The Directors have pleasure in submitting to shareholders the 18th Annual Report and audited accounts of the Company for the year ended 30 June 2005.

Business Activities
The group’s sole business activities during the 2004/05 financial year continued to be jewellery retailing and manufacturing.

Consolidated Financial Results
The Group has recorded a tax paid surplus of $16,510,000 for the year ended 30 June 2005 (2004 - $15,060,000). This surplus was achieved on a turnover of $271,573,000 (2004 - $259,777,000). The accounts for the year ended 30 June 2005 have been presented in accordance with the accounting principles and policies detailed on pages 38 and 39 of this report.

Shareholders Funds/Reserves
Total Shareholders’Funds of the Group now stand at $65,389,000 -an increase of $7,782,000 over the previous year. The Group’s reserves at 30 June 2005 totalled $57,495,000.

Accounting Policies
There have been no changes in accounting policies during the year.

Dividends
Your Directors paid an interim dividend of 9 cents per share,with full imputation credits and franking credits attached on the 29th March 2005. Overseas shareholders were also paid a supplementary dividend. On the 18th August 2005,your Directors declared a final dividend of 14 cents per share payable on the 17th October 2005. The share register will close at 5:00pm on the 7th October 2005 for the purpose of determining entitlement to the final dividend. Overseas shareholders will also be entitled to a supplementary payment on the final dividend.

The total ordinary dividend for the year was 23 cents (fully imputed), a 9.5% increase over last year. The payout represents 53.8% of the tax paid profit of the group.

Directors
L.W. Peters and A.C. Hill retire by rotation and being eligible offer themselves for re-election.

Directors Remuneration
Directors remuneration and all other benefits received,or due and receivable during the year was as follows:-

*Note - Executive Directors do not receive Director’s fees. Executive remuneration includes salary, superannuation, bonus payments,retirement allowances and provision of a vehicle received in their capacity as employees.

Remuneration of Employees
The number of employees (not including Directors) whose remuneration exceeded $100,000 is as follows:-

Australian remuneration has been converted into New Zealand dollars at the exchange rate used for translating the Australian profits into New Zealand dollars,0.92 (2004 - 0.88). Canadian remuneration on the same basis at 0.87 (2004 - 0.84).

Information on Directors
The qualifications and experience of the Directors are shown on page 29 of the report.

The Directors are responsible for the preparation of the financial statements and other information included in this Annual Report. The financial statements have been prepared in conformity with generally accepted accounting principles to give a true and fair view of the financial position of the Company and Group and the results of their operations and cash flows.

The Company appoints independent chartered accountants to audit the Financial Statements prepared by the Directors and to express an opinion on these Financial Statements. The independent auditors report,which sets out their opinion and the basis of that opinion is set out on page 32 of this report.

Donations
The total of donations made during the year amounted to $38,311.

Annual Report Awards
The Company was delighted to receive a number of awards for its 2004 Annual Report.

In the Annual Report Awards competition conducted by the New Zealand Institute of Chartered Accountants,the Company won the top award in the “small to medium sized Companies”category. MHI has won this division for six out of the last seven years with a commendation being received in 2002.The company was also a finalist in the special award categories of “Corporate Governance reporting”. In commenting on the MHI report, the Judges stated “This report was a clear winner in this category,taking the award for the third straight year. It was a well-presented report that provided the reader with a good overview of where the company was at in a short space of time.”

In addition,the Company was also awarded a silver medal for the third consecutive year in the prestigious Australasian Reporting Awards,which covers all companies in both Australia and New Zealand.

The Board again extends its congratulations to the dedicated team who compiled and designed last year’s report.

On behalf of the Directors,

R. M. Hill

M. R. Parsell