Hi @Niraj1980,I think generally this is pretty positive as it's...

Hi @Niraj1980,

I think generally this is pretty positive as it's an increased debt facility with room for further expansion and it gives the company clear air for the next 3 years. But please read on below as I think there are some challenges for B4P over that time-frame.

A note from the previous cash flow reports:
the third-party funding cost of the average pay advance is c.0.64% of the amount advanced, based on a 25-day loan duration. A 1% increase in interest ratewould increase this to approximately 0.69%.

So if third-party funding costs are currently 9.5%, and that increases to an average of say 12.5%, then 3rd-party funding costs of cash advances of $165m (based on an average 25-day loan duration) goes up by approx. 0.15% - about $250k per quarter, or $1m per annum.

My view, cost control becomes even more important in order to get to cash flow +ve but that may not be the strategy, it could be continued expansion of the loan book through capital-funded expansion. Here's a snippet of the Q4FY24 cash flow report which says there's $21.8m cash on hand, and which contains the quarterly and annual cash flows in columns 1 and 2 (respectively) below:


A few things I find challenging for B4P:
1. Last year they lent out $628m yet received back $630m inclusive of the 5% lending fee. That's a $2m annual positive result on their lending business. This equation needs to improve by at least $3M per quarter.
2. New funding interest rate, makes the above equation more difficult by about $1m p.a. ($250k per quarter) as of Q3FY24...there is also a ~$1m setup fee (1.7% of $55m) which has to be paid up front
3. Based on last years cash burn, B4P have 5 quarters of cash left, based on Q4FY23, about 7 quarters of cash left. If we see that cash burn is still running at $3m per quarter for the Q1FY24 and Q2FY24 reports, I reckon you should expect a capital raise aimed at mid next year, and therefore dilution in the share price.

So...watch that cash flow, forget the hype. Cash flow is the key to sustained share price movement in either direction IMHO.

Regards.