FY19H1 Investor presentation

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FY19H1 RESULTS
31 DECEMBER 2018

Certain statements in this presentation constitute forward-looking statements. Forward-looking statements are statements (otherthan
statements of historical fact) relating to future events and the anticipated or planned financial and operational performanceofMichael
Hill International Limited and its related bodies corporate (the Company). The words “targets,” “believes,” “expects,” “aims,” “intends,”
“plans,” “seeks,” “will,” “may,” “might,” “anticipates,” “would,” “could,” “should,” “continues,” “estimates” or similar expressions or the
negatives thereof, identify certain of these forward-looking statements. Other forward-looking statements can be identified in the
context in which the statements are made. Forward-looking statements include, among other things, statements addressing matters
such as the Company’s future results of operations; financial condition; working capital, cash flows and capital expenditures; and
business strategy, plans and objectives for future operations and events, including those relating to ongoing operational andstrategic
reviews, expansion into new markets, future product launches, points of sale and production facilities.
Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, such forward-
looking statements involve known and unknown risks, uncertainties and other important factors that could cause the Company’s actual
results, performance, operations or achievements or industry results, to differ materially from any future results, performance,operations
or achievements expressed or implied by such forward-looking statements.
Such risks, uncertainties and other important factors include, among others: global and local economic conditions; changes inmarket
trends and end-consumer preferences; fluctuations in the prices of raw materials, currency exchange rates, and interest rates; the
Company’s plans or objectives for future operations or products, including the ability to introduce new jewellery and non-jewellery
products; the ability to expand in existing and new markets and risks associated with doing business globally and, in particular, in
emerging markets; competition from local, national and international companies in the markets in which the Company operates; the
protection and strengthening of the Company’s intellectual property rights, including patents and trademarks; the future adequacy of the
Company’s current warehousing, logistics and information technology operations; changes in laws and regulations or any interpretation
thereof, applicable to the Company’s business; increases to the Company’s effective tax rate or other harm to the Company’s business
as a result of governmental review of the Company’s transfer pricing policies, conflicting taxation claims or changes in tax laws; and
other factors referenced to in this presentation.
Should one or more of these risks or uncertainties materialise, or should any underlying assumptions prove to be incorrect, the
Company’s actual financial condition, cash flows or results of operations could differ materially from that described herein as anticipated,
believed, estimated or expected.
The Company does not intend, and do not assume any obligation, to update any forward-looking statements contained herein, exceptas
may be required by law. All subsequent written and oral forward-looking statements attributable to us or to persons acting on the
Company’s behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in this
presentation.
DISCLAIMER
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Michael Hill – FY19H1 Results
• CHAIR’S OVERVIEW
• FINANCIAL RESULTS
• CEO’S UPDATE

CHAIR’S OVERVIEW
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•Since the beginning of 2018, Michael Hill International (MHJ) has been working through a
significant program of transformation to recalibrate its future strategy:
•Prioritise strategic focus on the Michael Hill Brand –closure of Emma & Roe and US
•Five strategic shifts critical to sustainable growth –better integration of digital platform
and stores; enhanced customer experiences; develop branded collections; increase brand
loyalty and positioning; and enhanced operational capabilities
•The strategic journey is underway:
•e-commerce–up 68.3% to $9.5m
•Branded collections –representing more than 20% of total sales
•Discounting –shift away from a high frequency of deep discount event days during July to
October. A more integrated approach during the Christmas period delivered a turnaround.
•The appointment of new CEO Daniel Bracken:
•The right appointment –deep retailing operations and business transformation skills
•Enhancing the strategy –since beginning in mid-November, Daniel has already identified
further opportunities and initiatives

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KEY PERFORMANCE RESULTS
$
315.4m
GROUP REVENUE
$
19.5m
N ET PROFIT
AFTER TAX
$
20.7m
NET DEBT
2 018: $23.0m
$
29.6m
UNDERLYING E B I T
2.5c
D IVIDEND
2018: 2.5c
62.6%
G ROSSMARGI N
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NEW STORES
OPENED
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20.0%
BRANDED COLLECTION
SALES
$9.5m
68.3% E- COMMERCE
GROWTH
$
29.6m
UNDERLYING EBIT

•Statutory net profit after tax increased by 125% to $19.5m (FY18H1: $8.7m)
•Statutory earnings before interest and tax increased by 88% to $28.5m (FY18H1: 15.1m)
•Underlying earnings before interest and tax declined by 16% to $29.6m (FY18H1: $35.2m)
•Operating revenues declined by 2.7% to $315.4m (FY18H1: $324.1m)
•Gross margin was stable at 62.6% (FY18H1: 62.7%)
•Interim dividend of 2.5 cents per share, in line with prior year, unfranked and fullyimputed declared
as conduit foreign income
For theyear endingAUDDec-18Dec-17move
Revenue315.4m324.1m(2.7)%
Gross margin62.6%62.7%-0.1%
Underlying EBIT29.6m35.2m(16.0)%
Underlying EBIT as a % of revenue9.4%10.9%-1.5%
Statutory NPAT19.5m8.7m125%
Total storesopen311347(36)
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GROUP RESULTS

MICHAEL HILLAUSTRALIA
R E TA I L S EGMENT
•The segment was heavily impacted by the shift away from a high frequency of deep discount event
days during FY19Q1, although improvements were made over the Christmas trading period
•Operating revenues declined by 5.1% to $175.5m
•EBIT slowed to $24.6m
•Gross margin was stable at 63.0%
•To drive improved performance, the company adjusted its management structure
For theyear endingAUDDec-18Dec-17move
Revenue175.5m185.0m(5.1)%
Grossprofit110.5m117.5m(5.9)%
Gross profit as a % ofrevenue63.0%63.5%-0.5%
EBIT24.6m33.0m(24.4)%
EBIT as a % ofrevenue14.0%17.6%-3.6%
Same store sales163.5m179.3m(8.8)%
Total storesopen171172(1)
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MICHAEL HILLCANADA
R E TA I L S EGMENT
•Revenue grewby0.9%toCA$74.4m
•EBIT declined by17. 4% to CA$8.6m, due to increased investment in the company’s
workforce and higher labour costs arising from mandatory indexation and market forces
•Gross margin was stable at 61.8%
•Canada remains a core growth opportunity for the business, with a heightened focus
on increased productivity being undertaken for the second half
For theyear endingCADDec-18Dec-17move
Revenue74.4m73.4m0.9%
Grossprofit46.0m45.8m0.3%
Gross profit as a % ofrevenue61.8%62.1%-0.3%
EBIT8.6m10.4m(17.4)%
EBIT as a % ofrevenue11.5%14.1%-2.6%
Same store sales69.2m69.3m(0.1)%
Total storesopen85832
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MICHAEL HILL NEWZEALAND
R E TA I L S EGMENT
•Revenue of NZ$65.8mwere down 5.6% from NZ$69.7m in the prior year
•EBIT of NZ$15.1m, down 4.5% from prior year
•Gross profit margin lifted 100 basis points for the half to 62.7%
•A focus on retail costs partially offset the impact of a decline in headline sales
For theyear endingNZDDec-18Dec-17move
Revenue65.8m69.7m(5.6)%
Grossprofit41.2m43.0m(4.1)%
Gross profit as a % ofrevenue62.7%61.7%1.0%
EBIT15.1m15.8m(4.5)%
EBIT as a % ofrevenue22.9%22.6%0.3%
Same store sales59.7m62.7m(4.8)%
Total storesopen5353-
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CEO’s UPDATE
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•A significant opportunity to modernise our retail offering: a new operating model; brand,
product, store and e-commerce initiatives; and cost efficiencies
•The five strategic shifts provide the framework:focus will be on differentiation and execution
•Talented and experienced management team in place: new Chief Operating Officer, Andrea
Slingsby, and Chief People Officer, Joanne Matthews bring deep retail experience and skills to
MHJ
•Continual operational evolution: CEO and Executive team will continually seek ways to
enhance the strategy and deliver on new initiatives to accelerate MHJ’s growth
•Moving forward, there are three integrated pathways to growth:
•Restoring financial performance – being a foundationally strong and modern retailer
•Resetting and enhancing our agenda – being disciplined and focused on core strategic
initiatives that will deliver the most value for our customers, and the growth of MHJ
•Delivering a long-term strategy for sustainable growth – by strengthening our brand
and retailing capabilities, MHJ will then seek to capitalise on new growth opportunities

SUMMARY OF KEY INITIATIVES (1/2)
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1.Execution in January 2019 of a cost reduction programme delivering $5 million in
annualised savings. Initiatives targeting a further $5 million in annualised cost savings.
•Initial cost reduction programme focussed on head office overheads
•Further initiatives targeting annualised savings across a range of areas
2.A more sophisticated and integrated customer-led retail operating model
•Leverage revenue and operational synergies through closer alignment of the products
sold in stores, with the marketing and manufacturing functions
3.Acceleration of the branded collections strategy
•Leverage opportunities to aggressively grow branded collections beyond 20% of sales
and develop a majority of exclusive collections in specific categories
4.Reinvigorate the company’s merchandising and inventory management end-to-end
processes
•Optimising the end-to-end process covering the full product lifecycle and embedding the
required capabilities, to deliver more compelling products to customers
•Ensuring product volumes and styles better reflect targeted market segments, store
opportunities and promotions

SUMMARY OF KEY INITIATIVES (2/2)
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5.Productivity improvements in the Canadian market
•Focus on retail fundamentals to deliver a considerable uplift in store productivity,
consistent with the Australian and New Zealand markets
6.Targeted activation of scalable digital and omni-channel strategies
•Shift from a high-touch 1-on-1 service, to consumers choosing their own journey
supported by digital enablement
7.Initiatives to drive greater efficiencies across the global store network and supply chain
•Productivity improvements key to being a foundationally strong retailer
•Greater efficiencies across the supply chain, from logistics, product design, distribution,
manufacturing and inventory
•Better optimisation of the global store network and stabilisation of underperforming
stores

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THAN K YO U