent with the impairment testing described in note 13. Impairment charges are recognised within cost of sales in
the consolidated income statement. In 2021, the Group recorded a net reversal of impairment charges of £46.8m (2020: charge of
£163.9m) in respect of right-of-use assets and a net reversal of £7.4m (2020: charge of £82.1m) in respect of leasehold
improvements.
140
140
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
16. Other long-term receivables
Deposits held by landlords against rent obligations
Other receivables
Amounts owed by joint ventures
Total non-current
17. Trade and other receivables
Trade receivables, net
Prepayments and accrued income
Acquired debt receivable
Other receivables
Partner contributions receivables
VAT recoverable
Deposits held by landlords against rent obligations
Total current
FINANCIAL STATEMENTS
2021
£m
49.5
0.2
–
49.7
2021
£m
262.4
133.7
–
145.5
30.2
159.4
3.0
734.2
2020
£m
54.5
0.5
–
55.0
2020
£m
285.1
128.4
276.2
106.0
33.8
171.8
2.4
1,003.7
The amount of £276.2m recognised in 2020, related to mezzanine and senior debt in an acquisition target that the Group did not
control as at 31 December 2020. This classification as a current asset reflected the status of the counterparty in default and that
the debt was technically repayable on demand. The balances were recognised at amortised cost of £276.2m at 31 December 2020
as the acquisition did not complete. The debts were fully repaid to the Group in February 2021.
18. Trade and other payables (including customer deposits)
Customer deposits
Other accruals
Trade payables
VAT payable
Other payables
Other tax and social security
Total current
2021
£m
384.5
188.5
167.4
104.1
67.2
14.9
926.6
2020
£m
423.6
160.0
270.7
125.6
12.9
14.8
1,007.6
During 2021 the Group conducted a review of its customer deposits for inactive customer accounts. Based on this review, the
Group has released the financial liabilities in respect of such deposits where the obligation qualifies for derecognition. The effect
of these changes was an increase in operating profit of £21.9m in 2021.
19. Borrowings
The Group’s total loan and borrowing position at 31 December 2021 and at 31 December 2020 had the following maturity profiles:
Bank and other loans
Repayments falling due as follows:
In more than one year but not more than two years
In more than two years but not more than five years(1)
In more than five years
Total non-current
Total current
Total bank and other loans
1. Includes convertible bond debt of £308.3m (2020: £298.8m).
2021
£m
4.7
446.5
2.1
453.3
21.5
474.8
2020
£m
6.6
392.8
0.8
400.2
21.9
422.1
The Group issued £350.0m convertible bonds in December 2020, raising £343.2m, net of transaction fees. At the date of issue, the
convertible bonds were bifurcated between:
– A financial liability recognised at amortised cost of £298.2m, by using the discounted cash flow of interest payments and the
bonds’ nominal value; and subsequently remeasured at amortised cost of £308.3m (2020: £298.8m) at 31 December 2021. The
financial liability is included in the above, falling due in more than two but not more than five years.
– A derivative financial liability of £51.8m, not being closely related to the host financial liability, was recognised separately and
measured at fair value through profit or loss (note 24). A gain has been recognised at 31 December 2021 of £22.5m (2020:
£2.4m) through net finance expenses, resulting in a year-end liability of £26.9m (2020: £49.4m).
Further information regarding the committed borrowings and the convertible bonds can be found on page 149 in note 24.
iwgplc.com
iwgplc.com
141
141
NOTES TO THE ACCOUNTS CONTINUED
20. Provisions
At 1 January
Acquired in the period
Provided in the period
Utilised in the period(1)
Exchange rate movements
At 31 December
Analysed between:
Current
Non-current
At 31 December
Closures
£m
23.9
–
12.4
(22.5)
(0.6)
13.2
0.8
12.4
13.2
2021
2020
Other
£m
7.1
4.3
2.7
(6.5)
(0.2)
7.4
7.4
–
7.4
Total
£m
31.0
4.3
15.1
(29.0)
(0.8)
20.6
8.2
12.4
20.6
Closures
£m
13.0
–
40.3
(29.0)
(0.4)
23.9
11.5
12.4
23.9
Other
£m
2.8
–
4.5
–
(0.2)
7.1
6.0
1.1
7.1
Total
£m
15.8
–
44.8
(29.0)
(0.6)
31.0
17.5
13.5
31.0
1. Includes provisions release related to discontinued operations of £0.2m (2020: £nil).
Closures
Provisions for closures relate to the expected costs of centre closures, including restructuring costs. Impairments of right-of-use
assets and property, plant and equipment (note 15) are not included above.
Other
Other provisions include the estimated costs of claims against the Group outstanding at 31 December 2021, of which, due to their
nature, the maximum period over which they are expected to be utilised is uncertain.
The Group is involved in various disputes, primarily related to potential lease obligations, some of which are in the course of
litigation. Where there is a dispute and where, based on legal counsel advice, the Group estimates that it is probable that the
dispute will result in an outflow of economic resources, provision is made based on the Group’s best estimate of the likely
financial outcome. Where a reliable estimate cannot be made, or where the Group, based on legal counsel advice, considers that it
is not probable that there will be an outflow of economic resources, no provision is recognised. There are no disputes which are
expected to have a material impact on the Group.
21. Investments in joint ventures
At 1 January 2020
Share of loss
Disposals
Exchange rate movements
At 31 December 2020
Acquisition of joint ventures(1)
Share of loss
Exchange rate movements
At 31 December 2021
Investments in
joint ventures
£m
13.8
Provision for
deficit in
joint ventures
£m
(2.9)
(0.9)
(1.6)
–
11.3
33.4
0.1
0.1
44.9
(1.7)
–
–
(4.6)
–
(2.3)
0.4
(6.5)
Total
£m
10.9
(2.6)
(1.6)
–
6.7
33.4
(2.2)
0.5
38.4
1. The acquisition of joint ventures was settled via a non-cash transaction of £33.4m.
The Group has 82 centres operating under joint venture agreements (2020: 46) at the reporting date, all of which are individually
immaterial. The Group has a legal obligation in respect of its share of any deficits recognised by these operations.
The results of the joint ventures below are the full-year results of the joint ventures and do not represent the effective share:
Income statement
Revenue
Expenses
Loss before tax for the year
Tax charge
Loss after tax for the year
Balance sheet
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets/(liabilities)
2021
£m
35.3
(38.2)
(2.9)
(0.4)
(3.3)
136.9
168.6
(160.1)
(125.6)
19.8
2020
£m
28.3
(36.9)
(8.6)
(0.7)
(9.3)
43.1
50.8
(68.8)
(36.4)
(11.3)
142
142
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
22. Share capital
Ordinary equity share capital
Authorised
Ordinary 1p shares in IWG plc at 1 January
Ordinary 1p shares in IWG plc at 31 December
Issued and fully paid up
Ordinary 1p shares in IWG plc at 1 January
Ordinary 1p shares issued for cash in the year
FINANCIAL STATEMENTS
2021
Number
Nominal value
£m
2020
Number
Nominal value
£m
8,000,000,000
8,000,000,000
1,057,248,651
–
80.0
80.0
10.5
–
8,000,000,000
8,000,000,000
923,357,438
133,891,213
80.0
80.0
9.2
1.3
10.5
Ordinary 1p shares in IWG plc at 31 December
1,057,248,651
10.5
1,057,248,651
On 28 May 2020 the Group announced the placement of 133,891,213 new ordinary shares, with a par value of 1.0 pence each.
The price of 239.0 pence represented a discount of 8.1% to the middle market closing price of 260.2 pence on 27 May 2020, with
the Group recognising net proceeds of £313.9m, with share premium of £312.6m recognised.
Treasury share transactions involving IWG plc shares between 1 January 2021 and 31 December 2021
During the year, nil shares were purchased in the open market and 49,832,721 treasury shares held by the Group were utilised to
satisfy the exercise of share awards by employees. As at 8 March 2022, 49,832,721 treasury shares were held. The holders of
ordinary shares in IWG plc are entitled to receive such dividends as are declared by the Company and are entitled to one vote per
share at meetings of the Company. Treasury shares do not carry such rights until reissued.
1 January
Purchase of treasury shares in IWG plc
Treasury shares in IWG plc utilised
31 December
23. Net debt analysis
2021
Number
of shares
50,677,280
2020
Number
of shares
39,055,369
£m
154.1
–
–
13,590,080
(844,559)
49,832,721
(2.8)
(1,968,169)
151.3
50,677,280
£m
116.9
43.7
(6.5)
154.1
Cash and cash
equivalents
£m
Gross
cash
£m
Debt due
within one
year
£m
Debt due
after one
year(2) (3)
£m
Lease due
within one
year(1)
£m
Lease due
after one
year(1)
£m
Gross
debt
£m
Net
debt
£m
Derivative
liability
£m
Total
£m
At 1 January 2020
66.6
66.6
(9.7)
(351.0)
(977.4)
(5,568.6)
(6,906.7)
(6,840.1)
(0.2)
(6,840.3)
Cash flow
Non-cash movements(4)
Exchange rate movements
At 31 December 2020
Cash flow
Non-cash movements(4)
Exchange rate movements
(0.7)
(0.7)
(13.1)
(45.0)
151.6
995.1
1,088.6
1,087.9
(51.8)
1,036.1
–
5.1
71.0
5.0
–
1.8
–
5.1
71.0
5.0
–
1.8
–
0.9
(0.5)
(3.7)
(200.5)
(965.4)
(1,166.4)
(1,166.4)
2.4
(1,164.0)
6.7
–
3.9
9.0
–
9.0
(21.9)
(400.2)
(1,019.6)
(5,538.9)
(6,980.6)
(6,909.6)
(49.6)
(6,959.2)
1.1
(0.9)
0.2
(37.5)
(15.5)
(0.1)
149.1
(81.6)
19.6
882.8
(630.7)
98.1
995.5
(728.7)
117.8
(6,596.0)
1,000.5
(728.7)
119.6
0.2
22.5
–
1,000.7
(706.2)
119.6
(6,518.2)
(26.9)
(6,545.1)
At 31 December 2021
77.8
77.8
(21.5)
(453.3)
(932.5)
(5,188.7)
1. There are no significant lease commitments for leases not commenced at 31 December 2021.
2. Includes £308.3m (2020: £298.8m) convertible bond liability.
3. Excludes the convertible bond derivative liability element at 31 December 2021 of £26.9m (2020: £49.4m) and a cash flow hedging liability at 31
December 2021 of £nil (2020: £0.2m).
4. Includes early termination of lease liabilities of £231.7m (2020: £362.8m) of which £52.3m (2020: £0.8m) is related to discontinued operations.
Cash and cash equivalent balances held by the Group that are not available for use amounted to £7.4m at 31 December 2021
(2020: £4.1m). Of this balance, £2.6m (2020: £1.6m) is pledged as security against outstanding bank guarantees and a further
£4.8m (2020: £2.5m) is pledged against various other commitments of the Group.
Cash flows on lease liabilities consist of principal payments of £864.8m (2020: £897.3m) and interest payments of £167.1m
(2020: £249.4m). Total cash outflows of £1,094.7m (2020: £1,211.6m) for leases, including variable payments of £62.8m (2020:
£64.9m), were incurred in the year.
Non-cash movements of £712.3m (2020: £1,165.9m) represent the movements on lease liabilities in relation to new leases, lease
modifications/re-measurements and lease cessations.
Cash flows on debt due within, and after, one year relate to movements in the revolving credit facility and other borrowings. These
net movements align with the activities reported in the cash flow statement after taking into consideration the £26.9m (2020:
£49.4m) derivative liability and a £nil (2020: £0.2m) cash flow hedging liability recognised separately.
iwgplc.com
iwgplc.com
143
143
NOTES TO THE ACCOUNTS CONTINUED
23. Net debt analysis (continued)
The following amounts are included in the Group’s consolidated financial statements in respect of its leases:
Depreciation charge for right-of-use assets
Principal lease liability repayments
Interest expense on lease liabilities
Expenses relating to leases of low-value assets that are not shown above as short-term leases
Expenses relating to variable lease payments not included in lease liabilities
Total cash outflow for leases comprising interest and capital payments
Additions to right-of-use assets
Acquired right-of-use assets
2021
(892.9)
(864.8)
(167.1)
1.0
62.8
2020
(946.0)
(897.3)
(249.4)
3.4
64.9
1,031.9
1,146.7
176.2
78.3
501.4
3.0
24. Financial instruments and financial risk management
The objectives, policies and strategies applied by the Group with respect to financial instruments and the management of capital
are determined at Group level. The Group’s Board maintains responsibility for the risk management strategy of the Group and the
Chief Financial Officer is responsible for policy on a day-to-day basis. The Chief Financial Officer and Group Treasurer review the
Group’s risk management strategy and policies on an ongoing basis. The Board has delegated to the Group Audit Committee the
responsibility for applying an effective system of internal control and compliance with the Group’s risk management policies.
Exposures to credit, interest rate and currency risks arise in the normal course of business.
Going concern
The Strategic Report on pages 1 to 75 sets out the Group’s strategy and the factors that are likely to affect the future performance
and position of the business. The financial review on pages 46 to 51 within the Strategic Report reviews the trading performance,
financial position and cash flows of the Group. The Group’s net debt position decreased by £391.4m (2020: increased by £69.5m)
to a net debt position of £6,518.2m (2020: £6,909.6m) as at 31 December 2021. Excluding the IFRS 16 lease liabilities, the net
debt position increased to £397.0m (2020: £351.1m). The investment in growth is funded by a combination of cash flow
generated from the Group’s mature business centres, cash consideration received in franchising the business and debt. The Group
had a £950.0m revolving credit facility (RCF) provided by a group of relationship banks with a final maturity in 2025 with an option
to extend until 2026. As at 31 December 2021, £530.1m (2020: £731.3m) of the RCF was available and undrawn.
Although the Group has net current liabilities of £1,439.4m (2020: £1,330.4m), the Group does not consider that this gives rise to
a liquidity risk. A large proportion of the net current liabilities comprise non-cash liabilities such as deferred revenue of £346.4m
(2020: £328.9m) which will be recognised in future periods through the income statement. The Group holds customer deposits of
£384.5m (2020: £423.6m) which are spread across a large number of customers and no deposit held for an individual customer is
material. Therefore, the Group does not believe the net current liabilities represents a liquidity risk.
Subsequent events
In February 2022, the £950.0m revolving credit facility was reduced to £750.0m, with an unchanged maturity date in 2025. The
facility is subject to financial covenants which include EBITDA, minimum liquidity, interest cover and net debt to EBITDA ratio.
The Directors performed an updated going concern assessment to reflect the impact of the amended revolving credit facility and
concluded that the facility remains sufficient for the Group to retain sufficient cash reserves to continue as a going concern, for a
period of at least 12 months from the date of approval of these group consolidated financial statements.
In addition, a £330m bridge facility for The Instant Group acquisition has been agreed. The bridge facility has a maturity in
September 2023. This facility is secured and is subject to interest cover and net debt to EBITDA covenants.
Credit risk
Credit risk could occur where a customer or counterparty defaults under the contractual terms of a financial instrument and arises
principally in relation to customer contracts and the Group’s cash deposits.
A diversified customer base, requirement for customer deposits, and payments in advance on workstation contracts minimise the
Group’s exposure to customer credit risk. No single customer contributes a material percentage of the Group’s revenue. The
Group’s policy is to provide against trade receivables when specific debts are judged to be irrecoverable or where formal recovery
procedures have commenced. Trade debtors that are more than three months overdue are considered to be in default and
therefore, under the simplified lifetime approach, are impaired in full. This reflects the Group’s experience of the likelihood of
recoverability of these trade receivables based on both historical and forward-looking information. These provisions, which take
into consideration any customer deposits held, are reviewed on an ongoing basis to assess changes in the likelihood of
recoverability.
The Group has assessed the other receivable balances for expected credit losses, with no expected credit losses recognised due to
the nature and default history of these items.
144
144
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
The maximum exposure to credit risk for trade receivables at the reporting date, not taking into account customer deposits held,
analysed by geographic region, is summarised below.
FINANCIAL STATEMENTS
Americas
EMEA
Asia Pacific
United Kingdom
2021
£m
103.7
88.5
21.9
48.3
262.4
2020
£m
113.6
82.7
31.6
57.2
285.1
All of the Group’s trade receivables relate to customers purchasing workplace solutions and associated services and no individual
customer has a material balance owing as a trade receivable.
The ageing of trade receivables at 31 December was:
Not overdue
Past due 0 – 30 days
Past due 31 – 60 days
Past due 61 – 90 days
Past due more than 90 days
Gross
2021
£m
219.9
20.8
7.3
4.3
37.7
290.0
Provision
2021
£m
–
–
–
–
(27.6)
(27.6)
Gross
2020
£m
161.5
27.9
16.9
3.9
100.6
310.8
Provision
2020
£m
–
–
–
–
(25.7)
(25.7)
The Group conducted a review of the expected credit risk associated with accounts receivable balances during 2021. This review
was performed in response to changing commercial circumstances, with the Group recognising an increase in the expected credit
losses of £6.1m.
At 31 December 2021, the Group maintained a provision of £27.6m for expected credit losses (2020: £25.7m) arising from trade
receivables. The Group had provided £99.5m (2020: £34.8m) in the year, utilised £97.6m (2020: £16.8m) and released £nil (2020:
£nil). Customer deposits of £384.5m (2020: £423.6m) are held by the Group, mitigating the risk of default.
IFRS 9 requires the Group to record expected credit losses on all of its receivables, either on a 12-month or lifetime basis. The
Group has applied the simplified approach to all trade receivables, which requires the recognition of the expected credit loss
based on the lifetime expected losses. The expected credit loss is mitigated through the invoicing of contracted services in
advance and customer deposits.
Cash investments and derivative financial instruments are only transacted with counterparties of sound credit ratings, and
management does not expect any of these counterparties to fail to meet their obligations.
Liquidity risk
Liquidity risk represents the risk that the Group will not be able to meet its obligations as they fall due. The Group manages
liquidity risk by closely monitoring the global cash position, the available and undrawn credit facilities, and forecast capital
expenditure and expects to have sufficient liquidity to meet its financial obligations as they fall due. In response to the COVID-19
pandemic, the Group continues to focus on cash generation by reducing cost, renegotiating rents and rationalising the network,
resulting in short or long-term cash benefits. The Group has free cash and liquid investments (excluding blocked cash) of £70.4m
(2020: £66.9m). In addition to cash and liquid investments, the Group had £530.1m (2020: £731.3m) available and undrawn under
its committed borrowings. The Directors consider the Group has adequate liquidity to meet day-to-day requirements.
The Group maintained a revolving credit facility provided by a group of international banks. At 31 December 2021, the amount of
the facility remained £950.0m (2020: £950.0m) and the final maturity was extended in March 2020 to March 2025 with an option
to extend until 2026.
Subsequent events
In February 2022, the £950m revolving credit facility was reduced to £750m, with an unchanged maturity date in 2025. The
facility is subject to financial covenants which include EBITDA, minimum liquidity, interest cover and net debt to EBITDA ratio.
The Directors performed an updated going concern assessment to reflect the impact of the amended revolving credit facility and
concluded that the facility remains sufficient for the Group to retain sufficient cash reserves to continue as a going concern, for a
period of at least 12 months from the date of approval of these group consolidated financial statements.
In addition, a £330m bridge facility for The Instant Group acquisition has been agreed. The bridge facility has a maturity in
September 2023. This facility is secured and is subject to interest cover and net debt to EBITDA covenants.
The Group actively reviews its exposure to interest rate movements. The issuance of the fixed rate convertible bond significantly
reduces the Group's exposure to an increase in interest rates. The final interest rate swap taken to hedge against the floating
interest rate obligations of debt drawn under the revolving credit facility matured in February 2021. This had a nominal amount of
£30.0m and a fixed rate of 1.2%.
iwgplc.com
iwgplc.com
145
145
NOTES TO THE ACCOUNTS CONTINUED
24. Financial instruments and financial risk management (continued)
Market risk
The Group is exposed to market risk primarily related to foreign currency exchange rates, interest rates and the market value of our
investments in financial assets. These exposures are actively managed by the Group Treasurer and Chief Financial Officer in
accordance with a written policy approved by the Board of Directors. The Group does not use financial derivatives for trading or
speculative reasons.
Interest rate risk
The Group manages its exposure to interest rate risk through the relative proportions of fixed rate debt and floating rate debt. Any
surplus cash balances are invested short term, and at the end of 2021 no cash was invested for a period exceeding three months
(2020: £nil).
Foreign currency risk
The Group is exposed to foreign currency exchange rate movements. The majority of day-to-day transactions of overseas
subsidiaries are carried out in local currency and the underlying foreign exchange exposure is small. Transactional exposures do
arise in some countries where it is local market practice for a proportion of the payables or receivables to be in other than the
functional currency of the affiliate. Intercompany charging, funding and cash management activity may also lead to foreign
exchange exposures. It is the policy of the Group to seek to minimise such transactional exposures through careful management of
non-local currency assets and liabilities, thereby minimising the potential volatility in the income statement. Net investments in
IWG affiliates with a functional currency other than pounds sterling are of a long-term nature and the Group does not normally
hedge such foreign currency translation exposures.
The principal exposures of the Group are to the US dollar and the euro, with approximately 35% (2020: 37%) of the Group’s
revenue being attributable to the US dollar and 23% (2020: 22%) to the euro.
From time to time the Group uses short-term derivative financial instruments to manage its transactional foreign exchange
exposures where these exposures cannot be eliminated through balancing the underlying risks. No transactions of a speculative
nature are undertaken.
The foreign currency exposure arising from open third-party transactions held in a currency other than the functional currency of
the related entity is summarised as follows:
£m
Trade and other receivables
Trade and other payables
Net statement of financial position exposure
£m
Trade and other receivables
Trade and other payables
Net statement of financial position exposure
Other market risks
GBP
–
(0.9)
(0.9)
GBP
0.1
(0.4)
(0.3)
2021
2020
EUR
2.3
(8.6)
(6.3)
EUR
1.8
(4.1)
(2.3)
USD
0.4
0.2
0.6
USD
1.3
(1.8)
(0.5)
The Group does not hold any equity securities for fair value measurement under IFRS 9 and is therefore not subject to risks of
changes in equity prices in the income statement.
Sensitivity analysis
For the year ended 31 December 2021, it is estimated that a general increase of one percentage point in interest rates would have
increased the Group’s loss before tax by approximately £1.2m (2020: £1.8m) with a corresponding decrease in total equity.
It is estimated that a five-percentage point weakening in the value of the US dollar against pounds sterling would have increased
the Group’s loss before tax by approximately £1.5m for the year ended 31 December 2021 (2020: £2.9m). It is estimated that a
five-percentage point weakening in the value of the euro against pounds sterling would have increased the Group’s loss before tax
by approximately £0.4m for the year ended 31 December 2021 (2020: £1.0m).
It is estimated that a five-percentage point weakening in the value of the US dollar against pounds sterling would have decreased
the Group’s total equity by approximately £8.0m for the year ended 31 December 2021 (2020: £6.3m). It is estimated that a five-
percentage point weakening in the value of the euro against pounds sterling would have decreased the Group’s total equity by
approximately £4.5m for the year ended 31 December 2021 (2020: £5.4m).
146
146
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
FINANCIAL STATEMENTS
Capital management
The Group’s parent company is listed on the UK stock exchange and the Board’s policy is to maintain a strong capital base. The
Chief Financial Officer monitors the diversity of the Group’s major shareholders and further details of the Group’s communication
with key investors can be found in the Corporate Governance Report on page 78. In 2006, the Board approved the commencement
of a progressive dividend policy to enhance the total return to shareholders.
The Group’s Chief Executive Officer, Mark Dixon, is a major shareholder of the Company. Details of the Directors’ shareholdings
can be found in the Directors’ Remuneration report on pages 94 to 108. In addition, the Group operates various share option plans
for key management and other senior employees.
Treasury share transactions involving IWG plc shares between 1 January 2021 and 31 December 2021
During the year, no shares were purchased in the open market and 844,559 treasury shares held by the Group were utilised to
satisfy the exercise of share awards by employees. As at 31 December 2021, 49,832,721 treasury shares were held.
The Company declared and paid no interim dividend per share during the year ended 31 December 2021 (2020: nil pence) and
proposed no final dividend per share (2020: nil pence per share).
The Group’s objective when managing capital (equity and borrowings) is to safeguard the Group’s ability to continue as a going
concern and to maintain an optimal capital structure to reduce the cost of capital.
Effective interest rates
In respect of financial assets and financial liabilities, the following table indicates their effective interest rates at the balance sheet
date and the periods in which they mature.
Except for lease liabilities and the convertible bond, the undiscounted cash flow and fair values of these instruments is not
materially different from the carrying value.
As at 31 December 2021
Cash and cash equivalents
Trade and other receivables(1)
Other long-term receivables
Financial assets(2)
Non-derivative financial liabilities(3):
Bank loans and corporate borrowings
Convertible bonds – debt host
Lease liabilities
Other loans
Contingent consideration on
acquisitions
Trade and other payables
Other long-term payables
Derivative financial liabilities:
Convertible bonds – embedded
conversion option
Interest rate swaps
– Outflow
– Inflow
Financial liabilities
–
–
–
–
–
–
Effective
interest rate
%
0.0%
–
–
Carrying
value
£m
77.8
600.5
49.7
728.0
Contractual
cash flow
£m
77.8
600.5
49.7
728.0
Less than
1 year
£m
77.8
600.5
–
678.3
1-2 years
£m
2-5 years
£m
More than
5 years
£m
–
–
25.0
25.0
–
–
24.7
24.7
4.0%
3.8%
3.3%
0.0%
–
–
–
–
–
–
(136.5)
(308.3)
(136.5)
(357.2)
(0.2)
(1.8)
(0.3)
(1.8)
(136.0)
(353.6)
(6,121.2)
(7,869.2)
(1,094.7)
(1,068.9)
(2,564.0)
(3,141.6)
(30.0)
(30.0)
(21.3)
(4.4)
(2.2)
(2.1)
(6.8)
(919.8)
(5.6)
(6.8)
(919.8)
(5.6)
(26.9)
(26.9)
–
–
–
–
(6.8)
(919.8)
–
–
–
–
–
–
(5.6)
–
–
–
–
–
–
(26.9)
–
–
–
–
–
–
–
–
(7,555.1)
(9,352.0)
(2,044.6)
(1,081.0)
(3,082.9)
(3,143.7)
iwgplc.com
iwgplc.com
147
147
NOTES TO THE ACCOUNTS CONTINUED
24. Financial instruments and financial risk management (continued)
As at 31 December 2020
Cash and cash equivalents
Trade and other receivables(1)
Other long-term receivables
Financial assets(2)
Non-derivative financial liabilities(3):
Bank loans and corporate borrowings
Convertible bonds – debt host
Lease liabilities
Other loans
Trade and other payables
Other long-term payables
Derivative financial liabilities:
Convertible bonds – embedded
conversion option
Interest rate swaps
– Outflow
– Inflow
Financial liabilities
More than
5 years
£m
–
–
–
–
–
–
Effective
interest rate
%
0.1%
–
–
Carrying
value
£m
71.0
875.3
55.0
Contractual
cash flow
£m
71.0
875.3
55.0
1,001.3
1,001.3
Less than
1 year
£m
71.0
875.3
–
946.3
1-2 years
£m
–
–
27.8
27.8
2-5 years
£m
–
–
27.2
27.2
2.8%
3.8%
3.4%
1.2%
–
–
–
–
–
–
(91.7)
(298.8)
(91.7)
(358.8)
–
(1.8)
(1.0)
(1.8)
(90.7)
(355.2)
(6,558.5)
(9,073.8)
(1,159.3)
(1,074.1)
(2,538,7)
(4,301.7)
(31.6)
(31.6)
(21.9)
(1,007.6)
(1,007.6)
(1,007.6)
(5.9)
(5.9)
(49.4)
(49.4)
–
–
(0.2)
–
(0.2)
–
(0.2)
–
(5.6)
–
(5.9)
–
–
–
(3.3)
(0.8)
–
–
(49.4)
–
–
–
–
–
–
–
(8,043.7)
(10,619.0)
(2,190.8)
(1,088.4)
(3,037.3)
(4,302.5)
1. Excluding prepayments.
2. Financial assets are all held at amortised cost.
3. All financial instruments are classified as variable rate instruments.
Fair value disclosures
The fair values together with the carrying amounts shown in the balance sheet are as follows:
Carrying amount
Other
financial
liabilities
Cash flow –
hedging
instruments
31 December 2021
£m
Cash and cash equivalents
Trade and other receivables
Other long-term receivables
Derivative financial liabilities
Convertible bonds
Bank loans and corporate borrowings
Other loans
Contingent consideration on
acquisitions
Trade and other payables
Other long-term payables
Cash,
loans and
receivables
77.8
600.5
49.7
–
–
–
–
–
–
–
–
–
–
(26.9)
(308.3)
(136.5)
(30.0)
(6.8)
(919.8)
(5.6)
728.0
(1,433.9)
31 December 2020
£m
Cash and cash equivalents
Trade and other receivables
Other long-term receivables
Derivative financial liabilities
Convertible bonds
Bank loans and corporate borrowings
Other loans
Trade and other payables
Other long-term payables
Cash,
loans and
receivables
71.0
875.3
55.0
Carrying amount
Other
financial
liabilities
–
Cash flow –
hedging
instruments
–
–
–
–
–
–
–
–
–
(49.4)
(298.8)
(91.7)
(31.6)
(1,007.6)
(5.9)
–
–
(0.2)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
77.8
600.5
49.7
(26.9)
(308.3)
(136.5)
(30.0)
(6.8)
(919.8)
(5.6)
(705.9)
Total
71.0
875.3
55.0
(49.6)
(298.8)
(91.7)
(31.6)
(1,007.6)
(5.9)
1,001.3
(1,485.0)
(0.2)
(483.9)
Fair value
Level 1
Level 2
Level 3
Total
–
–
–
–
–
–
–
–
–
–
–
Level 1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(26.9)
(26.9)
(308.3)
(308.3)
–
–
–
–
(6.8)
(6.8)
–
–
–
–
(342.0)
(342.0)
Fair value
Level 2
–
276.2
–
Level 3
–
–
–
Total
–
276.2
–
(0.2)
(49.4)
(49.6)
–
–
–
–
–
(298.8)
(298.8)
–
–
–
–
–
–
–
–
276.0
(348.2)
(72.2)
Included within other receivables is £nil (2020: £276.2m) relating to mezzanine and senior debts acquired in December 2020. The
balances have been recognised at fair value of £nil (2020: £276.2m) at 31 December 2021. The mezzanine and senior debt
receivable balances was settled in full in February 2021.
148
148
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
FINANCIAL STATEMENTS
At the date of issue, the £350.0m was bifurcated at £298.2m and £51.8m between corporate borrowings (debt) and a derivative
financial liability respectively. At 31 December 2021, the debt was valued at its amortised cost, £308.4m (2020: £298.8m) and the
derivative liability at its fair value, £26.9m (2020: £49.4m).
During the years ended 31 December 2021 and 31 December 2020, there were no transfers between levels for fair value
measured instruments.
Valuation techniques
When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are
categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
– Level 1: quoted prices in active markets for identical assets or liabilities;
– Level 2: inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly or
indirectly; and
– Level 3: inputs for the asset or liability that are not based on observable market data.
The following tables show the valuation techniques used in measuring level 3 fair values and methods used for financial assets
and liabilities not measured at fair value:
Type
Cash and cash equivalents, trade and other
receivables/payables, customer deposits,
contingent consideration and investment
loan receivables
Loans, overdrafts and debt element of
convertible bonds
Foreign exchange contracts, interest rate swaps
and derivative element of convertible bonds
Valuation technique
For cash and cash equivalents, receivables/payables with a remaining life of less than
one year and customer deposits, the book value approximates the fair value because
of their short-term nature.
The fair value of bank loans, overdrafts and other loans approximates the carrying
value because interest rates are at floating rates where payments are reset to market
rates at intervals of less than one year.
The fair values are based on a combination of broker quotes, forward pricing, and
swap models. The fair value of the derivative element of convertible bonds has been
calculated with reference to unobservable credit spreads.
Derivative financial instruments
The following table summarises the notional amount of the open contracts as at the reporting date:
Derivatives used for cash flow hedging
Committed borrowings
Revolving credit facility
2021
£m
–
2020
Facility
£m
950.0
2020
£m
30.0
2020
Available
£m
731.3
2021
Facility
£m
950.0
2021
Available
£m
530.1
The Group maintains a revolving credit facility provided by a group of international banks. At 31 December 2021, the amount of
the facility remains £950.0m (2020: £950.0m) and the final maturity was extended in March 2020 to March 2025 with an option to
extend until 2026. As at 31 December, £530.1m (2020: £731.3m) was available and undrawn under this facility.
The £950.0m revolving credit facility was subject to financial covenants. In April 2021 the Group agreed revised covenants for the
period to June 2022 relating to EBITDA and liquidity headroom. The Group was in compliance with its covenants up to the date of
the amendment of the covenants and is in compliance with the amended covenant requirements.
Subsequent events
In February 2022, the £950.0m revolving credit facility was reduced to £750.0m, with an unchanged maturity date in 2025. The
facility is subject to financial covenants which include EBITDA, minimum liquidity, interest cover and net debt to EBITDA ratio.
In addition, a £330m bridge facility for The Instant Group acquisition has been agreed. The bridge facility has a maturity in
September 2023. This facility is secured and is subject to interest cover and net debt to EBITDA covenants.
The Group actively reviews its exposure to interest rate movements. The issuance of the fixed rate convertible bond significantly
reduces the Group's exposure to an increase in interest rates.
Convertible bonds
In December 2020 the Group issued a £350.0m convertible bond, issued by IWG Group Holdings Sarl and transferred in the year
to IWG International Holdings Sarl, a subsidiary of the Group and guaranteed by IWG plc, which is due for repayment in 2027 if not
previously converted into shares. If the conversion option is exercised by the holder of the option, the issuer has the choice to
settle by cash or equity shares in the Group. The holders of the bond have the right to put the bonds back to the Group in 2025 at
par. The bond carries a fixed coupon of 0.5% per annum. The bond liability is split between corporate borrowings (debt) and a
derivative financial liability. At the date of issue, the £350.0m was bifurcated at £298.2m and £51.8m between corporate
borrowings (debt) and a derivative financial liability, respectively. At 31 December 2021, the debt was valued at its amortised cost,
£308.4m (2020: £298.8m) and the derivative liability at its fair value, £26.9m (2020: £49.4m).
The derivative liability represents a level 3 instrument, which has been valued with reference to the total convertible bond price
(a level 1 valuation) minus the level 3 valuation of the debt host. A change of 10 basis points in the credit spread that is indirectly
used to value the derivative liability would have increased or decreased profit or loss by £1.2m (2020: £1.1m).
iwgplc.com
iwgplc.com
149
149
NOTES TO THE ACCOUNTS CONTINUED
25. Share-based payments
There are three share-based payment plans, details of which are outlined below:
Plan 1: IWG Group Share Option Plan
During 2004 the Group established the IWG Group Share Option Plan that entitles Executive Directors and certain employees to
purchase shares in IWG plc. In accordance with this programme, holders of vested options are entitled to purchase shares at the
market price of the shares at the day before the date of grant.
The IWG Group also operates the IWG Group Share Option Plan (France) which is included within the numbers for the IWG Share
Option Plan disclosed above. The terms of the IWG Share Option Plan (France) are materially the same as the IWG Group Share
Option Plan with the exception that they are only exercisable from the fourth anniversary of the date of grant, assuming the
performance conditions have been met.
Reconciliation of outstanding share options
At 1 January
Granted during the year
Lapsed during the year
Exercised during the year
Outstanding at 31 December
Exercisable at 31 December
2021
2020
Number of
share options
42,926,841
3,508,813
(2,566,253)
(1,041,658)
42,827,743
11,694,349
Weighted average
exercise price per
share
184.38
Number of
share options
32,511,195
Weighted average
exercise price per
share
200.34
313.90
21,248,148
190.35
142.60
(9,296,503)
(1,535,999)
195.65
42,926,841
198.51
7,355,419
167.62
208.41
145.00
184.38
174.33
Date of grant
13/06/2012
12/06/2013
18/11/2013
18/12/2013
20/05/2014
05/11/2014
19/05/2015
22/12/2015
29/06/2016
28/09/2016
01/03/2017
14/12/2017
10/10/2018
21/12/2018 (Grant 1)
28/12/2018 (Grant 2)(2)
15/05/2019
13/09/2019
19/12/2019
02/04/2020
15/05/2020
05/08/2020
09/09/2020
26/03/2021
11/05/2021
28/06/2021
12/08/2021
10/11/2021
09/12/2021
Total
Numbers
granted
11,189,000
Weighted average
exercise price per
share
84.95
Lapsed
(3,805,914)
Exercised
(6,447,899)
7,741,000
155.60
(4,306,000)
(2,752,173)
600,000
1,000,000
1,845,500
191.90
195.00
(575,000)
(833,333)
187.20
(1,658,500)
(25,000)
(166,667)
(160,300)
12,875,796
186.00
(8,698,738)
(1,646,552)
1,906,565
1,154,646
444,196
249,589
1,200,000
1,000,507
685,127
300,000
250.80
(1,829,565)
322.20
272.50
258.00
283.70
(395,186)
(367,735)
(214,313)
–
197.00
(1,000,507)
223.20
203.10
(685,127)
(75,000)
20,900,000
199.80
(8,608,330)
613,872
196,608
108,349
20,325,000
450,000
300,000
173,148
466,377
318,645
487,964
580,655
1,500,000
155,172
88,767,716
341.90
402.30
408.60
165.00
202.00
222.60
291.00
342.80
376.60
307.40
310.00
297.70
290.00
(385,635)
(130,508)
(81,427)
(747,500)
(300,000)
–
–
–
–
–
–
–
–
–
(25,000)
(11,009)
(7,055)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
At 31 Dec
2021
935,187(1)
682,827(1)
–(1)
–(1)
26,700(1)
2,530,506(2)
77,000(2)
734,460(2)
65,452(2)
28,221(2)
1,200,000(2)
–(1)
–(1)
225,000(2)
12,291,670(2)
228,237(3)
66,100(2)
26,922(3)
19,577,500(3)
150,000(3)
300,000(3)
173,148(3)
466,377(3)
318,645(3)
487,964(3)
580,655 (3)
1,500,000 (3)
155,172 (3)
Exercisable from
13/06/2015
Expiry date
13/06/2022
12/06/2016
12/06/2023
18/11/2016
17/11/2023
18/12/2016
17/12/2023
20/05/2017
19/05/2024
05/11/2017
04/11/2024
19/05/2018
18/05/2025
22/12/2018
22/12/2025
29/06/2019
29/06/2026
28/09/2019
28/09/2026
01/03/2020
01/03/2027
14/12/2020
14/12/2027
10/10/2021
10/10/2028
21/12/2021
21/12/2028
28/12/2021
28/12/2028
15/05/2022
15/05/2029
13/09/2022
13/09/2029
19/12/2022
19/12/2029
02/04/2023
02/04/2030
15/05/2023
15/05/2030
05/08/2023
05/08/2030
09/09/2023
09/09/2030
26/03/2024
26/03/2031
11/05/2024
11/05/2031
28/06/2024
28/06/2031
12/08/2024
12/08/2031
10/11/2024
10/11/2031
09/12/2024
09/12/2031
(34,698,318)
(11,241,655)
42,827,743
1. These options have fully vested as of 31 December 2021.
2. The performance targets for these options have been met and they are subject to vesting schedules as described below.
3. These options are subject to performance targets and vesting schedules as described below.
The vesting of share options is subject to an ongoing employment condition. As at 31 December 2021 there were 11,649,349
(2020: 7,355,419) outstanding share options which had fully vested with no further performance or holding period requirements
and which had a weighted average exercise price of £198.51 (2020: £174.33).
150
150
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
FINANCIAL STATEMENTS
Performance conditions for share options
May 2015 share options
The share options outstanding under this grant at 31 December 2021 reflect the options that have been awarded based on
achievement against the relevant performance targets and are now vesting ratably over a five-year period beginning May 2020
and ending May 2024.
December 2015 share options
The share options outstanding under this grant at 31 December 2021 reflect the options that have been awarded based on
achievement against the relevant performance targets and are now vesting ratably over a five-year period beginning December
2018 and ending December 2022.
June 2016 share options
The share options outstanding under this grant at 31 December 2021 reflect the options that have been awarded based on
achievement against the relevant performance targets and are now vesting ratably over a five-year period beginning June 2019
and ending June 2023.
September 2016 share options
The share options outstanding under this grant at 31 December 2021 reflect the options that have been awarded based on
achievement against the relevant performance targets and are now vesting ratably over a five-year period beginning September
2019 and ending September 2023.
March 2017 share options
The share options outstanding under this grant at 31 December 2021 reflect the options that have been awarded based on
achievement against the relevant performance targets and are now vesting ratably over a three-year period beginning March 2020
and ending March 2022.
December 2018 (Grant 1) share options
The share options outstanding under this grant at 31 December 2021 are subject to the Group ranking at or above the median for
TSR performance relative to a comparator group over a period of three years with a minimum performance threshold of achieving
a ranking at the median TSR or above and the maximum award being given for exceeding the comparator group median TSR
performance by 10% or more. Any shares awarded based on achievement of these performance targets are subject to vesting
ratably over a three-year period beginning December 2021 and ending December 2023.
December 2018 (Grant 2) share options
The share options outstanding under this grant at 31 December 2021 reflect the options that have been awarded based on
achievement against performance targets and are now subject to vesting ratably over a three-year period beginning December
2021 and ending December 2023.
May 2019 share options
The share options outstanding under this grant at 31 December 2021 are subject to Group performance targets based on Group
ranking at or above the median for TSR performance relative to a comparator group over a period of three years. Any shares
awarded based on achievement of these performance targets will be subject to vesting ratably over a three-year period beginning
May 2022 and ending May 2024.
September 2019 share options
The share options outstanding under this grant at 31 December 2021 are subject to Group performance targets based on Group
operating profit and the Group ranking at or above the median for TSR performance relative to a comparator group over a period of
three years with a minimum performance threshold of achieving a ranking at the median TSR or above and the maximum award
being given for exceeding the comparator group median TSR performance by 10% or more. Any shares awarded based on
achievement of these performance targets will be subject to vesting ratably over a five-year period beginning September 2022
and ending September 2026.
December 2019 share options
The share options outstanding under this grant at 31 December 2021 are subject to Group performance targets based on Group
operating profit and the Group ranking at or above the median for TSR performance relative to a comparator group over a period of
three years with a minimum performance threshold of achieving a ranking at the median TSR or above and the maximum award
being given for exceeding the comparator group median TSR performance by 10% or more. Any shares awarded based on
achievement of these performance targets will be subject to vesting ratably over a five-year period beginning December 2022 and
ending December 2026.
April 2020 share options
The share options outstanding under this grant at 31 December 2021 are subject to performance targets with 50% of the options
subject to the achievement of a performance target based on the Group ranking at or above the median for TSR performance
relative to a comparator group over a period of three years with a minimum performance threshold of achieving a ranking at the
median TSR or above and the maximum award being given for exceeding the comparator group median TSR performance by 10%
or more. The remaining 50% of outstanding options are subject to individual and Group franchising targets for a three-year period
with a minimum performance threshold based on achieving a minimum level of franchises and the maximum award based on
achieving a stretch target for franchises. Any shares awarded based on achievement of these performance targets will then be
subject to vesting ratably over a three-year period beginning April 2023 and ending April 2025.
iwgplc.com
iwgplc.com
151
151
NOTES TO THE ACCOUNTS CONTINUED
25. Share-based payments (continued)
May 2020 share options
The share options outstanding under this grant at 31 December 2021 are subject to performance targets with 50% of the options
subject to the achievement of a performance target based on the Group ranking at or above the median for TSR performance
relative to a comparator group over a period of three years with a minimum performance threshold of achieving a ranking at the
median TSR or above and the maximum award being given for exceeding the comparator group median TSR performance by 10%
or more. The remaining 50% of outstanding options are subject to individual and Group franchising targets for a three-year period
with a minimum performance threshold based on achieving a minimum level of franchises and the maximum award based on
achieving a stretch target for franchises. Any shares awarded based on achievement of these performance targets will then be
subject to vesting ratably over a three-year period beginning May 2023 and ending May 2025.
August 2020 share options
The share options outstanding under this grant at 31 December 2021 are subject to performance targets with 50% of the options
subject to the achievement of a performance target based on the Group ranking at or above the median for TSR performance
relative to a comparator group over a period of three years with a minimum performance threshold of achieving a ranking at the
median TSR or above and the maximum award being given for exceeding the comparator group median TSR performance by 10%
or more. The remaining 50% of outstanding options are subject to individual and Group franchising targets for a three-year period
with a minimum performance threshold based on achieving a minimum level of franchises and the maximum award based on
achieving a stretch target for franchises. Any shares awarded based on achievement of these performance targets will then be
subject to vesting ratably over a three-year period beginning August 2023 and ending August 2025.
September 2020 share options
The share options outstanding under this grant at 31 December 2021 are subject to performance targets with 50% of the options
subject to the achievement of a performance target based on the Group ranking at or above the median for TSR performance
relative to a comparator group over a period of three years with a minimum performance threshold of achieving a ranking at the
median TSR or above and the maximum award being given for exceeding the comparator group median TSR performance by 10%
or more. The remaining 50% of outstanding options are subject to individual and Group franchising targets for a three-year period
with a minimum performance threshold based on achieving a minimum level of franchises and the maximum award based on
achieving a stretch target for franchises. Any shares awarded based on achievement of these performance targets will then be
subject to vesting ratably over a three-year period beginning September 2023 and ending September 2025.
March 2021 share options
The share options outstanding under this grant at 31 December 2021 are subject to Group performance targets based on the Group
ranking at or above the median for TSR performance relative to a comparator group over a period of three years with a minimum
performance threshold of achieving a ranking at the median TSR or above and the maximum award being given for exceeding the
comparator group median TSR performance by 10% or more. Any shares awarded based on achievement of these performance targets
will then be subject to vesting ratably over a three-year period beginning March 2024 and ending March 2026.
May 2021 share options
The share options outstanding under this grant at 31 December 2021 are subject to Group performance targets based on the
Group ranking at or above the median for TSR performance relative to a comparator group over a period of three years with a
minimum performance threshold of achieving a ranking at the median TSR or above and the maximum award being given for
exceeding the comparator group median TSR performance by 10% or more. Any shares awarded based on achievement of these
performance targets will then be subject to vesting ratably over a three-year period beginning May 2024 and ending May 2026.
June 2021 share options
The share options outstanding under this grant at 31 December 2021 are subject to Group performance targets based on the
Group ranking at or above the median for TSR performance relative to a comparator group over a period of three years with a
minimum performance threshold of achieving a ranking at the median TSR or above and the maximum award being given for
exceeding the comparator group median TSR performance by 10% or more. Any shares awarded based on achievement of these
performance targets will then be subject to vesting ratably over a three-year period beginning June 2024 and ending June 2026.
August 2021 share options
The share options outstanding under this grant at 31 December 2021 are subject to Group performance targets based on the Group
ranking at or above the median for TSR performance relative to a comparator group over a period of three years with a minimum
performance threshold of achieving a ranking at the median TSR or above and the maximum award being given for exceeding the
comparator group median TSR performance by 10% or more. Any shares awarded based on achievement of these performance
targets will then be subject to vesting ratably over a three-year period beginning August 2024 and ending August 2026.
November 2021 share options
The share options outstanding under this grant at 31 December 2021 are subject to performance targets with 17% of the options subject
to the achievement of a performance target based on the Group ranking at or above the median for TSR performance relative to a
comparator group over a period of three years with a minimum performance threshold of achieving a ranking at the median TSR or above
and the maximum award being given for exceeding the comparator group median TSR performance by 10% or more.
Another 17% of the options are subject to individual and Group franchising targets for a three-year period with a minimum performance
threshold based on achieving a minimum level of franchises and the maximum award based on achieving a stretch target for franchises.
22% of the options are subject to targets of value returned to shareholders during a two-year period with a minimum performance
threshold based on achieving a minimum level of value paid per share to shareholders and the maximum award given for
exceeding the maximum level of value paid per share to shareholders.
152
152
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
FINANCIAL STATEMENTS
A further 22% of the options are subject to the date in which the value returned to shareholder targets are achieved during the
two-year period with the maximum awarded if the shareholder return targets are achieved by December 2022 and half is awarded
if the shareholder return targets are achieved by December 2023.
The remaining 22% of outstanding options are subject to the percentage of shareholder return paid in cash during the two-year
period with the maximum awarded if the shareholder return targets are paid 100% in cash and half is awarded if the shareholder
return targets are paid by a minimum of 50% in cash. Any shares awarded based on achievement of these performance targets will
then be subject to vesting ratably over a three-year period beginning November 2024 and ending November 2026.
December 2021 share options
The share options outstanding under this grant at 31 December 2021 are subject to Group performance targets based on the
Group ranking at or above the median for TSR performance relative to a comparator group over a period of three years with a
minimum performance threshold of achieving a ranking at the median TSR or above and the maximum award being given for
exceeding the comparator group median TSR performance by 10% or more. Any shares awarded based on achievement of these
performance targets will then be subject to vesting ratably over a three-year period beginning December 2024 and ending
December 2026.
Measurement of fair values
The fair value of the rights granted through the employee share purchase plan was measured based on the Monte Carlo simulation
or the Black-Scholes formula. The expected volatility is based on the historic volatility adjusted for any abnormal movement in
share prices.
The inputs to the model are as follows:
Share price on grant date
Exercise price
Expected volatility
Option life
Expected dividend
Fair value of option at time of grant
Risk-free interest rate
Share price on grant date
Exercise price
Expected volatility
Option life
Expected dividend
Fair value of option at time of grant
Risk-free interest rate
Share price on grant date
Exercise price
Expected volatility
Option life
Expected dividend
Fair value of option at time of grant
Risk-free interest rate
December
2021
290.00
290.00
November
2021
297.70
297.70
August
2021
310.00
310.00
June
2021
307.40
307.40
May
2021
376.60
376.60
March
2021
342.80
342.80
53.80% -
56.45%
53.77% -
56.46%
53.67% -
57.07%
53.69% -
58.28%
53.78% -
59.19%
53.64% -
59.13%
3-7 years
3-7 years
3-7 years
3-7 years
3-7 years
3-7 years
1.17%
1.17%
1.12%
1.13%
0.96%
1.00%
152.27p -
158.90p
157.28p -
163.15p
163.92p -
171.67p
0.52% -
0.61%
0.52% -
0.61%
0.37% -
0.49%
162.59p -
173.10p
0.37% -
0.49%
202.75p -
217.81p
0.16% -
0.34%
183.02p -
196.95 p
0.15% -
0.33%
September
2020
291.00p
August
2020
222.60p
May
2020
202.00p
April
2020
165.00p
December
2019
408.60p
September
2019
402.30p
May
2019
341.90p
291.00p
222.60p
202.00p
165.00p
408.60p
402.30p
341.90p
51.81% -
62.96%
51.88% -
63.17%
50.15% -
61.06%
49.02% -
59.29%
36.24% –
44.72%
36.33% -
44.83%
38.84% -
45.75%
3-7 years
3-7 years
3-7 years
3-7 years
3-7 years
3-7 years
3-5 years
2.39%
3.12%
3.44%
4.21%
1.59%
1.62%
1.85%
122.93p -
146.68p
(0.08%) -
(0.04%)
84.95p –
102.54p
(0.08%) -
(0.04%)
71.39p -
86.80p
0.00% -
0.06%
50.79p -
62.29p
141.77p -
172.84p
137.79p -
169.19p
120.77p -
141.08p
0.00% -
0.06%
0.57% -
0.65%
0.48% -
0.50%
0.52% -
0.60p
December
2018
(Grant 2)
199.80p
December
2018
(Grant 1)
203.10p
March
2017
283.70p
September
2016
258.00p
June
2016
272.50p
December
2015
322.20p
May
2015
250.80p
199.80p
203.10p
283.70p
258.00p
272.50p
322.20p
250.80p
37.66% -
44.35%
37.63% –
44.25%
27.42% –
29.87%
27.45% –
32.35%
27.71% -
34.81%
24.80% -
37.08%
27.23% -
30.12%
3-5 years
3-5 years
3-5 years
3-7 years
3-7 years 3-7 years
3-7 years
2.95%
58.77% -
69.33%
0.87% -
1.01%
2.90%
39.36p -
46.42p
0.73% -
0.88%
1.80%
1.80%
1.71%
1.40%
1.59%
44.51p -
76.88p
0.23% -
0.56%
40.96p -
67.89p
0.09% -
0.38%
44.28p -
78.68p
0.14% -
0.39%
29.76p -
90.61p
0.14% -
0.21%
42.35p –
69.12p
0.81% -
1.53%
iwgplc.com
iwgplc.com
153
153
NOTES TO THE ACCOUNTS CONTINUED
25. Share-based payments (continued)
Plan 2: IWG plc Performance Share Plan (PSP)
The PSP provides for the Remuneration Committee to make standalone awards, based on normal plan limits, up to a maximum of
250% of base salary.
Reconciliation of outstanding share awards
At 1 January
PSP awards granted during the year
Lapsed during the year
Exercised during the year
Outstanding at 31 December
Exercisable at 31 December
2021
Number of
awards
3,237,768
2020
Number of
awards
2,370,535
959,015
915,739
(1,036,166)
–
–
(48,506)
3,160,617
3,237,768
–
–
There were no shares which were exercised during the year ended 31 December 2021. The weighted average share price at the
date of exercise for share awards exercised during the year ended 31 December 2021 was nil pence (2020: 288.60p).
Plan
PSP
PSP
PSP
PSP
PSP
Date of grant
01/03/2017
Numbers
granted
1,095,406
Lapsed
(512,367)
Exercised
–
07/03/2018
1,278,350
1,051,546
07/03/2019
1,058,578
(276,151)
04/03/2020
26/03/2021
915,739
959,015
(306,407)
–
5,307,088
(2,246,471)
–
–
–
–
–
At 31 Dec
2021
Release date
583,039 01/03/2022
226,804 07/03/2023
782,427 07/03/2024
609,332 04/03/2025
959,015 26/03/2026
3,160,617
Measurement of fair values
The fair value of the rights granted through the employee share purchase plan was measured based on the Monte Carlo simulation.
The inputs to the model are as follows:
Share price on grant date
Exercise price
Number of simulations
Number of companies
Award life
Expected dividend
Fair value of award at time of grant
Risk-free interest rate
26/03/2021
PSP
346.40p
nil
04/03/2020
PSP
356.50p
nil
07/03/2019
PSP
244.90p
07/03/2018
PSP
240.90p
nil
nil
01/03/2017
PSP
283.70p
nil
250,000
250,000
250,000
250,000
250,000
32
5 years
1.00%
206.19p-
312.37p
0.33%
32
5 years
1.95%
292.36p-
192.98p
0.06%
32
5 years
2.57%
32
5 years
2.37%
32
5 years
1.80%
124.38p –
188.43p
124.92p –
189.26p
155.83p –
236.08p
0.79%
1.21%
0.56%
It is recognised by the Remuneration Committee that the additional EPS targets represent a highly challenging goal and
consequently, in determining whether they have been met, the Committee will exercise its discretion. The overall aim is that the
relevant EPS targets must have been met on a run-rate or underlying basis. As such, an adjusted measure of EPS will be calculated
to assess the underlying performance of the business.
2017 PSP investment grant
The total number of shares awarded was subject to three different performance conditions with one third subject to defined
earnings per share (EPS) conditions, one third subject to relative total shareholder return (TSR) conditions and one third subject
return on investment (ROI) conditions. These conditions were all achieved based on 2019 results and the total 583,039 shares
vested in March 2021.
2018 PSP investment grant
The total number of shares awarded was subject to three different performance conditions, with one third subject to defined
earnings per share (EPS) conditions, one third subject to relative total shareholder return (TSR) conditions and one third subject to
return on investment (ROI) conditions. These conditions are measured over three financial years commencing on 1 January 2018.
Based on results as of 31 December 2020, the relative TSR target of exceeding the comparator group median TSR by more
than 10% was achieved in full, resulting in the vesting of 226,804 shares subject to a holding period ending March 2022.
The performance targets for EPS and ROI were not met and the share awards pursuant to these targets lapsed.
154
154
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
FINANCIAL STATEMENTS
2019 PSP investment grant
The total number of shares awarded is subject to three different performance conditions. These conditions are measured over
three financial years commencing on 1 January 2019. Thus, conditional on meeting these performance targets, these shares will
vest in March 2024. One third is subject to defined earnings per share (EPS) conditions, one third is subject to relative total
shareholder return (TSR) conditions and one third is subject to return on investment (ROI) conditions.
The EPS condition is based on the compound annual growth in EPS over the performance period measured from EPS in the
financial year ending 31 December 2018 as follows:
Vesting scale
25%
Between 5% and 25%
5%
% of one third of the award that vests
100%
On a straight-line basis between 0% and 100%
0%
The TSR condition is based on the performance of the Group’s TSR growth against the median TSR growth of the comparator group
as follows:
Vesting scale
Exceeds the median by 10% or more
Exceeds the median by less than 10%
Ranked at median
Ranked below the median
% of one third of the award that vests
100%
On a straight-line basis between 25% and 100%
25%
0%
The ROI condition is based on the ROI improvement over the performance period relative to ROI for the financial year ending
31 December 2018 as follows:
Vesting scale
Exceeds 2018 ROI plus 300 basis points
Exceeds 2018 ROI by less than 300 basis points
Equal to or less than the 2018 ROI
% of one third of the award that vests
100%
On a straight-line basis between 0% and 100%
0%
2020 PSP investment grant
The total number of shares awarded is subject to relative total shareholder return (TSR) conditions, measured over three financial
years commencing on 1 January 2020. Thus, conditional on meeting these performance targets, these shares will vest in December
2025.
The TSR condition is based on the performance of the Group’s TSR growth against the median TSR growth of the comparator group
as follows:
Exceeds the median by 10% or more
Exceeds the median by less than 10%
Ranked at median
Ranked below the median
On a straight-line basis between 25% and 100%
% of the award that vests
100%
25%
0%
2021 PSP investment grant
The total number of shares awarded is subject to relative total shareholder return (TSR) conditions, measured over three financial
years commencing on 1 January 2021. Thus, conditional on meeting these performance targets, these shares will vest in March
2026.
The TSR condition is based on the performance of the Group’s TSR growth against the median TSR growth of the comparator group
as follows:
Exceeds the median by 10% or more
Exceeds the median by less than 10%
Ranked at median
Ranked below the median
On a straight-line basis between 25% and 100%
% of the award that vests
100%
25%
0%
iwgplc.com
iwgplc.com
155
155
NOTES TO THE ACCOUNTS CONTINUED
25. Share-based payments (continued)
Plan 3: Deferred Share Bonus Plan
The Deferred Share Bonus Plan, established in 2016, enables the Board to award options to selected employees on a discretionary
basis. The awards are conditional on the ongoing employment of the related employees for a specified period of time. Once this
condition is satisfied, those awards that are eligible will vest three years after the date of grant.
Reconciliation of outstanding share options
At 1 January
DSBP awards granted during the year
Lapsed during the year
Exercised during the year
Outstanding at 31 December
Exercisable at 31 December
2021
Number of
awards
376,291
–
–
–
2020
Number of
awards
495,678
264,277
–
(383,664)
376,291
376,291
–
–
The weighted average share price at the date of exercise for share awards exercised during the year ended 31 December 2021
was nil (2020: 360.62p).
Plan
DSBP
DSBP
Measurement of fair values
Date of grant
07/03/2019
04/03/2020
Numbers
granted
112,014
264,277
376,291
Lapsed
–
–
–
Exercised
–
–
–
At 31 Dec
2021
Release date
112,014 07/03/2022
264,277 04/03/2023
376,291
The fair value of the rights granted through the employee share purchase plan was measured based on the Black-Scholes formula.
The expected volatility is based on the historic volatility adjusted for any abnormal movement in share prices.
The inputs to the model are as follows:
Share price on grant date
Exercise price
Number of simulations
Number of companies
Award life
Expected dividend
Fair value of award at time of grant
Risk-free interest rate
March 2020
356.50p
March 2019
244.90p
nil
–
–
nil
–
–
3 years
1.95%
3 years
2.57%
292.36p
188.42p
0.00%
0.68%
26. Retirement benefit obligations
The Group accounts for the Swiss and Philippines pension plans as defined benefit plans under IAS 19 – Employee Benefits.
The reconciliation of the net defined benefit liability and its components is as follows:
Fair value of plan assets
Present value of obligations
Net funded obligations
Switzerland
Philippines
4.6
(5.8)
(1.2)
–
(0.7)
(0.7)
2021
£m
Total
4.6
(6.5)
(1.9)
Switzerland
4.8
Philippines
–
(6.0)
(1.2)
(0.9)
(0.9)
2020
£m
Total
4.8
(6.9)
(2.1)
156
156
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
27. Acquisitions
Current period acquisitions
During the year ended 31 December 2021 the Group made various individually immaterial acquisitions for a total consideration
of £30.0m.
FINANCIAL STATEMENTS
£m
Net assets acquired
Intangible assets
Right-of-use assets
Other property, plant and equipment
Cash
Other current and non-current assets
Lease liabilities
Current liabilities
Non-current liabilities
NCI based on their proportionate interest in the recognised amounts of the assets and
liabilities of ‘The Wing’
Goodwill arising on acquisition
Negative goodwill arising on acquisition
Total consideration
Less: deferred consideration
Less: contingent consideration
Cash flow on acquisition
Cash paid
Less: cash acquired
Net cash inflow
Book value
Provisional
fair value
adjustments
Provisional
fair value
1.4
78.3
24.8
32.1
12.6
(80.8)
(27.0)
(10.9)
30.5
–
–
–
–
–
–
–
–
–
1.4
78.3
24.8
32.1
12.6
(80.8)
(27.0)
(10.9)
30.5
(15.2)
16.4
(1.7)
30.0
(4.7)
(3.8)
21.5
(32.1)
(10.6)
Goodwill of £16.4m arose relating to 2021 acquisitions. In addition, a final fair value adjustment of £(3.7)m and a £3.0m
contingent consideration were recognised for the 2020 acquisitions.
Goodwill arising on acquisitions in 2021 includes negative goodwill of £1.7m, recognised as part of the selling, general and
administration expenses in the consolidated income statement.
The goodwill arising on the 2021 acquisitions reflects the anticipated future benefits IWG can obtain from operating the
businesses more efficiently, primarily through increasing occupancy and the addition of value-adding products and services.
Of the above goodwill, £16.4m is expected to be deductible for tax purposes.
If the above acquisitions had occurred on 1 January 2021, the revenue and net retained loss arising from these acquisitions
would have been £16.7m and £23.0m respectively. In the year, the acquisitions contributed revenue of £11.9m and net retained
loss of £19.3m.
Deferred consideration of £4.7m arose on the acquisitions made in the year and is held on the Group’s balance sheet at
31 December 2021. No additional deferred consideration relating to prior period acquisitions is held on the Group’s balance sheet
at 31 December 2021.
Contingent consideration of £3.8m arose on the 2021 acquisitions. No contingent consideration was paid during the current year
with respect to milestones achieved on previous acquisitions. Contingent consideration balances of £6.8m are held on the Group’s
balance sheet at 31 December 2021.
The acquisition costs associated with these transactions were £1.0m, recorded within administration expenses in the consolidated
income statement.
For acquisitions completed in 2021, the fair value of assets acquired has only been provisionally assessed, pending completion of
a fair value assessment which has not yet been completed. The main changes in the provisional fair values expected are primarily
for customer relationships and property, plant and equipment. The final assessment of the fair value of these assets will be made
within 12 months of the acquisition dates and any adjustments reported in future reports.
iwgplc.com
iwgplc.com
157
157
NOTES TO THE ACCOUNTS CONTINUED
27. Acquisitions (continued)
Prior period acquisitions
During the year ended 31 December 2020 the Group made acquisitions for a total consideration of £31.5m.
£m
Net assets acquired
Intangible assets
Right-of-use assets
Other property, plant and equipment
Cash
Other current and non-current assets
Lease liabilities
Current liabilities
Non-current liabilities
Previously held share of net assets(1)
Goodwill arising on acquisition
Total consideration
Less: deferred consideration
Less: contingent consideration(2)
Cash flow on acquisition
Cash paid
Less: cash acquired
Net cash outflow
Book value
Provisional
fair value
adjustments
Final
fair value
adjustments
Final
fair value
–
3.0
5.1
1.7
12.3
(3.0)
(14.8)
(5.9)
(1.6)
–
–
–
–
–
–
–
–
–
3.7
–
–
–
–
–
–
–
3.7
(3.7)
3.7
3.0
5.1
1.7
12.3
(3.0)
(14.8)
(5.9)
2.1
1.4
28.0
31.5
–
(3.0)
28.5
(1.7)
26.8
1. The 2020 acquisitions include one stepped-acquisition where the non-controlling interest in a former joint venture was acquired by the Group.
2. Contingent consideration of £3.0m was recorded in 2021, relating to an acquisition completed in late December 2020. This consideration, and the related
£3.0m goodwill, has been recognised in 2021.
The goodwill arising on the 2020 acquisitions reflects the anticipated future benefits IWG can obtain from operating the
businesses more efficiently, primarily through increasing occupancy and the addition of value-adding products and services. Of
the above goodwill, £28.0m was expected to be deductible for tax purposes.
If the above acquisitions had occurred on 1 January 2020, the revenue and net retained profit arising from these acquisitions
would have been £17.8m and £1.5m respectively. During 2020, the acquisitions contributed revenue of £2.6m and net retained
profit of £0.6m.
No deferred consideration arose on the 2020 acquisitions.
Contingent consideration of £3.0m arose on the 2020 acquisitions but was only recognised in 2021 due to the late timing of the
related acquisition. No contingent consideration was paid during the current year with respect to milestones achieved on previous
acquisitions.
The acquisition costs associated with these transactions were £0.4m, recorded within administration expenses in the consolidated
income statement.
The prior year comparative information has not been restated due to the immaterial nature of the final fair value adjustments
recognised in 2020.
158
158
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
Non-controlling interests
During 2021, the Group completed the acquisition of ‘The Wing’, which included a 43% non-controlling interest.
The following table summarises the information relating to each of the Group’s subsidiaries that have a material non-controlling
interest.
FINANCIAL STATEMENTS
NCI percentage
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Net assets attributable to NCI
Revenue
Loss after tax
Other comprehensive income
Total comprehensive income
Loss allocated to NCI
Other comprehensive income allocated to NCI
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net increase in cash and cash equivalents
28. Capital commitments
2021
43%
42.3
11.4
(24.8)
(6.7)
22.2
9.6
0.7
(13.0)
–
(12.3)
(5.6)
–
(14.1)
29.3
(7.4)
7.8
2020
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Contracts placed for future capital expenditure not provided for in the financial statements
2021
£m
88.7
2020
£m
147.0
These commitments are principally in respect of centre fit-out obligations. There are £0.5m capital commitments in respect of joint
ventures at 31 December 2021 (2020: £nil).
29. Contingent assets and liabilities
The Group has bank guarantees and letters of credit held with certain banks, predominantly in support of leasehold contracts with
a variety of landlords, amounting to £309.4m (2020: £143.9m). There are no material lawsuits pending against the Group.
30. Related parties
Parent and subsidiary entities
The consolidated financial statements include the results of the Group and its subsidiaries.
Joint ventures
The following table provides the total amount of transactions that have been entered into with related parties for the relevant
financial year.
£m
2021
Joint ventures
2020
Joint ventures
Management
fees received
from related
parties
Amounts
owed by
related party
Amounts
owed to
related party
3.5
2.6
19.7
20.0
17.6
4.3
As at 31 December 2021, none of the amounts due to the Group have been provided for as the expected credit losses arising on
the balances are considered immaterial (2020: £nil). All outstanding balances with these related parties are priced on an arm’s
length basis. None of the balances are secured.
Key management personnel
No loans or credit transactions were outstanding with Directors or Officers of the Company at the end of the year or arose during
the year that are required to be disclosed.
iwgplc.com
iwgplc.com
159
159
NOTES TO THE ACCOUNTS CONTINUED
Compensation of key management personnel (including Directors)
Key management personnel include those personnel (including Directors) that have responsibility and authority for planning,
directing and controlling the activities of the Group:
Short-term employee benefits
Retirement benefit obligations
Share-based payments
2021
£m
4.3
0.3
1.8
6.4
2020
£m
6.7
0.2
1.9
8.8
Share-based payments included in the table above reflect the accounting charge in the year. The full fair value of awards granted
in the year was £6.1m (2020: £6.8m). These awards are subject to performance conditions and vest over three, four and five years
from the award date (note 25).
Transactions with related parties
During the year ended 31 December 2021 the Group acquired goods and services from a company indirectly controlled by a
Director of the Company amounting to £27,319 (2020: £5,629). There was a £6,751 balance outstanding at the year-end
(2020: £5,629).
All transactions with these related parties are priced on an arm’s length basis and are to be settled in cash. None of the balances
are secured.
31. Principal Group companies
The Group’s principal subsidiary undertakings at 31 December 2021, their principal activities and countries of incorporation are
set out below:
% of
ordinary
shares and
votes held
Name of undertaking
Management companies
Country of
incorporation
% of
ordinary
shares and
votes held
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
RGN Management Limited Partnership Canada
Pathway IP II Sarl
Franchise International GmbH
Switzerland
Switzerland
Regus Service Centre Philippines B.V.
Philippines
Regus Global Management Centre SA
Switzerland
100
100
100
100
100
Regus Group Services Ltd
IW Group Services (UK) Ltd
United Kingdom 100
United Kingdom 100
Regus Management Group LLC
United States
100
Holding and finance companies
IWG Enterprises Sarl
IWG Group Holdings Sarl
IWG International Holdings Sarl
Genesis Finance Sarl
Pathway Finance Sarl
Pathway Finance EUR 2 Sarl
Pathway Finance USD 2 Sarl
Regus Group Limited
Regus Corporation
Switzerland
Luxembourg
Luxembourg
Switzerland
Switzerland
Switzerland
Switzerland
100
100
100
100
100
100
100
United Kingdom 100
United States
100
Name of undertaking
Trading companies
Regus Australia Management Pty Ltd
Regus Belgium SA
Regus do Brasil Ltda
Regus Business Service (Shenzen) Ltd
Regus Management ApS
Regus Management (Finland) Oy
RBC Deutschland GmbH
Regus CME Ireland Limited
Regus Business Centres Limited
Regus Business Centres Italia Srl
Country of
incorporation
Australia
Belgium
Brazil
China
Denmark
Finland
Germany
Ireland
Israel
Italy
Regus Management Malaysia Sdn Bhd
Malaysia
Regus Management de Mexico, SA de CV Mexico
Regus New Zealand Management Ltd
New Zealand
Regus Business Centre Norge AS
IWG Management Sp z.o.o.
Regus Business Centre, Lda
Norway
Poland
Portugal
Regus Management Singapore Pte Ltd
Singapore
Regus Management Espana SL
IWG Management (Sweden) AB
Avanta Managed Offices Ltd
Basepoint Centres Limited
H Work LLC
RGN National Business Centre LLC
RB Centres LLC
Spain
Sweden
United Kingdom 100
United Kingdom 100
United States
United States
United States
100
100
100
160
160
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
FINANCIAL STATEMENTS
32. Key judgemental and estimates areas adopted in preparing these accounts
The preparation of consolidated financial statements in accordance with IFRS requires management to make certain judgements
and assumptions that affect reported amounts and related disclosures.
Key judgements
Adjusting items
Adjusting items are separately disclosed by the Group so as to provide readers with helpful additional information on the
performance of the business across periods. Items arising specifically from the impact of the COVID-19 pandemic have been
deemed to meet the definition of adjusting items. Each of these items are considered to be significant in nature and/or size and
are also consistent with items treated as adjusting in prior periods in which significant non-recurring transactions occurred. The
exclusion of these items is consistent with how the business performance is planned by, and reported to, the Board and the
Operating Committee. The profit before tax and adjusting items measure is not a recognised profit measure under IFRS and may
not be directly comparable with adjusted profit measures used by other companies. The classification of adjusting items requires
significant management judgement after considering the nature and intentions of a transaction or provision.
Tax assets and liabilities
The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the worldwide
provision for income taxes. Where appropriate, the Group assesses the potential risk of future tax liabilities arising from the
operation of its business in multiple tax jurisdictions and includes provisions within tax liabilities for those risks that can be
estimated reliably. Changes in existing tax laws can affect large international groups such as IWG and could result in additional tax
liabilities over and above those already provided for.
Determining the lease term of contracts with renewal and termination options
IFRS 16 defines the lease term as the non-cancellable period of a lease together with the options to extend or terminate a lease,
if the lessee were reasonably certain to exercise that option. Where a lease includes the option for the Group to extend the lease
term, the Group makes a judgement as to whether it is reasonably certain that the option will be taken. This will take into account
the length of time remaining before the option is exercisable, macro-economic environment, socio-political environment and other
lease specific factors.
The lease term represents the period from lease inception up to either:
– The earliest point at which the lease could be broken, where break clauses exist;
– The point at which the lease could be extended, but no further, where extension options exist; or
– To the end of the contractual lease term in all other cases.
Key estimates
Impairment of intangibles and goodwill
We evaluate the fair value of goodwill and other indefinite life intangible assets to assess potential impairments on an annual
basis, or during the year if an event or other circumstance indicates that we may not be able to recover the carrying amount of the
asset. We evaluate the carrying value of goodwill based on our CGUs aggregated at a country level and make that determination
based upon future cash flow projections which assume certain growth projections which may or may not occur. We record an
impairment loss for goodwill when the carrying value of the asset is less than its estimated recoverable amount. Further details of
the methodology and assumptions applied to the impairment review in the year ended 31 December 2021, including the
sensitivity to changes in those assumptions, can be found in note 13.
Deferred tax assets
We base our estimate of deferred tax assets and liabilities on current tax laws and rates and, where relevant, the Group’s
three-year business plans and other expectations about future outcomes. Changes in existing laws and rates, and their related
interpretations, and future business results may affect the amount of deferred tax liabilities or the valuation of deferred tax assets
over time. Our accounting for deferred tax consequences represents management’s best estimate of future events that can be
appropriately reflected in the accounting estimates. It is Group policy to recognise a deferred tax asset to the extent that it is
probable that future taxable profits will be available against which the assets can be used. Significant changes to the Group's
forecasts and other expectations of future outcomes could significantly impact the recognition of deferred tax assets.
Given the significant level of corporate developments in the Group and the number of legal entities and countries in which the
Group operates, the determination of the period of time representing foreseeable future requires judgement to be exercised.
Management has determined the most suitable period to be the three-year period corresponding to the Group’s business
forecasting processes. Any changes in management’s approach to this assessment could significantly impact the recognition of
deferred tax assets.
iwgplc.com
iwgplc.com
161
161
NOTES TO THE ACCOUNTS CONTINUED
32. Key judgemental and estimates areas adopted in preparing these accounts (continued)
Impairment of property, plant and equipment (including right of use assets)
We evaluate the potential impairment of property, plant and equipment at a centre (CGU) level where there are indicators of
impairment at the balance sheet date. In the assessment of value-in-use, key judgemental areas in determining future cash flow
projections include: an assessment of the location of the centre; the local economic situation; competition; local environmental
factors; the management of the centre; and future changes in occupancy, revenue and costs of the centre.
While centre costs remain relatively stable, revenue is a function of the expected levels of occupancy and the corresponding
pricing achieved. In assessing any impairment, the value-in-use calculated is therefore assessed for sensitivity to changes in both
occupancy and pricing, to determine the extent to which these estimates need to change before an impairment arises. On a similar
basis, overall performance is also a function of the discount rate applied (which is based on the capital asset pricing model). The
value-in-use calculation is therefore also assessed for sensitivity to changes in this discount rate, to determine the extent to which
this discount rate needs to change before an impairment arises.
While impairment of property, plant and equipment was noted as a key estimate in the 2020 Annual Report and Accounts,
COVID-19 continues to accelerate the need for further network rationalisation. We evaluate the potential impairment of property,
plant and equipment at a centre (CGU) level where there are indicators of impairment at the balance sheet date and for centres
which have been identified as part of the Group’s rationalisation programme. The key area of estimation involved is in determining
the recoverable amount of the rationalised centres, over what period the rationalisation will take place, and the level of moveable
assets that will be utilised in other centres.
The Group has considered the impact of COVID-19 with respect to all judgements and estimates it makes in the application of its
accounting policies. This included assessing the impairment of property, plant and equipment, goodwill and the recoverability of
trade receivables. The result of these reviews is detailed in note 10.
Estimating the incremental borrowing rates on leases
The determination of applicable incremental borrowing rates on leases at the commencement of lease contracts also requires
judgement. The Group determines its incremental borrowing rates by obtaining interest rates from various external financing
sources and makes certain adjustments to reflect the terms of the lease. The Group considers the relevant market interest rate,
based on the weighted average of the timing of the lease payments under the lease obligation. In addition, a spread over the
market rate is applied based on the cost of funds to the Group, plus a spread that represents the risk differential of the lessee
entity compared to the Group funding cost.
Valuation of embedded conversion option (Level 3) in convertible bonds
The embedded conversion option relating to the Group's issue of convertible bonds is measured at mark-to-market with reference
to the traded price of the convertible bonds as well as external valuation inputs based on credit comparables and bond spreads
across competitors and wider markets.
Fair value accounting for business combinations
For each business combination, we assess the fair values of assets and liabilities acquired. Where there is not an active market in
the category of the non-current assets typically acquired with a business centre or where the books and records of the acquired
company do not provide sufficient information to derive an accurate valuation, management calculates an estimated fair value
based on available information and experience.
The main categories of acquired non-current assets where management’s judgement has an impact on the amounts recorded
include tangible fixed assets, customer list intangibles and the fair market value of leasehold assets and liabilities. For significant
business combinations management also obtains third-party valuations to provide additional guidance as to the appropriate
valuation to be included in the financial statements.
33. Subsequent events
In February 2022, the £950.0m revolving credit facility was reduced to £750.0m, with an unchanged maturity date in 2025. The
facility is subject to financial covenants which include EBITDA, minimum liquidity, interest cover and net debt to EBITDA ratio.
On 8 March 2022, the Group entered into a contract to merge certain of its digital and technology assets with The Instant Group, a
global business which operates as the world’s leading independent provider of flexible workspace platform and services, for a net
cash investment of £270m. Due to the timing of this transaction, it is not practical to disclose the information associated with the
initial accounting for this acquisition.
A £330.0m bridge facility for The Instant Group acquisition has been agreed. The bridge facility has a maturity in September 2023.
This facility is secured and is subject to interest cover and net debt to EBITDA covenants.
The Group notes with concern the escalation of the conflict in Ukraine in 2022. The Group operates 10 centres in Ukraine with a
net asset value of £9.8m. Our primary focus has been on the safety and well-being of our employees and customers and we are
committed to providing them with support throughout these extremely difficult circumstances.
There have been no other significant events affecting the Group since the year end.
162
162
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
PARENT COMPANY ACCOUNTS
FINANCIAL STATEMENTS
Summarised extract of UNAUDITED Company balance sheet
(Accounting policies are based on the Swiss Code of Obligations)
Trade and other receivables
Prepayments
Total current assets
Investments
Total non-current assets
Total assets
Trade and other payables
Accrued expenses
Total short-term liabilities
Long-term interest-bearing liabilities
Total long-term liabilities
Total liabilities
Issued share capital
Reserves from capital contributions
Retained earnings
(Loss)/profit for the year
Treasury shares
Total shareholders’ equity
Total liabilities and shareholders’ equity
The values of the investments recognised have been considered by the Directors and are considered fully recoverable.
Approved by the Board on 8 March 2022
Mark Dixon
Chief Executive Officer
Accounting policies
Basis of preparation
Glyn Hughes
Chief Financial Officer
As at
31 Dec 2021
£m
As at
31 Dec 2020
£m
1.2
0.3
1.5
1.1
0.5
1.6
3,069.1
3,069.1
3,272.3
3,272.3
3,070.6
3.273.9
21.1
1.5
22.6
99.3
99.3
7.0
1.1
8.1
99.3
99.3
121.9
107.4
10.5
2,439.4
874.5
(224.4)
(151.3)
2,948.7
10.5
2,439.4
(1,699.1)
2,569.8
(154.1)
3,166.5
3,070.6
3,273.9
These financial statements were prepared in accordance with accounting policies based on the Swiss Code of Obligations.
The Company is included in the consolidated financial statements of IWG plc.
The balance sheet has been extracted from the non-statutory accounts of IWG plc for the year ended 31 December 2021, which
are available from the Company’s registered office, Dammstrasse 19, CH-6300, Zug, Switzerland.
Investments
The value of the investment held in IWG Group is measured at acquisition cost.
During 2021, the Company acquired the direct investment in IWG International Holdings Sarl, as part of an internal restructuring.
At the same time, the Company disposed of its investment in IWG Enterprise Sarl, IWG Global Investments Sarl and Umbrella
Management Limited to IWG International Holdings Limited. This restructuring resulted in the Company recognising an impairment
in subsidiaries of £203.2m.
iwgplc.com
iwgplc.com
163
163
PRE-IFRS 16 PRO FORMA STATEMENTS
Consolidated income statement (unaudited)
The purpose of these unaudited pages is to provide a reconciliation from the 2021 financial results to the pro forma statements in
accordance with the previous pre-IFRS 16 policies adopted by the Group, and thereby give the reader greater insight into the
impact of IFRS 16 on the results of the Group. The pro forma statements also reflect the impact of the adjusting items during 2021.
£m
Revenue
Total cost of sales
Cost of sales
Adjusting items to cost of sales(1)
Reversal of impairment of property, plant and equipment and right-
of-use assets(1)
Expected credit losses on trade receivables(1)
Gross profit (centre contribution)
Total selling, general and administration expenses
Selling, general and administration expenses
Adjusting items to selling, general and administration expenses
Share of loss of equity-accounted investees, net of tax
Operating loss
Finance expense
Finance income
Net finance expense
Loss before tax for the year from continuing operations
Income tax expense
Loss after tax for the year from continuing operations
Profit after tax for the period from discontinued operations
Loss for the year
Attributable to equity shareholders of the Group
Year ended
31 Dec 2021
As reported
2,227.9
Notes
3
Rent &
finance
Other
costs Depreciation
–
–
adjustments Taxation
–
–
(1,885.8)
(982.3)
(1,870.0)
(982.3)
791.1
791.1
(70.0)
3,5
54.2
(99.5)
–
–
–
–
–
–
29.9
79.6
4.5
(54.2)
–
5
3
10
21
5
7
7
8
9
242.6
(982.3)
791.1
29.9
(327.8)
(294.7)
(33.1)
(2.2)
(0.5)
(0.5)
–
–
1.2
1.2
–
–
–
–
–
–
(87.4)
(982.8)
792.3
29.9
(198.0)
165.7
26.0
–
(172.0)
165.7
–
–
–
1.2
–
1.2
(259.4)
(817.1)
792.3
31.1
(10.3)
–
(269.7)
(817.1)
59.3
(13.3)
(210.4)
(830.4)
(204.8)
(830.4)
–
792.3
11.5
803.8
803.8
–
–
31.1
(11.1)
20.0
19.7
0.3
(2.1)
(2.1)
3.0
0.9
0.9
–
Attributable to non-controlling interests
27
(5.6)
–
Loss per ordinary share (EPS):
Attributable to ordinary shareholders
Basic (p)
Diluted (p)
From continuing operations
Basic (p)
Diluted (p)
11
11
11
11
(20.3)
(20.3)
(26.2)
(26.2)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Year ended
31 Dec 2021
pre-IFRS 16
2,227.9
(2,047.1)
(1,981.6)
(65.5)
–
(99.5)
81.3
(327.1)
(294.0)
(33.1)
(2.2)
(248.0)
(31.1)
26.0
(5.1)
(253.1)
(12.4)
(265.5)
49.4
(216.1)
(210.8)
(5.3)
(20.9)
(20.9)
(25.8)
(25.8)
1. The net reversal of adjusting items of £1.7m comprises the following items included in the balances referenced (note 10):
A reversal of the impairment of property, plant and equipment and right-of-use assets of £125.2m, the adjusting items to costs of sales of £70.0m and
£53.5m of the expected credit losses on trade receivables balances reported.
164
164
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
FINANCIAL STATEMENTS
Pro forma adjustments recognised
The performance of the Group is impacted by the following significant adjustments in adopting IFRS 16. The recognition of these
balances will not impact the overall cash flows of the Group or the cash generation per share.
1. Right-of-use assets and related lease liabilities
These adjustments reflect the right-of-use assets recognised, together with the related lease liabilities. The initial lease liabilities
are equal to the present value of the lease payments during the lease term that have not yet been paid. The cost of the right-of-
use asset comprises the amount of the initial measurement of the lease liability, plus any additional direct costs associated with
setting up the lease.
2. Rent and finance costs
Under IFRS 16, conventional rent charges are not recognised in the profit or loss. The payments associated with these charges
instead form part of the lease payments used in calculating the right-of-use assets and related lease liabilities noted above.
The lease liabilities are measured in subsequent periods using the effective interest rate method, based on the applicable
interest rate determined at the date of transition. The related finance costs arising on subsequent measurement are recognised
directly through profit or loss.
3. Depreciation and lease payments
Depreciation on the right-of-use assets recognised is depreciated over the life of the lease on a straight-line basis, adjusted for
any period between the lease commencement date and the date the related centre opens, reflecting the lease related costs
directly incurred in preparing the business centre for trading. Lease payments reduce the lease liabilities recognised in the
balance sheet.
4. Taxation
The underlying tax charge is impacted by the change in the profit before tax and deferred tax assets recognised.
5. Other adjustments
These adjustments primarily reflect the impairment of the right-of-use assets and other property, plant and equipment as well as
the reversal of the closure cost provision on a pre-IFRS 16 basis. Certain parking, storage and brokerage costs are also reversed,
as they form part of the lease payments.
iwgplc.com
iwgplc.com
165
165
PRE-IFRS 16 PRO FORMA STATEMENTS CONTINUED
Consolidated balance sheet (unaudited)
Total current liabilities
2,271.1
(914.6)
250.0
£m
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Right-of-use assets
Other property, plant and equipment
Deferred tax assets
Other long-term receivables
Investments in joint ventures
Other investments
Total non-current assets
Current assets
Inventory
Trade and other receivables
Corporation tax receivable
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables (incl.
customer deposits)
Deferred revenue
Corporation tax payable
Bank and other loans
Lease liabilities
Provisions
13
14
15
15
15
8
16
21
17
8
23
18
8
19,23
23
20
Non-current liabilities
Other long-term payables
Deferred tax liability
Bank and other loans
Lease liabilities
Derivative financial liabilities
Provisions
Provision for deficit on joint ventures
Retirement benefit obligations
Total non-current liabilities
Total liabilities
Total equity
Issued share capital
Issued share premium
Treasury shares
Foreign currency translation reserve
Hedging reserve
Other reserves
Retained earnings
Total shareholders’ equity
Non-controlling interests
Total equity
23
24
20
21
26
22
22
22
27
As at
31 Dec 2021
As reported
Notes
Right-of-use
assets &
related lease
liability
Rent &
finance
costs
Depreciation
& lease
payments
Other
adjustments
Taxation
As at
31 Dec 2021
pre-IFRS 16
703.8
78.0
6,376.5
5,254.1
1,122.4
326.6
49.7
44.9
0.3
–
–
–
–
(5,773.4)
568.9
(6,113.6)
–
340.2
568.9
–
–
–
–
–
–
–
–
–
–
805.0
892.9
(87.9)
–
–
–
–
–
–
(40.8)
(33.4)
(7.4)
–
0.2
–
–
–
–
–
–
–
703.8
78.0
1,936.2
–
1,936.2
(111.7)
214.9
–
–
–
49.9
44.9
0.3
7,579.8
(5,773.4)
568.9
805.0
(40.6)
(111.7)
3,028.0
1.2
734.2
18.5
77.8
831.7
8,411.5
926.6
346.4
35.9
21.5
932.5
8.2
–
–
–
–
–
(5,773.4)
–
–
–
–
–
122.1
–
–
122.1
691.0
417.1
–
–
–
(914.6)
(167.1)
–
–
8
19,23
5.6
140.6
453.3
–
–
–
5,188.7
(6,071.4)
26.9
12.4
6.5
1.9
–
–
–
–
896.6
–
–
–
–
–
–
–
5,835.9
8,107.0
(6,071.4)
896.6
(6,986.0)
1,146.6
882.7
1,031.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1.2
856.3
18.5
77.8
953.8
805.0
(40.6)
(111.7)
3,981.8
–
–
–
–
149.2
–
149.2
–
–
–
882.7
–
–
–
–
–
–
–
–
–
126.8
126.8
0.2
–
–
–
–
13.4
–
–
13.6
140.4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(5.8)
–
–
–
–
–
–
1,343.7
346.4
35.9
21.5
–
135.0
1,882.5
902.4
134.8
453.3
–
26.9
25.8
6.5
1.9
(5.8)
(5.8)
1,551.6
3,434.1
–
–
–
–
–
–
10.5
312.6
(151.3)
(2.4)
–
25.8
344.7
539.9
7.8
–
–
–
–
–
–
–
–
–
–
–
–
10.5
312.6
(151.3)
15.3
–
25.8
82.0
294.9
9.6
304.5
–
–
–
(17.7)
–
–
1,230.3
1,212.6
–
(455.6)
(455.6)
–
(226.9)
(226.9)
(179.2)
(105.9)
(179.2)
(105.9)
–
(1.8)
–
1,212.6
(455.6)
(226.9)
(181.0)
(105.9)
547.7
Total equity and liabilities
8,411.5
(5,773.4)
691.0
805.0
(40.6)
(111.7)
3,981.8
166
166
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
Consolidated statement of cash flows (unaudited)
£m
Operating activities
Loss for the year from continuing operations
Adjustments for:
Profit from discontinued operations
Net finance expense(1)
Share of loss on equity-accounted investees, net of income tax
Depreciation charge
Right-of-use assets
Other property, plant and equipment
Loss on impairment of goodwill
Loss on disposal of property, plant and equipment
Profit on disposal of right-of-use assets and related lease liabilities
Profit on sales of current assets
Loss on disposal of intangible assets
Reversal of impairment of property, plant and equipment
Reversal of impairment of right-of-use assets
Amortisation of intangible assets
Negative goodwill arising on an acquisition
Loss on disposal of other investments
Tax expense
Expected credit losses on trade receivables
Decrease in provisions
Share-based payments
Other non-cash movements
Operating cash flows before movements in working capital
Proceeds from partner contributions (reimbursement of costs)(3)
Increase in trade and other receivables
Decrease in trade and other payables
Cash generated from operations
Interest paid and similar charges on bank loans and corporate borrowings
Interest paid on lease liabilities
Tax paid
Net cash inflows from operating activities
Investing activities
Purchase of property, plant and equipment
Payment of initial direct costs related to right-of-use assets
Purchase of subsidiary undertakings, net of cash acquired
Purchase of intangible assets
Purchase of other investments
Proceeds from other current receivables(2)
Proceeds on the sale of discontinued operations, net of cash disposed of
Proceeds on sale of property, plant and equipment
Interest received
Net cash inflows from investing activities
Financing activities
Proceeds from issue of loans
Repayment of loans
Proceeds from issue of convertible bonds (net of transaction costs)
Payment of lease liabilities
Proceeds from partner contributions (lease incentives)(3)
Proceeds from issue of ordinary shares, net of costs
Purchase of treasury shares
Proceeds from exercise of share awards
Payment of ordinary dividend
Net cash outflows from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of exchange rate fluctuations on cash held
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aatt eenndd ooff tthhee yyeeaarr
FINANCIAL STATEMENTS
Year ended
31 Dec 2021
As reported
Rent &
finance
Depreciation
& lease
payments
Other
adjustments
Year ended
31 Dec 2021
pre-IFRS 16
Notes
(269.7)
(817.1)
792.3
29.0
(265.5)
9
7
21
15
15
15
13
5
5, 23
5
5, 15
5, 15
5, 14
27
21
8
5
20
15
23
15
27
14
17
9,21
7
19
23
15
22
22
12
23
4.0
172.0
2.2
1,095.9
892.9
203.0
–
64.2
(41.5)
(1.4)
0.3
(7.4)
(46.8)
13.5
(1.7)
–
10.3
99.5
(14.5)
5.8
(12.3)
1,072.4
19.7
(127.3)
(38.5)
(13.3)
(165.7)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(2.1)
(998.2)
20.1
829.4
926.3
(148.7)
(19.0)
(167.1)
(5.4)
734.8
–
167.1
–
18.4
(220.5)
(1.3)
10.6
(33.7)
(0.3)
283.7
18.9
1.0
3.5
61.9
983.1
(946.7)
–
(864.8)
35.9
–
–
0.8
–
(791.7)
5.0
71.0
1.8
77.8
(19.7)
1.3
–
–
–
–
–
–
–
(18.4)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
11.5
–
–
(803.8)
(892.9)
89.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(19.7)
–
(809.2)
(828.9)
–
–
–
(828.9)
–
–
–
–
–
–
–
–
–
–
–
–
–
864.8
(35.9)
–
–
–
–
828.9
–
–
–
–
(1.4)
(1.2)
–
–
–
–
–
32.1
41.5
–
–
7.4
46.8
–
1.7
–
2.1
–
(107.5)
–
(1.9)
48.6
–
(0.3)
(48.3)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.8
5.1
2.2
292.1
–
292.1
–
96.3
–
(1.4)
0.3
–
–
13.5
–
–
12.4
99.5
(122.0)
5.8
(16.3)
122.8
–
(107.5)
(66.6)
(51.3)
(19.0)
–
(5.4)
(75.7)
(240.2)
–
10.6
(33.7)
(0.3)
283.7
18.9
1.0
3.5
43.5
983.1
(946.7)
–
–
–
–
–
0.8
–
37.2
5.0
71.0
1.8
77.8
1. The net finance expense includes mark-to-market adjustments of £22.5m (2020: £2.4m).
2. Included in other receivables at 31 December 2020 was mezzanine and senior debt recognised at amortised cost of £276.2m. This receivable balance was
fully repaid to the Group in February 2021, together with the reimbursement of associated costs, resulting in an additional £1.4m gain on settlement.
3. The total proceeds from partner contributions relating to the reimbursement of costs and lease incentives of £55.6m are allocated by estate in the post-tax
cash return on net investment, on page 171.
iwgplc.com
167
167
IWG plc Annual Report and Accounts 2021
SEGMENTAL ANALYSIS
Segmental analysis – management basis (unaudited)
Pre-2020(1)
Square feet (000’s)(4)
Occupancy (%)
Workstations(8)
Workstations occupancy (%)
Revenue (£m)
REVPOS (£)
2020 Expansions(2)
Square feet (000’s)(4)
Occupancy (%)
Revenue (£m)
2021 Expansions(2)(5)
Square feet (000’s)(4)
Occupancy (%)
Revenue (£m)
Network rationalisations(3)
Square feet (000’s)(4)
Occupancy (%)
Revenue (£m)
Total
Square feet (000’s)(4)
Occupancy (%)
Revenue (£m)
Period end square feet (000’s)(7)
Pre-2020
2020 Expansions
2021 Expansions
Total
Americas
2021
(pre-IFRS 16
basis)
EMEA
2021
(pre-IFRS 16
basis)
Asia Pacific
2021
(pre-IFRS 16
basis)
11,693
70.9%
8,342
72.1%
211,031
180,653
69.0%
866.1
105
434
50.9%
40.2
142
29.6%
4.8
137
48.2%
12.5
12,405
69.4%
923.6
11,733
433
239
71.6%
624.6
104
829
55.3%
45.8
597
35.2%
21.9
257
51.5%
14.8
10,024
68.0%
707.1
8,356
819
955
12,405
10,130
2,956
67.3%
79,828
67.3%
214.5
108
143
61.1%
10.5
108
28.8%
3.4
135
58.5%
8.7
3,343
65.4%
237.1
2,975
144
193
3,312
United
Kingdom
2021
(pre-IFRS 16
basis)
4,397
69.2%
102,150
66.8%
316.9
104
Other
2021
(pre-IFRS 16
basis)
Total
2021
(pre-IFRS 16
basis)
–
–
–
–
5.9
–
27,388
70.6%
573,662
69.2%
2,028.0
105
302
52.8%
23.9
41
43.7%
1.6
151
51.2%
11.8
4,892
67.4%
354.2
4,430
305
55
4,790
–
–
–
–
–
–
–
–
–
–
–
5.9
–
–
–
–
1,708
54.2%
120.4
888
33.9%
31.7
680
52.1%
47.8
30,664
68.2%
2,227.9
27,494
1,701
1,442
30,637
168
168
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
Segmental analysis – management basis (unaudited)
FINANCIAL STATEMENTS
Pre-2020(1)
Square feet (000’s)(4)
Occupancy (%)
Workstations(8)
Workstations occupancy (%)
Revenue (£m)
REVPOS (£)
2020 Expansions(2)
Square feet (000’s)(4)
Occupancy (%)
Revenue (£m)
Network rationalisations(6)
Square feet (000’s)(4)
Occupancy (%)
Revenue (£m)
Total
Square feet (000’s)(4)
Occupancy (%)
Revenue (£m)
Americas
2020
(pre-IFRS 16
basis)
EMEA
2020
(pre-IFRS 16
basis)
Asia Pacific
2020
(pre-IFRS 16
basis)
United
Kingdom
2020
(pre-IFRS 16
basis)
Other
2020
(pre-IFRS 16
basis)
Total
2020
(pre-IFRS 16
basis)
11,733
73.9%
209,922
71.8%
994.3
114.7
325
26.2%
11.0
818
59.1%
61.2
8,388
71.5%
173,527
69.8%
642.2
107.0
545
37.8%
20.1
762
63.7%
52.8
2,940
69.5%
79,697
68.8%
223.9
109.5
100
34.7%
4.5
400
65.1%
27.5
4,447
72.6%
98,662
70.5%
344.1
106.6
155
36.1%
8.6
415
64.4%
36.1
12,876.0
71.7%
1,066.5
9,695.0
69.0%
715.1
3,440.0
68.0%
255.9
5,017.0
70.8%
388.8
–
–
–
–
5.6
–
–
–
–
–
–
–
–
–
5.6
27,508
72.5%
561,808
70.5%
2,210.1
110.8
1,125
33.9%
44.2
2,395
62.5%
177.6
31,028.0
70.3%
2,431.9
1. The pre-2020 business comprises centres not opened in the current or previous financial year.
2. Expansions include new centres opened and acquired businesses.
3. A network rationalisation for the 2021 data is defined as a centre closed during the period from 1 January 2021 to 31 December 2021.
4. Office square feet are calculated as the weighted average for the period.
5. 2021 expansions include any costs incurred in 2021 for centres which will open in 2022.
6. A network rationalisation for the 2020 comparative data is defined as a centre closed during the period from 1 January 2020 to 31 December 2020.
7. Office square feet available at year-end.
8. Workstation numbers are calculated as the weighted average for the year.
iwgplc.com
iwgplc.com
169
169
PRE-TAX CASH RETURN ON NET INVESTMENT CONTINUED
The purpose of this unaudited page is to reconcile some of the key numbers used in the returns calculation, on a pre-IFRS 16 basis,
back to the Group’s IFRS 16 pro forma statements, and thereby give the reader greater insight into the returns calculation drivers.
2021
Description
Post-tax cash return on net investment
(unaudited)
Revenue
Centre contribution
Loss on disposal of assets
Underlying centre contribution
Selling, general and administration
expenses
EBIT
Depreciation and amortisation(1)
Amortisation of partner contributions
Amortisation of acquired lease fair value
adjustments
Non-cash items
Taxation(2)
Adjusted net cash profit
Maintenance capital expenditure
Partner contributions
Net maintenance capital expenditure
Post-tax cash return
Growth capital expenditure
Partner contributions
Net investment (unaudited)
2021
EBITDA reconciliation
Centre contribution
Reference
2019
Aggregation
1.4%
2020
Expansions
–
2021
Expansions
–
2022
Expansions
–
Closures
–
Total
0.4%
Pro forma income
statement, p164
Pro forma income
statement, p164
EBIT reconciliation
(analysed below)
CBIT reconciliation
(analysed below)
Pro forma income
statement, p164
EBIT reconciliation
(analysed below)
Capital expenditure
(analysed below)
Partner contributions
(analysed below)
2,028
164.5
20.9
185.4
120.4
(25.0)
11.3
31.7
(25.9)
–
(13.7)
(25.9)
–
–
–
–
47.8
2,227.9
(44.3)
64.1
19.8
69.3
96.3
165.6
(256.0)
(20.9)
(11.5)
(0.5)
(5.1)
(294.0)
(70.6)
(34.6)
(37.4)
(0.5)
14.7
(128.4)
261.5
(82.0)
–
179.5
14.1
123.0
101.1
(5.2)
95.9
27.1
25.0
(9.2)
–
15.8
6.9
8.7
(2.8)
–
5.9
7.5
(11.9)
(24.0)
–
–
–
–
–
–
–
–
–
–
0.1
(0.4)
–
–
–
6.8
(1.1)
–
5.7
(2.9)
17.5
–
–
–
(11.9)
(24.0)
(0.4)
17.5
302.0
(95.1)
–
206.9
25.7
104.2
101.1
(5.2)
95.9
8.3
Capital expenditure
(analysed below)
Partner contributions
(analysed below)
2,656.0
393.4
117.3
(673.8)
(115.4)
1,982.2
278.0
(55.7)
61.6
5.7
(4.5)
1.2
–
–
–
3,172.4
(849.4)
2,323.0
Selling, general and administration expenses
Depreciation and amortisation
Share of profit in joint ventures
EBITDA on continuing operations
Pro forma income
statement, p164
1. Excludes depreciation expenses related to discontinued operations of £3.6m.
2. Based on EBIT at the Group’s long-term effective tax rate of 20%.
2019
Aggregation
164.5
2020
Expansions
(25.0)
2021
Expansions
(25.9)
2022
Expansions
–
(256.0)
261.5
170.0
(2.2)
(20.9)
25.0
(20.9)
–
(11.5)
8.7
(28.7)
–
Closures
(44.3)
(5.1)
6.8
(0.5)
–
(0.5)
(42.6)
–
–
Total
69.3
(294.0)
302.0
77.3
(2.2)
75.1
167.8
(20.9)
(28.7)
(0.5)
(42.6)
170
170
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
2021
Movement in capital expenditure (unaudited)
December 2020
2021 Capital expenditure(3)
Properties acquired
Centre closures(4)
December 2021
FINANCIAL STATEMENTS
2019
Aggregation
2,812.2
2020
Expansions
328.2
2021
Expansions
40.2
2022
Expansions
–
Closures
–
–
–
(156.2)
2,656.0
79.4
–
(14.2)
393.4
66.4
10.7
–
117.3
5.7
–
–
5.7
–
–
–
–
Total
3,180.6
151.5
10.7
(170.4)
3,172.4
3. 2022 expansions relate to costs and investments incurred in 2021 for centres which will open in 2022.
4. The growth capital expenditure for an estate is reduced by the investment in centres closed during the year, but only where that investment has been fully
recovered.
2021
Movement in partner contributions (unaudited)
December 2020
2021 Partner contributions
Centre closures(5)
December 2021
2019
Aggregation
712.1
2020
Expansions
116.5
2021
Expansions
13.7
2022
Expansions
–
Closures
–
–
(38.3)
3.9
(5.0)
42.0
–
(673.8)
(115.4)
(55.7)
4.5
–
(4.5)
–
–
–
5. The partner contributions for an estate are reduced by the partner contributions for centres closed during the year.
2021
CBIT reconciliation (unaudited)
Centre contribution
Adjusting items(6)
Gross profit (centre contribution)
Reference
Note 10, p136
Pro forma income statement, p164
Total
842.3
50.4
(43.3)
(849.4)
£m
69.3
12.0
81.3
6. The adjusting items of a reversal of £12.0m represents the costs of sales impact which, when combined with the additional £33.1m selling, general and
administration impact, agrees to the £21.1m referred to on page 47.
2021
EBIT reconciliation (unaudited)
EBIT
Loss on disposal of assets
Share of profit in joint ventures
Adjusting items(7)
Operating loss
Reference
Pro forma statement of cash flows, p167
Pro forma income statement, p164
CFO review. P47
Pro forma income statement, p164
7. The adjusting items of £21.1m represents the total adjusting items referred to on page 47.
2021
Partner contributions receivables (unaudited)
Opening partner contribution receivables
Acquired in the period
Net partner contributions recognised
– Maintenance partner contributions
– Growth partner contributions
Settled in the period
Disposed of in the period
Exchange differences
Note 17
Statement of cash flows, p121
CFO review, p50
CFO review, p50
Closing partner contribution receivables
Note 17
2021
Capital expenditure (unaudited)
Maintenance capital expenditure
Growth capital expenditure
– 2021 Capital expenditure
– Properties acquired
Total capital expenditure
Analysed as
– Purchase of subsidiary undertakings
– Purchase of property, plant and equipment
– Purchase of intangible assets
iwgplc.com
iwgplc.com
Reference
CFO review, p50
CFO review, p50
Pro forma statement of cash flows, p167
Pro forma statement of cash flows, p167
Pro forma statement of cash flows, p167
£m
(128.4)
(96.3)
(2.2)
(21.1)
(248.0)
£m
33.8
–
55.6
5.2
50.4
(59.2)
–
(0.9)
30.2
£m
101.1
162.2
151.5
10.7
(10.6)
240.2
33.7
171
171
FIVE-YEAR SUMMARY
Income statement (full year ended)
Revenue
Cost of sales
Expected credit losses on trade receivables
Gross profit (centre contribution)
Selling, general and administration expenses
Share of (loss)/profit of equity-accounted investees, net of tax
Operating (loss)/profit
Finance expense
Finance income
(Loss)/profit before tax for the year from continuing operations
Income tax (expense)/credit
(Loss)/profit for the year from continuing operations
Profit/(loss) after tax for the year from discontinued operations
(Loss)/profit after tax for the year
(Loss)/earnings per ordinary share (EPS):
Attributable to ordinary shareholders
Basic (p)
Diluted (p)
31 Dec 2021
£m
31 Dec 2020
Restated
£m(1)
31 Dec 2019
Restated
£m(1)
31 Dec 2018
Restated
£m(1)
31 Dec 2017
Restated
£m(1)
2,227.9
2,431.9
2,594.3
2,354.7
2,200.5
(1,885.8)
(2,377.0)
(2,043.1)
(1,975.6)
(1,819.3)
(99.5)
242.6
(327.8)
(2.2)
(87.4)
(198.0)
26.0
(259.4)
(10.3)
(269.7)
59.3
(210.4)
(34.8)
20.1
(367.5)
(2.6)
(350.0)
(266.4)
3.1
(613.3)
(32.0)
(645.3)
(1.5)
(646.8)
(2.0)
549.2
(279.4)
2.7
272.5
(228.5)
0.4
44.4
21.9
66.3
384.3
450.6
(17.7)
361.4
(246.5)
(1.4)
113.5
(15.9)
0.5
98.1
(29.1)
69.0
36.7
105.7
(16.3)
364.9
(230.9)
(0.8)
133.2
(14.1)
0.3
119.4
(32.7)
86.7
27.3
114.0
(20.3)
(20.3)
(67.9)
(67.9)
50.5
49.6
11.7
11.6
12.4
12.3
Weighted average number of shares outstanding (‘000s)
1,007,215
951,891
892,738
907,077
915,676
From continuing operations
Basic (p)
Diluted (p)
(26.2)
(26.2)
(67.8)
(67.8)
7.4
7.3
7.6
7.5
9.5
9.4
Weighted average number of shares outstanding (‘000s)
1,007,215
951,891
892,738
907,077
915,676
Balance sheet data (as at)
Intangible assets
Right-of-use assets
Property, plant and equipment
Deferred tax assets
Other assets
Cash and cash equivalents
Total assets
Current liabilities
Non-current liabilities
Equity
Total equity and liabilities
781.8
5,254.1
1,122.4
326.6
848.8
77.8
8,411.5
2,271.1
5,835.9
304.5
8,411.5
748.8
5,646.9
1,209.0
188.2
1,100.4
71.0
8,964.3
2,435.5
6,015.0
513.8
8,964.3
719.6
5,917.4
1,273.3
195.0
781.4
66.6
8,953.3
2,139.7
5,933.1
880.5
8,953.3
721.7
–
712.1
–
1,751.2
1,367.2
30.6
848.7
69.0
3,421.2
1,429.5
1,240.5
751.2
3,421.2
23.0
702.7
55.0
2,860.0
1,224.7
907.6
727.7
2,860.0
1. The comparative information has been restated to reflect the impact of discontinued operations (note 9).
172
172
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
GLOSSARY
OTHER INFORMATION
The Group reports certain alternative performance measures
(APMs) that are not required under International Financial
Reporting Standards (IFRS) which represents the generally
accepted accounting principles (GAAP) under which the Group
reports. The Group believes that the presentation of these APMs
provides useful supplemental information, when viewed in
conjunction with our IFRS financial information as follows:
Growth capital expenditure
Capital expenditure in respect of centres which opened during
the current or prior financial period.
Growth estate
Comprises centres which opened during the current or prior
financial year.
– to evaluate the historical and planned underlying results
Growth-related partner contributions
of our operations;
– to set Director and management remuneration; and
– to discuss and explain the Group’s performance with the
investment analyst community.
None of the APMs should be considered as an alternative to
financial measures derived in accordance with GAAP. The APMs
can have limitations as analytical tools and should not be
considered in isolation or as a substitute for an analysis of our
results as reported under GAAP. These performance measures
may not be calculated uniformly by all companies and
therefore may not be directly comparable with similarly titled
measures and disclosures of other companies.
Adjusted centre contribution
Centre contribution excluding adjusting items.
Adjusted EBITDA
EBITDA excluding adjusting items.
Adjusted EPS
EPS excluding adjusting items.
Adjusted operating profit/(loss)
Operating profit excluding adjusting items.
Adjusting items
Adjusting items reflects the impact of adjustments, both
incomes and costs, which are considered to be significant in
nature and/or size.
Available workstations
The total number of workstations in the Group (also termed
Inventory). During the year, this is expressed as a weighted
average. At period ends the absolute number is used.
EBIT
Earnings before interest and tax.
EBITDA
Earnings before interest, tax, depreciation and amortisation.
EPS
Earnings per share.
Expansions
Partner contributions received in respect of centres which
opened during the current or prior financial period.
Like-for-like
The financial performance from centres owned and operated
for a full 12-month period prior to the start of the financial year,
which therefore have a full-year comparative.
Maintenance capital expenditure
Capital expenditure in respect of centres owned for a full 12-
month period prior to the start of the financial year and
operated throughout the current financial year, which therefore
have a full-year comparative.
Maintenance-related partner contributions
Partner contributions received in respect of centres owned for
a full 12-month period prior to the start of the financial year
and operated throughout the current financial year, which
therefore have a full-year comparative.
Mature business
Operations owned for a full 12-month period prior to the start
of the financial year and operated throughout the current
financial year, which therefore have a full-year comparative.
Net debt
Operations cash and cash equivalents, adjusted for both short
and long-term borrowings and lease liabilities.
Net growth capital investment
Growth capital expenditure net of growth-related partner
contributions.
Network rationalisation
Network rationalisation for the current year is defined as a
centre that ceases operation during the period from 1 January
to December of the current year. Network rationalisation for the
prior year comparative is defined as a centre that ceases
operation from 1 January of the prior year to December of the
current year.
Occupancy
Occupied square feet divided by available square feet
expressed as a percentage.
A general term which includes new business centres
established by IWG and acquired centres in the year.
Open centres
All centres excluding closures.
Franchisee
The owners of business centres operating under a formal
franchise arrangement.
iwgplc.com
iwgplc.com
173
173
GLOSSARY CONTINUED
SHAREHOLDER INFORMATION
OTHER INFORMATION
Open centre revenue
Revenue for all centres excluding closures.
Operating profit/(loss) before growth
Reported operating profit adjusted for the gross profit impact
arising from centres opening in the preceding and current
years, and centres to be opened in the subsequent year.
Partners
Owners or landlords of business centres, operating under a
management lease arrangement.
Pre-2020 business
Operations owned for a full 12-month period prior to the start
of the financial year and operated throughout the current
financial year, which therefore have a full-year comparative.
Pre-2020 gross margin
Gross margin attributable to the Pre-2020 business.
Pre-IFRS 16 basis
IFRS accounting standards effective as at the relevant reporting
date with the exception of IFRS 16.
Revenue development
Revenue programme on a continuing basis, for the last four
years.
ROI
Return on investment.
TSR
Total shareholder return.
REVPOS
Revenue per occupied square feet.
System wide revenue
Total reported revenue generated, including revenue from
franchise, managed centre and joint-venture partners, but
excluding fee income.
Workstation occupancy
Occupied workstations divided by available workstations
expressed as a percentage.
WIPOS
Workstation revenue per occupied square metre.
Corporate directory
Secretary and Registered Office
Tim Regan, Company Secretary
Registered Head Office:
Dammstrasse 19
CH-6300
Zug
Switzerland
Legal advisors to the Company as to English law
Legal advisors to the Company as to Jersey law
Legal advisors to the Company as to Swiss law
IWG plc
Registered Office:
22 Grenville Street
St Helier
Jersey JE4 8PX
Registered number
Jersey
122154
Registrars
12 Castle Street
St Helier
Jersey JE2 3RT
Auditor
KPMG
1 Stokes Place
St. Stephen’s Green
Dublin 2
DO2 DE03
Ireland
Link Market Services (Jersey) Limited
Slaughter and May
One Bunhill Row
London EC1Y 8YY
Mourant Ozannes
22 Grenville Street
St Helier
Jersey JE4 8PX
Bär & Karrer Ltd
Brandschenkestrasse 90
CH-8027
Zurich
Switzerland
Corporate stockbrokers
Investec Bank plc
2 Gresham Street
London EC2V 7QP
Barclays Bank plc
5 The North Colonnade
Canary Wharf
London E14 4BB
HSBC Bank plc
8 Canada Square
London E14 5HQ
Financial PR advisors
Brunswick Group LLP
16 Lincoln’s Inn Fields
London WC2A 3ED
174
174
IWG plc Annual Report and Accounts 2021
IWG plc Annual Report and Accounts 2021
iwgplc.com
175
SHAREHOLDER INFORMATION
OTHER INFORMATION
Corporate directory
Secretary and Registered Office
Tim Regan, Company Secretary
IWG plc
Registered Office:
22 Grenville Street
St Helier
Jersey JE4 8PX
Registered Head Office:
Dammstrasse 19
CH-6300
Zug
Switzerland
Registered number
Jersey
122154
Registrars
Link Market Services (Jersey) Limited
12 Castle Street
St Helier
Jersey JE2 3RT
Auditor
KPMG
1 Stokes Place
St. Stephen’s Green
Dublin 2
DO2 DE03
Ireland
Legal advisors to the Company as to English law
Slaughter and May
One Bunhill Row
London EC1Y 8YY
Legal advisors to the Company as to Jersey law
Mourant Ozannes
22 Grenville Street
St Helier
Jersey JE4 8PX
Legal advisors to the Company as to Swiss law
Bär & Karrer Ltd
Brandschenkestrasse 90
CH-8027
Zurich
Switzerland
Corporate stockbrokers
Investec Bank plc
2 Gresham Street
London EC2V 7QP
Barclays Bank plc
5 The North Colonnade
Canary Wharf
London E14 4BB
HSBC Bank plc
8 Canada Square
London E14 5HQ
Financial PR advisors
Brunswick Group LLP
16 Lincoln’s Inn Fields
London WC2A 3ED
iwgplc.com
iwgplc.com
175
175
Visit us at: IWGplc.com
I
W
G
p
l
c
A
n
n
u
a
l
R
e
p
o
r
t
a
n
d
A
c
c
o
u
n
t
s
2
0
2
1
This report is printed on paper certified in accordance with the FSC® (Forest Stewardship Council®) and is recyclable and acid-free.
Pureprint Ltd is FSC certified and ISO 14001 certified showing that it is committed to all round excellence and improving environmental
performance is an important part of this strategy. Pureprint Ltd aims to reduce at source the effect its operations have on the environment
and is committed to continual improvement, prevention of pollution and compliance with any legislation or industry standards. Pureprint
Ltd is a Carbon/Neutral® Printing Company.
Designed and produced by Black Sun Plc
www.blacksunplc.com