Cash Converters Faces Profit Pressure Amid Strategic Costs and Lending Shift

Robust Revenue Growth and Strategic Acquisitions

Cash Converters International Limited has delivered a solid half-year performance for the period ended 31 December 2025, with revenue climbing 8% to $206.7 million. This growth was underpinned by the company’s ongoing strategy to acquire franchised stores, adding 36 new outlets across Australia during the period. These acquisitions have contributed positively to the Group’s earnings, reinforcing its position in the consumer finance and retail sectors.

Operating profit after tax rose by 9% to $13.2 million, reflecting the benefits of the franchise expansion and a disciplined approach to managing operational costs. However, net profit attributable to members fell 17% to $10.05 million, primarily due to non-operating expenses related to merger and acquisition activities and the strategic Return to Growth (RTG) program.

Transitioning Lending Business and Product Innovation

The company continues to transition its lending portfolio, notably exiting the Small Amount Credit Contract (SACC) loans by 30 September 2025. This move aligns with the RTG program’s objective to simplify personal finance offerings and reduce regulatory complexity. The new Cashies Loan product is gaining traction, targeting lower-risk customers with more flexible and affordable lending options.

Cash Converters reported a reduction in net loss rates from 15.5% to 13.7%, indicating improved credit quality as the loan book shifts towards these newer products. The company’s proprietary machine-learning credit risk tools are playing a key role in this evolution, enabling more responsible lending practices.

Balance Sheet Strength and Funding Flexibility

The Group closed the half-year with a strong balance sheet, holding $43.5 million in cash and cash equivalents, despite a net cash outflow of $29.2 million driven by franchise acquisitions, debt repayments, and dividend payments. Importantly, Cash Converters maintains $71.5 million of undrawn capacity under its securitisation facility, providing ample funding headroom to support ongoing operations and strategic growth initiatives.

Discussions with Fortress Investment Group have resulted in a permanent amendment to the securitisation facility, extending the minimum draw amount to $90 million, ensuring continued funding flexibility beyond the temporary waiver that expired in February 2026.

Dividend Declaration and Shareholder Returns

Reflecting confidence in its financial position and growth prospects, the Board declared a fully franked interim dividend of 1.00 cent per share, consistent with the prior half-year. The Dividend Reinvestment Plan (DRP) has been reinstated, offering shareholders the option to reinvest dividends into additional shares, a move welcomed by investors seeking to compound their holdings.

Outlook and Growth Opportunities

Cash Converters is focused on accelerating earnings through further franchise acquisitions in Australia and the UK, with a forward pipeline of targets under review. The company’s unique business model, combining a global network of stores with digital assets and advanced credit risk technology, positions it well to capture demand from under-served borrowers amid ongoing cost-of-living pressures.

Subsequent to the reporting period, the Group acquired five additional UK franchise stores, underscoring its commitment to expanding its footprint and enhancing shareholder value. The Return to Growth program and Cashies Loan product remain central to the company’s strategy to deliver sustainable, responsible growth.