Appendix 4E and
Annual Report
For the year ended 30 June 2022
Pioneer Credit Limited ABN 44 103 003 505
Annual Report - 30 June 2022
Contents
Appendix 4E - Results for announcement to the market
Corporate Directory
About Pioneer
Directors’ Report
Auditor’ Independence Declaration
Corporate Governance Statement
Financial Statements
Independent Auditors Report to the Members
Shareholder information
3
4
5
6
33
34
37
90
95
Pioneer Credit Limited
30 June 2022
2
Pioneer Credit Limited ABN 44 103 003 505
Appendix 4E
Preliminary Final Report
for the year ended 30 June 2022
(previous corresponding period 30 June 2021)
Appendix 4E - Results for announcement to the market
Key information
30 June 30 June Change
2022
$’000
2021
$’000
$’000
%
Revenue from ordinary activities*
(Loss) / Profit from ordinary activities after tax attributable to
members
Net (loss) / profit for the period attributable to members
54,312
53,366
10,436
1.77
(33,094)
(19,655)
(3,907)
(68.38)
(33,094)
(19,655)
(3,907)
(68.38)
*Revenue from ordinary activities excludes interest income earned on bank deposits and loans to management.
Dividends per ordinary share / distributions
There is no provision for a final dividend in respect of the year ended 30 June 2022.
Financial Statements
Released with this Appendix 4E report are the following:
• Consolidated Statement of Profit or Loss and Other Comprehensive Income together with notes
• Consolidated Statement of Financial Position together with notes
• Consolidated Statement of Changes in Equity, showing movements
• Consolidated Statement of Cash Flows together with notes
This report is based on financial statements which have been audited.
Key ratios
30 June 2022
(cents)
30 June 2021
(cents)
Net tangible assets per fully paid ordinary share
Basic (loss) earnings per fully paid ordinary share
29.72
(40.48)
72.70
(30.43)
The Right of Use Asset under AASB 16 Leases ($8.5m) has been excluded from tangible assets, while the lease liability has been
included in liabilities.
Pioneer Credit Limited
30 June 2022
3
Corporate Directory
Directors
Mr Michael Smith (Chairperson)
Mr Keith John (Managing Director)
Ms Andrea Hall
Mr Peter Hall
Mr Stephen Targett
Ms Michelle d’Almeida
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
FCCD (Australia) Pty Ltd (Fortress Investment Group)
Suite 19.02, Level 19, Gateway
1 Macquarie Place
Sydney NSW 2000
+61 2 8239 1900
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 2022
4
About Pioneer
Pioneer Credit Limited (‘Pioneer’) is ASX listed (ASX: PNC) and provides quality, flexible, financial services
support to help everyday Australians out of financial difficulty and assist them in resolving their outstanding
debts. We have the trust of long-term partners to do the right thing and respectfully support customers to
achieve financial independence.
With more than 250,000 customers throughout Australia and New Zealand, our focus is on providing them
with exceptional levels of service, and a broad range of 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 substantially, 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 we acquire,
reflects on both Pioneer and our partners.
A focus on customer service
We continually invest in the ongoing training and development of our staff to ensure we provide a consistent
customer service-oriented approach to 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
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5
Directors’ Report
The Board of Directors present their report on the Consolidated Entity (‘the Group’ or ‘the Company’)
consisting of Pioneer Credit Limited and the entities it controlled at or during the year ended 30 June 2022.
Directors
The following were Directors of Pioneer 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
Mr Stephen Targett
Ms Michelle d’Almeida
Principal activities
Pioneer acquires portfolios of customers experiencing financial difficulty, from vendors such as the big 4
Australian banks. By building a genuine relationship with each customer we support them to pay down their
debt using an empathetic, ethical, human approach.
Customers are acquired in tranches called Purchased Debt Portfolios (‘PDPs’) and our business model relies
on generating returns through our differentiated customer service approach and by carefully managing our
Cost to Service (‘CTS’). We are disciplined in our investment, relying on our extensive industry expertise,
vendor relationships and considerable data analytics capability to only acquire where we know we can service
those customers appropriately.
The returns that we generate are invested back into the business to grow our position as the preferred option
for employees, partners and investors. We aim for long term, sustainable growth, and communicate to all
with transparency and fairness.
These metrics tie back to our strategic objectives and ensure that we have clear and consistent understanding
of how we are performing as a business: -
• Customer experience is measured through Net Promoter Score (‘NPS’);
• Our ability to generate positive and sustainable customer outcomes is measured through liquidations,
•
•
•
and the growth of our Performing Arrangement (‘PA’) portfolio;
The efficiency of our business is measured through CTS;
Purchasing discipline and capability is measured through Return on Investment (‘ROI’);
Employee satisfaction is measured through employee engagement and employee Net Promoter
Score (‘eNPS’).
Pioneer Credit Limited
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6
Dividends
Since the end of the financial year the Directors have not declared a final dividend.
Review of operations
Financial Performance
Financial Year ’22 will become known in the history of Pioneer as the period during which management and
the Board positioned the Group for sustained profitability and success, following the trying conditions of the
previous two periods.
Heading into the year, and coming out of the Management and Board Strategy sessions, the group had five
key deliverables for the period;
1. Refinance the senior facilities to reduce the funding costs of the business,
2. Capitalise on opportunities to grow PDPs,
3. Grow the PA portfolio,
4. Realise our operational leverage and to thrive under increased regulation, and
5.
Improve across key financial metrics.
1. Refinance senior debt facilities – (Capital Management)
One of the key deliverables for the Group was completed in November 2021, with the Company entering into
an agreement with Fortress Investment Group for a $200m, four-year senior debt facility (‘Facility’), at
approximately half the cost of the previous facility. The Facility was drawn to $168m on commencement, with
$32m of headroom available for growth.
In addition to the new Facility, the Company’s increased its subordinated Medium-Term Notes (‘MTNs’) by
$20m to $60m and amended the terms so they would expire in 2026.
To support the refinance, and increase in the MTN’s, the Group completed the first of two equity raises for
the financial year, both of which were completed at a premium to the last closing price of the shares. The first
equity raise, was for $5.4m (before transaction costs) and included participation by the former senior financier
($1.1m), Mr James Simpson ($2.0m) and the Company’s Managing Director Keith John ($1.16m), who
contributed $0.66m in cash, and converted $0.5m of MTN’s held by his interests, to equity.
On completion of this refinance, the Group had materially reduced its funding costs, and had increased in
size of its facilities to fund that growth which is beyond its operating cash generation in the current year.
In March 2022, Pioneer agreed to an investment in performing assets from a group with which the Company
had a long-term relationship. Our financiers provided an additional $40m of funding for the acquisition, which
was supported by the second equity raise during the period in the sum of ~$16.1m.
Again, the equity raise was supported by the Managing Director Keith John ($1.5m), our former financers
($2.0m) and Mr James Simpson who contributed $5.0m, $1.0m in cash and $4.0m through the conversion of
MTN’s to equity.
Pioneer Credit Limited
30 June 2022
7
At the close of the financial year, the Company had drawn $173.8m of the $200m facility, had repaid $5.9m
of the additional $40m fully drawn facility and had reduced the outstanding balance of its MTNs to $55.5m.
2. Capitalise on PDP opportunities
Investment opportunities over the past two financial years have been heavily impacted by the pandemic, and
particularly across high quality financial services firms, due to their suspension of sales for sustained periods,
and then the low level of defaults in loan books due to unprecedented government stimulus.
At the commencement of the year Pioneer forecast PDP investment of ~$41m, less than the estimated $60m
annual investment needed to sustain the operational headcount, infrastructure, and cost base of the business.
We were confident that very good opportunities would emerge during the period, and they did.
During the financial year the Company acquired $99.5m of PDPs, the first time we had invested at this level,
and more than the prior two years combined. These investments were made at attractive price points, as
vendors chose to partner with Pioneer because of its strong relationships and focus on customer outcomes.
Underpinning the future growth of the Company, Pioneer announced in June 2022 that it had entered a five
year forward flow agreement with the Commonwealth Bank of Australia. This is the first long term banking
agreement in Australia and recognises the unquestionable value Pioneer brings to the debt sale partnership.
In addition, during the period the Company invested in Performing Arrangements (‘PAs’), including insolvency
arrangements, which will contribute strongly to cash flows in the coming years.
With a contraction in the number of buyers in the market, and a continually growing preference for quality
relationships and service providers like Pioneer, the outlook for future years is in our favour, and supportive
of meaningful growth.
3. Grow the PA portfolio
There are generally two ways to grow PAs, organically through working better with customers, and through
investment in performing portfolios.
Pioneer has always been a strong generator of PAs and over the preceding 6 years to the start of FY22 had
grown this portfolio at a cumulative annual growth rate of 20% to $377m.
The focus of our operational teams has always been on presenting customers with options that meet both
their requirement to move to financial freedom, and ours for a fair commercial return.
During the period our operational focus on creating sustainable PAs increased, particularly as we continued
supporting customers initially through the impacts of the pandemic, and later in the financial year with the
increasing cost of living pressures. The focus on sustainability means that to the end of June there had been
no measurable impact on PA payment adherence.
In total we had 6% net organic growth through the period from $377m to $400m, which was then
supplemented by the acquisition of performing arrangements of ~$64m, bringing the total PA balance to
$464m. The Company has also acquired insolvency arrangements of $50.5m during the period.
Pioneer Credit Limited
30 June 2022
8
The growth of the PAs provides several significant benefits to the Company;
• PAs continue to underpin the substantive part of the PDP valuation in the balance sheet, as the most
demonstrable, predictable, and certain expected liquidations,
• An increase in contributions to liquidations in future periods, which underpin the cashflow and top
line performance of the business,
• The opportunity to introduce new lower cost funding into the business given the scale of repeatable
cashflows which international financiers are both familiar with and favourable to.
FY22 has been the strongest year yet for the Company in the growth of its PAs, and this segment of our
performance will remain a focus in the coming periods.
4. Realise our operational leverage and to thrive under increased regulation
As with most businesses, reaching scale is a time consuming and expensive exercise. It generally involves
periods of inefficiency, exacerbated by the inability to invest heavily in productivity measures such as next
level technology. These are objectives that have been evident in the Pioneer business in recent years.
Immediately prior to scale, which is the case of the Pioneer business, is the point at which the cost to service
is highest. In many respects this has been deliberate in that our strategy has always been on providing a
differentiated customer experience and outstanding compliance and governance outcomes. These have
been and continue to be achieved, though we have used more people than you would if these considerations
were not core to strategy. To that point, in FY21 our CTS was 47%, and we have reduced to 44% for the full
year.
The reduction in costs has been achieved through a range of business initiatives. These include the continued
improvements across the analytics and data function through both an increase in capable headcount, and
the continued capture and growth in data point through which to operationalise our portfolio. We are also now
availing ourselves of better purchasing power, and are buying some services more cost effectively, with
significant opportunity to continue to extract savings in the coming periods. We have continued to develop
the way we deal with the small number of customer complaints we receive, respecting the changing regulatory
environment, staying at the forefront of best practice, and becoming more efficient in handling these matters.
The operational improvements mentioned above, which we have an opportunity to continue to improve in
future periods, along with an increase in liquidations through the financial year (which we also expect to
continue to increase) will also be supported in future periods by the transition to, and implementation of, an
enterprise grade core system on which we will host, and from which we will service our customer base.
The Company is in the process of replacing its core recoveries system. By selecting, which we have now
done, and implementing a new core system, which is expected to occur by the end of FY23, we will continue
to improve our liquidations through more efficient and better data practices and reduce costs through the
removal of manual processes consistent with legacy systems.
While improvements have been made in reducing CTS, there remains work to be done, and this aspect of
our business will continue to be a strategic priority.
Pioneer Credit Limited
30 June 2022
9
5.
Improve across key financial metrics.
Like all businesses there is a broad range of key financial metrics against which performance is measured.
Some of these are published, others are measures against which management is held to account by the
Board. In all cases improvements have been made. In all cases further improvements must also be made,
and the Board and management are both cognisant, and committed to doing that.
At the most visible level, improvements on the prior year have been made as follows;
a. Liquidations are up 13% to $106.7m
b. Net revenue is up 2% to $54.3m
c. Cost to Service is down to 44%, from 47%
d. PDP investment up 220% to $99.5m
The discipline that sits within the Pioneer business continues and will continue to realise benefits over the
coming periods, with a strong focus on both liquidations and realisation of value, on focussed cost
management, and a steadfast commitment to delivering sustainable profitability.
People
Like most Australian businesses, staff retention has been more critical than ever before, and in the case of
Pioneer it needs to grow its workforce to meet the requirements of the growth in its PDP investment, along
with supporting a range of operational initiatives it is progressing to improve both the total liquidations
extracted from portfolios each year, and to continue to reduce the cost to service those portfolios.
With a workplace environment that is aesthetically pleasing, spacious and a culture that is supportive of a
friendly and enjoyable workplace, focussed on achievement, and where personal growth can occur and is
encouraged, despite a tight resources market, Pioneer has been able to recruit sufficient people to ensure it
can advance its improvement programmes.
Across our customer service centres we have maintained sufficient headcount, under significant pressure
from other institutions to attract our exceptionally talented and loyal people. Supporting our employee offering,
Pioneer has flexible working arrangements for all qualifying employees and during the period we upgraded
our employee on-line training and self-service learning capabilities through a properly distributed Learning
Management System, which provides online delivery of programs to our teams, focussing on improving the
employee experience and gaining operating efficiencies. This development has been critical in recruiting and
making successful our remote employees who now cover five states of Australia.
Our employee offering is a complete offering. Our remuneration is highly competitive. We expect to grow our
headcount into the new financial year as people continue to look for employers that respect and reward them
well. Pioneer does both.
Diversity and Inclusion
Pioneer has always been committed to providing an environment that recognises, respects and values
differences, ensures security, supports true acceptance and genuine consideration of an individual. This is
a large part of why our Employee Net Promotor Score (‘eNPS’) has response rate of 73% and an engagement
index of 81% (all Australian average 73%) and an eNPS of +18 (all Australian average -1%)
Pioneer Credit Limited
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Our employee engagement is supported by many aspects of our business and its leadership, and in particular
the Pioneer Principles. We have also late this year finalised our Diversity and Inclusion Policy titled Belonging.
Belonging has been a significant piece of work for our business. It has involved countless stakeholder
meetings, focus groups, and debate. The development of Belonging has tested our boundaries and
challenged us. It has caused time for self-reflection. It is a 268-word statement that encapsulates everything
we believe we are, and everything we hope to be. It is fierce commitment to be better, and to inspire. A key
take out, which sets the scene for shareholders to understand us from Belonging is …. At Pioneer, we
celebrate our broad community, which is founded in good.
We believe that our living out Belonging will make us an even better workplace for all.
Digital and technology transformation
Like most of the debt purchase and collections industry in Australia, Pioneer has used legacy technology to
underpin its business. Much has been made of new digital only collection platforms in recent years, and while
they provide some limited capability, our customers want a true omni-channel service experience.
Thinking for a moment about our financial education, and the repeated warnings of institutions and
governments not to share your details with unknown parties, and those that just use email or text. This is
what digital only platforms claim to do. Some people will engage with them. In our experience most will not.
Our customers have an average account balance of ~$9,000.00. It is a significant amount of money, and
generally people want to speak with a customer service person before they commence paying. We do not
see this changing in the near term.
To support the delivery of our services, to improve liquidations, to improve our cost to service, and to
dramatically improve customer experience, Pioneer has during the period upgraded its infrastructure, and
materially improved its cyber security stance. We have also progressed, and during FY23 expect to update
our existing CRM to a new best in breed, world grade, end-to-end system.
We expect that this upgrade will ensure we have the best platform in Australia from which to service our
customers, in a very compliant manner, that is efficient, supportive of liquidations performance through better
customer segmentation and service journeys, and through ease of interaction and a very pleasant easy
experience for our customers.
Economic conditions
Following a period of very low purchase activity, as FY22 progressed, and the height of the pandemic
subsided, opportunities within the market started to present. Importantly for Pioneer, where this occurred, in
the segments we specialise in, vendors were focussed in selling to purchasers who had a history of delivering
a quality service to customers, of clearly demonstrating they could manage difficult customer situations, were
financially secure, and where the management team was both known and trusted. Pioneer exhibits all these
characteristics and benefitted from them. We expect this focus to continue.
The increase in opportunities in the market was dampened by the strong and persistent shift to a hybrid work
environment. There is little doubt that while our business is effective with its workforce operating in this
manner, that it is better when its people are together, and able to properly collaborate in a face to face setting.
Pioneer Credit Limited
30 June 2022
11
Pleasingly, the return to office working gathered steam in the last quarter of the financial year, and the
Company is benefitting from that.
Our customer base has continued to perform well during the past year, and there has been no noticeable
difference in their payment behaviour. We believe this is supported by high levels of employment.
The Reserve Bank of Australia (RBA) has begun increasing interest rates with further increases forecast in
FY23. The recent interest rate rises have increased the cost of borrowing on the Groups debt facilities.
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 COVID-19 pandemic.
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 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;
•
• Our people, who are here to help, rather than chase, and who work in a culture of strong values
Investing only in quality account portfolios from leading financial institutions; and
where a premium is placed on customer service and empathy.
These aspects to the Pioneer business were critical in guiding us through the past two years and remain
critical to our ongoing success.
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.
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
Pioneer Credit Limited
30 June 2022
12
behaviours. These are the source of regular attention and review by the Company’s Executive and Board of
Directors.
Risk Governance
Our risk governance framework is embedded in all our practices. Pioneer uses a combination of different
and complementary skills in assessing the material risks faced and our framework is built on the 3 lines of
defence model with accountability from our employees, risk compliance through our processes,
policies and procedures and independent oversight via internal audit reporting through to our Board.
Pioneer’s risk processes are reviewed bi-annually by its Board with the goal of aligning risk taking with
its statutory requirements, strategic objectives, and capital planning.
Corporate governance
Pioneer is a good corporate citizen, committed to sound corporate governance practices that see each of
our customers, employees, vendors, shareholders, and other stakeholders treated with empathy, respect,
and transparency. We take these responsibilities, and our accountability, seriously.
Pioneer continues to adopt all ASX Corporate Governance Council Guidelines and Recommendations.
Our corporate governance framework is established to ensure effective engagement with all our
stakeholders. This framework is underpinned by our Pioneer Principles, which are a set of values that we
work and live by. The Pioneer Principles are embedded throughout the Company and underpin every
interaction we have with our customers and stakeholders. They assist us to produce an inclusive and
empowering culture.
Regulation and compliance
Pioneer operates in a highly regulated environment.
Our regulatory landscape includes Australian Securities Exchange, Australian Securities, and Investments
Commission (‘ASIC’), Australian Competition and Consumer Commission (‘ACCC’) and Australian
Financial Complaints Authority (‘AFCA’), among a broad range of other regulators.
We are of course, not without fault, and our policy and response to mistakes remain very certain. That is,
where we are at fault or error, we will call that out without question, and we will honestly and expeditiously
remedy that fault to return our customer, or any other impacted party, to at least the position they were in
prior. We care deeply for people, and we work hard to demonstrate that daily.
Sustainability and corporate responsibility
At the Company’s 2021 Annual General Meeting, the Company amended its Constitution to affirm its
purpose to deliver returns to shareholders whilst having an overall positive impact on society and the
environment. While Pioneer operates in a non-carbon intensive environment, we adopt sustainable options
as part of our day-to-day business. These include efficient energy consumption at our premises,
Pioneer Credit Limited
30 June 2022
13
responsible waste recycling and disposal, increased use of electronic communication to reduce our carbon
and gas emissions and operating to an environmentally preferable purchasing policy.
Pioneer has self-assessed and meets the requirement for B Corp Certification. Certified B Corps are for-
profit companies that use the power of business to build a more inclusive and sustainable economy. They
meet the highest verified standards of social and environmental performance, transparency, and
accountability.
In addition to clearly demonstrating our ESG credentials, which is an important aspect of Pioneer continuing
to differentiate itself from others, certification will also enable the Company to access wider pools of capital
which are important to driving down the capital costs of the Company.
B-Corp has commenced it processes to audit the Pioneer business for certification, and for which the
Company is expecting to receive during the next financial year.
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
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
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14
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, Director of Poppy Lissiman and AusCycling
and Chair of AusCycling’s High Performance Committee.
• 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
Chair of the Board
Chair of Nomination Committee¹
Chair of Remuneration Committee¹
Member of Audit and Risk Management Committee
Ordinary Shares
Options (Listed)
882,305
36,365
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
Options (Unlisted)
Options (Listed)
11,242,934
75,000
8,000,000
2,727,273
Pioneer Credit Limited
30 June 2022
15
Ms Andrea Hall
Experience and expertise
Independent Non-Executive Director
• Appointed a Director of Pioneer in November 2016
• An experienced non-executive director currently serving on the
boards of Perenti Global Limited, Evolution Mining Limited,
Insurance Commission of WA and Fremantle Football Club (AFL)
• Bachelor of Commerce from UWA, a Masters of Applied Finance
and is a Fellow of the Institute of Chartered Accountants Australia
and New Zealand. She served on the WA Council of Chartered
Accountants of Australia New Zealand for seven years until 2011,
the last year as Chair.
• A former 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 Committee¹
Member of Remuneration Committee¹
Chair of Audit and Risk Management Committee
Ordinary Shares
97,887
Mr Peter Hall
Experience and expertise
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 Committee¹
Member of Remuneration Committee¹
Nil
Listed Company Directorships
including those held at any time in
the previous 3 years
Special responsibilities
Interests in shares and options
Pioneer Credit Limited
30 June 2022
16
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 Member Owned Bank Police & Nurses
Limited (P&N) and former Chair of BCU, a division of P&N.
• 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 Committee¹
Member of Remuneration Committee¹
Ordinary Shares 136,363
Options (Listed) 136,363
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 Committee¹
Member of Remuneration Committee¹
Ordinary Shares 36,363
Options (Listed) 36,363
Pioneer Credit Limited
30 June 2022
17
Meeting of Directors
The number of meetings held, and attended, by the Directors during the year ended 30 June 2022 was:
Name
Board Meetings
Mr Michael Smith
Mr Keith John
Ms Andrea Hall
Mr Peter Hall
Mr Stephen Targett
Ms Michelle d’Almeida
Attended
21
21
18
20
21
21
Audit and Risk
Held
21
21
21
21
21
21
Attended
4
n/a
4
4
4
4
Held
4
n/a
4
4
4
4
Committee Meetings
Remuneration¹
Held
Attended
1
1
1
1
1
1
1
0
1
1
1
1
Nomination¹
Held
1
1
1
1
1
1
Attended
1
1
0
1
1
1
¹ On 6 July 2022 the Nomination and Remuneration Committees merged to form the People, Remuneration and Nomination Committee.
This is Chaired by Stephen Targett, and its members are the full Board.
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 2022
18
Remuneration Report
This Remuneration Report explains the Board’s approach to executive remuneration and the remuneration
outcomes for the Company’s Key Management Personnel (‘KMP’) for the year ended 30 June 2022.
1. Overview
KMP includes all directors and executives who have responsibility for planning, directing, and controlling
material activities of the Company. In this report ‘executive’ refers to KMP excluding Non-Executive Directors.
The remuneration report for the year ended 30 June 2022 has been prepared in accordance with section
300A of the Corporations Act 2001 and has been audited under Section 308(3C).
List of KMP
Directors
Mr Michael Smith
Independent Non-Executive Chairman
Mr Keith John
Ms Andrea Hall
Mr Peter Hall
Managing Director
Independent Non-Executive Director
Independent Non-Executive Director
Mr Stephen Targett
Independent Non-Executive Director
Ms Michelle d’Almeida
Independent Non-Executive Director
Executives
Ms Susan Symmons
Company Secretary
Ms Andrea Hoskins
Chief Operating Officer
Mr Barry Hartnett
Chief Financial Officer
Mr. Joseph Terribile
Chief Information Officer
Appointed effective 30 November 2021
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 benefit 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.
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’).
Pioneer Credit Limited
30 June 2022
19
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.
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
2022
$’000
2021
$’000
2020
$’000
2019
$’000
2018
$’000
(33,094)
(40.48)
-
-
-
N/A
$0.42
(17.0)%
(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%
For FY19 a dividend payment of $2.7m was declared based on the half-year reported profit of $5.5m. The
dividend payout ratio was 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 half-year 2019.
2. Remuneration governance
The Board has a People, Remuneration and Nominations Committee (‘PRNC’) committee which was formed
on 6 July 2022, merging the Remuneration and Nominations Committees. The PRNC has a Charter setting
out its responsibilities and is supported by a robust internal framework, which includes:
-
-
-
-
-
a strong and embedded corporate culture, built around the Pioneer Principles;
a risk register that records 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.
Pioneer Credit Limited
30 June 2022
20
Role of the PRNC
The PRNC is responsible for making recommendations to the Board on:
-
-
Base salaries for executives, and Board and Committee fees for non-executive Directors; and
The adequacy and structure of any incentives, including equity-based remuneration plans, and the
quantum provided to executives.
The Committee reviews its remuneration strategy at least annually to ensure that remuneration structures
are fair and support the attraction and retention of quality people who are aligned to, and can deliver on, the
Company’s strategy.
As required under the ASX Corporate Governance Principles, neither the Managing Director nor any other
executive participates in any decision relating to their own remuneration, nor that of their peers.
The Corporate Governance Statement and the PRNC Charter provide full details of this Committees role.
Use of remuneration consultants
To ensure the PRNC is fully informed when making decisions it will periodically seek external advice. Any
appointment of an external advisor is made in accordance with the ASX Corporate Governance Principles.
The Company has previously engaged consultants to assist in the review of remuneration of its executives.
In May 2022, a remuneration consultant was appointed with the intention to review and support the design of
an LTI framework as part of our remuneration strategy.
The proposed design of the LTI framework was presented to the People, Renumeration and Nominations
Committee in July 2022 with the Committee requesting further information on the setting of long-term targets,
such that they are fully aligned to good shareholder outcomes, before a recommendation is made to the
Board.
A total of $16,500 was paid in relation to the LTI framework in FY22.
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.
The policy sets out prohibited trading periods which include:
-
-
the 30-day period prior to, and 3-day period after, release of the full year and half year results; and
the 30-day period prior to, and 3-day period after, the AGM.
Executives are prohibited from to hedging their exposure to any securities held in the Company.
3. Executive remuneration
The Board recognises that satisfying appropriate remuneration expectations is important in attracting and
retaining quality people.
Pioneer Credit Limited
30 June 2022
21
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 which vests
over a medium time frame.
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 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 up to 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 by making an ex-gratia payment.
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. The review
process is consultative in nature and contains an assessment of the executive’s performance against their
responsibilities and the Company’s expectations.
including
The Chair meets regularly with the Managing Director to discuss all matters pertaining to the operations of
financial
the Company
performance. 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 PRNC completes a formal
performance evaluation of the Managing Director at least annually against the stated objectives.
individual performance, strategy,
leadership, management, and
Remuneration for all executives is reviewed at least annually. There is no guaranteed increase in any
executive’s employment contract.
Long term incentives
At the Annual General Meeting (‘AGM’) held on 29 October 2014, shareholders approved the Pioneer Credit
Equity Incentive Plan (‘the Plan’) and at the 2017 AGM the Company refreshed the Plan under ASX Listing
Rule 7.2 (Exception 9(b)). The Plan was further refreshed at the 2020 AGM.
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 awarded 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.
The Plan is currently being updated to provide executives and shareholders greater clarity on what the targets
are for any payment to be made under it, and the amount that will be paid on the achievement of targets. This
Pioneer Credit Limited
30 June 2022
22
intended change to the Plan, which has occurred on advice from the Company’s remuneration consultants
will be fully explained to, and where required, presented to shareholders for approval.
Long term incentive awards in place during the year
LTI awards were made under the Plan during the period as follows:
Instrument
Quantum
Grant Date
Key performance measures Employment at vesting date
Performance Rights for Ordinary Shares
500,000 Performance Rights
1 July 2021
Performance period
Dividends
Fair value, vesting date and
fully vested period schedule
The Company’s Shares trade at a VWAP of +>$1.00 for at least 30 days
1 July 2021 to 23 September 2024
No dividends are paid on Performance Rights
$138,400
23 September 2024
100%
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 fixed fee policy for time and responsibilities, that are not linked to individual performance.
Non-Executive Directors fees for FY22 were:
$160,000 (plus Superannuation)
- Chairman Fee
- Audit and Risk Management Committee Chair $120,000 (plus Superannuation)
$100,000 (plus Superannuation)
- Non-Executive Director
A Non-Executive Director is not entitled to receive any performance-based fee. They may be entitled to fees
or other amounts, as the Board determines, where they perform duties outside the scope of their ordinary
duties and are entitled to be reimbursed for out of pocket expenses reasonably incurred.
The maximum pool of non-executive director fees approved by shareholders at the 29 November 2018 AGM
was $800,000. Non-Executive Director fees have remained the same since 27 September 2017.
Pioneer Credit Limited
30 June 2022
23
5. Statutory remuneration disclosures
The following tables details KMP remuneration in accordance with applicable accounting standards.
Statutory remuneration tables
Non-Executive Directors
Fixed remuneration
Variable remuneration
Year
Cash
salary
Non-
monetary
benefits
Annual
and long
service
leave
Post-
employment
benefits
Other
Termination
benefits
Cash
bonus
Post-
employment
benefits
Options
Indeterminate
rights
Total
Mr Michael Smith
2022
160,000
2021
160,000
Ms Andrea Hall
2022
120,000
2021
120,000
Ms Ann Robinson 1
-
2022
2021
93,462
Mr Peter Hall
2022
100,000
2021
47,308
Mr Stephen Targett
100,000
2022
2021
6,923
Ms Michelle d’Almeida
2022
100,000
2021
4,231
Total
2022
580,000
2021
431,924
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16,000
15,200
12,000
11,400
-
8,879
10,000
4,494
10,000
658
10,000
402
58,000
41,033
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 Ms Ann Robinson resigned effective 7 June 2021
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
176,000
175,200
132,000
131,400
-
102,341
110,000
51,802
110,000
7,581
110,000
4,633
638,000
472,957
Pioneer Credit Limited
30 June 2022
24
Executive Director
Year
Fixed remuneration
Cash
salary
Non-
monetary
benefits
Mr Keith John
Annual
and long
service
leave
Post-
employment
benefits
Variable remuneration
Other4 Termination
benefits
Cash
bonus
Post-
employment
benefits
Options
Indeterminate
rights
Total
2022
2021
777,623
12,906
20,807
27,500
-
752,885
14,268
8,387
25,000 200,000
-
-
-
-
-
426,400
274,734 1,539,970
- 2,573,733
594,195 4,168,468
Executive Key Management Personnel
Year
Fixed remuneration
Cash
salary
Non-
monetary
benefits
Ms Susan Symmons1
Annual
and long
service
leave
Post-
employment
benefits
Variable remuneration
Other4 Termination
benefits
Cash
bonus
Post-
employment
benefits
Options
Performance
rights
Total
2022
2021
295,894
12,906
41,495
27,500
-
271,038
14,268
42,147
25,000 150,000
Ms Andrea Hoskins
2022
2021
446,000
12,906
25,436
321,231
14,268
21,389
27,500
25,000
Mr Barry Hartnett
445,385
12,906
41,560
27,500
301,154
14,268
46,839
25,753 100,000
2022
2021
2022
2021
2022
2021
Total
Mr Joseph Terribile2
Mr Jason Musca3
-
-
308,923
190,769
5,772
12,933
14,861
-
-
-
-
-
-
-
22,477
25,000
-
-
-
-
-
-
-
-
91,172
12,308
91,172
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,547
398,342
30,934
533,387
68,054
579,896
6,919
388,807
176,426
703,777
148,142
636,156
-
-
-
-
224,335
-
91,172
368,708
-
426,400
539,761 3,537,492
- 2,573,733
780,190 6,095,526
2022
2,155,671
57,396
142,231
124,861
2021
1,955,231
57,072
141,239
125,753 450,000
12,308
1Ms. Susan Symmons transitioned to 0.8 Full Time Equivalent during the financial year
2Mr. Joseph Terribile commenced effective 30 November 2021
3Mr. Jason Musca commenced effective 25 May 2020 and resigned effective 4 June 2021
4Represents ex-gratia payments in FY21 to three executives who were key to the refinancing process
Pioneer Credit Limited
30 June 2022
25
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 Barry Hartnett
Mr. Joseph Terribile
2022
2022
2022
2022
2022
Fixed remuneration
At risk – STI
At risk – LTI
54%
95%
88%
75%
100%
-
-
-
-
-
46%
5%
12%
25%
-
Contractual arrangements with senior executives
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
Mr. Joseph Terribile
Chief Information Officer
$778,500 per annum
plus superannuation
$350,000 per annum
plus superannuation pro-
rata on a 0.8 FTE basis
$450,000 per annum
plus superannuation
$450,000 per annum
plus superannuation
$320,000 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
Continuing agreement with 6
months’ notice by either party
Pioneer Credit Limited
30 June 2022
26
6. Security holdings held by KMP
The tables below show the number of 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
Balance at the start
of the year
Granted
Vested Forfeit
Balance at the
end of the year
Unvested
Name
Indeterminate Rights
Executive Director
Mr Keith John
875,000
-
(425,000)
Performance Rights
Executive Key Management Personnel
Ms Susan Symmons
Mr Barry Hartnett
Ms Andrea Hoskins
Mr Joseph Terribile
Total
345,000
1,510,000
500,000
-
3,230,000
-
100,000
100,000
-
200,000
(19,500)
(67,500)
-
-
(512,000)
Listed Options
-
-
-
-
-
-
450,000
450,000
325,500
1,542,500
600,000
-
2,918,000
325,500
1,542,500
600,000
-
2,918,000
These options were issued where a member of KMP participated in the Company’s priority offer completed on
18 May 2022. These options have an exercise price of $0.80 and expire on 31 March 2025.
Name
Non-Executive Directors
Mr Michael Smith
Ms Andrea Hall
Mr Peter Hall
Mr Stephen Targett
Ms Michelle d’Almeida
Total – Non-Executive Directors
Executive Director
Mr Keith John
Executive Key Management Personnel
Ms Susan Symmons
Mr Barry Hartnett
Ms Andrea Hoskins
Mr Joseph Terribile
Total – Executive Key Management Personnel
Total held by KMP
Balance at the
start of the
year
Issued
Exercised
Balance at the
end of the year
-
-
-
-
-
-
-
-
-
-
-
-
-
36,365
-
-
136,363
36,363
209,091
2,727,273
36,363
454,545
272,727
272,727
3,763,635
3,972,726
-
-
-
-
-
-
-
-
-
-
-
-
-
36,365
-
-
136,363
36,363
209,091
2,727,273
36,363
454,545
272,727
272,727
3,763,635
3,972,726
Pioneer Credit Limited
30 June 2022
27
Share Purchase Facility
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 Share 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 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 Shares.
Name
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
Management loans
250,000
-
-
250,000
In May 2022, Loans were issued to four executives for the purposes of acquiring shares under the Priority
Offer completed on 18 May 2022. The shares were issued at a purchase price of $0.55 with an attaching Listed
Option on a 1 for 1 basis, with an exercise price of $0.80 expiring in March 2025.
The loans are on a full recourse basis, with interest payable monthly at a rate of 5% per annum and are secured
by the underlying shares.
The company engaged an external advisor to confirm that the transaction was of an arm’s length nature and
no employee benefits have been recognised in relation to the loan or share transaction.
Name
Balance at the
start of the year
Loans
provided
Interest paid and
payable for the year
Mr Keith John
Mr Barry Hartnett
Ms Andrea Hoskins
Mr Joseph Terribile
Total
-
-
-
-
-
1,500,000
250,000
150,000
150,000
2,050,000
8,836
1,473
884
884
12,077
Balance at
the end of
the year
1,500,000
250,000
150,000
150,000
2,050,000
Highest
indebtedness
during the year
1,500,000
250,000
150,000
150,000
2,050,000
Because of the security interest, no provision has been recognised for doubtful debts in relation to the loans.
Ordinary Shares
250,000 Shares were issued to two executives on 1 July 2021. The key terms are:
a)
b)
The fair value per share was $0.4025,
The shares are restricted from trading for 3 years from the date of issue
The shares will be released from a holding lock after 3 years from issue or the date of cessation of employment
from the Company. As there are no vesting conditions the shares have been expensed at the date of issue
Pioneer Credit Limited
30 June 2022
28
Name
Balance at the start
of the year
Granted
Vested Forfeit Balance at the
end of the year
Unvested
Executive Key Management Personnel
Mr Barry Hartnett
Ms Andrea Hoskins
Total
-
-
-
125,000
125,000
250,000
125,000
125,000
250,000
-
-
-
-
-
-
-
-
-
Unlisted Options
Name
Balance at the
start of the year
Granted Vested Forfeited
Balance at the
end of the year
Vested Unvested
8,000,000
-
-
-
8,000,000
5,000,000 3,000,000
Executive Director
Mr Keith John
Shareholdings
Name
Non-Executive Directors
Mr Michael Smith
Ms Andrea Hall
Mr Peter Hall
Mr Stephen Targett
Ms Michelle d’Almeida
Total – Non-Executive Directors
Executive Director
Mr Keith John
Executive Key Management Personnel
Ms Susan Symmons
Mr Barry Hartnett
Ms Andrea Hoskins
Mr Joseph Terribile1
Balance at the
start of the year
Other changes
during the year
Balance at the
end of the year
845,940
97,887
-
-
-
943,827
36,365
-
-
136,363
36,363
209,091
882,305
97,887
-
136,363
36,363
1,152,918
6,067,461
5,175,473
11,242,934
418,791
167,991
-
-
78,779
605,379
272,727
272,727
497,570
773,370
272,727
272,727
Total – Executive Key Management Personnel
6,654,243
6,405,085
13,059,328
Total held by the KMP
7,598,070
6,614,176
14,212,246
1 Mr Joseph Terribile commenced effective 30 November 2021
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 expired on 1 January 2022 and was at arm’s-length basis and for the year ended 30
June 2022, the net amount of $17,322 (inclusive of GST) was paid to JFPIT in respect of the lease. No amount
was owing to the related party at 30 June 2022.
Pioneer Credit Limited
30 June 2022
29
JFPIT is the owner of 188 Bennett Street, East Perth which was leased by the Company as part of the
Company’s COVID disaster recovery strategy on 3 February 2022. The Lease was entered into following an
assessment by the Independent Directors of the Company that the lease was at arm’s length, that the
commercial benefit was to the Company, and that it was a necessary step to protect the Company from the
vast changing environment that the omicron variant of COVID presented in Western Australia at the time.
The lease expires on 2 February 2023, unless renewed by the Company, and is at arm’s length terms on terms
and conditions no more favourable than those which it is reasonable to expect would have been adopted if
dealing with an unrelated individual at arm’s length in the same circumstances. For the year ended 30 June
2022 the net amount of $18,979 (inclusive of GST) was paid to JFPIT in respect of the lease. No amount was
owing to the related party at 30 June 2022.
Contracting Services with Alana John Design
During the year, the Company leased the space located at 188 Bennett Street, East Perth. Alana John Design,
a design firm owned by the Managing Director’s wife was appointed to design and project manage the fit out
of the leased space.
Alana John Design had previously designed, and project managed each of the Company’s four floors at 108
St Georges Terrace, Perth. Significant efficiencies were gained in appointing the firm given their previous
experience and knowledge with respect to the Company’s requirements and ensuring that the look and feel of
the new leased space is consistent with that of the Company’s existing fit outs.
Alana John Design was paid normal commercial rates, in the sum of $34,403 (inclusive of GST), and this is
deemed to be an arm’s length transaction for the year ended 30 June 2022.
Loans from related parties
Medium Term Notes (‘MTN’)
Mr Keith John is a Director and Secretary of Avy Nominees Pty Ltd, the trustee of the KR & AN John Family
Superannuation Fund (‘JFSF’). JFSF held 500 MTN, with a face value of $500,000 at the beginning of the
fiscal year. The notes were issued on an arm’s length basis.
On 22 October 2021, the majority of the registered holders of the outstanding MTN (including JFSF), voted in
favour of the Special Resolution to amend the terms of the MTN. The beneficial holders that voted in favour
were entitled to receive a fee of 0.5% of the outstanding principal amount to each MTN. The Company
completed the financial close of the refinancing of its debt facilities on 8 November 2021.
On 23 December 2021, the Company held a general meeting of shareholders for the exchange of 500 MTN
held by JFSF for a face value of $500,000 in consideration for the issue of 833,333 shares at $0.60 per share
and the 500 MTNs were cancelled upon exchange.
During the period $20,095 in interest and $2,500 in consent fee were paid on to Midbridge Nominees Pty Ltd
in relation to the note transactions. At 30 June 2022, JFSF no longer held any MTNs.
Pioneer Credit Limited
30 June 2022
30
Participation in the Senior Facility Agreement – Midbridge Investments Pty Ltd
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 $1,000,000 under the Syndicate
Facility Agreement (‘SFA’) arranged by Nomura Australia.
Midbridge was paid $110,613 in interest during the period, and on refinance of the Senior Debt Facilities on 8
November 2021, the principal balance of $1,000,000 was repaid.
In consideration of other syndicate members entering the SFA, Midbridge provided the other syndicate
members a real estate backed guarantee and mortgage security to the value of $2.5m. These security interests
were extinguished as part of the Company’s refinance of its Senior Debt Facilities on 8 November 2021.
Participation in the Senior Facility Agreement – Shucked Investments Pty Ltd
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.
During the fiscal year Shucked received interest payments to the sum of $11,061, and on refinance of the
Senior Debt Facilities on 8 November 2021, the principal balance of $100,000 was repaid.
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.
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 (‘ARMC’), 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:
Pioneer Credit Limited
30 June 2022
31
a) all non-audit services have been reviewed by the ARMC 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 (including Independence Standards).
A copy of the Auditor’s Independence Declaration under section 307C of the Corporations Act 2001 is on
page 33. During the year the following fees were paid or payable for non-audit services.
Deloitte Touche Tohmatsu
Total remuneration for non-audit services
Rounding of amounts
2022
$
2021
$
158,263 165,000
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.
Michael Smith
Chairman
Perth
31 August 2022
Pioneer Credit Limited
30 June 2022
32
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Tower 2, Brookfield Place
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
31 August 2022
The Board of Directors
Pioneer Credit Limited
Level 6, 108 St Georges Terrace
Perth WA 6000
Dear Board Members
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 2022, 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 Corporate Governance Statement is dated 30 June 2022 and reflects the corporate governance practices
in place throughout the 2022 financial year and was approved by the Board on 25 August 2022. The Group's
Corporate Governance Statement can be viewed at:
https://pioneercredit.com.au/corporate/governance
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 2022
34
• 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 document 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 2022
35
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 2022
36
Pioneer Credit Limited ABN 44 103 003 505
Annual Report
For the year ended 30 June 2022
Financial Statements
Contents
Consolidated statement of financial position 38
Consolidated statement of profit or loss and other comprehensive income
39
Consolidated statement of changes in equity
40
Consolidated statement of cash flows 41
Notes to the consolidated financial statements
42
Pioneer Credit Limited
30 June 2022
37
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 liabilities
Borrowings
Provisions
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
2022
$’000
2021
$’000
13
14
18
12
15
16
16
17
18
12
15
20
19
21
17
19
17
21
24
24
23,071
6,174
979
3
96,298
126,525
804
958
8,446
3,504
-
199,218
10,373
855
818
53
73,397
85,496
351
1,558
4,930
2,286
-
175,697
212,930
184,822
339,455
270,318
28,721
20,378
1,971
961
52,031
5,467
425
1,518
3,060
10,470
236,283
9,090
971
200,656
3,327
1,196
246,344
205,179
298,375
215,649
41,080
54,669
103,589
9,545
(72,054)
41,080
81,755
11,874
(38,960)
54,669
41,080
54,669
The consolidated statement of financial position should be read in conjunction with the accompanying notes.
Pioneer Credit Limited
30 June 2022
38
Consolidated statement of profit or loss and other comprehensive income
Continuing operations
Interest income at amortised cost
Net impairment (loss) on PDPs
Other income
Employee expenses
Finance expenses
Direct liquidation expenses
Information technology and communications
Depreciation and amortisation
Consultancy and professional fees
Other expenses
Fair value adjustments on financial assets
Gain on lease modification
(Loss) / Profit before income tax
Income tax (expense)/benefit
Note
15
15
8
11
9
10
2022
$’000
62,574
(8,913)
653
2021
$’000
57,020
(4,286)
662
54,314
53,396
(33,176)
(39,131)
(2,691)
(3,490)
(2,822)
(2,503)
(3,549)
-
7
(30,634)
(26,699)
(1,997)
(4,013)
(3,783)
(2,385)
(3,212)
2,288
145
(33,041)
(16,894)
12
(53)
(2,761)
(Loss) / Profit for the period from continuing operations
(33,094)
(19,655)
Total comprehensive (loss) / income for the year is attributable to:
Owners of Pioneer Credit Limited
(33,094)
(19,655)
(Loss) / Earnings per share
Basic (cents per share)
Diluted (cents per share)
33
33
(40.48)
(40.48)
(30.43)
(30.43)
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 2022
39
Consolidated statement of changes in equity
Contributed
Equity
Note
$’000
Share
Based
Payment
Reserve
$’000
Warrant
Reserve
Other
Reserves
Retained
Earnings
Total Equity
$’000
$’000
$’000
$’000
Balance at 1 July 2020
80,049
3,870
Total comprehensive (loss)/income for the year
-
-
80,049
3,870
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)
-
-
7,485
(2,025)
2,544
5,460
Balance at 30 June 2021
24
81,755
6,414
5,460
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(19,960)
63,959
(19,655)
(39,615)
(19,655)
44,304
-
655
-
-
-
-
(745)
3,625
-
7,485
-
655
10,365
(38,960)
54,669
Balance at 1 July 2021
81,755
6,414
5,460
-
(38,960)
54,669
Total comprehensive (loss)/income for the year
-
-
-
Transactions with owners in their capacity as
owners:
Issue of shares
Treasury share acquired
Share based payments
Issue of treasury shares to employees
Warrants converted
Foreign currency conversion
24
24
11
24
24
24
81,755
6,414
5,460
20,908
(2,370)
-
525
2,771
-
-
-
1,126
(525)
-
-
-
-
-
-
(2,771)
-
21,834
601
(2,771)
-
-
-
-
-
-
-
(159)
(159)
(33,094)
(33,094)
(72,054)
21,575
-
-
-
-
-
-
-
20,908
(2,370)
1,126
-
-
(159)
19,505
Balance at 30 June 2022
24
103,589
7,015
2,689
(159)
(72,054)
41,080
Pioneer Credit Limited
30 June 2022
40
Consolidated statement of cash flows
Restated
2021
$’000
2022
$’000
Note
Cash flows from operating activities
Receipts from liquidations of PDPs and services (inclusive of goods and
services tax)
106,739
95,350
Payments to suppliers and employees (inclusive of goods and services tax)
(52,036)
(41,122)
Interest received
Interest paid
Net income taxation (paid)/refund
54,703
54,228
22
31
(25,730)
(42,040)
(3)
580
Cash flows from operating activities before changes in operating assets
28,992
12,799
Acquisitions of PDPs
Net cash outflow used in operating activities
(75,750)
(29,818)
13
(46,758)
(17,019)
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangible assets
Proceeds on sale of other assets
Net cash flow from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Payments for third party financing transaction costs
Proceeds from issue of ordinary shares net of issue 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
(696)
(116)
-
(812)
(102)
(1,326)
2,288
860
233,163
169,000
(174,154)
(142,033)
(6,716)
12,544
(2,199)
(2,370)
60,268
12,698
10,373
23,071
(8,471)
-
(2,238)
(745)
15,513
(646)
11,019
10,373
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Pioneer Credit Limited
30 June 2022
41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
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 intangible assets
17. Leases
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
43
43
45
46
47
55
58
59
59
59
59
60
62
63
63
67
69
70
71
75
76
76
77
78
80
81
82
82
83
83
84
85
87
88
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
1. Reporting entity
The Consolidated Financial Statements for the financial year ended 30 June 2022 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 Consolidated Financial Statements were authorised for issue by the Board of Directors on 31 August
2022.
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, assume 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 2022
43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
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’)
- Note 17 (p.69) - Leases
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:
New Standard
AASB 2020-3 Amendments to Australian Accounting
Standards – Annual Improvements 2018–2020 and
Other Amendments
to Australian
- Amendments
AASB 2021-3
Accounting Standards – COVID-19 Related Rent
Concessions
AASB 2020-8 Amendments to Australian Accounting
Standards – Interest Rate Benchmark Reform –
Phase 2
Overview of Changes
AASB 9 Financial instruments - to clarify the fees an
entity includes when assessing whether the terms of
a new or modified financial liability are substantially
different from the terms of the original financial liability
Allow rent deferrals / waivers due to COVID-19
received on or before 30 June 2022 to be treated as
variable lease payments rather than a modification of
the lease.
Instruments, AASB
Amends AASB 4 Insurance Contracts, AASB 9
Financial
139 Financial
Instruments: Recognition and Measurement, AASB 7
Financial Instruments: Disclosures and AASB 16
Leases to address issues that may affect financial
reporting during interest rate benchmark reform,
including the effect of changes to contractual cash
flows or hedging relationships resulting from the
replacement of an interest rate benchmark with an
alternative benchmark rate.
New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30
June 2022 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 2022
44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
e)
Restatement of comparative information
The Group has reviewed its presentation in the Statement of cash flows in line with the requirements of AASB
107 Statement of Cashflows. In accordance with AASB 108 Accounting Policies, Changes in Accounting
Estimates and Errors, the Group has corrected the classification of Acquisitions of PDPs– financial assets
from investing activities to operating activities to better align to the revenue generating activities of the group
as required by AASB 107. There is no impact of the reclassification on either Earnings per share (“EPS”),
Statement of Financial Position, or the Statement of Financial Performance.
Consolidated statement of cash flows
Cash flows from/ (used in) operating activities
Cash flows from/ (used in) investing activities
Net increase/(decrease) in cash and cash equivalents
Reconciliation of profit after income tax to net cash
flows from operating activities
Net cash flow from operating activities
3. Going Concern
As reported
$’000
30 June 2021
Adjustment
$’000
Restated
$’000
12,799
(28,958)
(646)
(29,818)
29,818
-
(17,019)
860
(646)
12,799
(29,818)
(17,019)
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 2022, the Group
generated a net loss before tax of $33.0m (2021: loss $16.9m) and had positive working capital of $74.5m
(2021: $75.0m).
During the period the Group completed a $200m refinancing of its Senior Debt Facility (‘Facility’) (please refer
to Note 19), increased the MTNs to $60m and raised $21.6m of equity, to support the acquisition of Purchased
Debt Portfolios (‘PDPs’) and reduce the leverage of the Group.
The Facility and MTNs contain covenants which are closely linked to the carrying value of the PDPs and the
level and timing of PDP acquisitions and liquidations which include sales. Whilst the forecast prepared by
Management using their best estimate assumptions does not indicate any covenant breaches in the period
to August 2023, this is dependent on the ability of the business to operate in line with forecasts, and future
market conditions which are out of the control of the Group and may be subject to change.
If a breach with respect to an obligation under the Facility appeared likely to occur or did occur, the Company
has numerous options available to remedy the triggering event and prevent a breach under the terms of the
Facility, beyond increasing liquidations. These include but are not limited to:
• obtaining a waiver of any likely breach from the financiers,
•
ceasing to acquire PDP’s, thereby generating additional net cash,
•
•
the ability to raise funds through an equity issue,
selling non-core assets, or part of its PDP portfolio
Pioneer Credit Limited
30 June 2022
45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
If a breach is not waived or remedied through one or a combination of the above options, the financiers could
declare that all or a part of the debt is due and payable on demand. In addition, a default under the Facility
would cause a cross default under the MTNs.
Management have prepared a detailed cash flow forecast, using their best estimate assumptions based on
historical performance which includes:
• PDP acquisitions, funded from a combination of the Facility and free cash,
liquidations of PDPs and sale of non-core PDPs,
•
•
• delivery of business initiatives, including reducing the Group’s cost to service PDPs.
recruitment of experienced employees in Western Australia and in the eastern states, and
The Directors have assessed the cash flow forecast based on their expectation including liquidations,
acquisitions, and sales. In making their assessment the Directors have considered the impact of macro-
economic factors on the Group’s operating initiatives and performance, in particular on PDP acquisitions and
the flow on impact to liquidations. The Directors have also considered the impact of the Group’s operational
focus on recruiting experienced employees, continuing to transition more customers onto payment
arrangements and the focus on reducing the cost to service.
The key assumptions underpinning the cash flow forecast are inherently uncertain and are subject to variation
due to factors which are outside the control of the Group. 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
Refinance transactions
On 8 November 2021, the Company completed financial close on its refinancing of debt facilities.
The refinance included:
• A $200.0m four-year Senior Facility Agreement (‘Facility’) with global investment manager Fortress
Investment Group (‘Fortress’);
• Extending the maturity of its MTN’s to 5 years expiring in 2026, and upsized to $60m through a fully
subscribed offer; and
• Completing an equity raise of $5.4m from institutions and high net worth investors at a premium to
the prevailing share price.
On 23 December 2021, Pioneer held a general meeting of shareholders for the exchange of 500 MTN held
by Managing Director, Keith John, for a face value of $500,000 in consideration for the issue of 833,333
shares at $0.60 per share. The 500 MTNs were cancelled upon exchange, reducing the total amount of the
MTN outstanding to $59.5m.
On 16 March 2022, the cornerstone investor and holder of MTNs proposed to swap $4.0m of MTNs to equity
at a placement price of $0.55 per share as part of an equity raise. This was agreed to by the Company and
as a result $4.0m of MTN’s were extinguished. The total amount of MTNs outstanding was reduced to a face
value of $55.5m, and remained at that level at 30 June 2022.
On 23 March 2022, the Company executed an amendment deed to the Facility to incorporate an additional
tranche totalling $40.0m for the purpose of acquiring a performing portfolio of assets. During the period,
$5.9m was repaid against this facility.
Pioneer Credit Limited
30 June 2022
46
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
Pioneer’s access to debt funding at 30 June 2022 comprises senior and subordinated facilities totalling
$289.6m and as at the reporting date $26.25m remains undrawn and available for use.
For full details on the refinance transactions during the period please refer to Note 19
Equity raises
In addition to the $5.4m in equity raised (before transaction costs) as part of the refinance of its facilities in
November 2021, the Company completed an equity raise on 16 March 2022 of $11.4m (before transaction
costs) from institutions and high net worth investors through the issue of 20,636,361 new fully paid ordinary
shares at a price of $0.55 per share, and following shareholder approval the equity raise participants also
received an attaching 1-for-1 option at an exercise price of $0.80, expiring on 31 March 2025. This placement
enabled the Company to fund the acquisition of a PA Portfolio, and any additional funds were allocated to
working capital.
In May 2022, a further $4.8m (before transaction costs) which was raised from existing substantial
shareholders through a priority offer of a total of 8,725,365 shares, with a 1-for-1 attaching option issued at
$0.55 per share. The attaching options are exercisable at $0.80 with an expiry date of 31 March 2025
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 2022. 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.
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.
Pioneer Credit Limited
30 June 2022
47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
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.
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.
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 2022 and
the corresponding credit losses experienced within this period. The historical loss rates are adjusted to reflect
Pioneer Credit Limited
30 June 2022
48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
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.
Refer to note 6 for detailed Impairment methodology for trade receivables.
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 2022
49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
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. In calculating the quantum of a substantial
modification, the incremental borrowing rate is reset at the date of modification of the lease.
Pioneer Credit Limited
30 June 2022
50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
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. Where the Group’s borrowings include floating rate
instruments, the Group recognises borrowings initially at the principal amount owing net of directly attributable
transaction costs incurred. Where the simplified approach is taken for floating rate instruments, the directly
attributable transaction costs are amortised on a straight-line basis over the term of the facility.
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
Pioneer Credit Limited
30 June 2022
51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
to settle the obligation and the amount has been reliably estimated. Provisions are not recognised for future
operating losses.
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 2022
52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
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 2022
53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
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 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 2022
54
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
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 and other receivables
Purchased Debt Portfolios
Interest rate
Variable
Variable
Fixed
Financial liabilities
Trade and other payables (excluding interest payable) Variable
Borrowings – before transaction costs:
Senior financier
Medium term notes
Other loans
Market risk management
Interest Rate Risk
Variable
Variable
Fixed
2022
$’000
2021
$’000
23,071
6,174
295,516
10,373
855
249,094
28,721
4,558
199,573
53,394
502
161,092
39,639
-
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.
Pioneer Credit Limited
30 June 2022
55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
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. In undertaking this
analysis, the group considers a wide range of economic papers on projected interest rate movements to
inform risk management processes. Based on these scenarios, the Group calculates the impact on profit or
loss of a defined interest rate shift and cashflow requirements under existing financing arrangements The
scenarios are run only for liabilities that represent the major interest-bearing positions. The simulation is done
on a monthly 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. The Group has several options available to improve the liquidity
position, such as ceasing to buy PDPs, raise funds through an equity raise, and selling non-core assets or
part of its PDP portfolio.
PDP risk is the risk that the Group will be impacted by its ability to acquire new PDPs 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.
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.
Pioneer Credit Limited
30 June 2022
56
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
At 30 June 2022
Trade and other payables
Borrowings (incl. interest and make-whole)
At 30 June 2021
Trade and other payables
Borrowings (incl. interest and make-whole)
Credit risk management
Within 1
year
$’000
Between 1
and 2
years
$’000
Between 2
and 5
years
$’000
Carrying
amount
$’000
28,721
20,378
49,099
5,467
425
5,892
-
11,821
11,821
-
224,462
224,462
28,721
256,661
285,382
-
200,656
200,656
-
-
-
5,467
201,081
206,548
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.
At 30 June 2022 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.
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.
Pioneer Credit Limited
30 June 2022
57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
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
Opening loss allowance as at 1 July
Increase / (Decrease) in provision for loss allowance
Amounts written-off during the period
Loss allowance at 30 June
2022
$’000
68
38
(8)
98
2021
$’000
97
(29)
-
68
The Group recognises a lifetime expected credit loss for trade receivables. The expected credit loss on these
financial assets are estimated using a provision matrix based on the Group’s historical credit loss experience,
adjusted for factors that are specific to the debtors, general economic conditions, and an assessment of both
the current as well as the forecast direction of conditions at the reporting date, including the time value of
money where appropriate.
To measure the expected credit losses, trade receivables have been grouped based on shared credit risk
characteristics and days past due. Grid 1 contains those receivables that have a positive repayment history,
made up of government funded agencies, listed financial institutions and other listed public entities. Grid 2
contains all other receivables made up of SME businesses, individuals, and other unlisted financial service
providers.
Days past due
0-30
31-60
61-90
91-120
121-150 Over 150 Total
Expected Credit Loss Rates
1.76%
Grid 1
7.88%
Grid 2
Gross Carrying Amounts
3.90%
8.95%
10.25%
10.34%
13.43%
12.51%
17.98%
15.93%
26.27%
18.02%
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Grid 1
Grid 2
Lifetime
expected loss
121
107
11
7. Segment information
26
36
4
5
-
-
22
1
3
16
-
3
285
6
475
150
77
98
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, Chief Financial Officer, and Chief
Information 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.
Pioneer Credit Limited
30 June 2022
58
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
8. Other income
Fees for services
Interest Income
Other
9. Finance expenses
Bank fees and borrowing expenses
Gain on modification of MTN1
Loss on derecognition of SFA1
Break fees
Commitment fees
Interest and finance charges paid/payable for financial liabilities not at fair value
Lease liability
1Refer to Note 19 – Borrowings for further information.
10. Other expenses
Occupancy costs
Administration expenses
Other
Impairment of tangible and intangible assets
11. Employee expenses
Wages and salaries
Superannuation
Change in liabilities for employee benefits
Share-based payment transactions
Other associated personnel expenses
2022
$’000
577
22
54
653
2021
$’000
605
31
26
662
2022
$’000
2,837
(122)
1,332
6,300
166
28,072
546
39,131
2021
$’000
1,035
-
1,067
-
137
23,980
480
26,699
2022
$’000
1,054
2,018
448
29
3,549
2021
$’000
975
1,939
156
142
3,212
2022
$’000
27,216
2,330
92
1,126
2,412
33,176
2021
$’000
23,027
1,925
300
3,721
1,661
30,634
Pioneer Credit Limited
30 June 2022
59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
12. Income tax
Income tax recognised in profit or loss
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
Numerical reconciliation of income tax expense to prima facie tax payable
(Loss) / profit from operations before income tax expense
Tax at the Australian tax rate of 30.0% (FY21: 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
2022
$’000
-
50
3
53
2021
$’000
-
-
2,761
2,761
(33,041)
(16,894)
-
-
-
-
-
-
2,761
2,761
2022
$’000
(33,041)
2021
$’000
(16,894)
(9,912)
58
338
50
(711)
-
8
10,222
(5,067)
38
1,116
64
(224)
(193)
16
7,011
53
2,761
Pioneer Credit Limited
30 June 2022
60
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
Deferred tax assets and liabilities
The balance comprises temporary differences attributable to:
Employee benefits (annual leave)
Retirement benefit obligations (superannuation payable)
Other accrued expenses (audit, accounting, payroll tax)
Other temporary differences (formation costs, legal and 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
Net deferred tax assets
2022
$’000
2021
$’000
421
28
449
364
68
432
159
81
1,674
2,100
(19)
2,229
-
505
(4,548)
(20)
(445)
1,369
535
(3,620)
-
-
-
-
Pioneer Credit Limited
30 June 2022
61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
13. Cash and cash equivalents
a) Cash and cash equivalents
Cash at bank
2022
2021
$’000
23,071
23,071
$’000
10,373
10,373
b) Reconciliation of profit after income tax to net cash inflow from operating activities
(Loss)/Profit for the period
Non-cash items in profit or loss:
Foreign currency translation
Other non-cash expenses
Fair value adjustment
Lease Liability Interest accrual
Impairment of tangible and intangible assets
Non-cash employee benefits expense
Other non-cash items
Income tax benefit
Depreciation and amortisation
Interest
(Increase)/decrease in assets:
Trade and other receivables
PDPs
Deferred tax assets
Other assets
Increase/(decrease) in liabilities:
Trade and other payables and liabilities
Interest payable
Income tax payable
Provisions
Net cash flow inflow used in operating activities before changes in operating
assets
Non-cash investing and financing activities
Fair value adjustments on financial assets
MTN to equity swap
Refinancing transaction fees equity swap
Other – KMP Loans
2022
$’000
(33,094)
2021
$’000
(19,655)
4
566
-
356
29
1,268
-
-
2,822
1,596
(5,319)
(44,153)
-
(161)
-
(18)
(2,262)
335
142
4,255
33
2,761
3,783
2,312
989
12,166
2,761
-
23,251
6,355
(50)
(228)
149
(25,196)
(581)
1,007
(46,758)
(17,019)
2022
$’000
-
4,500
1,940
2,050
2021
$’000
2,288
-
-
Pioneer Credit Limited
30 June 2022
62
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
14. Trade and other receivables
Trade receivables
Other receivables
15. Purchased debt portfolios
Current
Non-current
2022
$’000
547
5,627
6,174
2021
$’000
800
55
855
2022
$’000
96,298
2021
$’000
73,397
199,218 175,697
295,516 249,094
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 2022 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.
Interest on PDPs is accrued using the EIR on each portfolio and recognised as interest income at amortised
cost on the consolidated statement of profit or loss and other comprehensive income.
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
2022
$’000
249,094
99,493
(106,732)
62,574
(8,913)
2021
$’000
260,047
31,030
(94,717)
57,020
(4,286)
295,516
249,094
Pioneer Credit Limited
30 June 2022
63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
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 tranche level, which are assumed to have a maximum life of up to 15
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 $10.8m.
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 many 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 reviews 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 2022 of $295.5m would change by $14.3m in a downside
scenario and $14.3m 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.
Pioneer Credit Limited
30 June 2022
64
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
In calculating the carrying value of the assets based on expected future cash flows, inclusive of an impairment
charge, the Group 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
Group has the potential to affect forecast future cash flows and thereby impairment of the carrying value of
the PDP portfolio.
In assessing the reasonableness of forecast cash flows produced by the valuation model, management
considered the key factors affecting the current and expected Australian economic environment, including
the COVID pandemic, rising consumer interest rates and an inflationary environment currently being
managed through Reserve Bank policy measures. Improved household liquidity and strong employment
levels are considered as offsetting circumstances to these economic impacts for Pioneer’s customer base.
The Group’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 Group’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 2022 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 current economic environment and measured optimism on Australia’s long term economic future, the
scenarios model a period of dampened short-term performance followed by a full or partial recovery of the
variance and no outperformance 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:
Unemployment rate
Headline CPI
Domestic demand growth
RBA cash rate
Source: NAB - The Forward View, Australia (Jun 2022)
2022
%
3.6
6.2
5.5
2.1
2023
%
3.7
2.7
2.8
2.6
2024
%
4.0
2.5
2.4
2.6
Pioneer Credit Limited
30 June 2022
65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
The Group has applied a probability-weighted view capturing various 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 $2.0m.
Scenario
Weighting
Deferred
cash flows
Period of
impact
Recovery
rate
Recovery
period
Future out
performance
Impact
$’m
Low impact
Medium impact
Severe downside
35%
60%
5%
(5%)
(8%)
(10%)
6 months
12 months
18 months
100%
100%
50%
12 months
24 months
36 months
nil
nil
nil
(0.4)
(2.1)
(8.2)
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 overlay
of $2.7m.
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.
For the PDP valuation at 30 June 2022, the Group considered the recent and expected impacts to cash flows
resulting from disruption to the Group’s workforce as a result of COVID-related absences, transition to a
hybrid work model and changes in the timing and quantum of the FY22 purchasing programme which affects
workforce planning and operational strategies. Consideration of these impacts resulted in a short-term
dampening of the forecast cash flows produced by the valuation model.
Part of management’s assessment also included consideration of the initiatives and underway to drive
improvements in liquidations, such as:
• Continued focus on creating long term value through creation of payment arrangements; and
•
Investment in Pioneer’s Employee Value Proposition to improve in employee retention and maintain
strong levels of experience in the business; and
• An expansion of Pioneer’s operational headcount on the east coast of Australia.
These initiatives are expected to generate significant benefits for Pioneer, across both an uplift in liquidations
and decrease in cost to service in future years. This resulted is the inclusion of a positive overlay of $7.4m at
30 June 2022.
Pioneer Credit Limited
30 June 2022
66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
16. Property, plant and equipment and intangible assets
a) Property, plant, and equipment
2021
At 1 July 2020
Cost
Accumulated depreciation
Net book amount
At 30 June 2021
Opening net book amount
Additions
Depreciation charge
Closing net book amount
Cost
Accumulated depreciation
Net book amount
2022
At 1 July 2021
Opening net book amount
Additions
Disposals
Transfers
Depreciation charge
Closing net book amount
At 30 June 2022
Cost
Accumulated depreciation
Net book amount
Plant and
equipment
Furniture,
fittings, and
equipment
Leasehold
improvements
Total
$’000
$’000
$’000
$’000
2,914
(2,614)
300
300
51
(292)
59
2,965
(2,906)
59
59
591
-
57
(103)
604
3,556
(2,952)
604
665
(458)
207
207
43
(153)
97
708
(611)
97
97
12
-
(39)
(27)
43
720
(677)
43
3,477
(2,914)
7,056
(5,986)
563
1,070
563
8
(376)
195
1,070
102
(821)
351
3,485
(3,290)
7,158
(6,807)
195
351
195
93
-
(5)
(126)
157
351
696
-
13
(256)
804
3,578
(3,421)
7,854
(7,050)
157
804
Pioneer Credit Limited
30 June 2022
67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
b)
Intangible assets
2021
At 1 July 2020
Cost
Accumulated amortisation
Net book amount
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
2022
At 1 July 2021
Opening net book amount
Additions
Disposals
Transfers
Amortisation
Closing net book amount
At 30 June 2022
Cost
Accumulated amortisation and impairment
Net book amount
Amortisation methods and useful lives
Software
and
licenses
$’000
5,049
(4,117)
932
932
1,326
(105)
(142)
(453)
1,558
6,375
(4,817)
1,558
1,558
116
(4)
(14)
(698)
958
6,491
(5,533)
958
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
Pioneer Credit Limited
30 June 2022
68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
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
basis.
17. Leases
a) Right of use assets
Balance at 1 July 2020
Depreciation
Balance at 30 June 2021
Balance at 1 July 2021
Revaluation of lease asset on modification
Depreciation
Balance at 30 June 2022
b) Lease liabilities
Current lease liability
Non-current lease liability
Maturity analysis – undiscounted
Lease commitments (principal and interest) at 30 June
2022
Within one year
Later than one year but no later than five years
Later than 5 years
$’000
7,440
(2,510)
4,930
4,930
5,383
(1,867)
8,446
2021
$’000
3,060
3,327
6,387
$’000
961
7,107
1,983
10,051
2022
$’000
961
9,090
10,051
On 31 January 2022, the Group entered into a Lease extension agreement with Brookfield Funds
Management Limited extending the non-cancellable period of premises leased at 108 St Georges Terrace,
Perth to 30 June 2029 (previously 30 June 2023).
In determining the non-cancellable period of the lease, the Group has applied the lease term, 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 treated the extension of leases as a modification of existing leases under AASB 16, with the
revised cashflows under the new lease being discounted back using the companies incremental borrowing
rate at the time of modification, resulting in an increase of $5.4m in the companies lease liabilities and right
of use asset on modification.
Pioneer Credit Limited
30 June 2022
69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
The Incremental Borrowings Rate (‘IBR’) was reset upon modification. The group engaged an independent
review of its IBR which considered the reference rate, spread and lease specific data in relation to the
Brookfield lease. It was determined that the IBR on modification was 7.05%.
As a result of this extension, previously deferred rental payments under COVID relief were waived by the
lessor.
The extended lease agreement includes an amount of $4.5m to be applied as a rental abatement or fit-out
incentive with the Group electing to apply a portion of the lease incentive to a fit-out refresh of the premises
with the remaining portion being applied as an abatement over the term of the lease.
During the period, the Group also entered into a Lease Agreement with Avy Nominees Pty Ltd (a related
entity of the Managing Director) for 188 Bennett St Perth as part of the Groups COVID mitigation strategy
during the Omicron wave. The lease is at arm’s length for a term of 12 months and has been treated under
the short term lease exemption in AASB 16 and payments in relation to this lease are expensed when
incurred.
The Group has the option, under some of these 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.
18. Other assets
Current
Prepayments
Non-current
Cash backed rental guarantee
Loans to management1
1Refer to Note 31 – Related party transactions for further details on loans to management.
2022
$’000
979
979
1,454
2,050
3,504
2021
$’000
818
818
2,286
-
2,286
Pioneer Credit Limited
30 June 2022
70
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
19. Borrowings
Secured
Senior debt facilities
Medium term notes
Interest and make-whole
payable
Other Loans
2022
Current
Non-
current
2021
Total
Current
Non-
current
Total
$’000
$’000
$’000
$’000
$’000
$’000
18,280
-
182,114
54,169
200,394
54,169
1,596
502
-
-
1,596
502
-
-
153,571 153,571
39,575
39,575
425
7,510
7,935
-
-
-
20,378
236,283
256,661
425
200,656 201,081
All borrowings are initially recognised at fair value which is usually their principal amount, net of directly
attributable transaction costs incurred, and subsequently measured under amortised cost. Given the Facility
has a variable interest rate, it is classified as a floating instrument and the transactions costs are expensed
under the simplified approach on a straight-line basis. The MTN’s are measured using the effective interest
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 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 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.
Secured liabilities and assets pledged as security
Security has been pledged over all 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, Pioneer Credit Connect
(Personal Loans) Pty Ltd and Switchmyloan Pty Ltd and unlimited cross guarantees and indemnities from
each of these entities.
All property of the Group comprises the Groups total assets of $339,455,000 at 30 June 2022 (30 June 2021:
$270,318,000).
Financing arrangements
Senior Facility
During the period, the Group refinanced with Fortress. The Group has access to a Senior Facility of $234.1m
at 30 June 2022 (30 June 2021: $189.0m) comprised of a $125.0m term facility, $50.0m Revolving Facility,
$25.0m Growth Facility, and $34.1m Delayed Draw Term Loan Facility.
The refinance completed on 8 November 2021 included:
Pioneer Credit Limited
30 June 2022
71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
• A $200.0m four-year Senior Facility Agreement (‘Initial Facility’) with global investment manager
Fortress Investment Group (‘Fortress’);
• Extending the maturity of its MTN’s to 5 years expiring in 2026, and upsized to $60m through a fully
subscribed offer; and
• Completing an equity raise of $5.4m ($0.66m issued 20 January 2022) from institutions and high net
worth investors at a premium to the prevailing share price
On 23 March 2022, the Group executed an amendment deed to the Facility to incorporate and additional
tranche (‘Tranche 4’) totalling $40.0m for the purpose of acquiring a performing portfolio of assets. This
Delayed Draw Term Loan facility was fully drawn to $40.0m during the period with repayments of $5.9m,
noting that no redraw facilities are available on this Tranche.
The undrawn limit of the Senior Facility is $26.3m at 30 June 2022 (30 June 2021: $20.0m). The Senior
Facility maturity date is 6 November 2026.
The key terms of the Initial Facility comprise:
• Facility Amount up to A$240.0m, consisting of:
o Tranche 1: A$125.0m Term Facility (fully drawn at 30 June 2022)
o Tranche 2: A$50.0m Revolving Facility (partially drawn at 30 June 2022)
o Tranche 3: A$25.0m Growth Facility (undrawn at 30 June 2022)
o Tranche 4: A$40.0m Delayed Draw Term Loan Facility (Fully drawn at 30 June 2022 with
$5.9m repaid during the period)
• Scheduled maturity date is four years of drawdown date being 8 November 2025.
• Termination date is five years of drawdown date being 8 November 2026.
• The Facility has a first ranking fixed and floating charge over all the assets of the Group; and
• Variable interest rate plus BBSY (minimum 0.25%). The variable interest rate is set by the Advance
Rate on the facility. The Advance Rate refers to the aggregate principal amount in respect of all
facilities divided by the aggregate book value of the PDPs.
Advance Rate
Margin
<= 60%
> 60% and <= 65%
> 65% and <= 70%
> 70%
7.25% per annum
7.75% per annum
8.25% per annum
8.75% per annum
• The default rate is an additional margin of 4.0% p.a. over the applicable interest rate;
• Establishment fee of 2.5%
• Unused line fee of 1.5% per annum (not applicable to the growth facility until first drawdown);
• Funding by Pioneer will be limited to the Borrowing Base. The Borrowing Base is calculated monthly,
as PDP value as a percentage to each tranche based on nature of the underlying receivables;
• The Group has 2 prepayment options on the Facility:
o Make whole interest payment applies to tranche 1 of the Facility if it is repaid up to 24 months
post financial close; and
o Early repayment premium of 1% applies to tranche 1 of the Facility if it is repaid in the period
24 to 30 months post financial close.
• The financial covenants are tested monthly and shall include:
o compliance with the Borrowing Base;
o a minimum Interest Cover Ratio of 2.0x to apply;
Pioneer Credit Limited
30 June 2022
72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
o no equity is to be released to the shareholders during the term of the Facility; and
o Group change of control covenant.
• The Collateral Performance Triggers are tested monthly and shall include but not limited to:
o Actual-to-Expected Collections Ratio for each individual cohort (financial year vintage) is not
less than 85%; and
o Actual-to-Expected Collections Ratio (total) is not less than 75%.
At 30 June 2022 a Performance Trigger Event (‘the Event’) occurred with the Borrowing Base resulting in the
reclassification of $1.6 million of the Facility from non-current to current as it could be required to be repaid.
The financier deemed the event with the Borrowing base was rectified in July.
The terms of the Tranche 4 facility are largely consistent with the Initial facility, the key terms applicable to
Tranche 4 only are as follows:
• Establishment fee of 2.5% of the Tranche 4 Facility payable over a 6 month term
• Variable interest rate plus BBSY (minimum 0.25%). The variable interest rate is set by the Loan to
Value (LTV) margin on the facility. The LTV Rate refers to the aggregate principal amount in respect
to Tranche 4 divided by the aggregate principle amount in respect of the Tranche 4 facility plus the
aggregate equity support amount
LTV Rate
<= 60%
> 60% and <= 65%
> 65% and <= 70%
> 70%
Margin
7.25% per annum
7.75% per annum
8.25% per annum
8.75% per annum
• Equity support is the amount contributed to the purchase price of the PDP net of any amounts funded
by Tranche 4 borrowings
• Liquidations from the PDP asset funded by Tranche 4 are used to directly pay down the Tranche 4
facility interest, establishment fee and principal amortisation amount.
• At 30 June 2022, the Group had fully drawn the $40m and repaid $5.9m against the outstanding
principle
• Repayments against this Facility are not available for re-draw
On derecognition of the Group’s former senior facility, a loss of $1.3m and break costs of $6.3m were incurred.
The Senior Facility contains the following embedded derivatives:
• Make whole payment relates to the 24 month period after financial close on tranche 1 of the Senior
Facility. This early redemption option has been assessed and considered not closely related and it
has therefore been separated and measured at fair value through profit and loss. Management have
concluded that early redemption will not occur within the 24 month period and the separate derivative
has been valued at zero.
• Call Option related to the early redemption of tranche 1 of the Senior Facility. The call option relates
to the period 24 to 30 months after financial close and will incur a 1% premium on tranche 1 balance.
This call option has been assessed and considered not closely related and it has therefore been
separated and measured at fair value through profit and loss. Management have concluded that
Pioneer Credit Limited
30 June 2022
73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
early redemption will not occur within the 30-month period and the separate derivative has been
valued at zero.
MTN
On 8 November 2021, in conjunction with the Facility, Pioneer completed financial close on the $60.0m
MTN’s.
On 22 October 2021, the majority of the registered holders of the outstanding MTN, voted in favour of the
Special Resolution. The beneficial holders that voted in favour were entitled to receive a fee of 0.5% of the
outstanding principal amount to each MTN.
The key terms of the special resolutions were as follows:
• an extension of the Maturity Date of the Notes to 30 November 2026;
• an increase to the Margin to +8.75% per annum;
revised optional redemption dates and pricing;
•
• an increase to the Loan Book Value Ratio (Total) to 87.5% for the period to 30 March 2023; and
• an early redemption call option as follows:
-
-
20% of MTN can be redeemed at face value at any time prior to Maturity Date
80% of MTN can be redeemed as follows:
o 104% of face value for redemptions prior to and including 31 October 2022
o 103% of face value for redemptions from 1 November 2022 and 31 October 2023
o 102% of face value for redemptions from 1 November 2023 and 31 October 2024
o 101% of face value for redemptions from 1 November 2024 and 31 October 2025;
and
o 100% of face value for redemptions after and including 1 November 2025.
Upon modification, a quantitative assessment to determine if the terms of the amended MTN were
substantially different was completed. The assessment result of 17% difference exceeded the threshold of
10%, meaning the original MTN liability of $40m was derecognised resulting in gain of $122k and the
remaining transaction costs of $254.0k were expensed through the profit or loss. A new MTN liability of
$60.0m was subsequently recognised.
The Group’s exchange of 500 MTNs held by Managing Director, Keith John, for a face value of $500,000 in
consideration for the issue of 833,333 shares, at $0.60 per share, was approved at a general meeting of
shareholders of 23 December 2021. The 500 MTNs have been extinguished as part of the Liability and $5.3k
of transaction costs relating to the 500 MTNs have been derecognised and expensed as part of the swap.
Subsequently, on 16 March 2022, the cornerstone investor in the Group’s equity Placement and holder of
MTNs proposed to swap $4.0m of MTNs to equity instruments at the placement price of $0.55 per share as
part of the equity raise. This was agreed to by the Group and as a result $4.0m of MTN’s were extinguished
as part of the liability as well as $70.0k in transaction costs related to the MTNs have been derecognised and
expensed as part of the swap.
The balance of the MTNs has effectively been reduced to a face value of $55.5m at 30 June 2022 as a result
of the above transactions.
The MTN contains the following embedded derivative:
• Call Option related to the early redemption of the MTNs. Under the agreement, Pioneer may redeem
20% of the aggregate principal amount of the face value of the MTN’s at no additional cost. The call
option premium relates to the remaining 80% and steps down over the life of the MTNs:
Pioneer Credit Limited
30 June 2022
74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
Redemption Date
Redemption Amount
Falling any time prior to (and including) 31 October 2022
104 per cent
Falling any time from (and including) 1 November 2022 to
(and including) 31 October 2023
Falling any time from (and including) 1 November 2023 to
(and including) 31 October 2024
Falling any time from (and including) 1 November 2024 to
(and including) 31 October 2025
103 per cent
102 per cent
101 per cent
Falling any time after (and including) 1 November 2025
100 per cent
This call option has been assessed and considered not closely related and it has therefore been separated
and measured at fair value through profit and loss. Management has concluded that early redemption on the
applicable 80% of the MTN’s will not occur prior to 1 November 2025 and the separate derivative has been
valued at zero. Further information on borrowings following the refinancing of the Group’s senior debt facility
and amendment and extension of the MTN’s can be found in Note 4.
Changes in liabilities arising from the financing activities
Borrowings
Lease liabilities
Borrowings
Lease liabilities
$’000
$’000
Opening balance
at 1 July 2020
Cash flow
206,292
8,290
214,582
(23,544)
(2,238)
(25,782)
Opening balance
at 1 July 2021
Cash flow
201,081
6,387
207,468
59,009
(2,199)
56,810
$’000
Other
non-cash
flow1
18,333
335
18,668
Other
non-cash
flow1
(3,429)
5,863
2,434
$’000
Closing Balance at
30 June 2021
201,081
6,387
207,468
Closing Balance at
30 June 2022
256,661
10,051
266,712
1Other 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
PDPs payable1
Other liabilities
1Significant PDP acquisitions of $24m finalised in late June 2022.
2022
$’000
1,056
24,611
3,054
28,721
2021
$’000
4,104
839
524
5,467
Pioneer Credit Limited
30 June 2022
75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
21. Provisions
Current
Provision for long service leave
Provision for annual leave
Share based payments
Non-current
Lease make good
Provision for long service leave
Share based payments
2022
$’000
522
1,404
45
1,971
421
395
155
971
2021
$’000
241
1,214
63
1,518
411
559
226
1,196
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 2029. A provision has been recognised for the present value of the estimated
expenditure required at the end of the lease term. No provision for make good has been recognised on the
Group’s short term leases as agreed with the Lessor.
Share Based Payments
A provision has been recognised for the current value of the obligation to settle in future periods, at the 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
No matter or circumstance has occurred subsequent to year end that has significantly affected, or may
significantly affect, the operations of the Group, the results of those operations or the situation of the Group
or economic entity in subsequent financial years.
Pioneer Credit Limited
30 June 2022
76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
23. Financial Instruments
The Group has the following financial instruments
As at 30 June 2022
Measurement
Current
$’000
Non-current
$’000
Financial assets
Cash and cash equivalents
Trade and other receivables
Purchased Debt Portfolios
Other assets
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Financial liabilities
Trade and other payables
Borrowings
Amortised cost
Amortised cost
23,071
6,174
96,298
979
126,522
28,721
20,378
49,099
-
-
199,218
3,504
202,722
-
236,283
236,283
As at 30 June 2021
Measurement
Current
$’000
Non-current
$’000
Financial assets
Cash and cash equivalents
Trade and other receivables
Purchased Debt Portfolios
Other assets
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Financial liabilities
Trade and other payables
Borrowings
Amortised cost
Amortised cost
Classification as trade and other receivables
10,373
855
73,397
-
84,625
5,467
-
5,467
-
-
175,697
2,286
177,983
-
201,081
201,081
Total
$’000
23,071
6,174
295,516
4,483
329,244
28,721
256,661
285,382
Total
$’000
10,373
855
249,094
2,286
262,608
5,467
201,081
206,548
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.
Pioneer Credit Limited
30 June 2022
77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
24. Equity
Contributed equity
Ordinary shares – fully paid excluding treasury shares 106,592,433
103,589
66,277,190 81,755
2022
Shares
2022
$’000
2021
Shares
2021
$’000
Share capital
Movement
2021
Opening balance 1 July 2020
Treasury shares acquired
Treasury shares issued to employees
Exercise of warrants
Closing balance 30 June 2021
2022
Opening balance 1 July 2021
Issue of shares
Treasury shares acquired
Treasury shares issued to employees
Exercise of warrants
Closing balance 30 June 2022
Ordinary shares
Number of shares
$’000
62,878,293
(1,507,688)
302,000
4,604,585
66,277,190
80,049
(745)
426
2,025
81,755
66,277,190
38,496,726
(4,617,216)
856,500
5,579,233
106,592,433
81,755
20,908
(2,370)
525
2,771
103,589
All authorised Ordinary shares have been issued, have no par value and the Group 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 Group 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.
Pioneer Credit Limited
30 June 2022
78
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
Treasury shares
2021
Opening balance 1 July 2020
Treasury shares issued to employees
Treasury shares acquired during the period
Closing balance 30 June 2021
2022
Opening balance 1 July 2021
Treasury shares issued to employees
Treasury shares acquired during the period
Closing balance 30 June 2022
Number of shares
$’000
519,956
(302,000)
1,507,688
1,725,644
1,725,644
(856,500)
4,617,216
5,486,360
1,934
(426)
745
2,253
2,253
(525)
2,370
4,098
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
The Company has previously issued 8,000,000 unlisted options to the Managing Director, with 3,000,000 of
these remaining unvested at 30 June 2022. No options were exercised or had expired during the period.
As part of the company’s equity placement completed on 18 May 2022, 29,361,726 listed options were issued
on a one for one basis. These options have an exercise price of $0.80 and expire on 31 March 2025. At 30
June 2022, all options issued remain outstanding.
Share based payment reserve
The following table shows a breakdown of the 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 plan1
Treasury shares loan repayments
Performance rights issued
At 30 June
2022
$’000
6,414
1,126
-
(525)
7,015
2021
$’000
3,870
3,332
(362)
(426)
6,414
12021 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.
Pioneer Credit Limited
30 June 2022
79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
Warrant reserve
The following table shows a breakdown of Warrant Reserve and the movements in this reserve during the
reporting period.
At 1 July
Opening balance
Warrants issued
Warrants converted
At 30 June
Foreign exchange translation reserve
2022
$’000
5,460
-
(2,771)
2,689
2021
$’000
-
7,485
(2,025)
5,460
The following table shows a breakdown of Foreign Exchange Translation Reserve and the movements in this
reserve during the reporting period.
At 1 July
Opening balance
Foreign currency translation
At 30 June
25. Capital management
2022
$’000
-
(159)
(159)
2021
$’000
-
-
-
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 Group’s risk appetite; and maximise the return on invested
capital ensuring that all capital invested or reinvested to achieve internal return hurdles
Focus on capital recycling through the sale of non-core portfolios
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 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 daily to ensure that immediate and short-term requirements are met.
Pioneer Credit Limited
30 June 2022
80
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
Details of financing facilities at 30 June 2022 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 (FY21: $5.8m).
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
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
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
1
2
3
United Kingdom Ordinary
New Zealand
Ordinary
Australia
Australia
Australia
Ordinary
Ordinary
N/A
2022
100
2021
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
1Pioneer Credit Acquisition Services (UK) Limited is an entity incorporated in the United Kingdom and has not conducted
any business since inception to 30 June 2022.
2Pioneer Credit Connect (Fund 1) Pty Ltd was incorporated on 15 January 2018 and has not conducted any business
since inception to 30 June 2022.
3Pioneer Credit Connect (Personal Loans) Pty Ltd was incorporated on 15 January 2018 and has not conducted any
business since inception to 30 June 2022.
Pioneer Credit Limited
30 June 2022
81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
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
Contributed equity
Reserves
Accumulated losses
Profit for the year
Total comprehensive (loss) / profit
Guarantees entered into by the Parent entity
2022
$’000
2021
$’000
17,873
215,439
1,746
197,974
4,722
272,678
10,470
213,572
103,909
7,992
(169,140)
(57,239)
82,075
10,181
(107,854)
(15,598)
(61,285)
(54,231)
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
Proceedings were commenced against the company in February 2022 for an alleged breach of an agreement
in relation to corporate advice allegedly provided, claiming up to $300,000. Pioneer disputes this and is
defending the claim.
The Parent entity had no other contingent liabilities at 30 June 2022.
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 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 2022
82
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
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 2022:
- Pioneer Credit Solutions (NZ) Limited has assets of $3.49m (2021: $2.36m), liabilities of $1.75m
(2020: $1.19m) of which the majority relates to amounts due to Group entities and contributed $0.36m
(2020: $0.16m) to Group profit before income tax; and
- Pioneer Credit Acquisition Services (UK) Limited has no assets (2021: $6) and liabilities of $0.02m
(2021: nil) all of which relates to amounts due to Group entities. The UK entity generates no revenue.
29. Contingencies
Proceedings were commenced against the company in February 2022 for an alleged breach of an agreement
in relation to corporate advice allegedly provided, claiming up to $300,000. Pioneer disputes this and is
defending the claim.
The Group had no other contingent liabilities at 30 June 2022.
30. Commitments
Service Contract
The Group has services contracts for the operation of its Philippines facility that ends in February 2024,
telecommunications contracts that ends in October 2023 and February 2024 and a payroll services
agreement that ends in September 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
2022
$’000
2021
$’000
3,333
1,938
5,271
3,438
5,293
8,731
Pioneer Credit Limited
30 June 2022
83
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
31. Related party transactions
Key Management Personnel
Short-term employee benefits1
Post-employment benefits2
Other long-term benefits3
Other4
Termination benefits
Options
Share-based payments
2022
$
182,861
142,231
-
91,172
2021
$
2,793,067 2,444,227
166,786
141,239
450,000
12,308
426,400 2,573,733
780,190
539,761
4,175,492 6,568,483
1Short-term benefits include 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
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
Loans from related parties
2022
$
2021
$
70,703
51,922
85,500
66,033
During the period, Avy Nominees Pty Ltd, a related entity controlled by Keith John held 500 Medium Term
Notes. The loans were on an arm’s length basis and were extinguished and converted to Equity at $0.60
following approval from Shareholders in December 2021.
Medium term notes
Loans from key management personnel:
Beginning of the year
Interest charged
Interest paid
Consent fee charged
Consent fee paid
Conversion of MTN to fully paid ordinary shares
End of year
2022
$
2021
$
500,000
20,095
(20,095)
2,500
(2,500)
(500,000)
-
500,000
33,999
(33,999)
2,500
(2,500)
-
500,000
Pioneer Credit Limited
30 June 2022
84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
During the period, Shucked Investments Pty Ltd, a related entity controlled by Susan Symmons and
Midbridge Investments Pty Ltd, a related entity controlled by Keith John held loans in the Syndicate Facility
Agreement arranged by Nomura Investments. The loans were at arm’s length and were extinguished on 8
November 2022 as part of the refinance with Fortress Australia.
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
Extinguishment of Loan
End of year
2022
$
2021
$
1,100,000
-
87,500
(87,500)
-
-
121,674
(121,674)
(1,100,000)
-
-
1,100,000
186,660
(186,660)
70,128
(70,128)
144,750
(144,750)
-
1,100,000
Loans to related parties
In May 2022, Loans were issued to 4 executives for the purposes of acquiring shares under the Priority Offer
completed on 18 May 2022. The shares were issued at a purchase price of $0.55 with an attaching Listed
Option on a 1 for 1 basis with an exercise price of $0.80 expiring in March 2025.
The loans are on a full recourse basis with interest payable monthly at a rate of 5% per annum and are
secured by the underlying shares.
The Group engaged an external advisor to confirm that the transaction was of an arm’s length nature and no
Employee benefits have been recognised in relation to the loan or share transaction.
Loans to key management personnel
Loans to key management personnel:
Beginning of the year
Loans to KMP
Interest charged
Interest paid
End of year
32. Share-based payments
2022
$
2021
$
-
(2,050,000)
(12,075)
12,075
(2,050,000)
-
-
-
-
-
Pioneer Credit Limited
30 June 2022
85
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
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 9 July 2021, 500,000 performance rights were transferred to executives and senior leadership employees
from a departing executive. 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
Equity settled rights issued during the year
Unvested Rights at the end of the period
2022
9 July 2021
$0.2768
$0.48
3
Nil
23-Sep-24
$1.00
Nil
2022
2021
Number of rights Number of rights
3,250,000
4,118,000
500,000
4,011,500
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 4,482,316 shares during the financial year and paid $2,370,000. As at 30 June 2022 the
Trust held 4,951,460 shares (2021: 1,725,844)
Pioneer Credit Limited
30 June 2022
86
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
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
2022
Cents
(40.48)
(40.48)
2022
Cents
(40.48)
(40.48)
2021
Cents
(30.43)
(30.43)
2021
Cents
(30.43)
(30.43)
2022
$’000
2021
$’000
(33,094)
(19,655)
(33,094)
(19,655)
2022
Number
2021
Number
82,143,521 64,596,792
Weighted average number of ordinary and potential shares used
as the denominator in calculating diluted earnings per share
82,143,521 64,596,792
Performance rights
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.
Pioneer Credit Limited
30 June 2022
87
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
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 services1
Total remuneration of Deloitte Australia
2022
$
2021
$
-
728,200 460,405
23,100
126,500 165,000
854,700 648,505
1 Other services are in relation to Vendor Due Diligence report incurred as part of the refinance process in FY22
Amounts are inclusive of GST and expense reimbursement.
Pioneer Credit Limited
30 June 2022
88
Directors Declaration
In the Directors' opinion:
a)
the financial statements and notes set out on pages 38 to 88 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 2022 and of its performance for the year ended on that date; and
b)
there are reasonable grounds to believe that the Group 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 2022
Pioneer Credit Limited
30 June 2022
89
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 2022, 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 2022 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
How the scope of our audit responded to the Key Audit Matter
Measurement of purchased debt portfolios
(PDPs)
As set out in Note 15 of the financial
statements, 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 design and implementation 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.
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.
estimating the impact of the macro-
economic outlook and future operational
performance on forecast cash flows
requires considerable judgement.
the models used by management remain
sensitive to the inherent uncertainty of
estimating 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.
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
testing the mathematical accuracy of calculations in the 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;
assessing the reasonableness of the assumptions and key estimates
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 original 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;
testing the model performance retrospectively against the actual
liquidations over the historical period; and
agreeing the model outputs to accounting entries recorded
in the Group’s financial report.
Model overlays
●
Challenging the assumptions, judgements and quantifications
made in determining the macro-economic outlook, model risk
and operational risk overlays.
We also assessed the adequacy of the disclosures in Note 15 to the
financial statements.
Our audit procedures included, but were not limited to:
●
●
assessing the process undertaken by management to develop
the cash flow forecast for the 14-month period ending 31
August 2023;
Evaluating the quantum and timing of forecast cash flows in the
cash flow forecast, in particular:
-
-
-
-
-
-
assessing forecasted PDP liquidations in the cash flow
forecast against the underlying cash flow 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 and industry reports, to challenge management’s
ability to conclude PDP sales
●
reading and understanding the key terms of the Senior Facility
and the MTNs and:
-
-
-
evaluating the financing costs included in the cash flow
model against the terms and conditions included in the
Senior Facility and MTNs;
evaluating the covenant calculations for consistency with
the definitions in the Senior Facility and MTNs;
inspecting correspondence with the financiers regarding
Liquidity
As at 30 June 2022, the Group has a positive
working capital of $74.5m.
As disclosed in note 3, during the period the
Group completed a $200m refinancing of its
Senior Debt Facility (‘ Senior Facility’) and
increased the Medium Term Notes (‘MTNs’) to
$60m.
The Senior Facility and MTNs contain covenants
which are closely linked to the carrying value of
the PDPs and the level and timing of forecasted
cash flows including PDP acquisitions, liquidations
and sales as disclosed in Note 19 to the financial
statements.
The achievement of the cash flow forecasts are
inherently uncertain.
compliance with the loan agreements; and
-
assessing the forecasted covenant calculations over the
period to August 2023, including applying sensitivities to
PDP liquidations, acquisitions and sales to identify
reasonably possible potential breaches.
We also assessed the adequacy of the disclosures in Note 3 and Note 17
to 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 2022 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 19 to 32 of the Directors’ Report for the year ended 30 June 2022.
In our opinion, the Remuneration Report of Pioneer Credit Limited, for the year ended 30 June 2022, 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 2022
Shareholder information
The shareholder information set out below was applicable as at 23 August 2022.
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
526
552
269
527
151
2,025
Ordinary shares
220,257
1,547,266
2,076,108
17,860,158
90,240,304
111,944,093
There were 581 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:
Ordinary shares
Name
Jamplat Pty Ltd
Mr Keith R John
Citicorp Nominees Pty Ltd
Pacific Custodians Pty Ltd
HSBC Custody Nominees (Australia) Limited
Pacific Custodians Pty Ltd
Mrs Lilian Jeanette Warmbrand
S & G Morris Super Pty Ltd
ZLT Investment Co Pty Ltd
CS Third Nominees Pty Ltd
Wingate Corporate Credit Fund Pty Ltd
Mr Sunny Yang & Mrs Connie Yang
USB Nominees Pty Ltd
Mr Allan Hart
Mr Michael Smith
Wingate Investment Partners 3 Pty Ltd
BFA Super Pty Ltd
Jetan Pty Ltd
Ms Elif Ceren Gunes
Quinta Investment Management Pty Ltd
Pioneer Credit Limited
30 June 2022
Number
held
14,872,000
11,617,934
9,731,644
4,483,960
2,651,561
2,111,489
1,654,217
1,320,498
1,300,000
1,141,544
1,083,377
1,075,065
963,636
903,100
882,305
840,033
801,313
750,000
749,479
730,000
% of issued
shares
13.29
10.37
8.69
4.01
2.37
1.89
1.48
1.18
1.16
1.02
0.97
0.96
0.86
0.81
0.79
0.75
0.72
0.67
0.67
0.65
95
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
Jamplat Pty Ltd
Mr Keith R John
Citicorp Nominees Pty Ltd
Securities subject to voluntary escrow
Escrow ends
1 July 2024
Voting rights
Indeterminate rights
Number held
425,000
Number of
holders
1
Performance rights
Number held
3,719,000
Number of
holders
7
Options
Number held
8,000,000
Number of
holders
1
Number held
14,872,000
11,617,934
9,731,644
% of
issued
shares
13.29
10.37
8.69
Class
Number
of shares
Ordinary Shares
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 2022
96