Australia's largest payday lender Cash Converters has begun scaling back its troubled business in Britain.
The lender and second-hand goods retailer has returned to profit in the first half thanks to growth from its Australian business and reduced losses from its UK network.
Despite signs of improvement, Cash Converters managing director Peter Cumins says the group has decided to sell its corporate stores in the UK.
Mr Cumins says negotiations are already underway with two franchise groups expected to sign agreements to buy more than a dozen stores on Monday.
An earlier restructure of its UK business and a $23 million law suit settlement in New South Wales dragged the group to an annual loss of $21.7 million in 2014/15.
That restructure was sparked by legislative changes in Britain forcing lenders to make sure customers could afford to repay loans before they signed up. Price caps were also introduced, along with bans on loans being rolled over monthly.
Mr Cumins said those changes had made it difficult to make a profit.
"We tried to offset that by introducing our financial services products but we were late to the market," he said.
"There were already some very significant players and we could never get the scale that we needed.
"Australia will be our strategic focus now. It has unmatched strength."
Mr Cumins said he was not concerned about the Australian government's regulatory review of the payday lending industry, which is due to hand down its findings in coming weeks.
"I have been encouraged by the initial government position that there is a role for short-term lending as long as it is conducted responsibly and within a clear regulatory framework," he said.
In June last year, the lender settled a class action taken by NSW borrowers who claimed they were slugged excessive interest.
It also faces a similar class action in Queensland.
Shares in Cash Converters closed 3.5 cents higher at 52 cents.
The stock has more than halved in the past year.
CASH CONVERTERS RETURNS TO PROFIT:
* First half net profit of $15.9m, compared to $5.3m loss
* Revenue up 5.8 pct to $198.6m
* Interim dividend unchanged at 2.0 cents a share.
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