Good morning, and welcome to the Annual General Meeting of Michael Hill International Limited. I begin today by acknowledging the traditional custodians of country and First Nations people throughout Australia, New Zealand, and Canada, and recognize their continuing connection to land, waters, and community. I pay my respects to them and their cultures, and to elders past, present, and future. I'm Rob Fyfe, Chair of the Board of Directors, and it is my pleasure to chair today's meeting. Our company secretary has confirmed that a quorum is present, so I formally declare the meeting properly constituted and open for business. Before I get into the housekeeping matters, I'd like to welcome my fellow board members who are here virtually at this meeting.
Firstly, the company's founder, Sir Michael Hill, Gary Smith, Chair of our Audit and Risk Management Committee, Emma Hill, Chair of our People Development and Remuneration Committee, Dave Whittle, Daniel Bracken, our Managing Director and CEO, and our newest addition to the board, Claudia Batten. As a cycle of board renewal, we are pleased to welcome Claudia as a non-executive director. Claudia brings a wealth of knowledge and experience, particularly in technology and digital growth strategies, which will be invaluable to the company. Her extensive international and corporate development experience, along with her legal background, complements the existing board composition. Today, we are also joined by our CFO and Company Secretary, Andrew Lowe, and Kelly McKenzie, Lead External Audit Partner from Ernst & Young. Andrew and Kelly are present to address any questions on our financial reports. Now on to housekeeping.
Today's meeting is being held online via the Lumi platform. This allows shareholders, proxies, and guests to attend this meeting virtually. Online attendees can watch a live webcast of the meeting. In addition, shareholders and proxies can ask questions and submit votes. To that end, if you do have any questions or comments on any item of business, then this year you're able to do so in either of two ways: in writing at any time, or verbally during the dedicated question time following the presentations. To ask a written question, select the messaging icon, type your question in the box towards the top of the page, and press the Send button. A copy of your submitted questions, along with any written responses from our meeting team, can be viewed by selecting My Messages.
To ask your questions verbally, click on the Request to Speak button at the bottom of the broadcast window. The Audio Questions interface will now display. You'll be prompted to confirm your name and enter the topic of your question. Submit your details and select Join Queue to be connected. Please note, while you can submit questions from now on, we will address your questions and comments after Daniel and I have presented. If we do not get to your question for whatever reason during the meeting, we will follow up directly with you. Shortly, I will declare voting open on all items of business. At that time, the resolutions and voting options will appear on screen. Voting today will be conducted by way of a poll on all items of business. To cast your vote, simply select one of the options. Your vote is automatically recorded.
There is no need to press a Submit or Enter button. You do, however, have the ability to change your vote up until the time I declare voting closed. I now declare voting open on all items of business. If you are eligible to vote at this meeting, the resolutions will soon appear. Please submit your votes at any time, and I'll give you a warning before I move to close the voting. If we experience technical issues that result in a number of shareholders being unable to reasonably participate, I will adjourn the meeting, and it will be reconvened at a later time. If this occurs, we'll lodge an ASX and a NZX release after the adjournment that sets out the details and next steps. Today, I'd like to give you an overview of how we view the year that's closed.
Following that, Daniel will give more detail on our 2024 operating performance, an update on our strategic initiatives, and an update on current trading performance. Undoubtedly, our financial year ending 30th June 2024 has been the most challenging year I've experienced since joining the board in 2014. We cycled record sales performance from the previous year, while faced with significant headwinds of low consumer confidence, a tough macroeconomic environment impacting retail trading conditions, and inflationary forces placing pressure on operating costs across the business. Pleasingly, we have now seen interest rate reductions in both Canada and New Zealand and are seeing some early signs of improved trading performance, albeit we expect the recovery will be gradual over the remainder of the financial year.
Given the difficult trading environment, the business made some tough, yet prudent decisions in order to navigate the group through one of the worst retail cycles for some decades. We exited a number of senior leadership roles, reduced operating costs, reduced capital expenditure, and executed an inventory optimization strategy. On a positive note, we are seeing the benefits from the geographic and demographic diversity of our business and remain committed to our group multi-brand strategy, with each brand uniquely positioned to target a differentiated customer segment and price proposition. The gradual elevation of the Michael Hill brand to a more aspirational position is key to this multi-brand strategy. The refresh of the Michael Hill brand across digital platforms, new brand logos and color palette, together with Miranda Kerr as our brand ambassador, is resonating well across all geographies.
Retention and development of our team is an important board and management priority, and we see a strong correlation between staff retention, sales performance, and customer satisfaction. Our people are the heart of our business. With our values of we care, we're inclusive and diverse, we are professional, and we create outstanding experiences truly embedded across the entire company. Pleasingly, our engagement survey was completed by 85% of our workforce and resulted in an engagement score of 80%. Our results continue to outperform the global retail averages, demonstrating how hard we continue to work to ensure that Michael Hill remains an employer of choice and is a great place to work.
The challenging retail conditions have not dimmed our focus on sustainability, which is embraced across the organization as we pursue new initiatives and seek greater transparency across the group and throughout our supply chains. I'm particularly proud of the launch of the Michael Hill Foundation in late February 2024, representing our ongoing commitment to meaningful change and our dedication to a better world.... The Michael Hill Foundation encompasses two key areas of focus: empowering women and nature restoration. Since the launch of the foundation, we have planted over 50,000 trees across Australia, New Zealand and Canada, and we have established a long-term partnership with the Collective Good Foundation in India, with a focus on driving projects to empower local women.
In addition, we expanded our renewed sustainable jewelry ecosystem by extending our recycle offering to Canada and New Zealand, launching our diamond trade-up program, Reimagine in New Zealand, and investing in our repairs network to grow our restore capability and service offering. As a proactive capital management measure, the Board of Management have been focused on strengthening the balance sheet and underpinning our earnings performance by securing an uplift to our existing debt facility to support seasonal working capital requirements for the Christmas trade period. In addition, management has taken action to reduce capital expenditure across both technology and stores throughout financial year 2025, as well as taking steps to improve inventory productivity and reduce costs.
Given compressed earnings in FY 2024, and in conjunction with a commitment to prudent investment in operating and capital expenditure in FY 2025, the board determined that no final dividend will be declared for FY 2024, resulting in a total dividend for the year of AUD 0.0175 per share. The FY 2024 results were deeply disappointing, but please be assured that your board and the entire Michael Hill team are resolutely focused on driving sales, refreshing the Michael Hill brand, embedding and expanding the new Bevilles business, and restoring the financial performance of the group. I'm extremely proud and grateful for the resilience, perseverance, and commitment of Daniel and the entire team. I'd like to close my address by acknowledging and thanking all our shareholders for their ongoing support.
I now invite Managing Director and CEO, Daniel Bracken, to address the meeting and discuss the 2024 operational performance, provide a current trading update and comments on our strategic focus. Daniel?
Thank you, Rob. Good morning, and thank you for joining us today. I will now take you through a review of the 2024 financial results and operational achievements. We will also provide you with our current trading performance and some further insights on group strategy. There is no doubt that FY 2024 was a challenging period for the business as we cycled record performance and tough retail trading conditions, driven by low consumer confidence and macroeconomic pressures. Notwithstanding the difficult conditions, it is pleasing to see external third-party transactional data demonstrating that Michael Hill is performing better than the broader jewelry market and taking market share. Clearly, margin was under pressure from both input costs and promotional activity due to the market conditions, with inflationary forces driving elevated costs across many aspects of the business, which together impacted our EBIT.
Omni-channel continues to be a key strategic focus for the group, with further advancements across ship from store, Click and Collect, and virtual selling, all contributing to annual growth in digital sales of 16% to AUD 48 million. Critical to the Michael Hill Group strategy was to establish a clearly defined portfolio of brands on which we made significant progress throughout the year. The complete refresh of the Michael Hill brand across digital platforms, new brand logos, color palette, in-store visual merchandising and packaging, partnering with our first-ever global brand ambassador, Miranda Kerr, who perfectly embodies our brand values and sustainable business practices, and aligned with the brand relaunch, Michael Hill opened its first true global flagship store at Chadstone, Australia's number one fashion destination. These key, key milestones have been years in the making.
The meticulous planning that took place is a credit to the team, as all elements came together seamlessly. In what was already a busy year, the group also expanded the store network and integrated the operational systems of the newly acquired Bevilles brand. Additionally, in the year, the business further demonstrated its commitment to sustainability with the launch of its Renew ecosystem, including gold recycling, jewelry repairs, and the creation of the Michael Hill Foundation. Furthermore, we soft launched our new digital startup brand, TenS evenS even, which is designed to deliver a completely unique and elevated proposition, capturing an entirely new high-end customer. And, Medley trialed its first-ever pop-up kiosk in Chadstone. With our new and existing brands in place, the business remains committed to its group multi-brand strategy, and I will speak later on this in the presentation.
In what was both a challenging and busy year, I could not be prouder of how our teams came together across all functions and geographies, embracing change and prioritizing customer experience. Disappointingly, the group reported a decline in performance, with comparable Earnings Before Interest and Tax of AUD 15.9 million for the year ending 30th of June 2024. This result was driven by a combination of lower gross margins and inflationary cost pressures. The group did deliver revenue of AUD 645 million, up 4% on a 52-week basis, including Bevilles, and up 2% on a statutory basis, where FY 2023 was 53 weeks. Pleasingly, average transaction value grew by 6% during the year, further demonstrating the traction of the Michael Hill aspirational brand journey.
Higher input costs for both gold and mined diamonds continued through the year, and combined with heightened competitor activity, resulted in gross margin of 60.6%. During May and June, there was a deliberate focus on clearing inventory to make way for newness and higher margin product in FY 2025. And in addition, to reflect inflated gold raw material pricing, the group periodically lifted retail prices accordingly. Inflationary cost pressures impacted the majority of operating expenses across the business, with the most significant being store labor and occupancy. With this in mind, throughout the year, management took action to reduce discretionary spend, corporate roles and overheads, reflecting the underperformance of the business, with many of these savings now annualizing through FY 2025.
Active management of inventory saw year-end holdings reduced by AUD 7 million to AUD 196 million, as the group took deliberate steps to ensure the right product mix, newness, and higher margin profile. During the year, the business deployed cash for a number of strategic initiatives, including the refresh of the Michael brand, the Chadstone global flagship store, development of TenSevenSeven , along with digital and data investments, resulting in a closing net debt position of AUD 39 million. And in line with our store network strategy, the core Michael Hill brand has continued to optimize its store network throughout the year, while at the same time expanding the Bevilles store network. The group finished the year with 300 stores. But now moving on to our current trading update. We are encouraged by the first 14 weeks of FY 2025.
Group same-store sales were up 4% on the prior year, with same-store sales for the Australian segment up 6.3%, the Canadian segment up 4.7%, and the New Zealand segment down 4.2%, with total sales for the group up 4.3%. Furthermore, as previously signaled, product and brand initiatives are delivering group gross margin recovery, resulting in meaningful improvement since FY 2024 H2. And as always, the group remains focused on inventory management, capital and operational cost control, along with optimization of store rostering. As we prepare for the all-important Christmas trading period, the positive momentum we have seen in the first 14 weeks is very encouraging. Our two largest markets of Australia and Canada are showing good and consistent growth, and our digital channels are performing well, driving strong omni-channel adoption from our customers.
While New Zealand is still underperforming, the recent economic improvements are encouraging, and we are starting to see green shoots in their performance, and in the all-important world of product, we have successfully launched our new Pendant Bar concept with a focus on both build your own and ready-to-wear gifting. This provides a unique gifting proposition in all stores in all markets. We have introduced a range of high-margin gifting products to drive transaction volumes for the key Christmas trading period, and we are elevating our sustainable lab-grown diamonds to the highest quality, introducing E color and VVS clarity into this high-growth category, so that Michael Hill represents the very best in market. For the rest of the presentation, I will provide you with an overview of our group strategy, which is divided into .
Starting with the repositioning of the Michael Hill brand, which has been progressively taking place since 2020, with brand-led emotive campaigns, the successful launch of our loyalty program, achieving higher average transaction value and gross margin, and increased productivity. As the Michael Hill brand successfully elevated, we then moved to establish a portfolio of brands, which saw the acquisition of Bevilles and the launch of TenS evenS even, which significantly expands our addressable market. The acquisition of Bevilles provides a vehicle to take market share at the value end of the fine jewelry category. In the H1 of 2024 , FY 2024 , the company soft launched its new bespoke brand, TenSevenSeven, focused on servicing the high end of the market with its unique, personalized diamond ring proposition.
With these additional brands, the Michael Hill Group now services all significant customer segments of the fine jewelry category and delivers multiple new growth pipelines. In addition to our core fine jewelry brands, Medley continues to establish itself as an emerging brand in the fashion demi-fine jewelry category, and now in the current phase, which is focused on clearly defining and articulating each brand's market proposition. With the group multi-brand strategy now in place, each brand is uniquely positioned for different customer segments and price propositions, and its own strategic priorities. TenSevenSeven, uniquely modern, high-end bespoke. Michael Hill, premium contemporary classics, milestone moments. Bevilles, everyday essentials, great value. And Medley, fashion-forward, accessible style. April 2024 saw a complete brand refresh, Michael Hill delivering a new, elevated aesthetic across the brand assets, color palette, and logos. These assets combine to bring both a contemporary and feminine personality to the brand.
Over the months that followed, elements of our new brand assets were progressively brought to life across digital platforms, stores, and brand packaging. This was soon followed by the exciting milestone of the brand's first Store of the Future. In late April 2024 , a new global flagship store came to life in Chadstone, the most premium center in the Australian market. The new store incorporated all aspects of the new brand, product, and proposition, with a new high-value product offering, elevated in-store experience, and private selling spaces. To coincide with the brand refresh and our first flagship Store of the Future, Michael Hill partnered with its first ever global brand ambassador, Miranda Kerr.
Miranda Kerr's timeless elegance resonates in all our markets. She embodies our brand values, is aspirational, and yet accessible. Michael Hill has the ambition to be one of the most sustainable jewelry brands in the world, and this aligns perfectly with the sustainable business practices of Miranda Kerr.
Product evolution continues with a focus on quality, innovation, and sustainability, and simultaneously, the development of key signature ranges that embody the premium brand positioning. These are best demonstrated by the new Signature Lock range and the exclusive proprietary 101 Facet diamond collection, and leading into the final phase, network expansion and productivity, and the overarching growth ambitions for the group out to 2030.
With each brand uniquely positioned for their target customer segments, and with both product and brand propositions established, the group will be well-placed to grow revenue and profits through a more productive and expanded distribution network. For Michael Hill, store productivity has proven to be a key lever of growth over recent years, and as the brand continues to attract new target customers, it is anticipated that this will continue. This will be further supported by incorporating elements of the Store of the Future design in new store fit outs and refurbishments. As the network aligns over time to the elevated product proposition, and with the continued focus on brand evolution, it is expected that average transaction values will continue to remain high to support revenue growth.
The brand refresh of our direct-to-consumer digital platforms will deliver improved customer experience and conversion rates, which, in conjunction with investments in data and insights, will increase productivity across all channels. Gross margin recovery will be a key focus, underpinned by product evolution, increased penetration of higher margin product, category mix, and leveraging the Brilliance by Michael Hill loyalty program, and beyond the brand's leading position in bridal, promoting other key milestone moments, like birthdays and anniversaries, provides significant revenue opportunities for the business, while leveraging the data in our loyalty program and growing the opportunities with self-purchasing customers. Even with the challenging trading conditions in the fine jewelry sector, the business has held firm on its strategic intent to grow the footprint and strengthen the Bevilles' position in the market. During the 1st year of ownership, the Bevilles' network grew from 26 to 36 stores.
With the expansion of the network into Queensland, the business will focus on optimizing the store layout, product range, and building brand presence prior to rolling out further stores. Leveraging Michael Hill experience, data insights, and competitor analysis, the opportunity to grow the network to over 100 stores in Australia remains very much in place. As the Michael Hill brand elevates to a more premium position, this presents opportunities with select stores to transition to the Bevilles brand in a low-cost, efficient model, as shown in these images. Four trial conversion stores are already underway as a test and learn, with further conversion stores subject to performance, and a streamlined product offering will enable a step change in visual presentation and customer experience, leading to a more efficient store footprint and increase in productivity.
In addition, the business will continue to invest in its people with training to upskill leadership and lift performance and drive productivity. I'm very excited by the opportunities for the Bevilles brand, and I'm extremely enthused by our group multi-brand strategy that I've just taken you through. I will now hand you back to the Chair to conduct the formal business of the meeting. Thank you, Rob.
Thanks, Daniel. Before we move on to the formal business of the meeting, we'll now take questions or comments. If you do have any questions of the board or our external auditors, or you wish to make any comments on any item of business, please either submit them in writing or use the audio function now, if you haven't already done so. Our moderator for the question and answer session is Kate. Kate, have any written questions or comments been received, or are there any shareholders waiting to speak via the online platform?
Thank you, Rob. At this stage, we've just received one question via the online platform, so we'll address it first. The first question comes from Andrew Ott, and he asks: "Has there been any easing off of store thieving in New Zealand?
Thanks, Andrew. I might address that question directly. You know, in terms of the issues we've had in New Zealand, our primary focus throughout has been to ensure the safety of our staff, and all actions we've taken have had that as the preeminent focus. We've made a significant investment in infrastructure, predominantly capital investment in fog cannons, screamer alarms throughout all our stores that can be instantly activated by our staff. We've put toughened glass, assault-proof glass in all our counters, and these measures have certainly had a significant impact. We've continued to have a very close working relationship with New Zealand Police, which helps us a lot with assessing the threat environment, and we've had excellent engagement from the new Minister of Police, Mark Mitchell.
As a result of all those actions and activities, we've certainly seen a reduction in criminal events in New Zealand, and at this stage, you know, if I look at the last six months or so, you know, I'd say our activity in New Zealand has fallen back into line with the sort of trends that we see elsewhere across our network in Australia and Canada, so New Zealand is no longer an outlier. Thank you. Are there any further questions, Kate?
Thank you, Rob. I can confirm there's no further written questions, and there's no shareholders waiting in the queue.
Thanks, Kate. We'll now move on to the formal items of business of the meeting, as set out in the notice of meeting. The notice of meeting, including the explanatory notes, was sent to all shareholders. I propose that the notice of meeting be taken as read. You'll find a copy of the notice on the ASX and NZX platform and on the Investor Centre website. Voting on all resolutions will remain, oh, sorry, open until all items of business have been put to the meeting. The first item of business is to consider the 2024 audited financial statements, directors' report, and auditors' report. These reports are contained in the company's 2024 annual report, which has been released and distributed to shareholders prior to this meeting. You can also find a copy of the annual report online on the Investor Centre website.
There's no resolution on this item. I now confirm the 2024 audited financial statements, directors' report, and auditors' report are now received. We'll now move to the next item of business. It's a non-binding resolution to adopt the 2024 remuneration report. Please note that the vote on this resolution is advisory only. Voting exclusions apply to this resolution, as set out in the notice of meeting. Direct and proxy votes received in respect to this resolution are shown on the presentation slide on your screen. Open proxies appointing the chair shall be voted for the resolution. The next item of business is the re-election of board-endorsed director, Sir Michael Hill. Sir Michael is retiring from the board in accordance with the ASX listing rules and the company's constitution, and being eligible, offers himself for re-election as a director of the company.
Sir Michael is the founder of the Michael Hill Group. A description of his experience and details are set out in the explanatory notes, which accompanied the notice of meeting. Each of the directors, with Sir Michael abstaining, recommends that shareholders vote in favor of his re-election. Direct and proxy votes received in respect of this resolution are shown on the presentation slide on your screen, and open proxies appointing the chair shall be voted for the resolution. The next item of business is the re-election of board-endorsed director, Emma Hill. Emma is retiring from the board in accordance with the ASX listing rules and the company's constitution, and being eligible, offers herself for re-election as a director of the company. Emma's experience and details are set out in the explanatory notes, which accompany the notice of meeting.
Each of the directors, with Emma abstaining, recommends that shareholders vote in favor of Emma's re-election. Direct and proxy votes received in respect of this resolution are shown on the presentation slide on your screen. Open proxies appointing the chair shall be voted for the resolution. The next item of business is the re-election of board-endorsed director, Claudia Batten. Claudia was appointed to the board on the thirtieth of August, 2024. In accordance with the ASX listing rules and the company's constitution, and being eligible, Claudia retires and offers herself for re-election as a director of the company. Claudia's experience and details are set out in the explanatory notes, which accompanied the notice of meeting. Each of the directors, with Claudia abstaining, recommends that shareholders vote in favor of Claudia's re-election.
Direct and proxy votes received in respect of this resolution are shown on the presentation slide on your screen. Open proxies appointing the chair shall be voted for the resolution. We now move on to the proposed grant of share rights to our Managing Director and CEO, Daniel Bracken, under the company's equity incentive plan. Full details of the proposed grant of share rights under the company's equity incentive plan are set out in the explanatory notes, which accompanied the notice of meeting. The purpose of this resolution is to seek your approval for Daniel to acquire share rights under Michael Hill's equity incentive plan for FY 2025, which form part of his total FY 2025 remuneration package. Voting exclusions apply to this resolution as set out in the notice of meeting. The board, other than Mr. Daniel Bracken, recommends that shareholders vote for Resolution five.
Direct and proxy votes received in respect of this resolution are shown on the presentation slide on your screen. Open proxies appointing the chair shall be voted for the resolution. We now move on to the proposed loan to our Managing Director and CEO, Daniel Bracken. Full details of the proposed loan to Mr. Bracken are set out in the explanatory notes, which accompanied the notice of meeting. The purpose of this resolution is to seek your approval of a related party transaction to loan funds to Daniel to fund upcoming tax liabilities arising in relation to shares issued to him as part of his FY 2021 and FY 2022 remuneration package. The company and Mr. Bracken will enter into a loan agreement in relation to the loan.
The key terms are summarized in the explanatory notes and include a term of three years, an interest rate, which is substantially similar to the interest rate paid by the company under its finance facility, ensuring that interest costs incurred by the company are covered by Mr. Bracken, and the loan is unsecured. However, while the loan is outstanding, if Mr. Bracken sells any of his shares in the company, then the proceeds of those shares must be paid to the company to pay down the outstanding balance of the loan.
While we acknowledge that the loan transaction is not one which the company would normally advance, the significant tax liability incurred by Mr. Bracken in relation to the issue of shares as part of his FY 2021 and FY 2022 remuneration package, combined with low trading volumes and trading restrictions under the group's trading policy, have created an unintended outcome which significantly impacts the personal financial circumstances of Daniel Bracken.
The objective of the company's equity incentive plan is to reward and incentivize executives to deliver long-term growth and to align their interests with the interests of shareholders. For the reasons already noted, this has not been the case in this instance, and therefore, the company is seeking to rectify this unintended outcome by loaning funds to Mr. Bracken to fund the tax liability arising in relation to the shares issued to him. The loan will allow him to pay the tax liability when due and ensure he remains wholly focused on leading the group as CEO and Managing Director.
The three-year loan term allows sufficient time to sell shares or seek alternative funding to repay the loan to the company. Voting exclusions apply to this resolution as set out in the notice of meeting. The board, other than Mr. Bracken, recommends that shareholders vote for Resolution six. Direct and proxy votes received in respect of this resolution are shown on the presentation slide on your screen. Open proxies appointing the chair shall be voted for the resolution. That concludes the last item of business at this meeting. I'd like to remind shareholders who have not yet cast their votes on this and all other resolutions to do so now. Voting will close in approximately 30 seconds. Voting is now closed.
Now that the formal items of business have been addressed, I would like to thank you on behalf of the board and management for attending Michael Hill's 2024 annual general meeting, and look forward to your continued support in the coming year. The results of this meeting will be announced on the ASX and the NZX later today and will be displayed on the Investor Center website. I now declare the 2024 AGM closed. Thank you and Ma te wa.