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- Cash-strapped WeWork pulled more than $60 million from its UK subsidiary and lumped it with close to $240 million in extra debt in 2018.
- WeWork International Limited grew revenue by 90% last year, but payments to its parent company for intellectual property and other support services fueled a tenfold surge in pre-tax losses to £76 million.
- The UK company’s wage and salary costs soared 150%, and its interest payments jumped sixfold due to the increased debt.
- Read more of Business Insider’s WeWork coverage here.
WeWork pulled more than $60 million out of its UK subsidiary and lumped it with close to $240 million in extra debt in 2018.
WeWork International Limited grew revenue by 90% to about £36 million last year, according to Companies House accounts published on Friday. However, it paid £48.4 million ($61 million) to its US parent for intellectual property and other support services, up from £1.7 million in 2017, contributing to its administrative expenses more than quadrupling to about £110 million.
WeWork shelved its IPO last month after significant investor backlash due to its valuation, mushrooming losses, cofounder and now-former CEO Adam Neumann, and other issues. It is now scrambling to secure financing after missing out on an expected influx of cash from its flotation and funding tied to it.
Wage and salary expenses soared 150% to about £31 million as average headcount more than doubled to 440. Interest payments jumped sixfold to £4.9 million after borrowings nearly tripled to £300 million. Combined with the spike in administrative expenses, the upshot was pre-tax losses surged tenfold to £76 million.
WeWork International revealed a sharp rise in its investments in subsidiaries, from less than £500,000 to just over £5 million. It also reported £4.1 million in inventories, comprising £1.2 million in leasehold improvements, £2.9 million in furniture and equipment, and nearly £100,000 in computer equipment.
In a comment to Markets Insider on Thursday, WeWork said: “WeWork International Limited is a services holding company that primarily exists to hold centralized set-up costs for UK and European operations, and receives revenues only as a small percentage of building profits, collected as a management fee. Its financial performance is therefore not a representation of the health and profitability of the overall UK business.”
Read more:Salesforce’s Mark Benioff was a big fan of WeWork’s Adam Neumann — now he’s changed his tune
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