Annual Report to Shareholders

ANNUAL REPORT 2020

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-
looking statements.
Such risks, uncertainties and other important
factors include, among others: global and local
economic conditions; changes in market trends
and end-consumer preferences; fluctuations in the
prices of raw materials, currency exchange rates,
and interest rates; the Group’s plans or objectives for
future operations or products, including the ability to
introduce new jewellery and non-jewellery products;
the ability to expand in existing and new markets and
risks associated with doing business globally and,
in particular, in emerging markets; competition from
local, national and international companies in the
markets in which the Group operates; the protection
and strengthening of the Group’s intellectual property
rights, including patents and trademarks; the future
adequacy of the Group’s current warehousing, logistics
and information technology operations; changes in
laws and regulations or any interpretation thereof,
applicable to the Group’s business; increases to the
Group’s effective tax rate or other harm to the Group’s
business as a result of governmental review of the
Group’s transfer pricing policies, conflicting taxation
claims or changes in tax laws; and other factors
referenced to in this presentation.
Should one or more of these risks or uncertainties
materialise, or should any underlying assumptions
prove to be incorrect, the Company’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,
particularly in light of the current economic climate
and the significant volatility, uncertainty and disruption
caused by the COVID-19 pandemic.
The Group does not intend, and do not assume any
obligation, to update any forward-looking statements
contained herein, except as may be required by law.
All subsequent written and oral forward-looking
statements attributable to us or to persons acting
on the Group’s behalf are expressly qualified in their
entirety by the cautionary statements referred to
above and contained elsewhere in this announcement.
TERMINOLOGY: In this report, unless otherwise
specified or appropriate in the context, the term
"Company" refers to Michael Hill International
Limited, and the terms "Group" or "Michael Hill" refer
to the Company and its subsidiaries (as appropriate).

1
What’s inside
3 COMPANY PROFILE
An introduction to the
Company and our vision
5 CHAIR & CEO REVIEW
Emma Hill & Daniel Bracken
review the Group’s overall
performance for the year
11 KEY FACTS
Key results and data for
the year
The Directors are pleased to present the
annual report of Michael Hill International
Limited and its subsidiaries for the year
ended 28 June 2020
14 TREND STATEMENT
A table of our historical
performance over the past
five years
17 SUSTAINABILITY
22 OUR EXECUTIVE TEAM
25 DIRECTORS' REPORT
A review of the year’s
operations and the plans and
priorities for the future
37 REMUNERATION REPORT
Remuneration of Directors and
key executives
46 AUDITOR’S DECLARATION
47 FINANCIAL STATEMENTS
98 AUDITOR’S REPORT
102 ADDITIONAL INFORMATION
104 CORPORATE DIRECTORY
FRONT COVER: MODEL WEARS
EVERMORE BRIDAL SET
OPPOSITE PAGE: MODEL WEARS
EVERMORE ENGAGEMENT RING

2
Our vision:
to be the most
loved jewellery
destination

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.
Successful listing on the New Zealand Stock
Exchange in 1987 saw the Group expand across the
Tasman to Australia. After 15 years of sustained growth
in both countries, Michael Hill embraced the opportunity
to expand to North America in 2002, opening its first
stores in Vancouver, Canada. The Group's Canadian retail
presence continues to evolve as does its innovative online
presence in all markets in which it operates.
In 2016 Michael Hill moved its primary stock
exchange to the Australian Securities Exchange and
continues to maintain a secondary listing on the New
Zealand Stock Exchange (ASX/NZX: MHJ).
As of 28 June 2020, the Group proudly operates
155 stores in Australia, 49 in New Zealand and 86
stores in Canada. Around the world, the Group employs
approximately 2,300 permanent employees across retail
sales, manufacturing and administration roles.
From 1979 until now and into the future, one constant
underpins all that we do: we’re for love. Michael Hill
remains committed to creating quality jewellery for our
customers to cherish for a lifetime.
Information on our corporate governance policies
and practices, including our Corporate Governance
Statement, is available on our Investor Relations Centre
website at investor.michaelhill.com
Michael Hill is an international
multi-channel retail jewellery chain
with a vision to be the most loved
jewellery destination by creating
fine jewellery accessible to all.
As of 28 June 2020, it operates
290 stores and digital platforms
across Australia, New Zealand
and Canada.
THIS PAGE AND OPPOSITE PAGE: JEWELLERY
FROM OUR MARK HILL COLLECTION

4
We started the year celebrating our
40th birthday and our journey from
a traditional retailer to a modern,
differentiated omni-channel
jewellery brand...

5
VALUES, CULTURE, DIVERSITY AND INCLUSION
Strong, values-led leadership in times of uncertainty is
paramount. I am proud of the determination, resilience
and agility our leadership team demonstrated throughout
the year. Our values; We care, We create outstanding
experiences, We are professional, and We are inclusive
and diverse were reflected and entrenched in the
approach taken by the leadership team when dealing
with the crisis. These attributes and values are engrained
in all levels of our business. As we navigate the rapidly
changing environment, our commitment to creating a
diverse and inclusive organisation will strengthen our
company. We are striving to create a culture where every
team member can thrive and feel valued, so they can
bring their whole self to work. This year we established
the diversity and inclusion council with stakeholders
from all levels and geographies of the business meeting
monthly to identify barriers to inclusion and opportunity
for improvement. While there is much more to do, we are
proud of our female representation at 85% throughout
the company. The majority of our customers are women,
likewise women form the majority of our team. 40% of
board, 50% of the executive and 52% of senior leadership
are female. Recognising diversity is not just about gender,
we will increasingly seek to reflect the communities we
serve across all attributes of diversity.
As highlighted last year, given culture has always
been important to us, we were very disappointed to
discover the misapplication in Australia of the General
Retail Industry Award. The company has largely
remediated existing team member payments. However,
during the COVID-19 closure period, the remediation
program for former teams was paused, noting that
interest will be paid on all amounts owing until this
program of work is completed.
BUILDING ON OUR
STRONG HERITAGE DURING
UNCERTAIN TIMES
The 2020 financial year has been
extraordinary. We started the year
celebrating our 40th birthday
and our journey from a traditional
retailer to a modern, differentiated
omni-channel jewellery brand. We
shared memories from the early days, the many challenges
overcome, and how the brand’s deep heritage remains
relevant in our business today. On a personal level, I’m very
proud of the company’s evolution, the strength that has
been built, and the direction it is headed in.
This past year has also been extremely challenging
and uncertain. Initially, bushfires, drought and floods
affected our Australian communities. This was followed
by the COVID-19 pandemic, one of the greatest health
threats of a generation, which profoundly impacts the
global economy, and continues to have a devastating
impact on many people’s lives. COVID-19 resulted in an
unprecedented temporary closure of our entire store
network severely impacting our operations, sales and profit.
While the effect of the pandemic on our business
is material, throughout the crisis we are adapting
and embracing learnings to remain strong and well
positioned to support our colleagues, customers and
the communities we serve. Across our network, we have
implemented robust protocols to keep our people and
customers safe. Managed retail entry, health screens,
personal protection, and intensified daily cleaning, along
with staged shifts in our support centre, and working
from home, were quickly mobilised. While conditions
may be unusual, and varied across geographies, we are
functioning smoothly.
As the crisis unfolded we accelerated a range of
digital engagement platforms, such as virtual selling,
enabling our customers to connect with our brand and
sales professionals even when they can’t visit us in
person. Jewellery is a considered purchase; our highly
trained sales professionals helping our customers
has always been central to our business model. The
virtualisation of our one to one selling model is a great
example of our continued quest to meet changing
customer needs. We are emerging from the crisis
a stronger, leaner, more relevant business.
Dear Shareholders,

6
We continue to improve the strategic foundations of
the business: this year we successfully embedded the
new retail operating model, launched our new loyalty
program, trialled laboratory-created diamonds, and
implemented a raft of digital developments.

7
RHYTHM OF THE BUSINESS
GAINING TRACTION
As I reflect on the 2020 financial
year, it was certainly a year of
two halves. Following on from
the positive sales momentum
achieved across FY19, the business
delivered consecutive quarters of
sales growth in all markets to finish
the first half with +6.3% comparative sales. As we entered
the second half, we started to see the benefits from our
disciplined “rhythm of the business” approach coupled
with our strategies gaining traction, as the business shifted
its focus to a balance of both sales and margin.
The business has continued to leverage the brand’s
deep heritage as we celebrated our 40th birthday
in August. The roll-out of various digital capabilities
accelerated our journey of evolving into a modern,
differentiated, omni-channel jewellery brand. I’m proud of
how our teams have embraced and truly cemented the
retail fundamentals into the company culture.
Prior to the COVID-19 store closures at the end of
March, the business was successfully delivering both
sales and margin growth, and was tracking to achieve
increased year-on-year EBIT.
Undoubtedly, the 2020 financial year will always
be remembered for the COVID-19 global pandemic.
The impact of COVID-19 was beyond anything we have
ever experienced. The global economic and health
consequences are having a profound and far reaching
impact. As the pandemic advanced, given selling
jewellery is an intimate close quarter process, we had no
choice but to temporarily close all our stores to keep our
people and customers safe. The closures lasted between
five and thirteen weeks, depending on region and
country. Similar to many speciality retailers our business
was severely impacted, resulting in an estimated revenue
loss of at least $80m for FY20Q4.
From May 2020, our store network progressively
reopened with the establishment of best-in-class health
and safety protocols to protect our people and customers.
I am particularly proud of all our people. Never before
have we asked so much from them. Despite incredible
uncertainly, for themselves and their families, they responded
with resilience, determination and professionalism.
FY20 STRATEGY EXECUTION
Throughout the year, the company has maintained a laser
sharp focus on delivering new initiatives to modernise
Michael Hill. We successfully embedded the new retail
operating model, launched our new loyalty program,
trialled laboratory-created diamonds, along with a raft
of digital developments as we continued to improve the
strategic foundations of the business.
CEO’s message
OUR BOARD
Michael Hill has an outstanding and highly engaged
board of directors. I would like to personally thank the
directors for their commitment, and wise counsel during
the year. We normally meet monthly, however in the midst
of the crisis the board met up twice weekly to support,
govern and offer guidance to the Executive team.
As a cycle of board renewal, we are pleased to
welcome Jacquie Naylor as a Non-Executive Director.
Jacquie has over thirty years’ experience in retail, fashion,
and eCommerce. Her deep understanding of driving
retail performance, organisational change, and strategy
development will be a valuable and complimentary
addition to the Board.
Janine Allis will step down from the Board at the
2020 Annual General Meeting. Janine’s entrepreneurial
flare and commercial acumen has brought valuable
insights and judgement to Michael Hill. We are thankful
for the contribution and counsel she has provided.
DIVIDENDS
Given the uncertain economic environment, and our
desire to maintain a resilient balance sheet to withstand
stress, the Board has decided to not declare an end of
year dividend and to defer the payment of the interim
dividend. Our goal is to restore a regular pattern of
dividend payments as performance improves and
earnings stabilise.
On behalf of the Board, I would like to thank our
people, customers and shareholders for their ongoing
support, unwavering loyalty, and commitment to Michael
Hill. Furthermore, I would like to make particular mention
of our CEO Daniel Bracken and the Executive team, who
demonstrated outstanding leadership and dedication
throughout these unprecedented times.
Stay safe,

Emma Hill
Chair

8
The progress we have made during
FY20 across costs, loyalty, digital
and retail fundamentals has Michael
Hill well positioned to navigate both
the opportunities, and the potential
market disruptions ahead.

9
UNWAVERING FOCUS ON COSTS
Our continued focus on costs resonated across the
business as the reality of COVID-19 store closures
impacted the entire business. As a direct consequence,
we implemented a number of measures to preserve cash,
negotiated deferred vendor payment terms, tax payment
deferrals and rental abatements. The business cancelled
all discretionary spend, paused most of our planned
capital expenditure and operated with a leaner global
support office.
A number of initiatives had already been delivered
prior to COVID-19, such as a reinvigorated retail structure,
consolidation of our repair network in all countries, and
improved terms with some of our credit providers.
LAUNCH OF OUR LOYALTY PROGRAM –
BRILLIANCE BY MICHAEL HILL
Pleasingly, our long-awaited loyalty program was
soft-launched digitally late last year, and only eight
months later it has already more than 200,000 members.
This gives us the ability to capture customer data for
future engagement. As a result of the successful member
pricing aspect of the program, we are experiencing
higher transaction values and improved gross margins.
DIGITAL EXPLOSION
The Company experienced a surge in sales from our
digital business, resulting in record digital sales of $24.7m
which represented a milestone 5% of total sales, up from
2.8% of total sales in FY19.
As our customers turned to online shopping
channels due to COVID-19 store closures, we launched
several digital initiatives capitalising on the increased
website traffic. These involved an enhanced website
with improved customer experience, checkout process
and navigation functions; direct selling through social
media and digital catalogues; and a number of virtual
applications added into our ecosystem, including a virtual
selling platform, virtual appointments and virtual try ons.
RETAIL FUNDAMENTALS
We have made great progress in how we are organised
and operate our retail business.
During the year, we trialled our new store incentive
scheme. Those trials demonstrated increased
performance across many aspects of our business, most
notably higher margins. I’m pleased to say that the new
scheme has now been rolled across all stores in the
network, and is delivering very strong results.
The new Retail Operating Model is firmly embedded in
the business, and we have significantly ramped up our focus
on in-store execution and visual merchandising standards.
I’m incredibility proud of the strategic
progress we have made during FY20 across
costs, loyalty, digital and retail fundamentals,
which I believe have Michael Hill well
positioned to navigate both the opportunities,
and the potential market disruptions ahead.
OUTLOOK FOR FY21 -
EMPHASIS ON GROWTH AND MARGIN
In FY21, the company will continue to strengthen the retail
fundamentals of the business, focus on providing a true
omni-channel customer experience, and rapidly progress
the key initiatives set out in the Directors’ report, with an
emphasis on growth in sales and margin.
I’m excited that as part of our digital-first initiative,
in August 2020, we launched our new pure play digital
brand – Medley. This offers us a real opportunity
to expand into the high margin demi-fine category,
attracting a new customer demographic in an agile and
capital light manner.
There is no doubt that the economic uncertainty of
the global pandemic will continue to have some impact
on FY21 performance, given the volatility in consumer
confidence, the economic reliance on government
stimulus packages, and the ongoing potential of store
closures. Having said this, the business has started FY21
positively in all markets, with continued gross margin
improvements, as our strategic initiatives steadily gather
momentum. We believe Michael Hill is a resilient business
with best in-class health and safety protocols and is
well positioned for growth and margin opportunities to
strengthen our business, across product, digital and
omni-channel offerings.
After what can only be described as a historic and
challenging year, I would like to personally thank our loyal
customers, our dedicated team members, the Executive
team and Board members for their resilience and
unwavering support.
Daniel Bracken
Chief Executive Officer
THIS PAGE AND OPPOSITE PAGE:
PENDANTS FROM OUR INFINITAS COLLECTION

10
10
The surge in the Company’s online
business resulted in record digital
sales of $24.7m for the full year
(up 54.7% on FY19)

11
Year ended 28 June 2020 2020 2019
KE Y R ATI O S
Return on average shareholders’ funds 1.9% 9.4%
Gross margin 60.6% 62.0%
Interest expense cover (times) 1.5 8.6
Equity ratio (total equity / total assets) 30.7% 46.6%
Gearing Ratio (net debt / total equity) -0.3% 23.5%
Working capital ratio
(current assets / trade payables) 3.0 : 1 5.0 : 1
Current ratio
(current assets / current liabilities)* 1.4 : 1 2.1 : 1
EARNINGS PER SHARE
Basic earnings per share au0.79¢ au4.26¢
Diluted earnings per share au0.79¢ au4.25¢
DISTRIBUTION TO SHAREHOLDERS
Dividends - including final dividend
Per ordinary share au1.5¢ au4.0¢
Times covered by net profit after tax 0.53 0.85
SHARE PRICE
30 June au$0.32 au$0.54
ADJUSTED SAME STORE SALES*
Michael Hill adjusted same store sales*
movement (in local currency)
Australia 0.1% -5.7%
New Zealand 2.4% -4.5%
Canada 2.3% -1.7%
Group same store sales movement 2.7% -3.3%
NUMBER OF STORES
Australia 155 167
New Zealand 49 52
Canada 86 86
Michael Hill stores 290 305
Emma & Roe stores - 1
Total stores 290 306
* EBIT, Underlying trading EBIT and Adjusted Same Store Sales are
Non-IFRS information and are unaudited. Please refer to page 31 for
an explanation of Non-IFRS information and a reconciliation of EBIT
and Underlying trading EBIT.
Key Facts
Year ended 28 June 2020 2020 2019 % Change
au$000 unless stated
TRADING RESULTS
From continuing operations
Group revenue 492,060 569,500 (13.6%)
Gross margin 298,204 353,032 (15.5%)
Earnings before interest and tax* 14,079 21,115 (33.3%)
Underlying trading earnings
before interest and tax* 25,686 34,608 (25.8%)
Net profit before tax 4,485 18,811 (76.2%)
Net profit after tax 3,059 16,498 (81.5%)
Group trading results
Profit for the year 3,059 16,498 (81.5%)
Net cash inflow
from operating activities 83,699 38,969 114.8%
FINANCIAL POSITION AT YEAR END
Contributed equity
387,769,105 ordinary shares 11,016 10,984 0.3%
Total equity 153,806 176,752 (13.0%)
Total assets 501,618 379,193 32.3%
Net debt/(cash) (523) 24,781 (102.1%)
Capital expenditure 17,353 16,134 7.6%

1212
GROUP REVENUE
DOWN 14%
AU$ MILLIONS /
FINANCIAL YEAR
1718192016
522.2
551.1
575.5
569.5
4 9 2 .1
ORDINARY DIVIDEND
AU CENTS PER SHARE /
FINANCIAL YEAR
1718192016
5.05.0
5.0
4.0
1.5

13
Performance
Highlights
KEY FINANCIAL RESULTS
■
Statutory net profit after tax
of $3.1m
■
Statutory earnings before
interest and tax of $14.1m
■
Group operating revenues
of $492.1m
■
Underlying trading earnings
before interest and tax* of
$25.7m
■
Group adjusted same store
sales* $469.3m, up 2.7%
■
Gross margin 60.6%
■
Inventory reduced to $178.7m
■
Equity ratio 30.7%
OPERATIONAL PERFORMANCE
■
Digital sales increased by
54.7% to $24.7m
■
Digital sales represent
5.0% of total sales
■
Branded Collection sales
represented 37.3% of total sales
■
Delivery of cloud enabled ERP
platform in June 2020
■
Decisive cash preservation
and cost management
throughout the year
■
Loyalty program Brilliance by
Michael Hill launched with over
200,000 members to date
■
Stores temporarily closed due
to COVID-19 for a period of
five to thirteen weeks
■
One new store opened and
seventeen underperforming
stores were closed
* EBIT, Underlying trading EBIT and Adjusted
Same Store Sales are Non-IFRS information
and are unaudited. Please refer to page 31
for an explanation of Non-IFRS information
and a reconciliation of EBIT and Underlying
trading EBIT.
13
1718192016
EARNINGS BEFORE
INTEREST, TAXATION,
DEPRECIATION AND
AMORTISATION
(EBITDA) UP 72%
AU$ MILLIONS / FINANCIAL YEAR
FY2020 RESULT INCLUDES THE
ADOPTION OF AASB16 LEASES
67. 2
75.5
64.5
40.5
69.7
GEARING RATIO
-0.3%
% / FINANCIAL YEAR
17181916
18.0
20.6
2 7.7
23.5
-0.3
REVENUE BY COUNTRY
FINANCIAL YEAR
AUSTRALIA 54%
NEW ZEALAND
21%
CANADA 25%
DIGITAL SALES
UP 55%
AU$ MILLIONS /
FINANCIAL YEAR
1718192016
4 .1
6.9
1 1 .1
16.0
24.7
BRANDED
COLLECTIONS
UP 13%
% OF TOTAL SALES /
FINANCIAL YEAR
1718192016
13.0
14.2
18.0
32.5
37. 3
STORES BY COUNTRY
FINANCIAL YEAR
AUSTRALIA 53%
NEW ZEALAND
17%
CANADA 30%

14
FINANCIAL PERFORMANCE 2020 2019 2018 2017 2016^
FROM CONTINUING OPERATIONS

$000 $000 $000 $000 $000
Group revenue 492,060 569,500 575,539 551,099 522,214
Earnings before interest, tax, depreciation
and amortisation (EBITDA)* 69,690 40,481 64,481 75,482 67,212
Depreciation and amortisation 55,611 19,366 18,694 17,427 16,796
Earnings before interest and tax (EBIT)* 14,079 21,115 45,787 58,055 50,416
Net interest paid 9,594 2,304 2,680 3,149 5,508
Net profit before tax (NPBT) 4,485 18,811 43,107 54,906 44,908
Income tax 1,426 2,313 11,342 13,768 21,384
Net profit after tax (NPAT) 3,059 16,498 31,765 41,138 23,524
Net operating cash flow 83,699 38,969 54,893 39,752 47,794
Ordinary dividends paid 5,817 19,365 19,371 19,264 17,490
FINANCIAL POSITION 2020 2019 2018 2017 2016^


$000 $000 $000 $000 $000
Cash 11,204 7,923 7,220 5,676 8,853
Inventories 178,742 179,503 192,074 203,853 199,961
Other current assets 31,007 35,878 29,314 29,052 31,298
Total current assets 220,953 223,304 228,608 238,581 240,112
Other non-current assets 57,857 72,742 72,219 83,864 74,450
Deferred tax assets 74,468 67,708 68,022 62,712 67,610
Total tangible assets 353,278 363,754 368,849 385,157 382,172
Right of use asset 123,911 - - - -
Intangible assets 24,429 15,439 12,626 8,784 5,561
Total assets 501,618 379,193 381,475 393,941 387,733
Total current liabilities 159,405 105,130 108,710 95,716 112,772
Non-current borrowings 10,681 32,704 35,213 45,034 40,887
Lease liabilities 115,848 - - - -
Other long term liabilities 61,878 64,607 62,627 62,252 55,923
Total liabilities 347,812 202,441 206,550 203,002 209,582
Net assets 153,806 176,752 174,925 190,939 178,151
Reserves and retained profits* 142,790 165,768 164,659 180,924 174,384
Paid up capital 11,016 10,984 10,266 10,015 3,767
Total shareholder equity 153,806 176,752 174,925 190,939 178,151
Per ordinary share
Basic earnings per share 0.79¢ 4.26¢ 8.20¢ 10.66¢ 6.14¢
Diluted earnings per share 0.79¢ 4.25¢ 8.19¢ 10.66¢ 6.11¢
Dividends declared per share - Interim au1.5¢ au2.5¢ au2.5¢ au2.5¢ nz2.5¢
- Final - au1.5¢ au2.5¢ au2.5¢ au2.5¢
Net tangible asset backing $0.33 $0.42 $0.42 $0.47 $0.45
^ 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 EBITDA are Non-IFRS information and are unaudited. Please refer to page 31 for an explanation of Non-IFRS information
and a reconciliation of EBIT.
Trend Statement

15
ANALYTICAL INFORMATION 2020 2019 2018 2017 2016^
EBITDA
*
to sales 14.2% 7.1% 11.2% 13.7% 12.9%
EBIT
*
to sales 2.9% 3.7% 8.0% 10.5% 9.7%
Net profit after tax to sales 0.6% 2.9% 5.5% 7.5% 4.5%
EBIT
*
to total assets 2.8% 5.6% 12.0% 14.7% 13.0%
Return on average shareholders funds 1.9% 9.4% 17.4% 20.9% 12.9%
Return on average total assets 0.7% 4.3% 8.2% 10.5% 6.3%
Working capital ratio 3.0 : 1 5.0 : 1 4.6 : 1 4.9 : 1 5.2 : 1
Current ratio 1.4 : 1 2.1 : 1 2.1 : 1 2 .5 : 1 2.1 : 1
EBIT
*
interest expense cover 1.5 8.6 17.0 18.3 8.3
Effective tax rate 31.8% 12.3% 26.3% 25.1% 47.6%
Gearing
Net borrowings to equity -0.3% 23.5% 27.7% 20.6% 18.0%
Equity ratio 30.7% 46.6% 45.9% 48.5% 45.9%
Other
Shares issued at year end excl Treasury 387,769,105 387,750,000 387,438,513 387,438,513 383,138,513
Treasury stock at year end - - - 14,677 14,677
Exchange rate for translating:
New Zealand results 1.04 1.06 1.09 1.07 1.07
Canadian results 0.90 0.95 0.98 0.97 0.97
United States results - - 0.78 0.83 0.83
Number of Michael Hill stores
Australia 155 167 171 166 168
New Zealand 49 52 52 52 52
Canada 86 86 83 76 67
USA - - - 9 10
Total number of Michael Hill stores 290 305 306 303 297
^ 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 EBITDA are Non-IFRS information and are unaudited. Please refer to page 31 for an explanation of Non-IFRS information
and a reconciliation of EBIT.
TOTAL MICHAEL HILL STORES 290
1987 - 2020

16
We care.
We create outstanding experiences.
We are professional.
We are inclusive and diverse.

17
FY20 has fundamentally tested our
notion of sustainability. The incredible
challenges that this year has presented
have been all encompassing. From
the bushfires that devastated so many
Australian communities throughout
late 2019 and into 2020, to the global
COVID-19 pandemic that continues to
dictate many of our daily interactions, we
have all been impacted.
Regardless of size, businesses
across the globe have had their very
ability to survive called into question as
immediate and sweeping events have
impacted their communities, customers,
teams and supply chains. Michael Hill
has been no exception to this, and we
have embraced the agility required to
adapt to these events while remaining
true to the values which serve as the
very foundation of our business.
At Michael Hill, we want each of
our team members to feel they are
a valued part of our family. We want
our customers to have confidence
that their jewellery has been ethically
sourced and produced, and that we
will continue to strive for innovation in
our products and the ways we offer
them. We want our investors to know
that we are willing and able to adapt
to the rising and increasingly complex
challenges facing people, communities
and the planet. Accordingly, our
sustainability strategy is driven by the
three areas identified as most material
by our key stakeholders during a
materiality assessment we conducted
based on the Global Reporting Initiative
Standards for sustainability reporting.
Key stakeholders consulted included:
trade partners, customers, internal
team members (from Board through
to team member), academics and
industry bodies.
PEOPLE: BUILDING TALENT AND TEAMS
Our people and our teams lie at the
very heart of our brand. With the
challenges that FY20 presented, so
too came valuable opportunities and
lessons in teamwork and responsive-
ness. Our leaders navigated new ways
to maintain team connections and
culture while working remotely and
delivering outcomes in challenging and
constantly changing environments.
Supporting this, our operational teams
were rapidly developing processes and
facilities to allow our teams to feel safe
at work, ranging from the deployment
of respirator masks to vulnerable team
members in the Australian bushfires, to
implementing safe operating protocols
(for both team members and customers)
following the COVID-19 pandemic.
FY20 saw the launch of several new
programs and initiatives to measure and
improve team member experiences,
strengthen internal capabilities, and
attract new talent. Early in the year
we conducted our first Great Place
to Work (GPTW) survey to measure
team member experience across the
key areas of: Trust, Engagement and
Collaboration. Just over half of our
global team responded to the survey
and overall, we scored 71% on the
GPTW measurement scale. We have
developed a clear plan of action to lift
this score to 75% and to increase team
member participation in the survey.
We aim for Michael Hill to provide
exceptional experiences for all and
to be a loved employer. Our People
Promise is ‘Enabling you to realise your
potential’. It’s what sets us apart as an
employer to ensure we attract, develop
and retain the right talent our business
needs to succeed.
For us, being a loved employer
is about making that connection,
it’s about living our values, it’s about
joining brilliance together. The Michael
Hill Leadership Promise is ‘As leaders,
we will create a high-performance,
high-trust culture that is open, honest
and committed to excellence’. We
have commenced embedding our
Leadership Promise, a statement with
corresponding actions that show to
our team members how we commit
Sustainability
TOTAL EMPLOYEES
BY REGION
AU
NZ
CA
TOTAL EMPLOYEES
BY AGE
EDUCATION, TRAINING
AND PROGRESSION
Employees that received regular performance
and career development review during the year
30–50
~90%
<30
>50
TOTAL EMPLOYEES
BY GENDER
Our Team
AS AT 28 JUNE 2020
ENGAGEMENT RING
FROM OUR SOLITAIRE
BY MICHAEL HILL
COLLECTION

18
It's our people
who make our
company!

19
to interacting with them, into our culture. Respect,
understanding, development, feedback, informing and
empowering are all key elements of this promise.
In September 2019 we formally launched our
Values, as outlined in the FY19 Annual Report. These
values work cohesively with our People and Leadership
Promises to form a clear framework for further building
the Michael Hill culture.
Our focus this year has been to understand our
employer value proposition touchpoints and to reinforce
and embed our People and Leadership Promises
into our employment lifecycle to further enhance our
team member experience. Additionally, we equipped
our team leaders with a clearly defined process for
reviewing talent and planning succession; a critical step
in building a high performing business for the future.
Pleasingly, FY20 also saw significant progress in the
rectification of the historic underpayment to our retail
workers identified in July 2019. While the discovery of this
underpayment was deeply disappointing, we are proud
of the commitment shown by our leadership team to
remediate this. In early 2020, underpayments to impacted
current team members were made. Our remediation work
to rectify our former team members continues.
Diversity also remained a focal point, with the
establishment of the Michael Hill Diversity and Inclusion
(D&I) Council to support the business to bring the
D&I strategy to life. Council members represent all
geographic and operational areas of the business and
span all levels of seniority. The Council meets monthly
to identify barriers to inclusion and opportunities for
improvement. Additionally, they support the execution of
D&I initiatives throughout the year across all countries.
In terms of gender diversity, at the conclusion of
FY20 85% of our total team mix was female (FY19: 84%).
Women in leadership positions (defined as executive
team, regional and store management, and support
centre senior leadership) was 52% (FY19: 48%). Female
representation on our executive team was 50% (FY19:
50%) and remained steady at 40% of the Michael Hill
Board of Directors (FY19: 40%).
We continue to communicate the availability of a
hotline available for team members to report instances
of discrimination or harassment. This supports the
Whistleblowing Policy endorsed by the Board.
Our health, safety and wellbeing initiatives gained
momentum during the year. We launched our strategy
roadmap to 2023, with a focus on five priorities: Risk
Management, Systems and Compliance, Culture and
Capabilities, Innovation and Enhanced Wellbeing.
The health, safety and wellbeing of our customers
and teams became a critical area of focus during the
COVID-19 pandemic. We were the first major Australian
retailer to take action in terms of closing stores and
while simultaneously increasing our online capabilities,
allowing us to redeploy some of our retail team
members to supporting those new digital initiatives.
As many of our team members across all areas of the
business were stood down, we accessed available
government wage subsidies in all three countries.
Additionally, we rapidly transitioned to flexible working
arrangements as many of our working team members
took on additional family responsibilities such as home
schooling. As our retail business resumed trading, we
took (and continue to take) a consultative response to
restarting stores and transitioning team members back
to our support office, whilst keeping team member and
customer safety as the first priority.
Finally, in terms of safety performance FY20 saw a
Lost Time Injury Frequency Rate (LTIFR) of 3.46 against
a target of 7.01 and industry average rate of 6.0. This was
a very pleasing improvement on our FY19 LTIFR of 7.65,
however, we acknowledge that this improvement may
be partially due to the COVID-19 shutdown period. FY21
will see a continued focus on improving the functionality
and effectiveness of our Safety Management Systems,
reporting processes and analytics.
RINGS FROM OUR
PRELUDE COLLECTION

20
PRODUCT: ETHICAL SOURCING
FY20 saw continued focus on ethical sourcing, a core
and non-negotiable principle of our business. Our
responsible sourcing program is supported by our
Conflict Free Diamonds and Sourcing Policy, as well as
our Code of Business Ethics and Code of Conduct for
Suppliers, a copy of which is available on our Investor
Relations Centre website.
As an international multi-channel jewellery retailer,
we recognise the inherent supply chain risk exposures
that come from operating within the global mining
and extractives industry. Notably, in March 2020, we
launched our online supply chain transparency platform
enabling us to better assess our supply chain for risks of
unacceptable practices. This new platform supports our
analysis of risks within our supply chain such as unethical
sourcing from conflict affected areas, corruption, and
modern slavery, and extends on our existing measures to
ensure responsible sourcing, including sound supplier due
diligence and contractual requirements.
The launch of this platform incorporated sixty-five
of our finished jewellery, component, raw material and
packaging suppliers representing approximately 60% of
company spend. The COVID-19 pandemic has impacted
the broader implementation of the platform, however,
we will continue improving our supply chain risk
management framework as we look to further increase
supply chain transparency through FY21.
The launch of the supply chain platform
complemented additional work performed in
preparation for our first Modern Slavery Statement.
Michael Hill is committed to the ethical use of human
resources in the supply chain and while no instances
of modern slavery have ever been identified in our
business, we continue to strengthen our supply
chain controls. Our first Modern Slavery Statement
will be publicly available in 2021 on the Australian
Government’s Online Register and our Investor Relations
Centre at investor.michaelhill.com
INNOVATION
Product and service innovation is a key element of our
sustainable business model. In August 2019, we became
the first major Australian jeweller to offer a range of
laboratory-created diamonds. Our expansion into this
range, which is available throughout our global operations,
was designed to offer a quality alternative to mined
diamonds with competitive pricing and clear provenance.
In October 2019, we launched our new loyalty
program, Brilliance by Michael Hill, which offers
members access to exclusive promotions, product
education insights, VIP sale events and new range
product previews. Brilliance by Michael Hill provides
another avenue to build meaningful connections with
our customers and ensure our business evolves to
meet their needs. As at 28 June 2020, there were
144,086 members of the Brilliance family. Since then,
membership has grown to over 200,000.
Additionally, our Brisbane based manufacturing team
continued to design and manufacture unique Branded
Collections which continue to be popular with our
customers. Our in-house manufacturing capability also
enables the creation of bespoke pieces for our customers.
The evolution of COVID-19 also provided us with
opportunities for innovation in the ways in which we
reach and connect with our customers. We launched
an online virtual direct selling platform, enabling group
or one-on-one product viewing, styling and purchasing.
We launched new digital applications to support
increased customer engagement and developed the
functionality to allow customers to shop directly from
digital online catalogues. These developments enabled
us to continue to serve our customers without an
operational network of physical stores and have proven
fundamental in sustaining
our business through this
challenging period.

21
PLANET: SUPPORTING THE PLANET AND THE
COMMUNITIES IN WHICH WE OPERATE
With the challenges that FY20 brought, our business
has made every effort to extend its support to the
communities in which we operate.
At our global conference in September 2019, we
partnered with SolarBuddy to donate over three hundred
solar lights to children living in energy poverty. This
program is designed to enable children to continue their
studies after dusk and improve education outcomes.
In December 2019, we sponsored the World’s
Big Sleep Out event in Brisbane, a global initiative to
raise funds for homeless and displaced people. Our
Group Executive team joined a number of support
centre team members, in sleeping overnight at the
‘Gabba’ (a major sporting stadium) in Brisbane, for the
cause. In total, Michael Hill contributed over $40,000
to Mercy Community Services through sponsorship
and fundraising efforts, making us one of the top three
fundraisers across Australia – achieving second place
in the categories ‘Highest Team Fundraisers’ and
‘Individual Fundraiser’ (our CEO Daniel Bracken). By
sponsoring the event, Michael Hill made a significant
contribution to addressing the issue of homelessness in
our local community, with all fundraising going towards
food and accommodation for vulnerable individuals and
families in need.
The Australian bushfires in the summer of 2019
saw eleven stores close at various times, and many of
our team members needing to evacuate their homes.
Michael Hill contributed $100,000 to the Australian
Red Cross Disaster Relief and Recovery Fund, helping
support Australians affected by the bushfires to rebuild
and recover. Additionally, several individual stores
donated funds to their local community organisations
and many individual team members made voluntary
donations to the NSW Rural Fire Service and The
Australian Koala Foundation through our payroll system,
in support of the courageous work and much-needed
environmental recovery efforts of those organisations.
This year our proud partnership with the Michael
Hill International Violin Competition continued,
celebrating and supporting New Zealand’s cultural
offerings and showcasing the artistic talents of the
world’s finest young violinists.
During the COVID-19 pandemic, we were the first
major Australian retailer to take action in terms of
closing stores and standing down teams, simultaneously
increasing our online capabilities to continue to support
our vendors. We also focused efforts on supporting
local industry, purchasing all hand sanitiser needed
to stock Australian and New Zealand stores from the
Brisbane Distillery.
This year also saw us introduce product packaging
made primarily from recycled materials. Additionally, our
gift bags are now recyclable. Our manufacturing centre
continued their processes to recover and recycle scrap
gold and lemel generated from their manufacture and
repair operations, while our corporate offices made use
of waste separation facilities to maximise recycling and
diversion from landfill.
We have not identified any non-compliance with
environmental laws and regulations in any of our operations.
THE FUTURE OF SUSTAINABILITY AT MICHAEL HILL
We remain in the early stages of our sustainability journey.
FY20 has seen an increased focus on sustainability at a
Board level, the development of a broad sustainability
strategy and a concerted effort from our entire team
to align our operations with this strategy. These efforts
were validated in March 2020, when we undertook an
interim audit of our Responsible Jewellery Council Code
of Practices (RJC COP) certification. The RJC COP covers
Human Rights, Labour Rights, Health and Safety, Product
Integrity and many other key topics and is aligned with
the OECD Due Diligence Guidance and the UN Guiding
Principles of Business and Human Rights. Through the
implementation of the RJC COP, Michael Hill contributes
towards the United Nations 2030 agenda and the 17
Sustainable Development Goals. The interim audit saw all
previously identified non conformances closed out, with
no additional non-conformances identified. Accordingly,
Michael Hill International has retained its RJC certification,
with our next comprehensive audit due in 2022.
This year has seen us gain momentum in
demonstrating our commitment to sustainability and
providing a benchmark for future performance, however
we recognise that there are opportunities for improvement.
Our immediate challenge is to embed and ingrain our sus-
tainability values more deeply into the way we do business.
This will be our focus over the coming year.

22
Our Executive Team
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
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.
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 a
number of 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).
FROM LEFT:
MATT KEAYS, VANESSA BRENNAN,
DANIEL BRACKEN, ANDREW LOWE,
ANDREA SLINGSBY,
JOANNE MATTHEWS

23
Vanessa Brennan
Chief Brand & Strategy 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.
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 to 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 Queensland
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,
where he worked initially as
a Finance Accountant, and
also gained solid shop floor
experience during his tenure.
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 in-
frastructure 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 nearly 300
stores across Australia, New
Zealand and Canada, Joanne’s
experience will help to support
the company’s core priority of
attracting, developing, rewarding
and retaining top quality people
at Michael Hill.
Joanne holds a MBA and
Bachelor of Business in Human
Resources and Marketing.
RINGS FROM THE FENIX CREATED DIAMONDS
FOR MICHAEL HILL COLLECTION

Adjusted same store sales* were up
2.7% for the full year to $469.3m, as the
Company focused on enhancing the
retail fundamentals and implemented
the new retail operating model.

MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT 25
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 28 June 2020.
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:
2020 2019
$000 $000
Final ordinary dividend for the year
ended 30 June 2019 of au1.5¢
(2019: au2.5 cents) per fully paid
share paid on 27 September 2019
(2019: 28 September 2018) 5,817 9,679
Interim ordinary dividend for the year
ended 28 June 2020 of au1.5¢
(2019: au2.5¢) per fully paid share
deferred for payment
(2019: 29 March 2019)^ 5,816 9,686
No final dividend has been declared
by the Directors for the year ended
28 June 2020 (2019: au1.5¢). - 5,816
^ Interim dividend for the year ended 28 June 2020 of
au1.5¢ was declared. Subsequent to the shares trading
ex-dividend, but prior to payment date, the interim
dividend payment was deferred to 30 September 2021.
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 $492.1m (2019: $569.5m) for the 2020 financial
year, producing a net profit after tax (NPAT) of $3.1m
(2019: $16.5m). The Group reported an earnings before
interest and tax (EBIT) of $14.1m (2019: $21.1m) for the
2020 financial year. Underlying EBIT adjusted for non-cash
items and AASB 16 Leases (Underlying Trading EBIT)* for
the Group was $25.7m (2019: $34.6m) for the year.
OPERATIONAL REVIEW
The Group achieved the following key outcomes for the
2020 financial year:
Key Financial Results
• Statutory net profit after tax of $3.1m (FY19: $16.5m),
noting new AASB 16 Leases applies for FY20 only.
• Earnings before interest and tax (EBIT)* of $14.1m
(FY19: $21.1m).
• Underlying trading EBIT* adjusted for non-cash items
and AASB 16 Leases of $25.7m (FY19: $34.6m).
• Group operating revenues of $492.1m (FY19: $569.5m),
largely attributable to COVID-19 store closures.
• Group adjusted same store sales* were up 2.7% at
$469.3m (FY19: $457.1m).
• Group gross margin 60.6% (FY19: 62.0%),
predominantly impacted by foreign exchange.
• Controlled inventory management, resulting in stock
holdings of $178.7m (FY19: $179.5m).
• Strong working capital management.
• No final dividend declared. Interim dividend payment
of au1.5¢ per share deferred to 30 September 2021.
Operational Performance
• Digital sales increased by 54.7% to a record $24.7m
(FY19: $16.0m), representing 5.0% of total sales
(FY19: 2.8%).
• Branded collection sales represented 37.3% of total
sales for the full year (FY19: 32.5%).
• Delivery of cloud enabled ERP platform in June 2020,
to optimise inventory allocation and store profiling.
• Decisive cash preservation and cost management
throughout the year.
• Loyalty program Brilliance by Michael Hill launched
online and in-store during the year, with over 200,000
members to date.
• Stores were temporarily closed due to COVID-19 for a
period of five to thirteen weeks, opening progressively
in accordance with Government health guidelines.
• One new store opened and seventeen under-performing
stores were closed during the year, giving a network
total of 290 stores across all markets (FY19: 306).
* EBIT, Underlying trading EBIT and Adjusted Same Store
Sales are Non-IFRS information and are unaudited. Please
refer to page 31 for an explanation of Non-IFRS information
and a reconciliation of EBIT and Underlying EBIT.

The Group reported statutory earnings before interest
and tax (EBIT) of $14.1m for the year ended 28 June 2020
(FY19: $21.1m). Underlying EBIT adjusted for non-cash
items and AASB 16 Leases for the year decreased to
$25.7m (FY19: $34.6m).
Prior to COVID-19, the Company had been gaining
positive momentum with increasing same store sales
growth and margin improvement. Adjusted same store
sales* were up 2.7% for the full year to $469.3m (FY19:
$457.1m), as the Company focused on enhancing the
retail fundamentals and implemented the new retail
operating model. This was particularly evident in the first
half, when same store sales returned to positive growth
with an increase of 6.3%.
The second half erosion of EBIT was a result of the
temporary closure of all stores for a period between five
to thirteen weeks, due to the COVID-19 pandemic. The
Company reduced the financial impact by implementing a
lean operating model, ceasing all discretionary spend, and
seeking rent abatements from landlords. In addition, wage
subsidies were received in each market which partially
offset the employee benefits paid out during this period.
The surge in the Company’s online business resulted
in record digital sales of $24.7m for the full year (up
54.7% on FY19). The online business delivered some
of the highest weeks in the Company’s history during
the COVID-19 period as customers embraced online
purchasing whilst stores were closed. Digital sales
now represent 5.0% of total sales. During the year, the
Company accelerated the delivery of a number of digital
first initiatives including enhanced website and user
experience, direct selling from social media platforms
and digital catalogues, virtual selling, along with the
successful launch of our loyalty program (Brilliance
by Michael Hill) which has now reached over 200,000
members globally.
A continued focus on re-imagining our Branded
Collections saw them represent 37.3% of total product
sales for the year (FY19: 32.5%). A key milestone was
reached with the delivery and go-live of the cloud
enabled ERP platform. This platform will optimise
inventory management, enhance store profiling and
stock allocation, and facilitate multiple initiatives to
deliver a true omni-channel customer experience.
During the second half of the year (COVID-19
lockdown period), the Company took decisive action
to preserve cash, reduce expenditure, and actively
monitor inventory. Cash management initiatives included
the cancellation or deferral of capital expenditure,
renegotiation of vendor payment terms, engaging with
landlords to obtain rental assistance packages including
deferrals, and a reduction in the cost of doing business
through leaner labour models.
Furthermore, during the COVID-19 temporary store
closure period, the Company worked closely with its
long standing lending partner ANZ. Given a nil net
debt position at year end, the existing $70m facility
limit is considered appropriate to meet the Company’s
inventory and working capital requirements.
Sales from the Group’s Professional Care Plan (PCP)
declined to $24.0m (FY19: $28.5m) with an amount of
$27.5m (FY19: $32.9m) recognised as revenue for the
full year. At 28 June 2020, a deferred amount of $73.8m
remained on the balance sheet (FY19: $77.8m).
The Company opened one new store and closed
seventeen under-performing stores, resulting in 290
stores at year end.
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 channels 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 results
below are expressed in local currency.
26 MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT

MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT 27
Michael Hill Australia
OPERATING RESULTS (AU $000) 2020 2019 2018 2017 2016
Revenue from continuing operations 266,610 313,587 325,709 321,981 309,457
Gross margin 161,030 194,052 206,303 201,707 194,152
Gross margin as a % of revenue 60.4% 61.9% 63.3% 62.6% 62.7%
EBIT 27,410 32,917 48,621 51,688 49,975
As a % of revenue 10.3% 10.5% 14.9% 16.1% 16.1%
Number of stores 155 168 171 166 168
In Australia, adjusted same store sales* marginally improved by 0.1%, and all stores revenue declined by 15.0% to $266.6m
(FY19: $313.6m) for the year. Gross margin for the year was 60.4% (FY19: 61.9%), largely due to FX impacts on cost of
goods. While the majority of the revenue decline is attributable to the COVID-19 temporary store closure period, a portion
is also due to the closure of thirteen underperforming stores during the year. Due to COVID-19 health restrictions, all
stores in Australia were closed on 24 March 2020 and progressively reopened from May 2020, and as such, stores were
closed for a period of between five and ten weeks.
Thirteen underperforming stores permanently closed during the period, resulting in 155 stores trading at 28 June 2020.
Michael Hill New Zealand
OPERATING RESULTS (NZ $000) 2020 2019 2018 2017 2016
Revenue 106,696 120,064 125,239 121,970 122,903
Gross margin 63,641 73,011 77,673 75,204 75,895
Gross margin as a % of revenue 59.6% 60.8% 62.0% 61.7% 61.8%
EBIT 21,067 24,125 27,800 27,836 27,136
As a % of revenue 19.7% 20.1% 22.2% 22.8% 22.1%
Number of stores 49 52 52 52 52
FX rate for profit translation 1.05 1.06 1.09 1.06 1.09
In New Zealand, adjusted same store sales* increased by 2.4% to NZ$103.9m (FY19: NZ$101.4m) and all store revenue
declined by 11.1% to NZ$106.7m (FY19: NZ$120.1m) for the year. Gross margin for the year was 59.6% (FY19: 60.8%). The
decline in revenue was attributable to the COVID-19 temporary store closure period. The New Zealand Government
mandated store closures from 24 March 2020, with stores reopening on either 16 May 2020 or 23 May 2020. Stores were
closed for a period of eight to nine weeks.
Three underperforming stores permanently closed during the period, resulting in 49 stores trading at 28 June 2020.
Michael Hill Canada
OPERATING RESULTS (CA $000) 2020 2019 2018 2017 2016
Revenue 110,799 133,146 130,762 112,721 95,423
Gross margin 63,991 80,726 81,576 69,078 59,252
Gross margin as a % of revenue 57.8% 60.6% 62.4% 61.3% 62.1%
EBIT (2,412) 9,797 14,605 12,386 8,929
As a % of revenue (2.2)% 7.4% 11.2% 11.0% 9.4%
Number of stores 86 86 83 76 67
FX rate for profit translation 0.90 0.95 0.98 1.00 0.97
In Canada, adjusted same store sales* increased by 2.3% to CA$102.8m (FY19: CA$100.5m) and all store revenue
declined by 16.8% to CA$110.8m (FY19: CA$133.1m) for the year. Gross margin declined to 57.8% (FY19: 60.6%), largely
due to FX impacts. The decline in revenue was largely attributable to the COVID-19 temporary store closure period. All
stores in Canada were temporarily closed on 20 March 2020 and progressively reopened across the provinces from
June 2020, and as such stores were closed for a period of between ten and thirteen weeks. One store was opened in
Canada at McArthur Glen, British Columbia.
One underperforming store permanently closed during the period. There were 70 of the 86 stores trading at 28 June 2020.
* Adjusted Same Store Sales is Non-IFRS information and is unaudited. Please refer to Non-IFRS information on page 31
for an explanation of Non-IFRS information.

28 MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT
Our strong retail fundamentals
embedded within a disciplined
framework provide a true
omni-channel customer
experience and maximise
growth opportunities...

MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT 29
Key initiatives for
FY21 - emphasis on
growth and margin
Strong retail fundamentals embedded
within a disciplined framework providing a
robust platform to enable a true omni-channel customer
experience and maximise growth opportunities:
1 OMNI-CHANNEL - leveraging the recent investment
in our new ERP platform, the business will embark on
multiple digital and physical initiatives to meet the
demands of a modern-day customer, including "click
and collect/reserve", "ship from store", as well as "drop
ship" and marketplace opportunities.
2 DIGITAL FIRST - building on the successes of FY20
including positive launches of virtual try-on and
virtual selling, further enhancements will be delivered
across loyalty, new sales platforms and customer
communication channels. August 2020 launch of a
pure play digital brand - medleyjewellery.com.au - an
aspirational and attainable on-trend jewellery offering.
3 RETAIL FUNDAMENTALS - continue to deliver
improved gross profit and sales performance by
embedding multiple initiatives and reinvigorating
the retail store culture and customer experience.
Additionally, an increased focus on space planning to
optimise store productivity and efficiencies.
4 CANADIAN OPPORTUNITIES - maintaining focus
on increased productivity targets while delivering
a new supply chain solution, exploring new growth
channels, and maximising commercial opportunities
of the in-house credit program including a potential
divestment of the credit book.
5 PRODUCT EVOLUTION - undertake range and
assortment rationalisation strategy aligned to
refreshed product newness calendar and higher
inventory turns. A focus on optimising margin through
product mix and continuing to enhance higher margin
product offerings (eg. laboratory-created diamonds)
and branded collections.
6 COST CONSCIOUS CULTURE - embedding an
absolute focus on cost disciplines, inventory and capital
management across all aspects of the Company.
THIS PAGE AND OPPOSITE PAGE: JEWELLERY
FROM OUR EVERLIGHT COLLECTION
Cash, cash flow and
dividends
Net operating cash inflows were $80.9m compared to
$39.0m the previous year. Due to the adoption of AASB
16 Leases, $32.7m was classified as principal portion of
lease payments within cash flow from financing activities
for FY2020, previously rent payments that were reported
in cash flows from operating activities.
Despite the impact to profit over FY2020, $13.2m
related to non-cash impairments (refer to page 31 of
the Directors' Report). Through further disciplined
inventory and working capital management, the Group's
debt levels reduced. The Group remains in a resilient
financial position with $0.5m in net cash (FY19: net debt
of $24.8m) to continue to invest in improvements to its
systems, infrastructure, and capabilities. At balance date,
$13.1m of rental costs were accrued.
Dividends
On 23 March 2020, the Company announced that
its FY20 interim dividend had been deferred until 30
September 2020 and was subject to review again
before that date. Given the impact of COVID-19 and the
uncertain economic environment, in order to protect the
Company's balance sheet and liquidity in the interests
of shareholders, the Board has decided to further
defer payment of the FY20 interim dividend until 30
September 2021. The Board will continue to monitor
economic conditions and the Company's performance
and may revisit and change the date for payment of
the FY20 interim dividend if considered necessary or
desirable in the circumstances. The Board has also
decided not to declare a final dividend for FY20. The
Company’s objective is to restore a regular pattern
of dividend payments as performance improves and
earnings stabilise. Decisions on future dividends will
continue to be made in line with the Company's financial
framework and dividend policy.

30 MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT
STRATEGIES AND MITIGATION
The Group has a crisis management framework and
nominated crisis management team in place. Internal
resources are designated to identify and coordinate
responses to factors affecting the ongoing operations
of the Group. This framework was utilised to manage
events including bushfires and COVID-19 this year.
The Group is exploring and investing in better in-market
strategies as well as revamping its ranging and
increasing emphasis on sourcing and mix of product.
As part of the COVID-19 pandemic the Group has
executed business continuity plans as well as invested in
increased IT disaster recovery initiatives. Both business
continuity and disaster recovery processes will continue
to evolve to meet the needs of the business. External
consultants continue to be used to help with penetration
testing and to provide other technical assessments.
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 continues to have an intense focus on digital
channels and initiatives to meet consumer demand.
Following the completion of our ERP upgrade, planning is
now underway for further omni-channel enhancements.
Risk management
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:
RISK
External factors are not
appropriately recognised or
responded to appropriately
Disruption to supply chain and
inefficiencies in replenishment
strategies
Inadequate business continuity
program and/or disaster
recovery strategies
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
Environmental regulation
The Group has determined that no particular or significant environmental regulations
apply to it.
THIS PAGE AND OPPOSITE PAGE: JEWELLERY
FROM OUR SOUTHERN STAR COLLECTION

MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT 31
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:
• Adjusted same store sales reflect sales through store and online channels on
a comparable trading day basis
• Earnings before interest, tax, depreciation and amortisation (EBITDA)
• Earnings before interest and tax (EBIT)
• Underlying EBIT and Underlying Trading EBIT
• Significant item
CALCULATION OF UNDERLYING EBIT AND UNDERLYING TRADING EBIT
Underlying EBIT and Underlying Trading EBIT has been calculated as follows:
2020 2019
$000 $000
Statutory EBIT 14,079 21,115
Add back costs relating to:
Employee restructure costs 2,170 1,987
Direct, incremental costs relating to COVID-19 1,755 -
Emma & Roe closure costs - 258
CEO transition costs - 758
Remediation of employee benefits - 4,536
Impairment of aged inventory - 5,954
Underlying EBIT 18,004 34,608
Non-cash items included above
in underlying EBIT:
Impairment of stores and fixed assets 6,796 -
Impairment of inventory 6,437 -
Underlying EBIT adjusted for non-cash items 31,237 34,608
Less: Impact of AASB 16 Leases (5,551) -
Underlying trading EBIT 25,686 34,608

32 MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT
Information on Directors
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 directorship
experience. He is currently Chairman and
member of the Audit and Remuneration
committees of Flight Centre Travel Group
Limited, one of Australia’s largest 100 public
companies which operates in 23 countries and
is one of the world’s largest retail and corporate
travel providers. He is also a director of National
Roads and Motorists Association Limited (the
NRMA), Australia’s largest member-based
organisation with over 2.6 million members
offering a variety of member services and
operating a range of diverse businesses,
where he is also a member of the Audit and
Risk Management committee as well as the
Finance and Investment committee. This follows
an extensive executive career in tourism and
hospitality development and management.
Gary is Fellow of The Institute of Chartered
Accountants 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
FROM LEFT:
JANINE ALLIS, GARY SMITH,
EMMA HILL, SIR MICHAEL HILL
AND ROBERT FYFE
This section contains information on the
Directors of Michael Hill International Limited
in office during the financial year and until the
date of this report.

MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT 33
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
OTHER CURRENT DIRECTORSHIPS
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
2,693,640 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
651,745 Ordinary Shares
Jacqueline Elizabeth Naylor
Jacqueline was appointed a Director of the
Company on 15 July 2020.
Jacqueline is a highly regarded Australian retail
leader with over thirty years’ executive and board
experience in retail, fashion and eCommerce.
She is currently an independent non-executive
director of Myer and Cambridge Clothing and
was previously a director of PAS Group, Macpac
and the Virgin Australia Melbourne Fashion
Festival. This follows an extensive career as a
retail executive (and later an Executive Director)
at the Just Group, where Jacqueline oversaw
merchandising, marketing and brand strategies
across a portfolio of 800 stores.
OTHER CURRENT DIRECTORSHIPS
OF LISTED ENTITIES
Myer Holdings Limited
FORMER DIRECTORSHIPS IN LAST 3 YEARS
OF LISTED ENTITIES
none
RESPONSIBILITIES
Non-Executive and Independent Director
INTERESTS IN SHARES AND OPTIONS
160,000 Ordinary Shares
PENDANTS AND RING FROM OUR SPIRITS BAY
COLLECTION, DESIGNED BY CHRISTINE HILL

34 MICHAEL HILL INTERNATIONAL LIMITED 2020 FINANCIAL STATEMENTS
Our purpose:
"We're for love"
in all its forms...

MICHAEL HILL INTERNATIONAL LIMITED DIRECTORS' REPORT 35
Company secretaries
The Company has appointed two company
secretaries, Andrew Lowe and Emily Bird.
Andrew Lowe, who is also the Chief Financial
Officer of the Group, 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.
Emily Bird, who is also the General Counsel
of the Group, was appointed to the position of
Company Secretary on 31 July 2020. Emily joined
Michael Hill in September 2019 as Senior Legal
Counsel, and was appointed General Counsel
& Company Secretary in July 2020. She holds a
Bachelor of Laws, Bachelor of Arts (Psychology),
Graduate Diploma in Legal Practice and Graduate
Diploma in Applied Corporate Governance and Risk.
Emily has broad legal experience with in-house
roles at Lactalis Australia (formerly Parmalat
Australia), Virgin Blue (now Virgin Australia) and
a secondment at Tarong Energy (now Stanwell
Corporation), having started her legal career at
top-tier firm Clayton Utz.
Prior to Emily’s appointment, Richard Amos
was Company Secretary from 25 February 2020
to 31 July 2020.
CHRISTINE HILL IS THE DESIGN TALENT BEHIND SEVERAL ICONIC
MICHAEL HILL COLLECTIONS, INCLUDING 'KNOTS'
Meetings of Directors
The numbers of meetings of the Company's Board of Directors and of each
Board committee held during the year ended 28 June 2020, 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 16 16 - - 5 5
Sir R M Hill 16 16 - - - -
G W Smith 16 16 4 4 5 5
R I Fyfe 15 16 4 4 5 5
J S Allis 16 16 4 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
Robert Fyfe
c
Janine Allis Emma Hill
Robert Fyfe Gary Smith
c
designates chair of the committee.
THIS PAGE AND OPPOSITE PAGE: EARRINGS AND PENDANTS
FROM OUR KNOTS COLLECTION, DESIGNED BY CHRISTINE HILL

36 MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT
Our remuneration objectives are
to attract, motivate and retain executive talent;
reward the achievement of strategic objectives;
and alignment to shareholder value creation.

MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT 37
Audited
Remuneration Report
The Directors present the 2020 Michael Hill International
Limited remuneration report, outlining key aspects of our
remuneration policy and framework, and remuneration
awarded during the 2020 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 recommendations
to the Board on:
• the over-arching executive remuneration framework
• operation of the incentive plans which apply to senior
executives, 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, available
on the Company's Investor Relations Centre website at
investor.michaelhill.com
REMUNERATION OBJECTIVES
The following objectives inform the determination of
remuneration related decisions:
• Attract, motivate and retain executive talent
• Reward the achievement of strategic objectives
• Alignment to shareholder value creation.
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 2020 financial year, it was determined that
the KMPs of Michael Hill International were:
• Chief Executive Officer (CEO) - Daniel Bracken
• Chief Financial Officer (CFO) - Andrew Lowe
• Chief Operating Officer (COO) - Andrea Slingsby
Vanessa Brennan (Chief Brand & Strategy Officer)
became a KMP on 11 August 2020.
BRIDAL SETS FROM OUR
EVERMORE COLLECTION

38 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. Further details in relation to the review process including the most recent review, please refer
to the Services from remuneration consultants section below.
Remuneration levels are reviewed annually by the Committee through a process that considers individual, segment and
overall performance of the Group.
During the 2019-2020 financial year, the performance linked components of compensation for KMP comprised
approximately 11.1% of total payments to senior executives (FY19: 10.5%).
TEMPORARY SUSPENSION OF STI AND LTI AWARDS FOR SENIOR EXECUTIVES INCLUDING KMP
The Company was significantly impacted by the COVID-19 global pandemic, resulting in the closure of the entire store
network for a period during March to June 2020, and standing down a large portion of our team members during that
time. In response to those market conditions, the STI and LTI incentive programs for all senior executives, including KMP,
were suspended from 1 April 2020 for the financial year. Senior executives including KMPs had already been awarded
an STI payment in relation to the first half of the financial year in February 2020 prior to the COVID-19 related impacts
being experienced by the Company and will receive the resulting LTI award in relation to that first half; however they will
not receive any STI or LTI award for the second half of the financial year. The STI and LTI framework described below is
expected to recommence for the 2021 financial year but this will remain subject to Committee and Board determination.
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
CEO
70% of TFR
50% of STI earned
Short term incentive
potential value
Long term incentive
potential value
The weighting and potential of STI and LTI for KMP is:
CFO
50% of TFR
30% of STI earned
COO
50% of TFR
30% of STI earned
Other KMP
50% of TFR
30% of TFR

MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT 39
TEMPORARY REDUCTION OF BASE SALARY FOR
SENIOR EXECUTIVES INCLUDING KMP
In addition to the temporary suspension of STI and LTI
awards described above, each senior executive of the
Company, including KMPs, voluntarily reduced their salaries
by 20% for the period inclusive of April to June 2020.
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 70% STI component
is paid on an annual basis if the Group financial
performance target and performance hurdle/s are met.
The 30% STI for the individual KPI component is paid
biannually post the performance review. The Committee
review the PDPs of each Senior Executive to determine
achievement, entitlement and eligibility for payment.
The policy and framework cascades from the CEO
to Senior 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 and
subsequently on 24 October 2019. 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 and share
rights is conditional on continuing employment with the
Group. No options were issued during the reporting period.
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 30%
of the STI payment earned, except for KMPs whose
relevant percentage rate of the STI payment earned is
greater as detailed earlier in this report. 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. No exercise
price is payable upon the exercise of any share right.
Feature
Opportunity/ 30% of respective STI which is issued
Allocation to the executive (or a different percentage
rate for KMP as detailed earlier in this
report) by way of share rights which are
granted. Each share 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.
RINGS FROM OUR
WHITEFIRE COLLECTION

40 MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT
We remain
committed to
creating quality
jewellery for our
customers to
cherish.

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.
2020 2019 2018 2017 2016
$000 $000 $000 $000 $000
NPAT 3,059 16,498 1,557 29,654 16,771
NPAT from continuing operations 3,059 16,498 31,765 41,138 23,524
EBIT* 14,079 21,115 8,854 43,840 43,050
EBIT from continuing operations* 14,079 21,115 45,787 58,055 50,416
Underlying EBIT* 18,004 34,608 40,106 48,117 47,058
Dividends payments^ 5,817 19,365 19,371 19,264 17,490
Share price at year end (2016: nz$) $0.32 $0.54 $0.97 $1.11 $1.14
Return on shareholders equity 1.9% 9.4% 17.4% 20.9% 12.9%
Return on average total assets 0.7 % 4.3% 8.2% 10.5% 6.3%
* EBIT and Underlying EBIT are Non-IFRS information and are unaudited. Please refer to page 31 for an explanation of
Non-IFRS information and a reconciliation of EBIT and Underlying EBIT.
^ The 2020 dividend payment relates to the FY19 final dividend.
EBIT is considered the primary financial performance target in setting the STI. Profit amounts for 2016 to 2020 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.
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 are unlimited in term but capable of termination on three months'
notice (six months in the case of the CEO) and that the Group retains the right to terminate the contract immediately,
by making payment equal to three months' pay in lieu of notice (or six months’ in the case of the CEO). 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 contracts with all KMP (including the CEO) outline 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.
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 recommendations 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. The Company did not engage a remuneration consultant during the 2020 financial year.
MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT 41
THIS AND OPPOSITE PAGE: JEWELLERY FROM OUR
WILLOWS COLLECTION, DESIGNED BY CHRISTINE HILL

42 MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT
Share-
Post- based
Short-term Long-term employment payments
Salary & STI cash Non-monetary Total Long service Superannuation Termination Options Total Proportion Value of
fees bonus benefits leave benefits benefits and share remuneration options as
(relocation) rights performance proportion of
related remuneration
Non-executive Directors $ $ $ $ $ $ $ $ $ % %
Emma Jane Hill
2020 170,849 - - 170,849 - - - - 170,849 - -
2019 197,047 - - 197,047 - - - - 197,047 - -
Sir Richard Michael Hill
2020 97,989 - - 97,989 - - - - 97,989 - -
2019 98,523 - - 98,523 - - - - 98,523 - -
Gary Warwick Smith
2020 104,327 - - 104,327 - 9,911 - - 114,238 - -
2019 117,628 - - 117,628 - 11,175 - - 128,803 - -
Robert Ian Fyfe
2020 105,545 - - 105,545 - - - - 105,545 - -
2019 118,878 - - 118,878 - - - - 118,878 - -
Janine Suzanne Allis
2020 78,594 - - 78,594 - 7,467 - - 86,061 - -
2019 89,799 - - 89,799 - 8,533 - - 98,332 - -
Total Director
remuneration
2020 557,304 - - 557,304 - 17,378 - - 574,682 - -
2019 621,875 - - 621,875 - 19,708 - - 641,583 - -
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:
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 2019-20 year were $100,419 per annum. Where a Director serves as Chair on the People
Development and Remuneration Committee they are entitled to an additional payment of $20,747 per annum. Where a Director serves
as Chair on the Audit and Risk Committee they are entitled to an additional payment of $31,120 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-related compensation.
Directors’ fees cover all main board activities and membership of committees.
Non-executive directors are not provided with retirement benefits apart from statutory superannuation.
TEMPORARY REDUCTION IN REMUNERATION FOR NON-EXECUTIVE DIRECTORS
In response to the COVID-19 global pandemic market conditions impacting the Company in the 2020 financial year, all non-executive
director fees were reduced by 50% for the period from 1 April 2020 to 30 June 2020.

MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT 43
Share-
Post- based
Short-term Long-term employment payments
Salary & STI cash Non-monetary Total Long service Superannuation Termination Options Total Proportion Value of
fees bonus benefits leave benefits benefits and share remuneration options as
(relocation) rights performance proportion of
related remuneration
Non-executive Directors $ $ $ $ $ $ $ $ $ % %
Daniel Bracken, CEO
2020 905,142 134,092 - 1,039,234 10,980 25,481 - 15,324 1,091,019 12.29 1.40
2019 594,726 69,300 19,970 683,996 9,327 15,385 - - 708,708 9.78 -
Phil Taylor, CEO
(ceased 21 Sept 2018)
2019 192,680 58,508 - 251,188 8,830 6,731 - 71,794 338,543 17.28 21.21
Andrew Lowe, CFO
2020 429,075 40,021 - 469,096 3,790 25,481 - 9,728 508,095 7.88 1.91
2019 403,807 42,273 - 446,080 8,107 24,355 - 5,067 483,609 8.74 1.05
Andrea Slingsby, COO
2020 456,372 32,681 - 489,053 5,862 25,481 - 2,688 523,084 6.25 0.51
2019 217,708 25,900 - 243,608 3,597 11,538 - - 258,743 10.01 -
Vanessa Brennan, CB&CO
(ceased 9 Jan 2019)
2019 236,298 37,014 - 273,312 3,637 12,981 - 3,963 293,893 12.59 1.35
Matt Keays, CIO
(ceased 9 Jan 2019)
2019 174,788 13,372 - 188,160 3,128 12,981 - 8,154 212,423 6.30 3.84
Galina Hirtzel, GESC
(ceased 6 Aug 2018)
2019 30,160 2,982 - 33,142 445 2,885 - 1,908 38,380 7.77 4.97
Stewart Silk, GEHR
(ceased 3 Sept 2018)
2019 44,962 - - 44,962 625 4,327 - 2,714 52,628 - 5.16
Total KMP
remuneration
2020 1,790,589 206,794 - 1,997,383 20,632 76,443 - 27,740 2,122,198 9.74 1.31
2019 1,895,129 249,349 19,970 2,164,4 48 37,696 91,183 - 93,600 2,386,927 10.45 3.92
Total Director and
KMP remuneration
2020 2,347,893 206,794 - 2,554,687 20,632 93,821 - 27,740 2,696,880 7.67 1.03
2019 2,517,004 249,349 19,970 2,786,323 37,696 110,891 - 93,600 3,028,510 8.23 3.09
ANALYSIS OF BONUSES INCLUDED IN REMUNERATION
Details of the short-term incentive cash bonuses awarded as remuneration to each KMP are detailed below.
Target bonus Included in Amounts
available remuneration forfeited
KMP $ $ $
Daniel Bracken 438,984 134,092 304,892
Andrew Lowe 148,460 40,021 108,439
Andrea Slingsby 164,970 32,681 132,289

44 MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT
Additional statutory information
EQUITY INSTRUMENTS
All options or rights refer to options or rights 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 1,400,000 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 granted to KMPs as compensation for the financial year.
SHARE RIGHTS
The number of share rights issued to KMP and senior executives during the last financial year was 286,294 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 110,018 0.57
Andrew Lowe 33,463 0.57
Andrea Slingsby 19,301 0.57
RECONCILIATION OF OPTIONS AND SHARE RIGHTS HELD BY KMP
No options are held by KMP.
This table below details share rights that were issued, vested and forfeited during the year for each KMP.

Balance Issued Vested Forfeited Balance at
at start of during end of year
the year the year (unvested)
Number Number Number Number Number
Daniel Bracken - 110,018 - - 110,018
Andrew Lowe 17,298 33,463 - - 50,761
Andrea Slingsby - 19,301 - - 19,301
Total 17,298 162,782 - - 180,080
Share rights relating to the current reporting period are anticipated to be granted in late 2020. The number of shares
will depend on the Michael Hill International Limited’s share price over the five days prior to the grant date.

MICHAEL HILL INTERNATIONAL LIMITED REMUNERATION REPORT 45
VOTING OF SHAREHOLDERS AT LAST YEAR'S
ANNUAL GENERAL MEETING
The Company received 99.2% of “For” votes on its
remuneration report for the 2019 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:
2020 2019
Ernst & Young firm: $ $
Advisory fees 10,050 127,512
Total remuneration
for non-audit services 10,050 127,512
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 18 August 2020 in accordance
with a resolution of Directors as required by section 298 of
the Corporations Act 2001.
E. J. Hill, Chair
Brisbane
18 August 2020
BRIDAL SET FROM OUR
EVERMORE COLLECTION

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 28 June 2020, 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
18 August 2020
Auditor’s Independence Declaration
to the Directors of
Michael Hill International Limited
THIS PAGE:
BRIDAL SETS FROM OUR
EVERMORE COLLECTION
OPPOSITE PAGE:
MODEL WEARS EARRINGS
FROM OUR MARK HILL
COLLECTION

Financial
Statements
ABN 25 610 937 598
The Directors present the
consolidated financial statements
of Michael Hill International Limited
for the year ended 28 June 2020
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 – ADDITIONAL INFORMATION
47

48 MICHAEL HILL INTERNATIONAL LIMITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 JUNE 2020
NOTES 2020 2019
$000 $000
Revenue from contracts with customers 5 492,060 569,500
Other income 6(a) 20,574 1,555
Cost of goods sold (193,855) (216,468)
Employee benefits expense 6(b) (149,173) (163,177)
Occupancy costs (14,390) (60,587)
Marketing expenses (28,918) (33,732)
Selling expenses (18,701) (24,636)
Impairment of property, plant and equipment 9(b) (6,473) (289)
Impairment of other assets (1,582) (1,823)
Depreciation and amortisation expense 6(b) (55,611) (19,366)
Loss on disposal of property, plant and equipment (499) (619)
Other expenses (29,349) (29,083)
Finance costs 6(b) (9,598) (2,464)
Profit before income tax 4,485 18,811
Income tax expense 7 (1,426) (2,313)
Profit for the year 3,059 16,498
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Gains/(losses) on cash flow hedges 11(b) 434 (323)
Currency translation differences arising during the year 11(b) (1,716) 4,911
Other comprehensive income for the year, net of tax (1,282) 4,588
Total comprehensive income for the year 1,777 21,086
Total comprehensive income for the year is attributable to:
Owners of Michael Hill International Limited 1,777 21,086
Earnings per share for profit attributable to the
ordinary equity holders of the Company:
Basic earnings per share 21 0.79¢ 4.26¢
Diluted earnings per share 21 0.79¢ 4.25¢
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 FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 JUNE 2020 49
Consolidated statement of
financial position
NOTES 2020 2019
ASSETS $000 $000
Current assets
Cash and cash equivalents 8(a) 11,204 7,923
Trade and other receivables 8(b) 25,006 29,656
Contract assets 5(b) 625 701
Right of return assets 5(b) 108 291
Inventories 9(a) 178,742 179,503
Current tax receivables 9(e) 3,165 2,295
Other current assets 2,103 2,935
Total current assets 220,953 223,304
Non-current assets
Trade and other receivables 8(b) 10,727 6,985
Property, plant and equipment 9(b) 45,405 63,213
Right-of-use assets 10(a) 123,911 -
Deferred tax assets 9(d) 74,468 67,708
Intangible assets 9(c) 24,429 15,439
Contract assets 5(b) 1,048 1,438
Other non-current assets 677 1,106
Total non-current assets 280,665 155,889
Total assets 501,618 379,193
LIABILITIES
Current liabilities
Trade and other payables 8(d) 64,472 44,548
Contract liabilities 5(b) 25,974 26,054
Derivative financial instruments 8(f) 34 468
Current tax liabilities 9(f) 1,445 1,367
Provisions 9(g) 24,949 31,441
Deferred revenue 9(h) 367 1,252
Lease liabilities 10(b) 42,164 -
Total current liabilities 159,405 105,130
Non-current liabilities
Contract liabilities 5(b) 53,539 55,813
Borrowings 8(e) 10,681 32,704
Provisions 9(g) 8,339 6,947
Deferred revenue 9(h) - 1,847
Lease liabilities 10(b) 115,848 -
Total non-current liabilities 188,407 97,311
Total liabilities 347,812 202,441
Net assets 153,806 176,752
EQUITY
Contributed equity 11(a) 11,016 10,984
Reserves 11(b) 4,420 5,805
Retained profits 11(b) 138,370 159,963
Total equity 153,806 176,752
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

50 MICHAEL HILL INTERNATIONAL LIMITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 JUNE 2020
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 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 14(b)(i) - - - - (19,365) (19,365)
Option expense through share based
payments reserve 19(c) - 11 - - - 11
Issue of share capital on
vesting of share rights 490 (490) - - - -
Transfer option reserve to retained
earnings on forfeiture of options 11(a) 228 (228) - - - -
Share rights expense through
share based payments reserve 19(c) - 95 - - - 95
718 (612) - - (19,365) (19,259)
Balance at 30 June 2019 10,984 757 5,516 (468) 159,963 176,752
Adjustment on adoption of
AASB 16 (net of tax) 2(x) - - (43) - (13,019) (13,062)
Restated total equity
at the beginning of the financial year 10,984 757 5,473 (468) 146,944 163,690
Profit for the year - - - - 3,059 3,059
Currency translation differences - - (1,716) - - (1,716)
Currency forward contracts 8(f) - - - 145 - 145
Interest rate swaps 8(f) - - - 289 - 289
Total comprehensive income for the year - - (1,716) 434 3,059 1,777
Transactions with members
in their capacity as owners:
Dividends paid/provided 14(b)(i) - - - - (11,633) (11,633)
Issue of share capital on
vesting of share rights 11(a) 32 (32) - - - -
Transfer option reserve to retained
earnings on forfeiture of options 11(b) - (166) - - - (166)
Share rights expense through
share based payments reserve 19(c) - 166 - - - 166
Share rights forfeited 11(b) - (28) - - - (28)
32 (60) - - (11,633) (11,661)
Balance at 28 June 2020 11,016 697 3,757 (34) 138,370 153,806
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Consolidated statement of changes in equity
50 MICHAEL HILL INTERNATIONAL LIMITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 JUNE 2020

MICHAEL HILL INTERNATIONAL LIMITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 JUNE 2020 51
NOTES 2020 2019
$000 $000
Cash flows from operating activities
Receipts from customers (inclusive of GST and sales taxes) 547,258 618,416
Payments to suppliers and employees
(inclusive of GST and sales taxes) (451,577) (536,855)
95,681 81,561
Interest received 4 160
Other revenue 13,193 1,303
Interest paid (2,261) (2,474)
Income tax paid (3,974) (5,245)
Net GST and sales taxes paid (18,944) (36,336)
Net cash inflow from operating activities 12(a) 83,699 38,969
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 146 432
Payments for property, plant and equipment 9(b) (6,112) (10,753)
Payments for intangible assets 9(c) (11,241) (5,381)
Net cash (outflow) from investing activities (17,207) (15,702)
Cash flows from financing activities
Proceeds from borrowings 70,500 128,800
Repayment of borrowings (92,300) (132,000)
Principal portion of lease payments (35,520) -
Dividends paid to Company's shareholders 14(b) (5,817) (19,365)
Net cash (outflow) from financing activities (63,137) (22,565)
Net increase in cash and cash equivalents 3,355 702
Cash and cash equivalents at the beginning of the financial year 7,923 7,220
Effects of exchange rate changes on cash and cash equivalents (74) 1
Cash and cash equivalents at the end of the financial year 8(a) 11,204 7,923
The above consolidated cash flow statement should be read in conjunction with the accompanying notes.
Consolidated cash flow statement

52 MICHAEL HILL INTERNATIONAL LIMITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 JUNE 2020
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.
For the financial year the Group adopted a
weekly 'retail calendar' closing each Sunday. This
resulted in a change in reporting dates with a 52
week period ending on 28 June 2020.
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
Notes to the financial statements
Note 1 Corporate information
The consolidated financial statements of Michael Hill
International Limited and its subsidiaries (collectively, the
Group) for the year ended 28 June 2020 were authorised
for issue in accordance with a resolution of the Directors
on 18 August 2020. 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').

MICHAEL HILL INTERNATIONAL LIMITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 JUNE 2020 53
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) 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.
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
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.

54 MICHAEL HILL INTERNATIONAL LIMITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 JUNE 2020
• 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) 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. Right-of-use assets
are also incorporated into the calculation. 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 9.4% and
12.8%, depending on the geographical segment of
the assets.
(j) CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash on hand,
deposits held at call with financial institutions, other
short-term, highly liquid investments with original
maturities of three months or less that are readily
convertible to known amounts of cash and which
are subject to an insignificant risk of changes in
value, and bank overdrafts. Bank overdrafts are
shown within borrowings in current liabilities in the
statement of financial position when utilised.
(k) 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
Notes to the financial statements cont.
Note 2 Summary of significant
accounting policies continued
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 where
there is a legally enforceable right to offset current
tax assets and liabilities and where 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.
(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

MICHAEL HILL INTERNATIONAL LIMITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 JUNE 2020 55
• 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
• 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.
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 based on recoverability at a
product level and impair as appropriate.
(l) 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, 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 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 instruments)
• 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
Note 2 Summary of
significant accounting
policies continued

56 MICHAEL HILL INTERNATIONAL LIMITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 JUNE 2020
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.
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.
Notes to the financial statements cont.
Note 2 Summary of significant
accounting policies continued
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)
• 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.

MICHAEL HILL INTERNATIONAL LIMITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 JUNE 2020 57
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 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 13 for more details.
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 points) 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
(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.
(m) 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.

58 MICHAEL HILL INTERNATIONAL LIMITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 JUNE 2020
(o) LEASES
The Group assesses at contract inception whether
a contract is, or contains, a lease. That is, if the
contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration.
Group as a lessee
The Group applies a single recognition and measurement
approach for all leases, except for short-term leases
and leases of low-value assets which are recognised in
the profit or loss. The Group recognises lease liabilities
to make lease payments and right-of-use assets
representing the right to use the underlying assets.
(i) Right-of-use assets
The Group recognises right-of-use assets at the
commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted
for any remeasurement of lease liabilities. The
cost of right-of-use assets includes the amount
of lease liabilities recognised, initial direct costs
incurred, and lease payments made at or before
the commencement date less any lease incentives
received. Right-of-use assets are depreciated on a
straight-line basis over the lease term.
The right-of-use assets are also subject to
impairment. Refer to the accounting policies in Note 2(i).
If ownership of the leased asset transfers to
the Group at the end of the lease term or the
cost reflects the exercise of a purchase option,
depreciation is calculated using the estimated useful
life of the asset.
(ii) Lease liabilities
At commencement date of the lease, the Group
recognises lease liabilities measured at the present
value of lease payments to be made over the lease
term. The lease payments include fixed payments
(including in-substance fixed payments) less any
lease incentives receivable, variable lease payments
that depend on an index or a rate, and amounts
expected to be paid under residual value guarantees.
The lease payments also include the exercise price
of a purchase option reasonably certain to be
exercised by the Group and payments of penalties
for terminating the lease, if the lease term reflects the
Group exercising the option to terminate. Variable
lease payments that do not depend on an index
or a rate are recognised as expenses (unless they
are incurred to produce inventories) in the period
in which the event or condition that triggers the
payment occurs.
In calculating the present value of lease
payments, the Group uses its incremental borrowing
rate at the lease commencement date because
the interest rate implicit in the lease is not readily
Notes to the financial statements cont.
Note 2 Summary of significant
accounting policies continued
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.
(n) PROPERTY, PLANT AND EQUIPMENT
All property, plant and equipment is stated at
historical cost less depreciation and impairment.
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(i)).
Gains and losses on disposals are determined
by comparing proceeds with carrying amount. These
are included in profit or loss. When revalued assets
are sold, it is Group policy to transfer any amounts
included in other reserves in respect of those assets
to retained earnings.

MICHAEL HILL INTERNATIONAL LIMITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 JUNE 2020 59
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).
(q) GOVERNMENT GRANTS
Where government grants have been approved or
received, the Group releases to 'Other income' as
any prerequisite to the grant is met. This includes
recognition and timing of expenses as required.
During the year, the Group received grants in relation
to wage subsidies in all three regions. These grants
were recognised as income upon recognition of the
corresponding employee benefit expense.
(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.
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.
determinable. After the commencement date, the
amount of lease liabilities is increased to reflect
the accretion of interest and reduced for the lease
payments made. In addition, the carrying amount of
lease liabilities is remeasured if there is a modification,
a change in the lease term, a change in the lease
payment (e.g., changes to future payments resulting
from a change in an index or rate used to determine
such lease payments) or a change in the assessment
of an option to purchase the underlying asset.
The Group's lease liabilities are included at
Note 10(b).
(iii) Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition
exemption to its short-term leases of machinery and
equipment (i.e., those leases that have a lease term
of 12 months or less from the commencement date
and do not contain a purchase option). It also applies
the lease of low-value assets recognition exemption
to leases of office equipment that are considered to
be low value. Lease payments on short-term leases
and leases of low-value assets are recognised as
expense on a straight-line basis over the lease term.
The Group adopted AASB 16 using the modified
retrospective method of adoption from 1 July 2019.
As a result, the results for the comparative period
have been prepared on the basis of AASB 117 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.
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.
(p) 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).

60 MICHAEL HILL INTERNATIONAL LIMITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 JUNE 2020
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 2020 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).
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 19(b).
Notes to the financial statements cont.
Note 2 Summary of significant
accounting policies continued
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) Other long-term employee benefit obligations
The liabilities for long service leave and annual leave
that are not expected to be settled wholly within
12 months after the end of the year in which the
employees render the related service are measured
as the present value of expected future payments
to be made in respect of services provided by
employees up to the end of the reporting year using
the projected unit credit method. Consideration is
given to expected future wage and salary levels,
experience of employee departures and periods of
service. Expected future payments are discounted
using the Milliman G100 discount rates at the end
of the reporting period. Remeasurements as a result
of experience adjustments and changes in actuarial
assumptions are recognised in profit or loss.
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.

MICHAEL HILL INTERNATIONAL LIMITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 JUNE 2020 61
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 (Note 21(d)).
(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.
(x) CHANGES IN ACCOUNTING POLICIES AND
DISCLOSURES
The Group applied AASB 16 Leases 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 2020, 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 16 Leases
The Group adopted AASB 16 using the modified
retrospective method of adoption with the date of
initial application of 1 July 2019. Under this method, the
standard is applied retrospectively with the cumulative
effect of initially applying the standard recognised at the
date of initial application. The Group elected to use the
transition practical expedient to not reassess whether a
contract is, or contains a lease at 1 July 2019. Instead,
the Group applied the standard only to contracts that
were previously identified as leases applying AASB 117
and IFRIC 4 at the date of initial application.

62 MICHAEL HILL INTERNATIONAL LIMITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 JUNE 2020
• The net effect of these adjustments had been
adjusted to retained earnings ($13,019).
Upon adoption of AASB 16, the Group applied a
single recognition and measurement approach for
all leases except for short-term leases and leases
of low-value assets. The standard provided specific
transition requirements and practical expedients,
which have been applied by the Group.
Leases previously classified as finance leases
The Group did not change the initial carrying amounts
of recognised assets and liabilities at the date of initial
application for leases previously classified as finance
leases (i.e., the right-of-use assets and lease liabilities
equal the lease asses and liabilities recognised under
AASB 17). The requirements of AASB 16 were applied
to these leases from 1 July 2019.
Leases previously accounted for as
operating leases
The Group recognised right-of-use assets and lease
liabilities for those leases previously classified as
operating leases, except for short-term leases and
leases of low-value assets. The right-of-use assets
for most leases were recognised based on the
carrying amount as if the standard had always
been applied, apart from the use of incremental
borrowing rate at the date of initial application. In
some leases, the right-of-use assets were recognised
based on the amount equal to the lease liabilities,
adjusted for any related prepaid and accrued lease
payments previously recognised. Lease liabilities
were recognised based on the present value of
the remaining lease payments, discounted using
the incremental borrowing rate at the date of initial
application.
The Group also applied the available practical
expedients wherein it:
• Used a single discount rate to a portfolio of leases
with reasonably similar characteristics
• Relied on its assessment of whether leases are
onerous immediately before the date of initial
application
• Applied the short-term leases exemptions to
leases with lease term that ends within 12 months
of the date of initial application
• Excluded the initial direct costs from the
measurement of the right-of-use asset at the date
of initial application
• Used hindsight in determining the lease term
where the contract contained options to extend or
terminate the lease.
Notes to the financial statements cont.
Note 2 Summary of significant
accounting policies continued
AASB 16 Leases addresses the recognition and
measurement of assets and liabilities for all leases
with a term of more than 12 months, unless they are of
low value. It also contains the disclosure requirements
for lessees and lessors. AASB 16 supersedes:
a) AASB 117 Leases;
b) Interpretation 4 Determining whether an
Arrangement contains a Lease;
c) SIC-15 Operating Leases - Incentives; and
d) SIC-27 Evaluating the Substance of Transactions
involving the Legal Form of a Lease.
The effect of adoption of AASB 16 on the statement
of financial position increase/(decrease) as at 1 July
2019:
$000
Assets
Right-of-use assets 144,326
Property, plant and equipment (3,060)
Trade and other receivables 963
Deferred tax assets 5,375
Total assets 147,604
Liabilities
Trade and other payables 25
Deferred revenue (2,810)
Lease liability 168,054
Provisions (4,603)
Total liabilities 160,666
Equity
Foreign currency translation (43)
Retained earnings (13,019)
Total equity (13,062)
• Right-of-use assets of $144,326 were recognised
and presented separately in the statement of
financial position.
• Property, plant and equipment reduced by $3,060
in relation to fit out contributions received from
landlords previously recognised as deferred
revenue and recalculation of the make good asset.
• Deferred tax assets increased by $5,375 due to the
deferred tax impact of the changes in assets and
liabilities.
• Lease liabilities of $168,054 were recognised, with
$34,017 as a current liability and $134,037 as a
non-current liability.
• Deferred revenue of $2,810 relating to lease incentive
revenue was derecognised.
• Provisions of $4,603 related to straight line leasing
adjustments for previous operating leases were
derecognised.