MIRA INFORM REPORT

Report Date :

31.12.2012

IDENTIFICATION DETAILS

Name :	MICHAEL HILL MANUFACTURING PTY. LIMITED
Formerly Known As :	ANASTATE PTY. LTD.
Registered Office :	7 Smallwood Place, Murarrie, Queensland 4172
Country :	Australia
Financials (as on) :	30.06.2012 (Group Consolidated)
Date of Incorporation :	26.09.1989
Com. Reg. No.:	010975952
Legal Form :	Australian Proprietary Company
LINE OF BUSINESS :	MANUFACTURING AND DISTRIBUTION OF DIAMOND AND GOLD JEWELLERY.
No. of Employees :	2,000 employees (Michael Hill Group)

RATING & COMMENTS

MIRA’s Rating :

Ba

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Status :	Satisfactory
Payment Behaviour :	No complaints
Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail: infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – June 30^th, 2012

Country Name	Previous Rating (31.03.2012)	Current Rating (30.06.2012)
Australia	A1	A1

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

Australia - ECONOMIC OVERVIEW

Australia's abundant and diverse natural resources attract high levels of foreign investment and include extensive reserves of coal, iron ore, copper, gold, natural gas, uranium, and renewable energy sources. A series of major investments, such as the US$40 billion Gorgon Liquid Natural Gas project, will significantly expand the resources sector. Australia also has a large services sector and is a significant exporter of natural resources, energy, and food. Key tenets of Australia''s trade policy include support for open trade and the successful culmination of the Doha Round of multilateral trade negotiations, particularly for agriculture and services. The Australian economy grew for 17 consecutive years before the global financial crisis. Subsequently, the former RUDD government introduced a fiscal stimulus package worth over US$50 billion to offset the effect of the slowing world economy, while the Reserve Bank of Australia cut interest rates to historic lows. These policies - and continued demand for commodities, especially from China - helped the Australian economy rebound after just one quarter of negative growth. The economy grew by 1.4% during 2009 - the best performance in the OECD - by 2.7% in 2010, and by 1.8% in 2011. Unemployment, originally expected to reach 8-10%, peaked at 5.7% in late 2009 and fell to 5.0% in 2011. As a result of an improved economy, the budget deficit is expected to peak below 4.2% of GDP and the government could return to budget surpluses as early as 2015. Australia was one of the first advanced economies to raise interest rates, with seven rate hikes between October 2009 and November 2010. The GILLARD government is focused on raising Australia''s economic productivity to ensure the sustainability of growth, and continues to manage the symbiotic, but sometimes tense, economic relationship with China. Australia is engaged in the Trans-Pacific Partnership talks and ongoing free trade agreement negotiations with China, Japan, and Korea.

Source : CIA

IDENTIFICATION DETAILS

Verified Address

Subject name : MICHAEL HILL MANUFACTURING PTY. LIMITED

Business address : 7 Smallwood Place

Town : Murarrie

Province : Queensland

Zip/postal code : 4172

Country : Australia

Tel : +61 7 33990200

Fax : +61 7 33990270

Email : inquiry@michaelhill.com.au

Website : www.michaelhill.com

Registered address : 7 Smallwood Place

Town : Murarrie

Province : Queensland

Zip/postal code : 4172

Country : Australia

Postal address : GPO Box 2922

Town : Brisbane

Province : Queensland

Zip/postal code : 4001

Country : Australia

SUMMARY DETAILS

Executive Summary

Date founded or registered : 26/09/1989

Legal form : Australian Proprietary Company

Chief executive : Michael Robin Parsell

Issued & paid up capital : AUD 2

Sales turnover : NZD 511,497,000 (Group-consolidated 12 months, 30/06/2012)

Net income : NZD 36,511,000 (Group-consolidated 12 months, 30/06/2012)

Total fixed assets : NZD 323,648,000 (Group-consolidated 12 months, 30/06/2012)

Line of business : Manufacturing and distribution of jewellery.

Staff employed : 2,000 employees (Michael Hill Group)

Company Analysis

Country risk : Country risk is minimal

Operation trend : Operational trend is steady

Management experience : Management is adequately experienced

Financial performance : Financial performance is good

Organization structure : Organizational structure is stable

Detrimental : No detrimental found

Payment history : No payment delays noted

Credit amount asked : Not described.

Comments : Larger credit can still be considered.

STATUTORY DETAILS

Registry Data

Registration date : 26/09/1989

Legal form : Australian Proprietary Company

Registration no Australia Company Number : 010975952

Registered authority : Australian Securities and Investments Commission

Fiscal/ Tax no : Australia Business Number : 58010975952

Registry status : Live/Active

Previous name : ANASTATE PTY. LTD. (initial)

Change of legal form : None reported.

MANAGEMENT / DIRECTORS

Key Management

Name : Michael Robin Parsell

Designation : Managing Director

Name : Philip Roy Taylor

Designation : Chief Financial Officer

BOARD OF DIRECTORS/ OTHER APPOINTMENTS

Appointments

Name : Michael Robin Parsell

Designation : Director

Appointment date : 23/01/90

Address : 19 Masthead Drive

Cleveland, QLD 4163

Australia

Biography : Born on 23/05/1959 in Kawakawa, New Zealand.

Name : Richard Michael Hill

Designation : Director

Appointment date : 23/01/90

Address : 424 Arrowtown-Lake Hayes Road, Rd 1

Queenstown 9371

New Zealand

Biography : Born on 23/12/1938 in Whangarei, New Zealand.

Name : Ann Christine Hill

Designation : Director

Appointment date : 23/01/90

Address : 424 Arrowtown-Lake Hayes Road, Rd 1

Queenstown 9371

New Zealand

Biography : Born on 17/11/1939 in United Kingdom.

Name : Philip Roy Taylor

Designation : Director and Company Secretary

Appointment date : 26/06/09

Address : 12 Ada Street

Taringa, QLD 4068

Australia

Biography : Born on 31/12/1958 in Whangarei, New Zealand.

Staff employed : 2,000 employees (Michael Hill Group)

Key Advisors

Auditors : PRICEWATERHOUSECOOPERS

'Riverside Centre', Level 15

123 Eagle Street

Brisbane, QLD 4000

Australia

SHARE CAPITAL

Composition

Authorized Capital : AUD 2

No of shares : 2 Ordinary Shares

Share par value : AUD 1

Issued capital : AUD 2

Paid up capital : AUD 2

OWNERSHIP / SHAREHOLDERS

How listed : Full List

Composition

Shareholder name : MICHAEL HILL JEWELLER (AUSTRALIA) PTY LTD

Address : 7 Smallwood Place

Murarrie, QLD 4172

Australia

No. of shares : 2 Ordinary Shares

% of shares : 100%

RELATED

RELATED COMPANIES & CORPORATE

AFFILIATIONS

Structure

Name : DURANTE HOLDINGS PTY LTD

Affiliation type : Ultimate Holding Company

Address : 7 Smallwood Place

Murarrie, QLD 4172

Australia

Comments : Durante Holdings Pty Limited is wholly owned by the Michael Hill family through

Boxer Hill Trust.

Name : MICHAEL HILL INTERNATIONAL LIMITED

Affiliation type : Intermediate Holding Company

Address : The Offices Of Kensington Swan, Ground Floor

18 Viaduct Harbour Avenue

Auckland Central, Auckland 1010

New Zealand

Comments : Michael Hill International Limited manufactures, wholesales and distributes

jewellery. The Company's products consist of rings, bracelets, watches and other

items. Michael Hill operates stores in New Zealand, Australia, Canada and the

United Staes.

Name : MICHAEL HILL JEWELLER (AUSTRALIA) PTY LTD

Affiliation type : Parent Company

Address : 7 Smallwood Place

Murarrie, QLD 4172

Australia

Name : MICHAEL HILL JEWELLER LIMITED

Affiliation type : Sister Company

Address : The Offices Of Kensington Swan, Ground Floor

18 Viaduct Harbour Avenue

Auckland Central, Auckland 1010

New Zealand

Name : MICHAEL HILL WHOLESALE PTY LIMITED

Affiliation type : Sister Company

Address : 7 Smallwood Place

Murarrie, QLD 4172

Australia

Related companies and corporate

affiliations comments : : Other companies of the Michael Hill Group should be considered affiliates of the Subject.

BANK & MORTGAGES

Bank Details

Name of bank : Australia and New Zealand Banking Group Limited

Address : Australia

Account details : Current account

Comments : It is generally not the policy of local banks to provide credit status information to

non related parties, however interested parties would be advised to consult first

with the Subject if banker's references are required.

Mortgages : None reported.

Legal Fillings

Bankruptcy fillings : None reported.

Court judgements : None reported.

Tax liens : None reported.

Others : None reported.

FINANCIAL DATA

Description

Source of financial statement : Public Record Sources

Financial statement date : 30/06/12

Type of accounts : Full audited

Currency : New Zealand, Dollar (NZD)

Exchange rate : 1 USD = NZD 1.22 as of 28-12-2012

Summarized Financial Information

Consolidation type : Group Consolidated Group Consolidated

Currency : New Zealand, Dollar New Zealand, Dollar

(NZD) (NZD)

Denomination : (x1) One (x1) One

Date of financial year end : 30/06/12 30/06/11

Length of accounts : 12 months 12 months

Sale turnover / Income : 511,497,000 489,330,000

Profit before tax : 42,036,000 39,985,000

Net income : 36,511,000 34,499,000

Non current assets : 112,720,000 102,962,000

Current assets : 210,928,000 190,146,000

Inventories : 187,017,000 173,055,000

Total assets : 323,648,000 293,108,000

Current liabilities : 68,786,000 57,192,000

Non current liabilities : 60,503,000 57,540,000

Total liabilities : 129,289,000 114,732,000

Share equity : 194,359,000 178,376,000

Retained earning : 188,483,000 171,111,000

Comments : The group’s consolidated financial information above relates to the Subject’s Intermediate Holding Company Michael Hill International Limited and all its subsidiaries which include the Subject.

OPERATION DETAILS

Main activities : The Subject is engaged in manufacturing and distribution of jewellery.

The Subject operates as a subsidiary of Michael Hill International Limited

based in New Zealand. Michael Hill International Limited is publicly traded

on the New Zealand Stock Exchange.

Michael Hill International Limited, together with its subsidiaries, engages in

the manufacture and retail of jewellery under the Michael Hill brand. The

company offers a range of engagement rings, wedding rings, bracelets,

watches and bridal sets. As of June 30, 2012, it operated 153 stores in

Australia, 53 stores in New Zealand, 37 stores in Canada, and 9 stores in

the United States. The company was founded in 1979 and is

headquartered in Brisbane.

Purchases

International : Mainly from India, Hong Kong, Belgium

Sales

Local : Yes

International : New Zealand

Key events : 24-12-2010

Michael Hill family in push for control

Michael Hill's family interests have given formal notice of a partial takeover

offer to buy a further 10 million shares in jewellery retailer Michael Hill

International, taking their stake from 47.6 to 50.2 per cent.

The offer price will be 90c a share, 5c above Friday's closing price of 85c.

In August the Hill family told the market they aimed to increase their stake

to above 50 per cent, after consolidating their various holdings into a single

entity.

At the company's annual meeting on November 5 shareholders approved

the consolidation of the Hill's holdings into a single Australian company,

Durante Holdings Pty Ltd, wholly owned by the family's Boxer Hill Trust.

The takeover offer from Durante will start no later than January 19.

In a statement issued through public relations firm Senescall Akers, Emma

Hill, a director of Durante and daughter of founder Michael Hill, said the

family shareholding was locked in the "no-fly zone'' (between 20 and 50 per

cent) where no further shares can be acquired without making a Takeover

Code compliant offer to all shareholders.

"The acquisition of this small percentage of shares in MHI will give the

family interests flexibility to acquire additional shares in compliance with the

Takeovers Code should there be attractive opportunities to do so.''

The "creep'' provision of the Takeovers Code allows majority shareholders

to buy up to 5 per cent of a company's stock in any 12 month period.

The 90c offer price is a 19 per cent premium to the 90-day volume

weighted average price and exceeds the highest price Michael Hill

International shares have traded at in the last two years.

"This offer signals the family's confidence in the future of MHI as well as

giving existing shareholders the opportunity to sell a proportion of their

shares at a premium. There is no intention at this time to make a full

takeover offer or indeed to sell our shares.''

The company said ACC and NZ Super Fund had already agreed sell 3

million and 1 million shares respectively into the offer.

The formal offer document will be dispatched to shareholders in January.

Source: www.stuff.co.nz

Property & Assets

Premises : The Subject operates from premises located at the verified heading

address consisting of a production facilities, warehouse and administrative

office.

Branches : None reported.

SUMMARIZED COUNTRY RISK

Gross Domestic Products (GDP) & Economic Overview

Central bank : Reserve Bank of Australia

Reserve of foreign exchange & gold : US$ 43.879 billion

Gross domestic product - GDP : US$ 1.586 trillion

GPP (Purchasing power parity) : 954.296 billion of International dollars

GDP per capita - current prices : US$ 68,916

GDP - composition by sector : agriculture: 4%

industry: 25.6%

services: 70.4%

Inflation : 2009: 1.8%

2010: 2.8%

2011: 3.4%

Unemployment rate : 2009: 5.6%

2010: 5.2%

2011: 5.1%

Public debt

(General Government gross debt as

a % GDP) : 2009: 16.9%

2010: 20.4%

2011: 22.9%

Government bond ratings : Standard & Poor's: AAA/Stable/A-1+

Moody's rating: Aaa

Moody's outlook: STA

Market value of publicly traded

Shares : US$1.258 trillion

Largest companies in the country : Commonwealth Bank (Banking), BHP Billiton (Materials), Westpac Banking Group (Banking), Rio Tinto (Materials), National Australia Bank (Banking) ANZ Banking (Banking), Telstra (Telecommunications)

Trade & Competitiveness Overview

Total exports : US$210.7 billion

Exports commodities : Coal, iron ore, gold, meat, wool, alumina, wheat

Total imports : US$187.2 billion

Imports commodities : Machinery and transport equipment, computers and office machines,

telecommunication equipment and parts, crude oil and petroleum products

Export - major partners : Japan 18.9%, China 14.2%, South Korea 8%, US 6%, NZ 5.6%, India

5.5%, UK 4.2%

Import - major partners : China 15.5%, US 12.8%, Japan 9.6%, Singapore 5.6%, Germany 5.2%,

UK 4.3%, Thailand 4.2%

FDI Inflows : 2008: US$46,843 million

2009: US$25,716 million

2010: US$32,472 million

FDI Outflows : 2008: US$33,604 million

2009: US$16,160 million

2010: US$26,431 million

Best countries for doing business : 10 out of 183 countries

Global competitiveness ranking : 20 (ranking by country on a basis of 142, the first is the best)

Country and Population Overview

Total population : 22.23 million

Total area : 7,692,024 km2

Capital : Canberra

Currency : Australian dollars (AUD)

Internet users as % of total

Population : 76%

PAYMENT HISTORY

Purchase Term

International : L/C, Telegraphic transfer, D/P, Credit 30-120 days

Sales Term

Local : Prepayment, Bank transfer, D/P, Credit 30-120 days

International : L/C, Telegraphic transfer, D/P, Credit 30-120 days

Trade Reference/ Payment

Behaviour

Comments : As local and international trade references were not supplied, the Subject's

payment track record history cannot be appropriately determined but based

on our research, payments are believed to be met without delay.

Investigation Note

Sources : Interviews and material provided by the Subject

: Other official and local business sources

DIAMOND INDUSTRY – INDIA

- From time immemorial, India is well known in the world as the birthplace for diamonds.  It is difficult to trace the origin of diamonds but history says that in the remote past, diamonds were mined only in India. Diamond production in India can be traced back to almost 8^th Century B.C.  India, in fact, remained undisputed leader till 18^th Century when Brazilian fields were discovered in 1725 followed by emergence of S. Africa, Russia and Australia.

- The achievement of the Indian diamond industry was possible only due to combination of the manufacturing skills of the Indian workforce and the untiring and unflagging efforts of the Indian diamantaires, supported by progressive Government policies.

- The area of study of family owned diamond businesses derives its importance from the huge conglomerate of family run organizations which operate in the diamond industry since many generations.

- Some of the basic traits of family run business enterprises include spirit of entrepreneurship, mutual trust lowers transaction costs, small, nimble and quick to react, information as a source of advantage and philanthropy.

- Family owned diamond businesses need to improve on many fronts including higher standard of corporate governance, long-term performance – focused strategies, modern management and technology.

- The diamond jewellery industry in India today may be more than Rs 60000 mil and is rated amongst the fastest growing  in the world. Indi ranks third in the world in domestic diamond consumption.

- Utmost caution is to be exercised while dealing with some medium and large diamond traders which are usually engaged in fictitious import – export, inter-company transactions, financially assisted by banks. In the process, several public sector banks lost several hundred million rupees. They mostly diverted borrowed money for diamond business into real estate and capital markets.

- Excerpts from Times of India dated 30^th October 2010 is as under –

DIAMOND SAGA – DIRTY DOZEN STUCK WITH 2K CR DEBT

This could be the biggest credibility crisis the Indian diamond industry has ever faced. Fifteen banks run the risk of losing Rs 2000 crore lent to a dozen diamond firms in Surat. Until about two months ago, they had not repaid  these dues. Bankers believe many diamantaires borrowed money during the economic downturn two years ago and diverted funds to businesses like real estate and capital markets. Many of themselves made money from these businesses but their diamond companies have gone sick and declared insolvency.

- Most of the money borrowed from the banks in the name of their diamond business has been diverted in real estate and the share market. The banks are not in a position to seize their properties because in many cases, these were purchased in the name of their relatives and friends.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.54.84
UK Pound	1	Rs.88.39
Euro	1	Rs.72.62

INFORMATION DETAILS

Report Prepared by :

NLM

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
--	NB	New Business	--

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.