The Pioneer Credit Ltd (ASX: PNC) share price is up over 7% after providing an update about its purchased debt portfolio (PDP) accounting.
Pioneer Credit is a debt collecting business that also provides other financial services with over 160,000 customers across Australia and New Zealand. Pioneer Credit Solutions acquires and manages retail debt portfolios, Pioneer has headquarters in Perth, it also has offices in Sydney, Melbourne, Brisbane and Manila.
Pioneer’s Update
Pioneer announced that it will adopt ‘Amortised Cost’ as its primary classification and measurement method for FY19. It will report the PDP carrying value for both the Amortised Cost and Fair Value through the profit or loss.
The company has been working with two of the ‘big four’ accounting firms including its auditor to develop its model for measurement of its financial asset using the Amortised Cost method.
Pioneer expects both net profit and the value of its PDP on the balance sheet will be similar under both methods. However, it does expect a small positive revaluation of assets.
Net profit for FY19 is still expected to be in line with previous guidance of at least $20 million. It is good that Pioneer has come to a decision to move beyond this troublesome accounting question.
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