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 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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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.