Hybrid
works.
Annual Report and Accounts 2022
S
T
N
E
T
N
O
C
Strategic report
Hybrid Works.
Our purpose
Chairman’s statement
Chief Executive Officer’s review
Market review
Business Model
Our strategy
Key performance indicators
Our brands
Stakeholder engagement
Chief Financial Officer’s review
Risk
Introduction to ESG
Environment
Social
Governance and task force on climate-related
financial disclosures
Governance
Board of Directors
Corporate governance
Nomination Committee report
Audit Committee report
Directors’ Remuneration report
Directors’ report
Directors’ statement
Financial statements
Independent auditor’s report
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
Reconciliation for alternative performance
Five-year summary
Glossary
Shareholder information
01
08
10
14
18
20
22
26
28
34
36
44
54
56
60
66
72
74
84
90
96
118
121
122
129
130
131
132
133
134
183
184
187
188
190
Revenue from continuing operations (£m)
£2,751m
‘22
‘21
‘20
‘19
‘18
2,751
2,227
2,432
2,593
2,355
Overheads as percentage of revenue (%)
15.5%
‘22
‘21
‘20
‘19
‘18
15.5
14.7
15.1
10.8
10.5
16
Adjusted EBITDA (before application of IFRS 16)
£308m
‘22
‘21
‘20
‘19
‘18
308
80
134
428
390
0
Network (locations)
3,345
‘22
‘21
‘20
‘19
‘18
3,345
3,314
3,313
3,388
3,306
450
0
3450
Net growth capital investment
£141m
‘22
‘21
‘20
‘19
‘18
141
104
177
260
330
0
450
* A glossary is included on page 188 which defines
various alternative measures used to provide useful
and relevant information.
Hybrid
works.
Q
A
Q
A
Is hybrid working
and the use of
flexspace here to
stay?
Definitely. We’re witnessing a
major cultural shift – and you
only have to look at the data
to see some of the reasons
why. Quit rates are down 35%,
and 77% of workers are saying
an office close to home is a
must have for their next job.
According to Global Workplace
Analytics companies are saving
$11,000 per employee. And 87%
of CFOs see hybrid as a more
affordable business model.
In short, hybrid works.
How important is
hybrid in achieving
sustainability goals?
Massively important, our latest
research, in partnership with
ARUP, is telling us that carbon
emissions are lower by up to
70% in the hybrid model,
demonstrating how its continued
uptake has the power to make
these reductions part of the new
normal. Helping customers solve
some of their sustainability
challenges is at the core of our
business, and this report covers
several of the ways in which
we’re making this happen.
Hybrid’s the
accelerant that’s
empowering IWG’s
rapid growth, right
across the world.
And its multiple
benefits mean it’s
here to stay.”
Mark Dixon, Founder and CEO, IWG plc
Q
A
With the uptake of
hybrid working sky
rocketing over the
last two years, can
we say it truly
works?
Yes, and the reason is simple: it
works. Being able to work close
to home is giving people a
better work/life balance –
seeing more of friends and
family, cutting out the daily
commute, saving on travel
costs, supporting their local
economies. It’s massively
cutting the real-estate costs of
employers too, while reducing
employee churn and providing
access to a global talent pool.
More than 50% of professional
employees will work in the
hybrid model over the next five
years, outnumbering those who
don’t.
IWG plc Annual Report and Accounts 2022
1
Strategic report Hybrid works.
For business
Millions of businesses are already gaining from better
agility, reduced costs, heightened productivity and the
ability to attract the best talent the planet has to offer.
+80%
of CFOs see
hybrid as a
money saver1
Freedom to grow
With thousands of locations
globally, we give businesses
everywhere the freedom to
grasp opportunities wherever
and whenever they occur.
The ability to flex their footprint
rapidly and easily is empowering
them to implement growth-
orientated real-estate strategies
and ways of working that are
truly fit for purpose.
Lower costs
Less fixed space means less
cost. That’s why over 80% of
CFOs see hybrid as a money
saver, and why 72% of
companies are planning to
reduce their traditional
property spend. And it’s why
freedom from the constraints
of the long-term lease is
enabling our customers to
focus their resources
on growth.
More productive
Having access to a professional
environment that’s convenient
and close to home is enabling
people everywhere to work
and be creative together.
Right across our global network,
businesses are reporting
productivity boosts powered
by engaged employees whose
workstyle suits their lifestyle.
Attracting talent
Hybrid is changing the
geography of work forever.
Now, with no need for
employees to be close to
headquarters, businesses can
hire talent from across the
planet. And with 77% of
employees saying a flexible
workspace close to home is
amust-have for their next job,
hybrid’s the magnet companies
need to attract the best.
1. IWG CFO Study, Conducted by Mortar (2022)
2
IWG plc Annual Report and Accounts 2022
Q
A
Do you expect your
people in the office
fulltime?
“There’s no doubt in my mind
that we’re never going back to
full occupancy five days a week
in an office.
We need to get past the historic
view that attendance is somehow
a proxy for productivity. To get
the best people, we don’t have to
force anybody to relocate from
the south of Spain or to London. ”
Christian Bigsby
VP of Workspace Solutions,
Cisco
Q
A
How are you
approaching the
shift to hybrid
working?
“It requires close collaboration
between our IT, HR, Facilities and
Security teams, to build a holistic
strategy, approach and success
measures. Our business results
show it’s working for us, and I
believe this model will be
embraced as the future of work.”
Michael Dell
CEO and Chairman, Dell
Technologies
72%
of companies
are planning to
reduce their
property spend
For a long time,
companies have
expected people
to come to the
mountain. Now the
mountain is going
to have to come
to the people…”
Christian Bigsby
VP of Workspace Solutions, Cisco
Q
A
What’s your
experience to date
of working with IWG?
“We love the fact that IWG has
multiple brands, a global
presence and spaces we can
configure to our exact needs.
Today, we have a partner with
the right culture, values and
global scale that’s helping us
provide the right flexible,
coworking global real-estate
strategy to manage the new
way of working in the future.”
Arvind Kumar
Global Vice President of
Indirects, NTT Global Sourcing
Q
A
Are you now fully
committed to the
hybrid model?
“If your employees can do their
jobs remotely and they have all
the digital tools they need, if
productivity is up and your
clients are happy, why would
you force them into the office
five days a week?”
Luigi Sciabarrasi
Corporate SVP, Global Real
Estate, AECOM
IWG plc Annual Report and Accounts 2022
3
Strategic report Hybrid works.
For our
customers
“Hybrid gives people so
much of what they want
most from life: the freedom
to choose how they work;
more time for the things
that matter; less stress and
expense – and the ability
to reduce their
environmental impact.”
Mark Dixon, Founder and CEO, IWG plc
76%
say commuting
less is
important
to fight the
climate crisis1
Happiness and
wellbeing
Happy employees are
productive. They’re happiest
when they have the freedom to
choose where and when they
can work at their best, with the
right support, tools and
technology. And this is exactly
what millions of people get
from IWG every day.
Reduced commuting,
lower carbon
Enabling people to work close
to home achieves far more than
just diminishing the misery of
the daily commute. Replacing
cars, buses, trains and planes
with feet and bicycles also
greatly reduces the impact
of the single biggest cause
of carbon emissions – a factor
that’s of growing importance
to workers of all ages.
78%
say their
wellbeing
has improved
thanks
to Hybrid1
Community spirit
The death of the daily commute
is breathing new life into
communities everywhere.
Working where is most
convenient means more time
with family and friends, more
money spent with local
businesses, less stress and
improved wellbeing. So our
focus is on the places where
people want to be.
The future of work
At IWG, we empower
companies to create the
working infrastructure where
their people can be at their
best and happiest. With our
multiple brands and workplace
solutions, we are shaping the
future of work: where tech-
empowered workers and
businesses collaborate and
learn together, driving growth
and enabling companies to put
their employees first.
1. IWG Research, conducted by Mortar (2022)
4
IWG plc Annual Report and Accounts 2022
Q
A
Q
A
How are you
ensuring that people
end up working in
the way that best
suits them?
“We have committed to allowing
team members around the globe
to choose the work pattern that
best fits their lifestyle, whether
that’s remote, in an office or
a blend of the two. And we’re
redesigning offices to enhance
the hybrid experience by bringing
teams together for social
connection and collaboration.”
Michael Dell
CEO and Chairman, Dell
Technologies
Why is ‘happiness’
a key objective
for Avaya?
“At Avaya, we talk about ‘hybrid
happiness’. Employees are happy
when they can choose where to
work – and their happiness leads
to productivity, which is
beneficial for the company.
Young professionals increasingly
embrace the freedom to choose
where they can work best: for
team collaboration or client
meetings this might be at
a nearby IWG workspace, while
for processing an offer or a
tender it might be from home…”
Ourania Odermatt
Managing Director, Avaya
Switzerland and Austria
Q
A
How do you plan to
get the right balance
between what’s best
for your people and
what’s best for the
business?
“In the world of tomorrow, we’ll
never have one offer that fits
all. We’re going to have a hybrid
environment that works for
a host of different people and
purposes. What’s exciting is that
we’ve found the right partner.”
Arvind Kumar
Global Vice President of
Indirects, NTT Global Sourcing
We’re having
extremely positive
employee feedback
on improved work/
life balance, reduced
commuting and
lower costs…”
Luigi Sciabarrasi
Corporate SVP,
Global Real Estate, AECOM
Q
A
What is the greatest
benefit of hybrid
working that you’ve
seen so far?
“The benefits of flexibility are
clear to see, especially when
you think about the time people
would otherwise spend
commuting, freeing up time to
spend with families. Flexibility
drives so many other things,
such as productivity, happiness,
engagement and retention.”
Kim Colucci
People Director, Mixbook
Q
A
Do you have
ambitions to change
your employee
relationships under
the hybrid model?
“We really want people to take
that time to go to their child’s
game or take care of their
parents. It’s about being a
company that cares for their
employees – and providing that
flexibility is invaluable.”
Luigi Sciabarrasi
Corporate SVP, Global Real
Estate, AECOM
IWG plc Annual Report and Accounts 2022
5
Strategic report Hybrid works.
For our planet
The hybrid model is ushering in a new way of working that’s fast reducing
the negative impact of economic activity on society and the environment.
Better lives on
a cleaner planet
The IWG approach to hybrid
working has a direct positive
impact on six of the United
Nations’ Sustainable
Development Goals. Of these,
four relate to important social
issues: SDG#3 (Good Health
and Wellbeing); #5 (Gender
Equality); #8 (Economic
Growth); and #11 (Sustainable
Cities and Communities).
But the approach is particularly
powerful when it comes to
supporting SDG #7 (Clean
Energy) and #13 (Climate
Action). Our work is not only
helping businesses downsize
their office property into
advanced, environmentally
efficient shared workspaces;
it’s also getting people out of
their cars and onto their
bicycles and their feet to end
the intensely destructive
long-distance daily commute.
6
IWG plc Annual Report and Accounts 2022
Advances reducing
the impact of work
Digitalisation and other
technological, scientific and
engineering advances are
freeing people everywhere to
work as they wish.
And this is empowering IWG to
help cut the impact of work on
the planet in several ways:
through the increasing use
of advanced, LEED-certified
Class A office space that helps
businesses slash workplace
power usage and emissions;
through enabling the re-use
of resources and office-based
recycling schemes; and above
all, by making obsolete much
of the work-related travel
that is the single largest
source of atmospheric fossil
CO2 emissions.
We are increasingly
reducing carbon
emissions and energy
usage across our
estate and paying
close attention to the
recycling and the re-
use of materials”
Douglas Sutherland, Chairman
Our carbon
initiatives
While we work towards our
objective to achieve Net Zero
carbon emissions by 2040, to
eliminate the remaining net
effect of our operating
activities in the interim we are
investing in a range of carbon
removal projects which will
result in achieving carbon
neutrality during the course
of 2023. As part of our climate
action plan, we have set targets
to reduce carbon emissions
from our building and supply
chain whilst establishing
sustainable business
operations, encouraging our
people to take action.
Recycling and the
re-use of materials
We are refreshing our
processes to ensure that we
encourage the use of materials
with low carbon intensity
including locally sourced
materials, high recycled
content and innovative
products that reduce waste
of natural resources such
as water.
1. Arup and IWG Hybrid Working: Carbon
Reduction Study (2023)
Reducing carbon
emissions and
energy usage
In line with our Net Zero
commitment, we are
accelerating our efforts to
achieve 100% green electricity.
We have also aligned our
investment decisions to
sustainable building standards,
ensuring that our building
selection process aligns to our
Net Zero trajectory and existing
buildings are continuously
improving our sustainability
performance.
Our focus on reducing our
footprint extends beyond
building operations, we are also
working to optimise our supply
chains and operations to
encourage eco-friendly
practices.
Environmental best
practice
Our purpose of helping
everyone have a great day at
work, whilst protecting people
and planet is at the heart of our
organisation and we believe
that transparency is a key part
to achieving this goal.
As a global employer, our
purpose and values have never
been more important, and we
want to play a leading role in
promoting environmental best
practice. This progress has
been recognised through
our strong AA rating by MSCI
and B score for our CDP
submissions. We also continue
to take necessary steps to work
collaboratively with our
customers, partners suppliers
and other stakeholders to drive
the change that’s needed.
70%
potential
reduction in net
emissions with
home or local
working1
IWG plc Annual Report and Accounts 2022
7
Strategic report Our purpose
Our
purpose
culture and
values
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 three 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.
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.
Hybrid works
Our ability to deliver against this
purpose is empowered by our
uniquely diverse, truly global
culture, which is the result of
operating 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.
8
IWG plc Annual Report and Accounts 2022
Our purpose
Our business
model
Our strategy
Our people and
culture
Governance and
risk management
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 20 to 21
1
2
3
Our three strategic priorities enable
sustainable growth to achieve our
purpose.
See pages 22 to 25
Network
Partnerships
Platform
(technology)
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 to 65
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 44 to 53
IWG plc Annual Report and Accounts 2022
9
Strategic report Chairman’s statement
Hybrid
working
is driving
flexible
workspace
mainstream.
When viewed in the context of
the challenges over the last three
years, these results are a
significant accomplishment
that reflects the dedication and
continued hard work of our
people.”
Douglas Sutherland
Chairman
10
IWG plc Annual Report and Accounts 2022
The hybrid model is
becoming the preferred
way of working for
millions of people across
the planet. This reflects
major societal and
behavioural change, as
technological advances
empower people to work
wherever they are most
productive. IWG is
uniquely positioned
to benefit from these
fundamental changes to
how work is conducted.
Hybrid working is leading
companies to replace their
expensive conventional HQs
in city centres with smaller,
more flexible workspaces,
while simultaneously taking
on advanced workspaces in
the suburbs and smaller
communities close to where
their employees live to benefit
from the fundamental changes
to how work is conducted.
As a result, our rapidly growing
network is bringing new
opportunities into the heart
of local communities, and
companies of all sizes are using
IWG across multiple locations
as they continue to shift their
real estate strategies to focus
on flexibility.
This shift delivers benefits to
multiple groups. To businesses,
helping them reduce costs, meet
their ESG priorities and win the
war for talent. To their people,
enabling them to lead happier,
healthier, less costly and less
environmentally damaging lives
closer to where they live. To
communities, through increased
local business opportunities.
To our shareholders, from
“We therefore
look forward
to a future
of profitable
growth
providing
opportunities
and rewards
for our people,
customers,
partners and
investors in 2023
and beyond”
I remain immensely proud and
grateful to them for maintaining
the IWG difference and our
position at the forefront of one
of the world’s most exciting and
important business sectors.
Our strategy
As true pioneers of flexible
workspace, we have the
coverage, the offer, the
approach, the technology, and
the people to place us front of
mind for any business wishing
to explore the advantages
of hybrid. As previously
announced, to capture the
opportunities created by the
rapid shift to hybrid working,
we have organised to improve
focus on three important areas.
First, we continue to develop our
platform benefitting from years
of investment and experience in
effectively operating the largest
global workspace physical
network. This includes industry
leading systems and processes
to manage all aspects of flexible
workspace and deliver services
in an efficient and cost-effective
manner. Our on-going
management platform
developments will further
improve efficiencies and service
levels while addressing new
opportunities from hybrid
working.
Second, our network
development organisation is
accelerating the capital-light
expansion of our physical
network through management
agreements, partnering and
improved financial returns
as we implement our strategy
to capture the opportunities
from hybrid working.
While addressing the changes
being brought by hybrid working,
IWG remained concentrated on
the fundamentals to deliver a
strong finish to a year impacted
by unforeseen geopolitical and
economic developments. This
resulted in IWG reporting record
revenues, a record network
footprint, steady increases
to occupancy and pricing, and
limited impacts from inflation
due to strict cost discipline.
When viewed in the context
of the challenges over the last
three years, these results are
a significant accomplishment
that reflects the dedication
and continued hard work
of our people.
Our people
We continually aim to bring our
people every opportunity to
build a great career with us. We
provide the means for them to
develop their talent and
capabilities in a diverse, inclusive
and often challenging
environment that enables them
to stretch themselves and
represent IWG as a truly
progressive force.
I would like to extend my
personal thanks to everybody
who has been responsible for
IWG’s outstanding achievements
during the year, especially those
team members who have
continued to represent the
Company so brilliantly in all
our markets across the world.
Our people provide great service
to our millions of customers,
delivering to each and every one
of them a great day at work.
IWG plc Annual Report and Accounts 2022
11
Strategic report Chairman’s statement continued
franchising as building owners
adapt to providing flexible
workspace. Having the largest
and fastest growing flexible
workspace network in
convenient locations will be
key to meeting the needs of
hybrid workers.
Finally, during 2022 we
completed the merger of certain
digital assets with the Instant
Group to create Worka, the
world’s leading integrated
independent workspace digital
platform for serving the needs
of the broader flexible
workspace market.
Our Board
I remain indebted 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
yet another very active year. I
would like to take this
opportunity to thank Florence
Pierre, who left the Board in
November after nine years as an
active Board member, as well as
Glyn Hughes, who stepped down
as Chief Financial Officer in
October. We also welcomed
three new Directors during the
year, who bring a wealth of
experience and important new
perspectives on our business.
Tarun Lal joined us in May,
bringing extensive international
franchising expertise. Tarun has
over 20 years of experience
gained with Yum! Restaurants,
where his executive roles have
included Global Chief Operating
Officer KFC and Managing
Director – KFC Middle East,
Pakistan, Turkey, Africa, and
India. Currently he is President
of KFC U.S.
Charlie Steel joined us in
November as CFO. Previously,
Charlie was CFO of Babylon
Holdings, a New York Stock
Exchange listed digital health
delivery and AI diagnosis business.
Sophie L’Hélias joined us in
December. A trained lawyer,
Sophie is currently the President
of LeaderXXchange™, which
promotes diversity and
sustainability in governance,
leadership and investment
through solutions for companies
and investors seeking impact.
She has public board experience
in the US and Europe and was a
co-founder of the International
Corporate Governance Network.
We continue to implement the
results of our internal board
review process in our plans and
have full confidence in the Board
members and processes. We will
maintain our focus on strategic
objectives and succession
planning at the Board
level in 2023.
Our environmental
journey
We are committed to advancing
on our environmental journey
and delivering against the
objectives we have set. We are
proud to be doing so much to
promote and lead the global
uptake of the hybrid-working
model. This is at the forefront
of efforts to reduce the negative
effects of the daily commute,
reducing both the environmental
impact and personal time
associated with travel. Recent
research we have conducted
with Arup highlights the
importance of this shift,
identifying the commute as a
major contributor. By moving
away from long daily commutes
and working locally some of the
time an average worker’s carbon
footprint can be reduced by
up to 70%, making it a
fundamentally important issue
for all of us.
We are also actively reducing
our own carbon footprint as part
of the implementation of our
robust ESG strategy. The actions
we have already taken resulted
in our AA ESG rating by MSCI.
And, while we work towards our
objective to achieve net zero
carbon emissions by 2040, to
eliminate the remaining net
effect of our operating activities
in the interim we are investing in
a range of carbon removal
projects to achieve carbon
neutrality during 2023.
12
IWG plc Annual Report and Accounts 2022
As part of our journey, we are
working to convert to certified
green electricity with the goal
to achieve this by 2030. We are
improving the efficiency of our
global supply chain by
consolidating it into regional
hubs that reduce the overall
impact of our logistics
operations. In addition, our
colleagues from across the world
are leading numerous initiatives
to reduce waste and promote
recycling in our centres.
Looking ahead
While we enter 2023 with great
confidence in the future, we are
fully cognizant of the challenging
economic and geopolitical
environment in which we and
our customers will be operating
throughout the coming year.
We will remain focused on our
purpose at IWG, to help people
have a great day at work. By
enabling them to increasingly
work in the ways they want and
closer to home, we are actively
improving the way people live –
not just at work but in many
other aspects of their
lives as well.
IWG is a clear leader in enabling
the changes from hybrid working
and has everything in place to
build on that lead: a rapidly
growing global network, an
efficient management platform,
industry leading technology, an
expanding customer base,
a broad brand and service
portfolio to meet the needs
of our customers and property
owners, our people experienced
in all aspects of delivering
flexible workspace, and the
vision and drive necessary
to ultimately benefit from these
changes. We therefore look
forward to a future of profitable
growth providing opportunities
and rewards for our people,
customers, partners and
investors in 2023 and beyond.
Douglas Sutherland
Chairman
20 March 2023
IWG plc Annual Report and Accounts 2022
13
Strategic report Chief Executive Officer’s review
Leading the
global shift
to hybrid.
We mustn’t underestimate
the significance of what we
are witnessing. In years to come,
the ‘hybrid revolution’ will
be recognised as every bit as
important as all of the biggest
previous innovations that have
shaped the world of work.”
Mark Dixon
Chief Executive Officer
14
IWG plc Annual Report and Accounts 2022
For many years, I have
been saying that
I believed companies
and their employees
would eventually move
to a hybrid working
model, with people being
given the flexibility to get
their work done when and
where they’re most
productive. This shift was
taking place pre-Covid at
a gradual pace, but now
it’s happening at break-
neck speed, and there
there’s no turning back.
Hybrid working is here
to stay.
Hybrid working is better for
people, cheaper and far more
flexible for companies. The
advent of hybrid has made it
redundant for companies to tie
themselves into inflexible and
expensive long-term contracts
on city-centre properties, while
also having a hugely positive
impact on the environment.
This type of working is being
rapidly adopted by companies
worldwide. It’s no longer just
about plans or intentions, as we
can see in our record numbers
for 2022, it’s already changed
the actions business leaders
are taking when it comes
to managing their property
footprint. In IWG’s recent
CFO study, half of the financial
leaders surveyed have already
opted for some form of hybrid
working solutions1.
The reasoning for this shift to
hybrid is simple: the approach
gives them the flexibility to scale
up or down quickly without
82%
of CEOs globally
are concerned about
uncertain economic
growth
This future world of work is one
in which we thrive, as the global
market leader of hybrid working
products supplied from our
platform. A new real estate
frontier, where buildings are
‘linked together’ to form a single
work platform that can be
accessed by millions in a
convenient, productive and
efficient way. Most importantly,
work becomes more local for
many, with growing indications
that the fast-changing working
habits of millions of people
across the world mean the days
could be numbered for one of
the greatest drivers of global
warming: the daily commute.
Little has done more over the
years to depress, stress and
irritate workers than the daily
commute, affecting people in
otherwise fantastic careers, in
exceptional cities and with great
employers. It separates families,
fractures communities, pollutes
the environment and wastes
vast amounts of time
and money.
Today the daily commute is
entirely unnecessary, because
the office is no longer a physical
place that people have to go to.
Rather, it is a digital space, where
data saved in the cloud is
accessible at any time,
from anywhere.
being locked into lengthy
contracts. It’s also ‘a no brainer’
when it comes to profit, with
an independent Global Analytics
survey recently showing that
hybrid working can save
organisations an average of
more than $11,000 per employee
per year2.
Savings of that scale ramp up
dramatically. It’s estimated that
since Cisco went hybrid five
years ago it has saved around
$500 million by cutting around
half of its real-estate footprint3.
We see a future where between
30% and 50% of white-collar
workers (well over a billion people)
will work in the hybrid style.
Significant academic research and
opinion reinforces this prediction
and highlights why companies are
embracing the model.
According to Stanford
University’s Professor Nicholas
Bloom, acknowledged as the
leading academic expert on
hybrid: “Firms don’t do things
that lose them money. They
do things that make them
money. That’s why every firm
just about out there is doing
hybrid, because it’s such
a no-brainer to increase profit”4.
1. IWG Research, 2022
2. Global Workplace Analytics: Latest Work-at-Home/Telecommuting/Remote Work Statistics –
Global Workplace Analytics
3. BBC STORYWORKS
4. What we now know about hybrid work (charterworks.com)
IWG plc Annual Report and Accounts 2022
15
Strategic report Chief Executive Officer’s review continued
While sophisticated web-based
technology has been around for
a few years, it is only since the
pandemic that companies have
seen first-hand not only that
hybrid works, but that they are
able to thrive under the model.
Firms are able to operate more
efficiently with a more
productive workforce, while
employees are happier as
they see hybrid working as
the equivalent of a 7% to 8%
pay rise1.
A Bright future
As we enter 2023, our focus is
sharper than ever and we have
completely repositioned the
Company and its strategy in
three key areas to enable us to
deliver against our full potential.
The first of these is an
unrelenting focus on growing
our margin, driven by strong
performance on new and
embedded price, sequential
improvements in occupancy,
service revenue growth and
strict control of costs.
The second is our parallel focus
on the rapid growth of our
network coverage in partnership
with the property industry and
investors using capital-light
expansion methods such as
management agreements,
partnering deals and franchising.
Finally, we are committed to
accelerating the growth of our
Worka business following our
investment in the Instant Group
at the beginning of Q1 in 2022.
Expanding as a
carbon neutral
business
There are two distinct yet
complementary trends that
companies are embracing
that are driving the demand
for hybrid working solutions.
First, companies are downsizing
in city centres, replacing long,
restrictive, and expensive
leases with flexible space with
operators like IWG. Second, they
are taking on flexible workspace
in local neighbourhoods, closer
to where their people live and
want to be.
These drivers are empowering
us to grow faster than ever
before, supporting our plans to
add new signed locations during
2023 and bring the benefits of
hybrid to many more people.
Growth is clearly a priority for
IWG, but we are determined only
to expand as a carbon-neutral
organisation. The action we have
taken to restrict and offset IWG
plc’s environmental impact is
having the desired effect; our
strong rating by MSCI was
upgraded to AA and I am
pleased to say that we are
on track to achieve carbon
neutrality during 2023.
Driving growth at IWG
Hybrid working is sometimes
presented as a binary choice,
between people working
from home and a central
headquarters, but this
misses the point entirely.
All studies show employees
don’t want to spend hours
commuting each day to work in
an inconveniently located office.
1. What we now know about hybrid work (charterworks.com)
16
IWG plc Annual Report and Accounts 2022
“Make no mistake the office
is most definitely not dead;
it has just changed location”
My greatest thanks go to all our
team members, who were the
driving force behind our success
in achieving excellent results in
an extraordinary year for our
global market and our business.
Looking to the
year ahead
We enter 2023 with strong
momentum behind us.
The future is extremely bright
for IWG and all our stakeholders
as we continue to grow our
customer base, our global
network and our matchless
portfolio of brands and
other solutions.
We remain ambitious and
hungry for yet greater success.
Our ultimate goal is to grow
by thousands of centres over
the coming years, further
consolidating our position at the
forefront of the most important
and positive revolution in the
world of work.
With the market trends on our
side, the right strategy, the right
people and the right impetus,
we are superbly placed to
deliver against all our ongoing
growth ambitions.
Mark Dixon
Founder and CEO, IWG plc
20 March 2023
Just look at the sites of some
of our most recent openings.
In the UK: Gerrards Cross,
Buckinghamshire (population
8,000); Marlow, also in
Buckinghamshire (14,000);
and Chippenham in Wiltshire
(relatively large at 45,000). In
the USA: Kodak, Tennessee
(10,500); Destin, Florida (14,000);
Blufton, South Carolina (27,700);
Middleton, Wisconsin (20,000);
Ridgeland, Mississippi (24,000);
and Stafford, Virginia (5,500).
That is not to say that
businesses are abandoning city
centres: far from it. Increasingly,
we are helping companies shake
off the expense of the long-term,
city-centre lease and replace
it with a flexible, cost-effective
agreement on a smaller space
in one of our city-based centres.
This, too, is a trend that is
proving highly beneficial for IWG
and as a result we will continue
to expand across metropolitan,
suburban and rural locations.
Make no mistake the office is
most definitely not dead; it has
just changed location.
Our financial
performance in 2022
With all the trends on our side it
is no surprise that our financial
results for 2022 were very
strong with the highest-ever
revenue in IWG’s 34-year history
with 24% growth in system-wide
revenue to £3.1bn.
The strong financial results
we generated, with growth in
revenue and operating profit,
are providing outstanding
momentum for the business.
We also started to grow our
network strongly by signing
462 new centres in 2022,
and we are planning for even
stronger network growth
in the year ahead.
IWG plc Annual Report and Accounts 2022
17
Now, the remarkable advances
in cloud technology and video
conferencing software – both
vital to enabling effective hybrid
working – mean they don’t need
to. That is why we are seeing
a fundamental shift in the
geography of work with the
centre of gravity moving towards
the local communities where
people actually live.
This rapidly growing demand
for hybrid working is propelling
the IWG business forward.
The demand to work locally
is particularly strong in the
suburbs, former dormitory
towns, satellite villages and
countryside communities that
used to be denuded of their
people in the working week by
the irresistible draw of the big
city. In parallel, businesses
everywhere are now typically
opting for a fraction of their
former conventional city-centre
space in favour of sites closer
to where their employees live
and actually want to be.
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 shows
that half of all workers would seek another
job if asked to make a full time return to
the office1. SME demand for high-quality
accommodation and services in local
markets continues to accelerate.
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.
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.
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.
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.
• 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.
• Growing requirement for advanced tech solutions
• Supporting new ways of working that allow people
to support home working as individuals seek
to enhance their lifestyles and reduce their
carbon footprints.
everywhere to contribute to the carbon-
reduction agenda.
• To attract and retain the best talent, employers
are seeking partners who can provide flexible space
and services.
• Workspace providers without diverse portfolios are
• Our network expansion is focused on local markets,
enabled and accelerated by our capital light growth
strategy that is driving our global presence towards
our goal of reaching 30,000 centres.
struggling to meet emerging customer needs and
• We ensure our customers gain from our scale,
remain competitive.
brand portfolio and service levels at every stage
• Communities that cannot provide high-quality
of their development.
workspace are finding it hard to meet the evolving
• We enable our customers to participate in our local
needs of local employers.
social investment programmes across the world.
• Companies are increasingly taking a portfolio
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.
• We provide ‘hub-and-spoke’ infrastructure to meet
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 appropriate range of digital offerings is a key
differentiator.
• We leverage our unmatched insight into the tech
needs and expectations of businesses, delivered
by millions of individuals who use our services
• Companies are focusing their attention on identifying
the right tech investments to make the moment
every day.
they are required.
• The need to maintain service provision is mission-
critical, driving the often expensive requirement
to keep pace with advances.
• We continually invest in world-class, resilient
IT infrastructure, innovative digital offerings and
services at all our centres.
• With thousands of 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.
18
IWG plc Annual Report and Accounts 2022
1. IWG Research conducted by Mortar (2021)
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 shows
that half of all workers would seek another
job if asked to make a full time return to
the office1. SME demand for high-quality
accommodation and services in local
markets continues to accelerate.
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.
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.
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.
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
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 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.
• Our network expansion is focused on local markets,
enabled and accelerated by our capital light growth
strategy that is driving our global presence towards
our goal of reaching 30,000 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
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.
• We provide ‘hub-and-spoke’ infrastructure to meet
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 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.
• We leverage our unmatched insight into the tech
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 thousands of 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.
IWG plc Annual Report and Accounts 2022
19
Strategic report
Business model
Creating value
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 property owners
and investors 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
Our
competitive
operating
model
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.
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 strategic
pillars
Our three strategic priorities enable sustainable
growth to achieve our purpose.
See pages 22-25 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.
20
IWG plc Annual Report and Accounts 2022
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
Franchise partners
Our franchise partners find it easy to activate our
business model, brands and access the group’s
marketing support.
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.
1
2
3
Network
Franchise
partnerships
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 44-53 for more on our
approach to risk and governance
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.
IWG plc Annual Report and Accounts 2022
21
Strategic report
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
1
2
3
Network
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.
Franchise and
Partnerships
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.
Platform (technology)
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 page 23 for more on
our locations
See pages 24 for more on
partners and franchising
See pages 25 for more on
our technology
Market opportunity
22
IWG plc Annual Report and Accounts 2022
Strategy: Network
Global operations
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 via
19 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..
19
BRANDS
8M
CUSTOMERS
IWG plc Annual Report and Accounts 2022
23
Strategic report Strategy: Partnerships
Empowering our partners:
partnerships
for shared success
Working with property
owners, investors and
franchisees across the
world is central to IWG’s
capital-light growth
strategy. It’s an approach
that benefits all parties,
empowering our partners
to turn today’s surge in
demand for hybrid
working into valuable,
cash-generating and
profitable businesses.
We are the leading global
provider of hybrid working
solutions, the area of the global
workspace market that’s in most
vibrant growth today – and
predicted to grow by 600%
before 2030. As such, we are
uniquely well-positioned to help
ambitious businesses diversify
into this fast-growing sector,
leveraging more than three
decades of experience and
our deep understanding of over
120 national markets.
600%
amount the flexible
workspace market
will grow by 2030
Demand for our solutions is
growing fast, supporting the
acceleration of our network
expansion over the next year.
As a result, we can deliver
sustainable demand and
income for our partners:
• Building owners: traditional
building owners are taking a hit
as companies cut back on
conventional office space. As
demand for hybrid grows, IWG
can provide them with a route
to higher income –
immediately. With our turnkey
services, including dedicated
sales and marketing, design
and fit-out support, we can
radically accelerate and
sustain their return to
profitable occupancy.
• Franchise investors: we
already work with many
individual, multi-unit and
regional franchise investors
across the world to develop
highly successful flexible-
workspace locations. With the
right vision for growth and the
desire to seize the commercial
opportunities facing them,
they recognise IWG as the only
true partner of choice. And
growing numbers are joining
them every day.
• Institutional developers
and investors: with 88% of
organisations adopting
hybrid-working solutions for
their people, business leaders
are reducing their traditional
office speed at an accelerating
pace. This is offering
developers and investors with
interests in commercial real
estate a powerful opportunity
to future-proof their
investments. By removing
dependence on a few large
leases, the shift to hybrid
enables diversification,
mitigating risk and providing a
route to long-term growth and
stability. However, without the
right partner providing the
essential platform, network,
scale and experience, making
that shift will present significant
challenges. As market leader,
only IWG provides a roadmap
to success, helping to create
amenities that benefit tenants
while delivering a premium
income in perpetuity.
35%
24
IWG plc Annual Report and Accounts 2022
Strategy: 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, for 8 million
people working in multiple
languages and in multiple
places – in the office,
at home and on the move.
As a result, we invest more than
£50m annually 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
atime of global uncertainty. IWG
therefore started to build a full digital
representation of its global estate
last year, 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 ‘Everyware’
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.
IWG plc Annual Report and Accounts 2022
25
Strategic report Key performance indicators
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
Adjusted EBITDA (£m)
£308m
308
‘22
‘21
‘20
‘19
80
134
428
2 Best-in-class cost
leadership
Overhead as percentage of revenue (%)
15.5%
‘22
15.5
‘21
‘20
‘19
14.7
15.1
10.8
Network (locations)
3,345
‘22
3,345
‘21
‘20
‘19
3,314
3,313
3,388
Net growth capital investment (£m)
£141m
‘22
141
‘21
‘20
‘19
104
177
260
Total shareholder returns (£m)
£5m
‘22
5
‘21
‘20
‘19
nil
44
108
3 Global multi-brand
network
4 Capital-light
growth
5 Shareholder returns
26
IWG plc Annual Report and Accounts 2022
Overview
Future ambitions and risk
Adjusted EBITDA (before application of IFRS 16) up £228m, from £80m
More companies are permanently embracing hybrid working and IWG,
in 2021 to £308m in 2022, reflecting the great progress we made in
as the global industry leader, is set to benefit most from these
restructuring our centre costs, mitigating the inflationary impacts
fundamental changes to how work is conducted. We believe that
and benefiting from increasing revenue.
maintaining our strong focus on capital-light growth, creating the
world’s largest digital workspace platform and continued cost
discipline, together with increasing revenue, will drive
improving profitability.
Overheads as a % of revenue before adjusting items were well
We will continue to focus on controlling overhead cost to deliver
controlled at 15.5%.
Group overheads for 2022, increased 27% at constant currency
to £427m (2021: £328m). This increase reflects the successful
investment in our in-country sales teams and our marketing
to support our pivot to capital-light growth, yielding strong results
with 462 new deals signed in 2022.
operational efficiency. This will be balanced with investments in
overhead cost, where necessary, to improve the performance of
our well invested operating platform, processes and people and
delivery of the Group’s capital-light strategy.
We continue to add quality, convenience and choice to our network in
Macroeconomic and geopolitical uncertainties are likely to persist in
a carefully controlled and risk-managed way. Overall, we rationalised
many regions in 2023, which may lead to further rationalisation of the
121 locations during 2022, with 152 new high-quality locations added
network. However, we remain clearly focused on accelerating growth
to maintain the largest global and most widely distributed network.
through our capital-light and partnering strategy. Simultaneously we
will continue to develop our brands to enhance the choice available to
more customers.
During 2022 net growth capital expenditure was £141m, reflecting
In 2022 we signed a total of 462 new centre deals (2021: 193 deals
centres we signed in prior years. This investment resulted in our
signed) which will be added to our global and widely distributed
highest-ever network footprint of more than 65 million sq. ft.
network in the future. 91% or 421 deals out of these 462 deals in total
were capital-light which will result in significantly reduced net growth
capital expenditure investments in future years.
Given the continuing macroeconomic and geopolitical tensions, we
Our capital allocation policy remains in place, prioritising investment
believe it was prudent to protect our liquidity and as a result there
in the long-term development of our business and distributions to
was no cash distribution to shareholders in 2022. We did however
shareholders. We intend to return, at the earliest possible date, to
make a number of small-scale share repurchases, in total acquiring
providing attractive returns to shareholders through dividend
2.1m shares to be held in treasury at a cost of £5m.
distributions and share repurchase programmes.
1
Industry-leading
profitable growth
Adjusted EBITDA (£m)
£308m
2 Best-in-class cost
leadership
Overhead as percentage of revenue (%)
15.5%
3 Global multi-brand
network
Network (locations)
3,345
‘22
‘21
‘20
‘19
‘22
‘21
‘20
‘19
‘22
‘21
‘20
‘19
‘22
‘21
‘20
‘19
‘22
‘21
‘20
‘19
308
80
134
428
15.5
14.7
15.1
10.8
3,345
3,314
3,313
3,388
141
104
177
260
5
nil
44
108
Overview
Future ambitions and risk
Adjusted EBITDA (before application of IFRS 16) up £228m, from £80m
in 2021 to £308m in 2022, reflecting the great progress we made in
restructuring our centre costs, mitigating the inflationary impacts
and benefiting from increasing revenue.
More companies are permanently embracing hybrid working and IWG,
as the global industry leader, is set to benefit most from these
fundamental changes to how work is conducted. We believe that
maintaining our strong focus on capital-light growth, creating the
world’s largest digital workspace platform and continued cost
discipline, together with increasing revenue, will drive
improving profitability.
Overheads as a % of revenue before adjusting items were well
controlled at 15.5%.
Group overheads for 2022, increased 27% at constant currency
to £427m (2021: £328m). This increase reflects the successful
investment in our in-country sales teams and our marketing
to support our pivot to capital-light growth, yielding strong results
with 462 new deals signed in 2022.
We will continue to focus on controlling overhead cost to deliver
operational efficiency. This will be balanced with investments in
overhead cost, where necessary, to improve the performance of
our well invested operating platform, processes and people and
delivery of the Group’s capital-light strategy.
We continue to add quality, convenience and choice to our network in
a carefully controlled and risk-managed way. Overall, we rationalised
121 locations during 2022, with 152 new high-quality locations added
to maintain the largest global and most widely distributed network.
Macroeconomic and geopolitical uncertainties are likely to persist in
many regions in 2023, which may lead to further rationalisation of the
network. However, we remain clearly focused on accelerating growth
through our capital-light and partnering strategy. Simultaneously we
will continue to develop our brands to enhance the choice available to
more customers.
4 Capital-light
growth
Net growth capital investment (£m)
£141m
During 2022 net growth capital expenditure was £141m, reflecting
centres we signed in prior years. This investment resulted in our
highest-ever network footprint of more than 65 million sq. ft.
In 2022 we signed a total of 462 new centre deals (2021: 193 deals
signed) which will be added to our global and widely distributed
network in the future. 91% or 421 deals out of these 462 deals in total
were capital-light which will result in significantly reduced net growth
capital expenditure investments in future years.
5 Shareholder returns
Total shareholder returns (£m)
£5m
Given the continuing macroeconomic and geopolitical tensions, we
believe it was prudent to protect our liquidity and as a result there
was no cash distribution to shareholders in 2022. We did however
make a number of small-scale share repurchases, in total acquiring
2.1m shares to be held in treasury at a cost of £5m.
Our capital allocation policy remains in place, prioritising investment
in the long-term development of our business and distributions to
shareholders. We intend to return, at the earliest possible date, to
providing attractive returns to shareholders through dividend
distributions and share repurchase programmes.
IWG plc Annual Report and Accounts 2022
27
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. Here, we
describe the brands
that help to make
this possible.
IWG provides a world-leading
hybrid working 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.
brands
19
3,314
8m+
locations
users
28
IWG plc Annual Report and Accounts 2022
THE OFFICE OPERATORS 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.
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.
IWG plc Annual Report and Accounts 2022
29
Strategic report Our brands continued
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.
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, community
programme of partnerships,
professional events and
hospitality services.
30
IWG plc Annual Report and Accounts 2022
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.
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.
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.
IWG plc Annual Report and Accounts 2022
31
Strategic report Our brands continued
Our digital
businesses
During 2022, IWG’s digital brands
were combined with The Instant
Group to create Worka, the
world’s leading integrated
independent workspace digital
platform for serving the needs
of the broader flexible
workspace market.
The app
containing
every hybrid
work solution
Worka will bring together every
type of flexible workspace in one
easy-to-use app.
Users will be able to search and
compare over 30,000 global
locations and instantly book a
range of hybrid working solutions
including office space, coworking
and meeting rooms.
With the largest offering of
flexible workspace and real-time
availability, Worka meets
the needs of all hybrid
workers globally.
32
IWG plc Annual Report and Accounts 2022
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.
IWG plc Annual Report and Accounts 2022
33
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.
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 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.
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.
34
IWG plc Annual Report and Accounts 2022
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.
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?
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.
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 2022, our Investor Relations
function held more than
500 meetings with investors
and analysts. These meetings were
held both virtually and in person.
IWG plc Annual Report and Accounts 2022
35
Strategic report Chief Financial Officer’s review
Growing rapidly
and profitably
2022 has been an extraordinary year for the Group, demonstrating the ability to deliver its
highest-ever system-wide revenue of £3.1bn in IWG’s 34-year history whilst simultaneously
increasing operating profit and cash generation. Combining the Group’s unique brand strategy
and unrivalled global network with historic investment in new centre capacity positions the
business well for 2023.
Financial performance
The Group reports 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.
Group income statement (£m)
System-wide revenue
Group revenue
Gross profit
Overheads
Joint ventures
Operating profit/(loss)
Net finance cost
Loss before tax from continuing operations
Taxation
Effective tax rate
Loss after tax from continuing operations
Profit after tax from discontinued operations
Loss for the period
Basic EPS (p)
From continuing operations, adjusted
Attributable to shareholders
Depreciation & amortisation
Profit on discontinued operations
EBITDA
Network rationalisation charge
Reversal of impairment of PP&E
Provision for expected credit losses
Asset impairment of Russia & Ukraine
Other one-off items incl. restructuring
Total adjusting items
EBITDA adjusted
36
IWG plc Annual Report and Accounts 2022
2022
3,086
2,751
575
(427)
(1)
147
(252)
(105)
(16)
-15%
(121)
1
(120)
(10.1)
(11.2)
1,189
-
2021
2,498
2,227
243
(328)
(2)
(87)
(172)
(259)
(10)
-4%
(269)
59
(210)
(23.4)
(20.4)
1,110
3
Constant
currency
Actual
currency
+18%
+17%
+124%
+27%
n.m.
+24%
+24%
+137%
+30%
n.m.
+47%
-59%
+2%
+7%
1,336
1,026
+22%
+30%
58
(73)
-
9
19
13
71
(125)
53
-
32
31
1,349
1,057
+20%
+28%
Revenue
System-wide revenue increased by 24%, or 18% at
constant currency, to £3,086m. Group revenue also
increased by 24%, or 17% at constant FX, to £2,751m.
All three geographic regions reported good year-on-
year revenue growth. In particular, our largest region
of EMEA had strong revenue growth to £1,199m
(17% at constant FX) and Americas to £1,024m
(8% at constant FX). Asia still had significant COVID-19
restrictions throughout much of 2022, in particular
in China, and therefore revenue growth was weaker
to £248m (2% at constant FX). Worka grew to £271m
(103% at constant FX) impacted in particular by
investment in The Instant Group in March 2022.
On a pro-forma basis, had we consolidated
The Instant Group for the full year in 2022,
Worka had revenue of approximately £304m.
Revenue (£m)
EMEA
Americas
Asia
Other
2022
1,199
1,024
248
9
2021
1,027
836
231
1
Group pre-Worka
2,480
2,095
Worka
Group
Worka pro-forma1
271
2,751
304
132
2,227
132
1. Pro-forma for Instant Group investment for the full year
Constant
currency
+17%
+8%
+2%
n.m.
+12%
+103%
+17%
+128%
IWG plc Annual Report and Accounts 2022
37
Changes to segmental reporting
In March 2022 we invested in The Instant Group,
which is the world’s largest independent marketplace
for flexible working solutions for a smarter working
world, with an innovative technology platform and
award-winning digital marketing capabilities (refer
to note 28 for financial details). As stated at the time
of the investment in The Instant Group, the intention
was to combine this business with some of IWG’s
other assets, including digital assets, to form Worka.
During the year this integration progressed as planned
and as a result we have made changes to our
segmental reporting. Worka is operated by
an independent management team.
We have also split the Group pre-Worka into three
principal geographical segments: the Americas, Asia
and EMEA (Continental Europe including UK, Middle
East and Africa). As part of our focus on operational
efficiency we have organised our main management
functions and processes on a global basis. These
geographical segments reflect how we practically
exercise our global management through groupings
based on time zones, economic relationships, market
characteristics, cultural similarities, and language
clusters. As a result, the UK is now included in the
EMEA segment reporting.
Strategic report Chief Financial Officer’s review continued
Gross Profit
Revenue improvement coupled with cost control
resulted in a 124% improvement of gross profit
to £575m (2021: £243m).
Gross Profit (£m)
EMEA
Americas
Asia
Other
Group pre-Worka
Worka
Group
2022
191
184
51
11
437
138
575
2021
78
73
20
(6)
165
78
243
Constant
currency
+141%
+123%
+153%
n.m.
+148%
+76%
+124%
Overheads
We are pleased that investment in our in-country
sales teams and our marketing to support our pivot
to capital-light growth is yielding results with 462
new deals signed in 2022. This investment to grow
our network, coupled with the investment to fill
our centres and the impact of The Instant Group
investment, resulted in Group increased overheads
of £(427)m (2021: £(328)m).
Operating Profit/(Loss) adjusted –
continuing operations
In 2022 our results recovered strongly and we are
pleased to report an operating profit for year
of £147m compared to a loss of £(87)m in 2021.
EBITDA
The Group’s EBITDA increased by 22% at constant
currency to £1,336m from £1,026m in 2021.
This EBITDA improvement demonstrates the great
progress we made in restructuring our centre costs,
mitigating the inflationary impacts and benefiting
from increasing revenue.
The Group reports 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. Results are additionally
presented before the application of IFRS 16
(in accordance with IAS 17 accounting standards)
as it provides useful information to stakeholders
on how the Group is managed, and reporting for
bank covenants and certain lease agreements
The primary difference between the two standards
is the treatment of operating lease liabilities.
There is no difference between underlying cash flow.
38
IWG plc Annual Report and Accounts 2022
Before the application of IFRS 16 the Group’s EBITDA
increased by 389% at constant currency to £317m
from £59m in 2021.
To bridge the Group’s EBITDA of £1,336m under
the IFRS 16 standard to £317m under IAS 17, we need
to recognise rental income on subleases which are
recognise as lease receivables under IFRS 16, rental
costs on our lease portfolio reflected as lease liabilities
under IFRS 16 and centre closure and other costs
which are reflected as impairments under IFRS 16.
EBITDA bridge (£m)
EBITDA
Rent income
Rent expense
Centre closure & other cost
EBITDA before application
of IFRS 16
Network rationalisation charge
Closure cost provision release
Provision for expected credit
losses
Asset impairment of Russia &
Ukraine
Other one-off items incl.
restructuring
Total adjusting items
Adjusted EBITDA before
application of IFRS 16
2022
1,336
50
2021
1,026
-
(1,059)
(997)
(10)
317
25
(71)
-
19
18
(9)
308
30
59
60
(125)
53
-
33
21
80
All our segments reported strong results, led by EMEA
with EBITDA up 26% at constant FX from £474m
to £597m, Asia up 19% at constant FX from £115m
to £144m and Americas up 15% at constant FX from
£451m to £588m. Worka EBITDA was at £112m
(2021: £75m) positively impacted by The Instant
Group investment in March 2022. On a pro-forma
basis, i.e. including The Instant Group for full 12 months,
Worka EBITDA was at £117m.
EBITDA by segment
(£m)
EMEA
Americas
Asia
Other
Group pre-Worka
Worka
Continuing operations
Discontinuing
operations
Group
Worka (pro-forma)1
FY
2022
597
588
144
(105)
1,224
112
1,336
-
1,336
117
Constant
currency
+26%
+15%
+19%
-2%
+23%
+48%
+25%
FY
2021
474
451
115
(108)
932
75
1,007
19
1,026
+22%
75
1. Pro-forma for Instant Group investment for the full year
Adjusting items
As in prior years, in order to improve the transparency
and usefulness of the financial information presented
and to improve year-on-year comparability the Group
identified net adjusting items on operating profit
of £13m compared to £31m in 2021, of which all £13m
are non-cash items (2021: £8m).
These adjusting items in 2022 primarily reflect
COVID-19 related network rationalisation charges of
£58m vs. £71m in 2021, a reversal of impairment of
property, plant and equipment of £(73)m vs. £(125)m
in 2021 and other one-off items including restructuring
costs of £19m vs. £32m in 2021. Additionally, a charge
related to the asset impairment of Russia and the
Ukraine of £9m as a result of the ongoing geopolitical
tensions was also recognised.
Foreign exchange
The overall impact of exchange rate movements over
the course of the year increased revenue by £133m
and EBITDA by £79m. The Group’s results are exposed
to translation risk from the movement in currencies.
During 2022 key exchange rates moved, as shown
in the table below.
£ sterling
US dollar
Euro
At 31 Dec
Average
2022
2021
%
2022
2021
%
1.21
1.13
1.35 -10%
1.19
-5%
1.23
1.17
1.38
-11%
1.16
1%
Network growth
Our focus has been and will continue
to be on the expansion through partnerships.
91% (or 421 deals out of 462) of deals we signed
in 2022 in total were capital-light. As a result,
we are continuing to improve the quality of our
portfolio as we grow our global network.
Total occupancy of the Group’s continued operations
improved strongly by 530 bps in 2022 to 73.5%
(2021: 68.2%). This is a great achievement. It also
means that we still have 26.5% of centre capacity
to grow revenues at low marginal cost and with
minimal further investment.
The Group’s overall pricing continued to improve
throughout the year and importantly ahead of cost
inflation, with year-on-year pricing increasing
by 7%, albeit down from the all-time high of Q1 2020.
Our ability to increase prices is tied closely to
macroeconomic inflation rates, and therefore
we expect that our ability to pass on inflationary
increases to customers will slow as inflation
reduces globally.
We continue to manage prices appropriately and
continue to mitigate ongoing inflationary pressures
through our strong focus on supplier consolidation
and renegotiation, further strengthening our industry
cost leadership. Cost efficiency and focus on
profitable growth is our key focus area together
with our focus on capital-light growth.
Revenue (£m)
Number of centres
Centre openings
Centre
rationalisations
Number of SQFT
Total new centre
deals signed
Of which capital light
Average total
occupancy
Embedded price,
indexed*
2022
3,345
152
2021
3,314
146
Constant
currency
+31
(121)
(145)
65.1m
64.1m
+2%
462
421
193
182
+139%
73.5%
68.2% +530 bps
95
89
+7%
* Price per square foot, Q1 2020 = 100
Finance costs and taxation
The Group reported a net finance expense for the year
of £(252)m (2021: £(172)m). The net finance expense
includes interest on the Group’s lease liabilities
of £(230)m (2021: £(166)m) and borrowing facilities
of £(22)m (2021: £(6)m). The increase in the finance
expense related to the borrowing facilities is driven
by increased interest rates globally and increased
debt related to the investment in The Instant
Group in March 2022 mitigated by a £27m gain
on the mark-to-market of the option element
of the convertible bond (gain of £23m). Excluding
the mark-to-market of the convertible bond
the financial expense related to the borrowing
facilities was £(49)m (2021: £(29)m).
The effective tax rate is -15% (2021: -4%). 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.
IWG plc Annual Report and Accounts 2022
39
Strategic report Chief Financial Officer’s review continued
Earnings per share
Earnings per share improved in the year from a loss
of (26.2)p to a loss of (11.3)p. Earnings per share from
continuing operations on an adjusted basis was a loss
of (10.1)p compared to a loss of (23.4)p in 2021.
Diluted earnings per share for the year was a loss
of (11.3)p (2021: loss of (26.2)p). Diluted earnings per
share on a continuing basis on an adjusted basis for
the year was a loss of (10.1)p (2021: loss of (24.2)p).
The weighted average number of shares in issue
during the year was 1,006,884,755 (2021: 1,007,214,854).
The weighted average number of shares for
diluted earnings per share was 1,090,855,142
(2021: 1,102,444,936). 2,174,738 shares were acquired
in the period to be held in treasury to satisfy future
exercises under various Group long-term incentive
schemes. The Group reissued 1,442,606 shares from
treasury to satisfy such exercises during the year.
At 31 December 2022 the Group held 50,564,853
treasury shares (2021: 49,832,721).
Cash flow – continuing operations
In 2022 we demonstrated that actions taken to
manage cost tightly, restructure centres where
necessary and improve revenue resulted in £151m
of cash inflow from business activities compared
to an outflow of £(219)m in 2021. Net maintenance
capital expenditure was £5m lower in 2022 at £(90)m
(2021: £(95)m).
Cash inflow before growth capex and corporate
activities was £90m (2021: outflow of £(240)m).
Net growth capital expenditure was at £(141)m
(2021: £(104)m) mainly due to centres we signed
in prior years. It is important to note that in 2022
we signed a total of 462 new centre deals (2021: 193
deals signed) which will be added to our global and
widely distributed network in the future. 91% or 421
deals out of these 462 deals in total were capital-light
which will result in significantly reduced net growth
capital expenditure investments in future years.
Net cash for the year increased by £77m as cash
outflow before investments, share repurchase and
dividends of £(359)m (2021: £(334)m) was financed
through net proceeds on transactions of £54m and
net proceeds from loans of £386m.
40
IWG plc Annual Report and Accounts 2022
Cashflow (£m)
Operating profit/(loss)
Depreciation & amortisation
Profit on discontinued operations
EBITDA
Rent income
Rent expense
Centre closure & other costs
EBITDA before application of IFRS 16
Working capital (excl. amortisation of partner contributions)
Working capital related to the amortisation of partner contributions
Maintenance capital expenditure (net)
Other items1
Cash inflow/(outflow) from business activities2
Tax paid
Finance costs on bank & other facilities
Cash inflow/(outflow) before growth capex and corporate activities
Gross growth capital expenditure
Growth-related partner contributions
Net growth capital expenditure
Purchase of subsidiary undertakings (net of cash)
Cash outflow before corporate activities
Purchase of shares
Investment-related loan receivable
Net proceeds on transactions
Net proceeds from loans
Net cash inflow for the year
Opening net cash
FX movements
Closing cash
1. Includes capitalised rent related to centre openings (gross growth capital expenditure) of £(12)m (2021: £(20)m)
2. Cash flow before growth capex, corporate activities, tax and finance cost on bank & other facilities
2022
147
1,189
-
1,336
50
2021
(87)
1,110
3
1,026
-
(1,059)
(997)
(10)
317
22
(104)
(90)
6
151
(24)
(37)
90
(180)
39
(141)
(307)
(358)
(5)
-
54
386
77
78
6
161
30
59
(129)
(95)
(95)
41
(219)
(5)
(16)
(240)
(154)
50
(104)
11
(333)
-
283
19
36
5
71
2
78
IWG plc Annual Report and Accounts 2022
41
Strategic report Chief Financial Officer’s review continued
Cash at year-end 2022 was £161m (2021: £78m).
Mainly due to the investment in The Instant Group
we increased our loan balance by £(386)m to £(861)m
and non-cash movements, which was further
impacted by foreign exchange losses of £(12)m.
This resulted in net debt before application
of IFRS 16 of £(712)m (2021: £(397)m).
Under IFRS, we are obliged to report net debt including
operating leases which comprise c.90% of our net
debt balance. During 2022 we paid principal and
interest on finance leases of £1,227m and recognised
new principal and interest on net lease investments
of £(48)m. Non-cash movements and currency impact
on lease liabilities and investments increased the
liability by £(950)m. Hence, total IFRS 16 related
lease liabilities at the end of 2022 were £(5,892)m
(2021: £(6,121)m).
As a result, net debt at the end of 2022 was at
£(6,604)m compared with £(6,518)m at the end of
2021. Again, the increase in net debt was primarily
driven by £(307)m of acquisitions (predominantly
The Instant Group in March 2022), growth capex
related to centre openings which we signed in prior
years and the impact of currency changes.
Net debt (£m)
Closing cash
Opening loans
Net proceeds from issue &
repayment of loans
Non-cash movements & FX impact
on loans
Net financial debt
Opening lease liabilities
Principal & interest payments
on finance leases
Non-cash movements (net)
Principal & interest received
on net lease investment
FX impact on lease liabilities
& investments (net)
2022
161
2021
78
(475)
(422)
(386)
(36)
(12)
(712)
(17)
(397)
(6,121)
(6,559)
1,227
(524)
(48)
(426)
1,032
(712)
-
118
Net debt
(6,604)
(6,518)
42
IWG plc Annual Report and Accounts 2022
Risk management
Effective management of risk is an everyday activity
for the Group and, crucially, integral to our growth
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 44 to 53 of this
report. The principal risks and uncertainties are
unchanged, other than climate change risk, where
an inadequate ESG strategy would mean that IWG
is unable to manage climate related exposures.
IWG manages this risk in the following ways:
• ESG is firmly on the agenda for the Board;
• IWG is exposed to physical and transitional climate
related risks and are exposed to assessment
throughout the year; and
• ESG considerations are an integral part of our
businesses, and our strategy will continue to evolve
to address climate related risks and opportunities.
The Group continually reviews its product offering
to provide low carbon services; and In changing
asset allocations towards decarbonising operations
and value chains.
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 twelve months ended 31 December 2022.
Details of related party transactions that have taken
place in the period can be found in note 31.
Dividends and share repurchase
Given continuing macroeconomic uncertainties and
geopolitical tensions the Group continued to focus
on maintaining sufficient funding. As a result, dividend
payments currently remain on hold with a clear
intention to return to our progressive dividend policy
at the earliest possible opportunity. During the year
the Group made a number of small-scale share
repurchases, in total acquiring 2.1m shares to be held
in treasury at a cost of £5m.
Financing
The Group has a combination of debt financing
instruments, including:
• Convertible bond of £318m (face value £350m,
2021: £308m) with an interest rate of 0.5%,
due for repayment in 2027 with an option for
the bondholders to put the instrument back
to the Group in 2025 at par; and
• Net financial debt (excluding the convertible bond)
at 31 December 2022 of £394m. This includes
a non-recourse bridge facility against the Worka
group, the gross balance of which was £270m at
31 December 2022
As at year-end 2022 the Group complied with
all facility covenants. The financial instruments
are discussed in relation to the going concern
assessment below.
Going Concern
The Group reported a loss after tax of £(121)m
(2021: £(269)m) from continuing operations for the
year, while net cash of £1,147m (2021: £735m) was
generated from operations during the year. Although
the Group’s balance sheet at 31 December 2022
reports a net current liability position of £1,868m
(2021: £1,435m) which could give rise to a potential
liquidity risk, the Directors concluded and are satisfied
after a comprehensive review that no liquidity risk
exists after taking into account the following
considerations:
1. The Group has funding available under the Group’s
£750m revolving credit facility. £173m
(2021: £530m) was available and undrawn at
31 December 2022. This facility is committed until
March 2025 with an option to extend until 2026
(note 25);
2. The Group’s initial £330m non-recourse bridge
facility, to fund the investment in The Instant Group,
matures in September 2023. The Instant Group,
combined with the IWG digital assets in Worka,
has been highly cash generative and reduced
its net debt to £176m, excluding £4m of lease
liabilities, at 31 December 2022. Based on the
modelled scenarios the Directors expect that
Worka will continue to reduce its net debt position
by September 2023, and has already been doing
so at the start of 2023. The Group is pursuing
various options available to address the bridge
facility refinancing, including but not limited to:
repaying the bridge facility through asset sales,
cash generated from operations, and/or the
extension or replacement of this facility to ensure
continued funding of this highly successful and cash
generative business; and
3. The Group maintains a 12-month rolling forecast
and a three-year strategic outlook. It also monitors
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:
i. the potential cash generation of the Group
against a range of illustrative scenarios
(including a severe but plausible outcome); and
ii. mitigating actions to reduce operating costs
and optimise cash flows during any ongoing
global restrictions.
Details of the principal risks, outcomes of modelled
and stress tested scenarios are set out in the Viability
statement review on page 53.
Based on the above, the Directors consider that
the Group is well placed to successfully manage
the actual and potential liquidity risks faced
by the organisation subject to successful resolution
of the uncertainty with regard to the bridge facility
referred to in section 2 above.
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.
Charlie Steel
Chief Financial Officer
20 March 2023
IWG plc Annual Report and Accounts 2022
43
Strategic report Risk management and principal risks
Managing
risk in an
uncertain
world
Risk management is an
integral part of IWG's
strategic planning
process. The importance
of having robust and
effective enterprise risk
management is vital to
the achievement of our
goals, 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.
The Board has overall responsibility
for ensuring that IWG has an
appropriate 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.
Risk Management
Approach
IWG operates the three lines
of defence to manage risk,
endorsed by the Board.
See diagram on page 45
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 74 to 83.
In 2022, 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 the Group’s control were
considered in 2022 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 2022. 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.
44
IWG plc Annual Report and Accounts 2022
IWG is on track to achieve carbon
neutrality during 2023. We
participate annually in the Carbon
Disclosure Programme and
maintained a stronger rating than
the global and industry averages
for our carbon and water
submissions. At its core, IWG
embraces the 15-minute commute
and advocates a hybrid working
environment.
Principal risks to the
achievement of our
strategy in 2022
Our principal risks are linked to
our key business objectives and
overall strategy and in 2022 were
considered in the context of the
ongoing pandemic, economic
downturn and climate change.
A critical component of the risk
management process is assessing
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.
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.
THREE LINES OF DEFENCE
Board
Approves 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
IWG plc Annual Report and Accounts 2022
45
Strategic report Risk management and principal risks continued
Strategic risks
Risk description
Growth risk
IWG continues to undertake
significant Global growth.
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 and delivery of
programmes are not achieved
within desired timelines or do
not meet the desired
outcomes.
Lease obligations
The Group’s portfolio of leases
gives rise to an inherent risk in
relation to lease obligations
and associated financial
commitment. The lives 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.
Mitigation
Change / improvement since 2021
Throughout 2022 additional resource
investment took place for network
development teams to focus on capital-light
growth.
Strong growth plans were implemented and
monitored.
New centre opening strength that occurred
in 2021, continued throughout 2022.
We have recruited a number of senior roles
to provide additional expertise.
We have a coordinated transformation
programme in place to align multiple
transformational activities.
External expertise is called on as and when
required to assist in the delivery of our
transformation.
Approximately 96% of our leases are flexible
giving the Group the agility to change to
economic conditions.
At the end of 2022, we were operating
3,345 locations of which approximately
40% are variable deals.
Further, more than 90% of new deals signed
in 2022 were variable in nature.
IWG mitigates this risk as follows:
1. A strong capital-light growth structure is
implemented, enabling low-cost investment.
2. All investments or acquisitions are subject to
review and approval by the Investment
Committee.
3. New leases are principally required to be
variable in nature.
4. 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.
5. Monthly Business Reviews take place to
monitor spend and profitability. A quarterly
review process is in place to monitor new
centre performance profitability. As part of the
annual planning process, a growth plan is
agreed for each country which clearly sets out
the annual growth objectives and means to
achieve those goals.
This risk is mitigated as follows:
1. Governance Committee in place for all
transformation programmes. Clear timelines
and expected outcomes are monitored and
managed.
2. Programme 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. A Resource
Committee is established to manage resource
requirements needed for the execution of this.
This risk is mitigated in a number of ways:
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.
Additionally, close to 40% of all our open centres
as at December 2022 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. The sheer number of leases and geographic
diversity of our business reduce the overall risk to
our business. Additionally, our capital-light growth
model together with Increased partner
agreements reduces the overall risk to the Group.
Each year a significant number of leases in our
portfolio reach a natural break point further
reducing the risk.
46
IWG plc Annual Report and Accounts 2022
Risk description
Mitigation
Change / improvement since 2021
Prolonged economic downturn
A prolonged economic
downturn in key and emerging
markets, or changes in market
conditions, could adversely
impact our global market
share, operating revenue and
profit performance.
The Group is operationally
leveraged, resulting in
profitability moving up and
down with relatively small
changes in revenue.
The Group has taken a number of actions
to mitigate this risk:
The number of ‘flexible’ leases as a
percentage of the total remained at 96%.
1. The Group has a strategy in place, which
is reviewed and approved by the Board.
2. Approximately 40% of all our leases are variable
in nature and our rental payments, if any, vary
with the performance of the centre.
3. Lease contracts include break clauses when
leases can be terminated at our behest.
4. We review our customer base to assess exposure
to a particular customer or industry group and
take action where necessary to manage any risk.
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 any single market or region.
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 when making
its annual Viability statement.
Innovation and competitive advantage
Failure to innovate and
respond to market demand
could result In IWG’s leading
market share being
compromised.
IWG's strategy includes investment in innovation
to develop new products and services to further
Increase its competitive advantage, protect
current revenue and unlock potential new sources
of revenue.
2022 saw continued modernisation of the
technology used by IWG. The adoption of the
Microsoft suite of ERP 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.
Partner portfolio
The continued expansion of
our franchising and managed
partnerships is key to the
Group's capital-light growth
strategy. Achieving our partner
model objectives will require
the continued development of
our skills, services and
resources.
Increased competition
The residual impact from
the pandemic and the 'great
resignation' has solidified
hybrid working as the ‘new
normal’. 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.
This risk is mitigated as follows:
1. A Partner Committee oversees key
programmes connected with the franchising
model and the managed partnership 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 2022, more countries and partners were
added in our partner portfolio.
Partner development and support teams
were further strengthened in 2022 with the
recruitment of dedicated sales and
development and support personnel in key
markets. We have implemented hands-on
targeted support for our partners with
monthly reviews to drive performance and
review of processes to identify improvement
opportunities.
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. As market leaders, IWG
also responded quickly to the pandemic and
offered clients its unique "hub and spoke" model.
The competitive landscape has continued
to shift in 2022. We continue our efforts to
offer an unrivalled global network and varied
product range to suit the different
requirements of our customers. In 2022,
we added 20 new towns and cities.
In addition to our global network and product
range we maintained cost leadership which
is pivotal for a sustainable business.
IWG also offers a diverse product range under its
different brands to cater to multiple customer
segments. This allows us to capture and maintain
market share across the flexible workspace
market. We explore new and emerging markets to
ensure our supply of products meets demand. We
continuous 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.
IWG plc Annual Report and Accounts 2022
47
Strategic report Risk management and principal risks continued
Strategic risks continued
Risk description
Mitigation
Change / improvement since 2021
Geopolitical instability
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 and we have exited some
markets impacted. 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. IWG has taken concerted action
during 2022 to reduce risk relating
to geopolitical conflict and to ensure
there is a robust KYC process in place.
(NEW) Climate change risk
Inadequate ESG Strategy
would mean that IWG is unable
to manage climate-related
exposures.
The Group adopted greenhouse gas
emission reduction goals and a commitment
to achieve carbon neutrality during 2023.
This was communicated in our 2021
annual report.
IWG manages this risk In the following ways:
1. ESG is firmly on the agenda for the Board.
2. IWG is exposed to physical and transitional
climate-related risks and are exposed
to assessment throughout the year.
3. ESG considerations are an integral part
of our businesses, and our strategy will continue
to evolve to address climate-related risks and
opportunities. The Group continually reviews its
product offering to provide low carbon services;
and in changing asset allocations towards
decarbonising operations and value chains.
Financial risks
Risk description
Mitigation
Change / improvement since 2021
Business planning and forecasting
The Group is exposed to
constantly changing external
environment (e.g.: geopolitical
risks and global Inflation rises)
which can impact business
planning and forecasting.
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.
Business plans, forecasts and review processes
are embedded into the Group to provide timely
and reliable information for short-, mid- and
long-term opportunities. Any risks to performance
will be identified by early warning indicators so
that they can be addressed on a proactive basis.
The existing forecasting process was
enhanced by creating different scenarios
to reflect various economic environments
and financial outcomes. The focus has
been on cash generation by reducing cost,
renegotiating rents and rationalising
the network.
Funding
The Group relies on external
funding to support a net
financial debt position of
£712m at the end of 2022.
Any change to this support
would result in liquidity risk
for the Group.
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
(Refer to the Viability statement on Page 53).
3. The Board intends to maintain a prudent
approach to the Group’s capital structure
and constant review of the maturity profile
of external funding is in place.
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.
The Group’s funding comprises of a GBP
350m convertible bond with a fixed 0.5%
interest rate, a GBP 750m Revolving Credit
Facility (RCF) and a GBP 270m non-recourse
Bridge Facility as at December 2022.
The convertible bond matures in 2027 with
an option for the bondholders to put the
instrument back to the Group in 2025.
The RCF is committed until March 2025
with an option to extend until 2026.
The non-recourse Bridge Facility, to fund the
investment in The Instant Group in March
2022, matures in September 2023. The Group
is pursuing various options available to
address the bridge facility refinancing,
including but not limited to: repaying the
bridge facility through asset sales, cash
generated from operations, and/or the
extension or replacement of this facility to
ensure continued funding of this highly
successful and cash generative business.
48
IWG plc Annual Report and Accounts 2022
Mitigation
Change / improvement since 2021
Mitigating actions include:
1. The short-term nature of most customer
contracts allows 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.
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.
Inflationary pressures are expected
to increase.
Continued pricing management and focus
on cost and efficiencies are largely mitigating
inflationary pressure.
In 2022, exchange rates had a positive
impact on results.
Revenue increased during the year
by £133m and EBITDA by £79m.
Risk description
Inflation risk
Increasing global inflationary
pressures may impact the
Group’s costs, including
financing charges, impacting
profitability and cash flows.
Exchange rates
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 currency
volatility can impact revenue.
The Group does not undertake
any speculative transactions
to manage risk.
Operational risks
Risk description
Mitigation
Change / Improvement since 2021
High level recruiting and succession planning
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 in 2022 met demand and we
expect more of the same in 2023 to meet
the growing needs of the business.
The Board of Directors was increased
by an additional Non-Executive Director
with three of the Board members being
newly appointed during 2022.
IWG plc Annual Report and Accounts 2022
49
Strategic report Risk management and principal risks continued
Operational risks continued
Risk description
Mitigation
Change / improvement since 2021
Employee engagement and retention
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.
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.
Ethics and compliance
Ethical misconduct by our
employees or non-compliance
with regulation, whether
inadvertently, knowingly or
negligently, could lead to
financial loss/penalties,
reputational damage, loss of
business and impact on staff
morale.
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.
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 world to support continuously giving
customers a great day at work.
In 2022, the Group issued a number
of employee engagement surveys across
specific functions and to the Group
as a whole, with positive results.
We continue to actively monitor and respond
to reports via 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 and
the Investment Committee presides over
key decisions.
A dedicated cost function to review spend
across all categories and detect anomalies
or exceptions is in place.
50
IWG plc Annual Report and Accounts 2022
Risk description
Mitigation
Change / improvement since 2021
Data protection and privacy
IWG is required to comply with
legislation in the jurisdictions
in which it operates including
the new General Data
Protection Regulation
(GDPR) and other local
data privacy laws.
Non-compliance and breaches
could result in significant
financial penalties and
reputational damage
Cyber security
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 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 &
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.
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 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.
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 require
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 continually
implement new security features to improve
our processes and controls in this area,
keeping pace with the ever-changing
best-practice.
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 with which all centres
need to comply.
IWG plc Annual Report and Accounts 2022
51
Strategic report Risk management and principal risks continued
Operational risks continued
Risk description
Mitigation
Change / improvement since 2021
Business continuity
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 & 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.
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 should
the worst case scenario occur in 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.
2. 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.
3. A robust managed services and managed
security services agreement in place with
leading vendor.
4. 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.
5. Appropriate business interruption insurance
is in place.
6. Country Business Continuity Plan and Centre
Disaster Recovery Plan are in place and
regularly reviewed.
52
IWG plc Annual Report and Accounts 2022
2023. The Instant Group,
combined with the IWG digital
assets in Worka, has been
highly cash generative and
reduced its net debt to £176m,
excluding £4m of lease
liabilities, at 31 December
2022. Based on the modelled
scenarios the Directors expect
that Worka will continue to
reduce its net debt position
by September 2023, and
has already been doing so
at the start of 2023. The Group
is pursuing various options
available to address the bridge
facility refinancing, including
but not limited to: repaying
the bridge facility through
asset sales, cash generated
from operations, and/or the
extension or replacement
of this facility to ensure
continued funding of this
highly successful and cash
generative business.
Viability statement
In accordance with the UK
Corporate Governance Code
published by the Financial Reporting
Council in July 2018, 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 is cognizant
of the maturing Bridge Facility
in September 2023. The Group
has various options to address
this, including: repaying the bridge
facility via asset sales, cash
generated from operations,
or refinancing via extension
or replacement of the facility.
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,
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;
• £ sterling appreciation; and
• Significant cybersecurity
or data breach event.
Two scenarios (likely-case and
worst-case) modelled for revenue
shortfall, 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.
The impact on performance was
assessed over a three-year period
(2023-25) and on account
of individual risks as well as
a combination of risks materialising.
The modelling for worst case
revenue shortfall reflects the low
starting point given the recovery
from COVID-19 and the worst case
for cyber/data event reflects the
limited private data held and other
steps taken to limit the risk/impact
of such events.
In the event of extreme worst-case
scenarios there are actions that
could/would be taken including
an accelerated sale of properties,
cutting growth and related capex
and costs, etc. The significant
potential benefits from such actions
have not been reflected in the
modelling.
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 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.
In making its assessment, the Board
considered the outcome of each
modelled scenario against the
Group’s current and projected
future net cash/(debt) and liquidity
position, specifically:
1. The Group had funding available
under the Group’s £750m
revolving credit facility. As at
31 December, £173m
(2021: £530.1m) was available and
undrawn under this facility.
This facility is committed until
March 2025 with an option to
extend until 2026;
2. The Group’s initial £330m non-
recourse bridge facility, to fund
the investment in The Instant
Group, matures in September
IWG plc Annual Report and Accounts 2022
53
Strategic report Environment, Social, Governance
IWG puts
people and
planet first
Climate change is at a pivotal
moment – I believe it is critical
that IWG plays its part. We have
amplified our efforts in this
space to ensure we deliver an
environmentally friendly and
inclusive space for all customers.”
Mark Dixon
Chief Executive Officer
54
IWG plc Annual Report and Accounts 2022
Teams across
IWG collaborate to
continuously improve
and innovate ensuring
our business delivers
against our main
ambitions:
Our carbon reduction
journey
• We are reducing carbon
emissions across all IWG
spaces, investing in buildings
that have recognisable
sustainable credentials
and reducing waste
across operations
• We remain on track to deliver
carbon neutrality during 2023
and have set a target to reach
Net Zero by 2040
Being a socially
responsible employer
• We continue to invest in
recruiting and training the best
talent and are proud to be
recognised as a leading
employer
• Our teams and customers
have made huge contributions
to charitable organisations
in the communities where we
operate in across the world
Providing transparent
and regular information
• We have improved the
transparency of our ESG data
• This year we have disclosed
our carbon footprint for 2021
and 2022
ESG Highlights
Adopting hybrid working brings considerable sustainability benefits. It can provide a major
pillar in any company’s ESG strategy and the foundation of a new approach that benefits
work and life for both the planet and its people.
At IWG we continue to push our ESG agenda so that we and our customers can make
a difference and contribute to the global climate challenge.
This year, we have delivered our strongest performance to date.
2040
Target to achieve Net Zero
2023
On track to deliver
carbon neutrality
FORESTS
AA
9.2
Rated by MSCI
Rated by Sustainalytics
100%
B
Large scale investments
globally
Green electricity target
by 2030
CDP score for Climate Change
& Water Security
SCOPE 3
£474k
Reduction through improved
supply chain
Provided to charitable organisations
TOP 1%
Won the UK Leading
Employer Award
IWG plc Annual Report and Accounts 2022
55
Strategic report Environment
Our carbon reduction
journey
Environmental
sustainability remains
a global imperative and
partnering with IWG for
flexible workspaces is
a form of climate action.
This year, IWG collaborated
with renowned consultancy, Arup,
to independently verify the impact
of hybrid working on carbon
emissions. This analysis
demonstrates that hybrid working
reduces carbon emissions through
improved commuting options and
building efficiency – the impact
per person can drive a 70%
reduction in carbon emissions.
We place great importance on
ensuring our business activities
achieve the highest level of
environmental sustainability.
As part of this, we’re pleased
to remain on track to deliver
carbon neutrality across our
operations globally (Scope 1
and 2). Our continued progress
has made us more determined
and we have set out a transition
plan to reach Net Zero emissions
by 2040.
We continue to remain mindful
of the wider impacts of our
actions and strive to support
the protection of the planet,
including reducing our impact
on natural resources,
biodiversity and pollution.
Transition plan to reach
Net Zero emissions by
2040
Since embarking on our
environmental journey, we have
continually broadened our
ambitions. Following our progress
last year, we have calculated our
Scope 1 and 2 greenhouse gas
emissions for 2021 and 2022.
Our initial transition plan to
support our target to Net Zero
emissions by 2040 features
a working group focused on
converting the energy we use
to green. This will initially prioritise
electricity, but will also address all
forms of energy through innovative
solutions and collaboration with
our partners and suppliers.
As we continue on our journey,
we are developing reduction plans
across the spaces we operate
to reduce our energy intensity.
These plans focus on optimising
our buildings with energy-efficient
equipment, evolving our
operational practices to be more
sustainable, and working with our
customers to reduce the energy
they use in their spaces. Where
we have emissions that we have
not yet been able to eliminate,
we will compensate through
investments in carbon
removal solutions.
HYBRID WORKING AS A FORM OF CLIMATE ACTION
IWG and ARUP partnered to
investigate the carbon impact
of new ways of working
compared with the traditional
commute into the city centre.
Our research was conducted
across six cities and uses
disaggregated calculations for
transport and building
emissions. The study highlights
that modern hybrid working
reduces employees carbon
emissions.
As anticipated, less commuting
to city centre locations reduces
carbon emissions.
Surprisingly, however, even
where people drive to local
offices the carbon emissions are
still lower than the traditional
five-day city centre commute.
Hybrid working at a local office
in Los Angeles demonstrated
a 70% reduction in carbon
emissions, despite widespread
reliance on cars.
Where employees chose to work
in an office close to home, their
total emissions are lowest -
although commuting emissions
increase, sharing resources
within a building provides the
lowest overall carbon emissions.
In LA the ‘close to home’ or
hybrid scenario consistently
emits 41%+ less emissions that
the traditional five-day city
centre scenario.
The widespread adoption of
hybrid working has accelerated
changes in our society, creating
new possibilities for the future.
Beyond the potential to tackle
the emission of greenhouse
gases, hybrid working supports
the United Nations’ 17
Sustainable Development Goals
including economic growth,
sustainable cities and
communities, gender equality,
good health and wellbeing and
clean energy and climate action.
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IWG plc Annual Report and Accounts 2022
0
4
0
y 2
b
Net Zero
NET ZERO BY 2040
OUR TRANSITION PLAN
2040
Target to achieve Net Zero emissions
across global operations.
2030
Commitment to 100% green electricity, in alignment
with RE100 guidance.
2025
Scope 3 emissions tracked in accordance with the guidelines provided
by science-based frameworks and reduction plan established.
2023
IWG is set to deliver carbon neutrality ahead
of 2025 commitment.
2020
IWG announced its commitment to
achieving carbon neutrality globally
(Scope 1 and 2) by 2025.
Key actions to deliver
Reduce carbon emissions
created in heating and
cooling of buildings
Continue to transition
to green energy
Monitor and reduce Scope
3 emissions, prioritising
centre fit-out
emissions
Identify and invest in low
carbon products and
solutions
Investment in natural
carbon removal solutions
IWG plc Annual Report and Accounts 2022
57
Strategic report
To enable this, we are developing
relevant criteria to assess
development projects from
the beginning of design to
construction and through to the
ultimate impact on the in-use
building. This has highlighted the
importance of product innovation
to support delivery of our circular
design principles that will reduce
the climate impact of our
products and processes.
We are also working concurrently
with our partners to drive
decisions towards low carbon
products, sustainable raw
materials and low-energy
manufacturing processes.
This includes avoiding the use
of materials with high carbon
intensity and instead using
locally sourced materials with
high recycled content and
innovative low-carbon materials.
Our long-term partnership with
strategic suppliers enables
the identification of low-carbon
products and consolidation
of our supply chain to support
reductions in logistics
related emissions.
We intend to evolve our
frameworks over time through
collaboration with partners
and suppliers.
Environment continued
Making our global office spaces
sustainable
To embed sustainability in our
capital allocation and long term
investment decisions, we have
introduced IWG’s Centre
Sustainability Assessment
Framework. This toolkit is
designed to identify and acquire
less-energy intensive buildings
that align with our Net Zero
trajectory. It also helps us monitor
criteria such as on-site renewable
energy or green building
certification, to ensure our
investments promote
sustainable practices.
Additionally, we are utilising
the assessment to analyse our
existing portfolio and help us
identify further opportunities
to reduce the energy intensity
of our buildings. By developing
an internal metric, we can
evaluate carbon risks and
opportunities, to feed into our
investment decision-making in
line with our wider climate targets.
Our internal framework is aligned
to international sustainable
building standards, so that IWG
can continue to demonstrate
leadership in promoting
sustainable workspace standards
in our building selection, internal
fit-out and operations. We will
continue to seek opportunities
to use recognised green
certifications (e.g. LEED or
BREEAM). Given our global reach,
we will work in close partnership
with landlords and partners that
share our ambition.
Reducing our operational
footprint
This year we expanded
sustainable practices at
community and operational levels,
including establishing an eco-
friendly cleaning programme.
This approach places emphasis
on minimising water usage and
waste generated, allowing us to
reduce our carbon footprint and
contribute to delivering a healthier
environment for our customers
and colleagues.
In 2022, we announced the launch
of our UK electric vehicle scheme,
in partnership with Tusker. This
is another example of our green
efforts that enable customers and
colleagues to reduce their carbon
emissions from commuting.
To further encourage uptake,
we are committed to expanding
electric vehicle (EV) charging
point availability at our centres.
Building understanding of our
Scope 3 emissions
Part of our plan is to ensure we
have a reliable and responsible
supply chain for customers,
through working with our suppliers
to embed sustainability into the
value chain. This year, our
thorough review of our supply
chain including logistics, enabled
us to consolidate our regional
hubs where possible, reducing
carbon emissions and improving
logistical efficiency.
Our supply chain transparency
has increased dramatically
through monthly measurement
of new suppliers. During 2022,
we launched an audit into the
sustainability credentials of our
top suppliers globally using our
Supply Chain ESG Framework.
Responses are collated and
analysed, including innovations
and opportunities to improve
the sustainability of the products
and processes bought through
third parties.
Alongside this, our procurement
team regularly communicates
our responsible sourcing
requirements, and ESG ambitions
to all suppliers.
Addressing embodied carbon
As part of our Net Zero transition
plan, we have identified fit-out
of new centres as a key driver
of lifecycle emissions. We are
therefore setting targets for
fit-out projects.
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IWG plc Annual Report and Accounts 2022
Achieving carbon
neutrality
To reduce our environmental
impact, we recognise the need
to take action to address the
emissions we can’t yet avoid.
As part of this commitment,
we are dedicated to preserving
the environment and investing
in nature-based solutions that
offer both ecological and social
benefits. By supporting the
restoration and protection of
forests, we can help preserve
biodiversity, enhance
ecosystems, and mitigate
climate change impacts.
We continue to take our
responsibility seriously and
are committed to investing
in projects that align with our
ESG strategy and also generate
additional co-benefits to help
meet some of the the United
Nations’ 17 Sustainable
Development Goals. Our
carefully designed project
selection process is focused on
identifying high quality carbon
investments that contribute
to improved economic growth
and opportunities (Goal #8),
addressing climate change (Goal
#13) and species protection
(Goal #15).
IWG plc Annual Report and Accounts 2022
59
Strategic report Social
A socially
responsible
employer for
colleagues
Advancing our talent
strategy
The year 2022 turned out to be
one of the most dynamic job
markets that the world has seen
for decades. Phenomenal career
opportunities combined with
increases in inflation and energy
costs gave rise to an exciting
race to hire and retain great
talent. The IWG recruitment
model, our technology and
investments in marketing and
recruitment delivered highly
productive results with over
4,000 people starting new
careers with IWG around
the world.
Our IWG people promises are:
• Interesting work
• A manager and company
that cares
• An opportunity to develop
& grow your career
In order to give customers a
great day at work, we have to
ensure our team members also
have a great day at work. The
two are inextricably linked and
we are delighted to say that IWG
has again won the UK Leading
Employer Award, in December
2022 for the year 2023, which
is awarded to the top 1%
of employers.
Our People Plan for 2022
focused on six essential
strategies:
• The development of our
global HR information and
administration platform
in Manila
• The acquisition of new talent
• Training and careers
• Diversity, equity and inclusion
• Communication and
recognition
• Reward
HR platform
As our team grows in numbers
across the world, we continue to
build on the global HR platform
that is accessible to all team
members 24/7, 365 days a year.
This is a single ticketed system
to get answers on all topics from
global policies, processes and
documents to accessing the
IWG Learning Academy and
much more in terms of best
working practices.
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IWG plc Annual Report and Accounts 2022
The development of this
platform is key for franchise and
property partners to manage
their own teams locally with
efficiency and consistency.
In addition, all our team
members use a unique app that
they can access on any device,
day or night, called TeamHub.
This app had broad functionality
from resource allocation
to absence management.
Talent acquisition
2022 was the most challenging
year in our history. We pride
ourselves on best-in-class
career opportunities combined
with technology and ways of
working that allow IWG and its
partners the capability to recruit
any talent, in any location,
quickly and effectively. The team
that looks after our customers
is of prime importance.
We added new opportunities
in product development, finance,
country management, sales,
a new technology hub in Porto,
franchising, property
partnerships and project
management, all focused
on delivering and deploying
innovation, automation
and network growth across
the business.
Our Apprentice Programme,
where individuals can attain
formal qualifications while
working proved to be an
excellent channel for new talent
and the retention of this cadre
of our team was very high at
more than 85%.
Diversity, equity and
inclusion
Diversity of talent continues
to be a focus for us, and our
recruitment channels and
processes offer opportunity
to everybody. In 2022 IWG
offered new and existing talent
a range of opportunities that
can be done on a part-time
basis, entirely from home, to suit
individuals that have diverse
personal priorities that makes
it difficult for them to commute
or be based in an office. This
new talent pool will continue
to be an important part of
our strategy.
Our current global gender split
is 65% female and 35% male.
At regional leadership level our
split is 42% female and 58%
male. At senior leadership level,
which includes our Senior
Leadership Team of global
geographic and functional
leaders as well as our country
leadership, our gender split
is 25% female and 75% male,
with the gender representation
similar in both of these groups.
Based on the colleagues who
were happy to disclose their
data, further information
regarding our diversity picture
is as follows:
White
Hispanic
Black
Asian
Mixed
Pacific Islander
52%
19%
18.5%
6.3%
2.5%
1.5%
We have continued our Board
diversification with two new
Non-Executive Directors in 2022.
We also continued our series
of ‘Affinity Groups’ in the USA.
Made up of team members,
these work with the Leadership
Team to make and consider
recommendations on how best
to ensure we remain fair and
equitable in our day-to-day
business operations.
In 2021 we started our global
Voice Councils and these
continued into 2022. Hosted
by a senior audience, our team
drives the agenda with
recommendations for
improvement and innovation
documented and actioned
as appropriate.
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.
Learning, development
and careers
2022 was another record year
for IWG. With much success
in our recruitment drive,
onboarding and induction
was re-designed from scratch
with a huge improvement in
the number of those new people
successfully completing their
induction and within their first
30 days of employment. The
year ended with a 95% success.
We filled 25,000 training slots
(webinars) from induction to
skills development in key areas
such as customer service, sales
and communication.
We continued our core
programmes on important
topics such as health and
well-being, technology skills
and hybrid working.
We launched a new compliance
programme which all our team
members completed. This
extends to all employees including
part-time and contractors and
covers topics from anti-money
laundering to cyber-attacks, given
this education becomes ever
more important.
OPPORTUNITIES TO
PROGRESS AT IWG
Retaining great talent is about leaders focusing
on talent development and supporting individuals
to progress their careers at IWG.
• Great opportunity to progress vertically
and cross-functionally
• Training programmes focused on career progression
and development of high potentials
• 2023 management focus on talent development
and succession planning
“A true leader’s legacy
is the number of people
we have helped grow
and progress”
City Team
Leader
Community
Operations
Lead –
Stager
Sr.
Community
Manager
Hunter
Community
Manager
Closer
Assistant
Community
Manager
Assistant
Closer
Trainee
Graduate
Partnership
Sales
Director
Partnership
Sales
Manager
Account
Manager
Team
Leader
Account
Manager
L&D
– Trainer
Project
Manager
IWG plc Annual Report and Accounts 2022
61
Strategic report Social continued
Our learning and development
curriculum is focused on giving
our team members the right
start at IWG. Then, it is about
developing the skills and
knowledge of our team members
to offer them an opportunity to
develop and take the next step
on their career ladder. Our
customer-facing teams have a
defined career path with
multiple opportunities in front of
them.
We place great importance
on continuous learning and have
established partnerships
to accelerate growth of our
employees. Engagement with
strategic collaborators and
industry experts, including
Corndel, allows IWG to deliver
professional learning and our
team members the opportunity
to develop new skills, enhance
their expertise, and reach their
full potential. We also continue
to deliver Content Club training
into our academy forums.
Communication and
recognition
Communication and
connectivity in a globally
dispersed workforce is a critical
agenda point. Regular calls on
performance, new partnerships
and innovation with new ways
of working underpin our annual
communication calendar.
Investment in leadership
meetings, monthly performance
reviews and monthly town halls
create a drum beat for the
organisation that gives absolute
focus on performance and
objectives.
Intertwined with this are
initiatives on staying healthy,
career opportunities and charity
events that combine driving
performance with a sense of
pride and return on investment.
We held a full global engagement
survey in 2022 and are thrilled
with the results. By continually
seeking out and valuing the
opinions of our team members,
we are able to maintain
a workplace that is responsive
and fosters a culture of open
communication and
collaboration.
Over 78% of IWG employees
said they would recommend
IWG as an employer to friends
and family, as endorsed by our
UK Leading Employer Award.
2022 ENGAGEMENT SURVEY FINDINGS
98%
of our
team members
are clear about
their role, KPIs
and contribution
to IWG
78%
would recommend
IWG to family and
friends as an
employer
82%
of our
team members
think our technology
is relevant and
effective
30%
want
even more
improvement
in ways of
working
85%
of our
team members
confirm they have
the resources and
tools to be
successful
23%
want
better training
and coaching
88%
of our
team members
have regular
communication
with their
manager
25%
want
more recognition
for the job
that they do
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IWG plc Annual Report and Accounts 2022
As we extend our health and
well-being offerings to
customers we will look to extend
these to our team members
at the same time. GP services,
nutrition and gym facilities are
all programmes of work for the
forthcoming year.
Balancing progressive,
happy and productive work
environments with health and
well-being whilst helping the
climate is a foundation for our
team members and for our
customers.
Reward
IWG reviewed salary bands for
customer-facing employees on
a continuous basis throughout
2022, increasing base pay
and salary bands accordingly.
In some high-inflation markets
this required several reviews
throughout the year.
Incentives were simplified in the
second half of the year making it
easier for team members to earn
performance-related incentives
as a key part of total
compensation.
The Remuneration Committee
also reviewed total leadership
compensation and a new grant
of options was made to critical
executives around the world.
New benefits such as the
opportunity to buy an electric
vehicle or a bicycle through
salary sacrifice programmes
are supporting team member
requests for different, more
interesting benefit packages.
There is additional work to do on
careers, process improvement
and recognition in 2023 and this
will be a continued focus in the
coming months.
We held four regional leadership
conferences holding two in North
America and the UK in December
2022 with a further two
conferences for Europe, Middle
East and Africa and Asia Pacific
in January. Holding regional
rather than global conferences
requires additional investment
in time, however we deemed
getting closer to our leadership
teams in country to be critical
given we have not been together
in person since January 2020.
Our ongoing recognition
programme continues with
recognition pins given out
to colleagues on the spot for
exceptional behaviours and
to other team members where
people have gone above-and-
beyond for their customers or
colleagues.
Every new person in IWG will get
their own tree to plant in IWG
forests. As their career grows, so
their contribution to saving the
planet grows. Team members
receive additional trees for great
work and exceptional
performance, promotions and
milestone events such as long
service. As a united team we
believe we can contribute
significantly to tackling climate
change, being carbon neutral
during 2023 and doing our part
collectively to protect
the planet.
IWG plc Annual Report and Accounts 2022
63
Strategic report Social continued
Engaging with
the communities
in which we operate
Our office spaces hosted
35 senior managers, clinicians,
and mental health allies and
welcomed the Mayor of Sutton
Councillor, the Mayor’s Consort
and the Vice Chair of
Healthwatch. A display of mental
health recognition resources
including poetry books and
artwork were also available
as supplementary resources.
“We were at Spaces
when the idea for the
Bridging the Gap event
was born. We’d met
many mental health
professionals doing
amazing work but
noticed they were
working in silos.
We wondered if we, as
a creative partnership,
could smash the silos as
well as the stigma. ”
Zoe Hannam
Carer Peer Support Worker,
UK NHS
Raising awareness
Our teams across California,
together with our clients,
have joined forces to raise
awareness of Breast Cancer.
Several awareness campaigns
were set up throughout Cancer
Awareness Month, including fun
photo booths in the centre,
a designated day of wearing
pink and pink potluck events
with clients. Some of our team
members also participated in
“Making Strides” – a renowned
charity run – to raise money
for the American Cancer Society.
Additionally, IWG colleagues
in the UK organised “Bridging
the Gap”, a networking event
to connect mental health
professionals in the community
and raise awareness of the
importance of supporting
mental health.
Our business puts people
and planet first,
especially through the
collective IWG desire to
make a difference in the
lives of our customers
and our communities.
As a global organisation,
we continue to invest
in our communities to create
opportunities that promote a
fairer and more inclusive society
for all. We achieve this through
a combination of monetary
donations, strategic partnerships
with customers and charities
that align with our brands, gifts
in kind, and active engagement
campaigns with local
communities. This year, we are
pleased to have donated a total
of £474k to charitable and
environmental organisations.
“Cancer awareness is
a cause that is near and
dear to me, and I was
touched by how many
of our team members
thanked our group for
supporting this, as they
and their loved ones had
also been impacted.”
Bonnie Fisher
IWG Sales Director
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IWG plc Annual Report and Accounts 2022
“It has been wonderful
to see our local Regus
centre taking part in
such well deserving
charity events this year.
Well done KidsOut and
thanks to the staff at
Regus for promoting
awareness.”
Steve Taylor
IWG customer, IceBlue
“Thanks Regus team
to put this together,
we’re all going to make
happy children on
Christmas Day!”
Toni Lleo
IWG customer, Laminam UK
Movement to work
Continuing efforts from last year,
our colleagues in Denmark once
again partnered with a non-
profit bottle collection service
that provides socially
disadvantaged people
with concrete work.
By donating empty bottles, our
teams helped vulnerable citizens
seize opportunities to put
homelessness behind them.
Spreading a smile
For the second successive year,
the IWG team in the UK took part
in the Giving Tree initiative
to buy gifts and raise money
for the KidsOut Foundation.
This non-profit organisation
makes Christmas wishes for
underprivileged children come
true – many of whom have
escaped domestic violence,
being forced to flee their homes
quickly and leave all possessions
behind. During the life of this
outstanding partnership, our
people raised an amazing
£55k and donated over 4k
physical toys.
“We stand united
in support of our
colleagues, customers,
and everyone impacted
at this unimaginably
difficult time.”
Mark Dixon
Founder & CEO, IWG
In Mexico, IWG partnered with
Asilo Primavera, a children’s
home, to ensure underprivileged
children were able to celebrate
“El dia de Reyes” or Three Kings
Day. Our team members
organised toy collections and
were excited to deliver gifts
and spread kindness throughout
the festive season.
Supporting
humanitarian war relief
This year, IWG has set up a
fundraising appeal in partnership
with the Ukraine Humanitarian
Fund established by UNICEF
– a global charity that has
committed to providing vital
support to millions of children
and families impacted by the
war in Ukraine.
In total, IWG colleagues globally
have raised £23k and continued
to support our teams and
customers in Ukraine throughout
a difficult year. Several centres
across Poland, France and
Romania have arranged
collections of essential supplies
– including food, clothing,
medication, and tents for
refugees fleeing the war –
playing a key role in relief efforts.
IWG plc Annual Report and Accounts 2022
65
Strategic report Governance and task force on climate-related financial disclosures
Transparent
information
for investors
IWG supports the
recommendations of the
Task Force on Climate-
related Financial
Disclosures (TCFD). These
are designed to encourage
consistent and effective
reporting of climate-
related risks and
opportunities. IWG has
adopted the following key
themes: (i) Governance;
(ii) Strategy; (iii) Risk
Management; and (iv)
Metrics & Targets.
This year, we have evolved
our climate strategy and taken
necessary steps to further
integrate climate change
within our governance and risk
management frameworks.
The findings of our first
scenario-based climate risk
assessment have further
strengthened our understanding
of the potential impacts of
climate change on our business.
Transparent
and regular
ESG information
We have a long-standing
commitment to the environment
and believe that transparency is
a key part to achieving our goals.
In order to drive progress, we
have prioritised data visibility,
leveraging our carbon footprint
analysis, and engaging our
partners to determine the
sustainability performance of
our existing portfolio.
Additionally, we have initiated
the tracking of our Scope 3
emissions through the use of
our Supply Chain ESG Framework.
Our progress has not gone
unnoticed, as demonstrated by
our strong AA rating from MSCI
and negligible risk score of 9.2
from Sustainalytics. Additionally,
our efforts to address climate
change and water security were
recognised with a B score in our
submissions to the Carbon
Disclosure Project, surpassing
both global and industry averages.
In our continued efforts to provide
transparency, we have completed
a comprehensive Climate-related
Financial Disclosure in accordance
with TCFD recommendations, and
include a summary of our first
Climate Scenario Analysis in this
report.
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IWG plc Annual Report and Accounts 2022
Governance
The Chairman of the Board has
overall responsibility for
sustainability supported by the
Board with clear roles and
responsibility assigned. Successful
implementation of our approved
sustainability and climate change
strategies is a critical element of
IWG’s purpose and drives our
culture and values.
Our ability to deliver on our
sustainability and climate change
objectives underpins our overall
strategy. These are key
considerations in Board and
Committee decision making,
including major actions and
project decisions, risk
management policies, annual
budgets and in setting our
performance objectives. For
further information see pages 70
and 74 to 121.
Risks & opportunities
A summary of six most material risks and opportunities.
Category
Impact
Impact Rating*
Risks
Physical
• Extreme weather impacting IWG centres, resulting
Acute/Chronic
Revenue
in loss of customers and certain markets
• Operating costs (including insurance costs) rising
due to increased frequency of extreme weather
Acute/Chronic
Cost
Transition
• Rising carbon tax increasing IWG’s operational cost
Regulation/
Compliance
Cost
• IWG not meeting externally stated commitments
Reputation
(including meeting existing and emerging
regulations) resulting in reputational damage
Market cap.
Revenue
L
L
L
L
M
M
M
M
H
H
H
H
• Supply chain disrupted due to climate-related
risks impacting operations and increased costs
Supply Chain/
Market
Ops. disruption
Cost
L
M
H
Opportunities
Category
Transition
• Establish market leadership in providing
Reputation
Revenue
L
M
H
sustainable workspaces
* Impact Rating
(Project Management Institute – risk analysis & management for financial impact)
Based on estimated % impact on cost or revenue, against 2021 revenue and cost.
Our scenario analysis has
allowed us to be more targeted
in our understanding of the
current resilience to climate
change and focus on developing
appropriate mitigation strategies
at the Group, regional and local
levels. The table above
summarises the findings of
our scenario assessment –
identifying the potential impact
of both physical and transition
risks and opportunities.
Strategy
Climate-risk analysis
IWG has an acute understanding
that climate-related risks and
opportunities have the potential
to impact our work and
stakeholders. In response, we
have taken the necessary steps
to identify and assess the
potential materiality of these, in
accordance with TCFD
recommendations.
This year, we commissioned a
third-party independent
assessment to identify the
climate-related risks and
opportunities that are most
relevant to our business model.
We identified five climate-
related risks and one climate-
related opportunity that could
have the potential to materially
impact our business under three
plausible climate scenarios
(1.5°C, 2°C and 2.5°C).
Rating: Financial impact:
L
Low 0-5%
M
Medium 5-10%
H High >15%
Scenario analysis
findings
Based on our climate scenario
analysis, we have determined
that our strategic plans and
capabilities position us
effectively to address risks and
opportunities associated with
climate change. As the world
continues to evolve, certain
areas of our business will face
greater challenges than others,
but our modelling indicates that
we have a robust strategy that
aligns with our purpose of
helping everyone have a great
day at work, whilst protecting
people and planet.
IWG plc Annual Report and Accounts 2022
67
Strategic report Governance and task force on climate-related financial disclosures continued
We fully recognise that scenario
analysis is a dynamic process and
iterative exercise and our findings
are not a definitive prediction of the
future but rather to help us envision
potential future outcomes.
In particular, our analysis indicates
that IWG centres are at low risk of
significant impact from the physical
risks of extreme weather and
temperature rises. Furthermore, the
direct financial impact to IWG is
limited due to our low freehold model,
partnership growth strategy and our
Centre Sustainability Framework
which enables the early identification
of climate risks in our investment
process.
Financial impacts of operating costs
and insurance due to physical climate
risks, are able to be mitigated through
stringent cost management and rate
inflation. To minimise disruptions
caused by physical climate risks, IWG
will maintain robust tenancy
contracts and business continuity
plans, including displacement
procedures.
Transition risks, including existing
and emerging policy, markets and
technology, have been classified as
‘low’ risk. This is due to IWG
transitioning away from carbon
intensive operations and continuing
to drive a localised supply chain
model. Whilst the potential to impact
remains, these risks are expected to
be minimised through delivery of our
Net Zero strategy and continued
collaboration with relevant partners.
Our analysis also presents significant
opportunities for IWG due to the
increasing requirement to reduce
employee commuting and ensure
workspace buildings are sustainable.
Given IWG’s leading position and
existing investment in sustainable
workspaces, the Company is
well-positioned to align with
emerging regulations, drive relevance
and growth in both existing and new
markets – particularly in urban and
rural areas.
68
IWG plc Annual Report and Accounts 2022
The path forward
As a global organisation, managing
climate-related risks and opportunities
remains a top business priority. IWG will
continue to progress the journey to Net
Zero for our customers and employees.
We have used guidance from the
Transition Pathway Initiative’s four-level
staircase to assess our progress and are
pleased to have reached level 2
awareness. We recognise that our
commitment to driving positive change
will require progressive changes and we
expect to continue driving towards a
low-carbon future for our people and the
communities we serve.
Our methodology uses available data
from Scope 1 and 2 activities to develop
energy consumption averages per built
square meter (SQM). These averages are
extrapolated across IWG’s operational
boundary to estimate our carbon
footprint. For the year 2022, we have
calculated our Scope 1 emissions to be
87k tCO2e, while our Scope 2 emissions
amounted to 138k tCO2e.
Our carbon footprint
tCO2e
Total carbon
emissions
(Scope 1 & 2)1
2022
2021
225k
240k
We intend to take further steps during
2023 to improve data quality and
consistency used in our total carbon
emissions calculations. Furthermore,
IWG’s 2030 target is to source 100%
green electricity, introduce innovative
services and solutions for a more
sustainable future and help our
customers achieve their own climate
commitments. These achievements will
accelerate our push towards Net Zero
operations.
For more information, please
see page pages 56-59.
Risk management
IWG operates an enterprise-wide risk
management process in order to
identify and report key business and
strategic risks. We have renewed our
overall approach to climate risk
management and fully integrated
climate risk considerations into our
Group-wide risk management
framework. As a result, climate change
was formally considered a standalone
principal risk to the business in 2022.
This risk is managed through the three
lines of defence, to ensure robust
oversight – see page 45 for further
information.
Furthermore, our sustainability
objectives are reflected in our risk
management frameworks to ensure our
risk appetite is aligned with wider
business objectives and external
commitments.
As part of our wider strategic process, we
continue to carry out risk assessments
throughout the year. Annual disclosures
to frameworks, including CDP, allows risk
management processes to be captured,
and mitigation measures assessed.
For more information on IWG’s risk
management, please see pages 44 to 53.
Metrics and targets
IWG has successfully established the
metrics and targets for the effective
management of our impact on the
environment. This includes monitoring
and reporting our global Scope 1 and 2
emissions – in alignment with guidance
provided by the Greenhouse
Gas Protocol. Our Scope 1 and 2
greenhouse gas emissions information
has received limited assurance for 2021
and 2022 through independent third
parties.
1. GHG Conversion Factors for Company Reporting 2022
(Scope 1) and the International Energy Agency (Scope 2)
IWG plc Annual Report and Accounts 2022
69
Strategic report Governance and task force on climate-related financial disclosures continued
ESG - Governance
Robust 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.
Full details of our Corporate
Governance Framework can
be found on pages 72 to 121.
Board sustainability
oversight
The Chairman of the Board has
responsiblity for the oversight
of IWG’s ESG agenda. He leads
the Board in setting the
Company’s sustainability and
climate change strategy and
monitoring implementation
against agreed milestones.
The Board receives updates at all
scheduled Board meetings from
the Executive Directors. During
2022 three ESG sessions were
held during Board meetings,
these sessions focused on
refreshing our climate strategy
and detailed reviews of the
progress made towards achieving
the milestones in the plan to
achieve Net Zero carbon
emissions by 2040.
The Nomination Committee
ensures that the Board has the
skill set needed to implement
and oversee its sustainability
strategy and on 1 December
2022, Sophie L’Hélias, who has
significant corporate governance
and relevant ESG experience,
was appointed as a Non-
Executive Director.
The Board also receives regular
updates on employee
engagement and corporate
social responsibility initiatives
through Nina Henderson, the
Non-Executive Director who has
oversight of these areas on
behalf of the Board.
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.
“IWG will continue to look for ways
to lead the journey to Net Zero for
our customers and employees.”
Douglas Sutherland
Chairman
The Board delegates
responsibility for risk
management, including the
impact of climate change on
financial statements to the Audit
Committee. Further details are
available on pages 92 and 93.
Climate change risk is recognised
as a standalone principal risk to
the business. 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. We detail key risks
and actions to mitigate these in
our Risk report on pages 44 to 52
and in our TCFD disclosures on
pages 67 to 69.
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 investments in this
area to ensure that the IWG
Information Security
Management System (ISMS)
meets the Group’s objectives.
A summary of the policies,
procedures, structures and
technologies used to implement
effective controls can be found
on page 51.
IWG’s data privacy policy 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.
All sensitive information is
encrypted and all systems are
compliant with data protection
and privacy regulation of all the
markets in which we operate.
Security awareness training is
mandatory for all employees and
contractors and covers
Information Security, PCI and
GDPR. Our commitment to
safeguarding personal
information is set out in our
Terms and Conditions and
Privacy Policy.
Visit www.iwgplc.com to
learn more.
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 including for
local legislation to all employees
and encourage them to make
use of our whistleblowing
channel without fear of
repercussions. See pages
77 to 78 and page 93 for
further details.
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IWG plc Annual Report and Accounts 2022
Bribery and corruption
We give all employees training
on our Bribery and Corruption
Policy, and you can see our
Statement of Commitment at
www.iwgplc.com.
For more information on our
‘Right to Speak’ policy and our
robust whistleblowing procedure
where issues can be raised
anonymously to an independent
third party see pages 77, 78,
and 93.
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
can be found on the Company’s
website: www.iwgplc.com.
We give all employees training
through the IWG Learning
Academy.
Ethics and compliance
The Board is committed to
instilling an ethical and
conscientious culture, ensuring
that IWG does what is right for
people and planet and that our
people act fairly and
professionally in all business
activities.
For more information on our
suite of compliance training
courses see pages 61 and 62
and for information on our
independent whistleblowing
channel see pages 77, 78 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 page 85.
IWG plc Annual Report and Accounts 2022
71
Strategic report Board of Directors
Leading the way
Douglas Sutherland
Mark Dixon
Chairman
Chief Executive Officer
Laurie Harris
Independent Non-
Executive Director
Founder
1989
Nationality
British
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.
N
Appointment*
27 August 2008
Nationality
American and Luxembourgish
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., a Director
of Medtop Group S.A., and
a member of the board
of managers of AI Monet
Parento S.àr.l.
* Independent on appointment
as Chairman on 18 May 2010.
72
IWG plc Annual Report and Accounts 2022
A R N
Appointment
14 May 2019
Nationality
American
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 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 an
affiliate of an investment fund
managed by the Blackstone
Group (NYSE: BX).
Nina Henderson
Independent Non-
Executive Director with
oversight of employee
engagement and CSR
A R N
Appointment
20 May 2014
Nationality
American
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
and Chair of their Remuneration
Committee. She is also Director
of CNO Financial Inc. (Bankers
Life, Washington, National and
Colonial Penn insurance
companies) and Chair of their
Human Resource Compensation
Committee. Nina is also Vice
Chair of Drexel University’s Board
of Trustees, Commissioner
of the Smithsonian National
Portrait Gallery and a Director
of the Foreign Policy Association
and VNS Health. Nina holds a
Bachelor of Science with honours
from Drexel University.
Committee
membership
key
A Audit
R Remuneration
N Nomination
Chair
Tarun Lal
Sophie L’Hélias
François Pauly
Charlie Steel
Independent
Non-Executive Director
Independent
Non-Executive Director
Senior Independent
Non-Executive Director
Chief Financial Officer
A N
Appointment
10 May 2022
Nationality
American
Experience
Tarun, born in Bhagalpur and
raised in Delhi, India, brings
extensive franchising expertise
to the Board from over 25 years
with Yum! Brands, Inc., where he
currently serves as President of
KFC U.S. and has previously held
executive roles, including KFC’s
Global Chief Operating Officer
and Managing Director – KFC
Middle East, Pakistan, Turkey,
Africa, and India.
External appointments
Tarun Is the President
of KFC U.S.
A R N
Appointment
19 May 2015
Nationality
Luxembourgish
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 Boards of several
charitable organisations.
A R
Appointment
1 December 2022
Nationality
French
Experience
Sophie is President of
LeaderXXchange™ which
advises investors and
companies on diversity,
sustainability and ESG. She
initially practised as a M&A
lawyer and later specialised in
finance as Managing Director of
a New York-based investment
fund. She also launched an
investor consulting business
focused on corporate
governance investment
strategies and is a co-founder
of the International Corporate
Governance Network. She has
served as Chair of Suez SA
and Lead Independent Director
of Kering.
External appointments
Sophie serves as Non-Executive
Director on the Boards of:
Herbalife (NYSE); Africa50;
Agence France-Locale;
Echiquier Positive Impact
Europe funds; and the ECGI
(European Corporate
Governance Institute). She is
a member of the HCGE (Haut
Comité de Gouvernement
d’Entreprise) and is a Senior
Fellow at The Conference Board
ESG Center in New York.
Appointment
1 November 2022
Nationality
British and Irish
Experience
Before joining IWG, Charlie was
CFO of Babylon Holdings (NYSE:
BBLN). As CFO at Babylon,
Charlie had oversight of Finance,
Legal, Property, Procurement,
Risk and Compliance, and was
heavily involved in the
formulation and execution of
strategy. Prior to Babylon,
Charlie was Global Head of
Corporate Development at CMC
Markets Plc (LSE: CMCX) and
was also a Vice President in the
Investment Banking Division at
Deutsche Bank AG. Charlie holds
a degree in Economics and
Management from the University
of Oxford.
External appointments
Charlie is also a Non-Executive
Member on the Transformation
Advisory Committee at the
Department of Work and
Pensions in the UK Government.
IWG plc Annual Report and Accounts 2022
73
Governance Corporate governance
Managing our
business
responsibly
Attendance
(out of
possible
maximum
number of
meetings)
11/11
11/11
11/11
11/11
10/10
5/5
1/1
10/11
10/10
1/1
Members
Douglas Sutherland,
Chairman
Mark Dixon
Laurie Harris
Nina Henderson
Glyn Hughes1
Tarun Lal2
Sophie L'Hélias3
François Pauly
Florence Pierre4
Charlie Steel5
1. resigned 31 October 2022
2. appointed 10 May 2022
3. appointed 1 December 2022
4. resigned 30 November 2022
5. appointed 1 November 2022
Length of tenure of
Non-Executive Directors
Sustainability and
social
responsibility
underpin our
strategy; they are
key considerations
in all Board
decision-making.”
Douglas Sutherland
Chairman
■ 0-3 years
■ 3-5 years
■ 6–9 years
■ 9+ years
33.3%
16.7%
33.3%
16.7%
74
IWG plc Annual Report and Accounts 2022
Dear Shareholder,
I am pleased to introduce the
Corporate Governance report
for 2022. This report explains
our approach to corporate
governance and details the
governance structure we have
implemented to facilitate
an effective Board and
entrepreneurial management
whilst ensuring the long-term
sustainable success of the
Company for the benefit
of our stakeholders.
Sustainability and
social responsibility
Delivering a sustainable business
for the benefit of our customers,
employees, partners, investors
and society is a critical element
of IWG’s purpose and drives our
culture and values. Sustainability
and social responsibility
underpin our strategy; they are
key considerations in all Board
decision-making.
As Chairman of the Board
I have overall responsibility
for the oversight of corporate
sustainability; this year the
Board has been actively engaged
in refreshing our climate policy
to meet the expectations of our
stakeholders and ensure we
work to benefit society. Further
details of our climate policy and
how we measure success are
detailed on pages 66 to 69.
We are on track to achieve
our target of carbon neutrality
during 2023. We are working to
continuously reduce emissions,
targeting Net Zero carbon
emissions no later than 2040.
Further information on our
carbon reduction journey and
The Remuneration Committee
made the successful
establishment of Worka part
of the strategic objectives in
relation to the 2022 annual
bonus plan for Executive
Directors, further information on
our assessment of the objective
can be found on page 110.
Board changes
During 2022 we continued
our work of creating a stronger
and more diverse Board. We
increased our Board membership
to eight and welcomed three
new Board members.
As reported in last year’s annual
report, in March 2022 we were
pleased to announce the
appointment of Tarun Lal.
Tarun joined the Board as
Non-Executive Director on
10 May 2022 and we are
benefiting from his extensive
franchising industry expertise
gained from over 25 years with
Yum! Brands, Inc.
In September 2022 we were
pleased to announce the
appointment of Charlie Steel
as Chief Financial Officer in
place of Glyn Hughes. Charlie
joined the Board on 1 November
2022 and brings with him
a proven track record of
formulating and delivering
strategy, most recently in his
role as CFO at Babylon Holdings.
On 1 December 2022 we
welcomed Sophie L’Hélias,
who has extensive corporate
governance experience and
relevant ESG knowledge,
to the Board as Independent
Non-Executive Director.
Sophie was appointed in place
of Florence Pierre who stepped
down after nine years of
committed service to IWG as
Non-Executive Director. During
her tenure IWG continued to
strengthen its position as the
global leader in the rapidly
developing flexible workspace
market and we were fortunate
to benefit from her expertise.
In recommending new Board
appointees the Nomination
Committee took into account
all elements of diversity. Further
information on the Board changes
and the application of our Board
the milestones we have set
ourselves for achieving Net Zero
carbon emissions can be found
on pages 56 to 59.
Targets related to achieving
our environment and climate
change objectives continue to
be incorporated as targets in our
annual bonus plan for Executive
Directors. Further information
can be found in our Directors’
Remuneration report on
pages 96 to 117.
Establishment of
Worka
During 2022 the Board approved
and oversaw the merger
of certain digital assets with
The Instant Group to create
Worka, the world’s leading fully
integrated independent
workspace platform. Enlarging
the hybrid work marketplace,
through the creation of Worka,
will enable more corporates to
transition to hybrid working,
creating clear benefits for the
planet and the work-life balance
of the global workforce. The
Board is committed to the
independent management and
continued growth of Worka.
Further Information on the
Board’s decision making can be
found on page 78.
During 2022 the Board carefully
monitored the establishment of
Worka, receiving regular updates
from Worka's independent
management team. The Audit
Committee oversaw the
successful coordination
of Worka with our reporting
and annual Audit as further
detailed in the Audit Committee
report on pages 90 to 95.
Diversity Policy can be found
in our Nomination Committee
Report on pages 84 to 89.
UK Corporate
Governance Code
During 2022 we have complied
with the UK Corporate
Governance Code published by
the Financial Reporting Council
in July 2018 (the “Code”), except
for provision 10. My time as
Chairman has exceeded 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 in
consideration of the Group’s
near-term strategic objectives,
it remains in the best interests of
our stakeholders 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 9 May 2023.
Douglas Sutherland
Chairman
In this section
Corporate governance
Nomination Committee report
Audit Committee report
74
84
90
Directors’ Remuneration report 96
Directors’ report
Directors’ statement
118
121
75
IWG plc Annual Report and Accounts 2022
Governance Corporate governance continued
Board effectiveness
Our governance framework aims
to ensure the Board is effective
and able to provide leadership
and oversight of the Company
within a framework of effective
controls that enables risk to be
assessed and managed and where
assumptions and ideas can
be challenged and debated.
Our framework enables the Board
to function as an effective team in
order to develop and promote its
collective vision of the Company’s
purpose, its culture, and the
behaviours that the Board wishes
to promote in conducting business.
Board composition
Our Board is made up of eight
unique individuals with a diverse
combination of skills, drive, beliefs,
knowledge, personal attributes and
experiences. Individual biographies
can be found on pages 72 and 73.
The benefits of having a strong and
diverse Board are clear and in its
regular review of Board
composition the Nomination
Committee considers how new
appointments can strengthen our
decision-making by increasing
Board diversity and ensuring we
have the expertise needed to
meet our strategic ambitions.
Further information on the work
of the Nomination Committee,
including our Board Diversity Policy,
succession planning and annual
performance review, can be found
in our Nomination Committee report
on pages 84 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 2022 with additional
meetings to be arranged as
needed to ensure the Board was
kept abreast of our strategic
projects and to respond
to business challenges and
opportunities in a timely manner.
In total the Board met 11 times
during 2022, including 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 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, including the monthly
Board Report and Business Review.
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 2022.
Matters reserved for
the Board
Matters that are considered
sufficiently material that they can
only be decided by the Board as a
whole and cannot be delegated
include:
• approval of long-term objectives
and commercial strategy;
• approval of the annual plan;
• 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;
76
IWG plc Annual Report and Accounts 2022
• 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.
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.
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
Tarun Lal are included here.
Induction programmes for
Charlie Steel and Sophie
L’Hélias are in progress and
will be reported on in our
2023 Annual Report.
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
creation framework on pages eight
and nine. 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 annual deep-dive
strategic assessment. This
included a review of performance,
purpose and culture, personnel
and ESG as well as presentations
from key areas of the business.
The Board is also responsible for
approving the Group’s operating
model and annual plan, 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 71.
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
Tarun Lal was appointed as Non-Executive Director on 10 May 2022.
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; ESG, stakeholder engagement; remuneration; talent;
succession planning; governance and legal.
Visits
Tarun spent time with geographic leadership while visiting our
offices in Dubai and our operations in Dallas, USA.
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 the
importance of our climate policy.
We continue to identify climate
change as a standalone principal
risk and have carefully monitored
progress made towards our goal of
achieving carbon neutrality during
2023 as well as steps being taken
across the Group to reduce our
emissions. This year we refreshed
our climate strategy and have set
a target of achieving Net Zero
carbon emissions by 2040.
Further information on this can
be found in our Environment report
on pages 56 to 59.
As a Board we aim to balance the
benefits of meeting in person with
our environmental goals and
accordingly we use commercial
flights, avoid unnecessary air travel
and choose environment-friendly
options for travel where possible.
To support our culture, values and
ethics we provide access to the
IWG Learning Academy to all
employees. The platform includes
training on our Code of Conduct,
compliance policies and approach
to diversity and inclusion.
Our “Right to Speak” policy
encourages employees to speak
out without fear of repercussions
or retaliation. We have implemented
a robust and confidential
whistleblowing procedure where
issues can be raised anonymously;
this is operated by an independent
third party ensuring protection for
whistleblowers against retaliation.
During 2022 we received 41 reports
through our whistleblowing channel;
14 of these were classified as
requiring further investigation and
were reported to the Audit
Committee; of these 14 reports,
11 have been resolved to date and
the remaining reports, are under
investigation.
We maintain a zero-tolerance
policy both to bribery and
corruption and to slavery and
human trafficking. Training is
provided to all employees and our
statements on these are reviewed
annually and made available
on www.iwgplc.com.
IWG plc Annual Report and Accounts 2022
77
Governance Corporate governance continued
During 2022 four instances of
bribery and corruption were
investigated and reported to the
Audit Committee along with the
steps taken to prevent recurrence.
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
for 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
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 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.
these accounts as detailed on
page 135, and reviewing the stress
testing and analysis which
underpins the Viability statement
as detailed on page 53.
The Board also reviews the Group’s
ESG activities and reporting,
receiving updates on:
• the Group’s carbon footprint and
progress made in achieving the
agreed milestones;
• 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 ESG can be
found on pages 54 to 71.
Prudent and effective
controls
The Board is responsible for
assessing the nature and extent
The following are some of the
decisions taken by the Board
during the year and the
consideration given to the
stakeholder interests and impacts:
Net Zero carbon emissions
by 2040
We are committed to achieving
Net Zero carbon emissions by
2040 and have set milestones
to ensure this is achieved.
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 social responsibility and
the views of our stakeholders,
including our employees,
customers, franchise partners,
landlords and shareholders.
Further information can be found
in our Environment report on
pages 56 to 59.
Establishment of Worka
The Board made a detailed review
of its organisational structure in
2021. In our review we considered
the best structure to position the
Company to meet the future
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,
both financial and non-financial,
and the steps taken to manage
and mitigate them which were
reviewed and approved by the
Board, are detailed on pages
44 to 52. Information on climate
change risk can also be found
on pages 67 to 69.
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 92 and 93.
demands for hybrid working and
achieve the long-term success
of the Company for the benefit
of our customers, employees,
partners and investors. Our review
was informed by the results of
pulse surveys undertaken with
employees and business leaders
on the future of work and
discussions with our customers,
landlords, franchise partners
and investors to understand
their views.
A particular focus was on how
we could enlarge the hybrid work
marketplace to enable more
corporates to transition to hybrid
working, creating clear benefits for
the planet and the work-life
balance of the global workforce.
Our review concluded that our
stakeholders would benefit from
a structural separation of some
of the Group’s operating assets
and capabilities. As a result, in
2022, the Board approved and
oversaw the separation of certain
digital assets, which were then
merged with The Instant Group to
create Worka, the world’s leading
fully integrated independent
workspace platform.
78
IWG plc Annual Report and Accounts 2022
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 Tarun Lal as Non-Executive
Director
• Appointment of Charlie Steel
as Chief Financial Officer
• Appointment of Sophie
L’Hélias as Non-Executive
Director
• Monitored employee
engagement and ESG
• Reviewed the performance
of the Board, its Committees
and all Directors
• Approved the Board Diversity
Policy and reviewed our
performance against prior year
• Reviewed and approved
statements on anti-slavery
and human trafficking, and
anti-bribery and corruption
Corporate reporting
and performance
monitoring
• Received regular performance
updates at scheduled
meetings and through Board
reports
• Reviewed and agreed a new
Board Reporting process.
• 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
strategy and culture
Stakeholder
engagement
• Received policy statements
provided by significant
shareholders
• Received reports from the
Chairman, CEO and CFO on
feedback from shareholder
meetings and correspondence
• Engaged with shareholders
to further understand the
significant minority vote
against our 2021 Annual Report
on Remuneration
• Consulted with shareholders
regarding the Remuneration
Policy update
• 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 including our 2022
global engagement survey
• Reviewed updates on ESG
activities and reporting and
community initiatives
Key activities of
the Board in 2022
Strategy
• Approved the purpose
and values
• Approved strategy
and objectives
• Refreshed our climate strategy
• Set milestones to achieve
Net Zero carbon emissions
by 2040
• Approved the three-year plan
• Approved the operating model
and annual plan
• Regular review of forecast,
strategy and objectives
• Approved the separation of
IWG’s digital assets and their
subsequent merger with The
Instant Group to create Worka
• Monitored and reviewed the
Group’s response to COVID-19
• Monitored and reviewed the
Group’s response to the war in
Ukraine and sanctions on
Russia and Belarus
• Approved strategic projects
and monitored implementation
Financing
• Regular review of the Group’s
financial structure and
approval of amendments
• Approval and monitoring
of share buybacks
• Determined that no final
dividend should be declared
in respect of the financial year
ended 31 December 2021 and
that no interim dividend
should be declared in respect
of the financial year ended
31 December 2022
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
• 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
IWG plc Annual Report and Accounts 2022
79
Governance Corporate governance continued
The Chairman, Chief Executive
Officer and Chief Financial Officer
maintain a close dialogue with
institutional investors on the
Company’s performance,
sustainability initiatives,
governance, plans and objectives.
Stakeholder
engagement
Building and maintaining
strong relationships with our
stakeholders is key to the
long-term success of our
business. During 2022 we
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 2022 included;
pulse surveys with business
leaders and employees about
the workplace and preferred
ways of working; our Global
Engagement Survey which
sought feedback from all
employees; the employee
engagement programme
overseen from the Board
by Nina Henderson; our global
Voice Councils; and initiatives
to engage with the Group’s
strategic franchise partners,
many of whom attended the
Company’s virtual Leadership
conference held in January 2022
and our Regional Leadership
conferences which were held
in person at the end of 2022
and in January 2023.
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
of how we create value for our
primary stakeholders can be
found on pages 20 and 21.
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
on pages 64 and 65.
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 2022 investor relations
held over 500 meetings
with investors and analysts.
80
IWG plc Annual Report and Accounts 2022
The Chairman, Chief Executive
Officer and Chief Financial
Officer maintain a close dialogue
with institutional investors on
the Company’s performance,
sustainability initiatives,
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 and the
Chief Executive regularly update
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 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.
All Directors attended our
2022 annual general meeting
in person and were also available
to respond to shareholder
queries outside of the meeting.
All resolutions were voted on
separately by means of a poll
and the final results were
published after the meeting.
All resolutions were passed with
at least 91.8% of votes in favour
except for resolution 2, the
advisory vote in relation to our
2021 Annual Report on
Remuneration which was passed
by 72.6%. The Board recognised
the significant minority vote
against the Annual Report on
Remuneration and we announced
the steps that would be taken to
understand the reasons behind
the vote following the annual
general meeting. In September
2022 we provided an update on
the steps taken which included
engagement with the dissenting
shareholders.
Further information on this
can be found in our Directors’
Remuneration report
on pages 98 and 117.
The 2023 annual general meeting
will be held on Tuesday 9 May
2023. Notice of the meeting will
be in a separate document sent
out at least 20 working days
before the meeting. As always,
the Directors will be available on
request to respond to any
shareholder queries outside of
the meeting and will publish plans
to understand any significant
votes against any resolutions.
Company website
Our website www.iwgplc.com
has a dedicated Investor
Relations 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 2022 Nina continued her
programme of meeting with our
global workforce and had the
privilege to interact with a wide
variety of employees through;
our on-line leadership
conference with 300 managers
in January 2022 and through site
visits and on-line meetings with
smaller groups of employees
throughout the year. Most
recently she attended one of our
Regional Leadership conferences
which were held in person for the
first time since the COVID-19
pandemic. Employees provided
her with their reactions
and views on our strategic
endeavours, sustainability
initiatives, reward plans and the
resources available to them to
deliver job performance.
Nina ensures that the Board are
aware of the views of employees
and the feedback she receives
through her role. This year she
was delighted to report the
results of our 2022 Global
Engagement survey to the Board,
which showed that 77% of IWG
employees recommend IWG as
an employer to friends and
family; this was also endorsed by
our UK Leading Employer Award.
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 provides the
Board with valuable insights
from these interactions.
In 2022 the Board continued to
support and monitor the
success 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 needs in the business.
Regional webinars are held 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
77%
of IWG employees
recommend IWG
as an employer to
friends and family.
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’ policy,
encouraging employees to make
use of our third party managed
whistleblowing system without
fear of retaliation. 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 to 63.
IWG plc Annual Report and Accounts 2022
81
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 83
Executive Directors
Non-Executive Directors
Mark Dixon
Charlie Steel
François Pauly
Chief Executive
Chief Financial
Officer
Senior Independent
Director
Laurie Harris,
Nina Henderson,
Tarun Lal
Sophie L’Hélias
Non-Executive
Directors
See Executive responsibilities on page 83
See Non-Executive responsibilities on page 83
Audit
Committee
Remuneration
Committee
Nomination
Committee
Oversight of
employee
engagement
and CSR
Laurie Harris
Nina Henderson
François Pauly
Nina Henderson
Chair
Chair
Chair
Terms of reference
page 91
Terms of reference
page 107
Terms of reference
page 87
Terms of reference
page 83
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 76
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82
IWG plc Annual Report and Accounts 2022
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
Chairman
The Chairman is responsible
for leading the Board, setting
high governance standards
and focusing the Board
on strategic matters.
He oversees the Group's
business and implementation
of the Group’s sustainability
policies and strategy.
The Chairman sets the Board’s
agenda ensuring adequate time
is available for all agenda items,
particularly strategic issues.
He monitors the effectiveness
of the Board and ensures
effective communication
with shareholders and that
the Board is aware of the
views of all major stakeholders.
He facilitates the contribution
of the Non-Executive Directors
and ensures constructive
relations between the Executive
Directors and Non-Executive
Directors. He 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.
Charlie Steel
Chief Financial Officer
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
The Non-Executive Director
with oversight of employee
engagement and CSR 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 as to 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.
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.
IWG plc Annual Report and Accounts 2022
83
Governance Nomination Committee report
Achieving strength,
diversity and
sustainability
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
Chair, Nomination Committee
Attendance
(out of
possible
maximum
number of
meetings)
5/5
5/5
5/5
3/3
3/3
5/5
Members
François Pauly
Laurie Harris
Nina Henderson
Tarun Lal1
Florence Pierre2
Douglas Sutherland
1. Tarun Lal joined the Committee
on 10 May 2022
2. Florence Pierre stepped down as
Committee member on 10 May 2022
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%
20%
40%
20%
Dear Shareholder,
I am pleased to present to you
our report on the work of the
Nomination Committee (the
“Committee”) during 2022.
During 2022 , in recognition of
the skill set needed to achieve
the Company’s strategic plans,
we increased the size and skill
set of our Board. In accordance
with our Board Diversity
Policy objectives for 2022
we have 37.5% female Board
representation and we also made
our first appointment aimed at
broadening the ethnic diversity
of our Board.
Key activities Included:
• identifying and recommending
the appointment of Tarun Lal
as Non-Executive Director;
• identifying and recommending
the appointment of Charlie
Steel as Chief Financial Officer
and Director;
• identifying and recommending
the appointment of Sophie
L’Hélias as Non-Executive
Director;
• measuring the effectiveness
of our Board through our
Internal 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 2023.
84
IWG plc Annual Report and Accounts 2022
We consider that the Board
changes made in 2022 have
strengthened our Board, adding
new viewpoints and positions
to our Board discussions and
supporting our ongoing efforts
to maintain an independent
and challenging Board.
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,
neurocognition, ethnicity, sexual
orientation and political beliefs.
Progress made against the
Diversity objectives we set
ourselves for 2022 can be found
on page 89. Our objectives for
2023 which will be reported
on in 2024 are to:
• maintain a level of at least
37.5% female Directors on the
IWG plc Board in the short term
rising to 40% in the medium
term;
• 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;
• consider candidates for
appointment as Non-Executive
Directors from a wide
international pool including
those with little or no previous
FTSE Board experience;
• ensure Non-Executive Director
longlists 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.
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. The last external Board
review was conducted in respect
of 2021 by Condign Board
Consulting and was reported on
in last year’s Annual Report.
The 2022 Board Evaluation was
conducted internally by our
Chairman through a series of
one-to-one discussions with
Board members. 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.
IWG plc Annual Report and Accounts 2022
85
Board composition
As at the date of this report, your
Board comprised eight members
(seven in 2021), being: the
Non-Executive Chairman
(independent at the time of
appointment); two Executive
Directors; and five independent
Non-Executive Directors.
The biographies of Board
members can be found
on pages 72 and 73.
In last year’s annual report
we reported on our nomination
of Tarun Lal as Non-Executive
Director. Tarun was elected at
our annual general meeting and
joined the Board on 10 May 2022.
His appointment increased the
ethnic diversity of our Board and
also made a significant addition
to our franchising expertise.
Charlie Steel was appointed
as Chief Financial Officer and
Director on 1 November 2022
in place of Glyn Hughes; details
of the Committee’s search and
ultimate nomination of Charlie
can be found on page 86.
Charlie will seek election
by our shareholders at the
2023 annual general meeting.
During 2022 we led a search
to identify a new Non-Executive
Director or Directors. In our
search and when drawing
up our longlist of candidates
we considered all aspects
of diversity and ultimately
recommended the appointment
of Sophie L’Hélias. Sophie will
seek election by our shareholders
at our 2023 annual general
meeting. Further Information
on the search and nomination of
Sophie can be found on page 86.
Governance Nomination Committee report continued
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 2022;
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.
Senior
Leadership Team
The Committee oversees
changes to the Senior Leadership
Team, and supports initiatives
to strengthen the executive
talent pipeline.
Appointment
of Charlie Steel
In drawing up a profile for the
role of Chief Financial Officer,
the Committee reviewed the
balance of existing skills,
knowledge and experience both
on the Board and within the
Senior Leadership Team and
considered the strategic plans
for the Group.
The Committee provided its
search criteria to Korn Ferry,
who provide executive search
consultancy and have no other
connection to the Company.
Korn Ferry identified a longlist
of candidates from diverse
backgrounds and all candidates
were considered on merit
against the criteria set by the
Committee giving due regard
to all aspects of 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 Charlie Steel
who brought highly relevant
experience to the role from his
previous positions.
The Board accepted the
recommendation of the
Committee and Charlie was
appointed to the Board as Chief
Financial Officer with effect from
1 November 2022. His biography
can be found on page 73.
Appointment
of Sophie L’Hélias
Following a review of the balance
of existing skills, knowledge,
diversity and experience on the
Board and the results of the 2021
Board Evaluation, the Committee
commenced a search for a
Non-Executive Director or
Directors with a requirement
that 50% of all candidates
longlisted reflect aspects of
diversity including gender,
ethnicity and disability.
The Committee used Audeliss
Executive Search, 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 longlist
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
Sophie L’Hélias be appointed
as Non-Executive Director.
The Board accepted the
recommendation of the
Committee and Sophie was
appointed to the Board
on 1 December 2022. Sophie
is a trained lawyer with strong
knowledge of financial markets,
extensive corporate governance
experience and relevant ESG
knowledge. Her biography can
be found on page 73.
86
IWG plc Annual Report and Accounts 2022
Succession planning
We monitor 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 Company’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 18 May 2010 having been
a Non-Executive Director of the
Company since 27 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 2022 Internal
Board Review as well as the 2021
External Board Review, and in
consideration of the Group’s
near-term strategic objectives,
the Committee considers that
it is in the best interests of its
stakeholders 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.
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
re-appointment 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
IWG plc Annual Report and Accounts 2022
87
Governance Nomination Committee report continued
Board Diversity
Nationality split of the Board
Age split of the Board
Ethnicity split of the Board
■ American
■ British
■ French
■
Irish
■ Luxembourgish
Two directors are dual nationals.
50%
25%
12.5%
12.5%
25%
■ 36-45 years
■ 46-55 years
■ 56-65 years
■ 66-75 years
12.5%
12.5%
50%
25%
■ Asian
■ White
12.5%
87.5%
Information on the ethnicity of
employees is included on pages 60
and 61
Gender split of the Board
Experience of the Board
Number of Directors
Corporate Governance
Working Internationally
Rapid Growth Strategies
Digital Transformation
Franchising
Enterprise Risk Management
Outsourcing
Mergers and acquisitions
7
8
5
6
3
7
4
8
■ Female
■ Male
37.5%
62.5%
Employee Diversity
Gender split of Senior leadership
Gender split of Regional Leadership
Gender split of all employees
■ Female
■ Male
25%
75%
■ Female
■ Male
42%
58%
■ Female
■ Male
65%
35%
Further information on employee diversity is available on pages 60 and 61
88
IWG plc Annual Report and Accounts 2022
Performance against 2022 Diversity objectives
Objective
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.
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.
Consider candidates for appointment as
Non-Executive Directors from a wider pool
including those with little or no previous FTSE
Board experience.
Ensure Non-Executive Director longlists have
at least 50% of candidates reflecting diversity
including women and candidates with different
racial and ethnic backgrounds.
Engage executive search firms who have signed
up to the November 2017 Voluntary Code
of Conduct on gender balance, diversity
and best practice.
Performance achieved
Throughout 2022 we have had three female Board members,
currently representing 37.5% of our Board.
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 to 63.
Our profile resulting in the appointment of Sophie L'Hélias was
drawn up to allow us to consider a wider pool of talent; FTSE
experience was not a pre-requisite.
Our profile resulting in the appointment of Sophie L'Hélias was
drawn up to ensure that longlists reflect our desire to continue to
improve the 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.
During 2022 we worked with Audeliss Executive Search, Korn Ferry
and Spencer Stuart, each of whom are signatories to the
November 2017 Voluntary Code of Conduct.
IWG plc Annual Report and Accounts 2022
89
Governance Audit Committee report
Managing our
business ethically
and responsibly
Attendance
(out of
possible
maximum
number of
meetings)
6/6
6/6
3/3
1/1
6/6
5/5
Members
Laurie Harris
Nina Henderson
Tarun Lal1
Sophie L’Hélias2
François Pauly
Florence Pierre3
1. Tarun Lal joined the Committee
on 10 May 2022
2. Sophie L’Hélias joined the Committee
on 1 December 2022
3. Florence Pierre stepped down
as Committee member
on 30 November 2022
All members of the Committee are
independent.
Length of tenure of Non-Executive
Directors within the Committee
Responsible
corporate
behaviour is an
integral part of the
overall governance
framework and our
management
structures.”
Laurie Harris
Chair, Audit Committee
■ 0-3 years
■ 3-5 years
■ 6–9 years
40%
20%
40%
90
IWG plc Annual Report and Accounts 2022
Dear Shareholder,
I am pleased to present you with
this report on the work of the
Audit Committee (the
“Committee”) during 2022.
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.
This year has been a busy year
for the Committee with key
activities including:
• Overseeing the coordination
of Worka with our reporting,
following its establishment
through the acquisition of The
Instant Group in March 2022
and the merger of certain
digital assets.
• Interacting with KPMG with
regard to their planning and
execution of the Group audit.
In particular, detailed
discussions were held with
KPMG in relation to the
coordination of Worka
into our annual audit.
The acquisition of The Instant
Group involved a number of
judgements and assumptions
in determining the fair value of
assets and liabilities acquired
by the Group on completion of
the transaction which required
our involvement.
Membership and
meetings
The Committee consists entirely
of independent Non-Executive
Directors.
Six 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.
Activities of the
Audit Committee
during the year
This section summarises
the main focus areas of the
Committee during 2022 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 to confirm it is fair,
balanced and understandable.
The Committee formally
considers (and minutes)
key audit matters as detailed
on page 94 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.
IWG plc Annual Report and Accounts 2022
91
• Review of management’s
assessment of the impact
on the Company’s operations
and financial statements
caused by the war in Ukraine
and the resulting sanctions.
It was concluded that there
were no material impacts
on the financial statements
of the Group.
• Monitoring the Group’s
implementation of its policies
and targets on climate change.
This included reviewing the
limited assurance work
performed by an independent
third party on our Scope 1
and 2 greenhouse gas
emissions information
included on page 69, as well as
the Committee’s assessment
of the impact of climate
change on the Group’s
financial statements as
detailed in note 2 on page 134.
The Committee also reviewed
the enhanced disclosures on
climate change provided on
pages 66 to 69 in compliance
with the framework provided
by the Task Force on Climate-
Related Financial Disclosure.
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.
Governance Audit Committee report continued
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.
Climate change risk
Climate change risk is
recognised as a standalone
principal risk to the business.
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. Further
information can be found on
page 48 and pages 67 to 69.
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 are presented
on pages 44 to 52 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 2022, 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 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 plan
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;
92
IWG plc Annual Report and Accounts 2022
• 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 through the IWG
Learning Academy;
• formal procedures for the
review and approval of all
investment and acquisition
projects. The Group’s
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 IWG
Learning Academy;
• 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 2022 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
A whistleblowing channel, hosted
by an independent third party
and which may be used
anonymously, is available
to all employees via email,
the web, or on the IWG Learning
Academy. We operate
a “Right to Speak” policy,
the aim of which is to encourage
all employees, regardless of
seniority, to bring matters that
cause them concern to the
attention of the Committee,
through the whistleblowing
channel, without fear of
repercussions or retaliation.
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.
During 2022 we received
41 reports through our
whistleblowing channel.
14 of these were classified
as requiring further investigation
and were reported to the
Committee; of these 14 reports,
11 have been resolved to date
and the remaining reports, which
were received are under
investigation. Four of the reports
involved instances of bribery
and corruption; these were
investigated and reported to the
Committee along with the steps
taken to prevent recurrence.
IWG plc Annual Report and Accounts 2022
93
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 2022. 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
Goodwill and
intangible assets
Valuation of
intangibles
– The Instant
Group acquisition
Recognition of
deferred tax
assets
Impairment of
leasehold
property, plant
and equipment
(“PPE”) and
right-of-use
(“ROU”) assets
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.
The Committee considered and discussed
with management the key assumptions used
in determining the fair value of assets and liabilities
acquired and was satisfied that the process and
assumptions used in determining the fair values
of assets and liabilities in conjunction with
management's independently engaged experts
had been appropriately challenged and were
sufficiently robust. The Committee agreed with
management’s assessment of the fair values of
assets and liabilities acquired through business
combinations and was satisfied that the related
disclosures required under IFRS 3 were complete,
accurate and understandable. See note 28 for
further information.
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 associated
with the Group’s intellectual property 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 reviewed the process used
by management during 2022 to assess all open,
non-franchise business centres across the Group
for indicators of impairment. We challenged 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.
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IWG plc Annual Report and Accounts 2022
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 2021
and completed a review of the
half-year results of the Group
for the period to 30 June 2022.
The value of non-audit services
provided by KPMG in 2022
amounted to £0.3m
(2021: £0.3m). Non-audit
services primarily related
to assurance and audit
related services.
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)
and assurance on finance-
related projects;
• 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.
Our lead audit partner rotated
onto our account in respect
of 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 2022 can
be found in note 5 on page 145.
In assessing the effectiveness
of the external audit process
for 2022 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 exercise by the external
audit team of its professional
scepticism during the 2022
audit process and its ability
to challenge management
assumptions where necessary
such as in the valuation
of The Instant Group’s
intangible assets;
• 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
2022 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 2023
be proposed at the annual
general meeting.
Corporate
governance changes
During 2022 we have also
discussed the consultation
paper published by BEIS
on restoring trust in audit
and corporate governance
and are assessing the potential
implications to the Group.
Laurie Harris
Chair, Audit Committee
IWG plc Annual Report and Accounts 2022
95
Governance Directors’ Remuneration report
Fostering the
long-term success
of the Company
The Committee
has designed
performance-
driven
remuneration
policies that
reward delivery
of our strategic
priorities and
support our
culture and
values to foster
the Group’s
sustainable long-
term success.”
Nina Henderson
Remuneration Committee Chair
Attendance
(out of
possible
maximum
number of
meetings)
7/7
7/7
7/7
6/6
1/1
Members
Nina Henderson
Laurie Harris
François Pauly
Florence Pierre1
Sophie L'Hélias2
1. Resigned 30 November 2022
2. Appointed 1 December 2022
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%
25%
50%
Dear Shareholder,
On behalf of the Board’s
Remuneration Committee
(the “Committee”), I present
the 2022 Directors’ Remuneration
report. The Committee has
designed performance-driven
remuneration policies that
reward delivery of our strategic
priorities and support our culture
and values to foster the Group’s
sustainable long-term success.
A challenging 2022 was
marked by COVID-19’s
continuing impact combined with
macroeconomic headwinds of
inflation, currency movements,
and a highly competitive
marketplace for talent. The
seismic shift in how and where
work is conducted continues
with the widespread adoption
of hybrid working. IWG has
continued to execute its strategy
to meet the needs created by
this evolving shift in how work
is conducted. IWG’s intention
is to assure its position as the
preeminent provider of global
hybrid work solutions.
Achievements during 2022
include: the record signing of
462 new capital-light contracts;
merging key digital assets with The
Instant Group to create the leading
digital platform, Worka, to serve
the broader flexible office market;
improving margins through actively
managing sequential occupancy
and pricing improvements; as well
as minimising the impacts of
inflationary pressures through
Group-wide cost control initiatives.
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IWG plc Annual Report and Accounts 2022
The Chair of the Committee and
Board Chairman will continue to
consult with shareholders to
assure the alignment of Policy to
strategy implementation and
creation of value for all
stakeholders.
The full Policy can be found
on pages 100 to 106 of this
Annual Report.
2022 Remuneration
Outcomes
Annual bonus
At the start of the year, the
Committee set targets for three
measures for the annual bonus,
each with an equal weighting.
These were operating profit,
relative TSR, and strategic
objectives. The achieved results
for operating profit and TSR were
below the targets set. Although
these measures continued to be
impacted by significant
unforeseen circumstances, no
annual bonus for 2022 will be
payable under these two
measures.
The Committee considered
delivery against the strategic
objectives set at the start of
the year. A comprehensive
disclosure of this assessment
can be found on page 110, with
the Committee determining that
the strategic objectives had
been achieved in full. This
resulted in an overall formulaic
outcome of 33.33% of maximum
for the 2022 annual bonus.
Performance Share Plan (“PSP”)
The Committee acknowledges
the unprecedented trading
conditions of the last three years
for providers of workspaces and
the associated negative impact
on IWG’s financial outcomes and
relative TSR.
The PSP award was made in
March 2020, shortly before
the potential severity of the
COVID-19 pandemic began to
emerge. At that time, the
Company’s share price was
experiencing all-time highs.
The award was subject to a
relative TSR condition only.
Performance was assessed
as below the median of the
FTSE350 (excluding investment
trusts). Therefore, the 2020 PSP
award will lapse in full in March
2023
Whilst the 2020-2023 award will
lapse in full and no discretionary
adjustments will be made,
the Committee considers
management’s performance
and stewardship of the group
to have been exceptional during
this period.
Specifically, management has
navigated the Group through
the pandemic impacts and
unforeseen macroeconomic
factors, delivering significant
achievements, including:
• Renegotiating the majority
of over 3,400 lease
agreements, significantly
reducing the Group's
cost base.
• Accelerating capital-light
network expansion through
management agreements
to provide more convenient
locations to support hybrid
working; 91% of the Group's
network locations were signed
as capital-light, partnered deals.
• Ongoing cost reduction
programmes to improve
margins and address
inflationary pressures.
• Investing in expanding
digital capabilities through
in-house developed
offerings and acquisitions.
• Merging key digital assets with
The Instant Group to create
Worka, the leading digital
platform for independently
serving the entire flexible
office market.
In the Committee’s judgement,
management’s leadership of the
Group through this period has
been noteworthy. Their actions
have not only seen the Group
navigate the challenges created
by the non-predictive pandemic,
but have also positioned the
Company to capture the unique
opportunities created by the
shift to hybrid working.
IWG plc Annual Report and Accounts 2022
97
These accomplishments,
requiring current investment,
will continue to provide future
benefits and create value for
all stakeholders.
Remuneration Policy
Our Remuneration Policy
(the “Policy”) was last approved
by shareholders at the 2020
annual general meeting, receiving
widespread support from 94.3%
of shareholders. As three years
have now passed, we are required
to submit our Policy
for shareholder approval.
The Committee carefully
considered whether any
changes were required to the
Policy, to ensure it allows the
Company flexibility to
implement remuneration in
line with our evolving strategy
and aligns with best practice
governance expectations.
The Chair of the Committee and
the Board Chairman consulted
with shareholders regarding the
Policy and after consideration of
the consultations and the strong
level of support in 2020 the
Committee are confident that
the current Policy is the right
one for the immediate future.
As such the proposed Policy
being submitted for approval
at the 2023 annual general
meeting is effectively unchanged
from 2020.
Governance Directors’ Remuneration report continued
Response to 2022
annual general
meeting outcome
Whilst a significant majority of
shareholders (72.6%) approved
our Annual Report on
Remuneration in 2022, the level of
votes against was higher than we
typically receive. The Committee
is aware that the shareholders
who voted against the Annual
Report on Remuneration last year
did not agree with the Committee
applying its discretion by
considering management’s
achievements in mitigating the
unexpected negative impact of
new COVID-19 variants, which
led to additional lockdowns,
when determining the Executive
Director bonus outcome for 2021.
The Committee consulted with
shareholders prior to the annual
general meeting, the majority of
whom were supportive of the
rationale for the Committee’s
decision-making. Following
the annual general meeting,
the Committee Chair and the
Board Chairman contacted
major shareholders who had
not supported our Annual Report
on Remuneration to understand
the reasons for their vote and to
offer further engagement to
understand.
Following our engagement,
we are comfortable that those
shareholders who voted against
the Annual Report on
Remuneration for 2022 did not
have ongoing concerns with the
overall approach to
remuneration at IWG.
We are thankful for all
engagement with our
shareholders on this matter over
the last year. No discretion has
been used in determining
incentive outcomes in 2023.
The year ahead
Assuming shareholder approval
of the Policy originally designed
and approved in 2020,
the Committee plans
implementation of 2023
remuneration as follows:
• Executive Director salaries will
be subject to the annual salary
review process.
• The maximum annual bonus
will remain unchanged at 150%
of base salary for Executive
Directors with half of any
bonus paid deferred in shares
which vest after three years.
Performance will be measured
against EBITDA, net debt
reduction and strategic metrics.
• Awards of 250% of base salary
were granted under the PSP in
line with the approved Policy.
100% of these awards will vest
subject to a relative TSR target
measured over three financial
years, 2023-2025. Any award
that vests will be subject to
an additional two-year
holding period.
The Committee is satisfied that
our variable pay model remains
fit for purpose in the face of
pandemic impacts and the
hybrid work evolution, and
ensures alignment between
pay and performance through
robust target setting.
The Committee has considered
the pay and conditions across
the Group’s workforce, the
experiences of the Company
and its stakeholders along with
the need to reward executive
performance that enables the
future success of the Company.
Executive changes
As previously announced,
Charlie Steel was appointed
to the Board as Chief Financial
Officer with effect from
1 November 2022. Upon
appointment Charlie’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.
He received a buy-out award to
replace the value of incentives
he was forgoing as a result of
his recruitment. The Committee
sought to ensure this award was
granted on a ‘like for like’ basis
with that forgone, including the
application of performance
conditions. Full details are
provided on page 112.
Upon departure, the Committee
determined an appropriate exit
package for Glyn Hughes 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 page 117.
Workforce
engagement and
wider workforce pay
Through my role as Non-Executive
Director with oversight of
employee engagement I have
continued my programme of
meeting with our global
workforce. During 2022 I had the
privilege to interact with a wide
variety of employees through
our online leadership conference
with 300 managers in January
2022 and though site visits and
online meetings with smaller
groups of employees
throughout the year.
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IWG plc Annual Report and Accounts 2022
Most recently I attended one
of our Regional Leadership
conferences which were held
in person for the first time
since the COVID-19 pandemic.
Employees provided me with
their reactions and views on our
strategic endeavours and reward
plans and resources available to
them to deliver job performance.
I ensure that the Committee and
the Board are aware of the views
of employees and the feedback
I receive through my role. This
year I was delighted to report the
results of our Global Engagement
survey to the Board. The results
showed that 77% of IWG
employees recommend IWG
as an employer to friends and
family, and this was endorsed by
our UK Leading Employer Award.
I also 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. This
enables me to provide the
Committee with insights
from these interactions.
I provide a sounding board
for the team designing IWG’s
climate and environmental
initiatives. During 2022, I met
with the team over seven times
and coordinated regular Board
updates on their progress.
In addition to its review of
executive remuneration,
the Committee reviews the
remuneration approaches and
practices in place across the
Group. The Committee ensures
that there is strong rationale for
how compensation approaches
evolve across different levels of
the organisation and that we
offer competitive and fair pay
across the Group which is free
from all forms of discrimination.
The majority of our
approximately 10,000
employees’ remuneration
is determined by role,
performance, location,
and longevity within the
Group compared to marketplace
benchmarks. Salaries are
reviewed annually, and all eligible
employees share in our success
through performance related
incentives. The average pay rise
awarded to employees who
received an increase in respect
of 2022 is 3%.
Annual general
meeting
Shareholders will be asked
to approve resolutions in
support of the 2022 Annual
Report on Remuneration and
the 2023 Policy.
On behalf of the Committee,
I commend this report to you
and look forward to your support
for the resolutions at the annual
general meeting.
Nina Henderson
Chair, Remuneration Committee
IWG plc Annual Report and Accounts 2022
99
Governance Directors’ Remuneration report continued
Directors’ Remuneration Policy
This report sets out the Group’s Policy on remuneration for Executive and Non-Executive Directors, to be proposed
to shareholders at the annual general meeting on 9 May 2023, from which date the Policy will apply if approved.
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 2018;
• to align management and shareholder interests through building material share ownership over time;
• to reflect the remuneration received by the wider employees, 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 equality;
diversity and inclusion; and
• to reflect the global operating model of the Group whilst taking account of governance best practice.
Policy table for Executive Directors
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.
N/A
Maximum
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).
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.
Component
Base salary
Benefits
Purpose/link
to strategy
Operation
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.
To provide a
competitive
benefits
package.
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.
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).
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IWG plc Annual Report and Accounts 2022
Maximum
Set at a level
commensurate with the
workforce in the
executive’s location
(currently 7% of base
salary for existing
Directors)
150% of base salary per
annum.
The normal plan limit is
250% of base salary.
Component
Pension
Annual bonus
Performance
Share Plan
(“PSP”)
Purpose/link
to strategy
Operation
To provide
retirement
benefits in
line with
the overall
Group Policy.
To incentivise
and reward
annual
performance
and create
further
alignment
with
shareholders
through the
delivery and
retention
of deferred
equity.
Motivates and
rewards the
creation of
long-term
shareholder
value.
Aligns
executives’
interests with
those of the
shareholders.
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 arrangement
in response to changes in legislation or
similar developments.
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 below).
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 three years following grant,
subject to performance against pre-
determined targets which are set and
communicated at the time of grant.
Vested awards are 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.
Recovery and withholding provisions
apply to PSP awards (see note 1 below).
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.
Performance
framework
N/A
Performance metrics
are selected annually
based on the current
business objectives.
At least 70% will be
linked to key financial
metrics, of which
there will typically
be a significant
profit-based element
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.
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.
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%.
IWG plc Annual Report and Accounts 2022
101
Governance Directors’ Remuneration report continued
Component
Shareholding
guidelines
Post-
cessation
shareholding
requirement
Purpose/link
to strategy
Operation
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 through
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.
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.
To align
Executive
Directors’
interests with
those of our
long-term
shareholders
and other
stakeholders
Maximum
N/A
Performance
framework
N/A
Notes to the policy table:
1. Recovery and withholding provisions may be applied in circumstances which include misconduct or material error by a participant, material misstatement
in the Company’s audited accounts or a material downturn in the performance of the Company, or error in the assessment of performance and in other
circumstances in which the Committee thinks the operation of the process is appropriate, including a failure in risk management or material reputational
damage. Awards subsequent to the grant, but before the expiry of the holding period, may be reduced or an Executive Director may be required to repay
an award at any time within three years of the date on which the award vests. All annual cash and share bonuses alongside long-term incentives are
subject to a malus and clawback policy.
2. For the avoidance of doubt, by approval of the Policy, authority has been given to the Company to honour any commitments entered into with current
or former Directors (such as the payment of a pension or the unwinding of legacy share schemes) that have been disclosed to shareholders in previous
Directors’ Remuneration reports. Details of any payments to former Directors will be set out in the Annual Report on Remuneration as they arise.
3. As IWG operates in a number of geographies, employee remuneration practices vary across the Group to reflect local market practice. However,
employee remuneration policies are based on the same broad principles. Our primary objective in awarding variable pay is to drive achievement of
results, according to role, and to recognise and reward excellent performance. Accordingly, to account for variances in responsibilities, influence and
seniority, incentive schemes are not uniform in approach. Performance targets are set annually taking into account a number of internal and external
reference points including: the level of performance that is achievable over a sustained period of time; historic performance and internal forecasts
of future performance; market expectations, and any guidance provided to the market.
4. In order to ensure that the Policy achieves its intended aims, the Committee retains discretion over the operation of certain elements of the variable
pay policy. This includes the discretion to adjust the annual bonus and PSP outcome if it is not considered to be reflective of the wider performance of
IWG and to ensure that it can, in appropriate circumstances, override formulaic outcomes. In addition,
the Committee may adjust elements of the plans including but not limited to:
• participation;
•
• determining the extent of payment or vesting of an award based on the assessment of any performance condition, including discretion as to the
in exceptional circumstances determining that any share-based award (or any dividend equivalent) will be settled (in full or in part) in cash;
basis on which performance is to be measured if an award vests in advance of normal timetable (on cessation of employment as a good leaver or on
the occurrence of a corporate event) and whether (and to what extent) pro-ration will apply in such circumstances;
• whether (and to what extent) recovery and/or withholding will apply to any award;
• ability to adjust the number of shares under the DSBP, PSP or other share-based award to take into account a variation in the share capital;
• the timing of the grant of award and/or payment;
• the size of an award (up to plan limits) and/or payment within the limits set out in the policy table above;
• discretion relating to the measurement of performance within the limits set out in the policy table above in the event of a change of control;
• determination of a good leaver (in addition to any specified categories) for incentive plan purposes;
• adjustments required in certain circumstances (e.g. rights issues, corporate restructuring and special dividends); and
• the ability to adjust existing performance conditions for exceptional events at any point before vesting so that they can still fulfil their original
purpose. Should any such discretions be exercised, an explanation would be provided in the following Annual Report on Remuneration and may be
subject to shareholder consultation as appropriate.
5. For the avoidance of doubt, in approving this Policy, authority is given to the Company to make payments and honour any prior commitments entered
into with current or former Directors (such as the payment of pension or the unwinding of legacy share schemes prior to the approval of the current
Policy). Details of any payments will be set out in the Annual Report on Remuneration as they arise. The Committee reserves the right to make any
remuneration payments and payments for loss of office (including exercising any discretions available to it in connection with such payments)
notwithstanding that they are not in line with the Policy set out above where the terms of the payment were agreed (i) before the Policy came into
effect or (ii) at a time when the relevant individual was not a Director of the Company and, in the opinion of the Committee, the payment was not in
consideration for the individual becoming a Director of the Company. For these purposes “payments” include the Committee satisfying awards of
variable remuneration and, in relation to an award over shares, the terms of the payment are “agreed” at the time the award is granted.
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IWG plc Annual Report and Accounts 2022
Policy table for the Chairman and Non-Executive Directors
Component
Purpose/link to strategy
Operation
Maximum
Chairman fees
Normally reviewed, but not necessarily increased, annually
and as determined by the Committee. The Committee will
consider, where appropriate, pay data at companies of a
similar scale and relevant multi-country operating model.
A single fee which reflects all Board and Committee duties.
Set at a level sufficient to attract and retain individuals with
the required skills, experience and knowledge to allow the
Board to effectively carry out its duties.
There is no prescribed
maximum although
fees and fee increases
will be considered in
line with the increases
of the wider workforce
and market rates.
The Chairman is
not eligible for any
performance-related
remuneration.
There is no prescribed
maximum although fees
and fee increases will be
considered in line with
the increases of the
wider workforce and
market rates.
The Non-Executive
Directors are not
eligible for any
performance-related
remuneration.
Non-
Executive
Director fees
Normally reviewed, but not necessarily increased, annually
and as determined by the Chairman and the Executive
Directors.
The Committee will consider, where appropriate, pay data
at companies of a similar scale and relevant multi-country
operating model.
A base fee is payable with additional fees for chairing key
Board Committees, for being the Senior Independent Director
and for being responsible for the oversight of employee
engagement and CSR.
Set at a level sufficient to attract and retain individuals with
the required skills, experience and knowledge to allow the
Board to effectively carry out its duties. Any reasonable
business-related expenses (including tax thereon) can be
reimbursed if determined to be a taxable benefit. Additional
fees may be payable in relation to extra responsibilities
undertaken such as chairing a Board Committee or other
similar duties or being a member of a committee. If there is a
temporary yet material increase in the time commitments for
Non-Executive Directors, the Board may pay extra fees on a
pro-rata basis to recognise the additional workload.
Fees are paid entirely in cash.
Consideration of
conditions elsewhere
in the Group
The Committee has regard
to the pay and employment
conditions of employees within
the Group when it sets the
Policy for the remuneration of
Executive Directors, the first
layer of management below the
Board, the Company Secretary
and the Chairman of the Board.
The Committee does not consult
directly with employees.
However the Committee Chair is
the dedicated NED responsible
for employee engagement
and ensuring a two way
dialogue between the Board
and the workforce. A summary
of some of the activities
undertaken is included on pages
98 to 99 and all information
gathered from this engagement
is considered by the Committee
and informs the overall decision
making. This Policy is unchanged
from our previous Policy, which
provides consistency and means
there are no changes in how
executive policy aligns with our
Policy more broadly.
The general principles of the
Policy are broadly applied
throughout the Group and are
designed to support recruitment,
motivation and retention as well
as to reward high performance in
a framework of approved risk
management, and to promote
the long-term sustainable
success of the Company.
The structure of total
remuneration packages for those
within the Committee’s remit
and for the broader employee
population is similar, comprising
salary, pension and benefits and
eligibility for a discretionary
annual bonus. The level of bonus
opportunity is determined by
role and responsibility. Executive
Directors, the first layer of
management below the
Board and other selected senior
executives participate in the
Company’s share schemes to
aid retention and motivate the
delivery of long-term growth in
shareholder value and to align
their interests with those of
shareholders. Annual base pay
increases for the Executive
Directors and the first layer of
management below the Board
are normally limited to the
average base pay increase for
the wider employee population
unless there are exceptional
circumstances such as a change
in role or salary progression for
a newly appointed Director.
IWG plc Annual Report and Accounts 2022
103
Governance Directors’ Remuneration report continued
Consideration of
shareholder views
The Committee is dedicated
to ensuring that shareholders
understand and support our
remuneration structures.
Accordingly, where changes are
being made to the Policy, or in
the event of a significant
exercise of discretion, we will
consult with shareholders, as
appropriate, to explain our
approach and rationale fully.
Additionally, the Committee
considers shareholder feedback
received in relation to each
annual general meeting
alongside any views expressed
during the year. We actively
engage with our largest
shareholders and consider
the range of views expressed.
In exceptional circumstances,
the members of the Committee,
including the Committee Chair,
attend the Company’s annual
general meeting and are
available to listen to views and
to answer shareholders’
questions about Directors’
remuneration.
The Committee also reviews
the executive remuneration
framework in the context of
published shareholder guidelines.
Approach to
recruitment
remuneration
When determining the
remuneration package for
a newly appointed Executive
Director, the Committee
would seek to apply the
following principles:
• The package must be
sufficiently competitive to
facilitate the recruitment
of individuals of the highest
calibre and experience
needed to shape and
execute the Company’s
strategy. At the same time,
the Committee would seek to
pay no more than necessary.
• The remuneration package
for a new Executive Director
would be set in accordance
with the terms of the Policy
in force at the time of the
appointment. Salaries would
reflect the skills and
experience of the individual,
and may (but not necessarily)
be set at a level to allow future
salary progression to reflect
performance in the role. Where
salaries are set below market,
multi-year staged increases
may be awarded to achieve
the desired market positioning
over time. Where necessary
these increases may be above
those of the wider workforce
but will be subject to
continued development
in the role.
• Benefits will be limited to
those outlined in the Policy,
with relocation assistance
provided where appropriate.
Where provided, relocation
assistance will normally be
for a capped amount and/or
limited time. Pension
provisions will be set in
line with the Policy.
• The Committee may offer
additional cash and/or
share-based payments in the
year of appointment when it
considers these to be in the
best interests of the Company
and, therefore, shareholders.
In accordance with the Policy,
the maximum level of variable
remuneration which may be
awarded is 400% of salary (of
which 250% is permitted
under the PSP under the
exceptional circumstances
limit and 150% under the
annual bonus plan).
Performance conditions for
variable pay in the year of
appointment may be different
to those applying to other
Directors, which would be
subject to stretching
performance conditions.
• Depending on the timing of the
appointment, the Committee
may deem it appropriate to
set different performance
conditions to the current
Executive Directors for the
first performance year of
appointment. A long-term
incentive award can be
made shortly following an
appointment (assuming
the Company is not in
a close period).
104
IWG plc Annual Report and Accounts 2022
• Where an individual forfeits
remuneration at a previous
employer as a result of
appointment to the Company,
the Committee may offer
compensatory payments
or awards to facilitate
recruitment. Such payments
or awards could include cash
as well as performance and
non-performance-related share
awards and would be in such
form as the Committee
considers appropriate taking
into account all relevant factors
such as the form, expected
value, anticipated vesting and
timing of the forfeited
remuneration. The aim of any
such award would be to ensure
that, so far as possible,
the expected value and
structure of the award will
be no more generous than
the amount forfeited.
• Any share-based awards
referred to in this section will
be granted as far as possible
under the Company’s existing
share plans. If necessary,
awards may be granted
outside of these plans as
permitted under the Listing
Rules, and in line with the
approach and the limits
set out above.
• In the case of an internal
appointment, variable pay
awarded in respect of the
incumbent’s prior role may
pay out according to its
terms of grant. In addition,
any other ongoing
remuneration obligations
prior to their appointment
may continue, provided that
they are put to shareholders
for approval at the first
annual general meeting
following their appointment.
• For an overseas appointment,
the Committee will have
discretion to offer cost-
effective benefits, including
expatriate benefits, and
pension provisions which
reflect market practice and
relevant legislation.
The remuneration package
for a newly appointed
Non-Executive Director
would normally be in line
with the structure set out in the
Policy table for Non-Executive
Directors on page 103.
Service contracts
Executive Directors have service
contracts with the Group
which can be terminated by the
Company or the Director by giving
12 months’ notice. The service
contract policy for new
appointments will be on
similar terms as those for existing
Executive Directors, with the
facility to include a notice
period of no more than 12 months.
The Company may terminate
employment of the Executive
Directors by making a payment
in lieu of notice which would not
exceed 12 months’ salary.
Under the current service
agreements, Mark Dixon’s
contract provides that, on
a change of control, he may
terminate the contract by giving
one month’s notice and will,
in addition to contractual
payments for the one-month
notice period, receive a payment
equal to 12 months’ salary,
and remain eligible for a
discretionary bonus.
The Chairman and Non-
Executive Directors are
appointed for a three-year term,
which is renewable, 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.
Policy on payment for
loss of office
Where an Executive
Director leaves employment,
the Committee’s approach to
determining any payment for loss
of office will normally be based
on the following principles:
• The Committee’s objective
is 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.
Payments in lieu of notice will
not exceed 12 months’ salary
and benefits.
• Treatment of annual bonus:
There is no contractual right to
receive an annual bonus in the
year of termination. However,
the Committee has discretion,
for certain leavers, to make a
payment under the annual
bonus entirely in cash.
This will reflect the period
of service during the year and
performance (measured at the
same time as performance for
other plan participants, if
feasible). Should the Committee
make a payment in these
circumstances, the rationale
would be set out in the following
Annual Report on Remuneration.
• Treatment of share plans:
If an Executive Director
leaves employment with
the Company, unvested PSP
and deferred bonus shares
will lapse unless the
Committee in its absolute
discretion determines
otherwise (good leaver) for
reasons including, amongst
others, injury, disability,
retirement, redundancy
and death or in any other
circumstances at the
discretion of the Committee.
In such circumstances an
Executive Director’s award
will vest at the normal vesting
date, may be pro-rated, and will
be subject to achievement of
performance criteria.
Any post-vesting or
post-cessation holding
requirements, as defined in the
Policy, will also normally apply.
Should the Committee adjust
the time pro-rating, then this
would be explained in the
following Annual Report on
Remuneration. If the Executive
Director ceases to be an
employee for any reason other
than those specified above
then the award shall lapse
immediately on such cessation.
Awards will vest on the
normal vesting date unless
the Committee determines,
in its discretion, that awards
will vest at the date of cessation.
• The Committee reserves the
right to make additional exit
payments where such
payments are made in good
faith in discharge of an existing
legal obligation (or by way of
damages for breach of such
an obligation) or by way of
settlement or compromise of
any claim arising in connection
with the termination of a
Director’s office or
employment. The Committee
may also pay reasonable
outplacement and legal fees
where considered appropriate.
Policy in respect of
external Board
appointments for
Executive Directors
It is recognised that external
non-executive directorships
may be beneficial for both
the Company and Executive
Directors. At the discretion of
the Board, Executive Directors
are permitted to retain fees
received in respect of any such
non-executive directorship.
Illustration of
Remuneration Policy
The charts below illustrate the
application of the Policy set out
in the Policy table for Executive
Directors. This assumes the level
of fixed remuneration (salary,
benefits and pension) as at
1 January 2023 and the following
in respect of each scenario:
• “Fixed” represents fixed
remuneration only (i.e. current
salary, benefits and pension).
• “Target” represents fixed
remuneration plus an annual at
target bonus of 90% of salary
and 50% of salary (20% of
maximum) vesting of the
maximum PSP award. Note,
target levels of award are for
illustrative purposes only.
• “Maximum” represents the
maximum annual bonus of
150% of salary and full vesting
of the PSP grant of 250% of
base salary.
• “Maximum + 50% share price
growth” represents maximum
levels of award plus the impact
of 50% share price growth on
the PSP award.
IWG plc Annual Report and Accounts 2022
105
Governance
Directors’ Remuneration report continued
Remuneration Policy
Chief Executive Officer
Minimum
Target
Maximum
Maximum, with 50%
share price growth
Fixed pay
Annual bonus
Long-term incentives
Chief Financial Officer
Minimum
Target
Maximum
Maximum, with 50%
share price growth
Fixed pay
Annual bonus
Long-term incentives
£944
100%
£2,169
£4,444
£5,538
44%
21%
17%
36%
20%
30%
24%
£479
100%
£1,095
£2,239
£2,789
44%
21%
17%
36%
20%
30%
24%
All figures in £’000s and rounded to the nearest thousand.
Benefits and pension values are based on the value of benefits received in relation to 2022 calculated on a full-year-basis.
49%
49%
59%
59%
106
IWG plc Annual Report and Accounts 2022
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 96. 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 2023
This Annual Report on Remuneration (and the Committee Chair’s annual statement) will be put to a single advisory
shareholder vote at the 2023 annual general meeting. The information below includes how we intend to operate our
Policy in 2023 and the pay outcomes in respect of the 2022 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
The current salaries as at 1 January 2023 (and compared to 2022) are as follows:
Mark Dixon
Charlie Steel
1. Charlie Steel was appointed on 1 November 2022.
Effective
1 Jan 2023
(£’000)
Effective
1 Jan 2022
(£’000)
Percentage
change
£875
£440
£875
£440(1)
0%
0%
For context, the average base salary increase for eligible employees in respect of 2022 is 3%.
Benefits and pension
Benefits and pension provisions will operate in line with the approved Policy.
Annual bonus
For 2023 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 2023 annual bonus will be based 50% on measurement against EBITDA targets, 20% on measurement against
net debt reduction targets and 30% against measurement of strategic targets, a portion of which will be focused on
achieving specific environment and climate change objectives. 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.
IWG plc Annual Report and Accounts 2022
107
Governance Directors’ Remuneration report continued
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 have been 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 2025.
The awards are 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
Maximum performance
Relative TSR versus FTSE 350 excluding
investment trusts (100% weighting)
25%
Median
100%
10% compound annual
growth above median
Awards are 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
The current fees as at 1 January 2023 (and compared to 2022) 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)
1. The level of dislocation allowance for non-Swiss Directors is determined according to their country of residence.
Remuneration outcomes for 2022
Single total figure of remuneration table (Audited)
2023
(£’000)
2022
(£’000)
Percentage
change
300
62
300
62
15
15
15
15
15
15
15
15
5 to 10
5 to 10
0%
0%
0%
0%
0%
–
0%
The following table shows the total remuneration in respect of the year ending 31 December 2022, together with the
prior year comparative.
Executive Directors
Salary
Benefits
Pension
Other
Annual bonus
Long Term
Incentive Awards
Total
Total fixed
Total variable
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
875
875
74
–
366
291
–
–
–
–
–
–
61
84
–
6
–
74
26
20
–
–
–
–
438
656
–
–
183
218
–
–
–
274
1,374 1,890
936
959
438
931
–
–
154
–
154
–
–
–
575
528
392
310
183
218
£’000
Mark
Dixon
Charlie
Steel
Glyn
Hughes
108
IWG plc Annual Report and Accounts 2022
Non-Executive Directors
£’000
Douglas Sutherland
Laurie Harris
Nina Henderson
Tarun Lal
Sophie L'Hélias
Florence Pierre
François Pauly
Fees
Benefits
Pension
Annual bonus
Long Term
Incentive Awards
Total
2022
300
87
102
46
6
61
82
2021
300
87
102
–
–
67
82
2022
2021
2022
2021
2022
2021
2022
2021
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2022
300
87
102
46
6
61
82
2021
300
87
102
–
–
67
82
Annual bonus – The bonus shown is the full award in respect of the relevant financial year. Half of the bonus awarded to Executive Directors was deferred
into shares for three years.
Pension - This includes a cash payment to Charlie Steel in lieu of a pension contribution.
Other - This includes a bonus award that was agreed to be paid to Charlie Steel as part of his recruitment, given he joined IWG towards the very end
of the financial year. See page 112 for further information.
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 2019 PSP award (118,054 shares) vested in March 2022 based on performance until
31 December 2021; the value of this is shown in 2021 and reflects a price on the date of vesting of 232.4p. None of the 2019 PSP value of £274.4k was
attributable to share price increase.
Charlie Steel was appointed as Director and Chief Financial Officer on 1 November 2022. Remuneration detailed above reflects time served in respect
of the role during the relevant period.
Glyn Hughes was appointed as Director and Chief Financial Officer on 25 March 2021 and resigned on 31 October 2022. Remuneration detailed above
reflects time served in respect of the role during the relevant period.
Tarun Lal was appointed as Non-Executive Director on 10 May 2022. Remuneration detailed above reflects time served in respect of the role during
the relevant period.
Sophie L’Hélias was appointed as Non-Executive Director on 1 December 2022. Remuneration detailed above reflects time served in respect of the role
during the relevant period.
Florence Pierre resigned as Non-Executive Director on 30 November 2022. Remuneration detailed above reflects time served in respect of the role
during the relevant periods.
IWG plc Annual Report and Accounts 2022
109
Governance Directors’ Remuneration report continued
Determination of 2022 annual bonus (Audited)
The targets set for the 2022 bonus at the start of the year were as follows:
Measure
Threshold
payout
(% of maximum)
Threshold
Target
(60% of
maximum)
Maximum
(100% of award)
Operating profit (pre-IFRS 16 basis) (33.3% weighting)
33%
£117m
£130m
£150m
Relative TSR versus FTSE 350 (excluding investment
trusts) (33.3% weighting)
25%
Median
–
Exceeds the
median by 10%
Achieved
£(48)m(1)
Below
median
Strategic objectives (including ESG) (33.3% weighting)(2)
N/A
N/A
N/A
Targets met
in full
Targets met
in full
1. Reflects the achieved pre-IFRS 16 operating profit after adjusting items.
2. Assessment of the strategic objectives is shown below.
The strategic objectives for the annual bonus were assessed against two equally weighted measures. The targets and
outcome against each measure were as follows:
Measure
Assessment
Successful establishment of Worka
through the combination of IWG digital
assets with The Instant Group (50%)
comprising:
Strategic development
During the year under review executive leadership actions were taken to
ensure that Worka was created, through the combination of IWG digital
assets with The Instant Group, to operate as a standalone entity serving
the flexible workspace industry.
• Strategic development (1/3)
• Financial performance (1/3)
• Migration of assets (1/3)
Financial performance
The 2022 financial performance targets for Worka were achieved,
resulting in an EBITA of £115m.
Migration of assets
The migration of relevant IWG digital assets into Worka was successfully
achieved, contributing to meeting the strategic and financial objectives.
Environment and climate change (50%):
Clear actions and commitment to achieve
Net Carbon Neutrality during 2023 (1/2),
with meaningful targets and plans with
interim milestones for achieving the
conversion to green certified electricity
and Net Zero carbon emissions (1/2)
The Executives have been active in refreshing our climate strategy during
2022 and have put measures in place to ensure that we are continuously
working to reduce carbon emissions. As a result of management’s actions
during 2022 we are on track to achieve our target of carbon neutrality
during 2023 and have put in place plans to enable us to target attainment
of 100% certified green energy by 2030 and Net Zero carbon emissions no
later than 2040. Full achievement was based on environment and climate
change objectives being fully integrated into our strategy.
During 2022 we were rated as an AA organisation by the MSCI index. Further
information on our achievements in 2022 and our carbon reduction journey
can be found in our Environment report on pages 56 to 59.
Outcome
100%
100%
Director
Mark Dixon
Glyn Hughes(2)
Bonus
maximum
(% of base
salary)
Bonus
awarded (%
of award)
150%
33.33%
150%
33.33%
Bonus awarded
(£’000)
Cash bonus
(£’000)
438
183
219
92
Deferred
shares
(£’000)(1)
219
92
1. Half of the bonus was awarded in cash, with half deferred in shares which vest after three years.
2. Glyn Hughes resigned on 31 October 2022. Bonus detailed reflects time served in respect of the role.
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IWG plc Annual Report and Accounts 2022
PSP awards vesting in 2023 (Audited)
The award made to Executive Directors under the PSP in 2020 was subject to a TSR performance metric measured
over the three financial years ending 31 December 2022. Performance and vesting are as detailed below.
Performance conditions
Threshold vesting
Threshold
performance
Maximum vesting
Maximum
performance
Performance
achieved
Actual % vesting
Relative TSR versus FTSE 350
excluding investment trusts
(100% weighting)
25%
Median
100%
10% compound
annual growth
above median
Below
median
0%
PSP awards vesting in 2024 (Audited)
PSP awards granted to Executive Directors on 9 March 2022 which vest subject to a three-year performance period
ending 31 December 2024 were as follows:
Executive
Mark Dixon
Glyn Hughes(2)
Number of
share options
857,844
431,373
% of base salary
250%
250%
Value of award
(£’000)(1)
% of maximum
amount receivable
for threshold vesting
£2,187
£1,100
25%
25%
1. Based on a face value grant of 250% of salary and using the share price of 255.0p on 9 March 2022.
2. Glyn Hughes’ award has lapsed following his resignation on 31 October 2022.
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.
IWG plc Annual Report and Accounts 2022
111
Governance Directors’ Remuneration report continued
DSBP awards granted in the year
DSBP awards granted to Executive Directors on 9 March 2022 as a deferred bonus in respect of the financial year ended
31 December 2021 and which become exercisable on the third anniversary after the date of grant, subject to continuous
employment, were as follows:
Executive
Mark Dixon
Glyn Hughes
Number of share
options
% of
2021 bonus
Value of award(1)
(£’000)
128,677
42,738
50%
50%
£328
£109
Recruitment terms for new CFO
To facilitate the recruitment of Charlie Steel, a one-off award was granted at the time of his appointment in recognition
of the awards being forgone in leaving his previous employer.
The Committee considered the value and nature of awards being forgone when determining the form of any
replacement award. The Committee determined to grant the buyout award through a PSP with forward looking
performance conditions, as this ensures that the incoming executive is aligned to IWG performance and shareholders’
interests immediately. The Committee sought to replicate the target value of awards being forgone when determining
the value of the buyout award.
The below award will vest five years from the date of grant, and the number of interests granted was as follows:
Executive
Charlie Steel
Number of share
options
Value of award
(£’000)(1)
% of maximum
amount receivable
for threshold vesting
511,751
£675
25%
1. Determined by reference to the middle market quotation at close on 1 November 2022, being 131.9p.
The award is subject to a TSR performance metric, assessed over a three-year performance period beginning
on 23 August 2022. This condition is 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
In addition, to facilitate his recruitment and in recognition of a 2022 bonus award being forgone and the fact that he
joined IWG towards the end of the financial year, the Committee agreed to award a bonus at 100% of salary for 2022,
pro-rated for when he commenced employment. Given his start date of 1 November 2022, the total bonus awarded is
£73k. 50% of this award will be deferred into shares under the DSBP which will vest after three years, in line with our
general policy for Executive Directors. This provides further immediate alignment to IWG share price.
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 on page 108.
112
IWG plc Annual Report and Accounts 2022
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 through 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 2022
alongside the interests in share schemes for the Executive Directors. Details for Glyn Hughes are as at 31 October 2022
when he resigned as Director and Chief Financial Officer. Details for Florence Pierre are as at 30 November 2022 when
she resigned as Non-Executive Director.
Shares held
outright
% of salary
required
Guideline
met?
% of salary
attained(1)
Shareholding guidelines
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 or as a One
Off Award
subject to
performance
conditions)
Executive
Directors
Mark Dixon
Charlie Steel
Glyn Hughes
Non-Executive
Directors
Douglas
Sutherland
Laurie Harris
Nina Henderson
Tarun Lal
Sophie L'Hélias
289,178,386
–
–
200%
200%
200%
Yes
54,761.3%
301,031
1,495,972
945,190
–
No
No
–
–
–
–
42,738
752,260
–
–
511,751(5)
300,000(6)
400,000
15,000
30,800
–
–
François Pauly
125,000
Florence Pierre
–
1. Based on a share price of 166p and base salary as at 31 December 2022.
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 2021 and 2022 PSP are subject to further performance conditions. PSP awards granted to Glyn Hughes lapsed following his
resignation on 31 October 2022.
4. Options under the PSP 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. On 2 November 2022 Charlie received a conditional award over 511,751 shares at nil cost. This was granted as a one-off award arrangement established
under Listing Rule 9.4.2(2) in order to facilitate his recruitment. The level of the award was determined by reference to compensation otherwise due
Charlie, that he gave up upon accepting employment with IWG. See further information on page 112.
6. 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. These options lapsed following his resignation on 31 October 2022.
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. Movements in Directors’ share interests since year end to the date of
this report are as follows:
• On 8 March 2023 1,139,027 options were issued to Mark Dixon under the PSP as further detailed on page 108.
• On 8 March 2023 572,768 options were issued to Charlie Steel under the PSP as further detailed on page 108.
• On 8 March 2023 113,903 options were issued to Mark Dixon under the DSBP as part of the 2022 annual bonus as
further detailed on page 110.
• On 8 March 2023 19,145 options were issued to Charlie Steel under the DSBP as part of a bonus to facilitate his
recruitment as detailed on page 112.
IWG plc Annual Report and Accounts 2022
113
Governance Directors’ Remuneration report continued
Supporting disclosures and additional context
Percentage change in remuneration of Directors compared to employees
The table below shows the percentage change in remuneration of each Director compared to our employees in
Switzerland (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 2022. Comparisons have been made to employees on a
full time-equivalent basis.
Year-on-year change in Directors’ and employees’ pay
Base salary
% change
Benefits
% change
2021(1)
2020
Base salary
% change
Benefits
% change
Annual bonus
% change
Base salary
% change
Benefits
% change
Annual bonus
% change
Executive Directors
Mark Dixon
Charlie Steele
Glyn Hughes(5)
Non-Executive Directors
Douglas Sutherland
Laurie Harris
Nina Henderson
Tarun Lal
Sophie L'Hélias
François Pauly
Florence Pierre(6)
Employees
0%
–
26%
0%
0%
0%
–
–
0%
(8)%
3%
2022
Annual
bonus
% change
(33)%
–
(19)%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0%
–
–
0%
0%
0%
–
–
0%
0%
6%
–
–
–
–
–
–
–
–
–
–
NM(4)
–
NM(4)
6%
–
–
–
–
–
–
–
–
–
20%
12%
33%
–
–
12%
9%
9%
–
–
–
–
–
–
–
–
–
(100)%(2)
–
–
–
–
–
–
–
–
–
2%
(100)%(3)
(1)%(7)
3%
(3)%(7)
NM(4)
1. 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 (Nina Henderson’s responsibilities increased to include
oversight of employee engagement and CSR) 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 reflects the % changes
excluding the effect of these voluntary waivers and deferrals during the height of the COVID-19 pandemic.
2. No annual bonus was paid to Mark Dixon in respect of 2020. A bonus of £1,237.5k was paid in respect of 2019.
3. No annual bonuses were paid to employees in Switzerland in respect of 2020.
4. The percentage change is not meaningful due to no annual bonuses being paid in respect of 2020.
5. Glyn Hughes was appointed as Director and Chief Financial Officer on 25 March 2021 and resigned on 31 October 2022. Bonus and base salary changes
are calculated with reference to time served in the role in the relevant period.
6. Florence Pierre resigned on 30 November 2022. Remuneration detailed above reflects time served in respect of the role during the relevant period.
7. Reductions in employee benefits during 2021 and 2022 were primarily due to reductions in disturbance allowances and car allowances resulting from
changes in the way employees worked during the COVID-19 pandemic.
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 2022 and 31 December 2021 and the percentage changes between years:
Total employee remuneration
Distributions to shareholders via dividends and share buybacks
1. No distributions to shareholders were made in respect of 2021, in 2022 2.1m shares were repurchased.
2022
2021
Change
2021 to 2022
£423m
£342m
£6m
£0m
23.7%
NM(1)%
114
IWG plc Annual Report and Accounts 2022
Chief Executive Officer’s pay ratio
The table below shows our voluntary disclosure of the Chief Executive Officer’s pay ratio information from 2019 and the
required disclosure from 2020 to 2022 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. No element was omitted
for the purpose of the calculation.
The median pay ratio was lower this year as compared with last year largely due to the CEO’s bonus for 2022 being
awarded at 33.33% of maximum compared to the 2021 bonus which was awarded at 50% of maximum. 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
2022
2022
Total pay
Base salary
Methodology
Option A
Option A
Option A
Option A
Mark Dixon
(£’000)
1,374
875
P25
(Lower
quartile)
P50
(Median)
P75
(Upper
quartile)
231:1
43:1
74:1
49:1
148:1
35:1
50:1
36:1
102:1
20:1
29:1
24:1
P25
(£’000)
P50
(£’000)
P75
(£’000)
28
27
38
36
57
51
Performance graph and table
The graph below shows the TSR of IWG in the ten-year period to 31 December 2022 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.
IWG plc
Value (£)
(rebased)
500
400
300
200
100
Dec
2012
Dec
2013
Dec
2014
Dec
2015
Dec
2016
Dec
2017
Dec
2018
Dec
2019
Dec
2020
Dec
2021
Dec
2022
■ IWG
■ FTSE 350 (exclusing investment trusts)
Source: Eikon from Refinitiv
This graph shows the value, by 31 December 2022, of £100 invested in IWG plc on 31 December 2012, compared with
the value of £100 invested in the FTSE 350 (excluding investment trusts) Index on the same date.
IWG plc Annual Report and Accounts 2022
115
Governance Directors’ Remuneration report continued
The table below provides remuneration data for the Chief Executive Officer for each of the ten financial years over the
equivalent period.
2013
2014
2015
2016
2017
2018
2019
2020
2021(1)
2022
Single total figure
of remuneration
Bonus (% of
maximum)
£1,854k
£2,770k
£1,968k £3,035k
£1,132k
£1,451k
£4,181k
£1,454k
£1,890k
£1,374k
79%
100%
100%
93%
0%
43%
100%
0%
50%
33%
Long-term
incentive vesting
(% of maximum)
1. The single total figure of remuneration has been restated to reflect that the share price for the 2019 PSP on the date of vesting is now known.
100%
86%
35%
33%
97%
91%
11%
2%
17.1%
0%
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 2022. Charlie Steel and Sophie L’Hélias will seek election at the 2023 annual general
meeting when all other directors, except those retiring, will seek re-election.
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
Charlie Steel
Non-Executive
Directors
Appointment agreement – 19 December 2016
Director service agreement – 1 July 2020
Founder
Appointment agreement – 23 August 2022
Employment agreement – 23 August 2022
1 November 2022
Douglas Sutherland Appointment agreement – 16 February 2017
27 August 2008
Laurie Harris
Appointment agreement – 14 May 2019
14 May 2019
Nina Henderson
Appointment agreement – 19 December 2016
20 May 2014
–
–
–
–
–
Founder
2 months
14 years 5 months (11
years 8 months as
Chairman)
3 years 8 months
8 years 8 months
Tarun Lal
Appointment agreement – 7 March 2022
10 May 2022
9 May 2025
8 months
Sophie L'Hélias
Appointment agreement – 30 November 2022
1 December 2022
1 December
2025
1 month
François Pauly
Appointment agreement – 19 December 2016
19 May 2015
–
7 years 8 months
116
IWG plc Annual Report and Accounts 2022
Payments to past Directors/payments for loss of office – Glyn Hughes
(Audited)
Glyn Hughes stepped down from the Board on 31 October 2022.
In respect of 2022 the Committee determined that Glyn would remain eligible to receive a bonus for 2022, pro-rated
for time served to 31 October 2022. They also determined that Glyn would not be eligible to receive a PSP award in
respect of 2022.
In relation to unvested equity awards, the Committee determined that Glyn was a good leaver, under the terms of the
relevant share plan rules. In line with the 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.
In its absolute discretion the Committee determined that the following awards would lapse in their entirety:
• Share Option Plan award granted on 5 August 2020 (prior to joining the Board); and
• PSP awards granted on 26 March 2021 and 9 March 2022.
The awards granted under the DSBP on 9 March 2022 and 8 March 2023, will become exercisable at the normal times,
on 9 March 2025 and 8 March 2026 respectively, subject to the rules of the DSBP.
Advisors to the 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. The fees charged by PwC
for the provision of independent advice to the Committee during 2022 were £37k (2021: £19k). 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 10 May 2022 in respect of
remuneration-related resolutions are shown in the table below:
Resolution
Approval of Directors’ Remuneration Policy
at the 2020 annual general meeting
Approval of the Annual Report on Remuneration
for year ending 31 December 2021
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
598,542,469
72.6% 225,876,892
27.4% 824,423,243
3,882
Whilst the resolution approving the Annual Report on Remuneration on for the financial year ending 31 December 2021
on an advisory basis was supported by a clear majority of shareholders the significant minority vote against was
recognised. The Committee consulted with shareholders before the 2022 annual general meeting. The majority of
shareholders who the Committee engaged were supportive of the rationale used in applying its discretion in respect of
the Executive Director bonus outcome for 2021 but the Committee recognises the views of some shareholders and
proxy advisors who did not support this use of discretion. Overall the Committee believes that it acted fairly and
appropriately in determining the bonus outcome for Executive Directors in 2021. Following the 2022 annual general
meeting, Nina Henderson, the Committee Chair, and Douglas Sutherland, the Chairman of the Board, contacted major
shareholders who had not supported the Annual Report on Remuneration to understand the reasons for their vote and
to offer further engagement.
For and on behalf of the Committee
Nina Henderson
Chair of the Remuneration Committee
IWG plc Annual Report and Accounts 2022
117
Governance Directors’ report
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 2022.
Directors
The Directors of the Company
who held office during the
financial year under review were:
Executive Directors
• Mark Dixon
• Charlie Steel (appointed
1 November 2022)
• Glyn Hughes (resigned
31 October 2022)
Non-Executive
Directors
• Douglas Sutherland (Chairman)
• Laurie Harris
• Nina Henderson
• Tarun Lal (appointed
10 May 2022)
• Sophie L’Hélias (appointed
1 December 2022)
• Florence Pierre (resigned
30 November 2022)
• François Pauly
Biographical details for the current
Directors are shown on pages 72
and 73.
Details of the Directors’ interests
and shareholdings are given
in the Directors’ Remuneration
report on page 113.
Details of the role of the Board
can be found on pages 82
and 83, and the process for
the appointment of Directors
can be found on page 86.
The Directors’ biographies,
Corporate Governance report,
Nomination Committee report,
Audit Committee report,
Directors’ Remuneration report
and Directors’ statement on
pages 72 to 117 and 121 all form
part of this report.
Corporate
Governance
Statement
The Governance section of this
Annual Report on pages 72 to 121,
together with information
contained in the Shareholder
information section on page 190,
constitutes our Corporate
Governance Statement. This
includes:
• information on how the
Company complies with the
UK Corporate Governance
Code published by the
Financial Reporting Council
in July 2018 (the "Code"), and
where the Code is publicly
available (page 75);
• a description of the main
features of our internal
control and risk management
arrangements in relation
to the financial reporting
process (pages 92 and 93);
• a description of the
composition and operation of
the Board and its Committees
(pages 74 to 117); and
• our Board Diversity Policy
set out on page 85.
118
IWG plc Annual Report and Accounts 2022
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 71 as follows:
• The Chief Executive Officer’s
review and Chief Financial
Officer’s review, on pages 14
to 17 and 36 to 43 respectively,
address:
• the review of the Company’s
business (pages 14 to 17);
• an indication of the likely
future developments in the
business (pages 16 and 17);
• the development and
performance of the business
during the financial year
(pages 36 to 40); and
• the position of the business
at the end of the year (pages
40 to 43).
• The Risk management and
principal risks report, on pages
44 to 52, includes a description
of the principal risks facing the
Company, including financial
risks, and the steps taken and
policies implemented to
mitigate those risks.
• Climate change has been
identified as a stand-alone
principal risk and the steps taken
to manage this risk are detailed
on page 48 and pages 67 to 69.
• The Company’s activities in
research and development are
detailed on page 25 and in the
Risk management and principal
risks report on page 47.
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 £0.5m during the
year (2021: £0.4m).
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
(2021: 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 26 of the notes to
the accounts on pages 168 to 175.
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.
• The ESG section, on pages 54
to 71, includes the following
reports:
• Environment Report
on pages 56 to 59;
• Social Report on pages 60
to 65 covering employee
development, diversity
and performance, and
community engagement;
and
• Task Force on Climate
Related Financial Disclosures
on pages 66 to 69.
• The Nomination Committee
report on pages 84 to 89
covers our approach to Board
diversity.
• The Directors’ statement on
page 121 includes 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 £105m (2021: loss of
£259m).
No interim dividend has been paid
and the Directors do not
recommend a final dividend in
respect of the 2022 financial year
(2021: £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.
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.
IWG plc Annual Report and Accounts 2022
119
Governance Directors’ report continued
Power for the
Company to
issue shares
At the Company’s annual general
meeting held on 10 May 2022 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 conclusion of the Company’s
next annual general meeting or
9 August 2023.
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 (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
2022. 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.
Power for the
Company to
repurchase shares
At the Company’s annual general
meeting held on 10 May 2022
the shareholders of the
Company approved a resolution
giving authority for the Company
to purchase in the market up
to 100,717,023 ordinary shares
representing approximately
10% of the issued share capital
(excluding treasury shares)
as at 5 April 2022.
Substantial interests
At 17 March 2023, the Company has been notified of the following
substantial interests held in the issued share capital of the Company.
Number of
voting rights
% of issued share capital
(excluding treasury shares)
289,178,386
146,625,056
28.73%
16.80%
Post balance sheet
events
Subsequent events are detailed
in note 34 of the notes to the
accounts on page 175.
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 20 March 2023.
On behalf of the Board
Timothy Regan
Company Secretary
20 March 2023
Estorn Limited(1)
Toscafund Asset Management LLP
1. Mark Dixon owns 100% of Estorn Limited.
1,479,685 shares were
repurchased during 2022, the
purpose of which was to satisfy
share option obligations and as
part of a share buyback
programme supporting the
Board’s prudent approach to
managing its capital structure.
Branches
The Company is incorporated in
Jersey with a head office branch
in Switzerland.
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 129 to 182.
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 14 to 17,
as well as the Group’s principal
risks and uncertainties as set
out on pages 44 to 52 and
the outcomes of modelled
and stress-tested scenarios set
out in the Viability statement
on page 53.
Further details on the going
concern basis of preparation
can be found in note 2 of the
notes to the accounts,
on page 135.
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IWG plc Annual Report and Accounts 2022
Directors’ statement
Directors’
statement
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.
In accordance with the Companies
(Jersey) Law 1991 (the “Law) the
Directors are responsible for
preparing Group financial
statements each financial year
using generally accepted
accounting principles (“GAAP”)
as prescribed in the Law. The
Directors use International Financial
Reporting Standards (“IFRS”) as
adopted by the EU which have
been specified as meeting the
Law’s prescribed standards.
In accordance with the 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 the
Group financial statements, the
Directors are required to:
1. select suitable accounting
policies and then apply them
consistently;
2. make judgements and estimates
that are reasonable and prudent;
3. state which prescribed GAAP
the financial statements have
been prepared in accordance
with; and
4. 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 Law
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.
Under applicable law and
regulations, the Directors are also
responsible for preparing a
Directors’ report, a Strategic report,
a Directors’ 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 website.
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 this
Directors’ statement 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:
1. 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;
2. 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
3. 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
Charlie Steel
Chief Financial Officer
20 March 2023
IWG plc Annual Report and Accounts 2022
121
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 2022 set out on pages 129 to 182, 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 2022 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 7 financial years ended 31 December 2022. 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.
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IWG plc Annual Report and Accounts 2022
122
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.
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.
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IWG plc Annual Report and Accounts 2022
123
Financial statements
Independent auditor’s report to the members of IWG plc continued
Key Audit Matters: Our Assessment of Risk 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.
Except for the ‘Valuation of intangible assets arising on acquisition of The Instant Group’, the key audit matters are
consistent with our 2021 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 – £1,148 million (2021: £782 million)
Refer to pages 138 (accounting policy) and pages 152 to 155 (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
(including Worka) country operations accounts for 78% of the total carrying amount with the latter having limited
headroom in the impairment model.
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 control therein.
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. We compared the value in use for the Group as a whole to the Group’s market capitalisation and
noted that the Group’s market capitalisation exceeded the net book value of assets at year end.
We compared the key assumptions to external industry specific and general economic data and performed sensitivity
analysis considering various downside scenarios which were more pessimistic than those considered by the Group. The
key judgement in our approach to addressing the key audit matter was that we focused on the assumptions around
carrying value of UK goodwill due to the limited headroom in the UK operations in the past, and given its significance to
the Group’s goodwill balance.
The Group’s impairment model identified an impairment of £3 million at 31 December 2022 relating to the Group’s
Brazilian Goodwill. 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.
Valuation of intangible assets arising on acquisition of The Instant Group – £324 million
Refer to page 138 (accounting policy) and page 176 (financial disclosures)
The Key Audit Matter
During the year, the Group acquired a majority shareholding in ‘The Instant Group’ as highlighted in Note 28.
At the date of initial recognition, the Group is required to quantify the fair value of the identifiable net assets acquired,
the fair value of the consideration transferred and the amounts allocated to intangibles and goodwill. The identification
of intangible assets and the measurement of fair values involves a significant degree of judgement and estimation.
We focused on this area due to the significance of the goodwill and intangible assets acquired on acquisition and due
to the judgement and estimation involved in the identification, recognition, valuation of intangibles and allocation of this
value to each intangible component.
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124
How the matter was addressed in our audit
We obtained and documented our understanding of the process surrounding acquisition and valuation of intangibles
and tested the related design and implementation of the relevant control.
Our audit procedures in this area, among others, included inspection of the underlying legal agreement and related
documentation to ensure the appropriateness of the acquisition accounting applied including the date at which control
is deemed to have passed.
We challenged the Group's critical assumptions in relation to the identification and valuation of intangible assets by
assessing whether intangible assets have been appropriately identified, whether the useful lives determined are
appropriate and by ensuring the mathematical accuracy of the calculations underpinning the values.
With the assistance of our in-house valuation specialists, we evaluated the appropriateness of the methodology used
to value the intangibles by comparing the key assumptions used to external data and by evaluating the work
completed by external experts used by management to assist in preparing the valuation.
We also considered the adequacy of the disclosures in respect of new acquisition to ensure that they are in
compliance with IFRS 3.
We found the judgements made by the Group in the valuation of intangible assets on acquisition of The Instant Group
is reasonable and the disclosures in the financial statements is appropriate.
Recognition of Deferred Tax Assets associated with the Group’s intellectual property in
Switzerland - £77 million (2021: £70 million)
Refer to pages 140 and 141 (accounting policy) and pages 147 to 149 (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 2022 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.
How the matter was addressed in our audit
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 control therein. In
addition, we used our own tax specialists to assist us in evaluating and challenging the key assumptions used by the
Group 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 developing
their capital light model 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.
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 relating to
Swiss intellectual property assets are reasonable.
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125
Financial statements
Independent auditor’s report to the members of IWG plc continued
Impairment of Leasehold Property, Plant and Equipment (‘PPE’) and Right of Use (‘ROU’)
assets – £52 million net reversal of impairment (2021: £54 million net reversal of
impairment)
Refer to pages 136 and 138 (accounting policy) and page 156 (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 Group’s ongoing network rationalisation programme which has resulted in the closure and planned closure of
certain centres. 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 2021 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 2022. We consider this
area to be a key audit matter, in consideration of the significance of the 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.
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 assessing 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 control. 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 assumptions in relation to 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 £39 million and £13 million related to Right of Use assets and Leasehold
Improvements PPE respectively in the year ended 31 December 2022. 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.
We also considered the adequacy of the disclosures to ensure that they are in compliance with IAS 36 including the
presentation of the net impairment reversal as ‘business as usual’ and ‘adjusting items’.
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 calculation of the impairment charge
and impairment charge reversal recognised in the year were accurately recorded.
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 (2021: £9 million) which is
0.33% (2021: 0.40%) of total revenues. In 2022, consistent with 2021, we have used revenue as the benchmark for
materiality. Consistent with 2021, we determined that adjusted profit before tax was not an appropriate benchmark in
2022 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.
In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a
lower threshold, performance materiality, so as to reduce to an acceptable level the risk that individually immaterial
misstatements in individual account balances add up to a material amount across the financial statements as a whole.
Performance materiality was set at 75% (2021: 75%) of materiality for the financial statements as a whole, which
equates to £6.8 million (2021: £6.8 million) for the group. We applied this percentage in our determination of
performance materiality because we did not identify any factors indicating an elevated level of risk.
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 (2021: £0.45 million). We also agreed to report other audit misstatements
below that threshold that we believe warranted reporting on qualitative grounds.
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126
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 twelve identified key
reporting components, augmented by risk focused audit procedures which were performed for certain other
components. These audits covered 83% (2021: 81%) of total Group revenue and 84% (2021: 95%) of Group total 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 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 £1m 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 Alternative Performance Measures,
summarised extract of the unaudited Company balance sheet, 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.
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 Code published by the Financial Reporting Council in July 2018 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 121;
• Directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why the
period is appropriate set out on page 121;
• Directors’ statement on whether it has a reasonable expectation that the Group will be able to continue in operation
and meets its liabilities set out on page 121;
• 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 121;
• 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 44 to 53;
• The section of the annual report that describes the review of effectiveness of risk management and internal control
systems set out on page 92; and
• The section describing the work of the audit committee set out on pages 90 to 95.
127
IWG plc Annual Report and Accounts 2022
127
Financial statements
Independent auditor’s report to the members of IWG plc continued
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 118, the directors are responsible for:
the preparation of the financial statements in accordance with IFRS as adopted by the European Union and otherwise
comply with the Companies (Jersey) Law 1991 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.
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
20 March 2023
for and on behalf of KPMG
1 Stokes Place,
St. Stephen’s Green,
Dublin 2,
Ireland
128
IWG plc Annual Report and Accounts 2022
128
Consolidated income statement
£m
Revenue
Total cost of sales
Cost of sales
Adjusting items to cost of sales(2)
Net reversal of impairment of property, plant, equipment and right-of-use assets(2)
Expected credit reversal/(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 profit/(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
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)
Year ended
31 Dec 2022
Year ended
31 Dec 2021
Restated(1)
2,751
(2,182)
(2,169)
(65)
52
6
575
(427)
(406)
(21)
(1)
147
(287)
35
(252)
(105)
(16)
(121)
1
(120)
(117)
(3)
2,227
(1,885)
(1,869)
(70)
54
(99)
243
(328)
(295)
(33)
(2)
(87)
(198)
26
(172)
(259)
(10)
(269)
59
(210)
(205)
(5)
(11.2)
(11.2)
(20.4)
(20.4)
(11.3)
(11.3)
(26.2)
(26.2)
Notes
3
3,5
5
3
10
21
5
7
7
8
9
23
11
11
11
11
1. The comparative information has been restated to reflect the impact of discontinued operations (note 9).
2. The net reversal of adjusting items of £17m (2021: £2m) 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 £73m (2021: £125m), impairment of Ukraine and Russia of
£9m (2021: £nil), the adjusting items to costs of sales of £65m (2021: £70m) and £nil (2021: £53m) of the expected credit losses on trade receivables
balances reported.
The above consolidated income statement should be read in conjunction with the accompanying notes.
129
IWG plc Annual Report and Accounts 2022
129
Financial statements
Consolidated statement of comprehensive income
£m
Loss for the year
Notes
Year ended
31 Dec 2022
Year ended
31 Dec 2021
(120)
(210)
Other comprehensive income/(loss) that is or may be reclassified to profit or loss in subsequent
periods:
Foreign exchange recycled to profit or loss from discontinued operations
9
Foreign currency translation gain/(loss) for foreign operations
Items that are or may be reclassified to profit or loss in subsequent periods
–
5
5
–
5
–
(20)
(20)
–
(20)
(230)
(225)
(5)
(115)
(112)
(3)
23
Other comprehensive income that will never be reclassified to profit or loss in
subsequent periods:
Items that will never be reclassified to profit or loss in subsequent periods
Other comprehensive profit/(loss) 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
The above consolidated statement of comprehensive income should be read in conjunction with the
accompanying notes.
130
IWG plc Annual Report and Accounts 2022
130
Consolidated statement of changes in equity
£m
Issued
share
capital
Notes
Share
premium
Treasury
shares
Foreign
currency
translation
reserve
Other
reserves(1)
Retained
earnings
Total
equity
attributable
to equity
shareholders
Non-
controlling
interests Total equity
Balance at 1 January 2021
10
313
(154)
36
26
283
514
–
514
Balance at 31 December 2021
10
313
(151)
16
26
82
296
Total comprehensive income/(loss)
for the year:
Loss for the year
Other comprehensive
income/(loss):
Foreign exchange recycled to profit or
loss from discontinued operations
Foreign currency translation
gain/(loss) 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
Purchase of shares
Proceeds from exercise of share
awards
Total transactions with owners of
the Company
Acquisition of subsidiary with non-
controlling interests
9
6
12
22
22
23
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3
3
–
–
–
(20)
(20)
(20)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total comprehensive income/(loss)
for the year:
Loss for the year
Other comprehensive
income/(loss):
Foreign exchange recycled to profit or
loss from discontinued operations
Foreign currency translation
gain/(loss) 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
Purchase of shares
Proceeds from exercise of share
awards
Total transactions with owners of
the Company
Acquisition of subsidiary with non-
controlling interests
Divestiture of subsidiary with non-
controlling interests
9
6
12
22
22
23
23
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(5)
4
(1)
–
–
–
–
5
5
5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(205)
(205)
(5)
(210)
–
–
–
–
(20)
(20)
–
–
–
–
(20)
(20)
(205)
(225)
(5)
(230)
6
–
–
(2)
4
–
6
–
–
1
7
–
–
–
–
–
–
14
9
6
–
–
1
7
14
305
(117)
(117)
(3)
(120)
–
–
–
–
5
5
–
–
–
–
5
5
(117)
(112)
(3)
(115)
4
–
–
(4)
–
–
–
4
–
(5)
–
(1)
–
–
–
–
–
–
–
53
(7)
52
4
–
(5)
–
(1)
53
(7)
235
Balance at 31 December 2022
10
313
(152)
21
26
(35)
183
1. Other reserves include £11m 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, £38m arising from the Scheme of Arrangement undertaken on 14 October 2008, £6m relating to
merger reserves and £nil to the redemption of preference shares, partly offset by £29m 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.
131
IWG plc Annual Report and Accounts 2022
131
Financial statements
Consolidated balance sheet
£m
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Right-of-use assets
Other property, plant and equipment
Non-current net investment in finance leases
Deferred tax assets
Other long-term receivables
Investments in joint ventures
Other investments
Total non-current assets
Current assets
Inventory
Trade and other receivables
Current net investment in finance leases
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
Other reserves
Retained earnings
Total shareholders' equity
Non-controlling interests
Total equity
Total equity and liabilities
Notes
As at
31 Dec 2022
As at
31 Dec 2021
13
14
15
15
15
24
8
16
21
17
24
8
24
18
8
19,24
24
20
8
19,24
24
25
20
21
27
22
22
23
934
214
6,234
5,009
1,225
95
350
57
45
–
7,929
1
919
52
19
161
1,152
9,081
1,202
455
45
285
1,002
31
3,020
11
145
588
5,037
–
37
6
2
5,826
8,846
10
313
(152)
21
26
(35)
183
52
235
9,081
704
78
6,376
5,254
1,122
–
327
50
45
–
7,580
1
734
–
19
78
832
8,412
923
346
36
22
932
8
2,267
10
141
453
5,189
27
12
6
2
5,840
8,107
10
313
(151)
16
26
82
296
9
305
8,412
The financial statements on pages 129 to 182 were approved by the Board on 20 March 2023
Mark Dixon
Chief Executive Officer
Charlie Steel
Chief Financial Officer
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
132
IWG plc Annual Report and Accounts 2022
132
Consolidated statement of cash flows
£m
Operating activities
Loss for the year from continuing operations
Adjustments for:
Profit from discontinued operations
Net finance expense(2)
Share of loss on equity-accounted investees, net of 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
Net reversal of impairment of property, plant and equipment
Net reversal of impairment of right-of-use assets
Amortisation of intangible assets
Negative goodwill arising on an acquisition
Tax expense
Expected credit reversal/(losses) on trade receivables
Increase/(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)(4)
Increase in trade and other receivables
Increase/(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
Interest received on net lease investment
Payment received from net lease investment
Purchase of subsidiary undertakings, net of cash acquired
Purchase of intangible assets
Purchase of other investments
Proceeds on the sale of discontinued operations, net of cash disposed of
Proceeds on sale of property, plant and equipment
Proceeds on other current receivables(3)
Interest received
Net cash (outflows)/inflows from investing activities
Financing activities
Proceeds from issue of loans
Repayment of loans
Payment of lease liabilities
Proceeds from partner contributions (lease incentives)(4)
Proceeds from Non-controlling interests
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 the year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of the year
Notes
Year ended
31 Dec 2022
Year ended
31 Dec 2021
Restated(1)
(121)
(269)
9
7
21
15
15
15
13
5
5,24
5
5,15
5,15
5,14
28
8
5
20
6
15
24
15
7
24
28
14
9
17
7
24
24
24
15
23
22
12
24
–
252
1
1,145
955
190
3
34
(31)
–
–
(13)
(39)
44
–
16
(6)
40
4
(3)
1,326
19
(97)
191
1,439
(38)
(230)
(24)
1,147
(242)
(1)
7
41
(307)
(39)
–
1
1
–
1
(538)
1,340
(954)
(997)
31
53
(5)
–
–
(532)
77
78
6
161
2
173
2
1,096
893
203
–
64
(42)
(1)
–
(7)
(47)
14
(1)
10
99
(15)
6
(11)
1,073
20
(127)
(40)
926
(19)
(167)
(5)
735
(221)
–
–
–
11
(34)
(33)
52
1
283
3
62
983
(947)
(865)
36
–
–
1
–
(792)
5
71
2
78
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 £27m (2021: £23m).
3. Included in other receivables at 31 December 2020 was mezzanine and senior debt recognised at amortised cost of £276m. This receivable balance
was fully repaid to the Group in February 2021, in addition to associated costs reimbursements, resulting in an additional £1m gain on settlement.
4. The total proceeds from partner contributions relating to the reimbursement of costs and lease incentives of £50m (2021: £56m) are allocated
between maintenance partner contributions of £11m (2021: £6m) and growth partner contributions of £39m (2021: £50m), on pages 185 and 186.
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
133
IWG plc Annual Report and Accounts 2022
133
Financial statements
Notes to the accounts
1. Authorisation of financial statements
IWG plc is a public limited company incorporated in Jersey and registered and domiciled in Switzerland. The
Company’s ordinary shares are traded on the London Stock Exchange. The Group and Company financial statements
for the year ended 31 December 2022 were authorised for issue by the Board of Directors on 20 March 2023 and the
balance sheets were signed on the Board’s behalf by Mark Dixon and Charlie Steel. The audited Group accounts are
included from pages 129 to 182.
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 32, and information on other related party
relationships of the Group is provided in note 31.
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 183.
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 2022 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 2022, with no material impact on the Group:
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
These Group consolidated financial statements are presented in pounds sterling (£), which is IWG plc’s functional
currency, and all values are in million pounds, except where indicated otherwise.
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.
The attributable results of those companies acquired or disposed of during the year are included for the periods of
ownership.
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 33.
Climate change
The potential climate change-related risks and opportunities to which the Group is exposed, as identified by
management, are disclosed in the Group’s TCFD disclosures on pages 67 and 68. Management has assessed the
potential financial impacts relating to the identified risks, primarily considering the useful lives of, and retirement
obligations for, property, plant and equipment, the possibility of impairment of goodwill and other long-lived assets and
the recoverability of the Group’s deferred tax assets. Management has exercised judgement in concluding that there
are no further material financial impacts of the Group’s climate-related risks and opportunities on the consolidated
financial statements. These judgements will be kept under review by management as the future impacts of climate
change depend on environmental, regulatory and other factors outside of the Group’s control which are not all currently
known.
134
IWG plc Annual Report and Accounts 2022
134
Going concern
The Group reported a loss after tax of £121m (2021: £269m) from continuing operations for the year, while net cash of
£1,147m (2021: £735m) was generated from operations during the year. Although the Group’s balance sheet at 31
December 2022 reports a net current liability position of £1,868m (2021: £1,435m) which could give rise to a potential
liquidity risk, the Directors concluded and are satisfied after a comprehensive review that no liquidity risk exists after
taking into account the following considerations:
1. The Group had funding available under the Group’s £750m revolving credit facility. £173m (2021: £530m) was
available and undrawn at 31 December 2022. This facility is committed until March 2025 with an option to extend until
2026 (note 25);
2. The Group’s £330m non-recourse bridge facility, to fund the investment in The Instant Group, matures in September
2023. The Instant Group, combined with the IWG digital assets in Worka has been highly cash generative and reduced
its net debt to £176m, excluding £4m of net lease liabilities, at 31 December 2022. Based on the modelled scenarios
the Directors expect that Worka will continue to reduce its net debt position by September 2023. The Group is
pursuing various options available to address this, including repaying the bridge facility through asset sales, cash
generated from operations, and/or the extension or replacement of this facility to ensure continued funding of this
highly successful and cash generative business; and
3. The Group maintains a 12-month rolling forecast and a three-year strategic outlook. It also monitors 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.
Details of the principal risks, outcomes of modelled and stress-tested scenarios are set out in the Viability statement
review on page 53.
Based on the above, the Directors consider that the Group is well placed to successfully manage the actual and
potential liquidity risks faced by the organisation subject to successful resolution of the uncertainty with regard to the
bridge facility referred to in section 2 above.
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.
IFRS not yet effective
The following new or amended standards and interpretations that are mandatory for 2023 annual periods (and future
years) are not expected to have a material impact on the Group financial statements:
Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12
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 2023
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.
135
IWG plc Annual Report and Accounts 2022
135
Financial statements
Notes to the accounts continued
2. Accounting policies continued
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 primarily 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.
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. 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.
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6. 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.
7. 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.
8. Net investment in finance leases
The Group acts as an intermediate lessor where certain commercial office real estate properties, rented under a
separate ‘head’ lease agreement, are sublet as part of a separate sublease agreement. Interest in the ‘head’ lease and
sublease are accounted for separately, with the classification of the sublease assessed with reference to the right-
of-use assets arising from the head lease (not with reference to the underlying asset).
The initial net investment in finance leases is equal to the present value of the lease receipts during the lease term
that have not yet been paid. The right-of-use asset arising from the head lease is offset by the initial measurement of
the net investment in the finance lease, plus any additional direct costs associated with setting up the lease.
If the sublease agreement contains lease and non-lease components, the Group applies IFRS 15 in determining the
allocation of the agreement consideration.
Client contributions are contributions received from sub-lessees towards the initial costs of preparing the
commercial property for their use, including the fit-out of the property. These contributions represent a
reimbursement of costs incurred by the Group and are accounted for as agency arrangements, and form part of the
sub-lessees’ assets.
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 2022. 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.
At each reporting date, the Group assesses whether there is an indication that a previously recognised impairment loss
has reversed because of a change in th estimates used to determine the impairment loss. If there is such an indication,
and the recoverable amount of the impaired asset or CGU subsequently increases, then the impairment loss is
generally reversed.
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.
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137
Financial statements
Notes to the accounts continued
2. Accounting policies continued
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.
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 – service agreements
Customer lists – sublease agreements
Indefinite life
20 years
Up to 5 years
2 years
Up to 5 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
1. 10 years represents the average useful economic life across the lease portfolio.
Over the lease term
50 years
10 years
5 – 10 years
3 – 5 years
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138
Revenue
The Group’s primary activity is the provision of fully integrated, end-to-end 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 workspace bookings, meeting rooms and inventory management) 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.
Deferred revenue
Invoices issued in advance of services provided, in accordance with contractual arrangements with customers, are held
on the balance sheet as a current liability until the services have been rendered.
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,
geopolitical circumstances in the Ukraine and related sanctions against Russia, have been deemed to meet the
definition of adjusting items. Each of these items is 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 33. 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.
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139
Financial statements
Notes to the accounts continued
2. Accounting policies continued
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 26 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.
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
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IWG plc Annual Report and Accounts 2022
140
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.
Derivative financial instruments
The Group’s policy on the use of derivative financial instruments can be found in note 25. 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.
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141
Financial statements
Notes to the accounts continued
2. Accounting policies continued
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, on either
a 12-month or a 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 coordinated 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.
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IWG plc Annual Report and Accounts 2022
142
Foreign currency translation rates
US dollar
Euro
At 31 December
Annual average
2022
1.21
1.13
2021
1.35
1.19
2022
1.23
1.17
2021
1.38
1.16
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 two operating segments. The Group’s primary operating
segment is managed through three principal geographical segments: the Americas; EMEA (Continental Europe including
UK, Middle East and Africa); and Asia Pacific. The results of business centres in each of these regions, based on time
zones; economic relationships; market characteristics; cultural similarities; and language clusters, form the basis for
reporting geographical results to the chief operating decision-maker. As a result, the UK is now included in the EMEA
regional reporting. These geographical segments exclude the Group’s non-trading, holding and corporate management
companies, which are included in the Other segment. The impact from The Instant Group investment (note 28) has
been incorporated into Worka, which is disclosed as a separate operating segment. The combined digital assets in
Worka, represents the world’s leading fully integrated workspace platform. 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
EMEA(2)
Asia Pacific
Other
Pre-Worka
Worka
Total
2021
Restated(1)
2022
2021
2021
2021
2021
2021
2021
2022
Restated(1)
2022
Restated(1)
2022
Restated(1)
2022
Restated(1)
2022
Restated(1)
2022
Restated(1)
£m
Continuing
operations
Reported
revenue(3)
Rent income
Revenue on pre-
IFRS 16 basis
Workstation
revenue(4)
Fee income
Customer
Service income(5)
Gross
profit/(loss)
(centre
contribution)
Share of loss of
equity-
accounted
investees
Operating
(loss)/profit
Finance expense
Finance income
(Loss)/profit
before tax for
the year
Depreciation and
amortisation
Impairment of
assets
1,024
836
1,199
1,027
248
–
–
–
–
–
1,024
836
1,199
1,027
248
709
3
611
1
904
19
312
224
276
793
13
221
188
10
50
82
(8)
120
14
26
–
–
(1)
(2)
(23)
(94)
23
(78)
–
2
231
–
231
179
10
42
3
–
9
–
9
–
2
7
1
–
1
–
–
1
2,480
2,095
–
–
271
50
132
2,751
2,227
–
50
–
2,480
2,095
321
132
2,801
2,227
1,801
1,583
34
24
50
–
–
–
1,851
1,583
34
24
645
488
271
132
916
620
13
(5)
241
4
142
78
383
82
–
–
(1)
(2)
–
(19)
(130)
(130)
(128)
(321)
166
147
–
–
116
–
111
–
27
–
27
–
21
–
16
–
(37)
27
(31)
26
(138)
(326)
330
301
–
–
–
73
–
(1)
(2)
(43)
(50)
27
(248)
(31)
26
73
(66)
(253)
1
–
360
302
–
–
85
(13)
–
72
30
–
Assets(3)
3,587
3,364
3,782
3,937
549
532
475
535
8,393
8,368
688
44
9,081
8,412
Liabilities(3)
Net assets/
(liabilities)
Non-current
asset additions(6)
(3,445)
(3,232)
(3,559)
(3,682)
(538)
(540)
(752)
(645)
(8,294)
(8,099)
(552)
(8) (8,846)
(8,107)
142
132
223
255
131
50
211
172
11
32
(8)
(277)
(110)
99
268
136
36
235
305
48
29
82
403
352
24
–
427
352
1. Restated to exclude revenue from discontinued operations (note 9) and/or the separate disclosure of the Worka segment.
2. Includes UK performance as follows: Revenue of £386m (2021: £346m), gross profit of £34m (2021: loss of £11m) and operating profit of £13m (2021: loss
of £34m).
3. Presented on a basis consistent with IFRS 16.
4. Includes customer deposits.
5. Includes membership card income.
6. Excluding deferred taxation.
143
IWG plc Annual Report and Accounts 2022
143
Financial statements
Notes to the accounts continued
3. Segmental analysis continued
Operating profit in the ‘Other’ category is generated from
offset by corporate overheads.
services related to the provision of workspace solutions,
The operating segment’s results presented on a pre-IFRS 16 basis reconcile to the financial statements as follows:
£m
Americas
EMEA
Asia Pacific
Other
Pre-Worka
Worka
Total
Continuing
operations
Gross
profit/(loss)
(centre
contribution)
– pre-IFRS 16
Rent income
Rent
Depreciation
of property,
plant and
equipment
including
right-of-use
assets
Other
Gross
profit/(loss)
(centre
contribution)
2021
2021
2021
2021
2021
2021
2021
2022
Restated(1)
2022
Restated(1)
2022
Restated(1)
2022
Restated(1)
2022
Restated(1)
2022
Restated(1)
2022
Restated(1)
82
–
(8)
–
434
414
120
–
443
14
–
448
26
–
126
3
–
116
13
–
8
(5)
–
4
241
–
1,011
4
–
982
142
(50)
47
78
–
1
383
(50)
82
–
1,058
983
(345)
(317)
(389)
(378)
13
(16)
17
(6)
(90)
(11)
(91)
(8)
(3)
(7)
(5)
–
(827)
12
(791)
(30)
(1)
–
–
(1)
(828)
12
(791)
(31)
184
73
191
78
51
20
11
(6)
437
165
138
78
575
243
1. Restated to reflect the impact of discontinued operations on a pre-IFRS 16 basis and/or the separate disclosure of the Worka segment.
£m
Continuing
operations
Operating
profit/(loss) –
pre-IFRS 16
Rent income
Rent
Depreciation of
property, plant
and equipment
including right-of-
use assets
Other
Operating
profit/(loss)
Americas
EMEA
Asia Pacific
Other
Pre-Worka
Worka
Total
2021
2021
2021
2021
2021
2021
2021
2022
Restated(1)
2022
Restated(1)
2022
Restated(1)
2022
Restated(1)
2022
Restated(1)
2022
Restated(1)
2022
Restated(1)
(23)
(94)
–
434
–
414
23
–
(78)
–
2
–
443
448
126
(19)
(130)
(130)
(128)
–
116
–
9
–
5
–
1,012
(321)
–
983
85
(50)
47
(345)
(317)
(389)
(378)
(90)
(11)
(91)
(9)
(4)
(5)
(7)
2
(7)
11
77
(16)
(13)
15
92
(15)
27
(3)
(130)
(130)
(828)
10
66
(793)
(30)
(161)
(1)
–
81
73
–
–
–
1
74
(43)
(50)
1,059
(248)
–
983
(829)
(793)
10
147
(29)
(87)
1. Restated to reflect the impact of discontinued operations on a pre-IFRS 16 basis (note 5) and/or the separate disclosure of the Worka segment.
£m
Continuing
operations
Depreciation and
amortisation –
pre-IFRS 16
Depreciation of
property, plant
and equipment
including right-of-
use assets
Depreciation and
amortisation
Americas
EMEA
Asia Pacific
Other
Pre-Worka
Worka
Total
2021
Restated(1)
2022
2021
2021
2021
2021
2022
Restated(1)
2022
Restated(1)
2022
Restated(1)
2022
Restated(1)
2022
2021
Restated(1)
2021
2022
Restated(1)
166
147
116
111
27
27
21
16
330
301
30
1
360
302
345
317
389
378
511
464
505
489
90
117
91
118
4
25
7
828
793
23
1,158
1,094
1
31
–
1
829
793
1,189
1,095
1. Restated to reflect the impact of discontinued operations on a pre-IFRS 16 basis (note 5) and/or the separate disclosure of the Worka segment.
£m
Continuing
operations
Impairment of
assets – pre-
IFRS 16
(Net reversal)
/impairment of
property, plant
and equipment
including right-of-
use assets
(Net reversal)
/Impairment of
assets
Americas
EMEA
Asia Pacific
Other
Pre-Worka
Worka
Total
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
–
–
–
–
–
(30)
(56)
(16)
(3)
(6)
(30)
(56)
(16)
(3)
(6)
–
5
5
–
–
–
–
–
–
–
–
–
–
–
–
(52)
(54)
(52)
(54)
–
–
–
–
(52)
(54)
(52)
(54)
144
IWG plc Annual Report and Accounts 2022
144
4. Segmental analysis – entity-wide disclosures
The Group’s primary activity is the provision of global workplace solutions, therefore all revenue is attributed to a single
group of similar products and services. Relevant product categories have; however, been included in the segmental
analysis in note 3. 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
EMEA
Worka
All other countries(2)
1. Excluding deferred tax assets.
2. Revenue of £nil (2021: £34m) is included in discontinued operations (note 9).
5. Operating profit/(loss) – continuing operations
Operating profit/(loss) has been arrived at after crediting/(charging):
£m
Revenue
Depreciation on property, plant and equipment(2)
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 reversal/(losses) on trade receivables(3)
Loss on disposal of property, plant and equipment
Profit on disposal of right-of-use assets and related lease liabilities
Impairment of goodwill
Net reversal of impairment of property, plant and equipment(4)
Net reversal of impairment of other property, plant and equipment
Net reversal of impairment of right-of-use assets
Negative goodwill arising on acquisition
Other costs
Operating profit/(loss) before equity-accounted investees
Share of loss of equity-accounted investees, net of tax
Operating profit/(loss)
2022
2021
External
revenue
Non-current
assets(1)
External
revenue
Non-current
assets(1)
5
868
1,199
271
408
2,751
–
2,787
3,264
429
1,099
7,579
4
694
1,027
132
370
2,227
–
2,737
3,467
34
1,015
7,253
Notes
2022
Restated(1)
2021
2,751
2,227
15
15
15
14
24
24
6
25
13
15
15
15
28
21
(1,145)
(955)
(190)
(44)
(68)
–
(423)
(496)
6
(34)
31
(3)
52
13
39
–
(479)
148
(1)
147
(1,081)
(880)
(201)
(14)
(63)
(1)
(342)
(414)
(99)
(64)
42
–
54
7
47
1
(331)
(85)
(2)
(87)
1. The comparative information has been restated to reflect the impact of discontinued operations.
2. Excludes depreciation expenses related to discontinued operations for right-of-use assets of £nil (2021: £13m) and other property, plant and
equipment of £nil (2021: £2m).
3. Of the £6m reversal of expected credit loss (2021: charge of £99m), £nil (2021: £53m) relates to COVID-19 adjusting items (note 10).
4. The net reversal of impairment of £52m (2021: £54m) includes an additional impairment of £39m (2021: £97m), offset by the reversal of £91m (2021:
£151m) previously provided for (note 15).
£m
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
Other non-audit services
2022
(2)
(3)
–
–
2021
(1)
(3)
–
–
145
IWG plc Annual Report and Accounts 2022
145
Financial statements
Notes to the accounts continued
6. Staff costs
£m
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 £nil (2021: £2m).
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
Corporate functions
2021
2022(1)
Restated(1)
357
55
7
4
423
281
50
5
6
342
2022
Average
full-time
Equivalents(1)
2021
Average
full-time
Equivalents(1)
6,572
532
647
1,005
8,756
2,778
3,356
995
1,627
8,756
6,142
510
640
947
8,239
2,518
3,129
998
1,594
8,239
1. The average full-time equivalents exclude employees for disposals during 2022 of 2 (2021: 65).
Details of Directors’ emoluments and interests are given on pages 96 to 117 in the Directors’ Remuneration report, with
audited schedules identified where relevant.
7. Net finance expense
£m
Interest payable and similar charges on bank loans and corporate borrowings
Interest payable on lease liabilities(2)
Total interest expense
Other finance costs(3)
Unwinding of discount rates
Total finance expense
Interest income
Interest received on net lease investment
Fair value gain on financial liabilities measured at FVTPL
Total finance income
Net finance expense
1. The comparative information has been restated to reflect the impact of discontinued operations.
2. Excludes lease liability finance expense related to discontinued operations of £nil (2021: £1m).
3. Excludes interest expense related to discontinued operations of £nil (2021: £nil).
Notes
19
2022
(39)
(230)
(269)
(18)
–
(287)
1
7
27
35
2021
Restated(1)
(42)
(166)
(208)
10
–
(198)
3
–
23
26
(252)
(172)
146
IWG plc Annual Report and Accounts 2022
146
8. Taxation
(a) Analysis of charge in the year
£m
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
Previously unrecognised tax losses and other differences
Total deferred taxation
Tax charge on continuing operations
2022
(40)
6
1
(33)
9
8
17
(16)
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% (2021: 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
2022
£m
(105)
13
(34)
12
14
(55)
1
33
(16)
%
(12)
32
(11)
(14)
52
(1)
(31)
15
2021
Restated(1)
£m
(259)
31
(29)
34
8
(113)
5
54
(10)
2021
Restated(1)
(24)
8
5
(11)
1
–
1
(10)
%
(12)
11
(13)
(3)
44
(2)
(21)
4
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.
£m
2022
2023
2024
2025
2026
2027
2028
2029
2030 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
2022
2021
–
54
40
56
65
72
341
71
1,434
2,133
1,468
3,601
64
3,665
33
41
48
49
70
36
37
25
1,431
1,770
1,302
3,072
125
3,197
Additional tax losses have been generated in 2022. The above loss expiry table excludes £254m (2021: £238m) US
state tax losses.
147
IWG plc Annual Report and Accounts 2022
147
Financial statements
Notes to the accounts continued
8. Taxation continued
The following deferred tax assets have not been recognised due to uncertainties over recoverability.
£m
Intangibles
Accelerated capital allowances
Tax losses
Rent
Leases
Short-term temporary differences
(d) Corporation tax
£m
Corporation tax payable
Corporation tax receivable
(e) Deferred taxation
The movement in deferred tax is analysed below:
2022
368
33
852
63
37
11
2021
390
30
758
49
30
7
1,364
1,264
2022
(45)
19
2021
(36)
19
£m
Deferred tax asset
At 31 December 2020
Current year movement
Prior year movement
Disposals
Transfers(1)
Exchange rate movements
At 31 December 2021
Current year movement
Prior year movement
Disposals
Transfers
Exchange rate movements
At 31 December 2022
Deferred tax liability
At 31 December 2020
Current year movement
Prior year movement
Disposals
Transfers(1)
Exchange rate movements
At 31 December 2021
Current year movement
Prior year movement
Disposals
Transfers
Exchange rate movements
At 31 December 2022
Property,
plant and
equipment
Intangibles
Tax losses
Rent
Leases
Other
temporary
differences
63
107
(182)
22
–
–
–
48
–
70
12
1
–
–
(6)
77
–
(3)
–
–
(48)
–
(51)
(6)
–
–
–
–
(78)
1
–
–
77
–
–
(4)
13
–
–
(9)
–
–
(6)
–
–
(77)
–
(83)
2
–
–
–
–
(57)
(81)
257
(17)
(199)
–
–
–
41
(16)
(14)
–
–
4
15
–
–
–
–
–
–
–
–
–
–
–
–
–
5
–
–
–
–
68
(4)
(3)
–
–
8
69
–
–
–
–
–
–
–
(1)
–
–
–
–
(1)
Total
189
11
(199)
–
326
–
327
21
–
–
–
2
4
–
–
1
–
112
8
–
–
–
–
18
–
–
200
–
36
25
3
–
–
5
120
69
350
–
(5)
–
–
(1)
–
(6)
2
–
–
–
–
(4)
–
1
198
–
–
(13)
198
–
(200)
(326)
–
(1)
(1)
–
–
–
–
(2)
–
(141)
(4)
–
–
–
–
(145)
1. In 2021 the Group 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.
148
IWG plc Annual Report and Accounts 2022
148
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 £350m (2021: £327m) and a deferred tax liability of
£145m (2021: £141m).
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 include assets 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 assets can be utilised
over a period of three years, based on the period corresponding to the Group’s business forecasting processes. Recent
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.
In 2022 the deferred tax asset recognised in respect of the fair market value of IP resulting from a group restructure in
2019, in relation to which the amortisation is deductible for Swiss corporate income tax purposes, increased to £77m
(2021: £70m) and this is included as Intangibles in the deferred tax table above. Recognition of this deferred tax asset is
based on the approved three-year forecast.
To address concerns about uneven profit distribution and tax contributions of large multinational corporations, various
agreements have been reached at the global level, including an agreement by over 135 jurisdictions to introduce a
global minimum tax rate of 15%. In December 2021, the Organisation for Economic Co-operation and Development
(OECD) released a draft legislative framework, followed by detailed guidance released March 2022, that is expected to
be used by individual jurisdictions that signed the agreement to amend their local tax laws. Once changes to the tax
laws in any jurisdiction in which the Group operates are enacted or substantively enacted, the Group may be subject to
top-up tax. At the date when the financial statements were authorised for issue, one jurisdiction in which the Group
operates had enacted or substantively enacted the tax legislation related to the top-up tax. The Group may be
potentially subject to the top-up tax because it operates in countries where the statutory tax rate is below 15%.
Management is closely monitoring the progress of the legislative process in each jurisdiction in which the Group
operates in. At 31 December 2022 the Group did not have sufficient information to determine the potential quantitative
impact.
9. Discontinued operations
During 2022, 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. Closures in the
ordinary course of business are not considered part of discontinued operations.
Disposal of operations
During the year, the Group completed the sale of individually immaterial operations for the consideration of £1m (2021:
£52m). The results of these operations up to the date of disposal were as follows:
£m
Revenue
Expenses
Operating profit
Net finance expense
Profit before tax for the year
Income tax expense
Loss after tax for the year
Gain on the sale of discontinued operations
Profit after tax for the year
1. The comparative information has been restated to reflect the impact of discontinued operations.
2021
2022
Restated(1)
–
–
–
–
–
–
–
1
1
34
(31)
3
(1)
2
(4)
(2)
61
59
149
IWG plc Annual Report and Accounts 2022
149
Financial statements
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:
£m
Total assets
Total liabilities
Net liabilities
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 £nil (2021: £33m).
The net cash flows incurred by these operations are as follows:
£m
Operating
Investing
Financing
Net cash outflow
1. The comparative information has been restated to reflect the impact of discontinued operations.
10. Adjusting items
The Group has recognised the following adjusting items for the year ended 31 December 2022:
£m
COVID-19 related adjusting items
Impairment of Ukraine and Russia
Total adjusting items
2022
1
(1)
–
–
–
–
1
1
2021
72
(82)
(10)
1
–
(9)
52
61
2021
2022
Restated(1)
–
–
(1)
(1)
48
(2)
(46)
–
2022
2021
4
9
13
31
–
31
COVID-19 related adjusting items
Following the declaration by the World Health Organization of the COVID-19 pandemic 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 continued to see significant volatility and business disruption,
impacting performance in 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 recognised a net charge of £4m (2021: £31m) 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 significant in both nature and value to the results of the Group in the
current period. Reversals of £17m (2021: £2m) have been recognised as adjusting items to cost of sales and charges of
£21m (2021: £33m) have been recognised as adjusting items to selling, general and administration expenses in the
Group’s income statement.
The charges relate to several separateIy identifiable areas of accounting judgement and estimates as follows:
£m
Net reversal of impairment of property, plant and equipment (including right-of-
use assets)
Impairment of goodwill
Provision for expected credit losses
Network rationalisation
Other one-off items including restructuring(1)
Total COVID-19 related adjusting items
2022
2021
Selling,
general and
administration
costs
Cost of sales
Selling,
general and
administration
costs
Cost of sales
(73)
–
–
58
(2)
(17)
–
3
–
–
18
21
(125)
–
53
71
(1)
(2)
–
–
–
–
33
33
1. Included as adjusting items in selling, general and administration except for £2m (2021: £1m) in respect of worldwide financial support schemes which is
included in costs of sales.
150
IWG plc Annual Report and Accounts 2022
150
• Impairments of property, plant and equipment (including right-of-use assets)
The continuation of COVID-19, including new and extended preventative measures in some of the Group’s markets,
continues to prolong the impact on our business in 2022. As a result of these measures, management continues to
carry 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 ongoing rationalisation process undertaken 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 2022. Following this review, a net reversal of £73m
(2021: net reversal of £125m) was recognised within cost of sales. Of this net reversal, £22m (2021: £38m) and £51m
(2021: £87m) were recognised against property, plant and equipment and right-of-use assets respectively.
• Impairments of goodwill
COVID-19 and linked restrictions impacted our ability to trade our way to sustainable profitable growth in certain
markets. As a result, the projected cash flows for these markets continued to be evaluated to determine the carrying
value of the CGUs, with an additional impairment of £3m taken during 2022 (2021: £nil).
• Provision for expected credit losses
The Group continues to review the recoverability of its trade and other receivables portfolio; however, no additional
expected credit loss was deemed necessary (2021: £53m). The provision for expected credit losses reflecting the
greater likelihood of credit default by the Group’s debtors, directly attributable to the impact of COVID-19, is fully
utilised as at 31 December 2022.
• Network rationalisation
£58m (2021: £71m) 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 £nil (£2021: £6m) has also been recorded which is not included as adjusting items.
• Other one-off items including restructuring
During the year, the Group incurred £nil (2021: £1m) of transaction costs in respect of master franchise agreements
that did not complete due to the outbreak of COVID-19.
Other charges of £18m (2021: £32m) 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 2022, as well as claims in
respect of centre closures. In addition, during the year, the Group received a total of £2m (2021: £1m) in respect of
worldwide financial support schemes.
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.
Impairment of Ukraine and Russia
As a result of geopolitical circumstances in the Ukraine and related sanctions against Russia, the Board has taken the
decision to recognise a total provision of £9m against the gross assets of both its Russian and Ukrainian operations.
These operations are not material to the Group, representing less than 1% of both total revenue and net assets of the
Group. Accordingly, the Group’s significant accounting judgements, estimates and assumptions have not changed.
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
2022
(120)
(11.2)
(11.2)
(121)
(11.3)
(11.3)
1
0.1
0.1
2021
(210)
(20.4)
(20.4)
(269)
(26.2)
(26.2)
59
5.9
5.4
1,006,884,755
1,007,214,854
35,393,807
39,512,057
Weighted average number of shares that would have been issued at average market price
(29,608,587)
(22,437,997)
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
1,776,964
1,747,819
76,408,203
76,408,203
1,090,855,142
1,102,444,936
151
IWG plc Annual Report and Accounts 2022
151
Financial statements
Notes to the accounts continued
11. Earnings per ordinary share (basic and diluted) continued
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 £350m of convertible bonds in December 2020. The bond issue creates a potential 76,408,203
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 207.05p (2021: 321.95p), with a high of 302.10p on 4 January
2022 and a low of 115.40p on 12 October 2022.
12. Dividends
£m
Dividends per ordinary share proposed
Interim dividends per ordinary share declared and paid during the year
2022
2021
–
–
–
–
Given continuing macroeconomic uncertainties and geopolitical tensions, the Group’s capital allocation policy remains
unchanged, prioritising investment in the long-term growth of our business and dividend distribution to shareholders.
In order to protect our liquidity in the short-term, no dividend will be paid for the year ended 31 December 2022 (2021:
£nil) and future dividend payments continue to be placed on hold, with the intention to review the return to our
progressive dividend policy when appropriate.
13. Goodwill
£m
Cost
At 31 December 2020
Recognised on acquisition of subsidiaries(1)
Goodwill derecognised on sale of subsidiaries
Goodwill impairment
Exchange rate movements
At 31 December 2021
Recognised on acquisition of subsidiaries(1)
Goodwill derecognised on sale of subsidiaries
Goodwill impairment
Exchange rate movements
At 31 December 2022
Net book value
At 31 December 2021
At 31 December 2022
Total
696
16
(1)
–
(7)
704
188
–
(3)
45
934
704
934
1. Net of £nil 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 and Worka
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 and Worka level and is subject to impairment
reviews based on the cash flows of the CGUs within that country and the Worka segment.
152
IWG plc Annual Report and Accounts 2022
152
The carrying amount of goodwill attributable to the reportable business segments is as follows:
£m
Americas
EMEA
Asia Pacific
Worka(2)
2022
314
373
27
220
934
2021
Restated(1)
283
367
25
29
704
1. Restated to reflect the impact of the separate disclosure of the Worka segment.
2. Includes goodwill of £183m relating to the acquisition of The Instant Group and £5m from other immaterial acquisitions (note 28).
The carrying value of goodwill and indefinite life intangibles allocated to the USA, UK and Worka is material relative to
the total carrying value, comprising 78% of the total. The remaining 22% of the carrying value is allocated to a further 38
countries. The goodwill and indefinite life intangibles allocated to the USA, UK and Worka are set out below:
£m
USA
United Kingdom
Worka(3)
Other countries
Goodwill
Intangible
assets(1)
2022
Restated(2)
2021
290
219
220
205
934
–
11
–
–
11
290
230
220
205
945
262
230
29
194
715
1. The indefinite life intangible asset relates to the Regus brand.
2. Restated to reflect the impact of the separate disclosure of Worka.
3. Includes goodwill of £183m relating to the acquisition of The Instant Group and £5m from other immaterial acquisitions (note 28).
The value-in-use for each country and Worka has been determined using a model which derives the present value of
the expected future cash flows for each individual country and Worka. 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.
153
IWG plc Annual Report and Accounts 2022
153
Financial statements
Notes to the accounts continued
13. Goodwill continued
The following key assumptions have been used in calculating the value-in-use for each country and Worka:
• 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 2023, 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 increased from 7.5% in 2021 to 9.1% in 2022 (post-tax WACC: 6.7%). The country-specific pre-tax WACC
reflecting the respective market risk adjustment has been set between 8.1% and 11.0% (2021: 7.2% to 9.7%).
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 only result in a recognised
impairment of £3m (2021: £nil), in respect of individually immaterial 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 21% (2021: 24%) over the next five years. A terminal value
centre gross margin of 23% is adopted from 2027, with a 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 8.5% (2021: 8.3%).
The UK model assumes an average centre contribution of 13% (2021: 18%) over the next five years. A terminal value
centre gross margin of 20% is adopted from 2027, with a 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 9.1% (2021: 7.5%).
The Worka model assumes an average contribution of 36% over the next five years. A terminal value centre gross
margin of 38% is adopted from 2027, with a 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 9.1%.
Management has considered the following sensitivities:
• Market growth and REVPOS – Management has considered the impact of a variance in market growth and REVPOS.
The value-in-use calculation shows that if the long-term growth rate is nil, the recoverable amount of the US, UK and
Worka 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 216.6% (2021: 88.1%) for the US, 14.4% (2021: 25.3%) for the UK and 12.0%
for Worka.
• 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 17.1% (2021: 23.0%) for the US and 8.1% (2021: 12.0%) for the UK.
154
IWG plc Annual Report and Accounts 2022
154
14. Other intangible assets
£m
Cost
At 31 December 2020
Additions at cost
Acquisition of subsidiaries
Disposals
Exchange rate movements
At 31 December 2021
Additions at cost
Acquisition of subsidiaries
Disposals
Exchange rate movements
At 31 December 2022
Amortisation
At 31 December 2020
Charge for year
Disposals
Exchange rate movements
At 31 December 2021
Charge for year
Disposals
Exchange rate movements
At 31 December 2022
Net book value
At 31 December 2020
At 31 December 2021
At 31 December 2022
Brand
Customer
lists
Software
Total
65
–
2
–
–
67
–
24
–
–
91
42
1
–
–
43
2
–
–
45
23
24
46
31
–
2
–
–
33
–
77
–
1
111
31
1
–
–
32
17
–
2
51
–
1
60
83
34
1
–
–
118
39
40
–
2
199
53
12
–
–
65
25
–
1
91
30
53
108
179
34
5
–
–
218
39
141
–
3
401
126
14
–
–
140
44
–
3
187
53
78
214
During the year ended 31 December 2022, the Group completed the investment in The Instant Group. As part of the
purchase price allocation, the Group engaged with third party experts in recognising acquired brands valued at £24m,
customer lists from sublease agreements of £77m and digital asset software of £40m.
Included within the brand value is £11m 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).
155
IWG plc Annual Report and Accounts 2022
155
Financial statements
Notes to the accounts continued
15. Property, plant and equipment
£m
Cost
At 31 December 2020
Additions
Modifications(2)
Acquisition of subsidiaries
Disposals(4)
Exchange rate movements
At 31 December 2021
Additions
Modifications(2)
Acquisition of subsidiaries
Disposals(4)
Exchange rate movements
At 31 December 2022
Accumulated depreciation
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
Charge for the year(3) (6)
Disposals(4) (5)
Net reversal of impairment(7)
Exchange rate movements
At 31 December 2022
Net book value
At 31 December 2020
At 31 December 2021
At 31 December 2022
Right-of-use
assets(1)
Land and
buildings
Leasehold
improvements
Furniture and
equipment
Computer
hardware
Total
9,530
150
176
479
78
(852)
(123)
9,288
253
313
4
(826)
622
9,654
3,883
893
(675)
(47)
(20)
4,034
955
(563)
(39)
258
4,645
5,647
5,254
5,009
11
–
–
(1)
–
160
–
–
–
–
–
1,521
110
–
23
(147)
(22)
1,485
139
–
16
(84)
149
160
1,705
8
3
–
–
–
11
3
–
–
–
14
142
149
146
836
134
(66)
(7)
–
897
115
(61)
(13)
103
1,041
685
588
664
775
73
–
2
(33)
(6)
811
78
–
–
(36)
70
923
421
58
(24)
–
(4)
451
65
(25)
–
42
533
354
360
390
129
12,105
7
–
–
(6)
(2)
128
6
–
–
(6)
10
138
101
8
(5)
–
(1)
103
7
(5)
–
8
113
28
25
25
377
479
103
(1,039)
(153)
11,872
476
313
20
(952)
851
12,580
5,249
1,096
(770)
(54)
(25)
5,496
1,145
(654)
(52)
411
6,346
6,856
6,376
6,234
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 £nil (2021: £13m) and other property, plant and
equipment of £nil (2021: £2m).
4. Includes disposals related to discontinued operations for right-of-use assets of £1m (2021: £39m) and other property, plant and equipment of £nil
(2021: £24m).
5. Disposals are net of £9m (2021: £19m) in respect of COVID-19 related adjusting items previously provided for (note 10).
6. Depreciation is net of £11m (2021: £25m) in respect of COVID-19 related adjusting items previously provided for (note 10).
7. The net reversal of impairment of £52m (2021: £54m) includes an additional COVID-19 related impairment of £22m (2021: £70m), offset by the reversal
of £75m (2021: £151m) 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 2 and 33.
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, 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 2022, the Group recorded a net reversal of
impairment charges of £39m (2021: £47m) in respect of right-of-use assets and a net reversal of £13m (2021: £7m) in
respect of leasehold improvements.
156
IWG plc Annual Report and Accounts 2022
156
16. Other long-term receivables
£m
Deposits held by landlords against rent obligations
Other receivables
17. Trade and other receivables
£m
Trade receivables, net
Prepayments and accrued income
Other receivables
Partner contributions receivables
VAT recoverable
Deposits held by landlords against rent obligations
18. Trade and other payables (including customer deposits)
£m
Customer deposits
Other accruals
Trade payables
VAT payable
Other payables
Other tax and social security
2022
2021
57
–
57
2022
395
152
174
23
172
3
919
2022
447
252
220
119
147
17
1,202
50
–
50
2021
262
134
146
30
159
3
734
2021
385
189
163
104
67
15
923
During 2021 the Group conducted a review of its customer deposits for inactive customer accounts. Based on this
review, the Group released the financial liabilities in respect of such deposits where the obligation qualified for
derecognition. The effect of these changes was an increase in operating profit of £22m in 2021.
19. Borrowings
The Group’s total loan and borrowing position at 31 December 2022 and at 31 December 2021 had the following
maturity profiles:
Bank and other loans
£m
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 £318m (2021: £308m).
2022
2021
5
581
2
588
285
873
5
446
2
453
22
475
The Group issued £350m convertible bonds in December 2020, raising £343m, net of transaction fees. At the date of
issue, the convertible bonds were bifurcated between:
• A financial liability recognised at amortised cost of £298m, by using the discounted cash flow of interest payments
and the bonds’ nominal value; and subsequently remeasured at amortised cost of £318m (2021: £308m) at 31
December 2022. 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 £52m, not being closely related to the host financial liability, was recognised
separately and measured at fair value through profit or loss (note 25). A gain has been recognised at 31 December
2022 of £27m (2021: £23m) through net finance expenses, resulting in a year-end liability of £nil (2021: £27m).
Further information regarding the committed borrowings and the convertible bonds can be found on page 167 in
note 25.
157
IWG plc Annual Report and Accounts 2022
157
Financial statements
Notes to the accounts continued
20. Provisions
£m
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
2022
2021
Closures
Other
Total
Closures
Other
Total
13
7
38
(1)
3
60
23
37
60
8
–
6
(6)
–
8
8
–
8
21
7
44
(7)
3
68
31
37
68
24
–
12
(22)
(1)
13
1
12
13
7
4
3
(7)
–
7
7
–
7
31
4
15
(29)
(1)
20
8
12
20
1. Includes provisions release related to discontinued operations of £nil (2021: £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 2022, 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
£m
At 31 December 2020
Acquisition of joint ventures(1)
Share of loss
Exchange rate movements
At 31 December 2021
Acquisition of joint ventures
Share of loss
Exchange rate movements
At 31 December 2022
Investments in
joint ventures
Provision for
deficit in
joint ventures
11
33
–
1
45
–
(1)
1
45
(5)
–
(2)
1
(6)
–
–
–
(6)
Total
6
33
(2)
2
39
–
(1)
1
39
1. The acquisition of joint ventures was settled via a non-cash transaction of £33m.
The Group has 82 centres operating under joint venture agreements (2021: 82) 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.
158
IWG plc Annual Report and Accounts 2022
158
The results of the joint ventures below are the full-year results of the joint ventures and do not represent the effective
share:
£m
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
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
Ordinary 1p shares in IWG plc at 31 December
2022
2021
86
(88)
(2)
(1)
(3)
153
329
(322)
(139)
21
35
(38)
(3)
–
(3)
137
169
(160)
(126)
20
2022
2021
Number
Nominal value
£m
Number
Nominal value
£m
8,000,000,000
8,000,000,000
80 8,000,000,000
80 8,000,000,000
1,057,248,651
–
1,057,248,651
10
–
10
1,057,248,651
–
1,057,248,651
80
80
10
–
10
Treasury share transactions involving IWG plc shares between 1 January 2022 and 31 December 2022
During the year, 2,174,738 shares were purchased in the open market and 1,442,606 treasury shares held by the Group
were utilised to satisfy the exercise of share awards by employees. As at 7 March 2023, 50,564,853 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
2022
Number
of shares
49,832,721
2,174,738
(1,442,606)
50,564,853
2021
£m
Number
of shares
151 50,677,280
–
5
(4)
(844,559)
152
49,832,721
£m
154
–
(3)
151
159
IWG plc Annual Report and Accounts 2022
159
Financial statements
Notes to the accounts continued
23. Non-controlling interests
During 2022, the Group completed the investment in The Instant Group, acquiring 100% of the equity voting rights. In a
separate transaction, the Group sold a 13.4% non-controlling equity interest in a subsidiary of the Worka structure for a
consideration of £53m. The Group no longer exercises control of its 57% investment in The Wing and disposed of the
remaining £7m non-controlling interest during the year.
The following table summarises the information relating to each of the Group’s subsidiaries that have a material non-
controlling interest.
2022
13.4%
413
282
(131)
(163)
401
52
138
(13)
–
(13)
(3)
–
31
49
(33)
47
Notes
2022
161
52
95
308
(285)
(588)
(1,002)
(5,037)
(6,912)
(6,604)
19
–
2021
43%
42
11
(24)
(7)
22
9
1
(12)
–
(12)
(5)
–
(14)
29
(7)
8
2021
78
–
–
78
(22)
(453)
(932)
(5,189)
(6,596)
(6,518)
(27)
(6,604)
(6,545)
£m
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
24. Net debt analysis
£m
Cash and cash equivalents
Current net investment in finance leases
Non-current net investment in finance leases
Gross cash and lease receivables
Debt due within one year
Debt due after one year(1)(2)
Lease due within one year(3)
Lease due after one year(3)
Gross debt
Net debt
Derivative liability
1. Includes £318m (2021: £308m) convertible bond liability.
2. Excludes the convertible bond derivative liability element at 31 December 2022 of £nil (2021: £27m).
3. There are no significant lease commitments for leases not commenced at 31 December 2022.
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IWG plc Annual Report and Accounts 2022
160
The following table shows a reconciliation of net cash flow to movements in net debt:
£m
Net debt at 1 January
Net increase in cash and cash equivalents
Interest received on net lease investment
Payment received from net lease investment
Proceeds from issue of loans
Repayment of loans
Interest paid on lease liabilities
Payment of lease liability
Non-cash movements(1)
Exchange rate movements
Net debt at 31 December
2022
2021
(6,518)
(6,910)
77
(7)
(41)
5
–
–
(1,340)
(983)
954
230
997
(534)
(422)
947
167
865
(729)
120
(6,604)
(6,518)
1. Includes acquired debt of £nil (2021: £6m), interests accrued on the convertible bond liability of £10m (£10m) and movements on leases in relation to
new leases, lease modifications/re-measurements and lease cessations of £524m (2021: £713m). Early termination of lease liabilities represent £294m
(2021: £232m) of the non-cash movements, including £1m (2021: £52m) related to discontinued operations.
Cash and cash equivalent balances held by the Group that are not available for use amounted to £7m at 31 December
2022 (2021: £7m). Of this balance, £1m (2021: £2m) is pledged as security against outstanding bank guarantees and a
further £6m (2021: £5m) is pledged against various other commitments of the Group.
Cash flows on debt 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 £nil (2021: £27m)
derivative liability recognised separately.
The following amounts are included in the Group’s consolidated financial statements in respect of its leases:
£m
Depreciation charge for right-of-use assets
Principal lease liability repayments
Interest expense on lease liabilities
Expenses relating to leases of low-value assets
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
Interest income on net lease investment
Principal payments received from net lease investment
2022
(955)
(997)
(230)
–
68
1,227
253
4
7
41
2021
(893)
(865)
(167)
1
63
1,032
176
78
–
–
Total cash outflows of £1,295m (2021: £1,095m) for leases, including variable payments of £68m (2021: £63m), were
incurred in the year.
161
IWG plc Annual Report and Accounts 2022
161
Financial statements
Notes to the accounts continued
25. 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 71 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 36 to 43 within the Strategic Report reviews
the trading performance, financial position and cash flows of the Group. The Group’s net debt position increased by
£86m (2021: decreased by £392m) to a net debt position of £6,604m (2021: £6,518m) as at 31 December 2022.
Excluding the IFRS 16 net investment in finance leases and lease liabilities, the net debt position increased to £712m
(2021: £397m). 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 £750m 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 2022, £173m (2021: £530m) of the RCF was available and undrawn.
Although the Group has net current liabilities of £1,868m (2021: £1,435m), 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 £455m (2021: £346m) which will be recognised in future periods through the income statement. The Group
holds customer deposits of £447m (2021: £385m) 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.
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.
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.
£m
Americas
EMEA
Asia Pacific
Worka
2021
2022
Restated(1)
151
192
28
24
395
103
135
22
2
262
1. Restated to reflect the impact of the separate disclosure of the Worka segment.
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:
£m
Not overdue
Past due 0 – 30 days
Past due 31 – 60 days
Past due 61 – 90 days
Past due more than 90 days
162
IWG plc Annual Report and Accounts 2022
162
2022
2021
Gross
Provision
Gross
Provision
312
40
19
15
19
405
–
–
–
–
(10)
(10)
220
21
7
4
38
290
–
–
–
–
(28)
(28)
At 31 December 2022, the Group maintained a provision of £10m for expected credit losses (2021: £28m) arising from
trade receivables. The Group had provided £nil (2021: £99m) in the year, utilised £12m (2021: £98m) and released £6m
(2021: £nil). Customer deposits of £447m (2021: £385m) 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, on either a 12-month or a 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 ongoing political and economic uncertainty, the Group continues to focus on cash generation by reducing
cost, renegotiating rents and rationalising the network, resulting in short-term or long-term cash benefits. The Group
has free cash and liquid investments (excluding blocked cash) of £154m (2021: £71m). In addition to cash and liquid
investments, the Group had £173m (2021: £530m) 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 2022, the
amount of the facility is £750m (2021: £950m) and the final maturity was extended in March 2020 to March 2025 with
an option to extend until 2026.
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 £30m and a fixed rate of 1.2%.
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 2022 no cash was invested for a period
exceeding three months (2021: £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 36% (2021: 35%) of the
Group’s revenue being attributable to the US dollar and 23% (2021: 23%) 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.
163
IWG plc Annual Report and Accounts 2022
163
Financial statements
Notes to the accounts continued
25. Financial instruments and financial risk management continued
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
2022
2021
EUR
4
(11)
(7)
EUR
2
(8)
(6)
GBP
–
(1)
(1)
GBP
–
(1)
(1)
USD
7
(15)
(8)
USD
1
–
1
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 2022, 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 £4m (2021: £1m) 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 £2m for the year ended 31 December 2022 (2021: £1m). 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 £3m for the year ended 31 December 2022 (2021: £nil).
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 £5m for the year ended 31 December 2022 (2021: £8m). 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 £2m for the year ended 31 December 2021 (2021: £4m).
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 74. 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 96 to 117. 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 2022 and 31 December 2022
During the year, 2,174,738 shares were purchased in the open market and 1,442,606 treasury shares held by the Group
were utilised to satisfy the exercise of share awards by employees. As at 31 December 2022, 50,564,853 treasury
shares were held.
The Company declared and paid no interim dividend per share during the year ended 31 December 2022 (2021: nil
pence per share) and proposed no final dividend per share (2021: 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.
164
IWG plc Annual Report and Accounts 2022
164
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 2022
£m
Cash and cash equivalents
Trade and other receivables(1)
Net investment in finance leases
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
Deferred and contingent consideration
Trade and other payables
Other long-term payables
Derivative financial liabilities:
Convertible bonds – embedded conversion
option
Effective
interest rate
%
Carrying
value
Contractual
cash flow
Less than
1 year
1-2 years
2-5 years
More than
5 years
0.3%
–
5.6%
–
4.8%
3.8%
4.1%
0.0%
–
–
–
–
161
767
147
57
1,132
161
767
172
57
1,157
(266)
(318)
(266)
(356)
(6,039)
(8,235)
(289)
(8)
(1,198)
(7)
(289)
(8)
(1,198)
(7)
–
–
161
767
60
–
988
–
(2)
(1,264)
(283)
(4)
(1,198)
–
–
–
–
36
29
65
–
–
51
28
79
–
(2)
(266)
(352)
–
–
25
–
25
–
–
(1,203)
(2,795)
(2,973)
(3)
(2)
–
(7)
–
(1)
(2)
–
–
–
(2)
–
–
–
–
Financial liabilities
(8,125)
(10,359)
(2,751)
(1,217)
(3,416)
(2,975)
As at 31 December 2021
£m
Cash and cash equivalents
Trade and other receivables(1)
Net investment in finance leases
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
Deferred and contingent consideration
Trade and other payables
Other long-term payables
Derivative financial liabilities:
Convertible bonds – embedded conversion
option
Effective
interest rate
%
0.0%
–
–
–
4.0%
3.8%
3.3%
0.0%
–
–
–
–
Carrying
value
Contractual
cash flow
Less than
1 year
1-2 years
2-5 years
More than
5 years
78
600
–
50
728
(137)
(308)
(6,121)
(30)
(12)
(915)
(6)
78
600
–
50
728
78
600
–
–
678
–
–
–
25
25
–
–
–
25
25
(137)
(357)
(1)
(2)
–
(2)
(136)
(353)
–
–
–
–
–
–
–
(7,869)
(1,095)
(1,069)
(2,564)
(3,141)
(30)
(12)
(915)
(6)
(21)
(8)
(915)
–
–
(5)
–
–
(6)
(2)
(2)
–
–
–
(27)
(2)
(2)
–
–
–
(27)
(27)
Financial liabilities
(7,556)
(9,353)
(2,042)
(1,082)
(3,084)
(3,145)
1. Excluding prepayments.
2. Financial assets are all held at amortised cost.
3. All financial instruments are classified as variable rate instruments.
165
IWG plc Annual Report and Accounts 2022
165
Financial statements
Notes to the accounts continued
25. Financial instruments and financial risk management continued
Fair value disclosures
The fair values together with the carrying amounts shown in the balance sheet are as follows:
31 December 2022
£m
Cash and cash equivalents
Trade and other receivables(1)
Other long-term receivables
Derivative financial liabilities
Bank loans and corporate borrowings
Convertible bonds
Other loans
Deferred and contingent consideration
Trade and other payables
Other long-term payables
31 December 2021
£m
Cash and cash equivalents
Trade and other receivables(1)
Other long-term receivables
Derivative financial liabilities
Bank loans and corporate borrowings
Convertible bonds
Other loans
Deferred and contingent consideration
Trade and other payables
Other long-term payables
1. Excluding prepayments.
Carrying amount
Fair value
Cash,
loans and
receivables
Other
financial
liabilities
Total
Level 1
Level 2
Level 3
Total
161
767
57
–
–
–
–
–
–
–
–
–
–
–
(266)
(318)
(289)
(8)
161
767
57
–
(266)
(318)
(289)
(8)
(1,198)
(1,198)
(7)
(7)
985
(2,086)
(1,101)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(318)
(318)
–
(8)
–
–
–
(8)
–
–
(326)
(326)
Carrying amount
Fair value
Cash,
loans and
receivables
Other
financial
liabilities
78
600
50
–
–
–
–
–
–
–
–
–
–
(27)
(137)
(308)
(30)
(12)
(915)
(6)
728
(1,435)
Total
78
600
50
(27)
(137)
(308)
(30)
(12)
(915)
(6)
(707)
Level 1
Level 2
Level 3
Total
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(27)
–
–
–
–
(27)
–
(308)
(308)
–
(12)
–
–
–
(12)
–
–
(347)
(347)
At the date of issue, the £350m was bifurcated at £298m and £52m between corporate borrowings (debt) and a
derivative financial liability respectively. At 31 December 2022, the debt was valued at its amortised cost, £318m (2021:
£308m) and the derivative liability at its fair value, £nil (2021: £27m).
During the years ended 31 December 2022 and 31 December 2021, 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.
166
IWG plc Annual Report and Accounts 2022
166
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
Valuation technique
Cash and cash equivalents, trade and other
receivables/payables, customer deposits and
investment loan receivables
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.
Loans, overdrafts and debt element of
convertible bonds
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.
Contingent consideration, foreign exchange
contracts, interest rate swaps and derivative
element of convertible bonds
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
Committed borrowings
£m
Revolving credit facility
Bridge facility
2022
2021
Facility
Available
Facility
Available
750
330
173
–
950
–
530
–
The Group maintains a revolving credit facility provided by a group of international banks. At 31 December 2022, the
amount of the facility remains £750m (2021: £950m) and the final maturity was extended in March 2020 to March
2025 with an option to extend until 2026. As at 31 December, £173m (2021: £530m) was available and undrawn under
this facility.
The £750m revolving credit facility is subject to financial covenants which include EBITDA, minimum liquidity, interest
cover and net debt to EBITDA ratio. The Group continued to operate in compliance with the covenants agreed with the
lenders.
A £330m non-recourse bridge facility specifically to fund the investment in The Instant Group, has been fully utilised.
The bridge facility, with an outstanding balance of £270m, has a maturity in September 2023. This facility is secured
and is subject to interest cover and net debt to EBITDA covenants. The Instant Group, combined with the IWG digital
assets in Worka has reduced its net debt to £176m, excluding £4m net lease liabilities, at 31 December 2022 and
continues to be highly cash generative.
Convertible bonds
In December 2020 the Group issued a £350m convertible bond, issued by IWG Group Holdings S.à r.l. and transferred
in the year to IWG International Holdings S.à r.l., 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 £350m
was bifurcated at £298m and £52m between corporate borrowings (debt) and a derivative financial liability,
respectively. At 31 December 2022, the debt was valued at its amortised cost, £318m (2021: £308m) and the derivative
liability at its fair value, £nil (2021: £27m).
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 £1m
(2021: £1m).
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.
167
IWG plc Annual Report and Accounts 2022
167
Financial statements
Notes to the accounts continued
26. 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 eligible employees to purchase
shares in IWG plc. In accordance with this programme, holders of vested options are entitled to purchase shares at the
mid-market closing 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
2022
2021
Number of
share options
42,827,743
18,603,116
(7,829,580)
(1,297,155)
52,304,124
12,273,441
Weighted average
exercise price
per share
195.65
130.85
215.97
118.47
Number of
share options
42,926,841
3,508,813
(2,566,253)
(1,041,658)
171.48
42,827,743
213.23
11,694,349
Weighted average
exercise price
per share
184.38
313.90
190.35
142.60
195.65
198.51
Date of grant
13/06/2012
12/06/2013
20/05/2014
05/11/2014
19/05/2015
22/12/2015
29/06/2016
28/09/2016
01/03/2017
21/12/2018 (Grant 1)
Numbers
granted
Weighted average
exercise price per
share
Lapsed
Exercised
11,189,000
7,741,000
1,845,500
12,875,796
1,906,565
1,154,646
444,196
249,589
1,200,000
300,000
84.95
(3,944,407)
(7,244,593)
155.60
(4,306,000)
(3,061,233)
187.20
(1,658,500)
(160,300)
186.00
(9,366,754)
(1,671,285)
250.80
(1,862,565)
–
322.20
272.50
258.00
283.70
203.10
(395,186)
(25,000)
(389,150)
(214,313)
–
(75,000)
(11,009)
(7,055)
–
–
28/12/2018 (Grant 2)
20,900,000
199.80
(8,841,662)
(166,668)
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
09/03/2022
10/05/2022 (Grant 1)
17/05/2022 (Grant 2)
613,872
196,608
108,349
341.90
(595,834)
402.30
408.60
(156,608)
(81,428)
20,325,000
165.00
(4,020,834)
450,000
300,000
173,148
466,377
318,645
487,964
580,655
202.00
(300,000)
222.60
(300,000)
291.00
342.80
376.60
307.40
310.00
(155,964)
(58,345)
–
(487,964)
(161,292)
1,500,000
297.70
(1,500,000)
155,172
204,659
1,042,774
382,791
290.00
255.00
222.10
242.30
(155,172)
–
–
–
14/10/2022 (Grant 1)
15,087,586
117.95
(406,953)
At 31 Dec
2022
– (1)
373,767 (1)
26,700 (1)
1,837,757 (2)
44,000 (2)
734,460 (1)
44,037 (2)
28,221 (2)
1,200,000 (1)
225,000 (2)
11,891,670 (2)
18,038 (2)
40,000 (2)
26,921 (2)
16,304,166 (3)
150,000 (3)
– (1)
17,184 (3)
408,032 (3)
318,645 (3)
– (1)
419,363 (3)
– (1)
– (1)
204,659 (3)
1,042,774 (3)
382,791 (3)
14,680,633 (3)
600,000 (3)
1,285,306 (3)
52,304,124
Exercisable from
Expiry date
13/06/2015
13/06/2022
12/06/2016
12/06/2023
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
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
09/03/2025 09/03/2032
10/05/2025
10/05/2032
17/05/2025
17/05/2032
14/10/2025
14/10/2032
17/10/2025
17/10/2032
01/12/2025
01/12/2032
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
17/10/2022 (Grant 2)
01/12/2022
600,000
1,285,306
104,085,198
122.25
159.35
–
–
(39,433,931)
(12,347,143)
1. These options have fully vested as of 31 December 2022.
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.
168
IWG plc Annual Report and Accounts 2022
168
The vesting of share options is subject to an ongoing employment condition. As at 31 December 2022, there were
12,273,441 (2021: 11,649,349) outstanding share options which had fully vested with no further performance or holding
period requirements and which had a weighted average exercise price of £213.23 (2021: £198.51).
Performance conditions for share options
June 2013 share options
The share options outstanding under this grant at 31 December 2022 reflect the options that have been awarded and
vested, based on achievement against the relevant performance targets and are now exercisable with an expiry date of
June 2023.
May 2014 share options
The share options outstanding under this grant at 31 December 2022 reflect the options that have been awarded and
vested, based on achievement against the relevant performance targets and are now exercisable with an expiry date of
May 2024.
November 2014 share options
The share options outstanding under this grant at 31 December 2022 reflect the options that have been awarded and
vested, based on achievement against the relevant performance targets and are now exercisable with an expiry date of
November 2024.
May 2015 share options
The share options outstanding under this grant at 31 December 2022 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 2022 reflect the options that have been awarded and
vested, based on achievement against the relevant performance targets and are now exercisable with an expiry date of
December 2025.
June 2016 share options
The share options outstanding under this grant at 31 December 2022 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 2022 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 2022 reflect the options that have been awarded and
vested, based on achievement against the relevant performance targets and are now exercisable with an expiry date of
March 2027.
December 2018 (Grant 1) share options
The share options outstanding under this grant at 31 December 2022 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 December 2021 and ending December 2023.
December 2018 (Grant 2) share options
The share options outstanding under this grant at 31 December 2022 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 2022 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 May 2022 and ending May 2024.
September 2019 share options
The share options outstanding under this grant at 31 December 2022 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 2022 and ending September 2026.
December 2019 share options
The share options outstanding under this grant at 31 December 2022 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 2022 and ending December 2026.
169
IWG plc Annual Report and Accounts 2022
169
Financial statements
Notes to the accounts continued
26. Share-based payments continued
April 2020 share options
The share options outstanding under this grant at 31 December 2022 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.
May 2020 share options
The share options outstanding under this grant at 31 December 2022 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.
September 2020 share options
The share options outstanding under this grant at 31 December 2022 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 2022 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 2022 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.
August 2021 share options
The share options outstanding under this grant at 31 December 2022 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.
March 2022 share options
The share options outstanding under this grant at 31 December 2022 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 2025 and ending March 2027.
170
IWG plc Annual Report and Accounts 2022
170
May 2022 (Grant 1) share options
The share options outstanding under this grant at 31 December 2022 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 2025 and ending May 2027.
May 2022 (Grant 2) share options
The share options outstanding under this grant at 31 December 2022 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 2025 and ending May 2027.
October 2022 (Grant 1) share options
The share options outstanding under this grant at 31 December 2022 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 October 2025 and ending October 2027.
October 2022 (Grant 2) share options
The share options outstanding under this grant at 31 December 2022 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 October 2025 and ending October 2027.
December 2022 share options
The share options outstanding under this grant at 31 December 2022 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 2025 and ending December 2027.
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
December
2022
159.35p
159.35p
October
2022
(Grant 2)
122.25p
122.25p
October
2022
(Grant 1)
117.95p
117.95p
54.01% –
59.92%
53.34% –
58.16%
53.30% –
58.05%
May
2022
May
2022
(Grant 2)
(Grant 1)
242.30p
242.30p
53.48% –
56.71%
222.10p
222.10p
54.59% –
56.66%
March
2022
255.00p
255.00p
54.33% –
57.32%
3-5 years
3-5 years
3-5 years
3-5 years
3-5 years
3-5 years
0.00%
106.53p -
113.10p
3.22% –
3.24%
0.00%
81.12p -
85.29p
3.22% –
3.24%
0.00%
78.24p –
82.21p
3.22% –
3.24%
0.00%
153.52p –
158.97p
1.42% –
1.60%
0.00%
142.70p –
145.61p
1.42% –
1.60%
0.00%
162.79p –
168.44p
1.41% –
1.49%
171
IWG plc Annual Report and Accounts 2022
171
Financial statements
Notes to the accounts continued
26. Share-based payments continued
August
2021
May
2021
March
September
2021
2020
May
2020
April
2020
December
2019
September
2019
Share price on grant date
310.00p
376.60p
342.80p
291.00p
202.00p
165.00p
408.60p
402.30p
Exercise price
Expected volatility
Option life
Expected dividend
Fair value of option at time of grant
310.00p
376.60p
342.80p
291.00p
202.00p
165.00p
408.60p
402.30p
53.67% –
57.07%
53.78% –
59.19%
3-5 years 3-5 years
1.12%
163.92p –
171.67p
0.96%
202.75p –
217.81p
53.64% –
59.13%
3-5 years
1.00%
183.02p –
196.95p
51.81% –
62.96%
50.15% –
61.06%
49.02% –
59.29%
36.24% –
44.72%
36.33% –
44.83%
3-5 years
3-5 years
3-5 years 3-7 years
3-7 years
2.39%
122.93p –
146.68p
3.44%
71.39p –
86.80p
4.21%
50.79p –
62.29p
1.59%
141.77p –
172.84p
1.62%
137.79p –
169.19p
Risk-free interest rate
0.37% –
0.49%
0.16% –
0.34%
0.15% –
0.33%
(0.08%) –
(0.04%)
0.00% –
0.06%
0.00% –
0.06%
0.57% –
0.65%
0.48% –
0.50%
Share price on grant date
341.90p
199.80p
203.10p
283.70p
258.00p
272.50p
322.20p
250.80p
May
2019
December
2018
(Grant 2)
December
2018
(Grant 1)
March
2017
September
2016
June
2016
December
2015
May
2015
Exercise price
Expected volatility
Option life
Expected dividend
Fair value of option at time of grant
Risk-free interest rate
341.90p
38.84% –
45.75%
199.80p
37.66% –
44.35%
3-5 years 3-5 years
203.10p
37.63% –
44.25%
3-5 years
283.70p
27.42% –
29.87%
3-5 years
258.00p
27.45% –
32.35%
250.80p
27.23% –
30.12%
3-7 years 3-7 years 3-7 years 3-7 years
322.20p
24.80% –
37.08%
272.50p
27.71% –
34.81%
1.85%
2.95%
2.90%
1.80%
1.80%
1.71%
1.40%
1.59%
120.77p –
141.08p
0.52% –
0.60p
58.77% –
69.33%
0.87% –
1.01%
39.36p –
46.42p
0.73% –
0.88%
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%
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
2022
2021
Number of
awards
Number of
awards
3,160,617
3,237,768
1,289,217
959,015
(1,324,583)
(1,036,166)
(583,039)
–
2,542,212
3,160,617
–
–
There were 583,039 shares which were exercised during the year ended 31 December 2022 (2021: nil). The weighted
average share price at the date of exercise for share awards exercised during the year ended 31 December 2022 was
256.00p (2021: nil pence).
Plan
PSP
PSP
PSP
PSP
PSP
PSP
Date of grant
Numbers
granted
Lapsed
Exercised
01/03/2017
1,095,406
(512,367)
(583,039)
07/03/2018
1,278,350
(1,051,546)
07/03/2019
1,058,578
(848,474)
04/03/2020
915,739
(306,407)
26/03/2021
959,015
(320,887)
09/03/2022
1,289,217
(431,373)
–
–
–
–
–
At 31 Dec
2022
Release date
– 01/03/2022
226,804 07/03/2023
210,104 07/03/2024
609,332 04/03/2025
638,128 26/03/2026
857,844 09/03/2027
6,596,305
(3,471,054)
(583,039)
2,542,212
172
IWG plc Annual Report and Accounts 2022
172
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
March
2022
March
2021
March
2020
March
2019
March
2018
255.00p
346.40p
356.50p
244.90p
240.90p
nil
nil
nil
nil
nil
250,000
250,000
250,000
250,000
250,000
32
5 years
0.00%
167.75p –
254.14p
32
32
32
32
5 years
5 years
5 years
5 years
1.00%
206.19p –
312.37p
1.95%
292.36p –
192.98p
2.57%
124.38p –
188.43p
2.37%
124.92p –
189.26p
1.45%
0.33%
0.06%
0.79%
1.21%
It is recognised by the Remuneration Committee that the 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.
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.
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.
Based on results as of 31 December 2021, the relative TSR target of exceeding the comparator group median TSR by
less than 10% was achieved, resulting in the vesting of 118,055 shares subject to a holding period ending March 2023.
The performance targets for EPS and ROI were not met and the share awards pursuant to these targets lapsed.
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 relative 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
% of the award that vests
100%
On a straight-line basis between 25% and 100%
25%
0%
173
IWG plc Annual Report and Accounts 2022
173
Financial statements
Notes to the accounts continued
26. Share-based payments continued
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 relative 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
% of the award that vests
100%
On a straight-line basis between 25% and 100%
25%
0%
2022 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 2022. Thus, conditional on meeting these performance targets, these
shares will vest in March 2027.
The relative 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
Plan 3: Deferred Share Bonus Plan
% of the award that vests
100%
On a straight-line basis between 25% and 100%
25%
0%
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
2022
2021
Number of
awards
Number of
awards
376,291
376,291
683,166
–
(112,014)
–
–
–
947,443
376,291
–
–
The weighted average share price at the date of exercise for share awards exercised during the year ended 31
December 2022 was 256.00p (2021: nil pence).
Lapsed
Exercised
(112,014)
–
–
–
–
–
–
–
–
At 31 Dec
2022
Release date
– 07/03/2022
264,277 04/03/2023
171,415 09/03/2025
511,751 02/11/2027
(112,014)
947,443
Plan
DSBP
DSBP
DSBP
DSBP
Date of grant
Numbers
granted
07/03/2019
112,014
04/03/2020
264,277
09/03/2022
02/11/2022
171,415
511,751
1,059,457
174
IWG plc Annual Report and Accounts 2022
174
Measurement of fair values
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
November
2022
March
2022
March
2020
March
2019
131.90p
255.00p
356.50p
244.90p
nil
–
–
nil
–
–
nil
–
–
nil
–
–
5 years
3 years
3 years
3 years
0.00%
131.18p
3.24%
0.00%
1.95%
2.57%
254.14p
292.36p
188.42p
1.41%
0.00%
0.68%
27. 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:
£m
Fair value of plan assets
Present value of obligations
Net funded obligations
2022
2021
Switzerland
Philippines
Total
Switzerland
Philippines
Total
6
(7)
(1)
–
(1)
(1)
6
(8)
(2)
5
(6)
(1)
–
(1)
(1)
5
(7)
(2)
175
IWG plc Annual Report and Accounts 2022
175
Financial statements
Notes to the accounts continued
28. Acquisitions
Current period acquisitions
The Instant Group
On 8 March 2022, the Group completed the investment in The Instant Group, acquiring 100% of the equity voting rights,
for a total consideration of £324m. The primary reason for the investment was to combine The Instant Group with the
IWG digital assets, to form Worka.
In a separate transaction on 8 March 2022, the Group sold a 13.4% non-controlling equity interest in a subsidiary of the
Worka structure, for a consideration of £53m.
£m
Net assets acquired
Intangible assets
Right-of-use assets
Other property, plant and equipment
Net investment in finance leases
Cash
Other current and non-current assets
Lease liabilities
Provisions due within one year
Current liabilities
Goodwill arising on acquisition
Total consideration
Cash flow on acquisition
Cash paid
Less: cash acquired
Net cash outflow
Final
fair value
adjustments
Final
fair value
Book value
2
3
15
177
25
64
(172)
(7)
(111)
(4)
139
–
–
–
–
–
–
–
6
145
141
3
15
177
25
64
(172)
(7)
(105)
141
183
324
324
(25)
299
The goodwill arising on this acquisition reflects the future benefits anticipated by the IWG Group.
If the above acquisition had occurred on 1 January 2022, the revenue and net retained loss arising from this acquisition
would have been £121m and £10m respectively. In the year, this acquisition contributed revenue of £104m and net
retained loss of £11m.
The was no deferred or contingent consideration arising on this acquisition.
The acquisition costs associated with this transaction were £11m, recorded within administration expenses in the
consolidated income statement.
176
IWG plc Annual Report and Accounts 2022
176
Other immaterial acquisitions
During the year ended 31 December 2022 the Group made various other individually immaterial acquisitions for a total
consideration of £5m.
£m
Net assets acquired
Right-of-use assets
Other property, plant and equipment
Lease liabilities
Current liabilities
Goodwill arising on acquisition
Total consideration
Less: deferred consideration
Less: contingent consideration
Cash flow on acquisition
Cash paid
Net cash outflow
Provisional
fair value
adjustments
Provisional
fair value
Book value
1
1
(1)
(1)
–
–
–
–
–
–
1
1
(1)
(1)
–
5
5
(1)
(1)
3
3
The goodwill arising on these other immaterial 2022 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, £5m is expected to be deductible for tax purposes.
If the above acquisitions had occurred on 1 January 2022, the revenue and net retained profit arising from these
acquisitions would have been £2m and £nil respectively. In the year, the acquisitions contributed revenue of £1m and
net retained profit of £nil.
Deferred consideration of £1m arose on the acquisitions made in the year and is held on the Group’s balance sheet at
31 December 2022. In addition, £5m deferred consideration relating to prior period acquisitions is held on the Group’s
balance sheet at 31 December 2022.
Contingent consideration of £1m arose on the 2022 acquisitions. Contingent consideration of £5m was paid and £1m
released, during the current year, with respect to milestones, achieved or not achieved, on previous acquisitions. In
addition, £1m contingent consideration is held on the Group’s balance sheet at 31 December 2022.
The acquisition costs associated with these transactions were £nil, recorded within administration expenses in the
consolidated income statement.
For acquisitions completed in 2022, except for The Instant Group, 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.
Goodwill of £188m arose relating to 2022 acquisitions.
177
IWG plc Annual Report and Accounts 2022
177
Financial statements
Notes to the accounts continued
28. Acquisitions continued
Prior period acquisitions
During the year ended 31 December 2021 the Group made acquisitions for a total consideration of £30m.
£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
Provisions due after one year
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
Provisional
fair value
adjustments
Final
fair value
adjustments
Final
fair value
Book value
1
78
25
32
13
(81)
(27)
(4)
(7)
30
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1
78
25
32
13
(81)
(27)
(4)
(7)
30
(15)
16
(1)
30
(5)
(4)
21
(32)
(11)
Goodwill of £16m arose relating to 2021 acquisitions. Goodwill arising on acquisitions in 2021 includes negative goodwill
of £1m, 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, £16m is expected to be deductible for tax purposes.
Deferred consideration of £5m arose on the acquisitions made in the year and was held on the Group’s balance sheet
at 31 December 2021.
Contingent consideration of £4m arose on the 2021 acquisitions. 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 £1m, 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 2022.
29. Capital commitments
£m
Contracts placed for future capital expenditure not provided for in the financial statements
2022
76
2021
89
These commitments are principally in respect of centre fit-out obligations. There are £1m (2021: £1m) of capital
commitments in respect of joint ventures and no significant lease commitments for leases not commenced at 31
December 2022.
30. 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 £337m (2021: £309m). There are no material lawsuits pending
against the Group.
178
IWG plc Annual Report and Accounts 2022
178
31. 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
2022
Joint ventures
2021
Joint ventures
Management
fees received
from related
parties
Amounts
owed by
related party
Amounts
owed to
related party
6
4
51
20
49
20
As at 31 December 2022, none of the amounts due to the Group have been provided for as the expected credit losses
arising on the balances are considered immaterial (2021: £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.
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:
£m
Short-term employee benefits
Retirement benefit obligations
Share-based payments
2022
2021
6
–
3
9
4
–
2
6
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 £6m (2021: £6m). These awards are subject to performance conditions and vest over
three, four and five years from the award date (note 26).
Transactions with related parties
During the year ended 31 December 2022 the Group acquired goods and services from a company indirectly controlled
by a Director of the Company amounting to an insignificant amount of £19,015 (2021: £27,319). There was a £5,217
balance outstanding at the year-end (2021: £6,751).
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.
179
IWG plc Annual Report and Accounts 2022
179
Financial statements
Notes to the accounts continued
32. Principal Group companies
The Group’s principal subsidiary undertakings at 31 December 2022, their principal activities and countries of
incorporation are set out below:
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 S.r.l.
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 España SL
IWG Management (Sweden) AB
Spain
Sweden
% 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
Name of undertaking
Country of
incorporation
Management companies
RGN Management Limited Partnership Canada
Pathway IP II S.à r.l.
Franchise International GmbH
Switzerland
Switzerland
Regus Service Centre Philippines B.V. Philippines
Regus Global Management Centre SA Switzerland
% of
ordinary
shares
and
votes
held
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 Enterprise S.à r.l.
IWG Group Holdings S.à r.l.
Switzerland
Luxembourg
IWG International Holdings S.à r.l.
Luxembourg
Genesis Finance S.à r.l.
Pathway Finance S.à r.l.
Pathway Finance EUR 2 S.à r.l.
Pathway Finance USD 2 S.à r.l.
Switzerland
Switzerland
Switzerland
Switzerland
100
100
100
100
100
100
100
Regus Group Limited
United Kingdom 100
Global Platform Services GmbH
United Kingdom 100
Avanta Managed Offices Ltd
United Kingdom 100
Ibiza Holdings Limited
Basepoint Centres Limited
United Kingdom 100
Ibiza Finance Limited
Jersey
Jersey
Green (Topco) Limited
HQ Global Workplaces LLC
RGN National Business Centre LLC
RB Centres LLC
Regus Management Group LLC
United Kingdom 86.6
Regus Corporation
United States
United States
United States
United States
United States
100
100
100
100
86.6
100
100
180
IWG plc Annual Report and Accounts 2022
180
33. 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,
geopolitical circumstances in the Ukraine and related sanctions against Russia, have been deemed to meet the
definition of adjusting items. Each of these items is considered to be significant in nature and/or size and is 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 2022, 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.
181
IWG plc Annual Report and Accounts 2022
181
Financial statements
Notes to the accounts continued
33. 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.
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.
34. Subsequent events
In December 2022, TKP Corporation sold its Japanese operations to Mitsubishi Estate Co. which entered into a new 10-
year master franchise agreement with the Group. The transaction received regulatory approval in February 2023, when
the transaction became effective, and the Group received and recognised a settlement fee of £18m post year-end.
Concurrently the Group acquired the Taiwanese operations from TKP Corporation for a consideration of £6m.
182
IWG plc Annual Report and Accounts 2022
182
Parent Company Accounts
Summarised extract of unaudited company balance sheet
(Accounting policies are based on the Swiss Code of Obligations)
£m
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
Other long-term liabilities
Total long-term liabilities
Total liabilities
Issued share capital
Reserves from capital contributions
Retained earnings
Loss 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 20 March 2023
As at
31 Dec 2022
As at
31 Dec 2021
2
–
2
2
–
2
3,069
3,069
3,069
3,069
3,071
3,071
45
1
46
99
–
99
22
1
23
99
–
99
145
122
10
2,439
650
(21)
(152)
10
2,439
875
(224)
(151)
2,926
2,949
3,071
3,071
Mark Dixon
Chief Executive Officer
Accounting policies
Basis of preparation
Charlie Steel
Chief Financial Officer
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
2022, 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.
183
IWG plc Annual Report and Accounts 2022
183
Financial statements
Reconciliation for alternative performance measures
Alternative performance measurement adjustments recognised
The purpose of these unaudited pages is to provide a reconciliation from the 2022 financial results to the alternative
performance measures 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 recognition of these adjustments
will not impact the overall cash flows of the Group or the cash generation per share.
1. Rent income and finance income
Under IFRS 16, where the sublease is assessed with reference to the right-of-use assets arising from the head lease,
conventional rent income is not recognised in the profit or loss. The receipts associated with this income instead are
used to determine the net investment in finance leases noted above. The net investment in finance leases is
measured in subsequent periods using the effective interest rate method, based on the applicable interest rate. The
related finance income arising on subsequent measurement is recognised directly through profit or loss.
2. Rent expense 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. The related finance costs arising on subsequent measurement are
recognised directly through profit or loss.
3. Depreciation, lease payments and lease receipts
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 on head leases
reduce the lease liabilities recognised in the balance sheet. Lease receipts on subleases reduce the net investment in
finance leases recognised in the balance sheet.
4. 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.
Consolidated EBITDA (unaudited)
Year ended 31 December 2022
£m
Notes
As reported Rent income Rent expense Depreciation
adjustments(1)
pre-IFRS 16
EBITDA
Depreciation on property plant and equipment
Amortisation of intangible assets
Operating profit/(loss)
Operating profit/(loss) from discontinued
operations
Operating profit/(loss) from continuing
operations
1,336
(1,145)
(44)
147
–
147
5
5
9
5
50
–
–
50
–
(1,059)
–
–
(1,059)
–
–
829
–
829
–
(10)
–
–
(10)
–
317
(316)
(44)
(43)
–
50
(1,059)
829
(10)
(43)
Other
1. Includes £52m of net reversals of impairment of property, plant and equipment including right-of-use assets.
Year ended 31 December 2021
£m
Notes
As reported
Rent income Rent expense Depreciation
adjustments(1)
pre-IFRS 16
EBITDA
Depreciation on property plant and equipment
Amortisation of intangible assets
Operating (loss)/profit
Operating (loss)/profit from discontinued
operations
Operating (loss)/profit from continuing
operations(2)
1,026
(1,096)
(14)
(84)
(3)
(87)
5
5
9
5
–
–
–
–
–
–
(997)
(997)
–
805
–
805
14
(12)
(983)
793
30
–
–
30
(1)
29
59
(291)
(14)
(246)
(2)
(248)
Other
1. Includes £54m of net reversals of impairment of property, plant and equipment including right-of-use assets.
2. Restated to reflect the impact of discontinued operations on a pre-IFRS 16 basis.
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184
Working capital (unaudited)
Year ended 31 December 2022
£m
Reference
As reported
Rent income
& expense
and finance
income &
costs
Depreciation
and lease
payments
Other
adjustments
pre-IFRS 16
Partner contributions – reimbursement
(Increase)/decrease in trade and other
receivables
Increase/(decrease) in trade and other
payables
Working capital
Analysed as:
Working capital (excluding amortisation
of partner contributions)
Working capital related to the
amortisation of partner contributions
Growth-related partner contributions
Year ended 31 December 2021
Statement of cash flows, p133
19
–
(19)
Statement of cash flows, p133
(97)
(54)
–
Statement of cash flows, p133
191
113
852
798
(906)
(925)
–
–
(29)
(29)
CFO review, p41
CFO review, p41
CFO review, p41
–
(151)
108
(43)
22
(104)
39
£m
Reference
As reported
Rent income &
expense and
finance
income &
costs
Depreciation
and lease
payments
Other
adjustments
pre-IFRS 16
Partner contributions – reimbursement
(Increase)/decrease in trade and other
receivables
(Decrease)/increase in trade and other
payables
Working capital
Analysed as:
Working capital (excluding amortisation
of partner contributions)
Working capital related to the
amortisation of partner contributions
Growth-related partner contributions
Statement of cash flows, p133
20
Statement of cash flows, p133
Statement of cash flows, p133
(127)
(40)
(147)
–
20
829
849
(20)
–
(809)
(829)
–
–
(47)
(47)
CFO review, p41
CFO review, p41
CFO review, p41
–
(107)
(67)
(174)
(129)
(95)
50
Partner contributions receivables (unaudited)
£m
Opening partner contribution receivables
Net partner contributions recognised
• Maintenance partner contributions
• Growth partner contributions
Settled in the period
Exchange differences
Reference
Note 17
Statement of cash flows, p133
CFO review, p41
CFO review, p41
Closing partner contribution receivables
Note 17
2022
2021
30
50
11
39
(59)
2
23
34
56
6
50
(59)
(1)
30
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IWG plc Annual Report and Accounts 2022
185
Financial statements
Reconciliation for alternative performance measures continued
Capital expenditure (unaudited)
Year ended 31 December 2022
£m
Reference
As reported
Rent income
& expense
and finance
income &
costs
Purchase of property, plant and equipment
Purchase of intangible assets
Total capital expenditure
Statement of cash flows, p133
Statement of cash flows, p133
(242)
(39)
(281)
(12)
–
(12)
pre-IFRS 16
(254)
(39)
(293)
Analysed as:
Net maintenance capital expenditure
Gross growth capital expenditure
Capitalised rent related to centre openings
CFO review, p41
CFO review, p41
CFO review, p41
Net capital
expenditure
Partner
contributions
Gross capital
expenditure
(90)
(141)
(12)
(243)
11
39
–
50
(101)
(180)
(12)
(293)
Year ended 31 December 2021
£m
Reference
As reported
Rent income
& expense
and finance
income &
costs
Purchase of property, plant and equipment
Purchase of intangible assets
Total capital expenditure
Statement of cash flows, p133
Statement of cash flows, p133
(221)
(34)
(255)
(20)
–
(20)
pre-IFRS 16
(241)
(34)
(275)
Analysed as:
Net maintenance capital expenditure
Gross growth capital expenditure
Capitalised rent related to centre openings
CFO review, p41
CFO review, p41
CFO review, p41
Net capital
expenditure
Partner
contributions
Gross capital
expenditure
(95)
(104)
(20)
(219)
6
50
–
56
(101)
(154)
(20)
(275)
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IWG plc Annual Report and Accounts 2022
186
Five-year summary
£m
Income statement (full year ended)
Revenue
Cost of sales
Expected credit reversal/(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 profit/(loss)
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
31 Dec 2021
31 Dec 2020
31 Dec 2019
31 Dec 2018
31 Dec 2022
Restated(1)
Restated(1)
Restated(1)
Restated(1)
2,751
(2,182)
2,227
(1,885)
2,432
2,593
(2,377)
(2,043)
6
575
(427)
(1)
147
(287)
35
(105)
(16)
(121)
1
(120)
(99)
243
(328)
(2)
(87)
(198)
26
(259)
(10)
(269)
59
(210)
(35)
20
(367)
(3)
(350)
(266)
3
(613)
(30)
(643)
(4)
(647)
(2)
548
(279)
3
272
(229)
1
44
22
66
385
451
2,355
(1,975)
(18)
362
(247)
(2)
113
(16)
1
98
(29)
69
37
106
(Loss)/earnings per ordinary share (EPS):
Attributable to ordinary shareholders
Basic (p)
Diluted (p)
(11.2)
(11.2)
(20.4)
(20.4)
(67.9)
(67.9)
50.5
49.6
11.7
11.6
Weighted average number of shares outstanding (‘000s)
1,006,885
1,007,215
892,738
892,738
907,077
From continuing operations
Basic (p)
Diluted (p)
(11.3)
(11.3)
(26.2)
(26.2)
(67.8)
(67.8)
7.4
7.3
7.6
7.5
Weighted average number of shares outstanding (‘000s)
1,006,885
1,007,215
892,738
892,738
907,077
Balance sheet data (as at)
Intangible assets
Right-of-use assets
Property, plant and equipment
Net investment in finance leases
Deferred tax assets
Other assets
Cash and cash equivalents
Total assets
Current liabilities
Non-current liabilities
Equity
Total equity and liabilities
1,148
5,009
1,225
147
350
1,041
161
9,081
3,020
5,826
235
9,081
782
5,254
1,122
–
327
849
78
8,412
2,267
5,840
305
8,412
749
5,647
1,209
–
188
1,100
71
8,964
2,435
6,015
514
8,964
720
5,917
1,273
–
195
781
67
8,953
2,140
5,933
880
8,953
722
–
1,751
–
31
848
69
3,421
1,430
1,240
751
3,421
1. The comparative information has been restated to reflect the impact of discontinued operations (note 9).
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187
Financial statements
Glossary
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:
• to evaluate the historical and planned underlying results
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.
EBIT
Earnings before interest and tax.
EBITDA
Earnings before interest, tax, depreciation and
amortisation.
EPS
Earnings per share.
Expansions
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.
Growth-related partner contributions
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.
Net debt
Operations cash and cash equivalents, adjusted for both
short-term 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 centre revenue
Revenue for all centres excluding closures.
Franchisee
The owners of business centres operating under a formal
franchise arrangement.
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188
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-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.
TSR
Total shareholder return.
System wide revenue
Total reported revenue generated, including revenue from
franchise, managed centre and joint-venture partners, but
excluding fee income.
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189
Other information
Shareholder Information
Corporate directory
Secretary and Registered Office
Legal advisors to the Company as to English law
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
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
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190
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