Solvar Limited reported a 5.8% rise in net profit for the half year ending December 2025, driven by strategic asset sales and expanded funding facilities. The company declared both interim and special dividends, signalling confidence despite ongoing regulatory challenges.
- Net profit up 5.8% to $17.8 million
- Operating income down 9.5% due to NZ loan book rundown
- Sale of NZ written-off loan book for NZ$9.4 million
- Interim dividend of 6.0 cents and special dividend of 2.5 cents declared
- Funding facilities increased by approximately $250 million
Financial Performance Overview
Solvar Limited has delivered a solid financial performance for the half year ended 31 December 2025, with net profit attributable to members rising 5.8% to $17.824 million. This increase comes despite a 9.5% decline in operating income to $98.214 million, largely reflecting the strategic run down of its New Zealand loan book. The company’s gross loan book contracted by 3.6% to $896.9 million, with the Australian segment showing growth while New Zealand operations wound down.
Strategic Sale of New Zealand Loan Book
In a notable move, Solvar sold the majority of its written-off loan book in New Zealand for NZ$9.399 million in November 2025. This transaction, which included an upfront payment and a retention component, effectively monetised an asset previously valued at nil on the books. The sale also enabled a reduction in the New Zealand workforce related to post write-off collections, signalling a clear shift in focus towards the Australian market.
Dividend Declarations Reflect Confidence
Reflecting its strong cash position and operational results, Solvar declared a fully franked interim dividend of 6.00 cents per share and a special dividend of 2.50 cents per share, both payable in April 2026. These dividends follow a final dividend of 8.00 cents per share paid in October 2025, underscoring the company’s commitment to returning value to shareholders. Notably, the company did not offer a dividend reinvestment plan for the interim and special dividends.
Funding and Loan Book Growth
Solvar strengthened its funding position by increasing its debt facilities by approximately $250 million through the introduction of a new warehouse facility and resizing an existing one. This expansion provides significant headroom to support ongoing loan book growth, particularly in Australia where the gross loan book increased by 2.7% to $846.6 million. Commercial loans within Australia grew by 16.2%, highlighting the company’s focus on secured automotive and personal loans in its core market.
Regulatory Proceedings and Outlook
Solvar continues to navigate regulatory challenges, with ongoing proceedings involving the Australian Securities & Investment Commission (ASIC) and the Commerce Commission in New Zealand. While the majority of claims against its subsidiary Money3 Loans Pty Ltd were dismissed, a penalty hearing is pending. Similarly, Solvar and its New Zealand subsidiary are defending allegations related to responsible lending but do not anticipate material liabilities. These regulatory matters remain a watchpoint for investors.
Overall, Solvar’s half-year results reflect a company in transition, streamlining its New Zealand operations while reinforcing its Australian business through funding enhancements and disciplined capital management. The declared dividends and improved profitability suggest management’s confidence in the company’s strategic direction despite external uncertainties.
Bottom Line?
Solvar’s focus on Australian growth and disciplined capital returns set the stage for cautious optimism amid regulatory scrutiny.
Questions in the middle?
- What impact will the pending ASIC penalty have on Solvar’s financials and reputation?
- How will the sale of the New Zealand loan book affect future earnings and cash flow?
- Can Solvar sustain loan book growth in Australia amid competitive funding and regulatory pressures?