Heartland announces full year profit of $73.6 million

15 August 2019 Heartland Group Holdings Limited (Heartland) (NZX/ASX: HGH) achieved a net profit after tax (NPAT) of $73.6 million for the financial year ended 30 June 2019 (FY2019), an increase of 9.0% from the previous financial year ended 30 June 2018 (FY2018). Achievements for the year ended 30 June 2019 Financial: - Gross Finance Receivables (Receivables) $4.4 billion, up 10.5% (excluding the impact of changes in foreign currency exchange rates). - Net profit after tax $73.6 million, up 9.0%. - FY2019 Final Dividend 6.5 cents per share (cps), taking FY2019 total dividends to 10.0cps. A 1.0cps increase on FY2018, up 11%, and a dividend yield of 8.6%3. - Return on equity (ROE) 11.1%, unchanged from FY2018. - Earnings per share (EPS) 13.0cps, unchanged from FY2018. - Net interest margin (NIM) 4.33%, down 0.09% from 4.42%. - Net operating income $205.8 million up 4.6%. - Cost to income ratio 39.9% (excluding costs associated with the corporate restructure), improved from 40.9%. Business: - New Zealand Reverse Mortgage Receivables increased $52.0 million (11.4% growth excluding the impact of foreign exchange and transfers). - Motor Receivables increased $127.6 million (13.3% growth). - Harmoney and other personal lending Receivables increased $45.1 million (24.9% growth excluding the impact of foreign exchange). - Business Receivables increased $38.1 million (3.5% growth), with Business Intermediated lending up $101.7 million (31.4% growth) and Open for Business lending up $43.4 million (48.2% growth). o Australian Reverse Mortgage Receivables increased $163.0 million (24.0% excluding the impact of foreign exchange and transfers). Strategic: - Corporate restructure successfully completed - creating funding flexibility. - ASX foreign exempt listing successfully completed. - Diversification and expansion of Australian funding through an A$50 million medium-term note issue and a new A$250 million reverse mortgage funding facility. - Heartland Bank issue of $125 million five-year unsubordinated unsecured fixed rate notes. Customer outcomes: - Uptake of the Heartland Mobile App continues to rise, increasing by 72% in the last six months. - Awarded Canstar's 2019 Bank of the Year - Savings Award for the second year running. - Awarded Canstar's 5-Star Rating for Outstanding Value Savings Account for Heartland's Direct Call Account for the fourth year in a row. - Heartland Seniors Finance Australia awarded Best Reverse Mortgage 2019 by Money Magazine for the fourth consecutive year. - Work plan submitted to the Financial Markets Authority (FMA) and Reserve Bank of New Zealand (RBNZ) in response to the recent Conduct and Culture Review. Culture: - Increase in gender diversity among people in the strategic management group, currently 37.5% male and 62.5% female. - Internship initiative has contributed to Maori constituting 4% of Heartland's population. This is positive compared to the sector where 2.3% of people in the financial and insurances services sector identify as Maori5. - Heartland launched its new matapono (values) with a focus on customer outcomes. The matapono are: Mahi Tika - do the right thing, Mahi Tahi - be one team, Mahi Toa - have big ambition and Mahi Tipu - be always evolving. FINANCIAL POSITION Net Receivables increased by $424.8 million (10.7% growth). However, reported net receivables increased by $363.1 million (9.1% growth) to $4,348 million due to an adverse foreign exchange impact on Australian receivables of $34.5 million, and the impact of the adoption of IFRS9 of $27.3 million. End CA:00339194 For:HGH Type:FLLYR Time:2019-08-15 10:22:11