IWG : 2023 Annual Report and Accounts

The global leader in

hybrid working

Annual Report and Accounts 2023

What stands IWG apart in the market?

Contents

Strategic report

Hybrid working: a global mega-trend	1
At a glance	2
The global leader in hybrid working	4
Our purpose	12
Chairman's statement	14
Chief Executive Officer's review	18
Market review	22
Business Model	24
Our strategy	26
Key performance indicators	30
Our brands	32
Stakeholder engagement	38
Chief Financial Officer's review	40
Risk	50
Environmental, Social, Governance	60
Governance
Board of Directors	78
Corporate governance	80
Nomination Committee report	90
Audit Committee report	96
Directors' Remuneration report	102
Directors' report	115
Directors' statement	118
Financial statements
Independent auditor's report	119
Consolidated income statement	125
Consolidated statement of comprehensive	126
income
Consolidated statement of changes in	127
equity
Consolidated balance sheet	128
Consolidated statement of cash flows	129
Notes to the accounts	130
Parent company accounts	179
Reconciliation for alternative performance	180
measures
Five-year summary	184
Glossary	185
Shareholder information	186

Hybrid working: A global mega-trend

Q Why are more companies and their employees working in the hybrid model than ever before?

A Academic studies from leading institutions have demonstrated that more than 30% of workers will adopt hybrid for the long-term and the reasons are simple. Being able to work close to home is freeing workers from the unproductive bind of long daily commutes, giving them a better work-life balance, while dramatically reducing real estate costs for employers, increasing productivity and giving them access to the best talent. Hybrid is also helping companies meet their ESG commitments with our latest research with Arup showing that emissions are lower by up to 87% in the model.

Q

A Our network reach and experience are unparalleled. IWG has 3,514 buildings globally in more than 120 countries, and with 867 new buildings signed to the global network in the last 12 months, we are growing rapidly, bringing advanced hybrid working facilities into the heart of local communities, where our customers need us. We have also been leading on innovation for the last three decades with our well-established R&D Team developing and bringing several innovative products to market.

Q Why is having a strong global footprint so important?

A Our customers are increasingly partnering with us across multiple locations in multiple markets giving their teams access to high-quality workspaces no matter where they are in the world.

They want one trusted provider that can meet their needs across all markets and with around eight times the number of locations compared to our nearest competitor, IWG is the only truly global platform.

Hybrid's the accelerant that's empowering IWG's rapid growth, right across the world. And its multiple benefits mean it's here to stay."

Mark Dixon, Founder and CEO, IWG plc

Strategic report

System-wide revenue (£m)

£3,335

'23 3,335

'22 3,086

'21 2,498

'20 2,480

'19 2,648

Overhead as percentage of revenue (%)

15.0%

'23 15.0

'22 15.5

'21 14.7

'20 15.1

'19 10.8

Adjusted EBITDA1 (£m)

£403m

'23		403
'22		311
'21		80
'20			134
'19						428

Network (locations)

3,514

'23 3,514

'22 3,345

'21 3,314

'20 3,313

'19 3,388

Net growth capital investment (£m)

£75m

'23 75

'22 141

'21 104

'20 177

'19 260

1. Adjusted EBITDA before the application of IFRS 16

• A glossary is included on page 185 which defines various alternative measures used to provide useful and relevant information.

1

At a glance

Who we are

The idea of offering workspace solutions for the short and long-term has become a global success story and the Company, known as IWG plc since 2011, now covers every continent and every time zone across the globe.

Global Operations

The		The world of work is
global
leader in		What we do
	home, working from a hub,
		changing. The old 9-5 model
hybrid		is over, with working from
	help you fully embrace this
		or working on-the-go the
working		new normal. IWG is here to
	productive way of working.
		flexible, greener and more

8m+	3,500+	120+		10,000+
People use	Workspace	Countries	Global
our workspaces	locations globally	we're present in	team members
Every day millions of	Name a major city or	We have workspaces of	Our team members come
people open their laptops	town anywhere in the	every size in every time	from a truly diverse
at an IWG workspace.	world and there's a	zone across the planet.	background, speaking
Whether they're working	good chance we're	And we're growing	over 50 different
solo or part of a team.	already there.	by the day.	languages.

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Strategic report

Our promises...

1

Here to help, every day

We're here to help people and businesses work however suits them best. Every day we enjoy engaging with and listening to our customers to put ourselves in their shoes.

2

Workspace innovators

We've spent over 30 years redefining how people and businesses work. Now we're shaping the workspace of the future. With energy, ambition and an innovative mindset, we're turning big ideas into reality.

3

A world of opportunity

On average, we add at least one new location to our network every day. The speed of our growth creates lots of opportunities - to explore new markets, relocate to another country or city, or scale your business.

4

The power to succeed

We're strong believers in empowering people to succeed. With us, you'll have the flexibility to work however you need to, supported by a committed team that cares about your success.

...Are delivered through our trusted brands

Our international brands

Our domestic office and coworking brands

Our digital businesses

Our managed conventional office space

Read more on pages 32 to 37

3

The global leader in hybrid working

Hybrid works for business

Millions of businesses are already gaining from better agility, reduced costs, heightened productivity and the ability

to attract the best talent the planet has to offer.

Freedom to grow

With thousands of locations globally, we give businesses everywhere the freedom to grasp opportunities wherever and whenever they occur. The ability to flex their footprint rapidly and easily is empowering them to implement growth-orientatedreal-estate strategies and ways of working that are truly fit for purpose.

Lower costs

Less fixed space means less cost. That's why over 80% of CFOs see hybrid as a money saver, and why 72% of companies are planning to reduce their traditional property spend. And it's why freedom from the constraints of the long-term lease is enabling our customers to focus their resources on growth.

4 IWG plc Annual Report and Accounts 2023

More productive

Having access to a professional environment that's convenient and close to home is enabling people everywhere to work and be creative together. Right across our global network, businesses are reporting productivity boosts powered by engaged employees whose workstyle suits their lifestyle.

Attracting talent

Hybrid is changing the geography of work forever. Now, with no need for employees to be close to headquarters, businesses can hire talent from across the planet. And with 77% of employees saying a flexible workspace close to home is a must-have for their next job, hybrid's the magnet companies need to attract the best.

Hybrid working has unlocked a lot of benefits for our team, including happiness, productivity and work-life balance. It has lent an "extra sparkle" when it comes to recruiting and we've been able to open the door in more places, like Hungary

and Romania, without the need to open a Mixbook office there."

Kim Colucci, Culture and Growth Director, Mixbook

Strategic report

Profit, people, planet

At IWG, we believe strongly that the hybrid working model is good for business, good for people, and good for the environment.

We don't only have our own experience, compelling though it is, to support this view. Countless studies from leading academic institutions including Harvard, Stanford, King's College London, Princeton, Columbia and other prestigious universities, as well as reports from organisations ranging from Ernst & Young to Arup and Cisco to Spotify, have endorsed the positive impact of hybrid across multiple criteria.

Business benefits

When it comes to the benefits for business, take the research of the academic credited as the world's leading expert on hybrid: Stanford economist Professor Nicholas Bloom. He highlights better productivity and lower attrition as key outcomes for businesses, based on several studies including measuring the impact of hybrid working on Trip.com, China's largest travel agency.

Fellow academic Dr Gleb Tsipursky has highlighted in Forbes magazine the significant annual cost savings of $1.2m made by one of his clients, a mid-size tech company, through cutting its office space by 30%.

And Kate Lister, President of Global Workplace Analytics, not only states that companies can save around $11,000 a year for every person who works remotely for half the time but also says that hybrid will "save U.S. employers over $30 billion a day in what would otherwise have been lost productivity during office closures due to COVID-19."

People power

Turning to people, Professor Bloom highlights the fact that quit rates are down by 35% in companies embracing hybrid, adding: "The number one biggest benefit is employees think of hybrid working as a 7% or 8% pay increase: a free pension plan is about the same value to employees."

Bryan Robinson Ph.D., Professor Emeritus at the University of North Carolina, raises further important benefits. He quotes studies that find remote and hybrid workers to be "22% happier than workers in an onsite office," and that say "remote workers had less stress, more focus and were more productive…"

He also reports key improvements in areas like job satisfaction, physical health, work-life balance, comfortable work environments and wellness programmes.

Cutting carbon

Much of this improved worker wellbeing is due to the greatly reduced need to commute, which the U.S. Environmental Protection Agency (EPA) identified as the world's biggest source of greenhouse gases in 2021, contributing 28% of the total.

Reduced commuting cuts carbon and boosts happiness. As a recent study from Arup in partnership with IWG shows, hybrid working has the potential to reduce urban carbon emissions by a massive 87% in the US and by 70% in the UK.

The study went on to find that switching to a 'close to home' working model could cut emissions dramatically in US cities including Atlanta (by up to 90%), Los Angeles (87%) and New York (82%), and in the UK by 80% in Glasgow, 70% in Manchester and 49% in London.

Read on to find out more about how hybrid is making the world of work better for everybody.

5

The global leader in hybrid working

Hybrid working: Improved profitability and productivity

for companies

Multiple studies have shown that companies can boost profitability through the adoption of the hybrid working model. Leading hybrid expert Dr Gleb Tsipursky has highlighted in an article for Forbes the significant cost savings made by his client, a mid-size tech company that has been able to save $1.2m annually by reducing office space by 30%.

Larger corporations have made even greater savings

• a widely reported example is Cisco, which has saved $500m over the past five years through the shift to hybrid.

A significant proportion of this heightened profitability is being achieved by less reliance on expensive inner- city office rental. For example, a study by academics from the NYU Stern School of Business (Arpit Gupta) and Columbia Business School (Vrinda Mittal and Stijn Van Nieuwerburgh) has found that one of the most immediate and evident impacts of the shift away from the city-centre office to the hybrid model has been that on physical office occupancy levels and therefore rental costs.

The study found a direct correlation between

the heightened use of hybrid working and a decline for office space in sync with the number of days a week people spend working away from the traditional office. This is clearly leading to some significant savings for businesses exercising the hybrid model, as it changes the business geography of entire regions and cities to significantly lighten the historic cost burden on companies.

Global Workplace Analytics, meanwhile, has stated that property and associated savings mean that "a typical employer can save about $11,000/year for every person who works remotely half of the time". Their President Kate Lister has also said it "will save U.S. employers over $30 billion a day in what would have otherwise been lost productivity during office closures due

to COVID-19."

Enhanced productivity

Stanford-based economist Professor Nicholas Bloom is one of many academics to have identified better productivity as of one of several essential gains from the hybrid model. This conclusion is partly based on one of the most significant experiments designed specifically to measure the impact of hybrid working on a company's productivity and attrition levels.

As a project for Professor Bloom's graduate economics class at Stanford, he agreed to work with James Liang

• CEO and co-founder of Trip.com (formerly Ctrip), China's largest travel agency - who was keen to offer his employees a flexible option due to the expense of Shanghai office space and the long commutes arising from the costs of city living.

Bloom devised a test for 500 of the Company's 16,000 employees, whereby a control group of 250 continued working at HQ, while the remainder worked from home. The results of the nearly two-year study were compelling:

The work-from-homers displayed a productivity boost equivalent to a full day's work, enabled by fewer distractions and time saved through not having to commute. Not only did employee attrition among this group fall significantly; workers also had fewer sick days and took less time off.

6 IWG plc Annual Report and Accounts 2023

But perhaps the most important finding was this: more than half the work-from-home group felt isolated due to never going to the office. Bloom's recommendation was therefore that the ideal working model should also involve regular attendance at a flexible workspace for socialisation, brainstorming, team building, and variety.

The Company saved close to

US$2,000

per employee

on rent annually

Following the experiment, in fact, Trip.com extended hybrid working across its entire workforce - an especially significant step in China, where full-time office work is still the expected norm.

Bloom also participated alongside academics from King's College London, Princeton University, and other leading institutions in a research exercise that highlighted the productivity benefits of remote working. More than half (56.4%) of the full-time workers surveyed in 27 countries said they were more productive remotely, with 18.6% saying they were more than 20% more productive.

Strategic report

IWG is very different from traditional coworking space companies. It is willing to work with us to design the fit-out that is exactly tailored to our needs."

Patricia Neo, Vice President, Global Contact Centers Operations, Hyatt Hotels Corporation

7

The global leader in hybrid working

Hybrid working: Improved employee happiness, wellbeing and work-lifebalance

The hybrid model is regularly revealed by research as a significant driver of greater contentment, wellbeing and satisfaction among workers. A primary source of this important gain is the reduced need to commute to city centres that hybrid working allows.

According to a study led by Dr Kiron Chatterjee, Professor of Travel Behaviour in the Geography and Environmental Management Department at the University of the West of England, this offers considerable opportunities for improved subjective wellbeing (SWB).

According to the abstract of Dr Chatterjee's team's study on Commuting and Wellbeing, "Our assessment of the evidence shows that mood is lower during the commute than other daily activities, and stress can be induced by congestion, crowding, and unpredictability. People who walk or cycle to work are generally more satisfied with their commute than those who travel by car and especially those who use public transport."

But the end of the commute also has a much more important positive impact on happiness levels. As the study continues, "Satisfaction decreases with

the duration of commute, regardless of the mode used, and increases when travelling with company. After the journey, evidence shows that the commute experience 'spills over' into how people feel and perform at work and home."

In other words, reducing the need to commute has the potential to improve human happiness by creating a better work-life balance.

8 IWG plc Annual Report and Accounts 2023