Pioneer announces $1m profit upgrade

Perth financial services provider Pioneer Credit has today reported its 2014-15 earnings are expected to exceed its $6.6 million forecast, and post an operating profit of $7.7 million.

The primary reason for the upgrade, which was flagged at voluntary trading halt last week, was a higher than expected valuation of the portfolio of customer accounts. It expects the change to result in a net gain after tax of $700,000.

The results remain subject to audit completion and will be announced on August 21.

Pioneer listed on May 1 2015, and prepared its prospectus forecast for FY15 earnings on the basis of expected performance in early 2014. It has a market capitalisation of around $80 million. 

Pioneer managing director Keith John said he was comfortable the company has maintained a conservative approach to valuing its portfolio.

“It is important to highlight that this change means there is now an improvement in the value expected to be realised over the life of the portfolio, which can extend out to 6 to 10 years, relative to our original forecast,” Mr John said.

A fair value assessment, which represents the risk adjusted and discounted present value Pioneer expects to receive from the acquired accounts, is periodically calculated on the portfolio.

Using observable evidence, the effective expensing rate for 2014-15 has now moved from 30.8 per cent to 30.2 per cent.

Pioneer Credit sold $3.1 million worth of bankruptcy-comprised customer accounts last April, but the company said none of the proceeds would contribute to the company’s full-year profit.

Pioneer also recently took a 14.1 per cent stake in Kalgoorlie-based financial institution Goldfields Money for $2.3 million, as the two companies make plans for a joint working relationship.

The company purchases overdue retail debt from banks and works with customers to recover the loans.

Pioneer shares were up 3.2 per cent today to close at $1.75 each.