Michael Hill International Limited - Cash Flow Model and DCF Analysis

($ AUD in Millions Except Per Share Amounts in AUD as Stated and Per Unit Amounts)

Michael Hill International Limited - DCF Assumptions & Output:

Company Name: Michael Hill International Limited Terminal Value - Multiples Method: Terminal Value - Perpetuity Growth Method:
Ticker: ASX:MHJ
Current Share Price: $ 0.68 Median EV / EBITDA of Comps: 7.7 x Expected Long-Term GDP Growth: 2.0%
Diluted Shares Outstanding: 387.821
Baseline Terminal EBITDA Multiple: 7.5 x Baseline Terminal FCF Growth Rate: 1.5%
Tax Rate: 30.0% Baseline Terminal Value: $ 833.8 Baseline Terminal Value: $ 829.7
Discount Rate (WACC): 9.16% Implied Terminal FCF Growth Rate: 1.5% Implied Terminal EBITDA Multiple: 7.5 x
Last Fiscal Year: 2018-06-30
(+) PV of Terminal Value: 347.0 (+) PV of Terminal Value: 345.3
Current Equity Value: $ 263.7 (+) Sum of PV of Free Cash Flows: 325.6 (+) Sum of PV of Free Cash Flows: 325.6
(-) Cash & Cash-Equivalents: (7.2) Implied Enterprise Value: $ 672.6 Implied Enterprise Value: $ 670.9
(-) Other Non-Core-Business Assets: -
(+) Total Debt: 35.2 % of Implied EV from Terminal Value: 51.6% % of Implied EV from Terminal Value: 51.5%
(+) Other Funding Sources: -
Current Enterprise Value: 291.7 (+) Cash & Cash-Equivalents: $ 7.2 (+) Cash & Cash-Equivalents: $ 7.2
(+) Other Non-Core-Business Assets: - (+) Other Non-Core-Business Assets: -
Canada - Store-Level Assumptions: (-) Total Debt: (35.2) (-) Total Debt: (35.2)
Max # Stores: 100 (-) Other Funding Sources: - (-) Other Funding Sources: -
# of New Stores per Year: 3 Implied Equity Value: 644.6 Implied Equity Value: 642.9

Initial Sales per Store Growth Rate: 6.5% Diluted Shares Outstanding: 387.821 Diluted Shares Outstanding: 387.821
Annual Change in Growth Rate: (0.5%)
Minimum Growth Rate: 3.0% Implied Share Price from DCF: $ 1.66 Implied Share Price from DCF: $ 1.66
Premium / (Discount) to Current: 144.4% Premium / (Discount) to Current: 143.8%
Annual Margin Increase: 0.5%
Maximum Margin: 15.0%
 Historical Projected
Revenue and Expenses: Units: FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28
# of Stores and Sales per Store:
Revenue by Segment for Continuing Operations:
Australia: $ M AUD $ 309.5 $ 322.0 $ 325.7 $ 315.9 $ 309.9 $ 333.3 $ 354.9 $ 373.2 $ 388.6 $ 403.6 $ 416.8 $ 429.3 $ 442.2
New Zealand: $ M NZD 122.9 122.0 125.2 121.4 120.1 124.9 129.9 135.0 139.0 141.8 144.7 147.5 150.5
Canada: $ M CAD 95.4 112.7 130.8 148.0 162.5 177.3 192.3 207.4 221.3 231.4 238.3 245.5 252.8
Corporate & Other: $ M AUD 1.6 1.3 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5

Number of Retail Stores:

Australia: # Stores 168 166 171 173 175 178 180 182 184 185 185 185 185
New Zealand: # Stores 52 52 52 53 53 53 53 54 54 54 54 54 54
Canada: # Stores 67 76 83 86 89 92 95 98 100 100 100 100 100
Total Stores, Fiscal Year End: # Stores 287 294 306 312 317 323 328 334 338 339 339 339 339

Sales per Store per Year:

Australia: $ M AUD 1.85 1.93 1.93 1.84 1.78 1.89 1.98 2.06 2.12 2.19 2.25 2.32 2.39
New Zealand: $ M NZD 2.36 2.35 2.41 2.31 2.27 2.36 2.45 2.52 2.57 2.63 2.68 2.73 2.79
Canada: $ M CAD 1.50 1.58 1.64 1.75 1.86 1.96 2.06 2.15 2.24 2.31 2.38 2.45 2.53

Sales per Store per Year Growth Rates:

Growth Rate in Sales per Store - Australia: % 3.8% 4.4% 0.3% (5.0%) (3.0%) 6.0% 5.0% 4.0% 3.0% 3.0% 3.0% 3.0% 3.0%
Growth Rate in Sales per Store - New Zealand: % 7.8% (0.8%) 2.7% (4.0%) (2.0%) 4.0% 4.0% 3.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Growth Rate in Sales per Store - Canada: % 8.3% 4.9% 4.3% 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% 3.0% 3.0% 3.0%

EBIT Margin by Segment and CapEx: FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28
Operating Income (EBIT) by Segment:
Australia: $ M AUD 50.0 51.7 48.6 45.8 44.9 49.0 52.9 56.4 59.5 62.6 64.6 66.5 68.5
New Zealand: $ M NZD 27.1 27.8 27.8 26.1 25.8 27.1 28.4 29.8 31.0 31.9 32.5 33.2 33.9
Canada: $ M CAD 8.9 12.4 14.6 17.3 19.8 22.5 25.3 28.4 31.4 33.9 35.7 36.8 37.9

EBIT Margin by Segment:

Australia: % 16.1% 16.1% 14.9% 14.5% 14.5% 14.7% 14.9% 15.1% 15.3% 15.5% 15.5% 15.5% 15.5%
New Zealand: % 22.1% 22.8% 22.2% 21.5% 21.5% 21.7% 21.9% 22.1% 22.3% 22.5% 22.5% 22.5% 22.5%
Canada: % 9.4% 11.0% 11.2% 11.7% 12.2% 12.7% 13.2% 13.7% 14.2% 14.7% 15.0% 15.0% 15.0%

Exchange Rates for Translation to AUD:

New Zealand: FX Rate 1.09 1.06 1.09 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08
Canada: FX Rate 0.97 1.00 0.98 0.98 0.98 0.98 0.98 0.98 0.98 0.98 0.98 0.98 0.98

Corporate Overhead: $ M AUD (29.7) (28.0) (38.9) (33.9) (34.3) (36.8) (39.2) (41.5) (43.4) (45.1) (46.4) (47.7) (49.1)
% Revenue: % 5.7% 5.1% 6.8% 5.8% 5.8% 5.8% 5.8% 5.8% 5.8% 5.8% 5.8% 5.8% 5.8%

Capital Expenditures (CapEx): $ M AUD 24.5 33.1 24.6 25.5 24.2 26.6 27.5 29.6 29.9 29.1 29.5 29.8 30.2
% Revenue: % 4.7% 6.0% 4.3% 4.4% 4.1% 4.2% 4.1% 4.2% 4.0% 3.8% 3.7% 3.7% 3.6%

Average Cost of New Stores: $ M / Store 0.500 0.525 0.560 0.575 0.600 0.625 0.650 0.675 0.700 0.725 0.740 0.750 0.750

# Net New Stores: # Stores 8 7 12 6 5 6 5 6 4 1 - - -

New Stores - Estimated CapEx: $ M AUD 4.0 3.7 6.7 3.5 3.0 3.8 3.3 4.1 2.8 0.7 - - -

Estimated Maintenance CapEx: $ M AUD 20.5 29.5 17.8 22.0 21.2 22.8 24.2 25.6 27.1 28.4 29.5 29.8 30.2
Maintenance CapEx per Store: $ M / Store 0.074 0.103 0.061 0.072 0.068 0.072 0.075 0.078 0.081 0.084 0.087 0.088 0.089

Net Interest Expense: $ M AUD (5.5) (3.2) (2.7) (2.7) (2.8) (2.9)
 Historical Projected
Free Cash Flow (FCF) Projections: Units: FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28

Revenue from Continuing Operations: $ M AUD $ 522.2 $ 551.1 $ 575.5 $ 580.3 $ 587.9 $ 630.7 $ 672.2 $ 710.7 $ 743.9 $ 771.7 $ 794.6 $ 817.1 $ 840.2
Revenue Growth Rate: % 5.5% 5.5% 4.4% 0.8% 1.3% 7.3% 6.6% 5.7% 4.7% 3.7% 3.0% 2.8% 2.8%

Operating Income (EBIT): $ M AUD 54.4 62.3 50.1 53.6 54.6 60.1 65.7 71.3 76.6 81.6 84.7 87.0 89.4
Operating Margin: % 10.4% 11.3% 8.7% 9.2% 9.3% 9.5% 9.8% 10.0% 10.3% 10.6% 10.7% 10.7% 10.6%
Growth Rate: % 12.1% 14.5% (19.5%) 7.0% 1.8% 10.0% 9.4% 8.5% 7.4% 6.4% 3.9% 2.7% 2.7%

(-) Taxes, Excluding Effect of Interest: $ M AUD (16.3) (18.7) (15.0) (16.1) (16.4) (18.0) (19.7) (21.4) (23.0) (24.5) (25.4) (26.1) (26.8)

Net Operating Profit After Taxes (NOPAT): $ M AUD 38.1 43.6 35.1 37.6 38.2 42.1 46.0 49.9 53.6 57.1 59.3 60.9 62.6

Adjustments for Non-Cash Charges:

(+) Depreciation & Amortisation: $ M AUD 16.8 17.4 18.7 19.7 18.3 20.3 20.8 22.5 22.4 21.4 21.5 21.7 21.8
% Revenue: % 3.2% 3.2% 3.2% 3.4% 3.1% 3.2% 3.1% 3.2% 3.0% 2.8% 2.7% 2.7% 2.6%

(+/-) Deferred Income Taxes: $ M AUD (19.5) 3.4 (6.3) 4.0 3.3 2.7 2.0 2.1 2.3 2.4 2.5 2.6 2.7
% Book Taxes: % (88.8%) 28.0% (106.3%) 25.0% 20.0% 15.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%

Net Change in Working Capital: $ M AUD 27.9 (20.5) 20.7 1.4 2.3 12.8 10.4 9.6 8.3 6.9 5.7 5.6 5.8
% Change in Revenue: % 74.4% (70.9%) 84.6% 30.0% 30.0% 30.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0%
% Revenue: % 5.4% (3.7%) 3.6% 0.2% 0.4% 2.0% 1.5% 1.4% 1.1% 0.9% 0.7% 0.7% 0.7%

(-) Capital Expenditures: $ M AUD (24.5) (33.1) (24.6) (25.5) (24.2) (26.6) (27.5) (29.6) (29.9) (29.1) (29.5) (29.8) (30.2)
% Revenue: % 4.7% 6.0% 4.3% 4.4% 4.1% 4.2% 4.1% 4.2% 4.0% 3.8% 3.7% 3.7% 3.6%

Unlevered Free Cash Flow: $ M AUD $ 38.8 $ 10.9 $ 43.6 $ 37.2 $ 37.9 $ 51.3 $ 51.6 $ 54.6 $ 56.8 $ 58.8 $ 59.6 $ 61.0 $ 62.6
Growth Rate: % N/A (72.0%) 300.9% (14.7%) 1.9% 35.3% 0.6% 5.7% 4.1% 3.4% 1.5% 2.3% 2.7%

Discount Period: # 1 2 3 4 5 6 7 8 9 10
PV of Unlevered FCF: $ M AUD $ 34.1 $ 31.8 $ 39.4 $ 36.4 $ 35.2 $ 33.6 $ 31.8 $ 29.6 $ 27.7 $ 26.1

EBITDA: $ M AUD $ 71.2 $ 79.8 $ 68.8 $ 73.3 $ 73.0 $ 80.4 $ 86.5 $ 93.9 $ 99.0 $ 103.0 $ 106.2 $ 108.7 $ 111.2
Growth Rate: % 12.0% (13.7%) 6.5% (0.5%) 10.1% 7.6% 8.5% 5.5% 4.0% 3.2% 2.3% 2.3%

Net Profit After Tax: $ M AUD $ 26.3 $ 44.1 $ 34.8 $ 35.7 $ 36.3 $ 40.0
Sensitivity Analyses:

Weighted Average Cost of Capital (WACC):

$ 1.66 7.91% 8.16% 8.41% 8.66% 8.91% 9.16% 9.41% 9.66% 9.91% 10.16% 10.41%
7.90 x
Terminal EV / 7.80 x
EBITDA 7.70 x
Multiple 7.60 x
(Terminal Value
Calculated 7.50 x
Using the 7.40 x
Multiples 7.30 x
Method): 7.20 x
7.10 x

Weighted Average Cost of Capital (WACC):

$ 1.66 7.91% 8.16% 8.41% 8.66% 8.91% 9.16% 9.41% 9.66% 9.91% 10.16% 10.41%
1.90%
1.80%
Terminal FCF 1.70%
Growth Rate
(Terminal Value 1.60%
Calculated 1.50%
Using the 1.40%
Gordon Growth
Method): 1.30%
1.20%
1.10%
WACC Analysis - Michael Hill International Limited
($ AUD in Millions Except Per Share Amounts in AUD as Stated)

Discount Rate Calculations - Assumptions:

Risk-Free Rate: 2.10%
Equity Risk Premium: 5.96%
Pre-Tax Cost of Debt: 6.70%
Cost of Preferred Stock: 10.00%

Comparable Companies - Unlevered Beta Calculation:

Levered Preferred Equity Unlevered
Name Beta Debt % Debt Stock % Preferred Value % Equity Tax Rate Beta
Accent Group Limited 1.50 71.5 7.9% - – 838.0 92.1% 30.0% 1.42
Vita Group Limited 1.97 9.8 3.9% - – 239.0 96.1% 30.0% 1.92
Noni B Limited 1.27 22.0 6.9% - – 295.6 93.1% 30.0% 1.21
Adairs Limited 1.41 25.0 7.8% - – 296.9 92.2% 30.0% 1.33
Baby Bunting Group Limited 1.17 13.0 4.2% - – 294.6 95.8% 30.0% 1.13
MotorCycle Holdings Limited 1.25 78.8 42.6% - – 106.1 57.4% 30.0% 0.82
Nick Scali Limited 1.16 33.7 6.6% - – 477.9 93.4% 30.0% 1.11
Beacon Lighting Group Limited 1.12 33.4 11.7% - – 252.8 88.3% 30.0% 1.03
Lovisa Holdings Limited 1.70 - – - – 993.4 100.0% 30.0% 1.70

Median: 1.27 $ 25.0 6.9% $ - – $ 295.6 93.1% 30.0% 1.21

Michael Hill International Limited 1.22

Michael Hill International Limited - Levered Beta & WACC Calculation

Unlevered Preferred Equity Levered
Beta Debt % Debt Stock % Preferred Value % Equity Tax Rate Beta
Current Capital Structure: 1.21 $ 35.2 11.8% $ - – $ 263.7 88.2% 30.0% 1.32
"Optimal" Capital Structure: 1.21 20.7 6.9% - – 278.2 93.1% 30.0% 1.27

Cost of Equity Based on Comparables, Current Capital Structure: 9.97%

Cost of Equity Based on Comparables, "Optimal" Capital Structure: 9.67%
Cost of Equity Based on Historical Beta: 9.37%

WACC = Cost of Equity * % Equity + Cost of Debt * (1 - Tax Rate) * % Debt + Cost of Preferred Stock * % Preferred Stock

WACC, Current Capital Structure: 9.35%

WACC, "Optimal" Capital Structure: 9.32%
WACC, Current Capital Structure and Historical Cost of Equity: 8.82%

Average WACC Produced by All Methods: 9.16%

Comparable Companies - Australia-Based Fashion/Apparel/Jewelry Specialty Retailers with FY 18 Revenue Above $100 Million AUD
($ AUD in Millions Except Per Share Amounts in AUD as Stated)

Operating Statistics: Capitalisation Projected Projected

Equity Enterprise Revenue EBITDA Net Income Revenue EBITDA EBITDA Margin
Company Name Value Value FY18 FY19 FY20 FY18 FY19 FY20 FY18 FY19 FY20 Growth Growth FY18 FY19 FY20
Accent Group Limited $ 838.0 $ 869.6 $ 703.2 $ 764.4 $ 848.9 $ 89.7 $ 106.9 $ 117.1 $ 44.0 $ 55.4 $ 60.9 11.0% 9.6% 12.8% 14.0% 13.8%
Vita Group Limited 239.0 221.7 684.5 724.0 743.7 27.7 47.2 47.6 22.0 25.3 25.3 2.7% 0.8% 4.0% 6.5% 6.4%
Noni B Limited 295.6 252.9 364.2 894.2 921.2 36.8 46.0 79.9 17.3 16.4 38.9 3.0% 73.9% 10.1% 5.1% 8.7%
Adairs Limited 296.9 307.1 314.8 349.4 380.1 51.0 54.9 59.6 30.6 32.9 35.5 8.8% 8.6% 16.2% 15.7% 15.7%
Baby Bunting Group Limited 294.6 301.1 303.1 356.7 406.0 17.1 26.2 33.1 8.7 14.1 18.2 13.8% 26.3% 5.6% 7.3% 8.1%
MotorCycle Holdings Limited 106.1 179.8 302.4 333.5 344.5 20.4 20.0 22.6 9.1 10.1 11.7 3.3% 13.2% 6.7% 6.0% 6.6%
Nick Scali Limited 477.9 473.4 250.8 272.0 290.0 61.6 67.4 70.8 41.0 45.9 48.0 6.6% 5.1% 24.6% 24.8% 24.4%
Beacon Lighting Group Limited 252.8 263.1 237.7 244.9 271.9 33.1 34.2 38.1 19.6 19.5 21.8 11.0% 11.4% 13.9% 14.0% 14.0%
Lovisa Holdings Limited 993.4 961.1 217.0 245.7 295.2 58.6 60.6 71.2 36.0 36.4 42.4 20.2% 17.6% 27.0% 24.7% 24.1%

Maximum $ 993.4 $ 961.1 $ 703.2 $ 894.2 $ 921.2 $ 89.7 $ 106.9 $ 117.1 $ 44.0 $ 55.4 $ 60.9 20.2% 73.9% 27.0% 24.8% 24.4%
75th Percentile 477.9 473.4 364.2 724.0 743.7 58.6 60.6 71.2 36.0 36.4 42.4 11.0% 17.6% 16.2% 15.7% 15.7%
Median $ 295.6 $ 301.1 $ 303.1 $ 349.4 $ 380.1 $ 36.8 $ 47.2 $ 59.6 $ 22.0 $ 25.3 $ 35.5 8.8% 11.4% 12.8% 14.0% 13.8%
25th Percentile 252.8 252.9 250.8 272.0 295.2 27.7 34.2 38.1 17.3 16.4 21.8 3.3% 8.6% 6.7% 6.5% 8.1%
Minimum 106.1 179.8 217.0 244.9 271.9 17.1 20.0 22.6 8.7 10.1 11.7 2.7% 0.8% 4.0% 5.1% 6.4%

Michael Hill International Limited $ 263.7 $ 291.7 $ 575.5 $ 580.3 $ 587.9 $ 68.8 $ 73.3 $ 73.0 $ 34.8 $ 35.7 $ 36.3 1.3% (0.5%) 12.0% 12.6% 12.4%

Valuation Statistics: Capitalization Enterprise Value / Enterprise Value /

Equity Enterprise Revenue EBITDA P / E Multiple
Company Name Value Value FY18 FY19 FY20 FY18 FY19 FY20 FY18 FY19 FY20
Accent Group Limited $ 838.0 $ 869.6 1.2 x 1.1 x 1.0 x 9.7 x 8.1 x 7.4 x 19.0 x 15.1 x 13.8 x
Vita Group Limited 239.0 221.7 0.3 x 0.3 x 0.3 x 8.0 x 4.7 x 4.7 x 10.9 x 9.4 x 9.5 x
Noni B Limited 295.6 252.9 0.7 x 0.3 x 0.3 x 6.9 x 5.5 x 3.2 x 17.1 x 18.0 x 7.6 x
Adairs Limited 296.9 307.1 1.0 x 0.9 x 0.8 x 6.0 x 5.6 x 5.2 x 9.7 x 9.0 x 8.4 x
Baby Bunting Group Limited 294.6 301.1 1.0 x 0.8 x 0.7 x 17.6 x 11.5 x 9.1 x 33.9 x 21.0 x 16.2 x
MotorCycle Holdings Limited 106.1 179.8 0.6 x 0.5 x 0.5 x 8.8 x 9.0 x 8.0 x 11.7 x 10.6 x 9.1 x
Nick Scali Limited 477.9 473.4 1.9 x 1.7 x 1.6 x 7.7 x 7.0 x 6.7 x 11.7 x 10.4 x 10.0 x
Beacon Lighting Group Limited 252.8 263.1 1.1 x 1.1 x 1.0 x 7.9 x 7.7 x 6.9 x 12.9 x 12.9 x 11.6 x
Lovisa Holdings Limited 993.4 961.1 4.4 x 3.9 x 3.3 x 16.4 x 15.9 x 13.5 x 27.6 x 27.3 x 23.5 x

Maximum $ 993.4 $ 961.1 4.4 x 3.9 x 3.3 x 17.6 x 15.9 x 13.5 x 33.9 x 27.3 x 23.5 x
75th Percentile 477.9 473.4 1.2 x 1.1 x 1.0 x 9.7 x 9.0 x 8.0 x 19.0 x 18.0 x 13.8 x
Median $ 295.6 $ 301.1 1.0 x 0.9 x 0.8 x 8.0 x 7.7 x 6.9 x 12.9 x 12.9 x 10.0 x
25th Percentile 252.8 252.9 0.7 x 0.5 x 0.5 x 7.7 x 5.6 x 5.2 x 11.7 x 10.4 x 9.1 x
Minimum 106.1 179.8 0.3 x 0.3 x 0.3 x 6.0 x 4.7 x 3.2 x 9.7 x 9.0 x 7.6 x

Michael Hill International Limited $ 264 $ 291.7 0.5 x 0.5 x 0.5 x 4.2 x 4.0 x 4.0 x 7.6 x 7.4 x 7.3 x
Precedent Transactions - Specialty Retail Sellers in Australia, New Zealand, and Canada with Transaction Enterprise Values
Above $100 Million USD Announced Between 20 March 2014 and 20 March 2019
($ USD in Millions; CAD, NZD, and AUD Converted at Exchange Rate at Time of Transaction)

Michael Hill International Limited - Comparable M&A Transactions: Valuation Multiples

Transaction Transaction LTM LTM
Announcement Enterprise Equity LTM LTM LTM EV / EV / LTM
Acquirer Name Target Name Geography Date Value Value Revenue EBITDA Net Income Revenue EBITDA P/E
Euro Garages Limited Petrol Business of Woolworths Group Limited AU 2018-11-09 $ 1,249.3 $ 1,249.3 N/A N/A N/A N/A N/A N/A
TPG Asia VII SF Pte. Ltd; TPG Growth IV SF Pte. Ltd.; TPG Clarinet Co-Invest, L.P. Greencross Limited AU 2018-11-05 698.3 481.4 650.1 64.0 15.3 1.1 x 10.9 x 31.5 x
Intermediate Capital Group plc (LSE:ICP) RSEA Pty Ltd AU 2018-05-14 109.4 109.4 N/A N/A N/A N/A N/A N/A
Fairfax Financial Holdings Limited (TSX:FFH) Toys"R"Us (Canada) Ltd. CAN 2018-04-27 233.3 233.3 777.7 77.8 - 0.3 x 3.0 x N/A
TFG Retailers Pty Ltd Retail Apparel Group Pty Ltd AU 2017-05-25 225.8 - N/A N/A N/A N/A N/A N/A
Genesis Energy Limited (NZSE:GNE) Nova Energy Limited, Retail LPG Business NZ 2017-05-01 132.9 132.9 N/A N/A N/A N/A N/A N/A
Brookfield Business Partners L.P. (NYSE:BBU) Loblaw Companies Limited, Gas Station Business CAN 2017-04-19 438.0 401.5 1,115.3 N/A N/A 0.4 x N/A N/A
Al-ALFIA HOLDING City Chic Collective Limited AU 2017-02-08 93.5 102.9 594.4 8.9 0.8 0.2 x 10.5 x NM
Caltex Australia Limited (ASX:CTX) Gull New Zealand Limited NZ 2016-12-22 234.9 234.9 N/A N/A N/A N/A N/A N/A
JB Hi-Fi Limited (ASX:JBH) The Muir Electrical Company Proprietary Limited AU 2016-09-13 650.9 650.9 1,563.7 N/A N/A 0.4 x N/A N/A
Nutrien Ltd. (TSX:NTR) Agrium Inc. CAN 2016-09-12 18,430.0 13,078.2 14,071.0 1,894.0 868.0 1.3 x 9.7 x 15.1 x
Epharmacy Group Pty Ltd; Aurrum Pty Ltd; Spotlight Group Holdings Pty Ltd Hydrox Holdings Pty Ltd AU 2016-08-24 672.4 634.8 N/A N/A N/A N/A N/A N/A
TPG Capital, L.P.; The Carlyle Group L.P. (NasdaqGS:CG) Greencross Limited AU 2016-02-15 715.2 546.6 509.9 65.0 25.6 1.4 x 11.0 x 21.3 x
Lowe's Companies Canada, ULC Rona Inc. CAN 2016-02-03 2,294.6 1,876.8 3,067.0 162.5 42.5 0.7 x 14.1 x 44.2 x
TPG Capital, L.P. Greencross Limited AU 2016-01-27 675.4 508.6 509.9 65.0 25.6 1.3 x 10.4 x 19.9 x
The Carlyle Group L.P. (NasdaqGS:CG) Greencross Limited AU 2016-01-27 699.2 532.5 509.9 65.0 25.6 1.4 x 10.8 x 20.8 x
Archer Capital Pty Ltd. Crick Auto Group Pty Ltd AU 2015-11-06 200.0 200.0 N/A N/A N/A N/A N/A N/A
Sleep Country Canada Holdings Inc. (TSX:ZZZ) Sleep Country Canada Inc. CAN 2015-07-10 362.5 362.5 N/A N/A N/A N/A N/A N/A
Briscoe Group Limited (NZSE:BGP) Kathmandu Holdings Limited NZ 2015-07-01 293.0 245.8 309.5 37.5 18.8 0.9 x 7.8 x 13.1 x
Accent Group Limited (ASX:AX1) ACCENT FOOTWEAR NZ, Ltd. NZ 2015-03-19 152.4 152.4 138.3 20.2 - 1.1 x 7.5 x N/A
Rogers Communications Inc. (TSX:RCI.B) Glentel Inc. CAN 2014-12-24 726.5 675.0 1,356.9 54.8 2.5 0.5 x 13.2 x NM
BCE Inc. (TSX:BCE) Glentel Inc. CAN 2014-11-28 572.6 518.0 1,356.9 54.8 2.5 0.4 x 10.4 x NM
Parkland Industries Ltd. Pioneer Energy LP CAN 2014-09-17 342.7 342.7 N/A 50.2 N/A N/A 6.8 x N/A
Greencross Limited City Farmers Retail Pty Ltd AU 2014-06-16 193.2 193.2 78.9 N/A N/A 2.4 x N/A N/A

Maximum $ 18,430.0 $ 13,078.2 $ 14,071.0 $ 1,894.0 $ 868.0 2.4 x 14.1 x 44.2 x

75th Percentile 698.5 590.7 1,356.9 65.0 25.6 1.3 x 10.9 x 26.4 x
Median $ 400.2 $ 401.5 $ 650.1 $ 64.0 $ 22.2 0.9 x 10.4 x 20.8 x
25th Percentile 219.3 216.7 509.9 50.2 5.7 0.4 x 7.8 x 17.5 x
Minimum 93.5 102.9 78.9 8.9 0.8 0.2 x 3.0 x 13.1 x
Valuation Summary - Michael Hill International Limited
($ AUD in Millions Except Per Share Amounts in AUD as Stated)

Valuation Summary Range of Valuation Multiples / Premiums Implied Per-Share Value Range

75th 25th Applicable 25th 75th

Maximum Percentile Median Percentile Minimum Company Minimum Percentile Median Percentile Maximum
Methodology Name Multiple Multiple Multiple Multiple Multiple Figure Multiple Multiple Multiple Multiple Multiple

Public Company Comparables:

LTM EV / Revenue: 4.4 x 1.2 x 1.0 x 0.7 x 0.3 x $ 575.5 $ 0.41 $ 0.96 $ 1.40 $ 1.76 $ 6.50
FY YY EV / Revenue: 3.9 x 1.1 x 0.9 x 0.5 x 0.3 x 580.3 0.35 0.73 1.24 1.63 5.78
FY YY EV / Revenue: 3.3 x 1.0 x 0.8 x 0.5 x 0.3 x 587.9 0.34 0.72 1.15 1.48 4.86
LTM EV / EBITDA: 17.6 x 9.7 x 8.0 x 7.7 x 6.0 x 68.8 1.00 1.29 1.35 1.65 3.05
FY YY EV / EBITDA: 15.9 x 9.0 x 7.7 x 5.6 x 4.7 x 73.3 0.82 0.99 1.38 1.63 2.93
FY YY EV / EBITDA: 13.5 x 8.0 x 6.9 x 5.2 x 3.2 x 73.0 0.52 0.90 1.23 1.42 2.47
LTM P / E: 33.9 x 19.0 x 12.9 x 11.7 x 9.7 x 34.8 0.87 1.05 1.16 1.71 3.04
FY YY P / E: 27.3 x 18.0 x 12.9 x 10.4 x 9.0 x 35.7 0.83 0.96 1.19 1.65 2.51
FY YY P / E: 23.5 x 13.8 x 10.0 x 9.1 x 7.6 x 36.3 0.71 0.85 0.93 1.29 2.19

Precedent Transactions:
LTM EV / Revenue: 2.4 x 1.3 x 0.9 x 0.4 x 0.2 x 575.5 0.46 1.32 1.78 1.86 2.43
LTM EV / EBITDA: 14.1 x 10.9 x 10.4 x 7.8 x 3.0 x 68.8 1.10 1.50 1.79 2.30 3.89
LTM P / E: 44.2 x 26.4 x 20.8 x 17.5 x 13.1 x 34.8 1.18 1.57 1.87 2.37 3.96

Discounted Cash Flow Analysis:

0.09% - 0.10% WACC, 0.01% - 0.02% Terminal FCF Growth Rate: 1.53 1.59 1.66 1.73 1.82
 Michael Hill Valuation - Range of Implied Share Prices
Public Company Comparables:

LTM EV / Revenue:
FY YY EV / Revenue:
FY YY EV / Revenue:
LTM EV / EBITDA:
FY YY EV / EBITDA:
FY YY EV / EBITDA:
LTM P / E: Column N s
Column O
FY YY P / E: 25th to Median
Median to 75th
FY YY P / E:
Precedent Transactions:

LTM EV / Revenue:
LTM EV / EBITDA:
LTM P / E:
Discounted Cash Flow Analysis:
0.09% - 0.10% WACC, 0.01% - 0.02% Terminal FCF Growth Rate:
$0.00 $0.50 $1.00 $1.50 $2.00 $2.50

Implied Share Price