JD Logistics, Inc. - Proxy Solicitation & Information Statement 2003

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Midas International Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser, transferee or to the bank manager, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

This circular is not an offer of, nor is it calculated to invite offers for, securities of Midas International Holdings Limited.

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CONVERSION OF PREFERENCE SHARES BY GOLD THRONE FINANCE LIMITED, A WHOLLY OWNED SUBSIDIARY OF CHUANG’S CHINA INVESTMENTS LIMITED; APPLICATION FOR WHITEWASH WAIVER BY GOLD THRONE FINANCE LIMITED; DECLARATION OF CONDITIONAL SPECIAL DIVIDEND; AND GENERAL MANDATES TO ISSUE SECURITIES AND TO REPURCHASE SHARES

Financial adviser to Chuang’s China Investments Limited

SOMERLEY LIMITED

Independent financial adviser to the Independent Board Committee

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A letter of advice from Tai Fook Capital Limited to the Independent Board Committee containing its opinion regarding the Whitewash Waiver is set out on pages 14 to 27 of this circular. The recommendation of the Independent Board Committee to the Independent Shareholders is set out on page 13 of this circular.

A notice convening an extraordinary general meeting of Midas International Holdings Limited to be held at 10:00 a.m. on Monday, 30th June, 2003 at 20th Floor, Gloucester Tower, The Landmark, Central, Hong Kong is set out on pages 92 to 95 of this circular. A form of proxy for use at the extraordinary general meeting is enclosed. Whether or not you intend to attend the meeting, you are requested to complete the accompanying form of proxy and return it in accordance with the instructions printed thereon as soon as possible to the Company’s registrars in Hong Kong, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong and in any event not less than 48 hours before the time appointed for the holding of the meeting or any adjourned meeting. Completion and return of the form of proxy will not preclude you from attending and voting at the meeting or any adjourned meeting should you so wish.

12th June, 2003

* For identification only

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Expected timetable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
The Concession Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
The Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Shareholding structure of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Information on CCIL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Information on the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Reasons for the Concession Agreement and the Conversion . . . . . . . . . . . . . . . . . . . . . .	10
Takeovers Code implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Future intentions of CCIL on the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Conditional Special Dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
General mandates to issue securities and to repurchase Shares . . . . . . . . . . . . . . . . . . .	11
EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Further information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Letter of advice from Tai Fook Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Appendix I – Financial information on the Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	28
Appendix II – Property valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	66
Appendix III – Explanatory statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	83
Appendix IV – General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	85
Notice of EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	92

DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions have the following meanings:–

“Announcement”	the joint announcement dated 22nd May, 2003 made by the
	Company and CCIL in relation to, among other things, the
	Concession Agreement and the Whitewash Waiver
“associate(s)”	has the meaning ascribed to it under the Listing Rules
“Board”	board of Directors
“CCIL”	Chuang’s China Investments Limited, a company incorporated
	in Bermuda with limited liability whose securities are listed
	on the Stock Exchange
“CCIL Directors”	directors of CCIL
“CCIL Group”	CCIL and its subsidiaries
“Chuang’s Consortium”	Chuang’s Consortium International Limited, a company
	incorporated in Bermuda with limited liability whose securities
	are listed on the Stock Exchange
“Completion”	completion of the Concession Agreement
“Concessions”	concessions offered by Gold Throne to the Company (upon the
	Conversion pursuant to the Concession Agreement)
“Concession Agreement”	an agreement dated 22nd May, 2003 entered into between Gold
	Throne and the Company in relation to the Concessions offered
	by Gold Throne to the Company, and the Conversion
“Conditional Special Dividend”	a conditional special dividend of HK$0.012 per Share declared
	by the Directors to be payable to the Shareholders whose names
	appear on the register of members of the Company on the
	Record Date
“Conversion”	conversion of 72,000,000 convertible Series A Preference
	Shares pursuant to the terms of the Concession Agreement
“Conversion Shares”	144,000,000 new Shares to be issued by the Company upon
	completion of the Conversion
“Director(s)”	director(s) of the Company
“DTZ”	DTZ Debenham Tie Leung Limited, an independent firm of
	professional valuers
“EGM”	an extraordinary general meeting of the Company to be
	convened to consider and, if thought fit, approve, among other
	things, the Whitewash Waiver

– 1 –

DEFINITIONS

“Executive”

the Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director

“General Mandates” the Issue Mandate and the Repurchase Mandate
“Gold Throne” Gold Throne Finance Limited, a company incorporated in the British Virgin Islands with limited liability, a wholly owned subsidiary of CCIL and the holder of the Preference Shares
“Hong Kong” the Hong Kong Special Administrative Region of the PRC
“Independent Board Committee” the independent committee of the Board, comprising Mr. Shek Lai Him, Abraham, which has been established for the purpose of advising the Independent Shareholders in relation to the Whitewash Waiver
“Independent Shareholders” Shareholders other than CCIL, Gold Throne and persons acting in concert with them (as defined under the Takeovers Code) or their respective associates or persons otherwise involved in or interested in the Concession Agreement and the Conversion
“Initial Announcement” the joint announcement dated 24th March, 2003 made by the Company and CCIL in relation to, among other things, the intention of CCIL regarding the conversion of Series A Preference Shares
“Issue Mandate” a mandate proposed to be sought at the EGM to authorize the Directors to allot and issue new Shares or convertible securities or similar rights to subscribe for any Shares or convertible securities of the Company in the manner set out in Ordinary Resolutions numbered 2 and 4 in the notice of the EGM
“Latest Practicable Date” 9th June, 2003, being the latest practicable date for ascertaining certain information for inclusion in this circular
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange
“Midas” or “Company” Midas International Holdings Limited, a company incorporated in the Cayman Islands with limited liability whose securities are listed on the Stock Exchange
“Midas Group” or “Group” the Company and its subsidiaries
“Preference Shares” Series A Preference Shares and Series B Preference Shares “PRC” the People’s Republic of China “Record Date” 30th June, 2003, being the date by reference to which entitlements to the Conditional Special Dividend are determined

– 2 –

DEFINITIONS

“Repurchase Mandate”	a general and unconditional mandate to be granted to the
	Directors to exercise the powers of the Company to repurchase
	Shares in the manner set out in Ordinary Resolution numbered
	3 in the notice of the EGM
“Series A Preference Shares”	72,000,000 convertible non-voting redeemable preference
	shares with par value of HK$0.01 each in the capital of the
	Company
“Series B Preference Shares”	254,166,667 non-convertible non-voting redeemable preference
	shares with par value of HK$0.01 each in the capital of the
	Company
“SFC”	the Securities and Futures Commission
“SFO”	Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong)
“Shareholder(s)”	holder(s) of Shares
“Share(s)”	ordinary share(s) of HK$0.10 each in the capital of the
	Company
“Share Option Scheme”	the share option scheme of the Company adopted by the
	Company on 13th December, 2001
“Somerley”	Somerley Limited, a licensed corporation under the SFO and
	the financial adviser to CCIL in connection with the Whitewash
	Waiver and the Conversion
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Tai Fook Capital”	Tai Fook Capital Limited, a licensed corporation under
	transitional arrangement to carry out the Type 6 regulated
	activity for the purpose of the SFO and the independent
	financial adviser appointed by the Company to advise the
	Independent Board Committee
“Takeovers Code”	the Hong Kong Code on Takeovers and Mergers
“Whitewash Waiver”	a waiver from the obligation of Gold Throne, which may
	otherwise arise as a result of the Conversion, to make a
	mandatory general offer for the Shares under the Takeovers
	Code pursuant to Note 1 to the Notes on Dispensations from
	Rule 26 of the Takeovers Code
“HK$”	Hong Kong dollars

– 3 –

EXPECTED TIMETABLE

2003

Last day of dealings in the Shares cum

the Conditional Special Dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 24th June

Commencement of dealings in the Shares

on an ex-Conditional Special Dividend basis . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 25th June Latest time for lodging transfers of Shares to be entitled to the Conditional Special Dividend . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Thursday, 26th June Books closure period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 27th June to Monday, 30th June Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 30th June EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10:00 a.m. on Monday, 30th June

Remittance for the Conditional Special Dividend to be posted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . on or before Monday, 21st July

– 4 –

LETTER FROM THE BOARD

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Executive Directors:

Mr. CHAN Sheung Chiu (Chairman) Mr. KWONG Tin Lap (Managing Director)

Mr. KWOK Chi Fai (Deputy Managing Director) Ms. LI Mee Sum, Ann Mr. TANG Chow Ming, Paul

Registered office: Century Yard, Cricket Square Hutchins Drive PO Box 2681GT, George Town Grand Cayman, Cayman Islands British West Indies

Non-executive Director:

Mr. LEE Sai Wai

Independent Non-executive Directors: Mr. Dominic LAI Mr. SHEK Lai Him, Abraham

Head office and principal place of business: 1st Floor, 100 Texaco Road Tsuen Wan New Territories Hong Kong

12th June, 2003

To the Shareholders

Dear Sir or Madam,

INTRODUCTION

The Directors announced that on 22nd May, 2003, the Company and Gold Throne entered into the Concession Agreement pursuant to which Gold Throne would convert 72,000,000 Series A Preference Shares and offer the Concessions to the Company subject to certain conditions.

Pursuant to the Concession Agreement, (i) Gold Throne agreed that the Company should redeem the Series B Preference Shares in the amount of approximately HK$4 million for an aggregate consideration of HK$1.00; (ii) Gold Throne would waive any dividend payable on the Series A Preference Shares from January to June 2003 which Gold Throne would otherwise be entitled to as a holder of the Series A Preference Shares; and (iii) the Directors declared the Conditional Special Dividend of HK$0.012 per Share.

* For identification only

– 5 –

LETTER FROM THE BOARD

Pursuant to the Takeovers Code, the Conversion will give rise to an obligation on the part of Gold Throne to make a general offer for all the issued Shares unless the Whitewash Waiver is granted by the Executive. The Concession Agreement is conditional on, among other things, the Whitewash Waiver being granted by the Executive and being approved by the Independent Shareholders at the EGM with the relevant resolution to be taken by way of poll. An application has been made on behalf of Gold Throne to the Executive for the Whitewash Waiver.

Somerley has been appointed as the financial adviser to advise CCIL in connection with the Whitewash Waiver and the Conversion. The executive Directors, Messrs. Chan Sheung Chiu, Kwong Tin Lap, Kwok Chi Fai and Tang Chow Ming, Paul are salaried employees of the Group and Mr. Chan Sheung Chiu and Ms. Li Mee Sum, Ann are both directors of Gold Throne and executive directors of CCIL. The non-executive Directors, Mr. Lee Sai Wai is an executive director of CCIL and Mr. Dominic Lai is a senior partner of Messrs. Iu, Lai & Li, the legal advisers to the Company. Accordingly, none of the above Directors are considered to be independent under the Takeovers Code insofar as the Whitewash Waiver is concerned and it is therefore considered inappropriate for any of them to give any advice or recommendation to the Independent Shareholders in this regard. Accordingly, the Independent Board Committee, comprising Mr. Shek Lai Him, Abraham, has been appointed to consider the Whitewash Waiver and to advise the Independent Shareholders thereon. Tai Fook Capital has been appointed as the independent financial adviser to advise the Independent Board Committee on the Whitewash Waiver.

The Directors also intend to propose resolutions at the EGM to renew the Directors’ general mandates to issue securities and to repurchase Shares so that the number of securities which are permitted to be issued and the number of Shares which are permitted to be repurchased under the General Mandates are calculated by reference to the Company’s issued ordinary share capital following Completion.

The purpose of this circular is to provide you with further information on the Concession Agreement and the Whitewash Waiver, to set out the advice of Tai Fook Capital to the Independent Board Committee and the recommendation of the Independent Board Committee to the Independent Shareholders in respect of the Whitewash Waiver and to give you notice of the EGM at which meeting necessary resolutions will be proposed to seek your approval of the Whitewash Waiver and the General Mandates.

THE CONCESSION AGREEMENT

Terms of the Concession Agreement:

Pursuant to the Concession Agreement, Gold Throne will convert all Series A Preference Shares and has agreed on the following terms:

(i) Redemption of HK$4 million in face value of Series B Preference Shares at HK$1.00

Gold Throne agreed that the Company should redeem 6,666,667 Series B Preference Shares with a par value (plus premium) of approximately HK$4 million at an aggregate consideration of HK$1.00. This represents a benefit for the Company and the Shareholders of a reduction in redemption obligation of approximately HK$4 million and an annual saving of dividend on the redeemed Series B Preference Shares of HK$100,000 per year for up to 4 years. The remaining 247,500,000 Series B Preference Shares after the redemption will continue to be held by Gold Throne;

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LETTER FROM THE BOARD

(ii) Waiving of Series A Preference Share dividend

Gold Throne will waive dividend payment for all Series A Preference Shares for the period from January 2003 to June 2003 which Gold Throne would otherwise be entitled to as a holder of the Series A Preference Shares. This represents a saving for the Company and the Shareholders of HK$540,000. However, the Shares to be issued on the Conversion will rank for any 2003 interim dividend of the Company (but not the Conditional Special Dividend). As at the Latest Practicable Date, save for the Conditional Special Dividend, no 2003 interim dividend had been declared by the Company; and

(iii) Declaration of Conditional Special Dividend

The Directors declared the Conditional Special Dividend of HK$0.012 per Share to be paid to the Shareholders. The distribution of the Conditional Special Dividend shall be conditional upon Completion and shall take place within 3 weeks after Completion. The Shares to be issued on the Conversion will not rank for any Conditional Special Dividend.

Conditions of the Concession Agreement:

(a) the Executive granting Gold Throne the Whitewash Waiver;
(b) the Independent Shareholders approving at the EGM (with the resolution to be taken by poll) the Whitewash Waiver granted by the Executive; and
(c) approval (if any) to the transactions contemplated herein from all regulatory authorities.

The above conditions are not waivable. If the above conditions are not fulfilled on or before 30th August, 2003 (or such other date as may be agreed by Gold Throne and the Company), all rights, obligations and liabilities of the parties under the Concession Agreement shall lapse and terminate. In such event, CCIL still intends to convert the Series A Preference Shares but will reconsider the timing, extent and circumstances of such conversion, in which case, a general offer may or may not be made for the Shares. If CCIL converts the Series A Preference Shares to such extent that results in a general offer being triggered, CCIL has stated that such conversion will only take place on the basis that the financial adviser is satisfied that CCIL has sufficient financial resources to satisfy such offer.

THE CONVERSION

Upon Completion, Gold Throne will serve a notice to the Company to convert 72,000,000 Series A Preference Shares. As at the Latest Practicable Date, the Company had in issue an aggregate of 390,290,068 Shares and 326,166,667 Preference Shares. The Preference Shares carry a fixed dividend at 2.5% per annum and are redeemable by the Company in multiples of HK$2.5 million together with any unpaid dividend in cash at HK$0.60 per Preference Share. The Series B Preference Shares are redeemable by the Company at any time up to 14th December, 2006 while the non-converted Series A Preference Shares shall be redeemable only on 14th December, 2006. All the Preference Shares are held by Gold Throne.

– 7 –

LETTER FROM THE BOARD

Out of the existing issued Preference Shares, 72,000,000 Series A Preference Shares are convertible into 144,000,000 Shares at any time during a period of 5 years until 13th December, 2006. This represents a conversion ratio of one Series A Preference Share into two Shares (subject to adjustment), which represents an equivalent conversion price of HK$0.30 per Share. The remaining 254,166,667 Series B Preference Shares are not convertible.

SHAREHOLDING STRUCTURE OF THE COMPANY

The following table sets out the existing holding of Shares by CCIL (through its interests in Gold Throne) and the other Shareholders and their shareholding after the Conversion:

Holders of Shares Gold Throne_(Note a) MPL(Note b) Gold Throne and concert parties A Director and a director of a subsidiary(Notes c and d)_ Public	Existing Shareholding 84,000,000 25,000,000 109,000,000 240,000 281,050,068 390,290,068	Shareholding after % the Conversion 21.52 228,000,000 6.41 25,000,000 27.93 253,000,000 0.06 240,000 72.01 281,050,068 100 534,290,068	% 42.67 4.68
			47.35 0.05 52.60
			100

Notes:

(a) Gold Throne is a company wholly owned by CCIL.
(b) Moscow Profits Limited (“MPL”) is a company indirectly owned as to 66% by Mr. Alan Chuang Shaw Swee and as to 34% by Mrs. Alice Siu Chuang Siu Suen, both being substantial shareholders and directors of Chuang’s Consortium, the controlling shareholder of CCIL. MPL is a party acting in concert with Gold Throne.
(c) A non-executive Director, Mr. Shek Lai Him, Abraham, holds 10,000 Shares. A director of a subsidiary of the Company, Mr. Lam Wai Man, holds 230,000 Shares. Mr. Shek and Mr. Lam have no relationship with CCIL, Gold Throne, MPL and their concert parties and are not acting in concert with any of them.
(d) As set out in the Announcement, Mr. Lam Wai Man held 530,000 Shares as at the date of the Announcement. Subsequently, Mr. Lam disposed of an aggregate of 300,000 Shares between 28th May, 2003 and 3rd June, 2003. Accordingly, as at the Latest Practicable Date, Mr. Lam held 230,000 Shares.

INFORMATION ON CCIL

CCIL is principally engaged in property development and investment, manufacturing and sale of watches and watch components, securities investments and trading, and the provision of information technology services. Through the interests held in the Company, CCIL is involved in books printing and paper products printing.

INFORMATION ON THE COMPANY

The Group is principally engaged in printing and property investment. The printing business focuses on two major sectors: books and paper products printing. The Books Printing Division is the Group’s exporting arm serving clients in the United States, Europe, Australia and New Zealand. The Paper Products Printing Division provides services to manufacturers in the PRC and greeting cards and paper products printing services to customers overseas and in Hong Kong. The Group’s property investments provide a stable source of rental income.

– 8 –

LETTER FROM THE BOARD

For the first four months in 2003, the Group’s turnover of printing business amounted to about HK$143 million, representing an increase of approximately 35% when compared to HK$106 million in the corresponding period in 2002. As set out in the annual report for the year ended 31st December, 2002, the Group planned to invest HK$60 million to expand its plant and machineries in the PRC. Such expansion plans have been carried out as scheduled.

The extension of the Group’s books printing plant in Yuanzhou, the PRC, has recently been completed. The total gross floor area of the Yuanzhou plant has increased from 260,000 sq. ft. to 410,000 sq. ft., of which an additional 75,000 sq. ft. are used for hand-assembly works. A new 8-colour perfector has been installed and put into full use in the Yuanzhou plant. Following these expansions, the printing capacity of the Yuanzhou plant will be enhanced by more than 30% in order to accommodate the sales of the Group.

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Yuanzhou plant extension

The Group’s paper products printing plant in Dongguan occupies a gross floor area of 410,000 sq. ft.. In accordance with its expansion plans, a 6-colour full-size printing press has been installed in the Dongguan plant to increase the printing capacity in paper products printing.

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Lever plant in Dongguan

To reduce manufacturing cost, the Group has relocated all plant and machinery from its Tsuen Wan plant to its leased printing premises in Dongguan, the Group’s Lever plant, which occupies a gross floor area of 250,000 sq. ft. and is adjacent to the Dongguan plant. Following the relocation, the Lever plant will be fully equipped to provide printing services for books as well as paper products.

– 9 –

LETTER FROM THE BOARD

REASONS FOR THE CONCESSION AGREEMENT AND THE CONVERSION

According to the audited consolidated results of the Group for the year ended 31st December, 2002 as set out in Appendix I to this circular, the turnover of the Group has increased to HK$574.1 million for the year ended 31st December, 2002 from HK$513.5 million for the year ended 31st December, 2001. The net profit for the year ended 31st December, 2002 was HK$50.7 million, representing an approximately 81.1% increase compared to HK$28.0 million for the year ended 31st December, 2001.

At the time when the Preference Shares were issued in December 2001, it was the intention of CCIL to maintain a shareholding in the Company which, when aggregated with Shares held by persons acting in concert with CCIL, would amount to less than 30% (or such other percentage as stipulated under the Takeovers Code from time to time) and CCIL had no intention to convert the Series A Preference Shares to such an extent that would result in Gold Throne incurring an obligation to make a general offer for the Shares. In view of the financial performance of the Group for the year ended 31st December, 2002, the CCIL Directors have reviewed its previous intentions and consider that it is in the interests of CCIL and its shareholders to procure Gold Throne to convert, subject to the conditions of the Concession Agreement being fulfilled, all the Series A Preference Shares to increase its stake in the Company. The CCIL Directors believe that an increased holding in the Shares will enable the CCIL Group to participate more fully in the future of the Company.

Pursuant to the Concession Agreement, Gold Throne will offer the Concessions to the Company (subject to conditions as set out above). The Concessions are beneficial to the Group and the Shareholders as a whole. By redeeming an amount of approximately HK$4 million in face value of Series B Preference Shares by the Company and the waiver by Gold Throne of the dividend payable on the Series A Preference Shares, the Company will recognise an aggregate monetary benefit of approximately HK$4.9 million. Accordingly, the Directors consider that the Conversion is in the interests of the Company and the Shareholders as a whole. The Conversion will also release the Company from the obligation to repay the Series A Preference Shares in the aggregate face value of HK$43.2 million and increase the ordinary issued share capital by the same amount. The Directors believe that the additional ordinary share capital generated will strengthen the net asset base of the Group. Pursuant to the possible distribution of the Conditional Special Dividend detailed below, the Directors will distribute substantially all the immediate cash benefits of approximately HK$4.6 million from the Conversion to the Shareholders if the Concession Agreement is completed.

TAKEOVERS CODE IMPLICATIONS

Upon completion of the Conversion, the aggregate interest of Gold Throne and its concert parties in the Company will increase from approximately 27.9% to approximately 47.4% of the enlarged issued Shares. As a result, Gold Throne will be obliged under Rule 26 of the Takeovers Code to make a mandatory general offer for all the Shares not already owned by Gold Throne and its concert parties upon completion of the Conversion. Any general offer extended as a result of the Conversion would be made at an expected offer price of HK$0.30 per Share. An application has been made to the Executive for the granting of the Whitewash Waiver and the Executive has agreed, subject to the approval of the Independent Shareholders with the relevant resolution to be taken by way of poll, to waive any obligation of Gold Throne and parties acting in concert with it to make a general offer which will otherwise arise as a result of the completion of the Conversion.

Gold Throne and its concert parties have confirmed that they had not dealt in the Shares for the six months period prior to the date of the Initial Announcement and up to the Latest Practicable Date.

– 10 –

LETTER FROM THE BOARD

FUTURE INTENTIONS OF CCIL ON THE COMPANY

It is the intention of CCIL to maintain the existing principal activities of the Company, and CCIL has no intention of injecting, nor procuring the disposal of any material assets or businesses of, the Group immediately after the Conversion. CCIL has no plan for any redeployment of fixed assets of the Company. CCIL intends to hold its interest in the Company as a long term investment and it is the intention of CCIL that the employment of the existing employees of the Group will not be altered save for the natural turnover of the employees of the Group.

The Stock Exchange has stated that, if the Company remains a listed company, any future injections into or disposals by the Company will be subject to the provisions of the Listing Rules. Pursuant to the Listing Rules, the Stock Exchange has the discretion to require the Company to issue a circular to the Shareholders irrespective of the size of the proposed transaction, particularly when such proposed transaction represents a departure from the principal activities of the Group following Completion. The Stock Exchange also has the power, pursuant to the Listing Rules, to aggregate a series of acquisitions, or disposals by the Company and any such acquisitions or disposals may, in any event, result in the Company being treated as a new applicant for listing and subject to the requirement for new applicants as set out in the Listing Rules.

Further announcement will be made by the Company in compliance with the Listing Rules in the event of any changes to the nature of the principal business of the Group or any injections or disposals of assets or businesses by the Group.

Shareholders and investors should note that the Concession Agreement is subject to certain conditions and may or may not complete. In the event that the Concession Agreement cannot become unconditional and is not completed, CCIL still intends to convert the Series A Preference Shares but will reconsider the timing, extent and circumstances of such conversion, in which case, a general offer may or may not be made for the Shares. If CCIL converts the Series A Preference Shares to such extent that results in a general offer being triggered, CCIL has stated that such conversion will only take place on the basis that the financial adviser is satisfied that CCIL has sufficient financial resources to satisfy such offer.

CONDITIONAL SPECIAL DIVIDEND

The Directors declared the Conditional Special Dividend of HK$0.012 per Share to be payable to the Shareholders whose names appear on the register of members of the Company on the Record Date. For the purpose of ascertaining the entitlements to the Conditional Special Dividend, the register of members of the Company will be closed from Friday, 27th June, 2003 to Monday, 30th June, 2003, both days inclusive, during which period no transfers of Shares will be registered. Remittance for the Conditional Special Dividend is expected to be despatched to the Shareholders on or before 21st July, 2003.

In order to be eligible to receive the Conditional Special Dividend, all transfers accompanied by the relevant share certificates must be lodged with the registrars of the Company in Hong Kong, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong, not later than 4:00 p.m. on Thursday, 26th June, 2003.

GENERAL MANDATES TO ISSUE SECURITIES AND TO REPURCHASE SHARES

At the EGM, ordinary resolutions will be proposed to the Shareholders to grant the General Mandates to the Directors to exercise all powers of the Company: (i) to allot, issue and deal with additional new Shares or convertible securities of the Company or similar rights to subscribe for any new Shares or convertible securities of the Company up to an amount not exceeding 20% of the aggregate of the nominal amount of the issued ordinary share capital of the Company at the

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LETTER FROM THE BOARD

date of the passing of Ordinary Resolution numbered 2 set out in the notice of the EGM, and if the Conversion takes place, as enlarged by the allotment and issue of the Shares upon the Conversion being completed; (ii) to repurchase on the Stock Exchange fully paid-up Shares up to a maximum of 10% of the aggregate nominal amount of the issued ordinary share capital of the Company as at the date of the passing of Ordinary Resolution numbered 3 set out in the notice of the EGM, and if the Conversion takes place, as enlarged by the allotment and issue of the Shares upon completion of the Conversion; and (iii) to extend the Issue Mandate by an amount representing the aggregate nominal amount of the Shares repurchased by the Company pursuant to and in accordance with the Repurchase Mandate.

An explanatory statement as required under the Listing Rules to provide the requisite information in respect of the Repurchase Mandate is set out in Appendix III to this circular.

EGM

Set out in this circular is a notice convening the EGM which will be held at 10:00 a.m. on Monday, 30th June, 2003 at 20th Floor, Gloucester Tower, The Landmark, Central, Hong Kong at which resolutions will be proposed to approve the Whitewash Waiver (by way of poll) and the General Mandates.

The form of proxy for use by the Shareholders at the EGM is enclosed with this circular. Whether or not you intend to attend the EGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return it as soon as possible to the Company’s registrars in Hong Kong, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong, and in any event not less than 48 hours before the time appointed for the holding of the EGM or any adjourned meeting thereof. Completion and return of a form of proxy will not preclude you from attending and voting in person at the EGM or any adjourned meeting should you so desire.

Gold Throne and its concert parties, who as at the Latest Practicable Date, together held approximately 109 million Shares, representing approximately 27.9% of the existing issued ordinary share capital of the Company, and their respective associates will abstain from voting on the resolution to approve the Whitewash Waiver at the EGM.

RECOMMENDATION

Your attention is drawn to the letter from the Independent Board Committee to the Independent Shareholders set out on page 13 of this circular. The Independent Board Committee, taking into account the advice of Tai Fook Capital, the text of which is set out on pages 14 to 27 of this circular, considers that the Whitewash Waiver is fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the resolution set out in the notice of the EGM to approve the Whitewash Waiver.

FURTHER INFORMATION

Your attention is drawn to the letter of advice from Tai Fook Capital to the Independent Board Committee and the additional information set out in the appendices to this circular.

Yours faithfully, For and on behalf of the Board KWONG Tin Lap Managing Director

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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12th June, 2003

To the Independent Shareholders

Dear Sir or Madam,

WHITEWASH WAIVER

As the Independent Board Committee, I have been appointed by the Company to advise you in connection with the Whitewash Waiver, details of which are set out in the letter from the Board contained in the circular to the Shareholders dated 12th June, 2003 (the “Circular”), of which this letter forms part. Terms defined in the Circular shall have the same meanings when used herein unless the context otherwise requires.

Having considered the Whitewash Waiver and the advice of Tai Fook Capital in relation thereto as set out on pages 14 to 27 of the Circular, I am of the opinion that the Whitewash Waiver is fair and reasonable so far as the Independent Shareholders are concerned. I therefore recommend that you vote in favour of the ordinary resolution to be proposed at the EGM to approve the Whitewash Waiver.

Yours faithfully, Independent Board Committee Shek Lai Him, Abraham

* For identification only

– 13 –

LETTER OF ADVICE FROM TAI FOOK CAPITAL

The following is the text of a letter of advice received from Tai Fook Capital in respect of the Whitewash Waiver, and is prepared for the purpose of inclusion in this circular:–

==> picture [45 x 45] intentionally omitted <==

26th Floor New World Tower 16-18 Queen’s Road Central Hong Kong

12th June, 2003

To the Independent Board Committee Midas International Holdings Limited

Dear Sirs,

WHITEWASH WAIVER BY GOLD THRONE FINANCE LIMITED

We refer to our appointment as the independent financial adviser to advise the Independent Board Committee in respect of the terms of the Whitewash Waiver, details of which are contained in the circular dated 12th June, 2003 (the “Circular”) to the Shareholders of which this letter forms part. Terms used in this letter shall have the same respective meanings in the Circular unless the context otherwise requires.

As stated in the letter from the Board contained in the Circular, Gold Throne, on 22nd May, 2003, entered into the Concession Agreement with Midas pursuant to which Gold Throne will, subject to the Completion, convert 72,000,000 Series A Preference Shares and offer the Concessions to Midas. As at the Latest Practicable Date, Gold Throne and its concert parties were interested in 109,000,000 Shares, representing approximately 27.93% of the voting rights of Midas. Immediately following completion of the Conversion, Midas will issue 144,000,000 Shares to Gold Throne and the interest of Gold Throne and its concert parties in the voting rights of Midas will be increased to approximately 47.35%. As such, Gold Throne or its concert parties will be obliged under Rule 26 of the Takeovers Code to make a mandatory general offer for all the Shares not already owned by Gold Throne and its concert parties. In this regard, Gold Throne has applied to the Executive for the Whitewash Waiver, which, if granted, would be subject to the approval by the Independent Shareholders (to be taken by way of poll) at the EGM in accordance with the requirements of the Takeovers Code.

In our capacity as the independent financial adviser to the Independent Board Committee, our role is to provide you with an independent opinion and recommendations as to whether the terms of the Whitewash Waiver are fair and reasonable so far as the interest of the Independent Shareholders is concerned. The Independent Board Committee, the composition of which is set out in the letter from the Board contained in the Circular, has also been established to advise the Independent Shareholders in respect of the Whitewash Waiver.

In formulating our recommendations, we have relied on the information and facts supplied and representations expressed by the Directors and/or the management of the Group. We have been advised by the Directors and/or the management of the Group that no material facts have been omitted from the information supplied and representations expressed to us and we are not aware of any facts or circumstances which would render such information and representations untrue, inaccurate or misleading. We have assumed that the information contained and representations

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LETTER OF ADVICE FROM TAI FOOK CAPITAL

made or referred to in the Circular were complete, true and accurate at the time they were made and continue to be so at the date of despatch of the Circular. We have also discussed with the Directors and/or the management of the Group with respect to the terms of and reasons for the terms of the Whitewash Waiver as well as the Concession Agreement, and consider that we have reviewed sufficient information to reach an informed view and have no reason to doubt the completeness, truth or accuracy of the information and facts provided and representations made to us. We have not, however, conducted an independent investigation into the business and affairs of the Group.

PRINCIPAL FACTORS AND REASONS CONSIDERED

Gold Throne and its concert parties were interested in 109,000,000 Shares, representing approximately 27.93% of the voting rights of Midas as at the Latest Practicable Date. Immediately following completion of the Conversion, the interest of Gold Throne and its concert parties in the voting rights of Midas will be increased to approximately 47.35%. Under Rule 26 of the Takeovers Code, Gold Throne and its concert parties will be obliged to make a mandatory general offer for all the Shares other than those already owned by Gold Throne or its concert parties upon completion of the Conversion. In this regard, Gold Throne has applied to the Executive for the Whitewash Waiver. The Whitewash Waiver, if granted by the Executive, will be subject to the approval by the Independent Shareholders (to be taken by way of poll).

It should be noted that if the resolution (to be taken by way of poll) in respect of the Whitewash Waiver is rejected by the Independent Shareholders at the EGM or in the event that the Concession Agreement cannot become unconditional, Gold Throne still intends to convert the Series A Preference Shares but will reconsider the timing, extent and circumstances of such conversion. In other words, it does not necessarily mean that a general offer obligation for Gold Throne will automatically arise if the Whitewash Waiver is rejected. This is because Gold Throne is only obliged to make such general offer in the event that the aggregate voting rights in Midas held by Gold Throne and its concert parties exceed 30% (or such other percentage as stipulated under the Takeovers Code from time to time). On the other hand, Gold Throne will serve a notice to Midas to convert 72,000,000 Series A Preference Shares if the Concession Agreement proceeds to Completion.

In addition, as stated in the letter of the Board in the Circular, even if a general offer is made to the Independent Shareholders as a result of the Conversion, the expected general offer price will be HK$0.30 per Share i.e. the Conversion Price (as defined under the section headed “Background” below). Such price was at a significant discount of approximately 41.2% to the closing price of the Shares of HK$0.510 per Share as quoted on the Stock Exchange as at the Latest Practicable Date. In other words, the general offer, even made, does not appear to be attractive as compared with the closing price of the Shares of HK$0.510 per Share as at the Latest Practicable Date.

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LETTER OF ADVICE FROM TAI FOOK CAPITAL

Since the Concession Agreement forms an integral part of the Whitewash Waiver, in formulating our opinion in respect of the terms of the Whitewash Waiver, we have also considered the terms of the Concession Agreement and the effects of the Conversion on Midas and the Independent Shareholders as a whole. In arriving at our opinion in respect of the terms of the Whitewash Waiver, we have considered, among other things, the following principal factors and reasons:

I. CONCESSION AGREEMENT AND CONVERSION

Background

Business of the Group

The Group is principally engaged in printing and property investments. The printing business focuses on two major sectors: books and paper products printing. The books printing division is the Group’s exporting arm which is serving clients in the United States, Europe, Australia and New Zealand. The paper products printing division of the Group provides services to manufacturers in the PRC, greeting cards and paper products printing services to customers overseas and in Hong Kong. The Group’s property investments provide a stable source of rental income to the Group.

Preference Shares

In Midas’s extraordinary general meeting held on 13th December, 2001, the independent shareholders of Midas approved, among other things, the issue of the Series A Preference Shares (with conversion rights) and the Series B Preference Shares (without conversion rights).

As at the Latest Practicable Date, Midas had, in issue, an aggregate of 390,290,068 Shares and 326,166,667 Preference Shares. The Preference Shares, comprising 72,000,000 Series A Preference Shares and 254,166,667 Series B Preference Shares, carry a fixed dividend at 2.5% per annum on the aggregate face value of HK$0.60 per Preference Share of the outstanding Preference Shares. The 2.5% fixed dividend per annum is payable half-yearly and cumulatively in arrears. All the Preference Shares are redeemable by Midas on or before 14th December, 2006 at HK$0.60 per Preference Share. All the existing issued Preference Shares are held by Gold Throne, which, together with its concert parties, is interested in approximately 27.93% of the existing issued ordinary share capital of Midas as at the Latest Practicable Date.

Out of the existing issued Preference Shares, the 72,000,000 Series A Preference Shares are convertible into 144,000,000 Conversion Shares at any time during a period of 5 years until 13th December, 2006. This represents a conversion ratio of one Series A Preference Share into two Shares (subject to adjustment), which represents an equivalent conversion price of HK$0.30 per Share (the “Conversion Price”). The remaining 254,166,667 Series B Preference Shares are not convertible.

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LETTER OF ADVICE FROM TAI FOOK CAPITAL

The Concession Agreement

On 22nd May, 2003, Midas entered into the Concession Agreement with Gold Throne, details of which are set out in the letter from the Board in the Circular. The Completion is conditional upon, among other things, (i) the Executive granting Gold Throne the Whitewash Waiver; and (ii) the approval of the Whitewash Waiver by the Independent Shareholders at the EGM. Upon Completion, Gold Throne will serve a notice to Midas to convert 72,000,000 Series A Preference Shares into 144,000,000 Shares. The key terms of the Concession Agreement are set out as follows:–

Redemption of approximately HK$4 million in face value of Series B Preference Shares at HK$1.00

Gold Throne conditionally agreed with Midas to redeem 6,666,667 Series B Preference Shares with a par value (plus premium) of approximately HK$4 million (based on 6,666,667 Series B Preference Shares at a face value of HK$0.60 per Series B Preference Share) at a nominal consideration of HK$1.00 (the “HK$4 Million Redemption”). Such arrangement will bring outright future cash saving for Midas of approximately HK$4 million as Midas will be released from the obligation to redeem such “haircut” amount for the Series B Preference Shares in the future. Upon Conversion, Gold Throne will still be interested in the remaining 247,500,000 Series B Preference Shares of aggregate face value of HK$148.5 million, which Midas is obliged to redeem on or before 14th December, 2006 at HK$0.60 per Series B Preference Share.

In addition, Midas would achieve an annual saving of the 2.5% fixed dividend on the 6,666,667 Series B Preference Shares in an amount of approximately HK$100,000 for each of the four consecutive years up to December 2006 as a result of the HK$4 Million Redemption. Accordingly, Midas would achieve an aggregate saving of fixed dividend payment of approximately HK$400,000 throughout the four consecutive years up to December 2006.

Waiving of Series A Preference Shares Dividend

Gold Throne will waive the 2.5% fixed dividend payment for the 72,000,000 Series A Preference Shares for the period from January 2003 up to and including June 2003 upon Completion and the Conversion. This represents a one-off saving of dividend payment for Midas of HK$540,000.

Declaration of the Conditional Special Dividend

The Directors declared the Conditional Special Dividend of HK$0.012 per Share to be paid to the Shareholders subject to Completion. The distribution of the Conditional Special Dividend shall take place within three weeks after the Completion. In any event, the Conversion Shares to be issued will not rank for any Conditional Special Dividend.

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LETTER OF ADVICE FROM TAI FOOK CAPITAL

Conversion Price

Comparison of Conversion Price to the market prices of the Shares prior to the issue of the Preference Shares:

The Conversion Price of the 72,000,000 Series A Preference Shares is HK$0.30 per Conversion Share (subject to adjustment), representing:

(i) a premium of approximately 51.5% over the closing price of the Shares of HK$0.198 per Share as quoted on the Stock Exchange as at 29th October, 2001, being the date of the subscription agreement entered into between Midas and CCIL which involved the issue of the Preference Shares;
(ii) a premium of approximately 50.0% over the average of the closing prices of the Shares of approximately HK$0.200 per Share as quoted on the Stock Exchange for the 30 consecutive trading days ended up to and including 29th October, 2001;
(iii) a premium of approximately 42.2% over the average of the closing prices of the Shares of approximately HK$0.211 per Share as quoted on the Stock Exchange for the 60 consecutive trading days ended up to and including 29th October, 2001; and
(iv) a premium of approximately 57.9% over the closing price of the Shares of HK$0.190 per Share as quoted on the Stock Exchange as at 13th December, 2001, being the date on which the issue of the Preference Shares was approved by the independent shareholders of Midas.

Comparison of Conversion Price to the prevailing market prices of the Shares:

The Conversion Price of the 72,000,000 Series A Preference Shares is HK$0.30 per Conversion Share (subject to adjustment), representing:

(i) a discount of approximately 34.1% to the closing price of the Shares of HK$0.455 per Share as quoted on the Stock Exchange as at 22nd May, 2003, being the date of the Concession Agreement;
(ii) a discount of approximately 30.1% to the average of the closing prices of the Shares of approximately HK$0.429 per Share as quoted on the Stock Exchange for the 10 consecutive trading days ended up to and including 22nd May, 2003;
(iii) a discount of approximately 28.2% to the average of the closing prices of the Shares of approximately HK$0.418 per Share as quoted on the Stock Exchange for the 30 consecutive trading days ended up to and including 22nd May, 2003;
(iv) a discount of approximately 66.7% to the pro forma unaudited adjusted consolidated net tangible asset value of the Group per Share before the Conversion of approximately HK$0.90; and

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LETTER OF ADVICE FROM TAI FOOK CAPITAL

(v) a discount of approximately 41.2% to the closing price of the Shares of HK$0.510 per Share as quoted on the Stock Exchange as at the Latest Practicable Date.

The following chart sets out the daily turnover and closing prices of the Shares as quoted on the Stock Exchange during the six months period commencing from 10th December, 2002 up to and including the Latest Practicable Date (the “Comparison Period”):

==> picture [356 x 225] intentionally omitted <==

----- Start of picture text -----

Volume (Shares) Turnover Price Price (HK$)
20,000,000 0.55
18,000,000
0.50
16,000,000
14,000,000 0.45
12,000,000
0.40
10,000,000
0.35
8,000,000
6,000,000 0.30
4,000,000 Conversion
0.25 Price
2,000,000
0 0.20
Dec-02 Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03
Month
----- End of picture text -----

Source of data: the website of the Stock Exchange at www.hkex.com.hk

As illustrated above, the closing prices of the Shares were traded (i) within a range between HK$0.300 to HK$0.510 per Share during the Comparison Period; and (ii) at a premium over the Conversion Price during the period from 20th December, 2002 up to and including the Latest Practicable Date.

Notwithstanding the Conversion Price is at a discount to the prevailing market price of the Shares, we would like to draw the attention of the Independent Shareholders that the Conversion Price, which was already approved by the independent shareholders of Midas in an extraordinary general meeting of Midas held on 13th December, 2001, was set at a significant premium of approximately 51.5% to the closing price of the Shares of HK$0.198 as quoted on the Stock Exchange as at 29th October, 2001, being the date of the subscription agreement entered into between Midas and CCIL in relation to the issue of the Preference Shares.

CCIL’s intentions regarding Midas

Upon completion of the Conversion, CCIL (through Gold Throne), currently the largest Shareholder, will become the controlling Shareholder. We have enquired with and were informed by the Directors that there would be no intention to change either the management or the principal business of the Group as a result of the Completion and the Conversion. In other words, the approval of the Whitewash Waiver will not affect CCIL’s position as the largest Shareholder and the management and principal business of the Group.

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LETTER OF ADVICE FROM TAI FOOK CAPITAL

II. EFFECTS OF THE COMPLETION AND THE CONVERSION ON MIDAS AND INDEPENDENT SHAREHOLDERS

Shareholding structure

As at the Latest Practicable Date, Gold Throne (being the largest Shareholder) and its concert parties were interested in 109,000,000 Shares, representing approximately 27.93% of the existing issued ordinary share capital of Midas.

Upon completion of the Conversion, 144,000,000 new Shares will be issued to Gold Throne, representing approximately 36.90% of the existing issued ordinary share capital of Midas and approximately 26.95% of the issued ordinary share capital of Midas as enlarged by such allotment and issue of the Conversion Shares. Accordingly, the interest of Gold Throne and its concert parties in the issued ordinary share capital of Midas will be increased from approximately 27.93% to approximately 47.35%, whilst the interest of the public Shareholders in the issued ordinary share capital of Midas will be diluted by approximately 26.95% (from approximately 72.01% to approximately 52.60%).

Set out below is the shareholding structure of Midas (i) as at the Latest Practicable Date; and (ii) immediately following completion of the Conversion:

Shareholders Gold Throne_(Note 1) Moscow Profits Limited(Note 2) Gold Throne and its concert parties A Director of Midas and a director of a subsidiary (Note 3 and 4)_ Public Total	Number of Shares at the Latest Practicable Date 84,000,000 25,000,000 109,000,000 240,000 281,050,068 390,290,068	% of issued ordinary share capital of Midas 21.52 6.41 27.93 0.06 72.01 100.00	Number of Shares immediately following completion of the Conversion 228,000,000 25,000,000 253,000,000 240,000 281,050,068 534,290,068	% of issued ordinary share capital of Midas 42.67 4.68
				47.35 0.05 52.60
				100.00

Notes:

Gold Throne is a wholly-owned subsidiary of CCIL.
Moscow Profits Limited (“MPL”) was a company indirectly owned as to 66% by Mr. Alan Chuang Shaw Swee and as to 34% by Mrs. Alice Siu Chuang Siu Suen as at the Latest Practicable Date, both being substantial shareholders and directors of Chuang’s Consortium, the controlling shareholder of CCIL. MPL is a party acting in concert with Gold Throne.

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LETTER OF ADVICE FROM TAI FOOK CAPITAL

A non-executive Director, Mr. Shek Lai Him, Abraham, held 10,000 Shares as at the Latest Practicable Date. A director of a subsidiary of Midas, Mr. Lam Wai Man, held 230,000 Shares as at the Latest Practicable Date. Mr. Shek and Mr. Lam have no relationship with CCIL nor Gold Throne nor MPL and their concert parties and are not acting in concert with any of them.
As set out in the Announcement, Mr. Lam Wai Man held 530,000 Shares as at the date of the Announcement. Subsequently, Mr. Lam disposed of an aggregate of 300,000 Shares between 28th May, 2003 and 3rd June, 2003. Accordingly, Mr. Lam held 230,000 Shares as at the Latest Practicable Date.

As illustrated above, the Conversion will have a dilution effect on the shareholding interest of the Independent Shareholders.

Notwithstanding the aforesaid dilution impact on the shareholding interest, the Independent Shareholders should consider the advantages of the Concession Agreement and the Conversion as detailed in the section headed “Financial benefits to Midas and/or the Independent Shareholders as a result of the Completion” below.

Independent Shareholders should also note that if the Whitewash Waiver is not granted by the Executive and/or approved by the Independent Shareholders, the Completion will not take place and in which case, the financial benefits as a result of the Completion as explained under the section headed “Financial benefits to Midas and/or the Independent Shareholders as a result of the Completion” below will not materialize. Although it is set out in the letter from the Board in the Circular that Gold Throne still intends to convert the Series A Preference Shares should the Concession Agreement and the Conversion cannot proceed to Completion, it does not necessarily mean that a general offer obligation for Gold Throne will automatically arise since Gold Throne is only obliged to make such general offer in the event that the aggregate voting rights in Midas held by Gold Throne and its concert parties exceed 30% (or such other percentage as stipulated under the Takeovers Code from time to time). In such event, the pro forma consolidated net tangible asset value per Share and earnings per Share will nevertheless be diluted as described under the sections headed “Net tangible asset value” and “Earnings” below.

In addition, although Gold Throne is not committed to convert any part of the Series A Preference Shares into Shares in the event the Whitewash Waiver is not granted by the Executive and/or approved by the Independent Shareholders at the EGM, it is likely that Gold Throne would choose to convert all or part of the Series A Preference Shares given the Conversion Price was at a significant discount of approximately 41.2% to the closing price of the Shares of HK$0.510 per Share as quoted on the Stock Exchange as at the Latest Practicable Date. In that case, the Independent Shareholders would suffer a similar degree of dilution of their shareholding interest in Midas irrespective of whether the Whitewash Waiver is granted and/or approved or not.

Financial benefits to Midas and/or the Independent Shareholders as a result of the Completion

Outright and recurring financial benefits

As described above, the HK$4 Million Redemption will (i) bring an outright future cash saving for Midas of approximately HK$4 million; and (ii) allow Midas to achieve an annual saving of the 2.5% fixed dividend on the 6,666,667 Series B Preference Shares in an amount of HK$100,000 for each of the four consecutive years up to December 2006. Together

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LETTER OF ADVICE FROM TAI FOOK CAPITAL

with the waiver of dividend payment of the Series A Preference Share of HK$540,000 for the first half of year 2003 as a result of the Completion, Midas will achieve an aggregate saving of approximately HK$4.64 million for the year ending 31st December, 2003 (the “2003 Saving”) as a result of the Completion.

Apart from the 2003 Saving, Midas, after Completion, will not be required to pay the 2.5% fixed dividend during the three consecutive years from 2004 to 2006 in respect of the 6,666,667 Series B Preference Shares which will amount to approximately HK$100,000 per annum. In light of the above, Midas would be able to achieve an aggregate saving of fixed dividend in an amount of approximately HK$0.3 million during the three consecutive years from 2004 to 2006.

Opportunity to realize part of the investments of the Shareholders

Upon Completion, the Shareholders would also be able to realize part of their investments in Midas through the paying out of the Conditional Special Dividend of HK$0.012 per Share. Since the Conversion Shares will not rank for any Conditional Special Dividend, the aggregate amount of the Conditional Special Divided, based on the existing issued ordinary share capital of Midas as at the Latest Practicable Date of 390,290,068 Shares, is approximately HK$4.68 million.

Net tangible asset value

The estimated effect of the Completion and the Conversion on the consolidated net tangible asset value of the Group as set out in Appendix I to the Circular is summarised below:

	Approximately in	Per Share
	HK$’000	HK$
Pro forma unaudited adjusted consolidated net
tangible asset value of the Group before the
Completion and Conversion	547,778	0.90
		(Note 1)
Pro forma unaudited adjusted consolidated net
tangible asset value of the Group after the
Completion and Conversion	543,095	0.74
		(Note 2)

Notes:

Based on 390,290,068 Shares in issue as at the Latest Practicable Date, and the share capital and share premium of 326,166,667 Preference Shares of approximately HK$195.7 million has been excluded in calculating the pro forma unaudited adjusted net tangible asset value of the Group per Share.
Based on 534,290,068 Shares in issue immediately following completion of the Conversion, and the share capital and share premium of the remaining 247,500,000 Series B Preference Shares of approximately HK$148.5 million has been excluded in calculating the pro forma unaudited adjusted net tangible asset value of the Group per Share.

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LETTER OF ADVICE FROM TAI FOOK CAPITAL

As illustrated above, the pro forma unaudited adjusted consolidated net tangible asset value of the Group will decrease from approximately HK$547.8 million to approximately HK$543.1 million immediately following the Completion and the Conversion, representing a decrease of approximately 0.86%. The aforesaid reduction is mainly attributable to the payment of the Conditional Special Dividend to the Shareholders.

Before the Completion and Conversion, the pro forma unaudited adjusted consolidated net tangible asset value of the Group per Share was approximately HK$0.90. Based on 534,290,068 Shares in issue immediately following the Completion, the Conversion and the payment of the Conditional Special Dividend, the pro forma unaudited adjusted consolidated net tangible asset value of the Group per Share will become approximately HK$0.74, representing a decrease of approximately 17.8% as compared to the pro forma unaudited adjusted consolidated net tangible asset value of the Group before the Conversion per Share of approximately HK$0.90. Such decrease is mainly attributable to (i) the dilution of interest of the Shareholders in the issued ordinary share capital of Midas by approximately 26.95% as a result of Gold Throne’s exercise of its contractual right to convert 72,000,000 Series A Preference Shares; and (ii) the payment of the Conditional Special Dividend to the Shareholders.

Earnings

According to the prevailing applicable accounting standards, the fixed dividend payment is treated as a distribution of earnings rather than a profit and loss item. As such, the annual saving in the fixed dividend payment on the HK$4 Million Redemption which will amount to approximately HK$100,000 per annum upon Completion will not have any impact on the consolidated earnings of the Group.

Based on the aforesaid, the estimated effect of the Completion and the Conversion on the consolidated earnings of the Group is summarized below:

	Approximately in	Per Share
	HK$’000	HK$
Audited consolidated net profit of the Group
for the year ended 31st December, 2002	50,673	0.13
		(Note 1)
Pro forma unaudited consolidated net profit
of the Group adjusted to reflect the effects
of the Completion and the Conversion	50,673	0.09
		(Note 2)

Notes:

Based on 390,290,068 Shares in issue as at the Latest Practicable Date. 2. Based on 534,290,068 Shares in issue immediately following completion of the Conversion.

As illustrated above, the pro forma unaudited consolidated net profit per Share will decrease by approximately 30.8% immediately after the Completion and the Conversion, from approximately HK$0.13 to approximately HK$0.09. Such decrease is attributable to

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LETTER OF ADVICE FROM TAI FOOK CAPITAL

the dilution of the shareholding interest of the Shareholders of approximately 26.95% as a result of Gold Throne’s exercise of its contractual right to convert 72,000,000 Series A Preference Shares.

Cash saving as a result of the Completion

The Completion and the Conversion would also have the following impacts on the cash position of the Group:

Impact on cash position of the Group as a result of the Completion

Approximately in	Approximately in
	HK$’000
HK$ 4 Million Redemption	4,000
Saving in dividend for 2003 in respect
of the HK$4 Million Redemption	100
Waiving of dividend for the period from January 2003 to
June 2003 in respect of the 72,000,000 Series A Preference Shares	540
Saving in annual dividend for the three years from
2004 to 2006 in respect of the HK$4 Million Redemption	300
Cash saving to be achieved by the Group as a result of the Completion	4,940

As illustrated above, the Group can achieve cash saving of approximately HK$4.9 million as a result of the Completion. A substantial portion of the cash saving as a result of the Completion will be distributed to the Shareholders in the form of Conditional Special Dividend of approximately HK$4.68 million upon Completion.

Performance of Midas’s management

Set out below is a summary of the audited consolidated results of the Group for each of the five years ended 31st December, 2002:–

		For the	year ended 31st December,	year ended 31st December,
		Approximately in HK$’000
	2002	2001	2000	1999	1998
Turnover	574,090	513,537	663,286	472,522	420,823
Audited consolidated
net profit of the
Group for the year	50,673	28,047	27,594	25,425	26,657
Earnings per Share –
basic (HK$)	0.116	0.076	0.088	0.107	0.113

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LETTER OF ADVICE FROM TAI FOOK CAPITAL

As advised by the Directors, Midas had undergone a change in its largest Shareholder in early 2000. Based on the above table, we noted that the Group (i) recorded an increase in net profit of approximately 8.5% during the year ended 31st December, 2000; (ii) recorded an increase in net profit of approximately 1.6% during the year ended 31st December, 2001; and (iii) recorded an increase in net profit of approximately 80.7% during the year ended 31st December, 2002. Under the present management of Midas, the financial performance of the Group had shown improvement as demonstrated by the aforesaid increases in the net profit.

We also noted that the basic earnings per Share of the Group ranged between HK$0.076 and HK$0.116 during the five years ended 31st December, 2002. Despite the fact that the basic earnings per Share of the Group decreased from HK$0.088 in the year ended 31st December, 2000 to HK$0.076 in the year ended 31st December, 2001, it increased to HK$0.116 in the year ended 31st December, 2002. We consider that the Group’s financial performance had shown improvement under the present management, as demonstrated by the fact that the Group’s net profit and basic earnings per Share during the year ended 31st December, 2002 were higher than those corresponding amounts during each of the two years ended 31st December, 1999.

Gearing

Based on the pro forma statement of unaudited adjusted consolidated net tangible asset value as set out in Appendix I to the Circular, the gearing ratio (expressed in terms of (i) the Group’s total liabilities of approximately HK$362.62 million as at 31st December, 2002, over (ii) the pro forma unaudited adjusted consolidated net tangible asset value of the Group before the Conversion of approximately HK$547.78 million) of the Group was approximately 66.2%. Immediately after the Completion and the Conversion, the gearing ratio (expressed in terms of (i) the Group’s total liabilities of approximately HK$362.62 million as at 31st December, 2002, over (ii) the pro forma unaudited adjusted consolidated net tangible asset value of the Group after the Conversion of approximately HK$543.10 million) will be slightly increased to approximately 66.8%. Such increase in the gearing ratio was mainly attributable to the payment of the Conditional Special Dividend to the Shareholders.

The above calculation of gearing ratio of the Group is based on the fact that both the Series A Preference Shares and Series B Preference Shares were classified as equity in its audited consolidated balance sheet as at 31st December, 2002. Accordingly, conversion of the Preference Shares alone will not have any impact on the gearing ratio of the Group.

In summary, the outstanding face value of the Preference Shares will be reduced in an aggregate amount of approximately HK$47.2 million (being the sum of face value of (i) 72,000,000 Series A Preference Shares of HK$43.2 million and (ii) 6,666,667 Series B Preference Shares of approximately HK$4 million), representing approximately 8.6% of the pro forma unaudited adjusted consolidated net tangible asset value of the Group before the Conversion of approximately HK$547.78 million.

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LETTER OF ADVICE FROM TAI FOOK CAPITAL

III. WHITEWASH WAIVER

Gold Throne and its concert parties are currently interested in 109,000,000 Shares, representing approximately 27.93% of the voting rights of Midas as at the Latest Practicable Date. Immediately following completion of the Conversion, the interest of Gold Throne and its concert parties in the voting rights of Midas will be increased to approximately 47.35%. Under Rule 26 of the Takeovers Code, Gold Throne and its concert parties will be obliged to make a mandatory general offer for all the Shares other than those already owned by Gold Throne or its concert parties upon completion of the Conversion. In this regard, Gold Throne has applied to the Executive for the Whitewash Waiver. The Whitewash Waiver, if granted by the Executive, will be subject to the approval by the Independent Shareholders (to be taken by way of poll).

The Independent Shareholders should note that although it is set out in the letter from the Board in the Circular that Gold Throne still intends to convert the Series A Preference Shares should the Concession Agreement and the Conversion cannot proceed to Completion, it does not necessarily mean that a general offer obligation for Gold Throne will automatically arise since Gold Throne is only obliged to make such general offer in the event that the aggregate voting rights in Midas held by Gold Throne and its concert parties exceed 30% (or such other percentage as stipulated under the Takeovers Code from time to time). In such event, the pro forma consolidated net tangible asset value and earnings per Share will nevertheless be diluted as described under the sections headed “Net tangible asset value” and “Earnings” above but the financial benefits as a result of the Completion as explained under the section headed “Financial benefits to Midas and/or the Independent Shareholders as a result of the Completion” above will not materialize.

If a general offer is made to the Independent Shareholders as a result of the Conversion, the expected general offer price will be HK$0.30 per Share i.e. the Conversion Price and such price was at a significant discount of approximately 41.2% to the closing price of the Shares of HK$0.510 per Share as quoted on the Stock Exchange as at the Latest Practicable Date. In other words, the general offer, even made, does not appear to be attractive as compared with the closing price of the Shares of HK$0.510 per Share as at the Latest Practicable Date.

Having considered the aforesaid, the outright financial benefits to Midas and the Independent Shareholders and the opportunity for the Shareholders to realize part of their investments in Midas through the paying out of the Conditional Special Dividend as a result of the Completion and the Conversion as explained under the section headed “Financial benefits to Midas and/or the Independent Shareholders as a result of the Completion” above, we consider that it is beneficial for the Independent Shareholders to approve the Whitewash Waiver notwithstanding the dilutions to the net tangible asset value per Share and earnings per Share.

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LETTER OF ADVICE FROM TAI FOOK CAPITAL

IV. CONCLUSION AND RECOMMENDATION

Having considered the above principal factors and reasons, we consider that the terms of the Whitewash Waiver are fair and reasonable so far as the interests of the Independent Shareholders are concerned and are in the interests of the Group as a whole. Accordingly, we advise the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the resolution (to be taken by way of poll) to approve the Whitewash Waiver to be proposed at the EGM.

Yours faithfully, For and on behalf of Tai Fook Capital Limited Derek C. O. Chan Marcus Ho Deputy Managing Director Director

– 27 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

1. SHARE CAPITAL

The authorised and issued share capitals of the Company as at the Latest Practicable Date were as follows:–

Authorised: 1,000,000,000 Shares 1,000,000,000 Series A Preference Shares 1,000,000,000 Series B Preference Shares Issued and fully paid: 390,290,068 Shares 72,000,000 Series A Preference Shares 254,166,667 Series B Preference Shares	HK$ 100,000,000.00 10,000,000.00 10,000,000.00
	120,000,000.00

	39,029,006.80 720,000.00 2,541,666.67
	42,290,673.47

All the existing issued Shares rank pari passu in all respects including all rights as to dividends, voting and capital. All the Shares to be in issue following Completion will rank pari passu in all respects with each other including as regards to dividends, voting and return of capital. On 27th January, 2003, the Company redeemed 83,333,333 Series B Preference Shares at a redemption price of HK$0.60 each with an aggregate value of HK$50,000,000. On 13th February, 2003, an aggregate of 1,000,000 Shares had been issued as a result of exercise of share options by an employee of the Group. Save as the aforesaid, there have been no changes to the authorised and issued share capital of the Company since 31st December, 2002 (being the end of the last financial year of the Company).

Under the Share Option Scheme adopted by the Company, the Directors may at their discretion, invite employees of the Group, including Directors, to take up options to subscribe for Shares, subject to the terms and conditions stipulated therein, which in aggregate may not exceed 10% of the issued ordinary share capital of the Company from time to time, excluding for this purpose, Shares issued pursuant to the Share Option Scheme. As at the Latest Practicable Date, there were no outstanding options granted pursuant to the Share Option Scheme.

The Company has outstanding an aggregate of 72,000,000 Series A Preference Shares. Each of the Series A Preference Shares is convertible into two Shares. Conversion in full of the Series A Preference Shares will result in the issue of 144,000,000 Shares. On 22nd May, 2003, Gold Throne has entered into the Concession Agreement in relation to the conversion in full of the Series A Preference Shares for the issue of 144,000,000 Shares (details are set out in letter from the Board in this circular).

No share or loan capital of the Company has been put under option or agreed conditionally or unconditionally to be put under option and no warrant or conversion right affecting the Shares has been issued or granted or agreed conditionally, or unconditionally to be issued or granted.

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Save as disclosed above, the Company has no options, warrants and conversion rights convertible into Shares. Save as disclosed herein, no share or loan capital of the Company has been issued or is proposed to be issued for cash or otherwise and no commissions, discounts, brokerages or other special terms have been granted in connection with the issue or sale of any such capital.

The Shares are listed on the Stock Exchange. No part of the securities of the Company is listed or dealt in, nor is listing or permission to deal in the securities of the Company being or proposed to be sought, on any other stock exchange.

2. SUMMARY OF CONSOLIDATED INCOME STATEMENTS

The following information has been extracted from the audited consolidated accounts of the Group for each of the five years ended 31st December, 2002.

RESULTS

Turnover Profit before taxation Taxation Profit before minority interest Minority interest Net profit for the year Dividends to Shareholders Earnings per Share (Basic) Earnings per Share (Diluted) Dividends per Share	2002 HK$’000 574,090 52,751 (1,937) 50,814 (141) 50,673 7,786 11.6¢ 8.6¢ 2¢	For the year ended 31st December, 2001 2000 1999 1998 HK$’000 HK$’000 HK$’000 HK$’000 513,537 663,286 472,522 420,823 28,628 28,549 36,901 31,625 (581) (955) (11,476) (4,968) 28,047 27,594 25,425 26,657 – – – – 28,047 27,594 25,425 26,657 – 7,284 – 9,461 7.6¢ 8.8¢ 10.7¢ 11.30¢ 7.5¢ 8.7¢ 10.6¢ 11.20¢ – 2¢ – 4¢

Note: Neither extraordinary items nor exceptional items have been recorded for each of the five years ended 31st December, 2002.

– 29 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

3. AUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following is a summary of the audited consolidated income statement of the Group for the two years ended 31st December, 2002, the audited consolidated balance sheet of the Group as at 31st December, 2001, and 31st December, 2002, the statement of changes in equity and consolidated cash flow statement for the year ended 31st December, 2002 together with accompanying notes extracted from the audited accounts of the Company:

Consolidated Income Statement

For the year ended 31st December, 2002

Notes Turnover 4 Direct expense Gross profit Other operating income 5 Selling expenses Administrative expenses Impairment loss on property, plant and equipment Profit from operations 6 Finance costs 8 Profit before taxation Taxation 9 Profit before minority interest Minority interest Net profit for the year Dividends 10 Earnings per Share 11 Basic Diluted	2002 HK$’000 574,090 (398,877) 175,213 13,917 (17,531) (114,744) – 56,855 (4,104) 52,751 (1,937) 50,814 (141) 50,673 13,928 11.6 cents 8.6 cents	2001 HK$’000 513,537 (359,650) 153,887 13,002 (12,720) (115,739) (1,263) 37,167 (8,539) 28,628 (581) 28,047 – 28,047 294 7.6 cents 7.5 cents

– 30 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Consolidated Balance Sheet

At 31st December, 2002

Notes ASSETS AND LIABILITIES Non-current assets Investment properties 12 Property, plant and equipment 13 Properties under development 14 Contractual reimbursement from related companies 15 Negative goodwill 16 Investments in securities 18 Current assets Inventories 19 Trade receivables 20 Deposits, prepayments and other receivables Taxation recoverable Bank balances and cash Current liabilities Trade payables 21 Accrued charges and other payables Amount due to a related company 22 Taxation payable Dividend payable Borrowings 23 Amount due to a minority shareholder 24 Obligations under finance leases 25 Net current assets Total assets less current liabilities	2002 HK$’000 382,700 197,273 – 35,899 (6,302) – 609,570 44,534 155,238 14,285 99 182,129 396,285 115,493 85,798 – 4,454 – 46,025 32,546 1,788 286,104 110,181 719,751	2001 HK$’000 143,700 219,840 161,596 50,623 (8,477) 136 567,418 33,018 104,633 12,291 93 136,255 286,290 61,371 41,247 5,837 355 294 58,259 – 1,774 169,137 117,153 684,571

– 31 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Notes Non-current liabilities Borrowings 23 Obligations under finance leases 25 Retirement benefit obligations 29 Amount due to a minority shareholder 24 Deferred taxation 26 MINORITY INTERESTS NET ASSETS CAPITAL AND RESERVES Share capital 27 Ordinary shares Preference shares Share premium Other reserves SHAREHOLDERS’ FUNDS	2002 HK$’000 37,350 1,540 283 18,720 18,622 76,515 48,453 594,783 38,929 4,095 377,728 174,031 594,783	2001 HK$’000 17,850 3,417 – 37,618 21,593
		80,478
		46,057
		558,036

		36,529 4,215 380,008 137,284
		558,036

– 32 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Statement of Changes in Equity

For the year ended 31st December, 2002

THE GROUP At 1st January, 2001 Realised on disposal of investment in securities Revaluation decrease in the year not recognised in the consolidated income statement Issue of shares on exercise of share options Issue of shares for acquisition of subsidiaries Net profit for the year Dividend At 31st December, 2001 Conversion from Series A preference shares to ordinary shares Realised on disposal of investment in securities Net profit for the year Dividends At 31st December, 2002	Ordinary share capital HK$’000 36,466 – – 63 – – – 36,529 2,400 – – – 38,929	Preference share capital HK$’000 – – – – 4,215 – – 4,215 (120 ) – – – 4,095	Ordinary share premium HK$’000 131,241 – – 82 – – – 131,323 4,800 – – – 136,123	Preference share premium HK$’000 – – – – 248,685 – – 248,685 (7,080 ) – – – 241,605	Merger reserve HK$’000 (Note a) 24,000 – – – – – – 24,000 – – – – 24,000	Contributed surplus HK$’000 – – – – – – – – – – – – –	Goodwill HK$’000 (33,216 ) – – – – – – (33,216 ) – – – – (33,216 )	Investments revaluation reserve HK$’000 282 (210 ) (74 ) – – – – (2 ) – 2 – – –	Translation reserve HK$’000 239 – – – – – – 239 – – – – 239	Retained profits HK$’000 118,510 – – – – 28,047 (294 ) 146,263 – – 50,673 (13,928 ) 183,008	Total HK$’000 277,522 (210 ) (74 ) 145 252,900 28,047 (294 ) 558,036 – 2 50,673 (13,928 ) 594,783

Note:

(a) The merger reserve of the Group represents the difference between the nominal value of the shares of the acquired subsidiaries and the nominal value of the Company’s ordinary shares issued for the acquisition at the time of a group reorganisation in 1996 (the “Group Reorganisation”).

– 33 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Consolidated Cash Flow Statement

For the year ended 31st December, 2002

Notes OPERATING ACTIVITIES Profit from operations Adjustments for: Interest income Dividend income Release of negative goodwill to income Impairment loss on property, plant and equipment Depreciation and amortisation Loss on disposal of investments in securities Gain on disposal of property, plant and equipment Retirement benefit obligations Operating cash flows before movements in working capital (Increase) decrease in inventories (Increase) decrease in trade receivables Decrease in deposits, prepayments and other receivables Increase (decrease) in trade payables Increase in accrued charges and other payables Decrease in an amount due to a related company Net cash generated from operations Hong Kong Profits Tax paid Overseas tax paid Hong Kong Profits Tax refunded Interest paid Finance charge on obligations under finance leases NET CASH FROM OPERATING ACTIVITIES INVESTING ACTIVITIES Payments for properties under development Purchase of property, plant and equipment Reimbursement of payment for properties under development from related companies Interest received Proceeds from disposal of property, plant and equipment Proceeds from disposal of investments in securities Dividend received from investments in securities Decrease in pledged bank deposits Purchase of subsidiaries (net of cash and cash equivalents acquired) 30 NET CASH USED IN INVESTING ACTIVITIES	2002 HK$’000 56,855 (2,038) (1) (3,880) – 33,390 2 (214) 283 84,397 (11,516) (50,605) 2,533 54,122 44,448 (6,301) 117,078 (1,145) – 330 (8,223) (175) 107,865 (72,971) (11,640) 14,724 2,038 892 136 1 – – (66,820)	2001 HK$’000 37,167 (4,647) (10) – 1,263 34,463 6 (928) – 67,314 20,080 57,769 9,350 (1,084) 8,356 (252) 161,533 (5,299) (300) 99 (7,944) (595) 147,494 (4,214) (38,034) 2,242 4,647 2,090 219 10 24,848 4,210 (3,982)

– 34 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

FINANCING ACTIVITIES New import loans raised New bank loans raised Advance from a minority shareholder Repayment of import loans Repayment of bank loans Dividends paid Repayment of obligations under finance leases and hire purchase contracts Repayment of other loans Proceeds from issue of ordinary shares NET CASH FROM (USED IN) FINANCING ACTIVITIES INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT END OF THE YEAR, represented by bank balances and cash ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS Cash and cash equivalents as previously reported Effect of reclassification of import loans with less than three months to maturity when raised Cash and cash equivalents as restated	2002 HK$’000 88,633 48,692 13,648 (93,536) (36,523) (14,222) (1,863) – – 4,829 45,874 136,255 182,129	2001 HK$’000 54,997 41,677 – (64,553) (32,135) – (10,614) (1,566) 145 (12,049) 131,463 4,792 136,255 114,689 21,566 136,255

– 35 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Notes to the Financial Statements

For the year ended 31st December, 2002

1. GENERAL

The Company is incorporated in the Cayman Islands as an exempted company with limited liability under the Companies Law (Revised) of the Cayman Islands (“Companies Law”). Its ordinary shares are listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

The Company is an investment holding company. The principal activities of its principal subsidiaries are set out in note 38.

2. ADOPTION OF STATEMENTS OF STANDARD ACCOUNTING PRACTICE

In the current year, the Group has adopted for the first time a number of new and revised Statements of Standard Accounting Practice (“SSAP(s)”) issued by the Hong Kong Society of Accountants. Adoption of these SSAPs has led to a number of changes in the Group’s accounting policies. The revised accounting policies are set out in note 3. In addition, the new and revised SSAPs have resulted in a change in the format of presentation of the cash flow statement and an inclusion of a statement of changes in equity. Comparative amounts and disclosures for the prior period have been restated in order to achieve a consistent presentation.

Foreign currencies

The revisions to SSAP 11 “Foreign Currency Translation” have eliminated the choice of translating the income statements of overseas subsidiaries at the closing rate for the year, the policy previously followed by the Group. They are now required to be translated at an average rate. This change in accounting policy has not had any material effect on the results for the current or prior accounting years.

Cash flow statements

Under SSAP 15 (Revised) “Cash Flow Statements”, cash flows are now classified under three headings – operating, investing and financing, rather than the previous five headings. Interest and dividends, which were previously presented under a separate heading, are classified as investing cash flows. Cash flows arising from taxation are classified as operating activities, unless they can be separately identified with investing or financing activities. In addition, the amounts presented for cash and cash equivalents have been amended to exclude short-term loans that are financing in nature. The re-definition of cash and cash equivalents has resulted in a restatement in the comparative amounts shown in the cash flow statement.

Employee benefits

SSAP 34 “Employee Benefits”, introduces measurement rules for employee benefits, including retirement plans. The principal effect of the implementation of SSAP 34 is in connection with the recognition of costs for the Group’s defined benefit retirement plan. In prior years, the cost of providing retirement benefits under this plan was determined using a projected benefit valuation method, with actuarial valuations carried out every three years. Actuarial gains and losses and past service cost were spread systematically over the expected remaining working lives of existing employees, irrespective of the date of vesting.

Under SSAP 34, the cost of providing retirement benefits under the Group’s defined benefit retirement plan is determined using the projected unit credit method, with actuarial valuations being carried out annually. Actuarial gains and losses which exceed 10% of the greater of the present value of the Group’s defined benefit obligation and the fair value of plan assets are amortised over the expected average remaining working lives of the employees participating in the plan. Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on a straightline basis over the average period until the amended benefits become vested.

The effect of this change in accounting policy has resulted in a decrease of the profit for the year of approximately HK$283,000 (2001: Nil), the details of which are set out in note 29.

– 36 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

3. SIGNIFICANT ACCOUNTING POLICIES

The financial statements have been prepared under the historical cost convention as modified for the revaluation of investment properties and investments in securities.

The financial statements have been prepared in accordance with accounting principles generally accepted in Hong Kong. The principal accounting policies adopted are as follows:

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to 31st December each year.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Goodwill

Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition.

Goodwill arising on acquisitions of subsidiaries prior to 1st January, 2001 continues to be held in reserves, and will be charged to the income statement at the time of disposal of the relevant subsidiary, or at such time as the goodwill is determined to be impaired.

Goodwill arising on acquisitions of subsidiaries after 1st January, 2001 is capitalised as a separate asset on the balance sheet and amortised on a straight-line basis over its useful economic life.

Negative goodwill

Negative goodwill represents the excess of the Group’s interest in the fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition over the cost of acquisition.

Negative goodwill arising on acquisitions of subsidiaries is presented as a deduction from assets. To the extent that such negative goodwill is attributable to losses or expenses anticipated at the date of acquisition, it is released to income in the period in which those losses or expenses arise. The remaining negative goodwill is recognised as income on a straight-line basis over the remaining average useful life of the identifiable acquired depreciable assets. To the extent that such negative goodwill exceeds the aggregate fair value of the acquired identifiable non-monetary assets, it is recognised as income immediately.

Investment properties

Investment properties are completed properties which are held for their investment potential, any rental income being negotiated at arm’s length.

Investment properties are stated at their open market value. Any revaluation increase or decrease arising on the revaluation of investment properties is credited or charged to the investment property revaluation reserve unless the balance on this reserve is insufficient to cover a revaluation decrease, in which case the excess of the revaluation decrease over the balance on the investment property revaluation reserve is charged to the income statement. Where a decrease has previously been charged to the income statement and a revaluation increase subsequently arises, this increase is credited to the income statement to the extent of the decrease previously charged.

On disposal of an investment property, the balance on the investment property revaluation reserve attributable to that property is transferred to the income statement.

No depreciation is provided on investment properties except where the unexpired term of the relevant lease is 20 years or less.

Property, plant and equipment

Property, plant and equipment are stated at cost less depreciation and amortisation and accumulated impairment losses.

– 37 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Depreciation and amortisation are provided to write off the cost of items of property, plant and equipment other than properties under development over their estimated useful lives, from the date on which they become fully operational, using the straight-line method, as follows:

Leasehold land 50 years or, if shorter, over the term of the relevant lease Buildings 20 - 30 years Leasehold improvements Over the term of the relevant lease Plant and machinery 3 - 15 years Furniture and fixtures 3 - 5 years Motor vehicles 3 - 5 years

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets.

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sale proceeds and the carrying amount of the asset and is recognised in the income statement.

Properties under development

Properties under development are stated at cost less any identified impairment loss.

Assets held under finance leases

Leases are classified as finance leases when the terms of the leases transfer substantially all the risks and rewards of ownership of the assets concerned to the Group.

Assets held under finance leases are capitalised at their fair values at the date of acquisition. The corresponding liability to the lessor, net of interest charges, is included in the balance sheet as obligations under finance leases. Finance costs, which represent the difference between the total finance lease and the original outstanding principal at the inception of the finance lease, are charged to the income statement over the period of the respective leases so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period.

All other leases are classified as operating leases and the rentals payable are charged to the income statement on a straight-line basis over the term of the relevant lease.

Investments in subsidiaries

Investments in subsidiaries are included in the Company’s balance sheet at cost less any identified impairment loss.

Investments in securities

Investments in securities are recognised on a trade-date basis and are initially measured at cost.

All securities other than held-to-maturity debt securities are measured at fair value at subsequent reporting dates.

Where securities are held for trading purposes, unrealised gains and losses are included in net profit or loss for the period. For other securities, unrealised gains and losses are dealt with in equity, until the security is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognised is included in net profit or loss for the period.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the weighted average cost method. Net realisable value represents the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

Impairment

At each balance sheet date, the Group reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. Impairment losses are recognised as an expense immediately.

– 38 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately.

Revenue recognition

Sales of goods are recognised when goods are delivered and title has passed.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the interest rate applicable.

Sales of investments in securities are recognised when the related Bought and Sold notes are executed.

Dividend income from investments is recognised when the Group’s rights to receive payment have been established.

Rental income, including rentals invoiced in advance from properties let under operating leases, is recognised on a straight-line basis over the term of the relevant lease.

Taxation

The charge for taxation is based on the results for the year as adjusted for items which are nonassessable or disallowed. Timing differences arise from the recognition for tax purposes of certain items of income and expense in a different accounting period from that in which they are recognised in the financial statements. The tax effect of timing differences, computed under the liability method, is recognised as deferred taxation in the financial statements to the extent that it is probable that a liability or an asset will crystallise in the foreseeable future.

Foreign currencies

Transactions in currencies other than Hong Kong dollars are translated into Hong Kong dollars at the rates ruling on the dates of the transactions or at the contracted settlement rate. Monetary assets and liabilities denominated in currencies other than Hong Kong dollars are re-translated into Hong Kong dollars at the rates ruling on the balance sheet date. Gains and losses arising on exchange are dealt with in the income statement.

On consolidation, the assets and liabilities of subsidiaries which are denominated in currencies other than Hong Kong dollar and which operate outside Hong Kong are translated into Hong Kong dollars at the approximate rates ruling on the balance sheet date. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising, if any, are classified as equity and are recognised as income or as expenses in the period in which the operations are disposed of.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, are capitalised as part of the cost of those assets. Capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised as an expense in the period in which they are incurred.

Retirement benefit costs

Payments to the Mandatory Provident Fund Scheme are charged as an expense as they fall due.

For defined benefit retirement plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses which exceed 10 per cent of the greater of the present value of the Group’s defined benefit obligation and the fair value of plan assets are amortised over the expected average remaining working lives of the employees participating in the plan. Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on a straight-line basis over the average period until the amended benefits become vested.

The amount recognised in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognised actuarial losses and unrecognised transitional liability on initial adoption of SSAP 34, and as reduced by the fair value of plan assets.

– 39 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

4. SEGMENT INFORMATION

In accordance with the Group’s internal financial reporting, the Group has determined that geographical segments by market is its primary reporting segment and business segments are its secondary reporting segment.

Geographical segments

The Group’s printing business is located in both Hong Kong and the People’s Republic of China, other than Hong Kong (“the PRC”), while the property business is located in the PRC.

The Group reports its primary segment information by geographical location of its customers who are principally located in Hong Kong, Europe, North America, Australia and New Zealand, and the PRC. Segment information about these geographical markets is presented below:

2002

Hong Kong HK$’000 TURNOVER Sales of goods 180,636 Property rental income – 180,636 SEGMENT RESULT 1,149 Unallocated corporate income Unallocated corporate expenses Profit from operations Finance costs Profit before taxation Taxation Profit before minority interest	Europe HK$’000 151,023 – 151,023 19,746	North America HK$’000 131,592 – 131,592 15,284	Australia and New Zealand HK$’000 88,776 – 88,776 17,503	PRC HK$’000 16,872 4,715 21,587 5,600	Others HK$’000 476 – 476 180	Con- solidated HK$’000 569,375 4,715 574,090 59,462 2,504 (5,111) 56,855 (4,104) 52,751 (1,937) 50,814

– 40 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

2002

The following is an analysis of the carrying amount of segment assets and segment liabilities, analysed by the geographical location of its customers:

						Australia	Australia
	Hong			North		and	New				Con-
	Kong	Europe		America		Zealand			PRC	Others	solidated
	HK$’000	HK$’000		HK$’000		HK$’000		HK$’000		HK$’000	HK$’000
ASSETS
Segment assets	135,556	90,179		101,364		49,983			442,318	34	819,434
Unallocated
corporate
assets											186,421
Consolidated
total assets											1,005,855

LIABILITIES
Segment
liabilities	65,659	46,053		38,754		24,252			91,146	112	265,976
Unallocated
corporate
liabilities											96,643
Consolidated
total liabilities											362,619

					Australia
	Hong			North	and New						Con-
	Kong	Europe	America		Zealand		PRC		Others	Corporate	solidated
	HK$’000	HK$’000	HK$’000		HK$’000		HK$’000		HK$’000	HK$’000	HK$’000
OTHER
INFORMATION
Capital expenditure	1,309	3,513		3,881		2,280	77,729		1	331	89,044
Depreciation and
amortisation	13,558	7,308		6,399		3,751	1,272		2	1,239	33,529

– 41 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

2001

Hong Kong HK$’000 TURNOVER Sales of goods 173,922 Property rental income – 173,922 SEGMENT RESULT 3,528 Unallocated corporate income Unallocated corporate expenses Profit from operations Finance costs Profit before taxation Taxation Profit before minority interest	Europe HK$’000 142,090 – 142,090 14,822	North America HK$’000 98,080 – 98,080 9,281	Australia and New Zealand HK$’000 90,223 – 90,223 10,160	PRC HK$’000 8,881 130 9,011 333	Others HK$’000 211 – 211 38	Con- solidated HK$’000 513,407 130 513,537 38,162 4,766 (5,761) 37,167 (8,539) 28,628 (581) 28,047

– 42 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

2001

The following is an analysis of the carrying amount of segment assets and segment liabilities, analysed by the geographical location of its customers:

						Australia	Australia
	Hong			North		and	New				Con-
	Kong	Europe		America		Zealand			PRC	Others	solidated
	HK$’000	HK$’000		HK$’000		HK$’000		HK$’000		HK$’000	HK$’000
ASSETS
Segment assets	128,142	88,776		76,209		53,576			365,414	33	712,150
Unallocated
corporate
assets											141,558
Consolidated
total assets											853,708

LIABILITIES
Segment
liabilities	45,778	28,486		20,053		17,223			51,893	55	163,488
Unallocated
corporate
liabilities											86,127
Consolidated
total liabilities											249,615

					Australia
	Hong			North	and New						Con-
	Kong	Europe	America		Zealand		PRC		Others	Corporate	solidated
	HK$’000	HK$’000	HK$’000		HK$’000		HK$’000		HK$’000	HK$’000	HK$’000
OTHER
INFORMATION
Capital expenditure	22,591	11,297		608		694	308,826		1	1,032	345,049
Depreciation and
amortisation	14,666	7,985		5,231		4,570		641	1	1,369	34,463
Impairment loss
recognised	–	–		–		–		–	–	1,263	1,263

In addition to the analysis by the geographical location of its customers, the following is an analysis of the carrying amount of segment assets, and capital expenditure, analysed by the geographical area in which the assets and liabilities are located:

Hong Kong The PRC	Carrying amount of segment assets 2002 2001 HK$’000 HK$’000 382,808 285,424 623,047 568,284 1,005,855 853,708	Capital expenditure 2002 2001 HK$’000 HK$’000 528 2,779 88,516 342,270 89,044 345,049	Capital expenditure 2002 2001 HK$’000 HK$’000 528 2,779 88,516 342,270 89,044 345,049
			345,049

– 43 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Business segments

The Group is currently operating in two business segments, namely printing, and property investment and development. Segment information about these businesses is presented below:

Printing Property investment and development Unallocated corporate income Unallocated corporate expenses Profit from operations	Turnover 2002 2001 HK$’000 HK$’000 569,375 513,407 4,715 130 574,090 513,537	Contribution to profit (loss) from operations 2002 2001 HK$’000 HK$’000 53,693 38,171 5,769 (9 59,462 38,162 2,504 4,766 (5,111) (5,761 56,855 37,167	Contribution to profit (loss) from operations 2002 2001 HK$’000 HK$’000 53,693 38,171 5,769 (9 59,462 38,162 2,504 4,766 (5,111) (5,761 56,855 37,167
			38,162

			4,766 (5,761
			37,167

The following is an analysis of the carrying amount of segment assets, and capital expenditure, analysed by the two business activities:

Printing Property investment and development	Carrying amount of segment assets 2002 2001 HK$’000 HK$’000 613,924 489,264 391,931 364,444 1,005,855 853,708	Capital 2002 HK$’000 11,472 77,572 89,044	expenditure 2001 HK$’000 38,199 306,850
			345,049

5. OTHER OPERATING INCOME

Included in other operating income is investment income as follows:

	2002	2001
	HK$’000	HK$’000
Dividend from investments in securities	1	10
Interest earned on bank deposits	2,038	4,647

– 44 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

6. PROFIT FROM OPERATIONS

Profit from operations has been arrived at after charging: Directors’ remuneration_(note 7)_ Other staff costs Pension scheme contribution Total staff costs Auditors’ remuneration: Current year (Over) underprovision in prior year Cost of inventories recognised as an expense Depreciation and amortisation _Less:_Amount capitalised in properties under development Loss on disposal of investments in securities Rental of premises under operating leases and after crediting: Gain on disposal of property, plant and equipment Release of negative goodwill Rental income from investment properties, net of outgoings of HK$2,612,000 (2001: HK$66,000)	2002 HK$’000 6,077 81,228 2,206 89,511 798 (150) 396,265 33,529 (139) 33,390 2 4,217 214 3,880 2,103	2001 HK$’000 4,966 73,962 2,052
		80,980
		778 119 359,584 34,463 –
		34,463
		6 4,349 928 – 64

7. DIRECTORS’ AND EMPLOYEES’ EMOLUMENTS

Particulars of the emoluments of directors and the five highest paid employees are as follows:

(a) Directors’ emoluments

Fees: Executive Non-executive Independent non-executive Other emoluments: Executive Salaries and other benefits Bonus Pension scheme contributions	2002 HK$’000 110 20 160 290 2,340 3,411 36 5,787 6,077	2001 HK$’000 110 20 149
		279
		3,249 1,400 38
		4,687
		4,966

– 45 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Emoluments of the directors are within the following bands:

HK$1,000,000 or below HK$1,000,001 to HK$1,500,000 HK$1,500,001 to HK$2,000,000	Number 2002 6 – 3 9	of directors 2001 10 3 –
		13

(b) Employees’ emoluments

During the year, the five highest paid individuals included three directors (2001: three directors), details of whose emoluments are set out in note 7(a) above.

The emoluments of the remaining two individuals (2001: two individuals) are as follows:

Salaries and other benefits Bonus Pension scheme contributions	2002 HK$’000 1,594 1,909 24 3,527	2001 HK$’000 1,726 1,173 24
		2,923

Emoluments of the employees are within the following bands:

HK$1,000,000 or below HK$1,000,001 to HK$1,500,000 HK$1,500,001 to HK$2,000,000 HK$2,000,001 to HK$2,500,000	Number of employees 2002 2001 – 1 1 – – 1 1 – 2 2	Number of employees 2002 2001 – 1 1 – – 1 1 – 2 2
		2

During the years ended 31st December, 2002 and 2001, no emoluments were paid by the Group to the five highest paid individuals, including directors, as an inducement to join or upon joining the Group or as compensation for loss of office. In addition, during the years ended 31st December, 2002 and 2001, no director waived any emoluments.

8. FINANCE COSTS

Finance charge on obligations under finance leases Interest on borrowings wholly repayable within five years: Bank borrowings Amount due to a minority shareholder Others _Less:_Interest capitalised in properties under development	2002 HK$’000 175 3,901 4,322 – 8,398 (4,294) 4,104	2001 HK$’000 595 7,914 182 30
		8,721 (182
		8,539

– 46 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

9. TAXATION

The charge comprises: Hong Kong Profits Tax Current year (Over)underprovision in previous years PRC income taxation Deferred taxation_(note 26)_	2002 HK$’000 3,900 (165) 1,173 4,908 (2,971) 1,937	2001 HK$’000 1,433 716 32
		2,181 (1,600
		581

Hong Kong Profits Tax is calculated at 16% (2001: 16%) of the estimated assessable profit for the year.

PRC income tax is calculated at the applicable rates relevant to the PRC subsidiaries.

Details of the deferred taxation, provided and unprovided, for the year are set out in note 26.

10. DIVIDENDS

2001 final dividend of HK2 cents per share paid to ordinary shareholders Dividends to preference shareholders (2002: HK1.5 cents per share; 2001: HK0.07 cent per share for the period from 14th December, 2001 to 31st December, 2001)	2002 HK$’000 7,786 6,142 13,928	2001 HK$’000 – 294
		294

Subject to the Companies Law, the holders of preference shares are entitled to receive dividends semiannually at 2.5 percent per annum on the issue price of HK$0.60 per preference share in arrears on a daily basis.

The final dividend of HK2.8 cents (2001: HK2 cents) per share to ordinary shareholders on the register of members on 6th May, 2003, amounting to approximately HK$10,928,000, has been proposed by the directors and is subject to approval by the shareholders in general meeting.

– 47 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

11. EARNINGS PER SHARE

The calculation of the basic and diluted earnings per share is based on the following data:

12.

Net profit for the year
Dividend on preference shares
Earnings for the purposes of basic earnings per share
Effect of dilutive potential ordinary shares:
– Dividend on convertible preference shares
Earnings for the purposes of diluted earnings per share
Weighted average number of ordinary shares for the
purposes of basic earnings per share
Effect of dilutive potential ordinary shares:
– Convertible preference shares
– Share options
Weighted average number of ordinary shares for the purposes of
diluted earnings per share
INVESTMENT PROPERTIES
VALUATION
Balance at 1st January, 2002
Transferred from properties under development during the year
Balance at 31st December, 2002

2002
2001
HK$’000
HK$’000
50,673
28,047
(6,142)
(294)
44,531
27,753
1,128
59
45,659
27,812
Number of shares
382,780,479
365,286,616
150,509,589
7,824,658
6,292
123,134
533,296,360
373,234,408
THE GROUP
HK$’000
143,700
239,000
382,700

The Group’s investment properties are held under long leases in the PRC for rental income under operating leases. Legal title to certain investment properties amounting to approximately HK$143,700,000 (2001: HK$143,700,000) still rests in the name of the vendor even though the Group has the right to execute the transfer at anytime at their discretion. As substantially all the risks and rewards of ownership of the properties have been transferred to the Group upon execution of sales agreement, the Group has recognised the properties as its assets.

At 31st December, 2002, these investment properties were revalued by DTZ Debenham Tie Leung Limited, a firm of independent professional valuers, on an open market value basis. There was no surplus or deficit arising on the revaluation.

– 48 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

13. PROPERTY, PLANT AND EQUIPMENT

Leasehold Leasehold land and improve- buildings ments HK$’000 HK$’000 THE GROUP COST At 1st January, 2002 56,059 1,083 Additions 1,155 – Disposals – – At 31st December, 2002 57,214 1,083 DEPRECIATION AND AMORTISATION At 1st January, 2002 3,596 1,083 Provided for the year 2,235 – Eliminated on disposals – – At 31st December, 2002 5,831 1,083 NET BOOK VALUES At 31st December, 2002 51,383 – At 31st December, 2001 52,463 – The net book value of the properties comprises: Leasehold land and buildings situated in: – the PRC under medium-term land use right – Hong Kong under long leases	Plant and machinery HK$’000 297,360 7,503 (3,300) 301,563 140,416 26,682 (2,748) 164,350 137,213 156,944	Furniture and Motor fixtures vehicles Total HK$’000 HK$’000 HK$’000 29,492 4,789 388,783 2,231 751 11,640 (26) (634) (3,960) 31,697 4,906 396,463 20,706 3,142 168,943 3,735 877 33,529 (12) (522) (3,282) 24,429 3,497 199,190 7,268 1,409 197,273 8,786 1,647 219,840 THE GROUP 2002 2001 HK$’000 HK$’000 50,782 51,812 601 651 51,383 52,463

The net book value of property, plant and equipment of the Group at 31st December, 2002 included an amount of approximately HK$6,387,000 (2001: HK$7,366,000) in respect of assets held under finance leases.

14. PROPERTIES UNDER DEVELOPMENT

	THE GROUP
	HK$’000
COST
At 1st January, 2002	161,596
Construction and development costs incurred	73,110
Interest capitalised	4,294
Transferred to investment properties	(239,000)
At 31st December, 2002	–

– 49 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

15. CONTRACTUAL REIMBURSEMENT FROM RELATED COMPANIES

Reimbursement of construction costs of properties under development_(note a) _Less:_Reimbursement entitled up to the balance sheet date Reimbursement of deferred taxation liabilities(note b)_	2002 HK$’000 41,718 (16,966) 24,752 11,147 35,899	2001 HK$’000 41,718 (2,242
		39,476 11,147
		50,623

Notes:

(a) Pursuant to a sale and purchase agreement dated 29th October, 2001 entered into with Chuang’s China Commercial Limited (“CCC”) in respect of the acquisition of the entire issued share capital of, and shareholder’s loan to, AsianWisdom.Com Limited (“AsianWisdom”), a company incorporated in the British Virgin Islands (the “BVI”) which, together with its subsidiaries, are engaged in property investment and development in the PRC (“Acquisition Agreement”), the properties under development as set out in note 14 were acquired, among other assets and liabilities, by the Group. CCC is a wholly owned subsidiary of Chuang’s China Investments Limited (“Chuang’s China”), a substantial shareholder of the Company in which Mr. CHAN Sheung Chiu, Ms. LI Mee Sum, Ann and Mr. LEE Sai Wai are also the directors. Chuang’s China also joined as a party to the Acquisition Agreement in order to guarantee the due and full performance of the obligations of CCC under the Acquisition Agreement. Pursuant to the Acquisition Agreement, CCC had agreed and undertaken in favour of the Company to bear 51 percent of all the construction costs from the date of completion of the Acquisition Agreement up to completion of the construction works of the properties under development (“Completion Costs”). Accordingly, the relevant portion of the estimated Completion Costs amounting to approximately HK$41,718,000 had been presented as a reimbursement of outstanding construction costs due from CCC and Chuang’s China at the time of acquisition of the properties under development by the Group.

(b) The amount represents a reimbursement due from CCC and Chuang’s China in respect of certain deferred taxation liabilities arising from the excess of fair value over historical cost of investment properties and properties under development of subsidiaries at the date of acquisition by the Group pursuant to the Acquisition Agreement.

16. NEGATIVE GOODWILL

	THE GROUP
	HK$’000
GROSS AMOUNT
At 1st January, 2002	8,477
Adjustments to fair values of net assets acquired and estimated guaranteed rental income	1,705
At 31st December, 2002	10,182
RELEASED TO INCOME
Released in the period and balance at 31st December, 2002	3,880
CARRYING AMOUNT
At 31st December, 2002	6,302
At 31st December, 2001	8,477

During the year ended 31st December, 2002, the gross amount of negative goodwill arising from the completion of the Acquisition Agreement was increased by approximately HK$1,705,000 as a result of adjustments to the carrying amount of the identifiable assets and liabilities of AsianWisdom acquired (net of minority interest of approximately HK$2,255,000) and an estimate of the probable guaranteed rental income for certain of the Group’s investment properties acquired in the above acquisition. These adjustments have not had any effects on the results of the Group for 2001.

– 50 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

In addition, approximately HK$3,880,000 of the negative goodwill has been released to offset the administrative expenses in the consolidated income statement against the expected losses recognised in respect of an acquired subsidiary.

17. INTERESTS IN SUBSIDIARIES

Unlisted shares, at cost Amounts due from subsidiaries	THE COMPANY 2002 2001 HK$’000 HK$’000 92,963 92,963 347,996 363,179 440,959 456,142	THE COMPANY 2002 2001 HK$’000 HK$’000 92,963 92,963 347,996 363,179 440,959 456,142
		456,142

The amounts due from subsidiaries are unsecured, interest-free and have no fixed repayment terms. In the opinion of the directors, the amounts will not be repayable within twelve months from the balance sheet date and are therefore shown as a non-current asset.

Particulars of the Company’s principal subsidiaries at 31st December, 2002 are set out in note 38.

18. INVESTMENTS IN SECURITIES

The amount at 31st December, 2001 represented non-trading equity securities listed in Hong Kong which were stated at market value and the entire balance was disposed of during the year.

19. INVENTORIES

Raw materials Work in progress Finished goods	THE GROUP 2002 2001 HK$’000 HK$’000 30,728 22,780 10,251 7,904 3,555 2,334 44,534 33,018	THE GROUP 2002 2001 HK$’000 HK$’000 30,728 22,780 10,251 7,904 3,555 2,334 44,534 33,018
		33,018

Included above are raw materials of approximately HK$275,000 (2001: HK$1,114,000) which are carried at net realisable value.

20. TRADE RECEIVABLES

The Group has a policy of allowing credit periods ranging from 30 days to 120 days (2001: 30 days to 120 days) to its trade customers. The aged analysis of trade 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 More than 120 days	THE GROUP 2002 2001 HK$’000 HK$’000 43,072 34,211 34,502 20,910 33,100 19,863 28,270 18,085 16,294 11,564 155,238 104,633	THE GROUP 2002 2001 HK$’000 HK$’000 43,072 34,211 34,502 20,910 33,100 19,863 28,270 18,085 16,294 11,564 155,238 104,633
		104,633

– 51 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

21. TRADE PAYABLES

The aged analysis of trade 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	THE GROUP 2002 2001 HK$’000 HK$’000 26,831 16,710 19,968 14,009 20,421 10,434 22,771 8,217 25,502 12,001 115,493 61,371	THE GROUP 2002 2001 HK$’000 HK$’000 26,831 16,710 19,968 14,009 20,421 10,434 22,771 8,217 25,502 12,001 115,493 61,371
		61,371

22. AMOUNT DUE TO A RELATED COMPANY

The amount was payable to a subsidiary of Chuang’s China and was unsecured, interest-free and fully repaid during the year.

23. BORROWINGS

Borrowings comprise: Bank loans Import loans Analysed as: Secured Unsecured Bank borrowings are repayable as follows: Within one year or on demand More than one year but not exceeding two years More than two years but not exceeding five years Total _Less:_Amount repayable within one year or on demand and shown under current liabilities Amount due after one year	THE GROUP 2002 2001 HK$’000 HK$’000 66,542 54,373 16,833 21,736 83,375 76,109 59,942 43,603 23,433 32,506 83,375 76,109 46,025 58,259 14,950 6,600 22,400 11,250 83,375 76,109 (46,025) (58,259 37,350 17,850	THE GROUP 2002 2001 HK$’000 HK$’000 66,542 54,373 16,833 21,736 83,375 76,109 59,942 43,603 23,433 32,506 83,375 76,109 46,025 58,259 14,950 6,600 22,400 11,250 83,375 76,109 (46,025) (58,259 37,350 17,850
		76,109

		43,603 32,506
		76,109

		58,259 6,600 11,250
		76,109 (58,259
		17,850

– 52 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

24. AMOUNT DUE TO A MINORITY SHAREHOLDER

The amount is unsecured and repayable as follows:

Within one year More than one year but not exceeding two years More than two years but not exceeding five years Total _Less:_Amount repayable within one year and shown under current liabilities Analysed as: Interest bearing at approximately 0.6 percent (2001: ranging from 0.8 percent to 1 percent) per month Interest-free	THE GROUP 2002 2001 HK$’000 HK$’000 32,546 – 3,381 29,849 15,339 7,769 51,266 37,618 (32,546) – 18,720 37,618 40,724 31,399 10,542 6,219 51,266 37,618	THE GROUP 2002 2001 HK$’000 HK$’000 32,546 – 3,381 29,849 15,339 7,769 51,266 37,618 (32,546) – 18,720 37,618 40,724 31,399 10,542 6,219 51,266 37,618
		37,618 –
		37,618

		31,399 6,219
		37,618

25. OBLIGATIONS UNDER FINANCE LEASES

The maturity of obligations under finance leases is as follows: Within one year In the second to fifth year inclusive _Less:_Future finance charges Present value of lease obligations _Less:_Amount due for settlement within one year and shown under current liabilities Amount due after one year	THE GROUP Present value of Minimum minimum lease lease payments payments 2002 2001 2002 2001 HK$’000 HK$’000 HK$’000 HK$’000 1,878 1,956 1,788 1,774 1,565 3,551 1,540 3,417 3,443 5,507 (115) (316) 3,328 5,191 3,328 5,191 (1,788) (1,774 1,540 3,417	THE GROUP Present value of Minimum minimum lease lease payments payments 2002 2001 2002 2001 HK$’000 HK$’000 HK$’000 HK$’000 1,878 1,956 1,788 1,774 1,565 3,551 1,540 3,417 3,443 5,507 (115) (316) 3,328 5,191 3,328 5,191 (1,788) (1,774 1,540 3,417
		5,191 (1,774
		3,417

It is the Group’s policy to lease certain of its motor vehicles and plant and machinery under finance leases. The average lease term is 3 years. All leases are on a fixed repayment basis in Hong Kong dollars and no arrangement has been entered into for contingent rental payments.

The Group’s obligations under finance leases are secured by the lessor’s charge over the leased assets.

– 53 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

26. DEFERRED TAXATION

Balance brought forward Acquired on acquisition of subsidiaries Credit for the year_(note 9)_ Balance carried forward	THE GROUP 2002 2001 HK$’000 HK$’000 21,593 7,889 – 15,304 (2,971) (1,600 18,622 21,593	THE GROUP 2002 2001 HK$’000 HK$’000 21,593 7,889 – 15,304 (2,971) (1,600 18,622 21,593
		21,593

At 31st December, 2002, the major components of the deferred taxation (liabilities) assets, provided and unprovided, are as follows:

		THE	GROUP
		Provided	Unprovided
	2002	2001	2002	2001
	HK$’000	HK$’000	HK$’000	HK$’000
Tax effect of timing differences attributable to:
Excess of fair value over historical cost of
investment properties and properties
under development of certain subsidiaries
at the date of acquisition by the Group	(15,304)	(15,304)	–	–
Excess of depreciation allowances claimed
for tax purpose over depreciation charged
in the financial statements	(3,300)	(6,200)	–	–
Tax losses unutilised	–	–	2,730	1,063
Other timing difference	(18)	(89)	–	–
	(18,622)	(21,593)	2,730	1,063

The unprovided deferred taxation credit for the year amounting to approximately HK$1,667,000 (2001: HK$90,000) represents tax effect of timing differences attributable to tax losses incurred for the year.

A deferred taxation asset has not been recognised in the financial statements in respect of tax losses available to offset future profits as it is not certain that the tax losses will be utilised in the foreseeable future.

– 54 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

27. SHARE CAPITAL

Number of shares
Authorised:
Ordinary shares of HK$0.10 each
At 1st January, 2001, 31st December, 2001 and
31st December, 2002
1,000,000,000
Preference shares of HK$0.01 each
Series A preference shares
Increased during the year ended 31st December,
2001 and balance at 31st December, 2001
and 31st December, 2002
1,000,000,000
Series B preference shares
Increased during the year ended 31st December, 2001 and
balance at 31st December, 2001 and 31st December, 2002
1,000,000,000
2,000,000,000
Issued and fully paid:
Ordinary shares of HK$0.10 each
At 1st January, 2001
364,660,068
Issue of shares on exercise of share options
630,000
At 31st December, 2001
365,290,068
Conversion from Series A preference shares during the year
24,000,000
At 31st December, 2002
389,290,068
Preference shares of HK$0.01 each
Series A preference shares
Issue of shares for acquisition of subsidiaries during
the year ended 31st December, 2001 and balance
at 31st December, 2001
84,000,000
Conversion to ordinary shares during the year
(12,000,000)
At 31st December, 2002
72,000,000
Series B preference shares
Issue of shares for acquisition of subsidiaries during
the year ended 31st December, 2001 and balance
at 31st December, 2001 and 31st December, 2002
337,500,000
409,500,000

Amount
HK$’000
100,000
10,000
10,000
20,000
36,466
63
36,529
2,400
38,929
840
(120)
720
3,375
4,095

(a) During the year ended 31st December, 2001, the following changes in the ordinary and preference share capital of the Company took place:
(i) 630,000 ordinary shares of HK$0.10 each in the Company were issued at HK$0.23 per share upon the exercise of share options granted under the share option scheme of the Company. The ordinary shares issued rank pari passu with the then existing ordinary shares in all respects.
(ii) Pursuant to a resolution passed at an extraordinary general meeting of the Company on 13th December, 2001, the authorised share capital of the Company was increased from HK$100,000,000 to HK$120,000,000 by the creation of 1,000,000,000 Series A preference shares of HK$0.01 each (“Series A Preference Shares”) and 1,000,000,000 Series B preference shares of HK$0.01 each (“Series B Preference Shares”, together with Series A Preference Shares collectively referred to as “Preference Shares”).

– 55 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(iii) On 14th December, 2001, the Company issued 84,000,000 Series A Preference Shares and 337,500,000 Series B Preference Shares at a subscription price of HK$0.60 per share to Chuang’s China to satisfy the consideration payable of HK$252,900,000 in respect of the acquisition of AsianWisdom and the related shareholder’s loan. The Preference Shares are non-voting, redeemable and their holders are entitled to a fixed cumulative preferential dividend payable semi-annually at a rate of 2.5 percent per annum on the issue price of HK$0.60 of each preference share. In addition, the Preference Shares rank in priority to the ordinary shares in the Company as to dividend and return of capital. Subject to adjustment in accordance with the terms of Series A Preference Shares, each of the Series A Preference Shares is convertible into two ordinary shares in the Company of HK$0.10 each (“Conversion Shares”) at the option of the holders at any time from 14th December, 2001 (the date of issue of Series A Preference Shares) prior to the fifth anniversary from the date of their issue. The Conversion Shares shall, when issued, rank pari passu in all respects with the then existing ordinary shares of the Company. Subject to the Companies Law, unless previously converted, the Preference Shares are redeemable by the Company at any time prior to the fifth anniversary from 14th December, 2001 at their outstanding subscription amount together with any unpaid dividend in cash. Further, the Company shall redeem all outstanding Preference Shares which have not been previously redeemed or converted on the fifth anniversary from 14th December, 2001 at their outstanding subscription amount together with any unpaid dividend in cash.

Further details of the rights of the Preference Shares have been set out in the Company’s circular to the shareholders dated 20th November, 2001.

(b) During the year ended 31st December, 2002, the holder of Series A Preference Shares exercised the conversion right of 12,000,000 shares of HK$0.01 each, which were originally issued at the issue price of HK$0.60 per preference share, resulting in the issuance of 24,000,000 new ordinary shares in the Company of HK$0.10 each. The ordinary shares issued rank pari passu in all respects with the then existing issued ordinary shares of the Company.

28. SHARE OPTION SCHEME

The share option scheme of the Company adopted on 22nd May, 1996 (the “1996 Scheme”) was for the primary purpose of providing incentives to directors and eligible employees, and would be valid and effective for a period of ten years from the date of its adoption. Under the 1996 Scheme, the directors of the Company might grant options to any executive director or employee of the Group to subscribe for ordinary shares in the Company at a price notified by the directors and should not be less than 80 percent of the average of the closing prices of the Company’s ordinary shares as stated in the daily quotation sheets issued by the Stock Exchange (“Daily Quotation Sheets”) for the five trading days immediately preceding the date of the offer of the option or the nominal value of the ordinary shares, whichever is the higher. The number of ordinary shares in respect of which options might be granted to any individual at any time was not permitted to exceed 2.5 percent of the issued ordinary share capital of the Company at any point in time and the maximum number of ordinary shares in respect of which options might be granted under the 1996 Scheme should not exceed 10 percent of the issued ordinary share capital of the Company from time to time.

Options granted under the 1996 Scheme should be taken up within 28 days from the date of grant of share options and were exercisable at any time after the date of options were accepted (“Acceptance Date”) to the third anniversary of the Acceptance Date, subject to certain restrictions contained in the offer letters. Consideration received by the Company for the options granted was nominal.

At 31st December, 2002, the outstanding number of ordinary shares in respect of which options had been granted under the 1996 Scheme was 1,000,000 (2001: 1,500,000), representing 0.26 (2001: 0.41) percent of the then issued ordinary share capital of the Company.

– 56 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

A summary of the movements during the years ended 31st December, 2001 and 2002 in the share options granted under the 1996 Scheme, which were all granted to employees of the Company and its subsidiaries, is as follows:

				Number of ordinary shares to be	Number of ordinary shares to be	Number of ordinary shares to be
				issued	upon exercise of the share options
	Exercise			Lapsed	Exercised		Lapsed
	price per		Balance	during the	during the	Balance	during the	Balance
Date of	ordinary		at	year ended	year ended	at	year ended	at
grant	share	Exercisable period	1.1.2001	31.12.2001	31.12.2001	31.12.2001	31.12.2002	31.12.2002
	HK$			(Note a)	(Note b)		(Note c)
27.1.1998	0.230	27.1.1998 to 26.1.2001	630,000	–	630,000	–	–	–
1.3.1999	0.175	1.3.1999 to 28.2.2002	876,000	376,000	–	500,000	500,000	–
3.2.2000	0.320	3.2.2000 to 2.2.2003	1,000,000	–	–	1,000,000	–	1,000,000

Notes:

(a) These options lapsed upon resignation of grantees.
(b) The weighted average closing price of the Company’s ordinary shares immediately before the dates on which the options were exercised was HK$0.30.
(c) These options lapsed upon expiration of the exercisable period.

Pursuant to an extraordinary general meeting held on 13th December, 2001, a new share option scheme (the “2001 Scheme”) was adopted by the Company in place of the 1996 Scheme. The termination of the 1996 Scheme did not affect the rights of the holders of the share options granted prior thereto and such options granted continue to remain valid and exercisable in accordance with the 1996 Scheme.

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 Sheets on the day of offer; (ii) the average of the closing prices of the Company’s ordinary shares as stated in the Daily Quotation Sheets 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 in respect of which options may be granted to any individual in any one year 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 shall not exceed 10 percent of the issued ordinary share capital of the Company from time to time.

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 the Acceptance Date, but none of them can be exercised later than ten years from the Acceptance Date. No options have been granted under the 2001 Scheme since its adoption.

Details of the share options exercised subsequent to 31st December, 2002 are set out in note 37.

29. RETIREMENT BENEFITS PLANS

Defined contribution plan

The Group operates a Mandatory Provident Fund Scheme (the “Scheme”) for its qualifying employees. The assets of the Scheme are held separately from those of the Group, in funds under the control of trustees. The Group contributes at the lower of HK$1,000 or 5% of the relevant payroll costs to the Scheme, which contribution is matched by employees.

The total cost charged to the consolidated income statement of HK$756,000 (2001: HK$692,000) represents contributions payable to the Scheme by the Group in respect of the current accounting period. As at 31st December, 2002, contributions of approximately HK$66,000 (2001: HK$80,000) due in respect of the reporting period had not been paid over to the Scheme.

– 57 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Defined benefit plan

The Group also operates a defined benefit plan (the “Plan”) for its qualifying employees. Under the Plan, the employees are entitled to retirement benefits varying between 30 and 170 per cent of final salary multiplied by the pensionable service on attainment of a retirement age of 60. No other postretirement benefits are provided.

ORSO Funding Valuation

The most recent formal statutory actuarial valuation of the Plan was carried out at 30th September, 2000 by Mr. Keat Tian, Fellow of the Institute of Actuaries, of Watson Wyatt Hong Kong Limited in accordance with the requirements of Occupational Retirement Schemes Ordinance. The valuation was conducted using attained age method with a discount rate net of long-term salary increase of 1% per annum. The resulted funding level was 65% and the required employer cash funding contribution rate was 9.5% of basic salaries.

SSAP 34 Accounting Valuation

Actuarial valuations have been conducted as of 1st January, 2002 and 31st December, 2002 based on requirements of SSAP 34 by Ms. Elaine Hwang, Fellow of the Institute of Actuaries, of Watson Wyatt Hong Kong Limited. The present value of the defined benefit obligation, the related current service cost and past service costs were measured using the projected unit credit method.

	2002	2001
	per annum	per annum
The main actuarial assumptions used were as follows:
Discount rate	5.25%	6.25%
Expected return on plan assets	7.00%	7.00%
Expected rate of salary increases	3.00%	3.00%

The actuarial valuation showed that the market value of plan assets was approximately HK$4,160,000 (2001: HK$4,843,000) and that the actuarial value of these assets represented 57% (2001: 77%) of the benefits that had accrued to members. The shortfall of approximately HK$3,175,000 is to be cleared over the estimated remaining service period of the current membership of 15 years.

As a result of the adoption of SSAP 34 with effect from 1st January, 2002, the Group has determined the transitional liability for its defined benefit plan at 1st January, 2002 as approximately HK$1,417,000 more than the liability that would have been recognised at the same date using the previous accounting policy. This amount is being recognised on a straight-line basis over five years. A charge of approximately HK$283,000 (2001: Nil) was recognised in the current year. As at 31st December, 2002, approximately HK$1,134,000 remained unrecognised.

Total expenses recognised in the consolidated income statement in respect of the Plan are as follows:

Current service cost Interest cost Expected return on plan assets Amortisation of the transitional liability upon first adoption of SSAP 34 Past service cost Total, included in administrative expenses	2002 HK$’000 1,155 386 (374) 283 – 1,450	2001 HK$’000 798 327 (422 – 657
		1,360

The actual return on plan assets was approximately HK$837,000 (2001: a loss of HK$864,000).

– 58 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

The amount included in the balance sheet arising from the Group’s obligation in respect of the Plan is as follows:

Present value of funded obligations Fair value of plan assets Unrecognised actuarial losses Unrecognised transitional liability on initial adoption of SSAP 34 Total, included in non-current liabilities	2002 HK$’000 7,335 (4,160) (1,758) (1,134) 283	2001 HK$’000 6,260 (4,843) – (1,417) –

No equity shares of the Group and property occupied by the Group were included in the fair value of plan assets.

Movements in the net liability in the current year were as follows:

At 1st January Amounts charged to income Contributions At 31st December 30. PURCHASE OF SUBSIDIARIES Net assets acquired Investment properties Property, plant and equipment Properties under development Deposits, prepayments and other receivables Bank balances and cash Accrued charges and other payables Amount due to a related company Amount due to a minority shareholder Taxation payable Amount due to former shareholder Deferred taxation Minority interests Negative goodwill Satisfied by: Issue of Preference Shares of the Company Expenses paid in relation to the acquisition Assignment of amount due to former shareholder Contractual reimbursement from related companies – Construction costs of properties under development – Deferred taxation liabilities	2002 HK$’000 – 1,450 (1,167) 283 2002 HK$’000 – – – – – – – – – – – – – – – – – – – – –	2001 HK$’000 – 1,360 (1,360) – 2001 HK$’000 143,700 1,544 157,200 11,527 6,003 (4,660) (6,089) (37,436) (123) (116,958) (15,304) (46,057) 93,347 (8,477) 84,870 252,900 1,793 (116,958) (41,718) (11,147) 84,870

– 59 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

The subsidiaries acquired in 2001 did not contribute significantly to the Group’s cash flows or operating

results.

Analysis of the inflow of cash and cash equivalents in respect of the purchase of subsidiaries:

2002 HK$’000 Bank balances and cash acquired – Expense paid in relation to the acquisition – Inflow of cash and cash equivalents in respect of the purchase of subsidiaries –	2001 HK$’000 6,003 (1,793
	4,210

31. MAJOR NON-CASH TRANSACTIONS

(i) During the year ended 31st December, 2001, the Group entered into finance leases in respect of new assets acquired with a total capital value at the inception of the leases of approximately HK$175,000 (2002: Nil).
(ii) In December 2001, the Group acquired AsianWisdom and the respective shareholder’s loan for a consideration of HK$252,900,000 which was satisfied by ways of allotment and issue of Preference Shares.

32. CAPITAL COMMITMENTS

At 31st December, 2002, the Group had commitments of approximately HK$43,890,000 for capital expenditure contracted for but not provided in the financial statements in respect of the acquisition of property, plant and equipment.

At 31st December, 2001, the Group had commitments of approximately HK$47,617,000 for capital expenditure contracted for but not provided in the financial statements in respect of the acquisition of property, plant and equipment and the construction of properties under development. However, HK$22,391,000 of this amount would be reimbursed by CCC as incurred pursuant to the Acquisition Agreement. Details of this arrangement are set out in note 15(a).

33. OPERATING LEASES

(a) Operating lease commitments

At the balance sheet date, the Group was committed to make minimum lease payments under non-cancellable operating leases for land and buildings which fall due as follows:

Within one year More than one year but within five years	THE GROUP 2002 2001 HK$’000 HK$’000 5,607 3,612 11,543 2,408 17,150 6,020	THE GROUP 2002 2001 HK$’000 HK$’000 5,607 3,612 11,543 2,408 17,150 6,020
		6,020

Operating lease payments represent rental payable by the Group for certain of its office and warehouse properties with fixed monthly rentals for an average term of three years.

(b) Operating lease arrangements

Property rental income earned during the year was HK$4,715,000 (2001: HK$130,000). The properties are expected to generate rental yields of 5% on an ongoing basis. All of the properties held have committed tenants for the next 2 years.

– 60 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Certain properties under development of the Group at 31st December, 2001 were pre-leased to an independent third party for a term of 10 years upon complete construction of the properties with annual rental of RMB10,000,000 (equivalent to approximately HK$9,434,000) in the first year and escalating rent thereafter. Total rentals receivable in the second to fifth years inclusive and over five years amounted to approximately HK$48,000,000 and HK$75,000,000, respectively. These properties had been completed during the year.

At 31st December, 2002, the Group had contracted with tenants for the following future minimum lease payments in respect of its completed properties:

Within one year More than one year but within five years More than five years	THE GROUP 2002 2001 HK$’000 HK$’000 14,557 6,572 66,309 3,959 84,154 – 165,020 10,531	THE GROUP 2002 2001 HK$’000 HK$’000 14,557 6,572 66,309 3,959 84,154 – 165,020 10,531
		10,531

34. CONTINGENT LIABILITIES

At 31st December, 2001 and 31st December, 2002, the Group did not have any contingent liabilities.

35. PLEDGE OF ASSETS

At the balance sheet date, certain assets of the Group with the following net book values had been pledged to secure borrowings granted to the Group:

Investment properties Leasehold land and buildings Trade receivables Plant and machinery	THE GROUP 2002 2001 HK$’000 HK$’000 71,562 – 30,573 17,086 – 85,708 6,387 7,366 108,522 110,160	THE GROUP 2002 2001 HK$’000 HK$’000 71,562 – 30,573 17,086 – 85,708 6,387 7,366 108,522 110,160
		110,160

36. RELATED PARTY TRANSACTIONS

(a) On 14th December, 2001, the Company completed the Acquisition Agreement with CCC to acquire the entire issued share capital of, and the shareholder’s loan to, AsianWisdom for an aggregate consideration of HK$252,900,000. On the same date, the Company also completed subscription agreement with Chuang’s China pursuant to which the proceeds under the Acquisition Agreement were utilised by Chuang’s China to subscribe for the Preference Shares of the Company at an issue price of HK$0.60 each. Full details of the transactions were contained in the circular issued to the shareholders of the Company dated 20th November, 2001 and disclosed in the announcements of the Company dated 29th October, 2001, 19th November, 2001 and 13th December, 2001. Included in the terms of the Acquisition Agreement, CCC and Chuang’s China agreed to indemnify the Group against any loss arising from claim for taxation in relation to the acquisition of subsidiaries as a consequence of events occurring on or before the completion of the Acquisition Agreement.
(b) Pursuant to the Acquisition Agreement, CCC has also given an undertaking in favour of the Group that in the event the annual rental income of certain of the investment properties acquired by the Group through the above acquisition for each of the two years after the date of completion of the Acquisition Agreement shall be less than HK$3,880,000, CCC and Chuang’s China will indemnify the Group for an amount of the shortfall on a dollar for dollar basis. Such guaranteed income received for the year ended 31st December, 2002 was approximately HK$3,880,000 (2001: HK$187,000).

– 61 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

The Group also leased certain of the acquired properties to Yuen Sang Hardware Co. (1988) Limited, a wholly owned subsidiary of Chuang’s China, at an aggregate annual rental of approximately HK$1,067,000 which is based on market rate of similar properties. The lease agreement is for a duration of 2 years expiring on 31st March, 2003 with an option to renew for an additional term of 2 years. Rental income received by the Group under this agreement for the year ended 31st December, 2002 was approximately HK$1,067,000 (2001: HK$50,000).

Details of other transactions entered into in association with the Acquisition Agreement are set out in note 15.

(c) During the year ended 31st December, 2002, the Group also paid building management fee amounting to approximately HK$841,000 (2001: Nil) to Chuang’s Development (China) Limited, a wholly owned subsidiary of Chuang’s China. This transaction was carried out in accordance with market rate of similar properties.

37. POST BALANCE SHEET EVENTS

The following significant events took place subsequent to 31st December, 2002:

(a) Pursuant to a resolution in writing of all the directors of the Company passed on 6th January, 2003, a written request was made by the Company to the holder of Series B Preference Shares of the Company to redeem 83,333,333 Series B Preference Shares at a redemption price of HK$0.60 each with an aggregate value of HK$50,000,000. The redemption of the shares took place on 27th January, 2003.
(b) Subsequent to 31st December, 2002, options to subscribe for 1,000,000 ordinary shares in the share capital of the Company at an exercise price of HK$0.32 per share were exercised.

38. SUBSIDIARIES

Particulars of the principal subsidiaries of the Company as at 31st December, 2002 are as follows:

			Proportion
			of equity
		Issued and	interest
	Place of	fully paid	indirectly
	incorporation	share capital/	held by the	Principal
Name of subsidiary	or registration	registered capital	Company	activities(note a)
成都莊士中心開發有限公司	PRC	RMB20,000,000	51%	Properties development
Chengdu Chuang’s Centre	(note b)			and investment
Development Company
Limited
Dah Hua Printing Press	Hong Kong	HK$600,000	100%	Trading of printing
Company Limited		ordinary shares		products
東莞勤達印刷有限公司	PRC	HK$93,800,000	100%	Manufacturing and
Dongguan Midas Printing	(note c)			trading of printing
Company Limited				products
Lever Printing Factory Limited	Hong Kong	HK$150,000	100%	Trading of packaging
		founders’ shares		printing products
		HK$350,000
		ordinary shares
Midas Printing (Asia) Limited	Hong Kong	HK$100	100%	Trading of printing
		ordinary shares		products
Midas Printing (HK) Limited	Hong Kong	HK$2	100%	Trading of printing
		ordinary shares		products
Midas Printing Factory Limited	Hong Kong	HK$2	100%	Manufacturing of
		ordinary shares		printing products

– 62 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

			Proportion
			of equity
		Issued and	interest
	Place of	fully paid	indirectly
	incorporation	share capital/	held by the	Principal
Name of subsidiary	or registration	registered capital	Company	activities(note a)
Midas Printing International	Hong Kong	HK$7,000	100%	Trading of printing
Limited		ordinary shares		products
Midas Printing Limited	Hong Kong	HK$100	100%	Investment holding
		ordinary shares
		HK$10,000,000
		non-voting deferred
		shares_(note d)_
Riverside Trinity Limited	Hong Kong	HK$2	100%	Property investment
		ordinary shares
Sino Stream Limited	Hong Kong	HK$2	100%	Property investment
		ordinary shares
廣東省博羅縣圓洲勤達	PRC	US$7,500,000	100%	Book printing
印務有限公司	(note c)			and binding

Notes:

a. All subsidiaries carry out their operations principally in their respective place of incorporation or registration.
b. The company is registered in the form of an equity joint venture.
c. The company is registered in the form of a wholly owned foreign investment enterprise.
d. The deferred shares practically carry no rights to dividends or to receive notice of attend or vote at any general meeting of the company or to participate in any distribution on winding up.

The above table lists the subsidiaries of the Group which, in the opinion of the directors, principally affected the results of the Group for the year or formed a substantial portion of the net assets of the Group at the end of the year. To give details of other subsidiaries would, in the opinion of the directors, result in particulars of excessive length.

None of the subsidiaries had any debt securities subsisting at the end of the year or at any time during the

year.

– 63 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

4. PRO FORMA STATEMENT OF UNAUDITED ADJUSTED CONSOLIDATED NET TANGIBLE ASSET VALUE

Set out below is a pro forma statement of the unaudited adjusted consolidated net tangible asset value of the Group based on the audited consolidated net assets of the Group as at 31st December, 2002 and adjusted as follows:

	HK$’000
Audited consolidated net assets as at 31st December, 2002	594,783
Add:
Negative goodwill	6,302
Proceeds received from the Shares issued on exercise of employee share options	320
Net surplus on revaluation of the Group’s leasehold land and buildings
(Note 1)	7,301
Less:
Redemption of 83,333,333 Series B Preference Shares in cash	(50,000)
Final dividend paid	(10,928)
Pro forma unaudited adjusted net tangible asset value
of the Group before the Conversion	547,778
Conditional Special Dividend declared
to be distributed upon the Completion	(4,683)
Pro forma unaudited adjusted net tangible asset value
of the Group after the Conversion	543,095

Pro forma unaudited adjusted net tangible asset value
of the Group per Share before the Conversion_(Note 2)_	0.90

Pro forma unaudited adjusted net tangible asset value
of the Group per Share after the Conversion_(Note 3)_	0.74

Notes:

The net surplus from the revaluation of leasehold land and buildings held by the Group are based on the valuation carried out by DTZ on the Group’s property interests as at 30th April, 2003, the report of which is set out in Appendix II to this circular.

In accordance with the accounting policy adopted by the Group, leasehold land and buildings are stated in balance sheet at cost less accumulated depreciation, amortisation and accumulated impairment losses. Accordingly, the net surplus arising from revaluation of leasehold land and buildings is not recognized in the financial statements of the Group.

Neither surplus nor deficit in relation to investment properties of the Group was arisen from the valuation carried out by DTZ on the Group’s property interests as at 30th April, 2003.

Based on the existing issued ordinary share capital of 390,290,068 Shares and the share capital and share premium of 326,166,667 Preference Shares of HK$195.7 million has been excluded in calculating the pro forma unaudited adjusted net tangible asset value per Share.
Based on the enlarged issued ordinary share capital of 534,290,068 Shares after the Conversion and the share capital and share premium of the remaining 247,500,000 series B Preference Shares of HK$148.5 million has been excluded in calculating the pro forma unaudited adjusted net tangible asset value per Share.

– 64 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

5. MATERIAL CHANGES

Save as disclosed in the pro forma statement of unaudited adjusted consolidated net tangible asset value in this Appendix and in paragraphs headed “Information on the Company” in letter from the Board in this circular, the Directors are not aware of any material changes in the financial or trading position or prospects of the Group since 31st December, 2002, the date to which the latest audited financial statements of the Company were made up.

6. INDEBTEDNESS

At the close of business on 30th April, 2003, being the latest practicable date of this indebtedness statement prior to the printing of this circular, the Group had outstanding bank loans of approximately HK$80.1 million and obligations under finance leases of approximately HK$2.7 million. In addition, there is an advance from a minority shareholder of a subsidiary of approximately HK$52.2 million which was unsecured and repayable within five years, of which approximately HK$11.5 million is interest-free, and the rest of the balance bears interest at prevailing market rates.

At the close of business on 30th April, 2003, the Group’s borrowings of approximately HK$69.8 million were secured by a charge over the Group’s investment properties, leasehold land and building and plant and machinery with carrying values of approximately HK$71.6 million, HK$30.1 million and HK$6.1 million, respectively and corporate guarantees given by the Company.

Save as aforesaid, and apart from the Preference Shares, intra-group liabilities and normal trade debts payable, none of the companies in the Group had outstanding at the close of business on 30th April, 2003, any loan capital issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, mortgages, charges, any guarantees or other material contingent liabilities.

Foreign currency amounts have for these purposes been translated into Hong Kong dollars at the approximate rates prevailing at the close of business on 30th April, 2003.

– 65 –

PROPERTY VALUATION

APPENDIX II

Set out below are the texts of a letter, summary of valuations and valuation certificates received from DTZ Debenham Tie Leung Limited, an independent property valuer, in connection with their valuations as at 30th April, 2003 of the property interests of the Group, and prepared for the purpose of inclusion in this circular:–

==> picture [161 x 71] intentionally omitted <==

12th June, 2003

The Directors Midas International Holdings Limited 1st Floor, 100 Texaco Road Tsuen Wan New Territories Hong Kong

Dear Sirs,

RE: PORTFOLIO VALUATIONS

INSTRUCTIONS, PURPOSE & DATE OF VALUATION

In accordance with the instructions of Midas International Holdings Limited (the “Company”) for us to value the interests held by the Company and its subsidiaries (the “Group”) in certain properties (as per the “Summary of Valuations” attached below) situated in Hong Kong and in the People’s Republic of China (the “PRC”), we confirm that we have carried out inspection, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the open market value of these property interests as at 30th April, 2003 (the “date of valuation”) for the purpose of incorporation into a public document issued by the Group.

DEFINITION OF OPEN MARKET VALUE

Our valuation of each of the properties represents our opinion of its open market value which we would define as intended to mean “the best price at which the sale of an interest in property would have been completed unconditionally for cash consideration on the date of valuation, assuming:–

(a) a willing seller;
(b) that, prior to the date of valuation, there had been a reasonable period (having regard to the nature of the property and the state of the market) for the proper marketing of the interest, for the agreement of price and terms and for the completion of the sale;
(c) that the state of the market, level of values and other circumstances were, on any earlier assumed date of exchange of contracts, the same as on the date of valuation;

– 66 –

PROPERTY VALUATION

APPENDIX II

(d) that no account is taken of any additional bid by a purchaser with a special interest; and
(e) that both parties to the transaction had acted knowledgeably, prudently and without compulsion.”

VALUATION BASES & ASSUMPTION

Our valuations have been made on the assumption that the Group sells the property interests on the open market without the benefit of a deferred terms contract, leaseback, management agreement, or any similar arrangement which would serve to increase the value of the such property interests.

In valuing the property situated in Hong Kong the Government lease of which expired before 30th June, 1997, we have taken into account the provisions contained in Annex III of the Joint Declaration of the Government of the United Kingdom and the Government of the PRC on the Question of Hong Kong and the New Territories Leases (Extension) Ordinance that such leases have been extended without premium until 30th June, 2047 and that a rent of three per cent of the then rateable value is charged per annum for the property from the date of extension.

In undertaking our valuation of the properties situated in the PRC, we have assumed that transferable land use rights in respect of the properties for respective specific terms at nominal annual land use fees have been granted and that, unless otherwise stated, any premium payable has already been fully paid. We have also assumed that the Group has free and uninterrupted rights to use or to assign the respective properties for the whole of the respective unexpired terms as granted.

No allowance has been made in our valuations for any charges, mortgages or amounts owing on the properties nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the properties are free from encumbrances, restrictions and outgoings of an onerous nature which could affect value.

As advised by the Group, the potential tax liability upon disposal of the entire property interests held by the Group valued at approximately HK$332.1 million is estimated to be approximately HK$19 million. However, we have been further advised by the Group that the properties are currently and will continue to be used in the Group’s business operation and at present the Group has no intention to dispose of these property interests, such tax liability is not likely to be crystallized in the foreseeable future.

METHOD OF VALUATION

In valuing the properties, we have valued each of them by Direct Comparison Method by making reference to the comparable sale prices in the relevant locality and, where appropriate, by capitalizing the net rental income derived from the existing tenancies with due allowance for the reversionary potential of the properties. We have also taken into account the construction cost expended on the proposed development.

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SOURCE OF INFORMATION

We have relied to a very considerable extent on the information given by the Group and have accepted advice given to us on such matters as planning approval or statutory notices, easements, tenure, particulars of occupancy and tenancies, construction cost, site and floor areas and all other relevant matters.

Dimension, measurements and areas included in the valuation certificates attached are based on information provided to us and are therefore only approximation. We have had no reason to doubt the truth and accuracy of the information provided to us by the Group which is material to the valuation. We were also advised by the Group that no material facts have been omitted from the information provided.

TITLE INVESTIGATION

We have caused searches to be made at the appropriate Land Registry in respect of the property in Hong Kong and have been provided with copies of documents in relation to the titles to the properties in the PRC. However, we have not been able to carry out searches to verify the ownership of the properties or to ascertain any amendment which may not appear on the copies handed to us.

SITE INSPECTION

We have inspected each of the properties. However, no structural survey has been made, but in the course of our inspection, we did not note any serious defect. We are not, however, able to report that the properties are free of rot, infestation or other structural defects. Unless otherwise stated, we have not been able to carry out detailed on-site measurements to verify the site and floor areas of the properties and we have assumed that the areas shown on the documents handed to us are correct.

CURRENCY & EXCHANGE RATE

Unless otherwise stated, all money amounts stated herein are in Hong Kong dollars. The exchange rate adopted in our valuation is HK$1 = RMB1.06 which was the approximate exchange rate prevailing as at the date of valuation and there has been no significant fluctuation in such rate between that date and the date of this letter.

Our valuations are summarized below and the valuation certificates are attached.

Yours faithfully, for and on behalf of

DTZ Debenham Tie Leung Limited Andrew K. F. Chan MSc., R.P.S.(GP), M.H.K.I.S., M.R.I.C.S. Director

Note: Mr. Andrew K. F. Chan is a Registered Professional Surveyor who has over 13 years of experience in valuation of properties in the PRC.

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SUMMARY OF VALUATIONS

				Capital value
				in existing state
		Capital value in	Interest	attributable to
	existing state as at		attributable to	the Group as at
	Property	30th April, 2003	the Group	30th April, 2003
		HK$		HK$
Group I – Properties held and occupied		by the Group
1.	A factory complex situated on	27,800,000	100%	27,800,000
	Xin Nan 1st Road,
	Xia Nan Administrative Zone,
	Yuanzhou Town, Boluo County,
	Huizhou, Guangdong Province,
	the PRC
2.	A factory complex situated in	37,400,000	100%	37,400,000
	Xiao Bian Administrative Zone,
	Changan Town, Dongguan,
	Guangdong Province, the PRC
3.	Unit Nos. 7 and 8 on Level 5 and	1,240,000	51%	632,400
	a car park on Level 1, Block 2F,
	No. 9 Youyi Road,
	Wuhou District,
	Chengdu, Sichuan Province,
	the PRC
4.	Car Parking Space Nos. 5 and 11	700,000	100%	700,000
	on Ground Floor,
	Wing Wah Industrial Building,
	No. 677 King’s Road,
	North Point, Hong Kong
			Sub-total:	66,532,400

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						Capital value
					in existing state
		Capital value in		Interest		attributable to
		existing state as at		attributable to	the Group as at
	Property	30th	April, 2003	the Group	30th April, 2003
			HK$			HK$
Group II – Properties held for sale/investment by the Group
5.	The whole of Block Nos. 1, 2 and 3,		97,000,000	100%		97,000,000
	Chuang’s Garden,
	Chuang’s New Town,
	Kai Cheng Avenue, Danshui Town,
	Huiyang, Guangdong Province,
	the PRC
6.	Lambda Building,		46,700,000	100%		46,700,000
	Yuen Sang Building and
	Block Nos. D1, D2 and D3,
	Chuang’s New Town,
	Kai Cheng Avenue, Danshui Town,
	Huiyang, Guangdong Province,
	the PRC
7.	The commercial podium and		239,000,000	51%		121,890,000
	basement of Chengdu Chuang’s
	Centre situated at No. 1 Renmin
	South Road Section 4,
	Wuhou District, Chengdu,
	Sichuan Province, the PRC
				Sub-total:		265,590,000
				Grand total:		332,122,400

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VALUATION CERTIFICATE

Group I – Properties held and occupied by the Group

Property Description and tenure 1. A factory complex The property occupies a site with an situated on area of 38,056 sq.m. (409,635 sq.ft). Xin Nan 1st Road, Xia Nan The property comprises various Administrative workshop and dormitory buildings Zone, with ancillary facilities. The various Yuanzhou Town, buildings were mainly completed in Boluo County, 1996 except for a single storey Huizhou, workshop which was completed in Guangdong 2002. Province, the PRC The various buildings of the property have a total gross floor area of 20,037.14 sq.m. (215,680 sq.ft.). The property is also planned to comprise a 2-storey workshop which is planned to have a gross floor area of 14,805 sq.m. (159,361 sq.ft.) and is scheduled for completion by May 2003. The land use rights of the property have been granted for a term of 50 years from 1st January, 1995 to 31st December, 2044.

Capital value in Particulars of existing state as at occupancy 30th April, 2003

HK$27,800,000

The property is currently occupied by the Group as workshop with ancillary office and dormitory. A 2-storey workshop is currently under construction.

Notes:–

(1) According to Certificate for the Use of State-owned Land No. (96) 19000330 issued by the People’s Government of Boluo County on 13th March, 1996, the land use rights of the property, comprising a site area of 38,056 sq.m., have been granted to 廣東省博羅縣圓洲勤達印務有限公司 (Guangdong Boluo Yuanzhou Midas Printing Co., Ltd.), a wholly-owned subsidiary of the Company, for a term of 50 years for “Printing Factory and ancillary” use.
(2) According to ten Real Estate Title Certificates all issued by the People’s Government of Boluo County on 2nd January, 1999, the title to the various buildings of the property, comprising a total gross floor area of 18,308.14 sq.m., is vested in Guangdong Boluo Yuanzhou Midas Printing Co., Ltd. Details of the said certificates are summarized as follows:–

Certificate No.	Building	Year of completion	No. of storeys	Gross floor area
1685087	Plant	1996	1	195.00 sq.m.
1685088	Residential	1996	6	2,135.20 sq.m.
1685089	Dormitory	1996	3	1,153.00 sq.m.
1685090	Residential	1996	4	367.94 sq.m.
1685091	Residential	1996	4	442.00 sq.m.
1685092	Timber workshop	1996	1	112.50 sq.m.
1685093	Workshop	1996	1	2,624.00 sq.m.
1685094	Canteen	1996	2	974.80 sq.m.
1685095	Workshop	1996	1	5,308.70 sq.m.
1685096	Workshop	1996	2	4,995.00 sq.m.

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(3) According to Construction Permit No. 442526200205220101 dated 22nd May, 2002, a warehouse comprising a gross floor area of 1,729 sq.m. is permitted to be constructed.
According to Construction Permit No. 442526200301140101 dated 14th January, 2003, a factory comprising a gross floor area of 14,805 sq.m. is permitted to be constructed.
(4) As advised by the Group, as at the date of valuation, the construction cost expended on the proposed workshop was in the sum of approximately RMB3,350,000. We have taken into account such cost in our valuation.
(5) We noted upon our inspection that certain additions and extensions to the existing structures, comprising a total gross floor area of 5,886.53 sq.m., had been erected to provide extra accommodation for workshop use. However, no planning approvals regarding the construction of these additions and extensions have been made available to us. In the course of our valuation, we have disregarded these additions and extensions and their values, nor have we taken into account the reinstatement cost of the same.
(6) According to Business Licence No. 002576, Guangdong Boluo Yuanzhou Midas Printing Co., Ltd. has been incorporated as a sole-proprietorship enterprise with a registered capital of US$7,500,000 and an operation period of 30 years from 8th September, 1994 to 7th September, 2024.
(7) The opinion of the Group’s legal adviser on PRC law states, inter alia, that:–
(i) Guangdong Boluo Yuanzhou Midas Printing Co., Ltd. has obtained the land use rights of the property by virtue of obtaining the relevant Certificate for the Use of State-owned Land.
(ii) Guangdong Boluo Yuanzhou Midas Printing Co., Ltd. has settled in full the land premium.
(iii) Guangdong Boluo Yuanzhou Midas Printing Co., Ltd. has obtained the title to ten buildings of the property by virtue of obtaining the relevant Real Estate Title Certificates.
(iv) The property is free from any encumbrances.
(v) Guangdong Boluo Yuanzhou Midas Printing Co., Ltd. is entitled to occupy and transfer the property.
(8) We have relied on the aforesaid legal opinion and prepared our valuation on the following assumptions:–
(i) Guangdong Boluo Yuanzhou Midas Printing Co., Ltd. is in possession of a proper legal title to the property and is entitled to transfer the property with the residual term of its land use rights with no extra land premium or other onerous payment payable to the government;
(ii) all land premium and other costs of ancillary utilities services have been settled in full;
(iii) the design and construction of the property are in compliance with the local planning regulations and have been approved by the relevant authorities; and
(iv) the property may be disposed of freely to third parties.

(9) The status of title and grant of major approvals and licences in accordance with the information provided by the Group are as follows:– Real Estate Title Certificate/Building Ownership Certificate Yes Certificate for the Use of State-owned Land Yes Grant Contract of State-owned Land Use Rights Yes Planning Permit for Construction Works N/A Business Licence Yes

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VALUATION CERTIFICATE

				Capital value in
			Particulars of	existing state as at
	Property	Description and tenure	occupancy	30th April, 2003
2.	A factory complex	The property occupies a site with an	The property is	HK$37,400,000
	situated in	area of 18,990.15 sq.m. (204,410	currently occupied by
	Xiao Bian	sq.ft).	the Group as workshop
	Administrative		with ancillary office
	Zone,	The property comprises various	and dormitory.
	Changan Town,	workshop and dormitory buildings
	Dongguan,	with ancillary facilities. The various
	Guangdong	buildings were mainly completed
	Province,	between 1992 and 1994 except for a
	the PRC	5-storey workshop building which
		was completed in 2000.
		The various buildings of the property
		have a total gross floor area of
		39,080.99 sq.m. (420,668 sq.ft.).
		The land use rights of the property
		have been granted for a term of 50
		years expiring on 20th December,
		2043.

Notes:–

(1) According to Certificate for the Use of State-owned Land No. (1994) S90 issued by Dongguan Land Resources Bureau on 28th March, 2002, the land use rights of the property, comprising a site area of 18,990.15 sq.m., have been granted to 東莞勤達印刷有限公司 (Dongguan Midas Printing Company Limited), a whollyowned subsidiary of the Company, for a term of 50 years from December 1993 to December 2043 for “Industrial” use.
(2) According to five Real Estate Title Certificates all dated 22nd May, 2002, the title to the various buildings of the property, comprising a total gross floor area of 39,080.99 sq.m., is vested in Dongguan Midas Printing Co., Ltd. Details of the said certificates are summarized as follows:–

Certificate No.	Building	Year of completion	No. of storeys	Gross floor area
C0975711	Workshop	2000	5	12,065.10 sq.m.
C0975712	Workshop/Dormitory	1992	6	1,788.40 sq.m.
C0975713	Dormitory	1992	7	3,480.99 sq.m.
C0975714	Plant	1994	1	367.50 sq.m.
C0975715	Workshop	1994	5	21,379.00 sq.m.

(3) According to Business Licence No. 001717, Dongguan Midas Printing Co., Ltd. has been incorporated as a sole-proprietorship enterprise with a registered capital of HK$93,800,000 and an operation period of 50 years from 22nd December, 1993 to 21st December, 2043.
(4) The opinion of the Group’s legal adviser on PRC law states, inter alia, that:–
(i) Dongguan Midas Printing Co., Ltd. has obtained the land use rights of the property by virtue of obtaining the relevant Certificate for the Use of State-owned Land.
(ii) Dongguan Midas Printing Co., Ltd. has settled in full the land premium.
(iii) Dongguan Midas Printing Co., Ltd. has obtained the title to five buildings of the property by virtue of obtaining the relevant Real Estate Title Certificates.
(iv) The property is subject to a legal charge in favour of Bank of East Asia.
(v) Dongguan Midas Printing Co., Ltd. is entitled to occupy and transfer the property.

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(5) We have relied on the aforesaid legal opinion and prepared our valuation on the following assumptions:–
(i) Dongguan Midas Printing Co., Ltd. is in possession of a proper legal title to the property and is entitled to transfer the property with the residual term of its land use rights with no extra land premium or other onerous payment payable to the government;
(ii) all land premium and other costs of ancillary utilities services have been settled in full;
(iii) the design and construction of the property are in compliance with the local planning regulations and have been approved by the relevant authorities; and
(iv) the property may be disposed of freely to third parties.
(6) The status of title and grant of major approvals and licences in accordance with the information provided by the Group are as follows:–

Real Estate Title Certificate/Building Ownership Certificate Yes Certificate for the Use of State-owned Land Yes Grant Contract of State-owned Land Use Rights Yes Planning Permit for Construction Works N/A Business Licence Yes

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VALUATION CERTIFICATE

				Capital value in
			Particulars of	existing state as at
	Property	Description and tenure	occupancy	30th April, 2003
3.	Unit Nos. 7 and 8	The property comprises two	The property is	HK$1,240,000
	on Level 5 and	residential units on the 5th level	currently occupied by
	a car park on	together with a car park on the 1st	the Group as staff	(51% interest
	Level 1,	level of a medium-rise composite	quarters and car park.	attributable to the
	Block 2F,	building completed in the 1990’s.		Group: HK$632,400)
	No. 9 Youyi Road,
	Wuhou District,	The residential units have a total
	Chengdu,	gross floor area of 324.60 sq.m.
	Sichuan Province,	(3,494 sq.ft.) whilst the car park has
	the PRC	an area of 15.64 sq.m. (168 sq.ft.).
		The land use rights of the property
		have been granted for a term of 70
		years.

Notes:–

(1) According to Real Estate Certificate No. 0057688 issued by the Supervisory Office for Housing Title of Chengdu, the title to the two residential units of the property, comprising a total gross floor area of 324.60 sq.m., is vested in Chengdu Chuang’s Centre Development Co. Limited, a 51% subsidiary of the Company, for “Residential” use.
(2) According to Real Estate Certificate No. 0057689 issued by the Supervisory Office for Housing Title of Chengdu, the title to the car park of the property, comprising an area of 15.64 sq.m., is vested in Chengdu Chuang’s Centre Development Co. Limited for “Car parking” use.
(3) The opinion of the Group’s legal adviser on PRC law states, inter alia, that:–
(i) By virtue of obtaining a business licence, Chengdu Chuang’s Centre Development Co. Limited (the “JV”) has been duly incorporated as a sino-foreign joint equity enterprise which is held as to 51% by Chuang’s Development (Chengdu) Limited, a wholly-owned subsidiary of the Company, and as to 49% by成都華聯商廈股份有限公司 (Chengdu Hualian Business Building Co., Ltd.), an independent third party.
(ii) The JV has already paid in full the consideration and has obtained the title to the property by virtue of obtaining the relevant Real Estate Certificates.
(iii) The JV is entitled to occupy, transfer and mortgage the property.
(4) We have relied on the aforesaid legal opinion and prepared our valuation on the following assumptions:–
(i) Chengdu Chuang’s Centre Development Co. Limited is in possession of a proper legal title to the property and is entitled to transfer the property with the residual term of its land use rights with no extra land premium or other onerous payment payable to the government;
(ii) all land premium and other costs of ancillary utilities services have been settled in full;
(iii) the design and construction of the property are in compliance with the local planning regulations and have been approved by the relevant authorities; and
(iv) the property may be disposed of freely to third parties.
(5) The status of title and grant of major approvals and licences in accordance with the information provided by the Group are as follows:–

Real Estate Certificate/Building Ownership Certificate Yes Certificate for the Use of State-owned Land Yes Grant Contract of State-owned Land Use Rights Yes Business Licence Yes

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VALUATION CERTIFICATE

				Capital value in
			Particulars of	existing state as at
	Property	Description and tenure	occupancy	30th April, 2003
4.	Car Parking Space	The property comprises two car	The property is	HK$700,000
	Nos. 5 and 11	parking spaces on the ground floor of	currently vacant.
	on Ground Floor,	a 23-storey industrial building
	Wing Wah	completed in 1977.
	Industrial Building,
	No. 677	The property is held under
	King’s Road,	Conditions of Sale No. 10151 for a
	North Point,	term of 75 years from 17th August,
	Hong Kong	1972 renewable for a further term of
		75 years. The Government rent
	2/1848th shares of	payable for the lot is HK$688 per
	and in Inland	annum.
	Lot No. 7954

Note: The registered owner of the property is Midas Printing Limited, a wholly-owned subsidiary of the Company.

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VALUATION CERTIFICATE

Group II – Properties held for sale/investment by the Group

Capital value in Particulars of existing state as at Property Description and tenure occupancy 30th April, 2003 5. The whole of The property comprises three 1810 units of the property HK$97,000,000 Block Nos. 1, 2 storey (plus a commercial podium are leased for a term and 3, and basement) residential buildings, from 1st February, 2003 Chuang’s Garden, namely Block Nos. 1, 2 and 3, in to 30th September, Chuang’s New Chuang’s Garden of Chuang’s New 2005 at a monthly rent Town, Town. The buildings were completed of RMB5,755. Kai Cheng Avenue, between 1995 and 1996. Danshui Town, The remaining units of Huiyang, The various buildings of the property the property are Guangdong have a total gross floor area of currently vacant. Province, 28,547.21 sq.m. (307,282 sq.ft.). the PRC The land use rights of Chuang’s New Town have been granted for a term commencing on 21st October, 1993 and expiring on 20th October, 2063.

Notes:–

(1) According to Certificate for the Use of State-owned Land No. (93) 13210101836 issued by the People’s Government of Guangdong Province on 30th December, 1993, the land use rights of Chuang’s New Town, comprising a total site area of 200,000 sq.m., have been granted to Chuang’s Development (China) Limited, a wholly-owned subsidiary of CCIL, for a term commencing on 21st October, 1993 and expiring on 20th October, 2063 for “Commercial/Residential” uses.
(2) According to four Building Ownership Certificates, the title to the various blocks of the property is vested in Chuang’s Development (China) Limited. Details of the said certificates are summarized as follows:–

Certificate No.	Block No(s).	Use	Gross floor area
3466625	1	Residential	9,231.66 sq.m.
3466626	2	Residential	9,231.66 sq.m.
3466627	3	Residential	9,231.66 sq.m.
3466621	1-3	Residential	852.23 sq.m.
	1-3	Non-residential	2,153.55 sq.m.

(3) According to Contract for Sale and Purchase of Commodity Housing No. 0001603 entered into between Chuang’s Development (China) Limited (“Party A”) and Riverside Trinity Limited, a wholly-owned subsidiary of the Company, (“Party B”) on 12th October, 2001, Party A has agreed to sell the property to Party B at a consideration of HK$48,000,000.
(4) The opinion of the Group’s legal adviser on PRC law states, inter alia, that:–
(i) Riverside Trinity Limited has acquired the property by virtue of entering into the Contract for Sale and Purchase of Commodity Housing No. 0001603 with Chuang’s Development (China) Limited.
(ii) Riverside Trinity Limited has settled in full the consideration.
(iii) Riverside Trinity Limited is entitled to occupy, transfer and/or lease the property.
(iv) Riverside Trinity Limited is entitled to apply for the title certificate upon making payment of relevant fees to the government.

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(5) We have relied on the aforesaid legal opinion and prepared our valuation on the following assumptions:–
(i) Riverside Trinity Limited is in possession of a proper legal title to the property and is entitled to transfer the property with the residual term of its land use rights with no additional land premium or other onerous payment payable to the government;
(ii) all land premium and other costs of ancillary utilities services have been settled in full;
(iii) the design and construction of the property are in compliance with the local planning regulations and has been approved by the relevant authorities; and
(iv) the property may be disposed of freely to third parties.
(6) The status of title and grant of major approvals and licences in accordance with the information provided by the Group are as follows:–

Building Ownership Certificate N/A Certificate for the Use of State-owned Land N/A Grant Contract of State-owned Land Use Rights N/A Business Licence N/A

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APPENDIX II

VALUATION CERTIFICATE

				Capital value in
			Particulars of	existing state as at
	Property	Description and tenure	occupancy	30th April, 2003
6.	Lambda Building,	The property comprises two 2 to	Various portions of the	HK$46,700,000
	Yuen Sang Building	4-storey composite blocks, namely	property are subject to
	and Block Nos. D1,	Lambda Building and Yuen Sang	various terms of
	D2 and D3,	Building, and three 8-storey	tenancies with the latest
	Chuang’s New	residential blocks, namely Block Nos.	expiring on 31st
	Town,	D1, D2 and D3, in Chuang’s New	December, 2005 at a
	Kai Cheng Avenue,	Town. The various blocks were all	total monthly rent of
	Danshui Town,	completed in 1993.	HK$251,110.55
	Huiyang,		inclusive of
	Guangdong	The gross floor areas of Lambda	management fees but
	Province,	Building, Yuen Sang Building and	exclusive of utilities
	the PRC	Block Nos. D1, D2 and D3 are	charges.
		12,890 sq.m. (138,748 sq.ft.),
		13,905.35 sq.m. (149,677 sq.ft.) and	The remaining portion
		8,382.05 sq.m. (90,224 sq.ft.)	of the property is
		respectively.	occupied by as a
			management office or
		The land use rights of Chuang’s New	vacant.
		Town have been granted for a term
		commencing on 21st October, 1993
		and expiring on 20th October, 2063.

Notes:–

(1) According to Certificate for the Use of State-owned Land No. (93) 13210101836 issued by the People’s Government of Guangdong Province on 30th December, 1993, the land use rights of Chuang’s New Town, comprising a total site area of 200,000 sq.m., have been granted to Chuang’s Development (China) Limited, a wholly-owned subsidiary of CCIL, for a term commencing on 21st October, 1993 and expiring on 20th October, 2063 for “Commercial/Residential” use.
(2) According to six Building Ownership Certificates, the title to the various buildings of the property is vested in Chuang’s Development (China) Limited. Details of the certificates are summarized as follows:–

Certificate No.	Block No(s).	Use	Gross floor area
2861366	Lambda Building (part)	Non-residential	4,030.00 sq.m.
2861367	Lambda Building (part)	Non-residential	8,860.00 sq.m.
2861365	Yuen Sang Building	Non-residential	13,905.35 sq.m.
2931807	No. D1	Residential	2,625.91 sq.m.
2862403	No. D2	Residential	2,932.15 sq.m.
2862402	No. D3	Residential	2,823.99 sq.m.

(3) According to Contract for Sale and Purchase of Commodity Housing No. 0001602 entered into between Chuang’s Development (China) Limited (“Party A”) and Sino Stream Limited, a wholly-owned subsidiary of the Company, (“Party B”) on 12th October, 2001, Party A has agreed to sell the property to Party B at a consideration of HK$30,000,000.
(4) As advised by the Group, various portions of the property are leased to third parties on various terms of tenancies. Details are summarized as follows:–

Portion

Portion Monthly rent Lease term A portion of Lambda Building with a gross floor area HK$127,898.85 2003/01/01 – 2005/12/31 of 12,699.84 sq.m. and a portion of Block No. D1 with a gross floor area of 2,174.47 sq.m.
A portion of Yuen Sang Building with a gross floor area HK$88,931.70 2003/04/01 – 2005/3/31 of 5,936.45 sq.m. and a portion of Block No. D2 with a gross floor area of 2,249.16 sq.m.

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Portion Monthly rent Lease term A portion of Level 3 of Yuen Sang Building with HK$7,500.00 2003/01/01 – 2005/12/31 a gross floor area of 1,000 sq.m. A portion of Level 3 of Yuen Sang Building with HK$19,363.50 2003/01/01 – 2005/12/31 a gross floor area of 2,398.55 sq.m. Levels 2-5 of Block No. D3 with a gross floor area HK$7,416.50 2003/01/01 – 2005/12/31 of 1,378.02 sq.m.

(5) The opinion of the Group’s legal adviser on PRC law states, inter alia, that:–
(i) Sino Stream Limited has acquired the property by virtue of entering into the Contract for Sale and Purchase of Commodity Housing No. 0001602 with Chuang’s Development (China) Limited.
(ii) Sino Stream Limited has settled in full the consideration.
(iii) Sino Stream Limited is entitled to occupy, transfer and/or lease the property.
(iv) Sino Stream Limited is entitled to apply for the title certificate upon making payment of relevant fees to the government.
(6) We have relied on the aforesaid legal opinion and prepared our valuation on the following assumptions:–
(i) Sino Stream Limited is in possession of a proper legal title to the property and is entitled to transfer the property with the residual term of its land use rights at no extra land premium or other onerous payment payable to the government;
(ii) all land premium and other costs of ancillary utilities services have been settled in full;
(iii) the design and construction of the property are in compliance with the local planning regulations and have been approved by the relevant authorities; and
(iv) the property may be disposed of freely to third parties.
(7) The status of title and grant of major approvals and licences in accordance with the information provided by the Group are as follows:–

Building Ownership Certificate	N/A
Certificate for the Use of State-owned Land	N/A
Grant Contract of Land Use Rights	N/A
Business Licence	N/A

– 80 –

PROPERTY VALUATION

APPENDIX II

VALUATION CERTIFICATE

				Capital value in
			Particulars of	existing state as at
	Property	Description and tenure	occupancy	30th April, 2003
7.	The commercial	Chengdu Chuang’s Centre occupies	The various portions of	HK$239,000,000
	podium and	an irregular-shaped site having an	the property are
	basement of	area of 6,344.50 sq.m. (68,292 sq.ft.).	currently leased on	(51% interest
	Chengdu Chuang’s		various terms of	attributable to the
	Centre situated at	Chengdu Chuang’s Centre comprises	tenancies.	Group:
	No. 1 Renmin South	a 23-storey commercial/residential		HK$121,890,000)
	Road Section 4,	tower erected upon a 6-storey
	Wuhou District,	commercial podium and a 3-level
	Chengdu,	basement and was completed in 2002.
	Sichuan Province,
	the PRC	The property comprises the
		commercial podium and the
		basements of Chengdu Chuang’s
		Centre.
		The commercial podium of the
		property has a total gross floor area
		of 29,484.20 sq.m. (317,368 sq.ft.)
		whilst the basements have a total area
		of 13,246.26 sq.m. (142,583 sq.ft.)
		and accommodate approximately 200
		car parking spaces.
		The land use rights of the property
		have been granted for a term of 70
		years from the date of issue of the
		Certificate for the Use of State-owned
		Land.

Notes:–

(1) According to Certificate for the Use of State-owned Land No. (1993) 026 issued by the People’s Government of Chengdu on 12th July, 1993, the land use rights of Chengdu Chuang’s Centre, comprising a site area of 6,344.50 sq.m., have been granted to Chengdu Chuang’s Centre Development Co. Limited, a 51% subsidiary of the Company, for a term of 70 years for “Commercial/Residential” use.
(2) According to Grant Contract of Land Use Rights No. (1993) 57 entered into between Chengdu Land Administrative Bureau (“Party A”) and Chengdu Chuang’s Centre Development Co. Limited (“Party B”) on 30th April, 1993, Party A has agreed to grant the land use rights of Chengdu Chuang’s Centre to Party B at a land premium in the sum of RMB33,000,000 which is inclusive of land grant fee, composite development fee and resettlement fee.
(3) According to Business Licence No. 00341, Chengdu Chuang’s Centre Development Co. Ltd. has been incorporated as a sino-foreign joint equity enterprise with a registered capital of RMB20,000,000 and an operation period of 70 years from 16th November, 1992 to 15th November, 2062. The joint equity partner of Chengdu Chuang’s Centre Development Co. Ltd. is 成都華聯商廈股份有限公司 (Chengdu Hualian Business Building Co., Ltd.), an independent third party.
(4) As advised by the Group, the various portions of the property are leased on various terms of tenancies. The rental schedules, after deducting the rental rebates, are summarized as follows:–

Portion	Gross floor area	Year	Net annual rent
Levels 1 – 5	21,866 sq.m.	1	RMB10,000,000
		2	RMB10,370,000
		3	RMB11,570,000
		4	RMB12,760,000
		5	RMB14,800,000
		6-10 (each)	RMB16,000,000

– 81 –

APPENDIX II

PROPERTY VALUATION

Portion	Gross floor area	Year	Net annual rent
Level 6	4,547 sq.m.	1	RMB390,833
		2	RMB814,000
		3	RMB838,000
		4	RMB922,000
		5	RMB1,006,000
		6-10 (each)	RMB1,090,000
Level 7	2,712 sq.m.	1	RMB470,000
		2	RMB1,000,000
		3	RMB1,150,000
		4	RMB1,250,000
		5	RMB1,300,000
		6-10 (each)	RMB1,400,000
Basement 1	4,399 sq.m.	1	RMB700,000
		2	RMB786,000
		3	RMB868,000
		4	RMB952,000
		5	RMB1,036,000
		6-10 (each)	RMB1,120,000
Basement 1 (Car park)	400 sq.m.	1-3 (each)	RMB12,000
Basements 2&3 (Car park)	8,847 sq.m.	1-3 (each)	RMB700,000

(5) The opinion of the Group’s legal adviser on PRC law states, inter alia, that:–
(i) By virtue of obtaining a business licence, Chengdu Chuang’s Centre Development Co. Limited (the “JV”) has been duly incorporated as a sino-foreign joint equity enterprise which is held as to 51% by Chuang’s Development (Chengdu) Limited, a wholly-owned subsidiary of the Company.
(ii) The JV has already paid in full the land grant fee and has obtained the land use rights of Chengdu Chuang’s Centre by virtue of obtaining the relevant Certificate for the Use of State-owned Land.
(iii) The JV is in the course of obtaining the occupation permit in respect of the building.
(iv) The JV is entitled to occupy, transfer and mortgage the property.
(v) Levels 1 to 3 of the commercial podium of Chengdu Chuang’s Centre are subject to a mortgage in favour of China Construction Bank Chengdu 3rd Branch.
(6) We have relied on the aforesaid legal opinion and prepared our valuation on the following assumptions:–
(i) Chengdu Chuang’s Centre Development Co. Limited is in possession of a proper legal title to the property and is entitled to transfer the property with the residual term of its land use rights with no extra land premium or other onerous payment payable to the government;
(ii) all land premium and other costs of ancillary utilities services have been settled in full;
(iii) the design and construction of the property are in compliance with the local planning regulations and have been approved by the relevant authorities; and
(iv) the property may be disposed of freely to both third parties.
(7) The status of title and grant of major approvals and licences in accordance with the information provided by the Group are as follows:–

Real Estate Certificate/Building Ownership Certificate No Certificate for the Use of State-owned Land Yes Grant Contract of State-owned Land Use Rights Yes Business Licence Yes

– 82 –

EXPLANATORY STATEMENT

APPENDIX III

This appendix serves as an explanatory statement, as required by the Listing Rules, to provide information to the Shareholders with regard to the Repurchase Mandate to be proposed at the EGM. Reference in the appendix to “Share(s)” means ordinary share(s) of HK$0.10 each in the capital of the Company.

1. SHARE CAPITAL

As at the Latest Practicable Date, the issued ordinary share capital of the Company comprised 390,290,068 Shares. Following completion of the Conversion, the enlarged issued ordinary share capital of the Company will comprise 534,290,068 Shares. Subject to the passing of the relevant resolutions approving the Repurchase Mandate and the implementation of the Conversion, and on the basis that no further Shares are issued or repurchased prior to the EGM, exercise in full of Repurchase Mandate could accordingly result in up to 53,429,006 Shares being repurchased by the Company.

2. REASONS FOR THE REPURCHASES

The Directors believe that it is in the best interests of the Company and the Shareholders to have a general authority from the Shareholders to enable the Directors to repurchase Shares in the market. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net asset value per Share and/or earnings per Share and will only be made when the Directors believe that such repurchases will benefit the Company and the Shareholders.

3. FUNDING OF REPURCHASES

Repurchases of Shares will be funded entirely from the Company’s funds legally available for the purpose and in accordance with the memorandum and the articles of association of the Company and the applicable laws of the Cayman Islands.

There might be an adverse effect on the working capital or gearing of the Company upon the full exercise of the Repurchase Mandate when compared with the working capital and gearing position disclosed in the audited accounts contained in the annual report of the year ended 31st December, 2002. However, the Directors would not propose to exercise the Repurchase Mandate to such an extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or the gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

4. GENERAL

None of the Directors nor, to the best of their knowledge having made all reasonable enquiries, any of their associates, have any present intention to sell any Shares to the Company or its subsidiaries if the Repurchase Mandate is exercised.

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will only exercise the Repurchase Mandate in accordance with the Listing Rules and the applicable laws of the Cayman Islands.

– 83 –

EXPLANATORY STATEMENT

APPENDIX III

If as a result of a repurchase of the Shares, a Shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purposes of the Takeovers Code. As a result, a Shareholder, or group of Shareholders acting in concert (within the meaning of the Takeovers Code), depending on the level of increase of the Shareholders’ interest, could obtain or consolidate control of the Company and becomes obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code.

No connected person (as defined in the Listing Rules) has notified the Company that he has a present intention to sell any of the Shares to the Company, or has undertaken not to do so, if the Repurchase Mandate is exercised.

5. SHARE PRICES

The highest and lowest prices at which the Shares have traded on the Stock Exchange during each of the previous 12 months prior to the Latest Practicable Date were as follows:–

	Highest	Lowest
	HK$	HK$
2003
1st June, 2003 to the Latest Practicable Date	0.510	0.475
May	0.480	0.385
April	0.450	0.370
March	0.510	0.410
February	0.480	0.395
January	0.435	0.330
2002
December	0.340	0.285
November	0.290	0.220
October	0.240	0.220
September	0.265	0.240
August	0.240	0.210
July	0.275	0.223
June	0.365	0.250

6. SHARE PURCHASES MADE BY THE COMPANY

The Company had not purchased any Shares (whether on the Stock Exchange or otherwise) in the six months preceding the Latest Practicable Date.

– 84 –

GENERAL INFORMATION

APPENDIX IV

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Takeovers Code and the Listing Rules for the purpose of giving information with regard to the Company. The Directors jointly and severally accept full responsibility for the accuracy of the information contained in this circular (other than insofar as it relates to CCIL and Gold Throne) and confirm, having made all reasonable inquiries, that to the best of their knowledge, opinions expressed in this circular (other than insofar as it relates to CCIL and Gold Throne) have been arrived at after due and careful consideration and there are no other facts not contained in this circular, the omission of which would make any statement in this circular misleading.

The information in this circular relating to CCIL and Gold Throne have been supplied by the CCIL Directors. The issue of this circular has been approved by the CCIL Directors who jointly and severally accept full responsibility for the accuracy of information contained in this circular, insofar as it relates to CCIL and Gold Throne and confirm, having made all reasonable inquiries, that to the best of their knowledge, opinions expressed in this circular relating to CCIL and Gold Throne have been arrived at after due and careful consideration and there are no other facts not contained in this circular, the omission of which would make any statement in this circular misleading.

2. DISCLOSURE OF INTERESTS

(a) Interests in the Company

(i) Directors’ interests and short positions in the securities of the Company and its associated corporations

As at the Latest Practicable Date, the interests and short positions of the Directors in the equity or debt securities of the Company and any associated corporations (within the meaning of Part XV of the SFO) which had been notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were deemed or taken to have under such provisions of the SFO) or which were required, pursuant to Section 352 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 Companies to be notified to the Company and the Stock Exchange were as follows:–

	Number of Shares held	Number of Shares held
	Personal	Corporate
Name of Director	interests	interests
Mr. Shek Lai Him, Abraham	10,000	–

– 85 –

GENERAL INFORMATION

APPENDIX IV

Save as disclosed herein, as at the Latest Practicable Date, none of the Directors had interests or short positions in any equity or debt securities of the Company or any associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or 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 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 Companies to be notified to the Company and the Stock Exchange.

(ii) Directors’ rights to acquire Shares

The Company had adopted the Share Option Scheme under which the Directors may, on or before 12th December, 2011, invite any employee or director of the Group to take up options to subscribe for Shares.

As at the Latest Practicable Date, no options had been granted and there were no options outstanding.

(iii) Substantial Shareholders

As at the Latest Practicable Date, so far as is known to, or can be ascertained after reasonable enquiry by, the Directors or chief executive of the Company, the following persons had an interest or short position in the equity or debts securities of the Company and any associated corporations (within the meaning of Part XV of the SFO) which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was expected, directly or indirectly, to be interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the Company or any other member of the Group or had any options in respect of such capital:–

Number of Shares	Number of Shares
Name of Shareholder	interested in
Gold Throne	228,000,000_(note 1)_
CCIL	228,000,000_(notes 1&2)_
Profit Stability Investments Limited (“PSI”)	228,000,000_(notes 1&2)_
Chuang’s Consortium	228,000,000_(notes 1&2)_
Moscow Profits Limited (“MPL”)	25,000,000
Chuang’s Cutlery Holdings Limited (“CCHL”)	25,000,000_(note 3)_
Alan Chuang Shaw Swee	25,000,000_(note 4)_
Alice Siu Chuang Siu Suen	25,000,000_(note 4)_
Chong Ho Pik Yu	25,000,000_(note 5)_
Siu Hok Chung	25,000,000_(note 5)_

Notes:

Such interests include equity derivative interests of 72,000,000 Series A Preference Shares which can be convertible into 144,000,000 Shares.
Such interests arose through the interests in the relevant Shares owned by Gold Throne, a wholly owned subsidiary of CCIL in which Chuang’s Consortium is entitled to exercise or control the exercise of one third or more of the voting power in general meetings through its wholly owned subsidiary, PSI.
Such interests arose through the ownership of the relevant Shares by MPL, a wholly owned subsidiary of CCHL.

– 86 –

GENERAL INFORMATION

APPENDIX IV

Such interests arose through the ownership of relevant Shares by corporations which the relevant person is entitled to exercise or control the exercise of one third or more of the voting power in general meetings of these corporations.
Such interests arose by attribution through the spouse of the relevant person.

(iv) Others

As at the Latest Practicable Date,

(aa) none of the subsidiaries or associates of the Company, nor any pension funds of the Company or of any of its subsidiaries, nor Somerley, Tai Fook Capital, nor DTZ had any interests in any Shares;
(bb) no person who had any arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Company or with any person who was an associate of the Company by virtue of classes 1,2,3,4 of the definition of associates as defined in the Takeovers Code, Gold Throne or with any parties acting in concert with any of them had any interests in any Shares;
(cc) Gold Throne was interested in 84,000,000 Shares, representing approximately 21.52% of the issued ordinary share capital of the Company. MPL, a party acting in concert with Gold Throne, was interested in 25,000,000 Shares, representing approximately 6.41% of the issued ordinary share capital of the Company. Accordingly, Gold Throne and its concert party were interested in an aggregate of 109,000,000 Shares, representing approximately 27.93% of the issued ordinary share capital of the Company; and
(dd) none of the directors of Gold Throne had any interests in any Shares.

(b) Dealings in Shares

(i) Directors

None of the Directors had dealt for value in any Shares during the period commenced on 24th September, 2002 (being the date six months prior to the date of the Initial Announcement) and ended on the Latest Practicable Date (the “Relevant Period”).

(ii) Gold Throne and its directors and parties acting in concert with them

During the Relevant Period, none of Gold Throne, nor the directors of Gold Throne, nor any persons acting in concert with them had dealt for value in any Shares.

(iii) Others

During the Relevant Period,

(aa) none of the subsidiaries or associates of the Company, nor any pension funds of the Company or any of its subsidiaries, nor Somerley, Tai Fook Capital nor DTZ had dealt for value in any Shares; and

– 87 –

GENERAL INFORMATION

APPENDIX IV

(bb) no person who had any arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Company or with any person who was an associate of the Company by virtue of classes 1,2,3,4 of the definition of associates as defined in the Takeovers Code, Gold Throne or with any persons acting in concert with any of them had dealt for value in any Shares.

(c) Interests and dealings in the securities issued by Gold Throne

None of the Directors nor the Company had any interest in the securities issued by Gold Throne nor had any of them dealt for value in any such securities during the Relevant Period.

(d) Miscellaneous disclosures of interests

(i) As at the Latest Practicable Date, there was no agreement, arrangement or understanding between Gold Throne and any other persons for the transfer of the beneficial interest in the Shares to be held upon the Conversion.
(ii) As at the Latest Practicable Date, there was no agreement, arrangement or understanding (including any compensation arrangement) between Gold Throne or any person acting in concert with it and any of the directors, recent directors, shareholders or recent shareholders of the Company having any connection with or dependence upon the Conversion.
(iii) As at the Latest Practicable Date, none of the shareholdings of the Company are managed on a discretionary basis by fund managers connected with the Company.

3. MARKET PRICES

The table below shows the closing prices of the Shares recorded on the Stock Exchange at the end of each of the six calendar months immediately preceding 22nd May, 2003 (being the date of the Announcement), on 22nd May, 2003 and on the Latest Practicable Date:

	HK$
2002
November	0.290
December	0.320
2003
January	0.405
February	0.480
March	0.440
April	0.375
22nd May, 2003	0.455
Latest Practicable Date	0.510

The lowest and highest closing market prices of the Shares recorded on the Stock Exchange during the Relevant Period were HK$0.224 on 8th October, 2002 to 11th October, 2002 and HK$0.51 on 3rd June, 2003 and 9th June, 2003, respectively.

– 88 –

GENERAL INFORMATION

APPENDIX IV

4. MATERIAL CONTRACTS

As at the Latest Practicable Date, the following contracts, not being contracts entered into in the ordinary course of business, had been entered into by the Company and its subsidiaries within the two years immediately preceding the date of this circular and are or may be material:

(i) On 29th October, 2001, the Company entered into an acquisition agreement (“Acquisition Agreement”) with Chuang’s China Commercial Limited to acquire the entire issued share capital of, and the shareholder’s loan to, AsianWisdom.Com Limited for an aggregate consideration of HK$252,900,000. Details of which have been set out in notes 15(a) and 36(a)&(b) to the financial information on the Group in Appendix I to this circular. On the same date, the Company also entered into a subscription agreement (“Subscription Agreement”) with CCIL pursuant to which the proceeds under the Acquisition Agreement will be utilised by CCIL to subscribe for the Preference Shares at an issue price of HK$0.60 each. Details of which have been set out in note 27(a)(iii) to the financial information on the Group in Appendix I to this circular. These transactions were approved by the independent shareholders of the Company in an extraordinary general meeting of the Company held on 13th December, 2001 and completion of the Acquisition Agreement and Subscription Agreement took place on 14th December, 2001. Full details of the transactions were contained in the circular issued to the Shareholders dated 20th November, 2001 and disclosed in the announcements of the Company dated 29th October, 2001, 19th November, 2001 and 13th December, 2001; and
(ii) the Concession Agreement.

Save as aforesaid, no material contracts (not being contracts entered into in the ordinary course of business carried on by the Group) had been entered into by any member of the Group within the two years preceding the date of this circular.

5. LITIGATION

Neither the Company nor any other members of the Group is engaged in any litigation or arbitration of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened against any member of the Group.

6. EXPERTS AND CONSENTS

(a) Each of Tai Fook Capital and DTZ has no shareholding in any member of the Group nor any right to subscribe for or to nominate persons to subscribe for securities in any member of the Group.
(b) Tai Fook Capital and DTZ have given and have not withdrawn their written consents to the issue of this circular with the inclusion of their respective letters or reports and references to their respective names, as the case may be, in the form and context in which they respectively appear.
(c) Each of Tai Fook Capital and DTZ does not have any direct or indirect interest in any assets which have been since 31st December, 2002, the date to which the latest published audited accounts of the Group were made up, acquired or disposed of by, or leased to, or which are proposed to be acquired or disposed of by, or leased to, the Company or any of its subsidiaries.

– 89 –

GENERAL INFORMATION

APPENDIX IV

7. ARRANGEMENTS AFFECTING DIRECTORS

(a) None of the Directors has any service contract with the Company or any of its subsidiaries or associated companies in force which has more than 12 months to run, or which has been entered into or amended within six months before the date of the Announcement.
(b) No benefit is being given to any Director as compensation for loss of office or otherwise in connection with the Concession Agreement.
(c) There is no agreement or arrangement between any Director and any other person which is conditional on the outcome of the Concession Agreement or otherwise connected therewith.
(d) There is no material contract entered into by Gold Throne in which any director of the Company or its subsidiaries has a material personal interest.

8. MISCELLANEOUS

(a) The secretary of the Company is Ms. Lee Wai Ching, Winky who is a fellow of the Institute of Chartered Secretaries and Administrators in the United Kingdom.
(b) The Hong Kong registrars of the Company are Computershare Hong Kong Investor Services Limited at Rooms 1901-1905, 19th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong.
(c) The registered office of the Company is at Century Yard, Cricket Square, Hutchins Drive, PO Box 2681GT, George Town, Grand Cayman, Cayman Islands, British West Indies.
(d) The registered office of Gold Throne is at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, the British Virgin Islands. Gold Throne is wholly owned by CCIL. The directors of Gold Throne are Mr. Chan Sheung Chiu and Ms. Li Mee Sum, Ann.
(e) As at the Latest Practicable Date, CCIL was owned as to 60.1% by Chuang’s Consortium, a company controlled by Mr. Alan Chuang Shaw Swee, Mrs. Alice Siu Chuang Siu Suen and a trust in which both of them are discretionary objects. The directors of Chuang’s Consortium are Mr. Alan Chuang Shaw Swee, Mrs. Alice Siu Chuang Siu Suen, Messrs. Bernard Ko Sheung Chi, Andrew Lui Lop Kay, Kwong Tin Lap, Dr. Peter Po Fun Chan and Mr. David Chris Lee Tsung Hei.
(f) The CCIL Directors are Dr. Hwang Jen, Mr. Chan Sheung Chiu, Ms. Li Mee Sum, Ann, Messrs. Lee Sai Wai, Tang Wing Lun, Sunny Pang Chun Kit and David Chu Yu Lin.
(g) The address of Somerley is Suite 3108, One Exchange Square, 8 Connaught Place, Central, Hong Kong.
(h) The English text of this circular and form of proxy shall prevail over the Chinese text in the case of any inconsistency.

– 90 –

GENERAL INFORMATION

APPENDIX IV

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the offices of Messrs. Iu, Lai & Li, at 20th Floor, Gloucester Tower, The Landmark, Central, Hong Kong up to and including 30th June, 2003:

(a) the memorandum and articles of association of the Company and Gold Throne;
(b) the annual reports of the Company for the two financial years ended 31st December, 2002;
(c) the material contracts referred to in the section headed “Material contracts” in this Appendix;
(d) the letter from the Independent Board Committee to the Independent Shareholders dated 12th June, 2003, the text of which is set out on page 13 of this circular;
(e) the letter of advice from Tai Fook Capital dated 12th June, 2003, the text of which is set out on pages 14 to 27 of this circular;
(f) the letter, summary of valuations and valuation certificates prepared by DTZ relating to the property interests of the Group, the texts of which are set out in Appendix II to this circular; and
(g) the written consents referred to in the section headed “Experts and consents” in this Appendix.

– 91 –

NOTICE OF EXTRAORDINARY GENERAL MEETING

==> picture [322 x 60] intentionally omitted <==

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of Midas International Holdings Limited (the “Company”) will be held at 10:00 a.m. on Monday, 30th June, 2003 at 20th Floor, Gloucester Tower, The Landmark, Central, Hong Kong for the purpose of considering and, if thought fit, passing, with or without modifications, the following resolutions:–

ORDINARY RESOLUTIONS

“ THAT the waiver granted by the Executive Director of the Corporate Finance Division of the Securities and Futures Commission in respect of the obligation of Gold Throne Finance Limited (“Gold Throne”), which may otherwise arise as a result of the conversion (the “Conversion”) of 72,000,000 convertible non-voting redeemable preference shares at par value of HK$0.01 each in the capital of the Company pursuant to the terms of the concession agreement dated 22nd May, 2003 entered into between Gold Throne and the Company, to make a mandatory general offer to the shareholders of the Company in respect of the issued ordinary shares of HK$0.10 each (“Share(s)”) in the capital of the Company not already owned or agreed to be acquired by it and its concert parties upon completion of the Conversion under Rule 26 of the Hong Kong Code on Takeovers and Mergers, be and is hereby approved.”
“ THAT :–
(a) subject to paragraph (c) of this Resolution, the exercise by the directors of the Company (the “Directors”) during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue and deal with additional Shares in the capital of the Company or options, warrants or similar rights to subscribe for any Shares and to make or grant offers, agreements and options (including warrants, bonds, debentures, notes or other securities which carry rights to subscribe for or are convertible into Shares) which would or might require the exercise of such powers be and is hereby generally and unconditionally approved;
(b) the approval in paragraph (a) of this Resolution shall authorise the Directors during the Relevant Period to make or grant offers, agreements and options (including warrants, bonds, debentures, notes or other securities which carry rights to subscribe for or are convertible into Shares) which would or might require the exercise of such powers after the end of the Relevant Period;
(c) the aggregate nominal amount of Share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) and issued by the Directors pursuant to the approval in paragraph (a) of this Resolution, otherwise than pursuant to (i) a Rights Issue (as hereinafter defined); or (ii) the exercise of rights of subscription or conversion under the terms of any existing warrants, bonds, debentures, notes or other securities which carry

* For identification only

– 92 –

NOTICE OF EXTRAORDINARY GENERAL MEETING

rights to subscribe for or are convertible into Shares; or (iii) the exercise of any option granted under any share option scheme or any similar arrangement for the time being adopted by the Company for the grant or issue to the eligible persons prescribed thereunder to subscribe for, or rights to acquire, Shares in the Company; or (iv) an issue of Shares by way of scrip dividend pursuant to the Articles of Association of the Company from time to time, shall not in aggregate exceed 20% of the aggregate nominal amount of the issued Share capital of the Company as at the date of the passing of this Resolution, and if the Conversion takes place, as enlarged by the allotment and issue of the Shares upon completion of the Conversion (as defined in Ordinary Resolution numbered 1 set out in the notice of the meeting of which this Resolution forms part), and the said approval shall be limited accordingly; and

(d) for the purposes of this Resolution:

“Relevant Period” means the period from the passing of this Resolution until whichever is the earlier of:

(i) the conclusion of the next annual general meeting of the Company;
(ii) the expiration of the period within which the next annual general meeting of the Company is required by the Articles of Association of the Company or any applicable laws to be held; or
(iii) the revocation or variation of the authority given under this Resolution by an ordinary resolution of the shareholders of the Company in general meeting; and

“Rights Issue” means an offer of Shares or issue of options, warrants or other securities giving the right to subscribe for Shares open for a period fixed by the Directors made to the holders of Shares whose names appear on the register of members of the Company (and, where appropriate, to holders of other securities of the Company entitled to the offer) on a fixed record date in proportion to their then holdings of such Shares or, where appropriate, such other securities (subject in all cases to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory outside Hong Kong).”

“ THAT :–
(a) subject to paragraph (b) of this Resolution, the exercise by the directors of the Company (the “Directors”) during the Relevant Period (as hereinafter defined) of all the powers of the Company to repurchase Shares on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) or on any other stock exchange on which the Shares may be listed and recognised by the Securities and Futures Commission of Hong Kong and the Stock Exchange for this purpose, subject to and in accordance with all applicable laws, the requirements of the Rules

– 93 –

NOTICE OF EXTRAORDINARY GENERAL MEETING

Governing the Listing of Securities on the Stock Exchange or of any other stock exchange as amended from time to time and the Articles of Association of the Company, be and is hereby generally and unconditionally approved;

(b) the aggregate nominal amount of Shares which the Company is authorised to repurchase pursuant to the approval in paragraph (a) of this Resolution shall not exceed 10% of the aggregate nominal amount of the Share capital of the Company in issue as at the date of the passing of this Resolution and, if the Conversion takes place, as enlarged by the allotment and issue of the Shares upon completion of the Conversion (as defined in Ordinary Resolution numbered 1 set out in the notice of the meeting of which this Resolution forms part), and the said approval shall be limited accordingly; and
(c) for the purposes of this Resolution, “Relevant Period” means the period from the passing of this Resolution until whichever is the earlier of:
- (i) the conclusion of the next annual general meeting of the Company;
- (ii) the expiration of the period within which the next annual general meeting of the Company is required by the Articles of Association of the Company or any applicable laws to be held; or
- (iii) the revocation or variation of the authority given under this Resolution by an ordinary resolution of the shareholders of the Company in general meeting.”
“ THAT subject to the passing of Ordinary Resolutions numbered 2 and 3 set out in the notice convening this meeting, the general mandate granted to the directors of the Company to exercise all the powers of the Company to allot, issue and deal with additional securities pursuant to Ordinary Resolution numbered 2 set out in the notice convening this meeting be and is hereby extended by the addition thereto of an amount representing the aggregate nominal amount of the Share capital of the Company repurchased by the Company under the authority granted pursuant to Ordinary Resolution numbered 3 set out in the notice convening this meeting, provided that such extended amount shall not exceed 10% of the aggregate nominal amount of the Share capital of the Company in issue as at the date of the passing of this Resolution and, if the Conversion takes place, as enlarged by the allotment and issue of the Shares upon completion of the Conversion (as defined in Ordinary Resolution numbered 1 set out in the notice convening this meeting of which this Resolution forms part).”

By Order of the Board LEE Wai Ching, Winky Company Secretary

Hong Kong, 12th June, 2003

– 94 –

NOTICE OF EXTRAORDINARY GENERAL MEETING

Head office and principal place of business: Registered office: 1st Floor, Century Yard, 100 Texaco Road, Cricket Square, Tsuen Wan, Hutchins Drive, New Territories, P.O. Box 2681GT, Hong Kong. George Town, Grand Cayman, Cayman Islands, British West Indies.

Notes:

Any member entitled to attend and vote at the meeting convened by the above notice is entitled to appoint another person as his proxy to attend and vote instead of him. A proxy need not be a member of the Company.
In order to be valid, the form of proxy must be deposited at the Company’s registrars in Hong Kong, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong together with the power of attorney or other authority, (if any), under which it is signed, or a notarially certified copy of such power of attorney or authority, not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.
Completion and return of the proxy form shall not preclude a member of the Company from attending and voting in person at the meeting or on the poll concerned and, in such event, the instrument appointing a proxy shall be deemed to be revoked.
Where there are joint registered holders of any share, any one of the such persons may vote at the meeting either personally or by proxy, in respect of such shares as if he were solely entitled thereto, but if more than one of such joint holders be present at the meeting personally or by proxy, that one of the said persons so present whose name stands first on the register of members of the Company in respect of such share shall alone be entitled to vote in respect thereof.
A form of proxy for use in connection with the meeting is enclosed.
Ordinary Resolution numbered 1 will be determined by way of poll.

– 95 –

AI assistant

JD Logistics, Inc. — Proxy Solicitation & Information Statement 2003

50717_rns_2003-06-16_2e9fb2e8-e0a2-4371-8032-a7a11e0f307a.pdf

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

Executive Directors:

INTRODUCTION

THE CONCESSION AGREEMENT

(i) Redemption of HK$4 million in face value of Series B Preference Shares at HK$1.00

(ii) Waiving of Series A Preference Share dividend

(iii) Declaration of Conditional Special Dividend

THE CONVERSION

SHAREHOLDING STRUCTURE OF THE COMPANY

INFORMATION ON CCIL

INFORMATION ON THE COMPANY

LETTER FROM THE BOARD

REASONS FOR THE CONCESSION AGREEMENT AND THE CONVERSION

TAKEOVERS CODE IMPLICATIONS

FUTURE INTENTIONS OF CCIL ON THE COMPANY

CONDITIONAL SPECIAL DIVIDEND

GENERAL MANDATES TO ISSUE SECURITIES AND TO REPURCHASE SHARES

LETTER FROM THE BOARD

EGM

RECOMMENDATION

FURTHER INFORMATION

WHITEWASH WAIVER

WHITEWASH WAIVER BY GOLD THRONE FINANCE LIMITED

PRINCIPAL FACTORS AND REASONS CONSIDERED

I. CONCESSION AGREEMENT AND CONVERSION

Background

Business of the Group

The Concession Agreement

Declaration of the Conditional Special Dividend

Conversion Price

CCIL’s intentions regarding Midas

II. EFFECTS OF THE COMPLETION AND THE CONVERSION ON MIDAS AND INDEPENDENT SHAREHOLDERS

Shareholding structure

Financial benefits to Midas and/or the Independent Shareholders as a result of the Completion

Opportunity to realize part of the investments of the Shareholders

Net tangible asset value

Earnings

Notes:

Cash saving as a result of the Completion

Performance of Midas’s management

Gearing

III. WHITEWASH WAIVER

IV. CONCLUSION AND RECOMMENDATION

1. SHARE CAPITAL

2. SUMMARY OF CONSOLIDATED INCOME STATEMENTS

RESULTS

3. AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Income Statement

Consolidated Balance Sheet

Statement of Changes in Equity

Consolidated Cash Flow Statement

Notes to the Financial Statements

1. GENERAL

2. ADOPTION OF STATEMENTS OF STANDARD ACCOUNTING PRACTICE

Foreign currencies

Cash flow statements

Employee benefits

3. SIGNIFICANT ACCOUNTING POLICIES

Basis of consolidation

Goodwill

Negative goodwill

Investment properties

Property, plant and equipment

Properties under development

Assets held under finance leases

Investments in subsidiaries

Investments in securities

Inventories

Impairment

Revenue recognition

Taxation

Foreign currencies

Borrowing costs

Retirement benefit costs

JD Logistics, Inc. Proxy Solicitation & Information Statement 2003