The global leader in
hybrid working
Annual Report and Accounts 2023
Contents
Strategic report
Hybrid working: a global mega-trend
At a glance
The global leader in hybrid working
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
Environmental, Social, Governance
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
measures
Five-year summary
Glossary
Shareholder information
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Hybrid
working:
A global
mega-trend
Q Why are more companies and
their employees working in the
hybrid model than ever before?
A Academic studies from leading institutions have
demonstrated that more than 30% of workers will
adopt hybrid for the long-term and the reasons
are simple. Being able to work close to home is
freeing workers from the unproductive bind of
long daily commutes, giving them a better
work-life balance, while dramatically reducing
real estate costs for employers, increasing
productivity and giving them access to the best
talent. Hybrid is also helping companies meet
their ESG commitments with our latest research
with Arup showing that emissions are lower by
up to 87% in the model.
Q What stands IWG apart in the
market?
A Our network reach and experience are
unparalleled. IWG has 3,514 buildings globally
in more than 120 countries, and with 867 new
buildings signed to the global network in the
last 12 months, we are growing rapidly, bringing
advanced hybrid working facilities into the heart
of local communities, where our customers need
us. We have also been leading on innovation for
the last three decades with our well-established
R&D Team developing and bringing several
innovative products to market.
Q Why is having a strong global
footprint so important?
A Our customers are increasingly partnering
with us across multiple locations in multiple
markets giving their teams access to
high-quality workspaces no matter where
they are in the world.
They want one trusted provider that can meet
their needs across all markets and with around
eight times the number of locations compared
to our nearest competitor, IWG is the only truly
global platform.
System-wide revenue (£m)
£3,335
‘23
‘22
‘21
‘20
‘19
3,335
3,086
2,498
2,480
2,648
Overhead as percentage of revenue (%)
15.0%
‘23
‘22
‘21
‘20
‘19
15.0
15.5
14.7
15.1
10.8
Adjusted EBITDA1 (£m)
£403m
‘23
‘22
‘21
‘20
‘19
80
134
Network (locations)
3,514
‘23
‘22
‘21
‘20
‘19
403
311
428
3,514
3,345
3,314
3,313
3,388
Net growth capital investment (£m)
£75m
‘23
‘22
‘21
‘20
‘19
75
141
104
177
260
1. Adjusted EBITDA before the application of IFRS 16
* A glossary is included on page 185 which defines
various alternative measures used to provide
useful and relevant information.
1
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
Strategic report At a glance
Global Operations
Who we are
The idea of offering
workspace solutions for
the short and long-term has
become a global success
story and the Company,
known as IWG plc since 2011,
now covers every continent
and every time zone across
the globe.
The
global
leader in
hybrid
working
What we do
The world of work is
changing. The old 9-5 model
is over, with working from
home, working from a hub,
or working on-the-go the
new normal. IWG is here to
help you fully embrace this
flexible, greener and more
productive way of working.
8m+
People use
our workspaces
Every day millions of
people open their laptops
at an IWG workspace.
Whether they’re working
solo or part of a team.
3,500+
Workspace
locations globally
Name a major city or
town anywhere in the
world and there’s a
good chance we’re
already there.
120+
Countries
we’re present in
We have workspaces of
every size in every time
zone across the planet.
And we’re growing
by the day.
10,000+
Global
team members
Our team members come
from a truly diverse
background, speaking
over 50 different
languages.
2
IWG plc Annual Report and Accounts 2023 Our promises...
2Workspace
3A world of
innovators
opportunity
4The power
to succeed
1Here to help,
every day
We’re here to help people and
businesses work however suits
them best. Every day we enjoy
engaging with and listening to
our customers to put ourselves
in their shoes.
We’ve spent over 30 years
redefining how people and
businesses work. Now we’re
shaping the workspace of the
future. With energy, ambition
and an innovative mindset, we’re
turning big ideas into reality.
On average, we add at least one
new location to our network every
day. The speed of our growth
creates lots of opportunities –
to explore new markets, relocate
to another country or city, or
scale your business.
We’re strong believers in
empowering people to
succeed. With us, you’ll have
the flexibility to work however
you need to, supported by a
committed team that cares
about your success.
...Are delivered through our trusted brands
Our international
brands
Our domestic office and
coworking brands
Our digital
businesses
Our managed
conventional
office space
Read more on
pages 32 to 37
3
Strategic report The global leader in hybrid working
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.
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 a must-have for their next job, hybrid’s the
magnet companies need to attract the best.
Hybrid working has
unlocked a lot of benefits
for our team, including
happiness, productivity
and work-life balance. It
has lent an “extra sparkle”
when it comes to recruiting
and we’ve been able to
open the door in more
places, like Hungary
and Romania, without the
need to open a Mixbook
office there.”
Kim Colucci, Culture and Growth Director, Mixbook
4
IWG plc Annual Report and Accounts 2023 Profit, people, planet
At IWG, we believe strongly that
the hybrid working model is good
for business, good for people, and
good for the environment.
We don’t only have our own experience, compelling
though it is, to support this view. Countless studies
from leading academic institutions including Harvard,
Stanford, King’s College London, Princeton, Columbia
and other prestigious universities, as well as reports
from organisations ranging from Ernst & Young to
Arup and Cisco to Spotify, have endorsed the positive
impact of hybrid across multiple criteria.
Business benefits
When it comes to the benefits for business, take the
research of the academic credited as the world’s leading
expert on hybrid: Stanford economist Professor Nicholas
Bloom. He highlights better productivity and lower
attrition as key outcomes for businesses, based on
several studies including measuring the impact of hybrid
working on Trip.com, China’s largest travel agency.
Fellow academic Dr Gleb Tsipursky has highlighted in
Forbes magazine the significant annual cost savings
of $1.2m made by one of his clients, a mid-size tech
company, through cutting its office space by 30%.
And Kate Lister, President of Global Workplace
Analytics, not only states that companies can save
around $11,000 a year for every person who works
remotely for half the time but also says that hybrid
will “save U.S. employers over $30 billion a day in
what would otherwise have been lost productivity
during office closures due to COVID-19.”
People power
Turning to people, Professor Bloom highlights the
fact that quit rates are down by 35% in companies
embracing hybrid, adding: “The number one biggest
benefit is employees think of hybrid working as a
7% or 8% pay increase: a free pension plan is about
the same value to employees.”
Bryan Robinson Ph.D., Professor Emeritus at the
University of North Carolina, raises further important
benefits. He quotes studies that find remote and hybrid
workers to be “22% happier than workers in an onsite
office,” and that say “remote workers had less stress,
more focus and were more productive…”
He also reports key improvements in areas like job
satisfaction, physical health, work-life balance, comfortable
work environments and wellness programmes.
Cutting carbon
Much of this improved worker wellbeing is due to
the greatly reduced need to commute, which the
U.S. Environmental Protection Agency (EPA) identified
as the world’s biggest source of greenhouse gases in
2021, contributing 28% of the total.
Reduced commuting cuts carbon and boosts
happiness. As a recent study from Arup in partnership
with IWG shows, hybrid working has the potential to
reduce urban carbon emissions by a massive 87% in
the US and by 70% in the UK.
The study went on to find that switching to a ‘close to
home’ working model could cut emissions dramatically
in US cities including Atlanta (by up to 90%), Los
Angeles (87%) and New York (82%), and in the UK by
80% in Glasgow, 70% in Manchester and 49% in London.
Read on to find out more about how hybrid is making
the world of work better for everybody.
5
Strategic report The global leader in hybrid working
Hybrid working:
Improved profitability
and productivity
for companies
Multiple studies have shown that
companies can boost profitability
through the adoption of the hybrid
working model. Leading hybrid
expert Dr Gleb Tsipursky has
highlighted in an article for
Forbes the significant cost savings
made by his client, a mid-size tech
company that has been able to save
$1.2m annually by reducing office
space by 30%.
Larger corporations have made even greater savings
– a widely reported example is Cisco, which has
saved $500m over the past five years through the
shift to hybrid.
A significant proportion of this heightened profitability
is being achieved by less reliance on expensive inner-
city office rental. For example, a study by academics
from the NYU Stern School of Business (Arpit Gupta)
and Columbia Business School (Vrinda Mittal and Stijn
Van Nieuwerburgh) has found that one of the most
immediate and evident impacts of the shift away from
the city-centre office to the hybrid model has been
that on physical office occupancy levels and therefore
rental costs.
The study found a direct correlation between
the heightened use of hybrid working and a decline
for office space in sync with the number of days a
week people spend working away from the traditional
office. This is clearly leading to some significant
savings for businesses exercising the hybrid model,
as it changes the business geography of entire regions
and cities to significantly lighten the historic cost
burden on companies.
Global Workplace Analytics, meanwhile, has stated that
property and associated savings mean that “a typical
employer can save about $11,000/year for every person
who works remotely half of the time”. Their President
Kate Lister has also said it “will save U.S. employers
over $30 billion a day in what would have otherwise
been lost productivity during office closures due
to COVID-19.”
Enhanced productivity
Stanford-based economist Professor Nicholas Bloom
is one of many academics to have identified better
productivity as of one of several essential gains from
the hybrid model. This conclusion is partly based on
one of the most significant experiments designed
specifically to measure the impact of hybrid working
on a company’s productivity and attrition levels.
As a project for Professor Bloom’s graduate economics
class at Stanford, he agreed to work with James Liang
– CEO and co-founder of Trip.com (formerly Ctrip),
China’s largest travel agency – who was keen to offer
his employees a flexible option due to the expense of
Shanghai office space and the long commutes arising
from the costs of city living.
Bloom devised a test for 500 of the Company’s
16,000 employees, whereby a control group of 250
continued working at HQ, while the remainder worked
from home. The results of the nearly two-year study
were compelling:
The work-from-homers displayed a productivity
boost equivalent to a full day’s work, enabled by fewer
distractions and time saved through not having to
commute. Not only did employee attrition among this
group fall significantly; workers also had fewer sick days
and took less time off.
6
IWG plc Annual Report and Accounts 2023 But perhaps the most important finding was this: more
than half the work-from-home group felt isolated due
to never going to the office. Bloom’s recommendation
was therefore that the ideal working model should also
involve regular attendance at a flexible workspace for
socialisation, brainstorming, team building, and variety.
The Company
saved close to
US$2,000
per employee
on rent annually
Following the experiment, in fact, Trip.com extended
hybrid working across its entire workforce – an
especially significant step in China, where full-time
office work is still the expected norm.
Bloom also participated alongside academics from
King’s College London, Princeton University, and
other leading institutions in a research exercise that
highlighted the productivity benefits of remote
working. More than half (56.4%) of the full-time
workers surveyed in 27 countries said they were
more productive remotely, with 18.6% saying they
were more than 20% more productive.
IWG is very different
from traditional
coworking space
companies. It is willing
to work with us to design
the fit-out that is exactly
tailored to our needs.”
Patricia Neo, Vice President, Global Contact
Centers Operations, Hyatt Hotels Corporation
7
Strategic report The global leader in hybrid working
Hybrid working:
Improved employee
happiness, wellbeing
and work-life balance
The hybrid model is regularly
revealed by research as a
significant driver of greater
contentment, wellbeing and
satisfaction among workers. A
primary source of this important
gain is the reduced need to
commute to city centres that
hybrid working allows.
According to a study led by Dr Kiron Chatterjee,
Professor of Travel Behaviour in the Geography
and Environmental Management Department at
the University of the West of England, this offers
considerable opportunities for improved subjective
wellbeing (SWB).
According to the abstract of Dr Chatterjee’s team’s
study on Commuting and Wellbeing, “Our assessment
of the evidence shows that mood is lower during the
commute than other daily activities, and stress can be
induced by congestion, crowding, and unpredictability.
People who walk or cycle to work are generally more
satisfied with their commute than those who travel by
car and especially those who use public transport.”
But the end of the commute also has a much more
important positive impact on happiness levels. As
the study continues, “Satisfaction decreases with
the duration of commute, regardless of the mode used,
and increases when travelling with company. After the
journey, evidence shows that the commute experience
‘spills over’ into how people feel and perform at work
and home.”
In other words, reducing
the need to commute has
the potential to improve
human happiness by
creating a better
work-life balance.
8
IWG plc Annual Report and Accounts 2023 Mental health conferred by hybrid
This is not the only source of improved happiness for
hybrid workers. Writing on Forbes.com, Bryan Robinson
Ph.D. – Professor Emeritus at the University of North
Carolina at Charlotte, and author of Chained to the
Desk in a Hybrid World (New York University Press,
2023) – quotes two studies, from Owl Labs and
Ergotron, which highlight the improved happiness
and mental health conferred by the hybrid model.
As he writes, the first “found that remote and hybrid
employees were 22% happier than workers in an onsite
office environment and stayed in their jobs longer. Plus,
remote workers had less stress, more focus and were
more productive than when they toiled in the office.”
The Ergotron research, he continues, “has empowered
employees to reclaim physical health, and they are
seeing mental health benefits too. A total of 56% of
employees cited mental health improvements, better
work-life balance, and more physical activity.”
He reports key improvements in the following areas:
better job satisfaction (reported by 88% of the
1,000 full-time workers sampled), physical health
(75%), work-life balance (75%), comfortable work
environments (62%), and wellness programmes (76%).
Reduced attrition
Better productivity and performance are also essential
aspects in increased happiness and job satisfaction
among working people. As Professor Bloom puts it,
“Quit rates are down 35%,” also significantly reducing
recruitment costs and disruption for employers.
Employees think of hybrid
working as a 7% or 8% pay
increase perk. A pension
plan is about the same
value to employees.”
There are also, as Bloom points out, many surveys that
show all demographics like hybrid working, meaning it is
a positive factor in an organisation’s Diversity, Equity &
Inclusion (DE&I) focus. “But,” he has said, “there is a
slightly stronger preference for people with kids, for
women, with minorities. And what that means is if you…
force a full return to the office, you’re going to see a
higher attrition of diverse employees.”
You can’t adapt to
commuting because it’s
entirely unpredictable.
Driving in traffic is a
different kind of hell
every day.”
Daniel T. Gilbert, Edgar Pierce Professor
of Psychology, Harvard University
9
Strategic report The global leader in hybrid working
Hybrid working and the
environment: a greener,
brighter future
The end of the commute
According to the U.S.
Environmental Protection Agency
(EPA), the transport sector –
comprising cars, trucks, trains,
planes, shipping, etc. – was the
biggest source of greenhouse
gases in 2021, contributing 28%
of the total.
This placed it ahead of the electricity-production,
industry/commercial, industry, and commercial/
residential sectors.
So it’s highly significant that a 2023 study by global
engineering and design firm Arup has found that by
reducing the need to commute, hybrid working can
reduce urban carbon emissions by a staggering 70%
in the UK – and by up to 87% in the US.
Citing car use and distance travelled as the main
factors influencing the levels of transport-related
emissions, this study established that a change to
working closer to home has a proportionally greater
effect on emissions. This means that cities in the US,
where commuting by car is far more prevalent than
in many other countries, show the largest potential
carbon savings.
Driving down carbon emissions
The study found, in fact, that a switch to a ‘close to
home’ working model could drive a potential reduction
in traffic-related carbon emissions of up to 90% in
Atlanta, 87% in Los Angeles, and 82% in New York. In
the UK, both Glasgow (80%) and Manchester (70%)
were close behind, while even London at 49%
displayed great potential for improvement.
10
IWG plc Annual Report and Accounts 2023 Commenting on these figures, Arup’s Director of
City Economics and Planning Matthew Dillon said:
Changing our behaviour
is key to achieving our
transport targets. We
must have more joined-up
thinking when it comes
to transport planning
and land usage, the
development of safe
cycling networks,
better public transport
connectivity, faster
adoption of electric
vehicles, the accelerated
production of renewable
energy, retrofits of existing
premises, and better
energy-performance
for new buildings.”
11
Strategic report Our purpose
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.
12
Our business
model
Our strategy
Our ESG
ambitions
Our people
and culture
Governance
and risk
management
IWG plc Annual Report and Accounts 2023 Our purpose
Helping millions of people live a happier, healthier
and more productive lifestyle.
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.
Read more on page 24
1
2
3
Network
Partnership
Platform
(technology)
Our three strategic
priorities enable
sustainable growth
to achieve our
purpose.
Read more on page 26
1
Reduce
our carbon
emissions
2
To be a
socially
responsible
employer
3
Provide
transparent
and regular
information
Read more on page 60
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.
Read more on page 66
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.
Read more on page 50
13
Strategic report Chairman’s Statement
Increased
demand for
hybrid
working has
accelerated
the growth
of our global
network
We believe that the
strengths which enabled us
to deliver a successful 2023
will continue to keep us at
the forefront of an exciting
and fast-evolving global
market.”
14
Douglas Sutherland, Chairman
The rapid uptake of the hybrid model is making it
the preferred way of working for millions everywhere.
This trend continues to gain momentum as ongoing
societal and behavioural change, supported by
ever-advancing technology, enables more and more
people to work wherever and however they are
happiest and most productive. During the year we
witnessed companies across the world reducing their
concentration on large city-centre sites, choosing
instead for state-of-the-art accommodation in the
suburbs, towns and smaller communities close to
where their people live and want to work, combined
with smaller, flexible city-based workspaces.
We are proud that our conveniently located flexible
workspace delivers multiple benefits to so many
different audiences, both in and out of city centres.
Clearly, to workers, who get to work where they wish,
slashing the commute which saves money and gains
quality time for themselves. To businesses, enabling
them to attract and retain key talent while reducing
both their costs and environmental footprint.
To communities, empowering them to attract
new business opportunities and increase their
economic activity. To property-owning partners
and franchisees, providing all the services necessary
to successfully convert buildings into the flexible
workspace offerings desired by hybrid workers.
And, of course, to our shareholders, through
improved financial returns.
IWG plc Annual Report and Accounts 2023 Our championing of
the hybrid working
model has a significant
positive effect on
reducing carbon
emissions across the
planet due to the major
cuts in commuting that
it enables. ”
During 2023, as we accelerated the expansion of our
global network we maintained a disciplined approach
to costs and capital-light growth that enabled us to
simultaneously generate sufficient cash to reduce
debt and return to a dividend payment.
In short, this was an exceptional year in the history of
IWG as we continue to lead the way reinventing and
expanding the world of flexible workspace.
Our people
We achieved this multi-faceted success during a
year that no one regarded as straightforward in light
of the significant geopolitical, economic and other
challenges faced by so many. Such accomplishments
were therefore not easily delivered, and we thank our
exceptional IWG people once more for the continued
professionalism and sheer hard work that have made
them possible.
It is particularly important that we reward their
commitment by offering every opportunity to build
great careers with IWG. We are committed to provide
a diverse and inclusive environment, together with the
excellent IWG training and development support, to
enable them to realise their full potential.
Our strategy
As a result of consistently applying a long-term
strategic approach over the years we are today
established as a leading pioneer of hybrid working.
During 2023, we continued to refine and improve
our offer by further strengthening our market lead
by focusing on a few key areas including geographic
coverage, technological excellence and people power.
The acceleration of the expansion of our global network
through our capital-light approach using management
agreements, partnering and franchising is naturally
extending our market lead. This enables us to meet
the needs of evermore hybrid workers while increasing
awareness and understanding among new prospects of
the benefits of the hybrid model.
We continue to develop our industry-leading platform,
using the insight and experience we’ve gained from
operating the world’s largest network of flexible
workspaces. This includes improvements to the
offer and delivery of services to our customers and
partners along with the further investment in our unique
technology platform. As a result, we are able to increase
both service levels and efficiency, while helping
customers and partners become ever-more efficient
and productive in achieving their own business aims
and ambitions.
Another important area of focus is our continued
development of the digital Worka integrated
independent workspace platform to capture the
value chain opportunities from the structural growth
of the entire market of hybrid working.
15
Strategic report Chairman’s Statement continued
The rapid uptake of the
hybrid model is making
it the preferred way of
working for millions
everywhere. This trend
continues to gain
momentum as ongoing
societal and behavioural
change, supported by
ever-advancing
technology, enables
more and more people to
work wherever and
however they are
happiest and most
productive. ”
Douglas Sutherland , Chairman
16
The Board
I would like to thank my Board colleagues for their
continued commitment and valued advice they have
brought to IWG over the past year during which the
Group delivered improved operating results while
securing the Group’s position as the leading provider
for both customers and building owners as hybrid
working is creating unique opportunities in the flexible
workspace market.
We have completed the induction processes for our
three Board members who joined during 2022 and
continue to implement the results of our ongoing
internal board review process in our plans. We have
full confidence in the Board members and processes as
we focus on delivering against our strategic objectives
and succession planning at the Board level in view of
those objectives.
3500+
locations
World’s largest supplier
of carbon-neutral
workspace
IWG plc Annual Report and Accounts 2023 Our environmental journey
Our environmental achievements during 2023 include
becoming the world’s largest supplier of carbon-neutral
workspace. While we accelerated our achievement of
carbon neutrality through the use of carbon removal
projects, this has not reduced our commitment and
actions to continually reduce our actual carbon
footprint on our way to our target of Net Zero carbon
emissions by 2040. Transitioning our centres to
certified green electricity is one of our most important
initiatives to reduce our carbon emissions, with the goal
to achieve this by 2030. By focusing on where it was
possible to achieve this conversion most rapidly, we
converted 901 centres to certified green electricity
during 2023, demonstrating significant progress on
our environmental journey.
Our championing of the hybrid working model has a
significant positive effect on reducing carbon emissions
across the planet due to the major cuts in commuting
that it enables. We also continue to progress with other
related environmental initiatives, including the use of
advanced building technology, consolidating our supply
chain into regional hubs that reduces the emissions
from our logistics operations and supporting our people
in their ongoing efforts to reduce waste and promote
recycling in our centres as an integral part of our
corporate culture.
Looking ahead
While we are pleased with our progress during 2023,
we recognise the continued complexity and challenges
associated with doing business in 2024 and beyond.
As ever, we are determined to continue enabling our
customers, people, and partners, to have a great day
at work.
We believe that the strengths which enabled us to
deliver a successful 2023 will continue to keep us at
the forefront of an exciting and fast-evolving global
market. This includes rapid network growth, continuous
development of new technology, great partners, a
growing customer base, an expanding brand portfolio,
improving shareholder returns, and truly great people.
These are the foundations of our business today and
will continue to support our profitable growth into the
future as we help people everywhere improve their
day-to-day lives by working how and where they
choose. I and my colleagues therefore look forward
to the years ahead as a period of continuing profitable
growth that delivers great opportunities for us and all
our stakeholders.
Douglas Sutherland, Chairman
18 March 2024
17
Strategic report Chief Executive Officer’s Review
The Global
leader in
hybrid
working
As somebody who’s
been one of the biggest
advocates of hybrid
working for three decades
now, I’ve been intrigued
in recent times to see how
academics, leading
industry commentators
and business leaders
are now recognising
the incredible benefits
of this way of working.”
Mark Dixon, Chief Executive Officer
$2
trillion
Our industry is
expected to be worth
more than $2 trillion.
18
Mark Dixon, Chief Executive Officer
The research of Professor Nicholas Bloom, a senior
fellow at the Stanford Institute for Economic Policy
Research and acknowledged as the world’s leading
authority on the hybrid model has shown that about
40% of white-collar employees now work in this
model and will continue to do so in the future.
This long-term shift towards the hybrid model is one
of the mega-trends of our time and represents a
colossal financial opportunity for IWG. With 1.2 billion
white-collar workers globally, our industry has a total
addressable audience valued at more than $2 trillion
and platform working is set to become the norm for
many of these employees.
The reasoning for the transition towards hybrid
working is clear and compelling for companies of all
sizes and their employees with positive impacts on,
productivity, lower costs, increased flexibility and
above all significantly enhanced worker happiness,
while investors, landlords and building owners are
increasingly seeing IWG as the ideal partner to
capitalise on the long-term shift towards the model.
IWG plc Annual Report and Accounts 2023 I am consistently struck by the growing role and positive
impact, hybrid working is having on business performance,
the environment, and individuals’ happiness.
In IWG’s recent CEO study, business leaders are unified
in their support for the hybrid model. 9 in 10 CEOs that
have adopted hybrid have seen significant cost savings,
while more than 7 in 10 say employee happiness has
increased. More than 6 in 10 cite improved productivity
as one of the key business benefits.
The groundbreaking research of Professor Bloom further
highlights the financial benefits that are helping multiple
thousands of companies across the world to reduce
their operating costs.
As Professor Bloom puts it, “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…” Small wonder that he recently put it on record
that he expects hybrid uptake to increase in the years
ahead, due to ongoing demand and projected
improvements in technology.
Beyond pure financial savings, hybrid gives business
leaders greater flexibility with the ability to scale up
or down quickly without being locked into lengthy and
costly contracts, while also enabling them to attract
and recruit from a talent pool in diverse locations.
Driving Positive Change
The hybrid model is driving incredibly positive change
for businesses and while commentators are starting to
recognise the benefits, the reality about where and how
people work is actually far more nuanced than much of
the current conversation implies. It’s not just a binary
choice between working from a traditional city centre
and from home.
There’s a third option: working out of a local co-working
space or office, near to home, with other like-minded
people. In fact, most white-collar employees are working
from a combination of all three of these locations.
The Rise of Local Working
Today, the remarkable advances in cloud technology
and video conferencing software – both vital to
enabling effective hybrid working – mean workers no
longer need to travel long distances on a daily basis.
As a result, we are seeing a fundamental shift in the
geography of work with the centre of gravity moving
towards local communities. Tech changes will continue
to advance in years to come and will radically underline
and advance the flexibility of location.
That’s why, during the course of 2023, around 80% of
the new locations we signed were in the suburbs and
smaller towns where people actually live. A smattering
of some of our most recent additions to the network
including Springfield, Virginia (USA), Chippenham,
Wiltshire (UK), Serris (France) and Hagsatra (Sweden)
bring this to life powerfully.
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 future world of
work is one in which
we thrive, as the global
market leader of hybrid
working products supplied
from our platform.”
19
Strategic report Chief Executive Officer’s review
continued
The study’s key finding
is simply allowing people
to work close to home,
enabling them to split
their time between a local
workplace and home, has
the potential to reduce an
employee’s work-related
carbon emissions by
between 49% and 90%. ”
Strategy
Our strategic focus is as clear as ever with the objective
to provide modern, flexible workspace conveniently
located where people want to work, on terms that bring
significant benefits to our customers while providing
attractive returns to our shareholders.
To accomplish this there is an unrelenting focus on
growing our margin, driven by strong performance
on new and embedded price, service revenue growth
and an ongoing strict control of costs. This enables us
to continue to make significant investments into our
world class platform and pursue the rapid expansion
of network coverage through capital-light growth while
still delivering cash generation that supports reductions
in net debt and increasing returns to shareholders.
We will continue to make significant investments into
our world class platform as well as focusing on the rapid
growth of network coverage in partnership with the
property industry and investors using capital-light
expansion methods such as management agreements,
partnering deals and franchising.
Capital-Light Growth
The shift towards hybrid and more localised working is
propelling our business forward with the fastest growth
that we have ever seen in our more than 35-year history.
In 2023, we added a record 867 locations globally, with
95% in the partnership model and achieved our highest
ever revenues at an improved margin.
During the course of the year, we accelerated our
capital-light growth strategy allowing us to capitalise
on the growing pipeline of property investors seeking
to maximise their returns by partnering with IWG. In
fact, we signed almost twice as many agreements in
2023 as we did in the previous year.
20
Focusing on growth through the capital-light
business means that growth capex requirements
will be dramatically lower in the future, generating
more free cash flow for shareholders.
We are increasingly seeing partners sign multiple
locations with IWG as they grasp the scale of the
opportunity in front of them. My greatest thanks go to
all our valued property owners and investors who have
chosen to partner with us and as a business we are
resolutely committed to the long-term success of
these partnerships.
Leading the Way in Innovation
As the market-leader in the structurally growing hybrid
working industry, we are exceptionally well positioned
for the long-term. Not only do we lead the market on
global reach, but also in a number of crucially important
areas for future growth.
IWG has invested heavily in an outstanding Research
and Development team to ensure we are at the
forefront of innovation. An annual allocation of £50m
has been set aside to provide substantial funds to
create new products and services, and this investment
will ultimately unlock further revenue opportunities for
the business.
Sustainable Growth
I am very pleased to say that the Group now
supplies millions of customers worldwide with
carbon neutral workplaces.
At IWG, we take our collective role and responsibility in
tackling the climate crisis seriously and as part of our
climate action plan, we have reduced and are reducing
further the carbon emissions from our buildings and
supply chain, while also investing in a range of carbon
removal projects to achieve carbon neutrality. Our
ultimate goal is to achieve Net Zero carbon emissions
by 2040.
Our purpose of helping everyone have a great day at
work, whilst protecting people and planet is at the heart
of what we do and as a global employer, our purpose
and values have never been more important. We are
in receipt of a strong AA rating by the MSCI and are
making substantial progress towards our goal to
source 100% certified green electricity by 2030.
Not only are we doing our part to tackle global warming,
but our services have an extraordinary opportunity to
radically reduce humanity’s negative environmental
impact by encouraging the adoption of hybrid working
in the more than 120 countries in which we operate.
In 2023, IWG published a landmark study with Arup, a
global leader in sustainable development, that shows
that hybrid working can facilitate major carbon savings
and has the potential for significant impact on the
climate crisis. The study measured the environmental
impact of hybrid working on six cities across the US
and UK: LA, New York City, Atlanta, London, Manchester
and Glasgow.
The study’s key finding is simply allowing people
to work close to home, enabling them to split their
time between a local workplace and home, has the
potential to reduce an employee’s work-related carbon
emissions by between 49% and 90%. These figures are
staggering and can make a genuine and tangible
difference in tackling the climate crisis.
IWG plc Annual Report and Accounts 2023 The Hybrid Boost to Local
Communities
Hybrid is boosting local economies too – a fact that I
know firsthand as I witness flexible workspaces spring
up in communities that used to be stripped of their
talent during the working day as people travelled every
day into city centres. In recent times, we’ve opened
new workspaces in multiple places that formerly would
simply not have had enough people working locally.
A recent report by IWG and Arup reveals that hybrid
working is set to have a major beneficial effect on US
and UK commuter towns, boosting local businesses
and creating new jobs. It’s a major economic shift that
will bring greater prosperity and greater opportunities
to formerly sleepy satellite towns. No longer places
to escape from, these are communities on the up,
transformed by the greatest shift in working practices
to have taken place in more than a century.
Thousands are changing their working habits, shifting from
daily trips to crowded, distant city centres to working
primarily in the commuter towns they call home, with only
occasional visits to city centre offices. The report predicts
that the presence of white-collar workers will increase by
up to 175% by 2043, with a 44% increase in those
choosing to work from local flexible workspaces.
Our Financial Performance in 2023
With such strong momentum globally behind the shift
to hybrid working, confirmed by our financial results for
2023, record system revenue and cash flows from
operations, we are very pleased to announce off the
back of our momentum, a restart to our progressive
dividend policy.
Following our Investor Day in December 2023, and
in response to investor feedback, we are reporting in
three divisions: Company-Owned & leased, Manged &
franchised, and Worka. We have also added further KPIs
to our reporting by measuring the number of rooms in
our network, and the revenue from these rooms. These
KPIs are well-understood in many industries, including
hotels, as it incorporates all expenditure.
I would like to take this opportunity to thank our
incredible team members that were the driving force
behind the rapid growth of our global network and an
excellent set of financial results.
Looking ahead
We enter the new year with good momentum. The
future for IWG and all our stakeholders remains bright
as we continue to grow our customer base, our global
network and our best-in-class portfolio of locations
and brands.
While 2023 was a record year for both revenue and
network expansion, it is clear that we’re only scratching
at the surface of our growth potential. With the
aforementioned 1.2 billion white-collar workers globally
and a potential audience valued at more than $2 trillion,
there is substantial room for growth and as a company,
we have a laser-like focus on capturing more of this
market over the coming months and years.
Mark Dixon, Founder and CEO
18 March 2024
21
Strategic report Market Review
The growing
flexible
workspace
market
Across the world, significant
forces are influencing the future
development of the flexible and
hybrid workspace market. The
underlying themes have been
in place for a long time and
accelerated dramatically over
recent years leaving the structural
growth drivers in the industry well
underpinned. Here we reflect on
how the ways we react to change
are enabling us to strengthen our
position as the global market leader.
22
Concern about the environment
By reducing commuting needs, continuing to
support people working at or near home 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
Hybrid working is now a pre-requisite for many
people. Research shows that the majority of
workers want to work from an office, but they
don’t want the commute and they demand
flexibility. Demand from companies of all sizes
for high-quality accommodation and services
in local markets continues to accelerate.
Evolving global economy
Corporates and consumers alike are aiming to
increase flexibility in every facet of their lives.
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, entering new markets, and initiating new
ways of maintaining closer relationships with
customers and suppliers alike.
Advancing technology
Historically, video conferencing and virtual meetings
were the preserve of the few – they were expensive
and temperamental. Advances in smart technology
and universal connectivity have enabled people to
choose how, when and where they work and recent
shifts have made remote communication the norm.
Advances in AI are further enabling the rise of
hybrid working – billions are now connecting
globally via the latest in video communications
and virtual reality platforms – a shift that’s being
enabled by major improvements in technology
and driving demand for hybrid workspaces.
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, green,
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.
• Investing in highly efficient, intelligent, green buildings,
continuously upgrading our estate and enabling
reduced commuting by opening more locations
• Increased demand for flexible workspace solutions,
outside city centres.
close to and in the communities where people want
• Upgrading or closing inefficient centres to improve
and can afford to live.
environmental performance across our portfolio.
• Growing requirement for advanced tech solutions to
• Supporting new ways of working that allow
support home working as individuals seek to enhance
people everywhere to contribute to the carbon-
their lifestyles and reduce their carbon footprints.
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.
• 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 long-term aspiration of reaching 30,000 centres.
• We ensure our customers gain from our scale,
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
• We leverage our unmatched insight into the
an appropriate range of digital offerings is a
key differentiator.
technological needs and expectations of businesses,
delivered by millions of individuals who use our
• Companies are focusing their attention on identifying
the right technological 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.
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 quickly and fluidly to rapidly changing
requirements are continuously evolving.
• Companies are seeking partners who can meet
needs and demands by developing bespoke solutions
that can be rapidly engineered for global uptake.
increasingly rigorous and mission-critical demands,
• We have the experience, scale and investment power
fast and efficiently.
• Growing complexity is increasing the need for
enterprise companies to have a single point of
contact for their property requirements.
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 2023 Concern about the environment
By reducing commuting needs, continuing to
support people working at or near home 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
Hybrid working is now a pre-requisite for many
people. Research shows that the majority of
workers want to work from an office, but they
don’t want the commute and they demand
flexibility. Demand from companies of all sizes
for high-quality accommodation and services
in local markets continues to accelerate.
Evolving global economy
Corporates and consumers alike are aiming to
increase flexibility in every facet of their lives.
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, entering new markets, and initiating new
ways of maintaining closer relationships with
customers and suppliers alike.
Advancing technology
Historically, video conferencing and virtual meetings
were the preserve of the few – they were expensive
and temperamental. Advances in smart technology
and universal connectivity have enabled people to
choose how, when and where they work and recent
shifts have made remote communication the norm.
Advances in AI are further enabling the rise of
hybrid working – billions are now connecting
globally via the latest in video communications
and virtual reality platforms – a shift that’s being
enabled by major improvements in technology
and driving demand for hybrid workspaces.
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, green,
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, green 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 to
• Supporting new ways of working that allow
support home working as individuals seek to enhance
their lifestyles and reduce their carbon footprints.
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 long-term aspiration 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 technological 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
technological 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
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.
• We can respond quickly and fluidly to rapidly changing
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.
23
Strategic report Business Model
Creating value
through our business
model
What we do
How we do it
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 centralised
support functions make implementation simple
and efficient.
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 platform and
centralised support
functions underpin
IWG’s operational
efficiency globally.
Centralised
support
functions
Centralised support
functions maximise
value for our partners,
franchisees, customers
and shareholders.
From procurement to
marketing, we, and our
stakeholders, benefit
from economies of
scale and global reach
to provide consistent
support and service
to the business.
Our strategic
pillars
See pages 26-29 to read more
about our strategic priorities
Our three
strategic priorities
enable sustainable
growth to achieve
our purpose.
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.
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,
franchisees and end customers
have a great day at work.
Key inputs
Our partner relationships
Our success depends on the success
of our partners and franchisees so we
use all our experience and expertise
to deliver the service and the support
they need.
Our people
We employ great people and help them
to achieve their full potential so they can
drive our and our partner’s success.
Our networks
It is our vision to have a centre serving
every community to support the
concept of the ‘15-minute city’ so
we and our partners can empower
businesses and individuals to work
flexibly and productively from
anywhere in the world.
Our brands
Our unique approach to brands allows us
to segment the market globally, and on a
local basis enables us to offer a solution
to all businesses, from a single person all
the way up to the biggest companies on
the planet allowing us to maximise uptake
and create a unique growth opportunity.
Our formats
Versatile, green, inspiring, secure and
practical, our formats drive employee
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.
24
IWG plc Annual Report and Accounts 2023 As we enter our 35th year, we have successfully developed our business
model to deliver cash flow from our three divisions. Today, with our
unmatched scale and network, our unique multi-brand approach and
highly efficient platform, IWG is poised for unprecedented growth.
Managed & Franchise partners
Our franchise partners find it easy to use our
business model, brands and access the group’s
marketing support.
Scaled
platform
IWG’s different brands
operate from a single,
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
Managed & Franchise
Partnerships
Platform
(technology)
See pages 50-59 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.
25
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 increases in fee
income, and create ever-closer
customer relationships.
26
Delivering growth through
our three strategic pillars:
y
t
i
n
u
t
r
o
p
p
o
t
e
k
r
a
M
1
Network
Our fast-growing, unique, global network,
providing high-quality workspace wherever
it is required, under a multiplicity of leading
brands and in increasingly advanced
buildings in cities, towns, suburbs and
rural locations across the world.
See page 27 for more on
our locations
2
Managed & Franchised
Partnerships
Our unique approach to franchising and
partnering with building owners, creating
close, symbiotic relationships and driving
significant revenue increases, now and into
the future.
See page 28 for more on
partners and franchising
3
Platform
Our approach to continuous-improvement
of technological development, bringing
our customers ever-better solutions that
maximise workforce efficiency, flexibility
and loyalty, no matter where their
employees work.
See page 29 for more on our
technology
IWG plc Annual Report and Accounts 2023
Our Strategy: Network
Our global network:
World-
leading, fast-
growing and
worker-
focused
The worldwide hybrid working
market is growing fast. We
are seeking to grow our global
network ahead of the curve to
attract an ever-increasing share
of the world’s employers and
their employees.
Including our pipeline, with over 4000 high-
quality centres serving more than eight million
members 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, enabled
by technology, 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...
8mMembers
Global Operations
Over
120countries
27
Strategic report Our 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 show
huge growth by 2030, with the long-term market
opportunity ultimately forecast to reach $2tn. As such,
we are uniquely well-positioned to help ambitious
businesses diversify into this fast-growing sector,
leveraging our 35 years of experience and our deep
understanding of over 120 national markets.
We are uniquely
well-positioned to help
ambitious businesses
diversify into this
fast-growing sector,
leveraging our 35 years
of experience.”
28
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 and franchisees:
• 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 shrinking their
traditional real-estate footprint 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
the market leader, only IWG provides a roadmap to
success, helping to create amenities that benefit
tenants while delivering premium income.
IWG plc Annual Report and Accounts 2023 Our 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 ensuring that customers get the tools
they need from us to fulfil their business goals, we ensure
their, and our growth is seamlessly interconnected,
maximising loyalty for long-term relationships.
With our global footprint of over 120 countries,
the demands placed on the technology we use to
support our customers are virtually unique. It must
meet the needs at every touchpoint, for millions of
people working in multiple languages, in multiple
places – in the office, at home and on the move.
As a result, we invest nearly £40m annually in
developing systems, automation and apps across
many areas. These range 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 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
times of global uncertainty. IWG has built a full
digital representation of its unique global estate,
to help businesses adopt flexible planning strategies
for the future. This enables 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. This unique data set, and best in class
AI tools, combined with an active feedback loop, is an
enormously powerful resource for training machine-
learning algorithms that 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.
29
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.
Industry-leading
profitable growth
Best-in-class cost
leadership
Global multi-
brand network
Capital-light
growth
RevPAR
Adjusted EBITDA1 (£m)
£403m
‘23
‘22
‘21
‘20
‘19
80
134
403
311
428
Overhead as percentage of revenue (%)
15.0%
‘23
‘22
‘21
‘20
‘19
15.0
15.5
14.7
15.1
10.8
Network (locations)
3,514
‘23
‘22
‘21
‘20
‘19
3,514
3,345
3,314
3,313
3,388
Net growth capital investment (£m)
£75m
‘23
‘22
‘21
‘20
‘19
75
141
104
177
260
IWG Network RevPAR
£291
‘23
‘22
291
280
1. Adjusted EBITDA before the application of IFRS 16
1
2
3
4
5
30
IWG plc Annual Report and Accounts 2023 Overview
Future ambitions and risk
Adjusted EBITDA (before application of IFRS 16)
up 34% on a constant currency basis to £403m,
reflecting the great progress we have made in
focusing on driving revenue through our platform
and a laser like focus on costs and efficiency.
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%. Group overheads for
2023 increased 5% at constant currency to £444m
(2022: £428m). This increase reflects the successful
investment in our Managed & Franchised sales team
and our marketing to support our pivot
to capital-light growth, yielding strong results
with 867 new deals signed in 2023.
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
159 locations during 2023 with 328 new high-quality
locations added to maintain the largest global and
most widely distributed network.
We remain clearly focused on accelerating growth through
our capital-light strategy through Managed & Franchised
locations. We will continue to rationalise certain locations
where it makes sense – but given the time lag between
signing and opening our managed partnership locations,
growth in the network should accelerate from here.
Simultaneously we will continue to develop our brands
to enhance the choice available to more customers.
As we continue our strategy of pivoting our
growth and business to the capital-light Managed
& Franchised segment, Group net growth capital
expenditure fell to £75m. This investment resulted
in our highest ever room count at 895,000 rooms
and 3,514 locations.
In 2023 we signed a total of 867 new centre deals
(2022: 462 signed) - of which 839 were capital-light
(2022: 421) which will be added to our global network in
the future. Given the focus on Managed & Franchised,
97% of new signings were capital-light which will
continue to significantly reduce our net growth capital
expenditure in future years.
At our Investor Day in December 2023, we announced
that we will report a revenue KPI ‘RevPAR’ as a new
monthly average KPI, defined as the system revenue
of the IWG Network (excluding Worka and excluding
centres opened and closed during the year), divided
by the number of available rooms. RevPAR is a
well-understood measure used across many
industries and is particularly relevant to IWG as
it incorporates all revenues received across IWG’s
expansive product portfolio. On a constant currency
basis, RevPAR grew by 6% in 2023.
We are very focused on driving revenue through the
system and will report the result as RevPAR for the
Group, Company-Owned & Leased and Managed
& Franchised. In 2023, IWG Network RevPAR increased
by 6% to £291, Company-Owned & Leased increased
by 6% to £280, and Managed & Franchised by 1%.
RevPAR in Managed & Franchised was £381 in 2023
with an estimated RevPAR of c£250 once all rooms
including the signed pipeline have opened and matured.
31
Strategic report Our brands
Adding value
through our brands
At IWG, our brands form part of
the largest workspace platform in
the world. As we help businesses
and people everywhere reimagine
how they work, what empowers
our customers the most is choice.
With a network of thousands of locations globally and
a range of solutions, our portfolio of brands enable us
to meet different design aesthetics, support different
workstyles, while recognising that when it comes to
workspace environment, one size does not fit all.
Approaching 35 years of experience, part of IWG’s role
is to help educate, inspire and enable our customers
to navigate the world of work and find the right solution
and space within our platform that supports their
business. We also help our partners capitalise on the
rapidly growing hybrid working market by unlocking the
value in their empty spaces. They too benefit from a
range of brands to choose from to suit their space and
local demographic.
What makes us unique from any other workspace
provider is our multi-brand approach. Through scale
and choice, we are uniquely geared to help businesses
of any size, from sole traders and start-ups to many of
the largest house-hold names in the world. Our aim is
to make workspace simple for everyone – one contract,
one price, everything that’s needed included.
32
IWG plc Annual Report and Accounts 2023 Strategic report
Global operating brands
Including some of the world’s most recognisable workspace brands,
our global operating brands cover a range of price points and aesthetic
requirements to meet the needs of our customers. These are the brands
through which we grow our network, from high-end luxury workspace,
to a practical and cost-effective fit-out and everything in between.
The world’s
flexible
workspace
experts
Regus was founded in 1989 to
support any individual or business
looking for a professional workspace
environment that gives them the
scale they need to succeed. With the
largest network of workspaces, Regus
enables everyone to find a workspace
that’s closer to home, so everyone
can enjoy a happier, healthier and
more productive lifestyle.
33
Beautifully
designed
collaborative
workspace
Spaces was founded in 2006 in
Amsterdam. It provides workers with
beautiful and creative environments
where they can be inspired and can
connect. Each Spaces is designed to
offer a professional and collaborative
working environment full of timeless
design classics, inspiring art and
accessories combined with a thriving
business community of like-minded
professionals.
All the essentials
in one
workspace
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.
Our brands continued
Your key to the
world’s ultimate
business
locations
Signature represents an exclusive
selection of landmark buildings in
the most sought-after locations
in the world. Signature provides
a premium working environment,
with custom designs reflecting the
quality and nature of the building.
It provides businesses with ultimate
prestige, offering an exclusive
address and place to work that
truly enhances their reputation,
along with a community programme
of partnerships, professional events
and hospitality services.
34
IWG plc Annual Report and Accounts 2023 Strategic report
Country
brands
No two markets are the same and as
our network spans across 120 countries,
our country-level brands represent
something unique tailored to the
country they’re in. They are often
either well established existing
brands that have been acquired
and the brand equity has been
preserved, or the brand is offering
something distinct such as light
industrial space as opposed to
more traditional office space.
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 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.
Central Working provides flexible and
scalable spaces, fully tailored to match
customer needs. More than just an
office space, it helps advance
business by providing access to
training, networking events
and a supportive
community.
The 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.
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.
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.
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.
Copernico provides smart working
environments across Italy with the aim
to change how 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.
35
Our brands continued
Digital
brands
With the advance of ‘on-demand’
platforms ranging from instant
travel to instant accommodation,
our digital brands have been built
and developed to meet the demand
for ‘instant workspace’.
36
Worka
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 will meet the
needs of all hybrid workers globally.
IWG plc Annual Report and Accounts 2023 Strategic report
Strategic report
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.
Managed conventional
office space
Managed Office
Solutions
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.
37
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.
Scope 3
reduction through
improved supply
chain
Customers
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?
IWG exists to serve its customers. By paying for our services,
they enable us to consistently improve our global offering with
ever-better property models, working environments, value,
service and business solutions that collectively add up to
a great day at work.
What do they want from us?
Our customers need us to understand their changing needs,
responding fast and with precision. This means giving them the
flexibility to achieve rapid shifts on cost, location and scale,
while providing the great working environments, world-class IT
and admin support they need to achieve their business goals.
How do we engage with them?
We empower our customers to choose from a wide range of
leading brands, so they can find the precise solution that works
best for their business. We also give them and their people all the
support they need, wherever they are: in the office, at home and
on the move.
Partners
Employees
Partners and 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.
Why are they important to us?
They not only own or manage the buildings where
our customers work, they also bring us the benefits
of their experience across a range of niche and local markets
to deepen our understanding of specific customer needs.
What do they want from us?
Our partners need flexible, bespoke relationships based
on shared trust, enabling them to maximise the benefits
of our proven business model, our experience, the power
of our brands and our global leadership position.
How do we engage with them?
We provide established international sales and marketing
channels and comprehensive training from the outset,
as well as ongoing support and training from
an experienced global team.
38
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.
Why are they important to us?
They are the public face of IWG. They ensure we deliver
customer value and drive our growth, attract new business
and deliver the returns our shareholders want.
What do they want from us?
Like everybody else, they want a great day at work,
based on mutual loyalty, exciting rewards, effective
development opportunities and the benefits associated
with working for a global leader.
How do we engage with them?
Our People Promise commits us to delivering interesting
and achievable work, together with sensitive management,
a company that cares, and the opportunity to advance
and develop their careers with us.
IWG plc Annual Report and Accounts 2023 >400
investor
meetings
Shareholders
Communities
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 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
a consistent 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.
How do we engage with them?
In 2023, our Investor Relations function held more than
400 meetings with investors and analysts. These meetings
were held both virtually and in person. Additionally the Investor
Day in December 2023 was attended by 75 people in person
with a further 200 virtual attendees.
The places where our centres are based, increasingly home
to where our own people and customers’ employees live
and wish to work.
Why are they important to us?
They are increasingly the source not only of our employees
but our customers too, enabling us to grow at scale in multiple
local markets across the world.
What do they want from us?
They want us to help them thrive, attracting new employment
and enabling local people to work closer to home.
How do we engage with them?
We are a part of the community, and are heavily involved
in community projects from education to health-related
and other initiatives.
39
Strategic report Chief Financial Officer’s Review
We have
continued to
grow rapidly
and profitably
2023 has been a good year
for the Group, delivering
both its highest-ever
system-wide revenue
of £3.3bn in IWG’s
35-year history whilst
simultaneously growing
adjusted EBITDA and cash
generation, all of which
were significantly higher
than in 2022.”
Charlie Steel, Chief Financial Officer
40
Charlie Steel, Chief Financial Officer
Combining the Group’s unique brand strategy and
unrivalled global network with an innovative new
route to market has enabled us to grow with far less
capital intensity, leaving the business well positioned
for 2024. We have delivered growth, cashflow, lower
capex, debt paydown, and we are delighted to
reinstate the dividend, as a demonstration of our
financial strength and confidence in future delivery.
In short, we have delivered growth, cash and a
dividend. We also continue to make the financials
clearer to stakeholders.
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.
IWG plc Annual Report and Accounts 2023 Group income statement (£m)
System-wide revenue
Group revenue
Gross profit before impact of rationalisations1
Margin
Rationalisation items1
Gross Profit
Overheads & Joint ventures
Operating Profit before impact of rationalisations1
Operating Profit
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
Attributable to shareholders
2023
2022
Constant
currency
Actual
Currency
3,335
2,958
738
3,086
2,751
559
+10%
+9%
35%
+8%
+8%
32%
24.9%
20.3%
n/a
+4.6ppt
+5%
+5%
+91%
+7%
+2%
+4%
+81%
-2%
+32%
(149)
589
(444)
290
145
(334)
(189)
(27)
-14%
(216)
–
(216)
(21.4)
(21.4)
16
575
(428)
159
147
(252)
(105)
32
31%
(73)
1
(72)
(7.0)
(6.9)
1. Rationalisations include charges related to closures, one-off impairments and other one-off items (see p. 42)
Additions to segmental reporting
At our Investor Day in December 2023 we outlined our strategy to grow our business both quickly and capital-light, especially
through our Managed & Franchised segment. The Group excluding Worka, the IWG Network, is managed through a matrix
organisation, i.e. by geographical regions and by ownership structure. Hence, in addition to the three geographical regions
(Americas, Asia, and EMEA) we are additionally reporting results of IWG Network by ownership structure (Company-Owned &
Leased and Managed & Franchised). This matrix reporting reflects how we practically manage the IWG Network on a day-to-
day basis. The management and reporting of the Worka segment remains unchanged.
Revenue
System-wide revenue increased by 8% or 10% on a constant currency basis, to £3,335m. Group revenue also increased
by 8% or 9% at constant currency to £2,958m. All three divisions reported excellent year-on-year revenue growth. Our
Managed & Franchised business saw fee income increase by 49% at constant currency to £50m mainly driven by 232
centre openings. Our biggest division, Company-Owned & Leased, reported growth of 7% at constant currency to
£2,589m and Worka reported revenue progression of 18% to £319m.
System revenue
Group Revenue
Revenue (£m)
Managed & Franchised
2023
427
2022
369
Company-Owned & Leased
2,589
2,446
Worka
Group
319
271
3,335
3,086
Actual
currency
Constant
currency
+16%
+6%
+18%
+8%
+20%
+7%
+18%
+10%
2023
50
2022
34
2,589
2,446
319
2,958
271
2,751
Actual
currency
Constant
currency
+47%
+49%
+6%
+18%
+8%
+7%
+18%
+9%
41
Strategic report
Chief Financial Officer’s Review
continued
Revenue KPIs – RevPAR
At our Investor Day in December 2023, we announced that we will report “RevPAR” as a new revenue performance
metric. RevPAR is a monthly average KPI, defined as the system revenue of the IWG Network (excluding Worka and
excluding centres opened and closed during the year), divided by the number of available rooms. RevPAR is a well-
understood measure used across many industries and is particularly relevant to IWG as it incorporates all revenues
received across IWG’s expansive product portfolio.
RevPAR grew by 6% on a constant currency basis to £291. Company-Owned & Leased RevPAR grew by 6% to £280
year-over-year driven primarily by higher pricing and ancillary revenue, with broad-based regional growth. Managed &
Franchised saw a 1% constant currency growth in RevPAR to £381.
2023
381
280
n.a.
291
2022
392
269
n.a.
280
Actual
currency
Constant
currency
-3%
+4%
–
+4%
+1%
+6%
–
+6%
Gross Profit
Gross Profit, excluding rationalisations, increased
35% at constant currency from £559m in 2022 to
£738m in 2023, resulting in 24.9% gross margin, a
4.6ppt improvement on 2022. Overall Gross Profit
increased 5% at constant currency and by 2% at
actual currency to £589m (2022: £575m).
Managed & Franchised delivered a 49% constant
currency improvement as more centres opened
and also reflects the high margin of this segment.
Gross Profit excluding rationalisations in Company-
Owned & Leased increased by 41% at constant
currency mainly as a result of increased RevPAR and
further cost control. The rationalisation impact of
£(149)m relates to the Company-Owned & Leased
segment relating to network rationalisation and a
one-off impairment charges relating to the fixed
telephony system, as technology moves away
from fixed landlines.
Worka Gross Profit improved by 16%, commensurate
with revenue growth.
Overheads and Joint-Ventures
The investment in our in-country sales teams and
marketing to support our pivot to capital-light growth
is translating through to earnings and we are pleased
with the returns this investment is yielding. We signed
867 new deals in 2023 vs 462 in 2022. The Group’s
Overhead cost including joint-ventures increased by
5% at constant currency to £(444)m compared to
£(428)m in the prior year. Whilst our partnership sales
team is an ongoing cost, we are not expecting it to
increase linearly with signings; as a result overheads
as a percentage of revenue is expected to fall.
System RevPAR (£, monthly average)
Managed & Franchised
Company-Owned & Leased
Worka
IWG Network
Rationalisation impact
In 2022, the Group specifically identified adjusting items
in response to the direct impacts of the COVID-19
pandemic on its financial results. However, in 2023 the
measurement of the impact of COVID-19 on financial
results was no longer distinguishable. The Group
consequently, has updated its classification criteria
to disclose all transactions not indicative of the
underlying performance of the Group as adjusting items.
To maintain consistency and comparability, the Group
have also retrospectively restated the comparative
information to align with this refined classification.
The Group identified net adjusting items on operating
profit relating to rationalisations in the network of
£(145)m compared to £(12)m in 2022, of which
£(103)m are non-cash items (2022: reversal of £12m).
These items refer to the impairment of PPE of £(57)m
(2022: reversal of £82m), closure costs (the actual costs
of closing centres, including non-cash write-downs) of
£(58)m (2022: £(59)m), asset impairment related to
Russia & Ukraine of £(4)m (2022: £(9)m) and other
one-off items including legal, acquisition and transaction
cost as well as obsolete desktop phone write-offs of
£(26)m (2022: £(26)m).
The PP&E reversal in 2022 was as a result of reversing
some of the provision for closures that was made in
2020, forecasting closures as a result of Covid-19.
Rationalisation impact (£m)
Closure costs
PP&E (impairment)/reversal
Obsolete desktop phone
write-offs & others
Rationalisation impact
on Gross Profit
Rationalisation impact on SG&A
Rationalisation impact on
Operating Profit
2023
(58)
(57)
(34)
(149)
4
2022
(59)
82
(7)
16
(28)
(145)
(12)
42
IWG plc Annual Report and Accounts 2023 Gross Profit (£m)
Managed & Franchised
Company-Owned & Leased
Worka
Gross Profit before impact of rationalisations
Closure costs
PP&E (impairment)/reversal
Obsolete desktop phone write-offs & others
Total rationalisation impact
Gross Profit
Operating Profit
Operating Profit before rationalisations increased
strongly by 91% at constant currency from £159m in
2022 to £290m in 2023, reflecting higher revenue and
cost control across all segments. Reported Operating
Profit improved by 7% at constant currency and was
at £145m (2022: £147m). As previously mentioned,
£(145)m in 2023 (2022: £(12)m) relates predominantly
to network rationalisation and desktop telephony
impairment charges.
Adjusted EBITDA
The Group’s Adjusted EBITDA increased by 9% to
£1,472m (2022: £1,348m) and Pre-IFRS Adjusted EBITDA
increased 30% to £403m (2022: £311m). On a constant
currency basis, Pre-IFRS Adjusted EBITDA increased
34% and would have been £415m had FX rates remained
constant throughout the year.
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, as well
as 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.
To bridge the Group’s Adjusted EBITDA of £1,472m
under the IFRS 16 standard to £403m Adjusted Pre-IFRS
EBITDA under IAS 17, we need to recognise rental
income in subleases which are recognised 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.
2023
50
528
160
738
(58)
(57)
(34)
(149)
589
Actual
currency
Constant
currency
+47%
+36%
+16%
+32%
+49%
+41%
+16%
+35%
2022
34
387
138
559
(59)
82
(7)
16
575
+2%
+5%
IFRS EBITDA to pre-IFRS 16 EBITDA bridge (£m)
Adjusted EBITDA
Rent income
Rent expense
Other costs
Net impact of network
rationalisation charges
Net impact of PPE impairments
vs. Closure cost provisions
Net impact of Russia & Ukraine
asset impairments and other
items
Adjusted EBITDA before
application of IFRS 16
2023
1,472
60
2022
1,348
50
(1,106)
(1,059)
(8)
(10)
(14)
(38)
8
(9)
403
10
10
311
Adjusted EBITDA by segment
Company Owned & Leased adjusted EBITDA increased
strongly by 11% at constant currency to £1,364m from
£1,251m in 2022 driven by improving revenue and good
cost control.
Managed & Franchised in 2023 showed strong 49%
revenue increase which was largely offset by our
investments into this capital-light growth model
which resulted in an EBITDA of £(20)m (2022: £(15)m).
As stated previously, the investment in Managed &
Franchised is now made and will not grow significantly
anymore, so adjusted EBITDA here will naturally improve
as fee revenue is generated.
Worka delivered good results with EBITDA growth of
14% at constant currency to £128m (2022: £112m).
Adjusted EBITDA
by segment (£m)
Managed &
Franchised
Company-
Owned & Leased
Worka
Group
2023
2022
Actual
currency
Constant
currency
(20)
(15)
n.m.
n.m.
1,364
128
1,251
112
1,472
1,348
+9%
+14%
+9%
+11%
+14%
+11%
43
Strategic report Chief Financial Officer’s Review
continued
Foreign exchange
Per £ sterling
US dollar
Euro
At 31 Dec
Average
2023
1.27
1.15
2022
1.21
1.13
%
-6%
-2%
2023
1.25
1.15
2022
1.23
1.17
%
-1%
+2%
Network growth
The success of our continued strategy to expand through partnerships is materialising. Our network increased by 5% to 3,514
centres (2022: 3,345). We opened 328 new centres (2022: 152 centres) and rationalised (159) centres (2022: (121) centres).
Furthermore, 867 new centre deals were signed in 2023, 88% more than in 2022, which will lead to new centre openings going
forward. Out of the 867 new deals signed 97% or 839 deals are capital-light which underpins our success of growing the
network through capital-light partnerships.
Key KPIs
Number of centres open
Centre openings
Of which capital-light1
In %
Total new centre deals signed
Of which capital-light1
In %
2023
2022
3,514
3,345
328
301
92%
867
839
97%
152
113
74%
462
421
91%
YoY
change
YoY
change in %
169
176
188
405
418
+5%
+116%
+166%
+88%
+99%
1. Includes locations signed/opened in Managed & Franchised and Variable rent areas
Of the 328 centres opened in 2023, 301 centres were capital-light openings which comprised of managed partnership
centres, variable rent centres, franchised centres and joint-venture centres. Only 27 centre openings were on a fully
conventional basis.
Our estate of 3,514 centres as per the end of December 2023 is split into 19% or 682 centres in Managed & Franchised,
which increased by 41% year-on-year, and 2,832 centres in Company-Owned & Leased (of which 780 are based on
variable rents). Based on the strong growth of opening new managed partnership centres and successful renegotiations
of existing centres we increased our estate in Managed partnerships by 174 centres or 215% to 255 centres. Strong
growth in Managed partnerships will continue in 2024.
44
IWG plc Annual Report and Accounts 2023 2023 System location movements by type
Conventional
Variable rent (capital-light)
Company-Owned & Leased
Managed & Franchised (capital-light)
Total
2022
2,103
757
2,860
485
3,345
Centre
Openings
Centre
Rationalisations
Changed
+27
+69
+96
+232
+328
(91)
(42)
(133)
(26)
(159)
+13
(4)
+9
(9)
-
2023
2,052
780
2,832
682
3,514
2023 System rooms movements by type (‘000)
Dec-2022
Rooms
Opened
Rooms
Rationalised
Changed
Dec-2023
Conventional
Variable rent (capital-light)
Company-Owned & Leased
Managed & Franchised (capital-light)
Total
566
206
772
92
864
+9
+20
+29
+37
+66
(21)
(10)
(31)
(4)
(35)
+4
(2)
+2
(2)
0
558
214
772
123
895
Finance costs and taxation
The Group reported a net finance expense for the year
of £(334)m (2022: £(252)m).
The net finance expense of £(334)m in 2023 mainly
includes cash interest of £(55)m related to borrowing
facilities (2022: £(38)m) plus interest on the Group’s
lease liabilities of £(280)m (2022: £(230)m). The
increase in the finance expense is mainly driven by
increased interest rates.
The effective tax rate in 2023 is -14% (2022: 31%). The
Group has adopted the amendment to IAS 12 from
1 January 2023, first reported during H1 2023, that
also impacted the 2022 accounted deferred tax asset
on leases. Following the amendments, the Group has
recognised a separate deferred tax asset in relation to
its lease liabilities and a deferred tax liability in relation
to its right-of-use assets. As a result, retained earnings
as at 1 January 2023 was restated by £77m (1 January
2022: £29m), which required a £48m income tax credit
restatement in 2022.
Earnings per share
Earnings per share from continuing operations in
2023 was a loss of (21.4)p (2022: (7.0)p). Earnings
per share attributable to ordinary shareholders in
2023 was a loss of (21.4)p (2022: (6.9)p).
The higher loss from continuing operations was driven
primarily by non-cash costs, including one-off non-
cash costs related to the write-off of legacy telephony
systems and higher one-off network rationalisation
charges, and higher lease interest costs. Many of
these are not expected to recur during 2024.
The weighted average number of shares in issue during
the year was 1,006,685,491 (2022: 1,006,884,755). When
profitable, the weighted average number of shares for
diluted earnings per share would be 1,089,381,136
(2022: 1,090,855,142). In 2023 519,022 shares were
purchased in the open market and 525,674 treasury
shares held by the Group were utilized to satisfy
the exercise of share awards by employees. At
31 December 2023 the Group held 50,558,201
treasury shares (31 December 2022: 50,564,853).
45
Strategic report Chief Financial Officer’s Review
continued
Cashflow
Group Cashflow Statement (£m)
Operating profit
Depreciation & amortization
Rationalisation impact
Rent income
Rent expense
Other costs
Pre-IFRS additional rationalisation impact differences
Adjusted 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 from business activities2
Tax paid
Finance costs on bank & other facilities
Cash inflow 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 inflow/(outflow) before corporate activities
Purchase of shares
Net proceeds on transactions
Net (repayments)/proceeds from loans
Net cash (outflow)/inflow for the year
Opening net cash
FX movements
Closing cash
2023
145
1,182
145
60
2022
147
1,189
12
50
(1,106)
(1,059)
(8)
(15)
403
92
(95)
(93)
(10)
297
(35)
(55)
207
(115)
40
(75)
(10)
122
(1)
–
(164)
(43)
161
(8)
110
(10)
(18)
311
22
(104)
(90)
12
151
(24)
(37)
90
(180)
39
(141)
(307)
(358)
(5)
54
386
77
78
6
161
1. Includes capitalised rent related to centre openings (gross growth capital expenditure) of £(2)m (2022: £(12)m).
2. Cash flow before growth capex, corporate activities, tax and finance cost on bank & other facilities.
We continued to manage our costs tightly, restructure
centres where necessary and improve revenue. This
resulted in strong cash inflow from business activities
in 2023 of £297m compared to £151m in 2022.
Working capital, excluding the amortisation of partner
contributions, saw an inflow during the year. This was
due to higher customer deposit inflows, as a result of
higher revenue and growth in rooms, controlled supplier
payments and other non-cash expenses recognised in
operating profit.
Working capital relating the amortisation of partner
contributions refers to historic cash contributions made
by landlords for growth capex in the Company-Owned
& Leased segment (shown as growth-related partner
contributions further down the cash flow statement) and
is amortised over the lifetime of the corresponding lease.
Cash tax paid was £(35)m in 2023 (2022: £(24)m),
and primarily relates to corporate income tax paid
in various countries and a £(10)m payment of 2022
US taxes based on the estimated US tax liability as
reported at year end 2022. Finance costs on bank &
other facilities was £(55)m in 2023 vs. £(37)m in 2022.
Cash inflow before growth capex and corporate
activities was £207m (2022: £90m).
Total net investment, including acquisitions and all
capex, was £(178)m (2022: £(538)m). This comprises
£(93)m net maintenance capex (of which £(41)m vs.
£(58)m in 2022 was spent on centres), £(75)m of net
growth capex (of which £(55)m vs. £(104)m in 2022
was spent on centres). Included within the total net
investment of £(178)m is £(10)m of M&A (2022: £(307)
m) and £(72)m investments into the platform and
systems, new products and processes (2022: £(69)m),
which also sits within Worka.
46
IWG plc Annual Report and Accounts 2023 It is worth noting that net growth capital expenditure
was significantly lower in 2023 at £(75)m compared to
£(141)m in 2022 and demonstrates the benefit of our
capital-light growth strategy. Centre-related growth
capex is expected to fall further in 2024.
Net cash before FX movements in 2023 decreased by
£(43)m primarily due to the repayment of loans of
£(164)m.
Net debt (£m)
Closing cash
Opening loans
Net proceeds from issue &
repayment of loans
FX impact on loans
Amortisation of the Convertible
Bond’s derivative financial
instrument (net)
Net financial debt
2023
110
2022
161
(873)
(475)
164
2
(386)
(1)
(11)
(608)
(11)
(712)
Opening lease liabilities (net)
(5,892)
(6,121)
Principal & interest payments on
finance leases
Non-cash movements (net)
Principal & interest received on
net lease investment
FX impact on lease liabilities &
investments (net)
Net debt
1,215
(738)
1,227
(524)
(61)
(48)
196
(426)
(5,888)
(6,604)
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 risk can
be found on pages 50-58 of the 2023 Annual Report
and Accounts. With the exception of the exchange rate
risk which was downgraded due to the change of the
reporting currency to USD as of 1st January 2024, the
other principal risks and uncertainties are unchanged.
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
year 2023. Details of related party transactions that
have taken place in the period can be found in note 31.
Dividends
As previously announced, IWG proposes resuming
dividend payments. Accordingly, the Board is
recommending a final dividend of 1.0p per share
which, if approved, would be payable on 31 May 2024
to shareholders on the register at the close of business
on 3 May 2024.
Financing
In June 2023 the Group successfully repaid the
non-recourse bridge facility, with a gross balance
of £(270)m at 31 December 2022, by increasing its
existing multicurrency, unsecured Revolving Credit
Facility (“RCF”) from £(750)m to £(875)m. Additionally,
the final maturity date of the RCF is in November 2025,
previously in March 2025, and no material terms, such
as pricing, have changed.
The Group also has a convertible bond of £(329)m
(face value £(350)m, 31 December 2022: £(318)m)
at 31 December 2023 with an interest rate of 0.5%,
due for repayment or conversion at £4.5807 per share
in December 2027 with an option for the bondholders
to put the instrument back to the Group in December
2025 at par.
Overall, net financial debt was £(608)m at 31 December
2023 (31 December 2022: £(712)m).
The Group’s total debt facilities, including details
of drawings, is summarized below:
Net financial debt (£m)
Convertible bond
Non-recourse bridge facility
Revolving credit facility (RCF)
Total facilities
2023
2022
(329)
–
(875)
(318)
(330)
(750)
(1,204)
(1,398)
Revolving credit facility (RCF)
(875)
(750)
RCF available (undrawn)
RCF guarantee utilisation
RCF drawn
Non-recourse bridge facility
outstanding
Convertible bond
Other debt
Closing cash
Net financial debt
219
290
173
313
(366)
(264)
–
(329)
(23)
110
(608)
(270)
(318)
(21)
161
(712)
At December 2023 the Group complied with all facility
covenants.
As a result of the Group moving to USD reporting in
2024, it has also transitioned the majority of its financial
debt exposure to USD.
• In January 2024, the Group took out a forward swap
on the £350m face value of the convertible bond
from GBP into USD, which is payable in December
2025. The resulting face value of the convertible
bond is fixed at $445m.
• In February 2024, the Group reached an agreement
with its banks to swap the £875m RCF facility into
USD, resulting in the facility size being $1,107m.
Although the facility is multicurrency, the majority
of the drawings are in USD.
The Group is seeking to refinance and increase the
tenor of some of its debt facilities during 2024.
47
Strategic report Chief Financial Officer’s Review
continued
Combining the Group’s
unique brand strategy and
unrivalled global network
with an innovative new
route to market has
enabled us to grow with
far less capital intensity,
leaving the business well
positioned for 2024. We
have delivered growth,
cashflow, lower capex,
debt paydown, and we
are delighted to reinstate
the dividend.”
Charlie Steel, Chief Financial Officer
48
Going concern
The Group reported a loss after tax of £(216)m
(2022: £(73)m) from continuing operations in 2023.
However, cashflow before growth capex and corporate
activities but after interest and tax was £207m
(2022: £90m). Furthermore, net cash of £1,197m
(2022: £1,147m) was generated from operations during
the same period. Although the Group’s balance sheet
at 31 December 2023 reports a net current liability
position of £(1,685)m (31 December 2022: £(1,868)m),
the Directors concluded after a comprehensive review
that no liquidity risk exists as:
1. The Group had funding available under the Group’s
£(875)m revolving credit facility of £219m
(31 December 2022: £173m) which was available and
undrawn at 31 December 2023. The facility’s current
maturity date is November 2025;
2. A significant proportion of the net current liability
position is due to lease liabilities which are held in
non-recourse special purpose vehicles but also with a
corresponding right-of-use asset. A large proportion
of the net current liabilities comprise non-cash
liabilities such as deferred revenue of £433m
(2022: £455m) which will be recognised in future
periods through the income statement. The Group
holds customer deposits of £459m (2022: £447m)
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; and
3. The Group maintained a 12-month rolling forecast and
a three-year strategic outlook. It also monitored the
covenants in its facility to manage the risk of potential
breach. The Group expects to be able to refinance
IWG plc Annual Report and Accounts 2023 external debt and/or renew committed facilities as
they become due, which is the assumption made in
the viability scenario modelling, and 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
uncertainty.
The Directors consider that the Group is well placed
to successfully manage the actual and potential risks
faced by the organisation including risks related to
inflationary pressures and geopolitical tensions.
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
18 March 2024
49
Strategic report Supply chain transparency
Supply chain transparency became a stand alone
principal risk to the business in 2023. Conducting
our business in a responsible manner is an important
value for IWG. As such, it’s vital that our supply chain
demonstrates responsible practices. We note the risks
associated with transparency and have put in place a
number of measures to manage this risk, including, but
not limited to, a centralised global supply chain that
enables enhanced transparency and reporting.
Principal risks to the achievement
of our strategy
Our principal risks are linked to our key business
objectives and overall strategy and were considered
in the context of the ongoing economic downturn
as well as market and competition changes.
A critical component of the risk management process
is to assess the impact and likelihood of risks, allowing
determination to be made over the current level of
controls in place versus future controls and risk status.
All our principal risks are managed in accordance with
our Group risk appetite and mitigated as far as reasonably
practical. We have zero tolerance of financial and
ethical non-compliance, and aim to have our health,
safety, environmental and security risks managed to
levels that are as low as reasonably practicable.
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;
• Audit Committee review of our principal risks, their
mitigation and status;
• an annual review of all risks in our risk register,
updated regularly for significant changes between
annual reviews.
Risk management and principal risks
Managing
our risks
Risk management is an integral
part of IWG’s operational practices
and strategic planning process.
Having efficient and robust
enterprise risk management is
vitally important to the achievement
of our strategic objectives. 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 implement 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.
Three lines model
IWG operates the Three Lines model to manage risk,
endorsed by the Board.
See diagram on page 51.
Three lines model
IWG’s risk management framework is designed to
reduce and manage, rather than eliminate risk 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 has a comprehensive
approach to risk management, as set out in more detail
in the Corporate Governance report on pages 80 to 89.
In 2023, our risk work incorporated ongoing
economic disruption, market changes, climate change
considerations and supply chain transparency impacts
on our principal risks.
In particular, external risks, and those outside of the
Group’s control were considered and included as part
of scenario testing relevant to our Viability Statement.
50
IWG plc Annual Report and Accounts 2023 Three lines of defence
Board
Sets the strategy
Defines IWG’s risk appetite
Monitors risk management
process
Assesses overall
effectiveness of risk
management
Audit
Committee
Reviews effectiveness of
internal controls
Monitors progress against
internal and external audit
recommendations
Approves the annual
internal audit plan
Assurance, risk and internal control reports
1st
Line
2nd
Line
3rd
Line
• Front line business operations
• Strategies, policies,
procedures and controls in
day-to-day activities
• Daily management of risk in
line with functional objectives
• Responsible for compliance
with Group policies,
procedures and
internal controls
• Corporate functions
• Sets policies and procedures
• Monitors risks and
internal controls
• Accountable for the design
and implementation of risk
management processes and
controls
• Accountable for the regular
review and appraisal of
key risks
• Contributes to the
identification and
assessment of key risks
• Independent assurance
• Tests the design and
operation of controls in
place including policies, and
procedures implemented by
the 1st and 2nd lines
• Assists management and
the Board in conducting
risk studies
• Advises and guides on
policies and internal
controls framework
• Drives implementation
of recommendations in
the business
• Tests compliance with
internal controls
51
Strategic report Risk management and principal risks continued
Strategic risks
Risk description
Mitigation
Progress in 2023
Growth risk
IWG continues to undertake
significant global growth.
There are increasing growth
opportunities available to
the Group.
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 life of
the Group’s leases are, on
average, significantly longer
than the average terms
of customer contracts,
which creates a potential
for mismatch if revenues
fall significantly, which can
impact profitability and
cash flow.
52
Throughout 2023, additional
resource investment took place
for network development teams.
Strong growth plans were
implemented and monitored.
New centre opening strength
continued throughout 2023.
IWG mitigates this risk as follows:
1. A strong capital-light growth structure
is implemented, enabling low-cost and
high-margin investment.
2. All investments or acquisitions are subject
to review and approval by the Investment
Committee.
3. New leases are 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
rigorously 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.
We have recruited a number of
senior roles to provide additional
expertise, and have a co-ordinated
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.
A number of the transformational
programmes have been delivered
in 2023, and are planned for 2024.
Approximately 91% of our leases are
flexible giving the Group the agility to
change to economic conditions.
In the Company-Owned & Leased
segment 28% of our leases are based
on either full or partial variable rental
payments.
Developing the network through our
Managed & Franchised segment
allows us to grow fast and without
any financial commitments.
At the end of 2023, we were operating
3,514 locations in 1,244 towns and
cities across 119 countries.
This risk is mitigated in a number of ways:
1. Almost all of our leases are ‘flexible’,
meaning that they are either terminable at
our option within six months and/or located
in, or assignable to, a standalone legal entity,
which is not fully cross-guaranteed. In this
way, individual centres are sustained by
their own profitability and cash flow.
2. In the Company-Owned & Leased segment
28% of our leases are based on either full or
partial variable rental payments. 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
reduces 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
breakpoint, further reducing the risk.
IWG plc Annual Report and Accounts 2023 Risk description
Mitigation
Progress in 2023
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 has taken a number of actions to
mitigate this risk:
1. The Group has a strategy in place, which is
reviewed and approved by the Board.
2. In the Company-Owned & Leased segment
28% of our leases are based on either full or
partial variable rental payments..
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.
Innovation and competitive advantage
Failure to innovate and
respond to market demand
could result in IWG’s global
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.
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 and dilute
IWGs leading market share.
An inability to maintain
sustainable global competitive
advantage could result in
a loss of market share and
impact on profitability for
the Group.
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 responded quickly to
the pandemic and offered clients its unique
“hub and spoke” model.
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 continuously
review our portfolio to provide products and
services that are aligned to customer
expectations and requirements combined
with an active investment programme.
The number of ‘flexible’ leases as
a percentage of the total remained
at 91%.
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.
IWG is adopting a suite of Microsoft
ERP products that 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.
The competitive landscape
continued to shift in 2023.
A decrease in uneconomical
competition based on cheap funding
is expected, however an increase in
very small operators will likely occur
as flexible space increases its share
of the overall office market.
We continue our efforts to offer an
unrivalled global network and varied
product range to suit the different
requirements of our customers.
53
Strategic report Risk management and principal risks continued
Strategic risks
Risk description
Mitigation
Progress in 2023
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 the impact from a range of economic
downturns, irrespective of the cause.
IWG has taken concerted effort
during 2023 to reduce risk relating to
geopolitical conflict and in ensuring
there is a robust KYC process in
place along with improved processes.
However, the risk of broader
economic impacts from geopolitical
instability, economic warfare, conflict
and sanctions is increasing. The
Group continues to monitor the
impact and takes action accordingly.
The Group adopted greenhouse
gas emission reduction goals and
achieved carbon neutrality in 2023
for Scope 1 and 2, ahead of its target.
Significant progress made towards
the Green Certified Electricity goals
during 2023.
IWG manages this risk In the following ways:
1. Environment issues are firmly on the agenda
for the Board.
2. IWG is exposed to physical and transitional
climate-related risks which are assessed
throughout the year.
3. Achievement of carbon neutrality in 2023
for Scope 1 and 2.
4. Detailed multi-year environmental plans
with target to achieve Net Zero emissions
by 2040.
5. Established Green Certified electricity
target by 2030. This will reduce overall
carbon footprint.
6. Environmental 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 to change asset allocations towards
decarbonising operations and value chains.
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.
2. The Group also stress tests these forecasts
with downside scenario planning to assess
risk and determine potential action plans.
3. The Board intends to maintain a prudent
approach to the Group’s capital structure
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 has a £350m of
convertible bonds at a fixed rate and
the remainder in a Revolving Credit
Facility provided by a group of prime
banks, which is committed and
available until 2025, with an option
to extend until 2026, given certain
conditions are met.
We expect to be able to refinance
external debt and/or renew
committed facilities as the become
due, which is the assumption made
in the viability scenario modelling,
and to remain within covenants
throughout the forecast period.
Continued strong cash generation,
before investment growth, and
reduction in net debt of £104m.
Climate Change
Inadequate Environmental
Strategy would mean that
IWG is unable to manage
climate-related exposures
and our external
commitments.
Financial risks
Funding
The Group relies on external
funding to support a net debt
position of £608m at the end
of 2023. Any change to this
support would result in
liquidity risk for the Group.
54
IWG plc Annual Report and Accounts 2023 Risk description
Mitigation
Progress in 2023
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.
Inflation risk
Increasing global inflationary
pressures may impact the
Group’s costs, including
financing charges, impacting
profitability and cash flows.
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.
Agreements were signed
with partners
Mitigating actions include:
1. The short-term nature of most customer
contracts allow the possibility for prices
to be adjusted in consideration of the
evolution of costs.
2. The Group’s capital-light strategy includes
a focus on flexible leases and management
contracts which reduce the negative
impacts of inflation.
3. The Group constantly monitors interest
rates exposure and has a fixed rate coupon
on its £350m convertible bond up to 2027.
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
practice to drive performance and deliver
consistent service to our customers.
The forecasting process is
continuously enhanced and adapted
to changing scenarios as the economic
environment evolves. The focus
remains on cash generation and
cost control.
Inflationary pressures are expected
to continue in 2024.
The continued focus on cost and
efficiencies along with active pricing
management are largely mitigating
inflationary pressure.
During 2023, the acceleration of
our capital-light growth strategy
continued with 839 capital-light
deals signed and 301 capital-light
centres opened.
Partner development and support
teams were further strengthened in
2023 with the increased 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 identify
improvement opportunities.
55
Strategic report Risk management and principal risks continued
Operational risks
Risk description
Mitigation
Progress in 2023
Recruitment channels are constantly
under review to continue offering
opportunities to as wide a population
as possible in each market.
Key hires in 2023 met demand, and
the Group has implemented a
comprehensive strategy to address
talent resource requirements and
meet the growing needs of the
business.
The Group has in place a
comprehensive training programme
for all levels and functions. The
significant investment in our Group’s
Learning and Development programme
continues to provide a means to
engage with our colleagues through
e-learning, videos, webinars, case
studies and coaching.
Our Management Skills Training
Programme and Sales and Customer
Service Training Academy are carried
out virtually throughout the globe to
support continuously giving
customers a great day at work.
Roll out of Supplier Questionnaire to
existing suppliers, and analysis and
follow ups completed.
Procurement tender process
improved to include ESG framework
as a critical part of supplier selection.
Audit programme defined and
scheduled for roll out in 2024, to
provide independent assessment
of responses.
IWG Purchase Order portal system
enhanced to improve transparency
and approvals internally.
Mitigating actions include:
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.
1. Resource Committee in place for all
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.
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.
(NEW) Supply Chain transparency
Increasing regulatory
requirements focus on the
ESG credentials of our supply
chain. IWG has an obligation
to mitigate ESG-related risks
stemming from its suppliers.
IWG manages this risk through:
1. A centralized global supply chain enabling
enhanced transparency across the broad
supply chain
2. Consolidation of supply chain to national
and regional suppliers where possible
3. IWG’s Code of Conduct and Terms and
Conditions are sent to all suppliers
clarifying expectations
4. Global ESG framework for suppliers
includes a detailed questionnaire which
large suppliers (over £1m) are required
to complete
56
IWG plc Annual Report and Accounts 2023 Risk description
Mitigation
Progress in 2023
Ethics and compliance
Ethical misconduct by our
employees or non-compliance
with regulation either
inadvertently, knowingly or
negligently could lead to
financial loss/penalties,
reputational damage, loss
of business and impact on
staff morale.
Data protection and privacy
IWG is required to comply
with legislation in the
jurisdictions in which it
operates including the
General Data Protection
Regulation (GDPR) and other
local data privacy laws.
Non-compliance and
breaches could result in
significant financial penalties
and reputational damage.
IWG 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.
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 actively monitor and
respond to reports in our
whistleblowing 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. In 2023
a new Global ESG Framework was
introduced where all large suppliers
are expected to complete a detailed
questionnaire.
IWG’s Code of Conduct is in place for
employees, partners and suppliers.
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.
We continue to remain compliant with
data protection and privacy regulations
across the business, continuously
monitoring and enhancing our privacy
and security controls. 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.
57
Strategic report Risk management and principal risks continued
Operational risks continued
Risk description
Mitigation
Progress in 2023
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.
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.
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.
5. Appropriate business interruption insurance is
in place.
6. Country Business Continuity Plan and Centre
Disaster Recovery Plan are in place and
regularly reviewed.
This risk is mitigated as follows:
1. IWG’s Information Security Steering Committee
reports regularly to the Board of Directors
and has wide representation from business
operations, risk assurance, legal, IT and Non-
Executive Board members.
2. IWG runs a world-class Information Security
programme with ISO/IEC 27000 adopted as
its charter to establish, operate and monitor
its Information Security Management System.
3. The programme is delivered in collaboration with
external specialists across our environments.
4. Using a risk-based approach, IWG continuously
identifies, evaluates and applies remediation
controls to threats that could impact the security,
confidentiality and integrity of its assets.
5. IWG transfers residual risk through its
comprehensive cyber insurance coverage
provided by a global leader in cyber insurance.
6. We have a robust security incident management
process which facilitates and coordinates our
response in the event of a security incident.
7. Security awareness training, covering
information security, PCI and Privacy, is
mandatory for all employees.
58
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 of both production and
DR sites simultaneously being rendered
inaccessible.
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 market-leading static
code analysis tools which ensures that all
code developed follows global secure code
best practices.
A programme is in place to continuously
implement new security features to improve
our processes and controls in this area,
keeping pace with the ever-changing
best practices.
In our business centre environment, we have a
security blueprint for all centres. We perform
penetration testing in this environment to
ensure that our blueprint remains up to date
as either technology changes, or new risks
emerge. All findings from these penetration
tests are used to update the blueprint with
which all centres need to comply.
IWG plc Annual Report and Accounts 2023 The impact on performance was assessed over a
three-year period (2024-26) and on account of
individual risks as well as a combination of risks
materialising.
The potential impact of each scenario was modelled on
the Group’s revenue, gross profit, operating profit, net
debt and debt covenants over the three-year forecast
period. The Board subsequently considered the viability
of the Group both in the context of the individual risks
listed above and in combination of two or more risks
over a range of assumptions. The stress testing showed
that the Group would be able to withstand any of the
severe but plausible scenarios by taking management
action in the normal course of business.
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’s consideration of the long-term viability
of the Group is an extension of our business planning
process which includes financial forecasting, a robust
enterprise-wide risk management programme, regular
business performance reviews and scenario planning.
For the purposes of assessing the Group’s viability, the
Board identified that, of the principal risks detailed on
pages 68 to 74, the following are the most important
to the assessment of the viability of the Group:
The following principal risks were modelled to support
the Viability Statement
• revenue shortfall;
• USD appreciation;
• a significant cybersecurity or data breach event.
Two scenarios (likely-case and worst-case) were
modelled for sterling appreciation and cybersecurity
or data breach event using assumptions derived from
historical data or based on case studies/available
market research to determine the impact on revenue,
gross profit, operating profit and EBITDA.
59
Strategic report Environment, Social, Governance
Sustainable
workspaces
for all
At IWG we have set clear targets and 2023 key
milestones have been delivered and we remain
on track for our long-term commitments.
IWG seeks to help customers reduce their carbon
emissions and is the world’s largest provider of carbon
neutral workspace.
By offering hybrid working and continuing progress
toward long-term, sustainable goals, both IWG and
our customers do their part in tackling the global
climate challenge.
We hear it from our
customers all the time:
where you work matters.
IWG is proud to offer
genuinely flexible
workspaces that are better
for people and planet.”
Mark Dixon, Chief Executive Officer
Target
2023 Progress Update
Net Zero
by 2040
100%
Green Electricity by 2030
3%
reduction in carbon footprint per sqm
900+ centres
utilising green electricity
Carbon Neutral
by 2025
Achieved
carbon neutrality for Scope 1 and 2
60
IWG plc Annual Report and Accounts 2023 Scores and ratings:
AA
Rated by MSCI
B
CDP score for
Climate Change
B
CDP score for Water
Security
9.2
Rated by Sustainalytics
TOP 1%
Won the UK Leading
Employer Award
£589k
donated to charitable
organisations
By offering hybrid working
and continuing progress
toward long-term,
sustainable goals, both
IWG and our customers
do their part in tackling the
global climate challenge.”
61
Strategic report Environment, Social, Governance
continued
Our carbon
reduction
journey
The reduction of carbon emissions is core to our
business model and integral to how we tackle climate
change. IWG’s workspaces continue to tackle daily
carbon emissions by supporting the transition to
hybrid working, which supports changing how people
commute and occupy buildings1. As an organisation,
we ensure our own business activities are aligned
with a high standard of environmental sustainability
by setting clear reduction targets and improving
performance annually.
In 2023, we have progressed the key milestones
agreed in our Net Zero transition plan, and are aligning
to the International Organisation for Standardisation
(ISO) Net Zero Guidelines. Additionally, this year, IWG
reduced emissions and purchased carbon removal
credits to achieve carbon neutrality for Scope 1 and 2.
We are proud to be the world’s largest supplier of
carbon neutral workspace.
Net Zero by 2040
Transition plan and interim targets
Progress towards Net Zero
The priorities for this year were to improve on the totality
and accuracy of our Scope 1 and 2 carbon footprint and
remain on track with our Net Zero transition plan.
A key success this year has been our investment
in an ESG platform to support us with improved data
governance and accuracy of our carbon footprint. This
enabled a significant improvement in the volume of data
calculated with actual usage rather than extrapolating
averages by region. We continue to seek further
improvements to the accuracy of our carbon footprint.
Our reported consumption of gas reduced through
improved accuracy of data and implementation of new
IWG Operating Standards which focus on preventing
energy waste.
Additionally, we achieved strong traction towards our
interim target of 100% renewable electricity by 2030.
We have transitioned 900+ centres to certified green
electricity and continue to identify further opportunities
across the portfolio. These actions met our Net Zero
milestones and drove a 3% reduction in our carbon
footprint per sqm.
Footnotes
1. 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 (ARUP, 2022).
0
4
0
y 2
b
o
r
e
Net Z
2040
Target to achieve Net Zero emissions across global operations
2030
Commitment to 100% green electricity aligned to
RE100
2025
Scope 3 emissions tracked in alignment with ISO Net
Zero guidelines
2024
Complete alignment to the ISO Net Zero transition plan
2023
IWG achieved carbon neutrality ahead of
2025 commitment
2020
IWG announced its commitment to
achieving carbon neutrality globally (Scope
1 and 2) by 2025
62
IWG plc Annual Report and Accounts 2023 We continue to engage our customers and teams in the
day-to-day changes that can support our Net Zero
programme through protecting natural resources and
reducing waste.
Further, this year we have invested in certified green
electricity through identifying all markets where IWG
directly purchases electricity and where possible we
seek to move to 100% renewable electricity. Where a
green tariff is unavailable, we have sought Renewable
Electricity Certificates (RECs) (or local equivalent) to
the value of our total consumption for 2023. We seek
to continue progress towards 100% renewable
electricity each year. IWG’s leases now request energy
consumption data quarterly and green electricity as
standard for all new landlord leases. During 2023, IWG
joined RE1001 as part of our commitment to progress to
renewable electricity and to report annually on this via
the Carbon Disclosure Project (CDP).
Where there are emissions IWG is unable to eliminate,
we will continue to compensate through investments
in carbon removal solutions. For further information,
see page 65.
Further, we continue to expand sustainable practices
across the organisation. We continue to localise and
further roll out our cleaning programme which includes
increasing sustainable products, reducing waste and
improving recycling options. We are proud of the
partnership we have built with Lyreco with 70% of our
spend on cleaning products now categorised as a green
product (e.g recycled plastic, low toxicity etc). We have
also launched a programme focused on e-waste to
increase donations of electronic waste that can’t be
reused in centre. This supports our goal of reducing
landfill waste and enables donations to worthy causes
across the globe.
Seeking opportunities in
green buildings is integral
to our ESG plan. IWG are
proud to occupy over 300
green certified buildings,
and look forward to
progressing this number
across our portfolio.”
Promoting green
buildings
As part of our commitment to increase the
number of green buildings across our portfolio
IWG continues to seek innovative solutions to
add to our network, such as the first ever
wooden hybrid office.
The Cradle, in Dusseldorf, was constructed in
accordance with the Cradle-to-Cradle principles
to create an office space using timber as the
main construction material. All materials were
optimised to reduce lifecycle carbon emissions.
Purposeful selection of materials allowed for a
less pollutant-intensive construction process
and for end of life management (design for
destruction) due to high recyclability.
In addition to the environmental benefits, having
a wooden office space brings further health
benefits to our customers. For example, the
replacement of plastic and concrete materials
with wood helps regulate air humidity and
temperature, creating a more comfortable
environment for customers. Additionally,
research has found using wood in building
materials helps calm cardiovascular and
nervous systems, improving the well-being
of customers using our centre.
1. Renewable Electricity 100 – https://www.there100.org/
63
0
4
0
y 2
b
o
r
e
Net Z
Strategic report Environment, Social, Governance
continued
We are working with
our suppliers to embed
sustainability into
the value chain and
seeking to encourage
a transition away from
fossil fuels for all.”
64 IWG plc Annual Report and Accounts 2023
Understanding our Scope 3 emissions
Our goal for Scope 3 emissions is to ensure we have
a reliable and responsible supply chain. As guided by
the ISO Net Zero Guidelines we have engaged a broader
set of stakeholders to develop a Scope 3 strategy to
reduce emissions by 95%. To achieve this, we are
working with our suppliers to embed sustainability into
the value chain and seeking to encourage a transition
away from fossil fuels for all. As part of our strategic
review of our supply chain a collaboration of decision
makers across IWG have improved our selection
framework to consider the cost of carbon within supply
chain decisions. This has led to more sustainable
decision-making, for example, having regional hubs
thereby reducing logistics related carbon emissions
as well as improving lead times for customers.
Following on from the launch of our Supplier Code of
Conduct last year, in 2023, IWG carried out an internal
audit of the sustainability credentials of our major
global suppliers. During 2023, the ESG Supply Chain
Framework was completed by suppliers and the results
were analysed and validated to confirm suppliers met
with IWG expectations. Where suppliers do not align to
mandated requirements, the ESG team collaborated
with the Audit and Procurement teams to assess risk
and engage suppliers to evolve their practices. For
non-mandated requirements, we will seek to engage
suppliers through training and support.
The ESG Supply Chain Framework and Supplier Code of
Conduct compliance is mandated during procurement
tenders for new suppliers. We seek to ensure our supply
chain shares our ambition and commits to a science
based Net Zero target. We aim to align 90%
of our supply chain with our environmental goals (where
IWG spends over £1m annually).
IWG acknowledges the need to disclose our full
Scope 3 emissions and activity is underway to
accurately baseline per supplier category. A partial
disclosure was completed in 2023 through CDP.
Addressing lifetime carbon
As part of our Net Zero transition plan, we seek to
reduce IWG’s lifetime carbon emissions. A materiality
assessment identified fit out of new centres as the key
factor to influence and therefore IWG has developed a
strategy which focuses on: innovation to transform fit
out for sustainability, seeking low carbon product swaps
and activating the circular economy (whereby reuse of
products is prioritised).
IWG partners with landlords and fit out suppliers to
drive innovation, for example in 2023 The Cradle the
first ever wooden hybrid office. These market leading
implementation projects provide learnings to feed into
the continuous improvement of the sustainability of our
design guides. Design guides are updated annually and
support our growth partners to embed sustainable
principles into their fit out projects.
IWG consistently reviews products used within our
fit out projects to seek low carbon, sustainable raw
materials and low energy manufacturing. We continue to
partner with strategic suppliers such as Tarkett who have
introduced a guaranteed take back programme. Moving to
reuse products such as Tarkett’s EcoBase carpet tile can
have substantial impact. This low carbon product results
in a reduction of carbon footprint from 15kg CO2e per sqm
to only 1kg CO2e per sqm.
A further example of reuse is within IWG’s own
circular economy. IWG’s market leading furniture
reuse programme enables customers to select their
own furniture from an IWG design catalogue. Unused
furniture is stored in central warehouses and repaired
for reuse by the next customer. This ‘closed loop’
economy reduces waste and supports IWG’s
growth through rapid provision of furniture within
the existing network.
Achieving carbon neutrality
While IWG has made progress in reducing its total
carbon footprint, we recognise the need to account
for the emissions we can’t yet avoid.
As part of this commitment, we carefully selected
a nature based carbon removal with Bio Assets,
which supports Amazon Rainforest protection
and development and is independently verified
by renowned standards, Verra and Social Carbon.
IWG seeks to support the United Nations’ 17 Sustainable
Development Goals and our carbon removal solution is an
example of this. Our selected project invests in improved
economic growth and opportunities (goal #8) through
developing commercial berry farming and supports
species protection (goal #15) through a biodiversity
focused programme including reintroduction of native
species lost through deforestation.
Making our global office spaces
sustainable
To embed sustainability in our capital allocation and
long-term investment decisions, we introduced IWG’s
Centre Sustainability Assessment Framework. This year,
all IWG landlords have been requested to complete the
framework to help baseline our portfolio for sustainability
credentials. This insight is critical to enabling decision-
making for investments and renewal going forward.
Today IWG has over 300 green certified buildings, with
the majority of these certified as LEED or BREEAM. IWG
actively seeks to engage more landlords with green
certified buildings in addition to establishing an ongoing
programme to achieve new certifications for our
Operational Standards (e.g BREEAM In-Use).
IWG also has 58 centres with WELL certification that
include building features with wellness rooms, gyms
and air purification technology. During 2023 IWG began
research and trials into future design features such
as air purification, ergonomic workstations and EV
charging. We will continue to seek partners to innovate
and provide customers with sustainable solutions.
Additionally, analysis of our Centre Sustainability
Framework has identified a number of centres with
solar panels, EV charging stations and other sustainable
solutions. The impact of these sustainability features
has been analysed and IWG recognises the importance
these features have for customers, employees and
energy cost efficiency. Therefore, considering IWG’s
global reach, we will actively seek partners investing
in critical sustainable infrastructure.
Protecting natural resources
During 2023, we completed an initial assessment of
IWG’s impact on natural resources to identify actions
to support the protection of biodiversity and pollution,
in alignment with Task Force on Nature-related Financial
Disclosures (TNFD) and International Sustainabiilty
Standards Board (ISSB). IWG intends to complete a
biodiversity baseline in line with ISO Net Zero Guidelines
and continue progress on actions to reduce our impact
on natural resources.
IWG believes protection of natural resources needs
to be embedded into all elements of our business.
Alongside setting clear policies to clarify our
Environmental and Water protection expectations,
IWG has taken several actions to lead to operational
change1. An example of this is the updating of repairs
and maintenance guidelines to prioritise activity where
energy or water is being wasted, for example water
leaks. This simple action will support our target of
20% reduction per sqm whilst reducing cost of
wasted water.
300
LEED or BREEAM buildings
in IWG portfolio
1. For more information on our Environmental and Water policies,
visit iwgplc.com.
65
Strategic report Environment, Social, Governance continued
A talent strategy for
transformational growth
Growth
Deliver a high performing network development team
to drive our global growth of new locations with
investment partners, landlords and organic growth.
Customers
Structure the customer operational teams to focus on
existing and new customers via a new city structure,
harnessing the abilities of all our team members in a city
to look after customers rather than centre by centre.
Innovation
IWG has a new strategy and innovation team, who are
consultants, planning and researching IWG 2.0 in terms
of new products, efficient ways of working, automation
and new services, to enhance the work life of our
customers and to provide continuous improvement
to the IWG platform for our network partners, suppliers
and our own IWG team.
IWG Team Members
Our IWG people promises:
• Interesting work
• A manager & company that cares
• An opportunity to develop & grow your career
In addition, our continuous need to recruit new talent with
exciting reward and recognition plans for everyone at all
levels underpins the IWG team member talent strategy.
HR Platform & Data
The development of our HR platform with fast
self-service knowledge transfer for team members,
combined with AI automation of key HR processes,
is an ongoing plan for 2024 and 2025, to streamline
core HR activity such as on and off boarding and
support our growth plans.
Dynamic Recruitment
The IWG recruitment model delivered over 4,000
people starting new careers with IWG around the world.
Whilst we partner with the world’s leading search firms
to deliver Board and executive talent, we have an
in-house recruitment team who are finding talent
around the world, largely via the research team that we
have developed in-house. A key focus for the recruiters
was to build an entirely new network growth team of
more than 250 professionals delivering in offering a
new investment partnership to landlords and investors
whilst welcoming new customer service talent into the
organisation in every market.
Learning & Development supporting
the IWG Careers Framework
With many new starters joining IWG each week,
onboarding and induction has been entirely re-
engineered. This resulted in over 97.5% of employees
successfully completing and passing their induction in
2023. The IWG induction programme was recognised
by The Learning and Performance Institute (LPI) who
awarded IWG the gold medal for their new induction.
The LPI is a global organisation recognising leading-
edge learning and development around the world in
over 80 countries.
66
IWG plc Annual Report and Accounts 2023 For existing team members, we filled 31,500 individual
seats on live training courses and webinars on skills
development in key areas like partnership network
growth, customer service, sales and team engagement.
We continued our core programmes on important
topics such as health and well-being, compliance and
IT security. We launched new programmes for the
first-time manager and also for our leadership cadre,
all of which gives team members the opportunity to
develop their career with IWG supported by a
professional manager.
Additionally, our customer facing teams have a defined
career path with multiple opportunities in front of them
to retain the best talent whilst we give every customer
“a great day at work”. This career path has defined
curriculums to enhance the depth of expertise required
to move to the next level, with accreditation at each
step of the way.
Rising at IWG
Progression from Trainee to City Manager
9
8
7
6
5
4
3
2
1
City Manager
Deputy – City Manager
Community Manager 3
Community Manager 2
Community Manager 1
Community Associate 3
Community Associate 2
Community Associate 1
Community Associate Trainee
Overall, our IWG Academy had 2.5 million views and 98% of the IWG
workforce used the platform in 2023.
67
Strategic report We overlaid the full global engagement survey that we
did in 2022 with specific new starter and leaver surveys
and we are thrilled with the results.
93% of new IWG employees said they would
recommend IWG as an employer to friends and
family, endorsed by our Leading Employer Award.
94% of new people said their induction has helped
them to be successful in their role.
90% of new hires said their role and what is expected
of them is very clear.
We held four regional Leadership Conferences in North
America, UK, Europe and Africa, Middle East and Asia/
Pacific to set the strategic objectives for 2024. It is in
these events we celebrate the best performers in the
business with annual awards during each conference.
Ongoing recognition programmes for the field
team members continue with recognition pins
and accreditation certificates. We have exciting
international incentive trips to give our colleagues
real recognition for exceptional behaviours and
performance where they get to bring their partners
or a family member to share in their commitment to
delivering outstanding results.
Teams across the globe came together to celebrate
at our regional conferences.
Environment, Social, Governance continued
HR Platform & Data
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,
so that employees and partners get immediate answers
on all topics from global policies, processes and
information for speed and consistency.
All our team members use a unique app that they can
access on any device, day or night, called TeamHub.
This app has broad functionality from resource
allocation to absence management and mobile
access to the IWG Academy.
Diversity, Equity and Inclusion
Our diversity statistics based on voluntary survey
responses are as follows:
White
Hispanic
Black
Asian
Mixed
Pacific/Islander
52%
19%
18.5%
6.3%
2.5%
1.5%
Within Senior Leadership our gender split is 21% female
and 79% male, and our Board diversity split is 37.5%
female and 62.5% male. Across all employees, we have a
gender split of 67% female and 33% male.
We also continued our series of ‘Affinity Groups’ in the
US. Made up of team members, these work with the
Company to make and consider recommendations on
how best to ensure we remain fair and equitable in our
day-to-day business operations.
In 2023 we started our new Women in Business forum,
and we launched this formally on International Women’s
Day on the 8th of March 2024.
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.
Communication & Recognition
Communication and connectivity in a globally dispersed
workforce are critical agenda points.
A cadence of business reviews from a centre level
right through to a leadership level are the backbone
of driving margin and customer service.
Continued investment in leadership meetings and
functional 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 combine
driving performance with a sense of pride and
return on investment.
68
IWG plc Annual Report and Accounts 2023 Reward
IWG reviewed salary bands for customer facing
employees on a continuous basis throughout 2023,
increasing base pay and salary bands accordingly.
In some high inflation markets this required several
reviews throughout the year.
Variable incentives are a key part of the compensation
reward at every level of the organisation and our field
team members looking after customers and landlords
have a quarterly incentive programme to recognise
and reward performance.
The Remuneration Committee also reviewed total
leadership compensation, and a new grant of options
was made to high-potential executives around the world.
Benefits such as the opportunity to buy an electric car
or a bicycle through salary sacrifice programmes are
supporting team member requests for different, more
interesting benefit packages. Pre-employment health
checks, on site doctors, health seminars, annual medical
check-ups and occupational health checks are some of
the initiatives we have in place to assist in keeping our
team healthy and happy.
To be successful at IWG
you have to be passionate,
curious, tenacious and
highly commercial.
Alongside this is the
dedication to customers to
enable their team to work
anywhere and anytime.
Team members at IWG
can also do the same.”
Francesca Peters, Chief Talent Officer
69
Strategic report Raising awareness
Our teams and customers across Glasgow, Scotland
joined together to raise awareness for Breast Cancer.
Fundraising events included raffles and bake sales,
helping to raise £1,171 in total. Both customers and
teams shared their personal experiences with cancer,
and reflected on the success of the event and its
impact on spreading awareness to other women who
may be impacted.
Additionally, in aid of the mental health charity,
Mind, our communities in the UK held mental health
awareness events and raised funds with regular quizzes
and networking events. On World Mental Health Day,
IWG hosted bake sales to raise money for Mind. The
event presented a great opportunity for open
conversations with customers about mental well-being
in the workplace, as well as how we can better support
colleagues and destigmatise the cause.
“It was great to partner with IWG
for World Mental Health Day
given the clear link between safe
workspaces and mental health.
Increasing awareness of mental
health challenges and creating
opportunities to discuss this
in the work environment
is key to the mission
of Mind.”
Holly Mugnaioni,
Corporate Partnership
Manager at Mind
Environment, Social, Governance continued
Contributing
to local
communities
across the
world
IWG’s collective spirit continues to make a difference
in the lives of our customers and communities.
This year, IWG invested in more events to raise funds
for local communities than ever before. To support
our teams to contribute even more, this year IWG
Operations launched an aligned Networking and
Fundraising toolkit to enable all business networking
events to have a social or well-being impact.
Given our global scale, IWG empowers teams on the
ground to choose how they wish to collaborate with our
clients and suppliers to have an impact to the causes
that matter to them. Additionally, as part of our mission
to give everyone a great day at work, this year, IWG has
developed a policy for discounted space offering for
registered charities across the world.
“Our team had fun supporting Breast
Cancer Awareness. It’s always great
to see teams unite behind a cause they
are passionate about and support
local charities that mean something
to our customers.”
Fiona Uhe, Glasgow Team Lead
70
IWG plc Annual Report and Accounts 2023 Supporting our communities
Our colleagues in Houston, Texas served over a million
underprivileged people through the Food Bank. Steve
Ganji and Harold Shultz organised 16 staff and customers
to volunteer, and in total accumulated 39 volunteer
hours between the two employees. As a result of their
efforts, the team bagged 4 pallets and supported
4,266 meals.
Spreading joy
For the third successive year, the UK-based IWG team
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.
As a result of this outstanding partnership, our people
raised an amazing £60,000 and donated over 4,000
physical toys.
In September 2023, the earthquakes in Morocco claimed
over 3,000 lives and left thousands injured. In light of this
event, the IWG Global Recruitment Team committed to
walking, running or jogging 150 km per person. The
dedication of the team helped in raising £3,137 to
support those communities who were impacted.
“We always knew that coming
together as a globally dispersed team
to raise money would feel great for
team engagement. What we hadn’t
expected is the impact all of us
focussing on taking time out to
exercise would have.”
Merisha Leelodharry, UK field recruitment IWG
In South Africa, the IWG local team supported
64 centres to participate in the Santa Shoebox Project.
The efforts from this project included a total of 512
volunteering hours to collect and drop boxes. As a
result, a total of 619 boxes were collected and
distributed, containing essential items and treats
for children throughout South Africa.
“Delighted that IWG chose to support
KidsOut for the third year running.
The impact is phenomenal.”
Sam Johnson, KidsOut CEO
“It is an honour to be part of
something that touches the lives
of so many young children. The
passion shared among the team was
phenomenal, and seeing all of the
gifts donated by our amazing clients
and staff was heartwarming.”
Ray Keen, Deputy City Manager
71
Strategic report Environment, Social, Governance continued
Transparent
information
for investors
IWG seeks to consistently comply with regulation
and disclosures and share relevant information for
investor transparency.
We continue to benchmark our progress against our
peers and note external ratings remain above average
for our industry. We have retained a strong AA rating
from MSCI and a negligible risk score of 9.2 from
Sustainalytics. This year our investment in data
platforms enabled IWG to disclose water data and
develop a water policy for the first time. This supported
a strong B rating for our Water Carbon Disclosure
Project (CDP) score. Additionally, we have retained
a B score in our submission for Climate Change CDP.
In order to drive progress in 2023, we have prioritised
data quality improvement particularly in relation to
our carbon footprint for Scopes 1 and 2. Investment in a
data platform has improved the transparency and
accuracy of our carbon footprint. We have utilised
benchmarking and analysis of this carbon footprint to
assess energy performance of centres and utilised
this to engage our customers, employees, suppliers.
We have also progressed our Scope 3 strategy to
enable a full footprint disclosure.
Risks & opportunities
A summary of six most material risks and opportunities.
Risks
Physical
• Extreme weather impacting
IWG centres, resulting in loss of
customers and certain markets
• Operating costs (including
insurance costs) rising due
to increased frequency of
extreme weather
Transition
• Rising carbon tax increasing
IWG’s operational cost
• IWG not meeting externally stated
commitments (including meeting
existing and emerging regulations)
resulting in reputational damage
• Supply chain disrupted due to
climate-related risks impacting
operations and increased costs
• Establish market leadership in
providing green buildings and
sustainable hybrid working
Opportunities
Transition
* Impact Rating
Climate-related Financial Disclosure
We have progressed our approach to the Task Force
on Climate-related Financial Disclosures (TCFD) to
continuously improve our reporting on 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 implemented actions, based on our
findings in the 2022 Climate Risk assessment, and have
further strengthened our understanding of the potential
impacts of climate change on our business.
Governance
Successful implementation of our approved sustainability
and climate change strategies is a critical element of
IWG’s growth plan. The Chairman of the Board has overall
responsibility for sustainability supported by the Board
with clear roles and responsibility assigned, see pages 80
and 81 for further detail.
Having noted a key risk in the importance of achieving
externally stated commitments (2022 Climate Scenario
Analysis), IWG has evolved our reporting to the Board
and key decision-making committees. Progress against
key climate objectives is regularly reported to the CEO
and addressed at Board meetings. Additionally, the
Board and Audit Committee provide oversight across
our ESG activity, for further information see pages 88,
89, 96 to 99.
For further information see pages 78 to 117.
Category
Acute/Chronic
Impact
Revenue
Impact Rating*
L
M
H
Acute/Chronic
Cost
L
M
H
Regulation/
Compliance
Reputation
Cost
Market
cap. Revenue
L
L
M
H
M
H
Supply Chain/
Market
Ops.
disruption Cost
L
M
H
Category
Reputation
Revenue
L
M
H
(Project Management Institute – risk analysis & management for financial impact)
Based on estimated % impact on cost or revenue, against 2023 revenue and cost.
Rating: Financial impact:
L
Low 0-5%
M
Medium 5-10%
H High >15%
72
IWG plc Annual Report and Accounts 2023 Strategy
Climate-risk analysis
In 2022, the IWG Board approved the Climate Scenario
Analysis conducted. This included engagement of
stakeholders, detailed assessment of 3 plausible climate
scenarios (1.5°C, 2°C and 2.5°C) and support from an
independent consultancy with climate experience.
Our five climate-related risks and one opportunity
are key pillars of activity and progress for IWG’s ESG
strategy. Progress on mitigating actions is monitored
by the internal audit team and Board.
The table summarises the findings of our scenario
assessment which has been reviewed and updated
for 2023. No new risks or opportunities have been
identified, however, risk 5 Supply Chain Disruption
has been classified as a standalone risk within the
IWG Risk Management process, providing appropriate
regular scrutiny and monitoring. See pages 50, 51 and
56 for further information.
Scenario analysis findings
In 2023, we engaged with stakeholders across the
business to enhance our risk management strategies
for each risk. We are on track against plans to mitigate
based on a risk based approach and prioritisation.
We will continue to update climate risks annually as we
recognise this is a dynamic process and IWG will need
to evolve.
Actions to mitigate risk
Physical Risk: Extreme weather
Extreme weather is a risk factor for IWG’s existing
portfolio and new site identification. This year IWG
has continued to strengthen our Business Continuity
plan and displacement procedures to protect from the
risk of revenue loss due to extreme weather disruption
(see page 58).
Additionally, the Network Development team has
embedded the Centre Sustainability Assessment
criteria into the Investment Committee process enabling
enhanced information for decision-making, such as
identifying green certified buildings and investments in
urban areas. Further, our capital-light growth model will
reduce the severity of this risk going forward.
We are on track against
plans to mitigate based
on a risk based approach
and prioritisation.”
Physical Risk: Operating costs
Some climate scenarios will continue to present
operational cost risk, for example energy price volatility
and insurance costs. IWG maintains stringent cost
management across all lines which mitigates this risk.
See pages 40 to 43 for further information.
Transition Risk: Carbon tax
Carbon taxation remains a potential risk to IWG and
to ensure IWG is at the forefront of regulation we have
completed an initial Corporate Sustainability Reporting
Directive (CSRD) disclosure this year.
There are currently no mandated carbon taxes, however
to mitigate against future risk, IWG has continued to
prioritise and invest in carbon footprint reduction. This
is visible through efforts to transition away from fossil
fuels to green certified electricity and efforts to clarify
and reduce Scope 3 carbon emissions. This year IWG
saw a 3% reduction in carbon footprint per sqm and
will continue progress towards Net Zero.
Transition Risk: Failing to meet
externally stated commitments
IWG takes it commitments seriously and prioritisation
of achieving these is overseen by the Board and Senior
Leadership Team. This year, IWG met all key Net Zero
milestones and achieved carbon neutrality for Scope 1
and 2 two years earlier than planned. See page 62 for
further detail. In order to increase confidence in delivery
of our Net Zero by 2040 target IWG has invested in
technology to improve data visibility; transitioning to
green electricity; and further developed our detailed
transition plan.
Additionally, we believe it is critical we continue
to develop further standards and these are set out
in our new Water and Environmental policies1. These
policies guide activity and decisions across IWG, for
example encouraging the selection of products that
support biodiversity.
Transition Risk: Supply chain
disruption
Improving our engagement with suppliers allows IWG to
better understand and manage future risks which may
impact our supply chain. This year we have reviewed
suppliers for environmental risk management; strength
of strategic relationships; and ongoing cost management.
Supplier transparency has been improved through the
improved risk management process, see pages 50 to 59
for more information on how we manage supply chain risk.
A key action which reduces the risk of supply chain
disruption is the strategy to consolidate our supply
chain by region. By having numerous suppliers able
to deliver key products and services across the globe,
we reduce logistics related carbon footprint and
provide optionality for key purchases.
1. Our Environmental and Water policies are publicly available and can
be found at iwgplc.com.
73
Strategic report Net Zero
A key metric for tracking our progress to Net Zero is our
carbon footprint. Accurate and timely carbon footprint
reporting will help IWG mitigate identified risks including
missing external commitments and managing our
operating costs (e.g. electricity).
This year IWG has invested to improve our data quality
and our 2023 carbon footprint has received limited
assurance from an independent third party.
Our methodology remains aligned with the Greenhouse
Gas Protocol. We utilise available data from Scope 1 and
2 activities to develop energy consumption averages
per built sqm. These averages are extrapolated across
IWG’s operational boundary to estimate our carbon
footprint. This year the process was improved through
using a data platform which improves the volume of raw
data included in our estimations. This led to a reduction
in reliance on regional averages.
For the year 2023, we have calculated our Scope 1
emissions to be 78k tCO2e representing an 11% reduction.
Our Scope 2 emissions amounted to 147k tCO2e
representing a 6% increase, due to the rise in country
level emission factors utilised. Energy efficiency actions
have included implementing new operating standards
focused on energy waste; transitioning to green certified
electricity and seeking energy efficient buildings.
IWG Carbon Footprint
2021
2022
2023
Energy consumption (MWh) 940,910 943,641 884,192
Scope 1 emissions
(tCO2e, k)
Scope 2 emissions
(tCO2e, k)
Total carbon emissions
(tCO2e, k)
86
87
78
154
138
147
240
225
225
Emissions (tCO2e) per sqm
0.042
0.041 0.040
We also calculated our Scope 3 for joint ventures
gas and electricity emissions and shared a partial
Scope 3 disclosure in CDP. In 2024, our focus will
transition to further understanding our indirect
emissions, enhancing our supply chain engagement,
and better reporting on potential supply chain risk.
IWG will begin to disclose Scope 3 by 2025, in
alignment with the ISO Net Zero Guidelines.
Additionally, IWG’s target of 100% renewable electricity
has progressed with 900+ centres transitioned to
certified green electricity. Next year we will continue
to invest in green electricity, including exploring further
options such as solar panels and driving change with
landlords through embedding green clauses (e.g. utility
data sharing mandates) into our lease framework.
Achievements in green electricity will support our goal of
Net Zero operations and enhance transition opportunities.
Environment, Social, Governance continued
Evolving our business to
maximise opportunity
Opportunity: Establish market
leadership in providing green buildings
and sustainable hybrid working
Given IWG’s leading position in hybrid working and
existing investment in sustainable work spaces, we are
well-positioned to align with emerging regulations, drive
relevance and growth in both existing and new markets
– particularly in urban and rural areas.
The announcement of our Net Zero target and
announcement of carbon neutral work spaces was
positively received, especially by companies with
Net Zero targets.
Additionally, the activity to increase the number
of green buildings in our portfolio supports market
leadership and our Net Zero targets. See page 65
for more information on green buildings at IWG.
Risk management
IWG operates an enterprise-wide risk management
process in order to identify and report key business
and strategic risks. Since 2022 climate risk has been
a standalone principle risk and this year we added a
risk regarding supply chain transparency. This risk is
managed through the three lines of defence, to ensure
robust oversight and alignment to the IWG risk
management framework.
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 50 to 59.
Metrics and targets
IWG measures progress against key metrics to support
the delivery of all targets.
I was pleased to see IWG
meeting key environmental
targets during 2023, and
seek to ensure we continue
to make continuous
meaningful progress on our
journey towards Net Zero.”
Douglas Sutherland, Chairman
74
IWG plc Annual Report and Accounts 2023 This year we continued to disclose and comply with existing recommendations and for the first time are sharing
an initial viewpoint of IWG’s response to the EU’s Corporate Sustainability Reporting Directive (CSRD). We intend
to comply with the disclosure by 2025.
Information related to our overarching Governance, Strategy, Risk Management and Metrics is documented within the
TCFD section of our report, see pages 72 to 74.
In addition to this, IWG conducted a double materiality assessment following European Financial Reporting Advisory
Group (EFRAG) guidelines and additional evaluations. Interviews were conducted to evaluate ESG impact areas,
strengths, and development areas. Topics were systematically scored based on impact and financial implications,
including metrics like scale, scope, remediability, resource utilisation dynamics, market conditions, and stakeholder
relationships. The following topics have been deemed to be material through stakeholder engagement and analysis
and we have outlined our policies and actions to manage these areas. The omitted topics were not deemed material
as part of the materiality assessment, with minimal impact on the business’s financial position, operational performance,
or stakeholders’ decision-making processes.
Topic Area
ESRS Topic
Governance, Strategy & Risk
Metrics & Targets
Environment Climate
change
mitigation
Documented in our TCFD section of this
report.
To reduce waste within our business
processes, we are developing relevant
criteria to assess development projects
from the beginning of design, to
construction, through to in-use building.
Resource use
and circular
economy:
resource
inflows,
resource
outflows,
waste
Social
Own
workforce:
working
conditions,
health &
safety
We prioritise compliance with local health
and safety laws and regulations in every
country where we conduct business. All our
principal risks are managed in accordance
with our Group risk appetite and mitigated
as far as reasonably practical.
Workers in
the value
chain: Secure
employment,
adequate
wages, health
& safety
Consumers
and end-
users:
Information-
related
impacts,
personal
safety
Two core principles articulated in our
Supplier Code of Conduct emphasise the
importance of lawful and ethical business
practices, as well as the provision of a
safe and healthy work environment. The
former stipulates that suppliers must
adhere to all relevant laws, regulations,
and standards concerning employment
security, fair wages, and workplace health
and safety in the jurisdictions where they
operate, especially in relation to their
activities for IWG.
Information security is a top priority for
IWG and the Board. 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 privacy laws.
IWG continues to set targets aimed at
carbon reduction and climate resiliency.
We measure progress against key metrics
to support delivery of these targets. This
includes monitoring and reporting global
Scope 1 and 2 emissions, committing to
obtaining 100% renewable electricity by
2030, disclosing Scope 3 emissions by
2025, baselining our supply chain for
nature-based impact by 2025, reducing
water per sqm by 20% and achieving
Net Zero emissions by 2040.
IWG has programmes in place to reduce
resource use and support the circular
economy, for example, through our
furniture recycling initiative. Within
this programme, we use centralised
warehouses to store unused furniture for
reuse or refurbishment to extend end-of-
life. This results in reduced requirements
for newly manufactured furniture and
supports IWG’s rapid growth rate.
IWG seeks to ensure health, safety,
environmental and security risks are
managed to levels that are as low as
reasonably practicable. IWG has
documentation of policies and key
control procedures for Health and Safety
which have group wide application and
completion of training is mandated for
all employees.
All suppliers are requested to confirm
compliance with the IWG Code of
Conduct. The ESG Supply Chain
Framework is rolled out to suppliers
to request confirmation of adherence
to key principles.
IWG has business objectives in place to
manage associated risk, including robust
policies related to how data is processed.
75
Strategic report Topic Area
ESRS Topic
Governance, Strategy & Risk
Metrics & Targets
Social
continued
Affected
communities:
Communities’
economic,
social &
cultural rights
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 to the impact of the
Company’s operations on the
community and the environment.
Governance
Risk
management,
internal
control
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 operates
an enterprise-wide risk management
process in order to identify and report
key business and strategic risks.
We are a part of the community, and are
heavily involved in community projects
from education to health-related and
other initiatives including fundraising.
IWG has a policy for discounted space
offering for registered charities.
Further, this year we continued to localise
and further roll out of our cleaning and
recycling programme which includes
sustainable products, energy efficiency
and reduced landfill within the constraints
of local markets.
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.
76
IWG plc Annual Report and Accounts 2023 CSRD Table of Contents
Topic Area
CSRD metric(s)
Climate change mitigation Monitoring and reporting global Scope 1
and 2 emissions
Net Zero emissions by 2040
IWG response
Detail of our Scope 1 and 2 emissions can
be found on page 74
Detail of our Net Zero commitment,
alignment with ISO Net Zero Guidelines,
and progress on pages 62, 73 and 74
Committing to obtaining 100% renewable
electricity by 2030
See details of our commitment and target
progress on pages 62, 73 and 74
Disclosing Scope 3 emissions by 2025
See details of our commitment on page 64
and 74
Baselining our supply chain for nature-
based impact by 2025
See details of our commitment on pages
64, 65 and 73
Reducing water per sqm by 20%
See details of our commitment on page 73
Resource use and
circular economy
Circular economy
Own workforce: working
conditions; health and
safety
Documentation of policies and key control
procedures for Health and Safety which
have group wide application
Reference our section on “Addressing
lifetime carbon” to learn more about or
furniture recycling initiatives; pages 63, 64
and 65 and supplier partnerships; pages
63, 64 and 65
See reference to our Health and Safety
policy on pages 50, 87 and 99
Completion of training is mandated for all
employees
Training of our workforce is completed on
our internal IWG Academy platform. For
more information, see pages 66 and 67
Working in the value chain:
secure employment,
adequate wages, health
and safety
Suppliers are requested to confirm
compliance with the IWG Code of Conduct
To access our Code of Conduct, please
visit iwgplc.com
The ESG Supply Chain Framework is rolled
out to suppliers to request confirmation of
adherence to key principles
For more information on the ESG Supply
Chain Framework, see pages 64 and 74
Consumers and end-
users: information-related
impacts, personal safety
IWG has business objectives in place to
manage associated risk, including robust
policies related to how data is processed
See details of our strategy and risk
management framework on pages 50-59.
For detail on our data protection and
privacy see page 57
Affected communities:
communities’ economic,
social & cultural
Involvement in community projects from
education to health-related and other
initiatives including fundraising
For more detail about our community
initiatives, please see our Social section,
pages 70 and 71
Our Human Rights policy sets out
expectations against all forms of forced and
child labour, and protection of all workers
Our Fair Treatment policy can be found on
the company website: www.iwgplc.com.
For more information about our Board
Diversity policy and data, see pages 90 to 95
Risk management,
internal control
Annual disclosures to frameworks allows
risk management processes to be
captured, and mitigation measures
assessed
IWG disclose against a number
of frameworks:
TCFD – see pages 72 to 74
CDP, MSCI & Sustainalytics – see page 72
To reference our strategy and risk
management framework see pages 50 to 59
77
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
Mark is one of Europe’s
best-known entrepreneurs
and since founding the Regus
Group in Brussels, Belgium
in 1989, he has achieved a
formidable reputation for
leadership and innovation. By
understanding the way that
globalisation, personal mobility
and digital technology have
enabled new ways of working,
Mark has overseen the growth
of IWG into the world’s largest
workspace provider.
Prior to Regus and IWG he
established businesses in
the retail and wholesale
food industry.
Mark has received many awards
for enterprise and is widely
acknowledged as one of the
pioneers of the workspace
industry who revolutionised the
way business approaches its
property needs with his vision
of the future of work.
A R N
Appointment
14 May 2019
Nationality
American
Experience
Laurie was a global engagement
audit partner with
PricewaterhouseCoopers LLP,
advising large public companies,
including Fortune 100 financial
services companies, in the US
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 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, 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).
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.
78
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.
IWG plc Annual Report and Accounts 2023
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 R
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
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 a
consulting business focused
on sustainability and corporate
governance 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),
Vice President, Ideas and
Prospective at the MEDEF, and a
Senior Fellow at The Conference
Board ESG Center in New York.
A R N
Appointment
19 May 2015
Nationality
Luxembourgish
Experience
François was CEO of the Edmond
de Rothschild Group in Geneva
until March 2023 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
After stepping down as CEO
of the Edmond de Rothschild
Group in March 2023, François
serves as Non-Executive
Chairman of Compagnie
Financière La Luxembourgeoise
SA and as Non-Executive
Director of Cobepa SA. François
also serves on the Board of
several charitable organisations.
Appointment
1 November 2022
Nationality
British and Irish
Experience
Prior to joining IWG, Charlie
was Chief Financial Officer of
Babylon, a US-listed digital-first,
value-based healthcare provider,
Global Head of Corporate
Development at CMC Markets, a
retail-focused financial services
business, Vice President at
Deutsche Bank AG and held
positions at Lehman Brothers
and IBM. Charlie holds a degree
in Economics and Management
from the University of Oxford.
External appointments
Charlie is a Non-Executive
Director and Chair of the Audit
Committee at the Department
of Work and Pensions in the
UK Government, and a
Non-Executive Director of
AICPA which is the world’s
largest accounting body and
represents Chartered
Professional Accountants
(CPAs) in the United States
and Chartered Institute of
Management Accountants
(CIMA) globally.
79
Governance Corporate Governance
Managing
our business
responsibly
Sustainability and social
responsibility underpin
our strategy and are an
integral component of
Board decision-making.”
Douglas Sutherland, Chairman
Members
Douglas Sutherland, Chairman
Mark Dixon
Laurie Harris
Nina Henderson
Tarun Lal
Sophie L’Hélias
François Pauly
Charlie Steel
Attendance
(out of possible maximum
number of meetings)
8/8
8/8
8/8
8/8
8/8
8/8
8/8
8/8
Length of tenure of Non-Executive Directors
■ 0-3 years
■ 3-5 years
■ 6-9 years
■ +9 years
33.3%
16.7%
16.7%
33.3%
80
Douglas Sutherland, Chairman
Dear Shareholder,
I am pleased to introduce the Corporate Governance
report for 2023. 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 and are an integral component
of Board decision-making.
As Chairman, I lead the Board in its oversight of
corporate sustainability. The Board and Management
are focused on ensuring that IWG makes continuous
progress in its carbon reduction journey towards our
target of achieving Net Zero carbon emissions by 2040.
As part of that journey, during 2023 we achieved
carbon neutrality (for Scope 1 and 2) and converted
more than 900 centres to certified green electricity, an
important step towards achieving our Net Zero carbon
emissions target. Further details of our carbon
reduction journey are detailed on pages 62 to 65.
Information on the Audit Committee’s role in monitoring
implementation of our policies and targets on climate
change can be found in the Audit Committee Report on
pages 96 to 101.
10% of our Executive Directors’ bonus for 2023 was
subject to achievement of targets related to the
adoption of green electricity and we are delighted
with the results from the significant effort that went
into accelerating the conversion to certified green
electricity during 2023. For 2024 targets related to
achieving our environment and climate change
objectives have again been included in our annual
bonus plan. Further information can be found in our
Directors’ Remuneration report on pages 102 to 114.
IWG plc Annual Report and Accounts 2023 Diversity and Inclusion
During 2023, we maintained a level of 37.5% female
Directors on our Board and between 40% and 60%
female membership on our Audit, Nomination and
Remuneration Committees. Both our Audit Committee
and our Remuneration Committee continue to be
chaired by women.
Whilst we did not meet the new Listing Rules guidelines
in respect of gender diversity in 2023, it is notable that
from May 2019 until May 2022 we had a level of 43%
female representation on the Board, which dropped
below 40% when we increased the size of our Board.
Our Board and Committee membership consists of
Directors from two ethnic groups. Whilst we are pleased
to report our compliance with the Listing Rule guidelines
on ethnic diversity, we are aware that there is more
work that needs to be done to increase the
representation of different ethnic groups and all
aspects of diversity on our Board and Senior Leadership
Team. We have continued at Board level to lead the
way, this has included extending our Board Diversity
Policy to include the Board Committees and including
diversity as a key factor in our succession planning for
senior roles both within the Board and on our Senior
Leadership Team.
Our process for identifying and engaging potential
new directors as part of our current Board succession
activities incorporates our gender and ethnic diversity
objectives. Information on our Board and Committee
Diversity Policy, our succession planning, the diversity
of the Board and the statistical information required by
the Listing Rules in respect of gender and ethnic
diversity at Board level can be found in the Nomination
Committee Report on pages 90 to 95. In addition,
information on the gender and ethnic diversity of our
Committees has been included at the start of each of
our Committee reports.
Board Membership
The current composition of the Board reflects the
decision to maintain relevant experience in the Board
through the transformational period which the Company
and the flexible workspace market have been
experiencing. We have three Board members with
extensive enterprise and business knowledge directly
applicable to IWG’s important near-term strategic
decisions and objectives. This includes the Nomination
Committee Chair and Senior Independent Director, the
Remuneration Committee Chair, and myself as
Chairman, who are approaching or past the term
guidelines recommended by the 2018 UK Corporate
Governance Code. At the same time, we have recently
refreshed the Board, with three of our Board members
having less than two years’ tenure on the Board. We are
addressing our Board succession activities keeping this
in mind. Nina Henderson and François Pauly have
agreed to remain on the Board as a near-term solution
to facilitate our Board succession activities.
As we continue to implement value enhancing activities,
including determining the appropriate stock exchanges
for listing the Company’s shares, the impact such
decisions may have on the future structure and
composition of the Board is integrated into our Board
succession planning. We are conducting a search
process for identifying and engaging with potential new
Directors to assure we will have the necessary profiles
for the refreshment of senior Board roles from within
the existing Board as well as new Board members.
Stakeholder Engagement
During 2023 your Board has supported a number of
measures to improve stakeholder engagement and
ensure that our strategy and director incentives are
clearly aligned with those of our stakeholders. As
announced at our 2023 Investor Day, this has included
a decision to present our business as three distinct
but complementary business units with associated
KPIs; a focus on growth through the capital-light
business ensuring that growth capex requirements will
be dramatically lower in the future, generating more free
cash flow for shareholders; and the resumption of our
progressive dividend policy, with a final dividend of one
pence per share recommended for approval by
shareholders at the 2024 annual general meeting.
Further information on Board decision-making and
stakeholder engagement is detailed on pages 86
and 87.
Corporate Governance Code
During 2023 we have complied with the UK Corporate
Governance Code published by the Financial Reporting
Council in July 2018 (the “Code”), except for provision
19. My time as Chairman has exceeded nine years from
the date of my first appointment to the Board. My
appointment is regularly reviewed by the Nomination
Committee which, as further explained on page 95, 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 for the near-term, 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 21 May 2024.
Douglas Sutherland,
Chairman
In this section
Corporate governance
Nomination Committee report
Audit Committee report
Directors’ Remuneration report
Directors’ report
Directors’ statement
80
90
96
102
115
118
81
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 members consisting of
five men and three women across two ethnic groups.
Each Board member is valued for the unique combination
of skills, drive, beliefs, knowledge, personal attributes
and experiences they bring to the boardroom. Individual
biographies can be found on pages 78 and 79 and
information on the diversity of our Board can be
found on page 94.
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 90 to 95.
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 discussed at appropriate times.
Initially seven meetings were scheduled for 2023
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 eight times during 2023 including
a detailed 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.
82
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 2023.
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;
• 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 on the Board and in respect of any Board
Committees to which they are appointed;
• the opportunity to meet with major shareholders;
• access to the Company’s operations and employees;
• access to training which is provided and reviewed
on an ongoing basis to meet particular needs;
• access to the advice and services of the Company
Secretary; and
• access to independent professional advice at the
Company’s expense.
Conflicts of interest
Directors are required to notify the Company as soon
as they become aware of a conflict of interest or a
potential conflict of interest. At the start of each Board
meeting the Chairman requires each Director to confirm
that they do not have a conflict of interest with any of
the matters to be discussed; if a conflict does arise the
Director is excluded from that discussion.
Time commitment
Directors are required to have sufficient time to meet
their Board responsibilities; this is considered when
making new appointments. Following their appointment
Directors are required to seek Board approval before
taking on additional external appointments.
IWG plc Annual Report and Accounts 2023 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 12 and 13. Our
purpose underpins everything we do and is closely
aligned with our three-year plan and strategy which is
reviewed annually by the Board.
The Board meeting held in September focused on
strategy and allowed the Board to make 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 77.
Culture, values and ethics
Our people are at the heart of our culture which is
based on our pioneering spirit, mutual empowerment,
shared leadership and unified global network that is
united by trust in one another.
Your Board is committed to doing what is right, ensuring
that we do what is right for the environment and for our
people and ensuring that our people act ethically and
without bias or discrimination in all our business activities.
As a Board we are very aware of our impact on the
climate and the importance of our climate policy. We
continue to identify climate change as a standalone
principal risk and in 2023, we carefully monitored the
achievement of our carbon neutrality goal as well as
the continued steps being taken across the Group to
reduce our emissions and achieve Net Zero carbon
emissions by 2040. Further information on our carbon
reduction journey can be found on pages 62 to 65.
As a Board we aim to balance the benefits of meeting
in person with our environmental goals and accordingly
we use commercial flights, 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. Information on the reports received during
2023 can be found in the Audit Committee Report on
page 100.
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.
All instances of bribery and corruption are investigated
and reported by our Audit Committee and further
information can be found on pages 99 and 100.
Performance monitoring
The Board monitors performance through a regular
report covering key performance indicators, profitability
and cash flow, operating unit 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 these accounts as detailed on page 131,
and reviewing the stress testing and analysis which
underpins the Viability Statement as detailed on
page 59.
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 progress on other environmental objectives,
such as reducing water usage and waste;
• 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
60 to 77.
Prudent and effective controls
The Board is responsible for assessing the nature and
extent of the principal risks it is willing to take to
achieve its strategy and long-term objectives, and also
those risks and emerging risks that threaten its
business model, future performance, solvency or
liquidity.
The key risks and emerging 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 50 to 58.
Information on climate change risk can also be found on
pages 72 to 74.
The Board has delegated authority for overseeing and
reviewing its system of internal controls and risk
management to the Audit Committee, which reports
regularly to the Board. Details of the system and the
Committee’s review of its effectiveness are reported
on pages 98 and 99.
83
Governance Corporate Governance continued
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.
Sophie L’Hélias was appointed as Non-Executive Director on 1 December 2022. The following activities were included in
her induction programme:
Activity
Summary
Documentation
Meetings
Visits
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
Committee Chairs and 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, corporate reporting and regulation,
stakeholder engagement; remuneration; talent; succession planning; governance and legal.
Sophie spent time with global and geographic leadership, including visits to Germany and
France, and attended one of the four global Leadership Conferences, which had
approximately sixty participants, including country management and franchisees, from both
Europe and South America.
Charlie Steel was appointed as Chief Financial Officer and Director on 1 November 2022. The following activities were
included in his induction programme:
Activity
Summary
Documentation
Meetings
Finance
Audit
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 all 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.
Charlie spent time with all his direct reports and visited geographic leadership, offices and
operations throughout the world.
Charlie spoke with the Chair, members of the Audit Committee, and KPMG in order to
understand the Audit Committee’s remit and obtain an overview of key issues, policies
and developments.
84
IWG plc Annual Report and Accounts 2023 Key activities of the Board in 2023
Strategy
• Approved the purpose and values
• Approved strategy and objectives
• Approved the three-year plan
• Approved the operating model and annual plan
• Regular review of forecast, strategy and objectives
• Monitored and reviewed the Group’s response to the
Israel- Hamas war
• Approved strategic projects and monitored
implementation
Financing
• Updated the Group’s financing and capital structure
• Re-introduced a progressive dividend policy
starting with a final dividend of one pence per share
recommended to shareholders in respect of the
financial year ended 31 December 2023
• Provided capital allocation guidance for once our net
financial debt / EBITDA falls below 1x
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 principal risks and mitigating
actions
• Received updates from the Audit Committee Chair
on key areas discussed
• Renewed the Group’s insurance programme
Corporate reporting and performance
monitoring
• Received regular performance updates at scheduled
meetings and through Board reports
• Received updates from the Remuneration Committee
Chair on key areas discussed
• Approved the Company’s year-end and interim results
• Approved Q1 and Q3 trading statements and trading
updates
• Reviewed the Group’s talent strategy and culture
Stakeholder engagement
• Received policy statements provided by significant
shareholders
• Received reports from the Chairman, Chief Executive
Officer and Chief Financial Officer on feedback from
shareholder meetings and correspondence
• Engaged with shareholders to further understand the
significant minority vote against our 2022 Annual
Report on Remuneration
• Consulted with shareholders regarding the
Remuneration Policy update
• Attended investor presentations and virtual meetings
• Held an Investor Day in December 2023
• Reviewed monthly updates on investor relations
• Reviewed updates on our global franchise partners
• Reviewed updates on employee engagement initiatives
• Reviewed updates on ESG activities and reporting
and community initiatives
Governance
• Reviewed and approved the Notice of annual
general meeting
• Received updates from the Nomination Committee
Chairman on succession planning, searches for Board
members and diversity
• Induction of Sophie L’Hélias as Non-Executive Director
• Induction of Charlie Steel as Chief Financial Officer
• Monitored employee engagement and ESG
• Evaluated the independence of all Non-Executive
Directors
• Reviewed the performance of the Board, its
Committees and all Directors
• Approved the Board Diversity Policy and reviewed our
performance against prior year
• Reviewed policies and statements including those on
anti-slavery and human trafficking, and anti-bribery
and corruption
85
Governance Additionally the 2023 Investor Day, which was attended
in person by 75 people with a further 200 virtual
attendees, presented an opportunity for the Company’s
Senior Leadership Team and Board members to meet
with investors, potential investors and analysts to
explain the Company’s objectives and strategic plans
for 2024. At the 2023 Investor Day the Company
announced a number of initiatives including the
resumption of regular dividend payments and capital
allocation guidance with net debt continuing to be paid
down towards our target of 1x Net Debt/ EBITDA.
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 Officer 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 2023 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 82% of votes
in favour except for resolution 3, the advisory vote in
relation to our 2022 Annual Report on Remuneration
which was passed by 77.7%. 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 October 2023
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 103 and 114.
The 2024 annual general meeting will be held on
Tuesday 21 May 2024. Notice of the meeting will be in
a separate document. 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.
Corporate Governance continued
Stakeholder engagement
Building and maintaining strong relationships with our
stakeholders is key to the long-term success of our
business. During 2023 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, landlords, 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 2023 included; our 2023 Investor Day;
engagement with shareholders regarding the 2023
annual general meeting voting outcomes; pulse surveys
undertaken with business leaders and employees about
the workplace and preferred ways of working; the
employee engagement programme overseen from the
Board by Nina Henderson; and initiatives to engage with
the Group’s franchise partners, many of whom attended
the Company’s North American Leadership Conference
in December 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.
During 2023 we have also sought to make our reporting
clearer for investors and potential investors through
redesigning it to focus on three distinct, but
complementary business models with associated KPIs.
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 12 and 13.
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 70
and 71.
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 2023 investor
relations continued its program of meeting with
investors and analysts holding over 400 meetings
online or in person.
86
IWG plc Annual Report and Accounts 2023 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. Talent is
placed at the centre of IWG and we are pleased that
the Group was once again recognised in 2023 as a
Top 1% LEADING EMPLOYER in the UK.
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 2023, Nina had the privilege of interacting with
a wide variety of employees through multiple channels.
This included her attendance at our Asian, Middle
Eastern and African Leadership Conference in January
2023 and our North American Leadership Conference
in December 2023. Through discussions with
employees held throughout the year, employees
informed her of their reactions to and views on our
strategic endeavours, sustainability initiatives, reward
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.
The following are some of the decisions taken by the
Board during the year and the consideration given to
the stakeholder interests and impacts:
plans and the resources available to team members
to enable them to deliver job performance.
She also received feedback through the IWG new
starter and leaver process which provides invaluable
data to ensure team members have a great start to
working at IWG and also provides understanding of the
reasons why team members might leave the business.
In addition, Nina meets regularly with senior HR
executives across the business to discuss critical
issues such as diversity, equity and inclusion, reward
and talent.
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 66 to 69.
Decision to target conversion of centres to certified
green electricity in 2023
Your Board is committed to achieving Net Zero carbon
emissions no later than 2040. In order to make continuous
progress towards this ultimate strategic goal, the Board
set a priority and objectives for converting centres to
certified green electricity during 2023, resulting in over
900 centres being converted during the year.
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, shareholders
and the wider society in which we operate.
Decision to focus on growth through the capital-
light business
The Board has approved the Group’s strategy of
focusing on growth through its capital-light business.
In our decision-making we considered how this strategy
could promote the long-term success of IWG for our
shareholders and all of our stakeholders. We engaged
with our customers, landlords and franchise partners
to understand their views and how we could better
support them in the implementation of hybrid working.
Of particular importance in our decision-making was
the fact that focusing on growth through the capital-
light business meant that growth capex requirements
would be dramatically lower in the future which in turn
would result in the generation of more free cash flow
for shareholders.
87
Governance Corporate Governance continued
Division of Responsibilities
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.
Board
Non-Executive Chairman
Douglas Sutherland
See responsibilities on page 89
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 89
See Non-Executive responsibilities on page 89
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 97
Terms of reference
page 107
Terms of reference
page 95
Terms of reference
page 89
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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 82
88
IWG plc Annual Report and Accounts 2023
Role of Board members
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. He also acts as secretary
to the Board Committees.
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.
Division of responsibilities
There is a clear separation of responsibilities between
the running of the Board and the Executive responsibility
for running the business.
89
Governance Nomination Committee report
Achieving
strength,
diversity and
sustainability
Your Board is made up of
three women and five men,
it represents two ethnic
groups, five nationalities,
a broad age range and a
combination of backgrounds
and experiences. ”
François Pauly, Chair, Nomination Committee
Members
François Pauly
Laurie Harris
Nina Henderson
Tarun Lal
Douglas Sutherland
Attendance (out of possible
maximum number of
meetings)
4/4
4/4
4/4
4/4
4/4
The majority of members of the Committee are independent non-
executive directors.
Length of tenure within the Committee
François Pauly, Chair, Nomination Committee
Dear Shareholder,
I am pleased to present to you our report on the work
of the Nomination Committee (the “Committee”) during
2023. This has been a productive year for the Committee,
with a particular focus on reviewing our succession
plans to refresh and strengthen the Board.
Key activities during 2023 included:
• reviewing our Board and Committee composition
and planning succession activities; and
• Extending our Board Diversity Policy to include Board
committees and updating our targets for 2024, taking
account of the new Listing Rules guidelines on gender
and ethnicity.
Gender representation within the Committee
■ Male
■ Female
60%
40%
Ethnic group representation within the Committee
■ 0-3 years
■ 3-5 years
■ 6-9 years
■ +9 years
20%
20%
20%
40%
■ White
■ Asian
80%
20%
90
IWG plc Annual Report and Accounts 2023 Board composition
At the date of this report, your Board comprises
eight members, being: the Non-Executive Chairman
(independent at the time of appointment); two
Executive Directors; and five independent Non-
Executive Directors. Your Board is made up of three
women and five men, it represents two ethnic groups,
five nationalities, a broad age range and a combination
of backgrounds and experiences. The biographies of
Board members can be found on pages 78 and 79.
The current composition of the Board reflects the
decision to maintain relevant experience on the Board
through the transformational period which the flexible
workspace market has been experiencing. As a result,
three of our Board members with extensive enterprise
and business knowledge applicable to IWG’s strategic
intentions, including the Chairman of the Board, the
Remuneration Committee Chair and myself as
Nomination Committee Chair and Senior Independent
Director, are approaching or past the term guidelines
recommended by the Code. At the same time, we have
recently refreshed the Board, with three of our Board
members having less than two years’ tenure. During
2023 the Committee has put in place plans to
implement Board succession activities. Our plans
respect the value of Board member knowledge and
experience which are directly applicable to our
important near-term strategic decisions and objectives.
As the Board continues to implement value enhancing
activities, including determining the appropriate stock
exchanges for listing the Company’s shares, the impact
such decisions may have on the future structure and
composition of the Board is integrated into our Board
succession planning. We are conducting a search
process for identifying and engaging with potential new
Directors to assure we will have the necessary profiles
for the refreshment of senior Board roles from within
the existing Board as well as new Board members. When
designing the profiles for new Directors we have taken
particular account of the results from our 2023 Board
review and our Board Diversity Policy and targets.
Recognising our need to retain expertise, both Nina
Henderson and I, have agreed to remain on the Board
in the near-term to support strategic implementation
while facilitating the execution of our succession
activities. Both Nina and I are independent directors
as further detailed on page 95. We are pleased that
Tarun Lal accepted his appointment to the
Remuneration Committee, effective 2024.
Additionally we are pleased to advise that Douglas
Sutherland will continue as Chairman of the Board.
As previously advised Douglas’ tenure exceeds the
recommended nine year term. Following our review
(page 95), discussions with investors and in light of our
strategic objectives we have determined that, subject
to our annual review, Douglas should remain as Chair
in the near-term.
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.”
40 – 60%
Females on Committees
In 2023 we extended our
Board Diversity Policy to
apply to our Board
Committees.
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.
During 2023 we extended our Board Diversity Policy
so that in addition to the Board it also applies to our
Board Committees. Information on the diversity of
these Committees can be found within the relevant
Committee Reports on pages 90, 96 and 102.
Progress made against the Diversity objectives we
set ourselves for 2023 can be found on page 92. Our
objectives for 2024 which will be reported on in 2025
are to:
• maintain a level of at least 37.5% female directors on
the IWG plc Board, rising to 40% in the near-term;
• appoint a female director and/or a director from a
non-white ethnic group to one of the positions of
Chair, Chief Executive Officer, Senior Independent
Director or Chief Financial Officer in the mid-term;
• maintain or increase the current levels of ethnic
diversity on the Board, Audit Committee, Nomination
Committee and Remuneration Committee;
91
Governance Nomination Committee report continued
• maintain or increase current levels of female
members on the Nomination Committee, Audit
Committee and Remuneration Committee;
• 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.
This year the new Listing Rules on gender and ethnicity
apply to us for the first time and full disclosures in
respect of this can be found on page 93. We are
pleased to have met the ethnicity target and although
we do not currently meet the gender targets we are
pleased to have maintained a level of 37.5% female
Board representation, 40-60% female representation
on all Board committees and to have two female
committee Chairs. It is also notable that from May 2019
until May 2022 we had a level of 43% female
representation on the Board; which dropped below 40%
when we increased the size of our Board. As a relatively
small Board vacancies do not arise frequently, when
they do we seek to use these as opportunities to
enhance both the gender and ethnicity of the Board,
whilst also taking account of all other aspects of
diversity. Our most recent appointment was Sophie
L’Hélias in 2022, however as she replaced another
female Non-Executive Director this did not impact our
gender balance.
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 page 68.
Performance against 2023 Diversity objectives
Performance achieved
Objective
Maintain a level of at least 37.5%
Throughout 2023 we have had three female Board members, representing
female directors on the IWG plc
37.5% of our Board and as part of our succession plans we are taking account
Board in the short-term rising
of all elements of diversity including gender.
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.
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 66 to 69.
Consider candidates for
appointment as non-executive
directors from a wider international
pool including those with little or no
previous FTSE board experience.
Ensure non-executive directors
long-lists 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.
The profile, which is being used to identify and engage with potential new
directors, was drawn up to allow us to consider a wider pool of talent; FTSE
experience is not a pre-requisite.
The profile, which is being used to identify and engage with potential new
directors, 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 37.5% female directors in the short term rising to 40% in the
medium-term.
During 2023 we worked with Audeliss Executive Search and Korn Ferry, each
of whom are signatories to the November 2017 Voluntary Code of Conduct.
92
IWG plc Annual Report and Accounts 2023 Board and Senior Leadership Team gender and ethnicity metrics –
Listing Rules 9.8.6R (9) and 14.3.33R (1)
New Listing Rules for gender and ethnic diversity apply to the Company for the first time this financial year. As at
31 December 2023 the Company has not met all the targets of the Listing Rules diversity guidelines as set out below:
Detail
Not yet achieved: During 2023 we have maintained a level of 37.5% female
Board representation and we have set ourselves a target for 2024 of achieving
40% female board representation in the near-term. Three out of our eight
directors are female and as our Board consists of eight directors, vacancies
are not frequent. Our most recent Non-Executive Director appointment was
female, however she replaced an outgoing female and so this did not increase
our female Board representation.
Not yet achieved: As at 31 December we did not have a woman in any of the
senior board positions. We are targeting the appointment of a woman to a
senior position as part of our succession planning.
Achieved: As at 31 December 2023 we had one director who is not from a
white ethnic group.
Listing Rules requirement
At least 40% of the Board are women.
At least one of the senior board
positions (Chair, Chief Executive
Officer (CEO), Senior Independent
Director (SID) or Chief Financial
Officer (CFO) is a woman).
At least one member of the Board is
from an ethnic minority background
(which is defined by reference to the
categories recommended by the
Office for National Statistics (ONS)
excluding those listed, by the ONS
as coming from a white ethnic
background).
The numerical data required under the Listing Rules is set out in Table One covering sex/gender representation and
Table Two covering ethnicity representation. All data provided has been collected through self-reporting from the
individuals concerned. By “executive management” we refer to our Senior Leadership Team which encompasses the
most senior levels of management reporting to the Chief Executive Officer, including the Company Secretary but
excluding all administrative and support staff.
Table One: Reporting table on sex/gender representation
Men
Women
Other categories
Not specified/prefer not to say
Table Two: Reporting table on ethnicity representation
White British or other White (including minority white groups)
Mixed/Multiple Ethnic Groups
Asian/Asian British categories
Black/African/Caribbean/Black British
Other ethnic group, including Arab
Not specified / prefer not to say
Number of
board
members
Percentage of
the board
Number of
senior positions
on the board
(CEO, CFO, SID
and Chair)
Number in
executive
management
Percentage of
executive
management
5
3
-
-
62.5%
37.5%
-
-
4
0
-
-
11
3
-
-
79%
21%
-
-
Number of
board
members
Percentage of
the board
Number of
senior positions
on the board
(CEO, CFO, SID
and Chair)
Number in
executive
management
Percentage of
executive
management
7
-
1
-
-
-
87.5%
-
12.5%
-
-
-
4
-
-
-
-
-
13
-
-
-
1
-
93%
-
-
-
7%
-
93
Governance Nomination Committee report continued
Board Diversity
Nationality representation on the Board
Age group representation on the Board
Ethnicity group representation on 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 page 68
Gender representation on 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 representation: Senior leadership
Gender representation: Regional
Leadership
Gender representation: all employees
■ Female
■ Male
21%
79%
■ Female
■ Male
33%
67%
■ Female
■ Male
67%
33%
Further information on employee diversity is available on page 68
94
IWG plc Annual Report and Accounts 2023 Board Review
The performance of your Board, its Committees, the
Chairman and individual Directors is reviewed 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, who have no other
connection to the Company, and was reported on in the
2021 Annual Report.
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.
The 2023 Board review was conducted internally by our
Chairman through a series of one-to-one discussions
with Board members. The review included enquiry into
the other appointments held by each Director (detailed
on pages 78 and 79) and the time they were able to
commit to performing their role for the Company. 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, their commitment to the Company
and in the Board’s processes.
The review of the Chairman of the Board was led by
the Senior Independent Director and discussed by the
Nomination Committee who were also informed by the
views of the Executive Directors and investors. Based
on the review of his performance in 2023 the Committee
recommends that Douglas Sutherland remain in this role
in the near-term. The Committee believes that given the
strategic plans and ongoing initiatives that his continued
leadership of the Board is in the best interests of all
stakeholders. As previously advised, Douglas, has been
on the Board for more than the recommended term of
nine years. He was appointed as Chairman on 18 May
2010 and was considered independent on appointment.
From 27 August 2008 until his appointment as Chairman,
Douglas served as an independent Non-Executive
Director of the Company.
Independence of Non-Executive
Directors
The Committee reviewed the independence of all
Non-Executive Directors in 2023; all are independent
and continue to make independent contributions and
effectively challenge management.
The Committee does not consider that independence
will necessarily be compromised by the length of
service of an individual director and following careful
evaluation has determined, despite Nina Henderson’s
tenure exceeding nine years and my tenure being close
to nine years, that we continue to demonstrate clear
independence of character and judgement.
Re-election of the Board
All Directors (unless they are retiring) submit
themselves for re-election by shareholders annually.
Directors appointed during the period since the last
annual general meeting are required to seek election at
the next annual general meeting under the Company’s
articles of association.
Reasons why the contribution of Directors offering
themselves for re-election or election continues to be
important to the long-term success of the Company
are described in the Notice of annual general meeting.
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 and succession
planning for the Senior Leadership Team, and supports
initiatives to strengthen and improve diversity within
the executive talent pipeline.
Succession planning
We monitor that succession plans are in place for the
orderly succession of appointments to the Board and
all senior Board and Committee 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.
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
Chair, Nomination Committee
95
Governance Audit Committee report
Managing
our business
ethically and
responsibly
Responsible corporate
behaviour is an integral
part of the overall
governance framework
and our management
structures.”
Laurie Harris, Chair, Audit Committee
Laurie Harris, Chair, Audit Committee
Dear Shareholder,
I am pleased to present you with this report on the work
of the Audit Committee (the “Committee”) during 2023.
Your Committee has an important responsibility to act
independently of Company management. We ensure,
for the benefit of shareholders and all stakeholders,
that we provide robust challenge in respect of financial
reporting and internal control.
This report sets out the role and responsibilities of
the Committee and our key activities during the year.
Attendance (out of possible
maximum number of
meetings)
Gender representation within the Committee
Members
Laurie Harris
Nina Henderson
Tarun Lal
Sophie L’Hélias
François Pauly
6/6
6/6
6/6
6/6
6/6
All members of the Committee are independent non-executive directors.
Length of tenure within the Committee
■ Male
■ Female
40%
60%
Ethnic group representation within the Committee
■ 0-3 years
■ 3-5 years
■ 6-9 years
■ +9 years
40%
20%
20%
20%
■ White
■ Asian
80%
20%
96
IWG plc Annual Report and Accounts 2023 Activities in 2023 included:
• Oversight of financial reporting, which included
consideration of and recommendation to approve
Management’s proposal to change to a US dollar
reporting currency with effect from 1 January 2024 as
well as the continuing consideration of the potential
change to use US GAAP reporting standards.
• Participation in and review of the outcomes of
the FRC review of KPMG’s audit of the Company
for the year ended 31 December 2022, including
the comments from the FRC and KPMG’s responses,
noting there were no significant findings identified
as part of this process.
• Review of changes to improve the Company’s
reporting, including providing additional information
on three business units, Managed & Franchised,
Company-Owned & Leased and Worka.
Membership
The Committee consists entirely of independent
Non-Executive Directors. In compliance with the Code
and as determined by the Nomination Committee and
the Board, I am the Committee member possessing
recent and relevant financial experience and qualifications.
Committee members represent different genders, age
groups, nationalities and ethnic groups. They hold a
diverse range of skills, experience, qualifications and
industry acumen in areas such as franchising, retail,
risk, human resources, ESG and governance and all
Committee members have proven track records in
leadership and financial transactions. Taken as a whole
the Nomination Committee and the Board have ensured
that the Committee has the competence needed to
effectively fulfil its role. The biographies of all
Committee members can be found on pages 78 and 79.
Meetings
Six Committee meetings were held in the year and
where time-sensitive approvals were needed authority
was delegated to a sub-committee.
Meetings are planned with the Company Secretary to
co-ordinate with key dates within the financial reporting
calendar and audit cycle. The Company Secretary
ensures that information and meeting papers are
provided to Committee members in a timely manner,
takes minutes at all meetings of the Committee, and
provides any necessary practical support.
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. During
meetings and discussions Executive Directors, internal
and external auditors are expected to make information
freely available to the Committee, to listen to the views
of the Committee and talk through issues openly.
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 Executive Directors,
the Chairman, the external lead audit partner and the
Business Assurance Director outside of the formal
Committee process.
Performance
The effectiveness of the Committee is reviewed
annually as part of the Board Review process detailed
on page 95.
Training
All Committee members are provided with the
necessary training to be able to fulfil their role. This
includes training as part of their induction programme
and ongoing training which includes updates on any
new standards, legal or reporting requirements and
best practice. Further information can be found on
pages 82 and 84.
During 2023 we carefully monitored discussions
around Audit Committee governance. Following the
recent revision of the Code, we are preparing for its
application in future financial years.
Resources
Executive Directors are under an obligation to ensure
Committee members are kept properly informed and
have the information needed to discharge their duties
as Directors of the Company. This obligation includes
taking the initiative to supply relevant information in
a timely manner rather than waiting to be asked and
ensuring that all employees and directors are advised
of the need to cooperate with the Committee and
provide it with any information it requires.
Resources are available for the Committee to take
independent legal, accounting or other advice as needed.
Responsibilities
The 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 these responsibilities and on any other
matters where the Board has requested the Committee’s
opinion. This reporting includes highlighting any
concerns raised or areas for improvement that have
been identified.
Where there is disagreement between the Board and
the Committee which cannot be resolved through
discussion the Committee has the right to report on the
matter to the shareholders as part of the Annual Report.
97
Governance Audit Committee report continued
Activities of the Audit Committee in
respect of 2023
This section summarises the main focus areas of the
Committee in respect of 2023 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 101 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.
During 2023 the Committee also reviewed proposals,
liaised with KPMG and provided advice to Management
and the Board in respect of the projects to change the
Company’s reporting currency to US dollars with effect
from 1 January 2024 as well as the potential change to
use US GAAP reporting standards.
Risk management
The Board is responsible for establishing the risk
appetite for the Group. The Committee oversees and
reviews an ongoing process for identifying, evaluating
and managing the risks faced by the Group. Major
business risks and their financial implications are
appraised by the responsible executives as part
of the planning process and are endorsed by regional
management. Key risks are reported to the Committee,
which reports on them to the Board. The appropriateness
of controls is considered by the executives, having
regard to cost, benefit, materiality and the likelihood
of risks crystallising. Key risks and actions to mitigate
those risks were considered by both the Committee
and the Board and were formally reviewed and approved.
Emerging and principal risks
There are a number of existing and emerging risks
and uncertainties which could have an impact on the
Group’s long-term performance. The Group has a risk
management structure in place designed to identify,
manage and mitigate such business risks. Risk
assessment and evaluation are an integral part of the
annual planning process, as well as the Group’s monthly
review cycle.
98
The Group’s principal risks, together with an explanation
of how the Group manages these risks are presented on
pages 50 to 58 of this Annual Report.
Climate change
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 54 and pages 72 to 74.
On the request of the Board the Committee monitors
the Group’s implementation of its policies 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 74, as well as the Committee’s
assessment of the impact of climate change on the
Group’s financial statements as detailed in note 1 on
page 131. The Committee also reviewed the disclosures
on climate change and protection of natural resources
provided on pages 72 to 74 in compliance with the
framework provided by the Task Force on Climate-
Related Financial Disclosures.
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 2023, 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.
IWG plc Annual Report and Accounts 2023 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;
• 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 2023 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 2023 we received 39 reports through our
whistleblowing channel. 28 of these were classified as
requiring further investigation and were reported to the
Committee; of these 28 reports, 24 have been resolved
to date and the remaining reports which were received
are under investigation. None of the investigations
identified instances of bribery and corruption that
needed to be reported to the Committee.
99
Governance Audit Committee report continued
Internal Audit
The Committee has overall responsibility for monitoring
and reviewing the effectiveness of the Company’s
internal audit function within the context of the overall
risk management system.
This includes responsibility for the appointment and
removal of the head of the internal audit function, the
Business Assurance Director, and for approving the
remit of internal audit; ensuring it is free to work
independently and objectively and that it has the
necessary resources and access to information to
enable it to fulfil its mandate in accordance with
appropriate professional standards. This includes
ensuring that the Group will continue to evaluate the
internal audit team skillset, including increasing the
breadth of skills within the team to take into account
forthcoming UK legislation with additional consideration
towards US requirements.
During 2023 the Committee reviewed progress made
against the 2023 internal audit plan and assessed and
approved the internal audit plan for 2024. The
Committee received regular reports from the Business
Assurance Director which were reviewed promptly and
it monitored management’s responsiveness to the
finding and recommendations of the internal audit
team. The Committee held its annual meeting with the
Business Assurance Director without the presence of
management. The Business Assurance Director
had direct access to the Committee Chair and to
the Chairman of the Board throughout the year.
External audit
The Committee is responsible for making
recommendations to the Board, to be put to
shareholders at the annual general meeting in relation
to the appointment, reappointment and removal of the
external auditor. They are responsible for overseeing
the relationship with the external auditor which includes
annually assessing the objectivity and independence of
the external auditor and the measures in place to
safeguard their independence , as well as undertaking
an annual evaluation of their effectiveness.
KPMG were initially appointed in 2016 as the external
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. KPMG were reappointed at the 2023 annual
general meeting and in respect of the financial year
ended 31 December 2023 they completed a review
of the half-year results of the Group for the period to
30 June 2023 and audited the consolidated financial
statements of the Group for the year ended
31 December 2023.
The Committee approves the remuneration of the
external auditor and their terms of engagement. The
breakdown of the audit fees paid to the external auditor
during the year to 31 December 2023 can be found in
note 5 on page 143.
100
Independence and objectivity of the external auditor
The Committee has assessed and confirmed the
continuing independence and objectivity of KPMG.
The value of non-audit services provided by KPMG in
2023 amounted to £0.3m (2022: £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 has also undertaken its annual review
of the measures in place to safeguard KPMG’s
independence as detailed in 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.
Effectiveness of the external auditor
The Committee has evaluated and confirmed
the effectiveness of KPMG as external auditor
of the Company.
The Committees’ annual assessment of the effectiveness
of the external auditor, covers all aspects of the
external audit process including planning, execution,
communication and reporting. The Chair discusses the
results of the assessment with the audit partner and
agrees on the action plans to be put in place as needed.
IWG plc Annual Report and Accounts 2023 The Committee’s assessment of the effectiveness
external audit conducted by KPMG in respect of the
year ended 31 December 2023 was informed by the
views of employees, senior leaders and stakeholders
across the Group. Particular focus was given to:
• the audit process as a whole and its suitability for the
challenges facing the Group, this included considering
the delivery against the agreed audit plan and the
actions agreed with the Committee in relation to the
change of reporting currency of the Group to US
Dollars, as well as changes made to improve the
Company’s reporting including the provision of
additional information on the three business units,
Managed & Franchised, Company-Owned & Leased,
and Worka;
• the strength and independence of the external audit
team and the level of resourcing;
• the exercise by the external audit team of its
professional scepticism and its ability to challenge
management assumptions where necessary; it was
noted that as part of their audit, KPMG had
challenged management to ensure robustness of
reporting across a wide set of topics, in particular
concerning: impairment tests of right of use assets,
PPE, goodwill and intangibles; lease accounting;
revenue recognition; taxation; controls. No material
issues were identified as part of this audit challenge.
• the external audit team’s understanding of the control
environment as detailed in their Management letter
and other communications;
• the culture of the external auditor in seeking
continuous improvement and increased quality
including KPMG’s self-assessment of risks to the
audit quality and the actions taken in response to
previous quality assessments; and
• the quality and timeliness of communications and
reports received and the quality of interactions
with management.
Audit tendering process
The Company’s last audit tendering process was
undertaken in 2018. The Committee notes the ongoing
process to evaluate a potential change to reporting its
financial results under US GAAP as well as separately
a consideration of the appropriate stock market
exchange for the listing of its shares. These processes
have involved new senior team members from KPMG
as well as other experts and also occupy internal
accounting resources. In view of the nature and status
of these processes, recognising that an audit tender is
a significant undertaking requiring significant time and
planning, and in view of the relative recent appointment
of the Chief Financial Officer in 2022, the Committee
does not believe it is appropriate to consider an audit
tender at this time. This will be re-evaluated in future
years in consideration of the outcome of the above
processes, among other factors.
Re-appointment of the external auditor
Following the Committee’s assessments of the
independence, objectivity and effectiveness of KPMG
as external auditor, the Committee has recommended
to the Board that KPMG Ireland be recommended to the
Company’s shareholders for reappointment as the
Company’s external auditor in respect of the financial
year ended 31 December 2024.
Laurie Harris
Chair, Audit Committee
Significant financial reporting judgements
The Committee discussed and reviewed the following key audit matters with KPMG and management in relation to
the financial statements for 2023. 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.
Listing rule requirement
Goodwill and intangible assets
Recognition of deferred tax assets
Impairment of leasehold property,
plant and equipment (“PPE”) and
right-of-use (“ROU”) assets
Detail
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 appropriate
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 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 2023
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.
101
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, Chair, Remuneration Committee
Members
Nina Henderson
Laurie Harris
François Pauly
Sophie L'Hélias
Tarun Lal1
Attendance (out of possible
maximum number of
meetings)
4/4
4/4
4/4
4/4
NA
1 Tarun Lal was appointed from 2024
All members of the Committee are independent non-executive
directors.
Length of tenure within the Committee
Nina Henderson, Chair, Remuneration Committee
Dear Shareholder,
On behalf of the Board’s Remuneration Committee (the
“Committee”), I present the 2023 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.
Gender representation within the Committee
■ Male
■ Female
40%
60%
Ethnic group representation within the Committee
■ 0-3 years
■ 3-5 years
■ 6-9 years
■ +9 years
40%
20%
20%
20%
■ Asian
■ White
20%
80%
102
IWG plc Annual Report and Accounts 2023 In 2023, IWG produced its highest ever revenue growth
in the Company’s 35 year history at 8% delivering
£3.3bn. IWG now has the largest-ever network footprint
of 3,514 locations (3,345 in 2022). Concurrently, the
Company continued to build its Managed Partnership
pipeline. All was accomplished while simultaneously
applying continued cost discipline in the face of global
inflationary pressure.
During our 2023 Investor Day we were pleased to
announce the resumption of regular dividend payments.
Notable 2023 performance achievements, linked to our
2023 bonus plan, include: an adjusted EBITDA (on a pre
IFRS 16 and constant currency basis) of £415m; net debt
reduction of £104m; continued network growth through
the opening of more than 300 new capital-light centres;
and the continuation of our carbon reduction journey
through the conversion of 900+ centres to certified green
electricity. These accomplishments, requiring current
investment, will continue to provide future benefits and
create long-term value for all stakeholders.
The metrics we set in respect of 2023 executive
performance and those metrics which we will apply for
2024 performance evaluation have and will continue to
align the interests of our Executives with the long-term
interests of our shareholders.
2023 Remuneration Outcomes
Annual bonus
During 2023, the Committee set financial and strategic
targets for the annual bonus. After consultations with
shareholders the weighting of the strategic targets was
reduced to 20% with 80% focused on financial targets.
This resulted in financial measures consisting of
adjusted EBITDA (on a pre-IFRS 16 and constant
currency basis) (55%), net debt reduction (25%) and
strategic targets consisting of measures relating to
network growth (10%) and carbon footprint reduction
through the conversion to certified green electricity
(10%). Achievement of minimum financial targets was a
condition for the application of strategic target payouts.
The achieved result for adjusted EBITDA (on a pre IFRS
16 and constant currency basis) was £415m resulting in
a bonus payment equal to 75% of maximum for this
element. Net debt reduction of £104m was achieved
resulting in a bonus payment equal to 100% of
maximum for this element.
During 2023, 900+ centres were converted to certified
green electricity. This high rate of conversion to green
electricity was achieved centre-by-centre in numerous
cities and countries by focusing on negotiating specific
certified green electricity contracts for centres where
the Company directly purchased the electricity and
there were reliable certified green electricity suppliers.
The capital-light growth target was also achieved with
the opening of 328 new centres in the year, of which
301 were capital-light. This reflected the significant
efforts to build the capabilities to accelerate centre
openings delivering an increase of 116% over the capital-
light openings during 2022. These achievements
resulted in a bonus payment equal to 100% of maximum
in respect of the strategic objectives.
Overall, the 2023 annual bonus formulaic outcome was
86% of maximum. The Committee reviewed this formulaic
outcome and were comfortable it was an accurate
reflection of performance and in line with stakeholders'
experience. Therefore, no discretion was applied.
Performance Share Plan (“PSP”)
The Performance Share Plan (PSP) pays for
performance against a predetermined relative TSR
target measured over three years as described below.
The plan’s structure recognises that IWG’s strategic
plans are designed to drive increasing value over
multiple years. Beyond reward, the PSP’s intention
is to also support retention of key management talent.
The PSP award was made in March 2021. The award was
subject to a relative TSR condition measured over three
financial years 2021-2023. Largely due to challenges
created by the pandemic, performance was assessed
as below the median of the FTSE350 (excluding
investment trusts). Therefore, the 2021 PSP award
has lapsed in full.
Response to 2023 annual general
meeting outcome
A significant majority of shareholders (77.7%) approved
our Annual Report on Remuneration in 2023, we are
appreciative of the support. The level of votes against
was higher than we would have liked. The Committee
is aware that a number of the shareholders who voted
against the Annual Report on Remuneration did not
agree with the 33.33% payout of the annual bonus for
2022 based on achieving strategic target objectives
when the financial objectives were not achieved.
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,
Douglas Sutherland, the Chairman, and I contacted
major shareholders who had not supported our
Directors’ Remuneration Report to understand the
reasons for their vote and to offer further engagement.
This engagement has been taken into account in
respect of the 2023 annual bonus targets for
Executive Directors as detailed on page 107.
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 appreciate all the engagement with our
shareholders over the last year.
The year ahead
The Committee is implementing the Directors’
Remuneration Policy in 2024 as follows:
• Executive Director salaries were subject to the annual
salary review process which included comparative
benchmarking. The last pay rise awarded to Executive
Directors was approved in 2020 but was not
implemented until 2021, the Executive Directors
having agreed to delay their pay increases and take a
50% salary cut until the end of 2020 during the
COVID-19 pandemic. During 2022 and 2023, there
were no salary increases for Executive Directors.
IWG’s 2023 performance is noteworthy. The
Committee recognises the Chief Executive Officer’s
leadership and expert navigation through tumultuous
events has positioned the company well and enables
IWG to continue to capture the opportunity present
in the evolution of how and where work is done. The
Committee has agreed a salary increase of 5% for the
Chief Executive Officer. The Committee has also
103
Governance Directors’ Remuneration report continued
agreed a 5% increase for the Chief Financial Officer in
recognition of his contributions to 2023 performance.
These increases were effective 1st January 2024. The
global workforce received an average annual salary
increase of 5 % during 2023.
• The maximum annual bonus potential remains
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 adjusted EBITDA, cash
generation 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, 2024-2026. Any
award that vests will be subject to an additional
two-year holding period.
IWG is a global company with the United States
representing its largest geographic operation and an
executive team recruited from and working throughout
the world. There is currently a remuneration gap for
both salaries and variable pay with global comparatives
that will need to be addressed in view of the Company’s
succession planning and retention objectives. The
Committee is committed to thorough consultations
with investors as we consider how best to address this
remuneration gap during the coming year to ensure our
pay model remains fit for purpose, ensures a pay for
performance culture through robust target setting
and aligns with shareholder experience.
In making its decisions, the Committee continues
to consider 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.
104
Workforce engagement and wider
workforce pay
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 employees share in our success
through performance related incentives. The average
pay rise awarded to employees in respect of 2023
was 5% (3% in respect of 2022).
Through my role as Non-Executive Director with
oversight of employee engagement, I have continued
my programme of meeting with our global workforce
and providing feedback and insight to the Board and
the Committee on the information I receive through my
role. This information can then be used to inform our
decision-making process including our review of the
compensation approach used across the Group and
ensuring that the interests of all employees are aligned
with the strategic objectives of the Company.
During 2023 I was privileged to interact with a wide
variety of employees through multiple channels, this
included my attendance at our Asian, Middle Eastern
and African Leadership Conference in January 2023
and our North American Leadership Conference in
December 2023. Through discussions with employees
held throughout the year, employees have informed me
of their reactions and views on our strategic endeavours,
sustainability initiatives, reward plans and the resources
available to team members to enable them to deliver job
performance. I also receive feedback through the IWG
new starter and leaver process which provides
invaluable data to ensure team members have a great
start to work at IWG and also provides understanding
of the reasons why team members might leave the
business. In addition I meet regularly with senior HR
executives across the business on critical issues such as
diversity, equity and inclusion, reward and talent. Talent
is placed at the centre of IWG and I was pleased that in
2023, the Group was once again recognised as a Top 1%
LEADING EMPLOYER in the UK.
In addition, I provide a sounding board for the team
designing IWG’s climate and environmental initiatives.
During 2023, I met with the team over seven times and
coordinated regular Board updates on their progress.
Annual general meeting
Shareholders will be asked to approve resolutions in
support of the 2023 Annual Report on Remuneration.
On behalf of the Committee, I commend this report to
you and look forward to your support for the resolution
at the annual general meeting.
Nina Henderson
Chair, Remuneration Committee
IWG plc Annual Report and Accounts 2023 Directors’ Remuneration Policy – Summary
This section summarises the Group’s policy on remuneration for Executive and Non-Executive Directors, which
was approved by the Company’s shareholders at the annual general meeting on 9 May 2023 (the “Policy”). The full
version of the shareholder-approved Policy can be found on the Company’s website at https://investors.iwgplc.com/
reports-and-presentations.
The Committee is satisfied that the approved Policy operated as intended in 2023.
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.
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.
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 the 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.
Summary Policy table for Executive Directors
Component
Base salary
Purpose/link to
strategy
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.
Operation
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.
Benefits
To provide a
competitive
benefits package.
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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Governance
Directors’ Remuneration report continued
Operation
Provided through participation in the
Company’s money purchase (personal
pension) scheme, under which the
Company matches individual
contributions up to a maximum
of base salary.
The Company may amend the form
of an Executive Director’s pension
arrangements in response to changes
in legislation or similar developments.
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.
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.
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.
Executive Directors are expected to
build a holding in the Company’s shares
to a minimum value of two times their
base salary within five years. This may
be built via the retention of the
net-of-tax shares vesting under the
Company’s equity-based share plans.
Deferred shares and shares subject to
a holding period (net-of-tax) can be
counted towards the total.
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.
Maximum
Set at a level
commensurate with
the workforce in the
executive’s location
(currently 7% of base
salary for existing Directors
in accordance with
local laws).
150% of base salary
per annum.
The normal plan limit is
250% of base salary.
Performance
framework
Performance metrics are
selected annually based
on the current business
objectives. The majority
of the bonus will be linked
to key financial metrics,
of which there will
typically be a significant
profit based element.
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 re-weight
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%.
N/A
N/A
N/A
N/A
Component
Pension
Purpose/link to
strategy
To provide retirement
benefits in line with the
overall Group Policy.
Annual bonus
To incentivise and
reward annual
performance and
create further
alignment with
shareholders via the
delivery and retention
of deferred equity.
Performance
Share Plan
(“PSP”)
Motivates and rewards
the creation of
long-term shareholder
value.
Aligns executives’
interests with those
of the shareholders.
Shareholding
guidelines
To align Executive
Directors’ interests
with those of
our long-term
shareholders and
other stakeholders.
Post-cessation
shareholding
requirement
To align Executive
Directors’ interests
with those of our
long-term
shareholders and
other stakeholders
106
IWG plc Annual Report and Accounts 2023 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 102.
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 2024
This Annual Report on Remuneration (including the
Committee Chair’s annual statement on pages 102 to 104)
will be put to a single advisory shareholder vote at the
2024 annual general meeting. The information below
includes how we intend to operate our Policy in 2024 and
the pay outcomes in respect of the 2023 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 2024
(and compared to 2023) are as follows:
Mark Dixon
Charlie Steel
Effective
1 Jan 2024
(£’000)
£919
£462
Effective
1 Jan 2023
(£’000)
£875
£440
Percentage
change
5%
5%
For context, the average base salary increase for global
employees in respect of 2023 is 5%.
Benefits and pension
Benefits and pension provisions will operate in line with
the approved Policy.
Annual bonus
For 2024 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 2024 annual bonus will be based 50% on
measurement against EBITDA targets, 30% on
measurement against cash generation targets
and 20% against measurement of strategic targets,
a portion of which will be focused on achieving
specific environment and climate change objectives.
Achievement of minimum financial targets is a condition
for the application of strategic target payouts. 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.
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
2026. 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 Committee is responsible for reviewing the
Chairman’s fees and the Chairman and Executive
Directors are responsible for reviewing Non-Executive
fees. No fee changes were proposed for 2024 and the
current fees as at 1 January 2024 (and compared to
2023) 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
Directors1
2024
(£’000)
2023
(£’000)
Percentage
change
300
300
0%
62
62
0%
15
15
15
15
15
15
15
15
0%
0%
0%
0%
5 to 10
5 to 10
0%
1. The level of dislocation allowance for non-Swiss Directors is
determined according to their country of residence.
107
Governance Directors’ Remuneration report continued
Remuneration outcomes for 2023
Single total figure of remuneration table (Audited)
The following table shows the total remuneration in respect of the year ending 31 December 2023, together with the
prior year comparative.
Executive Directors
Salary
Benefits
Pension
Other
Annual bonus
Long-Term
Incentive
Awards
Total
Total fixed
Total variable
£’000
Mark
Dixon
Charlie
Steel
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
875 875
440 74
-
-
–
–
61
61
31
6
–
–
– 1,129 438
74 568
–
-
-
– 2,065 1,374
936 936
1,129 438
– 1,039
154
471
154
568
–
Non-Executive Directors
Fees
Benefits
Pension
Annual bonus
Long-Term
Incentive Awards
Total
£’000
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Douglas Sutherland
300
300
Laurie Harris
Nina Henderson
Tarun Lal
Sophie L'Hélias
François Pauly
87
102
72
67
82
87
102
46
6
82
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
300
300
87
102
72
67
82
87
102
46
6
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 2022 financial year.
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.
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.
Determination of 2023 annual bonus (Audited)
The targets set for the 2023 bonus at the start of the year were as follows:
Measure
Adjusted EBITDA (pre-IFRS 16
and constant currency basis)
Net debt reduction
Network growth through new
capital-light centres open1
Carbon footprint reduction
through use of certified green
electricity1
Overall outcome
Weighting
(60% of maximum)
Target
Achieved
Outcome
(% maximum)
Maximum
(100%)
£440m
£80m
55%
25%
10%
10%
£400m
£65m
£415m
£104m
250 new centres
opened (gross)
300 new centres
opened (gross)
301 new centres
opened (gross)
700 centres
at year end
775 centres
at year end
+900 centres
at year end
75%
100%
100%
100%
86%
1. Achievement of minimum financial targets was a condition for the application of strategic target payouts.
108
IWG plc Annual Report and Accounts 2023 Director
Mark Dixon
Charlie Steel
Bonus maximum
(% of base salary)
Bonus awarded
(% of award)
150%
150%
86%
86%
Bonus awarded
Cash bonus
Deferred shares
(£’000)
1,129
568
(£’000)
(£’000)1
565
284
565
284
1. Half of the bonus was awarded in cash, with half deferred in shares which vest after three years.
PSP awards vesting in 2023 (Audited)
The award made to Executive Directors under the PSP in 2021 was subject to a TSR performance metric measured over
the three financial years ending 31 December 2023. Performance and vesting are as detailed below.
Performance conditions
Relative TSR versus FTSE 350
excluding investment trusts
(100% weighting)
Threshold
vesting
Threshold
performance
Maximum
vesting
Maximum performance
Performance achieved
Actual % vesting
25%
Median
100%
10% compound
annual growth
above median
Below median
0%
PSP awards vesting in 2025 (Audited)
PSP awards granted to Executive Directors on 8 March 2023 which vest subject to a three-year performance period
ending 31 December 2025 were as follows:
Executive
Mark Dixon
Charlie Steel
Number of
share options
1,139,027
572,768
% of base salary
250%
250%
Value of award
(£’000)1
£2,188
£1,100
% of maximum
amount receivable
for threshold vesting
25%
25%
1. Based on a face value grant of 250% of salary and using the share price of 192.05p on 7 March 2023.
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.
DSBP awards granted in the year
DSBP awards granted to Executive Directors on 8 March 2023 as a deferred bonus in respect of the financial year ended
31 December 2022 and which become exercisable on the third anniversary after the date of grant, subject to continuous
employment, were as follows:
Executive
Mark Dixon
Charlie Steel1
Number of
share options
113,903
19,145
% of base salary
50%
50%
Value of award1
(£’000)
£219
£37
1. Charlie Steel was appointed on 1 November 2022. Bonus detailed reflects time served in respect of the role.
109
Governance Directors’ Remuneration report continued
Total pension benefits
During the year under review, the Executive Directors received pension contributions of 7% of salary into defined
contribution arrangements (or cash equivalent) plus any contributions in accordance with standard local practice or
employment regulations. Details of the value of pension contributions received in the year under review are set out in
the Pension column of the single total figure of remuneration table on page 108.
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 2023 alongside the
interests in share schemes for the Executive Directors.
Shareholding guidelines
Shares held
outright
% of salary
required
Guideline
met?
% of salary
attained1
Deferred Share
Bonus Plan
options2
PSP options
subject to
performance
conditions3
PSP options for
which
performance
conditions have
been achieved4
Options as a
One Off Award
(subject to
performance
conditions)
289,677,544
20,000
200%
200%
Yes 62,709%
242,580 2,634,999
118,054
–
No5
13%
19,145
572,768
–
511,7516
Executive Directors
Mark Dixon
Charlie Steel
Non-Executive
Directors
Douglas Sutherland
400,000
Laurie Harris
Nina Henderson
Tarun Lal
Sophie L’Hélias
François Pauly
15,000
30,800
–
–
175,000
1. Based on a share price of 189.3p and base salary as at 31 December 2023. Awards not subject to performance conditions included on a notional
net of tax basis.
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, 2022 and 2023 PSP are subject to further performance conditions.
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. Charlie Steel was appointed on 1 November 2022 and has until 1 November 2027 (5 years) to meet the guideline.
6. On 2 November 2022 Charlie Steel received a conditional award of 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.
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 21 February 2024 638,128 options issued to Mark Dixon on 26 March 2021 under the PSP were lapsed following
determination by the Committee that the performance conditions had not been achieved as further detailed
on page 107.
• On 6 March 2024 1,215,278 options were issued to Mark Dixon under the PSP as further detailed on page 107.
• On 6 March 2024 611,112 options were issued to Charlie Steel under the PSP as further detailed on page 107.
• On 6 March 2024 313,664 options were issued to Mark Dixon under the DSBP as part of the 2023 annual bonus
as further detailed on pages 108 and 109.
• On 6 March 2024 157,728 options were issued to Charlie Steel under the DSBP as part of the 2023 annual bonus
as further detailed on pages 108 and 109.
110
IWG plc Annual Report and Accounts 2023 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 2023. Comparisons have been made to employees on a full
time-equivalent basis.
Year-on-year change in Directors’ and employees’ pay
2023
2022
20211
2020
Base salary
% change
Benefits %
change
Annual
bonus %
change
Base salary
% change
Benefits %
change
Annual
bonus %
change
Base salary
% change
Benefits %
change
Annual
bonus %
change
Base salary
% change
Benefits %
change
Annual
bonus %
change
Executive
Directors
Mark Dixon
Charlie Steel
Non-
Executive
Directors
Douglas
Sutherland
Laurie Harris
Nina
Henderson
Tarun Lal
Sophie
L’Hélias
François
Pauly
Employees
0%
0%6
0% 158%
0%
NM7
0%
–
0%
0%
0%
0%8
0%9
0%
1%
–
–
–
-
-
–
–
–
–
-
-
–
4% 18%10
0%
0%
0%
–
–
0%
3%
–
–
–
–
–
–
–
–
(33)%
–
–
–
–
–
–
–
(1)%5
3%
0%
–
0%
0%
0%
–
–
0%
6%
–
–
–
–
–
–
–
–
NM4
–
6%
–
– (100)%2
–
–
–
–
–
–
–
–
20%
12%
33%
–
–
12%
9%
–
–
–
–
–
–
–
–
–
–
–
2% (100)%3
(3)%5
NM4
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. 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.
6. Charlie Steel was appointed as Director and Chief Financial Officer on 1 November 2022. Base salary changes are calculated with reference to time
served in the role in the relevant period.
7. No annual bonus was paid to Charlie Steel in respect of 2022, A bonus of £568k was paid in respect of 2023.
8. Tarun Lal was appointed as Non-Executive Director on 10 May 2022. Base salary changes are calculated with reference to time served in the role in the
relevant period.
9. 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.
10. The lower percentage increase in employee bonuses compared to Executive Directors in respect of 2023, is a result of higher 2022 bonus payouts to
employees reflecting achievement against personal goals.
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 2023 and 31 December 2022 and the percentage changes between years:
Total employee remuneration
Distributions to shareholders via dividends and share buybacks
1. No distributions were made to shareholders in respect of 2023, in 2022 2.1m shares were repurchased.
2023
2022
2022 to 2023
Change
£433m
£423m
£0
£6m
2.4%
NM1
111
Governance Directors’ Remuneration report continued
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 2023 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 higher this year as compared with last year largely due to the CEO’s bonus for 2023 being
awarded at 86% of maximum compared to the 2022 bonus which was awarded at 33% 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
2023
2023
Total pay
Base salary
Methodology
(Lower quartile)
(Median)
(Upper quartile)
P25
P50
P75
Option A
Option A
Option A
Option A
Option A
231:1
43:1
74:1
49:1
78:1
148:1
35:1
50:1
36:1
55:1
102:1
20:1
29:1
24:1
38:1
Mark Dixon
(£’000)
P25
(£’000)
P50
(£’000)
P75
(£’000)
2,065
875
26
25
38
36
54
51
Performance graph and table
The graph below shows the TSR of IWG in the ten-year period to 31 December 2023 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)
300
200
100
Dec
2013
Dec
2014
Dec
2015
Dec
2016
Dec
2017
Dec
2018
Dec
2019
Dec
2020
Dec
2021
Dec
2022
Dec
2023
■ IWG
■ FTSE 350 (excluding investment trusts)
Source: Eikon from Refinitiv
This graph shows the value, by 31 December 2023, of £100 invested in IWG plc on 31 December 2013, compared with the
value of £100 invested in the FTSE 350 (excluding investment trusts) Index on the same date.
The table below provides remuneration data for the Chief Executive Officer for each of the ten financial years over the
equivalent period.
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Single total figure
of remuneration
Bonus
(% of maximum)
Long-term incentive
vesting (% of maximum)
112
£2,770k £1,968k £3,035k
£1,132k
£1,451k
£4,181k £1,454k £1,890k £1,374k £2,065k
100%
100%
93%
0%
43%
100%
0%
50%
33%
86%
86%
97%
91%
11%
2%
100%
33%
17%
0%
0%
IWG plc Annual Report and Accounts 2023 Payments to past directors/payments for loss of office (Audited)
There have been no payments to past directors or payments for loss of office in 2023.
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 2023. All directors except those retiring will seek re-election at
the 2024 annual general meeting.
Current service contract/
appointment agreement
Initial appointment date as
Director within the Group
Expiry of
current term
Length of service as
Director with the Group
Executive Directors
Mark Dixon
Charlie Steel
Appointment agreement
– 19 December 2016
Director service agreement
– 1 July 2020
Appointment agreement –
23 August 2022
Employment agreement –
23 August 2022
Founder 1989
–
Founder 1989
1 November 2022
–
1 year 2 months
Non-Executive Directors
Douglas Sutherland
Appointment agreement
– 16 February 2017
27 August 2008
–
Laurie Harris
Nina Henderson
Tarun Lal
Sophie L’Hélias
François Pauly
Appointment agreement –
14 May 2019
Appointment agreement
– 19 December 2016
Appointment agreement –
7 March 2022
Appointment agreement
– 30 November 2022
Appointment agreement
– 19 December 2016
15 years 5 months
(12 years
8 months as
Chairman)
4 years 8 months
9 years 8 months
14 May 2019
20 May 2014
–
–
10 May 2022
9 May 2025
1 year 8 months
1 December 2022
1 December 2025
1 year 1 month
19 May 2015
–
8 years 8 months
113
Governance Directors’ Remuneration report continued
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 2023 were £47k (2022: £37k). 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 meeting held on 9 May 2023 in respect of remuneration-related
resolutions are shown in the table below:
Resolution
#
%
#
%
Total votes
cast
Votes
withheld
Votes for
Votes against
Approval of Directors’
Remuneration Policy at the 2023
annual general meeting
Approval of the Annual Report on
Remuneration for year ending
31 December 2022
719,060,452 87.23%
105,260,913
12.77%
824,321,365 4,315
639,920,416 77.68%
183,827,277
22.32%
823,747,693 568,987
Whilst the resolution approving the Annual Report on Remuneration for the financial year ending 31 December 2022
on an advisory basis was supported by a clear majority of shareholders the significant minority vote against was
recognised. 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, major
shareholders who had not supported our Directors’ Remuneration Report were contacted to understand the reasons
for their vote and to offer further engagement.
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.
For and on behalf of the Committee
Nina Henderson
Chair, Remuneration Committee
114
IWG plc Annual Report and Accounts 2023 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 2023.
Directors
The Directors of the Company who held office during
the financial year under review were:
Executive Directors
• Mark Dixon
• Charlie Steel
Non-Executive Directors
• Douglas Sutherland (Chairman)
• Laurie Harris
• Nina Henderson
• Tarun Lal
• Sophie L’Hélias
• François Pauly
Biographical details for the current Directors are shown
on pages 78 and 79.
Details of the Directors’ interests and shareholdings are
given in the Directors’ Remuneration report on page 110.
Details of the role of the Board can be found on pages
88 and 89, and the process for the appointment of
Directors can be found on page 95.
The Directors’ biographies, Corporate Governance
report, Nomination Committee report, Audit Committee
report, Directors’ Remuneration report and Directors’
statement on pages 78 to 114 and 118 all form part of
this report.
Corporate Governance Statement
The Governance section of this Annual Report on pages
78 to 118, together with information contained in the
shareholder information section on page 186, constitute
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 81):
• a description of the main features of our internal
control and risk management arrangements in relation
to the financial reporting process (pages 98 and 99);
• a description of the composition and operation of the
Board and its Committees (pages 80 to 114); and
• our Board Diversity Policy set out on pages 91 and 92.
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 77 as follows:
• The Chief Executive Officer’s review and Chief
Financial Officer’s review, on pages 18 to 21 and 40
to 49 respectively, address:
• the review of the Company’s business
(pages 18 to 21):
• an indication of the likely future developments in
the business (pages 18 to 21);
• the development and performance of the business
during the financial year (pages 40 to 45); and
• the position of the business at the end of the year
(pages 46 to 49).
• The Risk management and principal risks report, on
pages 50 to 58, 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 54 and pages 72 to 74.
• The Company’s activities in research and
development are detailed on page 29 and in the Risk
management and principal risks report on page 53.
• The ESG section, on pages 60 to 77, includes the
following reports:
• Environment Report on pages 60 to 65;
• Social Report on pages 66 to 71 covering employee
development, diversity and performance, and
community engagement; and
• Task Force on Climate Related Financial Disclosures
on pages 72 to 74.
• The Nomination Committee report on pages 90 to 95
covers our approach to Board diversity.
• The Directors’ statement on page 118 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 zero tolerance
of bribery and corruption, this applies to its employees,
its suppliers and other third parties working with
the Company.
All employees receive training on our bribery and
corruption policy. The Company’s statement of
commitment is reviewed by the Board annually
and was fully updated in 2023, it can be can be
found on the Company’s website: www.iwgplc.com.
115
Governance Details of the Company’s employee share schemes
can be found in note 26 of the notes to the accounts
on pages 165 to 173. The Company’s employee share
schemes contain provisions relating to a change of
control of the Company. The terms, conditions and
discretion for the vesting and exercise of awards and
options may be amended in the event of a change of
control of the Company.
Power for the Company to issue shares
At the Company’s annual general meeting held on
9 May 2023 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 disapply pre-
emption rights, in each case, until the earlier of the
conclusion of the Company’s next annual general
meeting or 8 August 2024.
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 2023. 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
9 May 2023 the shareholders of the Company
approved a resolution giving authority for the Company
to purchase in the market up to 100,668,380 ordinary
shares representing approximately 10% of the issued
share capital (excluding treasury shares) as at 4 April
2023. No repurchases took place in 2023.
Branches
The Company is incorporated in Jersey with a head
office branch in Switzerland.
Directors’ report continued
Respect for human rights
The Company has zero tolerance to slavery and human
trafficking. Our Modern Slavery Statement is aligned to
the Modern Slavery Act 2015 and is reviewed by the
Board annually. In addition our Fair Treatment policy
sets out our commitment to protect human rights and
against all forms of forced labour. Both policies can be
found on the Company website: www.iwgplc.com.
Results and dividends
The loss before taxation for the year was £189m (2022:
loss of £105m).
The Directors are pleased to recommend a final
dividend of one pence per ordinary share (2022: Nil
pence per share). No interim dividend was paid in 2023
(2022: £nil). Assuming the final dividend is approved by
shareholders at the forthcoming annual general
meeting, to be held on 21 May 2024, the final dividend is
expected to be paid on 31 May 2024 to shareholders on
the register at the close of business on 3 May 2024.
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.
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 £0.6m during
the year (2022: £0.5m).
Capital structure
The Company’s share capital (including treasury shares)
comprises 1,057,248,651 issued and fully paid up
ordinary shares of one pence nominal value in IWG plc
(2022: 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.
116
IWG plc Annual Report and Accounts 2023 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 125 to 178.
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 18 to 21, as well as the
Group’s principal risks and uncertainties as set out on
pages 52 to 58 and the outcomes of modelled and
stress-tested scenarios set out in the Viability
Statement on page 59.
Further details on the going concern basis of preparation
can be found in note 2 of the notes to the accounts, on
pages 130 to 138.
Post balance sheet events
Subsequent events are detailed in note 34 of the notes
to the accounts on page 178.
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.
Substantial interests
At 15 March 2024, the Company has been notified of
the following substantial interests held in the issued
share capital of the Company.
Estorn Limited1
Toscafund Asset
Management LLP
Number of voting
rights
% of issued share
capital (excluding
treasury shares)
289,677,544
28.8%
104,313,674
10.4%
1. Mark Dixon owns 100% of Estorn Limited.
Approval
This report was approved by the Board on 18 March 2024.
On behalf of the Board
Timothy Regan
Company Secretary
18 March 2024
117
Governance 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
18 March 2024
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.
118
IWG plc Annual Report and Accounts 2023 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 2023 set out on pages 125 to 178, 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 United Kingdom. In our opinion:
• the financial statements give a true and fair view of the state of the Group’s affairs as at 31 December 2023 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 United Kingdom; 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 8 financial years ended 31 December 2023. 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.
119
Financial Statements Independent auditor’s report to the members of IWG plc continued
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.
120
IWG plc Annual Report and Accounts 2023 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 exclusion of ‘Valuation of intangible assets arising on acquisition of The Instant Group’, the key audit
matters are consistent with our 2022 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 – £1,128 million (2022: £1,148 million)
Refer to pages 132 and 134 (accounting policy) and pages 149 to 152 (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 80% of the total carrying amount.
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.
For the reasons outlined above the engagement team determine this matter to be a key audit matter.
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.
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.
Recognition of Deferred Tax Assets associated with the Group’s intellectual property
in Switzerland – £77 million (2022: £77 million)
Refer to page 138 (accounting policy) and pages 145 to 147 (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 2023 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.
121
Financial Statements Independent auditor’s report to the members of IWG plc continued
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.
Impairment of Leasehold Property, Plant and Equipment (‘PPE’) and Right-of-use
(‘ROU’) assets – £78 million net charge of impairment (2022: £52 million net reversal
of impairment)
Refer to page 132 (accounting policy) and page 153 (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 closure and planned closure of certain centres in the ordinary course of business. 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 2022 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 2023. We consider this area to be a key audit matter, in
consideration of the significance of the assets and the related net impairment charge, 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 for the reasons outlined above.
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 assessing the performance of business centres for any impairment indicators. 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
impairment charge of £42 million and £36 million related to Right of Use assets and Leasehold Improvements PPE
respectively in the year ended 31 December 2023. 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.
122
IWG plc Annual Report and Accounts 2023 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 £10 million (2022: £9 million) which is
0.34% (2022: 0.33%) of total revenues. In 2023, consistent with 2022, we have used revenue as the benchmark for
materiality. Consistent with 2022, we determined that adjusted profit before tax was not an appropriate benchmark in
2023 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% (2022: 75%) of materiality for the financial statements as a whole, which equates
to £7.5 million (2022: £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 £0.5 million (2022: £0.45 million). We also agreed to report other audit misstatements
below that threshold that we believe warranted reporting on qualitative grounds.
We applied materiality to assist us determine what risks were significant risks and the appropriate audit procedures to
be performed.
The structure of the Group’s finance function is such that certain transactions and balances are accounted for by
central Group finance teams, with the remainder accounted for in the operating units. We performed comprehensive
audit procedures, including those in relation to the key audit matters, on those transactions and balances accounted for
at Group and operating unit level. In determining those components in the Group on which we perform audit
procedures, we considered the relevant size and risk profile of the components.
In relation to the Group’s operating units, audits for Group reporting purposes were performed at twelve identified key
reporting components, augmented by risk focused audit procedures which were performed for certain other
components. These audits covered 82% (2022: 83%) of total Group revenue and 83% (2022: 84%) 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 summarised extract of unaudited Company
balance sheet, reconciliation for alternative performance measures, 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 Statement specified for our review. Based on the work undertaken as part of our audit, we have concluded
that each of the following elements of the Corporate Governance Statement is materially consistent with the financial
statements or our knowledge obtained during the audit:
123
Financial Statements Independent auditor’s report to the members of IWG plc continued
• Directors’ statement with regards the appropriateness of adopting the going concern basis of accounting and any
material uncertainties identified set out on page 118;
• 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 118;
• Director’s 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 118;
• 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 118;
• 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 50 to 58;
• The section of the annual report that describes the review of effectiveness of risk management and internal control
systems set out on pages 98 and 99; and
• The section describing the work of the audit committee set out on pages 96 to 101.
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 United Kingdom 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.
Keith Watt
18 March 2024
for and on behalf of KPMG
1 Stokes Place,
St. Stephen’s Green,
Dublin 2,
Ireland
124
IWG plc Annual Report and Accounts 2023 Consolidated income statement
£m
Revenue(2)
Total cost of sales
Cost of sales
Adjusting items to cost of sales(3)
Net (impairment)/reversal of property, plant, equipment and right-of-use assets(3)
Expected credit (losses)/reversal on trade receivables
Gross profit (centre contribution)
Total selling, general and administration expenses
Selling, general and administration expenses
Adjusting items to selling, general and administration expenses(3)
Share of loss of equity-accounted investees, net of tax
Operating profit
Finance expense
Finance income
Net finance expense
Loss before tax for the year from continuing operations
Income tax (expense)/credit
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)
Notes
3
10
3,5
5
3
10
21
5
7
7
8
9
23
11
11
11
11
Year ended
31 Dec 2023
2,958
(2,354)
(2,205)
(71)
(78)
(15)
589
(443)
(447)
4
(1)
145
(348)
14
(334)
(189)
(27)
(216)
–
(216)
(215)
(1)
(21.4)
(21.4)
(21.4)
(21.4)
Year ended
31 Dec 2022
Restated(1)
2,751
(2,182)
(2,166)
(68)
52
6
575
(427)
(399)
(28)
(1)
147
(287)
35
(252)
(105)
32
(73)
1
(72)
(69)
(3)
(6.9)
(6.9)
(7.0)
(7.0)
1. The comparative information has been restated as the Group changed its accounting policy on deferred tax related to assets and liabilities arising from
a single transaction due to amendments to IAS 12 (note 2) and changed its classification of adjusting items.
2. Includes a net settlement fee of £2m recognised (comprising the settlement fee of £18m, offset by a release of related accrued income of £16m), for TKP
Corporation’s sale of the Japanese master franchise agreement to Mitsubishi Estate Co.
3. The net adjusting items charge on operating profit relating to rationalisations in the network of £145m (2022: £12m) comprises the following items
included in the balances referenced (note 10):
The net impairment of property, plant and equipment and right-of-use assets of £57m (2022: net reversal of £82m), closure costs of £58m (2022:
£59m), the impairment of Ukraine and Russia of £4m (2022: £9m) and other one-off items including legal, acquisition and transaction cost as well
as obsolete desktop phone write-offs of £26m (2022: £26m).
The above consolidated income statement should be read in conjunction with the accompanying notes.
125
Financial Statements
Consolidated statement of comprehensive income
£m
Loss for the year
Other comprehensive income/(loss) that is or may be reclassified to profit or loss in
subsequent periods:
Foreign currency translation (loss)/gain for foreign operations
Items that are or may be reclassified to profit or loss in subsequent periods
Other comprehensive income that will never be reclassified to profit or loss in
subsequent periods:
Items that will never be reclassified to profit or loss in subsequent periods
Other comprehensive (loss)/profit for the period, net of tax
Notes
Year ended
31 Dec 2023
Year ended
31 Dec 2022
Restated(1)
(216)
(72)
(16)
(16)
–
(16)
(232)
(231)
(1)
5
5
–
5
(67)
(64)
(3)
Total comprehensive loss for the year, net of tax
Attributable to shareholders of the Group
Attributable to non-controlling interests
23
1. The comparative information has been restated as the Group changed its accounting policy on deferred tax related to assets and liabilities arising from
a single transaction due to amendments to IAS 12 (note 2).
The above consolidated statement of comprehensive income should be read in conjunction with the
accompanying notes.
126
IWG plc Annual Report and Accounts 2023
Consolidated statement of changes in equity
£m
Balance at 1 January 2022
Change in accounting policy
Restated balance at 1 January 2022
Total comprehensive income/(loss)
for the year:
Restated loss for the year
Other comprehensive income:
Foreign currency translation gain for
foreign operations
Other comprehensive income, net of
tax
Total comprehensive income/(loss)
for the year
Transactions with owners of the
Company
Ordinary dividend paid
Share-based payments
Purchase of shares
Settlement from exercise of share
awards
Total transactions with owners of the
Company
Acquisition of subsidiary with non-
controlling interests
Disposal of subsidiary with non-
controlling interests
Balance at 31 December 2022
Total comprehensive loss
for the year:
Loss for the year
Other comprehensive loss:
Foreign currency translation loss for
foreign operations
Other comprehensive loss, net of tax
Total comprehensive loss
for the year
Transactions with owners of the
Company
Ordinary dividend paid
Share-based payments
Purchase of shares
Settlement from exercise of share
awards
Total transactions with owners of the
Company
Balance at 31 December 2023
Notes
2
Issued
share
capital
10
–
10
Share
premium
Treasury
shares
313
–
313
(151)
–
(151)
–
–
–
–
–
–
–
–
–
–
–
10
–
–
–
–
–
–
–
–
–
10
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(5)
4
(1)
–
–
313
(152)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1)
1
–
313
(152)
12
6
22
22
23
23
12
6
22
22
Foreign
currency
translation
reserve
Other
reserves(1)
Retained
earnings
Total
equity
attributable
to equity
shareholders
Non-
controlling
interests Total equity
16
–
16
–
5
5
5
–
–
–
–
–
–
26
–
26
82
29
111
296
29
325
9
–
9
305
29
334
–
(69)
(69)
(3)
(72)
–
–
–
–
–
–
–
–
–
–
–
5
5
–
–
5
5
(69)
(64)
(3)
(67)
–
4
–
(4)
–
–
–
42
–
4
(5)
–
(1)
–
–
260
–
–
–
–
–
53
(7)
52
–
4
(5)
–
(1)
53
(7)
312
–
21
–
26
–
–
(215)
(215)
(1)
(216)
(16)
(16)
(16)
–
–
–
–
–
5
–
–
–
–
–
–
–
–
26
–
–
(16)
(16)
–
–
(16)
(16)
(215)
(231)
(1)
(232)
–
6
–
(1)
5
(168)
–
6
(1)
–
5
34
–
–
–
–
–
51
–
6
(1)
–
5
85
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.
127
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 2023
As at 31 Dec 2022
Restated (1)
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
919
209
5,399
4,372
1,027
64
451
53
45
–
7,140
1
891
33
27
110
1,062
8,202
1,310
433
43
13
924
24
2,747
12
173
705
4,453
–
18
6
3
5,370
8,117
10
313
(152)
5
26
(168)
34
51
85
8,202
934
214
6,234
5,009
1,225
95
457
57
45
–
8,036
1
919
52
19
161
1,152
9,188
1,202
455
45
285
1,002
31
3,020
11
175
588
5,037
–
37
6
2
5,856
8,876
10
313
(152)
21
26
42
260
52
312
9,188
1. Based on the audited financial statements for the year ended 31 December 2022. The comparative information has been restated as the Group
changed its accounting policy on deferred tax related to assets and liabilities arising from a single transaction due to amendments to IAS 12 (note 2).
The financial statements on pages 125 to 178 were approved by the Board on 18 March 2024
Mark Dixon
Charlie Steel
Chief Executive Officer
Chief Financial Officer
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
128
IWG plc Annual Report and Accounts 2023
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
Impairment of goodwill
Impairment of other intangible assets
Loss on disposal of property, plant and equipment
Profit on disposal of right-of-use assets and related lease liabilities
Net of impairment/(reversal) of property, plant and equipment
Net of impairment/(reversal) of right-of-use assets
Amortisation of intangible assets
Tax expense/(credit)
Expected credit losses/(reversal) on trade receivables
(Decrease)/increase in provisions
Share-based payments
Other non-cash movements
Operating cash flows before movements in working capital
Proceeds from partner contributions (reimbursement of costs)(3)
Increase in trade and other receivables
Increase in trade and other payables
Cash generated from operations
Interest paid and similar charges on bank loans and corporate borrowings
Interest paid on lease liabilities
Tax paid
Net cash inflows from operating activities
Investing activities
Purchase of property, plant and equipment
Payment of initial direct costs related to right-of-use assets
Interest received on net lease investment
Payment received from net lease investment
Purchase of subsidiary undertakings, net of cash acquired
Purchase of intangible assets
Proceeds on the sale of discontinued operations, net of cash disposed of
Proceeds on sale of property, plant and equipment
Interest received
Net cash outflows from investing activities
Financing activities
Proceeds from issue of loans
Repayment of loans
Payment of lease liabilities
Proceeds from partner contributions (lease incentives)(3)
Proceeds from Non-controlling interests
Purchase of treasury shares
Settlement from exercise of share awards
Payment of ordinary dividend
Net cash outflows from financing activities
Net (decrease)/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 2023
Year ended
31 Dec 2022
Restated(1)
(216)
–
334
1
1,117
919
198
–
1
61
(37)
36
42
65
27
15
(26)
6
(6)
1,420
22
(19)
144
1,567
(55)
(280)
(35)
1,197
(153)
(2)
6
55
(10)
(60)
–
–
1
(163)
985
(1,149)
(935)
23
–
(1)
–
–
(1,077)
(43)
161
(8)
110
9
7
21
15
15
15
5,13
5,14
5
5,15,24
5,15
5,15
5,14
8
5
20
6
15
24
15
7
24
28
14
9
7
24
24
24
15
23
22
12
24
(73)
–
252
1
1,145
955
190
3
–
34
(31)
(13)
(39)
44
(32)
(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
1. Based on the audited financial statements for the year ended 31 December 2022. The comparative information has been restated as the Group
changed its accounting policy on deferred tax related to assets and liabilities arising from a single transaction due to amendments to IAS 12 (note 2).
2. The net finance expense includes mark-to-market adjustments of £nil (2022: £27m).
3. Details from partner contributions relating to the reimbursement of costs and lease incentives of £45m (2022: £50m) are provided on pages 181 and 182.
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
129
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 2023 were authorised for issue by the Board of Directors on 18 March 2024 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 125 to 178.
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 179.
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 for 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 material 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 2023
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 2023, with no material impact on the Group:
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)
These Group consolidated financial statements are presented in pounds sterling (£), which was IWG plc’s functional
currency in 2023, 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.
Change in accounting policy – Global Minimum Top-up Tax (Amendments to IAS 12)
The Group has adopted International Tax Reform – Pillar Two Model Rules (Amendments to IAS 12) upon their release on
23 May 2023. The amendments provide a temporary mandatory exception from deferred tax accounting for the top-up
tax, which is effective immediately, and require new disclosures about the Pillar Two exposure (see note 8).
The mandatory exception applies retrospectively. However, because no new legislation to implement the top-up tax
was enacted or substantively enacted at 31 December 2022 in any jurisdiction in which the Group operates and no
related deferred tax was recognised at that date, the retrospective application has no impact on the Group’s
consolidated financial statements.
Change in accounting policy – Deferred Tax related to Assets and Liabilities arising from a Single Transaction
(Amendments to IAS 12)
The Group has adopted the amendment to IAS 12 with retrospective effect from 1 January 2023. The amendments
narrow the scope of the initial recognition exemption on leases, to exclude transactions that give rise to equal and
offsetting temporary differences. Following this reassessment, the deferred tax asset and liabilities recognised relating
to the Group’s leases has resulted in a £77m impact on the opening retained earnings as at 1 January 2023 (1 January
2022: £29m). The retained earnings for the year ended 31 December 2022, required a £48m income tax credit
restatement of the losses for the period, being the increase in the deferred tax asset during the period.
The Group has not presented a restated third balance sheet on the basis that only the following line items in the table
below have changed as a result of the amendment to IAS 12. The adjustment to retained earnings relates to leases which
were originally dealt with using the initial recognition exemption.
130
IWG plc Annual Report and Accounts 2023
The following table summarises the opening balance impact, on transition to the IAS 12 amendment:
£m
Balance reported at 1 January 2022
Adjustment
Restated balance at 1 January 2022
Balance reported at 1 January 2023
Adjustment
Restated balance at 1 January 2023
IFRS not yet effective
Deferred tax asset Deferred tax liability
Retained Earnings
327
59
386
350
107
457
141
30
171
145
30
175
82
29
111
(35)
77
42
The following new or amended standards and interpretations that are mandatory for 2024 annual periods (and future
years) are not expected to have a material impact on the Company:
Non-current Liabilities with Covenants – Amendments to IAS 1
Classification of Liabilities as Current or Non-Current – Amendments to IAS 1
Lease Liability in a Sale and Leaseback – Amendments to IFRS 16
Supplier Finance Arrangements – Amendments to IAS 7 and IFRS 7
The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability – Amendments to IAS 21
1 January 2024
1 January 2024
1 January 2024
1 January 2024
1 January 2024
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.
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 72 and 74. 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.
Going concern
The Group reported a loss after tax of £216m (2022: £73m) from continuing operations in 2023. However, cash flow
before growth capex and corporate activities but after interest and tax was £207m (2022: £90m). Furthermore, net
cash of £1,197m (2022: £1,147m) was generated from operations during the same period. Although the Group’s balance
sheet at 31 December 2023 reports a net current liability position of £1,685m (2022: £1,868m), the Directors concluded
after a comprehensive review that no liquidity risk exists as:
1. The Group had funding available under the Group’s £875m revolving credit facility (2022: £750m). £219m
(2022: £173m) which was available and undrawn at 31 December 2023. This facility’s current maturity date is
November 2025 (note 19);
2. A significant proportion of the net current liability position is due to lease liabilities which are held in non-recourse
special purpose vehicles but also with a corresponding right-of-use asset. A large proportion of the net current
liabilities comprise non-cash liabilities such as deferred revenue of £433m (2022: £455m) which will be recognised
in future periods through the income statement. The Group holds customer deposits of £459m (2022: £447m) 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; and
3. The Group maintained a 12-month rolling forecast and a three-year strategic outlook. It also monitored the covenants
in its facility to manage the risk of potential breach. The Group expects to be able to refinance external debt and/or
renew committed facilities as they become due, which is the assumption made in the viability scenario modelling, and
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 uncertainty.
Details of the principal risks, outcomes of modelled and stress-tested scenarios are set out in the Viability Statement
review on page 59.
The Directors consider that the Group is well placed to successfully manage the actual and potential risks faced by
the organisation including risks related to inflationary pressures and geopolitical tensions.
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.
131
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.
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.
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.
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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IWG plc Annual Report and Accounts 2023
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 initial 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 assessed for indicators of impairment 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.
6. Lease term
The lease term is the non-cancellable period of the lease adjusted for any renewal or termination options which are
reasonably certain to be exercised. Management applies judgement in determining whether it is reasonably certain
that a renewal or termination option will be exercised.
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
separate ‘head’ lease agreements, are sublet as part of a separate sublease agreements. 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.
133
Financial Statements
Notes to the accounts continued
2. Accounting policies continued
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 2023. 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 the 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, with the exception of goodwill.
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.
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.
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.
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.
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.
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IWG plc Annual Report and Accounts 2023
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.
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.
Dilapidations
A provision is recognised for those potential dilapidation payments when it is probable that an outflow will occur and
can be reliably estimated.
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.
Equity
Equity instruments issued by the Group are recorded at the fair 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.
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.
135
Financial Statements
Notes to the accounts continued
2. Accounting policies continued
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.
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.
Adjusting items
Significant transactions, not indicative of the underlying performance of the consolidated Group are reported separately
as adjusting items. 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.
Adjusting items are separately disclosed by the Group to provide readers with helpful, additional information on the
performance of the business across periods. Each of these items is considered to be significant in nature and/or size.
The exclusion of these items is consistent with how the business performance is planned by, and reported to, the Board.
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. 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, to determine whether or not some, or all, of the associated costs are arising in the
ordinary course of business.
In 2022, the Group specifically identified adjusting items in response to the direct impacts of the COVID-19 pandemic
on its financial results. However, in 2023 the measurement of the impact of COVID-19 on financial results was no longer
distinguishable. The Group consequently, has updated its classification criteria to disclose all transactions not indicative
of the underlying performance of the Group as adjusting items. To maintain consistency and comparability, the Group
have also retrospectively restated the comparative information to align with this refined classification.
136
IWG plc Annual Report and Accounts 2023 Management classifies the following as adjusting items:
1. Network rationalisation charges, representing direct closure costs and the write-off of the book values of assets
pertaining to centers closed during the year;
2. Impairment charges and reversals, representing the impairment of property, plant and equipment, right-of-use assets,
goodwill and other assets, and the reversals of prior impairments recorded;
3. Costs associated with acquisitions and restructurings during the year;
4. Other significant and non-recurring items, including write-off of fixed assets due to obsolescence.
Where estimated amounts provide to be in excess of the amounts required, the release of any amounts provided
for at year-end are treated as adjusting items.
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.
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).
137
Financial Statements
Notes to the accounts continued
2. Accounting policies continued
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.
In accordance with IFRIC Interpretation 23, the Group considers whether it has any uncertain tax positions, particularly
those relating to transfer pricing. The Company’s and the subsidiaries’ tax filings in different jurisdictions include
deductions related to transfer pricing and the taxation authorities may challenge those tax treatments. The Group
determined, based on its tax compliance and transfer pricing studies, that in most jurisdictions it is probable that
its tax treatments (including those for the subsidiaries) will be accepted by the taxation authorities. The Group has,
where considered appropriate, provided for the potential impact of uncertain tax positions where the likelihood of tax
authority adjustment is considered to be more likely than not. The adoption of the interpretation did not have an impact
on the consolidated financial statements of the Group.
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.
Foreign currency translation rates
At 31 December
Annual average
2023
1.27
1.15
2022
1.21
1.13
2023
1.25
1.15
2022
1.23
1.17
US dollar
Euro
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IWG plc Annual Report and Accounts 2023
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, IWG Network and Worka.
IWG Network represents the Group’s segmental results excluding Worka. IWG Network is managed through both
geographical regions and ownership structure splits. The three principle geographical regions are: the Americas, EMEA
(including UK) 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. These geographical regions exclude the Group’s non-trading, holding and
corporate management companies, which are included in Other.
The Group’s IWG Network results are also managed by ownership structure and are an additional basis for reporting
results to the chief operating decision-maker. Company-owned and Leased comprises results from business centres
owned and operated by the Group. Managed & Franchised comprises results relating to services provided to business
centres owned by third parties.
The Worka operating segment comprises the results relating to The Instant Group investment (note 28) and includes
the Group’s digital assets, representing 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.
Continuing operations on pre-IFRS 16 basis
IWG Network Operating Segment
£m
Americas
EMEA
Asia Pacific
Other
Company-
owned & Leased
Managed &
Franchised
By geography
By ownership
IWG Network
Worka
Operating
Segment
Revenue
Workstation revenue(1)
Fee income
Customer Service income(2)(3)
Gross profit (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
Loss on disposal of assets
Assets(4)
Liabilities(4)
Net assets/(liabilities)(4)
Non-current asset additions(4)(5)
Non-current asset acquisitions(4)(5)
1,046
706
9
331
48
–
(27)
1,315
986
25
304
104
(1)
(9)
155
–
37
3,101
(3,070)
31
109
1
123
–
32
3,477
(3,409)
68
242
–
273
203
14
56
20
–
(6)
25
–
9
469
(496)
(27)
60
14
5
–
–
5
11
–
(149)
35
1
–
553
(880)
(327)
54
–
2,589
1,895
–
694
133
(1)
(171)
338
1
78
7,600
(7,855)
(255)
465
15
50
–
48
2
50
–
(20)
–
–
–
–
–
–
–
–
2,639
1,895
48
696
183
(1)
(191)
(67)
7
(251)
338
1
78
7,600
(7,855)
(255)
465
15
379
–
–
379
160
–
88
(9)
1
80
38
–
–
602
(262)
340
31
6
2023
3,018
1,895
48
1,075
343
(1)
(103)
(76)
8
(171)
376
1
78
8,202
(8,117)
85
496
21
1. Includes customer deposits.
2. Includes membership card income.
3. Managed & Franchised relates to a net settlement fee of £2m recognised (comprising the settlement fee of £18m, offset by a release of related accrued
income of £16m), for TKP Corporation’s sale of the Japanese master franchise agreement to Mitsubishi Estate Co.
4. Presented on a basis consistent with IFRS 16.
5. Excluding deferred taxation.
139
Financial Statements
Notes to the accounts continued
3. Segmental analysis continued
Restated Continuing operations on
pre-IFRS 16 basis (1
By geography
By ownership
IWG Network
IWG Network Operating Segment
£m
Americas
EMEA
Asia Pacific
Other
Company-
owned & Leased
Managed &
Franchised
Revenue(2)
Workstation revenue(3)
Fee income
Customer Service income(4)
Gross profit (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
Loss on disposal of assets
Assets(5)
Liabilities(5)
Net assets/(liabilities)(5)
Non-current asset additions(5)(6)
Non-current asset acquisitions (5)(6)
1,024
709
3
312
82
–
(23)
1,199
904
19
276
120
(1)
23
166
3
44
3,587
(3,445)
142
157
–
116
–
8
3,782
(3,559)
223
237
–
248
188
10
50
26
–
5
27
–
9
549
(538)
11
38
–
9
–
2
7
13
–
(133)
21
–
–
582
(782)
(200)
29
–
2,446
1,801
–
645
207
(1)
(113)
330
3
61
8,500
(8,324)
176
461
–
34
–
34
–
34
–
(15)
–
–
–
–
–
–
–
–
2,480
1,801
34
645
241
(1)
(128)
(37)
27
(138)
330
3
61
8,500
(8,324)
176
461
–
Worka
Operating
Segment
321
–
–
321
143
–
85
(13)
–
72
30
–
–
688
(552)
136
54
349
2022
2,801
1,801
34
966
384
(1)
(43)
(50)
27
(66)
360
3
61
9,188
(8,876)
312
515
349
1. The comparative information has been restated for the separate disclosure of the Managed & Franchised segment and as the Group changed
its accounting policy on deferred tax related to assets and liabilities arising from a single transaction due to amendments to IAS 12 (note 2).
2. Excludes revenue from discontinued operations.
3. Includes customer deposits.
4. Includes membership card income.
5. Presented on a basis consistent with IFRS 16.
6. Excluding deferred taxation.
140
IWG plc Annual Report and Accounts 2023
Operating profit in the ‘Other’ category is generated from services related to the provision of workspace solutions,
offset by corporate overheads.
The operating segment’s results presented on a pre-IFRS 16 basis reconcile to the financial statements as follows:
Continuing operations
IWG Network Operating Segment
£m
Americas
EMEA
Asia Pacific
Other
Company-
owned & Leased
Managed &
Franchised
By geography
By ownership
IWG Network
Worka
Operating
Segment
Revenue – pre-IFRS 16
Rent income
Revenue
Gross profit (centre contribution) –
pre-IFRS 16
Rent income
Rent
Depreciation of property, plant and
equipment including right-of-use
assets(1)
Other(2)
Gross profit
(centre contribution)
Operating (loss)/profit – pre-IFRS 16
Rent income
Rent
Depreciation of property, plant and
equipment including right-of-use
assets(1)
Other(2)
Operating profit/(loss)
Depreciation and amortisation
– pre-IFRS 16
Depreciation of property, plant and
equipment including right-of-use
assets
Depreciation and amortisation
1,046
–
1,046
48
–
445
1,315
–
1,315
104
–
486
273
–
273
20
–
113
(349)
(16)
(367)
13
(87)
5
128
236
51
(27)
–
445
(349)
(16)
53
(9)
–
486
(367)
15
125
155
123
349
504
367
490
(6)
–
113
(87)
5
25
25
87
112
–
11
11
9
5
–
5
11
–
–
(2)
5
14
(149)
–
–
(2)
5
(146)
35
2
37
1
(3)
(2)
–
–
–
2,589
–
2,589
133
–
1,044
(805)
7
379
(171)
–
1,044
(805)
9
77
338
805
1,143
1
78
79
78
(53)
25
50
–
50
50
–
–
–
–
50
(20)
–
–
–
–
(20)
–
–
–
–
–
–
–
–
–
2,639
–
2,639
183
–
1,044
(805)
7
379
(60)
319
160
(60)
62
(1)
(1)
2023
3,018
(60)
2,958
343
(60)
1,106
(806)
6
429
160
589
(191)
–
1,044
(805)
9
57
338
805
1,143
1
78
79
78
(53)
25
88
(60)
62
(1)
(1)
88
38
1
39
–
–
–
–
(1)
(1)
(103)
(60)
1,106
(806)
8
145
376
806
1,182
1
78
79
78
(54)
24
Impairment of assets – pre-IFRS 16
Net impairment/(reversal) of property,
plant and equipment including right-
of-use assets
Net impairment/(reversal) of assets
–
33
33
–
37
37
Loss on disposal of assets
– pre-IFRS 16
Loss on disposal of property, plant and
equipment including right-of-use
assets(3)
Loss on disposal of assets
37
32
(29)
8
(19)
13
(5)
4
1. Includes depreciation on right of use assets of £919m offset by reduced depreciation on leasehold improvements under IFRS 16 due to the classification
of certain partner contributions as a reduction to property, plant and equipment.
2. Includes £78m of net impairment of property, plant and equipment including right-of-use assets offset by losses on disposal of property, plant and
equipment including right-of-use assets of £54m.
3. Loss on disposal under IFRS 16 is lower due to the classification of certain partner contributions as a reduction to property, plant and equipment under
IFRS 16.
141
Financial Statements
Notes to the accounts continued
3. Segmental analysis continued
Restated Continuing operations(1)
IWG Network Operating Segment
£m
Americas
EMEA
Asia Pacific
Other
Company-
owned & Leased
Managed &
Franchised
By geography
By ownership
IWG Network
Worka
Operating
Segment
Revenue – pre-IFRS 16
Rent income
Revenue
Gross profit (centre contribution)
– pre-IFRS 16
Rent income
Rent
Depreciation of property, plant and
equipment including right-of-use
assets(2)
Other(3)
Gross profit
(centre contribution)
Operating (loss)/profit –
pre-IFRS 16
Rent income
Rent
Depreciation of property, plant and
equipment including right-of-use
assets(2)
Other(3)
Operating profit/(loss)
1,024
–
1,024
82
–
438
1,199
–
1,199
120
–
443
248
–
248
26
–
126
(345)
9
(389)
17
(90)
(11)
184
191
51
9
–
9
13
–
5
(4)
(3)
11
(23)
–
438
(345)
7
77
23
–
443
(389)
16
93
5
–
126
(90)
(15)
26
(133)
–
5
(4)
2
(130)
Depreciation and amortisation
– pre-IFRS 16
Depreciation of property, plant and
equipment including right-of-use
assets
Depreciation and amortisation
166
116
27
345
511
389
505
90
117
Impairment of assets – pre-IFRS 16
Net impairment reversal of property,
plant and equipment including right-
of-use assets
Net reversal of assets
3
–
–
(30)
(27)
(16)
(16)
(6)
(6)
Loss on disposal of assets
– pre-IFRS 16
Loss on disposal of property, plant and
equipment including right-of-use
assets(4)
Loss on disposal of assets
44
8
9
(18)
26
(29)
(21)
(12)
(3)
21
4
25
–
–
–
–
–
–
2,446
–
2,446
207
–
1,012
(828)
12
403
(113)
–
1,012
(828)
10
81
330
828
1,158
3
(52)
(49)
61
(59)
2
34
–
34
34
–
–
–
–
34
(15)
–
–
–
(15)
–
–
–
–
–
–
–
–
–
2,480
–
2,480
241
–
1,012
(828)
12
321
(50)
271
143
(50)
47
(1)
(1)
2022
2,801
(50)
2,751
384
(50)
1,059
(829)
11
437
138
575
(128)
–
1,012
(828)
10
66
85
(50)
47
(1)
–
81
(43)
(50)
1,059
(829)
10
147
330
30
360
828
1,158
3
(52)
(49)
61
(59)
2
1
31
–
–
–
–
1
1
829
1,189
3
(52)
(49)
61
(58)
3
1. The comparative information has been restated for the separate disclosure of the Managed & Franchised segment.
2. Includes depreciation on right of use assets of £955m offset by reduced depreciation on leasehold improvements under IFRS 16 due to the
classification of certain partner contributions as a reduction to property, plant and equipment.
3. Includes £52m of net reversals of impairment of property, plant and equipment including right-of-use assets.
4. Loss on disposal under IFRS 16 is lower due to the classification of certain partner contributions as a reduction to property, plant and equipment
under IFRS 16.
142
IWG plc Annual Report and Accounts 2023
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
UK
Worka
All other countries
1. Excluding deferred tax assets.
5. Operating profit – continuing operations
Operating profit has been arrived at after crediting/(charging):
£m
Revenue
Depreciation on property, plant and equipment
Right-of-use assets
Other property, plant and equipment
Amortisation of intangible assets
Variable property rents payable in respect of leases
Lease expense on short-term leases
Staff costs
Facility and other property costs
Expected credit (losses)/reversal on trade receivables
Loss on disposal of property, plant and equipment
Profit on disposal of right-of-use assets and related lease liabilities
Impairment of goodwill
Impairment of other intangible assets
Net (impairment)/reversal of property, plant and equipment(1)
Net (impairment)/reversal of other property, plant and equipment
Net (impairment)/reversal of right-of-use assets
Other costs
Operating profit before equity-accounted investees
Share of loss of equity-accounted investees, net of tax
Operating profit
2023
2022
External
revenue
Non-current
assets(1)
External
revenue
Non-current
assets(1)
6
951
909
394
319
379
2,958
–
2,401
1,930
1,008
426
924
6,689
Notes
15
15
15
14
24
6
25
13
14
15
15
15
21
5
868
804
385
271
418
2,751
2023
2,958
(1,117)
(919)
(198)
(65)
(64)
(1)
(433)
(524)
(15)
(61)
37
–
(1)
(78)
(36)
(42)
(490)
146
(1)
145
–
2,787
2,166
1,099
428
1,099
7,579
2022
2,751
(1,145)
(955)
(190)
(44)
(68)
–
(423)
(496)
6
(34)
31
(3)
–
52
13
39
(479)
148
(1)
147
1. The net impairment of £78m (2022: net reversal of impairment of £52m) includes an additional impairment of £112m (2022: £39m), offset by the reversal
of £34m (2022: £91m) 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
2023
(2)
(3)
–
–
2022
(2)
(3)
–
–
143
Financial Statements
Notes to the accounts continued
6. Staff costs
£m
The aggregate payroll costs were as follows:
Wages and salaries
Social security
Pension costs
Share-based payments
2023
363
58
6
6
433
2022
357
55
7
4
423
Average full-time Equivalents(1)
2023
2022
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
6,536
572
709
1,238
9,055
2,837
3,366
1,001
1,851
9,055
6,572
532
647
1,005
8,756
2,778
3,356
995
1,627
8,756
1. The average full-time equivalents exclude employees for disposed entities during 2023 of nil (2022: 2).
Details of Directors’ emoluments and interests are given on pages 102 to 114 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
Interest expense on the convertible bond
Total interest expense
Other finance costs
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 interest income
Other finance income
Total finance income
Net finance expense
Notes
19
2023
(55)
(280)
(13)
(348)
–
–
(348)
1
6
-
7
7
14
2022
(38)
(230)
(12)
(280)
(7)
–
(287)
1
7
27
35
–
35
(334)
(252)
144
IWG plc Annual Report and Accounts 2023
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)/credit on continuing operations
2023
2022
Restated(1)
(77)
44
8
(25)
(19)
17
(2)
(27)
(40)
6
1
(33)
57
8
65
32
1. The comparative information has been restated to reflect the change in the Group’s accounting policy on deferred tax related to assets and liabilities
arising from a single transaction due to amendments to IAS 12 (note 2).
(b) Reconciliation of taxation charge
Loss before tax from continuing operations
Tax on profit at 11.9% (2022: 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
2023
£m
(189)
23
(82)
14
62
(79)
8
27
(27)
%
(12)
43
(8)
(33)
42
(4)
(14)
14
2022 Restated(1)
£m
(105)
13
(34)
12
14
(7)
1
33
32
%
(12)
32
(11)
(14)
7
(1)
(31)
(30)
1. The comparative information has been restated to reflect the change in the Group’s accounting policy on deferred tax related to assets and liabilities
arising from a single transaction due to amendments to IAS 12 (note 2).
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
2023
2024
2025
2026
2027
2028
2029
2030
2031 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
The above loss expiry table excludes £123m (2022: £254m) US state tax losses.
2023
2022
–
30
35
36
31
64
69
82
1,369
1,716
1,417
3,133
216
3,349
54
40
56
65
72
341
71
26
1,408
2,133
1,468
3,601
64
3,665
145
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
2023
358
53
778
107
63
16
2022
368
33
852
63
37
11
1,375
1,364
2023
(43)
27
2022
(45)
19
The movement in deferred tax is analysed below:
£m
Intangibles
Property,
plant and
equipment
Tax losses
Rent
Leases
Other temporary
differences
Deferred tax asset
At 31 December 2021
Current year movement
Prior year movement
Transfers(1)
Exchange rate movements
Change in accounting policy(2)
At 31 December 2022
Current year movement
Prior year movement
Transfers
Exchange rate movements
At 31 December 2023
Offset against deferred tax liabilities
Net deferred tax assets
at 31 December 2023
Deferred tax liability
At 31 December 2021
Current year movement
Prior year movement
Transfers(1)
Exchange rate movements
Change in accounting policy(2)
At 31 December 2022
Current year movement
Prior year movement
Transfers
Exchange rate movements
At 31 December 2023
Offset against deferred tax assets
Net deferred tax liabilities
at 31 December 2023
70
12
1
–
(6)
–
77
(2)
–
–
2
77
–
77
(51)
(6)
–
–
–
–
(57)
1
–
–
–
(56)
–
(56)
–
(4)
13
–
(9)
–
–
(3)
(1)
–
4
–
–
–
(83)
2
–
–
–
–
(81)
10
–
–
–
(71)
–
(71)
41
(16)
(14)
–
4
–
15
39
–
–
(1)
53
–
53
–
–
–
–
–
–
–
–
–
–
–
–
–
–
68
(4)
(3)
–
8
–
69
(58)
6
–
(3)
14
–
14
–
(1)
–
–
–
–
(1)
1
–
–
–
–
–
–
112
8
–
–
–
932
1,052
(135)
–
–
–
917
(700)
217
(6)
2
–
–
–
(855)
(859)
118
–
–
–
(741)
700
(41)
36
25
3
–
5
–
69
30
(6)
–
(3)
90
–
90
(1)
(1)
–
–
–
–
(2)
(3)
–
–
–
(5)
–
(5)
Total
327
21
–
–
2
932
1,282
(129)
(1)
–
(1)
1,151
(700)
451
(141)
(4)
–
–
–
(855)
(1,000)
127
–
–
–
(873)
700
(173)
1. In 2022 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 reflects the adjustment required to the opening balances as at 1 January 2022 to reflect this change in presentation.
2. The comparative information has been restated to reflect the change in the Group’s accounting policy on deferred tax related to assets and liabilities
arising from a single transaction due to amendments to IAS 12 (note 2).
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IWG plc Annual Report and Accounts 2023
The Group has changed its accounting policy and adopted the amendment to IAS 12 from 1 January 2023. The amendment
relates to the recognition of separate deferred tax assets and liabilities arising from a single transaction (note 2).
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 deferred tax asset of £451m (2022 restated: £457m) and a deferred tax liability
of £173m (2022 restated: £175m).
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.
At the balance sheet date, the temporary difference arising from unremitted earnings of overseas subsidiaries was £12m
(2022: £14m). The only tax that would arise on these reserves if they were remitted would be non-creditable withholding tax.
In 2023 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, remained at £77m
(2022: £77m) 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.
(f) International Tax Reform – Pillar Two Model Rules
To address concerns about uneven profit distribution and tax contributions of large multinational corporations, the
Organisation for Economic Co-operation and Development (OECD) published the Pillar Two model rules designed to
address the tax challenges arising from the digitalisation of the global economy. Pillar Two legislation based on these rules
has been enacted or substantively enacted in certain jurisdictions in which the Group operates. The legislation is effective
for the Group’s financial year beginning 1 January 2024. The Group is in scope of the enacted or substantively enacted
legislation and has performed an assessment of the Group’s potential exposure to Pillar Two income taxes based on the
most recent tax filings, country-by-country reporting and financial statements for the constituent entities in the Group.
Notwithstanding that there are a small number of entities where the transitional safe harbour rules do not apply, the
Group does not expect a material exposure to Pillar Two income taxes in any of the jurisdictions in which it operates.
The Group has applied the temporary exception issued by the IASB in May 2023 from the accounting requirements for
deferred taxes in IAS12. Accordingly, the Group neither recognises nor discloses information about deferred tax assets
and liabilities related to Pillar Two income taxes.
9. Discontinued operations
During the year, the Group had no discontinued operations (2022: consideration of £1m and a gain on sale of £1m).
10. Adjusting items
In 2022, the Group specifically identified adjusting items in response to the direct impacts of the COVID-19 pandemic
on its financial results. However, in 2023 the measurement of the impact of COVID-19 on financial results was no longer
distinguishable. The Group consequently, has updated its classification criteria to disclose all transactions not indicative
of the underlying performance of the Group as adjusting items. To maintain consistency and comparability, the Group
have also retrospectively restated the comparative information to align with this refined classification.
The Group has recognised the following adjusting items:
£m
Network rationalisation charge
Net impairment/(reversal) of property, plant and equipment
(including right-of-use assets) (1)
Acquisition and restructuring costs
15
Impairment of Ukraine and Russia
Impairment of goodwill
Other one-off items
Total adjusting items
2023
2022
Restated
Selling,
general and
administration
costs
Cost of sales
Selling,
general and
administration
costs
Cost of sales
58
57
–
4
–
30
149
–
–
2
–
–
(6)
(4)
59
(82)
(2)
9
–
–
(16)
–
–
10
–
3
15
28
1. Net impairment of £78m (2022: net reversal of £52m) excludes depreciation of £17m (2022: £21m) and disposals of £4m (2022: £9m) in respect of
adjusting items previously provided for (note 15).
147
Financial Statements
Notes to the accounts continued
10. Adjusting items continued
Network rationalisation
£58m (2022: £59m) 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.
Impairments of property, plant and equipment (including right-of-use assets)
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. 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 2023. Following this review, a net
impairment of £57m (2022: net reversal of £82m) was recognised within cost of sales. Of this net impairment, £26m
(2022: net reversal of £27m) and £31m (2022: net reversal of £55m) were recognised against property, plant and
equipment and right-of-use assets respectively.
Acquisition and restructuring costs
During the year, the Group incurred £1m (2022: £nil) of transaction costs.
The Group also received a total of £1m (2022: £2m) in respect of worldwide financial support schemes while incurring
severance costs and restructurings of £2m (2022: £10m).
Should the estimated charges be in excess of the amounts required, the release of any amounts provided for at
31 December 2023 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 £13m 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.
Impairment of goodwill
Projected cash flows for cash-generating units (CGUs), grouped by country continued to be evaluated to determine
the carrying value of the CGUs, with an additional impairment of £nil taken during 2023 (2022: £3m).
Other one-off items
Following a review of revenues derived from desktop telephones during the year, the Group wrote-off £30m (2022: £nil)
of telephone assets and £1m (2022: £nil) of obsolete computer software during the year.
During the year, the Group utilised closure related legal provisions of £7m (2022: provided for £15m).
11. Loss 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 and diluted EPS
Weighted average number of shares under option
Weighted average number of shares that would have been issued at average market price
Weighted average number of share awards under the CIP, PSP, DSBP and One-off Award
Weighted average number of shares on convertible bonds
Weighted average number of shares for diluted EPS when profitable
2022
2023
Restated(1)
(215)
(21.4)
(21.4)
(215)
(21.4)
(21.4)
–
–
–
(69)
(6.9)
(6.9)
(70)
(7.0)
(7.0)
1
0.1
0.1
1,006,685,491 1,006,884,755
35,393,807
17,380,163
(13,303,122)
(29,608,587)
2,210,401
1,776,964
76,408,203
76,408,203
1,089,381,136
1,090,855,142
1. The comparative information has been restated to reflect the change in the Group’s accounting policy on deferred tax related to assets and liabilities
arising from a single transaction due to amendments to IAS 12 (note 2).
148
IWG plc Annual Report and Accounts 2023
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. All awards are 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 159.96p (2022: 207.05p), with a high of 197.70p on
2 February 2023 (302.10p on 4 January 2022) and a low of 127.40p on 25 October 2023 (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
2023
1.00p
–
2022
–
–
The Company is returning to a progressive dividend policy and has proposed to shareholders a final dividend of 1.00p
per share (2022: nil pence per share). Subject to shareholder approval, it is expected that the dividend will be paid on
31 May 2024 to shareholders on the register at the close of business on 3 May 2024.
13. Goodwill
£m
Cost
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
Recognised on acquisition of subsidiaries(1)
Goodwill derecognised on sale of subsidiaries
Goodwill impairment
Exchange rate movements
At 31 December 2023
Net book value
At 31 December 2022
At 31 December 2023
Total
704
188
–
(3)
45
934
8
–
–
(23)
919
934
919
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.
149
Financial Statements
Notes to the accounts continued
13. Goodwill continued
The carrying amount of goodwill attributable to the reportable business segments is as follows:
£m
Americas
EMEA
Asia Pacific
Worka
2023
299
369
26
225
919
2022
314
373
27
220
934
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 79% of the total. The remaining 21% 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
Other countries
Goodwill
Intangible assets(1)
279
219
225
196
919
–
11
–
–
11
2023
279
230
225
196
930
2022
290
230
220
205
945
1. The indefinite life intangible asset relates to the Regus brand.
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.
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 2024, 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 9.1% in 2022 to 12.4% in 2023 (post-tax WACC: 9.2%). The country-specific pre-tax WACC
reflecting the respective market risk adjustment has been set between 11.0% and 13.6% (2022: 8.1% to 11.0%).
150
IWG plc Annual Report and Accounts 2023
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 £nil (2022: £3m), 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 22% (2022: 21%) over the next five years. A terminal value
centre gross margin of 25% is adopted from 2028, with a 2.5% long-term growth rate assumed on revenue and costs
into perpetuity. The cash flows have been discounted using a pre-tax discount rate of 11.1% (2022: 8.5%).
The UK model assumes an average centre contribution of 16% (2022: 13%) over the next five years. A terminal value
centre gross margin of 20% is adopted from 2028, with a 2.2% long-term growth rate assumed on revenue and costs
into perpetuity. The cash flows have been discounted using a pre-tax discount rate of 12.4% (2022: 9.1%).
The Worka model assumes an average contribution of 34% (2022: 36%) over the next five years. A terminal value
centre gross margin of 39% is adopted from 2028, with a 2.2% long-term growth rate assumed on revenue and
costs into perpetuity. The cash flows have been discounted using a pre-tax discount rate of 12.4% (2022: 9.1%).
Management has considered the following sensitivities:
• Market growth and REVPAR – Management has considered the impact of a variance in market growth and REVPAR.
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 435.9% (2022: 216.6%) for the US, 24.2% (2022: 14.4%) for the UK and
16.3% for Worka (2022: 12.0%).
• 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 13.4% (2022: 17.1%) for the US and 5.3% (2022: 8.1%) for the UK.
151
Financial Statements
Notes to the accounts continued
14. Other intangible assets
£m
Cost
At 31 December 2021
Additions at cost
Acquisition of subsidiaries
Disposals
Exchange rate movements
At 31 December 2022
Additions at cost
Acquisition of subsidiaries
Disposals
Exchange rate movements
At 31 December 2023
Amortisation
At 31 December 2021
Charge for year
Disposals
Impairment
Exchange rate movements
At 31 December 2022
Charge for year
Disposals
Impairment
Exchange rate movements
At 31 December 2023
Net book value
At 31 December 2021
At 31 December 2022
At 31 December 2023
Brand
Customer lists
Software
Total
67
–
24
–
–
91
–
–
–
–
91
43
2
–
–
–
45
3
–
–
–
48
24
46
43
33
–
77
–
1
111
–
–
–
(1)
110
32
17
–
–
2
51
24
–
–
(3)
72
1
60
38
118
39
40
–
2
199
60
–
(5)
(2)
252
65
25
–
–
1
91
38
(5)
1
(1)
124
53
108
128
218
39
141
–
3
401
60
–
(5)
(3)
453
140
44
–
–
3
187
65
(5)
1
(4)
244
78
214
209
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).
152
IWG plc Annual Report and Accounts 2023
15. Property, plant and equipment
£m
Cost
At 31 December 2021
Additions
Modifications(2)
Acquisition of subsidiaries
Disposals
Exchange rate movements
At 31 December 2022
Additions
Modifications(2)
Acquisition of subsidiaries
Disposals
Exchange rate movements
At 31 December 2023
Accumulated depreciation
At 31 December 2021
Charge for the year
Disposals(3)
Net reversal of impairment(6)
Exchange rate movements
At 31 December 2022
Charge for the year(4)
Disposals(5)
Net Impairment(6)
Exchange rate movements
At 31 December 2023
Net book value
At 31 December 2021
At 31 December 2022
At 31 December 2023
Right-of-use
assets(1)
Land and
buildings
Leasehold
improvements
Furniture and
equipment
Computer
hardware
Total
9,288
253
313
4
(826)
622
9,654
297
332
9
(716)
(341)
9,235
4,034
955
(563)
(39)
258
4,645
919
(559)
42
(184)
4,863
5,254
5,009
4,372
160
–
–
–
–
–
160
–
–
–
–
–
160
11
3
–
–
–
14
3
–
–
(1)
16
149
146
144
1,485
139
–
16
(84)
149
1,705
88
–
4
(49)
(74)
1,674
897
115
(61)
(13)
103
1,041
122
(22)
36
(52)
1,125
588
664
549
811
78
–
–
(36)
70
923
40
–
–
(140)
(39)
784
451
65
(25)
–
42
533
67
(106)
–
(24)
470
360
390
314
128
11,872
6
–
–
(6)
10
138
3
–
–
(6)
(6)
129
103
7
(5)
–
8
113
6
(6)
–
(4)
109
25
25
20
476
313
20
(952)
851
12,580
428
332
13
(911)
(460)
11,982
5,496
1,145
(654)
(52)
411
6,346
1,117
(693)
78
(265)
6,583
6,376
6,234
5,399
1. Right-of-use assets consist of property-related leases.
2. Modifications includes lease modifications and extensions.
3. Includes disposals related to discontinued operations for right-of-use assets of £nil (2022: £1m) and other property, plant and equipment
of £nil (2022: £nil).
4. Depreciation is net of £17m (2022: £21m) in respect of adjusting items previously provided for (note 10).
5. Disposals are net of £4m (2022: £9m) in respect of adjusting items previously provided for (note 10).
6. The net impairment of £78m (2022: net reversal of £52m) includes an additional impairment of £112m (2022: £39m), offset by the reversal of £34m
(2022: £91m) 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 2023, the Group recorded impairment
charges of £42m (2022: net reversal of £39m) in respect of right-of-use assets and £36m (2022: net reversal of £13m)
in respect of leasehold improvements.
153
Financial Statements
Notes to the accounts continued
16. Other long-term receivables
£m
Deposits held by landlords against rent obligations
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
19. Borrowings
Bank and other loans
2023
53
2023
368
145
181
25
168
4
891
2023
459
326
243
104
148
30
2022
57
2022
395
152
174
23
172
3
919
2022
447
252
220
119
147
17
1,310
1,202
The Group’s total loan and borrowing position at 31 December 2023 and at 31 December 2022 had the following
maturity profiles:
£m
Repayments falling due as follows:
In more than one year but not more than two years(1)
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 £329m (2022: £318m).
2023
2022
702
1
2
705
13
718
5
581
2
588
285
873
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 £329m (2022: £318m) at 31 December
2023. The financial liability is included in the above, falling due in more than one but not more than two 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
2023 of £nil (2022: £27m) through net finance expenses, resulting in a year-end liability of £nil (2022: £nil).
Further information regarding the convertible bonds can be found on page 164 in note 25.
154
IWG plc Annual Report and Accounts 2023
Committed borrowings
£m
Revolving credit facility
Bridge facility
2023
2022
Facility
Available
Facility
Available
875
–
219
–
750
330
173
–
The Group maintains a revolving credit facility provided by a group of international banks. At 31 December 2023, the
amount of the facility rose to £875m (2022: £750m) and the final maturity was extended in March 2020 to November
2025 with an automatic extension until March 2026, given certain conditions are met. As at 31 December, £219m (2022:
£173m) was available and undrawn under this facility.
The £875m revolving credit facility is subject to financial covenants which include interest cover and net debt to EBITDA
ratio. The Group continued to operate in compliance with the covenants agreed with the lenders. It is concluded that
the amendment to the facility represents a non-substantial debt modification in accordance with IFRS 9.
A £330m bridge facility for the Instant acquisition was repaid in full in June 2023.
20. Provisions
£m
At 1 January
Acquired in the period
Provided in the period
Utilised in the period
Exchange rate movements
At 31 December
Analysed between:
Current
Non-current
At 31 December
Closures
2023
2022
Closures
Other
Total
Closures
Other
Total
60
–
7
(24)
(1)
42
24
18
42
8
–
–
(8)
–
–
–
–
–
68
–
7
(32)
(1)
42
24
18
42
13
7
38
(1)
3
60
23
37
60
8
–
6
(6)
–
8
8
–
8
21
7
44
(7)
3
68
31
37
68
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 2023, 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.
155
Financial Statements
Notes to the accounts continued
21. Investments in joint ventures
£m
At 31 December 2021
Acquisition of joint ventures
Share of loss
Exchange rate movements
At 31 December 2022
Acquisition of joint ventures
Share of loss
Exchange rate movements
At 31 December 2023
Investments in
joint ventures
Provision for
deficit in
joint ventures
45
–
(1)
1
45
–
(1)
1
45
(6)
–
–
–
(6)
–
–
–
(6)
Total
39
–
(1)
1
39
–
(1)
1
39
The Group has 81 centres operating under joint venture agreements (2022: 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. No indicators of impairment were identified by management in relation to these investments.
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
2023
2022
87
(90)
(3)
–
(3)
142
559
(558)
(129)
14
86
(88)
(2)
(1)
(3)
153
329
(322)
(139)
21
2023
2022
Number
Nominal value
£m
Number
Nominal value
£m
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
8,000,000,000
8,000,000,000
80
80
8,000,000,000
8,000,000,000
1,057,248,651
–
1,057,248,651
10
–
10
1,057,248,651
–
1,057,248,651
Treasury share transactions involving IWG plc shares between 1 January 2023 and 31 December 2023
During the year, 519,022 shares were purchased in the open market and 525,674 treasury shares held by the Group
were utilised to satisfy the exercise of share awards by employees. As at 5 March 2024, 50,558,201 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
156
2023
Number of shares
50,564,853
519,022
(525,674)
50,558,201
2022
Number of shares
49,832,721
2,174,738
(1,442,606)
50,564,853
£m
152
1
(1)
152
80
80
10
–
10
£m
151
5
(4)
152
IWG plc Annual Report and Accounts 2023
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 following table summarises the information relating to each of the Group’s subsidiaries that have a material non-
controlling interest.
£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 (decrease)/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)
Lease due within one year(2)
Lease due after one year(2)
Gross debt
Net debt
1. Includes £329m (2022: £318m) convertible bond liability.
2. There are no significant lease commitments for leases not commenced at 31 December 2023.
2023
13.4%
426
263
(108)
(192)
389
51
166
(10)
–
(10)
(1)
–
29
35
(98)
(34)
2023
110
33
64
207
(11)
(707)
(924)
(4,453)
(6,095)
(5,888)
2022
13.4%
413
282
(131)
(163)
401
52
138
(13)
–
(13)
(3)
–
31
49
(33)
47
2022
161
52
95
308
(285)
(588)
(1,002)
(5,037)
(6,912)
(6,604)
157
Financial Statements
Notes to the accounts continued
24. Net debt analysis continued
The following table shows a reconciliation of net cash flow to movements in net debt:
Cash and cash
equivalents
Net investment
in finance
leases
Gross cash
and lease
receivables
Bank and
other loans
Convertible
bond Lease liabilities
Gross debt
Net debt
(167)
(308)
(6,121)
(6,596)
(6,518)
£m
At 31 December 2021
Net increase in cash and cash
equivalents
Proceeds from issue of loans
and net investment in finance
leases
Repayment of loans and
lease liabilities
Interest (received)/paid
Non-cash movements
Interest income/(expense)
Other non-cash
movements(1)
Exchange rate movements
At 31 December 2022
Net decrease in cash and
cash equivalents
Proceeds from issue of loans
and net investment in finance
leases
Repayment of loans and
lease liabilities
Interest (received)/paid
Non-cash movements
Interest income/(expense)
Other non-cash
movements(1)
Exchange rate movements
At 31 December 2023
78
77
–
–
–
–
–
–
6
161
(43)
–
–
–
–
–
–
(8)
110
(41)
(1,340)
78
77
–
(7)
192
7
185
9
308
–
–
(41)
–
(7)
192
7
185
3
147
–
–
(6)
15
6
9
(4)
97
–
(6)
15
6
9
(12)
207
–
954
36
(37)
(37)
–
(1)
1,149
53
(54)
(54)
–
3
(43)
–
(55)
(55)
(985)
(555)
(318)
(6,039)
(6,912)
–
–
–
2
(12)
(12)
–
–
–
–
997
230
(715)
(230)
(485)
(430)
–
77
(1,340)
(1,381)
1,951
268
(764)
(279)
(485)
(431)
1,951
261
(572)
(272)
(300)
(422)
6,604
–
–
–
2
(13)
(13)
–
–
–
–
935
280
(753)
(280)
(473)
200
–
(43)
(985)
(1,040)
2,084
2,084
335
(820)
(347)
(473)
203
329
(805)
(341)
(464)
191
(389)
(329)
(5,377)
(6,095)
(5,888)
1. Includes movements on leases in relation to new leases, lease modifications/re-measurements of £658m (2022: £594m). Early termination of lease
liabilities represent £194m (2022: £294m) of the non-cash movements, including £nil (2022: £1m) related to discontinued operations.
Cash and cash equivalent balances held by the Group that are not available for use amounted to £9m at 31 December
2023 (2022: £7m). Of this balance, £1m (2022: £1m) is pledged as security against outstanding bank guarantees and a
further £8m (2022: £6m) 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 (2022: £nil)
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
2023
(919)
(935)
(280)
(1)
(64)
(1,215)
297
9
6
55
2022
(955)
(997)
(230)
–
(68)
(1,227)
253
4
7
41
Total cash outflows of £1,279m (2022: £1,295m) for leases, including variable payments of £64m (2022: £68m), were
incurred in the year.
158
IWG plc Annual Report and Accounts 2023
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.
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 40 to 49 within the Strategic Report reviews
the trading performance, financial position and cash flows of the Group. The Group’s net debt position decreased by
£716m (2022: increased by £86m) to a net debt position of £5,888m (2022: £6,604m) as at 31 December 2023.
Excluding the IFRS 16 net investment in finance leases and lease liabilities, the net financial debt position improved
to £608m (2022: £712m). 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 £875m
revolving credit facility (RCF) provided by a group of relationship banks with a final maturity in 2025, with an automatic
extension until March 2026, given certain conditions are met. As at 31 December 2023, £219m (2022: £173m) of the RCF
was available and undrawn.
Although the Group has net current liabilities of £1,685m (2022: £1,868m), 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 £433m (2022: £455m) which will be recognised in future periods through the income statement. The Group
holds customer deposits of £459m (2022: £447m) 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 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. 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 immaterial 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
2023
133
185
30
20
368
2022
151
192
28
24
395
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
2023
2022
Gross
Provision
Gross
Provision
284
36
19
16
19
374
–
–
–
–
(6)
(6)
312
40
19
15
19
405
–
–
–
–
(10)
(10)
159
Financial Statements
Notes to the accounts continued
25. Financial instruments and financial risk management continued
At 31 December 2023, the Group maintained a provision of £6m for expected credit losses (2022: £10m) arising
from trade receivables. The Group had provided £15m (2022: £nil) in the year, utilised £19m (2022: £12m) and released
£nil (2022: £6m). Customer deposits of £459m (2022: £447m) 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 £101m (2022: £154m). In addition to cash
and liquid investments, the Group had £219m (2022: £173m) 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 2023, the
amount of the facility is £875m (2022: £750m) and the final maturity was extended in March 2020 to November 2025
with an automatic extension until March 2026, given certain conditions are met.
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.
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 2023 no cash was invested for a period
exceeding three months (2022: £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% (2022: 36%) of
the Group’s revenue being directly attributable to the US dollar and 25% (2022: 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.
160
IWG plc Annual Report and Accounts 2023
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
2023
2022
EUR
10
(19)
(9)
EUR
4
(11)
(7)
GBP
–
(1)
(1)
GBP
–
(1)
(1)
USD
7
(19)
(12)
USD
7
(15)
(8)
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 2023, 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 (2022: £4m) 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 £8m for the year ended 31 December 2023 (2022: increased
by £2m). 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 2023 (2022:
increased by £3m).
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 2023 (2022: decreased
by £5m). 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 2023 (2022: decreased
by £2m).
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 80. In 2006,
the Board approved the commencement of a progressive dividend policy to enhance the total return to shareholders.
The Company is returning to this progressive dividend policy and has proposed to shareholders a final dividend of
1.00p per share (2022: nil pence per share).
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 102 to 114. 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 2023 and 31 December 2023
During the year, 519,022 shares were purchased in the open market and 525,674 treasury shares held by the Group
were utilised to satisfy the exercise of share awards by employees. As at 31 December 2023, 50,558,201 treasury
shares were held.
The Company declared and paid no interim dividend per share during the year ended 31 December 2023
(2022: nil pence per share) and proposed a final dividend per share of 1.00p per share (2022: 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.
161
Financial Statements
Notes to the accounts continued
25. Financial instruments and financial risk management continued
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 the net investment in finance leases, the 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 2023:
£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 consideration on acquisitions
Contingent consideration on acquisitions
Trade and other payables
Other long-term payables
Derivative financial liabilities:
Convertible bonds – embedded
conversion option
Financial liabilities
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 consideration on acquisitions
Contingent consideration on acquisitions
Trade and other payables
Other long-term payables
Derivative financial liabilities:
Convertible bonds – embedded
conversion option
Financial liabilities
Effective
interest rate
%
Carrying
value
Contractual
cash flow
Less than
1 year
1-2 years
2-5 years
More than
5 years
0.6%
–
6.3%
–
8.0%
3.8%
5.5%
0.5%
–
–
–
–
–
110
746
97
53
110
746
133
53
1,006
1,042
110
746
41
–
897
–
–
25
27
52
(375)
(329)
(375)
(354)
–
(2)
(375)
(352)
–
–
50
26
76
–
–
–
–
17
–
17
–
–
(5,377)
(7,295)
(1,216)
(1,105)
(2,548)
(2,426)
(14)
(4)
(6)
(14)
(4)
(6)
(11)
(2)
–
(1,308)
(1,308)
(1,308)
(4)
(4)
–
–
–
–
–
(2)
–
–
(4)
–
(1)
–
(6)
–
–
–
(2)
–
–
–
–
–
(7,417)
(9,360)
(2,539)
(1,838)
(2,555)
(2,428)
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
161
767
172
57
1,132
1,157
(266)
(318)
(266)
(356)
(6,039)
(8,235)
(289)
(289)
(6)
(2)
(6)
(2)
161
767
60
–
988
–
(2)
(1,264)
(283)
(2)
(2)
(1,198)
(1,198)
(1,198)
(7)
(7)
–
–
–
–
–
–
36
29
65
–
–
51
28
79
–
(2)
(266)
(352)
–
–
25
–
25
–
–
(1,203)
(2,795)
(2,973)
(3)
(2)
–
–
(7)
–
(1)
(2)
–
–
–
–
(2)
–
–
–
–
–
(8,125)
(10,359)
(2,751)
(1,217)
(3,416)
(2,975)
1. Excluding prepayments.
2. Financial assets are all held at amortised cost.
3. All financial instruments are classified as variable rate instruments.
162
IWG plc Annual Report and Accounts 2023
Fair value disclosures
The fair values together with the carrying amounts shown in the balance sheet are as follows:
As at 31 December 2023:
£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 consideration on acquisitions
Contingent consideration on acquisitions
Trade and other payables
Other long-term payables
As at 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 consideration on acquisitions
Contingent consideration on acquisitions
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
110
746
53
–
–
–
–
–
–
–
–
–
–
–
–
(375)
(329)
(14)
(4)
(6)
110
746
53
–
(375)
(329)
(14)
(4)
(6)
(1,308)
(1,308)
(4)
(4)
909
(2,040)
(1,131)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(300)
(300)
–
–
(6)
–
–
–
–
(6)
–
–
(306)
(306)
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)
(6)
(2)
161
767
57
–
(266)
(318)
(289)
(6)
(2)
(1,198)
(1,198)
(7)
(7)
985
(2,086)
(1,101)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(318)
(318)
–
–
(2)
–
–
–
–
(2)
–
–
(320)
(320)
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 2023, the debt was valued at its amortised cost, £329m
(2022: £318m) and the derivative liability at its fair value, £nil (2022: £nil).
During the years ended 31 December 2023 and 31 December 2022, there were no transfers between levels for fair
value measured instruments.
163
Financial Statements
Notes to the accounts continued
25. Financial instruments and financial risk management continued
Valuation techniques
When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair
values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques
as follows:
• Level 1: quoted prices in active markets for identical assets or liabilities;
• Level 2: inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly
or indirectly; and
• Level 3: inputs for the asset or liability that are not based on observable market data.
The following tables show the valuation techniques used in measuring level 3 fair values and methods used for financial
assets and liabilities not measured at fair value:
Type
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.
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 December 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 2023, the debt was valued at its amortised cost, £329m (2022: £318m) and the derivative
liability at its fair value, £nil (2022: £nil).
The derivative liability represents a level 3 instrument, which has been valued with reference to the total convertible
bond price (a level 2 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 (2022: £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.
164
IWG plc Annual Report and Accounts 2023
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
Date of grant
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)
28/12/2018 (Grant 2)
15/05/2019
13/09/2019
02/12/2019
02/04/2020
15/05/2020
09/09/2020
26/03/2021
11/05/2021
12/08/2021
09/03/2022
10/05/2022 (Grant 1)
17/05/2022 (Grant 2)
14/10/2022 (Grant 1)
17/10/2022 (Grant 2)
01/12/2022
08/03/2023
27/03/2023
21/08/2023
03/10/2023
09/11/2023
13/12/2023
2023
2022
Number of
share options
Weighted average
exercise price
per share
Number of
share options
Weighted average
exercise price
per share
52,304,124
3,986,347
(2,681,896)
(126,516)
53,482,059
21,477,049
171.48
42,827,743
150.55
18,603,116
178.41
(7,829,580)
158.42
169.60
198.95
(1,297,155)
52,304,124
12,273,441
195.65
130.85
215.97
118.47
171.48
213.23
Numbers
granted
Weighted average
exercise price per
share
Lapsed
Exercised
At 31 Dec
2023
Exercisable from
Expiry date
7,741,000
1,845,500
12,875,796
1,906,565
1,154,646
444,196
249,589
1,200,000
300,000
20,900,000
613,872
196,608
108,349
20,325,000
450,000
173,148
466,377
318,645
580,655
204,659
1,042,774
382,791
15,087,586
600,000
1,285,306
498,336
571,333
575,000
1,520,264
750,000
71,414
94,439,409
155.60
187.20
186.00
250.80
322.20
272.50
258.00
283.70
203.10
199.80
341.90
402.30
408.60
165.00
202.00
291.00
342.80
376.60
310.00
255.00
222.10
242.30
117.95
122.25
159.35
192.05
144.40
162.00
141.00
137.50
158.10
(4,591,167)
(1,658,500)
(9,385,573)
(1,862,565)
(395,186)
(389,150)
(214,313)
–
(75,000)
(8,983,330)
(595,834)
(196,608)
(102,964)
(5,552,218)
(404,500)
(156,737)
(115,095)
(39,831)
(209,680)
–
(42,774)
–
(681,953)
–
(75,306)
–
–
–
–
–
–
–
–
–
45,500 (2)
(3,149,833)
(160,300)
(1,671,285)
–
(25,000)
(11,009)
(7,055)
–
–
12/06/2016
20/05/2017
05/11/2017
19/05/2018
22/12/2018
– (1)
26,700 (1)
1,818,938 (1)
44,000 (2)
734,460 (1)
44,037 (1)
28,221 (1)
1,200,000 (1)
225,000 (1)
(166,668) 11,750,002 (1)
18,038 (2)
– (1)
5,385 (1)
12/06/2023
19/05/2024
04/11/2024
18/05/2025
22/12/2025
29/06/2019 29/06/2026
28/09/2019 28/09/2026
01/03/2027
01/03/2020
21/12/2028
21/12/2021
28/12/2028
28/12/2021
15/05/2029
15/05/2022
13/09/2029
13/09/2022
19/12/2029
19/12/2022
(37,916) 14,734,866 (2) 02/04/2023 02/04/2030
15/05/2030
16,411 (2) 09/09/2023 09/09/2030
351,282 (3)
26/03/2031
26/03/2024
278,814 (3)
11/05/2031
11/05/2024
370,975 (3)
12/08/2031
12/08/2024
204,659 (3) 09/03/2025 09/03/2032
10/05/2032
10/05/2025
17/05/2032
17/05/2025
14/10/2032
14/10/2025
17/10/2032
17/10/2025
01/12/2032
01/12/2025
498,336 (3) 08/03/2026 08/03/2033
571,333 (3)
27/03/2033
27/03/2026
575,000 (3)
21/08/2033
21/08/2026
1,520,264 (3) 03/10/2026 03/10/2033
750,000 (3)
09/11/2033
09/11/2026
71,414 (3)
13/12/2033
13/12/2026
–
–
–
–
–
–
1,000,000 (3)
–
382,791 (3)
–
– 14,405,633 (3)
600,000 (3)
–
1,210,000 (3)
–
–
–
–
–
–
–
15/05/2023
(35,728,284)
(5,229,066) 53,482,059
1. These options have fully vested as of 31 December 2023.
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.
165
Financial Statements
Notes to the accounts continued
26. Share-based payments continued
The vesting of share options is subject to an ongoing employment condition. As at 31 December 2023, there were
21,477,049 (2022: 12,273,441) outstanding share options which had fully vested with no further performance or holding
period requirements and which had a weighted average exercise price of 198.95p (2022: 213.23p).
Performance conditions for share options
May 2014 share options
The share options outstanding under this grant at 31 December 2023 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 2023 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 2023 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 2023 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 2028.
June 2016 share options
The share options outstanding under this grant at 31 December 2023 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 2026.
September 2016 share options
The share options outstanding under this grant at 31 December 2023 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
September 2026.
March 2017 share options
The share options outstanding under this grant at 31 December 2023 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 2023 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 2028.
December 2018 (Grant 2) share options
The share options outstanding under this grant at 31 December 2023 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 2028.
May 2019 share options
The share options outstanding under this grant at 31 December 2023 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 2023 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
September 2029.
December 2019 share options
The share options outstanding under this grant at 31 December 2023 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 2029.
166
IWG plc Annual Report and Accounts 2023
April 2020 share options
The share options outstanding under this grant at 31 December 2023 are subject to a performance target for 50% of the
options based on the Group achieving a ranking at or above the median for TSR performance relative to a comparator
group over a period of four 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 have met their performance targets. Any shares awarded pursuant to
these options will 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 2023 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 2023 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 2023 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 2023 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 2023 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 2023 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.
167
Financial Statements
Notes to the accounts continued
26. Share-based payments continued
May 2022 (Grant 1) share options
The share options outstanding under this grant at 31 December 2023 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 2023 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 2023 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 2023 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 2023 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.
March 2023 (Grant 1) share options
The share options outstanding under this grant at 31 December 2023 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 2026 and ending March 2028.
March 2023 (Grant 2) share options
The share options outstanding under this grant at 31 December 2023 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 2026 and ending March 2028.
August 2023 share options
The share options outstanding under this grant at 31 December 2023 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 2026 and ending August 2028.
168
IWG plc Annual Report and Accounts 2023 October 2023 share options
The share options outstanding under this grant at 31 December 2023 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. For the US individuals,
the share options outstanding at 31 December 2023 are subject to performance target with 50% based on the
previously described TSR target and 50% based on personal target focused on achieving the Group’s strategic
ambitions.
Any shares awarded based on achievement of these performance targets will then be subject to vesting ratably over
a three-year period beginning October 2026 and ending October 2028, or over a two-year period beginning October
2027 and ending October 2028 for the French individuals only.
November 2023 share options
The share options outstanding under this grant at 31 December 2023 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 November 2026 and ending November 2028.
December 2023 share options
The share options outstanding under this grant at 31 December 2023 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 2026 and ending December 2028.
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
158.10p
137.50p
141.00p
162.00p
144.40p
192.05p
159.35p
122.25p
December
2023
November
2023
October
2023 August 2023
March 2023
(Grant 2)
March 2023
(Grant 1)
December
2022
October
2022
(Grant 2)
Exercise price
Expected volatility
Option life
Expected dividend
Fair value of option at time
of grant
Risk-free interest rate
158.10p
137.50p
141.00p
162.00p
144.40p
192.05p
159.35p
122.25p
40.64% –
55.49%
42.00% –
55.25%
42.97% –
55.18%
42.96% –
54.98%
53.62% –
59.37%
52.75% –
60.04%
54.01% –
59.92%
53.34% –
58.16%
3-5 years 3-5 years 3-5 years 3-5 years 3-5 years 3-5 years 3-5 years 3-5 years
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
91.30p –
108.55p
82.73p –
95.52p
86.63p –
98.25p
99.53p –
112.66p
96.70p –
102.37p
126.16p –
136.44p
106.53p –
113.10p
3.66% –
3.83%
4.22% –
4.38%
4.37% –
4.61%
4.37% –
4.61%
3.35% –
3.46%
3.12% –
3.21%
3.22% –
3.24%
81.12p –
85.29p
3.22% –
3.24%
October
2022
May
2022
May
2022
(Grant 1)
(Grant 2)
(Grant 1)
March
2022
August
2021
May
2021
March
September
2021
2020
Share price on grant date
117.95p 242.30p
222.10p 255.00p 310.00p 376.60p 342.80p
291.00p
Exercise price
Expected volatility
Option life
Expected dividend
Fair value of option at time
of grant
Risk-free interest rate
117.95p 242.30p
222.10p 255.00p
310.00p 376.60p 342.80p
291.00p
53.30% –
58.05%
53.48% –
56.71%
54.59% –
56.66%
54.33% –
57.32%
53.67% –
57.07%
53.78% –
59.19%
53.64% –
59.13%
51.81% –
62.96%
3-5 years 3-5 years 3-5 years 3-5 years 3-5 years 3-5 years 3-5 years 3-5 years
0.00%
0.00%
0.00%
0.00%
1.12%
0.96%
1.00%
2.39%
78.24p –
82.21p
3.22% –
3.24%
153.52p –
158.97p
142.70p –
145.61p
162.79p –
168.44p
163.92p –
171.67p
202.75p –
217.81p
183.02p –
196.95p
122.93p –
146.68p
1.42% –
1.60%
1.42% –
1.60%
1.41% –
1.49%
0.37% –
0.49%
0.16% –
0.34%
0.15% –
0.33%
(0.08%) –
(0.04%)
169
Financial Statements
Notes to the accounts continued
26. Share-based payments continued
Share price on grant date
202.00p
165.00p 408.60p 402.30p
341.90p
199.80p
203.10p
283.70p
May
2020
April
2020
December
2019
September
2019
May
2019
December
2018
(Grant 2)
December
2018
(Grant 1)
March
2017
Exercise price
Expected volatility
Option life
Expected dividend
Fair value of option at time
of grant
Risk-free interest rate
Share price on grant date
Exercise price
Expected volatility
Option life
Expected dividend
Fair value of option at time
of grant
Risk-free interest rate
202.00p
165.00p 408.60p 402.30p
341.90p
199.80p
203.10p 283.70p
50.15% –
61.06%
49.02% –
59.29%
36.24% –
44.72%
36.33% –
44.83%
38.84% –
45.75%
37.66% –
44.35%
37.63% –
44.25%
27.42% –
29.87%
3-5 years 3-5 years 3-7 years 3-7 years 3-5 years 3-5 years 3-5 years 3-5 years
3.44%
4.21%
1.59%
1.62%
1.85%
2.95%
2.90%
1.80%
71.39p –
86.80p
50.79p –
62.29p
141.77p –
172.84p
137.79p –
169.19p
120.77p –
141.08p
58.77% –
69.33%
39.36p –
46.42p
44.51p –
76.88p
0.00% –
0.06%
0.00% –
0.06%
0.57% –
0.65%
0.48% –
0.50%
0.52% –
0.60%
0.87% –
1.01%
0.73% –
0.88%
0.23% –
0.56%
September
2016
June
2016
December
2015
May
2015
258.00p
272.50p 322.20p 250.80p
258.00p
272.50p 322.20p 250.80p
27.45% –
32.35%
27.71% –
34.81%
24.80% –
37.08%
27.23% –
30.12%
3-7 years 3-7 years 3-7 years 3-7 years
1.80%
1.71%
1.40%
1.59%
40.96p –
67.89p
44.28p –
78.68p
29.76p –
90.61p
42.35p –
69.12p
0.09% –
0.38%
0.14% –
0.39%
0.14% –
0.21%
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
2023
2022
Number of
awards
2,542,212
1,711,795
Number of
awards
3,160,617
1,289,217
(609,332)
(1,324,583)
(226,804)
(583,039)
3,417,871
2,542,212
–
–
There were 226,804 shares which were exercised during the year ended 31 December 2023 (2022: 583,039).
The weighted average share price at the date of exercise for share awards exercised during the year ended
31 December 2023 was 150.00p (2022: 256.00p).
Date of grant
Numbers
granted
Lapsed
Exercised
07/03/2018
1,278,350
(1,051,546)
(226,804)
07/03/2019
1,058,578
(848,474)
04/03/2020
26/03/2021
09/03/2022
08/03/2023
915,739
959,015
1,289,217
1,711,795
(915,739)
(320,887)
(431,373)
–
–
–
–
–
–
At 31 Dec
2023
Release date
– 07/03/2023
210,104 07/03/2024
– 04/03/2025
638,128 26/03/2026
857,844 09/03/2027
1,711,795 08/03/2028
7,212,694
(3,568,019)
(226,804)
3,417,871
Plan
PSP
PSP
PSP
PSP
PSP
PSP
170
IWG plc Annual Report and Accounts 2023
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:
March
2023
March
2022
March
2021
March
2020
March
2019
March
2018
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
192.05p 255.00p 346.40p 356.50p 244.90p 240.90p
nil
nil
nil
nil
nil
nil
250,000 250,000 250,000 250,000 250,000 250,000
32
32
32
32
32
32
5 years
5 years
5 years
5 years
5 years
5 years
0.00%
0.00%
1.00%
1.95%
2.57%
2.37%
126.29p –
191.32p
167.75p –
254.14p
206.19p –
312.37p
292.36p –
192.98p
124.38p –
188.43p
124.92p –
189.26p
3.12%
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.
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
more than 10% was achieved, resulting in the vesting of 118,055 shares subject to a service 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
2021 PSP investment grant
% of the award that vests
100%
On a straight-line basis between 25% and 100%
25%
0%
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%
171
Financial Statements
Notes to the accounts continued
26. Share-based payments continued
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
2023 PSP investment grant
% of the award that vests
100%
On a straight-line basis between 25% and 100%
25%
0%
The total number of shares awarded is subject to relative total shareholder return (TSR) conditions, measured over
three financial years commencing on 1 January 2023. Thus, conditional on meeting these performance targets, these
shares will vest in March 2028.
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
2023
2022
Number of
awards
947,443
180,752
–
(172,354)
955,841
91,923
Number of
awards
376,291
683,166
–
(112,014)
947,443
–
The weighted average share price at the date of exercise for share awards exercised during the year ended
31 December 2023 was 150.00p (2022: 256.00p).
Lapsed
Exercised
(172,354)
–
–
–
–
–
–
–
–
(172,354)
955,841
At 31 Dec
2023
Release date
91,923 04/03/2023
171,415 09/03/2025
02/11/2027
511,751
180,752 08/03/2026
Date of grant
Numbers
granted
04/03/2020
264,277
09/03/2022
02/11/2022
08/03/2023
171,415
511,751
180,752
1,128,195
Plan
DSBP
DSBP
DSBP
DSBP
172
IWG plc Annual Report and Accounts 2023
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
March
2023
November
2022
March
2022
March
2020
March
2019
192.05p
131.90p 255.00p 356.50p 244.90p
nil
–
–
nil
–
–
nil
–
–
nil
–
–
nil
–
–
3 years
5 years
3 years
3 years
3 years
0.00%
0.00%
0.00%
1.95%
2.57%
191.17p –
191.33p
131.18p
254.14p
292.36p
188.42p
3.21%
3.24%
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
Switzerland
Philippines
Total
Switzerland
Philippines
Total
2023
2022
Fair value of plan assets
Present value of obligations
Net funded obligations
28. Acquisitions
Current period acquisitions
6
(8)
(2)
–
(1)
(1)
6
(9)
(3)
6
(7)
(1)
–
(1)
(1)
6
(8)
(2)
During the year ended 31 December 2023 the Group made various individually immaterial acquisitions for a total
consideration of £16m.
£m
Net assets acquired
Right-of-use assets
Other property, plant and equipment
Cash
Other current and non-current assets
Lease liabilities
Current liabilities
Goodwill arising on acquisition
Total consideration
Less: deferred consideration
Less: contingent consideration
Cash flow on acquisition
Cash paid
Less: cash acquired
Net cash outflow
Book value
Provisional
fair value
adjustments
Provisional
fair value
9
4
2
8
(9)
(6)
8
–
–
–
–
–
–
–
9
4
2
8
(9)
(6)
8
8
16
(2)
(6)
8
(2)
6
The goodwill arising on these 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.
In the year, the acquisitions contributed revenue of £8m and net retained profit of £1m. If the above acquisitions
had occurred on 1 January 2023, the revenue and net retained profit arising from these acquisitions would have
been £9m and £1m respectively.
173
Financial Statements
Notes to the accounts continued
28. Acquisitions continued
The acquisition costs associated with these transactions were £nil, recorded within administration expenses in the
consolidated income statement.
Deferred consideration of £2m arose from acquisitions, £1m was released, £3m were settled during the year.
£4m deferred consideration is held on the Group’s balance sheet at 31 December 2023.
Contingent consideration of £6m arose on the 2023 acquisitions. Contingent consideration of £1m was paid and
£nil released, during the current year, with respect to milestones, achieved or not achieved, on previous acquisitions.
£6m contingent consideration is held on the Group’s balance sheet at 31 December 2023.
For acquisitions completed in 2023, 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 £8m arose relating to 2023 acquisitions.
Prior period acquisitions
During the year ended 31 December 2022, the Group completed the investment in The Instant Group, acquiring 100%
of the equity voting rights, for a total consideration of £324m. In addition, the Group made various other individually
immaterial acquisitions for a total consideration of £5m.
£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
Current liabilities
Provisions due after one year
Goodwill arising on acquisition
Total consideration
Less: deferred consideration
Less: contingent consideration
Cash flow on acquisition
Cash paid
Less: cash acquired
Net cash outflow
Book value
Provisional
fair value
adjustments
Final
fair value
adjustments
Final
fair value
2
4
16
177
25
64
(173)
(112)
(7)
(4)
139
–
–
–
–
–
–
6
–
145
–
–
–
–
–
–
–
–
–
–
141
4
16
177
25
64
(173)
(106)
(7)
141
188
329
(1)
(1)
327
(25)
302
Goodwill of £188m arose relating to 2022 acquisitions. The goodwill arising on the 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.
In the year, the acquisitions contributed revenue of £105m and net retained loss of £11m. If the above acquisitions had
occurred on 1 January 2022, the revenue and net retained loss arising from these acquisitions would have been £123m
and £10m respectively in the year ended 31 December 2022.
Deferred consideration of £1m arose on the acquisitions made in the year and was 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. In addition, £nil contingent consideration relating
to prior period acquisitions is held on the Group’s balance sheet at 31 December 2022.
The acquisition costs associated with these transactions were £11m, 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 2023.
Non-controlling interests
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.
174
IWG plc Annual Report and Accounts 2023
29. Capital commitments
£m
Contracts placed for future capital expenditure not provided for in the financial statements
2023
54
2022
76
These commitments are principally in respect of centre fit-out obligations. There are £1m (2022: £1m) of capital
commitments in respect of joint ventures and no significant lease commitments for leases not commenced at
31 December 2023.
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 £305m (2022: £337m). There are no material lawsuits pending
against the Group.
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
2023
Joint ventures
2022
Joint ventures
Management fees
received from
related parties
Amounts
owed by
related party
Amounts
owed to
related party
8
6
39
51
36
49
As at 31 December 2023, none of the amounts due to the Group have been provided for as the expected credit losses
arising on the balances are considered immaterial (2022: £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
2023
2022
8
–
3
11
6
–
3
9
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 £4m (2022: £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 2023 the Group acquired goods and services from a company indirectly controlled
by a Director of the Company amounting to £65,122 (2022: £19,015). There was a £63,934 balance outstanding at the
year-end (2022: £5,217).
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.
175
Financial Statements
Notes to the accounts continued
32. Principal Group companies
The Group’s principal subsidiary undertakings at 31 December 2023, 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
IWG France Management Sarl
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
France
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
100
Name of undertaking
Country of
incorporation
Management companies
RGN Management Limited Partnership Canada
Regus Service Centre Philippines B.V. Philippines
Franchise International GmbH
Pathway IP II S.à r.l.
Switzerland
Switzerland
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 Sarl
IWG Group Holdings S.à r.l.
Luxembourg
Luxembourg
IWG International Holdings S.à r.l.
Luxembourg
Ibiza Holdings Limited.
Jersey
Global Platform Services GmbH
Switzerland
100
100
100
86.6
100
Regus Group Limited
Regus Corporation
Ibiza Finance Limited.
Genesis Finance SARL
Pathway Finance Sarl
United Kingdom 100
United States
Jersey
Switzerland
Switzerland
Switzerland
Switzerland
100
100
100
100
100
100
Avanta Managed Offices Ltd
United Kingdom 100
Pathway Finance EUR 2 Sarl
Basepoint Centres Limited
United Kingdom 100
Pathway Finance USD 2 Sarl
Green (Topco) Limited
HQ Global Workplaces LLC
RGN National Business Centre LLC
RB Centres LLC
Regus Management Group LLC
United Kingdom 86.6
United States
United States
United States
United States
100
100
100
100
176
IWG plc Annual Report and Accounts 2023
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
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 is the non-cancellable period of the lease adjusted for any renewal or termination options which are
reasonably certain to be exercised. Management applies judgement in determining whether it is reasonably certain
that a renewal or termination option will be exercised.
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 2023, 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.
177
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.
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.
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
Reporting currency change
Effective 1 January 2024, the Group will report in US dollars going forward.
Forward exchange contracts
The Group entered into a series of forward exchange rate contracts on 16 and 18 January, respectively, to hedge against
foreign currency fluctuations in relation to its £350m convertible loan notes denominated in GBP. The Group contracted
to purchase £350m for $445m in 2025.
Revolving credit facility
On 21 February 2024, the Group amended its revolving credit facility’s base currency from Sterling to US dollars. At the
date of amendment, the amount of the facility was redenominated from £875m to $1.1bn.
There were no other significant events occurring after 31 December 2023 affecting the consolidated financial
statements of the Group.
178
IWG plc Annual Report and Accounts 2023
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 18 March 2024
Mark Dixon
Charlie Steel
Chief Executive Officer
Chief Financial Officer
Accounting policies
Basis of preparation
As at
31 Dec 2023
As at
31 Dec 2022
21
2
23
2,886
2,886
2
–
2
3,069
3,069
2,909
3,071
7
2
9
–
–
–
9
10
2,439
634
(31)
(152)
45
1
46
99
–
99
145
10
2,439
650
(21)
(152)
2,900
2,926
2,909
3,071
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
2023, 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.
179
Financial Statements
Reconciliation for alternative performance measures
Alternative performance measures
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.
Additional information has been provided on the following pages to bridge the statutory information reported with
the performance presented as part of the Chief Executive Officer’s and Chief Financial Officer’s review.
Reconciliation of alternative performance measurement adjustments recognised
The purpose of these unaudited pages is to provide a reconciliation from the 2023 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.
180
IWG plc Annual Report and Accounts 2023
Consolidated EBITDA (unaudited)
Year ended 31 December 2023:
£m
Adjusted EBITDA
Adjusting items
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
Notes
As reported Rent income Rent expense Depreciation
adjustments(1) pre-IFRS 16(2)
Other
1,472
(145)
(1,117)
(65)
145
–
145
5
5
9
5
60
(1,106)
–
–
(1,106)
–
–
60
–
(17)
17
806
–
806
–
–
(6)
(2)
–
–
(8)
–
403
(130)
(311)
(65)
(103)
–
60
(1,106)
806
(8)
(103)
1. Includes £78m of net impairment of property, plant and equipment including right-of-use assets.
2. Pre-IFRS Adjusted EBITDA on a constant currency basis was £415m.
Year ended 31 December 2022:
Restated(1)
£m
Adjusted EBITDA
Adjusting items
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
Notes
As reported
Rent income Rent expense Depreciation
adjustments(2)
pre-IFRS 16
Other
1,348
(12)
(1,145)
(44)
147
–
147
5
5
9
5
50
(1,059)
–
–
–
–
–
–
50
(1,059)
(21)
21
829
–
829
–
–
–
(7)
(3)
–
–
(10)
–
311
6
(316)
(44)
(43)
–
50
(1,059)
829
(10)
(43)
1. The comparative information has been restated as the Group changed its classification of adjusting items.
2. Includes £52m of net reversals of impairment of property, plant and equipment including right-of-use assets.
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, p129
CFO review, p46
CFO review, p46
Closing partner contribution receivables
Note 17
2023
2022
23
45
5
40
(42)
(1)
25
30
50
11
39
(59)
2
23
181
Financial Statements
Reconciliation for alternative performance measures continued
Working capital (unaudited)
Year ended 31 December 2023:
£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 2022:
Statement of cash flows, p129
Statement of cash flows, p129
Statement of cash flows, p129
22
(19)
144
147
–
32
742
774
(22)
–
(836)
(858)
–
–
(26)
(26)
CFO review, p46
CFO review, p46
CFO review, p46
–
13
24
37
92
(95)
40
£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, p129
19
–
(19)
Statement of cash flows, p129
(97)
(54)
–
Statement of cash flows, p129
191
113
852
798
(906)
(925)
–
–
(29)
(29)
CFO review, p46
CFO review, p46
CFO review, p46
–
(151)
108
(43)
22
(104)
39
182
IWG plc Annual Report and Accounts 2023
Capital expenditure (unaudited)
Year ended 31 December 2023:
£m
Reference
As reported
Rent income
& expense
and finance
income &
costs
pre-IFRS 16
Purchase of property, plant and equipment
Purchase of intangible assets
Total capital expenditure
Statement of cash flows, p129
Statement of cash flows, p129
(153)
(60)
(213)
(2)
–
(2)
(155)
(60)
(215)
Analysed as:
Maintenance capital expenditure
Gross growth capital expenditure
Capitalised rent related to centre openings
CFO review, p46
CFO review, p46
CFO review, p46
Net capital
expenditure
Partner
contributions
Gross capital
expenditure
(93)
(75)
(2)
(170)
(5)
(40)
–
(45)
(98)
(115)
(2)
(215)
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, p129
Statement of cash flows, p129
(242)
(39)
(281)
(12)
–
(12)
pre-IFRS 16
(254)
(39)
(293)
Analysed as:
Maintenance capital expenditure
Gross growth capital expenditure
Capitalised rent related to centre openings
CFO review, p46
CFO review, p46
CFO review, p46
Net capital
expenditure
Partner
contributions
Gross capital
expenditure
(90)
(141)
(12)
(243)
(11)
(39)
–
(50)
(101)
(180)
(12)
(293)
183
Financial Statements
Five-year summary
£m
Income statement (full year ended)
Revenue
Cost of sales
Expected credit (losses)/reversal 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
(Loss)/earnings per ordinary share (EPS):
Attributable to ordinary shareholders
Basic (p)
Diluted (p)
31 Dec 2023
31 Dec 2022
Restated(1)(2)
31 Dec 2021
Restated(1)(2)
31 Dec 2020
31 Dec 2019
Restated(1)
Restated(1)
2,958
(2,354)
(15)
589
(443)
(1)
145
(348)
14
(189)
(27)
(216)
–
(216)
2,751
(2,182)
6
575
(427)
(1)
147
(287)
35
(105)
32
(73)
1
(72)
2,227
(1,885)
(99)
243
(328)
(2)
(87)
(198)
26
(259)
(10)
(269)
59
2,432
(2,377)
(35)
20
(367)
(3)
(350)
(266)
3
(613)
(30)
(643)
(4)
(210)
(647)
2,593
(2,043)
(2)
548
(279)
3
272
(229)
1
44
22
66
385
451
(21.4)
(21.4)
(6.9)
(6.9)
(20.4)
(20.4)
(67.9)
(67.9)
50.5
49.6
Weighted average number of shares outstanding (‘000s)
1,006,685
1,006,885
1,007,215
892,738
892,738
From continuing operations
Basic (p)
Diluted (p)
(21.4)
(21.4)
(7.0)
(7.0)
(26.2)
(26.2)
(67.8)
(67.8)
7.4
7.3
Weighted average number of shares outstanding (‘000s)
1,006,685
1,006,885
1,007,215
892,738
892,738
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
1,128
4,372
1,027
97
451
1,017
110
8,202
2,747
5,370
85
8,202
1,148
5,009
1,225
147
457
1,041
161
9,188
3,020
5,856
312
9,188
782
5,254
1,122
–
386
849
78
8,471
2,267
5,870
334
8,471
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
1. The comparative information has been restated to reflect the impact of discontinued operations (note 9)
2. The comparative information has been restated as the Group changed its accounting policy on deferred tax related to assets and liabilities arising from
a single transaction due to amendments to IAS 12 (note 2).
184
IWG plc Annual Report and Accounts 2023
Glossary
Adjusted EBITDA
EBITDA excluding adjusting items.
Adjusting items
Managed & Franchised
Business centres operating under a formal joint-venture,
managed or franchise arrangements.
Adjusting items reflects the impact of adjustments, both
incomes and costs not indicative of the underlying
performance, which are considered to be significant in
nature and/or size.
Net debt
Operations cash and cash equivalents, adjusted for both
short and long-term borrowings, lease liabilities and net
investments in finance leases.
Company-owned
Net financial debt
Business centres operated by the Group under a
conventional lease or variable lease arrangements.
Operations cash and cash equivalents, adjusted for both
short and long-term borrowings.
Capital-light
Network rationalisation
Business centres operating under a variable lease, joint-
venture, Managed & Franchised arrangements.
EBIT
Earnings before interest and tax.
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.
EBITDA
Occupancy
Earnings before interest, tax, depreciation and
amortisation.
Occupied square feet divided by available square feet
expressed as a percentage.
EPS
Earnings per share.
Expansions
A general term which includes new business centres
established and acquired in the year by IWG through
Company-owned and Managed & Franchised segments.
Operating profit/(loss) before impact of rationalisation
Operating profit excluding adjusting items.
Pre-IFRS 16 basis / Before application of IFRS 16
IFRS accounting standards effective as at the relevant
reporting date with the exception of IFRS 16.
Green building
Buildings certified as LEED, BREEAM or equivalent.
Rooms
The yearly average total business centre square meters
divided by a standard room of seven square meters.
Gross profit before impact of rationalisation
REVPAR
Gross profit excluding adjusting items to cost of sales.
Growth capital expenditure
Capital expenditure in respect of centres which opened
during the current or prior financial period.
Growth-related partner contributions
Average monthly IWG Network revenue, divided by the
average number of rooms during the period.
System wide revenue
Total revenue generated, including revenue from franchise,
managed centre and joint-venture partners, but excluding
related fee income.
Partner contributions received in respect of centres which
opened during the current or prior financial period.
TSR
Total shareholder return.
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.
185
Financial Statements
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
186
IWG plc Annual Report and Accounts 2023
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