Heartland announces half year NPAT of $44.1 million

1
NZX/ASX Release

Heartland announces net profit after tax of $44.1 million
for the six months ended 31 December 2020
(or $43.2 million on an underlying basis after removing the impacts of one-offs)

22 February 2021

Heartland Group Holdings Limited (Heartland) (NZX/ASX: HGH) achieved a net profit after tax
(NPAT) of $44.1 million for the six-month period ended 31 December 2020 (1H2021), an increase of
$4.2 million (10.6%) compared with the six-month period ended 31 December 2019 (1H2020). On
an underlying basis (which excludes the impacts of one-offs
1
), 1H2021 NPAT was $43.2 million, an
increase of $5.1 million (13.4%) compared with 1H2020 underlying NPAT.

Highlights for 1H2021
2


NPAT of $44.1 million, up 10.6% ($4.2 million). Underlying NPAT of $43.2 million, up 13.4% ($5.1
million) on 1H2020 underlying NPAT.
One-off items had a $0.9 million net impact on NPAT, consisting of $5.2 million of one-off gains and
$4.3 million of one-off expenses.
3

Gross finance receivables
4
of $4.7 billion, up 2.7%
5
($62.3 million).
Return on equity of 12.2%, up 54 basis points.
Net interest margin
6
of 4.28%, up 5 basis points.
Net operating income of $125.3 million, up 5.6%.
Cost to income ratio of 48.8%, up 2.8 percentage points. Underlying cost to income ratio of 45.9%,
up 0.8 percentage points.
Impairment expense as a percentage of average receivables decreased from 0.40% in 1H2020 to
0.19% in 1H2021.
FY2021 interim dividend of 4.0 cents per share, a decrease of 0.5 cents per share from 1H2020 (as a
result of Reserve Bank of New Zealand restrictions on distributions by banks).
Earnings per share of 7.6 cents per share, up 0.7 cents per share.
In October 2020, Heartland Bank Limited was one of two Australasian banks to have no reduction or
adverse change to its ratings or outlook by Fitch Ratings since January 2020.
$5.2 million fair value gain recognised in Harmoney, which is currently transitioning its funding
model from peer-to-peer funding to wholesale securitised funding via warehouse structures.
Reverse Mortgages awarded Consumer Trusted Accreditation for the fourth year in a row.
Heartland Bank Limited awarded Canstar awards for savings accounts for consecutive years.
Further digitalisation of product applications and digital platforms – including digital Home Loans,
Sheep & Beef Direct online loans, and a self-service online vehicle loan application.
45 participants in the 2020/2021 Manawa Ako internship programme, up from 34 in 2019/2020.
Launch of Rocket, a mobile-led financial literacy programme for school leavers.

1
Underlying results exclude the impacts of one-offs. Refer to Profitability section on page 3 for details.
2
All financial performance comparatives are based on the 31 December 2019 unaudited interim consolidated
financial statements of Heartland and its subsidiaries (the Group), and financial position comparatives are based
on 30 June 2020 audited full year consolidated financial statements of the Group, unless otherwise noted.
3
Refer to Profitability section on page 3 for details.
4
Gross finance receivables include Reverse Mortgages.
5
Annualised 1H2021 growth excluding the impact of changes in foreign currency exchange (FX) rates.
6
Net interest margin (NIM) is calculated based on average gross interest earning assets.

2
Operating environment

The financial impact of the COVID-19 pandemic on the New Zealand economy has been more
subdued than forecast by major bank economists in the early months of 2020, as illustrated in the
chart below. Forecasts continued to improve over the course of the year as the economic recovery
exceeded expectations
7
, assisted by the support measures provided by the New Zealand
Government.



During this time, Heartland’s loan portfolios showed resilience to the effects of the pandemic as the
industries and demographics most affected by COVID-19 are not materially represented in
Heartland’s core lending or customer base
8
. Reflecting this, in October 2020, Fitch Ratings (Fitch)
affirmed the Long-Term Issuer Default Ratings (IDR) of Heartland and Heartland Bank Limited
(Heartland Bank) at ‘BBB’ and the Long-Term IDR of Heartland Australia Group Pty Ltd (Heartland
Australia) at ‘BBB-’. Heartland Bank was one of just two Australasian banks to have no reduction or
adverse change to its ratings or outlook despite the economic impacts of COVID-19 since January
2020.

While Heartland experienced continued growth in its core lending portfolios (Motor, Reverse
Mortgages, Business Intermediated), overall balance sheet growth has been impacted by the
continued reduction in non-core portfolios and higher than forecast repayments. Elevated
repayments are believed to have resulted from the extensive economic stimulus provided by the
New Zealand Government and Reserve Bank of New Zealand (RBNZ), and mortgage repayment
holidays by other banks which allowed customers to divert funds normally used to service mortgage
repayments to pay off other debt instead. With increased economic confidence emerging and the
cessation of mortgage repayment holidays by the other banks, Heartland expects customer
repayment behaviour to normalise.

7
Actual GDP is annual growth rate for last 12 months (source: Statistics New Zealand). Forecast is average of
major bank Economists’ point in time GDP projection for 2020 (source: major bank publications).
8
Heartland’s total exposure to the retail, accommodation and transport (excluding road freight transport)
industries at 31 December 2020, based on borrower ANZSIC codes, was 2.41%, 2.00% and 1.17% respectively.
Heartland’s exposure to customers aged 15-24 years (those most affected by heightened unemployment) at 31
December 2020 was 3.32% in Motor and 0.37% in personal lending.

3
Despite the general improvement in the economic forecasts and evidence of customer resilience to
date, uncertainty remains regarding the COVID-19 pandemic’s impact on future economic conditions
– as discussed in more detail on page 5 (Impact of COVID-19 on provisioning).

Heartland’s economic overlay of $9.6 million taken in respect of the financial year ended 30 June
2020 (FY2020) has not been utilised, and, as a result of the continued uncertainty, remains available
to be applied to any credit losses experienced as a consequence of the economic impact of the
pandemic.

Financial results

Profitability
NPAT was $44.1 million, a $4.2 million (10.6%) increase on 1H2020. Underlying NPAT was $43.2
million, a $5.1 million (13.4%) increase on 1H2020.

Return on equity (ROE) was 12.2%, up 54 basis points (bps) from 1H2020. Underlying ROE was
11.9%, up 80 bps from 1H2020.

Earnings per share (EPS) was 7.6 cents per share (cps), up 0.7 cps from 1H2020. Underlying EPS was
7.4 cps, up 0.8 cps from 1H2020.
1H2021 one-offs included in the reported result
9

As described below, the following one-off items are included in the 1H2021 reported result and
should be considered when analysing the underlying result.
1. Fair value gain on equity investment in Harmoney Corp Limited (Harmoney): A $5.2 million fair
value gain was recognised. Harmoney listed on the ASX and NZX in November 2020, with
approximately 72% of shares (including those owned by Heartland, other major shareholders,
employees and directors) subject to escrow arrangements that restrict the ability to sell the
Harmoney shares. The fair value measurement of Heartland’s equity investment in Harmoney
as at 31 December 2020 takes into consideration observed trading volumes, closing market
prices of Harmoney’s shares, and the restriction imposed by the escrow arrangements.
2. Voluntarily accelerated amortisation of intangible assets: A $4.3 million expense was
recognised within operating expenses, reflecting an acceleration of amortisation following a
review of software assets held on the balance sheet, taking into account Heartland’s current
technology strategy.
3. Write-off and provisioning of aged suspense account items: $1.7 million of aged legacy
suspense account transactions have been conservatively written off or provisioned for within
operating expenses where collectability is significantly uncertain.


9
As disclosed in the previous reporting period, the following one-off items are included in the 1H2020
reported result and should be considered when analysing the underlying result: $2.8 million was recognised in
other operating income and $3.3 million recognised in operating expenses due to the required accounting
standard change in respect of upfront reverse mortgage income and expenses; A $2.1 million fair value gain
was recognised on Heartland’s equity investment in Harmoney.

4
The impact of these one-off items on the respective financial metrics is outlined in the table below.

Reported Underlying
1H2021 1H2020 Movement 1H2021 1H2020 Movement
Net operating income
(NOI)
10
($m)
125.3 118.6 6.7 120.1 113.7 6.4
NPAT ($m) 44.1 39.9 4.2 43.2 38.1 5.1
NIM 4.28% 4.23% 5 bps 4.28% 4.23% 5 bps
NIM excl. liquid assets
11
4.65% 4.44% 21 bps 4.65% 4.44% 21 bps
Cost to income ratio (CTI) 48.8% 46.0% 2.8 pps 45.9% 45.1% 0.8 pps
Impairment expense ratio 0.19% 0.40% (21 bps) 0.19% 0.40% (21 bps)
ROE 12.2% 11.7% 54 bps 11.9% 11.1% 80 bps
EPS 7.6 cps 6.9 cps 0.7 cps 7.4 cps 6.6 cps 0.8 cps

Income
Total NOI was $125.3 million, an increase of $6.7 million (5.6%) from 1H2020.
Excluding the impact of one-offs
12
, underlying NOI was $6.4 million (5.6%) higher half-on-half. This
was largely due to an $8.0 million (7.6%) increase in underlying net interest income, driven by a
$299.8 million (6.1%) higher average interest earning assets in 1H2021 than 1H2020, and a 5 bps
increase in NIM compared with 1H2020 to 4.28%. Underlying other operating income decreased by
$1.6 million (19.2%) compared with 1H2020, primarily due to a lower treasury result.

Expenses
Operating expenses were $61.1 million, an increase of $6.5 million (12.0%) on 1H2020. Excluding
the impact of one-offs (including those described above), the underlying operating expenses were
$3.8 million (7.5%) higher compared with 1H2020.
Higher underlying operating expenses were primarily due to the following increased expenses.
1. A $4.5 million (16.5%) increase in staff expenses. Heartland employed 78 more people in
permanent or fixed term roles compared with 1H2020 to provide additional support to
customers in response to COVID-19, and to support digital and technology capability, enabling
Heartland to accelerate its evolution as a digitally-led financial services group. The teams are
now well resourced to deliver on Heartland’s strategic objectives, and the number of staff
employed in response to COVID-19 has been reduced as those fixed term and temporary
employment periods come to an end.
2. A $1.1 million (17.8%) increase in IT and communication expenses (as a result of software
amortisation and licencing costs for additional full-time equivalent (FTE) employees).
The CTI increased to 48.8%, up 2.8 percentage points (pps) compared with 1H2020. The underlying
CTI increased 0.8 pps to 45.9%.

10
NOI includes fair value gains/losses on investments.
11
NIM is calculated based on average gross interest earning assets excluding liquid assets.
12
1H2020 one-offs include $2.8 million due to the required accounting standard change in respect of upfront
reverse mortgage fees and $2.1 million of fair value gains on equity investments. 1H2021 one-offs include
$5.2 million of fair value gains on equity investments.

5
Impairment expense
Impairment expense decreased by $4.5 million (49.7%) to $4.5 million. Impairment expense as a
percentage of average receivables decreased from 0.40% in 1H2020 to 0.19% in 1H2021 and
continues to perform strongly in the year-to-date.

Remediation of accounts previously in arrears, and the release of provisions held against those
borrowers, has been a significant driver of the reduction in impairment expense. That remediation
has largely been due to repayments, refinancing and ordinary restructures, rather than the use of
the Heartland Extend product.

As at 31 December 2020:
‒ of the total Heartland Extend book, approximately 77% comprises refinanced Business
Intermediated and Open for Business loans, none of which were non-performing loans (NPLs)
as at 30 June 2020
‒ only 24% of Motor loans that were non-performing as at 30 June 2020 had been refinanced
with a Heartland Extend product.

However, the use of Heartland Extend can be expected to have assisted borrowers in meeting their
obligations going forward, and therefore assisted in controlling impairment expense.

In terms of the performance of the Heartland Extend book, whilst it is early days and remains
relatively unseasoned, it is pleasing to note that the secured Business Extend sub-portfolio
(representing approximately 70% of the total Heartland Extend book) is performing very strongly
when compared with the Heartland portfolio against which it is benchmarked, with early and late
stage arrears all below benchmark levels. Whilst the balance of the book is showing some early
stage signs of stress, Heartland continues to monitor it closely and note NPLs for those sub-portfolios
are below the NPLs of the Heartland portfolios against which they are benchmarked.

Impact of COVID-19 on provisioning

During FY2020, Heartland took a COVID-19 economic overlay of $9.6 million (pre-tax). At the time,
Heartland explained that it had no reason to consider that its (then) existing provisions were not
adequate – but the overlay was required to allow for the uncertainty created by COVID-19, taking
into consideration that traditional indicators of increased credit risk may not have provided an
accurate measure of the credit quality of Heartland’s book.

The overlay did not represent any losses that Heartland had actually experienced, but was taken to
provide a buffer against any future losses that the uncertainty may give rise to.

Heartland has not consumed any of the COVID-19 overlay and still has no reason to consider that its
current provisions are not adequate. Heartland now has a more developed understanding of the
impact of COVID-19 on the credit quality of Heartland’s book. In particular:
a. total NPLs were down year-on-year at 1.96% compared with 2.19% (as at 31 December 2019)
b. the Heartland Extend portfolio is still relatively unseasoned, but NPLs are much lower than
NPLs in the equivalent portfolios (as described above)
c. there are currently no NPLs in the Business Finance Guarantee Scheme (BFGS) portfolio.
Moreover, the return to Alert Level 3 in Auckland for 20 days in August 2020 (and the rest of New
Zealand to Alert Level 2 for 43 days) did not impact the economy as significantly as expected,
resulting in a 9% drop in card-based retail spending, with only minor setbacks for businesses.

6
However, despite those positive indicators and a general improvement in the economic forecast,
there remains uncertainty in relation to the impact of the pandemic on the overall credit quality of
Heartland’s book. In particular, whilst forecasts about future economic conditions have improved,
all forecasts make assumptions around important matters such as when New Zealand’s border will
re-open, the nature and extent of any further lockdowns, when and how effective a vaccination
programme may be, and how key markets (such as the used car and primary produce markets) may
respond. Until such time as there is more certainty that downside scenarios may not adversely
affect Heartland’s portfolios, Heartland has decided to retain its COVID-19 overlay.

A further update will be provided as part of the full year financial results announcement.

Financial position
Total assets increased by $119.9 million (2.3%) during 1H2021, driven by a $62.3 million (2.7%)
13

increase in gross finance receivables (Receivables) and a $57.5 million (10.6%) increase in liquid
assets which includes cash, cash equivalents and investments, reflecting a deliberate strategy to
maintain significant excess liquidity through the period of uncertainty associated with COVID-19.

Receivables growth was experienced primarily in Motor, Australian Reverse Mortgages, Business
Intermediated, New Zealand Reverse Mortgages and digital Home Loans, partly offset by decreases
in Harmoney and other personal lending, Livestock, Business Relationship, Open for Business (O4B)
and Rural Relationship.
Borrowings
14
increased by $110.4 million (2.4%). Deposits increased $4.4 million and other funding
increased $106.0 million, primarily due to growth in Australian Reverse Mortgages.
Net assets increased by $37.1 million to $737.1 million. Net tangible assets (NTA) increased by $40.6
million to $650.7 million, resulting in an NTA per share of $1.12 (30 June 2020: $1.05).

Business performance

New Zealand Reverse Mortgages
New Zealand Reverse Mortgages NOI was $11.2 million, a decrease of $1.8 million (13.8%) compared
with 1H2020. Excluding the impact of one-offs (described above) from 1H2020, underlying NOI was
largely flat half-on-half on account of timing differences between changes to lending rates and cost
of funds.
New Zealand Reverse Mortgages Receivables increased $16.7 million (5.9%) to $576.6 million, driven
by continued enhancements in digital platforms and investment in marketing to increase brand
awareness. Receivables growth has been impacted by elevated repayments in 1H2021 due to:
- comparatively lower repayments in Q4 of FY2020 with property sales restricted by COVID-19
related lockdowns
- a buoyant property market in 1H2021.

Motor
Motor NOI was $33.0 million, an increase of $2.9 million (9.6%) compared with 1H2020.

13
Annualised 1H2021 growth excluding the impact of changes in FX rates.
14
Includes retail deposits and other borrowings.

7
Following a strong result in FY2020, Motor Receivables continued to increase during 1H2021, posting
a $78.3 million (13.8%) increase to $1,203.9 million. The growth was mainly from the Motor dealer
book via car dealerships, brokers and partnerships such as Kia Finance and Jaguar/Land Rover
Financial Services.

Heartland intends to grow its distribution channels and innovate to offer new products and world-
class customer experiences. Investment in digital enhancements, such as the aforementioned self-
serve online application, underpins strong performance of the Motor book which resulted in a 22%
increase in new business origination compared with 1H2020.

Harmoney and other personal lending
Harmoney NOI was $6.8 million, a decrease of $1.6 million (19.0%) compared with 1H2020.
Harmoney Receivables decreased by $56.0 million (55.6%), with the New Zealand Harmoney
portfolio contracting $34.7 million (47.2%) to $111.2 million, while the Australian Harmoney
portfolio decreased by $21.3 million (78.2%) to $32.7 million. Both New Zealand and Australian
portfolios continued to contract in 1H2021 as a result of high repayments, as described above.
Harmoney is currently undergoing a transition of its funding model from a peer-to-peer off-balance
sheet model to wholesale securitised on-balance sheet funding via warehouse structures. Heartland
supports this transition and has entered into a non-binding Heads of Agreement with Harmoney
such that it expects its facilities to move to this model in the near term, therefore allowing for the
resumption of portfolio growth.

Home Loans
Following a successful pilot, Heartland’s digital Home Loans product was launched in October 2020
with conservative lending criteria targeting high quality applicants. Loans were slow to drawdown
over the summer holiday period, however strong application rates have continued in the second half
of FY2021 (2H2021) with $303.6 million approved online and $16.6 million drawn down year-to-
date.

The challenges in converting applications to drawdowns are being driven by the time taken to
process refinances from other banks and the struggle faced by approved purchasers to find and
secure their desired property in a buoyant market.

Business Intermediated
Business Intermediated lending NOI was $13.4 million, an increase of $2.7 million (25.2%) compared
with 1H2020.
Business Intermediated Receivables increased $33.1 million (13.2%) to $532.1 million, reflecting
Heartland Bank’s growth focus on this portfolio, and continued deepening and expansion of the
intermediary network underpinned by a strong focus on distributor/vendor and point of sale
support. The growth was further supported by strong demand from partners in the transport and
logistics sector which continues to experience increasing demand and a solid performance following
the COVID-19 outbreak.

Heartland Bank has been proactively approaching its business customers to understand their
requirements in response to the pandemic, and provide the support where needed. In addition,
Heartland Bank launched Heartland Extend for Business, providing business owners with the
flexibility to manage and adjust their loan repayments in line with the cash and growth requirements
of their businesses. The product has been well received and the uptake has been pleasing.

8
Business Relationship
Business Relationship lending NOI was $12.2 million, an increase of $1.0 million (8.9%) compared
with 1H2020.
Business Relationship Receivables decreased $16.6 million (6.6%) to $479.8 million as a result of a
continued focus on reducing concentration risk in low margin exposures.
O4B
O4B NOI was $7.5 million, an increase of $0.9 million (13.6%) compared with 1H2020.

O4B growth slowed down in 2H2020 as a result of COVID-19 disruptions and the availability of
Government-backed funding for small businesses. This trend continued in 1H2021, resulting in O4B
Receivables decreasing a further $14.4 million (18.4%) to $140.7 million. Ongoing investments in
operational capacity, automation and marketing to increase product awareness, and improving
economic sentiment are expected to fuel growth to pre-COVID-19 levels in future periods.

Rural
Rural lending NOI was $15.6 million, a decrease of $0.1 million (0.5%) compared with 1H2020.
Rural Receivables decreased by $35.2 million (11.5%) to $570.5 million. Rural Relationship
Receivables reduced by $12.1 million (4.9%) to $478.3 million, while Livestock Receivables decreased
by $23.1 million (39.7%) to $92.2 million. The continued downward trend reflects Heartland’s
strategy to continue to optimise non-core Rural Relationship lending to reduce low margin
concentration.

Whilst in its infancy, the Sheep & Beef Direct platform has seen a pleasing volume of high-quality
applications since its launch in late 2020. At 16 February 2021, eligible applications totalled $52.3
million, with $26.8 million approved online and $3.0 million drawn down. Refinements will continue
to be made to reach target customers and improve user experience.

Australia
Australian operations NOI was $18.2 million, an increase of $1.6 million (9.6%) compared with
1H2020.
Australian Reverse Mortgages Receivables increased by $52.1 million (10.6%)
15
to $1,030.8 million.

New applications for reverse mortgages remained steady throughout the period, notwithstanding
the disruption arising from COVID-19 and associated lockdowns in Australia, and are expected to
increase as those disruptions ease. There has been recent interest in Heartland’s reverse mortgage
product from significant mortgage aggregators in Australia, which Heartland expects to come to
fruition in 2H2021.

Funding and liquidity

New Zealand
Heartland Bank increased borrowings by $32.7 million (0.9%), primarily as a result of an increase in
other borrowings of $30.9 million (8.6%) and an increase in deposits of $1.9 million (0.1%).


15
Excluding the impact of changes in FX rates.

9
Within other borrowings, money market borrowings for liquidity management purposes increased
by $31.9 million and secured funding increased by $2.3 million.

Deposits grew $1.9 million (0.1%). Heartland Bank continues its focus on reducing risk
concentrations in its deposit book while shifting its deposit mix in favour of lower rate call deposits
where Heartland is relatively underweight. This resulted in the call to total deposit ratio increasing
to 31% as at 31 December 2020 (31 December 2019: 27%; 30 June 2020: 25%).

Heartland’s savings products have also received market recognition, being awarded Canstar’s Bank
of the Year – Savings award in 2020 (third consecutive year), and Canstar’s 5-Star Rating for
Outstanding Value Savings Account for its Direct Call (fifth consecutive year) and YouChoose
accounts.

Heartland Bank increased total liquidity by $18.8 million (2.6%) primarily due to growth in
investments of $21.8 million (5.6%).

Heartland Bank increased its committed auto warehouse facility from $150 million to $300 million in
May 2020, and its target holding of cash and cash equivalents in response to the uncertain economic
and liquidity impacts of COVID-19 in 2H2020, which it continued to maintain in 1H2021. As such,
Heartland Bank holds liquidity well in excess of regulatory minimums.

Heartland Bank’s capital position has progressively increased during 1H2021, reflecting its continued
strong profitability and the RBNZ restrictions on distributions imposed in 2H2020. As a result,
Heartland Bank’s regulatory capital ratio was 13.95% as at 31 December 2020 (31 December 2019:
12.56%; 30 June 2020: 12.67%) considerably in excess of regulatory minimum.

Australia
Heartland Australia increased borrowings by A$72.7 million (8.6%), largely as a result of an A$142
million new long-term mortgage-backed syndicated loan for the Australian Reverse Mortgage
business funded by established offshore institutional investors. The first-of-its-kind transaction
achieves another milestone in executing Heartland’s strategy to diversify type, source and tenor of
its Australian funding and importantly, evidences market liquidity to existing warehouse funders.
The financing structure provides Heartland access to deep pools of efficient long-dated funding that
is typically unavailable to most Australian non-bank financial institutions. Heartland’s high-quality
reverse mortgage asset portfolio has enabled the structure to achieve leverage of 98%
16
.

During 1H2021, Heartland Australia successfully continued to execute on its strategic funding
programme to cater for the strong growth that continues to be generated.

Heartland now has access to committed Australian Reverse Mortgage loan funding of A$1 billion in
aggregate. Further expansion of existing warehouse funding through increased senior limits and the
introduction of mezzanine funding is planned, together with continued optimisation of long-term
duration matched funding.

Digitalisation

As a financial technology business (FinTech), digitalisation is at the core of everything Heartland
does. The COVID-19 pandemic has accelerated customer demand for digital services and products.
Heartland’s digital strategy has positioned it well to respond to this, with multiple digital platforms
enabling contactless online applications and decisioning.

16
Being total senior debt divided by total reverse mortgages funded.

10
Heartland continues its journey to digitalise each customer touchpoint, including its processes and
customer care services, enhancing the customer experience and reducing operational costs. Over
the last six-month period, various new digital platforms were developed, including an online quoting
tool for business intermediaries, online calculator for Kia Finance, integrated biometrics for Motor
dealers, and a broker portal for Australian Reverse Mortgage broker partners.

In October 2020, Heartland Bank relaunched its digital Home Loans, expanding lending criteria and
improving the self-serve online application following customer feedback received in the March 2020
trial. Heartland Bank continues to maintain the lowest floating, 1-, 2-, and 3-year fixed interest rates
by banks in New Zealand.

The self-serve online application for Heartland Bank’s Motor product allows New Zealanders to apply
for a vehicle loan online at any time and receive a decision in minutes. Development of a similar
solution for dealers is currently underway.

Sheep & Beef Direct is Heartland Bank’s new Rural Loans product, designed to enable farmers who
are looking to buy or refinance a sheep or beef farm to do so online – anytime, anywhere, with
online approval available upon completion.

The relaunch of O4B in Australia followed a trial in November 2019. The platform allows small
business owners to apply online for unsecured business finance up to $150,000, with longer terms
and lower interest rates available compared with similar competitor products.

Regulatory update

As a result of COVID-19, some delays to regulatory change timeframes were announced in 2020.
However, a significant volume of regulatory change continues to be upcoming. Key changes include
Phase 2 of the review of the Reserve Bank of New Zealand Act 1989 (RBNZ Act), the proposed
Financial Markets (Conduct of Institutions) Amendment Bill (Conduct Bill), and the changes to the
Consumer Credit law.

The Government has made a number of in-principle decisions in relation to its review of the RBNZ
Act which will affect the New Zealand financial system, including proposing a depositor protection
scheme and significant strengthening of accountability requirements for directors and executives.
Submissions were due in October 2020 on the latest round of consultation and Heartland will
continue to monitor progress in respect of the review.

If enacted, the Conduct Bill would introduce a new conduct regime for registered banks (including
Heartland Bank), licensed insurers and non-bank deposit takers in New Zealand.
In October 2021, changes to New Zealand Consumer Credit law will come into force. These changes
will result in lenders being required to obtain more information for the purposes of their suitability
and affordability determinations, and the liability regime for directors and senior managers will be
substantially strengthened. Heartland is considering the changes currently and the potential impact
of them on its business.

The RBNZ, in late 2020, also announced a further delay to the start of increases in bank capital until
1 July 2022 to allow banks continued headroom to respond to the impacts of COVID-19 and to
support economic recovery. The RBNZ has launched a consultation on the details for implementing
the final capital review decisions, which closes on 31 March 2021. Decisions are due to be
implemented from 1 July 2021 onwards.

11
Sustainability update

Heartland’s sustainability framework comprises three pillars, being Social Equity, Environmental
Conservation and Economic Prosperity. For more detail, go to page 60 of Heartland’s FY2020 Annual
Report, found at shareholders.heartland.co.nz.

Heartland is currently undergoing a phase of assessing and measuring the impact of the risks arising
from these pillars, including climate change risk. However, progress towards Heartland’s
sustainability goals is underway with key achievements noted below.

Social Equity
‒ The 2020/2021 Manawa Ako internship programme ended on 29 January. This year’s intake
increased significantly on the previous intake – up 32% (11 interns) to 45 interns.
‒ There are currently 12 interns who have remained in full-time or part-time employment.

Environmental Conservation
‒ Heartland’s baseline measurement of greenhouse gas (GHG) emissions has now been audited.
The work of the auditor (which is still subject to peer review) validated the methodology taken
to measure Heartland’s emissions and has amended the FY2019 emissions profile slightly to
1,157 tCO2e (within 1% of that reported in Heartland’s FY2020 Annual Report).
‒ Heartland’s GHG emissions reduction target will be published on Heartland’s website by 31
March 2021.
‒ A ‘Green Team’ has been established internally to champion environmental initiatives.

Economic Prosperity
‒ Delivered total shareholder return (TSR) of 124% over the last five years (17 February 2016 –
17 February 2021), compared with the NZX50 Index TSR of 108% in the same period, and
continued growth in EPS (from 10.0 cps in FY2015 to 12.5 cps in FY2020).
‒ Initial development was completed for Rocket, a financial literacy programme targeted at
school leavers. The programme, designed to be used on a smartphone, was soft-launched at
Heartland’s Annual Shareholder Meeting in November 2020.

Strategic priorities

Heartland has three core strategic objectives: acquiring scale in New Zealand, expanding in Australia
and digitalising everything it does.

Currently, the Group comprises four distinct businesses: New Zealand banking, motor finance,
financial technology, and Australia (primarily comprising Reverse Mortgages). As a result of
management’s review of how these underlying businesses are presented in the market, more
emphasis is being put on discrete reporting of these business activities.

New Zealand
Heartland continues to explore opportunities to consolidate banking services to achieve scale and
enhance customer offerings. Heartland also continues to look for ways to enhance its existing
customer offerings – it is currently expanding the YouChoose product features to make it more
accessible for customers and enable it to appeal to a wider customer segment.

Heartland is also seeking to achieve the optimal holding structure for the motor vehicle finance
business to provide access to flexible and efficient capital. No conclusions have yet been reached,

12
however work is underway to set the foundations which would allow Heartland to separate the
business to be a Group subsidiary, should it choose to do so.

Australia
Heartland has recently rebranded its Australian Seniors Finance product to Heartland Reverse
Mortgages to ensure a stronger brand alignment and consistency with Heartland and its products.

Looking forward, Heartland aims to more broadly service the needs of the aged sector in Australia
through a diversified product offering to a wider demographic. Opportunities exist to provide
products which support customers transitioning from late stage employment to retirement, and
subsequent entry into various stages of aged care. Other forms of equity release, in addition to
reverse mortgages, are being explored.

This represents a significant growth opportunity for Heartland, with the Federal Government
recently releasing the independent Retirement Income Review Final Report which observes that
“individuals can significantly boost their retirement incomes without having to increase their
superannuation contributions [by] ...accessing equity in their home”
17
.

In addition to this, research about financing ageing in place, released by Melbourne’s RMIT
University and supported by Heartland, found that almost 90% of senior Australians want to remain
in their home for as long as they can, but have limited funds to do so. RMIT University supported
the Federal Government’s notion that reverse mortgages could be the solution for many.

Heartland remains the leading provider of reverse mortgages in Australia with 12-month market
share increasing from 26%
18
to 28%
19
. With the equity release market set to triple in the next 10
years
20
, a similar trend is expected in the future.

Heartland began the 2021 calendar year with the completion of a senior unsecured bond placement
of A$75 million. This is the third issuance under Heartland Australia’s Medium-Term Note
programme and takes aggregate outstanding issuance to A$220 million. The funding will enable
scale and expansion in Australia, including through the development of new products intended to
appeal to various segments of the aged sector, thereby ensuring Australian retirees can choose how
best to fund their retirement lifestyle.

Digital
Recognising Heartland as a FinTech, Heartland’s strategy is to digitalise everything it does. Progress
towards this goal is described in the ‘Digitalisation’ section on page 10.

Interim dividend

Heartland is pleased to declare a 1H2021 interim dividend of 4.0 cps (0.5 cps down on 1H2020). The
dividend yield of 4.8%
21
compares with 8.3%
22
in 1H2020. As was the case for the 2H2020 final
dividend, the dividend decrease reflects restrictions imposed by the RBNZ on distributions by banks
in New Zealand. However, the continued growth in Heartland’s Australian operations enable it to

17
Source: Retirement Income Review Final Report, The Treasury, Australian Government.
18
Based on APRA ADI Property Exposure and Heartland Seniors Finance data as at 31 March 2020.
19
Based on APRA ADI Property Exposure and Heartland Seniors Finance data as at 30 September 2020.
20
Source: Global Equity Release Roundtable 2020 survey report, EPPARG and EY.
21
Total fully imputed dividends for 1H2021 (interim) and 2H2020 (final) divided by the closing share price as at
9 February 2021 of $1.88.
22
Total fully imputed dividends for 1H2020 (interim) and 2H2019 (final) divided by the closing share price as at
14 February 2020 of $1.84.

13
distribute earnings derived from assets held outside of Heartland Bank. Heartland expects to return
to a pay-out ratio aligning to historical levels once the RBNZ restrictions are removed.

The interim dividend will be paid on Tuesday 16 March 2021 (Payment Date) to shareholders on the
company’s register as at 5.00pm on Tuesday 2 March 2021 (Record Date) and will be fully imputed.

Heartland has a Dividend Reinvestment Plan (DRP), giving eligible shareholders the opportunity to
reinvest some or all of their dividend payments into new ordinary shares. The DRP will apply to the
final dividend with a 2.0% discount
23
.

The DRP offer document and participation form is available on Heartland’s shareholder website at:
https://shareholders.heartland.co.nz/shareholder-resources/dividends.

Looking forward

Heartland’s 1H2021 NPAT has exceeded expectations, particularly due to a much lower than forecast
impaired asset expense and pleasing origination levels in core portfolios. However, aggregate
balance sheet growth has been modest (primarily due to elevated repayments) and this may
moderate the uplift in net operating income ordinarily experienced in the second half of the financial
year.

Heartland believes customer repayment activity will normalise, and impaired asset expense levels
will be in line with budget for the remainder of the financial year. Provided this occurs and the
economic conditions continue to improve, Heartland expects NPAT for FY2021 to be at the upper
end of the guidance range of $83 million to $85 million.

– Ends –

For further information, please contact the person(s) who authorised this announcement:

Jeff Greenslade Andrew Dixson
Chief Executive Officer Chief Financial Officer
M 027 382 0023 M 027 263 2666

Address:
Level 3, Heartland House
35 Teed Street
Newmarket, Auckland
New Zealand

For media enquiries, please contact:

Nicola Foley
Head of Communications
M 027 345 6809

23
That is, the strike price under the DRP will be 98.0% of the volume weighted average sale price of Heartland
shares over the five trading days following the Record Date. For the full details of the DRP and the Strike Price
calculation, refer to Heartland Group Holdings Limited DRP offer document dated 10 December 2018.

---

2021 Interim Results
22 February 2021

2
Important notice
•This presentation has been prepared by Heartland Group Holdings Limited (NZX/ASX: HGH) (the Companyor
Heartland) for the purpose of briefings in relation to its financial statements.
•The presentation and the briefing (together the Presentation) contain summary information only, and you should
not rely on the information in the Presentation in isolation from the full detail in the financial statements.
•The information in the Presentation has been prepared with due care and attention. However, no person (including
the Company and its directors, shareholders and employees) will be liable to any other person for any loss arising in
connection with the Presentation.
•The Presentation outlines a number of the Company’s forward-looking plans and projections. Those plans and
projections reflect current expectations, but are inherently subject to risk and uncertainty, and may change at any
time. There is no assurance that those plans will be implemented or that projections will be realised.
•No person is under any obligation to update this presentation at any time after its release to you or to provide you
with further information about the Company.
•The information in this presentation is of a general nature and does not constitute financial product advice,
investment advice or any recommendation. Nothing in this presentation constitutes legal, financial, tax or other
advice.

1H2021
highlights

4
Net interest margin (NIM) 4.28% (+5 bps vs 1H2020)
Average interest earning assets +$299.8m (6.1%) vs 1H2020
NPAT
1
+10.6% vs 1H2020
$44.1m
1.Refer to Appendix 3 for reconciliation between reported and underlying net profit after tax (NPAT) result
2.OOI includes fair value gains/losses on investments
3.Gross finance receivables (Receivables) also include Reverse Mortgages
4.Annualised 1H2021 growth excluding the impact of changes in foreign currency exchange (FX) rates
Financial performance
$43.2m (+13.4%) on
an underlying basis after
removing the impacts of
one-offs
Net interest income
$113.2m
+7.6% vs 1H2020
Underlying other operating income (OOI)$6.9m (-19.2%
vs 1H2020), excluding the impact of fair value gain on
equity investment in Harmoney Corp Limited (Harmoney)
Underlying operating expenses (OPEX)
$55.1m (+7.5% vs 1H2020), excluding $4.3m
voluntarily accelerated amortisation of
intangible assets, and $1.7m write-off and
provisioning of aged suspense account items
Gross finance
receivables
3
$4,706m
+2.7%
4
vs June 2020
Borrowings
$4,643m
+2.4%
vs June 2020
Equity
$737m
+5.3%
vs June 2020
Return on
equity
$737m
+5.3%
vs June 2020
Return on
equity
12.2%
+54 bps
vs 1H2020
Earnings per
share
7.6 cps
+0.7 cps
vs 1H2020

5
Financial performance highlights
Receivables growth
‒Continued growth in core lending portfolios
(Motor, Reverse Mortgages, Business Intermediated)
‒Overall growth impacted by continued reduction in
non-core portfolios and elevated repayments, caused
by Government and RBNZ stimulus combined with
mortgage holidays allowing customers to divert
funds to repay other debt
‒Customer repayment behaviour is expected to
normalise
Improved impairment
‒An improved arrears position due to repayments,
refinancing and ordinary restructures
‒Portfolio growth weighted toward secured
portfolios, with unsecured portfolios contracting
Stable margin
‒Strong NIM maintained
‒Asset yields reduced in line with low interest rate
environment, impacted by portfolio mix, and
continued excess liquidity position
‒Funding cost matched asset yield reduction with
New Zealand deposit rates and Australian
wholesale benchmark rates at historic lows
Costs controlled
‒Underlying costs increased as a result of additional
headcount, with underlying cost-to-income ratio
relatively stable
‒Cost base positioned to scale as portfolio growth
resumes to historic levels

6
Direct Call Account and
YouChoose awarded
Canstar’s 5-Star Rating
for Outstanding Value
Savings Account
Heartland Bank awarded
Canstar’s 2020 Savings
Bank of the Year for the
third year in a row
NZ Reverse Mortgages
remains Consumer
Trusted for the fourth
year in a row
Oneof two Australasian
banks to have no reduction
or adverse change to its
ratings or outlook by Fitch
Ratings since January 2020
Launch of Rocket, a
mobile financial literacy
programme for school
leavers
45 participants in the
2020/2021 Manawa Ako
internship –up from 34 in
2019/2020
Further digitalisation of
product applications and
digital platforms in NZ and
Australia
Relaunch of Heartland
Home Loans with NZ’s
lowest interest rates
among banks
Interimhighlights

7
Impairment expense
‒Impairment expense decreased by $4.5m, decreasing the impairment expense ratio
1
from 0.40% in 1H2020 to 0.19% in 1H2021
Driven by:
‒remediation of accounts previously in arrears, and the release of provisions held against those borrowers largely due to
repayments, refinancing and ordinary restructures
‒growth in portfolios that attract lower rates of provisioning (Motor, Business Intermediated) or are subject to fair value
(Reverse Mortgages), and contraction in portfolios that attract higher rates of provisioning (Open for Business, Harmoney).
‒Importantly, the impairment performance has not been assisted by the use of the Heartland Extend product:
‒77% of the Heartland Extend book comprises refinanced Business Intermediated and Open for Business loans, none of which
were non-performing at 30 June 2020
‒23% comprises refinanced Motor loans, with only 24% ($1.4m) being non-performing at 30 June 2020.
‒While Heartland Extend is a “business as usual” product, it may assist borrowers in meeting their obligations going forward, andcan
therefore be expected to assist in controlling impairment expense.
1. Impaired asset expense as a percentage of average receivables

8
Impact of COVID-19
−The financial impact of the COVID-19 pandemic on the New
Zealand economy has been more subdued than forecast by
bank economists
1
.
−Returns to higher Alert Levels have not impacted the
economy as significantly as expected, with only a small drop
in retail spending, and minor setbacks experienced for SMEs.
1.Actual GDP is annual growth rate for last 12 months (source: Statistics New Zealand). Forecast is average
of major bank Economist’s point in time GDP projection for 2020 (source: major bank publications).
‒An economic overlay of $9.6m (pre-tax) was taken at 30
June 2020 to:
‒allow for the uncertainty created by COVID-19, not
due to any inadequacy of existing provisions
‒provide a buffer against any future losses that the
uncertainty may give rise to, not due to any actual
loss experienced.
‒The overlay remains unutilised at 31 December 2020:
‒current provisions remain adequate
‒a more developed understanding of the impact of
COVID-19 on credit quality of Heartland’s book,
with total NPLs down year-on-year, Heartland
Extend NPLs lower than comparative portfolios,
and no BFGS NPLs.
‒Despite positive indicators and general improvement in
economic forecasts, Heartland has retained its COVID-19
overlay as uncertainty around the impact of COVID-19 on
overall credit quality of Heartland’s book remains.

Financial
results

Growth in profitability
10
1.All figures in NZ$m.
2.Post-tax impact of $9.6m economic overlay due to COVID-19.
3.2H2020 NPAT in NZ$m including the impact of $9.6m pre-tax economic overlay due to COVID-19.
33.1
39.9
44.1
40.5
32.1
6.9
FY19FY20FY21
H1H2COVID-19 Overlay
+11%
+20%
2
39.0
3
One-off impacts
↗ 4.2 (10.6%)
(1.8)
2.7
(0.9)
(1.4)
(0.4)
(1.6)
(0.2)
(6.5)
↗ 5.1 (13.4%)
1H2020 one-offs:
$2.1m fair value gain on equity investments
$2.8m upfront Reverse Mortgage fees
1H2021 one-offs:
$5.2m fair value gain on equity investments
1H2020 one-offs:
$3.3m upfront Reverse Mortgage costs
1H2021 one-offs:
$4.3m voluntarily accelerated amortisation
$1.7m aged items write-off and provision

Growth in receivables
11
1.The graph shows 1H2021 growth in receivables by portfolio excluding the impact of changes in FX rates. Relative growth is annualised.
2.All figures in NZ$m.
11%
6%
13%
18%
7%
5%
40%
14%
56%
75%
↗63 (2.7%)

Key performance measures
12
1.NIM is calculated as net interest income/average gross interest earning assets.
2.Underlying CTI excludes one-off impacts. Refer to Appendix 3 for reconciliation between reported and underlying result.
3.Impairment expense ratio is calculated as impairment expense/average gross finance receivables.
4.Adjusted impairment expense ratio excludes the impact of $9.6m pre-tax economic overlay due to COVID-19.
41.6%
46.0%
45.4%
48.8%
39.9%
45.1%
44.5%
45.9%
Jun-19Dec-19Jun-20Dec-20
CTI
Reported CTIUnderlying CTI
0.49%
0.40%
0.65%
0.44%
0.19%
Jun-19Dec-19Jun-20Dec-20
Impairment Expense Ratio
Reported Impairment Expense Ratio
Adjusted Impariment Expense Ratio
4.33%
4.23%
4.33%
4.28%
4.46%
4.44%
4.59%
4.65%
Jun-19Dec-19Jun-20Dec-20
NIM
Total NIMNIM excl. Liquid Assets
75.6
82.3
87.0
83.5
1.72%
1.80%
1.87%
1.77%
0%
1%
1%
2%
2%
Jun-19Dec-19Jun-20Dec-20
0
20
40
60
80
100
Non Performing Loans
Non Performing LoansNon Performing Loans Ratio

Shareholder return
‒Underlying return on equity (ROE) of 11.9% (up 80
bps vs 1H2020)
1
‒Earnings per share (EPS)
2
of 7.6 cps, up 0.7 cps
compared to 1H2020
‒Interim dividend of 4.0 cps, down 0.5 cps on 1H2020
(pay-out ratio expected to return to historical levels
once RBNZ restrictions are removed)
‒Dividend yield of 4.8%
3
‒Five year total shareholder return (TSR) of 124%,
compared with the NZX50 Index TSR of 108% in the
same period
4
11.1%
11.7%
11.4%
12.2%
0.9%
Jun-19Dec-19Jun-20Dec-20
ROE
Adjusted ROEReported ROE
10.5%
13
1.Refer to Appendix 3 for reconciliation between reported and underlying result. June 2020 ROE of 10.5%
includes the impact of $9.6m pre-tax economic overlay due to COVID-19.
2.Jun 20 EPS of 12.5 cps includes the impact of $9.6m pre-tax economic overlay due to COVID-19.
3.Total fully imputed dividends for 1H2021 (interim) and 2H2020 (final) divided by the closing share price
as at 9 February 2021 of $1.88.
4.TSR for the period 17 February 2016 –17 February 2021.
3.5 3.5 4.54.0
5.5
6.5
2.5
FY18FY19FY20FY21
Dividend per share (cps)
Interim dividendFinal dividend
6.0
5.9
6.9
7.6
7.0
7.1
5.6
1.2
FY18FY19FY20FY21
Earnings per share (cps)
Interim EPSFinal EPSAdjusted EPS

Divisional
summary

15
Australian Reverse Mortgages
‒Net operating income increased 15.2%compared with 1H2020 to
$18.2m.
‒Receivables increased 10.6%
1
in 1H2021 to $1,030.8m.
‒Receivables growth in 1H2021 impacted by elevated repayments
(+28%vs 2H2020).
‒Australian Seniors Finance product recently rebranded to Heartland
Reverse Mortgages to ensure a stronger brand alignment and
consistency with Heartland and its products.
‒Recent interest in the reverse mortgage product from significant
mortgage aggregators in Australia, which Heartland expects to come to
fruition in 2H2021.
‒Heartland remains the leading provider of reverse mortgages in
Australia with 12-month market share increasing from 26%
2
to 28%
3
.
A similar trend is expected in the future as the equity market is set to
triple in the next 10 years.
$1,031m
As at 31 December 2020
annualised
growth since
June 2020
1
+10.6%
1.Excluding the impact of changes in FX rates.
2.Based on APRA ADI Property Exposure and Heartland Seniors Finance data as at 31 March 2020.
3.Based on APRA ADI Property Exposure and Heartland Seniors Finance data as at 30 September 2020.

16
NZ Reverse Mortgages
$577m
As at 31 December 2020
‒Net operating income decreased -13.8%compared with
1H2020 to $11.2m.Excluding the impact of one-offs
1
from
1H2020, underlying net operating income was largely flat
half-on-half.
‒Receivables increased 5.9%in 1H2021 to $576.6m.
‒Receivables growth in 1H2021 impacted by elevated
repayments (+40% vs 2H2020).
‒Growth in NZ Reverse Mortgages was driven by continued
enhancements in digital platforms and investment in
marketing to increase brand awareness.
1.1H2020 include one-offs of $1.6m due to the required accounting standard change in respect of upfront reverse mortgage fees.
annualised
growth since
June 2020
+5.9%

17
NZ Reverse
Mortgages
$577m
+$16m (5.9%)
vs June 2020
AU Reverse
Mortgages
A$966m
+A$51m (11.1%)
vs June 2020
Average loan size: $108,797
Weighted average borrowers’ age : 79
Average origination LVR: 10.5%
Weighted average LVR: 23.7%
Proportion of the book over 75% LVR: 0.1%
Origination: $45m (+$7m vs 2H2020)
Total repayments in 1H2021: $44m (+$13m vs 2H2020)
1H2021 average repayment rate: 16% (vs 12% in 2H2020)
Repayments from vintage loans (+11 years): 35% (vs 33% in 2H2020)
A$131,362 :Average loan size
77:Weighted average borrowers’ age
11.4% :Average origination LVR
24.2% :Weighted average LVR
0.5% :Proportion of the book over 75% LVR
A$96m (flat vs 2H2020) :Origination
A$70m(+A$15m vs 2H2020) :Total repayments in 1H2021
15% (vs 13% in 2H2020) :1H2021average repayment rate
30% (vs 24% in 2H2020) :Repayments from vintage loans (+11 years)
Elevated repayments in 1H2021 due to:
•comparatively lower repayments in Q4 of FY2020
with property sales restricted by COVID-19 related
lockdowns
•a buoyant property market in 1H2021
Reverse mortgages portfolio analytics

18
Open for Business (O4B)
‒Net operating income increased 13.6%compared with 1H2020
to $7.5m.
‒Receivables decreased -18.4%in 1H2021 to $140.7m.
‒Growth slowed down in 2H2020 as a result of COVID-19
disruptions and the availability of Government-backed funding
for small businesses. This trend continued in 1H2021.
‒Ongoing investments in operational capacity, automation and
marketing to increase product awareness, and improving
economic sentiment are expected to fuel growth to pre-
COVID-19 levels in future periods.
$141m
As at 31 December 2020
annualised
decrease since
June 2020
-18.4%

19
Business Intermediated
$532m
As at 31 December 2020
+13.2%
‒Net operating income increased 25.2%compared with 1H2020
to $13.4m.
‒Receivables increased 13.2%in 1H2021 to $532.1m.
‒Continued deepening and expansion of the intermediary
network underpinned by a strong focus on distributor/vendor
and point of sale support. The growth was further supported
by strong demand from partners in the transport and logistics
sector which continues to experience increasing demand and a
solid performance following the COVID-19 outbreak.
‒Launch of Heartland Extend for Business product, providing
business owners with the flexibility to manage and adjust their
loan repayments.
annualised
growth since
June 2020

20
Business Relationship
$480m
As at 31 December 2020
-6.6%
‒Net operating income increased 8.9%compared with 1H2020
to $12.2m.
‒Receivables decreased -6.6%
1
in 1H2021 to $479.8m.
‒The continued downward trend reflects Heartland’s strategy to
continue to optimise non-core Relationship lending to reduce
low margin concentration.
1.Excluding the impact of changes in FX rates.
annualised
decrease since
June 2020

21
Motor Finance
$1,204m
As at 31 December 2020
+13.8%
‒Net operating income increased 9.6%compared with 1H2020
to $33.0m.
‒Receivables increased 13.8%in 1H2021 to $1,203.9m.
‒Growth was mainly from the Motor dealer book via car
dealerships, brokers and partnerships such as Kia Finance and
Jaguar/Land Rover Financial Services.
‒New business origination is 22% higher compared with
1H2020 due to Heartland’s strategic focus on innovation and
continued investments in digital enhancements.
‒Guaranteed Future Value product continues to grow as
consumers become more familiar with the product and its
various options.
‒Average loan size increased from $26k to $29k due to an
increased weighting of new and near-new vehicles financed
(44% in 1H2021 v 40% in 1H2020)
annualised
growth since
June 2020

22
$144m
As at 31 December 2020
-55.6%
‒Net operating income decreased -19.0%compared with 1H2020
to $6.8m.
‒Harmoney Receivables decreased -55.6%
1
in 1H2021 to $143.9m.
‒Both New Zealand and Australian Harmoney portfolios continued
to contract in 1H2021 as a result ofhigh repayments, and
continued high impairment rate due to the additional provisions
taken up to cover potential future losses under the COVID-19
environment.
‒Harmoney is currently undergoing a transition of its funding model
from the peer-to-peer off-balance sheet model to wholesale
securitised on-balance sheet funding via warehouse structures.
Heartland supports this transition and expects its facilities to move
to this model in the near term, resulting in the resumption of
portfolio growth assisted by an expected abatement in the current
elevated repayment levels.
1.Excluding the impact of changes in FX rates.
annualised
decrease since
June 2020
1
Harmoneyand other personal lending

2323
Home Loans
‒Home Loans
1
Receivables increased +7.0min 1H2021 to
$7.6m.
‒Following a successful pilot, Heartland’s digital Home Loans
product was launched in October 2020 with conservative
lending criteria targeting high quality applicants.
‒Loans were slow to draw down over the summer holiday
period, however strong application rates have continued with
$303.6m approved online and $16.6m drawn down year to
date.
‒Challenges in converting applications to drawdowns are
driven by time taken to process refinances from other banks
and approved purchasers taking time to find and secure their
desired property.
1.Excludes legacy Retail Mortgages.

24
Rural
$571m
As at 31 December 2020
-11.5%
‒Net operating income decreased 0.5%compared with 1H2020 to
$15.6m. Rural Relationship net operating income increased by 5.0% to
$12.7m and Livestock net operating income decreased by -15.3% to
$2.9m.
‒Receivables decreased -11.5%in 1H2021 to $570.5m. Rural
Relationship receivables reduced by -4.9% to $478.3m and Livestock
receivables reduced by -39.7% to $92.2m.
‒The continued downward trend reflects Heartland’s strategy to
continue to optimise non-core Relationship lending to reduce low
margin concentration.
‒The Sheep & Beef Direct platform was launched in late 2020. At 16
February 2021, eligible applications totaled $52.3m, with
$26.8m approved online and $3.0m drawn down. Refinements will
continue to be made to reach target customers and improve user
experience.
annualised
decrease since
June 2020

25
Funding and liquidity
New Zealand
‒Heartland Bank increased borrowings by $32.7m (0.9%) in 1H2021
‒Deposits grew $1.9m (0.1%)
‒Heartland Bank increased total liquidity by $18.8m (2.6%)
‒Heartland Bank holds liquidity well in excess of regulatory minimums
‒Continued focus on reducing risk concentrations in the deposit book and shifting mix in favour of call deposits
Australia
‒Heartland Australia increased borrowings by A$72.7m (8.6%) in 1H2021 and has access to committed Australian reverse
mortgage loan funding of A$1b in aggregate
‒Heartland completed an A$142m long-term reverse mortgage-backed syndicated loan funded by established offshore
institutional investors. The first-of-its-kind transaction complements continued efforts to diversify type, source and tenor of
funding and evidence market liquidity to existing warehouse funders
‒Heartland recently completed a third senior unsecured bond placement, taking aggregate outstanding issuance to A$220m
‒Further expansion of existing warehouse funding through increased senior limits and the introduction of mezzanine funding is
planned, together with continued optimisation of long-term duration matched funding

Strategic
update

27
Acquire scale
•By consolidating banking services in
New Zealand
•By increasing market share using
new and enhanced ‘best or only’
products to appeal to a wider
customer base
•Supported by a low cost operating
model
Expand in Australia
•Service the needs of a broader
demographic of the aged sector
•Support customers transition from
late stage employment to
retirement, and subsequent entry
into various stages of aged care
•Explore opportunities for organic
and inorganic reverse mortgage
growth
•Continue to focus on long-term
funding to enable growth and
expansion
Digitalise everything we do
•New/enhanced platforms launched
–Home Loans
–Sheep & Beef Direct
–Motor Direct
–O4B Australia
•Digital tools now live
–Online quoting tools
–Integrated biometrics for
motor dealers
–Broker portals
•Digitalising the fulfilment process
and customer service touchpoints.
AustraliaDigital
Strategic objectives
New Zealand

28
Looking forward
•1H2021 NPAT exceeded expectations, contributing
factors being:
‒lower than forecast impaired asset expense
‒strong origination levels in core portfolios
‒NIM stable.
•Overall modest balance sheet (primarily due to
elevated repayments) may moderate the uplift in
NOI historically experienced in the second half of the
financial year.
•Customer repayment activity expected to normalise
and impaired asset expenses expected to be in line
with budget for remainder of the financial year.
NPAT for FY2021
Provided repayment activity and
impairment asset expense forecasts
are met and economic conditions
continue to improve, Heartland
expects NPAT for FY2021 to be at the
upper end of the guidance range of
$83m to $85m.

Appendices

Appendix 1 –Financial position
30
$m
31 December
2020
30 June
2020
Movement
($m)
Movement
(%)
Liquid Assets6025445710.6%
Net Finance Receivables4,650 4,58466 1.4%
Other Assets186 190 (4) (2.0%)
TOTAL ASSETS5,438 5,318120 2.3%
Retail Deposits3,269 3,26440.1%
Other Borrowings1,374 1,268 106 8.4%
Other Liabilities 58 86 (28) (32.1%)
Equity737 700 37 5.3%
TOTAL EQUITY & LIABILITIES5,438 5,318 1202.3%

Appendix 2 –Financial performance
31
$mW1H20211H2020Change ($)Change (%)
Net Operating Income
1
125.3118.66.75.6%
Operating Expenses
(61.1)(54.6)(6.5)(12.0%)
Impairment Expense
(4.5)(9.0)(4.5)(49.7%)
Profit Before Tax
59.655.04.68.4%
Tax Expense
(15.5)(15.1)(0.4)(2.5%)
Net Profit After Tax
44.139.94.210.6%
Net Interest Margin
4.28%4.23%5 bps
Cost to Income Ratio
48.8%46.0%2.8 pp
Return on Equity
12.2%11.7%54 bps
Earnings per Share
7.6 cps6.9 cps0.7 cps
1. Includes fair value movements.

Appendix 3 –Reconciliation of reported with underlying results
32
$m1H20211H2020Movement ($)Movement (%)
Reported NOI125.3118.66.75.6%
Less:
Upfront Reverse Mortgage fees-2.82.8
Fair value gain on equity investments-5.2-2.1-3.1
Underlying NOI120.1113.76.45.6%
Reported OPEX61.154.66.512.0%
Less:
Upfront Reverse Mortgage costs-3.33.3
Voluntarily accelerated amortisation-4.3-4.3
Aged items provision and write-off-1.7-1.7
Underlying OPEX55.151.33.87.5%
Reported NPAT44.139.94.210.6%
Less:
Post-tax impact of one-offs-0.9-1.80.9
Underlying NPAT43.238.15.113.4%
Reported Average Equity718.5681.636.95.4%
Underlying Average Equity718.1680.737.45.5%
Reported CTI48.8%46.0%2.80%
Underlying CTI45.9%45.1%0.80%
Reported ROE12.2%11.7%0.54%
Underlying ROE11.9%11.1%0.80%

Thank you
For Heartland’s 1H2021 Interim Results announcement, please see shareholders.heartland.co.nz

---

Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)
Updated as at 17 October 2019


Results for announcement to the market
Name of issuer Heartland Group Holdings Limited
Reporting Period 6 months to 31 December 2020
Previous Reporting Period 6 months to 31 December 2019
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$125,292 5.6%
Total Revenue $125,292 5.6%
Net profit/(loss) from
continuing operations
$44,090 10.6%
Total net profit/(loss) $44,090 10.6%
Interim/Final Dividend
Amount per Quoted Equity
Security
$0.04000000
Imputed amount per Quoted
Equity Security
$0.01555556
Record Date 02/03/2021
Dividend Payment Date 16/03/2021
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$1.12 $1.05
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Please refer to the 31 December 2020 unaudited interim
consolidated financial statements of Heartland Group Holdings
Limited that accompany this announcement for a further
explanation of these figures.
Authority for this announcement
Name of person

authorised
to make this announcement
Andrew Dixson, Chief Financial Officer
Contact person for this
announcement
Andrew Dixson, Chief Financial Officer
Contact phone number 09 927 9274
Contact email address Andrew.Dixson@heartland.co.nz
Date of release through MAP

22/02/2021

Unaudited financial statements accompany this announcement.

---

Distribution Notice

Updated as at 18 December 2019



Please note: all cash amounts in this form should be provided to 8 decimal places

Section 1: Issuer information
Name of issuer Heartland Group Holdings Limited
Financial product name/description Ordinary shares
NZX ticker code HGH
ISIN (If unknown, check on NZX
website)
NZHGHE0007S9
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year Quarterly
Half Year X Special
DRP applies X
Record date 02/03/2021
Ex-Date (one business day before the
Record Date)
01/03/2021
Payment date (and allotment date for
DRP)
16/03/2021
Total monies associated with the
distribution
1

$23,336,857.76
Source of distribution (for example,
retained earnings)
Retained earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution
2
$0.05555556
Gross taxable amount
3
$0.05555556
Total cash distribution
4
$0.04000000
Excluded amount (applicable to listed
PIEs)
NIL
Supplementary distribution amount $0.00705882
Section 3: Imputation credits and Resident Withholding Tax
5

Is the distribution imputed Fully imputed - YES
Partial imputation

1
Continuous issuers should indicate that this is based on the number of units on issue at the date of the form
2
“Gross distribution” is the total cash distribution plus the amount of imputation credits, per financial product, before the deduction of
Resident Withholding Tax (RWT).
3
“Gross taxable amount” is the gross distribution minus any excluded income.
4
“Total cash distribution” is the cash distribution excluding imputation credits, per financial product, before the deduction of RWT.
This should include any excluded amounts, where applicable to listed PIEs.
5
The imputation credits plus the RWT amount is 33% of the gross taxable amount for the purposes of this form. If the distribution is
fully imputed the imputation credits will be 28% of the gross taxable amount with remaining 5% being RWT. This does not constitute
advice as to whether or not RWT needs to be withheld.

No imputation
If fully or partially imputed, please
state imputation rate as % applied
6

28%
Imputation tax credits per financial
product
$0.01555556
Resident Withholding Tax per
financial product
$0.00277777
Section 4: Distribution re-investment plan (if applicable)
DRP % discount (if any)
2.0%
Start date and end date for
determining market price for DRP
03/03/2021 09/03/2021
Date strike price to be announced (if
not available at this time)
10/03/2021
Specify source of financial products to
be issued under DRP programme
(new issue or to be bought on market)
New issue
DRP strike price per financial product
$

Last date to submit a participation
notice for this distribution in
accordance with DRP participation
terms
03/03/2021, 5:00pm (NZT)

Section 5: Authority for this announcement
Name of person

authorised to make
this announcement
Andrew Dixson, Chief Financial Officer
Contact person for this
announcement
Andrew Dixson, Chief Financial Officer
Contact phone number 09 927 9274
Contact email address Andrew.Dixson@heartland.co.nz
Date of release through MAP

22/02/2021





6
Calculated as (imputation credits/gross taxable amount) x 100. Fully imputed dividends will be 28% as a % rate applied.

---

Interim
Financial Statements
For the sixmonths ended 31 December 2020

Contents
Page
General Information..........................................................................................................................................................................................3
Directors..................................................................................................................................................................................................................3
Auditor.....................................................................................................................................................................................................................3
Directors' Statements............................................................................................................................................................................................4
Consolidated Interim Statement of Comprehensive Income...........................................................................................................................................................................................5
Consolidated Interim Statement of Changes in Equity...........................................................................................................................................................................................6
Consolidated Interim Statement of Financial Position........................................................................................................................................................................................8
Consolidated Interim Statement of Cash Flows..................................................................................................................................................................................................9
Notes to the Interim Financial Statements
1Interim financial statements preparation...............................................................................................................................................................................................................................................................11
Performance
2Segmental analysis......................................................................................................................................................................................................................................................................13
3Net interest income............................................................................................................................................................................................................................................................15
4Operating expenses............................................................................................................................................................................................................................................................15
5Compensation of auditor............................................................................................................................................................................................................................................................15
6Impaired asset expense............................................................................................................................................................................................................................................................16
7Earnings per share......................................................................................................................................................................................................16
Financial Position
8Finance receivables............................................................................................................................................................................................................................................................17
9Borrowings............................................................................................................................................................................................................................................................22
10Share capital and dividends............................................................................................................................................................................................................................................................23
11Related party transactions and balances............................................................................................................................................................................................24
12Fair value............................................................................................................................................................................................................................................................25
Risk Management
13Enterprise risk management program............................................................................................................................................................................................................................................................29
14Credit risk exposure............................................................................................................................................................................................................................................................29
15Liquidity risk............................................................................................................................................................................................................................................................30
16Interest rate risk............................................................................................................................................................................................................................................................32
Other Disclosures
17Structured entities............................................................................................................................................................................................................................................................34
18Insurance business, securitisation, funds management and other fiduciary activities............................................................................................................................................................................................................................................................35
19Contingent liabilities and commitments............................................................................................................................................................................................................................................................35
20Events after reporting date............................................................................................................................................................................................................................................................35
Independent Auditor's Review Report............................................................................................................................................................................................................................................................36
2

General Information
Directors
Auditor
Auckland 1010
Heartland Group Holdings Limited (HGH) is incorporated in New Zealand and registered under the Companies Act 1993. The shares in
HGH are listed on the New Zealand's Exchange (NZX) main board and the Australian Securities Exchange (ASX) under a foreign
exempt listing.
KPMG
HGH's address for service is Level 3, Heartland House, 35 Teed Street, Newmarket, Auckland 1023.
All Directors of HGH reside in New Zealand with the exception of Ellen Comerford who resides in Australia. Communications to the
Directors can be sent to Heartland Group Holdings Limited, Level 3, Heartland House, 35 Teed Street, Newmarket, Auckland 1023.
There have been no changes in the composition of the Board of Directors of HGH since 30 June 2020 to the six months ended 31
December 2020.
KPMG Centre
18 Viaduct Harbour Avenue
3

Directors' Statements
E F Comerford
J K GreensladeC R Mace
G R Tomlinson
G T Ricketts (Chair)
The consolidated interim financial statements for HGH and its subsidiaries (together the Group) are dated 19 February 2021 and
have been signed by all the Directors.
4

Consolidated Interim Statement of Comprehensive Income
For the six months ended 31 December 2020
UnauditedAudited
6 Months to 12 Months to
$000's
NoteDecember 2019June 2020
Interest income3166,387172,536346,802
Interest expense353,17467,353130,129
Net interest income113,213105,183216,673
Operating lease income2,5792,9105,946
Operating lease expense1,5981,9624,063
Net operating lease income9819481,883
Lending and credit fee income4,0416,82710,811
Other income1,8803,5793,882
Net operating income120,115116,537233,249
Operating expenses461,13054,597106,794
58,98561,940126,455
Fair value gain on investments
125,1772,0972,097
Impaired asset expense64,5389,02329,419
Profit before income tax59,62455,01499,133
Income tax expense15,53415,14927,161
Profit for the period44,09039,86571,972
Other comprehensive income
4,580(225)(2,179)
Movement in fair value reserve(1,038)(968)766
Movement in foreign currency translation reserve(121)(513)114
3,421(1,706)(1,299)
Total comprehensive income for the period47,51138,15970,673
Earnings per share
Basic earnings per share78c7c12c
Diluted earnings per share78c7c12c
Total comprehensive income for the period is attributable to the owners of the Group.
Items that are or may be reclassified subsequently to profit or
loss, net of income tax:
Other comprehensive income/(loss) for the period,
net of income tax
The notes to the interim financial statements form an integral part of, and should be read in conjunction with, these consolidated interim
financial statements.
Profit before impaired asset expense and income tax
Unaudited
6 Months to
December 2020
Effective portion of change in fair value of derivative financial
instruments
5

Consolidated Interim Statement of Changes in Equity
For the six months ended 31 December 2020
Foreign
EmployeeCurrencyFairDefinedCash Flow
ShareBenefitsTranslationValue BenefitsHedgeRetainedTotal
$000's
Capital ReserveReserveReserve ReserveReserveEarningsEquity
Unaudited - December 2020
Balance at 1 July 2020
576,257 934 (3,907) 5,324 171 (8,022) 129,223 699,980
Profit for the period- - - - - - 44,090 44,090
- - (121) (1,038) - 4,580 - 3,421
- - (121) (1,038) - 4,580 44,090 47,511
- - - - - - (14,524) (14,524)
3,046- - - - - - 3,046
- 1,057- - - - - 1,057
Total transactions with owners
3,046 1,057- - - - (14,524) (10,421)
Balance at 31 December 2020579,303 1,991 (4,028) 4,286 171 (3,442) 158,789 737,070
Unaudited - December 2019
Balance at 1 July 2019
558,970 838 (4,021) 4,558 171 (5,843) 120,995 675,668
NZ IFRS 16 adjustment
- - - - - - (751) (751)
558,970 838 (4,021) 4,558 171 (5,843) 120,244 674,917
Profit for the period- - - - - - 39,865 39,865
- - (513) (968) - (225) - (1,706)
- - (513) (968) - (225) 39,865 38,159
- - - - - - (37,007) (37,007)
11,296- - - - - - 11,296
(30)- - - - - - (30)
- 153- - - - - 153
420 (420)- - - - - -
Total transactions with owners
11,686 (267)- - - - (37,007) (25,588)
Balance at 31 December 2019570,656 571 (4,534) 3,590 171 (6,068) 123,102 687,488
Contributions by and distributions to owners
Contributions by and distributions to owners
Total comprehensive income for the period
Restated balance at beginning of period
Dividends paid
Total comprehensive income/(loss) for the
period
Total comprehensive income for the period
The notes to the interim financial statements form an integral part of, and should be read in conjunction with, these consolidated interim
financial statements.
Dividends paid
Transaction costs associated with capital
raising
Dividend reinvestment plan
Dividend reinvestment plan
Share based payments
Share based payments
Shares vested
10
10
Total comprehensive income/(loss) for the
period
Note
10
Other comprehensive income/(loss),
net of income tax
Other comprehensive (loss),
net of income tax
10
6

Consolidated Interim Statement of Changes in Equity
For the six months ended 31 December 2020 (continued)
Foreign
EmployeeCurrencyFairDefinedCash Flow
ShareBenefitsTranslationValue BenefitsHedgeRetainedTotal
$000's
Capital ReserveReserveReserve ReserveReserveEarningsEquity
Audited - June 2020
Balance at 1 July 2019
558,970 838 (4,021) 4,558 171 (5,843) 120,995 675,668
NZ IFRS 16 adjustment- - - - - - (751) (751)
Restated balance at beginning of year558,970 838 (4,021) 4,558 171 (5,843) 120,244 674,917
Profit for the period- - - - - - 71,972 71,972
- - 114 766 - (2,179) - (1,299)
- - 114 766 - (2,179) 71,972 70,673
- - - - - - (62,993) (62,993)
16,895- - - - - - 16,895
(28)- - - - - - (28)
- 516- - - - - 516
420 (420)- - - - - -
Total transactions with owners
17,287 96- - - - (62,993) (45,610)
Balance at 30 June 2020576,257 934 (3,907) 5,324 171 (8,022) 129,223 699,980
The notes to the interim financial statements form an integral part of, and should be read in conjunction with, these consolidated interim
financial statements.
Other comprehensive income/(loss),
net of income tax
Total comprehensive income/(loss) for the
period
Note
Shares vested
Transaction costs associated with capital
raising
Share based payments
Contributions by and distributions to owners
Dividend reinvestment plan
Dividends paid
10
Total comprehensive income for the period
10
7

Consolidated Interim Statement of Financial Position
As at 31 December 2020
UnauditedAudited
$000'sNoteDecember 2019June 2020
Assets
Cash and cash equivalents152,818185,732 147,179
Investments470,368321,990 413,340
Investment properties11,13211,132 11,132
Derivative financial instruments15,02311,936 17,246
Finance receivables8(a)3,042,5883,101,4373,045,195
Finance receivables - reverse mortgages8(b)1,607,3521,419,4861,538,585
Operating lease vehicles12,71218,549 17,603
Right of use assets17,20219,844 18,362
Other assets22,39717,401 19,558
Intangible assets68,87472,159 72,813
Deferred tax asset17,5219,831 17,123
Total assets5,437,9875,189,4975,318,136
Liabilities
Deposits93,268,5543,234,0253,264,192
Other borrowings91,373,9621,209,5401,267,931
Lease liabilities19,36321,30620,456
Tax liabilities4,2385,58812,303
Derivative financial instruments12,8059,84317,012
Trade and other payables21,99521,70736,262
Total liabilities4,700,9174,502,0094,618,156
Equity
Share capital10579,303570,656576,257
Retained earnings and reserves157,767116,832123,723
Total equity737,070687,488699,980
Total equity and liabilities5,437,9875,189,4975,318,136
The notes to the interim financial statements form an integral part of, and should be read in conjunction with, these consolidated interim
financial statements.
Unaudited
December 2020
8

Consolidated Interim Statement of Cash Flows
For the six months ended 31 December 2020
UnauditedUnaudited
Audited
6 Months to6 Months to 12 Months to
$000'sNoteDecember 2020 December 2019June 2020
Cash flows from operating activities
Interest received122,922128,530258,665
Operating lease income received1,4802,3615,934
Lending, credit fees and other income received4,71914,03516,037
Operating inflows129,121144,926280,636
Interest paid(42,973)(61,225)(117,313)
Payments to suppliers and employees(53,258)(48,205)(92,861)
Taxation paid(25,061)(12,512)(24,619)
Operating outflows(121,292)(121,942)(234,793)
7,82922,98445,843
Proceeds from sale of operating lease vehicles5,5842,2544,969
Purchase of operating lease vehicles(1,594)(6,614)(9,938)
Net movement in finance receivables(24,714)(133,854)(171,617)
Net movement in deposits7,56380,299110,993
Net cash flows (applied to) operating activities(5,332)(34,931)(19,750)
Cash flows from investing activities
- 23118
Total cash provided from investing activities- 23118
(4,322)(2,866)(6,739)
Net (increase)/decrease in investments(62,877)34,070(45,562)
Total cash (applied to)/from investing activities(67,199)31,204(52,301)
Net cash flows (applied to)/from investing activities(67,199)31,227(52,183)
Cash flows from financing activities
Net increase in wholesale funding91,03834,56985,795
Proceeds from issue of Unsubordinated Notes- 106,952106,952
Total cash provided from financing activities91,038141,521192,747
Dividends paid10(11,478)(25,711)(46,098)
Payment of lease liabilities(1,390)(840)(2,005)
Transaction costs associated with capital raising- (30)(28)
Total cash (applied to) financing activities(12,868)(26,581)(48,131)
Net cash flows from financing activities78,170114,940144,616
Net increase in cash held5,639111,23672,683
Opening cash and cash equivalents147,17974,49674,496
Closing cash and cash equivalents152,818185,732147,179
The notes to the interim financial statements form an integral part of, and should be read in conjunction with, these consolidated interim
financial statements.
Net cash flows from operating activities before
changes in operating assets and liabilities
Sale of property, plant and equipment and intangible assets
Purchase of property, plant and equipment and intangible assets
9

Consolidated Interim Statement of Cash Flows
For the six months ended 31 December 2020 (continued)
Reconciliation of profit after tax to net cash flows from operating activities
UnauditedUnaudited
Audited
6 Months to6 Months to 12 Months to
$000's
NoteDecember 2020December 2019June 2020
Profit for the period44,09039,86571,972
Add/(less) non-cash items:
Depreciation and amortisation expense9,4634,3579,161
Depreciation on lease vehicles1,4361,7223,634
Capitalised net interest income and fee income(32,640)(40,117)(77,429)
Impaired asset expense64,5389,02329,419
Investments fair value movement(5,177)(2,097)(2,097)
Other non-cash items(7,335)3,4452,488
Total non-cash items (29,715)(23,667)(34,824)
Finance receivables(24,714)(133,854)(171,617)
Operating lease vehicles3,990(4,360)(4,969)
Other assets1,8759,7329,528
Current tax (8,065)(1,944)4,771
Derivative financial instruments2,5961,026931
Deferred tax(398)(300)(7,592)
Deposits7,56380,299110,993
Other liabilities(2,554)(1,728)1,057
Total movements in operating assets and liabilities(19,707)(51,129)(56,898)
Net cash flows applied to operating activities(5,332)(34,931)(19,750)
Add/(less) movements in operating assets and liabilities:
The notes to the interim financial statements form an integral part of, and should be read in conjunction with, these consolidated interim
financial statements.
10

Notes to the Interim Financial Statements
For the six months ended 31 December 2020
1Interim financial statements preparation
Basis of reporting
•
•
•
Change in accounting policy
Accounting standards issued not yet effective
The interim financial statements presented are the consolidated interim financial statements comprising Heartland Group Holdings
Limited (HGH) and its subsidiaries (the Group). They have been prepared in accordance with Generally Accepted Accounting
Practice in New Zealand (NZ GAAP) as defined in the Financial Reporting Act 2013, the NZX Main Board Listing Rules and the ASX
Listing Rules. The consolidated interim financial statements comply with NZ IAS 34 Interim Financial Reporting as appropriate for
publicly accountable for-profit entities and IAS 34 Interim Financial Reporting.
The consolidated interim financial statements do not include all notes of the type normally included in an annual financial report.
Accordingly this report is to be read in conjunction with the consolidated financial statements for the year ended 30 June 2020 and
any public announcements made by the Group during the interim reporting period.
The consolidated interim financial statements presented here are for the following periods:
6 month period ended 31 December 2020 - Unaudited
6 month period ended 31 December 2019 - Unaudited
12 month period ended 30 June 2020 - Audited
The consolidated interim financial statements have been prepared on a going concern and historical cost basis, unless stated
otherwise. The accounting policies adopted are consistent with those of the previous financial year and corresponding interim
reporting period.
There have been no changes to accounting policies or new or amended standards that are issued and effective that are expected to
have a material impact on the Group.
NZ IFRS 17 Insurance Contracts was issued in July 2017 and is applicable to general and life insurance contracts. NZ IFRS 17 will
replace NZ IFRS 4 Insurance Contracts. In March 2020, the effective date of NZ IFRS 17 was deferred by one year. As such the
standard will be effective for the Group's reporting for the financial year ending 30 June 2024, including 30 June 2023 comparatives.
Certain comparative balances have been reclassified to align with the presentation used in the current financial period. These
reclassifications have no impact on the overall financial performance or financial position of the comparative periods.
MARAC Insurance Limited (MIL), a subsidiary of Heartland Bank Limited (HBL), no longer conducts insurance business as HBL
entered into a distribution agreement with DPL Insurance Limited (DPL) to distribute DPL’s insurance products through its network
and therefore MIL stopped writing insurance policies. MIL's existing policies are expected to expire by the end of June 2024.
Other amendments to existing standards that are not yet effective are not expected to have a material impact on the Group.
11

1Financial statements preparation (continued)
Estimates and judgements
Covid-19 Pandemic - Impact on Estimates and judgements
While actual performance relative to the “base case” has been favourable, residual market uncertainty regarding the magnitude of
the economic impact of the pandemic remains. The Group also reapplied the three methodologies to the portfolios as at 31
December 2020 to again confirm a range of potential expected credit losses on each of its portfolios. As a result, it was determined
that maintaining the overlay as at 31 December 2020 is appropriate.
An economic overlay of $9.6 million was applied as at 30 June 2020 in response to the deterioration in economic conditions caused
by the COVID-19 pandemic. The overlay was formulated through applying judgement utilising the Group’s experience and deep
understanding of its customers, assuming that a “base case” economic forecast (as to gross domestic product, unemployment and
house price inflation) and other assumptions (as to lockdowns, customer support packages, second hand and export primary
produce prices) prevailed. This downside risk was quantified under three methodologies to ascertain a range of potential expected
credit losses on each of its portfolios.
There have been no material changes to the use of estimates and judgements for the preparation of the interim financial
statements since the reporting date of the previous financial statements. Refer to the Group’s financial statements for the year
ended 30 June 2020 for the estimates and judgements used.
12

Performance
2Segmental analysis

Operating segments
The Group operates within New Zealand and Australia and comprises the following main operating segments:
Motor
Reverse Mortgages
Other Personal
Business
Rural
Australia
$000's
Unaudited - December 2020
Net interest income31,255 10,175 7,633 31,659 15,071 17,669 (249) 113,213
Net other income1,717 1,018 1,137 1,343 460 524 703 6,902
Net operating income32,972 11,193 8,770 33,002 15,531 18,193 454 120,115
Operating expenses1,843 1,986 3,151 5,896 1,172 6,838 40,244 61,130
31,129 9,207 5,619 27,106 14,359 11,355 (39,790) 58,985
Fair value gain on investments- - - - - - 5,177 5,177
Impaired asset expense/(benefit) 2,266- (793) 2,674 391- - 4,538
Profit/(loss) before income tax 28,863 9,207 6,412 24,432 13,968 11,355 (34,613) 59,624
Income tax expense- - - - - - 15,534 15,534
Profit/(loss) for the period28,863 9,207 6,412 24,432 13,968 11,355 (50,147) 44,090
Total assets1,200,349 576,579 163,519 1,133,767 569,676 1,030,983 763,114 5,437,987
Total liabilities4,700,917
Certain operating expenses, such as premises, IT and support centre costs are not allocated to operating segments and are included
in Other. Liabilities are managed centrally and therefore are not allocated across the operating segments.
Reverse mortgage lending and other financial services within Australia.
Motor vehicle finance.
A range of financial services - including term, transactional and personal loans to individuals.
Reverse
Mortgage
Other
PersonalMotorBusiness Rural Australia Other Total
Reverse mortgage lending in New Zealand.
Segment information is presented in respect of the Group's operating segments which are those used for the Group's management
and internal reporting structure.
Term debt, plant and equipment finance, commercial mortgage lending and working capital solutions
for small-to-medium sized businesses.
Specialist financial services to the farming sector offering livestock finance, rural mortgage lending,
seasonal and working capital financing, as well as leasing solutions to farmers.
The Group's operating segments are different from the industry categories detailed in Note 14 - Credit risk exposure. The operating
segments are primarily categorised by sales channel, whereas Note 14 - Credit risk exposure categorises exposures based on credit
risk concentrations.
Profit/(loss) before impaired
asset expense and income tax
13

2Segmental analysis (continued)
ReverseOther
$000's
Motor
MortgagePersonal
BusinessRuralAustraliaOtherTotal
Unaudited - December 2019
Net interest income28,204 11,826 9,238 28,026 15,380 12,549 (40) 105,183
Net other income1,895 2,779 646 1,317 535 1,567 2,615 11,354
Net operating income30,099 14,605 9,884 29,343 15,915 14,116 2,575 116,537
Operating expenses1,615 3,178 1,934 5,980 1,396 6,828 33,666 54,597
28,484 11,427 7,950 23,363 14,519 7,288 (31,091) 61,940
Fair value gain on investments- - - - - - 2,097 2,097
Impaired asset expense3,611- 3,345 1,880 13948- 9,023
Profit/(loss) before income tax 24,873 11,427 4,605 21,483 14,380 7,240 (28,994) 55,014
Income tax expense- - - - - - 15,149 15,149
Profit/(loss) for the period24,873 11,427 4,605 21,483 14,380 7,240 (44,143) 39,865
Total assets1,127,408 536,462 244,498 1,148,614 615,072 883,668 633,775 5,189,497
Total liabilities4,502,009
Audited - June 2020
Net interest income56,957 20,118 18,365 57,950 29,674 30,127 3,482 216,673
Net other income3,622 3,430 3,055 3,465 1,028 4,214 (2,238) 16,576
Net operating income60,579 23,548 21,420 61,415 30,702 34,341 1,244 233,249
Operating expenses3,248 4,804 6,776 11,283 2,648 11,680 66,355 106,794
57,331 18,744 14,644 50,132 28,054 22,661 (65,111) 126,455
Fair value gain on investments- - - - - - 2,097 2,097
Impaired asset expense/(benefit) 10,160- 11,119 10,110 (1,970)- - 29,419
Profit/(loss) before income tax 47,171 18,744 3,525 40,022 30,024 22,661 (63,014) 99,133
Income tax expense- - - - - - 27,161 27,161
Profit/(loss) for the period47,171 18,744 3,525 40,022 30,024 22,661 (90,175) 71,972
Total assets1,125,295 559,934 214,759 1,126,632 604,938 979,496 707,082 5,318,136
Total liabilities4,618,156
Profit/(loss) before impaired
asset expense and income tax
Profit/(loss) before impaired
asset expense and income tax
14

3Net interest income
UnauditedUnaudited
Audited
6 Months to12 Months to
$000'sDecember 2020 December 2019June 2020
Interest income
Cash and cash equivalents47309499
Investments3,6354,3648,496
Finance receivables118,751124,658250,606
Finance receivables - reverse mortgages43,95443,20587,201
Total interest income166,387172,536346,802
Interest expense
Retail deposits33,48747,73190,739
Other borrowings17,06418,22335,888
Net interest expense on derivative financial instruments2,6231,3993,502
Total interest expense53,17467,353130,129
Net interest income113,213105,183216,673
4Operating expenses
UnauditedUnaudited
Audited
6 Months to12 Months to
$000'sDecember 2020 December 2019June 2020
Personnel expenses30,85226,60254,511
Directors' fees5495141,059
Superannuation7185061,069
Depreciation - property, plant and equipment1,4731,1122,380
Legal and professional fees1,3461,7873,615
Advertising and public relations2,1813,9166,729
Depreciation - right of use asset1,1591,1432,324
Technology services3,4073,1816,372
Telecommunications, stationary and postage9009521,886
Customer acquisition costs4,3725,1107,419
Amortisation of intangible assets6,8312,1024,456
Other operating expenses
1
7,3427,67214,974
Total operating expenses61,13054,597106,794
5Compensation of auditor
UnauditedUnaudited
Audited
6 Months to12 Months to
$000'sDecember 2020 December 2019June 2020
Audit and review of the financial statements
1
465401774
Other assurance services paid to auditor
2
5131133
Total compensation of auditor516432907
6 Months to
6 Months to
6 Months to
1
Other operating expenses include compensation of auditor which is further disclosed in Note 5.
2
Other assurance related services paid to auditor comprise review of regulatory returns, trust deed reporting, registry audits and other agreed upon
procedure engagements.
1
Audit and review of the financial statements includes fees paid for both the audit of annual financial statements and the review of interim financial
statements.
15

6Impaired asset expense
UnauditedUnaudited
Audited
6 Months to12 Months to
$000'sDecember 2020 December 2019June 2020
Non-securitised
Individually impaired asset expense3,414
1,6383,385
Collectively impaired asset expense1,099
7,26225,637
Total non-securitised impaired asset expense4,513
8,90029,022
Securitised
Collectively impaired asset expense25
123397
Total securitised impaired asset expense25
123397
Total
Individually impaired asset expense3,414
1,6383,385
Collectively impaired asset expense1,124
7,38526,034
Total impaired asset expense4,538
9,02329,419
7Earnings per share
Weighted
Earnings Net Profit Average No.
Per Share After Tax of Shares
Cents $000's 000's
Unaudited - December 2020
Basic earnings
8 44,090 582,081
Diluted earnings
844,090582,081
Unaudited - December 2019
Basic earnings
7 39,865 574,277
Diluted earnings
739,865574,277
Audited - June 2020
Basic earnings
12 71,972 576,929
Diluted earnings
1271,972576,929
6 Months to
At each reporting date, the Group applies a three stage approach to measuring expected credit loss (ECL) to finance receivables not
carried at fair value. The following table details impairment charges of those finance receivables for the six months ended 31
December 2020.
16

Financial Position
8Finance receivables
(a) Finance receivables held at amortised cost
UnauditedUnaudited
Audited
$000'sDecember 2020 December 2019June 2020
Non-securitised
2,938,9043,049,8852,945,858
At least 90 days past due45,76146,78058,876
Individually impaired33,66728,43324,667
Gross finance receivables3,018,3323,125,0983,029,401
Less provision for impairment(55,415)(60,381)(62,272)
Total non-securitised finance receivables2,962,9173,064,7172,967,129
Securitised
79,64536,84378,059
At least 90 days past due448- 404
Individually impaired- - -
Gross finance receivables80,09336,84378,463
Less provision for impairment(422)(123)(397)
Total securitised finance receivables79,67136,72078,066
Total
3,018,5493,086,7283,023,917
At least 90 days past due46,20946,78059,280
Individually impaired33,66728,43324,667
Gross finance receivables3,098,4253,161,9413,107,864
Less provision for impairment(55,837)(60,504)(62,669)
Total finance receivables3,042,5883,101,4373,045,195
Neither at least 90 days past due nor impaired
Neither at least 90 days past due nor impaired
Neither at least 90 days past due nor impaired
17

8Finance receivables (continued)
(a) Finance receivables held at amortised cost (continued)
Movement in provision
LifetimeLifetime
ECLECL
12 - MonthNot CreditCreditSpecific
$000's
ECLImpairedImpairedProvisionTotal
Unaudited - December 2020
Non-securitised
Impairment allowance as at 30 June 202032,160 2,143 22,668 5,301 62,272
Changes in loss allowance
Transfer between stages(860) (395) 153 1,102-
(1,197) 102 4,605 2,312 5,822
Recovery of amounts written off- - (1,309)- (1,309)
Credit impairment charge(2,057) (293) 3,449 3,414 4,513
Recovery of amounts previously written off- - 1,309- 1,309
Write offs- - (10,199) (2,481) (12,680)
Effect of changes in foreign exchange rate(1)11- 1
Impairment allowance as at 31 December 202030,102 1,851 17,228 6,234 55,415
Securitised
Impairment allowance as at 30 June 2020260 23 114- 397
Changes in loss allowance
Transfer between stages231 (24)- -
(33) (10) 68- 25
Recovery of amounts written off- - - - -
Credit impairment charge(10) (9) 44- 25
Recovery of amounts previously written off- - - - -
Write offs- - - - -
Effect of changes in foreign exchange rate- - - - -
Impairment allowance as at 31 December 2020250 14 158- 422
Total
Impairment allowance as at 30 June 202032,420 2,166 22,782 5,301 62,669
Changes in loss allowance
Transfer between stages(837) (394) 129 1,102-
(1,230) 92 4,673 2,312 5,847
Recovery of amounts written off- - (1,309)- (1,309)
Credit impairment charge(2,067) (302) 3,493 3,414 4,538
Recovery of amounts previously written off- - 1,309- 1,309
Write offs- - (10,199) (2,481) (12,680)
Effect of changes in foreign exchange rate(1)11- 1
Impairment allowance as at 31 December 202030,352 1,865 17,386 6,234 55,837
New and increased provision (net of collective provision releases)
New and increased provision (net of collective provision releases)
New and increased provision (net of collective provision releases)
The following table details the movement from the opening balance to the closing balance of the provision for impairment losses by
class.
18

8Finance receivables (continued)
(a) Finance receivables held at amortised cost (continued)
Movement in provision (continued)
LifetimeLifetime
ECLECL
12 - MonthNot CreditCreditSpecific
$000's
ECLImpairedImpairedProvisionTotal
Unaudited - December 2019
Non-securitised
Impairment allowance as at 30 June 201930,422 1,781 18,425 7,863 58,491
Changes in loss allowance
Transfer between stages(1,664) (127) 706 1,085-
1,070 665 6,612 553 8,900
Recovery of amounts written off- - - - -
Credit impairment charge(594) 538 7,318 1,638 8,900
Recovery of amounts previously written off- - - - -
Write offs- - (6,905) (100) (7,005)
Effect of changes in foreign exchange rate(3)- (2)- (5)
Impairment allowance as at 31 December 201929,825 2,319 18,836 9,401 60,381
Securitised
Impairment allowance as at 30 June 2019- - - - -
Changes in loss allowance
Transfer between stages- - - - -
1221- - 123
Recovery of amounts written off- - - - -
Credit impairment charge1221- - 123
Recovery of amounts previously written off- - - - -
Write offs- - - - -
Effect of changes in foreign exchange rate- - - - -
Impairment allowance as at 31 December 20191221- - 123
Total
Impairment allowance as at 30 June 201930,422 1,781 18,425 7,863 58,491
Changes in loss allowance
Transfer between stages(1,664) (127) 706 1,085-
1,192 666 6,612 553 9,023
Recovery of amounts written off- - - - -
Credit impairment charge(472) 539 7,318 1,638 9,023
Recovery of amounts previously written off- - - - -
Write offs- - (6,905) (100) (7,005)
Effect of changes in foreign exchange rate(3)- (2)- (5)
Impairment allowance as at 31 December 201929,947 2,320 18,836 9,401 60,504
New and increased provision (net of collective provision releases)
New and increased provision (net of collective provision releases)
New and increased provision (net of collective provision releases)
19

8Finance receivables (continued)
(a) Finance receivables held at amortised cost (continued)
Movement in provision (continued)
LifetimeLifetime
ECLECL
12 - MonthNot CreditCreditSpecific
$000's
ECLImpairedImpairedProvisionTotal
Audited - June 2020
Non-securitised
Impairment allowance as at 30 June 201930,422 1,781 18,425 7,863 58,491
Changes in loss allowance
Transfer between stages(1,190) (294) (109) 1,593-
2,901 2,090 25,047 1,792 31,830
Recovery of amounts written off- - (2,808)- (2,808)
Credit impairment charge1,711 1,796 22,130 3,385 29,022
Recovery of amounts previously written off- - 2,808- 2,808
Write offs- (1,438) (20,705) (5,947) (28,090)
Effect of changes in foreign exchange rate27410- 41
Impairment allowance as at 30 June 202032,160 2,143 22,668 5,301 62,272
Securitised
Impairment allowance as at 30 June 2019- - - - -
Changes in loss allowance
Transfer between stages(19) 118- -
279 12 106- 397
Recovery of amounts written off- - - - -
Credit impairment charge260 23 114- 397
Recovery of amounts previously written off- - - - -
Write offs- - - - -
Effect of changes in foreign exchange rate- - - - -
Impairment allowance as at 30 June 2020260 23 114- 397
Total
Impairment allowance as at 30 June 201930,422 1,781 18,425 7,863 58,491
Changes in loss allowance
Transfer between stages(1,209) (283) (101) 1,593-
3,180 2,102 25,153 1,792 32,227
Recovery of amounts written off- - (2,808)- (2,808)
Credit impairment charge1,971 1,819 22,244 3,385 29,419
Recovery of amounts previously written off- - 2,808- 2,808
Write offs- (1,438) (20,705) (5,947) (28,090)
Effect of changes in foreign exchange rate27410- 41
Impairment allowance as at 30 June 202032,420 2,166 22,782 5,301 62,669
New and increased provision (net of collective provision releases)
New and increased provision (net of collective provision releases)
New and increased provision (net of collective provision releases)
20

8Finance receivables (continued)
(a) Finance receivables held at amortised cost (continued)
Impact of changes in gross finance receivables held at amortised cost on allowance for ECL
LifetimeLifetime
ECLECL
12 - MonthNot CreditCreditSpecific
$000's
ECLImpairedImpairedProvisionTotal
Unaudited - December 2020
Gross finance receivables as at 30 June 20202,826,208 183,260 73,729 24,667 3,107,864
Transfer between stages(50,423)31,814 3,841 14,768 -
Additions796,845 - - - 796,845
Deletions(733,346)(36,470)(19,081)(3,233)(792,130)
Write offs- - (11,619)(2,535)(14,154)
Gross finance receivables as at 31 December 20202,839,284178,60446,87033,6673,098,425
Unaudited - December 2019
Gross finance receivables as at 30 June 20192,799,282 206,882 57,043 26,412 3,089,619
Transfer between stages(40,404) 9,697 27,069 3,638-
Additions922,101 62,329 6,788- 991,218
Deletions(805,809) (74,204) (27,385) (1,517) (908,915)
Write offs(1,590) (1,960) (6,331) (100) (9,981)
Gross finance receivables as at 31 December 20192,873,580202,74457,18428,4333,161,941
Audited - June 2020
Gross finance receivables as at 30 June 20192,799,282 206,882 57,043 26,412 3,089,619
Transfer between stages(61,191) 12,570 41,245 7,376-
Additions1,497,073 87,843 23,610- 1,608,526
Deletions(1,402,340) (118,572) (37,334) (3,174) (1,561,420)
Write offs(6,616) (5,463) (10,835) (5,947) (28,861)
Gross finance receivables as at 30 June 20202,826,208183,26073,72924,6673,107,864
(b) Finance receivables held at fair value
UnauditedUnaudited
Audited
$000'sDecember 2020 December 2019June 2020
Finance receivables - reverse mortgages
1,607,3521,419,486
1,538,585
Total finance receivables - reverse mortgages
1,607,3521,419,486
1,538,585
21

9Borrowings
UnauditedUnaudited
Audited
$000'sDecember 2020 December 2019June 2020
Deposits3,268,5543,234,0253,264,192
Total deposits3,268,5543,234,0253,264,192
Unsubordinated notes444,845444,128448,228
Certificate of deposit- 69,811-
Securitised borrowings897,228695,601819,703
Repurchase agreement
1
31,889- -
Total other borrowings1,373,9621,209,5401,267,931
PrincipalValuation
Issue dateMaturity
$125 millionAmortised cost
$150 millionAmortised cost
AU $45 millionAmortised costQuarterly
AU $100 millionAmortised costQuarterly
•
•
•
•
12 April 2019
21 September 2017
8 March 2019
13 November 2019
12 April 2024
21 September 2022
8 March 2021
13 May 2022
Frequency of
Interest Repayment
Semi annually
Senior Warehouse Trust No.2 securitisation facility AU $250 million, drawn AU $156 million (December 2019: AU $250 million,
drawn AU $100 million; June 2020: AU $250 million, drawn AU $160 million). Notes issued to investors are secured over the
assets of Seniors Warehouse Trust No.2. The facility has a maturity date of 1 July 2022.
Senior Warehouse Trust securitisation facility AU $600 million, drawn AU $481 million (December 2019: AU $600 million, drawn
AU $538 million; June 2020: AU $600 million, drawn AU $544 million). Notes issued to investors are secured over the assets of
Seniors Warehouse Trust. The facility has a maturity date of 30 September 2022.
Deposits and unsubordinated notes rank equally and are unsecured.
Atlas 2020-1 Trust securitisation facility AU $139 million, drawn AU$139 million (December 2019: nil; June 2020: nil). Loans
issued to investors are secured over the assets of Atlas 2020-1 Trust and has a maturity date of 24 September 2050.
Heartland Auto Receivables Warehouse Trust 2018-1 securitisation facility $300 million, drawn $68 million (December 2019:
$150 million, drawn $30 million; June 2020: $300 million, drawn $66 million). Notes issued to investors are secured over the
assets of the Heartland Auto Receivables Warehouse Trust 2018-1. The facility has a maturity date of 29 August 2022.
The Group has the following unsubordinated notes on issue at reporting date:
At 31 December 2020 the Group had the following securitised borrowings outstanding:
1
The amounts disclosed as securities sold under arrangements to repurchase include $30.0 million (face value) of high quality liquid assets. The cash
consideration received (recognised as a liability) was $31.9 million.
Semi annually
22

10Share capital and dividends
UnauditedUnaudited
Audited
December 2020 December 2019
June 2020
000'sNumber of Shares Number of Shares Number of Shares
Issued shares
Opening balance580,979569,338569,338
Shares issued - performance rights plan- 817817
Shares issued - dividend reinvestment plan2,4427,31310,824
Closing balance583,421577,468580,979
Dividends paid
CentsCents
Per Share$000'sPer Share$000's
Final dividend2.5 14,5246.5 37,007
Interim dividend- - - 4.5 25,986
Total dividends paid14,52462,993
17 September 2020
6 Months to 31 December 2020
18 February 2020
HGH had issued 2,442,338 new shares at $1.2470 per share on 9 October 2020 under the dividend reinvestment plan for the period
(for the period of 12 months to June 2020: 7,313,501 new shares were issued at $1.5444 per share on 6 September 2019 and
3,511,020 new shares were issued at $1.5948 per share on 11 March 2020).
Date Declared
15 August 2019
12 Months to 30 June 2020
Date Declared
23

11Related party transactions and balances
(a) Transactions with key management personnel
UnauditedUnaudited
Audited
6 Months to6 Months to12 Months to
$000'sDecember 2020 December 2019June 2020
Transactions with key management personnel
Interest income26- 18
Interest expense(8)(55)(47)
Total transactions with key management personnel18(55)(29)
Due (to)/from key management personnel
Lending574- 239
Borrowings - deposits(1,778)(2,322)(1,646)
Total due (to) key management personnel(1,204)(2,322)(1,407)
(b)
Transactions with related parties
UnauditedUnaudited
Audited
6 Months to6 Months to12 Months to
$000'sDecember 2020 December 2019June 2020
Interest expense81833
5510
ASF Custodians Pty Limited
Audit fees- - 7
Heartland Trust (HT)
Dividend paid162421712
(c)
UnauditedUnaudited
Audited
$000'sDecember 2020 December 2019June 2020
Southern Cross Building Society Staff Superannuation
Retail deposits1,8712,0081,934
KMP receive personal banking and financial investment services from the Group in the ordinary course of business. The terms and
conditions, for example interest rates and collateral, and the risks to the Group are comparable to transactions with other
employees and did not involve more than the normal risk of repayment or present other unfavourable features.
Other balances with related parties
Key management personnel (KMP) are those who, directly or indirectly, have authority and responsibility for planning, directing
and controlling the activities of the Group. This includes all executive staff, Directors and their close family members.
Entities within the Group have regular transactions between each other on agreed terms. The transactions include the provision of
administrative services, tax transactions, and customer operations and call centre. Banking facilities are provided by Heartland Bank
Limited to other Heartland Group entities on normal commercial terms as with other customers. There is no lending from
subsidiaries within the Group to HGH.
Southern Cross Building Society Staff Superannuation
(SCBS)
HGH is the ultimate parent company of the Group.
Management fees from SCBS
All other transactions with KMPs and their related entities are made on terms equivalent to those that prevail in arm's length
transactions.
Related party transactions between the Group eliminate on consolidation. Related party transactions outside of the Group are as
follows:
24

12Fair value
(a) Financial instruments measured at fair value
Investments
Investment properties
Finance receivables - reverse mortgages
Reverse mortgage loans are classified at fair value through profit or loss (FVTPL). On initial recognition the Group considers the
transaction price to represent the fair value of the loan.
For subsequent measurement the Group has considered if the fair value can be determined by reference to a relevant active
market or observable inputs, but has concluded relevant support is not currently available. In the absence of such market evidence
the Group has used valuation techniques (income approach) including actuarial assessments to consider the fair value.
When the Group enters into a reverse mortgage loan the Group has set expectations regarding the loan’s current and future risk
profile and expectation of performance. This expectation references a wide range of assumptions including:
The following methods and assumptions were used to estimate the fair value of each class of financial asset and liability measured
at fair value on a recurring basis in the consolidated interim statement of financial position.
Investments in public sector securities and corporate bonds are measured at fair value through other comprehensive income
(FVOCI), with the fair value being based on quoted market prices (Level 1 under the fair value hierarchy) or modelled using
observable market inputs (Level 2 under the fair value hierarchy).
Investments valued under Level 2 of the fair value hierarchy are valued either based on quoted market prices or dealer quotes for
similar instruments, or discounted cash flows analysis.
The Group has an established framework in performing valuations required for financial reporting purposes including level 3 fair
values. The Group regularly reviews and calibrates significant unobservable inputs and valuation adjustments in accordance with
market participants’ views. If external valuation specialists are engaged to measure fair values, the Group assesses the evidence
obtained from these specialists to support the conclusion of these valuations. All significant valuations are reported to the Group's
Board Audit and Risk Committee for approval prior to its adoption in the financial statements.
Investments in equity securities are classified as fair value through profit or loss unless an irrevocable election is made by the Group
to measure at FVOCI. Investment in listed securities traded in liquid, active markets where prices are readily observable are
measured under Level 1 of the fair value hierarchy with no modelling or assumptions used in the valuation. Investments in unlisted
equity securities are measured under Level 3 of the fair value hierarchy with the fair value being based on unobservable inputs
using market accepted valuation techniques. Where appropriate, the Group may apply adjustments to the abovementioned
techniques to determine fair value of an equity security to reflect the underlying characteristics. These adjustments are reflective of
market participant considerations in valuing the said security.
Following the Initial Public Offering of Harmoney Corp Limited (Harmoney) on the ASX and NZX in November 2020, Harmoney’s
shares are now traded publicly on the respective stock exchanges. As part of the listing, HGH, alongside other major shareholders,
employees and directors, have entered into escrow arrangements that restrict the ability to sell its Harmoney shares, with
approximately 72% of the shares being in escrow. As at reporting date, the fair value of HGH’s investment in Harmoney, has taken
into consideration observed trading volumes, closing market prices of Harmoney’s shares and the restriction imposed by the
escrow arrangements. Consequently the investment is measured under Level 3 of the fair value hierarchy.
Investment properties are initially recorded at their fair value, with subsequent changes in fair value recognised in profit or loss. Fair
value are determined by qualified independent valuers or other similar external evidence, adjusted for changes in market
conditions.
Investment properties have been acquired through the enforcement of security over finance receivables and are held to earn rental
income or for capital appreciation (or both).
25

12Fair value (continued)
(a) Financial instruments measured at fair value (continued)
Finance receivables - reverse mortgages (continued)
•
Mortality and move to care;
•
Voluntary exits;
•
House price changes;
•
No negative equity guarantee; and
•
Interest rate margin.
Derivative financial instruments
$000'sLevel 1 Level 2 Level 3 Total
Unaudited - December 2020
Assets
Investments328,620 112,831 21,512 462,963
Investment properties- - 11,132 11,132
Derivative financial instruments- 15,023- 15,023
Finance receivables - reverse mortgages- - 1,607,352 1,607,352
Total financial assets measured at fair value328,620 127,854 1,639,996 2,096,470
Liabilities
Derivative financial instruments- 12,805-
12,805
Total financial liabilities measured at fair value- 12,805- 12,805
Unaudited - December 2019
Assets
Investments282,428 16,572 16,020 315,020
Investment properties- - 11,132 11,132
Derivative financial instruments- 11,936- 11,936
Finance receivables - reverse mortgages- - 1,419,557 1,419,557
Total financial assets measured at fair value282,428 28,508 1,446,709 1,757,645
Liabilities
Derivative financial instruments- 9,843- 9,843
Total financial liabilities measured at fair value- 9,843- 9,843
At balance date the Group does not consider any of the above expectations to have moved outside of the original expectation
range. Therefore the Group has continued to estimate the fair value of the portfolio at transaction price. There has been no fair
value movement recognised in profit or loss during the period. Given the nature of the loan terms and tenor, the fair value as
recorded is regarded as not being highly sensitive to the above assumptions, particularly to house prices and interest rates, that
would impact the fair value at balance date. While noting the continued uncertainty around future economic conditions, based on
current judgement there is no evidence that COVID-19 will have a long-term adverse impact on market conditions, particularly
regarding the key elements of house prices or interest rates, that would materially influence the fair value of the reverse mortgage
portfolio at balance date.
The Group will continue to reassess the existence of a relevant active market and movements in expectations on an on-going basis.
Interest rate and foreign currency related contracts are recognised in the financial statements at fair value. Fair values are
determined from observable market prices as at the reporting date, discounted cash flow models or option pricing models as
appropriate. (Level 2 under the fair value hierarchy).
The following table analyses financial instruments measured at fair value at the reporting date by the level in the fair value
hierarchy into which each fair value measurement is categorised. The amounts are based on the values recognised in the
consolidated interim statement of financial position.
26

12Fair value (continued)
(a) Financial instruments measured at fair value (continued)
$000'sLevel 1 Level 2 Level 3 Total
Audited - June 2020
Assets
Investments295,300 94,354 16,335 405,989
Investment properties- - 11,132 11,132
Derivative financial instruments- 17,246- 17,246
Finance receivables - reverse mortgages- - 1,538,585 1,538,585
Total financial assets measured at fair value295,300 111,600 1,566,052 1,972,952
Liabilities
Derivative financial instruments- 17,012- 17,012
Total financial liabilities measured at fair value- 17,012- 17,012
The movement in Level 3 assets measured at fair value are below:
Investment
$000's
Investments propertiesTotal
Unaudited - December 2020
As at 30 June 20201,538,58516,33511,1321,566,052
New loans145,674- - 145,674
Repayments(119,653)- - (119,653)
Capitalised Interest and fees45,878- - 45,878
Additions- - - -
Other(3,132)5,177- 2,045
As at 31 December 20201,607,35221,51211,1321,639,996
Unaudited - December 2019
As at 30 June 20191,318,67712,43511,1321,342,244
New loans152,412- - 152,412
Repayments(93,209)- - (93,209)
Capitalised Interest and fees45,560- - 45,560
Additions- 1,488- 1,488
Other(3,954)2,097- (1,857)
As at 31 December 20191,419,48616,02011,1321,446,638
Unaudited - June 2020
As at 30 June 20191,318,67712,43511,1321,342,244
New loans290,488- - 290,488
Repayments(182,653)- - (182,653)
Capitalised Interest and fees91,288- - 91,288
Additions- 1,803- 1,803
Other20,7852,097- 22,882
As at 30 June 20201,538,58516,33511,1321,566,052
Finance Receivables
- Reverse Mortgage
There were no transfers between any fair value hierarchy levels in the six months ended 31 December 2020 (December 2019: nil;
June 2020: nil).
27

12Fair value (continued)
(b) Financial instruments not measured at fair value
TotalTotalTotal
Fair Value
Total FairCarryingTotal FairCarryingTotal FairCarrying
$000's
Hierarchy
ValueValueValueValueValueValue
Assets
Cash and cash equivalentsLevel 1 152,818 152,818 185,732 185,732 147,179 147,179
Investments
1
Level 27,4137,4056,9616,9707,3757,351
Finance receivablesLevel 2 3,062,211 3,042,588 3,082,052 3,101,366 3,092,150 3,045,195
Other financial assetsLevel 3 1,085 1,085 1,805 1,805 3,563 3,563
Total financial assets3,223,527 3,203,896 3,276,550 3,295,873 3,250,267 3,203,288
Liabilities
Retail depositsLevel 2 3,287,485 3,268,554 3,245,194 3,234,025 3,278,483 3,264,192
Borrowings - securitisedLevel 2 897,228 897,228 695,601 695,601 819,305 819,703
Other borrowingsLevel 2 476,734 476,734 513,939 513,939 448,626 448,228
Other financial liabilitiesLevel 3 13,247 13,247 11,344 11,344 26,751 26,751
Total financial liabilities4,674,694 4,655,763 4,466,078 4,454,909 4,573,165 4,558,874
The following table sets out the fair values of financial instruments not measured at fair value and analyses these by the level in the
fair value hierarchy into which each fair value measurement is categorised.
December 2020December 2019June 2020
1
Included within investments are bank deposits which are held to support the Group's contractual cash flows. Such investments are measured at amortised
cost.
UnauditedAuditedUnaudited
28

Risk Management
13Enterprise risk management program
14Credit risk exposure
(a) Maximum exposure to credit risk at the relevant reporting dates
UnauditedUnaudited
Audited
$000'sDecember 2020 December 2019June 2020
Cash and cash equivalents152,818185,732147,179
Investments448,856305,970397,005
Finance receivables3,042,5883,101,4373,045,195
Finance receivables - reverse mortgages1,607,3521,419,4861,538,585
Derivative financial assets15,02311,93617,246
Other financial assets1,0851,8053,563
Total on balance sheet credit exposures5,267,7225,026,3665,148,773
(b) Concentration of credit risk by geographic region
UnauditedUnaudited
Audited
$000'sDecember 2020 December 2019June 2020
New Zealand3,891,4333,866,9223,855,199
Australia1,092,465968,0951,060,894
Rest of the world
1
339,661251,853295,349
5,323,5595,086,8705,211,442
Provision for impairment(55,837)(60,504)(62,669)
Total on balance sheet credit exposures5,267,7225,026,3665,148,773
During the period the Group’s governance structure for managing risk changed. The Board Risk Committee (BRC) and the Audit
Committee (AC) were combined to form the Board Audit and Risk Committee (BARC). The focus and responsibility of the BARC is
consistent with the previously separate BRC and AC, as set out in the Heartland Group Holdings Limited Annual Report for the year
ended 30 June 2020. There have been no material exposures to any new types of risk since the reporting date.
The following table represents the maximum credit risk exposure, without taking account of any collateral held. The exposures set
out below are based on net carrying amounts as reported in the consolidated interim statement of financial position.
1
Primarily NZD-denominated investments in AA+ and higher rated securities issued by offshore supranational agencies ("Kauri Bonds").
29

14Credit risk exposure (continued)
(c) Concentration of credit risk by industry sector
UnauditedUnaudited
Audited
$000'sDecember 2020 December 2019June 2020
Agriculture595,601648,894625,141
Forestry and fishing147,824152,344145,045
Mining11,96514,18512,993
Manufacturing73,67473,47575,659
Finance and insurance684,066539,863596,772
Wholesale trade38,62540,76839,540
Retail trade and accommodation 207,492244,041232,664
Households2,673,0152,506,6232,603,760
Other business services144,006136,762163,801
209,895194,402197,174
Rental, hiring and real estate services153,942144,937142,467
Transport and storage273,362256,182257,634
Other110,092134,394118,792
5,323,5595,086,8705,211,442
Provision for impairment(55,837)(60,504)(62,669)
Total on balance sheet credit exposures5,267,7225,026,3665,148,773
(d) Commitments to extend credit
UnauditedUnaudited
Audited
$000'sDecember 2020 December 2019June 2020
Undrawn facilities available to customers280,750 218,726260,098
Conditional commitments to fund at future dates24,570 13,16158,045
Total commitments305,320 231,887318,143
15Liquidity risk
Construction
As at 31 December 2020 there were no undrawn lending commitments available to counterparties for whom drawn balances are
classified as individually impaired (December 2019: nil, June 2020: nil).
The Group’s exposure to liquidity risk is governed by the liquidity policy approved by the Board and managed by the Asset and
Liability Committee (ALCO). This policy sets out the nature of the risk which may be taken and aggregate risk limits. The objective of
the ALCO is to derive the most appropriate strategy for the Group in terms of a mix of assets and liabilities given its expectations of
future cash flows, liquidity constraints and capital adequacy to meet the requirements of the policy. The Group employs asset and
liability cash flow modelling to determine appropriate liquidity and funding strategies.
Liquidity risk is the risk that the Group is unable to meet its payment obligations as they fall due. The timing mismatch of cash flows
and the related liquidity risk in all banking operations is closely monitored by the Group.
Measurement of liquidity risk is designed to ensure that the Group has the ability to generate or obtain sufficient cash in a timely
manner and at a reasonable price to meet its financial commitments on a daily basis.
30

15Liquidity risk (continued)
RBNZ facilities
The Group holds the following financial assets for the purpose of managing liquidity risk:
UnauditedUnaudited
Audited
$000'sDecember 2019June 2020
Cash and cash equivalents152,818185,732147,179
Investments448,856305,970397,005
Undrawn committed bank facilities459,631325,451390,762
Total liquidity1,061,305817,153934,946
Contractual liquidity profile of financial liabilities
On 0-6 6-12 1-2 2-5 5+
$000'sDemand Months Months Years Years Years Total
Unaudited - December 2020
Financial liabilities
Retail deposits994,767 1,382,593 554,159 275,364 94,526- 3,301,409
Other borrowings- 97,070 13,460 1,027,935 156,311 157,875 1,452,651
Derivative financial liabilities- 5,864 2,994 3,201 430- 12,489
Lease liabilities- 1,412 1,429 2,895 7,985 8,139 21,860
Other financial liabilities- 13,247- - - - 13,247
Total financial liabilities994,767 1,500,186 572,042 1,309,395 259,252 166,014 4,801,656
280,750- - - - - 280,750
Undrawn committed bank facilities459,631- - - - - 459,631
Unaudited - December 2019
Financial liabilities
Retail deposits991,345 1,539,292 468,729 246,518 105,137- 3,351,021
Other borrowings- 48,270 13,089 81,855 1,070,512- 1,213,726
Derivative financial liabilities9,843- - - - - 9,843
Lease liabilities- 1,167 1,397 2,838 10,874 8,139 24,415
Other financial liabilities- 11,344- - - - 11,344
Total financial liabilities1,001,188 1,600,073 483,215 331,211 1,186,523 8,139 4,610,349
218,726- - - - - 218,726
Undrawn committed bank facilities325,451- - - - - 325,451
In March 2020, HBL was onboarded by the RBNZ as an approved counterparty and executed a 2011 Global Master Repo Agreement
providing an additional source for intra-day liquidity for the Group if required.
On 16 March 2020, as a result of COVID-19, the RBNZ announced that it would provide term funding through a Term Auction
Facility to give banks the ability to access term funding using repurchase agreements with qualifying collateral for a term of up to
twelve months. From 26 May 2020, the RBNZ also made available, for a period of 6 months, a Term Lending Facility (TLF) to offer
loans for a fixed term of three years at the Official Cash Rate, with access to the funds linked to banks’ lending under the Business
Finance Guarantee Scheme. On 20 August 2020, the RBNZ announced it would extend the availability of the TLF to 1 February 2021
with terms of five years. Additional stimulus provided through a funding for lending programme also commenced in December
2020 designed to enable banks to provide low-cost lending. The Group had not utilised any of these facilities as at 31 December
2020.
The following tables present the Group's financial liabilities by relevant maturity groupings based upon contractual maturity date.
The amounts disclosed in the tables represent undiscounted future principal and interest cash flows. As a result, the amounts in the
tables below may differ to the amounts reported on the consolidated interim statement of financial position.
The contractual cash flows presented below may differ significantly from actual cash flows. This occurs as a result of future actions
by the Group and its counterparties, such as early repayments or refinancing of term loans and borrowings. Deposits and other
public borrowings include customer savings deposits and transactional accounts, which are at call. These accounts provide a stable
source of long term funding for the Group.
Undrawn facilities available to customers
Undrawn facilities available to customers
December 2020
31

15Liquidity risk (continued)
Contractual liquidity profile of financial liabilities (continued)
On 0-6 6-12 1-2 2-5 5+
$000'sDemand Months Months Years Years Years Total
Audited - June 2020
Financial liabilities
Retail deposits813,140 1,418,656 833,440 162,221 86,615- 3,314,072
Other borrowings- 13,517 61,038 196,835 1,039,462- 1,310,852
Derivative financial liabilities- 5,722 4,665 5,297 1,354- 17,038
Lease liabilities- 1,400 1,415 5,730 7,634 7,085 23,264
Other financial liabilities- 26,751- - - - 26,751
Total financial liabilities813,140 1,466,046 900,558 370,083 1,135,065 7,085 4,691,977
260,098- - - - - 260,098
Undrawn committed bank facilities390,762- - - - - 390,762
16Interest rate risk
Contractual repricing analysis
Non-
0-3 3-6 6-12 1-22+ Interest
$000'sMonths Months Months Years Years Bearing Total
Unaudited - December 2020
Financial assets
Cash and cash equivalents152,803- - - - 15 152,818
Investments55,036 23,265 38,705 75,963 255,886 21,513 470,368
Finance receivables1,481,611 134,370 286,777 469,999 656,238 13,593 3,042,588
1,607,352- - - - - 1,607,352
Derivative financial assets- - - - - 15,023 15,023
Other financial assets- - - - - 1,085 1,085
Total financial assets3,296,802 157,635 325,482 545,962 912,124 51,229 5,289,234
Financial liabilities
Retail deposits1,738,119 611,540 546,713 266,193 86,697 19,292 3,268,554
Other borrowings1,086,068 987- 156,063 130,844- 1,373,962
Derivative financial liabilities- - - - - 12,805 12,805
Lease liabilities- - - - - 19,363 19,363
Other financial liabilities- - - - - 13,247 13,247
Total financial liabilities
2,824,187 612,527 546,713 422,256 217,541 64,707 4,687,931
463,422 (63,969) (92,103) (130,193) (177,157)- -
Net financial assets/(liabilities)936,037 (518,861) (313,334) (6,487) 517,426 (13,478) 601,303
Finance receivables - reverse mortgages
Effect of derivatives held for risk
management
The interest rate risk profile of financial assets and liabilities that follows has been prepared on the basis of maturity or next
repricing date, whichever is earlier.
Undrawn facilities available to customers
32

16Interest rate risk (continued)
Contractual repricing analysis (continued)
Non-
0-3 3-6 6-12 1-22+ Interest
$000'sMonths Months Months Years Years Bearing Total
Unaudited - December 2019
Financial assets
Cash and cash equivalents185,729- - - - 3 185,732
Investments34,690 60,279 15,534 59,787 135,680 16,020 321,990
Finance receivables1,543,914 215,723 355,919 563,825 417,055 4,930 3,101,366
1,419,557- - - - - 1,419,557
Derivative financial assets- - - - - 11,936 11,936
Other financial assets- - - - - 1,805 1,805
Total financial assets3,183,890 276,002 371,453 623,612 552,735 34,694 5,042,386
Financial liabilities
Retail deposits1,688,278 602,765 597,217 235,773 96,449 13,543 3,234,025
Other borrowings924,071 968- - 284,501- 1,209,540
Derivative financial liabilities- - - - - 9,843 9,843
Lease liabilities- - - - - 21,306 21,306
Other financial liabilities- - - - - 11,344 11,344
Total financial liabilities2,612,349 603,733 597,217 235,773 380,950 56,036 4,486,058
380,373 (437) (94,721) (291,712) 6,497- -
Net financial assets/(liabilities)951,914 (328,168) (320,485) 96,127 178,282 (21,342) 556,328
Audited - June 2020
Financial assets
Cash and cash equivalents147,172- - - - 7 147,179
Investments43,863 18,425 52,708 59,296 222,713 16,335 413,340
Finance receivables1,522,837 198,446 352,076 557,569 400,658 13,609 3,045,195
1,538,585- - - - - 1,538,585
Derivative financial assets- - - - - 17,246 17,246
Other financial assets- - - - - 3,563 3,563
Total financial assets3,252,457 216,871 404,784 616,865 623,371 50,760 5,165,108
Financial liabilities
Retail deposits1,616,521 585,482 815,366 155,219 77,655 13,949 3,264,192
Other borrowings976,638 970- - 290,323- 1,267,931
Derivative financial liabilities- - - - - 17,012 17,012
Lease liabilities- - - - - 20,456 20,456
Other financial liabilities- - - - - 26,751 26,751
Total financial liabilities2,593,159 586,452 815,366 155,219 367,978 78,168 4,596,342
557,955 (51,349) (239,137) (237,212) (30,257)- -
Net financial assets/(liabilities)1,217,253 (420,930) (649,719) 224,434 225,136 (27,408) 568,766
Effect of derivatives held for risk
management
Finance receivables - reverse mortgages
Finance receivables - reverse mortgages
Effect of derivatives held for risk
management
33

Other Disclosures
17Structured entities
(a) Heartland Cash and Term PIE Fund (Heartland PIE Fund)
UnauditedUnaudited
Audited
$000'sDecember 2019June 2020
Deposits167,147165,602166,676
(b) Heartland Auto Receivable Warehouse Trust 2018-1 (Auto Warehouse)
UnauditedUnaudited
Audited
$000'sDecember 2019June 2020
Cash and cash equivalents5,8761,3385,493
Finance receivables79,67236,72078,066
Other borrowings(81,541)(36,519)(79,012)
(c)
UnauditedUnaudited
Audited
$000'sDecember 2019June 2020
Cash and cash equivalents21,04817,32426,491
Finance receivables - reverse mortgages839,219833,554929,179
Other borrowings(710,034) (665,586)(783,373)
(d) Atlas 2020-1 Trust (Atlas Trust)
Unaudited
$000's
Cash and cash equivalents9,629
Finance receivables - reverse mortgages145,935
Other borrowings(148,855)
December 2020
A structured entity is one which has been designed such that voting or similar rights are not the dominant factor in deciding who
controls the entity. Structured entities are created to accomplish a narrow and well-defined objective such as the securitisation or
holding of particular assets, or the execution of a specific borrowing or lending transaction. Structured entities are consolidated
where the substance of the relationship is that the Group controls the structured entity.
The Group controls the operations of the Heartland PIE Fund which is a portfolio investment entity that invests in the Group's
deposits. Investments of Heartland PIE Fund are represented as follows:
December 2020
The Group continues to recognise the securitised assets and associated borrowings in the consolidated interim statement of
financial position as the Group remains exposed to and has the ability to affect variable returns from those assets and liabilities.
Although the Group recognises those interests in Auto Warehouse, the loans sold to the Trust are set aside for the benefit of
investors in Auto Warehouse and other depositors and lenders to the Group have no recourse to those assets.
December 2020
The Auto Warehouse securitises motor loan receivables as a source of funding.
December 2020
Atlas Trust was set up on 11 September 2020 as part of ASF's reverse mortgage business similar to the existing SW Trusts and ASF
Trust. The Trustee for the Trust is BNY Trust Company of Australia Limited and the Trust Manager is ASF. The balances of Atlas Trust
are represented as follows:
SW Trusts and ASF Trust (collectively the Trusts) were set up by Australian Seniors Finance Pty Limited (ASF) as asset holding
entities and form part of ASF's reverse mortgage business. The Trustee for the Trusts is ASF Custodians Pty Limited and the Trust
Manager is ASF. The reverse mortgage loans held by the Trusts are set aside for the benefit of the investors in the Trusts. The
balances of SW Trusts and ASF Trust are represented as follows:
Seniors Warehouse Trust, Seniors Warehouse Trust No.2 (together the SW Trusts) and ASF Settlement Trust (ASF Trust)
34

18Insurance business, securitisation, funds management and other fiduciary activities
Securitisation, funds management and other fiduciary activities
19Contingent liabilities and commitments
Audited
$000'sJune 2020
6,1455,9906,515
Total contingent liabilities6,1455,9906,515
Undrawn facilities available to customers280,750 218,726260,098
Conditional commitments to fund at future dates24,570 13,16158,045
Total commitments305,320 231,887318,143
20Events after reporting date
There have been no other material events after the reporting date that would affect the interpretation of the consolidated interim
financial statements or the performance of the Group.
The Group in the ordinary course of business will be subject to claims and proceedings against it whereby the validity of the claim
will only be confirmed by uncertain future events. In such circumstances the contingent liabilities are possible obligations, or
present obligations if known, where the transfer of economic benefit is uncertain or cannot be reliably measured. Contingent
liabilities are not recognised, but are disclosed, unless they are remote. Where some loss is probable, provisions have been made
on a case by case basis.
Contingent liabilities and credit related commitments arising in respect of the Group's operations were:
The Group's aggregate amount of insurance business comprises the total consolidated assets of MIL of $10.8 million (December
2019: $11.6 million, June 2020: $10.9 million), which represents 0.20% of the total consolidated assets of the Group.
Changes to the Group's involvement in securitisation activities are set out in note 17 - Structured entities. There have been no
material changes to the Group’s involvement in funds management and other fiduciary activities, in either case since the reporting
date of the previous financial statements.
Insurance business
Letters of credit, guarantee commitments and
performance bonds
Marac Insurance Limited, a subsidiary of HBL, no longer conducts Insurance business as HBL entered into a distribution agreement
with DPL Insurance Limited to distribute DPL's insurance products through its network and therefore MIL stopped writing insurance
policies. MIL's existing policies are expected to expire by the end of June 2024.
UnauditedUnaudited
December 2020 December 2019
The Group declared a fully imputed interim dividend of 4 cents per share on 19 February 2021.
HGH subsidiary Heartland Australia Group Pty Limited completed a senior unsecured bond placement on 22 January 2021 of AU
$75 million.
35

© 2021 KPMG, a New Zealand Partnership and a member firm of the KPMG global organization of independent member
firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Independent Review Report
To the shareholders of Heartland Group Holdings Limited
Report on the consolidated interim financial statements of Heartland Group Holdings Limited (the
“Group”)
Conclusion
We have completed a review of the accompanying
consolidated interim financial statements which
comprise:
— the consolidated interim statement of financial
position as at 31 December 2020;
— the consolidated interim statements of
comprehensive income, changes in equity and
cash flows for the 6 month period then ended;
and
— notes, including a summary of significant
accounting policies and other explanatory
information.
Based on our review, nothing has come to our
attention that causes us to believe that the
consolidated interim financial statements on pages
5 to 35 do not:
i. present, in all material respects the Group’s
financial position as at 31 December 2020 and
its financial performance and cash flows for
the 6 month period ended on that date; and
ii. comply with NZ IAS 34 Interim Financial
Reporting.
Basis for conclusion
A review of consolidated interim financial statements in accordance with NZ SRE 2410 Review of Financial
Statements Performed by the Independent Auditor of the Entity (“NZ SRE 2410”) is a limited assurance
engagement. The auditor performs procedures, consisting of making enquiries, primarily of persons responsible
for financial and accounting matters, and applying analytical and other review procedures.
As the auditor of Heartland Group Holdings Limited, NZ SRE 2410 requires that we comply with the ethical
requirements relevant to the audit of the annual financial statements.
Our firm also provides other services to the Group in relation to financial statement audits, regulatory assurance
services, agreed upon procedure engagements and supervisor reporting. Subject to certain restrictions, partners
and employees of our firm may also deal with the Group on normal terms within the ordinary course of trading
activities of the business of the Group. These matters have not impaired our independence as reviewer of the
Group. The firm has no other relationship with, or interest in, the Group.
Emphasis of matter
We draw attention to Note 1 of the consolidated interim financial statements, which describes the residual
market uncertainty resulting from the potential economic impact of the COVID-19 pandemic, specifically relating
to the estimation of the Group’s expected credit loss.

In our view, this issue is fundamental to the users’ understanding of the consolidated interim financial
statements and the financial position and performance of the Group. Our conclusion is not modified in respect of
this matter.

36

37
Use of this Independent Review Report
This report is made solely to the shareholders as a body. Our review work has been undertaken so that we
might state to the shareholders those matters we are required to state to them in the Independent Review
Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the shareholders as a body for our review work, this report, or any of the
opinions we have formed.
Responsibilities of the Directors for the consolidated interim financial
statements
The Directors, on behalf of the G roup, are responsible for:
— the preparation and fair presentation of the consolidated interim financial statements in accordance with NZ
IAS 34 Interim Financial Reporting;
— implementing necessary internal control to enable the preparation of consolidated interim financial
statements that are free from material misstatement, whether due to fraud or error; and
— assessing the ability to continue as a going concern. This includes disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless they either intend to liquidate or to
cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the review of the consolidated interim
financial statements
Our responsibility is to express a conclusion on the consolidated interim financial statements based on our
review. We conducted our review in accordance with NZ SRE 2410. NZ SRE 2410 requires us to conclude
whether anything has come to our attention that causes us to believe that the consolidated interim financial
statements are not prepared, in all material respects, in accordance with NZ IAS 34 Interim Financial Reporting.
The procedures performed in a review are substantially less than those performed in an audit conducted in
accordance with International Standards on Auditing (New Zealand). Accordingly we do not express an audit
opinion on these consolidated interim financial statements.
KPMG
Auckland
19 February 2021

---

Disclosure Statement
For the sixmonths ended 31 December 2020

Contents
Page
General Information...............................................................................................................................................................................................3
Priority of Creditors' Claims......................................................................................................................................................................................3
Guarantee Arrangements..................................................................................................................................................................................3
Directors..................................................................................................................................................................................................................3
Auditor.......................................................................................................................................................................................................................3
Directors' Statements............................................................................................................................................................................................4
Consolidated Interim Statement of Comprehensive Income...........................................................................................................................................................................................5
Consolidated Interim Statement of Changes in Equity...........................................................................................................................................................................................6
Consolidated Interim Statement of Financial Position........................................................................................................................................................................................8
Consolidated Interim Statement of Cash Flows..................................................................................................................................................................................................9
Notes to the Financial Statements
1Interim financial statements preparation...............................................................................................................................................................................................................................................................11
Performance
2Segmental analysis......................................................................................................................................................................................................................................................................13
3Net interest income............................................................................................................................................................................................................................................................15
4Operating expenses............................................................................................................................................................................................................................................................15
5Compensation of auditor............................................................................................................................................................................................................................................................15
6Impaired asset expense............................................................................................................................................................................................................................................................16
Financial Position
7Finance receivables............................................................................................................................................................................................................................................................17
8Borrowings............................................................................................................................................................................................................................................................22
9Share capital and dividends............................................................................................................................................................................................................................................................22
10Related party transactions and balances............................................................................................................................................................................................23
11Fair value............................................................................................................................................................................................................................................................24
Risk Management
12Enterprise risk management program............................................................................................................................................................................................................................................................28
13Credit risk exposure............................................................................................................................................................................................................................................................28
14Asset quality............................................................................................................................................................................................................................................................31
15Liquidity risk............................................................................................................................................................................................................................................................36
16Interest rate risk............................................................................................................................................................................................................................................................38
17Concentrations of funding............................................................................................................................................................................................................................................................39
Other Disclosures
18Structured entities............................................................................................................................................................................................................................................................41
19Capital adequacy............................................................................................................................................................................................................................................................41
20Insurance business, securitisation, funds management and other fiduciary activities............................................................................................................................................................................................................................................................47
21Contingent liabilities and commitments............................................................................................................................................................................................................................................................47
22Events after reporting date............................................................................................................................................................................................................................................................47
Conditions of Registration....................................................................................................................................................................................48
Credit Ratings...................................................................................................................................................................................................................49
Other Material Matters...........................................................................................................................................................................................49
Independent Auditor's Review Report............................................................................................................................................................................................................................................................50
2

General Information
Priority of Creditors' Claims
Guarantee Arrangements
Directors
Auditor
There have been no changes in the composition of the Board of Directors of the Bank since 30 June 2020 to the six months ended 31
December 2020.
This Disclosure Statement has been issued by Heartland Bank Limited (the Bank or HBL) and its subsidiaries (collectively the Banking
Group) for the six months ended 31 December 2020 in accordance with the Registered Bank Disclosure Statements (New Zealand
Incorporated Registered Banks) Order 2014 (as amended) (the Order). The interim financial statements of the Banking Group for the
six months ended 31 December 2020 form part of, and should be read in conjunction with, this Disclosure Statement.
In the event of the Bank becoming insolvent or ceasing business, certain claims set out in legislation are paid in priority to others.
These claims include secured creditors, taxes, certain payments to employees and any liquidator’s costs. After payment of those
creditors, the claims of all other creditors are unsecured and would rank equally, with the exception of holders of subordinated
bonds and notes which rank behind all other claims.
KPMG
KPMG Centre
18 Viaduct Harbour Avenue
Words and phrases defined by the Order have the same meanings when used in this Disclosure Statement.
The Bank's address for service is Level 3, Heartland House, 35 Teed Street, Newmarket, Auckland 1023.
As at the date this Disclosure Statement was signed, no material obligations of the Bank were guaranteed.
All Directors of the Bank reside in New Zealand with the exception of Ellen Comerford who resides in Australia. Communications to
the Directors can be sent to Heartland Bank Limited, Level 3, Heartland House, 35 Teed Street, Newmarket, Auckland 1023.
Auckland 1010
3

Directors' Statements
1.
(a)
(b)
2.
(a)
(b)
(c)
B R Irvine (Chair - Board of Directors)
K Mitchell
E F Comerford
S M Ruha
credit exposures to connected persons were not contrary to the interests of the Banking Group; and
J K Greenslade
G T Ricketts
E J Harvey
the Bank had systems in place to monitor and control adequately material risks of the Banking Group, including credit
risk, concentration of credit risk, interest rate risk, currency risk, equity risk, liquidity risk, operational risk and other
business risks, and that those systems were being properly applied.
This Disclosure Statement is dated 19 February 2021 and has been signed by all the Directors.
Each Director of the Bank states that he or she believes, after due enquiry, that:
As at the date on which this Disclosure Statement is signed:
the Disclosure Statement contains all the information that is required by the Order; and
the Disclosure Statement is not false or misleading.
During the six months ended 31 December 2020:
the Bank complied with all Conditions of Registration applicable during the period;
4

Consolidated Interim Statement of Comprehensive Income
For the six months ended 31 December 2020
UnauditedAudited
6 Months to 12 Months to
$000's
NoteDecember 2019June 2020
Interest income3139,875148,680297,512
Interest expense343,64255,708108,476
Net interest income96,23392,972189,036
Operating lease income2,5792,9105,946
Operating lease expense1,5981,9624,063
Net operating lease income9819481,883
Lending and credit fee income3,2245,0797,894
Other income3,3092,3245,965
Net operating income103,747101,323204,778
Operating expenses453,25644,49890,782
Profit before impaired asset expense and income tax50,49156,825113,996
Impaired asset expense64,5388,97529,372
Profit before income tax45,95347,85084,624
Income tax expense12,93912,95423,924
Profit for the period33,01434,89660,700
Other comprehensive income
4,5801,843(2,179)
Movement in fair value reserve(1,038)(968)766
3,542875(1,413)
Total comprehensive income for the period36,55635,77159,287
Total comprehensive income for the period is attributable to the owner of the Bank.
Unaudited
6 Months to
December 2020
Items that are or may be reclassified subsequently to profit
or loss, net of income tax:
Effective portion of change in fair value of derivative financial
instruments
Other comprehensive income/(loss) for the period,
net of income tax
The notes to the interim financial statements form an integral part of, and should be read in conjunction with, these consolidated interim
financial statements.
5

Consolidated Interim Statement of Changes in Equity
For the six months ended 31 December 2020
Foreign
EmployeeCurrencyFairDefinedCash Flow
ShareBenefitsTranslationValue BenefitsHedgeRetainedTotal
$000's
Capital ReserveReserveReserve ReserveReserveEarningsEquity
Unaudited - December 2020
Balance at 1 July 2020
553,239- - 5,324 171 (8,022) 46,325 597,037
Profit for the period- - - - - - 33,014 33,014
- - - (1,038) - 4,580 - 3,542
- - - (1,038) - 4,580 33,014 36,556
- - - - - - - -
Total transactions with owner
- - - - - - - -
Balance at 31 December 2020553,239- - 4,286171(3,442)79,339633,593
Unaudited - December 2019
Balance at 1 July 2019
553,239- - 4,558 171 (5,843) 51,265 603,390
NZ IFRS 16 adjustment- -
- - - -
(640) (640)
553,239- - 4,558171(5,843)50,625602,750
Profit for the period- - - - - - 34,896 34,896
- - - (968) - 1,843 - 875
- - - (968) - 1,843 34,896 35,771
- - - - - - (65,000) (65,000)
Total transactions with owner
- - - - - - (65,000) (65,000)
Balance at 31 December 2019553,239- - 3,590171(4,000)20,521573,521
Total comprehensive income for the period
Total comprehensive income/(loss) for the
period
Contributions by and distributions to owner
Note
9
9
Other comprehensive income/(loss),
net of income tax
Other comprehensive income/(loss),
net of income tax
Total comprehensive income for the period
Restated balance at beginning of period
Dividend to Heartland Group Holdings
Limited (HGH)
Dividend to HGH
The notes to the interim financial statements form an integral part of, and should be read in conjunction with, these consolidated interim
financial statements.
Total comprehensive income/(loss) for the
period
Contributions by and distributions to owner
6

Consolidated Interim Statement of Changes in Equity
For the six months ended 31 December 2020 (continued)
Foreign
EmployeeCurrencyFairDefinedCash Flow
ShareBenefitsTranslationValue BenefitsHedgeRetainedTotal
$000's
Capital ReserveReserveReserve ReserveReserveEarningsEquity
Audited - June 2020
Balance at 1 July 2019
553,239- - 4,558 171 (5,843) 51,265 603,390
NZ IFRS 16 adjustment- - - - - - (640) (640)
Restated balance at beginning of year553,239- - 4,558 171 (5,843) 50,625 602,750
Profit for the period- - - - - - 60,700 60,700
- - - 766 - (2,179) - (1,413)
- - - 766 - (2,179) 60,700 59,287
- - - - - - (65,000) (65,000)
Total transactions with owner
- - - - - - (65,000) (65,000)
Balance at 30 June 2020553,239- - 5,324171(8,022)46,325597,037
Total comprehensive income for the period
9
Note
Contributions by and distributions to owner
Dividend to HGH
Other comprehensive income/(loss),
net of income tax
Total comprehensive income/(loss) for the
period
The notes to the interim financial statements form an integral part of, and should be read in conjunction with, these consolidated interim
financial statements.
7

Consolidated Interim Statement of Financial Position
As at 31 December 2020
UnauditedAudited
$000'sNoteDecember 2019June 2020
Assets
Cash and cash equivalents104,965122,737105,463
Investments451,159307,958399,308
Investment properties11,13211,13211,132
Derivative financial instruments15,02310,80617,246
Due from related parties10(c)2592,0631,481
Finance receivables7(a)3,042,3783,101,3663,044,960
Finance receivables - reverse mortgages7(b)622,137586,003609,346
Operating lease vehicles12,71218,54917,603
Right of use assets16,77919,22517,843
Other assets14,25714,96817,380
Intangible assets52,18156,78157,470
Deferred tax asset14,89010,01915,327
Total assets4,357,8724,261,6074,314,559
Liabilities
Retail deposits83,271,1093,244,0353,269,239
Other borrowings8389,589385,163358,732
Due to related parties10(c)9,3992,1387,944
Lease liabilities18,87820,62319,871
Tax liabilities5,3416,13311,271
Derivative financial instruments12,3909,84316,974
Trade and other payables17,57320,15133,491
Total liabilities3,724,2793,688,0863,717,522
Equity
Share capital9553,239553,239553,239
Retained earnings and reserves80,35420,28243,798
Total equity633,593573,521597,037
Total equity and liabilities4,357,8724,261,6074,314,559
Total interest earning and discount bearing assets4,204,7274,113,2064,143,158
Total interest and discount bearing liabilities3,641,4063,617,7933,614,022
Unaudited
December 2020
The notes to the interim financial statements form an integral part of, and should be read in conjunction with, these consolidated interim
financial statements.
8

Consolidated Interim Statement of Cash Flows
For the six months ended 31 December 2020
UnauditedUnaudited
Audited
6 Months to 12 Months to
$000'sNoteDecember 2020December 2019June 2020
Cash flows from operating activities
Interest received122,874128,838258,797
Operating lease income received1,4802,3615,934
Lending, credit fees and other income received6,91412,12917,422
Operating inflows131,268143,328282,153
Interest paid(46,659)(49,481)(103,793)
Payments to suppliers and employees(48,024)(37,117)(77,904)
Taxation paid(19,759)(9,888)(20,281)
Operating outflows(114,442)(96,486)(201,978)
16,82646,84280,175
Proceeds from sale of operating lease vehicles5,5842,2544,969
Purchase of operating lease vehicles(1,594)(6,614)(9,938)
Net movement in finance receivables3,840(83,217)(51,372)
Net movement in deposits5,07190,309116,040
Net movement in related party balances2,67721,25227,640
Net cash flows from operating activities32,40470,826167,514
Cash flows from investing activities
Sale of property, plant and equipment and intangible assets- - 95
Total cash provided from investing activities- - 95
Purchase of property, plant and equipment and intangible assets(3,954)(2,722)(6,602)
Net (increase)/decrease in investments(62,876)46,003(33,627)
Total cash applied to investing activities(66,830)43,281(40,229)
Net cash flows (applied to)/from investing activities(66,830)43,281(40,134)
Cash flows from financing activities
Net increase in wholesale funding34,21935,2375,745
Total cash provided from financing activities34,21935,2375,745
Dividends paid9- (65,000)(65,000)
Payment of lease liabilities(291)(747)(1,802)
Total cash applied to financing activities(291)(65,747)(66,802)
Net cash flows from/(applied to) financing activities33,928(30,510)(61,057)
Net (decrease)/increase in cash held(498)83,59766,323
Opening cash and cash equivalents105,46339,14039,140
Closing cash and cash equivalents104,965122,737105,463
The notes to the interim financial statements form an integral part of, and should be read in conjunction with, these consolidated interim
financial statements.
Net cash flows from operating activities before
changes in operating assets and liabilities
6 Months to
9

Consolidated Interim Statement of Cash Flows
For the six months ended 31 December 2020 (continued)
Reconciliation of profit after tax to net cash flows from operating activities
UnauditedUnaudited
Audited
6 Months to 12 Months to
$000's
NoteDecember 2020December 2019June 2020
Profit for the period33,01434,89660,700
Add/(less) non-cash items:
Depreciation and amortisation expense9,3114,2068,859
Depreciation on lease vehicles1,4361,7223,634
Capitalised net interest income and fee income(18,481)(20,203)(39,620)
Impaired asset expense64,5388,97529,372
Other non-cash items(7,205)3,5776,310
Total non-cash items (10,401)(1,723)8,555
Add/(less) movements in operating assets and liabilities:
Finance receivables3,840(83,217)(51,372)
Operating lease vehicles3,990(4,360)(4,969)
Other assets2,91432,70732,471
Current tax (5,930)4665,604
Derivative financial instruments2,2194,200869
Deferred tax437(71)(5,379)
Deposits5,07190,309116,040
Other liabilities(2,750)(2,381)4,995
Total movements in operating assets and liabilities9,79137,65398,259
Net cash flows from operating activities32,40470,826167,514
The notes to the interim financial statements form an integral part of, and should be read in conjunction with, these consolidated interim
financial statements.
6 Months to
10

Notes to the Interim Financial Statements
For the six months ended 31 December 2020
1Interim financial statements preparation
Basis of reporting
•
•
•
Change in accounting policy
Accounting standards issued not yet effective
The interim financial statements presented are the consolidated interim financial statements comprising Heartland Bank Limited (the
Bank or HBL) and its subsidiaries (the Banking Group). They have been prepared in accordance with the Order, Generally Accepted
Accounting Practice in New Zealand (NZ GAAP) as defined in the Financial Reporting Act 2013, NZ IAS 34 Interim Financial Reporting
as appropriate for publicly accountable for-profit entities and IAS 34 Interim Financial Reporting.
The Disclosure Statement does not include all notes of the type normally included in an annual financial report. Accordingly this report
is to be read in conjunction with the Disclosure Statement for the year ended 30 June 2020 and any public announcements made by
the Bank during the interim reporting period.
The consolidated interim financial statements presented here are for the following periods:
6 month period ended 31 December 2020 - Unaudited
6 month period ended 31 December 2019 - Unaudited
12 month period ended 30 June 2020 - Audited
The consolidated interim financial statements have been prepared on a going concern and historical cost basis, unless stated
otherwise. The accounting policies adopted are consistent with those of the previous financial year and corresponding interim
reporting period.
There have been no changes to accounting policies or new or amended standards that are issued and effective that are expected to
have a material impact on the Banking Group.
Other amendments to existing standards that are not yet effective are not expected to have a material impact on the Banking Group.
NZ IFRS 17 Insurance Contracts was issued in July 2017 and is applicable to general and life insurance contracts. NZ IFRS 17 will replace
NZ IFRS 4 Insurance Contracts. In March 2020, the effective date of NZ IFRS 17 was deferred by one year. As such the standard will be
effective for the Banking Group's reporting for the financial year ending 30 June 2024, including 30 June 2023 comparatives.
Certain comparative balances have been reclassified to align with the presentation used in the current financial period. These
reclassifications have no impact on the overall financial performance or financial position of the comparative periods.
MARAC Insurance Limited (MIL), a subsidiary of HBL, no longer conducts insurance business as HBL entered into a distribution
agreement with DPL Insurance Limited (DPL) to distribute DPL’s insurance products through its network and therefore MIL stopped
writing insurance policies. MIL's existing policies are expected to expire by the end of June 2024.
11

1Financial statements preparation (continued)
Estimates and judgements
Covid-19 pandemic - impact on estimates and judgements
There have been no material changes to the use of estimates and judgements for the preparation of the interim financial statements
since the reporting date of the previous financial statements. Refer to the Banking Group’s Disclosure Statement for the year ended
30 June 2020 for the estimates and judgements used.
An economic overlay of $9.6 million was applied as at 30 June 2020 in response to the deterioration in economic conditions caused by
the COVID-19 pandemic. The overlay was formulated through applying judgement utilising the Banking Group’s experience and deep
understanding of its customers, assuming that a “base case” economic forecast (as to gross domestic product, unemployment and
house price inflation) and other assumptions (as to lockdowns, customer support packages, second hand and export primary produce
prices) prevailed. This downside risk was quantified under three methodologies to ascertain a range of potential expected credit
losses on each of its portfolios.
While actual performance relative to the “base case” has been favourable, residual market uncertainty regarding the magnitude of
the economic impact of the pandemic remains. The Banking Group also reapplied the three methodologies to the portfolios as at 31
December 2020 to again confirm a range of potential expected credit losses on each of its portfolios. As a result, it was determined
that maintaining the overlay as at 31 December 2020 is appropriate.
12

Performance
2Segmental analysis
Operating segments
The Banking Group operates within New Zealand and comprises the following main operating segments:
Motor
Reverse Mortgages
Other Personal
Business
Rural
ReverseOther
$000's
Motor
MortgagesPersonal
BusinessRuralOtherTotal
Unaudited - December 2020
Net interest income31,255 10,175 7,625 31,659 15,071 448 96,233
Net other income1,717 1,018 1,137 1,343 460 1,839 7,514
Net operating income32,972 11,193 8,762 33,002 15,531 2,287 103,747
Operating expenses1,843 1,986 3,151 5,896 1,172 39,208 53,256
31,129 9,207 5,611 27,106 14,359 (36,921) 50,491
Impaired asset expense/(benefit)2,266- (793) 2,674 391- 4,538
Profit/(loss) before income tax28,863 9,207 6,404 24,432 13,968 (36,921) 45,953
Income tax expense- - - - - 12,939 12,939
Profit/(loss) for the period28,863 9,207 6,404 24,432 13,968 (49,860) 33,014
Total assets1,200,349 576,579 163,519 1,133,767 569,676 713,982 4,357,872
Total liabilities3,724,279
Profit/(loss) before impaired asset expense
and income tax
Reverse mortgage lending in New Zealand.
Certain operating expenses, such as premises, IT and support centre costs are not allocated to operating segments and are included in
Other. Liabilities are managed centrally and therefore are not allocated across the operating segments.
Specialist financial services to the farming sector offering livestock finance, rural mortgage lending,
seasonal and working capital financing, as well as leasing solutions to farmers.
The Banking Group's operating segments are different from the industry categories detailed in Note 13 - Credit risk exposure. The
operating segments are primarily categorised by sales channel, whereas Note 13 - Credit risk exposure categorises exposures based on
credit risk concentrations.
A range of financial services - including term, transactional and personal loans to individuals.
Segment information is presented in respect of the Banking Group's operating segments which are those used for the Banking Group's
management and internal reporting structure.
Term debt, plant and equipment finance, commercial mortgage lending and working capital solutions
for small-to-medium sized businesses.
Motor vehicle finance.
13

2Segmental analysis (continued)
ReverseOther
$000's
Motor
MortgagesPersonal
BusinessRuralOtherTotal
Unaudited - December 2019
Net interest income28,204 12,176 9,238 28,026 15,380 (52) 92,972
Net other income1,895 2,824 646 1,317 535 1,134 8,351
Net operating income30,099 15,000 9,884 29,343 15,915 1,082 101,323
Operating expenses1,615 3,331 1,934 5,980 1,396 30,242 44,498
28,484 11,669 7,950 23,363 14,519 (29,160) 56,825
Impaired asset expense3,611- 3,345 1,880 139- 8,975
Profit/(loss) before income tax24,873 11,669 4,605 21,483 14,380 (29,160) 47,850
Income tax expense- - - - - 12,954 12,954
Profit/(loss) for the period24,873 11,669 4,605 21,483 14,380 (42,114) 34,896
Total assets1,127,408 586,003 244,498 1,148,614 615,072 540,012 4,261,607
Total liabilities3,688,086
Audited - June 2020
Net interest income56,957 20,118 18,365 57,950 29,674 5,972 189,036
Net other income3,622 3,430 3,055 3,465 1,028 1,142 15,742
Net operating income60,579 23,548 21,420 61,415 30,702 7,114 204,778
Operating expenses3,248 4,804 6,776 11,283 2,648 62,023 90,782
57,331 18,744 14,644 50,132 28,054 (54,909) 113,996
Impaired asset expense/(benefit)10,113- 11,119 10,110 (1,970)- 29,372
Profit/(loss) before income tax47,218 18,744 3,525 40,022 30,024 (54,909) 84,624
Income tax expense- - - - - 23,924 23,924
Profit/(loss) for the period47,218 18,744 3,525 40,022 30,024 (78,833) 60,700
Total assets1,125,295 559,934 214,759 1,126,632 604,938 683,001 4,314,559
Total liabilities3,717,522
Profit/(loss) before impaired asset expense
and income tax
Profit/(loss) before impaired asset expense
and income tax
14

3Net interest income
UnauditedUnaudited
Audited
6 Months to6 Months to12 Months to
$000'sDecember 2019June 2020
Interest income
Cash and cash equivalents45301482
Investments3,6354,4488,496
Finance receivables118,737124,658250,592
Finance receivables - reverse mortgages17,45819,27337,942
Total interest income139,875148,680297,512
Interest expense
Retail deposits33,49547,74190,786
Other borrowings7,5246,56814,188
2,6231,3993,502
Total interest expense43,64255,708108,476
Net interest income96,23392,972189,036
4Operating expenses
UnauditedUnaudited
Audited
6 Months to6 Months to12 Months to
$000'sDecember 2019June 2020
Personnel expenses28,45423,03845,759
Directors' fees338310650
Superannuation467419836
Depreciation - property, plant and equipment1,4171,0612,280
Legal and professional fees9411,6573,049
Advertising and public relations1,7142,4824,577
Depreciation - right of use asset1,0641,0412,122
Technology services3,2563,0506,063
Telecommunications, stationary and postage7998571,651
Customer acquisition costs9612,1042,919
Amortisation of intangible assets6,8302,1024,456
Other operating expenses
1
7,0156,37716,420
Total operating expenses53,25644,49890,782
5Compensation of auditor
UnauditedUnaudited
Audited
6 Months to6 Months to12 Months to
$000'sDecember 2019June 2020
Audit and review of the financial statements
1
374317559
Other assurance services paid to auditor
2
103160
Total compensation of auditor384348619
1
Other operating expenses include compensation of auditor which is further disclosed in Note 5.
1
Audit and review of the financial statements includes fees paid for both the audit of annual financial statements and the review of interim financial statements.
Net interest expense on derivative financial instruments
2
Other assurance related services paid to auditor comprise review of regulatory returns, trust deed reporting, registry audits and other agreed upon procedure
engagements.
December 2020
December 2020
December 2020
15

6Impaired asset expense
UnauditedUnaudited
Audited
6 Months to6 Months to12 Months to
$000'sDecember 2019June 2020
Non-securitised
Individually impaired asset expense3,414
1,6383,385
Collectively impaired asset expense1,099
7,21425,590
Total non-securitised impaired asset expense4,513
8,85228,975
Securitised
Collectively impaired asset expense25
123397
Total securitised impaired asset expense25
123397
Total
Individually impaired asset expense3,414
1,6383,385
Collectively impaired asset expense1,124
7,33725,987
Total impaired asset expense4,538
8,97529,372
December 2020
At each reporting date, the Banking Group applies a three stage approach to measuring expected credit loss (ECL) to finance
receivables not carried at fair value. The following table details impairment charges of those finance receivables for the six months
ended 31 December 2020.
16

Financial Position
7Finance receivables
(a) Finance receivables held at amortised cost
UnauditedUnaudited
Audited
$000'sDecember 2019June 2020
Non-securitised
2,938,6943,049,8142,945,623
At least 90 days past due45,76146,78058,876
Individually impaired33,66728,43324,667
Gross finance receivables3,018,1223,125,0273,029,166
Less provision for impairment(55,415)(60,381)(62,272)
Total non-securitised finance receivables2,962,7073,064,6462,966,894
Securitised
79,64536,84378,059
At least 90 days past due448- 404
Individually impaired - - -
Gross finance receivables80,09336,84378,463
Less provision for impairment(422)(123)(397)
Total securitised finance receivables79,67136,72078,066
Total
3,018,3393,086,6573,023,682
At least 90 days past due46,20946,78059,280
Individually impaired33,66728,43324,667
Gross finance receivables3,098,2153,161,8703,107,629
Less provision for impairment(55,837)(60,504)(62,669)
Total finance receivables3,042,3783,101,3663,044,960
Refer to Note 14 - Asset quality for further analysis of finance receivables by credit risk concentration.
Neither at least 90 days past due nor impaired
Neither at least 90 days past due nor impaired
Neither at least 90 days past due nor impaired
December 2020
17

7Finance receivables (continued)
(a) Finance receivables held at amortised cost (continued)
Movement in provision
LifetimeLifetime
ECLECL
12 - MonthNot CreditCreditSpecific
$000's
ECLImpairedImpairedProvisionTotal
Unaudited - December 2020
Non-securitised
Impairment allowance as at 30 June 2020
32,160 2,144 22,667 5,301 62,272
Changes in loss allowance
Transfer between stages
(860) (395) 153 1,102-
(1,197) 102 4,605 2,312 5,822
Recovery of amounts written off
- - (1,309)- (1,309)
Credit impairment charge
(2,057) (293) 3,449 3,414 4,513
Recovery of amounts previously written off
- - 1,309- 1,309
Write offs
- - (10,199) (2,481) (12,680)
Effect of changes in foreign exchange rate
(1)11- 1
Impairment allowance as at 31 December 202030,102 1,852 17,227 6,234 55,415
Securitised
Impairment allowance as at 30 June 2020
26023 114- 397
Changes in loss allowance
Transfer between stages23 1
(24)- -
(33) (10) 68- 25
Recovery of amounts written off
- - - - -
Credit impairment charge
(10) (9) 44- 25
Recovery of amounts previously written off
- - - - -
Write offs
- - - - -
Effect of changes in foreign exchange rate
- - - - -
Impairment allowance as at 31 December 202025014 158- 422
Total
Impairment allowance as at 30 June 2020
32,420 2,167 22,781 5,301 62,669
Changes in loss allowance
Transfer between stages
(837) (394) 129 1,102-
(1,230) 92 4,673 2,312 5,847
Recovery of amounts written off
- - (1,309)- (1,309)
Credit impairment charge
(2,067) (302) 3,493 3,414 4,538
Recovery of amounts previously written off
- - 1,309- 1,309
Write offs
- - (10,199) (2,481) (12,680)
Effect of changes in foreign exchange rate
(1)11- 1
Impairment allowance as at 31 December 202030,3521,86617,3856,23455,837
New and increased provision (net of collective provision releases)
New and increased provision (net of collective provision releases)
New and increased provision (net of collective provision releases)
The following table details the movement from the opening balance to the closing balance of the provision for impairment losses by
class.
18

7Finance receivables (continued)
(a) Finance receivables held at amortised cost (continued)
Movement in provision (continued)
LifetimeLifetime
ECLECL
12 - MonthNot CreditCreditSpecific
$000's
ECLImpairedImpairedProvisionTotal
Unaudited - December 2019
Non-securitised
Impairment allowance as at 30 June 2019
30,422 1,781 18,425 7,863 58,491
Changes in loss allowance
Transfer between stages
(1,664) (127) 706 1,085-
1,070 665 8,331 553 10,619
Recovery of amounts written off
- - (1,767)- (1,767)
Credit impairment charge
(594) 538 7,270 1,638 8,852
Recovery of amounts previously written off
- - 1,767- 1,767
Write offs
- - (8,624) (100) (8,724)
Effect of changes in foreign exchange rate
(3)- (2)- (5)
Impairment allowance as at 31 December 201929,825 2,319 18,836 9,401 60,381
Securitised
Impairment allowance as at 30 June 2019
- - - - -
Changes in loss allowance
Transfer between stages- - - - -
1221- - 123
Recovery of amounts written off
- - - - -
Credit impairment charge
1221- - 123
Recovery of amounts previously written off
- - - - -
Write offs
- - - - -
Effect of changes in foreign exchange rate
- - - - -
Impairment allowance as at 31 December 20191221- - 123
Total
Impairment allowance as at 30 June 2019
30,422 1,781 18,425 7,863 58,491
Changes in loss allowance
Transfer between stages
(1,664) (127) 706 1,085-
1,192 666 8,331 553 10,742
Recovery of amounts written off- - (1,767)- (1,767)
Credit impairment charge(472) 539 7,270 1,638 8,975
Recovery of amounts previously written off
- - 1,767- 1,767
Write offs
- - (8,624) (100) (8,724)
Effect of changes in foreign exchange rate
(3)- (2)- (5)
Impairment allowance as at 31 December 201929,9472,32018,8369,40160,504
New and increased provision (net of collective provision releases)
New and increased provision (net of collective provision releases)
New and increased provision (net of collective provision releases)
19

7Finance receivables (continued)
(a) Finance receivables held at amortised cost (continued)
Movement in provision (continued)
LifetimeLifetime
ECLECL
12 - MonthNot CreditCreditSpecific
$000's
ECLImpairedImpairedProvisionTotal
Audited - June 2020
Non-securitised
Impairment allowance as at 30 June 2019
30,422 1,781 18,425 7,863 58,491
Changes in loss allowance
Transfer between stages
(1,190) (294) (109) 1,593-
2,901 2,091 24,999 1,792 31,783
Recovery of amounts written off
- - (2,808)- (2,808)
Credit impairment charge
1,711 1,797 22,082 3,385 28,975
Recovery of amounts previously written off
- - 2,808- 2,808
Write offs
- (1,438) (20,658) (5,947) (28,043)
Effect of changes in foreign exchange rate
27410- 41
Impairment allowance as at 30 June 202032,160 2,144 22,667 5,301 62,272
Securitised
Impairment allowance as at 30 June 2019
- - - - -
Changes in loss allowance
Transfer between stages(19) 118- -
27912 106- 397
Recovery of amounts written off
- - - - -
Credit impairment charge
26023 114- 397
Recovery of amounts previously written off
- - - - -
Write offs
- - - - -
Effect of changes in foreign exchange rate
- - - - -
Impairment allowance as at 30 June 202026023 114- 397
Total
Impairment allowance as at 30 June 2019
30,422 1,781 18,425 7,863 58,491
Changes in loss allowance
Transfer between stages
(1,209) (283) (101) 1,593-
3,180 2,103 25,105 1,792 32,180
Recovery of amounts written off- - (2,808)- (2,808)
Credit impairment charge1,971 1,820 22,196 3,385 29,372
Recovery of amounts previously written off
- - 2,808- 2,808
Write offs
- (1,438) (20,658) (5,947) (28,043)
Effect of changes in foreign exchange rate
27410- 41
Impairment allowance as at 30 June 202032,4202,16722,7815,30162,669
New and increased provision (net of collective provision releases)
New and increased provision (net of collective provision releases)
New and increased provision (net of collective provision releases)
20

7Finance receivables (continued)
(a) Finance receivables held at amortised cost (continued)
Impact of changes in gross finance receivables held at amortised cost on allowance for ECL
LifetimeLifetime
ECLECL
12 - MonthNot CreditCreditSpecific
$000's
ECLImpairedImpairedProvisionTotal
Unaudited - December 2020
Gross finance receivables as at 30 June 20202,825,973 183,260 73,729 24,667 3,107,629
Transfer between stages(50,423)31,814 3,841 14,768 -
Additions796,845 - - - 796,845
Deletions(733,321)(36,470)(19,081)(3,233)(792,105)
Write offs- - (11,619)(2,535)(14,154)
Gross finance receivables as at 31 December 20202,839,074178,60446,87033,6673,098,215
Unaudited - December 2019
Gross finance receivables as at 30 June 20192,799,220 206,882 57,043 26,4123,089,557
Transfer between stages(40,404) 9,697 27,069 3,638-
Additions922,101 62,329 6,788- 991,218
Deletions(805,818) (74,204) (27,385) (1,517) (908,924)
Write offs(1,590) (1,960) (6,331) (100) (9,981)
Gross finance receivables as at 31 December 20192,873,509202,74457,18428,4333,161,870
Audited - June 2020
Gross finance receivables as at 30 June 20192,799,220 206,882 57,043 26,412 3,089,557
Transfer between stages(61,191) 12,570 41,245 7,376-
Additions1,496,900 87,843 23,610- 1,608,353
Deletions(1,402,340) (118,572) (37,334) (3,174) (1,561,420)
Write offs(6,616) (5,463) (10,835) (5,947) (28,861)
Gross finance receivables as at 30 June 20202,825,973183,26073,72924,6673,107,629
(b) Finance receivables held at fair value
UnauditedUnaudited
Audited
$000'sDecember 2019June 2020
Finance receivables - reverse mortgages
622,137586,003
609,346
Total finance receivables - reverse mortgages
622,137586,003
609,346
December 2020
21

8Borrowings
UnauditedUnaudited
Audited
$000'sDecember 2019June 2020
Deposits3,271,1093,244,0353,269,239
Total deposits3,271,1093,244,0353,269,239
Unsubordinated notes289,786285,337293,147
Certificate of deposit- 69,811-
Repurchase agreement
1
31,889- -
Securitised borrowings67,91430,01565,585
Total other borrowings389,589385,163358,732
PrincipalValuation
Issue dateMaturity
$125 millionAmortised cost
$150 millionAmortised cost
•
9Share capital and dividends
Unaudited
UnauditedAudited
December 2020 December 2019June 2020
000'sNumber of Shares Number of Shares
Issued shares
Opening balance565,430565,430565,430
Closing balance565,430565,430565,430
Dividends paid
Cents Cents
Per Share$000's Per Share$000's
Dividend to HGH- - - - 35,000
Dividend to HGH- - - - 20,000
Dividend to HGH- - - - 10,000
Total dividends paid- 65,000
6 Months to December 2020
1 August 2019
15 November 2019
December 2020
Number of Shares
Deposits and unsubordinated notes rank equally and are unsecured.
12 Months to June 2020
The Banking Group has the following unsubordinated notes on issue at reporting date:
There were no new shares issued during the period (December 2019: nil; June 2020: nil).
Date Declared
At 31 December 2020 the Banking Group had the following securitised borrowings outstanding:
Heartland Auto Receivables Warehouse Trust 2018-1 securitisation facility $300 million, drawn $68 million (December 2019: $150
million, drawn $30 million; June 2020: $300 million, drawn $66 million). Notes issued to investors are secured over the assets of
the Heartland Auto Receivables Warehouse Trust 2018-1. The facility has a maturity date of 29 August 2022.
Date Declared
The change in Conditions of Registration (COR) effective from 2 April 2020 restricts the payment of dividends on ordinary shares, and
the redemption on non-CET1 capital instruments as a result of the COVID-19 pandemic. The restrictions remain in place at 31
December 2020.
21 September 2017
12 April 201912 April 2024
21 September 2022
Frequency of
Interest Repayment
5 December 2019
Semi annually
Semi annually
1
The amounts disclosed as securities sold under arrangements to repurchase include $30.0 million (face value) of high quality liquid assets. The cash
consideration received (recognised as a liability) was $31.9 million.
22