1H2018 Results Investor Presentation

INTERIM RESULTS
31 DECEMBER 2017

CEO REVIEW
• GROUP RESULTS
• OPERATIONAL SUMMARY
• REVIEW OF PRIORITIES
• MARKET OVERVIEW

KEY PERFORMANCE RESULTS
$
342.2 MILLION
GROUP REVENUE
4.5%
$
8.7 MILLION
NET PROFIT
AFTER TAX
$
42.3 MILLION

OPERATING NET CASH INFLOW
165.7%
$
34.9 MILLION

UNDERLYING EBIT
$
15.1 MILLION

STATUTORY EBIT
2.5c
DIVIDEND
2016: 2.5C
64.8%
GROSS MARGIN
0.8%
$
23.0 MILLION


NET DEBT
37.3%
47.1%
EQUITY RATIO
2016:48.9%

OPERATIONAL RESULTS
347 STORES
INCLUDING 30 EMMA & ROE
14 MICHAEL HILL
STORES OPENED
4.1% CANADA
SAME STORE
SALES GROWTH
(0.1%) AUSTRALIA
SAME STORE
SALES GROWTH
3.5% NEW ZEALAND
SAME STORE
SALES GROWTH
0.3%

SAME STORE
SALES GROWTH
73%
ECOMMERCE
SALES GROWTH

GROUP RESULTS
• Revenue grew 4.5%, with same store sales up 0.3%
• Gross profit lifted to 64.8% of revenue
• One off impairment and onerous lease accounting provisions recognised of $19.8m relating to
planned US exit ($4.6m) and Emma & Roe repositioning ($15.2m)
• Underlying EBIT of $34.9m, impacted by additional losses reported for Emma & Roe and US markets
• Dividend of 2.5 cents per share in line with prior year, unfranked and fully imputed
For the year ending AUDDec-17Dec-16move
Revenue342.2m327.5m4.5%
Gross profit220.6m208.4m5.8%
Gross profit as a % of revenue64.8%64.0%0.8%
Underlying EBIT34.9m40.0m-12.6%
Underlying EBIT as a % of revenue10.2%12.2%2.0%
Statutory EBIT15.1m40.0m-62.2%
Statutory EBIT as a % of revenue4.4%12.2%-7.8%
Total stores open34732918

MICHAEL HILL AUSTRALIA
RETAIL SEGMENT
• Revenue grew 1.6% in a tough retail market
• Gross profit up 3.5%, lifting to 63.5% of revenue
• Challenging November trading period and increased marketing costs impacted bottomline results
• 6 new stores opened during the half, giving a total of 172 trading at the end of the period
• Potential exists to improve the Australian performance in the second half as our brand is well
positioned to take market share in a relatively stagnant category
For the half-year ending AUDDec-17Dec-16move
Revenue185.0m182.0m1.6%
Gross profit117.4m113.5m3.5%
Gross profit as a % of revenue63.5%62.4%1.1%
EBIT32.6m33.7m-3.2%
EBIT as a % of revenue17.6%18.5%-0.9%
Total stores open1721702

MICHAEL HILL NEW ZEALAND
RETAIL SEGMENT
• Revenue grew by 4.2% to NZ$69.7m
• Same store sales growth of 3.5% in a mature market
• Increased investment in marketing and higher than expected payment plan costs adversely
impacted the segment’s bottom line
• Second half focus on lifting gross margin and achieving cost efficiencies
For the half-year ending NZDDec-17Dec-16move
Revenue69.7m66.9m4.2%
Gross profit43.0m41.5m3.7%
Gross profit as a % of revenue61.7%62.0%-0.3%
EBIT15.8m16.5m-4.6%
EBIT as a % of revenue22.6%24.7%-2.1%
Total stores open5353-

MICHAEL HILL CANADA
RETAIL SEGMENT
• Revenue grew by 17.6% to CA$73.7m
• Same store sales grew by 4.1%
• EBIT increased 17.6% to a record CA$10.4m
• This segment is benefiting from a strong and stable leadership team
• Captured additional market share from increased awareness and brand credibility
• 7 new stores opened during the half year giving a total of 83 stores operating
For the half-year ending CADDec-17Dec-16move
Revenue73.7m62.7m17.6%
Gross profit45.8m38.4m19.5%
Gross profit as a % of revenue62.1%61.1%1.0%
EBIT10.4m8.8m17.6%
EBIT as a % of revenue14.1%14.1%0.0%
Total stores open837211

MICHAEL HILL US
RETAIL SEGMENT
• Same store revenue down 10.6%
• Impairment and onerous leases recognised of US$3.5m (AU$4.6m)
• Underlying EBIT loss of US$2.1m
• Continued strategic review leading to January US exit announcement
• Exit expected to be completed by 30 June 2018
For the half-year ending USDDec-17Dec-16move
Revenue6.0m7.0m-15.2%
Gross profit3.6m4.2m-14.5%
Gross profit as % of revenue60.5%60.0%0.5%
Underlying EBIT(2.1m)(1.1m)-89.1%
Underlying EBIT as % of revenue-35.1%-15.7%-123.1%
Statutory EBIT(5.6m)(1.1m)-404.2%
Statutory EBIT as a % of revenue-93.6%-15.7%-77.9%
Total stores open910-1

EMMA & ROE
RETAIL SEGMENT
• Total sales growth of 20.0% with same store sales declining 5.4%
• Underlying EBIT loss of $4.4m
• Impairment and onerous leases recognised of AU$15.2m
• Strategic review of Emma & Roe progressed ahead of January repositioning announcement
For the half-year ending AUDDec-17Dec-16Move
Revenue10.5m8.8m20.0%
Gross profit7.1m5.8m22.6%
Gross profit as a % of revenue67.4%66.0%1.4%
Underlying EBIT(4.4m)(2.2m)-95.6%
Underlying EBIT as % of revenue-41.3%-25.3%-16.0%
Statutory EBIT(19.6m)(2.2m)-782.4%
Statutory EBIT as a % of revenue-186.4%-25.3%-161.1%
Total stores open30246

REVIEW OF PRIORITIES FOR 2017-18
• Increased same store sales for the Group, with Canada and New Zealand achieving solid growth
• Continued to target strategically suitable growth opportunities with 14 new Michael Hill
stores opened
• A brand review of Emma & Roe resulted in an announcement in January of our intention to
reposition the Emma & Roe brand in coming months, which will result in store closures, and
a fresh test and trial period for the remaining portfolio, along with an increased focus on
eCommerce
• A strategic review of our US business resulted in an announcement in January of our intention
to exit the US operations prior to 30 June 2018
• Increased emphasis on branded collections, accounting for 18.5% of Michael Hill sales
(1H2018: $55.8m vs 1H2017: $51.0m)
• An increased focus on margin planning and management has helped lift gross margin to 64.8%
• eCommerce revenue grew 73% due to continued omnichannel investment. eCommerce now
represents 1.7% of Group revenue (1H2018: $5.6m vs 1H2017: $3.3m)
• Investment in key systems and infrastructure included a new point of sale system
• New sales opportunities include clearance stores and popular online market places

AUDUSEmma & RoeTotal
Onerous lease provision0.931m7.445m8.376m
Impairment of property,
plant and equipment
3.648m7.795m11.443m
Total4.579m15.240m19.819m
MATERIAL ADJUSTMENTS
• Impairment and onerous lease accounting provisions recognised of AU$19.8m relating to
planned US exit and Emma & Roe repositioning
• After tax, AU$15.2m impact on net profit after tax
• Final cash costs associated with the closures will be provided to the market once available

THANK YOU