Heartland Group Holdings Ltd. · NZX:HGH
Heartland — Heartland New Zealand — Shareholder Meeting (October 2014)
32 slides from Heartland's shareholder meeting presentation, Oct 31, 2014
Slide 1: Annual Meeting, 31 October 2014
Annual Meeting, 31 October 2014 Novotel Hotel, Ellerslie, Auckland Annual Meeting 1 Nov 2013 Addington Events Annual Meeting 1 November 2013 | PageCentre, 1 Christchurch 1
Slide 2: Agenda
Agenda • Welcome • Administrative Matters • Chairman’s Overview • CEO’s Performance Overview • Voting on Resolutions • General Business Annual Meeting 1 November 2013 | Page 2 2
Slide 3: Introduction of Directors
Introduction of Directors As at 30 June 2014 HNZ HBL Bruce Irvine (chair) Geoff Ricketts (chair) Geoff Ricketts Graham Kennedy Graham Kennedy Jeff Greenslade (Managing Director) Jeff Greenslade (Managing Director) Gary Leech Nicola Greer Chris Mace John Harvey Greg Tomlinson Michael Jonas (Executive
Slide 4: Chairman's Overview
Chairman’s Overview Geoff Ricketts Annual Meeting 1 November 2013 | Page 4 4
Slide 5: Chairman's Overview
Chairman’s Overview Geoff Ricketts - Chairman • Introducing Heartland • Notable Highlights • Shareholders and Dividend • Heartland Trust • Our People Annual Meeting 1 November 2013 | Page 5 5
Slide 6: A Journey of Transformation
A Journey of Transformation Geoff Ricketts - Chairman • Notable Milestones • Board Structure and Overview • Dividend • Heartland Trust Annual Meeting 1 November 2013 | Page 6 6 6
Slide 7: Notable Highlights
Notable Highlights • Lift in net profit after tax from $7m to $36m • Acquisition of Australian and New Zealand home equity release mortgage businesses • Consistent growth in earnings – net operating income up 14% • Standard & Poor’s and Fitch credit ratings on Heartland Bank Limited raised to BBB •
Slide 8: CEO's Performance Overview
CEO’s Performance Overview Jeff Greenslade Annual Meeting 1 November 2013 | Page 8 8
Slide 9: CEO's Performance Overview
CEO’s Performance Overview Jeff Greenslade • Heartland at a Glance • Financial Overview 30 June 2014 • Strategic Highlights • Outlook and Direction Annual Meeting 1 November 2013 | Page 9 9
Slide 10: Heartland at a glance
Heartland at a glance Listed Heartland New Zealand Limited is listed on the NZX Main Board with approximately 8,000 shareholders Market Capitalisation ~NZ$460m - $470m Diversified Diversified asset portfolio, widespread depositor base and a balanced geographic footprint Bank registration Granted to
Slide 11: Financial Overview
Financial Overview 30 June 2014 Annual Meeting 1 November 2013 | Page 11 11
Slide 12: Financial Full Year Overview
Financial Full Year Overview Step up in profitability • Achieved NPAT of $36.0m 12 months 12 months Change to June 14 to June 13 (NZ$m (NZ$m) • Increase in Adjusted NPAT of $11.6m or Net interest income 109.1 95.5 14% 48% Net other income 13.5 11.8 14% • Increase in NPAT of $29.1m or 421% Net operat
Slide 13: Return On Equity & profit trending up
Return On Equity & profit trending up • Profitability increasing • ROE for year ended 30 June 2014 9.0% compared to ROE of 1.8% and Adjusted ROE2 of 6.4% for the prior year • ROE trending up • Specific focus on improving ROE – Continued focus on higher yielding products – Continued investigation of
Slide 14: Cost of funds continue to track lower
Cost of funds continue to track lower Solid retail deposit performance and lower cost of funds driven by: • Rate alignment with bank peers • Changing funding mix (increased retail, reduced wholesale) Annual Meeting 1 November 2013 | Page 14 14
Slide 15: Growth in receivables
Growth in receivables • Total assets increased by $512m • Net finance receivables increased by $597m • Households biggest segment up $679m largely from HER acquisition • Residential mortgages and non-core property back $178m as we execute strategy to exit • Equity up $82m due to capital raised for a
Slide 16: Total Shareholder Return
Total Shareholder Return Heartland has generated strong shareholder return Heartland • Heartland New Zealand is a regular dividend payer • Share price has appreciated 92% since 1 July 2012 • Total shareholder return (TSR) (share price appreciation and dividends received) has been 127% since 1 July 2
Slide 17: Strategic Highlights
Strategic Highlights Annual Meeting 1 November 2013 | Page 17 17
Slide 18: Effect of Balance Sheet Changes
Effect of Balance Sheet Changes Strategic changes to Heartland’s balance sheet composition have resulted in increased EPS and ROE 30 June 2011 30 June 20121 30 June 2013 30 June 2014 Total Net Receivables6 Total Net Receivables6 Total Net Receivables6 Total Net Receivables6 $1.7b $2.1b $2.1b $2.6b N
Slide 19: Selected Australasian peer group
Selected Australasian peer group P / E (FY15) ROE (FY15) Average = 12.7x 13.2% Average = 10.8% 13.4x 13.0x 11.6% 12.8x 12.2x 12.0x 10.4% 11.0x 9.9% 9.3% 8.8% Macquarie Suncorp BoQ NAB Bendigo Heartland NAB Macquarie BoQ Suncorp Bendigo Heartland P / E v ROE (FY15) P / NTA(a) 14.0x Macquarie 2.3x 2.2
Slide 20: HER update
HER update • Lead conversion steady – New lending of $9m in the 1st Quarter 2015, leads building – In addition, undrawn facility limits of $7.5m established – Repayments $6m ahead of budget impacting net book growth • After some years of inactivity in the sector, Heartland’s focus has been to: – Inc
Slide 21: Outlook and Direction
Outlook and Direction Annual Meeting 1 November 2013 | Page 21 21
Slide 22: Pathway to 2015 Forecast Financial Performance
Pathway to 2015 Forecast Financial Performance • NPAT forecast of $42m - $45m • Growth in Receivables in 2015 – Consumer: 5 - 10% (1st Quarter 2015 +$16m, 2% annualised 10%) – Business: some modest growth (1st Quarter 2015 +$25m, 4% annualised 15%) – Rural: some modest growth (1st Quarter 2015 +$26m
Slide 23: Pathway to 2015 Forecast Financial Performance
Pathway to 2015 Forecast Financial Performance • Improving Cost to Income as NOI growth ahead of Costs • Impairments benign • Focus on improving ROE – Forecast is based on ‘Business as Usual’ – New initiatives not included – Acquisitions not included – Possibility of capital review is not included A
Slide 24: 10% Investment in Harmoney
10% Investment in Harmoney • 10% shareholding Harmoney Corp Limited • New Zealand’s only licensed peer-to-peer lending platform • A funding line provided by Heartland Bank to give initial momentum • Valuable channel to attract customers in the Household sector we do not currently reach • Heartland’s
Slide 25: "Banking is necessary, banks are not"
“Banking is necessary, banks are not” Bill Gates – Founder Microsoft Heartland is a new bank Margins in financial services industry remain high • Absence of alternatives to mainstream • Absence of choice in consumer markets Technology will overcome these – disruption and switching is inevitable Annu
Slide 26: Questions
Questions Questions Annual Meeting 1 November 2013 | Page 26 26
Slide 27: Annual Report
Annual Report Geoff Ricketts To receive and consider the Annual Report for the year ended 30 June 2014 and, if agreed, pass the following resolution as an ordinary resolution: • That the Annual report for the year ended 30 June 2014 be received. Annual Meeting 1 November 2013 | Page 27 27
Slide 28: Election of Directors
Election of Directors Gary Leech and Geoff Ricketts To consider and, if agreed, pass the following resolutions as ordinary resolutions (each as a separate ordinary resolution): • That Geoffrey Ricketts be re-elected as a director of the Company. • That Graham Kennedy be re-elected as a director of t
Slide 29: Directors' Remuneration
Directors’ Remuneration Geoff Ricketts To consider and, if agreed, pass the following resolution as an ordinary resolution: • That the maximum total amount of annual directors’ remuneration be increased from $917,500 to $1,000,000, on an increase of $82,500, until such time as the amount may be alte
Slide 30: Polling Procedures
Polling Procedures Geoff Ricketts Voting papers are now being collected. If you require assistance please raise your hand. Annual Meeting 1 November 2013 | Page 30 30
Slide 31: General Business
General Business Geoff Ricketts To consider any other matters that may properly be brought before the Meeting. Following the formal part of the Meeting, the Directors invite Shareholders to join them for light refreshments. Annual Meeting 1 November 2013 | Page 31 31
Slide 32: Annual Meeting, 31 October 2014
Annual Meeting, 31 October 2014 Novotel Hotel, Ellerslie, Auckland Annual Meeting 1 Nov 2013 Addington Events Annual Meeting 1 November 2013 | PageCentre, 32 Christchurch 32
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