Announcement PDF ABN 26 133 623 962 Level 2, 137 Harrington Street Hobart 7000 Tasmania Australia 19 August 2024 The Manager Company Announcements Australian Securities Exchange 20 Bridge Street Sydney NSW 2000 MyState Limited – Preliminary Final Report (Appendix 4E) for the year ended 30 June 2024 The Directors of MyState Limited (the “Company”) are pleased to announce the audited results of the Company for the year ended 30 June 2024 as follows: RESULTS FOR ANNOUNCEMENT TO THE MARKET $’000 $’000 30 June 2024 30 June 2023 % Change Income from operations 152,430 160,378 -5.0% Profit after tax attributable to members 35,289 38,502 -8.3% 35,289 38,502 -8.3% Extracted from the Financial Statements for the year ended Net profit after tax attributable to members Dividends for the current year are: Amount per security Franked amount per security 11.5 cents 11. 5 cents 11.5 cents 11.5 cents Amount per security Franked amount per security 11.5 cents 11.5 cents Interim Dividend 2024 - fully franked at 30% Paid 22 March 2024 Final Dividend 2024 - fully franked at 30% Payable 16 September 2024 Record Date for determining entitlements for final dividend – 23 August 2024 Dividend for the prior corresponding period: Final dividend 2023 Dividend Reinvestment Plan Last Date for Receipt of DRP Election The MyState Limited Dividend Reinvestment Plan is operational for this 2024 Final Dividend at nil discount to the Volume Weighted Average Price over the DRP pricing period from Tuesday 27 August 2024 to Monday 2 September 2024 inclusive. Net Tangible Assets per share 26 August 2024 2024 2023 339 cents 335 cents Details of entities over which control has been gained or lost during the period During the financial period the holding company MyState Limited gained control of the following entity:  Nil Subsequent events The remainder of the information requiring disclosure to comply with Listing Rule 4.3A is contained in the attached copy of the Financial Statements and comments on performance of the Company included in the Media and ASX Release dated 19 August 2024. Further information regarding MyState Limited and its business activities can be obtained by visiting the company’s website at www.mystatelimited.com.au. Scott Lukianenko Company Secretary MyState Limited Consolidated Financial Report For the period ended 30 June 2024 Appendix 4E ACN 133 623 962 MyState Limited Directors’ report Directors’ reportcontinued Your Directors present their report for MyState Limited and its controlled entities (the Group) for the year ended 30 June 2024. Directors Operating and Financial Review • Vaughn Richtor BA (Hons), MAICD Chairman and Independent Non-Executive Director. • Robert Gordon BSc, FIFA, MAICD Deputy Chairman and Independent Non-Executive Director. • Brett Morgan BEc, MAppFin Managing Director and Chief Executive Officer - Executive Director. • Stephen Davy BSc (Hons) Independent Non-Executive Director. • Sibylle Krieger LLB (Hons), LLM, FAICD, MBA Independent Non-Executive Director. • Warren Lee BCom, CA Independent Non-Executive Director. Financial performance The Group delivered a net profit after income tax (NPAT) for the year ended 30 June 2024 of $35.3m, a decrease of 8.3% on the prior corresponding period (pcp) to 30 June 2023 of $38.5m. Earnings per share (EPS) was 32.0 cents per share (FY23: 35.5 cents per share), return on equity (ROE) was 7.7% (FY23: 8.7%) and the cost to income ratio (CTI) was 66.3% (FY23: 64.0%). These key metrics reflect the current environment banks operate in with competitive home loan and retail deposit markets contributing to softer net interest margin. MyState constantly evaluates and seeks to optimise financial performance, including actively balancing the trade-off between growth and margin, as well as continuing to focus on operating efficiency. Group net profit after tax ($m) • Andrea Waters BCom, FCA, GAICD Independent Non-Executive Director. Company Secretary 38.5 35.3 FY23 FY24 32.0 • Scott Lukianenko Ad Dip BMgmt, Grad Dip BA, GIA (Cert). Principal Activities MyState Limited (MyState) provides banking, trustee and managed fund products and services through its wholly-owned subsidiaries MyState Bank Limited (MyState Bank) and TPT Wealth Limited (TPT Wealth). MyState Bank delivers home lending, savings and transactional banking solutions through digital and branch channels, an Australian based contact centre, mobile lenders and mortgage brokers. TPT Wealth delivers asset management and trustee services through relationship managers, digital channels and an Australian based estate planning, trust administration and support team. There have been no significant changes in the nature of the principal activities of the Group during the year. Dividends Dividends paid in the full year ended 30 June 2024 were as follows: • For the year ended 30 June 2023, a fully franked dividend of 11.50 cents per share, amounting to $12.60m was paid on 19 September 2023. • For the half year ended 31 December 2023, a fully franked dividend of 11.50 cents per share, amounting to $12.68m was paid on 23 February 2024. The Directors have declared a fully franked final dividend of 11.5 cents per share. The dividend will be payable on 16 September 2024 to shareholders on the register at the record date of 23 August 2024, taking the dividend for the full year to 23.0 cents per share. FY22 The total loan book (excluding capitalised acquisition costs) grew $145.6m or 1.8% from June 2023. The home loan book grew $158.9m or 2.0% during the period. MyState will continue to focus on maintaining asset quality and profitable growth. Pre-provision operating profit of $51.4m decreased 10.9% on pcp, largely driven by a decrease in operating income of $7.9m or 5.0%, partly offset by a decrease in operating expenses of 1.6%, highlighting MyState’s ongoing focus on operating efficiency in a high-inflation environment. While prudently managing operating costs, MyState continues to invest in key strategic initiatives, with July 2024 culminating in the initial launch of a brand new MyState Bank mobile app and internet banking experience with customer centricity and an enhanced digital experience in mind. MyState also continues to invest in initiatives to mitigate the sector-wide impact of cyber and fraud related risks. Despite a period of significant change and the challenges presented by the rising cost of living, MyState’s internally measured customer net promoter score was +58 at 30 June 2024 and continues to reflect a high level of ongoing customer advocacy. 1 MyState Limited Directors’ report continued MyState Bank All non-First Home Owner Grant scheme loans with an LVR >80% are mortgage insured. MyState Bank’s loan portfolio grew 1.8% from 30 June 2023, reaching $8,022m at 30 June 2024. While MyState’s 30 and 90-day arrears have increased as a consequence of the rise in interest rates since May 2022, they remain below industry benchmarks at 0.97% and 0.44% respectively (30 June 2023: 0.81% and 0.34%). Total loan book composition ($m) 6,939 7,876 8,022 Loan losses remained negligible in line with historical experience. Impairment expense was $1.2m during the period, reflecting an increase of $1.0m in total collective provisions, consistent with an increase in arrears in a rising interest rate environment. As at 30 June 2024, there were five Mortgagee in Possession loans. Net interest margin (NIM) trend 6,838 7,799 7,958 1.67% Jun 22 Jun 23 1.63% 1.45% 1.46% 1.45% FY24 1H24 2H24 Jun 24 Housing Loans Other Loans (personal / business / overdrafts) The Bank remains focused on low-risk, owner-occupied lending with a loan to valuation ratio (LVR) of less than 80%. Exposure to investor and interest-only lending remains relatively low compared to sector averages. 7,958 6,838 467 298 5,321 Jun 22 619 395 FY23 Net interest income was down $8.1m or 6.1% on pcp as a result of a fall in NIM partly offset by the benefits of a slightly larger average balance sheet. Home loan book – LVR profile ($m) 7,799 FY22 674 399 5,845 6,112 Jun 23 Jun-24 Relative to FY23, the fall in NIM of 18 bps to 1.45% during the year is a result of sector-wide pressures from competition for lending, elevated levels of customer switching and retention discounting and higher funding costs. In FY24, home loan book growth was driven by loans with an LVR of less than 80%. Since June 2021, high LVR lending has generally been to borrowers eligible to participate in the First Home Owner Grant scheme reserved for owner-occupied lending. The scheme is an Australian Government initiative to support eligible customers purchase their first home sooner with as little as a 5% deposit. The National Housing Finance and Investment Corporation (NHFIC) provides a guarantee of up to a maximum amount of 15% of the value of a property (as assessed by MyState) purchased under the scheme. 2 MyState Limited Directors’ report continued Funding mix (%) TPT Wealth Funds under management ($m) 1,062 Jun-22 994 996 Jun-23 Jun-24 Income from wealth management activities increased by $1.1m or 7.7% on pcp, with an increase in Trustee Services income reflecting higher capital commission levels, partly offset by lower Investment Services income due to a reduction in the Growth funds management fee, from 1.0% to 0.5%, effective from 1 August 2023. MyState’s funding mix remains well diversified. The reduction in the Customer deposit ratio is driven by the decline in more price sensitive third party deposits and an increase in term securitisation with our largest deal ever issued, completed in September 2023. With the increase in interest rates, customers continued to shift from lower cost transaction and savings accounts to higher interest bearing products. Funds under Management (FUM) was marginally up over the period, supported by higher investor returns. TPT Wealth NPAT for the year was $2.8m, a significant uplift on pcp, driven by higher revenue as noted above and lower operating costs. Competition for retail deposits remained strong for the period and was further heightened by the effects of Banks repaying the RBA’s Term Funding Facility (TFF). The TFF allowance for MyState at 30 June 2023 was $154.7m and this has been repaid in full with the final instalment of $18.6m paid on 24 June 2024. Capital position MyState remains well capitalised with the Group’s Common Equity Tier 1 (CET1) ratio increasing by 79bps to 12.01% and the total capital ratio increasing by 99bps to 16.42% at 30 June 2024. MyState welcomed more than 14,000 new to bank customers this financial year. During the period, MyState completed a $500m capital relief term Residential Mortgage Backed Security (RMBS) transaction and drew down on a committed warehouse facility established in June 2023. Non-interest income Non-interest income from banking activities decreased by $1.0m or 7.3% on pcp, as a result of lower transaction and loan fees. Capital 15.43% 0.12% 1.01% 1.25% 0.92% 0.36% 16.42% 0.13% 0..02% 1.98% 1.89% 2.43% 2.32% CET1 capital AT1 capital Tier 2 capital Increase Decrease 12.01% 11.22% Jun-23 Capital initiatives Securitisation activity Profit Dividends paid Secured mortgage lending Capitalised intangibles Other asset growth Jun-24 3 MyState Limited Directors’ report continued Community Events subsequent to balance date MyState seeks to make a genuine difference to customers and the communities within which they operate. On 19 August 2024, MyState announced that the company and its wholly owned subsidiary, MyState Bank, had signed a Scheme Implementation Agreement pursuant to which MyState Bank will acquire all of the ordinary shares in Auswide Bank Limited (Auswide). Under the proposed Scheme, Auswide shareholders will receive new shares in MyState which will result in pro forma ownership of 65.9% of the combined group for existing MyState shareholders. Since 2001, the MyState Foundation has awarded more than $2.6m in grants to help 167 not-for-profit organisations in Tasmania with a focus on helping young Tasmanians reach their full potential. Outlook The combination of two high-quality, complementary businesses is expected to deliver significant scale, contributing to improved operating efficiency from a larger balance sheet and increased funding flexibility. The proposed merger is expected to be Earnings per share accretive from FY26 on a post synergies run rate basis. The Scheme, which is subject to regulatory, Auswide shareholder and third party approvals, is expected to become effective in mid-tolate December 2024. The Board remains focused on profitably growing our share of deposits, lending and funds under management. Since announcing a growth strategy in mid-2021, the home loan portfolio and customer deposits have increased by 46% and 33% respectively and the Board remains committed to the strategic intent of profitably growing our share of the market. Given the economic and competitive environment in FY24, the business temporarily slowed home lending growth, whilst continuing to invest into strategic priorities including digital, data, cyber and scam prevention, and plans to accelerate growth as market conditions and returns become more favourable and following the successful launch of the new internet banking platform and mobile app in early July 2024. Other than the above, in the opinion of the Directors, there are no other matters or circumstances that have arisen since the end of the financial year that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial periods. Environmental regulation Lead auditor’s independence declaration under section 307C of the Corporations Act 2001 The lead auditor’s independence declaration is set out on page 6 and forms part of the Directors’ Report for the year ended 30 June 2024. The Group is not subject to any significant environmental regulation. A task force on Climate-Related Financial Disclosures (TCFD) Report outlining MyState’s baseline scope 1, 2 and 3 greenhouse gas (GHG) emissions associated with the activities and facilities that support the businesses’ everyday operations, will be included in MyState’s 2024 Annual Report. Rounding of amounts Directors’ meetings In accordance with applicable financial reporting regulations and current industry practices, amounts in this report have been rounded-off to the nearest one thousand dollars, unless otherwise stated. Any discrepancies between totals and sums of components in charts contained in this report are due to rounding. The number of meetings of Directors (including meetings of the Committees of Directors) held during the year and the number of meetings attended by each director are as indicated in the following table: Directors’ meetings MYS Directors MYS Board Meetings Group Audit Committee Group Risk Committee Group People, Remuneration & Nominations Committee A B A B A B A B S Davy 9 10 5 6 4 5 4 4 R Gordon 8 10 n/a n/a 5 5 4 4 S Krieger 10 10 n/a n/a 5 5 4 4 W Lee 10 10 6 6 5 5 n/a n/a B Morgan 10 10 n/a n/a n/a n/a n/a n/a V Richtor 10 10 6 6 5 5 4 4 A Waters 10 10 6 6 5 5 n/a n/a A = Number of meetings attended. B = Number of meetings eligible to attend. 4 MyState Limited Directors’ report continued Indemnification and Insurance of Directors and Officers The Company has paid, or agreed to pay, a premium in relation to a contract insuring the Directors and Officers listed in this report against those liabilities for which insurance is permitted under Section 199B of the Corporations Act 2001. The Company has not otherwise, during or since the relevant period, indemnified or agreed to indemnify an Officer or Auditor of the Company or of any related body corporate against a liability incurred as such an Officer or Auditor. Non-Audit Services During the year, Wise Lord & Ferguson, the Company’s auditor has performed certain other services in addition to their statutory duties. Further details are set out in note 8.2 to the financial statements. The Board has considered the non-audit services provided during the year by the auditor and, in accordance with written advice provided by the Group Audit Committee, is satisfied that the provision of those non-audit services during the year by the auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001, for the following reasons: • All non-audit services were subject to the corporate governance procedures adopted by the Company and have been reviewed by the Group Audit Committee, to ensure that they do not impact the integrity and objectivity of the auditor; and • The non-audit services provided do not undermine the general principles relating to auditor independence as they related to technical disclosure issues. 5 Auditor’s Independence Declaration to the Directors of MyState Limited In relation to our audit of the financial report of MyState Limited for the financial year ended 30 June 2024, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct. WISE LORD & FERGUSON NICK CARTER Partner Date: 19 August 2024 6 MyState Limited Remuneration report Letter from the Chair of the Group People, Remuneration and Nominations Committee Dear Shareholder, On behalf of the Board, I present to you the Company’s Remuneration Report for the year ended 30 June 2024 (FY24). MyState’s executive remuneration framework is designed to align executive remuneration with the interests of the company and shareholders and the regulatory framework we operate in. MyState’s remuneration needs to be competitive to attract, motivate and retain skilled individuals focused on our strategic priorities; making managing money easy for our customers and creating long-term value for our shareholders. Our performance targets are challenging and our executives are assessed against financial and non-financial measures including threshold performance for behaviour and individual accountability for risk and compliance. The design of our remuneration framework takes into account regulatory and prudential requirements, including long-term risk management. In assessing executive performance for FY24, the Board has taken into account the performance of the Group in a challenging environment. While NPAT for the Group was lower than the prior year, costs were well managed in a higher inflationary environment and the TPT Wealth business returned to growth in FY24, driven by a strong uplift in Trustee Services related income. During the year, lending growth was slowed and costs controlled to focus attention on margin and strategic priorities, such as the new digital experience for bank customers and our new internet banking and mobile App launched in July 2024. Our credit quality remains sound and the dividend was maintained at 23 cents per share for the year. We continued to invest in our people including leadership capability across the Group and we are well prepared to accelerate growth when market conditions become more favourable. It is within this context that the Board awarded Short Term Incentive payments to executives for their significant contributions. Each executive has been assessed against the individual gates of risk, accountability and values. These gates are considered open for all executives. In determining the value of incentives awarded, payments are targeted to those who have supported delivery of results and key initiatives over the year. The Remuneration Report explains the Director and executive remuneration frameworks and how they support our business strategy, values, and culture. We trust this overview helps you understand our approach to executive and non-executive remuneration. Our remuneration policy can be found on the MyState Limited website at https://www.mystatelimited.com.au/home/?page=corporate-governance. We welcome your feedback. Please email any comments to secretariat@mystatelimited.com.au. Stephen Davy Chair – Group People, Remuneration and Nominations Committee 7 MyState Limited Our people and our company Key Management Personnel and Directors who served our company in the year ended 30 June 2024 were: Name Role Commenced Group, People, Remuneration and Nominations Committee Vaughn Richtor Chairman 1 September 2019  Stephen Davy Non-Executive Director 1 July 2021 Chair Robert Gordon Deputy Chairman and Non-Executive Director 12 February 2009  Sibylle Krieger Non-Executive Director 1 December 2016  Warren Lee Non-Executive Director 19 October 2017 Andrea Waters Non-Executive Director 19 October 2017 Brett Morgan Managing Director, Chief Executive Officer 17 January 2022 Gary Dickson Chief Financial Officer 19 October 2019 Mandakini Khanna Chief Risk Officer 12 December 2015 Paul Moss Chief Operating Officer 13 May 2015 Tim Newman General Manager Lending 12 June 2023 Janelle Whittle General Manager People, Community and Public Affairs 22 January 2018 Claudio Mazzarella General Manager Everyday Banking and Marketing 29 May 2023 Matthew Pearson General Manager Wealth 11 September 2023 8 MyState Limited Our remuneration framework Philosophy and principles MyState Limited’s remuneration policy is founded on a company-wide commitment to transparency, ethical practices and the creation of long-term value. The framework is designed to encourage and reward actions by executives that deliver positive results for both customers and shareholders through good discipline and strong financial performance, prudent risk management, and the maintenance and enhancement of our company’s earned and valued reputation for trustworthiness in the market for financial services. The remuneration policy is designed to support these objectives through: • Appropriately structured performance-based pay for executives and other eligible employees, including short-term and long-term incentive plans. • Recognition and reward for strong performance linked to both favourable customer experiences and positive sustainable returns to shareholders. • A thoughtful balancing of the company’s capacity to pay and our need to attract and retain excellent staff at all levels. • Careful structuring of remuneration for our risk and financial control managers, including performance-based payments, to preserve their independence in carrying out their important roles. • Board discretion over variable remuneration generally, including discretion to apply malus (reduction or forfeiture) to executive incentives, when appropriate, to preserve the interests of shareholders and customers and avoid unexpected or unjust outcomes. • Enhancement of risk management and governance by maintaining separate structures for Non-Executive Director remuneration and executive remuneration. Directors’ remuneration MyState’s Non-Executive Directors (NEDs) are paid annual fixed fees, including statutory superannuation, for their services. They are also entitled to reimbursement of reasonable expenses. Unlike executives, Non-Executive Directors do not receive short-term or long-term incentive payments. The Board determines the level of fees paid to Non-Executive directors according to two main criteria: • the level of skill and experience required to conduct their roles • the level of fees needed to attract and retain talented Non-Executive Directors. By resolution of shareholders at the Annual General Meeting in 2023, the aggregate remuneration paid to all NEDs, including statutory superannuation, was increased by $250 000 per annum, to a maximum of $1,200 000. This is the first time the total amount has been increased in 11 years. Aggregate remuneration paid to all NED’s, may not exceed this amount fixed by shareholders. Each NED currently receives a base fee of $110,000 per annum, and the Chairman receives $236,500 per annum. Chairs of Board Committees (other than the Board Chair) receive an additional $20,000 per annum, the TPT Wealth Limited Board Chair receives an additional $30,000 per annum and the Deputy Chair receives an additional $20,000 per annum. 9 MyState Limited Managing Director and executive remuneration Executive remuneration mix MyState Limited’s remuneration packages for the Managing Director and executives who report directly to the Managing Director are structured to support the company’s ability to attract and retain talented and experienced leaders, and to provide incentives and rewards for high performance and achievement of the company’s goals and objectives over the short, medium and long term. Executive remuneration packages comprise three elements: total fixed reward (TFR), cash-based short-term incentives (STI) and equity-based long-term incentives (ELTIP). 1. Total fixed reward TFR 2. Cash-based short-term incentives STI 3. Equity-based long-term incentives ELTIP Total fixed reward (TFR) for executives, including the Managing Director, comprises a fixed base salary, superannuation contributions and optional salary sacrifice. The level of payment is set with reference to: Cash-based short-term incentives (STI) provide appropriate rewards to executives for meeting or exceeding performance targets and achieving our core company goals – both financial and non-financial. To this end, STI performance measures and associated targets are set with reference to the drivers of annual company performance and the roles of individual executives in achieving positive business outcomes. The level of STI assigned to executives is calculated annually using an STI ‘scorecard’, which comprises multiple performance elements. These include financial, growth, cultural, risk and compliance, reputational, customer and stakeholder measures. Financial and nonfinancial gateways serve to balance reward with MyState’s profitability and to avoid rewarding conduct that is inconsistent with our values and risk framework. The STI is calculated as a percentage of TFR for each role, and the maximum percentage of TFR payable as an STI is determined by the Board. Long-term incentive payments to executives, in the form of company shares or performance rights, under the Executive Long-Term Incentive Plan (ELTIP) exist to encourage and culturally embed long-term thinking and risk management among our company leaders. Long-term planning plays an indispensable role in preparing the company to meet future challenges in an evolving financial services marketplace, and to take advantage of new opportunities as they arise. MyState’s ongoing transition to a national, digital business model exemplifies this approach – one designed to meet the ever-changing needs of customers and to sustain long-term value for shareholders. • the relative strategic value and importance of the role. • the complexity and breadth of the role. • experience and skills required. • external market considerations for comparable positions. Base salary rates are set with a view to attracting and retaining talented and culturally aligned executives, while delivering value to shareholders. Executive salaries are periodically reviewed to take into account external market conditions, the business-critical nature of the role, and individual performance. FY2024 Executive remuneration breakdown Managing Director & CEO – total target reward Total fixed remuneration 40% Maximum STI 28% Maximum ELTIP 32% Paid as cash. Performance assessed against business performance for the financial year. Paid as shares or performance rights 70% of total fixed reward 80% of total fixed reward Maximum STI 18% Maximum ELTIP 23% Paid as cash. Performance assessed against business and individual performance for the financial year Paid as shares or performance rights 30% of total fixed reward 40% of total fixed reward Total shareholder return (TSR) 75% Return on equity (ROE) 25% Executives – total target reward Total Fixed Remuneration 59% Total shareholder return (TSR) 75% Return on equity (ROE) 25% 10 MyState Limited CRO – total target reward Total Fixed Remuneration 62% Maximum STI 19% Maximum ELTIP 19% Paid as cash. Performance assessed against business and individual performance for the financial year Paid as shares or performance rights 30% of total fixed reward 30% of total fixed reward Total shareholder return (TSR) 75% Return on equity (ROE) 25% Remuneration governance A Group People, Remuneration and Nominations Committee – appointed by the MyState Board and comprising four Non-Executive Directors – assists the Board in discharging its remuneration governance responsibilities. Among a range of functions, the Committee reviews and makes recommendations to the Board on: • remuneration arrangements for Directors, the Managing Director and other executives. • executive incentives, including setting gateways, performance measures and targets at the commencement of the performance period, and assessing performance outcomes against these measures and targets at the conclusion of the performance period, and making recommendations for payment or otherwise. • incentive payments for Material Risk Takers, and the aggregate pool for short term incentives for non-executive staff. • the appropriate exercise of Board discretion on variable remuneration matters. The Committee assists the Board to meet remuneration obligations required by APRA Prudential Standards and the Financial Accountability Regime (FAR). Effective from 15 March 2024, the FAR replaced the Banking Executive Accountability Regime (BEAR), which commenced in 2018, and is jointly administered by APRA and ASIC. The Committee