Michael Hill International Limited/Announcement

FY21 Preliminary Final Report

Full Year Results22 August 2021MHJConsumer Discretionary

MICHAEL HILL INTERNATIONAL LIMITED
ABN 25 610 937 598
APPENDIX 4E
RESULTS FOR ANNOUNCEMENT TO THE MARKET
REPORTING PERIOD
Reporting period:
Previous reporting period:
RESULTS FOR ANNOUNCEMENT TO THE MARKET
$'000
Revenue from contracts with customersUp13.1%to556,486
Earnings before interest and taxation (EBIT)*Up414.2%to72,398
Net profit after tax for the period attributable to membersUp1,381.8%to45,328
BRIEF EXPLANATION OF FIGURES REPORTED ABOVE TO ENABLE THE FIGURES TO BE UNDERSTOOD
DIVIDENDS
Amount per
security
Franked amount
per security
Interim dividend for year ended 27 June 2021 declared and paid (cents per share)1.5-
Final dividend for year ended 27 June 2021 declared (cents per share)3.0-
NET TANGIBLE ASSETS
20212020
Net tangible asset backing per ordinary security$0.14$0.01
Chair
https://edge.media-server.com/mmc/p/j7yxdaxb
Media & Investors: Anthea Noble
Head of Investor Relations
+61 7 3114 3500
www.michaelhill.com.au
www.michaelhill.co.nz
www.michaelhill.ca
www.michaelhill.com
www.medleyjewellery.com.au
http://investor.michaelhill.com
12 months ending 27 June 2021
12 months ending 28 June 2020
This report is based on the consolidated financial statements which have been audited and an unqualified opinion given. For commentary
on the results, please refer to the attached full financial report for all other disclosures in respect of the Appendix 4E.
R. I. Fyfe
Brisbane
Webcast scheduled to take place at 10.00am (AEST) on Monday, 23 August 2021. Please use the following link to register.
20 August 2021
The interim dividend for the year ended 28 June 2020, originally deferred to 30 September 2021 for payment, was paid on 29 January
2021.
Net tangible assets were calculated excluding the Group's right-of-use assets relating to leases under AASB16
Leases and includes lease
liabilities.
*EBIT is non-IFRS information and is unaudited. Please refer to non-IFRS information in the Directors' Report for an explanation of non-IFRS information and a
reconciliation of EBIT.
APPENDIX 4E 2021 MICHAEL HILL GROUP

MICHAEL HILL INTERNATIONAL LIMITED
ABN 25 610 937 598
DIRECTORS' REPORT AND ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED 27 JUNE 2021
TABLE OF CONTENTS
CORPORATE DIRECTORY
1
DIRECTORS' REPORT
2
AUDITOR'S INDEPENDENCE DECLARATION
19
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
20

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
21
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
22
CONSOLIDATED STATEMENT OF CASH FLOWS
23
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
24
DIRECTORS' DECLARATION
59

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.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP

MICHAEL HILL INTERNATIONAL LIMITED
CORPORATE DIRECTORY
DIRECTORS
R I Fyfe
B.Eng, F.E.N.Z. Chair
Sir R M Hill K.N.Z.M.
E J Hill B.Com., M.B.A.
G W Smith B.Com., F.C.A., F.A.I.C.D.
J E Naylor (appointed 15 July 2020)
D Bracken (appointed 28 June 2021)
COMPANY SECRETARIES
A Lowe
BCom, LLB (Hons), MAppFin, CA, CTA
PRINCIPAL REGISTERED OFFICE IN AUSTRALIA
Metroplex on Gateway
7 Smallwood Place
Murarrie QLD 4172
Australia
Telephone +61 7 3114 3500
Fax +61 7 3399 0222
SHARE REGISTRAR
Computershare Investor Services Pty Ltd
Level 1
200 Mary Street
Brisbane QLD 4000
1300 552 270 (within Australia)
+61 3 9415 4000 (outside of Australia)
AUDITOR
Ernst & Young
Level 51
111 Eagle Street
Brisbane QLD 4000
SOLICITOR
Allens
Level 26
480 Queen Street
Brisbane QLD 4000
BANKERS
Australia and New Zealand Banking Group Limited
ANZ Banking Group (New Zealand) Limited
HSBC Australia Limited
Bank of Montreal
Bank of America
WEBSITES
www.michaelhill.com.au
www.michaelhill.co.nz
www.michaelhill.ca
www.michaelhill.com
www.medleyjewellery.com.au
http://investor.michaelhill.com
EMAIL
online@michaelhill.com.au
E Bird LLB (Hons), BA (Psych), GradDipLegalPrac,
GradDipAppCorpGov
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 1

MICHAEL HILL INTERNATIONAL LIMITED
DIRECTORS' REPORT
27 JUNE 2021
PRINCIPAL ACTIVITIES
DIVIDENDS
20212020
$'000$'000
- 5,817
5,8165,817
11,644-
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
REVIEW OF OPERATIONS
Key Financial Results
•
•
•
•
•
•
•
•
Operational Performance
•
•
•
•
•
•
The directors have declared the payment of a final dividend of AU 3.0 cents per fully paid ordinary share
(2020: no final dividend declared). The final dividend will be unfranked for Australian shareholders and fully
imputed for New Zealand shareholders. The aggregate amount of the proposed dividend expected to be
paid on 24 September 2021 out of retained earnings, but not recognsied as a liability at year end, is:
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 27 June 2021.
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 paid to members during the financial year were as follows:
Interim dividend for the year ended 27 June 2021 of AU 1.5 cents (2020: AU 1.5 cents) per fully paid share
paid on 26 March 2021 (2020: 29 January 2021).
No final dividend was declared for the year ended 28 June 2020 (2019: AU 1.5 cents per fully paid share).
Information on likely developments in the Group’s operations and the expected results of operations have been included in the Operational
Review and Strategic Update sections of this report.
In Australian dollars, the Group has reported operating revenue of $556.5m (2020: $492.1m) for the 2021 financial year, producing a net profit
after tax (NPAT) of $45.3m (2020: $3.1m). The Group reported EBIT* of $72.4m for the year ended 27 June 2021 (2020: $14.1m) an increase of
$58.3m, largely driven by a lift in gross profit of $50.7m to $348.9m (2020: $298.2m). Comparable EBIT* increased to $56.6m (2020: loss of
$5.2m).
The Group achieved the following key outcomes for the 2021 financial year:
Statutory net profit after tax of $45.3m (2020: $3.1m).
Extensive temporary store closures in Eastern Canada, together with sporadic closures across Australia, culminating in 10,447 lost trading
days for the year.
One new store opened and six under-performing stores were closed during the year, giving a network total of 285 stores across all
markets (2020: 290).
*EBIT and Comparable EBIT are non-IFRS information and are unaudited. Please refer to non-IFRS information section in this report for an explanation of non-
IFRS information and a reconciliation of EBIT and Comparable EBIT.
Product enhancements saw our unique to Michael Hill jewellery, branded collection sales climb to 42.1% of total sales for the full year
(2020: 37.3%).
Re-engineering our global supply chain – Canadian 3PL distribution centre to open in advance of Christmas trading.
Strong balance sheet with a healthy net cash position of $72.4m (2020: $0.5m).
Final dividend of AU 3.0 cents per share declared, resulting in total dividends for the year of AU 4.5 cents per share.
Digital sales increased by 53.4% to a record $34.8m, representing 6.3% of total sales, up from 5.0% last year.
Loyalty strategy continues to deliver –
Brilliance by Michael Hill now over 800,000 members (2020: ~200,000).
EBIT increased to $72.4m (2020: $14.1m).
Group operating revenue increased 13.1% to $556.5m (2020: $492.1m), with 10,447 lost store trading days.
Group same store sales were up 8.6% for the year, with H1 +6.3% and H2 +13.2%.
Group gross margin increased by 210bps to 62.7% (2020: 60.6%), underpinned by our strategic initiatives.
Maintained target inventory levels at $171.2m (2020: $178.7m).
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 2

Impact of COVID-19
SEGMENT RESULTS
Australian Retail Performance
OPERATING RESULTS (AU $'000)
20212020201920182017
312,264 266,610 313,587 325,709 321,981
194,149 161,030 194,052 206,303 201,707
62.2%60.4%61.9%63.3%62.6%
62,88927,41032,91748,62151,688
20.1%10.3%10.5%14.9%16.1%
New Zealand Retail Performance
OPERATING RESULTS (NZ $'000)
20212020201920182017
127,067 106,696 120,064 125,239 121,970
78,771 63,641 73,011 77,673 75,204
62.0%59.6%60.8%62.0%61.7%
35,45121,06724,12527,80027,836
27.9%19.7%20.1%22.2%22.8%
Gross margin for the year was 62.2% (2020: 60.4%), which is a significant improvement on both FY19 and FY20.
At year end, of the 150 Australian stores (2020: 155), 30 NSW and 2 NT stores were temporarily closed. Currently, 46 NSW, 27 VIC, and 4 ACT
are temporarily closed.
Sales from the Group’s Professional Care Plan (PCP) increased to $30.3m (2020: $24.0m) with an amount of $27.3m (2020: $27.5m)
recognised as revenue for the full year. At 27 June 2021, a deferred amount of $76.6m remained on the balance sheet (2020: $73.8m).
The Group opened one new store in Canada and closed six under-performing stores, resulting in 285 stores at 27 June 2021 (2020: 290).
The Group continues to monitor the situation throughout the geographies in which it operates. Uncertainty remains as to the future impact of
COVID-19 and the ability to operate bricks-and-mortar stores during this period. The Group continues to adhere to local and national
government guidance in relation to any future impacts which would temporarily close stores.
As a % of revenue
In New Zealand, segment revenue increased by 19.1% to NZ$127.1m (2020: NZ$106.7m) and same store sales increased by 7.1% for the year.
This result represents significant outperformance against FY17, FY18 and FY19. It should also be noted that during the year, 16 Auckland stores
were required to temporarily close on three separate occasions resulting in 464 lost store trading days.
Five underperforming stores permanently closed during the period, resulting in 150 stores at 27 June 2021.
Revenue
Gross margin
Gross margin as a % of revenue
EBIT
As a result of Government mandated lockdowns, the Michael Hill global store network suffered 10,447 lost store trading days. Despite the
impact of disrupted trading conditions and the reduced global store network, total revenue grew by 13.1% to $556.5m (2020: $492.1m) as the
Group continues to elevate, modernise the brand and transform the customer journey.
Following the FY20 global store network shutdown, the Group delivered significant same store sales growth across all four quarters of FY21.
For the year, the Group delivered same store sales growth of +8.6% and gross margin increased by 210 bps to 62.7% for the group. These
results demonstrate the growth initiatives underpinning the seven strategic pillars are firmly embedded in the Group. These initiatives have
created a sustainable platform for sales growth and margin expansion through the success of our loyalty program, continued penetration of
our online business, acceleration of retail fundamentals, and product evolution.
The Group’s online business exceeded expectations in outperforming 2020, resulting in another year of record digital sales of $34.8m and
now represents 6.3% of total sales. Website traffic increased by 35.3% against prior year, with customers continuing to utilise our enhanced
online platform. During the year, the Group launched "ship from store", "click and reserve" and in-store appointment capabilities, and
enhanced its "virtual selling" offering to expand the Group’s omni-channel ecosystem.
The Group continues to prioritise product evolution and creating uniquely Michael Hill jewellery, with branded collections now representing
42.1% of total sales for the year (2020: 37.3%). Our merchandise team have been refining and improving our product offering, ranging and
assortment whilst ensuring our inventory levels are maintained. This saw delivery of the targeted inventory range, with a holding of $171.2m
(2020: $178.7m) at year end.
The Group has strengthened its balance sheet, with a year-end net cash position of $72.4m (FY20: $0.5m) and nil debt. During the year, the
Group also entered into a new financing facility, jointly funded by ANZ and HSBC. This new $70m facility is currently undrawn, with a term to
February 2024. Furthermore, the Group has strategically reviewed the in-house Canadian credit program to de-risk the balance sheet – the
sale of the credit book and partnering with a new credit provider is nearing conclusion.
During the period, the Group received financial support and assistance from its suppliers, landlords, and local governments. A number of
landlords and suppliers provided extended payment terms. These agreements have concluded with no material amounts outstanding.
Additionally, landlords have provided support in the form of rental abatements.
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.
Revenue
Gross margin
Gross margin as a % of revenue
EBIT
As a % of revenue
In Australia, segment revenue increased by 17.1% to $312.3m (2020: $266.6m) and same store sales increased by 13.0% for the year. This
result is a credit to the segment, as it saw 3,458 lost store trading days due to various government mandated store closures across the
country.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 3

Canada Retail Performance
OPERATING RESULTS (CA $'000)
20212020201920182017
118,445110,799133,146130,762112,721
72,64363,99180,72681,57669,078
61.3%57.8%60.6%62.4%61.3%
15,074(2,412)9,79714,60512,386
12.7%(2.2)%7.4%11.2%11.0%
•
CASH, CASH FLOW AND DIVIDENDS
Dividends
STRATEGIC UPDATE : EMPHASIS ON GROWTH AND MARGIN
1.
2.
3.
4.
5.
6.
One store was opened in Canada during the period as follows:
The Board has previously stated its intention to restore dividend payments to historic levels as the pandemic recovery becomes more certain.
After taking into consideration sales and margin performance, the strength of the balance sheet, and while also recognising the risk of
ongoing trading disruption, the Board has decided to declare a final dividend of AU 3.0 cents per share unfranked, fully imputed with conduit
foreign income.
There were 49 stores trading at 27 June 2021. Currently, all New Zealand stores are temporarily closed, due to government mandated
lockdowns.
EBIT
As a % of revenue
In Canada, segment revenue increased by 6.9% to CA$118.4m (2020: CA$110.8m) and same store sales increased by 6.8% for the year. This
segment was heavily impacted by temporary store closures in Eastern Canada, with 6,525 lost store trading days for the year. By early July, all
86 stores were open and have remained trading, with our strategic focus now returning to the productivity opportunity in the market.
One underperforming store permanently closed during the period, resulting in 86 stores at 27 June 2021.
Gross margin for the year was 61.3% (2020: 57.8%), which is a significant improvement on both FY19 and FY20.
Avalon, Newfoundland
Net operating cash inflows of $149.2m increased from prior year of $76.1m. This is largely due to improvement of receipts from customers
through trade and working capital management.
Gross margin for the year was 62.0% (FY20: 59.6%), resulting in the strongest margin in the last five years.
Revenue
Gross margin
Gross margin as a % of revenue
The roll out of our new ERP platform in early FY21, was the enabler for Omni-channel at Michael Hill. Across the year, we successfully
tested and trialled “virtual selling”, “click and reserve”, and “ship from store”. These initiatives will now be progressively rolled out across
our global network. Further connecting our physical and digital businesses we will be launching “click and collect” for Christmas 2021,
delivering incremental sales and enhanced customer experience.
While the
Brilliance by Michael Hill Loyalty program is only 18 months old, membership has already grown to over 800,000. Acquisition
has been our priority and while this will continue to be a key focus, the business is now turning its attention to the opportunities of
activation and retention. Our early insights already provide confidence that the program is resonating with our customers, delivering
increased frequency, larger baskets, and higher margins. Predicative analytics and increased personalisation are being enabled by
investment in data analytics capability and artificial intelligence to deliver further growth in the business.
Product Evolution is the foundation of a customer-led retail strategy, and is critical to continued sales and margin growth. The business
will maintain its focus on uniquely Michael Hill branded product as a key differentiator in the categories and markets in which we operate.
The business now delivers regular product newness to excite our customers and increase sales, with significantly lower inventory and
higher margins. Our Australian manufacturing division has been reinvigorated delivering new bridal collections and increased speed to
market, underpinned by a focus on craftsmanship, quality and local artisans and still achieving improved margins.
Through further disciplined inventory and working capital management, the Group remains in a resilient financial position with $72.4m in net
cash (2020: $0.5m) to continue to invest in improvements to its systems, infrastructure, and capabilities.
The seven strategic pillars are underpinned by initiatives that continue to deliver a transformation agenda focused on sales growth and
margin expansion, driving efficiencies within the business, elevating the Michael Hill brand and enabling a true omni-channel customer
experience:
The elevation of the Michael Hill Brand is gaining traction, as it continues to evolve into a modern, differentiated, omni-channel jewellery
brand. Transitioning our brand messaging from discount-led promotions to quality and aspirational brand-led campaigns is key to
enticing a deeper customer base, generate higher average transaction value (ATV) and margin growth.
Digital is at the forefront of our transformation with an emphasis on customer experience, product offering, and fulfilment. Following
another year of exceptional growth, investment in our highest profit margin channel continues to focus on incremental traffic, higher
conversion rates, and increased transaction value. Our early foray into 3rd party digital channels has provided the confidence to develop
an integrated marketplace solution that will be rolled out in the first half of FY22. Looking further afield, we have identified opportunities
to explore new digital channels and markets.
With a portfolio of 285 stores across three countries, bricks and mortar retail is at the core of the Michael Hill business. Our Retail
Fundamentals strategy is focused on driving increased sales, higher margins, lower costs, and a modern, differentiated customer
experience, all underpinned by our new retail incentive scheme. The key retail metrics of ATV, IPS and conversion all increased in all
markets in FY21 and will continue to be a key area of focus.
This represents total dividends for the year of AU 4.5 cents per share and lays the foundation for a sustainable dividend profile going forward,
subject to the impacts of ongoing trading disruptions.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 4

7.
RISK MANAGEMENT
RiskStrategies and mitigation
NON-IFRS FINANCIAL INFORMATION
The Cost Conscious Culture exists across every aspect of the Group. We continue to optimise the global supply chain, improve the
global store network, and enhance our credit propositions globally. The new Canadian 3PL facility will be fully operational for peak
Christmas trade - servicing both online customers and stores, optimising inventory, reducing logistics costs, and enhancing overall
Canadian productivity and customer experience.
Inability to adjust to the rapidly changing consumer segment
and retail environment
The Group continues to have an intense focus on digital channels and
initiatives to meet consumer demand. The Group is investing in new omni-
channel initiatives, including responding to key disruptions of trading due to
COVID-19.
Breach of regulation or law in one of our jurisdictions in an
increasingly complex legal compliance environment
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.
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 Group 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. Any new legislative requirements or
rectification initiatives have dedicated teams focussed on ensuring our
compliance.
Theft appeal of our product increases during periods of
financial hardship and uncertainty.
Our focus is on the safety and security of our staff and we are investing in
initiatives and processes that improve the overall security of our stores, and
contribute to the safety of our staff. We work with local law enforcement
bodies and other eternal parties to better the overall retail environment for
our staff and customers.
Increase in cyber attacks disrupting operations and causing
financial distress
The Group has invested in new technologies and sought to remove
vulnerable points of attack throughout its digital network. External parties
are brought in to boost our capabilities, including both proactive and
reactive responses to cyber attacks.
Penetration testing and disaster recovery planning are built into our
operating rhythm to further prepare and respond to attacks.
The Group has a COVID-19 crisis management team focussed on
monitoring the status in key counties where it operates and has supply chain
impacts. Where possible, we seek to leverage government financial
assistance for our staff. Furthermore, we are working closely with our supply
chain to support suppliers and ensure continuity of supply.
Disruption to supply chain and inefficiencies in replenishment
strategies
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. This risk is further being addressed with the establishment of a
Canadian warehouse to reduce shipping times within country and reduce
the concentration of produce within our network.
Risk of a disruptor or new competition entering our markets
The Board believe that a strong Corporate Governance framework will underpin the Group’s growth and success. The Group regularly reviews
its risk management framework and has identified the following at risk areas and mitigating strategies:
Ongoing impacts from COVID-19 continue longer than
expected or become more intensive than forecasted impacting
customers, suppliers and staff
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 5

•
•
•
•
•
Calculation of Comparable EBIT
20212020
$'000$'000
Statutory EBIT
72,398 14,079
Add back costs relating to:
Employee restructure costs- 2,170
Direct, incremental costs relating to COVID-19- 1,755
Canadian credit book revaluation2,986-
Less items relating to:
Government grants received (AU, NZ, CA)(14,593)(17,678)
Impact of AASB16
Leases(4,197)(5,551)
Comparable EBIT56,594(5,225)
ENVIRONMENTAL REGULATIONS
The Group has determined that no particular or significant environmental regulations apply to it.
The non-IFRS measures used in describing the business performance include:
Earnings before interest, tax, depreciation and amortisation (EBITDA)
Same store sales reflect sales through store and online channels on a comparable trading day basis
Earnings before interest and tax (EBIT)
Comparable EBIT
Significant item
Comparable EBIT has been calculated as follows:
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 6

INFORMATION ON DIRECTORS
Emma is not a director of any other listed entities and has not
had any former directorships of listed entities in the last three
years.
• Non-executive and
independent director
• Chair of ARMC
• Member of PDRC
Gary is a director of Flight Centre Travel Group Limited and has
not had any former directorships of listed entities in the last
three years.
Gary 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 and has served as director of
Michael Hill’s listed entity since 2 November 2012. Gary has had
extensive Director experience. He is Chairman of Flight Centre
Travel Group Ltd, one of Australia’s top 100 public companies
and is a member of their Audit and Remuneration sub-
committee. He is a Chartered Accountant and a Fellow of the
Australian Institute of Company Directors.
Information on the directors of Michael Hill International Limited in office during the financial year and until the date of this report are set out below.
DIRECTOREXPERIENCE AND DIRECTORSHIPS
SPECIAL
RESPONSIBILITIES
DIRECTORS'
INTERESTS IN
SHARES AND
OPTIONS
80,000 Ordinary
Shares
2,693,640 Ordinary
Shares
Emma Hill
B.Com, M.B.A
Emma was appointed a director of the Company on 9 June
2016 and has served as director of Michael Hill’s listed entity
since 22 February 2007. She served as Deputy Chair of the
Group from 2011 until 2015 when she was appointed Chair.
Emma stepped down from the Chair role in June 2021. 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. Emma
holds a Bachelor of Commerce degree and an MBA from Bond
University.
• Non-executive director
• Chair of PDRC
167,487,526 Ordinary
Shares
Rob is also a director of Air Canada and has not had any former
directorships of listed entities in the last three years.
Sir Richard (Michael) Hill
K.N.Z.M.
148,330,600 Ordinary
Shares
Sir Michael is not a director of any other listed entities and has
not had any former directorships of listed entities in the last
three years.
Robert Fyfe

B.Eng, F.E.N.Z.
Rob was appointed a director of the Company on 9 June 2016
and has served as director of Michael Hill’s listed entity since 22
February 2007. He was appointed Chair of the Board in June
2021. 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 and subsequent to his time at Air New Zealand, Rob has
gained extensive general management experience in various
retail businesses operating in New Zealand, Australia and Great
Britain, across sectors including retail banking,
telecommunications, pay television and outdoor apparel. On
New Year's Eve 2020, Rob was appointed as a Companion of
the New Zealand Order of Merit for services to business and
tourism.
• Chair
• Non-executive and
independent director
• Member of ARMC
• Member of PDRC
Sir Michael is the founder of Michael Hill and was appointed a
director of the Company on 9 June 2016, having served as
director of Michael Hill’s listed entity since its initial listing in
1990. He led the Group as Chairman from 1987 until 2015. Sir
Michael 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.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 7

201,869 Ordinary
Shares
2,310,215 Performance
Rights
Janine is not a director of any other listed entities and has not
had any former directorships of listed entities in the last three
years.
651,745 Ordinary
Shares
DIRECTORS'
INTERESTS IN
SHARES AND
OPTIONS
160,000 Ordinary
Shares
Daniel joined Michael Hill International as the CEO in November
2018. He has more than 25 years’ experience managing some of
the world’s most iconic brands. He has an extensive background
in corporate strategy, brand development, product design,
customer engagement, digital expansion and has been
instrumental in executing turnaround initiatives across many
retail businesses.
• Managing director
• Chief Executive Officer
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 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.
• Non-executive and
independent director
• Member of ARMC
EXPERIENCE AND DIRECTORSHIPS
SPECIAL
RESPONSIBILITIES
Janine AllisJanine was appointed a director of the Company on 9 June
2016 and retired on 27 October 2020. 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.
• Non-executive and
independent director
• Member of ARMC
Daniel is not a director of any other listed entities and has not
had any former directorships of listed entities in the last three
years.
Jacqueline is a director of Myer Holdings Limited and has not
had any former directorships of listed entities in the last three
years.
Daniel Bracken
Jacqueline Naylor
DIRECTOR
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 8

COMPANY SECRETARIES
MEETINGS OF DIRECTORS
ABA B AB
R I Fyfe15156655
Sir R M Hill1415----
E J Hill1515--55
G W Smith15156655
J E Naylor (appointed 15/07/2020)131344--
J S Allis (retired 27/10/2020)6822--
A = Number of meetings attended
B = Number of meetings held during the time the director held office or was a member of the committee during the year
COMMITTEE MEMBERSHIP
Audit and Risk Management CommitteePeople Development and Remuneration Committee
Gary Smith (c)Emma Hill (c)
Robert FyfeRobert Fyfe
Jacqueline NaylorGary Smith
(c) Designates chair of the committee
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.
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, Graduate Diploma in Applied Corporate Governance
and Risk, and has completed the Company Directors Course at the Australian Institute of Company Directors. 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.
The numbers of meetings of the Company's Board of Directors and of each Board committee held during the year ended 27 June 2021, and
the numbers of meetings attended by each director were:
Full meetings of directorsMeeting of committees
Audit and Risk
Management
People Development and
Remuneration
*Daniel Bracken was appointed a director of the Company on 28 June 2021, after the end of the reporting period.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 9

AUDITED REMUNERATION REPORT
CONTENTS
SECTION 1
•
Total Group revenue of $556.5m (2020: $492.1m) - an increase of 13.1%
•
EBIT of $72.4m (2020: $14.1m) - an increase of 414.2%
•
Comparable EBIT of $56.6m (2020: -$5.2m) - an increase of 1,183%
•
Earnings per share of 11.68 cents (2020: 0.79 cents) - an increase of 1,378%
The directors present the 2021 Michael Hill International Limited remuneration report, outlining key aspects of our remuneration policy and
framework, and remuneration awarded during FY21. The information provided in this remuneration report has been audited as required by
section 308(3C) of the Corporations Act 2001.
Emma Hill
Chair of the People Development and Remuneration Committee
The Board acknowledges the performance and resilience of the Executive Leadership Team which has enabled the Group to report above
target results for the financial year. As discussed earlier in the Annual Report, we have successfully navigated the challenges brought on by
COVID-19. Despite the extremely challenging retail environment, with continuing volatility and regional government mandated lockdowns
affecting store trade, our digital and omni retail strategy has enabled us to adapt to changing customer behaviour. Highlights include:
Section 1
Section 2
Section 3
Section 4
Section 5
Section 6
These results have translated into shareholder returns with the share price growing to $0.83, from $0.34 in 2020 and $0.54 in 2019. After the
2020 pause on dividends to shareholders, dividends of 3.0c per share were paid to our shareholders in FY21. Our performance provides furthe
r
evidence that our strategic transformation agenda is on track and delivering. We’ve seen record digital sales, our loyalty program going from
strength to strength, further deployment of omni-channel initiatives, and continued evolution of our product offering, go-to-market campaigns
and retail fundamentals.
Letter from the Chair of the People Development and Remuneration Committee
Remuneration Overview
Remuneration Framework
FY21 Executive Remuneration Summary
Company Performance - Relationship of Remuneration to Group Performance
Director and Executive Remuneration Outcomes for FY21
LETTER FROM THE CHAIR OF THE PEOPLE DEVELOPMENT AND REMUNERATION COMMITTEE
We are proud of our values led culture which has established Michael Hill as an employer of choice. Our values; We care, We create
outstanding experiences, We are professional and We are inclusive and diverse, underpin team engagement and performance. Our 2021 team
engagement score of 85% is well above retail, country and global benchmarks. I’m proud we continue to be a leader in gender diversity with
55% of leadership positions globally held by women. We continue to build our capability by attracting and developing key talent. This year we
have had three new members join our Executive Leadership Team: Amy Sznicer, Chief Retail Officer, Jo Feeney, Chief Marketing Officer and
Keith Louie, Chief Digital Officer. All three bring tremendous strategic and technical capability to the cohesive, collaborative, and high
performing executive team.
Moving to the structure of our remuneration, following a review of the executive incentive framework, and in response to challenges in how to
reward and recognise in a rapidly changing and unpredictable environment, the Board approved changes to the Short Term Incentive Scheme
(STI) and Long Term Incentive Scheme (LTI) with effect from FY21. The STI opportunity for on target performance reduced and an STI
outperformance mechanism was introduced. The LTI opportunity was amended to increase the weighting towards long-term outcomes and a
sliding vesting scale based on Total Shareholder Return was introduced.
Given the challenging and uncertain environment, executive salaries were not adjusted at the commencement of the year as per the usual
review cycle. A review was completed after the first half which recognised performance had strongly rebounded. A moderate 1.75% increase
was applied to CEO Daniel Bracken’s base salary with an uplift of 10% applied to Andrew Lowe’s base to remain market competitive and in
recognition of the expanded breadth of the CFO’s role.
Financial and non-financial risks were systematically considered in the overall assessment of STI outcomes. The CEO and CFO achieved 100%
of on target STI and due to the strong EBIT result, 75% of the outperformance STI was achieved. No awards to current KMP vested under the
LTI during the year. There were no changes to the structure, level or value of non-executive director (NED) fees.
Dear Shareholders,
The Board will continue to review executive remuneration to ensure that it aligns with our strategy and support the delivery of sustainable long-
term returns to shareholders. In FY22 we will seek independent advice on the appropriateness of remuneration practices of the Group.
In conclusion, the Committee believes the remuneration changes and outcomes for FY21 reflect an appropriate alignment between pay and
performance during the year and are also fair in terms of the operating environment in which decisions have been made. We are confident that
shareholders will recognise this as a continuation of our long-held approach to prior years. The results the Company has achieved in the last 12
months are outstanding and the executive remuneration set out in this report is considered by the Board to be reflective of this performance.
Regards
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 10

SECTION 2 REMUNERATION OVERVIEW
POSITIONCOMMENCEMENT AS KMP
Robert FyfeChair2016
Sir Richard Michael HillFounder and non-executive director2016
Emma HillNon-executive director2016
Gary SmithNon-executive director2016
Jacqueline NaylorNon-executive director2020
Janine AllisNon-executive director9 June 2016 until 27 October 2020
Daniel BrackenManaging Director and Chief Executive Officer2019
Executives
Andrew LoweChief Financial Officer and Company Secretary2017
Vanessa BrennanChief Brand and Strategy Officer11 August 2020 until 13 December 2020
Andrea SlingsbyChief Operating Officer9 January 2019 until 22 January 2021
The following changes were made on the 28 June 2021:
•
Emma Hill stepped down as Chair
•
Robert Fyfe was appointed as Chair
•
Daniel Bracken was appointed as Managing Director in addition to his Chief Executive Officer role
People Development and Remuneration Committee
•
Robert Fyfe - Independent non-executive and Chair of the Committee
•
Emma Hill - Chair of the Board of Directors
•
Gary Smith - Independent non-executive
Use of Remuneration Consultants
SECTION 3 REMUNERATION FRAMEWORK
Our Values
We are professionalWe are inclusive and diverseWe create outstanding experiences
Our Remuneration Philosophy
Reward the achievement of
strategic objectives
Non-Executive Directors
Former Non-Executive Director
Manager Director and CEO
The primary objective of the People Development and Remuneration Committee (PDRC) is to assist the Board fulfil its corporate governance
and oversight responsibilities in relation to the Company’s people strategy including remuneration components, performance measurements
and accountability frameworks, recruitment, engagement, retention, talent management and succession planning.
The following non-executive directors are members of the PDRC for the 2021 reporting period:
In FY22, Emma Hill has assumed the role of Chair of the Committee and Robert Fyfe will remain as a non-executive committee member.
Attract, motivate and retain talent
Align to shareholder value
creation
The PDRC 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. No advice was received in
FY21. It is the Committee’s intention to seek this independent advice in FY22.
Our remuneration philosophy is guided by our vision to be a modern, differentiated, omni channel jewellery brand. The structure of
compensation is designed with a mix of market competitive fixed remuneration, short-term incentives to reward annual performance and long-
term incentives to align long term financial performance and shareholder value creation.
We care
Former Executives
NAME
This report sets out the remuneration arrangements for Michael Hill International’s key management personnel (KMP). KMP have the authority
and responsibility for planning, directing and controlling the activities of the entity. All KMP listed below have held their positions for the entire
reporting period unless indicated otherwise.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 11

Our Remuneration Framework
SECTION 4 FY21 EXECUTIVE REMUNERATION SUMMARY
•
•
•
Fixed Remuneration
LTI opportunity for executives has also been updated to increase the weighting towards long-term outcomes
Whilst the total target incentive opportunity has remained consistent for both the CEO and CFO, being 105% and 65% respectively, the
structure of the STI was changed. FY21 CEO STI opportunity at target is 36.75% of TFR and LTI is 68.25% of TFR to give a total target incentive
of 105%. The structure for the CFO STI is 22.75% of target incentive and LTI is 42.25% of target incentive.
In addition, the FY21 scheme includes an STI outperformance component which allows executives to earn up to 200% of their on target STI
payment for outstanding performance. This outperformance component was added on the basis that it was self-funding and only rewarded for
significant EBIT outperformance (excluding any benefit from Government wage subsidies).
How it is set
Align senior executive reward with
achievement of performance
targets designed to drive
shareholder value creation.
Reward executives for
sustainable long-term growth
aligned to shareholders' interests.
Fixed RemunerationShort Term IncentiveLong Term Incentive
Fixed remuneration is set with
reference to market competitive
rates in comparative companies
for similar positions adjusted to
account for the experience,
ability and effectiveness of the
individual executive.
STI opportunity for on target performance has reduced
An STI stretch or outperformance mechanism has been introduced
Due to the uncertainty and volatility of trading in a COVID-19 environment, executive salaries were not adjusted for CPI at the commencement
of the reporting period as per the usual review cycle. It was decided that any adjustment to salaries would occur after a review of FY21 H1
performance. This end of first half review recognised that the performance of the company had strongly rebounded. Salaries were increased
from 1 February 2021. As the full year (2020) CPI was negative, it was agreed that KMP remuneration decisions would deviate from usual
remuneration policy. The CEO’s salary increased by 1.75% in line with the 2020 national minimum wage decision. It was also recognised that
the CFO’s role had increased in complexity and the fixed remuneration was not market competitive. Fixed remuneration increased by 10% for
the CFO.
Following a review of the executive incentive framework, and in response to challenges in how to reward and recognise in a rapidly changing
and unpredictable environment, the Board approved a number of changes to both the STI and LTI with effect from the FY21 year. The key
changes are outlined below:
Historically, the STI opportunity was 70% of total fixed remuneration (TFR) for the CEO and 50% of TFR for the CFO. LTI potential was 50% of
STI earned for the CEO (or 35% of TFR) and 30% of the STI earned for the CFO (being 15% of TFR). The total target incentive (STI + LTI) for the
CEO was 105% of TFR and 65% for the CFO.
Senior executives participate in
the Group’s STI which is directed
to achieving Board approved
targets. Refer to Section 4 for
details.
The Company has established a
Share Rights Plan as deferred
compensation. Refer to Section 4
for details.
How is it deliveredBase salary plus any fixed
elements including
superannuation and leave
entitlements.
CashAn issue of share rights is made
to participating Executives. The
rights vest at the end of the
performance period if certain
performance hurdles and vesting
conditions are met.
Fixed remuneration is set with reference to market competitive rates in comparable companies, locally and internationally, for similar positions
adjusted for the experience, ability and effectiveness of the individual executive. Fixed remuneration includes base salary and superannuation
at the rate of the maximum concessional contributions cap.
Fixed remuneration is reviewed annually and adjusted. Our policy is to increase base salary by CPI and increase superannuation in line with any
increase to the concessional contributions cap. In addition, external consultants provide analysis and advice every three years to ensure
compensation packages are appropriate and competitive in the marketplace. If there is a change in role scope or complexity the position is
reassessed against market benchmarks.
What is the objectiveAttract and retain key executive
talent.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 12

Short Term Incentive Scheme
Strategy 20% weighting – Omni Channel, Supply Chain Evolution
Customer 20% weighting – Brilliance Membership, Global Credit Strategy
People 10% weighting – Engagement, Retention
FY21 STI Outcomes
Analysis Of Bonuses Included In Remuneration
Daniel Bracken
Andrew Lowe
Andrea Slingsby
Long Term Incentive Scheme
Stretch
target bonus
achieved
KMP's short-term
incentive cash bonuses
On target
bonus
achieved
100%
100%
100%
75%
75%
n/a70,000 70,000 -
26,361
Vanessa Brennan ceased to be a KMP during the first half of the financial year and was not awarded a bonus for the year.
Total
potential bonus
available
Included in
remuneration
Amount
forfeited
$$$
709,128 620,487 88,641
performance
210,887 184,526
Performance measure for outperformance componentScaled EBIT increments above on target performance
Opportunity
Vesting conditionSubject to remaining an employee of the Group at the vesting date (following the
release of the FY23Q4 results), and satisfaction of TSR target metric, share rights
will vest in accordance with a sliding vesting schedule. The absolute TSR sliding
vestin
g schedule is as follows:
- No rights vest if TSR is equal to or less than 15% CAGR
- 5% of share rights vest for each 1% increase in CAGR performance between
15% CAGR to 35% CAGR
How the STI is paid?
The Board considers that the strong results delivered were a direct outcome of the response of the management team in successfully
navigating a raft of complex issues and implementing new initiatives to drive the business through this period. These events required an
immediate range of actions by the management team to both manage the COVID-19 impacts and to allow the business to continue trading in
a complex and constantly changing global environment.
In FY21, the CEO and CFO earned 100% of their on target STI. This STI was awarded due to the achievement in full of the KPIs related to the
financial, strategy, customer and people performance measures. An outperformance STI of 75% was awarded to both KMP due to the
achievement of the EBIT performance measure. An overall payment of 87.5% of total potential STI was achieved.
In cash
CEO – 73.5% of fixed remuneration comprised of 36.75% for on target
performance, and 36.75% for outperformance
The scheme is supported by a performance management system, along with integrated reporting for visibility and transparency of progress by
each executive. The framework aligns the executive’s KPIs to delivery of the strategic plan, divisional business plans along with critical
operational and leadership measures of each role. Performance against KPIs is formally measured on a biannual basis and informally in regular
meetings.
The STI program in FY21 was structured as follows:
The STI is detailed in performance scorecards that are agreed with the Committee at the start of each half year. These scorecards detail the
performance goals, targets and weightings for the financial half and follow a balanced scorecard approach where performance against key
deliverables across financial, strategy, business improvement, customer and people areas are measured.
In FY21, the LTI framework was amended. This amended framework aligns with the existing Incentive Plan Rules. The Board considers this new
LTI framework to be aligned with shareholder interests with a sliding vesting schedule reflecting total returns to shareholders over the
performance period.
Performance/vesting period
Share rights
Performance metricTotal Shareholder Return (TSR) compound annual growth rate (CAGR) over 3
years
3 years
Opportunity65% of on target incentive delivered as LTI, at no cost to the executive
Performance period6 monthly based on H1 and H2 performance
Performance measures/KPIs for on targetFinancial 50% weighting – EBIT, Sales, Margin, Costs
Instrument
CFO – 45.5% of fixed remuneration comprised of 22.75% for on target
performance, and 22.75% for outperformance
Performance conditionsAwarded to the executive if performance measures and KPIs are achieved
How is STI assessed?The Chair reviews the CEO’s performance against the performance targets and
objectives set for that year. The CEO assesses the performance of the Executive
team, with the CEO having oversight of his direct reports and the day-to-day
functions of the Company. The Committee reviews the assessed performance to
determine STI outcome for executives
Despite the challenging market conditions, FY21 has been a successful year for the Group with management delivering revenue of $556.5m (u
p
13.1%), Comparable EBIT of $56.6m (up 1,183%) and EPS of 11.68c (up 1,378%). The Comparable EBIT growth achieved of 1,183% was in excess
of the growth required for payment of 75% of the potential outperformance STI.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 13

FY21 LTI Outcomes
Non-Executive Director Remuneration
People Development and Remuneration
Audit and Risk
SECTION 5
20212020201920182017
Revenue ($'000)556,486 492,060 569,500 604,319 582,975
EBIT* ($'000)72,398 14,079 21,115 8,854 43,840
Profit for the year attributable to owners of the Company ($'000)45,328 3,059 16,498 1,557 29,654
Earnings per share (cents)11.68c0.79c4.26c0.40c10.66c
Dividends paid during the financial year^ ($'000)11,636 5,817 19,365 19,371 19,264
Market capitalisation ($'000)322,158 131,841 209,385 375,815 430,057
Share price at year end ($)0.83 0.34 0.54 0.97 1.11
Compound annual growth rate148.5%(34.3)%(40.2)%(8.1)%10.9%
Return on average total assets9.0%0.7%4.3%8.2%10.5%
Rationale for the performance metric and conditionThe absolute TSR metric has been deemed by the Committee to be the best
market based measure to create alignment between the interests of
management and the interests of shareholders
What happens when a KMP ceases employment?If the KMP’s employment is terminated for cause, or due to resignation, all
unvested Performance Rights will lapse, unless the Board determines otherwise
Dividends and voting rightsShare rights do not confer on the holder any entitlement to any dividends or other
distributions by the Group or any right to attend or vote at any general meeting of
the Group
Profit amounts for 2017 to 2021 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.
Daniel Bracken, CEO and Andrew Lowe, CFO are the only current KMP eligible to participate in the FY21 LTI. Andrew commenced with Michael
Hill in FY18 and participated in that year’s LTI, which has three vesting dates (or ‘tranches’) over consecutive years; Andrew’s first tranche of
that scheme vested in early FY21. Daniel commenced with Michael Hill in FY19 and participated in that year’s LTI, which again has three vesting
dates over consecutive years; the first tranche vesting date is early FY22 and is subject to continual employment. Further details of the number
of share rights granted to the CEO and CFO in relation to the FY21 LTI can be found later in this report under the heading 'Share Rights'.
Total compensation for all non-executive directors, last voted upon by shareholders on 29 June 2016, is not to exceed $840,000 per annum.
Directors’ base fees for FY21 year were $100,419 per annum. The Board Chair receives twice the base fee. Additional fees are paid where a
director is Chair of a committee.
Committee Chair
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. However, in response to the COVID-19 global pandemic market conditions impacting the Company in FY21, there
was no increase to any non-executive director fees.
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. 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.
The overall level of remuneration takes into consideration the performance of the Group over several years.
COMPANY PERFORMANCE - RELATIONSHIP OF REMUNERATION TO GROUP PERFORMANCE
The remuneration framework operates to create a clear link between Executive remuneration and the Group’s performance. The performance
of the Group over the past five years is summarised below:
- 100% of share rights vest if TSR is equal to or above 35% CAGR
Awards are subject to a service condition requiring the Executive to remain
employed by the Group until the end of the vesting period
Fees per Annum
$20,747
$31,120
*EBIT and Comparable EBIT are Non-IFRS Information and are unaudited. Please refer to Non-IFRS Information in the Directors Report for an explanation of Non-
IFRS information and a reconciliation of EBIT and Comparable EBIT.
^The dividends paid in FY21 are the postponed interim dividend for FY20 and the interim dividend for FY21. No final dividend was declared for FY20.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 14

Executive KMP remuneration mix
Executive KMP
Daniel Bracken - CEO
Andrew Lowe - CFO
Andrea Slingsby - COO
Vanessa Brennan - CBSO
FY22 Remuneration
Other benefits
Service contracts
81%19%-100%
100%--100%
54%24%22%100%
The total remuneration for the executive KMPs comprises both fixed remuneration and at-risk components in STI and LTI. The mix shown
below indicates the potential remuneration based on the current remuneration as at 27 June 2021 with STI presented at maximum opportunity.
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.
For FY22, fixed annual remuneration increased in line with policy at CPI for the CEO, CFO and non-executive directors. Superannuation will
increase to the adjusted concessional contributions cap. The incentive scheme has been reweighted to balance on target STI with LTI at 50%
of total target incentive opportunity for the CEO and CFO. The absolute TSR sliding vesting conditions of the LTI framework for FY22 will be a
CAGR-based calculation whereby a prorata achievement of share rights commencing from 10% CAGR, increasing by 10% for every 1% CAGR
increment, limited to 100% achievement at 20% CAGR. The committee and Board will continue reviewing the remuneration framework and
incentive plans to ensure they continue to align to market and shareholders’ best interests. An independent review is underway.
Key management personnel do not receive additional benefits, such as non-cash benefits, other than superannuation, as part of the terms and
conditions of their appointment. Loans are not provided.
Fixed
Remuneration
STILTITotal
41%31%28%100%
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 15

SECTION 6
Short-term
Long-term
Post-
employment
Share-based
payments
Salary &
STI cash
Non-monetary
Total
Long service
Superannuation
Termination
Share
Total
Proportion
Value of
fees
bonus
benefits
leave
benefits
benefits
rights
remuneration
rights as
(relocation)
performance
proportion of
related
remuneration
Name
$$$$$$$$$%%
NON-EXECUTIVE DIRECTORSEmma Jane Hill2021
194,736

-

-

194,736

-

-

-

-

194,736

--
2020
170,849

-

-

170,849

-

-

-

-

170,849

--
Sir Richard Michael Hill2021
97,368

-

-

97,368

-

-

-

-

97,368

--
2020
87,709

-

-

87,709

-

-

-

-

87,709

--
Gary Warwick Smith2021
120,127

-

-

120,127

-

11,412

-

-

131,539

--
2020
104,327

-

-

104,327

-

9,911

-

-

114,238

--
Robert Ian Fyfe2021
117,485

-

-

117,485

-

-

-

-

117,485

--
2020
105,545

-

-

105,545

-

-

-

-

105,545

--
Jacqueline Elizabeth Naylor (appointed 15 July 2020)2021
88,180

-

-

88,180

-

8,377

-

-

96,557

--
2020
-

-

-

-

-

-

-

-

-

--
Janine Suzanne Allis (retired 27 October 2020)2021
30,485

-

-

30,485

-

2,896

-

-

33,381

--
2020
78,594

-

-

78,594

-

7,467

-

-

86,061

--
2021
648,381

-

-

648,381

-

22,685

-

-

671,066

--
2020
547,024

-

-

547,024

-

17,378

-

-

564,402

--
KMPDaniel Bracken, CEO2021
1,025,532

620,487

-

1,646,019

16,962

25,000

-

33,716

1,721,697

36.04%
1.96%
2020
905,142

134,092

-

1,039,234

10,980

25,481

-

15,324

1,091,019

12.29%
1.40%
Andrew Lowe, CFO2021
483,848

184,526

-

668,374

12,930

25,000

-

19,684

725,988

25.42%
2.71%
2020
429,075

40,021

-

469,096

3,790

25,481

-

9,728

508,095

7.88%
1.91%
Andrea Slingsby, COO (ceased 22 January 2021)2021
293,388

70,000

-

363,388

-

14,904

-

19,909

398,201

17.58%
5.00%
2020
456,372

32,681

-

489,053

5,862

25,481

-

2,688

523,084

6.25%
0.51%
Vanessa Brennan, CBSO (commenced 11 August 2020 and ceased 13 December 2020)2021
136,657

-

-

136,657

-

8,654

-

13,489

158,800

-
8.49%
2020
-

-

-

-

-

-

-

-

-

--
TOTAL KMP REMUNERATION2021
1,939,425

875,013

-

2,814,438

29,892

73,558

-

86,798

3,004,686

29.12%
2.89%
2020
1,790,589

206,794

-

1,997,383

20,632

76,443

-

27,740

2,122,198

9.74%
1.31%
TOTAL DIRECTOR AND KMP REMUNERATION2021
2,587,806

875,013

-

3,462,819

29,892

96,243

-

86,798

3,675,752

23.81%
2.36%
2020
2,337,613

206,794

-

2,544,407

20,632

93,821

-

27,740

2,686,600

7.67%
1.03%
Salary and fees include the net leave entitlement accrual, calculated as leave accrued less leave taken.In response to COVID-19, all director's fees were reduced 50% for the period from 1 April 2020 to 30 June 2020. Each of the ex
ecutive KMP's salaries were reduced by 20% over the same period.
Details of the nature and amount of each major element of remuneration of each Director of the Company and other KMP of the con
solidated entity are:
DIRECTOR AND EXECUTIVE REMUNERATION OUTCOMES FOR FY21
TOTAL DIRECTOR REMUNERATION
FINANCIAL REPORT 2021
MICHAEL HILL GROUP 16

ADDITIONAL STATUTORY INFORMATION
EQUITY INSTRUMENTS
OPTIONS AND RIGHTS OVER EQUITY INSTRUMENTS ISSUED AS COMPENSATION
MODIFICATION OF TERMS OF EQUITY-SETTLED SHARE-BASED PAYMENT TRANSACTIONS
UNISSUED SHARES
ANALYSIS OF OPTIONS AND RIGHTS OVER EQUITY INSTRUMENTS GRANTED AS COMPENSATION
SHARE RIGHTS
Issued
during
the year
KMP
Number
Daniel Bracken*2,200,197
Andrew Lowe628,814
Andrea Slingsby (ceased 22/01/2021)33,311
Vanessa Brennan (ceased 13/12/2020)24,285
RECONCILIATION OF OPTIONS AND SHARE RIGHTS HELD BY KMP
Vested and
Exercisable
UnvestedIssuedForfeitedVestedExercised Vested and
Exercisable
Unvested
NumberNumberNumberNumberNumberNumberNumberNumber$
Daniel Bracken*- 110,018 2,200,197 - - - - 2,310,215 317,367
Andrew Lowe- 50,761 628,814 - - - - 679,575 87,399
Andrea Slingsby
#
- 19,301 33,311 - - - - 52,612 11,659
Vanessa Brennan
#
^
- 49,760 24,285 - - - - 74,045 8,500
Total- 229,840 2,886,607 - - - - 3,116,447 424,924
#
Andrea Slingsby and Vanessa Brennan ceased to be KMP before financial year end. The "Balance at end of the year" reflects their holdings at the time they
ceased to be KMP. The Board resolved that both could retain their share rights on cessation of employment and accordingly the share rights vested to both at
the date of the resolution.
Balance at start of the
year
Balance at end of the
year
KMP share rights
movements
Value of
rights issued
during the
year
No options are held by KMP. The number of rights over ordinary shares held during the financial year by KMP, including the number issued,
vested, exercised and forfeited is set out below:
Fair value
per share
right
The number of share rights issued to KMP and senior executives during FY21 was 4,189,622 share rights. Of these, share rights issued to KMP
are set out below.
No options were granted to KMP as compensation for the financial year.
As at the date of this report, there were 1,300,000 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.
*Share rights issued to Daniel Bracken during the reporting period prior to him being appointed as a director of the Board.
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.
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.
$
0.14
0.35
Share rights relating to FY21 performance are anticipated to be granted in late 2021. The number of shares will depend on the Michael Hill
International Limited’s share price over the five days prior to the grant date.
^Vanessa Brennan became a KMP during the financial year and at that time held the share rights in the opening balance.
*Share rights issued to Daniel Bracken during the reporting period were issued prior to him being appointed as a director of the Board. Accordingly, shareholder
approval was not required pursuant to ASX Listing Rule 10.14.
0.14
0.35
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 17

SHAREHOLDINGS
NON-EXECUTIVE DIRECTORS
Emma Hill*
Sir Richard (Michael) Hill*
Gary Smith
Robert Fyfe
Jacqueline Naylor
#
Janine Allis^
KMP
Daniel Bracken
Andrew Lowe
Andrea Slingsby^
Vanessa Brennan
#
^
VOTING OF SHAREHOLDERS AT LAST YEAR'S ANNUAL GENERAL MEETING
INSURANCE OF OFFICERS AND INDEMNITIES
NON-AUDIT SERVICES
ERNST & YOUNG (AUSTRALIA)
Employment advisory
Total remuneration for non-audit services
AUDITOR'S INDEPENDENCE DECLARATION
ROUNDING OF AMOUNTS
R. I. Fyfe
Chair
Brisbane
20 August 2021
*Includes common shareholding due to a related party.
NumberNumberNumberNumber
^Ceased to be a KMP before financial year end and "Balance at end of the year" reflects their holdings at time of ceasing to be KMP.
#
Became a KMP during the financial year and at that time held the ordinary shares in "Balance at the start of the year".
141,869
-
-
-
80,000
2,693,640
160,000
651,745
Received on
exercise of rights
-
-
-
-
-
-
-
-
-
-
-
-
-
Other changes
-
-
-
-
-
-
60,000
-
-
-
2,693,640
160,000
651,745
201,869
The number of ordinary shares held during the financial year by KMP is set out below:
Balance at
end of the year
167,487,526
148,330,600
Balance at
start of the year
167,487,526
148,330,600
20212020
The Company received 99.4% of “For” votes on its remuneration report for FY20. The Company did not receive any specific feedback at the
AGM or throughout the year on its remuneration practices.
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.
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:
80,000
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 19.
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 20 August 2021 in accordance with a resolution of directors as required by section 298 of the Corporations Act 2001.
$$
3,682 10,050
3,682 10,050
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 18

NOTES20212020
$'000$'000
Revenue from contracts with customersA2556,486 492,060
Other incomeA317,969 20,574
Cost of goods sold(207,570)(193,855)
Employee benefits expenseD1(147,619)(146,482)
Occupancy costs(15,135)(14,390)
Marketing expenses(28,325)(28,918)
Selling expenses(17,959)(18,701)
Impairment of property, plant and equipmentF5(1,883)(6,473)
Impairment of other assets(3,513)(1,582)
Depreciation and amortisation expenseF1(51,293)(55,611)
Loss on disposal of property, plant and equipment(448)(499)
Other expenses(28,308)(32,040)
Finance expensesF1(7,595)(9,598)
Profit before income tax64,807 4,485
Income tax expenseF9(19,479)(1,426)
Profit for the year45,328 3,059
Other comprehensive income
Item that may be reclassified subsequently to profit or loss:
Gains/(losses) on cash flow hedges34 434
Currency translation differences arising during the year(173)(1,716)
Other comprehensive income for the year, net of tax(139)(1,282)
Total comprehensive income for the year45,189 1,777
Total comprehensive income for the year is attributable to:
Owners of Michael Hill International Limited 45,189 1,777
centscents
Basic earnings per shareF211.68 0.79
Diluted earnings per shareF211.63 0.79
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
Earnings per share for profit attributable to the ordinary equity holders of the Company:
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 20

NOTES20212020
$'000$'000
ASSETS
Current assets
Cash and cash equivalentsB172,361 11,204
Trade and other receivablesF38,352 25,006
InventoriesA4171,246 178,742
Assets held for saleF414,397 -
Current tax receivables732 3,165
Contract assetsA2406 733
Other current assets3,576 2,103
Total current assets271,070 220,953
Non-current assets
Trade and other receivables F3- 10,727
Right-of-use assetsA5105,882 123,911
Property, plant and equipmentF536,453 45,405
Intangible assetsF632,845 24,429
Deferred tax assetsF960,585 74,468
Contract assets A2739 1,048
Other non-current assets537 677
Total non-current assets237,041 280,665
Total assets508,111 501,618
LIABILITIES
Current liabilities
Trade and other payablesF773,961 64,472
Lease liabilitiesA534,304 42,164
Contract liabilitiesA224,157 25,974
ProvisionsF814,854 24,949
Liabilities directly associated with assets held for saleF41,607 -
Current tax liabilities1,886 1,445
Deferred revenue753 367
Total current liabilities151,522 159,405
Non-current liabilities
Lease liabilities A599,382 115,848
Contract liabilities A256,393 53,539
BorrowingsB2- 10,681
Provisions F87,413 8,339
Total non-current liabilities163,188 188,407
Total liabilities314,710 347,812
Net assets193,401 153,806
EQUITY
Contributed equityF1111,285 11,016
ReservesF124,221 4,420
Retained profits177,895 138,370
Total equity193,401 153,806
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 21

NOTES
CONTRIBUTED
EQUITY
SHARE BASED
PAYMENTS
RESERVE
FOREIGN
CURRENCY
TRANSLATION
RESERVE
CASH FLOW
HEDGE
RESERVE
RETAINED
PROFITS
TOTAL
EQUITY
$000
$000
$000
$000
$000
$000
Balance at 1 July 2019
10,984
757
5,516
(468)
159,963
176,752
Adjustment on adoption of AASB16 (net of tax)
-
-
(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)
Derivative fair value changes
- -
- 434
- 434
Total comprehensive income for the year
-
-
(1,716)
434
3,059
1,777
Transactions with members in their capacity as owners:Dividends provided
B3
- -
- - (11,633)
(11,633)
Issue of share capital on exercise of share rights
F11
32
(32)
- - - -
Transfer option reserve on forfeiture of options
D3
- (166)
-
-
- (166)
Share based payments expense
D3
- 138
- - - 138
32
(60)
- - (11,633)
(11,661)
Balance at 28 June 2020
11,016
697
3,757
(34)
138,370
153,806
Profit for the year
- -
- - 45,328
45,328
Currency translation differences
-
-
(173)
-
-
(173)
Derivative fair value changes
- -
- 34
- 34
Total comprehensive income for the year
-
-
(173)
34
45,328
45,189
Transactions with members in their capacity as owners:Dividends provided
B3
- -
- -
(5,820)
(5,820)
Issue of share capital on exercise of share rights
F11
269
(269)
-
-
-
-
Transfer option reserve on forfeiture of options
D3
-
(17)
-
-
17
-
Share-based payments expense
D3
-
226
-
-
-
226
269
(60)
- - (5,803)
(5,594)
Balance at 27 June 2021
11,285
637
3,584
- 177,895
193,401
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to owners of Michael Hill International Limited
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
FINANCIAL REPORT 2021
MICHAEL HILL GROUP 22

NOTES20212020
$'000$'000
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers (inclusive of GST and sales taxes)657,320 547,258
Payments to suppliers and employees (inclusive of GST and sales taxes)(484,021)(451,577)
173,299 95,681
Interest received4 4
Other revenue received14,442 13,193
Interest paid(1,036)(2,261)
Leasing interest paidA5(6,653)(7,628)
Income tax paid(4,082)(3,974)
Net GST and sales taxes paid(32,522)(18,944)
Net cash inflow from operating activitiesB1143,452 76,071
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment73 146
Payments for property, plant and equipmentF5(6,430)(6,112)
Payments for intangible assetsF6(12,597)(11,241)
Net cash (outflow) from investing activities(18,954)(17,207)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings2,000 70,500
Repayment of borrowings(12,682)(92,300)
Principal portion of lease paymentsA5(40,997)(27,892)
Dividends paid to Company's shareholdersB3(11,636)(5,817)
Net cash (outflow) from financing activities(63,315)(55,509)
Net increase in cash and cash equivalents61,183 3,355
Cash and cash equivalents at the beginning of the financial year11,204 7,923
Effects of exchange rate changes on cash and cash equivalents(25)(74)
Cash and cash equivalents at the end of the financial yearB172,361 11,204
CONSOLIDATED STATEMENT OF CASH FLOWS
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 23

CORPORATE INFORMATION25FOTHER INFORMATION40
F1Expenses40
AFINANCIAL OVERVIEW25F2Earnings per share40
A1Segment information25F3Trade and other receivables41
A2Revenue26F4Assets held for sale and directly associated liabilities42
A3Other income27F5Property, plant and equipment42
A4Inventories27F6Intangible assets43
A5Leases28F7Trade and other payables44
F8Provisions44
BCASH MANAGEMENT30F9Tax45
B1Cash and cash equivalents30F10Auditors' remuneration46
B2Borrowings30F11Contributed equity46
B3Dividends31F12Reserves47
CFINANCIAL RISK MANAGEMENT32GGROUP STRUCTURE48
C1Financial risk management32G1Interests in other entities48
C2Derivative financial instruments34G2Deed of cross guarantee48
C3Capital management36G3Parent entity financial information51
DREWARD AND RECOGNITION37HUNRECOGNISED ITEMS52
D1Employee benefits37H1Contingencies and commitments52
D2Key management personnel37
H2Events occuring after the end of the reporting
52
D3Share-based payments37
period
ERELATED PARTIES39I
SUMMARY OF ACCOUNTING POLICIES AND
53
SIGNIFICANT ESTIMATES AND JUDGEMENTS
I1Summary of significant accounting policies53
I2Significant estimates and judgements58
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 24

NOTES TO THE FINANCIAL STATEMENTS
CORPORATE INFORMATION
A
A1
A2
A3
A4
A5
A1 SEGMENT INFORMATION
AustraliaNew
Zealand
Canada Corporate &
other
Group
pre-AASB16
AASB16
adjustment
Group
$'000$'000$'000$'000$'000$'000$'000
Operating revenue312,264 118,663 123,930 1,629 556,486 -556,486
Gross profit194,148 73,554 76,017 5,197 348,916 -348,916
Gross profit %62.2%62.0%61.3%62.7%62.7%
EBITDA*69,250 35,117 20,935 (40,411)84,891 38,800 123,691
Depreciation and amortisation(6,361)(1,996)(5,100)(3,233)(16,690)(34,603)(51,293)
Segment EBIT*62,889 33,121 15,835 (43,644)68,201 4,197 72,398
EBIT as a % of revenue20.1%27.9%12.8%12.3%13.0%
Interest income---4 4 -4
Finance costs
(68)(7)-(867)(942)(6,653)(7,595)
Net profit before tax62,821 33,114 15,835 (44,507)67,263 (2,456)64,807
Income tax expense
(19,479)
Net profit after tax45,328
The segment disclosures are prepared on a pre-AASB16
Leases basis. An adjustment column, representing the Group's entries due to
AASB16
Leases, has been included for the purposes of reconciliation to statutory results.
MAJOR CUSTOMERS
Michael Hill International Limited and its controlled entities operate predominately in the sale of jewellery and related services.
The consolidated financial statements of Michael Hill International Limited and its subsidiaries (collectively, the Group) for the year ended
27 June 2021 were authorised for issue in accordance with a resolution of the directors on 20 August 2021. 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').
FINANCIAL OVERVIEW
Segment information
Revenue
Other income
Inventories
Leases
The amounts provided to the Board and Executive Management team in respect of total assets and liabilities are measured in a manner
consistent with the financial statements. These reports do not allocate total assets or total liabilities based on the operations of each
segment or by geographical location.
Management have determined the operating segments based on the reports reviewed by the Board and Executive Management team that
are used to make strategic decisions. The Board and Executive Management team consider, organise and manage the business primarily
from a geographic perspective, being the country of origin where the sale and service was performed.
The Group's operations are in three geographical segments: Australia, New Zealand and Canada.
SEGMENT RESULTS
Year ended 27 June 2021
TYPES OF PRODUCTS AND SERVICES
The Corporate and other segment includes revenue and expenses that do not relate directly to the relevant Michael Hill retail segments.
These predominately relate to corporate costs and Australian based support costs, but also include manufacturing activities, warehouse
and distribution, interest and company tax. Inter-segment pricing is at arm's length or market value.
Michael Hill International Limited and its controlled entities sell goods and provide services to a number of customers from which revenue
is derived. There is no single customer from which the Group derives more than 10% of total consolidated revenue.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 25

AustraliaNew
Zealand
Canada Corporate &
other
Group
pre-AASB16
AASB16
adjustment
Group
$'000$'000$'000$'000$'000$'000$'000
Operating revenue266,610 101,276 123,038 1,136 492,060 -492,060
Gross profit161,030 60,412 71,075 5,687 298,204 -298,204
Gross profit %60.4%59.7%57.8%60.6%60.6%
EBITDA*35,102 22,554 3,471 (33,971)27,156 42,534 69,690
Depreciation and amortisation(7,692)(2,550)(6,031)(2,355)(18,628)(36,983)(55,611)
Segment EBIT*27,410 20,004 (2,560)(36,326)8,528 5,551 14,079
EBIT as a % of revenue10.3%19.8%(2.1)%1.7%2.9%
Interest income---4 4 -4
Finance costs
145 16 -(2,131)(1,970)(7,628)(9,598)
Net profit before tax27,555 20,020 (2,560)(38,453)6,562 (2,077)4,485
Income tax expense
(1,426)
Net profit after tax3,059
A2
20212020
$'000$'000
Revenue from sale of goods and repair services525,781 460,393
Revenue from Professional Care Plans (PCP)*27,310 27,478
Interest and other revenue from in-house customer finance program2,792 3,958
Revenue from Lifetime Diamond Warranty (LTDW)603 231
Total revenue from contracts with customers556,486 492,060
AustraliaNew
Zealand
CanadaCorporate &
other
Total
Timing of revenue recognition$'000$'000$'000$'000$'000
At a point in time296,723 113,547 114,099 1,412 525,781
Over time15,541 5,116 9,831 217 30,705
312,264 118,663 123,930 1,629 556,486
Timing of revenue recognition
At a point in time249,852 95,770 114,145 626 460,393
Over time16,758 5,506 8,893 510 31,667
266,610 101,276 123,038 1,136 492,060
(i)
(ii)
(iii)
ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES
Sales of goods are recognised when a Group entity delivers a product to the customer. Retail sales are usually by cash, payment plan or
credit card. The recorded revenue is the gross amount of sale (excluding taxes), including any fees payable for the transaction and net
amounts deferred under AASB15
Revenue from Contracts with Customers such as significant financing components and potential
customer returns.
Repair services
Sales of services for repair work performed is recognised in the accounting period in which the services are performed.
Deferred service revenue and expenses
Sale of goods
The Group offers a PCP product which is considered deferred revenue until such time that service has been provided. A PCP is a plan
under which the Group offers future services, such as cleaning, repairs and resizing, to customers based on the type of plan purchased.
The Group subsequently recognises the income in revenue in the statement of comprehensive income once these services are performed.
An estimate based on the timing and quantum of expected services under the plans is used as a basis to establish the amount of service
revenue to recognise in the Consolidated Statement of Comprehensive Income.
2021
2020
*During the financial year ended 27 June 2021, the Group did not recognise revenue of $1.3m (2020: $2.1m) for PCP services in Canada from February to
June 2021 due to the inability to service customers from temporary closure of stores due to COVID-19. Revenue not recognised and deferred in the prior
period was recognised in the current reporting period.
REVENUE
The Group derives revenue from the transfer of goods and services over time and at a point in time in the following geographical regions:
DISAGGREGATION OF REVENUE FROM CONTRACTS WITH CUSTOMERS
Year ended 28 June 2020
*EBIT and EBITDA are non-IFRS information. Please refer to non-IFRS information in the Directors' Report for an explanation of non-IFRS information and a
reconciliation of EBIT to statutory results.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 26

(iv)
(v)
(vi)
20212020
$'000$'000
Right of return assets58 108
Deferred PCP bonuses1,087 1,673
Total contract assets1,145 1,781
Deferred service revenue76,581 73,856
Deferred interest revenue- 2,918
Right of return liabilities148 250
Lifetime Diamond Warranty3,821 2,489
Total contract liabilities80,550 79,513
20212020
$'000$'000
Revenue recognised that was included in the contract liability balance at the beginning of the year22,243 22,300
(1,305)-
A3 OTHER INCOME
20212020
$'000$'000
Net foreign exchange gain2,367 2,382
Government grants14,593 17,678
Other items1,009 514
17,969 20,574
A4 INVENTORIES
20212020
$'000$'000
Raw materials12,435 6,313
Finished goods156,199 169,094
Packaging and other consumables2,612 3,335
171,246 178,742
Finished goods are held at the lower of cost or net realisable value (NRV). During the year, $2,327,000 (2020: $5,608,000) was recognised
as an expense for finished goods inventories carried at NRV. This is recognised in cost of goods sold.
Management estimates the returned sales based on historical sale return information and any recent trends that may suggest future claims
could differ from historical amounts. For sales that are expected to be returned, the Group recognises a right of return liability. The
associated inventory value for sales that are expected to be returned is recognised as a right of return asset.
Lifetime Diamond Warranty
LTDW is a warranty provided to customers with the purchase of jewellery items set with a diamond (excluding watches). This has been
deemed a service-type warranty and is calculated with reference to the estimated value of service provided to customers and the stand-
alone value of customers obtaining the service independently. Income in relation to the LTDW is recognised in line with the estimated
pattern of customers utilising this service-type warranty.
Interest revenue is deferred on the in-house customer finance program when the sale of the good or service occurs. It is calculated as the
difference between the nominal cash and cash equivalents received from customers and the discounted cashflows, on both interest and
non-interest bearing products. Interest revenue is brought to account over the term of the finance agreement, and the rate used for non-
interest bearing products is in line with current, comparable market rates.
Right of return assets and liabilities
Rights of return recognises the estimated returned sales under the Group's return policy, being 30 day change of mind in Australia and
New Zealand and 60 day change of mind in Canada.
Deferred interest revenue
Direct and incremental sales staff bonuses associated with the sale of PCPs are capitalised in contract assets and amortised in proportion
to the PCP revenue recognised.
Impact on revenue recognised relating to performance obligations satisfied in previous years
The Group received grants in relation to COVID-19 wage subsidies in all three markets. These grants were accounted for as income upon
recognition of the corresponding employee benefit expense as satisfactory prerequisites of the grant were met. Further information
regarding wage subsidies is disclosed in note I2.
The following table shows how much of the revenue recognised in the current reporting year relates to carried-forward contract liabilities
and how much relates to performance obligations that were satisfied or partially satisfied in a prior year:
ASSETS AND LIABILITIES RELATED TO CONTRACTS WITH CUSTOMERS
REVENUE RECOGNISED IN RELATION TO CONTRACT LIABILITIES
Revenue recognition patterns are regularly reassessed based on new and historical trends resulting in remeasurement of revenue
recognised in previous years.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 27

A5 LEASES
20212020
RIGHT-OF-USE ASSETS$'000$'000
Right-of-use assets179,524 162,380
Less: Accumulated depreciation(72,925)(37,654)
Less: Accumulated impairment(717)(815)
105,882 123,911
20212020
RECONCILIATION OF RIGHT-OF-USE ASSETS$'000$'000
Opening carrying value123,911 142,833
Additional right-of-use assets relating to leases entered into during the year13,311 21,702
Lease modifications agreed during the year7,581 (126)
Depreciation expense(35,357)(37,876)
Reduction in right-of-use assets as a consequence of COVID-19 on rent concessions(3,902)(2,033)
Impairment of right-of-use assets- (815)
Foreign currency translation338 226
Closing carrying value105,882 123,911
20212020
LEASE LIABILITIES$'000$'000
Current34,304 42,164
Non-current99,382 115,848
133,686 158,012
20212020
RECONCILIATION OF LEASE LIABILITIES$'000$'000
Opening carrying value158,012 166,322
Additional lease liabilities entered into during the year13,177 21,671
Lease modifications agreed during the year7,517 14
Net reduction in future lease payments agreed as a consequence of COVID-19 on rent concessions(3,902)(2,033)
Interest expense6,653 7,628
Lease repayments(47,650)(35,520)
Foreign currency translation(121)(70)
Closing carrying value133,686 158,012
Expenses relating to short-term leases during the period of $6,444,000 (2020: $4,467,000) were included in occupancy costs.
The incremental borrowing rate used in determining the lease liability ranged between 1.47% and 7.12% (2020: 1.85% and 6.95%).
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 28

20212020
Within five
years
More than
five years
TotalWithin five
years
More than
five years
Total
$'000$'000$'000$'000$'000$'000
Extension options expected not to be exercised277 55 332 455 60 515
Set out below are the undiscounted potential future rental payments relating to the period following the exercise date of extension options
that are not included in the lease term:
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 expensed on a straight-line basis over the lease term.
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 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.
Short-term leases and leases of low-value assets
Lease liabilities
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.
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 I1(F).
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.
The Group has several lease contracts that include extension options. These options are negotiated by management to provide flexibility in
managing the leased-asset portfolio and align with the Group’s business needs. Management exercises significant judgement in
determining whether these extension options are reasonably certain to be exercised (refer to note I2).
ACCOUNTING POLICIES AND SIGNIFICANT JUDGEMENTS
On 28 May 2020, the IASB issued COVID-19-Related Rent Concessions - amendment to AASB16 Leases. The amendments provide relief
to lessees from applying AASB16
Leases guidance on lease modification accounting for rent concessions arising as a direct consequence
of the COVID-19 pandemic. As a practical expedient, a lessee may elect not to assess whether a COVID-19 related rent concession from a
lessor is a lease modification. A lessee that makes this election accounts for any change in lease payments resulting from the COVID-19
related rent concession the same way it would account for the change under AASB16
Leases, if the change were not a lease modification.
The Group has applied this practical expedient in the consolidated financial statements for all COVID-19 impacted leases. Where the
practical expedient has been applied, the Group has remeasured its lease liabilities, using the remeasured consideration (e.g., reflecting the
lease payment reduction or lease payment deferral provided by the lessor), with a corresponding adjustment to the right-of-use asset.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 29

B
B1
B2
B3
B1 CASH AND CASH EQUIVALENTS
20212020
$'000$'000
Cash at bank and on hand72,361 11,204
20212020
$'000$'000
Profit for the year45,328 3,059
Adjustment for:
Depreciation of property, plant and equipment11,746 15,484
Depreciation of right-of-use assets35,357 37,876
Amortisation of intangible assets4,190 2,251
Impairment of property, plant and equipment1,883 6,473
Impairment of other assets3,513 1,579
Impairment of intangibles assets- 3
Non-cash employee benefits expense - share-based payments226 (25)
Make good interest(57)(228)
Net loss on sale of non-current assets448 442
Net exchange differences2,998 1,143
Change in operating assets and liabilities
(Increase)/decrease in trade and other receivables13,163 1,490
(Increase)/decrease in inventories7,663 (206)
(Increase)/decrease in deferred tax assets16,121 (1,430)
(Increase)/decrease in other non-current assets451 2,324
(Increase)/decrease in other current assets(1,192)89
(Decrease)/increase in trade and other payables6,635 12,987
(Decrease)/increase in current tax liabilities2,896 8,509
(Decrease)/increase in provisions(11,114)(6,121)
(Decrease)/increase in contract liabilities3,197 (2,000)
Net cash inflow from operating activities143,452 83,699
B2 BORROWINGS
Current
Non-
current
TotalCurrent
Non-
current
Total
$'000$'000$'000$'000$'000$'000
Bank loans- - - - 10,681 10,681
Total secured borrowings- - - - 10,681 10,681
CASH MANAGEMENT
Cash and cash equivalents
Borrowings
Dividends
On 24 March 2021, the Group entered into a financing agreement with ANZ Banking Group and HSBC Australia for an availability
period of three years. The financial arrangement includes a $72 million multi-option borrowing facility and ancillary working capital
facilities in line with the business requirements of the Group. At balance date no amounts were drawn on these facilities. Refer to note
C3 for details of covenants relating to the financing facilities.
20212020
RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH INFLOW FROM
OPERATING ACTIVITIES
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 30

B3 DIVIDENDS
20212020
Ordinary shares$'000$'000
- 5,817
5,820 5,816
5,820 11,633
20212020
Dividends not recognised at the end of the reporting period$'000$'000
11,644
-
20212020
Franking and imputation credits$'000$'000
2,552 2,174
18,072 18,474
The interim dividend for the year ended 28 June 2020 of $5,816,000, originally deferred to 30 September 2021 for payment, was paid
on 29 January 2021.
No final dividend was declared for the year ended 28 June 2020 (2019: 1.5 cents).
Interim dividend for the year ended 27 June 2021 of 1.5 cents (2020: 1.5 cents) per fully paid
share paid on 26 March 2021 (2020: 29 January 2021).
The above franking credit amounts represent the balance of the franking account as at the end of the financial year, adjusted for
franking credits that will arise from the payment and refund of income tax payable.
The above imputation credit amounts represent the balance of the imputation account as at the end of the financial year, adjusted for
imputation credits that will arise from the payment and refund of income tax payable.
As the dividend recommended by the directors since year end, but not recognised as a liability at year end, will be unfranked there will
be no reduction in the franking account.
The impact on the imputation credit account of the dividend recommended by the directors since year end, but not recognised as a
liability at year end, is estimated to be a reduction in the imputation credit account of NZ4,736,175 (2020: no dividend declared). The
amount of imputation credits is dependent on the NZD exchange rate at the time of the dividend.
Franking credits available for subsequent reporting periods based on a tax rate of 30.0%
(2020: 30.0%)
Imputation credits (NZ$) available for subsequent reporting periods based on New Zealand
tax rate of 28.0% (2020: 28.0%)
The dividends paid during the current financial period and corresponding previous financial period were fully imputed and not franked.
Since year-end, the directors have recommended a 3 cents per fully paid share (2020: no
final dividend declared) final dividend.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 31

C
C1
C2
C3
C1 FINANCIAL RISK MANAGEMENT
RiskExposure arising fromMeasurementManagement
Market risk - foreign exchange
Market risk - interest rate
Credit risk
Liquidity riskBorrowings and other liabilities
MARKET RISK
USDNZDCADUSDNZDCAD
$'000$'000$'000$'000$'000$'000
Cash and cash equivalents1,633 7 4 36 64 43
Trade receivables839 -8 500 --
Trade payables(15,723)(36)(42)(7,539)-(2)
Forward exchange contracts:
Buy foreign currency7,780 -----
Sell foreign currency-(5,000)(5,000)---
Net foreign currency exposure(5,471)(5,029)(5,030)(7,003)64 41
2021202020212020
Foreign exchange rate sensitivities$'000$'000$'000$'000
AUD increases 10%1,574 831 --
AUD decreases 10%(1,924)(1,016)--
The Group's overall risk management program includes a focus on financial risk including the unpredictability of financial markets and
foreign exchange risk.
Impact on pre-tax profitImpact on other
components of equity
FINANCIAL RISK MANAGEMENT
Financial risk management
Derivative financial instruments
Capital management
Cash and cash equivalents and trade
receivables
Cash flow forecasting and
sensitivity analysis
Sensitivity analysis
Ageing analysis
Rolling cash flow forecasts
Forward foreign exchange
contracts
The Group's activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit
risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the financial performance of the Group. The Group seeks to use derivative financial instruments
such as foreign exchange contracts and interest rate swaps to hedge certain risk exposures as required. Derivatives are exclusively used
for hedging purposes, i.e. not as trading or other speculative instruments. The Group uses different methods to measure different types
of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate and foreign exchange risks and aging
analysis for credit risk.
Interest rate swaps
Diversification of bank
deposits, credit limits and
letters of credit
Availability of committed
credit lines and borrowing
facilities
Future commercial transactions
Recognised financial assets and
liabilities not denominated in AUD
Long-term borrowings at variable
rates
The policies are implemented by the central finance function that undertakes regular reviews to enable prompt identification of financial
risks so that appropriate actions may be taken.
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities that are denominated in a
currency that is not the entity’s functional currency and net investments in foreign operations.
The Group's exposure to foreign currency risk at the end of the reporting year, expressed in transactional currency, was as follows:
The following table summarises the sensitivity of the Group's financial assets and financial liabilities to foreign currency risk. The foreign
exchange sensitivities are based on the Group's exposure existing at balance date. Sensitivity figures are pre-tax.
Sensitivity
27 June 202128 June 2020
Exposure
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures. Where it is
considered appropriate, the Group enters into forward foreign exchange contracts to buy specified amounts of various foreign currencie
s
in the future at a pre-determined exchange rate.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 32

(B) Interest Rate Risk
20212020
$'000$'000
Variable rate borrowings-n/a10,681 100.0%
Weighted
average
interest rate
BalanceWeighted
average
interest rate
Balance
%$'000%$'000
Bank overdrafts and bank loansn/a-1.88%10,681
Interest rate swaps (notional principal amount)n/a-4.63%5,000
Net exposure to cash flow interest rate risk-5,681
2021202020212020
$'000$'000$'000$'000
Interest rates - increase by 100 basis points 724 (107)-(15)
Interest rates - decrease by 100 basis points*-107 -(36)
CREDIT RISK
LIQUIDITY RISK
Credit risk is managed on a Group basis and refers to the risk of a counterparty failing to discharge an obligation. In the normal course of
business, the Group incurs credit risk from trade receivables and transactions with financial institutions. The Group places its cash and
short term deposits with only high credit quality financial institutions. Sales to retail customers are required to be settled via cash, major
credit cards or passed onto various credit providers in each country
.
27 June 202128 June 2020
At the reporting date, no material credit risk exposure existed in relation to potential counterparty failure on financial instruments. Other
than the loss allowance recognised in trade and other receivables in note F3, no financial assets were impaired or past due. The
maximum exposure to credit risk at the end of the reporting year is the carrying amount of each class of financial assets disclosed in note
F3.
The Group maintains prudent liquidity risk management with sufficient cash and the availability of funding through an adequate amount
of committed credit facilities.
Financing arrangements
The Group’s objectives when managing capital are to ensure sufficient liquidity to support its financial obligations and execute the
Group's operational and strategic plans. The Group continually assesses its capital structure and makes adjustments to it with reference
to changes in economic conditions and risk characteristics associated with its underlying assets.
Sensitivity^
As the Group has a cash surplus with no borrowings, profit or loss is sensitive to higher/lower interest revenue from cash and cash
equivalents as a result of changes in interest rates. All other non-derivative and non-lease financial liabilities have a contractual maturity
of less than six months.
*Deposit rates are close to nil. Negative interest rates have not been modelled due to the low probability of this occurring within the geographical segments
in which the Group trades.
^Sensitivity for prior year is based on the Group being in a borrowing position. Cash balances in prior year were not considered material for sensitivity
analysis purposes.
The details of the variable rate borrowings and interest rate swap contracts outstanding are outlined below.
Impact on pre-tax profitImpact on other
components of equity
Instruments used by the Group
Historically, interest rate swaps are used to manage the Group's interest rate exposure. At 27 June 2021, the Group had no borrowings
and there were no swaps in place (2020: 46.8% of the variable rate principal outstanding).
% of total
loans
% of total
loans
The current variable rate borrowings are detailed below:
The Group had no borrowings and a cash surplus at the end of the reporting period. The interest rate for cash balances is currently close
to nil so the Group is not exposed to any interest rate downside risk.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 33

20212020
Floating rate
$'000$'000
- Expiring beyond one year (bank overdrafts)1,932 1,935
- Expiring beyond one year (bank loans)70,000 46,248
71,932 48,183
•
•
Contractual maturies of financial liabilities
Less than 6
months
6-12
months
Between 1
and 2 years
Between 2
and 5 years
Over 5 yearsTotal
contractual
cash flow
At 27 June 2021
$'000$'000$'000$'000$'000$'000
Non-derivatives
Lease liabilities19,831 18,300 30,378 51,179 34,661 154,349
Trade payables73,961 - - - - 73,961
Borrowings- - - - - -
Total non-derivatives93,792 18,300 30,378 51,179 34,661 228,310
Derivatives
Gross settled (FECs)232 - - - - 232
Net settled (interest rate swaps)- - - - - -
232 - - - - 232
At 28 June 2020
Non-derivatives
Lease liabilities10,065 1,168 9,954 59,411 77,414 158,012
Trade payables64,964 - - - - 64,964
Borrowings- - 10,681 - - 10,681
Total non-derivatives75,029 1,168 20,635 59,411 77,414 233,657
Derivatives
Gross settled (FECs)69 - - - - 69
Net settled (interest rate swaps)34 - - - - 34
103 - - - - 103
C2 DERIVATIVE FINANCIAL INSTRUMENTS
ACCOUNTING POLICY
•
•
•
The Group’s risk management strategy and how it is applied to manage risk are explained below.
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 amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying
balances as the impact of discounting is not significant. For interest rate swaps the cash flows have been estimated using forward
interest rates applicable at the end of the reporting year.
The Group is exposed to certain risks relating to its ongoing business operations. The primary risks managed using derivative instruments
are foreign currency risk and interest rate risk.
The Group had access to the following undrawn borrowing facilities at the end of the reporting year:
Maturities of financial liabilities
The tables below analyse the Group's financial liabilities into relevant maturity groupings based on their contractual maturities for:
all non-derivative financial liabilities, and
net and gross settled derivative financial instruments for which the contractual maturities are essential for an understanding of the
timing of the cash flows.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 34

•
•
•
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.
The amounts accumulated in OCI are accounted for, depending on the nature of the underlying hedged transaction. If the hedged
transaction subsequently results in the recognition of a non-financial item, the amount accumulated in equity is removed from the
separate component of equity and included in the initial cost or other carrying amount of the hedged asset or liability. This is not a
reclassification adjustment and will not be recognised in OCI for the period. This also applies where the hedged forecast transaction of a
non-financial asset or non-financial liability subsequently becomes a firm commitment for which fair value hedge accounting is applied.
For any other cash flow hedges, the amount accumulated in OCI is reclassified to profit or loss as a reclassification adjustment in the
same period or periods during which the hedged cash flows affect profit or loss.
If cash flow hedge accounting is discontinued, the amount that has been accumulated in OCI must remain in accumulated OCI if the
hedged future cash flows are still expected to occur. Otherwise, the amount will be immediately reclassified to profit or loss as a
reclassification adjustment. After discontinuation, 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.
A loss of $34,000 (2020: $434,000 loss) was reclassified from the cash flow hedge reserve to profit or loss during the year.
Hedging reserves
The Group’s hedging reserves are disclosed in the statement of changes in equity.
Hedges that meet all the qualifying criteria for hedge accounting are accounted for, as described below.
Fair value hedge
The change in the fair value of a hedging instrument is recognised in the statement of profit or loss as other expense. The change in the
fair value of the hedged item attributable to the risk hedged is recorded as part of the carrying value of the hedged item and is also
recognised in the statement of profit or loss as other expense.
If the hedged item is derecognised, the unamortised fair value is recognised immediately in profit or loss.
Classification of derivatives
Derivatives are only used for economic hedging purposes and not as speculative investments. However, where derivatives do not meet
the hedge accounting criteria, they are classified as ‘held for trading’ for accounting purposes and are accounted for at fair value through
profit or loss. They are presented as current assets or liabilities to the extent they are expected to be settled within 12 months after the
end of the reporting year.
Derivatives not designated as hedging instruments
The Group uses foreign currency-denominated borrowings and foreign exchange forward contracts to manage some of its transaction
exposures. The foreign exchange forward contracts are not designated as cash flow hedges and are entered into for periods consistent
with foreign currency exposure of the underlying transactions, generally from one to six months.
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.
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 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.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 35

20212020
$'000$'000
Net foreign exchange gain/(loss) included in other gains/(losses)232 69
•
•
C3 CAPITAL MANAGEMENT
•
•
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to
shareholders, issue new shares or sell assets to reduce debt.
There are a number of external bank covenants in place relating to debt facilities. These covenants are calculated and reported to the
banks quarterly on a pre-AASB16
Leases basis. The principal covenants relating to capital management are the EBIT fixed cover charge
ratio, consolidated debt to EBITDA, consolidated debt to capitalisation, and consolidated debt to inventory. There have been no
breaches of these covenants and the Group continues to collaborate with the external financing partners as required.
the credit value/debit value adjustment on the interest rate swaps which is not matched by the loan, and
differences in critical terms between the interest rate swaps and loans.
There was no recognised ineffectiveness during 2021 or 2020 in relation to the interest rate swaps.
The Group's objectives when managing capital are to:
safeguard its ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other
stakeholders, and
maintain an optimal capital structure to reduce the cost of capital.
Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness
assessments to ensure that an economic relationship exists between the hedged item and hedging instrument.
Hedge ineffectiveness
For hedges of interest rate risk, the Group enters into hedge relationships where the critical terms of the hedging instrument match
exactly with the terms of the hedged item. The Group therefore performs a qualitative assessment of effectiveness. If changes in
circumstances affect the terms of the hedged item such that the critical terms no longer match exactly with the critical terms of the
hedging instrument, the Group uses the hypothetical derivative method to assess effectiveness. It may occur due to:
Amounts recognised in profit or loss
In addition to the amounts disclosed in the reconciliation of hedging reserves above, the following amounts were recognised in profit or
loss in relation to derivatives:
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 36

D
D1
D2
D3
D1 EMPLOYEE BENEFITS
20212020
$'000$'000
Employee wages133,147 131,548
Employee wages on-costs and post-retirement benefits14,246 14,796
Employee share-based payments expense226 138
147,619 146,482
D2 KEY MANAGEMENT PERSONNEL
20212020
$$
Short-term employee benefits2,814,438 1,997,383
Long-term benefits29,892 20,632
Post-employment benefits73,558 76,443
Share-based payments86,798 27,740
3,004,686 2,122,198
D3 SHARE-BASED PAYMENTS
OPTIONS
Set out below are summaries of options granted under the plan:
Average
exercise price
per option
Number of
options
Average
exercise
price per
o
ption
Number of
options
As at 29 June 2020 NZD options1.56 1,100,000 1.58 1,900,000
Expired during the year0.88 (100,000)0.94 (100,000)
Forfeited during the year- - 1.70 (700,000)
As at 27 June 2021 NZD options1.63 1,000,000 1.56 1,100,000
As at 29 June 2020 AUD options1.56 300,000 1.56 600,000
Expired during the year
- - - -
Forfeited during the year- - 1.56 (300,000)
As at 27 June 2021 AUD options1.56 300,000 1.56 300,000
20212020
REWARD AND RECOGNITION
Key management personnel
Share-based payments
Options are granted under the plan for no consideration. Options expire ten years after granted, vest over five years and are exercisable at
any time during the final five years.
Options granted under the plan carry no dividend or voting rights. When exercisable, each option is convertible into one ordinary share.
Options are granted from time to time at the discretion of Directors to senior executives within the Group. Motions to issue options to
related parties of Michael Hill International Limited are subject to the approval of shareholders at the Annual General Meeting in
accordance with the Company's constitution.
Employee benefits
EMPLOYEE BENEFITS
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 37

Grant dateExpiry dateExercise price20212020
17 September 201030 September 2020
NZ$0.88
-100,000
16 November 201130 September 2021
NZ$1.16
100,000 100,000
19 September 201230 September 2022
NZ$1.41
100,000 100,000
18 September 201330 September 2023
NZ$1.82
100,000 100,000
29 November 201330 September 2023
NZ$1.82
500,000 500,000
10 November 201430 September 2024
NZ$1.63
100,000 100,000
5 October 201730 September 2027
AU$1.44
100,000 100,000
22 September 201630 September 2026
AU$2.12
100,000 100,000
22 January 201630 September 2025
NZ$1.14
100,000 100,000
22 September 201830 September 2028
AU$1.11
100,000 100,000
1,300,000 1,400,000
•
•
•
Average fair
value per
share right
Number of
share rights
Average fair
value per
share right
Number of
share rights
Outstanding at 29 June 20200.81 788,798 0.54 521,609
Granted0.15 4,189,622 0.57 286,294
Exercised0.72 (373,044)1.66 (19,105)
Forfeited1.41 (27,858)- -
Outstanding at 27 June 20210.20 4,577,518 0.81 788,798
20212020
Number of rights3,878,533286,294
Share price$0.39 $0.68
Annualised volatility45%40%
Expected dividend yield10.0%6.5%
Risk free rate0.27%0.75%
Fair value of share right$0.13 $0.57
20212020
$'000$'000
Expenses arising from share-based payment transactions226 166
Further to the share rights issued above, there were an additional 311,089 share rights issued on 6 October 2020 with a fair value of $0.35
per right.
Subject to remaining an employee of the Group for a period of 3 years and satisfaction of TSR target metric, share rights will vest in
accordance with the sliding vesting schedule:
no share rights vest if TSR is equal to or less than 15% CAGR;
5% share rights vest for each 1% increase in CAGR performance between 15% CAGR to 35% CAGR;
100% share rights vest if TSR is equal to or above 35% CAGR.
Share rights issued during the current financial year used the Monte Carlo model to determine the fair value of share rights using the
following inputs:
Under the plan, a senior 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 65% of their target opportunity. The
performance metric uses is Total Shareholder Return (TSR) compound annual growth rate (CAGR) over 3 years.
During the year, the Board agreed to grant 4,189,622 share rights to eligible participants of the deferred compensation plan, subject to
continual employment for a period three years and an absolute Total Shareholder Return condition for vesting in three years.
20212020
Options outstanding at the end of the year have the following expiry dates and exercise prices:
The weighted average remaining contractual life of share options outstanding at the end of the period was 3.2 years (2020: 3.9 years).
The exercise price will be converted to Australian dollars using the Reserve Bank of Australia exchange rate on the day the option is
exercised.
The number of share rights in each tranche is based on the prescribed dollar value for each tranche divided by the volume weighted
average share price ('VWAP') of Michael Hill International Limited shares over ten trading days following the Michael Hill International
shares trading subsequent to the final quarterly trade announcement.
The Company introduced a deferred compensation plan (LTI) involving the granting of share rights to eligible participants in 20
16 and was
approved by shareholders at the Company’s Annual General Meeting held on 31 October 2016.
SHARE RIGHTS
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 38

ACCOUNTING POLICY
•
•
•
E
20212020
Related party transactions
$$
13,559 13,945
Share rights
RELATED PARTIES
All transactions with related parties were in the normal course of business and on normal terms and conditions.
Services rendered for graphic design of the annual report by a related party
of board members
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 using the Monte Carlo method and is recognised over the period during which the employees
become unconditionally entitled to the rights.
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.
Options
Upon the exercise of options, the balance of the share-based payments reserve relating to those options is transferred to share capital.
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 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, market performance conditions, the impact of dilution, the non-tradeable nature of the option, the share
price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the
term of the option. It also assumes the options will be exercised at the mid-point of the exercise period.
The fair value of options granted is recognised as an employee benefits expense with a corresponding increase in equity. The total
amount to be expensed is determined by reference to the fair value of the options granted:
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.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 39

F
F1
F2
F3
F4
F5
F6
F7
F8
F9
F10
F11
F12
F1EXPENSES
NOTES
20212020
$'000$'000
Depreciation on property, plant and equipmentF511,746 15,484
Depreciation on right-of-use assetA535,357 37,876
Total depreciation47,103 53,360
Amortisation on software F64,190 2,251
Total amortisation4,190 2,251
Total depreciation and amortisation51,293 55,611
NOTES
20212020
$'000$'000
Interest on lease liabilitiesA56,653 7,628
Bank and interest charges999 2,198
Interest on make good provision(57)(228)
7,595 9,598
F2EARNINGS PER SHARE
RECONCILIATION OF EARNINGS USED IN CALCULATING EARNINGS PER SHARE
20212020
Basic earnings per share
$'000$'000
45,328 3,059
Diluted earnings per share
45,328 3,059
20212020
WEIGHTED AVERAGE NUMBER OF SHARES USED AS THE DENOMINATOR
NumberNumber
387,924,289 387,766,481
Share rights1,771,137 574,013
389,695,426 388,340,494
Profit attributable to the ordinary equity holders of the Company used in calculating basic
earnings per share
Tax
Auditors' remuneration
Contributed equity
Reserves
DEPRECIATION AND AMORTISATION
FINANCE COSTS
Profit from continuing operations attributable to the ordinary equity holders of the Company
Weighted average number of ordinary shares used as the denominator in calculating basic
earnings per share
Adjustments for calculation of diluted earnings per share:
Weighted average number of ordinary and potential ordinary shares used as the denominator in
calculating diluted earnings per share
Options and share rights granted to employees under the Michael Hill International Limited Employee Option Plan are considered to be potential
ordinary shares and have been included in the determination of diluted earnings per share to the extent to which they are dilutive. All options
outstanding at financial year end were considered to be non-dilutive. The options and share rights have not been included in the determination of
basic earnings per share. Details are set out in note D3.
Provisions
OTHER INFORMATION
Expenses
Earnings per share
Trade and other receivables
Property, plant and equipment
Intangible assets
Trade and other payables
Assets held for sale and directly associated liabilities
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 40

F3TRADE AND OTHER RECEIVABLES
CurrentNon-currentTotalCurrentNon-currentTotal
$'000$'000$'000$'000$'000$'000
Trade receivables6,555 - 6,555 3,432 - 3,432
Provision for expected credit loss
(373)- (373)(340)- (340)
6,182 - 6,182 3,092 - 3,092
Canadian in-house customer finance- - - 14,576 11,021 25,597
Provision for expected credit loss
- - - (1,143)(294)(1,437)
- - - 13,433 10,727 24,160
Sundry debtors
2,170 - 2,170 8,481 - 8,481
8,352 - 8,352 25,006 10,727 35,733
20212020
$'000$'000
Current5,9613,027
< 30 days past due298199
30 - 60 days past due77(2)
60+ days past due219208
6,5553,432
20212020
$'000$'000
Opening balance340409
Net amounts written back/(written off)17(193)
Additional provisions recognised16125
Exchange differences- (1)
Closing balance373340
20212020
Trade receivables
ECL and risk exposure
Trade receivables from sales made to customers through third party credit providers are non-interest bearing and are generally on 0-30 day terms.
The terms available to customers range from an interest-bearing revolving line of credit through to interest free terms of between 6 and 40
months, although 12 to 18 months is the typical financing period.
The receivables from the in-house customer finance program are comprised of a large number of transactions with no one customer representing
a significant balance. The finance portfolio consists of contracts of similar characteristics that are evaluated collectively for expected credit losses
(ECL).
Sundry debtors relates to supplier credits, security deposits and other sundry receivables. Based on the credit history of these debtors, it is
expected that these amounts will be received when due and no impairment is recognised.
Effective interest rates
All receivables are non-interest bearing except for a small portion of in-house customer finance receivables. In-house customer finance
receivables are recognised net of significant financing components determined in accordance with AASB15
Revenue from Contracts with
Customers
.
Canadian in-house customer finance
Sundry debtors
An ECL analysis is performed at each reporting date. The maximum exposure to credit risk is the carrying value of in-house customer finance
program and trade receivables. The Group does not hold collateral as security. The Group evaluates the concentration of risk with respect to these
receivables as low. For further details refer to note C1.
Ageing of trade receivables
Movements in the provision for ECL of trade receivables are as follows:
The Canadian in-house customer finance loan book was determined to be an asset held for sale as at 27 June 2021, refer to note F4.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 41

F4ASSETS HELD FOR SALE AND DIRECTLY ASSOCIATED LIABILITIES
2021
$'000
Canadian in-house customer finance debtors14,397
Total assets held for sale14,397
Deferred interest revenue1,607
Total liabilities directly associated with assets held for sale1,607
F5PROPERTY, PLANT AND EQUIPMENT
Plant and
equipment
Fixtures and
fittings
Motor
vehicles
Leasehold
improvements
Display
materials
Total
At 1 July 2019
$'000$'000$'000$'000$'000$'000
Cost32,867 33,153 366 85,774 15,449 167,609
Accumulated depreciation and impairment(21,961)(23,171)(277)(49,962)(9,025)(104,396)
Net book amount10,906 9,982 89 35,812 6,424 63,213
Year ended 28 June 2020
Opening net book amount10,906 9,982 89 35,812 6,424 63,213
Adjustment for change in accounting policy- - - (2,653)- (2,653)
Exchange difference(48)(52)- (265)19 (346)
Additions1,852 1,819 - 3,133 1,065 7,869
Disposals(190)(119)(38)(240)(131)(718)
Transfers90 253 - (346)- (3)
Depreciation charge(3,617)(3,373)(35)(6,540)(1,919)(15,484)
Impairment loss(738)(404)- (2,016)(3,315)(6,473)
Closing net book amount8,255 8,106 16 26,885 2,143 45,405
At 28 June 2020
Cost32,831 34,431 47 78,164 15,197 160,670
Accumulated depreciation and impairment(24,576)(26,325)(31)(51,279)(13,054)(115,265)
Net book amount8,255 8,106 16 26,885 2,143 45,405
Year ended 27 June 2021
Opening net book amount8,255 8,106 16 26,885 2,143 45,405
Exchange difference(52)9 (1)47 43 46
Additions2,109 792 - 3,279 250 6,430
Disposals(413)(38)(12)(1,092)(244)(1,799)
Transfers- - - - - -
Depreciation charge(2,938)(2,604)(3)(5,329)(872)(11,746)
Impairment loss(349)(126)(0)(1,357)(51)(1,883)
Closing net book amount6,612 6,139 - 22,433 1,269 36,453
At 27 June 2021
Cost33,906 34,291 - 78,996 2,184 149,377
Accumulated depreciation and impairment(27,294)(28,152)- (56,563)(915)(112,924)
Net book amount6,612 6,139 - 22,433 1,269 36,453
The loss recognised on this asset is included in the Canada Segment in note A1.
Receivables relating to the credit book and associated liabilities were classified as assets held for sale, alongside the corresponding liability,
deferred interest revenue. The carrying value of the credit book was written down to management's best estimate of net proceeds of the sale and
estimated costs of disposal. This resulted in an expense of $2,986,000 in the period being recognised as Impairment of other assets.This estimate
is based on significant unobservable inputs (Level 3 under AASB13
Fair Value Measurement Hierarchy) which includes assumptions in relation to
the terms of the eventual sale which may differ from this estimate.
During the period, the Group conducted a strategic review of the Canadian in-house customer credit book. At reporting date, as the sale is
considered probable and expected to be completed within a year from reporting date, it is presented as held for sale.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 42

IMPAIRMENT LOSS
DEPRECIATION METHODS AND USEFUL LIVES
•
4 - 7 years
•
Motor vehicles3 - 5 years
•
6 - 10 years
•
6 - 10 years
•
6 - 10 years
F6INTANGIBLE ASSETS
Patents,
trademarks
and other
rights
Computer
software
Total
At 1 July 2019
$'000$'000$'000
Cost79 30,852 30,931
Accumulated depreciation and impairment- (15,492)(15,492)
Net book amount79 15,360 15,439
Year ended 28 June 2020
Opening net book amount79 15,360 15,439
Additions- 11,241 11,241
Disposals- 3 3
Impairment charge- (3)(3)
Amortisation charge- (2,251)(2,251)
Closing net book amount79 24,350 24,429
At 28 June 2020
Cost79 39,383 39,462
Accumulated amortisation- (15,033)(15,033)
Net book amount79 24,350 24,429
Year ended 27 June 2021
Opening net book amount79 24,350 24,429
Additions- 12,597 12,597
Disposals- 9 9
Impairment charge- - -
Amortisation charge- (4,190)(4,190)
Closing net book amount79 32,766 32,845
At 27 June 2021
Cost79 51,945 52,024
Accumulated depreciation and impairment- (19,179)(19,179)
Net book amount79 32,766 32,845
As per the Group's accounting policies, the Group impairs assets where the recoverable amount is less than the carrying amount. This also
includes assets held at stores facing closure. Any assets held at an impaired store that are able to be redeployed throughout the Group are not
impaired.
Impairment indicators were identified due to the impact of COVID-19 which resulted in temporary store closures and reduction in sales, as
disclosed in note I2. The Group treats each store as a separate cash-generating unit for impairment testing of property, plant and equipment and
right of use assets.
The Group is currently assessing the impact of the IFRIC agenda decision - Configuration or Customisation Costs in a Cloud Computing
Arrangement, refer further detail note I1(R).
Depreciation is calculated using the straight-line method to allocate the cost or revalued amounts of the assets, net of their residual values, over
their estimated useful lives or, in the case of leasehold improvements and certain leased plant and equipment, the shorter lease term as follows:
Plant and equipment
Fixtures and fittings
Leasehold improvements
Display materials
The pre-tax discount rates used in determining the recoverable amount ranged between 8.2% and 13.4%, depending on the geographical segment
of the assets.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 43

F7TRADE AND OTHER PAYABLES
20212020
$'000$'000
Trade payables44,499 28,982
Annual leave liability9,390 7,758
Accrued expenses3,453 1,131
Other payables16,619 26,601
73,961 64,472
F8PROVISIONS
CurrentNon-currentTotalCurrentNon-currentTotal
$'000$'000$'000$'000$'000$'000
Employee benefits13,074 1,732 14,806 20,599 1,776 22,375
Assurance-type warranties1,082 280 1,362 1,125 280 1,405
Make good provision306 5,401 5,707 260 6,563 6,823
Restructuring costs152 - 152 2,325 - 2,325
Diamond warranty240 - 240 360 - 360
14,854 7,413 22,267 24,669 8,619 33,288
Employee
benefits
Assurance-
type
warranties
Make good
provision
Restructuring
costs
Diamond
warranty
Total
$'000$'000$'000$'000$'000$'000
Opening carrying amount22,375 1,405 6,823 2,325 360 33,288
Changes in provisions recognised719 (41)(848)- - (170)
Amounts incurred and charged(8,284)- (246)(2,145)(120)(10,795)
Exchange differences(4)(2)(22)(28)- (56)
Closing carrying amount14,806 1,362 5,707 152 240 22,267
ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES
Employee benefits
Assurance-type warranties
Make good provision
Restructuring
•
•
The Group has an obligation to restore certain leasehold sites to their original condition upon store closure or relocation. This provision represents
the present value of the expected future make good commitment. Amounts charged to the provision represent both the cost of make good costs
incurred and the costs incurred which mitigate the final liability prior to the closure or relocation.
A provision has been raised for the estimated staffing exit costs from business structure changes. Restructuring provisions are recognised only
when the Group has a constructive obligation, which is when:
the employees affected have been notified of the plan’s main features.
20212020
MOVEMENTS IN PROVISIONS
there is a detailed formal plan that identifies the business or part of the business concerned, the location and number of employees
affected, the detailed estimate of the associated costs, and the timeline; and
Employee benefits includes provision for long service leave, revaluation of employee benefits in New Zealand and the provision for remediation.
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 liability for long service leave is measured as the present value of expected future payments to be made in respect of services provided by
employees up to the reporting date using the projected unit credit method.
Provision is made for the estimated sale returns for the Group's return policies, being 12 month guarantee on the quality of workmanship and the 3
year watch guarantee. In addition, all Michael Hill watches sold before 30 June 2018 included a lifetime battery replacement guarantee.
Management estimates the provision based on historical sale return information and any recent trends that may suggest future claims could differ
from historical amounts.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 44

F9TAX
INCOME TAX EXPENSE
20212020
Current tax
$'000$'000
Current tax on profits for the year5,481 2,488
Unrecognised tax losses utilised during the year--
Adjustments for current tax of prior periods40 650
Foreign income tax offsets not recognised--
Total current tax expense5,521 3,138
Deferred income tax
(Increase)/Decrease in deferred tax assets14,002 (957)
Adjustments for deferred tax of prior periods(44)(755)
Total deferred tax expense/(benefit)13,958 (1,712)
Income tax expense19,479 1,426
20212020
$'000$'000
Profit before income tax expense64,807 4,486
Tax at the Australian tax rate of 30.0% (2020: 30.0%)19,442 1,346
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Non-deductible expenditure145 279
Non-assessable intragroup markups- -
Sundry items(13)(211)
19,574 1,414
Difference in overseas tax rates(64)208
Adjustments for current tax of prior periods40 650
Adjustments for deferred tax of prior periods(44)(755)
Utilisation of tax losses not recognised(27)(91)
Unrecognised tax losses utilised during the year- -
Foreign income tax offset not recognised- -
Change in tax rate on deferred tax balance- -
Income tax expense19,479 1,426
20212020
$'000$'000
Unused United States tax losses for which no deferred tax asset has been recognised32,369 35,745
Potential tax benefit @ 25.0%8,092 8,936
Unused New Zealand tax losses for which no deferred tax asset has been recognised2,639 2,651
Potential tax benefit @ 28.0%739 742
NUMERICAL RECONCILIATION OF INCOME TAX EXPENSE TO PRIMA FACIE TAX PAYABLE
TAX LOSSES
The unused tax losses incurred in the United States and New Zealand are available indefinitely for offsetting against future taxable profits of the
countries in which the losses arose. Deferred tax assets have not been recognised in respect of these losses as it is unknown when the New
Zealand losses may be used to offset taxable profits and the United States losses are not expected to be used.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 45

20212020
$'000$'000
The balance comprises temporary differences attributable to:
Expected credit loss provision377 485
Fixed assets and intangibles8,536 8,190
Intangible assets from intellectual property transfer19,705 22,723
Deferred expenditure(310)(478)
Prepayments(7)(19)
Deferred service revenue1,379 235
Unearned income- -
Right-of-use assets(31,798)(37,091)
Lease liabilities40,064 44,578
Provisions20,190 20,757
Unrealised foreign exchange losses885 (317)
Sundry items(780)(511)
Inventories2,344 15,916
Net deferred tax assets60,585 74,468
Expected settlement:
Deferred tax assets expected to be recovered within 12 months26,612 39,585
Deferred tax assets expected to be recovered after more than 12 months33,973 34,883
60,585 74,468
Movements:
Opening balance at 29 June 202074,468 67,708
Credited/(charged) to the income statement(14,003)957
Adjustment on adoption of AASB16- 5,375
Prior year adjustment44 755
Foreign exchange differences76 (327)
Closing balance at 27 June 202160,585 74,468
F10AUDITORS' REMUNERATION
20212020
ERNST & YOUNG (AUSTRALIA)
$$
Fees for auditing the statutory financial report of the Company and its subsidiaries554,541 535,506
Fees for other services
3,682 10,050
558,223 545,556
F11CONTRIBUTED EQUITY
2021202020212020
SHARE CAPITAL
SharesShares$'000$'000
Ordinary shares - fully paid388,142,149 387,769,105 11,285 11,016
Total share capital388,142,149 387,769,105 11,285 11,016
Number of
shares
Total
MOVEMENTS IN ORDINARY SHARES
$'000
Opening balance at 1 July 2019387,750,000 10,984
Rights converted19,105 32
Balance at 28 June 2020387,769,105 11,016
Rights converted373,044 269
Balance at 27 June 2021388,142,149 11,285
Total remuneration paid to Ernst & Young (Australia)
DEFERRED TAX BALANCES
Employment advisory
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, Michael Hill International Limited,
its related practices and non-related audit firms:
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 46

Ordinary shares
Options
Rights issue
F12RESERVES
NATURE AND PURPOSES OF OTHER RESERVES
Cash flow hedges
Share-based payments
Foreign currency translation
Exchange differences arising on translation of the foreign controlled entity are recognised in other comprehensive income as described in note
I1(C) and accumulated in a separate reserve within equity. The cumulative amount is reclassified to profit or loss when the net investment is
disposed of.
The hedging reserve is used to record gains or losses on derivatives that are designated and qualify as cash flow hedges and that are recognised
in other comprehensive income, as described in note I1(I). Amounts are reclassified to profit or loss when the associated hedged transaction
affects profit or loss.
The share-based payments reserve is used to recognise the value of equity-settled share-based payments provided to employees, including key
management personnel, as part of their remunerations. Refer to note D3 for further details of these plans.
Ordinary shares entitle the holder to participate in dividends, and to share in the proceeds of winding up the Company in proportion to the number
of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and on a poll each share is
entitled to one vote.
Information relating to the Michael Hill International Employee Option Plan, including details of options issued, exercised and lapsed during the
financial year and options outstanding at the end of the financial year, is set out in note D3.
Information relating to share rights issued under the Company's deferred compensation plan, including details of rights issued, exercised and
lapsed during the financial year and rights outstanding at the end of the financial year, is set out in note D3.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 47

G
G1
G2
G3
G1
Country of
incorporation
20212020
%%
Michael Hill Jeweller (Australia) Pty LimitedAustralia100100
Michael Hill Wholesale Pty LimitedAustralia100100
Michael Hill Manufacturing Pty LimitedAustralia100100
Michael Hill Franchise Pty LimitedAustralia100100
Michael Hill Franchise Services Pty LimitedAustralia100100
Michael Hill Finance (Limited Partnership)Australia100100
Michael Hill Group Services Pty LimitedAustralia100100
Michael Hill Charms Pty LimitedAustralia100100
Michael Hill Online Pty LimitedAustralia100100
Emma & Roe Pty LimitedAustralia100100
Medley Jewellery Pty LimitedAustralia100100
Durante Holdings Pty LimitedAustralia100100
Michael Hill New Zealand LimitedNew Zealand100100
Michael Hill Jeweller LimitedNew Zealand100100
Michael Hill Finance (NZ) LimitedNew Zealand100100
Michael Hill Franchise Holdings LimitedNew Zealand100100
MHJ (US) LimitedNew Zealand100100
Emma & Roe NZ LimitedNew Zealand100100
Michael Hill Online Holdings LimitedNew Zealand100100
Michael Hill Jeweller (Canada) Pty LimitedCanada100100
Michael Hill LLCUnited States100100
G2DEED OF CROSS GUARANTEE
GROUP STRUCTURE
Interests in other entities
Deed of cross guarantee
Parent entity financial information
INTERESTS IN OTHER ENTITIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the
accounting policy described in note I1(B):
Ownership interest held by
the group
Pursuant to ASIC Class Order 2016/785, the Australian wholly-owned subsidiaries listed below are relieved from the Corporations Act 2001
requirements for preparation, audit and lodgement of financial reports and directors' report in Australia.
The subsidiaries subject to the deed are: Durante Holdings Pty Ltd, Michael Hill Group Services Pty Ltd, Michael Hill Jeweller (Australia) Pty
Ltd, Michael Hill Manufacturing Pty Ltd, Michael Hill Wholesale Pty Ltd, Michael Hill Franchise Services Pty Ltd, Michael Hill Franchise Pty
Ltd, Michael Hill New Zealand Ltd, Michael Hill Jeweller Ltd, Michael Hill Franchise Holdings Ltd, Michael Hill Finance (NZ) Ltd, Michael Hill
Online Pty Ltd, Michael Hill Charms Pty Ltd, Emma & Roe Pty Ltd, Medley Jewellery Pty Ltd, Michael Hill Online Holdings Ltd and Emma &
Roe NZ Ltd.
The Class Order requires the Parent Company and each of the subsidiaries to enter into a Deed of Cross Guarantee. The effect of the deed
is that the Company guarantees each creditor payment in full of any debt in the event of winding up of any of the subsidiaries under certain
provisions of the Corporations Act 2001. If a winding up occurs under other provisions of the Corporations Act 2001, the Company will only
be liable in the event that after six months any creditor has not been paid in full. The subsidiaries have also given similar guarantees in the
event that the Company is wound up.
The above companies represent a Closed Group for the purposes of the Class Order and, as there are no other parties to the Deed of
Cross Guarantee that are controlled by Michael Hill International Limited, they also represent the Extended Closed Group.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 48

20212020
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
$'000$'000
Revenue from sales of goods and services431,904 370,986
Sales to Group companies not in Closed Group47,254 30,941
Other income15,212 15,703
Cost of goods sold(206,747)(175,412)
Employee benefits expense(123,295)(117,063)
Occupancy costs(10,758)(9,193)
Marketing expenses(20,569)(20,684)
Selling expenses(14,480)(15,223)
Depreciation and amortisation expense(38,239)(40,988)
Loss in disposal of property, plant and equipment(384)(454)
Other expenses(9,949)(17,588)
Finance costs(5,363)(6,949)
Profit before income tax64,586 14,076
Income tax expense(14,255)(3,801)
Profit for the year50,331 10,275
OTHER COMPREHENSIVE INCOME
20212020
Items that may be reclassified to profit or los
s
$'000$'000
Exchange differences on translation of foreign operations104 (23,808)
Other comprehensive income for the period, net of tax104 (23,808)
Total comprehensive income for the year50,435 (13,533)
20212020
STATEMENT OF CHANGES IN EQUITY$'000$'000
Equity at the beginning of the financial year426,106 474,874
Change in accounting policy - adoption of AASB16- (23,574)
Total comprehensive income/(loss)50,435 (13,533)
Share rights through share-based payments reserve9 -
Option expense through share based payments reserve- (28)
Dividends paid(5,820)(11,633)
Total equity at the end of the financial year470,730 426,106
CONSOLIDATED STATEMENT OF PROFIT OR LOSS, STATEMENT OF COMPREHENSIVE INCOME AND SUMMARY OF MOVEMENTS
IN CONSOLIDATED RETAINED EARNINGS
Set out below is a consolidated statement of profit or loss, a consolidated statement of comprehensive income and a summary of
movements in consolidated retained earnings for the year ended 27 June 2021 of the closed group consisting of Michael Hill International
Limited and the entities noted above.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 49

20212020
CURRENT ASSETS
$'000$'000
Cash and cash equivalents17,190 6,915
Trade receivables7,822 8,953
Inventories133,096 144,719
Current tax receivables580 -
Loans to related parties279,769 231,628
Other current assets3,455 1,980
Total current assets441,912 394,195
NON-CURRENT ASSETS
Property, plant and equipment21,219 26,004
Right-of-use assets71,900 81,372
Investments in subsidiaries87,834 87,834
Other non-current assets1,117 1,465
Intangible assets32,844 24,419
Deferred tax assets53,489 64,952
Total non-current assets268,403 286,046
Total assets710,315 680,241
CURRENT LIABILITIES
Trade and other payables64,922 56,575
Lease liabilities23,921 23,732
Current tax liabilities- 8,260
Deferred revenue18,925 17,456
Provisions15,172 24,505
Total current liabilities122,940 130,528
NON-CURRENT LIABILITIES
Lease liabilities65,176 73,776
Deferred revenue44,336 41,492
Provisions7,133 8,339
Total non-current liabilities116,645 123,607
Total liabilities239,585 254,135
Net assets470,730 426,106
EQUITY
Contributed equity310,275 310,006
Reserves(24,789)(24,633)
Retained profits185,244 140,733
Total equity470,730 426,106
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Set out below is a consolidated statement of financial position as at 27 June 2021 of the Closed Group consisting of Michael Hill
International Limited and the entities noted above
.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 50

G3
SUMMARY FINANCIAL INFORMATION
20212020
STATEMENT OF FINANCIAL POSITION$'000$'000
Current assets344 1,495
Non-current assets452,206 464,727
Total assets452,549 466,222
Current liabilities521 6,153
Total liabilities521 6,153
Net assets452,028 460,069
Issued capital291,445 291,158
Reserves41,544 41,604
Retained earnings119,039 127,307
Total equity452,028 460,069
20212020
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME$'000$'000
Profit or loss for the year(8,268)92,647
Total comprehensive income(8,268)92,647
GUARANTEES ENTERED INTO BY THE PARENT ENTITY
(i)
(ii)
CONTINGENT LIABILITIES OF THE PARENT ENTITY
The Parent has issued the following guarantees in relation to the debts of its subsidiaries:
Pursuant to Class Order 2016/785, Michael Hill International Limited and the subsidiaries listed below entered into a deed of
cross guarantee on 30 June 2016. The effect of the deed is that Michael Hill International Limited has guaranteed to pay any
deficiency in the event of winding up of any controlled entity or if they do not meet their obligations under the terms of
overdrafts, loans, leases or other liabilities subject to the guarantee. The controlled entities have also given a similar guarantee
in the event that Michael Hill International Limited is wound up or if it does not meet its obligations under the terms of
overdrafts, loans, leases or other liabilities subject to the guarantee.
The subsidiaries subject to the deed are: Durante Holdings Pty Ltd, Michael Hill Group Services Pty Ltd, Michael Hill Jeweller
(Australia) Pty Ltd, Michael Hill Manufacturing Pty Ltd, Michael Hill Wholesale Pty Ltd, Michael Hill Franchise Services Pty Ltd,
Michael Hill Franchise Pty Ltd, Michael Hill New Zealand Ltd, Michael Hill Jeweller Ltd, Michael Hill Franchise Holdings Ltd,
Michael Hill Finance (NZ) Ltd, Michael Hill Online Pty Ltd, Michael Hill Charms Pty Ltd, Emma & Roe Pty Ltd, Medley Jewellery
Pty Ltd, Michael Hill Online Holdings Ltd and Emma & Roe NZ Ltd.
The Parent entity had no material contingent liabilities as at balance date.
PARENT ENTITY FINANCIAL INFORMATION
The individual financial statements for Michael Hill International Limited (the Parent) show the following aggregate amounts.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 51

H
H1
H2
H1 CONTINGENCIES AND COMMITMENTS
CONTINGENT LIABILITIES
CONTINGENT ASSETS
COMMITMENTS
Within one
year
One to five
years
Greater than
five years
Total
$'000$'000$'000$'000
3,11111,7459,53924,395
H2 EVENTS OCCURRING AFTER THE END OF THE REPORTING PERIOD
UNRECOGNISED ITEMS
Contingencies and commitments
Events occurring after the end of the reporting period
No other matters or circumstances have occurred subsequent to year end that has significantly affected, or may significantly affect, the
operations of the Group, the results of those operations or the state of affairs of the Group or economic entity in subsequent financial years.
The Group had no material contingent liabilities as at balance date.
From time to time, Companies within the Group are party to various legal actions as well as inquiries from regulators and government bodies
that have arisen in the normal course of business. The Directors have given consideration to such matters which are or may be subject to claims
or litigation at year end and are of the opinion that that any liabilities arising over and above already provided in the financial statements from
such action would not have a material effect on the Group's financial performance.
The Group is not aware of any significant events occurring subsequent to balance date that have not been disclosed.
The Group has no material contingent assets existing as at balance date.
The following sets out the various lease contracts that the Group has entered into and have yet to commence as at 27 June 2021.
Future lease payments for these non-cancellable lease contracts
The Group continues to operate in an environment of regional lockdowns due to the COVID-19 pandemic. Subsequent to reporting date, a
number of regions in which the Australian and New Zealand businesses operate experienced periods of lockdown. This impacted the ability of
the stores within those regions to remain open and trade.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 52

I
I1
I2
I1SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A)BASIS OF PREPARATION
(B)PRINCIPLES OF CONSOLIDATION
(C)FOREIGN CURRENCY TRANSLATION
Functional currency translation
Transactions and balances
Group companies
•
•
•
(D)TAXES
Current income tax
Deferred income tax
For reporting purposes, the Group adopts a weekly 'retail calendar' closing each Sunday. The current 52 week reporting period ended on
27 June 2021.
The consolidated financial statements of the Group comply with International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB).
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.
Investments in subsidiaries are accounted for at cost in the individual financial statements of Michael Hill International Limited.
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.
SUMMARY OF ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES AND JUDGEMENTS
Summary of significant accounting policies
Significant estimates and judgements
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 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.
The income tax expense or credit for the year is the tax payable on the current year's taxable income based on the applicable income tax
rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused
tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting
year in the countries where the Group operates and generates taxable income. Management periodically evaluates positions taken in tax
returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid to the tax authorities.
all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other
financial instruments designated as hedges of such investments, are recognised in other comprehensive income.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Net 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 as other income or other expenses, 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.
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
Current tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or
directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
Deferred income tax 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 and liabilities are classified as non-current
assets and liabilities.
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.
Items included in the financial statements of each of the Group 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.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 53

Tax consolidation group
(E)GOODS AND SERVICES TAX (GST)
•
•
(F)IMPAIRMENT OF ASSETS
(G)CASH AND CASH EQUIVALENTS
(H)INVENTORIES
(I)FINANCIAL INSTRUMENTS - INITIAL RECOGNITION AND SUBSEQUENT MEASUREMENT
(i)Financial assets
Initial recognition and measurement
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.
Revenues, expenses and assets are recognised net of the amount of GST, except:
When the GST incurred on a sale or purchase of assets or services is not payable to or recoverable from the taxation authority, in
which case the GST is recognised as part of the revenue or the expense item or as part of the cost of acquisition of the asset, as
applicable; or
When receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
statement of financial position. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to,
the taxation authority.
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 i
s
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.
Management review stock holdings based on recoverability at a product level and write-down as appropriate.
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.
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.
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.
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.
Raw materials and finished goods are stated at the lower of cost and net realisable value. Cost comprises direct materials, direct labour
and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating
capacity. Costs are assigned to individual items of inventory on the basis of weighted average costs. Net realisable value is the estimated
selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the
sale.
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 AASB15
Revenue from Contracts with Customers. Refer to the accounting
policies in note A2.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 54

Subsequent measurement
•
•
Financial assets at amortised cost (debt instruments)
•
•
Financial assets at fair value through profit or loss
Derecognition
•
•
Impairment of financial assets
The financial asset is held within a business model with the objective to hold financial assets in order to collect
contractual cash flows; and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the Effective Interest Rate (EIR) method and are subject to
impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
The Group 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.
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 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.
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.
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.
Further disclosures relating to impairment of financial assets are also provided in note F3.
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.
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
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:
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 55

(ii)Financial liabilities
Initial recognition and measurement
Subsequent measurement
Financial liabilities at fair value through profit or loss
Loans and borrowings at amortised cost
Derecognition
Offsetting of financial instruments
(J)PROPERTY PLANT AND EQUIPMENT
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting year.
(K)INTANGIBLE ASSETS
Software
•
•
•
•
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 AASB9
Financial Instruments are satisfied. The Group has not designated any financial
liability as at fair value through profit or loss.
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.
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and
borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly
attributable transaction costs.
The measurement of financial liabilities depends on their classification, as described below.
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 AASB9
Financial Instruments. 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.
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 (Note F4).
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 I1(F))
.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss.
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software.
These costs are amortised over their estimated useful lives (three to five years).
Costs associated with developing or maintaining software programmes are recognised as an expense as incurred. Development costs
that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are
recognised as intangible assets when the following criteria are met:
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.
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-bearing loans and borrowings. For more information, refer to note B2.
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.
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.
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
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 56

•
•
(L)PROVISIONS
(M)EMPLOYEE ENTITLEMENTS
Short-term obligations
Other long-term employee benefit obligations
Profit-sharing and bonus plans
Retirement benefit obligations
(N)CONTRIBUTED EQUITY
(O)DIVIDENDS
(P)EARNINGS PER SHARE
Basic earnings per share
•
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).
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.
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.
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.
The Group provides retirement benefits to employees through a defined contribution superannuation fund. Contributions are recognised
as expenses as they become payable.
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.
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.
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 t
o
be received from the contract.
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.
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.
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 respec
t
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.
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
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 57

•
Diluted earnings per share
•
•
(Q)ROUNDING OF AMOUNTS
(R)CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
IFRIC agenda decision - Configuration or Customisation Costs in a Cloud Computing Arrangement
IFRIC agenda decision - Net Realisable Values of Inventory
I2SIGNIFICANT ESTIMATES AND JUDGEMENTS
Impact of COVID-19
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results.
Management also needs to exercise judgement in applying the Group’s accounting policies. Estimates and judgements are continually
evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be
reasonable under the circumstances. The estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year are incorporated within the relevant note.
The Group continues to monitor the situation throughout the geographies in which it operates. Uncertainty remains as to the future
impact of COVID-19 and the ability to operate bricks-and-mortar stores during this period. The Group continues to adhere to local and
national government guidance in relation to any future impacts which would temporarily close stores.
the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all
dilutive potential ordinary shares (note F2).
During the period, the Group received financial support and assistance from its suppliers, landlords, and local governments. A number of
landlords and suppliers provided extended payment terms. These agreements have concluded with no material amounts outstanding.
Additionally, landlords have provided support in the form of rental abatements. These amounts have been disclosed in note A5.
Government grants were received during the period and further information can be found in note A3.
In June 2021, IFRIC published an agenda decision in relation to the accounting treatment when determining net realisable value (NRV) of
inventories, in particular what costs are necessary to sell inventories under IAS2
Inventories. The Group is currently assessing the impact
the agenda decision will have on its current accounting policy and whether an adjustment to inventory may be necessary. Accordingly, a
reliable estimate of the impact of the IFRIC agenda decision on the Group cannot be made at the date of this report, however based on
preliminary analysis performed, the Group isn’t expecting a material impact from the adoption of the IFRIC agenda decision. The Group
expects to complete the implementation of the above IFRIC agenda decision as part of its half-yearly reporting.
The process to quantify the impact of the decision is ongoing. A project team has been appointed and a timeline has been determined.
The project is ongoing due to the effort required in obtaining the underlying information from historical records covering multiple project
s
and assessing the nature of each of the costs.
At the date of this report, the impact of the IFRIC agenda decision on the Group is not reasonably estimable.
The uncertainty surrounding the trading environment for the Group has impacted management's approach to forecasting, modelling
cash flows and other accounting estimates.
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.
In April 2021, the IFRS Interpretations Committee (IFRIC) published an agenda decision for configuration and customisation costs
incurred related to implementing Software as a Service (SaaS) arrangements. The Group is currently assessing the impact of the agenda
decision on its current accounting policy, which may result in previously capitalised costs needing to be recognised as an expense.
Several other amendments and interpretations apply for the first time in 2021, 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.
Significant Estimates And Judgements
The significant accounting judgements relate to the accounting for COVID-19 related lease concessions (note A5) and assets held for
sale (note F4) and the significant accounting estimates were in relation to the pattern of PCP revenue recognition (note A2), employee
remediation (note F8) and the valuation of the assets held for sale (note F4).
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 F2).
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
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 58

DIRECTORS' DECLARATION
(a)
(b)
(i)
(ii)
(c)
R. I. Fyfe
Chair
Brisbane
20 August 2021
In the directors' opinion:
This declaration is made in accordance with a resolution of the directors.
The directors have been given the declarations by the chief executive officer and chief financial officer required by
section 295A of the Corporations Act 2001.
Note I1(A) confirms that the financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board.
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.
the financial statements and notes of the Group for the financial year ended 27 June 2021, are in accordance
with the Corporations Act 2001, including:
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable;
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements, and
giving a true and fair view of the consolidated entity's financial position as at 27 June 2021 and of its
performance for the financial year ended on that date;
as at the date of this declaration, there are reasonable grounds to believe that the members of the extended
group identified in note G1 will be able to meet any obligations or liabilities to which they are, or may become,
subject to by virtue of the deed of cross guarantee described in note G2.
FINANCIAL REPORT 2021 MICHAEL HILL GROUP 59

A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation

Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au

Independent auditor’s report to the members of Michael Hill International
Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Michael Hill International Limited (the Company) and its
subsidiaries (collectively the Group), which comprises the consolidated statement of financial position
as at 27 June 2021, the consolidated statement of profit or loss and other comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the year
then ended, notes to the financial statements, including a summary of significant accounting policies,
and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a. Giving a true and fair view of the consolidated financial position of the Group as at 27 June 2021
and of its consolidated financial performance for the year ended on that date; and
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
financial report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.

A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation

Existence of inventories
Why significant How our audit addressed the key audit matter
The existence of inventories is a key audit
matter due to the size of the recorded asset (27
June 2021: $171,246,000) which represents
34% (2020: 36%) of the Group’s total assets, the
nature of the inventory and the geographic
spread of locations where items are held.
Inventories are primarily kept in the Group’s 285
retail stores located in Australia, New Zealand
and Canada, and the distribution and
manufacturing centres. Inventories comprise a
large number of physically small but high value
items which are subject to misappropriation and
other loss.
As a result, we considered the evidencing of the
existence of the Group’s inventory at 27 June
2021 to be a key audit matter.
The Group accounts for inventories in
accordance with the policy disclosed in Note
I1(H) and further disclosure is included in Note
A4 of the financial report.

Our audit procedures included the following:
► Testing the effectiveness of key controls
relevant to the conduct of physical
stocktakes, the review and investigation of
stocktake variances, and the approval of
adjustments made to stock quantities.
► In performing our testing, we attended 12
stocktakes conducted at retail stores across
Australia, New Zealand and Canada, of which
two were conducted virtually due to COVID-19
restrictions.
► In addition to the retail stores, we attended
the stocktakes completed at the distribution
and manufacturing centres in June 2021.
► At these stocktakes at the retail stores,
distribution and manufacturing centres, we
observed compliance with the stocktake
instructions (including the suspension of
inventory movements during the stocktake
process) and selected a sample of items to re-
count to establish the accuracy of the counts
performed by the Group.
► For each of these locations attended, and for
a further representative sample of retail
stores, we inspected evidence that stocktakes
had been conducted, stock variances
identified had been reviewed and approved,
and that the adjustments were accurately
recorded.
► Where stocktakes were completed prior to
the year end date, we performed inventory
movement analysis and, on a sample basis,
evidenced changes in inventory quantities to
evaluate the movement of inventories
between the stocktake date and year end
date. For retail locations not attended at
stocktake, we performed movements analysis
on a store-by-store basis and further analysis
where the year end balance was outside our
set expectations.
► We obtained details of stock-in-transit at year
end, as well as movements either side of the
year end date and performed procedures to
address the risk of incorrect cut-off of
inventory quantities at year end.

A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation

Professional Care Plan (PCP) revenue recognition
Why significant How our audit addressed the key audit matter
The recognition of Professional Care Plan (PCP)
revenue is a key audit matter due to the
significant degree of estimation involved in
determining the appropriate revenue
recognition pattern for both the lifetime and 3
year plans offered to the Group’s customers.
Under these plans, revenue is deferred on
receipt of the payment from the customer, and
recognised over time in a manner that reflects
the proportion of actual services used by
customers relative to the total amount of
expected services to be provided under the
PCPs.
The balance of the deferred PCP revenue
liability at 27 June 2021 was $76,581,000
(2020: $73,856,000), and PCP revenue
recognised in the income statement for the year
ended 27 June 2021 was $27,310,000 (2020:
$27,478,000).
The estimation is primarily based on an analysis
of actual services (through historical cleaning,
repairs and re-sizing service data) made under
these plans since inception in October 2010,
with management judgement applied to take
account of emerging trends in customer
behaviour, industry data and exceptional
circumstances such as COVID related store
closures.
The estimation is reviewed by the Group on at
least an annual basis. As circumstances change
over time, the Group updates its measure of
progress and any adjustments are recognised as
a cumulative catch up in revenue recognition (or
reversal) in the current year results. In the
current year, a total of $1,305,000 was
reversed from revenue due to the changes in
estimates.
The accounting policy for PCP revenue and
description of the estimation uncertainty is
disclosed in Note A2 of the financial report.
Our audit procedures included the following:
► Considered the Group’s PCP revenue
recognition accounting policies and assessed
compliance with the requirements of
Australian Accounting Standards.
► Tested the operating effectiveness of
controls related to PCP customer transactions
to ensure these sales are captured accurately,
and the related cash receipts are deferred on
receipt.
► Assessed the accuracy of the data used in the
PCP revenue estimation calculation and
challenged the reasonableness of the key
judgements including:
► Obtaining details of the sales of PCP
products to customers during the year,
and testing that the cash receipts were
appropriately deferred.
► Obtaining details of the actual cleaning,
repairs and resizing services in the year,
and tested a sample to ensure the repair is
accurately tagged to the associated PCP
plan date.
► Performing analysis over the historic
repairs data, to determine whether the
assumptions made by management were
supportable, including the length of the
lookback period, any adjustments made for
the impact of COVID related store
closures, and the weighting of recent
trends compared to older data.
► Tested the mathematical accuracy of the PCP
revenue estimation model and reperformed
the Group’s calculation supporting the change
in estimate relating to PCP revenue
recognition.
► We evaluated the adequacy of disclosures in
financial statements of PCP revenue recorded
and deferred at year end and the associated
estimation uncertainty.

A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation

Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2021 annual report other than the financial report and our
auditor’s report thereon. We obtained the directors’ report that is to be included in the annual report,
prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the annual
report after the date of this auditor’s report.
Our opinion on the financial report does not cover the other information and we do not and will not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
► Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.

A member firm of Ernst & Young Global Limited
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► Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
► Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
► Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
► Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
► Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 27
June 2021.
In our opinion, the Remuneration Report of Michael Hill International Limited for the year ended 27
June 2021, complies with section 300A of the Corporations Act 2001.

A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation

Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.

Ernst & Young

Kellie McKenzie
Partner
Brisbane
20 August 2021

Full year results date Michael Hill International Ltd (“MHJ”) – NTA Figure

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