Annual Report to shareholders

Annual Report 2019

b
DISCLAIMER: Certain statements in this report 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-look-
ing 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. Accordingly, you are cautioned not to place
undue reliance on any forward-looking statements.
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).
JEWELLERY FROM SPIRITS BAY
COLLECTION BY CHRISTINE HILL

1
What’s inside
3 COMPANY PROFILE
An introduction to the Company
and our goals
5 CHAIR & CEO REVIEW
Emma Hill & Daniel Bracken
review 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
15 SUSTAINABILITY REPORT
17 OUR PEOPLE PROMISE
Enabling our team members to
reach their full potential
18 EXECUTIVE AND MANAGEMENT
Our key people across Australia,
New Zealand and Canada
20 CELEBRATING OUR SUCCESS
A look at how we pay tribute to
our managers and high achievers
21 MICHAEL HILL INTERNATIONAL
VIOLIN COMPETITION
Our Group’s involvement in giving
back to our community
23 DIRECTORS' REPORT
A review of the year’s operations
and the plans and priorities for
the future
30 INFORMATION ON DIRECTORS
35 REMUNERATION REPORT
Remuneration of Directors and
key executives
46 AUDITOR’S DECLARATION
47 FINANCIAL STATEMENTS
98 AUDITOR’S REPORT
102 ASX LISTING RULES -
ADDITIONAL INFORMATION
104 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 2019

2

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 2019, the Group had 168 stores in
Australia, 52 in New Zealand and 86 stores in Canada.
Around the world, the Group employs approximately
2,500 permanent employees across retail sales,
manufacturing and administration roles.
Michael Hill's vision is to be the most loved jewellery
destination.
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
EXCLUSIVE TO MICHAEL HILL, THE SOUTHERN STAR DIAMOND IS
UNIQUELY CUT TO REVEAL AN EIGHT POINT STAR, EIGHT HEARTS
AND EIGHT ARROWS, SYMBOLISING TRIPLE GOOD FORTUNE
Michael Hill is a specialist retail
jewellery chain. As at 30 June 2019,
it operates 306 stores in Australia,
New Zealand and Canada.

4
Chair & CEO
Review
... many of our pieces are created
by our in-house team of master
jewellers – one of the only retailer-led
workshops in the world...

5
As culture has always been important to us we were
disappointed to discover during the year a misapplication of the
General Retail Industry Award which affected many of our store
based Australian teams. We moved quickly and decisively to self
report this mistake and are committed to a thorough process to
put it right. We sincerely apologise to our team members and
stakeholders who have been affected by this misapplication.
Last year we continued to strengthen our sustainability
practices. The highlight of this was being issued the Responsible
Jewellery Councils certification for a period of three years which
validates our adherence to responsible business practices
throughout our supply chain capturing human rights, labour rights,
health and safety, environmental impact, conflict free diamonds
and many more important topics for the jewellery industry.
WHAT ARE THE PRIORITIES FOR THE COMING YEAR?
We are certainly proud of the way the team pulled together,
reversing the momentum of the business during the course
of the year. Whilst we expect market conditions to remain
challenging next year, we will continue to focus on strengthening
our customer proposition with new branded collections and
improved disciplines in buying, selling and marketing. Our cost
reduction and improved productivity initiatives will also continue
as we look to build on our recent successes.
The coming year we will focus on retail basics in our core
businesses – building on the positive momentum that we have
worked so hard for.
Last year we introduced a new disciplined “rhythm of the
business” that provides a structured operating model across
Merchandise, Marketing, Retail and Online. The strategy
ensures total alignment across all customer-facing aspects of
the brand. It provides the platform for bringing new product to
market on a regular schedule, to ensure our stores are always
showcasing new and compelling product for our customers.
We will also continue to prioritise investment in our online
business, and develop a loyalty program that forges deeper
and more engaged relationships with our customers.
It’s an exciting time to be leading Michael Hill. The pace
of change has been intense this year with a greater sense of
urgency and determination to deliver, which is really infectious.
There is a strong belief in the strategy and each other – and a
healthy impatience among us to see results.
Emma Hill Daniel Bracken
Chair CEO
POSITIVE MOMENTUM AND A REAL SENSE OF PURPOSE
The last year has been both transitional and formative for
Michael Hill. Whilst we are not satisfied with the financial result,
we are very excited about the work we have been doing to
reshape the business for the future. As our new initiatives and
strategies gain momentum, we are confident in our ability to
grow our brand and our market share and improve our financial
performance.
The Board was delighted to welcome Daniel Bracken
as CEO in November and we have since strengthened the
executive team with the appointment of Andrea Slingsby as
Chief Operating Officer and Joanne Matthews as Chief People
Officer. We are all aligned on the strategy and focused on
building scalable foundations for future growth. The Board
was pleased with Daniel’s refinement and endorsement of
the strategy and encouraged by the way the business moved
decisively in the second quarter to ensure a steady turnaround
in sales momentum for the balance of the financial year.
BRANDED COLLECTIONS - THE CORNERSTONE OF
OUR STRATEGY
At Michael Hill, we celebrate love in all its forms, and our
vision is to be the most loved jewellery destination. The
cornerstone of our strategy is our ongoing commitment to
branded collections. Many of these pieces are created by our
in-house team of master jewellers – one of the only retailer-led
workshops in the world. Talented designers and craftsmen
dedicated to making truly unique and beautiful pieces to
celebrate love in all its forms. Quality and provenance are
always our first priorities. Which is why we are active members
of the Responsible Jewellery Council and why we are
committed to using responsibly sourced materials in our work.
VALUES AND CULTURE
High standards of culture and conduct have always been
important to us and putting the customer first has been
fundamental to our success over a long period of time.
This year our values were reviewed and refreshed to clearly
communicate and reflect what we stand for today, these
are; We care. We create outstanding experiences. We are
professional. We are inclusive and diverse. Our values form
the foundations to guide our decisions and behaviours. We
have for some time measured and tracked our performance
against our values through culture and organisational
health surveys, these provide the executive and board with
actionable insights for continual improvement. We are proud
of our culture of success and the real sense of customer led
purpose throughout the group.
Dear Shareholders,

6
Key facts
6

MICHAEL HILL INTERNATIONAL LIMITED 2019 KEY FACTS 7
Year ended 30 June 2019 2018


Restated
KE Y R ATI O S
Return on average shareholders’ funds 9.4% 17.4%
Gross margin 62.0% 63.7%
Interest expense cover (times) 8.6 17.0
Equity ratio (total equity / total assets) 46.6% 45.9%
Gearing Ratio (net debt / total equity) 23.5% 27.7%
Working capital ratio
(current assets / trade payables) 5.0 : 1 4.6 : 1
Current ratio
(current assets / current liabilities)* 2.1 : 1 2.1 : 1
EARNINGS PER SHARE
Basic earnings per share au4.3¢ au8.2¢
Diluted earnings per share
au4.3¢ au8.2¢
DISTRIBUTION TO SHAREHOLDERS
Dividends - including final dividend
Per ordinary share
au4.0¢ au5.0¢
Times covered by net profit after tax 0.85 1.64
SHARE PRICE
30 June au$0.54 au$0.97
SAME STORE SALES
Michael Hill same store sales
movement (in local currency)
Australia -5.7% -0.9%
New Zealand -4.5% 2.3%
Canada -1.7% 3.8%
Group same store sales movement -3.3% 0.4%
NUMBER OF STORES
Australia 167 171
New Zealand 52 52
Canada 86 83
Michael Hill stores 305 306
Emma & Roe stores 1 6
Total stores 306 312
* EBIT and Normalised EBIT are Non-IFRS Information and are unaudited.
Please refer to Non-IFRS Information in the Directors’ Report on
page 29 of this annual report for an explanation of Non-IFRS
information and a reconciliation of EBIT from continuing operations
and Normalised EBIT.
Year ended 30 June 2019 2018 % Change
au$000 unless stated
Restated
TRADING RESULTS
From continuing operations
Group revenue 569,500 575,539 (1.0%)
Gross margin 353,032 366,882 (3.8%)
Earnings before interest and tax* 21,115 45,787 (53.9%)
Underlying earnings
before interest and tax* 34,608 40,106 (13.7%)
Net profit before tax 18,811 43,107 (56.4%)
Net profit after tax 16,498 31,765 (48.1%)
Group trading results
Loss from discontinued operations - (30,208) -
Profit for the year 16,498 1,557 959.8%
Net cash inflow
from operating activities 38,969 54,893 (29.0%)
FINANCIAL POSITION AT YEAR END
Contributed equity
387,750,000 ordinary shares 10,984 10,266 7.0%
Total equity 176,752 174,925 1.0%
Total assets 379,193 381,475 (0.6%)
Net debt 24,781 27,993 (11.5%)
Capital expenditure 16,134 24,555 (34.3%)
GOLD AND DIAMOND RING FROM WILLOW
COLLECTION BY CHRISTINE HILL

8 MICHAEL HILL INTERNATIONAL LIMITED 2019 KEY FACTS
Total stores 306
1987 - 2018, year ended 30 June
■ MH stores ■ E&R stores
Earnings before
interest, taxation,
depreciation and
amortisation
(EBITDA)
down 37%
AU$ millions /
year ended 30 June
1617181915
59.3
67. 2
75.5
64.5
40.5
Group revenue
down 1%
AU$ millions /
year ended 30 June
1617181915
484.7
522.2
551.1
575.5
569.5

Key Financial Results
Group operating revenues $569.5m
Statutory net profit after tax increased to $16.5m
Statutory earnings before interest and tax increased to $21.1m
Underlying earnings before interest and tax* $34.6m
Group same store sales $524.7m
Net debt reduction of 11.4% to $24.8m
Final dividend of
au1.5¢ per share, giving a full year
dividend
au4.0¢
Operational Performance
e-commerce sales increased by 43.6% to $16.0m
Branded collection sales represented 32.5% of total sales
Ten Michael Hill stores opened and eleven under-performing
stores were closed (along with five Emma & Roe stores) during
the year, giving a total of 306 stores trading at year end
* EBIT and Underlying EBIT are Non-IFRS Information and are unaudited. Please refer to Non-IFRS
Information on page 29 for an explanation of Non-IFRS information and a reconciliation of EBIT and
Underlying EBIT.
Performance
Highlights
MICHAEL HILL INTERNATIONAL LIMITED PERFORMANCE HIGHLIGHTS FOR THE 12 MONTHS TO 30 JUNE 2019 9

GRAND ARPEGGIO ENGAGEMENT RING FROM
SIR MICHAEL HILL DESIGNER BRIDAL COLLECTION
Net profit from
operating activities
after tax down 48%
AU$ millions /
year ended 30 June
1617181915
30.5
23.5
41 .1
31.8
16.5
Ordinary
dividend
AU cents per share /
year ended 30 June
1617181915
nz
5.0
5.05.05.0
4.0
1617181915
nz
1.06
Share price
performance
AU$ / year ended 30 June
nz
1.14
1 .1 1
0.97
0.54
10 MICHAEL HILL INTERNATIONAL LIMITED 2019 KEY FACTS

Source of
funding
30 June 2019
EQUITY 46%
CURRENT
LIABILITIES 28%
NON-CURRENT
LIABILITIES 26%
MICHAEL HILL INTERNATIONAL LIMITED 2019 KEY FACTS 11
Gearing ratio
23.5%
% / year ended 30 June
1617181915
21.0
18.0
20.6
2 7.7
23.5
Return on
average
shareholders’
funds 9.4%
% / year ended 30 June
16
17
18
19
15
16.5
12.9
20.9
1 7.4
9.4
Return on
average assets
4.3%
% / year ended 30 June
1617181915
8.8
6.3
10.5
8.2
4.3
ROSE GOLD AND DIAMOND RING FROM
WILLOW COLLECTION BY CHRISTINE HILL

12
FINANCIAL PERFORMANCE 2019 2018 2017 2016^ 2015^
FROM CONTINUING OPERATIONS
Restated Restated Restated Restated

$000 $000 $000 $000 $000
Group revenue 569,500 575,539 551,099 522,214 484,667
Earnings before interest, tax, depreciation
and amortisation (EBITDA)* 40,481 64,481 75,482 67,212 59,250
Depreciation and amortisation 19,366 18,694 17,427 16,796 14,645
Earnings before interest and tax (EBIT)* 21,115 45,787 58,055 50,416 44,605
Net interest paid 2,304 2,680 3,149 5,508 4,665
Net profit before tax (NPBT) 18,811 43,107 54,906 44,908 39,940
Income tax 2,313 11,342 13,768 21,384 9,488
Net profit after tax (NPAT) 16,498 31,765 41,138 23,524 30,452
Net operating cash flow 38,969 54,893 39,752 47,794 54,566
Ordinary dividends paid 19,365 19,371 19,264 17,490 23,176
2019 2018 2017 2016 2015^
FINANCIAL POSITION
Restated Restated Restated Restated

$000 $000 $000 $000 $000
Cash 7,923 7,220 5,676 8,853 6,797
Inventories 179,503 192,074 203,853 199,961 182,232
Other current assets 35,878 29,314 29,052 31,298 39,378
Total current assets 223,304 228,608 238,581 240,112 228,407
Other non-current assets 72,742 72,219 83,864 74,450 67,734
Deferred tax assets 67,708 68,022 62,712 67,610 50,715
Total tangible assets 363,754 368,849 385,157 382,172 346,856
Intangible assets 15,439 12,626 8,784 5,561 6,491
Total assets 379,193 381,475 393,941 387,733 353,347
Total current liabilities 105,130 108,710 95,716 112,772 77,657
Non-current borrowings 32,704 35,213 45,034 40,887 45,116
Other long term liabilities 64,607 62,627 62,252 55,923 48,397
Total liabilities 202,441 206,550 203,002 209,582 171,170
Net assets 176,752 174,925 190,939 178,151 182,177
Reserves and retained profits* 165,768 164,659 180,924 174,384 178,410
Paid up capital 10,984 10,266 10,015 3,767 3,767
Total shareholder equity 176,752 174,925 190,939 178,151 182,177
Per ordinary share
Basic earnings per share 4.26¢ 8.20¢ 10.66¢ 6.14¢ 7.95¢
Diluted earnings per share 4.25¢ 8.19¢ 10.66¢ 6.11¢ 7.92¢
Dividends declared per share - Interim
au2.5¢ au2.5¢ au2.5¢ nz2.5¢ nz2.5¢
- Final
au1.5¢ au2.5¢ au2.5¢ au2.5¢ nz2.5¢
Net tangible asset backing $0.42 $0.42 $0.47 $0.45 $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.
* EBIT and Underlying EBIT are Non-IFRS and are unaudited. Please refer to page 29 of the Directors Report for an explanation of
Non-IFRS information and a reconciliation of EBIT and Underlying EBIT.
Trend Statement

13
ANALYTICAL INFORMATION 2019 2018 2017 2016^ 2015^
Restated Restated Restated Restated
EBITDA to sales ^ 7.1% 11.2% 13.7% 12.9% 12.2%
EBIT to sales
^ 3.7% 8.0% 10.5% 9.7% 9.2%
Net profit after tax to sales 2.9% 5.5% 7.5% 4.5% 6.3%
EBIT to total assets
^ 5.6% 12.0% 14.7% 13.0% 12.6%
Return on average shareholders funds 9.4% 17.4% 20.9% 12.9% 16.5%
Return on average total assets 4.3% 8.2% 10.5% 6.3% 8.8%
Working capital ratio 5.0 : 1 4.6 : 1 4.9 : 1 5.2 : 1 5.2 : 1
Current ratio 2.1 : 1 2.1 : 1 2 .5 : 1 2.1 : 1 2.9 : 1
EBIT interest expense cover
^ 8.6 17.0 18.3 8.3 9.5
Effective tax rate 12.3% 26.3% 25.1% 47.6% 23.8%
Gearing
Net borrowings to equity 23.5% 27.7% 20.6% 18.0% 21.0%
Equity ratio 46.6% 45.9% 48.5% 45.9% 51.6%
Other
Shares issued at year end excl Treasury 387,750,000 387,438,513 387,438,513 383,138,513 383,138,513
Treasury stock at year end - - 14,677 14,677 14,677
Exchange rate for translating:
New Zealand results 1.06 1.09 1.07 1.07 1.07
Canadian results 0.95 0.98 0.97 0.97 0.97
United States results - 0.78 0.83 0 83 0.83
Number of Michael Hill stores
Australia 167 171 166 168 167
New Zealand 52 52 52 52 52
Canada 86 83 76 67 60
USA - - 9 10 9
Total Michael Hill stores 305 306 303 297 288
Number of Emma & Roe stores
Australia 1 6 28 15 7
New Zealand - - 1 1 1
Number of Emma & Roe stores 1 6 29 16 8
Total stores 306 312 332 313 296
^ 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.
* EBIT and Underlying EBIT are Non-IFRS and are unaudited. Please refer to page 29 of the Directors Report for an explanation of
Non-IFRS information and a reconciliation of EBIT and Underlying EBIT.
RING FROM
THE SOLITAIRE
BY MICHAEL HILL
COLLECTION

14
Our purpose:
We celebrate love
in all its forms.

15
At Michael Hill we are committed to continue
strengthening our sustainability practices across the
breadth of the organisation. We are proud to announce
our success in obtaining Responsible Jewellery
Council’s (RJC) certification granted in February 2019
for a period of three years; the maximum period granted
by the 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. Michael
Hill is one of the select few retailers in Australia and
New Zealand to receive this certification.
SOURCING
The Company’s sourcing strategies and activities embrace
the RJC principles and have enabled the Company to:
• Redesign jewellery packaging reducing the size,
materials and weights of packaging. This not only
reduces the quantity of raw materials required to
produce packaging as well as end-user waste, it also
creates cost efficiencies in freight.
• Complete the first stage of removing 95% of all
plastic from packaging. Where plastic continues to be
used, this is recycled plastics.
• Undertake a general waste review at the Company’s
head office. In 2018 the Company implemented
new waste and recycling programs, removing all
general waste bins from individual work stations, and
introducing waste, recycling and paper bins in work
areas and bulk harvest bins at loading docks.
• Reduce printer devices and drive the adoption
of
digital work practices. In addition, all
empty printer ink cartridges are
now collected and disposed of
by an ink recycling company.
• Begin implementing LED
lighting within our retail
store portfolio and Head
Office to reduce the
Company’s energy usage
and carbon footprint.
RECOVERY
The Company’s Brisbane based manufacturing
centre has established practices for the collection
and recycling of gold scrap and lemel generated from
manufacturing and repair operations. The recovered
product is monitored to ensure it is in line with
benchmarked recovery standards.
DIVERSITY
At Michael Hill we are committed to ensure the profile of
our workforce and employees reflect the diversity and
demographics of the communities we serve including
gender, religion, ethnicity and age. In FY19 two new
female executives were appointed to the leadership
team with broad experience outside the jewellery
industry. This has brought valuable gender diversity
and different experience, insight and perspective to the
leadership team. Females continue to hold the majority
of our sales professional and store management roles,
reflective of the customer base we serve.
HEALTH, SAFETY AND WELLBEING
We care about the wellbeing, safety and security of our
workforce. We know that the success of Michael Hill
depends on its people, and we are committed to the
safety and wellbeing. We are focused beyond regulatory
compliance and risk management, by placing people
at the centre of solutions we will develop as a proactive
health, safety and wellness organisation.
In 2019 we further encouraged a culture of genuine
care and personal commitment by establishing a
Zero Harm committee focussing on the identification,
management and mitigation of safety and security
hazards across all our operations.
The wellbeing of our team is currently considered
through Employee Assistance Programs and leave
schemes designed to support team members with both
work and personal life challenges.
Sustainability and
the Responsible Jewellery
Council

16
Our vision:
To be the most
loved jewellery
destination

17
Our People Promise
Enabling our team members to reach
their potential
We aim for Michael Hill to provide exceptional experiences
for all and to be a loved employer. Our Employee Value
Proposition is our promise to our team members. It’s
what sets us apart as an employer to ensure we attract
and retain the right talent our business needs to succeed.
Through our focus on our people and our commitment
to each individual, we deliver an amazing Michael Hill
experience to our teams. Our People Promise ensures we
are equipped to deliver against our customer promise.
Our People Promise, validated through workshops
with our team members, is to deliver excellent customer
focused solutions that value our people, building their
capability and enabling the realisation of their potential.
Our team members create outstanding experiences. They
become part of our diverse family, a family who care about
each other, customers, communities and our purpose. We
invest in our culture of learning, career development and
coaching. We empower and incentivise.
For us, being a loved employer, is about making that
connection, it’s about living our values, it’s about joining
brilliance together. Our People Promise, crafted by our
people, is completely aligned with our corporate culture,
our vision and our brand. In the year ahead we will
integrate our People Promise across the team member
lifecycle in our business as we further enhance our team
member experience.
OUR VALUES
We are a people business. In listening to our people we
identified the need to revamp our Company Values, to
make them more relevant and aligned with our culture
and desired behaviours for all, from leadership to front
line team members, in every location.
Our values, which will be launched and reinforced in the
year ahead are:
• We care
• We create outstanding experiences
• We are professional
• We are inclusive and diverse
These values form the core of how we operate. They will
inform our decision making processes, they clarify what
we stand for and what we are aligned to, they confirm
our desired culture, they influence our overall behaviour.
They will inspire our people to action and contribute to
the overall success of our company.
OUR LEADERSHIP PRINCIPLES
Our leadership principles have continued in 2019:
• Customer focus
• Mindset for growth
• Bias for action
• Building talent and teams
• Accountability and responsibility
Our focus in 2020 will be on further defining and
embedding a Leadership Promise, a statement and
actions that show to our team members how we
commit to interacting with them. This Leadership
Promise is: As leaders, we will create a high-
performance, high-trust culture that is open, honest
and committed to excellence.
Our leaders are champions of our values and shapers
of our culture. How they interact with our team members is
important on delivering on our goal to provide exceptional
experiences for all and to be a loved employer.

18
Our Executive Team at 30 June 2019
Daniel Bracken
Chief Executive Officer
Daniel has more than 25 years
experience managing some of the
world’s most iconic brands. He has an
extensive background in retailing, fashion,
and brand development in Australia
and international markets, as a Chief
Executive Officer and in senior executive
positions across strategy, marketing,
merchandise, product design and digital
and customer engagement strategies.
Prior to joining Michael Hill as CEO
in November 2018, Daniel was CEO at
Specialty Fashion Group and previously
held positions as the Group Vice
President, Strategy for Burberry London,
as Deputy CEO and Chief Merchandise
& Customer Officer of Myer, and as CEO
of The Apparel Group.
During his time at Speciality Fashion
Group, Daniel led the company’s
corporate restructure and the successful
divestment of the Millers, Katies,
Crossroads, Autograph and Rivers brands,
returning the company to profitability. At
Myer, he oversaw merchandise buying,
design, sourcing, and manufacturing,
and led the Myer brand and customer
experience strategy. During his tenure,
the Apparel Group owned leading fashion
brands Sportscraft, Saba, Willow, and JAG.
His international experience
includes more than 15 years at Burberry
London in the United Kingdom, where
he was a key member of the leadership
team involved in their turnaround into
an iconic global brand. He performed a
range of roles at Burberry including Vice
President – Strategy (Group), Head of
Merchandising & Production (Ready to
Wear), and Commercial & Operations
Director (Menswear).
Andrew Lowe
Chief Financial Officer
and Company Secretary
Andrew joined Michael Hill in December
2017 as Chief Financial Officer, and later
assumed the role of Company Secretary.
He holds a Bachelor of Commerce, a
Bachelor of Laws (Hons) and a Masters
of Applied Finance, and is a qualified
Chartered Accountant and a Chartered
Taxation Adviser of the Taxation Institute
of Australia.
Andrew has extensive experience
in finance and leadership roles across
a range of listed corporate groups with
Australian and offshore operations.
This includes as Head of Tax, Shared
Services and Finance Partnering at
Australia’s largest rail-based freight
operator and ASX100 firm, Aurizon.
Previously, he was Deputy CFO and
Head of Tax at Cleanaway Waste
Management, and spent a decade with
global mining company, Anglo American.
Vanessa Brennan
Chief Brand & Customer Officer
Vanessa joined Michael Hill in January
2018 in the newly created position of
Chief Brand & Customer Officer, to lead
the commercial growth strategy for the
business across customer, product,
brand marketing and eCommerce. She
is a recognised leader in strategic brand,
customer and digital strategy, and is
renowned as a transformative specialist
in building brands with expertise covering
the end-to-end spectrum of customer,
brand and marketing communications.
Vanessa has more than 20 years’
experience gained in Australia, Europe,
Latin America and Asia, where she
has been a key advisor to a number of
global and domestic commercial and
government organisations, including as
a Partner at PWC and Managing Director
of Clemenger BBDO.

19
Andrea Slingsby
Chief Operating Officer
Andrea has more than 25 years corporate
experience working in high-growth
service sectors, and has held various
Board, Managing Director, Chief Executive
Officer, senior management and corporate
advisory roles for a broad range of
Australian private and public companies.
She has outstanding Australian and
international experience, and is an Alumni
of Harvard Business School.
Prior to joining Michael Hill in 2019,
Andrea held a number of senior roles
across 14 years working for Flight Centre,
including President & CEO for North
America. She also worked as a corporate
advisor to Michael Hill in late 2018 on the
company’s HR strategy and operational
execution, prior to her appointment to the
company’s Executive Management Team.
Andrea’s background working for
many fast-growing companies, as well
as her unique experience in business
model improvement and operational
excellence, is fundamental for
Michael
Hill as it realises its strategy to be a
globally relevant and modern retailer in
the premium jewellery category.
Matt Keays
Chief Information Officer
Matt joined Michael Hill in June 2015,
bringing with him extensive international
IT experience in the retail space. Prior
to joining the company, Matt led the
global IT strategy for Forever New as
their General Manager Information
Technology, and prior to that worked
as Chief Information Officer for Super
Amart where his final project was
successfully leading a full-scale Disaster
Recovery process after the Qld floods
in 2011. He also worked for leading
national footwear and apparel company,
Colorado Group after enjoying his long
Retail apprenticeship with 11 years at
Country Road.
Matt has strong technical skills
and a track record of developing an
effective team focused on business
alignment. Matt’s career has seen him
lead significant technology and infra-
structure programs, covering Microsoft
Dynamics, Infor, Oracle and JDE. He has
helped all Retail businesses implement
and embrace Data Warehousing with his
first Microsoft based implementation
as far back as 2004. The Michael Hill
advanced Data Warehouse went live in
2016 and his team continually evolve our
data platforms to align with the strategic
shifts across the business.
Joanne Matthews
Chief People Officer
Joanne joined Michael Hill in January
2019 with extensive experience
in change leadership, and talent
management and development. This
experience was gained across 14 years in
senior human resource leadership roles,
including as Divisional Human Resources
Manager (Leisure) for Super Retail Group.
Joanne has also worked as the
Executive General Manager, Human
Resources for MAX Solutions Pty Ltd, a
national organisation that delivers health,
training and humanitarian solutions
for Federal and State Governments,
and prior to this she worked in retail
operations with Woolworths.
With a workforce of more than
3000 people in over 300 stores across
Australia, New Zealand and Canada,
Joanne’s experience will help to support
the company’s core priority of recruiting,
training, rewarding and retaining top
quality people at Michael Hill.
Joanne holds a MBA and
Bachelor of Business in Human
Resources and Marketing.
NORTHERN RADIANCE EARRINGS
AND PENDANT

20
Managers’ Conferences
It truly is our people who make our Company.
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 of our Leaders came
together in their home countries of Australia, New
Zealand, and Canada, focused to inspire our teams
to continue to produce outstanding results and most
importantly – incredible customer experiences.
Gold Club
Every year we celebrate the personal achievements
of our highest performing Sales Professionals. This
year the 291 incredible individuals who achieved gold
club status, accounting for over A$123m in sales,
were invited to celebrate their success in Toronto,
Canada and Melbourne, Australia. Our top performers
were joined by our Senior Executives and CEO, to
personally congratulate and thank them for their
contributions to the success of Michael Hill for 2018.
Celebrating
our Success
A look at how we pay
tribute to our managers
and high achievers
TOP: SOME OF OUR GOLD STAR RECIPIENTS AT THE 2018 MANAGERS' CONFERENCE;
PHOTOS 2 - 4: SIR MICHAEL HILL CELEBRATES WITH OUR STELLAR SALES
PROFESSIONALS AT THE 2019 GOLD CLUB AWARDS

21
Michael Hill
International Violin
Competition
The Michael Hill International Violin Competition is the launch-pad for violin
virtuosos; the foundation stone of brilliant musical careers.
With a prize package valued at over NZ$100,000, the “Michael Hill” as
it
is affectionately named, shapes the artistry of 16 of the world’s finest young
violinists. It delivers a sublime, unique experience to violinists and audiences alike.
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 broadcast of the June 2019 event was enjoyed by 1.3 million around the
world, and the full digital reach was 1.6 million – with “Michael Hill International”
being the most-recognised business partner as attested in audience surveys.
Established two decades ago by entrepreneur and passionate violinist,
New Zealander Sir Michael Hill, the Michael Hill International Violin Competition
is regarded as one of the world’s top violin events. 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 commercial business people and ardent
arts lovers, the organisation carefully selects international and leading local
luminaries to guide brilliant young talent through competition, intensive master
classes and career development, and launches these artists onto the world stage,
empowered with the necessary skills to broaden their career opportunities.
The Michael Hill International Violin Competition aims to recognise and
celebrate excellence, distinctiveness and musical artistry. It takes pride in New
Zealand Aotearoa’s cultural offerings and showcases its finest artistic talents.
Through our dedicated partnership with this major event, which invites the
world’s celebrated violinists, we are raising the awareness of fine music and the
standards of musical performance that richly impacts the next layer of talent in
New Zealand.
PICTURED: THIS YEAR'S WINNER, ANNA IM FROM SOUTH KOREA PERFORMING AT THE QUARTER FINAL
ROUNDS IN QUEENSTOWN. ANNA WILL BE TOURING ACROSS NEW ZEALAND AND AUSTRALIA IN 2020
AS PART OF HER PRIZE PACKAGE.
michaelhillviolincompetition.co.nz

...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 2019.
Principal activities
The Group operates predominately in the retail sale of
jewellery and related services sector in Australia, New
Zealand and Canada.
There were no 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:
2019 2018
$000 $000
Final ordinary dividend for the year
ended 30 June 2018 of
au2.5¢
(2017 -
au2.5¢) per fully paid share
paid on 28 September 2018
(2017 - 29 September 2017) 9,679 9,685
Interim ordinary dividend for the
year ended 30 June 2019 of
au2.5¢
(2018 -
au2.5¢) per fully paid share
paid on 27 March 2019
(2018 - 29 March 2018) 9,686 9,686
The Directors have declared the
payment of a final dividend of
au1.5¢
per fully paid ordinary share* (2018
-
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 27 September 2019 out of
retained earnings, but not recognised
as a liability at year end is: 5,816 9,686
* This will be declared as conduit foreign income,

therefore no Australian withholding tax will be deducted
from the dividend payment for foreign (non-Australian tax
resident) shareholders.
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 of $569.5m (2018: $575.5m) for the 2019 financial
year, producing earnings before interest and tax ('EBIT')
of $21.1m (2018: $8.9m restated). The Group reported a
net profit after tax ('NPAT') of $16.5m for the 2019 financial
year. Underlying EBIT for the Group was $34.6m for the
year. Underlying EBIT excludes one off costs, including
employee benefit remediation and significant items per
the Non-IFRS Information note on page 29.
OPERATIONAL REVIEW
The Group achieved the following key outcomes for the
2019 financial year:
Key Financial Results
• Statutory net profit after tax increased to $16.5m
(Restated FY18: $1.6m)
• Statutory earnings before interest and tax increased to
$21.1m (Restated FY18: $8.9m)
• Group operating revenues $569.5m (FY18: $575.5m)
• Underlying earnings before interest and tax* $34.6m
(FY18: $40.1m)
• Group same store sales $524.7m (FY18: $542.8m),
down 3.3%
• Gross margin 62.0% (FY18: 63.7%)
• Controlled working capital management with inventory
reduced to $179.5m after one off impairment of $6.0m
•
Net debt reduction of 11.4% to $24.8m (FY18: $28.0m)
• Equity ratio 46.8% (FY18: 45.9%)
•
Final dividend of AU 1.5 cents per share, giving a full year
dividend AU 4.0 cents per share (FY18:
au5.0¢ per share)
ROSE GOLD AND DIAMOND RING
FROM THE MARK HILL COLLECTION

24 MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT
Operational Performance
• Same store sales momentum recovery continued
throughout the year, finishing with FY19Q4 at +0.7%
• e-commerce sales increased by 43.6% to $16.0m
(FY18: $11.1m)
•
Branded collection sales represented 32.5% of total sales
• Delivery of a $5m cost out, largely from a reduction in
corporate overhead costs, to annualise in FY20
• A further $5m annualised savings from vendor
negotiations, supply chain efficiencies and other retailing
operating costs to be delivered across FY20 and FY21
• Continued investment in technology as the Company
migrates to a highly integrated IT environment,
including an upgraded inventory management system
• Ten Michael Hill stores opened and eleven under-per-
forming stores were closed (along with five Emma &
Roe stores) during the year, giving a total of 306 stores
trading at year end.
* EBIT and Underlying EBIT are Non-IFRS Information
and are unaudited. Please refer to Non-IFRS Information
on page 29 ofor an explanation of Non-IFRS information
and a reconciliation of EBIT and Underlying EBIT.
The Group reported a net profit after tax (NPAT) of
$16.5m for the full year ending 30 June 2019. Underlying
earnings before interest and tax (EBIT) for the period
was $34.6m (FY18: $40.1m). The decline in EBIT was
partially offset by our cost out program, announced
in February 2019. In addition to compressed margins
arising from the current competitive retail environment
and clearing of aged off range inventory, the results for
FY19 were impacted by employee remediation costs of
$4.5m, one-off aged inventory impairment of $6.0m and
employee restructuring costs of $2.0m as part of the
cost out program.
Same store sales were down 3.3% for the full year
to $524.7m (FY18: $542.8m), due to the Company’s
shift away from aggressive discounting for the first four
months of the year and a competitive retail environment.
Same store sales returned to positive growth in FY19Q4
with an increase of 0.7%.
The continued investment and development of the
Company’s e-commerce business resulted in record
on-line revenue of $16.0m for the full year (up 43.6% on
FY18) and now represents 2.8% of total sales. The launch
of a number of new branded bridal collections and a
concerted marketing focus led to branded collections
representing 32.5% of total product sales for the full year.
The active inventory management program along
with one-off aged inventory impairment of $6.0m has
seen inventory levels reduced to $179.5m at year end
(FY18: $192.1m). This focus on working capital, along with
the cost out program and renegotiated vendor payment
terms, have contributed to the reduction in net debt to
$24.8m from $28.0m in FY18.
Sales from the Group’s Professional Care Plan
(PCP) declined to $28.5m with an amount of $32.9m
recognised as revenue for the full year. At 30 June 2019,
a deferred amount of $77.8m remained on the balance
sheet (FY18: $80.0m).
The company opened ten new stores and closed
eleven under-performing stores along with five Emma &
Roe stores, resulting in 306 stores at year end (including
one remaining Emma & Roe store).
GOLD AND DIAMOND RING
FROM THE MARK HILL COLLECTION

MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT 25
Segment Results
The operational segments below reflect the performance of the Group's retail operations in each geographic segment.
The segments include trading activity from our online presence and our Canadian in-house credit function. The segments
exclude revenue and expenses that do not relate directly to the relevant 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
prior year following the announcement of their planned closure. As a result, the wind-down of Michael Hill United States
has been included in Corporate/Other and Emma & Roe has been included in the Australian retail segment. The results
below are expressed in local currency.
Michael Hill Australia
OPERATING RESULTS (AU $000) 2019 2018 2017 2016 2015
Revenue from continuing operations 313,587 325,709 321,981 309,457 294,442
Gross margin 194,052 206,303 201,707 194,152 183,582
Gross margin as a % of revenue 61.9% 63.3% 62.6% 62.7% 62.3%
EBIT 32,917 48,621 51,688 49,975 45,933
As a % of revenue 10.5% 14.9% 16.1% 16.1% 15.6%
Number of stores 168 171 166 168 167
Australian retail segment revenue declined by 3.7% to $313.6m (FY18: $325.7m) with gross margin of 61.9% (FY18:
63.3%) during the year. Gross margins were compressed as the Company moved decisively to defend market share in
challenging retail conditions.
In FY20, we expect the Australian retail environment will continue to be challenging, but we are focused on building
momentum off the back of the last quarter of FY19. We expect performance to be driven by improved retail in-store
execution and product newness, strong property portfolio management and continued online revenue growth.
Four stores were opened in Australia during the period as follows:
• Coomera, Queensland
• DFO Perth, Western Australia
• Harbourtown, Queensland
• Launceston, Tasmania
Eight stores closed during the period. There were 168 stores trading at 30 June 2019, including one Emma & Roe store.
Michael Hill New Zealand
OPERATING RESULTS (NZ $000) 2019 2018 2017 2016 2015
Revenue 120,064 125,239 121,970 122,903 113,983
Gross margin 73,011 77,673 75,204 75,895 70,488
Gross margin as a % of revenue 60.8% 62.0% 61.7% 61.8% 61.8%
EBIT 24,125 27,800 27,836 27,136 23,545
As a % of revenue 20.1% 22.2% 22.8% 22.1% 20.7%
Number of stores 52 52 52 52 52
FX rate for profit translation 1.06 1.09 1.06 1.09 1.07
In New Zealand, retail segment revenue declined by 4.1% to NZ$120.1m (FY18: NZ$125.2m), with a decline in gross margin
to 60.8% (FY18: 62.0%). In FY20, we expect that the New Zealand business will benefit from operational improvements,
continued refinement of the property portfolio and improved cost efficiencies.
Two stores were opened in New Zealand as follows:
• DFO Onehunga, Auckland
• Tauranga Crossing, Tauranga
Two stores closed during the period. There were 52 stores trading at 30 June 2019.

26 MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT
Michael Hill Canada
OPERATING RESULTS (CA $000) 2019 2018 2017 2016 2015
Revenue 133,146 130,762 112,721 95,423 79,097
Gross margin 80,726 81,576 69,078 59,252 48,689
Gross margin as a % of revenue 60.6% 62.4% 61.3% 62.1% 61.6%
EBIT 9,797 14,605 12,386 8,929 6,041
As a % of revenue 7.4% 11.2% 11.0% 9.4% 7.6%
Number of stores 86 83 76 67 60
FX rate for profit translation 0.95 0.98 1.00 0.97 0.97
In Canada, the business saw retail segment revenue growth of 1.8% to CA$133.1m (FY18: CA$130.8m), with a decline in
gross margin to 60.6% (FY18: 62.4%). A series of measures to improve productivity and sales were introduced in FY19H2
that are expected to drive performance improvement for FY20.
• Charlottetown, Prince Edward Island
• Quinte Mall, Ontario
• Rideau Centre, Ontario
• St Albert, Alberta
One store closed during the period. There were 86 stores trading at 30 June 2019.
Cash, Cash flow and Dividends
The Group has an equity ratio of 46.8% at 30 June 2019 (45.9% in 2018 restated), and a working capital ratio of 5.0:1 (4.6:1
in 2018). Net operating cash inflows were $39.0m compared to $54.9m the previous year. Net debt at 30 June 2019 was
$24.8m compared to $28.0m at 30 June 2018.
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.
Despite the one off costs, which impacted statutory profit after tax, through disciplined inventory and working
capital management, the Group's debt levels reduced.
The Company has declared a final dividend for the year of AU1.5¢ per share, bringing the total dividends paid for
the financial year to 4.0¢. The final dividend will be paid on 27 September 2019, unfranked with conduit foreign income
and fully imputed.
FROM LEFT: GRAND ARPEGGIO AND GRAND ARIA FROM SIR MICHAEL HILL DESIGNER
BRIDAL COLLECTION AND A THREE STONE EVERMORE

MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT 27
With a strengthened leadership team in place, the focus
will be on the retail fundamentals of the business and
building on the framework of the five strategic priorities
announced with the FY18 results:
• OMNI-CHANNEL:
Building capability to deliver a seamless customer
experience.
• CUSTOMER LOYALTY:
Building data capability to better service customers.
• UNIQUE BRANDED COLLECTIONS:
Escalate our growth of branded collections.
• BRAND POSITION:
Strengthen and grow brand loyalty.
• OPERATIONAL EXCELLENCE:
Enhance execution capability and agility.
These strategic priorities are going to be key drivers to
the success of our business. In addition to delivering
these strategies, the company will be focused on a
number of key initiatives throughout FY20:
1 CONTINUED FOCUS ON COSTS - the cost out
program delivered in FY19 will see annualised full-year
benefits in FY20 of $5m. Management has identified
a further $5m cost reduction program that will be
delivered across FY20 and FY21.
2 RETAIL OPERATING MODEL - the implementation of a
more sophisticated and integrated customer focussed
retail operating model is well underway. This model
will drive regular product newness to our stores, a
structured and consistent marketing platform, and
exciting changes within stores for our customers.
We anticipate that this initiative will drive improved
customer transaction frequency and conversion rates.
Outlook and Key Initiatives for FY20
3 RETAIL FUNDAMENTALS - a deliberate emphasis on
the Company's core disciplines presents a significant
opportunity. A much greater focus is being applied to
retail execution and visual merchandising, enhancing
our brand, inventory management, and cost control.
4 ACCELERATION OF THE BRANDED COLLECTIONS
STRATEGY
- as demonstrated in the second half
of FY19, we have a clear pathway to drive exclusive
Branded Collection sales to 50% over the coming
years. This represents both a sales growth and margin
opportunity with existing customers, and an avenue to
attract new customers to the Michael Hill brand.
5 NEW MERCHANDISE RHYTHM - implementing new
processes and a critical path to ensure that product
newness is brought to market on a regular basis.
A focus on margin mix and margin outcomes via
deliberate product selection will be delivered by way of
multiple strategies.
6 CANADIAN PRODUCTIVITY - Canada presents a
significant opportunity from a productivity perspective.
A plan to drive increased sales per square metre has
been developed, and we will be implementing initiatives
to deliver improved results over the first half of FY20.
7 ONLINE AS A CORE FOCUS - to improve our existing
online customer experience and expanding our digital
platform, while building capability for the future.

28 MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT
The Board believe that a
strong Corporate Governance
framework will underpin the
Group’s growth and success...

MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT 29
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 the Group 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 users 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)
• Underlying EBIT
• Significant item
CALCULATION OF UNDERLYING EBIT
Underlying EBIT has been calculated
as follows:
2019 2018
restated
$000 $000
EBIT from continuing operations 21,115 45,788
EBIT from discontinued operations - (36,937)
Group Statutory EBIT 21,115 8,851
Add back costs relating to:
Emma & Roe and US closure costs 258 25,505
CEO transition costs 758 -
Employee restructure costs 1,987 -
Impairment of aged inventory 5,954 -
Revaluation of employee benefits - 1,391
Remediation of employee
underpayment 4,536 4,359
Underlying EBIT 34,608 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 resources have
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 resources
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
increase 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.
The Group is in the process
of investing in improved IT
infrastructure and capabilities
with a goal to meet the rapidly
changing retail environment and
focus on consumer demands.
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 increasingly
complex legal compliance
environment
Inability to adjust to the
rapidly changing consumer
segment and retail
environment
The Board believe that a strong Corporate Governance
framework will underpin the Group’s growth and success. The
Company regularly reviews its risk management framework and
has identified the following at risk areas and mitigating strategies:
Environmental regulation
The Group has determined that no particular or significant
environmental regulations apply to it.

30 MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT
Information on
Directors
From left: Gary Smith, Emma Hill, Sir Michael Hill, Janine Allis
and Robert Fyfe. Information on the Directors of Michael Hill
International Limited in office during the financial year and until
the date of this report follows.

MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT 31
Emma Jane
Hill
(Chair)
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
OF LISTED ENTITIES
none
FORMER DIRECTORSHIPS IN LAST
3 YEARS OF LISTED ENTITIES
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
OF LISTED ENTITIES
none
FORMER DIRECTORSHIPS IN LAST
3 YEARS OF LISTED ENTITIES
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.
OTHER CURRENT DIRECTORSHIPS
OF LISTED ENTITIES
Flight Centre Travel
Group Limited
FORMER DIRECTORSHIPS IN LAST
3 YEARS OF LISTED ENTITIES
none
RESPONSIBILITIES
Non-Executive and
Independent Director
Chair Audit and Risk
Management Committee
Member People
Development and
Remuneration
Committee
INTERESTS IN SHARES AND
OPTIONS
80,000
Ordinary Shares
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
OF LISTED ENTITIES
Air Canada
FORMER DIRECTORSHIPS IN LAST
3 YEARS OF LISTED ENTITIES
none
RESPONSIBILITIES
Non-Executive and
Independent Director
Chair People
Development and
Remuneration
Committee
Member Audit and Risk
Management Committee
INTERESTS IN SHARES AND
OPTIONS
1,513,640
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.
OTHER CURRENT DIRECTORSHIPS
OF LISTED ENTITIES
none
FORMER DIRECTORSHIPS IN LAST
3 YEARS OF LISTED ENTITIES
none
RESPONSIBILITIES
Non-Executive and
Independent Director
Member Audit and Risk
Management Committee
INTERESTS IN SHARES AND
OPTIONS
551,745
Ordinary Shares

32 MICHAEL HILL INTERNATIONAL LIMITED 2019 FINANCIAL STATEMENTS

MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT 33
Company Secretary
The Company Secretary is Andrew Lowe, who is also the Chief Financial
Officer of the Group. Andrew was
appointed to the position of Company
Secretary on 1 March 2019, having held that position previously (15 December
2017 to 22 January 2018).
Andrew holds a Bachelor of Commerce, a Bachelor of Laws (Hons) and
a Masters of Applied Finance, and is a qualified Chartered Accountant and a
Chartered Taxation Adviser of the Taxation Institute of Australia. Andrew has
extensive experience in finance and leadership roles across a range of listed
corporate groups with Australian and offshore operations.
Prior to Andrew’s appointment, Katherine Hammond was Company
Secretary from 22 January 2018 and resigned with effect from 1 March 2019.
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 2019, and the numbers
of meetings attended by each Director were:

Full meetings

Meetings of committees

of Directors
Audit and Risk
People Development
Management and Remuneration
Meetings Meetings Meetings Meetings Meetings Meetings
attended held* attended held* attended held*
E J Hill 13 13 - - 7 7
Sir R M Hill 9 13 - - - -
G W Smith 11 13 4 4 6 7
R I Fyfe 12 13 4 4 7 7
J S Allis 10 13 3 4 - -
* Number of meetings held during the time the Director held office or was a
member of the committee during the year.
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 and
Management Committee and Remuneration Committee
Gary Smith
c
Rob Fyfe
c
Janine Allis Emma Hill
Rob Fyfe Gary Smith
c
designates chair of the committee.

34 MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT
Our Remuneration
objectives: To attract,
motivate and retain
executive talent and to
create shareholder value
through equity.
SILVER CUFF BRACELET AND GOLD AND DIAMOND
RING FROM THE MARK HILL COLLECTION

MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT 35
Audited
Remuneration Report
The Directors present the 2019 Michael Hill International
Limited remuneration report, outlining key aspects of our
remuneration policy and framework, and remuneration
awarded during the 2019 financial year. The information
provided in this remuneration report has been audited as
required by section 308(3C) of the Corporations Act 2001.
Remuneration framework
REMUNERATION POLICY AND LINK TO PERFORMANCE
Our People Development and Remuneration Committee
(the Committee) is a Committee of the Board and 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 obtains independent
advice every three years on the appropriateness of
remuneration practices of the Group given trends in
comparative companies both locally and internationally,
and the objectives of the Group’s remuneration strategy.
It is primarily responsible for making recommenda-
tions 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.
The Committee is responsible for assessing performance
against key performance indicators ('KPIs') and
determining the short-term incentive ('STI') and
long-term incentive ('LTI') to be paid. In the event of
serious misconduct or a material misstatement in the
Company’s financial statements, the Committee can
cancel or defer performance-based remuneration.
The Committee’s objective is to ensure that
remuneration policies and structures are fair and
competitive and aligned with the long-term interests
of the Company. The role of the Committee is set out
in more detail in the Corporate Governance Statement
(link to website below). The ASX Corporate Governance
Principles and Recommendations rules and principles
may materially differ from NZX's Corporate Governance
rules and NZX Code.
http://investor.michaelhill.com/corporate-policies-compliance
REMUNERATION OBJECTIVES
The following objectives inform the determination of
remuneration related decisions:
• Attract, motivate and retain executive talent
• Reward the achievement of strategic objectives
• The creation of reward differentiation to drive
performance values and behaviours
• Shareholder value creation through equity.
KEY MANAGEMENT PERSONNEL
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 2019 financial year, it was determined that
the KMPs of Michael Hill International were:
• Chief Executive Officer (CEO) -
Daniel Bracken (appointed 15 November 2018)
• Chief Executive Officer (CEO) -
Phil Taylor (ceased 21 September 2018)
• Chief Financial Officer (CFO) - Andrew Lowe
• Chief Operating Officer (COO) - Andrea Slingsby
(COO is a new role, appointed 9 January 2019)
• Chief Brand & Customer Officer (CB&CO) -
Vanessa Brennan (ceased 9 January 2019)
1

• Chief Information Officer (CIO) -
Matt Keays (ceased 9 January 2019)
2
• Group Executive Supply Chain (GESC) -
Galina Hirtzel (ceased 6 August 2018)
3
• Group Executive Human Resources (GEHR) -
Stewart Silk (ceased 3 September 2018)
4
1
Ms Brennan ceased as a KMP on 9 January 2019 and
remains employed by the Company. The remuneration
details of the CB&CO contained in this remuneration
report relate to the period the CB&CO was a KMP.
2 Mr Keays ceased as a KMP 9 January 2019 and
remains employed by the Company. The remuneration
details of the CIO contained in this remuneration
report relate to the period the CIO was a KMP.
3 Ms Hirtzel ceased as a KMP on 6 August 2018 and
remains employed by the Company. The remuneration
details of the GESC contained in this remuneration
report relate to the period the GESC was a KMP.
4 Mr Silk ceased as a KMP on 3 September 2018 and
was employed by the Company until 30 July 2019. The
remuneration details of the GEHR contained in this
remuneration report relate to the period the GEHR
was a KMP.

36 MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT
EXECUTIVE REMUNERATION FRAMEWORK
The executive remuneration structure has three components: Total Fixed Remuneration (TFR), STI and LTI.
Compensation levels are reviewed annually by the 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
.
In FY19, the performance linked component of compensation comprises approximately 10.5% of total payments to
senior executives (FY18: 10.7%).
Changes for FY20
A full remuneration review has been completed in 2019. This included analysis and advice from external remuneration
consultants on the competitiveness and suitability of the current TFR, STI and LTI of KMP. It also considered available
market information.
Total target remuneration mix for FY20 is below. It reflects the STI opportunity for the FY20 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.
TFR
TFR is set based on relevant
market relativities, reflecting
responsibilities,performance,
qualifications, experience and
geographic location
Base salary plus any fixed
elements including superan-
nuation and leave entitlements
TFR will generally be positioned
at the median compared to
relevant market based data.
Expertise and performance in
the role are also considerations

Determination
Delivery
Strategic intent
STI
On target performance is
determined as a percentage of
TFR and paid as cash
70% is directly aligned to
achieving a Group EBIT target
and other related items. 30%
is based on achievement of
individual performance and
development plans
Performance incentive is
directed to achieving Board
approved targets, reflective of
market circumstances
LT I
An issue of share rights is
made to participants of the
scheme, the quantum being a
% of the STI earned
Alignment of executive
incentives with the long term
performance is achieved by
way of a deferred remuneration
component
LTI is intended to reward
executive KMP for sustainable
long-term growth aligned to
shareholders' interests
Other KMP
50% of TFR
30% of TFR
COO
50% of TFR
35% of STI earned
CFO
50% of TFR
30% of STI earned
CEO
70% of TFR
50% of STI earned
Short term incentive
potentional value
Long term incentive
potentional value
The weighting and potential of STI and LTI for KMP is:
49%
60%
69%
68%
34%
30%
24%
25%
17%
10%
7%
7%
CEO
Other KMP
GESC
GEHR
■ TFR ■ STI ■ LT I
Remuneration levels are reviewed annually by the Committee through a process that considers individual, segment and
overall performance of the Group. The 2018-2019 remuneration policy settings for KMP for total target remuneration mix
are as follows:

MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT 37
SHORT-TERM INCENTIVE SCHEME
The short term incentive scheme is detailed in
performance and development plans ('PDPs') that are
agreed at the start of the reporting period. The KPIs are
in the form of a balanced scorecard, where performance
against key deliverables across financial, strategy, business
improvement, customer and people areas are measured.
The scheme is supported by 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. Performance
against KPIs is formally measured on a biannual basis and
informally in regular meetings. The STI component is paid
on an annual basis if the Group financial performance
target and performance hurdle/s are met. The STI for
the individual KPI component is paid biannually post the
performance review. The Committee review the PDPs
of each Group Executive to determine achievement,
entitlement and eligibility for payment.
The policy and framework cascades from the CEO
to group executives and 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.
LONG-TERM INCENTIVE SCHEME
The Company introduced a deferred compensation
plan ('LTI') involving the grant of share rights to eligible
participants in the 2015-16 financial year. This was
approved by shareholders at the Company’s Annual
General Meeting held on 31 October 2016. Prior to that,
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 relate to
the entitlements set in prior years. Options previously
issued are detailed in this report.
Under the LTI 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
the STI payment earned. The share rights progressively
vest 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. During the year, Mr Taylor retired
from his position as CEO and, having been deemed a
‘Good Leaver’ the Board, waived the vesting conditions
of the share rights already issued to him as at his date of
resignation.
Feature
Opportunity/ % value of the respective STI which is issued
Allocation to the 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.

38 MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT
CONSEQUENCES OF PERFORMANCE ON SHAREHOLDER WEALTH
In considering the Group’s performance and benefits for shareholder wealth, the Committee have regard to the following
indices in respect of the current financial year and the previous four financial years.
2019 2018 2017 2016 2015
Restated Restated Restated Restated
$000 $000 $000 $000 $000
NPAT 16,498 1,557 29,654 16,771 24,987
NPAT from continuing operations 16,498 31,765 41,138 23,524 30,452
EBIT* 21,115 8,854 43,840 43,050 38,108
EBIT from continuing operations* 21,115 45,787 58,055 50,416 44,605
Underlying EBIT* 34,608 40,106 48,117 47,058 42,061
Dividend payments 19,365 19,371 19,264 17,490 23,176
Share price as at 30 June (NZ$ 2016 to 2014) $0.54 $0.97 $1.11 $1.14 $1.06
Return on shareholders equity 9.4% 17.4% 20.9% 12.9% 16.5%
Return on average total assets 4.3% 8.2% 10.5% 6.3% 8.8%
Please refer to note 3(b) regarding the restatement of prior period results.
*
EBIT and Underlying EBIT are Non-IFRS Information and are unaudited. Please refer to Non-IFRS Information on page 29
for an explanation of Non-IFRS information and a reconciliation of EBIT and Underlying EBIT.
EBIT is considered the primary financial performance target in setting the STI. Profit amounts for 2015 to 2019 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 IFRS as
issued by the International Accounting Standards Board.
The overall level of remuneration takes into consideration 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
superannuation, as part of the terms and conditions of their appointment, except as detailed below for the CEO.
LOANS TO KEY MANAGEMENT PERSONNEL
The Company does not provide loans to any KMP or to other senior executives.
SERVICE CONTRACTS
It is the Group's policy that service contracts for KMP, 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 two KMP 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 for those two KMP. KMP 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 service contract outlines the components of remuneration but does not prescribe how remuneration
levels are modified year to year. The Committee reviews remuneration levels each year to take into
consideration 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 the remuneration policy.
DIAMOND RING FROM THE
SOUTHERN STAR COLLECTION

CEO CONTRACT
The Group has entered into a service contract with the
CEO, Daniel Bracken, who was appointed CEO on
15 November 2018 and had a probationary period of six
months. The service contract is terminable on six months
notice. Otherwise, the Group may terminate Mr Bracken's
position for serious misconduct or professional negligence.
The remuneration payable to Mr Bracken was as follows:
a) Total Fixed Remuneration - $950,000 (inclusive of the
statutory superannuation contributions but excluding
leave provisions).
b) Short terms incentives (STI) - 70% of base salary
payable in cash on performance of agreed Group
profit targets based on EBIT target and other related
items achievement (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 50% 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 Bracken is
deemed a 'Good Leaver' pursuant to the LTI plan rules.
In addition, Mr Bracken was provided with support relating
to his relocation and is entitled to the following benefits:
a) coverage of costs associated with moving personal
and household items.
b) access to a relocation consultant to provide
resettlement assistance.
c) economy class airfares for his family’s relocation to be
used within the first 12 months of employment.
Mr Bracken 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.
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.
DIRECTOR CONSULTING AGREEMENT
Michael Hill Group Services Pty Limited ACN 134
562 440, a subsidiary of Michael Hill International
Limited (MHIL), previously entered into a consultancy
agreement (Consultancy Agreement) with Robert Ian
Fyfe providing mentoring support to Mr Taylor. 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.
This consultancy agreement effectively terminated
upon Mr Taylor's retirement announcement on 21
September 2018. Mr Fyfe’s mentoring was non-pre-
scriptive and Mr Fyfe did not participate in management
decisions. Mr Fyfe and the Board consider that Mr Fyfe
maintained 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 accounted
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. No amounts were
paid pursuant to the Consultancy Agreement for FY19.
SERVICES FROM REMUNERATION CONSULTANTS
The Committee engaged a remuneration consultant
during the 2016 financial year to review the amount and
elements of KMP remuneration and provide recommen-
dations in relation thereto.
During the 2019 financial year, there was an internal
review completed and the Committee were satisfied with
the results of this review. There is no intention to engage
a remuneration consultant during the 2020 financial year.
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 for the 2018-19 year were $98,332
per annum. Where a Director serves as Chair on the
People Development and Remuneration Committee they
are entitled to an additional payment of $20,420 per
annum. Where a Director serves as Chair on the Audit
and Risk Committee they are entitled to an additional
payment of $30,630 per annum. It is the Company’s
policy to increase directors’ fees annually at the
commencement of each financial year of the Company,
in accordance with the consumer price index. 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-re-
lated 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 39

40 MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT
DIRECTOR AND KMP 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
Non-monetary Total Long service Superannuation Termination Options Total Proportion Value of
fees bonus (a) (b) benefits leave benefits benefits and rights remuneration options as
(relocation) (c) performance proportion of
related remuneration
Non-executive Directors $ $ $ $ $ $ $ $ $ $ % %
Emma Jane Hill
2019 197,047 - - - 197,047 - - - - 197,047 - -
2018 193,610 - - - 193,610 - - - - 193,610 - -
Sir Richard Michael Hill
2019 98,523 - - - 98,523 - - - - 98,523 - -
2018 96,805 - - - 96,805 - - - - 96,805 - -
Gary Warwick Smith
2019 117,628 - - - 117,628 - 11,175 - - 128,803 - -
2018 115,804 - - - 115,804 - 11,001 - - 126,805 - -
Robert Ian Fyfe
(b)

2019 118,878 - - - 118,878 - - - - 118,878 - -
2018 116,805 - 84,000 - 200,805 - - - - 200,805 - -
Janine Suzanne Allis
2019 89,799 - - - 89,799 - 8,533 - - 98,332 - -
2018 96,805 - - - 96,805 - - - - 96,805 - -
Total Director remuneration
2019 621,875 - - - 621,875 - 19,708 - - 641,583 - -
2018 619,829 - 84,000 - 703,829 - 11,001 - - 714,830 - -

MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT 41
Share-
Post- based
Short-term Long-term employment payments
Salary & STI cash Other
Non-monetary Total Long service Superannuation Termination Options Total Proportion Value of
fees bonus (a) (b) benefits leave benefits benefits and rights remuneration options as
(relocation) (c) performance proportion of
related remuneration
Non-executive Directors $ $ $ $ $ $ $ $ $ $ % %
Daniel Bracken, CEO
(appointed 15/11/2018)
2019 594,726 69,300 - 19,970 683,996 9,327 15,385 - - 708,708 9.78 -
Phil Taylor, CEO
(ceased 21/9/2018)
2019 192,680 58,508 - - 251,188 8,830 6,731 - 71,794 338,543 17.28 21.21
2018 720,306 119,407 - - 839,713 20,625 19,427 - 313,940 1,193,705 10.00 26.30
Andrew Lowe, CFO
2019 403,807 42,273 - - 446,080 8,107 24,355 - 5,067 483,609 8.74 1.05
2018 180,200 47,320 - - 227,520 2,890 15,981 - 2,979 249,370 18.98 1.19
Andrea Slingsby, COO
(appointed 9/1/2019)
2019 217,708 25,900 - - 243,608 3,597 11,538 - - 258,743 10.01 -
Vanessa Brennan, CB&CO
(appointed 15/1/2018)
(ceased 9/1/2019)
2019 236,298 37,014 - - 273,312 3,637 12,981 - 3,963 293,893 12.59 1.35
2018 192,980 70,000 - - 262,980 2,976 17,018 - 4,113 287,087 24.38 1.43
Matt Keays, CIO
(ceased 9/1/2019)
2019 174,788 13,372 - - 188,160 3,128 12,981 - 8,154 212,423 6.30 3.84
2018 324,316 30,802 - - 355,118 5,596 25,000 - 14,461 400,175 7.70 3.61
Galina Hirtzel, GESC
(ceased 6/8/2018)
2019 30,160 2,982 - - 33,142 445 2,885 - 1,908 38,380 7.77 4.97
2018 281,606 24,609 - - 306,215 6,243 23,355 - 34,682 370,495 6.64 9.36
Stewart Silk, GEHR
(ceased 3/9/2018)
2019 44,962 - - - 44,962 625 4,327 - 2,714 52,628 - 5.16
2018 216,018 6,830 - - 222,848 5,462 22,443 - 32,689 283,442 2.41 11.53
Total KMP
remuneration
2019 1,895,129 249,349 - 19,970 2,164,448 37,696 91,183 - 93,600 2,386,927 10.45 3.92
2018 1,915,426 298,968 - - 2,214,394 43,792 123,224 - 402,864 2,784,274 10.74 14.47
Total Director and
KMP remuneration
2019 2,517,004 249,349 - 19,970 2,786,323 37,696 110,891 - 93,600 3,028,510 8.23 3.09
2018 2,535,255 298,968 84,000 - 2,918,223 43,792 134,225 - 402,864 3,499,104 8.75 11.80
Notes in relation to the table of Director and KMP remuneration:
a) The short-term incentive bonus is for performance during the respective financial year using the criteria set out on page 36. The amount was determined
on 15 August 2019 after performance reviews were completed and approved by the People Development and Remuneration Committee.
b) The amount of $200,805 in respect of Robert Ian Fyfe’s 2018 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.
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. The amounts displayed above for each of Ms Brennan, Mr Keays, Ms Hirtzel and Mr Silk relate to compensation for services during
the period from 1 July 2018 to the date that person ceased being a KMP (For Ms Brennan - 9 January 2019; Mr Keays - 9 January 2019; for Ms Hirtzel
- 6 August 2018; for Mr Silk - 3 September 2018).

42 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 KMP are
detailed below.
Target bonus Included in Amounts Vested in year
Short-term incentive bonus available $ remuneration $ (a) forfeited $ (b) %
KMPs
Daniel Bracken 424,459 69,300 355,159 100%
Phil Taylor 130,249 58,508 71,741 100%
Andrew Lowe 225,000 42,273 182,727 100%
Andrea Slingsby 117,808 25,900 91,908 100%
Vanessa Brennan

(c)
81,251 37,014 44,237 100%
Matt Keays

(c)
63,959 13,372 50,587 100%
Galina Hirtzel

(c)
8,820 2,982 5,838 100%
Stewart Silk

(c)
15,255 - 15,255 100%
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 14 August 2019.
b) The amounts forfeited due to the performance or service criteria not being met in relation to the current financial year.
c) The amounts displayed above for each of Ms Brennan, Mr Keays, Ms Hirtzel and Mr Silk relate to compensation for
services during the period from 1 July 2018 to the date that person ceased being a KMP (For Ms Brennan - 9 January
2019; for Mr Keays - 9 January 2019; for Ms Hirtzel - 6 August 2018; for Mr Silk - 3 September 2018).
ROSE GOLD AND WHITE GOLD RINGS FROM THE EVERMORE COLLECTION

MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT 43
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
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 2,500,000 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.
ANALYSIS OF OPTIONS AND RIGHTS OVER EQUITY INSTRUMENTS GRANTED AS COMPENSATION
No options were held by KMPs as at the date of this report.
SHARE RIGHTS
The number of share rights issued to KMP and senior executives during the last financial year was 224,670 share rights.
Of these, share rights issued to KMP are set out below.
Number of Fair value
share rights issued per share right
KMP $
Daniel Bracken - -
Phil Taylor - -
Andrew Lowe 17,298 0.54
Andrea Slingsby - -
Vanessa Brennan - -
Matt Keays - -
Galina Hirtzel - -
Stewart Silk - -
The above relates to share rights issued during tenure as KMP during the period from 1 July 2018 to the date that
person ceased being a KMP (For Ms Brennan - 9 January 2019; Mr Keays - 9 January 2019; for Ms Hirtzel - 6 August
2018; for Mr Silk - 3 September 2018).
RECONCILIATION OF OPTIONS AND SHARE RIGHTS HELD BY KMP
The table below shows a reconciliation of options held by each KMP during the 2019 financial year. All vested
options are exercisable during the period commencing on the date immediately following the announcement of the
Company’s annual financial results for the 5th year following the vesting year and ending on 30 September 2028.
Balance at the start Balance at the end
of the year of the year
Vested Unvested Vested Exercised Forfeited Ceased to Vested and Un-vested
be KMP exercisable
Phil Taylor 1,500,000 - - - - (1,500,000) - -
Galina Hirtzel - 900,000 - - - (900,000) - -
Stewart Silk - 900,000 - - - (900,000) - -
Total 1,500,000 1,800,000 - - - (3,300,000) - -
No options were exercised during the period.
No amounts are unpaid on any shares issued on the exercise of options.

44 MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT
This table below details share rights that were issued, vested and forfeited during the year for each KMP.

Balance Granted Vested Forfeited Ceased Balance at
at start of during as KMP end of year
the year the year (unvested)
Number Number Number Number Number Number
Daniel Bracken - - - - - -
Phil Taylor
(a)
622,163 - - - (622,163) -
Andrew Lowe - 17,298 - - - 17,298
Andrea Slingsby - - - - - -
Vanessa Brennan
(b)
- - - - - -
Matt Keays
(b)
35,261 - - - (35,261) -
G Hirtzel
(b)
30,219 - - - (30,219) -
S Silk
(b)
25,362 - - - (25,362) -
Total 713,005 17,298 - - (713,005) 17,298
Share rights relating to the current reporting period are anticipated to be granted in late 2019. The number of shares
will depend on the Michael Hill International Limited’s share price over the five days prior to the grant date.
a) Mr Taylor ceased as a KMP on 21 September 2019 and retired from the Company on 18 March 2019. As at the date
of Mr Taylor’s retirement, the Company had granted to him 311,487 share rights pursuant to the rules of the CFO
Retention Plan, the Interim CEO Remuneration Package and the Employee Incentive Scheme he participated in as
CEO with other executives (as detailed in the Company’s last Remuneration Report). The vesting conditions of those
311,487 granted share rights (of 3 years’ continuous employment from the date of grant) had not been met as at the
date of Mr Taylor’s retirement. However, Mr Taylor was deemed a ‘Good Leaver’ under the rules of each of those plans
and the Board accordingly waived the vesting conditions in relation to the share rights. 311,487 ordinary class shares
in the Company were issued to Mr Taylor on 9 May 2019.
b) The amounts displayed above for each of Mr Keays, Ms Hirtzel and Mr Silk relate to compensation for services during
the period from 1 July 2018 to the date that person ceased being a KMP (For Mr Keays - 9 January 2019; for Ms Hirtzel
- 6 August 2018; for Mr Silk - 3 September 2018).
VOTING OF SHAREHOLDERS AT LAST YEAR'S ANNUAL GENERAL MEETING
Michael Hill International Limited received 99.7% of “yes” votes on its remuneration report for the 2018 financial year.
The Company did not receive any specific feedback at the AGM or throughout the year on its remuneration practices.
INSURANCE OF OFFICERS AND INDEMNITIES
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.
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:
2019 2018
$ $
Ernst & Young firm advisory fees 127,512 170,231
Total remuneration for non-audit services 127,512 170,231

MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT 45
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 46.
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 15 August 2019 in accordance with
a resolution of Directors as required by section 298 of the
Corporations Act 2001.
E. J. Hill, Chair
Brisbane
15 August 2019

46
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
As lead auditor for the audit of the financial report of Michael Hill International Limited
for the financial year ended 30 June 2019, 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
15 August 2019
Auditor’s Independence Declaration
to the Directors of
Michael Hill International Limited
COLOURED STONE ENGAGEMENT RINGS
FROM THE EVERMORE COLLECTION

MICHAEL HILL INTERNATIONAL LIMITED 2019 CHAIR REVIEW 47
Financial
Statements
ABN 25 610 937 598
The Directors present the
consolidated financial statements of
Michael Hill International Limited for
the year ended 30 June 2019
48 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
49 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
50 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
51 CONSOLIDATED CASH FLOW STATEMENT
52 NOTES TO THE FINANCIAL STATEMENTS
97 DIRECTORS' DECLARATION
98 AUDITOR'S REPORT
102 ASX LISTING RULES – ADDITIONAL INFORMATION

48 MICHAEL HILL INTERNATIONAL LIMITED 2019 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTES 2019 2018

Restated
$000 $000
Revenue from continuing operations 5 569,500 575,539
Other income 6(a) 1,555 1,074
Cost of goods sold (216,468) (208,657)
Employee benefits expense 6(b) (163,177) (156,298)
Occupancy costs (60,587) (58,074)
Marketing expenses (33,732) (31,433)
Selling expenses (24,636) (26,708)
Impairment of property, plant and equipment 9(b) (289) (348)
Impairment of other assets (1,823) (134)
Depreciation and amortisation expense 6(b) (19,366) (18,694)
Loss on disposal of property, plant and equipment (619) (522)
Other expenses (29,083) (29,948)
Finance costs 6(b) (2,464) (2,690)
Profit before income tax 18,811 43,107
Income tax expense 7 (2,313) (11,342)
Profit from continuing operations 16,498 31,765
Profit/(loss) from discontinued operations 14 - (30,208)
Profit for the year 16,498 1,557
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Gains on cash flow hedges 10(b) (323) 996
Currency translation differences arising during the year 10(b) 4,911 320
Other comprehensive income for the year, net of tax 4,588 1,316
Total comprehensive income for the year 21,086 2,873
Total comprehensive income for the year is attributable to:
Owners of Michael Hill International Limited 21,086 2,873
Total comprehensive income for the year attributable to
owners of Michael Hill International Limited arises from:
Continuing operations 21,086 33,081
Discontinuing operations - (30,208)
21,086 2,873
Earnings per share for profit attributable to the ordinary equity
holders of the Company, attributable to continuing operations:
Basic earnings per share 22 4.26¢ 8.20¢
Diluted earnings per share 22 4.25¢ 8.19¢
Earnings per share for profit attributable to the
ordinary equity holders of the Company:
Basic earnings per share 22 4.26¢ 0.40¢
Diluted earnings per share 22 4.25¢ 0.40¢
The above consolidated statement of comprehensive income should be read in conjunction with the
accompanying notes.
Consolidated statement of
comprehensive income

MICHAEL HILL INTERNATIONAL LIMITED 2019 FINANCIAL STATEMENTS AS AT 30 JUNE 2019 49
Consolidated statement of
financial position
NOTES 2019 2018

Restated
ASSETS $000 $000
Current assets
Cash and cash equivalents 8(a) 7,923 7,220
Trade and other receivables 8(b) 29,656 25,381
Contract assets 5(b) 701 799
Right of return assets 5(b) 291 -
Inventories 9(a) 179,503 192,074
Derivative financial instruments 12(a) - 245
Current tax receivables 9(e) 2,295 -
Other current assets 2,935 2,889
Total current assets 223,304 228,608
Non-current assets
Trade and other receivables 8(b) 6,985 2,665
Property, plant and equipment 9(b) 63,213 66,666
Deferred tax assets 9(d) 67,708 68,022
Intangible assets 9(c) 15,439 12,626
Contract assets 5(b) 1,438 1,695
Other non-current assets 1,106 1,193
Total non-current assets 155,889 152,867
Total assets
379,193 381,475
LIABILITIES
Current liabilities
Trade and other payables 8(d) 44,548 49,340
Contract liabilities 5(b) 26,054 -
Derivative financial instruments 8(f) 468 390
Current tax liabilities 9(f) 1,367 2,696
Provisions 9(g) 31,441 29,808
Deferred revenue 9(h) 1,252 26,476
Total current liabilities 105,130 108,710
Non-current liabilities
Contract liabilities 5(b) 55,813 -
Borrowings 8(e) 32,704 35,213
Provisions 9(g) 6,947 4,907
Deferred revenue 9(h) 1,847 57,720
Total non-current liabilities 97,311 97,840
Total liabilities 202,441 206,550
Net assets 176,752 174,925
EQUITY
Contributed equity 10(a) 10,984 10,266
Reserves 10(b) 5,805 1,829
Retained profits 10(b) 159,963 162,830
Total equity 176,752 174,925
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

50 MICHAEL HILL INTERNATIONAL LIMITED 2019 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
Notes Contributed Share Foreign Cash flow Retained Total
equity based currency hedge profits equity
Attributable to owners of
payments translation reserve
Michael Hill International Limited reserve reserve
$000 $000 $000 $000 $000 $000
Balance at 1 July 2017 10,015 1,136 285 (1,141) 191,888 202,183
Correction of error (net of tax) 3(b) - - - - (11,244) (11,244)
Total equity at the beginning
of the financial year 10,015 1,136 285 (1,141) 180,644 190,939
Profit for the year - - - - 4,610 4,610
Correction of error (net of tax) 3(b) - - - - (3,053) (3,053)
Restated profit for the year - - - - 1,557 1,557
Currency translation differences - - 320 - - 320
Currency forward contracts 8(f) - - - 337 - 337
Interest rate swaps 8(f) - - - 659 - 659
Total comprehensive income for the year - - 320 996 1,557 2,873
Transactions with members
in their capacity as owners:
Dividends paid 13(b)(i) - - - - (19,371) (19,371)
Option expense through share based
payments reserve 20(c) - 42 - - - 42
Transfer option reserve to contributed
equity on exercise of options 251 (251) - - - -
Share rights expense through
share based payments reserve 20(c) - 442 - - - 442
251 233 - - (19,371) (18,887)
Balance at 30 June 2018 10,266 1,369 605 (145) 162,830 174,925
Profit for the year - - - - 16,498 16,498
Currency translation differences - - 4,911 - - 4,911
Currency forward contracts 8(f) - - - (390) - (390)
Interest rate swaps 8(f) - - - 67 - 67
Total comprehensive income for the year - - 4,911 (323) 16,498 21,086
Transactions with members
in their capacity as owners:
Dividends paid 13(b)(i) - - - - (19,365) (19,365)
Option expense through share based
payments reserve 20(c) - 11 - - - 11
Issue of share capital on
vesting of share rights 10(a) 490 (490) - - - -
Transfer option reserve to contributed
equity on forfeiture of options 10(a) 228 (228) - - - -
Share rights expense through
share based payments reserve 20(c) - 95 - - - 95
718 (612) - - (19,365) (19,259)
Balance at 30 June 2019 10,984 757 5,516 (468) 159,963 176,752
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
See note 3(b) for details regarding the restatement as a result of an error and note 2(x) for details about restatements
for changes in accounting policies.
Consolidated statement of changes in equity

MICHAEL HILL INTERNATIONAL LIMITED 2019 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 51
NOTES 2019 2018

Restated
$000 $000
Cash flows from operating activities
Receipts from customers (inclusive of GST and sales taxes) 618,416 671,165
Payments to suppliers and employees
(inclusive of GST and sales taxes) (536,855) (570,280)
81,561 100,885
Interest received 160 10
Other revenue 1,303 1,078
Interest paid (2,474) (2,794)
Income tax paid (5,245) (6,448)
Net GST and sales taxes paid (36,336) (37,838)
Net cash inflow from operating activities 11 38,969 54,893
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 432 549
Payments for property, plant and equipment 9(b) (10,753) (17,890)
Payments for intangible assets 9(c) (5,381) (6,665)
Net cash (outflow) from investing activities (15,702) (24,006)
Cash flows from financing activities
Proceeds from borrowings 128,800 116,500
Repayment of borrowings (132,000) (126,500)
Dividends paid to Company's shareholders 13(b) (19,365) (19,371)
Net cash (outflow) from financing activities (22,565) (29,371)
Net increase in cash and cash equivalents 702 1,516
Cash and cash equivalents at the beginning of the financial year 7,220 5,676
Effects of exchange rate changes on cash and cash equivalents 1 28
Cash and cash equivalents at the end of the financial year 8(a) 7,923 7,220
The above consolidated cash flow statement should be read in conjunction with the accompanying notes.
Consolidated cash flow statement
MICHAEL HILL INTERNATIONAL LIMITED 2019 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 51

52 MICHAEL HILL INTERNATIONAL LIMITED 2019 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
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 2019 were authorised
for issue in accordance with a resolution of the Directors
on 15 August 2019. Michael Hill International Limited
(the Company or Parent) is a for profit company limited
by shares incorporated in Australia. The Company is
listed on the Australian Securities Exchange ('ASX') 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 pronouncements 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.
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
hyperinflationary 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
Notes to the financial statements

MICHAEL HILL INTERNATIONAL LIMITED 2019 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 53
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 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)
CURRENT VERSUS NON-CURRENT CLASSIFICATION
The Group presents assets and liabilities in the
statement of financial position based on current/
non-current classification.
An asset is current when it is:
• Expected to be realised or intended to be sold or
consumed in the normal operating cycle;
• Held primarily for the purpose of trading;
• Expected to be realised within twelve months after
the reporting period; or
• Cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for at
least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
• It is expected to be settled in the normal operating
cycle;
• It is held primarily for the purpose of trading;
• It is due to be settled within twelve months after
the reporting period; or
• There is no unconditional right to defer the
settlement of the liability for at least twelve months
after the reporting period.
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as
non-current assets and liabilities.
(f)
REVENUE RECOGNITION
The accounting policies for the Group’s revenue from
contracts with customers are explained in note 5.
Interest income
Interest income is recognised using the effective
interest method.
(g)
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 inter-
pretation. 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 form a tax consolidation
group. As a consequence, one income tax return is
completed for the Australian tax group and is 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 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.

54 MICHAEL HILL INTERNATIONAL LIMITED 2019 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
Note 2 Summary of significant
accounting policies continued
(h) 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.
(i)
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.
(j)
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, 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. Subsequent to an
impairment occurring, if the recoverable amount from
assets exceeds the carrying value, the impairment
loss
is reversed to the extent that it has been recognised.
The pre-tax discount rates used in determining
the recoverable amount ranged between 11.5% and
13.0% (2018: 10.5% and 11.5%), depending on the
geographical segment of the assets.
(k)
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.
(l)
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 estimated
selling price in the ordinary course of business less
the estimated costs of completion and the estimated
costs necessary to make the sale. Management
review stock holdings on an aged basis and impair
as appropriate.
Notes to the financial statements cont.

MICHAEL HILL INTERNATIONAL LIMITED 2019 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 55
(m) 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 consolidated statement of profit or loss.
(n) FINANCIAL INSTRUMENTS - INITIAL RECOGNITION
AND SUBSEQUENT MEASUREMENT
A financial instrument is any contract that gives
rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.
(i) Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition,
as subsequently measured at amortised cost, fair
value through other comprehensive income (OCI),
and fair value through profit or loss.
The classification of financial assets at initial
recognition depends on the financial asset’s
contractual cash flow characteristics and the
Group’s business model for managing them. With
the exception of trade receivables that do not
contain a significant financing component or for
which the Group has applied the practical expedient,
the Group initially measures a financial asset at its
fair value plus, in the case of a financial asset not at
fair value through profit or loss, transaction costs.
Trade receivables that do not contain a significant
financing component or for which the Group has
applied the practical expedient are measured at the
transaction price determined under AASB 15. Refer to
the accounting policies in section 5(c).
In order for a financial asset to be classified and
measured at amortised cost or fair value through
OCI, it needs to give rise to cash flows that are ‘solely
payments of principal and interest (SPPI)’ on the
principal amount outstanding. This assessment is
referred to as the SPPI test and is performed at an
instrument level.
The Group’s business model for managing
financial assets refers to how it manages its financial
assets in order to generate cash flows. The business
model determines whether cash flows will result from
collecting contractual cash flows, selling the financial
assets, or both.
Subsequent measurement
Whilst there are four categories, two are relevant in
the current reporting period for the Group, being:
• Financial assets at amortised cost (debt instru-
ments); and
• Financial assets at fair value through profit or loss.
Financial assets at amortised cost
(debt instruments)
This category is the most relevant to the Group. The
Group measures financial assets at amortised cost if
both of the following conditions are met:
• The financial asset is held within a business model
with the objective to hold financial assets in order
to collect contractual cash flows; and
• The contractual terms of the financial asset give
rise on specified dates to cash flows that are solely
payments of principal and interest on the principal
amount outstanding.
Financial assets at amortised cost are subsequently
measured using the effective interest rate (EIR)
method and are subject to impairment. Gains and
losses are recognised in profit or loss when the asset
is derecognised, modified or impaired.
The Group’s financial assets at amortised cost
include trade receivables included under current and
non-current financial assets.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss
include financial assets held for trading, financial
assets designated upon initial recognition at fair value
through profit or loss, or financial assets mandatorily
required to be measured at fair value. Financial
assets are classified as held for trading if they are
acquired for the purpose of selling or repurchasing
in the near term. Derivatives, including separated
embedded derivatives, are also classified as held
for trading unless they are designated as effective
hedging instruments. Financial assets with cash flows
that are not solely payments of principal and interest
are classified and measured at fair value through
profit or loss, irrespective of the business model.
Notwithstanding the criteria for debt instruments
to be classified at amortised cost or at fair value
through OCI, as described above, debt instruments
may be designated at fair value through profit or
loss on initial recognition if doing so eliminates, or
significantly reduces, an accounting mismatch.
Financial assets at fair value through profit or
loss are carried in the statement of financial position
at fair value with net changes in fair value recognised
in the statement of profit or loss.
This category includes derivative instruments
which the Group had not irrevocably elected to
classify at fair value through OCI.
Derecognition
A financial asset (or, where applicable, a part of a
financial asset or part of a group of similar financial
assets) is primarily derecognised (i.e. removed from
the Group’s consolidated statement of financial
position) when:
• The rights to receive cash flows from the asset
have expired; or

56 MICHAEL HILL INTERNATIONAL LIMITED 2019 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
Note 2 Summary of significant
accounting policies continued
• The Group has transferred its rights to receive
cash flows from the asset or has assumed an
obligation to pay the received cash flows in full
without
material delay to a third party under a ‘pass-
through’ arrangement; and either (a) the Group has
transferred substantially all the risks and rewards of
the asset, or (b) the Group has neither transferred
nor retained substantially all the risks and rewards of
the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive
cash flows from an asset or has entered into a
pass-through arrangement, it evaluates if, and to
what extent, it has retained the risks and rewards
of ownership. When it has neither transferred nor
retained substantially all of the risks and rewards
of the asset, nor transferred control of the asset,
the Group continues to recognise the transferred
asset to the extent of its continuing involvement. In
that case, the Group also recognises an associated
liability. The transferred asset and the associated
liability are measured on a basis that reflects the
rights and obligations that the Group has retained.
Continuing involvement that takes the form of a
guarantee over the transferred asset is measured at
the lower of the original carrying amount of the asset
and the maximum amount of consideration that the
Group could be required to repay.
Impairment of financial assets
Further disclosures relating to impairment of financial
assets are also provided in the following notes:
• Changes in accounting policies and disclosures
(note 2(x)(i)).
•
Trade receivables including contract assets (note 8).
The Group recognises an allowance for expected
credit losses (ECLs) for all debt instruments not held
at fair value through profit or loss. ECLs are based on
the difference between the contractual cash flows due
in accordance with the contract and all the cash flows
that the Group expects to receive, discounted at an
approximation of the original effective interest rate.
For trade receivables and contract assets, the
Group applies a simplified approach in calculating
ECLs. Therefore, the Group does not track changes
in credit risk, but instead recognises a loss allowance
based on lifetime ECLs at each reporting date.
The Group has established a provision matrix that
is based on its historical credit loss experience,
adjusted for forward-looking factors specific to the
debtors and the economic environment.
The Group considers a financial asset in default
when contractual payments are past due. However,
in certain cases, the Group may also consider a
financial asset to be in default when internal or
external information indicates that the Group is
unlikely to receive the outstanding contractual
amounts in full before taking into account any credit
enhancements held by the Group. A financial asset is
written off when there is no reasonable expectation
of recovering the contractual cash flows.
(ii) Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition,
as financial liabilities at fair value through profit or
loss, loans and borrowings, payables, or as derivatives
designated as hedging instruments in an effective
hedge, as appropriate.
All financial liabilities are recognised initially at fair
value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs.
The Group’s financial liabilities include trade and
other payables, loans and borrowings including bank
overdrafts, and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on
their classification, as described below.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or
loss include financial liabilities held for trading and
financial liabilities designated upon initial recognition
as at fair value through profit or loss.
Financial liabilities are classified as held for
trading if they are incurred for the purpose of
repurchasing in the near term. This category also
includes derivative financial instruments entered into
by the Group that are not designated as hedging
instruments in hedge relationships as defined by
AASB 9. Separated embedded derivatives are
also classified as held for trading unless they are
designated as effective hedging instruments.
Gains or losses on liabilities held for trading are
recognised in the statement of profit or loss.
Financial liabilities designated upon initial
recognition at fair value through profit or loss are
designated at the initial date of recognition, and only
if the criteria in AASB 9 are satisfied. The Group has
not designated any financial liability as at fair value
through profit or loss.
Loans and borrowings at amortised cost
This is the category most relevant to the Group.
After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortised
cost using the effective interest rate (EIR) method.
Gains and losses are recognised in profit or loss
when the liabilities are derecognised as well as
through the EIR amortisation process.
Notes to the financial statements cont.

MICHAEL HILL INTERNATIONAL LIMITED 2019 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 57
Amortised cost is calculated by taking into
account any discount or premium on acquisition and
fees or costs that are an integral part of the EIR. The
EIR amortisation is included as finance costs in the
statement of profit or loss.
This category generally applies to interest-bear-
ing loans and borrowings. For more information, refer
to note 8.
Derecognition
A financial liability is derecognised when the obligation
under the liability is discharged or cancelled or
expires. When an existing financial liability is replaced
by another from the same lender on substantially
different terms, or the terms of an existing liability
are substantially modified, such an exchange or
modification is treated as the derecognition of the
original liability and the recognition of a new liability.
The difference in the respective carrying amounts is
recognised in the statement of profit or loss.
(iii) Offsetting of financial instruments
Financial assets and financial liabilities are offset
and the net amount is reported in the consolidated
statement of financial position if there is a currently
enforceable legal right to offset the recognised
amounts and there is an intention to settle on a net
basis, to realise the assets and settle the liabilities
simultaneously.
(o)
DERIVATIVES AND HEDGING ACTIVITIES
Initial recognition and subsequent measurement
The Group uses derivative financial instruments,
such as forward currency contracts and interest
rate swaps, to hedge its foreign currency risks
and interest rate risks, respectively. Such derivative
financial instruments are initially recognised at fair
value on the date on which a derivative contract is
entered into and are subsequently remeasured at fair
value. Derivatives are carried as financial assets when
the fair value is positive and as financial liabilities
when the fair value is negative.
For the purpose of hedge accounting, hedges
are classified as:
• Fair value hedges when hedging the exposure to
changes in the fair value of a recognised asset or
liability or an unrecognised firm commitment.
• Cash flow hedges when hedging the exposure to
variability in cash flows that is either attributable to
a particular risk associated with a recognised asset
or liability or a highly probable forecast transaction
or the foreign currency risk in an unrecognised firm
commitment.
• Hedges of a net investment in a foreign operation.
At the inception of a hedge relationship, the Group
formally designates and documents the hedge
relationship to which it wishes to apply hedge
accounting and the risk management objective
and strategy for undertaking the hedge.
The documentation includes identification of the
hedging instrument, the hedged item, the nature of
the risk being hedged and how the Group will assess
whether the hedging relationship meets the hedge
effectiveness requirements (including the analysis of
sources of hedge ineffectiveness and how the hedge
ratio is determined). A hedging relationship qualifies
for hedge accounting if it meets all of the following
effectiveness requirements:
• There is ‘an economic relationship’ between the
hedged item and the hedging instrument.
• The effect of credit risk does not ‘dominate the
value changes’ that result from that economic
relationship.
• The hedge ratio of the hedging relationship is
the same as that resulting from the quantity of
the hedged item that the Group actually hedges
and the quantity of the hedging instrument that
the Group actually uses to hedge that quantity of
hedged item.
Hedges that meet all the qualifying criteria for hedge
accounting are accounted for, as described below.
Fair value hedge
The change in the fair value of a hedging instrument
is recognised in the statement of profit or loss
as other expense. The change in the fair value of
the hedged item attributable to the risk hedged is
recorded as part of the carrying value of the hedged
item and is also recognised in the statement of profit
or loss as other expense.
If the hedged item is derecognised, the unamortised
fair value is recognised immediately in profit or loss.
When an unrecognised firm commitment is

designated as a hedged item, the subsequent cumulative
change in the fair value of the firm commitment
attributable to the hedged risk is recognised as an
asset or liability with a corresponding gain or loss
recognised in the statement of profit or loss.
Cash flow hedge
The effective portion of the gain or loss on the
hedging instrument is recognised in OCI in the cash
flow hedge reserve, while any ineffective portion is
recognised immediately in the statement of profit or
loss. The cash flow hedge reserve is adjusted to the
lower of the cumulative gain or loss on the hedging
instrument and the cumulative change in fair value of
the hedged item.
The Group uses forward currency contracts as
hedges of its exposure to foreign currency risk in
forecast transactions and firm commitments, as well
as interest rate swaps for its exposure to volatility
in interest rates. The ineffective portion relating to
foreign currency contracts is recognised as other
expense and the ineffective portion relating to
interest rate swaps is recognised in other operating
income or expenses. Refer to note 12 for more details.

58 MICHAEL HILL INTERNATIONAL LIMITED 2019 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
Note 2 Summary of significant
accounting policies continued
When forward contracts are used to hedge forecast
transactions, the group designates the change in
fair value of the forward contract related to the spot
component as the hedging instrument. Gains or
losses relating to the effective portion of the change
in the spot component of the forward contracts are
recognised in the cash flow hedge reserve within
equity. The change in the forward element of the
contract that relates to the hedged item (‘aligned
forward element’) is recognised within OCI in the
cash flow hedge reserve within equity. In some cases,
the entity may designate the full change in fair value
of the forward contract (including forward poi
nts) as
the hedging instrument. In such cases, the gains or
losses relating to the effective portion of the change in
fair value of the entire forward contract are recognised
in the cash flow hedge reserve within equity.
The amounts accumulated in OCI are accounted
for, depending on the nature of the underlying hedged
transaction. If the hedged transaction subsequently
results in the recognition of a non-financial item,
the amount accumulated in equity is removed from
the separate component of equity and included
in the initial cost or other carrying amount of the
hedged asset or liability. This is not a reclassification
adjustment and will not be recognised in OCI for the
period. This also applies where the hedged forecast
transaction of a non-financial asset or non-financial
liability subsequently becomes a firm commitment
for which fair value hedge accounting is applied.
For any other cash flow hedges, the amount
accumulated in OCI is reclassified to profit or loss as
a reclassification adjustment in the same period or
periods during which the hedged cash flows affect
profit or loss.
If cash flow hedge accounting is discontinued,
the amount that has been accumulated in OCI must
remain in accumulated OCI if the hedged future
cash flows are still expected to occur. Otherwise,
the amount will be immediately reclassified to profit
or loss as a reclassification adjustment. After dis-
continuation, once the hedged cash flow occurs,
any amount remaining in accumulated OCI must
be accounted for depending on the nature of the
underlying transaction as described above.
(p)
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 9(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(j)).
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.
(q)
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 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).
Notes to the financial statements cont.

MICHAEL HILL INTERNATIONAL LIMITED 2019 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 59
(r) PROVISIONS
Provisions 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. Leases
recognised as onerous during the reporting period are
reported at note 9(g).
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.
(s)
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) Long-term 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.
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 have previously been issued to Executives
of Michael Hill International Limited in accordance
with the Company's constitution. The Board of
Directors passed resolutions approving the issue of
the options. The fair value of options granted was
recognised as an employee benefit expense with a
corresponding increase in equity.
The fair value was measured at grant date and
is recognised over the period during which the
employees become unconditionally entitled to the
options. The fair value at grant date for options
issued during prior financial years was 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. No options
were granted during the 2019 financial year.
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 period); and
• including the impact of any non-vesting
conditions (eg the requirement for employees to

save or holdings shares for a specific period of time).

60 MICHAEL HILL INTERNATIONAL LIMITED 2019 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
Note 2 Summary of significant
accounting policies continued
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-market 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.
Share rights
Share rights are granted to eligible senior executives
in accordance with the Company's deferred
compensation plan ('LTI'). The fair value of rights
granted is recognised as an employee benefit
expense with a corresponding increase in equity.
The fair value was measured at grant date and
is recognised over the period during which the
employees become unconditionally entitled to the
rights. The valuation methodology to calculate fair
value is detailed in note 20(b).
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 share rights that are expected to
vest based on the non-market 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 the share rights, the balance
of the share-based payments reserve relating to
those rights 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 superan-
nuation 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 super-
annuation 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.
(t)
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.
(u)
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.
(v)
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.
(w)
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 financial statements cont.

MICHAEL HILL INTERNATIONAL LIMITED 2019 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 61
(x) CHANGES IN ACCOUNTING POLICIES AND
DISCLOSURES
The Group applied AASB 15 and AASB 9 for the first
time. The nature and effect of the changes as a result
of adoption of these new accounting standards are
described below.
Several other amendments and interpretations
apply for the first time in 2019, but do not have an
impact on the consolidated financial statements of
the Group. The Group has not early adopted any
standards, interpretations or amendments that have
been issued but are not yet effective.
AASB 9 Financial Instruments
AASB 9 Financial Instruments replaces AASB 139
Financial Instruments: Recognition and Measurement
for annual periods beginning on or after 1 January
2018, bringing together all three aspects of the
accounting for financial instruments: classification and
measurement; impairment; and hedge accounting.
The adoption of AASB 9 has not had a significant
effect on the Group's accounting policies related
to financial assets, financial liabilities and derivative
financial instruments. No adjustments were required to
be made to the opening financial statement balances.
(i) Classification and measurement
Under AASB 9, debt instruments are subsequently
measured at fair value through profit or loss,
amortised cost, or fair value through OCI. The classi-
fication is based on two criteria: the Group’s business
model for managing the assets; and whether the
instruments’ contractual cash flows represent ‘solely
payments of principal and interest’ on the principal
amount outstanding.
The assessment of the Group’s business model
was made as of the date of initial application, 1 July
2018, and then applied retrospectively to those
financial assets that were not derecognised before
1 July 2018. The assessment of whether contractual
cash flows on debt instruments are solely comprised
of principal and interest was made based on the
facts and circumstances as at the initial recognition
of the assets.
The classification and measurement requirements
of AASB 9 did not have a significant impact on the
Group. The Group continued measuring at fair value
all financial assets previously held at fair value under
AASB 139. The following are the changes in the clas
-
sification of the Group’s financial assets:
• Trade receivables and Other non-current
financial assets previously classified as Loans and
receivables are held to collect contractual cash
flows and give rise to cash flows representing
solely payments of principal and interest. These are
now classified and measured as Debt instruments
at amortised cost.
The Group has not designated any financial
liabilities as at fair value through profit or loss. There
are no changes in classification and measurement for
the Group’s financial liabilities.
(ii) Impairment
The adoption of AASB 9 has changed the Group’s
accounting for impairment losses for financial assets
by replacing AASB 139’s incurred loss approach with a
forward-looking expected credit loss (ECL) approach.
AASB 9 requires the Group to recognise an allowance
for ECLs for all debt instruments not held at fair value
through profit or loss and contract assets.
The adoption of the ECL requirements of AASB
9 resulted in an immaterial change to the Group's
financial assets. Therefore, no adjustment to Retained
Earnings was required.
(iii) Hedge accounting
The Group applied hedge accounting prospectively.
At the date of initial application, all of the Group’s
existing hedging relationships were eligible to be
treated as continuing hedging relationships. Before
the adoption of AASB 9, the Group designated the
change in fair value of the entire forward contracts in
its cash flow hedge relationships. Upon adoption of
the hedge accounting requirements of AASB 9, the
Group designates only the spot element of forward
contracts as the hedging instrument. The forward
element is recognised in OCI and accumulated as a
separate component of equity under Cost of hedging
reserve. This change only applies prospectively from
the date of initial application of AASB 9 and has no
impact on the presentation of comparative figures.
Under AASB 139, all gains and losses arising
from the Group’s cash flow hedging relationships
were eligible to be subsequently reclassified to profit
or loss. However, under AASB 9, gains and losses
arising on cash flow hedges of forecast purchases of
non-financial assets need to be incorporated into the
initial carrying amounts of the non-financial assets.
This change only applies prospectively from the date
of initial application of AASB 9 and has no impact on
the presentation of comparative figures.
AASB 15 Revenue from Contracts with Customers
AASB 15 supersedes AASB 111 Construction Contracts,
AASB 118 Revenue and related Interpretations and
it applies, with limited exceptions, to all revenue
arising from contracts with its customers. AASB 15
establishes a five-step model to account for revenue
arising from contracts with customers and requires
that revenue be recognised at an amount that
reflects the consideration to which an entity expects
to be entitled in exchange for transferring goods or
services to a customer.

62 MICHAEL HILL INTERNATIONAL LIMITED 2019 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
Note 2 Summary of significant accounting policies continued
AASB 15 requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances
when applying each step of the model to contracts with their customers. The standard also specifies the accounting
for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, the
standard requires extensive disclosures.
The Group has adopted AASB 15 using the cumulative effect method (with practical expedients), with the
effect of initially applying this standard recognised at the date of initial application (i.e. 1 July 2018). Accordingly,
the information presented for 2018 has not been restated - i.e. it is presented as previously reported, under AASB
118, AASB 111 and related interpretations. There was no adjustment made to opening retained earnings.
The following table summarises the impacts of adopting AASB 15 on the Group's statement of financial
position as at 30 June 2019 and statement of profit or loss for the year ended 30 June 2019. There was no material
impact on the Group's statement of cash flows for the year ended 30 June 2019.
Amounts without
adoption of
As reported Reclassification Reclassification AASB 15
30 Jun 2019 Opening balance Current year 1 July 2018
$000 $000 $000 $000
Inventories 179,503 - 701 180,204
Contract assets 701 - (701) -
Current tax receivables 2,295 - (322) 1,973
Other current assets 40,805 - - 40,805
Non-current assets 155,889 - - 155,889
Total assets 379,193 - (322) 378,871
Current contract liabilities 26,054 (26,623) 569 -
Current provisions 31,441 929 (247) 32,123
Current deferred revenue 1,252 25,694 (476) 26,470
Other current payables 46,383 - - 46,383
Non current contract liabilities 55,813 (55,490) (323) -
Non current deferred revenue 1,847 55,490 (637) 56,700
Other non current liabilities 39,651 - - 39,651
Total liabilities 202,441 - (1,113) 201,328
Reserves 5,805 - (5) 5,800
Retained profits 159,963 - 796 160,759
Total equity 176,752 - 791 177,543
Revenue from contracts with customers 569,500 - 1,118 570,618
Profit before income tax 18,811 - 1,118 19,929
Income tax expense (2,313) - 322 (1,991)
Profit from continuing operations 16,498 - 796 17,294
Profit for the year 16,498 - 796 17,294
Total comprehensive income for the year 21,086 - 796 21,882
(i) Sale 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 contract liability and corresponding
right of return.
The refund liability and corresponding return of asset was presented in the current year in line with AASB 15,
with the corresponding comparative balance presented in note 9(g) as Provisions.
Notes to the financial statements cont.

MICHAEL HILL INTERNATIONAL LIMITED 2019 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 63
(ii) Sales of goods - Lifetime Diamond Warranty
The Group offers a Lifetime Diamond Warranty
(LTDW) which forms part of deferred revenue until the
service is performed or at such a time the owner or
product lifetime ceases. The LTDW is a service-type
warranty provided to retail customers on diamond
purchases, which provides assurance against lost,
chipped or broken diamonds during normal wear.
The Group recognises the deferred 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.
Since the Group has adopted the cumulative
effect method and applied the practical expedient,
the LTDW provision recognised related to completed
contracts were recognised under AASB 137
Provisions. Therefore, no adjustments to prior period
or opening balances were recognised relating to
LTDW upon transition.
(iii) 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.
This is consistent with the treatment under AASB 118.
(iv) Interest revenue from in-house
customer finance program
Interest revenue is recognised on the in-house
customer finance program when consideration
is deferred. The Group concluded that there is
a significant financing component for those
contracts where the customer elects to pay in
arrears considering the length of time between the
customer's payment and the time of entering into
the contract. The transaction price for such contracts
is adjusted to take into consideration the significant
financing component. 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.
This is consistent with the treatment under AASB 118.
(y) STANDARDS ISSUED BUT NOT YET EFFECTIVE
Australian Accounting Standards and Interpretations
that are issued, but are not yet effective, up to the date
of issuance of the Group’s financial statements are
disclosed below. The Group intends to adopt these
new standards and interpretations, if applicable,
when they become effective.
AASB 16 Leases
AASB 16 was issued in January 2016 and it replaces
AASB 117 Leases, AASB Interpretation 4 Determining
whether an Arrangement contains a Lease, AASB
Interpretation-115 Operating Leases-Incentives and
AASB Interpretation 127 Evaluating the Substance
of Transactions Involving the Legal Form of a Lease.
AASB 16 sets out the principles for the recognition,
measurement, presentation and disclosure of leases
and requires lessees to account for all leases under
a single on-balance sheet model similar to the
accounting for finance leases under AASB 117. The
standard includes two recognition exemptions for
lessees - leases of ’low-value’ assets (e.g., personal
computers) and short-term leases (i.e., leases with a
lease term of 12 months or less). At the commencement
date of a lease, a lessee will recognise a liability to
make lease payments (i.e., the lease liability) and an
asset representing the right to use the underlying
asset during the lease term (i.e., the right-of-use
asset). Lessees will be required to separately recognise
the interest expense on the lease liability and the
depreciation expense on the right-of-use asset in the
statement of comprehensive income.
Lessees will be also required to remeasure the
lease liability upon the occurrence of certain events
(e.g., a change in the lease term, a change in future
lease payments resulting from a change in an index
or rate used to determine those payments). The
lessee will generally recognise the amount of the
remeasurement of the lease liability as an adjustment
to the right-of-use asset.
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 early
adopted AASB 16 Leases.
The Group intends to 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 financial
impact on the Group's consolidated balance sheet,
consolidated cash flow statement and statement
of comprehensive income. While the assessment is
significantly progressed, there are material items still
under consideration (such as discount rates used and
treatment of holdover leases) before the quantitative
impact of this standard can be disclosed.
The Group will elect to use the exemptions
proposed by the standard on lease contracts for
which the lease terms ends within 12 months as of
the date of initial application, and lease contracts for
which the underlying asset is of low value. The Group
has leases of certain office equipment (i.e., personal
computers, printing and photocopying machines)
that are considered of low value.

64 MICHAEL HILL INTERNATIONAL LIMITED 2019 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
Note 3 Significant estimates,
judgements and errors
(a) SIGNIFICANT ESTIMATES AND JUDGEMENTS
The preparation of financial statements requires the
use of accounting estimates which, by definition, will
seldom equal the actual results. Management also
needs to exercise judgement in applying the Group’s
accounting policies. Estimates and judgements are
continually evaluated and are based on historical
experience and other factors, including expectations
of future events that are believed to be reasonable
under the circumstances. The estimates and
assumptions that have a significant risk of causing
a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are
addressed below.
Share-based payment transactions
The Group measures the cost of equity-settled
transactions with employees by reference to the
fair value of the equity instruments at the date at
which they are granted. The fair value is determined
with the assistance of an external valuer using the
Black Scholes model. The related assumptions are
detailed in note 20. The accounting estimates and
assumptions relating to equity-settled share-based
payments would have no impact on the carrying
amounts of assets and liabilities within the next
annual reporting period but may impact expenses
and equity.
Make good provisions
A provision has been made for the present value of
anticipated costs of future restoration of leased store
and office premises. The provision includes future cost
estimates associated with dismantling and closure of
stores and offices. The calculation of this provision
requires assumptions such as discount rates, lease
exit dates and lease terms. These uncertainties may
result in future actual expenditure differing from the
amounts currently provided. The provision recognised
is periodically reviewed and updated based on
the facts and circumstances available at the time.
Changes for the estimated future costs for sites are
recognised in the statement of financial position by
adjusting both the expense or asset (if applicable) and
provision. The related carrying amounts are disclosed
in note 9(g) Provisions.
Estimation of useful lives of assets
The estimation of the useful lives of assets has
been based on historical experience, lease terms
(for display assets) and policies (for motor vehicles).
In addition, the condition of the assets is assessed
at least once per year and considered against the
remaining useful life. Adjustments to useful lives are
made when considered necessary.
Revenue recognition
Professional care plan revenue is recognised as sales
revenue in the statement of comprehensive income.
Management judgement is required to determine the
amount of service revenue that can be recognised
based on the usage pattern of PCPs and general
information obtained on the operation of service
plans in other markets. Those direct and incremental
bonuses associated with the sale of these plans are
deferred and amortised in proportion to the revenue
recognised. Management reviews trends in current
and estimated future services provided under the
plan to assess whether changes are required to the
revenue and cost recognition rates used.
Due to management reviews conducted during
the year, an adjustment to the revenue recognition
pattern has been deemed necessary. As a result of
this, an additional $1,770,000 has been recognised
as revenue in the current financial year. Of this,
($69,000) relates to the current financial year, and
$1,839,000 relates to prior financial years. The
change in estimate will result in lower revenue in
future periods by the corresponding amount.
Taxation and recovery of deferred tax assets
The Group is subject to income taxes in Australia
and jurisdictions where it has foreign operations.
Significant judgement is required in determining
the worldwide provision for income taxes. There are
many transactions and calculations for which the
ultimate tax determination is uncertain during the
ordinary course of business.
Deferred tax assets are recognised for deductible
temporary differences as management considers
that it is probable that future taxable profits will
be available to utilise those temporary differences.
Management judgement is required to determine the
amount of deferred tax assets that can be recognised.
Impairment of non-financial assets other than
goodwill and indefinite life intangibles
The Group assesses impairment of all assets at each
reporting date by evaluating conditions specific to
the Group and to the particular asset that may lead
to impairment. These include store performance,
product and manufacturing performance, technology
and economic environments and future product
expectations. If an impairment trigger exists the
recoverable amount of the asset is determined.
Employee benefits
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.
Notes to the financial statements cont.