1 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
ANNUAL
REPORT
2024
2 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
DISCLAIMER: Certain statements in this report constitute forward-looking statements. Forward-looking statements are statements (other than statements
of historical fact) relating to future events and the anticipated or planned financial and operational performance of Michael Hill International Limited and its
related bodies corporate (the Group). The words “targets”, “believes”, “expects”, “aims”, “intends”, “plans”, “seeks”, “will”, “may”, “might”, “anticipates”, “projects”,
“assumes”, “forecast”, “likely”, “outlook”, “would”, “could”, “should”, “continues”, “estimates” or similar expressions or the negatives thereof, generally identify
these forward- looking statements. Other forward-looking statements can be identified in the context in which the statements are made. Forward-looking
statements include, among other things, statements addressing matters such as the Group’s future results of operations; financial condition; working capital,
cash flows and capital expenditures; and business strategy, plans and objectives for future operations and events, including those relating to ongoing operational
and strategic reviews, sustainability targets, expansion into new markets, future product launches, points of sale and production facilities.Although the Group
believes that the expectations reflected in these forward-looking statements are reasonable, they are not guarantees or predictions of future performance
or statements of fact. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the
Group’s actual results, performance, operations or achievements or industry results, to differ materially from any future results, performance, operations or
achievements expressed or implied by such forward-looking statements. Such risks, uncertainties and other important factors include, among others: global and
local economic conditions; changes in market trends and end-consumer preferences; fluctuations in the prices of raw materials, currency exchange rates, and
interest rates; the Group’s plans or objectives for future operations or products, including the ability to introduce new jewellery and non-jewellery products; the
ability to expand in existing and new markets and risks associated with doing business globally and, in particular, in emerging markets; competition from local,
national and international companies in the markets in which the Group operates; the protection and strengthening of the Group’s intellectual property rights,
including patents and trademarks; the future adequacy of the Group’s current warehousing, logistics and information technology operations; changes in laws and
regulations or any interpretation thereof, applicable to the Group’s business; increases to the Group’s effective tax rate or other harm to the Group’s business as
a result of governmental review of the Group’s transfer pricing policies, conflicting taxation claims or changes in tax laws; and other factors referenced to in this
report. 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, as there can be no assurance the actual outcomes will not differ materially from
the forward-looking statements in this report. Except as required by applicable laws or regulations (including the ASX Listing Rules), the Group does not intend,
and does not assume any obligation, to update any forward- looking statements contained herein. All subsequent written and oral forward-looking statements
attributable to us or to persons acting on the Group’s behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained
elsewhere in this report.
TERMINOLOGY: In this report, unless otherwise specified or appropriate in the context, the term “Company” refers to Michael Hill International Limited, the term
“Group” or “Michael Hill Group” refer to the Company and its subsidiaries (as appropriate), and the use of “Michael Hill”, “Bevilles”, “TenSevenSeven” and “Medley”
is reference to the relevant brand within the Michael Hill Group.
3 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
CONTENTS
04
COMPANY PROFILE
06
LETTER FROM THE CHAIR
08
CEO’S MESSAGE
10
PERFORMANCE HIGHLIGHTS
11
KEY FACTS
12
PERFORMANCE
14
TREND STATEMENT
17
SUSTAINABILITY SNAPSHOT
22
EXECUTIVE LEADERSHIP TEAM
25
DIRECTORS’ REPORT
35
INFORMATION ON DIRECTORS
41
REMUNERATION REPORT
52
ADDITIONAL STATUTORY INFORMATION
56
AUDITOR’S INDEPENDENCE DECLARATION
58
FINANCIAL STATEMENTS
63
NOTES TO FINANCIALS
100
CONSOLIDATED ENTITY DISCLOSURE STATEMENT
101 DIRECTORS’ DECLARATION
102
INDEPENDENT AUDITOR’S REPORT
108 ADDITIONAL SHAREHOLDER INFORMATION
110 CORPORATE DIRECTORY
The Directors are pleased to present
the annual report of Michael Hill
International Limited and its subsidiaries
for the year ended 30 June 2024.
4 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
Additionally, in late 2023, the Group soft launched its new
bespoke brand TenSevenSeven, focused on servicing the high-
end of the market with its unique personalised diamond ring
proposition. With these new brands, the Michael Hill Group
now services all significant customer segments of the fine
jewellery category, and delivers multiple new growth pipelines.
Around the world, the Group employs over 3,400 employees
across retail sales, manufacturing and corporate roles. As at
30 June 2024, the Group operates 171 stores in Australia, 44
in New Zealand and 85 stores in Canada.
From 1979 to the present day, and as we look to the future,
the Michael Hill Group is dedicated to offering quality
jewellery and service for our customers to celebrate the key
moments in their lives.
At Michael Hill Group, we are committed to becoming a more
sustainable and ethically responsible business, protecting our
eco-system and contributing to the communities we serve in
meaningful ways, for generations to come.
Information on our corporate governance policies and
practices, including our Corporate Governance Statement,
is
available
on
our
Investor
Centre
website
at
investor.michaelhill.com
COMPANY
PROFILE
The first Michael Hill store opened in 1979 when Sir Michael
Hill and his wife, Lady Christine Hill launched their unique
retail jewellery formula in Whangarei, on the North Island
of New Zealand.
With engaging store designs, a product range devoted to
attainable jewellery with a high concentration of diamonds,
and the clever use of high impact advertising, Michael Hill
rapidly gained popularity and rose to national prominence.
In 2016, the Company moved its primary stock exchange
listing to the Australian Securities Exchange and maintains
a secondary listing on the New Zealand Stock Exchange (ASX/
NZX: MHJ).
Over the last four years, the Group has been on a transformative
journey reshaping many aspects of the business, underpinned
by a clearly defined strategic agenda to elevate the Michael
Hill brand and drive growth. The strategic framework is
customer-led and continually evolving as we adapt to the
ever-changing landscape of retail. As the Michael Hill brand
continues its aspirational brand journey to a more premium
position, the acquisition of the Bevilles business in June 2023
provided a vehicle to retain market share at the value end of
the fine jewellery category.
THE MICHAEL HILL GROUP IS A MARKET LEADING JEWELLERY RETAILER, WITH A PORTFOLIO
OF BRANDS, OPERATING A NETWORK OF 300 STORES ACROSS AUSTRALIA, NEW ZEALAND
AND CANADA, WITH MULTIPLE INTERNATIONAL DIGITAL PLATFORMS.
5 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
OUR PURPOSE
The people behind the
moments that matter
6 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
OUR PEOPLE AND OUR VALUES
Retention and development of our team is a top Board and
management priority, and we see a strong correlation between
staff retention, sales performance and customer satisfaction.
Our people are the heart of our business, with our values
of “We care”, “We are inclusive and diverse”, “We are
professional”, and “We create outstanding experience”
truly embedded across the entire Company.
Pleasingly, our engagement survey was completed by 85%
of our workforce and resulted in an engagement score of
80%. Our results continue to outperform the global retail
averages demonstrating how hard we continue to work to
ensure that Michael Hill remains an employer of choice and
is a great place to work.
SUSTAINABILITY COMMITMENT
The challenging retail conditions have not dimmed our focus
on sustainability which is embraced across the organisation
as we pursue new initiatives and seek greater transparency
across the Group and throughout our supply chains.
I’m particularly proud of the launch of The Michael Hill
Foundation in late February 2024 representing our ongoing
commitment to meaningful change, and our dedication to
a better world. The Michael Hill Foundation encompasses
two key areas of focus: Empowering Women and Nature
Restoration.
Since the launch of the Foundation, we have planted over
50,000 trees across Australia, New Zealand and Canada,
and we have established a long-term partnership with the
Collective Good Foundation in India, with a focus on driving
projects to empower local women.
LETTER FROM
THE CHAIR
DEAR SHAREHOLDERS
CHALLENGING MARKET CONDITIONS
Undoubtedly, FY24 has been the most challenging year
I’ve experienced since joining the Board in 2014, as we
cycled record sales performance and were faced with
significant headwinds of low consumer confidence, a tough
macro-economic environment impacting retail trading
conditions and inflationary forces placing pressure on
operating costs across the business.
Pleasingly, we have now seen interest rate reductions in
both Canada and New Zealand, and while we are seeing
some early signs of improvement in trading performance,
we expect that the recovery will be gradual.
Given the difficult trading environment, the business
made some tough yet prudent decisions in order to navigate
the Group through one of the worst retail cycles for some
decades - exiting a number of senior leadership roles,
reducing unit operating costs, reducing capital expenditure,
and executing an inventory optimisation strategy.
COMMITMENT TO GROUP STRATEGY
Despite these challenges, we are seeing the benefits from
the geographic and demographic diversity of our business
and remain committed to our group multi-brand strategy,
with each brand uniquely positioned to a differentiated
customer segment and price proposition.
The gradual elevation of the Michael Hill brand to a more
premium position is key to this multi-brand strategy. The
refresh of the Michael Hill brand across digital platforms,
new brand logos and colour palette, together with Miranda
Kerr as our brand ambassador is resonating well across
all geographies.
During the year, we embedded the newly-acquired Bevilles
brand into the Group and are currently testing the extension
of the brand, with some new stores in the Queensland
market, some new product ranges and differentiated
marketing campaigns, in order to capture the value end
of the fine jewellery category.
7 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
CAPITAL MANAGEMENT
As a proactive capital management measure, the Board
and Management have been focused on strengthening the
balance sheet and underpinning the earnings performance
by securing an uplift to our existing debt facility to support
seasonal working capital requirements for the Christmas
trade period. In addition, Management has taken action
to reduce capital expenditure across both technology and
stores throughout FY25, as well as taken steps to improve
inventory productivity and reduce costs.
Given compressed earnings in FY24, and in conjunction
with a commitment to prudent investment in operating and
capital expenditure in FY25, the Board has determined that
no final dividend will be declared for FY24, resulting in
a total dividend for the year of AU1.75 cents per share.
OUR BOARD
It continues to be a privilege to serve on the Michael Hill
Board alongside such a talented group of directors, including
our founder, Sir Michael Hill, a true entrepreneur and
creative spirit who continues to inspire and challenge us all.
As a cycle of board renewal, we are pleased to welcome
Claudia Batten as a Non-Executive Director. Claudia brings
a wealth of knowledge and experience particularly in
technology and digital growth strategies which will be
invaluable to the Company. Her extensive international and
corporate development experience also complements the
existing Board composition.
Furthermore, Jacquie Naylor stepped down from the Board
in April 2024. Jacquie’s deep retail and leadership experience
has been invaluable to the Company. We are thankful for the
contribution and counsel she provided.
IN CONCLUSION
The FY24 results were deeply disappointing, but please be
assured that your Board and the entire Michael Hill team are
resolutely focused on driving sales, refreshing the Michael Hill
brand, embedding and expanding the new Bevilles business
and restoring the financial performance of the Group.
I am extremely proud and grateful for the resilience,
perseverance and commitment of Daniel and the entire team.
Regards,
Robert Fyfe
Chair
8 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
pressure on gross margin, and prompting some repricing
across the business. With this in mind, the business has
implemented a number of initiatives to drive margin
recovery, with a deliberate reduction in inventory to make
way for higher margin product in FY25.
WELCOMING THE NEW ERA – MICHAEL HILL BRAND
In April a key milestone of the Michael Hill brand elevation
journey was unveiled – The New Era:
•
A complete brand refresh of Michael Hill, delivering a
new elevated aesthetic across digital platforms, brand
assets, colour palette and logos. These assets combine
to bring both a more contemporary and feminine
perspective to the brand.
•
Our first global flagship store at Chadstone in
Melbourne, the most premium centre in the Australian
market, incorporating all aspects of the “store of the
future” with elevated in-store experience, extended
product offer, and an inviting environment that includes
private selling spaces.
•
Partnering with our first ever global Brand Ambassador,
Miranda Kerr. Her timeless elegance resonates in all our
markets, she embodies our brand values, is aspirational
and yet accessible.
I am extremely proud of the enthusiasm, passion and
dedication demonstrated by all our team involved in the
meticulous and considered delivery of such a pivotal moment
for the Michael Hill brand.
EMBEDDING AND EXPANDING - BEVILLES
With the repositioning of the Michael Hill brand to a more
aspirational position well underway, this provides the perfect
opportunity for the newly acquired Bevilles business to take
market share at the value end of the fine jewellery category.
CEO’S
MESSAGE
Following a period of record performances, I was extremely
disappointed by the Company’s financial results in FY24.
NAVIGATING CHALLENGING RETAIL TRADING CONDITIONS
Our earnings underperformance was a combination of both
weaker sales and margin deterioration, coupled with the
rising cost of doing business. All markets were faced with
challenging economic conditions and inflationary pressures
impacting consumer confidence, which in turn required
management to make a number of difficult structural and
cost-out decisions in order to protect and improve the
longer-term financial performance of the business. Each
market is at a different stage of the economic cycle and
recovery, with Canada showing the earliest signs of
financial improvement.
Our Australian segment (including our Bevilles brand),
while missing our financial expectations, did perform
strongly against the broader jewellery market, taking
market share albeit fuelled by incremental promotional
activity. Our Canadian segment continued to be our most
resilient market, delivering another year of consistent sales
performance, even with cycling a record prior year. And
finally, on to New Zealand which was, and continues to be,
our most challenging market – with the toughest economic
environment, coupled with our ongoing elevated focus on
security.
Pleasingly, our collaboration with the New Zealand Police
and the measures we have put in place seem to be working.
Furthermore, our National Retail Manager, has been
appointed to a position on the NZ Government Advisory
Council for a two year term, reporting to the Minister of
Justice, with a focus on Retail Crime Prevention across
NZ and driving legislative changes.
Clearly margin was under pressure from both input costs
and promotional activity due to market conditions, with
inflationary forces driving elevated costs across many
aspects of the business, which together, impacted EBIT.
Throughout the year, the price of key raw materials (gold
and diamonds) continued to elevate to record highs placing
During the first year of ownership, we executed a number
of key strategic initiatives in the Bevilles business:
•
Expanding the store network, with five new stores
and two conversion stores in a new territory,
Queensland, along with three new stores in existing
territories, ending the year with 36 stores
•
Transitioning to Group operational IT systems across
point-of-sale, finance and inventory
•
Relocating the head office and distribution centre
from Melbourne to Brisbane
•
Undertaking an extensive product range review with
a view to creating a more productive and streamlined
range focused on core and everyday value
Select Michael Hill stores have been converted to the
Bevilles brand in a cost-efficient test & learn model,
with further conversion stores planned, subject to the
performance of these trials.
CULTURE AND TEAM
And most importantly, the Michael Hill Group is built on
the foundations of a great culture and a fantastic team
as evidenced by our most recent engagement survey
result, with our global engagement score of 80%. I’d like
to acknowledge and thank the ongoing determination,
commitment and effort from our people across all levels
of the business.
As we approach the key trading period of Christmas,
our teams are excited and energised by the brand refresh,
new product ranges, and our Christmas campaign. While
there is no doubt that market conditions will continue to
be challenging, our strategies and the focus of our team
will be on sales growth, margin expansion and continued
cost control, with the aim of improving financial
performance in FY25.
Daniel Bracken
Managing Director and CEO
9 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
PERFORMANCE
HIGHLIGHTS
OPERATIONAL PERFORMANCE
KEY FINANCIAL RESULTS
$15.9M
Comparable
EBIT of
2.5M
Digital sales
grew 16% to
$48M
Brilliance by Michael Hill
membership now over
Successful
relocation of the
Bevilles head office
to Queensland
Opened 10 new
Bevilles stores,
including entry
into Queensland
with 7 stores
Launched the
Michael Hill
Foundation
Complete refresh of the Michael Hill brand
The Michael Hill brand opened its
first global flagship store, at Chadstone
$645M
Group revenue
increased by 4.2%* to
$196M
Active management
of inventory - ~$7m
reduction to
Average
transaction
value grew by
6%
$39M
Closing net debt
position of
60.6%
Group gross margin
settled at
10 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
*on a 52-week basis (including Bevilles)
11 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
KEY FACTS
TRADING RESULTS
%
Change
2024
$000’s
2023
$000’s
Group revenue
2.4%
644,929
629,562
Group revenue
(52-week basis)
4.2%
644,929
619,054
Gross profit
(3.3%)
390,918
404,440
Earnings before interest
and tax (EBIT)*
(75.8%)
14,228
58,883
Comparable earnings
before interest and tax
(EBIT)*
(73.0%)
15,898
58,889
Net profit before tax
(NPBT)
(100.7%)
(368)
49,747
Net profit after tax
(NPAT)
(101.4%)
(479)
35,182
Net cash inflow from
operating activities
(52.8%)
37,773
80,072
FINANCIAL POSITION
%
Change
2024
$000’s
2023
$000’s
Contributed equity
(384,623,963
ordinary shares)
14.9%
12,763
11,112
Total equity
(11.5%)
166,881
188,615
Total assets
(0.2%)
545,244
546,488
Net (debt)/cash
(562.8%)
(38,726)
8,367
Capital expenditure
(19.4%)
27,609
34,269
KEY RATIOS
2024
2023
Return on average
shareholders funds
(0.3%)
18.3%
Gross margin
60.6%
64.2%
Interest expense cover (times)
1.0
5.9
Equity ratio
30.6%
34.5%
Working capital ratio
3.5 : 1
3.4 : 1
Current ratio
1.7 : 1
1.6 : 1
DIVIDENDS (including final dividend)
2024
2023
Per Ordinary Share
AU1.75c
AU7.5c
Times covered by net profit
after tax
(0.02)
1.15
KEY INVESTOR RATIOS
2024
2023
Basic earnings per share
(0.12c)
9.20c
Diluted earnings per share
(0.12c)
9.00c
EBIT to sales
2.2%
9.4%
Return on average total assets
(0.1%)
6.7%
SEGMENT REVENUE GROWTH (LC)
2024
2023
Australia
8.5%
9.1%
New Zealand
(13.3%)
5.8%
Canada
(1.1%)
(0.5%)
Group
2.4%
5.8%
STORE NUMBERS
2024
2023
Australia1
171
172
New Zealand
44
46
Canada
85
86
Total stores
300
304
SHARE PRICE AT YEAR END
2024
2023
Share price (ASX)
AUD 0.45
AUD 0.90
1 Includes 36 Bevilles stores (FY23 includes 26 Bevilles stores).
* EBIT and Comparable EBIT are non-IFRS information. Please refer to page 34 for an explanation of non-IFRS information and a reconciliation of EBIT and Comparable EBIT.
12 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
PERFORMANCE
YEAR ENDED 30 JUNE 2024
REVENUE BY COUNTRY
AUSTRALIA 55.9%
NEW ZEALAND 16.6%
CANADA 27.5%
AU$ MILLIONS
GROUP REVENUE
629.6
492.1
556.5
595.2
644.9
2020
2024
2023
2022
2021
%
GROSS MARGIN
64.2
60.6
62.7
64.7
60.6
2020
2024
2023
2022
2021
AU$ MILLIONS
DIGITAL SALES
41.3
24.7
34.0
41.9
47.9
2024
2023
2022
2021
2020
AU$ MILLIONS
EBITDA
82.2
116.6
69.7
114.7
125.2
2020
2024
2023
2022
2021
AU$ MILLIONS
INVENTORY
203.3
178.7
171.2
181.5
195.8
2020
2024*
2023*
2022
2021
AU$ MILLIONS
COMPARABLE EBIT
58.9
(5.2)
56.6
62.9
15.9
2024
2023
2022
2021
AU CENTS PER SHARE
ORDINARY DIVIDEND
7.5
1.75
1.5
4.5
7.5
2020
2024
2023
2022
2021
AU$ MILLIONS
NET PROFIT FROM
OPERATING ACTIVITIES
AFTER TAX
3.1
41.0
46.7
35.2
(0.5)
2020
2024
2023
2022
2021
%
18.3
1.9
25.0
25.3
(0.3)
2020
2024
2023
2022
RETURN ON AVERAGE
SHAREHOLDERS’ FUNDS
2021
*Includes Bevilles inventory
2020
I am extremely proud of the enthusiasm,
passion and dedication demonstrated
by all our team in delivering the
refresh of the Michael Hill brand.
DANIEL BRACKEN
MANAGING DIRECTOR & CEO
14 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
TREND STATEMENT
FINANCIAL PERFORMANCE (AUD)
2024
$’000
2023
$’000
2022
$’000
2021
$’000
2020
$’000
Group revenue
644,929
629,562
595,210
556,486
492,060
Earnings before interest, tax, depreciation and
amortisation (EBITDA)
82,241
116,607
125,180
114,733
69,690
Depreciation and amortisation
68,013
57,724
51,944
48,061
55,611
Earnings before interest and tax (EBIT)
14,228
58,883
73,236
66,672
14,079
Net interest paid
14,596
9,136
7,533
7,591
9,594
Net profit before tax (NPBT)
(368)
49,747
65,703
59,081
4,485
Income tax
111
14,565
18,991
18,066
1,426
Net profit after tax (NPAT)
(479)
35,182
46,712
41,015
3,059
Net operating cash flow
37,773
80,072
111,574
134,497
83,699
Ordinary dividends paid during the year
20,915
30,719
25,239
11,636
5,817
FINANCIAL POSITION (AUD)
2024
$’000
2023
$’000
2022
$’000
2021
$’000
2020
$’000
Cash
20,174
20,867
95,844
72,361
11,204
Inventories
195,785
203,260
181,539
171,246
178,742
Other current assets
23,640
20,735
14,749
27,463
31,007
Total current assets
239,599
244,862
292,132
271,070
220,953
Other non-current assets
61,347
59,546
42,121
37,729
57,857
Deferred tax assets
52,507
49,118
58,552
68,329
74,468
Total tangible assets
353,453
353,526
392,805
377,128
353,278
Right-of-use assets
133,988
139,052
107,385
105,882
123,911
Intangible assets
57,803
53,910
10,989
6,013
24,429
Total assets
545,244
546,488
511,179
489,023
501,618
Total current liabilities
145,042
155,001
158,596
151,522
159,405
Non-current borrowings
58,900
12,500
-
-
10,681
Lease liabilities
114,303
117,518
91,386
99,382
115,848
Other long term liabilities
60,118
72,854
66,102
63,806
61,878
Total liabilities
378,363
357,873
316,084
314,710
347,812
Net assets
166,881
188,615
195,095
174,313
153,806
Reserves and retained profits
154,118
177,503
183,707
163,028
142,790
Paid up capital
12,763
11,112
11,388
11,285
11,016
Total shareholder equity
166,881
188,615
195,095
174,313
153,806
Basic earnings per share
(0.12c)
9.20c
12.03c
10.57c
0.79c
Diluted earnings per share
(0.12c)
9.00c
11.86c
10.53c
0.79c
Dividends declared per share (interim)
AU1.75c
AU4.0c
AU3.5c
AU1.5c
AU1.5c
Dividends declared per share (final)
-
AU3.5c
AU4.0c
AU3.0c
-
Net tangible asset backing
$0.28
$0.35
$0.20
$0.16
$0.01
15 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
ANALYTICAL INFORMATION (AUD)
2024
2023
2022
2021
2020
EBITDA to sales
12.8%
18.5%
21.0%
20.6%
14.2%
EBIT to sales
2.2%
9.4%
12.3%
12.0%
2.9%
Net profit after tax to sales
(0.1%)
5.6%
7.8%
7.4%
0.6%
EBIT to total assets
2.6%
10.8%
14.3%
13.6%
2.8%
Return on average shareholders funds
(0.3%)
18.3%
25.3%
25.0%
1.9%
Return on average total assets
(0.1%)
6.7%
9.3%
8.2%
0.7%
Working capital ratio
3.5 : 1
3.4 : 1
3.7 : 1
3.7 : 1
3.4 : 1
Current ratio
1.7 : 1
1.6 : 1
1.8 : 1
1.8 : 1
1.4 : 1
EBIT interest expense cover
1.0
5.9
9.7
8.8
1.5
Effective tax rate
30.2%
29.3%
28.9%
30.6%
31.8%
Net borrowings to equity
23.2%
(4.4%)
(49.1%)
(41.5%)
(0.3%)
Equity ratio
30.6%
34.5%
38.2%
35.6%
30.7%
Shares issued at year end excl Treasury
384,623,963
379,688,884
388,285,374
388,142,149
387,769,105
Exchange rate for translating:
- New Zealand results
1.09
1.09
1.06
1.07
1.04
- Canadian results
0.92
0.90
0.92
0.95
0.90
STORE NUMBERS
2023
2022
2021
2020
Australia1
171
172
147
150
155
New Zealand
44
46
48
49
49
Canada
85
86
85
86
86
TOTAL STORES1
300
304
280
285
290
¹ Includes 36 Bevilles stores (FY23 includes 26 Bevilles stores).
While there is no doubt market conditions will
continue to be challenging, our strategies and the
focus of our team will be on sales growth, margin
expansion and continued cost control, with the
aim of improving financial performance in FY25.
DANIEL BRACKEN
MANAGING DIRECTOR & CEO
16 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
17 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
I am also pleased to report our progress in achieving Net-
Zero scope 1 and 2 emissions by 2025, having calculated
our Scope 1 and 2 emissions for FY23 and FY24. By the end
of this financial year, we achieved a 34 per cent reduction
in scope 1 and 2 emissions across the Group since the same
time last year.
As a Group, our brands continue to offer both natural
diamond and lab grown diamond (LGD) products to our
customers, and we continue to stay at the forefront of
global changes in standards for both products to maintain
our leadership position. From the Responsible Jewellery
Council (RJC)’s draft LGD standard forming part of a wider
Code of Practices uplift, to the Kimberley Process and World
Diamond Council’s potentially expanded definition of conflict
diamonds, we monitor ongoing developments closely.
Sustainability is now embedded into our core business and
practices, and while there is still a lot of work to do, we
are all committed to achieving our 2030 goals and remain
focussed on ever improving and moving our business and
the broader jewellery industry towards a more sustainable,
innovative, and responsible future.
We are proud to publish our eighth Sustainability Report.
This year, our Sustainability Report sets out our progress
against our sustainability strategy in a standalone
document, published separately to this Annual Report. The
Sustainability Report 2024 is available to download on our
investor website.
Daniel Bracken
CEO and Managing Director
The jeweller
that cares.
EXECUTIVE COMMENTARY
REFLECTING ON THE PAST YEAR, I AM
INCREDIBLY PROUD OF THE IMMENSE
CHANGE WE HAVE BEEN ABLE TO MAKE IN
OUR BUSINESS FROM A SUSTAINABILITY
PERSPECTIVE IN SUCH A SHORT TIME.
SINCE OUR LAST SUSTAINABILITY REPORT,
WE HAVE BEEN RECOGNISED FOR OUR
SUSTAINABILITY INITIATIVES ACROSS
AUSTRALIA, NEW ZEALAND AND CANADA,
WITH PRAISE OF OUR SUSTAINABILITY
STANDARDS AND EFFORTS IN BOTH THE
RETAIL AND JEWELLERY INDUSTRIES.
I am particularly proud of the launch of The Michael Hill
Foundation, dedicated towards empowering women and
restoring nature. This initiative demonstrates our deep
commitment to empowering the lives of women in need,
as well as recognising the impact our industry has on
the planet through a strong restoration program in our
countries of operation. Our team are incredibly engaged
with the program, and we look forward to achieving our
ambitious goals.
Our focus on innovation has also not gone unnoticed, with
the expansion of our gold recycling program re:cycle from
Australia, to now also cover Canada and New Zealand.
This program is now offered in all markets for the Michael
Hill brand and continues to save carbon emissions and
mining ore through trading broken or old gold jewellery
from our customers’ homes, then repurposing the alloy to
be crafted into something new – a true circularity program
in our industry.
SUSTAINABILITY
SNAPSHOT
RESPONSIBLE SUPPLIERS
100% of all suppliers meet our expectations on their
social and environmental impacts [by 2030]
EMPOWERING WOMEN
Deliver initiatives and develop partnerships
focused on empowering and supporting
over 100,000 women [by 2030]
GREAT PLACE TO WORK
Michael Hill will maintain a leading workforce
engagement score of greater than 80%
TRANSPARENCY
100% use of certified sustainable or responsibly
sourced natural diamonds, coloured gemstones
and cultured pearls [by 2030]
METAL STEWARDSHIP
100% of Michael Hill’s products will be made
from certified recycled, local, artisanal or
responsibly sourced metals [by 2025]
INNOVATION
We will pioneer an innovation hub to champion
and integrate jewellery circularity, product
innovation and lab grown diamonds [by 2024]
ZERO CARBON OPERATIONS
Achieve net zero carbon operations
(scopes 1 & 2) [by 2025]
NATURE POSITIVE
Contributing to the restoration and conservation of the
natural environment in our key markets [by 2025]
ELIMINATE WASTE
We will send zero waste to landfill and eliminate
single use plastic from our packaging [by 2027]
OUR PILLARS Our 2030 goals are outlined below:
18 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
PRODUCT
100% OF OUR PRODUCTS
WILL BE SUSTAINABLE,
RESPONSIBLE OR
CIRCULAR
PLANET
WE WILL NURTURE
NATURE AND REDUCE
OUR NEGATIVE IMPACTS
TO NET ZERO
PEOPLE
WE WILL IMPROVE THE
LIVES OF PEOPLE ACROSS
OUR VALUE CHAIN
19 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
HIGHLIGHTS FOR FY24
AUGUST 2023
BEVILLES STORES ON
RENEWABLE ENERGY
Following the acquisition,
Bevilles stores were incorporated
into existing renewable
energy agreements.
SEPTEMBER 2023
CONFLICT FREE GOLD
ANNOUNCED
98% of all gold products for Michael
Hill were crafted in certified Conflict
Free Gold, with Medley and
TenSevenSeven achieving 100%
OCTOBER 2023
DIAMOND TRADE UP
PROGRAM LAUNCHED
Re:imagine, our circular diamond
trade up program is launched
in New Zealand
NOVEMBER 2023
CONTINUED TRANSITION
TO RENEWABLES
Our head office, repairs centre and
NZ head office energy is successfully
transitioned to supporting 100%
renewable energy – heading towards
Net Zero scope 2 emissions.
JANUARY 2024
RECYCLING OUR
PRODUCTION WASTE
The Group agreed terms for a new
product circularity arrangement
under which we have returned 5
kilos of gold from manufacturing
scrap to the gold supply chain.
MARCH 2024
CUSTOMER CIRCULARITY
IS EXPANDED
We expanded re:cycle, our gold
recycling service to both Canada
and New Zealand markets.
FEBRUARY 2024
THE MICHAEL HILL
FOUNDATION LAUNCHED
Aimed at Empowering Women
and Restoring nature across the
markets in which we operate.
MAY 2024
FIRST CANADIAN
MODERN SLAVERY
STATEMENT LODGED
To prevent and reduce the risk
of forced/child labour
in our supply chain.
JUNE 2024
APCO ACTION
PLAN PUBLISHED
Michael Hill publishes its 2024
Action Plan for sustainable packaging.
OVERALL GOAL
PROGRESSION
GROWTH OVER THE YEAR
Here is a snapshot of our progress over the past year across
our three key sustainability pillars and 2030 goals:
100%
CONFLICT FREE
DIAMONDS ACROSS
MICHAEL HILL, MEDLEY
AND TENSEVENSEVEN
FIRST
APCO REPORT
AND ACTION PLAN
SUBMITTED
68%
OF OUR SPEND
WITH VENDORS IS
ASSESSED THROUGH
OUR MODERN
SLAVERY PLATFORM
34%
REDUCTION IN SCOPE 1
AND 2 EMISSIONS ACROSS
THE GROUP SINCE THE
SAME TIME LAST YEAR
ANNOUNCED
TARGET TO
EMPOWER
100,000
WOMEN
SAVED
64,423
KILOGRAMS
OF CARBON EMISSIONS
THROUGH OUR RE:CYCLE
PROGRAM
PLANTED
51,981 TREES
ACROSS A MIX OF INDIGENOUS-LED AND
NATIVE REFORESTATION PROJECTS IN
AUSTRALIA, NEW ZEALAND AND CANADA.
80%
WORKFORCE
ENGAGEMENT
SCORE OF
98%
MICHAEL HILL
ACHIEVED
CONFLICT
FREE GOLD
20 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
22 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
ANDREW LOWE
CHIEF FINANCIAL OFFICER & COMPANY SECRETARY
Andrew joined Michael Hill Group in 2017 as Chief Financial
Officer, and later assumed the role of Company Secretary.
He holds a Bachelor of Commerce, a Bachelor of Laws 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 corporate governance,
mergers and acquisitions, finance and leadership roles
across a range of listed corporate groups with Australian
and offshore operations, including with Aurizon, Cleanaway
Waste Management and Anglo American.
AMY SZNICER
CHIEF RETAIL OFFICER
Amy has over 25 years’ leadership experience across retail
and beauty industries, having worked with prominent retail
brands such as Witchery, GAP, Bras n Things, Guess Jeans and
Aldo. She has led the roll out of over 200 new retail stores in
Australia, New Zealand and Singapore and was named 2006
Australian Young Business Woman of the Year at the Telstra
Business Women’s Awards.
Amy’s extensive career in specialty fashion retailing has
built a broad skill set that goes beyond store operations.
She has worked as an Executive Leader in privately owned,
private-equity controlled, and listed organisations. Amy is
extremely passionate about dynamic leadership, developing
strong company culture and deep retail foundations and
EXECUTIVE
LEADERSHIP TEAM
DANIEL BRACKEN
MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER
Daniel has more than 25 years’ experience managing some
of the world’s most iconic brands. He has an extensive
background in retailing, fashion, and brand development
in Australia and international markets, as a Chief Executive
Officer and in senior executive positions across strategy,
marketing, merchandise, product design and digital and
customer engagement strategies.
Prior to joining Michael Hill Group as CEO in November
2018, Daniel was CEO at Specialty Fashion Group and
previously held positions as the Group Vice President,
Strategy for Burberry London, as Deputy CEO and Chief
Merchandise & Customer Officer of Myer, and as CEO of
The Apparel Group, which owned leading fashion brands
Sportscraft, Saba, Willow and JAG.
During his time at Specialty Fashion Group, Daniel led
the company’s corporate restructure and the successful
divestment of a number of brands, returning the company
to profitability. At Myer, he oversaw merchandise buying,
design, sourcing, and manufacturing, and led the Myer brand
and customer experience strategy.
His international experience includes more than 15 years
at Burberry London in the United Kingdom, where he was
a key member of the leadership team involved in their
turnaround into an iconic global brand. He performed
a range of roles at Burberry including Vice President
– Strategy, Head of Merchandising & Production, and
Commercial & Operations Director.
FROM LEFT: AMY SZNICER, MATT KEAYS, DANIEL BRACKEN, JO FEENEY, ANDREW LOWE, TABITHA PEARSON.
23 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
Jo has held senior marketing roles in a variety of industries,
gaining early retail experience at Woolworths before a shift
to telecommunications, spending over four years at Telstra
as Group Manager Brand and Retail. Jo then moved to Foxtel
as Head of Acquisition and Brand before her most recent
role as Director of Marketing at McDonald’s Australia. In
this role she was responsible for marketing, brand and media
strategies and driving commercial growth through innovation
and re-imagination of the McDonald’s brand. In her time
with McDonald’s, she was pivotal in the development
and execution of key business platforms including the
introduction of McCafé in Drive Thru and Create Your Taste.
Jo is also a recognised leader in creativity - winning multiple
awards both locally and internationally as well as being a
judge for industry advertising awards. Jo brings with her
a fresh approach to driving the future growth of the brand
through a lens of commercial creativity.
TABITHA PEARSON
CHIEF PEOPLE OFFICER
Tabitha joined Michael Hill Group in May 2024 as Chief
People Officer.
With 30 years’ experience in people and culture across a
number of ASX listed companies, including Bunnings, Super
Retail Group, Myer and G8 Education, Tabitha’s strength
lies in her commercial and people driven approach. She is
experienced in leading large and diverse teams, integrating
large scale acquisitions, and implementing modern
people and culture strategies. She has a focus on building
capability and talent, while driving a strong performance
culture in organisations.
With a workforce of over 3,000 people across Australia, New
Zealand and Canada, Tabitha’s experience will be invaluable
in delivering Michael Hill Group’s strategic priority of
attracting, retaining and developing top quality teams across
the Group.
Tabitha holds a Bachelor of Arts in Psychology and Post
Graduate Diploma in Human Resources and Industrial Relations.
driving high performance in an ever-changing retail
landscape. These qualities enable her to consistently
deliver the highest standard of customer service and
ultimately, strong business performance.
MATT KEAYS
CHIEF TECHNOLOGY OFFICER
Matt joined Michael Hill Group in June 2015, bringing with
him extensive international IT experience in the retail space.
Prior to joining the Group, Matt led the global IT strategy
for Forever New as their General Manager Information
Technology, and prior to that worked as Chief Information
Officer for Super Amart where his final project was
successfully leading a full-scale disaster recovery process
after the Queensland floods in 2011. He also worked for
leading national footwear and apparel company, Colorado
Group after enjoying a long retail apprenticeship with
11 years at Country Road, where he worked as a Finance
Accountant, and also gained solid shop floor experience.
Matt has strong technical skills and a track record of
building team capabilities aligned with business purpose
and strategies. Matt’s career has seen him lead significant
technology and infrastructure programs, covering Microsoft
Dynamics 365 Retail & ERP, Infor, Oracle, Adobe, Dayforce
and JDE. He has helped retail businesses implement and
embrace data warehousing (B.I) with his first Microsoft based
implementation as far back as 2004 and more recently
cloud-based data warehousing with Snowflake.
JO FEENEY
CHIEF MARKETING OFFICER
Jo joined Michael Hill Group in March 2021 as Chief
Marketing Officer to lead the revitalisation and growth of the
Group’s brands, delivering end to end marketing strategies
in an omnichannel environment. Responsible for shaping
the Group’s messaging, delivering an outstanding experience
to the Group’s customers across both digital and traditional
marketing channels, and leading the vision for a world
class loyalty program, the role has direct accountability for
the performance of the Brand, Marketing, Campaign and
Content, and Visual Merchandising in all stores, as well as
leading the Customer Data and Insights teams.
Jo Brings with her over 24 years’ experience in both local and
global organisations, specialising in strategic brand building,
end to end marketing communications and driving key
customer growth strategies across channels.
The FY24 results were deeply disappointing,
but please be assured that your Board and
the entire Michael Hill team are resolutely
focused on driving sales, refreshing the
Michael Hill brand, embedding and expanding
the new Bevilles business and restoring
the financial performance of the Group.
ROB FYFE
CHAIR
25 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
REVIEW OF OPERATIONS
The Group achieved the following key outcomes for the
2024 financial year:
KEY FINANCIAL RESULTS
•
Group revenue increased by 4.2% on a 52-week basis
(including Bevilles) to $644.9m, and by 2.4% on a
statutory basis (FY23: 53 weeks).
•
Group gross margin settled at 60.6% in line with previous
guidance, impacted by higher input costs and increased
promotional activity in response to more aggressive
retail trading conditions. In addition, during the last
two months of FY24, there was deliberate focus on
promoting inventory to make way for higher margin
product in FY25.
•
Comparable earnings before interest and tax (EBIT)*
of $15.9m, at the upper end of previous guidance.
•
Statutory net profit after tax decreased to a loss
of $0.5m with the variance to comparable EBIT
performance largely driven by AASB16 Leases
& SaaS, finance costs and normalisations.
•
Active management of inventory delivering a ~$7m
reduction to $195.8m.
•
As a proactive capital management measure, the existing
debt facility has been increased by $40m for the four-
month period from 15 September 2024 to support
seasonal working capital requirements for Christmas
trade.
•
Closing net debt position of $38.7m, having deployed
cash to support ongoing investment in the business.
•
No final dividend was declared, delivering total dividends
for the year of AU1.75 cents per share.
* Comparable EBIT is non-IFRS information. Please refer to non-IFRS information
section in this report for an explanation of non-IFRS information and a
reconciliation of Comparable EBIT.
DIRECTORS’
REPORT
The Directors present their report on the consolidated
entity (referred to hereafter as the ‘Group’) consisting
of Michael Hill International Limited ACN 610 937 598
(‘Michael Hill International’ or the ‘Company’) and all
controlled subsidiaries for the year ended 30 June 2024.
FY24 is a 52- week period (3 July 2023 to 30 June 2024)
compared to FY23 a 53-week period (27 June 2022 to
2 July 2023).
PRINCIPAL ACTIVITIES
The Group operates predominately in the retail sale of
jewellery and related services sector in Australia, New
Zealand and Canada.
There were no significant changes in the nature of the
Group’s activities during the year.
DIVIDENDS
Dividends paid to members during the financial year were
as follows:
2024
$’000
2023
$’000
Final dividend for the year
ended 2 July 2023 of 3.5
cents (2022: 4.0 cents) per
fully paid share paid on
22 September 2023 (2022:
23 September 2022)
13,289
15,531
Interim dividend for the year
ended 30 June 2024 of 1.75
cents (2023: 4.0 cents) per
fully paid share paid on
22 March 2024 (2023:
24 March 2023)
6,906
15,188
No final dividend was
declared for the year ended
30 June 2024 (2023: 3.5 cents)
-
13,289
LIKELY DEVELOPMENTS AND EXPECTED
RESULTS OF OPERATIONS
Information on likely developments in the Group’s
operations and the expected results of operations have been
included in the Review of Operations and Strategic Update
sections of this report.
26 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
Given this environment, the Group reported a decline in
performance, with comparable earnings before interest and
tax of $15.9m for the year ended 30 June 2024. This result
was driven by a combination of lower gross margins and
inflationary cost pressures.
The Group delivered revenue of $644.9m, up 4.2% on a
52-week basis including Bevilles, and up 2.4% on a statutory
basis (FY23: 53 weeks). Pleasingly, average transaction value
grew by 6% during the year, as further demonstration of the
traction of the Michael Hill aspirational brand journey.
Higher input costs for both gold and mined diamonds
continued through the year and combined with heightened
competitor activity, resulted in gross margin of 60.6%.
During May and June, there was a deliberate focus on
clearing inventory to make way for newness and higher
margin product in FY25 to drive the recovery of recent
margin declines. In addition, to reflect the inflated gold raw
material pricing the group does periodically lift retail prices
accordingly.
Inflationary cost pressures impacted the majority of
operating expenses across the business, the most significant
being store labour and occupancy. With this in mind,
throughout the year management took action to reduce
discretionary spend, corporate roles and overheads,
reflecting the underperformance of the business, with many
of these savings annualising through FY25. Omni-channel
continues to be a key strategic focus for the Group with
further advancements across ship from store, click & collect,
and virtual selling, all contributing to annual growth in
digital sales of 16% to $47.9m.
Active management of inventory saw year-end holdings
reduced by $7m to $195.8m, as the Group took deliberate
steps to ensure the right product mix, newness and high
margin profile.
During the first year of ownership, the Bevilles brand
expanded its store network by ten stores to 36. This included
entry into a new territory, Queensland, with five new stores
and two conversion stores, along with three new stores in
existing territories. In addition, in the second half of the
year, the business completed a full transition to Group
operational IT systems across retail, finance and inventory,
and seamlessly relocated its Melbourne head office and
distribution centre to Brisbane.
In line with our store network strategy, the core Michael
Hill brand has continued to optimise its store network
throughout the year, while at the same time expanding the
Bevilles’ store network. The Group finished the year with 300
stores (FY23: 304).
OPERATIONAL PERFORMANCE
•
Group revenue was up 4.2% for the year on a 52-week
basis, with Australia +10.3%, New Zealand -11.8% and
Canada flat.
•
Digital sales grew 16% to $47.9m for the year,
demonstrating a strong return to growth.
•
Complete refresh of the Michael Hill brand, across
digital platforms, new brand logos, colour palette,
instore visual merchandising and packaging.
•
Partnering with our first ever global Brand Ambassador,
Miranda Kerr, who perfectly embodies our brand values
and sustainable business practices.
•
Aligned with the brand relaunch, the Michael Hill brand
opened its first true global flagship store, at Chadstone,
Australia’s leading fashion destination.
•
Launched the Michael Hill Foundation, focused on
empowering women and restoring nature.
•
Expanded our re:new sustainable jewellery ecosystem:
extending our re:cycle offering to Canada and New
Zealand, launched diamond trade up program,
re:imagine in New Zealand, and invested in our repairs
network to grow our re:store (repairs) capability and
service offering.
•
Integration of Bevilles onto Group operational systems
and successful relocation of the head office, supply chain
and distribution centre from Victoria to Queensland.
•
In line with our store network strategy, the core Michael
Hill brand has continued to optimise its store network
throughout the year, while at the same time expanding
the Bevilles’ store network from 26 to 36 stores. The
Group finished the year with 300 stores (FY23: 304).
FY24 - GROUP BUSINESS PERFORMANCE
Following a period of record results for the Group, retail
conditions for the fine jewellery sector over the last 18
months have been challenging due to low consumer
confidence and broader macroeconomic pressures.
Notwithstanding the difficult conditions, third-party data
suggests that the Michael Hill brand has continued to
outperform the broader jewellery market.
DIRECTORS’ REPORT,
CONTINUED.
27 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
SEGMENT RESULTS
The results below are expressed in local currency.
AUSTRALIAN RETAIL PERFORMANCE
2024
2023
2022
2021
2020
OPERATING RESULTS (AU $’000)
Revenue
359,102
331,007
303,409
312,264
266,610
Gross profit
217,074
211,823
196,936
194,148
161,030
Gross margin
60.4%
64.0%
64.9%
62.2%
60.4%
Comparable EBIT
29,568
53,549
51,750
54,347
27,641
Comparable EBIT as a % of revenue
8.2%
16.2%
17.1%
17.4%
10.4%
Number of stores
171
172
147
150
155
Retail segment revenue increased by 10.3% to $359.1m for the year on a 52-week basis (including Bevilles),
and increased by 8.5% on a statutory basis (FY23: 53 weeks).
Gross margin for the year was 60.4%.
The Australian store network finished the year with 171 stores, including 36 Bevilles stores (FY23: 172, including 26 Bevilles stores).
NEW ZEALAND RETAIL PERFORMANCE
2024
2023
2022
2021
2020
OPERATING RESULTS (NZ $’000)
Revenue
114,785
132,359
125,090
127,067
106,696
Gross profit
68,453
81,961
79,288
78,771
63,641
Gross margin
59.6%
61.9%
63.4%
62.0%
59.6%
Comparable EBIT
14,567
25,622
30,130
35,119
21,067
Comparable EBIT as a % of revenue
12.7%
19.4%
24.1%
27.6%
19.7%
Number of stores
44
46
48
49
49
Retail segment revenue decreased by 11.8% to NZ$114.8m for the year on a 52-week basis, and decreased by 13.3% on a
statutory basis (FY23: 53 weeks).
Gross margin for the year was 59.6%.
Given the heightened level of security incidents experienced in New Zealand and in order to protect our customers, teams and
stores, significant investment in security measures continued throughout the year and had a ~$5m direct impact on earnings.
During the year, two stores closed, resulting in 44 stores at year end (FY23: 46).
28 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
DIRECTORS’ REPORT,
CONTINUED.
CANADA RETAIL PERFORMANCE
2024
2023
2022
2021
2020
OPERATING RESULTS (CA $’000)
Revenue
157,094
158,894
159,661
118,445
110,799
Gross profit
95,222
100,531
103,623
72,643
63,991
Gross margin
60.6%
63.3%
64.9%
61.3%
57.8%
Comparable EBIT
18,775
27,110
28,785
12,320
(2,412)
Comparable EBIT as a % of revenue
12.0%
17.1%
18.0%
10.4%
(2.2)%
Number of stores
85
86
85
86
86
Retail segment revenue increased by 0.6% to CA$157.1m for the year on a 52-week basis, and decreased by 1.1% on a statutory
basis (FY23: 53 weeks). This result is a credit to the segment considering last year was another record performance.
Gross margin for the year was 60.6%.
During the year, one store closed, resulting in 85 stores at year end (FY23: 86).
CAPITAL MANAGEMENT
During the year, the business deployed cash for a number of strategic initiatives, including refresh of the Michael Hill brand,
the Chadstone global flagship store, development of TenSevenSeven, along with digital and data investments, resulting in a
closing net debt position of $38.7m.
As a proactive capital management measure, the existing debt facility has been increased by $40m for the four-month period
from 15 September 2024, to support seasonal working capital requirements for Christmas trade. In addition, the business
has taken decisive action to reduce capital expenditure across both technology and stores throughout FY25.
Given compressed earnings in FY24, and in conjunction with a commitment to prudent investment in operating and capital
expenditure in FY25, the Board has decided that no final dividend will be declared for FY24, resulting in a total dividend for
the year of AU1.75 cents per share.
GROUP STRATEGY, THE PATH TO 2030 - EMPHASIS ON SALES AND MARGIN GROWTH
While market conditions continue to be challenging, the business remains committed to its multi-brand group strategy with
an emphasis on sales and margin growth.
2020-2023
REPOSITION
MICHAEL HILL BRAND
2023-2024
ESTABLISH PORTFOLIO
OF BRANDS
LUXURY
PREMIUM
VALUE
PURE-PLAY
2024-2025
PRODUCT & BRAND
PROPOSITION
PREMIUM PRICE / LUXURY
Uniquely modern, high end bespoke
Premium contemporary classics,
milestone moments
Everyday essentials, great value
Fashion forward, accessible style
LOW PRICE / VALUE
BRAND & FASHION
POSITIONING
2025-2030
NETWORK EXPANSION
& PRODUCTIVITY
$492m
$556m $595m
$619m
FY20
FY21
FY22
FY23
FY24
FY30
290
285
280
278
264
36
$645m
revenue
NETWORK EXPANSION
(number of stores)
Michael Hill Bevilles TenSevenSeven Medley
29 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
REPOSITION MICHAEL HILL BRAND, 2020 - 2023
Much of the strong performance over the last three years can
be attributed to the strategic transformation of the Michael
Hill brand – the strategy to elevate and modernise the brand
has underpinned the overarching vision for the business.
The aspirational brand journey to a more premium market
position continues, with consistent customer-led business
imperatives:
•
Brand & Loyalty – Contemporary premium jewellery
brand, leveraging best-in-class loyalty program
•
Retail Fundamentals – Elevated customer experience,
unwavering focus on productivity
•
Digital & Omni-channel – Omni-first, channel agnostic,
digitally-led new markets
•
Product Evolution – Premium yet accessible, with
diamonds at our core
•
Sustainability – “the jeweller that cares”,
global category leader
The Company has demonstrated the success of the
aspirational brand journey strategy, firstly through an
increasing average transaction value of ~30% over
this period, validating our focus on elevated customer
experience, higher quality product and attraction of a
new modern customer. Secondly, retail productivity has
lifted considerably across all markets, delivering increased
revenues from an optimised store network.
ESTABLISH PORTFOLIO OF BRANDS, 2023 - 2024
With the Michael Hill brand having been repositioned to
a more premium position, the acquisition of the Bevilles
business provided a vehicle to take market share at the value
end of the fine jewellery category. Additionally, in the first half
of FY24, the Company soft launched its new bespoke brand
TenSevenSeven, focused on servicing the high-end of the
market with its unique personalised diamond ring proposition.
With these additional brands, the Group now services all
significant customer segments of the fine jewellery category,
and delivers multiple new growth pipelines.
In addition to our core fine jewellery brands, Medley
continues to establish itself as an emerging brand in the
fashion demi-fine/fine jewellery category.
PRODUCT & BRAND PROPOSITION, 2024 - 2025
With the Michael Hill Group multi-brand strategy now in place,
each brand is uniquely positioned for different segments and
price propositions, and its own strategic priorities:
Michael Hill
•
In April 2024, the complete refresh of the Michael Hill
brand was revealed, delivering a new elevated aesthetic
across all brand assets, colour palette and logos. Over
the months that followed, elements of the new brand
assets were gradually brought to life across digital
platforms, stores and consumer packaging.
•
This was soon followed by the exciting milestone of the
brand’s first “store of the future”. In late April 2024, a
new global flagship store came to life in Chadstone, the
most premium centre in the Australian market. The new
store incorporated all aspects of the new brand product
and proposition, with a new high value product offering,
elevated in-store experience, and private selling spaces.
•
To coincide with the brand refresh, and our first flagship
store of the future, Michael Hill partnered with its first
ever global Brand Ambassador, Miranda Kerr.
•
Miranda Kerr’s timeless elegance resonates in all our
markets, she embodies our brand values, is aspirational
and yet accessible. Michael Hill has the ambition to be
one of the most sustainable jewellery brands in the world
and this aligns perfectly with the sustainable business
practices that Miranda follows.
LUXURY
PREMIUM
VALUE
PURE-PLAY
PREMIUM PRICE / LUXURY
Uniquely modern, high end bespoke
Premium contemporary classics,
milestone moments
Everyday essentials, great value
Fashion forward, accessible style
LOW PRICE / VALUE
BRAND & FASHION
POSITIONING
30 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
•
Product evolution continues with a focus on quality,
innovation and sustainability and simultaneously, the
development of key signature ranges that embody
the premium brand positioning. These are best
demonstrated by the new signature lock range and
the exclusive cut 101 facet diamond collection.
•
Launch of the Michael Hill Foundation in late February
represents our ongoing commitment to meaningful
change, and our dedication to a better world. The
Michael Hill Foundation encompasses two key areas
of focus: Empowering Women and Nature Restoration.
Bevilles
•
During the first year of ownership, the store network
expanded into a new territory, Queensland, with five new
stores and two conversion stores, along with three new
stores in existing territories, increasing the store network
to 36 stores (FY23: 26).
•
In the second half of the year, the business transitioned
across to the group operational IT systems, and
seamlessly relocated its Melbourne head office &
distribution centre to Brisbane.
•
An increased focus on enhancing the brand’s
differentiated proposition to increase disruption in the
value segment.
•
After trading the all-important Christmas period, an
extensive range review was undertaken with a view to
rebalancing the product offering and visual presentation
to take advantage of clearly identified market
opportunities and in turn, maximising sales and margin.
•
Re-establishing the brand’s dominance in its core and
everyday value product offering with a more productive
and streamlined product range.
•
In support of the clearly defined network expansion
plan, building a cost-effective marketing strategy that
resonates with both existing and new customers.
TenSevenSeven
•
New start-up brand with a unique and elevated
proposition, capturing an entirely new high-end
customer.
•
Continued enhancements of the digital customer
experience, with product extensions and an increased
unique diamond offering.
•
Investment in customer acquisition intended to be
reignited as Group performance returns to growth.
Medley
•
Building on fashion positioning across both demi-fine
and fine jewellery to a younger demographic.
•
Successfully trialled a pop-up kiosk in Chadstone.
NETWORK EXPANSION & PRODUCTIVITY, 2025 - 2030
With each brand uniquely positioned for their target
customer segments, and with both product and brand
propositions established, the Group will be well-placed to
grow revenue and profits through a more productive and
expanded distribution network.
Michael Hill
•
Store productivity has proven to be a key lever of growth
over recent years and as the brand continues to elevate
and attract new target customers, it is anticipated that
this will continue.
•
As the network aligns over time to the elevated product
proposition, and with the continued focus on brand
evolution, it is expected that average transaction values
will continue to increase and support revenue growth.
•
Gross margin recovery will be a key focus, underpinned
by product evolution, increased penetration of higher
margin product, category mix and leveraging the
Brilliance by Michael Hill loyalty program
•
The brand refresh of our direct-to-consumer digital
platforms is already delivering improved customer
experience and conversion rates, which in conjunction
with investments in data and insights, will increase
productivity across all channels.
DIRECTORS’ REPORT,
CONTINUED.
$492m
$556m $595m
$619m
FY20
FY21
FY22
FY23
FY24
FY30
290
285
280
278
264
36
$645m
revenue
NETWORK EXPANSION
(number of stores)
Michael Hill Bevilles TenSevenSeven Medley
31 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
•
Beyond the brand’s leading position in bridal, promoting
other key milestone moments like birthdays, provides
significant revenue growth opportunities for the
business.
•
Data insights from the Brilliance by Michael Hill
loyalty program have identified further opportunities
in targeting the self-purchasing customer, providing
additional revenue growth opportunities.
Bevilles
•
Even with the challenging trading conditions in the
fine jewellery sector, the business has held firm on its
strategic intent to grow the footprint and strengthen its
position in the market.
•
The business has grown the Bevilles network from 26 to
36 stores in the first year of ownership.
•
With the expansion of the network into Queensland,
the business will focus on optimising the store layout,
product range, and building brand presence prior to
rolling out further stores.
•
Based on Michael Hill experience, data insights and
competitor analysis, the opportunity to grow the
network to over 100 stores in Australia remains firmly
in place.
•
As the Michael Hill brand elevates to a more premium
position, this presents opportunities with select stores
to transition to the Bevilles brand in a cost-efficient
model. Three trial conversion stores are already as a test
& learn and further conversion stores will be subject to
performance.
•
A streamlined product offering will enable a step-change
in visual presentation and customer experience, leading
to a more efficient store footprint and an increase in
productivity.
•
Investment in our people and training to upskill
leadership, lift performance, and drive productivity.
TenSevenSeven
•
Given the current trading conditions, the Group has
prioritised resources to the Michael Hill and Bevilles
brands.
•
As and when trading conditions improve, a resumption
of the TenSevenSeven strategy will see delivery of key
initiatives including: leveraging group data for customer
acquisition, expansion of product offering, and opening
a small number of flagship showrooms in key capital city
destinations.
Medley
•
Continue to optimise core digital platform, through
customer acquisition and increased purchase frequency.
•
Following the initial success of the Chadstone pop-up
kiosk, it was extended for Christmas 2024.
Leveraging Group Capabilities
The multi-brand strategy is underpinned by a philosophy
of leveraging group capabilities to drive productivity across
all brands:
•
Group technology investments and capabilities
•
Customer data and insights
•
Distribution and logistics synergies to optimise the
cost of doing business
•
Portfolio vendor management to support product
quality and margins
•
Digital capabilities to drive efficiency and growth
•
Property management to optimise real estate network
•
Core support and specialist functions across Human
Resources, Finance and Legal.
32 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
33 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
RISK MANAGEMENT
The Board believes that a strong risk management framework supports the Group’s growth and success. The Group regularly
reviews its risk environment and has identified the following at risk areas and mitigating strategies:
RISK
STRATEGIES AND MITIGATION
Continued uncertainty of timeframes for
global recovery and changing geopolitical
risks creates volatility for the Group’s
operating environments
The Group has a growth strategy that embraces omni-channel expansion and strategic acquisitions
in markets that limit cannibalisation of sales and focusses on improving the customer experience.
Furthermore, there is executive oversight of all drivers, both internal and external, and prudent
policy execution and governance mechanisms to respond accordingly.
Increase in cyber-attacks disrupting
operations and increased reliance on
third-party platform providers to have
robust cyber controls
The Group has tasked the Technology Governance Committee to oversee its response to cyber
risk and the maturing of our cyber resilience. The Group continues to invest in new technologies
and remove vulnerable points of attack throughout its digital network.
External partners have been engaged to uplift 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.
Theft appeal of our product increases
during periods of financial hardship and
uncertainty
The safety and security of our staff and customers is our most important priority. We are
investing in initiatives and processes which improve the overall security of our stores and
contribute to the safety of our staff and customers. We are working with both local and national
law enforcement bodies and other external parties to better the overall retail environment for
our staff and customers.
With the increasing escalation of theft and violence in all operating environments, the Group has
expanded the remit of the dedicated executive led taskforce responding to New Zealand challenges
to consider all jurisdictions we operate in and develop tailored and appropriate actions.
Sustainability goals and supply chain
transparency
The Group has also outlined its goals in the Sustainability Strategy of having all suppliers
meeting our expectations on their social and environmental impacts by 2030. Michael Hill’s
sustainability vision is to transform how we source and manufacture our products, impact our
planet and improve peoples lives.
There are dedicated workstreams supporting each of our pillars of people, planet and product.
In the product and people pillars, the Group is working closely with our key suppliers across our
sourcing and procurement ecosystems to ensure our suppliers’ manufacturing and operations
comply with our responsible sourcing practices. Further, the Group has developed a modern slavery
roadmap to minimise the risk of modern slavery occurring in our business and supply chains.
Increasing price gaps between mined and
laboratory created diamonds impacts
pricing of our range and could influence
consumer behaviours to the detriment
of one or both precious stones
The Group regularly reviews its product range to ensure it satisfies consumer demand and offers
choices in the markets we operate. This is supported by a long-standing vendor relationships
with key jewellery manufacturers and buyers who have global insights and can advise on market
trends.
Both mined and laboratory created diamonds feature in our core range and collections targeted
to specific consumer preferences.
Breach of regulation or law in one of our
jurisdictions in an increasingly complex
compliance environment
The Group has in-house legal and compliance teams who are focused on compliance in our three
markets and utilise external firms for specialised advice when required. Any new legislative
requirements or rectification initiatives have dedicated teams focused on ensuring our
compliance and training our teams appropriately.
Ability to respond to rapidly changing
customer demographics, requirements
and behaviours.
The Group regularly conducts range reviews to ensure product mix is on trend and meets
customer demands and customer demographics. We are investing in customer analytic platforms
to better understand our current and future customers and tailoring our channels and product
mix to meet the desired customer demands.
34 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
DIRECTORS’ REPORT,
CONTINUED.
NON-IFRS FINANCIAL INFORMATION
This report contains certain non-IFRS financial measures
of historical financial performance. Non-IFRS financial
measures are financial measures other than those defined
or specified under all relevant accounting standards. The
measures therefore may not be directly comparable with
other companies’ measures. Many of the measures used are
common practice in the industry in which the Group operates.
Non-IFRS financial information should be considered in
addition to, and is not intended to be a substitute for, or more
important than, IFRS measures. The presentation of non-
IFRS measures is in line with Regulatory Guide 230 issued by
Australian Securities and Investments Commission (ASIC) to
promote full and clear disclosure for investors and other users
of financial information, and minimise the possibility of those
users being misled by such information.
The measures are used by management and directors for
the purpose of assessing the financial performance of the
Group and individual segments. The directors also believe
that these non-IFRS measures assist in providing additional
meaningful information on the drivers of the business,
performance and trends, as well as the position of the Group.
Non-IFRS financial measures are also used to enhance the
comparability of information between reporting periods by
adjusting for non-recurring or controllable factors which
affect IFRS measures, to aid the user in understanding the
Group’s performance. Consequently, non-IFRS measures
are used by the directors and management for performance
analysis, planning, reporting and incentive setting. These
measures are not subject to audit.
The non-IFRS measures used in describing the business
performance include:
•
Earnings before interest, tax, depreciation and
amortisation (EBITDA)
•
Earnings before interest and tax (EBIT)
•
Comparable EBIT
•
Significant item
COMPARABLE EBIT
Comparable EBIT has been calculated as follows:
2024
$’000
2023
$’000
Reported EBIT
14,228
58,883
Add back costs relating to:
Impact of IFRIC SaaS-related
guidance
4,450
7,356
Litigation judgement1
4,000
-
Bevilles acquisition
transaction costs
-
1,960
Bevilles integration costs
2,372
-
Employee restructure costs
962
734
Less items relating to:
Impact of AASB16 Leases
(10,114)
(10,044)
Comparable EBIT
15,898
58,889
1 Refer to note I2 in the Financial Statements for events occurring after the end
of the reporting period for information regarding the litigation judgement.
ENVIRONMENTAL REGULATIONS
AND CLIMATE REPORTING
The Group has determined that no particular or significant
environmental regulations apply to it.
Under New Zealand’s Financial Markets Conduct (Climate-
related Disclosures for Foreign Listed Issuers) Exemption
Notice 2024 (Notice), Michael Hill International Limited does
not have a large presence in New Zealand and has a primary
listing on the ASX. Michael Hill International Limited relied
on the exemption in clause 6 of the Notice in respect of its
FY24 period and is therefore an exempt entity. In the FY24
period, Michael Hill International Limited was not required
to comply with any Australian climate-related disclosure
requirements. The climate statements voluntarily prepared
by Michael Hill International Limited can be found in the
FY24 Sustainability Report.
35 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
INFORMATION
ON DIRECTORS
DIRECTOR
Robert Fyfe B.Eng, F.E.N.Z., C.N.Z.M.
EXPERIENCE AND DIRECTORSHIPS
Rob was appointed a Director of the Company on 9 June 2016 having previously served as
Director of Michael Hill’s listed entity in New Zealand commencing 6 January 2014. He was
appointed Chair of the Board in June 2021. Prior to joining the Company, Rob served as CEO
of Air New Zealand between 2005 and 2012, a period that saw a resurgence of 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. Rob also has extensive general management and board
experience in various retail businesses operating in New Zealand, Australia and Great Britain,
across sectors including retail banking, telecommunications, pay television, sport, manufacturing
and outdoor apparel. In 2015 Rob was awarded an Honorary Doctor of Commerce from
University of Canterbury and 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.
Rob is also a Director of Air Canada. He has not had any other directorships of listed entities in
the last three years.
SPECIAL RESPONSIBILITIES
Chair
Non-executive and independent director
Member of ARMC
Member of PDRC
DIRECTORS’ INTERESTS
IN SHARES AND OPTIONS
1,953,578 Ordinary Shares
FROM LEFT: CLAUDIA BATTEN, ROBERT FYFE, DANIEL BRACKEN, SIR MICHAEL HILL, DAVID WHITTLE, EMMA HILL, AND GARY SMITH.
36 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
DIRECTOR
Sir Richard (Michael) Hill K.N.Z.M.
EXPERIENCE AND DIRECTORSHIPS
Sir Michael is the founder of Michael Hill, and his visionary leadership has been the foundation
for the Company’s listing on the New Zealand Stock Exchange (NZX) in 1987 and successful
international expansion. Sir Michael’s dedication to the jewellery retailing industry and his
commitment to excellence have been evident throughout his career. He had 23 years of jewellery
retailing experience before establishing Michael Hill in 1979, and his strategic decisions and
innovative approaches have played a significant role in the growth and success of Michael Hill.
Sir Michael led the Group as Chairman from when it listed on NZX in 1987 until 2015, and was
appointed a Director of the Company on 9 June 2016. 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. As a Knight Companion of the New
Zealand Order of Merit, Sir Michael’s contribution to both business and the arts has been widely
recognised and celebrated. His leadership continues to inspire those within the company and the
industry as a whole.
Sir Michael is not a Director of any other listed entities and has not had any directorships of listed
entities in the last three years.
SPECIAL RESPONSIBILITIES
Non-executive director
DIRECTORS’ INTERESTS
IN SHARES AND OPTIONS
148,330,600 Ordinary Shares
DIRECTOR
Emma Hill B.Com, M.B.A
EXPERIENCE AND DIRECTORSHIPS
Emma was appointed a Director of the Company on 9 June 2016 having previously served as
Director of Michael Hill’s listed entity in New Zealand commencing 22 February 2007. She served
as Deputy Chair of the Group from 2011 until 2015 and as Chair from 2015 until June 2021.
Emma has over 30 years’ experience working in various roles within the Group, 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.
Emma is not a Director of any other listed entities and has not had any directorships of listed
entities in the last three years.
SPECIAL RESPONSIBILITIES
Non-executive director
Chair of PDRC
DIRECTORS’ INTERESTS
IN SHARES AND OPTIONS
167,487,526 Ordinary Shares
DIRECTOR
Gary Smith B.Com, F.C.A., F.A.I.C.D.
EXPERIENCE AND DIRECTORSHIPS
Gary was appointed a Director of the Company on 24 February 2016 having previously served as
Director of Michael Hill’s listed entity in New Zealand commencing 2 November 2012. Gary has
extensive Director experience across a range of boards and tourism related industry bodies. 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-committees. He is a Chartered Accountant and a
Fellow of the Australian Institute of Company Directors.
Gary is a Director of Flight Centre Travel Group Limited. He has not had any other directorships of
listed entities in the last three years.
SPECIAL RESPONSIBILITIES
Non-executive and independent director
Chair of ARMC
Member of PDRC
DIRECTORS’ INTERESTS
IN SHARES AND OPTIONS
102,000 Ordinary Shares
INFORMATION ON
DIRECTORS, CONTINUED.
37 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
DIRECTOR
Jacqueline Naylor M.A.I.C.D.
EXPERIENCE AND DIRECTORSHIPS
Jacqueline was appointed a Director of the Company on 15 July 2020, and retired as a Director of
the Company on 8 April 2024. 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.
Jacqueline is a Director of Myer Holdings Limited. She has not had any other directorships of
listed entities in the last three years.
SPECIAL RESPONSIBILITIES
Non-executive and independent director
Member of ARMC
DIRECTORS’ INTERESTS
IN SHARES AND OPTIONS
160,000 Ordinary Shares (as at date of retirement as a director)
DIRECTOR
David Whittle B.A., B.Com
EXPERIENCE AND DIRECTORSHIPS
Dave was appointed a Director of the Company on 2 August 2023. Dave has considerable brand,
data, technology, omni-channel retail and digital transformation experience. He is a Founder of
Lexer, a global software company helping brands and retailers genuinely understand and engage
their customers. In 2015, Dave became the youngest ASX 200 Non-Executive Director when he
joined the board of Myer. Previously, Dave spent 10 years with global advertising group M&C
Saatchi in several local and international leadership roles, culminating in three years as Managing
Director in Australia.
Dave is a Director of Myer Holding Limited. He has not had any other directorships of listed
entities in the last three years.
SPECIAL RESPONSIBILITIES
Non-executive and independent director
Member of ARMC
DIRECTORS’ INTERESTS
IN SHARES AND OPTIONS
70,431 Ordinary Shares
DIRECTOR
Claudia Batten LLB (Hons), B.Com
EXPERIENCE AND DIRECTORSHIPS
Claudia was appointed a Director of the Company on the 30 August 2024. Claudia started her
professional career at law firm Russell McVeagh specialising in contract, IP, and technology law
before moving to New York in 2002. Claudia was a member of the founding team of Massive
Incorporated, a network for advertising in video games which helped pioneer “digital” as a media
buy. Massive was sold to Microsoft in 2006, where Claudia spent 3 years scaling the in-game
network. In 2009 she co-founded Victors & Spoils, the first advertising agency built on the
principles of crowdsourcing which was acquired by French holding company Havas Worldwide
just two years later.
Claudia has been widely recognised for her work supporting the technology and start up scene
in New Zealand and spent three years running North American operations for NZTE, supporting
disruptive thinking for the growth of NZ exports in North America. Claudia is a graduate of
Victoria University of Wellington with degrees in Law (Hons) and Commerce.
Claudia is currently a Director of Air New Zealand Limited, Vista Group International Limited and
is Chair of Serko Limited. She has not had any other directorships of listed entities in the last
three years.
SPECIAL RESPONSIBILITIES
Non-executive and independent director
Member of PDRC
DIRECTORS’ INTERESTS
IN SHARES AND OPTIONS
Nil Ordinary Shares
38 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
INFORMATION ON
DIRECTORS, CONTINUED.
DIRECTOR
Daniel Bracken
EXPERIENCE AND DIRECTORSHIPS
Daniel joined the Group as the CEO in November 2018 and was appointed to the Board as an
executive Director in June 2021. 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 and digital expansion, and has been
instrumental in executing turnaround initiatives across many retail businesses.
Daniel is not a Director of any other listed entities and has not had any other directorships of
listed entities in the last three years.
SPECIAL RESPONSIBILITIES
Managing Director
Chief Executive Officer
DIRECTORS’ INTERESTS
IN SHARES AND OPTIONS
2,845,693 Ordinary Shares
2,826,226 Share Rights
39 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
COMPANY SECRETARIES
The Company has appointed two company secretaries, Andrew Lowe and Kate Palethorpe.
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 also held that position previously from 15 December 2017 to 22 January 2018. Andrew has extensive
experience in finance and leadership roles across a range of listed corporate groups with Australian and offshore operations.
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.
Kate Palethorpe, who is also the General Counsel of the Group, was appointed to the position of Company Secretary on 18 March
2024. Kate is an experienced ASX company secretary and governance professional, starting her career at top-tier law firm Minter
Ellison before moving to in-house roles including Aesop, Aussie Farmers Direct and Australian Dairy Nutritionals. She has broad
legal, commercial and governance experience and a strong background in retail and consumer brands/products.
Emily Bird held the position of Company Secretary from 31 July 2020 until 5 January 2024.
MEETINGS OF DIRECTORS
The numbers of meetings of the Company’s Board of Directors and of each Board committee held during the year ended
30 June 2024, and the numbers of meetings attended by each director were:
FULL MEETINGS
OF DIRECTORS
MEETING OF COMMITTEES
Audit and Risk Management
People Development
and Remuneration
A
B
A
B
A
B
R I Fyfe
11
11
4
4
5
5
Sir R M Hill
10
11
-
-
-
-
E J Hill
11
11
-
-
5
5
G W Smith
10
11
4
4
5
5
J E Naylor^
6
6
2
3
-
-
D Whittle*
10
10
2
2
-
-
D Bracken
11
11
-
-
-
-
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
^
J E Naylor ceased to be a director of the company on 8 April 2024. She also ceased to be a member of the ARMC on that date.
*
D Whittle was appointed as director of the company on 2 August 2023 and was appointed as a member of the ARMC on 13 November 2023.
COMMITTEE MEMBERSHIP
As at the date of this report, Michael Hill International Limited has an Audit and Risk Management Committee and
a People Development and Remuneration Committee.
AUDIT AND RISK MANAGEMENT COMMITTEE
PEOPLE DEVELOPMENT AND REMUNERATION COMMITTEE
Gary Smith (Chair)
Emma Hill (Chair)
Robert Fyfe
Robert Fyfe
Jacqueline Naylor (ceased membership on 8 April 2024)
Gary Smith
David Whittle (commenced membership on 13 November 2023)
Claudia Batten (commenced membership on 30 August 2024)
40 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
41 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
AUDITED REMUNERATION
REPORT
LETTER FROM THE CHAIR OF
THE PEOPLE DEVELOPMENT AND
REMUNERATION COMMITTEE
Dear Shareholders,
On behalf of Michael Hill Group, I am pleased to present the
FY24 remuneration report. The report outlines the Group’s
remuneration strategy and framework and details how the
Board has approached remuneration to retain and incentivise
key management personal (KMP), while aligning reward with
shareholder value creation.
Over the past several years Michael Hill Group has achieved
significant growth and has transformed to become a
modern, differentiated, omni- channel jewellery group. In
FY24 however, persistent cost of living pressures has led to
significant declines in consumer confidence and discretionary
spending, which weighed heavily on the Group’s financial
performance.
Key results from FY24 include:
•
Total Group revenue of $644.9m (2023: $629.6m) -
an increase of 2.4%
•
Reported EBIT* of $14.2m (2023: $58.9m) -
a decrease of 75.8%
•
Comparable EBIT* of $15.9m (2023: $58.9m) -
a decrease of 73.0%
*Reported EBIT and Comparable EBIT are non-IFRS information. Please refer to
non-IFRS information section in the Directors’ Report for an explanation of non-
IFRS information and a reconciliation of EBIT and Comparable EBIT.
On 1 June 2023, the Company completed the acquisition
of jewellery and watch retailer ‘Bevilles’. The Bevilles
acquisition included a portfolio of 26 Australian stores and
350 team members. During the year 10 new Bevilles stores
opened, establishing a brand presence in the Queensland
market, with a total of seven stores to date. Throughout
FY24 there was a strong focus on integration of the Bevilles
business including relocation of the Bevilles head office
from Melbourne to Brisbane to leverage the Group’s existing
distribution and support capability.
In response to challenging trading conditions during the year
a cost optimisation program was undertaken. This program
resulted in a review of the support centre structure and
costs. A number of departments were restructured, resulting
in the exit of some senior leadership roles and one executive
role, which resulted in the redistribution of responsibilities to
other executives.
It was pleasing to see an increase of two percentage points in
our most recent engagement survey and we continue to rate
well above industry average across all countries.
FY24 REMUNERATION
The Group’s KMP and executive remuneration structure
comprises a mix of market competitive fixed remuneration,
short term incentives (STI) to reward annual performance
and long-term incentives (LTI) to align long term financial
performance and shareholder value creation. There were no
changes to the Group remuneration structure during FY24.
The STI awarded for the year was 9.7% of potential and
19.5% of target for the CEO and 9.2% of potential and
18.5% of target for the CFO. The STI payment was for
achievement of H1 KPIs which were awarded at the end of
the half in accordance with policy. As a result of continued
profit decline during H2 the STI program was suspended with
no further payments made, despite the delivery of a number
of strategic and operational objectives being achieved.
Under the Group’s LTI program, 1,123,592 share rights were
awarded to the CEO and 241,871 share rights were awarded
to the CFO in FY24. These share rights are subject to the
satisfaction of certain performance metrics over a three year
performance period. In addition, in FY24 the CEO was issued
2,628,412 shares in the Company on vesting of his FY20
and FY21 LTI share rights and FY22 STI share rights. The CFO
was issued 778,205 shares in the Company on vesting of his
FY20 and FY21 LTI share rights and FY22 STI share rights.
At the 2023 Annual General Meeting shareholders
approved an increase in the Non-Executive Director (NED)
remuneration pool from $840,000 to $1,200,000. Non-
Executive Director (NED) fees were increased by the Wage
Price Index (WPI) of 3.6%. There were no other changes to
the structure of NED fees.
The directors present the 2024 Michael Hill International Limited remuneration report, outlining key aspects of our remuneration
policy and framework, and remuneration awarded during FY24. The information provided in this remuneration report has been
audited as required by section 308(3C) of the Corporations Act 2001.
42 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
AUDITED REMUNERATION
REPORT, CONTINUED.
FY25 REMUNERATION UPDATE
In recognition of the challenging trade environment and
FY24 decline in profit, no increase will be applied to Director
fees for the FY25 year. In line with our remuneration policy
the executive salaries were reviewed and an increase of 3%
awarded, which was below CPI of 3.8% for 12 months to
June 2024. Daniel Bracken as Managing Director and CEO
elected to forgo a base salary increase for FY25. As a result
of the Pay IQ review the structure of STI has moved from
individual KPIs that are measured and awarded on a six
monthly basis, to annual performance targets and payment.
The Outperformance component of the STI, which grants
the opportunity to double the On-Target award for financial
outperformance, has moved from a stepped to linear
payment curve awarded for above budget performance.
The maximum award performance hurdle has moved to
165% of EBIT target from the previous 112% of EBIT.
In conclusion, the Board believes the remuneration outcomes
for FY24 reflect an appropriate alignment between pay
and performance during the year and are also reasonable in
terms of the challenging operating environment.
Regards,
Emma Hill
Chair of the People Development
and Remuneration Committee
43 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
REMUNERATION OVERVIEW
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.
Name
Position
Commencement as KMP
Non-Executive Directors
Robert Fyfe
Chair and non-executive director
2016
Sir Richard Michael Hill
Founder and non-executive director
2016
Emma Hill
Non-executive director
2016
Gary Smith
Non-executive director
2016
David Whittle1
Non-executive director
2024
Jacqueline Naylor2
Non-executive director
2020
Managing Director and CEO
Daniel Bracken
Managing Director and Chief Executive Officer
2019
Executive
Andrew Lowe
Chief Financial Officer and Company Secretary
2017
1 David Whittle was appointed a non-executive director on 2 August 2023.
2 Jacqueline Naylor resigned as a non-executive director effective 8 April 2024.
PEOPLE DEVELOPMENT AND REMUNERATION
COMMITTEE (PDRC)
The primary objective of the People Development and
Remuneration Committee (PDRC) is to assist the Board to
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 2024 reporting period:
•
Emma Hill - Chair of the PDRC
•
Robert Fyfe - Chair of the Board of Directors
•
Gary Smith - Chair of the Audit and Risk Committee
USE OF REMUNERATION CONSULTANTS
The PDRC obtains independent advice every three years on
the appropriateness of remuneration practices of the Group
given trends in comparative companies and the objectives of
the Group’s remuneration strategy. In FY22 PriceWaterhouse
Coopers were engaged to benchmark KMP and Executive
team remuneration and the results were considered in FY24
remuneration decisions.
In FY24 PayIQ were engaged to review the Group’s STI
Framework, which informed changes to FY25 Remuneration
Framework. The fees paid to PayIQ for the remuneration
recommendations were $25,300.
44 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
AUDITED REMUNERATION
REPORT, CONTINUED.
REMUNERATION FRAMEWORK
Our remuneration philosophy is guided by our vision to be a modern, differentiated, omni channel jewellery group. 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 financial performance and shareholder value creation.
OUR REMUNERATION FRAMEWORK
FIXED REMUNERATION
SHORT TERM INCENTIVE (STI)
LONG TERM INCENTIVE (LTI)
How is it set?
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.
Executive KMP participate in the
Group’s STI program prioritising
Board approved on target and
outperformance targets.
The Company has established an
LTI plan as deferred compensation.
How is it delivered?
Base salary plus any fixed
elements including superannuation
and leave entitlements.
Cash for on target performance
and for outperformance.
An issue of share rights is made
to Executive KMP. The rights vest
at the end of the performance
period if certain performance
hurdles and vesting conditions
are met. Under the LTI plan rules
the Board also has discretion to
settle an issue of vested shares
via an equivalent cash payment.
What is the objective?
Attract and retain key
Executive talent.
Drive annual profit growth and
align Executive reward with
achievement of performance
targets that underpin strategy.
Reward Executive KMP for
sustainable long term growth
aligned to shareholders’ interests.
OUR VALUES
WE CARE
•
WE ARE PROFESSIONAL
•
WE ARE INCLUSIVE AND DIVERSE
•
WE CREATE OUTSTANDING EXPERIENCES
OUR REMUNERATION
PHILOSOPHY
ATTRACT, MOTIVATE AND RETAIN TALENT
•
REWARD THE ACHIEVEMENT OF STRATEGIC OBJECTIVES
•
ALIGN TO SHAREHOLDER VALUE CREATION
45 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
RELATIONSHIP OF REMUNERATION TO GROUP PERFORMANCE
The remuneration framework operates to create a clear link between Executive remuneration and the Group’s performance.
The overall level of remuneration takes into consideration the performance of the Group over several years. The performance
of the Group over the past five years is summarised below:
2024
2023
2022
2021
2020
Revenue ($'000)
644,929
629,562
595,210
556,486
492,060
Comparable EBIT* ($'000)
15,898
58,889
62,870
56,594
25,686
Profit for the year attributable to owners
of the Company ($'000)
(479)
35,182
46,712
41,015
3,059
Earnings per share (cents)
(0.12c)
9.20c
12.03c
10.57c
0.79c
Dividends paid during the financial year1 ($'000)
20,195
30,719
25,239
11,636
5,817
Market capitalisation ($'000)
173,081
339,822
361,105
322,158
131,841
Share price at year end ($)
0.45
0.90
0.93
0.83
0.34
Compound annual growth rate
(20.1%)
(2.2%)
13.9%
148.5%
(34.3%)
Return on average total assets
(0.1%)
6.7%
9.3%
9.0%
0.7%
* EBIT and Comparable EBIT 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 and Comparable EBIT.
1 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.
The first graph below shows the share price growth and movement compared to the ASX300 whilst the second graph shows the
dividend paid and yield per financial year.
SHARE PRICE AND ASX 300
DIVIDEND AND YIELD
$1.7
$1.5
$1.3
$1.1
$0.9
$0.7
$0.5
$0.3
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
-
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
cents per share
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
Share price ASX 300 (RHS)
FY21
FY22
FY23
FY24
JUN 20
DEC 20
JUN 21
DEC 21
JUN 22
DEC 22
JUN 23
DEC 23
JUN 24
Dividend Yield (RHS)
KMP REMUNERATION AND REVENUE
KMP REMUNERATION AND ADJUSTED EARNINGS PER SHARE
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$0
$700m
$650m
$600m
$550m
$500m
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
(2.0)
(4.0)
cents per share
FY21
FY22
FY23
FY24
KMP Fixed KMP STI KMP LTI Adjusted EPS (RHS)
KMP Fixed KMP STI KMP LTI Revenue (RHS)
The graphs below show the relationship of KMP remuneration to revenue and Adjusted Earnings Per Share1 for the last
four financial years.
1 Adjusted Earnings Per Share is calculated similarly to statutory Earnings Per Share except EBIT is adjusted to Comparable EBIT as set out in the Directors’ Report.
46 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
AUDITED REMUNERATION
REPORT, CONTINUED.
FY24 EXECUTIVE KEY MANAGEMENT PERSONNEL (KMP) REMUNERATION
As per our Remuneration Policy, formal benchmarking of KMP remuneration is conducted every three years. The last review was
conducted in the lead up to FY23 and the findings from this activity were used to inform the FY24 KMP remuneration outcomes.
REMUNERATION MIX
The total remuneration for Executive KMPs comprises both Fixed Remuneration and at risk components in the form of On-
Target STI, Outperformance STI and LTI. Maximum STI and LTI incentives are calculated as a % of the relevant Executive KMPs
Fixed Remuneration component, with the actual amount delivered to the KMP subject to satisfaction of certain performance
conditions. The remuneration mix is designed to compensate KMP in a way that strongly correlates to Group performance. The
Outperformance STI gives the Executive KMPs the ability to earn the equivalent % of the On-Target STI value, paid in cash.
KMP
Fixed Remuneration
Maximum STI
LTI
Total
Daniel Bracken - CEO
34.8%
32.1%
33.1%
100.0%
Andrew Lowe - CFO
48.5%
32.0%
19.4%
100.0%
FIXED REMUNERATION
Fixed Remuneration is reviewed annually, and our policy is to consider the consumer price index (CPI), Executive performance and
retention, and increases to any applicable superannuation concessional contributions cap. Remuneration is set with reference
to market competitive rates in comparable companies for similar positions adjusted for the experience, ability and effectiveness
of the individual Executive KMP. Fixed Remuneration includes base salary and superannuation contributions at the rate of the
concessional contributions cap. At the commencement of the reporting period, CPI was at 6%, which had decreased from the
previous quarter, in addition the minimum wage was increased 5.75%. Due to wage inflation the base salary of the CEO increased
by 5% and the base salary of the CFO increased by 5%. Superannuation was maintained at the concessional contributions cap of
$27,500 for both KMP.
47 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
SHORT TERM INCENTIVE (STI) SCHEME
The Group’s STI program is designed to reward delivery of annual profit targets and ensure achievement of strategic and
operational objectives. The maximum STI is calculated as a % of the relevant Executive KMP’s Fixed Remuneration component
and detailed in performance scorecards that are set by the People, Development and Remuneration Committee (PDRC). The
scorecards detail the performance targets, indicators and weightings for each Executive across the key performance areas of
Financial, Strategy, Customer and People. The CEO’s scorecard is comprised of core objectives from each Executive’s scorecard.
The STI program is supported by a performance management system giving visibility and transparency of progress by each Executive.
Performance against key performance indicators (KPIs) is formally measured on a biannual basis and informally in regular meetings.
The STI program in FY24 for KMP was structured as follows:
Performance period
Annual award for Financial KPI
Six monthly award for Strategy, Customer and People KPIs
Opportunity
CEO - 92% of Fixed Remuneration comprised of 46% for On-Target performance,
and 46% for Outperformance
CFO - 66% of Fixed Remuneration comprised of 33% for On-Target performance,
and 33% for Outperformance
How the STI is paid?
In cash for On-Target performance and in cash for Outperformance
On-Target performance measures
Financial KPI 60% weighting
Strategy, Customer and People KPIs 40% weighting
Performance measure for Outperformance
component
Starting at $2.0m above FY24 budgeted EBIT and increasing progressively
How is STI assessed?
The PDRC reviews the CEO’s performance against the performance targets and objectives set
for that year. The CEO assesses the performance of his direct reports which include the CFO.
The PDRC reviews the assessed performance for Board endorsement.
STI OUTCOMES
The following tables detail the FY24 STI scorecard KPIs and assessment applied to the CEO and CFO. In H1 the majority of the
individual KPIs for both KMP were achieved and payment made, as detailed in the table below. At the end of the FY24 financial
year, both KMP achieved their strategic and customer targets, with an improvement on the people target. However, with the
decline in profit in H2 the STI program was suspended with no further payments made at the end of the year for the second half.
KPI
2024 Performance Assessment
FINANCIAL (60% weighting)
EBIT
Target not achieved
STRATEGY (15% weighting)
Growth, Cyber security, Store of the future
Achieved
CUSTOMER (15% weighting)
Brand refresh
Achieved
PEOPLE (10% weighting)
Culture and engagement, ESG
Engagement improvement on FY23 but not to target and not awarded. ESG achieved.
48 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
AUDITED REMUNERATION
REPORT, CONTINUED.
ANALYSIS OF BONUSES INCLUDED IN REMUNERATION
Incentive
Remuneration
Amount
Forfeited
On-Target
achieved
Out-
performance
achieved
Total potential
available
Cash STI
component
Total STI
included
%
%
$
$
$
$
Daniel Bracken
19.5%
0.0%
1,027,283
100,160
100,160
927,123
Andrew Lowe
18.5%
0.0%
376,777
34,852
34,852
341,925
LTI SCHEME
The FY24 LTI program for KMP was structured as follows:
Performance period
3 years
Opportunity
CEO - 95% of Fixed Remuneration
CFO - 40% of Fixed Remuneration
Instrument
Share rights
Performance metrics
Total Shareholder Return (TSR) compound annual growth rate (CAGR) over 3 years
Earnings per Share (EPS) CAGR over 3 years
Service condition
Awards are subject to a service condition requiring the Executive KMP to remain employed by the Group until the
performance hurdle assessment date (being 10 ASX trading days following the release of the Group’s FY26 results).
Vesting schedule
for the Performance
metrics
Subject to the KMP meeting the Service condition, share rights attached to the TSR and EPS performance metrics
vest in accordance with a sliding vesting schedule:
The TSR vesting schedule is as follows:
• No rights vest if TSR is equal to or less than 10% CAGR
• 10% of share rights vest for each 1% increase in CAGR performance between 10% CAGR to 20% CAGR
• 100% of share rights vest if TSR is equal to or above 20% CAGR
The EPS vesting schedule is as follows:
• No rights vest if EPS is equal to or less than 5% CAGR
• 10% of share rights vest for each 1% increase in CAGR between 5% CAGR to 10% CAGR
• 100% of share rights vest if EPS is equal to or above 10% CAGR
Rationale for the
performance metric
and condition
The TSR and EPS metrics have been deemed by the PDRC to be a suitable market based measure to create alignment
between the interests of Executive KMP and the interests of shareholders.
What happens
when a KMP ceases
employment?
The treatment of the KMP’s share rights (both vested and unvested) will depend on the circumstances of cessation
of their employment. For example, where the KMP ceases employment due to resignation or termination for
cause, they will be entitled to retain their vested and unexercised share rights but will forfeit all of their unvested
share rights (unless the Board determines a different treatment). In other cases such as redundancy or bona fide
retirement, the KMP will be entitled to retain their vested and unexercised share rights, and their unvested share
rights. Any unvested share rights will be retained on a pro rata basis (based on the proportion of the vesting period
for those share rights that will have lapsed on the date the KMP’s employment ceased). In addition, any vesting
conditions applicable to a KMP’s unvested share rights will automatically be waived, unless the Board determines a
different treatment.
Dividends and
voting rights
Share 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.
49 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
FY24 LTI OUTCOMES
Both Executive KMP were eligible to participate in the
FY24 LTI in accordance with the LTI program detailed in the
preceding table. For the CEO, the grant of share rights under
the FY24 LTI plan was approved by shareholders at the
2023 Annual General Meeting held on 14 November 2023.
Further details of the number of share rights granted to the
CEO and CFO in relation to the FY24 LTI can be found later in
this report under the heading ‘Reconciliation of Options and
Share Rights held by KMP’.
OTHER BENEFITS
Executive KMP do not receive additional benefits, such as
non-cash benefits, other than superannuation and leave
entitlements, as part of the terms and conditions of their
appointment. Loans are not provided.
SERVICE CONTRACTS
It is the Group’s policy that service contracts for KMP are
unlimited in term but capable of termination on six months’
notice (twelve 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 twelve 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.
FY24 NON-EXECUTIVE DIRECTOR
REMUNERATION
Total compensation for all Non-Executive Directors, voted
upon by shareholders on 14 November 2023, is not to
exceed $1,200,000 per annum. Directors’ base fees for
FY24 were $110,795 per annum. The Board Chair receives
twice the base fee. Additional fees are paid where a Director
is Chair of a committee.
COMMITTEE CHAIR FEES
$
People Development and Remuneration
22,890
Audit and Risk
34,336
It is the Company’s policy to consider CPI and the WPI in
determining any increase to Directors’ fees annually. In FY24,
CPI was 6% and WPI was 3.6%. It was decided that that the
appropriate measure to apply was WPI and the Non-Executive
Director fees increased by the WPI percentage of 3.6%.
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.
50 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
AUDITED REMUNERATION
REPORT, CONTINUED.
DIRECTOR AND EXECUTIVE REMUNERATION OUTCOMES FOR FY24
Details of the nature and amount of each major element of remuneration of each Director of the Company and other KMP
of the consolidated entity are:
Name
Short-term
Long-term
Post-
employment
Share-based payments
Proportion
remuneration
performance
related
Value of
rights as
proportion
of
remuneration
Salary
& fees*
STI cash
bonus
Total
Long service
leave
Super-
annuation
benefits
Termination
benefits
Share rights
Total
$
$
$
$
$
$
$
$
%
%
NON-EXECUTIVE DIRECTORS
Emma Jane Hill
2024
133,544
-
133,544
-
-
-
-
133,544
-
-
2023
128,748
-
128,748
-
-
-
-
128,748
-
-
Sir Richard Michael Hill
2024
110,678
-
110,678
-
-
-
-
110,678
-
-
2023
106,702
-
106,702
-
-
-
-
106,702
-
-
Gary Warwick Smith
2024
130,602
-
130,602
-
14,529
-
-
145,131
-
-
2023
126,634
-
126,634
-
13,454
-
-
140,088
-
-
Robert Ian Fyfe
2024
221,356
-
221,356
-
-
-
-
221,356
-
-
2023
213,405
-
213,405
-
-
-
-
213,405
-
-
David Whittle (appointed 2 August 2023)
2024
91,477
-
91,477
-
10,187
-
-
101,664
-
-
2023
-
-
-
-
-
-
-
-
-
-
Jacqueline Elizabeth Naylor (resigned 8 April 2024)
2024
76,781
-
76,781
-
8,446
-
-
85,227
-
-
2023
96,674
-
96,674
-
10,390
-
-
107,064
-
-
EXECUTIVE DIRECTOR
Daniel Bracken, CEO
2024
1,149,265
100,160
1,249,425
22,139
27,500
-
150,822
1,449,886
6.91%
10.40%
2023
1,062,937
342,850
1,405,786
21,252
27,500
-
290,033
1,744,572
19.65%
16.62%
TOTAL DIRECTOR REMUNERATION
2024
1,913,703
100,160
2,013,863
22,139
60,662
-
150,822
2,247,485
6.91%
10.40%
2023
1,735,100
342,850
2,077,949
21,252
51,344
-
290,033
2,440,578
19.65%
16.62%
* Salary and fees include the net leave entitlement accrual, calculated as leave accrued less leave taken.
51 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
Name
Short-term
Long-term
Post-
employment
Share-based payments
Proportion
remuneration
performance
related
Value of
rights as
proportion
of
remuneration
Salary
& fees*
STI cash
bonus
Total
Long service
leave
Super-
annuation
benefits
Termination
benefits
Share rights
Total
$
$
$
$
$
$
$
$
%
%
NON-DIRECTOR KMP
Andrew Lowe, CFO
2024
528,326
34,852
563,178
11,454
27,500
-
32,056
634,189
5.50%
5.05%
2023
523,568
125,895
649,463
11,117
27,500
-
78,139
766,220
16.43%
10.20%
TOTAL NON-DIRECTOR KMP REMUNERATION
2024
528,326
34,852
563,178
11,454
27,500
-
32,056
634,189
5.50%
5.05%
2023
523,568
125,895
649,463
11,117
27,500
-
78,139
766,220
16.43%
10.20%
TOTAL KMP REMUNERATION
2024
2,442,029
135,012
2,577,041
33,593
88,162
-
182,878
2,881,674
4.64%
6.29%
2023
2,258,668
468,745
2,727,413
32,369
78,844
-
368,172
3,206,798
14.62%
11.48%
* Salary and fees include the net leave entitlement accrual, calculated as leave accrued less leave taken.
52 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
ADDITIONAL STATUTORY
INFORMATION
EQUITY INSTRUMENTS
All options or rights refer to options or rights over ordinary
shares of Michael Hill International Limited, which are
exercisable on a one-for-one basis under the Company’s
Equity Incentive Plan (Plan).
MODIFICATION OF TERMS OF EQUITY-
SETTLED SHARE-BASED PAYMENT
TRANSACTIONS
The terms of the Plan were approved by shareholders
at the Company’s 2023 Annual General Meeting held
on 14 November 2023. The Plan replaced the Group’s
previous incentive scheme approved by shareholders
to address significant changes to the Corporations Act
covering employee share schemes. No changes were
otherwise made to the terms of the Plan during the
reporting period.
The Plan applies to any rights or shares issued after
14 November 2023 as part of the Company’s LTI
remuneration strategy.
The terms of equity-settled share-based payment
transactions (including options and rights granted as
compensation to a KMP) entered into prior to 14 November
2023 have not been altered or modified by the Company
during the reporting period or the prior period. 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 Australia foreign
exchange rate on that date. The exercise price of any future
option grants will be set by using the same method, with
reference to the Australian Securities Exchange (‘ASX’).
ANALYSIS OF OPTIONS AND RIGHTS
OVER EQUITY INSTRUMENTS GRANTED
AS COMPENSATION
No options were granted to KMP as compensation for the
financial year.
SHARE RIGHTS
The number of share rights issued to KMP and senior
management during FY24 was 1,365,463 share rights. Of
these, the number of share rights issued to KMP are set out
below. Refer to note D3 of the accompanying financial report
for further details.
Issued during
the year
Fair value per
share right
KMP
Number
$
Daniel Bracken
1,123,592
0.45
Andrew Lowe
241,871
0.45
53 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
RECONCILIATION OF OPTIONS AND SHARE RIGHTS HELD BY KMP
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:
Balance at start of the year
Balance at end of the year
Vested and
Exercisable
Unvested
Issued
Forfeited
Vested
Exercised
Vested and
Exercisable
Unvested
DANIEL BRACKEN
FY19 LTI Plan
Tranche one
27,504
-
-
-
-
(27,504)
-
-
Tranche two
27,504
-
-
-
-
(27,504)
-
-
Tranche three
-
55,010
-
55,010
FY20 LTI Plan
Tranche one
35,615
-
-
-
-
(35,615)
-
-
Tranche two
-
35,615
-
-
-
-
-
35,615
Tranche three
-
71,229
-
-
-
-
-
71,229
FY21 LTI Plan
Single Issue
-
2,057,738
-
-
2,057,738
(2,057,738)
-
-
FY22 LTI Plan
Single Issue
-
634,081
-
-
-
-
-
634,081
FY22 STI Plan
Single Issue
480,051
-
-
-
-
(480,051)
-
-
FY23 LTI Plan
Single Issue
-
906,699
-
-
-
-
-
906,699
FY24 LTI Plan
Single Issue
-
-
1,123,592
-
-
-
-
1,123,592
54 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
Balance at start of the year
Balance at end of the year
Vested and
Exercisable
Unvested
Issued
Forfeited
Vested
Exercised
Vested and
Exercisable
Unvested
ANDREW LOWE
FY18 LTI Plan
Tranche three
8,648
-
-
-
(8,648)
-
-
FY19 LTI Plan
Tranche two
8,365
-
-
-
(8,365)
-
-
Tranche three
-
16,733
-
-
-
-
16,733
FY20 LTI Plan
Tranche one
6,424
-
-
-
(6,424)
-
-
Tranche two
-
6,424
-
-
-
-
6,424
Tranche three
-
12,847
-
-
-
-
12,847
FY21 LTI Plan
Single Issue
-
603,119
-
603,119
(603,119)
-
-
FY22 LTI Plan
Single Issue
-
200,307
-
-
-
-
200,307
FY22 STI Plan
Single Issue
151,649
-
-
-
(151,649)
-
-
FY23 LTI Plan
Single Issue
-
195,411
-
-
-
-
195,411
FY24 LTI Plan
Single Issue
-
-
241,871
-
-
-
241,871
TOTAL
745,760
4,795,213
1,365,463
-
2,660,857
(3,406,617)
-
3,499,819
* Share rights granted to Daniel Bracken during the reporting period were approved by shareholders at the Company’s 2023 AGM as required by ASX Listing Rule 10.14.
SHAREHOLDINGS
The number of ordinary shares held during the financial year by KMP is set out below:
Balance at start
of the year
Received on
exercise of rights
Other changes
Balance at end
of the year
NON-EXECUTIVE DIRECTORS
Number
Number
Number
Number
Emma Hill*
167,487,526
-
-
167,487,526
Sir Richard (Michael) Hill*
148,330,600
-
-
148,330,600
Gary Smith
80,000
-
22,000
102,000
Robert Fyfe
1,953,578
-
-
1,953,578
David Whittle
-
-
70,431
70,431
Jacqueline Naylor
160,000
-
(160,000)
-
EXECUTIVE DIRECTOR
Daniel Bracken
201,869
2,628,412
15,412
2,845,693
NON- DIRECTOR
Andrew Lowe
17,015
778,205
-
795,220
* Includes common shareholding due to a related party.
ADDITIONAL STATUTORY
INFORMATION, CONTINUED.
55 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
VOTING OF SHAREHOLDERS AT LAST YEAR’S ANNUAL GENERAL MEETING
The Company received 99.08% of “For” votes on its remuneration report for FY23. The Company also obtained approval
to increase the Non-Executive Director remuneration pool from $840,000 to $1,200.000 at the 2023 AGM. 77.73% of
shareholders voted “For” this resolution. The Company did not otherwise receive any specific feedback at the AGM or
throughout the year on its remuneration practices.
INSURANCE OF OFFICERS AND INDEMNITIES
The Company’s Constitution provides that it may indemnify any person who is, or has been, an officer of the Group, including the
directors, the Secretaries and other officers, against liabilities incurred whilst acting as such officers to the extent permitted by
law. The Company has entered into a Deed of Indemnity, Insurance and Access with each of the Company’s directors, Company
Secretaries 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.
To the extent permitted by law, the Company has agreed to indemnify its auditor, Ernst & Young, as part of the terms of its audit
engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been
made to indemnify Ernst & Young during or since the financial year.
NON-AUDIT SERVICES
There were no non-audit services provided by the entity’s auditor, Ernst & Young (Australia).
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 (Cth) is
included in this report.
ROUNDING OF AMOUNTS
The Company is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to the ‘rounding off’ of amounts in the
Directors’ Report. Amounts in the Directors’ Report have been rounded off in accordance with the instrument to the nearest
thousand dollars, or in certain cases, to the nearest dollar.
This report is made on 30 August 2024 in accordance with a resolution of directors as required by section 298 of the
Corporations Act 2001.
R I Fyfe
Chair
Brisbane
30 August 2024
56 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF MICHAEL HILL
INTERNATIONAL LIMITED
As lead auditor for the audit of the financial report of Michael Hill International Limited for the financial year ended
30 June 2024, I declare to the best of my knowledge and belief, there have been:
a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
b. No contraventions of any applicable code of professional conduct in relation to the audit; and
c. No non-audit services provided that contravene any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Michael Hill International Limited and the entities it controlled during the financial year.
Ernst & Young
Kellie McKenzie
Partner
30 August 2024
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
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
FINANCIAL
STATEMENTS
58 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
59 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
Notes
2024
$’000
2023
$’000
Revenue from contracts with customers
A2
644,929
629,562
Other income
A3
2,856
2,256
Cost of goods sold
(254,011)
(225,122)
Employee benefits expense
D1
(182,670)
(168,357)
Occupancy costs
(13,468)
(9,928)
Marketing expenses
(42,052)
(44,152)
Selling expenses
(22,330)
(20,871)
Impairment reversal of property, plant and equipment and other assets
265
2,244
Depreciation and amortisation expense
F1
(68,013)
(57,724)
Loss on disposal of property, plant and equipment
(413)
(116)
Administrative expenses
(26,847)
(25,533)
Other expenses
(23,700)
(22,581)
Finance expenses
F1
(14,914)
(9,931)
Profit/(loss) before income tax
(368)
49,747
Income tax expense
F8
(111)
(14,565)
Profit/(loss) for the year
(479)
35,182
OTHER COMPREHENSIVE INCOME
Notes
2024
$’000
2023
$’000
Item that may be reclassified subsequently to profit or loss:
Currency translation differences arising during the year
(1,228)
(2,554)
Other comprehensive income for the year, net of tax
(1,228)
(2,554)
Total comprehensive income/(loss) for the year
(1,707)
32,628
Total comprehensive income/(loss) for the year is attributable to:
Owners of Michael Hill International Limited
(1,707)
32,628
EARNINGS PER SHARE FOR PROFIT/(LOSS) ATTRIBUTABLE
TO THE ORDINARY EQUITY HOLDERS OF THE COMPANY
Notes
2024
cents
2023
cents
Basic earnings per share
F2
(0.12)
9.20
Diluted earnings per share
F2
(0.12)
9.00
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
60 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
ASSETS
Notes
2024
$’000
2023
$’000
CURRENT ASSETS
Cash and cash equivalents
B1
20,174
20,867
Trade and other receivables
F3
14,803
14,533
Inventories
A4
195,785
203,260
Current tax receivables
704
689
Contract assets
A2
557
452
Other current assets
7,576
5,061
Total current assets
239,599
244,862
NON-CURRENT ASSETS
Trade and other receivables
F3
990
995
Right-of-use assets
A5
133,988
139,052
Property, plant and equipment
F4
59,707
57,806
Intangible assets
F5
57,803
53,910
Deferred tax assets
F8
52,507
49,118
Contract assets
A2
251
371
Other non-current assets
399
374
Total non-current assets
305,645
301,626
Total assets
545,244
546,488
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
F6
68,135
71,202
Lease liabilities
A5
40,278
41,075
Contract liabilities
A2
19,616
20,685
Provisions
F7
13,114
13,245
Current tax liabilities
812
6,768
Deferred revenue
236
212
Deferred consideration
2,851
1,814
Total current liabilities
145,042
155,001
NON-CURRENT LIABILITIES
Lease liabilities
A5
114,303
117,518
Contract liabilities
A2
52,955
59,418
Borrowings
B2
58,900
12,500
Provisions
F7
7,163
10,879
Deferred consideration
-
2,557
Total non-current liabilities
233,321
202,872
Total liabilities
378,363
357,873
Net assets
166,881
188,615
EQUITY
Contributed equity
F10
12,763
11,112
Reserves
(102)
2,609
Retained profits
154,220
174,894
Total equity
166,881
188,615
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
61 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
ATTRIBUTABLE TO OWNERS OF
MICHAEL HILL INTERNATIONAL LIMITED
Notes
Contributed
Equity
Share Based
Payments
Reserve
Foreign
Currency
Translation
Reserve
Retained
Profits
Total Equity
$’000
$’000
$’000
$’000
$’000
Balance at 26 June 2022
11,388
767
2,602
180,338
195,095
Profit for the year
-
-
-
35,182
35,182
Currency translation differences
-
-
(2,554)
-
(2,554)
Total comprehensive income for the year
-
-
(2,554)
35,182
32,628
Transactions with members in their capacity as owners:
Dividends paid/provided
B3
-
-
-
(30,719)
(30,719)
Issue of share capital on exercise of share rights
24
(24)
-
-
-
Share-based payments expense
D3
-
1,818
-
-
1,818
Share buy-back
F10
(300)
-
-
(9,907)
(10,207)
(276)
1,794
-
(40,626)
(39,108)
Balance at 2 July 2023
11,112
2,561
48
174,894
188,615
Loss for the year
-
-
-
(479)
(479)
Currency translation differences
-
-
(1,228)
-
(1,228)
Total comprehensive income/(loss) for the year
-
-
(1,228)
(479)
(1,707)
Transactions with members in their capacity as owners:
Dividends paid/provided
B3
-
-
-
(20,195)
(20,195)
Issue of share capital on exercise of share rights
1,651
(1,651)
-
-
-
Share-based payments expense
D3
-
168
-
-
168
1,651
(1,483)
-
(20,195)
(20,027)
Balance at 30 June 2024
12,763
1,078
(1,180)
154,220
166,881
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
62 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
CONSOLIDATED STATEMENT OF CASH FLOWS
CASH FLOWS FROM OPERATING ACTIVITIES
Notes
2024
$’000
2023
$’000
Receipts from customers (inclusive of GST and sales taxes)
720,045
693,744
Payments to suppliers and employees (inclusive of GST and sales taxes)
(624,642)
(571,361)
95,403
122,383
Interest received
318
792
Other revenue received
1,674
1,460
Interest paid
(3,641)
(919)
Leasing interest paid
A5
(10,640)
(8,791)
Income tax paid
(11,912)
(6,728)
Net GST and sales taxes paid
(33,429)
(28,125)
Net cash inflow from operating activities
B1
37,773
80,072
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment
10
61
Payments for property, plant and equipment
F4
(21,099)
(26,479)
Payments for intangible assets
F5
(6,510)
(7,790)
Acquisition of business
G1
(250)
(48,113)
Net cash (outflow) from investing activities
(27,849)
(82,321)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings
B2
124,500
21,500
Repayment of borrowings
B2
(65,600)
(9,000)
Principal portion of lease payments
A5
(49,240)
(45,098)
Dividends paid to company's shareholders
B3
(20,195)
(30,719)
Share buyback / share options exercised
F10
-
(10,207)
Net cash (outflow) from financing activities
(10,535)
(73,524)
Net increase in cash and cash equivalents
(611)
(75,773)
Cash and cash equivalents at the beginning of the financial year
20,867
95,844
Effects of exchange rate changes on cash and cash equivalents
(82)
796
Cash and cash equivalents at the end of the financial year
B1
20,174
20,867
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
63 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
CORPORATE INFORMATION
The consolidated financial statements of Michael Hill International Limited and its subsidiaries (collectively, the Group) for the
year ended 30 June 2024 were authorised for issue in accordance with a resolution of the directors on 30 August 2024. 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’).
A. FINANCIAL OVERVIEW
A1. SEGMENT INFORMATION
Management have determined the operating segments based on the reports reviewed by the Board and Executive Management
team (chief operating decision makers (CODM)) 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 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.
The Group’s operations are in three geographical segments: Australia, New Zealand and Canada.
The corporate and other segment includes revenue and expenses that do not relate directly to the relevant Michael Hill Group
retail segments. These predominantly relate to refining income, head office staff sales, 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 and inter-segment revenue is eliminated on consolidation.
The segment disclosures are prepared excluding the impact of AASB16 Leases and IFRIC SaaS guidance. An adjustment column
representing these entries has been included for the purposes of reconciliation to statutory results.
TYPES OF PRODUCTS
Michael Hill International Limited and its controlled entities operate predominately in the sale of jewellery and related services.
MAJOR CUSTOMERS
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.
SEGMENT RESULTS
Australia
New Zealand
Canada
Corporate
& other
Group pre-
adjustments
Adjustments
Group
Year ended 30 June 2024
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Operating revenue
359,102
106,283
176,669
2,875
644,929
-
644,929
Gross profit
217,074
63,386
107,115
3,343
390,918
-
390,918
Gross margin
60.4%
59.6%
60.6%
60.6%
60.6%
EBITDA*
41,726
17,224
28,811
(52,596)
35,165
47,076
82,241
Depreciation and amortisation
(12,515)
(3,715)
(7,772)
(2,599)
(26,601)
(41,412)
(68,013)
Segment EBIT*
29,211
13,509
21,039
(55,195)
8,564
5,664
14,228
EBIT as a % of revenue
8.1%
12.7%
11.9%
1.3%
2.2%
Interest income
4
-
-
314
318
-
318
Finance costs
(233)
(27)
-
(4,014)
(4,274)
(10,640)
(14,914)
Net profit/(loss) before tax
28,982
13,482
21,039
(58,895)
4,608
(4,976)
(368)
Income tax expense
(111)
Net loss after tax
(479)
64 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
SEGMENT RESULTS, CONTINUED.
Australia
New Zealand
Canada
Corporate
& other
Group pre-
adjustments
Adjustments
Group
Year ended 2 July 2023
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Operating revenue
331,007
121,470
176,442
643
629,562
-
629,562
Gross profit
211,823
75,193
111,629
5,795
404,440
-
404,440
Gross margin
64.0%
61.9%
63.3%
64.2%
-
64.2%
EBITDA*
63,774
26,842
36,753
(48,701)
78,668
37,939
116,607
Depreciation and amortisation
(10,242)
(3,292)
(6,742)
(2,197)
(22,473)
(35,251)
(57,724)
Segment EBIT*
53,532
23,550
30,011
(50,898)
56,195
2,688
58,883
EBIT as a % of revenue
16.2%
19.4%
17.0%
-
8.9%
-
9.4%
Interest income
3
-
-
792
795
-
795
Finance costs
(155)
(3)
-
(982)
(1,140)
(8,791)
(9,931)
Net profit/(loss) before tax
53,380
23,547
30,011
(51,089)
55,850
(6,103)
49,747
Income tax expense
(14,565)
Net profit after tax
35,182
* 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.
A2. REVENUE
2024
$’000
2023
$’000
Revenue from sale of goods and repair services
609,337
595,105
Revenue from Professional Care Plans (PCP)
32,700
32,905
Interest and other revenue from in-house customer finance program
1,216
590
Revenue from Lifetime Diamond Warranty (LTDW)
1,676
962
Total revenue from contracts with customers
644,929
629,562
DISAGGREGATION OF REVENUE FROM CONTRACTS WITH CUSTOMERS
The Group derives revenue from the transfer of goods and services over time and at a point in time in the following
geographical regions:
2024
Australia
New
Zealand
Canada
Corporate
& other
Group
Timing of revenue recognition
$’000
$’000
$’000
$’000
$’000
At a point in time
339,948
100,167
166,057
3,165
609,337
Over time
18,824
6,116
10,612
40
35,592
358,772
106,283
176,669
3,205
644,929
2023
Australia
New
Zealand
Canada
Corporate
& other
Group
Timing of revenue recognition
$’000
$’000
$’000
$’000
$’000
At a point in time
311,884
114,588
168,248
385
595,105
Over time
19,123
6,882
8,194
258
34,457
331,007
121,470
176,442
643
629,562
65 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
ASSETS AND LIABILITIES RELATED
TO CONTRACTS WITH CUSTOMERS
2024
$’000
2023
$’000
Right of return assets
426
257
Deferred PCP bonuses
382
566
Total contract assets
808
823
Deferred service revenue - PCP
66,041
73,860
Deferred service revenue -
Lifetime Diamond Warranty
5,652
5,664
Rights of return liabilities
878
579
Total contract liabilities
72,571
80,103
REVENUE RECOGNISED IN RELATION
TO CONTRACT LIABILITIES
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:
2024
$’000
2023
$’000
Revenue recognised that
was included in the contract
liability balance at the
beginning of the year
23,371
22,075
Impact on revenue recognised
relating to performance
obligations satisfied
in previous years
4,317
2,319
Revenue recognition patterns are regularly reassessed based
on new and historical trends resulting in remeasurement of
revenue recognised in previous years.
ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES
(i) Sale of goods
Sales of goods are recognised when a Group entity delivers
a product to the customer. Retail sales are usually by cash,
payment and instalment plans or debit and credit cards.
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.
(ii) Repair services
Sales of services for repair work performed is recognised in the
accounting period in which the services are performed.
(iii) Deferred service revenue and expenses
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 Consolidated Statement of Profit or
Loss and Other 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 Profit or Loss and Comprehensive Income.
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.
(iv) Deferred interest revenue
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.
(v) Right of return assets and liabilities
Rights of return recognises the estimated returned sales under
the Group’s return policy, being 30 days for all countries.
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.
(vi) 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.
A3. OTHER INCOME
2024
$’000
2023
$’000
Net foreign exchange gains
863
-
Interest received
318
792
Other items
1,675
1,464
2,856
2,256
Net foreign exchange gains of $863,000 (2023: net foreign exchange
losses of $1,570,000).
66 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
A4. INVENTORIES
2024
$’000
2023
$’000
Raw materials
4,224
9,547
Finished goods
183,908
185,602
Packaging and other consumables
7,653
8,111
195,785
203,260
Finished goods are held at the lower of cost and net realisable value (NRV). During the year, finished goods incurred a write-down
of $1,106,000 (2023: $805,000) to be carried at NRV. This is recognised in cost of goods sold.
A5. LEASES
RIGHT-OF-USE ASSETS
2024
$’000
2023
$’000
Right-of-use assets
336,399
296,237
Less: Accumulated depreciation
(202,411)
(156,575)
Less: Accumulated impairment
-
(610)
133,988
139,052
RECONCILIATION OF RIGHT-OF-USE ASSETS
Notes
2024
$’000
2023
$’000
Opening carrying value
139,052
107,385
Additional right-of-use assets relating to leases entered into during the year
33,582
58,683
Lease modifications agreed during the year
12,042
14,486
Depreciation expense
F1
(49,646)
(42,211)
Impairment of right-of-use assets
-
(54)
Foreign currency translation
(1,042)
763
Closing carrying value
133,988
139,052
LEASE LIABILITIES
2024
$’000
2023
$’000
Current
40,278
41,075
Non-current
114,303
117,518
154,581
158,593
RECONCILIATION OF LEASE LIABILITIES
Notes
2024
$’000
2023
$’000
Opening carrying value
158,593
129,569
Additional lease liabilities entered into during the year
35,247
58,697
Lease modifications agreed during the year
11,400
14,446
Interest expense
F1
10,640
8,791
Lease repayments
(59,880)
(53,889)
Foreign currency translation
(1,419)
979
Closing carrying value
154,581
158,593
The incremental borrowing rate used in determining the lease liability ranged between 2.13% and 10.06% (2023: 1.44% and 10.06%).
67 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
ACCOUNTING POLICIES AND SIGNIFICANT JUDGEMENTS
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
The right-of-use assets are also subject to impairment. Refer to
the accounting policies in note J1(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.
Lease liabilities
At commencement date of the lease, the Group recognises
lease liabilities measured at the present value of lease
payments to be made over the lease term. The lease payments
include fixed payments (including in-substance fixed payments)
less any lease incentives receivable, variable lease payments
that depend on an index or a rate, and amounts expected to
be paid under residual value guarantees. The lease payments
also include the exercise price of a purchase option reasonably
certain to be exercised by the Group and payments of penalties
for terminating the lease, if the lease term reflects the Group
exercising the option to terminate. Variable lease payments that
do not depend on an index or a rate are recognised as expenses
(unless they are incurred to produce inventories) in the period in
which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the
Group uses its incremental borrowing rate at the lease
commencement date because the interest rate implicit in the
lease is not readily determinable. After the commencement
date, the amount of lease liabilities is increased to reflect
the accretion of interest and reduced for the lease payments
made. In addition, the carrying amount of lease liabilities is
remeasured if there is a modification, a change in the lease
term, a change in the lease payment (e.g., changes to future
payments resulting from a change in an index or rate used to
determine such lease payments) or a change in the assessment
of an option to purchase the underlying asset.
The Group 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 J1).
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:
2024
2023
Within five
years
More than
five years
Total
Within five
years
More than
five years
Total
$’000
$’000
$’000
$’000
$’000
$’000
Extension options expected not to be exercised
-
-
-
1,058
144
1,202
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e., those leases
that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the
lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on
short-term leases and leases of low-value assets are expensed on a straight-line basis over the lease term.
68 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
B. CASH MANAGEMENT
B1. CASH AND CASH EQUIVALENTS
2024
$’000
2023
$’000
Cash at bank and on hand
20,174
20,867
RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH
INFLOW FROM OPERATING ACTIVITIES
Notes
2024
$’000
2023
$’000
Profit/(loss) for the year
(479)
35,182
Adjustment for:
Depreciation of property, plant and equipment
F4
14,335
12,632
Depreciation of right-of-use assets
A5
49,646
42,211
Amortisation of intangible assets
F5
4,032
2,881
Impairment of property, plant and equipment
F4
-
(2,293)
Impairment of other assets
-
49
Non-cash employee benefits expense - share-based payments
D3
168
1,818
Make good interest
288
220
Net loss on sale of non-current assets
413
116
Net exchange differences
981
(2,508)
Change in operating assets and liabilities
(Increase)/decrease in trade and other receivables
(147)
(8,446)
(Increase)/decrease in inventories
7,349
(2,772)
(Increase)/decrease in deferred tax assets
(3,388)
9,433
(Increase)/decrease in other non-current assets
98
137
(Increase)/decrease in other current assets
(2,616)
1,249
(Decrease)/increase in trade and other payables
(14,321)
(15,839)
(Decrease)/increase in current tax liabilities
(5,972)
4,931
(Decrease)/increase in provisions
(5,067)
5,080
(Decrease)/increase in contract liabilities
(7,547)
(4,009)
Net cash inflow from operating activities
37,773
80,072
B2. BORROWINGS
2024
2023
Current
Non-current
Total
Current
Non-current
Total
$’000
$’000
$’000
$’000
$’000
$’000
Bank loans
-
58,900
58,900
-
12,500
12,500
Total secured borrowings
-
58,900
58,900
-
12,500
12,500
In 2023, the Group extended its financing agreement with ANZ Banking Group and HSBC Australia for an availability period of three
years, maturing on the 31 August 2026. The financial arrangement includes a $92 million multi-option borrowing facility and ancillary
working capital facilities in line with the business requirements of the Group. At balance date, $58.9m was drawn on these facilities.
Refer to note C3 for details of covenants relating to the financing facilities.
69 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
B3. DIVIDENDS
ORDINARY SHARES
2024
$’000
2023
$’000
Final dividend for the year ended 2 July 2023 of 3.5 cents (2022: 4.0 cents) per
fully paid share paid on 22 September 2023 (2022: 23 September 2022)
13,289
15,531
Interim dividend for the year ended 30 June 2024 of 1.75 cents (2023: 4.0
cents) per fully paid share paid on 22 March 2024 (2023: 24 March 2023)
6,906
15,188
20,195
30,719
DIVIDENDS NOT RECOGNISED AT THE END OF THE REPORTING PERIOD
2024
$’000
2023
$’000
No final dividend was declared with respect to the year ended
30 June 2024 (2 July 2023: AU 3.5 cents)
-
13,289
FRANKING AND IMPUTATION CREDITS
2024
$’000
2023
$’000
Franking credits available for subsequent reporting periods
based on a tax rate of 30.0% (2024: 30.0%)
9,822
2,812
Imputation credits (NZ$) available for subsequent reporting periods
based on New Zealand tax rate of 28.0% (2024: 28.0%)
2,775
2,196
The dividends paid during the current financial period were not fully imputed and not franked. The dividends paid in the previous
financial period were fully imputed and not franked.
The 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.
No dividend was recommended by the Directors since year end.
70 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
C. FINANCIAL RISK MANAGEMENT
C1. FINANCIAL RISK MANAGEMENT
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 by its treasury policy. Derivatives
are exclusively used for hedging purposes, i.e. not as trading or other speculative instruments. The Group may use 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 ageing analysis for credit risk.
RISK
EXPOSURE ARISING FROM
MEASUREMENT
MANAGEMENT
Market risk
- foreign exchange
Future commercial transactions
Recognised financial assets and
liabilities not denominated in AUD
Cash flow forecasting and
sensitivity analysis
Forward exchange
contracts (FEC)
- interest rate
Long-term borrowings at variable rates
Sensitivity analysis
Interest rate swaps
- input prices
Components of finished goods
Sensitivity analysis
End product pricing flexibility
Credit risk
Cash and cash equivalents
and trade receivables
Ageing analysis
Diversification of bank deposits,
credit limits and letters of credit
Liquidity risk
Borrowings and other liabilities
Rolling cash flow forecasts
Availability of committed credit
lines and borrowing facilities
The Group’s overall risk management program includes a focus on financial risk including the unpredictability of financial markets
and foreign exchange risk.
The policies are overseen by the Board and executed by management who undertake regular reviews to enable prompt identification
of financial risks so that appropriate actions may be taken.
MARKET RISK
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 operates internationally and is exposed to foreign exchange risk arising from various currency exposures, including the
purchase of inventory. Where it is considered appropriate, the Group enters into forward foreign exchange contracts to buy specified
amounts of various foreign currencies in the future at a pre-determined exchange rate.
Exposure
The Group’s exposure to foreign currency risk at the end of the reporting year, expressed in the presentation currency, was as follows:
2024
2023
USD
$’000
NZD
$’000
CAD
$’000
EUR
$’000
USD
$’000
NZD
$’000
CAD
$’000
EUR
$’000
Cash and cash equivalents
529
-
5
-
520
-
1
20
Trade receivables
6
38
83
27
(54)
4
67
89
Trade payables
(7,229)
(84)
(89)
(359)
(12,825)
-
(33)
(1,288)
Forward exchange contracts:
Buy foreign currency
-
-
-
-
8,163
-
-
-
Sell foreign currency
-
-
-
-
-
-
-
-
Net foreign currency exposure
(6,694)
(46)
(1)
(332)
(4,196)
4
35
(1,179)
71 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
Sensitivity
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.
Impact on pre-tax profit
Impact on other components
of equity
2024
2023
2024
2023
Foreign exchange rate sensitivities
$’000
$’000
$’000
$’000
AUD increases 10%
643
485
-
-
AUD decreases 10%
(786)
(593)
-
-
INTEREST RATE RISK
The Group’s main interest rate risk arises from long-term borrowings and cash. Borrowings issued at variable rates expose the Group to
cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. Group policy is to maintain
fixed interest cover of core debt in line with the Group’s treasury policy. As the Group has a working capital facility, no core debt
(corporate long term debt) was identified.
To manage variable interest rate borrowings risk, the Group may enter into interest rate swaps in which the Group agrees to exchange, at
specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional
principal amount. At 30 June 2024, the Group had no core debt and there were no swaps in place (2023: no swaps in place).
The interest rate derivatives require settlement of net interest receivable or payable each 30 days and are settled on a net basis.
The exposure of the Group’s borrowings to interest rate changes at the end of the reporting year are as follows:
2024
% of
total loans
2023
% of
total loans
$’000
$’000
Variable rate borrowings
58,900
100%
12,500
100%
58,900
100%
12,500
100%
An analysis by maturities is provided below. The percentage of total loans shows the proportion of loans that are currently at variable
rates in relation to the total amount of borrowing.
The details of the variable rate borrowings outstanding are outlined below.
30 June 2024
2 July 2023
Weighted
average
interest rate
Balance
Weighted
average
interest rate
Balance
%
$’000
%
$’000
Bank overdrafts and bank loans
6.30%
58,900
6.01%
12,500
Net exposure to cash flow interest rate risk
58,900
12,500
Sensitivity
Profit or loss is sensitive to higher/lower interest income from cash and cash equivalents as a result of changes in interest rates. Other
components of equity change as a result of an increase/decrease in the fair value of the cash flow hedges of borrowings. All other non-
derivative financial liabilities have a contractual maturity of less than 6 months.
Impact on pre-tax profit
Impact on other
components of equity
2024
2023
2024
2023
$’000
$’000
$’000
$’000
Interest rates - increase by 100 basis points
(387)
84
-
-
Interest rates - decrease by 100 basis points
387
(84)
-
-
72 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
CREDIT 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.
At the reporting date, no material credit risk exposure existed
in relation to potential counterparty failure on financial
instruments. The Group provides interest-free consumer credit
in Canada as a secondary product and the credit risk exposure
which exists against this financial instrument is detailed in note
F3. 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.
LIQUIDITY RISK
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.
The Group had access to an overdraft facility, as well as a $90m
working capital facility which increases by $40 million for
the four-month period from 15 September 2024 to support
seasonal working capital requirements for Christmas trade. The
following were undrawn from these facilities at the end of the
reporting year:
FLOATING RATE
2024
$’000
2023
$’000
- Expiring beyond one year
(bank overdrafts)
2,000
1,914
- Expiring beyond one
year (bank loans)
31,100
77,500
33,100
79,414
The maturity date of the financing facilities provided to the
Group by both Australia and New Zealand Banking Group
Limited and The Hongkong and Shanghai Banking Corporation
Limited, Sydney Branch is 31 August 2026.
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.
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.
73 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
CONTRACTUAL MATURITIES
OF FINANCIAL LIABILITIES
Less than
6 months
6-12
months
Between 1
and 2 years
Between
2 and 5
years
Over 5
years
Total
contractual
cash flow
At 30 June 2024
$’000
$’000
$’000
$’000
$’000
$’000
Non-derivatives
Lease liabilities
24,939
22,942
36,140
54,198
17,343
155,563
Trade payables
68,135
-
-
-
-
68,135
Borrowings
-
-
-
58,900
-
58,900
Total non-derivatives
93,074
22,942
36,140
113,098
17,343
282,598
The Group did not hold any derivatives at financial year end.
At 2 July 2023
Non-derivatives
Lease liabilities
25,699
20,069
33,274
48,336
15,766
143,144
Trade payables
71,202
-
-
-
-
71,202
Borrowings
-
-
-
12,500
-
12,500
Total non-derivatives
96,901
20,069
33,274
60,836
15,766
226,846
Derivatives
Outward payments FECs
8,011
-
-
-
-
8,011
Inward receipts FECs
(8,163)
-
-
-
-
(8,163)
(152)
-
-
-
-
(152)
C2. DERIVATIVE FINANCIAL INSTRUMENTS
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 does not apply hedge accounting.
C3. CAPITAL MANAGEMENT
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.
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 for the quarters up to and including 30 June 2024.
74 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
D. REWARD AND RECOGNITION
D1. EMPLOYEE BENEFITS
EMPLOYEE BENEFITS
2024
$’000
2023
$’000
Employee wages
160,303
147,781
Employee wages on-costs and post-retirement benefits
22,199
18,758
Employee share-based payments expense
168
1,818
182,670
168,357
D2. KEY MANAGEMENT PERSONNEL
2024
$
2023
$
Short-term employee benefits
2,577,041
2,727,413
Long-term benefits
33,593
32,369
Post-employment benefits
88,162
78,844
Share-based payments
182,878
368,172
2,881,674
3,206,798
D3. SHARE-BASED PAYMENTS
OPTIONS
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.
Options are granted under the plan for no consideration. Options expire ten years after granted, vest over five years, are exercisable at
any time during the final five years and vesting is subject to remaining employed by the Group.
Options granted under the plan carry no dividend or voting rights. When exercisable, each option is convertible into one ordinary share.
2024
2023
Set out below are summaries of options granted under the plan:
Average
exercise price
per option
Number of
options
Average
exercise price
per option
Number of
options
Opening balance NZD options
1.70
700,000
1.70
700,000
Expired during the year
1.82
(500,000)
-
-
Closing balance NZD options
1.40
200,000
1.70
700,000
Opening balance AUD options
1.56
300,000
1.56
300,000
Closing balance AUD options
1.56
300,000
1.56
300,000
75 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
Options outstanding at the end of the year have the following expiry dates and exercise prices:
Grant date
Expiry date
Exercise price
2024
2023
29 November 2013
30 September 2023
NZ$1.82
-
500,000
10 November 2014
30 September 2024
NZ$1.63
100,000
100,000
22 January 2016
30 September 2025
NZ$1.14
100,000
100,000
22 September 2016
30 September 2026
AU$2.12
100,000
100,000
5 October 2017
30 September 2027
AU$1.44
100,000
100,000
22 September 2018
30 September 2028
AU$1.11
100,000
100,000
500,000
1,000,000
The weighted average remaining contractual life of share options outstanding at the end of the period was 2.3 years (2023: 1.7 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.
SHARE RIGHTS
The Company’s Equity Incentive Plan was approved by shareholders at the 2023 Annual General Meeting held on 14 November 2023
(Plan). The Plan allows the Board to issue share rights to executive directors, executives and other senior leaders eligible to participate in
the Plan.
Each share right represents a right to receive on ordinary share in the Company, subject to the terms and conditions of the Plan including
satisfaction of certain performance metrics. An allocation of share rights is made to an eligible participant on an annual basis typically
calculated as a % of the value of their total fixed remuneration. 50% of a participants share rights are allocated to an earnings per share
(EPS) performance hurdle and 50% of share rights are allocated to a total shareholder return (TSR) performance hurdle. Vesting of the
share rights is subject to the Company achieving a minimum compound annual growth rate (CAGR) in EPS or TSR (as the case requires)
over three years (Performance Period). Subject to the participant remaining an employee of the Group at the end of the Performance
Period, the share rights vest based on the following vesting schedule:
EPS CAGR
TSR CAGR
VESTING OUTCOME
Less than 5% CAGR
Less than 10% CAGR
No share rights vest
Between 5% CAGR and <10% CAGR
Between 10% CAGR and <20% CAGR
EPS: 20% of share rights vest for
each 1% increase in CAGR
TSR: 10% of share rights vest for
each 1% increase in CAGR
Equal to or greater than 10% CAGR
Equal to or greater than 20% CAGR
100% of share rights vest
During the year, the Board agreed to grant 3,138,838 share rights to eligible participants.
2024
2023
Average fair
value per
share right
Number of
share rights
Average fair
value per
share right
Number of
share rights
Opening balance
0.37
10,054,881
0.21
6,112,332
Granted
0.45
3,138,838
0.85
4,001,391
Exercised
0.33
(4,935,079)
0.74
(34,747)
Forfeited
0.48
(824,387)
0.29
(24,095)
Closing balance
0.96
7,434,253
0.37
10,054,881
76 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
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 shares trading subsequent to the final Annual results
announcement.
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:
2024
$’000
2023
$’000
Number of rights
3,138,838
4,001,391
Share price
$0.82
$1.15
Annualised volatility
40%
45%
Expected dividend yield
9.0%
6.8%
Risk free rate
4.11%
3.42%
Fair value of share right
$0.45
$0.85
2024
$’000
2023
$’000
Expenses arising from share-
based payment transactions
168
1,818
ACCOUNTING POLICY
Options
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:
•
including any market performance conditions (e.g. the
entity’s share price)
•
excluding the impact of any service and non-market
performance vesting conditions (e.g. profitability, sales
growth targets and remaining an employee of the entity
over a specified period), and
•
including the impact of any non-vesting conditions (e.g. the
requirement for employees to save or holdings shares for a
specific period of time).
The total expense is recognised over the vesting period, which
is the period over which all of the specified vesting conditions
are to be satisfied. At the end of each year, the entity revises
its estimates of the number of options that are expected to
vest based on the non-market vesting and service conditions.
It recognises the impact of the revision to original estimates, if
any, in profit or loss, with a corresponding adjustment to equity.
Upon the exercise of options, the balance of the share-based
payments reserve relating to those options is transferred to
share capital.
Share rights
Share rights are granted to eligible senior executives in
accordance with the Company’s deferred compensation plan
(‘LTI’). The fair value of rights granted is recognised as an
employee benefit expense with a corresponding increase in
equity.
The fair value was measured at grant date 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.
E.
RELATED PARTIES
RELATED PARTY
TRANSACTIONS
2024
$
2023
$
Contribution to Michael Hill
Violin Charitable Trust
-
37,624
77 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
F.
OTHER INFORMATION
F1. EXPENSES
DEPRECIATION AND AMORTISATION
Notes
2024
$’000
2023
$’000
Depreciation on property, plant and equipment
F4
14,335
12,632
Depreciation on right-of-use assets
A5
49,646
42,211
Total depreciation
63,981
54,843
Amortisation on software
F5
4,032
2,881
Total amortisation
4,032
2,881
Total depreciation and amortisation
68,013
57,724
FINANCE COSTS
Notes
2024
$’000
2023
$’000
Interest on lease liabilities
A5
10,640
8,791
Bank and interest charges
3,986
920
Interest on make good provision
288
220
14,914
9,931
FOREIGN EXCHANGE
2024
$’000
2023
$’000
Net foreign exchange loss
-
1,570
F2. EARNINGS PER SHARE
RECONCILIATION OF EARNINGS USED IN CALCULATING EARNINGS PER SHARE
2024
$’000
2023
$’000
Basic earnings per share
Profit/(loss) attributable to the ordinary equity holders of the Company used in calculating
basic earnings per share
(479)
35,182
Diluted earnings per share
Profit/(loss) from continuing operations attributable to the ordinary equity holders
of the Company
(479)
35,182
WEIGHTED AVERAGE NUMBER OF SHARES USED AS THE DENOMINATOR
2024
Number
2023
Number
Weighted average number of ordinary shares used as the denominator in calculating
basic earnings per share
383,793,875
382,252,063
Adjustments for calculation of diluted earnings per share:
Share rights1
-
8,446,083
Weighted average number of ordinary and potential ordinary shares used
as the denominator in calculating diluted earnings per share
383,793,875
390,698,146
1 The weighted average share rights of 7,465,931 have been excluded from the calculation of potential ordinary shares in 2024 as they are anti-dilutive.
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 anti-dilutive. The options and share rights have been
excluded in the determination of basic earnings per share. Details are set out in note D3.
78 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
Trade receivables
Trade receivables from sales made to customers through third
party credit providers are non-interest bearing and are generally
on 0-30 day terms.
Sundry debtors
Sundry debtors relates to supplier credits, security deposits,
insurance recoveries 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.
ECL and risk exposure
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
2024
$’000
2023
$’000
Current
3,175
3,197
< 30 days past due
396
91
30 - 60 days past due
146
64
60+ days past due
61
142
3,778
3,494
MOVEMENTS IN THE
PROVISION FOR ECL OF
TRADE RECEIVABLES ARE
AS FOLLOWS:
2024
$’000
2023
$’000
Opening balance
225
657
Additional provisions
recognised
127
225
Net amounts written off
(225)
(657)
Closing balance
127
225
AGEING OF CANADIAN
IN-HOUSE CUSTOMER
DEBTOR FINANCE
2024
$’000
2023
$’000
Current, aged 0 - 30 days
6,083
5,171
Past due, aged 31 - 90 days
368
409
Past due, aged more than
90 days
346
488
6,797
6,068
MOVEMENTS IN THE
PROVISION FOR ECL OF
CANADIAN IN-HOUSE
CUSTOMER DEBTOR
FINANCE ARE AS
FOLLOWS:
2024
$’000
2023
$’000
Opening balance
184
215
Additional provisions
recognised
237
531
Net amounts written off
(197)
(565)
Exchange differences
(7)
3
Closing balance
217
184
F3. TRADE AND OTHER RECEIVABLES
2024
2023
Current
Non-current
Total
Current
Non-current
Total
$’000
$’000
$’000
$’000
$’000
$’000
Trade receivables
3,778
-
3,778
3,494
-
3,494
Provision for expected credit loss
(127)
-
(127)
(225)
-
(225)
3,651
-
3,651
3,269
-
3,269
Canadian in-house customer finance
5,775
1,022
6,797
5,041
1,027
6,068
Provision for expected credit loss
(184)
(33)
(217)
(152)
(32)
(184)
5,591
989
6,580
4,889
995
5,884
Sundry debtors
5,561
1
5,562
6,375
-
6,375
14,803
990
15,793
14,533
995
15,528
79 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
F4. PROPERTY, PLANT AND EQUIPMENT
Plant and
equipment
Fixtures and
fittings
Leasehold
improvements
Display
materials
Total
Notes
$’000
$’000
$’000
$’000
$’000
At 26 June 2022
Cost
36,315
35,733
86,673
6,489
165,210
Accumulated depreciation and impairment
(29,573)
(29,892)
(63,053)
(1,680)
(124,198)
Net book amount
6,742
5,841
23,620
4,809
41,012
Year ended 2 July 2023
Opening net book amount
6,742
5,841
23,620
4,809
41,012
Exchange difference
(62)
43
192
31
204
Additions
5,875
3,515
12,455
2,945
24,790
Acquired as part of business combination
G2
270
-
1,725
321
2,316
Disposals
(62)
(13)
(58)
(44)
(177)
Depreciation charge
(2,478)
(2,132)
(5,603)
(2,419)
(12,632)
Impairment write-back/(loss)
242
223
1,893
(65)
2,293
Closing net book amount
10,527
7,477
34,224
5,578
57,806
At 2 July 2023
Cost
41,122
38,353
98,342
9,743
187,560
Accumulated depreciation and impairment
(30,595)
(30,876)
(64,118)
(4,165)
(129,754)
Net book amount
10,527
7,477
34,224
5,578
57,806
At 30 June 2024
Opening net book amount
10,527
7,477
34,224
5,578
57,806
Exchange difference
(211)
(60)
(320)
(31)
(622)
Additions
5,337
4,291
6,385
1,110
17,123
Acquired as part of business combination
G1
132
23
-
-
155
Disposals
(157)
(136)
(99)
(28)
(420)
Depreciation charge
(2,859)
(2,256)
(6,529)
(2,691)
(14,335)
Closing net book amount
12,769
9,339
33,661
3,938
59,707
At 30 June 2024
Cost
45,104
41,086
102,283
10,527
199,000
Accumulated depreciation and impairment
(32,335)
(31,747)
(68,622)
(6,589)
(139,293)
Net book amount
12,769
9,339
33,661
3,938
59,707
Impairment loss
As per the Group’s accounting policies, the Group impairs assets where the recoverable amount is less than the carrying amount and
reverses the impairment if no longer applicable. 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.
A review of impairment indicators was performed. The accounting policy for this is disclosed in note J1. There were no indicators of
impairment identified. The Group treats each store as a separate cash-generating unit for impairment testing of property, plant and
equipment and right of use assets.
80 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
F4. PROPERTY, PLANT AND EQUIPMENT, CONTINUED.
Depreciation methods and useful lives
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
4 - 7 years
•
Motor vehicles
3 - 5 years
•
Fixtures and fittings
6 - 10 years
•
Leasehold improvements
6 - 10 years
•
Display materials
2 - 5 years
F5. INTANGIBLE ASSETS
Goodwill
Brand,
Loyalty
Programs &
Trademarks
Computer
software
Total
Notes
$’000
$’000
$’000
$’000
At 26 June 2022
Cost
-
79
25,715
25,794
Accumulated amortisation and impairment
-
-
(14,805)
(14,805)
Net book amount
-
79
10,910
10,989
Year ended 2 July 2023
Opening net book amount
-
79
10,910
10,989
Exchange difference
-
-
(106)
(106)
Additions
-
-
7,792
7,792
Acquired as part of business combination
G2
17,695
20,421
-
38,116
Amortisation charge
-
-
(2,881)
(2,881)
Closing net book amount
17,695
20,500
15,715
53,910
At 2 July 2023
Cost
17,695
20,500
33,509
71,704
Accumulated amortisation
-
-
(17,794)
(17,794)
Net book amount
17,695
20,500
15,715
53,910
At 30 June 2024
Opening net book amount
17,695
20,500
15,715
53,910
Exchange difference
-
-
(113)
(113)
Additions
-
-
6,510
6,510
Acquired as part of business combination
G1
150
-
-
150
PPA adjustment
G2
1,378
-
-
1,378
Amortisation charge
-
-
(4,032)
(4,032)
Closing net book amount
19,223
20,500
18,080
57,803
At 30 June 2024
Cost
19,223
20,500
40,001
79,724
Accumulated depreciation and impairment
-
-
(21,921)
(21,921)
Net book amount
19,223
20,500
18,080
57,803
81 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
F4. PROPERTY, PLANT AND EQUIPMENT, CONTINUED.
Impairment tests
The group tests goodwill and indefinite life intangibles (brand names) annually for impairment, in accordance with the accounting policy
stated in note J1(K). For all cash-generating units (CGUs) which contain goodwill or indefinite life intangibles and all other CGUs which
show an indicator of impairment, the recoverable amounts have been determined based on value-in-use calculations.
Goodwill acquired through business combinations is allocated to the Australian CGU, which is a reportable segment. The brand
intangible asset with an indefinite useful life is allocated based on the cashflows for which the brand operates.
Current year
There has been no impairment of goodwill or indefinite life brand names in the current year.
Prior year
There has been no impairment of goodwill or indefinite life brand names in the prior year.
Key assumptions used for value-in-use / fair value less cost to sell calculations
A pre-tax discount rate of 8.05% was applied. For the purposes of impairment testing, a long-term growth rate of 3.6% was used to
extrapolate cash flows beyond the budget period and calculate a terminal value.
These assumptions have been used for the analysis of each CGU, in line with the Australian expected long-term inflation.
The basis of estimation of the five-year cash flows uses the following key operating assumptions:
•
Five-year budgeted EBITDA is based on management’s forecasts of revenue;
•
Revenue forecasts take into account historical revenue and consider external factors such as market sector and geography; and
•
Costs are calculated taking into account historical margins, forecast increases and estimated inflation rates over the period,
consistent with the locations in which the CGUs operate.
Impact of possible changes in key assumptions
There are no CGUs identified as being sensitive to changes in key assumptions.
F6. TRADE AND OTHER PAYABLES
2024
$’000
2023
$’000
Trade payables
38,448
39,422
Annual leave liability
9,050
10,376
Accrued expenses
2,057
4,006
Consumption taxes payable
3,471
2,803
Other payables
15,109
14,595
68,135
71,202
F7. PROVISIONS
2024
2023
Current
Non-current
Total
Current
Non-current
Total
$’000
$’000
$’000
$’000
$’000
$’000
Employee benefits
9,932
2,195
12,127
9,986
2,090
12,076
Assurance-type warranties
2,222
-
2,222
1,927
-
1,927
Make good provision
597
4,968
5,565
594
8,789
9,383
Restructuring costs
363
-
363
738
-
738
13,114
7,163
20,277
13,245
10,879
24,124
82 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
F7. PROVISIONS, CONTINUED.
Employee
benefits
Assurance-
type
warranties
Make good
provision
Restructuring
costs
Total
Movements in Provisions
$’000
$’000
$’000
$’000
$’000
Opening carrying amount
12,076
1,927
9,383
738
24,124
Changes in provisions recognised
1,050
295
(3,358)
351
(1,662)
Amounts incurred and charged
(972)
-
(463)
(716)
(2,151)
Exchange differences
(27)
-
3
(10)
(34)
Closing carrying amount
12,127
2,222
5,565
363
20,277
ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES
Employee benefits
Employee benefits includes provision for long service leave,
assessment 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.
In determining the employee remediation provision,
management has applied certain assumptions and
judgements including interpretation of relevant legal
requirements and expectations regarding final settlement
of obligations with the regulator. Any such estimates and
assumptions may change as new information becomes
available and/or when the remediation program is completed
and approved by the regulator.
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.
Assurance-type warranties
Provision is made for the Group’s assurance-type warranties,
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.
Make good provision
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.
Restructuring
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:
•
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
•
the employees affected have been notified of the plan’s
main features.
83 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
F8. TAX
INCOME TAX EXPENSE
2024
$’000
2023
$’000
Current tax
Current tax on profits for the year
4,145
11,043
Adjustments for current tax of prior periods
(349)
(964)
Total current tax expense
3,796
10,079
Deferred income tax
(Increase)/decrease in deferred tax assets
(4,043)
3,517
Adjustments for deferred tax of prior periods
358
969
Total deferred tax expense/(benefit)
(3,685)
4,486
Income tax expense
111
14,565
Deferred income tax (benefit)/expense included in income tax comprises:
Increase in deferred tax assets
(8,315)
(631)
Increase in deferred tax liabilities
4,272
4,148
(4,043)
3,517
NUMERICAL RECONCILIATION OF INCOME TAX EXPENSE
TO PRIMA FACIE TAX PAYABLE
2024
$’000
2023
$’000
Profit before income tax expense
(369)
49,744
Tax at the Australian tax rate of 30.0% (2023: 30.0%)
(111)
14,923
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Non-deductible expenditure/non-assessable income
730
50
619
14,973
Difference in overseas tax rates
(543)
(542)
Adjustments for current tax of prior periods
(349)
(964)
Adjustments for deferred tax of prior periods
358
969
Tax losses not recognised
26
172
Change in tax rate on deferred tax balance
-
(43)
Income tax expense
111
14,565
UNRECOGNISED POTENTIAL DEFERRED TAX ASSETS
2024
$’000
2023
$’000
Unused United States tax losses for which no deferred tax asset has been recognised
36,939
35,497
Potential tax benefit @ 25.0%
9,235
8,874
Unused New Zealand tax losses for which no deferred tax asset has been recognised
2,593
2,597
Potential tax benefit @ 28.0%
726
727
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.
84 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
F8. TAX, CONTINUED.
DEFERRED TAX BALANCES
2024
$’000
2023
$’000
The balance comprises temporary differences attributable to:
Expected credit loss provision
83
114
Fixed assets and intangibles
2,666
1,552
Intangible assets from intellectual property transfer
22,235
21,825
Deferred expenditure
(109)
(162)
Prepayments
9
(89)
Deferred service revenue
364
399
Right-of-use assets
(39,012)
(40,149)
Lease liabilities
48,177
48,513
Provisions
15,503
17,267
Unrealised foreign exchange losses
(78)
(124)
Sundry items
(8)
(25)
Inventories
4
(3)
Tax losses recognised
2,673
-
Net deferred tax assets
52,507
49,118
Expected settlement:
Deferred tax assets expected to be recovered within 12 months
29,969
21,377
Deferred tax assets expected to be recovered after more than 12 months
22,538
27,741
52,507
49,118
Movements:
Opening balance at 3 July 2023
49,118
58,552
Credited/(charged) to the income statement
4,043
(3,517)
Acquisition of Bevilles
-
(5,105)
Prior year adjustment
(358)
(969)
Foreign exchange differences
(296)
157
Closing balance at 30 June 2024
52,507
49,118
F9. AUDITORS’ REMUNERATION
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:
ERNST & YOUNG (AUSTRALIA)
2024
$
2023
$
Fees for auditing the statutory financial report of the Company and its subsidiaries
577,443
528,563
577,443
528,563
85 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
F10. CONTRIBUTED EQUITY
SHARE CAPITAL
2024
Shares
2023
Shares
2024
$’000
2023
$’000
Ordinary shares - fully paid
384,623,963
379,688,884
12,763
11,112
Total share capital
384,623,963
379,688,884
12,763
11,112
MOVEMENTS IN ORDINARY SHARES
Number of shares
Total
$’000
Opening balance at 27 June 2022
388,285,374
11,388
Share buy-back
(8,631,237)
(300)
Balance at 2 July 2023
379,688,884
11,112
Rights converted
4,935,079
1,651
Balance at 30 June 2024
384,623,963
12,763
Ordinary shares
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.
Options
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.
Rights issue
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.
F11. RESERVES
NATURE AND PURPOSES OF OTHER RESERVES
Share-based payments
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.
Foreign currency translation
Exchange differences arising on translation of the foreign
controlled entity are recognised in other comprehensive income
as described in note J1(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.
G. BUSINESS COMBINATION
G1. CURRENT YEAR ACQUISITIONS
ACQUISITION OF JEWELLERY SERVICES AUSTRALIA
On 8 December 2023, the Group acquired the business and
selected assets and liabilities of Jewellery Services Australia,
with consideration consisting of cash upfront.
Jewellery Services Australia is a jewellery repair workshop
based in Brisbane, Australia. The acquisition provides an
opportunity to stabilise the repair network for the Michael Hill
Group, whilst presenting an opportunity to grow the repairs
offering and revenue within Australia.
The Group measures the assets and liabilities assumed in the
acquisition at fair value. The purchase price accounting for
Jewellery Services Australia is provisional as at 30 June 2024.
86 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
G1. CURRENT YEAR ACQUISITIONS,
CONTINUED.
ACQUISITION OF JEWELLERY SERVICES AUSTRALIA,
CONTINUED.
Assets acquired and liabilities assumed
Details of the purchase consideration, the net assets acquired
and goodwill are set out in the table below:
ASSETS
Notes
Fair value
recognised
on acquisition
$’000
Property, plant and equipment
F4
155
Total assets
155
LIABILITIES
Annual leave
28
Long service leave
27
Total liabilities
55
Total identifiable net assets
at fair value
100
Goodwill arising on acquisition
150
Purchase consideration
transferred
250
The goodwill represents the synergies expected to be achieved
through integrating Jewellery Services Australia and its
associated workforce.
G2 PRIOR YEAR ACQUISITIONS
ACQUISITION OF BEVILLES
On 1 June 2023, the Group acquired the business and selected
assets and liabilities of Bevilles, with consideration consisting
of cash upfront (after adjustments) and earn-out payments over
two years.
Bevilles is an Australian jewellery and watch retailer that
centres its brand and products on the ‘value’ customer segment.
As such, this provides a strong strategic fit and complements
the strategy to elevate the Michael Hill brand to a ‘premium’
market positioning.
The Group measures the assets and liabilities assumed in the
acquisition at fair value.
Assets acquired and liabilities assumed
In finalising the purchase price allocation (PPA) for Bevilles, a
detailed review of the inventory that existed at acquisition was
conducted. It was determined some of the acquired inventory
did not align with the strategic growth objectives of the brand.
Consequently, this inventory was partially written down to
its recoverable value, to ensure focus remains on ranges that
support the long term vision of the brand, with an associated
adjustment to goodwill recognised on acquisition. The amount
of the write down was $1,378,000. No further significant
changes arose as a result of finalisation of the PPA for Bevilles.
The fair values of the identifiable assets and liabilities of
Bevilles as at the date of acquisition were:
ASSETS
Notes
Fair value
recognised
on acquisition
$’000
Cash
Cash
22
22
Trade receivables
Trade receivables
49
49
Inventories
Inventories
17,531
17,531
Property, plant and equipment
Property, plant and equipment
F4
F4
2,316
2,316
Intangibles
Intangibles
F5
F5
20,421
20,421
Right-of-use assets
Right-of-use assets
10,812
10,812
Other current assets
Other current assets
172
172
Total assets
Total assets
51,322
51,322
LIABILITIES
Trade payables
Trade payables
1,098
1,098
Contract liabilities
Contract liabilities
1,162
1,162
Employee entitlements
Employee entitlements
2,212
2,212
Lease liabilities
Lease liabilities
10,812
10,812
Provisions
Provisions
1,001
1,001
Deferred tax liabilities
Deferred tax liabilities
5,105
5,105
Total liabilities
Total liabilities
21,390
21,390
Total identifiable net assets
Total identifiable net assets
at fair value
at fair value
29,933
29,933
Goodwill arising on acquisition
Goodwill arising on acquisition
F5
F5
19,073
19,073
Purchase consideration
Purchase consideration
transferred
transferred
49,006
49,006
PURCHASE CONSIDERATION
Cash consideration paid
Cash consideration paid
to the vendor
to the vendor
44,635
44,635
Deferred contingent
Deferred contingent
consideration paid in escrow
consideration paid in escrow
3,500
3,500
Deferred consideration payable
Deferred consideration payable
871
871
Total consideration
Total consideration
49,006
49,006
87 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
H. GROUP STRUCTURE
H1. 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 noteJ1(B):
Country of
incorporation
Ownership interest held by the group
2024
%
2023
%
Michael Hill Jeweller (Australia) Pty Limited
Australia
100
100
Michael Hill Wholesale Pty Limited
Australia
100
100
Michael Hill Manufacturing Pty Limited
Australia
100
100
Michael Hill Franchise Pty Limited
Australia
100
100
Michael Hill Franchise Services Pty Limited
Australia
100
100
Michael Hill Finance
Australia
100
100
Michael Hill Group Services Pty Limited
Australia
100
100
Michael Hill Charms Pty Limited
Australia
100
100
MH Bespoke Diamonds AU Pty Ltd (previously Michael Hill Online Pty Ltd)
Australia
100
100
Fine Jewellery Retail AU Pty Ltd (previously Emma & Roe Pty Limited)
Australia
100
100
Medley Jewellery Pty Limited
Australia
100
100
Durante Holdings Pty Limited
Australia
100
100
Michael Hill New Zealand Limited
New Zealand
100
100
Michael Hill Jeweller Limited
New Zealand
100
100
Michael Hill Finance (NZ) Limited
New Zealand
100
100
Michael Hill Franchise Holdings Limited
New Zealand
100
100
MHJ (US) Limited
New Zealand
100
100
Emma & Roe NZ Limited
New Zealand
100
100
Michael Hill Online Holdings Limited
New Zealand
100
100
Michael Hill Jeweller (Canada) Limited
Canada
100
100
Michael Hill LLC
United States
100
100
H2. DEED OF CROSS GUARANTEE
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, MH Bespoke Diamonds AU Pty Ltd, Michael Hill Charms Pty Ltd, Fine Jewellery Retail AU 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.
88 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
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 30 June 2024 of the closed group consisting of Michael Hill
International Limited and the entities noted above.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
2024
$’000
2023
$’000
Revenue from sales of goods and services
465,857
435,796
Sales to Group companies not in Closed Group
2,315
17,121
Other income
471
(236)
Cost of goods sold
(183,599)
(160,161)
Employee benefits expense
(144,797)
(129,675)
Occupancy costs
(7,589)
(4,812)
Marketing expenses
(30,865)
(31,594)
Selling expenses
(14,391)
(12,845)
Administrative expenses
(23,465)
22,459
Depreciation and amortisation expense
(54,209)
(44,960)
Loss in disposal of property, plant and equipment
(384)
(114)
Other expenses
(6,739)
(426)
Finance costs
(11,120)
(6,583)
Profit/(loss) before income tax
(8,515)
39,052
Income tax expense
1,995
(12,964)
Profit/(loss) for the year
(6,520)
26,088
OTHER COMPREHENSIVE INCOME
2024
$’000
2023
$’000
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
(3,534)
1,379
Other comprehensive income/(loss) for the period, net of tax
(3,534)
1,379
Total comprehensive income/(loss) for the year
(10,054)
27,467
STATEMENT OF CHANGES IN EQUITY
2024
$’000
2023
$’000
Equity at the beginning of the financial year
481,734
472,985
Share buy-back
-
10,207
Total comprehensive income/(loss)
(10,054)
27,467
Share rights through share-based payments reserve
-
1,794
Issue of share capital on exercise of share rights
(409)
-
Dividends paid
(20,195)
(30,719)
Total equity at the end of the financial year
451,076
481,734
89 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Set out below is a consolidated statement of financial position as at 30 June 2024 of the Closed Group consisting
of Michael Hill International Limited and the entities noted above.
CURRENT ASSETS
2024
$’000
2023
$’000
Cash and cash equivalents
9,816
9,971
Trade receivables
8,216
5,950
Inventories
148,757
151,266
Loans to related parties
249,706
246,710
Other current assets
7,627
4,714
Current tax asset
215
-
Total current assets
424,337
418,611
NON-CURRENT ASSETS
Property, plant and equipment
45,235
41,756
Right-of-use assets
110,624
108,121
Investments in subsidiaries
83,346
83,346
Other non-current assets
573
18,341
Intangible assets
57,803
36,215
Deferred tax assets
45,539
40,767
Total non-current assets
343,120
328,546
Total assets
767,457
747,157
CURRENT LIABILITIES
Trade and other payables
57,021
54,035
Lease liabilities
30,453
31,074
Current tax liabilities
-
9,450
Deferred revenue
14,084
14,616
Provisions
12,494
12,310
Deferred consideration
2,851
-
Total current liabilities
116,903
121,485
NON-CURRENT LIABILITIES
Lease liabilities
94,524
88,947
Deferred revenue
38,891
44,113
Provisions
7,163
10,878
Borrowings
58,900
-
Total non-current liabilities
199,478
143,938
Total liabilities
316,381
265,423
Net assets
451,076
481,734
EQUITY
Contributed equity
320,585
320,585
Reserves
(20,295)
(16,352)
Retained profits
150,786
177,501
Total equity
451,076
481,734
90 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
H3. PARENT ENTITY FINANCIAL INFORMATION
SUMMARY FINANCIAL INFORMATION
The individual financial statements for Michael Hill International Limited (the Parent) show the following aggregate amounts.
STATEMENT OF FINANCIAL POSITION
2024
$’000
2023
$’000
Current assets
140
286
Non-current assets
353,616
387,715
Total assets
353,756
388,001
Current liabilities
-
11,664
Total liabilities
-
11,664
Net assets
353,756
376,337
Issued capital
291,832
291,255
Reserves
33,096
33,504
Retained earnings
28,828
51,578
Total equity
353,756
376,337
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
2024
$’000
2023
$’000
Loss for the year
(24,905)
(39,437)
Total comprehensive loss
(24,905)
(39,437)
GUARANTEES ENTERED INTO BY THE PARENT ENTITY
The Parent has issued the following guarantees in relation to the debts of its subsidiaries:
(i) 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.
(ii) 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.
CONTINGENT LIABILITIES OF THE PARENT ENTITY
The Parent entity had no material contingent liabilities as at balance date.
I. UNRECOGNISED ITEMS
I1. CONTINGENCIES AND COMMITMENTS
CONTINGENT LIABILITIES
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.
91 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
I1. CONTINGENCIES AND COMMITMENTS, CONTINUED.
CONTINGENT LIABILITIES, CONTINUED.
The Group is not aware of any significant events occurring subsequent to balance date that have not been disclosed.
The Group had no material contingent liabilities as at balance date.
CONTINGENT ASSETS
The Group has no material contingent assets existing as at balance date.
COMMITMENTS
The following sets out the various lease contracts that the Group has entered into and have yet to commence as at 30 June 2024.
Within one year
One to five years
Greater than five years
Total
$’000
$’000
$’000
$’000
Future lease payments for these
non-cancellable lease contracts
568
458
777
1,803
I2. EVENTS OCCURRING AFTER THE END OF THE REPORTING PERIOD
In July 2024, it was agreed with ANZ Banking Group and HSBC Australia for the facility to increase by $40 million for the four-month
period from 15 September 2024 to support seasonal working capital requirements for Christmas trade.
The Supreme Court of New South Wales handed down its judgment in Gispac Pty Ltd v Michael Hill Jeweller (Australia) Pty Ltd on 31
January 2024, which involved a dispute in relation to the supply of packaging in the years 2014 to 2018. The Supreme Court ordered
Michael Hill Jeweller (Australia) Pty Ltd to pay damages of $2,259,971 plus interest and costs, for which the Group provided
$4,500,000 for in the consolidated interim financial report for the period ended 31 December 2023. The Group subsequently
appealed that decision to the NSW Court of Appeal. On 27 August 2024, the NSW Court of Appeal handed down its judgement
for the appeal and has reduced the damages amount to $359,858, plus interest. Gispac was ordered to pay the Group’s costs of
the appeal, however the initial trial costs are subject to further determination by the Court. Gispac has a right to apply for leave to
appeal to the High Court within 28 days of the judgement. As the initial trial costs are subject to further Court determination and
the decision still remains subject to appeal, the Group has maintained the existing provision amount noted above in the consolidated
annual financial report for the year ended 30 June 2024
On 30 August 2024, Claudia Batten was appointed a non-executive director of Michael Hill International Limited.
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.
J. SUMMARY OF ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES AND JUDGEMENTS
J1. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION
(A) BASIS OF PREPARATION
The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the
Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting
Standards Board.
The financial statements have been prepared on a historical cost basis, except for derivative financial instruments that have been
measured at fair value. The consolidated financial statements provide comparative information in respect of the previous period.
For reporting purposes, the Group adopts a weekly ‘retail calendar’ closing each Sunday. The current 52 week reporting period ended
on 30 June 2024.
The consolidated financial statements of the Group comply with International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB).
92 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
J1. SUMMARY OF MATERIAL ACCOUNTING
POLICY INFORMATION, CONTINUED.
(B) PRINCIPLES OF CONSOLIDATION
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.
(C) FOREIGN CURRENCY TRANSLATION
Functional currency translation
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.
Transactions and balances
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.
Group companies
The results and financial position of all the Group entities
(none of which have the currency of a hyperinflationary
economy) that have a functional currency different from the
presentation currency are translated into the presentation
currency as follows:
•
assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of the statement
of financial position;
•
income and expenses for each statement of profit or loss
and statement of comprehensive income are translated
at average exchange rates, unless this is not a reasonable
approximation of the cumulative effect of the rates prevailing
on the transaction dates, in which case income and expenses
are translated at the dates of the transactions; and
•
all resulting exchange differences are recognised in other
comprehensive income.
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.
(D) TAXES
Current income tax
The income tax expense or credit for the year is the tax payable
on the current year’s taxable income based on the applicable
income tax rate for each jurisdiction adjusted by changes in
deferred tax assets and liabilities attributable to temporary
differences and to unused tax losses.
The current income tax charge is calculated on the basis of the
tax laws enacted or substantively enacted at the end of the
reporting year in the countries where the Group operates and
generates taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in
which applicable tax regulation is subject to interpretation.
It establishes provisions where appropriate on the basis of
amounts expected to be paid to the tax authorities.
Current tax is recognised in profit or loss, except to the extent
that it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also
recognised in other comprehensive income or directly in
equity, respectively.
Deferred income tax
Deferred income tax is provided in full, using the liability
method, on temporary differences between the tax bases
of assets and liabilities and their carrying amounts in the
consolidated financial statements. Deferred tax assets 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.
Deferred tax liabilities and assets are not recognised for
temporary differences between the carrying amount and tax
bases of investments in controlled entities where the Parent
Entity is able to control the timing of the reversal of the
temporary differences and it is probable that the differences
will not reverse in the foreseeable future.
Deferred tax is recognised in profit or loss, except to
the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the
tax is also recognised in other comprehensive income or
directly in equity, respectively.
Deferred tax assets and liabilities are offset where there is
a legally enforceable right to offset current tax assets and
liabilities and where the deferred tax balances relate to the
same taxation authority. Current tax assets and tax liabilities are
offset where the entity has a legally enforceable right to offset
93 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
and intends either to settle on a net basis, or to realise the asset
and settle the liability simultaneously.
Tax consolidation group
Michael Hill International Limited and its wholly-owned
Australian controlled entities form a tax consolidation group.
As a consequence, one income tax return is completed for the
Australian tax group and is treated for income tax purposes as
one taxpayer.
The tax balances have been attributed for reporting purposes
to each of the entities on the basis of their individual results.
Amounts of tax due to and receivable from the Australian
Taxation Office are made by Michael Hill International Limited
as nominated member of the Australian tax consolidated
group. The current tax balance for the Australian tax group
has been allocated between the members based on each
entity’s current tax movement for the period. Where tax losses
are incurred by Australian tax group members, these are
offset within the group.
(E) GOODS AND SERVICES TAX (GST)
Revenues, expenses, assets and liabilities 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. 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.
(F) IMPAIRMENT OF ASSETS
At each annual reporting date (or more frequently if events or
changes in circumstances indicate that they might be impaired),
the Group assesses whether there is any indication that an
asset may be impaired. Where such an indication is identified,
the Group estimates the recoverable amount of the asset and
recognises an impairment loss where the recoverable amount
is less than the carrying amount. The recoverable amount is the
higher of an asset’s fair value less costs to sell and value-in-use.
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.
(G) CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash on hand, deposits
held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months
or less that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of changes in
value, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities in the statement of financial
position when utilised.
(H) INVENTORIES
Raw materials and finished goods are stated at the lower of
cost and net realisable value. Cost comprises direct materials,
direct labour and an appropriate proportion of variable and
fixed overhead expenditure, the latter being allocated on
the basis of normal operating capacity. Costs are assigned to
individual items of inventory on the basis of weighted average
costs. Net realisable value is the estimated selling price in
the ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the sale.
Management review stock holdings based on recoverability at a
product level and write-down as appropriate.
(I) FINANCIAL INSTRUMENTS - INITIAL RECOGNITION
AND SUBSEQUENT MEASUREMENT
(i) Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as
subsequently measured at amortised cost, fair value through
Other Comprehensive Income (OCI), and fair value through
profit or loss.
The classification of financial assets at initial recognition
depends on the financial asset’s contractual cash flow
characteristics and the Group’s business model for managing
them. With the exception of trade receivables that do not
contain a significant financing component, the Group initially
measures a financial asset at its fair value plus, in the case
of a financial asset not at fair value through profit or loss,
transaction costs. Trade receivables that do not contain
a significant financing component are measured at the
transaction price determined under AASB15 Revenue from
Contracts with Customers. Refer to the accounting policies
in note A2.
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.
94 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
Subsequent measurement
Whilst there are four categories, two are relevant in the current
reporting period for the Group, being:
•
Financial assets at amortised cost (debt instruments)
•
Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Group. The Group
measures financial assets at amortised cost if both of the
following conditions are met:
•
The financial asset is held within a business model with
the objective to hold financial assets in order to collect
contractual cash flows; and
•
The contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured
using the Effective Interest Rate (EIR) method and are subject
to impairment. Gains and losses are recognised in profit or loss
when the asset is derecognised, modified or impaired.
The Group’s financial assets at amortised cost include
trade receivables included under current and non-current
financial assets.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include
financial assets held for trading, financial assets designated
upon initial recognition at fair value through profit or loss,
or financial assets mandatorily required to be measured at
fair value. Financial assets are classified as held for trading if
they are acquired for the purpose of selling or repurchasing
in the near term. Derivatives, including separated embedded
derivatives, are also classified as held for trading unless they are
designated as effective hedging instruments. Financial assets
with cash flows that are not solely payments of principal and
interest are classified and measured at fair value through profit
or loss, irrespective of the business model. Notwithstanding
the criteria for debt instruments to be classified at amortised
cost or at fair value through OCI, as described above, debt
instruments may be designated at fair value through profit or
loss on initial recognition if doing so eliminates, or significantly
reduces, an accounting mismatch.
Financial assets at fair value through profit or loss are carried
in the statement of financial position at fair value with net
changes in fair value recognised in the statement of profit
or loss.
This category includes derivative instruments which the Group
had not irrevocably elected to classify at fair value through OCI.
Derecognition
A financial asset (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is primarily
derecognised (i.e. removed from the Group’s consolidated
statement of financial position) when:
•
The rights to receive cash flows from the asset have
expired; or
•
The Group has transferred its rights to receive cash flows
from the asset or has assumed an obligation to pay the
received cash flows in full without material delay to a
third party under a ‘pass-through’ arrangement; and either
(a) the Group has transferred substantially all the risks
and rewards of the asset, or (b) the Group has neither
transferred nor retained substantially all the risks and
rewards of the asset, but has transferred control of
the asset.
When the Group has transferred its rights to receive cash flows
from an asset or has entered into a pass-through arrangement,
it evaluates if, and to what extent, it has retained the risks and
rewards of ownership. When it has neither transferred nor
retained substantially all of the risks and rewards of the asset,
nor transferred control of the asset, the Group continues to
recognise the transferred asset to the extent of its continuing
involvement. In that case, the Group also recognises an
associated liability. The transferred asset and the associated
liability are measured on a basis that reflects the rights and
obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over
the transferred asset is measured at the lower of the original
carrying amount of the asset and the maximum amount of
consideration that the Group could be required to repay.
Impairment of financial assets
Further disclosures relating to impairment of financial assets
are also provided in note F3.
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.
95 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
The Group considers a financial asset in default when
contractual payments are past due. However, in certain cases,
the Group may also consider a financial asset to be in default
when internal or external information indicates that the Group
is unlikely to receive the outstanding contractual amounts in
full before taking into account any credit enhancements held
by the Group. A financial asset is written off when there is
no reasonable expectation of recovering the contractual
cash flows.
(ii) Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as
financial liabilities at fair value through profit or loss, loans and
borrowings, payables, or as derivatives designated as hedging
instruments in an effective hedge, as appropriate.
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.
Subsequent measurement
The measurement of financial liabilities depends on their
classification, as described below.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include
financial liabilities held for trading and financial liabilities
designated upon initial recognition as at fair value through
profit or loss.
Financial liabilities are classified as held for trading if they
are incurred for the purpose of repurchasing in the near term.
This category also includes derivative financial instruments
entered into by the Group that are not designated as hedging
instruments in hedge relationships as defined by 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.
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 anu
financial liability as at fair value through profit and loss.
Loans and borrowings at amortised cost
This is the category most relevant to the Group. After initial
recognition, interest-bearing loans and borrowings are
subsequently measured at amortised cost using the Effective
Interest Rate (EIR) method. Gains and losses are recognised in
profit or loss when the liabilities are derecognised as well as
through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount
or premium on acquisition and fees or costs that are an integral
part of the EIR. The EIR amortisation is included as finance costs
in the statement of profit or loss.
This category generally applies to interest-bearing loans and
borrowings. For more information, refer to note C1.
Derecognition
A financial liability is derecognised when the obligation under
the liability is discharged or cancelled or expires. When an
existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange
or modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in
the respective carrying amounts is recognised in the statement
of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net
amount is reported in the consolidated statement of financial
position if there is a currently enforceable legal right to offset
the recognised amounts and there is an intention to settle
on a net basis, to realise the assets and settle the liabilities
simultaneously.
(J) PROPERTY PLANT AND EQUIPMENT
All property, plant and equipment is stated at historical cost
less depreciation and impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of
the items.
Subsequent costs are included in the asset’s carrying amount
or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with
the item will flow to the Group and the cost of the item can
be measured reliably. The carrying amount of any component
accounted for as a separate asset is derecognised when
replaced. All other repairs and maintenance are charged
to profit or loss during the reporting year in which they
are incurred.
Depreciation on other assets is calculated using the straight line
method to allocate their cost or revalued amounts, net of their
residual values, over their estimated useful lives (note F4).
The assets’ residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting year.
An asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount (note J1(F)).
Gains and losses on disposals are determined by comparing
proceeds with carrying amount. These are included in profit
or loss.
96 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
(K) INTANGIBLE ASSETS AND GOODWILL
Goodwill
Goodwill is initially measured at cost (being the excess of the
aggregate of the consideration transferred and the amount
recognised for non- controlling interests and any previous
interest held over the net identifiable assets acquired and
liabilities assumed). If the fair value of the net assets acquired
is in excess of the aggregate consideration transferred, the
Group re-assesses whether it has correctly identified all of the
assets acquired and all of the liabilities assumed and reviews
the procedures used to measure the amounts to be recognised
at the acquisition date. If the reassessment still results in
an excess of the fair value of net assets acquired over the
aggregate consideration transferred, then the gain is recognised
in profit or loss.
After initial recognition, goodwill is measured at cost less any
accumulated impairment losses. For the purpose of impairment
testing, goodwill acquired in a business combination is,
from the acquisition date, allocated to each of the Group’s
cash-generating units that are expected to benefit from the
combination, irrespective of whether other assets or liabilities
of the acquiree are assigned to those units.
Brand
Brand names are acquired as part of business combinations
and are recognised initially at fair value. Where they have an
indefinite useful life, they are not subject to amortisation but
are tested annually for impairment or more frequently if events
or changes in circumstances indicate they may be impaired. Key
factors taken into account in assessing useful life of brands are:
•
The brands are well established and protected by
trademarks; and
•
There are currently no legal, technical or commercial
obsolescence factors applying to the brands which indicate
that the life should be considered limited.
Loyalty program
Loyalty programs associated to brands operate a customer
loyalty program which attributes value to the business by
offering a returning customer base. The cost of intangible
assets acquired in a business combination is their fair value at
the date of acquisition. Following initial recognition, intangible
assets are carried at cost less any accumulated amortisation
and accumulated impairment losses. Internally generated
intangibles, excluding capitalised development costs, are not
capitalised and the related expenditure is reflected in profit or
loss in the period in which the expenditure is incurred.
Software
Acquired computer software licences are capitalised on
the basis of the costs incurred to acquire and bring to use
the specific software. These costs are amortised over their
estimated useful lives (three to five years).
Costs associated with developing or maintaining software
programmes are recognised as an expense as incurred.
Development costs that are directly attributable to the design
and testing of identifiable and unique software products
controlled by the Group are recognised as intangible assets
when the following criteria are met:
•
it is technically feasible to complete the software so that
it will be available for use;
•
management intends to complete the software and use
or sell it;
•
there is an ability to use or sell the software;
•
adequate technical, financial and other resources to
complete the development and to use or sell the software
are available;
•
it can be demonstrated how the software will generate
probable future economic benefits; and
•
the expenditure attributable to the software during its
development can be reliably measured.
In respect to cloud computing arrangements, the Group
assesses whether the arrangement contains a lease and if not,
whether the arrangement provides the Group with a resource
that it can control. Costs associated with implementation
are then assessed as to whether they can be capitalised in
accordance with relevant accounting standards.
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).
Useful life
The useful lives of intangible assets are assessed as either finite
or indefinite.
Intangible assets with finite lives are amortised over the useful
economic life i.e. three years for customer loyalty program
and assessed for impairment whenever there is an indication
that the intangible asset may be impaired. The amortisation
period and the amortisation method for an intangible asset
with a finite useful life are reviewed at least at the end of
each reporting period. Changes in the expected useful life
or the expected pattern of consumption of future economic
benefits embodied in the asset are considered to modify
the amortisation period or method, as appropriate, and are
treated as changes in accounting estimates. The amortisation
expense on intangible assets with finite lives is recognised in
the statement of profit or loss in the expense category that is
consistent with the function of the intangible assets.
97 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
(L) PROVISIONS
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of past events, it is probable
that an outflow of resources will be required to settle the
obligation and the amount can be reliably estimated.
Where there are a number of similar obligations, the
likelihood that an outflow will be required in settlement is
determined by considering the class of obligations as a whole.
A provision is recognised even if the likelihood of an outflow
with respect to any one item included in the same class of
obligations may be small.
Present obligations arising from onerous contracts are required
to be recognised and measured as a provision. An onerous
contract is considered to exist where the unavoidable cost
of meeting the obligations under the contract exceed the
economic benefits expected to be received from the contract.
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.
(M) EMPLOYEE ENTITLEMENTS
Short-term obligations
Liabilities for wages and salaries, including non-monetary
benefits and accumulating sick leave that are expected to be
settled wholly within 12 months after the end of the year in
which the employees render the related service are recognised
in respect of employees’ services up to the end of the reporting
year and are measured at the amounts expected to be paid
when the liabilities are settled.
Liabilities 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.
Other long-term employee benefit obligations
The liabilities for long service leave and annual leave that
are not expected to be settled wholly within 12 months
after the end of the year in which the employees render the
related service are measured as the present value of expected
future payments to be made in respect of services provided
by employees up to the end of the reporting year using
the projected unit credit method. Consideration is given to
expected future wage and salary levels, experience of employee
departures and periods of service. Expected future payments
are discounted using the Milliman G100 discount rates at the
end of the reporting period. Remeasurements as a result of
experience adjustments and changes in actuarial assumptions
are recognised in profit or loss.
The obligations are presented as current liabilities in the
statement of financial position if the entity does not have an
unconditional right to defer settlement for at least twelve
months after the reporting year, regardless of when the actual
settlement is expected to occur.
Profit-sharing and bonus plans
The Group recognises a liability and an expense for bonuses and
profit-sharing based on a formula that takes into consideration
the profit attributable to the Company’s shareholders after
certain adjustments. The Group recognises a provision where
contractually obliged or where there is a past practice that has
created a constructive obligation.
Retirement benefit obligations
The Group provides retirement benefits to employees through
a defined contribution superannuation fund. Contributions are
recognised as expenses as they become payable.
(N) BUSINESS COMBINATIONS
Business combinations are accounted for using the
acquisition method. The cost of an acquisition is measured
as the aggregate of the consideration transferred, which is
measured at acquisition date fair value, and the amount of any
non-controlling interests in the acquiree. For each business
combination, the Group elects whether to measure the non-
controlling interests in the acquiree at fair value or at the
proportionate share of the acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred and included
in administrative expenses. At the acquisition date, identifiable
assets acquired and liabilities and contingent liabilities assumed
in a business combination are measured initially at their fair
values, except deferred tax assets or liabilities and assets or
liabilities related to employee benefit arrangements which are
recognised and measured in accordance with AASB 112 Income
Taxes and AASB 119 Employee Benefits respectively.
The Group determines that it has acquired a business when
the acquired set of activities and assets include an input and a
substantive process that together significantly contribute to
the ability to create outputs. The acquired process is considered
substantive if it is critical to the ability to continue producing
outputs, and the inputs acquired include an organised
workforce with the necessary skills, knowledge, or experience
to perform that process or it significantly contributes to the
ability to continue producing outputs and is considered unique
or scarce or cannot be replaced without significant cost, effort,
or delay in the ability to continue producing outputs.
When the Group acquires a business, it assesses the financial
assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic
circumstances and pertinent conditions as at the acquisition
date. This includes the separation of embedded derivatives in
host contracts by the acquiree.
98 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
Any contingent consideration to be transferred by the
acquirer will be recognised at fair value at the acquisition date.
Contingent consideration classified as equity is not remeasured
and its subsequent settlement is accounted for within equity.
Contingent consideration classified as an asset or liability that is
a financial instrument and within the scope of AASB 9 Financial
Instruments, is measured at fair value with the changes in fair
value recognised in the statement of profit or loss in accordance
with AASB 9. Other contingent consideration that is not within
the scope of AASB 9 is measured at fair value at each reporting
date with changes in fair value recognised in profit or loss.
(O) CONTRIBUTED EQUITY
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Where any group company purchases the Company’s equity
instruments, for example as the result of a share buy-back or
a share-based payment plan, the consideration paid, including
any directly attributable incremental costs (net of income
taxes) is deducted from equity attributable to the owners of
Michael Hill International Limited as treasury shares until the
shares are cancelled or reissued. Where such ordinary shares
are subsequently reissued, any consideration received, net of
any directly attributable incremental transaction costs and the
related income tax effects, is included in equity attributable to
the owners of Michael Hill International Limited.
(P) DIVIDENDS
Provision is made for the amount of any dividend declared,
being appropriately authorised and no longer at the discretion
of the entity, on or before the end of the reporting year but not
distributed at the end of the reporting year.
(Q) EARNINGS PER SHARE
Basic earnings per share
Basic earnings per share is calculated by dividing:
•
the profit attributable to owners of the Company, excluding
any costs of servicing equity other than ordinary shares
•
by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the year and
excluding treasury shares (note F2).
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account:
•
the after-income tax effect of interest and other financing
costs associated with dilutive potential ordinary shares, and
•
the weighted average number of additional ordinary shares
that would have been outstanding assuming the conversion
of all dilutive potential ordinary shares (note F2).
(R) ROUNDING OF AMOUNTS AND COMPARATIVES
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.
Some comparative amounts included within these financial
statements have been reclassified, to allow greater
transparency when comparing current period to prior period.
The reclassification adjustments have had no impact on the
prior period Profit Before Tax, Profit After Tax, or Net Assets.
(S) CHANGES IN ACCOUNTING POLICIES
AND DISCLOSURES
Several other amendments and interpretations apply for
the first time from 1 July 2023, 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.
Certain new accounting standards and interpretations have
been published that are not mandatory or effective for the 30
June 2024 year end. The Group is in the process of determining
the impact of these new standards and amendments, which are
summarised below:
AASB 2020-1 Amendments to AASs - Classification of
liabilities as current or non-current and AASB 2022-6
Amendment to AASs - Non-current liabilities with covenants
In January 2020, the AASB issued amendments to paragraphs
69 to 76 of AASB 101 to specify the requirements
for classifying liabilities as current or non-current. The
amendments clarify:
•
what is meant by a right to defer settlement;
•
that a right to defer settlement must exist at the end of the
reporting period; and
•
that classification is unaffected by the likelihood that
an entity will exercise its deferral right that only if an
embedded derivative in a convertible liability is itself an
equity instrument would the terms of a liability not impact
its classification.
The amendments were originally effective for annual reporting
periods beginning on or after 1 January 2023, however the
AASB has now issued AASB 2022-6 Amendments to AASs -
Non-Current Liabilities with Covenants which has changed the
effective date of AASB 2020-1 to annual reporting periods
beginning on or after 1 January 2024 and must be applied
retrospectively. This means that it will be applied in the
reporting period ending 30 June 2025.
99 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
The amendments in AASB 2022-6 clarify:
•
that only covenants with which an entity must comply
on or before the reporting date will affect a liability’s
classification as current or non- current; and
•
specific situations in which an entity does not have a
right to defer settlement for at least 12 months after
the reporting date.
The amendments in AASB 2022-6 also add presentation and
disclosure requirements for non-current liabilities subject to
compliance with future covenants within the next 12 months.
The group is still assessing the impacts of the new disclosure
requirements.
AASB 18 Presentation and Disclosure in Financial Statements
AASB 18 has been issued to improve how entities communicate
in their financial statements, with particular focus on
information about financial performance in the statement of
profit or loss. The key presentation and disclosure requirements
established by AASB 18 are:
•
the presentation of newly defined subtotals in the
statement of profit or loss;
•
the disclosure of management defined performance
measures (MPM); and
•
enhanced requirements for grouping information (ie.
aggregation and disaggregation).
AASB 18 is accompanied with limited consequential
amendments to the requirements in other accounting
standards, including AASB 107
Statement of Cash Flows
AASB 18 introduces three new categories for classification
of all income and expenses in the statement of profit or loss:
operating, investing and financing. Additionally, entities will
be required to present subtotals for ‘operating profit or loss’,
‘profit or loss before financing and income taxes’ and ‘profit
or loss’.
For the purpose of classifying income and expenses into one of
the three new categories, entities will need to assess their main
business activity, which will require judgement. There may be
more than one main business activity.
AASB 18 also requires several disclosures in relation to MPMs,
such as how the measure is calculated, how it provides useful
information and a reconciliation to the most comparable
subtotal specified by AASB 18 or another standard.
AASB 18 will replace AASB 101 Presentation of Financial
Statements.
The group is still assessing the impacts of the new disclosure
requirements.
There are no other standards that have been issued but are not
yet effective and that are expected to have a material financial
impact on the Group in the current or future reporting periods.
J2 SIGNIFICANT ESTIMATES AND JUDGEMENTS
Significant estimates and judgements
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 significant accounting judgements relate to the pattern
of PCP revenue recognition (note A2) and accounting for the
acquisition of Bevilles (note G2).
100 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
Bodies corporate
Tax residency
ENTITY NAME
Entity type
Trustee,
Partner or JV
Participant
Place formed or
incorporated
% of share
capital
held (i)
Australian
or foreign
Foreign
jurisdiction
Michael Hill International Limited
Body corporate
No
Queensland
N/A
Australian
N/A
Durante Holdings Pty Ltd
Body corporate
Yes - partner
Queensland
100%
Australian
N/A
MH Bespoke Diamonds AU
Pty Ltd
Body corporate
No
Queensland
100%
Australian
N/A
Michael Hill Franchise Pty Ltd
Body corporate
No
Queensland
100%
Australian
N/A
Michael Hill Franchise Services
Pty Ltd
Body corporate
No
Queensland
100%
Australian
N/A
Michael Hill Jeweller (Canada) Ltd
Body corporate
No
Canada
100%
Foreign
Canada
Michael Hill Charms Pty Ltd
Body corporate
No
Queensland
100%
Australian
N/A
Fine Jewellery Retail AU Pty Ltd
Body corporate
No
Queensland
100%
Australian
N/A
Medley Jewellery Pty Ltd
Body corporate
No
Queensland
100%
Australian
N/A
Michael Hill Group Services
Pty Ltd
Body corporate
No
Queensland
100%
Australian
N/A
Michael Hill Manufacturing
Pty. Limited
Body corporate
No
Queensland
100%
Australian
N/A
Michael Hill Wholesale Pty Ltd
Body corporate
No
New South Wales
100%
Australian
N/A
Michael Hill Jeweller (Australia)
Pty Ltd
Body corporate
Yes - partner
New South Wales
100%
Australian
N/A
Michael Hill Finance
Partnership
N/A
Queensland
N/A
Australian
N/A
Michael Hill New Zealand Limited
Body corporate
No
New Zealand
100%
Foreign
New Zealand
Michael Hill Jeweller Limited
Body corporate
No
New Zealand
100%
Foreign
New Zealand
Michael Hill Finance (NZ) Limited
Body corporate
No
New Zealand
100%
Foreign
New Zealand
Emma & Roe NZ Limited
Body corporate
No
New Zealand
100%
Foreign
New Zealand
MHJ (US) Limited
Body corporate
No
New Zealand
100%
Foreign
New Zealand
Michael Hill LLC
Body corporate
No
Delaware, US
100%
Foreign
Delaware, US
The above Consolidated Entity Disclosure Statement should be read in conjunction with the accompanying notes.
BASIS OF PREPARATION
The consolidated entity disclosure statement has been prepared in accordance with subsection 295(3A)(a) of the Corporations Act
2001. The entities listed in the statement are Michael Hill International Limited and all the entities it controls in accordance with
AASB 10 Consolidated Financial Statements.
The percentage of share capital disclosed for bodies corporate included in the statement represents the economic interest consolidated
in the consolidated financial statements controlled by Michael Hill International Limited either directly or indirectly.
In relation to the tax residency information included in the statement, judgement may be required in the determination of residency
of the entities listed.
CONSOLIDATED ENTITY
DISCLOSURE STATEMENT
101 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
In the directors’ opinion:
(a)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable;
(b)
the financial statements and notes of the Group for the financial year ended 30 June 2024, are in accordance with
the Corporations Act 2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements,
(ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2024 and of its performance
for the financial year ended on that date, and
(iii) the consolidated entity disclosure statement required by section 295(3A) of the Corporations Act is true and correct;
(c)
as at the date of this declaration, there are reasonable grounds to believe that the members of the extended group
identified in note H1 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 H2.
Note J1(A) confirms that the financial statements also comply with International Financial Reporting Standards as issued
by the International Accounting Standards Board.
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.
This declaration is made in accordance with a resolution of the directors.
R I Fyfe
Chair
Brisbane
30 August 2024
DIRECTORS’ DECLARATION
102 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
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 30 June 2024 , 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 material accounting policy information, the
consolidated entity disclosure statement 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 30 June 2024 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.
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
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
103 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
EXISTENCE OF INVENTORIES
WHY SIGNIFICANT
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
As at 30 June 2024 the Group’s inventories balance
totals $196 million or 36% of the Group’s total assets.
Inventories are primarily kept in the Group’s 300 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 loss.
The Group accounts for inventories in accordance
with the policy disclosed in Note J1(H) and further
disclosure is included in Note A4 of the financial report.
Inventory is considered a key audit matter due to the
nature, size and geographic spread of locations where
items are held.
Our audit procedures included the following:
• Attended a sample of stocktakes conducted at retail stores across
Australia, New Zealand and Canada.
• In addition to the retail stores, we attended the stocktakes
completed at each of the distribution and manufacturing centres
in June 2024 prior to year end.
• Tested the operating effectiveness of key controls relevant to
the conduct of physical stocktakes, the review and evaluation of
inventory variances, and the approval of adjustments made to
inventory quantities.
• At these stocktakes for 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 assess the accuracy of the counts
performed by the Group.
• For each of the locations attended, and for a further
representative sample of retail stores, we inspected that
stocktakes had been conducted in accordance with Group policies,
inventory 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 an inventory movement analysis. On a sample basis
we 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
analytical procedures in relation to the year on year movements
and further analysed where the year end balances were outside
our set expectations.
• Obtained details of stock-in-transit at year end, as well as
movements before and after year end date and assessed the risk
of incorrect cut-off of inventory quantities at year end.
• Assessed the adequacy of the disclosures included in the Notes to
the financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
104 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
PROFESSIONAL CARE PLAN (PCP) REVENUE RECOGNITION
WHY SIGNIFICANT
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
The balance of the deferred PCP revenue liability
at 30 June 2024 was $66 million, and PCP revenue
recognised in the consolidated statement of profit
or loss and other comprehensive income for the year
ended 30 June 2024 was $33 million as disclosed in
Note A2 of the financial report.
The recognition of PCP revenue involves a significant
degree of estimation in determining the appropriate
revenue recognition pattern for lifetime, 10 year
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 estimation process for PCP revenue is based
on an analysis of actual services (through historical
cleaning, repairs and re-sizing service data) performed
under these plans since inception, with management
judgement applied to take account of emerging trends
in customer behaviour, industry data and exceptional
circumstances.
The result of the estimation process 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.
Accordingly, this is considered a key audit matter.
Our audit procedures included the following:
• Assessed the Group’s PCP revenue recognition accounting policies
and compliance in accordance with the requirements of Australian
Accounting Standards.
• Assessed the accuracy of the data used in the PCP revenue
estimation calculation and challenged the reasonableness of the
key judgements including:
- Obtained details of the sales of PCP products to customers
during the year, and on a sample basis, we vouched the cash
receipts to bank statements and tested that the revenue was
appropriately deferred.
- Obtained details of the actual cleaning, repairs and resizing
services during the year and tested a sample of transactions to
understand if repairs are accurately tagged to the associated
PCP plan date.
- Performed analysis over the historic repairs data, to determine
whether the assumptions made by the Group were supportable,
including the length of the lookback period.
• Tested the mathematical accuracy of the PCP revenue estimation
model and re-performed the Group’s calculation supporting the
estimate relating to PCP revenue recognition.
• Re-performed management’s sensitivity analysis over the
assumptions using reasonable alternative scenarios to assess
whether there would be a material impact on revenue recognised
in the year.
• Assessed the adequacy of disclosures included in the Notes to
the 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
105 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
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 2024 annual report, but does not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do 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, 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:
a. The financial report (other than the consolidated entity disclosure statement) that gives a true and fair view in accordance
with Australian Accounting Standards and the Corporations Act 2001; and
b. The consolidated entity disclosure statement that is true and correct in accordance with the Corporations Act 2001; and
for such internal control as the directors determine is necessary to enable the preparation of:
i. The financial report (other than the consolidated entity disclosure statement) that gives a true and fair view and is free
from material misstatement, whether due to fraud or error; and
ii. The consolidated entity disclosure statement that is true and correct and is free of 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
106 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
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.
• 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
107 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
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 30 June 2024.
In our opinion, the Remuneration Report of Michael Hill International Limited for the year ended 30 June 2024, complies
with section 300A of the Corporations Act 2001.
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
30 August 2024
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
108 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
ADDITIONAL SHAREHOLDER
INFORMATION
AS AT 21 AUGUST 2024
The Company has one class of shares on issue (being ordinary shares). The Company’s shares are listed on the Australian
Securities Exchange and the New Zealand Stock Exchange.
Number
Issued Capital
384,623,963
Number of shareholders
4,269
Minimum parcel price
$0.520
Holders with less than a marketable parcel
499
TWENTY LARGEST SHAREHOLDERS
Rank
Shareholder Name
Number of Fully
Paid Ordinary
Shares
% of Fully Paid
Ordinary Shares
1
HOGLETT HAMLETT LIMITED*
145,740,600
37.89
2
CITICORP NOMINEES PTY LIMITED
37,261,472
9.69
3
SQUEAKIDIN LIMITED*
19,156,926
4.98
4
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
15,615,901
4.06
5
PETER KARL CHRISTOPHER HULJICH + JOHN HAMISH BONSHAW IRVING
14,277,336
3.71
6
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
13,544,554
3.52
7
NEW ZEALAND CENTRAL SECURITIES DEPOSITORY LTD
8,244,419
2.14
8
MOLE HILL LIMITED*
7,991,786
2.08
9
MOLE HILL LIMITED*
5,000,000
1.30
10
CHRISTOPHER PETER HULJICH + CONSTANCE MARIA F HULJICH +
PETER KARL CHRISTOPHER HULJICH
3,488,861
0.91
11
FORSYTH BARR CUSTODIANS LIMITED
3,225,456
0.84
12
NEW ZEALAND DEPOSITORY NOMINEE LIMITED
2,845,751
0.74
13
HOGLETT HAMLETT LIMITED*
2,590,000
0.67
14
BNP PARIBAS NOMINEES PTY LTD
2,577,648
0.67
15
HWM (NZ) HOLDINGS LIMITED
2,458,570
0.64
16
FNZ CUSTODIANS LIMITED
2,452,737
0.64
17
VANWARD INVESTMENTS LIMITED
2,036,974
0.53
18
MONKEY TRUSTEE LIMITED +PETER DENNIS BROWN +COLIN JOHN BROWN
1,946,433
0.51
19
CUSTODIAL SERVICES LIMITED
1,540,923
0.40
20
BNP PARIBAS NOMINEES PTY LTD
1,320,072
0.34
Total
293,316,419
76.26
Total Remaining Holders Balance
91,307,544
23.74
*Denotes entities in which a member or members of the Hill family have an interest.
109 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
DISTRIBUTION OF SECURITY HOLDERS
Range
Number of holders of fully
paid ordinary shares
Number of fully paid ordinary shares
1 - 1,000
698
404,032
1,001 - 5,000
1,318
3,979,090
5,001 - 10,000
781
6,389,225
10,001 - 100,000
1,312
42,404,958
Over 100,001
160
331,446,658
Total
4,269
384,623,963
UNMARKETABLE PARCELS
Minimum Parcel Size
Number of Holders
Number of Units
Minimum $500.00 parcel at $0.52 per unit
962
499
205,351
As at 21 August 2024, there are five substantial shareholders that the Company is aware of:
SUBSTANTIAL HOLDERS
Name
Latest Notice Date
Shares
Hoglett Hamlett Limited and others*
13 October 2016
148,330,600
Mark Simon Hill
3 September 2021
163,487,902
Emma Jane Hill
13 October 2016
167,487,526
Spheria Asset Management Pty Ltd
26 June 2024
48,465,930
Pinnacle Investment Management Group Limited
1 July 2024
19,263,299
* Includes: Hoglett Hamlett Limited (New Zealand incorporated company with company number 5994887), Sir Richard Michael Hill, Lady Ann Christine Hill and Veritas Hill
Limited (New Zealand incorporated company with company number 2303840).
The above table sets out the number of securities held by substantial shareholders in the Company as disclosed in their last
substantial shareholder’s notice. Those shareholders may have acquired or disposed of securities in the Company since the date
of that notice. A substantial shareholder is only required to disclose acquisition or disposals where there has been a movement
of at least 1% in their shareholding.
SHARE OPTIONS AND RIGHTS
The Company has 500,000 unlisted share options and 7,434,253 share rights on issue. As at 21 August 2024 there was 1 holder
of share options and 39 holders of share rights.
110 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024
DIRECTORS
R I Fyfe B.Eng, F.E.N.Z., C.N.Z.M. 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.
D Whittle B.A., B.Com (appointed 2 August 2023)
J E Naylor M.A.I.C.D. (resigned 8 April 2024)
C Batten LLB (Hons), B.Com (appointed 30 August 2024)
D Bracken
COMPANY SECRETARIES
A Lowe BCom, LLB (Hons), MAppFin, CA, CTA
K Palethorpe LLB (Hons), BSc (Biochemistry) (Hons),
GradDipLegalPrac, GradDipACGRM
PRINCIPAL REGISTERED OFFICE IN AUSTRALIA
34 Southgate Avenue
Cannon Hill QLD 4170
Australia
SHARE REGISTER
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)
STOCK EXCHANGE LISTING
Michael Hill International Limited shares are listed on
the Australian Securities Exchange as its primary listing
(ASX:MHJ), and on the New Zealand Stock Exchange as
a secondary listing (NZX:MHJ).
AUDITOR
Ernst & Young
Level 51,
111 Eagle Street,
Brisbane QLD 4000
SOLICITOR
Allens Linklaters
Level 26,
480 Queen Street,
Brisbane QLD 4000
BANKERS
ANZ Australia
ANZ New Zealand
HSBC Australia
Royal Bank of Canada
Bank of Montreal
Commonwealth Bank of Australia
WEBSITES
www.michaelhill.com.au
www.michaelhill.co.nz
www.michaelhill.ca
www.michaelhill.com
www.medleyjewellery.com.au
www.bevilles.com.au
www.watchesgalore.com.au
www.tensevenseven.com
investor.michaelhill.com
EMAIL
online@michaelhill.com.au
CORPORATE
DIRECTORY
111 | MICHAEL HILL INTERNATIONAL LIMITED | ANNUAL REPORT 2024