Investor Presentation Michael Hill Acquisition of Bevilles

ACQUISITION
OF BEVILLES
19 APRIL 2023

2
MICHAEL HILL ASPIRATIONAL BRAND JOURNEY
ASPIRATIONAL BRAND JOURNEY
STRATEGIC PILLARS
PREMIUM
LUXURY
VALUE
MID-MARKET

3
MICHAEL HILL INVESTMENT DRIVING GROWTH
CAPITAL MANAGEMENT FRAMEWORK
Circular economy offering re:new:
̶Digitally-enabled gold recycling platform
̶Launching a diamond upgrade program
̶Reimagining of jewellery repair business
Development of a new digitally-led bespoke
diamond jewellery brand
Introducing third-party jewellery insurance and
replacement solutions for customers
Dividend Policy
50% - 75% adjusted NPAT
Continue to deliver at the higher
end of the range
Organic Growth
~$25m to $30m annual spend
Organic
+
Investment
New markets & channels via
digital platforms
Launch of new revenue streams
Capital Investment
Opportunities
Share buy-back
Continue to pursue acquisition
opportunities across the jewellery
sector in our existing countries
Brand elevation – driving higher ATV
Increasing retail productivity
Product evolution through newness and
elevation
Digital-first and marketplace expansion
International digital channels
Data and loyalty driving growth
Refreshed Policy aligned to strong business
performance
Current dividend yield ~8%
1
Share buy-back successfully executed
Opportunity to acquire complementary
business
1
Based on last two distributions and current share price.

PREMIUM
LUXURY
4
EXECUTING THE ACQUISITION STRATEGY
VALUE
MID-MARKET
ACQUISITION OF BEVILLES BRAND, DELIVERS INCREMENTAL STORE ROLLOUT GROWTH STRATEGY
Catering to the ‘value’ market segment through selling quality products at a more
affordable price point
Strong strategic fit and complements MHJ strategy to elevate own brand and
products
Minimal cannibalisation and ability to capture a broader, full-spectrum, customer
base
Highly profitable including omni-channel distribution capabilities, successful
loyalty program and open frontage / accessible stores
Under-penetrated network (26 stores) with a differentiated product mix
Complementary market positioning servicing two distinct segments of the market
281 physical stores across Australia (148), New Zealand (47) and Canada (86)
Brand elevation strategy underway, moving further into the premium segment
Product elevation with diamonds at our core
Omni-first, digital-led and channel agnostic

5
TRANSACTION OVERVIEW
TRANSACTION EXPECTED TO BE IMMEDIATELY EPS ACCRETIVE
TRANSACTION
TERMS
Acquire the business and Selected Assets
1
of Bevilles for a Net Enterprise Value (EV) of ~$45m
̶Includes upfront consideration, net of working capital adjustments, and minimum $1m earn-out payment
Earn-out payment, payable over two years, linked to MHJ share price performance
Separate Ambassadorial Fees payable to Michelle Beville over two years for ongoing contribution to the business
Attractive deal terms and asset acquisition structure carves out potential legacy liabilities
ACQUISITION
METRICS AND
FINANCIAL
IMPACT
Net Enterprise Value of ~$45m, implying an EV/EBITDA multiple of ~5.6x based on expected adjusted FY23E underlying
EBITDA (pre-AASB16) of ~$8m
2
Acquisition expected to be immediately EPS accretive
Expected to complete in Q2 CY2023 subject to satisfaction of certain conditions precedent (regulatory approvals from
ACCC and Fair Work Commission, transfer of leases, people and contracts, and release of guarantee/security
arrangements)
FUNDING &
CAPITAL
MANAGEMENT
Up-front cash consideration and transaction costs will be funded from MHJ’s cash reserves and undrawn debt facility
Any future earn-out payments and Ambassadorial Fees expected to be funded from MHJ’s cash reserves/debt facility
No change to MHJ’s existing dividend policy (50%-75% of adjusted net profit after tax), with share buy-back program
paused
Notes:
1.Selected Assets includes underlying business, inventory, fixtures and fittings, intellectual property, contracts, brand and other non-current assets and liabilities
2.Based on unaudited, pre-AASB16, pre-IFRIC SaaS-related adjustments, and with normalisations, EBITDA mid-point for $7.5m - $8.5m

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BEVILLES OVERVIEW
BEVILLES IS A WELL-ESTABLISHED AND REPUTABLE JEWELLERY RETAILER, WITH A NETWORK
OF 26 STORES AND A GROWING ONLINE PRESENCE
BUSINESS OVERVIEW
Family-owned Australian jewellery and watch retailer known for
creating and selling quality products at affordable prices
Notable growth and profitability achieved since restructuring in
2014, with nine new stores being opened in the last five years
Investment in omni-channel distribution strategy, including
presence on multiple online marketplaces, driving material growth
in online sales, and recently launched pure-play watch business
Clearly defined market position, focusing on a core range of
categories that are always in demand and suitable for a wide range
of customers
Loyal customer base, with 88% of sales over the last twelve
months coming from loyalty members
Expected to generate $60 - 65m in sales and $7.5 - 8.5m in
EBITDA (pre-AASB16) in FY23
̶Average sales per store expected to be $2.0 -2.2m
CURRENT STORE NETWORK
2
14
10
BEVILLES SALES BY
CHANNEL (%) –CY22
Loyal customer base with
long standing brand
Strong growth and
profitability

Affordable, quality
jewellery
Omni-channel distribution
capabilities




10%
90%
OnlineStores

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STRATEGIC BRAND POSITIONING
BRAND, PRODUCT AND CUSTOMER DIFFERENTIATION WITH STRATEGIC OPERATIONAL ALIGNMENT
BEVILLESMICHAEL HILL
Category
Position
Value/Mid-MarketPremium
Customer
Base
Eternity Club Loyalty Program
with 1.1m members
Brilliance by Michael Hill Loyalty Program
with 1.8m members
Product Mix
Highly transactional, lower ATV
with a focus on gifting and watches
Lifetime moments, higher ATV
with a focus on diamonds
Locations
26 locations
(same locations as MH except for 1)
281 locations
(148 in Australia)
Supply
Chain &
Distribution
Multiple stock and non-stock suppliers
One distribution centre in Melbourne
Multiple stock and non-stock suppliers
Two distribution centres
Customer
Offerings
Customer care plans, consumer credit
offerings and repair network
Customer care plans, consumer credit
offerings and repair network
Limited crossover
Limited crossover
Limited crossover
Strong relationship
with all landlords
Crossover and
synergies
Crossover and
synergies

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COMPLEMENTARY STRATEGIC FIT AND SALES CHANNELS
MICHAEL HILL AND BEVILLES: SYNERGISTIC SALES CHANNELS WITH MEANINGFUL GROWTH POTENTIAL
SALES CHANNELS
Stores located in high-traffic areas
Location of store network assists with freight synergies
Large opportunity to grow Bevilles stores from current 26
Opportunity to ‘flip’ selected Michael Hill stores into Bevilles
network
No overlap in online marketplaces given differentiated brand
positioning
STORE PRESENCE
2
14
10
7
35
45
30
21
2
148 MHJ STORES
AUSTRALIA
26 BEVILLES STORES
NEW ZEALAND
CANADA
4
4
TEE TREE PLAZA
LIVERPOOL
86
47

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COMPLEMENTARY BRANDS & PRODUCTS
BEVILLES PRODUCTS, BRANDS AND COLLECTIONS ARE COMPLEMENTARY TO MHJ
DIFFERENTIATED PRODUCT OFFERING TO MHJ
Bevilles has a gifting and transactional focus with products targeting
a more accessible price point
Key product differences include:
̶Less focus on bridal leading to a lower diamond mix
̶Higher focus on gold and silver jewellery
̶With a significant focus on a multi-brand watch strategy
Differentiated brand positioning, price and products limits sales
crossover
THIRD PARTY BRANDS -BEVILLES AND WATCHES GALORE
Dataonthissliderelatestothe period March 2022 to February 2023

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SIGNIFICANT OPPORTUNITY FOR MHJ TO ADD VALUE
GROWTH OPPORTUNTIES AND EBITDA ENHANCEMENTS READILY ACHIEVEABLE
KEY GROWTH OPPORTUNTIES
Alignment of shared services
Consolidate vendor base, improve terms & intake margins

Retail leadership and development capabilities
Sales training, store presentation & increase store
conversion
Landlord and consumer credit relationships
Store grading, ranging and assortment planning
EBITDA ENHANCEMENT OPPORTUNITIES
Substantial store roll-out opportunity in short and medium term
Rapidly expand lab diamonds and new category opportunities
Enhance value add services offerings e.g.repairs, care plans and
insurance
Third party brand expansion (jewellery and watches)
Refine and expand omni-channel offering
Increase conversion through improved customer experience
New Zealand and Canada present future market expansion
opportunities
Supply chain synergies and efficiencies






BEVILLES AU STORE ROLLOUT PROFILE
1
(~10 to 15 per year)
1
Subject to landlord negotiations and real estate availability

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POST ACQUISITION GROUP OVERVIEW
Leading jewellery and watch retailer, with a material presence in Australia, New Zealand and
Canada
Catering to multiple market and consumer segments through products with broad appeal
Customer focused, detail oriented, nimble, multi-channel operations
State of the art distribution technology and high calibreleadership and retail teams
ASX & NZX: MHJ
LUXURY
PREMIUM
VALUE
PURE-PLAY
281 physical stores across Australia (148), New Zealand (47) and Canada (86)
Brand elevation strategy underway, moving further into the premium segment
Omni-first, digital-led and channel agnostic
MH
Bespoke
(under development)
26 physical stores in Australia
Catering to the ‘value-led’ market through selling quality products at affordable prices
Omni-channel distribution model
Medley – MHJ’s recently launched, online pure-play, delivering 53% year-on-year
sales growth (as at 31 December 2022)
To be accompanied by Bevilles standalone watch website, Watches Galore
Developing a new digitally-led bespoke jewellery brand
Luxury customer with higher ATV
Limited showroom presence

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APPENDICES

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EARN-OUT STRUCTURE
EARN-OUT PAYMENT TIED TO MHJ SHARE PRICE PERFORMANCE, WITH A MINIMUM FLOOR OF $1M
Earn-out paid in cash in two tranches
̶Tranche 1: paid one year post Completion (first anniversary)
̶Tranche 2: paid two years post Completion (second
anniversary)
The quantum of each payment determined by multiplying the
applicable number of shares (determined in accordance with the
table to the right) by the 30-day MHJ ASX VWAP
1
in the lead up
the respective anniversary
Minimum earn-out floor of $1m
̶Top up payment to be made at the second anniversary post
Completion if total earn-out payments over the two tranches
does not exceed $1m
NO. OF SHARES
30-DAY ASX VWAP
1
(A$)YEAR 1YEAR 2
$1.50450-
$1.60600450
$1.70900600
$1.801,080900
$1.90+1,0801,080
Example: if the 30-day VWAP in the lead up to the first anniversary is
$1.55, the payment for Tranche 1 will be $1.55 multiplied by 450
Shares, resulting in a cash payment of $697,500. If the 30-day VWAP
in the lead up to the secondary anniversary is still $1.55, no Tranche 2
payment will be made. However, given the total earn-out amount will
be less than the $1m floor, a top up payment of $302,500 will be paid.
Note:
1.Volume Weighted Average Price

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 does 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 presentation.