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Pioneer Credit (PNC) Releases FY19 Results But Remains In Trading Halt

Pioneer Credit Limited (ASX: PNC) has just released its full year results. However, we will get no share price reaction today as shares remain in a prolonged trading halt.

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 FY19 Results

Pioneer Credit has reported a net profit after tax (NPAT) of $4.3 million for the period on the back of a 17% increase in EBITDA to $63.4 million.

It’s hard to get a good grasp on the results as the company has made changes to the way in which revenue and, by extension, profits are recognised and reported.

The company announced that it will not pay a final dividend and with the help of its financial advisers, is in the process of reviewing its capital management plan. The company will provide an update to investors when its shares resume trading on the ASX.

In the past, Pioneer has been out of step with common industry practice when it comes to its accounting for purchased debt portfolios (PDP). The company has been delayed in releasing its FY19 results as it goes about altering its methodology for calculating income to become more in-line with its peers.

The company remains in a ‘Standstill Agreement’ with its senior financiers, Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC). The agreement ensures that the senior financiers will not take any action with regards to existing defaults until at least October 14, which may be extended further.

For those unfamiliar, the video below explains sharemarket trading halts:

Management Comments

Commenting on the results this morning, Chairman Michael Smith said: “Despite a disappointing NPAT outcome due to the application of Amortised Cost to our portfolio, we are pleased with the growth metrics not impacted by the accounting change, in particular the record EBITDA and cash liquidations, which have continued strongly through the start of FY20.”

Mr Smith did his best to alleviate the growing concern of investors saying, “the company’s business fundamentals remain strong. We are achieving an enviable net promoter score, evidencing the excellent outcomes we are achieving for our customer base. These customer outcomes and our disciplined approach to PDP investment position the company for consistent and continued growth over the long term.”

Waiting Game Set To Continue

Along with the release of its FY19 results, the company also requested a further extension to the suspension of its shares on the ASX. It is unknown exactly when trading will recommence, but it is likely to be at some stage during October.

It will be a nervous wait for shareholders, who must be bracing for a heavy hit to the share price upon the resumption of trade.

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At the time of publishing, Luke has no financial interest in any companies mentioned.

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