FY20H1 Investor Presentation

FY20H1 RESULTS

DISCLAIMER
Certainstatementsinthisannouncementconstituteforward-lookingstatements.Forward-lookingstatementsarestatements(otherthanstatementsofhistoricalfact)
relatingtofutureeventsandtheanticipatedorplannedfinancialandoperationalperformanceofMichaelHillInternationalLimitedanditsrelatedbodiescorporate(the
Company).Thewords“targets,”“believes,”“expects,”“aims,”“intends,”“plans,”“seeks,”“will,”“may,”“might,”“anticipates,”“would,”“could,”“should,”“continues,”
“estimates”orsimilarexpressionsorthenegativesthereof,identifycertainoftheseforward-lookingstatements.Otherforward-lookingstatementscanbeidentifiedinthe
contextinwhichthestatementsaremade.Forward-lookingstatementsinclude,amongotherthings,statementsaddressingmatterssuchastheCompany’sfutureresultsof
operations;financialcondition;workingcapital,cashflowsandcapitalexpenditures;andbusinessstrategy,plansandobjectivesforfutureoperationsandevents,including
thoserelatingtoongoingoperationalandstrategicreviews,expansionintonewmarkets,futureproductlaunches,pointsofsaleandproductionfacilities.
AlthoughtheCompanybelievesthattheexpectationsreflectedintheseforward-lookingstatementsarereasonable,suchforward-lookingstatementsinvolveknownand
unknownrisks,uncertaintiesandotherimportantfactorsthatcouldcausetheCompany’sactualresults,performance,operationsorachievementsorindustryresults,to
differmateriallyfromanyfutureresults,performance,operationsorachievementsexpressedorimpliedbysuchforward-lookingstatements.
Suchrisks,uncertaintiesandotherimportantfactorsinclude,amongothers:globalandlocaleconomicconditions;changesinmarkettrendsandend-consumerpreferences;
fluctuationsinthepricesofrawmaterials,currencyexchangerates,andinterestrates;theCompany’splansorobjectivesforfutureoperationsorproducts,includingthe
abilitytointroducenewjewelleryandnon-jewelleryproducts;theabilitytoexpandinexistingandnewmarketsandrisksassociatedwithdoingbusinessgloballyand,in
particular,inemergingmarkets;competitionfromlocal,nationalandinternationalcompaniesinthemarketsinwhichtheCompanyoperates;theprotectionand
strengtheningoftheCompany’sintellectualpropertyrights,includingpatentsandtrademarks;thefutureadequacyoftheCompany’scurrentwarehousing,logisticsand
informationtechnologyoperations;changesinlawsandregulationsoranyinterpretationthereof,applicabletotheCompany’sbusiness;increasestotheCompany’seffective
taxrateorotherharmtotheCompany’sbusinessasaresultofgovernmentalreviewoftheCompany’stransferpricingpolicies,conflictingtaxationclaimsorchangesintax
laws;andotherfactorsreferencedtointhispresentation.
Shouldoneormoreoftheserisksoruncertaintiesmaterialise,orshouldanyunderlyingassumptionsprovetobeincorrect,theCompany’sactualfinancialcondition,cash
flowsorresultsofoperationscoulddiffermateriallyfromthatdescribedhereinasanticipated,believed,estimatedorexpected.Accordingly,youarecautionednottoplace
unduerelianceonanyforward-lookingstatements.
TheCompanydoesnotintend,anddonotassumeanyobligation,toupdateanyforward-lookingstatementscontainedherein,exceptasmayberequiredbylaw.All
subsequentwrittenandoralforward-lookingstatementsattributabletousortopersonsactingontheCompany’sbehalfareexpresslyqualifiedintheirentiretybythe
cautionarystatementsreferredtoaboveandcontainedelsewhereinthispresentation.
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•Business Overview
•Financial Summary
•Financial Snapshot
•Key Performance Results
•Financial Results
•Group Results
•Michael Hill Australia
•Michael Hill New Zealand
•Michael Hill Canada
•Strategic Update
•Q & A
•Appendix A: AASB 16 Leases
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Michael Hill International Limited
CEO and CFO FY20H1 Update

Business Overview
•Sales performance and EBIT growth
-All markets deliveredsame store sales growth across both quarters, and growth in Group EBIT
•Focused fiscal discipline
-Committed approach to disciplinedcostmanagement while the business focuses on margin
•Challenging trading conditions
-Local and global environmental factors, and competitive retail landscape
•Capable senior leadership team
-Assembled an invigorated seniorleadership team with depth, talent andexperience
•Celebrating 40 years
-Evolving to a more contemporary anddifferentiated jewellery brand
•Focuson business and retail fundamentals
-Digital-first, new incentive scheme, retail execution, and productivity focus
•Ongoing refinement of strategy and initiatives
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An established retail business, with a transformational agenda

FY20H1 Financial Snapshot
•Two consecutive quarters of positive same store sales
growth across allretailsegments
•FY20Q1: AU:+6.3%, NZ:+9.8%, CA:+13.4%
•FY20Q2: AU:+1.4%, NZ:+4.8%, CA:+1.0%
•Underlying EBIT growth of 6.9% to $31.6m, driven by
increasedrevenue and reduction in costs
•Continued focus on costs and retail disciplines delivering
results
•Active inventory management program continues
•Disciplined cash management
•Adoption of a 52 weekretail calendar
•AASB 16 Leases was adopted on 1 July 2019 –See
AppendixA
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FY20H1FY19H1Change
Revenue$329.5m$315.4m+4.4%
Statutory NPAT*$21.4m$17.9m+19.6%
Underlying EBIT**$31.6m$29.6m+6.9%
Interim Dividend1.5c2.5c-1.0c
Inventory$200.1m$220.1m-$20.0m
Net Cash/(Debt)$0.4m($20.7m)+$21.1m
* FY19H1 restated for employee remediation
** Pre-AASB 16 Leases
FY20H1 Financial Snapshot

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6.3%
G RO U P S A ME STORE
S A L E S
61.7%
GROUP
GRO S SM A RGIN
FY19H1: 64.2%
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S T O R E S
C L O S E D
35.4%
B R A N D E D C O L L E C T I O N
S A L E S
FY19H1: 2 0 %
Steph pic
FY20H1 Key Performance Results
+6.3%
GROUP
SAME STORE SALES
GROWTH
+3.3%
AUSTRALIA
SAME STORE SALES
GROWTH
+6 .6 %
NEW ZEALAND
SAME STORE SALES
GROWTH
+5 .1 %
CANADA
SAME STORE SALES
GROWTH
$9.7m
M H W E B S I T E L F L S A L E S
FY19H1: $ 6 . 7 m
+ 4 4 . 3 %
+6.9%
UNDERLYING EBIT
GROWTH
1
S T O R E
O P E N E D

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•Group revenueincreased by 4.4%, with same store sales up 6.3%
•Underlying EBIT improved by 6.9%, to $31.6m**
•Gross margin decline largely attributable to foreign currency headwinds andrising goldprice
•Interim dividendin line with FY19H2, at AU1.5cents per share
For thehalf year endedAUD29-Dec-1931-Dec-18Change
Revenue329.5m315.4m+4.4%
Grossprofit203.4m202.5m+0.5%
Underlying EBIT**31.6m29.6m+6.9%
Underlying EBITas a % ofrevenue9.6%9.4%+20bps
StatutoryEBIT*35.3m26.2m+34.6%
Statutory EBIT as a % ofrevenue10.7%8.3%+240bps
Gross profit as a % ofrevenue61.7%64.2%-250bps
Total storesopen304311
Group Results
* FY19H1 restated for employee remediation
** Pre-AASB 16Leases
Group Results

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For the half year endedAUD29-Dec-1931-Dec-18Change
Revenue174.2m175.5m-0.7%
Gross profit104.3m110.5m-5.6%
EBIT**22.7m24.6m-8.0%
EBIT as a % of revenue13.0%14.0%-100bps
Gross profit as a % of revenue59.9%63.0%-310bps
Total stores open165173
R E TA I L SEG M E N T
•Revenue declined slightlyby 0.7%,reflecting closure of 9 under-performing stores
•Same store sales increased by 3.3%
•EBIT of $22.7m down from $24.6m
•Gross margin of 59.9%, down from 63.0%in prior year
•Competitiveretailenvironment persists, however, recent data suggests Michael Hill is taking market share
Michael Hill Australia
** Pre-AASB 16Leases

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R E TA I L SE G M E N T
•Revenue increased by 6.4% toNZ$69.9m
•Same store sales increased by 6.6%
•New Zealand remains the most profitable market
•EBIT of NZ$14.5m, down from NZ$15.1m
•Pursuing CODB initiatives to bolster EBIT
For thehalfyearendedNZD29-Dec-1931-Dec-18Change
Revenue69.9m65.8m+6.4%
Gross profit41.1m41.2m-0.2%
EBIT**14.5m15.1m-4.0%
EBIT as a % of revenue20.7%22.9%-220bps
Gross profit as a % of revenue58.8%62.7%-390bps
Total stores open5253
Michael Hill New Zealand
** Pre-AASB 16Leases

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R E TA I L SE G M E N T
•Revenue growth of7.5%
•Same store sales increasedby 5.1%
•EBIT of CA$7.9m down from CA$8.6m
•Canada remains acore profit growth opportunity, with early signs of our key productivityinitiatives gaining traction
•Annualised sales per sqmincreased by 7.7%
For thehalfyearendedCAD29-Dec-1931-Dec-18Change
Revenue79.9m74.4m+7.5%
Gross profit46.5m46.0m+1.1%
EBIT**7.9m8.6m-7.5%
EBIT as a % of revenue9.9%11.5%-160bps
Gross profit as a % of revenue58.2%61.8%-360bps
Total stores open8785
Michael Hill Canada
** Pre-AASB 16Leases

1.Unwavering focus on costs
•Second tranche of $5m savings starting to be realisedin FY20
•Pursuing further non-customer facing CODB reductions
•Disciplined fiscal approach
2.Retail Operating Model
•Successful roll-out of integrated customer-focused retail operating model in H1
•Positive result from Black Friday and Christmas campaign
•Refinements for FY21 as we continue to perfect the model
3.Retail Fundamentals
•Emphasis on retail performance supported by our new incentive scheme and
early learnings from customer feedback program
•Intense focus on retail execution and visual merchandising, enhancing our
brand, inventory management, and cost control
•Increased prioritisation of margin management supported by new incentive
scheme
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Strategic Update

4.Product Evolution
•Refreshed assortment in exclusive Branded Collections to support a target of
50% of sales over the coming years
•Ongoing newness as part of the new merchandise rhythm
•Increased emphasis on sourcing, margin and mix
5.Canadian Productivity
•Increased productivity remains a core profit growth opportunity
•Continued investment in retail leadership, training and development
6.Digital-first
•Website re-launched
•Enhancedcustomer experience, checkout process and navigation
•Extended on-line exclusive product offer
•Planned omni-channel enhancements following ERP upgrade
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Strategic Update

7.Loyalty
•Online launchof Brilliance in Nov 2019, with positive early results
•Attracting new customers
•Instore launch in H2 provides a significant opportunity to increase customer
engagement through targeted marketing
8.Brand
•Deep and rich heritage centred around innovation, quality, and value with a
modernised approach
•Reimagining for a digital world
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Strategic Update

Questions and Answers

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Key Points:
-Adopted modified retrospective approach
from 1 July 2019. No restatement of prior
year comparatives required
-Lease rental expenses have been replaced by
depreciation on right-of-useasset and
interest on lease liability
-No impact on:
-Cash earnings andcashflow
-Debt covenants and facility headroom
-Ability to pay dividend
-Note 2 in the half-year consolidated financial
statementsprovides detailed information on
the adoption.
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Appendix A: AASB 16 Leases Impact
(AUD million)
FY20H1
Stat
Impact of
AASB 16
FY20H1
pre-AASB 16
FY19H1
pre-AASB 16
Change
pre-AASB 16
Revenue329.5329.5315.44.4%
Cost of sales(126.1)(126.1)(112.9)11.6%
Gross profit203.4203.4202.50.5%
Employee benefits expense(82.9)(82.9)(86.7)(4.3)%
Occupancy costs(9.5)(21.3)(30.8)(30.3)1.7%
Marketing expenses(20.5)(20.5)(19.2)6.7%
Selling expenses(12.2)(12.2)(14.1)(13.8)%
Other income/(expenses)(15.8)(15.8)(16.3)(2.9)%
EBITDA62.5(21.3)41.235.914.7%
Depreciation and amortisation
expenses
(27.2)17.6(9.6)(9.7)(1.0)%
EBIT35.3(3.7)31.626.220.5%
Finance expenses(5.0)3.9(1.1)(1.4)(16.6)%
Profit before tax30.30.230.524.822.6%
Income tax expense(8.9)0.0(8.9)(6.9)27.4%
Net profit after tax21.40.221.617.920.7%