JD Logistics, Inc. — Interim / Quarterly Report 2007

Sep 28, 2007

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Midas International Holdings Limited (Incorporated in the Cayman Islands with limited liability) Stock Code: 1172

This Interim Report is printed by Midas International Holdings Limited

RESULTS

The Board of Directors (the “Directors”) of Midas International Holdings Limited (the “Company”) announces that the unaudited consolidated results of the Company and its subsidiaries (the “Group”) for the six months ended 30th June, 2007 together with the comparative figures for the previous period are as follows:

CONDENSED CONSOLIDATED INCOME STATEMENT

FOR THE SIX MONTHS ENDED 30TH JUNE, 2007

NOTES Turnover Direct expenses Gross profit Other income 4 Increase in fair value of investment properties Selling expenses Administrative and other expenses Finance costs Profit before taxation 5 Income tax expenses 6 Profit for the period Attributable to: Ordinary shareholders of the Company Dividends 7 Earnings per share 8 Basic Diluted	For the six months ended 30th June, 2007 2006 HK$’000 HK$’000 (unaudited) (unaudited) 323,919 299,489 (245,037) (219,462) 78,882 80,027 6,526 6,504 11,145 – (28,765) (26,785) (56,215) (47,701) (3,356) (3,516) 8,217 8,529 (4,577) (2,355) 3,640 6,174 3,640 6,174 6,411 17,632 0.7 HK cents 1.2 HK cents 0.7 HK cents N/A

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CONDENSED CONSOLIDATED BALANCE SHEET

AT 30TH JUNE, 2007

NOTES ASSETS AND LIABILITIES Non-current assets Investment properties 9 Prepaid lease payments Property, plant and equipment 9 Deposits paid for acquisition of property, plant and equipment Contractual reimbursement from related companies Current assets Inventories Accounts receivables 10 Deposits, prepayments and other receivables Prepaid lease payments Tax recoverable Bank balances and cash Current liabilities Accounts payables 11 Accrued charges and other payables Tax payable Borrowings 12 Net current assets Total assets less current liabilities	30th June, 31st December, 2007 2006 HK$’000 HK$’000 (unaudited) (audited) 191,960 175,500 8,249 8,361 207,894 220,596 950 703 21,019 21,019 430,072 426,179 136,850 98,126 227,403 220,727 18,218 12,705 229 229 3,622 2,507 124,331 86,430 510,653 420,724 149,700 152,466 76,512 59,437 8,273 7,561 55,437 38,050 289,922 257,514 220,731 163,210 650,803 589,389	30th June, 31st December, 2007 2006 HK$’000 HK$’000 (unaudited) (audited) 191,960 175,500 8,249 8,361 207,894 220,596 950 703 21,019 21,019 430,072 426,179 136,850 98,126 227,403 220,727 18,218 12,705 229 229 3,622 2,507 124,331 86,430 510,653 420,724 149,700 152,466 76,512 59,437 8,273 7,561 55,437 38,050 289,922 257,514 220,731 163,210 650,803 589,389
		426,179
		98,126 220,727 12,705 229 2,507 86,430
		420,724
		152,466 59,437 7,561 38,050
		257,514
		163,210
		589,389

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CONDENSED CONSOLIDATED BALANCE SHEET (cont’d) AT 30TH JUNE, 2007

NOTES Non-current liabilities Borrowings 12 Convertible note 13 Deferred tax NET ASSETS CAPITAL AND RESERVES Share capital Reserves TOTAL EQUITY	30th June, 31st December, 2007 2006 HK$’000 HK$’000 (unaudited) (audited) 90,450 80,113 40,045 – 32,405 29,892 162,900 110,005 487,903 479,384 53,429 53,429 434,474 425,955 487,903 479,384	30th June, 31st December, 2007 2006 HK$’000 HK$’000 (unaudited) (audited) 90,450 80,113 40,045 – 32,405 29,892 162,900 110,005 487,903 479,384 53,429 53,429 434,474 425,955 487,903 479,384
		110,005
		479,384
		53,429 425,955
		479,384

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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30TH JUNE, 2007

Attributable to ordinary shareholders of the Company

At 1st January, 2006 (audited) Profit and the total recognised income for the period Dividends At 30th June, 2006 (unaudited) Exchange differences arising on translation of foreign operations recognised directly in equity Profit for the period Total recognised income for the period Dividends At 31st December, 2006 (audited) Exchange differences arising on translation of foreign operations recognised directly in equity Profit for the period Total recognised income for the period Recognition of equity component of convertible note Dividends At 30th June, 2007 (unaudited)	Share capital HK$’000 53,429 – – 53,429 – – – – 53,429 – – – – – 53,429	Share premium HK$’000 164,773 – – 164,773 – – – – 164,773 – – – – – 164,773	Other reserve HK$’000 4,000 – – 4,000 – – – – 4,000 – – – – – 4,000	Merger Translation reserve reserve HK$’000 HK$’000 24,000 239 – – – – 24,000 239 – 5,219 – – – 5,219 – – 24,000 5,458 – 1,820 – – – 1,820 – – – – 24,000 7,278	Con- vertible note Acc- equity umulated reserve profits HK$’000 HK$’000 – 234,137 – 6,174 – (17,632 ) – 222,679 – – – 11,456 – 11,456 – (6,411 ) – 227,724 – – – 3,640 – 3,640 9,470 – – (6,411 ) 9,470 224,953	Total Equity HK$’000 480,578 6,174 (17,632 ) 469,120 5,219 11,456 16,675 (6,411 ) 479,384 1,820 3,640 5,460 9,470 (6,411 ) 487,903

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CONDENSED CONSOLIDATED CASH FLOW STATEMENT

FOR THE SIX MONTHS ENDED 30TH JUNE, 2007

Net cash used in operating activities Investing activities Purchases of property, plant and equipment and investment properties Other investing cash flows Net cash used in investing activities Financing activities Proceeds from issuance of convertible note New bank loans raised Repayment of bank loans Dividends paid Other financing activities Net cash from (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at 1st January Cash and cash equivalents at 30th June represented by bank balances and cash

For the six months ended 30th June, 2007 2006 HK$’000 HK$’000 (unaudited) (unaudited) (22,335) (15,787) (8,629) (17,558) 1,393 (4,170) (7,236) (21,728) 49,500 – 47,436 22,475 (19,712) (28,682) (6,411) (17,632) (3,341) (3,516) 67,472 (27,355) 37,901 (64,870) 86,430 138,214 124,331 73,344

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30TH JUNE, 2007

1. Basis of preparation

The condensed consolidated financial statements have been prepared in accordance with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities (the “Listing Rules”) on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) and with Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

2. Principal accounting policies

The condensed consolidated financial statements have been prepared on the historical cost basis except for investment properties and certain financial instruments, which are measured at fair values.

The accounting policies used in the condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual financial statements for the year ended 31st December, 2006. In addition, the Group has applied the following accounting policy for convertible note issued during the current interim period:

Convertible note

Convertible note issued by the Group that contain both financial liability and equity components are classified separately into respective liability and equity components on initial recognition. On initial recognition, the fair value of the liability component is determined using the prevailing market interest rate of similar non-convertible debts. The difference between the proceeds of the issue of the convertible note and the fair value assigned to the liability component, representing the conversion option for the holder to convert the note into equity, is included in equity (convertible note equity reserve).

In subsequent periods, the liability component of the convertible note is carried at amortised cost using the effective interest method. The equity component, represented by the option to convert the liability component into ordinary shares of the Company, will remain in convertible note equity reserve until the embedded option is exercised in which case the balance stated in convertible note equity reserve will be transferred to share premium. Where the option remains unexercised at the expiry date, the balance stated in convertible note equity reserve will be transferred to accumulated profits. No gain or loss is recognised in profit or loss upon conversion or expiration of the option.

Transaction costs that relate to the issue of the convertible note are allocated to the liability and equity components in proportion to the allocation of the proceeds. Transaction costs relating to the equity component are charged directly to equity. Transaction costs relating to the liability component are included in the carrying amount of the liability portion and amortised over the period of the convertible note using the effective interest method.

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2. Principal accounting policies (cont’d)

In the current interim period, the Group has applied, for the first time, a number of new standards, amendments and interpretations issued by the HKICPA (hereinafter collectively referred to as the “new HKFRSs”), which are effective for the Group’s financial year beginning 1st January, 2007.

HKAS 1 (Amendment) Capital Disclosures[1] HKFRS 7 Financial Instruments: Disclosures[1] HK(IFRIC)-Int 7 Applying the Restatement Approach under HKAS 29 Financial Reporting in Hyperinflationary Economies[2] HK(IFRIC)-Int 8 Scope of HKFRS 2[3] HK(IFRIC)-Int 9 Reassessment of Embedded Derivatives[4] HK(IFRIC)-Int 10 Interim Financial Reporting and Impairment[5]

• 1 Effective for annual periods beginning on or after 1st January, 2007 2 Effective for annual periods beginning on or after 1st March, 2006 3 Effective for annual periods beginning on or after 1st May, 2006 4 Effective for annual periods beginning on or after 1st June, 2006 5 Effective for annual periods beginning on or after 1st November, 2006

The adoption of the new HKFRSs had no material effect on the results or financial position of the Group for the current or prior accounting periods. Accordingly, no prior period adjustment has been required.

The Group has not early applied the following new standards or interpretations that have been issued but are not yet effective.

HKAS 23 (Revised) Borrowing Costs[1] HKFRS 8 Operating Segments[1] HK(IFRIC)-Int 11 HKFRS 2: Group and Treasury Share Transactions[2] HK(IFRIC)-Int 12 Service Concession Arrangements[3]

• 1 Effective for annual periods beginning on or after 1st January, 2009 2 Effective for annual periods beginning on or after 1st March, 2007 3 Effective for annual periods beginning on or after 1st January, 2008

The Directors of the Company anticipate that the application of these standards or interpretations will have no material impact on the results and the financial position of the Group.

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3. Segment information

Business segments

The Group is currently operating in two business segments, namely printing and property investment. Turnover of the Group represents net amounts received and receivable for goods sold by the Group to outside customers, less returns and allowances and property rental income during the period. Segmental information about these businesses is presented below.

Six months ended 30th June, 2007

			Property
	Printing	investment		Consolidated
	HK$’000		HK$’000	HK$’000
TURNOVER – external	322,929		990	323,919
SEGMENT RESULTS	867		10,329	11,196
Unallocated corporate income				1,576
Unallocated corporate expenses				(1,199)
Finance costs				(3,356)
Profit before taxation				8,217
Income tax expenses				(4,577)
PROFIT FOR THE PERIOD				3,640
Six months ended 30th June, 2006
			Property
	Printing		investment	Consolidated
	HK$’000		HK$’000	HK$’000
TURNOVER – external	297,207		2,282	299,489
SEGMENT RESULTS	10,338		696	11,034
Unallocated corporate income				1,631
Unallocated corporate expenses				(620)
Finance costs				(3,516)
Profit before taxation				8,529
Income tax expenses				(2,355)
PROFIT FOR THE PERIOD				6,174

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4. Other income

Income from sale of scrap Interest income Sundry income	For the six months ended 30th June, 2007 2006 HK$’000 HK$’000 2,951 3,824 1,576 1,631 1,999 1,049 6,526 6,504	For the six months ended 30th June, 2007 2006 HK$’000 HK$’000 2,951 3,824 1,576 1,631 1,999 1,049 6,526 6,504
		6,504

5. Profit before taxation

Profit before taxation has been arrived at after charging (crediting):

Cost of inventories recognised as an expense Depreciation of property, plant and equipment Interest earned on bank deposits Income tax expenses The charge comprises: Hong Kong Profits Tax The People’s Republic of China (“PRC”) Enterprise Income Tax Deferred tax – current year	For the six months ended 30th June, 2007 2006 HK$’000 HK$’000 244,587 216,273 18,191 17,924 (1,576) (1,631) For the six months ended 30th June, 2007 2006 HK$’000 HK$’000 1,729 2,394 764 376 2,084 (415) 4,577 2,355	For the six months ended 30th June, 2007 2006 HK$’000 HK$’000 244,587 216,273 18,191 17,924 (1,576) (1,631) For the six months ended 30th June, 2007 2006 HK$’000 HK$’000 1,729 2,394 764 376 2,084 (415) 4,577 2,355
		2,355

6. Income tax expenses

Hong Kong Profits Tax is calculated at 17.5% of the estimated assessable profits for the six months ended 30th June, 2006 and 2007.

PRC Enterprise Income Tax is calculated at the applicable rates relevant to the PRC subsidiaries.

On 16th March, 2007, the PRC promulgated the Law of People’s Republic of China on Enterprise Income Tax by Order No. 63 of the President of the PRC which will change the tax rate from 33% to 25% for certain subsidiaries from 1st January, 2008.

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7. Dividends

2005 final dividend of HK3.3 cents per share 2006 final dividend of HK1.2 cents per share	For the six months ended 30th June, 2007 2006 HK$’000 HK$’000 – 17,632 6,411 – 6,411 17,632	For the six months ended 30th June, 2007 2006 HK$’000 HK$’000 – 17,632 6,411 – 6,411 17,632
		17,632

Subsequent to the interim period end, the directors have recommended that an interim dividend of HK0.5 cents (2006: HK1.2 cents) per share to be paid to the ordinary shareholders of the Company whose names appear on the register of members on 17th October, 2007.

8. Earnings per share

The calculation of basic and diluted earnings per share attributable to the ordinary shareholders of the Company is based on the following data:

	For the six months	For the six months
	ended 30th June,
	2007	2006
	HK$’000	HK$’000
Earnings:
Profit for the period attributable to ordinary shareholders
of the Company for the purpose of basic earnings
per share	3,640	6,174
Effect of dilutive potential ordinary shares:
Interest on convertible note	15	–
Profit for the period attributable to ordinary shareholders
of the Company for the purpose of diluted earnings
per share	3,655	6,174

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Number of shares: Number of ordinary shares for the purpose of basic earnings per share Effect of dilutive potential ordinary share: Convertible note Number of ordinary shares for the purpose of diluted earnings per share	For the six months ended 30th June, 2007 2006 ’000 ’000 534,290 534,290 603 – 534,893 534,290	For the six months ended 30th June, 2007 2006 ’000 ’000 534,290 534,290 603 – 534,893 534,290
		534,290

Diluted earnings per share for the six months ended 30th June, 2006 are not applicable as there were no potential ordinary shares in existence for that period.

9. Movements in investment properties and property, plant and equipment

Certain of the investment properties of the Group are held for rental purposes under operating leases and were fair valued at 30th June, 2007 by DTZ Debenham Tie Leung Limited, a firm of independent professional valuers, by reference to market evidence of transaction prices of similar properties. The resulting increase in fair value of investment properties is approximately HK$11,145,000 which has been recognised directly in the condensed consolidated income statement.

During the six months ended 30th June, 2007, the Group acquired property, plant and equipment and investment property at a cost of approximately HK$5,563,000 and HK$3,066,000 respectively (2006: HK$17,558,000 and Nil).

10. Accounts receivables

The Group has a policy of allowing credit periods ranging from 30 days to 180 days to its trade customers. The aged analysis of accounts receivables prepared on the basis of sales invoice date is stated as follows:

0 to 30 days 31 to 60 days 61 to 90 days 91 to 120 days 121 to 180 days More than 180 days	30th June, 31st December, 2007 2006 HK$’000 HK$’000 77,059 57,277 51,384 43,953 49,424 39,727 21,406 34,598 20,424 36,372 7,706 8,800 227,403 220,727	30th June, 31st December, 2007 2006 HK$’000 HK$’000 77,059 57,277 51,384 43,953 49,424 39,727 21,406 34,598 20,424 36,372 7,706 8,800 227,403 220,727
		220,727

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11. Accounts payables

The aged analysis of accounts payables prepared on the basis of supplier invoice date is stated as follows:

0 to 30 days 31 to 60 days 61 to 90 days 91 to 120 days More than 120 days	30th June, 31st December, 2007 2006 HK$’000 HK$’000 52,230 37,764 40,848 45,016 31,452 18,952 15,197 29,279 9,973 21,455 149,700 152,466	30th June, 31st December, 2007 2006 HK$’000 HK$’000 52,230 37,764 40,848 45,016 31,452 18,952 15,197 29,279 9,973 21,455 149,700 152,466
		152,466

12. Borrowings

During the period, the Group obtained new bank loans in the amount of approximately HK$47,436,000 (2006: HK$22,475,000) and made repayments of approximately HK$19,712,000 (2006: HK$28,682,000). The new loans bear interest ranging from 4.73% to 5.36% and are repayable in one to four years.

13. Convertible note

On 29th June, 2007, the Company issued 1.5% unsecured convertible note to Chuang’s Consortium International Limited (“CCIL”), with principal amount of HK$49,500,000, for cash in the same amount (the “Convertible Note”). The Convertible Note is denominated in Hong Kong dollars. The Convertible Note entitles the holder to convert, in whole or in part, the principal amount into ordinary shares of the Company on any business day prior to five business days before the fourth anniversary from the date of issue of the Convertible Note, at the conversion price of HK$0.45 per share (subject to anti-dilutive adjustment). If the Convertible Note has not been converted, it will be redeemed at par on 28th June, 2011. Interest of 1.5% will be payable in arrears every twelve months until the settlement date. The effective interest rate of the liability component of the Convertible Note is 7.17%.

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The movement of the liability component of the Convertible Note for the period is set out below:

Liability component at date of issue – at fair value Interest charge Liability component at end of the period	30th June, 31st December, 2007 2006 HK$’000 HK$’000 40,030 – 15 – 40,045 –	30th June, 31st December, 2007 2006 HK$’000 HK$’000 40,030 – 15 – 40,045 –
		–

The fair value of the liability component of the Convertible Note at the date of issue was determined based on the present value of the estimated future cash outflows discounted at the prevailing market rate for an equivalent non-convertible note at that date.

The equity portion of the Convertible Note at the date of issue is HK$9,470,000.

14. Capital commitments

At 30th June, 2007, the Group had commitments of approximately HK$1,431,000 (31st December, 2006: HK$1,263,000) for capital expenditure contracted for but not provided in the financial statements in respect of the acquisition of property, plant and equipment.

15. Related party disclosure

The relevant related party disclosure is as follows:

(a) Transactions with a controlling shareholder and its affiliates

CCIL is a controlling shareholder of the Company. Chuang’s China Investments Limited (“Chuang’s China”) is a non-wholly owned subsidiary of CCIL. Chuang’s China and its subsidiaries are referred to as the “Chuang’s China Group”. During the period, the Group had transactions with CCIL and Chuang’s China Group as follows:

	For the six months	For the six months
	ended 30th June,
	2007	2006
	HK$’000	HK$’000
Property rental income received from
Chuang’s China Group	497	497
Building management fee paid to
Chuang’s China Group	495	401
Subscription of Convertible Note by CCIL	49,500	–

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In addition, on 11th May, 2007, the Company has conditionally agreed to pay HK$13,195,000 together with a transfer to Chuang’s China of a subsidiary, the sole asset of which is a property in Chengdu, PRC, in return for the transfer of a subsidiary by Chuang’s China to the Company, the sole asset of which is a vacant industrial site in Dongguan, PRC. This exchange of assets has not been completed as at the date of this report. Further details of this transaction are set out in a circular published by the Company on 4th June, 2007.

• (b) The remuneration of Directors and other members of key management during the period was as follows:

Short-term benefits Post employment benefits	For the six months ended 30th June, 2007 2006 HK$’000 HK$’000 2,393 2,653 59 71 2,452 2,724	For the six months ended 30th June, 2007 2006 HK$’000 HK$’000 2,393 2,653 59 71 2,452 2,724
		2,724

16. Post balance sheet events

The following significant events took place subsequent to 30th June, 2007:

• (a) On 19th September, 2007, the Company completed its acquisition of 87.5% interest in Profitable Industries Limited which is engaged in the provision of cemetery services in the PRC for a consideration of HK$350,000,000. The consideration is settled by the Company as to (i) HK$170,000,000 by transfer of the entire issued share capital of, and shareholders’ loans to subsidiaries, Sino Stream Limited, Riverside Trinity Limited and Far Hero Limited, of which investment properties are their sole assets; (ii) HK$130,000,000 by the issue of a convertible note; and (iii) HK$50,000,000 by issue of a loan note. Since the Group is still in the process of assessing the fair value of the relevant assets and liabilities of Profitable Industries Limited as of the date of completion, the financial effects of the acquisition cannot be reasonably estimated.

• (b) On 30th August 2007, CCIL converted part of its holding of the Convertible Note in the principal amount of HK$6,750,000 at a conversion price of HK$0.45 per share. After such conversion, CCIL’s interest in the Company has increased from 44.7% to 46.2%.

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INTERIM DIVIDEND

The Directors have declared an interim dividend of HK0.5 cents (2006: HK1.2 cents) per ordinary share payable on or before 25th October, 2007 to ordinary shareholders whose names appear on the Company’s register of members on 17th October, 2007.

MANAGEMENT DISCUSSION ON RESULTS

During the period under review, turnover of the Group increased by 8% to HK$324 million from HK$299 million in the last corresponding period. However, the Group’s profit margin was dampened by the rise in paper, materials, labour costs and appreciation of Renminbi. Gross profit margin decreased from 27% to 24% and gross profit decreased by 1% to HK$79 million (2006: HK$80 million). Selling expenses increased slightly from HK$27 million to HK$29 million whereas administrative expenses increased from HK$48 million to HK$56 million mainly due to increase in staff, energy and logistic costs. During the period, the Group recorded an increase in fair value of investment properties of HK$11 million.

Taking into account the above, profit before taxation during the period amounted to HK$8 million (2006: HK$9 million) and net profit attributable to ordinary shareholders of the Company for the period amounted to HK$4 million (2006: HK$6 million). EBITDA for the six months ended 30th June, 2007 amounted to HK$28 million.

BUSINESS REVIEW

(a) Printing Division

The printing business of the Group comprised book printing and paper product printing. Book printing business focused mainly on multinational publishers and conglomerates in the USA, Europe, Australia and New Zealand. Paper product printing business concentrated on a comprehensive range of products including packaging products, commercial printing, premium gift products, greeting cards, stationery items and paper bags.

The trading environment of the printing industry continued to be highly competitive. Major materials costs and operating costs were rising which affected the Group’s profit margin during the period. In order to alleviate this difficult business environment, the Group has taken proactive measures including strengthening the sales effort, implementing effective cost control and improving the profit margin.

As regards strengthening the sales effort, the Group has increased its sales force by recruiting more experienced salesmen and marketing personnel to broaden its customer base. The Group has also participated in major printing fairs around the world so as to extend its market presence.

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As regards implementing effective cost control, the Group has reviewed its operation flow and organisational structure. Certain operating functions have been streamlined and relocated to lower cost region in the PRC so as to reduce the overall operating cost of the Group.

As regards improving profit margin, the Group has negotiated and applied price increment to our clients. Besides, the Group has conducted a review of the existing product mix and reduced the orders for low margin products. At the same time the Group continued to concentrate its resources in developing and promoting innovative products with higher margin. In anticipation of production demand for high margin products, the Group has agreed to acquire a piece of industrial land in Shatian, Dongguan, with a site area of 830,000 sq.ft. for expansion. The Group has commenced the design of the factory layout and plans to develop the site into a plant with a total gross floor area of 1,200,000 sq.ft..

(b) Cemetery Division

In September, 2007, the Group has completed the acquisition of an attributable interest of 80.5% in a cemetery business in Zhaoqing, Guangdong, PRC named 四會聚福寶華僑陵園 (Fortune Wealth Memorial Park) at a consideration of HK$350 million. The cemetery operator has been approved by the Ministry of Civil Affairs of the PRC and the Department of Civil Affairs of Guangdong Province, the PRC to develop and operate a cemetery for the lease of burial spaces to the public in the PRC, to overseas Chinese, and to the residents of Hong Kong, Macau and Taiwan for profit purpose. It has also been authorized by the above government authorities to provide services such as the sale of tomb sets, headstones and stelas and the provision of management and burial related services.

The cemetery operator has acquired a site of 518 mu (the “Existing Area”) and reserved an adjacent site of 4,482 mu (the “Reserved Area”) for the development of the cemetery. According to its development blueprint, the two sites will provide a total of 184,000 grave plots and 2,168,000 niches for lease of burial rights upon full development.

Development work on 100 mu within the Existing Area has been completed on which an entrance square with a central fountain and encircled by waterways, a pond, a sales and administrative building, 4 graveyards with 1,783 grave plots and a mausoleum which can accommodate 3,294 niches have been built. Leases for burial rights of the grave plots are now priced within the range from RMB8,800 to RMB398,000 per plot and those for the niches are set within the range from RMB2,800 to RMB8,800 per niche. The entire lease payments for leasing of the grave plots or the niches will be received upfront in one lump sum.

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Entrance of Fortune
Wealth Memorial Park
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The Mausoleum
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Sales and Administrative Building

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Since signing the acquisition agreement of the cemetery business in August, 2007, the Group has commenced detail design work for the development of the remaining 418 mu within the Existing Area and completion is scheduled to be within 3 to 5 years. Upon its completion, approximately 16,200 additional grave plots and approximately 210,700 additional niches will be available for leases. The Group has also commenced the process of obtaining the land use rights of a further 500 mu within the Reserved Area for future development purposes.

On the sale and marketing aspects, the cemetery operator has now established 3 sales offices, one in Hong Kong, one in the Municipality of Sihui and one in Zhaoqing of Guangdong, the PRC. In addition, it has also developed and operated an internet website which provides services such as the establishment of virtual memorial mausoleums, virtual and online broadcasting of ancestors’ memorial services and periodic reports on conditions of burial spaces.

Upon taking over the management of the cemetery business, the Group will allocate resources to strengthen its management team particularly in the area of sales and marketing. The Group will commence work to set up additional sales offices for the cemetery business in Guangzhou, Faoshan and Sanshui to expand its market exposure in Guangdong, the PRC. The Group also plans to develop an extensive agency network in Hong Kong, Macau, Taiwan, Singapore and Malaysia for promoting the services of the cemetery to residents of Chinese origin in those areas. The Group has recently organized a familiarization tour of the cemetery for members of the Funeral Business Association of Hong Kong and will soon commence negotiations of agency arrangements with those interested members. Similar tours will be arranged for participants in the burial related industry for Macau, Taiwan, Singapore and Malaysia in due course.

(c) Property Division

The Group’s property interests comprised Chuang’s Garden, Lambda Building and Yuen Sang Building in Huiyang, Guangdong, the PRC, and 6/F of Chengdu Chuang’s Centre in Chengdu, Sichuan, the PRC, with a total gross floor area of 731,700 sq.ft.. During the period under review, rental income from investment properties amounted to HK$1 million. Subsequent to the balance sheet date, the Group has disposed of or agreed to dispose of all its investment properties and accordingly the Group will cease to hold any material interests in property investment in the PRC.

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LIQUIDITY AND FINANCIAL POSITIONS

As at 30th June, 2007, the Group’s bank balances and cash amounted to HK$124 million while bank borrowings amounted to HK$146 million, of which HK$90 million are due from the second to fifth year. The Group’s net bank borrowings amounted to HK$22 million and its net borrowings to equity ratio (being bank borrowings less bank balances and cash as a ratio to total equity) is 4.5%. Most of the Group’s bank balances and borrowings were denominated in Hong Kong dollars, U.S. dollars and Renminbi, risk in exchange rate fluctuation would not be material. Interest on bank borrowings was charged at variable commercial rates prevailing in Hong Kong and the PRC.

PROSPECTS

In view of the competitiveness in the printing industry, the trading environment for printing business will continue to be challenging in 2007. Nevertheless, the Group will implement effective measures to mitigate the adverse effect of those negative factors against the Group. With our commitments to provide quality service and professional printing solution to our customers, the Group is confident to meet the challenges ahead.

The Group has diversified into the business of development and operation of cemetery in the PRC. We expect that this investment will generate a steady income to the Group. In the long run, the Group will leverage the experience in developing the existing cemetery to identify similar projects elsewhere in the PRC.

DIRECTORS’ INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES

As at 30th June, 2007, the interests and short positions of the Directors and chief executive of the Company in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (“SFO”)) which have been notified to the Company and the Stock Exchange pursuant to the provisions of Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which any such Directors and chief executive of the Company would be taken or deemed to have under such provisions of the SFO) or which were required, pursuant to Section 352 of Part XV of the SFO, to be entered in the register referred to therein or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”), to be notified to the Company and the Stock Exchange were as follows:–

Number of Approximate % ordinary shares of of shareholding Name of Director the Company held Capacity Nature of Interest in the Company Mr. SHEK Lai Him, 10,000 Beneficial Personal interest 0.002% Abraham owner

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Other than as disclosed herein, as at 30th June, 2007, none of the Directors and chief executive of the Company had any interest or short position in shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which had to be notified to the Company and the Stock Exchange pursuant to the provisions of Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO) or which were required, pursuant to Section 352 of Part XV of the SFO, to be entered in the register referred to therein or which were required, pursuant to the Model Code, to be notified to the Company and the Stock Exchange.

SUBSTANTIAL SHAREHOLDERS

So far as is known to the Directors or chief executive of the Company and save as disclosed in the section headed “Directors’ Interests and Short Positions in Shares, Underlying Shares and Debentures” above, as at 30th June, 2007, the interests and short positions of person in the shares and underlying shares of the Company which would fall to be disclosed to the Company pursuant to the provisions of Divisions 2 and 3 of Part XV of the SFO or which were required, pursuant to section 336 of Part XV of the SFO, to be entered in the register referred to therein were as follows:

	Number of
	ordinary shares of
Name of shareholder	the Company held	Capacity
Gold Throne Finance Limited (“Gold Throne”)	348,800,000 (note 1)	Beneficial owner
Chuang’s Consortium International Limited (“CCIL”)	348,800,000 (note 1)	(note 2)
Evergain Holdings Limited (“Evergain”)	348,800,000 (note 1)	(note 2)
Chuang Shaw Swee, Alan (“Mr. Chuang”)	348,800,000 (note 1)	(note 2)
Chong Ho Pik Yu	348,800,000 (note 1)	(note 3)
Keywise Greater China Master Fund	33,158,000 (note 4)	Beneficial owner
Keywise Capital Management (HK) Limited	33,158,000 (note 4)	Investment Manager
UBS AG	33,158,000 (note 4)	Person having a
		security interest

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Notes:

1. Such interests represented 65.28% of the issued ordinary share capital and comprised 238,800,000 shares and 110,000,000 conversion shares to be issued upon the exercise of conversion rights attached to the convertible note held by Gold Throne, a wholly-owned subsidiary of CCIL.

2. Such interests arose through the interests in the relevant shares owned by Gold Throne. Evergain, a company beneficially owned by Mr. Chuang, is entitled to exercise or control the exercise of one third or more of the voting power in general meetings of CCIL.

3. Such interests arose by attribution through her spouse, Mr. Chuang.

4. Such interests represented approximately 6.21% of the issued ordinary share capital.

Save as disclosed above, as at 30th June, 2007, there was no other person who was recorded in the register of the Company as having interests or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were required, pursuant to section 336 of Part XV of the SFO, to be entered in the register referred to therein.

SHARE OPTION SCHEME

On 13th December, 2001, a share option scheme (the “2001 Scheme”) was adopted by the Company. The purpose of the 2001 Scheme is to recognise the contribution of the employees, including Directors of the Company and its subsidiaries (the “Eligible Persons”), to the growth of the Group and to further motivate the Eligible Persons to continue to contribute to the Group’s long term prosperity.

Under the 2001 Scheme which is valid and effective for a term of ten years from the date of its adoption, the Directors of the Company may grant options to the Eligible Persons to subscribe for ordinary shares in the Company at a price to be notified by the Directors and to be no less than the higher of: (i) the closing price of the Company’s ordinary shares as stated in the daily quotation sheet issued by the Stock Exchange on the day of offer; (ii) the average closing price of the Company’s ordinary shares as stated in the daily quotation sheets issued by the Stock Exchange for the five trading days immediately preceding the date of offer; and (iii) the nominal value of the Company’s ordinary shares. The number of ordinary shares issued and to be issued upon exercise of the options granted to any individual in any 12-month period is not permitted to exceed 1 percent of the issued ordinary share capital of the Company at any point in time, without prior approval from the Company’s shareholders. The maximum number of ordinary shares in respect of which options may be granted under the 2001 Scheme and any other share option schemes of the Company shall not exceed 30 percent of the issued ordinary share capital of the Company from time to time.

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Options granted under the 2001 Scheme must be taken up within 28 days from the date of grant, upon payment of a nominal price. Options may be exercised at any time after their date of acceptance, but none of them can be exercised later than ten years from their date of acceptance.

No options have been granted under the 2001 Scheme since its adoption.

CORPORATE GOVERNANCE

The Company has complied throughout the six months ended 30th June, 2007 with the code provisions set out in the Appendix 14 – Code on Corporate Governance Practices of the Listing Rules.

The Audit Committee has been established by the Company to review and supervise the Company’s financial reporting process and internal controls, and review the relationship with auditors. The Audit Committee has held meetings in accordance with the relevant requirements and has reviewed the results for the six months ended 30th June, 2007. The current members of the Audit Committee are three Independent NonExecutive Directors, Mr. Shek Lai Him, Abraham, Dr. Li Sau Hung, Eddy and Mr. Yau Chi Ming and a Non-Executive Director, Mr. Dominic Lai.

The Company has adopted the Model Code (the “Model Code”) contained in Appendix 10 of the Listing Rules. Having made specific enquiries of all Directors of the Company, the Company received confirmations from all Directors that they have complied with the required standard set out in the Model Code.

The interim results have been reviewed by the Company’s external auditors in accordance with Hong Kong Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the HKICPA.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES

During the six months ended 30th June, 2007, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities.

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CLOSING OF REGISTER

The register of members will be closed from Monday, 15th October, 2007 to Wednesday, 17th October, 2007, both days inclusive, during which period no transfer of shares will be effected. In order to qualify for the interim dividend, all transfers, accompanied by the relevant share certificates, must be lodged for registration with the Company’s share registrars in Hong Kong, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, Hopewell Centre, 183 Queen’s Road East, Hong Kong, by no later than 4:30 p.m. on Friday, 12th October, 2007.

STAFF

As at 30th June, 2007, the Group, including its subcontracting processing plants, employed approximately 5,300 staff and workers, with their remuneration normally reviewed annually. The Group also provides its staff with other benefits including yearend double-pay, discretionary bonus, contributory provident fund, share options and medical insurance. Staff training is also provided as and when required.

DISCLOSURE PURSUANT TO RULE 13.21 OF THE LISTING RULES

As at 30th June, 2007, the Group had certain banking facilities with an aggregate amount of HK$64.3 million (the “Banking Facilities”), comprising a term loan, an overdraft facility and other trade related facilities, which required CCIL to remain as the single largest shareholder of the Company at all time during the subsistence of the Banking Facilities.

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GENERAL

As at the date of this report, Mr. Hung Ting Ho, Richard, Mr. Kwong Tin Lap, Mr. Kwok Chi Fai, Miss. Li Mee Sum, Ann and Mr. Wong Chi Sing are Executive Directors, Mr. Dominic Lai is a Non-Executive Director, Mr. Shek Lai Him, Abraham, Dr. Li Sau Hung, Eddy and Mr. Yau Chi Ming are Independent Non-Executive Directors of the Company.

By Order of the Board of Midas International Holdings Limited

Hung Ting Ho, Richard Chairman

Hong Kong, 19th September, 2007

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