Debt buyer Pioneer Credit has issued an earnings downgrade, saying “liquidations” (collections) of A$106.7 million in the year to June were below what it has previously forecast, and it will report a loss for the year.

In a statement yesterday, the company said its typical approach was to sell non-core portfolios where the carrying value is of low value. 

It had planned to sell a non-core portfolio, which would have realised around $4 million, but called off the sale “following the late release of a competing sale of an asset divestment of very significant size into the secondary market”.

It also decided not to recognise a $22.3 million deferred taxation asset, which it will hold over until the 2022/23 financial year.

These changes mean the company will report a loss of around $23 million.

Pioneer Credit managing director Keith John said the withdrawal of the debt portfolio from sale and the decision to postpone recognition of the tax asset have no impact on the company’s funding. Pioneer continues to comply with all covenants and terms of current debt facilities.

Pioneer has not made a profit for a few years and had to recapitalise the business last year. It reported a loss of $22.8 million in the December half, a loss of $19.6 million in 2020/21 and a loss of $40.1 million in 2019/20.

The company’s chair, Michael Smith, said: “Clearly our processes and practices need strengthening, notwithstanding working closely with our auditors on these matters. This has the board’s focus.”