A A ED FULL YEAR RESULTS 30 JUNE 2014 TH E YEAR I N R E V I E W AU $000’s §  Revenue increased 9.9% to $483.935m. §  Same store sales up 5% §  EBIT of $42.151m up 4.7% §  Revenue collected from PCPs of $31.719m §  Canadian segment achieved 10.1% same store sales increase and EBIT of CA $3.794m, up 238.5% §  First Emma & Roe concept store opened in Mackay in April. There are now six stores trading §  Michael Hill website relaunched in November TH E YEAR I N R E V I E W AU $000’s §  New diamond bridal range tested in the US and selected Canadian stores §  19 new Michael Hill stores opened costing $6.6m §  15 Michael Hill stores refurbished costing $4.2m §  278 Michael Hill stores open at 30 June 2014 §  Dividend steady at NZ 6.5 cents per share §  Equity ratio at 53.3% §  Dispute with Australian Taxation Office resolved TH E YEAR I N R E V I E W AU $000’s PRIORITIES RESULTS To drive same store sales and EBIT performance across the Group Group same store sales increased 5.0%. EBIT was up in 3 segments, an increase of 4.7% for the Group. To open 20 new Michael Hill stores across the Group 19 new stores were opened during the year. To deliver a return on average shareholders’ funds of 20% A return on average shareholders’ funds was achieved of 18.4% excluding the one-off ATO tax settlement and the interest paid into the tax pool in New Zealand. To establish our e-commerce operation across all four countries The Group relaunched its website in November 2013 with a much stronger focus on e-commerce. TH E YEAR I N R E V I E W AU $000’s PRIORITIES RESULTS To achieve further EBIT improvement in the Canadian operation EBIT improved 238.5% to a record CA $3.794m, an increase of CA$2.673m on the previous year. To improve same store sales in the US operation through an increased focus on the bridal market Same store sales in the US increased 6.1% during the year. To improve return on assets employed The Group implemented two new through increased efficiency in inventory inventory management systems in the management last 24 months. The full benefit of these systems won’t be evident until the implementation of all componentss is completed. FINANCIAL HIGHLIGHTS FI NAN C IAL H I G H LI G HTS AU $000’s 12  months     Ended  30/6/14   12  months     Ended  30/6/13   %  Move   Group revenue 483,935 440,225 +9.9% Gross profit 309,260 280,357 +10.3% EBITDA 55,221 50,711 +8.9% Depreciation 13,070 10,452 +25.0% EBIT 42,151 40,259 +4.7% EBIT % of sales 8.7% 9.1% NPBT 36,775 37,737 -2.5% NPAT 25,041 32,099 -22.0% * Depreciation has increased primarily from investment in inventory management systems and new store openings / refits / relocations. M O R E H I G H LI G HTS AU $000’s 12  months   ended  30/6/14   12  months  ended   30/6/13   %  Move   Net operating cash flows 14,689 41,686 -64.8% Working capital 141,588 119,430 +18.6% Net debt 47,891 17,539 +173.1% Equity ratio 53.3% 59.4% Return on shareholders’ funds 14.1% 19.7% Earnings per share AU 6.54c AU 8.38c -22.0% Total dividend per share NZ 6.5c NZ 6.5c 0% * Net operating cash flow and net debt has been impacted by the increase in inventory from the North American bridal trial and new stores, ATO tax settlement and funds paid into the tax pool in NZ. SEGMENT RESULTS TD 30 JUNE 2014 S E G M E NT R E SU LTS AUSTR ALAS IA AU ST R A LI A (AU $000’s) 2014 2013 % move Revenue 302,024 289,333 +4.4% EBIT 46,703 42,225 +10.6% As a % of revenue 15.5% 14.6% N EW Z EALAN D (NZ $000’s) 2014 2013 % move Revenue 109,693 111,357 -1.5% EBIT 22,062 22,128 -0.3% As a % of revenue 20.1% 19.9% S E G M E NT R E SU LTS N O RTH AM E R I CA CA N A DA (CA $000’s) 2014 2013 % move Revenue 69,025 52,950 +30.4% EBIT 3,794 1,121 +238.5% As a % of revenue 5.5% 2.1% 2014 2013 % move Revenue 9,994 10,265 -2.6% EBIT (1,679) (2,359) +28.8% As a % of revenue (16.8%) (23.0%) USA (US $000’s) SALES 2013 - 2014 G R O U P R E V E N U E TO 30 J U N E 500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 AU$000’s SALE S BY C O U NTRY Australia  62%   New  Zealand  21%   Canada  15  %   USA  2%   12 M O NTH S SALE S TO 30 J U N E All figures in local currency Country 2014 2013 +/- AU same stores $273.7m $271.5m +0.8% NZ same stores $108.4m $110.5m -1.9% CA same stores $51.9m $47.2m +10.1% US same stores $8.1m $7.6m +6.1% AU all stores $302.0m $289.3m +4.4% NZ all stores $109.7m $111.4m -1.5% CA all stores $69.0m $52.9m +30.4% US all stores $10.0m $10.3m -2.6% EBIT CONTRIBUTIONS EAR N I N G S B E FO R E I NTE R E ST & TAX TO 30 J U N E 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 AU$000’s E B IT C O NTR I B UTI O N S BY C O U NTRY 50,000 NZ Australia Canada 40,000 30,000 20,000 10,000 0 -10,000 USA AU$000’s FUNDS S HAR E H O LD E R S’ FU N D S 200,000 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 AU$000’s R ETU R N O N AV E RAG E S HAR E H O LD E R S’ FU N D S 2009 to 2014 returns impacted by deferred tax credit of NZ$50.1m booked in 08/09 60 50 40 30 20 10 0 %   DIVIDENDS D I V I D E N D S PAI D NZ cents per share   7 6 5 4 3 2 1 0 Note: due to the share split in 2007, prior years have been divided by 10 for comparative purposes •  2005 •  2006 •  2007 •  2008 •  2009 •  2010 •  2011 •  2012 •  2013 •  2014 2.3c 2.3c 2.6c 3.2c 2.5c 4.0c 4.5c 5.5c 6.5c 6.5c STORE EXPANSION G RO WTH P H I LOSOP HY Controlled profitable growth with an emphasis on improving existing operations TOTAL M I C HAE L H I LL STO R E S O P E RATI N G 300 250 200 150 100 50 0 Stores Numbers •  1998 – 94 +6 •  1999 – 102 +8 •  2000 – 106 +4 •  2001 – 115 +9 •  2002 – 120 +5 •  2003 – 134 +14 •  2004 – 143 +9 •  2005 – 156 +13 •  2006 – 177 +21 •  2007 – 192 +15 •  2008 – 210 +18 •  2009 – 239 +29 •  2010 – 232 -7 •  2011 – 240 +8 •  2012 – 252 +12 •  2013 – 267 +15 •  2014 – 278 +11 N E W STO R E S O P E N E D 12 months ended 30/6/14 12 months ended 30/6/13 Australia 6 10 New Zealand 1 0 Canada 10 8 USA 2 0 Michael Hill stores opened 19 18 Michael Hill stores closed 8 3 Emma & Roe stores opened 1 5 TOTAL STO R E S O P E RATI N G 12 months ended 30/6/14 12 months ended 30/6/13 Australia 164 162 New Zealand 52 52 Canada 54 45 USA 8 8 Total Michael Hill 278 267 Emma & Roe 6 5 AUSTRALASIAN EXPANSION AUSTRALIAN E XPAN S I O N Stores Open 30/6/14 164 Planned for 14/15 5 stores 169 Planned for 15/16 4 stores 173 Planned for 16/17 4 stores 177 185 store locations have been identified as suitable locations N E W Z EALAN D E XPAN S I O N Stores Open 30/6/14 52 Planned for 14/15 0 stores 52 Planned for 15/16 0 stores 52 Planned for 16/17 1 store 53 E M MA & R O E E XPAN S I O N Stores Open 30/6/14 Planned for 14/15 6 4 stores 3 new store locations planned for Australia and 1 for New Zealand 10 NORTH AMERICAN EXPANSION CANAD IAN E XPAN S I O N Stores Open 30/6/14 54 Planned for 14/15 10 stores 64 Planned for 15/16 10 stores 74 Planned for 16/17 10 stores 84 110 store locations have been identified as suitable locations USA E XPAN S I O N Stores Open 30/6/14 8 Planned for 14/15 1 store 9 Planned for 15/16 1 store 10 Planned for 16/17 4 stores 14 P R I O R ITI E S FO R 2014/15 §  To drive same store sales and EBIT performance across the Group §  To deliver 20% return on shareholders’ funds §  To open 20 new stores across the Group §  To open six Emma & Roe stores across Australasia while continuing to test and refine the Emma & Roe model §  To increase sales from our e-commerce platforms across both brands while integrating the online and instore experience §  To open ten new stores in Canada while maintaining strong EBIT growth §  To continue the test of the US market and bring all eight stores to a cash positive position §  To improve the performance of our investment in inventory through deployment of our recent investment in inventory management systems §  To continue to fine tune our in-house credit model in North America to “best practice” within our industry I I michael hill INTERNATIONAL LIMITED