Propell’s ASX Delisting Raises Questions on Future Funding and Growth

Financial Performance and Cash Flow

Propell Holdings Limited (ASX: PHL), the SME-focused digital finance platform, released its Q3 FY25 update revealing a net cash outflow from operating activities of $227,000 for the quarter and $122,000 year-to-date. Despite these outflows, receipts from customers rose sharply by 91% compared to the prior corresponding period, reaching $521,000, reflecting significant loan book growth throughout 2024.

Operating costs increased by 29% quarter-on-quarter to $748,000 but remained consistent with the prior year, benefiting from cost savings following a 2023 restructuring. Propell ended the quarter with $982,000 in cash and $1.277 million in unused financing facilities, providing a runway estimated to cover 10 quarters at current operating cash flow levels.

Innovating Credit Assessment with ‘Low Doc’ Model

Responding to broker network feedback, Propell introduced a new ‘Low Doc’ credit assessment model that evaluates loan applicants based on bank statement data rather than traditional financial statements. This innovation aims to enhance the accuracy of profitability and loan serviceability assessments, particularly for customers lacking formal financial documentation.

The ‘Low Doc’ approach is expected to boost deal flow and improve risk management by providing a more reliable financial picture, while maintaining the company’s core credit criteria focused on cash profit and debt repayment capacity. This development positions Propell to better serve SMEs that have been underserved by conventional lending processes.

Loan Book and Lending Metrics

While the loan book remained relatively flat during the quarter, the average loan size on originations declined by 24% quarter-on-quarter to $70,000, consistent with the prior year. The weighted average interest rate on new loans also decreased by 4% to 2.50% per month, reflecting competitive pricing strategies amid evolving market conditions.

Corporate Developments: ASX Delisting and Funding

In a significant corporate move, Propell shareholders approved the company’s delisting from the ASX, with the last trading day scheduled for 2 May 2025. This decision follows a strategic review and aims to provide the company with greater operational flexibility away from public market pressures.

On the funding front, Propell extended its existing Convertible Note Facility and continues discussions for alternative funding arrangements to support loan book growth. The company currently holds a $11 million wholesale facility with Altor Capital Management and a $0.749 million working capital facility secured against R&D tax incentives.

Outlook and Strategic Focus

Propell’s board remains focused on achieving sustained profitability through strong net interest margins, a lean operating cost base, and scalable loan book growth. The company plans to expand its broker referral network and secure increased wholesale funding to meet rising SME lending demand.

Propell’s vision is to become the preferred digital finance platform for small businesses, offering a seamless, all-in-one solution that simplifies financial management and lending. The new ‘Low Doc’ model and operational efficiencies are expected to underpin this ambition as the company transitions to a private entity.