Annual Report to shareholders

ANNUAL REPORT 2018

b
DISCLAIMER: Certain statements in this
announcement constitute forward-looking statements.
Forward-looking statements are statements (other
than statements of historical fact) relating to future
events and the anticipated or planned financial and
operational performance of Michael Hill International
Limited and its related bodies corporate (the Group).
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 Group’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 and strategic
reviews, expansion into new markets, future product
launches, points of sale and production facilities.
Although the Group 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 Group’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 in market trends
and end-consumer preferences; fluctuations in the
prices of raw materials, currency exchange rates,
and interest rates; the Group’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 Group operates; the protection and strengthening
of the Group’s intellectual property rights, including
patents and trademarks; the future adequacy of the
Group’s current warehousing, logistics and information
technology operations; changes in laws and
regulations
or any interpretation thereof, applicable to the Group’s
business; increases to the Group’s effective tax rate
or other harm to the Group’s business as a result of
governmental review of the Group’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 Group’s actual
financial condition, cash flows or results of operations
could
differ materially from that described herein as
anticipated, believed, estimated or expected.
The Group does not intend, and do not
assume any obligation, to update any forward-looking
statements contained herein, except as may be required
by law. All subsequent written and oral forward-looking
statements attributable to us or to persons acting on
the Group’s behalf are expressly qualified in their
entirety by the cautionary statements referred to above
and contained elsewhere in this announcement.
TERMINOLOGY: In this report, unless otherwise
specified or appropriate in the context, the term
"Company" refers to Michael Hill International
Limited, and the terms "Group" or "Michael Hill" refer
to the Company and its subsidiaries (as appropriate).

1
WHAT’S INSIDE
3 COMPANY PROFILE &
CORPORATE GOALS
An introduction to the Company
and our goals
5 CHAIR'S REVIEW
Emma Hill reviews the Group’s
overall performance for the year
7 KEY FACTS
Key results and data for the year
12 TREND STATEMENT
A table of our historical performance
over the past five years
14 OUR COMMUNITY SPIRIT
The Group’s involvement in the
communities we do business in
16 CELEBRATING OUR SUCCESS
A look at how we pay tribute to
our managers and high achievers
19 SUSTAINABILITY
20
OUR LEADERSHIP PRINCIPLES
20 OUR KEY STRATEGIC GOALS
21
EXECUTIVE AND MANAGEMENT
Our key people across Australia,
New Zealand and Canada
23 DIRECTORS' REPORT
A review of the year’s operations
and the plans and priorities for
the future
34 INFORMATION ON DIRECTORS
37 REMUNERATION REPORT
Remuneration of Directors
and key executives
48 AUDITOR’S DECLARATION
49 FINANCIAL STATEMENTS
94 AUDITOR’S REPORT
98 ADDITIONAL INFORMATION
100 INDEX
100 CORPORATE DIRECTORY
The Directors are pleased to present the annual report
of Michael Hill International Limited and its subsidiaries
for the year ended 30 June 2018

2
Our vision: To resurrect jewellery
as a way of commemorating and
honouring all love.
2

MICHAEL HILL INTERNATIONAL LIMITED 2018 CHAIR REVIEW 3
COMPANY PROFILE
The first Michael Hill store opened in 1979 when Sir Michael
Hill and his wife, Lady Christine Hill launched their unique
retail jewellery formula in the New Zealand town of Whangarei,
some 160 kilometres north of Auckland.
With dramatically different store designs, a product
range devoted exclusively to accessible jewellery and the
clever use of high impact advertising, Michael Hill rapidly
gained popularity and rose to national prominence.
Through the successful listing on the New Zealand
Stock Exchange in 1987, the Group expanded into Australia.
The next 15 years saw sustained growth and in 2002,
Michael Hill expanded into North America, opening its first
stores in Vancouver, Canada. The Group's Canadian store
presence continues to grow as does the Group's online
presence in all markets in which it operates.
In June 2016 shareholders voted overwhelmingly in
favour of moving the primary stock exchange listing of
Michael Hill from the New Zealand Stock Exchange to the
Australian Securities Exchange. On 7 July 2016 the Company
was admitted to the official list of the Australian Securities
Exchange as its primary listing with a secondary listing on the
New Zealand Stock Exchange (ASX/NZX: MHJ).
As at 30 June 2018, the Group has 177 stores in
Australia, 52 in New Zealand and 83 stores in Canada.
Around the world, the Group employs approximately 2,600
permanent employees across retail sales, manufacturing
and administration roles.
Michael Hill's vision is to resurrect jewellery as a way
of commemorating and honouring all love.
Information on our corporate governance policies and
practices, including our Corporate Governance Statement,
is available in the corporate governance section of our
website at investor.michaelhill.com
3
SIR MICHAEL HILL DESIGNER BRIDAL COLLECTION
Michael Hill is a specialist retail
jewellery chain. As at 30 June 2018, it
operates 312 stores in Australia, New
Zealand and Canada.

4
CHAIR'S REVIEW
...this year we made significant progress towards delivering
our strategy of creating a true point of difference for the
Michael Hill brand, products and customer experience...
4

5
people and technology, and in expanding and
refurbishing our store network.
We approach 2019 with a clearly defined
set of priorities to execute over the coming
years, and a strong balance sheet positioning us
to deliver our ambition of being a global leader in
the fine jewellery category.
BUSINESS PERFORMANCE
Exiting the US and Emma & Roe businesses allows us to focus
on increasing profitability of the Michael Hill brand in our three
established markets.
Our Canadian business grew strongly in terms of revenue and
earnings, and we continue to achieve scale and increase market
share. The Australian and New Zealand businesses largely held
their positions in challenging markets and we anticipate that our
differentiated omni-channel offering will help to deliver growth in
these regions and improve overall quality of earnings.
To support this, we decided to divide management responsibili
-
ties of the Australian segment, with two Retail General Managers
overseeing separate regional teams. This is designed to allow
for greater focus on team capability and execution and help to
strengthen our position in a competitive Australian market.
LEADERSHIP
The progression made on our strategy is recognition of the
outstanding contribution made to Michael Hill by CEO Phil
Taylor, who has advised the Board of his decision to resign due
to health reasons. The Board would like to acknowledge the
tremendous service Phil has given to Michael Hill for more than
three decades, and as CEO since August 2016.
In September 2018, the Board confirmed the appointment
of Daniel Bracken as its new CEO. Daniel brings more than 25
years of retail experience having worked with some of the world’s
most iconic brands. He has a deep understanding of the retail
environment with valued experience in e-commerce, in designing
integrated digital and in-store experiences, and in leading
merchandising, product design and customer engagement
strategies. We welcome Daniel to Michael Hill and look forward
to him continuing to build on our strategy in the years ahead.
On behalf of the Board, we thank you for your ongoing
support and investment in Michael Hill.
Emma Hill
Chair
26 September 2018
Dear Shareholders,
I am pleased to present the Michael Hill
International Limited annual report to
shareholders for FY18.
The year was one of recalibration and
repositioning for the Group as we made significant
progress towards delivering our strategy of creating a true point
of difference for the Michael Hill brand, products and customer
experience. We also decided to exit the loss-making US and
Emma & Roe businesses, which puts us in a stronger position to
deliver sustainable and long-term growth.
The exit of these businesses had a material impact on the
financial result, with statutory net profit after tax of $4.6m after
$25.5m of one-off closure costs. Normalised earnings before
interest and tax was $40.1m, while operating revenues from
continuing operations increased by 4.4% to $575.5m.
STRATEGIC REVIEW
The Board completed a wide-ranging review which identified
an opportunity to increase market share and profitability of
the Michael Hill brand by accelerating our evolution into a
design led, customer-centric jewellery brand. Our ambition is
to be a global leader in the premium jewellery category with a
deep engagement and commitment to our customers and the
communities we serve.
To give our customers a more engaging experience, we
are placing increased emphasis on integrating our digital and
in-store experience, and personalising our communications
across all channels. Jewellery is an omni channel business; with
customers investing significant time understanding our brand
and offer through digital channels before visiting our stores.
To be a successful jewellery retailer in today’s rapidly changing
environment our customers must be able to shift seamlessly
between channels.
Underpinning customer experience will be the continued
evolution of our brand and product. Our brand will be refreshed in
the coming year with a more inclusive customer proposition. We
will accelerate growth in our proprietary collections by enhancing
our in-house design capabilities.
We are confident that these strategies, combined with
our best in class sales force, will drive sustainable long
term growth.
Delivering this strategy requires focus and
investment. We have already strengthened the
leadership team in the areas most relevant to our
strategy and we will complement this in the year
ahead with further infrastructure investment in both
PENDANT FROM WILLOW BY CHRISTINE HILL COLLECTION

6
KEY FACTS
6

MICHAEL HILL INTERNATIONAL LIMITED 2018 KEY FACTS 7
YEAR ENDED 30 JUNE / AU$000 UNLESS STATED 2018 2017 % CHANGE
TRADING RESULTS
From continuing operations
Group revenue 575,549 551,099 4.4%
Gross profit 366,893 351,007 4.5%
Earnings before interest and tax* 50,147 62,332 (19.5%)
Normalised earnings before interest and tax* 40,106 48,117 (16.6%)
Net profit before tax 47,467 59,183 (19.8%)
Net profit after tax 34,818 44,132 (21.1%)
Group trading results
Loss from discontinued operations (30,208) (11,485) (163.0%)
Profit for the year 4,610 32,647 (85.9%)
Net cash inflow from operating activities 58,893 39,752 38.1%
FINANCIAL POSITION AT YEAR END
Contributed equity
387,438,513 ordinary shares 10,266 10,015 2.5%
Total equity 189,221 202,183 (6.4%)
Total assets 375,348 389,122 (3.5%)
Net debt 27,993 39,358 (28.9%)
Capital expenditure 24,555 33,145 (25.9%)
KEY RATIOS
Return on average shareholders’ funds 17.8% 22.7%
Gross profit 63.7% 63.7%
Interest expense cover (times) 18.6 19.7
Equity ratio (total equity/total assets) 50.4% 52.0%
Gearing Ratio (net debt/total equity) 14.8% 19.5%
Current ratio
(current assets/current liabilities) 2.6:1 3.0:1
EARNINGS PER SHARE
Basic earnings per share 8.99¢ 11.43¢
Diluted earnings per share 8.98¢ 11.42¢
DISTRIBUTION TO SHAREHOLDERS
Dividends - including final dividend
Per ordinary share
au5.0¢ au5.0¢

Times covered by net profit after tax 1.80 2.29
* EBIT and Normalised EBIT are Non-IFRS Information and are
unaudited. Please refer to Non-IFRS Information in the Directors’
Report on page 33 of this annual report for an explanation of
Non-IFRS information and a reconciliation of EBIT from continuing
operations and Normalised EBIT.
SHARE PRICE 2018 2017
30 June au$0.97 au$1.11
SAME STORE SALES
Michael Hill same store sales
movement (in local currency)
Australia -0.9% 1.2%
New Zealand 2.3% -0.8%
Canada 3.8% 8.8%
Group same store sales
movement 0.4% 1.6%
NUMBER OF STORES
Australia 171 166
New Zealand 52 52
Canada 83 76
United States - 9
Michael Hill stores 306 303
Australia 6 28
New Zealand - 1
Emma & Roe stores 6 29
Total stores 312 332
SIR MICHAEL HILL
DESIGNER BRIDAL
COLLECTION

151617
18
14
474.4
Group revenue up 4.4%
AU$ MILLIONS /
YEAR ENDED 30 JUNE
484.7
522.2
5 5 1. 1
575.5
15
16171814
57.8
63.2
7 1. 2
79.8
68.8
Earnings before interest, taxation,
depreciation and amortisation
(EBITDA) down 13.8%
AU$ MILLIONS /
YEAR ENDED 30 JUNE
Total Michael Hill and Emma & Roe jewellery stores 312
1987 - 2018, YEAR ENDED 30 JUNE
■ MH STORES ■ E&R STORES
8 MICHAEL HILL INTERNATIONAL LIMITED 2018 KEY FACTS

MICHAEL HILL INTERNATIONAL LIMITED 2018 KEY FACTS 9
Revenue from continuing operations of $575.5m up
4.4 % on same period last year
Same store sales were 0.4% up on same period last year
Online sales grew 57.4% to $10.3m
Branded collection sales increased to 18.0% of total
product sales
EBIT from continuing operations of $50.1m
Normalised EBIT of $40.1m
Statutory net profit after tax for the Group of $4.6m
Continuing operations net profit after tax of $34.8m
Final dividend of au2.5¢ per share making the total
dividend au5.0¢ for the year
Equity ratio of 50.4% at 30 June 2018
Net operating cash inflow was $54.9m, up 38.1% on
prior year
17 Michael Hill stores opened and five closed
during the period
Total of 306 Michael Hill stores open at
30 June 2018
Total of six Emma & Roe stores open at
30 June 2018
Total of 312 stores in the Group open at
30 June 2018
(all values stated in $AU unless stated otherwise)
PERFORMANCE HIGHLIGHTS
FOR THE 12 MONTHS TO 30 JUNE 2018
SIR MICHAEL HILL
DESIGNER BRIDAL COLLECTION

10 MICHAEL HILL INTERNATIONAL LIMITED 2018 KEY FACTS
1516171814
28.2
33.2
26.3
44.1
34.8
Net profit after tax
from continuing operations
down 21%
AU$ MILLIONS /
YEAR ENDED 30 JUNE
1516
17
18
14
nz

1.24
Share price performance
AU$ / YEAR ENDED 30 JUNE
nz

1. 0 6
nz

1. 14
1. 11
0.97
1516171814
nz

6.5
Ordinary dividend
AU CENTS PER SHARE /
YEAR ENDED 30 JUNE
nz

5.0
nz

4.75
5.05.0
SIR MICHAEL HILL DESIGNER BRIDAL COLLECTION

Source of funding
30 JUNE 2018
EQUITY 50%
CURRENT
LIABILITIES 15%
NON-CURRENT
LIABILITIES 35%
MICHAEL HILL INTERNATIONAL LIMITED 2018 KEY FACTS 11
1516171814
15.9
18.0
14.1
22.7
17.8
Return on average shareholders’
funds 17.8%
% / YEAR ENDED 30 JUNE
1516171814
8.9
Return on average
assets 9.1%
% / YEAR ENDED 30 JUNE
9.6
7.2
11. 4
9.1
1516171814
26.4
Gearing ratio 14.8%
% / YEAR ENDED 30 JUNE
20.4
17.2
19.5
14.8

12
FINANCIAL PERFORMANCE 2018 2017 2016 2015 2014
FROM CONTINUING OPERATIONS
$000 $000 $000 $000 $000
Group revenue 575,549 551,099 522,214 484,667 474,353
Earnings before interest, tax, depreciation
and amortisation (EBITDA)^ 68,841 79,759 71,220 63,203 57,752
Depreciation and amortisation 18,694 17,427 16,796 14,645 12,540
Earnings before interest and tax (EBIT)^ 50,147 62,332 54,424 48,558 45,212
Net interest paid 2,680 3,149 5,508 4,665 5,370
Net profit before tax (NPBT) 47,467 59,183 48,916 43,893 39,842
Income tax* 12,649 15,051 22,586 10,674 11,671
Net profit after tax (NPAT)* 34,818 44,132 26,330 33,219 28,171
Net operating cash flow 54,893 39,752 47,794 54,566 14,689
Ordinary dividends paid 19,371 19,264 17,490 23,176 22,336
FINANCIAL POSITION 2018 2017 2016 2015 2014
$000 $000 $000 $000 $000
Cash 7,220 5,676 8,853 6,797 8,109
Inventories 192,074 203,853 199,961 182,232 179,280
Other current assets 29,314 29,052 31,298 39,378 25,204
Total current assets 228,608 238,581 240,112 228,407 212,593
Other non-current assets 72,219 83,864 74,450 67,734 58,488
Deferred tax assets 61,895 57,893 64,074 48,381 62,324
Total tangible assets 362,722 380,338 378,636 344,522 333,405
Intangible assets 12,626 8,784 5,561 6,491 6,413
Total assets 375,348 389,122 384,197 351,013 339,818
Total current liabilities* 88,287 79,653 100,986 69,879 71,005
Non-current borrowings 35,213 45,034 40,887 45,116 56,000
Other long term liabilities 62,627 62,252 55,923 48,397 31,528
Total liabilities* 186,127 186,939 197,796 163,392 158,533
Net assets* 189,221 202,183 186,401 187,621 181,285
Reserves and retained profits* 178,956 192,168 182,634 183,861 177,634
Paid up capital 10,266 10,015 3,767 3,767 3,702
Treasury stock - - - (7) (51)
Total shareholder equity 189,221 202,183 186,401 187,621 181,285
Per ordinary share
Basic earnings per share* 8.99¢ 11.43¢ 6.87¢ 8.67¢ 7.36¢
Diluted earnings per share* 8.98¢ 11.42¢ 6.84¢ 8.64¢ 7.24¢
Dividends declared per share - Interim
au2.5¢ au2.5¢ nz2.5¢ nz2.5¢ nz2.5¢
- Final
au2.5¢ au2.5¢ au2.5¢ nz2.5¢ nz4.0¢
Net tangible asset backing* $0.46 $0.50 $0.47 $0.47 $0.46
* Please note that several key measures in the 2015-16 financial year were materially affected by the separate booking of the IR tax
settlement and the income tax consolidation cost base adjustments as a consequence of the ASX listing.
^
EBITDA and EBIT are Non-IFRS Information and are unaudited. Please refer to Non-IFRS Information in the Directors’ Report on page 33
of this annual report for an explanation of Non-IFRS information.
TREND STATEMENT

13
ANALYTICAL INFORMATION 2018 2017 2016 2015 2014
$000 $000 $000 $000 $000
EBITDA to sales 12.0% 14.5% 13.6% 13.0% 12.2%
EBIT to sales 8.7% 11.3% 10.4% 10.0% 9.5%
Profit after tax to sales 6.0% 8.0% 5.0% 6.9% 5.9%
EBIT to total assets 13.4% 16.0% 14.2% 13.8% 13.3%
Return on average shareholders funds* 17.8% 22.7% 14.1% 18.0% 15.9%
Return on average total assets* 9.1% 11.4% 7.2% 9.6% 8.9%
Current ratio* 2.6 3.0 2.4 3.3 3.0
EBIT interest expense cover 18.6 19.7 8.9 10.3 8.3
Effective tax rate* 26.6% 25.4% 46.2% 24.3% 29.3%
Gearing
Net borrowings to equity 14.8% 19.5% 17.2% 20.4% 26.4%
Equity ratio 50.4% 52.0% 48.5% 53.5% 53.3%
Other
Shares issued at year end excl Treasury
387,438,513 387,438,513 383,138,513 383,138,513 383,041,606
Treasury stock at year end - - - 14,677 111,584
Exchange rate for translating
New Zealand results 1.09 1.06 1.09 1.07 1.10
Canadian results 0.98 1.00 0.97 0.97 0.98
United States results 0.78 0.75 0.73 0.83 0.92
Number of Michael Hill stores
Australia 171 166 168 167 164
New Zealand 52 52 52 52 52
Canada 83 76 67 60 54
USA - 9 10 9 8
Total Michael Hill stores 306 303 297 288 278
Number of Emma & Roe stores
Australia 6 28 15 7 6
New Zealand - 1 1 1 -
Number of Emma & Roe stores 6 29 16 8 6
Total stores 312 332 313 296 284
* Please note that several key measures in the 2015-16 financial year were materially affected by the separate booking of the IR tax
settlement and the income tax consolidation cost base adjustments as a consequence of the ASX listing.
BRACELET FROM KNOTS
BY CHRISTINE HILL COLLECTION

14
MICHAEL HILL
INTERNATIONAL
VIOLIN
COMPETITION
COMMUNITY SPIRIT
Michael Hill International takes great
pride in giving back to the communities
surrounding our stores
The Michael Hill International Violin
Competition is the launch-pad for violin
virtuosos, the foundation stone of brilliant
musical careers; which the Group supports
by providing an annual donation.
With a prize package valued at over
NZ$100,000, the Michael Hill International
Violin Competition shapes the artistry of
16 of the world’s finest young violinists.
It delivers violinists and audiences alike a
sublime, unique experience.
From concert stages in sub-tropical
Auckland and alpine Queenstown, New
Zealand, the globe’s best young violinists
deliver platinum-plated performances over
eight magnificent days.
THE WORLD’S BEST EMERGING
VIOLIN TALENT IN THE WORLD’S
MOST UNIQUE LOCATION
Established two decades ago by
entrepreneur and passionate violinist, New
Zealander Sir Michael Hill, the Michael Hill

International Violin competition is seated
at the top table of global, classical music
competitions. It is New Zealand’s most
prestigious classical music competition
and arguably one of its key iconic events
of the calendar.
Closely nurtured by a board of ardent
arts lovers, the biennial competition, the
“Michael Hill”, carefully selects international
and leading local luminaries to guide
brilliant young talent through competition,
intensive master classes and career
development.
You can keep up-to-date with all
upcoming competition news at:
michaelhillviolincompetition.co.nz

15
Supporting prostate cancer
research in Canada
Plaid for Dad was launched in 2015
to help raise awareness and vital
research funds for prostate cancer.
It has quickly become a fun and
easy way for Canadians to celebrate
dad and help the one in seven men
who will be diagnosed with prostate

cancer in their lifetime.
This year, North American
president Brett Halliday and his
entire team showed their support by
wearing plaid in store in the run up
to 16 June 2018, the Friday before
Father’s Day, officially designated
as the day to wear Plaid for Dad.
Brett and his team actively
supported Plaid for Dad initiatives
by raising over ca$10,000 and
they were recognised
with an ‘Outstanding
Achievement in the
Retail Services
Sector’.
PLAID FOR DAD
Whangarei's Hundertwasser Art Centre with Wairau M
-
aori Art
Gallery is under construction and due to open in 2020. Conceived
by the renowned Austrian/Kiwi artist, the unique building - a work
of art itself - will feature the only permanent gallery of original
Hundertwasser works outside Vienna and Aotearoa's first exhibition
space dedicated to contemporary M
-
aori fine art. Interactive and
immersive, the centre includes a substantial education facility
and will be crowned by the southern hemisphere's largest living
afforested roof.
The Hundertwasser Art Centre will be a world-class visitor
destination and a jewel in the crown for Northland. Recognised as
a catalyst for growth, investment and creativity in Northland, the
project is the culmination of a 25-year dream for a more thriving and
vibrant Northland.
The Group has provided a generous funding contribution,
boosting the Hundertwasser Art Centre's capital fundraising which
has been led by an entirely volunteer community-based team.
HUNDERTWASSER
ART CENTRE
SIR MICHAEL HILL
DESIGNER BRIDAL COLLECTION

16
CELEBRATING OUR SUCCESS
It’s our people who make our Company!
International Managers’ Conference, Las Vegas, United States of America: Each year, our Retail and Support
Centre Management Teams come together to celebrate their phenomenal achievements. We recognise their contributions and
share with them the Group’s strategic direction for the coming year.
This year over 400 delegates from four nations journeyed to one of the most exciting cities in the world - Las Vegas, in the
heart of the Nevada desert. Our culture, values and leadership principles were re-energised and focused, to drive our teams to
continue to produce outstanding results and most importantly – incredible customer experiences.

17
Gold Club: Every year we celebrate the personal achievements of our highest performing Sales Professionals. This year
the 245 incredible individuals who achieved gold club status, accounting for over au$158m in sales, were invited to celebrate
their success in the amazing cities of Miami, Florida and the Gold Coast, Australia. Our top performers were joined by our General
Managers and Chair of the Board, Emma Hill, to personally congratulate and thank them for their contributions to the success of
Michael Hill and Emma & Roe for 2017.

18
Our purpose: We celebrate
love in all its forms.
18

19
The story behind your jewellery begins long before you see
it sparkle. The Group is committed to operating its business
sustainably and responsibly, to protect the long-term value
of the Group, and to enhance its relationship with its stakeholders.
Responsible Jewellery Council
The Company is a member of the Responsible Jewellery Council (RJC).
The RJC is an international, not-for-profit standards and certification
organisation. Its 1,100+ members span the jewellery supply chain from mine
to retail and commit to being independently audited against the RJC Code
of Practices – an international standard on responsible business practices
for the diamond, gold and platinum jewellery supply chain addressing human
rights, labour rights, health and safety, environmental impact, conflict free
diamonds, product disclosure and many more important topics for the industry.
The Company is working towards achieving formal RJC certification,
which is a requirement for the Company to maintain its RJC membership.
Sustainability reporting
Although certain aspects of our business strategy and performance are
reported through our annual report, the Group is committed to aligning
its reporting with issues of key importance to the Group and to its
stakeholders, in order to meet the growing community expectations of
transparency, disclosure and corporate social responsibility. The Company
continues to work towards building a foundation upon which a formal
sustainability report, that is compliant with the Global Reporting Initiative
Standards or other independent standard, can be prepared.
SUSTAINABILITY
JEWELLERY FROM WILLOW
BY CHRISTINE HILL COLLECTION
It's as important to us as it is to you.

20 MICHAEL HILL INTERNATIONAL LIMITED SENIOR EXECUTIVES
CUSTOMER FOCUS
We brighten, impress and
delight our customers
We consider our customers in
everything we do
MINDSET FOR GROWTH
We show perseverance and
determination to grow
We are competitive and take
the lead in the marketplace
We innovate and challenge the
status quo
We display a positive attitude
and confidence towards our
future
We are visible, accessible and
clearly communicate the vision
BIAS FOR ACTION
We deliberately choose our
priorities to achieve our vision
We engage in thoughtful
decision making and intelligent
risk-taking
We act with speed and a
sense of urgency in executing
initiatives and strategy
BUILDING TALENT
AND TEAMS
We personally invest in the
development and success of
our teams
We identify and develop talent
to achieve the Michael Hill
vision
We commit to being part of,
and engendering an aligned
and cohesive team
We believe in having a diverse
team and placing the best
people in the right positions
ACCOUNTABILITY AND
RESPONSIBILITY
We lead by example, hold
ourselves to the highest
standards and deliver on our
personal KPIs
We hold our teams accountable
by setting clear expectations
and providing continuous
feedback
We personally drive positive
change
Our leadership principles
1 OMNI-CHANNEL:
Building capability to deliver a
seamless customer experience.
Evolving our online experience,
including integration of digital
and social channels with
our store network, to enable
a seamless experience for
customers where and when
they engage with us.
2 CUSTOMER LOYALTY:
Building data capability to
better service customers.
Using data driven customer
insights to deliver tailored
customer experiences to drive
brand loyalty and advocacy.
3 UNIQUE BRANDED
COLLECTIONS: Escalate
our growth of branded
collections.
Through enhanced designer
capability, create unique
branded collections to meet
growing customer demand for
differentiated products.
Our key strategic goals
4 BRAND POSITION:
Strengthen and grow brand
loyalty.
Based on recent brand review,
we will reposition our brand in
market to meet the changing
consumer landscape.
5 OPERATIONAL
EXCELLENCE: Enhance
execution capability and agility.
Build capability and agility
throughout the organisation to
adapt quickly to a fast changing
retail environment.
20

Our General Managers
AT 30 JUNE 2018
Our Executive Team
AT 30 JUNE 2018
21
KEVIN STOCK
RETAIL GENERAL MANAGER,
AUSTRALIA
GREG NEL
RETAIL GENERAL MANAGER,
NEW ZEALAND
TISHARA MINA
RETAIL GENERAL MANAGER,
EMMA & ROE
KATHERINE HAMMOND
Company Secretary
BRETT HALLIDAY
PRESIDENT,
NORTH AMERICA
PHIL TAYLOR
CHIEF EXECUTIVE OFFICER
GALINA HIRTZEL
GROUP EXECUTIVE SUPPLY
CHAIN
STEWART SILK
GROUP EXECUTIVE HUMAN
RESOURCES
VANESSA BRENNAN
CHIEF BRAND & CUSTOMER
OFFICER
ANDREW LOWE
CHIEF FINANCIAL OFFICER
MATT KEAYS
CHIEF INFORMATION OFFICER

22
...the Group remains in a strong
financial position to continue to invest in
improvements to its systems, infrastructure
and capabilities, and position the business
for future growth opportunities...

MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT 23
DIRECTORS' REPORT
The Directors present their report on the consolidated entity
(referred to hereafter as the ‘Group’) consisting of Michael
Hill International Limited ACN 610 937 598 (‘Michael Hill
International’ or the ‘Company’) and all controlled subsidiaries
for the year ended 30 June 2018.
Principal activities
The Group operates predominately in the retail sale of
jewellery and related services sector in Australia, New Zealand
and Canada.
During the year, the Group exited its US operations
and is in the process of exiting the Emma & Roe brand.
These segments have been reclassified as discontinued
operations for the 2017 and 2018 financial year. There
have been no other significant changes in the nature of the
Group's activities during the year.
Dividends
Dividends paid to members during the financial year were
as follows:
2018 2017
$000 $000
Final ordinary dividend for the year
ended 30 June 2017 of au2.5¢ (2016
- au2.5¢) per fully paid share paid
on 29 September 2017 (2016 - 6
October 2016)

9,685 9,578
Interim ordinary dividend for the year
ended 30 June 2018 of
au2.5¢ (2017
-
au2.5¢) per fully paid share paid on 29
March 2018 (2017 - 31 March 2017)

9,686 9,686
The Directors have declared the
payment of a final dividend of au2.5¢
per fully paid ordinary share* (2017
- au2.5¢). The final dividend will be
unfranked for Australian shareholders
and fully imputed for New Zealand
shareholders. The aggregate amount
of the proposed dividend expected to
be paid on 28 September 2018 out of
retained earnings, but not recognised
as a liability at year end, is

9,686 9,686
* This will not be declared as conduit foreign income,
therefore Australian withholding tax will be deducted
from the dividend payment for foreign (non-Australian tax
resident) shareholders.
Significant changes
in the state of affairs
During the year the Group exited its
loss making retail operations in the US
and is in the process of exiting the Emma
& Roe brand. Assets in both segments
were impaired as appropriate. As at 30 June
2018, all US stores have been closed. Of the 30 Emma
and Roe stores, 24 stores were closed as at 30 June
2018. The closure programme for the final six Emma &
Roe stores is still in progress. Impaired assets on hand
relating to the Emma & Roe closures will be disposed of
when it is determined they will not be redeployed.
Likely developments and expected
results of operations
Information on likely developments in the Group’s operations
and the expected results of operations have been included in
the Operational Review and Outlook sections of this report.
Review of operations
In Australian dollars, the Group has reported operating
revenue from continuing operations of $575.5m, producing
earnings before interest and tax ('EBIT') for continuing
operations of $50.1m. The Group reported a net profit after
tax ('NPAT') from continuing operations of $34.8m for the
2018 financial year, and a statutory net profit after tax of
$4.6m. Normalised EBIT for the Group was $40.1m for the
year. Normalised EBIT excludes one off costs, including
Emma & Roe and US closure costs and significant items
per the Non-IFRS Information note on page 33.
* EBIT and Normalised EBIT are Non-IFRS Information
and are unaudited. Please refer to Non-IFRS Information
on page 33 of the Directors Report for an explanation of
Non-IFRS information and a reconciliation of EBIT from
continuing operations and Normalised EBIT.
JEWELLERY FROM KNOTS
BY CHRISTINE HILL COLLECTION

24 MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT
CASH, CASH FLOW AND DIVIDENDS
The Group has an equity ratio of 50.4% at 30 June 2018
(52.0% in 2017), and a working capital ratio of 2.6:1 (3.0:1
in 2017). Net operating cash flows were $54.9m compared
to $39.8m the previous year. Net debt at 30 June 2018
was $28.0m compared to $39.4m at 30 June 2017.
The Group remains in a strong financial position to
continue to invest in improvements to its systems, infra-
structure and capabilities, and position the business for
future growth opportunities.
Despite the one off costs and operating losses
associated with the discontinued Emma & Roe and US
operations, which impacted statutory profit after tax, the
Group's debt levels reduced with higher operational cash
flows. Accordingly, for shareholders, the dividend for
the year was maintained at au5.0¢ (2017 - au5.0¢) per
share. There will be a final dividend of au2.5¢ per share
payable on 28 September 2018. The final dividend will be
unfranked for Australian shareholders and fully imputed for
New Zealand shareholders.
OPERATIONAL REVIEW
The Group achieved the following key outcomes for the
2018 financial year:
• Revenue from continuing operations increased 4.4%
to $575.5m
• Statutory net profit after tax for the Group of $4.6m
($34.8m profit after tax from continuing operations)
•
Same store sales from continuing operations were up 0.4%
• Online sales grew by 57.4% to $10.3m
• Canadian segment continues to gain market share with
same store sales increase of 3.8% and a record EBIT for
the year of ca$14.6m
• EBIT from continuing retail segments (Australia, New
Zealand, Canada) of $89.1m, down 1.6% from prior year
of $90.5m
• Branded collection sales increased to 18.0% of total
product sales, up from 14.2% on the prior year
• Sale of Professional Care Plans ('PCP') amounted to
$35.7m for continuing operations, increasing deferred
revenue on the balance sheet from PCP sales to $80.0m
• Gross margin increased in all continuing retail segments
(Australia +0.7%, New Zealand +0.3%, Canada +1.1%),
offset by stock provisions, including for Emma & Roe, leaving
gross margin for the Group flat on prior year at 63.7%
• Dividend of 5.0 cents in line with prior year
• Net operating cash inflow was $54.9m, up on $39.8m
in prior year
• Net debt of $28.0m down from $39.4m
•
EBIT before one-off items of $40.1m, down from $48.1m
• One off costs including write-down and disposal of
assets and lease settlement costs relating to US and
Emma & Roe exits amounting to $25.5m. Significant
items include a $1.4m employee benefits revaluation.
• 17 Michael Hill stores were opened and five were closed
within our three core markets during the year.
• 24 Emma & Roe stores and nine stores in the US were
closed. There was a total of 312 stores trading as at 30
June 2018, including six Emma & Roe stores.
2017-18 was a year of recalibration and repositioning
which saw the Group undertake a strategic review.
Despite significant investment into the US business, the
Group's lack of scale combined with the competitor dynamic
and sector outlook in that market led to the conclusion that we
would not generate an adequate return on further investment
in the business, and the decision was made in January 2018 to
close all US stores.
The decision was also made to close the Emma & Roe
brand, which had failed to meet performance projections.
This followed an in-depth review and analysis of the global
jewellery market and emerging trends which identified an
opportunity to reposition the Emma and Roe brand, however
it was determined that this was not an immediate strategic
priority. The Emma & Roe proposition remains a compelling
opportunity to be explored at the appropriate time.
The Group’s operational results were impacted materially
due to a combination of closure costs for the US and Emma
& Roe businesses and performance deterioration in these
segments once closure was announced.
Revenue from continuing operations grew 4.4%, with same
store sales up 0.4%. Canada produced pleasing same store
sales growth of 3.8% and a record EBIT result. New Zealand
had solid same store sales growth of 2.3% and EBIT slightly
down on last year, while Australia did not meet performance
projections with flat sales and a decline in EBIT contribution.
Gross margin grew across all continuing retail
segments (Australia +0.7%, New Zealand +0.3%, Canada
+1.1%) as a result of our proprietary collection strategy
commanding a premium.
During the 2017-18 year the Group implemented a new
Point of Sale system, with all 171 Australian stores changed
over during the 12 months, with New Zealand and Canadian
stores to be completed in the first quarter of 2018-19.
This was a major investment for the business and is a key
enabler as part of a larger strategic roadmap for the Group’s
information systems. The Group is undertaking a staged
program of investment in its finance, human resourcing,
customer experience and inventory management systems and
supporting cloud based infrastructure.
PCP revenue has again provided strong cash flow
for the Group. The PCP program is designed to provide a
comprehensive suite of care services to our customers so they
can maintain their jewellery in pristine condition. Total sales from
these plans for continuing operations amounted to $35.7m,
and at 30 June 2018 there was $80.0m of deferred PCP
revenue held on the statement of financial position. $31.9m in
PCP revenue was recognised for continuing operations in the
2017-18 year, down 0.6% on the previous year.

MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT 25
PRIORITIES
Same stores sales growth in all markets and for both brands
of above 2%
Open at least 10 new Michael Hill stores across all markets
Continue to review the Emma & Roe brand and adjust the
brand and offering.
To reduce the US operating losses and develop a viable model
Branded collection sales to reach 18%
Improved inventory management delivering increase in
GMROI (gross margin return on investment) and stock turn
Continue to develop the e-commerce
business and grow to 2% of Group revenue
Continued information systems investment
to migrate the organisation onto a highly
integrated ERP environment
Review of 2017-18 Priorities
RESULTS
Same stores sale growth of 0.4% occurred within the
Michael Hill segments of Australia, New Zealand and
Canada. Below target Australian performance prevented
attainment of our 2% goal.
17 new Michael Hill stores were opened during the year,
well ahead of our original goal.
A review of the Emma and Roe business in early 2018 lead
to the decision to close the brand.
A decision to exit the US market was announced during the
year and all stores have now been closed.
Michael Hill branded collections sales reached 18.0% of
total sales.
GMROI was 1.48, up on prior year of 1.42. This was a
pleasing improvement achieved through a combination
of inventory range refinement and improved margin
management. Stock turn was 1.11 for the year, in line
with prior year.
e-commerce sales grew 57.4% to $10.3m, amounting to
1.8% of total sales for the financial year. The business
continued to plan and invest in better online capabilities,
which will reap benefits in the years ahead when fully evolved.
There was a continued investment in technology and key
systems during the period consistent with the approved
roadmap for our IT systems. New IT systems and investment
in the development of future systems amounted to $6.5m
during the year.
In-house credit now represents 28.0% of Canadian sales.
The North American loan book was $20.5m at 30 June 2018
compared to $17.7m at 30 June 2017, with bad debts running at
4.7% of in-house credit sales for the year, which is in alignment
with expectations for credit default rates. The US book is being
closely monitored as the US book winds down following US
store closures. While US default rates have lifted, this was
anticipated, it is being managed and an uptick in default rates
has been provided for.
The Group's e-commerce platform continues to support the
retail segments well with revenue increasing by 57.4%, driven by
increased visitation and higher online conversion. e-commerce
sales now represent over 1.8% of the Group's total revenue.
As at 30 June 2018, the
Group operated Michael Hill
e-commerce sites in all of
the countries we operate
in and an Emma & Roe
e-commerce site in the
Australian market which
is expected to operate for at
least part of the coming financial
year, to facilitate stock clearance for
that brand.
There were 306 Michael Hill stores and six
Emma & Roe stores trading as at 30 June 2018.
JEWELLERY FROM INFINITAS BY MICHAEL HILL COLLECTION

26 MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT
Segment Results
The operational segments reported below reflect the performance of the Michael Hill and Emma & Roe retail operations
in each geographic segment, including the discontinued operations of Emma & Roe and Michael Hill United States. The
operational segments include trading activity from our online presence and our North American in-house credit function.
The segments exclude revenue and expenses that do not relate directly to the relevant Michael Hill or Emma & Roe retail
segments, and are treated as unallocated. These predominately relate to corporate costs and Australian based support costs,
but also include the manufacturing activities, warehouse and distribution, interest and company tax.
The Michael Hill United States and Emma & Roe segments were classified as Discontinued Operations during the year
following the announcement of their planned closure. As a result, the Michael Hill United States and Emma & Roe segments
were removed from the Group’s total segment result reported in the consolidated financial statements. The results below are
expressed in local currency.
Michael Hill Australia
OPERATING RESULTS (AU $000) 2018 2017 2016 2015 2014
Revenue 325,709 321,981 309,457 294,442 298,474
Gross profit 206,303 201,707 194,152 183,582 187,381
Gross profit as a % of revenue 63.3% 62.6% 62.7% 62.3% 62.8%
EBIT 48,621 51,688 49,975 45,933 47,493
As a % of revenue 14.9% 16.1% 16.1% 15.6% 15.9%
Number of stores 171 166 168 167 164
The Australian retail segment revenue increased by 1.2% to $325.7m, with same store sales 0.9% down on prior year. A
focus by management on margin management helped gross profit grow from 62.6% to 63.3% during the year. However,
rising costs combined with a challenging retail environment resulted in EBIT reducing to $48.6m. A decision was made during
the year to split the management of the large Australian segment into two businesses each led by a Retail General Manager
with their own regional management teams.
Seven stores were opened in Australia during the period as follows:
• Belmont Forum, Western Australia
• DFO Essendon, Victoria
• DFO Moorabbin, Victoria
• George Street Sydney CBD, New South Wales
• Mandurah, Western Australia
• Mildura, Victoria
• Palmerston, Northern Territory
Two stores closed during the period. There were 171 stores trading at 30 June 2018. The Group plans to expand its store
footprint by four new stores during the 2018-19 year. It is anticipated there will be store closures occurring in the coming year
as part of the Group’s active management of its store portfolio.
Michael Hill New Zealand
OPERATING RESULTS (NZ $000) 2018 2017 2016 2015 2014
Revenue 125,239 121,970 122,903 113,983 109,693
Gross profit 77,673 75,204 75,895 70,488 67,799
Gross profit as a % of revenue 62.0% 61.7% 61.8% 61.8% 61.8%
EBIT 27,800 27,836 27,136 23,545 22,102
As a % of revenue 22.2% 22.8% 22.1% 20.7% 20.1%
Number of stores 52 52 52 52 52
FX rate for profit translation 1.09 1.06 1.09 1.07 1.10
The New Zealand retail segment revenue increased 2.7% to NZ$125.2m for the 12 months, and the segment achieved a
solid EBIT result of NZ$27.8m, in line with the prior year. The focus on this mature market has been to improve store locations

MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT 27
where possible, build average store sales through a broadening of our product offer and improving our online sales channel.
Two stores were opened in New Zealand as follows:
• Silverdale, Auckland
• Victoria Street, Wellington
Two stores closed during the period. There were 52 stores trading at 30 June 2018. There are currently plans to open one
new store during 2018-19.
Michael Hill Canada
OPERATING RESULTS (CA $000) 2018 2017 2016 2015 2014
Revenue 130,762 112,721 95,423 79,097 69,025
Gross profit 81,576 69,078 59,252 48,689 42,466
Gross profit as a % of revenue 62.4% 61.3% 62.1% 61.6% 61.5%
EBIT 14,605 12,386 8,929 6,041 3,923
As a % of revenue 11.2% 11.0% 9.4% 7.6% 5.7%
Number of stores 83 76 67 60 54
FX rate for profit translation 0.98 1.00 0.97 0.97 0.98
The Canadian retail segment revenue increased by 16.0% for the twelve months to CA$130.8m, with same store sales
increasing 3.8% and gross margin lifting to 62.4%. The Canadian segment continues to show good growth as we achieve
scale and increase market share with EBIT increasing to a record CA$14.6m, 11.2% of revenue. While sales did slow during
the 2017-18 year, in the second half in particular, the Company is confident that continued growth can be achieved in the
coming year.
Eight stores were opened in Canada during the period, as follows:
• Conestoga Mall, Ontario • Orchard Park Mall, British Colombia
• Edmonton Outlet, Alberta • Park Place, Alberta
• Fairview Mall, Ontario • Regent Mall, New Brunswick
• McAllister Place, Ontario • Vaughan Mills, Ontario
One store closed during the period. There were 83 stores trading at 30 June 2018. There is potential for up to 100 stores
in Canada, and the Group plans to open at least five stores during the 2018-19 year, subject to availability of suitable sites.
Michael Hill USA
OPERATING RESULTS (US $000) 2018 2017 2016 2015 2014
Revenue 9,320 12,498 14,203 11,290 9,994
Gross profit 5,420 7,564 8,363 6,535 5,971
Gross profit as a % of revenue 58.2% 60.5% 58.9% 57.9% 59.7%
EBIT (9,840) (3,821) (2,599) (1,916) (2,283)
As a % of revenue (105.6%) (30.6%) (18.3%) (17.0%) (22.8%)
Number of stores - 9 10 9 8
FX rate for profit translation 0.78 0.75 0.73 0.83 0.92
Included in EBIT figures above:
Impairment and disposal of assets 2,775 595
Lease settlement and onerous lease provision 3,958 71
The Group exited the US operations during the year and closed all stores. No stores were trading as at 30 June 2018.

28 MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT
...The Group's e-commerce platform continues
to support the retail segments well with revenue
increasing by 57.4%...

MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT 29
Emma & Roe
OPERATING RESULTS (AU $000) 2018 2017 2016 2015
Revenue 16,934 15,448 9,539 4,879
Gross profit 11,216 10,201 6,663 3,374
Gross profit as a % of revenue 66.2% 66.0% 69.8% 69.2%
EBIT (21,790) (7,051) (2,418) (2,884)
As a % of revenue (128.7%) (45.6%) (25.3%) (59.1%)
Number of stores 6 29 16 8
Included in EBIT figures above:
Impairment and disposal of assets 7,412
Lease settlement and onerous lease provision 6,037
Emma & Roe reported sales of $16.9m for the year. Emma & Roe results during the second half of the year were impacted
by the announcement to reduce the brand’s store footprint by 24 stores, with five closing in April and 19 closing in June. The
closure programme for the final six Emma & Roe stores is still in progress.
Strategic Update
In the latter half of the year, a detailed strategic review was conducted. The purpose of the review was to identity performance
improvement opportunities for the Group within the context of the rapidly changing retail environment and changes in how
customers shop.
Five strategic shifts have been identified, designed to reposition Michael Hill from a traditional retailer to a differentiated
omni-channel brand.
Implementation of these changes is intended to increase market share through improved customer engagement across
all channels and increased frequency of visit. The five key strategic shifts are:
1 OMNI-CHANNEL: Building capability to deliver a seamless customer experience.
Evolving our online experience, including integration of digital and social channels with our store network, to enable a
seamless experience for customers where and when they engage with us.
2 CUSTOMER LOYALTY: Building data capability to better service customers.
Using data driven customer insights to deliver tailored customer experiences to drive brand loyalty and advocacy.
3 UNIQUE BRANDED COLLECTIONS: Escalate our growth of branded collections.
Through enhanced designer capability, create unique branded collections to meet growing customer demand for differenti-
ated products.
4 BRAND POSITION: Strengthen and grow brand loyalty.
Based on recent brand review, we will reposition our brand in market to meet the changing consumer landscape.
5 OPERATIONAL EXCELLENCE: Enhance execution capability and agility.
Build capability and agility throughout the organisation to adapt quickly to a fast changing retail environment.
To deliver against this ambition, investment will be made in capability and infrastructure. We will add capability to the Group
through the addition of a Chief Operating Officer and Chief People Officer at the executive level. A dedicated project
management team has been established to execute and manage initiatives in support of the five strategic shifts identified
above. Significant investment is being made in additional roles in data and digital, together with capital investment in enabling
systems and infrastructure. This will require the investment of additional unallocated corporate costs of ~$3m in the coming
2018-19 year, with total planned capex across new and refurbished stores, IT systems, tools and infrastructure of ~$25m
(2017-18: $24.6m).
2018-19 is a foundational year with benefits from these investments to be progressively realised. A differentiated offer
in brand, product and experience would provide a platform to establish new channels and markets if considered appropriate
in the coming years.

30 MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT

Outlook
We are committed to expanding the Michael Hill brand in
all three markets of Australia, New Zealand and Canada
with plans to open a minimum of 10 new stores in 2018-19
across these three markets, subject to site availability.
With this store growth, underpinned by the five identified
strategic shifts, it is planned that our differentiated offer
will deliver growth in all markets and take market share.
The business will be focused on quality of earnings and
continued strong gross margin performance.
In the 2018-19 year we will work to deliver a better quality
in-store customer experience. Proprietary branded collections
revenue is planned to continue to grow as we increase
investment in these ranges. Branded collections provide a
unique product offering to our customers and in doing so,
builds strong brand equity in the markets we operate in.
While the Australian segment has reached maturity
in terms of overall store numbers, it still offers potential
for improved EBIT performance through a combination
of increased productivity from the retail teams, improved
margins, property portfolio refinements, online revenue
growth, new product collections and an enhanced
customer experience.
The New Zealand business is expected to continue to
perform well and will benefit from increased online revenue,
extended product offering, improved margins, a continued
refinement of the property portfolio and improved cost
efficiencies, together with exploring opportunities to tap
into the growing Asian consumer market.
Canada still has opportunities for further store growth
and we will continue to work to build its profitability
through its maturing store portfolio, online revenue growth,
optimisation of its in-house credit program, and increased
productivity of its retail teams.
e-commerce revenue is planned to continue to grow
steadily in coming years as we refine our offer and optimise
the online channels. Further planned investment in our
e-commerce capability will take full advantage of this
growth opportunity.
Continued strong operational cash flows enable
further debt reduction and capital investment levels to be
maintained, while also leaving the Group well placed to
explore opportunities aligned with the five strategic shifts.
Priorities for 2018-19
• Open at least 10 new Michael Hill stores across
all markets.
• Reposition Michael Hill from a traditional retailer to a
unique omni-channel retailer.
• Branded collection sales to grow as a percentage of
total revenue.
• Continued improvement in inventory management to
deliver further improvement in GMROI (gross margin
return on investment).
• Continue to invest in and develop the e-commerce
business.
Environmental regulation
The Group has determined that no particular or significant
environmental regulations apply to it.
MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT 31
JEWELLERY FROM SPIRITS BAY, CHRISTINE HILL COLLECTION

32 MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT
...Continued strong operational cash flows enable
further debt reduction and capital investment levels
to be maintained, while also leaving the Group well
placed to explore opportunities aligned with the five
strategic shifts...

MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT 33
Non-IFRS Financial Information
This report contains certain non-IFRS financial measures of historical
financial performance. Non-IFRS financial measures are financial
measures other than those defined or specified under all relevant
accounting standards. The measures therefore may not be directly
comparable with other companies' measures. Many of the measures
used are common practice in the industry in which MHI operates.
Non-IFRS financial information should be considered in addition to,
and is not intended to be a substitute for, or more important than,
IFRS measures. The presentation of non-IFRS measures is in line
with Regulatory Guide 230 issued by Australian Securities and
Investments Commission (ASIC) to promote full and clear disclosure
for investors and other uses of financial information, and minimise
the possibility of those users being misled by such information.
The measures are used by management and Directors for the
purpose of assessing the financial performance of the Group and
individual segments. The Directors also believe that these non-IFRS
measures assist in providing additional meaningful information on
the drivers of the business, performance and trends, as well as the
position of the Group. Non-IFRS financial measures are also used
to enhance the comparability of information between reporting periods
by adjusting for non-recurring or controllable factors which affect IFRS
measures, to aid the user in understanding the Group's performance.
Consequently, non-IFRS measures are used by the Directors and
management for performance analysis, planning, reporting and
incentive setting. These measures are not subject to audit.
The non-IFRS measures used in describing the business
performance include:
• Same store sales
• Earnings before Interest, tax, depreciation and
amortisation (EBITDA)
• Earnings before Interest and tax (EBIT)
• Normalised EBIT
• Significant item
CALCULATION OF NORMALISED EBIT
Normalised EBIT has been calculated as follows: $000's
EBIT from continuing operations 50,147
EBIT from discontinuing operations (36,937)
Group EBIT 13,210
Add back E&R and US closure costs:
Lease settlements 9,833
Impairment and asset disposals 11,188
Make good expenses 177
Employee redundancies 1,743
Provision for stock obsolescence 1,600
Other expenses (Including consulting, legal fees,
packaging, stationery, travel) 964
Add back significant item:
Revaluation of employee benefits 1,391
Normalised EBIT 40,106
STRATEGIES AND MITIGATION
The process of updating the Group’s
business continuity plan and disaster
recovery processes will continue into
the coming year. Additional internal
resource has been put in place and
external consultants continue to
be used to help with penetration
testing and to provide other
technical assessments.
The decision was made recently
to appoint a Chief People Officer
to the executive team in an effort
to strengthen our focus on people
planning, talent acquisition and
development of this vital resource.
We are confident our people and
talent strategies will continue to
deliver sufficient quality resource to
the business.
A structured plan of system review
involving significant investment has
begun to facilitate the upgrade of
our key business systems.
We are committed to improving and
differentiating the brand from our
existing competitors to create a point
of difference and acquire market
share. This in itself helps mitigate the
risk of other competitors entering
our key markets and taking material
market share.
The Company invests via an
in-house legal team who are
focused on compliance in our three
markets and by utilising external
legal firms for specialised legal
advice when required.
As mentioned in the strategic
update, the Group is in the
process of investing in improved
infrastructure and capabilities
with a goal to meet the rapidly
changing retail environment and the
consumer of tomorrow.
RISK MANAGEMENT
RISK
Inadequate business
continuity program and/or
disaster recovery strategies
Insufficient leadership talent
to meet growth plans
Systems capability does not
meet demands of business
Risk of a disruptor
or new competition
entering our markets
Breach of regulation or law
in one of our jurisdictions
in an ever increasingly
complex legal compliance
environment
Inability to adjust to the
rapidly changing consumer
segment and retail
environment

34 MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT
INFORMATION ON DIRECTORS
Emma Jane Hill B.Com, M.B.A.
Emma was appointed a Director of the
Company on 9 June 2016.
Emma has over 30 years’ experience with
subsidiaries of the Company commencing
on the shop floor in Whangarei, New
Zealand. She held a number of management
positions in the Australian company before
successfully leading the expansion of
the Group into Canada as Retail General
Manager in 2002.
In 2011 Emma was appointed as Deputy
Chair of the listed New Zealand entity and
was appointed by the Board as Executive
Chair of that company in December 2015.
Emma holds a Bachelor of Commerce
degree and an MBA from Bond University.
OTHER CURRENT DIRECTORSHIPS
none
FORMER DIRECTORSHIPS IN LAST THREE YEARS
none
RESPONSIBILITIES
Chair
Non-Executive Director
Member People Development and
Remuneration Committee
INTERESTS IN SHARES AND OPTIONS
167,487,526 Ordinary Shares
Sir Richard Michael Hill K.N.Z.M.
Sir Michael was appointed a Director of the
Company on 9 June 2016.
Sir Michael is the founder of Michael Hill
Jeweller and was appointed as a Director
of Michael Hill New Zealand Limited on 30
March 1990. He had 23 years of jewellery
retailing experience before establishing
Michael Hill in 1979, which then listed on
the New Zealand Stock Exchange in 1987.
Sir Michael’s visionary leadership has been
the foundation for the Company’s successful
international expansion. In 2008 he was
recognised as Ernst & Young’s ‘Entrepreneur
of the Year’ and in 2011 was appointed a
Knight Companion of the New Zealand Order
of Merit for services to business and the arts.
Sir Michael was appointed Founder
President of the New Zealand listed entity in
2015 in recognition of his special connection
with Michael Hill for over 35 years.
Sir Michael led the Group as Chairman
from 1987 until December 2015.
OTHER CURRENT DIRECTORSHIPS
none
FORMER DIRECTORSHIPS IN LAST THREE YEARS
none
RESPONSIBILITIES
Non-Executive Director
INTERESTS IN SHARES AND OPTIONS
148,330,600 Ordinary Shares
Gary Warwick Smith B.Com, F.C.A., F.A.I.C.D.
Gary was appointed a Director of the Company
upon incorporation on 24 February 2016.
Gary has had extensive Director
experience. He is Chairman of Flight Centre
Travel Group, one of Australia’s top 100
public companies and is a member of their
Audit and Remuneration sub-committee.
He is a Chartered Accountant and a Fellow
of the Australian Institute of Company
Directors.
He is also a Director of Tourism Events
Queensland and Chair of its Audit and Risk
Committee.
OTHER CURRENT DIRECTORSHIPS
Flight Centre Travel Group Limited
Tourism Events Queensland
FORMER DIRECTORSHIPS IN LAST THREE YEARS
none
RESPONSIBILITIES
Non-Executive and Independent Director
Chair Audit and Risk Management Committee
Member People Development and
Remuneration Committee
INTERESTS IN SHARES AND OPTIONS
30,000 Ordinary Shares
From left: Gary Smith, Emma Hill, Sir Michael Hill, Janine Allis and Robert Fyfe. Information on Directors of
Michael Hill International Limited in office during the financial year and until the date of this report are set out below.

MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT 35
Robert Ian Fyfe B.Eng, F.E.N.Z
Rob was appointed a Director of the
Company on 9 June 2016.
Rob served as CEO of Air New Zealand
between 2005 and 2012, a period that saw
a resurgence in Air New Zealand to become
one of the most recognised and awarded
airlines in the world and one of the best
performers in a tough industry.
Prior to Air New Zealand, Rob had gained
extensive general management experience
in various retail businesses operating in New
Zealand, Australia and Great Britain.
OTHER CURRENT DIRECTORSHIPS
Antarctica New Zealand
Air Canada
FORMER DIRECTORSHIPS IN LAST THREE YEARS
Icebreaker Limited
RESPONSIBILITIES
Non-Executive and Independent Director
Chair People Development and
Remuneration Committee
Member Audit and Risk Management
Committee
INTERESTS IN SHARES AND OPTIONS
63,640 Ordinary Shares
Janine Suzanne Allis
Janine was appointed a Director of the
Company on 9 June 2016.
Janine is the Founder and Executive
Director of Retail Zoo Pty Ltd which currently
owns three brands - Boost Juice, Salsa’s
Fresh Mex Grill and Cibo. The Retail Zoo
network has over 500 stores in 13 countries.
Janine’s strong retail experience was
obtained by creating Boost Juice Bars and
turning it into an iconic Australian brand with
over 95% awareness rate in the Australian
market. Drive and passion have translated
into over $2 billion in global sales from
inception and has earned Janine many
accolades, including Telstra Businesswoman
of the Year, Amex Franchisor of the Year and
ARA Retailer of the Year. She was inducted
into the Australian Business Women Hall of
Fame as well as BRW listing Janine in the
top 15 people who have changed the way we
do business in the last 20 years. Janine now
shares her knowledge with others, including
through her role as a ‘Shark’, investor and
mentor on Channel Ten’s Shark Tank.
OTHER CURRENT DIRECTORSHIPS
Retail Zoo Pty Ltd
FORMER DIRECTORSHIPS IN LAST THREE YEARS
none
RESPONSIBILITIES
Non-Executive and Independent Director
Member Audit and Risk Management
Committee
INTERESTS IN SHARES AND OPTIONS
150,000 Ordinary Shares
Company Secretary
The Company Secretary is Katherine
A. Hammond
LLB (Hons), BA, GradDipLegPrac.
Katherine was appointed to the position of
Company Secretary on 22 January 2018, the
same day she joined the Group.
Katherine holds a Bachelor of Laws with
Honours and a Bachelor of Arts from the
University of Queensland and is admitted to
practice as a Solicitor of the Supreme Court
of Queensland. Prior to her appointment as
Company Secretary, Katherine practiced
law for 8 years in the areas of mergers &
acquisitions, capital markets and corporate
advisory, which included advising listed and
unlisted entities on governance, compliance
and transactional matters.
Mary-Anne Greaves was appointed
as Company Secretary on 11 July 2016
and resigned on 15 December 2017.
Andrew Lowe, Chief Financial Officer, was
appointed as Company Secretary on 15
December 2017 and resigned as Company
Secretary on 22 January 2018, upon the
appointment of Katherine Hammond.
Meetings of Directors
The numbers of meetings of the Company's Board of Directors and of each
Board committee held during the year ended 30 June 2018, and the numbers of
meetings attended by each Director were:

Full meetings Audit and Risk People Development
of Directors Management and Remuneration
Meetings Meetings Meetings Meetings Meetings Meetings
attended held attended held attended held
E J Hill 13 13 - - 4 4
Sir R M Hill 10 13 - - - -
G W Smith 10 13 2 2 3 4
R I Fyfe 11 13 2 2 4 4
J S Allis 13 13 2 2 - -
Committee membership
As at the date of this report, Michael Hill
International Limited has an Audit and Risk
Management Committee and a People
Development and Remuneration Committee.
Audit and Risk People Development
Management and Remuneration
Committee Committee
Gary Smith
c
Rob Fyfe
c
Janine Allis Emma Hill
Rob Fyfe Gary Smith
c
designates chair of the committee

36 MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT
...Compensation levels for key management
personnel of the Group are competitively set to
attract and retain appropriately qualified and
experienced directors and executives...
36

AUDITED REMUNERATION REPORT
The Directors present the 2018 Michael Hill International
Limited remuneration report, outlining key aspects of our
remuneration policy and framework, and remuneration
awarded during the 2018 financial year.
Remuneration framework
The information provided in this remuneration report has
been
audited as required by section 308(3C) of the
Corporations Act 2001.
PRINCIPLES OF COMPENSATION
Remuneration is referred to as compensation throughout
this report.
Key management personnel ('KMP'), including
Directors of the Company and other executives, have
authority and responsibility for planning, directing and
controlling the activities of the Group.
For the 2018 financial year, it was determined that the
KMP of Michael Hill International were:
• Chief Executive Officer (CEO) - Phil Taylor
• Chief Financial Officer (CFO) - Andrew Lowe
(appointed 4 December 2017)
• Chief Information Officer (CIO) - Matt Keays
• Group Executive Supply Chain (GESC) - Galina Hirtzel
• Chief Customer Officer (CB&CO) - Vanessa Brennan
(appointed 15 January 2018)
• Group Executive Human Resources (GEHR) -
Stewart Silk
Compensation levels for key management personnel
of the Group are competitively set to attract and retain
appropriately qualified and experienced directors and
executives. The People Development and Remuneration
Committee obtains independent advice every three years
on the appropriateness of compensation packages of the
Group given trends in comparative companies both locally
and internationally, and the objectives of the Group’s
compensation strategy.
The compensation structures explained
below are designed to attract suitably
qualified candidates, reward the
achievement of strategic objectives,
and achieve the broader outcome of
creation of value for shareholders.
The compensation structures take into
account the capability and experience of
the KMP, and the KMP's ability to control the
relevant segment's performance.
The Executive Remuneration framework consists of:
1 Total Fixed Remuneration ('TFR') - includes fixed cash
remuneration and superannuation component.
2 Short term incentive ('STI') - on target performance is
determined as a percentage of TFR, 70% of the STI is
directly aligned to achieving the Group EBIT return on
average total assets ('ROA') hurdle (15% ROA) and 30%
based on achievement of individual performance plans.
3 Long term incentive ('LTI') - alignment of executive
incentives with the long term performance is achieved
by way of a deferred remuneration component. An issue
of share rights is made to participants of the scheme,
the quantum being a % of the STI earned.
The current remuneration policy settings for the KMP
are as follows:
CEO TFR set at 90% of market median
On target STI set at 75% of TFR
LTI set at 30% of STI achieved
CFO TFR set at 90% of market median
On target STI set at 50% of TFR
LTI set at 30% of STI achieved
CB&CO TFR set at 90% of market median
On target STI set at 35% of TFR
LTI set at 30% of STI achieved
CIO TFR set at 90% of market median
On target STI set at 35% of TFR
LTI set at 30% of STI achieved
GESC TFR set at 90% of market median
On target STI set at 35% of TFR
LTI set at 30% of STI achieved
GEHR TFR set at 70% of market median
On target STI set at 35% of TFR
LTI set at 30% of STI achieved
TOTAL FIXED COMPENSATION
Fixed compensation consists of base compensation as
well as leave entitlements and employer
contributions to superannuation funds.
Compensation levels are reviewed
annually by the People Development and
Remuneration Committee through a process
that considers individual, segment and
overall performance of the Group. In addition,
external consultants provide analysis and advice
every three years to ensure the Directors’ and
senior executives’ compensation is competitive
in the market place. A senior executive’s
compensation is also reviewed on promotion.
MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT 37

38 MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT
PERFORMANCE LINKED COMPENSATION
Performance linked compensation includes both short-term
and long-term elements, and is designed to reward senior
executives for meeting or exceeding their financial and
personal objectives. The STI is an ‘at risk’ annual cash
payment, while the LTI is a deferred compensation plan
providing rights over ordinary shares of the Company under
the rules of the executive incentive plan.
SHORT-TERM INCENTIVE
The short term incentive scheme is comprised of two
components; 70% of the STI for key management personnel
is linked to achievement of the Group's EBIT return on
average total assets hurdle (15% ROA) for the year and
30% is linked to the achievement of key performance
indicators ('KPI's') that are agreed in personal performance
plans ('PPP's'), at the start of the reporting period.
The process and scheme provides an ongoing
performance management system, along with integrated
reporting for visibility and transparency of progress by
each senior executive. The framework aligns the senior
executive KPIs to delivery of the strategic plan, divisional
business plans along with critical operational measures
and leadership measures of each role. The following points
outline the framework:
• The policy and framework cascades from the CEO
to Group Executives with the intention in 2018-19 to
cascade relevant KPIs further down through the levels
of management. This aims to ensure key aspects of
the Group’s strategic plan, divisional business plans,
along with critical drivers of business outcomes are
clearly identified at each level of leadership. This
includes personal development plans, and leadership
performance.
• The metrics are assessed monthly (on a YTD basis)
and along with normal operational metrics, provides the
basis for monthly work in progress ('WIP') reviews.
LONG-TERM INCENTIVE
Options were issued under the Executive Incentive Plan
(made in accordance with thresholds set in plans approved
by shareholders). The ability to exercise the options is
conditional on continuing employment with the Group. The
options issued during the year relates to the entitlements
set in the prior years. Options previously issued are detailed
in this report and most recent Appendix 3B.
The Company introduced a deferred compensation
plan ('LTI') involving the granting of share rights to
eligible participants in the 2015-16 financial year and
was approved by shareholders at the Company’s Annual
General Meeting held on 31 October 2016.
Under the plan, an executive may be granted share
rights by the Company. Each share right represents a right
to receive one ordinary share in the Company, subject to the
terms and conditions of the rules of the plan. An allocation
of share rights is made to each eligible participant on an
annual basis to a value of 30% of the STI payment earned
1
.
The share rights progressively vest
2
over a 3, 4 and 5
year period from the date of issue and are only retained
on exiting the business in the event that the participant is
deemed a 'Good Leaver' pursuant to the LTI plan rules.
Feature
Opportunity/ 30% of respective STI which is issued to the
Allocation Executive by way of share rights which are
granted and vest in 3 tranches. Each right
represents a right to acquire one ordinary
share in the Company.
Tranches Year 3 - provided participant remains
employed with the Company, 25% will vest
Year 4 - provided participant remains
employed with the Company, 25% will vest
Year 5 - provided participant remains
employed with the Company, 50% will vest
Exercise Once the rights have vested, Participants
can exercise them. They can be exercised
by completing and returning to the Company
an Exercise Notice.
Expiry Rights will expire on the date 15 years from
the grant date.
In addition to the share rights issued to the CEO and other
eligible senior executives of the Group under the incentive
plan, the CEO was granted share rights as part of the CEO
package, which were granted to Mr Taylor during his tenure
as interim CEO between 8 August 2016 and 6 March 2017.
An allocation of share rights equal to 75% of 2016 TFR
($325,500) per annum for 3 years from 1 September 2016
were made to the CEO. Each tranche of share rights will
vest at a date which is 3 years from the date of issue and
are only retained provided Mr Taylor is employed by the
Group at the commencement of the financial year in which
the share right vesting is scheduled to occur. Termination of
employment prior to each corresponding 3 year period will
result in all unvested share rights being forfeited
3
.
1 The number of share rights in each tranche is based on
the prescribed dollar value for each tranche divided by
the volume weighted average share price of Michael
Hill International shares over 5 trading days following
the Michael Hill International shares trading on an
ex-dividend basis.
2 On vesting each share right represents a right to receive
one (1) ordinary share in the Company. No exercise price
is payable upon the exercise of any share rights.
3 The additional share rights component of Mr Taylor's
remuneration package is a continuation of the existing
plan agreed to upon Mr Taylor's appointment as interim
CEO. As a consequence, the deemed issue date for the
second tranche of share rights was 18 October 2017 and
the corresponding vesting date is 1 July 2020. The third
tranche of share rights is anticipated to be issued later
this year and the corresponding vesting date will be
1 July 2021.

MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT 39
SHORT-TERM AND LONG-TERM INCENTIVE STRUCTURE
The People Development and Remuneration Committee considers that the above performance-linked compensation
structure is generating the desired outcome.
The scheme is already demonstrating a close correlation between executive remuneration, achievement of budget
targets and share price performance as desired.
In 2017-18, the performance linked component of compensation comprises approximately 13% of total payments to
senior executives (2016-17: 7%).
In the current year the Group didn't meet its overall Board targets, and as a consequence bonuses earned by KMP's
in the current financial year were between 50 and 70% lower than the targeted STI% of TFR.
REMUNERATION POLICY AND LINK TO PERFORMANCE
Our People Development and Remuneration Committee is made up of two independent, non-executive Directors and the
Chair of the Board of Directors. The committee reviews and determines our remuneration policy and structure annually to
ensure it remains aligned to business needs, and meets the Group's remuneration principles. The Committee also engages
external remuneration consultants every three years to assist with this review.
The People Development and Remuneration Committee is a committee of the Board. It is primarily responsible for
making recommendations to the Board on:
• the over-arching executive remuneration framework
• operation of the incentive plans which apply to the senior executives (the executive team), including key performance
indicators and performance hurdles
• remuneration levels of executives, and
• non-executive Director fees.
Their objective is to ensure that remuneration policies and structures are fair and competitive and aligned with the
long-term interests of the Company
The Corporate Governance Statement provides further information on the role of this committee. The ASX Corporate
Governance Principles and Recommendations rules and principles may materially differ from NZX's Corporate Governance
rules and NZX Code. In particular, the Board aims to ensure that remuneration practices are:
• competitive and reasonable, enabling the Company to attract and retain key talent
• aligned to the Company's strategic and business objectives and the creation of shareholder value
• transparent and easily understood, and
• acceptable to shareholders.
Figure 1: Remuneration framework
Purpose
Provide competitive
market salary including
superannuation and
non-monetary benefits
Reward for in-year
performance
Alignment to
long-term shareholder
value
Element
Total fixed
remuneration (TFR)
STI
LT I
Performance metrics
All executives are
reviewed in line with
personal performance
plans
70% of the target
STI is calculated on a
return on total assets
basis. 30% of the
target STI is based on
a range of KPI's
Nil
Potential value
Positioned at a
percentage of median
market rate
CEO: 75% of TFR
CFO: 50% of TFR
Execs: 35% of TFR
CEO: 30% of STI
CFO: 30% of STI
Execs: 30% of STI
Changes for FY 2019
Reviewed in line with
market
Nil
Nil

40 MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT
ASSESSING PERFORMANCE AND CLAW-BACK OF REMUNERATION
The People Development and Remuneration Committee is responsible for assessing performance against KPIs and
determining the STI and LTI to be paid.
In the event of serious misconduct or a material misstatement in the Company’s financial statements, the People
Development and Remuneration Committee can cancel or defer performance-based remuneration.
CONSEQUENCES OF PERFORMANCE ON SHAREHOLDER WEALTH
In considering the Group’s performance and benefits for shareholder wealth, the People Development and Remuneration
Committee have regard to the following indices in respect of the current financial year and the previous four financial years.
2018 2017 2016 2015 2014
$000 $000 $000 $000 $000
N PAT 4,610 32,648 19,577 27,754 25,041
NPAT from continuing operations 34,818 44,132 26,330 33,219 28,171
EBIT* 13,210 48,117 47,058 42,061 42,151
EBIT from continuing operations* 50,147 62,332 54,424 48,558 45,212
Normalised EBIT* 40,106 48,117 47,058 42,061 42,151
Dividends payments ($000) 19,371 19,264 17,490 23,176 22,336
Share price as at 30 June (NZ$ 2016 to 2014) $.97 $1.11 $1.14 $1.06 $1.24
Return on shareholders equity 17.8% 22.7% 14.1% 18.0% 15.9%
Return on average total assets 9.1% 11.4% 7.2% 9.6% 8.9%
* EBIT and Normalised EBIT are Non-IFRS Information and are unaudited. Please refer to Non-IFRS Information on page 33
of the Directors Report for an explanation of Non-IFRS information and a reconciliation of EBIT from continuing operations
and Normalised EBIT.
EBIT and ROA hurdles are considered the primary financial performance targets in setting the STI. Profit amounts for 2014
to 2018 have been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting
Standards and other authoritative pronouncements of the Australian Accounting Standards Board. This also complies with
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.
The overall level of compensation takes into account the performance of the Group over a number of years.
OTHER BENEFITS
Key management personnel do not receive additional benefits, such as non-cash benefits, other than statutory superannua-
tion, as part of the terms and conditions of their appointment.
LOANS TO KEY MANAGEMENT PERSONNEL
The Company does not provide loans to KMPs or other senior executives.
Figure 2: Actual remuneration mix for FY 2018Figure 3: Target remuneration mix for FY 2019
BALANCING SHORT-TERM AND LONG-TERM PERFORMANCE
Annual incentives are set between 35% and 75% of TFR, in order to drive performance without encouraging undue risk-taking.
Long-term incentives are assessed over a 3 to 5 year period and are designed to promote long-term stability in
shareholder returns and talent retention.
The actual remuneration mix for FY 2018 is shown in figure 2 below and target remuneration mix for 2019 is in figure 3
below. It reflects the STI opportunity for the 2018-19 year that will be available if the performance conditions are satisfied at
target, and the value of the LTI rights and options granted for the year, as determined at the grant date.
83%11 %6%
■ TFR ■ STI ■ LTI ■ ENGAGEMENT PACKAGE
KMP
41%31%9%19%
62%29%9%
■ TFR ■ STI ■ LTI ■ ENGAGEMENT PACKAGE
CEO
KMP
64%13%3
%
22%CEO

SERVICE CONTRACTS
It is the Group’s policy that service contracts for KMPs,
excluding the chief executive officer, are unlimited in term
but capable of termination on three months’ notice and
that the Group retains the right to terminate the contract
immediately, by making payment equal to three months’
pay in lieu of notice.
The Group has entered into a service contract with
four KMPs that are capable of termination on three
months’ notice. The Group retains the right to terminate a
contract immediately by making payment equal to three
months’ pay in lieu of notice. The KMPs are also entitled
to receive on termination of employment their statutory
entitlements of accrued annual and long service leave,
together with any superannuation benefits.
The Group has entered into a service contract with
two KMPs that are capable of termination on six month's
notice. The Group retains the right to terminate a contract
immediately by making payment equal to six months' pay
in lieu of notice. The KMP is also entitled to receive on
termination of employment their statutory entitlements of
accrued annual and long service leave, together with any
superannuation benefits.
CEO CONTRACT
The Group has entered into a service contract with the CEO,
Phil Taylor who was appointed CEO on 6 March 2017 after a
period as Interim CEO following the resignation of the former
CEO, Mike Parsell on 8 August 2016. The service contract
does not contain any probationary period or fixed term.
The remuneration payable to Mr Taylor is as follows:
a Annual base salary - $707,594 (inclusive of the
statutory superannuation contributions but excluding
leave provisions).
b Short terms incentives (STI) - 75% of base salary
payable in cash on performance of agreed Group profit
targets based on a return on asset formula (70% of STI)
and other agreed annual key indicators (30% of STI).
c
Deferred compensation plan (LTI) - an allocation of
share rights on an annual basis to a value of 30% of
the STI payment earned in the preceding year
1
. The
share rights progressively vest
2
over a 3 to 5 year period
from the date of issue and are retained on exiting the
business in the event that Mr Taylor is deemed a 'Good
Leaver' pursuant to the LTI plan rules.
d Interim CEO engagement package - an
allocation of share rights equal to 75% of
2016 TFR ($325,500) per annum for 3
years from 1 September 2016. Each tranche
of share rights will vest at a date which is 3
years from the date of issue and are retained
provided Mr Taylor is employed by the Group
at the commencement of the financial year
in which the share right vesting is scheduled
to occur. Termination of employment prior to
each corresponding 3 year period will result in all
unvested share rights being forfeited
3
.
Either party may terminate the engagement on six months'
notice. Otherwise, the Group may terminate Mr Taylor's
position for serious misconduct or professional negligence.
Mr Taylor will be restrained for up to 18 months
following the cessation of his engagement with the Group
from soliciting business, customers, suppliers or employees
of the Group.
The service contract outlines the components of
compensation but does not prescribe how compensation
levels are modified year to year. The People Development
and Remuneration Committee reviews compensation levels
each year to take into account cost-of-living changes, any
change in the scope of the role performed by the senior
executive and any changes required to meet the principles
of compensation policy.
1
The number of share rights in each tranche is based on
the prescribed dollar value for each tranche divided by
the volume weighted average share price of Michael
Hill International shares over 5 trading days following
the Michael Hill International shares trading on an
ex-dividend basis.
2
On vesting, each share right represents a right to
receive one (1) ordinary share in the capital of the
Company. No exercise price is payable upon the
exercise of any share right.
3
The additional share rights component of Mr Taylor's
remuneration package is a continuation of the existing
plan agreed to upon Mr Taylor's appointment as interim
CEO. As a consequence, the deemed issue date for the
second tranche of share rights is 18 October 2017 and
the corresponding vesting date is 1 September 2020.
DIRECTOR CONSULTING AGREEMENT
Michael Hill Group Services Pty Limited ACN 134 562
440, a subsidiary of Michael Hill International Limited
(MHIL), has entered into a consultancy agreement
(Consultancy Agreement) with Robert Ian Fyfe. Mr Fyfe is a
non-executive
Director of MHIL. Details of the Consultancy
Agreement were disclosed to the ASX and NZX on 31
August 2017. The Board
(with Rob abstaining) formed the
view that the Consultancy Agreement is on arm’s length
commercial terms.
Under the Consultancy Agreement, Mr Fyfe provides
mentoring support to the CEO, Phil Taylor.
Mr Taylor was appointed to the role of CEO
following a long and successful career with
Michael Hill, as CFO leading the global finance
team. The Board identified an opportunity
to expand Mr Taylor’s leadership capability
to ensure that Mr Taylor is well equipped for
the significant leadership responsibilities and
challenges as CEO.
Mr Fyfe is a very well regarded business
leader, with deep CEO and leadership experience
including having successfully led Air New Zealand
MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT 41

DIRECTORS' AND KMPs' REMUNERATION
Details of the nature and amount of each major element of remuneration of each Director of the Company, and other key management
personnel of the consolidated entity are:
Share-
Post- based
Short-term Long-term
employment payments
Salary & STI cash Other TOTAL Long service
Superannuation Termination Options TOTAL Proportion Value of
fees bonus leave benefits benefits and rights
remuneration options as

performance proportion of
related remuneration
Non-executive Directors $ $ $ $ $ $ $ $ $ % %
Emma Jane Hill 2018 193,610 - - 193,610 - - - - 193,610 - -
2017 190,000 - - 190,000 - - - - 190,000 - -
Sir Richard Michael Hill 2018 96,805 - - 96,805 - - - - 96,805 - -
2017 95,000 - - 95,000 - - - - 95,000 - -
Gary Warwick Smith 2018 115,804 - - 115,804 - 11,001 - - 126,805 - -
2017 104,072 - - 104,072 - 10,928 - - 115,000 - -
Robert Ian Fyfe 2018 116,805 - 84,000 200,805 - - - - 200,805 - -
2017 115,000 - - 115,000 - - - - 115,000 - -
Janine Suzanne Allis 2018 96,805 - - 96,805 - - - - 96,805 - -
2017 95,000 - - 95,000 - - - - 95,000 - -
Total Directors'
remuneration
2018 619,829 - 84,000 703,829 - 11,001 - - 714,830 - -
2017 599,072 - - 599,072 - 10,928 - - 610,000 - -
42 MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT
with over 11,000 employees. Over many years during Mr Fyfe’s
tenure, Air New Zealand was recognised globally for, its brand,
marketing, service culture and overall business performance.
Combined with Mr Fyfe’s understanding of the Michael Hill
business, the Board recognised that he is well positioned to
provide Mr Taylor with tailored leadership mentoring.
Mr Fyfe typically spends one to two days with Mr Taylor every
six weeks where he observes Mr Taylor’s management practices
and provides Mr Taylor with feedback and suggested techniques
and styles that Mr Taylor may adopt to enhance the effectiveness
of his management and leadership.
The mentoring also enables the Board to gain greater insight
into the leadership culture, strengths and challenges.
Mr Fyfe’s mentoring is non-prescriptive and Mr Fyfe does
not participate in management decisions. Mr Fyfe and the Board
consider that Mr Fyfe maintains an ability to bring independent and
critical assessment of Mr Taylor’s performance as CEO.
The income derived by Mr Fyfe (or entities Mr Fyfe controls)
under the Consultancy Agreement accounts for less than 10%
of Mr Fyfe’s aggregate annual income for FY18. For FY18, a
total amount of $84,000 was paid pursuant to the Consultancy
Agreement; this comprised an amount of $64,000 paid to Rob
Fyfe and an amount of $20,000 paid to The People Shop Ltd. The
Board anticipates that less than $100,000 will be paid pursuant
to the Consultancy Agreement for FY19 and will be paid to The
People Shop Ltd.
SERVICES FROM REMUNERATION CONSULTANTS
The People Development and Remuneration Committee
engaged a remuneration consultant during the 2016 financial
year to review the amount and elements of the key management
personnel remuneration and provide recommendations in relation
thereto. It is the committee's intention to engage consultants
every 3 years to review and advise on executive remuneration.
NON-EXECUTIVE DIRECTORS
Total compensation for all non-executive Directors, last voted upon
by shareholders on 29 June 2016, is not to exceed $840,000
per annum and is set based on advice from external advisors
with reference to fees paid to other non-executive Directors
of comparable companies. Directors’ base fees are presently
$96,805 per annum. Where a Director serves as Chair on the
People Development and Remuneration Committee they are
entitled to an additional payment of $20,000 per annum. Where
a Director serves as Chair on the Audit and Risk Committee they
are entitled to an additional payment of $30,000 per annum.
All non-executive Directors enter into a service agreement with
the Company in the form of a letter of appointment. The letter
summarises the board policies and terms, including remuneration,
relevant to the office of Director.
The Board Chair receives up to twice the base fee.
Non-executive Directors do not receive performance-related
compensation. Directors’ fees cover all main board activities and
membership of committees.
Non-executive directors are not provided with retirement
benefits apart from statutory superannuation.

MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT 43
Post- Share-based
Short-term Long-term employment payments
Salary & STI cash Other TOTAL Long service
Superannuation Termination Options TOTAL Proportion Value of
fees bonus leave benefits benefits and rights
remuneration options as

performance proportion of
related remuneration
$ $ $ $ $ $ $ $ $ % %
KMPs
Phil Taylor, CEO
(Formerly Interim
CEO and CFO)
2018 720,306 119,407 - 839,713 20,625 19,427 - 313,940 1,193,705 10.00% 26.30%
2017 691,733 167,267 - 859,000 112,205 30,627 - 227,332 1,229,164 13.61% 18.49%
Andrew Lowe, CFO
(Appointed
4 December 2017
) 2018 180,200 47,320 - 227,520 2,890 15,981 - 2,979 249,370 18.98% 1.19%
Vanessa Brennan, CB&CO
(Appointed
15 January 2018)
2018 192,980 70,000 - 262,980 2,976 17,018 - 4,113 287,087 24.38% 1.43%
Matt Keays, CIO 2018 324,316 30,802 - 355,118 5,596 25,000 - 14,461 400,175 7.70% 3.61%
2017 311,000 39,150 - 350,150 5,764 29,760 - 12,122 397,796 9.84% 3.05%
Galina Hirtzel, GESC 2018 281,606 24,609 - 306,215 6,243 23,355 - 34,682 370,495 6.64% 9.36%
2017 274,083 29,321 - 303,404 7,818 28,235 - 37,956 377,413 7.77% 10.06%
Stewart Silk, GEHR 2018 216,018 6,830 - 222,848 5,462 22,443 - 32,689 283,442 2.41% 11.53%
2017 216,847 24,023 - 240,870 4,114 27,640 - 36,281 308,905 7.78% 11.75%
Mike Parsell, CEO
(Resigned 8 August 2016) 2017 61,037 - - 61,037 (3,984) 38,623 1,603,742 - 1,699,418 -% -%
Anna Shaw, CMO
(Resigned 22 March 2017) 2017 304,022 68,000 - 372,022 - 29,498 - - 401,520 16.94% -%
Total KMPs'
remuneration
2018 1,915,426 298,968 - 2,214,394 43,792 123,224 - 402,864 2,784,274 10.74% 14.47%
2017 1,858,722 327,761 - 2,186,483 125,917 184,383 1,603,742 313,691 4,414,216 7.43% 7.11%
Total Directors'
and KMPs'
remuneration
2018 2,535,255 298,968 84,000 2,918,223 43,792 134,225 - 402,864 3,499,104 8.75% 11.80%
2017 2,457,794 327,761 - 2,785,555 125,917 195,311 1,603,742 313,691 5,024,216 6.52% 6.24%
Notes in relation to the table of Directors' and KMPs' remuneration:
a) The amount of $200,805 in respect of Robert Ian Fyfe’s salary & fees comprises an amount of $116,805 in respect of director fees and an amount
of $84,000 in respect of services provided pursuant to a consultancy agreement (Consultancy Fees); the Consultancy Fees comprised an amount of
$64,000 paid to Rob Fyfe and an amount of $20,000 paid to The People Shop Ltd. Further details regarding the consulting agreement are set out
in the Service contracts section above on page 41.
b) The short-term incentive bonus is for performance during the respective financial year using the criteria set out on page 38 of the Remuneration
report. The amount was determined on 24 August 2018 after performance reviews were completed and approved by the People Development and
Remuneration Committee.
c) The fair value of options is calculated at the date of grant using the Binomial option-pricing model and allocated to each reporting period evenly
over the period from grant date to vesting date. The value disclosed is the portion of the fair value of the options recognised as an expense in each
reporting period.
d) Mike Parsell's termination benefits were approved by shareholders and the Board on 31 October 2016.

44 MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT
ANALYSIS OF BONUSES INCLUDED IN REMUNERATION
Details of the vesting profile of the short-term incentive cash bonuses awarded as remuneration to each Director of the
Company, and other key management personnel are detailed below.
Target bonus Included in Amounts Vested in year
Short-term incentive bonus available $ remuneration $ (a) forfeited $ (b) %
KMPs
Phil Taylor 530,595 159,209 371,386 100%
Andrew Lowe 169,000 50,700 118,300 100%
Vanessa Brennan 150,500 70,000 80,500 100%
Matt Keays 118,470 35,541 82,929 100%
Galina Hirtzel 106,995 32,099 74,896 100%
Stewart Silk 85,371 25,611 59,760 100%
a) Amounts included in remuneration for the financial year represent the amount related to the financial year based on
achievement of personal goals and satisfaction of specified performance criteria. The People Development and
Remuneration Committee approved these amounts on 23 August 2018.
b) The amounts forfeited due to the performance or service criteria not being met in relation to the current financial year.
Additional statutory information
EQUITY INSTRUMENTS
All options refer to options over ordinary shares of Michael Hill International Limited, which are exercisable on a one-for-one
basis under the Executive Incentive Plan.
OPTIONS AND RIGHTS OVER EQUITY INSTRUMENTS ISSUED AS COMPENSATION
Details of tranches issued over ordinary shares in the Company that were issued as compensation to each key management
person during the reporting period under previously granted options and details on options that vested during the reporting
period are as follows:
Number of Option Fair value Exercise price Expiry date Number of

options issued issue date at grant date per option options vested
during 2018 per option during 2018
KMPs
Galina Hirtzel 100,000 05/10/2017 nz$0.148 au$1.44 30/09/2027 -
Stewart Silk 100,000 05/10/2017 nz$0.148 au$1.44 30/09/2027 -
All options expire on their expiry date or within 3 months of termination of the individual's employment. The options are
exercisable 5 years from release date. The options are conditional on continuing service. For options issued in the current
year, the earliest exercise date is 30/09/2022.
MODIFICATION OF TERMS OF EQUITY-SETTLED SHARE-BASED PAYMENT TRANSACTIONS
No terms of equity-settled share-based payment transactions (including options and rights granted as compensation to a key
management person) have been altered or modified by the issuing entity during the reporting period or the prior period. The
exercise price of any future option grants will be set by using the same method, with reference to the Australian Securities
Exchange ('ASX'). Upon exercise of any option previously granted with a NZ$ exercise price, the $ exercise price will be
converted to AU$ with reference to the Reserve Bank of Australian foreign exchange rate on that date.
UNISSUED SHARES
As at the date of this report, there were 3,800,000 unissued ordinary shares under options. Option holders do not have any
right, by virtue of the option, to participate in any share issue of the Company or any related body corporate.

MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT 45
ANALYSIS OF OPTIONS AND RIGHTS OVER EQUITY INSTRUMENTS GRANTED AS COMPENSATION
Details of vesting profiles of the options issued as remuneration to each key management person of the Group are detailed
below. When exercisable, each option is convertible into one ordinary share of Michael Hill International Limited. The vesting
conditions are set out in note 20(a).
Number Issue date* Exercise % % Financial years Financial years
price $ forfeited exercisable in which option in which option
Options granted in year** in year vests exercisable
KMPs
Phil Taylor 750,000 Nov 2007 nz$1.25 100% 100% 2008-2012 2013-2018
150,000 Nov 2009 nz$0.94 - 100% 2010-2014 2015-2020
150,000 Sep 2010 nz$0.88 - 100% 2011-2015 2016-2021
150,000 Sep 2011 nz$1.16 - 100% 2012-2016 2017-2022
150,000 Sep 2012 nz$1.41 - 100% 2013-2017 2018-2023
150,000 Sep 2013 nz$1.82 - - 2014-2018 2019-2024
750,000 Dec 2013 nz$1.82 - - 2014-2018 2019-2024
Total 2,250,000
Galina Hirtzel 500,000 Dec 2013 nz$1.82 - - 2014-2018 2019-2024
100,000 Sep 2014 nz$1.63 - - 2015-2019 2020-2025
100,000 Sep 2015 nz$1.14 - - 2016-2020 2021-2026
100,000 Sep 2016 au$2.12 - - 2017-2021 2022-2027
100,000 Oct 2017 au$1.44 2018-2022 2023-2028
Total 900,000
Stewart Silk 500,000 Dec 2013 nz$1.82 - - 2014-2018 2019-2024
100,000 Sep 2014 nz$1.63 - - 2015-2019 2020-2025
100,000 Sep 2015 nz$1.14 - - 2016-2020 2021-2026
100,000 Sep 2016 au$2.12 - - 2017-2021 2022-2027
100,000 Oct 2017 au$1.44 - - 2018-2022 2023-2028
Total 900,000
* The issue date refers to the date of the tranches prescribed in the options agreement.
** The percentage forfeited in the year represents the reduction from the maximum number of options available to vest due
to performance criteria not being achieved.
ANALYSIS OF MOVEMENTS IN OPTIONS
The movement during the reporting period, by value, of options over ordinary shares in the Company held by each key
management person is detailed below.
Value of options Value of options
issued in the year exercised in year
Phil Taylor - -
Andrew Lowe - -
Vanessa Brennan - -
Matt Keays - -
Galina Hirtzel nz$14,790 -
Stewart Silk nz$14,790 -

46 MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT
SHARE RIGHTS
The number of share rights issued to KMPs and senior executives during the last financial year (including the interim CEO
engagement package) was 536,551 share rights. Of these, share rights issued to KMPs are set out below (including the CEO
engagement package).
Number of Fair value
share rights issued per share right $
Phil Taylor 358,570 1.05
Andrew Lowe - -
Vanessa Brennan - -
Matt Keays 11,210 1.05
Galina Hirtzel 8,395 1.05
Stewart Silk 6,878 1.05
RECONCILIATION OF OPTIONS AND SHARE RIGHTS HELD BY KMP
The table below shows a reconciliation of options held by each KMP during the 2018 financial year. All vested options
were exercisable.
Balance at the start Balance at the end
of the year of the year
Vested Unvested Issued as Vested Exercised Forfeited Vested and Un-vested

compensation exercisable
Phil Taylor 2,250,000 - - - - (750,000) 1,500,000 -
Galina Hirtzel - 800,000 100,000 - - - - 900,000
Stewart Silk - 800,000 100,000 - - - - 900,000
Total 2,250,000 1,600,000 200,000 - - (750,000) 1,500,000 1,600,000
No options were exercised during the period.
No amounts are unpaid on any shares issued on the exercise of options.
This table below details share rights that were issued, vested and forfeited during the year for each KMP.

Balance Granted Vested Forfeited Balance at
at start of during end of year
the year the year (unvested)

Number Number Number Number Number
P Taylor 263,593 358,570 - - 622,163
M Keays 24,051 11,210 - - 35,261
G Hirtzel 21,824 8,395 - - 30,219
S Silk 18,484 6,878 - - 25,362
Total 327,952 385,053 - - 713,005
Share rights relating to the current reporting period are anticipated to be granted in late 2018. The number of shares will
depend on the Michael Hill International Limited’s share price over the five days prior to the grant date.
VOTING OF SHAREHOLDERS AT LAST YEAR'S ANNUAL GENERAL MEETING
Michael Hill International Limited received more than 99.92% of “yes” votes on its remuneration report for the 2017 financial
year. The Company did not receive any specific feedback at the AGM or throughout the year on its remuneration practices.

INSURANCE OF OFFICERS
The Company’s Constitution provides that it may indemnify any person who is, or has been, an officer of the Group, including
the Directors, the Secretaries and other officers, against liabilities incurred whilst acting as such officers to the extent
permitted by law. The Company has entered into a Deed of Indemnity, Insurance and Access with each of the Company’s
Directors, Company Secretary and certain other officers. No Director or officer of the Company has received benefits under
an indemnity from the Company during or since the end of the year.
The Company has paid a premium for insurance for officers of the Group. This insurance is against a liability for costs and
expenses incurred by officers in defending civil or criminal proceedings involving them as such officers, with some exceptions.
The contract of insurance prohibits disclosure of the nature of the liability insured against and the amount of the premium paid.
INDEMNITY OF AUDITORS
To the extent permitted by law, the Company has agreed to indemnify its auditor, Ernst & Young, as part of the terms of its
audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment
has been made to indemnify Ernst & Young during or since the financial year.
NON-AUDIT SERVICES
The following non-audit services were provided by the entity's auditor, Ernst & Young Australia. The Directors are satisfied
that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001. The nature and scope of each type of non-audit service provided means that auditor independence
was not compromised.
Ernst & Young Australia received or are due to receive the following amounts for the provision of non-audit services:
2018 2017

$ $
Ernst & Young firm advisory fees 170,231 7, 416
Total remuneration for non-audit services 170,231 7, 416
AUDITOR'S INDEPENDENCE DECLARATION
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
on page 48.
ROUNDING OF AMOUNTS
The Company is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to the 'rounding off' of amounts in the
Directors' report. Amounts in the Directors' report have been rounded off in accordance with the instrument to the nearest
thousand dollars, or in certain cases, to the nearest dollar.
This report is made on 24 August 2018 in accordance with a resolution of
Directors as required by section 298 of the Corporations Act 2001.
E. J. Hill, Chair
Brisbane
24 August 2018
MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT 47
JEWELLERY FROM INFINITAS
BY MICHAEL HILL COLLECTION

Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
T +61 7 3011 3333
F +61 7 3011 3100
ey.com/au
to the Directors of Michael Hill International Limited
As lead auditor for the audit of Michael Hill International Limited for the financial year
ended 30 June 2018, I declare to the best of my knowledge and belief, there have been:
a)
no contraventions of the auditor independence requirements of the Corporations
Act 2001 in relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Michael Hill International Limited and the entities it
controlled during the financial year.
Ernst & Young Alison de Groot
Partner
24 August 2018
AUDITOR’S INDEPENDENCE DECLARATION
48
JEWELLERY: SPIRITS BAY, CHRISTINE HILL COLLECTION

FINANCIAL STATEMENTS
49
The Directors present the consolidated financial
statements of Michael Hill International Limited and
its subsidiaries for the year ended 30 June 2018
50 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
51 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
52 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
53 CONSOLIDATED CASH FLOW STATEMENT
54 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
93 DIRECTORS' DECLARATION
94 AUDITOR'S REPORT

50 MICHAEL HILL INTERNATIONAL LIMITED 2018 FINANCIAL STATEMENTS
NOTES 2018 2017
$000 $000
Revenue from continuing operations 4 575,549 551,099
Other income 5(a) 1,064 1,640
Cost of goods sold (208,657) (200,093)
Employee benefits expense (151,939) (141,755)
Occupancy costs (58,074) (53,900)
Marketing expenses (31,433) (26,081)
Selling expenses (26,708) (24,647)
Impairment of property, plant and equipment (348) (36)
Impairment of other assets 8(c) (134) -
Onerous lease provision (6) -
Depreciation and amortisation expense 5(b) (18,694) (17,427)
Loss on disposal of property, plant and equipment (522) (557)
Other expenses (29,941) (25,896)
Finance costs 5(b) (2,690) (3,164)
Profit before income tax 47,467 59,183
Income tax expense 6 (12,649) (15,051)
Profit from continuing operations 34,818 44,132
Profit/(loss) from discontinued operations 14 (30,208) (11,485)
Profit for the year 4,610 32,647
Other comprehensive income
Item that may be reclassified subsequently to profit or loss:
Cash flow hedges 9(b) 996 (256)
Currency translation differences arising during the year 9(b) 320 (2,542)
Other comprehensive income for the year, net of tax 1,316 (2,798)
Total comprehensive income for the year 5,926 29,849
Total comprehensive income for the year attributable to:
Owners of Michael Hill International Limited 5,926 29,849
Total comprehensive income for the year attributable
to owners of Michael Hill International Limited arises from:
Continuing operations 36,134 41,334
Discontinuing operations (30,208) (11,485)
5,926 29,849
Earnings per share for profit attributable to the ordinary equity
holders of the Company, attributable to continuing operations:
Basic earnings per share 22 8.99¢ 11.43¢
Diluted earnings per share 22 8.98¢ 11.42¢
Earnings per share for profit attributable to
the ordinary equity holders of the Company:
Basic earnings per share 22 1.19¢ 8.46¢
Diluted earnings per share 22 1.19¢ 8.45¢
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
Consolidated statement of comprehensive income
FOR THE YEAR ENDED 30 JUNE 2018

MICHAEL HILL INTERNATIONAL LIMITED 2018 FINANCIAL STATEMENTS 51
Consolidated statement of financial position AS AT 30 JUNE 2018
NOTES 2018 2017
$000 $000
ASSETS
Current assets
Cash and cash equivalents 7(a) 7,220 5,676
Trade and other receivables 7(b) 25,381 24,219
Inventories 8(a) 192,074 203,853
Derivative financial instruments 11(a) 245 -
Current tax receivables 8(e) - 888
Other current assets 8(f) 3,688 3,945
Total current assets 228,608 238,581
Non-current assets
Trade and other receivables 7(b) 2,665 2,371
Property, plant and equipment 8(b) 66,666 79,436
Deferred tax assets 8(d) 61,895 57,893
Intangible assets 8(c) 12,626 8,784
Other non-current assets 8(f) 2,888 2,057
Total non-current assets 146,740 150,541
Total assets
375,348 389,122
LIABILITIES
Current liabilities
Trade and other payables 7(c) 49,339 47,918
Derivative financial instruments 11(a) 390 1,141
Current tax liabilities 8(g) 2,696 -
Provisions 8(h) 9,386 4,670
Deferred revenue 8(i) 26,476 25,924
Total current liabilities 88,287 79,653
Non-current liabilities
Borrowings 7(d) 35,213 45,034
Provisions 8(h) 4,907 6,235
Deferred revenue 8(i) 57,720 56,017
Total non-current liabilities 97,840 107,286
Total liabilities 186,127 186,939
Net assets 189,221 202,183
EQUITY
Contributed equity 9(a) 10,266 10,015
Reserves 9(b) 1,829 281
Retained profits 9(b) 177,126 191,887
Total equity 189,221 202,183
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

52 MICHAEL HILL INTERNATIONAL LIMITED 2018 FINANCIAL STATEMENTS
Attributable to owners of Notes Contributed Share Foreign Cash flow Retained Total
Michael Hill International Limited equity based currency hedge profits equity
payments translation reserve
reserve reserve
$000 $000 $000 $000 $000 $000
Balance at 1 July 2016 3,767 2,188 2,827 (884) 178,503 186,401
Profit for the year - - - - 32,648 32,648
Currency translation differences - - (2,542) - - (2,542)
Currency forward contracts - - - (834) - (834)
Interest rate swaps - - - 578 - 578
Total comprehensive income for the year - - (2,542) (256) 32,648 29,850
Transactions with members
in their capacity as owners:
Dividends paid 13(b)(i) - - - - (19,264) (19,264)
Option expense through share based
payments reserve 9(b) - 55 - - - 55
Issue of shares to employees
on exercise of options 4,825 - - - - 4,825
Transfer option reserve to contributed
equity on exercise of options 712 (712) - - - -
Transfer option reserve to contributed
equity on forfeiture of options 711 (711) - - - -
Share rights expense through
share based payments reserve - 316 - - - 316
6,248 (1,052) - - (19,264) (14,068)
Balance at 30 June 2017 10,015 1,136 285 (1,140) 191,887 202,183
Profit for the year - - - - 4,610 4,610
Currency translation differences - - 320 - - 320
Currency forward contracts - - - 336 - 336
Interest rate swaps - - - 659 - 659
Total comprehensive income for the year - - 320 995 4,610 5,925
Transactions with members
in their capacity as owners:
Dividends paid 13(b)(i) - - - - (19,371) (19,371)
Option expense through share based
payments reserve 9(b) - 42 - - - 42
Share rights expense through
share based payments reserve 442 - - - 442
Transfer option reserve to contributed
equity on expiration of options 251 (251) - - - -
251 233 - - (19,371) (18,887)
Balance at 30 June 2018 10,266 1,369 605 (145) 177,126 189,221
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Consolidated statement of changes in equity FOR THE YEAR ENDED 30 JUNE 2018

MICHAEL HILL INTERNATIONAL LIMITED 2018 FINANCIAL STATEMENTS 53
NOTES 2018 2017
$000 $000
Cash flows from operating activities
Receipts from customers (inclusive of GST and sales taxes) 671,165 649,041
Payments to suppliers and employees
(inclusive of GST and sales taxes) (570,280) (534,444)
100,885 114,597
Interest received 10 16
Other revenue 1,078 791
Interest paid (2,794) (3,106)
Income tax paid (6,448) (9,179)
Inland revenue tax settlement - (21,842)
Net GST and sales taxes paid (37,838) (41,525)
Net cash inflow from operating activities 10(a) 54,893 39,752
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 549 289
Payments for property, plant and equipment 8(b) (17,890) (27,294)
Payments for intangible assets 8(c) (6,665) (5,851)
Net cash (outflow) from investing activities (24,006) (32,856)
Cash flows from financing activities
Proceeds from issues of shares on exercise of options 9(a) - 4,825
Proceeds from borrowings 116,500 136,750
Repayment of borrowings (126,500) (132,250)
Dividends paid to Company's shareholders 13(b) (19,371) (19,264)
Net cash (outflow) from financing activities (29,371) (9,939)
Net increase / (decrease) in cash and cash equivalents 1,516 (3,043)

Cash and cash equivalents at the beginning of the financial year 5,676 8,853
Effects of exchange rate changes on cash and cash equivalents
28 (134)
Cash and cash equivalents at the end of the financial year 7(a) 7,220 5,676
The above consolidated cash flow statement should be read in conjunction with the accompanying notes.
Consolidated cash flow statement FOR THE YEAR ENDED 30 JUNE 2018

54 MICHAEL HILL INTERNATIONAL LIMITED 2018 FINANCIAL STATEMENTS
NOTE 1 Corporate information
The consolidated financial statements of Michael Hill
International Limited and its subsidiaries (collectively, the
Group) for the year ended 30 June 2018 were authorised for
issue in accordance with a resolution of the directors on 24
August 2018. Michael Hill International Limited (the Company
or Parent) is a for profit company limited by shares incorporated
in Australia. The Company listed on the Australian Securities
Exchange ('ASX') on 7 July 2016 as its primary listing, and
maintains a secondary listing on the New Zealand Stock
Exchange ('NZX').
NOTE 2 Summary of significant
accounting policies
(a) BASIS OF PREPARATION
The financial report is a general purpose financial
report, which has been prepared in accordance with the
requirements of the Corporations Act 2001, Australian
Accounting Standards and other authoritative pronounce-
ments of the Australian Accounting Standards Board.
The financial report is presented in Australian dollars
and all values are rounded to the nearest thousand
($'000), except when otherwise indicated.
The financial statements have been prepared on
a historical cost basis, except for derivative financial
instruments that have been measured at fair value. The
consolidated financial statements provide comparative
information in respect of the previous period.
Compliance with IFRS
The consolidated financial statements of the Group comply
with International Financial Reporting Standards (IFRS) as
issued by the International Accounting Standards Board
(IASB
(b)
PRINCIPLES OF CONSOLIDATION
AND EQUITY ACCOUNTING
Subsidiaries
Subsidiaries are all entities (including special purpose)
over which the Group has control. Control is achieved
when the Group is exposed, or has rights, to variable
returns from its involvement with the investee and has
the ability to affect those returns through its power to
direct the activities of the investee. Subsidiaries are fully
consolidated from the date on which control is transferred
to the Group. They are deconsolidated from the date that
control ceases.
The acquisition method of accounting is used to
account for the acquisition of subsidiaries by the Group.
The cost of an acquisition is measured as the fair value of
the assets given, equity instruments issued and liabilities
incurred or assumed at the date of exchange. Identifiable
assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially
at their fair values at the acquisition date, irrespective of
the extent of any non-controlling interest. The excess of
the cost of acquisition over the fair value of the Group's
share of the identifiable net assets acquired is recorded as
goodwill. If the cost of acquisition is less than the fair value
of the net assets of the subsidiary acquired, the difference
is recognised directly in the statement of comprehensive
income. Investments in subsidiaries are accounted for at
cost in the individual financial statements of Michael Hill
International Limited. Refer to note 15(a).
Intercompany transactions, balances and unrealised
gains on transactions between Group companies are
eliminated on consolidation. Unrealised losses are also
eliminated unless the transaction provides evidence of the
impairment of the transferred asset. Accounting policies
of subsidiaries have been changed where necessary to
ensure consistency with the policies adopted by the Group.
(c)
SEGMENT REPORTING
Operating segments are reported in a manner consistent
with the internal reporting provided to the chief operating
decision makers. The chief operating decision makers, who
are responsible for allocating resources and assessing
performance of the operating segments, have been
identified as the Executive Management team.
(d)
FOREIGN CURRENCY TRANSLATION
(i) Functional and presentation currency
Items included in the financial statements of each of
the Group's entities are measured using the currency of
the primary economic environment in which the entity
operates ('the functional currency'). The Group financial
statements are presented in Australian dollars, which is the
Group's presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and
losses resulting from the settlement of such transactions
and from the translation at year-end of monetary assets
and liabilities denominated in foreign currencies are
recognised in the income statement, except when deferred
in equity as qualifying cash flow hedges and qualifying net
investment hedges or are attributable to part of the net
investment in a foreign operation.
(iii) Group companies
The results and financial position of all the Group entities
(none of which have the currency of a hyperinflation-
ary economy) that have a functional currency different
from the presentation currency are translated into the
presentation currency as follows:
• assets and liabilities for each balance sheet presented
are translated at the closing rate at the date of the
statement of financial position;
• income and expenses for each statement of profit
or loss and statement of comprehensive income are
translated at average exchange rates, unless this is not
a reasonable approximation of the cumulative effect of
the rates prevailing on the transaction dates, in which
Notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2018

MICHAEL HILL INTERNATIONAL LIMITED 2018 FINANCIAL STATEMENTS 55
case income and expenses are translated at the dates
of the transactions; and
• all resulting exchange differences are recognised in
other comprehensive income.
On consolidation, exchange differences arising from
the translation of any net investment in foreign entities, and
of borrowings and other financial instruments designated
as hedges of such investments, are recognised in other
comprehensive income.
(e)
REVENUE RECOGNITION
(i) Sales of goods - retail
Sales of goods are recognised when a Group entity
delivers a product to the customer. Retail sales are
usually by cash, payment plan or credit card. The recorded
revenue is the gross amount of sale (excluding taxes),
including any fees payable for the transaction
It is the Group's policy to sell its products to the end
customer with a right of return. Accumulated experience is
used to estimate and provide for such returns at the time
of sale, recognising a Returns provision and corresponding
Returns Inventory.
(ii) Rendering of services -
deferred service revenue
The Group offers a professional care plan ('PCP') product
which is considered deferred revenue until such time that
service has been provided. A PCP is a plan under which
the Group offers future services to customers based
on the type of plan purchased. The Group subsequently
recognises the income in revenue in the statement of
comprehensive income once these services are performed.
An estimate is used as a basis to establish the amount
of service revenue to recognise in the consolidated
statement of comprehensive income.
(iii) Rendering of services - repairs
Sales of services for repair work performed is recognised
in the accounting period in which the services are rendered.
(iv) Interest revenue from in-house
customer finance program
Interest revenue is recognised on the in-house customer
finance program when consideration is deferred. It is
calculated as the difference between the nominal cash
and cash equivalents received from customers and the
discounted cashflows, on both interest and non-interest
bearing products. Interest revenue is brought to account
over the term of the finance agreement, and the rate used
for non-interest bearing products is in line with current,
comparable market rates.
(v) Interest income
Interest income is recognised using the effective interest
method.
(f)
TA X E S
Current income tax
The income tax expense or credit for the year is the tax
payable on the current year's taxable income based on the
applicable income tax rate for each jurisdiction adjusted by
changes in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.
The current income tax charge is calculated on the
basis of the tax laws enacted or substantively enacted
at the end of the reporting year in the countries where
the Group operates and generates taxable income.
Management periodically evaluates positions taken in
tax returns with respect to situations in which applicable
tax regulation is subject to interpretation. It establishes
provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Current tax is recognised in profit or loss, except
to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case,
the tax is also recognised in other comprehensive income
or directly in equity, respectively.
Deferred income tax
Deferred income tax is provided in full, using the liability
method, on temporary differences between the tax bases
of assets and liabilities and their carrying amounts in the
consolidated financial statements.
Deferred tax assets are recognised for deductible
temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to
utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised
for temporary differences between the carrying amount
and tax bases of investments in controlled entities where
the Parent Entity is able to control the timing of the
reversal of the temporary differences and it is probable
that the differences will not reverse in the foreseeable
future.
Deferred tax is recognised in profit or loss, except
to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case,
the tax is also recognised in other comprehensive income
or directly in equity, respectively.
Deferred tax assets and liabilities are offset when
there is a legally enforceable right to offset current tax
assets and liabilities and when the deferred tax balances
relate to the same taxation authority. Current tax assets
and tax liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle on
a net basis, or to realise the asset and settle the liability
simultaneously.
Tax consolidation group
Michael Hill International Limited and its wholly-owned
Australian controlled entities formed a tax consolidation
group on 29 June 2016. As a consequence, one income
tax return is completed for the Australian tax group and is
treated for income tax purposes as one taxpayer.
Formerly, Michael Hill Jeweller (Australia) Pty Ltd
and all wholly-owned Australian controlled entities formed
the Australian tax consolidation group which completed
one income tax return and was treated for income tax
purposes as one taxpayer.
The tax balances have been attributed for reporting
purposes to each of the entities on the basis of their
individual results. Amounts of tax due to and receivable

56 MICHAEL HILL INTERNATIONAL LIMITED 2018 FINANCIAL STATEMENTS
from the Australian Taxation Office are made by Michael
Hill International Limited as nominated member of the
Australian tax consolidated group. The current tax balance
for the Australian tax group has been allocated between
the members based on each entity’s current tax movement
for the period. Where tax losses are incurred by Australian
tax group members, these are offset within the group.
(g)
GOODS AND SERVICES TAX (GST)
Revenues, expenses and assets are recognised net of the
amount of GST, except:
• When the GST incurred on a sale or purchase of assets
or services is not payable to or recoverable from the
taxation authority, in which case the GST is recognised
as part of the revenue or the expense item or as part of
the cost of acquisition of the asset, as applicable; or
• When receivables and payables are stated with the
amount of GST included.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables
or payables in the statement of financial position.
Commitments and contingencies are disclosed net of
the amount of GST recoverable from, or payable to, the
taxation authority.
Cash flows are included in the statement of cash
flows on a gross basis and the GST components of cash
flows arising from investing or financing activities which
are recoverable from, or payable to, the taxation authority,
are presented as operating cash flows.
(h)
LEASES
Leases of property, plant and equipment where the Group,
as lessee, has substantially all the risks and rewards of
ownership are classified as finance leases. Finance leases
are capitalised at the lease's inception at the fair value
of the leased property or, if lower, the present value of
the minimum lease payments. The corresponding rental
obligations, net of finance charges, are included in other
short-term and long-term payables. Each lease payment
is allocated between the liability and finance cost. The
finance cost is charged to the consolidated statement
of comprehensive income over the lease period so as
to produce a constant periodic rate of interest on the
remaining balance of the liability for each year. The
property, plant and equipment acquired under finance
leases is depreciated over the asset's useful life or over
the shorter of the asset's useful life and the lease term.
Leases in which a significant portion of the risks
and rewards of ownership are not transferred to the
Group as lessee are classified as operating leases (note
17). Payments made under operating leases (net of any
incentives received from the lessor) are charged to profit
or loss on a straight-line basis over the year of the lease..
(i)
IMPAIRMENT OF ASSETS
At each annual reporting date (or more frequently if
events or changes in circumstances indicate that they
might be impaired), the Group assesses whether there
is any indication that an asset may be impaired. Where
such an indication is identified, the Group estimates
the recoverable amount of the asset and recognises an
impairment loss where the recoverable amount is less than
the carrying amount. The recoverable amount is the higher
of an asset's fair value less costs to sell and value-in-use..
In addition, at least annually, goodwill and intangible
assets with indefinite useful lives are tested for impairment
by comparing their estimated recoverable amounts with
their carrying amounts. Where the recoverable amount
exceeds the carrying amount of an asset, an impairment
loss is recognised.
The pre-tax discount rates used in determining the
recoverable amount ranged between 10.5% and 11.5%
(2017: 11.1% and 14.6%), depending on the geographical
segment of the assets.
(j)
CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash on hand, deposits
held at call with financial institutions, other short-term,
highly liquid investments with original maturities of three
months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant
risk of changes in value, and bank overdrafts. Bank
overdrafts are shown within borrowings in current liabilities
in the statement of financial position when utilised.
(k)
TRADE AND OTHER RECEIVABLES
Trade receivables are amounts due from customers for
goods sold or services rendered in the ordinary course of
business. If collection is expected in one year or less (or in
the normal operating cycle of the business if longer), they
are classified as current assets. If not, they are presented
as non-current assets.
Collectibility of trade receivables is reviewed on an
ongoing basis. Trade receivables which are known to
be uncollectible are written off. A provision for impaired
receivables is established when there is objective evidence
that the Group will not be able to collect all amounts due
according to the original terms of receivables. The amount
of the provision is the difference between the asset’s
carrying amount and the present value of estimated future
cash flows, discounted at the original effective interest
rate. Cash flows relating to short-term receivables are not
discounted if the effect of discounting is immaterial. The
amount of the provision is recognised in the statement of
comprehensive income.
(l)
DEFERRED EXPENDITURE
Direct and incremental bonuses associated with the sale
of PCPs are deferred and amortised in proportion to the
PCP revenue recognised. Management reviews trends in
current and estimated future services provided under the
plan to assess whether changes are required to the cost
recognition rates used.
(m)
INVENTORIES
Raw materials and finished goods are stated at the lower
of cost and net realisable value. Cost comprises direct
materials, direct labour and an appropriate proportion of
variable and fixed overhead expenditure, the latter being
allocated on the basis of normal operating capacity. Costs
are assigned to individual items of inventory on the basis
of weighted average costs. Net realisable value is the
Notes to the consolidated financial statements cont. FOR THE YEAR ENDED 30 JUNE 2018

MICHAEL HILL INTERNATIONAL LIMITED 2018 FINANCIAL STATEMENTS 57
estimated selling price in the ordinary course of business
less the estimated costs of completion and the estimated
costs necessary to make the sale.
(n)
DISCONTINUED OPERATIONS
A discontinued operation is a component of the entity
that has been disposed of or is classified as held for sale
and that represents a separate major line of business
or geographical area of operations, is part of a single
co-ordinated plan to dispose of such a line of business or
area of operations, or is a subsidiary acquired exclusively
with a view to resale. The results of discontinued operations
are presented separately in the statement of profit or loss.
(o)
INVESTMENTS AND OTHER FINANCIAL ASSETS
Classification
The Group classifies its financial assets in the following
categories:
• financial assets at fair value through profit or loss,
• loans and receivables,
• held-to-maturity investments, and
• available-for-sale financial assets.
The classification depends on the purpose for which the
investments were acquired. Management determines the
classification of its investments at initial recognition and, in
the case of assets classified as held-to-maturity, re-evaluates
this designation at the end of each reporting year. See note 7
for details about each type of financial asset.
(i) Financial assets at fair value through
profit or loss
Financial assets at fair value through profit or loss are
financial assets held for trading. A financial asset is
classified in this category if acquired principally for the
purpose of selling in the short term. Derivatives are
classified as held for trading unless they are designated
as hedges. Assets in this category are classified as current
assets if they are expected to be settled within 12 months;
otherwise they are classified as non-current.
(ii) Loans and receivables
Loans and receivables are non-derivative financial
assets with fixed or determinable payments that are not
quoted in an active market. They are included in current
assets, except for those with maturities greater than 12
months after the reporting period which are classified as
non-current assets. Loans and receivables are included in
trade and other receivables in the statement of financial
position (note 7(b)).
Held-to-maturity investments
Held-to-maturity investments are non-derivative financial
assets with fixed or determinable payments and fixed
maturities that the Group's management has the positive
intention and ability to hold to maturity. If the Group were to
sell other than an insignificant amount of held-to-maturity
financial assets, the whole category would be tainted and
reclassified as available-for-sale. Held-to-maturity financial
assets are included in non-current assets, except for those
with maturities less than 12 months from the end of the
reporting period, which are classified as current assets.
Available-for-sale financial assets
Available-for-sale financial assets, comprising principally
marketable equity securities, are non-derivatives that
are either designated in this category or not classified
in any of the other categories. They are included in
non-current assets unless the investment matures or
management intends to dispose of the investment within
12 months of the end of the reporting period. Investments
are designated as available-for-sale if they do not have
fixed maturities and fixed or determinable payments and
management intends to hold them for the medium to
long-term.
Impairment
The Group assesses at the end of each reporting period
whether there is objective evidence that a financial asset
or a Group of financial assets is impaired. A financial asset
or a Group of financial assets is impaired and impairment
losses are incurred only if there is objective evidence
of impairment as a result of one or more events that
occurred after the initial recognition of the asset (a 'loss
event') and that loss event (or events) has an impact on
the estimated future cash flows of the financial asset or
Group of financial assets that can be reliably estimated. In
the case of equity investments classified as available-for-
sale, a significant or prolonged decline in the fair value of
the security below its cost is considered an indicator that
the assets are impaired.
(p)
DERIVATIVES AND HEDGING ACTIVITIES
Derivatives are initially recognised at fair value on the date
a derivative contract is entered into and are subsequently
remeasured to their fair value at the end of each reporting
year. The accounting for subsequent changes in fair
value depends on whether the derivative is designated
as a hedging instrument, and if so, the nature of the item
being hedged. The Group designates certain derivatives
as either:
• hedges of the fair value of recognised assets or
liabilities or a firm commitment (fair value hedges)
• hedges of a particular risk associated with the cash
flows of recognised assets and liabilities and highly
probable forecast transactions (cash flow hedges), or
• hedges of a net investment in a foreign operation (net
investment hedges).
The Group documents at the inception of the hedging
transaction the relationship between hedging instruments
and hedged items, as well as its risk management objective
and strategy for undertaking various hedge transactions.
The Group also documents its assessment, both at
hedge inception and on an ongoing basis, of whether the
derivatives that are used in hedging transactions have
been and will continue to be highly effective in offsetting
changes in fair values or cash flows of hedged items.
The fair values of various derivative financial
instruments used for hedging purposes are disclosed
in note 7(e). Movements in the hedging reserve in
shareholder's equity are shown in note 9(b). The full fair
value of a hedging derivative is classified as a non-current

58 MICHAEL HILL INTERNATIONAL LIMITED 2018 FINANCIAL STATEMENTS
asset or liability when the remaining maturity of the
hedged item is more than 12 months; it is classified as a
current asset or liability when the remaining maturity of the
hedged item is less than 12 months. Trading derivatives
are classified as a current asset or liability.
(i) Fair value hedge
Changes in the fair value of derivatives that are designated
and qualify as fair value hedges are recorded in the income
statement, together with any changes in the fair value of
the hedged asset or liability that are attributable to the
hedged risk. The gain or loss relating to the effective portion
of interest rate swaps hedging fixed rate borrowings is
recognised in profit or loss within finance costs, together
with changes in the fair value of the hedged fixed rate
borrowings attributable to interest rate risk. The gain or loss
relating to the ineffective portion is recognised in profit or
loss within other income or other expenses.
If the hedge no longer meets the criteria for hedge
accounting, the adjustment to the carrying amount of
a hedged item for which the effective interest method
is used is amortised to profit or loss over the period to
maturity using a recalculated effective interest rate.
(ii) Cash flow hedge
The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash flow
hedges is recognised in other comprehensive income and
accumulated in reserves in equity. The gain or loss relating
to the ineffective portion is recognised immediately in
profit or loss within other income or other expense.
Amounts accumulated in equity are reclassified to
profit or loss in the years when the hedged item affects
profit or loss (for instance when the forecast sale that
is hedged takes place). The gain or loss relating to the
effective portion of interest rate swaps hedging variable
rate borrowings is recognised in profit or loss within
'finance costs'. The gain or loss relating to the effective
portion of forward foreign exchange contracts hedging
export sales is recognised in profit or loss within 'sales'.
However, when the forecast transaction that is hedged
results in the recognition of a non-financial asset (for
example, inventory or fixed assets) the gains and losses
previously deferred in equity are reclassified from equity
and included in the initial measurement of the cost of the
asset. The deferred amounts are ultimately recognised in
profit or loss as cost of goods sold in the case of inventory,
or as depreciation or impairment in the case of fixed assets.
When a hedging instrument expires or is sold or
terminated, or when a hedge no longer meets the criteria
for hedge accounting, any cumulative gain or loss existing in
equity at that time remains in equity and is recognised when
the forecast transaction is ultimately recognised in profit
or loss. When a forecast transaction is no longer expected
to occur, the cumulative gain or loss that was reported in
equity is immediately reclassified to profit or loss.
(iii) Net investment hedges
Hedges of net investments in foreign operations are
accounted for similarly to cash flow hedges.
Any gain or loss on the hedging instrument relating
to the effective portion of the hedge is recognised in other
comprehensive income and accumulated in reserves in
equity. The gain or loss relating to the ineffective portion
is recognised immediately in profit or loss within other
income or other expenses.
Gains and losses accumulated in equity are
reclassified to profit or loss when the foreign operation is
partially disposed of or sold.
(iv) Derivatives that do not qualify for hedge
accounting
Certain derivative instruments do not qualify for hedge
accounting. Changes in the fair value of any derivative
instrument that does not qualify for hedge accounting are
recognised immediately in profit or loss and are included
in other income or other expenses.
(q)
PROPERTY, PLANT AND EQUIPMENT
All property, plant and equipment is stated at historical cost
less depreciation. Historical cost includes expenditure that
is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's
carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic
benefits associated with the item will flow to the Group
and the cost of the item can be measured reliably. The
carrying amount of any component accounted for as a
separate asset is derecognised when replaced. All other
repairs and maintenance are charged to profit or loss
during the reporting year in which they are incurred.
Depreciation on other assets is calculated using
the straight line method to allocate their cost or revalued
amounts, net of their residual values, over their estimated
useful lives (see Note 8(b)).
The assets' residual values and useful lives are
reviewed, and adjusted if appropriate, at the end of each
reporting year.
An asset's carrying amount is written down
immediately to its recoverable amount if the asset's
carrying amount is greater than its estimated recoverable
amount (note 2(i)).
Gains and losses on disposals are determined
by comparing proceeds with carrying amount. These are
included in profit or loss. When revalued assets are sold, it
is Group policy to transfer any amounts included in other
reserves in respect of those assets to retained earnings.
(r)
INTANGIBLE ASSETS
Software
Acquired computer software licences are capitalised on
the basis of the costs incurred to acquire and bring to use
the specific software. These costs are amortised over their
estimated useful lives (three to five years).
Costs associated with developing or maintaining
software programmes are recognised as an expense as
Notes to the consolidated financial statements cont. FOR THE YEAR ENDED 30 JUNE 2018

MICHAEL HILL INTERNATIONAL LIMITED 2018 FINANCIAL STATEMENTS 59
incurred. Development costs that are directly attributable
to the design and testing of identifiable and unique
software products controlled by the Group are recognised
as intangible assets when the following criteria are met:
• it is technically feasible to complete the software so that
it will be available for use
• management intends to complete the software and use
or sell it
• there is an ability to use or sell the software
• it can be demonstrated how the software will generate
probable future economic benefits
• adequate technical, financial and other resources to
complete the development and to use or sell the
software are available, and
• the expenditure attributable to the software during its
development can be reliably measured.
Directly attributable costs that are capitalised as part of
the software include employee costs and an appropriate
portion of relevant overheads.
Capitalised development costs are recorded as
intangible assets and amortised from the point at which
the asset is ready for use.
Computer software development costs recognised as
assets are amortised over their estimated useful lives (not
exceeding ten years).
(s)
TRADE AND OTHER PAYABLES
These amounts represent liabilities for goods and services
provided to the Group prior to the end of financial year
which are unpaid. The amounts are unsecured and are
usually paid within 30 days of recognition. Trade and
other payables are presented as current liabilities unless
payment is not due within 12 months after the reporting
year. They are recognised initially at their fair value and
subsequently measured at amortised cost using the
effective interest method.
Deferred revenue represents lease incentives for
entering new lease agreements and revenue from PCPs.
The accounting policy used to recognise the revenue is
detailed in note 2(e)(ii).
(t)
BORROWINGS
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the
proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the year of the
borrowings using the effective interest method.
Borrowings are removed from the balance sheet
when the obligation specified in the contract is discharged,
cancelled or expired. The difference between the carrying
amount of a financial liability that has been extinguished
or transferred to another party and the consideration paid,
including any non-cash assets transferred or liabilities
assumed, is recognised in profit or loss as other income
or finance costs.
Borrowings are classified as current liabilities unless
the Group has an unconditional right to defer settlement of
the liability for at least 12 months after the reporting year.
(u)
PROVISIONS
Provisions for are recognised when the Group has a
present legal or constructive obligation as a result of past
events, it is probable that an outflow of resources will be
required to settle the obligation and the amount can be
reliably estimated. Provisions are not recognised for future
operating losses.
Where there are a number of similar obligations, the
likelihood that an outflow will be required in settlement is
determined by considering the class of obligations as a
whole. A provision is recognised even if the likelihood of an
outflow with respect to any one item included in the same
class of obligations may be small.
Present obligations arising from onerous contracts
are required to be recognised and measured as a provision.
An onerous contract is considered to exist where the
unavoidable cost of meeting the obligations under the
contract exceed the economic benefits expected to be
received from the contract. The Group has recognised a
provision in relation to one contract at our Maryborough
location in Australia that was identified as onerous during
the reporting period.
Provisions are measured at the present value of
management's best estimate of the expenditure required
to settle the present obligation at the end of the reporting
year. The discount rate used to determine the present
value is a pre-tax rate that reflects current market
assessments of the time value of money and the risks
specific to the liability. The increase in the provision due
to the passage of time is recognised as interest expense.
(v)
EMPLOYEE BENEFITS
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary
benefits and accumulating sick leave that are expected
to be settled wholly within 12 months after the end of the
year in which the employees render the related service are
recognised in respect of employees’ services up to the end
of the reporting year and are measured at the amounts
expected to be paid when the liabilities are settled.
Provisions for employee benefits are measured at
the present value of management’s best estimate of the
expenditure required to settle the present obligation at the
reporting date.
(ii) Other long-term employee benefit obligations
The liabilities for long service leave and annual leave that
are not expected to be settled wholly within 12 months
after the end of the year in which the employees render
the related service are measured as the present value
of expected future payments to be made in respect of
services provided by employees up to the end of the
reporting year using the projected unit credit method.
Consideration is given to expected future wage and salary
levels, experience of employee departures and periods
of service. Expected future payments are discounted
using the Milliman G100 discount rates at the end
of the reporting period. Remeasurements as a result
of experience adjustments and changes in actuarial
assumptions are recognised in profit or loss.

60 MICHAEL HILL INTERNATIONAL LIMITED 2018 FINANCIAL STATEMENTS
The obligations are presented as current liabilities in
the statement of financial position if the entity does not
have an unconditional right to defer settlement for at least
twelve months after the reporting year, regardless of when
the actual settlement is expected to occur.
(iii) Share-based payments – Employee options
Options are issued to Executives of Michael Hill
International Limited in accordance with the Company's
constitution. The Board of Directors pass a resolution
approving the issue of the options. The fair value of options
granted is recognised as an employee benefit expense
with a corresponding increase in equity.
The fair value is measured at grant date and
recognised over the period during which the employees
become unconditionally entitled to the options. The fair
value at grant date for options issued during 2018 were
independently determined using a Binomial option pricing
model, which is an iterative model for options that can
be exercised at times prior to expiry. The model takes
into account the grant date, exercise price, the vesting
and performance criteria, the impact of dilution, the
non-tradeable nature of the option, the share price at grant
date and expected price volatility of the underlying share,
the expected dividend yield and the risk-free interest rate
for the term of the option. It also assumes the options will
be exercised at the mid-point of the exercise period.
The fair value of options granted is recognised as an
employee benefits expense with a corresponding increase
in equity. The total amount to be expensed is determined
by reference to the fair value of the options granted:
• including any market performance conditions (eg the
entity’s share price)
• excluding the impact of any service and non-market
performance vesting conditions (eg profitability, sales
growth targets and remaining an employee of the entity
over a specified time year), and
• including the impact of any non-vesting conditions
(eg the requirement for employees to save or holdings
shares for a specific year of time).
The total expense is recognised over the vesting period,
which is the period over which all of the specified vesting
conditions are to be satisfied. At the end of each year, the
entity revises its estimates of the number of options that
are expected to vest based on the non-marketing vesting
and service conditions. It recognises the impact of the
revision to original estimates, if any, in profit or loss, with a
corresponding adjustment to equity.
Upon the exercise of options, the balance of the
share-based payments reserve relating to those options is
transferred to share capital.
(iv) Profit-sharing and bonus plans
The Group recognises a liability and an expense for
bonuses and profit-sharing based on a formula that
takes into consideration the profit attributable to the
Company's shareholders after certain adjustments. The
Group recognises a provision where contractually obliged
or where there is a past practice that has created a
constructive obligation.
(v) Retirement benefit obligations
All Australian and Canadian employees of the Group are
entitled to benefits from the Group's superannuation plan
on retirement, disability or death or can direct the group to
make contributions to a defined contribution plan of their
choice. The Group’s superannuation plan has a defined
benefit section which receives fixed contributions from
Group companies and the Group's legal or constructive
obligation is limited to these contributions.
(w)
CONTRIBUTED EQUITY
Ordinary shares are classified as equity
Incremental costs directly attributable to the issue of
new shares or options are shown in equity as a deduction,
net of tax, from the proceeds.
Where any Group company purchases the Company's
equity instruments, for example as the result of a share
buy-back or a share-based payment plan, the consideration
paid, including any directly attributable incremental costs
(net of income taxes) is deducted from equity attributable
to the owners of Michael Hill International Limited as
treasury shares until the shares are cancelled or reissued.
Where such ordinary shares are subsequently reissued,
any consideration received, net of any directly attributable
incremental transaction costs and the related income tax
effects, is included in equity attributable to the owners of
Michael Hill International Limited.
(x)
DIVIDENDS
Provision is made for the amount of any dividend declared,
being appropriately authorised and no longer at the
discretion of the entity, on or before the end of the reporting
year but not distributed at the end of the reporting year.
(y)
EARNINGS PER SHARE
(i) Basic earnings per share
Basic earnings per share is calculated by dividing:
•
the profit attributable to owners of the Company, excluding
any costs of servicing equity other than ordinary shares
• by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the year and
excluding treasury shares.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into
account:
• the after income tax effect of interest and other financing
costs associated with dilutive potential ordinary shares,
and
• the weighted average number of additional ordinary
shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.
(z)
ROUNDING OF AMOUNTS
The Company is of a kind referred to in ASIC Legislative
Instrument 2016/191, relating to the 'rounding off' of
amounts in the financial statements. Amounts in the
financial statements have been rounded off in accordance
with the instrument to the nearest thousand dollars, or in
certain cases, the nearest dollar.
Notes to the consolidated financial statements cont. FOR THE YEAR ENDED 30 JUNE 2018

MICHAEL HILL INTERNATIONAL LIMITED 2018 FINANCIAL STATEMENTS 61
(aa) NEW ACCOUNTING STANDARDS AND
INTERPRETATIONS
Certain new accounting standards and interpretations
have been published that are not mandatory for 30 June
2018 reporting periods and have not been early adopted
by the group. The Group's assessment of the financial
impact of these new standards and interpretations is set
out below.
(i) AASB 9 Financial Instruments:
Classification and measurement
AASB 9 Financial Instruments addresses the classifica-
tion, measurement and derecognition of financial assets
and financial liabilities. The standard is applicable to
financial years commencing on or after 1 January 2018,
and the Group will be adopting the new standard from 1
July 2018. The impairment model under the new Standard
is based on expected credit losses rather than incurred
losses under AASB 139. The expected credit loss model
results in early recognition of impairment allowances
and likely larger amount of the allowances. The level of
allowances will also be more volatile in the future, as
forecasts change. Adopting the expected credit loss model
requires changes in current systems and processes and
the use of judgement. Preliminary assessments indicate
that the impact of the standard is not expected to be
significant on the consolidated financial position, cash
flow and results of operations. This standard will require
additional assessment and disclosure of financial assets
and liabilities held by the Group. The Group will continue
to apply the provisions of AASB 139 in relation to open
hedges until they are settled.
(ii)
AASB 15 Revenue from Contracts with Customers
AASB 15 Revenue deals with revenue recognition and
establishes principles for reporting useful information to
users of financial statements about the nature, amount,
timing and uncertainty of revenue and cash flows arising
from an entity’s contracts with customers. Revenue is
recognised when a customer obtains control of a good
or service and thus has the ability to direct the use and
obtain the benefits from the good or service. AASB 15
supersedes:
(a) AASB 111 Construction Contracts;
(b) AASB 118 Revenue;
(c) Interpretation 13 Customer Loyalty Programmes;
(d) Interpretation 15 Agreements for the Construction of
Real Estate;
(e) Interpretation 18 Transfers of Assets from Customers;
(f) Interpretation 131 Revenue - Barter Transactions
Involving Advertising Services; and
(g) Interpretation 1042 Subscriber acquisition costs in
the Telecommunications Industry.
The core principle of AASB 15 is that an entity recognises
revenue to depict the transfer of promised goods or services
to customers in an amount that reflects the consideration to
which the entity expects to be entitled in exchange for those
goods or services. This is largely in line with the current
accounting policies adopted for recognition of revenue, as
described in note 2(e).
The standard is applicable for financial years
commencing on or after 1 January 2018, and the Group
will be adopting the new standard from 1 July 2018.
Substantial work has been completed reviewing the
Group's different revenue streams. The revenue from the
sale of goods will be recognised at a point in time while
the revenue from sale of PCP will be recognised over time
consistent with the current accounting treatment. The
impact of the new revenue standard is not expected to be
significant. The new standard will require certain disclosure
related changes to the 2019 financial statements.
(iii) AASB 16 Leases
AASB 16 Leases addresses the recognition and
measurement of assets and liabilities for all leases with a
term of more than 12 months, unless they are of low value.
It also contains the disclosure requirements for lessees
and lessors. AASB 16 supersedes:
(a) AASB 117 Leases;
(b) Interpretation 4 Determining whether an Arrangement
contains a Lease;
(c) SIC-15 Operating Leases - Incentives; and
(d) SEC - 27 Evaluating the Substance of Transactions
involving the Legal Form of a Lease.
The standard is not applicable until financial years
commencing on or after 1 January 2019 but is available
for early adoption provided the new revenue standard,
AASB 15 Revenue from Contracts with Customers, has
been applied or is applied at the same date as AASB 16.
The Group has not yet determined the timing of adopting
AASB 16 Leases.
The Group will use a modified retrospective adoption
approach and expect to elect the package of practical
expedients, including the use of hindsight to determine
the lease term. As the Group continues to evaluate this
standard and the effect on related disclosures, the primary
effect of adoption will be to record right-of-use assets
and corresponding lease obligations for current operating
leases. The adoption is expected to have a material impact
on the Group's consolidated balance sheet, consolidated
cash flow statement and statement of comprehensive
income.
Management is currently evaluating the anticipated
impact on the Group’s consolidated financial position
and results of operations, the quantitative and qualitative
factors that will impact the Group as part of the adoption of
this standard, as well as any changes to its leasing strategy
that may occur because of the changes to the accounting
and recognition of leases.
The ultimate impact of adopting the new standard will
depend on the Group's lease portfolio as of the adoption
date and the final discount rates used.

62 MICHAEL HILL INTERNATIONAL LIMITED 2018 FINANCIAL STATEMENTS
Additional information
This section provides additional information about those
individual line items in the financial statements that the Directors
consider most relevant in the context of the operations of the
entity, including:
(a) accounting policies that are relevant for an understanding
of the items recognised in the financial statements,
(b) analysis and sub-totals, including segment information,
(c) information about estimates and judgements made in
relation to particular items.
Note 3 Segment information page 62
Note 4 Revenue page 63
Note 5 Other income and expense items page 64
Note 6 Income tax expense page 64
Note 7 Financial assets and financial liabilities page 66
Note 8 Non-financial assets and liabilities page 69
Note 9 Equity page 73
Note 10 Cash flow information page 74
NOTE 3 Segment information
(a) DESCRIPTION OF SEGMENTS AND
PRINCIPAL ACTIVITIES
Management have determined the operating segments
based on the reports reviewed by the Board and Executive
team that are used to make strategic decisions. The Board
and executive team consider, organise and manage the
business primarily from a brand perspective. For the Michael
Hill brand, they also consider, organise and manage the
business from a geographic perspective, being the country of
origin where the sale and service was performed.
During the year, the Company announced the
closure of the Emma & Roe brand and the Michael Hill
United States segment. These segments have been
substantially closed and consequently these segments
have been classified as a discontinued operation and are
therefore not presented in the segment disclosures for
2018 and 2017.
The amounts provided to the Board and executive
team in respect of total assets and liabilities are
measured in a manner consistent with the financial
statements. These reports do not allocate total assets or
total liabilities based on the operations of each segment
or by geographical location.
The Group's continuing operations operate in three
geographical segments: Australia, New Zealand and
Canada.
The corporate and other segment includes revenue
and expenses that do not relate directly to the relevant
Michael Hill retail segments. These predominately relate
to corporate costs and Australian based support costs,
but also include manufacturing activities, warehouse and
distribution, interest and company tax. Inter-segment
pricing is at arm's length or market value.
Types of products and services
Michael Hill International Limited and its controlled entities
operate predominately in the sale of jewellery and related
services. As indicated above, the Group is organised and
managed globally by brand and geographic areas.
Major customers
Michael Hill International Limited and its controlled entities
sell goods and provide services to a number of customers
from which revenue is derived. There is no single customer
from which the Group derives more than 10% of total
consolidated revenue.
Accounting policies and inter-segment transactions
The accounting policies used by the Group in reporting
segments internally are the same as those contained in
note 2 to the accounts and in the prior period.
Notes to the consolidated financial statements cont. FOR THE YEAR ENDED 30 JUNE 2018

MICHAEL HILL INTERNATIONAL LIMITED 2018 FINANCIAL STATEMENTS 63
(b) SEGMENT RESULTS MH MH MH Corporate
Australia
New Zealand Canada and other Group
$000 $000 $000 $000 $000
Segment information 2018
Operating revenue 325,709 115,376 133,000 1,464 575,549
Gross profit 206,303 71,560 82,967 6,063 366,893
Gross profit % 63.3% 62.0% 62.0% - 63.7%
EBITDA* 56,935 28,063 19,986 (36,143) 68,841
Depreciation and amortisation (8,314) (2,464) (5,077) (2,839) (18,694)
EBIT* 48,621 25,599 14,909 (38,982) 50,147
EBIT as a % of revenue 14.9% 22.2% 11.0% - 8.7%
Interest income 2 1 - 7 10
Finance costs 59 10 - (2,759) (2,690)
Net profit before tax 48,682 25,609 14,909 (41,733) 47,467
Income tax expense - - - - (12,649)
Net profit after tax 48,682 25,609 14,909 (41,733) 34,818
Segment information 2017
Operating revenue 321,981 115,518 112,930 670 551,099
Gross profit 201,707 71,237 69,210 8,853 351,007
Gross profit % 62.6% 61.7% 61.0% - 63.7%
EBITDA* 59,454 29,048 16,643 (25,386) 79,759
Depreciation and amortisation (7,766) (2,651) (4,195) (2,815) (17,427)
EBIT* 51,688 26,397 12,448 (28,201) 62,332
EBIT as a % of revenue 16.1% 22.9% 11.0% - 11.3%
Interest income - 1 - 15 16
Finance costs (17) (41) - (3,106) (3,164)
Net profit before tax 51,671 26,356 12,448 (31,292) 59,183
Income tax expense - - - - (15,051)
Net profit after tax 51,671 26,356 12,448 (31,292) 44,132
* EBIT and EBITDA are Non-IFRS Information and are unaudited. Please refer to Non-IFRS Information on page
33 of the Directors Report for an explanation of Non-IFRS information and a reconciliation of EBIT from continuing
operations and Normalised EBIT.
2018 2017
NOTE 4 Revenue
$000 $000
From continuing operations:
Sales revenue
Revenue from sale of goods and repair services 541,349 517,222
Revenue from professional care plans 31,929
32,131
Interest and other revenue from in-house customer finance program 2,261 1,73 0
575,539 551,083
Other revenue
Interest income 10 16
Total revenue from continuing operations 575,549 551,099
MICHAEL HILL INTERNATIONAL LIMITED 2018 FINANCIAL STATEMENTS 63

64 MICHAEL HILL INTERNATIONAL LIMITED 2018 FINANCIAL STATEMENTS
NOTES 2018 2017
NOTE 5 Other income and expense items
$000 $000
(a) OTHER INCOME
Insurance recoveries - 2
Net foreign exchange gains 11(b) - 863
Other income 1,064 775
1,064 1,640
(b)
BREAKDOWN OF EXPENSES BY NATURE
Depreciation
Plant and equipment 4,153 3,386
Furniture and fittings 3,619 69
Motor vehicles 145 166
Leasehold improvements 6,668 9,677
Display materials 1,681 1,724
Total depreciation 8(b) 16,266 15,022
Amortisation – software 2,428 2,405
Total depreciation and amortisation 18,694 17,427
Finance costs
Bank and interest charges 2,762 3,105
Interest expense - make good provision 8(h) (72) 59
Total finance costs 2,690 3,164
Net foreign exchange losses included in other expenses 1,029 -
NOTES 2018 2017
NOTE 6 Income tax expense
$000 $000
(a) INCOME TAX EXPENSE
Current tax
Current tax on profits for the year 5,723 6,402
Derecognised tax losses 3,651 461
Adjustments for current tax of prior periods 3,908 947
Foreign income tax offsets not recognised (1,055) 1,055
Total current tax expense 12,227 8,865
Deferred income tax
(Increase) / Decrease in deferred tax assets 8(d) (2,659) 8,125
Tax consolidation cost base adjustments - (4,389)
Derecognised tax losses 66 -
Adjustments for deferred tax of prior periods (3,708) (291)
Total deferred tax expense/(benefit) (6,301) 3,445
Income tax expense 5,926 12,310
Notes to the consolidated financial statements cont. FOR THE YEAR ENDED 30 JUNE 2018

MICHAEL HILL INTERNATIONAL LIMITED 2018 FINANCIAL STATEMENTS 65
(b) NUMERICAL RECONCILIATION OF INCOME TAX
EXPENSE TO PRIMA FACIE TAX PAYABLE

2018 2017

$000 $000
Profit from continuing operations before income tax expense 47,467 59,183
Profit from discontinuing operations before income tax expense (36,934) (14,226)
10,533 44,957
Tax at the Australian tax rate of 30.0% (2017 - 30.0%) 3,160 13,487
Tax effect of amounts which are not deductible (taxable)
in calculating taxable income:
Non deductible expenditure 163 178
Non-assessable intragroup markups (551) (653)
Sundry items 10 89
Tax consolidation cost base adjustments - (4,389)
2,782 8 ,712
Difference in overseas tax rates 288 (321)
Adjustments for current tax of prior periods 3,908 947
Adjustments for deferred tax of prior periods (3,644) (291)
Tax losses not recognised 3,651 2,208
Foreign income tax offset not recognised (1,055) 1,055
Change in tax rate on deferred tax balance (4) -
Income tax expense 5,926 12,310
Income tax expense is attributable to:
Profit from continuing operations 12,649 15,051
Profit from discontinuing operations (6,723) (2,741)
5,926 12,310
(c)
TAX LOSSES
Unused United States tax losses for which
no deferred tax asset has been recognised
32,203 19,524
Potential tax benefit @ 25.0% (2017 @ 40.0%) 8,051 7, 8 10
Unused New Zealand tax losses for which
no deferred tax asset has been recognised
2,623 1,645
Potential tax benefit @ 28.0% 735 461
The unused tax losses incurred in the United States and New Zealand are available indefinitely for offsetting
against future taxable profits of the countries in which the losses arose. Deferred tax assets have not been
recognised in respect of these losses as it is unknown when the New Zealand losses may be used to offset
taxable profits and the United States losses are not expected to be used.

66 MICHAEL HILL INTERNATIONAL LIMITED 2018 FINANCIAL STATEMENTS

Notes

Derivatives Financial Total
NOTE 7 Financial assets and financial liabilities

used for assets at

hedging amortised
cost
$000 $000 $000
Financial assets 2018
Cash and cash equivalents 7(a) - 7,220 7,220
Trade and other receivables 7(b) - 28,046 28,046
Derivative financial instruments 11(a) 245 - 245
245 35,266 35,511
Financial assets 2017
Cash and cash equivalents 7(a) - 5,676 5,676
Trade and other receivables 7(b) - 26,590 26,590
- 32,266 32,266
Financial liabilities 2018
Trade and other payables 7(c) - 49,339 49,339
Borrowings 7(d) - 35,213 35,213
Derivative financial instruments 11(a) 390 - 390
390 84,552 84,942
Financial liabilities 2017
Trade and other payables 7(c) - 47,918 47,918
Borrowings 7(d) - 45,034 45,034
Derivative financial instruments 11(a) 1,141 - 1,141
1,141 92,952 94,093
The Group’s exposure to various risks associated with the financial instruments is discussed in note 11. The maximum exposure
to credit risk at the end of the reporting year is the carrying amount of each class of financial assets mentioned above.
2018 2017
(a) CASH AND CASH EQUIVALENTS $000 $000
Current assets
Cash at bank and on hand 7,220 5,676
Interest rates for the bank accounts have been between 0.00% and 1.15% during the year (2017: between 0.00%
and 1.15%).

2018 2017
(b) TRADE & OTHER RECEIVABLES Notes Current Non-current Total Current Non-current Total
$000 $000 $000 $000 $000 $000
Trade receivables 4,912 - 4,912 4,752 - 4,752
Provision for impairment of receivables (819) - (819) (502) - (502)

11(c)(i) 4,093 - 4,093 4,250 - 4,250
In-house customer finance 17,681 2,864 20,545 15,157 2,533 17,690
Provision for impairment of receivables (1,231) (199) (1,430) (956) (162) (1,118)

11(c)(ii) 16,450 2,665 19,115 14,201 2,371 16,572
Sundry debtors 4,838 - 4,838 5,768 - 5,768
25,381 2,665 28,046 24,219 2,371 26,590
Further information relating to loans to related parties and key management personnel is set out in note 19.
Notes to the consolidated financial statements cont. FOR THE YEAR ENDED 30 JUNE 2018

MICHAEL HILL INTERNATIONAL LIMITED 2018 FINANCIAL STATEMENTS 67
(i) Trade receivables
Trade receivables from sales made to customers through third party credit providers are non-interest bearing and
are generally on a 0-30 day terms.
(ii) In-house customer finance
In October 2012, Michael Hill launched an in-house customer finance program in the Canadian and United States
markets. The terms available to customers range from an interest bearing revolving line of credit through to
interest free terms of between 6 and 24 months, although 12 to 18 months is the typical financing period.
The receivables from the in-house customer finance program are comprised of a large number of transactions
with no one customer representing a significant balance. The finance portfolio consists of contracts of similar
characteristics that are evaluated collectively for impairment. The allowance is an estimate of the losses as of the
balance date, and is calculated using such factors as delinquency and recovery rates.
Sundry debtors
Sundry debtors relates to supplier credits, security deposits and other sundry receivables.
Effective interest rates
Other than in-house customer finance, all receivables are non-interest bearing. The majority of in-house customer
finance receivables are also non-interest bearing.
Impairment and risk exposure
Information about the impairment of trade and other receivables, their credit quality and the Group’s exposure to
credit risk, foreign currency risk and interest rate risk can be found in note 11(b) and 11(c).
Only trade receivables and in-house customer finance contain impaired assets. The remaining classes within
trade and other receivables do not contain impaired assets and are not past due. Based on the credit history of
these other classes, it is expected that these amounts will be received when due.
(c)
TRADE AND OTHER PAYABLES
2018 2017
$000 $000
Current liabilities
Trade payables 24,686 27,649
Annual leave liability 8,938 8,571
Accrued expenses 7, 15 4 6,442
Other payables 8,561 5,256
49,339 4 7, 9 18
Trade payables are unsecured and are usually paid within 30 days of recognition. The carrying amounts of trade
and other payables are considered to be the same as their fair values, due to their short-term nature.
2018 2017
(d) BORROWINGS Current Non-current Total Current Non-current Total
$000 $000 $000 $000 $000 $000
Bank loans - 35,213 35,213 - 45,034 45,034
Total secured borrowings - 35,213 35,213 - 45,034 45,034
The Group’s objectives when managing capital are to ensure sufficient liquidity to support its financial obligations
and execute the Group's operational and strategic plans. The Group continually assesses its capital structure and
makes adjustments to it with reference to changes in economic conditions and risk characteristics associated with its
underlying assets. Accordingly, the Group entered into a three year agreement with ANZ on 26 June 2018 that provides
for a $110,000,000 multi option borrowing facility, the availability of which is adjusted throughout the year in line with
business requirements. At balance date, $70,000,000 was available, and of that, $35,213,000 was utilised.
The Group also has access to various uncommitted credit facility lines serving working capital needs that, at
balance date, totalled $1,924,000. No amounts were drawn under these credit facility lines as at balance date.

68 MICHAEL HILL INTERNATIONAL LIMITED 2018 FINANCIAL STATEMENTS
NOTE 7 Financial assets and financial liabilities cont.
(e) RECOGNISED FAIR VALUE MEASUREMENTS
Fair value hierarchy
This section explains the judgements and estimates made in determining the fair values of the financial instruments
that are recognised and measured at fair value in the financial statements. To provide an indication about the
reliability of the inputs used in determining fair value, the Group has classified its financial instruments into the three
levels prescribed under the accounting standards. An explanation of each level follows underneath the table.
Notes Level 1 Level 2 Level 3 Total
Recurring fair value measurements $000 $000 $000 $000
at 30 June 2018
Financial assets
Derivatives used for hedging foreign exchange contracts 11(a) - 245 - 245
Total financial assets - 245 - 245
Financial Liabilities
Derivatives used for hedging interest rate swaps 11(a) - 390 - 390
Total financial liabilities - 390 - 390
Recurring fair value measurements
at 30 June 2017
Financial Liabilities
Derivatives used for hedging
- Foreign exchange contracts 11(a) - 414 - 414
- Interest rate swaps 11(a) - 727 - 727
Total financial liabilities - 1,141 - 1,141
There were no transfers between levels during the year.
The Group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of
the reporting period.
Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and
trading and available-for-sale securities) is based on quoted market prices at the end of the reporting
period. The quoted market price used for financial assets held by the Group is the current bid price.
These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the-
counter derivatives) is determined using valuation techniques which maximise the use of observable
market data and rely as little as possible on entity-specific estimates. If all significant inputs required to
fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included
in level 3. This is the case for unlisted equity securities.
(f) CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
Non-current interest-bearing
loans and liabilities Total
$000 $000
Movements
Carrying amount at start of year 45,034 45,034
Inwards cash flows 116,500 116,500
Outwards cash flows (126,500) (126,500)
Foreign exchange movements 179 179
Carrying amount at end of year 35,213 35,213
Notes to the consolidated financial statements cont. FOR THE YEAR ENDED 30 JUNE 2018

MICHAEL HILL INTERNATIONAL LIMITED 2018 FINANCIAL STATEMENTS 69
NOTE 8 Non-financial assets and liabilities
This note provides information about the Group's non-financial assets and liabilities, including:
(a)
INVENTORIES 2018 2017
$000 $000
Raw materials 10,243 7, 8 7 0
Finished goods 178,944 191,76 8
Packaging and other consumables 2,887 4,215
192,074 203,853
All inventories are held at the lower of cost or net realisable value.
(b) PROPERTY, PLANT & EQUIPMENT

Plant and Fixtures and Motor Leasehold Display Total
equipment fittings vehicles
improvements materials
$000 $000 $000 $000 $000 $000
At 1 July 2016
Cost or fair value 33,203 30,206 930 72,926 12,767 150,032
Accumulated depreciation (20,331) (15,443) (396) (36,933) (4,996) (78,099)
Net book amount 12,872 14,763 534 35,993 7,771 71,933
Year ended 30 June 2017
Opening net book amount 12,872 14,763 534 35,993 7,771 71,933
Exchange differences (124) (119) (6) (525) (93) (867)
Additions 6,868 5,034 153 13,193 2,046 27,294
Additions - make good - - - 773 - 773
Disposals (427) (118) (55) (791) (64) (1,455)
Depreciation charge (4,229) (3,956) (194) (7,089) (1,947) (17,415)
Impairment loss (iii) (26) (5) - (796) - (827)
Closing net book amount 14,934 15,599 432 40,758 7,713 79,436
At 30 June 2017
Cost or fair value 37,944 34,169 796 82,602 13,816 169,327
Accumulated depreciation (23,010) (18,570) (364) (41,844) (6,103) (89,891)
Net book amount 14,934 15,599 432 40,758 7,713 79,436
Year ended 30 June 2018
Opening net book amount 14,934 15,599 432 40,758 7,713 79,436
Exchange differences (70) (27) (4) 84 17 -
Additions 4,339 3,146 45 8,196 2,164 17,890
Additions - make good - - - (1,154) - (1,154)
Disposals (391) (216) (72) (392) (71) (1,142)
Depreciation charge (4,429) (3,925) (148) (7,257) (1,806) (17,565)
Impairment loss (iii) (1,490) (3,010) - (5,016) (1,283) (10,799)
Closing net book amount 12,893 11,567 253 35,219 6,734 66,666
At 30 June 2018
Cost 38,744 34,667 569 81,642 13,958 169,580
Accumulated depreciation
and impairment (25,851) (23,100) (316) (46,423) (7,224) (102,914)
Net book amount 12,893 11,567 253 35,219 6,734 66,666

70 MICHAEL HILL INTERNATIONAL LIMITED 2018 FINANCIAL STATEMENTS
NOTE 8 Non-financial assets and liabilities cont.
(i) Impairment loss
As per the Group's accounting policies, the Group impairs assets where the recoverable amount is less than the
carrying amount. The Group has impaired the assets of all Emma & Roe assets, four Michael Hill Australia stores
and two Michael Hill Canada stores. Any assets held at an impaired Emma & Roe store that are able to redeployed
throughout the Group are not impaired. This cost has reported in Other expenses in the statement of comprehensive
income. The segment breakdown of impairment losses recognised during the year is reported at note 3.
(ii) Revaluation, depreciation methods and useful lives
Depreciation is calculated using the straight-line method to allocate their cost or revalued amounts, net of their
residual values, over their estimated useful lives or, in the case of leasehold improvements and certain leased plant
and equipment, the shorter lease term as follows:
• Plant and equipment 5 - 6 years
• Motor vehicles 3 - 5 years
• Fixtures and fittings 6 - 10 years
• Leasehold improvements 6 - 10 years
• Display material 6 - 10 years

Patents, Computer Total
trademarks and software
(c) INTANGIBLE ASSETS other rights
$000 $000 $000
At 1 July 2016
Cost 79 16,675 16,754
Accumulation amortisation - (11,193) (11,193)
Net book amount 79 5,482 5,561
Year ended 30 June 2017
Opening net book amount 79 5,482 5,561
Exchange differences - (27) (27)
Additions - 5,851 5,851
Amortisation charge* - (2,601) (2,601)
Closing net book amount 79 8,705 8,784
At 30 June 2017
Cost 79 22,472 22,551
Accumulation amortisation - (13,767) (13,767)
Net book amount 79 8,705 8,784
Year ended 30 June 2018
Opening net book amount 79 8,705 8,784
Exchange differences - 2 2
Additions - 6,665 6,665
Impairment charge - (228) (228)
Amortisation charge * - (2,597) (2,597)
Closing net book amount 79 12,547 12,626
At 30 June 2018
Cost 79 28,941 29,020
Accumulated amortisation - (16,394) (16,394)
Net book amount 79 12,547 12,626
* Amortisation of $2,428,000 (2017: $2,405,000) is included in depreciation and amortisation expense in the
statement of comprehensive income. The amount above also includes amortisation for discontinued operations
(see note Discontinued operations).
Notes to the consolidated financial statements cont. FOR THE YEAR ENDED 30 JUNE 2018