Michael Hill International Limited, Annual Meeting 2025

October 15^th 2025

Michael Hill International Limited (MHJ)

The company will hold its Annual Shareholders Meeting at 1pm (NZDT) Wednesday 22 October 2025.

It will be a virtual meeting. You can join the meeting online at this link.

Company Overview

The company was founded by Sir Michael Hill and Lady Christine Hill in 1979 with the first store in Whangarei. It listed on the NZX in 1987 and in 2016 moved its primary listing and company registration to Australia. In June 2023, the company acquired Australian jewellery chain Bevilles. Its headquarters are in Brisbane with 160 stores in Australia, 45 in New Zealand, and 82 in Canada employing over 3,200 people. The Hill family are the largest shareholders.

It was a sad year for the company with both the Founder Sir Michael Hill passing away in July 2025, and the Managing Director Daniel Bracken passing away in February 2025. Moving tributes to both are contained in the Annual Report.

In August 2025, Jonathan Waecker was appointed CEO, and in September 2025 Andrea Slingsby, who had been an alternate Director for Sir Michael Hill, was appointed to the Board.

Current Strategy

The company has a Group 2030 Sustainbility Strategy with three key pillars,

• Product – 100% of its products will be sustainable, responsible or circular.
• Planet- It will nurture nature and reduce its negative impacts to net zero.
• People- It will improve the lives of people across the value chain.

Previous Year Shareholder Meeting

NZSA recorded the following key items at last year’s annual shareholder meeting:

1. It was a challenging year; however, the company outperformed the market whilst margins were under pressure due to input costs and market conditions.
2. Digital sales continued to grow, and the company made significant progress with its multi-brand strategy.
3. Michael Hill’s first global flagship store opened in Chadstone Shopping Mall, Melbourne – a premier location.

The meeting report is available at this link.

Disclaimer

To the maximum extent permitted by law, New Zealand Shareholders Association Inc. (NZSA) will not be liable, whether in tort (including negligence) or otherwise, to you or any other person in relation to this document, including any error in it.

Forward looking statements are inherently fallible.

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Key

The following sections calculate an objective rating against criteria contained within NZSA policies.

Governance

NZSA assessment against its key policy criteria are summarised below.

Directors Fees:  In general, good disclosure, although not disclosed if special exertion payments are available for Directors. The remuneration table is comprehensive, indicating that even if they are available, no such payments were made in FY25.

Director Share Ownership:  The company notes in its Corporate Governance Statement that “Directors are not required to have a minimum shareholding in the Company.”, a practice in line with NZSA policy. NZSA encourages director share ownership, but believe that diversity considerations, individual wealth, market signals and independence mean that it should be up to each Director to decide depending on their personal circumstances.

CEO Remuneration:  The company discloses its remuneration policy on its website, which includes an overview of the remuneration philosophy applicable to the company. The People Development and Remuneration Committee are responsible for implementing the policy.

Incentives: The CEO is paid a short-term incentive (STI) in cash and a long-term incentive (LTI) by way of Share Rights.

NZSA encourages fulsome disclosure in relation to any incentive payments made to the CEO, including disclosure of measures (or measure ‘groups’), weightings, targets, and the level of achievement versus target for each component associated with any awards. This methodology is supported by the new NZX Remuneration Reporting Template.

The maximum STI is 92% of base salary: 46% for on target and 46% for outperformance. There is good disclosure of the measures and weightings associated with the STI detailing both target and outperformance criteria. No award was made in FY25.

LTI comprises an award of performance share rights at 95% of base salary, vesting according to performance criteria over three years. The measures and weightings are well-disclosed. We note that the measures include an ‘absolute shareholder return’ metric, a position supported by NZSA.

An area of value offered by the NZX template compared with Australian disclosures is in removing the ‘conflation’ between remuneration earned/awarded versus that paid/vested. We encourage MHJ to consider utilising the practical disclosure tables provided to support this in future. While the company discloses the value of LTI outcomes in the Annual Report, it does not show the relationship to the initial award (or the year).

NZSA notes the slight weighting in award towards LTI, encouraging alignment with long term shareholders’ interests.

Total incentives at award are up to 187% of base salary. We recognise that MHJ is an Australian company, with operations in NZ, and is therefore subject to Australian remuneration practices.

The company does not disclose the gender pay gap and CEO/employee remuneration ratio.

Golden Parachutes: In the interests of transparency, NZSA believes there should be explicit disclosure around the severance terms and notice periods associated with the CEO, including whether specific termination payments are offered.

MHJ offers clear disclosure of the severance terms and notice periods associated with the CEO. NZSA appreciates this level of disclosure.

Director Independence:  A majority of Directors are independent.

Board Composition:  While the Corporate Governance Statement includes a skills matrix, it does not attribute skill sets to individual Directors to demonstrate how they contribute to the governance of the company.

The nature of the company’s board indicates a commitment to thought, experiential and social diversity.

Director Tenure:  NZSA looks for evidence of ongoing succession or ‘staggered’ appointment dates that reduce the risks associated with effective knowledge transfer in the event of succession. We also prefer a term maximum of 9-12 years, unless there are exceptional circumstances that may apply.

Prior to the ASX listing in 2016 Emma Hill was appointed to the NZ entity in February 2007, Gary Smith in November 2012 and Rob Fyfe in January 2014. The other Directors were appointed between 2023 and 2025. We note Gary Smith and Rob Fyfe are standing for re-election and comment further under Resolutions below.

ASM Format: Michael Hill is holding a virtual meeting. NZSA prefer a hybrid meeting (i.e., physical, and virtual) as a way of promoting shareholder engagement while maximising participation. 

We note the company has held virtual meetings in the past. We also note the company has over 4,000 shareholders and has the option of rotating a physical meeting to cities where a reasonable number of shareholders reside, to allow them to engage with the Directors and senior management on a face-to-face basis. Almost 70% of NZX listed companies hold hybrid meetings and this is now the expectation of shareholders.

Independent Advice for the Board & Risk Management: NZSA looks for evidence, through disclosures, that a Board has access to appropriate internal and external expertise to support board assurance activities. We also look for evidence that Boards are across their risk management responsibilities. 

The Board Charter discloses a Director is able to seek independent advice, with the approval of the Chair. We also note that the Company Secretary has unfettered access to the Board. The internal audit function is overseen by the Audit and Risk Committee with the Group Internal Audit Manager appointed by the Committee.

There are comprehensive disclosures in the Annual Report and the Corporate Governance Statement. around strategic, business, and financial risks and their mitigations, as well as the processes that support risk governance and management.

Audit

NZSA assessment against its key policy criteria are summarised below.

Audit Independence:  Good disclosure.

Audit Rotation:  There is no disclosure that the Lead Audit Partner is rotated at 5 years as required by the NZX Listing Rules or any policy on audit firm rotation. MHJ’s primary listing on the ASX means that the company is bound by the Corporations Act in terms of Lead Audit Partner rotation.

Notwithstanding auditor tenure, NZSA also expects disclosure of the appointment dates of both the Lead Audit Partner and Audit Firm to improve transparency for investors.

Environmental Sustainability

Overall approach: Michael Hill’s FY2025 climate disclosures are prepared voluntarily, as the company is exempt from mandatory New Zealand Climate Standards due to its ASX primary listing. Despite this, the company produced an ESG report that covers environmental sustainability-related issues.

This signals a proactive stance and an acknowledgement of investor expectations, relevant in the context of impending Australian requirements.

The disclosures focus strongly on decarbonisation and increasing renewable energy use. While not framed strictly under the four TCFD pillars, the substance of governance, risk, strategy, and metrics/targets is present. Beyond climate, the company is also making progress on broader environmental priorities, such as waste minimisation and biodiversity restoration, through its tree-planting and reforestation programmes. Overall, the approach indicates that sustainability is becoming part of business positioning, even though reporting maturity is still developing.

Sustainability Governance: Governance structures are outlined. A Sustainability Committee meets quarterly, includes senior executives, and reports to the Board twice a year. This establishes formal oversight at the management and board level. However, the Annual Report does not include a board skills matrix with explicit sustainability competencies, limiting visibility of director-level capability. Nevertheless, the existence of a dedicated committee demonstrates that sustainability is a recognised governance focus.

Strategy and Impact: Michael Hill outlines a Group 2030 Sustainability Strategy that includes key climate commitments: achieving net-zero operations (Scope 1 and 2) by 2025 (currently achieved a 79% reduction), 100% certified or recycled materials by 2030, and zero waste to landfill by 2027. The strategy is supported by initiatives such as LED retrofits, solar installations, and the procurement of renewable energy. While the disclosures highlight ambition and tangible actions, integration into the wider corporate strategy is less explicit.

Risk and Opportunity: The company has identified climate-related risks and opportunities, integrating them into its broader risk management processes. Scenario analysis and a climate reporting roadmap have been initiated, aligning with evolving expectations.

Metrics and Targets: Michael Hill discloses quantitative climate-related metrics, including a 79% reduction in Scope 1 and 2 emissions, solar power generation, and initiatives related to waste and recycling. Comparative year-on-year data is provided for some measures, allowing progress tracking. Scope 3 emissions are acknowledged but only preliminarily assessed, with further analysis planned.

Assurance: Michael Hill’s ESG disclosures are not subject to independent limited assurance. This leaves investors reliant on company-prepared data without third-party confirmation. NZSA encourages the adoption of assurance in future reporting, which would strengthen credibility and confidence.

Ethical and Social

NZSA assessment against its key policy criteria are summarised below.

Whistleblowing:  Good disclosure.

Political Donations:  There is no disclosure in the Annual Report or governance documents as to the company’s policy around political donations. NZSA expect an explicit statement as to whether donations are made.

Financial & Performance

Michael Hill’s share price fell from $0.55 to $0.40 (as of 16^th September 2025) over the last 12 months – a 27% decline. This compares unfavourably with the NZX 50 which rose 4% in the same period. The capitalisation of MHJ is $154m placing it 73^rd out of 115 companies on the NZX by size and makes it a mid-sized company.

¹ per share figures based off actual shares at balance date (not weighted average)

² Dividends are paid in Australian dollars and are fully franked.

From a financial perspective, FY25 was better than FY24, but there is room for improvement. Shareholders would wish for further improvements going forward. The result should be seen in the context of challenging retail environments not just in New Zealand, but in NSW and Victoria in Australia.

Revenues were unchanged at $646m, likewise cost of goods sold was also unchanged at $254m leading to an unchanged gross margin of 61%. This contributed to a marginally lower gross profit of $391m.

Michael Hill managed to cut expenses by 1%, an 11% fall in marketing expenses being the largest contributor, and this meant a small NPAT of $2.1m was reported. This gives EPS of $0.005 and places MHJ on a very high P/E of 73.

The company continued its suspension of paying dividends, focusing on debt reduction and working capital requirements. 

MHJ is in sound financial position with a current ratio of 1.76, and the debt equity declined somewhat to 2.04. We note the large portion of leases on the balance sheet (IFRS16) that distort the debt equity figure. $6.9m of long-term interest-bearing debt was paid down. MHJ have contract liabilities that total $66.8m and relate to contracts with customers. This is mainly deferred service revenue.

Operating cashflows rose sharply to $55.1m on rising inventory levels. Inventory turnover, which measures the rate of annual change in inventory, increased slightly to 1.29.

NTA per share arrested its decline and as at balance date is $0.00 and the shares trade at a large premium to NTA. The negligible NTA is a result of the intangibles on the balance sheet.

On the 25^th August the company released a 13 page investor presentation but has not provided any forward looking statements.

Members of the Hill Family have a large holding in the company. Their combined holding amounts to 46.90% of the company. Beyond the major shareholder, shares are reasonably widely held, with the top 20 shareholders comprising 77.51% of shares on issue.

Resolutions

This is a requirement of the ASX Listing Rules.

We will vote undirected proxies IN FAVOUR of this resolution.

Gary Smith was appointed to the Board on 24 February 2016, having previously served as Director of Michael Hill’s listed entity in New Zealand commencing 2 November 2012. He has extensive Director experience across a range of boards and tourism related industry bodies. He is Chair of Flight Centre Travel Group Ltd (ASX: FLT), one of Australia’s top 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.

If he is re-elected, he will have served a total of almost 16 years at the end of that term. We note the Notice of Meeting, “While Gary has served on the Board for more than 12 years, the Board is satisfied that the length of Gary’s tenure does not compromise his independence and that he brings objective and independent judgement to the Board’s deliberations and oversight of Management. Further, as the Group continues to navigate the transition to a new CEO, following the loss of Daniel Bracken and the recent loss of the Group’s founder, Sir Michael Hill, the Board believes it is important to maintain stability at the Board level and continue to benefit from Gary’s extensive knowledge and experience of the Group.”

We appreciate the company providing the rationale for his re-election – and also believe that at a time when the company’s CEO and CFO have changed, board stability is a critical element to ensure ongoing organisational knowledge.

Regardless of this, however, we also would expect to see some indication of his future tenure and/or succession prior to the end of the term.

We will vote undirected proxies IN FAVOUR of this resolution.

Andrea Slingsby was appointed to the Board in September 2025 and is therefore required to offer herself for election. She has extensive governance, strategic and operational transformational growth expertise developed over more than 20 years in Executive, Board, and advisory roles. Andrea also brings expertise in both domestic and international growth and sustainable scaling of significant ASX-listed businesses including Flight Centre and Blackmores. She is currently a Director of Prime Financial Group (ASX: PFG), Volunteering Gold Coast and an Investment Committee Member at construction company, McNab.

 Andrea has a strong understanding of the Company and its operations, having acted as an alternate director of the Company (ASX: MHJ) to Sir Michael Hill from 14 April 2025 to 29 July 2025 and, serving as the Company’s Interim Chief People Officer from August 2018 to December 2018, and its Chief Operating Officer from January 2019 to January 2021. The Board has considered Andrea’s independence status including her recent appointment as alternate director of the Company, as well as previous positions which she has held with the Group and confirms her status as an independent non-executive director of the Company.

We will vote undirected proxies IN FAVOUR of this resolution.

Rob Fyfe was appointed to the Board 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. He is also currently a Director of Air Canada. 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.

If he is re-elected he will have served a total of 14 years at the end of that term We note the Notice of Meeting, ” While Rob has served on the Board for more than 10 years, the Board is satisfied that the length of Rob’s tenure does not compromise his independence and that he brings objective and independent judgement to the Board’s deliberations and oversight of Management. Further, as the Group continues to navigate the transition to a new CEO, following the loss of Daniel Bracken and the recent loss of the Group’s founder, Sir Michael Hill, the Board believes it is important to maintain stability at the Board level and continue to benefit from Rob’s extensive knowledge and experience of the Group.”

We appreciate and agree with the statement, as per our comments in relation to Gary Smith. NZSA notes that Claudia Batten was appointed Deputy Chair in March 2025, perhaps a clear signal as to the succession planned by the company.

We will vote undirected proxies IN FAVOUR of this resolution.

Proxies

You can vote online or appoint a proxy at https://www.investorvote.com.au/

Instructions are on the Proxy/voting paper sent to you.

Voting and proxy appointments close 

Please note you can appoint the Association as your proxy. We will have a representative attending the meeting.

The Team at NZSA