TIDMIWG TIDMTTM
RNS Number : 0782S
IWG PLC
07 March 2023
7 March 2023
PRELIMINARY RESULTS ANNOUNCEMENT
IWG plc, the largest provider of hybrid workspace globally
including its Regus and Spaces brands and an unrivalled network of
3,345 buildings across 120 countries, issues its preliminary
results for the twelve months ended
31 December 2022.
IWG DELIVERS HIGHEST-EVER REVENUE IN ITS 34-YEAR HISTORY
-- Highest-ever revenue in IWG's 34-year history with 24% growth
in system-wide revenue to GBP3.1bn
-- Highest-ever network footprint of more than 65 million sq.
ft. - market leader worldwide by far
-- Continued cost discipline with central overhead costs
remaining almost flat, despite global inflationary pressure
-- Momentum continues going into 2023 with higher revenue,
higher operating profit, higher occupancy and higher pricing in
December 2022
-- All delivered with operating profit of GBP147m in 2022
Delivering both growth and cash in 2022
-- System-wide revenue(1) growth of 24% reflecting both
increased demand for flexible working and higher pricing
-- EBITDA(2) increase of 442% to GBP317m (2021: GBP59m) driven
by combination of higher revenue and cost focus
-- Cash flow from business activities of GBP151m (2021: outflow
of GBP(219)m), delivering net debt reduction
-- 26.5% of building capacity remaining with occupancy at
73.5%
Clear progress on expansion priorities
-- Record signing of 462 new capital-light contracts completed
in 2022 delivering both further capacity increases across the
network and an even more unrivalled global network
-- Continued strong momentum for new capital-light contracts
with 2023 signings on track to exceed 2022
-- Network now at 3,345 locations worldwide, with 65.1 million
sq. ft. of space under management
Worka
-- Continue to deliver on announced strategy to combine IWG's
digital assets together with the Instant Group (investment in 2022)
under a new brand, Worka
-- Total Worka revenue up 105% year-on-year to GBP271m (2022
pro-forma(4) revenue: GBP304m), with EBITDA of GBP112m
(2022 pro-forma(4) EBITDA: GBP117m)
-- IWG reaffirms Worka to operate independently, continuing
plans to evaluate reducing its ownership stake
SUMMARY FINANCIALS
The Group reports results in accordance with IFRS. Some results
are additionally presented before the application of IFRS 16 (in
accordance with IAS 17 accounting standards)(2) as it provides
useful information to stakeholders on how the Group is managed, and
reporting for bank covenants and certain lease agreements. The
primary difference between the two standards is the treatment of
operating lease liabilities. There is no difference between
underlying cash flow. A reconciliation between EBITDA before the
application of IFRS 16 and the IFRS 16 EBITDA is provided in the
CFO review.
Preliminary results (GBPm) Constant Actual
2022 2021 currency currency
-------------------------------------------- ------ ------ --------- ---------
System-wide revenue(1) 3,086 2,498 +18% +24%
Group revenue 2,751 2,227 +17% +24%
EBITDA 1,336 1,026 +22% +30%
Operating profit/(loss) 147 (87) n.m. n.m.
EBITDA, before application of IFRS 16 317 59 +389% +442%
Adjusted EBITDA, before application of IFRS
16 308 80 +250% +287%
EPS(3) (11.3) (26.2) n.m. n.m.
Cash flow from business activities(5) 151 (219) n.m. n.m.
-------------------------------------------- ------ ------ --------- ---------
1. System-wide revenue represents the total of all revenue made
by both non-consolidated and consolidated locations globally
2. Before the application of IFRS 16 as defined in the
Alternative performance measures section
3. Basic EPS (p) from continuing operations
4. Pro-forma for Instant Group investment for the full year
5. Cash flow from operations less tax, interest and payment of
lease liabilities (see p. 18)
Mark Dixon, Chief Executive of IWG plc, said:
"The growth juggernaut in hybrid working continues and 2022 has
been a record year for IWG with our highest-ever revenue produced
in our 34-year history, up 24% from 2021. We have delivered this
through our multi-brand strategy, primarily Regus and Spaces, and
continue to have the largest global network of hybrid workspace by
far. We have also shown that we can deliver both high levels of
growth and profitability alongside EBITDA and cash flow generation.
We have done this through a combination of higher demand for
flexible work products, higher pricing and continued cost
discipline, and I am looking forward to continuing this momentum in
2023.
During 2023 we will continue building on our capital-light
growth strategy which allows us to capitalise on the growing
pipeline of property investors seeking to maximise their returns by
partnering with IWG. We continue to be well-placed to deliver
further revenue, profitable growth and reducing leverage as more
companies permanently embrace hybrid working as their preferred
model, with IWG set to benefit most as by far the leading global
player.
I would like to thank the entire IWG team for their hard work in
2022, and also our customers for their continued support."
Outlook and guidance
The demand for hybrid working solutions continues to grow as
businesses globally seek to reduce their real estate costs and
respond to the needs of their employees. Whilst there are
macroeconomic headwinds around global growth, which can impact
demand, plus challenges for the Group from inflation and interest
rates impacting costs, we remain cautiously optimistic about the
outlook for 2023, with underlying EBITDA before application of IFRS
16 during the month of December 2022 at c.GBP30m. We are confident
that EBITDA will be in line with management's expectations with net
debt falling during the year. However, it should be noted that the
Group is operationally leveraged, resulting in profitability moving
up and down with relatively small changes in revenue.
Financial calendar
21(st) March
2023 2022 Annual Report & Accounts publication
25(th) April
2023 First quarter 2023 trading update
8(th) August
2023 Interim 2023 results
7(th) November
2023 Third quarter 2023 trading update
Details of results presentation
Mark Dixon, Chief Executive Officer, and Charlie Steel, Chief
Financial Officer, will be hosting a presentation of the results
today for analysts and investors at 9.00am GMT.
Conference call dials (for the live call, no PIN or password is
required; callers just need to state they are dialling in for the
IWG call):
UK & International +44 (0) 33 0551 0200
UK Toll Free 0808 109 0700
Replay (available for 7 days) After the LIVE presentation.
UK & International +44 (0) 203451 9993
UK Toll Free 0800 633 8453
Replay PIN: 1247003#
Further information
--------------------------------------- ------------------------------------
IWG plc Brunswick Tel: + 44 (0) 20 7404 5959
Mark Dixon, Chief Executive Officer Nick Cosgrove
Charlie Steel, Chief Financial Officer Peter Hesse
Chairman's statement
Hybrid working is driving flexible workspace mainstream
The hybrid model is becoming the preferred way of working for
millions of people across the planet. This reflects major societal
and behavioural change, as technological advances empower people to
work wherever they are most productive. IWG is uniquely positioned
to benefit from these fundamental changes to how work is
conducted.
Hybrid working is leading companies to replace their expensive
conventional HQs in city centres with smaller, more flexible
workspaces, while simultaneously taking on advanced workspaces in
the suburbs and smaller communities close to where their employees
live to benefit from the fundamental changes to how work is
conducted. As a result, our rapidly growing network is bringing new
opportunities into the heart of local communities, and companies of
all sizes are using IWG across multiple locations as they continue
to shift their real estate strategies to focus on flexibility.
This shift delivers benefits to multiple groups. To businesses,
helping them reduce costs, meet their ESG priorities and win the
war for talent. To their people, enabling them to lead happier,
healthier, less costly and less environmentally damaging lives
closer to where they live. To communities, through increased local
business opportunities. To our shareholders, from improved
financial returns as we implement our strategy to capture the
opportunities from hybrid working.
While addressing the changes being brought by hybrid working,
IWG remained concentrated on the fundamentals to deliver a strong
finish to a year impacted by unforeseen geopolitical and economic
developments. This resulted in IWG reporting record revenues, a
record network footprint, steady increases to occupancy and
pricing, and limited impacts from inflation due to strict cost
discipline. When viewed in the context of the challenges over the
last three years, these results are a significant accomplishment
that reflects the dedication and continued hard work of our
people.
Our people
We continually aim to bring our people every opportunity to
build a great career with us. We provide the means for them to
develop their talent and capabilities in a diverse, inclusive and
often challenging environment that enables them to stretch
themselves and represent IWG as a truly progressive force.
I would like to extend my personal thanks to everybody who has
been responsible for IWG's outstanding achievements during the
year, especially those team members who have continued to represent
the Company so brilliantly in all our markets across the world. Our
people provide great service to our millions of customers,
delivering to each and every one of them a great day at work. I
remain immensely proud and grateful to them for maintaining the IWG
difference and our position at the forefront of one of the world's
most exciting and important business sectors.
Our strategy
As true pioneers of flexible workspace, we have the coverage,
the offer, the approach, the technology, and the people to place us
front of mind for any business wishing to explore the advantages of
hybrid. As previously announced, to capture the opportunities
created by the rapid shift to hybrid working, we have organised to
improve focus on three important areas.
First, we continue to develop our platform benefitting from
years of investment and experience in effectively operating the
largest global workspace physical network. This includes industry
leading systems and processes to manage all aspects of flexible
workspace and deliver services in an efficient and cost-effective
manner. Our ongoing management platform developments will further
improve efficiencies and service levels while addressing new
opportunities from hybrid working.
Second, our network development organisation is accelerating the
capital-light expansion of our physical network through management
agreements, partnering and franchising as building owners adapt to
providing flexible workspace. Having the largest and fastest
growing flexible workspace network in convenient locations will be
key to meeting the needs of hybrid workers.
Finally, during 2022 we completed the merger of certain digital
assets with the Instant Group to create Worka, the world's leading
integrated independent workspace digital platform for serving the
needs of the broader flexible workspace market.
Our Board
I remain indebted to my Board colleagues for their continued
dedication to fulfilling the IWG vision and the outstanding quality
of advice that they have brought to the business during yet another
very active year. I would like to take this opportunity to thank
Florence Pierre, who left the Board in November after nine years as
an active Board member, as well as Glyn Hughes, who stepped down as
Chief Financial Officer in October. We also welcomed three new
Directors during the year, who bring a wealth of experience and
important new perspectives on our business.
Tarun Lal joined us in May, bringing extensive international
franchising expertise. Tarun has over 20 years of experience gained
with Yum! Restaurants, where his executive roles have included
Global Chief Operating Officer KFC and Managing Director - KFC
Middle East, Pakistan, Turkey, Africa, and India. Currently he is
President of KFC U.S.
Charlie Steel joined us in November as CFO. Previously, Charlie
was CFO of Babylon Holdings, a New York Stock Exchange listed
digital health delivery and AI diagnosis business.
Sophie L'Helias joined us in December. A trained lawyer, Sophie
is currently the President of LeaderXXchange(TM), which promotes
diversity and sustainability in governance, leadership and
investment through solutions for companies and investors seeking
impact. She has public board experience in the US and Europe and
was a co-founder of the International Corporate Governance
Network.
We continue to implement the results of our internal board
review process in our plans and have full confidence in the Board
members and processes. We will maintain our focus on strategic
objectives and succession planning at the Board level in 2023.
Our environmental journey
We are committed to advancing on our environmental journey and
delivering against the objectives we have set. We are proud to be
doing so much to promote and lead the global uptake of the
hybrid-working model. This is at the forefront of efforts to reduce
the negative effects of the daily commute, reducing both the
environmental impact and personal time associated with travel.
Recent research we have conducted with Arup highlights the
importance of this shift, identifying the commute as a major
contributor. By moving away from local daily commutes and working
locally some of the time an average worker's carbon footprint can
be reduced by up to 70%, making it a fundamentally important issue
for all of us.
We are also actively reducing our own carbon footprint as part
of the implementation of our robust ESG strategy. The actions we
have already taken resulted in our AA ESG rating by MSCI. And,
while we work towards our objective to achieve net zero carbon
emissions by 2040, to eliminate the remaining net effect of our
operating activities in the interim we are investing in a range of
carbon removal projects to achieve carbon neutrality during
2023.
As part of our journey, we are working to convert to certified
green electricity with the goal to achieve this by 2030. We are
improving the efficiency of our global supply chain by
consolidating it into regional hubs that reduce the overall impact
of our logistics operations. In addition, our colleagues from
across the world are leading numerous initiatives to reduce waste
and promote recycling in our centres.
Looking ahead
While we enter 2023 with great confidence in the future, we are
fully cognizant of the challenging economic and geopolitical
environment in which we and our customers will be operating
throughout the coming year. We will remain focused on our purpose
at IWG, to help people have a great day at work. By enabling them
to increasingly work in the ways they want and closer to home, we
are actively improving the way people live - not just at work but
in many other aspects of their lives as well.
IWG is a clear leader in enabling the changes from hybrid
working and has everything in place to build on that lead: a
rapidly growing global network, an efficient management platform,
industry leading technology, an expanding customer base, a broad
brand and service portfolio to meet the needs of our customers and
property owners, our people experienced in all aspects of
delivering flexible workspace, and the vision and drive necessary
to ultimately benefit from these changes. We therefore look forward
to a future of profitable growth providing opportunities and
rewards for our people, customers, partners and investors in 2023
and beyond.
Douglas Sutherland
Chairman
Chief Executive Officer's Review
Leading the global shift to hybrid
For many years, I have been saying that I believed companies and
their employees would eventually move to a hybrid working model,
with people being given the flexibility to get their work done when
and where they're most productive. This shift was taking place
pre-Covid at a gradual pace, but now it's happening at break-neck
speed, and there there's no turning back. Hybrid working is here to
stay.
Hybrid working is better for people, cheaper and far more
flexible for companies. The advent of hybrid has made it redundant
for companies to tie themselves into inflexible and expensive
long-term contracts on city-centre properties, while also having a
hugely positive impact on the environment.
This type of working is being rapidly adopted by companies
worldwide. It's no longer just about plans or intentions, as we can
see in our record numbers for 2022, it's already changed the
actions business leaders are taking when it comes to managing their
property footprint. In IWG's recent CFO study, half of the
financial leaders surveyed have already opted for some form of
hybrid working solutions(1) .
The reasoning for this shift to hybrid is simple: the approach
gives them the flexibility to scale up or down quickly without
being locked into lengthy contracts. It's also 'a no brainer' when
it comes to profit, with an independent Global Analytics survey
recently showing that hybrid working can save organisations an
average of more than $11,000 per employee per year(2) .
Savings of that scale ramp up dramatically. It's estimated that
since Cisco went hybrid five years ago it has saved around $500
million by cutting around half of its real-estate footprint(3)
.
We see a future where between 30% and 50% of white-collar
workers (well over a billion people) will work in the hybrid style.
Significant academic research and opinion reinforces this
prediction and highlights why companies are embracing the
model.
According to Stanford University's Professor Nicholas Bloom,
acknowledged as the leading academic expert on hybrid: "Firms don't
do things that lose them money. They do things that make them
money. That's why every firm just about out there is doing hybrid,
because it's such a no-brainer to increase profit"(4) .
This future world of work is one in which we thrive, as the
global market leader of hybrid working products supplied from our
platform. A new real estate frontier, where buildings are 'linked
together' to form a single work platform that can be accessed by
millions in a convenient, productive and efficient way. Most
importantly, work becomes more local for many, with growing
indications that the fast-changing working habits of millions of
people across the world mean the days could be numbered for one of
the greatest drivers of global warming: the daily commute.
Little has done more over the years to depress, stress and
irritate workers than the daily commute, affecting people in
otherwise fantastic careers, in exceptional cities and with great
employers. It separates families, fractures communities, pollutes
the environment and wastes vast amounts of time and money.
Today the daily commute is entirely unnecessary, because the
office is no longer a physical place that people have to go to.
Rather, it is a digital space, where data saved in the cloud is
accessible at any time, from anywhere.
While sophisticated web-based technology has been around for a
few years, it is only since the pandemic that companies have seen
first-hand not only that hybrid works, but that they are able to
thrive under the model. Firms are able to operate more efficiently
with a more productive workforce, while employees are happier as
they see hybrid working as the equivalent of a 7% to 8% pay rise(4)
.
A bright future
As we enter 2023, our focus is sharper than ever and we have
completely repositioned the Company and its strategy in three key
areas to enable us to deliver against our full potential.
The first of these is an unrelenting focus on growing our
margin, driven by strong performance on new and embedded price,
sequential improvements in occupancy, service revenue growth and
strict control of costs.
The second is our parallel focus on the rapid growth of our
network coverage in partnership with the property industry and
investors using capital-light expansion methods such as management
agreements, partnering deals and franchising.
Finally, we are committed to accelerating the growth of our
Worka business following our investment in the Instant Group at the
beginning of Q1 in 2022.
1. IWG Research, 2022
2. Global Workplace Analytics: Latest
Work-at-Home/Telecommuting/Remote Work Statistics - Global
Workplace Analytics
3. BBC STORYWORKS
4. What we now know about hybrid work (charterworks.com)
Only expanding as a green business
There are two distinct yet complementary trends that companies
are embracing that are driving the demand for hybrid working
solutions. First, companies are downsizing in city centres,
replacing long, restrictive, and expensive leases with flexible
space with operators like IWG. Second, they are taking on flexible
workspace in local neighbourhoods, closer to where their people
live and want to be.
These drivers are empowering us to grow faster than ever before,
supporting our plans to add new signed locations during 2023 and
bring the benefits of hybrid to many more people.
Growth is clearly a priority for IWG, but we are determined only
to expand as a carbon-neutral organisation. The action we have
taken to restrict and offset IWG plc's environmental impact is
having the desired effect; our strong rating by MSCI was upgraded
to AA and I am pleased to say that we are on track to achieve
carbon neutrality during 2023.
Driving growth at IWG
Hybrid working is sometimes presented as a binary choice,
between people working from home and a central headquarters, but
this misses the point entirely.
All studies show employees don't want to spend hours commuting
each day to work in an inconveniently located office. Now, the
remarkable advances in cloud technology and video conferencing
software - both vital to enabling effective hybrid working - mean
they don't need to. That is why we are seeing a fundamental shift
in the geography of work with the centre of gravity moving towards
the local communities where people actually live.
This rapidly growing demand for hybrid working is propelling the
IWG business forward. The demand to work locally is particularly
strong in the suburbs, former dormitory towns, satellite villages
and countryside communities that used to be denuded of their people
in the working week by the irresistible draw of the big city. In
parallel, businesses everywhere are now typically opting for a
fraction of their former conventional city-centre space in favour
of sites closer to where their employees live and actually want to
be.
Just look at the sites of some of our most recent openings. In
the UK: Gerrards Cross, Buckinghamshire (population 8,000); Marlow,
also in Buckinghamshire (14,000); and Chippenham in Wiltshire
(relatively large at 45,000). In the USA: Kodak, Tennessee
(10,500); Destin, Florida (14,000); Blufton, South Carolina
(27,700); Middleton, Wisconsin (20,000); Ridgeland, Mississippi
(24,000); and Stafford, Virginia (5,500).
That is not to say that businesses are abandoning city centres:
far from it. Increasingly, we are helping companies shake off the
expense of the long-term, city-centre lease and replace it with a
flexible, cost-effective agreement on a smaller space in one of our
city-based centres. This, too, is a trend that is proving highly
beneficial for IWG and as a result we will continue to expand
across metropolitan, suburban and rural locations. Make no mistake
the office is most definitely not dead; it has just changed
location.
Our financial performance in 2022
With all the trends on our side it is no surprise that our
financial results for 2022 were very strong with the highest-ever
revenue in IWG's 34-year history with 24% growth in system-wide
revenue to GBP3.1bn.
The strong financial results we generated, with growth in
revenue and operating profit, are providing outstanding momentum
for the business. We also started to grow our network strongly by
signing 462 new centres in 2022, and we are planning for even
stronger network growth in the year ahead.
My greatest thanks go to all our team members, who were the
driving force behind our success in achieving excellent results in
an extraordinary year for our global market and our business.
Looking to the year ahead
We enter 2023 with strong momentum behind us. The future is
extremely bright for IWG and all our stakeholders as we continue to
grow our customer base, our global network and our matchless
portfolio of brands and other solutions.
We remain ambitious and hungry for yet greater success Our
ultimate goal is to grow by thousands of centres over the coming
years, further consolidating our position at the forefront of the
most important and positive revolution in the world of work.
With the market trends on our side, the right strategy, the
right people and the right impetus, we are superbly placed to
deliver against all our ongoing growth ambitions.
Mark Dixon
Founder and CEO, IWG plc
Chief Financial Officer's review
In 2022 IWG showed the ability to grow rapidly and
profitably
2022 has been an extraordinary year for the Group, demonstrating
the ability to deliver its highest-ever system-wide revenue of
GBP3.1bn in IWG's 34-year history whilst simultaneously increasing
operating profit and cash generation. Combining the Group's unique
brand strategy and unrivalled global network with historic
investment in new centre capacity positions the business well for
2023.
Financial performance
The Group reports results in accordance with IFRS. Under IFRS
16, while total lease-related charges over the life of a lease
remain unchanged, the lease charges are characterised as
depreciation and financing expenses with higher total expense in
the early periods of a lease and lower total expense in the later
periods of the lease.
Group income statement
---------------------------------------------- ------------------------------------
Preliminary results (GBPm) Constant Actual
2022 2021 currency currency
---------------------------------------------- ------ ------ --------- ---------
System-wide revenue 3,086 2,498 +18% +24%
Group revenue 2,751 2,227 +17% +24%
---------------------------------------------- ------ ------ --------- ---------
Gross profit 575 243 +124% +137%
---------------------------------------------- ------ ------ --------- ---------
Overheads (427) (328) +27% +30%
Joint ventures (1) (2)
---------------------------------------------- ------ ------ --------- ---------
Operating profit/(Loss) 147 (87) n.m. n.m.
---------------------------------------------- ------ ------ --------- ---------
Net finance cost (252) (172) +47%
---------------------------------------------- ------ ------ --------- ---------
Loss before tax from continuing operations (105) (259) -59%
---------------------------------------------- ------ ------ --------- ---------
Taxation (16) (10)
Effective tax rate -15% -4%
---------------------------------------------- ------ ------ --------- ---------
Loss after tax from continuing operations (121) (269)
---------------------------------------------- ------ ------ --------- ---------
Profit after tax from discontinued operations 1 59
Loss for the period (120) (210)
---------------------------------------------- ------ ------ --------- ---------
Basic EPS (p)
From continuing operations, adjusted (10.1) (23.4)
Attributable to shareholders (11.2) (20.4)
---------------------------------------------- ------ ------ --------- ---------
Depreciation & amortisation 1,189 1,110 +2% +7%
Profit on discontinued operations - 3
---------------------------------------------- ------ ------ --------- ---------
EBITDA 1,336 1,026 +22% +30%
---------------------------------------------- ------ ------ --------- ---------
Network rationalisation charge 58 71
Reversal of impairment of PP&E (73) (125)
Provision for expected credit losses - 53
Asset impairment of Russia & Ukraine 9 -
Other one-off items incl. restructuring 19 32
---------------------------------------------- ------ ------ --------- ---------
Total adjusting items 13 31
---------------------------------------------- ------ ------ --------- ---------
EBITDA adjusted 1,349 1,057 +20% +28%
---------------------------------------------- ------ ------ --------- ---------
Changes to segmental reporting
In March 2022 we invested in The Instant Group, which is the
world's largest independent marketplace for flexible working
solutions for a smarter working world, with an innovative
technology platform and award-winning digital marketing
capabilities (refer to note 28 for financial details). As stated at
the time of the investment in The Instant Group, the intention was
to combine this business with some of IWG's other assets, including
digital assets, to form Worka. During the year this integration
progressed as planned and as a result we have made changes to our
segmental reporting. Worka is operated by an independent management
team.
We have also split the Group pre-Worka into three principal
geographical segments: the Americas, Asia and EMEA (Continental
Europe including UK, Middle East and Africa). As part of our focus
on operational efficiency we have organised our main management
functions and processes on a global basis. These geographical
segments reflect how we practically exercise our global management
through groupings based on time zones, economic relationships,
market characteristics, cultural similarities, and language
clusters. As a result, the UK is now included in the EMEA segment
reporting.
Revenue
System-wide revenue increased by 24%, or 18% at constant
currency, to GBP3,086m. Group revenue also increased by 24%, or 17%
at constant FX, to GBP2,751m. All three geographic regions reported
good year-on-year revenue growth. In particular, our largest region
of EMEA had strong revenue growth to GBP1,199m (17% at constant FX)
and Americas to GBP1,024m (8% at constant FX). Asia still had
significant COVID-19 restrictions throughout much of 2022, in
particular in China, and therefore revenue growth was weaker to
GBP248m (2% at constant FX). Worka grew to GBP271m (103% at
constant FX) impacted in particular by investment in The Instant
Group in March 2022. On a pro-forma basis, had we consolidated The
Instant Group for the full year in 2022, Worka had revenue of
approximately GBP304m.
Revenue
--------------------------- ------------------------
Preliminary results (GBPm) Constant
2021 currency
--------------------------- ------ ----- ---------
EMEA 1,199 1,027 +17%
Americas 1,024 836 +8%
Asia 248 231 +2%
Other 9 1 n.m.
--------------------------- ------ ----- ---------
Group pre-Worka 2,480 2,095 +12%
--------------------------- ------ ----- ---------
Worka 271 132 +103%
--------------------------- ------ ----- ---------
Group 2,751 2,227 +17%
--------------------------- ------ ----- ---------
Worka pro-forma(4) 304 132 +128%
--------------------------- ------ ----- ---------
4. Pro-forma for Instant Group investment for the full year
Gross Profit
Revenue improvement coupled with cost control resulted in a 124%
improvement of gross profit to GBP575m (2021: GBP243m).
Gross Profit
--------------------------- ---------------------
Preliminary results (GBPm) Constant
2022 2021 currency
--------------------------- ---- ---- ---------
EMEA 191 78 +141%
Americas 184 73 +123%
Asia 51 20 +153%
Other 11 (6) n.m.
--------------------------- ---- ---- ---------
Group pre-Worka 437 165 +148%
--------------------------- ---- ---- ---------
Worka 138 78 +76%
--------------------------- ---- ---- ---------
Group 575 243 +124%
--------------------------- ---- ---- ---------
Overheads
We are pleased that investment in our in-country sales teams and
our marketing to support our pivot to capital-light growth is
yielding results with 462 new deals signed in 2022. This investment
to grow our network, coupled with the investment to fill our
centres and the impact of The Instant Group investment, resulted in
Group increased overheads of GBP(427)m (2021: GBP(328)m).
Operating Profit/(Loss) adjusted - continuing operations
In 2022 our results recovered strongly and we are pleased to
report an operating profit for year of GBP147m compared to a loss
of GBP(87)m in 2021.
EBITDA
The Group's EBITDA increased by 22% at constant currency to
GBP1,336m from GBP1,026m in 2021. This EBITDA improvement
demonstrates the great progress we made in restructuring our centre
costs, mitigating the inflationary impacts and benefiting from
increasing revenue.
The Group reports results in accordance with IFRS. Under IFRS
16, while total lease-related charges over the life of a lease
remain unchanged, the lease charges are characterised as
depreciation and financing expenses with higher total expense in
the early periods of a lease and lower total expense in the later
periods of the lease. Results are additionally presented before the
application of IFRS 16 (in accordance with IAS 17 accounting
standards) as it provides useful information to stakeholders on how
the Group is managed, and reporting for bank covenants and certain
lease agreements. The primary difference between the two standards
is the treatment of operating lease liabilities. There is no
difference between underlying cash flow.
Before the application of IFRS 16 the Group's EBITDA increased
by 389% at constant currency to GBP317m from GBP59m in 2021.
To bridge the Group's EBITDA of GBP1,336m under the IFRS 16
standard to GBP317m under IAS 17, we need to recognise rental
income on subleases which are recognise as lease receivables under
IFRS 16, rental costs on our lease portfolio reflected as lease
liabilities under IFRS 16 and centre closure and other costs which
are reflected as impairments under IFRS 16.
EBITDA bridge
----------------------------------------------
Preliminary results (GBPm)
2022 2021
---------------------------------------------- -------- -----
EBITDA 1,336 1,026
Rent income 50 -
Rent expense (1,059) (997)
Centre closure & other cost (10) 30
---------------------------------------------- -------- -----
EBITDA before application of IFRS 16 317 59
---------------------------------------------- -------- -----
Network rationalisation charge 25 60
Closure cost provision release (71) (125)
Provision for expected credit losses - 53
Asset impairment of Russia & Ukraine 19 -
Other one-off items incl. restructuring 18 33
---------------------------------------------- -------- -----
Total adjusting items (9) 21
---------------------------------------------- -------- -----
Adjusted EBITDA before application of IFRS 16 308 80
---------------------------------------------- -------- -----
All our segments reported strong results, led by EMEA with
EBITDA up 26% at constant FX from GBP474m to GBP597m, Asia up 19%
at constant FX from GBP115m to GBP144m and Americas up 15% at
constant FX from GBP451m to GBP588m. Worka EBITDA was at GBP112m
(2021: GBP75m) positively impacted by The Instant Group investment
in March 2022. On a pro-forma basis, i.e. including The Instant
Group for full 12 months, Worka EBITDA was at GBP117m.
EBITDA by segment
--------------------------- ----------------------
Preliminary results (GBPm) FY FY Constant
2022 2021 ccy
--------------------------- ----- ----- --------
EMEA 597 474 +26%
Americas 588 451 +15%
Asia 144 115 +19%
Other (105) (108) -2%
--------------------------- ----- ----- --------
Group pre-Worka 1,224 932 +23%
--------------------------- ----- ----- --------
Worka 112 75 +48%
--------------------------- ----- ----- --------
Continuing operations 1,336 1,007 +25%
--------------------------- ----- ----- --------
Discontinuing operations - 19
--------------------------- ----- ----- --------
Group 1,336 1,026 +22%
--------------------------- ----- ----- --------
Worka (pro-forma)(4) 117 75
--------------------------- ----- ----- --------
Adjusting items
As in prior years, in order to improve the transparency and
usefulness of the financial information presented and to improve
year-on-year comparability the Group identified net adjusting items
on operating profit of GBP13m compared to GBP31m in 2021, of which
all GBP13m are non-cash items (2021: GBP8m).
These adjusting items in 2022 primarily reflect COVID-19 related
network rationalisation charges of GBP58m vs. GBP71m in 2021, a
reversal of impairment of property, plant and equipment of GBP(73)m
vs. GBP(125)m in 2021 and other one-off items including
restructuring costs of GBP19m vs. GBP32m in 2021. Additionally, a
charge related to the asset impairment of Russia and the Ukraine of
GBP9m as a result of the ongoing geopolitical tensions was also
recognised.
Foreign exchange
The overall impact of exchange rate movements over the course of
the year increased revenue by GBP133m and EBITDA by GBP79m. The
Group's results are exposed to translation risk from the movement
in currencies. During 2022 key exchange rates moved, as shown in
the table below.
Foreign exchange rates
At 31 Dec Average
------------- ---------------- ----------------
GBP sterling 2022 2021 % 2022 2021 %
------------- ---- ---- ---- ---- ---- ----
US dollar 1.21 1.35 -10% 1.23 1.38 -11%
Euro 1.13 1.19 -5% 1.17 1.16 1%
------------- ---- ---- ---- ---- ---- ----
Network growth
Our focus has been and will continue to be on the expansion
through partnerships. 91% (or 421 deals out of 462) of deals we
signed in 2022 in total were capital-light. As a result, we are
continuing to improve the quality of our portfolio as we grow our
global network.
Total occupancy of the Group's continued operations improved
strongly by 530 bps in 2022 to 73.5% (2021: 68.2%). This is a great
achievement. It also means that we still have 26.5% of centre
capacity to grow revenues at low marginal cost and with minimal
further investment.
The Group's overall pricing continued to improve throughout the
year and importantly ahead of cost inflation, with year-on-year
pricing increasing by 7%, albeit down from the all-time high of Q1
2020. Our ability to increase prices is tied closely to
macroeconomic inflation rates, and therefore we expect that our
ability to pass on inflationary increases to customers will slow as
inflation reduces globally.
We continue to manage prices appropriately and continue to
mitigate ongoing inflationary pressures through our strong focus on
supplier consolidation and renegotiation, further strengthening our
industry cost leadership. Cost efficiency and focus on profitable
growth is our key focus area together with our focus on
capital-light growth.
YoY
2022 2021 change
------------------------------ ----- ----- --------
Number of centres 3,345 3,314 +31
Centre openings 152 146
Centre rationalisations (121) (145)
------------------------------ ----- ----- --------
Number of SQFT 65.1m 64.1m +2%
------------------------------ ----- ----- --------
Total new centre deals signed 462 193 +139%
Of which capital light 421 182
------------------------------ ----- ----- --------
Average total occupancy 73.5% 68.2% +530 bps
------------------------------ ----- ----- --------
Embedded price, indexed* 95 89 +7%
------------------------------ ----- ----- --------
* Price per square foot, Q1 2020 = 100
Finance costs and taxation
The Group reported a net finance expense for the year of
GBP(252)m (2021: GBP(172)m). The net finance expense includes
interest on the Group's lease liabilities of GBP(230)m (2021:
GBP(166)m) and borrowing facilities of GBP(22)m (2021: GBP(6)m).
The increase in the finance expense related to the borrowing
facilities is driven by increased interest rates globally and
increased debt related to the investment in The Instant Group in
March 2022 mitigated by a GBP27m gain on the mark-to-market of the
option element of the convertible bond (gain of GBP23m). Excluding
the mark-to-market of the convertible bond the financial expense
related to the borrowing facilities was GBP(49)m (2021:
GBP(29)m).
The effective tax rate is -15% (2021: -4%). Despite reporting a
loss for the year, the Group incurred a tax charge due to the
continuing profitability of certain countries and entities within
the overall Group. Looking forward, factors that may potentially
influence the effective tax rate include the shape of the recovery
in the Group's trading performance, the availability of tax losses
and the continuing ownership of specific countries or regions which
may change due to future potential franchise agreements.
Earnings per share
Earnings per share improved in the year from a loss of (20.4)p
to a loss of (11.2)p. Earnings per share from continuing operations
on an adjusted basis was a loss of (10.1)p compared to a loss of
(23.4)p in 2021.
Diluted earnings per share for the year was a loss of (11.3)p
(2021: loss of (26.2)p). Diluted earnings per share on a continuing
basis on an adjusted basis for the year was a loss of (10.1)p
(2021: loss of (24.2)p).
The weighted average number of shares in issue during the year
was 1,006,884,755 (2021: 1,007,214,854). The weighted average
number of shares for diluted earnings per share was 1,090,855,142
(2021: 1,102,444,936). 2,174,738 shares were acquired in the period
to be held in treasury to satisfy future exercises under various
Group long-term incentive schemes. The Group reissued 1,442,606
shares from treasury to satisfy such exercises during the year. At
31 December 2022 the Group held 50,564,853 treasury shares (2021:
49,832,721).
Cash flow - continuing operations
In 2022 we demonstrated that actions taken to manage cost
tightly, restructure centres where necessary and improve revenue
resulted in GBP151m of cash inflow from business activities
compared to an outflow of GBP(219)m in 2021. Net maintenance
capital expenditure was GBP5m lower in 2022 at GBP(90)m (2021:
GBP(95)m).
Cash inflow before growth capex and corporate activities was
GBP90m (2021: outflow of GBP(240)m).
Net growth capital expenditure was at GBP(141)m (2021:
GBP(104)m) mainly due to centres we signed in prior years. It is
important to note that in 2022 we signed a total of 462 new centre
deals (2021: 193 deals signed) which will be added to our global
and widely distributed network in the future. 91% or 421 deals out
of these 462 deals in total were capital-light which will result in
significantly reduced net growth capital expenditure investments in
future years.
Net cash for the year increased by GBP77m as cash outflow before
investments, share repurchase and dividends of GBP(359)m (2021:
GBP(334)m) was financed through net proceeds on transactions of
GBP54m and net proceeds from loans of GBP386m.
Cash flow
-------------------------------------------------------------- --------------
Preliminary results (GBPm)
2022 2021
-------------------------------------------------------------- ------- -----
Operating profit/(loss) 147 (87)
Depreciation & amortisation 1,189 1,110
Profit on discontinued operations - 3
-------------------------------------------------------------- ------- -----
EBITDA 1,336 1,026
-------------------------------------------------------------- ------- -----
Rent income 50 -
Rent expense (1,059) (997)
Centre closure & other costs (10) 30
-------------------------------------------------------------- ------- -----
EBITDA before application of IFRS 16 317 59
-------------------------------------------------------------- ------- -----
Working capital (excl. amortisation of partner contributions) 22 (129)
Working capital related to the amortisation of partner
contributions (104) (95)
Maintenance capital expenditure (net) (90) (95)
Other items(5) 6 41
-------------------------------------------------------------- ------- -----
Cash inflow/(outflow) from business activities(6) 151 (219)
-------------------------------------------------------------- ------- -----
Tax paid (24) (5)
Finance costs on bank & other facilities (37) (16)
-------------------------------------------------------------- ------- -----
Cash inflow/(outflow) before growth capex and corporate
activities 90 (240)
-------------------------------------------------------------- ------- -----
Gross growth capital expenditure (180) (154)
Growth-related partner contributions 39 50
Net growth capital expenditure (141) (104)
Purchase of subsidiary undertakings (net of cash) (307) 11
-------------------------------------------------------------- ------- -----
Cash outflow before corporate activities (358) (333)
-------------------------------------------------------------- ------- -----
Purchase of shares (5) -
Investment-related loan receivable - 283
Net proceeds on transactions 54 19
Net proceeds from loans 386 36
-------------------------------------------------------------- ------- -----
Net cash inflow for the year 77 5
-------------------------------------------------------------- ------- -----
Opening net cash 78 71
FX movements 6 2
-------------------------------------------------------------- ------- -----
Closing cash 161 78
-------------------------------------------------------------- ------- -----
5. Includes capitalised rent related to centre openings (gross
growth capital expenditure) of GBP(12)m (2021: GBP(20)m)
6. Cash flow before growth capex, corporate activities, tax and
finance cost on bank & other facilities
Cash at year-end 2022 was GBP161m (2021: GBP78m). Mainly due to
the investment in The Instant Group we increased our loan balance
by GBP(386)m to GBP(861)m and non-cash movements, which was further
impacted by foreign exchange losses of GBP(12)m. This resulted in
net debt before application of IFRS 16 of GBP(712)m (2021:
GBP(397)m).
Under IFRS, we are obliged to report net debt including
operating leases which comprise c.90% of our net debt balance.
During 2022 we paid principal and interest on finance leases of
GBP1,227m and recognised new principal and interest on net lease
investments of GBP(48)m. Non-cash movements and currency impact on
lease liabilities and investments increased the liability by
GBP(950)m. Hence, total IFRS 16 related lease liabilities at the
end of 2022 were GBP(5,892)m (2021: GBP(6,121)m).
As a result, net debt at the end of 2022 was at GBP(6,604)m
compared with GBP(6,518)m at the end of 2021. Again, the increase
in net debt was primarily driven by GBP(307)m of acquisitions
(predominantly The Instant Group in March 2022), growth capex
related to centre openings which we signed in prior years and the
impact of currency changes.
Net debt
------------------------------------------------------ ----------------
Preliminary results (GBPm) 2022 2021
------------------------------------------------------ ------- -------
Closing cash 161 78
Opening loans (475) (422)
Net proceeds from issue & repayment of loans (386) (36)
Non-cash movements & FX impact on loans (12) (17)
------------------------------------------------------ ------- -------
Net financial debt (712) (397)
------------------------------------------------------ ------- -------
Opening lease liabilities (6,121) (6,559)
Principal & interest payments on finance leases 1,227 1,032
Non-cash movements (net) (524) (712)
Principal & interest received on net lease investment (48) -
FX impact on lease liabilities & investments (net) (426) 118
------------------------------------------------------ ------- -------
Net debt (6,604) (6,518)
------------------------------------------------------ ------- -------
Risk management
Effective management of risk is an everyday activity for the
Group and, crucially, integral to our growth planning. A detailed
assessment of the principal risks and uncertainties which could
impact the Group's long-term performance and the risk management
structure in place to identify, manage and mitigate such risks can
be found on pages 66 to 75 of the 2021 Annual Report and Accounts.
The principal risks and uncertainties are unchanged, other than
climate change risk, where an inadequate ESG strategy would mean
that IWG is unable to manage climate related exposures. IWG manages
this risk in the following ways:
-- ESG is firmly on the agenda for the Board;
-- IWG is exposed to physical and transitional climate related
risks and are exposed to assessment throughout the year; and
-- ESG considerations are an integral part of our businesses,
and our strategy will continue to evolve to address climate related
risks and opportunities. The Group continually reviews its product
offering to provide low carbon services; and In changing asset
allocations towards decarbonising operations and value chains.
Related parties
There have been no changes to the type of related party
transactions entered into by the Group that had a material effect
on the financial statements for the twelve months ended 31 December
2022. Details of related party transactions that have taken place
in the period can be found in note 31.
Dividends and share repurchase
Given continuing macroeconomic uncertainties and geopolitical
tensions the Group continued to focus on maintaining sufficient
funding. As a result, dividend payments currently remain on hold
with a clear intention to return to our progressive dividend policy
at the earliest possible opportunity. During the year the Group
made a number of small-scale share repurchases, in total acquiring
2.1m shares to be held in treasury at a cost of GBP5m.
Financing
The Group has a combination of debt financing instruments,
including:
-- Convertible bond of GBP318m (face value GBP350m, 2021:
GBP308m) with an interest rate of 0.5%, due for repayment in 2027
with an option for the bondholders to put the instrument back to
the Group in 2025 at par; and
-- Net financial debt (excluding the convertible bond) at 31
December 2022 of GBP394m. This includes a non-recourse bridge
facility against the Worka group, the gross balance of which was
GBP270m at 31 December 2022
As at year-end 2022 the Group complied with all facility
covenants. The financial instruments are discussed in relation to
the going concern assessment below.
Going Concern
The Group reported a loss after tax of GBP(121)m (2021:
GBP(269)m) from continuing operations for the year, while net cash
of GBP1,147m (2021: GBP735m) was generated from operations during
the year. Although the Group's balance sheet at 31 December 2022
reports a net current liability position of GBP1,868m (2021:
GBP1,435m) which could give rise to a potential liquidity risk, the
Directors concluded and are satisfied after a comprehensive review
that no liquidity risk exists after taking into account the
following considerations:
1. The Group has funding available under the Group's GBP750m
revolving credit facility. GBP173m (2021: GBP530m) was available
and undrawn at 31 December 2022. This facility is committed until
March 2025 with an option to extend until 2026 (note 25);
2. The Group's initial GBP330m non-recourse bridge facility, to
fund the investment in The Instant Group, matures in September
2023. The Instant Group, combined with the IWG digital assets in
Worka, has been highly cash generative and reduced its net debt to
GBP176m, excluding GBP4m of lease liabilities, at 31 December 2022.
Based on the modelled scenarios the Directors expect that Worka
will continue to reduce its net debt position by September 2023,
and has already been doing so at the start of 2023. The Group is
pursuing various options available to address the bridge facility
refinancing, including but not limited to: repaying the bridge
facility through asset sales, cash generated from operations,
and/or the extension or replacement of this facility to ensure
continued funding of this highly successful and cash generative
business; and
3. The Group maintains a 12-month rolling forecast and a
three-year strategic outlook. It also monitors the covenants in its
facilities to manage the risk of potential breach. The Group
expects to remain within covenants throughout the forecast period.
In reaching this conclusion, the Directors have assessed:
1. the potential cash generation of the Group against a range of
illustrative scenarios (including a severe but plausible outcome);
and
2. mitigating actions to reduce operating costs and optimise
cash flows during any ongoing global restrictions.
Based on the above, the Directors consider that the Group is
well placed to successfully manage the actual and potential
liquidity risks faced by the organisation subject to successful
resolution of the uncertainty with regard to the bridge facility
referred to in section 2 above.
On the basis of their assessment, the Directors have a
reasonable expectation that the Group has adequate resources to
continue in operational existence for a period of at least 12
months from the date of approval of these Group consolidated
financial statements and consider it appropriate to continue to
adopt the going concern basis in preparing the financial statements
of the Group.
Charlie Steel
Chief Financial Officer
Consolidated income statement
Year ended Year ended
31 Dec 31 Dec
2022 2021
GBPm Notes Unaudited Restated(1)
---------------------------------------------------------- ----- ---------- ------------
Revenue 3 2,751 2,227
Total cost of sales (2,182) (1,885)
---------------------------------------------------------- ----- ---------- ------------
Cost of sales (2,169) (1,869)
Adjusting items to cost of sales(2) (65) (70)
Net reversal of impairment of property, plant, equipment
and right-of-use assets(2) 3,5 52 54
---------------------------------------------------------- ----- ---------- ------------
Expected credit reversal/(losses) on trade receivables(2) 5 6 (99)
---------------------------------------------------------- ----- ---------- ------------
Gross profit (centre contribution) 3 575 243
Total selling, general and administration expenses (427) (328)
---------------------------------------------------------- ----- ---------- ------------
Selling, general and administration expenses (406) (295)
Adjusting items to selling, general and administration
expenses 10 (21) (33)
---------------------------------------------------------- ----- ---------- ------------
Share of loss of equity-accounted investees, net
of tax 21 (1) (2)
---------------------------------------------------------- ----- ---------- ------------
Operating profit/(loss) 5 147 (87)
Finance expense 7 (287) (198)
Finance income 7 35 26
---------------------------------------------------------- ----- ---------- ------------
Net finance expense (252) (172)
---------------------------------------------------------- ----- ---------- ------------
Loss before tax for the year from continuing operations (105) (259)
Income tax expense 8 (16) (10)
---------------------------------------------------------- ----- ---------- ------------
Loss after tax for the year from continuing operations (121) (269)
---------------------------------------------------------- ----- ---------- ------------
Profit after tax for the period from discontinued
operations 9 1 59
Loss for the year (120) (210)
---------------------------------------------------------- ----- ---------- ------------
Attributable to equity shareholders of the Group (117) (205)
Attributable to non-controlling interests 23 (3) (5)
---------------------------------------------------------- ----- ---------- ------------
Loss per ordinary share (EPS):
Attributable to ordinary shareholders
Basic (p) 11 (11.2) (20.4)
Diluted (p) 11 (11.2) (20.4)
From continuing operations
Basic (p) 11 (11.3) (26.2)
Diluted (p) 11 (11.3) (26.2)
---------------------------------------------------------- ----- ---------- ------------
1. The comparative information has been restated to reflect the
impact of discontinued operations (note 9).
2. The net reversal of adjusting items of GBP17m (2021: GBP2m)
comprises the following items included in the balances referenced
(note 10):
A reversal of the impairment of property, plant and equipment
and right-of-use assets of GBP73m (2021: GBP125m), impairment of
Ukraine and Russia of GBP9m (2021: GBPnil), the adjusting items to
costs of sales of GBP65m (2021: GBP70m) and GBPnil (2021: GBP53m)
of the expected credit losses on trade receivables balances
reported.
The above consolidated income statement should be read in
conjunction with the accompanying notes.
Consolidated statement of comprehensive income
Year ended
31 Dec Year ended
2022 31 Dec
GBPm Notes Unaudited 2021
-------------------------------------------------------------- ----- ---------- ----------
Loss for the year (120) (210)
Other comprehensive income/(loss) that is or may be
reclassified to profit or loss in subsequent periods:
Foreign exchange recycled to profit or loss from discontinued
operations 9 - -
Foreign currency translation gain/(loss) for foreign
operations 5 (20)
-------------------------------------------------------------- ----- ---------- ----------
Items that are or may be reclassified to profit or
loss in subsequent periods 5 (20)
-------------------------------------------------------------- ----- ---------- ----------
Other comprehensive income that will never be reclassified
to profit or loss in
subsequent periods:
Items that will never be reclassified to profit or - -
loss in subsequent periods
-------------------------------------------------------------- ----- ---------- ----------
Other comprehensive profit/(loss) for the period, net
of tax 5 (20)
-------------------------------------------------------------- ----- ---------- ----------
Total comprehensive loss for the year, net of tax (115) (230)
-------------------------------------------------------------- ----- ---------- ----------
Attributable to shareholders of the Group (112) (225)
Attributable to non-controlling interests 23 (3) (5)
-------------------------------------------------------------- ----- ---------- ----------
The above consolidated statement of comprehensive income should
be read in conjunction with the accompanying notes.
Consolidated statement of changes in equity
Total
Foreign equity
Issued currency attributable
share Share Treasury translation Other Retained to equity Non-controlling Total
GBPm Notes capital premium shares reserve reserves(1) earnings shareholders interests equity
---------------- ----- ------- ------- -------- ----------- ----------- -------- ------------ --------------- ------
Balance at 1
January
2021 10 313 (154) 36 26 283 514 - 514
---------------- ----- ------- ------- -------- ----------- ----------- -------- ------------ --------------- ------
Total
comprehensive
income/(loss)
for the year:
Loss for the
year - - - - - (205) (205) (5) (210)
Other
comprehensive
income/(loss):
Foreign exchange
recycled to
profit
or loss from
discontinued
operations 9 - - - - - - - - -
Foreign currency
translation
gain/(loss)
for foreign
operations - - - (20) - - (20) - (20)
---------------- ----- ------- ------- -------- ----------- ----------- -------- ------------ --------------- ------
Other
comprehensive
income/(loss),
net
of tax - - - (20) - - (20) - (20)
---------------- ----- ------- ------- -------- ----------- ----------- -------- ------------ --------------- ------
Total
comprehensive
income/(loss)
for the year - - - (20) - (205) (225) (5) (230)
Transactions
with
owners of the
Company
Share-based
payments 6 - - - - - 6 6 - 6
Ordinary
dividend
paid 12 - - - - - - - - -
Purchase of
shares 22 - - - - - - - - -
Proceeds from
exercise
of share awards 22 - - 3 - - (2) 1 - 1
---------------- ----- ------- ------- -------- ----------- ----------- -------- ------------ --------------- ------
Total
transactions
with owners of
the
Company - - 3 - - 4 7 - 7
Acquisition of
subsidiary
with
non-controlling
interests 23 - - - - - - - 14 14
---------------- ----- ------- ------- -------- ----------- ----------- -------- ------------ --------------- ------
Balance at 31
December
2021 10 313 (151) 16 26 82 296 9 305
---------------- ----- ------- ------- -------- ----------- ----------- -------- ------------ --------------- ------
Total
comprehensive
income/(loss)
for the year:
Loss for the
year - - - - - (117) (117) (3) (120)
Other
comprehensive
income/(loss):
Foreign exchange
recycled to
profit
or loss from
discontinued
operations 9 - - - - - - - - -
Foreign currency
translation
gain/(loss)
for foreign
operations - - - 5 - - 5 - 5
---------------- ----- ------- ------- -------- ----------- ----------- -------- ------------ --------------- ------
Other
comprehensive
income, net of
tax - - - 5 - - 5 - 5
---------------- ----- ------- ------- -------- ----------- ----------- -------- ------------ --------------- ------
Total
comprehensive
income/(loss)
for the year - - - 5 - (117) (112) (3) (115)
Transactions
with
owners of the
Company
Share-based
payments 6 - - - - - 4 4 - 4
Ordinary
dividend
paid 12 - - - - - - - - -
Purchase of
shares 22 - - (5) - - - (5) - (5)
Proceeds from
exercise
of share awards 22 - - 4 - - (4) - - -
---------------- ----- ------- ------- -------- ----------- ----------- -------- ------------ --------------- ------
Total
transactions
with owners of
the
Company - - (1) - - - (1) - (1)
Acquisition of
subsidiary
with
non-controlling
interests 23 - - - - - - - 53 53
Divestiture of
subsidiary
with
non-controlling
interests 23 - - - - - - - (7) (7)
---------------- ----- ------- ------- -------- ----------- ----------- -------- ------------ --------------- ------
Balance at 31
December
2022
(unaudited) 10 313 (152) 21 26 (35) 183 52 235
---------------- ----- ------- ------- -------- ----------- ----------- -------- ------------ --------------- ------
1. Other reserves include GBP11m 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, GBP38m arising from the Scheme of
Arrangement undertaken on 14 October 2008, GBP6m relating to merger
reserves and GBPnil to the redemption of preference shares, partly
offset by GBP29m 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.
Consolidated balance sheet
As at
31 Dec As at
2022 31 Dec
GBPm Notes Unaudited 2021
--------------------------------------------------- ----- ---------- -------
Non-current assets
Goodwill 13 934 704
Other intangible assets 14 214 78
Property, plant and equipment 15 6,234 6,376
--------------------------------------------------- ----- ---------- -------
Right-of-use assets 15 5,009 5,254
Other property, plant and equipment 15 1,225 1,122
--------------------------------------------------- ----- ---------- -------
Non-current net investment in finance leases 24 95 -
Deferred tax assets 8 350 327
Other long-term receivables 16 57 50
Investments in joint ventures 21 45 45
Other investments - -
--------------------------------------------------- ----- ---------- -------
Total non-current assets 7,929 7,580
--------------------------------------------------- ----- ---------- -------
Current assets
Inventory 1 1
Trade and other receivables 17 919 734
Current net investment in finance leases 24 52 -
Corporation tax receivable 8 19 19
Cash and cash equivalents 24 161 78
--------------------------------------------------- ----- ---------- -------
Total current assets 1,152 832
Total assets 9,081 8,412
--------------------------------------------------- ----- ---------- -------
Current liabilities
Trade and other payables (incl. customer deposits) 18 1,202 923
Deferred revenue 455 346
Corporation tax payable 8 45 36
Bank and other loans 19,24 285 22
Lease liabilities 24 1,002 932
Provisions 20 31 8
--------------------------------------------------- ----- ---------- -------
Total current liabilities 3,020 2,267
--------------------------------------------------- ----- ---------- -------
Non-current liabilities
Other long-term payables 11 10
Deferred tax liability 8 145 141
Bank and other loans 19,24 588 453
Lease liabilities 24 5,037 5,189
Derivative financial liabilities 25 - 27
Provisions 20 37 12
Provision for deficit on joint ventures 21 6 6
Retirement benefit obligations 27 2 2
--------------------------------------------------- ----- ---------- -------
Total non-current liabilities 5,826 5,840
Total liabilities 8,846 8,107
--------------------------------------------------- ----- ---------- -------
Total equity
Issued share capital 22 10 10
Issued share premium 313 313
Treasury shares 22 (152) (151)
Foreign currency translation reserve 21 16
Other reserves 26 26
Retained earnings (35) 82
--------------------------------------------------- ----- ---------- -------
Total shareholders' equity 183 296
Non-controlling interests 23 52 9
--------------------------------------------------- ----- ---------- -------
Total equity 235 305
--------------------------------------------------- ----- ---------- -------
Total equity and liabilities 9,081 8,412
--------------------------------------------------- ----- ---------- -------
The above consolidated balance sheet should be read in
conjunction with the accompanying notes.
Consolidated statement of cash flows
Year ended Year ended
31 Dec 31 Dec
2022 2021
GBPm Notes Unaudited Restated(1)
------------------------------------------------------------ ----- ---------- ------------
Operating activities
Loss for the year from continuing operations (121) (269)
Adjustments for:
Profit from discontinued operations 9 - 2
Net finance expense(2) 7 252 173
Share of loss on equity-accounted investees, net of
tax 21 1 2
Depreciation charge 15 1,145 1,096
------------------------------------------------------------ ----- ---------- ------------
Right-of-use assets 15 955 893
Other property, plant and equipment 15 190 203
------------------------------------------------------------ ----- ---------- ------------
Loss on impairment of goodwill 13 3 -
Loss on disposal of property, plant and equipment 5 34 64
Profit on disposal of right-of-use assets and related
lease liabilities 5,24 (31) (42)
Profit on sales of current assets - (1)
Loss on disposal of intangible assets 5 - -
Net reversal of impairment of property, plant and equipment 5,15 (13) (7)
Net reversal of impairment of right-of-use assets 5,15 (39) (47)
Amortisation of intangible assets 5,14 44 14
Negative goodwill arising on an acquisition 28 - (1)
Tax expense 8 16 10
Expected credit reversal/(losses) on trade receivables 5 (6) 99
Increase/(decrease) in provisions 20 40 (15)
Share-based payments 6 4 6
Other non-cash movements (3) (11)
------------------------------------------------------------ ----- ---------- ------------
Operating cash flows before movements in working capital 1,326 1,073
------------------------------------------------------------ ----- ---------- ------------
Proceeds from partner contributions (reimbursement
of costs)(4) 15 19 20
Increase in trade and other receivables (97) (127)
Increase/(decrease) in trade and other payables 191 (40)
------------------------------------------------------------ ----- ---------- ------------
Cash generated from operations 1,439 926
------------------------------------------------------------ ----- ---------- ------------
Interest paid and similar charges on bank loans and
corporate borrowings (38) (19)
Interest paid on lease liabilities 24 (230) (167)
Tax paid (24) (5)
Net cash inflows from operating activities 1,147 735
------------------------------------------------------------ ----- ---------- ------------
Investing activities
Purchase of property, plant and equipment 15 (242) (221)
Payment of initial direct costs related to right-of-use
assets (1) -
Interest received on net lease investment 7 7 -
Payment received from net lease investment 24 41 -
Purchase of subsidiary undertakings, net of cash acquired 28 (307) 11
Purchase of intangible assets 14 (39) (34)
Purchase of other investments - (33)
Proceeds on the sale of discontinued operations, net
of cash disposed of 9 1 52
Proceeds on sale of property, plant and equipment 1 1
Proceeds on other current receivables(3) 17 - 283
Interest received 7 1 3
Net cash (outflows)/inflows from investing activities (538) 62
------------------------------------------------------------ ----- ---------- ------------
Financing activities
Proceeds from issue of loans 24 1,340 983
Repayment of loans 24 (954) (947)
Payment of lease liabilities 24 (997) (865)
Proceeds from partner contributions (lease incentives)(4) 15 31 36
Proceeds from Non-controlling interests 23 53 -
Purchase of treasury shares 22 (5) -
Proceeds from exercise of share awards - 1
Payment of ordinary dividend 12 - -
Net cash outflows from financing activities (532) (792)
------------------------------------------------------------ ----- ---------- ------------
Net increase in cash and cash equivalents 77 5
Cash and cash equivalents at beginning of the year 78 71
Effect of exchange rate fluctuations on cash held 6 2
Cash and cash equivalents at end of the year 24 161 78
------------------------------------------------------------ ----- ---------- ------------
1. The comparative information has been restated to reflect the
impact of discontinued operations (note 9).
2. The net finance expense includes mark-to-market adjustments
of GBP27m (2021: GBP23m).
3. Included in other receivables at 31 December 2020 was
mezzanine and senior debt recognised at amortised cost of GBP276m.
This receivable balance was fully repaid to the Group in February
2021, in addition to associated costs reimbursements, resulting in
an additional GBP1m gain on settlement.
4. The total proceeds from partner contributions relating to the
reimbursement of costs and lease incentives of GBP50m (2021:
GBP56m) are allocated between maintenance partner contributions of
GBP11m (2021: GBP6m) and growth partner contributions of GBP39m
(2021: GBP50m).
The above consolidated statement of cash flows should be read in
conjunction with the accompanying notes.
Notes to the accounts
1. Authorisation of financial statements
The financial information presented in this preliminary release
does not constitute full statutory financial statements. The Annual
Report and Financial Statements will be approved by the Board of
Directors and reported on by the Auditor in due course.
Accordingly, the financial information is unaudited. The Group
financial statements for the year ended 31 December 2021 have been
published. The audit report on those financial statements was
unqualified.
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.
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').
2. Accounting policies
Basis of preparation
The Group financial statements consolidate those of the parent
company and its subsidiaries (together referred to as the 'Group')
and equity account the Group's interest in joint ventures. The
extract from the parent company annual accounts presents
information about the Company as a separate entity and not about
its Group.
The accounting policies set out below have been applied
consistently to all periods presented in these Group financial
statements. Amendments to adopted IFRSs issued by the International
Accounting Standards Board (IASB) and the International Financial
Reporting Interpretations Committee (IFRIC) with an effective date
from 1 January 2022 did not have a material effect on the Group
financial statements, unless otherwise indicated.
The following standards, interpretations and amendments to
standards were adopted by the Group for periods commencing on or
after 1 January 2022, with no material impact on the Group:
Onerous contracts - Cost of Fulfilling a Contract (Amendments to IAS
37)
Annual Improvements to IFRS Standards 2018-2020
Property, Plant and Equipment: Proceeds before Intended Use (Amendments
to IAS 16)
Reference to the Conceptual Framework - Amendments to IFRS 3
-----------------------------------------------------------------------
These Group consolidated financial statements are presented in
pounds sterling (GBP), which is IWG plc's functional currency, and
all values are in million pounds, except where indicated
otherwise.
The consolidated financial statements are prepared on a
historical cost basis, with the exception of certain financial
assets and liabilities that are measured at fair value.
The attributable results of those companies acquired or disposed
of during the year are included for the periods of ownership.
Judgements made by the Directors in the application of these
accounting policies that have significant effect on the
consolidated financial statements and estimates with a significant
risk of material adjustment in the next year are discussed in note
33.
Climate change
The potential climate change-related risks and opportunities to
which the Group is exposed, have been assessed by management, who
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 GBP121m (2021: GBP269m)
from continuing operations for the year, while net cash of
GBP1,147m (2021: GBP735m) was generated from operations during the
year. Although the Group's balance sheet at 31 December 2022
reports a net current liability position of GBP1,868m (2021:
GBP1,435m) which could give rise to a potential liquidity risk, the
Directors concluded and are satisfied after a comprehensive review
that no liquidity risk exists after taking into account the
following considerations:
1. The Group had funding available under the Group's GBP750m
revolving credit facility. GBP173m (2021: GBP530m) was available
and undrawn at 31 December 2022. This facility is committed until
March 2025 with an option to extend until 2026 (note 25);
2. The Group's GBP330m non-recourse bridge facility, to fund the
investment in The Instant Group, matures in September 2023. The
Instant Group, combined with the IWG digital assets in Worka has
been highly cash generative and reduced its net debt to GBP176m,
excluding GBP4m of net lease liabilities, at 31 December 2022.
Based on the modelled scenarios the Directors expect that Worka
will continue to reduce its net debt position by September 2023.
The Group is pursuing various options available to address this,
including repaying the bridge facility through asset sales, cash
generated from operations, and/or the extension or replacement of
this facility to ensure continued funding of this highly successful
and cash generative business; and
3. The Group maintains a 12-month rolling forecast and a
three-year strategic outlook. It also monitors the covenants in its
facilities to manage the risk of potential breach. The Group
expects to remain within covenants throughout the forecast period.
In reaching this conclusion, the Directors have assessed:
-- the potential cash generation of the Group against a range of
illustrative scenarios (including a severe but plausible outcome);
and
-- mitigating actions to reduce operating costs and optimise
cash flows during any ongoing global restrictions.
Details of the principal risks, outcomes of modelled and
stress-tested scenarios are set out in the Viability statement.
Based on the above, the Directors consider that the Group is
well placed to successfully manage the actual and potential
liquidity risks faced by the organisation subject to successful
resolution of the uncertainty with regard to the bridge facility
referred to in section 2 above.
On the basis of their assessment, the Directors have a
reasonable expectation that the Group has adequate resources to
continue in operational existence for a period of at least 12
months from the date of approval of these Group consolidated
financial statements and consider it appropriate to continue to
adopt the going concern basis in preparing the financial statements
of the Group.
IFRS not yet effective
The following new or amended standards and interpretations that
are mandatory for 2023 annual periods (and future years) are not
expected to have a material impact on the Group financial
statements:
Deferred Tax related to Assets and Liabilities arising from 1 January
a Single Transaction - Amendments to IAS 12 2023
Classification of Liabilities as Current or Non-Current (Amendment 1 January
to IAS 1) 2023
IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance 1 January
Contracts 2023
Amendments to IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors: Definition 1 January
of Accounting Estimates 2023
Disclosure of Accounting Policies (Amendments to IAS 1 and 1 January
IFRS Practice Statement 2) 2023
------------------------------------------------------------------ ---------
There are no other IFRS standards or interpretations that are
not yet effective that would be expected to have a material impact
on the Group.
The Group has not early adopted any standard, interpretation or
amendment that has been issued but is not yet effective.
Basis of consolidation
Subsidiaries are entities controlled by the Group. Control
exists when the Group controls an entity, when it is exposed to, or
has the rights to, variable returns from its involvement with the
entity and has the ability to affect those returns through its
power over the entity. The financial statements of subsidiaries are
included in the consolidated financial statements from the date
that control commences. The results are consolidated until the date
control ceases or the subsidiary qualifies as a disposal group, at
which point the assets and liabilities are carried at the lower of
fair value less costs to sell and carrying value.
Joint ventures are those entities over whose activities the
Group has joint control, whereby the Group has rights to the net
assets of the arrangement, rather than rights to its assets and
obligations for its liabilities. The consolidated financial
statements include the Group's share of the total recognised gains
and losses of joint ventures on an equity-accounted basis, from the
date that joint control commences until the date that joint control
ceases or the joint venture qualifies as a disposal group, at which
point the investment is carried at the lower of fair value less
costs to sell and carrying value. When the Group's share of losses
exceeds its interest in a joint venture, the Group's carrying
amount is reduced to nil and recognition of further losses is
discontinued except to the extent that the Group has incurred legal
or constructive obligations or made payments on behalf of a joint
venture.
Leases
The nature of the Group's leases relates primarily to the rental
of commercial office real estate premises globally.
1. Right-of-use assets
The Group recognises right-of-use assets at the commencement
date of the lease. Right-of-use assets are measured at cost, less
any accumulated depreciation and impairment losses, and adjusted
for any re-measurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities
recognised and initial direct costs incurred. The recognised
right-of-use assets are depreciated on a straight-line basis over
the shorter of its estimated useful life and the lease term.
Right-of-use assets are subject to impairment review on an
annual basis.
2. Lease liabilities
At the commencement date of the lease, the Group recognises
lease liabilities measured at the present value of lease payments
to be made over the lease term. The lease payments include fixed
payments and variable lease payments that depend on an index or a
rate. The variable lease payments that do not depend on an index or
a rate are recognised as a rent expense in the period in which they
are incurred.
In calculating the present value of lease payments, the Group
uses the incremental borrowing rate at the lease commencement date
as the interest rate implicit in the lease is not readily
determinable. After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of interest and
reduced for the lease payments made. In addition, the carrying
amount of lease liabilities is re-measured if there is a
modification, a change in the lease term or a change in the fixed
lease payments.
3. Lease modifications
The carrying amount of lease liabilities is re-measured where
there is a modification, a change in the lease term, a change in
the lease payments (e.g. changes to future payments resulting from
a change in an index or rate used to determine such lease payments)
or a change in the assessment of an option to purchase the
underlying asset. The impact of the modification is recognised
against the carrying amount of the right-of-use assets or is
recorded in profit or loss if the carrying amount of the
right-of-use assets has been reduced to zero.
4. Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to
short-term leases (i.e. those leases that have a lease term of 12
months or less from commencement). It also applies the lease of
low-value assets recognition exemption under IFRS 16 to leases that
are considered of low value. Lease payments on short-term leases
and leases of low-value assets are recognised as a rent expense on
a straight-line basis over the lease term.
5. Partner contributions
Partner contributions are contributions from our business
partners (property owners and landlords) towards the initial costs
of opening a business centre, including the fit-out of the
property. Partner contributions representing a reimbursement to the
lessee (IWG) are accounted for as agency arrangements, and form
part of the lessor's (landlord's) assets.
Partner contributions for lease incentives are received at or
before the lease commencement date for commercial reasons and,
where the Group retains ownership of the fit-out assets, are
accounted for as a lease incentive and recognised by reducing the
right-of-use asset. Any other partner contributions for lease
incentives received subsequent to the commencement of the lease are
accounted for as part of the associated lease modification.
6. Lease term
The lease term represents the period from lease inception up to
either:
-- The earliest point at which the lease could be broken, where break clauses exist;
-- The point at which the lease could be extended, but no
further, where extension options exist; or
-- To the end of the contractual lease term in all other cases.
7. Lease break penalties
Lease break penalties, where the lease term has been determined
as the period from inception up to a break clause and when there
are break payments or penalties, have been appropriately included
in the measurement of the lease liability.
8. Net investment in finance leases
The Group acts as an intermediate lessor where certain
commercial office real estate properties, rented under a separate
'head' lease agreement, are sublet as part of a separate sublease
agreement. Interest in the 'head' lease and sublease are accounted
for separately, with the classification of the sublease assessed
with reference to the right-of-use assets arising from the head
lease (not with reference to the underlying asset).
The initial net investment in finance leases is equal to the
present value of the lease receipts during the lease term that have
not yet been paid. The right-of-use asset arising from the head
lease is offset by the initial measurement of the net investment in
the finance lease, plus any additional direct costs associated with
setting up the lease.
If the sublease agreement contains lease and non-lease
components, the Group applies IFRS 15 in determining the allocation
of the agreement consideration.
Client contributions are contributions received from sub-lessees
towards the initial costs of preparing the commercial property for
their use, including the fit-out of the property. These
contributions represent a reimbursement of costs incurred by the
Group and are accounted for as agency arrangements, and form part
of the sub-lessees' assets.
Dilapidations
A provision is recognised for those potential dilapidation
payments when it is probable that an outflow will occur and can be
reliably estimated.
Impairment of non-financial assets
For goodwill, assets that have an indefinite useful life and
intangible assets that are not yet available for use, the
recoverable amount was estimated at 30 September 2022. At each
reporting date, the Group reviews the carrying amount of these
assets to determine whether there is an indicator of impairment. If
any indicator is identified, then the assets' recoverable amount is
re-evaluated.
The carrying amount of the Group's other non-financial assets
(other than deferred tax assets and inventory), including
right-of-use assets, is reviewed at the reporting date to determine
whether there is an indicator of impairment. If any such indication
exists, the assets' recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of
an asset or its cash-generating unit (CGU) exceeds its recoverable
amount. Impairment losses are recognised in the income
statement.
At each reporting date, the Group assesses whether there is an
indication that a previously recognised impairment loss has
reversed because of a change in th estimates used to determine the
impairment loss. If there is such an indication, and the
recoverable amount of the impaired asset or CGU subsequently
increases, then the impairment loss is generally reversed.
A CGU is the smallest identifiable group of assets that
generates cash inflows that are largely independent of the cash
inflows from other assets or groups of assets. The Group has
identified individual business centres as the CGU.
The potential impairment of immovable property, plant and
equipment and right-of-use assets at the centre (CGU) level are
evaluated where there are indicators of impairment.
Centres (CGUs) are grouped by country of operation for the
purposes of carrying out impairment reviews of goodwill as this is
the lowest level at which it can be assessed.
Individual fittings and equipment in centres or elsewhere in the
business that become obsolete or are damaged are assessed and
impaired where appropriate.
The recoverable amount of relevant assets is the greater of
their fair value less costs to sell and value-in-use. In assessing
value-in-use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks
specific to the asset. For an asset that does not generate largely
independent cash inflows, the recoverable amount is determined for
the cash-generating unit to which the asset belongs.
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 Indefinite life
Brand - Other acquired brands 20 years
Computer software Up to 5 years
Customer lists - service agreements 2 years
Customer lists - sublease agreements Up to 5 years
------------------------------------ ---------------
Amortisation of intangible assets is expensed through
administration expenses in the income statement.
Acquisitions of non-controlling interests
Acquisitions of non-controlling interests are accounted for as
transactions with owners in their capacity as owners and therefore
no goodwill is recognised as a result. Adjustments to
non-controlling interests arising from transactions that do not
involve the loss of control are based on a proportionate amount of
the net assets of the subsidiary.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated
depreciation and any impairment in value. Asset lives and
recoverable amounts are reviewed on an annual basis. Depreciation
is calculated on a straight-line basis over the estimated useful
life of the assets as follows:
Right-of-use assets (1) Over the lease term
Buildings 50 years
Leasehold improvements (1) 10 years
Furniture and equipment 5 - 10 years
Computer hardware 3 - 5 years
-------------------------- -------------------
1. 10 years represents the average useful economic life across
the lease portfolio.
Revenue
The Group's primary activity is the provision of fully
integrated, end-to-end global workspace solutions.
1. Workstations
The Group recognises workstation revenue when it transfers
services to a customer. It is measured based on the consideration
specified in a contract with a customer. Services transfer to the
customer equally over the contract period based on the time
elapsed. Where discounted periods are granted to customers, service
income is spread on a straight-line basis over the duration of the
customer contract. Invoices are generally issued in advance, on a
monthly basis with normal credit terms of 15 days, and initially
recognised as deferred revenue.
Workstation revenue is recognised over time as the services are
provided. Amounts invoiced in advance are accounted for as deferred
revenue (contract liability) and recognised as revenue upon
provision of the service.
2. Management and franchise fees
Fees received for the provision of initial and subsequent
services are recognised over time as the services are rendered.
Fees charged for the use of continuing rights granted by the
agreement are measured based on the contractually agreed percentage
of revenue, generated by the operation, except where a different
basis is determined in the contractual arrangements. Fees charged
for other services provided, during the period of the agreement,
are recognised as revenue as the services provided or the rights
used. Invoices are generally issued on a monthly basis with normal
credit terms of 30 days.
3 . Customer service income
Service income (including the provision of workspace bookings,
meeting rooms and inventory management) is recognised over time as
the services are delivered or at a point in time depending on
contractual obligations. Invoices are generally issued when the
service is provided and subject to immediate settlement. In
circumstances where the Group acts as an agent for the sale and
purchase of goods to customers, only the commission fee earned is
recognised as revenue.
4. Membership card income
Revenue from the sale of membership cards is deferred and
recognised over time within the period that the benefits of the
membership card are expected to be provided.
5. Customer deposits
Deposits received from customers against non-performance of the
contract are held on the balance sheet as a current liability until
they are either returned to the customer at the end of their
relationship with the Group, or released to the income
statement.
The Group has concluded that it is the principal in its revenue
arrangements, except where noted above.
Deferred revenue
Invoices issued in advance of services provided, in accordance
with contractual arrangements with customers, are held on the
balance sheet as a current liability until the services have been
rendered.
Adjusting items
Significant infrequent transactions not indicative of the
underlying performance of the consolidated Group are reported
separately as non-recurring/adjusting items.
Adjusting items are separately disclosed by the Group to provide
readers with helpful, additional information on the performance of
the business across periods. Items arising specifically from the
impact of the COVID-19 pandemic, geopolitical circumstances in the
Ukraine and related sanctions against Russia, have been deemed to
meet the definition of adjusting items. Each of these items is
considered to be significant in nature and/or size and are also
consistent with items treated as adjusting in prior periods in
which significant non-recurring transactions occurred. The
exclusion of these items is consistent with how the business
performance is planned by, and reported to, the Board. The profit
before tax and adjusting items measure is not a recognised profit
measure under IFRS and may not be directly comparable with adjusted
profit measures used by other companies.
The classification of adjusting items requires significant
management judgement after considering the nature and intentions of
a transaction. Adjusting items recognised are based on the actual
costs incurred and/or calculated on a basis consistent with the key
judgements and estimates disclosed in note 33. The classification
of adjusting items requires management judgement after considering
the nature and intentions of a transaction. Where necessary, this
judgement applied is based on a formal methodology, including the
comparison of current centre performance against pre-COVID-19
performance, to determine whether or not some, or all, of the
associated costs are arising in the ordinary course of
business.
Employee benefits
The majority of the Group's pension plans are of the defined
contribution type. For these plans the Group's contribution and
other paid and unpaid benefits earned by the employees are charged
to the income statement as incurred.
The cost of providing benefits under the defined benefit plans
is determined using the projected unit credit method.
Re-measurements, comprising actuarial gains and losses, the
effect of the asset ceiling and the return on plan assets,
excluding net interest, are recognised immediately in the balance
sheet with a corresponding debit or credit to retained earnings
through other comprehensive income in the period in which they
occur. Re-measurements are not reclassified to profit or loss in
subsequent periods.
Service costs are recognised in profit or loss, and include
current and past service costs as well as gains and losses on
curtailments.
Net interest is calculated by applying the discount rate to the
net defined benefit liability or asset. The Group recognises the
following changes in the net defined benefit obligation under 'cost
of sales' and 'selling, general and administration expenses' in the
consolidated income statement: service costs comprising current
service costs; past service costs; and gains and losses on
curtailments and non-routine settlements.
Settlements of defined benefit schemes are recognised in the
period in which the settlement occurs.
Grants that compensate the Group for expenses incurred are
recognised in profit or loss on a systematic basis in the periods
in which the expenses are recognised.
Share-based payments
The share awards programme entitles certain directors and
employees to acquire shares of the ultimate parent company (IWG
plc); these awards are granted by the ultimate parent company (IWG
plc) and are equity-settled.
The fair value of options and awards granted under the Group's
share-based payment plans outlined in note 26 is recognised as an
employee expense with a corresponding increase in equity. The fair
value is measured at grant date and spread over the period during
which the employees become unconditionally entitled to the options.
The fair value of the options granted is measured using the
Black-Scholes valuation model or the Monte Carlo method, taking
into account the terms and conditions upon which the options were
granted. The amount recognised as an expense is adjusted to reflect
the actual number of share options that vest in respect of
non-market conditions except where forfeiture is due to the expiry
of the option.
Taxation
Tax on the profit for the year comprises current and deferred
tax. Tax is recognised in the income statement except to the extent
that it relates to items recognised directly in equity, in which
case it is recognised in equity.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted at
the balance sheet date, and any adjustment to tax payable in
respect of previous years.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. Deferred tax
assets and liabilities are not subject to discounting. The
following temporary differences are not provided for: the initial
recognition of goodwill; the initial recognition of assets and
liabilities that affect neither accounting nor taxable profit other
than in a business combination; and differences relating to
investments in subsidiaries to the extent that they will probably
not reverse in the foreseeable future. The amount of deferred tax
provided is based on the expected manner of realisation or
settlement of the carrying amount of assets and liabilities, using
tax rates enacted or substantively enacted at the reporting
date.
A deferred tax asset is recognised for unused tax losses only to
the extent that it is probable that future taxable profits will be
available against which the asset can be utilised.
The carrying amount of a deferred tax asset or liability may
change for reasons other than a change in the temporary difference
itself. Such changes might arise as a result of a change in tax
rates or laws, a reassessment of the recoverability of a deferred
tax asset or a change in the expected manner of recovery of an
asset or the expected manner of a settlement of a liability. The
impact of these changes is recognised in the income statement or in
other comprehensive income depending on where the original deferred
tax balance was recognised.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Upon adoption of IFRIC Interpretation 23, the Group considered
whether it has any uncertain tax positions, particularly those
relating to transfer pricing. The Company's and the subsidiaries'
tax filings in different jurisdictions include deductions related
to transfer pricing and the taxation authorities may challenge
those tax treatments. The Group determined, based on its tax
compliance and transfer pricing studies, that in most jurisdictions
it is probable that its tax treatments (including those for the
subsidiaries) will be accepted by the taxation authorities. The
Group has, where considered appropriate, provided for the potential
impact of uncertain tax positions where the likelihood of tax
authority adjustment is considered to be more likely than not. The
adoption of the interpretation did not have an impact on the
consolidated financial statements of the Group.
Provisions
A provision is recognised in the balance sheet when the Group
has a present legal or constructive obligation as a result of a
past event that can be estimated reliably, and it is probable that
an outflow of economic benefits will be required to settle the
obligation.
Restructuring provisions are made for direct expenditures of a
business reorganisation where the plans are sufficiently detailed
and well-advanced and where the appropriate communication to those
affected has been undertaken at the reporting date.
Provision is made for closure costs to the extent that the
unavoidable costs of meeting the obligations exceed the economic
benefits expected to be delivered.
Equity
Equity instruments issued by the Group are recorded at the value
of proceeds received, net of direct issue costs.
When shares recognised as equity are repurchased, the amount of
the consideration paid, which includes directly attributable costs,
net of any tax effects, is recognised as a deduction from equity.
Repurchased shares are classified as treasury shares and are
presented in the treasury share reserve. When treasury shares are
sold or re-issued subsequently, the amount received is recognised
as an increase in equity and the resulting surplus or deficit on
the transaction is presented within retained earnings.
Inventory
Inventories relate to consumable items which are measured at the
lower of cost or net realisable value. The cost of inventories is
based on the first-in, first-out principle.
Net finance expense
Interest charges and income are accounted for in the income
statement on an accrual basis. Financing transaction costs that
relate to financial liabilities are charged to interest expense
using the effective interest rate method and are recognised within
the carrying value of the related financial liability on the
balance sheet. Fees paid for the arrangement of credit facilities
are recognised as an asset and recognised through the finance
expense over the term of the facility.
Where assets or liabilities on the Group balance sheet are
carried at net present value, the increase in the amount due to
unwinding the discount is recognised as a finance expense or
finance income as appropriate.
Costs arising on bank guarantees and letters of credit and
foreign exchange gains or losses are included in other finance
costs (note 7).
Interest-bearing borrowings and other financial liabilities
Financial liabilities, including interest-bearing borrowings,
are recognised initially at fair value less attributable
transaction costs. Subsequent to initial recognition, financial
liabilities are stated at amortised cost with any difference
between cost and redemption value being recognised in the income
statement over the period of the borrowings on an effective
interest rate method.
The Group derecognises financial liabilities when the Group's
obligations are discharged, cancelled or expired.
Financial liabilities are classified as financial liabilities at
fair value through profit or loss where the liability is either
held for trading or is designated as held at fair value through
profit or loss on initial recognition. Financial liabilities at
fair value through profit or loss are stated at fair value with any
resultant gain or loss recognised in the income statement.
Compound financial instruments issued by the Group comprise
convertible bonds denominated in pounds sterling that can be
converted to ordinary shares at the option of the holder.
The debt component of compound financial instruments is
initially recognised at the fair value of a similar liability that
does not have an equity conversion option. The conversion option
represents a derivative financial liability and is initially
recognised as the difference between the fair value of the compound
financial instrument as a whole and the fair value of the liability
component. Any directly attributable transaction costs are
allocated to the debt host.
Subsequent to initial recognition, the debt component of a
compound financial instrument is measured at amortised cost using
the effective interest rate method. The derivative component of a
compound financial instrument is re-measured at fair value through
profit or loss. Interest related to the debt is recognised as a
finance expense in profit or loss.
Derivative financial instruments
The Group's policy on the use of derivative financial
instruments can be found in note 25. Derivative financial
instruments are measured initially at fair value and changes in the
fair value are recognised through profit or loss unless the
derivative financial instrument has been designated as a cash flow
hedge whereby the effective portion of changes in the fair value
are deferred in equity.
Financial assets
Financial assets are classified and subsequently measured at
amortised cost, fair value through the profit or loss, or fair
value through other comprehensive income (OCI). The classification
depends on the nature and purpose of the financial assets and is
determined on initial recognition.
Financial assets (including trade and other receivables) are
measured at amortised cost if both of the following conditions are
met:
-- The financial asset is held within a business model whose
objective is to hold assets to collect contractual cash flows;
and
-- Its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the
principal amount outstanding.
The effective interest rate is the rate that exactly discounts
estimated future cash payments or receipts through the expected
life of the financial instruments to the gross carrying amount of
the financial assets.
Financial assets at fair value through profit or loss are
measured at fair value and changes therein, including any interest
or dividend income, are recognised in profit or loss.
Financial assets (including trade and other receivables) are
measured at fair value through OCI if both of the following
conditions are met:
-- The financial asset is held within a business model whose
objective is achieved by both collecting cash flows and selling
financial assets; and
-- Its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the
principal amount outstanding.
IFRS 9 requires the Group to record expected credit losses on
all of its financial assets held at amortised cost, on either a
12-month or a lifetime basis. The Group applies the simplified
approach to trade receivables and recognises expected credit losses
based on the lifetime expected losses. Provisions for receivables
are established based on both expected credit losses and
information available that the Group will not be able to collect
all amounts due according to the original terms of the
receivables.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and
are subject to an insignificant risk of change in value.
Non-controlling interests
Non-controlling interests are measured initially at their
proportionate share of the acquiree's identifiable net assets at
the date of acquisitions.
Discontinued operations
A discontinued operation is a component of the Group's business,
the operations and cash flows of which can be clearly distinguished
from the rest of the Group and which:
-- represents a separate major line of business or geographic
area of operations;
-- is part of a single co-ordinated plan to dispose of a
separate major line of business or geographic area of operations;
or
-- is a subsidiary acquired exclusively with a view to
resale.
Classification as a discontinued operation occurs at the earlier
of disposal or when the operation meets the criteria to be
classified as held-for-sale. When an operation is classified as a
discontinued operation, the comparative statement of profit or loss
and OCI is re-presented as if the operation had been discontinued
from the start of the comparative year.
Foreign currency transactions and foreign operations
Transactions in foreign currencies are recorded using the rate
of exchange ruling at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies are translated
using the closing rate of exchange at the balance sheet date and
the gains or losses on translation are taken to the income
statement. Non-monetary assets and liabilities that are measured in
terms of historical cost in a foreign currency are translated using
the exchange rate at the date of the transaction. The results and
cash flows of foreign operations are translated using the average
rate for the period. Assets and liabilities, including goodwill and
fair value adjustments, of foreign operations are translated using
the closing rate, with all exchange differences arising on
consolidation being recognised in other comprehensive income, and
presented in the foreign currency translation reserve in equity.
Exchange differences are reclassified to the income statement on
disposal.
Foreign currency translation rates
At 31 December Annual average
2022 2021 2022 2021
---------- -------- ------ ------- -------
US dollar 1.21 1.35 1.23 1.38
Euro 1.13 1.19 1.17 1.16
---------- -------- ------ ------- -------
3. Segmental analysis
An operating segment is a component of the Group that engages in
business activities from which it may earn revenue and incur
expenses. An operating segment's results are reviewed regularly by
the chief operating decision-maker (the Board of Directors of the
Group) on a pre-IFRS 16 basis to make decisions about resources to
be allocated to the segment and assess its performance, and for
which distinct financial information is available. The segmental
information is presented on the same basis on which the chief
operating decision-maker received reporting during the year.
Segmental assets and liabilities continue to be presented in
accordance with IFRS.
The business is run on a worldwide basis but managed through two
operating segments. The Group's primary operating segment is
managed through three principal geographical segments: the
Americas; EMEA (Continental Europe including UK, Middle East and
Africa); and Asia Pacific. The results of business centres in each
of these regions, based on time zones; economic relationships;
market characteristics; cultural similarities; and language
clusters, form the basis for reporting geographical results to the
chief operating decision-maker. As a result, the UK is now included
in the EMEA regional reporting. These geographical segments exclude
the Group's non-trading, holding and corporate management
companies, which are included in the Other segment. The impact from
The Instant Group investment (note 28) has been incorporated into
Worka, which is disclosed as a separate operating segment. The
combined digital assets in Worka, represents the world's leading
fully integrated workspace platform. All reportable segments are
involved in the provision of global workplace solutions.
The Group's reportable segments operate in different markets and
are managed separately because of the different economic
characteristics that exist in each of those markets. Each
reportable segment has its own distinct senior management team
responsible for the performance of the segment.
GBPm Americas EMEA(2) Asia Pacific Other Pre-Worka Worka Total
Continuing 2021 2021 2021 2021 2021 2021 2021
operations 2022 Restated(1) 2022 Restated(1) 2022 Restated(1) 2022 Restated(1) 2022 Restated(1) 2022 Restated(1) 2022 Restated(1)
----------------- ------- ----------- ------- ----------- ----- ----------- ----- ----------- ------- ----------- ----- ----------- ------- -----------
Reported
revenue(3) 1,024 836 1,199 1,027 248 231 9 1 2,480 2,095 271 132 2,751 2,227
Rent income - - - - - - - - - - 50 - 50 -
----------------- ------- ----------- ------- ----------- ----- ----------- ----- ----------- ------- ----------- ----- ----------- ------- -----------
Revenue
on pre-IFRS
16 basis 1,024 836 1,199 1,027 248 231 9 1 2,480 2,095 321 132 2,801 2,227
----------------- ------- ----------- ------- ----------- ----- ----------- ----- ----------- ------- ----------- ----- ----------- ------- -----------
Workstation
revenue
(4) 709 611 904 793 188 179 - - 1,801 1,583 50 - 1,851 1,583
Fee income 3 1 19 13 10 10 2 - 34 24 - - 34 24
Customer
Service
income
(5) 312 224 276 221 50 42 7 1 645 488 271 132 916 620
----------------- ------- ----------- ------- ----------- ----- ----------- ----- ----------- ------- ----------- ----- ----------- ------- -----------
Gross
profit/(loss)
(centre
contribution) 82 (8) 120 14 26 3 13 (5) 241 4 142 78 383 82
Share of
loss of
equity-accounted
investees - - (1) (2) - - - - (1) (2) - - (1) (2)
----------------- ------- ----------- ------- ----------- ----- ----------- ----- ----------- ------- ----------- ----- ----------- ------- -----------
Operating
(loss)/profit (23) (94) 23 (78) 2 (19) (130) (130) (128) (321) 85 73 (43) (248)
Finance
expense (37) (31) (13) - (50) (31)
Finance
income 27 26 - 27 26
----------------- ------- ----------- ------- ----------- ----- ----------- ----- ----------- ------- ----------- ----- ----------- ------- -----------
(Loss)/profit
before
tax for
the year (138) (326) 72 73 (66) (253)
Depreciation
and amortisation 166 147 116 111 27 27 21 16 330 301 30 1 360 302
Impairment
of assets - - - - - - - - - - - - - -
Assets(3) 3,587 3,364 3,782 3,937 549 532 475 535 8,393 8,367 688 44 9,081 8,412
Liabilities(3) (3,445) (3,232) (3,559) (3,682) (538) (540) (752) (645) (8,294) (8,099) (552) (8) (8,846) (8,107)
----------------- ------- ----------- ------- ----------- ----- ----------- ----- ----------- ------- ----------- ----- ----------- ------- -----------
Net assets/
(liabilities) 142 132 223 255 11 (8) (277) (110) 99 268 136 36 235 305
Non-current
asset
additions(6) 131 50 211 172 32 48 29 82 403 352 24 - 427 352
----------------- ------- ----------- ------- ----------- ----- ----------- ----- ----------- ------- ----------- ----- ----------- ------- -----------
1. Restated to exclude revenue from discontinued operations
(note 9) and/or the separate disclosure of the Worka segment.
2. Includes UK performance as follows: Revenue of GBP386m (2021:
GBP346m), gross profit of GBP34m (2021: loss of GBP11m) and
operating profit of GBP13m (2021: loss of GBP34m)
3. Presented on a basis consistent with IFRS 16.
4. Includes customer deposits
5. Includes membership card income
6. Excluding deferred taxation.
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:
GBPm Americas EMEA Asia Pacific Other Pre-Worka Worka Total
--------------- ------------------ ------------------ ----------------- ----------------- ------------------ ----------------- ------------------
Continuing 2021 2021 2021 2021 2021 2021 2021
operations 2022 Restated(1) 2022 Restated(1) 2022 Restated(1) 2022 Restated(1) 2022 Restated(1) 2022 Restated(1) 2022 Restated(1)
--------------- ----- ----------- ----- ----------- ---- ----------- ---- ----------- ----- ----------- ---- ----------- ----- -----------
Gross
profit/(loss)
(centre
contribution)
- pre-IFRS
16 82 (8) 120 14 26 3 13 (5) 241 4 142 78 383 82
Rent income - - - - - - - - - - (50) - (50) -
Rent 434 414 443 448 126 116 8 4 1,011 982 47 1 1,058 983
Depreciation
of property,
plant
and equipment
including
right-of-use
assets (345) (317) (389) (378) (90) (91) (3) (5) (827) (791) (1) - (828) (791)
Other 13 (16) 17 (6) (11) (8) (7) - 12 (30) - (1) 12 (31)
--------------- ----- ----------- ----- ----------- ---- ----------- ---- ----------- ----- ----------- ---- ----------- ----- -----------
Gross
profit/(loss)
(centre
contribution) 184 73 191 78 51 20 11 (6) 437 165 138 78 575 243
--------------- ----- ----------- ----- ----------- ---- ----------- ---- ----------- ----- ----------- ---- ----------- ----- -----------
1. Restated to reflect the impact of discontinued operations on
a pre-IFRS 16 basis and/or the separate disclosure of the Worka
segment.
GBPm Americas EMEA Asia Pacific Other Pre-Worka Worka Total
-------------- ------------------ ------------------ ----------------- ------------------ ------------------ ----------------- ------------------
Continuing 2021 2021 2021 2021 2021 2021 2021
operations 2022 Restated(1) 2022 Restated(1) 2022 Restated(1) 2022 Restated(1) 2022 Restated(1) 2022 Restated(1) 2022 Restated(1)
-------------- ----- ----------- ----- ----------- ---- ----------- ----- ----------- ----- ----------- ---- ----------- ----- -----------
Operating
profit/(loss)
- pre-IFRS
16 (23) (94) 23 (78) 2 (19) (130) (130) (128) (321) 85 73 (43) (248)
Rent income - - - - - - - - - - (50) - (50) -
Rent 434 414 443 448 126 116 9 5 1,012 983 47 - 1,059 983
Depreciation
of property,
plant and
equipment
including
right-of-use
assets (345) (317) (389) (378) (90) (91) (4) (7) (828) (793) (1) - (829) (793)
Other 11 (16) 15 (7) (11) (9) (5) 2 10 (30) - 1 10 (29)
-------------- ----- ----------- ----- ----------- ---- ----------- ----- ----------- ----- ----------- ---- ----------- ----- -----------
Operating
profit/(loss) 77 (13) 92 (15) 27 (3) (130) (130) 66 (161) 81 74 147 (87)
-------------- ----- ----------- ----- ----------- ---- ----------- ----- ----------- ----- ----------- ---- ----------- ----- -----------
1. Restated to reflect the impact of discontinued operations on
a pre-IFRS 16 basis (note 5) and/or the separate disclosure of the
Worka segment.
GBPm Americas EMEA Asia Pacific Other Pre-Worka Worka Total
------------- ----------------- ----------------- ----------------- ----------------- ------------------ ----------------- ------------------
Continuing 2021 2021 2021 2021 2021 2021 2021
operations 2022 Restated(1) 2022 Restated(1) 2022 Restated(1) 2022 Restated(1) 202 Restated(1) 2022 Restated(1) 2022 Restated(1)
------------- ---- ----------- ---- ----------- ---- ----------- ---- ----------- ----- ----------- ---- ----------- ----- -----------
Depreciation
and
amortisation
- pre-IFRS
16 166 147 116 111 27 27 21 16 330 301 30 1 360 302
Depreciation
of property,
plant and
equipment
including
right-of-use
assets 345 317 389 378 90 91 4 7 828 793 1 - 829 793
------------- ---- ----------- ---- ----------- ---- ----------- ---- ----------- ----- ----------- ---- ----------- ----- -----------
Depreciation
and
amortisation 511 464 505 489 117 118 25 23 1,158 1,094 31 1 1,189 1,095
------------- ---- ----------- ---- ----------- ---- ----------- ---- ----------- ----- ----------- ---- ----------- ----- -----------
1. Restated to reflect the impact of discontinued operations on
a pre-IFRS 16 basis (note 5) and/or the separate disclosure of the
Worka segment.
GBPm Americas EMEA Asia Pacific Other Pre-Worka Worka Total
--------------- ---------- ---------- -------------- ---------- ----------- ---------- ----------
Continuing
operations 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021
--------------- ---- ---- ---- ---- ------ ------ ---- ---- ----- ---- ---- ---- ---- ----
Impairment
of assets
- pre-
IFRS 16 - - - - - - - - - - - - - -
(Net reversal)
/impairment
of property,
plant and
equipment
including
right-of-use
assets (30) (56) (16) (3) (6) 5 - - (52) (54) - - (52) (54)
--------------- ---- ---- ---- ---- ------ ------ ---- ---- ----- ---- ---- ---- ---- ----
(Net reversal)
/Impairment
of assets (30) (56) (16) (3) (6) 5 - - (52) (54) - - (52) (54)
--------------- ---- ---- ---- ---- ------ ------ ---- ---- ----- ---- ---- ---- ---- ----
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:
2022 2021
External Non-current External Non-current
GBPm revenue assets(1) revenue assets(1)
-------------------------------------- -------- ----------- -------- -----------
Country of tax domicile - Switzerland 5 - 4 -
United States of America 868 2,787 694 2,737
EMEA 1,199 3,264 1,027 3,467
Worka 271 429 132 34
All other countries(2) 408 1,099 370 1,015
-------------------------------------- -------- ----------- -------- -----------
2,751 7,579 2,227 7,253
-------------------------------------- -------- ----------- -------- -----------
1. Excluding deferred tax assets.
2. Revenue of GBPnil (2021: GBP34m) is included in discontinued
operations (note 9).
5. Operating profit/(loss) - continuing operations
Operating profit/(loss) has been arrived at after
crediting/(charging):
2021
GBPm Notes 2022 Restated(1)
---------------------------------------------------------- ----- ------- ------------
Revenue 2,751 2,227
Depreciation on property, plant and equipment(2) 15 (1,145) (1,081)
---------------------------------------------------------- ----- ------- ------------
Right-of-use assets 15 (955) (880)
Other property, plant and equipment 15 (190) (201)
---------------------------------------------------------- ----- ------- ------------
Amortisation of intangible assets 14 (44) (14)
Variable property rents payable in respect of leases 24 (68) (63)
Lease expense on low-value assets 24 - (1)
Staff costs 6 (423) (342)
Facility and other property costs (496) (414)
Expected credit reversal/(losses) on trade receivables(3) 25 6 (99)
Loss on disposal of property, plant and equipment (34) (64)
Profit on disposal of right-of-use assets and related
lease liabilities 31 42
Impairment of goodwill 13 (3) -
Net reversal of impairment of property, plant and
equipment(4) 15 52 54
---------------------------------------------------------- ----- ------- ------------
Net reversal of impairment of other property, plant
and equipment 13 7
Net reversal of impairment of right-of-use assets 39 47
---------------------------------------------------------- ----- ------- ------------
Negative goodwill arising on acquisition 28 - 1
Other costs (479) (331)
---------------------------------------------------------- ----- ------- ------------
Operating profit/(loss) before equity-accounted
investees 148 (85)
Share of loss of equity-accounted investees, net
of tax 21 (1) (2)
---------------------------------------------------------- ----- ------- ------------
Operating profit/(loss) 147 (87)
---------------------------------------------------------- ----- ------- ------------
1. The comparative information has been restated to reflect the
impact of discontinued operations.
2. Excludes depreciation expenses related to discontinued
operations for right-of-use assets of GBPnil (2021: GBP13m) and
other property, plant and equipment of GBPnil (2021: GBP2m).
3. Of the GBP6m reversal of expected credit loss (2021: charge
of GBP99m), GBPnil (2021: GBP53m) relates to COVID-19 adjusting
items (note 10).
4. The net reversal of impairment of GBP52m (2021: GBP54m)
includes an additional impairment of GBP39m (2021: GBP97m), offset
by the reversal of GBP91m (2021: GBP151m) previously provided for
(note 15).
GBPm 2022 2021
------------------------------------------------------------------ ----- -----
Fees payable to the Group's auditor and its associates
for the audit of the Group accounts (2) (1)
Fees payable to the Group's auditor and its associates
for other services:
The audit of the Company's subsidiaries pursuant to legislation (3) (3)
Other services pursuant to legislation - -
Other non-audit services - -
------------------------------------------------------------------ ----- -----
6. Staff costs
2021
GBPm 2022(1) Restated(1)
--------------------------------------------- -------- ------------
The aggregate payroll costs were as follows:
Wages and salaries(2) 357 281
Social security 55 50
Pension costs 7 5
Share-based payments 4 6
--------------------------------------------- -------- ------------
423 342
--------------------------------------------- -------- ------------
1. Excludes staff costs related to discontinued operations of
GBPnil (2021: GBP2m).
2. Includes worldwide financial support schemes disclosed in
note 10.
2022 2021
Average Average
full-time full-time
Equivalents(1) Equivalents(1)
--------------------------------------------------------------- --------------- ---------------
The average number of persons employed by the Group (including
Executive Directors),
analysed by category and geography, was as follows:
Centre staff 6,572 6,142
Sales and marketing staff 532 510
Finance staff 647 640
Other staff 1,005 947
--------------------------------------------------------------- --------------- ---------------
8,756 8,239
--------------------------------------------------------------- --------------- ---------------
Americas 2,778 2,518
EMEA 3,356 3,129
Asia Pacific 995 998
Corporate functions 1,627 1,594
--------------------------------------------------------------- --------------- ---------------
8,756 8,239
--------------------------------------------------------------- --------------- ---------------
1. The average full-time equivalents exclude employees for
disposals during 2022 of 2 (2021: 65).
Details of Directors' emoluments and interests are given in the
Directors' Remuneration report.
7. Net finance expense
2021
GBPm Notes 2022 Restated(1)
--------------------------------------------------- ----- ----- ------------
Interest payable and similar charges on bank loans
and corporate borrowings (39) (42)
Interest payable on lease liabilities(2) (230) (166)
--------------------------------------------------- ----- ----- ------------
Total interest expense (269) (208)
Other finance costs(3) (18) 10
Unwinding of discount rates - -
--------------------------------------------------- ----- ----- ------------
Total finance expense (287) (198)
--------------------------------------------------- ----- ----- ------------
Interest income 1 3
Interest received on net lease investment 7 -
Fair value gain on financial liabilities measured
at FVTPL 19 27 23
--------------------------------------------------- ----- ----- ------------
Total finance income 35 26
--------------------------------------------------- ----- ----- ------------
Net finance expense (252) (172)
--------------------------------------------------- ----- ----- ------------
1. The comparative information has been restated to reflect the
impact of discontinued operations.
2. Excludes lease liability finance expense related to
discontinued operations of GBPnil (2021: GBP1m).
3. Excludes interest expense related to discontinued operations
of GBPnil (2021: GBPnil).
8. Taxation
(a) Analysis of charge in the year
2021
GBPm 2022 Restated(1)
------------------------------------------------------------- ----- ------------
Current taxation
Corporate income tax (40) (24)
Previously unrecognised tax losses and temporary differences 6 8
Over provision in respect of prior years 1 5
------------------------------------------------------------- ----- ------------
Total current taxation (33) (11)
------------------------------------------------------------- ----- ------------
Deferred taxation
Origin and reversal of temporary differences 9 1
Previously unrecognised tax losses and other differences 8 -
-----
Total deferred taxation 17 1
------------------------------------------------------------- ----- ------------
Tax charge on continuing operations (16) (10)
------------------------------------------------------------- ----- ------------
1. The comparative information has been restated to reflect the
impact of discontinued operations.
(b) Reconciliation of taxation charge
2021
2022 Restated(1)
GBPm % GBPm %
------------------------------------------------- ----- ---- ------- -----
Loss before tax from continuing operations (105) (259)
------------------------------------------------- ----- ---- ------- -----
Tax on profit at 11.9% (2021: 11.9%) 13 (12) 31 (12)
Tax effects of:
Expenses not deductible for tax purposes (34) 32 (29) 11
Items not chargeable for tax purposes 12 (11) 34 (13)
Previously unrecognised temporary differences
expected to be used in the future 14 (14) 8 (3)
Current year temporary differences not currently
expected to be used (55) 52 (113) 44
Adjustment to tax charge in respect of previous
years 1 (1) 5 (2)
Differences in tax rates on overseas earnings 33 (31) 54 (21)
------------------------------------------------- ----- ---- ------- -----
(16) 15 (10) 4
------------------------------------------------- ----- ---- ------- -----
1. The comparative information has been restated to reflect the
impact of discontinued operations.
The applicable tax rate is determined based on the tax rate in
the canton of Zug in Switzerland, which was the statutory tax rate
applicable in the country of domicile of the parent company of the
Group at the end of the financial year.
(c) Factors that may affect the future tax charge
Unrecognised tax losses to carry forward against certain future
overseas corporation tax liabilities have the following expiration
dates.
GBPm 2022 2021
------------------------------------------------------- ----- -----
2022 - 33
2023 54 41
2024 40 48
2025 56 49
2026 65 70
2027 72 36
2028 341 37
2029 71 25
2030 and later 1,434 1,431
------------------------------------------------------- ----- -----
2,133 1,770
Available indefinitely 1,468 1,302
------------------------------------------------------- ----- -----
Tax losses available to carry forward 3,601 3,072
------------------------------------------------------- ----- -----
Amount of tax losses recognised in deferred tax assets 64 125
------------------------------------------------------- ----- -----
Total tax losses available to carry forward 3,665 3,197
------------------------------------------------------- ----- -----
Additional tax losses have been generated in 2022. The above
loss expiry table excludes GBP254m (2021: GBP238m) US state tax
losses.
The following deferred tax assets have not been recognised due
to uncertainties over recoverability.
GBPm 2022 2021
--------------------------------- ----- -----
Intangibles 368 390
Accelerated capital allowances 33 30
Tax losses 852 758
Rent 63 49
Leases 37 30
Short-term temporary differences 11 7
--------------------------------- ----- -----
1,364 1,264
--------------------------------- ----- -----
(d) Corporation tax
GBPm 2022 2021
--------------------------- ----- -----
Corporation tax payable (45) (36)
Corporation tax receivable 19 19
--------------------------- ----- -----
(e) Deferred taxation
The movement in deferred tax is analysed below:
Property, Other
plant temporary
GBPm Intangibles and equipment Tax losses Rent Leases differences Total
------------------------ ----------- -------------- ---------- ---- ------ ------------ -----
Deferred tax asset
At 31 December 2020 22 (78) 257 63 107 (182) 189
Current year movement - 1 (17) 5 4 18 11
Prior year movement - - (199) - - - (199)
Disposals - - - - - - -
Transfers(1) 48 77 - - 1 200 326
Exchange rate movements - - - - - - -
------------------------ ----------- -------------- ---------- ---- ------ ------------ -----
At 31 December 2021 70 - 41 68 112 36 327
------------------------ ----------- -------------- ---------- ---- ------ ------------ -----
Current year movement 12 (4) (16) (4) 8 25 21
Prior year movement 1 13 (14) (3) - 3 -
Disposals - - - - - - -
Transfers - - - - - - -
Exchange rate movements (6) (9) 4 8 - 5 2
------------------------ ----------- -------------- ---------- ---- ------ ------------ -----
At 31 December 2022 77 - 15 69 120 69 350
------------------------ ----------- -------------- ---------- ---- ------ ------------ -----
Deferred tax liability
At 31 December 2020 - - - - - - -
Current year movement (3) (6) - - (5) 1 (13)
Prior year movement - - - - - 198 198
Disposals - - - - - - -
Transfers(1) (48) (77) - - (1) (200) (326)
Exchange rate movements - - - - - - -
------------------------ ----------- -------------- ---------- ---- ------ ------------ -----
At 31 December 2021 (51) (83) - - (6) (1) (141)
------------------------ ----------- -------------- ---------- ---- ------ ------------ -----
Current year movement (6) 2 - (1) 2 (1) (4)
Prior year movement - - - - - - -
Disposals - - - - - - -
Transfers - - - - - - -
Exchange rate movements - - - - - - -
------------------------ ----------- -------------- ---------- ---- ------ ------------ -----
At 31 December 2022 (57) (81) - (1) (4) (2) (145)
------------------------ ----------- -------------- ---------- ---- ------ ------------ -----
1. In 2021 the Group separately presented deferred tax assets
and deferred tax liabilities on a country-by-country, or
entity-by-entity basis where available. The transfers line in the
table above reflects the adjustment required to the opening
balances as at 1 January 2021 to reflect this change in
presentation.
The movements in deferred taxes included above are after the
offset of deferred tax assets and deferred tax liabilities where
there is a legally enforceable right to set off and they relate to
income taxes levied by the same taxation authority. The closing
deferred tax position above represents the aggregated deferred tax
asset or liability position within individual legal entities, with
some companies recognising deferred tax assets and others
recognising deferred tax liabilities. The closing position is a net
deferred tax asset of GBP350m (2021: GBP327m) and a deferred tax
liability of GBP145m (2021: GBP141m).
In evaluating whether it is probable that taxable profits will
be earned in future accounting periods for the purposes of deferred
tax asset recognition, management based their analysis on the
Board-approved three-year forecasts prepared for the purposes of
reviewing goodwill for impairment.
Recognised deferred tax assets include assets that have arisen
in the United States where despite recent losses the Group
considers it probable that sufficient taxable profits will be
available against which these assets can be utilised over a period
of three years, based on the period corresponding to the Group's
business forecasting processes. Recent losses recorded in the
United States were incurred during a period of uncertainty as a
result of the global COVID-19 pandemic. Management is confident
that the Group will return to profitability in this region within
the aforementioned period. No reasonably possible change in any of
the key assumptions would result in a significant reduction in
projected tax profits such that the recognised deferred tax asset
would not be realised.
In 2022 the deferred tax asset recognised in respect of the fair
market value of IP resulting from a group restructure in 2019, in
relation to which the amortisation is deductible for Swiss
corporate income tax purposes, increased to GBP77m (2021: GBP70m)
and this is included as Intangibles in the deferred tax table
above. Recognition of this deferred tax asset is based on the
approved three-year forecast.
To address concerns about uneven profit distribution and tax
contributions of large multinational corporations, various
agreements have been reached at the global level, including an
agreement by over 135 jurisdictions to introduce a global minimum
tax rate of 15%. In December 2021, the Organisation for Economic
Co-operation and Development (OECD) released a draft legislative
framework, followed by detailed guidance released March 2022, that
is expected to be used by individual jurisdictions that signed the
agreement to amend their local tax laws. Once changes to the tax
laws in any jurisdiction in which the Group operates are enacted or
substantively enacted, the Group may be subject to top-up tax. At
the date when the financial statements were authorised for issue,
one jurisdiction in which the Group operates had enacted or
substantively enacted the tax legislation related to the top-up
tax. The Group may be potentially subject to the top-up tax because
it operates in countries where the statutory tax rate is below 15%.
Management is closely monitoring the progress of the
legislative process in each jurisdiction in which the Group
operates in. At 31 December 2022 the Group did not have sufficient
information to determine the potential quantitative impact.
9. Discontinued operations
During 2022, the Group completed the sale of various operations
through the signing of franchise agreements. The financial impact
of these transactions is treated as discontinued operations in
accordance with IFRS 5; however, these operations under franchise
will continue to be an important strategic component of the overall
Group network. These transactions form part of the larger change in
strategy of the Group towards adopting a franchising model. Fees
from franchising activities subsequent to sale are reflected as
franchise revenues in continuing operations. Closures in the
ordinary course of business are not considered part of discontinued
operations.
Disposal of operations
During the year, the Group completed the sale of individually
immaterial operations for the consideration of GBP1m (2021:
GBP52m). The results of these operations up to the date of disposal
were as follows:
2021
GBPm 2022 Restated(1)
-------------------------------------------- ----- ------------
Revenue - 34
Expenses - (31)
-------------------------------------------- ----- ------------
Operating profit - 3
Net finance expense - (1)
-------------------------------------------- ----- ------------
Profit before tax for the year - 2
Income tax expense - (4)
-------------------------------------------- ----- ------------
Loss after tax for the year - (2)
Gain on the sale of discontinued operations 1 61
-------------------------------------------- ----- ------------
Profit after tax for the year 1 59
-------------------------------------------- ----- ------------
1. The comparative information has been restated to reflect the
impact of discontinued operations.
The assets and liabilities of these operations at their
respective dates of disposal were as follows:
GBPm 2022 2021
---------------------------------------------------- ----- -----
Total assets 1 72
Total liabilities (1) (82)
---------------------------------------------------- ----- -----
Net liabilities - (10)
Costs directly associated with the disposal - 1
Foreign exchange recycled to profit and loss - -
---------------------------------------------------- ----- -----
- (9)
Consideration on disposal (net of cash and debt)(1) 1 52
---------------------------------------------------- ----- -----
Gain on sale of discontinued operations 1 61
---------------------------------------------------- ----- -----
1. The consideration recognised includes a non-cash element of
GBPnil (2021: GBP33m).
The net cash flows incurred by these operations are as
follows:
2021
GBPm 2022 Restated(1)
----------------- ----- ------------
Operating - 48
Investing - (2)
Financing (1) (46)
----------------- ----- ------------
Net cash outflow (1) -
----------------- ----- ------------
1. The comparative information has been restated to reflect the
impact of discontinued operations.
10. Adjusting items
The Group has recognised the following adjusting items for the
year ended 31 December 2022:
GBPm 2022 2021
---------------------------------- ------ ------
COVID-19 related adjusting items 4 31
Impairment of Ukraine and Russia 9 -
---------------------------------- ------ ------
Total adjusting items 13 31
---------------------------------- ------ ------
COVID-19 related adjusting items
Following the declaration by the World Health Organization of
the COVID-19 pandemic (COVID-19) and subsequent global government
restrictions, the Group has been unable to operate at full
capacity. Given the political and economic uncertainty resulting
from COVID-19, the Group continued to see significant volatility
and business disruption, impacting performance in 2022.
The impact that COVID-19 has had on underlying trading
performance is not recognised within adjusting items.
In order to improve the transparency and usefulness of the
financial information presented and improve year-on-year
comparability, the Group has recognised a net charge of GBP4m
(2021: GBP31m) relating to directly attributable charges resulting
from COVID-19. These charges are considered to be adjusting items
as they meet the Group's definition, as disclosed in previous
annual reports, of being significant in both nature and value to
the results of the Group in the current period. Reversals of GBP17m
(2021: GBP2m) have been recognised as adjusting items to cost of
sales and charges of GBP21m (2021: GBP33m) have been recognised as
adjusting items to selling, general and administration expenses in
the Group's income statement.
The charges relate to several separateIy identifiable areas of
accounting judgement and estimates as follows:
2022 2021
Selling, Selling,
general general
Cost of and administration Cost of and administration
GBPm sales costs sales costs
----------------------------------------------- ------- ------------------- ------- -------------------
Net reversal of impairment of property,
plant and equipment (including right-of-use
assets) (73) - (125) -
Impairment of goodwill - 3 - -
Provision for expected credit losses - - 53 -
Network rationalisation 58 - 71 -
Other one-off items including restructuring(1) (2) 18 (1) 33
----------------------------------------------- ------- ------------------- ------- -------------------
Total COVID-19 related adjusting items (17) 21 (2) 33
----------------------------------------------- ------- ------------------- ------- -------------------
1. Included as adjusting items in selling, general and
administration except for GBP2m (2021: GBP1m) in respect of
worldwide financial support schemes which is included in costs of
sales.
-- Impairments of property, plant and equipment (including
right-of-use assets)
The continuation of COVID-19, including new and extended
preventative measures in some of the Group's markets, continues to
prolong the impact on our business in 2022. As a result of these
measures, management continues to carry out a comprehensive review
exercise for potential impairments across the whole portfolio at a
cash-generating units (CGUs) level.
The impairment review formed part of the Group's ongoing
rationalisation process undertaken due to the impact of COVID-19.
This review compared the value-in-use of CGUs, based on
management's assumptions regarding likely future trading
performance, to the carrying values at 31 December 2022. Following
this review, a net reversal of GBP73m (2021: net reversal of
GBP125m) was recognised within cost of sales. Of this net reversal,
GBP22m (2021: GBP38m) and GBP51m (2021: GBP87m) were recognised
against property, plant and equipment and right-of-use assets
respectively.
-- Impairments of goodwill
COVID-19 and linked restrictions impacted our ability to trade
our way to sustainable profitable growth in certain markets. As a
result, the projected cash flows for these markets continued to be
evaluated to determine the carrying value of the CGUs, with an
additional impairment of GBP3m taken during 2022 (2021:
GBPnil).
-- Provision for expected credit losses
The Group continues to review the recoverability of its trade
and other receivables portfolio; however, no additional expected
credit loss was deemed necessary (2021: GBP53m). The provision for
expected credit losses reflecting the greater likelihood of credit
default by the Group's debtors, directly attributable to the impact
of COVID-19, is fully utilised as at 31 December 2022.
-- Network rationalisation
GBP58m (2021: GBP71m) of charges were incurred relating to
network rationalisations that occurred in the year, which includes
the write-off of the book value of assets and direct closure costs
related to these centres. A separate rationalisation charge of
GBPnil (GBP2021: GBP6m) has also been recorded which is not
included as adjusting items.
-- Other one-off items including restructuring
During the year, the Group incurred GBPnil (2021: GBP1m) of
transaction costs in respect of master franchise agreements that
did not complete due to the outbreak of COVID-19.
Other charges of GBP18m (2021: GBP32m) were also incurred,
including severance costs and restructurings arising from
mitigating actions taken by the Group in respect of COVID-19,
completed by 31 December 2022, as well as claims in respect of
centre closures. In addition, during the year, the Group received a
total of GBP2m (2021: GBP1m) in respect of worldwide financial
support schemes.
Should the estimated charges not prove to be in excess of the
amounts required, the release of any amounts provided for at
year-end would be treated as adjusting items.
Impairment of Ukraine and Russia
As a result of geopolitical circumstances in the Ukraine and
related sanctions against Russia, the Board has taken the decision
to recognise a total provision of GBP9m against the gross assets of
both its Russian and Ukrainian operations. These operations are not
material to the Group, representing less than 1% of both total
revenue and net assets of the Group. Accordingly, the Group's
significant accounting judgements, estimates and assumptions have
not changed.
11. Earnings per ordinary share (basic and diluted)
2022 2021
-------------------------------------------------------- ------------- -------------
Basic and diluted loss for the year attributable to
shareholders (GBPm) (120) (210)
Basic loss per share (p) (11.2) (20.4)
Diluted loss per share (p) (11.2) (20.4)
-------------------------------------------------------- ------------- -------------
Basic and diluted loss for the year from continuing
operations (GBPm) (121) (269)
Basic loss per share (p) (11.3) (26.2)
Diluted loss per share (p) (11.3) (26.2)
-------------------------------------------------------- ------------- -------------
Basic and diluted profit for the year from discontinued
operations (GBPm) 1 59
Basic earnings per share (p) 0.1 5.9
Diluted earnings per share (p) 0.1 5.4
-------------
Weighted average number of shares for basic EPS 1,006,884,755 1,007,214,854
Weighted average number of shares under option 35,393,807 39,512,057
Weighted average number of shares that would have
been issued at average market price (29,608,587) (22,437,997)
Weighted average number of share awards under the
CIP, PSP, DSBP and One-off Award 1,776,964 1,747,819
Weighted average number of shares on convertible bonds 76,408,203 76,408,203
-------------------------------------------------------- ------------- -------------
Weighted average number of shares for diluted EPS 1,090,855,142 1,102,444,936
-------------------------------------------------------- ------------- -------------
Options are considered dilutive when they would result in the
issue of ordinary shares for less than the market price of ordinary
shares in the period. The amount of the dilution is taken to be the
average market price of shares during the period minus the exercise
price. There were no material awards considered anti-dilutive at
the reporting date.
The Group issued GBP350m of convertible bonds in December 2020.
The bond issue creates a potential 76,408,203 shares for
bondholders. This represents a potential 7.1% dilutive impact at
time of issue.
The average market price of one share during the year was
207.05p (2021: 321.95p), with a high of 302.10p on 4 January 2022
and a low of 115.40p on 12 October 2022.
12. Dividends
GBPm 2022 2021
------------------------------------------------------- ----- -----
Dividends per ordinary share proposed - -
Interim dividends per ordinary share declared and paid - -
during the year
------------------------------------------------------- ----- -----
Given continuing macroeconomic uncertainties and geopolitical
tensions, the Group's capital allocation policy remains unchanged,
prioritising investment in the long-term growth of our business and
dividend distribution to shareholders.
In order to protect our liquidity in the short-term, no dividend
will be paid for the year ended 31 December 2022 (2021: GBPnil) and
future dividend payments continue to be placed on hold, with the
intention to review the return to our progressive dividend policy
when appropriate.
13. Goodwill
GBPm Total
---------------------------------------------- ------
Cost
At 31 December 2020 696
Recognised on acquisition of subsidiaries(1) 16
Goodwill derecognised on sale of subsidiaries (1)
Goodwill impairment -
Exchange rate movements (7)
---------------------------------------------- ------
At 31 December 2021 704
---------------------------------------------- ------
Recognised on acquisition of subsidiaries(1) 188
Goodwill derecognised on sale of subsidiaries -
Goodwill impairment (3)
Exchange rate movements 45
---------------------------------------------- ------
At 31 December 2022 934
---------------------------------------------- ------
Net book value
At 31 December 2021 704
---------------------------------------------- ------
At 31 December 2022 934
---------------------------------------------- ------
1. Net of GBPnil 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 level and is
subject to impairment reviews based on the cash flows of the CGUs
within that country.
The carrying amount of goodwill attributable to the reportable
business segments is as follows:
2021
GBPm 2022 Restated(1)
------------- ----- ------------
Americas 314 283
EMEA 373 367
Asia Pacific 27 25
Worka(2) 220 29
------------- ----- ------------
934 704
------------- ----- ------------
1. Restated to reflect the impact of the separate disclosure of
the Worka segment.
2. Includes goodwill of GBP183m relating to the acquisition of
The Instant Group and GBP5m from other immaterial acquisitions
(note 28).
The carrying value of goodwill and indefinite life intangibles
allocated to the USA, UK and Worka is material relative to the
total carrying value, comprising 78% of the total. The remaining
22% of the carrying value is allocated to a further 38 countries.
The goodwill and indefinite life intangibles allocated to the USA,
UK and Worka are set out below:
Intangible 2021
GBPm Goodwill assets(1) 2022 Restated(2)
---------------- -------- ---------- ---- ------------
USA 290 - 290 262
United Kingdom 219 11 230 230
Worka(3) 220 - 220 29
Other countries 205 - 205 194
---------------- -------- ---------- ---- ------------
934 11 945 715
---------------- -------- ---------- ---- ------------
1. The indefinite life intangible asset relates to the Regus
brand.
2. Restated to reflect the impact of the separate disclosure of
Worka.
3. Includes goodwill of GBP183m relating to the acquisition of
The Instant Group and GBP5m from other immaterial acquisitions
(note 28).
The value-in-use for each country has been determined using a
model which derives the present value of the expected future cash
flows for each individual country 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:
-- Future cash flows are based on forecasts prepared by
management. The model excludes cost savings and restructurings that
are anticipated but had not been committed to at the date of the
determination of the value-in-use. Thereafter, forecasts have been
prepared by management for 2023, and for a further four years, that
follow a budgeting process approved by the Board;
-- These forecasts exclude the impact of acquisitive growth
expected to take place in future periods;
-- Management considers these projections to be a reasonable
projection of margins expected at the mid-cycle position;
-- A terminal value is included in the assessment, reflecting
the Group's expectation that it will continue to operate in these
markets and the long-term nature of the business; and
-- The Group applies a country-specific pre-tax discount rate to
the pre-tax cash flows for each country. The country-specific
discount rate is based on the underlying weighted average cost of
capital (WACC) for the Group. The Group WACC is then adjusted for
each country to reflect the assessed market risk specific to that
country. The Group pre-tax WACC increased from 7.5% in 2021 to 9.1%
in 2022 (post-tax WACC: 6.7%). The country-specific pre-tax WACC
reflecting the respective market risk adjustment has been set
between 8.1% and 11.0% (2021: 7.2% to 9.7%).
The amounts by which the values-in-use exceed the carrying
amounts of goodwill are sufficiently large to enable the Directors
to conclude that a reasonably possible change in the key
assumptions would only result in a recognised impairment of GBP3m
(2021: GBPnil), in respect of individually immaterial countries.
Foreseeable events are unlikely to result in a change in the
projections of such a significant nature as to result in the
goodwill carrying amount exceeding their recoverable amount. The
forecast models used in assessing the impairment of goodwill are
based on the related business centre structure at the end of the
year.
The US model assumes an average centre contribution of 21%
(2021: 24%) over the next five years. A terminal value centre gross
margin of 23% is adopted from 2027, with a 0% long-term growth rate
assumed on revenue and costs into perpetuity. The cash flows have
been discounted using a pre-tax discount rate of 8.5% (2021:
8.3%).
The UK model assumes an average centre contribution of 13%
(2021: 18%) over the next five years. A terminal value centre gross
margin of 20% is adopted from 2027, with a 0% long-term growth rate
assumed on revenue and costs into perpetuity. The cash flows have
been discounted using a pre-tax discount rate of 9.1% (2021:
7.5%).
The Worka model assumes an average contribution of 36% over the
next five years. A terminal value centre gross margin of 38% is
adopted from 2027, with a 0% long-term growth rate assumed on
revenue and costs into perpetuity. The cash flows have been
discounted using a pre-tax discount rate of 9.1%.
Management has considered the following sensitivities:
-- Market growth and REVPOS - Management has considered the
impact of a variance in market growth and REVPOS. The value-in-use
calculation shows that if the long-term growth rate is nil, the
recoverable amount of the US, UK and Worka would still be greater
than their carrying value.
-- Discount rate - Management has considered the impact of an
increase in the discount rate applied to the calculation. The
value-in-use calculation shows that for the recoverable amount to
be less than its carrying value, the pre-tax discount rate would
have to be increased to 216.6% (2021: 88.1%) for the US, 14.4%
(2021: 25.3%) for the UK and 12.0% for Worka.
-- Occupancy - Management has considered the impact of a
variance in occupancy. The value-in-use calculation shows that for
the recoverable amount to be less than its carrying value,
occupancy in all future years would have to decrease by 17.1%
(2021: 23.0%) for the US and 8.1% (2021: 12.0%) for the UK.
14. Other intangible assets
Customer
GBPm Brand lists Software Total
---------------------------- ----- -------- -------- -----
Cost
At 31 December 2020 65 31 83 179
Additions at cost - - 34 34
Acquisition of subsidiaries 2 2 1 5
Disposals - - - -
Exchange rate movements - - - -
---------------------------- ----- -------- -------- -----
At 31 December 2021 67 33 118 218
---------------------------- ----- -------- -------- -----
Additions at cost - - 39 39
Acquisition of subsidiaries 24 77 40 141
Disposals - - - -
Exchange rate movements - 1 2 3
---------------------------- ----- -------- -------- -----
At 31 December 2022 91 111 199 401
---------------------------- ----- -------- -------- -----
Amortisation
At 31 December 2020 42 31 53 126
Charge for year 1 1 12 14
Disposals - - - -
Exchange rate movements - - - -
---------------------------- ----- -------- -------- -----
At 31 December 2021 43 32 65 140
---------------------------- ----- -------- -------- -----
Charge for year 2 17 25 44
Disposals - - - -
Exchange rate movements - 2 1 3
---------------------------- ----- -------- -------- -----
At 31 December 2022 45 51 91 187
---------------------------- ----- -------- -------- -----
Net book value
At 31 December 2020 23 - 30 53
---------------------------- ----- -------- -------- -----
At 31 December 2021 24 1 53 78
---------------------------- ----- -------- -------- -----
At 31 December 2022 46 60 108 214
---------------------------- ----- -------- -------- -----
During the year ended 31 December 2022, the Group completed the
investment in The Instant Group. As part of the purchase price
allocation, the Group engaged with third party experts in
recognising acquired brands valued at GBP24m, customer lists from
sublease agreements of GBP77m and digital asset software of
GBP40m.
Included within the brand value is GBP11m 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).
15. Property, plant and equipment
Right-of-use Land and Leasehold Furniture Computer
GBPm assets(1) buildings improvements and equipment hardware Total
------------------------------ ------------ ---------- ------------- -------------- --------- -------
Cost
At 31 December 2020 9,530 150 1,521 775 129 12,105
Additions 176 11 110 73 7 377
Modifications(2) 479 - - - - 479
Acquisition of subsidiaries 78 - 23 2 - 103
Disposals(4) (852) (1) (147) (33) (6) (1,039)
Exchange rate movements (123) - (22) (6) (2) (153)
------------------------------ ------------ ---------- ------------- -------------- --------- -------
At 31 December 2021 9,288 160 1,485 811 128 11,872
------------------------------ ------------ ---------- ------------- -------------- --------- -------
Additions 253 - 139 78 6 476
Modifications(2) 313 - - - - 313
Acquisition of subsidiaries 4 - 16 - - 20
Disposals(4) (826) - (84) (36) (6) (952)
Exchange rate movements 622 - 149 70 10 851
------------------------------ ------------ ---------- ------------- -------------- --------- -------
At 31 December 2022 9,654 160 1,705 923 138 12,580
------------------------------ ------------ ---------- ------------- -------------- --------- -------
Accumulated depreciation
At 31 December 2020 3,883 8 836 421 101 5,249
Charge for the year(3) (6) 893 3 134 58 8 1,096
Disposals(4) (5) (675) - (66) (24) (5) (770)
Net reversal of impairment(7) (47) - (7) - - (54)
Exchange rate movements (20) - - (4) (1) (25)
------------------------------ ------------ ---------- ------------- -------------- --------- -------
At 31 December 2021 4,034 11 897 451 103 5,496
------------ ---------- ------------- -------------- --------- -------
Charge for the year(3) (6) 955 3 115 65 7 1,145
Disposals(4) (5) (563) - (61) (25) (5) (654)
Net reversal of impairment(7) (39) - (13) - - (52)
Exchange rate movements 258 - 103 42 8 411
------------------------------ ------------ ---------- ------------- -------------- --------- -------
At 31 December 2022 4,645 14 1,041 533 113 6,346
------------------------------ ------------ ---------- ------------- -------------- --------- -------
Net book value
At 31 December 2020 5,647 142 685 354 28 6,856
------------------------------ ------------ ---------- ------------- -------------- --------- -------
At 31 December 2021 5,254 149 588 360 25 6,376
------------------------------ ------------ ---------- ------------- -------------- --------- -------
At 31 December 2022 5,009 146 664 390 25 6,234
------------------------------ ------------ ---------- ------------- -------------- --------- -------
1. Right-of-use assets consist of property-related leases.
2. Modifications includes lease modifications and
extensions.
3. Includes depreciation expenses related to discontinued
operations for right-of-use assets of GBPnil (2021: GBP13m) and
other property, plant and equipment of GBPnil (2021: GBP2m).
4. Includes disposals related to discontinued operations for
right-of-use assets of GBP1m (2021: GBP39m) and other property,
plant and equipment of GBPnil (2021: GBP24m).
5. Disposals are net of GBP9m (2021: GBP19m) in respect of
COVID-19 related adjusting items previously provided for (note
10).
6. Depreciation is net of GBP11m (2021: GBP25m) in respect of
COVID-19 related adjusting items previously provided for (note
10).
7. The net reversal of impairment of GBP52m (2021: GBP54m)
includes an additional COVID-19 related impairment of GBP22m (2021:
GBP70m), offset by the reversal of GBP75m (2021: GBP151m)
previously provided for (note 10).
The key assumptions and methodology in calculating right-of-use
assets and the corresponding lease liability remain consistent with
those noted in notes 2 and 33.
Impairment tests for property, plant and equipment (including
right-of-use assets) are performed on a cash-generating unit basis
when impairment triggers arise. Cash-generating units (CGUs) are
defined as individual business centres, being the smallest
identifiable group of assets that generate cash flows that are
largely independent of other groups of assets. The Group assesses
whether there is an indication that a CGU may be impaired,
including persistent operating losses, net cash outflows and poor
performance against forecasts. During the year, and as a direct
result of the challenging economic circumstances, this gave rise to
impairment tests in relation to various centres where impairment
indicators were identified.
The recoverable amounts of property, plant and equipment are
based on the higher of fair value less costs to sell and
value-in-use. The Group considered both fair value less costs to
dispose and value-in-use in the impairment testing on a
centre-by-centre level, on a basis consistent with the impairment
testing described in note 13. Impairment charges are recognised
within cost of sales in the consolidated income statement. In 2022,
the Group recorded a net reversal of impairment charges of GBP39m
(2021: GBP47m) in respect of right-of-use assets and a net reversal
of GBP13m (2021: GBP7m) in respect of leasehold improvements.
16. Other long-term receivables
GBPm 2022 2021
---------------------------------------------------- ----- -----
Deposits held by landlords against rent obligations 57 50
Other receivables - -
57 50
---------------------------------------------------- ----- -----
17. Trade and other receivables
GBPm 2022 2021
---------------------------------------------------- ----- -----
Trade receivables, net 395 262
Prepayments and accrued income 152 134
Other receivables 174 146
Partner contributions receivables 23 30
VAT recoverable 172 159
Deposits held by landlords against rent obligations 3 3
-----
919 734
---------------------------------------------------- ----- -----
18. Trade and other payables (including customer deposits)
GBPm 2022 2021
------------------------------ ----- -----
Customer deposits 447 385
Other accruals 252 189
Trade payables 220 163
VAT payable 119 104
Other payables 147 67
Other tax and social security 17 15
-----
1,202 923
------------------------------ ----- -----
During 2021 the Group conducted a review of its customer
deposits for inactive customer accounts. Based on this review, the
Group released the financial liabilities in respect of such
deposits where the obligation qualified for derecognition. The
effect of these changes was an increase in operating profit of
GBP22m in 2021.
19. Borrowings
The Group's total loan and borrowing position at 31 December
2022 and at 31 December 2021 had the following maturity
profiles:
Bank and other loans
GBPm 2022 2021
------------------------------------------------------- ----- -----
Repayments falling due as follows:
In more than one year but not more than two years 5 5
In more than two years but not more than five years(1) 581 446
In more than five years 2 2
------------------------------------------------------- ----- -----
Total non-current 588 453
Total current 285 22
------------------------------------------------------- ----- -----
Total bank and other loans 873 475
------------------------------------------------------- ----- -----
1. Includes convertible bond debt of GBP318m (2021:
GBP308m).
The Group issued GBP350m convertible bonds in December 2020,
raising GBP343m, net of transaction fees. At the date of issue, the
convertible bonds were bifurcated between:
-- A financial liability recognised at amortised cost of
GBP298m, by using the discounted cash flow of interest payments and
the bonds' nominal value; and subsequently remeasured at amortised
cost of GBP318m (2021: GBP308m) at 31 December 2022. The financial
liability is included in the above, falling due in more than two
but not more than five years.
-- A derivative financial liability of GBP52m, not being closely
related to the host financial liability, was recognised separately
and measured at fair value through profit or loss (note 25). A gain
has been recognised at 31 December 2022 of GBP27m (2021: GBP23m)
through net finance expenses, resulting in a year-end liability of
GBPnil (2021: GBP27m).
Further information regarding the committed borrowings and the
convertible bonds can be found in note 25.
20. Provisions
2022 2021
GBPm Closures Other Total Closures Other Total
-------------------------- -------- ----- ----- -------- ----- -----
At 1 January 13 8 21 24 7 31
-------------------------- -------- ----- ----- -------- ----- -----
Acquired in the period 7 - 7 - 4 4
Provided in the period 38 6 44 12 3 15
Utilised in the period(1) (1) (6) (7) (22) (7) (29)
Exchange rate movements 3 - 3 (1) - (1)
-------------------------- -------- ----- ----- -------- ----- -----
At 31 December 60 8 68 13 7 20
-------------------------- -------- ----- ----- -------- ----- -----
Analysed between:
Current 23 8 31 1 7 8
Non-current 37 - 37 12 - 12
-------------------------- -------- ----- ----- -------- ----- -----
At 31 December 60 8 68 13 7 20
-------------------------- -------- ----- ----- -------- ----- -----
1. Includes provisions release related to discontinued
operations of GBPnil (2021: GBPnil).
Closures
Provisions for closures relate to the expected costs of centre
closures, including restructuring costs. Impairments of
right-of-use assets and property, plant and equipment (note 15) are
not included above.
Other
Other provisions include the estimated costs of claims against
the Group outstanding at 31 December 2022, of which, due to their
nature, the maximum period over which they are expected to be
utilised is uncertain.
The Group is involved in various disputes, primarily related to
potential lease obligations, some of which are in the course of
litigation. Where there is a dispute and where, based on legal
counsel advice, the Group estimates that it is probable that the
dispute will result in an outflow of economic resources, provision
is made based on the Group's best estimate of the likely financial
outcome. Where a reliable estimate cannot be made, or where the
Group, based on legal counsel advice, considers that it is not
probable that there will be an outflow of economic resources, no
provision is recognised. There are no disputes which are expected
to have a material impact on the Group.
21. Investments in joint ventures
Provision
for deficit
Investments in
in joint joint
GBPm ventures ventures Total
--------------------------------- ----------- ------------ -----
At 31 December 2020 11 (5) 6
--------------------------------- ----------- ------------ -----
Acquisition of joint ventures(1) 33 - 33
Share of loss - (2) (2)
Exchange rate movements 1 1 2
--------------------------------- ----------- ------------ -----
At 31 December 2021 45 (6) 39
--------------------------------- ----------- ------------ -----
Acquisition of joint ventures - - -
Share of loss (1) - (1)
Exchange rate movements 1 - 1
--------------------------------- ----------- ------------ -----
At 31 December 2022 45 (6) 39
--------------------------------- ----------- ------------ -----
1. The acquisition of joint ventures was settled via a non-cash
transaction of GBP33m.
The Group has 82 centres operating under joint venture
agreements (2021: 82) at the reporting date, all of which are
individually immaterial. The Group has a legal obligation in
respect of its share of any deficits recognised by these
operations.
The results of the joint ventures below are the full-year
results of the joint ventures and do not represent the effective
share:
GBPm 2022 2021
----------------------------- ----- -----
Income statement
Revenue 86 35
Expenses (88) (38)
----------------------------- ----- -----
Loss before tax for the year (2) (3)
Tax charge (1) -
----------------------------- ----- -----
Loss after tax for the year (3) (3)
----------------------------- ----- -----
Balance sheet
Non-current assets 153 137
Current assets 329 169
Current liabilities (322) (160)
Non-current liabilities (139) (126)
----------------------------- ----- -----
Net assets 21 20
----------------------------- ----- -----
22. Share capital
Ordinary equity share capital
2022 2021
Nominal Nominal
value value
Number GBPm Number GBPm
------------------------------------ ------------- ------- ------------- -------
Authorised
Ordinary 1p shares in IWG plc at 1
January 8,000,000,000 80 8,000,000,000 80
Ordinary 1p shares in IWG plc at 31
December 8,000,000,000 80 8,000,000,000 80
------------------------------------ ------------- ------- ------------- -------
Issued and fully paid up
Ordinary 1p shares in IWG plc at 1
January 1,057,248,651 10 1,057,248,651 10
Ordinary 1p shares issued for cash - - - -
in the year
Ordinary 1p shares in IWG plc at 31
December 1,057,248,651 10 1,057,248,651 10
------------------------------------ ------------- ------- ------------- -------
Treasury share transactions involving IWG plc shares between 1
January 2022 and 31 December 2022
During the year, 2,174,738 shares were purchased in the open
market and 1,442,606 treasury shares held by the Group were
utilised to satisfy the exercise of share awards by employees. As
at 7 March 2023, 50,564,853 treasury shares were held. The holders
of ordinary shares in IWG plc are entitled to receive such
dividends as are declared by the Company and are entitled to one
vote per share at meetings of the Company. Treasury shares do not
carry such rights until reissued.
2022 2021
Number Number
of shares GBPm of shares GBPm
--------------------------------------- ----------- ----- ---------- -----
1 January 49,832,721 151 50,677,280 154
Purchase of treasury shares in IWG plc 2,174,738 5 - -
Treasury shares in IWG plc utilised (1,442,606) (4) (844,559) (3)
31 December 50,564,853 152 49,832,721 151
--------------------------------------- ----------- ----- ---------- -----
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 15% non-controlling equity interest
in a subsidiary of the Worka structure for a consideration of
GBP53m. The Group no longer exercises control of its 57% investment
in The Wing and disposed of the remaining GBP7m non-controlling
interest during the year.
The following table summarises the information relating to each
of the Group's subsidiaries that have a material non-controlling
interest.
GBPm 2022 2021
-------------------------------------------- ----- -----
NCI percentage 15% 43%
-------------------------------------------- ----- -----
Non-current assets 413 42
Current assets 282 11
Non-current liabilities (131) (24)
Current liabilities (163) (7)
-------------------------------------------- ----- -----
Net assets 401 22
-------------------------------------------- ----- -----
Net assets attributable to NCI 52 9
Revenue 138 1
Loss after tax (13) (12)
Other comprehensive income - -
-------------------------------------------- ----- -----
Total comprehensive income (13) (12)
-------------------------------------------- ----- -----
Loss allocated to NCI (3) (5)
Other comprehensive income allocated to NCI - -
-------------------------------------------- ----- -----
Cash flows from operating activities 31 (14)
Cash flows from investing activities 49 29
Cash flows from financing activities (33) (7)
-------------------------------------------- ----- -----
Net increase in cash and cash equivalents 47 8
-------------------------------------------- ----- -----
24. Net debt analysis
GBPm Notes 2022 2021
--------------------------------------------- ----- ------- -------
Cash and cash equivalents 161 78
Current net investment in finance leases 52 -
Non-current net investment in finance leases 95 -
--------------------------------------------- ----- ------- -------
Gross cash and lease receivables 308 78
Debt due within one year (285) (22)
Debt due after one year(1)(2) (588) (453)
Lease due within one year(3) (1,002) (932)
Lease due after one year(3) (5,037) (5,189)
--------------------------------------------- ----- ------- -------
Gross debt (6,912) (6,596)
Net debt (6,604) (6,518)
--------------------------------------------- ----- ------- -------
Derivative liability 19 - (27)
--------------------------------------------- ----- ------- -------
(6,604) (6,545)
--------------------------------------------- ----- ------- -------
1. Includes GBP318m (2021: GBP308m) convertible bond
liability.
2. Excludes the convertible bond derivative liability element at
31 December 2022 of GBPnil (2021: GBP27m).
3. There are no significant lease commitments for leases not
commenced at 31 December 2022.
The following table shows a reconciliation of net cash flow to
movements in net debt:
GBPm 2022 2021
------------------------------------------- ------- -------
Net debt at 1 January (6,518) (6,910)
Net increase in cash and cash equivalents 77 5
Interest received on net lease investment (7) -
Payment received from net lease investment (41) -
Proceeds from issue of loans (1,340) (983)
Repayment of loans 954 947
Interest paid on lease liabilities 230 167
Payment of lease liability 997 865
Non-cash movements(1) (534) (729)
Exchange rate movements (422) 120
------------------------------------------- ------- -------
Net debt at 31 December (6,604) (6,518)
------------------------------------------- ------- -------
1. Includes acquired debt of GBPnil (2021: GBP6m), interests
accrued on the convertible bond liability of GBP10m (GBP10m) and
movements on leases in relation to new leases, lease
modifications/re-measurements and lease cessations of GBP524m
(2021: GBP713m). Early termination of lease liabilities represent
GBP294m (2021: GBP232m) of the non-cash movements, including GBP1m
(2021: GBP52m) related to discontinued operations.
Cash and cash equivalent balances held by the Group that are not
available for use amounted to GBP7m at 31 December 2022 (2021:
GBP7m). Of this balance, GBP1m (2021: GBP2m) is pledged as security
against outstanding bank guarantees and a further GBP6m (2021:
GBP5m) 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 GBPnil (2021: GBP27m) derivative liability and a
GBPnil (2021: GBPnil) cash flow hedging liability recognised
separately.
The following amounts are included in the Group's consolidated
financial statements in respect of its leases:
GBPm 2022 2021
---------------------------------------------------------- ----- -----
Depreciation charge for right-of-use assets (955) (893)
Principal lease liability repayments (997) (865)
Interest expense on lease liabilities (230) (167)
Expenses relating to leases of low-value assets that are
not shown above as short-term leases - 1
Expenses relating to variable lease payments not included
in lease liabilities 68 63
Total cash outflow for leases comprising interest and
capital payments 1,227 1,032
Additions to right-of-use assets 253 176
Acquired right-of-use assets 4 78
Interest income on net lease investment 7 -
Principal payments received from net lease investment 41 -
---------------------------------------------------------- ----- -----
Total cash outflows of GBP1,295m (2021: GBP1,095m) for leases,
including variable payments of GBP68m (2021: GBP63m), were incurred
in the year.
25. Financial instruments and financial risk management
The objectives, policies and strategies applied by the Group
with respect to financial instruments and the management of capital
are determined at Group level. The Group's Board maintains
responsibility for the risk management strategy of the Group and
the Chief Financial Officer is responsible for policy on a
day-to-day basis. The Chief Financial Officer and Group Treasurer
review the Group's risk management strategy and policies on an
ongoing basis. The Board has delegated to the Group Audit Committee
the responsibility for applying an effective system of internal
control and compliance with the Group's risk management
policies.
Exposures to credit, interest rate and currency risks arise in
the normal course of business.
Going concern
The Strategic Report 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 within the Strategic
Report reviews the trading performance, financial position and cash
flows of the Group. The Group's net debt position increased by
GBP86m (2021: decreased by GBP392m) to a net debt position of
GBP6,604m (2021: GBP6,518m) as at 31 December 2022. Excluding the
IFRS 16 net investment in finance leases and lease liabilities, the
net debt position increased to GBP712m (2021: GBP397m). 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 GBP750m revolving credit facility (RCF) provided by a
group of relationship banks with a final maturity in 2025 with an
option to extend until 2026. As at 31 December 2022, GBP173m (2021:
GBP530m) of the RCF was available and undrawn.
Although the Group has net current liabilities of GBP1,868m
(2021: GBP1,435m), the Group does not consider that this gives rise
to a liquidity risk. A large proportion of the net current
liabilities comprise non-cash liabilities such as deferred revenue
of GBP455m (2021: GBP346m) which will be recognised in future
periods through the income statement. The Group holds customer
deposits of GBP447m (2021: GBP385m) which are spread across a large
number of customers and no deposit held for an individual customer
is material. Therefore, the Group does not believe the net current
liabilities represents a liquidity risk.
Credit risk
Credit risk could occur where a customer or counterparty
defaults under the contractual terms of a financial instrument and
arises principally in relation to customer contracts and the
Group's cash deposits.
A diversified customer base, requirement for customer deposits,
and payments in advance on workstation contracts minimise the
Group's exposure to customer credit risk. No single customer
contributes a material percentage of the Group's revenue. The
Group's policy is to provide against trade receivables when
specific debts are judged to be irrecoverable or where formal
recovery procedures have commenced. Trade debtors that are more
than three months overdue are considered to be in default and
therefore, under the simplified lifetime approach, are impaired in
full. This reflects the Group's experience of the likelihood of
recoverability of these trade receivables based on both historical
and forward-looking information. These provisions, which take into
consideration any customer deposits held, are reviewed on an
ongoing basis to assess changes in the likelihood of
recoverability.
The Group has assessed the other receivable balances for
expected credit losses, with no expected credit losses recognised
due to the nature and default history of these items.
The maximum exposure to credit risk for trade receivables at the
reporting date, not taking into account customer deposits held,
analysed by geographic region, is summarised below.
2021
GBPm 2022 Restated(1)
------------- ----- ------------
Americas 151 103
EMEA 192 135
Asia Pacific 28 22
Worka 24 2
------------- ----- ------------
395 262
------------- ----- ------------
1. Restated to reflect the impact of the separate disclosure of
the Worka segment.
All of the Group's trade receivables relate to customers
purchasing workplace solutions and associated services and no
individual customer has a material balance owing as a trade
receivable.
The ageing of trade receivables at 31 December was:
2022 2021
GBPm Gross Provision Gross Provision
--------------------------- ----- --------- ----- ---------
Not overdue 312 - 220 -
Past due 0 - 30 days 40 - 21 -
Past due 31 - 60 days 19 - 7 -
Past due 61 - 90 days 15 - 4 -
Past due more than 90 days 19 (10) 38 (28)
--------------------------- ----- --------- ----- ---------
405 (10) 290 (28)
--------------------------- ----- --------- ----- ---------
At 31 December 2022, the Group maintained a provision of GBP10m
for expected credit losses (2021: GBP28m) arising from trade
receivables. The Group had provided GBPnil (2021: GBP99m) in the
year, utilised GBP12m (2021: GBP98m) and released GBP6m (2021:
GBPnil). Customer deposits of GBP447m (2021: GBP385m) 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 GBP154m (2021: GBP71m). In addition to
cash and liquid investments, the Group had GBP173m (2021: GBP530m)
available and undrawn under its committed borrowings. The Directors
consider the Group has adequate liquidity to meet day-to-day
requirements.
The Group maintained a revolving credit facility provided by a
group of international banks. At 31 December 2022, the amount of
the facility is GBP750m (2021: GBP950m) and the final maturity was
extended in March 2020 to March 2025 with an option to extend until
2026.
The Group actively reviews its exposure to interest rate
movements. The issuance of the fixed rate convertible bond
significantly reduces the Group's exposure to an increase in
interest rates. The final interest rate swap taken to hedge against
the floating interest rate obligations of debt drawn under the
revolving credit facility matured in February 2021. This had a
nominal amount of GBP30m and a fixed rate of 1.2%.
Market risk
The Group is exposed to market risk primarily related to foreign
currency exchange rates, interest rates and the market value of our
investments in financial assets. These exposures are actively
managed by the Group Treasurer and Chief Financial Officer in
accordance with a written policy approved by the Board of
Directors. The Group does not use financial derivatives for trading
or speculative reasons.
Interest rate risk
The Group manages its exposure to interest rate risk through the
relative proportions of fixed rate debt and floating rate debt. Any
surplus cash balances are invested short-term, and at the end of
2022 no cash was invested for a period exceeding three months
(2021: GBPnil).
Foreign currency risk
The Group is exposed to foreign currency exchange rate
movements. The majority of day-to-day transactions of overseas
subsidiaries are carried out in local currency and the underlying
foreign exchange exposure is small. Transactional exposures do
arise in some countries where it is local market practice for a
proportion of the payables or receivables to be in other than the
functional currency of the affiliate. Intercompany charging,
funding and cash management activity may also lead to foreign
exchange exposures. It is the policy of the Group to seek to
minimise such transactional exposures through careful management of
non-local currency assets and liabilities, thereby minimising the
potential volatility in the income statement. Net investments in
IWG affiliates with a functional currency other than pounds
sterling are of a long-term nature and the Group does not normally
hedge such foreign currency translation exposures.
The principal exposures of the Group are to the US dollar and
the euro, with approximately 36% (2021: 35%) of the Group's revenue
being attributable to the US dollar and 23% (2021: 23%) to the
euro.
From time to time the Group uses short-term derivative financial
instruments to manage its transactional foreign exchange exposures
where these exposures cannot be eliminated through balancing the
underlying risks. No transactions of a speculative nature are
undertaken.
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:
2022
GBPm GBP EUR USD
--------------------------------------------- --- ---- ----
Trade and other receivables - 4 7
Trade and other payables (1) (11) (15)
--------------------------------------------- --- ---- ----
Net statement of financial position exposure (1) (7) (8)
--------------------------------------------- --- ---- ----
2021
GBPm GBP EUR USD
--------------------------------------------- --- --- ---
Trade and other receivables - 2 1
Trade and other payables (1) (8) -
---------------------------------------------- --- --- ---
Net statement of financial position exposure (1) (6) 1
---------------------------------------------- --- --- ---
Other market risks
The Group does not hold any equity securities for fair value
measurement under IFRS 9 and is therefore not subject to risks of
changes in equity prices in the income statement.
Sensitivity analysis
For the year ended 31 December 2022, it is estimated that a
general increase of one percentage point in interest rates would
have increased the Group's loss before tax by approximately GBP4m
(2021: GBP1m) 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 GBP2m for the year
ended 31 December 2022 (2021: GBP1m). 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 GBP3m for the year ended 31 December 2022 (2021:
GBPnil).
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 GBP5m for the year ended
31 December 2022 (2021: GBP8m). 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 GBP2m for the year ended 31 December 2021 (2021:
GBP4m).
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. In
2006, the Board approved the commencement of a progressive dividend
policy to enhance the total return to shareholders.
The Group's Chief Executive Officer, Mark Dixon, is a major
shareholder of the Company. Details of the Directors' shareholdings
can be found in the Directors' Remuneration report. In addition,
the Group operates various share option plans for key management
and other senior employees.
Treasury share transactions involving IWG plc shares between 1
January 2022 and 31 December 2022
During the year, 2,174,738 shares were purchased in the open
market and 1,442,606 treasury shares held by the Group were
utilised to satisfy the exercise of share awards by employees. As
at 31 December 2022, 50,564,853 treasury shares were held.
The Company declared and paid no interim dividend per share
during the year ended 31 December 2022 (2021: nil pence) and
proposed no final dividend per share (2021: nil pence per
share).
The Group's objective when managing capital (equity and
borrowings) is to safeguard the Group's ability to continue as a
going concern and to maintain an optimal capital structure to
reduce the cost of capital.
Effective interest rates
In respect of financial assets and financial liabilities, the
following table indicates their effective interest rates at the
balance sheet date and the periods in which they mature.
Except for lease liabilities and the convertible bond, the
undiscounted cash flow and fair values of these instruments is not
materially different from the carrying value.
As at 31 December 2022
Effective
interest Contractual
rate Carrying cash Less than More than
GBPm % value flow 1 year 1-2 years 2-5 years 5 years
---------------------------------- --------- -------- ----------- --------- --------- --------- ---------
Cash and cash equivalents 0.3% 161 161 161 - - -
Trade and other receivables(1) - 767 767 767 - - -
Net investment in finance
leases 5.6% 147 172 60 36 51 25
Other long-term receivables - 57 57 - 29 28 -
--------- -------- ----------- --------- --------- --------- ---------
Financial assets (2) 1,132 1,157 988 65 79 25
---------------------------------- --------- -------- ----------- --------- --------- --------- ---------
Non-derivative financial
liabilities(3):
Bank loans and corporate
borrowings 4.8% (266) (266) - - (266) -
Convertible bonds - debt
host 3.8% (318) (356) (2) (2) (352) -
Lease liabilities 4.1% (6,039) (8,235) (1,264) (1,203) (2,795) (2,973)
Other loans 0.0% (289) (289) (283) (3) (1) (2)
Deferred and contingent
consideration - (8) (8) (4) (2) (2) -
Trade and other payables - (1,198) (1,198) (1,198) - - -
Other long-term payables - (7) (7) - (7) - -
Derivative financial liabilities:
Convertible bonds - embedded
conversion option - - - - - - -
Financial liabilities (8,125) (10,359) (2,751) (1,217) (3,416) (2,975)
---------------------------------- --------- -------- ----------- --------- --------- --------- ---------
As at 31 December 2021
Effective
interest Contractual
rate Carrying cash Less than More than
GBPm % value flow 1 year 1-2 years 2-5 years 5 years
---------------------------------- --------- -------- ----------- --------- --------- --------- ---------
Cash and cash equivalents 0.0% 78 78 78 - - -
Trade and other receivables(1) - 600 600 600 - - -
Net investment in finance - - - - - - -
leases
Other long-term receivables - 50 50 - 25 25 -
Financial assets (2) 728 728 678 25 25 -
---------------------------------- --------- -------- ----------- --------- --------- --------- ---------
Non-derivative financial
liabilities(3):
Bank loans and corporate
borrowings 4.0% (137) (137) (1) - (136) -
Convertible bonds - debt
host 3.8% (308) (357) (2) (2) (353) -
Lease liabilities 3.3% (6,121) (7,869) (1,095) (1,069) (2,564) (3,141)
Other loans 0.0% (30) (30) (21) (5) (2) (2)
Deferred and contingent
consideration - (12) (12) (8) - (2) (2)
Trade and other payables - (915) (915) (915) - - -
Other long-term payables - (6) (6) - (6) - -
Derivative financial liabilities:
Convertible bonds - embedded
conversion option - (27) (27) - - (27) -
Financial liabilities (7,556) (9,353) (2,042) (1,082) (3,084) (3,145)
---------------------------------- --------- -------- ----------- --------- --------- --------- ---------
1. Excluding prepayments.
2. Financial assets are all held at amortised cost.
3. All financial instruments are classified as variable rate
instruments.
Fair value disclosures
The fair values together with the carrying amounts shown in the
balance sheet are as follows:
31 December 2022 Carrying amount Fair value
--------------------------------------- --------------------------
Cash, Other
loans financial Level Level Level
GBPm and receivables liabilities Total 1 2 3 Total
--------------------------------- ---------------- ------------ ------- ----- ----- ----- -----
Cash and cash equivalents 161 - 161 - - - -
Trade and other receivables(1) 767 - 767 - - - -
Other long-term receivables 57 - 57 - - - -
Derivative financial liabilities - - - - - - -
Bank loans and corporate
borrowings - (266) (266) - - - -
Convertible bonds - (318) (318) - - (318) (318)
Other loans - (289) (289) - - - -
Deferred and contingent
consideration - (8) (8) - - (8) (8)
Trade and other payables - (1,198) (1,198) - - - -
Other long-term payables - (7) (7) - - - -
--------------------------------- ---------------- ------------ ------- ----- ----- ----- -----
985 (2,086) (1,101) - - (326) (326)
--------------------------------- ---------------- ------------ ------- ----- ----- ----- -----
31 December 2021 Carrying amount Fair value
Cash, Other
loans financial Level Level Level
GBPm and receivables liabilities Total 1 2 3 Total
--------------------------------- ---------------- ------------ ----- ----- ----- ----- -----
Cash and cash equivalents 78 - 78 - - - -
Trade and other receivables(1) 600 - 600 - - - -
Other long-term receivables 50 - 50 - - - -
Derivative financial liabilities - (27) (27) - - (27) (27)
Bank loans and corporate
borrowings - (137) (137) - - - -
Convertible bonds - (308) (308) - - (308) (308)
Other loans - (30) (30) - - - -
Deferred and contingent
consideration - (12) (12) - - (12) (12)
Trade and other payables - (915) (915) - - - -
Other long-term payables - (6) (6) - - - -
--------------------------------- ---------------- ------------ ----- ----- ----- ----- -----
728 (1,435) (707) - - (347) (347)
--------------------------------- ---------------- ------------ ----- ----- ----- ----- -----
1. Excluding prepayments.
At the date of issue, the GBP350m was bifurcated at GBP298m and
GBP52m between corporate borrowings (debt) and a derivative
financial liability respectively. At 31 December 2022, the debt was
valued at its amortised cost, GBP318m (2021: GBP308m) and the
derivative liability at its fair value, GBPnil (2021: GBP27m).
During the years ended 31 December 2022 and 31 December 2021,
there were no transfers between levels for fair value measured
instruments.
Valuation techniques
When measuring the fair value of an asset or a liability, the
Group uses market observable data as far as possible. Fair values
are categorised into different levels in a fair value hierarchy
based on the inputs used in the valuation techniques as
follows:
-- Level 1: quoted prices in active markets for identical assets
or liabilities;
-- Level 2: inputs other than quoted prices included in level 1
that are observable for the asset or liability, either directly or
indirectly; and
-- Level 3: inputs for the asset or liability that are not based
on observable market data.
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, For cash and cash equivalents, receivables/payables
trade and other receivables/payables, with a remaining life of less than one year
customer deposits and investment and customer deposits, the book value approximates
loan receivables the fair value because of their short-term
nature.
-------------------------------------- ---------------------------------------------------
Loans, overdrafts and debt The fair value of bank loans, overdrafts and
element of other loans approximates the carrying value
convertible bonds because interest rates are at floating rates
where payments are reset to market rates at
intervals of less than one year.
-------------------------------------- ---------------------------------------------------
Contingent consideration, The fair values are based on a combination
foreign exchange contracts, of broker quotes, forward pricing, and swap
interest rate swaps and models. The fair value of the derivative element
derivative element of convertible of convertible bonds has been calculated with
bonds reference to unobservable credit spreads.
-------------------------------------- ---------------------------------------------------
Derivative financial instruments
Committed borrowings
2022 2021
GBPm Facility Available Facility Available
-------------------------- -------- --------- -------- ---------
Revolving credit facility 750 173 950 530
-------------------------- -------- --------- -------- ---------
Bridge facility 330 - - -
-------------------------- -------- --------- -------- ---------
The Group maintains a revolving credit facility provided by a
group of international banks. At 31 December 2022, the amount of
the facility remains GBP750m (2021: GBP950m) and the final maturity
was extended in March 2020 to March 2025 with an option to extend
until 2026. As at 31 December, GBP173m (2021: GBP530m) was
available and undrawn under this facility.
The GBP750m revolving credit facility is subject to financial
covenants which include EBITDA, minimum liquidity, interest cover
and net debt to EBITDA ratio. The Group continued to operate in
compliance with the covenants agreed with the lenders.
A GBP330m non-recourse bridge facility specifically to fund the
investment in The Instant Group, has been fully utilised. The
bridge facility, with an outstanding balance of GBP270m, has a
maturity in September 2023. This facility is secured and is subject
to interest cover and net debt to EBITDA covenants. The Instant
Group, combined with the IWG digital assets in Worka has reduced
its net debt to GBP176m, excluding GBP4m net lease liabilities, at
31 December 2022 and continues to be highly cash generative.
Convertible bonds
In December 2020 the Group issued a GBP350m convertible bond,
issued by IWG Group Holdings S.à r.l. and transferred in the year
to IWG International Holdings S.à r.l., a subsidiary of the Group
and guaranteed by IWG plc, which is due for repayment in 2027 if
not previously converted into shares. If the conversion option is
exercised by the holder of the option, the issuer has the choice to
settle by cash or equity shares in the Group. The holders of the
bond have the right to put the bonds back to the Group in 2025 at
par. The bond carries a fixed coupon of 0.5% per annum. The bond
liability is split between corporate borrowings (debt) and a
derivative financial liability. At the date of issue, the GBP350m
was bifurcated at GBP298m and GBP52m between corporate borrowings
(debt) and a derivative financial liability, respectively. At 31
December 2022, the debt was valued at its amortised cost, GBP318m
(2021: GBP308m) and the derivative liability at its fair value,
GBPnil (2021: GBP27m).
The derivative liability represents a level 3 instrument, which
has been valued with reference to the total convertible bond price
(a level 1 valuation) minus the level 3 valuation of the debt host.
A change of 10 basis points in the credit spread that is indirectly
used to value the derivative liability would have increased or
decreased profit or loss by GBP1m (2021: GBP1m).
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.
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
2022 2021
Weighted Weighted
Number average Number average
of exercise of exercise
share price share price
options per share options per share
--------------------------- ------------ ---------- ----------- ----------
At 1 January 42,827,743 195.65 42,926,841 184.38
Granted during the year 18,603,116 130.85 3,508,813 313.90
Lapsed during the year (7,829,580) 215.97 (2,566,253) 190.35
Exercised during the year (1,297,155) 118.47 (1,041,658) 142.60
--------------------------- ------------ ---------- ----------- ----------
Outstanding at 31 December 52,304,124 171.48 42,827,743 195.65
--------------------------- ------------ ---------- ----------- ----------
Exercisable at 31 December 12,273,441 213.23 11,694,349 198.51
--------------------------- ------------ ---------- ----------- ----------
Weighted
average
exercise At 31
Numbers price per Dec Exercisable Expiry
Date of grant granted share Lapsed Exercised 2022 from date
------------------ ----------- ---------- ------------ ------------ ----------- ---- ----------- ----------
13/06/2012 11,189,000 84.95 (3,944,407) (7,244,593) - (1) 13/06/2015 13/06/2022
12/06/2013 7,741,000 155.60 (4,306,000) (3,061,233) 373,767 (1) 12/06/2016 12/06/2023
20/05/2014 1,845,500 187.20 (1,658,500) (160,300) 26,700 (1) 20/05/2017 19/05/2024
05/11/2014 12,875,796 186.00 (9,366,754) (1,671,285) 1,837,757 (2) 05/11/2017 04/11/2024
19/05/2015 1,906,565 250.80 (1,862,565) - 44,000 (2) 19/05/2018 18/05/2025
22/12/2015 1,154,646 322.20 (395,186) (25,000) 734,460 (1) 22/12/2018 22/12/2025
29/06/2016 444,196 272.50 (389,150) (11,009) 44,037 (2) 29/06/2019 29/06/2026
28/09/2016 249,589 258.00 (214,313) (7,055) 28,221 (2) 28/09/2019 28/09/2026
01/03/2017 1,200,000 283.70 - - 1,200,000 (1) 01/03/2020 01/03/2027
21/12/2018 (Grant
1) 300,000 203.10 (75,000) - 225,000 (2) 21/12/2021 21/12/2028
28/12/2018 (Grant
2) 20,900,000 199.80 (8,841,662) (166,668) 11,891,670 (2) 28/12/2021 28/12/2028
15/05/2019 613,872 341.90 (595,834) - 18,038 (2) 15/05/2022 15/05/2029
13/09/2019 196,608 402.30 (156,608) - 40,000 (2) 13/09/2022 13/09/2029
19/12/2019 108,349 408.60 (81,428) - 26,921 (2) 19/12/2022 19/12/2029
02/04/2020 20,325,000 165.00 (4,020,834) - 16,304,166 (3) 02/04/2023 02/04/2030
15/05/2020 450,000 202.00 (300,000) - 150,000 (3) 15/05/2023 15/05/2030
05/08/2020 300,000 222.60 (300,000) - - (1) 05/08/2023 05/08/2030
09/09/2020 173,148 291.00 (155,964) - 17,184 (3) 09/09/2023 09/09/2030
26/03/2021 466,377 342.80 (58,345) - 408,032 (3) 26/03/2024 26/03/2031
11/05/2021 318,645 376.60 - - 318,645 (3) 11/05/2024 11/05/2031
28/06/2021 487,964 307.40 (487,964) - - (1) 28/06/2024 28/06/2031
12/08/2021 580,655 310.00 (161,292) - 419,363 (3) 12/08/2024 12/08/2031
10/11/2021 1,500,000 297.70 (1,500,000) - - (1) 10/11/2024 10/11/2031
09/12/2021 155,172 290.00 (155,172) - - (1) 09/12/2024 09/12/2031
09/03/2022 204,659 255.00 - - 204,659 (3) 09/03/2025 09/03/2032
10/05/2022 (Grant
1) 1,042,774 222.10 - - 1,042,774 (3) 10/05/2025 10/05/2032
17/05/2022 (Grant
2) 382,791 242.30 - - 382,791 (3) 17/05/2025 17/05/2032
14/10/2022 (Grant
1) 15,087,586 117.95 (406,953) - 14,680,633 (3) 14/10/2025 14/10/2032
17/10/2022 (Grant
2) 600,000 122.25 - - 600,000 (3) 17/10/2025 17/10/2032
01/12/2022 1,285,306 159.35 - - 1,285,306 (3) 01/12/2025 01/12/2032
------------------ ----------- ---------- ------------ ------------ ----------- ---- ----------- ----------
104,085,198 (39,433,931) (12,347,143) 52,304,124
------------------ ----------- ---------- ------------ ------------ ----------- ---- ----------- ----------
1. These options have fully vested as of 31 December 2022.
2. The performance targets for these options have been met and
they are subject to vesting schedules as described below.
3. These options are subject to performance targets and vesting
schedules as described below.
The vesting of share options is subject to an ongoing employment
condition. As at 31 December 2022, there were 12,273,441 (2021:
11,649,349) outstanding share options which had fully vested with
no further performance or holding period requirements and which had
a weighted average exercise price of GBP213.23 (2021:
GBP198.51).
Performance conditions for share options
June 2013 share options
The share options outstanding under this grant at 31 December
2022 reflect the options that have been awarded and vested, based
on achievement against the relevant performance targets and are now
exercisable with an expiry date of June 2023.
May 2014 share options
The share options outstanding under this grant at 31 December
2022 reflect the options that have been awarded and vested, based
on achievement against the relevant performance targets and are now
exercisable with an expiry date of May 2024.
November 2014 share options
The share options outstanding under this grant at 31 December
2022 reflect the options that have been awarded and vested, based
on achievement against the relevant performance targets and are now
exercisable with an expiry date of November 2024.
May 2015 share options
The share options outstanding under this grant at 31 December
2022 reflect the options that have been awarded based on
achievement against the relevant performance targets and are now
vesting ratably over a five-year period beginning May 2020 and
ending May 2024.
December 2015 share options
The share options outstanding under this grant at 31 December
2022 reflect the options that have been awarded and vested, based
on achievement against the relevant performance targets and are now
exercisable with an expiry date of December 2025.
June 2016 share options
The share options outstanding under this grant at 31 December
2022 reflect the options that have been awarded based on
achievement against the relevant performance targets and are now
vesting ratably over a five-year period beginning June 2019 and
ending June 2023.
September 2016 share options
The share options outstanding under this grant at 31 December
2022 reflect the options that have been awarded based on
achievement against the relevant performance targets and are now
vesting ratably over a five-year period beginning September 2019
and ending September 2023.
March 2017 share options
The share options outstanding under this grant at 31 December
2022 reflect the options that have been awarded and vested, based
on achievement against the relevant performance targets and are now
exercisable with an expiry date of March 2027.
December 2018 (Grant 1) share options
The share options outstanding under this grant at 31 December
2022 reflect the options that have been awarded based on
achievement against the relevant performance targets and are now
vesting ratably over a three-year period beginning December 2021
and ending December 2023.
December 2018 (Grant 2) share options
The share options outstanding under this grant at 31 December
2022 reflect the options that have been awarded based on
achievement against performance targets and are now subject to
vesting ratably over a three-year period beginning December 2021
and ending December 2023.
May 2019 share options
The share options outstanding under this grant at 31 December
2022 reflect the options that have been awarded based on
achievement against the relevant performance targets and are now
vesting ratably over a three-year period beginning May 2022 and
ending May 2024.
September 2019 share options
The share options outstanding under this grant at 31 December
2022 reflect the options that have been awarded based on
achievement against the relevant performance targets and are now
vesting ratably over a five-year period beginning September 2022
and ending September 2026.
December 2019 share options
The share options outstanding under this grant at 31 December
2022 reflect the options that have been awarded based on
achievement against the relevant performance targets and are now
vesting ratably over a five-year period beginning December 2022 and
ending December 2026.
April 2020 share options
The share options outstanding under this grant at 31 December
2022 are subject to performance targets with 50% of the options
subject to the achievement of a performance target based on the
Group ranking at or above the median for TSR performance relative
to a comparator group over a period of three years with a minimum
performance threshold of achieving a ranking at the median TSR or
above and the maximum award being given for exceeding the
comparator group median TSR performance by 10% or more. The
remaining 50% of outstanding options are subject to individual and
Group franchising targets for a three-year period with a minimum
performance threshold based on achieving a minimum level of
franchises and the maximum award based on achieving a stretch
target for franchises. Any shares awarded based on achievement of
these performance targets will then be subject to vesting ratably
over a three-year period beginning April 2023 and ending April
2025.
May 2020 share options
The share options outstanding under this grant at 31 December
2022 are subject to performance targets with 50% of the options
subject to the achievement of a performance target based on the
Group ranking at or above the median for TSR performance relative
to a comparator group over a period of three years with a minimum
performance threshold of achieving a ranking at the median TSR or
above and the maximum award being given for exceeding the
comparator group median TSR performance by 10% or more. The
remaining 50% of outstanding options are subject to individual and
Group franchising targets for a three-year period with a minimum
performance threshold based on achieving a minimum level of
franchises and the maximum award based on achieving a stretch
target for franchises. Any shares awarded based on achievement of
these performance targets will then be subject to vesting ratably
over a three-year period beginning May 2023 and ending May
2025.
September 2020 share options
The share options outstanding under this grant at 31 December
2022 are subject to performance targets with 50% of the options
subject to the achievement of a performance target based on the
Group ranking at or above the median for TSR performance relative
to a comparator group over a period of three years with a minimum
performance threshold of achieving a ranking at the median TSR or
above and the maximum award being given for exceeding the
comparator group median TSR performance by 10% or more. The
remaining 50% of outstanding options are subject to individual and
Group franchising targets for a three-year period with a minimum
performance threshold based on achieving a minimum level of
franchises and the maximum award based on achieving a stretch
target for franchises. Any shares awarded based on achievement of
these performance targets will then be subject to vesting ratably
over a three-year period beginning September 2023 and ending
September 2025.
March 2021 share options
The share options outstanding under this grant at 31 December
2022 are subject to Group performance targets based on the Group
ranking at or above the median for TSR performance relative to a
comparator group over a period of three years with a minimum
performance threshold of achieving a ranking at the median TSR or
above and the maximum award being given for exceeding the
comparator group median TSR performance by 10% or more. Any shares
awarded based on achievement of these performance targets will then
be subject to vesting ratably over a three-year period beginning
March 2024 and ending March 2026.
May 2021 share options
The share options outstanding under this grant at 31 December
2022 are subject to Group performance targets based on the Group
ranking at or above the median for TSR performance relative to a
comparator group over a period of three years with a minimum
performance threshold of achieving a ranking at the median TSR or
above and the maximum award being given for exceeding the
comparator group median TSR performance by 10% or more. Any shares
awarded based on achievement of these performance targets will then
be subject to vesting ratably over a three-year period beginning
May 2024 and ending May 2026.
August 2021 share options
The share options outstanding under this grant at 31 December
2022 are subject to Group performance targets based on the Group
ranking at or above the median for TSR performance relative to a
comparator group over a period of three years with a minimum
performance threshold of achieving a ranking at the median TSR or
above and the maximum award being given for exceeding the
comparator group median TSR performance by 10% or more. Any shares
awarded based on achievement of these performance targets will then
be subject to vesting ratably over a three-year period beginning
August 2024 and ending August 2026.
March 2022 share options
The share options outstanding under this grant at 31 December
2022 are subject to Group performance targets based on the Group
ranking at or above the median for TSR performance relative to a
comparator group over a period of three years with a minimum
performance threshold of achieving a ranking at the median TSR or
above and the maximum award being given for exceeding the
comparator group median TSR performance by 10% or more. Any shares
awarded based on achievement of these performance targets will then
be subject to vesting ratably over a three-year period beginning
March 2025 and ending March 2027.
May 2022 (Grant 1) share options
The share options outstanding under this grant at 31 December
2022 are subject to Group performance targets based on the Group
ranking at or above the median for TSR performance relative to a
comparator group over a period of three years with a minimum
performance threshold of achieving a ranking at the median TSR or
above and the maximum award being given for exceeding the
comparator group median TSR performance by 10% or more. Any shares
awarded based on achievement of these performance targets will then
be subject to vesting ratably over a three-year period beginning
May 2025 and ending May 2027.
May 2022 (Grant 2) share options
The share options outstanding under this grant at 31 December
2022 are subject to Group performance targets based on the Group
ranking at or above the median for TSR performance relative to a
comparator group over a period of three years with a minimum
performance threshold of achieving a ranking at the median TSR or
above and the maximum award being given for exceeding the
comparator group median TSR performance by 10% or more. Any shares
awarded based on achievement of these performance targets will then
be subject to vesting ratably over a three-year period beginning
May 2025 and ending May 2027.
October 2022 (Grant 1) share options
The share options outstanding under this grant at 31 December
2022 are subject to Group performance targets based on the Group
ranking at or above the median for TSR performance relative to a
comparator group over a period of three years with a minimum
performance threshold of achieving a ranking at the median TSR or
above and the maximum award being given for exceeding the
comparator group median TSR performance by 10% or more. Any shares
awarded based on achievement of these performance targets will then
be subject to vesting ratably over a three-year period beginning
October 2025 and ending October 2027.
October 2022 (Grant 2) share options
The share options outstanding under this grant at 31 December
2022 are subject to Group performance targets based on the Group
ranking at or above the median for TSR performance relative to a
comparator group over a period of three years with a minimum
performance threshold of achieving a ranking at the median TSR or
above and the maximum award being given for exceeding the
comparator group median TSR performance by 10% or more. Any shares
awarded based on achievement of these performance targets will then
be subject to vesting ratably over a three-year period beginning
October 2025 and ending October 2027.
December 2022 share options
The share options outstanding under this grant at 31 December
2022 are subject to Group performance targets based on the Group
ranking at or above the median for TSR performance relative to a
comparator group over a period of three years with a minimum
performance threshold of achieving a ranking at the median TSR or
above and the maximum award being given for exceeding the
comparator group median TSR performance by 10% or more. Any shares
awarded based on achievement of these performance targets will then
be subject to vesting ratably over a three-year period beginning
December 2025 and ending December 2027.
Measurement of fair values
The fair value of the rights granted through the employee share
purchase plan was measured based on the Monte Carlo simulation or
the Black-Scholes formula. The expected volatility is based on the
historic volatility adjusted for any abnormal movement in share
prices.
The inputs to the model are as follows:
October October May May
December 2022 2022 2022 2022 March
2022 (Grant 2) (Grant 1) (Grant 2) (Grant 1) 2022
--------------------- ---------- ---------- ---------- ---------- ---------- ----------
Share price on grant
date 159.35p 122.25p 117.95p 242.30p 222.10p 255.00p
Exercise price 159.35p 122.25p 117.95p 242.30p 222.10p 255.00p
Expected volatility 54.01% - 53.34% - 53.30% - 53.48% - 54.59% - 54.33% -
59.92% 58.16% 58.05% 56.71% 56.66% 57.32%
Option life 3-5 years 3-5 years 3-5 years 3-5 years 3-5 years 3-5 years
Expected dividend 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Fair value of option 106.53p 81.12p 78.24p 153.52p 142.70p 162.79p
at time of grant - 113.10p - - - 158.97p - 145.61p - 168.44p
85.29p 82.21p
Risk-free interest 3.22% - 3.22% - 3.22% - 1.42% - 1.42% - 1.41% -
rate 3.24% 3.24% 3.24% 1.60% 1.60% 1.49%
--------------------- ---------- ---------- ---------- ---------- ---------- ----------
August May March September May April December September
2021 2021 2021 2020 2020 2020 2019 2019
--------------------- ---------- ---------- --------- ---------- --------- --------- ---------- ----------
Share price on grant
date 310.00p 376.60p 342.80p 291.00p 202.00p 165.00p 408.60p 402.30p
Exercise price 310.00p 376.60p 342.80p 291.00p 202.00p 165.00p 408.60p 402.30p
53.67% 53.78% 53.64%
- - - 51.81% 50.15% 49.02% 36.24% 36.33%
Expected volatility 57.07% 59.19% 59.13% - 62.96% - 61.06% - 59.29% - 44.72% - 44.83%
Option life 3-5 years 3-5 years 3-5 years 3-5 years 3-5 years 3-5 years 3-7 years 3-7 years
Expected dividend 1.12% 0.96% 1.00% 2.39% 3.44% 4.21% 1.59% 1.62%
183.02p
-
Fair value of option 163.92p 202.75p 196.95 122.93p 71.39p 50.79p 141.77p 137.79p
at time of grant - 171.67p - 217.81p p - 146.68p - 86.80p - 62.29p - 172.84p - 169.19p
0.37% 0.16% 0.15%
Risk-free interest - - - (0.08%) 0.00% 0.00% 0.57% 0.48%
rate 0.49% 0.34% 0.33% - (0.04%) - 0.06% - 0.06% - 0.65% - 0.50%
--------------------- ---------- ---------- --------- ---------- --------- --------- ---------- ----------
December December
May 2018 2018 March September June December May
(Grant (Grant
2019 2) 1) 2017 2016 2016 2015 2015
--------------------- ---------- --------- --------- --------- --------- --------- --------- ---------
Share price on grant
date 341.90p 199.80p 203.10p 283.70p 258.00p 272.50p 322.20p 250.80p
Exercise price 341.90p 199.80p 203.10p 283.70p 258.00p 272.50p 322.20p 250.80p
37.63% 27.42% 27.45% 27.71% 24.80% 27.23%
38.84% 37.66% - - - - - -
Expected volatility - 45.75% - 44.35% 44.25% 29.87% 32.35% 34.81% 37.08% 30.12%
Option life 3-5 years 3-5 years 3-5 years 3-5 years 3-7 years 3-7 years 3-7 years 3-7 years
Expected dividend 1.85% 2.95% 2.90% 1.80% 1.80% 1.71% 1.40% 1.59%
39.36p 44.51p 40.96p 44.28p 29.76p 42.35p
Fair value of option 120.77p 58.77% - - - - - -
at time of grant - 141.08p - 69.33% 46.42p 76.88p 67.89p 78.68p 90.61p 69.12p
0.73% 0.23% 0.09% 0.14% 0.14% 0.81%
Risk-free interest 0.52% 0.87% - - - - - -
rate - 0.60p - 1.01% 0.88% 0.56% 0.38% 0.39% 0.21% 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
2022 2021
Number Number
of awards of awards
----------------------------------- ------------ -----------
At 1 January 3,160,617 3,237,768
PSP awards granted during the year 1,289,217 959,015
Lapsed during the year (1,324,583) (1,036,166)
Exercised during the year (583,039) -
----------------------------------- ------------ -----------
Outstanding at 31 December 2,542,212 3,160,617
----------------------------------- ------------ -----------
Exercisable at 31 December - -
----------------------------------- ------------ -----------
There were 583,039 shares which were exercised during the year
ended 31 December 2022 (2021: nil). The weighted average share
price at the date of exercise for share awards exercised during the
year ended 31 December 2022 was 256.00p (2021: nil pence).
At 31
Date of Numbers Dec Release
Plan grant granted Lapsed Exercised 2022 date
----- ----------- ---------- ------------ ---------- ---------- ----------
PSP 01/03/2017 1,095,406 (512,367) (583,039) - 01/03/2022
PSP 07/03/2018 1,278,350 (1,051,546) - 226,804 07/03/2023
PSP 07/03/2019 1,058,578 (848,474) - 210,104 07/03/2024
PSP 04/03/2020 915,739 (306,407) - 609,332 04/03/2025
PSP 26/03/2021 959,015 (320,887) - 638,128 26/03/2026
PSP 09/03/2022 1,289,217 (431,373) - 857,844 09/03/2027
----- ----------- ---------- ------------ ---------- ---------- ----------
6,596,305 (3,471,054) (583,039) 2,542,212
----------------- ---------- ------------ ---------- ---------- ----------
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 March March March March
2022 2021 2020 2019 2018
Share price on grant date 255.00p 346.40p 356.50p 244.90p 240.90p
Exercise price nil nil nil nil nil
Number of simulations 250,000 250,000 250,000 250,000 250,000
Number of companies 32 32 32 32 32
Award life 5 years 5 years 5 years 5 years 5 years
Expected dividend 0.00% 1.00% 1.95% 2.57% 2.37%
167.75p 206.19p- 292.36p- 124.38p 124.92p
Fair value of award at time of grant - 254.14p 312.37p 192.98p - 188.43p - 189.26p
Risk-free interest rate 1.45% 0.33% 0.06% 0.79% 1.21%
------------------------------------- ---------- -------- -------- ---------- ----------
It is recognised by the Remuneration Committee that the EPS
targets represent a highly challenging goal and consequently, in
determining whether they have been met, the Committee will exercise
its discretion. The overall aim is that the relevant EPS targets
must have been met on a run-rate or underlying basis. As such, an
adjusted measure of EPS will be calculated to assess the underlying
performance of the business.
2018 PSP investment grant
The total number of shares awarded was subject to three
different performance conditions, with one third subject to defined
earnings per share (EPS) conditions, one third subject to relative
total shareholder return (TSR) conditions and one third subject to
return on investment (ROI) conditions. These conditions are
measured over three financial years commencing on 1 January
2018.
Based on results as of 31 December 2020, the relative TSR target
of exceeding the comparator group median TSR by more than 10% was
achieved in full, resulting in the vesting of 226,804 shares
subject to a holding period ending March 2022. The performance
targets for EPS and ROI were not met and the share awards pursuant
to these targets lapsed.
2019 PSP investment grant
The total number of shares awarded is subject to three different
performance conditions. These conditions are measured over three
financial years commencing on 1 January 2019. Thus, conditional on
meeting these performance targets, these shares will vest in March
2024. One third is subject to defined earnings per share (EPS)
conditions, one third is subject to relative total shareholder
return (TSR) conditions and one third is subject to return on
investment (ROI) conditions.
Based on results as of 31 December 2021, the relative TSR target
of exceeding the comparator group median TSR by less than 10% was
achieved, resulting in the vesting of 118,055 shares subject to a
holding period ending March 2023. The performance targets for EPS
and ROI were not met and the share awards pursuant to these targets
lapsed.
2020 PSP investment grant
The total number of shares awarded is subject to relative total
shareholder return (TSR) conditions, measured over three financial
years commencing on 1 January 2020. Thus, conditional on meeting
these performance targets, these shares will vest in December
2025.
The relative TSR condition is based on the performance of the
Group's TSR growth against the median TSR growth of the comparator
group as follows:
% of the award that vests
------------------------------------ --------------------------------
Exceeds the median by 10% or more 100%
On a straight-line basis between
Exceeds the median by less than 10% 25% and 100%
Ranked at median 25%
Ranked below the median 0%
------------------------------------ --------------------------------
2021 PSP investment grant
The total number of shares awarded is subject to relative total
shareholder return (TSR) conditions, measured over three financial
years commencing on 1 January 2021. Thus, conditional on meeting
these performance targets, these shares will vest in March
2026.
The 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:
% of the award that vests
------------------------------------ --------------------------------
Exceeds the median by 10% or more 100%
On a straight-line basis between
Exceeds the median by less than 10% 25% and 100%
Ranked at median 25%
Ranked below the median 0%
------------------------------------ --------------------------------
2022 PSP investment grant
The total number of shares awarded is subject to relative total
shareholder return (TSR) conditions, measured over three financial
years commencing on 1 January 2022. Thus, conditional on meeting
these performance targets, these shares will vest in March
2027.
The relative TSR condition is based on the performance of the
Group's TSR growth against the median TSR growth of the comparator
group as follows:
% of the award that vests
------------------------------------ --------------------------------
Exceeds the median by 10% or more 100%
On a straight-line basis between
Exceeds the median by less than 10% 25% and 100%
Ranked at median 25%
Ranked below the median 0%
------------------------------------ --------------------------------
Plan 3: Deferred Share Bonus Plan
The Deferred Share Bonus Plan, established in 2016, enables the
Board to award options to selected employees on a discretionary
basis. The awards are conditional on the ongoing employment of the
related employees for a specified period of time. Once this
condition is satisfied, those awards that are eligible will vest
three years after the date of grant.
Reconciliation of outstanding share options
2022 2021
Number Number
of awards of awards
------------------------------------ ---------- ----------
At 1 January 376,291 376,291
DSBP awards granted during the year 683,166 -
Lapsed during the year - -
Exercised during the year (112,014) -
------------------------------------ ---------- ----------
Outstanding at 31 December 947,443 376,291
------------------------------------ ---------- ----------
Exercisable at 31 December - -
------------------------------------ ---------- ----------
The weighted average share price at the date of exercise for
share awards exercised during the year ended 31 December 2022 was
256.00p (2021: nil pence).
At 31
Date of Numbers Dec Release
Plan grant granted Lapsed Exercised 2022 date
----- ----------- ---------- ------ ---------- -------- ----------
DSBP 07/03/2019 112,014 - (112,014) - 07/03/2022
DSBP 04/03/2020 264,277 - - 264,277 04/03/2023
DSBP 09/03/2022 171,415 - - 171,415 09/03/2025
DSBP 02/11/2022 511,751 - - 511,751 02/11/2027
--------
1,059,457 - (112,014) 947,443
----------------- ---------- ------ ---------- -------- ----------
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:
November March March March
2022 2022 2020 2019
------------------------------------- -------- ------- ------- -------
Share price on grant date 131.90p 255.00p 356.50p 244.90p
Exercise price nil nil nil nil
Number of simulations - - - -
Number of companies - - - -
Award life 5 years 3 years 3 years 3 years
Expected dividend 0.00% 0.00% 1.95% 2.57%
Fair value of award at time of grant 131.18p 254.14p 292.36p 188.42p
Risk-free interest rate 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:
2022 2021
GBPm Switzerland Philippines Total Switzerland Philippines Total
----------------------------- ----------- ----------- ----- ----------- ----------- -----
Fair value of plan assets 6 - 6 5 - 5
Present value of obligations (7) (1) (8) (6) (1) (7)
----------------------------- ----------- ----------- ----- ----------- ----------- -----
Net funded obligations (1) (1) (2) (1) (1) (2)
----------------------------- ----------- ----------- ----- ----------- ----------- -----
28. Acquisitions
Current period acquisitions
The Instant Group
On 8 March 2022, the Group completed the investment in The
Instant Group, acquiring 100% of the equity voting rights, for a
total consideration of GBP324m. The primary reason for the
investment was to combine The Instant Group with the IWG digital
assets, to form Worka.
In a separate transaction on 8 March 2022, the Group sold a 15%
non-controlling equity interest in a subsidiary of the Worka
structure, for a consideration of GBP53m.
Final
fair Final
value fair
GBPm Book value adjustments value
------------------------------------- ---------- ------------ ------
Net assets acquired
Intangible assets 2 139 141
Right-of-use assets 3 - 3
Other property, plant and equipment 15 - 15
Net investment in finance leases 177 - 177
Cash 25 - 25
Other current and non-current assets 64 - 64
Lease liabilities (172) - (172)
Provisions due within one year (7) - (7)
Current liabilities (111) 6 (105)
(4) 145 141
Goodwill arising on acquisition 183
------------------------------------- ---------- ------------ ------
Total consideration 324
Cash flow on acquisition
Cash paid 324
Less: cash acquired (25)
------------------------------------- ---------- ------------ ------
Net cash outflow 299
------------------------------------- ---------- ------------ ------
The goodwill arising on this acquisition reflects the future
benefits anticipated by the IWG Group.
If the above acquisition had occurred on 1 January 2022, the
revenue and net retained loss arising from this acquisition would
have been GBP121m and GBP10m respectively. In the year, this
acquisition contributed revenue of GBP104m and net retained loss of
GBP11m.
The was no deferred or contingent consideration arising on this
acquisition.
The acquisition costs associated with this transaction were
GBP11m, recorded within administration expenses in the consolidated
income statement.
Other immaterial acquisitions
During the year ended 31 December 2022 the Group made various
other individually immaterial acquisitions for a total
consideration of GBP5m.
Provisional
fair Provisional
value fair
GBPm Book value adjustments value
------------------------------------ ---------- ------------ -----------
Net assets acquired
Right-of-use assets 1 - 1
Other property, plant and equipment 1 - 1
Lease liabilities (1) - (1)
Current liabilities (1) - (1)
- - -
Goodwill arising on acquisition 5
------------------------------------ ---------- ------------ -----------
Total consideration 5
Less: deferred consideration (1)
Less: contingent consideration (1)
Cash flow on acquisition
Cash paid 3
Net cash outflow 3
------------------------------------ ---------- ------------ -----------
The goodwill arising on these other immaterial 2022 acquisitions
reflects the anticipated future benefits IWG can obtain from
operating the businesses more efficiently, primarily through
increasing occupancy and the addition of value-adding products and
services. Of the above goodwill, GBP5m is expected to be deductible
for tax purposes.
If the above acquisitions had occurred on 1 January 2022, the
revenue and net retained profit arising from these acquisitions
would have been GBP2m and GBPnil respectively. In the year, the
acquisitions contributed revenue of GBP1m and net retained profit
of GBPnil.
Deferred consideration of GBP1m arose on the acquisitions made
in the year and is held on the Group's balance sheet at
31 December 2022. In addition, GBP5m deferred consideration
relating to prior period acquisitions is held on the Group's
balance sheet at 31 December 2022.
Contingent consideration of GBP1m arose on the 2022
acquisitions. Contingent consideration of GBP5m was paid and GBP1m
released, during the current year, with respect to milestones,
achieved or not achieved, on previous acquisitions. In addition,
GBP1m contingent consideration is held on the Group's balance sheet
at 31 December 2022.
The acquisition costs associated with these transactions were
GBPnil, recorded within administration expenses in the consolidated
income statement.
For acquisitions completed in 2022, except for The Instant
Group, the fair value of assets acquired has only been
provisionally assessed, pending completion of a fair value
assessment which has not yet been completed. The main changes in
the provisional fair values expected are primarily for customer
relationships and property, plant and equipment. The final
assessment of the fair value of these assets will be made within 12
months of the acquisition dates and any adjustments reported in
future reports.
Goodwill of GBP188m arose relating to 2022 acquisitions.
Prior period acquisitions
During the year ended 31 December 2021 the Group made
acquisitions for a total consideration of GBP30m.
Provisional Final
fair fair Final
value value fair
GBPm Book value adjustments adjustments value
--------------------------------------------- ---------- ------------ ------------ ------
Net assets acquired
Intangible assets 1 - - 1
Right-of-use assets 78 - - 78
Other property, plant and equipment 25 - - 25
Cash 32 - - 32
Other current and non-current assets 13 - - 13
Lease liabilities (81) - - (81)
Current liabilities (27) - - (27)
Provisions due after one year (4) - - (4)
Non-current liabilities (7) - - (7)
--------------------------------------------- ---------- ------------ ------------ ------
30 - - 30
NCI based on their proportionate interest
in the recognised amounts of the assets and
liabilities of The Wing (15)
Goodwill arising on acquisition 16
Negative goodwill arising on acquisition (1)
--------------------------------------------- ---------- ------------ ------------ ------
Total consideration 30
Less: deferred consideration (5)
Less: contingent consideration (4)
Cash flow on acquisition
Cash paid 21
Less: cash acquired (32)
--------------------------------------------- ---------- ------------ ------------ ------
Net cash inflow (11)
--------------------------------------------- ---------- ------------ ------------ ------
Goodwill of GBP16m arose relating to 2021 acquisitions. Goodwill
arising on acquisitions in 2021 includes negative goodwill of
GBP1m, recognised as part of the selling, general and
administration expenses in the consolidated income statement.
The goodwill arising on the 2021 acquisitions reflects the
anticipated future benefits IWG can obtain from operating the
businesses more efficiently, primarily through increasing occupancy
and the addition of value-adding products and services. Of the
above goodwill, GBP16m is expected to be deductible for tax
purposes.
Deferred consideration of GBP5m arose on the acquisitions made
in the year and was held on the Group's balance sheet at 31
December 2021.
Contingent consideration of GBP4m arose on the 2021
acquisitions. No contingent consideration was paid during the
current year with respect to milestones achieved on previous
acquisitions.
The acquisition costs associated with these transactions were
GBP1m, recorded within administration expenses in the consolidated
income statement.
The prior year comparative information has not been restated due
to the immaterial nature of the final fair value adjustments
recognised in 2022.
29. Capital commitments
GBPm 2022 2021
------------------------------------------------------------- ----- -----
Contracts placed for future capital expenditure not provided
for in the financial statements 76 89
------------------------------------------------------------- ----- -----
These commitments are principally in respect of centre fit-out
obligations. There are GBP1m (2021: GBP1m) of capital commitments
in respect of joint ventures and no significant lease commitments
for leases not commenced at 31 December 2022.
30. Contingent assets and liabilities
The Group has bank guarantees and letters of credit held with
certain banks, predominantly in support of leasehold contracts with
a variety of landlords, amounting to GBP337m (2021: GBP309m). 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.
Amounts Amounts
Management owed owed
fees received by to
from related related related
GBPm parties party party
--------------- -------------- -------- --------
2022
Joint ventures 6 51 49
--------------- -------------- -------- --------
2021
Joint ventures 4 20 20
--------------- -------------- -------- --------
As at 31 December 2022, none of the amounts due to the Group
have been provided for as the expected credit losses arising on the
balances are considered immaterial (2021: GBPnil). 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:
GBPm 2022 2021
------------------------------- ----- -----
Short-term employee benefits 6 4
Retirement benefit obligations - -
Share-based payments 3 2
------------------------------- ----- -----
9 6
------------------------------- ----- -----
Share-based payments included in the table above reflect the
accounting charge in the year. The full fair value of awards
granted in the year was GBP6m (2021: GBP6m). These awards are
subject to performance conditions and vest over three, four and
five years from the award date (note 26).
Transactions with related parties
During the year ended 31 December 2022 the Group acquired goods
and services from a company indirectly controlled by a Director of
the Company amounting to an insignificant amount of GBP19,015
(2021: GBP27,319). There was a GBP5,217 balance outstanding at the
year-end (2021: GBP6,751).
All transactions with these related parties are priced on an
arm's length basis and are to be settled in cash. None of the
balances are secured.
32. Principal Group companies
The Group's principal subsidiary undertakings at 31 December
2022, their principal activities and countries of incorporation are
set out below:
% of ordinary % of ordinary
shares shares
Country and votes Country and votes
Name of undertaking of incorporation held Name of undertaking of incorporation held
----------------------- ------------------ ------------- ---------------------- ----------------- -------------
Trading companies Management companies
Regus Australia
Management RGN Management Limited
Pty Ltd Australia 100 Partnership Canada 100
Pathway IP II S.à
Regus Belgium SA Belgium 100 r.l. Switzerland 100
Franchise
International
Regus do Brasil Ltda Brazil 100 GmbH Switzerland 100
Regus Business Service Regus Service Centre
(Shenzen) Ltd China 100 Philippines B.V. Philippines 100
Regus Global
Management
Regus Management ApS Denmark 100 Centre SA Switzerland 100
Regus Management
(Finland) Regus Group Services
Oy Finland 100 Ltd United Kingdom 100
IW Group Services
RBC Deutschland GmbH Germany 100 (UK) Ltd United Kingdom 100
Regus CME Ireland Regus Management
Limited Ireland 100 Group LLC United States 100
Regus Business Centres
Limited Israel 100
Regus Business Centres Italy 100 Holding and finance
Italia S.r.l. companies
Regus Management IWG Enterprise
Malaysia S.à
Sdn Bhd Malaysia 100 r.l. Switzerland 100
Regus Management de IWG Group Holdings
Mexico, SA de CV Mexico 100 S.à r.l. Luxembourg 100
IWG International
Regus New Zealand Holdings S.à
Management Ltd New Zealand 100 r.l. Luxembourg 100
Genesis Finance
Regus Business Centre S.à
Norge AS Norway 100 r.l. Switzerland 100
Pathway Finance
IWG Management Sp S.à
z.o.o. Poland 100 r.l. Switzerland 100
Regus Business Centre, Pathway Finance EUR
Lda Portugal 100 2 S.à r.l. Switzerland 100
Regus Management
Singapore Pathway Finance USD
Pte Ltd Singapore 100 2 S.à r.l. Switzerland 100
Regus Management
España
SL Spain 100 Regus Group Limited United Kingdom 100
Global Platform
IWG Management (Sweden) Services
AB Sweden 100 GmbH United Kingdom 100
Avanta Managed Offices United
Ltd Kingdom 100 Ibiza Holdings Limited Jersey 85
Basepoint Centres United
Limited Kingdom 100 Ibiza Finance Limited Jersey 100
United
Green (Topco) Limited Kingdom 85 Regus Corporation United States 100
HQ Global Workplaces United
LLC States 100
RGN National Business United
Centre LLC States 100
United
RB Centres LLC States 100
Regus Management Group United
LLC States 100
----------------------- ------------------ ------------- ---------------------- ----------------- -------------
33. Key judgemental and estimates areas adopted in preparing
these accounts
The preparation of consolidated financial statements in
accordance with IFRS requires management to make certain judgements
and assumptions that affect reported amounts and related
disclosures.
Key judgements
Adjusting items
Adjusting items are separately disclosed by the Group so as to
provide readers with helpful additional information on the
performance of the business across periods. Items arising
specifically from the impact of the COVID-19 pandemic, geopolitical
circumstances in the Ukraine and related sanctions against Russia,
have been deemed to meet the definition of adjusting items. Each of
these items is considered to be significant in nature and/or size
and is also consistent with items treated as adjusting in prior
periods in which significant non-recurring transactions occurred.
The exclusion of these items is consistent with how the business
performance is planned by, and reported to, the Board and the
Operating Committee. The profit before tax and adjusting items
measure is not a recognised profit measure under IFRS and may not
be directly comparable with adjusted profit measures used by other
companies. The classification of adjusting items requires
significant management judgement after considering the nature and
intentions of a transaction or provision.
Tax assets and liabilities
The Group is subject to income taxes in numerous jurisdictions.
Significant judgement is required in determining the worldwide
provision for income taxes. Where appropriate, the Group assesses
the potential risk of future tax liabilities arising from the
operation of its business in multiple tax jurisdictions and
includes provisions within tax liabilities for those risks that can
be estimated reliably. Changes in existing tax laws can affect
large international groups such as IWG and could result in
additional tax liabilities over and above those already provided
for.
Determining the lease term of contracts with renewal and
termination options
IFRS 16 defines the lease term as the non-cancellable period of
a lease together with the options to extend or terminate a lease,
if the lessee were reasonably certain to exercise that option.
Where a lease includes the option for the Group to extend the lease
term, the Group makes a judgement as to whether it is reasonably
certain that the option will be taken. This will take into account
the length of time remaining before the option is exercisable,
macro-economic environment, socio-political environment and other
lease specific factors.
The lease term represents the period from lease inception up to
either:
-- The earliest point at which the lease could be broken, where
break clauses exist;
-- The point at which the lease could be extended, but no
further, where extension options exist; or
-- To the end of the contractual lease term in all other
cases.
Key estimates
Impairment of intangibles and goodwill
We evaluate the fair value of goodwill and other indefinite life
intangible assets to assess potential impairments on an annual
basis, or during the year if an event or other circumstance
indicates that we may not be able to recover the carrying amount of
the asset. We evaluate the carrying value of goodwill based on our
CGUs aggregated at a country level and make that determination
based upon future cash flow projections which assume certain growth
projections which may or may not occur. We record an impairment
loss for goodwill when the carrying value of the asset is less than
its estimated recoverable amount. Further details of the
methodology and assumptions applied to the impairment review in the
year ended 31 December 2022, including the sensitivity to changes
in those assumptions, can be found in note 13.
Deferred tax assets
We base our estimate of deferred tax assets and liabilities on
current tax laws and rates and, where relevant, the Group's
three-year business plans and other expectations about future
outcomes. Changes in existing laws and rates, and their related
interpretations, and future business results may affect the amount
of deferred tax liabilities or the valuation of deferred tax assets
over time. Our accounting for deferred tax consequences represents
management's best estimate of future events that can be
appropriately reflected in the accounting estimates. It is Group
policy to recognise a deferred tax asset to the extent that it is
probable that future taxable profits will be available against
which the assets can be used. Significant changes to the Group's
forecasts and other expectations of future outcomes could
significantly impact the recognition of deferred tax assets.
Given the significant level of corporate developments in the
Group and the number of legal entities and countries in which the
Group operates, the determination of the period of time
representing foreseeable future requires judgement to be exercised.
Management has determined the most suitable period to be the
three-year period corresponding to the Group's business forecasting
processes. Any changes in management's approach to this assessment
could significantly impact the recognition of deferred tax
assets.
Impairment of property, plant and equipment (including
right-of-use assets)
We evaluate the potential impairment of property, plant and
equipment at a centre (CGU) level where there are indicators of
impairment at the balance sheet date. In the assessment of
value-in-use, key judgemental areas in determining future cash flow
projections include: an assessment of the location of the centre;
the local economic situation; competition; local environmental
factors; the management of the centre; and future changes in
occupancy, revenue and costs of the centre.
While centre costs remain relatively stable, revenue is a
function of the expected levels of occupancy and the corresponding
pricing achieved. In assessing any impairment, the value-in-use
calculated is therefore assessed for sensitivity to changes in both
occupancy and pricing, to determine the extent to which these
estimates need to change before an impairment arises. On a similar
basis, overall performance is also a function of the discount rate
applied (which is based on the capital asset pricing model). The
value-in-use calculation is therefore also assessed for sensitivity
to changes in this discount rate, to determine the extent to which
this discount rate needs to change before an impairment arises.
We evaluate the potential impairment of property, plant and
equipment at a centre (CGU) level where there are indicators of
impairment at the balance sheet date and for centres which have
been identified as part of the Group's rationalisation programme.
The key area of estimation involved is in determining the
recoverable amount of the rationalised centres, over what period
the rationalisation will take place, and the level of moveable
assets that will be utilised in other centres.
The Group has considered the impact of COVID-19 with respect to
all judgements and estimates it makes in the application of its
accounting policies. This included assessing the impairment of
property, plant and equipment, goodwill and the recoverability of
trade receivables. The result of these reviews is detailed in note
10.
Estimating the incremental borrowing rates on leases
The determination of applicable incremental borrowing rates on
leases at the commencement of lease contracts also requires
judgement. The Group determines its incremental borrowing rates by
obtaining interest rates from various external financing sources
and makes certain adjustments to reflect the terms of the lease.
The Group considers the relevant market interest rate, based on the
weighted average of the timing of the lease payments under the
lease obligation. In addition, a spread over the market rate is
applied based on the cost of funds to the Group, plus a spread that
represents the risk differential of the lessee entity compared to
the Group funding cost.
Valuation of embedded conversion option (Level 3) in convertible
bonds
The embedded conversion option relating to the Group's issue of
convertible bonds is measured at mark-to-market with reference to
the traded price of the convertible bonds as well as external
valuation inputs based on credit comparables and bond spreads
across competitors and wider markets.
Fair value accounting for business combinations
For each business combination, we assess the fair values of
assets and liabilities acquired. Where there is not an active
market in the category of the non-current assets typically acquired
with a business centre or where the books and records of the
acquired company do not provide sufficient information to derive an
accurate valuation, management calculates an estimated fair value
based on available information and experience.
The main categories of acquired non-current assets where
management's judgement has an impact on the amounts recorded
include tangible fixed assets, customer list intangibles and the
fair market value of leasehold assets and liabilities. For
significant business combinations management also obtains
third-party valuations to provide additional guidance as to the
appropriate valuation to be included in the financial
statements.
34. Subsequent events
In December 2022, TKP Corporation sold its Japanese operations
to Mitsubishi Estate Co. which entered into a new 10-year master
franchise agreement with the Group. The transaction received
regulatory approval in February 2023, when the transaction became
effective, and the Group received and recognised a settlement fee
of GBP18m post year-end.
Concurrently the Group acquired the Taiwanese operations from
TKP Corporation for a consideration of GBP6m.
Reconciliation for alternative performance measures
Alternative performance measurement adjustments recognised
The purpose of these unaudited pages is to provide a
reconciliation from the 2022 financial results to the alternative
performance measures in accordance with the previous pre-IFRS 16
policies adopted by the Group, and thereby give the reader greater
insight into the impact of IFRS 16 on the results of the Group. The
recognition of these adjustments will not impact the overall cash
flows of the Group or the cash generation per share.
1. Rent income and finance income
Under IFRS 16, where the sublease is assessed with reference to
the right-of-use assets arising from the head lease, conventional
rent income is not recognised in the profit or loss. The receipts
associated with this income instead are used to determine the net
investment in finance leases noted above. The net investment in
finance leases is measured in subsequent periods using the
effective interest rate method, based on the applicable interest
rate. The related finance income arising on subsequent measurement
is recognised directly through profit or loss.
2. Rent expense and finance costs
Under IFRS 16, conventional rent charges are not recognised in
the profit or loss. The payments associated with these charges
instead form part of the lease payments used in calculating the
right-of-use assets and related lease liabilities noted above. The
lease liabilities are measured in subsequent periods using the
effective interest rate method, based on the applicable interest
rate. The related finance costs arising on subsequent measurement
are recognised directly through profit or loss.
3. Depreciation, lease payments and lease receipts
Depreciation on the right-of-use assets recognised, is
depreciated over the life of the lease on a straight-line basis,
adjusted for any period between the lease commencement date and the
date the related centre opens, reflecting the lease-related costs
directly incurred in preparing the business centre for trading.
Lease payments on head leases reduce the lease liabilities
recognised in the balance sheet. Lease receipts on subleases reduce
the net investment in finance leases recognised in the balance
sheet.
4. Other adjustments
These adjustments primarily reflect the impairment of the
right-of-use assets and other property, plant and equipment as well
as the reversal of the closure cost provision on a pre-IFRS 16
basis. Certain parking, storage and brokerage costs are also
reversed, as they form part of the lease payments.
Consolidated EBITDA (unaudited)
Year ended 31 December 2022
Other
Rent Rent adjustments pre-IFRS
GBP m Notes As reported income expense Depreciation (1) 16
------------------------------ ----- ----------- ------- -------- ------------ ------------ --------
EBITDA 1,336 50 (1,059) - (10) 317
Depreciation on property
plant and equipment 5 (1,145) - - 829 - (316)
Amortisation of intangible
assets 5 (44) - - - - (44)
Operating profit/(loss) 147 50 (1,059) 829 (10) (43)
Operating profit/(loss)
from discontinued operations 9 - - - - - -
------------------------------ ----- ----------- ------- -------- ------------ ------------ --------
Operating profit/(loss)
from continuing operations 5 147 50 (1,059) 829 (10) (43)
------------------------------ ----- ----------- ------- -------- ------------ ------------ --------
1. Includes GBP52m of net reversals of impairment of property,
plant and equipment including right-of-use assets.
Year ended 31 December 2021
Other pre-IFRS
GBP m Notes As reported Rent income Rent expense Depreciation adjustments(1) 16
--------------------------- ----- ----------- ----------- ------------ ------------ --------------- --------
EBITDA 1,026 - (997) - 30 59
Depreciation on property
plant and equipment 5 (1,096) - 805 - (291)
Amortisation of intangible
assets 5 (14) - - - (14)
Operating (loss)/profit (84) - (997) 805 30 (246)
Operating (loss)/profit
from discontinued
operations 9 (3) - 14 (12) (1) (2)
--------------------------- ----- ----------- ----------- ------------ ------------ --------------- --------
Operating (loss)/profit
from continuing
operations(2) 5 (87) - (983) 793 29 (248)
--------------------------- ----- ----------- ----------- ------------ ------------ --------------- --------
1. Includes GBP54m of net reversals of impairment of property,
plant and equipment including right-of-use assets.
2. Restated to reflect the impact of discontinued operations on
a pre-IFRS 16 basis
Working capital (unaudited)
Year ended 31 December 2022
Rent
income
& expense
and finance Depreciation
income and lease Other pre-IFRS
GBP m Reference As reported & costs payments adjustments 16
----------------------------- ------------------ ----------- ------------ ------------ ------------ --------
Partner contributions Statement of cash
- reimbursement flows 19 - (19) - -
Decrease/(increase) in Statement of cash
trade and other receivables flows (97) (54) - - (151)
(Decrease)/increase in Statement of cash
trade and other payables flows 191 852 (906) (29) 108
Working capital 113 798 (925) (29) (43)
------------------------------------------------- ----------- ------------ ------------ ------------ --------
Analysed as:
Working capital (excluding
amortisation of partner
contributions) CFO review 22
Working capital related
to the amortisation of
partner contributions CFO review (104)
Growth-related partner
contributions CFO review 39
----------------------------- ------------------ ----------- ------------ ------------ ------------ --------
Year ended 31 December 2021
Rent income
& expense
and finance Depreciation
income and lease Other pre-IFRS
GBP m Reference As reported & costs payments adjustments 16
----------------------------- ------------------ ----------- ------------ ------------ ------------ --------
Partner contributions Statement of cash
- reimbursement flows 20 - (20) - -
Decrease/(increase) in Statement of cash
trade and other receivables flows (127) 20 - - (107)
(Decrease)/increase in Statement of cash
trade and other payables flows (40) 829 (809) (47) (67)
Working capital (147) 849 (829) (47) (174)
------------------------------------------------- ----------- ------------ ------------ ------------ --------
Analysed as:
Working capital (excluding
amortisation of partner
contributions) CFO review (129)
Working capital related
to the amortisation of
partner contributions CFO review (95)
Growth-related partner
contributions CFO review 50
----------------------------- ------------------ ----------- ------------ ------------ ------------ --------
Partner contributions receivables (unaudited)
GBPm Reference 2022 2021
----------------------------------------- ------------------ ----- ----
Opening partner contribution receivables Note 17 30 34
Statement of cash
Net partner contributions recognised flows 50 56
----- ----
* Maintenance partner contributions CFO review 11 6
* Growth partner contributions CFO review 39 50
----- ----
Settled in the period (59) (59)
Exchange differences 2 (1)
------------------------------------------------------------- ----- ----
Closing partner contribution receivables Note 17 23 30
----------------------------------------- ------------------ ----- ----
Capital expenditure (unaudited)
Year ended 31 December 2022
Rent
income
& expense
and finance
income pre-IFRS
GBP m Reference As reported & costs 16
------------------------------------------ ------------------ ----------- ------------ --------
Statement of cash
Purchase of property, plant and equipment flows (242) (12) (254)
Statement of cash
Purchase of intangible assets flows (39) - (39)
Total capital expenditure (281) (12) (293)
-------------------------------------------------------------- ----------- ------------ --------
Gross
Net capital Partner capital
Analysed as: expenditure contributions expenditure
------------------------------------ ----------- ------------ -------------- ------------
Net maintenance capital expenditure CFO review (90) 11 (101)
Gross growth capital expenditure CFO review (141) 39 (180)
Capitalised rent related to centre
openings CFO review (12) - (12)
------------------------------------ ----------- ------------ -------------- ------------
(243) 50 (293)
------------------------------------------------ ------------ -------------- ------------
Year ended 31 December 2021
Rent income
& expense
and finance
income pre-IFRS
GBP m Reference As reported & costs 16
------------------------------------------ ------------------ ----------- ------------ --------
Statement of cash
Purchase of property, plant and equipment flows (221) (20) (241)
Statement of cash
Purchase of intangible assets flows (34) - (34)
Total capital expenditure (255) (20) (275)
-------------------------------------------------------------- ----------- ------------ --------
Gross
Net capital Partner capital
Analysed as: expenditure contributions expenditure
------------------------------------ ----------- ------------ -------------- ------------
Net maintenance capital expenditure CFO review (95) 6 (101)
Gross growth capital expenditure CFO review (104) 50 (154)
Capitalised rent related to centre
openings CFO review (20) - (20)
------------------------------------ ----------- ------------ -------------- ------------
(219) 56 (275)
------------------------------------------------ ------------ -------------- ------------
Five-year summary
31 Dec 31 Dec 31 Dec 31 Dec
31 Dec 2021 2020 2019 2018
GBPm 2022 Restated(1) Restated(1) Restated(1) Restated(1)
---------------------------------------------- --------- ------------ ------------ ------------ ------------
Income statement (full year ended)
Revenue 2,751 2,227 2,432 2,593 2,355
Cost of sales (2,182) (1,885) (2,377) (2,043) (1,975)
Expected credit reversal/(losses) on
trade receivables 6 (99) (35) (2) (18)
---------------------------------------------- --------- ------------ ------------ ------------ ------------
Gross profit (centre contribution) 575 243 20 548 362
Selling, general and administration
expenses (427) (328) (367) (279) (247)
Share of (loss)/profit of equity-accounted
investees, net of tax (1) (2) (3) 3 (2)
---------------------------------------------- --------- ------------ ------------ ------------ ------------
Operating profit/(loss) 147 (87) (350) 272 113
Finance expense (287) (198) (266) (229) (16)
Finance income 35 26 3 1 1
---------------------------------------------- --------- ------------ ------------ ------------ ------------
(Loss)/profit before tax for the year
from continuing operations (105) (259) (613) 44 98
Income tax (expense)/credit (16) (10) (30) 22 (29)
---------------------------------------------- --------- ------------ ------------ ------------ ------------
(Loss)/profit for the year from continuing
operations (121) (269) (643) 66 69
Profit/(loss) after tax for the year
from discontinued operations 1 59 (4) 385 37
---------------------------------------------- --------- ------------ ------------ ------------ ------------
(Loss)/profit after tax for the year (120) (210) (647) 451 106
---------------------------------------------- --------- ------------ ------------ ------------ ------------
(Loss)/earnings per ordinary share
(EPS):
Attributable to ordinary shareholders
Basic (p) (11.2) (20.4) (67.9) 50.5 11.7
Diluted (p) (11.2) (20.4) (67.9) 49.6 11.6
Weighted average number of shares outstanding
('000s) 1,006,885 1,007,215 892,738 892,738 907,077
From continuing operations
Basic (p) (11.3) (26.2) (67.8) 7.4 7.6
Diluted (p) (11.3) (26.2) (67.8) 7.3 7.5
Weighted average number of shares outstanding
('000s) 1,006,885 1,007,215 892,738 892,738 907,077
---------------------------------------------- --------- ------------ ------------ ------------ ------------
Balance sheet data (as at)
Intangible assets 1,148 782 749 720 722
Right-of-use assets 5,009 5,254 5,647 5,917 -
Property, plant and equipment 1,225 1,122 1,209 1,273 1,751
Net investment in finance leases 147 - - - -
Deferred tax assets 350 327 188 195 31
Other assets 1,041 849 1,100 781 848
Cash and cash equivalents 161 78 71 67 69
---------------------------------------------- --------- ------------ ------------ ------------ ------------
Total assets 9,081 8,412 8,964 8,953 3,421
---------------------------------------------- --------- ------------ ------------ ------------ ------------
Current liabilities 3,020 2,267 2,435 2,140 1,430
Non-current liabilities 5,826 5,840 6,015 5,933 1,240
Equity 235 305 514 880 751
---------------------------------------------- --------- ------------ ------------ ------------ ------------
Total equity and liabilities 9,081 8,412 8,964 8,953 3,421
---------------------------------------------- --------- ------------ ------------ ------------ ------------
1. The comparative information has been restated to reflect the
impact of discontinued operations (note 9).
Glossary
The Group reports certain alternative performance measures
(APMs) that are not required under International Financial
Reporting Standards (IFRS) which represents the generally accepted
accounting principles (GAAP) under which the Group reports. The
Group believes that the presentation of these APMs provides useful
supplemental information, when viewed in conjunction with our IFRS
financial information as follows:
-- to evaluate the historical and planned underlying results of
our operations;
-- to set Director and management remuneration; and
-- to discuss and explain the Group's performance with the
investment analyst community.
None of the APMs should be considered as an alternative to
financial measures derived in accordance with GAAP. The APMs can
have limitations as analytical tools and should not be considered
in isolation or as a substitute for an analysis of our results as
reported under GAAP. These performance measures may not be
calculated uniformly by all companies and therefore may not be
directly comparable with similarly titled measures and disclosures
of other companies.
Adjusted centre contribution
Centre contribution excluding adjusting items.
Adjusted EBITDA
EBITDA excluding adjusting items.
Adjusted EPS
EPS excluding adjusting items.
Adjusted operating profit/(loss)
Operating profit excluding adjusting items.
Adjusting items
Adjusting items reflects the impact of adjustments, both incomes
and costs, which are considered to be significant in nature and/or
size.
EBIT
Earnings before interest and tax.
EBITDA
Earnings before interest, tax, depreciation and
amortisation.
EPS
Earnings per share.
Expansions
A general term which includes new business centres established
by IWG and acquired centres in the year.
Franchisee
The owners of business centres operating under a formal
franchise arrangement.
Growth capital expenditure
Capital expenditure in respect of centres which opened during
the current or prior financial period.
Growth estate
Comprises centres which opened during the current or prior
financial year.
Growth-related partner contributions
Partner contributions received in respect of centres which
opened during the current or prior financial period.
Like-for-like
The financial performance from centres owned and operated for a
full 12-month period prior to the start of the financial year,
which therefore have a full-year comparative.
Maintenance capital expenditure
Capital expenditure in respect of centres owned for a full
12-month period prior to the start of the financial year and
operated throughout the current financial year, which therefore
have a full-year comparative.
Maintenance-related partner contributions
Partner contributions received in respect of centres owned for a
full 12-month period prior to the start of the financial year and
operated throughout the current financial year, which therefore
have a full-year comparative.
Net debt
Operations cash and cash equivalents, adjusted for both
short-term and long--term borrowings and lease liabilities.
Net growth capital investment
Growth capital expenditure net of growth-related partner
contributions.
Network rationalisation
Network rationalisation for the current year is defined as a
centre that ceases operation during the period from 1 January to
December of the current year. Network rationalisation for the prior
year comparative is defined as a centre that ceases operation from
1 January of the prior year to December of the current year.
Occupancy
Occupied square feet divided by available square feet expressed
as a percentage.
Open centre revenue
Revenue for all centres excluding closures.
Operating profit/(loss) before growth
Reported operating profit adjusted for the gross profit impact
arising from centres opening in the preceding and current years,
and centres to be opened in the subsequent year.
Partners
Owners or landlords of business centres, operating under a
management lease arrangement.
Pre-IFRS 16 basis
IFRS accounting standards effective as at the relevant reporting
date with the exception of IFRS 16.
Revenue development
Revenue programme on a continuing basis, for the last four
years.
TSR
Total shareholder return.
System wide revenue
Total reported revenue generated, including revenue from
franchise, managed centre and joint-venture partners, but excluding
fee income.
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END
FR ZZGGFFVFGFZZ
(END) Dow Jones Newswires
March 07, 2023 02:00 ET (07:00 GMT)
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