Heartland Group Holdings Ltd. · NZX:HGH
Heartland — Heartland New Zealand — H1 FY2015 Earnings Presentation
22 slides from Heartland's earnings presentation, February 2015
Slide 1: Half Year Results to 31 December 2014
Half Year Results to 31 December 2014 Jeff Greenslade Simon Owen Annual Meeting 1 November 2013 | Page 1
Slide 2: Important Notice
Important Notice This presentation has been prepared by Heartland New Zealand Limited (HNZ) for the purpose of briefings provided by HNZ in relation to its financial statements. The presentation and the briefing constitute summary information only, and you should not rely on them in isolation from t
Slide 3: Agenda
Agenda • Introduction • Financial overview • Strategy and business updates • Dividend • Questions Annual Half YearMeeting 1 November Results to 2013 31 December | Page 2014 3 3 | Page
Slide 4: Introduction
Introduction Annual Half YearMeeting 1 November Results to 2013 31 December | Page 2014 4 4 | Page
Slide 5: Half Year Highlights
Half Year Highlights • Increase in profitability (up 41% from first half FY14 NPAT) • Strong asset growth in core business divisions (up 6.5%) • Return on equity of 10.2% • Credit rating upgrade for Heartland Bank to BBB (outlook stable) • Acquisition of 10% shareholding in Harmoney (NZ’s first lice
Slide 6: Financial Overview
Financial Overview Annual Half YearMeeting 1 November Results to 2013 31 December | Page 2014 6 6 | Page
Slide 7: Half Year Overview
Half Year Overview 41% Growth in Profitability 6 months to 6 months to 12 months to Dec 2014 Dec 2013 Jun 2014 (NZ$m) (NZ$m) (NZ$m) • Achieved NPAT of $23.5m Net interest income 65.7 52.4 109.1 Net other income 4.6 6.7 13.5 • Increase in NPAT of $6.8m or 41% Net operating income * 70.3 59.1 122.6 •
Slide 8: Net Profit Before Tax
Net Profit Before Tax Continued Profitability Growth Trend Net Profit Before Tax ($m) • Adjustment for one-off Non-Core 31.7 Property expense in 2013, for like on 27.4 like 23.4 • Continued trend improvement 18.9 14.9 • Interest margin historic contributor to growth • Acquisition contributed in seco
Slide 9: Net Profit Before Tax - Bridge
Net Profit Before Tax - Bridge Breakdown of component parts NPBT NPBT 1H15 v 1H14 ($m) 1H15 v 2H14 ($m) 6.9 31.7 11.1 0.0 31.7 27.4 1.2 1.3 0.1 1.1 1.8 23.4 NPBT Net Operating Operating Impaired asset Equity NPBT Adjusted NPBT Net Operating Operating Impaired asset Equity NPBT 31/12/2013 Income expe
Slide 10: Operational Efficiency
Operational Efficiency Cost to Income below 50% • Ratio lower as NOI continues to grow and costs held flat • Cost to income ratio now below 50% at 48% • Some further improvement Cost to Income Ratio expected, as asset growth continues 70% 60% 62% 55% 58% 48% 2H12 1H13 2H13 1H14 2H14 1H15 Cost Income
Slide 11: Net Operating Income
Net Operating Income NOI driving profitability • NOI up $11m on prior half or $7m on preceding half • Growth in NOI due to: – Growth in core assets – Product mix changes – HER acquisition in 2H FY14 Annual Half YearMeeting 1 November Results to 2013 31 December | Page 2014 11 11 | Page
Slide 12: Balance Sheet Summary
Balance Sheet Summary Growth in receivables • Total assets increased by $145m • Net finance receivables increased by $115m • Core asset classes up $159m, retail and non-core property down $44m as we exit as planned • Asset re-balancing nearing completion 31 Dec 2013 30 Jun 2014 31 Dec 2014 (NZ$m) (N
Slide 13: Net Finance Receivables Bridge
Net Finance Receivables Bridge Portfolio mix improvements Annual Half YearMeeting 1 November Results to 2013 31 December | Page 2014 13 13 | Page
Slide 14: Asset Quality Trends
Asset Quality Trends Sound asset quality • Asset quality is sound • Non-Core Property significantly reduced • Core business impairment is low 30-Jun-11 30-Jun-12 30-Jun-13 30-Jun-14 31-Dec-14 Net Finance Receivables 1.7 2.1 2.0 2.6 2.7 Net Impairment % 5.9% 4.4% 2.4% 1.9% 1.5% Net Core Finance Recei
Slide 15: Cost of Funds – Heartland Bank
Cost of Funds – Heartland Bank Solid funding position Some increase in COF on back of OCR increases Expect growth in retail deposits to fund asset growth going forward Annual Half YearMeeting 1 November Results to 2013 31 December | Page 2014 15 15 | Page
Slide 16: Business Updates and Strategy
Business Updates and Strategy Annual Half YearMeeting 1 November Results to 2013 31 December | Page 2014 16 16 | Page
Slide 17: Business Updates
Business Updates Business Rural Household • Net operating income (NOI) • NOI of $11.8m, 11% growth • NOI of $37.5m of $19.5m in receivables • 7% growth in Consumer • 12% growth in receivables • Strong pipeline, new receivables book opportunities with • Growth driven by: underserviced clients of • Co
Slide 18: Strategic Priorities for 2H FY15
Strategic Priorities for 2H FY15 Strategic Priority Execution Plan for 2H FY15 • Growth in home equity release • Fresh advertising campaign to book commence Q4 • Employment of senior sales staff in Australia • Development of online strategy in Australia • New product development in aged care sector
Slide 19: Investment in Harmoney
Investment in Harmoney HNZ acquired a 10% shareholding in Harmoney Corp Limited (Harmoney) in September 2014 • Participation in Harmoney’s $10m capital raising in January 2015 to maintain 10% shareholding • Trade Me Limited also participated in capital raising acquiring a 15% shareholding Harmoney i
Slide 20: Dividend
Dividend Annual Half YearMeeting 1 November Results to 2013 31 December | Page 2014 20 20 | Page
Slide 21: Dividend
Dividend 4 Dividends 3.5 • Fully imputed interim dividend 3 2.5 of 3.0 cents per share Cents 2 1.5 1 0.5 0 2013 2014 2015 Special Interim Final Total Shareholder Return 1.50 TSR +213.3% 1.25 1.00 Share Price (NZ$) 0.75 0.50 Share Price +165.4% 0.25 - Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14
Slide 22: Questions
Questions Annual Half YearMeeting 1 November Results to 2013 31 December | Page 2014 22 22 | Page
Heartland New Zealand — H1 FY2015 Earnings Presentation on 6ix