annual general meeting -...

2008Annual General Meeting

Harry Winston Diamond Corporation

June 4, 2008

HARRY WINSTON DIAMOND CORPORATION 2

Forward-Looking Information

Information in this disclosure that is not current or historical factual information may constitute forward-looking information or statements within the meaning of applicable securities laws. Forward-looking information is based on certain factors and assumptions regarding, among other things, mining, production, construction and exploration activities at the Diavik Diamond Mine, credit market conditions and the ability of the Company to refinance its existing credit facilities, the level of worldwide diamond production and world and US economic conditions. Specifically, in estimating Harry Winston Diamond Corporation’s (HWDC) projected share of the Diavik Diamond Mine capital expenditure requirements over the next two years, HWDC has used an average Canadian/US dollar exchange rate of $0.99, and has assumed that construction will continue on schedule and without undue disruption with respect to current underground mining construction initiatives. In making statements regarding estimated production at the Diavik Diamond Mine, potential improvements in grade and tonnage at the Diavik Mine, the expected life of the Diavik Diamond Mine, and future mining activity and mine plans, including plans, timelines and targets for construction, mining, development, production and exploration activities at the Diavik Diamond Mine, and future rough diamond sales, HWDC has assumed, among other things, that mining operations and construction and exploration activities will proceed in the ordinary course according to schedule and consistent with past results. In making statements regarding expected diamond prices and expectations concerning the diamond industry and expected sales trends in the retail segment, the Company has made assumptions regarding, among other things, world and US economic conditions. While HWDC considers these assumptions to be reasonable based on the information currently available to it, they may prove to be incorrect.

Forward-looking information is subject to certain factors, including risks and uncertainties, which could cause actual results to differmaterially from what we currently expect. These factors include, among other things, the uncertain nature of mining activities, including risks associated with underground construction and mining operations, risks associated with joint venture operations, risks associated with the remote location of and harsh climate at the Diavik Diamond Mine site, risks associated with regulatory requirements, fluctuations in diamond prices and changes in US and world economic conditions, the risk of fluctuations in the Canadian/US dollar exchange rate, financing and credit market risk, risks relating to the Company’s salon expansion strategy and the risks of competition in the luxury jewelry segment. Readers/viewers are cautioned not to place undue importance on forward-looking information, which speaks only as of the date of this disclosure, and should not rely upon this information as of any other date. While HWDC may elect to, it is under no obligation and does not undertake to update or revise any forward-looking information, whether as a result of new information, future events or otherwise at any particular time, except as required by law. Additional information concerning factors that may cause actual results to materially differ from those in such forward-looking statements is contained in the Harry Winston Diamond Corporation’s filings with Canadian and United States securities regulatory authorities and can be found at www.sedar.com and www.sec.gov respectively.

The Premier Listed Diamond Company

3

The Unique Proposition


The Diavik Mine Retail Customer

Other Rough Diamond Suppliers

Other Jewelers

Cutters/Polishers

Diavik Mine Supply

Harry Winston Retail Demand

PRICE INFORMATION

SUPPLY LEVERAGE

The Components• Diavik Diamond Mine

• More than 100 million carats of reserves and resources in the world’s highest value per tonne diamond bearing kimberlites

• Harry Winston• The brand name most associated with high-quality diamonds• A diamond marketing platform that delivers premium pricing

from a knowledge base unique in the industry


• More Than 14 Years of Mine Life Remaining• Reserves of 77.1 million carats• Resources of 24.2 million carats• Additional geological potential identified at depth

• Exploration Potential• 2,700 square kilometres of mineral rights between Canada’s

two best diamond mines

• High-quality Diamond Product• Value in white diamonds that lead diamond price increases

(32% over the last 15 months)

The Diavik Diamond Mine


The Diavik Diamond Mine – Reserves and Resources


Exploratory

InferredResource

ProbableReserve

ProvenReserve

A418 A154S A154N

UndergroundDecline

A21

IndicatedResource

InferredResource

Exploratory

Exploration Potential


BHPB BHPB EkatiEkati BlockBlock

+150 +150 KimberliteKimberlite BodiesBodies

DiavikDiavik BlockBlock

68 68 KimberliteKimberlite BodiesBodies

DeBeersDeBeers

Hardy LakeHardy Lake

28 pipes28 pipes

Lac de GrasLac de Gras

DiavikDiavik

Project PipesProject Pipes10km10km

Legend

Kimberlite

High-quality Diamond Product – Revenue Distribution

*Based on Mining Segment Sales for FY 2008. Excludes +10.8ct.



High-quality Diamond Product – Diamond Prices(Indexed on First Shipment 2007)

32%

0%

5%

10%

15%

20%

25%

30%

35%

% C

hang

e

1 2 3 4 5 6 7 8 9 10 1 2

Shipments

2007 YTD 2008

*Diamond sales prices adjusted for size and quality variance.

• Named the leading luxury diamond jewelry brand for the third consecutive year by the Luxury Institute, LLC

Harry Winston – The Jeweler


*LBSI is computed from the average index score for each of the four components of the index, as described in the methodology. (Base: Brand familiar respondents)

Overall Luxury Brand Status Index8.14

8.048.04

8.017.97

7.917.907.89

7.87

7.447.437.42

7.167.03

6.985.84

7.677.69

7.657.53

Harry WinstonBuccellati

Van Cleef and ArpelsGraff

TiffanyPiagetCartier

ChopardBulgari

MikimotoAsprey

Carrera y CarreraDeBeers

FREDBoucheron

ChanelDavid Yurman

DiorGucci

Blue Nile

A common group of expert employees responsible for rough diamond sales and polished diamond purchases

Diamond Sales and Purchases


High standards of assurance of quality and provenance



Detailed technical and sales assortments to fill customer demands

High-quality at a price




Financial HighlightsSquare-cut diamond brooch - $6,600,000

Annual Financial Highlights

Sales

FY 2007 FY 2008

Gross Margin

FY 2007 FY 2008

Earnings from Operations

FY 2007 FY 2008

(in millions of US dollars) (in millions of US dollars) (in millions of US dollars)

559

679

273

368

22% 35%218

48%

147


Adjusted Earnings Per Share

FY 2006 FY 2007 FY 2008


$1.60 $1.64

$2.56

EPS excluding foreign exchange gain (loss)


*Adjusted EPS is a non-GAAP measure.

*

56%

Carats Recovered

CY 2006 CY 2007

Annual Mining Segment Financial Highlights

Sales

FY 2007 FY 2008


FY 2007 FY 2008

1 Represents Harry Winston Diamond Corporation’s 40% share of the Diavik production

(in thousands) (in millions of US dollars) (in millions of US dollars)

24%

53%22%3,931

4,777333

414

144

221

1


Annual Retail Segment Financial Highlights

Sales

FY 2007 FY 2008

(in millions of US dollars)

Gross Margin

FY 2007 FY 2008

(in millions of US dollars) (in millions of US dollars)

10817%

226 15%

124

266

(3)

2

FY 2007 FY 2008




Cash Flow from Operations

FY 2006 FY 2007 FY 2008


162178

193


8%

2009 First Quarter Financial Highlights

Sales

Q1 2008 Q1 2009

Gross Margin

Q1 2008 Q1 2009 Q1 2008 Q1 2009

(in millions of US dollars) (in millions of US dollars) (in millions of US dollars)

141156

70

83

10%18%

40

10%36




Q1 2008 Q1 2009

$0.29

$0.35

EPS excluding foreign exchange gain (loss)


*Adjusted EPS is a non-GAAP measure.

Adjusted Earnings Per Share*

21%

2009 First Quarter Mining Segment Financial Highlights

Sales

Q1 2008 Q1 2009 Q1 2008 Q1 2009


Carats Recovered

Q1 2008 Q1 2009

(in thousands)

1,034

714

83 81

37

42

1 Represents Harry Winston Diamond Corporation’s 40% share of Diavik production

1

31%

2%

13%



2009 First Quarter Retail Segment Financial Highlights

Sales

Q1 2008 Q1 2009


Gross Margin

Q1 2008 Q1 2009


2827%

59

20%

3475

(2)

(1)

Q1 2008 Q1 2009



2009 First Quarter Segment Financial Highlights

Cash Flow from Operations

Q1 2008 Q1 2009


14

34

137%



Net Debt

Q1 2008 FY 2008 Q1 2009


286

266

295


Financial Upside

• Opportunity for operating cost reductions at Diavik

• Mining segment expected to generate significant free cash flow after December 2009

• Retail segment expected to continue strong sales growth

• Improved conversion of sales growth to operating profit• Optimize balance between sales growth and gross margin• SG&A expense management

• Higher return on capital employed and free cash flow• Improved operating profit• Efficient management of inventory

• Retail business is self-financing and mining free cash flow is available for profitable investment or distribution to shareholders


HARRY WINSTON DIAMOND CORPORATION Lattice cuff bracelet $1,100,000

America’s Only True Luxury Brand

Rich Heritage of Important Gemstones


Rich Heritage of Important GemstonesCatherine the Great Sapphire

337.10 carats


Rich Heritage of Important GemstonesIndore Pears

44.63 and 44.18 carats


Rich Heritage of Important GemstonesJonker I

142.9 carats


Rich Heritage of Important GemstonesBurma Ruby

14 carats


Rich Heritage of Important GemstonesHope Diamond

45.93 carats


Rich Heritage of Important GemstonesIdol’s Eye

70.20 carats


Rich Heritage of Important GemstonesEmerald

62 carats


Rich Heritage of Important GemstonesStar of the East

94.80 carats


Illustrious Clientele

Elizabeth Taylor Scarlett Johansson Halle Berry



Iconic Design and Craftsmanship

Classic Wreath Necklace $3,500,000

“If I could, I would attach the diamonds directly onto a woman’s skin.”

– Harry Winston


Compelling Design Philosophy

Limited Edition and One-of-a-Kind Pieces

Emerald Ring Chandelier Earrings Ruby “Twist” Bracelet

$1,100,000 $1,500,000 $3,300,000


Engagement Rings


Micropavé Solitaire

from $22,000

Signature Winston Designs

Garland Heart Pendant Cluster Earrings Thom Browne Cufflinks

$28,000 from $18,000 $29,500


Diamond Jewelry Classics

Wedding Bands Diamond Pendant Stud Earrings

from $26K, $30K, $23K from $18,300 from $8,500


Harry Winston Timepieces


Improved Manufacturing Capabilities


Opened new watch factory in Geneva, Switzerland

Premium Sales Network

Retail Network Private Sales Wholesale Partners


Uniquely Positioned for GrowthClassic Winston diamond cluster earrings $210,000

• Ultra-High Net Worth [Super Rich]

• Net Worth* +$30 million• 916,000 people• Aggregate wealth of $112.6 trillion

• High Net Worth [Rich]

• Net Worth $10 million to $30 million• 2.2 million people

• Affluent [Mass Affluent]

• Net Worth $1 million to $10 million• 26.3 million people

*Net worth defined as liquid assets excluding primary residence

Source: Prince & Associates (January 2008)

Growing Affluent Customer Base


Geographically Diverse Clientele

Source: World Institute for Development Economics Research of the U.N. University

1

1


2004: 6 Salons

Growing Salon Network

New York

ParisGeneva

Beverly Hills

Tokyo Ginza

Osaka


2006–7: 13 Salons


New York

ParisGeneva

Beverly Hills

Tokyo Ginza

Osaka

Las Vegas

Ala Moana

Dallas

Bal Harbour

London

Taipei

Tokyo Omotesando


2008: 18 Salons


New York

ParisGeneva

Beverly Hills

Tokyo Ginza

Osaka

Las Vegas

Ala Moana

Dallas

Bal Harbour

London

Taipei

Tokyo OmotesandoBeijing

Chicago

Hong Kong Nagoya

Tokyo Midtown


2009: 19 Salons


New York

ParisGeneva

Beverly Hills

Tokyo Ginza

Osaka

Las Vegas

Ala Moana

Dallas

Bal Harbour

London

Taipei

Beijing

Chicago

Hong Kong NagoyaCosta Mesa

Tokyo OmotesandoTokyo Midtown


New York

ParisGeneva

Beverly Hills

Tokyo Ginza

Osaka

Las Vegas

Ala Moana

Dallas

Bal Harbour

London

Taipei

Beijing

Chicago

Hong Kong NagoyaCosta Mesa

Tokyo OmotesandoTokyo Midtown

• Russia, India, Middle East

Strategic Partnerships



46 POS

7 POS

37 POS

29 POS 41 POS

• 150 points of sale

Select Wholesale Watch Distribution

Leviev

Chaumet

BVLGARI

Strong Market Position

Chanel

Innovative/Design Value-added

Classic/Generic

Boucheron

Low PriceRange Target

High PriceRange Target

Dior

Fred

Auction

Houses

JARGRAFF

CARTIER

TIFF

ANY

HW

Chopard

Piaget

Van Cleef

De Beers / LVMH

Leviev

Chaumet

BVLGARI

Strong Market Position

Chanel

Innovative/Design Value-added

Classic/Generic

Boucheron

Low PriceRange Target

High PriceRange Target

Dior

Fred

Auction

Houses

JARGRAFF

CARTIER

TIFF

ANY

Chopard

Piaget

Van Cleef

De Beers / LVMH

HW

HARRY WINSTON DIAMOND CORPORATION 59Chandelier earrings $1,500,000

Maximizing Financial Results

Doubled Sales in Four Years

*These figures do not account for the impact of acquisition accounting on the acquisition; HWDC does not assume responsibility for the accuracy of HW prior to acquisition.

CAGR 19.7%


Improved Gross Margin

*These figures do not account for the impact of acquisition accounting on the acquisition; HWDC does not assume responsibility for the accuracy of HW prior to acquisition.

500 Basis Points


• Well-positioned to:• Drive 15%+ increase in sales• Improve operating performance

• Competitive pricing• Expense management

• Invest in future growth• Retail store – Costa Mesa• Watch research and development• Wholesale distribution• Identify new locations for FY2010

Outlook FY2009



The Power of Our Brand!

The Future

Vintage Harry Winston tassel diamond necklace – $525,000

Share Price


• Harry Winston Diamond Corporation 2007 – Current

• Mining Peer Group

Share Price


Petra Diamonds

Shore Gold

• Retail Peer Group

Share Price


• Increase sales through our premium rough diamond sales platform

• Acquire or merge with other diamond producing, or near producing assets

• Increase profitability and scale of our jewelry business• New geographic opportunities• New product opportunities• New distribution opportunities

The Future


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