Michael Hill International Limited/Announcement

Half yearly report and accounts

Half Year Results22 February 2018MHJConsumer Discretionary

MichaelHill InternationalLimited
Appendix4D
31 December2017
MichaelHill InternationalLimited
ABN 25 610 937 598
Appendix4D
Resultsfor announcementto the market
Half-year report31 December2017
Reportingperiod:1 July 2017to 31 December2017
Previouscorrespondingreporting
period:
1 July 2016to 31 December2016
Resultsin brief
31 Dec
2017
$'000
31 Dec
2016
$'000
Change
$'000
Change
%
Revenuefromcontinuingoperations
342,214
327,50214,7124.5%
Net profitbeforetax
13,608
38,237(24,629)(64.4)%
Net profitaftertax
8,697
25,753(17,056)(66.2)%
Dividends
Amountper
security
Cents
Franked
amountper
security
Cents
31 December2017
Interimdividend
1
AU 2.50cAU .00c
Amountper
security
Cents
Franked
amountper
security
Cents
31 December2016
InterimdividendAU 2.50cAU 1.25c
Finaldividend
2
AU 2.50cAU .00c
1. The recorddatefor determiningentitlementsto the interimdividendof AU 2.5 centsper shareis 15 March
2018.The paymentdatefor the interimdividendis 29 March2018.The dividendwill be unfrankedand fully
imputed.In addition,the dividendwill be declaredas conduitforeignincome,thereforeno Australianwithholding
tax will be deductedfromthe dividendpaymentto MichaelHill InternationalLimited'sforeignshareholders.
2. Finaldividendof AU 2.5 centsper sharefor the year ended30 June2017was declaredon 18 August2017.
Thereis no dividendreinvestmentplan in operationfor MichaelHill InternationalLimited.
For commentaryon the abovefigures,pleasereferto the Directors'Report.

MichaelHill InternationalLimited
Appendix4D
31 December2017
(continued)
Net tangibleassets
31 Dec
2017
31 Dec
2016
Net tangibleassetbackingper ordinarysecurity
$0.49
$0.52
Entitiesof whichcontrolhas been gainedor lost
Controlhas not beengainedor lost in relationto any entityduringthe period.Referto note14 of the annual
reportfor the yearended30 June2017for full detailson subsidiaries.
Associateand joint ventureentities
MichaelHill InternationalLimitedhas no associateor joint ventureentities.
This reportshouldbe readin conjunctionwith the annualreportfor the yearended30 June2017and any public
announcementsmadeby MichaelHill InternationalLimitedin accordancewith the continuousdisclosure
requirementsarisingundertheCorporationsAct2001(Cth),ASXListingRulesandNZXListingRules.
E J Hill
Chair
21 February2018
Brisbane

MichaelHill InternationalLimited
ABN25 610 937 598
Interimreport- 31 December2017
Contents
Page
Directors'report1
Auditor'sIndependenceDeclaration8
Interimfinancialstatements
Consolidatedstatementof comprehensiveincome9
Consolidatedstatementof financialposition10
Consolidatedstatementof changesin equity11
Consolidatedstatementof cashflows13
Notesto the consolidatedfinancialstatements14
Directors'declaration21
Independentauditor'sreviewreportto the shareholders22
Corporatedirectory24
This interimfinancialreportdoesnot includeall the notesof the type normallyincludedin an annualfinancial
report.Accordingly,this reportis to be readin conjunctionwith the annualreportfor the yearended30 June2017
and any publicannouncementsmadeby MichaelHill InternationalLimitedduringthe interimreportingperiodin
accordancewith the continuousdisclosurerequirementsof theCorporationsAct2001(Cth),ASXListingRules
andNZXListingRules.

MichaelHill InternationalLimited
Directors'report
31 December2017
Directors'report
YourDirectors presenttheirreporton the consolidatedentity(referredto hereafteras the Group) consistingof
MichaelHill InternationalLimitedand the entitiesit controlledat the end of, or during,the half-yearended31
December2017.
Directors
The followingpersonsweredirectorsof MichaelHill InternationalLimitedfor the entirehalf-yearand up to the
dateof this report.
E J Hill
Sir R M Hill
G W Smith
R I Fyfe
J S Allis
Principalactivities
The Groupoperatespredominatelyin the retailsale of jewelleryand relatedservicesin Australia,NewZealand,
Canadaand the UnitedStates.
Therewereno significantchangesin the natureof the Group's activitiesduringthe half-yearto 31 December
2017.
Reviewof operations
Key financialresults
• Operatingrevenuesincreasedby 4.5%to $342.2m(1H2017:$327.5m)
• Groupsamestoresalesincreasedby 0.3%to $316.8m(1H2017:0.8%increase)
• Statutorynet profitaftertax profitof $8.7m(1H2017:$25.8m)
• Statutoryearningsbeforeinterestand tax of $15.1m(1H2017:$40.0m)
• Underlyingearningsbeforeinterestand tax of $34.9m(1H2017:$40.0m),whichis calculatedby excludingthe
pre-taxadjustmentof $19.8mfor onerousleasesand provisionsfor impairmentrelatingto the plannedexit from
the US marketand the repositioningof the Emma& Roe brand.
• Underlyingnet profitaftertax declined7.0%to $23.9m(1H2017:$25.8m).This is calculatedby excludingthe
post-tax$15.2madjustmentfor impairmentand onerousleaseprovisions
• Net operatingcashflow increasedby 165.7%to $42.3m(1H2017:$15.9m)
• Net debt reductionof 37.3%to $23.0m(1H2017:$36.6m)
• Equityratioreducedto 47.1%(1H2017:48.9%)
• eCommercesalesincreasedby 73%to $5.6m(1H2017:$3.3m)
• Interimdividendof AU 2.5 centsper share,in line with 1H2017,unfrankedand fully imputed
Operationalperformance
• Strongperformancein the MichaelHill brand,particularlyin Canada
• Opened14 new MichaelHill storesto bringtotal Groupstoresto 347
• MichaelHill total storesalesgrowthof 4.1%and samestoresalesgrowthof 0.5%
• Emma& Roe total storesalesgrowthof 20.1%and samestoresalesdeclineof 5.4%
1

MichaelHill InternationalLimited
Directors'report
31 December2017
(continued)
Reviewof operations(continued)
Key Facts
TRADINGRESULTS
31 Dec
2017
$'000
31 Dec
2016
$'000+/-%
SIX MONTHSENDED(AU $000)
Revenue
342,214
327,5024.5%
EBIT
15,145
40,018(62.2)%
Groupprofitaftertax
8,697
25,753(66.2)%
Net cashfromoperatingactivities
42,255
15,904165.7%
Dividendspaid
9,686
9,5781.1%
FINANCIALPOSITION
31 Dec
2017
$'000
31 Dec
2016
$'000
30 June
2017
$'000
Contributedequity
10,015
10,01510,015
Totalequity
201,397
208,055202,183
Totalassets
427,174
425,128389,122
Net debt
22,964
36,62839,358
NUMBEROF STORES
31 Dec
2017
31 Dec
2016
30 June
2017
MichaelHill
Australia
172
170166
NewZealand
53
5352
Canada
83
7276
UnitedStates
9
109
TotalMichaelHill stores
317
305303
Emma& Roe
Australia
29
2328
NewZealand
1
11
TotalEmma& Roe stores
30
2429
KEY MEASURES
31 Dec
2017
$'000
31 Dec
2016
$'000
30 June
2017
$'000
Shareprice31 December(AU$)
1.23
1.271.11
Basicearningsper share(AUc)
2.24
6.708.46
Equityratio(%)
47.1
48.952.0
Currentratio
2.3:1
2.6:13.0:1
2

MichaelHill InternationalLimited
Directors'report
31 December2017
(continued)
Reviewof operations(continued)
Reviewof operationsand results
MichaelHill InternationalLimited(ASX/NZX:MHJ)todayannouncedan aftertax profitof $8.7mfor the six
monthsended31 December2017.
The Group’score MichaelHill businessesin Australia,NewZealandand Canadaperformedstronglyduringthe
first-quarterbeforeexperiencinga slowdownin the secondquarter,in particularthe Novembertradingperiod,
wheresalesfell shortof expectations.This challengingNovemberperiod,combinedwith a heavierinvestmentin
our marketingefforts,resultedin a flat EBITresultfromthe combinedthreebusinesses.
Canadacontinuesto deliverexceptionalgrowthwith a 17.6%increasein revenueand EBIT,and the Companyis
activelyseekingfurtheropportunitiesto expandthe businessand captureadditionalmarketshare.This includes
the openingof sevennew storesin the first half with currentplansto expandstorenumbersto 105 in the next two
to threeyears.
The Directorsare pleasedwith the progressof the omnichannelstrategywith 73%growthachievedin
eCommercesalesduringthe first half. This givesus confidencethat we are takingthe rightstepstowards
deliveringa fully integratedomnichannelexperiencefor our customers.
The Groupalso madesignificantprogressin workingthroughthe businesschallengesit facedduringthe
first-half,leadingto a decisionin January2018to exit the US and repositionEmma& Roe into a new market
segmentwith a materialreductionin stores.Thesedecisionshaveimpactedour first-halfauditedaccounts
materiallyto the extentof $19.8m.The actualcashcost of thesetwo decisionswill not be determineduntil the
conclusionof the respectiveclosuresof storesinvolved.
The Directorsare confidentthesestrategicactionswill delivergreaterlong-termvaluefor shareholdersand
currentlyexpectthe exit of the US and repositioningof Emma& Roe to be completedby the end of FY2018.
The Companystrengthenedits balancesheetby reducingnet debtto $23.0mfrom$36.6min the sameperiod
last year,whilenet operatingcashflowsincreasedbackto normallevelsat $42.3m,comparedto $15.9min the
priorcomparableperiod.
MichaelHill Australiaretail segment
31 Dec
2017
AU$'000
31 Dec
2016
AU$'000
+/- %
For the six monthsending
Revenue
184,953
181,994
1.6%
Grossprofit
117,450
113,525
3.5%
Grossprofit% of revenue
63.5%
62.4%
1.1%
EBIT
32,569
33,663
-3.2%
EBIT% of revenue
17.6%
18.5%
-0.9%
Numberof stores
172
170
2
Includedin EBITfigureabove:
Impairment
22
13
The Australiansegmentfacedchallengingretailconditionsin the first half resultingin flat samestoresalesfor the
period.Totalfirst-halfrevenuesincreasedto $185.0m,up 1.6%,with an increasein grossprofitmarginto 63.5%
particularlypleasing.However,resultsfor the periodwereaffectedby a challengingNovembertradingperiodand
an increasein marketingcosts,resultingin a first half EBITof $32.6mdownfrom$33.7min the prior
correspondingperiod.December2017tradingwas steadyon the prioryear,with 2018tradein Januaryand
February(to date)slightlyup on the previousyear.
3

MichaelHill InternationalLimited
Directors'report
31 December2017
(continued)
Reviewof operations(continued)
A continuedfocuson the productivityof the Company’sexistingstoreportfoliois the key priorityfor the retail
leadershipteam,to achievea strongersalesperformancein the secondhalf.
MichaelHill New Zealandretail segment
31 Dec
2017
NZ$'000
31 Dec
2016
NZ$'000
+/- %
For the six monthsending
Revenue
69,685
66,905
4.2%
Grossprofit
43,000
41,476
3.7%
Grossprofit% of revenue
61.7%
62.0%
-0.3%
EBIT
15,773
16,525
-4.6%
EBIT% of revenue
22.6%
24.7%
-2.1%
Numberof stores
53
53
Includedin EBITfigureabove:
Impairment
11
-
The NewZealandsegmentachievedsolidrevenuegrowthof NZ$69.7mfor the first-half,an increaseof 4.2%,
and samestoresalesgrowthof 3.5%.A slightdeclinein grossmarginof 0.3%combinedwith an increasein our
paymentplan costs,resultedin EBITdeclining4.6%to NZ$15.8mfor the half. A seriesof actionshavebeen
implementedwith the aim of addressingthe grossmarginshortfalland bringingpaymentplan costsbackdownto
previouslevels.
The priorityfor the secondhalf is to lift grossmarginand managethe segmentspaymentplan coststo a more
sustainablelevel.
MichaelHill Canadaretail segment
31 Dec
2017
CA$'000
31 Dec
2016
CA$'000
+/- %
For the six monthsending
Revenue
73,739
62,723
17.6%
Grossprofit
45,828
38,353
19.5%
Grossprofit% of revenue
62.1%
61.1%
1.0%
EBIT
10,388
8,835
17.6%
EBIT% of revenue
14.1%
14.1%
-%
Numberof stores
83
72
11
Canadacontinuesto be a majorgrowthopportunityfor the Groupfollowinganotherstrongfirst half result
reflectingstrongleadershipand improvedbrandrecognition.Revenuesincreased17.6%to CA$73.7mwith same
storesalesalso lifting4.1%.The segmentrecordeda 17.6%rise in EBITto CA$10.4m,supportedby strong
salesand an increasein grossprofitmarginof 1.0%.The Companynow has 83 storesand plansto add a further
storein the currentperiod.
4

MichaelHill InternationalLimited
Directors'report
31 December2017
(continued)
Reviewof operations(continued)
MichaelHill UnitedStatesretail segment
31 Dec
2017
US$'000
31 Dec
2016
US$'000
+/- %
For the six monthsending
Revenue
5,961
7,030
-15.2%
Grossprofit
3,604
4,217
-14.5%
Grossprofit% of revenue
60.5%
60.0%
0.5%
EBIT
(5,582)
(1,111)
-404.2%
EBIT% of revenue
(93.6)%
(15.8)%
-77.9%
Numberof stores
9
10
(1)
Includedin EBITfigureabove:
Impairment
2,779
-
Onerousleaseprovision
709
-
The performanceof the US segmentcontinuedto deteriorateand resultedin the Groupannouncingin Januaryits
decisionto exit its operationsin the country.Revenuesdeclined15.2%to US$6.0m,whilethe segment
contributedto an underlyingEBITloss of US$2.1m.The StatutoryEBITloss was US$5.6m,includinga US$3.5m
chargefor onerousleasesand impairmentof assets.
The Companycontinuesto exploreits optionsto exit, eithervia the successfulsale of the businessor through
reachingagreementwith the landlordsof the nine stores.This is currentlyplannedto be completedby the end of
FY2018.
Emma& Roe retail segment
31 Dec
2017
$'000
31 Dec
2016
$'000
+/- %
For the six monthsending
Revenue
10,503
8,749
20.1%
Grossprofit
7,079
5,775
22.6%
Grossprofit% of revenue
67.4%
66.0%
1.4%
EBIT
(19,580)
(2,219)
-782.4%
EBIT% of revenue
(186.4)%
(25.4)%
-161.1%
Numberof stores
30
24
6
Includedin EBITfigureabove:
Impairment
7,795
-
Onerousleaseprovision
7,445
-
While total revenuesgrew20.0%to $10.5min the perioddue to an increasein stores,samestoresalesgrowth
declinedby 5.4%with the Emma& Roe businessincurringan underlyingEBITloss of $4.4mfor the first half.
StatutoryEBITwas recordedat a loss of $19.6m,includinga $15.2mimpairmentfor onerousleasesand
impairmentof assets.
In January,the Companyannouncedit wouldrepositionthe Emma& Roe brandinto demi-finejewellery,an
emergingsegmentof the marketcombiningfine jewellerywith fashionfor thosecustomersseekingstylishyet
affordableitemsto accessorisetheir wardrobe.This new propositionwill includea smaller,moreconcentrated
storefootprintas the Companytrialsthe new concept.A decisionon the new Emma& Roe storefootprintis
intendedto be madein the comingmonth,pendingfurtherlandlorddiscussions.
5

MichaelHill InternationalLimited
Directors'report
31 December2017
(continued)
Reviewof operations(continued)
Forwardlookingstatementsaboverepresentthe currentintentionsand expectationsof the Directors,whichmay
changedue to mattersoutsidethe Company’scontrolor wherealternativecoursesof actionor decisionsare
consideredto be in the best interestsof the Company.
Strategicupdate
Sevennew storeswereopenedin the Canadianmarketduringthe first half and anotherone is plannedfor the
secondhalf. It is anticipatedthat the Canadiansegmentwill growto approximately105 storesoverthe next 2 to 3
years.The decisionto exit the US will allowour NorthAmericanGeneralManagerto focuson this growing
marketas it completesits storegrowthprogramand maximisesthe bottomline, whiletakingmarketsharefrom
increasedmarketawarenessand achievingscalein overheads.
Managementis takingthe necessarystepsto strengthenour corebusinessesthrougha continuedfocuson the
productivityof our stores,and significantgrowthopportunitiespresentedby a repositionedEmma& Roe brand,
furtherexpansionof MichaelHill in Canadaand enhancementsto the Group’somnichannelstrategy.
The Companyhas undertakena comprehensivereviewof Emma& Roe to help shapethe futurestrategic
directionof the brand.The findingsof this reviewidentifieda majoropportunityin the demi-finejewellerysegment
and emergencein customerpreferencestowardsfine fashion.Demi-fineis an emergingsegmentof the market
combiningfine jewellerywith fashionfor thosecustomersseekingstylishyet affordableitemsto accessorisetheir
wardrobe.By bridgingthe gap betweenthesetwo categories,it allowscustomerswith a preferencefor fine
jewelleryto achievetheirdesiredlook but at a lowerprice.
The Companyintendsto repositionEmma& Roe to this identifiedsegmentin late FY18and FY19.This will
involvefurtherinvestmentsin the Company’somnichannelcapabilitiesto providecustomerswith a seamless
cross-channelexperience,and marketinginitiativesto driveadditionaleCommercerevenueopportunities.This
will be furthersupportedthroughthe revampingof storesto providean immersivein-storeretailexperienceand
to capturethe essenceof the new brandpositioning.Exactstorenumbersare still uncertainas this will be driven
to a largeextentby ongoingnegotiationswith our landlords.Statementsin this paragraphrepresentthe Board's
presentintentionsand may change.
Brandedcollectionsbringuniqueand distinctdesignto the marketand representan opportunityto securea
premiumgrossmargin.Brandedcollectionsalescontinueto growas a percentageof total revenueand new
collectionsare underdevelopmentfor later in the year.
Newsaleschannelopportunitiesbeingexploredincludeclearancestoresand popularonlinemarketplaces.
Investmentin key systemsand infrastructurewill continueat a measuredpaceto ensurethe businessis
positionedto tackleongoingrapidchangein the retailenvironmentand shiftsin consumershoppinghabitsand
sentiment.MicrosoftDynamics365 for Retailis beingdeployedacrossthe Groupwith the aim to bringall key
managementinformationsystemsinto a fully integratedenvironment.Pointof Saleis beingrolledout currently
acrossour stores,financeis alreadydeployedas is CRMand furthermodulesare beingplannedfor
implementationin an orderlysequence.
This integratedenvironmentwill allowseamlessmovementof datafroma customer’sfirst touchpointthroughthe
entirecustomerjourneywhetherit be pureplay on-line,in-storeor a blendedomnichannelexperience.
Key financialresults
Dividends
The Directorsannouncean interimdividendof AU2.5¢per share(2016- AU2.5¢),unfrankedand fully imputed.
The dividendwill be paid on 29 March2018with the recorddatebeing15 March2018.The dividendwill be
declaredas conduitforeignincome,thereforeno Australianwithholdingtax will be deductedfromthe dividend
paymentto our foreignshareholders.
Auditor'sindependencedeclaration
A copyof the auditor'sindependencedeclarationas requiredundersection307Cof theCorporationsAct2001
(Cth)is set out on page8 and formspart of this report.
6

MichaelHill InternationalLimited
Directors'report
31 December2017
(continued)
Roundingof amounts
The amountscontainedin the financialreporthavebeenroundedto the nearest$1,000(whereroundingis
applicable)wherenoted($000)underthe optionavailableto the CompanyunderASICCorporations(Rounding
in Financial/Directors’Reports)Instrument2016/191.
The Companyis an entityto whichthe legislativeinstrumentapplies.
This reportis madeon 21 February2018in accordancewith a resolutionof Directors.
E J Hill
Chair
Brisbane
21 February2018
7

MichaelHill InternationalLimited
Consolidatedstatementof comprehensiveincome
For the half-year 31 December2017
Notes
31 Dec
2017
$'000
31 Dec
2016
$'000
Revenuefromcontinuingoperations
342,214
327,502
Otherincome
417
161
Costof goodssold
(120,423)
(118,061)
Employeebenefitsexpense
(88,351)
(83,034)
Occupancycosts
(31,608)
(29,090)
Marketingexpenses
(23,387)
(17,821)
Sellingexpenses
(16,027)
(14,248)
Depreciationand amortisationexpense
(10,986)
(9,650)
Losson disposalof property,plantand equipment
(14)
(300)
Impairmentof property,plantand equipment4
(11,528)
(13)
Onerousleaseprovision6
(8,376)
-
Otherexpenses
(16,782)
(15,419)
Financecosts
(1,541)
(1,790)
Profitbeforeincometax13,608
38,237
Incometax expense
(4,911)
(12,484)
Profitfor the half-year8,697
25,753
Othercomprehensiveincome
Itemthatmaybereclassifiedsubsequentlytoprofitorloss
Cashflow hedges
376
453
Currencytranslationdifferencesarisingduringthe half-year
(445)
97
Blank
Othercomprehensiveincomefor the half-year, net of tax
(69)
550
Total comprehensiveincomefor the half-year
8,628
26,303
Total comprehensiveincomefor the half-year is attributableto:
Ownersof MichaelHill InternationalLimited
8,628
26,303
Cents
Cents
Earningsper sharefor profit from continuingoperationsattributable
to the ordinaryequityholdersof the Company:
Basicearningsper share
2.24
6.70
Dilutedearningsper share
2.23
6.66
Theaboveconsolidatedstatementofcomprehensiveincomeshouldbereadin conjunctionwiththe
accompanyingnotes.
9

MichaelHill InternationalLimited
Consolidatedstatementof financialposition
As at 31 December2017
Notes
31 Dec
2017
$'000
31 Dec
2016
$'000
30 Jun
2017
$'000
ASSETS
Currentassets
Cashand cashequivalents
18,215
11,6495,676
Tradeand otherreceivables3
32,212
30,81524,219
Inventories
224,281
231,814203,853
Derivativefinancialinstruments3
-
360-
Currenttax receivables
-
-888
Othercurrentassets
4,531
4,2503,945
Total currentassets
279,239
278,888238,581
Non-currentassets
Tradeand otherreceivables3
3,561
1,4782,371
Property,plantand equipment4
70,937
77,76779,436
Deferredtax assets
60,624
59,11657,893
Intangibleassets5
10,961
5,5608,784
Othernon-currentassets
1,852
2,3192,057
Total non-currentassets
147,935
146,240150,541
Total assets
427,174
425,128389,122
LIABILITIES
Currentliabilities
Tradeand otherpayables3
74,163
70,93147,918
Derivativefinancialinstruments3
764
2181,141
Currenttax liabilities
881
3,629-
Provisions6
16,030
5,4614,670
Deferredrevenue
27,905
27,43425,924
Total currentliabilities
119,743
107,67379,653
Non-currentliabilities
Borrowings
41,179
48,27745,034
Provisions6
5,671
5,0786,235
Deferredrevenue
59,184
56,04556,017
Total non-currentliabilities
106,034
109,400107,286
Total liabilities
225,777
217,073186,939
Net assets
201,397
208,055202,183
EQUITY
Contributedequity7
10,015
10,01510,015
Reserves
484
3,362281
Retainedprofits
190,898
194,678191,887
Total equity
201,397
208,055202,183
Theaboveconsolidatedstatementoffinancialpositionshouldbereadin conjunctionwiththeaccompanying
notes.
10

MichaelHill InternationalLimited
Consolidatedstatementof changesin equity
For the half-year 31 December2017
Attributableto ownersof
MichaelHill InternationalLimited
Notes
Contributed
equity
$'000
Share
based
payments
reserve
$'000
Foreign
currency
translation
reserve
$'000
Cash
flow
hedge
reserve
$'000
Retained
profits
$'000
Total
equity
$'000
Balanceat 1 July 2017
10,0151,136285(1,140)191,887202,183
Profitfor the half-year----8,6978,697
Currencytranslationdifferences--(445)--(445)
Currencyforwardcontracts---216-216
Interestrate swaps
---160-160
Total comprehensiveincomefor
the half-year
--(445)3768,6978,628
Transactionswith ownersin
their capacityas owners:
Dividendspaid8---- (9,686)(9,686)
Optionexpensethroughshare
basedpaymentsreserve-23---23
Sharerightsexpensethrough
sharebasedpaymentsreserve
-249---249
-272--(9,686)(9,414)
Balanceat 31 December2017
10,0151,408(160)(764)190,898201,397
Theaboveconsolidatedstatementofchangesin equityshouldbereadin conjunctionwiththeaccompanying
notes.
11

MichaelHill InternationalLimited
Consolidatedstatementof changesin equity
For the half-year 31 December2017
(continued)
Attributableto ownersof
MichaelHill InternationalLimited
Notes
Contributed
equity
$'000
Share
based
payments
reserve
$'000
Foreign
currency
translation
reserve
$'000
Cash
flow
hedge
reserve
$'000
Retained
profits
$'000
Total
equity
$'000
Balanceat 1 July 2016
3,7672,1882,827(884)178,503186,401
Profitfor the half-year---- 25,75325,753
Currencytranslationdifferences--97--97
Currencyforwardcontracts---(61)-(61)
Interestrate swaps
---514-514
Total comprehensiveincomefor
the half-year
--9745325,75326,303
Transactionswith ownersin
their capacityas owners:
Dividendspaid8---- (9,578)(9,578)
Optionexpensethroughshare
basedpaymentsreserve-29---29
Sharerightsexpensethrough
sharebasedpaymentsreserve-75---75
Issueof sharecapital- exerciseof
options4,825----4,825
Transferoptionreserveto
contributedequityon exerciseof
options712(712)----
Transferoptionreserveto
contributedequityon forfeitureof
options
711(711)----
6,248(1,319)--(9,578)(4,649)
Balanceat 31 December2016
10,0158692,924(431)194,678208,055
Theaboveconsolidatedstatementofchangesin equityshouldbereadin conjunctionwiththeaccompanying
notes.
12

MichaelHill InternationalLimited
Consolidatedstatementof cash flows
For the half-year 31 December2017
Notes
31 Dec
2017
$'000
31 Dec
2016
$'000
Cash flows from operatingactivities
Receiptsfromcustomers(inclusiveof GSTand salestaxes)
373,902
364,770
Paymentsto suppliersand employees(inclusiveof GSTand salestaxes)
(309,349)
(302,462)
64,553
62,308
Interestreceived
4
9
Otherrevenue
417
161
Interestpaid
(1,501)
(1,696)
Incometax paid
(5,589)
(28,481)
Net GSTand salestaxespaid
(15,629)
(16,397)
Net cash inflowfrom operatingactivities
10
42,255
15,904
Cash flows from investingactivities
Proceedsfromsale of property,plantand equipment
180
57
Paymentsfor property,plantand equipment4
(12,555)
(14,680)
Paymentsfor intangibleassets
(3,619)
(1,302)
Net cash (outflow)from investingactivities
(15,994)
(15,925)
Cash flows from financingactivities
Proceedsfromborrowings
65,000
89,500
Paymentsfor shareoptionsexercised
-
4,825
Repaymentof borrowings
(69,000)
(82,000)
Dividendspaid to Company'sshareholders8
(9,686)
(9,578)
Net cash (outflow)inflowfrom financingactivities
(13,686)
2,747
Net increasein cash and cash equivalents12,575
2,726
Cashand cashequivalentsat the beginningof the financialyear
5,676
8,853
Effectsof exchangerate changeson cashand cashequivalents
(36)
70
Cash and cash equivalentsat end of half-year
18,215
11,649
Theaboveconsolidatedstatementofcashflowsshouldbereadin conjunctionwiththeaccompanyingnotes.
13

MichaelHill InternationalLimited
Notesto the consolidatedfinancialstatements
31 December2017
1 Basisof preparation
Theseconsolidatedinterimfinancialstatementsfor the half-yearreportingperiodended31 December2017have
beenpreparedin accordancewith AccountingStandardAASB134InterimFinancialReportingand the
CorporationsAct2001(Cth).
Theseconsolidatedinterimfinancialstatementsdo not includeall the notesof the type normallyincludedin an
annualfinancialreport.Accordingly,this reportis to be readin conjunctionwith the annualreportfor the year
ended30 June2017and any publicannouncementsmadeby MichaelHill InternationalLimitedduringthe interim
reportingperiodin accordancewith the continuousdisclosurerequirementsof theCorporationsAct2001(Cth),
ASXListingRulesandNZXListingRules.
The accountingpoliciesadoptedare consistentwith thoseof the previousfinancialyear and corresponding
interimreportingperiod,unlessotherwisestated.
MichaelHill InternationalLimited(the Company)is a for profitcompanylimitedby shares,incorporatedand
domiciledin Australia,whosesharesare publiclytraded.The Group’sprincipalactivityis the sale of jewelleryand
relatedservices.The Companylistedon the AustralianSecuritiesExchange('ASX')on 7 July 2016as its primary
listing,and maintainsa secondarylistingon the NewZealandStockExchange('NZX').
Due to the seasonalnatureof sellingjewelleryand relatedservices,higherrevenuesand operatingprofitsare
usuallyexpectedin the first half of the financialyear.Accordingly,inventorylevelsand workingcapitallevelsare
higherat the end of the first half of the financialyearratherthan at the end of the financialyear.A comparative
half-yearbalancesheethas beenincludedin the consolidatedstatementof financialposition.This informationis
providedto allowfor a betterunderstandingof the results.However,managementhas concludedthat this is not
'highlyseasonal’in accordancewith IAS 34.
Theseconsolidatedinterimfinancialstatementsof MichaelHill InternationalLimitedand its subsidiaries
(collectively,the Group)for the six monthsended31 December2017wereauthorisedfor issuein accordance
with a resolutionof the Directorson 21 February2018.
2 Segmentinformation
(a) Identificationand descriptionof segments
Managementhavedeterminedthe operatingsegmentsbasedon the reportsreviewedby the Boardand
ExecutiveTeamthat are usedto makestrategicdecisions.The Boardand Executiveteamconsider,organise
and managethe businessprimarilyfroma brandperspective.For the MichaelHill brand,they also consider,
organiseand managethe businessfroma geographicperspective,beingthe countryof originwherethe sale and
servicewas performed.The segmentdefinitionwas amendedduringthe 2017financialyear and now includes
tradingactivityfromour stores,onlinepresenceand NorthAmericanin-housecreditfunction.Discretefinancial
informationabouteachof theseoperatingbusinessesis reportedto the Boardand ExecutiveTeammonthly,via
the preparationof the Groupfinancialreports.
The amountsprovidedto the Boardand Executiveteamin respectof total assetsand liabilitiesare measuredin a
mannerconsistentwith the financialstatements.Thesereportsdo not allocatetotal assetsor total liabilities
basedon the operationsof eachsegmentor by geographicallocation.
The Groupoperatesin 4 geographicalsegments:Australia,NewZealand,Canadaand the UnitedStatesof
America.
The corporateand othersegmentincludesrevenueand expensesthat do not relatedirectlyto the relevant
MichaelHill or Emma& Roe retailsegments.Thesepredominatelyrelateto corporatecostsand Australianbased
supportcosts,but also includemanufacturingactivities,warehouseand distribution,interestand companytax.
Inter-segmentpricingis at arm'slengthor marketvalue.
14

MichaelHill InternationalLimited
Notesto the consolidatedfinancialstatements
31 December2017
(continued)
2 Segmentinformation(continued)
(a) Identificationand descriptionof segments(continued)
Types of productsand services
MichaelHill InternationalLimitedand its controlledentitiesoperatepredominatelyin the sale of jewelleryand
relatedservices.As indicatedabove,the Groupis organisedand managedgloballyby brandand geographic
areas.
Accountingpoliciesand inter-segmenttransactions
The accountingpoliciesusedby the Groupin reportingsegmentsinternallyare the sameas thosecontainedin
note1 to the accountsand in the priorperiod.
Segmentinformationby brand
for the periodended31 December2017
Michael
Hill
Emma&
Roe
Corporate
& otherGroup
$'000$'000$'000$'000
Operatingrevenue331,65710,50354
342,214
Grossprofit208,2037,0796,509
221,791
Grossprofit%62.8%67.4%-
64.8%
EBITDA58,735(18,433)(14,171)
26,131
Depreciationand amortisation
(8,362)(1,147)(1,477)
(10,986)
EBIT
50,373(19,580)(15,648)15,145
Interestincome2-2
4
Financecosts
186(1,565)
(1,541)
Net profit beforetax50,393(19,574)(17,211)13,608
Incometax expense
---
(4,911)
Net profit after tax
50,393(19,574)(17,211)8,697
Includedin EBITfigureabove:
Segmentimpairment3,6807,79553
11,528
Segmentonerousleaseprovision9317,445-
8,376
for the periodended31 December2016
Michael
Hill
Emma&
Roe
Corporate
& otherGroup
$'000$'000$'000$'000
Operatingrevenue318,3368,749417
327,502
Grossprofit197,3335,7756,333
209,441
Grossprofit%62.0%66.0%-
64.0%
EBITDA64,615(1,663)(13,284)
49,668
Depreciationand amortisation
(7,725)(556)(1,369)
(9,650)
EBIT
56,890(2,219)(14,653)40,018
Interestincome--9
9
Financecosts
(3)(4)(1,783)
(1,790)
Net profit beforetax56,887(2,223)(16,427)38,237
Incometax expense
---
(12,484)
Net profit after tax
56,887(2,223)(16,427)25,753
Includedin EBITfigureabove:
Segmentimpairment13--
13
15

MichaelHill InternationalLimited
Notesto the consolidatedfinancialstatements
31 December2017
(continued)
2 Segmentinformation(continued)
MichaelHill retail segmentby country
for the periodending31 December2017
Australia
$'000
New
Zealand
$'000
Canada
$'000
United
States
$'000
Michael
Hill
$'000
Segmentoperatingrevenue184,95363,78675,2267,692
331,657
Grossprofit117,45039,35746,7454,651
208,203
Segmentgrossprofit%63.5%61.7%62.1%60.5%
62.8%
SegmentEBITDA36,67315,66813,140(6,746)
58,735
Segmentdepreciationand amortisation
(4,104)(1,237)(2,510)(511)
(8,362)
SegmentEBIT
32,56914,43110,630(7,257)50,373
SegmentEBITas a % of revenue17.6%22.6%14.1%(94.3)%
15.2%
Segmentinterestincome2---
2
Segmentfinancecosts
810--
18
Segmentnet profit beforetax
32,57914,44110,630(7,257)50,393
Includedin EBITfigureabove:
Segmentimpairment2210-3,648
3,680
Segmentonerousleaseprovision---931
931
for the periodended31 December2016
Australia
$'000
New
Zealand
$'000
Canada
$'000
United
States
$'000
Michael
Hill
$'000
Segmentoperatingrevenue181,99463,77063,2199,353
318,336
Grossprofit113,52539,53438,6625,612
197,333
Segmentgrossprofit%62.4%62.0%61.2%60.0%
62.0%
SegmentEBITDA37,44217,03410,957(818)
64,615
Segmentdepreciationand amortisation
(3,779)(1,267)(2,030)(649)
(7,725)
SegmentEBIT
33,66315,7678,927(1,467)56,890
SegmentEBITas a % of revenue18.5%24.7%14.1%(15.7)%
17.9%
Segmentfinancecosts
8(11)--
(3)
Segmentnet profit beforetax
33,67115,7568,927(1,467)56,887
Includedin EBITfigureabove:
Segmentimpairment13---
13
16

MichaelHill InternationalLimited
Notesto the consolidatedfinancialstatements
31 December2017
(continued)
3 Financialassetsand financialliabilities
Set out belowis an overviewof financialassets,otherthancashand short-termdeposits,held by the Groupas at
31 December2017and 30 June2017:
31 Dec
2017
$'000
30 Jun
2017
$'000
Financialassetsat amortisedcost:
Tradeand otherreceivables
35,773
26,590
Total current32,212
24,219
Total non current3,561
2,371
Set out belowis an overviewof financialliabilitiesheld by the Groupas at 31 December2017and 30 June2017:
31 Dec
2017
$'000
30 Jun
2017
$'000
Financialliabilitiesat amortisedcost:
Tradeand otherpayables
74,163
47,918
Non-currentinterestbearingloansand borrowings
1
1
Securedbankloan
41,179
45,034
Derivativesdesignatedas hedginginstruments:11
Foreignexchangeforwardcontracts
198
414
Interestrate swaps
566
727
Total current74,927
49,059
Total non current41,179
45,034
4 Property, plant and equipment
Acquisitionsand disposals
Duringthe six monthsended31 December2017, the Groupacquiredassetswith a total cost of $12,555,000(31
December2016- $14,680,000).Assetswith a net bookvalueof $194,000weredisposedof duringthe six
monthsended31 December2017(31 December2016- $357,000),resultingin a net loss on disposalof $14,000
(31 December2016- $300,000loss).
Impairment
An impairmentchargeof $11,528,000was recognisedduringthe six monthsended31 December2017reporting
period(31 December2016:$13,000).Managementand the Boardhavebeenassessingthe US and Emma&
Roe marketsfor a periodof time and tradingresultsduringthe half-yearindicatedthe assetsdirectlyemployed
by thesesegmentsat 31 December2017wereimpaired.Followingthe half-yearend, a decisionwas madeto
repositionthe Emma& Roe brandand materiallyreducethe numberof Emma& Roe stores.Therefore,
$7,795,000in Emma& Roe relatedassetswereimpaired.In addition,the Groupannouncedthat it is exitingits
US operationsand all assetscurrentlyon handthat are not expectedto be redeployedwithinothersegments
wereimpaired,resultingin a $3,648,000impairmentof assets.
17

MichaelHill InternationalLimited
Notesto the consolidatedfinancialstatements
31 December2017
(continued)
5 Intangibleassets
Acquisitionsand disposals
Duringthe six monthsended31 December2017, the Groupacquiredassetswith a total cost of $3,619,000(31
December2016- $1,302,000).No assetsweredisposedof duringthe six monthsended31 December2017(31
December2016- no disposals),resultingin no net loss on disposal(31 December2016- no loss).
The significantincreasein intangibleassetsis part of the 2017-18prioritiesto continueinvestingin the Group's
informationsystemsand migratethe organisationontoa highlyintegratedERPenvironment.This includesthe
upgradeof the existingpointof sale systemduringthe 2017-18financialyear.
6 Provisions
31 Dec 2017
30 Jun 2017
Current
$'000
Non-
current
$'000
Total
$'000
Current
$'000
Non-
current
$'000
Total
$'000
Employeebenefits
2,0402,0794,119
1,8941,9313,825
Returnsprovision
4,851-4,851
2,518-2,518
Makegoodprovision
6913,5924,283
2234,2464,469
Onerousleases
8,448-8,448
355893
16,0305,67121,701
4,6706,23510,905
(a) Onerousleases
A provisionhas beenrecognisedat the reportingdatefor 21 of 30 Emma& Roe and 2 of 9 US leasesthat were
identifiedas onerous.An onerouscontractis consideredto existwherethe unavoidablecost of meetingthe
obligationsunderthe contractexceedthe economicbenefitsexpectedto be receivedfromthe contract.The
futureeconomicbenefitsavailableunderthe existingleasesconsideredthe currentoperatingenvironmentfor
thesetwo segmentsand the strategicreviewsunderwayfor Emma& Roe and the US marketsas at the end of
the half-yearend.A decisionhas beenmadeby Managementand the Boardsincehalf-yearend to exit its US
operationsand materiallyreduceEmma& Roe storenumbers.
7 Contributedequity
(a) Sharecapital
31 Dec
2017
Shares
30 Jun
2017
Shares
31 Dec
2017
Half-year
$'000
30 Jun
2017
Full-year
$'000
Sharecapital
Ordinaryshares- fully paid
387,438,513
387,438,513
10,015
10,015
18

MichaelHill InternationalLimited
Notesto the consolidatedfinancialstatements
31 December2017
(continued)
7 Contributedequity(continued)
(b) Movementsin ordinarysharecapital
31 Dec
2017
Shares
30 Jun
2017
Shares
31 Dec
2017
Half-year
$'000
30 Jun
2017
Full year
$'000
Ordinaryshares
Openingbalance
387,438,513
383,138,513
10,015
3,767
Exerciseof options- proceedsreceived
-
4,300,000
-
4,825
Transferoptionreserveto contributedequity
-
-
-
1,423
Closingbalance
387,438,513387,438,51310,01510,015
8 Dividends
(a) Ordinaryshares
31 Dec
2017
$'000
31 Dec
2016
$'000
Finaldividendfor the yearended30 June2017of 2.5 cents(2016:AU 2.5 cents)
per fully paid sharepaid on 29 September2017(2016:6 October2016)
9,686
9,578
(b) Dividendsnot recognisedat the end of the reportingperiod
31 Dec
2017
$'000
31 Dec
2016
$'000
In additionto the abovedividends,sincehalf-yearend the Directors have
recommendedthe paymentof an interimdividendof 2.5c centsper fully paid
ordinaryshare(2016- AU 2.5 cents), unfrankedand fully imputed*.The
aggregateamountof the proposeddividendexpectedto be paid on 29 March
2018out of retainedearningsat 31 December2017, but not recognisedas a
liabilityat half-yearend,is
9,686
9,686
* This will be declaredas conduitforeignincome,thereforeno Australianwithholdingtax will be deductedfrom
the dividendpaymentto MichaelHill InternationalLimited'sforeignshareholders.
(c) Frankeddividends
As the dividendrecommendedby the Directorssincehalf-yearend, but not recognisedas a liabilityat half-year
end,will be unfranked,therewill be no reductionin the frankingaccount.The impacton the imputationcredit
accountof the dividendrecommendedby the Directorssincehalf-yearend,but not recognisedas a liabilityat
half-yearend, is estimatedto be a reductionin the imputationcreditaccountof NZ$4,138,000(NZ$3,905,000).
The amountof imputationcreditsis dependenton the NZDexchangerate at the time of paymentof the dividend.
19

MichaelHill InternationalLimited
Notesto the consolidatedfinancialstatements
31 December2017
(continued)
9 Eventsoccurringafter the reportingperiod
On 24 January2018,the Companyannouncedthe strategicrepositioningof the Emma& Roe brandand the exit
of its US operations.As at the dateof signing,the Companycontinuesto assessthe viabilityof its 30 Emma&
Roe storesto determinethe final storeportfolioto trial the repositionedbrand.US storeswill continueto operate
as the Companynegotiatesand completesthe exit of its US operations.
No formalplan for the Emma& Roe brandrepositioningor the US exit has finalisedas at signingdate,and
thereforeno restructuringprovisionwas recognisedas at 31 December2017.All assetsin bothsegmentswere
impairedat 31 December2017and a numberof onerousleaseswereprovidedfor as per notes4 and 6.
Therehavebeenno othersignificanteventsafterthe end of the reportingperiod.
10 Reconciliationof profit after incometax to net cash inflowfrom operatingactivities
31 Dec
2017
$'000
31 Dec
2016
$'000
Profitfor the half-year
8,697
25,753
Depreciation
10,986
9,650
Impairment
11,528
-
Non-cashemployeebenefitsexpense- share-basedpayments
272
104
Othernon-cashexpenses
34
150
Net loss on sale of non-currentassets
14
300
Net exchangedifferences
442
(621)
Changein operatingassetsand liabilities:
(Increase)/ decreasein tradeand otherreceivables
(9,112)
(4,300)
(Increase)/ decreasein inventories
(19,234)
(23,603)
(Increase)/ decreasein deferredtax assets
(4,178)
4,725
(Increase)/ decreasein othercurrentassets
(563)
772
(Increase)/ decreasein othernon currentassets
222
(101)
(Decrease)/ increasein tradeand otherpayables
26,248
22,313
(Decrease)/ increasein currenttax liabilities
575
(25,142)
(Decrease)/ increasein provisions
10,359
256
(Decrease)/ increasein deferredrevenue
5,965
5,648
Net cashinflowfromoperatingactivities
42,255
15,904
20

MichaelHill InternationalLimited
Directors'declaration
31 December2017
Directors' declaration
For the purposesof section303(4)of theCorporationsAct2001(Cth)and for all otherpurposes,the Directors
declarethat in theiropinion:
(a)the interimfinancialstatementsand notesset out on pages9 to 20 are in accordancewith the
CorporationsAct2001(Cth), including:
(i)complyingwith AccountingStandards,theCorporationsRegulations2001(Cth)and other
mandatoryprofessionalreportingrequirementsand regulations,and
(ii)givinga true and fair viewof the consolidatedentity'sfinancialpositionas at 31 December2017
and of its performancefor the half-yearon that date,and
(b)thereare reasonablegroundsto believethat the Companywill be able to pay its debtsas and whenthey
becomedue and payable.
This declarationis madeon 21 February2018in accordancewith a resolutionof Directors.
E J Hill
Chair
Brisbane
21 February2018
21

A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Independent Auditor's Review Report to the Members of Michael Hill
International Limited
Report on the half-year financial report
Conclusion
We have reviewed the accompanying half-yearfinancial report of Michael Hill International Limited (the
Company) and its subsidiaries (collectively the Group), which comprises the consolidated statement of
financial position as at 31 December 2017, the consolidated statement of comprehensive income,
consolidated statement of changes in equityand consolidated statement of cash flows for the half-year
ended on that date, notes comprising a statement of significant accounting policies and other
explanatory information, and the directors’ declaration.
Based on our review, which is not an audit, nothing has come to our attention that causes us to believe
that the half-year financial report of the Group is not in accordance with theCorporations Act 2001,
including:
a)giving a true and fair view of the consolidated financial position of the Group as at 31 December
2017 and of its consolidated financial performance for the half-year ended on that date; and
b)complying with Accounting Standard AASB 134Interim Financial Reporting and theCorporations
Regulations 2001.
Directors’ Responsibility for the Half-Year Financial Report
The directors of the company are responsible for the preparation of the half-yearfinancial report that
gives a true and fair view in accordance with Australian Accounting Standards and theCorporations
Act 2001and for such internal controls as the directors determine are necessary to enable the
preparation of the half-year financial report that is free from material misstatement, whether due to
fraud or error.
Auditor’s responsibility
Our responsibility is to express a conclusion on the half-yearfinancial report based on our review. We
conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state
whether, on the basis of the procedures described, anything has come to our attention that causes us
to believe that the half-year financial report is not in accordance with theCorporations Act 2001
including: giving a true and fair view of the Group’s consolidated financial position as at 31 December
2017 and its consolidated financial performance for the half-yearended on that date; and complying
with Accounting Standard AASB 134Interim Financial Reporting and theCorporations Regulations
2001. As the auditor of the Group, ASRE 2410 requires that we comply with the ethical requirements
relevant to the audit of the annual financial report.
A review of a half-yearfinancial report consists of making enquiries, primarily of persons responsible
for financial and accounting matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with Australian Auditing Standards
and consequently does not enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Independence
In conducting our review, we have complied with the independence requirements of theCorporations
Act 2001.
Ernst & Young
Alison de Groot
Partner
Brisbane
21 February 2018

MichaelHill InternationalLimited
Corporatedirectory
Directors
E J Hill B.Comm.,M.B.A.
Chair
Sir R M Hill K.N.Z.M.
G W SmithB.Comm.,F.C.A.,F.A.I.C.D.
R I Fyfe
J S Allis
CompanySecretary
K A Hammond
Principalregisteredofficein Australia
Metroplexon Gateway
7 SmallwoodPlace
MurarrieQLD4172
Australia
GPOBox 2922
BrisbaneQLD4001
Australia
Telephone+61 7 31143500
Fax +61 7 33990222
Shareregister
ComputershareInvestorServicesPty Ltd
Level1
200 MaryStreet
BrisbaneQLD4000
Investorenquiries:
1300552 270 (withinAustralia)
+61 3 94154000(outsideAustralia)
Solicitors
HopgoodGanimLawyers
Level8
WaterfrontPlace
BrisbaneQLD4000
Auditor
Ernst& Young
Level51
One One One
111 EagleStreet
BrisbaneQLD4000
Bankers
Australiaand NewZealandBankingGroupLimited
ANZBankingGroup(NewZealand)Limited
Bankof Montreal
Bankof AmericaN.A.
Website
www.michaelhill.com.au
www.emmaandroe.com.au
investor.michaelhill.com
Email
inquiry@michaelhil.com.au
24

Analyst briefing for 1H2018 results Market Update: Emma & Roe

Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.