Losses at the parent company of WeWork’s UK properties more than trebled to £233.7m in 2019, a year in which it made thousands of job cuts across the globe and controversial founder Adam Neumann was forced to step down from the company.
The embattled flexible office giant said pre-tax losses had soared from just £75.9m the previous year, while also outlining the “material impact” that the Covid-19 pandemic has had on its business more recently.
The most recent accounts were filed for WeWork International, a holding company that provides services to many of the group’s European divisions as well as acting as the parent company to its UK properties. The accounts show that the mounting losses came despite the company nearly doubling its revenue to £68m during the year ending 31 December 2019.
Net debt also nearly trebled to £290.4m at the end of 2019, up from £75.3m the previous year, according to documents filed on Companies House this week.
WeWork International’s assets increased 54% in value to £485.4m, up from £315.6m in 2018, with borrowings growing a similar amount to £484.1m, up from £300.2m.
The company’s UK workforce grew to 651 employees over the year, up from 440 at the end of 2018. However, over the same period it spent £692,992 on redundancy costs, as part of 2,400 people being laid off across the globe during the year – nearly one-fifth of its total staff.
A spokesperson said: “We have made significant progress against our strategic goals under our new executive leadership since the period to which these filings relate.
“This includes divesting non-core ventures, rightsizing our global portfolio, significantly reducing costs and improving our balance sheet, all while delivering for our members with unparalleled flexibility, and health and safety first.
“This has not only given WeWork the ability to adapt and innovate in the face of a global pandemic, but it has also kept the company on its path to profitability.”
Covid-19 compounds WeWork headaches
The firm said the pandemic has had a “material impact” on demand for its office space, something which would continue for the near future and which “may adversely affect the 2020 results for the company”.
As a result, sales had fallen across both new and existing offices, occupancy levels were down, and rent collection rates had slowed amid months of lockdown measures over the course of the year.
Moreover, it had suffered “lowered credit limits provided by a number of suppliers”, as well as providing rent discounts and deferrals for tenants.
Bosses had also been forced to look at measures such as delaying both the opening of new offices and investment in existing locations, in a bid to mitigate the financial hit. The firm operates about 850 locations across the globe, with 70 sites in the UK.
Meanwhile, product design teams have also been forced to rethink the layout of existing WeWork sites ahead of a more widespread return to work, reconfiguring offices to bring in social distancing measures.
The firm did not give any indication of when it expects offices to reopen, saying that any further financial impact “depends on future developments, which are uncertain, cannot be predicted and are outside our control”.
However, it assured that directors had assessed the company’s finances as “sufficient to help the company mitigate the near-term uncertainty associated with Covid-19”.
Further to the 2019 layoffs, WeWork undertook several redundancy rounds in the UK over the course of 2020, with hundreds of staff thought to have been affected as part of a major restructuring over the summer months.
