Payday loans company Wonga has announced a significant loss as it continues its restructuring programme.
The short-term lender revealed a pre-tax loss of £37.3 million during 2014, a huge contrast from the £39.7 million profit in 2013. Wonga has been hit hard by a sizeable drop in lending to UK consumers in the past 12 months. It stated that it is bracing itself for "another tough year in 2015".
Wonga has been the subject of considerable criticism over the years and was forced to apologise last year after sending customers fake legal letters when chasing debts. This resulted in it also paying compensation and writing off thousands of unsuitable loans.
Sky News reported that sources close to the Wonga situation stated that the company would reveal a drop in revenues from £314.7 million to around £215 million over the past 12 months. This has triggered the company to shed around half of its UK workforce with 325 jobs under threat.
Andy Haste, Wonga's chairman, said: "Our focus is on creating a business that meets the demand for short-term credit sustainably and responsibly, resulting in good customer outcomes. We've already made significant changes, including appointing a new leadership team, implementing a new risk decision engine and tightening our lending criteria."
Differing football club fortunes
Wonga is currently the shirt sponsor of two football sides – Newcastle United and Blackpool. Despite the short-term lender's financial woes, Premier League side Newcastle have been performing well in regards to their finances.
In March, the Tyneside club revealed a record £18.7 million profit for 2013/14 representing the fourth consecutive financial year they have made money. The monetary success has not been replicated on the pitch, however, as the Magpies have been sliding down the league and are currently on a six-game losing streak.