6 Months trading update to 31 December 2011

Michael Hill International Limited
6 months trading update to 31 December 2011

Note that these figures represent 5 months accounting adjusted sales results plus December preliminary sales figures prior to final accounting adjustments and are unaudited. Sales figures stated below include the current portion of Professional Care Plan (PCP) revenues.

Revenue from sale of goods for the half year to 31 December 2011:

The following figures are in NZ Dollars Last Year This Year % Var
Australia same stores 178,209,185 177,400,018 (0.5%)
New Zealand same stores 54,409,635 59,814,848 9.9%
Canada same stores 25,179,995 25,719,444 2.1%
United States same stores 5,694,527 6,629,475 16.4%
Total same stores $263,493,342 $269,563,785 2.3%

Australia all stores 180,568,232 189,569,352 5.0%
New Zealand all stores 56,133,252 61,026,857 8.7%
Canada all stores 26,136,693 30,467,506 16.6%
United States all stores 5,613,544 6,629,475 18.1%
Total all stores $268,451,720 $287,693,190 7.2%

Exchange rates used for the 6 months:
Australia 0.78 0.78
Canada 0.77 0.80
USA 0.75 0.79

The following figures are in local currency Last Year This Year % Var
Australia same stores AUD 139,108,816 137,670,457 (1.0%)
New Zealand same stores NZD 54,409,635 59,814,848 9.9%
Canada same stores CAD 19,335,022 20,557,658 6.3%
United States same stores USD 4,265,606 5,267,891 23.5%

Australia all stores AUD 140,932,029 147,105,119 4.4%
New Zealand all stores NZD 56,133,252 61,026,857 8.7%
Canada all stores CAD 20,070,565 24,346,704 21.3%
United States all stores USD 4,204,996 5,267,891 25.3%

The Group has experienced some solid “same store” sales growth in New Zealand, Canada and the United States during the period, however retail has been challenging in our largest market, Australia, which experienced a small drop in “same store” sales for the period. The difficult market in Australia also put pressure on our margins during the second quarter which will adversely impact on profits for the half year. Despite the difficult trading in Australia during the period, the Group’s cash flow remained strong for the half year and the success of our PCP product since its launch in October 2010 is very encouraging.

It should be noted that the figures stated above now include the income from the sale of PCP’s for the period. The revenue from these plans is carried on the balance sheet as deferred revenue and is then brought to income over the life of the plans (3 Year and Life Time).

The following figures are in NZ Dollars Last Year This Year % Var
PCP Revenue collected for the half year ending 31 December NZD 2,937,882 14,407,745 390%
PCP Revenue brought to income for the half year NZD 0 1,466,312
Half year EBIT for the Group is expected to be in the range of $33m to $35m compared to $32.296m for the corresponding period last year. The full half year results for the 6 months ending 31 December 2011 are due for release to the NZX on the 16th February, 2012.

Sir Michael Hill 11 January 2012
Chairman

All enquiries should be made to Mike Parsell CEO phone +61 403 246655