IWG FY 2024 Preliminary Results

4 March 2025

PRELIMINARY RESULTS ANNOUNCEMENT

International Workplace Group plc, the world's largest hybrid workspace platform with a network in over 120 countries through flexible workspace brands such as Regus, Spaces, HQ and Signature issues its preliminary results for the twelve months ended 31 December 2024.

RECORD SYSTEM-WIDE REVENUE, RECORD EBITDA, RECORD CENTRE OPENINGS:

DELIVERY DRIVING $50M SHARE BUYBACK PROGRAMME

Group performance: record revenue, record EBITDA, cash generation

• Highest-ever system-wide revenue of $4.2bn (6% growth in open centres, 2% growth in all centres)

• Highest-ever pre-IFRS 16 EBITDA with growth of 11% to $557m (2023: $503m)

• Highest-ever network growth with 899 new centre signings and 624 openings

• Net financial debt continuing to fall to $712m (2023: $775m)

• Return to profitability with earnings per share of 2.0¢ (2023: (26.7)¢)

Managed & Franchised: fee growth, openings accelerating, RevPAR evolving as expected

• Growth in new centres driving fee income growth of 30% to $79m (2023: $61m)

• Record openings in 2024 with 73k rooms added to the network - almost 2x higher than in 2023 (37k)

• Signings continued to increase in 2024, with 725 new locations signed (2023: 678), expecting higher signings in 2025

• At the end of 2024, this segment had 185k rooms open and 182k rooms that were signed but not yet open. Once these rooms are all open and mature, they are expected to produce system-wide revenues of $1.4bn per year

Company-owned: further margin improvement

• Profitability continuing to improve with margin increase from 22% in 2023 to 25% to $790m (2023: $711m)

• Revenue growth in open centres of 5%

• Further reduction in centre-related net growth capex to $51m (2023: $70m) and maintenance capex continued to be controlled despite the inflationary backdrop

Digital & Professional Services: good underlying performance

• Underlying revenue excluding the impact of the previously announced loss of a legacy contract increased by 8% and underlying EBITDA growth was 18%

Overhead: continued disciplined control of overhead costs

• Underlying core overheads fell by 1% from maintaining cost control

• Discretionary overheads increased by $36m to $59m. Discretionary investment overheads is expenditure which are incurred on a discretionary basis, but not capitalised, to fuel growth. In 2024, these included:

◦ $25m headcount investment in the Partnership Sales team to drive managed partnership location signings

◦ $13m in increased marketing investment

◦ $4m in finance projects

• This resulted in total overheads increasing by 6% to $502m (2023: $473m)

• Discretionary overhead spend will result in enhanced scalability to support future growth

Segmental summary

Capital structure and allocation: Delivering the foundations to support investor returns

Capital structure

• Milestone $1.4bn debt refinancing, extending maturities to 2029/2030 with new revolving credit facility, inaugural bond issued backed by a debut investment-grade credit rating

Capital allocation

• $50m share buyback and increase in dividend

• On the prior trajectory, we expect to reach the 1.0x Net Debt/EBITDA target announced in December 2023 at the end of 2025

• The capital allocation policy of leverage reduction and a progressive dividend remain, but we are adding a $50m share buyback programme

• The Board has recommended a final dividend for 2024 of 0.90c. This results in an increase in the total dividend for 2024 compared to that in 2023 in-line with our progressive dividend policy.

• We maintain our commitment to a BBB credit rating and continued de-levering

Changes to presentation of financials

This is the first full year reporting in US dollars resulting in a reduction in the differential between actual and constant currency. As previously announced, the Group is adopting US GAAP accounting standards for the year ended December 31, 2025. Historic financials will be released prior to the H1 2025 results; following this we will be carrying out investor workshops, details of which will be announced soon.

Summary Group financials

The Group reports results in accordance with IFRS. Some results are additionally presented before the application of IFRS 16 (in accordance with IAS 17 accounting standards) as it provides useful information to stakeholders on how the Group is managed and reporting for debt covenants and certain lease agreements. The primary difference between the two standards is the treatment of operating lease liabilities. There is no difference between underlying cash flow. A reconciliation between EBITDA before the application of IFRS 16 and the IFRS 16 EBITDA is provided in the CFO review.

Managed & Franchised

1. Gross Profit excluding depreciation before the application of IFRS 16 defined in the alternative performance measures section

Company-owned

1. Gross Profit excluding depreciation before the application of IFRS 16 defined in the alternative performance measures section

Digital & Professional Services

1. Gross Profit excluding depreciation before the application of IFRS 16 defined in the alternative performance measures section

2. Pre-rationalisation costs, SG&A excluding depreciation before the application of IFRS 16 defined in the alternative performance measures section

Mark Dixon, Chief Executive of International Workplace Group plc, said:

"We are reaching an inflection point where the hard work from the last few years is coming to fruition. We have a supportive operating environment, structural industry tailwinds and a business which is both prepared for, and delivering, centre growth. We are by far the largest player in this industry and getting ahead of the competition even further as we deliver value to landlords and clients. I am confident that following last year's delivery of record revenue, record EBITDA and record centre growth, our share buyback programme announced today further underpins the position that IWG has as a global category leader whose offices you can find in almost every major city on the planet."

Outlook and guidance

We remain cautious given continued global macroeconomic uncertainty and volatility. In the short term we expect continued growth in pre-IFRS 16 EBITDA with FY 2025 expectation of $580m to $620m, net debt/EBITDA continuing to fall and centre growth and signings above FY 2024 levels. In the medium term we continue to target $1bn pre-IFRS 16 EBITDA. We also reiterate our commitment to maintaining a BBB credit rating.

Financial calendar

Results presentation

Mark Dixon, Chief Executive Officer, and Charlie Steel, Chief Financial Officer, will be hosting a presentation of the results today for analysts and investors at 9.00am UK time (SPACES, New Broad Street House, 35 New Broad St, London, EC2M 1NH).

The presentation will be available via live webcast and will be available to view at the following link: https://broadcaster-audience.mediaplatform.com/event/67b23bdb9d04665f3ecd8834

This announcement contains information that qualifies or may qualify as inside information. The person responsible for arranging the release of this announcement on behalf of International Workplace Group plc is Tim Regan, Company Secretary 

Further information

Chairman's Statement

Providing flexibility for a changing world

IWG has been providing flexible workspace since opening its first centre over 35 years ago. That flexibility has come to mean so much more in recent years as technology has significantly impacted how and where people work. In addition, the speed and magnitude of unprecedented social, economic and technological change continue to accelerate which all contribute to the escalating need for flexibility in the design, quantity, location and term of workspace.

With nearly 4,000 centres across 120 countries, flexibility is what IWG continued to provide in abundance during 2024, with the network and scalability businesses everywhere need to respond quickly, cost-efficiently and effectively to their space requirements so their people can work productively.

Executing our strategy

We are focused on executing our strategy which delivered record revenues, pre-IFRS 16 EBITDA and centre openings for 2024 and is creating value for all our stakeholders.

For workers we provide modern, flexible workspace conveniently located where people want to work, whether as their daily office, part of hybrid working arrangements, or a drop-in meeting location.

We help businesses improve productivity, reduce their environmental impact and increase employee loyalty by adding flexibility to where, when and how their people work. We take the complexity and costs out of providing effective working space for everything from entire workspace needs to providing for the special needs of mobile and hybrid workers, supporting special project teams, to entering new market locations.

For our building owner partners we provide strong returns from flexible workspace, simplifying the process by providing everything required to operate the business successfully. From the initial design through to ongoing daily operations, whether to improve returns on an entire building or to provide a profitable sought-after feature in larger buildings and developments.

For shareholders the execution of our strategy will deliver healthy returns from serving the rapidly growing need for flexible workspace.

Continuing our sustainability journey

IWG continues to advance towards our sustainability targets with reducing our carbon footprint through the conversion of our centres to green certified electricity remaining a key near-term priority. During 2024 we made significant progress in this area through focusing on the conversion of additional centres to certified green electricity aligned with RE100 guidelines.

We are also improving the performance of centre buildings using new technologies while further consolidating our supply chain and reducing waste across our extended organisation.

In addition, the positive effect of reduced commuting on carbon emissions by enabling more people to work closer to home continues to grow at pace through our rapidly expanding network. These ongoing achievements reflect the commitment to sustainability that is exhibited throughout our corporate culture.

Acknowledging our exceptional people

The Group's success during such a complex and fast-moving market environment is a testament to the professional approach and total commitment of our exceptional people at IWG. They are the key to executing our strategy, from the unprecedented speed of network expansion to providing outstanding customer experiences every day. As ever, it is a pleasure to acknowledge their amazing contribution to our success as we strive to provide a stimulating and inclusive working environment where they can leverage our robust development support to build satisfying and rewarding long-term careers with IWG.

Focusing on board succession

I am indebted to my Board colleagues for the high quality of their input and advice as they continue to contribute to the ongoing success of IWG. After over nine years on the Board, François Pauly has stepped down as the IWG Senior Independent Director and Chair of our Nominations Committee. I would like to thank François for his many contributions during a time of significant growth for IWG, and I particularly benefitted on a personal level from his wisdom and insights. I am grateful to Tarun Lal who is serving effectively as our Senior Independent Director and Chair of the Nominations Committee as we complete the process of identifying a permanent successor for these roles and preparing the board for the future.

Looking ahead

I am confident that in 2025 and beyond IWG will continue to build on the strengths developed over the last 35 years. We will do this by focusing on the execution of the essentials, including rapid capital-light network development supported by a growing customer base, increased efficiencies through adoption of new technologies, building strong partnerships and brands, and creating opportunities for our people and rewarding returns for shareholders. Our success will be realised through delivering tangible value for all stakeholders while enabling millions worldwide to have a great day at work.

Douglas Sutherland

Chairman

4 March 2025

Chief Executive Officer's Review

In 2024, we celebrated a very special milestone. 35 years ago, we opened our very first Regus location on the superbly located, Avenue Louise in Brussels, Belgium in September 1989. Over the course of three and a half decades, so many important and unrivalled milestones have been accomplished from serving 8 million customers in more than 120 countries worldwide to working with 83% of Fortune 500 companies.

Our defining mission today, as it was 35 years ago, is to revolutionise how and where people work, bringing significant productivity benefits and lower costs to companies while transforming the working lives of their teams. Over the past few years, we have seen hybrid and more flexible ways of working become the default model for a significant proportion of white-collar workers; with companies empowering their employees to work across multiple locations, splitting their time between local workspaces, a central office and home.

It is particularly rewarding to see over the past few years how academics, leading industry commentators and business leaders are now recognising the incredible benefits of this way of working for both companies and their people.

The research of Professor Nicholas Bloom - a senior fellow at the Stanford Institute for Economic Policy Research and acknowledged as the world's leading authority on the hybrid model - has shown that about 40% of white-collar employees now work in this model and will continue to do so in the future.

This long-term shift towards the hybrid model is one of the mega-trends of our time and represents a substantial financial opportunity for IWG. With 1.2 billion white-collar workers globally, our industry has a total addressable audience valued at more than $2 trillion and platform working is set to become the norm for many of these employees.

The reasoning for the transition towards hybrid working is clear and compelling for companies of all sizes and their employees with positive impacts on, productivity, lower costs, increased flexibility and above all significantly enhanced worker happiness, while investors, landlords and building owners are increasingly seeing IWG as the ideal partner to capitalise on the long-term shift towards the model.

The Office isn't dead - It's just moved

In recent months, headlines have been dominated by discussion around Return to Office (RTO) mandates and how these have been gaining significant momentum amongst companies of all sizes.

While media headlines miss some of the nuances of the shift towards RTO, the trend is unmistakenly taking place, driving our business forward in a very meaningful way. Where and how people work is far more nuanced than much of the current conversation implies. It's not just a binary choice between working from a traditional city centre office and from home.

There's a third option: working out of a local co-working space or office, near to home, with other like-minded people. In fact, most white-collar employees are working from a combination of all three of these locations and this is driving excellent growth for our business, with our centres in the heart of the suburbs and local communities showing the strongest increase in demand from across the network. The reality is the office isn't dead, it's just moved to a much more convenient place, close to where many people actually live.

The financial benefits of hybrid

Hybrid working is unlocking considerable benefits for businesses and amongst the most significant is the substantial cost savings. Research undertaken by Global Analytics has shown that companies operating in the hybrid model can save around $11,000 per employee, on a yearly basis. Not only is it a cheaper way for companies to run, but it enables businesses to operate in a capital light model moving capex costs into opex.

The groundbreaking research of Professor Bloom further highlights the financial benefits that are helping multiple thousands of companies across the world to reduce their operating costs.

As Professor Bloom puts it, "Firms don't do things that lose them money. They do things that make them money. That's why every firm just about out there is doing hybrid, because it's such a no-brainer to increase profit…". Small wonder that he recently put it on record that he expects hybrid uptake to increase in the years ahead, due to ongoing demand and projected improvements in technology.

IWG's CEO study which polled more than 500 business leaders found that CEOs are unified in their support for the hybrid model. 9 in 10 CEOs that have adopted hybrid have seen significant cost savings, while more than 7 in 10 say employee happiness has increased.

Beyond financial savings hybrid gives business leaders greater flexibility with the ability to scale up or down quickly without being locked into lengthy and costly contracts, while also enabling them to attract and recruit from a talent pool in diverse locations. Undoubtedly, hybrid working is incredibly popular with employees providing them with a better work/life balance and by adopting it companies are supporting their people, their most important asset.

Supporting the productivity of workers

The recent shift to more flexible ways of working has resulted in some instances to what academics describe as "Proximity bias". This is where business leaders and senior managers tend to treat workers who are physically closer to them more favourably, stemming in some instances from an outdated assumption that those who work remotely are less productive than those who work from a company's headquarters. All business leaders should remember that what your people are doing and how you're managing them are by far the most important factors in performance and productivity.

If work isn't being carried out effectively, it's not the fault of the location. It's generally the fault of management not making the job clear or setting good KPIs. Those problems will be the same whether your teams are sitting 10 metres away from you, or a local office or 1,000 kilometres away. Dr Gleb Tsipursky in the Harvard Business Review articulately spoke of the need of Instilling an "excellence from anywhere" culture and warning that if businesses do not tackle any overt or covert proximity bias, they will be hurting employee morale, retention, productivity, and ultimately company bottom lines.

A number of convincing studies - including by Professor Bloom - have shown productivity increases (3-4%) and reduced quit rates (35%) as a hallmark of hybrid working. International Workplace Group's own research with business leaders backs up these findings, and more. More than 6 in 10 cite improved productivity as one of the key business benefits, while 7 in 10 CEOs highlight that employee happiness has increased through the adoption of hybrid working.

The rise of local working

Today, the remarkable advances in cloud technology and video conferencing software - both vital to enabling effective hybrid working - mean workers no longer need to travel long distances on a daily basis. As a result, we are seeing a fundamental shift in the geography of work with the centre of gravity moving towards local communities. Tech changes will continue to advance in years to come and will radically underline and advance the flexibility of location.

The rising demand for more localised working has led to the majority of our new International Workplace Group centres opening in the heart of local communities, suburbs and rural areas, making 15-minute cities a reality to the many people around the world who are ditching the commute and saying clearly that hybrid working is essential, not optional.

During the course of 2024, around 80% of the new locations we signed were in the suburbs and smaller towns where many people actually live. Places like Cheadle, a small Staffordshire village in the UK with a population of 12,000, or Destin in Florida which has only 14,000 residents.

That is not to say that businesses are abandoning city centres: far from it. Increasingly, we are helping companies shake off the expense of the long-term city-centre lease and replace it with a flexible, cost-effective agreement on a smaller space in one of our city-based centres.

Strategy

Our strategic focus is as clear as ever and there is an unrelenting focus on growing our margin, driven by strong performance on new and embedded price, service revenue growth and an ongoing strict control of costs.

We will continue to make ongoing investments into our world class platform as well as focusing on the rapid growth of network coverage in partnership with the property industry and investors using capital-light expansion methods such as management agreements, partnering deals and franchising.

Capital-light growth

The shift towards hybrid and more localised working is propelling our business forward with the fastest growth that we have ever seen in our more than 35-year history. In 2024, we added a record number of locations globally, signing 899 centres - the vast majority under the partnership model - and achieved our highest ever revenues at an improved margin.

During the year, we accelerated our capital-light growth strategy allowing us to capitalise on the growing pipeline of property investors seeking to maximise their returns by partnering with IWG.

Focusing on growth through the capital-light business means that growth capex requirements will be dramatically lower in the future, generating more free cash flow for shareholders.

We are increasingly seeing partners sign multiple locations with IWG as they grasp the scale of the opportunity in front of them. My greatest thanks go to all our valued property owners and investors who have chosen to partner with us and as a business we are resolutely committed to the long-term success of these partnerships.

Market leader in innovation

As the market-leader in the structurally growing hybrid working industry, we are exceptionally well positioned for the long term. Not only do we lead the market on global reach, but also in a number of crucially important areas for future growth.

IWG has created an outstanding Research and Development team to ensure we are at the forefront of innovation. We are very pleased to have already added medical centres and labs to our existing line-up and throughout the course of 2025, we will add new concepts and platforms to further widen our offer to our expanding customer base.

Sustainable growth

I am very pleased to say that the Group continues to operate in an environmentally responsible manner and we take our collective role and responsibility in tackling the climate crisis incredibly seriously. As part of our climate action plan, we have reduced and are reducing further the carbon emissions from our buildings and supply chain and our ultimate goal is to achieve Net Zero carbon emissions by 2040.

Our purpose of helping everyone have a great day at work, whilst protecting people and planet is at the heart of what we do and as a global employer, our purpose and values have never been more important. We are in receipt of a strong AA rating by the MSCI and have been accredited by the RE100 for our commitment to only source 100% renewable electricity by 2030.

Not only are we doing our part to tackle global warming, but our services have an extraordinary opportunity to radically reduce humanity's negative environmental impact by encouraging the adoption of hybrid working in the more than 120 countries in which we operate.

IWG's landmark study with Arup, a global leader in sustainable development, shows that hybrid working can facilitate major carbon savings and has the potential for significant impact on the climate crisis. The study measured the environmental impact of hybrid working on six cities across the US and UK: LA, New York City, Atlanta, London, Manchester and Glasgow.

The study's key finding is simply allowing people to work close to home, enabling them to split their time between a local workplace and home, has the potential to reduce an employee's work-related carbon emissions by between 49% and 90%. The report highlights what a genuine and tangible difference reduced commuting can make in tackling the climate crisis.

The transformative impact of technology

Hybrid working and digital technology have always had a symbiotic relationship. Each wave of technological innovation enables more fluid collaboration across geographies and across teams, as well as between businesses, fuelling the growth of hybrid. As a company, we are using AI more and more across our business and it is improving our operations and making us more efficient.

The ongoing rise and adoption of AI will be beneficial for the IWG business and we will continue to be agile, adapting to new ways of working.

Our financial performance in 2024

With such strong momentum globally behind the shift to hybrid working, confirmed by our financial results for 2024, record system-wide revenue, EBITDA, and network growth leading to dividend growth, and a new buyback, announced today.

I would like to take this opportunity to thank all of our incredible team members that were the driving force behind the rapid growth of our global network and an excellent set of financial results.

Looking ahead

The future for IWG and all our stakeholders remains bright as we enter the new year with good momentum. We continue to grow our customer base, our global network and our best-in-class portfolio of locations and brands, while delivering on our capital light expansion strategy.

2024 was a record year for both revenue and network expansion and provides the foundations for continued growth in the year ahead. With the aforementioned 1.2 billion white-collar workers globally and a potential audience valued at more than $2 trillion, there is substantial room for growth and as a company, we are absolutely committed to capturing more of this market over the coming months and years ahead.

Mark Dixon

Chief Executive Officer

4 March 2025

Chief Financial Officer's Review

2024 has been another record year for the Group, delivering both its highest-ever system-wide revenue of $4.2bn and highest ever EBITDA of $557m whilst simultaneously reducing capex spend and delivering the foundations to support capital returns to investors. We have continued to deliver growth, cashflow, lower capex and reduce debt.

2024 has also been a busy year for the Finance department

• Invested over $10m in new core systems

• Converted our functional currency to USD

• Refinanced $1.4bn of debt with a new $720m revolving credit facility and €625m Euro bond with an inaugural investment grade (BBB) credit rating.

The result of this is we have a solid foundation from which we can deliver further on our existing capital allocation policy with the dividend and new share buyback programme.

Financial performance

The Group reports results in accordance with IFRS. Under IFRS 16, while total lease-related expenses over the life of a lease remain unchanged, the lease expenses are presented as depreciation and finance expenses with higher total expense in the early periods of a lease and lower total expense in the later periods of a lease.

Group income statement

1 Adjusting items refer to: Closures costs, Net impairment/(reversal) of PPE (including ROU assets), Other (impairments)/reversals and One-off items

Segmental reporting

The IWG Network, comprising of the Group excluding Digital & Professional Services, is managed through a matrix organisation, i.e. by geographical regions and by ownership structure. In addition to the three geographical regions (Americas, Asia, and EMEA) we are reporting results of IWG Network by ownership structure (Company-owned and Managed & Franchised) and Digital & Professional Services. This matrix reporting reflects how we practically manage the IWG Network on a day-to-day basis.

Revenue

System-wide revenue increased by 2% to $4,231m and Group revenue increased to $3,690m. Our Managed & Franchised business saw fee revenue increase by 30% to $79m mainly driven by 483 centre openings with signings continuing to convert into openings at pace. Company-owned remained relatively stable, delivering revenue of $3,222m with open centres contributing growth of c.5%. Digital & Professional Services reported a slight revenue regression of 2% to $389m.

Revenue per Available Room (RevPAR)

RevPAR is a monthly average KPI, defined as the system-wide revenue of the IWG Network (excluding Digital & Professional Services and excluding centres opened and closed during the year), divided by the number of available rooms, which is defined as 7 square metres across all usable space. RevPAR is a well understood measure used across many industries and is particularly relevant to IWG as it incorporates all revenue received across IWG's expansive product portfolio.

Managed & Franchised RevPAR is $408 (2023: $485), being driven by new centre revenue performing in line with our plans. RevPAR in our franchised locations was $487 (2023: $511) which is higher than in our Managed Partnerships locations due to: (a) franchise locations being predominantly in high RevPAR countries in particular Japan and Switzerland; (b) the higher maturity of franchise locations which have been operating for many years. Franchise RevPAR has fallen slightly in 2024 as there have been new openings in franchised locations and RevPAR has yet to reach maturity. Company-owned RevPAR grew by 1% to $356 year-over-year, or 3% if looking at the mature network only, driven primarily by higher pricing and ancillary revenue, with broad based regional growth. As we have previously disclosed, RevPAR on these additional Managed Partnerships rooms is targeted to be $250 at maturity.

Given the scale of growth and room additions that the Company is adding to the Network, RevPAR excluding centres opened in 2023 is presented below to show RevPAR progression excluding the impact of centres not yet mature.

It is expected that the higher-growth segments will show a falling year-over-year RevPAR because new locations that have opened but are not yet mature are contained within the calculation.

Adjusting Items

The Group identified net adjusting items on operating profit of $(86)m, of which $(113)m are non-cash items (2023: $42m). These Adjusting items refer to closure costs (the actual costs of closing centres, including non-cash write-downs) of $(2)m (2023: $(15)m), the net (impairment)/reversal of PPE (including Right of Use assets) of $(93)m (2023: $73m) relating to the net reversal of impairment of $24m (2023: net impairment of $99m), depreciation of $63m (2023: $21m) and disposals of $6m (2023: $5m) in respect of adjusting items previously provided for, other impairments/(reversals) of $3 m (2023: $4m) and no other one-off items for 2024 (2023: $39m), comprising predominantly legal, acquisition and transaction costs as well as obsolete desktop phone write-offs.

Gross Profit

Gross Profit, including adjusting items, increased from $732m in 2023 to $1,104m in 2024. Adjusted Gross Profit increased from $833m in 2023 to $1,012m in 2024.

Given the operating model, 100% of Managed & Franchised revenue drops through to Gross Profit. Adjusted Gross Profit in Company-owned increased by $163m mainly due to strategic cost control. The impact of adjusting items detailed above of $(92)m are all allocated to Company-owned.

Digital & Professional Services Gross Profit reduced commensurate with the change in revenue.

The Group focuses on Contribution margin as a financial KPI in its Company-owned segment rather than Gross Profit due to Gross Profit including depreciation and amortisation. A bridge from gross profit to Contribution margin is provided later in this section.

Overheads and other

Group overheads, excluding adjusting items increased to $558m in 2023 to $587m in 2024. The increase is due to investment in overheads that cannot be capitalised, including:

• The continued investment for the future, particularly due to the project costs recognised on one-off investments into the scalability of our sales and operating platform as we continue to optimise and automate processes.

• Investment in the Partnership sales team to ensure we maintain our market leading position. We signed 899 new deals in 2024 vs 867 in 2023, and whilst our partnership sales team is an ongoing cost, we are not expecting it to increase linearly with signings, therefore margins should continue to grow.

Operating Profit

Operating Profit after adjusting items increased from $274m in 2023 to $424m in 2024, reflecting higher Group revenue and cost control. As previously mentioned, adjusting items had a $(86)m impact in 2024 (2023: $95m) predominantly due to the non-cash impact of a reversal of impairments.

Reported Operating Profit was at $510m (2023: $179m).

Net finance expense

The Group reported a net finance expense for the year of $457m (2023: $416m). The net finance expense in 2024 mainly includes:

• Cash interest of $76m related to borrowing facilities (2023: $68m) The increase in the finance expense is due to the refinancing transactions completed during the year. Of the €625m Euro bond, €525m has been hedged into USD using a cross-currency interest rate swap. Under the swap agreement, interest is paid semi-annually, in June and December of each year. Interest is paid annually on the unhedged portion of the Euro bond.

• Interest on the Group's lease liabilities of $363m (2023: $349m).

1. Excluding financing fees on the issuance of the Euro bond which are capitalised

Taxation

The effective tax rate in 2024 is 64% (2023: (14)%). The Group has performed an assessment of its potential exposure to Pillar Two global minimum income taxes and does not expect any material top-up taxes to arise in any jurisdiction in which it operates. Whilst the majority of the Group's entities benefit from transitional safe harbour rules which take them out of scope of the full rules, for the remaining entities, proxy Pillar Two calculations have been performed which confirm that no material top-up tax is expected to arise in any jurisdiction.

Earnings per share

Earnings per share attributable to ordinary shareholders in 2024 was a profit of 2.0c (2023: loss of 26.7c) reflecting a return to profitability in 2024.

The weighted average number of shares in issue during the year was 1,009,815,126 (2023: 1,006,685,491). At 31 December 2024 the Group held 45,241,020 treasury shares (31 December 2023: 50,558,201). In 2024, 5,283,597 treasury shares were utilised to increase the Group's equity voting rights in non-controlling interests. For share awards exercised by employees, the value of the share award in excess of the exercise price was settled through the utilisation of 33,584 treasury shares and 118,054 were settled using shares purchased in the open market.

Adjusted EBITDA

The Group's Adjusted EBITDA increased to $1,824m (2023: $1,768m) and Pre-IFRS 16 Adjusted EBITDA increased 11% to $557m (2023: $503m). Adjusted EBITDA excludes the Group's largest cost - rent - and therefore management does not believe this is a useful financial metric. It is for this reason that management focuses on EBITDA before the application of IFRS 16 (Pre-IFRS 16 EBITDA) as the key alternative performance measure for EBITDA, as discussed below.

Adjusted EBITDA by segment

Results are additionally presented before the application of IFRS 16 (in accordance with IAS 17 accounting standards) as it provides useful information to stakeholders on how the Group is managed, as well as reporting for bank covenants and certain lease agreements. The primary difference between the two standards is the treatment of operating lease liabilities. There is no difference between underlying cash flow. To bridge the Group's Adjusted EBITDA of $1,824m under the IFRS 16 standard to $557m Adjusted Pre-IFRS 16 EBITDA under IAS 17, we need to recognise rental income in subleases which are recognised as lease receivables under IFRS 16, rental costs on our lease portfolio reflected as lease liabilities under IFRS 16 and centre closure and other costs which are reflected as impairments under IFRS 16.

Pre-IFRS 16 Adjusted Contribution margin by segment

The Group's Adjusted Contribution margin increased to $1,057m (2023: $977m).

• Company-owned increased strongly to $790m, reflecting a c.25% contribution margin, expanding the margin by c.3% from $711m, reflecting a 22% margin in 2023. This is due to the continued focus on cost control and operational efficiencies.

• Managed & Franchised increase from $61m to $79m is reflective of the growth in revenue.

• Digital & Professional Services delivered $188m (2023: $205m), the reduction in margin from c.52% to 48% due to loss of the profitable legacy contract.

Network growth

We had a record year for network expansion. Our network increased by 14% to 3,989 centres (2023: 3,514). We opened 624 new centres (2023: 328 centres) and rationalised (149) centres (2023: (159) centres). Furthermore, 899 new centre deals were signed in 2024. Out of the 899 new deals signed 95% or 852 deals are capital-light which underpins our success of growing the network through capital-light partnerships.

Of the 624 centres opened in 2024, 601 centres were capital-light openings which comprised of managed partnership centres, variable rent centres, franchised centres and joint-venture centres. Only 23 centre openings were on a fully conventional basis.

Our estate of 3,989 centres as per the end of December 2024 is split into 28% or 1,116 centres in Managed & Franchised, which increased by 64% year-on-year, and 2,873 centres in Company-owned (of which 869 are based on variable rents). Based on the strong growth of opening new managed partnership centres (all leases other than conventional lease agreements) and successful renegotiations of existing centres we increased our estate in Managed partnerships by 523 centres or 36% to 1,985 centres. Strong growth in Managed partnership openings is expected to continue in 2025.

1. Includes locations signed/opened in Managed & Franchised and Variable rent areas.

Cashflow

1. Includes capitalised rent related to centre openings (gross growth capital expenditure) of $(2)m (2023: $(3)m)

2. Cash flow before growth capex, tax, finance cost on bank & other facilities, financing activities and dividends

We continued to grow our business and revenues whilst managing our cost base. This resulted in a cash inflow from business activities in 2024 of $298m ($375m in 2023). Working capital, excluding the amortisation of partner contributions, saw an outflow during the year of $51m of which $47m related to movements in the first half of 2024 predominantly arising from carrying over some payments on facilities and other property costs from 2023 and property taxes for amounts less than accrued on 31 December 2023. These movements are summarised in the table below:

Working capital relating the amortisation of partner contributions refers to historic cash contributions made by landlords for growth capex in the Company-owned segment (shown as growth-related partner contributions further down the cash flow statement) and is amortised over the lifetime of the corresponding lease.

Cash tax paid was $(36)m in 2024 (2023: $(43)m) and primarily relates to corporate income tax paid in various countries. Finance costs paid on bank & other facilities was $(72)m in 2024 vs. $(69)m in 2023.

Cash inflow before growth capex, financing and dividends was $190m (2023: $263m).

Total net investment, including acquisitions and all capex, was $(186)m (2023: $(221)m). Group capex declined in 2024 and is expected to continue that trajectory. Maintenance capex has reduced to $93m (FY23: $113m) and is expected to stay broadly at that level. Growth capex declined from $95m to $88m. We are confident that overall capex will remain at this level due to new locations in our Company-owned business increasingly being signed up without capex needs for the Group; Managed & Franchised faces zero capex, and the majority of platform investment for Digital & Professional Services $21m is complete.

2024 saw growth in intangible capex investments of $27m including accounting projects to improve efficiencies. Whilst we will continue to invest in the platform and systems, the project spend of $6m in Company-owned is one-off in nature.

In 2025, we expect to acquire the remaining 10.7% minority shares outstanding in The Instant Group at the original purchase price per share, (£41.7m) predominantly using already-issued Treasury shares.

Financing

During 2024 the Group successfully completed a series of debt transactions and extended the Group's debt maturity:

• Issued €625m Euro bond (investment grade rating from Fitch of BBB, Stable) due in June 2030 of which;

◦ €525m has been swapped to $564m with a coupon of 8.137%, and

◦ €100m remains in euro with a coupon of 6.5%

• Signed a new $720m revolving credit facility due in June 2029 (which was reduced in size from $1.1bn)

• Reduced the face value of the £350m Convertible bonds (hedged at $445m) outstanding to £158m (hedged at $201m), valued at $193m as at 31 December 2024. The Convertible bonds are due for repayment or conversion at £4.5807 per share in December 2027 with an option for the bondholders to cash settle in December 2025 at par.

• Financing fees of $29m are in included as part of the issuance proceeds in the cashflow statement

Overall, net financial debt was $(712)m at 31 December 2024 (31 December 2023: $(775)m). The Group's total debt facilities, including details of drawings, is summarised below:

Net debt

At 31 December 2024 the Group complied with all facility covenants.

Dividends

In line with the Group's dividend policy, the Board has proposed to shareholders a final dividend of 0.90¢ per share for a total 2024 dividend of $1.33¢ per share. Subject to shareholder approval, it is expected that the final dividend will be paid on 30 May 2025 to shareholders on the register at the close of business on 2 May 2025. Dividends are declared in US dollars and paid in pounds sterling with an option for shareholders to elect to receive payment in US dollars. The foreign exchange rate at which the final dividend will be converted into pounds sterling will be the New York closing rate on 2 May 2025.

Share buyback

International Workplace Group plc (the "Company") announces that it has entered into an arrangement with Barclays Bank PLC ("the Broker"). The arrangement allows the Broker to purchase (a) prior to the expiration of the Company's current buyback authority granted by shareholder resolution dated 21 May 2024, 105,724,865 ordinary shares in the Company ("Shares"); and (b) following such expiration, the aggregate number of Shares authorised to be purchased by the Company under any subsequent buyback authority granted during the arrangement. The Shares will be purchased pursuant to this arrangement during open periods arising during the period from the date of this announcement to 4 March 2026. These share purchases will be made by the Broker acting as riskless principal.

Any share purchases effected pursuant to the arrangement will be subject to the terms of the arrangement with the Broker and in any case will be effected in a manner consistent with the general authority vested in the Company to repurchase shares, the Market Abuse Regulation 596/2014, the Commission Delegated Regulation (EU) 2016/1052 (both as incorporated into UK domestic law) and the UK Listing Rules. The aggregate purchase price under this arrangement will not exceed US$50,000,000.

All Shares purchased through this arrangement will be cancelled. The sole purpose of these share purchases is to reduce the Company's share capital.

Foreign Exchange

Risk management

Effective management of risk is an everyday activity for the Group, and crucially, integral to our growth planning. A detailed assessment of the principal risks and uncertainties which could impact the Group's long-term performance and the risk management structure in place to identify, manage and mitigate such risk will be in the 2024 Annual Report and Accounts.

Related parties

There have been no changes to the type of related party transactions entered into by the Group that had a material effect on the financial statements for the year 2024. Details of related party transactions that have taken place in the period can be found in note 29.

Going concern

The Group reported a profit after tax of $19m in 2024 (2023: loss of $271m). Cashflow before growth capex and corporate activities but after interest and tax was $190m (2023: $263). Furthermore, net cash of $21m (2023: $(52)m) was generated from operations during the same period. Although the Group's balance sheet at 31 December 2024 reports a net current liability position of $2,224m (31 December 2023: $2,145m), the Directors concluded after a comprehensive review that no liquidity risk exists as:

1. The Group had funding available under the Group's $720m revolving credit facility of $436m (31 December 2023: $279m) which was available and undrawn at 31 December 2024. The facility's current maturity date is June 2029;

2. A significant proportion of the net current liability position is due to lease liabilities which are held in non-recourse special purpose vehicles but also with a corresponding right-of-use asset. A large proportion of the net current liabilities comprise non-cash liabilities such as deferred revenue of $525m (2023: $552m) which will be recognised in future periods through the income statement. The Group holds customer deposits of $584m (2023: $585m) which are spread across a large number of customers and no deposit held for an individual customer is material; and

3. The Group maintains a 12-month rolling forecast and a three-year strategic outlook. It also monitors the covenants in its debt facilities to manage the risk of potential breach. The Group expects to be able to refinance external debt and/or renew committed facilities as they become due, which is the assumption made in the viability scenario modelling, and to remain within covenants throughout the forecast period. In reaching this conclusion, the Directors have assessed:

• the potential cash generation of the Group against a range of illustrative scenarios (including a severe but plausible outcome); and

• mitigating actions to reduce operating costs and optimise cash flows during any ongoing global uncertainty.

4. An external assessment from Fitch, a leading global credit rating agency, which has rated the Group and its listed bonds as investment grade with a BBB (Stable) rating and has continued to monitor the Group's financial performance since the initial rating assessment.

Due to the above, the Group does not believe the net current liabilities represents a liquidity risk. The Directors consider that the Group is well placed to successfully manage the actual and potential risks faced by the organisation including risks related to inflationary pressures and geopolitical tensions.

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

Charlie Steel

Chief Financial Officer

4 March 2025

Consolidated income statement

1. The comparative information has been restated in USD (note 2).

2. Includes a net settlement fee of $2m recognised in 2023 (comprising the settlement fee of $22m, offset by a release of related accrued income of $20m), for TKP Corporation's sale of the Japanese master franchise agreement to Mitsubishi Estate Co.

3. The net adjusting items credit on operating profit relating to rationalisations in the network of $86m (2023: charge of $95m) comprises the following items included in the balances referenced (note 8): The net reversal of impairment of property, plant and equipment and right-of-use assets of $93m (2023: net impairment of $73m), closure related credit of $2m (2023: $15m), other impairment of $3m (2023: $4m) and other one-off items including legal, acquisition and transaction cost as well as obsolete desktop phone write-offs of $6m (2023: $33m).

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

Consolidated statement of comprehensive income/(loss)

1. The comparative information has been restated in USD (note 2).

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

Consolidated statement of changes in equity

1. The comparative information has been restated in USD (note 2).

2. Other reserves include $14m 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, $66m arising from the Scheme of Arrangement undertaken on 14 October 2008, $10m relating to merger reserves and $nil to the redemption of preference shares, partly offset by $49m arising from the Scheme of Arrangement undertaken in 2003.

3. During the year, the Group increased its equity voting rights to 89.3% (2023: 86.6%) in the non-controlling interest for a consideration of $14m net of utilisation of $12m treasury shares.

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

Consolidated balance sheet

1. In accordance with IAS 1 Presentation of Financial Statements, the Group has presented a third balance sheet as at 1 January 2023 due to the retrospective restatement of the Group's financial statements in USD for the year ended 31 December 2023. Comparative information has been restated in USD (note 2).

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

Consolidated statement of cash flows