Office space provider IWG announced it will take a £156m hit due to the coronavirus pandemic as it shrinks its portfolio by four per cent amid a home-working boom.
IWG’s share price dropped more than five per cent today after it announced it will accelerate its office closure plans due to the Covid-19 crisis, with a provision of £126.7m.
It also announced a £29.1m charge for expected credit losses, transaction costs for deferred deals, restructuring costs and goodwill impairment.
“Rationalisation is always a last resort, with the priority to negotiate a way to make the centre profitable,” IWG said in a statement this morning.
“Consequently, there is a level of uncertainty over the ultimate size of the rationalisation programme.”
In the six months to 30 June the firm closed 2.5 per cent of its network, with around one per cent attributable to the coronavirus pandemic.
Companies were instructed to allow staff to work from home where possible during the coronavirus lockdown, although some have begun to gradually reopen physical offices.
A survey of 100 business leaders conducted by London First reveals a phased return of staff is underway for three quarters of London firms after four months of remote working.
The prime minister has called for people to return to the office if they can. “I think it’s very important that people should try to lead their lives more normally,” Boris Johnson said last month.
However IWG said it is “well placed” to capture growth opportunities to keep up with the shift in working preferences.
It said it is “uniquely positioned” to help companies adapt to the new world of working post Covid-19.
In the first half of the year open centre revenue was up 10.2 pr cent to £1.29m, up 17.7 per cent in the first quarter and up 2.5 per cent in the second quarter, at the height of the coronavirus lockdown.
“IWG chief executive Mark Dixon said: “This global crisis has dramatically changed the ways companies will work.
“In the new world of working post Covid-19, offices will still be needed but there will be a greater requirement for more flexible space.
“More companies will have distributed workforces with more satellite offices, more employees working closer to home or continuing to work from home. With our decentralised portfolio of workplace locations in over 1,100 towns and cities, both urban and suburban, we are uniquely positioned to help companies adapt to a new world of working.
“Whilst 2020 will undoubtedly be a challenging year given COVID-19, we look forward to entering 2021 as a more resilient, stronger and profitable business generating increased cashflows.”