Heartland Group (HGH) investor relations material

Deal rationale and strategic fit

• Merger creates a challenger bank of scale with a regional focus, enhancing competition and choice in New Zealand.

• Combines specialist product expertise with cost-effective funding and transactional capabilities.

• Will become New Zealand's seventh largest bank, with $15 billion in assets and a 171% increase in asset base.

• Retains and enhances specialist product focus across New Zealand and Australia.

• Supports Toi Foundation's philanthropic activities through a diversified investment portfolio.

Financial terms and conditions

• Aggregate consideration of $620 million, representing 76% of TSB's book value.

• Consideration includes $250 million in Heartland equity (17.5% shareholding), $50 million pre-completion cash dividend, $56 million subordinated debt, and $264 million vendor loan.

• No additional ordinary equity issuance required to meet future capital requirements.

• Transaction costs estimated at $15 million, split between FY2026 and FY2027.

Synergies and expected cost savings

• Material synergies expected, with ~$34 million per annum pre-tax benefit anticipated within three years post-completion.

• Cost efficiencies from reduced duplication and shared overheads.

• Potential for further upside from funding, liquidity, and technology synergies.

• One-off integration costs of ~$34 million expected over three years.