Appendix 4E and
Annual Report
For the year ended 30 June 2021
Pioneer Credit Limited ABN 44 103 003 505
Annual Report - 30 June 2021
Contents
Appendix 4E - Results for announcement to the market
Corporate Directory
About Pioneer
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance Statement
Financial Statements
Independent Auditors Report to the Members
Shareholder information
3
6
7
8
30
31
34
82
88
Pioneer Credit Limited
30 June 2021
2
Pioneer Credit Limited ABN 44 103 003 505
Appendix 4E
Preliminary Final Report
for the year ended 30 June 2021
(previous corresponding period 30 June 2020)
Appendix 4E - Results for announcement to the market
Key information
30 June
2021
$’000
30 June
2020
$’000
Change
$’000
%
Revenue from ordinary activities
(Loss) / Profit from ordinary activities after tax
attributable to members
Net (loss) / profit for the period attributable to
members
53,366
55,889
(2,523)
(4.51)
(19,655)
(40,084)
20,429
50.97
(19,655)
(40,084)
20,429
50.97
Revenue from ordinary activities excludes interest income and the profit on sale / revaluation of other assets in the comparative period.
Dividends per ordinary share / distributions
There is no provision for a final dividend in respect of the year ended 30 June 2021.
Financial Statements
Released with this Appendix 4E report are the following statements:
Consolidated Statement of Profit or Loss and Other Comprehensive Income together with notes to the
Statement
Consolidated Statement of Financial Position together with notes to the Statement
Consolidated Statement of Changes in Equity, showing movements
Consolidated Statement of Cash Flows together with notes to the Statement
This report is based on financial statements which have been audited.
Pioneer Credit Limited
30 June 2021
3
Key ratios
30 June 2021
(cents)
30 June 2020
(cents)
Net tangible assets per fully paid ordinary share
Basic (loss) earnings per fully paid ordinary share
72.26
(30.43)
87.85
(63.36)
The Right of Use Asset under AASB 16 Leases ($4.9m) has been excluded from tangible assets, while the lease liability has been
included in liabilities.
Review of operations and results
The Company experienced a challenging operating environment over the past year, with the impacts of an
extensive refinancing process imposing constraints on the Company’s ability to operationalise its business
and portfolio. These events, together with the impacts of the COVID-19 (“COVID”) pandemic, has seen
revenue from ordinary activities flat year on year. This was driven in part by a 46% decrease in new purchased
debt portfolios (“PDPs”) compared to prior year as major debt vendors suspended their debt sale
programmes. This lower investment in PDPs contributed materially to receipts from liquidations decreasing
6% to $94.7m.
The results for the period were also adversely impacted by significant one-off costs related to the terminated
scheme of arrangement and subsequent refinancing process.
Impacts of COVID
At the onset of the COVID pandemic in mid-March 2020, and through April 2020, the Company experienced
a reduction in its average payment instalments and lump sum settlements, consistent with the expectation
that customers would naturally become more cautious about their finances. The Company expected that the
reduction in payments would behave in a manner representing deferrals of customer payments rather than
hard defaults. This has, to date, proven to be the case with noticeable growth coming through payment
arrangements each month since May 2020.
The Company’s customer centric approach, combined with the high quality of its debt portfolio, being
predominantly Australian bank products with a strict origination process, has contributed to minimising any
material adverse impacts of COVID on liquidations. However as noted above, this was not the case for the
purchasing of new PDP’s which were significantly impacted as major debt vendors suspended their debt sale
programmes. Most of these debt sale programs have now resumed, and the Company recommenced
purchasing in July 2020 albeit at reduced volumes.
There remains a level of uncertainty as to the future economic outlook and potential impacts to the Company’s
future performance. Over the period, the Company claimed Jobkeeper on eligible employees for Pioneer
Credit Solutions (“PCS”) up to 28 September 2020 in the sum of $2,766,000 and on eligible employees for
Sphere Legal, ending on the 31 March 2021 in the sum of $104,400.
Following discussions with the Company’s landlord, Pioneer was granted a deferral of certain rental amounts.
The amounts deferred represented net rent, with all other costs and payments including outgoings paid. By
agreement there is a waiver of all deferred amounts if the Company extends its lease prior to 31 March 2022.
Pioneer Credit Limited
30 June 2021
4
Business risk statement
Like all businesses, Pioneer faces uncertainties in the future. The ability to understand, manage and mitigate
risk is a source of the Company’s competitive advantage. No period has bought to light the need to
appropriately manage risk more than the onset of COVID in early 2020.
For Pioneer, generally the most significant immediate financial risk is that our customers may not meet the
expected level of repayments as they manage their financial commitments.
Our success in working with our customers over time is based on several factors that mitigates default risk
with people who have experienced financial difficulty. These include:
Treating them with empathy, understanding and respect;
Offering expert help in getting over financial challenges;
A high investment in analytics to match effort and engagement to a customer’s financial capability;
Investing only in quality account portfolios from leading financial institutions; and
Our people, who are here to help, rather than chase, and who work in a culture of strong values
where a premium is placed on customer service and empathy.
These aspects to the Pioneer business were critical in guiding it through the onset of COVID, and the
Directors’ Report contained herein references performance through this period specifically.
We are also conscious that the Company needs to be able to purchase debt portfolios at appropriate prices,
and that risk is influenced by several factors. The availability of debt portfolios for acquisition is at the sole
discretion of the debt vendors and there exists the risk that debt vendors will stop or delay selling portfolios
in response to their own operating strategy or as a result of any potential changes in government policy.
While acknowledging this risk, the Company’s investment approach is a source of advantage:
Pioneer has been successfully buying quality portfolios for over ten consecutive years, and has
consistently been one of the largest participants in this market in Australia;
Pioneer’s empathetic approach to customers makes us a preferred partner for major financial
institutions who are sensitive to how their customers are treated;
Pioneer’s analytics is driven by a professional team of analysts and data scientists using a large,
growing and relevant statistical base to inform investment decisions; and
Pioneer’s success is evidenced by standing out of markets during periods of relatively high prices.
The Company remains focussed on delivering a capital management plan that aligns to our strategy with the
refinancing of the Company’s debt facility of significant importance. The Company has mitigated the risk by
engaging corporate advisors and are advanced in completing a refinancing at a materially lower cost of funds
to the current facility.
Overlaying this are the usual risks of regulatory change, the importance of our people complying with
regulations and our own internal policies, the impact of a strategy that is not well executed, the potential
failure to respond appropriately to changes in technology and the threat posed through competitor
behaviours. These are the source of regular attention and review by the Company’s Executive and Board of
Directors.
Pioneer Credit Limited
30 June 2021
5
Corporate Directory
Directors
Mr Michael Smith (Chairperson)
Mr Keith John (Managing Director)
Ms Andrea Hall
Mr Peter Hall (appointed 11 January 2021)
Mr Stephen Targett (appointed 7 June 2021)
Ms Michelle d’Almeida (appointed 16 June 2021)
Ms Ann Robinson (resigned on 7 June 2021)
Company Secretary
Ms Susan Symmons
Principal Registered Office
Share Registrar
Auditor
Solicitors
Bankers
Level 6
108 St Georges Terrace
Perth WA 6000
+61 1300 720 823
Link Market Services Limited
Level 12
250 St Georges Terrace
Perth WA 6000
+61 1300 554 474
Deloitte Touche Tohmatsu
Brookfield Place Tower 2
123 St Georges Terrace
Perth WA 6000
+61 8 9365 7000
K&L Gates
Level 32
44 St Georges Terrace
Perth WA 6000
+61 8 9216 0900
Nomura Australia Ltd
1 Farrer Place
Level 25 Governor Philip Tower
Sydney NSW 2000
+61 2 9321 3531
Stock Exchange Listings
Pioneer Credit Limited shares are listed on the
Australian Securities Exchange (ASX).
Website
www.pioneercredit.com.au
Pioneer Credit Limited
30 June 2021
6
About Pioneer
Pioneer Credit (“Pioneer” or “the Company”) is an ASX listed company (ASX:PNC) providing high quality,
flexible, financial services support to help everyday Australians out of financial difficulty. We have the trust of
long-term vendor partners to do the right thing and respectfully support customers to achieve their financial
independence.
With more than 250,000 customers throughout Australia and New Zealand, our focus is on providing them
with exceptional levels of customer service along with a range of products and solutions to help them achieve
their financial goals.
We specialise in acquiring and servicing retail debt portfolios. These portfolios consist of individuals with
financial obligations to us and are the cornerstone of our customer relationships. We value and respect our
customers greatly, and we work with our customers over time so that they can meet their obligations and
progress toward financial recovery, and through this process evolve as a ‘new consumer’.
We work with Australia’s major banks and financial institutions. Our success has been built on long-lasting
relationships, and while we have grown rapidly, we remain small and agile enough to meet our clients’
business requirements.
Our key focus is on providing commercial solutions to our financial sector partners. We never forget that the
reputation of our partners is paramount, and that how we approach the servicing of portfolios can directly
impact both our own brand and that of our partners – either positively or negatively.
A focus on customer service
We invest in the ongoing training and development of our staff to ensure we provide a consistent customer
service-oriented approach to our customer engagement. We also monitor all customer contact and are at the
forefront of compliance best practice. This approach means we are confident of delivering an industry-leading
service to our partners.
Strong corporate culture
Pioneer has a strong corporate culture, built around six Pioneer Principles. These are a very well defined set
of values that our people work and live by. They form the core of what we expect in terms of behaviour from
our people; they are embedded throughout the organisation and underpin every interaction we have with our
customers and our stakeholders.
Pioneer Credit Limited
30 June 2021
7
Directors’ Report
The Board of Directors present their report on the Consolidated Entity (‘the Group’ or ‘the Company’)
consisting of Pioneer Credit Limited (‘Pioneer’) and the entities it controlled at or during the year ended 30
June 2021.
Directors
The following people were Directors of Pioneer Credit Limited during the financial year and at the date of this
report:
Mr Michael Smith (Chairperson)
Mr Keith John (Managing Director)
Ms Andrea Hall
Mr Peter Hall (appointed 11 January 2021)
Mr Stephen Targett (appointed 7 June 2021)
Ms Michelle d’Almeida (appointed 16 June 2021)
Ms Ann Robinson (resigned 7 June 2021)
Principal activities
Pioneer is a financial services provider that specialises in acquiring and servicing Purchased Debt Portfolios
(‘PDP’s’).
Pioneer provides high quality, flexible financial services support to help everyday Australians out of financial
difficulty. Pioneer has the trust of long-term vendor partners to do the right thing and respectfully support
customers to achieve their financial independence. Pioneer focuses on driving positive customer outcomes
through our organisational values - the Pioneer Principles.
Dividends
Since the end of the financial year the Directors have not declared a final dividend.
Review of operations
The start of FY21 saw the Board’s and management’s focus on the refinancing of the Company following the
terminated Scheme of Arrangement from the intended acquirer. Through this process the Board was
steadfast in its desire to preserve as much shareholder value as was possible, noting the unique
circumstances that existed at that time in terms of the global operating environment.
A new Syndicated Facility Agreement (SFA) was executed on 16 September 2020. The SFA was entered
into with a syndicate of lenders and provided for a $169m term facility further described in note 19 in the
financial report.
Through the period until financial close of the SFA, the Company was operating under difficult conditions,
and in a restricted manner as part of its continuing conditions at that time. The lifting of those restrictions at
the end of September 2020 allowed the Company to commence the process of returning to a normal
operating model and rhythm.
Pioneer Credit Limited
30 June 2021
8
To the close of the financial year, the Company improved its operating performance while also continuing to
work to strengthen its balance sheet, through appropriate asset realisation, expense review and
rationalisation.
The investment in InDebted Australia was sold during the year for $2.3m.
At a statutory level, and prior to adjusting the effect of one-off items, for the year ended 30 June 2021, Pioneer
incurred a loss after tax of $19.7m. Receipts from Liquidations of PDP’s were $94.7m, down 6% on the prior
period.
Pioneer’s core business, investment discipline and our inclusive and empowering culture remains solid and
resilient.
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the Group during the financial year.
Events since the end of the financial year
In April 2021, the Board appointed corporate advisors to run a process to refinance the Company and reduce
the cost of debt.
The Company has reached an advanced stage in the refinancing process, receiving indicative non-binding
offers from a shortlist of financiers with favourable terms. The Board is confident of having a new finance
agreement in place with these improved by the end of September 2021.
On 13 August 2021 a legal matter between a software services provider and the Company was settled via
mediation for the amount of $225,000. The matter is an adjusting subsequent event and has been
recognised in the financial report.
No other matter or circumstance has occurred subsequent to the year-end that has significantly affected, or
may significantly affect, the operations of the Group, the results of those operations or the state of affairs of
the Group or economic entity in subsequent financial years.
Environmental regulation
The Company is not affected by any significant environmental regulations.
Pioneer Credit Limited
30 June 2021
9
Information on Directors
Mr Michael Smith
Experience and expertise
Listed Company Directorships
including those held at any time in
the previous 3 years
Special responsibilities
Interests in shares and options
Mr Keith John
Experience and expertise
Listed Company Directorships
including those held at any time in
the previous 3 years
Special responsibilities
Interests in shares and options
Independent Non-Executive Chairman
Appointed Chairman of Pioneer in February 2014
Managing Director of strategic marketing consultancy Black
House, Non-Executive Chairman of 7-Eleven Stores Pty Ltd and
Starbucks Australia
Fellow of AICD, D. Litt. (Hon) from UWA for his contribution to
business and the Arts
Previous roles include National Chair of the Australian Institute of
Company Directors, Deputy Chairman of Automotive Holdings
Group Limited and Chairman of iiNet Limited, Lionel Samson
Sadleirs Group, Synergy, Verve, Perth International Arts Festival,
West Coast Eagles and Scotch College.
Nil
Chairman of the Board
Chairman of Nomination Committee
Chairman of Remuneration Committee
Member of Audit and Risk Management Committee
Ordinary Shares
845,940
Managing Director
Founder of Pioneer Credit with over 25 years’ experience in the
financial services industry
Widely regarded expert in the impaired credit sector in Australia
Director of Midbridge Investments Pty Ltd and Bondi Born.
Nil
Managing Director
Ordinary Shares
Indeterminate rights
Medium Term Notes
Options
6,067,461
875,000
500
8,000,000
Pioneer Credit Limited
30 June 2021
10
Ms Andrea Hall
Experience and expertise
Independent Non-Executive Director
Appointed a Director of Pioneer in November 2016
A director of Perenti Global Limited, Evolution Mining Limited,
Insurance Commission of WA and Fremantle Football Club
Bachelor of Commerce from UWA, a Masters of Applied Finance
and is a Fellow of the Institute of Chartered Accountants Australia
and New Zealand
Previously director of Automotive Holdings Group Limited, C-
Wise, Lottery Wise and Tap Oil Limited, chair of the WA Council
of Chartered Accountants Australia and New Zealand and a Risk
Consulting Partner at KPMG with over 20 years’ experience in
governance and risk management,
financial management,
internal audit and external audit.
Listed Company Directorships
including those held at any time in
the previous 3 years
Automotive Holdings Group Ltd
Perenti Global Limited
Evolution Mining Limited
3 May 2018 to 30 Sept 2019
from 15 Dec 2019
from 1 Oct 2017
Special responsibilities
Interests in shares and options
Member of Nomination Committee
Member of Remuneration Committee
Chair of Audit and Risk Management Committee
Ordinary Shares
97,887
Mr Peter Hall
Experience and expertise
Listed Company Directorships
including those held at any time in
the previous 3 years
Special responsibilities
Interests in shares and options
Independent Non-Executive Director
Appointed a Director of Pioneer in January 2021
Significant career experience across financial services, with
specific expertise in credit risk in Australia, including five years
with Genworth Financial Australia and New Zealand, initially as
its Managing Director and later as Country Executive.
Previously seven years at GE Mortgage Insurance Australia and
New Zealand, the final five years as Managing Director and Chief
Executive Officer
BNK Banking Corporation Limited
from 15 Nov 2015
Member of Audit and Risk Management Committee
Member of Nomination Committee
Member of Remuneration Committee
Nil
Pioneer Credit Limited
30 June 2021
11
Mr Stephen Targett
Experience and expertise
Independent Non-Executive Director
Appointed a Director in June 2021
Extensive financial services experience as a board member and
an executive in Australia and overseas
Current Chairman of P&N Bank and former Chair of BCU, both
divisions of Polices & Nurses Limited
Previously CEO of RACQ Bank and in successive executive
positions, successfully led National Australia Bank’s European
services, Lloyds Banking Group’s wholesale and international
division and ANZ’s institutional bank.
Listed Company Directorships
including those held at any time in
the previous 3 years
Nil
Special responsibilities
Interests in shares and options
Member of Audit and Risk Management Committee
Member of Nomination Committee
Member of Remuneration Committee
Nil
Ms Michelle d’Almeida
Experience and expertise
Independent Non-Executive Director
Appointed a Director in June 2021
Former Managing Director of News Corporation’s Sunday Times
and Perth Now
Non-Executive Director of Perth Airport and ACTIV Foundation
Previously Non-Executive Director of Community Newspaper
Group WA and Variety the Children’s Charity
Listed Company Directorships
including those held at any time in
the previous 3 years
Nil
Special responsibilities
Interests in shares and options
Member of Audit and Risk Management Committee
Member of Nomination Committee
Member of Remuneration Committee
Nil
Pioneer Credit Limited
30 June 2021
12
Ms Ann Robinson
Experience and expertise
Independent Non-Executive Director (to 7 June 2021)
Appointed a Director of Pioneer in February 2018 and resigned
on 7 June 2021.
Experience
in
includes management consulting
Australia and overseas. She also has extensive experience in
mergers and acquisitions, post-merger
integration and
commercial management and governance, from her executive
roles at Wesfarmers Limited
to clients
A director of the Lionel Samson Sadleirs Group, Rottnest Island
Authority Board and a member of the Curtin University Audit, Risk
and Compliance Committee
Holds a Bachelor of Arts, Bachelor of Psychology and Graduate
Diploma in Applied Finance and Investment, and is a graduate of
the AICD.
Nil
Member of Nomination Committee
Chair of Remuneration Committee
Member of Audit and Risk Management Committee
Listed Company Directorships
including those held at any time in
the previous 3 years
Special responsibilities
Meeting of Directors
The number of meetings held, and attended, by the Directors during the year ended 30 June 2021 was:
Name
Board Meetings
Mr Michael Smith
Mr Keith John
Ms Andrea Hall
Ms Ann Robinson1
Mr Peter Hall²
Mr Stephen Targett³
Ms Michelle d’Almeida4
Attended
23
23
24
22
8
2
1
Held
24
24
24
22
8
2
1
Audit and Risk
Held
Attended
6
6
6
6
6
6
5
5
3
3
1
1
1
1
Committee Meetings
Remuneration
Held
Attended
3
3
n/a
n/a
3
3
2
2
2
2
1
1
1
1
Nomination
Held
1
1
1
1
n/a
n/a
n/a
Attended
1
1
1
1
n/a
n/a
n/a
1 Ms Ann Robinson resigned effective 7 June 2021
² Mr Peter Hall appointed effective 11 January 2021
³ Mr Stephen Targett appointed effective 7 June 2021
4 Ms Michelle d’Almeida appointed effective 16 June 2021
Company Secretary
Ms Susan Symmons joined Pioneer as Company Secretary and General Counsel on 1 October 2015. Ms
Symmons has over 25 years’ corporate experience including positions with Heytesbury Pty Ltd, Evans & Tate
Limited, Automotive Holdings Group Limited and Helloworld Limited. Ms Symmons holds a Bachelor of
Commerce from Curtin University and a Master of Business Law from UNSW and is a member of the Institute
of Company Directors and Governance Institute of Australia.
Pioneer Credit Limited
30 June 2021
13
Remuneration Report
This Remuneration Report explains the Board’s approach to executive remuneration and the remuneration
outcomes for the Company’s Key Management Personnel for the year ended 30 June 2021.
1. Overview
Key Management Personnel (‘KMP’)
KMP includes all directors and executives who have responsibility for planning, directing and controlling
material activities of the Company. In this report ‘senior executives’ refers to KMP excluding Non-Executive
Directors.
The information in this remuneration report has been audited under the Corporations Act 2001 S 308(3C).
List of KMP
Directors
Mr Michael Smith
Mr Keith John
Ms Andrea Hall
Mr Peter Hall
Mr Stephen Targett
Ms Michelle d’Almeida
Ms Ann Robinson
Independent Non-Executive Chairman
Managing Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Appointed effective 11 January 2021
Appointed effective 7 June 2021
Appointed effective 16 June 2021
Resigned effective 7 June 2021
Senior Executives
Ms Susan Symmons
Ms Andrea Hoskins
Mr Barry Hartnett
Company Secretary
Chief Operating Officer
Chief Financial Officer
Mr Jason Musca
Chief Financial Officer
Appointed CFO effective 4 June 2021,
previously Chief Development Officer.
Resigned effective 4 June 2021
Pioneer Credit Limited
30 June 2021
14
Remuneration policy and link to performance
In setting the Company’s remuneration strategy, the Board is committed to a framework which:
a) motivates executives to deliver long term sustainable growth within an appropriate control framework;
b)
c)
demonstrates a clear and strong correlation between performance and remuneration; and
aligns the interests of executives with the Company’s shareholders.
Structuring executive remuneration to align with the life of the assets Pioneer acquires is consistent with
Pioneer’s differentiated customer servicing approach, and reflects the Board’s commitment to maintaining an
executive team that is focused on making decisions for the long-term health and growth of the Company.
To achieve this, in part, the Board has determined that the Company will not award Short Term Incentives
(“STIs”) to any member of its executive or leadership teams.
Incentives are provided to the Operations team in line with APRA’s view of front line performance-based
remuneration. While Pioneer is not regulated by APRA, their views are considered best practice in the
financial services industry.
The Operational incentives program included the requirement to achievement a monthly compliance and
customer service gate-opener. No incentive is payable if this is not met, irrespective of the performance of
an individual against other key performances indicators.
Executives are incentivised based on Long Term Incentives (“LTIs”) through the issue of securities (in the
form of Performance and Indeterminate Rights (“Rights”) or Ordinary Shares) under the Pioneer Credit
Limited Equity Incentive Plan (“Plan”).
The terms of the Rights, generally are:
a)
b)
c)
d)
e)
Rights vest over a period of 3 to 5 years
Rights are issued for Nil consideration
Performance Rights convert to Ordinary Shares in the capital of Pioneer on a one-for-one basis
Indeterminate Rights may convert to Ordinary Shares in the capital of Pioneer on a one-for-one basis
or, alternatively, the Board may determine in its absolute discretion that a vested Indeterminate Right
will be satisfied by the Company making a cash payment in lieu of allocating Ordinary Shares at the 5
days Volume Weighted Average Price (“VWAP”) prior to each vesting date
Conditions may include the executive being employed at the vesting date and a minimum VWAP to be
achieved before vesting occurs.
The terms of any Ordinary Shares issued under the Plan are as follows:
a)
b)
A holding lock is applied to the Ordinary Shares for a period of 3-5 years; and
Ordinary Shares are issued for Nil consideration
Pioneer Credit Limited
30 June 2021
15
Performance
The following table shows the statutory key performance indicators of the group over the last five years
(Loss) Profit for the year attributable to owners of
the Group
Basic earnings (loss) per share (cents)
Dividend payments paid in financial year
Paid and relating to prior years 2H performance
Paid and relating to current year 1H performance
Dividend payout ratio
Closing share price
(Decrease) / Increase in share price
2021
$’000
2020
$’000
2019
$’000
2018
$’000
2017
$’000
(19,655)
(30.43)
-
-
-
N/A
$0.50
75.4%
(40,084)
(63.36)
-
-
-
N/A
$0.29
(89.4)%
4,281
6.88
7,476
4,752
2,724
N/A
$2.70
(14.8)%
17,600
28.88
7,273
3,219
4,054
50%
$3.17
33.2%
10,753
20.77
5,169
3,071
2,098
49%
$2.38
38.1%
Dividend payout ratio for FY18 and prior is calculated based on dividends paid as a ratio to the reported profit
for the financial year performance from which the dividend was declared.
For FY19 the dividend payment of $2.7m was declared based on the half-year reported profit of $5.5m. The
dividend payout ratio was therefore 50% for this payment. It is not meaningful to present this ratio for the full
year given the final full year result. No dividend has been declared since HY19.
Pioneer Credit Limited
30 June 2021
16
2. Remuneration governance
Overview
The Remuneration Committee is a committee of the Board which has clear responsibilities and a documented
role. To support them, there is a robust internal framework, which includes:-
-
-
-
-
-
a strong and embedded corporate culture, built around the Pioneer Principles;
a risk register that records Pioneer’s identified risks, the likelihood and consequences of a risk occurring
and action taken or to be taken to reduce those risks;
a comprehensive controls register that provides visibility on the adequacy of controls in place;
policies and procedures around key processes; and
a Delegation of Authority that specifies delegations from the Board to the Managing Director and from
the Managing Director to management.
The elements of this framework are regularly reviewed and well understood throughout the Company.
Role of the Remuneration Committee
The Remuneration Committee is responsible for making recommendations to the Board on:
a) Base salaries for executives, and Board and Committee fees for non-executive Directors; and
b)
The adequacy and structure of any short term and long term incentives including equity-based
remuneration plans and the quantum provided to executives.
The Corporate Governance Statement and the Remuneration Committee Charter provide further information
on the role of this Committee.
The Committee reviews its remuneration strategy at least annually to ensure that the Company’s
remuneration structures are fair and support the attraction and retention of quality people who are aligned to
the Company’s goal of sustainable long-term earnings growth.
The Managing Director and other executives do not participate in any decision relating to their own
remuneration, nor that of their peers.
Use of remuneration consultants
To ensure the Remuneration Committee is fully informed when making decisions it will periodically seek
external advice. Any appointment is made in accordance with the ASX Corporate Governance Principles and
Recommendations and is made free from influence from executives.
The Company has previously engaged consultants to assist in the review of remuneration of its executives.
In FY21 the Committee decided to move away from this method, having considered the value delivered for
shareholders previously, and used a number of advisors and remuneration reports as required to consider
Board and executive remuneration for FY21.
Pioneer Credit Limited
30 June 2021
17
Pioneer Credit’s securities trading policy
The Securities Trading Policy imposes trading restrictions on all employees, contractors and consultants who
are considered to be in possession of market sensitive information.
On 1 September 2020, the Company amended its Securities Trading Policy to replace share trading windows
with prohibited trading periods. These prohibited periods include the 30 day period prior to and 3 day period
from release of the full year and half year results to the ASX and the 30 day period prior to and 3 day period
from the AGM.
Executives are prohibited from entering into contracts to hedge their exposure to any securities held in the
Company.
3. Executive remuneration
Executive remuneration strategy
The Board recognises that satisfying appropriate remuneration expectations is important in attracting and
retaining quality people and does this through its remuneration strategy.
As an acquirer of assets that typically liquidate over a period of up to 10 years, the Board recognises the
importance of appropriately incentivising executives such that they are accountable for the most significant
part of tenure of acquired assets. In that regard, executives are primarily incentivised with equity.
Structuring employee remuneration to align with the life of the assets Pioneer acquires is consistent with
Pioneer’s differentiated servicing approach and reflects the Board’s commitment to maintaining an executive
that is focused on making decisions for the long-term health and growth of the Company.
Executives may be provided LTIs through the issue of Rights in the Company, vesting over a period of 3-5
years after the grant of the award and/or through the issue of Ordinary Shares in the Company, with a holding
lock applied for a period of 3 years. This structure ensures executives are retained and incentivised to
continue delivering sustainable long-term earnings of the business.
In limited cases, the Board may recognise individuals who are key to a process by making an ex-gratia
payment in recognition of past performance on the completion of that process. In FY21 ex-gratia payments
were made to three executives, who were key to the recent refinancing process.
Fixed remuneration
Fixed remuneration consists of base salary and superannuation as per the Superannuation Guarantee
(Administration) Act 1992.
The Managing Director reviews the performance of his executives by meeting each at least quarterly to
discuss their performance, and then separately assesses the performance of the executive team as a whole.
The review process is consultative in nature and contains a subjective assessment of the executive’s
performance and responsibilities and the setting of expectations.
The Chair of the Remuneration Committee meets regularly with the Managing Director to discuss several
objectives including individual performance, strategy, leadership, management and financial performance.
Pioneer Credit Limited
30 June 2021
18
The Chair also obtains feedback from other Directors on the performance of the Managing Director, at least
twice per year and provides that feedback back to him. The Nomination Committee completes a formal
performance evaluation of the Managing Director at least annually against the stated objectives.
Remuneration for all executives is reviewed at least annually. There is no guaranteed increase in any
executive’s employment contract.
Short term incentive
No executive was paid a short term incentive during FY21.
Long term incentives
At the Annual General Meeting held on 29 October 2014, shareholders approved the Pioneer Credit Equity
Incentive Plan (‘the Plan’). At the 2017 Annual General Meeting the Company refreshed the Plan under ASX
Listing Rule 7.2 (Exception 9(b)). The Plan was further refreshed at the 2020 Annual General Meeting.
Objective
The Plan provides participants with an equity incentive that recognises their contribution to the achievement
by the Company of its strategic goals and to provide a means of attracting, rewarding and retaining skilled
employees. Proposed grants of LTI are generally awarded retrospectively after considering the performance
of the executive over the previous 12 months, and then considered with the executive’s relative value to the
business in the future.
Participation
Participation in the Plan is at the sole discretion of the Board.
Assessment of performance
The Board reviews and approves the performance assessment and any LTI award for each eligible executive.
Sustained performance is required by executives over the life of the assets the Company acquires and is
consistent with the Board’s commitment to maintaining an executive that is focused on making decisions for
the long term health and growth of the Company.
Payment method
LTI awards are provided in grants of Performance Rights, which vest into Ordinary Shares on the
achievement of service conditions, Indeterminate Rights which exist where the Board, in their absolute
discretion, determine for the rights to vest into shares on the achievement of service conditions or to make a
cash payment equivalent to the value of vested rights or Ordinary Shares which have a trading lock applied
for a period of years.
Pioneer Credit Limited
30 June 2021
19
Long term incentive awards in place during the year
LTI awards were made under the Plan on 30 September 2020 as follows:
Instrument
Quantum
Grant Date
Key performance measures Employment at vesting date
Performance Rights for Ordinary Shares
3,250,000 Performance Rights
23 September 2020
Performance period
Dividends
Fair value, vesting date and
fully vested period schedule
The Company’s Shares trade at a VWAP of +>$1.00 for a period of at least
30 days prior to the vesting date.
23 September 2020 to 23 September 2024
No dividends are paid on Performance Rights yet to vest
100%
$239,850
23 September 2024
Pioneer Credit Limited
30 June 2021
20
4. Non-Executive Director Arrangements
On appointment to the Board each Non-Executive Director enters into an agreement with the Company which
sets out the policy to remunerate Non-Executive Directors at a fixed fee for time and responsibilities not linked
to individual performance.
Non-Executive Directors fees for FY21 were:
Chairman Fee
$160,000 (plus Superannuation)
Audit and Risk Management Committee Chair $120,000 (plus Superannuation)
Non-Executive Director
$100,000 (plus Superannuation)
Non-Executive Director fees have remained at the same level since 27 September 2017.
A Non-Executive Director is not entitled to receive performance based remuneration. They may be entitled
to fees or other amounts, as the Board determines, where they perform duties outside the scope of the
ordinary duties of a Director. They may also be reimbursed for out of pocket expenses incurred.
The maximum pool of non-executive director fees approved by shareholders at the 29 November 2018 AGM
was $800,000.
Pioneer Credit Limited
30 June 2021
21
5. Statutory remuneration disclosures
The following tables details KMP remuneration in accordance with applicable accounting standards.
Statutory remuneration tables
Non-Executive Directors
Year
Cash
salary
Non-
monetary
benefits
Fixed remuneration
Annual
and long
service
leave
Post-
employment
benefits
Variable
remuneration
Other Termination
benefits
Cash
bonus
Post-
employment
benefits
Options
Indeterminate
Rights
Total
Mr Michael Smith
2021
160,000
2020
160,000
Ms Andrea Hall
2021
120,000
2020
119,615
Ms Ann Robinson1
2021
93,462
2020
100,000
Mr Peter Hall 2
2021
47,308
2020
n/a
Mr Stephen Targett³
2021
6,923
2020
n/a
Ms Michelle d’Almeida4
2021
4,231
2020
n/a
Total
2021
431,924
2020
379,615
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,200
15,200
11,400
11,363
8,879
9,500
4,494
n/a
658
n/a
402
n/a
41,033
36,063
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 Ms Ann Robinson resigned effective 7 June 2021
² Mr Peter Hall appointed effective 11 January 2021
³ Mr Stephen Targett appointed effective 7 June 2021
4 Ms Michelle d’Almeida appointed effective 16 June 2021
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
175,200
175,200
131,400
130,978
102,341
109,500
51,802
n/a
7,581
n/a
4,633
n/a
472,957
415,678
Pioneer Credit Limited
30 June 2021
22
Executive Key Management Personnel
Fixed remuneration
Variable remuneration
Year
Cash salary
Non-
monetary
benefits
Annual
and long
service
leave
Post-
employment
benefits
Other4
Termination
benefits
Cash
bonus
Post-
employ-
ment
benefits
Options Performance
Rights
Total
Mr Keith John
2021
2020
752,885
14,268
8,387
25,000
200,000
692,604
14,268
35,573
25,000
-
Ms Susan Symmons
2021
2020
271,038
14,268
42,147
25,000
150,000
246,885
11,844
36,025
23,438
Ms Andrea Hoskins
2021
2020¹
321,231
14,268
21,389
25,000
20,923
926
1,665
1,988
Mr Jason Musca 2
2021
2020
308,923
19,569
-
-
22,477
25,000
1,759
1,859
Mr Barry Hartnett 3
-
-
-
-
-
-
12,308
-
-
-
-
-
-
-
-
301,154
14,268
46,839
25,753
100,000
14,601
926
1,123
1,387
-
2021
2020
Total
2021
2020
1,955,231
994,582
57,072
27,964
141,239
76,145
125,753
53,672
450,000
-
12,308
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,573,733
594,195
4,168,468
-
-
-
-
-
-
-
-
-
712,223
1,479,668
30,934
533,387
69,580
387,772
6,919
388,807
-
25,502
-
-
368,708
23,187
148,142
636,156
9,301
27,338
-
-
2,573,733
-
780,190
791,104
6,095,526
1,943,467
1 Andrea Hoskins commenced effective 8 June 2020
2 Jason Musca commenced effective 25 May 2020 and resigned effective 4 June 2021
3 Barry Hartnett has been employed by the Company since 29 May 2013, and commenced as a member of KMP from 8 June 2020
4 Represents ex-gratia payments
Pioneer Credit Limited
30 June 2021
23
Proportion of fixed and variable remuneration
The following table shows the proportion of remuneration that is fixed and that which is linked to performance.
Name
Executive Director
Mr Keith John
Executive Key Management Personnel
Ms Susan Symmons
Ms Andrea Hoskins
Mr Jason Musca¹
Mr Barry Hartnett
2021
2021
2021
2021
2021
¹ Jason Musca resigned effective 4 June 2021
Contractual arrangements with senior executives
Fixed remuneration
At risk – STI
At risk – LTI
24%
94%
98%
100%
76%
-
-
-
-
-
76%
6%
2%
-
24%
The terms of employment for the Company’s executives are formalised in service agreements. There are no
benefits payable to any executive on termination. The significant provisions of each service agreement are:
Employee
Position
Salary
Mr Keith John
Managing Director
Ms Susan Symmons
Company Secretary
Ms Andrea Hoskins
Chief Operating Officer
Mr Barry Hartnett
Chief Financial Officer
$778,500 per annum
plus superannuation
$350,000 per annum
plus superannuation
$450,000 per annum
plus superannuation
$450,000 per annum
plus superannuation
Term of agreement and notice
period
Continuing agreement with 12
months’ notice by either party
Continuing agreement with 3
months’ notice by either party
Continuing agreement with 6
months’ notice by either party
Continuing agreement with 6
months’ notice by either party
Pioneer Credit Limited
30 June 2021
24
6. Equity instruments held by KMP
The tables below show the number of Performance Rights or Indeterminate Rights, Options and Ordinary
Shares in the Company held during the financial year by KMP, including their close family members and
entities related to them.
Performance rights or indeterminate rights
Name
Issued
balance at
the start
of the year
Granted
Vested
Forfeit
Balance at the
end of the year
Unvested
Indeterminate Rights
Executive Director
Mr Keith John
1,000,000
-
(125,000)
-
875,000
875,000
Performance Rights
Executive Key Management Personnel
Ms Susan Symmons
Mr Barry Hartnett
Ms Andrea Hoskins
Mr Jason Musca¹
Total
112,500
289,500
-
-
1,402,000
1 Mr Jason Musca resigned effective 4 June 2021.
300,000
1,250,000
500,000
500,000
2,550,000
(67,500)
(29,500)
-
-
(222,000)
-
-
-
(500,000)
(500,000)
345,000
1,510,000
500,000
-
3,230,000
345,000
1,510,000
500,000
-
3,230,000
Performance Rights and Indeterminate Rights by their nature do not have an exercise price.
Executive Share Plan
250,000 Ordinary Shares remain from the shares issued to executives (excluding the Managing Director)
under a share purchase facility of 18 July 2017. The key terms are:
a)
b)
c)
d)
e)
The price of each Ordinary Share issued was equal to the 5 day VWAP as at 1 July 2017 (namely
$2.2864);
The facility accrues interest at normal commercial rates;
The shares are secured for the benefit of the Company;
All dividends paid on any Ordinary Shares owned by the executive will be applied in full against the
facility; and
The facility is not recognised as a loan as the Company only has recourse to the value of the Ordinary
Shares.
Name
Issued balance at
the start of the year
Granted as
compensation
Repaid during the
year
Balance at
the end of
the year
Executive Key Management Personnel
Ms Susan Symmons
Mr Leslie Crockett1
Total
250,000
250,000
500,000
1 Mr Leslie Crockett resigned effective 3 April 2020
-
-
-
-
(250,000)
(250,000)
250,000
-
250,000
Pioneer Credit Limited
30 June 2021
25
Options
Name
Executive Director
Mr Keith John
Shareholdings
Name
Issued balance at
the start of the year
Granted
Vested
Forfeit
Balance at the
end of the year
Unvested
-
8,000,000
(5,000,000)
-
3,000,000
3,000,000
Balance at the start of
the year
Other changes during
the year
Balance at the end of the
year
Non-Executive Directors
Mr Michael Smith
Ms Ann Robinson¹
Ms Andrea Hall
Mr Peter Hall²
Mr Stephen Targett³
Ms Michelle d’Almeida4
Total – Non-Executive Directors
Executive Director
Mr Keith John
Executive Key Management Personnel
Ms Susan Symmons
Mr Barry Hartnett
Ms Andrea Hoskins
Mr Jason Musca5
Total – Executive Key
Management Personnel
695,940
15,000
-
-
-
-
710,940
5,259,124
342,957
138,491
-
-
5,740,572
150,000
(15,000)
97,887
-
-
-
232,887
808,337
75,834
29,500
-
-
913,671
845,940
-
97,887
-
-
-
943,827
6,067,461
418,791
167,991
-
-
6,654,243
Total held by the Board and KMP
6,451,512
1,146,558
7,598,070
1 Ms Ann Robinson resigned effective 7 June 2021
² Mr Peter Hall appointed effective 11 January 2021
³ Mr Stephen Targett appointed effective 7 June 2021
4 Ms Michelle d’Almeida appointed effective 16 June 2021
5 Mr Jason Musca resigned effective 4 June 2021
Pioneer Credit Limited
30 June 2021
26
7. Other transactions with KMP
Leases entered into with related parties
Mr Keith John is the Sole Director and Secretary of Avy Nominees Pty Limited, the trustee of The John Family
Primary Investment Trust (“JFPIT”). JFPIT is the owner of 190 Bennett Street, East Perth which is leased by
the Company. The lease expires on 1 January 2022, is at arm’s length terms and for the year ended 30 June
2021 the net amount of $51,922 was paid to JFPIT in respect of the lease. No amount was owing to the related
party at 30 June 2021.
Loans from related parties
Medium Term Notes
Mr Keith John is a Director and Secretary of Midbridge Nominees Pty Ltd, the trustee of the KR & AN John
Family Superannuation Fund (“JFSF”).
JFSF holds 500 medium term notes, with a face value of $500,000. The notes were issued on an arm’s length
basis. $33,999 in interest and $2,500 in consent fee were paid on these notes during the financial year.
Participation in the Senior Facility Agreement
Mr Keith John is the Sole Director and Secretary of Midbridge Investments Pty Ltd (“Midbridge”). On 16
September 2020 Midbridge became a lender to the Company in the sum of $1 million under the SFA.
Midbridge received 83,337 unlisted Warrants with a value of $63,753 and was paid $131,591 in interest and
upfront fee of $10,000 during the year.
In consideration of other syndicate members entering into the SFA, Midbridge provided the other syndicate
members a real estate backed guarantee and mortgage security to the value of $2.5m. Midbridge was paid a
fee of $125,000 for that guarantee, and its Facility Fees of $50,660 including reimbursement of legal costs of
$660 for entering into that arrangement on a full indemnity basis.
Ms Sue Symmons is the Sole Director and Secretary of Shucked Investments Pty Ltd (“Shucked”).
On 16 September 2020 Shucked became a lender to the Company in the sum of $100,000 under the SFA.
Shucked Investments received 8,334 unlisted Warrants with a value of $6,376 and was paid $13,159 in
interest and upfront fee of $1,000 during the year.
Pioneer Credit Limited
30 June 2021
27
Insurance of officers
During the year the Company paid a premium to insure its Directors and Officers.
The exposures insured include legal costs that may be incurred in defending proceedings that may be brought
against people in their capacity as officers of the Group, and any other payments arising from liabilities
incurred in connection with such proceedings. This does not include such liabilities that arise from conduct
involving a wilful breach of duty or the improper use of their position or of information to gain advantage for
themselves or someone else or to cause detriment to the Company. It is not possible to apportion the premium
between amounts relating to the insurance against legal costs and those relating to other liabilities.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party,
for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under
section 237 of the Corporations Act 2001.
Pioneer Credit Limited
30 June 2021
28
Non-audit services
Deloitte Touche Tohmatsu (“Deloitte”) were appointed auditors on 25 November 2019.
The Company may decide to engage the auditor for matters additional to their statutory audit duties.
The Board has considered advice received from the Audit and Risk Management Committee, and is satisfied
that the provision of the non-audit services is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001 because:
a) all non-audit services have been reviewed by the Audit and Risk Management Committee to ensure
they do not impact the impartiality and objectivity of the auditor; and
b) none of the services undermine the general principles relating to auditor independence as set out in
APES 110 Code of Ethics for Professional Accountants.
A copy of the Auditor’s Independence Declaration under section 307C of the Corporations Act 2001 is on
page 30. During the year the following fees were paid or payable for non-audit services.
2021
$
2020
$
Deloitte Touche Tohmatsu
Total remuneration for non-audit services
165,000 118,272
PricewaterhouseCoopers Australia
International Network firms of PricewaterhouseCoopers Australia
Payroll and registration services
-
28,527
Rounding of amounts
The Company is of a kind referred to in ASIC Corporations Instrument 2016/191 (Rounding in
Financial/Directors’ Reports) relating to the ‘rounding off’ of amounts in the Directors’ Report. Amounts in the
Directors’ Report have been rounded off in accordance with that instrument to the nearest thousand dollars,
or in certain cases, to the nearest dollar.
This report is made in accordance with a resolution of Directors.
Keith John
Managing Director
Perth
31 August 2021
Pioneer Credit Limited
30 June 2021
29
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Brookfield Place Tower 2
123 St Georges Tce
Perth WA 6000
GPO Box A46
Perth WA 6837
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
31 August 2021
The Board of Directors
Pioneer Credit Limited
Level 6, 108 St Georges Tce
Perth WA 6000
Dear Directors
Auditor’s Independence Declaration to Pioneer Credit Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration
of independence to the directors of Pioneer Credit Limited.
As lead audit partner for the audit of the financial report of Pioneer Credit Limited for the year ended 30 June
2021, I declare that to the best of my knowledge and belief, there have been no contraventions of:
• The auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
• Any applicable code of professional conduct in relation to the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
Leanne Karamfiles
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
Corporate Governance Statement
The Board of Directors is committed to achieving the highest standards of corporate governance and has
the Corporate Governance Principles and
reviewed
Recommendations (4th edition) published by the ASX Corporate Governance Council.
its corporate governance practices against
The 2021 Corporate Governance Statement is dated 30 June 2020 and reflects the corporate governance
practices in place throughout the 2020 financial year and was approved by the Board on 27 August 2021.
The Group's Corporate Governance Statement can be viewed at:
https://pioneercredit.com.au/documents/corporate/governance/210827%20Corporate%20Governance%20
Statement%20-%20Final.pdf
Risk Management Framework
The overall risk appetite of Pioneer is to seek and take an appropriate and balanced range of risks that deliver
Pioneer’s strategic objectives while seeking to reduce or eliminate those risks that do not support these
objectives, where it is cost effective to do so.
In managing Pioneer’s risk exposure and in promoting a consistent manner in which activities and processes
are being undertaken across the business, the following are in place to facilitate this alignment:
Policies, Procedures & Guidelines
Management Level Controls
Controls Register
Compliance Obligations Register
Compliance Calendar
Risk Monitoring
Internal Audit
Policies, Procedures & Guidelines
In addition to those policies recommended by the ASX Corporate Governance Council Guidelines (e.g. Board
and Committee Charters, Code of Conduct, Conflict of Interest Policy, Risk Management Policy and
Whistleblower Policy), policies, procedures & guidelines are in place across all key processes and business
areas to facilitate the following:
Pioneer Credit Limited
30 June 2021
31
Consistency in the manner processes are undertaken and controls adopted, leading to predictable /
repeatable results;
Continuity in the process being performed from one individual to the next, especially where processes
/ controls are being performed by one or a handful of individuals (i.e. to reduce exposure to key
dependency risk); and
Efficiency in executing a process by reducing (where possible) uncertainty and ambiguity.
Management Level Controls
As part of Pioneer’s Line of Defence (LOD) model, management level controls (i.e. preventative and detective
manual / system controls) are implemented to provide internal / external stakeholders with a level of comfort
that key processes are being undertaken as intended (i.e. 1st LOD). These controls are captured within
Pioneer’s Controls Register.
Controls Register
Pioneer has a Controls Register that documents existing key controls and corresponding risk / obligations, in
providing visibility on the adequacy of controls in place to mitigating existing / emerging key risks, or in
complying with applicable regulatory and contractual obligations. The Controls Register establishes
accountabilities and facilitates monitoring and reporting activities, as part of Pioneer’s risk governance
framework and LOD model.
Compliance Obligations Register
Pioneer’s Compliance Obligations Register is a tool that management and the Audit & Risk Management
Committee monitor compliance obligations throughout the business and ensure that these obligations are
met.
Compliance Calendar
Pioneer’s Compliance Calendar is a tool that the Pioneer Audit & Risk Management Committee uses to
ensure that its obligation to review and consider Compliance related matters is maintained. The Calendar
sets out the Committee’s timetable for the coming year and allocates time to review various areas of
compliance and their frequency.
Risk Monitoring
In ensuring that Pioneer’s activities are conducted in a manner that is consistent with its risk appetite, the
following forums and monitoring initiatives have been implemented:
Audit & Risk Management Committee
Operational Risk Management Committee
Executive Leadership Group
Information Technology Governance Group
Independent Controls Assessment
In assessing if the controls captured with the Controls Register described above continues to be effectively
designed (in mitigating key risks and complying with obligations), and effectively operated (i.e. being
conducted in the manner and frequency required), periodic control assessments are undertaken by
Pioneer Credit Limited
30 June 2021
32
independent personnel (i.e. Operational Risk Management team). This forms part of Pioneer’s LOD model
(i.e. 2nd LOD).
The scope, frequency and approach of these periodic control assessments are clearly defined on the Controls
Register against each respective control.
Internal Audit
The Company has an Operational Risk Manager who objectively and independently reviews the Company’s
business processes, evaluates risk management procedures and conducts internal audit and risk
management reviews. This initiative forms part of Pioneer’s LOD model (i.e. 3rd LOD).
Pioneer Credit Limited
30 June 2021
33
Pioneer Credit Limited ABN 44 103 003 505
Annual Report
For the year ended 30 June 2021
Financial Statements
Contents
Consolidated statement of financial position 35
Consolidated statement of profit or loss and other comprehensive income
36
Consolidated statement of changes in equity
37
Consolidated statement of cash flows 38
Notes to the consolidated financial statements
40
Pioneer Credit Limited
30 June 2021
34
Consolidated statement of financial position
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Current tax asset
Purchased debt portfolio
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Right of use assets
Other non-current assets
Deferred tax assets
Purchased debt portfolio
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables and liabilities1
Borrowings
Provisions1
Lease liabilities
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Capital and reserves attributable to owners of Pioneer Credit Limited
Total equity
Note
2021
$’000
2020
$’000
13
14
18
15
16
16
17
18
12
15
20
19
21
17
19
17
21
10,373
855
818
53
73,397
85,496
351
1,558
4,930
2,286
-
175,697
184,822
11,019
1,844
1,182
634
87,255
101,934
1,070
932
7,440
-
2,761
172,792
184,995
270,318
286,929
4,558
425
2,427
3,060
10,470
200,656
3,327
1,196
205,179
5,571
206,292
1,898
2,568
216,329
-
5,722
919
6,641
215,649
222,970
54,669
63,959
24
24
81,755
11,874
(38,960)
54,669
80,049
3,870
(19,960)
63,959
54,669
63,959
1For improved transparency, amounts disclosed in prior year as “Accruals and other liabilities” have been re-categorised to either
“Provisions” or “Trade and other payables and liabilities” for the current year. Refer to notes [20] and [21] for further details.
The consolidated statement of financial position should be read in conjunction with the accompanying notes.
Pioneer Credit Limited
30 June 2021
35
Consolidated statement of profit or loss and other comprehensive income
Continuing operations
Interest income at amortised cost
Net impairment (loss) gain on PDPs
Other income
Employee expenses
Finance expenses
Direct liquidation expenses
Information technology and communications
Depreciation and amortisation
Consultancy and professional fees
Other expenses1
Fair value adjustments on financial assets
Gain on lease modification
Loss on sale consumer loans
(Loss) / Profit before income tax
Income tax (expense)/benefit
(Loss) / Profit for the period from continuing operations
Total comprehensive (loss) / income for the year is attributable
to:
Owners of Pioneer Credit Limited
(Loss) / Earnings per share
Basic (cents per share)
Diluted (cents per share)
Note
2021
$’000
2020
$’000
57,020
(4,286)
662
53,396
(30,634)
(26,699)
(1,997)
(4,013)
(3,783)
(2,385)
(3,212)
2,288
145
-
(16,894)
(2,761)
(19,655)
8
11
9
10
12
60,122
(6,320)
2,133
55,935
(34,816)
(38,472)
(4,057)
(4,251)
(4,345)
(6,322)
(4,560)
(682)
-
(2,263)
(43,833)
3,749
(40,084)
(19,655)
(40,084)
33
33
(30.43)
(30.43)
(63.36)
(63.36)
1 Immaterial amounts disclosed in prior year as “Travel and entertainment expenses”, “Occupancy costs” and “Impairment of tangible and
intangible assets” have been consolidated to “Other expenses” for the current year. Refer to note [10] for further details.
The consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
Pioneer Credit Limited
30 June 2021
36
Consolidated statement of changes in equity
Contributed
Equity
Note
$’000
Share
Based
Payment
Reserve
$’000
Warrant
Reserve
Retained
Earnings
Total
Equity
$’000
$’000
$’000
Balance at 1 July 2019
Deferred tax through equity
Total comprehensive (loss)/income for the year
Transactions with owners in their capacity as
owners:
Employee share scheme
Treasury shares and share based payments
Equity plans
Issue of treasury shares to employees
78,131
-
-
78,131
4,032
-
-
4,032
229
-
421
1,268
1,918
-
1,106
-
(1,268)
(162)
Balance at 30 June 2020
24
80,049
3,870
Balance at 1 July 2020
80,049
3,870
Deferred tax through equity
Total comprehensive (loss)/income for the year
-
-
80,049
-
-
3,870
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,576
(1,369)
(40,084)
(20,877)
102,739
(1,369)
(40,084)
61,286
-
917
-
-
917
229
2,023
421
-
2,673
(19,960)
63,959
(19,960)
63,959
(19,655)
(39,615)
(19,655)
44,304
Transactions with owners in their capacity as
owners:
Treasury share acquired
Treasury shares and share based payments
Equity plans
Issue of treasury shares to employees
Warrants issued
Warrants converted
(745)
-
-
426
-
2,025
1,706
-
2,970
-
(426)
-
-
2,544
-
-
-
-
7,485
(2,025)
5,460
-
655
-
-
-
-
655
(745)
3,625
-
7,485
-
10,365
Balance at 30 June 2021
24
81,755
6,414
5,460
(38,960)
54,669
The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Pioneer Credit Limited
30 June 2021
37
Consolidated statement of cash flows
Cash flows from operating activities
Receipts from liquidations1 of PDPs and services (inclusive of goods and
services tax)
Payments to suppliers and employees (inclusive of goods and services
tax)
Interest received 2
Interest paid
Net income taxation refund (paid)
Net cash inflow from operating activities before consumer loans
Cash flows from consumer loans:
Proceeds on sale of personal loan book
Net consumer loans recovered / (advanced)
Note
2021
$’000
2020
$’000
95,350
102,985
(41,122)
54,228
(50,704)
52,281
31
(42,040)
580
12,799
46
(5,134)
4,601
51,794
-
-
-
5,344
846
6,190
Net cash flow from operating activities
13
12,799
57,984
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangible assets
Proceeds on sale of other assets
Acquisitions of purchased debt portfolios - financial assets
Net cash flow from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Financing transaction costs
Lease payments
(Payments)/proceeds from Treasury shares and KMP loan
Net cash flow from financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of the financial year
(102)
(1,326)
2,288
(29,818)
(28,958)
(179)
(483)
-
(60,225)
(60,887)
169,000
(142,033)
(8,471)
(2,238)
(745)
15,513
141,725
(132,604)
(4,380)
(2,424)
421
2,738
(646)
11,019
10,373
(165)
11,184
11,019
1 Liquidations of PDPs are the recognised flow of economic benefits from the acquiring and servicing of PDPs including all
cash-flow sources from each portfolio’s respective purchase agreement.
2 Interest received represents interest earned on cash and cash equivalents.
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Pioneer Credit Limited
30 June 2021
38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the consolidated financial statements
1. Reporting entity
2. Basis of preparation
3. Going Concern
4. Significant events occurring in the current reporting period
5. Significant accounting policies
6.
Financial risk management
7. Segment information
8. Other Income
9.
Finance expenses
10. Other expenses
11. Employee expenses
12.
Income tax
13. Cash and cash equivalents
14. Trade and other receivables
15. Purchased debt portfolios
16. Property, plant and equipment and intangibles
17. Leases
a) Right of use assets
b)
Lease liabilities
18. Other assets
19. Borrowings
20. Trade and other payables and liabilities
21. Provisions
22. Events occurring after the reporting period
23. Financial Instruments
24. Equity
25. Capital management
26. Group structure
27. Parent entity financial information
28. Deed of cross guarantee
29. Contingencies
30. Commitments
31. Related party transactions
32. Share-based payments
33. Earnings / (Loss) per share
34. Remuneration of auditors
40
40
42
44
44
52
55
55
55
56
56
56
58
59
59
63
65
65
65
66
66
69
69
70
70
71
73
74
75
75
76
76
76
78
79
80
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
1. Reporting entity
The Consolidated Financial Statements for the financial year ended 30 June 2021 comprise Pioneer Credit
Limited (the “Company”), which is a “for-profit-entity” and a Company domiciled in Australia and its
subsidiaries (collectively, referred to as the “Group”) and the Group’s interest in associates and jointly
controlled entities. The Group’s principal activities over the financial year were acquiring and servicing
Purchased Debt Portfolio’s (“PDP’s”). The Company’s principal place of business is Level 6, 108 St Georges
Terrace, Perth, Western Australia.
2. Basis of preparation
a)
Statement of compliance
The Financial Report complies with Australian Accounting Standards and International Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
The Financial Report is a general-purpose financial report, for a “for-profit” entity which has been prepared in
accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standards and
other pronouncements of the Australian Accounting Standards Board.
The Financial Statements comprise the Consolidated Financial Statements of the Pioneer Group of
companies.
The Consolidated Financial Statements were authorised for issue by the Board of Directors on 31 August
2021.
b)
Basis of measurement
The Consolidated Financial Statements have been prepared on a historical cost basis and where applicable
at fair value for certain financial assets and financial liabilities.
c)
Functional and presentation currency
These Consolidated Financial Statements are presented in Australian Dollars (“AUD”).
The Group is of a kind referred to in ASIC Corporations Instrument 2016/191 dated 31 March 2016 and in
accordance all financial information presented in Australian dollars has been rounded to
the nearest thousand dollars ($000’s) unless otherwise stated.
d)
Use of estimates and judgements
The preparation of financial statements in conformity with AASB requirements requires management to make
judgements, estimates and assumptions that affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis, assumes a reasonable expectation
of future events and are based on current trends and economic data obtained both externally and within the
Group. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in
any future periods affected.
Pioneer Credit Limited
30 June 2021
40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates
have the most significant effect to the amounts recognised in the Financial Statements or which may result in
a material adjustment within the next financial year are included in the following note:
- Note 15 (p.59) – Purchased debt portfolios (“PDP’s”)
Taxation
Deferred income taxes arise from temporary differences between the tax bases of assets and liabilities and
their carrying amounts in the financial statements, which will result in taxable or deductible amounts in the
future. In evaluating the Company’s ability to recover deferred tax assets, management considers all available
evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, the results
of recent operations and events occurring after reporting date. The assumptions about future taxable income,
including PDP liquidations, require the use of significant judgement and may ultimately vary from
management’s best estimate.
- Changes in accounting policies and disclosures
The accounting policies adopted are consistent with those of the previous financial year except as follows:
Adoption of new and revised Accounting Standards
New and revised Standards and amendments thereof and interpretations effective for the current year that
are relevant to the Group include:
- AASB 2018-7 Amendments to Australian Accounting Standards – Definition of Material [AASB 101
and AASB 108];
- AASB 2018-6 Amendments to Australian Accounting Standards – Definition of a Business [AASB 3];
- AASB 2019-3 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform
[AASB 9, AASB 139 and AASB 7];
- AASB 2019-5 Amendments to Australian Accounting Standards – Disclosure of the Effect of New
IFRS Standards Not Yet issued in Australia [AASB 1054];
- Conceptual Framework for Financial Reporting and AASB 2019-1 Amendments to Australian
Accounting Standards – References to the Conceptual Framework;
- AASB 2020-4 Amendment to Australian Accounting Standards – COVID-19 Related Rent
Concessions.
During the year, the Company also revised its accounting policy in relation to upfront configuration and
customisation costs incurred in implementing Software-as-a-Service (“SaaS”) arrangements in response to
the IFRIC agenda decision clarifying its interpretation of how current accounting standards apply to these
types of arrangements. Previously the Company capitalised certain implementation and customisation costs
directly relating to internally development software where the Company obtains control over IP. Management
has assessed the change in policy and has determined there has been no material financial impact.
New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30
June 2021 reporting periods and have not been early adopted by the Group. These standards are not
expected to have a material impact on the entity in the current or future reporting periods and on foreseeable
future transactions.
Pioneer Credit Limited
30 June 2021
41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
3. Going Concern
The financial statements have been prepared on the going concern basis which assumes the realisation of
assets and the settlement of liabilities in the ordinary course of business.
At 30 June 2021, the Group generated a net loss before tax of $16.9m (2020: loss $43.8m) and has a positive
working capital of $75.0m (2020: $114.4m deficiency).
As detailed in Note 4, the Group entered into its current Syndicated Facility Agreement (“current SFA”) in
September 2020. At 30 June 2021 the borrowing under the SFA and Medium Term Notes (“MTN”) was
$206.0m.
In April 2021 Jarden Australia Pty Ltd was appointed as Corporate Advisor to the Company for the purposes
of arranging the refinancing of the current SFA (‘the refinancing”). A select number of suitable financiers have
been approached to provide indicative terms for a new senior finance facility to the Group.
At the date of signing this report, the refinancing has reached an advanced stage and the Directors and
management are currently considering indicative terms offered from a short list of potential financiers which
include significantly reduced interest rates and costs. Based on the level of interest from potential financiers
and the indicative terms being offered, the Directors are confident of executing a new senior finance facility
by the end of September 2021.
The current SFA is due to mature on 30 September 2022. Under the terms of the current SFA the Group can
rollover the facility if it extends, modifies refinances or replaces the Medium Term Notes (“MTNs”) within
certain conditions. The key terms of the SFA and MTNs are outlined in note 19.
The Group’s ability to meet its ongoing operational and financial obligations is primarily dependent on
executing a new senior finance facility to replace the current SFA and the ongoing compliance with the
undertakings and financial debt covenants that are in process of negotiation in relation to the new senior
finance facility.
The Directors believe that is appropriate to continue to adopt the going concern basis of preparation as the
Group is well advanced in refinancing the current SFA and the Directors are confident of executing a new
senior finance facility by the end of September 2021 with a significantly lower interest rate, an extended
maturity date and with appropriate covenants.
Management have prepared a detailed cash flow forecast (“the detailed cash flow forecast”) using the best
estimate assumptions and assuming the refinancing does not occur as planned in September 2021 and the
SFA is rolled over in September 2022. The Directors have assessed the detailed cash flow forecast based
on their expectation of PDP drivers including liquidations, acquisitions, and sales. In making their assessment
the Directors have considered the impact of COVID-19 on the Group’s performance on Purchased Debt
Portfolios (“PDP”) acquisitions and the flow-on impact to liquidations. The Directors have also considered
the impact of the Group’s operational focus on continuing to transition more customers onto payment
arrangements.
The current SFA and MTNs contain covenants which are closely linked to the carrying value of the PDPs and
are sensitive to the level and timing of PDP acquisitions, liquidations and sales. Under the terms of the current
SFA and MTNs, the covenants tighten between the date of this report and the maturity date of the current
SFA. The first such tightening occurs in March 2022. Whilst the detailed cash flow forecast prepared by
Management using their best estimate assumptions does not indicate any covenant breaches in the fifteen-
Pioneer Credit Limited
30 June 2021
42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
month period to 30 September 2022, this is highly dependent on the ability of the business to operate in line
with the detailed cash flow forecasts and future market conditions which are out of the control of the Group
and, as a result, may be subject to change.
If, subsequent to the signing of this report, a breach of a finance covenant or undertaking appeared likely to
occur or did occur, the Group has numerous options available to prevent or remedy any such breach under
the terms of the SFA, beyond increasing liquidations of PDPs. These include, but are not limited to:
Obtaining a waiver of any likely breach from the financiers;
Raising funds through an equity issue; or
selling non-core assets; or
selling part of its PDP portfolio.
In the event that a breach of a covenant is not waived by the financiers or remedied through one or a
combination of the above options in conjunction with the necessary approval of the majority of financiers, as
applicable, an event of default would occur, and the financiers could declare that all or a part of the debt
payable under the SFA to be due and payable on demand. In addition, any default under the SFA would
cause a cross default under the MTNs.
In the event that the refinancing does not occur as planned in September 2021 and has not been completed
by 31 March 2022, the Group’s ability to meet its ongoing operational and financial obligations would be
primarily dependent on:
i.
ii.
iii.
iv.
Achieving the detailed cash flow forecast for the period through to September 2022 which is
dependent on achieving the key assumptions in relation to EBITDA, including those in respect of PDP
acquisitions, liquidations and sales as well as a significant equity raise in March 2022;
The ongoing compliance with the financial debt covenants and other undertakings under the SFA and
MTNs;
The continued support of the current SFA financiers and MTN holders including, if necessary, these
financiers waiving any future breach of financial debt covenants and other undertakings; and
Successful refinancing or extension of the SFA on or prior to its initial maturity on 30 September 2022.
The Directors believe it is appropriate to continue to adopt the going concern basis of preparation for the
following reasons:
i.
ii.
Primarily, the Directors expect to complete the refinance of the current SFA by the end of September
2021;
Should the refinance not occur as planned;
a.
the Directors consider that the expected liquidity from forecasted PDP liquidations, PDP sales,
and a significant equity raising prior to March 2022 will be adequate to enable the Group to meet
its existing covenants, debts and obligations as and when they fall due for the fifteen-month
period to 30 September 2022; and
b. The Directors believe they would be able to secure an extension to the current SFA. To secure
the extension the Group would need to extend, modify, refinance or replace the MTNs, which the
Directors believe is highly probable for the following reasons:
o The Group has met all its coupon payments since inception of the MTNs;
o The Group has historically been able to achieve modifications to the terms and conditions
pursuant to the MTNs, most recently in June 2020 which resulted in a maturity extension and
an increase in the indebtedness limit of the MTNs; and
o The Group could offer the MTN financiers a higher coupon rate.
Pioneer Credit Limited
30 June 2021
43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
The key assumptions underpinning the Group’s cash flow forecasts are inherently uncertain and are subject
to variation due to factors which are outside the control of the Group. For example, Government or debt
vendor policy changes as a result of COVID could impact on the Group’s ability to acquire or liquidate PDPs.
Notwithstanding this, the Directors believe that it is appropriate to continue to adopt the going concern basis
of preparation.
4. Significant events occurring in the current reporting period
Senior Syndicated Facility Agreement
The Company entered into a syndicated facility agreement (“SFA”) of $189m in September 2020. As part of
the refinancing, the Company repaid $163.4m, comprised of $141.7m principal plus amounts for interest and
make whole. Further information about the SFA has been provided in Note 19.
Medium Term Notes
On 10 July 2020, holders of the MTN approved a series of modifications to the terms, subject to completion
being achieved under the SFA. This occurred on 16 September 2020. Further information about the MTN has
been provided in Note 19.
5. Significant accounting policies
a)
Basis of consolidation
Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Pioneer Credit
Limited as at 30 June 2021. Pioneer Credit Limited and its subsidiaries together are referred to in this financial
report as the (“Group”) or the (“Company”).
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group
controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through its power to direct the activities of the entity.
The acquisition method of accounting is used to account for business combinations undertaken by the Group.
Intercompany transactions, balances, and unrealised gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment
of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-
consolidated from the date that control ceases.
Associates
Associates are all entities over which the Group has significant influence but do not control or joint control.
This is generally the case where the Group holds between 20% to 50% of the voting rights or otherwise
demonstrates significant influence. Investments in associates are accounted for using the equity method of
accounting (described below), after initially being recognised at cost.
Pioneer Credit Limited
30 June 2021
44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
b)
Income tax
The income tax expense for the period is the tax payable on the current period's income based on the
applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary
differences and to unused tax losses.
The current income tax charge is calculated based on the tax laws enacted or substantively enacted at the
end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation. It establishes provisions where
appropriate based on amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.
However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred
income tax is also not accounted for if it arises from the initial recognition of an asset or liability in a transaction
other than a business combination, that at the time of the transaction, affects neither accounting nor taxable
profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or
substantially enacted by the end of the reporting period and are expected to apply when the related deferred
income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
The Group has implemented the tax consolidation legislation and its entities are taxed as a single entity and
the deferred tax assets and liabilities of these entities are offset in the consolidated financial statements.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised
in other comprehensive income or directly in equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity, respectively. Judgement has been applied on the uncertain tax
treatment resulting from the transition of PDP financial assets from fair value to be classified as measured at
amortised cost.
c) Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on
hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original
maturities of three months or less that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings
in current liabilities in the balance sheet.
d) Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using
the effective interest rate method, less loss allowance. Trade receivables are generally due for settlement
within 30 days. Trade and other receivables are presented as current assets unless collection is not expected
for more than 12 months after the reporting date.
The Group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables.
Pioneer Credit Limited
30 June 2021
45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
To measure the expected credit losses, trade receivables have been grouped based on shared credit risk
characteristics and the days past due.
The expected loss rates are based on the payment profiles over a 12 month period before 30 June 2021 and
the corresponding credit losses experienced within this period. The historical loss rates are adjusted to reflect
the current and forward looking information on macroeconomic factors affecting the ability of the customers
to settle the receivables.
Trade receivables are written off when there is no reasonable expectation of recovery. Impairment losses are
presented as net impairment losses within operating profit. Subsequent recoveries of amounts previously
written off are credited against the same line item.
e)
Purchased Debt Portfolios
Refer to Note 15 for detailed accounting policy.
f)
Property, plant and equipment
All property, plant and equipment acquired are stated at historical cost less depreciation. Historical cost
includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to the
Group and the cost of the item can be measured reliably. The carrying amount of any component accounted
for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to
profit or loss during the reporting period in which they are incurred.
The assets' residual values and useful lives are reviewed and adjusted if appropriate, at the end of each
reporting period and an asset's carrying amount is written down immediately to its recoverable amount if the
asset's carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are
included in profit or loss. When revalued assets are sold, it is Group policy to transfer any amounts included
in other reserves in respect of those assets to retained earnings.
Depreciation methods and useful lives
Depreciation of property, plant and equipment is calculated using the diminishing balance method to allocate
their cost or revalued amounts, net of their residual values, over their estimated useful lives. Certain leasehold
improvements and leased plant and equipment are depreciated on a straight line basis over the term of the
lease.
Plant and equipment
Furniture, fittings and equipment
Leasehold improvements
15% - 68%
15% - 50%
20% - 50%
Pioneer Credit Limited
30 June 2021
46
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
g)
Intangible assets
Software
Costs associated with maintaining software programmes are recognised as an expense as incurred.
Development costs that are directly attributable to the design and testing of identifiable and unique software
products controlled by the group are recognised as intangible assets where the following criteria are met:
it is technically feasible to complete the software so that it will be available for use
-
- management intends to complete the software and use it
-
-
there is an ability to use the software
it can be demonstrated how the software will generate probable future economic benefits, adequate
technical, financial and other resources to complete the development and to use the software are
available, and
the expenditure attributable to the software during its development can be reliably measured.
-
Directly attributable costs that are capitalised as part of the software include employee costs.
Capitalised development costs are recorded as intangible assets and amortised from the point at which the
asset is ready for use.
h) Leases
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying
asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and
impairment losses and adjusted for any re-measurement of lease liabilities. The cost of right-of-use assets
includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at
or before the commencement date less any lease incentives received. The recognised right-of-use assets are
depreciated on a straight-line basis over the lease term.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value
of lease payments to be made over the lease term. The lease payments include fixed payments less any
lease incentive receivable and variable lease payments that depend on an index or a rate. The lease payments
also include the exercise price of a purchase option reasonably certain to be exercised by the Group and
payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to
terminate. The variable lease payments that do not depend on an index or a rate are recognised as expense
in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease
commencement date as the interest implicit in the lease is not readily determinable. After the commencement
date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease
payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a
change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment
to purchase the underlying asset.
Pioneer Credit Limited
30 June 2021
47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Short-term leases and leases of low-value assets
The Group applies the low-value assets recognition exemption to leases that are considered of low value.
Lease payments on short-term leases (less than 12 months) and leases of low-value assets are recognised
as expenses on a straight-line basis over the lease term.
i) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial
year which are unpaid and are unsecured and are usually paid within 30 days of recognition. Trade and other
payables are presented as current liabilities unless payment is not due within 12 months from the reporting
date.
j) Borrowings
All borrowings are initially recognised at fair value which is usually their principal amount, net of directly
attributable transaction costs incurred. After initial recognition borrowings and interest are measured at
amortised cost using the effective interest rate method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent
that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the
draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be
drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the
facility to which it relates.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged,
cancelled or expired. Borrowings are classified as current liabilities unless the Group has an unconditional
right to defer settlement of the liability for at least 12 months after the reporting period.
k) Derivative liabilities
Derivative liabilities are accounted for at fair value through profit or loss. They are presented as current to the
extent they are expected to be settled within 12 months after the end of the reporting period.
An embedded derivative is a component of a hybrid contract that also includes a non-derivative host where
some of the cash flows of the combined instrument vary in a way similar to a standalone derivative, causing
some or all of the cash flows under the contract to be modified according to a specific financial variable i.e.
share price movement. A derivative that is attached to a financial instrument but is contractually transferable
independently of that instrument, or has a different counterparty, is not an embedded derivative, but a separate
financial instrument.
l) Provisions
Provisions for legal claims and make good obligations are recognised when the Group has a present legal or
constructive obligation as a result of past events, it is probable that an outflow of resources will be required to
settle the obligation and the amount has been reliably estimated. Provisions are not recognised for future
operating losses.
Pioneer Credit Limited
30 June 2021
48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Provisions are measured at the present value of management's best estimate of the expenditure required to
settle the present obligation at the end of the reporting period. The discount rate used to determine the present
value is a pre-tax rate that reflects current market assessments of the time value of money and the risks
specific to the liability. The increase in the provision due to the passage of time is recognised as an interest
expense.
m) Employee benefits
Short term obligations
Liabilities for wages and salaries, including non-monetary benefits such as annual leave expected to be settled
within 12 months after the end of the period in which the employees render the related service are recognised
in respect of employees’ services up to the end of the reporting period and are measured at the amounts
expected to be paid when the liabilities are settled. The liability for annual leave is recognised in the provision
for employee benefits. All other short-term employee benefit obligations are presented as payables.
Long service leave
Liabilities for long service leave are not generally expected to be settled wholly within 12 months after the end
of the period in which the employees render the related service. They are recognised in the provision for
employee benefits and measured as the present value of expected future payments to be made up to the end
of the reporting period using the projected unit credit method. Consideration is given to expected future wage
and salary levels, experience of employee departures and periods of service. Expected future payments are
discounted using rates published in the ‘Group of 100 Discount Rate Report and Discount Curve’. Re-
measurement as a result of experience, adjustments and changes in actuarial assumptions are recognised in
profit or loss. The obligations are presented as current liabilities in the consolidated balance sheet if the entity
does not have an unconditional right to defer settlement for at least 12 months after the reporting date,
regardless of when the actual settlement is expected to occur.
Share-based payments
The grant date fair value of equity-settled share-based payment awards granted to employees is generally
recognised as an expense, with a corresponding increase in equity, over the vesting period of the awards.
The amount recognised as an expense is adjusted to reflect the number of awards for which the related
service conditions are expected to be met, such that the amount ultimately recognised is based on the number
of awards that meet the related service conditions at the vesting date.
n) Contributed equity
Ordinary shares issued are classified as equity.
Where Pioneer Credit purchases the Company’s equity instruments as a result of a share-based payment
plan, the consideration paid, including any directly attributable incremental costs (net of income taxes) is
deducted from equity attributable to the owners of Pioneer Credit as treasury shares. Shares held in Pioneer
Credit Limited Equity Incentive Plan Trust are disclosed as treasury shares and deducted from contributed
equity.
Pioneer Credit Limited
30 June 2021
49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
o) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing:
a)
b)
the profit attributable to owners of the Company, excluding any costs of servicing equity
other than Ordinary shares; by
the weighted average number of Ordinary shares outstanding during the financial year,
adjusted for bonus elements in Ordinary shares issued during the year and excluding
treasury shares.
Diluted earnings per share
If basic earnings per share is a loss per share, then diluted earnings per share will reflect the same loss per
share as basic earnings per share, regardless of all dilutive potential Ordinary shares.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to
consider:
-
-
the after income tax effect of interest and other financing costs associated with dilutive
potential Ordinary shares; and
the weighted average number of additional Ordinary shares that would have been outstanding
assuming the conversion of all dilutive potential Ordinary shares.
p) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST
incurred is not recoverable from the taxation authority in which case it is recognised as part of the cost of
acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount
of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables
in the consolidated balance sheet.
Cash flows are presented on a gross basis.
q)
Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested
annually for impairment or more frequently if events or changes in circumstances indicate that they might be
impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the
asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of
assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are
reviewed for possible reversal of the impairment at the end of each reporting period.
Pioneer Credit Limited
30 June 2021
50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
r) Government grants
Grants that compensate the Group for expenses incurred are recognised through profit or loss on a systematic
basis in the periods in which the expenses are recognised.
To the extent that any of the Group entities are eligible to participate in the Government stimulus packages in
the wake of COVID, receipts of approximately $2.918m have been accounted for as government grants and
are presented as a reduction of the related employee costs and not revenue.
s) Foreign Currency translation
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of
the primary economic environment in which the entity operates (‘the functional currency’). The consolidated
financial statements are presented in Australian dollars, which is the Group’s functional and presentation
currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange
rates are generally recognised in profit or loss. They are deferred in equity if they relate to qualifying cash flow
hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign
operation.
Foreign exchange gains and losses that relate to borrowings are presented in the statement of profit or loss,
within finance costs. All other foreign exchange gains and losses are presented in the statement of profit or
loss on a net basis within other income or other expenses.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange
rates at the date when the fair value was determined. Translation differences on assets and liabilities carried
at fair value are reported as part of the fair value gain or loss.
Group companies
The results and financial position of foreign operations (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the
presentation currency as follows:
-
-
-
assets and liabilities for each balance sheet presented are translated at the closing rate at the
date of that balance sheet;
income and expenses for each statement of profit or loss and statement of comprehensive income
are translated at average exchange rates (unless this is not a reasonable approximation of the
cumulative effect of the rates prevailing on the transaction dates, in which case income and
expenses are translated at the dates of the transactions); and
all significant resulting exchange differences are recognised in other comprehensive income.
Pioneer Credit Limited
30 June 2021
51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
On consolidation, exchange differences arising from the translation of any net investment in foreign entities
and of borrowings and other financial instruments designated as hedges of such investments are recognised
in other comprehensive income.
6. Financial risk management
The Group's activities expose it to a variety of risks and its overall risk management programme focuses on
the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial
performance of the Group.
Risk management is the responsibility of Key Management Personnel. Policies approved by the Board ensure
that total risk exposure is consistent with the Group strategy, is in line with covenants and is within internal
risk tolerance guidelines.
The Group uses different methods to measure the different types of risk to which it is exposed which include
sensitivity analysis of interest rates, preparation and review of ageing analysis for credit risk and projected
cash flow analysis across the portfolio to manage the risk associated with financial assets and liabilities.
The main risks the Group is exposed to through its financial instruments are market risk, liquidity risk and
credit risk.
The Group periodically considers the need to make use of derivative financial instruments and hedging
arrangements to manage interest rate risk. There are currently no such arrangements in place.
The following table lists financial assets and liabilities, interest rate type and carrying value.
Financial assets
Cash and cash equivalents
Trade receivables
Purchased Debt Portfolios
Financial liabilities
Trade and other payables (excluding interest payable)
Borrowings – before transaction costs
Senior financier
Medium term notes
Other loans
Interest
rate
2021
$’000
2020
$’000
Variable
Variable
Fixed
10,373
855
249,094
11,019
1,844
260,047
Variable
4,358
5,571
Variable
Variable
Variable
161,092
39,639
-
166,560
39,499
233
Pioneer Credit Limited
30 June 2021
52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Market risk management
Interest Rate Risk
Risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
interest rates.
The Group’s main interest rate risk arises from long term loans and borrowings issued at both fixed and
variable interest rates. The Group’s fixed rate PDP’s and receivables are carried at amortised cost and not
subject to interest rate risk.
The Group analyses its interest rate exposure on a dynamic basis. Various scenarios are simulated taking
into consideration refinancing, renewal of existing positions and alternative financing. Based on these
scenarios, the Group calculates the impact on profit or loss of a defined interest rate shift. The scenarios are
run only for liabilities that represent the major interest-bearing positions. The simulation is done on a half
yearly basis to verify that the maximum loss potential is within the limit given by management.
To manage interest rate and credit risk arising from the investment in PDPs, the Group undertakes pricing
analysis prior to committing to any investment. This analysis includes consideration of information supplied
under due diligence, as well as macro and micro economic elements to which senior executives’ experience
and judgement is applied. In many instances there is knowledge of the expected performance of portfolios
with similar characteristics, however ultimately cash flows may differ to these expected.
Currency Risk
The risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
foreign exchange rates.
New Zealand operations expose the Group to foreign exchange risk. This may result in the fair value of
financial assets and liabilities fluctuating due to movements in exchange rates. Fluctuations in the New
Zealand dollar relative to the Australian dollar may impact the Group’s financial results, though the impact of
reasonably foreseeable exchange rate movements are unlikely to be material.
Liquidity risk management
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with
financial liabilities that are settled by delivering cash or another financial asset, including the risk of compliance
with covenants. A breach in covenant could potentially result in financiers calling the debt, if not remedied
within the agreed timeframe.
PDP risk is the risk that the Group will be impacted by its ability to acquire new PDP’s at sustainable pricing,
potentially impacting the future cash flow projections of the Group.
Prudent liquidity risk management requires maintaining sufficient cash reserves and debt funding to meet
obligations when due and through maintaining a reputable credit profile
Management monitors forecasts of the Group’s liquidity reserve based on expected cash flow. Cash flow is
forecast on a day-to-day basis to ensure that sufficient funds are available to meet requirements.
Pioneer Credit Limited
30 June 2021
53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Maturities of financial liabilities
The following table reflects an undiscounted contractual maturity analysis for financial liabilities. The timing of
cash flows represented in the table to settle financial liabilities reflects the earliest contractual settlement
dates.
Within 1
year
$’000
Between 1
and 2 years
$’000
Between 2
and 5 years
$’000
Carrying
amount
$’000
4,358
425
4,783
-
200,656
201,081
5,571
207,537
213,108
-
-
-
-
-
-
-
-
-
4,358
201,081
205,439
5,571
206,292
211,863
At 30 June 2021
Trade and other payables
Borrowings (incl. interest and make-whole)
At 30 June 2020
Trade and other payables
Borrowings (incl. interest and make-whole)
Credit risk management
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by
failing to discharge an obligation.
Credit risk arises from cash and cash equivalents, credit exposure to customers, including outstanding
receivables and committed transactions. Credit risk is managed on a Group basis. For corporate customers,
management assesses the credit quality of the customer. Individual risk limits are set by the Board.
Purchased or originated credit-impaired financial assets (“POCI”) are financial assets classified at amortised
cost that are purchased or originated at a deep discount that reflects incurred credit losses. At initial
recognition, POCI assets do not carry a separate impairment allowance; instead, lifetime expected credit
losses are incorporated into the calculation of the effective interest rate.
There are no significant concentrations of credit risk, whether through exposure to individual customers,
specific industry sectors and / or regions.
As at 30 June 2021 there were no material trade receivables that were past due and there are no trade
receivables that are in default. The Group’s trade receivables and consumer loans are subject to AASB 9’s
expected credit loss (“ECL”) model for recognising and measuring impairment of financial assets.
Given the nature of credit-impaired financial assets, the ultimate cash received may differ to the amount
recorded.
Impairment of trade and other receivables
Where a financial asset is measured at either amortised cost or fair value through other comprehensive
income, an entity shall recognise an allowance for expected credit losses.
Pioneer Credit Limited
30 June 2021
54
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
The loss allowances for financial assets are based on assumptions about risk of default and expected loss
rates. The estimation of credit exposure for risk management purposes is complex and requires the use of
models, as the exposure varies with changes in market conditions, expected cash flows and the passage of
time. The assessment of credit risk of a portfolio of assets entails further estimations as to the likelihood of
defaults occurring, of the associated loss ratio. As a result the ultimate cash received may differ to the amount
recorded.
Judgement has been applied on a forward-looking basis to assess the expected credit losses associated with
its financial assets carried at amortised cost.
The following table details the loss allowance balance and movement.
Trade and other receivables
2021
$’000
2020
$’000
Opening loss allowance as at 1 July
(Decrease)/increase in loss allowance recognised in profit or loss during the year
Loss allowance utilised during the year
Closing loss allowance at 30 June
97
(29)
-
68
65
32
-
97
7. Segment information
For management purposes, the Company is organised into one main business segment, which is the
provisions of financial services specialising in acquiring and servicing PDP’s. All significant operating
decisions are based upon analysis of the Company as one segment which is reviewed weekly by the KMP
(Managing Director, Company Secretary, Chief Operating Officer, and Chief Financial Officer) who is the Chief
Operating Decision Maker. The financial results from this segment are equivalent to the financial statements
of the Company as a whole.
8. Other income
Fees for services
Interest income
Other
9. Finance expenses
Bank fees and borrowing expenses
Interest and finance charges for liabilities not at fair value through profit or loss
Interest expense on lease liability
Senior financier make whole
Pioneer Credit Limited
30 June 2021
2021
$’000
631
31
-
662
2020
$’000
1,042
46
1,045
2,133
2021
$’000
1,172
25,047
480
-
26,699
2020
$’000
7,615
25,225
579
5,053
38,472
55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
10. Other expenses
Occupancy costs1
Administration expenses
Travel and entertainment1
Impairment of tangible and intangible assets1
2021
$’000
975
1,939
156
142
3,212
2020
$’000
1,348
2,173
526
513
4,560
1 Occupancy costs, Travel and entertainment and Impairment of tangible and intangible assets were disclosed as individual line items in
prior year’s Statement of profit or loss. These items have been consolidated to Other expenses in the current year.
11. Employee expenses
Wages and salaries
Superannuation
Change in liabilities for employee benefits
Share-based payment transactions
Other associated personnel expenses
12. Income tax
Income tax recognised in profit or loss
2021
$’000
23,027
1,925
300
3,721
1,661
30,634
2020
$’000
27,497
2,303
62
2,408
2,546
34,816
Current tax on profits for the year
Adjustments for current tax and deferred tax of prior periods
Deferred tax (benefit) expense
Income tax expense (benefit) expense
Income tax is attributable to:
(Loss)/Profit from operations
Deferred income tax expense / (income) included in income tax expense comprises:
(Decrease)/increase direct to equity
Decrease/(increase) in deferred tax assets of prior years
Decrease/(increase) in deferred tax assets
2021
$’000
-
-
2,761
2,761
2020
$’000
-
169
(3,918)
(3,749)
(16,894)
(43,833)
-
-
2,761
2,761
(1,369)
(127)
(2,422)
(3,918)
Pioneer Credit Limited
30 June 2021
56
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Numerical reconciliation of income tax expense to prima facie tax payable.
(Loss) / profit from operations before income tax expense
(16,894)
(43,833)
2021
$’000
2020
$’000
Tax at the Australian tax rate of 30.0% (FY19: 30.0%)
Non-deductible entertainment costs
Non-deductible share based payments
Under / (over) provision for prior year current and deferred taxation
Employee share scheme
Fair value write down of investment
Other non-deductible expenses and assessable income
Tax losses not recognised as a deferred tax asset
Income tax (benefit) / expense
Deferred tax assets and liabilities
The balance comprises temporary differences attributable to:
Employee benefits (annual leave)
Retirement benefit obligations (superannuation payable)
temporary differences (formation costs,
Other accrued expenses (audit, accounting, payroll tax)
Share issue expenses
Other
professional costs, fixed and intangible timings)
Prepayments
Provision for impairment (PDPs) through profit or loss
Provision for impairment (PDPs) through equity
Provision for leases
Deferred tax assets not recognised
legal and other
(5,067)
38
1,116
64
(224)
(193)
16
7,011
2,761
(13,150)
59
722
42
(69)
203
20
8,424
(3,749)
2021
$’000
364
68
432
81
-
2,100
(20)
(445)
1,369
535
(3,620)
-
2020
$’000
343
77
420
2,179
54
1,520
(13)
(1,708)
-
309
309
2,341
Net deferred tax assets
-
2,761
Pioneer Credit Limited
30 June 2021
57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
13. Cash and cash equivalents
a) Cash and cash equivalents
Cash at bank
2021
$’000
2020
$’000
10,373
11,019
b) Reconciliation of profit after income tax to net cash inflow from operating activities
(Loss) Profit for the period
Foreign currency translation
Other non-cash expenses
Fair value adjustment
Lease Liability Interest accrual
Non-cash employee benefits expense
Loss on sale of Consumer loan book
Other non-cash items
Non-cash financing amortisation
Income tax benefit
Depreciation and amortisation
Interest
Consumer loan interest accrual
Non-cash PDP movement
Change in operating assets and liabilities:
(Increase) / decrease in trade receivables
(Increase) / decrease in deferred tax assets through profit or loss
Decrease in income tax receivable
Decrease in interest payable
Increase in trade payables
Decrease in income tax payable
Increase in accruals and other liabilities
Net cash flow inflow from operating activities before changes in operating
assets
Non-cash investing and financing activities
Fair value adjustments on financial assets
Capitalised syndicate arrangement fee
Non-cash financing amortisation
2021
$’000
(19,655)
-
(18)
(2,262)
335
4,255
-
175
-
2,761
3,783
2,312
-
41,984
989
2,761
-
(25,196)
149
(581)
1,007
12,799
2020
$’000
(40,084)
63
158
1,087
579
2,411
2,263
-
6,536
-
4,345
25,144
(258)
47,380
(26)
(3,918)
4,770
-
1,067
-
277
51,794
2021
$’000
2,288
-
-
2020
$’000
(667)
(2,370)
(2,363)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
14. Trade and other receivables
Trade receivables
Accrued income
15. Purchased debt portfolios
Current
Non-current
2021
$’000
800
55
855
2021
$’000
73,397
175,697
249,094
2020
$’000
748
1,096
1,844
2020
$’000
87,255
172,792
260,047
PDPs are recognised at fair value at the date of purchase and are subsequently measured at amortised cost.
The fair value of PDPs at 30 June 2021 approximates the carrying value measured under amortised cost as
the discount rate applied to determine fair value would be similar to the effective interest rate (“EIR”).
PDPs are reported in accordance with the rules for purchased or originated credit–impaired assets, that is,
at amortised cost applying the EIR with the lifetime expected credit losses incorporated into the calculation
of the EIR at inception. This EIR is the rate that exactly discounts the estimated future cash receipts of the
purchased portfolio asset to the net carrying amount at initial recognition (i.e. the price paid to acquire the
portfolio). All changes in lifetime expected credit losses after the assets’ initial recognition are recognised as
an impairment change (gain or loss).
Cash flow projections are made at the portfolio level, which have an assumed life of 10 to 15 years depending
on the level of demonstrated consistency in consumer payment behaviour.
The carrying amount of each portfolio is determined at each reporting period by discounting projected future
cash flows to present value using the EIR as at the date the portfolio was acquired.
Movement on purchased debt portfolios at amortised cost is as follows:
At beginning of period
Debt portfolios acquired
Liquidations of PDPs
Interest income accrued
Net impairment (loss)/gain
2021
$’000
260,047
31,030
(94,717)
57,020
(4,286)
249,094
2020
$’000
249,776
57,651
(100,924)
59,864
(6,320)
260,047
Pioneer Credit Limited
30 June 2021
59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Critical judgement in applying the accounting policy
Classifying PDPs at amortised cost and the use of the EIR method requires the Group to estimate future cash
flows from PDPs at purchase date and at each balance sheet date.
Cash flow projections are made at the portfolio level, which are assumed to have a maximum life of 10 years.
For a small segment of the PDP assets (less than 4% of the carrying value) that have been part of the portfolio
for at least 3.5 years, the maximum expected life (and therefore future expected cash flows) is extended
based on demonstrated consistency in customer payment behaviour. This extension in the cash flow
projection period to a maximum of up to 11.5 years increases the carrying value of the asset by $9.6m.
Estimating the timing and amount of cash flows for both the calculation of EIRs and subsequent re-
measurement of the carrying amount of PDPs requires significant management judgement regarding key
assumptions. The underlying estimates that form the basis for amortised cost accounting depends on
variables including how the customer accounts were originated, serviced by which financial institution, the
quality and depth of information on the customer, if a customer has a scheduled payment arrangement, how
much time has elapsed since a payment was made against the accounts, outstanding amounts due, the time
elapsed since acquisition and the personal circumstances and characteristics of the customers. The Group
adjusts the carrying amount of the portfolios to reflect the revised estimated cash flows. Events or changes
in assumptions and management’s judgement will affect the recognition of revenue in the period.
The Group has used information and data obtained from debt sale vendors at acquisition and observation of
PDP attributes to determine expected cash flow forecasts for the calculation of EIRs. In addition, the Group
applies judgement and considers long term expectations of performance informed by historic analysis to
ensure the setting of EIRs is based on the best estimates that incorporate the lifetime expectation of credit
losses for the PDP. These cash flow forecasts are reviewed by management, with model overlays used to
address any modelling anomalies observed. Once the EIR is determined, it is set for the life of the PDP and
not revised. Any changes to PDP attributes from that point on, when additional information and data is
sourced or becomes available, will result in changes to cash flow forecasts and impairment gains or losses.
The Group has a policy of continually reviewing its estimation of cash flow forecasts.
Cash flow forecasts are generated using statistical models incorporating several factors which are formed by
customer and account level data, payment arrangement data, and the Group’s historical experience with
accounts which have similar key attributes.
Management also review the model on a portfolio basis to take into account factors which have impacted
historical, or will impact future performance and where necessary portfolios are calibrated to take into account
these known factors. The assumptions and estimates made are specific to the characteristics of each
portfolio.
If total forecasted cash flow projections utilised in determining the value of the portfolio were to change by
±5%, the carrying value of PDPs at 30 June 2021 of $249.1m would change by $12.5m in a downside
scenario and $12.5m in an upside scenario. If resolution of any uncertainty results in an increase or decrease
in carrying value of PDPs, this is recognised in the statement of profit or loss at that point in time as an
impairment gain or loss.
The valuation model continues to be enhanced with several changes incorporated since the previous
reporting period:
- Further updating and developing the emergence patterns (“EPs”) used to forecast cash flows at
tranche level to reflect recent performance in recoveries;
Pioneer Credit Limited
30 June 2021
60
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
- Further redevelopment of the classification model, whereby EPs are assigned based on
recoveries, the shape of the recoveries to date and certain tranche characteristics;
- Tranches < 36 Months On Book (“MOB”) underperforming to underwriting, with positive recovery
attributes are reverted to underwriting cashflows. Based on the underlying evidence,
management believe that the underwriting cashflows are reasonable and aligned to expectations;
and
Improvement in the model governance and internal control framework through increased
reporting and transparency, inclusion on the internal audit programme and automated transfer of
model output data to a central data warehouse.
-
In calculating the carrying value of the assets based on expected future cash flows, inclusive of an impairment
charge, the Company evaluates a range of possible outcomes and considers the time value of money, past
events and current and future economic conditions. All PDP assets are considered at a tranche level as these
are substantially homogeneous based on shared credit risk characteristics exhibited by purchased credit-
impaired debt.
Recovery methods include implementation and management of payment plans and communication with the
customer to tailor an appropriate outcome. When the Group has exhausted all practical recovery methods,
and there is no reasonable expectation of recovering cash flows from the financial asset, the financial asset
is sold or written off.
Impacts of an Uncertain Macroeconomic Environment
The uncertain macroeconomic environment and its potential impact on the operational performance of the
Company has the potential to affect forecast future cash flows and thereby impairment of the carrying value
of the PDP portfolio.
Through the past 18 months, the most significant factor affecting the current and future macroeconomic
environment has been the COVID global pandemic. The full effects of COVID on the Australian economy
were not yet known or quantifiable for much of 2020 and the impacts on specific industries and businesses
were expected to vary widely. At 30 June 2021, a level of uncertainty still exists but it is evident that the
consensus forecasts for economic indicators have improved significantly for Australia.
The Company’s focus on customer support, the underlying quality of its debt portfolio and the acceleration of
a payment arrangement growth strategy are all expected to combine to minimise the adverse impacts on
forecast future cash flows in the short term, with the medium to longer-term view being positive with a stronger
environment for consumers to pay down debt expected.
The model responds dynamically to changes in the Company’s ability to generate cash flows in line with
forecast. Lower performance against the forecast cash flows, which has been observed in the past 6-12
months, flows through to dampen expected cash flows in the forecast. The raw models do not assume a
recovery from underperformance in the forecast.
The scenarios modelled at 30 June 2021 considered the potential impacts of a deferral in cashflows over a
period of between 6 to 18 months, with varying periods of recovery of those deferred cash flows. Reflecting
the increased optimism in the economic outlook, a period of modest economic outperformance is considered
over the longer term.
In determining suitable timeframes for modelling these potential impacts, forward-looking economic
assumptions were considered. These include forecasts of unemployment rates, CPI, annual wage growth
and the RBA cash rate.
The overlay has been determined by considering the key metrics outlined in the following table:
Pioneer Credit Limited
30 June 2021
61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Unemployment rate
Headline CPI
Domestic demand growth
RBA cash rate
2021
%
4.9
1.7
6.5
0.10
2022
%
4.7
1.8
3.7
0.10
2023
%
4.5
2.0
2.6
0.10
The company has applied a probability-weighted view capturing various different scenarios which is the
generally accepted method of producing a macroeconomic overlay, outlined in the table below. This has
resulted in the inclusion of a negative macroeconomic overlay of $1.7m.
Weighting
Deferred
Cashflows
Period of
Impact
Recovery
Rate
Recovery
Period
Future
outperformance
Low impact scenario
Medium impact scenario
Severe downside scenario
35%
60%
5%
(5%)
(11%)
(17%)
6 months
10 months
18 months
100%
79%
38%
14 months
120 months
18 months
+6%
-
-
Weighted
Impact
$’000
8,448
(3,393)
(13,078)
Model Risk
Valuation model risk arises where key judgements may impact on the appropriateness of model outputs.
Commensurate with the complexity, materiality and business use of the model, the Group mitigated model
risk through:
Effective challenge and critical analysis involving objective, qualified and experienced parties in the
line of business in which the model is used; and
Output verification to ensure that the model performed as expected in line with design objectives
and business use.
Additional analysis is performed through back testing, stability testing and sensitivity analysis. The results,
outcomes and actions affirmed the conceptual soundness of the model. However, given the inherent
limitations of historic information predicting future liquidations, additional model risk mitigation is achieved
through appropriate downward calibration of the expected future cash flows, resulting in a negative model
risk overlay of $2.6m.
Operational Risk:
Operational risk arises where current or expected operational strategies or challenges may affect future
cashflows and lead to impairment gains or losses to the PDP carrying value.
The operational overlay is applied to recognise operational issues, challenges, initiatives or strategies that
are not considered in the modelling process and are expected to affect future cash flows.
The Group mitigates operational risk through strategies such as:
Continued focus on creating long term value through creation of payment arrangements and reduced
settlements;
Operational incentive schemes and workflow sequences that are applied consistently over long-term
periods; and
Account manager coaching, training and development that promotes long-term knowledge retention
and consistency of approach.
This has resulted in the inclusion of a negative operational overlay of $3.5m.
Pioneer Credit Limited
30 June 2021
62
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
16. Property, plant and equipment and intangibles
a) Property, plant and equipment
Plant and
equipment
$’000
Furniture,
fittings and
equipment
$’000
Leasehold
improvements
Total
$’000
$’000
2,834
(2,045)
789
789
179
(71)
(597)
-
300
2,914
(2,614)
300
300
51
(290)
59
2,965
(2,906)
59
665
(321)
344
344
-
-
(137)
-
207
665
(458)
207
207
43
(153)
97
708
(611)
97
5,663
(2,742)
2,921
2,921
-
-
(376)
(1,982)
563
3,477
(2,914)
563
563
8
(376)
195
9,162
(5,108)
4,054
4,054
179
(71)
(1,110)
(1,982)
1,070
7,056
(5,986)
1,070
1070
102
(820)
351
3,485
(3,290)
195
7,158
(6,807)
351
2020
At 1 July 2019
Cost
Accumulated depreciation
Net book amount
At 30 June 2020
Opening net book amount
Additions
Impairment charge
Depreciation charge
Lease incentive asset 1
Closing net book amount
Cost
Accumulated depreciation
Net book amount
2021
At 1 July 2020
Opening net book amount
Additions
Depreciation charge
Closing net book amount
At 30 June 2021
Cost
Accumulated depreciation
Net book amount
1 This amount represents leasehold improvements that have been presented together with the ROU Asset, the ROU Asset and the
leasehold improvements have the same depreciation profile.
Pioneer Credit Limited
30 June 2021
63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
b)
Intangible assets
2020
At 1 July 2019
Cost
Accumulated amortisation
Net book amount
Opening net book amount
Additions
Impairment charge
Amortisation charge
Closing net book amount
At 30 June 2020
Cost
Accumulated amortisation and impairment
Net book amount
2021
At 1 July 2020
Opening net book amount
Additions
Disposals
Impairment charge
Amortisation charge
Closing net book amount
At 30 June 2021
Cost
Accumulated amortisation and impairment
Net book amount
Software and
licenses
$’000
4,900
(3,398)
1,502
1,502
483
(334)
(719)
932
5,049
(4,117)
932
Software and
licenses
932
1,326
(105)
(142)
(453)
1,558
6,375
(4,817)
1,558
Total
$’000
4,900
(3,398)
1,502
1,502
483
(334)
(719)
932
5,049
(4,117)
932
Total
932
1,326
(105)
(142)
(453)
1,558
6,375
(4,817)
1,558
Pioneer Credit Limited
30 June 2021
64
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Amortisation methods and useful lives
In line with AASB138(118)(a),(b), the Group amortises intangible assets with a limited useful life using the
straight-line method over the following periods:
- Patents, trademarks and licences 3-5 years
3-5 years
-
IT development and software
The capitalised salaries were recognised as part of the IT development and software intangible assets. They
are recognised at their fair value at the date of acquisition and are subsequently amortised on a straight-line
based on the timing of projected cash flows of the contracts over their estimated useful lives.
17. Leases
a) Right of use assets
Balance at 1 July 2019 on adoption of AASB 16 Leases
Leasehold improvements and lease incentive
Depreciation
Balance at 30 June 2020
Balance at 1 July 2020
Leasehold improvements and lease incentive
Amortisation
Balance at 30 June 2021
b) Lease liabilities
Current lease liability
Non-current lease liability
Total lease liabilities
Maturity analysis - undiscounted
Lease commitments (principal and interest) at 30 June 2021
Within one year
Later than one year but no later than five years
$’000
10,135
(179)
(2,516)
7,440
7,440
-
(2,510)
4,930
2020
$’000
2,568
5,722
8,290
$’000
3,060
3,327
6,387
2021
$’000
3,060
3,327
6,387
Pioneer Credit Limited
30 June 2021
65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
The Group determines the lease term as the non-cancellable term of the lease, together with any periods
covered by an option to extend the lease if it is reasonably certain to exercise, or any periods covered by an
option to terminate the lease, if it is reasonably certain not to be exercised.
The Group has the option, under some of its leases, to lease the assets for additional terms. The Group
applies judgement in evaluating whether it is reasonably certain to exercise the option to renew. That is, it
considers all relevant factors that create an economic incentive for it to exercise the renewal. After the
commencement date, the Group reassesses the lease term if there is a significant event or change in
circumstances that is within its control and affects its ability to exercise (or not exercise) the option to renew.
The non-cancellable lease terms are for periods up to 30 June 2023.
The timing of certain lease payments have changed as a result of COVID rent deferrals, these changes have
not been treated as a lease modification.
18. Other assets
Current
Prepayments
Non-current
Cash backed rental guarantee
19. Borrowings
2021
$’000
818
2020
$’000
-
1,182
2,286
-
Current
$’000
2021
Non-
current
$’000
Total
Current
$’000
$’000
2020
Non-
current
$’000
Total
$’000
Secured
Senior debt facilities
Medium term notes
Interest and make-whole payable
Other loans
- 153,571 153,571
39,575
-
7,935
425
-
-
425 200,656 201,081
39,575
7,510
-
140,986
39,452
25,621
233
206,292
-
-
-
-
-
140,986
39,452
25,621
233
206,292
Secured liabilities and assets pledged as security
Security has been pledged over all of the assets and undertakings of each of Pioneer Credit Limited, Pioneer
Credit Solutions Pty Limited, Sphere Legal Pty Limited, Pioneer Credit (Philippines) Pty Limited, Pioneer
Credit Connect Pty Ltd, Pioneer Credit Broking Services Pty Ltd, Credit Place Pty Ltd and Switchmyloan Pty
Ltd and unlimited cross guarantees and indemnities from each of these entities.
All property of the Group comprises the Group total assets of $270,318,000 (FY20: $286,929,000).
Pioneer Credit Limited
30 June 2021
66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Senior debt facilities
The SFA comprises:
On 16 September 2020, the Company entered a new SFA providing for the refinancing of its existing SFA.
The SFA at initial recognition comprises of;
-
-
-
$169,000,000 term facility or which $169,000,000 is fully drawn;
$20,000,000 acquisition facility which remains undrawn, for up to 50% of the value of PDPs
(“Acquisition Facility”); and
15,750,626 zero cost detachable warrants to be issued to the syndicate (“Warrants”)
The SFA contains the following key terms:
- Weighted average interest rate of BBSY +11% p.a.;
- Commitment fee of 2.5% on the undrawn commitment under the Acquisition Facility;
- Exit fee of 2.0% per annum on actual amounts drawn and outstanding;
- Top-up fee to achieve an internal rate of return (“IRR”) of 14.5%, including the value of warrants
issued to the syndicate;
- Maturity date of 30 September 2022 with the ability, subject to conditions, to extend this to 1 July
2023; conditions include;
- Coupon to be no more than 120% of the coupon of Financial Close; and
- Term to be at least 6 months after the Initial Maturity Date; and
- Financial covenants to be tested on a quarterly basis from 31 December 2020.
- The financial covenants included are:
- Senior Leverage Ratio (“SLR”) (Debt to Adjusted EBITDA) (net senior secured debt to
EBITDA)
Interest Cover Ratio (“ICR”) (EBITDA to senior interest expense)
-
- Senior LBV (net senior secured debt to amortised cost portfolio value)
- Total LBV (total net secured debt to amortised cost portfolio value)
The SFA requires compliance with various covenants. The minimum SLR is 3.5x (3.0 from September 2022),
ICR 2.0x(2.5 from September 2022), Senior LBV of 65% (60% from March 2022) and Total LBV of 80% (75%
from March 2022).
Due to the inclusion of the top-up fee to achieve an IRR of 14.5%, a potential liability may exist in the future.
As at the reporting date, no liability exists.
The IRR top up is feature is an embedded derivative and has been accounted for separately from the host
debt facility and is accounted for at fair value through profit or loss.
As such, the IRR fee has not been recognised as this will be re-assessed at each reporting period to
determine if a financial liability is to be recognised.
The Warrants have a nil exercise price, are detachable and expire 4 years from 23 September 2020. The
Warrants were issued in two tranches to the syndicate as follows:
-
9,509,737 Warrants issued immediately; and
Pioneer Credit Limited
30 June 2021
67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
-
6,240,889 Warrants issued following Shareholder approval at the Group’s AGM on 19 November
2020.
The Warrants are separately recognised as a derivative and classified as equity and presented in a separate
reserve because they can be converted into a fixed number of Ordinary shares. A summary of the movement
on Warrants in the period and the closing balance of the Warrant reserve are outlined below:
Opening balance 1 July 2020
Issued
Exercised and converted
Closing balance 30 June 2021
Number
-
15,750,626
(4,604,585)
11,146,041
$’000
-
7,485
(2,025)
5,460
Medium Term Notes
On 10 July 2020, noteholders approved a series of modifications to the MTN, subject to completion being
achieved under the SFA. This occurred on 16 September 2020.
- An increase in the margin from 5.25% p.a. to 7.25% p.a.;
- An increase in maturity by 12 months to 22 March 2023; and
- An increase in frequency of optional redemption dates (by Pioneer Credit Limited as the issuer), to
the end of each quarter.
Noteholders received a consent fee of 0.5% of the outstanding principal amount of each MTN held if they
voted in favour of the changes.
The MTN includes financial undertakings in relation to Total LBV (82.5%) that are less restrictive than the
SFA undertakings and tighten in line with tightening in Total LBV under the SFA in March 2022 (77.5%).
The modifications on the notes were not substantial modifications and did not resulting in derecognition of
the original facility liability. The original amortisation schedule was compared to the updated schedule post
modification with the variance value of <1% considered immaterial.
Fair value
For all the borrowings, the fair values are not materially different to their carrying amounts since the interest
payable is either close to current market rates or the borrowings are of a short-term nature.
Pioneer Credit Limited
30 June 2021
68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Changes in liabilities arising from the financing activities
Opening balance
at 1 July 2020
$’000
Cash flow Other non-cash flow1 Closing Balance
at 30 June 2021
$’000
$’000
$’000
Borrowings
Lease liabilities
206,292
8,290
214,582
(23,544)
(2,238)
(25,782)
18,333
335
18,668
201,081
6,387
207,468
Opening balance
at 1 July 2019
$’000
Cash flow Other non-cash flow Closing Balance
at 30 June 2020
$’000
$’000
$’000
Borrowings
Lease liabilities
169,871
10,135
180,006
(393)
(2,424)
(2,817)
36,814
579
37,393
206,292
8,290
214,582
1 Other Non-cash flow items include the effective interest charge determined in accordance with AASB 9.
20. Trade and other payables and liabilities
Trade and other payables
Other liabilities1
1 In prior year categorised as “Accruals and other liabilities”.
21. Provisions
Current
Lease make good
Salaries and wages accrued1
Provision for long service leave
Provision for annual leave1
Share based payments
Non-current
Lease make good
Provision for long service leave
Share based payments
2021
$’000
4,034
524
4,558
2021
$’000
-
909
241
1,214
63
2,427
411
559
226
1,196
2020
$’000
2,849
2,722
5,571
2020
$’000
35
232
450
1,145
36
1,898
483
313
123
919
Pioneer Credit Limited
30 June 2021
69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
1 In prior year categorised as “Accruals and other liabilities”
Lease make good
The Group is required to make good each of its leased premises to their original condition at the end of each
lease which is 30 June 2023. A provision has been recognised for the present value of the estimated
expenditure required. These costs have been capitalised as part of the cost of leasehold improvements and
are amortised over the shorter of the term of the lease or the useful life of the assets.
Share Based Payments
A provision has been recognised for the current value of the obligation to settle in future periods, at the then
market value, the long term incentive rights that have been converted into a cash obligation.
An agreement with former employees where unvested performance rights will be cash settled in line with
future vesting dates under the original long term incentive plan. These liabilities will be Fair Valued at each
reporting date and prior to each repayment date.
22. Events occurring after the reporting period
On 13 August 2021 a legal matter between a software services provider and the Company was settled via
mediation for the amount of $225,000. The matter is an adjusting subsequent event and has been recognised
in the financial report.
23. Financial Instruments
The Group has the following financial instruments
As at 30 June 2021
Measurement
Current Non-current
$’000
$’000
Total
$’000
Financial assets
Cash and cash equivalents
Trade receivables
Purchased Debt Portfolios
Other assets
Financial liabilities
Trade and other payables
Borrowings
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Amortised cost
10,373
855
73,397
-
84,625
4,358
-
4,358
-
-
10,373
855
175,697 249,094
2,286
175,697 262,608
2,286
-
4,358
201,081 201,081
201,081 205,439
Pioneer Credit Limited
30 June 2021
70
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
As at 30 June 2020
Financial assets
Cash and cash equivalents
Trade receivables
Purchased Debt Portfolios
Financial liabilities
Trade and other payables
Borrowings
Measurement
Current Non-current
$’000
$’000
Total
$’000
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Amortised cost
11,019
1,844
87,255
100,118
5,571
206,292
211,863
-
-
11,019
1,844
172,792 260,047
172,792 272,910
-
5,571
- 206,292
- 211,863
Classification as trade and other receivables
Trade receivables are amounts due for services performed in the ordinary course of business. Other
receivables are held with the objective to collect the contractual cash flows and are therefore measured at
amortised cost under AASB 9, which is consistent with their treatment in prior years. All trade receivables are
expected to be recovered in one year or less hence have been classified as current.
Fair value of trade and other receivables, trade and other payables
Due to the short-term nature of the current receivables and payables, their carrying amount is assumed to be
the same as their fair value and for most of the non-current receivables and payables, the fair values are also
not significantly different to their carrying amounts.
24. Equity
Contributed equity
Share capital
Ordinary shares – fully paid excluding
treasury shares
Movement
2020
Opening balance 1 July 2019
Employee share scheme
Treasury shares issued to employees
Executive share plan
Closing balance 30 June 2020
2021
Shares
2021
$’000
2020
Shares
2020
$’000
66,277,190
81,755
62,878,293
80,049
Number of shares
$’000
62,370,655
83,538
424,100
-
62,878,293
78,131
229
1,268
421
80,049
Pioneer Credit Limited
30 June 2021
71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
2021
Opening balance 1 July 2020
Treasury shares acquired
Treasury shares issued to employees
Exercise of warrants
Closing balance 30 June 2021
Ordinary shares
62,878,293
(1,507,688)
302,000
4,604,585
62,277,190
80,049
(745)
426
2,025
81,755
All authorised Ordinary shares have been issued, have no par value and the Company does not have a
limited amount of authorised capital.
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company
in proportion to the number of and amounts paid on the shares held.
At a general meeting of shareholders; every shareholder entitled to vote may vote in person or by proxy,
attorney or representative; on a show of hands every shareholder who is present has one vote; and on a poll
every shareholder who is present has one vote for every share held, but, in respect of partly-paid shares,
shall have a fraction of a vote for each partly-paid share.
Treasury shares
2020
Opening balance 1 July 2019
Treasury shares issued to employees
Closing balance 30 June 2020
2021
Opening balance 1 July 2020
Treasury shares issued to employees
Treasury shares acquired during the period
Closing balance 30 June 2021
Number of shares
$’000
944,056
(424,100)
519,956
3,202
(1,268)
1,934
519,956
(302,000)
1,507,688
1,725,644
1,934
(426)
745
2,253
Shares issued to employees are recognised on a first-in-first-out basis. The shares may be acquired on
market and are held as treasury shares until such time as they are vested. Forfeited shares are reallocated
in subsequent grants. Under the terms of the trust deed, Pioneer Credit Limited is required to provide the
trust with the necessary funding for the acquisition of the shares. Included within the balance of treasury
shares are 400,000 management shares that were initially recognised in March 2014.
Options
During the period 8,000,000 options were issued and at 30 June 2021 these remain outstanding. No options
were exercised or had expired during the period.
Pioneer Credit Limited
30 June 2021
72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Share based payment reserve
The following table shows a breakdown of the Statement of Changes in Equity line item Share Based
Payments Reserve and the movements in this reserve during the reporting period.
The share based payments reserve is used to recognise the grant date fair value of options and rights issued
but not exercised, over the vesting period.
At 1 July
Opening balance
Share based payments and Executive share plan 1
Treasury shares loan repayments
Performance rights issued
At 30 June
2021
$’000
2020
$’000
3,870
3,332
(362)
(426)
6,414
4,032
1,106
-
(1,268)
3,870
1 Includes accelerated vesting of Performance Rights that will be paid out in line with the original vesting dates, at the
market value at that date.
Warrant reserve
The following table shows a breakdown of the Statement of Changes in Equity line item Warrant Reserve
and the movements in this reserve during the reporting period.
At 1 July
Opening balance
Warrants issued
Warrants converted
At 30 June
25. Capital management
2021
$’000
2020
$’000
-
7,485
(2,025)
5,460
-
-
-
-
The Group's objectives when setting a capital management plan are to:
ensure that the Group will be able to continue as a going concern whilst maximising the return to
shareholders through an optimal mix of debt and equity
Focus on reducing the current cost of capital and returning to profitability
identify the gearing levels based on the Company’s risk appetite; and maximise the return on invested
capital ensuring that all capital invested or reinvested to achieve internal return hurdles
Although the Group is not subject to any externally imposed regulatory requirement with respect to its capital
position, it maintains a focus on reducing current gearing levels with the significant sources of funding being
supplied by shareholder equity and variable rate financier borrowings, as well as appropriate trade working
capital arrangements. The Company’s focus is currently on refinancing its current SFA with an aim of reducing
the currently cost of funds. The Company are advanced in discussions with potential lenders and the Board
are confident of executing a transaction. The transaction will allow the Company to reassess its capital
Pioneer Credit Limited
30 June 2021
73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
management plan focussing on increasing performance, PDP growth, appreciating the asset base and
determining the optimal gearing position and mix of debt and equity.
The Board monitor key balance sheet ratios as part of the strategy as well as to demonstrate compliance with
the financier covenant requirements. Three year rolling capital forecast analysis is regularly reviewed to
assess the impact of growth and future opportunity on funding requirements with a focus on determining
adequacy of short to medium term requirements.
As far as possible, PDPs are funded from free cash flow, allowing undrawn balances to be maintained. Cash
is monitored on a daily basis to ensure that immediate and short-term requirements are met.
Details of financing facilities at 30 June 2021 are set out in Note 19.
Dividends
No dividends were declared or paid during the financial year. No dividends have been declared after the
financial year end.
Franking Account
The balance of the franking account at year end is, on a tax rate of 30.0%, $5.8m (FY20: $6.5m).
26. Group structure
Significant investments in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following
subsidiaries:
Name of entity
Country of
incorporation
Class of
shares
Equity holding %
Pioneer Credit Solutions Pty Limited
Sphere Legal Pty Limited
Pioneer Credit (Philippines) Pty Limited
Pioneer Credit Connect Pty Limited
Pioneer Credit Broking Services Pty Limited
Switchmyloan Pty Limited
Credit Place Pty Limited
Pioneer Credit Acquisition Services (UK)Limited
Pioneer Credit Solutions (NZ) Limited
Pioneer Credit Connect (Fund 1) Pty Ltd
Pioneer Credit Connect (Personal Loans) Pty Ltd
Pioneer Credit Limited Equity Incentive Plan Trust
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United Kingdom
New Zealand
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
N/A
1
2
3
2021
100
100
100
100
100
100
100
100
100
100
100
100
2020
100
100
100
100
100
100
100
100
100
100
100
100
1 Pioneer Credit Acquisition Services (UK) Limited is an entity incorporated in the United Kingdom and has not
conducted any business since inception to 30 June 2021.
2 Pioneer Credit Connect (Fund 1) Pty Ltd was incorporated on 15 January 2018 and has not conducted any business
since inception to 30 June 2021.
3 Pioneer Credit Connect (Personal Loans) Pty Ltd was incorporated on 15 January 2018 and has not conducted any
business since inception to 30 June 2021.
Pioneer Credit Limited
30 June 2021
74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
27. Parent entity financial information
The individual financial statements for the Parent entity show the following aggregate amounts:
Balance Sheet
Current assets
Total assets
Current liabilities
Total liabilities
Shareholder equity
Issued capital
Share based payment reserve
Accumulated (losses) / profits
Profit for the year
Total comprehensive (loss) / income
2021
$’000
1,799
246,499
7,079
211,502
82,075
10,181
(57,259)
34,997
2020
$’000
1,844
251,270
212,677
219,318
80,370
2,177
(50,595)
31,952
(54,231)
(55,629)
Guarantees entered into by the Parent entity
The Parent entity is bound by an unlimited guarantee and indemnity as part of the Group, with security held
over all property.
Contingent liabilities of the Parent entity
The Parent entity had contingent liabilities at 30 June 2021 and are outlined in note 29.
28. Deed of cross guarantee
Pioneer Credit Limited, Pioneer Credit Solutions Pty Limited, Sphere Legal Pty Limited, Pioneer Credit
(Philippines) Pty Limited, Pioneer Credit Connect Pty Limited, Switchmyloan Pty Limited, Pioneer Credit
Broking Services Pty Limited and Credit Place Pty Limited are parties to a deed of cross guarantee, entered
into on 25 June 2015. Credit Place Pty Limited was joined to this deed of cross guarantee on 26 June 2017.
Under the deed each company guarantees the debts of the others. By entering into the deed, these entities
have been relieved from the requirement to prepare a financial report and Directors' report under ASIC
Corporations (Wholly-owned Companies) Instrument 2016/785 issued by the Australian Securities and
Investments Commission.
The consolidated financial statements of Pioneer Credit Limited include the subsidiaries as set out in note
26.
Pioneer Credit Solutions (NZ) Limited, Pioneer Credit Acquisition Services (UK) Limited, Pioneer Credit
Connect (Fund 1) Pty Ltd and Pioneer Credit Connect (Personal Loans) Pty Ltd are not party to the deed of
cross guarantee. They are stand-alone wholly-owned companies. The Directors have determined that
Pioneer Credit Limited
30 June 2021
75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Pioneer Credit Solutions (NZ) Limited, Pioneer Credit Acquisition Services (UK) Limited, Pioneer Credit
Connect (Fund 1) Pty Ltd and Pioneer Credit Connect (Personal Loans) Pty Ltd are not reporting entities.
As at 30 June 2021:
c)
d)
Pioneer Credit Solutions (NZ) Limited has assets of $2.36m (2019: $2.44m), liabilities of $1.19m (2019:
$1.342m) of which the majority relates to amounts due to Group entities and contributed $0.16m (2019:
$0.420m) to Group profit before income tax; and
Pioneer Credit Acquisition Services (UK) Limited has assets of $6 and no liabilities. The UK entity
generates no revenue.
29. Contingencies
The Group had no contingent liabilities at 30 June 2021.
30. Commitments
Service Contract
The Group has services contracts for the operation of its Philippines facility that ends in February 2024, a
telecommunications contract that ends in October 2021 and a payroll services agreement that ends in May
2024. The minimum contractual commitments resulting from these agreements are outlined below.
Commitments for minimum service payments in relation to non-cancellable
contracts are payable as follows:
Within one year
Later than one year but not later than five years
2021
$’000
2020
$’000
3,438
5,293
8,731
732
155
887
31. Related party transactions
Key Management Personnel
Short-term employee benefits1
Post-employment benefits2
Other long-term benefits3
Other 4
Termination benefits
Options
Share-based payments
2021
$
2020
$
2,444,227 2,328,379
733,349
76,145
-
-
-
780,190 1,115,805
6,568,483 4,253,678
166,786
141,239
450,000
12,308
2,573,733
1Short-term benefits includes salary and fees, non-monetary benefits and other short-term benefits as per Corporation Regulation
2M.3.03(1) Item 6
2Includes superannuation guarantee
3Includes annual and long service leave
4 Represents ex-gratia payments in recognition of past performance
Pioneer Credit Limited
30 June 2021
76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Transactions with other related parties
Net rental expenses and other services:
Entities owned or controlled by KMP
Superannuation contributions:
Contributions to superannuation funds on behalf of Directors
Other transactions:
Remuneration paid to Directors of the ultimate Australian parent entity
Loans from related parties
2021
$
2020
$
51,922
75,504
64,487
68,466
1,635,179 1,867,695
The loans comprise participation in the MTN issue and SFA by entities of which Mr K John is a director and
shareholder of, all of which has occurred on an arm’s length basis.
Medium term notes
Loans from key management personnel
Beginning of the year
Interest charged
Interest paid
Consent fee charged
Consent fee paid
End of year
Syndicate facility agreement (SFA)
Loans from key management personnel:
Beginning of the year
SFA - Tranche B drawdown
SFA - upfront, guarantee and facility fees charged
SFA - upfront, guarantee and facility fees paid
Warrants issued
Warrant exercised
Interest charged
Interest paid
End of year
2021
$
2020
$
500,000
33,999
(33,999)
2,500
(2,500)
500,000
500,000
30,522
(30,522)
-
(30,522)
500,000
2021
$
2020
$
-
1,100,000
186,660
(186,660)
70,128
(70,128)
144,750
(144,750)
1,100,000
-
-
-
-
Pioneer Credit Limited
30 June 2021
77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
32. Share-based payments
Employee share scheme
No shares were issued under an Employee share scheme during the reporting period.
Equity incentive plan
The Company operates a Pioneer Credit Limited Equity Incentive Plan whereby certain eligible employees
are granted performance or indeterminate rights. Each Right entitles the holder to one fully paid ordinary
share for no consideration, subject to vesting conditions being met.
The cost of the equity settled transaction is determined by the fair value at the date when the grant is made
using an appropriate valuation model. Inputs to the valuation model include spot price, exercise price, vesting
period, expected future volatility, risk free rate and dividend yield.
The cost is recognised in employee expenses together with a corresponding increase in equity (reserves)
over the vesting period.
On 23 September 2020, 3,250,000 performance rights were granted to executives and senior leadership
employees. Each Right entitles the holder to one fully paid ordinary share for no consideration, provided the
holder of the Right remains employed by the Group at the Vesting Date.
The terms of each Right and assumptions used to determine fair value
Grant date
Fair value at grant date
Share price at grant date
Expiration period - years
Dividend yield
Vesting date
Barrier Price
Exercise price
Summary of Rights Granted
2021
23-Sep-20
$0.0738
$0.285
4.00
Nil
23 Sept 24
$1.00
Nil
Equity settled rights issued during the year
2021
Number of rights
2020
Number of rights
3,250,000
570,000
Unvested Rights at the end of the period
4,118,000
2,020,000
Pioneer Credit Limited Equity Incentive Plan Trust
The Trust acquires shares on market for the purpose of satisfying rights that vest under the Pioneer Credit
Limited Equity Incentive Plan.
The Trust acquired 1,257,688 shares during the financial year and paid $745,000. As at 30 June 2021 the
Trust held 1,325,644 shares (2020: 119,956).
Pioneer Credit Limited
30 June 2021
78
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
33. Earnings / (Loss) per share
Basic earnings / (loss) per share
From continuing operations attributable to the ordinary equity holders of the
Company
Total basic earnings / (loss) per share attributable to the ordinary equity
holders of the Company
Diluted earnings / (loss) per share
From continuing operations attributable to the ordinary equity holders of
the Company
Total diluted earnings / (loss) per share attributable to the ordinary equity
holders of the Company
Reconciliation of earnings / (loss) used in calculating earnings per share
Basic earnings / (loss) per share:
(Loss) / profit attributable to the ordinary equity holders of the Company
used in calculating basic earnings per share
From continuing operations
Diluted earnings / (loss) per share:
(Loss) / profit from continuing operations attributable to the ordinary equity
holders of the Company
Used in calculating diluted earnings per share
Weighted average number of shares used as the denominator
Weighted average number of Ordinary shares used as the denominator
in calculating basic earnings / (loss) per share
2021
Cents
(30.43)
2020
Cents
(63.36)
(30.43)
(63.36)
2021
Cents
(30.43)
2020
Cents
(63.36)
(30.43)
(63.36)
2021
$’000
2020
$’000
(19,655)
(40,084)
(19,655)
(40,084)
2021
Number
2020
Number
64,596,792
63,268,250
Weighted average number of ordinary and potential shares used as the
denominator in calculating diluted earnings per share
64,596,792
63,268,250
Performance rights
Pioneer Credit Limited
30 June 2021
79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Performance rights granted under the Pioneer Credit Limited Equity Incentive Plan are considered to be
potential Ordinary shares and have been included in the determination of diluted earnings per share.
34. Remuneration of auditors
During the year the following fees were paid or are payable for services provided by the auditor of the Group,
its related practices and non-related audit firms:
Deloitte
Audit and review of financial reports
Statutory assurance services required by legislation to be provided by the
auditor
Other services
Total remuneration of Deloitte Australia
PricewaterhouseCoopers Australia
Audit and review of financial reports
Total remuneration of PricewaterhouseCoopers Australia
Network firms of PricewaterhouseCoopers Australia
Other compliance and accounting advice
Total remuneration of Network firms of PricewaterhouseCoopers Australia
Amounts are inclusive of GST and expense reimbursement.
2021
$
2020
$
460,405 610,732
23,100
165,000 118,272
648,505 729,004
- 121,267
- 121,267
-
28,527
28,527
648,505 878,798
Pioneer Credit Limited
30 June 2021
80
Directors Declaration
In the Directors' opinion:
a)
the financial statements and notes set out on pages 35 to 80 are in accordance with the
Corporations Act 2001, including:
a. complying with Accounting Standards, the Corporations Regulations 2001
and other mandatory professional reporting requirements; and
b. giving a true and fair view of the Consolidated Entity's financial position as at
30 June 2021 and of its performance for the year ended on that date; and
b)
there are reasonable grounds to believe that the Company will be able to pay its debts
as and when they become due and payable; and
c) at the date of this declaration, there are reasonable grounds to believe that the
members of the extended closed Group identified in note 26 will be able to meet any
obligations or liabilities to which they are, or may become, liable by virtue of the deed
of cross guarantee described in note 28.
Note 2 confirms that the financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board.
The Directors have been given the declarations by the Managing Director and Chief Financial Officer
required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of Directors.
Keith John
Managing Director
Perth
31 August 2021
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Brookfield Place Tower 2
123 St Georges Tce
Perth WA 6000
GPO Box A46
Perth WA 6837
Tel: +61 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
Independent Auditor’s Report to the Members of Pioneer Credit
Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Pioneer Credit Limited (the “Company”) and its subsidiaries (the “Group”)
which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated statement
of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a
summary of significant accounting policies and other explanatory information, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
• Giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial performance
for the year then ended; and
• Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of
our report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report for the current period. These matters were addressed in the context of our audit of the
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
Key Audit Matter
Liquidity
As at 30 June 2021, the Group has a
positive working capital of $75.0m.
As disclosed in note 3, the Senior Facility
Agreement (“SFA”) matures on 30
September 2022 and can be automatically
rolled over at this date if the Medium
Term Notes (“MTNs”) are refinanced on
specified terms.
The refinancing of the SFA has reached an
advanced stage and the Group expects to
execute a new senior finance facility by the
end of September 2021.
Notwithstanding, the Group continues to
closely monitor its current financing
arrangements and ongoing liquidity to
ensure they can meet their undertakings
and commitments as and when they fall
due. These matters are disclosed in Notes
3, 6 and 19 to the financial statements
The achievement of the refinancing and
the cash flow forecasts are inherently
uncertain, and our audit procedures have
focused on these areas.
How the scope of our audit responded to the Key Audit Matter
Our audit procedures included, but were not limited to:
● Assessing the process undertaken by management to
develop the cash flow forecast for the 15-month period
ending 30 September 2022;
● Assessing management’s ability to conclude the
refinancing of the SFA, in particular:
- Holding discussions with the Group’s Corporate
Advisor, in conjunction with our debt advisory
specialists to:
▪
develop an understanding of the status of the
refinance process, shortlisted financiers and
expected timelines; and
evaluate the indicative terms being offered by
short listed financiers.
▪
- Inspecting relevant communications from the
Corporate Advisors concerning the refinance, including
the most recent indicative terms, up to the date of
signing our opinion.
●
Evaluating the quantum and timing of forecast cash
flows in the cash flow forecast, in particular:
- Assessing forecasted PDP liquidations in the cashflow
forecast against the underlying cashflow forecasts
used for the determination of the amortised cost of
the PDP;
- Comparing forecasted liquidations to historic levels
for consistency;
- Assessing actual liquidations after year end against
forecast liquidations;
- Comparing the forecasted portfolio acquisitions to
historic levels as well as actual acquisitions
subsequent to year end;
- Comparing forecasted employee benefits and other
operating costs to historic levels for consistency; and
- Inspecting available evidence including recent market
activity, industry reports and direct discussions with a
secondary debt broker, to challenge management’s
ability to conclude PDP sales; and
- Inspecting available evidence including discussions
with the Company’s equity placement advisors, to
challenge management’s ability to perform an equity
raise prior to March 2022.
● Reading and understanding the key terms of the SFA
and the MTN and:
- Evaluating the financing costs included in the cashflow
model against the terms and conditions included in
the SFA and MTN;
- Evaluating the covenant calculations for consistency
with the definitions in the SFA and MTN;
- Assessing the forecasted covenant calculations over
the period to September 2022, including applying
sensitives to PDP, liquidations, acquisitions and sales
to identify reasonably possible potential breaches;
- Inspecting available evidence, including through direct
discussions with a key syndicate financier in
conjunction with our debt advisory specialist, to
challenge the likelihood of a refinance of the SFA
before their maturity in September 2022, should the
SFA not be refinanced as planned in September 2021;
and
- Inspecting available evidence, including through direct
discussions with a key syndicate financier in
conjunction with our debt advisory specialist, to
challenge the refinance of the Medium Term Notes to
effect an automatic roll over of the SFA in September
2022, should the SFA not be refinanced as planned in
September 2021.
We also assessed the appropriateness of the disclosures in the
Going Concern Note 3 to the financial statements.
Measurement of purchased debt
portfolios (PDPs)
As set out in Note 15 of the financial
report, the PDPs are held at amortised
cost.
Our audit procedures, performed in conjunction with our
Treasury Specialists, included but were not limited to:
The measurement of the PDPs is
estimated by the Group using internally
developed cash flow models (the models).
Complexity arises in respect of the
accounting for PDPs due to the following:
● Assessing the process undertaken by management to
measure and account for PDPs;
●
●
Testing the operating effectiveness of selected controls
in relation to the PDP input data and models; and
Evaluating the appropriateness of the accounting policy
adopted by management.
●
●
the requirement to calculate
credit-adjusted effective interest
rates (CAEIRs) when PDPs are
acquired involves significant
judgement in estimating the
amount and timing of future
expected cash flows. In particular,
judgement is required in
estimating the credit risk attributes
of PDPs that underpin modelled
cash flow forecasts on acquisition;
and
re-estimating future cash flows for
PDPs at the end of each period
results in impairment gains/losses
which also require significant
judgement and reliance on
internally- developed cash flow
models.
Model methodology
● Developing an understanding and critically assessing
methodology and assumptions used by the Group to
determine the construction of the cash flow models;
● Assessing if the model methodology appropriately
included the expected amounts and timing of cash flows
from customers;
● Assessing the reasonableness of model parameters
such as the period of cash flow forecasts; and
● Re-calculated the mathematical accuracy of calculations
in the within models.
Model inputs
●
Testing a sample of current year additions, disposals and
liquidations to underlying source documentation to
assess the existence, accuracy and completeness of the
model data;
●
●
estimating the impact of the
macro-economic outlook on
forecast cash flows requires
considerable judgement.
the models used by management
remain sensitive to the inherent
uncertainty of predicting future
cash flows, both at acquisition date
and at period end.
As a result, the assessment of the carrying
value PDPs is a key audit matter.
● Assessing the reasonableness of the assumptions and
predictive factors used in the model with reference to
historical experience by:
-
-
-
testing a sample of customer account
characteristics to source documentation or
system information to assess the existence,
accuracy and completeness of the model data;
assessing the historical CAEIRs used in the model
for consistency to what had previously been
determined and applied on historic PDPs in
accordance with AASB 9, and
performing sensitivity analysis and challenging
management on cash flow forecast assumptions
having a significant impact on model outputs such
as liquidations.
Model outputs
•
•
•
Testing the reasonableness of PDP interest income and
impairment gains/losses calculated by management’s
models;
Testing the reasonability of the mathematical outputs
of the model forecasted cash flows for all customer
account tranches;
Evaluating the reasonableness of the tax treatment of
the PDPs, and
• Agreeing the model outputs to accounting entries
recorded in the Group’s financial report.
Model overlays
● Challenging the assumptions, judgments and
quantifications made in determining the macro-
economic outlook and model risk and operational risk
overlays.
We also assessed the appropriateness of the disclosures in the
financial statements.
Other Information
The directors are responsible for the other information. The other information comprises the information included
in the Group’s annual report for the year ended 30 June 2021, but does not include the financial report and our
auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause
the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the financial report. We are responsible for the direction,
supervision and performance of the Group’s audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards
applied.
From the matters communicated with the directors, we determine those matters that were of most significance
in the audit of the financial report of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 14 to 27 of the Directors’ Report for the year ended
30 June 2021.
In our opinion, the Remuneration Report of Pioneer Credit Limited, for the year ended 30 June 2021, complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
Leanne Karamfiles
Partner
Chartered Accountants
Perth, 31 August 2021
Shareholder information
The shareholder information set out below was applicable as at 23 August 2021.
Distribution of securities
Analysis of numbers of equity security holders by size of holding
Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Holders
575
672
326
672
575
2,248
Ordinary shares
248,263
1,922,880
2,541,930
18,786,123
47,901,733
71,400,929
There were 524 holders of less than a marketable parcel of Ordinary shares.
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest holders of quoted securities are:
Name
Mr Keith R John
Citicorp Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited
Mrs Lilian Jeanette Warmbrand
Pacific Custodians Pty Ltd
Ms Elif Ceren Gunes
Jamplat Pty Ltd
ZLT Investment Co Pty Ltd
NSR Investments Pty Ltd
Quinta Investment Management Pty Ltd
BNP Paribas Nominees Pty Ltd
BFA Super Pty Ltd
Melbykram Pty Ltd
Pacific Custodians Pty Ltd
Mr Sunny Yang & Mrs Connie Yang
Project Nottingham LP
Mr Shang-Xian Wu & Mrs Xiu-Rong Pan
Mr Allan Hart
Debuscey Pty Ltd
Jetan Pty Ltd
Ordinary shares
Number
held
6,492,461
3,427,123
2,608,028
1,739,217
1,655,377
1,400,000
1,040,000
1,000,000
1,000,000
833,367
810,916
801,313
735,000
695,144
691,942
683,360
670,000
610,650
600,000
500,000
% of issued
shares
9.09
4.80
3.65
2.44
2.32
1.96
1.46
1.40
1.40
1.17
1.14
1.12
1.03
0.97
0.97
0.96
0.94
0.86
0.84
0.70
Pioneer Credit Limited
30 June 2021
88
Unquoted equity securities
Name
Mr Keith R John
Name
Employee Incentive Plan
Name
Mr Keith R John
Substantial holders
Substantial holders in the Company are set out below:
Name
Mr Keith R John
Securities subject to voluntary escrow
Escrow ends
30 November 2021
14 August 2022
1 July 2024
Voting rights
Indeterminate rights
Number held
875,000
Number of
holders
1
Performance rights
Number held
3,243,000
Number of
holders
8
Options
Number held
8,000,000
Number of
holders
1
Number held
6,492,461
Percentage of
issued shares
9.1%
Class
Ordinary Shares
Ordinary Shares
Ordinary Shares
Number
of shares
24,962
46,592
250,000
At a general meeting of shareholders: every shareholder entitled to vote may vote in person or by proxy,
attorney or representative; on a show of hands every shareholder who is present in person or by proxy,
attorney or representative has one vote; and on a poll every shareholder who is present in person or by proxy,
attorney or representative has one vote for every share held, but, in respect of partly-paid shares, shall have
a fraction of a vote for each partly-paid share.
Pioneer Credit Limited
30 June 2021
89