Michael Hill International operates Michael Hill Jeweller - an Australasian retail jewellery chain with 106 stores between Australia and New Zealand as at 30 June 2000. The Company began in 1979 when Michael Hill opened the first store in the New Zealand town of Whangarei, some 160 kilometres north of Auckland.

A unique retail jewellery formula that included dramatically different store designs, a product range devoted exclusively to jewellery and almost saturation levels of high impact advertising elevated the Company to national prominence and record sales.

The Company grew rapidly, expanding to 10 stores by 1987 - the same year it was listed on the New Zealand Stock Exchange. 1987 also saw expansion into Australia, opening the first store in August, in the Brisbane suburb of Indooroopilly.

Today the Group employs over 1200 full and part time employees in retailing, manufacturing and administration. It has approximately 1800 shareholders and is the most profitable publicly listed retail jeweller in Australia/New Zealand.

Our Corporate Objectives:

• To provide a superior long term return for our shareholders.
• To provide employees with secure rewarding long term employment in an environment where excellence is encouraged.

Our Vision:

• To strive for perfection in jewellery retailing and manufacturing, and provide the highest quality, service and value to our customers.

2000 1999 Trading Results     Group revenue ($000's) 181,983 156,940 Group surplus after tax ($000's) 9,939 8,774 - First half 7,494 6,523 - Second half 2,445 2,251       Financial Position     Total assets ($000's) 82,394 74,421 Total shareholders' funds ($000's) 42,587 37,051       Ratios     Group surplus after tax to average     - Total assets 12.7% 12.8% - Shareholders' funds 24.9% 25.3% Earnings per share 25.8¢ 22.8¢ Shareholders' equity 52% 50% Interest cover (times) 10.6 9.9 Current ratio 3.5:1 3.8:1       Number of stores 30 June     New Zealand 40 38 Australia 66 64       Distribution to shareholders     Dividends     - Per ordinary share 13.5¢ 11.5¢ - Times covered by surplus after tax 1.90 1.97       Issued and paid up capital     38,558,600 Ordinary shares ($000's) 7,712 7,712       Share price - 30 June $2.85 $3.00

• Group revenue up 16% to $182 million.



• Group surplus after tax increased by 13%.



• Dividend up 17% for the year.



• Six new stores opened during the year.



• An excellent 25% return on shareholders' funds.



• Same store sales up 1.5% in New Zealand and 5.4% in Australia.



• Three new Superstores opened in New Zealand.