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Düsseldorf

Befreiender Konzernabschluss zum Geschäftsjahr vom 01.01.2021 bis zum 31.12.2021

IWG ENTERPRISE SÀRL

Luxemburg

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF IWG ENTERPRISE SÁRL

To the Board of Managers of

IWG Enterprise

26, Rue Boulevard Royal

L-2449 Luxembourg

Luxembourg

REPORT OF THE REVISEUR D'ENTREPRISES AGREE

Opinion

We have audited the consolidated financial statements of IWG Enterprise and its subsidiaries (the "Group"), which comprise the consolidated balance sheet as at 31 December 2021, and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2021 and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

Basis for opinion

We conducted our audit in accordance with the Law of 23 July 2016 on the audit profession ("Law of 23 July 2016") and with International Standards on Auditing ("ISA") as adopted for Luxembourg by the Commission de Surveillance du Secteur Financier ("CSSF'). Our responsibilities under the Law of 23 July 2016 and ISAs as adopted for Luxembourg by the CSSF are further described in the « Responsibilities of "réviseur d'entreprises agréé" for the audit of the consolidated financial statements" section of our report. We are also independent of the Group in accordance with the International Code of Ethics for Professional Accountants, including International Independence Standards, issued by the International Ethics Standards Board for Accountants ("IESBA Code") as adopted for Luxembourg by the CSSF together with the ethical requirements that are relevant to our audit of the consolidated financial statements, and have fulfilled our other ethical responsibilities under those ethical requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other information

The Board of Managers is responsible for the other information. The other information comprises the information stated in the annual report including the strategic report but does not include the consolidated financial statements and our report of the "reviseur d'entreprises agréé" thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report this fact. We have nothing to report in this regard.

Responsibilities of the Board of Managers for the consolidated financial statements

The Board of Managers is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRSs as adopted by the European Union, and for such internal control as the Board of Managers determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the Board of Managers is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Managers either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Responsibilities of the réviseur d'entreprises agréé for the audit of the consolidated financial statements

The objectives of our audit are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a report of the "réviseur d'entreprises agréé" that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

―	Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
―	Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
―	Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Managers.
―	Conclude on the appropriateness of the Board of Managers' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report of the "réviseur d'entreprises agréé" to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our report of the "réviseur d'entreprises agréé". However, future events or conditions may cause the Group to cease to continue as a going concern.
―	Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
―	Obtain sufficient appropriate audit evidence regarding the financial information of the entities and business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Luxembourg, 20 June 2022

KPMG Luxembourg
Société anonyme
Cabinet de révision agréé

Stephan Lego-Deiber, Partner

CONSOLIDATED INCOME STATEMENT

£m	Notes	Year ended 31 Dec 2021	Year ended 31 Dec 2020 Restated ⁽¹⁾
Revenue	3	2,210.2	2,406.7
Total cost of sales		(2,085.2)	(2,617.2)
Cost of sales		(2,069.4)	(2,299.5)
Adjusting items to cost of sales ⁽²⁾		(70.0)	(71.7)
Reversal of/(loss) on impairment of property, plant, equipment and right-of-use assets ⁽²⁾	3,5	54.2	(246.0)
Expected credit losses on trade receivables ⁽²⁾	5	(99.5)	(34.8)
Grossprofit/(loss) (centre contribution)	3	25.5	(245.3)
Other income ⁽³⁾		3,682.8	-
Total selling, general and administration expenses		(316.1)	(279.5)
Selling, general and administration expenses		(283.0)	(223.1)
Adjusting items to selling, general and administration expenses	10	(33.1)	(56.4)
Share of loss of equity-accounted investees, net of tax	21	(2.2)	(2.6)
Operating profit/(loss)	5	3,390.0	(527.4)
Finance expense	7	(196.0)	(340.8)
Finance income	7	26.1	31.9
Net finance expense		(169.9)	(308.9)
Profit/(loss) before tax for the year from continuing operations		3,220.1	(836.3)
Income tax expense	8	(77.5)	(28.0)
Profit/(loss) after tax for the year from continuing operations		3,142.6	(864.3)
Profit/(loss) after tax for the period from discontinued operations	9	59.3	(1.5)
Profit/(loss) for the year		3,201.9	(865.8)
Attributable to equity shareholders of the Group		3,207.5	(865.8)
Attributable to non-controlling interests	26	(5.6)	-
Profit/(loss) per ordinary share (EPS):
Attributable to ordinary shareholders
Basic (p)	11	646,394	(173,160,000)
Diluted (p)	11	646,394	(173,160,000)
From continuing operations
Basic (p)	11	634,422	(172,860,000)
Diluted (p)	11	634,422	(172,860,000)

^1. The comparative information has been restated to reflect the impact of discontinued operations (note 9).
^2. The net reversal of adjusting items of £1.7m (2020: charge of £333.4m) comprises the following items included in the balances referenced (note 10): A reversal of the impairment of property, plant and equipment and right-of-use assets of £125.2m (2020: charge of £244.8), the adjusting items to costs of sales of £70.0m (2020: £71.1m) and £53.5m (2020: £17.5m) of the expected credit losses on trade receivable balances reported.
^3. Other income represents the gain on disposal of investments in affilitiated companies, as part of an internal restructuring of the wider IWG plc Group.

The above consolidated income statement should be read in conjunction with the accompanying notes.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

£m	Notes	Year ended 31 Dec2021	Year ended 31 Dec 2020
Profit/(loss) for the year		3,201.9	(865.8)
Other comprehensive income/(loss) that is or may be reclassified to profit or loss in subsequent periods:
Cash flow hedges-effective portion of changes in fair value		0.2	-
Foreign exchange recycled to profit or loss from discontinued operations	9	(0.5)	-
Foreign currency translation (loss)/gain for foreign operations		(20.4)	1.3
Items that are or may be reclassified to profit or loss in subsequent periods		(20.7)	1.3
Other comprehensive income that will never be reclassified to profit or loss in subsequent periods:
Re-measurement of defined benefit liability, net of income tax	25	-	-
Items that will never be reclassified to profit or loss in subsequent periods		-	-
Other comprehensive (loss)/profit for the period, net of tax		(20.7)	1.3
Total comprehensive profit/(loss) for the year, net of tax		3,181.2	(864.5)
Attributable to shareholders of the Group		3,186.8	(864.5)
Attributable to non-controlling interests	26	(5.6)	-

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Issued share capital	Share premium	Foreign currency translation reserve	Hedging reserve
Balance at 1 January 2020	-	-	34.9	(0.2)
Total comprehensive income/(loss) for the year:
Loss for the year	-	-	-	-
Other comprehensive income:
Foreign currency translation differences for foreign operations	-	-	1.3	-
Other comprehensive income, net of tax	-	-	1.3	-
Total comprehensive income/(loss) for the year	-	-	1.3	-
Transactions with owners of the Company
Share-based payments	-	-	-	-
Ordinary dividend paid	-	-	-	-
Proceeds from issue of ordinary shares, net of costs	-	-	-	-
Purchase of shares	-	-	-	-
Proceeds from exercise of share awards	-	-	-	-
Total transactions with owners of the Company	-	-	-	-
Balance at 31 December 2020	-	-	36.2	(0.2)
Total comprehensive income/(loss) for the year:
Profit for the year	-	-	-	-
Other comprehensive income/(loss):
Cash flow hedges-effective portion of changes in fair value	-	-	-	0.2
Foreign exchange recycled to profit or loss from discontinued operations	-	-	(0.5)	-
Foreign currency translation differences for foreign operations	-	-	(20.4)	-
Other comprehensive income/(loss), net of tax	-	-	(20.9)	0.2
Total comprehensive income/(loss) for the year	-	-	(20.9)	0.2
Transactions with owners of the Company
Share-based payments	-	-	-	-
Ordinary dividend paid ⁽²⁾	-	-	-	-
Proceeds from issue of ordinary shares, net of costs	74.3	291.7	-	-
Purchase of shares	-	-	-	-
Proceeds from exercise of share awards	-	-	-	-
Total transactions with owners of the Company	74.3	291.7	-	-
Acquisition of subsidiary with non-controlling interests	-	-	-	-
Balance at 31 December 2021	74.3	291.7	15.3	-

	Other reserves ⁽¹⁾	Retained earnings	Total equity attributable to equity shareholders	Noncontrolling interests	Total equity
Balance at 1 January 2020	25.8	918.8	979.3	-	979.3
Total comprehensive income/(loss) for the year:
Loss for the year	-	(865.8)	(865.8)	-	(865.8)
Other comprehensive income:
Foreign currency translation differences for foreign operations	-	-	1.3	-	1.3
Other comprehensive income, net of tax	-	-	1.3	-	1.3
Total comprehensive income/(loss) for the year	-	(865.8)	(864.5)	-	(864.5)
Transactions with owners of the Company
Share-based payments	-	-	-	-	-
Ordinary dividend paid	-	-	-	-	-
Proceeds from issue of ordinary shares, net of costs	-	-	-	-	-
Purchase of shares	-	-	-	-	-
Proceeds from exercise of share awards	-	-	-	-	-
Total transactions with owners of the Company	-	-	-	-	-
Balance at 31 December 2020	25.8	53.0	114.8	-	114.8
Total comprehensive income/(loss) for the year:
Profit for the year	-	3,207.5	3,207.5	(5.6)	3,201.9
Other comprehensive income/(loss):
Cash flow hedges-effective portion of changes in fair value	-	-	0.2	-	0.2
Foreign exchange recycled to profit or loss from discontinued operations	-	-	(0.5)	-	(0.5)
Foreign currency translation differences for foreign operations	-	-	(20-4)	-	(20.4)
Other comprehensive income/(loss), net of tax	-	-	(20.7)	-	(20.7)
Total comprehensive income/(loss) for the year	-	3,207.5	3,186.8	(5.6)	3,181.2
Transactions with owners of the Company
Share-based payments	-	-	-	-	-
Ordinary dividend paid ⁽²⁾	-	(3,677.5)	(3,677.5)	-	(3,677.5)
Proceeds from issue of ordinary shares, net of costs	-	-	366.0	-	366.0
Purchase of shares	-	-	-	-	-
Proceeds from exercise of share awards	-	-	-	-	-
Total transactions with owners of the Company	-	(3,677.5)	(3,311.5)	-	(3,311.5)
Acquisition of subsidiary with non-controlling interests	-	-	-	15.2	15.2
Balance at 31 December 2021	25.8	(417.0)	(9.9)	9.6	(0.3)

^1. Other reserves include £10.5m for the restatement of the assets and liabilities of the UK associate, from historic to fair value at the time of the acquisition of the outstanding 58% interest on 19 April 2006, £37.9m arising from the Scheme of Arrangement undertaken on 14 October 2008, £6.5m relating to merger reserves and £0.1m to the redemption of preference shares, partly offset by £29.2m arising from the Scheme of Arrangement undertaken in 2003.
^2. The ordinary dividend paid represents a dividend-in-specie recognised as part of an internal restructuring of the wider IWG plc Group.

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

CONSOLIDATED BALANCE SHEET

£m	Notes	As at 31 Dec 2021	As at 31 Dec 2020
Non-current assets
Goodwill	13	703.8	695.2
Other intangible assets	14	19.0	51.5
Property, plant and equipment	15	6,374.4	6,765.1
Right-of-use assets	15	5,254.0	5,655.2
Other property, plant and equipment	15	1,120.4	1,109.9
Deferred tax assets	8	256.1	188.2
Other long-term receivables	16	203.9	270.5
Investments in joint ventures	21	44.9	11.3
Other investments		0.3	-
Total non-current assets		7,602.4	7,981.8
Current assets
Inventory		1.2	1.3
Trade and other receivables	17	659.3	1,049.4
Corporation tax receivable	8	18.5	29.1
Cash and cash equivalents	23	72.9	70.4
Total current assets		751.9	1,150.2
Total assets		8,354.3	9,132.0
Current liabilities
Trade and other payables (incl. customer deposits)	18	904.3	1,087.5
Deferred revenue		344.2	326.6
Corporation tax payable	8	34.2	36.0
Bank and other loans	19,23	21.5	21.9
Lease liabilities	23	931.7	1,021.8
Provisions	20	8.2	17.5
Total current liabilities		2,244.1	2,511.3
Non-current liabilities
Other long-term payables		0.5	6.9
Deferred tax liability	8	140.0	0.2
Bank and other loans	19,23	761.3	883.4
Lease liabilities	23	5,188.7	5,545.6
Derivative financial liabilities	24	-	49.6
Provisions	20	12.4	13.5
Provision for deficit on joint ventures	21	6.5	4.6
Retirement benefit obligations	25	1.1	2.1
Total non-current liabilities		6,110.5	6,505.9
Total liabilities		8,354.6	9,017.2
Total equity
Issued share capital	22	74.3	-
Issued share premium	22	291.7	-
Foreign currency translation reserve		15.3	36.2
Hedging reserve		-	(0.2)
Other reserves		25.8	25.8
Retained earnings		(417.0)	53.0
Total shareholders' equity		(9.9)	114.8
Non-controlling interests	26	9.6	-
Total equity		(0.3)	114.8
Total equity and liabilities		8,354.3	9,132.0

Approved by the Board on 20 June 2022

Lynsey Blair, Manager

The above consolidated balance sheet should be read in conjunction with the accompanying notes.

CONSOLIDATED STATEMENT OF CASH FLOWS

£m	Notes	Year ended 31 Dec 2021	Year ended 31 Dec 2020 Restated ⁽¹⁾
Operating activities
Profit/(loss) for the year from continuing operations		3,142.6	(864.3)
Adjustments for:
Profit/(loss) from discontinued operations	9	4.0	(0.9)
Net finance expense ⁽²⁾	7	169.9	308.9
Share of loss on equity-accounted investees, net of income tax	21	2.2	2.6
Depreciation charge	15	1,095.0	1,187.0
Right-of-use assets	15	892.5	948.3
Other property, plant and equipment	15	202.5	238.7
Loss on impairment of goodwill	13	-	4.9
Loss on disposal of property, plant and equipment	5	65.9	93.1
Profit on disposal of right-of-use assets and related lease liabilities	5,23	(26.1)	(25.7)
Profit on sales of current assets		(1.4)	-
Loss on disposal of intangible assets	5	37.2	0.1
(Reversal)/loss on impairment of property, plant and equipment	5,15	(7.4)	82.1
(Reversal)/loss on impairment of right-of-use assets	5,15	(46.8)	163.9
Amortisation of intangible assets	5,14	2.3	8.5
Negative goodwill arising on an acquisition	26	(1.7)	-
Loss on disposal of other investments	21	-	1.6
Tax expense	8	77.5	28.0
Expected credit losses on trade receivables	5	99.5	34.8
(Decrease)/increase in provisions	20	(14.5)	15.2
Share-based payments		-	-
Other non-cash movements		(217.5)	(5.7)
Operating cash flows before movements in working capital		4,380.7	1,034.1
Proceeds from partner contributions (reimbursement of costs)	15	19.7	38.4
Increase in trade and other receivables		(239.2)	(58.3)
(Decrease)/increase in trade and other payables		77.6	484.7
Cash generated from operations		4,238.8	1,498.9
Interest paid and similar charges on bank loans and corporate borrowings		(12.4)	(17.6)
Interest paid on lease liabilities	23	(167.1)	(249.3)
Tax paid		(3.3)	(17.5)
Net cash inflows from operating activities		4,056.0	1,214,5
Investing activities
Purchase of property, plant and equipment	15	(318.9)	(257.2)
Payment of initial direct costs related to right-of-use assets		0.8	(0.8)
Purchase of subsidiary undertakings, net of cash acquired	26	10.6	(26.8)
Purchase of intangible assets	14	(2.2)	(16.0)
Purchase of other investments		(0.3)	-
Proceeds from/(purchase of) other current receivables ⁽³⁾	17	283.7	(276.2)
Proceeds on the sale of discontinued operations, net of cash disposed of	9,21	18.9	3.3
Proceeds on sale of property, plant and equipment		1.0	8.2
Interest received	7	9.9	29.4
Net cash inflows/(outflows) from investing activities		3.5	(536.1)
Financing activities
Proceeds from issue of loans		983.1	876.5
Repayment of loans		(901.3)	(1,109.8)
Proceeds from issue of convertible bonds (net of transaction costs)	19	-	343.2
Payment of lease liabilities	23	(865.0)	(900.0)
Proceeds from partner contributions (lease incentives)	15	35.9	111.0
Proceeds from issue of ordinary shares, net of costs	22	366.0	-
Purchase of treasury shares	22	-	-
Proceeds from exercise of share awards		-	-
Payment of ordinary dividend	12	(3,677.5)	-
Net cash outflows from financing activities		(4,058.8)	-(679,1)
Net increase/(decrease) in cash and cash equivalents		0.7	(0.7)
Cash and cash equivalents at beginning of the year		70.4	66.1
Effect of exchange rate fluctuations on cash held		1.8	5.0
Cash and cash equivalents at end of the year	23	72.9	70.4

^1. The comparative information has been restated to reflect the impact of discontinued operations (note 9).
^2. The net finance expense includes mark-to-market adjustments of £22.5m (£2.4m).
^3. Included in other receivables at 31 December 2020 was mezzanine and senior debt recognised at amortised cost of £276.2m. This receivable balance was fully repaid to the Group in February 2021, together with the reimbursement of associated costs, resulting in an additional £1.4m gain on settlement.

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 Group's financial statements for the year ended 31 December 2021 were authorised for issue by the Board of Managers on 20 June 2022 and the balance sheets were signed on the Board's behalf by Lynsey Blair. IWG Enterprise ("IWG") is a limited liability company incorporated and domiciled in Luxembourg at 26 Boulevard Royal, L-2449 Luxembourg. The ultimate parent company of the Group is IWG plc, a company incorporated in Jersey and registered and domiciled in Switzerland. IWG plc is a company listed on the London Stock Exchange. On 13 May 2020, the Company changed its name from Crown Enterprises (Société ̱à responsabilité limitée) to IWG Enterprise (Société a responsabilité limitée).

IWG owns a network of business centres which are utilised by a variety of business customers. Information on the Group's structure is provided in note 30, and information on other related party relationships of the Group is provided in note 29.

The Group consolidated financial statements have been prepared and approved by the Board of Managers in accordance with Luxembourg laws and regulations and International Financial Reporting Standards as adopted by the European Union ('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 2021 did not have a material effect on the Group financial statements, unless otherwise indicated.

The following standards, interpretations and amendments to standards were adopted by the Group for periods commencing on or after 1 January 2021, with no material impact on the Group:

Interest Rate Benchmark Reform-Phase2 (Amendments to IFRS9, IAS39, IFRS7, IFRS4 and IFRS 16)

Judgements made by the Managers 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 31.

The consolidated financial statements are prepared on a historical cost basis, with the exception of certain financial assets and liabilities that are measured at fair value.

These Group consolidated financial statements are presented in pounds sterling (£), which is IWG plc's functional currency, and all values are in million pounds, rounded to one decimal place, except where indicated otherwise.

The attributable results of those companies acquired or disposed of during the year are included for the periods of ownership.

Going concern

The Group reported a profit after tax of £3,142.6m (2020: loss of £864.3m) from continuing operations for the year, while net cash of £4,056.0m (2020: £1,214.5m) was generated from operations during the year. Although the Group's balance sheet at 31 December 2021 reports a net current liability position of £1,492.2m (2020: £1,361.1 m) which could give rise to a potential liquidity risk, the Managers concluded after a comprehensive review that no liquidity risk exists as:

1.

The Group had funding available under the Group's £950.0m revolving credit facility. £530.1m (2020: £731.3m) was avail able and undrawn at 31 December 2021. This facility was committed until March 2025 with an option to extend until 2026 (note 24); and

2.

The Group maintained a 12-month rolling forecast and a three-year strategic outlook. It also monitored the covenants in its facilitiesto manage the risk of potential breach. The Group expects to remain within covenants throughout the forecast period. In reaching this conclusion,the Managers have assessed:

the potential cash generation of the Group against a range of illustrative scenarios (including a severe but plausible outcome); and- mitigating actions to reduce operating costs and optimise cash flows during any ongoing global restrictions.

The Managers consider that the Group is well placed to successfully manage the actual and potential risks faced by the organisation including risks related to COVID-19.

On the basis of their assessment, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for a period of at least 12 months from the date of approval of these Group consolidated financial statements and consider it appropriate to continue to adopt the going concern basis in preparing the financial statements of the Group.

Subsequent events

In February 2022, the £950.0m revolving credit facility was reduced to £750.0m, with an unchanged maturity date in 2025. The facility is subject to financial covenants which include EBITDA, minimum liquidity, interest cover and net debt to EBITDA ratio.

The Managers performed an updated going concern assessment to reflect the impact of the amended revolving credit facility and concluded that the facility remains sufficient for the Group to retain sufficient cash reserves to continue as a going concern, for a period of at least 12 months from the date of approval of these Group consolidated financial statements.

In addition, a £330.0m bridge facility for The Instant Group acquisition has been agreed. The bridge facility has a maturity in September 2023. This facility is secured and is subject to interest cover and net debt to EBITDA covenants.

IFRS not yet effective

The following new or amended standards and interpretations that are mandatory for 2022 annual periods (and future years) are not expected to have a material impact on the Group financial statements, unless otherwise stated:

Onerous Contracts-Cost of Fulfilling a Contract (Amendments to IAS 37)	1 January 2022
Annual Improvements to IFRS Standards 2018-2020	1 January 2022
Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)	1 January 2022
Reference to the Conceptual Framework - Amendments to IFRS 3	1 January 2022
Classification of Liabilities as Current or Non-Current (Amendment to IAS 1)	1 January 2023
IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts	1 January 2023
Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates	1 January 2023
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)	1 January 2023

There are no other IFRS standards or interpretations that are not yet effective that would be expected to have a material impact on the Group.

The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

Basis of consolidation

Subsidiaries are entities controlled by the Group. Control exists when the Group controls an entity, when it is exposed to, or has the rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences. The results are consolidated until the date control ceases or the subsidiary qualifies as a disposal group, at which point the assets and liabilities are carried at the lower of fair value less costs to sell and carrying value.

Joint ventures are those entities over whose activities the Group has joint control, whereby the Group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. The consolidated financial statements include the Group's share of the total recognised gains and losses of joint ventures on an equity-accounted basis, from the date that joint control commences until the date that joint control ceases or the joint venture qualifies as a disposal group, at which point the investment is carried at the lower of fair value less costs to sell and carrying value. When the Group's share of losses exceeds its interest in a joint venture, the Group's carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of a joint venture.

Leases

The nature of the Group's leases relates to the rental of commercial office real estate premises globally.

1. Right-of-use assets

The Group recognises right-of-use assets at the commencement date of the lease. Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised and initial direct costs incurred. The recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term.

Right-of-use assets are subject to impairment review on an annual basis.

2. Lease liabilities

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments and variable lease payments that depend on an index or a rate. The variable lease payments that do not depend on an index or a rate are recognised as a rent expense in the period in which they are incurred.

In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date as the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured 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. Lessor accounting

There are no lessor arrangements in the Group as a result of the contractual arrangements in place with customers which convey the right to use an identified asset.

6. Partner contributions

Partner contributions are contributions from our business partners (property owners and landlords) towards the initial costs of opening a business centre, including the fit-out of the property. Partner contributions representing a reimbursement to the lessee (IWG) are accounted for as agency arrangements, and form part of the lessor's (landlord's) assets.

Partner contributions for lease incentives are received at or before the lease commencement date for commercial reasons and, where the Group retains ownership of the fit-out assets, are accounted for as a lease incentive and recognised by reducing the right-of-use asset. Any other partner contributions for lease incentives received subsequent to the commencement of the lease are accounted for as part of the associated lease modification.

7. Lease term

The lease term represents the period from lease inception up to either:

―	The earliest point at which the lease could be broken, where break clauses exist;
―	The point at which the lease could be extended, but no further, where extension options exist; or
―	To the end of the contractual lease term in all other cases.

8. Lease break penalties

Lease break penalties, where the lease term has been determined as the period from inception up to a break clause and when there are break payments or penalties, have been appropriately included in the measurement of the lease liability.

Dilapidations

A provision is recognised for those potential dilapidation payments when it is probable that an outflow will occur and can be reliably estimated.

Impairment of non-financial assets

For goodwill, assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount was estimated at 30 September 2021. At each reporting date, the Group reviews the carrying amount of these assets to determine whether there is an indicator of impairment. If any indicator is identified, then the assets' recoverable amount is re-evaluated.

The carrying amount of the Group's other non-financial assets (other than deferred tax assets and inventory), including right-of-use assets, is reviewed at the reporting date to determine whet her there is an indicator of impairment. If any such indication exists, the assets' recoverable amount is estimated.

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit (CGU) exceeds its recoverable amount. Impairment losses are recognised in the income statement.

A CGU is the smallest identifiable group of assets that generates cash in flows 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	2 years

Amortisation of intangible assets is expensed through administration expenses in the income statement.

Acquisitions of non-controlling interests

Acquisitions of non-controlling interests are accounted for as transactions with owners in their capacity as owners and therefore no goodwill is recognised as a result. Adjustments to non-controlling interests arising from transactions that do not involve the loss of control are based on a proportionate amount of the net assets of the subsidiary.

Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and any impairment in value. Asset lives and recoverable amounts are reviewed on an annual basis. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows:

Right-of-use assets ⁽¹⁾	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 and only business segment is the provision of global workspace solutions.

1. Workstations

The Group recognises workstation revenue when it transfers services to a customer. It is measured based on the consideration specified in a contract with a customer. Services transfer to the customer equally over the contract period based on the time elapsed. Where discounted periods are granted to customers, service income is spread on a straight-line basis over the duration of the customer contract. Invoices are generally issued in advance, on a monthly basis with normal credit terms of 15 days, and initially recognised as deferred revenue.

Workstation revenue is recognised over time as the services are provided. Amounts invoiced in advance are accounted for as deferred revenue (contract liability) and recognised as revenue upon provision of the service.

2. Management and franchise fees

Fees received for the provision of initial and subsequent services are recognised over time as the services are rendered. Fees charged for the use of continuing rights granted by the agreement are measured based on the contractually agreed percentage of revenue, generated by the operation, except where a different basis is determined in the contractual arrangements. Fees charged for other services provided, during the period of the agreement, are recognised as revenue as the services provided or the rights used. Invoices are generally issued on a monthly basis with normal credit terms of 30 days.

3. Customer service income

Service income (including the provision of meeting rooms) is recognised over time as the services are delivered or at a point in time depending on contractual obligations. Invoices are generally issued when the service is provided and subject to immediate settlement. In circumstances where the Group acts as an agent for the sale and purchase of goods to customers, only the commission fee earned is recognised as revenue.

4. Membership card income

Revenue from the sale of membership cards is deferred and recognised over time within the period that the benefits of the membership card are expected to be provided.

5. Customer deposits

Deposits received from customers against non-performance of the contract are held on the balance sheet as a current liability until they are either returned to the customer at the end of their relationship with the Group, or released to the income statement.

The Group has concluded that it is the principal in its revenue arrangements, except where noted above.

Adjusting items

Significant infrequent transactions not indicative of the underlying performance of the consolidated Group are reported separately as non recurring/adjusting items.

Adjusting items are separately disclosed by the Group to provide readers with helpful, additional information on the performance of the business across periods. Items arising specifically from the impact of the COVID-19 pandemic have been deemed to meet the definition of adjusting items. Each of these items are considered to be significant in nature and/or size and are also consistent with items treated as adjusting in prior periods in which significant non-recurring transactions occurred. The exclusion of these items is consistent with how the business performance is planned by, and reported to, the Board. The profit before tax and adjusting items measure is not a recognised profit measure under IFRS and may not be directly comparable with adjusted profit measures used by other companies.

The classification of adjusting items requires significant management judgement after considering the nature and intentions of a transaction. Adjusting items recognised are based on the actual costs incurred and/or calculated on a basis consistent with the key judgements and estimates disclosed in note 31. 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.

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 jurisdiction sit 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 24. Derivative financial instruments are measured initially at fair value and changes in the fair value are recognised through profit or loss unless the derivative financial instrument has been designated as a cash flow hedge whereby the effective portion of changes in the fair value are deferred in equity.

Financial assets

Financial assets are classified and subsequently measured at amortised cost, fair value through the profit or loss, or fair value through other comprehensive income (OCI). The classification depends on the nature and purpose of the financial assets and is determined on initial recognition.

Financial assets (including trade and other receivables) are measured at amortised cost if both of the following conditions are met:

―	The financial asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and
―	Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instruments to the gross carrying amount of the financial assets.

Financial assets at fair value through profit or loss are measured at fair value and changes therein, including any interest or dividend income, are recognised in profit or loss.

Financial assets (including trade and other receivables) are measured at fair value through OCI if both of the following conditions are met:

―	The financial asset is held within a business model whose objective is achieved by both collecting cash flows and selling financial assets; and
―	Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

IFRS 9 requires the Group to record expected credit losses on all of its financial assets held at amortised cost, either on a 12-month or lifetime basis. The Group applies the simplified approach to trade receivables and recognises expected credit losses based on the lifetime expected losses. Provisions for receivables are established based on both expected credit losses and information available that the Group will not be able to collect all amounts due according to the original terms of the receivables.

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and are subject to an insignificant risk of change in value.

Non-controlling interests

Non-controlling interests are measured initially at their proportionate share of the acquiree's identifiable net assets at the date of acquisitions.

Discontinued operations

A discontinued operation is a component of the Group's business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which:

―	represents a separate major line of business or geographic area of operations;
―	is part of a single co-ordinated plan to dispose of a separate major line of business or geographic area of operations; or
―	is a subsidiary acquired exclusively with a view to resale.

Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held-for-sale. When an operation is classified as a discontinued operation, the comparative statement of profit or loss and OCI is re-presented as if the operation had been discontinued from the start of the comparative year.

Foreign currency transactions and foreign operations

Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the closing rate of exchange at the balance sheet date and the gains or losses on translation are taken to the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. The results and cash flows of foreign operations are translated using the average rate for the period. Assets and liabilities, including goodwill and fair value adjustments, of foreign operations are translated using the closing rate, with all exchange differences arising on consolidation being recognised in other comprehensive income, and presented in the foreign currency translation reserve in equity. Exchange differences are reclassified to the income statement on disposal.

Foreign currency translation rates

	At 31 December		Annual average
	2021	2020	2021	2020
US dollar	1.35	1.37	1.38	1.29
Euro	1.19	1.11	1.16	1.13

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 Managers of the Group) to make decisions about resources to be allocated to the segment and assess its performance, and for which distinct financial information is available.

The business is run on a worldwide basis but managed through four principal geographical segments (the Group's operating segments): the Americas; EMEA (Europe, Middle East and Africa); Asia Pacific; and the United Kingdom. These geographical segments exclude the Group's non-trading, holding and corporate management companies, which are included in the 'Other' segment. The results of business centres in each of these regions form the basis for reporting geographical results to the chief operating decision-maker. All reportable segments are involved in the provision of global workplace solutions.

The Group's reportable segments operate in different markets and are managed separately because of the different economic characteristics that exist in each of those markets. Each reportable segment has its own distinct senior management team responsible for the performance of the segment.

	Americas		EMEA
	2021	2020	2021	2020 Restated ⁽⁴⁾
Continuing operations	£m	£m	£m	£m
Revenue from external customers ⁽¹⁾	922.5	1,066.2	697.5	709.2
Mature ⁽²⁾	865.0	994.0	615.0	636.3
2020 Expansion ⁽²⁾	40.2	11.0	45.8	20.1
2021 Expansion ⁽²⁾	4.8	-	21.9	-
Closures ⁽²⁾	12.5	61.2	14.8	52.8
Gross profit/(loss) (centre contribution)	31.2	(4.8)	25.2	73.2
Share of loss of equity-accounted investees	-	-	(1.2)	(0.1)
Operating loss	(56.6)	(87.7)	(18.6)	(10.6)
Finance expense
Finance income
Loss before tax for the year
Depreciation and amortisation	464.2	500.9	336.5	336.6
Impairment of assets	(56.1)	161.3	0.1	25.2
Assets	3,364.0	3,460.0	2,481.5	2,542.0
Liabilities	(3,246.4)	(3,334.6)	(2,347.1)	(2,398.3)
Net assets/(liabilities)	117.6	125.4	134.4	143.7
Non-current asset additions ⁽³⁾	858.8	886.2	661.0	867.6

	Asia Pacific		United Kingdom
	2021	2020 Restated ⁽⁴⁾	2021	2020
Continuing operations	£m	£m	£m	£m
Revenue from external customers ⁽¹⁾	231.7	246.3	353.8	379.4
Mature ⁽²⁾	209.1	214.3	316.5	334.7
2020 Expansion ⁽²⁾	10.5	4.5	23.9	8.6
2021 Expansion ⁽²⁾	3.4	-	1.6	-
Closures ⁽²⁾	8.7	27.5	11.8	36.1
Gross profit/(loss) (centre contribution)	(0.8)	5.0	(29.4)	(57.5)
Share of loss of equity-accounted investees	(0.1)	(0.2)	(0.9)	(2.3)
Operating loss	(8.5)	(24.5)	(19.5)	(85.0)
Finance expense
Finance income
Loss before tax for the year
Depreciation and amortisation	117.3	139.8	152.4	173.4
Impairment of assets	4.7	14.1	(2.9)	45.4
Assets	525.4	676.5	1,456.1	1,927.7
Liabilities	(535.3)	(685.3)	(1,326.7)	(1,561.4)
Net assets/(liabilities)	(9.9)	(8.8)	129.4	366.3
Non-current asset additions ⁽³⁾	189.8	268.3	144.7	320.0

	Other		Total
	2021	2020	2021	2020 Restated ⁽⁴⁾
Continuing operations	£m	£m	£m	£m
Revenue from external customers ⁽¹⁾	4.7	5.6	2,210.2	2,406.7
Mature ⁽²⁾	4.7	5.6	2,010.3	2,184.9
2020 Expansion ⁽²⁾	-	-	120.4	44.2
2021 Expansion ⁽²⁾	-	-	31.7	-
Closures ⁽²⁾	-	-	47.8	177.6
Gross profit/(loss) (centre contribution)	(0.7)	(261.2)	25.5	(245.3)
Share of loss of equity-accounted investees	-	-	(2.2)	(2.6)
Operating loss	3,493.2	(319.6)	3,390.0	(527.4)
Finance expense			(196.0)	(340.8)
Finance income			26.1	31.9
Loss before tax for the year			(3,220.1)	(836.3)
Depreciation and amortisation	11.8	13.5	1,082.2	1,164.2
Impairment of assets	-	-	(54.2)	246.0
Assets	527.3	525.8	8,354.3	9,132.0
Liabilities	(899.1)	(1,037.6)	(8,354.6)	(9,017.2)
Net assets/(liabilities)	(371.8)	(511.8)	(0.3)	114.8
Non-current asset additions ⁽³⁾	48.9	35.9	1,903.2	2,378.0

^1. Excludes revenue from discontinued operations (note 9).
^2. Revenue has been disaggregated to reflect the basis on which it is reported to the chief operating decision-maker.
^3. Excluding deferred taxation.
^4. The comparative information has been restated to reflect the impact of discontinued operations.

Operating profit in the 'Other' category is generated from services related to the provision of workspace solutions, offset by corporate overheads.

4. Segmental analysis-entity-wide disclosures

The Group's primary activity and only business segment is the provision of global workplace solutions, therefore all revenue is attributed to a single group of similar products and services. It is not meaningful to separate this group into further categories of products. Revenue is recognised where the service is provided.

The Group has a diversified customer base and no single customer contributes a material percentage of the Group's revenue.

The Group's revenue from external customers and non-current assets analysed by foreign country are as follows:

	2021		2020
£m	External revenue	Non-current assets ⁽²⁾	External revenue	Non-current assets ⁽²⁾
Country of tax domicile - Luxembourg	3.5	-	10.3	71.3
United States of America	753.9	2,763.2	899.7	3,140.2
United Kingdom	353.8	1,328.8	379.4	1,635.0
All other countries ⁽¹⁾	1,099.0	3,254.3	1,116.8	2,947.1
	2,210.2	7,346.3	2,406.2	7,793.6

^1. Revenue of £33.8m (2020: £50.2m) is included in discontinued operations (note 9).
^2. Excluding deferred tax assets.

5. Operating profit - continuing operations

Operating loss has been arrived at after charging/(crediting):

		2021	2020
	Notes	£m	£m ⁽⁵⁾
Revenue		2,210.2	2,406.7
Other income ⁽¹⁾		3,682.8	-
Depreciation on property, plant and equipment ⁽²⁾	15	1,079.9	1,155.7
Right-of-use assets	15	879.4	921.6
Other property, plant and equipment	15	200.5	234.1
Amortisation of intangible assets	14	2.3	8.5
Variable property rents payable in respect of leases	23	62.0	61.7
Lease expense on low-value assets	23	1.0	2.5
Staff costs	6	296.6	334.5
Facility and other property costs		410.4	422.4
Expected credit losses on trade receivables ⁽³⁾	24	99.5	34.8
Loss on disposal of property, plant and equipment		65.9	93.1
Loss on disposal of right-of-use assets and related lease liabilities		(26.1)	(25.7)
Impairment of goodwill	13	-	4.9
Loss on disposal of intangible assets	14	37.2	0.1
(Reversal of impairment)/impairment of property, plant and equipment ⁽⁴⁾	15	(54.2)	246.0
(Reversal of impairment)/impairment of other property, plant and equipment		(7.4)	82.1
(Reversal of impairment)/impairment of right-of-use assets		(46.8)	163.9
Negative goodwill arising on acquisition	13	(1.7)	-
Other costs		528.0	593.0
Operating profit/(loss) before equity-accounted investees		3,392.2	(524.8)
Share of loss of equity-accounted investees, net of tax	21	(2.2)	(2.6)
Operating profit/(loss)		3,390.0	(527.4)

^1. Other income represents the gain on disposal of investments in affilitiated companies, as part of an internal restructuring of the wider IWG plc Group.
^2. Excludes depreciation expenses related to discontinued operations for right-of-use assets of £13.1m (2020: £26.7m) and other property, plant and equipment of £2.0m (2020: £4.6m).
^3. Of the £99.5m (2020: £34.8m) expected credit loss, £53.5m (2020: £17.5m) relates to COVID-19 adjusting items (note 10).
^4. The reversal of impairment of £54.2m includes an additional impairment of £96.9m (2020: £246.0m), offset by the reversal of £151.1m (2020: £nil) previously provided for (note 5).
^5. The comparative information has been restated to reflect the impact of discontinued operations.

	2021	2020
	£m	£m
Fees payable to the Group's auditor and its associates for the audit of the Group accounts	1.3	1.4
Fees payable to the Group's auditor and its associates for other services:
The audit of the Company's subsidiaries pursuant to legislation	3.0	2.9
Other services pursuant to legislation:
Tax services	-	-
Other services	0.3	0.2
Other non-audit services	0.3	1.2

6. Staff costs

	2021	2020
	£m ⁽¹⁾	£m ⁽¹⁾
The aggregate payroll costs were as follows:
Wages and salaries ⁽²⁾	246.1	279.4
Social security	46.3	49.6
Pension costs	4.2	5.5
Share-based payments	-	-
	296.6	334.5

^1. Excludes staff costs related to discontinued operations of £2.0m (2020: £2.9m).
^2. Includes worldwide financial support schemes disclosed in note 10.

	2021 Average full-time equivalents ⁽¹⁾	2020 Average full-time equivalents ⁽¹⁾⁽²⁾
The average number of persons employed by the Group, analysed by category and geography, was as follows:
Centre staff	6,077	6,316
Sales and marketing staff	100	425
Finance staff	193	775
Other staff	868	887
	7,238	8,403
Americas	2,518	2,431
EMEA	2,450	2,592
Asia Pacific	933	1,148
United Kingdom	679	632
Corporate functions	658	1,600
	7,238	8,403

^1. The average full-time equivalents exclude employees for disposals during 2021 of 65 (2020: 106).
^2. Following internal restructuring in 2021, the allocation ol stall between departments has been amended. The apportionment by department of 2020 staff numbers has been restated to reflect the revised allocation.

7. Net finance expense

	2021	2020
	£m	£m ⁽³⁾
Interest payable and similar charges on bank loans and corporate borrowings	(33.7)	(85.5)
Interest payable on lease liabilities ⁽¹⁾	(165.7)	(244.5)
Total interest expense	(199.4)	(330.0)
Other finance costs	3.4	(10.7)
Unwinding of discount rates	-	(0.1)
Total finance expense	(196.0)	(340.8)
Fair value gain on financial liabilities measured at FVTPL (note 19)	16.2	2.4
Total interest income ⁽²⁾	9.9	29.5
Total finance income	26.1	31.9
Net finance expense	(169.9)	(308.9)

^1. Excludes lease liability finance expense related to discontinued operations of £1.4m (2020: £4.8m).
^2. Excludes interest income related to discontinued operations of £nil (2020: £0.1 m).
^3. The comparative information has been restated to reflect the impact of discontinued operations.

8. Taxation

(a) Analysis of charge in the year

	2021	2020
	£m	£m ⁽¹⁾
Current taxation
Corporate income tax	(21.7)	(37.8)
Previously unrecognised tax losses and temporary differences	8.0	8.5
Over provision in respect of prior years	4.7	10.4
Total current taxation	(9.0)	(18.9)
Deferred taxation
Origin and reversal of temporary differences	(69.1)	(9.1)
Over provision in respect of prior years	0.6	-
Total deferred taxation	(68.5)	(9.1)
Tax charge on continuing operations	(77.5)	(28.0)

^1. The comparative information has been restated to reflect the impact of discontinued operations.

(b) Reconciliation of taxation charge

	2021		2020 ⁽¹⁾
	£m	%	£m	%
Profit/(loss) before tax from continuing operations	3,220.1		(836.3)
Tax on profit at 24.9% (2020:24.9%)	(803.1)	(24.9)	208.6	(24.9)
Tax effects of:
Expenses not deductible for tax purposes	(84.1)	(2.6)	(119.6)	14.3
Items not chargeable for tax purposes	990.9	30.7	15.2	(1.8)
Previously unrecognised temporary differences expected to be used in the future	8.0	0.2	8.5	(1.0)
Current year temporary differences not currently expected to be used	(194.6)	(6.0)	(152.8)	18.2
Adjustment to tax charge in respect of previous years	5.3	0.2	10.4	(13)
Differences in tax rates on overseas earnings	0.1	-	1.7	(0.2)
	(77.5)	(2.4)	(28.0)	3.3

^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 Luxembourg, which was the statutory tax rate applicable in the country of domicile of the parent company of the Group at the end of the financial year.

(c) Factors that may affect the future tax charge

Unrecognised tax losses to carry forward against certain future overseas corporation tax liabilities have the following expiration dates.

	2021	2020
	£m	£m
2021	-	-
2022	33.6	24.9
2023	41.1	43.1
2024	48.2	45.9
2025	49.1	49.3
2026	69.7	53.8
2027	36.5	38.8
2028	19.0	18.5
2029 and later	1,459.9	245.3
	1,757.1	519.6
Available indefinitely	1,303.6	739.8
Tax losses available to carry forward	3,060.7	1,259.4
Amount of tax losses recognised in deferred tax assets	120.3	232.6
Total tax losses available to carry forward	3,181.0	1,492.0

Additional tax losses have been generated during 2021. In addition, the inclusion of a number of loss making entities in the 2021 consolidated accounts significantly increases the total losses carried forward compared to 2020.

The following deferred tax assets have not been recognised due to uncertainties over recoverability.

	2021	2020
	£m	£m
Intangibles	2.3	420.0
Accelerated capital allowances	29.8	26.4
Tax losses	757.2	305.0
Rent	49.1	48.6
Leases	29.7	22.7
Short-term temporary differences	6.2	2.3
	874.3	825.0

(d) Corporation tax

	2021	2020
	£m	£m
Corporation tax payable	(34.2)	(36.0)
Corporation tax receivable	18.5	29.1

(e) Deferred taxation

The movement in deferred tax is analysed below:

	Intangibles	Property, plant and equipment	Tax losses
	£m	£m	£m
Deferred tax asset
At 1 January 2020	39.4	(31.5)	18.6
Current year movement	(19.0)	(42.7)	35.8
Prior year movement	-	-	-
Disposals	-	-	-
Transfers	(0.2)	(4.6)	4.2
Exchange rate movements	1.8	0.7	(0.3)
At 31 December 2020	22.0	(78.1)	58.3
Current year movement	(69.7)	1.1	(17.2)
Prior year movement	-	(0.4)	(0.7)
Disposals		-	-
Transfers	47.7	77.0	-
Exchange rate movements	-	0.4	-
At 31 December 2021	-	-	40.4
Deferred tax liability
At 1 January 2020	(0.2)	(4.6)	4.2
Current year movement	-	-	-
Prior year movement	-	-	-
Disposals	-	-	-
Transfers	0.2	4.6	(4.2)
Exchange rate movements	-	-	-
At 31 December 2020	-	-	-
Current year movement	(3.1)	(5.7)	-
Prior year movement	-	-	-
Disposals	-	-	-
Transfers	(47.7)	(77.0)	-
Exchange rate movements	0.1	(0.5)	-
At 31 December 2021	(50.7)	(83.2)	-

	Rent	Leases	Other temporary differences	Total
	£m	£m	£m	£m
Deferred tax asset
At 1 January 2020	54.1	93.6	20.7	194.9
Current year movement	9.6	13.4	(3.8)	(6.7)
Prior year movement	-	-	-	-
Disposals	-	-	-	-
Transfers	0.6	-	-	-
Exchange rate movements	(1.5)	(0.1)	(0.6)	-
At 31 December 2020	62.8	106.9	16.3	188.2
Current year movement	5.3	4.0	17.0	(59.5)
Prior year movement	-	-	-	(1.1)
Disposals	-	-	-	-
Transfers	(0.3)	0.7	3.3	128.4
Exchange rate movements	-	-	(0.3)	0.1
At 31 December 2021	67.8	111.6	36.3	256.1
Deferred tax liability
At 1 January 2020	0.6	-	-	-
Current year movement	-	(0.2)	-	(0.2)
Prior year movement	-	-	-	-
Disposals	-	-	-	-
Transfers	(0.6)	-	-	-
Exchange rate movements	-	-	-	-
At 31 December 2020	-	(0.2)	-	(0.2)
Current year movement	(0.3)	(4.9)	1.3	(12.7)
Prior year movement	-	-	1.7	1.7
Disposals	-	-	-	-
Transfers	0.3	(0.7)	(3-3)	(128.4)
Exchange rate movements	-	-	-	(0.4)
At 31 December 2021	-	(5.8)	(0.3)	(140.0)

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 £256.1m and a deferred tax liability of£140.0m.

Included within the current year movement in deferred tax assets is the release of a deferred tax asset of £69.7m in respect of Group intellectual property. The Group intellectual property owner is no longer included in the IWG Enterprise Sarl consolidation at the balance sheet date.

In 2021 the Group has separately presented deferred tax assets and deferred tax liabilities on a country by country, or entity by entity basis where available. The transfers line in the table above reflects the adjustment required to the opening balances as at 1 January 2021 to reflect this change in presentation.

In evaluating whether it is probable that taxable profits will be earned in future accounting periods for the purposes of deferred tax asset recognition, management based their analysis on the Board approved three year forecasts prepared for the purposes of reviewing goodwill for impairment.

Recognised deferred tax assets in respect of tax losses (£40.4m) include losses that have arisen in the United States where despite recent losses the Group considers it probable that sufficient taxable profits will be available against which these unused tax losses can be utilised over a period of three years, based on the period corresponding to the Group's business forecasting processes. The losses recorded in the United States were incurred during a period of uncertainty as a result of the global COVID-19 pandemic. Management is confident that the Group will return to profitability in this region within the aforementioned period. No reasonably possible change in any of the key assumptions would result in a significant reduction in projected tax profits such that the recognised deferred tax asset would not be realised.

At the balance sheet date, the temporary difference arising from unremitted earnings of overseas subsidiaries was £15.0m (2020 £11.9m). The only tax that would arise on these reserves if they were remitted would be non-creditable withholding tax.

In October 2021, the OECD published the model rules for part of the second pillar of the proposed two-pillar solution to address the tax challenges of the digitalisation of the economy. Pillar two is the so-called Global Anti-Base Erosion (GloBE) rule, which is designed to ensure that large multinational enterprises pay a minimum level of tax of 15% on the income arising in each jurisdiction where they operate. The minimum tax will apply to MNE's with revenue above EUR 750 million and so will apply to the Group. These changes have not been enacted or substantively enacted and therefore do not have any impact on the tax reporting position of the Group. IWG will continue to monitor developments in these areas and consider the potential tax impact for the Group at the relevant time.

9. Discontinued operations

During 2021, the Group completed the sale of various operations through the signing of franchise agreements. The financial impact of these transactions is treated as discontinued operations in accordance with IFRS 5, however these operations under franchise will continue to be an important strategic component of the overall Group network. These transactions form part of the larger change in strategy of the Group towards adopting a franchising model. Fees from franchising activities subsequent to sale are reflected as franchise revenues in continuing operations.

Disposal of operations

During the year, the Group completed the sale of individually immaterial operations for the consideration of £52.3m (2020: £3.3m). The results of these operations up to the date of disposal were as follows:

	2021	2020
	£m	£m
Revenue	33.8	50.2
Expenses	(31.3)	(56.0)
Profit/(loss) before tax for the year	2.5	(5.8)
Income tax (expense)/credit	(3.6)	1.5
Loss after tax for the year	(1.1)	(4.3)
Gain on the sale of discontinued operations	60.4	2.8
Profit/(loss) for the year, net of tax	59.3	(1.5)

The assets and liabilities of these operations at their respective dates of disposal were as follows:

	2021	2020
	£m	£m
Total assets	72.6	2.9
Total liabilities	(81.5)	(2.2)
Net (liabilities)/assets	(8-9)	0.7
Costs directly associated with the disposal	1.3	(0.2)
Foreign exchange recycled to profit and loss	(0.5)	-
	(8.1)	0.5
Consideration on disposal (net of cash and debt) ⁽¹⁾	52.3	3.3
Gain on sale of discontinued operations	60.4	2.8

^1. The consideration recognised includes a non-cash element of £33.4m.

The net cash flows incurred by these operations are as follows:

	2021	2020
	£m	£m
Operating	48.0	28.3
Investing	(2.1)	(13)
Financing	(45.8)	(27.3)
Net cash inflow/(outflow)	0.1	(0.3)

10. COVID-19 related adjusting items

Following the declaration by the World Health Organization of the COVID-19 pandemic (COVID-19) and subsequent global government restrictions, the Group has been unable to operate at full capacity. Given the political and economic uncertainty resulting from COVID-19, the Group continues to see significant volatility and business disruption, reducing expected performance in 2021 and potentially 2022.

The impact that COVID-19 has had on underlying trading performance is not recognised within adjusting items.

In order to improve the transparency and usefulness of the financial information presented and improve year-on-year comparability, the Group has identified net charges of £31.4m (2020: £389.8m) relating to directly attributable charges resulting from COVID-19. These charges are considered to be adjusting items as they meet the Group's definition, as disclosed in previous annual reports, of being both significant in nature and value to the results of the Group in the current period. Reversals of £1.7m (2020: expenses of £333.4m) have been recognised as adjusting items to cost of sales and £33.1m (2020: £56.4m) of these charges have been recognised as adjusting items to selling, general and administration expenses in the Group's income statement.

The charges relate to several separately identifiable areas of accounting judgement and estimates as follows:

	Year ended 31 Dec 2021	Year ended 31 Dec 2020
Impairments of property, plant and equipment (including right-of-use assets) ⁽¹⁾ -net of reversals	(125.2)	244.8
Impairments of goodwill ⁽²⁾	-	4.9
Provision for expected credit losses ⁽¹⁾	53.5	17.5
Network rationalisation ⁽¹⁾	70.7	77.5
Other one-off items including restructuring ⁽³⁾	32.4	45.1
Total adjusting items	31.4	389.8

^1. Included as an adjusting item in cost of sales.
^2. Included as an adjusting item in selling, general and administration.
^3. Included as adjusting items in selling, general and administration except for £0.7m (2020: £6.4m) in respect of worldwide financial support schemes which is included in costs of sales.

- Impairments of property, plant and equipment (including right-of-use assets)

The continuation of COVID-19, including new and extended preventative measures in most of the Group's markets, is expected to prolong the impact on our business in 2022. As a result of these measures, management carried out a comprehensive review exercise for potential impairments across the whole portfolio at a cash-generating units (CGUs) level.

The impairment review formed part of the Group's rationalisation process undertaken throughout the year due to the impact of COVID-19. This review compared the value-in-use of CGUs, based on management's assumptions regarding likely future trading performance, to the carrying values at 31 December 2021. Following this review, a reversal of £125.2m (2020: charge of £244.8m) was recognised within net operating expenses. Of this reversal, £38.1m (2020: charge of £80.9m) and £87.1m (2020: charge of £163.9m) were recognised against property, plant and equipment and right-of-use assets respectively.

- Impairments of goodwill

COVID-19 and linked restrictions have impacted our ability to trade our way to sustainable profitable growth in certain markets. As a result, the projected cash flows for these markets continue to be evaluated to determine the carrying value of the CGUs, with no additional impairment taken during 2021 (2020: impairment of £4.9m).

- Provision for expected credit losses

In light of the temporary closure of centres globally, the Group reviewed the recoverability of itstrade receivables profile and incurred further credit losses of £53.5m (2020: £17.5m). This increase reflects the increase in credit default by the Group's debtors directly attributable to the impact of COVID-19 and the significant change in the ageing profile of trade receivables as a direct consequence of COVID-19.

- Network rationalisation

£70.7m (2020: £77.5m)of charges were incurred relating to network rationalisations that occurred in the year, which includes the write off of the book value of asset sand direct closure costs related to these centres. A separate rationalisation charge of £5.7m (£2020: £15.3m) has also been recorded which is not included as adjusting items.

- Other one-off items including restructuring

During the year, the Group incurred £0.5m (2020:£8.2m) of transaction costs in respect of master franchise agreements that did not complete due to the outbreak of COVID-19. The Group fully expects to resume its pivot towards a franchising model in due course.

Other charges of £32.6m (2020: £43.3m) were also incurred, including severance cost sand restructurings arising from mitigating actions taken by the Group in respect of COVID-19, completed by 31 December 2021 as well as claims in respect of centre closures. In addition, during the year, the Group received a total of £0.7m (2020:£6.4m) in respect of worldwide financial support schemes to fund staff costs.

Should the estimated charges not prove to be in excess of the amounts required, the release of any amounts provided for at year-end would be treated as adjusting items.

11. Earnings per ordinary share (basic and diluted)

	2021	2020
Basic and diluted profit/(loss) for the year attributable to shareholders (£m)	3,201.9	(865.8)
Basic earnings/(loss) per share (p)	646,394	(173,160,000)
Diluted earnings/(loss) per share (p)	646,394	(173,160,000)
Basic and diluted profit/(loss) for the year from continuing operations (£m)	3,142.6	(864.3)
Basic earnings/(loss) per share (p)	634,422	(172,860,000)
Diluted earnings/(loss) per share (p)	634,422	(172,860,000)
Basic and diluted profit/(loss) for the year from discontinued operations (£m)	59.3	(1.5)
Basic earnings/(loss) per share (p)	11,971	(300,000)
Diluted earnings/(loss) per share (p)	11,971	(300,000)
Weighted average number of shares for basic and diluted EPS	495,348	500

12. Dividends

A dividend of £3,677.5m was declared and paid during the year (2020: £nil). The Board of Managers does not propose to declare any additional dividend for 2021 (2020: £nil).

13. Goodwill

	£m
Cost
At 1 January 2020	674.3
Recognised on acquisition of subsidiaries	28.7
Goodwill impairment	(4.9)
Exchange rate movements	(2.9)
At 31 December 2020	695.2
Recognised on acquisition of subsidiaries ⁽¹⁾	15.7
Goodwill derecognised on sale of subsidiaries	(0.9)
Goodwill impairment	-
Exchange rate movements	(6.2)
At 31 December 2021	703.8
Net book value
At 31 December 2020	695.2
At 31 December 2021	703.8

^1. Net of £3.7m derecognised on the finalisation of the accounting for prior year acquisitions previously reported on a provisional basis.

Cash-generating units (CGUs), defined as individual business centres, are grouped by country of operation for the purposes of carrying out impairment reviews of goodwill as this is the lowest level at which it can be assessed. Goodwill acquired through business combinations is held at a country level and is subject to impairment reviews based on the cash flows of the CGUs within that country.

The goodwill attributable to the reportable business segments is as follows:

	2021	2020
Carrying amount of goodwill included within:	£m	£m
Americas	311.9	307.0
EMEA	147.3	142.5
Asia Pacific	25.2	26.6
United Kingdom	219.4	219.1
	703.8	695.2

The carrying value of goodwill and indefinite life intangibles allocated to two countries, the USA and the UK, is material relative to the total carrying value, comprising 73% of the total. The remaining 27% of the carrying value is allocated to a further 38 countries. The goodwill and indefinite life intangibles allocated to the USA and the UK are set out below:

	Goodwill	Intangible assets ⁽¹⁾	2021	2020
	£m	£m	£m	£m
USA	290.3	-	290.3	286.1
United Kingdom	219.4	11.2	230.6	230.3
Other countries	194.1	-	194.1	190.0
	703.8	11.2	715.0	706.4

^1. The indefinite life intangible asset relates to the Regus brand.

The value in use for each country has been determined using a model which derives the present value of the expected future cash flows for each individual country. Although the model includes budgets and forecasts prepared by management it also reflects external factors, such as capital market risk pricing as reflected in the market capitalisation of the Group and prevailing tax rates, which have been used to determine the risk-adjusted discount rate for the Group. Management believes that the projected cash flows are a reasonable reflection of the likely outcomes over the medium to long term. In the event that trading conditions deteriorate beyond the assumptions used in the projected cash flows, it is also possible that impairment charges could arise in future periods.

The following key assumptions have been used in calculating the value in use for each country:

―	future cash flows are based on forecasts prepared by management. The model excludes cost savings and restructurings that are anticipated but had not been committed to at the date of the determination of the value in use. Thereafter, forecasts have been prepared by management for 2022, and for a further four years, that follow a budgeting process approved by the Board;
―	these forecasts exclude the impact of acquisitive growth expected to take place in future periods;
―	management considers these projections to be a reasonable projection of margins expected at the mid-cycle position.
―	A terminal value is included in the assessment, reflecting the Group's expectation that it will continue to operate in these markets and the long-term nature of the business; and
―	the Group applies a country-specific pre-tax discount rate to the pre-tax cash flows for each country. The country-specific discount rate is based on the underlying weighted average cost of capital (WACC) for the Group. The Group WACC is then adjusted for each country to reflect the assessed market risk specific to that country. The Group pre-tax WACC decreased from 8.2% in 2020 to 7.5% in 2021 (post-tax WACC: 6.1%). The country-specific pre-tax WACC reflecting the respective market risk adjustment has been set between 7.2% and 9.7% (2020: 7.9% to 10.6%).

The amounts by which the values in use exceed the carrying amounts of goodwill are sufficiently large to enable the Managers to conclude that a reasonably possible change in the key assumptions would not result in an impairment charge in any of the countries. Foreseeable events are unlikely to result in a change in the projections of such a significant nature as to result in the goodwill carrying amount exceeding their recoverable amount. The forecast models used in assessing the impairment of goodwill are based on the related business centre structure at the end of the year.

The US model assumes an average centre contribution of 24.0% (2020: 11.0%) over the next five years. A terminal value centre gross margin of 28.0% is adopted from 2026, with a 0.0% long-term growth rate assumed on revenue and costs into perpetuity. The cash flows have been discounted using a pre-tax discount rate of 8.3% (2020: 10.0%).

The UK model assumes an average centre contribution of 18.0% (2020:14.0%) over the next five years. A terminal value centre gross margin of 22.0% is adopted from 2026, with a 0.0% long-term growth rate assumed on revenue and costs into perpetuity. The cash flows have been discounted using a pre-tax discount rate of 7.5% (2020:8.3%).

Management has considered the following sensitivities:

―	Market growth and WIPOS-Management has considered the impact of a variance in market growth and WIPOS. The value in use calculation shows that if the long-term growth rate is nil, the recoverable amount of the US and UK would still be greater than their carrying value.
―	Discount rate - Management has considered the impact of an increase in the discount rate applied to the calculation. The value in use calculation shows that for the recoverable amount to be less than its carrying value, the pre-tax discount rate would have to be increased to 88.1% (2020: 31.0%) for the US and 25.3% (2020: 18.0%) for the UK.
―	Occupancy-Management has considered the impact of a variance in occupancy. The value in use calculation shows that for the recoverable amount to be less than its carrying value, occupancy in all future years would have to decrease by 23.0% (2020: 13.0%) for the US and 12.0% (2020: 8.0%) for the UK.

14. Other intangible assets

	Brand	Customer lists	Software	Total
	£m	£m	£m	£m
Cost
At 1 January 2020	62.2	30.6	75.8	168.6
Additions at cost	-	-	16.0	16.0
Acquisition of subsidiaries	-	0.1	0.2	0.3
Disposals (including discontinued operations)	-	(0.6)	(11.2)	(11.8)
Exchange rate movements	2.9	(0.6)	0.2	2.5
At 31 December 2020	65.1	29.5	81.0	175.6
Additions at cost	-	-	2.2	2.2
Acquisition of subsidiaries	2.2	1.5	1.4	5.1
Disposals (including discontinued operations)	(12.4)	-	(70.2)	(82.6)
Exchange rate movements	-	(0.2)	(0.5)	(0.7)
At 31 December 2021	54.9	30.8	13.9	99.6
Amortisation
At 1 January 2020	38.5	30.6	55.8	124.9
Charge for year	1.1	-	7.4	8.5
Disposals (including discontinued operations)	-	(0.6)	(11.1)	(11.7)
Exchange rate movements	2.3	(0.5)	0.6	2.4
At 31 December 2020	41.9	29.5	52.7	124.1
Charge for year	-	0.8	1.5	2.3
Disposals (including discontinued operations)	(0.7)	-	(44.7)	(45.4)
Exchange rate movements	-	(0.2)	(0.2)	(0.4)
At 31 December 2021	41.2	30.1	9.3	80.6
Net book value
At 1 January 2020	23.7	-	20.0	43.7
At 31 December 2020	23.2	-	28.3	51.5
At 31 December 2021	13.7	0.7	4.6	19.0

Included within the brand value is £11.2m relating to the acquisition of the remaining 58% of the UK business in the year ended 31 December 2006. The Regus brand acquired in this transaction is assumed to have an indefinite useful life due to the fact that the value of the brand is intrinsically linked to the continuing operation of the Group.

As a result of the Regus brand acquired with the UK business having an indefinite useful life no amortisation is charged but the carrying value is assessed for impairment on an annual basis. The brand was tested at the balance sheet date against the recoverable amount of the UK business segment at the same time as the goodwill arising on the acquisition of the UK business (see note 13).

15. Property, plant and equipment

	Right-of-use assets ⁽¹⁾	Land and buildings	Leasehold improvements
	£m	£m	£m
Cost
At 1 January 2020	9,449.3	51.7	1,469.5
Additions	501.4	2.2	267.3
Modifications ⁽²⁾	664.1	-	-
Acquisition of subsidiaries	3.0	-	4.1
Disposals ⁽⁴⁾	(1,070.8)	(8.7)	(193.7)
Exchange rate movements	(4.5)	-	(26.2)
At 31 December 2020	9,542.5	45.2	1,521.0
Additions	186.6	109.5	109.8
Modifications ⁽²⁾	475.0	-	-
Acquisition of subsidiaries	78.3	-	23.1
Disposals ⁽⁴⁾	(867.7)	(0.2)	(147.1)
Exchange rate movements	(123.0)	-	(22.8)
At 31 December 2021	9,291.7	154.5	1,484.0
Accumulated depreciation
At 1 January 2020	3,524.0	2.6	703.7
Charge for the year ⁽³⁾⁽⁶⁾	948.2	0.8	173.8
Disposals ⁽⁴⁾⁽⁵⁾	(736.4)	(0.7)	(108.1)
Impairment	163.9	-	82.1
Exchange rate movements	(12.4)	0.1	(16.0)
At 31 December 2020	3,887.3	2.8	835.5
Charge for the year ⁽³⁾⁽⁶⁾	892.5	2.6	133.9
Disposals ⁽⁴⁾⁽⁵⁾	(675.6)	(0.1)	(67.5)
Net reversal of impairment ⁽⁷⁾	(46.8)	-	(7.4)
Exchange rate movements	(19.7)	(0.1)	2.0
At 31 December 2021	4,037.7	5.2	896.5
Net book value
At 1 January 2020	5,925.3	49.1	765.8
At 31 December 2020	5,655.2	42.4	685.5
At 31 December 2021	5,254.0	149.3	587.5

	Furniture and equipment	Computer hardware	Total
	£m	£m	£m
Cost
At 1 January 2020	749.7	132.4	11,852.6
Additions	89.5	9.2	869.6
Modifications ⁽²⁾	-	-	664.1
Acquisition of subsidiaries	0.9	0.1	8.1
Disposals ⁽⁴⁾	(54.6)	(10.9)	(1,338.7)
Exchange rate movements	(10.5)	(2.1)	(43.3)
At 31 December 2020	775.0	128.7	12,012.4
Additions	73.3	6.6	485.8
Modifications ⁽²⁾	-	-	475.0
Acquisition of subsidiaries	1.7	-	103.1
Disposals ⁽⁴⁾	(34.1)	(11-7)	(1060.8)
Exchange rate movements	(6.1)	(2.2)	(154.1)
At 31 December 2021	809.8	121.4	11,861.4
Accumulated depreciation
At 1 January 2020	422.4	101.9	4,754.6
Charge for the year ⁽³⁾⁽⁶⁾	54.1	9.9	1,186.8
Disposals ⁽⁴⁾⁽⁵⁾	(46.4)	(10.2)	(901.8)
Impairment	-	-	246.0
Exchange rate movements	(9.3)	(0.7)	(38.3)
At 31 December 2020	420.8	100.9	5,247.3
Charge for the year ⁽³⁾⁽⁶⁾	58.0	8.0	1,095.0
Disposals ⁽⁴⁾⁽⁵⁾	(24.6)	(9.6)	(777.4)
Net reversal of impairment ⁽⁷⁾	-	-	(54.2)
Exchange rate movements	(4.0)	(1.9)	(23.7)
At 31 December 2021	450.2	97.4	5,487.0
Net book value
At 1 January 2020	327.3	30.5	7,098.0
At 31 December 2020	354.2	27.8	6,765.1
At 31 December 2021	359.6	24.0	6,374.4

^1. Right-of-use assets consist of property related leases.
^2. Modifications includes lease modifications and extensions.
^3. Includes depreciation expenses related to discontinued operations for right-of-use assets of £13.1m (2020: £26.7m)and other property, plant and equipment of £2.0m (2020: £4.6m).
^4. Includes disposals related to discontinued operations for right-of-use assets of £38.8m (2020: £0.7m) and other property, plant and equipment of £24.4m (2020: £1.2m).
^5. Disposals is net of £18.6m (2020: £nil) in respect of COVID-19 related adjusting items previously provided for (note 10).
^6. Depreciation is net of £25.2m (2020: £nil) in respect of COVID-19 related adjusting items previously provided for (note 10).
^7. The reversal of impairment of £54.2m includes an additional COVID-19 related impairment of £69.7m (2020: £nil), offset by the reversal of £151.1m (2020: £nil) previously provided for (note 10).

The key assumptions and methodology in calculating right-of-use assets and the corresponding lease liability remain consistent with those noted in notes 1 and 31.

Impairment tests for property, plant and equipment (including right-of-use assets) are performed on a cash-generating unit basis when impairment triggers arise. Cash-generating units (CGUs) are defined as individual business centres, being the smallest identifiable group of assets that generate cash flows that are largely independent of other groups of assets. The Group assesses whether there is an indication that a CGU may be impaired, including persistent operating losses, net cash outflows and poor performance against forecasts. During the year, and as a direct result of the challenging economic circumstances arising from COVID-19, this gave rise to impairment tests in relation to various centres where impairment indicators were identified.

The recoverable amounts of property, plant and equipment are based on the higher of fair value less costs to sell and value in use. The Group considered both fair value less costs to dispose and value in use in the impairment testing on a centre by centre level, on a basis consistent with the impairment testing described in note 13. Impairment charges are recognised within cost of sales in the consolidated income statement. In 2021, the Group recorded a net reversal of impairment charges of £46.8m (2020: charge of £163.9m)in respect of right-of-use assets and a net reversal of £7.4m (2020: charge of £82.1m) in respect of leasehold improvements.

16. Other long-term receivables

	2021	2020
	£m	£m
Deposits held by landlords against rent obligations	49.5	54.5
Other receivables	0.2	0.5
Receivables balances due from affiliated entities	154.2	215.5
Total non-current	203.9	270.5

17. Trade and other receivables

	2021	2020
	£m	£m
Trade receivables, net	267.3	371.6
Prepayments and accrued income	106.0	111.1
Acquired debt receivable	-	276.2
Other receivables	112.0	90.9
Partner contributions receivables	30.2	33.8
VAT recoverable	140.8	163.4
Deposits held by landlords against rent obligations	3.0	2.4
Total current	659.3	1,049.4

The amount of £276.2m recognised in 2020, related to mezzanine and senior debt in an acquisition target that the Group did not control as at 31 December 2020. This classification as a current asset reflected the status of the counterparty in default and that the debt was technically repayable on demand. The balances were recognised at amortised cost of £276.2m at 31 December 2020 as the acquisition did not complete. The debts were fully repaid to the Group in February 2021.

18. Trade and other payables (including customer deposits)

	2021	2020
	£m	£m
Customer deposits	384.5	423.6
Other accruals	167.5	158.3
Trade payables	185.0	363.0
VAT payable	88.0	117.9
Other payables	66.8	10.2
Other tax and social security	12.5	14.5
Total current	904.3	1,087.5

During 2021 the Group conducted a review of its customer deposits for inactive customer accounts. Based on this review, the Group has released the financial liabilities in respect of such deposits where the obligation qualifies for derecognition. The effect of these changes was an increase in operating profit of £21.9m in 2021.

19. Borrowings

The Group'stotal loan and borrowing position at 31 December 2021 and at 31 December 2020 had the following maturity profiles:

Bank and other loans

	2021	2020
	£m	£m
Repayments falling due as follows:
In more than one year but not more than two years	4.7	6.6
In more than two years but not more than five years ⁽¹⁾	754.5	876.0
In more than five years	2.1	0.8
Total non-current	761.3	883.4
Total current	21.5	21.9
Total bank and other loans	782.8	905.3

^1. Includes convertible bond debt of £nil (2020: £298.8m).

Further information regarding the committed borrowings can be found in note 24.

20. Provisions

	2021
	Closures	Other	Total
	£m	£m	£m
At 1 January	23.9	7.1	31.0
Acquired in the period	-	4.3	4.3
Provided in the period	12.4	2.7	15.1
Utilised in the period ⁽¹⁾	(22.5)	(6.5)	(29.0)
Exchange rate movements	(0.6)	(0.2)	(0.8)
At 31 December	13.2	7.4	20.6
Analysed between:
Current	0.8	7.4	8.2
Non-current	12.4	-	12.4
At 31 December	13.2	7.4	20.6

	2020
	Closures	Other	Total
	£m	£m	£m
At 1 January	13.0	2.8	15.8
Acquired in the period	-	-	-
Provided in the period	40.3	4.5	44.8
Utilised in the period ⁽¹⁾	(29.0)	-	(29.0)
Exchange rate movements	(0.4)	(0.2)	(0.6)
At 31 December	23.9	7.1	31.0
Analysed between:
Current	11.5	6.0	17.5
Non-current	12.4	1.1	13.5
At 31 December	23.9	7.1	31.0

^1. Includes provisions release related to discontinued operations of £0.2m (2020: £nil).

Closures

Provisions for closures relate to the expected costs of centre closures, including restructuring costs. Impairments of right-of-use assets and property, plant and equipment (note 15) are not included above.

Other

Other provisions include the estimated costs of claims against the Group outstanding at 31 December 2021, of which, due to their nature, the maximum period over which they are expected to be utilised is uncertain.

The Group is involved in various disputes, primarily related to potential lease obligations, some of which are in the course of litigation. Where there is a dispute and where, based on legal counsel advice, the Group estimates that it is probable that the dispute will result in an outflow of economic resources, provision is made based on the Group's best estimate of the likely financial outcome. Where a reliable estimate cannot be made, or where the Group, based on legal counsel advice, considers that it is not probable that there will be an outflow of economic resources, no provision is recognised. There are no disputes which are expected to have a material impact on the Group.

21. Investments in joint ventures

	Investments in joint ventures	Provision for deficit in joint ventures	Total
	£m	£m	£m
At 1 January 2020	13.8	(2.9)	10.9
Share of loss	(0.9)	(1.7)	(2.6)
Disposals	(1.6)	-	(1.6)
Exchange rate movements	-	-	-
At 31 December 2020	11.3	(4.6)	6.7
Acquisition of joint ventures ⁽¹⁾	33.4	-	33.4
Share of loss	0.1	(2.3)	(2.2)
Exchange rate movements	0.1	0.4	0.5
At 31 December 2021	44.9	(6.5)	38.4

^1. The acquisition of joint ventures was settled via a non-cash transaction of £33.4m.

The Group has 82 centres operating under joint venture agreements (2020:46) at the reporting date, all of which are individually immaterial.

The Group has a legal obligation in respect of its share of any deficits recognised by these operations.

The results of the joint ventures below are the full-year results of the joint ventures and do not represent the effective share:

	2021	2020
	£m	£m
Income statement
Revenue	35.3	28.3
Expenses	(38.2)	(36.9)
Loss before tax for the year	(2.9)	(8.6)
Tax charge	(0.4)	(0.7)
Loss after tax for the year	(3.3)	(9.3)
Balance sheet
Non-current assets	136.9	43.1
Current assets	168.6	50.8
Current liabilities	(160.1)	(68.8)
Non-current liabilities	(125.6)	(36.4)
Net assets/(liabilities)	19.8	(11.3)

22. Share capital

Ordinary equity share capital

	2021		2020
		Nominal value		Nominal value
	Number	£m	Number	£m
Authorised
Ordinary 1p shares in IWG plc at 1 January	500	0.0	500	0.0
Ordinary 1p shares in IWG plc 31 December	2,970,090	74.3	500	0.0
Issued and fully paid up
Ordinary 1p shares in IWG pIc at 1 January	500	0.0	500	0.0
Ordinary 1p shares in IWG plc at 31 December	2,970,090	74.3	500	0.0

On 5 November 2021, the Group issued 2,969,590 new ordinary shares at a par value of £25.00 and a share premium of £291.7m, with the Group recognising the net proceeds received of £366.0m, through an increased investment in IWG Group Holdings as part of an internal restructuring of the wider IWG plc Group.

23. Net debt analysis

	Cash and cash equivalents	Gross cash	Debt due within one year	Debt due after one year ⁽²⁾⁽³⁾
	£m	£m	£m	£m
At 1 January 2020	66.1	66.1	(9.7)	(637.5)
Cash flow	(0.7)	(0.7)	(13.1)	(45.0)
Non-cash movements ⁽¹⁾	-	-	-	(197.2)
Exchange rate movements	5.0	5.0	0.9	(3.7)
At 31 December 2020	70.4	70.4	(21.9)	(883.4)
Cash flow	0.7	0.7	1.1	(82.9)
Non-cash movements ⁽¹⁾	-	-	(0.9)	205.1
Exchange rate movements	1.8	1.8	0.2	(0.1)
At 31 December 2021	72.9	72.9	(21.5)	(761.3)

	Lease due within one year ⁽¹⁾	Lease due after one year ^'41	Gross debt	Net debt	Derivative liability	Total
	£m	£m	£m	£m	£m	£m
At 1 January 2020	(979.2)	(5,575.0)	(7,201.4)	(7,135.3)	(0.2)	(7,135.5)
Cash flow	151.5	997.7	1,091.4	1,090.4	(51.8)	1,038.6
Non-cash movements ⁽¹⁾	(200.8)	(968.3)	(1,366.3)	(1,366.3)	2.4	(1,363.9)
Exchange rate movements	6.7	-	3.9	8.9	-	8.9
At 31 December 2020	(1,021.8)	(5,545.6)	(7,472.3)	(7,402.3)	(49.6)	(7,451.9)
Cash flow	149.4	882.7	950.3	951.0	-	951.0
Non-cash movements ⁽¹⁾	(78.9)	(624.0)	(498.7)	(498.7)	49.6	(449.1)
Exchange rate movements	19.6	98.2	117.9	119.7	-	119.7
At 31 December 2021	(931.7)	(5,188.7)	(6,903.2)	(6,830.3)	-	(6,830.3)

^1. Includes early termination of lease liabilities of £231.7m (2020: £362.8m) of which £52.3m (2020: £0.8m) is related to discontinued operations, and the derecognition of the convertible bond derivative liability element of £49.4m.
^2. Includes £nil (2020: £298.8m) convertible bond liability.
^3. Excludes the convertible bond derivative liability element at 31 December 2021 of £nil (2020: £49.4m) and a cash flow hedging liability at 31 December 2021 of £nil (2020: £0.2m).
^4. There are no significant lease commitments for leases not commenced at 31 December 2021.

Cash and cash equivalent balances held by the Group that are not available for use amounted to £7.4m at 31 December 2021 (2020: £4.1m). Of this balance, £2.6m (2020: £1.6m) is pledged as security against outstanding bank guarantees and a further £4.8m (2020:£2.5m) is pledged against various other commitments of the Group.

Cash flows on lease liabilities consist of principal payments of £865.0m (2020: £900.0m) and interest payments of £167.1m (2020: £249.3m). Total cash outflows of £1,094.1m (2020: £1,210.9m) for leases, including variable payments of £62.0m (2020: £61.7m), were incurred in the year.

Non-cash movements of £702.9m (2020: £1,169.1m) represent the movements on lease liabilities in relation to new leases, lease modifications/re-measurements and lease cessations.

Cash flows on debt due within, and after, one year relate to movements in the revolving credit facility and other borrowings. These net movements align with the activities reported in the cash flow statement after taking into consideration the £nil (2020:£49.4m) derivative liability and a £nil (2020: £0.2m) cash flow hedging liability recognised separately.

The following amounts are included in the Group's consolidated financial statements in respect of its leases:

	2021	2020
Depreciation charge for right-of-use assets	(892.5)	(948.3)
Principal lease liability repayments	(865.0)	(900.0)
Interest expense on lease liabilities	(167.1)	(249.3)
Expenses relating to leases of low-value assets that are not shown above as short-term leases	1.0	2.5
Expenses relating to variable lease payments not included in lease liabilities	62.0	61.7
Total cash outflow for leases comprising interest and capital payments	1,032.1	1,149.2
Additions to right-of-use assets	186.6	501.4
Acquired right-of-use assets	78.3	3.0

24. Financial instruments and financial risk management

The objectives, policies and strategies applied by the Group with respect to financial instruments and the management of capital are determined at Group level. The Group's Board maintains responsibility for the risk management strategy of the Group and the Chief Financial Officer is responsible for policy on a day-to-day basis. The Chief Financial Officer and Group Treasurer review the Group's risk management strategy and policies on an ongoing basis. The Board has delegated to the Group Audit Committee the responsibility for applying an effective system of internal control and compliance with the Group's risk management policies.

Exposures to credit, interest rate and currency risks arise in the normal course of business.

Going concern

The Strategic Report on pages 22 to 28 sets out the Group's strategy and the factors that are likely to affect the future performance and position of the business. The financial review on pages 42 to 47 within the Strategic Report reviews the trading performance, financial position and cash flows of the Group. The Group's net debt position decreased by £572m (2020: increased by £267m) to a net debt position of £6,830.3m (2020: £7,402.3m) as at 31 December 2021. Excluding the IFRS 16 lease liabilities, the net debt position increased to £709.9m (2020: £834.9m). The investment ingrowth is funded by a combination of cash flow generated from the Group's mature business centres, cash consideration received in franchising the business and debt. The Group had a £950.0m revolving credit facility (RCF) provided by a group of relationship banks with a final maturity in 2025 with an option to extend until 2026. As at 31 December 2021, £530.1m (2020: £731.3m) of the RCF was available and undrawn.

Although the Group has net current liabilities of £1,492.2m (2020: £1,361.1m), 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 £344.2m (2020: £326.6m) which will be recognised in future periods through the income statement. The Group holds customer deposits of £384.5m (2020: £423.6m) which are spread across a large number of customers and no deposit held for an individual customer is material. Therefore, the Group does not believe the net current liabilities represents a liquidity risk.

Subsequent events

In February 2022, the £950.0m revolving credit facility was reduced to £750.0m, with an unchanged maturity date in 2025. The facility is subject to financial covenants which include EBITDA, minimum liquidity, interest cover and net debt to EBITDA ratio.

The Managers performed an updated going concern assessment to reflect the impact of the amended revolving credit facility and concluded that the facility remains sufficient for the Group to retain sufficient cash reserves to continue as a going concern, for a period of at least 12 months from the date of approval of these Group consolidated financial statements.

In addition, a £330m bridge facility for The Instant Group acquisition has been agreed. The bridge facility has a maturity in September 2023. This facility is secured and is subject to interest cover and net debt to EBITDA covenants.

Credit risk

Credit risk could occur where a customer or counterparty defaults under the contractual terms of a financial instrument and arises principally in relation to customer contracts and the Group's cash deposits.

A diversified customer base, requirement for customer deposits, and payments in advance on workstation contracts minimise the Group's exposure to customer credit risk. No single customer contributes a material percentage of the Group's revenue. The Group's policy is to provide against trade receivables when specific debts are judged to be irrecoverable or where formal recovery procedures have commenced. Trade debtors that are more than three months overdue are considered to be in default and therefore, under the simplified lifetime approach, are impaired in full. This reflects the Group's experience of the likelihood of recoverability of these trade receivables based on both historical and forward-looking information. These provisions, which take into consideration any customer deposits held, are reviewed on an ongoing basis to assess changes in the likelihood of recoverability.

The Group has assessed the other receivable balances for expected credit losses, with no expected credit losses recognised due to the nature and default history of these items.

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	2020
	£m	£m
Americas	106.0	114.5
EMEA	94.2	169.1
Asia Pacific	25.4	56.4
United Kingdom	41.7	31.6
	267.3	371.6

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:

	Gross 2021	Provision 2021	Gross 2020	Provision 2020
	£m	£m	£m	£m
Not overdue	224.7	-	248.0	-
Past due 0 - 30 days	20.8	-	27.9	-
Past due 31 - 60 days	7.3	-	16.9	-
Past due more than 60 days	41.9	(27.4)	104.5	(25.7)
	294.7	(27.4)	397.3	(25.7)

The Group conducted a review of the expected credit risk associated with accounts receivable balances during 2021. This review was performed in response to changing commercial circumstances, with the Group recognising an increase in the expected credit losses of £6.1 m.

At 31 December 2021, the Group maintained a provision of £27.4m for expected credit losses (2020: £25.7m) arising from trade receivables. The Group had provided £99.5m (2020: £34.8m) in the year, utilised £97.6m (2020: £16.8m) and released £nil (2020: £nil). Customer deposits of £384.5m (2020: £423.6m) are held by the Group, mitigating the risk of default.

IFRS 9 requires the Group to record expected credit losses on all of its receivables, either on a 12-month or lifetime basis. The Group has applied the simplified approach to all trade receivables, which requires the recognition of the expected credit loss based on the lifetime expected losses. The expected credit loss is mitigated through the invoicing of contracted services in advance and customer deposits.

Cash investments and derivative financial instruments are only transacted with counterparties of sound credit ratings, and management does not expect any of these counterparties to fail to meet their obligations.

Liquidity risk

Liquidity risk represents the risk that the Group will not be able to meet its obligations as they fall due. The Group manages liquidity risk by closely monitoring the global cash position, the available and undrawn credit facilities, and forecast capital expenditure and expects to have sufficient liquidity to meet its financial obligations as they fall due. In response to the COVID-19 pandemic, the Group continues to focus on cash generation by reducing cost, renegotiating rents and rationalising the network, resulting in short or long-term cash benefits. The Group has free cash and liquid investments (excluding blocked cash) of £65.5m (2020: £66.3m). In addition to cash and liquid investments, the Group had £530.1m (2020: £731.3m) available and undrawn under its committed borrowings. The Managers consider the Group has adequate liquidity to meet day-to-day requirements.

The Group maintained a revolving credit facility provided by a group of international banks. At 31 December 2021, the amount of the facility remained £950.0m (2020: £950.0m) and the final maturity was extended in March 2020 to March 2025 with an option to extend until 2026.

Subsequent events

In February 2022, the £950m revolving credit facility was reduced to £750m, with an unchanged maturity date in 2025. The facility is subject to financial covenants which include EBITDA, minimum liquidity, interest cover and net debt to EBITDA ratio.

The Managers performed an updated going concern assessment to reflect the impact of the amended revolving credit facility and concluded that the facility remains sufficient for the Group to retain sufficient cash reserves to continue as a going concern, for a period of at least 12 months from the date of approval of these Group consolidated financial statements.

In addition, a £330m bridge facility for The Instant Group acquisition has been agreed. The bridge facility has a maturity in September 2023. This facility is secured and is subject to interest cover and net debt to EBITDA covenants.

The Group actively reviews its exposure to interest rate movements. The issuance of the fixed rate convertible bond significantly reduces the Group's exposure to an increase in interest rates. The final interest rate swap taken to hedge against the floating interest rate obligations of debt drawn under the revolving credit facility matured in February 2021. This had a nominal amount of £30.0m and a fixed rate of 1.2%.

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 Managers. The Group does not use financial derivatives for trading or speculative reasons.

Interest rate risk

The Group manages its exposure to interest rate risk through the relative proportions of fixed rate debt and floating rate debt. Any surplus cash balances are invested short term, and at the end of 2021 no cash was invested for a period exceeding three months (2020: £nil).

Foreign currency risk

The Group is exposed to foreign currency exchange rate movements. The majority of day-to-day transactions of overseas subsidiaries are carried out in local currency and the underlying foreign exchange exposure is small. Transactional exposures do arise in some countries where it is local market practice for a proportion of the payables or receivables to be in other than the functional currency of the affiliate. Intercompany charging, funding and cash management activity may also lead to foreign exchange exposures. It is the policy of the Group to seek to minimise such transactional exposures through careful management of non-local currency assets and liabilities, thereby minimising the potential volatility in the income statement. Net investments in IWG affiliates with a functional currency other than pounds sterling are of a long-term nature and the Group does not normally hedge such foreign currency translation exposures.

The principal exposures of the Group are to the US dollar and the euro, with approximately 35% (2020:37%) of the Group's revenue being attributable to the US dollar and 23%(2020:22%) to the euro.

From time to time the Group uses short-term derivative financial instruments to manage its transactional foreign exchange exposures where these exposures cannot be eliminated through balancing the underlying risks. No transactions of a speculative nature are undertaken.

The foreign currency exposure arising from open third-party transactions held in a currency other than the functional currency of the related entity is summarised as follows:

	2021
£m	GBP	EUR	USD
Trade and other receivables	-	2.3	0.4
Trade and other payables	(0.9)	(8.6)	0.2
Net statement of financial position exposure	(0.9)	(6.3)	0.6

	2020
£m	GBP	EUR	USD
Trade and other receivables	0.1	1.8	1.3
Trade and other payables	(0.4)	(4.1)	(1.8)
Net statement of financial position exposure	(0.3)	(23)	(0.5)

Other market risks

The Group does not hold any equity securities for fair value measurement under IFRS9 and is therefore not subject to risks of changes in equity prices in the income statement.

Sensitivity analysis

For the year ended 31 December 2021, it is estimated that a general increase of one percentage point in interest rates would have increased the Group's loss before tax by approximately £1.2m (2020: £1.8m) with a corresponding decrease in total equity.

It is estimated that a five-percentage point weakening in the value of the US dollar against pounds sterling would have increased the Group's loss before tax by approximately £1.5m for the year ended 31 December 2021 (2020: £2.9m). It is estimated that a five-percentage point weakening in the value of the euro against pounds sterling would have increased the Group's loss before tax by approximately £0.4m for the year ended 31 December 2021 (2020: £1.0m).

It is estimated that a five-percentage point weakening in the value of the US dollar against pounds sterling would have decreased the Group's total equity by approximately £8.0m for the year ended 31 December 2021 (2020: £6.3m). It is estimated that a five-percentage point weakening in the value of the euro against pounds sterling would have decreased the Group's total equity by approximately £4.5m for the year ended 31 December 2021 (2020: £5.4m).

Effective interest rates

In respect of financial assets and financial liabilities, the following table indicates their effective interest rates at the balance sheet date and the periods in which they mature.

Except for lease liabilities and the convertible bond, the undiscounted cash flow and fair values of these instruments is not materially different from the carrying value.

As at 31 December 2021

	Effective interest rate	Carrying value	Contractual cash flow
	%	£m	£m
Cash and cash equivalents	0.0%	72.9	72.9
Trade and other receivables ⁽¹⁾	-	553.3	553.3
Other long-term receivables	-	203.9	203.9
Financial assets ⁽²⁾		830.1	830.1
Non-derivative financial liabilities ⁽³⁾ :
Bank loans and corporate borrowings	4.0%	(136.5)	(136.5)
Convertible bonds-debt host	-	-	-
Lease liabilities	3.3%	(6,120.4)	(7,851.9)
Other loans	0.0%	(646.3)	(646.3)
Contingent consideration on acquisitions	-	(6.8)	(6.8)
Trade and other payables	-	(897.5)	(897.5)
Other long-term payables	-	(0.5)	(0.5)
Derivative financial liabilities:
Convertible bonds-embedded conversion option	-	-	-
Interest rate swaps
- Outflow	-	-	-
- Inflow	-	-	-
Financial liabilities		(7,808.0)	(9,539.5)

	Less than 1 year	1-2 years	2-5 years	More than 5 years
	£m	£m	£m	£m
Cash and cash equivalents	72.9	-	-	-
Trade and other receivables ⁽¹⁾	553.3	-	-	-
Other long-term receivables	-	102.0	101.9	-
Financial assets ⁽²⁾	626.2	102.0	101.9	-
Non-derivative financial liabilities ⁽³⁾ :
Bank loans and corporate borrowings	(0.2)	(0.3)	(136.0)	-
Convertible bonds-debt host	-	-	-	-
Lease liabilities	(1,092.0)	(1,063.6)	(2,556.0)	(3,140.3)
Other loans	(21.3)	(4.4)	(618.5)	(2.1)
Contingent consideration on acquisitions	(6.8)	-	-	-
Trade and other payables	(897.5)	-	-	-
Other long-term payables	-	(0.5)	-	-
Derivative financial liabilities:
Convertible bonds-embedded conversion option	-	-	-	-
Interest rate swaps
- Outflow	-	-	-	-
- Inflow	-	-	-	-
Financial liabilities	(2,017.8)	(1,068.8)	(3,310.5)	(3,142.4)

As at 31 December 2020

	Effective interest rate	Carrying value	Contractual cash flow
	%	£m	£m
Cash and cash equivalents	0.1%	70.4	70.4
Trade and other receivables ⁽¹⁾	-	938.3	938.3
Other long-term receivables	-	270.5	270.5
Financial assets ⁽²⁾		1,279.2	1,279.2
Non-derivative financial liabilities ⁽³⁾ :
Bank loans and corporate borrowings	2.8%	(91.7)	(91.7)
Convertible bonds-debt host	3.8%	(298.8)	(358.8)
Lease liabilities	3.4%	(6,567.4)	(9,849.7)
Other loans	1.2%	(514.8)	(514.8)
Trade and other payables	-	(1,087.5)	(1,087.5)
Other long-term payables	-	(2.2)	(2.2)
Derivative financial liabilities:
Convertible bonds-embedded conversion option	-	(49.4)	(49.4)
Interest rate swaps
- Outflow	-	(0.2)	(0.2)
- Inflow	-	-	-
Financial liabilities	-	(8,612.0)	(11,954.3)

	Less than 1 year	1-2 years	2-5 years	More than 5 years
	£m	£m	£m	£m
Cash and cash equivalents	70.4	-	-	-
Trade and other receivables ⁽¹⁾	938.3	-	-	-
Other long-term receivables	-	135.3	135.2	-
Financial assets ⁽²⁾	1008.7	135.3	135.2	-
Non-derivative financial liabilities ⁽³⁾ :
Bank loans and corporate borrowings	-	(1.0)	(90.7)	-
Convertible bonds-debt host	(1.8)	(1.8)	(355.2)	-
Lease liabilities	(1,189.1)	(1,170.4)	(3,062.4)	(4,427.8)
Other loans	(21.9)	(5.6)	(486.5)	(0.8)
Trade and other payables	(1,087.5)	-	-	-
Other long-term payables	-	(2.2)	-	-
Derivative financial liabilities:
Convertible bonds-embedded conversion option	-	-	(49.4)	-
Interest rate swaps
- Outflow	(0.2)	-	-	-
- Inflow	-	-	-	-
Financial liabilities	(2,300.5)	(1,181.0)	(4,044.2)	(4,428.6)

^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 2021

	Carrying amount
£m	Cash, loans and receivables	Other financial liabilities	Cash flow - hedging instruments	Total
Cash and cash equivalents	72.9	-	-	72.9
Trade and other receivables	553.3	-	-	553.3
Other long-term receivables	203.9	-	-	203.9
Derivative financial liabilities	-	-	-	-
Convertible bonds	-	-	-	-
Bank loans and corporate borrowings	-	(136.5)	-	(136.5)
Other loans	-	(646.3)	-	(646.3)
Contingent consideration on acquisitions	-	(6.8)	-	(6.8)
Trade and other payables	-	(897.5)	-	(897.5)
Other long-term payables	-	(0-5)	-	(0.5)
	830.1	(1,687.6)	-	(857.5)

	Fair value
£m	Level 1	Level 2	Level 3	Total
Cash and cash equivalents	-	-	-	-
Trade and other receivables	-	-	-	-
Other long-term receivables	-	-	-	-
Derivative financial liabilities	-	-	-	-
Convertible bonds	-	-	-	-
Bank loans and corporate borrowings	-	-	-	-
Other loans	-	-	-	-
Contingent consideration on acquisitions	-	-	(6.8)	(6-8)
Trade and other payables	-	-	-	-
Other long-term payables	-	-	-	-
	-	-	(6.8)	(6.8)

31 December 2020

	Carrying amount
£m	Cash, loans and receivables	Other financial liabilities	Cashflow - hedging instruments	Total
Cash and cash equivalents	70.4	-	-	70.4
Trade and other receivables	938.3	-	-	938.3
Other long-term receivables	270.5	-	-	270.5
Derivative financial liabilities	-	(49.4)	(0.2)	(49.6)
Convertible bonds	-	(298.8)	-	(298.8)
Bank loans and corporate borrowings	-	(91.7)	-	(91.7)
Other loans	-	(514.8)	-	(514.8)
Trade and other payables	-	(1,087.5)	-	(1,087.5)
Other long-term payables	-	(2.2)	-	(2.2)
	1,279.2	(2,044.4)	(0.2)	(765.4)

	Fair value
£m	Level 1	Level 2	Level 3	Total
Cash and cash equivalents	-	-	-	-
Trade and other receivables	-	276.2	-	276.2
Other long-term receivables	-	-	-	-
Derivative financial liabilities	-	(0.2)	(49.4)	(49.6)
Convertible bonds	-	-	(298.8)	(298.8)
Bank loans and corporate borrowings	-	-	-	-
Other loans	-	-	-	-
Trade and other payables	-	-	-	-
Other long-term payables	-	-	-	-
	-	276.0	(348.2)	(72.2)

Included within other receivables is £nil (2020: £276.2m) relating to mezzanine and senior debts acquired in December 2020. The balances have been recognised at fair value of £nil (2020: £276.2m) at 31 December 2021. The mezzanine and senior debt receivable balances was settled in full in February 2021.

At the date of issue, the £350.0m was bifurcated at £298.2m and £51.8m between corporate borrowings (debt) and a derivative financial liability respectively. In November 2021, the convertible bond was transferred to IWG International Holdings Sari, a subsidiary of the Group and guaranteed by IWG plc.

During the years ended 31 December 2021 and 31 December 2020, there were no transfers between levels for fair value measured instruments.

Valuation techniques

When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

―	Level 1: quoted prices in active markets for identical assets or liabilities;
―	Level 2: inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly or indirectly; and
―	Level 3: inputs for the asset or liability that are not based on observable market data.

The following tables show the valuation techniques used in measuring level 3 fair values and methods used for financial assets and liabilities not measured at fair value:

Type	Valuation technique
Cash and cash equivalents, trade and other receivables/payables, customer deposits, contingent consideration and investment loan receivables	For cash and cash equivalents, receivables/payables with a remaining life of less than one year and customer deposits, the book value approximates the fair value because of their short-term nature.
Loans, overdrafts and debt element of convertible bonds	The fair value of bank loans, overdrafts and other loans approximates the carrying value because interest rates are at floating rates where payments are reset to market rates at intervals of less than one year.
Foreign exchange contracts, interest rate swaps and derivative element of convertible bonds	The fair values are based on a combination of broker quotes, forward pricing, and swap models. The fair value of the derivative element of convertible bonds has been calculated with reference to unobservable credit spreads.

Derivative financial instruments

The following table summarises the notional amount of the open contracts as at the reporting date:

	2021	2020
	£m	£m
Derivatives used for cash flow hedging	-	30.0

Committed borrowings

	2021 Facility	2021 Available	2020 Facility	2020 Available
	£m	£m	£m	£m
Revolving credit facility	950.0	530.1	950.0	731.3

The Group maintains a revolving credit facility provided by a group of international banks. At 31 December 2021, the amount of the facility remains£950.0m (2020: £950.0m) and the final maturity was extended in March 2020 to March 2025 with an option to extend until 2026. As at 31 December, £530.1m (2020: £731.3m) was available and undrawn under this facility.

The £950.0m revolving credit facility was subject to financial covenants. In April 2021 the Group agreed revised covenants for the period to June 2022 relating to EBITDA and liquidity headroom. The Group was in compliance with its covenants up to the date of the amendment of the covenants and is in compliance with the amended covenant requirements.

Subsequent events

In February 2022, the £950.0m revolving credit facility was reduced to £750.0m, with an unchanged maturity date in 2025. The facility is subject to financial covenants which include EBITDA, minimum liquidity, interest cover and net debt to EBITDA ratio.

In addition, a £330m bridge facility for The Instant Group acquisition has been agreed. The bridge facility has a maturity in September 2023. This facility is secured and is subject to interest cover and net debt to EBITDA covenants.

The Group actively reviews its exposure to interest rate movements. The issuance of the fixed rate convertible bond significantly reduces the Group's exposure to an increase in interest rates.

Convertible bonds

In December 2020, the Group issued a £350.0m convertible bond, issued by IWG Group Holdings Sàrl. The bond carries a fixed coupon of 0.5% per annum. The bond liability was split between corporate borrowings (debt) and a derivative financial liability. At the date of issue, the £350.0m was bifurcated at £298.2m and £51.8m between corporate borrowings (debt) and a derivative financial liability, respectively. In November 2021, the convertible bond was transferred to IWG International Holdings Sàrl, a subsidiary of the Group and guaranteed by IWG plc.

25. 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:

	2021
	£m
	Switzerland	Philippines	Total
Fair value of plan assets	4.7	-	4.7
Present value of obligations	(5.8)	-	(5.8)
Net funded obligations	(1.1)	-	(1.1)

	2020
	£m
	Switzerland	Philippines	Total
Fair value of plan assets	4.8	-	4.8
Present value of obligations	(6.0)	(0.9)	(6.9)
Net funded obligations	(1.2)	(0.9)	(2.1)

26. Acquisitions

Current period acquisitions

During the year ended 31 December 2021 the Group made various individually immaterial acquisitions for a total consideration of £30.0m.

£m	Book value	Provisional fair value adjustments	Provisional fair value
Net assets acquired
Intangible assets	1.4	-	1.4
Right-of-use assets	78.3	-	78.3
Other property, plant and equipment	24.8	-	24.8
Cash	32.1	-	32.1
Other current and non-current assets	12.6	-	12.6
Lease liabilities	(80.8)	-	(80.8)
Current liabilities	(27.0)	-	(27.0)
Non-current liabilities	(10.9)	-	(10.9)
	30.5	-	30.5
NCI based on their proportionate interest in the recognised amounts of the assets and liabilities of 'The Wing'			(15.2)
Goodwill arising on acquisition			16.4
Negative goodwill arising on acquisition			(1.7)
Total consideration			30.0
Less: deferred consideration			(4.7)
Less: contingent consideration			(3-8)
Cash flow on acquisition
Cash paid			21.5
Less: cash acquired			(32.1)
Net cash inflow			(10.6)

Goodwill of £16.4m arose relating to 2021 acquisitions. In addition, a final fair value adjustment of £(3.7)m and a £3.0m contingent consideration were recognised for the 2020 acquisitions.

Goodwill arising on acquisitions in 2021 includes negative goodwill of £1.7m, recognised as part of the selling, general and administration expenses in the consolidated income statement.

The goodwill arising on the 2021 acquisitions reflects the anticipated future benefits IWG can obtain from operating the businesses more efficiently, primarily through increasing occupancy and the addition of value-adding products and services.

Of the above goodwill, £16.4m is expected to be deductible for tax purposes.

If the above acquisitions had occurred on 1 January 2021, the revenue and net retained loss arising from these acquisitions would have been £16.7m and £23.0m respectively. In the year, the acquisitions contributed revenue of £11.9m and net retained loss of £19.3m.

Deferred consideration of £4.7m arose on the acquisitions made in the year and is held on the Group's balance sheet at 31 December 2021. No additional deferred consideration relating to prior period acquisitions is held on the Group's balance sheet at 31 December 2021.

Contingent consideration of £3.8m arose on the 2021 acquisitions. No contingent consideration was paid during the current year with respect to milestones achieved on previous acquisitions. Contingent consideration balances of £6.8m are held on the Group's balance sheet at 31 December 2021.

The acquisition costs associated with these transactions were £1.0m, recorded within administration expenses in the consolidated income statement.

For acquisitions completed in 2021, the fair value of assets acquired has only been provisionally assessed, pending completion of a fair value assessment which has not yet been completed. The main changes in the provisional fair values expected are primarily for customer relationships and property, plant and equipment. The final assessment of the fair value of these assets will be made within 12 months of the acquisition dates and any adjustments reported in future reports.

Prior period acquisitions

During the year ended 31 December 2020 the Group made acquisitions for a total consideration of £31.5m.

£m	Book value	Provisional fair value adjustments	Final fair value adjustments	Final fair value
Net assets acquired
Intangible assets	-	-	3.7	3.7
Right-of-use assets	3.0	-	-	3.0
Other property, plant and equipment	5.1	-	-	5.1
Cash	1.7	-	-	1.7
Other current and non-current assets	12.3	-	-	12.3
Lease liabilities	(3.0)	-	-	(3.0)
Current liabilities	(14.8)	-	-	(14.8)
Non-current liabilities	(5.9)	-	-	(5.9)
	(1.6)	-	3.7	2.1
Previously held share of net assets ⁽¹⁾				1.4
Goodwill arising on acquisition			(3.7)	28.0
Total consideration				31.5
Less: deferred consideration				-
Less: contingent consideration ⁽²⁾				(3.0)
Cash flow on acquisition
Cash paid				28.5
Less: cash acquired				(1.7)
Net cash outflow				26.8

^1. The 2020 acquisitions include one stepped-acquisition where the non-controlling interest in a former joint venture was acquired by the Group.
^2. Contingent consideration of £3.0m was recorded in 2021, relating to an acquisition completed in late December 2020. This consideration, and the related £3.0m goodwill, has been recognised in 2021.

The goodwill arising on the 2020 acquisitions reflects the anticipated future benefits IWG can obtain from operating the businesses more efficiently, primarily through increasing occupancy and the addition of value-adding products and services. Of the above goodwill, £28.0m was expected to be deductible for tax purposes.

If the above acquisitions had occurred on 1 January 2020, the revenue and net retained profit arising from these acquisitions would have been £17.8m and £1.5m respectively. During 2020, the acquisitions contributed revenue of £2.6m and net retained profit of £0.6m.

No deferred consideration arose on the 2020 acquisitions.

Contingent consideration of £3.0m arose on the 2020 acquisitions but was only recognised in 2021 due to the late timing of the related acquisition. No contingent consideration was paid during the current year with respect to milestones achieved on previous acquisitions.

The acquisition costs associated with these transactions were £0.4m, recorded within administration expenses in the consolidated income statement.

The prior year comparative information has not been restated due to the immaterial nature of the final fair value adjustments recognised in 2020.

Non-controlling interests

During 2021, the Group completed the acquisition of 'The Wing', which included a 43% non-controlling interest.

The following table summarises the information relating to each of the Group's subsidiaries that have a material non-controlling interest.

	2021	2020
NCI percentage	43%	-
Non-current assets	42.3	-
Current assets	11.4	-
Non-current liabilities	(24.8)	-
Current liabilities	(6.7)	-
Net assets	22.2	-
Net assets attributable to NCI	9.6	-
Revenue	0.7	-
Loss after tax	(13.0)	-
Other comprehensive income	-	-
Total comprehensive income	(12.3)	-
Loss allocated to NCI	(5.6)	-
Other comprehensive income allocated to NCI	-	-
Cash flows from operating activities	(14.1)	-
Cash flows from investing activities	29.3	-
Cash flows from financing activities	(7.4)	-
Net increase in cash and cash equivalents	7.8	-

27. Capital commitments

	2021	2020
	£m	£m
Contracts placed for future capital expenditure not provided for in the financial statements	88.7	147.0

These commitments are principally in respect of centre fit-out obligations. There are £0.5m capital commitments in respect of joint ventures at 31 December 2021 (2020: £nil).

28. Contingent assets and liabilities

The Group has bank guarantees and letters of credit held with certain banks, predominantly in support of leasehold contracts with a variety of landlords, amounting to 309.4m (2020: £143.9m). There are no material lawsuits pending against the Group.

29. Related parties

Parent and subsidiary entities

The consolidated financial statements include the results of the Group and its subsidiaries listed in note 30.

Joint ventures

The following table provides the total amount of transactions that have been entered into with related parties for the relevant financial year.

£m	Management fees received from related parties	Amounts owed by related party	Amounts owed to related party
2021
Joint ventures	3.5	19.7	20.0
2020
Joint ventures	2.6	17.6	4.3

As at 31 December 2021, none of the amounts due to the Group have been provided for as the expected credit losses arising on the balances are considered immaterial (2020: £nil). All outstanding balances with these related parties are priced on an arm's length basis. None of the balances are secured.

Key management personnel

No loans or credit transactions were outstanding with Managers 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 Managers)

Key management personnel include those personnel (including Managers) that have responsibility and authority for planning, directing and controlling the activities of the Group:

	2021	2020
	£m	£m
Short-term employee benefits	4.3	6.1
Retirement benefit obligations	0.3	0.2
	4.6	6.3

Transactions with related parties

During the year ended 31 December 2021 the Group acquired goods and services from a company indirectly controlled by a Director of the IWG plc Group amounting to £27,319 (2020: £5,629). There was a £6,751 balance outstanding at the year-end (2020: £5,629).

All transactions with these related parties are priced on an arm's length basis and are to be settled in cash. None of the balances are secured.

Affiliate companies

All balances with affiliate IWG plc entities not consolidated as part of the IWG Enterprise Annual Report & Accounts have been reflected as third-party balances.

30. Principal Group companies

The Group's principal subsidiary undertakings at 31 December 2021, their principal activities and countries of incorporation are set out below:

Name of undertaking	Country of incorporation	% of ordinary shares and votes held
Trading companies
Regus Australia Management Pty Ltd	Australia	100
Regus Belgium SA	Belgium	100
Regus do Brasil Ltda	Brazil	100
Regus Business Service (Shenzen) Ltd	China	100
Regus Management ApS	Denmark	100
Regus Management (Finland) Oy	Finland	100
RBC Deutschland GmbH	Germany	100
Regus CME Ireland Limited	Ireland	100
Regus Business Centres Limited	Israel	100
Regus Business Centres Italia Sri	Italy	100
Regus Management Malaysia Sdn Bhd	Malaysia	100
Regus New Zealand Management Ltd	New Zealand	100
Regus Business Centre Norge AS	Norway	100
IWG Management Sp z.o.o.	Poland	100
Regus Business Centre, Lda	Portugal	100
Regus Management Singapore Pte Ltd	Singapore	100
Regus Management Espana SL	Spain	100
IWG Management (Sweden) AB	Sweden	100
Avanta Managed Offices Ltd	United Kingdom	100
Basepoint Centres Limited	United Kingdom	100
H Work LLC	United States	100
RGN National Business Centre LLC	United States	100
RB Centres LLC	United States	100
Management companies
RGN Management Limited Partnership	Canada	100
Regus Service Centre Philippines B.V.	Philippines	100
IW Group Services (UK) Ltd	United Kingdom	100
Holding and finance companies
IWG Group Holdings Sarl	Luxembourg	100
Genesis Finance Sarl	Switzerland	100
Pathway Finance Sarl	Switzerland	100
Pathway Finance EUR2 Sarl	Switzerland	100
Pathway Finance USD 2 Sarl	Switzerland	100
Regus Group Limited	United Kingdom	100
Regus Corporation	United States	100
Regus GmbH & Co. KG	Germany	100
Berlin Kurfürstendamm 21 BC GmbH	Germany	100
Regus Verwaltungs GmbH	Germany	100
Regus Netspace Germany GmbH & Co. KG	Germany	100
Regus Germany Holding GP GmbH	Germany	100
Regus Germany Holding GmbH & Co. KG	Germany	100
München Landsberger Straße 302 BC GmbH	Germany	100
Hamburg Kurze Mühren BC GmbH	Germany	100
Düsseldorf Kaiserswerther Straße BC GmbH	Germany	100
Regus Management GmbH	Germany	100
Bremen Flughafenallee BCGP GmbH	Germany	100
Bremen Flughafenallee BC GmbH & Co. KG	Germany	100
Unterföhring Feringastraße BC GP GmbH	Germany	100
Unterföhring Feringastraße BC GmbH & Co. KG	Germany	100
Berlin Unter den Linden BC GP GmbH	Germany	100
Berlin Unter den Linden BC GmbH & Co. KG	Germany	100
Köln Kaiser-Wilhelm-Ring BC GP GmbH	Germany	100
Köln Kaiser-Wilhelm-Ring BC GmbH & Co. KG	Germany	100
Hannover Podbielskistrasse BC GP GmbH	Germany	100
Hannover Podbielskistrasse BC GmbH & Co. KG	Germany	100
Hamburg Valentinskamp BC GP GmbH	Germany	100
Hamburg Valentinskamp BC GmbH & Co. KG	Germany	100
München Landsberger Straße 155 BC GP GmbH	Germany	100
München Landsberger Straße 155 BC GmbH & Co. KG	Germany	100
Frankfurt Herriotstraße BC GmbH & Co. KG	Germany	100
Regus Net space Germany GP GmbH	Germany	100
Frankfurt Herriotstraße BC GP GmbH	Germany	100
Stuttgart Königstraße 10c BC GmbH & Co. KG	Germany	100
Stuttgart Königstraße 10c BC GP GmbH	Germany	100
Germany Centre Company No. 126 GmbH & Co. KG	Germany	100
Germany Centre Company No. 126 GP GmbH	Germany	100
München Maximilianstraße 35 BC GmbH & Co. KG	Germany	100
München Maximilianstraße 35 BC GP GmbH	Germany	100
Hamburg Willy-Brandt-Straße BC GmbH & Co. KG	Germany	100
Hamburg Willy-Brandt-Straße BC GP GmbH	Germany	100
Frankfurt Platz der Einheit BC GmbH & Co. KG	Germany	100
Frankfurt Platz der Einheit BC GP GmbH	Germany	100
Düsseldorf Speditionstraße BC GmbH & Co. KG	Germany	100
Düsseldorf Speditionstraße BC GP GmbH	Germany	100
Walldorf Altrottstraße BC GmbH & Co. KG	Germany	100
Walldorf Altrottstraße BC GP GmbH	Germany	100
Hamburg Stadthausbrücke BC GmbH & Co. KG	Germany	100
Hamburg Stadthausbrücke BC GP GmbH	Germany	100
Berlin Rahel-Hirsch-Straße BC GmbH & Co. KG	Germany	100
Berlin Rahel-Hirsch-Straße BC GP GmbH	Germany	100
München Terminal Straße Mitte BC GmbH & Co. KG	Germany	100
München Terminal Straße Mitte BC GP GmbH	Germany	100
Köln Richmodstraße BC GmbH & Co. KG	Germany	100
Köln Richmodstraße BC GP GmbH	Germany	100
Düsseldorf Stadttor BC GmbH & Co. KG	Germany	100
Düsseldorf Stadttor BC GP GmbH	Germany	100
Düsseldorf Prinzenallee BC GmbH & Co. KG	Germany	100
Düsseldorf Prinzenallee BC GP GmbH	Germany	100
Berlin Köthener Straße BC GP GmbH	Germany	100
Berlin Köthener Straße BC GmbH & Co. KG	Germany	100
Düsseldorf Königsallee 92a BC GP GmbH	Germany	100
Düsseldorf Königsallee 92a BC GmbH & Co. KG	Germany	100
Frankfurt Friedrich-Ebert-Anlage BC GP GmbH	Germany	100
Frankfurt Friedrich-Ebert-Anlage BC GmbH & Co. KG	Germany	100
Hamburg Fischertwiete BC GP GmbH	Germany	100
Hamburg Fischertwiete BC GmbH & Co. KG	Germany	100
Regus Deutschland GmbH	Germany	100
München Karlstraße BC GmbH	Germany	100
Frankfurt Taunusanlage BCGmbH & Co. KG	Germany	100
Frankfurt Taunusanlage BP GP GmbH	Germany	100
Berlin Friedrichstraße 191 BC GmbH & Co. KG	Germany	100
Berlin Friedrichstraße 191 BC GP GmbH	Germany	100
Hamburg Am Kaiserkai BC GmbH & Co. KG	Germany	100
Hamburg Am Kaiserkai BC GP GmbH	Germany	100
Frankfurt Hanauer Landstraße 126-128 BC GmbH & Co. KG	Germany	100
Frankfurt Hanauer Landstraße 126-128 BC GP GmbH	Germany	100
Hamburg Neuer Wall 63 BC GmbH & Co. KG	Germany	100
Hamburg Neuer Wall 63 BC GP GmbH	Germany	100
Köln Im Zollhafen 18 BC GmbH & Co. KG	Germany	100
Köln Im Zollhafen 18 BC GP GmbH	Germany	100
Berlin Kurfürstendamm 195 BC GmbH & Co. KG	Germany	100
Berlin Kurfürstendamm 195 BC GP GmbH	Germany	100
Nürnberg Zeltnerstraße BC GmbH & Co. KG	Germany	100
Nürnberg Zeltnerstraße BC GP GmbH	Germany	100
München Theresienhöhe BC GmbH & Co. KG	Germany	100
München Theresienhöhe BC GP GmbH	Germany	100
Hannover Bahnhofstraße BC GmbH & Co. KG	Germany	100
Hannover Bahnhofstraße BC GP GmbH	Germany	100
Berlin Pariser Platz BC GmbH & Co. KG	Germany	100
Berlin Pariser Platz BC GP GmbH	Germany	100
Düsseldorf Konigsallee 2b BC GmbH & Co. KG	Germany	100
Düsseldorf Königsallee 2b BC GP GmbH	Germany	100
Karlsruhe Ludwig-Erhard-Allee BC GmbH & Co. KG	Germany	100
Karlsruhe Ludwig-Erhard-Allee BC GP GmbH	Germany	100
Koln Waidmarkt BC GmbH & Co. KG	Germany	100
Köln Waidmarkt BC GP GmbH	Germany	100
Köln Erna-Scheffler-Straße BC GmbH & Co. KG	Germany	100
Köln Erna-Scheffler-Straße BC GP GmbH	Germany	100
Hamburg Millerntorplatz BC GmbH & Co. KG	Germany	100
Hamburg Millerntorplatz BC GP GmbH	Germany	100
Berlin Zweite RVG Business Center GmbH & Co. KG	Germany	100
Germany Centre Company No. 127 GmbH	Germany	100
Neu-Isenburg Dornhofstraße BC GmbH & Co.KG	Germany	100
Neu-Isenburg Dornhofstraße BC GP GmbH	Germany	100
München Theatinerstraße BC GP GmbH	Germany	100
München Theatinerstraße BC GmbH & Co. KG	Germany	100
Dusseldorf Andreasquartier Business Center GmbH	Germany	100
Stuttgart Zweite RVG Business Center GmbH & Co. KG	Germany	100
Regus Express (Germany) No.1 Verwaltungs GmbH	Germany	100
Regus Express (Germany) No.1 GmbH & Co. KG	Germany	100
München Kronstadter Straße BC GP GmbH	Germany	100
München Kronstadter Straße BC GmbH & Co. KG	Germany	100
München Marcel-Breuer-Straße BC GP GmbH	Germany	100
München Marcel-Breuer-Straße BC GmbH & Co. KG	Germany	100
Hamburg Hamburger Straße BC GP GmbH	Germany	100
Hamburg Hamburger Straße BCGmbH & Co. KG	Germany	100
Berlin Gontardstraße BC GP GmbH	Germany	100
Berlin Gontardstraße BC GmbH & Co. KG	Germany	100
Stuttgart Rotebühl platz BC GP GmbH	Germany	100
Stuttgart Rotebühlplatz BC GmbH & Co. KG	Germany	100
Düsseldorf Peter-Müller-Straße BC GP GmbH	Germany	100
Düsseldorf Peter-Müller-Straße BC GmbH & Co. KG	Germany	100
Stuttgart Königstraße 26 BC GmbH	Germany	100
München Maximilianstraße 35 MV GmbH	Germany	100
Hamburg Neuer Wall 50 BC GmbH	Germany	100
Köln Gertrudenstraße BC GmbH	Germany	100
Lübeck Maria-Goeppert Straße BC GmbH	Germany	100
Excellent Business Centers GmbH	Germany	100
Frankfurt Westhafenplatz BC GmbH	Germany	100
EBC consolidating company	Germany	100
Regus company consolidation	Germany	100
PAW consolidating company	Germany	100
Stuttgart Curiestraße BC GmbH	Germany	100
Frankfurt The Square BC GmbH	Germany	100
Frankfurt Friedrich-Ebert-Anlage 36 BC GmbH	Germany	100
Düsseldorf Neuer Zollhof BC GmbH	Germany	100
Essen Ruhrallee BC GmbH	Germany	100
Plug and work 5 GmbH	Germany	100
Dusseldorf Konigsallee 106 BC GmbH	Germany	100
Frankfurt Hanauer Landstraße BC GmbH	Germany	100
Frankfurt Mainzer Landstraße 41 BC GmbH	Germany	100
Erfurt Arnstädter Straße BC GmbH	Germany	100
Frankfurt Bockenheimer Landstraße BC GP GmbH	Germany	100
Frankfurt Bockenheimer Landstraße BC GmbH & Co. KG	Germany	100
Berlin Friedrichstraße 88 BC GmbH	Germany	100
RBC 12. Vorratsgesellschaft GmbH & Co. KG	Germany	100
Bonn Friedrich-Ebert-Allee BC GP GmbH	Germany	100
Bonn Friedrich-Ebert-Allee BC GmbH & Co. KG	Germany	100
Dresden Altmarkt BC GP GmbH	Germany	100
Dresden Altmarkt BC GmbH & Co. KG	Germany	100
Dusseldorf Berliner Allee BC GmbH	Germany	100
RBC 15. Vorratsgesellschaft GmbH & Co. KG	Germany	100
München Sonnenstraße BC GmbH	Germany	100
Germany Centre Company No. 16 GmbH & Co. KG	Germany	100
Eschborn Mergenthalerallee BC GP GmbH	Germany	100
Eschborn Mergenthalerallee BC GmbH & Co. KG	Germany	100
Ratingen Kokkolastraße BC GmbH	Germany	100
Germany Centre Company No. 18 GmbH & Co. KG	Germany	100
Dusseldorf Johannstraße BC GmbH	Germany	100
Germany Centre Company No. 19 GmbH & Co. KG	Germany	100
Frankfurt Mainzer Landstraße 49 BC GP GmbH	Germany	100
Frankfurt Mainzer Landstraße 49 BC GmbH & Co.KG	Germany	100
Bremen Bahnhofsplatz BC GmbH	Germany	100
Germany Centre Company No. 21 GmbH & Co. KG	Germany	100
Nurnberg Südwestpark BC GmbH	Germany	100
Germany Centre Company No. 22 GmbH & Co. KG	Germany	100
Stuttgart Friedrichstraße BC GmbH	Germany	100
Germany Centre Company No. 23 GmbH & Co. KG	Germany	100
Kiel Neufeldtstraße 6 BC GmbH	Germany	100
Germany Centre Company No. 24 GmbH & Co. KG	Germany	100
Hamburg Kapstadtring BC GmbH	Germany	100
Germany Centre Company No. 25 GmbH & Co. KG	Germany	100
Stuttgart Steiermarker Straße BC GmbH	Germany	100
Darmstadt Berliner Allee BC GmbH	Germany	100
Berlin Edisonstraße BC GmbH	Germany	100
Mannheim Theodor-Heuss-Anlage BC GmbH	Germany	100
Hamburg Gorch-Fock-Wall BC GmbH	Germany	100
Berlin Karl-Marx-Straße BC GmbH	Germany	100
Germany Centre Company No. 31 GmbH	Germany	100
Frankfurt An der Welle BCGmbH	Germany	100
Mönchengladbach Bismarckstraße BC GmbH	Germany	100
Wiesbaden Mainzer Straße BC GmbH	Germany	100
Erfurt Bahnhofstraße BC GmbH	Germany	100
München Putzbrunner Straße BC GmbH	Germany	100
Hamburg Heidenkampsweg BC GmbH	Germany	100
Unterschleißheim Konrad-Zuse-Straße BC GmbH	Germany	100
Berlin Jägerstraße BC GmbH	Germany	100
Bonn Bornheimer Straße BC GmbH	Germany	100
Germany Centre Company No. 41 GmbH	Germany	100
Bremen Karl-Ferdinand-Braun-Straße BC GmbH	Germany	100
Düsseldorf Breite Straße BC GmbH	Germany	100
Frankfurt Bockenheimer Landstraße 2-4 BC GmbH	Germany	100
Germany Centre Company No. 45 GmbH	Germany	100
WS Capital GmbH	Germany	100
Nürnberg Fürther Straße BC GmbH	Germany	100
Nürnberg Flughafenstraße BC GmbH	Germany	100
Germany Centre Company No. 46 GmbH	Germany	100
Augsburg Viktoriastraße BC GmbH	Germany	100
Oberhausen Centroallee BC GmbH	Germany	100
Heidelberg Rudolf-Diesel-Straße BC GmbH	Germany	100
Hamburg Veritaskai BC GmbH	Germany	100
Essen Grugaplatz BC GmbH	Germany	100
Hamburg Ottenser Hauptstraße BC GmbH	Germany	100
Berlin Greifswalder Straße BC GmbH	Germany	100
Dusseldorf Königsallee 61 BC GmbH	Germany	100
Wuppertal Laurentiusstraße BC GmbH	Germany	100
München Josephspitalstraße BC GmbH	Germany	100
Germany Centre Company No. 57 GmbH	Germany	100
München Dingolfinger Straße BC GmbH	Germany	100
Berlin Europaplatz 2 BC GmbH	Germany	100
Germany Centre Company No. 60 GmbH	Germany	100
Frankfurt Berliner Straße BC GmbH	Germany	100
Bremen Obernstraße BC GmbH	Germany	100
Unterschleißheim Emmy-Noether-Ring BC GmbH	Germany	100
Kiel Kaistraße BC GmbH	Germany	100
Frankfurt Tower 185 BC GmbH	Germany	100
Frankfurt Darmstädter Landstraße BC GmbH	Germany	100
Frankfurt Hahnstraße BC GmbH	Germany	100
Germany Centre Company No. 68 GmbH	Germany	100
Oldenburg Stau 123 BC GmbH	Germany	100
München Nymphenburger Straße BC GmbH	Germany	100
Köln Butzweilerhofallee BC GmbH	Germany	100
München Maximilianstraße 13 BC GmbH	Germany	100
Herne Bahnhofstraße BC GmbH	Germany	100
Germany Centre Company No. 74 GmbH	Germany	100
Stuttgart Heilbronner Straße BC GmbH	Germany	100
Köln Subbelrather Straße BC GmbH	Germany	100
Dortmund Florianstraße BC GmbH	Germany	100
Germany Centre Company No. 78 GmbH	Germany	100
Germany Centre Company No. 79 GmbH	Germany	100
Kaiserslautern Europaallee BC GmbH	Germany	100
Hamburg Überseeallee BC GmbH	Germany	100
Germany Centre Company No. 82 GmbH	Germany	100
Germany Centre Company No. 83 GmbH	Germany	100
Germany Centre Company No. 84 GmbH	Germany	100
Germany Centre Company No. 85 GmbH	Germany	100
Germany Centre Company No. 86 GmbH	Germany	100
Germany Centre Company No. 87 GmbH	Germany	100
Germany Centre Company No. 88 GmbH	Germany	100
Germany Centre Company No. 89 GmbH	Germany	100
Germany Centre Company No. 90 GmbH	Germany	100
Germany Centre Company No. 91 GmbH	Germany	100
Germany Centre Company No. 92 GmbH	Germany	100
Germany Centre Company No. 93 GmbH	Germany	100
Germany Centre Company No. 94 GmbH	Germany	100
Germany Centre Company No. 95 GmbH	Germany	100
Germany Centre Company No. 96 GmbH	Germany	100
Germany Centre Company No. 97 GmbH	Germany	100
Germany Centre Company No. 98 GmbH	Germany	100
Germany Centre Company No. 99 GmbH	Germany	100
Neuss Hammfelddamm BC GmbH	Germany	100
Germany Centre Company No. 101 GmbH	Germany	100
Germany Centre Company No. 102 GmbH	Germany	100
Germany Centre Company No. 103 GmbH	Germany	100
Germany Centre Company No. 104 GmbH	Germany	100
Germany Centre Company No. 105 GmbH	Germany	100
Germany Centre Company No. 106 GmbH	Germany	100
Germany Centre Company No. 107 GmbH	Germany	100
Germany Centre Company No. 108 GmbH	Germany	100
Germany Centre Company No. 109 GmbH	Germany	100
Germany Centre Company No. 110 GmbH	Germany	100
Germany Centre Company No. 111 GmbH	Germany	100
Germany Centre Company No. 112 GmbH	Germany	100
Germany Centre Company No. 113 GmbH	Germany	100
Germany Centre Company No. 114 GmbH	Germany	100
Germany Centre Company No. 115 GmbH	Germany	100
Germany Centre Company No. 116 GmbH	Germany	100
Germany Centre Company No. 117 GmbH	Germany	100
Germany Centre Company No. 118 GmbH	Germany	100
Germany Centre Company No. 119 GmbH	Germany	100
Germany Centre Company No. 120 GmbH	Germany	100
Germany Centre Company No. 121 GmbH	Germany	100
Germany Centre Company No. 122 GmbH	Germany	100
Germany Centre Company No. 123 GmbH	Germany	100
Germany Centre Company No. 124 GmbH	Germany	100
IWG Holdings (Germany) GmbH	Germany	100
IWG Deutschland GmbH	Germany	100

31. Key judgemental and estimates areas adopted in preparing these accounts

The preparation of consolidated financial statements in accordance with IFRS requires management to make certain judgements and assumptions that affect reported amounts and related disclosures.

Key judgements

Adjusting items

Adjusting items are separately disclosed by the Group so as to provide readers with helpful additional information on the performance of the business across periods. Items arising specifically from the impact of the COVID-19 pandemic have been deemed to meet the definition of adjusting items. Each of these items are considered to be significant in nature and/or size and are also consistent with items treated as adjusting in prior periods in which significant non-recurring transactions occurred. The exclusion of these items is consistent with how the business performance is planned by, and reported to, the Board and the Operating Committee. The profit before tax and adjusting items measure is not a recognised profit measure under IFRS and may not be directly comparable with adjusted profit measures used by other companies. The classification of adjusting items requires significant management judgement after considering the nature and intentions of a transaction or provision.

Tax assets and liabilities

The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the worldwide provision for income taxes. Where appropriate, the Group assesses the potential risk of future tax liabilities arising from the operation of its business in multiple tax jurisdictions and includes provisions within tax liabilities for those risks that can be estimated reliably. Changes in existing tax laws can affect large international groups such as IWG and could result in additional tax liabilities over and above those already provided for.

Determining the lease term of contracts with renewal and termination options

IFRS 16 defines the lease term as the non-cancellable period of a lease together with the options to extend or terminate a lease, if the lessee were reasonably certain to exercise that option. Where a lease includes the option for the Group to extend the lease term, the Group makes a judgement as to whether it is reasonably certain that the option will be taken. This will take into account the length of time remaining before the option is exercisable, macro-economic environment, socio-political environment and other lease specific factors.

The lease term represents the period from lease inception up to either:

―	the earliest point at which the lease could be broken, where break clauses exist;
―	the point at which the lease could be extended, but no further, where extension options exist; or
―	the end of the contractual lease term in all other cases.

Key estimates

Impairment of intangibles and goodwill

We evaluate the fair value of goodwill and other indefinite life intangible assets to assess potential impairments on an annual basis, or during the year if an event or other circumstance indicates that we may not be able to recover the carrying amount of the asset. We evaluate the carrying value of goodwill based on our CGUs aggregated at a country level and make that determination based upon future cash flow projections which assume certain growth projections which may or may not occur. We record an impairment loss for goodwill when the carrying value of the asset is less than its estimated recoverable amount. Further details of the methodology and assumptions applied to the impairment review in the year ended 31 December 2021, including the sensitivity to changes in those assumptions, can be found in note 13.

Deferred tax assets

We base our estimate of deferred tax assets and liabilities on current tax laws and rates and, where relevant, the Group's three-year business plans and other expectations about future outcomes. Changes in existing laws and rates, and their related interpretations, and future business results may affect the amount of deferred tax liabilities or the valuation of deferred tax assets over time. Our accounting for deferred tax consequences represents management's best estimate of future events that can be appropriately reflected in the accounting estimates. It is Group policy to recognise a deferred tax asset to the extent that it is probable that future taxable profit swill 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.

While impairment of property, plant and equipment was noted as a key estimate in the 2020 Annual Report and Accounts, COVID-19 continues to accelerate the need for further network rationalisation. We evaluate the potential impairment of property, plant and equipment at a centre (CGU) level where there are indicators of impairment at the balance sheet date and for centres which have been identified as part of the Group's rationalisation programme. The key area of estimation involved is in determining the recoverable amount of the rationalised centres, over what period the rationalisation will take place, and the level of moveable assets that will be utilised in other centres.

The Group has considered the impact of COVID-19 with respect to all judgements and estimates it makes in the application of its accounting policies. This included assessing the impairment of property, plant and equipment, goodwill and the recoverability of trade receivables. The result of these reviews is detailed in note 10.

Estimating the incremental borrowing rates on leases

The determination of applicable incremental borrowing rates on leases at the commencement of lease contracts also requires judgement. The Group determines its incremental borrowing rates by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease. The Group considers the relevant market interest rate, based on the weighted average of the timing of the lease payments under the lease obligation. In addition, a spread over the market rate is applied based on the cost of funds to the Group, plus a spread that represents the risk differential of the lessee entity compared to the Group funding cost.

Valuation of embedded conversion option (Level 3) in convertible bonds

The embedded conversion option relating to the Group's issue of convertible bonds is measured at mark-to-market with reference to the traded price of the convertible bonds as well as external valuation inputs based on credit comparables and bond spreads across competitors and wider markets.

Fair value accounting for business combinations

For each business combination, we assess the fair values of assets and liabilities acquired. Where there is not an active market in the category of the non-current assets typically acquired with a business centre or where the books and records of the acquired company do not provide sufficient information to derive an accurate valuation, management calculates an estimated fair value based on available information and experience.

The main categories of acquired non-current assets where management's judgement has an impact on the amounts recorded include tangible fixed assets, customer list intangibles and the fair market value of leasehold assets and liabilities. For significant business combinations management also obtains third-party valuations to provide additional guidance as to the appropriate valuation to be included in the financial statements.

32. Subsequent events

In February 2022, the £950.0m revolving credit facility was reduced to £750.0m, with an unchanged maturity date in 2025. The facility is subject to financial covenants which include EBITDA, minimum liquidity, interest cover and net debt to EBITDA ratio.

On 8 March 2022, the Group entered into a contract to merge certain of its digital and technology assets with The Instant Group, a global business which operates as the world's leading independent provider of flexible workspace platform and services, for a net cash investment of £270.0m. Due to the timing of this transact ion, it is not practical to disclose the information associated with the initial accounting for this acquisition.

A £330.0m bridge facility for The Instant Group acquisition has been agreed. The bridge facility has a maturity in September 2023. This facility is secured and is subject to interest cover and net debt to EBITDA covenants.

The Group notes with concern the escalation of the conflict in Ukraine in 2022. The Group operates 10 centres in Ukraine with a net asset value of £9.8m. Our primary focus has been on the safety and well-being of our employees and customers and we are committed to providing them with support throughout these extremely difficult circumstances.

There have been no other significant events affecting the Group since the year end.

PARENT COMPANY

Summarised extract of Company balance sheet

(Prepared under Luxembourg GAAP)

	As at 31 Dec 2021	As at 31 Dec 2020
	£m	£m
Assets
C. Fixed assets
III. Financial assets
1. Shares in affiliated undertakings	3,151.6	2,780.4
D. Current assets
II. Debtors
4. Other debtors
a) becoming due and payable within one year	-	-
E. Prepayments	-	-
Total assets	3,151.6	2,780.4
Capital, reserves and liabilities
A. Capital and reserves
I. Subscribed capital	74.3	-
II. Share premium and similar premiums	3,076.6	2,784.9
IV. Reserves
1. Legal reserve	-	-
V. Results brought forward	(5.1)	(0.5)
VI. Results for the financial year	3,682.6	(4.6)
VII. Interim dividends	(3,677.5)	-
Capital and reserves	3,150.8	2,779.8
C. Creditors
4. Trade creditors
a) becoming due and payable within one year	-	-
6. Amounts owed to affiliated undertakings
a) becoming due and payable within one year	-	-
b) becoming due and payable after more than one year	0.8	0.6
Liabilities	0.8	0.6
Total capital, reserves and liabilities	3,151.6	2,780.4

Approved by the Board on 20 June 2022

Lynsey Blair, Manager

Extract of the main accounting policies

Basis of preparation

The annual accounts have been prepared in accordance with Luxembourg legal and regulatory requirements under the historical cost convention which differs in material respects from IFRS in both measurement and presentation of certain transactions.

The annual accounts have been prepared on the going concern principles.

The Company is included in the consolidated financial statements of IWG plc.

The balance sheet has been extracted from the standalone accounts of IWG Enterprise S.à r.l. the year ended 31 December 2021, which are available from the Company's registered office, 26 Boulevard Royal, Luxembourg and which will be filed with the Luxembourg Register of Commerce.

Financial assets

Shares in affiliated undertakings are valued at purchase price including acquisition costs. Where any durable diminution in value is identified, value adjustments are recorded in the profit and loss account. These value adjustments are not continued if the reasons which cause their initial recording cease to apply.

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 Manager and management remuneration; and
―	to discuss and explain the Group's performance with the investment analyst community.

None of the APMs should be considered as an alternative to financial measures derived in accordance with GAAP. The APMs can have limitations as analytical tools and should not be considered in isolation or as a substitute for an analysis of our results as reported under GAAP. These performance measures may not be calculated uniformly by all companies and therefore may not be directly comparable with similarly titled measures and disclosures of other companies.

Adjusted centre contribution

Centre contribution excluding adjusting items.

Adjusted EBITDA

EBITDA excluding adjusting items.

Adjusted EPS

EPS excluding adjusting items.

Adjusted operating profit/(loss)

Operating profit excluding adjusting items.

Adjusting items

Adjusting items reflects the impact of adjustments, both incomes and costs, which are considered to be significant in nature and/or size.

Available workstations

The total number of workstations in the Group (also termed Inventory). During the year, this is expressed as a weighted average. At period ends the absolute number is used.

EBIT

Earnings before interest and tax.

EBITDA

Earnings before interest, tax, depreciation and amortisation.

EPS

Earnings per share.

Expansions

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.

Mature business

Operations owned for a full 12-month period prior to the start of the financial year and operated throughout the current financial year, which therefore have a full-year comparative.

Net debt

Operations cash and cash equivalents, adjusted for both short and long-term borrowings and lease liabilities.

Net growth capital investment

Growth capital expenditure net of growth-related partner contributions.

Network rationalisation

Network rationalisation for the current year is defined as a centre that ceases operation during the period from 1 January to December of the current year. Network rationalisation for the prior year comparative is defined as a centre that ceases operation from 1 January of the prior year to December of the current year.

Occupancy

Occupied square feet divided by available square feet expressed as a percentage.

Open centres

All centres excluding closures.

Open centre revenue

Revenue for all centres excluding closures.

Operating profit/(loss) before growth

Reported operating profit adjusted for the gross profit impact arising from centres opening in the preceding and current years, and centres to be opened in the subsequent year.

Partners

Owners or landlords of business centres, operating under a management lease arrangement.

Pre-2020 business

Operations owned for a full 12-month period prior to the start of the financial year and operated throughout the current financial year, which therefore have a full-year comparative.

Pre-2020 gross margin

Gross margin attributable to the Pre-2020 business.

Pre-IFRS 16 basis

IFRS accounting standards effective as at the relevant reporting date with the exception of IFRS 16.

Revenue development

Revenue programme on a continuing basis, for the last four years.

REVPOS

Revenue per occupied square feet.

ROI

Return on investment.

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.

WIPOS

Workstation revenue per occupied square metre.

Workstation occupancy

Occupied workstations divided by available workstations expressed as a percentage.

SHAREHOLDER INFORMATION

Corporate directory

Secretary and registered office

IWG Enterprise Société à responsabilité limitée

Registered Office:

26 Boulevard Royal

2449 Luxembourg

Registered number

Luxembourg

R.C.SB 167934

Board of managers

The Board of Managers shown below held office during the whole period from 1 January 2021 to 20 June 2022 (except where noted otherwise):

Lynsey Blair

Tim Regan

Remo Gross

Group Management Report for the Financial Year 2021

1 BUSINESS FUNDAMENTALS

1.1 BUSINESS MODEL

IWG provides a world-leading commercial real estate platform, drawing on our 33 year track record of delivering the best flexible real estate solutions for businesses worldwide. IWG's hybrid workspace options reduce the risk for our customers, with zero balance sheet impact and solutions designed with people's productivity in mind. Our products are simple to use, with a full suite of business support services that enable people to focus on their core business and enjoy a great day at work.

IWG covers a wider breadth of sectors and locations than any competitor, offering unparalleled choice to customers through our unique portfolio of global operating brands, including Regus, Spaces, HQ and Signature. Our diverse operational portfolio provides businesses with a variation of design, fit-out, location, building and customer base, enabling them to choose a style which meets their unique needs. For individuals, IWG offers the ability to work in practically every country, town, city and transport hub in the world. Enterprise clients can opt for a presence wherever they need to be, choosing an operating brand that closely matches the needs of their organisation and the people working within it.

Key inputs:

•	Our partner relationships: Our success depends on the success of our partners, so we use all our experience and expertise to deliver the service and support they need.
•	Our people: We employ great people and help them to achieve their full potential, so they can drive our and our partners' success.
•	Our networks: It is our vision to have a centre serving every community, so we and our partners can empower businesses and individuals to work flexibly and productively anywhere in the world.
•	Our brands: With a growing stable of global and local brands, we can segment the markets where we operate to maximise uptake and create a unique growth opportunity.
•	Our formats: Versatile, inspiring and practical, our formats drive worker satisfaction and productivity.
•	Our platform: Our flexible platform features world-class, easy-to-use infrastructure that delivers simple points of access and a great user experience.

Value created:

•	Customers: We help businesses perform better, with more flexibility and agility, staffed by more fulfilled, effective and loyal people.
•	Partners: We offer an exciting, sustainable business opportunity powered by our global leadership, unique experience and unrivalled operating platform.
•	Employees: We recognise the talents of our diverse and passionate workforce across the world, enabling our people to contribute to society while driving successful careers.
•	Communities: We bring employment opportunities to the heart of communities, attracting jobs, reducing unnecessary travel and encouraging social connection.

•	Shareholders: We deliver sustainable returns via a progressive dividend policy that's enabled by our prudent approach to investment.

1.2 GLOBAL BRANDS

Regus was founded in 1989 and is the world's largest provider of flexible workspace solutions. Regus helps businesses find and create the right workplace for their people, offering choice, flexibility, community, custom workspaces and consistently professional locations all over the world.

Spaces was founded in 2006 in Amsterdam. It creates an environment where people have freedom to do their jobs however they want to do them. Each Spaces is designed to offer a professional and inspirational working environment full of timeless design classics, inspiring art and accessories combined with a strong community programme of partnerships, professional events and hospitality services.

HQ provides efficient, functional space, offering practical places with all the essentials businesses need, set up and ready-to-go. HQ appeals to businesses of all shapes and sizes, from large corporates to individual freelancers - everyone is welcome.

Signature represents an exclusive selection of landmark buildings in the most sought-after locations in the world. Signature provides a premium working environment, with custom designs reflecting the quality and nature of the building. It provides businesses with ultimate prestige, offering an exclusive address and place to work that truly enhances their reputation.

1.3 DOMESTIC OFFICE AND COWORKING BRANDS

Basepoint Business Centres comprises a network of locations across England and Wales, providing multifunctional workspace to start-ups and SMEs. In addition to office space, virtual offices and meeting rooms, Basepoint offers practical business units which are ideally suited as studio or workshop space.

Stop & Work is a flexible working brand operating in France. Throughout its locations, it provides a drop-in service and professional environment for telecommuters to use open plan or private workspaces and meeting rooms. Customers can access the locations by the hour, day or longer as required.

The Office Operators is based in the Netherlands and Belgium, specialising in flexible office space, reception services and conference products. As an organisation, it aims to unburden its customers as much as possible in all facility and operational matters.

The Clubhouse is a leading business club in London, providing offices, lounge and meeting space. Designed to meet the requirements of growing businesses, The Clubhouse provides a luxurious, professional space where customers can meet and work in an inspiring and productive environment.

More than just a desk, BizDojo is a coworking and collaboration network operating in New Zealand. It is passionate about supporting its diverse community with an active and collaborative culture of events, projects, programmes and networking.

OpenOffice has locations exclusively in Japan and South Korea. OpenOffice provides office space, virtual offices and meeting rooms in a productive, self-service office environment.

No18 is a blend of curated business club environments in the best locations, with first- class service and expansive member benefits. It's a workplace where people do business and socialise, moving from premium offices to restaurants and collaborative workspaces.

Central Working provides flexible and scalable spaces, fully tailored to match customer needs. More than just an office space, it helps advance business by providing access to training, networking events and a supportive community.

The Wing is a community of professionals, entrepreneurs and leaders from across the globe, who find sanctuary and productivity in our beautiful work and community spaces designed for women, meaningful connections through our networking opportunities, career growth through our job platform and perhaps most importantly, support and camaraderie through sharing strategies and resources.

Copernico provides smart working environments across Italy. Set out to change the way work is done, it has created an ecosystem that accommodates businesses of any size with solutions ranging from coworking to office lounges. It also provides users with events, workshops and informal meetings, fostering new knowledge and local excellence.

2 MARKET AND ECONOMY FRAMEWORK

Right across the world, significant forces are influencing the future development of the flexible workspace market. In 2020, the COVID-19 pandemic made these all the stronger.

COVID-19 continued to present challenges globally, but it has also increased awareness and adoption of hybrid working. This, together with the swift actions the Group has taken since the onset of the pandemic, has delivered a sequentially improving financial performance commencing in the second quarter.

The rapid global rise in the adoption of the hybrid working model, where companies use technology to give their employees effective remote access and home working, in combination with easy-to-access local centres and traditional head-office sites, is here to stay. These structural changes in the way that people across the world work are driving an irreversible change in the office market. As a result, opportunities to grow our business are accelerating strongly.

3 BUSINESS DEVELOPMENT

3.1 BUSINESS PERFORMANCE REVIEW

Throughout 2021, a period once again dominated by the global impact of the COVID-19 pandemic, we have shown that we are well-positioned to meet the needs of individuals and organisations who wish to change the way they work.

This was a year of two halves that culminated in a period of significant positive change. In a matter of a few months, we moved from one of the most challenging moments in our Company's history at the beginning of 2021 when we experienced the highest concentration of lockdowns, which contributed to the losses reported for the year ended 31 December 2021, to the point where sales growth is now ahead of pre-pandemic levels. In fact, we experienced the best-selling months in our more than 30-year history in the year's fourth quarter. Our global membership continues to grow and over the year we added 2 million new network users. This was complemented with a major inflection in profitability and a cash positive performance that gathered strength as the year went on. We delivered our first franchise deals in new countries such as the USA, India, Malaysia, Poland, Brazil, Spain and Scotland. We have good momentum in the pipeline providing a positive outlook. We also continued to invest in capital-light network growth during 2021, adding 175 new centres to our global network at a cost of £238.2m (2020: £203.8m). We used an approach based on our franchise and management-agreement model for 80 of these new centre openings.

This accelerating growth in our franchise footprint is highly significant. Scale is essential for us to offer the convenience that employers and employees everywhere are looking for, and the fast-increasing coverage provided by our global network is a key competitive advantage. Working with new and existing franchise partners will therefore continue to be at the heart of our growth.

Expansion through partnership rather than investment delivers the capital- light growth that we and our shareholders are looking for, enabling us to invest in the brands, technologies and people that are our true differentiators. It also empowers us to add higher-quality centres to our network, with the full engagement of owners who retain a powerful interest in making our franchise partnerships, management agreements and partnership deals work. As a result of this expansion in 2021, we have significantly improved the quality of our portfolio overall and will continue to do so throughout 2022 and beyond as we grow our global network.

In addition, to underscore the relevance of our network to new and existing users across the world, we have progressively rebased our portfolio to deliver more choice and supply to commuter towns and rural areas. In this way, we continue to bring the workplace closer to home, helping to reduce the need for commuting and all the environmental and wellbeing challenges it brings.

Recognising that it is essential for us to offer customers brands that cater to everybody's working style, we also further developed our market leadership in this area during 2021.

The new brands in our portfolio include The Wing in the US and the Italian-based Copernico, both of which have ambitious expansion plans. The Wing, for example, is a female-focused co-working business and its acquisition gives us an exciting opportunity to expand its offer to women during a time of growing demand for alternative work environments. We also launched a new retail-based office-space concept: 'OpenDesks' with a more open plan environment. In addition, we continued to invest in industry-leading technology and focused on ensuring that our people have the opportunity to fulfil their talent with us. Ultimately, IWG creates value by enabling our customers to operate more cost-effectively and efficiently. We also maximise our own success by ensuring we have the skills and resources needed at every level to minimise the unnecessary use of resources, both physical and in terms of time and effort.

Our unique technology platform has evolved over many years to ensure our customers have access to some of the world's most innovative and effective tools to streamline and simplify the working day. We made significant investments in our platform during the year, recording a total IT spend of £50m. Innovations we introduced during the year include solutions supporting very large enterprise customers with tens of thousands of employees in multiple locations, to apps that help the smallest SMEs comply with local legislation. We have also continued to develop our solutions supporting hybrid working, cloud telephony and cloud printing around the world. We have invested to further support home working through our virtual products including HomeToWork, our leading platform providing access to useful daily content, a carefully curated programme of events and resources, and valuable benefits from industry-leading companies.

HomeToWork enables members to make home a great place to work. We also invested in our own systems and processes, including new enterprise ERP systems, leadership succession, and redesigned processes for forecasting and business review. In addition, we took the opportunity to improve efficiency by reducing our discretionary expenditure, with a notable reduction in our overheads while investing in technology, brand and growth.

Success on this scale is very exciting, and it continues to fuel our ambition to create the global coverage that will enable people to work anywhere and everywhere, no matter where they are located.

As a result, as we enter 2022, the company is clearly very well positioned for the future. Our network coverage is already four times the size of our nearest competitors, and now we are on a powerful trajectory of business wins, new partnerships and capital-light network expansion.

3.2 FINANCIAL PERFORMANCE REVIEW

The first half of 2021 was challenging, with a revenue decline at constant currency and a significant impact on our EBITDA and cashflow. However, this gave way to a strong second half, with a return to trading profit, reduced overheads and clear visibility into 2022. We saw an increase in sales in every quarter from March onwards, with progressive increases in occupancy and price, giving excellent momentum for further improvement in the year ahead. With the improvement in occupancy and price, a recovery in service revenues has followed, with further improvement expected in 2022.

During 2021, we saw a significant recovery in the profitability of our existing company-owned assets. Encouragingly, we are witnessing this strength of performance in multiple markets across the world, driven in part by the strong performance of our new centres which have improved the overall quality of our estate.

To take maximum advantage, we amended our financing facilities in early 2022, further securing our liquidity and strengthening our borrowing capacity for the medium term. Overall, these achievements and trends are delivering tangible evidence that we have entered 2022 as a much stronger business than we entered 2021.

Group income statement

£m	2021 (As reported)	2020 (As reported)	% Change (constant currency)	% Change (actual currency)
Revenue	2,210.2	2,406.7	(4.5)%	(8.2)%
Gross profit/(loss) (centre contribution)	25.5	(245.3)
Other income ⁽¹⁾	3,682.8	-
Overheads	(316.1)	(279.5)	17%	13%
Operating profit/(loss) ⁽²⁾	3,390.0	(527.4)
Operating profit/(loss) before adjusting items ⁽¹⁾	3,421.4	(137.6)
Profit/(loss) before tax from continuing operations	3,220.1	(836.3)
Taxation	(77.5)	(28.0)
Effective tax rate	(2.4)%	(3.3)%
Profit/(loss) after tax from continuing operations	3,142.6	(864.3)
Adjusted EBITDA ⁽¹⁾	4,523.0	1,056.9	344%	328%

^1. Other income represents the gain on disposal of investments in affiliated companies, as part of an internal restructuring of the wider IWG plc Group.
^2. Including joint ventures

Revenue by maturity

Continuing	2021 (As reported)	2020 (As reported)	% Change (constant currency)	% Change (actual currency)
(£m)
2018 Aggregation	1,790.9	1,977.4	(5.7)%	(9.4)%
New 19	219.4	207.5	9.5%	5.7%
Pre-2020	2,010.3	2,184.9	(4.3)%	(8.0)%
New 2020	120.4	44.2	179.6%	172.4%
New 2021	31.7	-	-	-
Open centre revenue	2,162.4	2,229.1	1.0%	(3.0)%
Closures	47.8	177.6	(72.2)%	(73.1)%
Group	2,210.2	2,406.7	(4.5)%	(8.2)%

Open centre revenue performance by region

On a regional basis, open centre revenue performance can be analysed as follows:

£m	FY 2021	FY 2020	% Change (constant currency)	% Change (actual currency)
Americas	910.0	1,005.0	(3.8)%	(9.5)%
EMEA	682.7	656.4	7.5%	4.0%
Asia Pacific	223.0	218.8	4.2%	1.9%
UK	342.0	343.3	(0.4)%	(0.4)%
Other	4.7	5.6	-	-
Total	2,162.4	2,229.1	1.0%	(3.0)%

Americas

The Americas, our largest region, was significantly impacted by the pandemic reaching its trough occupancy in February 2021 and has recovered strongly since then. The recovery in performance is mainly being driven by the US and the business in Canada also showed good recovery momentum in the second half of the year.

Major Central Business Districts (CBDs) were challenged most in early 2021 but recovered well in the second half of the year which bodes well for a continuing trend in 2022. Regional districts achieved a higher level of occupancy and customer activity in the centres. In line with increasing occupancies, promotions were removed, and discounts tightened which will result in improved pricing in 2022. Sales in the Americas continued its positive trend into 2022.

According to IWG research, 6 in 10 Americans want to work in the hybrid model and since the onset of the pandemic only 1 in 5 are now willing to commute for more than 30 minutes.

Revenue from open centres declined 3.8 % at constant currency to £910.0m. In the fourth quarter open centre revenue grew strongly at constant currency. It was a similar positive trend in Q4 in the pre-2020 estate with revenue growth at constant currency, while full year revenue decreased 7.5% at constant currency to £865.0m.

Average occupancy for the region in the pre-2020 business was 70.9% (FY 2020: 73.9%), with strong occupancy recovery in the second half. Pre-2020 occupancy reached 74.7% in Q4 2021, being 555 bps higher compared to Q4 2020.

Meeting room and day office revenues in the Americas improved strongly throughout the second half of 2021. The recovery of occupancy in LATAM improved in the fourth quarter with strong occupancy improvements in markets like Brazil, Peru and Chile.

There were 25 new locations added in the region in 2021 and 39 locations were rationalised. After these movements, the total number of locations in the region was 1,257 at 31 December 2021.

EMEA

Our EMEA business has seen a clear turnaround in performance since February 2021, with turnover and occupancy improving strongly, especially in the second half of the year. The momentum of occupancy recovery improved in the second half of the year in all EMEA countries. Similarly, increased customer activity in centres led to improved ancillary service revenues with the fourth quarter being the strongest of the year.

Open centre revenue increased by 7.5% at constant currency, with strong year-on-year growth in Q4. Pre-2020 revenue decreased by 0.1%, while occupancy increased to 72.1% (FY 2020: 71.5%). Pre-2020 occupancy reached 76.8% in Q4 2021, being 775 bps higher compared to Q4 2020.

COVID-19 restrictions in EMEA have been diverse across countries with respective impacts on our business, but the recovery in the second half of the year was across all markets. Our major markets like France, Germany, Italy and Spain all gained momentum in the recovery of occupancy in the second half of the year. Occupancy recovery was also strong in smaller countries, especially in markets like Ireland, Luxembourg, Norway and Portugal.

Growth of our network in EMEA is progressively accelerating with the benefit of new franchise locations, management agreements and acquisitions. A total of 84 new locations were added across this region in 2021. After these additions and the rationalisation of 49 locations, the total locations in the region were 1,128 at 31 December 2021.

Asia Pacific

The impact of COVID-19 on our business in Asia Pacific was quite diverse. Revenue from all open centres increased 4.2% at constant currency to £223.0m. Revenue growth improved throughout the second half of the year. Pre-2020 revenue was down 0.3% to £209.1m (FY 2020: £214.3m) and pre-2020 occupancy decreased to 67.3% (FY 2020: 69.5%). Q4 occupancy was at 67.8%, up 144 bps compared to Q4 2020.

Trading in the second half of the year improved in major countries like Australia, China, Hong Kong, India, Singapore and Pakistan. In other markets the business environment remained challenging with recoveries anticipated in 2022.

A total of 32 new locations were added and 33 were rationalised in the region in 2021. We are seeing a clear acceleration in variable rent and management agreement deals in the region. At 31 December 2021 we had a total of 644 centres in the region.

Good progress is being made on franchising in the region. During the year we entered into a 50:50 joint venture with Hysan Development Company Limited to operate a flexible workspace business across Hong Kong, Macau and Guangdong ("the Greater Bay Area" ("GBA")).

UK

Lockdown restrictions had a significant impact on the UK business, with lower demand throughout the CBD of London. Outside of London our business has been more robust. Since the announcement of easing restrictions in March 2021, demand for more distributed working has further increased sales in many of the satellite towns and cities outside of London, and since summer, also in CBD of London. As a result, pre-2020 occupancy improved from March to exit the year at 70.8%. Pre-2020 occupancy for the period averaged 69.2% (FY 2020: 72.6%).

Enquiries are good and sales conversion is improving. Lower discounting and the removal of COVID-19 promotions is helping pricing on new sales. Retention is improving and is now at its highest level since the start of the pandemic. Renewal pricing is also strengthening. Meeting room demand came back strongly in June and revenue from other services is recovering with footfall improvement.

Revenue from open centres reduced by 0.4% to £342.0m, with the growth rate improving in Q4 year-on-year. Pre-2020 revenue declined by 5.4% to £316.5m (FY 2020: £334.7m), with the rate of growth improving in Q4.

34 new locations were added and 24 rationalised in the UK in 2021. The net of these additions and the network rationalisation led to an overall reduction of locations in the region to 285 at 31 December 2021.

3.3 STRATEGIC REVIEW

The case for hybrid working has never been clearer. At its simplest, employers wish to reduce their real estate costs and minimise their carbon footprint while successfully attracting the best available talent to help them compete as effectively as possible.

Hybrid working is projected to save organisations an average of $11,000 every year for every person who works remotely for half of the week. The estimated savings have been calculated based on conservative assumptions by Global Workplace Analytics. The research-based consulting firm had noted that the primary savings will come from increased productivity, lower real estate costs, reduced absenteeism and turnover and better disaster preparedness.

Employees, meanwhile, want the freedom to choose to work in a metropolitan headquarters or at home, and to collaborate with colleagues in a rural or suburban centre close to where they live. Research commissioned by IWG shows that 70% of job candidates are insisting that companies have a hybrid work policy and half of existing employees would quit their job if forced back to the office five days a week. Enabling companies and individuals alike to gain from all these benefits takes more than just a global network of high-quality business centres.

Technology also plays an essential role, and IWG is unique in having a true platform strategy that enables us to bring together the users of hybrid space and the owners of real estate across the world. In a very important strategic review of our organisational structure, we set in motion a major programme of work in 2021 that will shape our future direction, not only throughout 2022 but for many years to come. Following the review in July, the Board determined that customers and shareholders would benefit from a structural separation of some of the Group's operating assets and capabilities.

We have subsequently completed the separation of certain of our digital assets and these digital assets will be merged with The Instant Group to create the world's leading fully integrated independent workspace platform. The merged business will be run by Instant's current management, led by CEO Tim Rodber, who have achieved c. 31% Compound Average Growth Rate in EBITDA over the period 2019 - 2021. The transaction comprises a net cash investment of £270m, provided by a fully underwritten debt facility, to acquire the shares of selling shareholders and provide capital for growth with Instant management investing a further £50m into the merged business. The merger underpins the new company's independent leadership position in the flexible workspace market and creates a preferred platform for the booking of flexible office space, services and inventory management, similar to models already operating in the travel and hospitality sectors. The merged business creates the largest digital platform, accessing over 30,000 buildings in more than 175 countries, served 24/7 through an integrated platform operating in more than 40 languages. The next step anticipated is a formal separation from the Group via a listing on the US or UK markets within the next two years. In a separate strategic strand, the Group continues to review the potential separation of the property investing activities. With these clear strategic objectives in place, the Group is in a strong position to generate enhanced free cash flow.

3.4 FINANCIAL ANALYSIS

The review below highlights the reported results in accordance with IFRS. Under IFRS 16, while total lease related charges over the life of a lease remain unchanged, the lease charges are characterised as depreciation and financing expenses with higher total expense in the early periods of a lease and lower total expense in the later periods of the lease.

The continuation of COVID-19 in most of the Group's markets had a significant impact on our business in early 2021 which initially slowed the pace of recovery and directly contributed to the reduced revenue reported in 2021 (when compared to 2020) and the net losses. Consequently, the Group in 2021 continued to take measures to build greater resilience into the business and future-proof it for the long-term structural growth opportunity. The success of these measures became evident in the momentum that built in the business during the remainder of 2021. These actions, together with the slower than originally anticipated recovery caused directly by COVID-19, have resulted in further charges. There adjusting items totalled £31.4m (2020: £389.8m), £8.4m of which are non-cash items.

Group income statement

£m	2021 (As reported)	2020 (As reported)	% Change (constant currency)	% Change (actual currency)
System revenue	2,480.8	2,696.7	(3.9)%	(8.0)%
Revenue	2,210.2	2,406.7	(4.5)%	(8.2)%
Gross profit/(loss) (centre contribution)	25.5	(245.3)
Gross profit before adjusting items! ⁽¹⁾	23.8	88.1
Other income	3,682.8	-
Overheads ⁽²⁾	(316.1)	(279.5)	17%	13%
Joint ventures	(2.2)	(2.6)
Operating profit/(loss)	3,390.0	(527.4)
Operating profit/(loss) before adjusting items ⁽¹⁾	3,421.4	(137.6)
Net finance costs	(169.9)	(308.9)
Profit/(loss) before tax from continuing operations	3,220.1	(836.3)
Taxation	(77.5)	(28.0)
Effective tax rate	2.4%	(3.3)%
Profit/(loss) after tax from continuing operations	3,142.6	(864.3)
Profit/(loss) after tax from discontinued operations	59.3	(1.5)
Profit/(loss) for the period	3,201.9	(865.8)
Basic EPS (p)
From continuing operations before adjusting items ⁽¹⁾	652,733	(94,420,000)
Attributable to shareholders	646,394	(173,160,000)
Depreciation & amortisation	1,097.3	1,195.3
Adjusted ⁽¹⁾ EBITDA	4,523.0	1,056.9	344%	328%

^1. Adjusting items relate to income and costs arising specifically from the impact of COVID-19.
^2. Overheads for 2021 include COVID-19 non-recurring items of £33.1m (2020: £56.4m).

Network rationalisation

With the uncertainty caused directly by COVID-19 persisting through 2021, further marginal centres were eliminated from the network. This led to a charge of £83.1m (2020: £58.5m). This charge was offset by a £125.2m reversal of impairment of property, plant and equipment (2020: impairment of £244.8m).

Restructuring costs

A charge of £32.6m (2020: £43.3m) is included within adjusting items to cover legal and other professional costs, including costs associated with the significant number of individual centre renegotiations undertaken during 2021.

Provision for expected credit losses

The prolonged impact of COVID-19 and the emergence of new variants of the virus in some markets continued to present an unprecedented challenge to many customers who may struggle to navigate through these challenges. The Group has therefore further reviewed the recoverability of its debtor profile and recognised an additional £53.5m (2020: £17.5m) in credit losses. The increase is low compared to the overall debtor profile as the Group has not historically incurred significant credit losses and continues to maintain customer deposits as additional security in the event of non-performance of customer contracts.

Other one-off items

During the year the Group incurred £0.5m of transaction costs in respect of aborted transactions that did not complete due to COVID-19 (2020: £8.2m). In addition, during the year, the Group received a total of £0.7m (2020: £6.4m) in respect of worldwide support schemes.

Cost benefit

The swift actions taken to mitigate the impact of the global pandemic on the business, together with the ongoing sharp focus on all costs, has resulted in significant savings in overheads and centre-related costs, despite the operating losses incurred in 2021.

Overall, the cost optimisation programme has delivered an annualised run rate cost reduction of approximately £324m. These cost savings exclude the c. £129m of cost investment in new centres. After the new centre investment, the net cost benefit in 2021 was c. £148m.

Revenue

System-wide revenue decreased from £2,696.7m to £2,480.8m, a 3.9% decline at constant currency. This is a new additional performance measurement for the Group and one we consider provides a better reflection of the scale of the business, which will become increasingly relevant as we progress our strategy of faster, capital-light growth, with the resultant increased emphasis on franchising, management agreements and other partnering arrangements. On a reported basis, total Group revenue decreased from £2,406.7m to £2,210.2m, a 4.5% decline when compared at constant currency. This is a good outcome given the on-going impact of the pandemic and one that demonstrates the growing sequential momentum achieved from the second quarter onwards. Full year revenue declined 4.5% reflecting the first half decline being offset by year-on-year growth in the second half. This improving momentum in the business from March 2021 was similarly reflected in the revenue from open centres and the like-for-like pre-2020 estate. Open centre revenue declined in H1 but increased in H2 year-on-year, delivering a 1.0% increase at constant currency to £2,162.4m (2020: £2,229.1 m). Pre-2020 revenue increased in H2 which, after a H1 decline, resulted in a revenue decline of 4.3% at constant currency to £2,010.3m (2020: £2,184.9m).

Occupancy in the pre-2020 estate for 2021 was 70.6% (2020: 72.5%), with momentum improving during the year, with a December exit rate of 74.5%. Encouragingly, this performance has continued into the start of 2022, with most major markets contributing. The breadth of our coverage in satellite towns and suburban locations continues to be beneficial. The continued maturation of the locations opened in 2019 and 2020 has been good. Revenue from centres opened in 2019 increased by 9.5% at constant currency. The new locations opened in 2020 have performed strongly, with occupancy increasing from 33.9% to 54.2%. The initial revenue contribution from the new 2021 openings has also been strong with exit occupancy in December 2021 of 44.5%.

Gross profit (before adjusting items)

The adjusted gross profit reported for the period was £23.8m, which compares to £88.1 m for 2020. Reported gross profit including the adjusting items was £25.5m (2020: loss of £245.3m).

EBITDA

Adjusted EBITDA as reported increased to £4,523.0 m (2020: £1,056.9 m), due to the gain on disposal of investments in affiliated companies, as part of an internal restructuring of the wider IWG plc Group. Reported EBITDA including the adjusting items was £4,491.6 m (2020: £667.0 m).

Overhead investment

Reported Group overheads, excluding adjusting items of £33.1 m, increased 31.4% at constant currency to £283.0 m (2020: £223.1 m). As a percentage of Group revenue, overheads were 14.3% which is higher than the 11.6% of revenue they represented in 2020, primarily as a result of the £196.5 m reduction in Group revenue from 2020. We also invested in building our in-country sales teams and our marketing to support our pivot to capital-light growth.

Operating profit/(loss) - continuing operations

Adjusted operating profit, taking into account the gain on disposal of investments in affiliated companies, as reported was £3,421.4m (2020: loss of £137.6m). Including the adjusting items, the operating profit was £3,390.0m compared to a loss of £527.4m in 2020.

Net finance costs

The Group has reported net finance costs for the year of £169.9m (2020: £308.9m), including interest on the Group's lease liabilities. The reduction in the net finance expense includes the significant gain on the mark-to-market of the option element of the convertible bond, resulting in a gain of £49.6m (2020: £2.4m gain).

Taxation

The reported effective tax rate for 2021 is 2.4% (2020: (3.3%)) on continuing operations. 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

Basis and diluted earnings per share were a profit of 646,394p (2020: loss of 173,160,000p). The profit per share from continuing operations before adjusting items was 652,733p (2020: loss of 94,420,000p). The weighted average number of basic and dilutive shares in issue for the year was 495,348 (2020: 500).

3.5 CASH FLOW ANALYSIS

Cash flow

The Group reported cash inflow for the year of £3,699.4m before net investment in growth capital expenditure (2020: £149.0m), which is a strong improvement on the cash outflow in the six months to 30 June 2021. This reflects the inflection of our trading performance and an improvement in working capital after the payment of deferred rents in H1 which were retained in 2020.

Overall, the Group reported a reduction in net debt for the year of £572.0m. This was after the investment in net growth capital expenditure of £238.2m (2020: £203.8m), purchase of investments in joint ventures of £33.4m, proceeds from franchise agreements of £52.3m, the return from an aborted potential acquisition of £283.7m and a currency translation benefit of £119.7m. Net debt at 31 December 2021 reduced to £6,830.3m from £7,402.3m at 31 December 2020.

Capital investment in the network

In line with the Group's expectations, net growth capital expenditure in 2021 increased by £34.4m to £238.2m (2020: £203.8m) whilst adding a similar number of new locations and space, representing clear evidence of the increasing success of our capital-light growth strategy. During 2021 we added 175 new locations (2020: 141) and rationalised 145 locations (2020: 216), mostly directly COVID-19 related.

At 31 December 2021, the Group's physical network comprised 3,314 locations globally, providing the largest global and most widely distributed network. The new locations added 4.1m sq. ft. of gross space. This, together with the impact of the rationalisation programme, resulted in the Group having 64.1m sq. ft. of gross space at 31 December 2021 (2020: 62.0m sq. ft.). Maintenance capital expenditure decreased to £72.3m from £96.2m. After partner contributions received, net maintenance capital expenditure increased from £81.2m to £67.1m.

Strong financial position

Reported net debt at 31 December 2021 reduced to £6,830.3m (2020: £7,402.3m), representing the renegotiation of existing leases and increased success of our capital-light growth strategy. The 31 December 2021 net debt position reflects the previously highlighted return of the £283.7m investment on an aborted potential acquisition and the higher-than-normal cash outflows resulting from the completion of more deals with landlords, which triggered the release of previously deferred rent payments held over by the Group in 2020.

In February 2022, the Group reduced the £950m revolving credit facility to £750m with an unchanged maturity date in 2025. In addition, a £330m bridge facility for The Instant Group acquisition has been agreed. The bridge facility has a maturity in September 2023.

Foreign exchange

The Group's results are exposed to translation risk from the movement in currencies. During 2021 key individual exchange rates have moved. Overall, these exchange rate movements had a mixed impact on the Group's results. Revenue and gross profit were reduced by £91.1m and £2.1m respectively, but operating profit increased by £7.2m, reflecting the relative contribution to Group profit from our US business.

4 NON-FINANCIAL PERFORMANCE INDICATORS

In last year's Annual Report, we said that sustainability was at the top of our agenda. This year, that statement is truer than ever, as we work hard to ensure that we are open and transparent on the ESG issues that matter most to all stakeholders. We aim to be a leading force in this area, evolving our business and reporting practices to meet all stakeholders' expectations in relation to our ethical and sustainability practices.

We have reviewed the Environmental, Social and Governance (ESG) issues that were most material to IWG's business and determined that these continued to be key priorities in 2021. We measure and report on the progress we have made against each one.

Environmental

Material issue	Action	Measurement
Sustainable working model	- Reduced energy consumption	- 2021 Carbon Disclosure Programme
	- Waste reduction & recycling
	- Reduced water usage

Social

Material issue	Action	Measurement
Employment opportunities, health and wellbeing and recognising talent	- Talent retention/acquisition	- Volume of new hires (including graduates and interns); internal promotions; courses and training completed
	- Training and education
	- Health and wellbeing campaigns/initiatives	- Competitiveness of compensation and reward
	- Feedback and recognition
	- Performance reward
Diversity, equity and inclusion	- Recognising talent in all diverse offerings	- Workforce diversity
	- DE&I training programme	- Training programme participation
	- Affinity/Business Resource Groups
	- Voice Councils programme
Corporate social responsibility	- Corporate citizenship	- Community investment (financial value generated)
	- Proactive local community support

Governance

Material issue	Action	Measurement
Corporate governance	- Embed sustainability principles within business operations	- Adherence to structure and approach
Risk governance	- Principal risk review and mitigation	- Risk management structure and approach
Ethics and compliance	- Training and education	- Business Assurance function conducts risk studies and tests compliance with internal controls
	- Whistleblowing channel
Bribery and corruption
Compliance with local legislation	- Compliance training	- Compliance reporting

4.1 ENVIRONMENTAL

Our core area of expertise, hybrid working, provides a powerful enabler for our customers to reduce their carbon footprint. However, it is not enough for us to enable the environmental strategies of our clients and we have an exciting and positive carbon-reduction strategy relating to our own business. We have taken the foundational steps towards its creation in 2021, which will allow us to enact a comprehensive carbon reduction strategy in 2022 with the objective of achieving carbon neutrality during 2023.

The majority of corporations, both domestic and global, are actively incorporating hybrid working into their operating models. The environmental agenda is one of the drivers of this change. We are increasingly seeing more businesses signing up to net zero commitments, with associated implications for their own core operations and supporting supply chains. This is creating a shift in the way businesses manage their real estate portfolio and workspace policies.

―	Sustainability is no longer a 'nice-to-have': businesses are positioning sustainability at the forefront of their decision-making, including real estate.
―	New standards in sustainability: businesses are demanding new minimum sustainability standards for the spaces they occupy, including energy performance, sustainable sourcing and responsible management.

IWG has an unparalleled network of inner and outer-city locations, presenting a wide choice of flexible workspaces for businesses to choose from. By adopting the hybrid working model, companies can optimise the workspace they need and support people working at or near home, reducing employee commuting levels. The compound saving across these two factors can significantly reduce office-related carbon intensity. While reduced emissions at the office and from commuting have to be balanced against increased energy use in the home, most studies show nonetheless that home or local working results in a net reduction. One suggests that carbon reduction can be as high as 77% (Source: IWG White Paper, Hybrid World: Sustainable World, 2021).

Hybrid working also has the potential to revitalise communities, as workers spend more time working at or close to home. This 'hub-and-spoke' model and the increasing number of flexible workspaces can also contribute to an increase in wellbeing, community spirit and the creation of local supply-chain networks. This working model is not only fundamentally and permanently changing the way our clients work: it is also transforming how people want to work for, and partner with, them. The major role that hybrid working can play in achieving their ESG goals means that companies can support six of the United Nations Sustainable Development Goals (UN SDGs) for 2030 through its adoption:

SDG 3	Good health and wellbeing: time spent working at home or at a nearby office that's accessible by foot or bike means fewer stressful commutes and a generally healthier lifestyle.
SDG 5	Gender equality: hybrid working offers a future of more equal opportunities and more equitable sharing of family responsibilities.
SDG7, 13	Affordable and clean energy and climate action: hybrid working can lead to significant reductions in greenhouse gas emissions through fewer car and plane journeys, while companies can reduce their carbon footprints by downsizing their offices and working from more advanced buildings.
SDG 8	Decent work and economic growth: economic growth can come from increased productivity, as workers choose to work when and where they're happiest and most effective.
SDG 11	Sustainable cities and communities: hybrid working revitalises communities, as more time is spent working at or close to home. This can also increase wellbeing and community spirit.

In 2021 we took the foundational steps necessary for us to progress a carbon-reduction strategy during 2022. Guided by the Greenhouse Gas (GHG) Protocol, developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), we carried out research during 2021 to determine our carbon- footprint boundary and began analysing data to make an accurate carbon calculation. We used this work to help us identify the best approach for us to take. To meet our ambition, we are pursuing three parallel strategies:

―	Investment: actively seeking low carbon properties and buildings with low carbon energy suppliers.
―	Improvement: driving significant sustainability impact through the widespread implementation of innovative initiatives, including increased recycling and energy reduction alongside improved staff engagement through our sustainable working model.
―	Carbon removal: in combination with the two strategies above, we aim to address the emissions we are unable to reduce by leveraging commercial offset schemes to accelerate the trajectory of our carbon-reduction work. We will progressively replace the emissions that are being offset with embedded savings from the greening of the estate.

We place a strong focus on continually improving the performance of our existing operations, specifically in reducing energy and water consumption, recycling and reducing waste.

Reducing energy consumption

Our energy-efficiency solutions have played an essential part in our environmental strategy and support the creation of emission savings across our business operations. We were pleased for the sixth consecutive year to have received a strong 'B' score for our climate change submissions to the Carbon Disclosure Programme (CDP), higher than the global average and that of our industry group. We have also responded more strongly than our industry peers in our governance of climate change and emissions- reduction initiatives, consistently receiving a score of A- or above.

While this performance is pleasing, we are confident that we can do even better. One example of further improvement is in the UK, where we have started to roll out an electricvehicle (EV) charging infrastructure across the country, with imminent delivery across 33 locations. This will become a global initiative as we aim to make all our workplaces more sustainable. We are also developing an initiative to lease EVs for use by our employees, so reducing the emissions caused by their commutes to work, their business miles and their personal travel. We continually seek opportunities to reduce our emissions further and have implemented energy-management tools and centre upgrades, procuring green technologies where possible and improving office facilities.

Water usage

Due to the nature of our business, we do not directly source or withdraw our water, meaning our impact is considered to be relatively low. Nevertheless, we are proud to have achieved a 'B' score for our water-security submission to the CDP for the third consecutive year, demonstrating strong management of water consumption across our portfolio. We have again exceeded the performance of our peers, achieving an 'A' score or above in categories including water business strategy, risk assessment, policies and governance. We also apply water-saving technologies and awareness initiatives to improve the water usage at our centres.

Waste reduction and recycling

With almost 3,400 centres in over 100 countries worldwide, we have a large and highly dispersed supply chain. The challenges involved in ensuring all suppliers are compliant with our requirements are significant, but we have made considerable progress in recent years. For example, IWG operates an effective Global Recycling Initiative, in which all centres around the world actively participate. We are also managing plastic waste more effectively, thanks to a programme that includes upgrading all our coffee machines from those that use single-service pods to ethically sourced beans. In addition, we have launched a programme to investigate the sustainability credentials of our procurement activities, which will give us the understanding necessary to manage this area as effectively as possible in future. This gives us a clear direction for further evolving our procurement activities across all product and services areas, countries and centres.

TCFD framework

The Task Force on Climate-related Financial Disclosures (TCFD) framework was established by the Financial Stability Board (FSB) in 2015 and aims to improve the reporting of climate-related financial information. The TCFD recommendations have been structured around four thematic areas that each represent a fundamental element of how organisations operate: governance; strategy; risk management; and metrics and targets. This is the first TCFD review we have issued, and we anticipate we will build upon the information provided here in future years as we deepen our understanding of and response to climate change.

4.2 SOCIAL

2021 was a defining year. We hired more people than in any other year in our trading history and trained our team on the broadest curriculum to date. We were recognised as being in the top 1% of employers from the Leading Employers group.

Our IWG people promises are to provide:

―	interesting and achievable work;
―	a manager who cares; and
―	an opportunity to advance and develop.

To give our customers a great day at work, we first have to ensure our team members have a great day at work. The two are inextricably linked, and talent is therefore always at the forefront of our global strategy as the cornerstone of success for IWG and the customers we are proud to look after. The key people strategies are:

―	building a global HR platform;
―	acquisition of talent;
―	learning, development and careers;
―	diversity, equity and inclusion (DE&I);
―	communication and recognition; and reward.

The HR platform

As our team grows across the world, we are providing two key HR tools as part of the ongoing simplification and efficiency programme that will run into 2022, supporting the growth of our investment partners and IWG. First, we are building an extensive HR platform that is accessible to all team members around the clock. This is a one-stop shop for everything from information on local and global policies, processes and documents to access to the IWG Learning Academy. Here you can raise an HR ticket, view data and much more. The platform provides employees and line managers with greater efficiency and real-time solutions to get their jobs done quickly and seamlessly. In addition, all our team members use TeamHub, a unique app they can access on any device, day or night. This gives them a rapid and intuitive way to book time off, register sickness or any other sort of absence, raise an IT ticket and see who is at work or out of office. It also enables them to check in for work every day, a vital security and safety feature in a geographically dispersed business.

Talent acquisition

We continued to recruit new talent throughout 2021, with a focus on delivering and deploying innovation, automation and simplification to give customers and team members a great day at work and ensure we can respond to the needs of the business over the next decade. In a record year we hired more than 3,000 new colleagues in a variety of roles, with a primary emphasis on the teams who look after our customers. We also added new opportunities in product development, country management, sales, technology franchising, acquisitions and project management. Graduates and interns are always a key element of our talent strategy, and we will wherever possible continue to provide them with employment opportunities. We took the opportunity to create a new learning and career development programme specifically for this cadre of our workforce, which we will launch in 2022. Of course, 2021 was another exceptional year, pivoting very quickly from a first half when there was great talent available to a second half characterised by a very competitive global landscape for talent. We responded by revising our fixed salary bands, city by city and country by country, to remain competitive in both retaining our exceptional people and in hiring new talent. We also launched a totally new global website for the external market, which better reflects the wealth of opportunity that is on offer at IWG. We also now have an easier, faster and fully inclusive process in place that makes it simple for all candidates to apply for roles with us.

Diversity, equity and inclusion (DE&I)

Diversity of talent continues to be a major focus area for us, and our recruitment channels and processes offer opportunity to everybody. In 2021, for example, we offered freelancers and home workers a range of opportunities that can be done on a part-time basis and entirely from home. This approach is designed to suit people with priorities that make it difficult for them to commute or be based in an office. In addition, we will continue to partner with the Good Youth Employment scheme giving opportunity to talent starting off in their careers.

We extended our online programme on DE&I during the year. This included interactive webinars exploring what DE&I means in practice, investigating how we should all interact without bias with all IWG team members, partners, customers and other stakeholders. We also launched a series of 'Affinity Groups' in the US. Made up of team members, these work with the Company to make and consider recommendations on how best to ensure we remain fair and equitable in our day-to-day business operations. We also launched our global 'Voice Councils' programme, an initiative led by team members to provide a dedicated forum where relevant senior audiences can hear their views, with the aim of establishing greater understanding of people's actual needs across the business. Regional webinars were set up on a quarterly basis with elected representatives from all countries. The agenda of each meeting is led by the participating Voice Council representatives, who gather questions, feedback and suggestions in advance from their colleagues. Answers and suggestions are captured and distributed for information to the broader population, along with progress made on previous action items. These meetings have helped to continuously improve the business in an orchestrated manner. They have also increased levels of engagement between our leadership and those working in the field. In addition, they are improving our people's sense of team work and their ability to improve situations both for themselves and for the team members they represent. This is a key part to our commitment to deliver on our promise to give team members interesting and achievable work. We also continue to operate our confidential 'Right to Speak' reporting helpline for all members of our extended team across the world. In addition, we have various programmes in place to provide employees with confidential counselling services, 24/7 and for 365 days a year.

Learning, development and careers

The learning and development curriculum is focused initially on giving our team members the right start at IWG. It is then about developing their skills and knowledge to offer opportunities to develop to take the next step on their career ladder. 2021 was another record year for training and development at IWG. We filled 24,000 training slots (webinars) from induction to skills development in key areas such as customer service, sales and communication. We also launched our new first line management development programme, underpinning our commitment to our 'A Manager who Cares' programme. A new development in 2021 was our 'training-in-a-box' programme which gives managers access to training plans and materials to deliver relevant training locally with their own team members. We held interviews with key executive functional leaders to enable team members to learn more about global functions, what they do and whether they might in future provide a fit for their interests and skills. We also continued our core programmes on important topics including health and wellbeing, financial compliance, and an introduction to local marketing and technology skills. We launched a new leadership programme incorporating 360 feedback as a starting point with a coaching and mentoring programme as development and ongoing support.

As a result of the People Plan, we promoted more team members from the field into Group functional roles than ever before in 2021. In addition, our customer facing teams have a defined career path with multiple opportunities on offer.

Communication and recognition

Communication and connectivity continued to be important in 2021 as hybrid working added complexity to staying aligned and connected with one another. Communications on staying healthy, our financial progress, new partnerships and important milestone events played a key role in our communications programme for the year. We also continued to operate our 'Share a Great Day at Work' initiative, which featured team events including informal online team meetings and pictures showing our people running customer events in our centres. We also highlighted our charitable activities here, inspiring us all wherever possible to give back to individuals and communities. This programme has been highly successful: simply sharing special moments with one another has helped us remain connected as a team, delivering an uplifting communication platform for everybody. Our usual 'drum beat' of business initiatives such as quarterly leadership calls, employee newsletters and townhalls all continue to play an important role in our communications strategy. We held our annual leadership conference on a virtual platform in 2021, which included our first virtual global award ceremony to recognise just some of our team members' extraordinary achievements. At a local level, team leaders and managers give out 'recognition pins' to colleagues on the spot for exceptional behaviours, including team members who have gone above-and- beyond for their customers or colleagues. These are complemented by recognising extraordinary achievements such as long service, certificates for exemplary work and on line badges for training accreditations that underpin career development at IWG.

Reward

Reward is a key focus area for us, and we work hard to ensure that high-potential people at every level - from intern to the Executive Committee - are encouraged to stay with us via short and long- term incentives. In the second half of the year, we set about re-setting fixed pay for our customer facing team members. This was complemented by variable pay programmes focused on giving customers a great day at work. We also cascade short-term incentive plans throughout the organisation to ascertain that everyone is rewarded for ensuring the millions of members and customers who use our workspaces and service portfolio receive a consistently great service.

Community engagement

The continuation of the COVID-19 pandemic through the whole of 2021 presented challenges to the efforts of our colleagues across the world to support charitable and environmental causes within their communities. However, yet again they managed to overcome the difficulties involved and have supported numerous causes with their local communities. When it comes to our Group-level social responsibility programmes, IWG also provides concessions to many charities in the form of reduced or complimentary office space or meeting rooms. We are proud to announce that at year end, together with our colleagues we had contributed £438,036 to charitable organisations.

Our global geographic spread across more than 120 countries means that CSR continues to be highly localised. While we have a global framework in place, our community engagement takes place at a local level, allowing our colleagues to provide support to causes and charitable organisations that are important to them, their communities, their customers and their wider stakeholders. As a result, every year a broad range of charitable and environmental giving takes place across our global footprint, from fundraising activities to donations of gifts in kind.

4.3 GOVERNANCE

Good governance helps us base the decisions we make on what is right for our people and shareholders; the communities where we work; our customers and their employees; our partners; and society at large. As a result, having good governance supports entrepreneurial and commercial management and ensures the long-term sustainable success of the business for everybody.

The Board has oversight of all the Group's sustainability initiatives and receives regular updates from the Executive Directors and the Senior Leadership Team.

Risk governance

The Board defines IWG's risk appetite and tolerance and annually reviews the principal risks the Group faces and the plans for mitigating them. The Audit Committee has responsibility for the system of internal control and risk management and for ensuring the effectiveness of this system. We detail key risks and actions to mitigate these risks in the Risk management report.

Data security and risk

Information security is a top priority for IWG and remains a standing agenda item with the Board. We continue to make significant investment in this area to ensure that the IWG Information Security Management System (ISMS) is established, implemented, monitored, reviewed and where necessary improved so that we always meet the organisation's specific security and business objectives. IWG's ISMS takes a holistic, coordinated and risk-based view of the organisation's information security risks. We achieve information security by implementing effective controls including policies, processes, procedures, organisational structures and software and hardware functions. These controls ensure that IWG's specific security and business objectives are met. IWG's data privacy strategy is to process only the minimum necessary amounts of personal data, to the extent necessary to provide a service to our customers and ensure the appropriate safeguards and controls are in place to protect this data.

Compliance with local legislation

We make every effort to take all reasonable and practical steps to ensure we comply with local legislation and regulations in all the countries where we operate. Compliance reporting is part of our internal control and risk management process, and the Audit Committee receives regular updates. We also provide compliance training to all employees and encourage them to make use of our whistleblowing channel without fear of repercussions.

Ethics and compliance

The Board is committed to instilling a culture of doing what's right, ensuring that IWG does what is right for the environment and for our people and ensuring that our people act fairly and professionally in all business activities. To support our culture and values and ensure compliance with our internal policies, such as our Code of Conduct, we provide a suite of training courses on our global learning platform. Employees are encouraged to raise any concerns through the whistleblowing channel.

Bribery and corruption

IWG is committed to carrying out business in an honest and ethical manner and has zero tolerance of bribery and corruption. We give all employees training on our bribery and corruption policy, and you can see our statement of commitment at https://iwgplc.com/Documents/IWG-Statement-of-Commitment-540723792-2.pdf.

Modern slavery

IWG has zero tolerance of slavery and human trafficking. You can read our statement made in accordance with the Modern Slavery Act 2015, which the Board reviews each year, at https://www.iwgplc.com/en-gb/sustainability. We give all employees training through our global learning platform.

5 BUSINESS OUTLOOK

The global pandemic presented IWG with many challenges throughout 2020 and the first half of 2021. However, these proved to be short-term issues, and during the second half of 2021 we made a rapid return to business growth, which is continuing strongly into 2022. Today, we are enhancing our strategy to enable us to deliver against our full potential by leveraging our global leadership position in two key areas. The first of these is our focus on growing our network through the increasing use of capital-light expansion methods such as franchising, management agreements and partnering deals. The second is our parallel focus on developing and deploying our digital assets to create an improved customer experience and build strong long-term growth with recurring revenues. As we enter 2022, our focus is sharper than ever. Our goals are clear. We believe that with 3,314 centres, we are operating at only a fraction of our underlying potential of 30,000 centres. We also believe that the optimal proportion of IWG-owned centres in the future will be at 10% at most. Today, conventional leases represent approximately 65% of our global portfolio, we expect to end the year with franchises, partnerships and management agreements reaching close to 50%.

During 2021, we entered into many attractive new franchising and management agreements. These included the sale of existing units to franchise partners, as well as entering new relationships with new partners on new properties. These actions significantly improved the quality and diversity of our global portfolio and are designed to accelerate our activities in this area throughout 2022 and the years ahead as we drive IWG towards achieving its full potential.

Today IWG is uniquely well-positioned to continue to grow strongly in 2022, benefiting from the trends we have already described. We have a clear strategy and are capitalising on continuing structural tailwinds. As a result, our scale, our history, our profile and our franchise offer make us the obvious partner for property owners everywhere. Our presence in markets across the world, long-established in urban centres and growing fast in suburban and rural communities, make us globally the most visible, the most reputable and the most experienced provider of high-quality hybrid and flexible office accommodation, membership and home-work products and associated services.

Looking to 2022 and beyond, we firmly believe that these advantages will drive our success and further strengthen our leadership position. We are committed to further improvement as accelerating capital-light growth, enabled by an expanding base of franchise and property partners, helps us serve the fast-increasing demand we are witnessing. We already have a strong balance sheet, a superior and differentiated technology offering and a strong team. More innovation, an ever-better platform and even stronger brands will improve our market-leading position yet further. This will enable us to bring new employment opportunities, a reduced carbon footprint, better work-life balance and heightened efficiency to businesses, workers and communities everywhere. We have all been watching with horror the devastating humanitarian crisis unfolding in Ukraine, where our thoughts are with those impacted, including some of our own people. Our commitment to our colleagues and customers in Ukraine is unwavering and we are supporting humanitarian relief efforts. Our centres in neighbouring countries are organising collections of essential supplies including clothing and food for the Ukrainian people displaced by the conflict. Additionally, a fund in aid of UNICEF has also been created.

Notwithstanding geopolitical uncertainties, we are confident that IWG has the energy, agility and momentum required for the significant opportunities ahead. Our trading momentum and forward order book are giving us clear visibility for strong growth in 2022 and an increasingly positive future, which confirms we are in the right place at the right time as businesses continue to embrace hybrid working.

During the pandemic, I believe our purpose - creating a better day at work - became stronger, more clearly defined, and more relevant for our stakeholders than ever before. This new strength has manifested itself in several ways over the last year, enabling us to articulate what matters most to us. For our customers, we aim always to ensure that our offering enables them to create value and flexibility in their working days, helps them to attract the best talent, and supports them with the sustainable management of their real estate.

For our people, we continuously invest in our teams, ensuring diversity and equal opportunities in all the communities across over 120 countries where we operate.

For the environment, we are empowering thousands of businesses and millions of people to reduce their carbon footprint. We achieve this simply by growing our network of centres to bring more and more workspaces into the local communities, small towns and suburbs where people actually live, raise their families and socialise with their friends.

Over the last two years, market demand has led us to open almost all our new centres in non-city centre environments. This approach is having three important positive results. First, by driving down the need to commute, it is significantly reducing the carbon footprint of millions of workers across the world. Second, it is enabling companies to play more than lip service to the concept of work-life balance by giving people more of their own time by enabling them to work close to where they live. And third, it is supporting local economies and small businesses by encouraging people to spend more in local communities, once again making them vibrant places to live and work.

In short, it is making the much-vaunted concept of the 15-minute city a reality for millions by providing all the facilities required for hybrid working in self- sustaining local neighbourhoods. In our 2020 Annual Report, we announced our commitment to being a carbon-neutral organisation by 2025. Throughout 2021, we have refined further our carbon-neutral programme. We accelerated our activities around minimising carbon emissions that arise from our supply chain and will be investing in carbon offset projects. As a result, we are bringing forward our ambition of becoming carbon-neutral during 2023.

6 RISK REPORT

6.1 RISK MANAGEMENT

We recognise the importance of effective enterprise risk management, especially in an ever changing environment. As such we conduct regular enterprise-wide risk reviews to identify and consider potential risks to the Group and its strategy. We calculate their possible impact and create strategies to protect the interests of IWG and all its stakeholders.

The Board has overall responsibility for ensuring that IWG has an adequate risk management framework in place. This includes approving the risk appetite for the Group. Our risk appetite outlines the extent to which we are willing to take measured risks in pursuit of our strategic objectives.

IWG operates the three lines of defence to manage risk, managed by the Board:

Board

―	Sets the strategy
―	Defines IWG's risk appetite
―	Monitors risk management process
―	Assesses overall effectiveness of risk management

Audit Committee

―	Reviews effectiveness of internal controls
―	Monitors progress against internal and external audit recommendations
―	Approves the annual internal audit plan

Assurance, risk and internal control reports

1st Line	2nd Line	3rd Line
- Front line business operations	- Corporate functions	- Independent assurance
- Strategies, policies, procedures and controls in day-to-day activities	- Sets policies and procedures	- Tests the design and operation of controls in place including policies, and procedures implemented by the 1st and 2nd lines
- Daily management of risk in line with functional objectives	- Monitors risks and internal controls	- Assists management and the Board in conducting risk studies
- Responsible for compliance with Group policies, procedures and internal controls	- Accountable for the design and implementation of risk management processes and controls	- Advises and guides on policies and internal controls framework
	- Accountable for the regular review and appraisal of key risks	- Drives implementation of recommendations in the business
	- Contributes to the identification and assessment of key risks	- Tests compliance with internal controls

IWG's risk management framework is designed to improve the prospect of meeting our strategic intentions through disciplined and practical risk identification, assessment and mitigation. Through this process, we are able to fully understand the risks and opportunities present in our day-to-day operations and in our business objectives. Our enterprise-wide risk management process allows us to understand the nature, scope and potential impact of our key business and strategic risks, enabling us to manage them effectively. IWG therefore has a comprehensive approach to risk management.

In 2021, our risk work incorporated ongoing pandemic impacts, including economic disruption as well as considering climate change impact on our principal risks. In particular, external risk and those outside of the Group's control were considered in 2021 and included as part of scenario testing.

Climate change risks and opportunities

Climate change risk has become a standalone principal risk to the business in 2021. It also presents a unique opportunity for the Group in providing sustainable office solutions for clients who may not be able to meet climate change targets alone. IWG participates annually in the Carbon Disclosure Programme and maintained a stronger rating than the global average for climate change. The Group has set a clear target of becoming carbon neutral during 2023. At its core, IWG embraces the 15 minute commute and advocates a hybrid working environment.

Principal risks to the achievement of our strategy in 2021

Our principal risks are linked to our key business objectives and overall strategy and in 2021 were considered in the context of the ongoing pandemic, economic downturn and climate change. A critical component of the risk management process is to assess the impact and likelihood of risks, allowing determination to be made over the current level of controls in place versus future controls and risk status. All our principal risks are managed in accordance with our Group risk appetite and mitigated as far as reasonably practical. We have zero tolerance of financial and ethical non-compliance, and aim to have our health, safety, environmental and security risks managed to levels that are as low as reasonably practicable.

Effective risk management requires awareness and engagement throughout IWG to provide a top down and bottom up view of risk. At IWG risk management is embedded into operational decision- making and reflected in the Group's key processes and controls. Risk management takes place at various levels across the business, including;

―	Monthly performance reviews for all countries and Group functions;
―	Individual reviews of every new location investment and all acquisitions;
―	An annual budgeting and planning process for all markets and Group functions;
―	A review in each Audit Committee meeting of the status of our principal risks; and
―	Annual review of all risks in our risk register, updated currently for significant changes between annual reviews.

6.2 STRATEGIC RISKS

Link to KPIs	Link to strategy	Risk status
1 Industry-leading profitable growth	A Network	^ Increased
2 Best-in-class cost leadership	B Franchise and partnering	= Same
3 Global multi-brand network	C Platform (Technology)	v Decreased
4 Strong cash generation, enabling investment		n New
5 Attractive shareholder returns

Risk description		Mitigation	Change / improvement since 2020
Growth risk
1 2 3 5 = A B	IWG continues to undertake significant growth to develop local and national networks. Mismatches between network growth and demand growth could lead to under or over supply, which could impact competitive position, profitability and cash generation.	IWG mitigates this risk as follows: 1. Each investment or acquisition is low risk and requires a proposal to be reviewed and approved by the Investment Committee. 2. A robust business planning and forecasting process is in place to provide timely and reliable information to address short and midterm opportunities and risks to performance. 3. A quarterly review process is in place to monitor new centre performance against the investment case to determine if the anticipated returns are being generated. As part of the annual planning process, a growth plan is agreed for each country which clearly sets out the annual growth objectives.	Additional resources were dedicated to network development teams. New centres showed strong opening occupancy in 2021 especially when taking COVID-19 restrictions into account. COVID-19 impact: Demand was negatively impacted during 2021 due to extended COVID-19 restrictions. The accelerating adoption of hybrid working is anticipated to increase demand as COVID-19 restrictions are reduced and new work habits adopted.
Transformation risk
3 5 n A C	Execution of programmes are not delivered on time or do not meet the desired outcomes.	This risk is mitigated as follows: 1. Governance Committee in place for all transformation programmes. 2. Project management team is in place to ensure programmes are monitored and properly managed. 3. Dedicated resources are recruited to ensure programme requirements are met. External expertise utilised where required. 4. A Resource Committee is established to manage resource requirements needed for the execution of this.	We have recruited a number of senior roles and external expertise is called on as and when required to assist in the delivery of our transformation.
Lease obligations
1 2 5 = A B	The Group's portfolio of leases gives rise to an inherent risk in relation to lease obligations and associated financial commitment. Whilst IWG has demonstrated consistently that it has a fundamentally profitable business model, the profitability of centres is affected by movements in market rents, which, in turn, impact the price at which IWG can sell to its customers. The life of the Group's leases are, on average, significantly longer than the average terms of customer contracts which creates a potential for mismatch if revenues fall significantly, which can impact profitability and cash flows.	This risk is mitigated in a number of ways: 1. Almost all of our leases are 'flexible', meaning that they are either terminable at our option within six months and/or located in or assignable to a standalone legal entity, which is not fully cross- guaranteed. In this way, individual centres are sustained by their own profitability and cash flow. This flexibility has no impact on our accounting for leases in the scope of IFRS 16. 2. Approximately one third of all our leases are variable in nature, which means that payments to landlords vary with the performance of the relevant centre. In this way the 'risk' to profitability and cash flow of that centre from fluctuations in market rates is softened by the consequent adjustment to rental costs. 3. The sheer number of leases and geographic diversity of our business reduces the overall risk to our business as the phasing of the business cycle and the performance of the commercial property market often varies from country to country and region to region. 4. Each year a significant number of leases in our portfolio reach a natural break point.	During 2021, the number of 'flexible' leases as a percentage of the total was 96%. Approximately a third of the leases we entered into during 2021 were variable in nature. At the end of 2021, we were operating 3,314 locations in 1,135 towns and cities across 120 countries. COVID-19 impact: During 2021 more than 1,500 leases were renegotiated or restructured which resulted in short- or long-term cash benefits. Reviews and discussions related to leases for underperforming centres are an ongoing process.
Economic downturn
2 5 = A B	Failure to respond to an economic downturn in key markets, or changes in market conditions could adversely impact our global market share, operating revenue and profit performance.	The Group has taken a number of actions to mitigate this risk: 1. Approximately one third of all our leases are variable in nature and our rental payments, if any, vary with the performance of the centre. 2. Lease contracts include break clauses when leases can be terminated at our behest. 3. The Group also looks to stagger leases in locations where we have multiple centres so that we can manage our overall inventory in those locations. 4. We review our customer base to assess exposure to a particular customer or industry group. 5. The geographic spread of the Group's network increases the depth and breadth of our business and provides better protection from an economic downturn in a single market or region.	The number of 'flexible' leases as a percentage of the total remained at 98%. Our monthly business performance reviews provide early warning of any impact on our business performance and allow management to react with speed. The Board reviewed the potential impact of an economic downturn and addressed a range of potential impacts from COVID-19 when making its annual viability statement. COVID-19 impact: There has been sharp focus on cash generation by reducing cost, renegotiating rents and rationalising the network. The adoption of hybrid working is reflected in stronger demand in suburban locations versus city centres. Reviews and discussions related to leases for underperforming centres are an ongoing process.
Disruptive technology and competitive advantage
1 5 = C	New disruptive technology could negatively impact the Group's market share. Failure of the Group to respond to such competition and/or technological developments could result in IWG's product offering being sub-optimal.	IWG continually invests in innovation to develop new products and services to increase its competitive advantage, protect current revenue and unlock potential new sources of revenue.	2021 saw the continued modernisation of the technology used by IWG. The adoption of the Microsoft suite of enterprise products underpins a digital operating platform which supports business agility and flexibility. The Company remains focused on using emerging technology to improve the customer experience and achieve operational efficiency. We are continuously looking at every aspect of our business for opportunities to leverage technology to automate, simplify and future-proof our platform. As technology evolves and matures, even more opportunities arise.
Increased competition
1 3 5 Λ A B	The pandemic has accelerated the shift from city and office working to remote working, hybrid models, suburban offices and digital enhancements. As such, more service office offerings are likely to emerge. An inability to maintain sustainable global competitive advantage could result in a loss of market share and impact on profitability for the Group.	While physical barriers to entry into the flexible workspace market at a local level are low, the barriers to establishing a national or international network are much higher. IWG also offers a diverse product range under its different brands to cater to multiple customer segments, allowing us to capture and maintain market share across the flexible workspace market. We continuously review our portfolio to provide products and services that are aligned to customer expectations and requirements and there are currently active investment programmes being implemented across our estate.	The competitive landscape has continued to shift in 2021 and has decreased. We continue our efforts to offer an unrivalled network and varied product range to suit the different requirements of our customers. In 2021, we added 20 new towns and cities. COVID-19 impact: There is a continuous review at both Group and country level to identify trends or activities impacting our business plus new acquisition opportunities.
Geopolitical Instability Developments
3 n ^ A B	Increasing geopolitical n instability and conflicts are directly impacting some of our markets. Continued escalation and sanctions could lead to broader economic impacts.	The geographies most directly impacted to date will not have a material effect on our global operations or results. Our broader economic downturn scenario planning considers a range of economic downturns, irrespective of the cause.	The risk of broader economic impacts from geopolitical instability, conflict and sanctions is increasing.
Business planning and forecasting
1 2 4 5 ^	Business plans, forecasts and review processes should provide timely and reliable information for short-, mid- and long-term opportunities and any risks to performance so that these can be addressed on a proactive basis. The challenges to forecast come from the constantly changing and hard to predict external environment driven by the changes in the way people work due to COVID-19 restrictions and the rapid uptake of hybrid working.	IWG maintains a three-year business plan which is updated and reviewed on an annual basis. We also use a 12-month rolling forecast which is reviewed every month based on actual performance.	The existing forecasting process was enhanced by creating different scenarios as the economic environment changes due to the pandemic.The main focus has been cash generation by reducing cost, renegotiating rents and rationalising the network. COVID-19 impact: There has been focus on cash flows to provide sufficient liquidity for working capital requirements and potential acquisitions, including focus on debt collection, supplier payments and on underlying profitability of the business.
Funding
4 5 ^ A	The Group relies on external funding to support a net debt position of £6,830.3m (including lease obligations) at the end of 2021. Any change to this support would result in liquidity risk for the Group.	This risk is mitigated in a number of ways: 1. The Group continually monitors its cash flow and financial headroom development and maintains a 12-month rolling forecast and a three-year strategic outlook. The Group also monitors the relevant financial ratios against the covenants in its facilities to manage the risk of breach. The measurement of these covenant ratios is unaffected by the recognition of lease liabilities under IFRS 16. 2. The Group also stress tests these forecasts with downside scenario planning to assess risk and determine potential action plans. 3. The Board intends to maintain a prudent approach to the Group's capital structure. 4. Part of the annual planning process is a debt strategy and action plan to ensure that the Group will have sufficient funding in place to achieve its strategic objectives. 5. The Group also constantly reviews and manages the maturity profile of its external funding.	The Group has a £350m of convertible bonds at a fixed rate and the remainder in a Revolving Credit Facility provided by a group of prime banks, which is committed and available until 2025 with an option to extend until 2026. Effective February 2022, updated financing arrangements aligned with the Group's evolving strategic objectives were put in place, including a committed RCF to 2025, and a £330m bridge facility. We expect to remain within the covenant limitations throughout the forecast period.
Franchise
1 2 3 4 5 = A B	The continued expansion of our franchising portfolio is key to the Group's capital-light strategy. Achieving our franchising objectives will require the continued development of our franchising skills, services and resources.	This risk is mitigated as follows: 1. A Franchise Committee oversees key programmes connected with the franchising model and ensures that significant risks are identified and mitigated. 2. We have regular communications with franchise partners including sharing best practices to drive performance and deliver consistent service to our customers.	In 2021, more countries and partners were added in our franchise portfolio. Franchise development and support teams strengthened with the recruitment of dedicated franchise development and support personnel in key markets. Franchise development resources will be further increased during 2022. We have implemented hands-on targeted support for franchise partners with monthly reviews to drive performance and review of processes to identify improvement opportunities.

6.3 FINANCIAL RISKS

Risk description		Mitigation	Change / improvement since 2020
Exchange rates
2 5 = A	The Group's global operations expose it to a variety of financial risks, including the effects of changes in foreign currency exchange rates. In particular, the Group's substantial US operations generate revenue in USD and therefore any currency volatility can impact revenue. The Group does not undertake any speculative transactions to manage risk.	Given that transactions generally take place in the functional currency of Group companies, the Group's exposure to transactional foreign exchange risk is limited. Where possible, the Group attempts to create natural hedges against currency exposures through matching income and expenses, and assets and liabilities, in the same currency.	Overall, in 2021 the movement in exchange rates had a mixed impact on results. Revenue and gross profit were reduced by £91.1m and £2.1m respectively. Whilst operating profit increased by £7.2m, reflecting the relative contribution to Group profit from our US business.
Inflation risk
2 5 n A	Increasing inflationary pressures may impact the Group's costs, including financing charges, impacting profitability and cash flows.	Mitigating actions include: 1. The short-term nature of most customer contracts allow the possibility for prices to be adjusted in consideration of the evolution of costs. 2. The Group's capital-light strategy includes a focus on flexible leases and management contracts which reduce the negative impacts of inflation. 3. The Group constantly monitors interest rates exposure and has a fixed rate coupon on its £350m convertible bond up to 2027.	Inflationary pressures are expected to increase. Currently pricing trends are keeping up with inflation.

6.4 OPERATIONAL RISKS

Risk description		Mitigation	Change / Improvement since 2020
High Level recruiting and succession planning
3 5 = A B C	To achieve its strategic objectives the Group needs to increase its management capabilities through the continued development of existing talent supplemented by the hiring of experienced professionals. This will support our strategic execution and enhance succession planning throughout the Group.	Mitigating actions include: 1. Resource Committee in place for key resource positions 2. Succession planning discussions are an integral part of our business planning and review process. 3. Part of the annual planning process is the Human Resources Plan, and performance against this Plan is reviewed through the year. 4. Regular external and internal evaluation of the performance of the Board, including succession planning.	Recruitment channels are constantly under review to continue offering opportunities to as wide a population as possible in each market. The Group has implemented a comprehensive strategy to address talent resource requirements. Key hires are planned for 2022 to meet the growing needs of the business and reinforce succession planning.
Employee engagement and retention
3 5 ^	As a serviced-based business, the strength and capabilities of our geographically diverse team are critical to achieving our strategic objectives, including delivering outstanding customer service. The increased competition for talent impacts retention at all levels, from executives to centre staff.	One of the key items in the Human Resources Plan is the Global Induction & Training Plan, which sets out the key objectives for the forthcoming year. Performance against these objectives is reviewed through the year. Strong ESG and a remote working Human Resources strategy on recruiting and salary banding, including benchmarking, are in place across the globe to ensure that salaries and benefits are competitive. All new employees are surveyed in the first three months to ensure they have been trained and are receiving effective support.	The Group has in place a comprehensive training programme for all levels and functions. The significant investment in our Group's Learning and Development programme continues to provide a means to engage with our colleagues through e-learning, videos, webinars, case studies and coaching. Our Management Skills Training Programme and Sales and Customer Service Training Academy are carried out virtually throughout the globe to support continuously giving customers a great day at work.
Ethics and compliance
2 = A B	Ethical misconduct by our employees or non-compliance with regulation either inadvertently, knowingly or negligently could lead to financial loss/penalties, reputational damage, loss of business and impact on staff morale.	IWG manages this risk through: 1. Visible ethical leadership. 2. A robust governance framework including a detailed Code of Conduct and other mandatory training for all employees (e.g. gifts and hospitality, anti-bribery and corruption). 3. Centralised procurement contracts with suppliers for key services and products. 4. Standardised processes to manage and monitor spend including controls over supplier on-boarding and payments approval. 5. Regular reviews to monitor effectiveness of controls. 6. Independent and confidential ethics hotline available to employees, contractors and third parties. 7. Independent investigation of fraud incidents and allegations of misconduct with Board-level oversight.	We continue to actively monitor and respond to reports in our ethics hotline. A robust supplier selection and evaluation process continues to be in place with a view to enhance controls to address the risk of fraud. All projects are monitored and evaluated by a centralised capex finance team. A dedicated cost function to review spend across all categories and detect anomalies or exceptions is in place.
Data protection and privacy
5 = A B C	IWG is required to comply with legislation in the jurisdictions in which it operates including the General Data Protection Regulation (GDPR) and other local data privacy laws. Non-compliance and breaches could result in significant financial penalties and reputational damage.	IWG mitigates this risk as follows: 1. IWG operates a comprehensive programme that covers all aspects of data privacy and data protection. 2. Our strategy is to process minimum amounts of personal data, which are kept only to the extent necessary to provide a service to our customers. 3. We apply the principle of 'least access' privilege and separation of duties to safeguard our data. 4. All credit card data is stored on PCI accredited payment service providers and not on IWG systems.	We continue to remain compliant with data protection and privacy regulations across the business, continuously monitoring and enhancing our privacy and security controls, including a project to remove Personal Identifiable Information (PII). We also continue to comply with PCI and Swift standards. In instances where specific countries implement stringent new cyber security and privacy laws which could threaten our operations if IWG is found to not be compliant, the Information Security team works with in-country experts to ensure we remain compliant.
Cyber security
2 5 = A B C	The continued integration of the digital economy and use of external cloud services, combined with a rise in phishing attempts and malicious attacks could result in additional costs and damage.	This risk is mitigated as follows: 1. IWG's Information Security Steering Committee reports regularly to the Board of Directors and has wide representation from business operations, risk assurance, legal, IT and Non-Executive Board members. 2. IWG runs a world-class Information Security programme with ISO/IEC 27000 adopted as its charter to establish, operate and monitor its Information Security Management System. 3. The programme is delivered in collaboration with external specialists across our environments. 4. Using a risk-based approach, IWG continuously identifies, evaluates and applies remediation controls to threats that could impact the security, confidentiality and integrity of its assets. 5. IWG transfers residual risk through its comprehensive cyber insurance coverage provided by a global leader in cyber insurance. 6. We have a robust security incident management process which facilitates and coordinates our response in the event of a security incident. 7. Security awareness training is mandatory for all employees that covers Information Security, PCI and Privacy.	IWG has developed a security roadmap to carry out information security best practices, strengthen controls and implement security operations to detect potential incidents. All critical systems have been migrated to the cloud with high availability and geo-redundancy for disaster recovery. As part of this cloud migration, IWG has implemented best practice cloud security controls. The entire environment is managed by a world- leading security managed services provider. Information Security gates have been established for all new projects which requires conformance to our cloud security blueprint. In our application development area, we have implemented a market-leading static code analysis tool which ensures that all code developed follows global secure code best practices. A programme is in place to continuously implement new security features to improve our processes and controls in this area, keeping pace with the ever-changing best practices. In our business centre environment, we have a security blueprint for all centres. We perform penetration testing in this environment to ensure that our blueprint remains up to date as either technology changes, or new risks emerge. All findings from these penetration tests are used to update the blueprint against which all centres need to comply.
Business continuity
2 3 5 = A B C	Business continuity covering systems, regional hubs and operations. Should the data centres, sales call centres, regional hubs and centres be impacted as a result of circumstances outside the Group's control there could be an adverse impact on the Group's operations and therefore its financial results.	IWG manages this risk through: 1. The implementation and regular testing of its business continuity plans for different parts of the organisation, which includes business processes, personnel knowledge of manual procedures and disaster recovery procedures for our technology systems. All critical applications have been migrated to the cloud with high availability and geo-redundancy, allowing availability of critical systems and providing employees access to the systems from any location, a critical element of our business continuity plans. 2. A robust managed services and managed security services agreement in place with leading vendor. 3. The Group uses a risk-based approach to determine additional redundancy requirements across its entire technology platform, including the global telephony infrastructure critical for continuity of its sales and call centre environment. 4. Appropriate business interruption insurance is in place. 5. Country Business Continuity Plan and Centre Disaster Recovery Plan are in place and regularly reviewed.	Our cloud migration project has been completed and all critical systems have disaster recovery plans in place. All new systems development includes high availability and disaster recovery built into the initial design phase. For our voice communications platform, we have built in additional redundancy in countries where we experience minor disruption due to external factors. COVID-19 impact: Many employees continue to successfully work from home. We have further implemented a daily process to ensure critical data is stored securely off-site. This is data that would be needed to run our business for several days in the worst case scenario of both production and DR sites simultaneously being rendered inaccessible.

6.5 VIABILITY STATEMENT

In accordance with provision, and considering the Group's current position and prospects as outlined in the Strategic Report and its principal risks for a period longer than 12 months as required by the going concern statement, the Board has a reasonable expectation that the Group will continue to operate and meet its liabilities as they fall due, for the next three years. The Board's consideration of the long-term viability of the Group is an extension of our business planning process which includes financial forecasting, a robust enterprise-wide risk management programme, regular business performance reviews and scenario planning.

For the purposes of assessing the Group's viability, the Board identified that, of the principal risks, the following are the most important to the assessment of the viability of the Group:

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The following principal risks were modelled to support the viability statement

•	revenue shortfall;
•	a sterling (£) appreciation;
•	a significant cybersecurity or data breach event.

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Two scenarios (likely-case and worst-case) were modelled for sterling appreciation and cybersecurity or data breach event using assumptions derived from historical data or based on case studies/available market research to determine the impact on revenue, gross profit, operating profit and EBITDA.

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Since the impact of COVID-19 and related economic conditions is already factored into the three-year plan (base and downside scenarios), the revenue shortfall scenario is based on these plans.

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The impact on performance was assessed over a three-year period (2022-24) and on account of individual risks as well as a combination of risks materialising.

The potential impact of each scenario was modelled on the Group's revenue, gross profit, operating profit, net debt and debt covenants over the three-year forecast period. The Board subsequently considered the viability of the Group both in the context of the individual risks listed above and in combination of two or more risks over a range of assumptions. The stress testing showed that the Group would be able to withstand any of the severe but plausible scenarios by taking management action in the normal course of business.

Hinweis zur Offenlegung: Der offengelegte Konzernabschluss weicht vom testierten Konzernabschluss ab: Der Konzernlagebericht war nicht Gegenstand der Konzernabschlussprüfung.