Propell Holdings has reported its first half-year cash profit since its 2021 ASX listing, driven by loan book growth and new product launches, despite a Q2 operating cash outflow.
- Year-to-date net cash inflow of $105,000, first half-year cash profit since listing
- Q2 FY25 operating cash outflow of $43,000 amid steady customer receipts
- Loan book growth fueled 111% increase in customer receipts year-on-year
- Launch of trade receivables loan facility and automated broker credit tool
- Operating costs up 49% quarter-on-quarter but down 11% year-on-year
Financial Milestone Achieved
Propell Holdings Limited (ASX:PHL), a specialist SME finance platform, has reported a significant financial milestone in its FY25 second quarter update. The company recorded a year-to-date net cash inflow from operating activities of $105,000, marking its first half-year cash profit since listing on the ASX in April 2021. This development signals a turning point for Propell, reflecting the fruits of its strategic initiatives and operational restructuring undertaken over recent years.
Despite this positive half-year result, the company experienced a net cash outflow of $43,000 in Q2 FY25, a reversal from the prior quarter’s $148,000 cash profit. However, receipts from customers remained stable quarter-on-quarter at $535,000, representing a robust 111% increase compared to the prior corresponding period (PCP), driven by sustained loan book growth throughout 2024.
Loan Book and Product Innovation
Propell’s loan book held relatively steady during the quarter, with the average loan size on originations increasing 152% year-on-year to $92,000. The weighted average interest rate on new loans remained consistent at 2.61% per month, underpinning strong net interest margins. These metrics underscore the company’s ability to maintain lending discipline while scaling its portfolio.
In a bid to address a high rate of declined credit applications, Propell launched a new Trade Receivables Loan Facility. This product allows customers to secure loans against their trade receivables, broadening access to credit and improving loan approval rates. Early indications suggest this innovation will accelerate loan book growth by enabling more SMEs to qualify for financing under more favourable terms.
Complementing this, Propell introduced an automated online credit assessment tool for brokers. This digital platform provides instant indicative credit decisions, significantly reducing turnaround times and improving the efficiency of the loan approval process. The tool has already contributed to a higher approval rate, enhancing the company’s competitive positioning in the SME lending market.
Operational Efficiency and Cost Management
Operating costs rose 49% quarter-on-quarter to $578,000, primarily due to timing of payments, but remained 11% lower than the PCP, reflecting cost savings from the 2023 restructuring. Propell’s management emphasizes that the reduced cost base is sustainable and will support future growth without compromising service quality or operational objectives.
Cash on hand stood at approximately $1.116 million at quarter-end, supplemented by an unused financing facility of $1.277 million. This liquidity position, combined with improved operating metrics, positions Propell to meet its near-term business objectives and pursue further loan book expansion.
Strategic Outlook
Looking ahead, Propell aims to secure an increased wholesale funding facility to meet anticipated client demand and continue expanding its broker referral network to drive lending growth. The company plans to maintain its current cost base while scaling operations, targeting sustained profitability as loan volumes increase.
The Board remains focused on establishing Propell as the preferred digital finance platform for Australian SMEs, offering a seamless, all-in-one solution that addresses the frustrations many small businesses face with traditional banks. With a market of 2.3 million SMEs and $423 billion in SME loans, Propell’s digital-first approach and innovative product suite position it well to capture a growing share of this underserved segment.
Bottom Line?
Propell’s first half-year cash profit and innovative lending tools set the stage for accelerated growth, but execution and funding will be critical in the quarters ahead.
Questions in the middle?
- How quickly will the new Trade Receivables Loan Facility translate into sustained loan book growth?
- What impact will the automated broker credit tool have on approval rates and customer acquisition long-term?
- Will Propell secure increased wholesale funding to fully capitalize on market demand?