Heartland Group Holdings Profile

NZX Release

Heartland Group Holdings Profile

1 November 2018


Attached is a copy of the profile document for Heartland Group Holdings Limited, prepared in
connection with its listing on the NZX Main Board.

– Ends –

For further information, please contact:

Julia Belk
Investor Relations Manager
DDI 09 926 3837
Julia.belk@heartland.co.nz

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3633481 v1


Supplementary pre-listing information in connection with the corporate restructure of
Heartland Bank Limited and its subsidiaries


26 October 2018

Introduction
This document has been prepared by Heartland Group Holdings Limited ("New Listed Parent") and
Heartland Bank Limited ("Heartland Bank") to provide certain supplementary information in
connection with the corporate restructure of Heartland Bank and its subsidiaries, immediately prior to
the New Listed Parent listing on the NZX Main Board and on ASX.
The supplementary information relates to key developments relating to the Restructure that have
occurred between the date of the Scheme Booklet and Notice of Meeting, and the date of this
document. This document should be read in conjunction with the announcements released by
Heartland Bank and/or the New Listed Parent through NZX.
Capitalised terms that are not defined in this document have the meanings given to those terms in the
Scheme Booklet.
This document, along with the Scheme Booklet and Notice of Meeting (copies of which are attached),
comprise a "Profile" for the New Listed Parent for the purposes of the NZX Listing Rules.
Key conditions
All of the remaining key conditions for the Restructure to be implemented (as set out in Section 5 of
the Scheme Booklet) have either been satisfied since the date of the Scheme Booklet, or, in the case
of the redemption of the Tier 2 Notes (which has been agreed with noteholders, as to which see
below), will be satisfied immediately prior to the implementation of the Restructure. The satisfaction of
the remaining key conditions is summarised below.
Restructure Resolution approved at Annual Meeting
At the Annual Meeting on 19 September 2018, Shareholders passed the Restructure Resolution,
which was required in order to approve Heartland Bank giving effect to the Restructure. The results of
the Annual Meeting were announced to NZX on 19 September 2018.
No-objection statement provided by the Takeovers Panel
On 4 October 2018, the Takeovers Panel provided Heartland Bank with a letter stating that (based on
the information it had been provided with) it had no objection to the Restructure.
Redemption of Tier 2 Notes
On 27 September 2018, a special resolution was passed by the holders of the Tier 2 Notes to amend
the terms of the Tier 2 Notes ("Special Resolution").
In accordance with the Special Resolution, the Tier 2 Notes will be amended on or immediately after
9am on the Implementation Date. The amended terms provide that each Tier 2 Note will, immediately
prior to the implementation of the Restructure, be redeemed by Heartland Bank. Accordingly, this
condition will be satisfied prior to the implementation of the Restructure.
Final Court Orders granted
Final Court Orders were granted by the High Court on 19 October 2018, as announced to NZX on that
day.

3633481 v1
2
ASX listing
On 5 October 2018, ASX informed the New Listed Parent that it will admit the New Listed Parent to
the official list of ASX as an ASX Foreign Exempt Listing and quote the New Listed Parent's shares.
This decision is subject to the satisfaction of certain conditions precedent, including the
implementation of the Restructure and the provision of the usual pre-listing disclosure information.
Timetable
A timetable of the remaining principal events to occur in connection with the Restructure is set out
below (these times and dates are the same as those set out in the Scheme Booklet):
Last day of trading in Heartland Bank Shares on the
NZX Main Board
(a trading halt will be applied to Heartland
Bank Shares from 5pm on 26 October
2018. You will be unable to sell your New
Listed Parent Shares until 10am on 1
November 2018)
26 October 2018

Record Date
(the number of New Listed Parent Shares
that will be issued to Shareholders on the
Implementation Date will equal the number
of Heartland Bank Shares held by
Shareholders at this time and date)
5pm on 30 October 2018
Implementation Date
(implementation of the Restructure,
including the issue of New Listed Parent
Shares to Shareholders)
31 October 2018
New Listed Parent Shares begin trading on the NZX
Main Board and on the ASX, and holding statements
mailed to New Listed Parent Shareholders
1 November 2018

All times and dates referred to above are times and dates in New Zealand, unless otherwise indicated.
Heartland Bank will notify NZX if these times and dates are amended.

IMPORTANT
This document is important and requires your prompt attention. You should read it carefully.
If you are in doubt as to any aspect of the Restructure, you should consult your financial, taxation or legal adviser.
If you have sold all your shares in Heartland Bank Limited, you should immediately hand this Scheme Booklet and the accompanying Notice
of Meeting and proxy form to the purchaser or the agent (eg the broker) through whom the sale was made, to be passed to the purchaser.
An independent adviser’s report on the merits of the Restructure for Shareholders is included in Appendix 1
and should be read in conjunction with this Scheme Booklet.
SCHEME BOOKLET
FOR A SCHEME OF ARRANGEMENT BETWEEN HEARTLAND BANK LIMITED AND ITS
SHAREHOLDERS IN RELATION TO THE PROPOSED CORPORATE RESTRUCTURE
VOTE IN FAVOUR
The board of Heartland Bank Limited unanimously recommends
that you vote in favour of the Restructure
Voting on the Restructure will take place at the
Annual Meeting to be held at 10am on 19 September 2018
at the Waipuna Hotel & Conference Centre, Auckland

HEARTLAND BANK SCHEME BOOKLET2
IMPORTANT NOTICES
General
This Scheme Booklet relates to the proposed corporate
restructure (“Restructure”) of Heartland Bank Limited
(“Heartland Bank”) and its subsidiaries (together, the
“Group”).
The Restructure will result in:
• Heartland Bank becoming a wholly-owned subsidiary
of a new listed parent company, “Heartland Group
Holdings Limited” (“New Listed Parent”); and
• shares in Heartland Australia Holdings Pty Limited
(“Heartland Australia”) and its subsidiaries
(“Australian Group”) being transferred from
Heartland Bank to the New Listed Parent so that
Heartland Australia becomes a “sister” company of
Heartland Bank.
Following the Restructure, the Group will also include the
New Listed Parent.
The Restructure is to be implemented by way of a Court
approved scheme of arrangement under Part 15 of the
Companies Act and must be approved by Shareholders. In
addition to the ordinary business of the annual meeting
of Shareholders (“Annual Meeting”), Shareholders will
be asked to consider and vote on the Restructure. A
notice convening the Annual Meeting has been sent
to Shareholders with this Scheme Booklet (“Notice of
Meeting”).
This is an important document and requires your
immediate attention. It is recommended you read this
document in its entirety before deciding whether to
vote for or against the Restructure Resolution. If the
Restructure Resolution is approved by the requisite
majority of Shareholders then, subject to all remaining key
conditions to the implementation of the Restructure (as
set out in Section 5 (Further Details of the Restructure))
being satisfied, including the Court granting the Final
Court Orders, the Restructure will be implemented and will
be binding on all Shareholders, including those who did not
vote or who voted against the Restructure Resolution.
Purpose of this Scheme Booklet
The purpose of this Scheme Booklet is to provide you with
the information that could reasonably be expected to be
material to your decision whether to vote for or against
the Restructure Resolution including:
• an outline of the background to, and rationale for, the
Restructure;
• the advantages, disadvantages and risks, and other
factors associated with the Restructure;
• the procedural steps required to effect the
Restructure, including why you are being asked to
vote;
• an overview of the Group on completion of the
Restructure;
• an explanation as to why the Board believes the
Restructure is in the best interests of all Shareholders;
and
• a recommendation from the Board that you vote in
favour of the Restructure Resolution.
This Scheme Booklet has been prepared in reliance
upon the Financial Markets Conduct (Heartland Group)
Exemption Notice 2018 (“FMC Act Exemption”) and is not
a product disclosure statement. Heartland Bank remains
subject to Part 2 of the Financial Markets Conduct Act
2013 and, as such, this Scheme Booklet must not contain
statements that are misleading and/or deceptive and there
must be reasonable grounds for each representation made.
As part of the Restructure process, Heartland Bank
has engaged Cameron Partners Limited (“Cameron
Partners”) to provide an independent adviser’s report
on the merits of the Restructure for Shareholders
(“Independent Adviser’s Report”). In its report Cameron
Partners concluded that, on balance, it believes that the
“potential value creation opportunities resulting from
the Restructure outweigh the costs” (see pages 9 and
34 of the Independent Adviser’s Report). A copy of the
Independent Adviser’s Report is included in Appendix 1
(Independent Adviser’s Report Prepared in Relation to the
Proposed Restructure of Heartland Bank Limited).
This Scheme Booklet, when taken together with the Wrap
that will be provided to NZX for release to the market
upon implementation of the Restructure, also constitutes
a “Profile” for the purposes of the NZX Listing Rules and
the listing of the New Listed Parent on the NZX Main
Board. The Wrap will record the outcome of the Annual
Meeting and any other material events that have occurred
in respect of Heartland Bank and/or the New Listed Parent
since the date of this Scheme Booklet, as confirmed by
Heartland Bank and the New Listed Parent.
Responsibility for information
Other than the Independent Adviser’s Report which
appears in Appendix 1 (Independent Adviser’s Report
Prepared in Relation to the Proposed Restructure of
Heartland Bank Limited), this Scheme Booklet has been
prepared by, and is the responsibility of, Heartland Bank.
No warranty as to performance
Except to the extent set out in this Scheme Booklet or
as required by law (and then only to the minimum extent
so required), no member of the Group (nor any of their
respective associates, advisers, employees or current or
proposed directors) warrants the performance of any
member of the Group.
Your decision
This Scheme Booklet does not take into account your
individual investment objectives, financial situation or
needs. You must make your own decisions and take your
own advice in this regard.

HEARTLAND BANK SCHEME BOOKLET3
The information and recommendations contained in this
Scheme Booklet do not constitute, and should not be
taken as constituting, financial advice.
If you are in any doubt as to what you should do, you
should seek advice from your financial, taxation, or
legal adviser before making any decision regarding the
Restructure.
Laws of New Zealand
This Scheme Booklet has been prepared in accordance
with the laws of New Zealand. Accordingly, the
information contained in this Scheme Booklet may not be
the same as that which would have been disclosed in this
Scheme Booklet if it had been prepared in accordance with
the laws and regulations of another jurisdiction.
Information for Shareholders in other jurisdictions
This Scheme Booklet and the Restructure do not
constitute an offer of New Listed Parent Shares in any
jurisdiction in which it would be unlawful. The distribution
of this Scheme Booklet outside of New Zealand may be
restricted by law and persons who come into possession
of it should observe any such restrictions. Any failure to
comply with such restrictions may contravene applicable
securities laws.
Nominees, custodians and other Shareholders who hold
Heartland Bank Shares on behalf of a beneficial owner
resident outside Australia, Bermuda, Canada, Macau,
Malaysia, Qatar, Singapore, Switzerland, the United Kingdom
and the United States (where the beneficial owner is
resident in one of the states listed in Section 8, other than
California or Connecticut) may not forward this Scheme
Booklet (or accompanying documents) to anyone outside
these countries without the consent of Heartland Bank.
For more information specific to your jurisdiction, you
should refer to Section 8 (Information for Shareholders
Outside New Zealand).
Shareholder warranties
Each Shareholder is deemed to have warranted to the
New Listed Parent that all their Heartland Bank Shares
(including any rights and entitlements attaching to those
Heartland Bank Shares) which are transferred to the
New Listed Parent under the Restructure will, at the time
of transfer, vest in the New Listed Parent free from all
encumbrances and interests of third parties of any kind.
Forward-looking statements
Certain statements contained in this Scheme Booklet
constitute “forward-looking statements”. Forward-looking
statements can generally be identified by the use of
forward-looking words such as ‘may’, ‘could’, ‘anticipate’,
‘estimate’, ‘expect’, ‘opportunity’, ‘plan’, ‘continue’,
‘objectives’, ‘outlook’, ‘guidance’, ‘intend’, ‘aim’, ‘seek’, ‘believe’,
‘should’, ‘will’ and similar expressions. Such forward-looking
statements are not guarantees of future performance
and involve known and unknown risks, uncertainties and
other factors, many of which are beyond the control of
Heartland Bank, Heartland Australia and the New Listed
Parent, which may cause actual results to differ materially
from those expressed in or implied by the statements
contained in this Scheme Booklet.
You are cautioned against relying on any such forward-
looking statements. None of Heartland Bank, Heartland
Australia or the New Listed Parent (or their respective
associates, advisers, employees or current or proposed
directors) gives any representation, assurance or guarantee
that the occurrence of the events expressed or implied in
any forward-looking statements in this Scheme Booklet
will actually occur. Other than as required by law or by the
rules of any applicable stock exchange, none of Heartland
Bank, Heartland Australia or the New Listed Parent (or
their respective associates, advisers, employees or current
or proposed directors) is under any obligation to publicly
release the result of any revisions to these forward-looking
statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated
events.
Privacy and personal information
Heartland Bank and the New Listed Parent may collect
personal information in the process of implementing the
Restructure. Heartland Bank will be the controller of this
personal information. Such information may include the
name, contact details and shareholdings of Shareholders
and the name and contact details of persons appointed by
those persons to act as a proxy or corporate representative
at the Annual Meeting. The primary purpose of the
collection of personal information is to assist Heartland
Bank and the New Listed Parent to conduct the Annual
Meeting and implement the Restructure. This information
is collected: (i) with the consent of the individual (such
consent can be withdrawn at any time); (ii) because the
information is necessary to conduct the Annual Meeting
and implement the Restructure; and (iii) because it is
necessary for the legitimate interests of Heartland Bank
and/or the New Listed Parent, including for the Annual
Meeting and the Restructure. Personal information of
the type described above may be disclosed to Link Market
Services, print and mail service providers, proxy solicitation
firms, other members of the Group, service providers and
advisers. Where any personal information is transferred
overseas for the purposes set out above, Heartland Bank
shall ensure that appropriate safeguards are put in place
to protect the personal information. Unless requested
otherwise, Heartland Bank will retain the personal
information for as long as the relevant individual retains
an interest in Heartland Bank or the New Listed Parent,
and for seven years after the date on which this interest
ends. Shareholders have certain individual rights to access,
rectify, erase, object or restrict processing of the personal
information that has been collected. Shareholders should
contact Link Market Services in the first instance if they
wish to access their personal information. Any complaints
regarding the personal information should be directed to
Heartland Bank at shareholders@heartland.co.nz or to the
New Zealand Privacy Commissioner. Shareholders who
appoint a named person to act as their proxy or corporate
representative should make sure that person is actively
aware of these matters.

HEARTLAND BANK SCHEME BOOKLET4
No internet site forms part of this Scheme
Booklet
Any references in this Scheme Booklet to any website are
for informational purposes only. No information contained
on any website forms part of this Scheme Booklet.
Diagrams, charts, maps, graphs and tables
Any diagrams, charts, maps, graphs and tables appearing
in this Scheme Booklet are illustrative only and may not be
to scale.
Effect of rounding
Any figures, amounts, percentages, prices, estimates,
calculations of value and fractions in this Scheme Booklet
may be subject to the effect of rounding. Accordingly,
actual calculations may differ from amounts set out in this
Scheme Booklet.
Notice of the Final Court Hearing
If you wish to oppose the Restructure at the Final Court
Hearing, which is expected to be at 9 am on 19 October
2018, you must file a notice of appearance or a notice of
opposition together with supporting documents on which
you wish to rely at the High Court and at Heartland Bank’s
registered office by 5pm on 3 October 2018.
Defined terms and interpretation
Capitalised terms set out in this Scheme Booklet have
the meanings given to them in the Glossary. Unless the
context otherwise requires:
(a) singular words include the plural and vice versa;
(b) references to times and dates are to times and dates
in New Zealand; and
(c) references to amounts of currency are to New
Zealand dollars, except where the term “A$” is used
where the reference is to Australian dollars.
Date of this Scheme Booklet
This Scheme Booklet is dated 15 August 2018.

HEARTLAND BANK SCHEME BOOKLET5
CONTENTS
IMPORTANT NOTICES 2
SECTION 1: LETTER FROM THE CHAIR 6
SECTION 2: KEY DATES 8
SECTION 3: OVERVIEW OF THE RESTRUCTURE 9
• Diagrams 9
• Restructure steps 10
• Overview of the Group on completion of the Restructure 10
• Rationale for the Restructure 10
• ASX listing 11
• Advantages of the Restructure 11
• Disadvantages and risks associated with the Restructure 11
• Board recommendation 11
SECTION 4: OTHER IMPORTANT QUESTIONS 12
SECTION 5: FURTHER DETAILS OF THE RESTRUCTURE 17
• How the Restructure will be effected 17
• Key conditions 17
• NZX and ASX Listings of the New Listed Parent 18
• Independent Adviser’s opinion 18
• Court approved scheme of arrangement 19
• Takeovers Panel no objection statement 19
• Waivers from NZX Listing Rules 20
SECTION 6: WHAT WILL THE GROUP LOOK LIKE AFTER THE RESTRUCTURE? 21
• New Listed Parent 21
• Heartland Bank 24
• Heartland Australia 27
• Group servicing arrangements 27
• Summary of balance sheet movements 28
SECTION 7: TAXATION IMPLICATIONS FOR SHAREHOLDERS 29
• New Zealand 29
• Australia 29
SECTION 8: INFORMATION FOR SHAREHOLDERS OUTSIDE NEW ZEALAND 32
GLOSSARY 40
APPENDIX 1: INDEPENDENT ADVISER’S REPORT PREPARED IN RELATION
TO THE PROPOSED RESTRUCTURE OF HEARTLAND BANK LIMITED 42
DIRECTORY 83

HEARTLAND BANK SCHEME BOOKLET6
SECTION 1: LETTER FROM THE CHAIR
Dear shareholders,
On behalf of the Board, I am pleased to be writing to you about Heartland Bank’s
proposed corporate restructure which will provide the Group with a more suitable
platform for future growth.
What is the Restructure?
The Restructure will result in Heartland Bank becoming a wholly owned subsidiary
of a new company, the New Listed Parent.
Your current shares in Heartland Bank will be exchanged with new shares in the
New Listed Parent on a one for one basis, and the Australian Group companies
will be transferred from Heartland Bank to the New Listed Parent. Your shares in
Heartland Bank will automatically convert into the same number of shares in the
New Listed Parent (provided you are an Eligible Shareholder – see Section 4 (Other
Important Questions) for more details).
The transfer of the Australian Group companies from Heartland Bank to the
New Listed Parent will result in the Australian business no longer forming part of
Heartland’s “banking group”, which comprises Heartland Bank and its current
subsidiaries. As a result of the Restructure, Heartland will have a banking group that is regulated by the Reserve Bank and
a non-banking group, which is not regulated by the Reserve Bank. This is a return to a similar structure that was in place
prior to the amalgamation of Heartland Bank and Heartland New Zealand Limited in 2015.
Rationale for the Restructure
The Restructure will remove constraints on the growth of the Group’s business currently arising from Reserve Bank
regulations, and will provide greater flexibility for the Group to explore and take advantage of future growth opportunities
in New Zealand and Australia outside the banking group. In addition, the Restructure will facilitate a Foreign Exempt
Listing on the ASX, which will expand the capital sources available to the Group in order to fund growth.
Since the amalgamation in 2015, all of Heartland Bank’s business activities have been regulated by the Reserve Bank,
including the Australian reverse mortgage business (although it is not funded by New Zealand retail deposits).
The Australian reverse mortgage business has grown at a faster rate than was anticipated at the time of the
amalgamation, which has been very pleasing. However, future growth is expected to be constrained as a result of
the Reserve Bank’s continued regulation of that business. This is because the Reserve Bank limits the extent to which
Heartland Bank is able to fund its operations with secured wholesale funding
1
and the size of its operations in Australia
2
.
Whilst Heartland Bank is currently able to operate its Australian business within those limitations, it will need to find
alternative ways to fund growth, or ultimately constrain growth, in order to remain compliant in the future.
Heartland Bank has therefore decided to proceed with the Restructure which, if approved by Shareholders and the High
Court, will move the current Australian Group companies outside of the banking group and allow the Australian business
to continue to grow using its preferred method of funding (secured wholesale funding).
The creation of the non-banking group, which is not regulated by the Reserve Bank, will provide greater flexibility for the
Group to explore and take advantage of growth opportunities in New Zealand and Australia outside the banking group.
There is, however, no current intention to change the core business of the Group.
ASX listing
Heartland is seeking a Foreign Exempt Listing on the ASX as part of the Restructure. Heartland has been considering
an ASX listing for some time, as it believes this will provide access to additional sources of capital for future growth
opportunities. The Restructure facilitates an ASX listing by the New Listed Parent, as it will remove a key complication
that has previously inhibited Heartland Bank from doing so (relating to the use of the word “bank” in its name). The New
Listed Parent will have its primary listing on the NZX Main Board, but will also have a Foreign Exempt Listing on the ASX.
Independent Adviser
Heartland has engaged Cameron Partners to prepare an independent adviser’s report on the Restructure, which is
included in Appendix 1 of this Scheme Booklet. The purpose of the report is to provide an independent assessment of the
merits of the Restructure for Shareholders. I encourage you to read and consider the Independent Adviser’s Report.
1 The Reserve Bank expects Heartland Bank to limit the extent to which its loans (both in New Zealand and Australia) are secured to wholesale funders to not more than 20%.
2 It is a condition of Heartland Bank’s registration as a registered bank that Heartland Bank must conduct a substantial portion of its business within New Zealand. This
requires Heartland Bank’s Australian assets to not exceed 33% of its total assets.

HEARTLAND BANK SCHEME BOOKLET7
Ineligible Shareholders
Some Shareholders with a registered address outside New Zealand or Australia may be ineligible to receive New Listed
Parent Shares under the Restructure because of regulatory constraints in their country (this is likely to be less than 1%
of Shareholders). Instead, the shares in the New Listed Parent those Shareholders would have been entitled to receive
under the Restructure will be sold on their behalf and they will receive the proceeds from that sale, without any deduction
of brokerage costs and/or transaction fees. In addition, for a limited time following the Implementation Date of the
Restructure, if those Shareholders purchase an equal or lesser number of shares in the New Listed Parent, they will be
refunded any brokerage costs and/or transaction fees associated with this purchase. Shareholders with a registered
address outside New Zealand or Australia should consult Section 8 (Information for Shareholders Outside New Zealand)
to determine whether they are entitled to receive New Listed Parent Shares under the Restructure. Section 4 (Other
Important Questions) contains further information on what will happen if you are not an Eligible Shareholder.
What do you need to do now?
Please read this Scheme Booklet carefully – it contains all of the information you should need regarding the Restructure.
The Board encourages you to consider the Restructure and seek financial, tax or other professional advice if required.
The resolution approving the Restructure proposal must be passed by 75% or more of the votes of Shareholders entitled
to vote and voting, and by more than 50% of the votes of all Shareholders entitled to vote (ie whether or not they vote on
the Restructure).
Voting on the Restructure will occur at this year’s Annual Meeting, in addition to the ordinary business of the meeting.
A notice convening the Annual Meeting is being sent to Shareholders separately, which contains details of the resolution
being put to shareholders and the procedures for voting.
Your vote is important, no matter how many shares you own. I strongly encourage you to vote on the
Restructure.
The Board unanimously supports the Restructure and believes it is in the best interests of all Shareholders because:
• it will remove constraints on the growth of the Group’s business currently arising from Reserve Bank regulations;
• it will provide greater flexibility for the Group to explore and take advantage of future growth opportunities in New
Zealand and Australia outside the banking group regulated by the Reserve Bank;
• it will facilitate a Foreign Exempt Listing on the ASX, which will expand the capital sources available to the Group in
order to fund growth; and
• while the Restructure will result in a small degree of increased overhead costs, the potential value creation
opportunities outweigh these costs.
The Board unanimously recommends that you vote in favour of the Restructure.
3
Each director intends
to vote any shares he or she holds or controls in favour of the Restructure.
You can cast your vote by:
• attending the Annual Meeting and voting in person;
• submitting a postal vote; or
• appointing a proxy (or representative) to attend in person and vote in your place.
Please refer to the separate Notice of Meeting for further details. If you are unable to attend the Annual Meeting, please
submit a postal vote or appoint a proxy to attend and vote in your place.
For those Shareholders who are attending the Annual Meeting, please bring your proxy form to the meeting. I look
forward to seeing you there.
Yours sincerely,
Geoff Ricketts
Chair of the Board
3 As Jeff Greenslade is currently the sole director of the New Listed Parent, he may be “interested” in the Restructure for the purposes of the Companies Act and the NZX
Listing Rules. Accordingly, while Jeff fully supports the Restructure, he is unable to vote on matters concerning the Restructure at meetings of the Board.

HEARTLAND BANK SCHEME BOOKLET8
SECTION 2: KEY DATES
EventDate
Time by which proxy forms must be received by Link Market
Services
10am on 17 September 2018
Date for determining eligibility to vote at the Annual
Meeting
5pm on 17 September 2018
Annual Meeting10am on 19 September 2018
IF THE RESTRUCTURE IS APPROVED BY SHAREHOLDERS
(The times and dates below may change and, among other things, are subject to Court approval)
Receipt of the Final Court Orders19 October 2018
Last day of trading in Heartland Bank Shares on the NZX
Main Board
(a trading halt will be applied to Heartland Bank Shares
from 5pm on 26 October 2018. You will be unable to sell
your New Listed Parent Shares until 10am on 1 November
2018)
26 October 2018
Record Date
(the number of New Listed Parent Shares that will be issued
to Shareholders on the Implementation Date will equal the
number of Heartland Bank Shares held by Shareholders at
this time and date)
5pm on 30 October 2018
Implementation Date
(implementation of the Restructure, including the issue of
New Listed Parent Shares to Shareholders)
31 October 2018
New Listed Parent Shares begin trading on the NZX Main
Board and on the ASX, and holding statements mailed to
New Listed Parent Shareholders
1 November 2018
All times and dates referred to in this Scheme Booklet are times and dates in New Zealand, unless otherwise indicated.
Heartland Bank reserves the right to amend the times and dates without prior notice.

HEARTLAND BANK SCHEME BOOKLET9
SECTION 3: OVERVIEW OF THE RESTRUCTURE
CURRENT GROUP STRUCTURE (SIMPLIFIED)
GROUP STRUCTURE ON COMPLETION OF THE RESTRUCTURE (SIMPLIFIED)
Shareholders
Heartland Bank
Heartland Australia
Other current
New Zealand
subsidiaries
Other current
Australian
subsidiaries
BANKING GROUP
Shareholders
New Listed Parent
Heartland AustraliaHeartland Bank
Other current
Australian
subsidiaries
Other current
New Zealand
subsidiaries
BANKING GROUPNON-BANKING GROUP

HEARTLAND BANK SCHEME BOOKLET10
RESTRUCTURE STEPS
The Restructure will involve the following steps:
• Shareholders exchange their Heartland Bank Shares on a one for one basis for New Listed Parent Shares. This results
in Heartland Bank becoming a wholly owned subsidiary of the New Listed Parent, and Shareholders becoming New
Listed Parent Shareholders.
• Heartland Australia is transferred from Heartland Bank to the New Listed Parent. This results in Heartland Australia
becoming a wholly owned subsidiary of the New Listed Parent, and no longer being part of the Banking Group.
OVERVIEW OF THE GROUP ON COMPLETION OF THE RESTRUCTURE
The Restructure will create a new listed parent company for the Group, the New Listed Parent, which will hold all of the
shares in:
• Heartland Bank, which will remain a registered bank in New Zealand regulated by the Reserve Bank, and will continue
to operate the Group’s current New Zealand business; and
• Heartland Australia, which will continue to be the head of the Australian Group that operates the Group’s current
Australian business.
On completion of the Restructure, the Group can be summarised as follows:
Group
New Listed ParentHeartland BankAustralian Group
• The new parent company for
the Group and holding company
for Heartland Bank and the
Australian Group
• Shares listed on the NZX Main
Board and the ASX
• Limited number of management
employees
• Registered bank in New Zealand
regulated by the Reserve Bank
• Products include motor vehicle
finance, reverse mortgage loans,
small business loans, personal
loans and livestock finance
• Existing customers will not be
affected by the Restructure
• Heartland Bank’s
Unsubordinated Notes will
remain listed on the NZX Debt
Market
• Specialist provider of reverse
mortgage loans
• Personal lending and small
business lending
• Existing customers will not be
affected by the Restructure
RATIONALE FOR THE RESTRUCTURE
The Australian business has grown at a faster rate than was anticipated at the time of the amalgamation in 2015. Finance
receivables in Australia have grown from NZ$423 million on 31 December 2015 to NZ$721 million on 30 June 2018,
which represents an annual growth rate of 35%. This growth is primarily attributable to the Australian reverse mortgage
business, which is funded by secured wholesale funding – the most efficient form of funding currently available to it in
Australia.
Future growth is, however, expected to be constrained as a result of the Reserve Bank’s continued regulation of the
Australian business. This is because the Reserve Bank limits the extent to which Heartland Bank is able to fund its
operations with secured wholesale funding
4
and the size of its operations in Australia
5
. Whilst Heartland Bank is currently
able to operate the business within those limitations, it will need to find alternative ways to fund growth, or ultimately
constrain growth, in order to remain compliant in the future.
By moving the current Australian Group companies outside of the Banking Group, the Australian business will be able
to continue to grow using its preferred method of funding, Australian sourced secured wholesale funding. However,
the Restructure does not preclude Heartland Bank from conducting business in Australia, or holding Australian assets
(including taking security over Australian assets), in the future.
In addition, the Restructure will also provide greater flexibility for the Group to explore and take advantage of growth
opportunities outside of the Banking Group and will facilitate a Foreign Exempt Listing on the ASX.
4 The Reserve Bank expects Heartland Bank to limit the extent to which its loans (both in New Zealand and Australia) are secured to wholesale funders to not more than
20%.
5 It is a condition of Heartland Bank’s registration as a registered bank that Heartland Bank must conduct a substantial portion of its business within New Zealand. This
requires Heartland Bank’s Australian assets to not exceed 33% of its total assets.

HEARTLAND BANK SCHEME BOOKLET11
ASX LISTING
The New Listed Parent is seeking a Foreign Exempt Listing on the ASX, and intends for this to occur at the same time
as the Restructure takes effect. An ASX listing is expected to give the New Listed Parent access to additional sources
of capital, which will provide additional flexibility for future growth opportunities.
The New Listed Parent will have its primary listing on the NZX Main Board, but will also have a Foreign Exempt Listing
on the ASX. Under a Foreign Exempt Listing, the New Listed Parent will only need to comply with a limited number of
ASX Listing Rules (which are procedural in nature) in addition to the NZX Listing Rules.
The Board has been considering an ASX listing for some time. The Restructure facilitates an ASX listing as it removes
a complication that currently inhibits Heartland Bank from listing in Australia, relating to the use of the word “bank”
in its name. Under the new structure, the New Listed Parent will be able to apply for the Foreign Exempt Listing under
the name “Heartland Group Holdings Limited”, which removes this complication.
ADVANTAGES OF THE RESTRUCTURE
The Restructure will remove constraints on the growth of the Group’s business currently arising from Reserve Bank
regulations.
It will provide greater flexibility for the Group to explore and take advantage of future growth opportunities in New
Zealand and Australia outside the Banking Group.
It will also facilitate a listing on the ASX, which will expand the capital sources available to the Group to fund growth.
DISADVANTAGES AND RISKS ASSOCIATED WITH THE RESTRUCTURE
Heartland Bank is expected to incur necessary transaction and other related costs in relation to the Restructure of
approximately $1.5 million, much of which has been necessary to incur prior to the time Shareholders vote at the Annual
Meeting. Approximately one third of these costs are the initial listing fees payable to ASX.
It is anticipated that there will also be some degree of increased overhead costs associated with the introduction of the
New Listed Parent, including additional management personnel, on-going ASX listing fees, and costs in relation to the
separate governance and financial reporting arrangements required by the New Listed Parent and Heartland Bank. Some
of these costs are also a natural consequence of continued growth and are likely to be incurred irrespective of whether the
Restructure goes ahead. The additional costs are not definitively known, but are expected to be around $600,000 per year.
This represents less than 1% of Heartland Bank’s 2018 net profit after tax (NPAT) of $67.5 million.
Following the Restructure, there is a risk that no growth opportunities arise or that the on-going additional costs of the
Group are higher than expected. The Restructure will also limit the Group’s ability to fund the Australian business from
New Zealand, due to Reserve Bank requirements on Heartland Bank.
BOARD RECOMMENDATION
The Board unanimously supports the Restructure and believes it is in the best interests of all shareholders because:
• it will remove constraints on the growth of the Group’s business currently arising from Reserve Bank regulations;
• it will provide greater flexibility for the Group to explore and take advantage of future growth opportunities in New
Zealand and Australia outside the banking group regulated by the Reserve Bank;
• it will facilitate a Foreign Exempt Listing on the ASX, which will expand the capital sources available to the Group in
order to fund growth; and
• while the Restructure will result in a small degree of increased overhead costs, the potential value creation
opportunities outweigh these costs.
The Board unanimously recommends that you vote in favour of the Restructure.
6
Each director intends to vote
any shares he or she holds or controls in favour of the Restructure.
6 As Jeff Greenslade is currently the sole director of the New Listed Parent, he may be “interested” in the Restructure for the purposes of the Companies Act and the NZX
Listing Rules. Accordingly, while Jeff fully supports the Restructure, he is unable to vote on matters concerning the Restructure at meetings of the Board.

HEARTLAND BANK SCHEME BOOKLET12
SECTION 4: OTHER IMPORTANT QUESTIONS
This Section answers other important questions about the Restructure. It is not intended to address all relevant issues.
This Section should be read together with all other parts of this Scheme Booklet.
QuestionAnswer
Restructure
How will the Restructure impact
Shareholders?
Shareholders will hold shares in the New Listed Parent, which will be called
“Heartland Group Holdings Limited”, instead of holding shares in Heartland
Bank. Shareholders will receive one share in the New Listed Parent for each
share they hold in Heartland Bank on the Record Date.
Shareholders will continue to have the same interest in the business as they
do now – they will indirectly own Heartland Bank and the current Australian
Group through their Shareholding in the New Listed Parent.
The Restructure will create a non-banking group that is not regulated by the
Reserve Bank. However, despite the creation of the non-banking group, there
is no current intention to change the core business of the Group. Heartland
Bank and the Banking Group will continue to be regulated by the Reserve
Bank.
For Shareholders that are New Zealand tax residents and hold their shares
on capital account, the Restructure should not result in any New Zealand tax
being payable by the Shareholder.
For Shareholders that are Australian tax residents and hold their shares on
capital account, the Restructure should not result in any Australian tax being
payable by the Shareholder, due to the availability of rollover relief.
All Shareholders are advised to obtain their own professional advice on the
tax implications of the Restructure for them based on their own specific
circumstances.
Further details as to the New Zealand and Australian tax consequences
for Shareholders in relation to the Restructure are contained in Section 7
(Taxation Implications for Shareholders).
What happens if the Restructure
does not proceed?
If the Restructure does not proceed:
• you will retain your current holding of Heartland Bank Shares which will
continue to trade on the NZX Main Board;
• the Australian Group will continue to be held by Heartland Bank and be
part of the Banking Group;
• the Group will continue to be subject to constraints on funding and asset
growth, which may impact performance;
• for reasons discussed in further detail in Section 5 (Further Details of the
Restructure), Heartland Bank will not easily be able to seek a listing on
the ASX and will need to explore other options; and
• the Board and management may consider other alternatives to the
Restructure.

HEARTLAND BANK SCHEME BOOKLET13
QuestionAnswer
Who is an Eligible Shareholder?All Shareholders with a registered address in New Zealand at 5pm on the
Record Date will be Eligible Shareholders.
In addition, you will be an Eligible Shareholder if you have a registered address
in one of the following jurisdictions at 5pm on the Record Date (subject to
the qualifications described in Section 8):
• Australia;
• Bermuda;
• Canada;
• Denmark;
• Finland;
• France;
• French Polynesia;
• Germany;
• Hong Kong;
• Japan;
• Luxembourg;
• Macau;
• Malaysia;
• Netherlands;
• Norway;
• the People’s Republic of China;
• Portugal;
• Qatar;
• Spain;
• Singapore;
• Switzerland;
• Thailand;
• the United Kingdom; or
• the United States.
If you have a registered address in one of the above jurisdictions (other
than New Zealand) you should read Section 8 (Information for Shareholders
Outside New Zealand) for more information specific to your jurisdiction.
At Heartland Bank’s discretion, it may deem persons with a registered
address in other jurisdictions to be Eligible Shareholders.
Can I choose to receive cash instead
of New Listed Parent Shares?
No, there is no option to receive cash instead of New Listed Parent Shares.
Shareholders who do not wish to receive New Listed Parent Shares may
either:
• sell their Heartland Bank Shares at any time prior to their trading on the
NZX Main Board being halted; or
• sell their New Listed Parent Shares once they have commenced trading.
You may incur brokerage in respect of any such sale.

HEARTLAND BANK SCHEME BOOKLET14
QuestionAnswer
What if I am not an Eligible
Shareholder?
If you are not an Eligible Shareholder as at 5pm on the Record Date, you will
not receive any New Listed Parent Shares, as it may be unlawful to issue
Shares to you.
Instead of New Listed Parent Shares, you will receive cash. The cash you
receive will be the proceeds from the sale of the New Listed Parent Shares
you would have been entitled to receive had you been an Eligible Shareholder.
Those shares will be held on trust for you by NZGT and sold on-market once
New Listed Parent Shares have commenced trading (any brokerage costs
and/or transaction fees associated with this sale will be paid by the New
Listed Parent).
NZGT will appoint a New Zealand broking firm (as chosen by the New Listed
Parent) to sell the relevant New Listed Parent Shares on-market and will
liaise with Link Market Services to ensure that the proceeds of the sale are
returned to the original Shareholder as soon as practicable following the
Implementation Date. If, within five Business Days of the Implementation
Date, that original Shareholder advises the New Listed Parent that it has
purchased an equal or lesser number of New Listed Parent Shares and
provides the New Listed Parent with evidence of any brokerage costs and/or
transaction fees incurred in relation to that purchase, the New Listed Parent
will refund those brokerage costs and transaction fees to that Shareholder.
As the New Listed Parent Shares of those Shareholders who are not
Eligible Shareholders will be sold on-market (rather than those shares being
purchased by the New Listed Parent), the purchase of these shares will not
represent a cost to the New Listed Parent (other than any brokerage costs
and/or transaction fees incurred in relation to the sale, which will be paid by
the New Listed Parent but are not expected to be material).
Will I need to make any payments to
participate in the Restructure?
No.
What if I don’t support the
Restructure?
A Shareholder who does not support the Restructure may:
• sell their Heartland Bank Shares at any time prior to their trading on the
NZX Main Board being halted;
• vote against the Restructure at the Annual Meeting (although there are
no other dissent or buy-out rights for Shareholders who do not support
the Restructure); and
• if they wish to do so, appear and be heard at the Application for Final
Orders after filing in Court and serving upon Heartland Bank a notice of
opposition and supporting documents (see Section 5 (Further Details of
the Restructure)).
Will other stakeholders be affected?In respect of depositors of Heartland Bank, the Restructure will decrease the
proportion of Heartland Bank’s assets that are secured against residential
property, which is a result of the current Australian Group companies moving
outside of the Banking Group. However, Heartland Bank does not believe this
will affect depositors. It also does not believe that other stakeholders will be
affected by the Restructure.
The Reserve Bank has also provided its non-objection to the New Listed
Parent acquiring all of the shares in Heartland Bank (subject to limited
conditions that Heartland Bank believes it will satisfy), and the Board is
confident that the Restructure will not have an impact on Heartland Bank’s
credit rating.

HEARTLAND BANK SCHEME BOOKLET15
QuestionAnswer
If the Restructure is a return to
a previous structure, why did
Heartland Bank amalgamate in
2015?
The purpose of the 2015 amalgamation was to simplify Heartland’s
organisational structure. As a result, other businesses (in particular the
Australian reverse mortgage business) were brought into the Banking Group.
Given the stronger than anticipated growth in the Australian business, and
the likelihood of the future growth of that business being constrained by
the Reserve Bank’s regulation, the Group considers it is now an appropriate
time to move the current Australian Group companies outside of the Banking
Group.
What will happen to Heartland
Bank’s listed bonds?
Heartland Bank’s Unsubordinated Notes will remain listed on the NZX Debt
Market. As such, treatment of the Unsubordinated Notes will be unchanged.
What will the Group look like after the Restructure?
What will the New Listed Parent do
after the Restructure?
The New Listed Parent will, at the time of the Restructure, have no material
assets other than its shares in Heartland Bank and the Australian Group
companies. Its shares will be listed on the NZX Main Board and the ASX.
The New Listed Parent will have a limited number of employees, including a
core management group called the “Group Executive”. All other employees
will remain employees of Heartland Bank or the Australian Group.
Under the Group Services Agreement, management services will be provided
across the Group as required, including the provision of management services
by the Group Executive to Heartland Bank and the Australian Group. More
information regarding the Group Services Agreement is set out in Section 6
(What Will the Group Look Like After the Restructure?).
How will the Restructure affect
the Board and governance
arrangements?
The current directors of Heartland Bank will sit on one or more of the Group’s
boards on completion of the Restructure.
The directors of each Group company must act in the best interests of that
company. In addition, as a registered bank, Heartland Bank’s constitution
must not include a provision that permits a director, when exercising powers
or performing duties, to act other than in what he or she believes to be the
best interests of Heartland Bank. This means that Heartland Bank’s directors
may not act in the best interests of the New Listed Parent if that act is not
also in the best interests of Heartland Bank.
More details, including profiles of the members of each board, are set out in
Section 6 (What Will the Group Look Like After the Restructure?).
Can I transfer my New Listed Parent
Shares from the New Zealand
register to the Australian register?
On the Implementation Date, all New Listed Parent Shares will be registered
on the New Zealand register by default. After the Implementation Date, if
any Shareholder wishes to transfer their New Listed Parent Shares from the
New Zealand register to the Australian register (and trade their New Listed
Parent Shares on the ASX), they should contact Link Market Services.
What will the New Listed Parent’s
share price be after the Restructure?
There is no certainty as to the price of New Listed Parent Shares after the
Restructure.
What will be the New Listed
Parent’s dividend policy?
The New Listed Parent’s dividend policy will, in all material respects, be
the same as Heartland Bank’s current dividend policy, which is available at
https://shareholders.heartland.co.nz/shareholder-resources/dividends.
Could Heartland Bank conduct
business in Australia or hold
Australian assets following the
Restructure?
Yes. Nothing in the Restructure precludes Heartland Bank from conducting
business in Australia, or holding Australian assets (including taking security
over Australian assets) in the future.

HEARTLAND BANK SCHEME BOOKLET16
QuestionAnswer
Voting on the Restructure
What are the voting thresholds?For the Restructure to proceed, the Restructure must be approved by:
• a majority of 75% of the votes of Shareholders entitled to vote and
voting on the Restructure Resolution; and
• a majority (being more than 50%) of the votes of those Shareholders
entitled to vote on the Restructure Resolution (ie whether or not they
vote on the Restructure Resolution).
Both of the above voting thresholds must be met for the Restructure
Resolution to be approved.
If the Restructure would result in a different effect for a group of
Shareholders, that group could form a separate interest class for the
purposes of voting on the Restructure. As at the date of this Scheme Booklet,
all Shareholders form part of a single interest class, because each Shareholder
is treated in the same way under the Restructure.
Who is entitled to vote on the
Restructure?
Shareholders as at 5pm on 17 September 2018 are entitled to vote on the
Restructure at the Annual Meeting.
When and where is the Annual
Meeting?
The Annual Meeting will be held at 10am on 19 September 2018 at the
Waipuna Hotel & Conference Centre. Refer to the Notice of Meeting for
further details.
What if I cannot attend the Annual
Meeting in person?
Shareholders who cannot attend the Annual Meeting are strongly
encouraged to submit a postal vote or appoint a proxy to attend and vote
at the Annual Meeting on their behalf. Refer to the Notice of Meeting for
further details.
Further questions
If you have any further questions, it is recommended that you consult your financial, taxation or legal adviser before
voting on the Restructure.

HEARTLAND BANK SCHEME BOOKLET17
SECTION 5: FURTHER DETAILS OF THE RESTRUCTURE
HOW THE RESTRUCTURE WILL BE EFFECTED
The process for giving effect to the Restructure is as follows:
• The New Listed Parent has been incorporated as a New Zealand company, with a single redeemable ordinary share
being held by NZGT Security Trustee Limited (“NZGT”), a subsidiary of The New Zealand Guardian Trust Company
Limited.
• In exchange for each Heartland Bank Share held by each Shareholder on the Record Date, the New Listed Parent will
issue to each Shareholder the same number of New Listed Parent Shares.
• At the same time as the exchange of shares, NZGT’s redeemable ordinary share in New Listed Parent will be redeemed
by the New Listed Parent.
• Following the exchange of shares and the redemption of NZGT’s redeemable ordinary share, Shareholders will own
New Listed Parent Shares, and the New Listed Parent will own all Heartland Bank Shares.
• Heartland Australia will be transferred from Heartland Bank to the New Listed Parent. This will result in Heartland
Australia becoming a wholly owned subsidiary of the New Listed Parent (as opposed to a wholly owned subsidiary of
Heartland Bank).
• New Listed Parent Shares will be listed on the NZX and the ASX, and Heartland Bank Shares will cease to be listed on
the NZX (as they will all be owned by the New Listed Parent).
For the Restructure to proceed it must first be approved by the requisite majority of Shareholders at the Annual Meeting.
The Court must then grant the Final Court Orders. If the requisite majority of Shareholders vote in favour of the
Restructure and the Final Court Orders are granted, the Restructure will be implemented and binding on all Shareholders,
including those who did not vote or who voted against the Restructure Resolution.
There is a risk that the Court will refuse to grant the Final Court Orders or that the granting of the Final Court Orders is
delayed, despite Shareholder approval. The Restructure cannot be implemented unless the Final Court Orders are granted.
Rights attaching to New Listed Parent Shares
All New Listed Parent Shares issued to Shareholders under the Restructure will be fully paid ordinary shares that rank
equally between them. The key features of the ordinary shares in New Listed Parent do not differ from those that
generally apply to ordinary shares in a company incorporated in New Zealand and are the same as those of Heartland Bank
Shares.
KEY CONDITIONS
The key conditions for the Restructure to be implemented are:
• approval of the Restructure Resolution by Shareholders at the Annual Meeting;
• the provision of a “no objection” statement by the Takeovers Panel;
• the redemption of Heartland Bank’s existing Tier 2 Notes; and
• Court approval of the Restructure through the granting of the Final Court Orders.
All of these conditions must be satisfied for the Restructure to proceed.
There are further key conditions for the Restructure, which have already been satisfied. These are the Reserve Bank having
provided its non-objection to the New Listed Parent acquiring all of the shares in Heartland Bank (which has been provided
subject to limited conditions that Heartland Bank believes it will satisfy), NZX having granted the NZX Waivers and the
FMA having granted the FMC Act Exemption.
Heartland Bank currently has A$20 million of Tier 2 Notes on issue. The Tier 2 Notes are a form of subordinated debt
that receives regulatory capital treatment from the Reserve Bank and are different to Heartland Bank’s Unsubordinated
Notes, which will continue to be listed on the NZX. The terms of the Tier 2 Notes include a provision that holders of the
notes will receive shares in Heartland Bank upon the occurrence of a non-viability trigger event, but do not contemplate
a circumstance where Heartland Bank Shares are not listed on the NZX Main Board. Heartland Bank therefore is seeking
to redeem the Tier 2 Notes and is currently liaising with the holders regarding the redemption of the notes. The Reserve
Bank has also provided its non-objection to the redemption of the notes.
The redemption of the Tier 2 Notes decreases the Group’s borrowings by A$20 million. It will also slightly reduce
Heartland Bank’s total capital ratio, but this will not have a material impact on Heartland Bank’s capital adequacy position.

HEARTLAND BANK SCHEME BOOKLET18
NZX AND ASX LISTINGS OF THE NEW LISTED PARENT
If the Restructure proceeds, the New Listed Parent will be listed on both the NZX Main Board and the ASX. New Listed
Parent will trade on both the NZX and the ASX under the name “Heartland Group Holdings Limited” and the ticker code
“HGH”.
For the purposes of the Foreign Exempt Listing on the ASX, the share register of the New Listed Parent will be separated
into two registers – a New Zealand register and an Australian register.
On the Implementation Date, all New Listed Parent Shares will be registered on the New Zealand register by default. After
the Implementation Date, if any New Listed Parent Shareholder wishes to transfer their New Listed Parent Shares from
the New Zealand register to the Australian register (and trade their New Listed Parent Shares on the ASX), they should
contact Link Market Services.
NZX Listing
It is intended that New Listed Parent Shares will be listed and tradeable on the NZX Main Board on the Business Day
following the Implementation Date.
Application has been made to NZX for permission to list the New Listed Parent and to quote New Listed Parent Shares
on the NZX Main Board. All of NZX’s requirements relating to that application that can be complied with on or before the
date of this Scheme Booklet have been duly complied with. However, NZX accepts no responsibility for any statement in
this Scheme Booklet.
The NZX Main Board is a licensed market operated by NZX, which is a licensed market operator regulated under the New
Zealand Financial Markets Conduct Act 2013.
ASX Listing
It is intended that New Listed Parent Shares will be listed and tradeable on the ASX on the Business Day following the
Implementation Date.
Application has been made to ASX for the New Listed Parent to be admitted to the official list of ASX as an ASX Foreign
Exempt Listing and for New Listed Parent Shares to be granted official quotation on the financial market operated by ASX.
ASX is not a registered market under the New Zealand Financial Markets Conduct Act 2013.
If the New Listed Parent is admitted as an ASX Foreign Exempt Listing, it will need to comply with the NZX Listing Rules
(other than as waived by NZX), but will not need to separately comply with the majority of the ASX Listing Rules. The New
Listed Parent will need to comply only with the rules specified in ASX Listing Rule 1.15, which are generally procedural
in nature. The New Listed Parent will not be subject to substantive ASX Listing Rule requirements such as the rules on
continuous disclosure, periodic reporting, shareholder approval of share issuances, escrow, transactions with persons of
influence and significant transactions.
ASX takes no responsibility for the contents of this Scheme Booklet or for the merits of the Restructure to which this
Scheme Booklet relates. Admission to the official list of ASX and quotation of New Listed Parent Shares on the ASX are
not guaranteed and are not to be taken as an indication of the merits, or as an endorsement by ASX, of the Restructure,
the New Listed Parent or New Listed Parent Shares.
Failure to achieve admission to list on ASX will not, of itself, prevent the Restructure from proceeding.
Holding Statements
Holding statements for New Listed Parent Shares issued to Shareholders under the Restructure will be sent as soon as
practicable after the Implementation Date. Shareholders can confirm their shareholdings by contacting Link Market
Services, whose contact details are set out in the Directory.
Selling New Listed Parent Shares on ASX and CHESS
The New Listed Parent will apply to participate in CHESS in accordance with the ASX Settlement Operating Rules. CHESS
is an automated transfer and settlement system for transactions in securities quoted on ASX under which transfers are
effected in an electronic (ie paperless) form.
INDEPENDENT ADVISER’S OPINION
Heartland Bank has engaged Cameron Partners as the Independent Adviser to prepare a report on the Restructure for
Shareholders. The provision of such a report is common for New Zealand schemes of arrangement. The purpose of the
report is to provide an independent assessment of the merits of the Restructure for Shareholders.
The Independent Adviser has concluded that, on balance, “the potential value creation opportunities resulting from the
Restructure outweigh the costs.”

HEARTLAND BANK SCHEME BOOKLET19
The Independent Adviser’s Report is contained in Appendix 1 (Independent Adviser’s Report Prepared in Relation to the
Proposed Restructure of Heartland Bank Limited). Please refer to pages 9 and 34 of the Independent Adviser’s Report for a
summary of the Independent Adviser’s conclusions.
COURT APPROVED SCHEME OF ARRANGEMENT
The Restructure is to be implemented by way of a Court approved scheme of arrangement under Part 15 of the
Companies Act. Under Part 15, the Court is empowered to make orders binding on Heartland Bank, Shareholders, the
New Listed Parent, New Listed Parent Shareholders, NZGT and other affected parties. In accordance with the Initial Court
Orders made by the Court on 9 August 2018, Heartland Bank is required to convene a meeting of Shareholders to consider
the Restructure.
Heartland Bank has already commenced the Court process to obtain Final Court Orders. Provided the Restructure
Resolution is passed by the requisite majority at the Annual Meeting and the other conditions required to implement the
Restructure as set out in this Scheme Booklet are satisfied, Heartland Bank can seek the Final Court Orders. The Final
Court Orders will make the Restructure binding on Heartland Bank, the New Listed Parent, NZGT and Shareholders subject
to its terms. A copy of the Initial Court Orders, and Heartland Bank’s application for Final Court Orders is available at
https://shareholders.heartland.co.nz/shareholder-resources/reports-results-presentations. A physical copy can also be
viewed at the registered office of Heartland Bank (which is set out in the Directory).
The Initial Court Orders included the following:
• Any Shareholder who wishes to appear and be heard on the application for Final Court Orders must, by 5pm on
3 October 2018, file and serve on Heartland Bank at its registered address for service a notice of appearance or a
notice of opposition (both containing an address for service within New Zealand) and, if they oppose the application,
any affidavits and a memorandum of submissions on which they intend to rely. Heartland Bank shall, by 5pm on
12 October 2018, serve upon that Shareholder (at the stated address for service) a copy of all documents filed in
support of the application for Final Court Orders.
• Any other person who considers they have a proper interest in the Restructure and who wishes to appear and be heard
on the application for Final Court Orders must, by 5pm on 3 October 2018, file and serve on Heartland Bank at its
registered address for service an application for leave to be heard on the application for Final Court Orders (containing
an address for service within New Zealand), a notice of opposition, any affidavits and a memorandum of submissions
upon which that person intends to rely. Heartland Bank shall, by 5pm on 12 October 2018, serve upon that person (at
the stated address for service) a copy of all documents filed in support of the application for Final Court Orders.
If the Court considers a hearing of the application for Final Court Orders to be necessary, the application for Final Court
Orders will be heard by the High Court at Auckland at 9am on 19 October 2018. In accordance with the Initial Court
Orders, the only persons entitled to appear and be heard at Heartland Bank’s application for Final Court Orders will be:
• Heartland Bank and the New Listed Parent;
• the Takeovers Panel;
• NZGT;
• those Shareholders who file a notice of appearance or a notice of opposition to Heartland Bank’s application for Final
Court Orders; and
• those persons who claim to have an interest in the Restructure who file an application for leave to be heard and a
notice of opposition to Heartland Bank’s application for Final Court Orders, and who are subsequently granted leave
to appear and be heard at the hearing of Heartland Bank’s application for Final Court Orders.
If the hearing of Heartland Bank’s application for Final Court Orders approving the Restructure is adjourned, only those
persons referred to above need be served with notice of the adjourned date.
TAKEOVERS PANEL NO OBJECTION STATEMENT
Under the Companies Act, when exercising its discretion to approve a scheme of arrangement, the Court may rely on a
statement from the Takeovers Panel indicating that the Takeovers Panel has no objection to the High Court making orders
to approve the scheme. This is commonly referred to as a “no objection statement”.
Heartland Bank has applied for a no objection statement. The Takeovers Panel will not issue a no objection statement
until just before documents are filed for the Final Court Hearing in respect of the Restructure. This will be after the Annual
Meeting.
In the meantime, the Takeovers Panel has provided Heartland Bank with a preliminary statement, called a “letter of
intention”, of its views on the Restructure. In its letter of intention, the Takeovers Panel has indicated that it has formed
an initial view, based on the information that has been provided to it, that it intends at this stage to issue a no objection

HEARTLAND BANK SCHEME BOOKLET20
statement in respect of the Restructure prior to the Final Court Hearing. The letter of intention was presented to the
High Court before it made the Initial Court Orders.
Role of the Takeovers Panel and High Court
The fact that the Takeovers Panel has provided a letter of intention indicating that it does not intend to object to the
scheme, or that the High Court has ordered that a meeting be convened, does not mean that the Takeovers Panel or the
Court:
• has formed any view as to the merits of the proposed scheme or as to how Shareholders should vote (on this matter
Shareholders must reach their own decision); or
• has prepared, or is responsible for the content of, the scheme documents or any other material.
When considering whether to provide a no objection statement, the Takeovers Panel will consider the Takeovers Code’s
disclosure requirements, the extent to which any separate interest classes of Shareholders have been adequately identified
under the Restructure and the other protections available to Shareholders under the Restructure.
Even where a no objection statement is issued by the Takeovers Panel, the High Court still has ultimate discretion whether
or not to approve a scheme.
WAIVERS FROM NZX LISTING RULES
In connection with the Restructure, Heartland Bank and the New Listed Parent have been granted a waiver from NZX
Listing Rules 5.1.1 and 5.2.1, so that the New Listed Parent’s application to list on the NZX Main Board need not be made
through a Primary Market Participant acting as an Organising Participant.

HEARTLAND BANK SCHEME BOOKLET21
SECTION 6: WHAT WILL THE GROUP LOOK LIKE
AFTER THE RESTRUCTURE?
NEW LISTED PARENT
Board
Following implementation of the Restructure, the New Listed Parent Board will comprise Geoff Ricketts (Chair), Greg
Tomlinson, Chris Mace, Ellie Comerford and Jeff Greenslade, all of whom are current members of the Board of Heartland Bank.
Biographies for these directors are set out below.
Geoff Ricketts
CNZM, LLB (Hons), LLD (honoris causa), CFInstD – Chair and Independent Non-Executive Director
Auckland
TERM OF OFFICE
Appointed to the Board of Heartland Bank on 30 September 2010 (last elected 21 November 2017)
BOARD COMMITTEES
Chair of the Group Governance, People, Remuneration and Nominations Committee
Chair of the Group Corporate Finance Committee
Member of the Group Audit and Risk Committee
Geoff is a company director and investor with wide experience in the New Zealand and Australian business environments.
He holds a number of directorships, including Chair of Todd Corporation Limited, Chair of Suncorp Group (NZ) Limited
and Chair of Vero Insurance New Zealand Limited. Geoff chairs The University of Auckland Foundation and is a strong
supporter of community and philanthropic activities, particularly in relation to the arts and education in New Zealand.
Ellie Comerford
BEc – Independent Non-Executive Director
Australia
TERM OF OFFICE
Appointed to the Board of Heartland Bank on 1 January 2017 (last elected 21 November 2017)
BOARD COMMITTEES
Chair of the Group Audit and Risk Committee
Member of the Group Corporate Finance Committee
Ellie has worked for more than 30 years in financial services in Australia and overseas across a range of banking and
insurance businesses in both an executive and non-executive capacity. Her most recent executive role was as CEO and
Managing Director of Genworth Mortgage Insurance Australia Limited successfully listing the company on the ASX in 2014.
Ellie is a non-executive director for financial services businesses in Australia including Cash Converters International
Limited and Hollard Insurance Australia. Ellie has significant experience in strategy planning, business development,
risk management, corporate finance, and operations management, and brings a track record of enhancing financial
performance and leadership culture within organisations.
Ellie has a strong passion for promoting diversity and is a member of Chief Executive Women in Australia, a forum to
educate and influence Australian business and government on the importance of gender balance.
GEOFF
RICKETTS
ELLIE
COMERFORD
JEFF
GREENSLADE
SIR CHRISTOPHER
MACE
GREG
TOMLINSON

HEARTLAND BANK SCHEME BOOKLET22
Jeff Greenslade
LLB – Executive Director and Chief Executive Officer
Auckland
TERM OF OFFICE
Appointed to the Board of Heartland Bank on 30 September 2010 (last elected 31 December 2015)
BOARD COMMITTEES
Member of the Group Corporate Finance Committee
Jeff has over 20 years’ experience as a senior banking executive, including with the ANZ National Banking Group, where he
last held the position of Managing Director of Corporate and Commercial Banking for ANZ National Bank. From February
2006 until February 2008 he spent time on the board of UDC Finance Limited. Jeff has also held a number of senior
positions in the Institutional and Capital Markets areas of The National Bank of New Zealand and its subsidiary, Southpac.
Jeff joined the Heartland Group as Chief Executive Officer of MARAC Finance Limited in 2009 and subsequently became
Chief Executive Officer of Heartland Bank.
Sir Christopher Mace
KNZM, CMInstD – Independent Non-Executive Director
Ngati Porou, Te Whanau-a-Apanui
Auckland
TERM OF OFFICE
Appointed to the Board of Heartland Bank on 30 September 2010 (last elected 21 November 2017)
BOARD COMMITTEES
Member of the Group Audit and Risk Committee
Sir Chris is an Auckland based company director with experience in the New Zealand and Australian business environments. Sir
Chris is a past Chairman of the Crown Research Institutes ESR (forensic and environmental science), NIWA (climate, freshwater
and ocean science) and the New Zealand Antarctic research unit, Antarctica New Zealand. He is a Commissioner for the
Tertiary Education Commission. Sir Chris continues as a director and/or investor in a number of companies
In 2014 he was awarded the Companion of the New Zealand Order of Merit (CNZM) for services to Antarctica and the community
and in 2016 was appointed as a Knight Companion of the New Zealand Order of Merit for services to science and education.
Sir Chris was named Maori Business Leader of the Year in 2012 and was inducted into the Business Hall of Fame in 2015.
Greg Tomlinson
AME – Non-Executive Director
Blenheim
TERM OF OFFICE
Appointed to the Board of Heartland Bank on 18 March 2013 (last elected 21 November 2017)
BOARD COMMITTEES
Member of the Group Governance, People, Remuneration and Nominations Committee
Member of the Group Corporate Finance Committee
Greg is a Christchurch based businessman and investor with 40 years’ experience owning, managing and building
businesses. An early pioneer of the mussel industry of Marlborough, he established Impact Capital with active investments
in the aged care, animal pharmaceutical, finance and wine sectors. Greg and his wife Jill support a variety of charities in
New Zealand and overseas.
Employees
On completion of the Restructure, with the exception of the Group Executive and the Investor Relations Manager, all
other Group employees will remain employed by Heartland Bank or the Australian Group companies under their existing
employment arrangements.
Group Executive
The Group Executive comprises:
• the Group Chief Executive Officer, Jeff Greenslade;
• the Group Chief Financial Officer, David Mackrell;
• the Head of Corporate Finance, Andrew Dixson;
• the Group General Counsel, Michael Drumm; and
• the Head of Internal Audit, Myles Perry.

HEARTLAND BANK SCHEME BOOKLET23
These executives will be employees of the New Listed Parent and will oversee the operations of the Group. Unlike
other staff members who will either be dedicated to Heartland Bank and its subsidiaries, or Heartland Australia and its
subsidiaries, the Group Executive will spend their time across Heartland Bank, Heartland Australia and their respective
subsidiaries, and any other subsidiaries of the Group from time to time. The Group Executive will devote a substantial
majority of their time to the activities of Heartland Bank. In addition to the Group Executive, the Investor Relations
Manager will be an employee of the New Listed Parent.
Corporate Governance
The New Listed Parent will have governance arrangements similar to those existing for Heartland Bank prior to the
Restructure, which are consistent with those required and expected of listed companies, including the NZX Listing
Rules and the NZX Corporate Governance Code 2017. Information on Heartland Bank’s current corporate governance
arrangements and key policies can be found at shareholders.heartland.co.nz.
Board Remuneration
The base fees payable to non-executive directors of the Group will not change.
Non-executive executive directors will continue to be paid a base fee of $100,000 and the board chair and board
committee chairs will continue to be paid an additional fee to reflect the extra workloads involved. There will no longer
be a deputy chair of the board (given that there will be a chair of the New Listed Parent Board and a chair of the Board of
Heartland Bank), which means that no deputy chair fee will be payable.
The base fees will be payable to the non-executive directors of the New Listed Parent and Heartland Bank. Although some
directors will be directors of both the New Listed Parent and Heartland Bank, they will not receive more than one base fee
to ensure that they are not paid twice.
Similarly, the non-executive directors of Heartland Australia will not receive an additional base fee given that each of
them is also a director of the New Listed Parent. The chair of the board of Heartland Australia will continue to receive an
additional fee under existing arrangements.
The total fee pool for the non-executive directors of the Group is currently $1,200,000 per annum, which was approved by
Shareholders at the Annual Shareholder Meeting on 22 November 2016.
The Restructure will not require an increase to the current pool of $1,200,000 per annum. The Restructure will result
in an increase of approximately $55,000 to the total fees payable to non-executive directors of the Group, however, this
increase can be satisfied within the current fee pool.
Constitution
The New Listed Parent will have a constitution that is appropriate for a company listed on the NZX Main Board and on the
ASX as a Foreign Exempt Listing.
The constitution of the New Listed Parent incorporates by reference the requirements of the NZX Listing Rules and
requires the New Listed Parent to comply with the NZX Listing Rules for so long as New Listed Parent Shares are quoted
on the NZX Main Board.
The constitution of the New Listed Parent that will apply from the implementation of the Restructure has been prepared
reflecting the existing constitution of Heartland Bank. However, the New Listed Parent constitution will include minor
updates to reflect some of the anticipated changes to the NZX Listing Rules.
These changes will not impact upon the rights or obligations of New Listed Parent Shareholders when compared with the
existing Heartland Bank constitution.
Business and Strategy of the New Listed Parent
The New Listed Parent will be the parent company for the Group and oversee the New Zealand business (carried on by
Heartland Bank and its subsidiaries) and the Australian business (carried on by the Australian Group companies).
On completion of the Restructure, it will have no material assets other than its shares in Heartland Bank and Heartland
Australia.
The New Listed Parent will have a limited number of employees, including the Group Executive and Investor Relations
Manager. All other employees will remain employees of Heartland Bank or the Australian Group companies.
Under the Group Services Agreement described in Section 6, management services will be provided across the Group as
required, including the provision of management services by the Group Executive to Heartland Bank.

HEARTLAND BANK SCHEME BOOKLET24
HEARTLAND BANK
Board
Following implementation of the Restructure, the Board will comprise Bruce Irvine (Chair), John Harvey, Vanessa Stoddart,
Graham Kennedy, Geoff Ricketts, Ellie Comerford, and Jeff Greenslade (provided those directors that are retiring by
rotation, as set out in the Notice of Meeting, are re-elected at the Annual Meeting). All of these individuals are current
members of the Board of Heartland Bank. Biographies for these directors are set out below.
Bruce Irvine
BCom, LLB, FCA, CFInstD, FNZIM – Chair and Independent Non-Executive Director
Christchurch
TERM OF OFFICE
Appointed to the Board of Heartland Bank on 31 December 2015 (last elected on 22 November 2016)
7
BOARD COMMITTEES
Member of the Heartland Bank Audit Committee
Member of the Group Governance, People, Remuneration and Nominations Committee
Member of the Group Corporate Finance Committee
Bruce is a chartered accountant and was admitted into the Christchurch partnership of Deloitte in 1988. He was
Managing Partner from 1995 to 2007 before his retirement from Deloitte in May 2008 to pursue his career as an
independent director. Bruce is a director of several public and private companies including House of Travel Holdings
Limited, Market Gardeners Limited, PGG Wrightson Limited, Rakon Limited, Scenic Hotels Limited and Skope Industries
Limited. Bruce is involved in a voluntary capacity as a trustee of the Christchurch Symphony Orchestra.
Ellie Comerford
BEc – Non-Executive Director
Australia
TERM OF OFFICE
Appointed to the Board of Heartland Bank on 1 January 2017 (last elected 21 November 2017)
BOARD COMMITTEES
Chair of the Heartland Bank Risk Committee
Chair of the Group Audit and Risk Committee
Member of the Group Corporate Finance Committee
Ellie has worked for more than 30 years in financial services in Australia and overseas across a range of banking and
insurance businesses in both an executive and non-executive capacity. Her most recent executive role was as CEO and
Managing Director of Genworth Mortgage Insurance Australia Limited successfully listing the company on the ASX in 2014.
Ellie is a non-executive director for financial services businesses in Australia including Cash Converters International
Limited and Hollard Insurance Australia. Ellie has significant experience in strategy planning, business development,
risk management, corporate finance, and operations management, and brings a track record of enhancing financial
performance and leadership culture within organisations.
Ellie has a strong passion for promoting diversity and is a member of Chief Executive Women in Australia, a forum to
educate and influence Australian business and government on the importance of gender balance.
GEOFF
RICKETTS
ELLIE
COMERFORD
JEFF
GREENSLADE
GRAHAM
KENNEDY
BRUCE
IRVINE
JOHN
HARVEY
VANESSA
STODDART

HEARTLAND BANK SCHEME BOOKLET25
Jeff Greenslade
LLB – Executive Director and Chief Executive Officer
Auckland
TERM OF OFFICE
Appointed to the Board of Heartland Bank on 30 September 2010 (last elected 31 December 2015)
BOARD COMMITTEES
Member of the Group Corporate Finance Committee
Jeff has over 20 years’ experience as a senior banking executive, including with the ANZ National Banking Group, where he
last held the position of Managing Director of Corporate and Commercial Banking for ANZ National Bank. From February
2006 until February 2008 he spent time on the board of UDC Finance Limited. Jeff has also held a number of senior
positions in the Institutional and Capital Markets areas of The National Bank of New Zealand and its subsidiary, Southpac.
Jeff joined the Heartland Group as Chief Executive Officer of MARAC Finance Limited in 2009 and subsequently became
Chief Executive Officer of Heartland Bank.
John Harvey
BCom, CA, CFInstD – Independent Non-Executive Director
Auckland
TERM OF OFFICE
Appointed to the Board of Heartland Bank on 31 December 2015 (last elected on 22 November 2016)
7
BOARD COMMITTEES
Chair of the Heartland Bank Audit Committee
Member of the Heartland Bank Risk Committee
John has considerable financial services experience and 36 years in the professional services industry, including 23 years
as a partner of PricewaterhouseCoopers where he also held a number of leadership and governance roles. Since his
retirement from PricewaterhouseCoopers in 2009, John has pursued a career as an independent director of a number
of companies, including NZX-listed Stride Property Limited, Investore Property Limited and NZX/ASX-listed Kathmandu
Holdings Limited. He is also chairman of NZ Opera Limited.
Graham Kennedy
MNZM, J.P., BCom, FCA, ACIS, ACIM, CFInstD – Independent Non-Executive Director
Ashburton
TERM OF OFFICE
Appointed to the Board of Heartland Bank on 30 September 2010 (last elected on 31 December 2015)
BOARD COMMITTEES
Member of the Heartland Bank Risk Committee
Graham has over 40 years’ experience as a chartered accountant and business advisor. He is now an independent
professional director and Chairman of a number of private companies, providing him with governance experience across
a diverse range of business sectors including property, tourism, agribusiness, transport, construction and professional
services. Graham is also actively involved, at a governance level, in a variety of community based charitable organisations.
He has considerable experience in Mergers and Acquisitions, Human Resources, Finance and Banking having been involved in the
Building Society sector since 1985.
Graham was awarded a New Zealand Order of Merit for services to Business, in the 2017 Queen’s Birthday Honours.
Geoff Ricketts
CNZM, LLB (Hons), LLD (honoris causa), CFInstD – Non-Executive Director
Auckland
TERM OF OFFICE
Appointed to the Board of Heartland Bank on 30 September 2010 (last elected 21 November 2017)
BOARD COMMITTEES
Member of the Heartland Bank Audit Committee
Chair of the Group Governance, People, Remuneration and Nominations Committee
Chair of the Group Corporate Finance Committee
Member of the Group Audit and Risk Committee
7 John and Bruce were directors of the former Heartland Bank Limited prior to its amalgamation with Heartland New Zealand Limited (now Heartland Bank) on
31 December 2015, and became directors of the amalgamated company on amalgamation. They were directors of the former Heartland Bank Limited since its
formation on 31 January 2013, with Bruce being its Chair.

HEARTLAND BANK SCHEME BOOKLET26
Geoff is a company director and investor with wide experience in the New Zealand and Australian business environments.
He holds a number of directorships, including Chair of Todd Corporation Limited, Chair of Suncorp Group (NZ) Limited
and Chair of Vero Insurance New Zealand Limited. Geoff chairs The University of Auckland Foundation and is a strong
supporter of community and philanthropic activities, particularly in relation to the arts and education in New Zealand.
Vanessa Stoddart
BCom/LLB (Hons), PGDip. Professional Ethics, GAICD, CMInstD – Independent Non-Executive Director
Auckland
TERM OF OFFICE
Appointed to the Board of Heartland Bank on 3 October 2016 (last elected on 22 November 2016)
BOARD COMMITTEES
Member of the Heartland Bank Audit Committee
Member of the Heartland Bank Risk Committee
Member of the Group Governance, People, Remuneration and Nominations Committee
Vanessa is an experienced director and serves on the boards of New Zealand Refining Company Limited, Alliance Group
Limited, Tertiary Education Commission and the Financial Markets Authority. Her government appointments include
MBIE’s Audit and Risk Committee, DOC’s Audit and Risk Committee, and Business New Zealand’s representative on DESC.
Following an early legal career, Vanessa gained broad commercial and leadership transformation experience with a specific
focus on people, culture and health and safety as well as best practice governance and business ethics with some of New
Zealand’s largest companies, including Air New Zealand and Carter Holt Harvey.
Vanessa’s drive for enhanced diversity in New Zealand companies is demonstrated through her commitment to Global
Women for which she is currently the Chair.
Board Remuneration
Please refer to the board remuneration arrangements for the New Listed Parent (which include the arrangements for
Heartland Bank).
Senior Management
Employees of Heartland Bank, under the supervision of the Group Executive, will provide the core services required by
Heartland Bank and its subsidiaries. Heartland Bank will have a dedicated Deputy Chief Executive Officer, Chief Risk Officer,
Chief People & Culture Officer, Chief Marketing & Communications Officer, Chief Technology & Enablement Officer, Chief
Digital Officer, Head of Finance, Head of Internal Audit and Heads of Customer Segments.
Business and Strategy of Heartland Bank
The business and strategy of Heartland Bank following implementation of the Restructure will be the same as its business
and strategy prior to implementation of the Restructure, except that it will relate solely to the New Zealand group companies.
Heartland Bank is focused on identifying technology and partnerships that can help it reach more customers. It focuses on
markets where it can provide the best product for its customers, and ensures that its product is the best choice in the market.
Heartland Bank’s strategic priorities will continue to be:
• being in the right place at the right time through digital, intermediated and direct channels to ensure it is in easy
reach for its customers;
• targeting markets with significant opportunity and focussing on niche products where customers are under-served by
the other banks;
• delivering specialised customer experiences for each product type;
• using data insights to predict customer intent, and drive strong lead generation and conversion; and
• leveraging established intermediary relationships and using digital platforms to distribute selected new products.
Heartland Bank will also retain a listing on the NZX Debt Market in respect of its Unsubordinated Notes. As such,
treatment of the Unsubordinated Notes will be unchanged.
Heartland Bank will adopt a new constitution that will apply from the implementation of the Restructure. Heartland
Bank’s new constitution will be appropriate for a registered bank. As a registered bank, Heartland Bank’s constitution
must not include a provision that permits a director, when exercising powers or performing duties, to act other than in
what he or she believes to be the best interests of Heartland Bank. This means that Heartland Bank’s directors may not
act in the best interests of the New Listed Parent if that act is not also in the best interests of Heartland Bank.
Under the Group Services Agreement described in Section 6, Heartland Bank employees will provide a number of core services
across the Group and Heartland Bank will licence the use of some of its intellectual property to the other Group companies.

HEARTLAND BANK SCHEME BOOKLET27
HEARTLAND AUSTRALIA
Following implementation of the Restructure, the board of Heartland Australia will comprise Ellie Comerford (Chair), Geoff
Ricketts, Greg Tomlinson and Jeff Greenslade, all of whom are current members of the Board of Heartland Bank and will be
members of the New Listed Parent Board. For their biographies, please refer to the New Listed Parent Board.
Board Remuneration
Please refer to the board remuneration arrangements for the New Listed Parent (which include the arrangements for
Heartland Australia).
Senior Management
The Restructure will not result in any immediate changes to the senior management of Heartland Australia, led by the
Chief Executive Officer of Heartland Seniors Finance Australia. However, the following additional roles may be required to
reflect growth in Heartland Australia’s operations:
• Head of Finance, Risk and Compliance;
• Head of Business.
In the interim, these functions will continue to be provided by Heartland Bank under the Group Services Agreement.
Business and Strategy of Heartland Australia
The business and strategy of Heartland Australia following implementation of the Restructure will be the same as its
business and strategy prior to implementation of the Restructure.
Heartland Australia will continue to be a specialist provider of reverse mortgage loans under the “Heartland Seniors
Finance” brand, and will continue to pursue additional lending activities.
It will continue to focus on growth, in particular by leveraging established intermediary relationships and using digital
platforms to distribute selected products. Examples of this are its partnerships with Harmoney and Spotcap and its
expanding broker distribution network for reverse mortgages.
While existing customers of Heartland Australia will not be affected by the Restructure, the Restructure will enable
Heartland Australia to take advantage of further growth opportunities as they arise. For the reverse mortgage business,
the Restructure will allow the Group to continue to fund growth with Australian-sourced secured funding, which is the
most efficient form of funding currently available to it.
GROUP SERVICING ARRANGEMENTS
To facilitate the operation of the Group following the Restructure, a number of arrangements have been entered into, or
will be entered into prior to the Restructure, between Heartland Bank, the New Listed Parent and Heartland Australia.
The principal arrangements are set out in the Group Services Agreement, which is a tripartite services agreement between
Heartland Bank, the New Listed Parent and Heartland Australia. The Group Services Agreement governs the provision of
certain services by the New Listed Parent to Heartland Bank and Heartland Australia, and by Heartland Bank to the New
Listed Parent and Heartland Australia.
In summary, under the Group Services Agreement:
• Heartland Bank employees will provide a number of core services to Heartland Australia and the New Listed Parent,
including in the areas of finance, treasury, internal audit, legal, human resources, as well as oversight and support in
the areas of credit, risk & compliance, sales channels and customers, IT and marketing;
• the Group Executive of the New Listed Parent will provide oversight and overall management of the operations of
Heartland Bank and Heartland Australia (although a substantial majority of their time will be devoted to the activities
of Heartland Bank);
• the New Listed Parent will regularly monitor its share register, engage with substantial product holders and engage
with the Reserve Bank to ensure that the requirements regarding a person acquiring “significant influence” over a
registered bank continue to be met; and
• Heartland Bank will licence the use of some of its intellectual property to the New Listed Parent and Heartland
Australia (such as the Heartland and Heartland Seniors Finance trademarks).
GEOFF
RICKETTS
ELLIE
COMERFORD
JEFF
GREENSLADE
GREG
TOMLINSON

HEARTLAND BANK SCHEME BOOKLET28
SUMMARY OF BALANCE SHEET MOVEMENTS
The below table provides an indication of the Group’s balance sheet had the Restructure been implemented on 30 June
2018. The “Post-Restructure” columns show the indicative individual balance sheets of each of the New Listed Parent, the
Banking Group and the Australian Group.
30 June 2018 $mPre-RestructurePost-Restructure
Consolidated
Group
Consolidated
Group
New Listed
Parent
Banking
Group
Australian
Group
Cash and cash equivalents
[1]
50285419
Investments
[2]
3413416593410
Investment properties99090
Finance receivables3,9853,98503,264721
Intercompany
[3]
000760
Operating lease vehicles18180180
Other assets14140140
Intangible assets747405321
Deferred tax55060
Total Assets4,4964,4746643,785761
Borrowings
[1]
3,7963,77403,159615
Intercompany
[3]
000076
Current tax liabilities1212093
Trade and other payables24240240
Deferred tax00001
Total Liabilities3,8323,81003,192695
Total Equity
[4]
66466466459366
Total Equity and Liabilities4,4964,4746643,783761
Please note that certain discrepancies between the line items for the Consolidated Group and the individual Group
companies post-Restructure are attributable to rounding.
[1]
Cash and cash equivalents and Borrowings
The Group’s cash and cash equivalents will decrease by $22 million, which will be used to repay Heartland Bank’s existing
Tier 2 Notes. Heartland Bank is seeking to redeem the Tier 2 Notes and is currently liaising with the holders regarding the
redemption of the notes. The redemption of the notes reduces the Group’s total assets by $22 million and decreases its
borrowings by $22 million. It will also slightly reduce Heartland Bank’s total capital ratio, but this will not have a material
impact on Heartland Bank’s capital adequacy position.
[2]
Investments
The New Listed Parent’s investments of $659 million reflect the value of its investments in Heartland Bank ($591 million)
and Heartland Australia ($68 million) and their respective subsidiaries, which are not reflected on a consolidated group
view.
[3]
Intercompany
This new line item recognises the intercompany funding arrangements between Heartland Bank and Heartland Australia,
which are not reflected on a consolidated group view.
[4]
Total Equity
The total equity of the Group (pre-Restructure) and total equity of the Group (post-Restructure) is the same. This shows
that no excess or additional capital is being created by the Restructure. Rather, the total equity of the Group (pre-
Restructure) is being appropriately sized to support the needs of each of Heartland Bank and Heartland Australia following
the implementation of the Restructure.

HEARTLAND BANK SCHEME BOOKLET29
SECTION 7: TAXATION IMPLICATIONS FOR SHAREHOLDERS
This Section comments, in summary, on the general taxation position of Shareholders in relation to the Restructure. It
does not constitute taxation advice. All Shareholders are advised to obtain advice from an appropriate professional
advisor having regard to their individual circumstances.
This Section does not purport to be a complete analysis, and is intended as a general guide to the New Zealand and
Australian tax implications only. No information is specifically provided in relation to Shareholders in other jurisdictions.
NEW ZEALAND
Income tax implications associated with the Restructure
• No dividend
The Restructure will not result in a dividend being treated as paid by Heartland Bank to Shareholders for New Zealand
income tax purposes.
• Disposal of Heartland Bank Shares
Under the Restructure, Shareholders will be disposing of each of their Heartland Bank Shares at the time of transfer in
consideration for being issued one New Listed Parent Share (or if the Shareholder is not an Eligible Shareholder, receiving
cash equal to the value of one New Listed Parent Share) for each Heartland Bank Share that the Shareholder transfers
to the New Listed Parent. If a Shareholder holds Heartland Bank Shares on capital account for New Zealand income tax
purposes, that disposal will not give rise to tax implications.
Certain Shareholders may be subject to New Zealand income tax on gains made, or allowed a deduction for loss sustained,
on the disposal of Heartland Bank Shares. Generally, a Shareholder will be subject to income tax on a gain (or allowed a
deduction for a loss) arising from the disposal of Heartland Bank Shares if the Shareholder is in the business of dealing in
shares, disposes of the Heartland Bank Shares as part of a profit-making undertaking or scheme, or acquired the Heartland
Bank Shares with the purpose of selling them.
If any gain on disposal of the Heartland Bank Shares is taxable (or loss deductible) to a Shareholder, the taxable gain
(or deductible loss) will be the difference between the cost base for the Shareholder in the Heartland Bank Shares and
the amount received for their disposal (ie the market value of the New Listed Parent Shares that are distributed to the
Shareholder in respect of their Heartland Bank Shares, on the Implementation Date).
Income tax implications associated with holding New Listed Parent Shares after the Restructure
• Dividends
As the New Listed Parent is a New Zealand incorporated and tax resident company, the tax rules applying to dividends
paid by the New Listed Parent will be the same as the rules applying to dividends paid by Heartland Bank.
The New Listed Parent intends to attach imputation credits to dividends to the extent they are available. It is expected
that this will be to a similar extent as Heartland Bank is currently able to.
Goods and services tax (GST) implications
The issue of New Listed Parent Shares to Shareholders in accordance with the Restructure will not result in any GST being
payable to the New Zealand Inland Revenue.
AUSTRALIA
Implications associated with the Restructure
• Income tax
This section is based on the provisions of the Australian Tax Act, the A New Tax System (Goods and Services Tax) Act 1999
(Cth) and related acts, regulations and Australian Taxation Office (“ATO”) rulings and determinations applicable at the date
of this Scheme Booklet.
The following comments consider the Australian income tax implications for New Zealand resident and Australian resident
Shareholders who hold their Heartland Bank Shares on capital account at the time of the Restructure.

HEARTLAND BANK SCHEME BOOKLET30
New Zealand resident Shareholders
A Shareholder who is not a resident of Australia for tax purposes must disregard any capital gain or loss arising from the
disposal of their Heartland Bank Shares under the Restructure, provided those Heartland Bank Shares are not “taxable
Australian property”.
A Shareholder’s Heartland Bank Shares may be taxable Australian property if those shares have been used at any time
in carrying on business through a permanent establishment in Australia. It is strongly recommended that a Shareholder
obtain Australian taxation advice specific to their circumstances if this situation may apply to them.
Australian resident shareholders
This section assumes that the Shareholder is an Australian resident for tax purposes (and is not a “temporary resident” as
defined in the Australian Tax Act).
• Application of CGT provisions
Under Australia’s capital gains tax (“CGT”) provisions, the transfer of Heartland Bank Shares will give rise to a CGT event
for Australian tax resident Shareholders. A taxable capital gain or capital loss may be realised as a result of the CGT event.
An Australian tax resident Shareholder should, however, be eligible to choose a ‘rollover’ under Division 615 of the Tax Act.
Where this rollover is chosen, any capital gain or capital loss arising to an Australian tax resident Shareholder from the
transfer of their Heartland Bank Shares under the Restructure should be disregarded.
If a Shareholder wishes to apply the rollover, the way in which the Shareholder prepares their Australian income tax return
for the income year will be sufficient evidence of having made that choice.
If a Shareholder does not choose to apply the rollover, the Shareholder may realise a taxable capital gain or loss in the
income year in which the Heartland Bank Shares are transferred under the Restructure.
• Division 615 rollover relief – CGT implications for New Listed Parent Shares
If a Shareholder chooses to apply the rollover, the cost base and CGT acquisition time of their New Listed Parent Shares
should be as set out below.
The first element of the Shareholder’s cost base (or reduced cost base, if applicable) for each New Listed Parent Share
acquired under the Restructure will be equal to the cost base of the corresponding Heartland Bank Share transferred
under the Restructure.
New Listed Parent Shares should be taken for CGT purposes (including for the purposes of the CGT discount provisions) to
have been acquired at the time the Heartland Bank Shares were originally taken to have been acquired.
• Stamp Duty
No Australian duty should be payable by any Shareholders in relation to the exchange of Heartland Bank Shares for New
Listed Parent Shares under the Restructure.
• Goods and services tax (Australian GST)
No Australian GST should be payable on the exchange of Heartland Bank Shares for New Listed Parent Shares under the
Restructure, as the distribution of New Listed Parent Shares will be outside the scope of Australian GST.
Implications associated with holding New Listed Parent Shares after the Restructure
• Dividends
Australian tax residents will be taxable in relation to dividends paid by the New Listed Parent.
• Sale of New Listed Parent Shares
New Zealand resident shareholders
A shareholder who holds their New Listed Parent Shares on capital account and is not an Australian tax resident must
disregard any capital gain or loss arising from the disposal of their New Listed Parent Shares under the Restructure if, at
the time of the disposal their New Listed Parent Shares are not “taxable Australian property”.
A shareholder’s New Listed Parent Shares are not expected to be taxable Australian property unless those shares
have been used at any time in carrying on business through a permanent establishment in Australia. It is strongly
recommended that a Shareholder obtain Australian taxation advice specific to their circumstances if this situation may
apply to them.

HEARTLAND BANK SCHEME BOOKLET31
Australian resident shareholders
Australian tax resident shareholders who hold their New Listed Parent Shares on capital account will recognise capital
gains or capital losses upon any future disposal of New Listed Parent Shares which will need to be disclosed in their
Australian income tax return.
The taxable capital gain should generally be equal to the difference between the cost base for the New Listed Parent
Shareholder and the amount received for their disposal. A capital loss may arise where the amount received for the
disposal of the shares is less than the cost base of the shares.
The first element of the New Listed Parent Shareholder’s cost base (or reduced cost base, if applicable) for each New
Listed Parent Share acquired under the Restructure will be equal to the cost base of the corresponding Heartland Bank
Share transferred under the Restructure.

HEARTLAND BANK SCHEME BOOKLET32
SECTION 8: INFORMATION FOR SHAREHOLDERS
OUTSIDE NEW ZEALAND
No action has been taken to register or qualify New Listed Parent Shares or otherwise permit a public offering of such
securities in any jurisdiction outside New Zealand.
All Shareholders with a registered address in New Zealand at 5pm on the Record Date will be Eligible Shareholders.
In addition, Shareholders whose addresses are shown in the Heartland Bank share register at 5pm on the Record Date
as being in the following jurisdictions will be entitled to have New Listed Parent Shares issued to them pursuant to the
Restructure (subject to the qualifications, if any, set out below in respect of that jurisdiction):
• Australia;
• Bermuda;
• Canada;
• Denmark, where (i) the Shareholder is a “qualified investor” (within the meaning of the Prospectus Directive (Directive
2003/71/EC), as amended and implemented in Denmark) or (ii) the number of non-qualified investors is less than 150;
• Finland, where (i) the Shareholder is a “qualified investor” or (ii) the number of non-qualified investors with a
registered address in Finland is less than 150;
• France, where (i) the Shareholder is a “qualified investor” (as defined in articles D. 411-1, L. 533-16, L. 533-20, D. 533-
11 and D. 533-13 of the French Monetary and Financial Code) or (ii) the number of non-qualified investors with a
registered address in France is less than 150;
• French Polynesia, where (i) the Shareholder is a “qualified investor” (as defined in articles D. 411-1, L. 533-16, L. 533-
20, D. 533-11 and D. 533-13 of the French Monetary and Financial Code) or (ii) the number of non-qualified investors
is less than 150;
• Germany, where (i) the Shareholder is a “qualified investor” (within the meaning of the Prospectus Directive (Directive
2003/71/EC), as amended and implemented in Germany) or (ii) the number of non-qualified investors with a
registered address in Germany is less than 150;
• Hong Kong, where (i) the Shareholder is a “professional investor” (as defined in the Securities and Futures Ordinance of
Hong Kong) or (ii) the number of non-professional investors with a registered address in Hong Kong does not exceed 50;
• Japan, where the number of Shareholders with a registered address in Japan is less than 50;
• Luxembourg, where (i) the Shareholder is a “qualified investor” (within the meaning of the Prospectus Directive
(Directive 2003/71/EC), as amended and implemented in Luxembourg) or (ii) the number of non-qualified investors
with a registered address in Luxembourg is less than 150;
• Macau;
• Malaysia;
• Netherlands, where (i) the Shareholder is a “qualified investor”(within the meaning of the Prospectus Directive
(Directive 2003/71/EC), as amended and implemented in the Netherlands) or (ii) the number of non-qualified
investors with a registered address in the Netherlands is less than 150;
• Norway, where (i) the Shareholder is a “professional client” (as defined in Norwegian Securities Regulation of 29 June
2007 no. 876) or (ii) the number of non-professional clients with a registered address in Norway is less than 150;
• Portugal, where (i) the Shareholder is a “professional investor” (within the meaning of the EU Markets in Financial
Instruments Directive (Directive 2014/65/EC, “MiFID II”), as amended and implemented in Portugal) or (ii) the number
of non-professional investors with a registered address in Portugal is less than 150;
• the People’s Republic of China, where the Shareholder is a qualified domestic institutional investor, sovereign wealth
fund or quasi-government investment fund or, at the discretion of Heartland Bank, where the Shareholder becomes
aware of the Restructure other than through a solicitation and requests that Heartland Bank permit the Shareholder
to participate in the Restructure;
• Qatar;
• Singapore;
• Spain, where (i) the Shareholder is a “qualified investor” (within the meaning of the Prospectus Directive (Directive
2003/71/EC), as amended and implemented in Spain) or (ii) the number of non-qualified investors with a registered
address in Spain is less than 150;

HEARTLAND BANK SCHEME BOOKLET33
• Switzerland;
• Thailand, where the number of Shareholders with a registered address in Thailand is less than 50;
• United Kingdom;
• United States, where the Shareholder’s registered address is in one of the following states:
• Arizona;
• California, where less than 25% of Shareholders have a registered address in California;
• Connecticut, where the number of Shareholders with a registered address in Connecticut is less than ten;
• Illinois;
• Massachusetts;
• Michigan;
• Missouri;
• New Hampshire;
• New Jersey, where the number of Shareholders with a registered address in New Jersey is less than ten;
• North Carolina;
• Pennsylvania;
• Texas;
• Washington; or
• Wisconsin; and
• any other person or jurisdiction in respect of which Heartland Bank reasonably believes that it is not prohibited
and not unduly onerous or impractical to implement the Restructure and to issue New Listed Parent Shares to a
Shareholder with a registered address in such jurisdiction.
Nominees, custodians and other Shareholders who hold Heartland Bank Shares on behalf of a beneficial owner resident
outside Australia, Bermuda, Canada, Macau, Malaysia, Qatar, Singapore, Switzerland, the United Kingdom and the United
States (where the beneficial owner is resident in one of the states listed above, other than California or Connecticut) may
not forward this Scheme Booklet (or accompanying documents) to anyone outside these countries without the consent of
Heartland Bank.
This Scheme Booklet and the Restructure does not constitute an offer of New Listed Parent Shares in any jurisdiction
in which it would be unlawful. In particular, this Scheme Booklet may not be distributed to any person, and New Listed
Parent Shares may not be offered or sold, in any country outside New Zealand except to the extent provided below.
Australia
The proposal to acquire your Heartland Bank Shares and the offer of New Listed Parent Shares, in accordance with the
Restructure, are made in Australia in reliance on exemptions from prospectus and other applicable securities laws. No
offer of New Listed Parent Shares is made in Australia other than in accordance with the Restructure.
This Scheme Booklet has not been filed with or registered by the Australian Securities and Investments Commission, and
has not been approved by any Australian court.
Bermuda
New Listed Parent Shares under the Restructure are only being offered to existing Shareholders and no invitation is being
made to persons resident in Bermuda for exchange control purposes to subscribe for New Listed Parent Shares.
Canada
New Listed Parent Shares will be issued by the New Listed Parent in reliance upon exemptions from the prospectus and
registration requirements of the applicable Canadian securities law in each province and territory of Canada.
No securities commission in Canada has reviewed or in any way passed upon this document or the merits of the
Restructure.
Denmark
The information in this document has been prepared on the basis that all offers of New Listed Parent Shares will be made
pursuant to an exemption under the Directive 2003/71/EC (“Prospectus Directive”), as amended and implemented in
Denmark, from the requirement to publish a prospectus for offers of securities.
An offer to the public of New Listed Parent Shares has not been made, and may not be made, in Denmark except pursuant
to one of the following exemptions under the Prospectus Directive as implemented in Denmark:
• to any legal entity that is authorized or regulated to operate in the financial markets or whose main business is to
invest in financial instruments;
• to any legal entity that satisfies two of the following three criteria: (i) balance sheet total of at least €20,000,000; (ii)

HEARTLAND BANK SCHEME BOOKLET34
annual net turnover of at least €40,000,000; and (iii) own funds of at least €2,000,000 (as shown on its last annual
unconsolidated or consolidated financial statements);
• to any person or entity who has requested to be treated as a professional client in accordance with the EU Markets in
Financial Instruments Directive (Directive 2014/65/EC, “MiFID II”);
• to any person or entity who is recognised as an eligible counterparty in accordance with Article 30 of the MiFID II;
• to fewer than 150 natural or legal persons (other than qualified investors within the meaning of Article 2(1)(e) of the
Prospectus Directive), subject to the prior consent of the New Listed Parent; or
• in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of New
Listed Parent Shares shall result in a requirement for the publication by either of the New Listed Parent or Heartland
Bank of a prospectus pursuant to Article 3 of the Prospectus Directive.
Finland
This Scheme Booklet and any other materials relating to the Restructure have not been registered as a prospectus in
Finland with the Finnish Financial Supervisory Authority. Accordingly, New Listed Parent Shares may not be offered,
subscribed, issued, distributed or sold to persons in Finland except pursuant to and in accordance with the exemptions
set forth in the Ministry of Finance Decree on EU Prospectuses and in the Ministry of Finance Decree on National
Prospectuses, or otherwise pursuant to, and in accordance with the conditions of the applicable provisions of the
Securities Market Act (495/1989, as amended).
France
This Scheme Booklet is not being distributed in the context of a public offering of financial securities (offre au public de titres
financiers) in France within the meaning of Article L.411-1 of the French Monetary and Financial Code (Code monétaire et
financier) and Articles 211-1 et seq. of the General Regulation of the French Autorité des marchés financiers (“AMF”). New
Listed Parent Shares have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France.
This Scheme Booklet and any other offering material relating to the Restructure have not been, and will not be, submitted
to the AMF for approval in France and, accordingly, may not be distributed or caused to be distributed, directly or
indirectly, to the public in France.
Such offers, sales and distributions have been and shall only be made in France (i) in a transaction that, in accordance
with Article L. 411-2-I of the French Monetary and Financial Code and Article 211-2 of the General Regulation of the AMF,
does not constitute a public offering of financial securities and/or (ii) to qualified investors (investisseurs qualifiés) acting
for their own account, as defined in and in accordance with Articles L.411-2-II-2°, D.411-1, L.533-16, L.533-20, D.533-11,
D.533-13, D.744-1, D.754-1 and D.764-1 of the French Monetary and Financial Code and any implementing regulation
and/or (iii) to a restricted number of non-qualified investors (cercle restreint d’investisseurs) acting for their own account,
as defined in and in accordance with Articles L.411-2-II-2°, D.411-4, D.744-1, D.754-1 and D.764-1 of the French Monetary
and Financial Code and any implementing regulation.
Pursuant to Article 211-3 of the General Regulation of the AMF, investors in France are informed that New Listed Parent
Shares cannot be distributed (directly or indirectly) to the public by the investors otherwise than in accordance with
Articles L.411-1, L.411-2, L.412-1 and L.621-8 to L.621-8-3 of the French Monetary and Financial Code.
French Polynesia
This Scheme Booklet is not being distributed in the context of a public offering of financial securities (offre au public de
titres financiers) in French Polynesia within the meaning of Article L.411-1 of the French Monetary and Financial Code
(Code monétaire et financier) and Articles 211-1 et seq. of the General Regulation of the French Autorité des marchés
financiers (“AMF”). New Listed Parent Shares have not been offered or sold and will not be offered or sold, directly or
indirectly, to the public in French Polynesia.
This Scheme Booklet and any other offering material relating to the Restructure have not been, and will not be, submitted
to the AMF for approval in French Polynesia and, accordingly, may not be distributed or caused to be distributed, directly
or indirectly, to the public in French Polynesia.
Such offers, sales and distributions have been and shall only be made in French Polynesia (i) in a transaction that, in
accordance with Article L. 411-2-I of the French Monetary and Financial Code and Article 211-2 of the General Regulation
of the AMF, does not constitute a public offering of financial securities and/or (ii) to qualified investors (investisseurs
qualifiés) acting for their own account, as defined in and in accordance with Articles L.411-2-II-2°, D.411-1, L.533-
16, L.533-20, D.533-11, D.533-13, D.744-1, D.754-1 and D.764-1 of the French Monetary and Financial Code and any
implementing regulation and/or (iii) to a restricted number of non-qualified investors (cercle restreint d’investisseurs)
acting for their own account, as defined in and in accordance with Articles L.411-2-II-2°, D.411-4, D.744-1, D.754-1 and
D.764-1 of the French Monetary and Financial Code and any implementing regulation.

HEARTLAND BANK SCHEME BOOKLET35
Pursuant to Article 211-3 of the General Regulation of the AMF, investors in French Polynesia are informed that New
Listed Parent Shares cannot be distributed (directly or indirectly) to the public by the investors otherwise than in
accordance with Articles L.411-1, L.411-2, L.412-1 and L.621-8 to L.621-8-3 of the French Monetary and Financial Code.
Germany and Luxembourg
The information in this document has been prepared on the basis that all offers of New Listed Parent Shares will be made
pursuant to an exemption under the Directive 2003/71/EC (“Prospectus Directive”), as amended and implemented in
Member States of the European Economic Area (each, a “Relevant Member State”), from the requirement to publish a
prospectus for offers of securities.
An offer to the public of New Listed Parent Shares has not been made, and may not be made, in a Relevant Member State
except pursuant to one of the following exemptions under the Prospectus Directive as implemented in the Relevant
Member State:
• to any legal entity that is authorised or regulated to operate in the financial markets or whose main business is to
invest in financial instruments;
• to any legal entity that satisfies two of the following three criteria: (i) balance sheet total of at least €20,000,000; (ii)
annual net turnover of at least €40,000,000; and (iii) own funds of at least €2,000,000 (as shown on its last annual
unconsolidated or consolidated financial statements);
• to any person or entity who has requested to be treated as a professional client in accordance with the EU Markets in
Financial Instruments Directive (Directive 2014/65/EC, “MiFID II”);
• to any person or entity who is recognised as an eligible counterparty in accordance with Article 30 of the MiFID II;
• to fewer than 150 natural or legal persons (other than qualified investors within the meaning of Article 2(1)(e) of the
Prospectus Directive), subject to the prior consent of the New Listed Parent; or
• in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of New
Listed Parent Shares shall result in a requirement for the publication by either of the New Listed Parent or Heartland
Bank of a prospectus pursuant to Article 3 of the Prospectus Directive.
Hong Kong
WARNING - The contents of this Scheme Booklet have not been reviewed or approved by any regulatory authority in Hong
Kong. You are advised to exercise caution in relation to the Restructure. If you are in any doubt about any of the contents
of this Scheme Booklet, you should obtain independent professional advice.
This Scheme Booklet does not constitute an offer or invitation to the public in Hong Kong to acquire or subscribe for
or dispose of any securities. This Scheme Booklet also does not constitute a prospectus (as defined in section 2(1) of
the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32 of the Laws of Hong Kong)) or notice,
circular, brochure or advertisement offering any securities to the public for subscription or purchase or calculated to invite
such offers by the public to subscribe for or purchase any securities, nor is it an advertisement, invitation or document
containing an advertisement or invitation falling within the meaning of section 103 of the Securities and Futures
Ordinance (Cap. 571 of the Laws of Hong Kong).
Accordingly, unless permitted by the securities laws of Hong Kong, no person may issue or cause to be issued this Scheme
Booklet in Hong Kong, other than to persons who are “professional investors” as defined in the Securities and Futures
Ordinance and any rules made thereunder or in other circumstances which do not result in the document being a
“prospectus” as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance or which do not constitute
an offer to the public within the meaning of the Companies (Winding Up and Miscellaneous Provisions) Ordinance.
No person may issue or have in its possession for the purposes of issue, this Scheme Booklet or any advertisement,
invitation or document relating to these securities, whether in Hong Kong or elsewhere, which is directed at, or the
contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the
securities laws of Hong Kong) other than any such advertisement, invitation or document relating to securities that are
or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the
Securities and Futures Ordinance and any rules made thereunder.
Copies of this Scheme Booklet may be issued to a limited number of persons in Hong Kong in a manner which does not
constitute any issue, circulation or distribution of this Scheme Booklet, or any offer or an invitation in respect of these
securities, to the public in Hong Kong. The document is for the exclusive use of Shareholders in connection with the
Restructure, and no steps have been taken to register or seek authorisation for the issue of this Scheme Booklet in Hong Kong.
This Scheme Booklet is confidential to the person to whom it is addressed and no person to whom a copy of this Scheme
Booklet is issued may issue, circulate, distribute, publish, reproduce or disclose (in whole or in part) this Scheme Booklet to
any other person in Hong Kong or use this Scheme Booklet for any purpose in Hong Kong other than in connection with
the consideration of the Restructure by the person to whom this Scheme Booklet is addressed.

HEARTLAND BANK SCHEME BOOKLET36
Japan
New Listed Parent Shares have not been and will not be registered under Article 4, paragraph 1 of the Financial
Instruments and Exchange Law of Japan (Law No. 25 of 1948), as amended (the “FIEL”) pursuant to an exemption
from the registration requirements applicable to a private placement of securities to a small number of investors. This
Scheme Booklet is for the exclusive use of existing shareholders of Heartland Bank in connection with the Restructure.
This document is confidential to the person to whom it is addressed and must not be distributed, published, reproduced
or disclosed (in whole or in part) to any other person in Japan or resident of Japan other than in connection with
consideration by Shareholders of the Restructure.
Macau
This Scheme Booklet is not being distributed by a Macau licensed financial institution nor in the context of a public
offering of financial securities or exercise of any financial activity on a regular basis in Macau within the meaning of Section
2(1), Financial System Act, approved by Decree-Law No. 32/93/M, dated 5 July 1993.
This Scheme Booklet and any other offering material relating to the Restructure have not been, and will not be, submitted
to the Monetary Authority of Macao (“AMCM”) for approval in Macau, and the offer of New Listed Parent Shares will not
be supervised by the AMCM.
Neither this Scheme Booklet nor any other offering or marketing material relating to New Listed Parent Shares may be
publicly distributed or otherwise made publicly available in Macau.
This Scheme Booklet is personal to the recipient only and not for general circulation in Macau.
Malaysia
No approval from, or recognition by, the Securities Commission of Malaysia has been or will be obtained in relation to
any offer of New Listed Parent Shares. New Listed Parent Shares may not be issued or transferred in Malaysia except to
persons who are shareholders of Heartland Bank in compliance with the Restructure.
Netherlands
The information in this Scheme Booklet has been prepared on the basis that all offers of New Listed Parent Shares will be
made pursuant to an exemption under the Directive 2003/71/EC (“Prospectus Directive”), as amended and implemented
in the Netherlands, from the requirement to produce a prospectus for offers of securities.
An offer to the public of New Listed Parent Shares has not been made, and may not be made, in the Netherlands except
pursuant to one of the following exemptions under the Prospectus Directive as implemented in the Netherlands:
• to any legal entity that is authorised or regulated to operate in the financial markets or whose main business is to
invest in financial instruments;
• to any legal entity that satisfies two of the following three criteria: (i) balance sheet total of at least €20,000,000; (ii)
annual net turnover of at least €40,000,000; and (iii) own funds of at least €2,000,000 (as shown on its last annual
unconsolidated or consolidated financial statements);
• to any person or entity who has requested to be treated as a professional client in accordance with the MiFID II;
• to any person or entity who is recognised as an eligible counterparty in accordance with Article 24 of the MiFID II;
• to fewer than 150 natural or legal persons (other than qualified investors within the meaning of Article 2(1)(e) of the
Prospectus Directive); or
• in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of New
Listed Parent Shares shall result in a requirement for the publication of a prospectus pursuant to Article 3 of the
Prospectus Directive.
The Dutch Authority for the Financial Markets (Autoriteit Financiële Markten, the “AFM”)
has not reviewed nor approved this Scheme Booklet.
Norway
This Scheme Booklet has not been approved by, or registered with, any Norwegian securities regulator under the
Norwegian Securities Trading Act of 29 June 2007. Accordingly, this Scheme Booklet shall not be deemed to constitute an
offer to the public in Norway within the meaning of the Norwegian Securities Trading Act of 2007.
New Listed Parent Shares may not be offered or sold, directly or indirectly, in Norway except:
• to “professional clients” (as defined in Norwegian Securities Regulation of 29 June 2007 no. 876 and including non-
professional clients having met the criteria for being deemed to be professional and for which an investment firm has
waived the protection as non-professional in accordance with the procedures in this regulation);

HEARTLAND BANK SCHEME BOOKLET37
• to fewer than 150 natural or legal persons (other than “professional clients”); or
• in any other circumstances provided that no such offer of New Listed Parent Shares shall result in a requirement for
the registration, or the publication of a prospectus pursuant to the Norwegian Securities Trading Act of 29 June 2007.
People’s Republic of China
This Scheme Booklet does not constitute a public offer of New Listed Parent Shares, whether by way of sale or
subscription, in the People’s Republic of China (excluding, for purposes of this paragraph, Hong Kong Special Administrative
Region, Macau Special Administrative Region and Taiwan). New Listed Parent Shares may not be offered or sold directly
or indirectly in the People’s Republic of China to legal or natural persons other than directly to “qualified domestic
institutional investors”, sovereign wealth funds and quasi-government investment funds.
Portugal
The information in this document has been prepared on the basis that all offers of New Listed Parent Shares will be made
pursuant to an exemption under the Directive 2003/71/EC (“Prospectus Directive”), as amended and implemented in
Portugal, from the requirement to publish a prospectus for offers of securities.
An offer to the public of New Listed Parent Shares has not been made, and may not be made, in Portugal except pursuant
to one of the following exemptions under the Prospectus Directive as implemented in Portugal:
• to any legal entity that is authorised or regulated to operate in the financial markets or whose main business is to
invest in financial instruments;
• to any legal entity that satisfies two of the following three criteria: (i) balance sheet total of at least €20,000,000; (ii)
annual net turnover of at least €40,000,000; and (iii) own funds of at least €2,000,000 (as shown on its last annual
individual financial statements) as foreseen in article 30(1), (k) of the Portuguese Securities Code (Código dos Valores
Mobiliários) as amended and republished by Law 35/2018 of 20 July which transposed MIFID II into Portugal;
• to any person or entity who has requested to be treated as a professional client in accordance with the EU Markets in
Financial Instruments Directive (Directive 2014/65/EC, “MiFID II”);
• to any person or entity who is recognised as an eligible counterparty in accordance with Article 30 of the MiFID II
unless such entity has requested to be treated as a non-professional client in accordance with the MiFID II Delegated
Regulation (EU) 2017/565;
• to fewer than 150 natural or legal persons (other than qualified investors within the meaning of Article 2(1)(e) of the
Prospectus Directive), subject to the prior consent of Heartland Bank; or
• in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of New
Listed Parent Shares shall result in a requirement for the publication by either of Heartland Bank or the New Listed
Parent of a prospectus pursuant to Article 3 of the Prospectus Directive.
Neither the offering nor the Scheme Booklet have been registered with the Portuguese Securities Market Commission
(Comissão do Mercado de Valores Mobiliários) and no action has been or will be taken that would permit a public offering
of any of New Listed Parent Shares in Portugal. Accordingly, no New Listed Parent Shares may be offered, sold or
distributed except in circumstances that will result in compliance with any applicable laws and regulations, in particular
with articles 109, 110, 110-B and 111 of the Portuguese Securities Code (Código dos Valores Mobiliários) as amended and
republished by Law 35/2018 of 20 July which transposed MIFID II into Portugal.
Qatar
This document is provided on an exclusive basis to the specifically intended recipient thereof upon that person’s request
and initiative, and for the recipient’s personal use only. Any distribution of this document by the recipient to third parties
in Qatar or the Qatar financial centre beyond the terms hereof is not authorised and shall be at the liability of such recipient.
Nothing in this document constitutes, is intended to constitute, or shall be treated as constituting, any offer or sale of the
securities in the state of Qatar or in the Qatar financial centre.
This document and any underlying instruments have not been approved, registered or licensed by the Qatar central bank,
the Qatar financial centre regulatory authority, the Qatar financial markets authority or any other regulator in the state
of Qatar. This document and any related documents have not been reviewed or approved by the Qatar financial centre
regulatory authority or the Qatar central bank.
Recourse against Heartland Bank or others involved with the Restructure may be limited or difficult and may have to be
pursued in a jurisdiction outside Qatar and the Qatar financial centre.

HEARTLAND BANK SCHEME BOOKLET38
Spain
The information in this document has been prepared on the basis that all offers of New Listed Parent Shares will be made
pursuant to an exemption under the Directive 2003/71/EC (“Prospectus Directive”), as amended and implemented in
Spain, from the requirement to publish a prospectus for offers of securities.
An offer to the public of New Listed Parent Shares has not been made, and may not be made, in Spain except pursuant to
one of the following exemptions under the Prospectus Directive as implemented in Spain:
• to any legal entity that is authorised or regulated to operate in the financial markets or whose main business is to
invest in financial instruments;
• to any legal entity that satisfies two of the following three criteria: (i) balance sheet total of at least €20,000,000; (ii)
annual net turnover of at least €40,000,000; and (iii) own funds of at least €2,000,000 (as shown on its last annual
unconsolidated or consolidated financial statements);
• to any person or entity who has requested to be treated as a professional client in accordance with the EU Markets in
Financial Instruments Directive (Directive 2014/65/EC, “MiFID II”);
• to any person or entity who is recognised as an eligible counterparty in accordance with Article 30 of the MiFID II
unless such entity has requested to be treated as a non-professional client in accordance with the MiFID II Delegated
Regulation (EU) 2017/565;
• to fewer than 150 natural or legal persons (other than qualified investors within the meaning of Article 2(1)(e) of the
Prospectus Directive), subject to the prior consent of Heartland Bank; or
• in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of New
Listed Parent Shares shall result in a requirement for the publication by either of Heartland Bank or the New Listed
Parent of a prospectus pursuant to Article 3 of the Prospectus Directive.
Singapore
This Scheme Booklet and any other document or material in connection with the offer, sale or distribution, or invitation
for subscription, purchase or receipt of New Listed Parent Shares have not been and will not be registered as a prospectus
with the Monetary Authority of Singapore and this offering is not regulated by any financial supervisory authority
pursuant to any legislation in Singapore. Accordingly, statutory liabilities in connection with the contents of prospectuses
under the Securities and Futures Act, Cap. 289 (the “SFA”) will not apply.
This Scheme Booklet and any other document or material in connection with the offer, sale or distribution, or invitation
for subscription, purchase or receipt of New Listed Parent Shares may not be offered, sold or distributed, or be made the
subject of an invitation for subscription, purchase or receipt, whether directly or indirectly, to persons in Singapore except
pursuant to exemptions in Subdivision (4) Division 1, Part XIII of the SFA, including the exemption under section 273(1)(c)
of the SFA, or otherwise pursuant to, and in accordance with the conditions of, any other applicable provisions of the SFA.
Any offer is not made to you with a view to New Listed Parent Shares being subsequently offered for sale to any other
party. You are advised to acquaint yourself with the SFA provisions relating to on-sale restrictions in Singapore and comply
accordingly.
Neither this document nor any copy of it may be taken or transmitted into any country where the distribution or
dissemination is prohibited. This document is being furnished to you on a confidential basis and solely for your information
and may not be reproduced, disclosed, or distributed to any other person.
The investments contained or referred to in this document may not be suitable for you and it is recommended that you
consult an independent investment advisor if you are in doubt about such investments or investment services. Nothing in
this document constitutes investment, legal, accounting or tax advice or a representation that any investment or strategy
is suitable or appropriate to your individual circumstances or otherwise constitutes a personal recommendation to you.
Neither Heartland Bank nor the New Listed Parent is in the business of dealing in securities or holds itself out, or purports
to hold itself out, to be doing so. As such, Heartland Bank and the New Listed Parent are neither licensed nor exempted
from dealing in securities or carrying out any other regulated activities under the SFA or any other applicable legislation in
Singapore.
Switzerland
New Listed Parent Shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange
(“SIX”) or on any other stock exchange or regulated trading facility in Switzerland. This Scheme Booklet has been
prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss
Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the
listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this Scheme Booklet nor any

HEARTLAND BANK SCHEME BOOKLET39
other offering or marketing material relating to New Listed Parent Shares may be publicly distributed or otherwise made
publicly available in Switzerland.
Neither this Scheme Booklet nor any other offering or marketing material relating to New Listed Parent Shares have been
or will be filed with or approved by any Swiss regulatory authority. In particular, this Scheme Booklet will not be filed with,
and the offer of New Listed Parent Shares will not be supervised by, the Swiss Financial Market Supervisory Authority.
This Scheme Booklet is personal to the recipient only and not for general circulation in Switzerland.
Thailand
This Scheme Booklet is not intended to be an offer, sale or invitation for subscription or purchase of securities in
Thailand. This Scheme Booklet has not been registered as a prospectus with the Office of the Securities and Exchange
Commission of Thailand. Accordingly, this Scheme Booklet and any other document relating to the Restructure may not
be circulated or distributed, nor may New Listed Parent Shares be offered or sold, or be made the subject of an invitation
for subscription or purchase, whether directly or indirectly, to the public in Thailand.
United Kingdom
Neither this Scheme Booklet nor any other document relating to the Restructure has been delivered for approval to the
Financial Conduct Authority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financial
Services and Markets Act 2000, as amended (“FSMA”)) has been published or is intended to be published in respect of New
Listed Parent Shares.
Any invitation or inducement to engage in investment activity (within the meaning of section 21 FSMA) received in
connection with the issue of New Listed Parent Shares has only been communicated, and will only be communicated,
in the United Kingdom in circumstances in which section 21(1) FSMA does not apply to Heartland Bank. In the United
Kingdom, this Scheme Booklet is being distributed only to, and is directed at, persons to whom it may lawfully be
distributed or directed within the circumstances described in Article 43 of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005 and/or any other persons to whom it may lawfully be communicated (all such persons
being referred to as “Relevant Persons”).
The investment to which this Scheme Booklet relates is available only to, and any invitation, offer or agreement to
purchase will be engaged in only with, Relevant Persons. Any person who is not a Relevant Person should not act or rely
on this Scheme Booklet or any of its contents.
United States
Heartland Bank and the New Listed Parent intend to rely on an exemption from the registration requirements of the
United States Securities Act of 1933 provided by Section 3(a)(10) thereof in connection with the consummation of the
Restructure and the issuance of New Listed Parent Shares. Approval of the Restructure by the Court will be relied upon by
Heartland Bank and the New Listed Parent for purposes of qualifying for the Section 3(a)(10) exemption.
United States shareholders of Heartland Bank should note that the Restructure is made for the securities of a New
Zealand company in accordance with the laws of New Zealand and the listing rules of NZX. The Restructure is subject to
disclosure requirements of New Zealand that are different from those of the United States.
It may be difficult for you to enforce your rights and any claim you may have arising under United States federal securities
laws since Heartland Bank is located in New Zealand and most of its officers and directors are residents of New Zealand.
You may not be able to sue Heartland Bank or its officers or directors in New Zealand for violations of the United States
securities laws. It may be difficult to compel Heartland Bank and its affiliates to subject themselves to a United States
court’s judgment.
You should be aware that Heartland Bank may purchase securities otherwise than under the Restructure, such as in open
market or privately negotiated purchases.
The Scheme Booklet has not been filed with or reviewed by the United States Securities and Exchange Commission or any
state securities authority and none of them has passed upon or endorsed the merits of the Restructure or the accuracy,
adequacy or completeness of the Scheme Booklet. Any representation to the contrary is a criminal offence.
New Listed Parent Shares to be issued pursuant to the Restructure have not been, and will not be, registered under
the United States Securities Act of 1933 or the securities laws of any United States state or other jurisdiction. The
Restructure is not being made in any United States state or other jurisdiction where it is not legally permitted to do so.

HEARTLAND BANK SCHEME BOOKLET40
GLOSSARY
Annual Meeting means the meeting of Shareholders to be
held at 10am on 19 September 2018 at the Waipuna Hotel
& Conference Centre, or any adjournment thereof.
ASX means ASX Limited, or the financial market operated
by ASX Limited, as the context requires.
Australian Group means Heartland Australia and its
subsidiaries.
Australian Tax Act means the Income Tax Assessment Act
1936 (Cth) and the Income Tax Assessment Act 1997 (Cth)
(as relevant).
Banking Group means Heartland Bank and its subsidiaries
at the relevant time, the business of which is regulated by
the Reserve Bank.
Board means the board of directors of Heartland Bank.
Business Day means a day (other than a Saturday or
Sunday) on which registered banks are generally open for
business in Auckland and/or Wellington.
Cameron Partners means Cameron Partners Limited.
Companies Act means the Companies Act 1993.
Court and High Court mean the High Court of New
Zealand.
Eligible Shareholder means a Shareholder who will be
entitled to have New Listed Parent Shares issued to them
pursuant to the Restructure subject to the qualifications,
if any, in respect of the jurisdiction in which they have a
registered address.
Final Court Hearing means the hearing of the Court in
respect of the Restructure in relation to the grant of the
Final Court Orders.
Final Court Orders means the final orders of the Court
in respect of the Restructure made under Part 15 of the
Companies Act.
FMC Act Exemption means the Financial Markets Conduct
(Heartland Group) Exemption Notice 2018.
Group means, prior to the Restructure, Heartland Bank
and its subsidiaries and, following the Restructure, includes
the New Listed Parent.
Group Executive means the core management group
employed by the New Listed Parent described in Section 6
(What Will the Group Look Like After the Restructure?).
Group Services Agreement means the services agreement
between the New Listed Parent, Heartland Bank and
Heartland Australia described in Section 6 (What Will the
Group Look Like After the Restructure?).
GST means goods and services tax or similar tax
chargeable under the Goods and Services Tax Act 1985 or
the A New Tax System (Goods and Services Tax) Act 1999
(Cth) (as appropriate).
Heartland Australia means Heartland Australia Holdings
Pty Limited.
Heartland Bank means Heartland Bank Limited.
Heartland Bank Share means an ordinary share in
Heartland Bank.
Implementation Date means the date on which the
Restructure will be implemented, which, as at the date of
this Scheme Booklet, is expected to be 31 October 2018.
Independent Adviser means Cameron Partners.
Independent Adviser’s Report means the report on
the merits of the Restructure for Shareholders found in
Appendix 1 (Independent Adviser’s Report Prepared in
Relation to the Proposed Restructure of Heartland Bank
Limited).
Initial Court Orders means the initial orders of the
Court relating to the Restructure as outlined in Section 5
(Further Details of the Restructure) of this Scheme Booklet.
Link Market Services means Link Market Services Limited.
New Listed Parent means Heartland Group Holdings
Limited.
New Listed Parent Board means the board of directors of
the New Listed Parent proposed in this Scheme Booklet.
New Listed Parent Share means an ordinary share in the
New Listed Parent.
New Listed Parent Shareholder means a registered holder
of New Listed Parent Shares following the implementation
of the Restructure.
Notice of Meeting means the notice convening the
Annual Meeting which accompanies this Scheme Booklet.
NZGT means NZGT Security Trustee Limited.
NZX means NZX Limited.
NZX Debt Market means the debt market operated by
NZX.
NZX Listing Rules means the NZX Main Board/Debt
Market Listing Rules.
NZX Main Board means the main board securities market
operated by NZX.
NZX Waivers means the waivers from the NZX Listing
Rules granted by NZX as outlined in Section 5 (Further
Details of the Restructure).
Record Date means the date and time at which the
entitlement of Shareholders to participate in the
Restructure is determined, which, as at the date of this
Scheme Booklet, is expected to be 5pm on 30 October 2018.
Reserve Bank means the Reserve Bank of New Zealand.

HEARTLAND BANK SCHEME BOOKLET41
Restructure means the proposed corporate restructure of
the Group to be implemented through the Court approved
scheme of arrangement under Part 15 of the Companies
Act as described in this Scheme Booklet, subject to any
amendments or variations made in accordance with
the Initial Court Orders, the Final Court Orders, and/or
required by the Court.
Restructure Resolution means a resolution to approve
the Restructure to be considered by Shareholders at the
Annual Meeting as set out in the Notice of Meeting.
Scheme Booklet means this document dated 15 August
2018.
Shareholder means a registered holder of Heartland Bank
Shares.
Takeovers Code means the New Zealand Takeovers Code
approved pursuant to the Takeovers Code Approval Order
2000 (SR 2000/210) (as amended).
Tier 2 Notes means Heartland Bank’s Tier 2 convertible
subordinated unsecured notes issued in April 2017.
Unsubordinated Notes means Heartland Bank’s
unsubordinated fixed rate notes issued in September 2017,
which are listed on the NZX Debt Market.
Wrap means the supplementary document that will
be provided to NZX for release to the market together
with this Scheme Booklet upon implementation of the
Restructure, recording the outcome of the Annual Meeting
and any other material changes that have occurred in
respect of the New Listed Parent since the date of this
Scheme Booklet, as confirmed by the New Listed Parent.

HEARTLAND BANK SCHEME BOOKLET42
APPENDIX 1: INDEPENDENT ADVISER’S REPORT PREPARED
IN RELATION TO THE PROPOSED RESTRUCTURE OF
HEARTLAND BANK LIMITED

















Heartland Bank Limited
Independent Adviser’s Report Prepared in Relation to the
Proposed Corporate Restructure of Heartland Bank Limited


STRICTLY PRIVATE AND CONFIDENTIAL
27 July 2018








Statement of Independence
Cameron Partners Limited confirms that it:
◼ Has no conflict of interest that could affect its ability to provide an unbiased report; and
◼ Has no direct or indirect pecuniary or other interest in the proposed transaction considered in the report, including any success or
contingency fee or remuneration, other than to receive the cash fee for providing this report.
Cameron Partners Limited has satisfied the Takeovers Panel, on the basis of the material provided to the Panel, that it is independent
under the Takeovers Code and the Panel’s requirements for schemes of arrangements involving Code companies for the purposes of
preparing this report.

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Table of Contents

Abbreviations 4
1. Introduction 5
1.1. Background ................................................................................................................................................ 5
1.2. Current structure ........................................................................................................................................ 5
1.3. Proposed Restructure ................................................................................................................................ 5
1.4. Rationale for Restructure ........................................................................................................................... 6
1.5. Purpose of this Report ............................................................................................................................... 7
1.6. Cameron Partners approach / Layout of report .......................................................................................... 7
1.7. Executive summary of the merits of the proposed Restructure .................................................................. 8
2. Company overview 10
2.1. Company summary .................................................................................................................................. 10
2.2. Company history ...................................................................................................................................... 10
2.3. New Zealand operations .......................................................................................................................... 10
2.4. Heartland Australia................................................................................................................................... 11
2.5. Share price performance / Liquidity.......................................................................................................... 11
2.6. Ownership ................................................................................................................................................ 12
2.7. Historical financial results ......................................................................................................................... 14
2.7.1 Historical Profit and Loss 14
2.7.2. Historical Assets and Liabilities 15
2.8. FY18F outlook .......................................................................................................................................... 16
2.9. Strategy .................................................................................................................................................... 16
2.10. Market position ......................................................................................................................................... 17
3. The Restructure 18
3.1. The Proposed Restructure ....................................................................................................................... 18
3.2. Steps / Transactions ................................................................................................................................ 18
3.3. Management’s Rationale for the Restructure ........................................................................................... 18
3.3.1. Heartland Australia Growth 19
3.3.2. RBNZ constraints on Heartland Australia growth 19
3.3.3. New Business Lines / Acquisition Flexibility / Efficient Capital 20
3.4. ASX listing ................................................................................................................................................ 20
3.5. Key conditions and approvals .................................................................................................................. 20
3.5.1. Shareholders’ approval 20
3.5.2. High Court approval 21
3.5.3. Further conditions 21
3.6. Timeline of key events ............................................................................................................................. 21
4. Effects and Implications of the Restructure 22
4.1. Ownership ................................................................................................................................................ 22

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4.2. Regulatory Issues .................................................................................................................................... 22
4.2.1. RBNZ 22
4.2.2. NZX / ASX 24
4.2.3. ASIC 24
4.3. Financial Performance ............................................................................................................................. 24
4.4. Costs of the Restructure .......................................................................................................................... 25
4.4.1. One-off costs incurred prior to Shareholder voting at the Annual Shareholder Meeting 25
4.4.2. One-off costs to be incurred post Shareholder voting at the Annual Shareholder Meeting 25
4.4.3. On-going costs 25
4.5. Capital Structure / Funding Arrangements ............................................................................................... 26
4.5.1. New Listed Parent 26
4.5.2. Intercompany funding 27
4.5.3. Tier 2 Convertible Notes 27
4.5.4. Funding arrangements 27
4.6. Credit Rating ............................................................................................................................................ 27
4.7. ASX Listing / Liquidity .............................................................................................................................. 28
4.8. Governance ............................................................................................................................................. 29
4.9. Management and Staff ............................................................................................................................. 30
4.10. Customers ................................................................................................................................................ 30
4.11. Dividends ................................................................................................................................................. 30
4.12. Tax ........................................................................................................................................................... 30
4.13.
Value ........................................................................................................................................................ 30
4.13.1. Future cash flows 30
4.13.2. Discount rate 31
4.13.3. Value implications 31
5. Merits of the Proposed Restructure 32
5.1. Shareholder decision framework .............................................................................................................. 32
5.2. Cameron Partners view ............................................................................................................................ 32
5.2.1. Advantages / benefits 33
5.2.2. Risks / disadvantages / costs 34
5.2.3. Summary 34
Appendix 1 – Qualifications and Declarations 35
Appendix 2 – Steps / Transactions of the Restructure 37
Sources 41

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Abbreviations
Abbreviation Description
$ New Zealand dollars (unless otherwise stated)
Annual Shareholder Meeting Heartland Bank Annual Shareholder Meeting to be held at 10am on 19 September 2018 at the
Waipuna Hotel and Conference Centre, Auckland
APRA Australian Prudential Regulation Authority
c. Approximately
ASIC Australian Securities & Investments Commission
ASX Australian Securities Exchange
A$ Australian dollars
Banking Group Heartland Bank and its subsidiaries (the group of companies subject to RBNZ regulation)
CBA Commonwealth Bank of Australia
Company Heartland Bank Limited
Court High Court of New Zealand
Distribution date The date on which the New Listed Parent shares will be first listed on the NZX
FMA Financial Markets Authority of New Zealand
FMCA Financial Markets Conduct Act 2013
Heartland Bank Heartland Bank Limited
Heartland Group Pre-restructure: Heartland Bank and its subsidiaries
Post-restructure: New Listed Parent and its subsidiaries
Heartland Group Executive Core management team of the New Listed Parent (Jeff Greenslade, Group Chief Executive; David
Mackrell, Group Chief Financial Officer; Michael Drumm, Group General Counsel; Myles Perry, Head
of Internal Audit; Andrew Dixson, Head of Corporate Finance)
Heartland Australia Heartland Group’s Australian businesses
Ineligible Shareholder A shareholder of Heartland Bank, at 5pm on the Record Date, with a registered address in a
jurisdiction where it is unlawful to be issued shares in the New Listed Parent
Management Heartland Bank Management
New Listed Parent Heartland Group Holdings Limited, the proposed parent company of Heartland Group post-restructure
NIM Net Interest Margin (the difference between interest income and interest expense, expressed as a
percentage of interest bearing assets)
Notice Notice of Meeting
NPAT Net Profit After Tax
NZX New Zealand Stock Exchange
NZDX NZX Debt Market
NZGT NZGT Security Trustee Limited, a subsidiary of the New Zealand Guardian Trust Company Limited
RBNZ Reserve Bank of New Zealand
Record Date The date on which the number of Heartland Bank shares held by Shareholders will determine the
number of New Listed Parent shares to be issued to Shareholders on the Distribution Date
Restructure Heartland Bank’s proposed corporate restructure
Scheme or Scheme of
Arrangement
Scheme of Arrangement under Part 15 the Companies Act 1993
Scheme Booklet Heartland Bank’s Scheme Booklet in relation to the Restructure
Shareholder Pre-Restructure: A shareholder of Heartland Bank
Post-Restructure: A shareholder of New Listed Parent
Share Registrar Heartland Bank’s share registrar
SMEs Small and Medium Enterprises

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1. Introduction
1.1. Background
Heartland Bank Limited (“Heartland Bank” or the “Company”) is a New Zealand registered bank with operations and
subsidiaries in New Zealand and Australia (“Heartland Group”). It was listed on the New Zealand Stock Exchange (“NZX”)
Main Board in February 2011 and obtained its bank registration in December 2012.

1.2. Current structure
An overview of Heartland Group’s current corporate structure is shown in Figure 1 below. Heartland Bank is the parent
company and all holdings form part of its ‘banking group’. All of Heartland Group is subject to regulation by the Reserve
Bank of New Zealand (“RBNZ”).

Figure 1: Heartland Group – current structure

Source: Management

1.3. Proposed Restructure
Heartland Bank has proposed a corporate restructure (“Restructure”) of Heartland Group. If approved, the Restructure will
proceed as a Scheme of Arrangement (“Scheme of Arrangement” or “Scheme”) under Part 15 of the Companies Act
1993 and will require High Court (“Court”) and Shareholder approval.

The Scheme of Arrangement will effect a separation (demerger) of Heartland Group's New Zealand and Australian
businesses. Key outcomes include:
◼ Heartland Bank will become a wholly owned subsidiary of a new listed holding company called Heartland Group
Holdings Limited (the "New Listed Parent")
◼ Heartland Group’s Australian businesses (“Heartland Australia”) will be transferred to the New Listed Parent so that
they become “sister” companies of Heartland Bank (rather than subsidiaries)
◼ Heartland Australia (and the New Listed Parent) will no longer form part of Heartland Bank’s banking group
(“Banking Group”)

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An overview of the proposed post-Restructure corporate structure is shown in Figure 2 below

Figure 2: Heartland Group – post-Restructure


Source: Management


The Restructure effectively substitutes existing Heartland Bank Shareholders’ shares in Heartland Bank with the equivalent
number of shares in the New Listed Parent. The Restructure will consequently have no material impact on Shareholders’
(other than any Ineligible Shareholders’) ownership in Heartland Group. That is, except for any Ineligible Shareholders,
Shareholders’ economic interest and voting power will not change in any material way. Ineligible Shareholders are
discussed in more detail in Section 4.1.

1.4. Rationale for Restructure
Heartland Bank management (“Management”) states that the primary rationale of the Restructure is to remove key
constraints on the growth of the Group’s business currently arising from RBNZ regulations and provide it with the ability to
establish and own businesses that are not subject to the RBNZ regulation. In addition, it will facilitate a Foreign Exempt
Listing on the ASX.

Heartland Australia (while relatively small) is a profitable and strongly growing part of Heartland Bank’s business. However,
at present growth rates, without the Restructure, RBNZ regulations may require Heartland Bank to:
◼ Seek new and potentially sub-optimal sources of funding for Heartland Australia; and / or
◼ Ultimately restrict growth in Heartland Australia

Management has been contemplating an Australian Securities Exchange (“ASX”) listing for some time as it will facilitate
access to additional sources of capital (because for example, various Australian funds and institutional investors have
investment mandates that restrict their investment choices to ASX or Australian dollar only securities). Given the
increasing scale of the business and potential future capital requirements, Management now considers it appropriate to
seek an ASX listing.

The Restructure simplifies a listing on the ASX because Australian Prudential Regulatory Authority (“APRA”) consent is
required to use the word "bank" in relation to Heartland Bank's business, and such consent is usually only granted in
conjunction with an application to become an Authorised Deposit-Taking Institution. Heartland Bank has no current
intention to apply to become an Authorised Deposit-Taking Institution in Australia.

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Post-restructure, APRA’s consent will not be required for the New Listed Parent to list on the ASX (because its name
"Heartland Group Holdings Limited" does not have the word “bank”). Therefore, as part of the Restructure the New Listed
Parent will file for a Foreign Exempt Listing on the ASX.

1.5. Purpose of this Report
As outlined, the proposed Restructure is to be implemented by way of Scheme of Arrangement under the Companies Act
1993 and requires Court and Shareholder approval.

Heartland Bank has requested that the Takeovers Panel issue a “no-objection statement” in relation to the Scheme of
Arrangement to present to the Court to assist with its deliberations. In this regard, the primary role of the Takeovers Panel
is to assist the Court by:
◼ Reviewing Scheme documents to ensure that appropriate information is placed before Shareholders
◼ Helping to ensure that matters that are relevant to the Court’s decision are properly brought to the Court’s
attention

Although there is no legal requirement under the Companies Act 1993 or the Takeovers Code for an independent adviser’s
report as a result of the Scheme of Arrangement, the practice of the Takeovers Panel (except in very limited
circumstances) is to require the preparation of an independent adviser’s report before it will consider issuing a ‘no-
objection statement’.

Cameron Partners has been engaged by Heartland Bank to prepare an independent adviser’s report regarding the merits
of the Restructure. Our appointment was approved by the Takeovers Panel on 11 May 2018.

As Heartland Bank is listed on the NZX Main Board, NZX Listing Rule 6.2.3 (as well as general law) specifies that the
Notice of Meeting (“Notice”) must state the nature of the business to be transacted at the meeting in sufficient detail to
enable Shareholders to form a reasoned judgement in relation to it.

This Report will accompany the Notice and Scheme Booklet prepared by Management (“Scheme Booklet”) to be sent to
all Heartland Bank Shareholders. It will also be provided to the Court considering the Scheme of Arrangement with respect
to the Restructure. This Report should not be used for any other purpose and should be read in conjunction with the
Qualifications and Declarations in Appendix 1.

1.6. Cameron Partners approach / Layout of report
The exact meaning of the word “merits” is not prescribed in the Takeovers Code and there is no well accepted,
authoritative New Zealand reference that clearly establishes what should be considered when assessing the merits of a
transaction. Although the Takeovers Panel has published a guidance note about the role of an Independent Adviser, it has
been careful not to limit the scope of the assessment and states that the relevant factors that should be taken into
consideration will depend on the features of the proposed transaction, as well as the prevailing circumstances of the
parties involved. However, the Takeovers Panel suggests that a merits assessment is broader than a valuation
assessment and will include other positive and negative aspects of a transaction.

Cameron Partners approach is to:
◼ Identify the effects of the Restructure
◼ Review and analyse the implications (ie the advantages / benefits and the risks / costs / disadvantages) of each
effect
◼ Weigh up the effects and implications and reach a conclusion on balance

The remainder of this report is structured as follows:
◼ Section 2: Company Overview
◼ Section 3: Details of the Restructure

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◼ Section 4: Effects and Implications of the Restructure
◼ Section 5: Merits of the Proposed Restructure
◼ Appendices

1.7. Executive summary of the merits of the proposed Restructure
Cameron Partners strongly recommends that Shareholders read this entire report for a full assessment of the merits of the
proposed Restructure (and in particular, Section 4 and Section 5). We summarise the material effects and implications of
the proposed Restructure in Table 1 below.

Table 1: Material effects and implications of the Restructure
Effect Implications of Restructure

Risks / Disadvantages / Costs Advantages / Benefits
Regulatory
Issues
Removal of RBNZ oversight creates scope for a
change in business mix and risk profile
Removal of RBNZ oversight removes constraints to Australian
funding and asset growth
Financial
Performance
BAU growth constraints removed
Potential NPV-positive acquisitive growth accommodated
Costs Post Annual Shareholder Meeting one-off costs
are minimal (c.$580,000)
Ongoing costs relatively immaterial (c.$590,000
pa equating to c.1% of FY17 NPAT)

ASX Listing Improved access to equity
Improved share liquidity
Value Relatively immaterial costs Potentially increased value from unconstrained Heartland
Australia growth and as-yet unidentified opportunities

Source: Cameron Partners

Many of the effects and implications of the proposed Restructure are negligible or neutral and we note that the Restructure
results in virtually no change to:
◼ Shareholders’ ownership (ie economic interest or voting ‘power’) in the Heartland Group (except for any Ineligible
Shareholders)
◼ The Heartland Group’s immediate strategy and business plan

Management estimates the impact of the additional on-going costs associated with the Restructure to be c$590,000 p.a.
These are relatively immaterial to the business.

Moving parts of the existing business outside the Banking Group and creating the potential for Heartland Group to grow
and acquire businesses outside of RBNZ regulation has both positive and negative consequences, depending on
Shareholders investment objectives and risk / return appetite:
◼ Undertaking the Restructure will remove constraints to Heartland Australia growth
◼ Without the Restructure, at present growth rates, Heartland Australia will face some asset growth and funding
constraints which have the potential to have a negative impact on its financial performance in future
◼ Nevertheless, the flexibility of the new structure creates additional scope to over time, move the business mix
away from that dictated by the RBNZ. This is likely to provide valuable opportunities but may also change the risk
profile of Heartland Group. Shareholders may wish to monitor this over time

The advantages and benefits of the Restructure are more difficult to quantify as they require a range of assumptions about
the future growth of the business and potential new business opportunities (both BAU and acquisitive). In this regard, we
estimate that the potential value impact of unconstrained growth in Australia and potential upside from new growth
opportunities could easily outweigh the more certain costs of the Restructure.

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Our conclusions are set out in more detail in Section 5. On balance, we consider the potential value creation opportunities
resulting from the Restructure outweigh the costs.

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2. Company overview
2.1. Company summary
Heartland Bank provides various financial services to Small and Medium Enterprises (“SMEs”), farmers, and families in
New Zealand and Australia, operating in the household, business, and rural segments.

The Company’s product offerings include:
◼ Transactional and savings accounts
◼ Residential and reverse mortgage lending products
◼ Motor vehicle and consumer finance
◼ Term debt, plant and equipment finance, commercial mortgage lending and working capital solutions
◼ Insurance products (offered through its fully owned subsidiary MARAC Insurance Limited, a licensed insurer)

2.2. Company history
The Company’s history dates to 1875 with the establishment of the Ashburton Permanent Building & Investment Society
which subsequently merged with SMC Building Society and Loan & Building Society to become CBS Canterbury. Table 2
presents an overview of recent milestones for Heartland Group.

Table 2: Overview of key milestones
Year Milestone
2011

Southern Cross, CBS Canterbury and MARAC merge to create a business that becomes
Heartland Building Society
2011 Heartland Building Society acquires PGG Wrightson Finance, enhancing the rural strategy
and asset base diversity
2012 Heartland Building Society is granted its bank registration by RBNZ, becoming the only New
Zealand operated, controlled and managed banking group, with a parent company
(Heartland New Zealand Limited) listed on the NZX Main Board
Heartland Building Society converts to a company and becomes Heartland Bank Limited
2014 Heartland Group acquires the Australian and New Zealand reverse mortgage businesses of
Seniors Money International in April 2014
2015 Heartland Bank Limited amalgamates with its parent company, Heartland New Zealand
Limited. This transaction positions Heartland Bank Limited as the first New Zealand
registered bank listed on the NZX Main Board

Source: www.heartland.co.nz and Management

2.3. New Zealand operations
The New Zealand operations encompass the full product offering. New Zealand operations currently represent the majority
of the Company’s business comprising c.$3.7 billion of assets as at 31 March 2018 (representing over 80% of Heartland
Bank’s total assets) and contributing net operating income of c.$157 million in FY17 (representing c.92% of Heartland
Group total operating income. The New Zealand assets are funded on an unsecured basis (other than a secured Motor
Vehicle loan funding facility of up to $175 million).

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2.4. Heartland Australia
Heartland Australia’s primary product offering is reverse mortgages, which it offers through Heartland Seniors Finance. It
also lends through Harmoney’s Australian platform and to SMEs via lending to Spotcap Australia and through its own
digital platform, Open for Business. Heartland Australia has experienced strong growth since April 2014 and is an
increasingly profitable part of Heartland Group’s business. Finance receivables in Australia have grown from $406 million
on 30 June 2014 to $648 million on 31 March 2018, which represents an annual growth rate of over 13%. The majority of
Heartland Australia’s reverse mortgage business is funded via secured wholesale funding from Commonwealth Bank of
Australia (“CBA”). The company’s non-reverse mortgage products in Australia are currently funded via funding from
Heartland Bank (which was c.$64 million as at 31 March 2018).

2.5. Share price performance / Liquidity
Heartland Bank shares have traded in a relatively wide range over the past three years (low: $1.07 in August 2015, high:
$2.14 in December 2017).

Over the same period Heartland Bank Total Shareholder Returns have been c.65%, compared to a total return (including
dividends) on the NZX50 of c.52%
1
.

Figure 3: Total Shareholder Returns and volumes traded


Source: Capital IQ

As shown in Table 3 below, Heartland Bank is relatively illiquid compared to the NZX50 average.



1
Source for Heartland Bank Total Shareholder Returns and NZX50 returns: Capital IQ

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Table 3: NZX Liquidity analysis – 10 May 2017 to 9 May 2018
Heartland NZX50 Average
1

Volume of shares traded as % of average shares outstanding 16% 31%
Value of shares traded as % of average market capitalisation 16% 31%

Notes:
¹Excludes NZX50 constituents Westpac Banking Corporation & Australian and New Zealand Banking Group Limited (with ASX primary listings), only
considers shares traded on the NZX, calculated as a simple average across remaining 48 constituents
Source: Capital IQ

2.6. Ownership
As at 10 May 2018 Heartland Bank had 560,587,927 of one class of ordinary shares on issue, which included 440,677
shares held as treasury stock. Table 4 below sets out Heartland Bank’s top 20 Shareholders.

Table 4: Top 20 Shareholders as at 10 May 2018
Shareholder # of shares %
Harrogate Trustee Limited 53,975,036 9.6%
FNZ Custodians Limited 25,851,713 4.6%
Citibank Nominees (NZ) Ltd 25,827,904 4.6%
Accident Compensation Corporation 13,913,772 2.5%
Oceania & Eastern Limited 13,267,285 2.4%
Philip Maurice Carter 12,072,780 2.2%
National Nominees New Zealand Limited 10,390,054 1.9%
HSBC Nominees (New Zealand) Limited 10,074,086 1.8%
Investment Custodial Services Limited 8,721,403 1.6%
Forsyth Barr Custodians Limited 8,700,584 1.6%
Leveraged Equities Finance Limited 7,509,250 1.3%
JP Morgan Chase Bank 6,966,436 1.2%
Heartland Trust 6,475,976 1.2%
HSBC Nominees (New Zealand) Limited 6,008,729 1.1%
BNP Paribas Nominees NZ Limited 4,940,163 0.9%
Jarden Custodians Limited 4,800,000 0.9%
Custodial Services Limited 4,492,964 0.8%
New Zealand Depository Nominee Limited 4,194,658 0.7%
Custodial Services Limited 3,671,722 0.7%
Cogent Nominees Limited 3,605,412 0.6%
Top 20 shareholders 235,459,927 42.0%
Other 325,128,000 58.0%
Total shares on issue 560,587,927 100.0%

Source: Management

On 10 May 2018, 42% of total shares on issue were held by the top 20 Shareholders (there were 11,958 total
Shareholders).

Figure 4 below presents a summary of Shareholders by location as at 31 March 2018, Shareholders are primarily New
Zealand based.

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Figure 4: Location of Heartland Shareholders (31 March 2018, weighted by number of shares held)


Notes:
¹ ‘Other’ includes: Canada, China, Hong Kong, Japan, Luxembourg, Netherlands, Singapore, Switzerland, United Kingdom
Source: Management

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2.7. Historical financial results
2.7.1. Historical Profit and Loss
Table 5 below presents a summary of Heartland Bank’s historical Profit and Loss over the period FY15 to FY17:
◼ The c.18% increase in Net operating income from FY15 to FY17 was driven by a growing asset base and
maintenance of a strong Net Interest Margin (“NIM”)
2
. This was partially offset by lower operating lease income on a
smaller lease book
◼ Selling and administration expenses as a percentage of net operating income declined from 47.3% in FY2015 to
41.9% in FY2017 as cost efficiencies were achieved
◼ These trends drove a c.$ 20 million increase in ‘Profit before income tax’ from FY15 to FY17

Table 5: Heartland Bank historical Profit & Loss (year end 30 June)
NZ$m FY2015 FY2016 FY2017
Interest income 260.5 265.5 278.3
Interest expense (126.0) (118.8) (115.2)
Net interest income 134.4 146.7 163.1

Operating lease income 10.4 8.9 7.0
Operating lease expenses (7.1) (6.2) (5.2)
Net operating lease income 3.3 2.6 1.8

Lending and credit fee income 3.1 3.3 3.0
Other income 3.9 4.9 3.3
Net operating income 144.7 157.6 171.3

Selling and administration expenses (68.4) (69.9) (71.7)
Profit before impaired asset expense and income tax 76.3 87.7 99.6

Impaired asset expense (12.1) (13.5) (15.0)
Share of joint arrangement profit 0.1 - -
Profit before income tax 64.3 74.2 84.6

Income tax expense (16.2) (20.0) (23.7)
Net profit after tax 48.2 54.2 60.8

Analysis

Net interest income - % change 9.1% 11.2%
Net operating income - % change

8.9% 8.7%
Net profit after tax / average equity 10.4% 11.1% 11.6%

Source: Heartland Bank Annual Reports





2
Over the period December 2014 to June 2017 Heartland Bank’s quarterly NIM averaged c.4.46% (on a pro forma basis, ie incorporating
the impact of the 2015 amalgamation in all quarters)

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2.7.2. Historical Assets and Liabilities
Table 6 below presents a summary of Heartland Bank’s historical year end (30 June) Balance Sheets over the period
FY15 to FY17.

Table 6: Heartland Bank historical Balance Sheet (year end 30 June)
NZ$m FY2015 FY2016 FY2017
Assets
Cash and cash equivalents
37 84 57
Investments
329 236 319
Investment properties
25 8 5
Finance receivables
2,862 3,099 3,546
Operating lease vehicles
30 25 19
Other assets
12 16 10
Investment in joint arrangement
4 - -
Intangible assets
51 58 71
Deferred tax asset
9 7 8
Total assets 3,359 3,533 4,035

Liabilities
Borrowings 2,825 3,000 3,430
Current tax liabilities 8 7 10
Trade and other payables 46 28 25
Total liabilities 2,879 3,035 3,465

Equity
Share capital 414 421 473
Treasury shares - (3) (3)
Retained earnings and other reserves 66 80 99
Total equity 480 498 570

Total equity and liabilities 3,359 3,533 4,035

Total interest earning and discount bearing assets
3,221 3,412 3,910
Total interest and discount bearing liabilities
2,834 2,999 3,426

Source: Heartland Bank Annual Reports

Figure 5 below presents a summary of Heartland Bank’s historical net finance receivables and funding base over the
period June 2015 to December 2017. Heartland Bank’s average funding cost has tracked at a relatively consistent level
above the average market funding cost over the period June 2015 to December 2017, reflecting the market position / risk
profile of Heartland Bank relative to other New Zealand registered banks.

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Figure 5: Heartland Bank historical net finance receivables and funding base

Notes:
1
Funding cost %:
- Jun-15: Heartland Bank's cost of borrowings calculated as its annual interest expense over total borrowings as at 30-Jun-2015
- Jun-16 to Dec-17: Heartland Bank's cost of borrowings calculated as the annual interest expense over average total borrowings of the immediately
preceding four quarters
2
‘Market funding cost %’ is an estimated market comparison of the cost of borrowings for New Zealand registered banks

Source: Heartland Bank Interim Report 2018 and RBNZ

2.8. FY18F outlook
Heartland Bank is continuing to grow in FY18. The Company estimates that its net profit after tax (“NPAT”) for FY18 will be
at the “upper end” of an estimate previously released to the market of $65.0 million to $68.0 million. If the Company
achieves a FY18 NPAT of (for example) $67.0 million this will represent a c.10% increase in NPAT from FY17.

2.9. Strategy
The Company is focused on providing “best or only” banking products within its Household, Business and Rural sectors.
Examples of its products include reverse mortgages and livestock finance, as well as products where it can offer better
features, such as faster online applications for small business working capital loans. Heartland Group is focused on using
technology and other partnerships with intermediaries to extend its customer reach.

The Company's stated strategic priorities for growing earnings and improving return on equity are:
◼ “Being in the right place at the right time through digital, intermediated and direct channels to ensure we are in easy
reach for our customers
◼ Targeting markets with significant opportunity and focussing on niche products where customers are under-served by
the other banks
◼ Delivering specialised customer experiences for each product type
◼ Using data insights to predict customer intent, and drive strong lead generation and conversion
◼ Leveraging established intermediary relationships and using digital platforms to distribute selected new products and
grow Heartland’s business in Australia”

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2.10. Market position
Key aspects of Heartland Group’s market position:
◼ Industry leading NIM - Heartland Bank had the strongest NIM of respondents to the FIPS 2017
3
survey, which was
attributed to Heartland’s niche markets focus, particularly in the areas of reverse mortgages, asset financing and
working capital
◼ NZ reverse mortgage leader – Cameron Partners understands that Heartland Group is the largest reverse mortgage
provider in New Zealand
◼ Significant player in Australian reverse mortgage market - The IBISWorld 2017
4
report estimated that Heartland
Australia (via its subsidiary Australian Seniors Finance Pty Limited) was the third largest player in the Australian
reverse mortgage market, with an estimated market share of 11.5%






3
FIPS 2017: The New Zealand Financial Institutions Performance Survey Review (2017)

4
IBISWorld 2017: IBISWorld Reverse Mortgage Providers Australian Industry Report (2017)

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3. The Restructure
3.1. The Proposed Restructure
The Proposed Restructure is a separation (demerger) of Heartland Group's New Zealand and Australian businesses. If
approved, it will proceed as a Scheme of Arrangement under Part 15 the Companies Act 1993 and will require Court
approval.

Post-restructure:
◼ Heartland Bank will become a wholly owned subsidiary of the New Listed Parent
◼ The companies comprising Heartland Australia will become wholly owned subsidiaries of the New Listed Parent
so that Heartland Bank and the companies comprising Heartland Australia become “sister” companies rather than
subsidiaries
◼ The New Listed Parent will:
◼ Be the parent company for Heartland Group and oversee the New Zealand business (carried on by
Heartland Bank and its subsidiaries) and the Australian business (carried on by the companies
comprising Heartland Australia)
◼ Have no material assets other than its shares in Heartland Bank and Heartland Australia
◼ Have a limited number of employees, constituting the Heartland Group Executive and an Investor
Relations Manager. All other employees will remain employees of Heartland Bank or Heartland Australia
and management services will be provided across Heartland Group as required, including the provision
of management services by the Heartland Group Executive (sitting within New Listed Parent) to
Heartland Bank
◼ Both Heartland Australia and New Listed Parent will sit outside the Banking Group

In conjunction with the Restructure (but outside the Scheme of Arrangement), it is proposed that the New Listed Parent will
seek a Foreign Exempt listing on the ASX.

3.2. Steps / Transactions
Implementing the Restructure will be effected through a series of steps / transactions as follows:
◼ Step 1: The New Listed Parent will be incorporated as a New Zealand company (sitting outside the Banking
Group)
◼ Step 2: In exchange for each Heartland Bank share held by each Shareholder, the New Listed Parent will issue
each Shareholder the same number of New Listed Parent shares
◼ Step 3: Heartland Australia will be transferred to the New Listed Parent. Heartland Australia will no longer form
part of the Banking Group
◼ Step 4: The New Listed Parent will own all the shares in Heartland Bank and Heartland Australia

See Appendix 2 for more detail.

3.3. Management’s Rationale for the Restructure
Management states that the primary objectives of the Restructure are to:
◼ Remove constraints to Heartland Australia’s business caused by RBNZ regulation
◼ Provide flexibility to Heartland Group to grow new businesses organically and through acquisitions that may be
better suited to an environment outside of the Banking Group and therefore not subject to RBNZ regulation
◼ Facilitate a Foreign Exempt Listing on the ASX

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The Restructure achieves these objectives by:
◼ Replacing Heartland Bank with the New Listed Parent as the ultimate parent / holding company which also will not
be part of Heartland Bank’s Banking Group
◼ Moving Heartland Australia from Heartland Bank to the New Listed Parent, so that the Australian business is no
longer part of Heartland Bank’s Banking Group

In addition, according to Management, the Restructure simplifies the ASX listing of the New Listed Parent

3.3.1. Heartland Australia Growth
Heartland Australia is currently a relatively small part of Heartland Bank’s business, representing c.17% of Heartland
Group’s Finance Receivables as at 31 March 2018 and c.6% of net operating income in FY17. As outlined in section 2.4,
Heartland Australia has experienced average annual Finance Receivables growth of over 13% during the period from 30
June 2014 to 31 March 2018.

Management wishes to pursue the growth potential in Australia – growing Australian based assets accordingly and
optimising the associated funding arrangements.

3.3.2. RBNZ constraints on Heartland Australia growth
Under Heartland Group’s current structure Heartland Australia is subject to RBNZ regulation. The RBNZ’s ‘Portion of
Business in New Zealand’ requirement and ‘Secured Asset Limit’, will potentially constrain Heartland Australia’s growth.

Management advises that at present growth rates (over 13% pa growth in finance receivables over the 3¾ years to 31
March 2018), without the Restructure, these RBNZ regulations may require Heartland Bank to:
◼ Seek new and potentially sub-optimal sources of funding; and / or
◼ Ultimately restrict growth in Heartland Australia

Portion of Business in New Zealand
The RBNZ’s Portion of Business in New Zealand limit (one of the RBNZ’s standard Conditions of Registration) requires a
substantial portion of Heartland Bank’s business to be conducted in and from New Zealand. Management’s current
forecasts indicate that under the current arrangements, the growth in Heartland Australia will exceed the non-New Zealand
business threshold permitted by RBNZ for Heartland Bank within the next four years.

The Restructure will remove this regulatory constraint on Heartland Australia’s growth.

Secured Asset Limit
The RBNZ also restricts Heartland’s secured assets to 20% of total assets.

At March 2018 secured assets represented c.18% of Heartland Group’s total assets. Of these secured assets, c.85%
related to the Australian reverse mortgage business and c.15% to New Zealand motor vehicle financing. Based on
Management’s current forecasts, the 20% Secured Asset Limit threshold will be exceeded within the next two years.

Post-restructure the majority of the secured assets (i.e. the Heartland Australia reverse mortgage assets) will no longer be
included in the Heartland Bank Secured Asset Limit ratio and this will decrease accordingly to c.3%.

This will remove the constraint to growth in the Australian business and create significant additional new headroom for
secured asset funding within the Heartland Bank business.

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3.3.3. New Business Lines / Acquisition Flexibility / Efficient Capital
As discussed in Section 3.1, Heartland Bank will be a subsidiary of the New Listed Parent. Along with Heartland Australia,
the New Listed Parent will also sit outside of the Banking Group. Consequently, the activities of the New Listed Parent,
Heartland Australia and any other subsidiaries of the New Listed Parent other than Heartland Bank will not be subject to
RBNZ regulation.

Management advises that in addition to enabling more organic growth in Heartland Australia, the Restructure provides
Heartland Group with the ability to establish and own businesses as subsidiaries of the New Listed Parent that will be
outside the Banking Group and may be better suited to non-bank regulation.

Removing Heartland Australia from the Banking Group will initially free up, and in the long term facilitate the use of capital
currently required to meet RBNZ regulatory requirements. For example, non-bank finance companies may be able to
operate with lower levels of equity relative to a registered bank.

3.4. ASX listing
Management believes:
◼ An ASX listing will facilitate access to a greater pool of equity funding through various Australian funds and
institutional investors that have ASX or Australian dollar only mandates
◼ That given the increasing scale of the business and potential future capital requirements it is now appropriate to
seek an ASX listing

As outlined in Section 1.4 the Restructure simplifies a listing on the ASX because APRA consent would be required to use
the word "bank" in relation to Heartland Bank's business, and such consent is usually only granted in conjunction with an
application to become an Authorised Deposit-Taking Institution. Heartland Bank has no current intention to apply to
become an Authorised Deposit-Taking Institution in Australia.

Following the Restructure, it is intended that the New Listed Parent will apply for the Foreign Exempt Listing on the ASX
under the name "Heartland Group Holdings Limited", and APRA's consent will not be required in respect to such listing.

3.5. Key conditions and approvals
Certain legal and regulatory conditions must be satisfied before the Scheme of Arrangement is binding.

3.5.1. Shareholders’ approval
The Scheme of Arrangement will only proceed if the resolution (“Restructure Resolution”) is approved at Heartland
Bank’s Annual Shareholder Meeting (“Annual Shareholder Meeting”).

The Restructure Resolution to be voted on by Shareholders at the Annual Shareholder Meeting is set out below:

“Restructure Resolution
That the Restructure (details of which are set out in the Scheme Booklet) is approved”

To achieve Shareholder approval, the Restructure Resolution must be passed by:
• a majority of 75% of the votes of Shareholders in each interest class* entitled to vote and voting; and
• a simple majority of the votes of those Shareholders entitled to vote

*Management advises that there is currently only one interest class

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The Restructure Resolution will be put to Shareholders as a single resolution. Voting will be by way of poll and the Share
Registrar and Heartland Bank's auditor will confirm whether each of the relevant voting thresholds have been met in
respect of the Restructure Resolution.


3.5.2. High Court approval
Once Shareholder approval is obtained, a final Court order will be sought to give effect to the Scheme of Arrangement
under Part 15 of the Companies Act. As mentioned in Section 1.5 above, when exercising its discretion to approve the
Scheme of Arrangement the Court may rely on a ‘no-objection statement’ from the Takeovers Panel. However, we note
that the Court does not need to approve the proposed Restructure even if the Takeovers Panel issues a ‘no-objection
statement’.

3.5.3. Further conditions
There are further key conditions for the Restructure, which Management advises have already been satisfied. These
include:
◼ The Reserve Bank having provided its non-objection to the Restructure
◼ The Financial Markets Authority of New Zealand (“FMA”) having granted the Financial Markets Conduct Act 2013
Exemption, required to the disclosure requirements that would otherwise apply to the New Listed Parent under
the Financial Markets Conduct Act (“FMCA”) (the exchange of shares in Heartland Bank for shares in the New
Listed Parent would likely constitute a ‘regulated offer’ by the New Listed Parent, under the FMCA and among
other things potentially require preparation of a Public Disclosure Statement (“PDS”) which it is considered would
not provide any meaningful additional information beyond what is included in the Scheme Booklet)

3.6. Timeline of key events
A timeline of key events in relation to the Restructure is shown in Table 7 below. Dates may change and are subject to
Court approval.

Table 7: Timeline of key events
Date Event
15 August 2018 Scheme Booklet sent to Shareholders
10am on 19 September 2018 Annual Shareholder Meeting
24 October 2018 Receipt of the final orders of the Court in respect of the Restructure
26 October 2018 Last day of trading in Heartland Bank’s shares on the NZX Main Board
31 October 2018 Restructure implemented
1 November 2018 First day of trading in New Listed Parent’s shares on the NZX Main Board and on the ASX

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4. Effects and Implications of the Restructure
4.1. Ownership
The Restructure effectively substitutes existing Heartland Bank Shareholders’ shares in Heartland Bank with the equivalent
number of shares in the New Listed Parent:
◼ There is only one class of ordinary shares pre-Restructure and there will only be one class post-Restructure
◼ Any Ineligible Shareholders will receive cash instead of being issued shares in the New Listed Parent because it
may be unlawful to issue shares to Shareholders with a registered address in certain jurisdictions. The number of
Shareholders that will be Ineligible Shareholders will only be known on the Record Date. Management advises
that on 27 July 2018 Ineligible Shareholders represented a maximum of c.0.03% of total shares. The shares of
Ineligible Shareholders will be sold on market by a broker appointed by NZGT, so there will be no change in the
number of shares on issue in Heartland Group. The impact on Heartland Group’s Shareholder base is expected
to be negligible
◼ The New Listed Parent will have no other assets other than the existing Heartland Bank assets

The Restructure will consequently have no material impact on Shareholders’ (other than any Ineligible Shareholders’)
ownership in Heartland Group. That is, except for any Ineligible Shareholders, Shareholders’ economic interest and voting
power will not change in any material way.

4.2. Regulatory Issues
Heartland Bank is currently subject to oversight and regulation from a number of regulators, including:
◼ The RBNZ
◼ The NZX (and with the proposed Foreign Exempt Listing, the ASX)
◼ ASIC (“Australian Securities & Investments Commission”) (in relation to Heartland Australia)

The Restructure is intended to address some RBNZ constraints to its Heartland Australia business and to create strategic
flexibility. In this regard, the Restructure achieves its purpose and the other regulatory effects are negligible.

4.2.1. RBNZ
RBNZ registration compliance
Heartland Bank is currently the ultimate holding company for the Heartland Group. Consequently it, and all its subsidiaries
are subject to RBNZ oversight and regulation as a ‘bank’.

To maintain registration as a bank with the RBNZ, Heartland Bank is required to provide monthly reporting to show
compliance with a number of ‘Conditions of Registration’ limits. Compliance reporting covers various financial metrics
which Heartland Bank currently complies with and will continue to comply with post-Restructure as summarised in Table 8.

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Table 8: Heartland Bank – summary of financial compliance
Heartland Bank - financial compliance limits Condition of
Registration
Reference Max / Min
Capital Ratio - Total Equity 10.50% Risk Wgt Assets Minimum
Capital Ratio - Tier 1 Equity 8.50% Risk Wgt Assets Minimum
Capital Ratio - Tier 1 Common Equity 7.00% Risk Wgt Assets Minimum
Total Capital $30m Capital Minimum
Buffer Ratio 2.50% Capital Minimum
One-Week Mismatch Ratio 0.00% Total Funding Minimum
One-Month Mismatch Ratio 0.00% Total Funding Minimum
One-Year Core Funding Ratio 75.00% Total Funding Minimum
Aggregate Credit Exposures - Connected Persons 15.00% Tier 1 Capital Maximum
Total Assets - Insurance Business 1.00% Total Assets Maximum
Assets Beneficially Owned by SPV (covered bond) 10.00% Total Assets Maximum
Medium LVR mortgages (property investment, residential mortgage
loans) - 6 mth rolling average
5.00% New loan
approvals
Maximum
High LVR mortgages (non-property investment, residential mortgage
loans) - 6 mth rolling average
10.00% New loan
approvals
Maximum
Substantial portion of business in New Zealand Not disclosed Total Assets Maximum

Source: Management

There is negligible negative change in Heartland Bank’s RBNZ compliance ratios as a result of the Restructure.

Key RBNZ constraints removed
As outlined in Section 3.3 the Restructure’s primary objective is to remove some of the RBNZ’s regulatory constraints on
Heartland Australia’s growth. In this regard the Restructure will ensure that Heartland Australia is no longer constrained by
the RBNZ’s regulatory requirements regarding Heartland Bank’s:
◼ Portion of Business in New Zealand
◼ Secured Asset Limit (creating significant additional new headroom for secured asset funding within the Heartland
Bank business)

Increased flexibility / Efficient capital
Also as outlined, the Restructure creates flexibility for Heartland Group to establish and own businesses as subsidiaries of
the New Listed Parent that will not be subject to RBNZ regulation and may be better suited to non-bank regulation. The
Restructure will also initially free up regulatory capital required by the RBNZ and enable it to be diverted for other
purposes.

There is no immediate change to Heartland Group’s strategy and business plan in conjunction with the Restructure.
Nevertheless, Shareholders should be aware that the Restructure creates scope over time for the Heartland Group
business mix to change from that imposed by RBNZ regulations and a change in risk profile.

Connected person exposure
As a result of the Restructure, the current funding to Heartland Australia becomes a ‘connected person exposure’ of
Heartland Bank and subject to a limit of not more than 15% of Heartland Bank’s Tier 1 Capital (and any loan from
Heartland Bank to Heartland Australia cannot be on more favourable terms than corresponding exposures to non-
connected persons). Heartland Bank currently provides funding to Heartland Australia of c.$64 million (as at 31 March
2018), representing c.12% of Heartland Bank’s Tier 1 Capital.

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The ‘connected person exposure’ limits the ability of Heartland Bank to provide finance to Heartland Australia.
Management advises that it is intended that Heartland Australia will repay the Heartland Bank funding and fully fund itself
with Australian based wholesale funding.

4.2.2. NZX / ASX
The Restructure involves Heartland Bank ceasing to list its equity on the NZX and effectively being replaced with the New
Listed Parent listing its equity on the NZX.

The New Listed Parent will maintain a primary listing on the NZX Main Board. It also intends to have a secondary listing on
the ASX through an ASX Foreign Exempt Listing. Under a Foreign Exempt Listing the New Listed Entity will only need to
comply with a limited set of ASX Listing Rules (which are procedural in nature), provided it continues to comply with NZX
Listing Rules. Effectively there will be no material substantive change to listing compliance requirements for the New Listed
Parent relative to Heartland Bank’s current listing compliance requirements.

Heartland Bank will continue to list its $150 million unsubordinated fixed rate notes on the NZX Debt Market (“NZDX”).
Heartland Bank will continue to comply with the NZDX listing requirements.

4.2.3. ASIC
Heartland Australia is currently subject to oversight and regulation from ASIC as a ‘credit licensee’. Heartland Australia
currently complies with all ASIC requirements.

There will be no additional regulation for Heartland Australia from ASIC as a result of the Restructure.

4.3. Financial Performance
All things equal, the Restructure should have no immediate direct, material impact on Heartland Group’s financial
performance (there will be some relatively minor ongoing costs associated with the Restructure outlined in Section 4.4).

The proposed Restructure itself does not change Heartland Group’s immediate strategy and business plan.

However, Management notes (and Cameron Partners agrees) that a continuation of current relative growth rates for
different parts of the business may in the medium term, without the Restructure see Heartland Group reach the limits of
the:
◼ Portion of Business in New Zealand constraint and consequently need to restrict growth out of New Zealand
◼ 20% Secured Asset Limit and be required to either:
◼ Restrict growth in those products that are funded through secured asset financing
◼ Make greater use of existing funding sources and / or use new alternative arrangements to fund any
additional growth in those products:
 From New Zealand sources this could include greater use of retail deposits and other
unsecured wholesale funding sources (see Section 4.5 Capital Structure / Funding
Arrangements). Use of such sources may increase basis risk and in relation to Australian assets
foreign currency risks
 From new Australian sources this would most likely be achieved through accessing Australian
retail deposits or other unsecured wholesale funding. Accessing Australian retail deposits
would require registration as a bank in Australia, which as discussed in Section 3.4 is not
considered appropriate by Heartland Group at this stage

Consequently, without the Restructure, Heartland Group may face some asset growth and funding constraints which have
the potential to have a negative impact on its financial performance in future.

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Post-restructure Heartland Group will not be constrained by the Portion of Business in New Zealand and Secured Assets
Limit imposed by the RBNZ and will have greater flexibility in regard to:
◼ Funding options
◼ Growth

Because both Heartland Bank will be listed on the NZDX and the New Listed Parent on the NZX there will be an increase
in governance and financial reporting requirements. Nevertheless, there will be considerable ‘cross-over’ in governance
and financial reporting requirements and the overall increase in burden is not considered to be significant.

4.4. Costs of the Restructure
There are several costs in relation to the Restructure. These costs can be divided into three groups:
◼ One-off costs incurred prior to Shareholder voting at the Annual Shareholder Meeting
◼ One-off costs to be incurred post Shareholder voting at the Annual Shareholder Meeting
◼ On-going costs

4.4.1. One-off costs incurred prior to Shareholder voting at the Annual Shareholder Meeting
The one-off costs incurred prior to Shareholder voting at the Annual Shareholder Meeting are sunk and therefore they are
not relevant to Shareholders’ decisions whether to support the Restructure Resolution. Management estimates that
c.$940,000 will be incurred prior to the Annual Shareholder Meeting. The major cost item incurred prior to the Annual
Shareholder Meeting is legal fees.

4.4.2. One-off costs to be incurred post Shareholder voting at the Annual Shareholder
Meeting
Management estimates that there will be c.$580,000 of one-off costs incurred post the Annual Shareholder Meeting
relating to NZX and ASX listing fees.

4.4.3. On-going costs
Management estimates that the Restructure will result in c.$590,000 in additional on-going costs comprised as follows:
◼ ASX listing costs of c.$87,000 per annum
◼ Additional management, governance, reporting and compliance costs of c.$500,000 per annum

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4.5. Capital Structure / Funding Arrangements
Heartland Bank’s current capital structure / assets and the anticipated capital structure / assets of the New Listed Parent,
Heartland Bank and Heartland Australia are as follows:

Table 9: Heartland Group – balance sheets pre and post-Restructure as at 31 March 2018
Pre-Restructure Post-Restructure Difference

a b b - a
NZ$m Heartland Group
Heartland
Bank
Heartland
Australia
New Listed
Parent
(unconsolidated)
(Ref: 4.5.1)
Heartland
Group

Assets
Cash and cash equivalents (Ref: 4.5.3) 80 39 11 5 55 (25)
Investments 316 316 - 632 316 -
Investment properties 2 2 - - 2 -
Finance receivables - external 3,882 3,234 648 - 3,882 -
Finance receivables - intercompany (Ref: 4.5.2) - 64 - - - -
Operating lease vehicles 18 18 - - 18 -
Other assets 13 12 - 13 -
Intangible assets 72 47 25 - 72 -
Deferred tax asset 6 6 - 6 -
Total assets 4,388 3,738 684 637 4,363 (25)

Liabilities (Ref: 4.5.4)
Borrowings - external (Ref: 4.5.3) 3,698 3,124 550 - 3,673 (25)
Borrowings - intercompany (Ref: 4.5.2) - - 64 - - -
Current tax liabilities 6 2 4 - 6 -
Dividend payable - - - - - -
Trade and other payables 47 47 1 - 47 -
Total liabilities 3,752 3,173 618 - 3,727 (25)

Total equity 637 565 66 637 637 -

Total equity and liabilities 4,388 3,738 684 637 4,363 (25)

Total interest earning and discount bearing
assets 4,264 3,576 659 5
4,239 (25)
Total interest and discount bearing liabilities 3,691 3,117 550 - 3,666 (25)

Source: Management

Overall these changes have negligible impact on Heartland Group’s immediate capital structure.

4.5.1. New Listed Parent
The New Listed Parent is the top-level parent company for Heartland Group. At the time of the Restructure it will have no
material assets other than its shares in Heartland Bank and Heartland Australia. The allocation of equity capital between
Heartland Bank and Heartland Australia is to optimise the competing requirements for equity to meet regulatory

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requirements in the case of Heartland Bank and to fund growth and achieve the best funding terms across both Heartland
Bank and Heartland Australia.

Future equity capital requirements of Heartland Bank and Heartland Australia can be met by the New Listed Parent raising
its own new equity and using this capital to subscribe for shares in its subsidiaries.

4.5.2. Intercompany funding
As shown on Table 9 above and mentioned in Section 2.4, Heartland Bank provides funding of (c.$64 million) to Heartland
Australia as part of its financing arrangements, Heartland Australia uses this funding to finance its non-reverse mortgage
products. The intercompany funding will remain in place immediately after the Restructure, therefore Heartland Australia
will be a ‘connected person’ to the post-Restructure Banking Group. However, Management advises that its intention is to
replace this with Australian based funding in the short term.

4.5.3. Tier 2 Convertible Notes
As shown in Table 9 above, Heartland Bank currently has Tier 2 Convertible Notes (a form of subordinated debt which
receives treatment as quasi-equity from the RBNZ for capital adequacy purposes) of A$20 million. These Tier 2
Convertible Notes do not contemplate a situation where Heartland Bank does not have its ordinary shares listed on the
NZX consequently the Restructure cannot proceed with the Tier 2 Convertible Notes in the current form. If the Restructure
proceeds the Tier 2 Convertible notes will be redeemed (as presented in Table 9) or restructured, in which case there
would be no material difference in the capital structure components of Heartland Group at an aggregate level Pre-
Restructure and Post-restructure.

4.5.4. Funding Arrangements
Heartland Group currently funds itself from a range of New Zealand retail and wholesale and Australian wholesale
sources.

The significant majority of funding is to Heartland Bank and is unsecured and without financial covenants (as creditors no
doubt take comfort from the RBNZ regulation and oversight of Heartland Bank which includes compliance requirements in
relation to various financial metrics).

The Restructure results in effectively no change for the majority of Heartland Group’s funding:
◼ The funding providers have limited rights in relation to the Restructure
◼ As outlined in Section 4.6 we do not anticipate any material change in credit rating for Heartland Bank

4.6. Credit Rating
Heartland Bank is currently rated by credit rating agency Fitch Ratings. As at October 2017, Fitch Ratings assessment of
Heartland Bank was:
◼ Foreign currency Long term Issuer Default Rating - ‘BBB (Stable)’
◼ Foreign currency Short term Issuer Default Rating – ‘F2’
◼ Viability Rating – ‘bbb’

A ‘BBB / F2’ credit rating is an ‘investment grade’ rating. Fitch definitions are as follows:
◼ BBB: Good Credit Quality. ‘BBB’ ratings indicate that expectations of default risk are currently low. The capacity
for payment of financial commitments is considered adequate, but adverse business or economic conditions are
more likely to impair this capacity
◼ F2: Good Short term Credit Quality. Good intrinsic capacity for timely payment of financial commitments.

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◼ bbb: Good Fundamental Credit Quality. Good prospects for ongoing viability. The bank’s fundamentals are
adequate, such that there is a low risk that it would have to rely on extraordinary support to avoid default.
However, adverse business or economic conditions are more likely to impair this capacity.

In an absolute sense the Restructure has little impact on the credit quality of the Heartland Group. The Restructure
involves no stated change in Heartland Group’s immediate strategy and business plan and there is negligible change in
Heartland Group’s capital structure.

Nevertheless, the Restructure does alter the:
◼ Capital structure of Heartland Bank and Heartland Australia
◼ The regulatory oversight of the Australian part of Heartland Group’s business and assets
◼ The nature of potential support from Heartland Bank to Heartland Australia

We do not expect that there will be a change in the credit rating of Heartland Bank due to the Restructure. The underlying
New Zealand business remains the same and the key operating and capital ratios only change slightly.

Likewise, the credit rating of the New Listed Parent is driven by the consolidated risk profile of the Heartland Group. Since
Heartland Bank would represent the significant majority (c.83%) of Heartland Group’s post-Restructure Finance
Receivables and (c.92%) of its operating profits (based on FY17 net operating income) it is reasonable to assume that the
New Holding Company will receive the same rating as Heartland Bank.

Over time if this business mix changes (all other things equal) there is scope for the risk profile and therefore credit rating
to change.

On a standalone basis Heartland Australia could be expected to be in a weaker position relative to Heartland Bank.
Nevertheless, rating methodologies typically look at the level of institutional support such a subsidiary could reasonably
expect from its parent company (i.e. the New Listed Parent). There are strong synergies, common directors, management
and systems integration. However, Heartland Australia is a relatively small part of the Heartland Group and not
fundamental to the core banking business, consequently it is reasonable to assume that:
◼ Heartland Australia will receive a lower credit rating than Heartland Bank and the New Listed Parent
◼ All else equal, at its current size relative to Heartland Group, Heartland Australia should not negatively impact
Heartland Bank’s and / or the New Listed Parent’s credit rating

Management advises that the price and terms of Heartland Australia’s wholesale funding facility will not negatively change
due to the Restructure.

4.7. ASX Listing / Liquidity
The New Listed Parent’s proposed secondary listing on the ASX is not strictly part of the Restructure. However, the
Restructure facilitates this listing because it removes the need to obtain APRA consent which Heartland Bank does not
wish to do at this stage (see Section 3.4).

As outlined in Section 4.2 there will be no material change to listing compliance requirements for the New Listed Parent.

There are currently 37 companies listed on the NZX and ASX with their primary listing on the NZX.

The reasons stated by these companies for also being listed on the ASX include:
◼ Access to equity capital - the Australian superannuation industry is significantly more developed than New
Zealand’s. Compulsory superannuation was instigated in Australia in 1992 and the superannuation funds under
management in Australia totalled c.A$2.6 trillion in December 2017. Kiwisaver funds under management totalled
c.$48.5 billion in March 2018. Various Australian funds and institutional investors have investment mandates that
restrict their investment choices to ASX or Australian dollar only securities.

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◼ Share liquidity – analysis indicates increased share liquidity for NZX listed companies that move to a secondary
ASX listing

An overview of Heartland Bank’s recent share price movements and liquidity analysis is shown in Section 2.5.

4.8. Governance
As part of the Restructure the governance arrangements will be streamlined:
◼ We draw attention to the fact that post-Restructure the New Listed Parent that Shareholders will have shares in
will have five of the existing nine directors (the minimum number of directors required under the NZX Listing rules
is three and the average number of directors of the top 50 NZX listed companies is seven)
◼ The governance arrangements for the New Listed Parent will be consistent with those expected of listed
companies
◼ Overall the expertise of the existing directors of Heartland Bank will continue to be available to Heartland Group
after the Restructure
◼ The nine current directors of Heartland Bank will continue as directors of one or more of the New Listed Parent,
Heartland Bank and Heartland Australia in Figure 6 below:

Figure 6: Directors Pre-Restructure and Post-Restructure



As a registered bank, Heartland Bank’s constitution must not have a provision that permits a director, when exercising
powers or performing duties, to act other than in what he or she believes to be the best interests of Heartland Bank. This
means that Heartland Bank’s directors may not act in the best interests of the New Listed Parent if it is not also in the best
interests of Heartland Bank.

The intention is to minimise any increase in directors’ workload created by the Restructure. For example, board meetings
will be held consecutively.

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4.9. Management and Staff
The Restructure will result in:
◼ Management and staff being redeployed from Heartland Bank to the New Listed Parent. The New Listed Parent
will have a limited number of employees comprising Group Executive (Jeff Greenslade, Group Chief Executive;
David Mackrell, Group Chief Financial Officer; Michael Drumm, Group General Counsel; Myles Perry, Head of
Internal Audit; Andrew Dixson, Head of Corporate Finance) and an Investor Relations Manager
◼ The New Listed Parent’s Group Executive providing services to Heartland Bank and Heartland Australia under
management / services agreements
◼ Heartland Bank providing services (including Treasury, Finance, Legal, Human Resources, Risk and Compliance,
Information Technology and Internal Audit) to Heartland Australia and New Listed Parent on an arms-length basis
◼ Some additional staff resource reflecting the additional management, governance, reporting and compliance
requirements of the Restructure (c.$500,000 pa as outlined in Section 4.4)

4.10. Customers
Heartland Bank and Heartland Australia customers should experience no change as a result of the Restructure.

4.11. Dividends
Management advises that the New Listed Parent will determine dividends based on its net profit after tax, subject to
maintaining prudent levels of capital for the needs of the Group.

4.12. Tax
Cameron Partners does not provide tax advice. We refer Shareholders to ‘Section 7: Taxation Implications for
Shareholders’ in the Scheme Booklet. All Shareholders are advised to obtain their own professional advice on the tax
implications for the proposed Restructure.

4.13. Value
An estimate of Heartland Group’s value is based on an assessment of its:
◼ Future cash flows
◼ Discount rate (to discount the future cashflows back to a present value)

4.13.1. Future cash flows
Heartland’s future cash flows will be impacted by its operating financial performance and capital costs.

As outlined, we envisage minimal immediate change in Heartland Group’s financial performance as a result of the
Restructure. The Restructure does not immediately change Heartland Group’s strategy or business plan.

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Additional ongoing costs are expected to be offset (to a greater or lesser extent) by:
◼ Removing regulatory constraints on Heartland Australia asset growth and other non-Banking Group growth
◼ Facilitating improved access to:
◼ Funding which will remove constraints to growth – particularly in the Australian reverse mortgage market
◼ Capital for BAU growth and acquisitions – particularly sizeable acquisitions

4.13.2. Discount rate
In relation to banks / finance companies the discount rate is typically defined as the cost of equity capital and applied to the
cash flows after payments to debt providers.

In this regard we do not envisage any material negative change in Heartland Group’s cost of equity capital. The assets
(and fundamental business and financial risk) of Heartland Group do not change as a result of the Restructure. All things
equal, there may be some scope for a marginal improvement in the cost of equity given the access to the deeper
Australian capital markets facilitated by the ASX listing.

4.13.3. Value implications
We see the Restructure as marginally positive for value (relative to the counterfactual of no Restructure):
◼ Future revenues should ultimately be impacted positively as:
◼ Potential growth constraints within Heartland Group’s existing businesses are removed (and offset
marginally increased costs from the Restructure)
◼ Potential NPV-positive acquisitions can be funded and accommodated within the new structure
◼ Equity capital may be deployed more efficiently (ie reducing the need to raise new equity for growth requirements)
◼ The discount rate should not be negatively impacted (and may at the margin improve given access to the deeper
Australian capital markets facilitated by the ASX listing)

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5. Merits of the Proposed Restructure
5.1. Shareholder decision framework
Except for any Ineligible Shareholders, the effective ownership interest held by each Heartland Bank Shareholder in the
New Listed Parent will be equal to their ownership interest in Heartland Bank immediately prior to the Restructure. That is,
the Restructure does not result in a diminution of ownership (ie economic interest or voting ‘power’) for existing Heartland
Bank Shareholders.

The Restructure itself, does not fundamentally change the Heartland Group business. Immediately post-Restructure the:
◼ Strategy and business plan is the same
◼ Operational assets of Heartland Group will be the same (other than some small capital structure related
adjustments triggered by the Restructure)
◼ Directors, management and staff will be the same (plus a small number of new employees reflecting the
additional governance and reporting requirements of the new structure)

Essentially, the Restructure results in no change to:
◼ Shareholders’ ownership in the Heartland Group (other than any Ineligible Shareholders)
◼ The Heartland Group’s immediate strategy and business plan

Nevertheless, there are advantages / benefits and risks / disadvantages / costs associated with the Restructure and
Heartland Shareholders must assess and make judgements regarding the quantum and probability of these when deciding
whether to vote for or against the Restructure.

The decision process for Shareholders can be summarised in Figure 7 below:


Figure 7: Shareholders decision process



5.2. Cameron Partners’ view
We summarise the effects and implications of the Restructure in the following table. Many of the effects and implications
are negligible or neutral. We highlight those effects and implications that we consider are potentially material for
Shareholders in Table 10 and comment on these in more detail below Table 10.

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Table 10: Implications of the Restructure
Effect Implications of Restructure

Risks / Disadvantages / Costs Advantages / Benefits Neutral
Ownership

No material change
Regulatory Issues
Removal of RBNZ oversight
creates scope for a change in
business mix and risk profile
Removal of RBNZ oversight
removes constraints to Australian
funding and asset growth
NZX – no material change
ASIC – no material change
Financial
Performance

BAU growth constraints removed
Potential NPV-positive acquisitive
growth accommodated

Costs
Post Annual Shareholder Meeting
one-off costs are minimal
(c.$580,000)
Ongoing costs relatively
immaterial (c.$590,000 pa
equating to c.1% of FY17 NPAT)

The majority of one-off costs are
‘sunk’ prior to the Special Meeting

Capital Structure No material change
Credit Rating No material change
ASX Listing
Improved access to equity
Improved share liquidity
ASX compliance requirements
Governance,
management, staff

No material change in workload
(additional costs covered in
Section 4.4)
Customers No change
Dividends No change
Tax Tax - Shareholder specific
Value Relatively immaterial costs
Increased value from
unconstrained Heartland Australia
growth and as yet unidentified
opportunities



5.2.1. Advantages / benefits
The advantages / benefits of the Restructure are not easily quantified as they relate to avoided risks and improved
flexibility and relate to:
◼ Removing RBNZ constraints – Enables Heartland Group to pursue potentially value-positive business
opportunities (organic or acquisitive) as it:
◼ Avoids constraints on asset growth and funding which could potentially limit growth in Heartland Australia
◼ Removes regulatory barriers to BAU and acquisitive growth that may be better suited to a non-RBNZ
regulatory environment
◼ Improving access to equity capital – Facilitated by the ASX listing, particularly relatively large amounts
required, for example for a sizeable acquisition

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5.2.2. Risks / disadvantages / costs
The material risks, disadvantages and costs implications of the Restructure relate to:
◼ Costs - The one-off and ongoing costs post the Shareholders Meeting are easily quantified (c.$580,000 and
c.$590,000 respectively) and can be considered relatively immaterial
◼ Tax – There are some potential tax consequences for certain Shareholders, which must be considered on a case-
by-case basis
◼ Removing some RBNZ oversight – There is no change in the immediate strategy or business plan in
conjunction with the Restructure proposal. Nevertheless, the flexibility of the new structure creates additional
scope to, over time, move the business mix away from that imposed by the RBNZ. This may provide valuable
opportunities but may also change the risk profile of Heartland Group

5.2.3. Summary
The impact of the additional on-going costs and one-off costs (estimated by Management) associated with the Restructure
are relatively immaterial to the business.

Moving parts of the existing business outside the Banking Group and creating the potential for Heartland Group to grow
and acquire businesses outside of RBNZ regulation has both positive and negative consequences, depending on
Shareholders investment objectives and risk / return appetite:
◼ Undertaking the Restructure will remove constraints to Heartland Australia growth
◼ Without the Restructure, at present growth rates, Heartland Australia will face some asset growth and funding
constraints which have the potential to have a negative impact on its financial performance in future
◼ Nevertheless, the flexibility of the new structure creates additional scope to, over time, move the business mix
away from that dictated by the RBNZ. This is likely to provide valuable opportunities but may also change the risk
profile of Heartland Group. Shareholders may wish to monitor this over time

The advantages and benefits are more difficult to quantify as they require a range of assumptions about the future growth
of the business and potential new business opportunities (both BAU and acquisitive). In this regard, we estimate that the
potential value impact of unconstrained growth in Australia and potential upside from new growth opportunities could easily
outweigh the more certain costs of the Restructure.

One way to represent the Restructure is that it places Heartland Group in a better position to pursue valuable BAU and
acquisitive growth opportunities, albeit that this creates scope to change the business mix and risk profile of the business
over time.

On balance, we consider the potential value creation opportunities resulting from the Restructure outweigh the costs.

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Appendix 1 – Qualifications and Declarations
Cameron Partners has been engaged by Heartland Bank Limited (“Heartland Bank”) to prepare an independent adviser’s
report in relation to the proposed corporate restructure of Heartland Bank under a court approved scheme of arrangement
(“Project”).

1. Qualifications
Cameron Partners Limited (Cameron Partners) is a leading New Zealand investment banking firm that has been providing
M&A and corporate finance advisory services in the New Zealand market for over 20 years. We have extensive
experience and have built a reputation for successfully completing a diverse range of transactions.

The persons responsible for preparing this report on behalf of Cameron Partners are Hugo Ellis (BCom (Hons) in
Economics and Graduate Diploma in Finance from the University of Otago), Paul Dougherty (BCom and Post-G rad
Diploma in Finance from the University of Otago and an MSc (Finance) with Distinction from the University of London),
Daniel Good (BCom (Economics and Finance) and an MCom (Finance) from the University of Auckland) and Jian-Wei
Hew (LLB and BCom (Honours) in Accounting and Finance from the University of Auckland). All four have significant
experience in providing relevant corporate finance advisory services.


2. Disclaimers
This report (“Report”) (which expression includes the whole and any part of it) has been prepared by Cameron Partners as
at 27 July 2018. It is not intended that this Report should be used or relied upon for any purpose other than as an expression
of Cameron Partners’ opinion as to the merits of the Project. Cameron Partners expressly disclaims any liability to any
Heartland Bank shareholder (or any other party) that relies or purports to rely on the Report for any purpose to the extent
permitted by law. This Report may not include all the information that may be required, or which is necessary, for a full
evaluation of the Project or for decision-making. This Report must not be used other than for the purpose for which it was
supplied.

Any recipient of this Report should exercise their own judgement in considering and using this Report and any other
material provided by Cameron Partners.

In preparing this Report, Cameron Partners has relied on information supplied by Heartland Bank and / or third parties and
/ or taken from public sources. Cameron Partners has not independently verified that information but, rather, has assumed
that information to be true, complete, accurate and up-to-date. No responsibility is accepted by Cameron Partners for any
errors or omissions arising (including as a result of negligence) in the preparation of this Report to the extent permitted by
law.

The Report may be based on or be by reference to:
◼ market conditions and economic rates and indicators, including assumptions regarding future market conditions
and economic rates and indicators;
◼ business forecasts, elements of which may have been provided by Heartland Bank.

Business and economic conditions and what may be a reasonable assumption or forecast can and do often change
without notice or warning. Cameron Partners has made, or adopted, assumptions and forecasts which it considers
reasonable, but those assumptions or forecasts may not be correct and, anyway, may be affected by changes in economic
and other circumstances. Cameron Partners in no way guarantees or otherwise warrants the achievability of any
assumptions or that business forecasts will be achieved. The actual future results may be significantly more or less
favourable.

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Cameron Partners will not update or correct this Report even if Cameron Partners becomes aware that it is out-of-date,
affected by changes in circumstance, or contains errors.


3. Independence
Cameron Partners does not have any shareholding in or other relationships or conflict of interest with Heartland Bank that
could affect its ability to provide an unbiased opinion in relation to the Project. Cameron Partners had no part in the
formulation of the Project. Its only role has been the preparation of this Report. Cameron Partners will receive a fee for
the preparation of this Report. This fee is not contingent on the outcome of the Project. Cameron Partners will receive no
other benefit for the preparation of this Report. Cameron Partners considers itself to be independent for the purposes of
the Takeovers Code.


4. Consent
Cameron Partners consents to the issuing of this Report, in the form and context in which it is to be included in the
information sent to Heartland Bank shareholders. Neither the whole nor any part of this Report nor any reference thereto
may be included in any other document without the prior written consent of Cameron Partners as to the form and context in
which it appears.

HEARTLAND BANK SCHEME BOOKLET78
APPENDIX 1: SCHEME BOOKLET
Independent Adviser’s Report Prepared in Relation to the Proposed Restructure of Heartland Bank Limited
HEARTLAND BANK LIMITED – INDEPENDENT ADVISER’S REPORT


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Appendix 2 – Steps / Transactions of the Restructure
This appendix summarises:
▪ Current corporate structure
▪ Proposed steps / transactions of the Scheme of Arrangement
▪ Resulting post-Restructure corporate structure

Current structure


Figure 8: Current corporate structure


Source: Management

HEARTLAND BANK SCHEME BOOKLET79
APPENDIX 1: SCHEME BOOKLET
Independent Adviser’s Report Prepared in Relation to the Proposed Restructure of Heartland Bank Limited
HEARTLAND BANK LIMITED – INDEPENDENT ADVISER’S REPORT


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AGE | 38
Incorporation of New Listed Parent
The first step of the scheme of arrangement involves the incorporation of New Listed Parent as a New Zealand company
(sitting outside the Banking Group), with a single redeemable ordinary share being held by NZGT.


Figure 9: Incorporation of New Listed Parent





Source: Management