Trading Update

ASX AND NZX ANNOUNCEMENT

CONTINUED STRONG PERFORMANCE
DELIVERING MATERIAL PROFIT GROWTH


Second Quarter Business Update

14 January 2021
Michael Hill International Limited (ASX/NZX: MHJ) is pleased to provide a business update, together with its second
quarter trading update for the period ended 27 December 2020.

KEY POINTS
• Significant EBIT growth – The Company expects FY21H1 Group EBIT
1
of $56m to $60m, with comparable EBIT
2
for
the half of $41m to $45m (FY20H1: $31.6m), representing 30% - 40% EBIT growth.
• Solid growth in same store sales in all markets and channels – Same store sales were up 6.3% for the half and up
5.6% for the quarter against prior year, with an outstanding performance in Australia.
• Sustained margin improvement – Margin growth in all markets and channels of 150 to 250 bps for the half against
prior year, underpinned by the strategic initiatives implemented over the last eighteen months.
• Growth maintained in digital sales – For the half, online sales were up 102%, with digital initiatives continuing to
deliver increased sales and margin across all markets. Digital channels now represent 5.8% of total sales
(FY20H1: 2.8%).
• Continued growth of branded collections – Branded collections represented 38.4% of total product sales for the
half (FY20H1: 35.4%).
• Strong balance sheet and ongoing disciplined cost focus – Diligent management of all expenditure, working capital,
inventory levels and a sustained, deliberate focus on CODB delivered a significant cash position at half year end.
• Canadian segment impacted by temporary store closures – In accordance with COVID-19 government directives,
21 stores progressively closed through November and December, and a further 25 stores closed from Boxing Day.
• Store portfolio management – No stores permanently closed or opened in the quarter, with a network total of 289
stores across all markets at the end of the half (FY20H1: 304).


Global Store Network Update

In relation to temporary store closures in each market:
Australia: During the quarter, 28 Melbourne stores reopened in late October and saw a strong return to trade.
In addition, 8 South Australian and 1 New South Wales store closed for a short period of time. All 154 Australian
stores were trading at the end of the quarter (FY20Q2: 165).
New Zealand: None of the 49 stores were temporarily closed for the quarter (FY20Q2: 52).
Canada: Of the 86 stores, 21 stores progressively closed through November and December, and a further 25
stores closed from Boxing Day, with 40 stores trading at the end of the quarter (FY20Q2: 87).
It should be noted that during temporary store closures, a number of initiatives have been successfully deployed (virtual
selling, click & reserve, contactless pick-up and ship from store) and leveraged to maximise sales opportunities.

1
Unaudited and pre-AASB16
2
Unaudited, pre-AASB16 and excludes gross wage subsidies received in three jurisdictions


Wage Remediation Program

Given the strength of trade through the critical Christmas period and the Company’s strong balance sheet position, the
program of remediation work has resumed. Impacted individuals will be contacted over the coming weeks with
payments to follow.


Payment of Deferred Dividend Debt

Payment of the FY20 interim dividend originally payable in March 2020 was deferred to preserve cash as the global
pandemic took hold. Given the Company’s first half FY21 trading performance and cash position, the Board has resolved
to pay this outstanding debt on 29 January 2021. This dividend will be paid to those shareholders on the register as at
the record date of 13 March 2020.


Executive Leadership Update

Vanessa Brennan and Andrea Slingsby are leaving the business to pursue new external opportunities. The Company
would like to thank both Vanessa and Andrea for their contributions to the business over the past few years.

The Company is pleased to announce two new members of the Michael Hill Executive Leadership team. Amy Sznicer is
joining in the role of Chief Retail Officer, and Jo Feeney in the role of Chief Marketing Officer, and both bring deep retail
experience to their roles.


Commenting on the result, Michael Hill International Limited, CEO Daniel Bracken said:
“Following a strong first five months, it was particularly pleasing to see all markets deliver positive same store sales
growth for the all-important Christmas trading period. I am delighted that our strong trading performance across the
half, coupled with our unwavering focus on costs, has in turn delivered material EBIT growth for the Group, in spite of
challenging trading conditions worldwide.

“All areas of the business have contributed to this outstanding performance, as the rhythm of the business and our
strategic initiatives operated in unison. Furthermore, the disciplined in -store execution by our dedicated retail teams
delivered impressive results during the critical last few weeks of December. These results reaffirm our continued focus
on a balance of both margin and sales growth, underpinned by a number of our strategic initiatives - brand, digital
transformation, loyalty, retail fundamentals, and product mix.

“As we emerge from our critical trading period, with a stronger balance sheet, a leaner operating model and evolving
strategies, I’m looking forward to welcoming two new leaders, who together with our existing executives, will continue
to transform and inspire the business for growth.

“Considering the global challenges over the last year, I couldn’t be prouder of the dedication, energy and resilience
consistently demonstrated by our teams, as we prioritise best-in -class health and safety protocols and continue to delight
our loyal customers. All of our global markets were directly impacted by the pandemic in the first half, and I would like
to make special mention of our Victorian and now our Canadian teams, who have weathered extended periods of
disruption for both themselves and their families.”

SEGMENT BREAKDOWN

Revenue for retail operations for FY21Q2 (thirteen week trading period ended 27 December 2020):


$m $m

The following figures are in Australian dollars

Last Year This Year
% Var
Total same stores AUD 184.9 195.3 5.6%
Total all stores AUD 202.8 198.0 -2.4%



Same store figures in local currency



Australia same stores AUD 98.3 109.8 11.6%
New Zealand same stores NZD 43.2 44.0 1.8%
Canada same stores CAD 41.2 42.0 1.9%



All stores figures in local currency



Australia all stores AUD 105.5 110.2 4.4%
New Zealand all stores NZD 43.8 43.9 0.1%
Canada all stores CAD 50.3 44.2 -12.1%



Exchange rates used for FY21Q2:

New Zealand

1.06 1.06

Canada

0.90 0.95


Revenue for retail operations for FY21H1 (twenty-six week trading period ended 27 December 2020):


$m $m

The following figures are in Australian dollars

Last Year This Year
% Var
Total same stores AUD 293.6 312.1 6.3%
Total all stores AUD 326.5 317.5 -2.8%



Same store figures in local currency



Australia same stores AUD 155.5 174.2 12.0%
New Zealand same stores NZD 66.5 68.4 2.8%
Canada same stores CAD 67.8 70.3 3.6%



All stores figures in local currency



Australia all stores AUD 173.7 175.1 0.8%
New Zealand all stores NZD 69.9 69.3 -0.9%
Canada all stores CAD 78.2 73.7 -5.7%



Exchange rates used for FY21H1:

New Zealand

1.06 1.07

Canada

0.90 0.95




Same store sales reflect sales through store and online channels on a comparable trading day basis and a proportional allocation of
Professional Care Plan (PCP) revenue and accounting adjustments, and are unaudited. Same store sales do not include permanent or
temporary store closures on a same trading day basis.

The above figures for all store sales represents two months sales results with accounting adjustments plus December preliminary
sales figures prior to final accounting adjustments, and are unaudited. All stores figures stated above include the PCP revenue
recognised during the period and sales through our store and online channels. The PCP income recognition pattern is based on
existing estimates and is subject to ongoing management review and adjusted at half-year/year-end as required.

This announcement is authorised for release by the Board.

ENDS

For more information, please contact:


Investors:
Andrew Lowe
CFO & Company Secretary
+61 7 3114 3505
andrew.lowe@michaelhill.com.au


Investors:
Anthea Noble
Head of Investor Relations
+61 438 770 704
anthea.noble@michaelhill.com.au

Media:
Mark Rudder
+61 411 362 362

ABOUT MICHAEL HILL INTERNATIONAL LIMITED

Michael Hill International was founded by Sir Michael Hill in 1979 when he opened his first jewellery store in Whangarei,
New Zealand. The Group currently has 289 stores globally across Australia, New Zealand and Canada. The Group’s global
headquarters, including its wholesale and manufacturing divisions, are located in Brisbane, Australia. The Company is
listed on the ASX (ASX:MHJ) and the NZX (NZX:MHJ).

www.investor.michaelhill.com

Disclaimer
Certain statements in this announcement constitute forward-looking statements. Forward-looking statements are statements (other
than statements of historical fact) relating to future events and the anticipated or planned financial and operational performance of
Michael Hill International Limited and its related bodies corporate (the Company). 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 Company’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 Company 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 Company’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
Company’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 Company operates; the
protection and strengthening of the Company’s intellectual property rights, including patents and trademarks; the future adequacy
of the Company’s current warehousing, logistics and information technology operations; changes in laws and regulations or any
interpretation thereof, applicable to the Company’s business; increases to the Company’s effective tax rate or other harm to the
Company’s business as a result of governmental review of the Company’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 Company 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
Company’s behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere
in this announcement.


Michael Hill International Limited ABN 25 610 937 598
7 Smallwood Place, Murarrie, QLD 4172