AGM Presentation

ANNUAL
GENERAL
MEETING
31
ST
OCTOBER 2017

>
Welcome
>
Year in review
CHAIR’S
AGENDA

YEAR IN REVIEW

>
Overview
>
Group Strategy
>
2017 Highlights
>
Operational Summary
>
Q1 Trading Update
CEO REVIEW

>
Global strategies
– internationalisation of brands and
consolidation of independents, especially in North America
>
Fragmentation of traditional marketing channels
– creating
challenges around market penetration and foot traffic
>
Branding strategies
– growth in branded jewellery set to reach
40% of total jewellery sales by 2020
>
Reconfiguration of the channel landscape
– omni-channel,
showrooming, click and collect, mono brand stores, aggregation sites and new channels...Amazon, Alibaba, Tmall....
>
Polarisation of customer segment
– growth occurring at top end
and bottom end, the middle is stagnating – blurring of lines between fine jewellery and fashion jewellery – women dressing up

and down...
>
Fashionability and acceleration of the supply chain
– retailers
are teaming with designers and reacting to latest trends quickl
y –
customers want to be different but they also want to be on tren
d
MARKET OVERVIEW

GROUP STRATEGY
Proprietary Branded Product Collections>
Unique and distinct designs to
differentiate in a cluttered mar
ket
>
Design will become increasingly important to both our brands
>
Gross margin premium available
Understand Our Customer: Increase Loyalty and Engagement>
Technology investment to improv
e insights, preferences and enga
gement
>
A continued obsession on servicing our customer to the highest
levels
Inventory Management: Improve ROI>
Systems investment to manage surplus stock and maximise margins
>
Reduced product range to declutter stores and support the brande
d collections strategy
eCommerce Platform: Engage with new customers and grow sales>
Investment in multi-channel platform to help customers find and
understand our brands
while growing both on-line and off-line sales
Systems Infrastructure Investment: Build capability and grow sc
alability
>
Improving capability through migrating to a full MS Dynamics ER
P environment over the
next three years to support existing finance, logistics, mercha
ndise, CRM and Point of
Sale capabilities
Discover and Nurture Talent: Our People>
Continued focus on attracting talent to improve capability for
tomorrow’s challenges
>
Increased investment in developing our people’s skills and comp
etencies

2017 HIGHLIGHTS
$48.1 million
Record EBIT
2.3%
1.6%
same store
sales growth
$39.8 million
Operating net cash inflow
$583 million
Group revenue 5.8%
5c AUD
Dividend
2016: 4.75c
63.5%
gross
margin
$39.7 million
Professional Care Plan
sales 1%

2017 HIGHLIGHTS
$39.4 million
Net debt
2016: $32M
US$1.3 million
asset write-down and
impairments
52%
Equity ratio
2016:48.5%
$77.1 million
Deferred PCP Revenue
NZ$22.6 million
settlement paid to
NZ Inland Revenue

2017 HIGHLIGHTS
Record profits
NZ, Australia, Canada
332 stores
including 29 Emma & Roe
8.8% Canada
same store sales growth
13 Michael Hill
stores opened
13 Emma & Roe
stores opened

MICHAEL HILL AUSTRALIAN
RETAIL SEGMENT
>
Modest same store sales growth of 1.2% in a tough retail market
>
EBIT lift of 3.4% to a record $52.4m
>
Focus on improved productivity and cost control
>
10 stores relocated, 3 stores refurbished to the latest design
and
layout, 3 new stores opened and 5 closed, leaving a total of 16
6
trading at the end of the period
For the year ending
2017
2016
move
Revenue
322.0m
309.5m
4.0%
EBIT
52.4m
50.7m
3.4%
EBIT as a % of revenue
16.3%
16.4%
-0.1%
Total stores open
166
168
-2

For the year ending
2017
2016
move
Revenue
122.0m
122.9m
(0.8%)
EBIT
28.0m
27.3m
2.6%
EBIT as a % of revenue
23.0%
22.2%
+0.8%
Total stores open
52
52
>
Like for like store sales slipped by 0.8% on prior year
>
Focus on variable costs helped deliver a record EBIT of NZ$28.0m
>
One store opened at Christchurch and one store closed during the period, leaving a total of 52 stores
MICHAEL HILL NEW ZEALAND
RETAIL SEGMENT

MICHAEL HILL CANADIAN
RETAIL SEGMENT
>
Revenue grew by 18.1% to C$112.7m
>
Like for like store sales grew by 8.8%
>
EBIT increased 38.1% to a record CA$12.6m
>
This segment is benefitting from a strong and stable leadership

team and from improved brand recognition and market share
>
9 new stores opened giving a total of 76 stores operating at 30 June 2017
For the year ending
2017
2016
move
Revenue
112.7m
95.4m
18.1%
EBIT
12.6m
9.1m
38.1%
EBIT as a % of revenue
11.1%
9.5%
+1.6%
Total stores open
76
67
+9

>
Revenue down 8.5% for the same stores
>
Store closure and impairments resulted in US$1.32 million write downs
>
Management change and marketing
experimentation continues
>
US business under review - in S
eptember 2016, the US was put
under the leadership of our North American President who has delivered outstanding results in Canada. The Board and executiv
e
team continue to closely monitor the US business
MICHAEL HILL US
RETAIL SEGMENT
For the year ending
2017
2016
move
Revenue
12.5m
14.2m
(12.0%)
EBIT
(3.8m)
(2.6m)
(47.2%)
EBIT as a % of revenue
(30.3%)
(18.1%)
-12.2%
Total stores open
9
10
-1

>
Sales growth of 61.7% with like for like store sales declining
2.1%
for the period
>
13 new stores opened during the year
including the first in NSW
>
Brand review was initiated in early 2017 due to revenue forecas
ts
not being met and losses growing faster than anticipated. Revie
w
was still underway at end of the 16-17 year.
>
Further store expansion plans
put on hold pending brand review
completion
EMMA & ROE
RETAIL SEGMENT
For the year ending
2017
2016
move
Revenue
15.1m
9.3m
61.7%
EBIT
(6.9m)
(2.4m)
(186.0%)
EBIT as a % of revenue
(45.9%)
(26.0%)
-19.9%
Total stores open
29
16
+13

>
Same store sales growth in all markets and for both brands through our continued focus on selling skills and productivity improvements
>
10 new Michael Hill stores planned for 17-18
>
Completion of the Emma & Roe brand review and consideration given to its recommendations, w
ith likely adjustments to the E&
R
model in the second half
>
Reduce the US operating losses
and determine if we can achieve
the level of productivity required for success in this market
>
Continued emphasis on developing Branded Collections
>
Further emphasis on our eCommerce and Omni-channel capability
>
Continued investment in key IT and business systems
>
Testing other retail formats such as clearance stores, and asse
ss
and consider other channels such as Amazon
2017-18 PRIORITIES

Catalog pic

Q1 TRADING
UPDATE
3.5%
same store
sales growth
7.8%
sales increase
10 Michael Hill
stores opened
1 Emma & Roe
store opened
12.3%
same store sales
27.4%
sales increase
Emma & Roe
343
stores trading
313
Michael Hill
30
Emma & Roe
3.8%
same store
sales growth
7.4%
sales increase
Michael Hill

Q1 TRADING
UPDATE
4.2%
same store
sales growth
6%
sales increase
Australia
4 more
Michael Hill
stores
to open
in December quarter
5.1%
same store
sales growth
6%
sales increase
New Zealand
9%
same store sales
14.8%
sales
US
7.6%
same store
sales growth
22%
sales increase
Canada

THANK YOUTHANK YOU

BUSINESS
OF THE
MEETING

FINANCIAL REPORT
Receive and consider the Financial Report for the year ended 30 June 2017
The financial report of Michael Hill International Limited and
the reports of
the Directors and of the Auditors for the financial year ended
30 June 2017
(2017 Annual Report) is tabled for discussion.

“That, the Remuneration Report for the year ended 30 June 2017 (as set out in the Directors Report) is adopted.”To consider and, if thought fit, to pass the following advisory
Resolution:
RESOLUTION 1:
REMUNERATION REPORT (ADVISORY RESOLUTION)
FOR
AGAINST
OPEN
ABSTAIN EXCLUDED
NO. OF SHARES
250,597,077 203,898
1,063,211
4,318,142 21,156,926
% OF ELIGIBLE VOTES
99.50%
0.08%
0.42%
N/A
N/A
% OF ALL SECURITIES
64.68%
0.05%
0.27%
1.11%
5.46%

“That Robert Ian Fyfe, who retires by rota
tion in accordance with Listing Rule
14.5 and Article 38.4 of the Company’s C
onstitution and, being eligible, offers
himself for re-election, be re-elected as a Director.”To consider and, if thought fit, pass the following resolution,
as an
Ordinary Resolution of the Company:
RESOLUTION 2:
RE-ELECTION OF ROBERT IAN FYFE AS A DIRECTOR
FOR
AGAINST
OPEN
ABSTAIN EXCLUDED
NO. OF SHARES
257,946,947 14,282,356 1,044,526
4,053,472
0
% OF ELIGIBLE VOTES
94.38%
5.23%
0.39%
N/A
N/A
% OF ALL SECURITIES
66.58%
3.69%
0.27%
1.05%
0.00%

THANK YOUTHANK YOU

---

ANNUAL
GENERAL
MEETING
31
ST
OCTOBER 2017

>
Welcome
>
Year in review
CHAIR’S
AGENDA

YEAR IN REVIEW

>
Overview
>
Group Strategy
>
2017 Highlights
>
Operational Summary
>
Q1 Trading Update
CEO REVIEW

>
Global strategies
– internationalisation of brands and
consolidation of independents, especially in North America
>
Fragmentation of traditional marketing channels
– creating
challenges around market penetration and foot traffic
>
Branding strategies
– growth in branded jewellery set to reach
40% of total jewellery sales by 2020
>
Reconfiguration of the channel landscape
– omni-channel,
showrooming, click and collect, mono brand stores, aggregation sites and new channels...Amazon, Alibaba, Tmall....
>
Polarisation of customer segment
– growth occurring at top end
and bottom end, the middle is stagnating – blurring of lines between fine jewellery and fashion jewellery – women dressing up

and down...
>
Fashionability and acceleration of the supply chain
– retailers
are teaming with designers and reacting to latest trends quickl
y –
customers want to be different but they also want to be on tren
d
MARKET OVERVIEW

GROUP STRATEGY
Proprietary Branded Product Collections>
Unique and distinct designs to
differentiate in a cluttered mar
ket
>
Design will become increasingly important to both our brands
>
Gross margin premium available
Understand Our Customer: Increase Loyalty and Engagement>
Technology investment to improv
e insights, preferences and enga
gement
>
A continued obsession on servicing our customer to the highest
levels
Inventory Management: Improve ROI>
Systems investment to manage surplus stock and maximise margins
>
Reduced product range to declutter stores and support the brande
d collections strategy
eCommerce Platform: Engage with new customers and grow sales>
Investment in multi-channel platform to help customers find and
understand our brands
while growing both on-line and off-line sales
Systems Infrastructure Investment: Build capability and grow sc
alability
>
Improving capability through migrating to a full MS Dynamics ER
P environment over the
next three years to support existing finance, logistics, mercha
ndise, CRM and Point of
Sale capabilities
Discover and Nurture Talent: Our People>
Continued focus on attracting talent to improve capability for
tomorrow’s challenges
>
Increased investment in developing our people’s skills and comp
etencies

2017 HIGHLIGHTS
$48.1 million
Record EBIT
2.3%
1.6%
same store
sales growth
$39.8 million
Operating net cash inflow
$583 million
Group revenue 5.8%
5c AUD
Dividend
2016: 4.75c
63.5%
gross
margin
$39.7 million
Professional Care Plan
sales 1%

2017 HIGHLIGHTS
$39.4 million
Net debt
2016: $32M
US$1.3 million
asset write-down and
impairments
52%
Equity ratio
2016:48.5%
$77.1 million
Deferred PCP Revenue
NZ$22.6 million
settlement paid to
NZ Inland Revenue

2017 HIGHLIGHTS
Record profits
NZ, Australia, Canada
332 stores
including 29 Emma & Roe
8.8% Canada
same store sales growth
13 Michael Hill
stores opened
13 Emma & Roe
stores opened

MICHAEL HILL AUSTRALIAN
RETAIL SEGMENT
>
Modest same store sales growth of 1.2% in a tough retail market
>
EBIT lift of 3.4% to a record $52.4m
>
Focus on improved productivity and cost control
>
10 stores relocated, 3 stores refurbished to the latest design
and
layout, 3 new stores opened and 5 closed, leaving a total of 16
6
trading at the end of the period
For the year ending
2017
2016
move
Revenue
322.0m
309.5m
4.0%
EBIT
52.4m
50.7m
3.4%
EBIT as a % of revenue
16.3%
16.4%
-0.1%
Total stores open
166
168
-2

For the year ending
2017
2016
move
Revenue
122.0m
122.9m
(0.8%)
EBIT
28.0m
27.3m
2.6%
EBIT as a % of revenue
23.0%
22.2%
+0.8%
Total stores open
52
52
>
Like for like store sales slipped by 0.8% on prior year
>
Focus on variable costs helped deliver a record EBIT of NZ$28.0m
>
One store opened at Christchurch and one store closed during the period, leaving a total of 52 stores
MICHAEL HILL NEW ZEALAND
RETAIL SEGMENT

MICHAEL HILL CANADIAN
RETAIL SEGMENT
>
Revenue grew by 18.1% to C$112.7m
>
Like for like store sales grew by 8.8%
>
EBIT increased 38.1% to a record CA$12.6m
>
This segment is benefitting from a strong and stable leadership

team and from improved brand recognition and market share
>
9 new stores opened giving a total of 76 stores operating at 30 June 2017
For the year ending
2017
2016
move
Revenue
112.7m
95.4m
18.1%
EBIT
12.6m
9.1m
38.1%
EBIT as a % of revenue
11.1%
9.5%
+1.6%
Total stores open
76
67
+9

>
Revenue down 8.5% for the same stores
>
Store closure and impairments resulted in US$1.32 million write downs
>
Management change and marketing
experimentation continues
>
US business under review - in S
eptember 2016, the US was put
under the leadership of our North American President who has delivered outstanding results in Canada. The Board and executiv
e
team continue to closely monitor the US business
MICHAEL HILL US
RETAIL SEGMENT
For the year ending
2017
2016
move
Revenue
12.5m
14.2m
(12.0%)
EBIT
(3.8m)
(2.6m)
(47.2%)
EBIT as a % of revenue
(30.3%)
(18.1%)
-12.2%
Total stores open
9
10
-1

>
Sales growth of 61.7% with like for like store sales declining
2.1%
for the period
>
13 new stores opened during the year
including the first in NSW
>
Brand review was initiated in early 2017 due to revenue forecas
ts
not being met and losses growing faster than anticipated. Revie
w
was still underway at end of the 16-17 year.
>
Further store expansion plans
put on hold pending brand review
completion
EMMA & ROE
RETAIL SEGMENT
For the year ending
2017
2016
move
Revenue
15.1m
9.3m
61.7%
EBIT
(6.9m)
(2.4m)
(186.0%)
EBIT as a % of revenue
(45.9%)
(26.0%)
-19.9%
Total stores open
29
16
+13

>
Same store sales growth in all markets and for both brands through our continued focus on selling skills and productivity improvements
>
10 new Michael Hill stores planned for 17-18
>
Completion of the Emma & Roe brand review and consideration given to its recommendations, w
ith likely adjustments to the E&
R
model in the second half
>
Reduce the US operating losses
and determine if we can achieve
the level of productivity required for success in this market
>
Continued emphasis on developing Branded Collections
>
Further emphasis on our eCommerce and Omni-channel capability
>
Continued investment in key IT and business systems
>
Testing other retail formats such as clearance stores, and asse
ss
and consider other channels such as Amazon
2017-18 PRIORITIES

Catalog pic

Q1 TRADING
UPDATE
3.5%
same store
sales growth
7.8%
sales increase
10 Michael Hill
stores opened
1 Emma & Roe
store opened
12.3%
same store sales
27.4%
sales increase
Emma & Roe
343
stores trading
313
Michael Hill
30
Emma & Roe
3.8%
same store
sales growth
7.4%
sales increase
Michael Hill

Q1 TRADING
UPDATE
4.2%
same store
sales growth
6%
sales increase
Australia
4 more
Michael Hill
stores
to open
in December quarter
5.1%
same store
sales growth
6%
sales increase
New Zealand
9%
same store sales
14.8%
sales
US
7.6%
same store
sales growth
22%
sales increase
Canada

THANK YOUTHANK YOU

BUSINESS
OF THE
MEETING

FINANCIAL REPORT
Receive and consider the Financial Report for the year ended 30 June 2017
The financial report of Michael Hill International Limited and
the reports of
the Directors and of the Auditors for the financial year ended
30 June 2017
(2017 Annual Report) is tabled for discussion.

“That, the Remuneration Report for the year ended 30 June 2017 (as set out in the Directors Report) is adopted.”To consider and, if thought fit, to pass the following advisory
Resolution:
RESOLUTION 1:
REMUNERATION REPORT (ADVISORY RESOLUTION)
FOR
AGAINST
OPEN
ABSTAIN EXCLUDED
NO. OF SHARES
250,597,077 203,898
1,063,211
4,318,142 21,156,926
% OF ELIGIBLE VOTES
99.50%
0.08%
0.42%
N/A
N/A
% OF ALL SECURITIES
64.68%
0.05%
0.27%
1.11%
5.46%

“That Robert Ian Fyfe, who retires by rota
tion in accordance with Listing Rule
14.5 and Article 38.4 of the Company’s C
onstitution and, being eligible, offers
himself for re-election, be re-elected as a Director.”To consider and, if thought fit, pass the following resolution,
as an
Ordinary Resolution of the Company:
RESOLUTION 2:
RE-ELECTION OF ROBERT IAN FYFE AS A DIRECTOR
FOR
AGAINST
OPEN
ABSTAIN EXCLUDED
NO. OF SHARES
257,946,947 14,282,356 1,044,526
4,053,472
0
% OF ELIGIBLE VOTES
94.38%
5.23%
0.39%
N/A
N/A
% OF ALL SECURITIES
66.58%
3.69%
0.27%
1.05%
0.00%

THANK YOUTHANK YOU