HGH meets Challenger Bank milestone & NZ$210m equity raise
Not for release to US wire services or distribution in the United States.
Heartland Group Holdings Limited | NZX/ASX: HGH | PO Box 9919, New market, Auckland 1149 | heartlandgroup.info
NZX/ASX release
8 April 2024
Heartland announces indicative regulatory approval of
Challenger Bank acquisition, and NZ$210m equity raise
Heartland Group Holdings Limited (Heartland) (NZX/ASX: HGH) is pleased to announce that it has
received indicative regulatory approvals from the Australian Prudential Regulation Authority (APRA)
and the Reserve Bank of New Zealand (RBNZ) for Heartland Bank Limited’s (Heartland Bank)
acquisition of Challenger Bank Limited (Challenger Bank) from Challenger Limited (ASX: CGF).
Subject to receipt of final regulatory approvals, Heartland Bank expects to complete the acquisition
of Challenger Bank on 30 April 2024 (Completion).
Heartland also announces a NZ$210 million equity raise, the successful completion of which APRA
and RBNZ’s final regulatory approvals are conditional on. The equity raise comprises a NZ$105
million underwritten placement (Placement) and a NZ$105 million underwritten 1 for 6.85
accelerated non-renounceable entitlement offer (Entitlement Offer), described in detail below.
Proceeds from the equity raise will be used to finance the balance of the consideration payable for
the Challenger Bank acquisition, support the expected regulatory capital requirements of Challenger
Bank and Heartland Bank, and cater for near-term projected asset growth post-Completion.
Shortly after Completion, Heartland will transfer Heartland Australia Holdings Pty Limited and its
subsidiaries (which include Heartland’s existing Australian Reverse Mortgage business (Heartland
Finance) and Livestock Finance business (StockCo Australia)) (together, Heartland Australia) to
Challenger Bank. This is expected to occur on 2 May 2024.
Becoming a bank in Australia
The acquisition is a critical step in Heartland’s strategy for expansion in the Australian market and
achieving its long-term growth ambitions. Heartland is already well-established in Australia through
Heartland Australia. At 31 December 2023, together, Heartland’s Australian Reverse Mortgage and
Livestock Finance businesses had approximately NZ$2 billion of gross finance receivables.
Completing the Challenger Bank acquisition will make Heartland Bank the first New Zealand
registered bank to acquire an Australian Authorised Deposit-Taking Institution (ADI). Subject to
Completion, under Heartland Bank’s ownership, Challenger Bank will be rebranded to Heartland
Bank (Heartland Bank Australia), providing a platform to extend Heartland’s “best or only” strategy
in Australia. Once Heartland Australia becomes part of Heartland Bank Australia, it will be the only
specialist bank provider of both reverse mortgages and livestock finance in Australia.
To accelerate growth in Australia, Heartland will leverage Challenger Bank’s foundation and funding
platform, Heartland’s successful track record in Australia, and its New Zealand product and
distribution expertise. This will enable Heartland Bank Australia to expand into new product
segments in which Heartland Bank has specialist expertise in New Zealand, such as Motor Finance
and Asset Finance.
1
1
Subject to meeting minimum return on equity (ROE) hurdles and APRA consultation.
Heartland Group Holdings Limited | 0800 85 20 20 | PO Box 9919, New market, Auckland 1149 | heartlandgroup.info
2
Expansion will be enabled through access to retail deposits, allowing Heartland to optimise the
advantage of a lower cost of funds. Challenger Bank continues to actively raise deposits ahead of
being acquired by Heartland Bank and will continue to do so following Completion. Challenger
Bank’s retail deposit growth to date has exceeded Heartland’s expectations. In the period between
30 December 2023 to 29 March 2024, Challenger Bank achieved retail deposit growth of A$702
million at a rate that is 1.74% lower than Heartland Australia’s current cost of funds.
2
Dividends
Having regard to the equity raise, acquisition of Challenger Bank and associated growth
opportunities, the Board expects to target a total dividend payout ratio in the financial year ending
30 June 2024 of 50% of underlying net profit after tax. The Board will, as it has historically, actively
manage dividend settings and carefully consider the declaration of any dividend based on
Heartland’s capital needs, ROE accretive growth opportunities, balance sheet flexibility and
Heartland’s financial performance.
Board and Management updates
After 15 years at Heartland, Jeff Greenslade has indicated to the Board his intention to step down
from his role as CEO of Heartland at the end of this calendar year. Jeff’s tenure at Heartland included
seeing through its formation in 2011, and receipt of Heartland Bank’s RBNZ banking registration in
2012. Post-Completion, Jeff’s focus as CEO will be on the strategic transition of Heartland in its role
as a listed parent company of banks in two jurisdictions, the integration of Challenger Bank into the
group, and the continued development of Heartland’s business in Australia.
The Board is confident in the continuation of senior expertise within the Heartland group, and will
work closely with Jeff on succession planning through the calendar year to ensure a successful
transition.
Subject to Completion, which is expected to take place on 30 April 2024, the following Board and
Management changes will occur.
‒ Geoff Summerhayes will resign from the Heartland Board and be appointed Chair of the new
Heartland Bank Australia Board. The accompanying investor presentation provides more
information about the proposed Heartland Bank Australia Board of Directors and Management
team.
‒ Michelle Winzer has been appointed Chief Executive Officer of Heartland Bank Australia with a
start date yet to be confirmed. Michelle will join Heartland Bank Australia from her role as Chief
Executive Banking of RACQ Bank in Queensland. Michelle will bring more than 30 years’
experience in banking and financial services, including as Chief Executive Officer of Bank of
Melbourne, and senior roles at Bankwest, the Commonwealth Bank of Australia and Westpac.
‒ John Harvey will be appointed to the Heartland Board as Independent Non-Executive Director,
and will remain on the Heartland Bank Board as Non-Independent Non-Executive Director.
‒ Ellie Comerford, who has served on Heartland Boards for more than seven years, has indicated
her intention to resign from the Heartland Board on or around 30 June 2024.
‒ Chris Flood, currently Deputy Chief Executive Officer of Heartland, will be appointed Acting Chief
Executive Officer of Heartland Bank Australia. Chris is expected to return to his role as Deputy
Chief Executive Officer of Heartland later in the 2024 calendar year, allowing time for a
comprehensive handover with Michelle.
2
The cost of funds benefit is calculated with reference to Heartland Australia’s average cost of funds over
January and February 2024.
Heartland Group Holdings Limited | 0800 85 20 20 | PO Box 9919, New market, Auckland 1149 | heartlandgroup.info
3
Kerry Conway recently joined Heartland Bank as Chief Financial Officer on 4 March 2024 and will
become a senior manager of Heartland Bank with effect from 8 April 2024. Andrew Dixson continues
in his role as Group Chief Financial Officer of Heartland with responsibility for managing liquidity,
funding and capital, corporate finance, including mergers and acquisitions, group tax, and investor
relations within the Heartland group.
Proposed equity raise
Heartland has announced a NZ$210 million equity raise to facilitate the completion of the Challenger
Bank acquisition. The proceeds of the equity raise will be used to:
1. finance the balance of the consideration payable for the Challenger Bank acquisition
2. support the expected regulatory capital requirements of Challenger Bank and Heartland Bank
3. cater for near term asset growth post-Completion.
The equity raise will comprise a NZ$105 million underwritten Placement and a NZ$105 million
underwritten 1 for 6.85 pro-rata Entitlement Offer. The Placement and Entitlement Offer are fully
underwritten by Jarden Partners Limited, with the exception of a pre-commitment received from
Heartland’s largest shareholder, Harrogate Trustee Limited, for approximately NZ$14 million of the
equity raise.
The Placement and Entitlement Offer will both be undertaken at a fixed price of NZ$1.00 per new
share, being a 18.0% discount to the last close price of NZ$1.22 on 5 April 2024, and a 14.6%
discount to the theoretical ex-rights price (TERP) of NZ$1.1703
3
.
Placement
The placement is underwritten by Jarden Partners Limited and will be conducted today through a
bookbuild in which institutional and other select investors in New Zealand, Australia and a limited
number of other jurisdictions will be invited to participate. The Placement has been underwritten at
a fixed price of NZ$1.00 per new share. The Placement will comprise 105 million new shares, which
represents 11.3% of Heartland’s shares on issue following completion of the equity raise. ASX
settlement will take place on Friday 12 April, and NZX settlement and allotment of all new shares
issued under the Placement will take place on Monday 15 April. New shares issued under the
Placement will be ex-entitlement under the Entitlement Offer. A trading halt has been requested
from NZX and ASX to facilitate the Placement.
Entitlement Offer
Under the Entitlement Offer, eligible shareholders may apply for 1 new share for every 6.85 existing
shares held at the dates and times described below, at an application price of NZ$1.00 per new
share. The Entitlement Offer will raise a total of approximately NZ$105 million and be underwritten
by Jarden Partners Limited at the same application price as the Placement of NZ$1.00 per new share.
The Entitlement Offer comprises the issue of approximately 105 million new shares which represents
11.3% of Heartland’s shares on issue following completion of the equity raise.
The Entitlement Offer will be conducted in two parts – a component to institutional investors
(Institutional Entitlement Offer) and a component to retail shareholders (Retail Entitlement Offer).
3
TERP is the Theoretical Ex-Rights Price at which Heartland ordinary shares would trade immediately after the
ex-rights date for the offer. TERP is calculated with reference to Heartland’s closing share price of NZ$1.22 on
5 April 2024 and includes all new shares issued under the placement and the offer. TERP is a theoretical
calculation only and the actual price at which Heartland ordinary shares will trade immediately after the ex-
rights date for the offer will depend on many factors and may not be equal to TERP.
Heartland Group Holdings Limited | 0800 85 20 20 | PO Box 9919, New market, Auckland 1149 | heartlandgroup.info
4
The Entitlement Offer is non-renounceable, and entitlements will not be tradeable or otherwise
transferable.
Eligible shareholders under the Institutional Entitlement Offer include institutional and other
selected investors in New Zealand, Australia and select international jurisdictions as at 7.00pm NZST
(5.00pm AEST) on the Record Date of Tuesday 9 April 2024 (Record Date). The Institutional
Entitlement Offer will be accelerated and will close on Monday 8 April 2024 for New Zealand,
Australia, Hong Kong and Singapore and on Tuesday 9 April 2024 for all other eligible international
jurisdictions.
The Retail Entitlement Offer will be offered to eligible retail shareholders with an address recorded
in Heartland’s share register in New Zealand or Australia as at 7.00pm NZST (5.00pm AEST) on the
Record Date. The Retail Entitlement Offer will open on Thursday 11 April 2024, and close on Monday
22 April 2024 (unless extended). Provided they have taken up their full entitlement, eligible retail
shareholders may also apply for additional new shares not taken up by other retail shareholders up
to a maximum of 100% above their pro-rata entitlement.
The Offer Document accompanies this announcement and will be sent to eligible retail shareholders
on Thursday 11 April 2024 and be available at www.heartlandshareoffer.co.nz on the same day. This
document contains the terms of the offer. Applications can be made through this website or as
otherwise directed by Heartland.
New shares to be issued under both the Placement and the Entitlement Offer will rank equally in all
respects with Heartland’s existing ordinary shares on issue.
Heartland chose this offer structure as it requires certainty that sufficient funds are raised to
complete the Challenger Bank acquisition and support expected regulatory requirements post-
Completion. The offer structure supports an accelerated timetable relative to renounceable offers to
ensure faster completion with the additional benefit of tighter pricing. For further details on why
Heartland has selected this offer structure, please refer to the Offer Document that accompanies
this announcement.
The Placement and Entitlement Offer also fulfils Heartland’s objective to further diversify its share
register to promote increased liquidity on both the NZX and ASX. This is important in driving long-
term value for all shareholders, by attracting depth of investment and widening demand. Through
the Placement and the ability for retail shareholders to subscribe for additional new shares not taken
up by other retail shareholders, Heartland endeavours to allow all shareholders that wish to
maintain their pro-rata shareholdings through the equity raising, the ability to do so.
Equity raise key dates
Event Date
4
Announcement of Equity Raising Monday 8 April 2024
Record date for the Entitlement Offer Tuesday 9 April 2024
Institutional Entitlement Offer and Placement
Institutional Entitlement Offer and Placement opens Monday 8 April 2024
Institutional Entitlement Offer and Placement closes (for
institutional shareholders in New Zealand, Australia, Hong Kong
and Singapore)
Monday 8 April 2024
4
The dates set out in the table above (and any references to them in this announcement) are subject to
change and are indicative only. All times and dates refer to NZ time (unless otherwise specified).
Heartland Group Holdings Limited | 0800 85 20 20 | PO Box 9919, New market, Auckland 1149 | heartlandgroup.info
5
Institutional Entitlement Offer and Placement closes (for
institutional shareholders in all other jurisdictions)
Tuesday 9 April 2024
Trading halt lifted and shares recommence trading on NZX and ASX
on an ‘ex-entitlement’ basis
By 12.00pm NZST Tuesday 9
April 2024
ASX settlement Thursday 11 April 2024
NZX settlement, allotment and commencement of trading of new
shares
Friday 11 April 2024
Retail Entitlement Offer
Retail Entitlement Offer opens Thursday 11 April 2024
Offer Document dispatched to Eligible Retail Shareholders Thursday 11 April 2024
Retail Entitlement Offer closes Monday 22 April 2024
ASX and NZX settlement and allotment Friday 26 April 2024
NZX commencement of trading of new shares Friday 26 April 2024
ASX commencement of trading of new shares Monday 29 April 2024
Investor briefing
Heartland will hold an investor briefing at 11.00am NZST. Register to attend the briefing here:
https://ccmediaframe.com/?id=JHLK8tlK
– ENDS –
The person(s) who authorised this announcement:
Jeff Greenslade
Chief Executive Officer
Andrew Dixson
Chief Financial Officer
For further information, please contact:
Nicola Foley
Group Head of Communications
+64 27 345 6809
nicola.foley@heartland.co.nz
Level 3, Heartland House, 35 Teed Street, Newmarket, Auckland, New Zealand
About Heartland
Heartland Group Holdings Limited (Heartland) is a financial services group with operations in
Australia and New Zealand. Heartland has a long history with roots stretching back to 1875, and is
listed on the New Zealand and Australian stock exchanges (NZX/ASX:HGH).
Heartland’s New Zealand business, Heartland Bank, provides customers with savings and deposit
products, online home loans, reverse mortgages, business loans, car loans and rural loans. In
Australia, Heartland’s main business is currently in reverse mortgages through Heartland Finance
which is a market leader. Heartland also operates StockCo Australia, a specialist livestock financier,
which was acquired by Heartland in May 2022. In October 2022, Heartland announced its intention
to purchase Challenger Bank, a digital bank based in Melbourne, Australia, subject to obtaining the
requisite regulatory approvals.
Heartland Group Holdings Limited | 0800 85 20 20 | PO Box 9919, New market, Auckland 1149 | heartlandgroup.info
6
Heartland’s point of differentiation is its “best or only” strategy – where it focuses on providing
products which are the best or only of their kind through scalable digital platforms. Heartland is
committed to delivering financial solutions through speed and simplicity, particularly via digital
platforms which reduce the cost of onboarding and make it easier for customers to open accounts or
apply for funds when they need it.
More about Heartland: heartlandgroup.info
About Challenger
Challenger Limited (Challenger) is an investment management firm focused on providing customers
with financial security for a better retirement.
Challenger operates a fiduciary Funds Management division, an APRA-regulated Life division and an
APRA regulated authorised deposit-taking institution. Challenger Life Company Limited is Australia's
largest provider of annuities.
More about Challenger: challenger.com.au
Currency
Unless otherwise stated, all references to “$” are to the New Zealand dollar.
Not an offer of securities in the United States
This announcement has been prepared for publication in New Zealand and Australia and may not be
released to US wire services or distributed in the United States. This announcement does not
constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States or any
other jurisdiction. Any securities described in this announcement have not been, and will not be,
registered under the US Securities Act of 1933 or the securities laws of any state or other jurisdiction
of the United States and may not be offered or sold in the United States except in transactions
exempt from, or not subject to, the registration requirements of the US Securities Act and applicable
US state securities laws.
---
1
HEARTLAND GROUP HOLDINGS LIMITED
OFFER DOCUMENT
1 for 6.85 Accelerated Non-Renounceable Entitlement Offer of New Shares
8 April 2024
Not for distribution or release in the United States
This Offer Document is an important document. You should read the entire document before deciding what action to take with
respect to your Entitlements. If you have any doubts as to what you should do, please consult your broker, financial, investment or
other professional advisor. This Offer Document may not be released to US wire services and may be distributed in the United
States only by the Company to Eligible Institutional Shareholders. The distribution of this Offer Document outside of New Zealand
and Australia may be restricted by law. If you come into possession of this Offer Document, you should observe any such
restrictions and should seek your own advice on those restrictions.
CONTENTS
IMPORTANT NOTICE 1
PART 1: LETTER FROM THE CHAIR 3
PART 2: OFFER AT A GLANCE 5
PART 3: IMPORTANT DATES 7
PART 4: DETAILS OF THE OFFER 9
PART 5: GLOSSARY 21
PART 6: DIRECTORY 25
1
IMPORTANT NOTICE
GENERAL INFORMATION
The Offer is made under the exclusion in clause 19 of
Schedule 1 of the FMCA and pursuant to the provisions of
section 708AA of the Corporations Act (as modified by
ASIC Corporations (Non-Traditional Rights Issues)
Instrument 2016/84 and ASIC Instrument 18-1012).
This Offer Document is not a product disclosure
statement or other disclosure document for the purposes
of the FMCA, the Corporations Act or any other law, has
not been lodged with the Financial Markets Authority or
ASIC, and does not contain all of the information that an
investor would find in a product disclosure statement or
other disclosure document, or which may be required in
order to make an informed investment decision about
the Offer or Heartland.
ADDITIONAL INFORMATION AVAILABLE UNDER
HEARTLAND’S CONTINUOUS DISCLOSURE OBLIGATIONS
Heartland is subject to continuous disclosure obligations
under the NZX Listing Rules. You can find market
releases by Heartland at nzx.com and at asx.com.au
under the code “HGH”.
Heartland may, during the period of the Offer, make
additional releases to the NZX and the ASX. To the
maximum extent permitted by law, no release by
Heartland to the NZX or the ASX will permit an applicant
to withdraw any previously submitted application
without Heartland’s prior consent.
OFFERING RESTRICTIONS
This Offer Document does not constitute an offer,
advertisement or invitation in any place in which, or to
any person to whom, it would not be lawful to make such
an offer, advertisement or invitation.
This Offer Document may not be sent or given to any
person who is not an Eligible Shareholder or an
Institutional Investor in circumstances in which the Offer
or distribution of this Offer Document would be unlawful.
The distribution of this Offer Document (including an
electronic copy) outside New Zealand or Australia may be
restricted by law. In particular, this Offer Document may
not be distributed to any person, and the New Shares
may not be offered or sold, in any country outside of
New Zealand or Australia except to Eligible Institutional
Investors or as Heartland may otherwise determine in
compliance with applicable laws.
This Offer Document and any accompanying NZX or ASX
announcements do not constitute an offer to sell, or the
solicitation of an offer to buy, any securities in the United
States or to any person who is acting for the account or
benefit of any person in the United States (to the extent
such person is acting for the account or benefit of a
person in the United States), or in any other jurisdiction
in which, or to any person to whom, such an offer would
be illegal.
The New Shares have not been, and will not be,
registered under the US Securities Act or the securities
laws of any state or other jurisdiction of the United
States. Accordingly, the New Shares may not be offered
or sold in the United States or to persons acting for the
account or benefit of a person in the United States (to
the extent such persons hold Existing Shares and are
acting for the account or benefit of a person in the
United States), except in transactions exempt from, or
not subject to, the registration requirements of the US
Securities Act and the applicable securities laws of any
state or other jurisdiction of the United States.
Further details on the offering restrictions that apply are
set out in Part Four.
If you come into possession of this Offer Document, you
should observe any such restrictions. Any failure to
comply with such restrictions may contravene applicable
securities law. Heartland disclaims all liability to such
persons.
FUTURE PERFORMANCE
This Offer Document includes certain “forward-looking
statements” about Heartland and the environment in
which Heartland operates, such as indications of, and
guidance on, future earnings and financial position and
performance. Forward-looking information is inherently
uncertain and subject to contingencies, known and
unknown risks and uncertainties and other factors, many
of which are outside of Heartland’s control, and may
involve significant elements of subjective judgement and
assumptions as to future events which may or may not
be correct. A number of important factors could cause
actual results or performance to differ materially from
forward-looking statements. No assurance can be given
that actual outcomes or performance will not materially
differ from the forward-looking statements. The forward-
looking statements are based on information available to
Heartland as at the date of this Offer Document. Except
as required by law or regulation (including the NZX Listing
Rules), Heartland undertakes no obligation to provide any
additional or updated information whether as a result of
new information, future events or results or otherwise.
2
In light of heightened geopolitical tensions, continuing
cost of living pressures and uncertainty around whether
New Zealand and Australian central bank inflation targets
will be reached (and the commencement of
commensurate rate cuts), extra caution should also be
taken when assessing the forward-looking statements.
These ever-evolving situations continue to pose
challenges for global financial markets and the New
Zealand and Australian economies. Capital markets may
continue to see equity securities suffer from spikes in
volatility.
As the holding company of an Australasian financial
services group, Heartland is exposed to credit, capital,
liquidity and funding, market (including interest rate and
currency), operational, regulatory compliance and
general business risk. Heartland has implemented (or will
implement in preparedness for the acquisition of
Challenger Bank) structures, policies, procedures,
controls and information systems that it considers
appropriate to manage these risks, but there are inherent
limitations to any risk management framework.
Heartland is exposed to risks that may not be anticipated
or are outside its control, its risk management framework
may not operate effectively or there may be unforeseen
challenges arising from the integration of Challenger
Bank or in executing on Heartland’s strategic objectives.
If any of Heartland’s risk management processes and
procedures prove ineffective or inadequate or are
otherwise not appropriately implemented, Heartland
could suffer unexpected losses and reputational damage
which could adversely affect Heartland’s business and
financial performance.
Investors are therefore strongly cautioned not to place
undue reliance on forward-looking statements.
CHANGES TO THE OFFER
Subject to the NZX Listing Rules, Heartland reserves the
right to alter the dates set out in this Offer Document.
Additionally, Heartland reserves the right to withdraw all
or any part of the Offer (either generally or in particular
cases) and the issue of New Shares at any time before the
Allotment Date at its absolute discretion.
NO GUARANTEE
No guarantee is provided by any person in relation to the
New Shares to be issued pursuant to the Offer. Likewise,
no warranty is provided with regard to the future
performance of Heartland or any return on any
investments made pursuant to this Offer Document.
DECISION TO PARTICIPATE IN THE OFFER
The information in this Offer Document does not
constitute a recommendation to acquire or invest in New
Shares nor does it amount to financial product advice.
This Offer Document has been prepared without taking
into account the particular needs or circumstances of any
investor, including an investor’s investment objectives,
financial and/or tax position. You should conduct your
own independent review, investigation and analysis of
the Shares the subject of the Offer. You should obtain
any professional advice you require to evaluate the
merits and risks of an investment in the Company before
making any investment decision based on your
investment objectives.
PRIVACY
Any personal information provided by Eligible
Shareholders via the online application will be held by
Heartland or the Registrar at the addresses set out in the
Directory.
Heartland and/or the Registrar may store your personal
information in electronic format, including in online
storage or on a server or servers which may be located in
New Zealand or overseas. The information will be used
for the purposes of administering your investment in
Heartland.
This information will only be disclosed to third parties
with your consent or if otherwise required or permitted
by law. Under the New Zealand Privacy Act 2020 and
Australian Privacy Act 1988 (Cth), you have the right to
access and correct any personal information held about
you.
ENQUIRIES
Enquiries about the Offer can be directed to a NZX
Primary Market Participant, or your solicitor, accountant
or other professional adviser.
If you have any questions about the number of New
Shares shown on the Entitlement Form that accompanies
this Offer Document, or how to apply online, please
contact the Registrar.
DEFINED TERMS
Capitalised terms used in this Offer Document have the
specific meaning given to them in the Glossary of this
Offer Document.
3
PART 1: LETTER FROM THE CHAIR
8 April 2024
Dear Heartland shareholder,
Heartland Group Holdings Limited (Heartland) is pleased to announce that it has received indicative
regulatory approvals from the Australian Prudential Regulation Authority (APRA) and the Reserve Bank of
New Zealand (RBNZ) for Heartland Bank Limited’s (Heartland Bank) acquisition of Challenger Bank Limited
(Challenger Bank) from Challenger Limited. Subject to receipt of final regulatory approvals, Heartland Bank
expects to complete the acquisition of Challenger Bank on 30 April 2024.
Heartland also announces a NZ$210 million equity raise, the successful completion of which APRA and
RBNZ’s final regulatory approvals are conditional on. The equity raise comprises a NZ$105 million
underwritten placement and a NZ$105 million underwritten 1 for 6.85 pro-rata entitlement offer
(Entitlement Offer), described in more detail below.
The acquisition of Challenger Bank is a critical step in Heartland’s strategy for expansion in the Australian
market and achieving its long-term growth ambitions. Heartland is already well-established in Australia
through its Reverse Mortgage business (Heartland Finance) and Livestock Finance business (StockCo),
(together, Heartland Australia). At 31 December 2023, together, Heartland’s Australian Reverse Mortgage
and Livestock Finance businesses had approximately NZ$2 billion of gross finance receivables.
Completing the Challenger Bank acquisition will make Heartland Bank the first New Zealand registered bank
to acquire an Australian Authorised Deposit-Taking Institution (ADI). Subject to completion, under
Heartland Bank’s ownership, Challenger Bank will be rebranded to Heartland Bank (Heartland Bank
Australia), providing a platform to extend Heartland’s “best or only” strategy in Australia. Once Heartland
Australia becomes part of Heartland Bank Australia, it will be the only specialist bank provider of both
reverse mortgages and livestock finance in Australia.
Proceeds from the equity raise will be used to fund the balance of the consideration payable for the
Challenger Bank acquisition, support the expected regulatory capital requirements of Challenger Bank and
Heartland Bank, and cater for near-term projected asset growth post-completion of the Challenger Bank
acquisition.
1 FOR 6.85 ENTITLEMENT OFFER AT NZ$1.00 PER NEW SHARE
Under the Entitlement Offer, eligible shareholders may apply for 1 new share for every 6.85 existing shares
held as at 7.00pm NZST (5.00pm AEST) on Tuesday 9 April 2024, at an application price of NZ$1.00 per new
share.
The application price is NZ$1.00, reflecting an 18.0% discount to the last close price of NZ$1.22 on 5 April
2024, and a 14.6% discount to the theoretical ex-rights price (TERP) of NZ$1.1703
1
.
The placement and the institutional component of the Entitlement Offer will be accelerated and will close
on Tuesday 9 April 2024. Eligible retail shareholders have until 5.00pm NZST (3.00pm AEST) on Monday 22
April 2024 to subscribe for new shares. In addition to being able to take up their entitlement, Eligible Retail
Shareholders who take up their entitlement in full may apply for additional new shares not taken up by
other retail shareholders up to a maximum of 100% above their pro-rata entitlement.
1
TERP is the theoretical ex-rights price at which Heartland ordinary shares would trade immediately after the ex-rights date for the Entitlement Offer.
TERP is calculated with reference to Heartland’s closing share price of NZ$1.22 on 5 April 2024 and includes all new shares issued under the placement
and the Entitlement Offer. TERP is a theoretical calculation only and the actual price at which Heartland ordinary shares will trade immediately after the
ex-rights date for the Entitlement Offer will depend on many factors and may not be equal to TERP.
4
Heartland has received a pre-commitment from its largest shareholder, Harrogate Trustee Limited, for
approximately NZ$14 million of the equity raise. The placement and Entitlement Offer, excluding the
amount pre-committed by Harrogate Trustee Limited, are fully underwritten by Jarden Partners Limited.
Under the Entitlement Offer, there will be no trading of entitlements or any shortfall bookbuild of new
shares not taken up. Those shareholders who do not exercise their entitlements, or who are ineligible to do
so, will have their shareholdings diluted.
After reading the accompanying Offer Document, the Board encourages you to seek financial, investment,
or other professional advice from a qualified professional adviser and that you take your time to consider
this Offer. Additional informational can be found at www.heartlandshareoffer.co.nz and in the
announcement and investor presentation released to the NZX and ASX on Monday 8 April 2024.
On behalf of the Board, thank you for your continued support. We welcome your consideration of, and
participation in, the Entitlement Offer.
Yours sincerely,
Greg Tomlinson
Heartland Board Chair
5
PART 2: OFFER AT A GLANCE
Issuer Heartland Group Holdings Limited
The Offer Heartland is undertaking an equity raise comprising the Placement to raise
NZ$105 million together with this accelerated non-renounceable entitlement
offer (ANREO) to raise approximately $105 million.
The ANREO is a pro rata offer of 1 New Share for every 6.85 Existing Shares held
by an Eligible Shareholder at 7.00pm (NZST) on the Record Date, with fractional
entitlements being rounded down to the nearest share.
Eligible Institutional Shareholders will have a shorter than usual offer period to
accept their Entitlement under the Institutional Entitlement Offer, with the
Institutional Entitlement Offer and the Placement conducted over two Business
Days (including the date of the announcement of the Offer).
If an Eligible Shareholder does not take up all of its Entitlements, its current
shareholding will be diluted as a result of the issue of New Shares.
New Shares attributable to the Institutional Entitlement Offer not taken up by
Eligible Institutional Shareholders under the Institutional Entitlement Offer and
the Entitlements of certain Ineligible Institutional Shareholders may, subject to
demand, be allocated to Institutional Investors who participate in the Placement
or as Heartland and the Underwriter may otherwise agree. Shares issued under
the Placement will not be eligible to participate in the ANREO.
New Shares that are attributable to Entitlements that are not taken up by
Eligible Retail Shareholders (together with those attributable to Entitlements of
Ineligible Retail Shareholders) will be offered to Eligible Retail Shareholders who
take up their Entitlements in full, allowing them to subscribe for additional New
Shares up to a maximum of 100% of their Entitlements.
Application Price NZ$1.00 (or the A$ Price) per New Share.
Existing Shares
currently on issue
719,509,038 Existing Shares.
Maximum number of
New Shares being
offered under the
Offer
105,037,815 New Shares (subject to rounding).
Offer size The approximate amount to be raised under the Offer is NZ$105 million.
New Shares The same class as, and ranking equally with, Existing Shares.
6
Eligible Retail
Shareholders
You are an Eligible Retail Shareholder if, as at 7.00pm (NZST) on the Record Date,
you are recorded in Heartland’s share register as a Shareholder and:
(a) your address is shown in Heartland’s share register as being in New
Zealand or Australia; or
(b) Heartland considers, in its discretion, you may be treated as an Eligible
Retail Shareholder under all applicable securities laws to receive an offer
of New Shares under the Offer,
and you are not in the United States and not acting for the account or benefit of
a person in the United States (or, in the event that you are acting for the account
or benefit of a person in the United States, you are not participating in the Offer
in respect of that person) and you are not an Institutional Shareholder.
How to apply Eligible Retail Shareholders
Applications must be made online at www.heartlandshareoffer.co.nz
Eligible Institutional Shareholders
The Lead Manager will contact Eligible Institutional Shareholders to advise them
of the terms and conditions of participation in the Offer and confirm their
application process.
Pre-commitments Heartland has received a pre-commitment from its largest shareholder,
Harrogate Trustee Limited, for approximately NZ$14 million of the equity raise.
Underwriting The Placement and the Entitlement Offer is fully underwritten by the
Underwriter with the exception of the amount pre-committed by Harrogate
Trustee Limited.
7
PART 3: IMPORTANT DATES
INSTITUTIONAL ENTITLEMENT OFFER
This timetable is relevant to participants in the Institutional Entitlement Offer. Eligible Retail Shareholders
should refer to the important dates for the Retail Entitlement Offer set out in the “Retail Entitlement Offer”
table on the following page.
Key Event Date
2
Trading halt commences on the NZX Main Board and the ASX (pre-
market open)
Monday 8 April 2024
Institutional Entitlement Offer opens at 10.00am (NZST) or 8.00am
(AEST)
Monday 8 April 2024
Institutional Entitlement Offer closes (for Eligible Institutional
Shareholders in New Zealand, Australia, Hong Kong and Singapore)
Monday 8 April 2024
Institutional Entitlement Offer closes (for all other jurisdictions) Tuesday 9 April 2024
Announce results of Institutional Entitlement Offer
Trading halt lifted on the NZX Main Board and ASX
Tuesday 9 April 2024
Record Date 7.00pm (NZST) or 5.00pm (AEST) Tuesday 9 April 2024
Settlement of Institutional Entitlement Offer on ASX Friday 12 April 2024
Settlement of Institutional Entitlement Offer on the NZX Main Board and
commencement of trading of allotted New Shares on the NZX Main
Board and ASX
Monday 15 April 2024
2
The dates set out in the table above (and any references to them in this Offer Document) are subject to change and are
indicative only. All times and dates refer to NZ time (unless otherwise specified). Heartland reserves the right to amend the
timetables (including by extending the closing dates for the Offer or accepting late Applications, either generally or in particular
cases) subject to the NZX Listing Rules. Any extension of the closing dates for the Offer will have a consequential effect on the
issue date of New Shares.
8
RETAIL ENTITLEMENT OFFER
The timetable immediately below is relevant to participants in the Retail Entitlement Offer. Eligible
Institutional Shareholders should refer to the important dates for the Institutional Entitlement Offer set out
in the “Institutional Entitlement Offer” table on the previous page.
Key Event Date
3
Record Date 7.00pm (NZST) or 5.00pm (AEST) Tuesday 9 April 2024
Expected dispatch of the Offer Document Thursday 11 April 2024
Retail Entitlement Offer opens Thursday 11 April 2024
Retail Entitlement Offer closes at 5.00pm (NZST) or 3.00pm (AEST) (last
day for online applications, or for receipt of the Acceptance Form, with
payment)
Monday 22 April 2024
Announce results for Retail Entitlement Offer
Wednesday 24 April 2024
Settlement of Retail Entitlement Offer on ASX Friday 26 April 2024
Settlement of Retail Entitlement Offer on the NZX Main Board and
commencement of trading of allotted New Shares on the NZX Main
Board
Friday 26 April 2024
Commencement of trading of allotted New Shares on ASX Monday 29 April 2024
Despatch of holding statements for New Shares issued under the Retail
Entitlement Offer
Tuesday 30 April 2024
Applicants must apply via the online application process as soon as possible. No cooling-off rights apply to
applications submitted under the Offer and once an application is submitted, it cannot be withdrawn
without Heartland’s prior consent.
3
The dates set out in the table above (and any references to them in this Offer Document) are subject to change and are
indicative only. All times and dates refer to NZ time (unless otherwise specified). Heartland reserves the right to amend the
timetables (including by extending the closing dates for the Offer or accepting late Applications, either generally or in particular
cases) subject to the NZX Listing Rules. Any extension of the closing dates for the Offer will have a consequential effect on the
issue date of New Shares.
9
PART 4: DETAILS OF THE OFFER
THE OFFER
The Offer is an offer of New Shares to Eligible Shareholders under a pro rata accelerated non-renounceable
entitlement offer. Under the Offer, Eligible Shareholders are entitled to subscribe for 1 New Share for
every 6.85 Existing Shares held at 7.00 pm (NZST) on the Record Date. The New Shares will be the same
class as, and will rank equally with, Existing Shares which are quoted on the NZX Main Board and ASX. It is a
term of the Offer that Heartland will take any necessary steps to ensure that the New Shares are,
immediately after issue, quoted on the NZX Main Board and ASX.
If you are an Eligible Shareholder you may take up all, part or none of your Entitlements. If you are an
Eligible Shareholder and you do not take up all of your Entitlements, your percentage holding in Heartland
will be reduced as a result of the issue of New Shares in the Placement and the Offer.
The maximum number of New Shares being offered under the Offer is 105,037,815 New Shares (subject to
rounding). Heartland will raise a total of approximately NZ$105 million through the Offer, which is fully
underwritten by the Underwriter with the exception of the amount pre-committed by Harrogate.
APPLICATION PRICE
The Application Price is NZ$1.00 (or the A$ Price) per New Share.
The A$ Price is A$0.9151 per New Share. The Australian dollar price of A$0.9151 has been set by Heartland
taking into account the NZ$:A$ exchange rate published by the Reserve Bank of New Zealand on its website
on 5 April 2024. The Application Price must be paid in full on application. Payment of the Application Price
must be made, for the Retail Entitlement Offer, in accordance with the online application process.
Any New Shares (including additional New Shares) issued to you will be issued on the branch register on
which you currently hold the Existing Shares to which your Entitlement relates.
Heartland may accept late applications and application monies, but it has no obligation to do so. Heartland
may accept or reject (at its discretion) any online application which it considers is not completed correctly
and may correct any errors or omissions in the online application.
An application may not be withdrawn without Heartland’s prior consent once submitted.
Application monies received will be held in a trust account with the Registrar until the corresponding New
Shares are allotted or the application monies are refunded. Interest earned on the application monies will
be for the benefit, and remain the property, of Heartland and will be retained by Heartland whether or not
the issue of New Shares takes place. Any refunds of application monies (without interest) will be made
within 10 Business Days of allotment (or the date that the decision not to accept an application is made, as
the case may be).
10
WITHDRAWAL
Subject to Heartland’s compliance with all applicable laws, Heartland reserves the right to withdraw the
Offer at any time at its absolute discretion. If any application is not accepted, all applicable application
monies will be refunded, without interest, to the relevant Shareholder.
OVERVIEW OF THE OFFER
Heartland will raise a total of approximately NZ$105 million through the Offer, which is fully underwritten
by the Underwriter with the exception of the amount pre-committed by Harrogate. The maximum number
of New Shares that are being offered under the Offer is 105,037,815 New Shares (subject to rounding).
The Offer comprises the following components:
• the Institutional Entitlement Offer; and
• the Retail Entitlement Offer,
in each case, as described in further detail below.
The Offer is an accelerated non-renounceable entitlement offer (ANREO). This means that if you, as an
Eligible Shareholder, do not take up your full Entitlement under the Offer, then your Entitlement will lapse,
and you will receive no value for those lapsed Entitlements. Further, if you do not take up your full
Entitlement, you will have your percentage holding in Heartland reduced as a result of the Placement and
the Offer by approximately 22.6%.
By receiving this Offer Document, you represent and warrant that:
• you are an Eligible Shareholder or an Institutional Investor;
• you have not sent, and will not send, this Offer Document or any other offer materials outside Australia
and New Zealand or to any person in the United States, except custodians and nominees may distribute
this Offer Document to beneficial shareholders who are Institutional Investors in the Permitted
Jurisdictions excluding the United States;
• you understand that the New Shares have not been, and will not be, registered under the US Securities
Act or the securities laws of any state or other jurisdiction of the United States, and the New Shares
may not be offered or sold in the United States, except in transactions exempt from, or not subject to,
the registration requirements of the US Securities Act and the applicable securities laws of any state or
other jurisdiction of the United States; and
• you acknowledge that, if you decide to sell or otherwise transfer any New Shares, you will only do so in
the regular way for transactions on the NZX Main Board or ASX, where neither you nor any person
acting on your behalf knows, or has reason to know, that the sale has been pre-arranged with, or that
the purchaser is, a person in the United States.
PURPOSE OF THE OFFER
The proceeds of the equity raise will be used to finance the balance of the consideration payable for the
Challenger Bank acquisition, support the expected regulatory capital requirements of Challenger Bank and
Heartland Bank, and cater for near-term asset projected growth post-completion of the Challenger Bank
acquisition.
11
OFFER STRUCTURE
Heartland has chosen to undertake a Placement and ANREO to raise capital. The ANREO structure is the
most common entitlement offer structure utilised by ASX listed companies. The board of directors of
Heartland has determined that this capital raising structure is in the best interests of Heartland, after
carefully considering alternative capital raising structures, and weighing the benefits of this capital raising
structure against the expected impact on non-participating Shareholders. ANREOs have a variety of
benefits compared to a renounceable pro-rata offer, which Heartland has assessed as desirable in the
current circumstances. Those benefits are:
• Certainty – Heartland requires certainty that sufficient funds be raised under the Offer to complete the
acquisition of Challenger Bank and to support the expected regulatory capital requirements of
Challenger Bank and Heartland Bank. The Placement and the Offer are fully underwritten with the
exception of the amount pre-committed by Harrogate, providing certainty that the necessary funds will
be received. The expert investment banking advice obtained from Jarden noted that undertaking an
ANREO enables greater sub-underwriting support due to the shorter timeframe exposure to market risk
compared to a renounceable pro rata capital raising structure, which in turn has enabled the Offer to
be fully underwritten with the exception of the amount pre-committed by Harrogate.
• Pricing – The expert investment banking advice obtained from Jarden also noted that using an ANREO
structure allows Heartland to price the Offer at a smaller discount than would be the case for a
renounceable pro rata capital raising structure. This minimises the dilutionary impact on non-
participating Shareholders and provides more certainty for existing Shareholders subscribing for
additional Shares at a fixed price.
• Timing – The Placement and the Offer are being conducted in relation to the acquisition of Challenger
Bank and to support the near-term capital needs of Challenger Bank and Heartland Bank post-
completion. Importantly, the accelerated nature of an ANREO enables completion of the Offer on a
faster timetable than a traditional rights issue or an accelerated renounceable entitlement offer as no
bookbuilds are required. This means Heartland will receive the proceeds of the capital raise more
quickly, which will in turn allow for the acquisition of Challenger Bank to complete sooner. The faster
timetable also means the period of risk associated with potential market volatility between the Offer
opening and settlement is reduced, which in turn supports greater participation by both sub-
underwriters and Shareholders, as well as a smaller discount.
The Placement and ANREO structure will mean that Shareholders who do not participate in the Offer will
have their shareholding diluted and will not receive any value for their Entitlements. If a Shareholder did
not participate in either the Placement or ANREO, their shareholding would be diluted by approximately
22.6%. To minimise the number of Ineligible Shareholders who are diluted as a result of the Offer,
Heartland has obtained foreign securities law advice confirming that Shareholders holding approximately
99% of Heartland’s Shares will be eligible to participate in the ANREO. Eligible Retail Shareholders who have
taken up all of their Entitlements in full may apply for additional New Shares, up to a maximum amount of
New Shares equal to 100% of their Entitlements, which means that in the event of a shortfall under the
Retail Entitlement Offer, those Eligible Retail Shareholders may be able to offset any dilution experienced
as a result of the Placement.
Heartland has obtained independent expert investment banking advice from Jarden which is consistent
with the explanation above as to why the Placement and ANREO structure has been selected and is in the
best interests of Heartland. Although Jarden acts as the Lead Manager (and a related company acts as the
Underwriter) to the Offer, Heartland and its board of directors concluded that it was still appropriate for
Jarden to provide this advice in these circumstances, as the advice was given in a manner that considers the
best interests of all Shareholders, generally. To the maximum extent permitted by law, Jarden does not
12
accept any liability to Shareholders in relation to the contents of this Offer Document or the choice of offer
structure by the board of directors of Heartland.
THE INSTITUTIONAL ENTITLEMENT OFFER
Overview of the Institutional Entitlement Offer
Heartland is offering Eligible Institutional Shareholders the opportunity to subscribe for 1 New Share for
every 6.85 Existing Shares held as at 7.00 pm (NZST) on the Record Date, at an Application Price of NZ$1.00.
This ratio and the Application Price are the same as for the Retail Entitlement Offer. The Lead Manager will
seek to approach Eligible Institutional Shareholders, who may take up all, part or none of their
Entitlements.
The Institutional Entitlement Offer opens at 10.00 am (NZST) on Monday 8 April 2024 and closes on
Monday, 8 April 2024 for Eligible Institutional Shareholders in New Zealand, Australia, Hong Kong and
Singapore, and Tuesday 9 April 2024 for Eligible Institutional Shareholders located in all other jurisdictions
(subject to Heartland’s right to modify these dates or times).
Entitlements will not be quoted and cannot be traded on the NZX Main Board, the ASX or privately
transferred.
Eligibility under the Institutional Entitlement Offer
The Institutional Entitlement Offer is only open to Eligible Institutional Shareholders. Heartland will
determine the Shareholders who will be treated as Eligible Institutional Shareholders for the purpose of
determining the Shareholders to whom an offer of New Shares will be made under the Institutional
Entitlement Offer. In exercising its discretion, Heartland may have regard to a number of matters, including
legal and regulatory requirements and logistical and registry constraints. Heartland will determine which
Shareholders will be treated as Ineligible Institutional Shareholders. To the maximum extent permitted by
law, the Lead Manager, Underwriter, Heartland and each of their respective shareholders, directors,
officers, employees, agents and advisers disclaims any duty or liability (including for negligence) in respect
of such determination or exercise of such discretion.
Heartland reserves the right to reject any application for New Shares under the Institutional Entitlement
Offer that it considers comes from a person who is not an Eligible Institutional Shareholder.
Acceptance of Entitlement under the Institutional Entitlement Offer
The Lead Manager may seek to contact Eligible Institutional Shareholders to inform them of the terms and
conditions of participation in the Institutional Entitlement Offer and seek confirmation of their Entitlements
under the Offer. Applications for New Shares by Eligible Institutional Shareholders (excluding those in the
United States) can only be made by contact with the Lead Manager. The Company will contact Eligible
Institutional Shareholders in the United States directly.
Entitlements are not rounded up to a minimum holding. The number of New Shares to which an Eligible
Institutional Shareholder is entitled under its Entitlement will, in the case of fractions of New Shares, be
rounded down to the nearest whole number. Applications in excess of an Eligible Institutional
Shareholder’s Entitlement will not be accepted.
New Shares attributable to the Institutional Entitlement Offer not taken up by Eligible Institutional
Shareholders under the Institutional Entitlement Offer and the Entitlements of certain Ineligible
Institutional Shareholders may, subject to demand, be allocated to Institutional Investors who participate in
the Placement or as the Lead Manager and Underwriter may otherwise determine. Shares issued under the
Placement will not be eligible to participate in the ANREO.
13
Settlement of the Institutional Entitlement Offer
Settlement of the Institutional Entitlement Offer will occur on the Institutional Settlement Date in
accordance with arrangements advised by the Lead Manager. Each investor remains responsible for
ensuring its own compliance with the Takeovers Code, the Banking (Prudential Supervision) Act 1989 and
other applicable legislation.
THE RETAIL ENTITLEMENT OFFER
Overview of the Retail Entitlement Offer
Heartland is offering Eligible Retail Shareholders the opportunity to subscribe for 1 New Share for every
6.85 Existing Shares held as at 7.00pm (NZST) on the Record Date, at an Application Price of NZ$1.00 per
New Share (or the A$ Price). This ratio and the Application Price are the same as for the Institutional
Entitlement Offer. Eligible Retail Shareholders are sent this Offer Document together with a personalised
Entitlement Form and may take up all, part or none of their Entitlements.
The Retail Entitlement Offer opens on Thursday 11 April 2024 and closes at 5.00 pm (NZST) on Monday 22
April 2024 (subject to Heartland’s right to modify these dates or times).
Entitlements will not be quoted and cannot be traded on the NZX Main Board, the ASX or privately
transferred.
Eligibility under the Retail Entitlement Offer
The Retail Entitlement Offer is only open to Eligible Retail Shareholders.
The Retail Entitlement Offer does not constitute an offer to any person who is not an Eligible Retail
Shareholder (including any Institutional Shareholder or an Ineligible Retail Shareholder) in any jurisdiction
in which, or to any person to whom, it would be unlawful to make such an offer. In particular, Shareholders
who are in the United States or who are acting for the account or benefit of persons in the United States (to
the extent such persons are acting for the account or benefit of a person in the United States) are not
eligible to participate in the Retail Entitlement Offer.
Any person allocated New Shares under the Institutional Entitlement Offer is not able to participate in the
Retail Entitlement Offer in respect of those New Shares.
Heartland reserves the right to reject any application for New Shares under the Retail Entitlement Offer
that it considers comes from a person who is not an Eligible Retail Shareholder.
Acceptance of Entitlement under the Retail Entitlement Offer
Applications for New Shares by Eligible Retail Shareholders can only be made via an online application at
www.heartlandshareoffer.co.nz.
Entitlements are not rounded up to a minimum holding. The number of New Shares to which an Eligible
Retail Shareholder is entitled under an Entitlement will, in the case of fractions of New Shares, be rounded
down to the nearest whole number.
Eligible Retail Shareholders are not obliged to subscribe for any or all of the New Shares to which they are
entitled under the Offer. They may take up all, part or none of their Entitlements.
Any nominee who takes up an Entitlement in the Retail Entitlement Offer (and therefore applies for New
Shares) on behalf of a person outside Australia and New Zealand will be deemed to have represented and
warranted to Heartland that such person is an Institutional Investor in a Permitted Jurisdiction excluding
14
the United States or such other jurisdiction as Heartland may consent taking into account applicable
securities laws.
New Shares attributable to the Retail Entitlement Offer not taken up by Eligible Retail Shareholders under
the Retail Entitlement Offer and the Entitlements of certain Ineligible Retail Shareholders may, subject to
demand, be allocated to Eligible Retail Shareholders who take up their Entitlements in full (as outlined
below) or as the Lead Manager and Underwriter may otherwise determine.
Applications to take up additional New Shares
New Shares that are attributable to Entitlements that are not taken up by Eligible Retail Shareholders
(together with those attributable to Entitlements of Ineligible Retail Shareholders) will be offered to Eligible
Retail Shareholders who take up their Entitlements in full.
Eligible Retail Shareholders who have taken up all of their Entitlements in full may apply for these
additional New Shares, up to a maximum amount of New Shares equal to 100% of their Entitlements.
Eligible Retail Shareholders may apply for these additional New Shares at the Offer Price as directed by the
online application. Payment must be made for both your Entitlements and any additional New Shares for
which you wish to apply.
If you elect to apply for your Entitlements using the A$ Price, then any additional New Shares that you are
applying for must also be paid for in Australian dollars at the A$ price.
Allocations and any necessary scaling of additional New Shares applied for by Eligible Retail Shareholders
who take up their Entitlements in full will be determined by Heartland and the Lead Manager.
NOMINEES
If you hold Existing Shares as nominee for more than one person, then you may (depending on the nature
of each such person) be an Eligible Institutional Shareholder, Ineligible Institutional Shareholder, Eligible
Retail Shareholder or Ineligible Retail Shareholder with regard to the Entitlement of each such person.
Nominees who hold Shares on behalf of persons in the United States, or who are acting for the account or
benefit of persons in the United States, are not eligible to participate on behalf of those persons.
Notice to nominees and custodians
The Retail Entitlement Offer is being made to all Eligible Retail Shareholders. Nominees and custodians with
registered addresses in eligible jurisdictions, irrespective of whether they participated under the
Institutional Entitlement Offer, may also be able to participate in the Retail Entitlement Offer in respect of
some or all of the beneficiaries on whose behalf they hold existing Shares, provided that the applicable
beneficiary would satisfy the criteria for an Eligible Retail Shareholder.
Nominees and custodians who hold Shares as nominees or custodians will receive a letter from Heartland.
Nominees and custodians should consider carefully the contents of that letter and note in particular that
the Retail Entitlement Offer is not available to, and they must not purport to accept the Retail Entitlement
Offer in respect of:
(a) beneficiaries on whose behalf they hold Existing Shares who would not satisfy the criteria for an
Eligible Retail Shareholder;
(b) Eligible Institutional Shareholders who received an offer to participate in the Institutional
Entitlement Offer (whether they accepted their Entitlement or not);
15
(c) Ineligible Institutional Shareholders who were ineligible to participate in the Institutional
Entitlement Offer; or
(d) Shareholders who are not eligible under all applicable securities laws to receive an offer under the
Retail Entitlement Offer.
In particular, nominees and custodians who hold Shares on behalf of persons outside Australia and New
Zealand, or persons who are acting for the account or benefit of persons in the United States, are not
eligible to participate on behalf of those persons, and may not take up Entitlements on behalf of, or send
any documents relating to the Retail Entitlement Offer to, any such person except for any beneficial
shareholder of the Company outside Australia and New Zealand that is an Institutional Investor in another
Permitted Jurisdiction (excluding the United States) or as Heartland may otherwise consent.
OVERSEAS SHAREHOLDERS
The Offer is only open to Eligible Shareholders and persons that Heartland is satisfied can otherwise
participate in the Offer in compliance with all applicable laws. Heartland has determined that it would be
unduly onerous to extend the Retail Entitlement Offer to Ineligible Retail Shareholders and the Institutional
Entitlement Offer to Ineligible Institutional Shareholders because of the small number of such
Shareholders, the number and value of Shares that they hold and the cost of complying with the applicable
regulations in jurisdictions outside New Zealand or Australia.
This Offer Document is only being sent by Heartland to Eligible Shareholders. The distribution of this Offer
Document (including an electronic copy) outside New Zealand or Australia may be restricted by law. Any
failure to comply with such restrictions may contravene applicable securities law. Heartland disclaims all
liability to such persons.
This Offer Document does not constitute an offer of New Shares in any jurisdiction in which it would be
unlawful. In particular, this Offer Document may not be distributed to any person, and the New Shares may
not be offered or sold, in any country outside New Zealand and Australia except to the extent permitted
below.
Hong Kong
WARNING: This Offer Document has not been, and will not be, registered as a prospectus under the
Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong, nor has it been
authorised by the Securities and Futures Commission in Hong Kong pursuant to the Securities and Futures
Ordinance (Cap. 571) of the Laws of Hong Kong (the “SFO”). Accordingly, this Offer Document may not be
distributed, and the New Shares may not be offered or sold, in Hong Kong other than to “professional
investors” (as defined in the SFO and any rules made under that ordinance).
No advertisement, invitation or document relating to the New Shares has been or will be issued, or has
been or will be in the possession of any person for the purpose of issue, in Hong Kong or elsewhere that is
directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if
permitted to do so under the securities laws of Hong Kong) other than with respect to New Shares that are
or are intended to be disposed of only to persons outside Hong Kong or only to professional investors. No
person allotted New Shares may sell, or offer to sell, such securities in circumstances that amount to an
offer to the public in Hong Kong within six months following the date of issue of such securities.
The contents of this Offer Document have not been reviewed by any Hong Kong regulatory authority. You
are advised to exercise caution in relation to the offer. If you are in doubt about any contents of this Offer
Document, you should obtain independent professional advice.
16
Norway
This Offer Document has not been approved by, or registered with, any Norwegian securities regulator
under the Norwegian Securities Trading Act of 29 June 2007 no. 75. Accordingly, this Offer Document shall
not be deemed to constitute an offer to the public in Norway within the meaning of the Norwegian
Securities Trading Act. The New Shares may not be offered or sold, directly or indirectly, in Norway except
to “professional clients” (as defined in the Norwegian Securities Trading Act).
Singapore
This Offer Document and any other materials relating to the New Shares have not been, and will not be,
lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. Accordingly,
this Offer Document and any other document or materials in connection with the offer or sale, or invitation
for subscription or purchase, of New Shares, may not be issued, circulated or distributed, nor may the New
Shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether
directly or indirectly, to persons in Singapore except pursuant to and in accordance with exemptions in
Subdivision (4) Division 1, Part 13 of the Securities and Futures Act 2001 of Singapore (the “SFA”) or
another exemption under the SFA.
This Offer Document has been given to you on the basis that you are an “institutional investor” or an
“accredited investor” (as such terms are defined in the SFA). If you are not such an investor, please return
this Offer Document immediately. You may not forward or circulate this Offer Document to any other
person in Singapore.
Any offer is not made to you with a view to the New Shares being subsequently offered for sale to any
other party in Singapore. On-sale restrictions in Singapore may be applicable to investors who acquire New
Shares. As such, investors are advised to acquaint themselves with the SFA provisions relating to resale
restrictions in Singapore and comply accordingly.
United Kingdom
Neither this Offer Document nor any other document relating to the offer has been delivered for approval
to the Financial Conduct Authority in the United Kingdom and no prospectus (within the meaning of section
85 of the Financial Services and Markets Act 2000, as amended (“FSMA”)) has been published or is
intended to be published in respect of the New Shares.
The New Shares may not be offered or sold in the United Kingdom by means of this Offer Document or any
other document, except in circumstances that do not require the publication of a prospectus under section
86(1) of the FSMA. This Offer Document is issued on a confidential basis in the United Kingdom to
“qualified investors” within the meaning of Article 2I of the UK Prospectus Regulation. This Offer Document
may not be distributed or reproduced, in whole or in part, nor may its contents be disclosed by recipients,
to any other person in the United Kingdom.
Any invitation or inducement to engage in investment activity (within the meaning of section 21 of the
FSMA) received in connection with the issue or sale of the New Shares has only been communicated or
caused to be communicated and will only be communicated or caused to be communicated in the United
Kingdom in circumstances in which section 21(1) of the FSMA does not apply to the Company.
In the United Kingdom, this Offer Document is being distributed only to, and is directed at, persons (i) who
have professional experience in matters relating to investments falling within Article 19(5) (investment
professionals) of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 (“FPO”),
(ii) who fall within the categories of persons referred to in Article 49(2)(a) to (d) (high net worth companies,
unincorporated associations, etc.) of the FPO or (iii) to whom it may otherwise be lawfully communicated
(“relevant persons”). The investment to which this Offer Document relates is available only to relevant
persons. Any person who is not a relevant person should not act or rely on this Offer Document.
17
United States
This Offer Document does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the
United States. The New Shares have not been, and will not be, registered under the US Securities Act of
1933 or the securities laws of any state or other jurisdiction of the United States. Accordingly, the New
Shares may not be offered or sold in the United States except in transactions exempt from, or not subject
to, the registration requirements of the US Securities Act and applicable US state securities laws.
The New Shares will only be offered and sold In the United States to:
● “qualified institutional buyers” (as defined in Rule 144A under the US Securities Act); and
● dealers or other professional fiduciaries organized or incorporated in the United States that are acting
for a discretionary or similar account (other than an estate or trust) held for the benefit or account of
persons that are not US persons and for which they exercise investment discretion, within the meaning
of Rule 902(k)(2)(i) of Regulation S under the US Securities Act.
UNDERWRITING AGREEMENT
Heartland has requested the Underwriter to underwrite the Offer and the Underwriter has agreed to do so
(except in respect of the amount pre-committed by Harrogate). This means that the Underwriter will
subscribe at the Application Price for any New Shares that are not subscribed for under the Placement or by
Eligible Shareholders under the Offer in accordance with the terms of the underwriting agreement. A
summary of the principal terms of the underwriting agreement are set out immediately below:
● The Underwriter has the power to appoint sub-underwriters.
● The Underwriter will be paid an agreed fee for its services in connection with the Offer.
● The underwriting agreement contains termination events, representations, warranties and indemnities
that are customary for an offer of this nature.
● The Underwriter may terminate its obligations under the underwriting agreement in certain
circumstances, including where on or before the Allotment Date for the Retail Entitlement Offer:
o the sale and purchase agreement for Challenger Bank is terminated;
o the Company is prevented from allotting Shares pursuant to the Placement or the Offer by any
applicable laws or as a result of an order or judgment of a Court or regulatory authority;
o a statement in this Offer Document, the investor presentation or otherwise published in connection
with the Offer and Placement is or becomes false, misleading or deceptive or likely to mislead or
deceive (including by omission) in any material adverse respect, or such materials otherwise fail to
comply with laws applicable to the Offer and Placement in any material respect;
o the S&P/NZX 50 Index or ASX 200 Index declines by a specified percentage over a prescribed time
period;
o an insolvency event occurs in relation to the Company or any of its subsidiaries;
o a material adverse event, or any event or development which is likely to give rise to a material
adverse event, occurs in relation to the Offer, Placement or other certain specified matters;
18
o a representation or warranty contained in the underwriting agreement on the part of the Company
is not, or has ceased to be, true or correct (and this is not remedied without adverse impact before
the Allotment Date for the Retail Entitlement Offer) or there is a breach of the underwriting
agreement by the Company that has, or is likely to have, a material adverse effect on the Offer,
Placement or other certain specified matters; or
o an external event, such as a material or fundamental change in financial, economic and political
conditions in certain countries or financial markets, occurs which is likely to have a material adverse
effect on the Offer, Placement or other certain specified matters.
● If the underwriting agreement is terminated, a termination fee may be payable to the Underwriter.
● Heartland has indemnified the Underwriter and its directors, officers, partners, employees and advisers
against certain losses sustained, suffered or incurred, arising out of or in connection with the Offer, the
allotment of the New Shares or the Underwriting Agreement.
● For a period commencing on the date of the Underwriting Agreement and ending three months after
the allotment date for the Retail Entitlement Offer, Heartland must not, without the prior written
consent of the Underwriter:
o allot or issue any Shares or other equity securities of Heartland (whether preferential, redeemable,
convertible or otherwise) or allow the issue of any equity securities by any of its subsidiaries (other
than to Heartland or another subsidiary of Heartland);
o issue or grant any right or option that entitles the holder to call for the issue of Shares or other
equity securities by Heartland or that is otherwise convertible into, exchangeable for or
redeemable by the issue of, Shares or other equity securities issued by Heartland;
o create any debt instrument or other obligation which may be convertible into, exchangeable for or
redeemable by, the issue of Shares or other equity securities by Heartland;
o otherwise enter into any agreement whereby any person may be entitled to the allotment and
issue of any Shares or other equity securities by Heartland; or
o make any announcement of an intention to do any of the above,
other than pursuant to the Placement or the Offer, as publicly disclosed or under Heartland’s
performance rights plan.
● For a period commencing on the date of the Underwriting Agreement and ending three months after
the allotment date for the Retail Entitlement Offer, Heartland and its subsidiaries must carry on their
business in the ordinary course and not dispose of, or grant security over, all or any material part of
their business or assets or acquire any material asset, except as publicly disclosed.
● For a period commencing on the date of the Underwriting Agreement and ending three months after
the allotment date for the Retail Entitlement Offer, Heartland and its subsidiaries must not reduce,
reorganise, or otherwise alter or restructure their capital structure, or agree or announce an intention
to do any of those things, without the prior written consent of Jarden except as publicly disclosed or in
connection with Heartland’s performance rights plan.
19
TERMS AND RANKING OF NEW SHARES
New Shares will rank equally with, and have the same voting rights, dividend rights and other entitlements
as, Existing Shares in Heartland quoted on the NZX Main Board and ASX. Entitlements will not be quoted
and cannot be traded on the NZX Main Board, ASX or privately transferred. It is a term of the Offer that
Heartland will take any necessary steps to ensure that the New Shares are, immediately after issue, quoted
on the NZX Main Board and ASX.
DIVIDEND POLICY
Heartland determines dividends (both interim and final) based on its net profit after tax, subject to
maintaining a prudent level of capital for its needs. Heartland’s capital needs will vary from time to time
depending on a range of factors (including regulatory and credit rating requirements, general economic
conditions, current and expected growth and the business mix). A key objective is to ensure an appropriate
balance between maximising shareholder returns, and protecting the interests of depositors through
prudent capital management.
Having regard to the equity raise, acquisition of Challenger Bank and associated growth opportunities, the
Board expects to target a total dividend payout ratio in the financial year ending 30 June 2024 of 50% of
underlying net profit after tax. The Board will, as it has historically, actively manage dividend settings and
carefully consider the declaration of any dividend based on Heartland’s capital needs, ROE accretive growth
opportunities, balance sheet flexibility and Heartland’s financial performance.
NZX
The New Shares have been accepted for quotation by NZX and will be quoted on the NZX Main Board upon
completion of allotment procedures. The NZX Main Board is a licensed market under the FMCA. However,
NZX accepts no responsibility for any statement in this Offer Document. It is expected that trading on the
NZX Main Board of the New Shares issued under:
• the Institutional Entitlement Offer will commence on Monday 8 April 2024; and
• the Retail Entitlement Offer will commence on Thursday 11 April 2024.
ASX
An application has or will be made to ASX for quotation of the New Shares issued under the Offer and
Heartland expects that the New Shares will be quoted upon completion of allotment procedures. It is
expected that trading on ASX of the New Shares issued under:
• the Institutional Entitlement Offer will commence on Monday 8 April 2024; and
• the Retail Entitlement Offer will commence on Thursday 11 April 2024.
ASX accepts no responsibility for any statement in this Offer Document. The fact that ASX may approve the
New Shares for quotation is not to be taken in any way as an indication of the merits of Heartland. Holding
statements for New Shares allotted under the Offer will be issued and mailed as soon as practicable after
allotment. Applicants under the Offer should ascertain their allocation before trading in the New Shares.
Applicants can do so by contacting the Registrar, whose contact details are set out in the Directory.
Applicants selling New Shares prior to receiving a holding statement do so at their own risk. No person
accepts any liability or responsibility should any person attempt to sell or otherwise deal with New Shares
20
before the holding statement showing the number of New Shares allotted to an applicant is received by the
applicant for those New Shares.
21
PART 5: GLOSSARY
Term Definition
A$ Price A$0.9151 per New Share.
Allotment Date In respect of the:
(a) Institutional Entitlement Offer, Monday 15 April 2024; and
(b) Retail Entitlement Offer, Friday 26 April 2024.
Application Price NZ$1.00 (or the A$ Price) per New Share.
ASIC
The Australian Securities and Investments Commission.
ASX ASX Limited or the market it operates (as the context requires).
Business Day Has the meaning giving to that term in the NZX Listing Rules.
Challenger Bank Challenger Bank Limited (Australian Business Number 54 087 651 750).
Corporations Act Corporations Act 2001 (Cth).
Eligible Institutional
Shareholder
A person who, as at 5.00 pm (NZST) on the Record Date, was recorded in
Heartland’s share register as being a Shareholder and is an Institutional
Investor in a Permitted Jurisdiction, or is a person in another jurisdiction
who Heartland is satisfied the Institutional Entitlement Offer may be
made to under all applicable laws without the need for any registration,
lodgement or other formality (other than a formality with which
Heartland is willing to comply), and is invited to participate in the
Institutional Entitlement Offer.
Eligible Retail
Shareholder
A person who, as at 7.00 pm (NZST) on the Record Date, was recorded in
Heartland’s share register as being a Shareholder and:
(a) whose address is shown in Heartland’s share register as being in New
Zealand or Australia; or
(b) who Heartland considers, in its discretion, may be treated as an
Eligible Retail Shareholder under all applicable securities laws to
receive an offer of New Shares under the Offer,
and who is not in the United States and not acting for the account or
benefit of a person in the United States (to the extent such person is
acting for the account or benefit of a person in the United States) and who
is not an Institutional Shareholder.
Eligible Shareholder An Eligible Retail Shareholder or an Eligible Institutional Shareholder.
Eligible US Fund Manager A dealer or other professional fiduciary organised or incorporated in the
United States that is acting for a discretionary or similar account (other
than an estate or trust) held for the benefit or account of persons that are
not “US persons” (as defined in Rule 902(k) under the US Securities Act)
for which it has and is exercising investment discretion, within the
meaning of Rule 902(k)(2)(i) of Regulation S under the US Securities Act.
22
Entitlement A right to subscribe for 1 New Share for every 6.85 Existing Shares held at
7.00 pm (NZST) on the Record Date at the Application Price, issued
pursuant to the Offer.
Entitlement Form The personalised entitlement form accompanying this Offer Document for
Eligible Retail Shareholders.
Existing Share A Share on issue on the Record Date, excluding Shares held as treasury
stock.
FMCA The Financial Markets Conduct Act 2013.
Ineligible Institutional
Shareholder
A person who, as at 7.00 pm (NZST) on the Record Date, was recorded in
Heartland’s share register as being a Shareholder who is not an
Institutional Investor but, if the Shareholder’s address was shown in
Heartland’s share register as being in New Zealand, Australia, United
States, United Kingdom, Hong Kong, Singapore and Norway, would in the
opinion of Heartland be an Institutional Investor.
Ineligible Retail
Shareholder
A Shareholder who is not an Institutional Shareholder or an Eligible Retail
Shareholder.
Ineligible Shareholder A Shareholder other than an Eligible Shareholder.
Institutional Entitlement
Offer
The offer of New Shares to Eligible Institutional Shareholders.
Institutional Investor A person with an address:
(a) in New Zealand, in relation to the Institutional Entitlement Offer, who
is a wholesale investor as defined in the FMCA;
(b) in Australia, who the Company considers is a “wholesale investor”
being a "sophisticated investor" within the meaning of section 708(8)
of the Corporations Act or an experienced investor meeting the
criteria in section 708(10) or the Corporations Act or a "professional
investor" within the meaning of section 708(11) of the Corporations
Act;
(c) in Hong Kong, who the Company considers is a “professional investor”
(as defined in the Securities and Futures Ordinance of Hong Kong,
Chapter 571 of the Laws of Hong Kong);
(d) in Norway, who the Company considers is a “professional client” as
defined in Norwegian Securities Trading Act of 29 June 2007 no. 75;
(e) in Singapore, who the Company considers is an “institutional investor”
or an “accredited investor” (as such terms are defined in the
Securities and Futures Act 2001 of Singapore (“SFA”));
(f) in United Kingdom, who the Company considers is a “qualified
investor” within the meaning of Article 2(e) of the UK Prospectus
Regulation; and within the categories of persons referred to in Article
19(5) (investment professionals) or Article 49(2)(a) to (d) (high net
worth companies, unincorporated associations, etc.) of the UK
Financial Services and Markets Act 2000 (Financial Promotion) Order
2005, as amended; or
(g) in the United States, who the Company and Jarden reasonable believe
to be a QIB or an Eligible US Fund Manager,
23
who Heartland is satisfied the Institutional Entitlement Offer may be
made to under all applicable laws without the need for any registration,
lodgement or other formality (other than a formality with which
Heartland is willing to comply).
Institutional Settlement
Date
The date of settlement of New Shares under the Institutional Entitlement
Offer, expected to be Monday 15 April 2024 on NZX and Friday 12 April
2024 on ASX.
Institutional Shareholder Eligible Institutional Shareholders and Ineligible Institutional Shareholders.
Jarden or Lead Manager Jarden Securities Limited (company number 646979).
Harrogate Harrogate Trustee Limited (company number 2377849).
Heartland Heartland Group Holdings Limited (company number 6937955).
New Share A Share in Heartland offered under the Offer of the same class as, and
ranking equally in all respects with, Heartland’s quoted Shares at the
Allotment Date.
NZX NZX Limited.
NZX Main Board The main board equity security market operated by NZX.
NZX Listing Rules The listing rules of NZX in relation to the NZX Main Board in force from
time to time, read subject to any applicable rulings or waivers.
NZX Primary Market
Participant
Any company, firm, organisation, or corporation designated or approved
as a primary market participant from time to time by NZX.
Offer or the ANREO The accelerated pro-rata non-renounceable entitlement offer of New
Shares detailed in this Offer Document, comprising the Institutional
Entitlement Offer and the Retail Entitlement Offer.
Offer Document This document.
Permitted Jurisdictions Australia, New Zealand, Hong Kong, Norway, Singapore, United Kingdom
and the United States.
Placement The NZ$105 million placement to certain investors invited to participate in
that placement by the Lead Manager with the exception of the amount
pre-committed by Harrogate.
QIB A “qualified institutional buyer” as that term is defined in Rule 144A under
the US Securities Act.
Record Date Tuesday 9 April 2024.
Registrar Link Market Services Limited.
Retail Entitlement Offer The offer of New Shares to Eligible Retail Shareholders.
Share A fully paid ordinary share in Heartland.
Shareholder A registered holder of Shares.
24
Takeovers Code The Takeovers Code set out in the schedule to the Takeovers Regulations
2000.
Underwriter Jarden Partners Limited (company number 1797701).
US Persons Has the meaning given in Rule 902(k) under the US Securities Act.
US Securities Act The U.S. Securities Act of 1933, as amended.
NOTE:
• All references to time are to New Zealand time unless stated or defined otherwise.
• All references to currency are to New Zealand dollars unless stated or defined otherwise.
• All references to legislation are references to New Zealand legislation unless stated or defined
otherwise.
• This Offer Document, the Offer and any contract resulting from it are governed by the laws of New
Zealand, and each applicant submits to the exclusive jurisdiction of the courts of New Zealand.
25
PART 6: DIRECTORY
ISSUER
Heartland Group Holdings Limited
35 Teed Street
Newmarket
Auckland 1023
New Zealand
For investor relations queries contact:
shareholders@heartland.co.nz
LEGAL ADVISORS
Chapman Tripp
Level 34, PwC Tower
15 Customs Street West
Auckland 1010
New Zealand
LEAD MANAGER AND
UNDERWRITER
Jarden Securities Limited (as Lead
Manager) and Jarden Partners
Limited (as Underwriter)
Level 32, PwC Tower
15 Customs Street West
Auckland 1010
New Zealand
If you have any queries about the Entitlements shown on the Entitlement Form which
accompanies this Offer Document, or how to apply online, please contact the Registrar at:
REGISTRAR
Link Market Services Limited
Level 30, PwC Tower
15 Customs Street West, Auckland
PO Box 91976, Auckland 1142
Telephone: +64 9 375 5998
enquiries@linkmarketservices.co.nz
---
Equity Raise
Investor
Presentation
8 April 2024
Not for release to US wire services or distribution in the United States
SectionItemPage
Executive summary3
01
Overview of Heartland and continued
expansion in Australia
5
02
Heartland’s business in Australia and
New Zealand moving forward
12
03Equity raise overview 23
04Key risks27
05Disclaimer, glossary and appendices 34
Agenda
2
Challenger Bank acquisition summary
•In October 2022, Heartland Group Holdings Limited (Heartland) announced it had signed a conditional share purchase agreement for the purchase of Challenger Bank Limited
(Challenger Bank). Heartland Bank Limited (Heartland Bank) will be the entity which acquires Challenger Bank.
•Heartland Bank has received indicative regulatory approvals from the Australian Prudential Regulation Authority (APRA) and the Reserve Bank of New Zealand (RBNZ) in respect
of its proposed acquisition of Challenger Bank, with final approvals expected to be received following completion of the Equity Raise. Subject to receipt of final regulatory
approvals, Heartland Bank expects to complete the acquisition of Challenger Bank on 30 April 2024.
•Challenger Bank is a long-established authoriseddeposit-taking institution (ADI) which offers customers a range of savings and lending products in Australia, operates under
the prudential supervision of APRA and is successfully executing a material deposit raising programme.
•Subject to completion, Heartland’s existing Reverse Mortgage and Livestock Finance businesses in Australia will be transferred to sit under Challenger Bank, and the bank will be
rebranded to Heartland Bank (Heartland Bank Australia).
•From completion, Heartland intends to operate solely as the holding company of the Heartland group, with its activities and capital deployment limited to that which supports
the businesses of Heartland Bank and Heartland Bank Australia, including setting the overall strategic direction and risk appetite for the Heartland group.
•Heartland entered the Australian market in 2014 through the acquisition of Heartland Finance
1
, a specialist provider of reverse mortgages since 2004. In 2022, Heartland
acquired StockCoAustralia, a specialist provider of Livestock Finance. Heartland has grown its Australian Receivables 18% p.a. since 2014.
2
•The acquisition of Challenger Bank is strategic for Heartland, providing:
1.immediate access to lower cost deposits in Australia to complement existing and successful wholesale funding capability
2.lower cost funding to:
•continue to grow market share in Reverse Mortgages supported by favourablesectoral structural drivers
•penetrate further in Livestock Finance market and increase market share progressively over the medium term with an innovativeand competitive offering to a sector
underserviced by larger banks
3.an established platform, systems and processes to extend Heartland’s “best or only” strategy in Australia and pursue future opportunities in sectors underserviced by
larger banks (e.g. Motor Finance and Asset Finance), leveraging Heartland’s 10+ years of experience in New Zealand.
1The business was originally known as Australian Seniors Finance and is now known as Heartland Finance.
2For the period 30 June 2014 to 31 December 2023. Receivables includes all Australian Receivables including Receivables included in Non-Strategic Assets (see page 13). Growth rate includes the StockCo Australia acquisition.
Executive summary
3
1TERP is the Theoretical Ex-Rights Price at which Heartland ordinary shares would trade immediately after the ex-rights date for the Entitlement Offer. TERP is calculated with reference to Heartland’s closing share price of NZ$1.22 on 5 April 2024 and includes all new shares issued under the
Equity Raise. TERP is a theoretical calculation only and the actual price at which Heartland ordinary shares will trade immediately after the ex-rights date for the Entitlement Offer will depend on many factors and may not be equal to TERP.
Equity Raise summary –institutional placement and entitlement offer
•Heartland is seeking to raise NZ$210m (Equity Raise)in new equity via a:
•NZ$105m placement to eligible investors (Placement); and
•1 for 6.85 pro-rata accelerated non-renounceable entitlement offer to raise approximately NZ$105m (Entitlement Offer).
•Use of funds to pay consideration for Challenger Bank, satisfy indicative conditions pertaining to regulatory capital and liquidity and fuel projected growth.
•Approximately 210m new Heartland ordinary shares will be issued under the Equity Raise.
•NZ$1.00 per new share representing:
•14.6% discount to TERP
1
of NZ$1.1703.
•18.0% discount to last closing price of NZ$1.22 as at 5 April 2024.
•The Australian Dollar Offer Price for eligible retail shareholders has been set at A$0.9151, using the prevailing RBNZ AUD/NZD exchange rate on 5 April 2024.
•The Placement and Entitlement Offer are fully underwritten (with the exception of the pre-committed amount byHeartland’s largest shareholder, Harrogate Trustee Limited)
FY2024 dividend
•Having regard to the equity raise, acquisition of Challenger Bank and associated growth opportunities, the Board expects to target a total dividend payout ratio in the financial year
ending 30 June 2024 of 50% of underlying net profit after tax. The Board will, as it has historically, actively manage dividend settings and carefully consider the declaration of any
dividend based on Heartland’s capital needs, ROE accretive growth opportunities, balance sheet flexibility and Heartland’s financial performance.
Board and Management updates
•After 15 years at Heartland, Jeff Greenslade has indicated to the Board his intention to step down from his role as CEO of Heartland at the end of this calendar year. Jeff’s tenure at
Heartland included seeing through its formation in 2011, and receipt of Heartland Bank’s RBNZ banking registration in 2012. Post-Completion, Jeff’s focus as CEO will be on the
strategic transition of Heartland in its role as a listed parent company of banks in two jurisdictions, the integration of Challenger Bank into the group, and the continued development
of Heartland’s business in Australia. The Board is confident in the continuation of senior expertise within the Heartland group,and will work closely with Jeff on succession planning
through the calendar year to ensure a successful transition.
•For further Board and Management updates, please refer to the announcement that accompanies this investor presentation.
Executive summary (cont.)
4
DRAFT
01
Overview of
Heartland and
continued
expansion in
Australia
Heartland is an Australasian financial services group focused on providing products that are “best or only” of their kind, through scalable digital platforms.
Fixed Home LenderFloating Home LenderHome LenderSavings
Heartland Bank
Heartland Australia
5
Recognised and market leading products
4
Heartland overview
1This BBB credit rating was issued by Fitch Australia Pty Ltd (Fitch Ratings) on 14 October 2015 and is applicable to long term unsecured obligations payable in New Zealand, in New Zealand dollars. This BBB stable credit rating was affirmed by Fitch Ratings on 1 September 2023.
2See page 39 for definition of underlying financial metrics.
3As at 31 December 2023. Includes casual, fixed term and permanent employees.
4Select awards presented only.
5Represents Heartland’s Australian business prior to the acquisition of Challenger Bank.
Key metrics
•Heartland’s origins date back to 1875 where it started as a small
building society in New Zealand. In 2011, it merged with several
other New Zealand financial institutions to become Heartland.
Since then, Heartland has demonstrated a successful track
record of profitable growth in New Zealand and Australia for 10+
years.
•Heartland is a financial services group with operations in New
Zealand and Australia focused on providing products that are the
“best or only” of their kind.
•Aim to continue to grow in Australia by offering products that
meet Heartland’s “best or only” model and are profitable.
•Investing in digitalisation and technology to improve customer
experience whilst lowering cost through removing “friction”.
•Proven ability to acquire, integrate and grow businesses
(e.g. Heartland Finance and StockCo Australia).
•Heartland has a history of strong shareholder returns and
Heartland Bank has a long term credit rating of BBB stable.
1
$6,924m
Receivables as at
31 December 2023
$108m
LTM underlying NPAT to
31 December 2023
2
566
Employees
3
517
New Zealand
3
49
Australia
3
5-star Mortgage Innovator AwardNon-Bank of the YearBest Banking Innovation
01
Overview of Heartland
6
01
The acquisition of Challenger Bank provides a significant platform for growth
~A$10-15b
Australian reverse mortgage
market size
3
~A$30b
Australian livestock finance
market size
4
~A$35b
Australian motor finance
market size
5
1Heartland Australia comprises Heartland Australia Holdings Pty Ltd and its subsidiaries and StockCo Australia. The cost of funds benefit is calculated with reference to Heartland Australia’s average cost of funds over January and February 2024.
2Subject to meeting minimum ROE hurdles and APRA consultation.
3Heartland internal analysis based on information from the ABS, Census, CoreLogic, Stats NZ and Deloitte. Market size based on Reverse Mortgage lending from banks and non-banks.
4StockCo Australia internal analysis.
5Annual lending includes consumer and commercial lending segments (see ABS 5601.0 Table 7 LTM to Jun 20, and ABS 5671.0 Table 9 LTM to-Nov 18 (ABS discontinued ABS 5671.0 in Nov-18)).
Significant market sizes in
Heartland’s target markets
in Australia
Significant growth opportunities in Australia
Access to a deep and
efficient pool of
funding
✓Challenger Bank is successfully executing a deposit raising programmeon a competitive
basis ahead of being acquired by Heartland Bank. This will enable Heartland to optimise
the advantage of a lower cost of funds post-acquisition completion.
✓From 30 December 2023 to 29 March 2024, Challenger Bank achieved retail deposit
growth of A$702m at a rate that is 1.74% lower than Heartland Australia’s current cost of
funds.
1
Strong opportunity to
consolidate existing
positions...
✓The Challenger Bank acquisition will make Heartland the only specialist bank provider of
both Reverse Mortgages and Livestock Finance in Australia with significant opportunity
to grow.
✓Highly experienced Heartland Bank Australia Board and Management team to drive
growth in Australia.
... and expand into
incremental “best or
only” strategies
✓Heartland’s deep expertise in New Zealand, developed over many years, in addition to a
competitive cost of funds, will allow Heartland to penetrate key target segments.
✓Motor Finance and Asset Finance are attractive asset classes where Heartland can
leverage its banking platform and existing B2B client relationships (e.g. auto
distributors).
2
Completing the Challenger Bank acquisition is a critical step in Heartland’s strategy for expansion in the Australian market.
7
01
To accelerate growth in Australia, Heartland will leverage Challenger Bank’s foundation and
funding platform, Heartland’s c.10-year successful track record in Australia and its New Zealand
product and distribution expertise.
Historical Australia Receivables
(NZ$m)
1,2
Opportunities for outsized growth
1Receivables includes Reverse Mortgages, Livestock Finance and Well Life Loans. StockCo Australia (Livestock Finance) was acquired in FY2022. Excludes Harmoney and Open for Business which are included in Non-Strategic Assets (see page 13).
2Receivables numbers exclude the impact of changes in FX rates.
3Other includes Well Life Loan AU.
4Subject to meeting minimum ROE hurdles and APRA consultation.
979
1,075
1,276
1,515
1,660
373
375
296
979
1,075
1,649
1,891
1,956
FY2020FY2021FY2022FY20231H2024
Reverse MortgagesLivestock FinanceOther
21.9% CAGR
3
Australia is well set up for continued growth
Reverse Mortgages
•Australia’s ageing population creates positive
tailwinds.
•Leading Reverse Mortgage provider in Australia.
Livestock Finance
•Consolidation in Australia to achieve scale.
•Leverage operational expertise in New Zealand to
drive organic growth.
Additional asset classes
•Pursue ROE accretive growth in Motor Finance
and Asset Finance, leveraging experience and
success from New Zealand.
4
Supported by Challenger Bank’s
deposit funding platform
8
01
Heartland’s funding strategy in Australia is to access deep, stable, efficient deposit funding and transition from its sole reliance on wholesale funding.
Heartland’s business in Australia today
•Heartland’s Australian business today
does not hold an ADI license, has no
access to deposit funding, and is solely
reliant on wholesale sources for funding.
•Wholesale funding is predominantly
through securitisation facilities
(A$1,334m
1
) and supported by an A$MTN
programme (A$402m
1
).
Heartland’s funding strategy in Australia
•Heartland’s strategy in Australia is underpinned by a transition to a retail funding base.
•Funding mix expected to be majority retail deposits within the next 12 months.
•Wholesale sources will be maintained in the minority for diversification and liquidity support.
•Deposit growth
‒Challenger Bank is successfully executing a material deposit raising programme.
‒From 30 December 2023 to 29 March 2024, Challenger Bank achieved retail deposit
growth of A$702m at a rate that is 1.74% lower than Heartland Australia’s current cost of
funds.
2
‒Post completion the ADI will materially scale its deposit programme.
•Right size of wholesale funding programmes
‒A$MTNs issued by Heartland Australia will be repaid as they mature.
‒Ability to pay down securitisations utilising date based calls embedded in the respective
programmes.
1As at 31 December 2023.
2Heartland Australia comprises Heartland Australia Holdings Pty Ltd and its subsidiaries and StockCo Australia. The cost of funds benefit is calculated with reference to Heartland Australia’s average cost of funds over January and February 2024.
Key benefits of executing on Heartland’s funding strategy in Australia
✓NIM expansion and greater flexibility to test price elasticity in chosen markets.
✓Access to funding that can scale materially with growth.
✓Credit rating positive.
Heartland Bank Australia’s funding strategy
9
01
Highly experienced Heartland Bank Australia Board with strong level of independence and knowledge of prudential regulatory requirements.
Heartland Bank Australia’s Management team carries extensive experience in banking and financial services.
Geoff
Summerhayes
Chair & Independent Non-Executive Director (35 years experience)
•Current Boards: Independent Non-Executive Director of Heartland Group, Chair of Zurich ANZ and Chair of the
AICD Climate Governance Initiative and senior advisor to Pollination Group
•Previously: APRA Board, CEO of Suncorp Life and held several senior executive roles at NAB and Lendlease
Shane
Buggle
Independent Non-Executive Director (30 years experience)
•Current Boards: Melbourne Symphony Orchestra and is a Non-Executive Director and Audit Committee Chair for
Monash College
•Previously: ANZ, Zurich Financial Services and PwC, including Group Chief Financial Officer, Chief Audit Officer,
CFO Institutional and CFO Retail at ANZ Banking Group
Lyn
McGrath
Independent Non-Executive Director (30 years experience)
•Current Boards: Currently Chair of the Australian Digital Health Agency, and Non-Executive Director of Credit Corp
•Previously: Executive General Manager Retail at Commonwealth Bank and Group Executive, Retail Banking at Bank
Of Queensland
Vivienne
Yu
Independent Non-Executive Director (25 years experience)
•Current Boards: Non-Executive Director at AIMS APAC REIT, Bridge Housing Ltd and the National Foundation for
Australian Women
•Previously: Executive General Manager, International Financial Services at Commonwealth Bank, and CEO
(Australia) of KVB Global Markets Pty Ltd
Bruce
Irvine
Independent Non-Executive Director (35 years experience)
•Current Boards: Chair & Independent Non-Executive Director of Heartland Bank, Chair of SkopeIndustries Ltd,
Market Gardeners Ltd and Non-Executive Director of House of Travel Ltd and Scenic Hotels Ltd
•Previously: Managing Partner at Deloitte
Leanne
Lazarus
Non-Independent Non-Executive Director (30 years experience)
•Current CEO of Heartland Bank
•Previously: CEO & Executive Director of Westpac NZ's insurance brand Westpac Life NZ
•Previously: Executive positions at Westpac NZ, ANZ, National Bank of New Zealand and Nedbank Group
Jeff
Greenslade
Non-Independent Non-Executive Director (30 years experience)
•Current CEO and Executive Director of Heartland Group, Non-Independent Non-Executive Director of Heartland
Bank
•Previously: Non-Executive Director at UDC Finance Limited, Managing Director of Corporate and Commercial
Banking for ANZ National Banking Group
Heartland Bank Australia Board
Chris
Flood
Acting Chief Executive Officer | Joined in 1997
•Over 35 years experience
•Previously: CEO of Heartland Bank and had originally joined Heartland
through MARAC finance in 1997. Senior roles at Westpac, National
Australia Bank and UDC
Michelle
Winzer
Chief Executive Officer | Appointment date to be confirmed
•Over 30 years experience in banking and financial services
•Previously: Chief Executive Banking RACQ Bank, Chief Executive and
other roles at Bank of Melbourne and senior roles at Bankwest,
Commonwealth Bank of Australia and Westpac
Richard
Collier
Chief Financial Officer | Joined Challenger Bank in 2024
•Over 27 years experience
•Previously: General Manager Business Performance & Analytics at
Challenger Limited and held several senior roles at Westpac and St.
George Bank
David
Brown
Chief Risk Officer | Joined Challenger Bank in October 2021
•Over 30 years experience in financial services
•Previously: Senior roles in Risk and Compliance, Credit and Audit with
ANZ, NAB and Deloitte
Sarah
Burgemeister
General Counsel | Joined in 2023
•Over 16 years experience
•Previously: Senior Lawyer at Westpac, Senior Associate at Allens,
Assistant General Counsel Bank of America Merrill Lynch (EMEA),
Associate at Freshfields (Australia, London, New York)
Sharon
Yardley
Chief Compliance & Sustainability Officer | Joined Heartland Finance
in 2004
1
•Over 22 years experience
•Current General Manager Reverse Mortgages of Heartland Finance
•Previously: Head of Operations, Risk and Compliance at Heartland
Finance
Heartland Bank Australia Management team
1 Prior to Heartland’s acquisition in 2014.
Highly experienced Board and Management to drive Australian expansion
10
01
Heartland Bank Australia will leverage Heartland’s existing expertise in Australia and New Zealand, and scale deposits in order to grow.
Heartland Bank Australia FY2025 projection (underlying)
2
Income statement (underlying)
2
A$mFY2025P
NII91
OOI3
NOI94
OPEX(42)
Impairment expense(0)
Profit before tax51
Tax expense(15)
NPAT36
1Assumes the Challenger Bank acquisition completes.
2See page 39 for definition of underlying financial metrics.
3Receivables net of provision for loan impairment.
4Impaired asset expense as a percentage of average Receivables. Impairment expense ratio is de-minimis due to Reverse Mortgages being subject to fair value measurement and Livestock Finance impairment ratio currently <0.05% p.a.
5Home Loans acquired through the acquisition of Challenger Bank and is assumed to be in run-off.
•Projections based on growth in Reverse Mortgages, Livestock Finance and Home Loans
5
only.
•Reverse Mortgage receivables projected to grow in-line with historical rates. Livestock Finance assumes a return to positive growth in FY2025P, underpinned by
improving market fundamentals and supported by retail cost of funds.
•Return profile of the business is projected to materially improve as the business continues to scale and the funding base transitions to majority retail (see page
17), driving an increase in net interest margin.
Balance sheet
A$mFY2025P
Net receivables
3
2,366
Other assets674
Total assets3,040
Deposits2,353
Wholesale borrowings267
Other liabilities3
Total liabilities2,623
Equity417
Key metrics (underlying)
2
%FY2025P
NIM3.3%
CTI45.2%
Impairment expense ratio
4
0.0%
Return on equity9.0%
Return on regulatory capital13.8%
MLH ratio (Level 2, average)
19.6%
Deposits / total liabilities
89.7%
Heartland Bank Australia FY2025 projection
1
11
DRAFT
02
Heartland’s business in Australia and
New Zealand moving forward
02
Heartland has $6.4b Receivables
1
across New Zealand and Australia portfolios which have a proven track record of profitable growth.
New ZealandAustraliaNon-Strategic Assets
Products
•Reverse Mortgages
•Livestock Finance
•Asset Finance
•Motor Finance
•Home Loans
•Sheep, Beef and Dairy Direct Lending
•Reverse Mortgages
•Livestock Finance
•Future growth opportunities in Motor Finance
and Asset Finance
4
•Equity investments
5
•Investment properties
•Portfolios of receivables that are inconsistent with current
business writing strategy and are sub-economic
Dec-23 Receivables
3.5 year CAGR
6
NZ$4,399m
15.0%
NZ$1,956m
21.9%
NZ$569m
(14.2%)
NPAT
NZ$65m
LTM Statutory NPAT
A$36m
FY2025P
c.(NZ$2m)
LTM Statutory NPAT
Return on regulatory
capital
7
c.13%c.14%c.(0%)
Regulatory capitalc.NZ$500m
c.A$260m
FY2025P
c.NZ$100m ‘recyclable’ capital
8
c.NZ$290m ‘non-recyclable’ capital
9
c.NZ$390m total capital
Heartland’s strategic growth priority
1Excluding Non-Strategic Assets.
2Subject to completion.
3Non-Strategic Assets does not reflect a structural change to Heartland’s operations.
4Subject to meeting minimum ROE hurdles and APRA consultation.
5Equity investments largely include Harmoney Corp Limited, Alex Corporation Limited, Avenue Hold Limited, Kurow-Duntroon Irrigation
Company Limited.
6Calculated based on closing receivables from 30 June 2020 to 31 December 2023.
7Calculated as NPAT divided by regulatory capital as presented in the table.
8Includes equity investments, investment properties and capital underlying portfolios of receivables that are inconsistent with current
business writing strategy and are sub-economic.
9Includes intangible assets, right of use assets, deferred tax assets and operating leases as at 31 December 2023.
•The acquisition of Challenger Bank
2
and the growth opportunity presented in Australia allows Heartland to reassess capital allocation, with the goal to focus resources on
target assets in Australia and New Zealand. Heartland’s strategic priority is to allocate capital and drive growth in higher risk-adjusted returning assets in both countries.
•“Non-Strategic Assets” include non-bank like assets, assets that earn little or no income or are returning less than Heartland’s cost of capital.
3
These will be subject to review and
where appropriate, capital recycled.
Heartland’s business across Australia and New Zealand
13
Financial metricToday
FY2028
ambition
Commentary
Receivables
$6.9b
Dec-23
4
> 10%
CAGR p.a.
•Assumes modest Receivables growth below Heartland’s track record of 12.1% over the last 3.5 years.
1
•Organic growth in existing Australia and New Zealand portfolios which are aligned with Heartland’s strategic
ambitions.
•Increased competitiveness in Australian Reverse Mortgages and Livestock Finance through utilisationof bank cost of
funds.
•Further upside from launch of Motor Finance and Asset Finance in Australia if it is ROE accretive.
2
Underlying
NIM
3
3.67%
1H2024
4
> 4%
•Continued shift of asset mix towards higher quality portfolios and focus on recycling capital related to Non-
Strategic Assets.
•Transition of Australian funding base from 100% wholesale to a retail/wholesale funding mix to drive a reduction in
the cost of funds in the Australian business through cheaper retail deposit costs relative to wholesale.
Underlying CTI
ratio
3
43.7%
1H2024
4
< 35%
•Investing in digitalisationand automation in New Zealand with a focus on Heartland Bank’s Collections &
Recoveries area to improve internal workflows and reduce manual effort.
•Motor digitalisationthrough branded online origination platforms for Motor Finance dealer partners in New
Zealand.
•Flow on benefit of improved revenue margins.
Underlying
impairment
expense ratio
3
0.23%
1H2024
4
< 0.30%
•Heartland’s long term underlying impairment expense has been 0.40%.
5
•FY2028 ambition of < 0.30% underlying impairment expense ratio through the cycle reflects portfolio mix
transitioning towards higher quality assets (i.e. Reverse Mortgages and Livestock Finance).
FY2028 ambitions are driven by modest Receivables growth, NIM expansion, cost savings from automation and improvement in impairments.
12%-14%
Heartland
FY2028
underlying
ROE
3
ambition
$200m+
Heartland
FY2028
underlying
NPAT
3
ambition
1
2
3
4
1CAGR calculated for the period from 30 June 2020 to 31 December 2023.
2Subject to meeting minimum ROE hurdles and APRA consultation.
3See page 39 for definition of underlying financial metrics.
4Unaudited.
5Average of impairment expense ratio between FY2016 and 1H2024.
The ratios and growth rates provided for the financial metrics underlying the FY2028 ambitions are not targets. They represent an indication of how the financial
metrics may work in combination to achieve the FY2028 underlying NPAT and ROE ambitions. The FY2028 ambitions and underlying key metrics assumes current
growth in Receivables being maintained and no material deterioration in the economic environment.
02
Heartland’s pathway to $200m+ underlying NPAT and 12%-14% ROE
14
02
Strong structural tailwinds are supporting Heartland’s Receivables growth.
707
858
700
720
740
760
780
800
820
840
860
880
900
'20A'21A'22A'23F'24F'25F'26F'27F'28F'29F'30F
Livestock FinanceMotor Finance
In 2023, for every new car sold, an
estimated ~2 used cars were sold
6
Reverse mortgage addressable market estimated to be ~A$10-
15b
2
in Australia and ~NZ$5.7b by 2030
2
in New Zealand.
Australian livestock finance addressable market
estimated to be ~A$30b.
4
Motor Finance addressable market estimated to be ~A$35b
7
in
Australia and ~NZ$12b
8
in New Zealand.
1Sourced from ARC Centre of Excellence in Population Ageing Research as at Aug-22.
2Heartland internal analysis based on information from the ABS, Census, CoreLogic, Stats NZ and Deloitte. Market size based on Reverse
Mortgage lending from banks and non-banks.
3Sourced from OECD-FAO Agricultural Outlook 2023-2032 as at 2023. MT CWE denotes megaton carcass weight equivalent.
4StockCo Australia internal analysis.
5Based on IBISWorld New Passenger Motor Vehicle Sales report dated April 2023. Forecast data from 2023 onwards. New passenger motor
vehicles are constructed primarily for the carriage of persons and contain up to nine seats (including the driver's seat). Included are cars,
station wagons, four-wheel drive passenger vehicles, campervans and passenger vans or mini buses with fewer than 10 seats.
6New car sales data was sourced from the Federal Chamber of Automotive Industries for 2023. Used car sales data was sourced from the
Australian Automotive Dealer Association for 2023.
7Annual lending includes consumer and commercial lending segments (see ABS 5601.0 Table 7 LTM to Jun 20, and ABS 5671.0 Table 9 LTM to-Nov
18 (ABS discontinued ABS 5671.0 in Nov-18)).
8Based on Heartland internal analysis and public disclosure of identified peers.
4.3m
6.7m
0.8m
1.3m
16.8%
20.8%
17.0%
22.8%
'21F
'22F
'23F
'24F
'25F
'26F
'27F
'28F
'29F
'30F
'31F
'32F
'33F
'34F
'35F
'36F
'37F
'38F
'39F
'40F
'41F
Aus. population aged 65+NZ population aged 65+
65+ % of Aus. population65+ % of NZ population
1
Australia and New Zealand population aged 65+
1
New Australian passenger motor vehicle sales
5
(k)
Reverse Mortgages
15
16
16
17
17
18
18
19
19
70
71
72
73
74
75
76
77
'23F'24F'25F'26F'27F'27F'28F'29F'30F'31F
Beef & Veal Production (LHS)
Beef and Veal Consumption (LHS)
Sheep Meat Production (RHS)
Heartland is positioned to benefit from structural tailwinds
Global projected beef, veal and sheep meat production
& consumption (mt cwe)
3
15
02
Heartland has a long history of growth in New Zealand driven by asset specific experience and operational expertise which can be leveraged in Australia.
1CAGR calculated for the period from 30 June 2020 to 31 December 2023.
2Subject to meeting minimum ROE hurdles and APRA consultation.
FY2028 underlying NPAT and ROE ambition assumes
Receivables grow at a lower rate than historical growth
2,697
3,054
3,800
4,192
4,399
979
1,075
1,649
1,891
1,956
971
890
747
709
569
4,646
5,018
6,196
6,791
6,924
FY2020FY2021FY2022FY20231H2024
New ZealandAustraliaNon-Strategic Assets
CAGR
1
12.1%
(14.2%)
21.9%
15.0%
1
Heartland has shown a long history of strong growth
Reverse Mortgages New Zealand and Australia
•Leading Reverse Mortgage provider in New Zealand and Australia with
significant scale and cost of capital advantage compared to competitors.
Rural and Livestock Finance New Zealand
•Strong expertise in Rural and Livestock Finance in New Zealand with
established direct and distributor networks and specialist teams.
Motor Finance New Zealand
•Leading provider of vehicle finance in New Zealand with more than 65
years’ experience and leading digital solutions.
Asset Finance New Zealand
•Strong relationships with distributors and logistics companies driving
growth in Asset Finance in New Zealand.
Australia
•Continue to grow existing Reverse Mortgage and Livestock Finance in
Australia supported by Challenger Bank’s deposit funding platform.
•Pursue ROE accretive growth in Motor Finance and Asset Finance
leveraging experience and success from New Zealand.
2
Historical Receivables growth (NZ$m)
16
>4.00%
4.28%
4.35%
4.30%
4.16%
4.02%
4.00%
3.67%
4.28%
4.35%
4.30%
4.05%
3.97%3.97%
3.67%
Dec-20Jun-21Dec-21Jun-22Dec-22Jun-23Dec-23FY2028
ambition
Reported NIMUnderlying NIMFY2028 underlying NIM ambition
NIM is expected to benefit from positive tailwinds and transitioning Australia from 100% wholesale to a mix of wholesale and deposit funding.
Positive tailwinds supporting NIM
•Heartland’s historical NIM compression driven by:
‒continued shift to higher quality assets (Reverse Mortgages)
‒increasing cost of funds in Australia and New Zealand due to
rapid rate hikes from historical lows, and a strategic decision
by Heartland to delay passing the full impact of interest rate
increases onto New Zealand Reverse Mortgages and
Australian Livestock Finance customers
‒competition in both lending and deposits in Australia and
New Zealand.
•Positive tailwinds are expected:
‒older New Zealand Asset Finance and Motor Finance loans
yielding lower rates being repaid and replaced with new
originations at higher rates
‒StockCo Australia growth
‒easing of deposit competition in New Zealand after banks
refinance their drawings under the RBNZ Funding for Lending
Programme
‒following completion of the Challenger Bank acquisition,
transitioning Australia from 100% wholesale funding to a
majority of retail funding
‒introduction of call accounts in Australia
‒solidification of brand and increased direct distribution for
Australian deposits.
1FY2028 ambition trajectory is not to scale.
2See page 39 for definition of underlying financial metrics.
3Heartland Australia comprises Heartland Australia Holdings Pty Ltd and its subsidiaries and StockCo Australia. The cost of funds benefit is calculated with reference to Heartland Australia’s average cost of funds over January and February 2024.
Challenger Bank deposit raising costs (%)
From the period between 30 December 2023 to 29 March 2024, Challenger Bank has achieved retail deposit
growth of A$702m at a rate that is 1.74% lower than Heartland Australia’s current cost of funds.
3
1.74 pps
6.74%
5.00%
Heartland Australia cost of funds
(January - February 2024)
Challenger Bank deposit raising cost of funds
(January - March 2024)
1, 2
2
02
2
Heartland’s net interest margin
Heartland net interest margin (%)
17
02
Heartland’s cost efficiency has improved consistently over the last 3 years despite NIM compression impacting CTI ratio.
Heartland cost to income ratio (%)Key drivers of underlying CTI ratio
2
ambition of <35%
1FY2028 ambition trajectory is not to scale.
2See page 39 for definition of underlying financial metrics.
3Cost to business volumes calculated as the first half of the financial year (6 months to December of the respective years) underlying operating expense annualised as a proportion of average business volumes (calculated as the sum of deposits and Receivables).
4Annualised 1H2024 growth excluding the impact of changes in FX rates.
Whilst recent NIM compression
has resulted in a reduction in CTI
ratio, Heartland’s cost efficiency
has improved as cost to
business volumes
3
have
consistently improved in the last
3 years.
In 1H2024, underlying operating
expenses reduced by $0.4m
whilst Receivables increased
4.2% (vs. 1H2023).
4
1.39%
1.34%
1.26%
1.15%
Dec-20Dec-21Dec-22Dec-23
1,2 2
Heartland cost to business volumes (%)
3
Dec-23 pro-forma underlying CTI
ratio assuming a 4.00% NIM
c.40%
3
Heartland’s cost to income ratio
Digitalisationand
automation
New Zealand
•Zero inbound calls: Enable self-serviceability to reduce dependency
on customer facing teams servicing inbound requests.
•One click deferral: Provide flexibility to manage cashflow via the app
by enabling customers to self-manage loan repayments, including
customers in arrears.
•Collections and operations automation: Upgrade and introduce
scalable digital technologies including process and workflow
automation, to optimiseback-end processes and improve efficiency.
Motor digitalisation
New Zealand
•Continue to enhance Motor Finance digital capabilities to enable
faster and easier access to vehicle finance through online
applications.
•Expand branded online origination platforms to more Motor Finance
dealer partners to provide customers with swift digital options.
•Enable new distributors to operate on a direct-to-consumer
business model, e.g. Tesla model.
Core banking upgrade
New Zealand
•Heartland Bank core banking system upgrade completed in 1H2024,
enabling accelerated digitalisation.
Challenger Bank
Australia
•Challenger Bank is a digital bank with no branches and does not have
legacy infrastructure that requires investment.
NIM improvement
Group
•CTI ratio increase has been driven by NIM compression.
•Funding benefits of the Challenger Bank acquisition is expected to
uplift NIM and drive CTI ratio improvement.
18
48.8%
46.8%
43.8%
43.6%
44.8%
44.9%
46.5%
45.9%
44.8%
43.1%
42.5%
42.7%
42.0%
43.7%
<35%
Dec-20Jun-21Dec-21Jun-22Dec-22Jun-23Dec-23FY2028 ambition
Reported CTIUnderlying CTIUnderlying CTI ambition
1.77%
3.32%
4.08%
1.75%
2.01%
3.57%
5.62%
7.24%
7.22%
6.03%
1.44%
2.70%
3.52%
2.29%
2.46%
3.33%
4.43%
5.03%
5.29%
5.03%
0.38%
1.34%
1.53%
1.32%
1.20%
1.61%
1.82%
Jun-18Jun-19Jun-20Jun-21Jun-22Jun-23Dec-23Jan-24Feb-24Mar-24
Sum of 30+%Gross NPL %Provision coverage %
4
3.79%
3.60%
4.15%
2.44%
3.11%
3.84%
4.87%
5.46%
5.54%5.58%
2.61%
2.52%
3.04%
2.05%
2.31%
2.95%
3.12%
3.35%
3.60%
3.68%
0.61%
1.30%
1.58%
1.19%
0.81%
0.95%
1.56%
Jun-18Jun-19Jun-20Jun-21Jun-22Jun-23Dec-23Jan-24Feb-24Mar-24
Sum of 30+%Gross NPL %Provision coverage %
4
0.64%
0.49%
0.40%
0.65%
0.19%
0.31%
0.33%
0.25%
0.29%
0.36%
0.70%
0.44%
0.19%
0.31%
0.33%
0.29%0.29%
0.36%
0.23%
<0.30%
Dec-18Jun-19Dec-19Jun-20Dec-20Jun-21Dec-21Jun-22Dec-22Jun-23Dec-23FY2028 ambition
Reported impairment expense ratioUnderlying impairment expense ratio
FY2028 underlying impairment expense ratio target
1
1
2
3
Underlying impairment expense ratio ambition of <0.30% driven by a continued mix shift to higher quality reverse mortgages.
Heartland impairment expense ratio (%)
Clear strategy to
support underlying
impairment expense
ratio ambition of
<0.30%
1
•Growth in higher quality asset
classes.
•Limiting exposure to lending in
sub-sectors experiencing
economic headwinds (e.g.
forestry, commercial property).
•Investing in digitalisation and
automation to improve internal
workflows and reduce manual
effort.
•The arrears experienced in a
subset of longer dated Motor
Finance loans are a result of
short-term operational
performance challenges. This is
primarily a resourcing issue in
Heartland Bank’s Collections &
Recoveries area and is being
addressed through a specialised
recruitment strategy and
automation.
1See page 39 for definition of underlying financial metrics.
2Reported impairment expense ratio increased due to a $16.0m increase in provisions to respond to issues affecting a subset of legacy lending.
3Represents non-performing loan ratio target at 30 June 2024 .
4Provision coverage metrics not yet available post 31 December 2023.
5Financial metrics including and post-December 2023 are based on unaudited management accounts.
Heartland non-performing loans ratio (%)
New Zealand Motor Finance
5
02
4
Heartland’s impairment expense ration
New Zealand Asset Finance
5
19
1.77%
1.58%
1.70%
1.81%
2.05%
1.87%
2.58%
<2.00%
Dec-20Jun-21Dec-21Jun-22Dec-22Jun-23Dec-23Jun-24 target
02
New Zealand Reverse Mortgage portfolio analytics Australia Reverse Mortgage portfolio analytics
3
Heartland’s reverse mortgage book is high quality with only <23% weighted average LVR.
1Annualised 1H2024 growth excluding the impact of changes in FX rates.
2Compounded annual growth rate for the period 1 July 2018 – 31 December 2023.
3Excluding the impact of changes in FX rates (where applicable). All figures in NZD.
4Annualised 1H2024 growth excluding the impact of changes in FX rates.
5Compounded annual growth rate for the period 1 July 2018 – 31 December 2023.
$1,668m
AU Reverse Mortgages
+$153m (20.0%)
4
vs June 2023
$190,849
Average loan size
77
Weighted average borrowers’ ages
22.7%
WeightedaverageLVR
11.9%
Average origination LVR
0.1%
Proportion of the loan book over 75% LVR
3
Number of loans in the book over 75% LVR
22.6%
Compounded annual growth rate
5
$972m
NZ Reverse Mortgages
+$84m (18.7%)
1
vs June 2023
$135,139
Average loan size
78
Weighted average borrowers’ ages
22.8%
WeightedaverageLVR
9.6%
Average origination LVR
0.0%
Proportion of the loan book over 75% LVR
0
Number of loans in the book over 75% LVR
16.7%
Compounded annual growth rate
2
As at 31 December 2023As at 31 December 2023
4
Reverse Mortgages credit quality
20
Heartland’s risk-adjusted margins are superior to listed Australian banking peers, some of which have operations across Australia and New Zealand.
1
Risk-adjusted NIM
1
1 Risk-adjusted NIM is calculated as net interest income less impairments over average interest earning assets. Peers used are Australian listed banking peers. Data is based on the most recent company disclosures as at 31 March 2024 and includes total banking operations including Australia
and New Zealand.
3.46%
2.60%
1.92%
1.88%
1.81%
1.80%
1.67%
1.66%
1.62%
1.25%
HeartlandPeer 1Peer 2Peer 3Peer 4Peer 5Peer 6Peer 7Peer 8Peer 9
1H2024
02
Heartland’s ‘best or only’ strategy delivers outsized risk-adjusted NIM
21
Capital will be deployed to ROE and
EPS accretive opportunities
Heartland has increased Reported NPAT from c.$7m to c.$110m over the past 12 years, predominantly funding that growth through organic capital
generation, coming to market for M&A related capital.
1 See page 39 for definition of underlying financial metrics.
Capital resources to
support strategy
Further capital needs beyond
this will be driven by...
Organic growth beyond
expectations
Entry into new markets
in Australia
Any large-scale
M&A activity
02
Capital allocation management
Organic growth
•Continue to deploy capital to support growth in
existing asset classes that are ROEand EPS accretive.
•Entry into new markets or products where it fits
Heartland’s “best or only” strategy and is ROE and EPS
accretive.
Capital management
•The Board will, as it has historically, actively manage
dividend settings and carefully consider the
declaration of any dividend based on Heartland’s
capital needs, ROE accretive growth opportunities,
balance sheet flexibility and Heartland’s financial
performance.
Targeted inorganic growth
•Proactive M&A strategy focused on ROE and EPS
accretive opportunities.
FY2028 underlying ROE ambition of 12%-14%
1
Organic capital generation
•$108-$112mFY2024 underlying
NPAT guidance
1
rising to ambition of $200m+by
FY2028.
Non-Strategic Assets
•Potential realisationof notional asset pool for
redeployment in accretive opportunity or distribution
to shareholders.
•c.$100mof capital to be realised.
Hybrid capital instruments
•Diversify, optimiseand support capital stack with
qualifying regulatory capital instruments (additional
Tier 1 and Tier 2) in Australia and New Zealand.
Dividend reinvestment
•Conduct dividend reinvestment plans.
22
DRAFT
03
Equity raise
overview
03
Offer size and
structure
•Heartland is seeking to raise NZ$210m (Equity Raise) in new equity via a:
‒NZ$105m placement to eligible investors (Placement);and
‒1 for 6.85 pro-rata accelerated non-renounceable entitlement offer to raise approximately NZ$105m (Entitlement Offer).
•Approximately 210m new Heartland ordinary shares will be issued under the Equity Raise.
1
Use of proceeds
•Proceeds of the Equity Raise will be used to:
1.finance the balance of the consideration payable for the proposed Challenger Bank acquisition
2.support the expected regulatory capital requirements of Challenger Bank and Heartland Bank
3.cater for near term asset growth post-completion.
Offer price for the
Equity Raise
•NZ$1.00 per new share representing:
‒14.6% discount to TERP
2
of NZ$1.1703.
‒18.0% discount to last closing price of NZ$1.22 as at 5 April 2024.
•The Australian Dollar Offer Price for eligible retail shareholders has been set at A$0.9151, using the prevailing RBNZ AUD/NZD exchange rate on 5 April 2024.
Institutional
Entitlement Offer
•Eligible institutional shareholders will be invited to take up their entitlements in an accelerated Institutional EntitlementOffer.
•The Entitlement Offer is non-renounceable and any entitlements not taken up will lapse.
Retail Entitlement
Offer
•Eligible retail shareholders in Australia and New Zealand will be sent offer materials and invited to take up their entitlementsin a Retail Entitlement Offer.
•Eligible retail shareholders may also subscribe for additional new shares in excess of their entitlements at the Offer Price, up to a maximum of 100% of their
entitlements.
•The entitlements will not be listed on NZX or ASX and there will be no shortfall bookbuild for those entitlements not taken up by eligible retail shareholders
or the entitlement of ineligible retail shareholders (the Offer is non-renounceable and any entitlements not taken up will lapse).
Ranking and
quotation
•New Shares issued under the Placement and the Entitlement Offer will rank equally with existing Heartland shares on issue andwill be quoted on NZX Main
Board and ASX from the date of allotment.
Pre-commitments•Heartland has received a pre-commitment from its largest shareholder, Harrogate Trustee Limited
3
, for approximately NZ$14m of the Equity Raise.
Underwriting•The Placement and Entitlement Offer are fully underwritten (with the exception of the pre-committed amount byHarrogate Trustee Limited).
1In addition, Heartland proposes to issue approximately 1.0m new Heartland ordinary shares to Washington H. Soul Patterson and Company Limited as consideration for the acquisition of 0.65% of the shares in Alex Corporation Limited, the holding company for Alex Bank. These shares will be
issued at the same time as shares are issued under the placement and institutional entitlement offer
2TERP is the Theoretical Ex-Rights Price at which Heartland ordinary shares would trade immediately after the ex-rights date for the Entitlement Offer. TERP is calculated with reference to Heartland’s closing share price of NZ$1.22 on 5 April 2024 and includes all new shares issued under the
Equity Raise. TERP is a theoretical calculation only and the actual price at which Heartland ordinary shares will trade immediately after the ex-rights date for the Entitlement Offer will depend on many factors and may not be equal to TERP.
3Heartland Chair, Greg Tomlinson, is a shareholder of Harrogate Trustee Limited.
Equity raise offer summary
24
EventDate
1
Announcement of Equity RaiseMonday 8 April 2024
Record date for the Entitlement OfferTuesday 9 April 2024
Institutional Entitlement Offer and Placement
Institutional Entitlement Offer and Placement opensMonday 8 April 2024
Institutional Entitlement Offer and Placement closes (for institutional shareholders in New
Zealand, Australia, Hong Kong and Singapore)
Monday 8 April 2024
Institutional Entitlement Offer and Placement closes (for institutional shareholders in all other
jurisdictions)
Tuesday 9 April 2024
Trading halt lifted and shares recommence trading on NZX and ASX on an ‘ex-entitlement’ basis
By 12.00pm (NZST) Tuesday 9 April
2024
ASX settlementFriday 12 April 2024
NZX settlement, allotment and commencement of trading of new sharesMonday 15 April 2024
Retail Entitlement Offer
2
Retail Entitlement Offer opensThursday 11 April 2024
Offer Document despatched to Eligible Retail ShareholdersThursday 11 April 2024
Retail Entitlement Offer closesMonday 22 April 2024
ASX and NZX settlement and allotmentFriday 26 April 2024
NZX commencement of trading of new sharesFriday 26 April 2024
ASX commencement of trading of new sharesMonday 29 April 2024
•Shareholders entitled to
participate in the Retail
Entitlement Offer should visit
www.heartlandshareoffer.co.nz
and apply online by 5.00pm
(NZST) on Monday 22 April 2024.
•Shares purchased on-market
following announcement of the
Equity Raising and shares
purchased via the Placement will
not settle prior to the record date
for the Entitlement Offer or before
Tuesday 9 April 2024.
•If you acquired Heartland shares
on or before Friday 5 April 2024,
your share purchase will settle on
or before Tuesday 9 April 2024 and
those shares will be eligible for
their respective entitlements.
1Dates are subject to change and are indicative only.
2Eligible shareholders with an address recorded in Heartland’s share register that is in New Zealand or Australia on the Record Date can find out more about the Retail Entitlement Offer at www.heartlandshareoffer.co.nz and can apply online during the Retail Entitlement Offer period.
03
Equity raise timetable
25
Heartland Bank Australia and Heartland Bank will have strong capital bases and be well positioned for growth.
•Use of proceeds primarily applied to acquisition of Challenger Bank and the
capitalisation of Heartland Bank Australia in accordance with APRA’s regulatory
capital and liquidity requirements.
•Both Heartland Bank Australia and Heartland Bank will have strong capital bases
and be well positioned for growth.
•AT1 or Tier 2 capital issuances may be considered over time to further optimise
and diversify Heartland’s capital base.
Commentary
Use of Equity Raise funds
4
NZ$m%
Challenger Bank acquisition consideration
~50~24%
Recapitalisation of Heartland Bank Australia
~105~51%
Growth capital
~50~24%
Total
~205~100%
Pro-forma total capital ratio
31 March 2024 pro-forma for the Equity Raise
1,2,3
131 March 2024 pro-forma capital metrics are a projection and include the impact of the Equity Raise. Heartland Bank Australia assumes that all Heartland Australia and StockCo Australia assets and liabilities are transferred into the Challenger Bank ADI.
2Assuming a NZD/AUD exchange rate of 0.9169 as at 31 March 2024.
3The RBNZ capital requirement for Heartland Bank is 11.5% CET1 and 16% total capital by 1 July 2028.
4Excluding transaction costs.
CET1 ($m)606261
Tier 2 ($m)100-
Total capital ($m)706261
03
Equity Raise impact on regulatory capital
26
12.1%
18.2%
2.0%
14.1%
18.2%
Heartland BankHeartland Bank Australia
CET1Tier 2
DRAFT
04
Key risks
This section does not (and does not purport to) set out all of the risks related to an investment in Heartland shares, the future operating or financial performance of
Heartland, the achievement of Heartland’s growth aspirations, the proposed equity raise or general market, industry, regulatory or legal risks. Some risks may be
unknown and other risks, currently believed to be immaterial, could turn out to be material.
In light of heightened geopolitical tensions, continuing cost of living pressures and uncertainty around whether New Zealand and Australian central bank inflation
targets will be reached (and the commencement of commensurate rate cuts), extra caution should also be taken when assessing the risks associated with the
investment. These ever-evolving situations continue to pose challenges for global financial markets and the New Zealand and Australian economies. Capital
markets may continue to see equity securities suffer from spikes in volatility.
As the holding company of an Australasian financial services group, Heartland is exposed to credit, capital, liquidity and funding, market (including interest rate and
currency), operational, regulatory compliance and general business risk. Heartland has implemented (or will implement in preparedness for the acquisition of
Challenger Bank) structures, policies, procedures, controls and information systems that it considers appropriate to manage these risks, but there are inherent
limitations to any risk management framework.
Heartland is exposed to risks that may not be anticipated or are outside its control, its risk management framework may not operate effectively or there may be
unforeseen challenges arising from the integration of Challenger Bank or in executing on Heartland’s strategic objectives. If any of Heartland’s risk management
processes and procedures prove ineffective or inadequate or are otherwise not appropriately implemented, Heartland could suffer unexpected losses and
reputational damage which could adversely affect Heartland’s business and financial performance.
Before deciding whether to invest in Heartland shares, you must make your own assessment of the risks associated with such an investment and consider whether
it is suitable for you, having regard to publicly available information (including this presentation), your personal circumstances and following consultation with a
financial adviser or other professional adviser.
This section outlines the key risks that Heartland has identified as relevant to investors in the proposed equity raise, including in relation to
the acquisition of Challenger Bank. These risks may affect the future operating and financial performance of Heartland and the Heartland
share price. Like any investment, there are risks associated with an investment in Heartland’s shares.
04
Key risks
28
Completion risk
•The acquisition of Challenger Bank remains conditional on final regulatory approvals being received from APRA and the RBNZ. While Heartland Bank has received
indicative regulatory approvals from the respective regulators, final approvals will not be received until after the shares are issued under the Equity Raise, the
proceeds of which are necessary to capitalise Challenger Bank and Heartland Bank (amongst other things).
•There is some complexity to the completion mechanics which will take place over several days. This includes reliance on Challenger Bank to complete the
repayment of an existing Heartland Australia wholesale funding facility provided by the Commonwealth Bank of Australia utilisingdeposit funding prior to the
acquisition being completed and Challenger Bank becoming a member of the Heartland group.
•While Heartland considers completion risk to be minimal following completion of the Equity Raise, should the acquisition not proceed, Heartland would need to
consider alternative uses for, or ways to return to shareholders, any excess capital it holds following the issue of the shares under the Equity Raise. Such
alternative uses may include investing in other growth initiatives in New Zealand and/or Australia or refinancing maturing debt.
Business
integration risk
•Since the share sale agreement was signed in October 2022, Challenger Bank carried on limited banking business until the recommencement of deposit raising in
2H2024. From completion, Challenger Bank will be executing on a strategic plan of expansion in Australia. In addition, shortly after completion, Heartland Australia
(including Heartland’s existing Australian reverse mortgage and livestock finance businesses) will be transferred to sit under Challenger Bank, with these
businesses required to comply with APRA prudential requirements. From a New Zealand perspective, certain RBNZ prudential requirements will apply to a new
trans-Tasman Consolidated Banking Group (NZ CBG),which will include Heartland Bank, Challenger Bank and its subsidiaries.
•There may be challenges faced operationally integrating Challenger Bank and Heartland Australia into an APRA prudentially regulated banking group or with
integrating the requirements imposed on the NZ CBG. However, Challenger Bank and Heartland Bank will retain a focus on completing required processes to keep
the business moving forward during integration, and the integration process for Challenger Bank is clearly defined and aligned with existing priorities.
•Additional staff/resources have also already been engaged by Heartland on behalf of Challenger Bank for this purpose. This means the likelihood of an integration
failure is considered to be low.
04
Key risks (cont.)
29
Successful
execution of
strategic
objectives
•From completion, Challenger Bank will be pursuing a strategy to create sustainable growth and differentiation through “best or only” products delivered through scalable digital
platforms. This includes growing Heartland’s existing Australian reverse mortgage and livestock lending businesses, while broadening its offering to pursue future opportunities
in Motor Finance and Asset Finance.
1
•The development and delivery of new products and improvements to existing products will be a key driver of Challenger Bank’s success. While Heartland has an established track
record of executing on its “best or only” strategy in both the New Zealand and Australian markets, there is uncertainty and additional complexity associated with entry into the
APRA regulated Australian banking sector, and the new compliance obligations which apply. There is always a risk that entry intoa new market or development of a new product
or product feature may not be successful or may take longer or be more expensive than anticipated. In addition, adverse changes in market, macro-economic or climatic
conditions, significant delays in suppliers providing services or increased costs of services may mean it is more challengingfor Challenger Bank to execute its strategy within its
original timeframes and budget.
•There is a risk that Challenger Bank (and the Heartland group more broadly) may not be successful in executing on its growth strategies, resulting in costs being incurred without
commensurate benefits being enjoyed. In addition, the performance of particular business units may fail to meet expectations.This may have a material adverse impact on
Heartland’s growth and financial performance, including Heartland’s ability to achieve its FY2028 ambitions.
•There are other risks associated with Heartland’s strategy, including Heartland’s ability to successfully compete in the increasingly competitive landscape in which Heartland
operates in both Australia and New Zealand; APRA consultation requirements prior to Challenger Bank launching new products; the ability to secure sufficient funding to
facilitate Heartland’s growth aspirations; and that overall market conditions mean that it is more challenging to execute Heartland’s strategy within normal timeframes and
budgets in the current environment.
Regulatory
impact
•The New Zealand and Australian banking and financial services sectors continue to face significant regulatory scrutiny and change. Of relevance in New Zealand is the
implementation of the Deposit Takers Act 2023 (including the introduction of a Depositor Compensation Scheme in mid-2025) and potential changes to the Credit Contracts
and Consumer Finance Act 2003, which may impact Heartland Bank’s consumer and retail businesses, respectively. Of relevance in Australia is the Financial Accountability
Regime which came into effect on 15 March 2024. This regime imposes a strengthened responsibility and accountability framework for entities in the banking, insurance and
superannuation industries and their directors and senior executives.
•Heartland Bank and Challenger Bank operate in an environment of significant regulatory supervision and are subject to prudentialregulatory requirements imposed by the RBNZ
and APRA, respectively (including in relation to regulatory capital). In addition, from completion, Heartland Australia must meet the same APRA prudential regulatory
requirements which apply to Challenger Bank.
•Any failures by Heartland or its subsidiaries to comply with new and existing regulatory requirements may impact both Heartland’s business and its reputation, potentially
resulting in regulatory enforcement action (including fines and/or other pecuniary penalties), litigation (including class actions), changes in licenceconditions or licencesbeing
revoked.
•Future changes in laws and regulations or further policy development in New Zealand and Australia may require changes to Heartland’s business plan and model and may affect
Heartland’s financial performance and/or its ability to successfully achieve its strategic objectives.
04
1 Subject to meeting minimum ROE hurdles and APRA consultation.
Key risks (cont.)
30
Information
technology and
cybersecurity
•Investing in technology and improving customer experience while lowering costs through removing friction is a core pillar of Heartland’s strategy. Heartland relies on
the performance, reliability and availability of its information technology, communication and other business systems. Cyber attacks or other malicious or operational
causes, damage, interruption or failure of Heartland’s key systems and cybersecurity measures, or compromise of data, could result in significant disruptions to
Heartland’s business, reputational damage, and heightened regulatory scrutiny. The delivery of many of Heartland’s products through digital platforms heightens the
risk associated with cyber attacks and the impacts those attacks may have on the availability of Heartland’s systems and services.
•Following completion, Heartland’s subsidiaries will maintain different core systems across their businesses and, in some cases, product types. In addition, Challenger
Bank’s successful entry into new markets in Australia will be reliant on securing licenses for new systems and ensuring the currency of its core banking system is
maintained, amongst other things.
•A failure to maintain or secure reliable systems may have an adverse effect on Heartland’s reputation, financial performance or achievement of its growth aspirations.
People and
projects
•The retention of key staff and the successful recruitment of additional staff will be important in achieving the successful integration of Challenger Bank, and the
successful achievement of Heartland’s strategic objectives. Heartland considers that a small number of Heartland, Heartland Bankand Challenger Bank employees are
crucial to the ongoing success of these businesses, and the ability of these key personnel to continue to support Heartland willbe a vital component for Heartland’s
continued growth. Heartland management has been communicating with key personnel and considers the risk of key personnel leavingfollowing completion of the
Challenger Bank acquisition to be low.
•Unemployment rates remain historically low and the labourmarket remains fairly tight in areas where key skills are in high demand. Staff turnover in Heartland has
decreased in this financial year reducing the number of overall vacancies, however, the recruitment of appropriately qualified staff across certain roles continues to
present challenges to ensure the continuity and availability of people. Resource challenges could affect the delivery of major projects at Heartland, achievement of
strategic priorities and the smooth functioning of business operations. Mitigation strategies include partnering with external consultants, agency staffing options and
engaging recruitment agencies for complex and hard to fill roles.
Macro-economic
conditions
•Volatility in macro-economic conditions continues to be experienced as a result of geopolitical tensions, ongoing cost of livingchallenges as inflation moderates but
remains high (particularly across New Zealand and Australia, with high migration) and other factors.
•Severe deterioration in macro-economic conditions could impact on the availability and/or utility of Heartland’s funding arrangements or otherwise impact upon
Heartland’s liquidity. In addition, dislocations in funding markets or reductions in depositor confidence can occur that may place pressure on bank liquidity, atboth an
institution and/or system wide level.
•It could also result in increased credit risk through higher unemployment for consumers and adverse financial conditions for businesses. As a financial services group,
either of those outcomes could have a material adverse impact on Heartland.
04
Key risks (cont.)
31
Credit risk
•Heartland Bank and Challenger Bank are exposed to credit risk and may incur losses from defaults by customers or counterparties.Levels of credit risk vary according
to the economic cycle, with increased risk ordinarily evident during periods of tighter economic conditions. Both New Zealand and Australia are currently experiencing
a period of higher interest rates and slower growth, hence underlying credit risk across all lending portfolios is elevated. Economic conditions are expected to improve
in calendar year 2025 as interest rates fall (noting that unemployment may remain a key variable for both economies).
•A failure to adequately manage credit risk and/or provide for potential losses could result in Heartland Bank or Challenger Banksuffering financial losses (lost principal
and interest income), disruption to cash flows and/or increased collection costs. This, in turn, could affect Heartland’s profitability.
•Heartland is exposed to lending to the New Zealand and Australian household sector (motor vehicle lending (currently NZ only), reverse mortgage lending and some
residential mortgage lending), asset financing and lending to small-to-medium sized businesses (currently NZ only) and livestock lending in both New Zealand and
Australia. Heartland's significant exposure to these sectors means that the economic, social and environmental conditions in NewZealand and Australia (as
applicable) may have a material impact on Heartland’s credit risk. For example:
1.Reverse mortgage loan borrowers are guaranteed lifetime occupancy of their property, make no payments until the last borrowerleaves the property and, at that time,
are only required to repay their loan up to the sale proceeds of the property. There is a risk therefore that the size of a reverse mortgage loan exceeds the value of the
property at the time of repayment.
2.Lending to the rural sector includes financing or taking security over livestock. Fluctuations in the market price of livestock or a widespread outbreak of disease
affecting livestock could increase loan defaults in this sector.
3.Motor finance credit risk outcomes tend to be more exposed to the rate of unemployment and business credit risk outcomes tendtobe correlated to overall economic
conditions but can also be impacted by asset and property valuations.
•Both Heartland Bank and Challenger Bank are mature organisationswith well-established credit risk management and provisioning frameworks, policies and
processes. Key lending and credit managers are experienced in all specialist segments and across various economic cycles. Stresstesting is also regularly performed
to assess the impact of severe but plausible adverse events on credit quality and overall organisationalstrength.
Operational risk
•Heartland Bank and Challenger Bank’s businesses are dependent on their ability to process and monitor, on a daily basis, a largenumber of transactions (particularly in
higher volume business areas, such as consumer lending and retail). This may be affected by human error, intentional actions such as internal or external fraud or
theft, improper business practices, the failure of internal or external processes or systems, or external events which are wholly or partly beyond Heartland Bank or
Challenger Bank’s control.
•Any such failure may result in reduced customer demand, financial losses or a failure to comply with laws or regulations, contractual arrangements or industry
standards, which could have an adverse impact on Heartland Bank or Challenger Group’s (and therefore Heartland’s) reputation.
04
Key risks (cont.)
32
04
Key risks (cont.)
Climate risk
•Heartland’s subsidiaries provide motor vehicle lending, reverse mortgage lending and residential mortgage lending, asset financing and lending to small-to-medium
sized New Zealand businesses and the rural sector (including small-to-medium sized New Zealand farming businesses and livestock lending in both New Zealand and
Australia). Heartland’s Australian lending is currently limited to reverse mortgages and livestock, but its product suite is expected to expand with the acquisition of
Challenger Bank and the execution of its strategic growth aspirations. Heartland's significant exposure to these sectors means that environmental conditions in New
Zealand and Australia may have a material impact on Heartland’s financial performance.
•For example, Heartland's lending to the rural sector includes financing or taking security over livestock. Widespread outbreak of disease affecting livestock (such as
foot and mouth disease) could increase loan defaults in this sector. In addition, significant natural disaster or weather eventsaffecting specific geographic regions of
New Zealand or Australia where Heartland has material exposures may also increase the risk of loan defaults.
•While Heartland endeavours to manage climate risk, including via undertaking scenario analysis to understand the risks and opportunities that climate change
presents to its business currently, and into the future, it is a risk which is rapidly evolving and differs in impact jurisdictionally. A failure to adequately manage climate
risk could result in Heartland suffering financial losses. It may also have a material adverse impact on Heartland’s financial performance.
Hedge
accounting
•Heartland endeavoursto fully hedge the economics of its interest rate risks. However, Heartland relies on the wholesale market for the derivatives used to create
these hedges and the derivatives are subject to different accounting treatment than loan and deposit books. Hedge accounting forderivatives is complex, and in
some market environments where ordinary correlations dislocate, it can be difficult to achieve exact matches for each position. This may cause accounting hedge
ineffectiveness, or for hedge accounting relationships to fail, resulting in some gain or loss through profit or loss. Shouldthis occur, it could possibly impact upon
Heartland’s FY2024 NPAT, however it would be non-cash and not reflective of underlying performance.
33
DRAFT
05
Disclaimer, glossary & appendices
This presentation has been prepared by Heartland Group Holdings Limited (the Company or Heartland) in relation to an offer
of new shares in the Company (New Shares) by way of:
•a placement to eligible institutional and other selected investors (Placement); and
•an accelerated, non-renounceable entitlement offer to eligible shareholders of the Company (ANREO), in New Zealand
under clause 19 of Schedule 1 to the Financial Markets Conduct Act 2013 (FMCA), and in Australia pursuant to the provisions
of section 708AA of the Corporations Act 2001 (Cth) (the Corporations Act) (as modified by ASIC Corporations (Non-
Traditional Rights Issues) Instrument 2016/84 and ASIC Instrument 18-1012),
(the Placement and the ANREO, together, are referred to as the Offer).
Information
This presentation contains summary information about the Company and its activities that is current as of the date of this
presentation. The information in this presentation is of a general nature and does not purport to be complete nor does it
contain all the information which a prospective investor may require in evaluating a possible investment in the Company or
that would be required in a product disclosure statement for the purposes of the FMCA. The Company is subject to
disclosure obligations that require it to notify certain material information to NZX Limited (NZX) and ASX Limited (ASX). This
presentation should be read in conjunction with the Company's financial statements for the year ended 30 June 2023 and
for the six months ended 31 December 2023, and other periodic and continuous disclosure announcements released to NZX
and ASX (which are available at www.nzx.com and www.asx.com.au under the ticker code "HGH"). No information set out in
this presentation will form the basis of any contract.
NZX and ASX
The New Shares will be quoted on the NZX Main Board following completion of each of the Placement and the ANREO, and an
application will be made by Heartland for the New Shares to be quoted on the ASX. Neither NZX nor ASX accepts any
responsibility for any statement in this presentation. NZX is a licensed market operator, and the NZX Main Board is a licensed
market under the FMCA.
Not financial product advice
This presentation does not constitute legal, financial, tax, accounting, financial product or investment advice or a
recommendation to acquire the Company's securities (including the New Shares), and has been prepared without taking
into account the objectives, financial situation or needs of individuals. Before making an investment decision, prospective
investors should consider the appropriateness of the information having regard to their own objectives, financial situation
and needs and consult a financial adviser, solicitor, accountant or other professional adviser if necessary.
Investment risk
An investment in securities in the Company is subject to investment and other known and unknown risks, some of which are
beyond the control of the Company. Pages 28 to 33 (Key Risks) of this presentation includes a non-exhaustive summary of
certain key risks associated with the Company and the Offer. The Company does not guarantee the performance of the
Company or any return on any securities of the Company.
Not an offer
This presentation is not a prospectus or product disclosure statement or other offering document under New Zealand or
Australian law or any other law (and will not be filed with or approved by any regulatory authority in New Zealand, Australia or
any other jurisdiction). This presentation is for information purposes only and is not an invitation or offer of securities for
subscription, purchase or sale in any jurisdiction. Any decision to purchase New Shares in the ANREO must be made on the
basis of all information provided in relation to the Offer, including information to be contained or referred to in the separate
offer document released via NZX and ASX (Offer Document). Any eligible shareholder who wishes to participate in the
ANREO should consider the Offer Document in deciding to apply under that offer. Anyone who wishes to apply for New
Shares under the ANREO will need to apply in accordance with the instructions contained in the Offer Document. The
distribution of this presentation outside New Zealand or Australia may be restricted by law. Any recipient of this
presentation who is outside New Zealand or Australia must observe any such restrictions. Refer to Appendix 4 of this
presentation (International Offer Restrictions) for information on restrictions on eligibility criteria to participate in the
Placement and institutional entitlement offer component of the ANREO.
Restrictions on distribution
The information in this presentation has been prepared on the basis that all offers in Australia of New Shares under the
Placement and the institutional entitlement offer component of the ANREO will be made to Australian resident investors to
whom an offer of shares for issue may lawfully be made without disclosure under Part 6D.2 of the Corporations Act because
of sections 708(8) to 708(11) of that act. This presentation is not a prospectus, product disclosure statement or any other
form of disclosure document regulated by the Corporations Act and has not been and will not be lodged with ASIC. ASIC
takes no responsibility for the contents of this presentation. Accordingly, this presentation may not contain all information
which a prospective investor may require to make a decision whether to subscribe for New Shares and it does not contain all
of the information which would otherwise be required by Australian law to be disclosed in a prospectus, product disclosure
statement or any other form of disclosure document regulated by the Corporations Act.
This presentation is not for distribution or release to US wire services or in the United States. This presentation does not
constitute an offer to sell, or the solicitation of an offer to buy, any securities in the United States. The New Shares have not
been, and will not be, registered under the US Securities Act of 1933 (US Securities Act), or the securities laws of any state
or other jurisdiction of the United States. Accordingly, the New Shares may not be offered or sold in the United States,
except in transactions exempt from, or not subject to, the registration requirements under the US Securities Act and the
applicable securities laws of any state or other jurisdiction of the United States.
05
Disclaimer and important notice
35
Financial data
All dollar values are in New Zealand dollars (NZ$ or NZD) unless otherwise stated.
This presentation includes certain financial measures that are "non-GAAP (generally accepted accounting practice)
financial information" under Guidance Note 2017: 'Disclosing non-GAAP financial information' published by the New Zealand
Financial Markets Authority, "non-IFRS financial information" under ASIC Regulatory Guide 230: 'Disclosing non-IFRS financial
information' and "non-GAAP financial measures" within the meaning of Regulation G under the U.S. Exchange Act of 1934.
Disclosure of such non-GAAP financial measures in the manner included in this presentation would not be permissible in a
registration statement under the U.S. Securities Exchange Act of 1934. Such financial information and financial measures
(including underlying profit or loss, underlying net interest margin, underlying CTI ratios and underlying impairment expense
ratio) do not have standardised meanings prescribed under New Zealand equivalents to International Financial Reporting
Standards (NZ IFRS), Australian Accounting Standards (AAS) or International Financial Reporting Standards (IFRS) and
therefore, may not be comparable to similarly titled measures presented by other entities.
Because the Company complies with accounting standards, investors know that comparisons can be made with confidence
between reported profits and those of other companies, and there is integrity in the Company’s reporting approach. These
non-GAAP figures are provided as a supplementary measure for readers to assess the Company’s performance alongside NZ
GAAP reported measures, where one-offs, both positive and negative, can make it difficult to compare profits between
years. However, these do not have standardised meanings and should not be viewed in isolation nor considered a substitute
for measures reported in accordance with NZ GAAP.
Disclaimer
None of the Company, the Lead Manager, or the Underwriter, nor their respective related companies and affiliates including,
in each case, their respective shareholders, directors, officers, employees, agents and advisers, as the case may be
(Specified Persons), have independently verified or will verify any of the content of this presentation and none of them are
under any obligation to you if they become aware of any change to or inaccuracy in the information in this presentation.
To the maximum extent permitted by law, each Specified Person disclaims and excludes all liability (whether in tort
(including negligence) or otherwise) for any direct or indirect loss, damage or other consequence (whether foreseeable or
not) suffered by any person: from the use of or reliance on the information contained in, or omitted from, this presentation;
from refraining from acting because of anything contained in or omitted from this presentation; or otherwise arising in
connection therewith (including for negligence, default, misrepresentation or by omission and whether arising under
statute, in contract or equity or from any other cause). To the maximum extent permitted by law, no Specified Person makes
any representation or warranty, either express or implied, as to the currency, fairness, accuracy, completeness or reliability
of the information contained in this presentation. You agree that you will not bring any proceedings against or hold or
purport to hold any Specified Person liable in any respect for this presentation or the information in this presentation and
waive any rights you may otherwise have in this respect.
None of the Lead Manager or the Underwriter or any of their respective affiliates, related bodies corporate, directors,
officers, partners, employees, agents or advisers have authorised, permitted or caused the issue, submission, dispatch or
provision of this presentation and none of them makes or purports to make any statement in this presentation and there is
no statement in this presentation which is based on any statement by any of them. None of the Lead Manager or the
Underwriter or any of their respective affiliates, related bodies corporate, directors, officers, partners, employees, agents or
advisers take responsibility for any part of this presentation, or the Offer, and make no recommendations as to whether you
or your related parties should participate in the Offer, nor do they make any representations or warranties to you concerning
the Offer. Determination of eligibility of investors of the purposes of the ANREO is determined by reference to a number of
matters, including legal requirements, logistical and registry constraints and discretion. To the maximum extent permitted
by law, the Lead Manager, Underwriter, Specified Persons or any one of them disclaims any duty or liability (including for
negligence) in respect of such determination or exercise of their discretion. You represent, warrant and agree that you have
not relied on any statements made by the Lead Manager, Underwriter, or their respective affiliates, related bodies
corporate, directors, officers, partners, employees, agents or advisers in relation to the Offer and you further expressly
disclaim that you are in a fiduciary, agency, custodial or other legal relationship with any of them, and agree that you are
responsible for making your own independent judgment in relation to any matter arising in connection with this document.
No person named in this presentation or any of their affiliates accept or shall have any liability to any person in relation to the
distribution of this presentation from or in any jurisdiction. To the maximum extent permitted by law, by accessing this
document, you undertake that you will not seek to sue or hold the Lead Manager, Underwriter, Specified Persons or any one
of them liable in any respect in connection with this document or the ANREO.
This presentation contains data sourced from and the views of independent third parties. In such data being replicated in
this presentation, no Specified Person makes any representation, whether express or implied, as to the accuracy of such
data. The replication of any views in this presentation should not be treated as an indication that the Company or any other
Specified Person agrees with or concurs with such views.
05
Disclaimer and important notice
36
Forward-looking statements
This presentation may contain certain forward-looking statements with respect to the financial condition, results of
operations and business of the Company. Forward-looking statements can generally be identified by the use of words such
as 'project', 'foresee', 'plan', 'expect', 'aim', 'intend', 'anticipate', 'believe', 'estimate', 'may', 'should', 'will' or similar expressions.
Forward-looking statements in this presentation include statements regarding the timetable, conduct and outcome of the
Offer and the use of proceeds thereof, Heartland’s strategies and future plans and Heartland’s future financial performance.
Any indications of, guidance or outlook on, or ambitions in respect of, future earnings or financial position or performance
and future distributions are also forward-looking statements. All such forward-looking statements involve known and
unknown risks, significant uncertainties, assumptions, contingencies, and other factors, many of which are outside the
control of the Company, which may cause the actual results or performance of the Company to be materially different from
any future results or performance expressed or implied by such forward-looking statements. Such forward-looking
statements speak only as of the date of this presentation. Except as required by law or regulation (including the NZX Listing
Rules and the ASX Listing Rules), the Company undertakes no obligation to update these forward-looking statements for
events or circumstances that occur subsequent to the date of this presentation or to update or keep current any of the
information contained herein. Any estimates or projections as to events that may occur in the future (including projections
of revenue, expense, net income and performance) are based upon the best judgement of the Company from the
information available as of the date of this presentation. A number of factors could cause actual results or performance to
vary materially from the projections, including the risk factors set out in this presentation. Investors should consider the
forward-looking statements in this presentation in light of those risks and disclosures. You are strongly cautioned not to
place undue reliance on any forward-looking statements, particularly in light of the current economic climate.
Past performance
Past performance information provided in this presentation is given for illustrative purposes only and should not be relied
upon as (and is not) a promise, representation, warranty or guarantee as to the past, present or future performance of the
Company.
General
For the purposes of this Disclaimer and Important Notice, "presentation" means the slides, any oral presentation of the slides
by the Company, any question-and-answer session that follows that oral presentation, hard copies of this presentation and
any materials distributed at, or in connection with, that presentation.
The information and opinions contained in this presentation are provided as at the date of this presentation and are subject
to change without notice. Subject to the NZX and ASX Listing Rules, the Company reserves the right to withdraw, or vary the
timetable for, the Placement and/or the ANREO, without notice.
Acceptance
By attending or reading this presentation, you agree to be bound by the foregoing limitations and restrictions and, in
particular, will be deemed to have represented, warranted, undertaken and agreed that: (i) you have read and agree to
comply with the contents of this Disclaimer and Important Notice; (ii) you are permitted under applicable laws and
regulations to receive the information contained in this presentation; and (iii) you will base any investment decision solely on
information released by the Company via NZX and ASX (including, in the case of the ANREO, the Offer Document).
05
Disclaimer and important notice
37
ABPAustralia Bank ProgrammeNIMNet interest margin
ADIAuthorised deposit-taking institutionNOINet operating income
APRAAustralian Prudential Regulation AuthorityNPATNet profit after tax
AT1Additional Tier 1NPLNon performing loans
Australian Seniors
Finance
Australian Seniors Finance Pty Ltd, now known as Heartland FinanceOOIOther operating income
Challenger BankChallenger Bank LimitedOPEXOperating expenses
CAGRCompound Annual Growth RateRBNZReserve Bank of New Zealand
CTI ratioCost to income ratioppsPercentage points
EPSEarnings per shareReceivablesGross Finance Receivables
FXForeign currency exchangeROEReturn on equity
HeartlandHeartland Group Holdings Limited or the CompanyStockCo AustraliaComprised of StockCo Australia Management Pty Ltd, StockCo Holdings 2 Pty Ltd
and their subsidiaries
Heartland AustraliaHeartland Australia Holdings Pty Ltd and its direct and indirect wholly-owned
subsidiaries, Heartland Australia Group Pty Ltd, Australia Seniors Finance and
StockCo Australia
TERP Theoretical Ex-Rights Price
Heartland Bank
Australia
Challenger Bank (an Australian ADI) and Heartland AustraliaFY2024Financial year ending 30 June 2024
Heartland BankHeartland Bank LimitedFY2025PFinancial projections for the financial year ending 30 June 2025
LTMLast twelve months to 31 December 2023FY2028Financial year ending 30 June 2028
LVRLoan-to-value ratio1H2023First half of FY2023 (1 July to 31 December 2022)
MTNMedium Term Note1H2024First half of FY2024 (1 July to 31 December 2023)
NIINet interest income2H2024Second half of FY2024 (1 January to 30 June 2024)
05
Glossary
38
Unaudited financial results in this investor presentation are presented on a
reported and underlying basis.
•Reported results are prepared in accordance with NZ GAAP and include the
impacts of one-offs, both positive and negative, which can make it difficult to
compare performance between periods.
•Underlying results (which are non-GAAP financial information) exclude the
impacts of fair value changes on equity investments held, the de-designation of
derivatives, the ABP costs, increase in provisions for a subset of legacy lending,
and any other impacts of one-offs. This is intended to allow for easier
comparability between periods, and is used internally by management for this
purpose.
Adjustments for underlying results impact net operating income (NOI), operating
expenses (OPEX), net profit after tax (NPAT), net interest margin (NIM) and
earnings per share (EPS). Underlying return on equity (ROE), underlying cost to
income (CTI) ratio and underlying impairment expense ratio measures are
supplementary, non-GAAP measures that may be used by investors, industry
analysts and others in assessing and benchmarking profitability and performance
against the industry and/or other companies. A GAAP and non-GAAP comparative is
provided for each of these measures.
Refer to Heartland’s full year and half year investor presentations at
heartlandgroup.info for a detailed reconciliation between reported and underlying
financial information, including details about one-offs in the periods covered in this
presentation.
05
Presentation of financial results
39
Heartland’s sustainability framework is built on three key pillars: environment, people and financial wellbeing.
Heartland is making good progress to meet
the new Climate-Related Disclosures
obligations in NZ, with Heartland’s first
climate statement required as part of full
year reporting for FY2024.
Heartland’s Board established a
Sustainability Committee to oversee
Heartland’s sustainability strategy and
implementation plans.
StockCo Australia announced a two-year
pilot project with Australian farmer-led
software provider Ruminati, to help
producers track and validate on-farm
climate action across the supply chain.
The Manawa Ako internship welcomed 30
Māori and Pasifika interns in its sixth intake,
with the greatest number of applications
since programme establishment in 2017.
Heartland Finance, awarded a Non-Bank of
the Year Excellence Award at the
Australian Mortgage Awards 2023
(fourth year in a row).
Heartland Bank awarded Canstar NZ’s
Bank of the Year – Savings (sixth year in
a row). Plus, Five-star ratings for Direct
Call Account, 32-Day Notice Saver Account
and 90-Day Notice Saver Account.
For more information on Heartland’s sustainability framework, please visit heartlandgroup.info/sustainability
05
Appendix 1: Sustainability
40
Greg
Tomlinson
Chairman & Non-Executive Director | Appointed in 2018 (2013 to Heartland NZ Ltd Board)
1
•40 years experience
•Currently director of Oceania Healthcare, Tomlinson Group and IndevinGroup
•Previously founder at Impact Capital
Ellie
Comerford
Independent Non-Executive Director | Appointed in 2018 (2017 to Heartland Bank Board)
•Over 35 years experience
•Currently Non-Executive Director for a range of financial services sector boards ANZ
•Previously Group CFO and Director of Hollard ANZ, CEO and Managing Director of Genworth
Mortgage Insurance Australia, International division COO of First American Financial
Corporation, CEO and Managing Director of First Title ANZ, and various senior executive roles at
Citigroup
•Ellie has indicated her intention to resign from the Heartland Board on or around 30 June 2024
Kate
Mitchell
Independent Non-Executive Director | Appointed in 2021
•Over 25 years experience
•Currently Chair of The New Zealand Merino Company and Link Engine Management, and
director of The a2 Milk Company and Christchurch International Airport
•Previously Managing Director, Debt Capital Markets at Deutsche Bank, following Global
Markets roles at Merrill Lynch and Goldman Sachs
Geoff
Summerhayes
Independent Non-Executive Director | Appointed in 2021
•Over 35 years experience
•Currently Chair of Zurich ANZ and Chair of the AICD Climate Governance Initiative and senior
advisor to Pollination Group
•Previously on APRA Board, CEO of Suncorp Life and held several senior executive roles at NAB
and Lendlease
•Subject to completion, MrSummerhayes will resign from the Heartland Board and will be
appointed as the Chairman of the Challenger Bank Board
Jeff
Greenslade
CEO and Executive Director| Appointed in 2018 (2010 to Heartland NZ Ltd Board)
1
•Over 30 years experience
•Previously Managing Director of Corporate and Commercial Banking for ANZ National Banking
Group and held numerous senior roles in the institutional and capital markets areas of The
National Bank of New Zealand and its subsidiary Southpac
•Previously on board of UDC Finance Limited
•MrGreenslade has indicated his intention to step down from his role as CEO of Heartland at the
end of this calendar year. The Board is confident in the continuation of senior expertise within
the Heartland group, and will work closely with Jeff on succession planning through the
calendar year to ensure a successful transition
Appendix 2: Current Board of Directors
1 Heartland changed its name from Heartland New Zealand Limited to Heartland Bank Limited on 31 December 2015 (in conjunction with the amalgamation of Heartland New Zealand Limited and Heartland Bank Limited).
05
Diversified and experienced Boards with a demonstrated good governance track record supported by extensive expertise in finance, banking and risk management.
Heartland Group
Bruce
Irvine
Chair & Independent Non-Executive Director | Appointed in 2015 (2013 to Heartland NZ Ltd Board)
1
•Over 35 years experience
•Currently Chair of SkopeIndustries Ltd, Market Gardeners Ltd and Non-Executive Director of House of Travel Ltd and
Scenic Hotels Ltd
•Previously Managing Partner at Deloitte
Jeff
Greenslade
Non-Independent Non-Executive Director | Appointed in 2015 (2010 to Heartland NZ Ltd Board)
1
•Over 30 years experience
•Previously Managing Director of Corporate and Commercial Banking for ANZ National Banking Group and held
numerous senior roles in the institutional and capital markets areas of The National Bank of New Zealand and its
subsidiary Southpac
•Previously on board of UDC Finance Limited
John
Harvey
Independent Non-Executive Director | Appointed in 2015 (2013 to Heartland NZ Ltd Board)
1
•Over 45 years experience
•Previously Partner at PWC
•Board experience includes Stride Property, InvestoreProperty, Napier Port, Kathmandu Holdings and previously APN
News and Media
•Subject to completion, MrHarvey will be appointed to the Heartland Board as an independent, non-executive
director and will remain on the Heartland Bank Board as a non-independent, non-executive director
Kate
Mitchell
Non-Independent Non-Executive Director | Appointed in 2019
•Over 25 years experience
•Currently Chair of The New Zealand Merino Company and Link Engine Management, and director of The a2 Milk
Company and Christchurch International Airport
•Previously Managing Director, Debt Capital Markets at Deutsche Bank, following Global Markets roles at Merrill Lynch
and Goldman Sachs
Shelley
Ruha
Independent Non-Executive Director | Appointed in 2020
•Over 30 years experience
•Currently Independent Director of Partners Life and 9Spokes and independent Chair of Allied Farmers and PaySauce
•Previous banking executive experience across business banking, institutional markets, technology and product, and
board experience at Hobson Wealth, Paymark, JB Were Australia, and The Icehouse
Simon
Tyler
Independent Non-Executive Director | Appointed in 2022
•Over 35 years experience
•Currently independent director on the audit committee of IHC New Zealand and director of Palliser Estate Wines of
Martinborough
•Previously CEO of the Government Superannuation Fund Authority and the National Provident Fund and also held
senior treasury and markets roles
Heartland Bank
41
Leanne
Lazarus
Chief Executive Officer | Joined in 2022
•Over 30 years experience
•Previously CEO & Executive Director of Westpac NZ's insurance brand Westpac Life NZ
•Held executive positions at Westpac NZ, ANZ, National Bank of New Zealand and Nedbank Group
Andy
Wood
Chief Risk Officer | Joined in 2022
•Over 30 years experience
•Previously Head of Supervision at Reserve Bank of New Zealand, where he was responsible for
implementing the RBNZ’s approach to supervision, covering both prudential and anti-money
laundering activities across the bank, non-bank and insurance sectors
Kerry
Conway
Chief Financial Officer | Joined in 2024
•Over 30 years experience
•Previously Chief Product Officer and Deputy CFO at Westpac NZ, as well as CFO positions at GE Capital
NZ and Paymark
•Held various senior finance roles within global organisations
Michael
Drumm
Chief Compliance & Sustainability Officer | Joined in 2015
•Over 15 years experience
•Held numerous senior roles at Heartland, including General Counsel and Chief Risk Officer
•Previously Senior Associate at commercial law firm Mayne Wetherell
Phoebe
Gibbons
General Counsel | Joined in 2020
•Over 15 years experience
•Previously Senior Associate at commercial law firm Chapman Tripp
•Provides a shared resource into Heartland Group
Lana
West
Chief People & Culture Officer | Joined in 2021
•Over 20 years experience
•Previously Head of People & Culture at ASB Bank, Beca, BNZ, Head of Diversity & Inclusion at BNZ,
People & Culture State Manager, Victoria & Tasmania at Bupa
•Provides a shared resource into Heartland Group
Jeff
Greenslade
Chief Executive Officer | Joined in 2009
•Over 30 years experience
•Previously Managing Director of Corporate and Commercial Banking for ANZ National
Banking Group and held numerous senior roles in the institutional and capital markets
areas of The National Bank of New Zealand and its subsidiary Southpac
•Previously on board of UDC Finance Limited
Chris
Flood
Deputy Chief Executive Officer | Joined in 1997
•Over 35 years experience
•Previously CEO of Heartland Bank and originally joined Heartland through MARAC
Finance in 1997
•Previously Westpac, National Australia Bank and UDC
•Director of numerous associated entities within the Heartland group of companies
Andrew
Dixson
Group Chief Financial Officer | Joined in 2010
•Over 20 years experience
•Held numerous senior roles focused on execution of key strategic projects
•Previously investment banker with Credit Suisse and ABN AMRO and auditor at PwC
Aleisha
Langdale
Chief Performance Officer | Joined in 2015
•9 years experience
•Previously Head of Digital Coordination, Home Loan Planning & Execution Manager
and Digital Projects Manager at Heartland Bank
05
Management team with a deep understanding of banking and finance and a commitment to achieving great outcomes for stakeholders.
1 Doug Snell will be leaving his role as StockCo Australia CEO on 12 April 2024. Chris Flood will cover the role in his capacity as Acting CEO of Heartland Bank Australia until a replacement is recruited.
Appendix 3: Current Management
Heartland Group
1
Heartland Bank
42
This document does not constitute an offer of new ordinary shares (“New Shares”) of the Company in any jurisdiction in which it would be unlawful. In particular, this document
may not be distributed to any person, and the New Shares may not be offered or sold, in any country outside New Zealand and Australia except to the extent permitted below.
Hong Kong
WARNING: This document has not been, and will not be, registered as a prospectus under the Companies (Winding Up
and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong, nor has it been authorised by the Securities and
Futures Commission in Hong Kong pursuant to the Securities and Futures Ordinance (Cap. 571) of the Laws of Hong Kong
(the “SFO”). Accordingly, this document may not be distributed, and the New Shares may not be offered or sold, in Hong
Kong other than to “professional investors” (as defined in the SFO and any rules made under that ordinance).
No advertisement, invitation or document relating to the New Shares has been or will be issued, or has been or will be in
the possession of any person for the purpose of issue, in Hong Kong or elsewhere that is directed at, or the contents of
which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws
of Hong Kong) other than with respect to New Shares that are or are intended to be disposed of only to persons outside
Hong Kong or only to professional investors. No person allotted New Shares may sell, or offer to sell, such securities in
circumstances that amount to an offer to the public in Hong Kong within six months following the date of issue of such
securities.
The contents of this document have not been reviewed by any Hong Kong regulatory authority. You are advised to
exercise caution in relation to the offer. If you are in doubt about any contents of this document, you should obtain
independent professional advice.
Norway
This document has not been approved by, or registered with, any Norwegian securities regulator under the Norwegian
Securities Trading Act of 29 June 2007 no. 75. Accordingly, this document shall not be deemed to constitute an offer to
the public in Norway within the meaning of the Norwegian Securities Trading Act. The New Shares may not be offered or
sold, directly or indirectly, in Norway except to “professional clients” (as defined in the Norwegian Securities Trading Act).
Singapore
This document and any other materials relating to the New Shares have not been, and will not be, lodged or registered as a
prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this document and any other document or
materials in connection with the offer or sale, or invitation for subscription or purchase, of New Shares, may not be issued,
circulated or distributed, nor may the New Shares be offered or sold, or be made the subject of an invitation for subscription
or purchase, whether directly or indirectly, to persons in Singapore except pursuant to and in accordance with exemptions
in Subdivision (4) Division 1, Part 13 of the Securities and Futures Act 2001 of Singapore (the “SFA”) or another exemption
under the SFA.
This document has been given to you on the basis that you are an “institutional investor” or an “accredited investor” (as
such terms are defined in the SFA). If you are not such an investor, please return this document immediately. You may not
forward or circulate this document to any other person in Singapore.
Any offer is not made to you with a view to the New Shares being subsequently offered for sale to any other party in
Singapore. On-sale restrictions in Singapore may be applicable to investors who acquire New Shares. As such, investors are
advised to acquaint themselves with the SFA provisions relating to resale restrictions in Singapore and comply accordingly.
United Kingdom
Neither this document nor any other document relating to the offer has been delivered for approval to the Financial
Conduct Authority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financial Services
and Markets Act 2000, as amended (“FSMA”)) has been published or is intended to be published in respect of the New
Shares.
The New Shares may not be offered or sold in the United Kingdom by means of this document or any other document,
except in circumstances that do not require the publication of a prospectus under section 86(1) of the FSMA. This
document is issued on a confidential basis in the United Kingdom to “qualified investors” within the meaning of Article
2(e) of the UK Prospectus Regulation. This document may not be distributed or reproduced, in whole or in part, nor may
its contents be disclosed by recipients, to any other person in the United Kingdom.
Any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) received in
connection with the issue or sale of the New Shares has only been communicated or caused to be communicated and will
only be communicated or caused to be communicated in the United Kingdom in circumstances in which section 21(1) of
the FSMA does not apply to the Company.
In the United Kingdom, this document is being distributed only to, and is directed at, persons (i) who have professional
experience in matters relating to investments falling within Article 19(5) (investment professionals) of the Financial
Services and Markets Act 2000 (Financial Promotions) Order 2005 (“FPO”), (ii) who fall within the categories of persons
referred to in Article 49(2)(a) to (d) (high net worth companies, unincorporated associations, etc.) of the FPO or (iii) to
whom it may otherwise be lawfully communicated (“relevant persons”). The investment to which this document relates is
available only to relevant persons. Any person who is not a relevant person should not act or rely on this document.
United States
This document does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States. The
New Shares have not been, and will not be, registered under the US Securities Act of 1933 or the securities laws of any
state or other jurisdiction of the United States. Accordingly, the New Shares may not be offered or sold in the United
States except in transactions exempt from, or not subject to, the registration requirements of the US Securities Act and
applicable US state securities laws.
The New Shares will only be offered and sold in the United States to:
•“qualified institutional buyers” (as defined in Rule 144A under the US Securities Act); and
•dealers or other professional fiduciaries organized or incorporated in the United States that are acting for a
discretionary or similar account (other than an estate or trust) held for the benefit or account of persons that
are not US persons and for which they exercise investment discretion, within the meaning of Rule 902(k)(2)(i) of
Regulation S under the US Securities Act.
05
Appendix 4: Internal offer restrictions
43
Investor information
For more information
heartlandgroup.info/investor-information
Investor & media relations
Nicola Foley
Group Head of Communications
+64 27 345 6809
nicola.foley@heartland.co.nz
Thank you
---
Corporate Action Notice
(Other than for a Distribution)
Page 1 of 4
Section 1: Issuer information (mandatory)
Name of issuer Heartland Group Holdings Limited
Class of Financial Product Ordinary Shares
NZX ticker code HGH
ISIN (If unknown, check on NZX
website)
NZHGHE0007S9
Name of Registry Link Market Services Limited
Type of corporate action
(Please mark with an X in the relevant
box/es)
Share Purchase
Plan/retail offer
Renounceable
Rights issue or
Accelerated
Offer
Capital
reconstruction
Non-
Renounceable
Rights issue or
Accelerated
Offer
X
Call Bonus issue
Placement X
Record date 09/04/2024
Ex Date (one business day before the
Record Date)
08/04/2024
Currency NZD / AUD
External approvals required before offer
can proceed on an unconditional basis?
N
Details of approvals required N/A
Section 2: Rights issue or Accelerated Offer
(delete full section if not applicable, or mark rows as N/A if not applicable)*
If Accelerated Offer, structure
Accelerated Non-renounceable Entitlement Offer
(ANREO)
Number of Rights to be issued or
entitlements available for security
holders in the Accelerated Offer
105,037,815
Maximum number of Equity Securities
to be issued if offer is fully subscribed
105,037,815
ISIN of Rights (if applicable) N/A
Oversubscription facility Y
2 of 4
Details of scaling arrangements for
oversubscriptions
Eligible Retail Shareholders who have taken up all of
their Entitlements in full may apply for additional New
Shares, up to a maximum amount of New Shares
equal to 100% of their Entitlements. Allocations and
any necessary scaling of additional New Shares
applied for by Eligible Retail Shareholders who take
up their Entitlements in full will be determined by
Heartland and the Lead Manager.
Entitlement ratio (for example 1 for 3)
Please contact NZX ahead of announcing the offer if
each Right will be exercisable for more or less than
one Equity Security (i.e unless prior arrangement is
made, Rights will be exercisable on a one for one
basis)
New 1 Existing 6.85
Treatment of fractions**
Entitlements are not rounded up to a minimum
holding. The number of New Shares to which an
Eligible Shareholder is entitled will, in the case of
fractions of New Shares, be rounded down to the
nearest whole number.
Subscription price
(per Equity Security)
$1.00 (or the A$ price)
Letters of entitlement mailed 11/04/2024
Offer open 11/04/2024
Offer close 22/04/2024
Quotation date (if Rights will be quoted) N/A
Allotment date Market open on:
26/04/2024
Section 7: Placement
Number of Equity Securities to be
issued
105,000,000
1
Issue price per Equity Security $1.00
Maximum dollar amount of Equity
Securities to be issued
$105,000,000
1
Proposed issue date 15/04/2024
Existing holders eligible to
participate
Y
Related Parties eligible to
participate
Y
1
As noted in the investor presentation released today, the offer also includes the issue of approximately 1.0 m new Heartland ordinary shares to
Washington H. Soul Patterson and Company Limited as consideration for the acquisition of 0.65% of the shares in Alex Corporation Limited, the
holding company for Alex Bank. The shares will be issued at the offer price. This component of the offer is a targeted placement to a single vendor
following a negotiation on arm’s length terms as to the basis of participation, and as such the responses in the balance of this notice relate to the
placement being undertaken to raise capital.
3 of 4
Basis upon which participation by
existing Equity Security holders will
be determined
Eligible institutional shareholders will be invited to
participate in the Placement component of the Offer.
Under the retail component of the ANREO, existing
eligible retail shareholders may oversubscribe up to 100%
of their entitlements which (if fully allocated) would
prevent dilution by the Placement component of the offer.
Purpose(s) for which the Issuer is
issuing the Equity Securities
Proceeds from the equity raise will be used to fund the
balance of the consideration payable for the Challenger
Bank acquisition, support the expected regulatory capital
requirements of Challenger Bank and Heartland Bank,
and cater for near-term projected asset growth post-
completion of the Challenger Bank acquisition.
Reason for placement rather than a
pro-rata rights issue or an offer
under a Share Purchase Plan in
which the Issuer’s existing Equity
Security holders would have been
eligible to participate
Heartland has chosen to undertake a Placement and
ANREO to raise capital. The board of directors of
Heartland has determined that this capital raising
structure is in the best interests of Heartland, after
carefully considering alternative capital raising structures,
and weighing the benefits of this capital raising structure
against the expected impact on non-participating
Shareholders. Those benefits are:
• Certainty – Heartland requires certainty that sufficient
funds be raised under the Placement and ANREO to
complete the acquisition of Challenger Bank and to
support the expected regulatory capital requirements
of Challenger Bank and Heartland Bank. The
Placement and ANREO are fully underwritten or pre-
committed, providing certainty that the necessary
funds will be received.
• Pricing – The expert investment banking advice from
Jarden also noted that using an ANREO structure
allows Heartland to price the Placement and ANREO
at a smaller discount than would be the case for a
renounceable pro rata capital raising structure. This
minimises the dilutionary impact on non-participating
Shareholders.
• Timing – The Placement and the ANREO are being
conducted in relation to the acquisition of Challenger
Bank and to support the near-term capital needs of
Challenger Bank and Heartland Bank post-completion.
Importantly, the accelerated nature of an ANREO
enables completion of the offer on a faster timetable
than a traditional rights issue or an accelerated
renounceable entitlement offer as no bookbuilds are
required. This means Heartland will receive the
proceeds of the capital raise more quickly, which will
in turn allow for the acquisition of Challenger Bank to
complete sooner. The faster timetable also means the
period of risk associated with potential market volatility
between the Placement and ANREO opening and
settlement is reduced, which in turn supports greater
4 of 4
participation by sub-underwriters, Shareholders and a
smaller discount.
Equity Securities to be issued
subject to voluntary escrow
N
Number and class of Equity
Securities to be issued that will be
subject to voluntary escrow and the
date from which they will cease to
be escrowed
N/A
Section 8: Lead Manager and Underwriter (mandatory)
Lead Manager(s) appointed Y
Name of Lead Manager(s) Jarden Securities Limited
Fees, commission or other
consideration payable to Lead
Manager(s) for acting as lead
manager(s)
The Company agrees to pay a lead management fee of
1.0% of the total gross proceeds raised under the
Placement and ANREO.
Underwritten Y
Name of Underwriter(s) Jarden Partners Limited
Extent of underwriting (i.e. amount
or proportion of the offer that is
underwritten)
Heartland has received a pre-commitment from its largest
shareholder, Harrogate Trustee Limited, for approximately
NZ$14 million of the equity raise. The placement and
ANREO, excluding the amount pre-committed by
Harrogate Trustee Limited, are fully underwritten by
Jarden Partners Limited.
Fees, commission or other
consideration payable to
Underwriter(s) for acting as
underwriter(s)
The Company agrees to pay an underwriting fee of 1.5%
of the total gross proceeds raised under the Placement
and ANREO excluding the amount pre-committed by
Harrogate Trustee Limited.
Summary of significant events that
could lead to the underwriting
being terminated
A summary of the significant events that could lead to the
underwriting being terminated are set out under the
heading “Underwriting Agreement” in the offer document.
Section 9: Authority for this announcement (mandatory)
Name of person authorised to make this
announcement
Jeff Greenslade, Chief Executive Officer
Andrew Dixson, Chief Financial Officer
Contact person for this announcement Nicola Foley, Group Head of Communications
Contact phone number 027 345 6809
Contact email address nicola.foley@heartland.co.nz
Date of release through MAP 8/04/2024
---
Heartland Group Holdings Limited | NZX/ASX: HGH | PO Box 9919, Newmarket, Auckland 1149 | heartlandgroup.info
8 A
pril 2024
NZ RegCo
Level 1, NZX Centre
11 Cable Street
Wellington 6011
New Zealand
ASX Limited
20 Bridge Street
Sydney NSW 2000
Australia
H
EARTLAND GROUP HOLDINGS LIMITED (NZX: HGH, ASX: HGH): NOTICE PURSUANT TO CLAUSE
20(1)(a) OF SCHEDULE 8 TO THE FINANCIAL MARKETS CONDUCT REGULATIONS 2014
Heartland Group Holdings Limited (Heartland) has today announced that it will undertake a
placement (the Placement), and accelerated non-renounceable entitlement offer (the ANREO) of
new fully paid ordinary shares of the same class as already quoted on the NZX and the ASX
(together, the Offer).
1
Pursuant to clause 19 of Schedule 1 of the Financial Markets Conduct Act 2013 (FMCA), clause 20
of Schedule 8 of the Financial Markets Conduct Regulations 2014 (FMC Regulations) and the
Australian Corporations Act 2001 (Cth) (Corporations Act), Heartland states that:
1 Heartland is making the Offer in reliance upon the exclusion in clause 19 of Schedule 1 of the
FMCA and is giving this notice under clause 20(1)(a) of Schedule 8 of the FMC Regulations.
2 Heartland will offer the ordinary shares for issue and issue the ordinary shares without
disclosure under Part 6D.2 of the Corporations Act.
3 Heartland is giving this notice under paragraph 708A(
12G) of the Corporations Act (as notionally
inserted by ASIC Instrument 18-1012) and 708AA(2)(f) of the Corporations Act (as modified by
the ASIC Corporations (Non-Traditional Rights Issues) Instrument 2016/84 and ASIC Instrument
18-1012).
4 As at the date of this notice, Heartland is in compliance:
4.1 with the continuous disclosure obligations that apply to it in relation to Heartland’s
quoted ordinary shares and its obligations under rule 1.15.2 of the ASX Listing Rules; and
4.2 with its “ financial reporting obligations” within the meaning set out in clause 20(5) of
Schedule 8 of the FMC Regulations.
5 As at the date of this notice, there is no information that is “ excluded information” as defined
in clause 20(5) of Schedule 8 to the FMC Regulations in respect of Heartland.
The Offer is not expected to have any effect on the control of Heartland within the meaning set out
in clause 48 of Schedule 1 of the FMCA.
This notice has been authorised for release to NZX and ASX by:
P
hoebe Gibbons
General Counsel
Heartland Group Holdings Limited
1
As noted in the investor presentation released today, the Offer also includes the issue of approximately 1.0 m new Heartland
ordinary shares to Washington H. Soul Patterson and Company Limited as consideration for the acquisition of 0.65% of the
shares in Alex Corporation Limited, the holding company for Alex Bank.
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.