Harmoney set to give a boost to Heartland

Heartland Group says its profit forecast for 2021 may need to be increased to reflect the value of its 8.44 per cent stake in personal lender Harmoney, which listed on the ASX and NZX on Thursday.

At the A$3.50 issue price, Heartland’s stake would be worth A$29.8 million ($31.4m). In its most recent accounts, Heartland’s equity investments — mostly Harmoney — came to $16.3m.

Heartland said it was reassessing the valuation of its equity investment in Harmoney.

Alongside

other

majority

shareholders, employees and directors, Heartland has entered into escrow restrictions prohibiting the disposal of its shareholding until the occurrence of certain events.

“Heartland will reassess the fair value of its equity investment in Harmoney as part of the preparation of its financial results for the six-month period ending 31 December 2020,” the company said.

In determining fair value, Heartland would take into consideration the market value of Harmoney shares alongside other factors, including the escrow restrictions. That might result in an increase in the “fair value” of the investment.

Heartland said its equity investment in Harmoney was not significant in the context of its total assets.

“However, any increase in the fair value of that investment would result in a one-off increase to Heartland’s net profit after tax for the financial year ended 30 June 2021,” the company said. “That increase has not been taken into account in Heartland’s forecast net profit for 2021, which may accordingly need to be revised.”

In September, Heartland announced a full-year net profit of $72m and said it expected its net profit for the June 2021 year to be between $83m and $85m.