MIRA INFORM REPORT

Report Date :

23.12.2014

IDENTIFICATION DETAILS

Name :	BIRKS GROUP INC.
Formerly Known As :	BIRKS & MAYORS INC.
Registered Office :	1240 Rue du Square Phillips, Montreal, Quebec H3B 3H4
Country :	Canada
Financials (as on) :	27.09.2014
Date of Incorporation :	22.03.1993
Legal Form :	Public Company
Line of Business :	Designs, develops, makes, and retails of fine jewelry, timepieces, sterling silver, and gifts in the United States and Canada.
No. of Employees :	731

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 – September 30, 2014

Country Name	Previous Rating (30.06.2014)	Current Rating (30.09.2014)
Canada	A1	A1

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

CANADA - ECONOMIC OVERVIEW

As a high-tech industrial society in the trillion-dollar class, Canada resembles the US in its market-oriented economic system, pattern of production, and high living standards. Since World War II, the impressive growth of the manufacturing, mining, and service sectors has transformed the nation from a largely rural economy into one primarily industrial and urban. The 1989 US-Canada Free Trade Agreement (FTA) and the 1994 North American Free Trade Agreement (NAFTA) (which includes Mexico) touched off a dramatic increase in trade and economic integration with the US, its principal trading partner. Canada enjoys a substantial trade surplus with the US, which absorbs about three-fourths of Canadian merchandise exports each year. Canada is the US's largest foreign supplier of energy, including oil, gas, uranium, and electric power. Given its abundant natural resources, highly skilled labor force, and modern capital plant, Canada enjoyed solid economic growth from 1993 through 2007. Buffeted by the global economic crisis, the economy dropped into a sharp recession in the final months of 2008, and Ottawa posted its first fiscal deficit in 2009 after 12 years of surplus. Canada's major banks, however, emerged from the financial crisis of 2008-09 among the strongest in the world, owing to the financial sector's tradition of conservative lending practices and strong capitalization. Canada achieved marginal growth in 2010-13 and plans to balance the budget by 2015. In addition, the country's petroleum sector is rapidly expanding, because Alberta's oil sands significantly boosted Canada's proven oil reserves. Canada now ranks third in the world in proved oil reserves behind Saudi Arabia and Venezuela.

Source : CIA

Company Name and address

Your order on: MAISON BIRKS

This is a business name owned by:

Company name: GROUPE BIRKS INC. (in French)

BIRKS GROUP INC. (in English)

Address: 1240 Rue du Square Phillips, Montreal, Quebec H3B 3H4 – Canada

Telephone: +1 514-397-2511

Fax: +1 514-397-2583

Website: www.birksgroup.com

Company Summary

Corporate ID#: 3572676

State: Federal

Judicial form: Public Company (NYSE = BGI)

Date incorporated: 03-22-1993

Stock: 17,927,548 shares issued and outstanding

Value: No par value

Name of manager: Jean-Charles BEDOS

ACTIVITIES & OPERATIONS

History:

Business issued from the merger of:

- 3138712 CANADA INC.

- HENRY BIRKS ET FILS INC.

IST

Business:

Birks Group Inc. designs, develops, makes, and retails fine jewelry, timepieces, sterling silver, and gifts in the United States and Canada.

The company offers designed products, as well as various merchandise, including designer jewelry, diamond, gemstone and precious metal jewelry, rings, wedding bands, earrings, bracelets, necklaces, charms, timepieces, and gifts.

As of May 31, 2014, it operated 51 luxury jewelry stores; 30 stores under the Birks brand in Canada; 2 retail locations in Calgary and Vancouver under the Brinkhaus brand; 18 stores under the Mayors brand, located in Florida and Georgia; and 1 store under the Rolex brand name.

The company was formerly known as Birks & Mayors Inc. and changed its name to Birks Group Inc. in October 2013.

Birks Group Inc. was founded in 1879 and is headquartered in Montreal, Canada.

No name of foreign suppliers available.

Staff: 731

Operations & branches:

At the headquarters, we find a large store and office.

The Company maintains 51 luxury jewelry stores; 30 stores under the Birks brand in Canada; 2 retail locations in Calgary and Vancouver under the Brinkhaus brand; 18 stores under the Mayors brand, located in Florida and Georgia; and 1 store under the Rolex brand name.

SHAREHOLDERS & MANAGERS

Shareholders:

1^st shareholder:

MONTROVEST BV (+50%)

Spoorsingell II 2871 TT Schoonhoven 2871 Ah

Schoonhoven, The Nertherlands

2^nd shareholder:

CEDE & CO.

PO Box 20, Bowling Green Station

New York, NY 10274 – USA

3^rd shareholder:

PRIME INVESTMENTS S.A.

63 Bd Prince Felix Saphine Bldg

L513 Luxemburg

Management:

Jean-Christophe BEDOS has been the Chief Executive Officer and President of Birks Group Inc. since April 1, 2012. Mr. Bedos served as Chief Operating Officer of Birks Group Inc., since January 4, 2012.

Mr. Bedos served as the Chief Executive Officer and President of Fine Jewelry House Boucheron at PPR SA. until June 10, 2011. Mr. Bedos served as the Chief Executive Officer of Jeweler Boucheron of Kering Holland NV since March 31, 2004. He served as Managing Director for Cartier France SA from 2002 to 2004. He started his career in the jewelery industry at Cartier in 1988.

He served as the Chief Executive Officer and President of luxury brand Boucheron International, Paris from May 2004 to June 2011. He has been Director of Birks Group Inc. since April 19, 2012. He served as an International Executive Manager and President of Richemont International from 2000 to 2002.

He holds a Master of Science in Management from the London Business School, a LLB in International Law from Universite Paris I Sorbonne, a BA (Honors) in European Business from Trent University, Nottingham and a Bachelor of Arts, European Business, from Toulouse Business School.

Other Directors include Shirley A. DAWE, Lorenzo ROSSI DI MONTELERA,

Nicolo ROSSI DI MONTELERA, Emily BERLIN, Guthrie J. STEWART, Frank DI TOMASO,

And David BARBERIS CANONICO.

Subsidiaries and partnership:

Mayor’s Jewelers, Inc.	Delaware
Mayor’s Jewelers of Florida, Inc.	Florida
Mayor’s Jewelers Intellectual Property Holding Co.	Delaware
JBM Retail Company, Inc.	Delaware
JBM Venture Co., Inc.	Delaware
Cash, Gold & Silver USA, Inc.	Delaware
Cash, Gold & Silver Inc.	Canada
Birks Jewellers Limited	Hong Kong

FINANCIALS

On November 19, 2014, Birks Group Inc. reported unaudited consolidated sales results for the thirteen weeks and earnings results for the twenty-six weeks

ended September 27, 2014.

For the thirteen weeks, the company’s net sales increased by 14.3% to $65.5 million from $57.3 million for the thirteen weeks ended September 28, 2013. The $8.2 million increase in net sales is primarily attributable to a 24% increase in comparable store sales partially offset by $1.1 million of lower sales related to 4 fewer stores than the prior year, $1.4 million of lower sales related to translating the company's Canadian sales into U.S. dollars due to the weaker Canadian dollar and $0.6 million of decreased revenues related to non-retail activities (primarily lower revenues from refining activities).

For the twenty-six weeks, the company's net sales increased 9.7% to $139.7 million from $127.4 million in the prior fiscal year. Operating income for the period increased by $5.9 million to $2.7 million compared to an operating loss of $3.3 million in the prior fiscal year period and net loss for the period was $4.0 million, or $0.22 per basic and diluted share, compared to a net loss of $7.7 million, or $0.50 per basic and diluted share, in the prior fiscal year period.

Loss before income taxes was $4,004,000 against $7,744,000 a year ago.

The $12.3 million increase in net sales is primarily attributable to a 20% increase in comparable store sales and $1.2 million of higher sales related to two new store locations partially offset by $6.6 million of lower sales related to the closure of six store locations in the past sixteen months and the temporary closure of two stores being relocated, $3.6 million of lower sales related to translating the company's Canadian sales into U.S. dollars due to the weaker Canadian dollar and $1.3 million of decreased revenues related to non-retail activities (corporate sales, refining activities and internet sales). Net cash provided by operating activities was $2.136 million against net cash used in operating activities of $24.143 million a year ago. Additions to property and equipment were $3.877 million against $3.792 million a year ago.

On attachment:

- 10K 2013-2014 (fiscal year ending March 2014)

- 2^nd 10Q 2014

Banks: Bank of America

Wells Fargo Bank

LEGAL FILINGS

Legal filings & complaints:

As of today date, there is no legal filing pending with the Courts.

Secured debts summary: Several

COMPANY CREDIT HISTORY

Trade references:

Date reported: December 2014

High credit: CAD 100,000

Now owing: 0

Past due: 0

Last purchase: November 2014

Line of business: Office supply

Paying status: 6 days beyond terms

Date reported: December 2014

High credit: CAD 1,000,000

Now owing: 0

Past due: 0

Last purchase: November 2014

Line of business: Payroll

Paying status: As agreed

Date reported: December 2014

High credit: CAD 5,000

Now owing: 0

Past due: 0

Last purchase: November 2014

Line of business: Telecommunications

Paying status: On terms

Domestic credit history:

National Credit Bureaus gave a satisfying credit rating.

According to our credit analysts, during the last 6 months, domestic payments were made on due date.

Other comments:

The Company maintains its business.

The Company is in good standing.

This means that all local and federal taxes were paid on due date.

Last report was filed on 09-26-2014.

The risk is medium/low.

Our opinion:

A business connection may be conducted.

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.

- 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 –

- Gem & Jewellery Export Promotion Council in its statistical data has shown the export of polished diamonds to have increase by 28 % in February 2013. Compared to $ 1.4 bn worth of polished diamond export in February, 2012, India exported $ 1.84 billion worth of polished diamonds in February 2013. A senior executive of GJEPC said, “Export of cut and polished diamonds started falling month-wise after the imposition of 2 % of import duty on the polished diamonds. But February, 2013 has given a new ray of hope to the industry as the export of polished diamonds has actually increased by 28 %. It means the industry  is on the track of recovery and round tripping of diamonds has stopped completely.” Demand has started coming from the US, the UK, Japan and China. India’s polished diamond export is expected to cross $ 21 bn in 2013-14.

- The banking sector has started exercising restraint while following prudent risk management norms when lending money to gems and jewellery sector. This follows the implementation of Basel III accord – a global voluntary regulatory standard on bank capital adequacy, stress testing and market liquidity.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.63.18
UK Pound	1	Rs.98.85
Euro	1	Rs.77.42

INFORMATION DETAILS

Analysis Done by :	KAR
Report Prepared by :	NIT

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%)

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