Wonga blame Newcastle United sponsorship for losses
According to The Guardian, Wonga made a loss of nearly £65m last year, but has insisted that it is on track to return to profitability in 2017, in part due to its Newcastle United sponsorship ending.
The sponsorship is reported to have cost the company £24 million. As well as cutting out football sponsorship Wonga have also been forced to move their head office to save cash
The UK’s biggest payday lender was forced to tear up its business model in 2014 after running into regulatory problems and because of the cap on loan rates introduced by the Financial Conduct Authority in 2015.
A new management team took over in late 2014 and said in the lender’s annual report that it expected “to report a significantly improved performance for the current financial year”.
Tara Kneafsey, the chief executive of Wonga, said that since 2014, the business “had been transformed as we have expanded our product offering, strengthened our governance, rationalised our operations and reduced our cost base”.
She is thought to be the highest-paid director disclosed in the 2016 annual report, with yearly remuneration of £467,000.
In 2014 Wonga was ordered to pay £2.6m in compensation to about 45,000 customers after sending threatening letters from non-existent law firms, and was then forced to write off £220m of debts of 375,000 borrowers who it admitted should never have been given loans.
The annual report shows revenue was £76.7m, up from £65.2m but still well below the £300m Wonga was generating in 2012. The loss of £64.9m is lower than the £80m incurred in 2015, however.
About 60% of the lender’s revenue is generated in the UK, with the rest made in Poland, South Africa and Spain.