JD Logistics, Inc. — Proxy Solicitation & Information Statement 2007

Jun 4, 2007

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in doubt as to any aspect of this circular or as to the action you should take, you should consult your licensed securities dealer or registered institution in securities, 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 or the transferee, or to the bank, licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or the 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.

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(Stock Code: 1172)

DISCLOSEABLE AND CONNECTED TRANSACTIONS

Financial adviser

Independent financial adviser to the Independent Board Committee and the Independent Shareholders

A letter of recommendation from the Independent Board Committee to the Independent Shareholders and a letter of advice from Quam to the Independent Board Committee and the Independent Shareholders are set out respectively on page 18 and pages 19 to 32 of this circular.

A notice convening an extraordinary general meeting of the Company to be held at 25th Floor, Alexandra House, 18 Chater Road, Central, Hong Kong at 11:00 a.m. on Thursday, 21 June 2007 is set out on pages 44 to 46 of this circular. Whether or not you intend to attend the meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at Rooms 1806-7, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting at the meeting or any adjournment thereof if you so wish.

* For identification purpose only

4 June 2007

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
The Transfer Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
The Subscription Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Application for listing of the Convertible Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Shareholding structure of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Information on CCIL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Information on Chuang’s China and Success Gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Information on the Company and CD Chengdu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Group structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Reasons for, benefits and effects of the Transfer and the Subscription . . . . . . . . . . . . .	16
Implications under the Listing Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
Additional information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
Letter from Quam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
Appendix I – Valuation Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	33
Appendix II – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	40
Notice of the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	44

DEFINITIONS

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

“associate(s)” has the meaning ascribed to it under the Listing Rules “Board” the board of Directors “CCIL” Chuang’s Consortium International Limited (Stock Code: 367), a company incorporated in Bermuda with limited liability whose issued shares are listed on the Main Board of the Stock Exchange “CCIL Group” CCIL and its subsidiaries “CD Chengdu” Chuang’s Development (Chengdu) Limited, a company incorporated in Hong Kong with limited liability and an indirect wholly-owned subsidiary of the Company as at the Latest Practicable Date “CD Chengdu’s Shareholder Loan” HK$16,098,752, being the interest free shareholder loan now and will immediately before the Transfer Completion be owing by CD Chengdu to a wholly-owned subsidiary of the Company “CD Chengdu Shares” 2 ordinary shares of HK$10 each and 100,000 non-voting deferred shares of HK$10 each in the issued share capital of CD Chengdu, representing the entire issued share capital of CD Chengdu “Chengdu Property” Level 6, Chengdu Chuang’s Centre, No. 1 Renmin South Road, Chengdu, Sichuan Province, the PRC “Chuang’s China” Chuang’s China Investments Limited (Stock Code: 298), a company incorporated in Bermuda with limited liability whose issued shares are listed on the Main Board of the Stock Exchange and was beneficially owned as to approximately 60.5% by CCIL as at the Latest Practicable Date “Chuang’s China Group” Chuang’s China and its subsidiaries “Chuang’s China SGM” the special general meeting of Chuang’s China to be convened to consider and, if thought fit, approve the Transfer and the transactions contemplated thereunder

– 1 –

DEFINITIONS

“Company”	Midas International Holdings Limited (Stock Code: 1172),
	a company incorporated in the Cayman Islands with limited
	liability whose issued Shares are listed on the Main Board
	of the Stock Exchange and was beneficially owned as to
	approximately 44.7% by CCIL as at the Latest Practicable
	Date
“Completion Accounts”	the proforma accounts of CD Chengdu and Success Gain
	as at the date of the Transfer Completion
“Convertible Note”	1.5% convertible note due 2011 in the principal amount of
	HK$49.5 million to be issued by the Company to CCIL or
	its nominee(s) pursuant to the Subscription Agreement
“Conversion Price”	the price of HK$0.45 per Conversion Share, subject to the
	adjustments which may be made pursuant to the terms of
	the Convertible Note
“Conversion Share(s)”	the Share(s) to be issued by the Company upon the exercise
	of the conversion rights attached to the Convertible Note or
	otherwise pursuant to the terms and conditions of the
	Convertible Note
“Director(s)”	director(s) of the Company
“EGM”	the extraordinary general meeting of the Company to be
	convened to consider and, if thought fit, approve the Transfer
	Agreement, the Subscription Agreement and the respective
	transactions contemplated thereunder
“Existing Dongguan Industrial Site”	a piece of industrial land located in Shatian Town,
	Dongguan, Guangdong Province, the PRC
“Group”	the Company and its subsidiaries
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Independent Board Committee”	the independent committee of the Board, comprising
	Mr. Abraham Shek Lai Him, Dr. Eddy Li Sau Hung and
	Mr. Yau Chi Ming, established for the purpose of advising
	the Independent Shareholders in relation to the Transfer
	Agreement, the Subscription Agreement and the respective
	transactions contemplated thereunder

– 2 –

DEFINITIONS

“Independent Shareholders”	Shareholders other than those who are required under the
	Listing Rules to abstain from voting on the resolutions to
	be proposed at the EGM to approve the Transfer and the
	Subscription
“Independent Third Party”	person or company who/which is not connected with the
	respective directors, chief executive or substantial
	shareholders (as defined under the Listing Rules) of the
	Company and its subsidiaries or any of their associates
“Latest Practicable Date”	29 May 2007, being the latest practicable date for
	ascertaining certain information for inclusion in this circular
“Listing Committee”	the listing sub-committee of the Stock Exchange
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Maturity”	the maturity of the Convertible Note, being the 4th
	anniversary from the date of issue of the Convertible Note
“New Dongguan Site”	a piece of land located at Coastal Industry Zone, Dongguan,
	Guangdong Province, the PRC
“Newco”	a wholly-foreign owned enterprise to be incorporated in
	the PRC by Success Gain in accordance with the
	requirements of the Transfer Agreement
“Noteholder”	the person who is for the time being the holder of the
	Convertible Note as shown in the register kept by the
	Company
“PRC”	the People’s Republic of China, which, for the purpose of
	this circular excludes, Hong Kong, the Macau Special
	Administrative Region and Taiwan
“Quam”	Quam Capital Limited, a licensed corporation for Type 6
	(advising on corporate finance) regulated activity under the
	SFO and the independent financial adviser appointed to
	advise the Independent Board Committee and the
	Independent Shareholders regarding the terms of the
	Transfer Agreement, the Subscription Agreement and the
	respective transactions contemplated thereunder
“RMB”	Renminbi, the lawful currency of the PRC

– 3 –

DEFINITIONS

“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 share capital of
	the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subscription”	the subscription of the Convertible Note to be issued by the
	Company to CCIL or its nominee(s) pursuant to the
	Subscription Agreement
“Subscription Agreement”	the conditional agreement dated 11 May 2007 entered into
	between CCIL and the Company in connection with the
	subscription of the Convertible Note
“Subscription Completion”	completion of the Subscription in accordance with the terms
	and conditions of the Subscription Agreement
“Success Gain”	Success Gain Investment Limited, a company incorporated
	in Hong Kong with limited liability and an indirect wholly-
	owned subsidiary of Chuang’s China as at the Latest
	Practicable Date
“Success Gain’s Shareholder Loan”	HK$5,299,057, being the interest free shareholder loan now
	and will immediately before the Transfer Completion be
	owing by Success Gain to a wholly-owned subsidiary of
	Chuang’s China
“Success Gain Shares”	2 shares of HK$1 each in the issued share capital of Success
	Gain, representing the entire issued share capital of Success
	Gain
“Transfer”	the transfer to the Company by Chuang’s China of all its
	rights, title, interest and benefit of and in the Success Gain
	Shares and the Success Gain’s Shareholder Loan, in
	exchange for all the Company’s rights, title, interest and
	benefit of and in the CD Chengdu Shares and the CD
	Chengdu’s Shareholder Loan and the payment of RMB13
	million (equivalent to approximately HK$13.3 million)
	(subject to adjustment) by the Company in the manner
	provided in the Transfer Agreement
“Transfer Agreement”	the conditional transfer agreement dated 11 May 2007
	entered into between Chuang’s China and the Company in
	connection with the Transfer

– 4 –

DEFINITIONS

“Transfer Completion” completion of the Transfer in accordance with the terms and conditions of the Transfer Agreement “Valuer” DTZ Debenham Tie Leung Limited, an independent valuer “sq.m.” square meter “%” per cent.

For the purpose of illustration only, amounts denominated in RMB in this circular have been translated into HK$ at the rate of RMB1 = HK$1.02. Such translation should not be construed as a representation that the amounts in question have been, could have been or could be converted at any particular rate or at all.

– 5 –

LETTER FROM THE BOARD

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(Stock Code: 1172)

Executive Directors:

Mr. Richard Hung Ting Ho (Chairman) Mr. Kwong Tin Lap (Managing Director) Mr. Kwok Chi Fai (Deputy Managing Director) Miss Ann Li Mee Sum Mr. Wong Chi Sing

Registered office: Cricket Square Hutchins Drive PO Box 2681 Grand Cayman KY1-1111 Cayman Islands

Non-executive Director:

Mr. Dominic Lai

Independent non-executive Directors:

Mr. Abraham Shek Lai Him, J.P. Dr. Eddy Li Sau Hung Mr. Yau Chi Ming

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

4 June 2007

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTIONS

INTRODUCTION

On 11 May 2007, the Company announced that it had entered into the Transfer Agreement with Chuang’s China and the Subscription Agreement with CCIL. Pursuant to the Transfer Agreement, Chuang’s China has conditionally agreed to procure the transfer and assignment to the Company and/or its nominee(s) of all its rights, title, interest and benefit of and in (i) the Success Gain Shares; and (ii) the Success Gain’s Shareholder Loan, in exchange for the transfer and assignment to Chuang’s China and/or its nominee(s) of all the Company’s rights, title, interest and benefit of and in (a) the CD Chengdu Shares; and (b) the CD Chengdu’s Shareholder Loan, and the payment by the Company of RMB13 million (equivalent to approximately HK$13.3 million) in cash (subject to adjustment). Pursuant to the Subscription Agreement, the Company has conditionally agreed to issue and CCIL has conditionally agreed to subscribe for the Convertible Note in the principal amount of HK$49.5 million.

• For identification purpose only

– 6 –

LETTER FROM THE BOARD

Each of the Transfer and the Subscription constitutes a connected transaction for the Company. Accordingly, the Transfer Agreement, the Subscription Agreement and the respective transactions contemplated thereunder are subject to the approval of the Independent Shareholders by poll at the EGM under the Listing Rules. The Transfer also constitutes a discloseable transaction for the Company under the Listing Rules.

The purpose of this circular is to give you (i) further information regarding the Transfer and the Subscription; (ii) the notice of the EGM; (iii) the letter of recommendation from the Independent Board Committee to the Independent Shareholders in respect of the respective terms of the Transfer and the Subscription; (iv) the letter of advice from Quam to the Independent Board Committee and the Independent Shareholders in respect of the respective terms of the Transfer and the Subscription; and (v) other information as required under the Listing Rules.

THE TRANSFER AGREEMENT

Date

11 May 2007

Parties

The Company and Chuang’s China

The assets to be transferred

Pursuant to the Transfer Agreement, Chuang’s China has conditionally agreed to procure the transfer and assignment to the Company and/or its nominee(s) of all its rights, title, interest and benefit of and in (i) the Success Gain Shares; and (ii) the Success Gain’s Shareholder Loan, in exchange for the transfer and assignment to Chuang’s China and/or its nominee(s) of all the Company’s rights, title, interest and benefit of and in (a) the CD Chengdu Shares; and (b) the CD Chengdu’s Shareholder Loan, and the payment by the Company of RMB13 million (equivalent to approximately HK$13.3 million) in cash (subject to adjustment).

The sole asset of Success Gain will be the New Dongguan Site, which is a vacant site designated for industrial use. The sole asset of CD Chengdu is the Chengdu Property which is currently leased to an Independent Third Party under a tenancy agreement.

The Transfer was arrived at after arm’s length negotiations between the parties to the Transfer Agreement with reference to (i) the market value of the New Dongguan Site as at 31 March 2007 as appraised by the Valuer amounting to RMB38 million (equivalent to approximately HK$38.8 million) assuming that the state land use rights certificate of the New Dongguan Site has been obtained; and (ii) the market value of the Chengdu Property as at 31 March 2007 as appraised by the Valuer amounting to RMB25 million (equivalent to HK$25.5 million).

– 7 –

LETTER FROM THE BOARD

The aforementioned RMB13 million (equivalent to approximately HK$13.3 million), being the difference of the appraised market value of the New Dongguan Site and the appraised market value of the Chengdu Property as at 31 March 2007, is subject to minor adjustments based on the Completion Accounts and will be paid by the Company from its internal resources to Chuang’s China on the Transfer Completion.

Conditions precedent to the Transfer Agreement

The Transfer Completion shall be conditional on the following:

• (a) the passing of the necessary resolution(s) by the shareholders of Chuang’s China (other than those (if any) who are required to abstain from voting under the Listing Rules) at the Chuang’s China SGM approving and ratifying the entering into of the Transfer Agreement and the performance of the transactions contemplated thereunder;

• (b) the passing of the necessary resolution(s) by the Independent Shareholders at the EGM approving and ratifying the entering into of the Transfer Agreement and the performance of the transactions contemplated thereunder;

• (c) the Company having obtained copies of documents and approval proving to its reasonable satisfaction the establishment of the Newco under the PRC laws pursuant to the Transfer Agreement;

• (d) the Newco having obtained the state land use rights certificate for the New Dongguan Site free from all encumbrances and with a site area of approximately 77,913.7 sq.m. for industrial use with a term of not less than 50 years, and the Company having received a copy of such documents evidencing the same, all certified as true, complete and accurate by a director of Chuang’s China;

• (e) the Company having received a PRC legal opinion from a firm of PRC lawyers acceptable to the Company in respect of the title of the New Dongguan Site in such form and content to the reasonable satisfaction of the Company;

• (f) Chuang’s China having received a PRC legal opinion from a firm of PRC lawyers acceptable to Chuang’s China in respect of the title of the Chengdu Property in such form and content to the reasonable satisfaction of Chuang’s China;

• (g) the warranties given by Chuang’s China in respect of the New Dongguan Site and the financial and operating position of Success Gain remaining true and accurate and not misleading in any material respect at the Transfer Completion;

• (h) the warranties given by the Company in respect of the Chengdu Property and the financial and operating position of CD Chengdu remaining true and accurate and not misleading in any material respect at the Transfer Completion; and

– 8 –

LETTER FROM THE BOARD

• (i) all necessary statutory, government and regulatory obligations having been complied with and all necessary regulatory, governmental and third party consents and waivers having been obtained and all filings have been made by Chuang’s China and the Company.

If any of the above conditions is not fulfilled (or waived as to the above condition (h) by Chuang’s China and as to the above condition (g) by the Company as appropriate) on or before 31 December 2007 or such other date as the parties to the Transfer Agreement may agree in writing, the rights and obligations of the parties under the Transfer Agreement shall lapse and be of no further effect, in which event the parties to the Transfer Agreement shall be released from any further obligations without any liability save for any liability arising out of any antecedent breaches.

The Transfer Completion

The Transfer Completion shall take place on the third business day after all conditions precedent to the Transfer Agreement are fulfilled or waived or on such other date as agreed by the parties to the Transfer Agreement in writing.

Upon the Transfer Completion, Success Gain will become a wholly-owned subsidiary of the Company and CD Chengdu will cease to be a wholly-owned subsidiary of the Company.

THE SUBSCRIPTION AGREEMENT

Date

11 May 2007

Parties

Issuer: The Company

Subscriber: CCIL

The Convertible Note

Pursuant to the Subscription Agreement, the Company has conditionally agreed to issue and CCIL has conditionally agreed to subscribe for the Convertible Note upon and subject to the terms and conditions of the Subscription Agreement.

– 9 –

LETTER FROM THE BOARD

Conditions precedent to the Subscription Agreement

The Subscription Completion shall be conditional on, among others, the following:

• (a) the passing of an ordinary resolution by the Independent Shareholders at the EGM approving the Subscription Agreement and the transactions contemplated thereunder, including, but not limited to, the issue of the Convertible Note and the Conversion Shares;

• (b) the Listing Committee having granted listing of, and permission to deal in, the Conversion Shares to be issued pursuant to the Convertible Note;

• (c) if necessary, all approvals, consents, permission from third party(ies) for the transactions contemplated under the Subscription Agreement having been obtained by the Company; and

• (d) the Subscription Agreement not being terminated by CCIL in accordance with the terms of the Subscription Agreement.

If the above conditions are not fulfilled on or before 31 December 2007 (or such later date as may be agreed between CCIL and the Company), the Subscription Agreement shall lapse and become null and void and the parties thereto shall be released from all obligations thereunder, save for any liability arising out of any antecedent breaches.

The Subscription Completion

The Subscription Completion shall take place on the third business day following the date on which the last of the above conditions (other than the above condition (d)) have been fulfilled (or such other date as the parties to the Subscription Agreement shall agree).

Principal terms of the Convertible Note

The terms of the Convertible Note were determined after arm’s length negotiations between CCIL and the Company.

• (a) Principal amount HK$49.5 million

• (b) Maturity

The fourth anniversary from the date of issue of the Convertible Note

• (c) Interest

• 1.5% per annum payable in arrears every twelve months

– 10 –

LETTER FROM THE BOARD

(d) Conversion rights

The Noteholder shall have the rights to convert, on any business day prior to five business days before the Maturity, the whole (or part only in an integral multiple of HK$450,000) of the principal amount of the Convertible Note into Shares at the Conversion Price.

(e) Conversion Price

The initial Conversion Price is HK$0.45 per Conversion Share, subject to adjustments in certain events such as share consolidation, share sub-division, reclassification, capitalisation issue, capital distribution, rights issue and other equity derivative issues.

(f) Ranking of the Conversion Shares

The Conversion Shares shall rank pari passu in all respects with all other existing Shares in issue at the date on which a notice is given for the exercise of conversion rights and be entitled to all dividends and other distributions the record date of which falls on a date on or after the notice for the exercise of conversion rights is given.

(g) Voting

The Noteholder shall not be entitled to receive notices of, attend or vote at any meetings of the Company by reason only of its capacity as a noteholder.

(h) Transferability

The Convertible Note may be transferred to any third party. Any transfer of the Convertible Note shall be in respect of the whole (or part only in an integral multiple of HK$450,000) of the outstanding principal amount of the Convertible Note. In the event of any transfer of the Convertible Note to a connected person of the Company (as defined under the Listing Rules), the Noteholder shall notify the Company in writing of such transfer, so that the Company will promptly notify the Stock Exchange of such transfer accordingly.

CCIL presently has no intention to transfer the Convertible Note after the Subscription Completion.

(i) Redemption

To the extent not previously converted into Shares, the Company shall, on the Maturity, redeem the Convertible Note at 100% of the outstanding principal amounts.

In the event that the Convertible Note is converted in full at the Conversion Price of HK$0.45 (subject to adjustments), a total of 110,000,000 Conversion Shares will be issued, representing approximately 20.6% of the existing issued share capital of the Company and approximately 17.1% of the issued share capital of the Company as enlarged by the issue of the Conversion Shares.

– 11 –

LETTER FROM THE BOARD

The Conversion Price of HK$0.45 represents:

• (i) a premium of approximately 12.5% over the closing price of HK$0.4 per Share as quoted on the Stock Exchange on 10 May 2007, being the last trading day of the Shares prior to the suspension of trading in the Shares on the Stock Exchange on 11 May 2007;

• (ii) a premium of approximately 16.3% over the average closing price of approximately HK$0.387 per Share for the five consecutive trading days up to and including 10 May 2007 as quoted on the Stock Exchange;

• (iii) a premium of approximately 17.2% over the average closing price of approximately HK$0.384 per Share for the 10 consecutive trading days up to and including 10 May 2007 as quoted on the Stock Exchange;

• (iv) a premium of approximately 4.7% over the closing price of HK$0.430 per Share as quoted on the Stock Exchange on the Latest Practicable Date; and

• (v) a discount of approximately 49.8% to the audited consolidated net assets value of the Group of approximately HK$0.897 per Share as at 31 December 2006.

APPLICATION FOR LISTING OF THE CONVERTIBLE NOTE

No application has been or will be made for listing of, or permission to deal in, the Convertible Note on the Stock Exchange or any other stock exchange. An application will be made to the Listing Committee for the listing of, and permission to deal in, the Conversion Shares to be issued as a result of the conversion of the Convertible Note.

SHAREHOLDING STRUCTURE OF THE COMPANY

The simplified shareholding structure of the Company as at the Latest Practicable Date and the simplified shareholding structure of the Company upon full conversion of the Convertible Note and assuming there is no change in the issued share capital of the Company from the Latest Practicable Date are set out as follows:

CCIL A Director_(Note)_ Public Total	Existing structure Number of % of total Shares issued Shares 238,800,000 44.7 10,000 0.0 295,480,068 55.3 534,290,068 100.0	Immediately after the Subscription Completion and full conversion of the Convertible Note Number of % of total Shares issued Shares 348,800,000 54.1 10,000 0.0 295,480,068 45.9 644,290,068 100.0	Immediately after the Subscription Completion and full conversion of the Convertible Note Number of % of total Shares issued Shares 348,800,000 54.1 10,000 0.0 295,480,068 45.9 644,290,068 100.0
			100.0

Note: Mr. Abraham Shek Lai Him, an independent non-executive Director, holds 10,000 Shares.

– 12 –

LETTER FROM THE BOARD

In the event that the Convertible Note is converted in full, CCIL’s shareholding interest in the Company would increase from approximately 44.7% as at the Latest Practicable Date to 54.1%. In such case, the Company will become a 54.1% subsidiary of CCIL.

INFORMATION ON CCIL

The CCIL Group is principally engaged in property investment and development in Hong Kong and Malaysia, property investment and development in the PRC (through Chuang’s China), investments in manufacturing businesses, securities investments and provision of information technology services.

INFORMATION ON CHUANG’S CHINA AND SUCCESS GAIN

The Chuang’s China Group is engaged in property investment and development principally in the PRC, investments in manufacturing businesses and provision of information technology services.

Success Gain is principally engaged in the holding of the Existing Dongguan Industrial Site. In view of the infrastructural development to be carried out by the local government at the Existing Dongguan Industrial Site, the relevant PRC authority has agreed to grant to the Chuang’s China Group the land use rights for the New Dongguan Site in exchange for the resumption of the Existing Dongguan Industrial Site. No land premium is required to be paid by the Chuang’s China Group in respect of the aforesaid granting of the New Dongguan Site. At present, Success Gain is in the process of establishing the Newco for the purpose of obtaining the state land use rights certificate for the New Dongguan Site, which is expected to take approximately three months from May 2007. Upon obtaining of the state land use rights certificate, the New Dongguan Site will be the sole asset of Success Gain. The New Dongguan Site is a piece of vacant land located at Coastal Industry Zone, Dongguan, Guangdong Province of the PRC having a site area of approximately 77,913.7 sq.m. for industrial use.

Set out below is the financial highlights of Success Gain for the two years ended 31 March 2007:

	For the year	For the year
	ended 31 March
	2006	2007
	Audited	Unaudited
	(HK$)	(HK$)
Loss before taxation	(92,715)	(1,006,025)
Loss after taxation	(92,715)	(1,006,025)

The unaudited net assets value of Success Gain (before deduction of the Success Gain’s Shareholder Loan of approximately HK$5.3 million) as at 31 March 2007 was approximately HK$3.0 million.

– 13 –

LETTER FROM THE BOARD

INFORMATION ON THE COMPANY AND CD CHENGDU

The Group is principally engaged in books and paper products printing and property investment.

CD Chengdu’s sole asset is the Chengdu Property which is located at Level 6, Chengdu Chuang’s Centre, No. 1 Renmin South Road, Chengdu, Sichuan Province, the PRC having a gross floor area of approximately 4,255 sq.m. and is currently leased to an Independent Third Party for a term of 10 years commencing from 25 October 2002. The annual rental income for the year ended 31 December 2006 was HK$889,231.

Set out below is the financial highlights of the CD Chengdu for the two years ended 31 December 2006:

	For the	year
	ended 31 December
	2005	2006
	Audited	Audited
	(HK$)	(HK$)
Profit before taxation	40,181,000	4,910,000
Profit after taxation	35,806,000	3,819,000

The audited net assets value of CD Chengdu (before deduction of the CD Chengdu’s Shareholder Loan of approximately HK$16.1 million) as at 31 December 2006 was approximately HK$23.5 million.

– 14 –

LETTER FROM THE BOARD

GROUP STRUCTURE

The following is the simplified group structure of the Company, Chuang’s China, Success Gain and CD Chengdu immediately prior to and after the Transfer Completion:

Immediately prior to the Transfer Completion:

==> picture [288 x 179] intentionally omitted <==

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

CCIL
60.5% 44.7%
Chuang’s China The Company
100% 100%
Success Gain CD Chengdu
100% 100%
The Existing
The Chengdu Property
Dongguan Industrial Site
----- End of picture text -----

Immediately after the Transfer Completion:

==> picture [283 x 221] intentionally omitted <==

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

CCIL
60.5% 44.7%
Chuang’ China The Company
100% 100%
CD Chengdu Success Gain
100% 100%
The Newco
The Chengdu Property
100%
The New Dongguan Site
----- End of picture text -----

– 15 –

LETTER FROM THE BOARD

REASONS FOR, BENEFITS AND EFFECTS OF THE TRANSFER AND THE SUBSCRIPTION

As stated in the annual report of the Company for the year ended 31 December 2006, the Group will allocate more resources into the research and development of higher margin products, such as original designed products, products with electronic components and pop-up books. To cater for the anticipated growth of these higher margin products, there is a need for the expansion of new hand assembly lines and thus the requirements for new factory premises. The Transfer Agreement will enable the Group to acquire the New Dongguan Site which, in the opinion of the Directors, is a suitable site for the construction of new factory premises. Under the Transfer Agreement, the Company will also transfer the Chengdu Property to Chuang’s China, the purpose of which is to reduce the amount of cash consideration for the acquisition of the New Dongguan Site so as to allow the Group to retain more working capital for the ongoing development and expansion of its core printing business. The book value of the Chengdu Property as at 31 December 2006 was HK$25 million. Accordingly, the disposal of the Chengdu Property will not result in any material gain or loss to the Group.

As at 31 December 2006, the cash position of the Group amounted to approximately HK$86.4 million and the bank borrowings of the Group amounted to approximately HK$118.2 million, approximately 95% of which are repayable within three years. These bank borrowings carry interest rates ranging from approximately 4.62% to 6.12% per annum. The issue of the Convertible Note will enable the Company to obtain financing for four years at a relatively low interest rate of 1.5% per annum. The Directors consider that the net proceeds of HK$49.5 million from the Subscription will strengthen the working capital position of the Group and will facilitate its expansion programme mentioned above which is beneficial to the long-term development of the Group.

During the past twelve months prior to 11 May 2007, being the date of the announcement of the Transfer and the Subscription, the Company did not have any fund raising activity.

The Directors (including the independent non-executive Directors) consider that the terms of the Transfer and the Subscription are fair and reasonable and in the interests of the Group and the Shareholders as a whole.

Save as disclosed in this circular, the Transfer Completion and the Subscription Completion will not have any material impact of the earnings and assets and liabilities of the Group.

IMPLICATIONS UNDER THE LISTING RULES

As at the Latest Practicable Date, CCIL was beneficially interested in approximately 60.5% and 44.7% of the issued share capital of Chuang’s China and the Company respectively. By virtue of the interest of CCIL in Chuang’s China and the Company, Chuang’s China and CCIL are connected persons to the Company under the Listing Rules. Accordingly, each of the Transfer and the Subscription constitutes a connected transaction for the Company and is subject to the approval of the Independent Shareholders by poll at the EGM under the Listing Rules. CCIL and its associates will abstain from voting at the EGM in respect of the proposed resolutions to approve the Transfer and the Subscription. The Transfer also constitutes a discloseable transaction for the Company under the Listing Rules.

– 16 –

LETTER FROM THE BOARD

Quam has been appointed to advise the Independent Board Committee and the Independent Shareholders in respect of the Transfer Agreement, the Subscription Agreement and the respective transactions contemplated thereunder. Your attention is drawn to their letter of advice set out on pages 19 to 32 of this circular.

The Independent Board Committee, comprising three independent non-executive Directors, namely Mr. Abraham Shek Lai Him, Dr. Eddy Li Sau Hung and Mr. Yau Chi Ming, has been established to advise the Independent Shareholders in respect of the Transfer Agreement, the Subscription Agreement and the respective transactions contemplated thereunder. Your attention is also drawn to the letter of recommendation from the Independent Board Committee set out on page 18 of this circular.

EGM

A notice convening the EGM is set out on pages 44 to 46 of this circular. At the EGM, ordinary resolutions will be proposed to the Independent Shareholders to consider and, if thought fit, approve the Transfer Agreement, the Subscription Agreement and the respective transactions contemplated thereunder, where votes of the Independent Shareholders will be taken on a poll.

The results of voting taken on a poll at the EGM will be announced by the Company in accordance with the Listing Rules.

Whether or not you will be able to attend the EGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at Rooms 1806-7, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of a form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof if you so wish.

The Board recommends the Independent Shareholders to vote in favour of the ordinary resolutions set out in the notice of the EGM to approve the Transfer Agreement, the Subscription Agreement and the respective transactions contemplated thereunder.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendices to this circular.

Yours faithfully,

For and on behalf of the Board of

Midas International Holdings Limited KWONG Tin Lap Managing Director

– 17 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of the letter of recommendation from the Independent Board Committee which has been prepared for the purpose of inclusion in this circular:

==> picture [322 x 123] intentionally omitted <==

(Stock Code: 1172)

4 June 2007

To the Independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTIONS

We refer to the circular of the Company dated 4 June 2007 (the “Circular”), of which this letter forms part. Unless specified otherwise, capitalised terms used herein shall have the same meanings as those defined in the Circular.

We have been appointed by the Board as members of the Independent Board Committee to advise you on the terms of the Transfer Agreement, the Subscription Agreement and the respective transactions contemplated thereunder. Quam has been appointed as the independent financial adviser to advise you and us in this regard. Details of their advice, together with the principal factors and reasons they have taken into consideration in giving such advice, are set out on pages 19 to 32 of the Circular. Your attention is also drawn to the letter from the Board in the Circular and the additional information set out in the appendices thereto.

Having considered the terms of the Transfer Agreement, the Subscription Agreement and the respective transactions contemplated thereunder and taking into account the independent advice of Quam, in particular the principal factors, reasons and recommendation as set out in their letter on pages 19 to 32 of the Circular, we consider that (i) the terms of the Transfer Agreement, the Subscription Agreement and the respective transactions contemplated thereunder are on normal commercial terms and are fair and reasonable in so far as the Independent Shareholders are concerned; and (ii) the entering into of the Transfer Agreement and the Subscription Agreement are in the interests of the Group and the Independent Shareholders as a whole. Accordingly, we recommend you to vote in favour of the ordinary resolutions to be proposed at the EGM to approve the Transfer Agreement, the Subscription Agreement and the respective transactions contemplated thereunder.

Yours faithfully,

Independent Board Committee

Abraham Shek Lai Him Eddy Li Sau Hung Yau Chi Ming Independent non-executive Directors

* For identification purpose only

– 18 –

LETTER FROM QUAM

The following is the text of a letter of advice from Quam, the independent financial adviser to the Independent Board Committee and the Independent Shareholders, which has been prepared for the purpose of incorporation into this circular, setting out its advice to the Independent Board Committee and the Independent Shareholders in connection with the Transfer and the Subscription.

==> picture [120 x 35] intentionally omitted <==

4 June 2007

The Independent Board Committee and

the Independent Shareholders 1st Floor, 100 Texaco Road Tsuen Wan New Territories Hong Kong

Dear Sir/Madam,

DISCLOSEABLE AND CONNECTED TRANSACTIONS

We refer to our appointment as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the Transfer and the Subscription. Details of the Transfer and the Subscription are set out in the “Letter from the Board” contained in the circular issued by the Company to the Shareholders dated 4 June 2007 (the “ Circular ”). Terms used in this letter shall have the same meanings as defined in the Circular unless the context otherwise requires.

Mr. Abraham Shek Lai Him, Dr. Eddy Li Sau Hung, Mr. Yau Chi Ming, the independent non-executive Directors, have been appointed as members of the Independent Board Committee to advise the Independent Shareholders (a) as to whether the Transfer and the Subscription are on normal commercial terms, and in the ordinary and usual course of business of the Group; whether the respective terms of the Transfer Agreement and the Subscription Agreement are fair and reasonable; and whether the Transfer and the Subscription are in the interests of the Company and the Shareholders as a whole; and (b) as to whether to vote in favour of the Transfer and the Subscription. As the independent financial adviser, our role is to give an independent opinion to the Independent Board Committee and the Independent Shareholders.

Quam is independent of and not connected with any members of the Group or any of their substantial shareholders, directors or chief executives, or any of their respective associates, and is accordingly qualified to give an independent advice in respect of the Transfer and the Subscription.

– 19 –

LETTER FROM QUAM

In formulating our recommendations, we have relied on the information and facts supplied by the Company and its advisers, and the opinions expressed by and the representations of the Directors and management of the Company. We have assumed that all the information and representations contained or referred to in the Circular are true and accurate in all respects at the date thereof and may be relied upon. We have also assumed that all statements contained and representations made or referred to in the Circular are true at the time they are made and continue to be true at the date thereof. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors and the Directors have confirmed to us that no material facts have been withheld or omitted from the information provided and referred to in the Circular, which would make any statements therein misleading.

We consider that we have reviewed sufficient information currently available to reach an informed view and to justify our reliance on the accuracy of the information contained in the Circular so as to provide a reasonable basis for our recommendations. We have not, however, carried out any independent verification of the information, nor have we conducted any form of in-depth investigation into the business, affairs, operations, financial position or future prospects of any member of the Group and Success Gain.

A. THE TRANSFER

The Company and Chuang’s China entered into the Transfer Agreement on 11 May 2007. Pursuant to the Transfer Agreement, Chuang’s China has conditionally agreed to procure the transfer and assignment to the Company and/or its nominees (a) the Success Gain Shares and (b) the Success Gain’s Shareholder Loan in exchange for the transfer and assignment to Chuang’s China and/or its nominees (a) the CD Chengdu Shares and (b) the CD Chengdu’s Shareholder Loan, and also the payment by the Company of RMB13 million (equivalent to approximately HK$13.3 million) in cash (subject to adjustment) (the “ Cash Payment ”).

Chuang’s China is a subsidiary of CCIL, the controlling Shareholder. Accordingly, the Transfer constitutes a connected transaction for the Company under the Listing Rules. The Transfer also constitutes a discloseable transaction for the Company under the Listing Rules.

– 20 –

LETTER FROM QUAM

A.1. PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our recommendation, we have taken into consideration the following principal factors and reasons:

A.1.1. Background of and reasons for the Transfer

• (i) The principal businesses and the expansion strategy of the Group

The Group is principally engaged in books and paper products printing and property investment.

Printing business

The Group is heavily reliant on its printing business. More than 97% of the Group’s turnover was attributable to its printing business for each of the five years ended 31 December 2006. For the year ended 31 December 2006, the turnover of its printing business accounted for approximately 99.4% of the Group’s turnover and contributed approximately 87.2% to its total segment results.

Gross profit margin of the Group was around 30% to 32% from 2002 to 2004. The increase in raw material costs and labour costs coupled with the appreciation of Renminbi in recent years led to the increase in direct costs of the Group’s printing business. Furthermore, the fierce competition in the printing industry exerted pricing pressure on the Group’s printing products. As a result, the Group’s gross profit margin was reduced to 28.3% in 2005 and 25.8% in 2006.

The Group’s turnover was approximately HK$574.1 million in 2002 and rose steadily to approximately HK$736.9 million in 2004. Turnover levelled off for the following two years. Due to the significant decrease in the export sales to one of the major customers in the first half of 2006, turnover of the Group decreased by 14.9% compared to the same period in 2005. However, the Group managed to increase its sales of printing products in the second half of 2006 and hence, the overall turnover in 2006 was decreased by only 2.7% compared to that of 2005.

In the face of the challenging operating environment discussed above, the management intends to take proactive measures, including developing higher margin products, broadening customer base and implementing effective cost control. As stated in the Company’s annual report of 2006, the Group will allocate more resources into the research and development of innovative products such as original designed products, products with electronic components and pop-up books, and will put additional efforts in the marketing and promotion of these higher margin products.

– 21 –

LETTER FROM QUAM

Property investment

The contributions from the Group’s property investment business had been relatively insignificant compared to its core business of printing. The Group’s property investment business recorded a segment profit of approximately HK$3.8 million in 2006 compared to approximately HK$9.4 million in 2005. The decline was attributable to the disposal of its 51% interest in Chengdu Chuang’s Centre Development Company Limited in 2005, which held the commercial podium and basements of Chengdu Chuang’s Centre at the time of disposal. The purchaser partially settled the consideration by the transfer of the Chengdu Property to the Group.

(ii) Reasons for and benefits of the Transfer

From the perspective of the Group, the Transfer comprises an acquisition of the New Dongguan Site, a disposal of the Chengdu Property together with the Cash Payment, which arises from the difference in value of the two properties to be exchanged.

Acquisition of the New Dongguan Site

Pursuant to the Transfer Agreement, the Company will acquire Chuang’s China’s interest in Success Gain, which consists of Success Gain Shares and Success Gain’s Shareholder Loan, from Chuang’s China.

Success Gain is principally engaged in the holding of the Existing Dongguan Industrial Site. Pursuant to an arrangement with the relevant PRC authority, the Chuang’s China Group agreed to exchange the Existing Dongguan Industrial Site for the New Dongguan Site. Upon obtaining of the state land use rights certificate, the New Dongguan Site will be the sole asset of Success Gain and its wholly-owned subsidiary, the Newco. It should be noted that the obtaining of the aforesaid state land use rights certificate by the Newco is a condition precedent to the Transfer Completion.

The New Dongguan Site is a piece of vacant land located at Coastal Industry Zone, Dongguan, Guangdong Province of the PRC. The site area is around 77,913.7 sq. m. designated for industrial purpose.

In anticipation of the growth in demand of the higher margin products, it is essential for the Group to expand its hand assembly lines. The Group, therefore, will require additional factory premises for the implementation of its expansion plan. It is noted that the New Dongguan Site is earmarked for the construction of new factory premises, and the Directors confirmed that they consider the site to be suitable for the expansion purposes. As such, we are of the view that the acquisition of the New Dongguan Site is incidental to the ordinary and usual course of business of the Group.

– 22 –

LETTER FROM QUAM

The Group’s strategy of proposed penetration in the market for higher margin products would help to enhance both its turnover and gross profit margin. In view of the challenging operating environment of its core business of printing as discussed in sub-section (i) above, we concur with the Directors’ view that the aforementioned expansion strategy is of benefits to the Group in respect of its future business growth and development.

Given that the acquisition of the New Dongguan Site is to accommodate the additional assembly lines for the production of higher margin products as part of the Group’s expansion plan, we are of the opinion that the acquisition is in the interests of the Company and the Shareholders as a whole in this regard.

Disposal of the Chengdu Property

According to the Transfer Agreement, the Group will dispose of its interest in CD Chengdu, which comprises CD Chengdu Shares and CD Chengdu’s Shareholder Loan, to Chuang’s China. It is noted that the main purpose of the transfer is to reduce the amount of cash consideration payable for the acquisition of the New Dongguan Site by the Company.

CD Chengdu is principally engaged in the leasing of the Chengdu Property, which is its sole investment property. The Chengdu Property is located at Level 6 of Chengdu Chuang’s Centre with a gross floor area of approximately 4,255 sq. m.. It is currently leased to an Independent Third Party for a term of 10 years commencing from 25 October 2002.

As discussed above in sub-section (i), one of the Group’s principal businesses is property investment. Therefore, the disposal of the Chengdu Property will be conducted in the Group’s ordinary and usual course of business.

Furthermore, the disposal of the Chengdu Property will reduce the Group’s cash outlay required for the acquisition of the New Dongguan Site and thereby allow the Group to retain more working capital for the ongoing development and expansion of its core business of printing, we consider that the settlement arrangement is in the interests of both the Company and the Shareholders as a whole.

(iii) Conclusion

In view of the foregoing, we are of the view that the Transfer is conducted in the ordinary and usual course of the Group’s business and in the interests of both the Company and the Shareholders as a whole.

– 23 –

LETTER FROM QUAM

A.1.2. The Consideration

The Transfer was arrived at after arm’s length negotiations between the Company and Chuang’s China. The New Dongguan Site and the Chengdu Property will be transferred at an agreed value of RMB38 million (equivalent to approximately HK$38.8 million) and RMB25 million (equivalent to HK$25.5 million) respectively. The difference of RMB13 million (equivalent to approximately HK$13.3 million), which arises from the exchange of the properties will be settled by the Company in cash on the Transfer Completion. This residual balance will be subject to minor adjustments based on the Completion Accounts.

It should be noted that the consideration for each of the New Dongguan Site and the Chengdu Property is based on its market value as at 31 March 2007 as appraised by the independent Valuer. We also noted that the Valuer adopted the direct comparison approach by reference to the comparable sales prices in the relevant market. Given the nature of the New Dongguan Site and the Chengdu Property, we consider that the valuation methodology adopted to be appropriate and in line with the prevailing market practice.

Based on the aforesaid, we consider that the consideration for each of the New Dongguan Site and the Chengdu Property is on normal commercial terms and fair and reasonable; and is in the interests of both the Company and the Shareholders as a whole.

A.1.3. Financial impacts of the Transfer on the Group

• (i) Net asset value

The Chengdu Property will be transferred to Chuang’s China at an agreed value of RMB25 million (equivalent to HK$25.5 million). As the book value of the Chengdu Property was HK$25 million as at 31 December 2006, the Group will record a gain on disposal of the Chengdu Property of approximately HK$0.5 million, and therefore the net asset value of the Group will also increase by the same amount.

(ii) Working capital position

The consideration of the New Dongguan Site will be settled by the transfer of the Chengdu Property at an agreed value of RMB25 million (equivalent to HK$25.5 million) and the Cash Payment will be financed by the Company from its internal resources.

Based on the Company’s annual report of 2006, the Group had bank balances and cash of approximately HK$86.4 million and net current assets of approximately HK$163.2 million as at 31 December 2006. In addition, net cash inflow from operating activities was amounted to approximately HK$21.9 million for the year ended 31 December 2006.

– 24 –

LETTER FROM QUAM

Based on the historical financial results, we are of the view that the Cash Payment would not have any material adverse impact on the Group’s working capital position.

• (iii) Rental income

Upon the Transfer Completion, the Group will forgo the future rental income to be generated from the Chengdu Property. The annual rental income of the Chengdu Property was HK$889,231 in 2006, representing about 0.1% of the Group’s turnover.

Based on the above, we are of the opinion that the absence of the aforementioned rental income will not be material in respect of the Group’s future financial position.

• (iv) Conclusion

Based on the foregoing, we are of the view that the Transfer will not have any material adverse impact on the Group’s financial position.

A.2. RECOMMENDATION

Having considered the principal factors and reasons discussed above, in particular the followings (which should be read in conjunction with and interpreted in the full context of this letter):

• the Group’s intended expansion strategy of manufacturing of higher margin products, in the face of the challenging operating environment of its core business of printing discussed herein, would be of benefits to the Group in respect of its future business growth and development;

• the New Dongguan Site, an industrial site, is earmarked for the construction of new factory premises to accommodate additional assembly lines for the production of higher margin products in anticipation of the growth in demand of such products, as part of the Group’s expansion strategy;

• the partial satisfaction of the consideration of the New Dongguan Site by way of transfer of the Company’s interest in CD Chengdu will minimise the Group’s cash outlay required for the acquisition; and thereby allow the Group to retain more working capital for the ongoing development and expansion of its core business of printing;

• the consideration for each of the New Dongguan Site and the Chengdu Property is the same as their respective appraised value as at 31 March 2007 by the independent Valuer; and

• the Transfer including the Cash Payment would not have any material adverse impact on the Group’s financial position as discussed above,

– 25 –

LETTER FROM QUAM

we are of the view that the Transfer is conducted in the ordinary and usual course of business of the Group, based on normal commercial terms, fair and reasonable and in the interests of both the Company and the Shareholders as a whole. Accordingly, we advise the Independent Shareholders and the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Transfer.

B. THE SUBSCRIPTION

On 11 May 2007, the Company and CCIL entered into the Subscription Agreement, pursuant to which the Company conditionally agreed to issue and CCIL conditionally agreed to subscribe for the Convertible Note in the principal amount of HK$49.5 million.

As CCIL is the controlling Shareholder, the Subscription constitutes a connected transaction for the Company under the Listing Rules.

B.1. PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our recommendation, we have taken into consideration the following principal factors and reasons:

B.1.1. Reasons for and benefits of the Subscription

As stated in the “Letter from the Board”, the Directors consider that the issue of the Convertible Note will help to strengthen the Group’s working capital position and will facilitate its expansion programme, as mentioned in the sub-section A.1.1.(i) headed “The principal businesses and the expansion strategy of the Group” above.

The net cash proceeds from the issue of the Convertible Note of HK$49.5 million will inevitably increase cash balances of the Group; and hence, provide additional working capital for financing the implementation of the Group’s expansion plan, which is beneficial to its long-term development for reasons discussed in details in sub-section A.1.1.(ii) above, we consider that the Subscription is in the interests of the Company and the Shareholders as a whole in this regard.

Furthermore, it is normal for companies to raise new funding for business development and expansion periodically. As such, we are of the view that the issue of the Convertible Note and hence the Subscription are incidental to the ordinary and usual course of the Group’s business.

B.1.2. Principal terms of the Convertible Note

The Company will issue the Convertible Note at 100% of its principal amount of HK$49.5 million. The Maturity falls on the fourth anniversary from its date of issue. The Noteholder shall have the right to convert the whole or part of the principal amount of the Convertible Note into Shares at the Conversion Price any time on or before the Maturity. To

– 26 –

LETTER FROM QUAM

the extent not previously converted into Shares, the Company shall redeem the Convertible Note at the face value of the outstanding principal amount. As such, the yield-to-maturity of the Convertible Note is the same as its annual interest rate of 1.5% (the “ Interest Coupon ”).

(i) Market comparables

To assess the reasonableness and fairness of the terms of the Subscription, and in particular the Conversion Price and the Interest Coupon, we have reviewed all the issues of convertible bonds or notes with tenures between three to five years, announced by the companies listed on the Main Board of the Stock Exchange between 1 January 2007 and 10 May 2007 (the “ Comparables ”), a day preceding to the date of the Subscription Agreement. As one of the key factors for the determination of the conversion price of a convertible instrument is the tenure of the issue, we do not consider issues with tenures outside the aforesaid range appropriate for comparison purposes in relation to the issue of the Convertible Note, as its term is of four years only. Details of our analysis are set out in the following table:

Table One

		Premium/(discount)	Premium/(discount)
		of conversion price	of conversion price
		over/to closing	over/to average
		price immediately	closing price for the
		before the date of	last 10 trading days
		announcement or	before the date of
		the suspension of	announcement or
		trading in the	the suspension of
		shares pending the	trading in the shares	Yield-to-
	Date of	release of the	pending the release	maturity
Issuer	announcement	announcement	of the announcement	per annum	Tenure
		(%)	(%)	(%)	(years)
Kerry Properties Limited	23/01/2007	35.00	41.90	3.2	5
New World Cyberbase Limited	07/02/2007	5.56	27.69	3.0	3
China Star Entertainment Limited	13/02/2007	6.67	7.02	0.0	5
Get Nice Holdings Limited	27/02/2007	20.48	43.06	5.0	3
Poly Investments Holdings Limited	27/02/2007	(18.00)	(13.00)	2.0	3
China Special Steel Holdings	05/03/2007	8.17	18.42	9.2	5
Company Limited
TCL Communication Technology	20/03/2007	23.58	26.20	5.7	5
Holdings Limited
Hong Kong Health Check and	11/04/2007	10.62	20.60	2.0	4
Laboratory Holdings Company Limited
China Infrastructure Machinery	11/04/2007	25.31	40.45	3.9	5
Holdings Limited

– 27 –

LETTER FROM QUAM

		Premium/(discount)	Premium/(discount)
		of conversion price	of conversion price
		over/to closing	over/to average
		price immediately	closing price for the
		before the date of	last 10 trading days
		announcement or	before the date of
		the suspension of	announcement or
		trading in the	the suspension of
		shares pending the	trading in the shares	Yield-to-
	Date of	release of the	pending the release	maturity
Issuer	announcement	announcement	of the announcement	per annum	Tenure
		(%)	(%)	(%)	(years)
Shang Hua Holdings Limited	12/04/2007	(16.67)	(8.68)	0.0	3
New Focus Auto Tech Holdings Limited	30/04/2007	(7.59)	(12.70)	5.2	3
Henry Group Holdings Limited	09/05/2007	(2.97)	10.11	1.7	5
Maximum		35.00	43.06	9.2	5
Minimum		(18.00)	(13.00)	0.0	3
The Company	11/05/2007	12.50	17.19	1.5	4

Note: Except for the data on the yield-to-maturity of the Comparables, the above information is extracted from the announcement of the respective listed companies.

• (ii) The Conversion Price

The initial Conversion Price of HK$0.45 per Conversion Share represents:

• a premium of approximately 12.5% over the closing price of HK$0.4 per Share as quoted on the Stock Exchange on 10 May 2007, being the last trading day of the Shares prior to the suspension of trading in the Shares on the Stock Exchange on 11 May 2007 pending the release of the announcement in respect of the Transfer and the Subscription;

• a premium of approximately 16.3% over the average closing price of approximately HK$0.387 per Share for the five consecutive trading days up to and including 10 May 2007 as quoted on the Stock Exchange; and

• a premium of approximately 17.2% over the average closing price of approximately HK$0.384 per Share for the 10 consecutive trading days up to and including 10 May 2007 as quoted on the Stock Exchange;

• a premium of approximately 4.7% over the closing price of HK$0.43 per Share as quoted on the Stock Exchange on 29 May 2007, being the Latest Practicable Date; and

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LETTER FROM QUAM

• a premium of approximately 9.0% over the average closing price of approximately HK$0.413 per Share for the 10 consecutive trading days up to and including 29 May 2007 as quoted on the Stock Exchange.

As illustrated in Table One above, the difference between the respective conversion prices of the Comparables and the then prevailing share prices of the relevant listed companies prior to the date of the announcement, ranges from a discount of up to 18% to a maximum premium of 35%. As the Conversion Price falls within this range and represents a premium to the then prevailing share prices of the Shares prior to the date of the Subscription Agreement and the Latest Practicable Date, we consider that the Conversion Price is fair and reasonable in this regard.

(iii) The Interest Coupon

As discussed above, as the Convertible Note will be redeemable at its face value of the outstanding principal amount, its yield-to-maturity will be the same as the Interest Coupon of 1.5% per annum. As shown in Table One above, the respective yield-to-maturity of the Comparables ranges from nil to 9.2%. The Interest Coupon is within such range and is indeed at the lower end of the range.

Furthermore, it should be noted that the Interest Coupon is much lower than the effective interest rates of the Group’s bank loans of 4.62% to 6.12% per annum as at 31 December 2006. As such, we concur with the Directors’ view that the Subscription will provide the Group with a funding opportunity that would enhance the Group’s savings on its financing costs.

Based on the above, we consider the Interest Coupon to be fair and reasonable.

(iv) Other major terms of the Subscription Agreement

We have also reviewed the other major terms of the Subscription Agreement, the details of which are set out in the “Letter from the Board”, and are not aware of any terms which are exceptional to normal market practice.

(v) Conclusion

Based on the foregoing, we are of the opinion that the Subscription Agreement is based on normal commercial terms and the terms are fair and reasonable.

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LETTER FROM QUAM

B.1.3. Financial impacts of the Subscription on the Group

(i) Working capital position

Upon the issue of the Convertible Note, the Company will receive net cash proceeds of around HK$49.5 million, which the Group intends to apply for its working capital purposes as discussed above. It should be noted that the Company is required to redeem the Convertible Note, only if the whole or the part of the Convertible Note is not converted into Shares upon Maturity.

Moreover, with the Interest Coupon of 1.5% per annum, the maximum annual interest expenses to be incurred by the Company in relation to the Convertible Note will be approximately HK$0.7 million, equivalent to about 2.8% of the Group’s profit before taxation of approximately HK$25.1 million for the year ended 31 December 2006. As discussed above, the Interest Coupon is much lower than the effective interest rates of the Group’s bank borrowings. Therefore, we are of view that the interest expenses to be incurred will not have any material adverse effect on the working capital position of the Group in this regard.

(ii) Gearing ratio

As at 31 December 2006, the gearing ratio of the Group was about 24.7% based on total debts of approximately HK$118.2 million and total equity of approximately HK$479.4 million. In the event that the Convertible Note is converted in full, the Group’s total equity will increase by its principal amount, whilst the total debts will remain the same, and accordingly, the gearing ratio of the Group will be improved.

A convertible note, being a compound financial instrument, is generally disclosed as both financial liability and equity components under Hong Kong accounting standards. If the Convertible Note was wholly recognised as a debt, the total debts of the Group would increase by HK$49.5 million whilst its total equity would remain the same, and therefore the gearing ratio would increase to about 35.0%. However, it should be noted that even under such scenario, the gearing ratio of the Group upon the issue of the Convertible Note would still be much lower than 100%, based on the Group’s financial position as at 31 December 2006.

Given the above, we consider that the issue of the Convertible Note will not have any material adverse impact on the Group’s gearing position.

(iii) Conclusion

In view of the foregoing, we are of the opinion that the issue of the Convertible Note, and hence the Subscription, will not have any material adverse impact on the Group’s financial position in this regard.

– 30 –

LETTER FROM QUAM

B.1.4. Possible impacts on the shareholding structure of the Company

The following table shows the shareholding structure of the Company as at the Latest Practicable Date, and that assumed full conversion of the Convertible Note (assuming that there is no change in the Company’s shareholding structure) for illustration purposes:

CCIL The Director Public Total	Existing structure Number of Shares % 238,800,000 44.7 10,000 0.0 295,480,068 55.3 534,290,068 100.0	Assumed full conversion of the Convertible Note Number of Shares % 348,800,000 54.1 10,000 0.0 295,480,068 45.9 644,290,068 100.0	Assumed full conversion of the Convertible Note Number of Shares % 348,800,000 54.1 10,000 0.0 295,480,068 45.9 644,290,068 100.0
			100.0

If the Convertible Note is converted in full at the initial Conversion Price, a total of 110,000,000 Conversion Shares will be issued, representing approximately 20.6% of the existing issued share capital of the Company and approximately 17.1% of the issued share capital of the Company as enlarged by the Conversion Shares.

In the event that the Convertible Note is converted in full, the Company will become a 54.1% owned subsidiary of CCIL. It should be noted that it is stated in the “Letter from the Board” that the directors of CCIL have no intention to convert the Convertible Note to the extent that such conversion will trigger a general offer for all the securities of the Company under the Hong Kong Code on Takeovers and Mergers.

Notwithstanding the above, the shareholding interests of the Independent Shareholders will be diluted from approximately 55.3% to 45.9% at the most, assumed full conversion of the Convertible Note. Given that the Subscription is in the interests of the Company and the Shareholders as a whole as discussed above, we consider such dilution impact to be acceptable in this regard.

B.2. RECOMMENDATION

Having considered the principal factors and reasons discussed above, in particular the followings (which should be read in conjunction with and interpreted in the full context of this letter):

• the Subscription will help to strengthen the Group’s working capital and provide the required funding for the implementation of the Group’s expansion strategy for its core business of printing as discussed in section A above;

– 31 –

LETTER FROM QUAM

• the Conversion Price represents a premium to the then prevailing share prices of the Shares prior to the date of the Subscription Agreement and the Latest Practicable Date; and falls within the range of those of the Comparables;

• the interest rate of the Convertible Note falls within the range of those of the Comparables and is much lower than the effective interest rates of the Group’s bank borrowings;

• the issue of the Convertible Note will not have any material adverse impact on the Group’s working capital position and gearing ratio; and

• the dilution effect of the shareholding interests of the Independent Shareholders is considered to be acceptable as discussed above,

we are of the view that the Subscription is conducted in the ordinary and usual course of business, based on normal commercial terms, fair and reasonable and in the interests of both the Company and the Shareholders as a whole. Accordingly, we advise the Independent Shareholders and the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Subscription.

Yours faithfully, For and on behalf of

Quam Capital Limited Karen C Wong Director

– 32 –

APPENDIX I

VALUATION REPORT

The following is the text of a letter, summary of values and valuation certificates prepared by DTZ Debenham Tie Leung Limited, an independent valuer, for the purpose of inclusion in this circular.

==> picture [63 x 59] intentionally omitted <==

10th Floor Jardine House 1 Connaught Place Central Hong Kong 4 June 2007

The Directors Chuang’s China Investments Limited 25th Floor Alexandra House 18 Chater Road Central Hong Kong

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

Dear Sirs,

Re: Portfolio Valuation

Instructions, In accordance with the instructions of Chuang’s China Investments Limited Purpose & (“Chuang’s China”) and Midas International Holdings Limited (“Midas”) Date of for us to value the property interests held by Chuang’s China and its subsidiaries Valuation (“the Chuang’s China Group”) and Midas and its subsidiaries (“the Midas Group”) 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 on the market value of such properties as at 31 March 2007.

Definition of Our valuation of each of the properties represents its Market Value which in Open Market accordance with the Valuation Standards on Properties of the Hong Kong Value Institute of Surveyors is defined as “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion”.

– 33 –

APPENDIX I

VALUATION REPORT

Valuation Bases Our valuation of the properties excludes an estimated price inflated or deflated & Assumption by special terms or circumstances such as atypical financing, sale and leaseback arrangement, special considerations or concessions granted by anyone associated with the sale, or any element of special value.

In the course of our valuation of the properties located in the PRC, we have assumed that transferable land use rights in respect of such properties for specific land use terms at nominal annual land use fees have been granted and that all premiums payable have already been fully paid.

We have also assumed that the grantees or the users of the respective properties have free and uninterrupted rights to use or to assign the respective properties for the whole of the respective unexpired terms as granted. We have relied on the advices given by the Chuang’s China Group and the Midas Group regarding the title of the respective properties and the interest in them.

No allowance has been made in our valuation for any charges, mortgages or amounts owing in respect of the respective 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 outgoing of any onerous nature which could affect their values.

In valuing the properties, we have complied with the requirements set out in Chapter 5 of and Practice Note 12 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the Valuation Standards (First Edition 2005) on Valuation of Properties published by The Hong Kong Institute of Surveyors.

Method of Valuation

In valuing the property in Group I which is held by the Midas Group for investment in the PRC, we have valued it by the direct comparison approach 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 tenancy with due allowance for the reversionary potential of the property.

We have ascribed no commercial value to the property in Group II held by the Chuang’s China Group because the Certificate for the Use of State-owned Land has not been obtained yet as at the date of valuation. However, for reference purpose, we have valued it by the direct comparison approach by making reference to the comparable sales evidence as available in the relevant market under the assumption had a valid Certificate for the Use of State-owned Land of the property been obtained.

Source of Information

We have relied to a very considerable extent on information given by the Chuang’s China Group and the Midas Group and have accepted advices given to us on such matters as planning approvals or statutory notices, easements, identification of the properties, tenure, particulars of occupancy, lettings, floor area and site areas and all other relevant matters.

– 34 –

APPENDIX I

VALUATION REPORT

Dimensions, measurements and areas included in the valuation certificates attached are based on information contained in the documents provided to us and are therefore only approximations. We have had no reason to doubt the truth and accuracy of the information provided to us which is material to the valuation. We have also been advised by the Chuang’s China Group and the Midas Group that no material facts have been omitted from the information supplied.

• Title We have been provided with copies of documents in relation to the title to the Investigation respective properties. However, we have not carried out searches to verify the ownership of the properties and to ascertain any amendment which may not appear on the copies handed to us.

• Site Inspection We have inspected the exterior and, where possible, the interior of 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. We have not carried out investigations on site to determine the suitability of the soil conditions and the services etc. for any future development. Unless otherwise stated, we have not been able to carry out on-site measurement to verify the site and floor areas of the respective properties and we have assumed that the areas shown on the copies of the documents handed to us are correct.

• Currency Unless otherwise stated, all sums stated in our valuation are in Renminbi, the official currency of the PRC.

A summary of our valuation and our valuation certificates are attached below.

Yours faithfully, for and on behalf of

DTZ Debenham Tie Leung Limited Andrew K. F. Chan Registered Professional Surveyor (GP) China Real Estate Appraiser MSc., 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 19 years of experience in the valuation of properties in the PRC and Hong Kong.

– 35 –

APPENDIX I

VALUATION REPORT

SUMMARY OF VALUATION

				Attributable
				capital value
		Capital value in		in existing
		existing state as at	Attributable	state as at
Property		31 March 2007	interest	31 March 2007
		RMB		RMB
Group	I – Property interest held for investment by the Midas Group		in the PRC
1.	Level 6,	25,000,000	100%	25,000,000
	Chengdu Chuang’s Centre,
	No. 1 Renmin South Road
	Section 4,
	Wuhou District,
	Chengdu,
	Sichuan Province,
	the PRC
			Sub-total:	25,000,000
Group	II – Property interest held for future development by the Chuang’s China Group in the PRC
2.	A piece of land situated at	No commercial value	100%	No commercial value
	Suifengnian Village,
	Coastal Industry Zone,
	Shatian Town,
	Dongguan,
	Guangdong Province,
	the PRC
			Sub-total:	No commercial value
			Grand total:	25,000,000

– 36 –

APPENDIX I

VALUATION REPORT

VALUATION CERTIFICATE

Group I – Property interest held for investment by the Midas Group in the PRC

				Capital value in
			Particulars of	existing state as at
Property		Description and tenure	occupancy	31 March 2007
1.	Level 6,	Chengdu Chuang’s Centre occupies an	The property is	RMB25,000,000
	Chengdu	irregular-shaped site having a total site area	leased for a term
	Chuang’s Centre,	of 6,344.50 sq.m. (68,292 sq.ft.). The whole	from 25 October,
	No. 1 Renmin South	development comprises a 23-storey	2002 to 24 October,
	Road Section 4,	commercial/residential tower erected upon a	2012.
	Wuhou District,	6-storey commercial podium and a 3-level
	Chengdu,	basement and was completed in 2002.	(Please see Note 4
	Sichuan Province,		below for the rental
	the PRC	The property comprises the whole of level 6	details)
		of Chengdu Chuang’s Centre with a total
		gross floor area of approximately 4,255.02
		sq.m. (45,801 sq.ft.).
		The land use rights of the property have
		been granted for a term due to expire on 9
		October 2041.

Notes:–

• (1) According to Building Ownership Certificate No. 1215736 issued by Chengdu Real Estate Administrative Bureau on 7 July 2005, the building ownership of the property, comprising a gross floor area of 4,255.02 sq.m. is held by Chuang’s Development (Chengdu) Limited for commercial use.

• (2) According to Certificate for the Use of State-owned Land No. (2005) 17845 issued by the People’s Government of Chengdu on 8 September 2005, the land use rights of the property, comprising an apportioned site area of 335.23 sq.m., have been granted to Chuang’s Development (Chengdu) Limited for a term due to expire on 9 October 2041.

• (3) According to Grant Contract of Land Use Rights No. (1993) 57 entered into between the Land Administrative Bureau of Chengdu (“Party A”) and Chengdu Chuang’s Centre Development Co. Limited (“Party B”) on 30 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.

• (4) As advised by the Midas Group, the property is subject to a tenancy. The rental schedule, after deducting the rental rebate and the rent free element, is summarized as follows:–

	Date of			Net annual rent
Portion	commencement	Gross floor area	Year	(RMB)
Level 6	2002/10/25	4,255 sq.m.	1	82,602
			2	814,000
			3	838,000
			4	922,000
			5	1,006,000
			6-10 (each)	1,090,000

– 37 –

APPENDIX I

VALUATION REPORT

• (5) The opinion of the legal adviser on PRC law states, inter alia , that:–

• (i) The property is held in the name of Chuang’s Development (Chengdu) Limited under Building Ownership Certificate No. 1215736 with a gross floor area of 4,255.02 sq.m. for commercial use;

• (ii) Chuang’s Development (Chengdu) Limited has duly settled all the land premium and land grant fee of the property;

• (iii) The property is not subject to any mortgage; and

• (iv) Chuang’s Development (Chengdu) Limited is entitled to use, transfer, mortgage and lease the property with the residual term of its land use rights at no extra land premium payable to the government.

• (6) The status of title and grant of major approvals and licences in accordance with the information provided by the Midas Group are as follows:–

Building Ownership Certificate	Yes
Certificate for the Use of State-owned Land	Yes
Grant Contract of State-owned Land Use Rights	Yes

– 38 –

APPENDIX I

VALUATION REPORT

VALUATION CERTIFICATE

Group II – Property interest held for future development by the Chuang’s China Group in the PRC

				Capital value in
			Particulars of	existing state as at
	Property	Description and tenure	occupancy	31 March 2007
2.	A piece of land	The property comprises an irregular-shaped	The property is	No commercial
	situated at	land having a site area of approximately	currently vacant and	value
	Suifengnian Village,	77,913.70 sq.m. (838,663 sq.ft.).	pending for future
	Coastal Industry		development.	(Please see Note 2
	Zone,	The property is expected to be held under a		below)
	Shatian Town,	land use term of 50 years for industrial use.
	Dongguan,
	Guangdong
	Province,
	the PRC
	Notes:–

• (1) According to a land exchange agreement, the People’s Government of Shatian Town of Dongguan has agreed to grant to a wholly-owned subsidiary of Chuang’s China the land use rights of a piece of land situated at Suifengnian Village, Coastal Industry Zone, Shatian Town, comprising a site area of 77,913.70 sq.m..

• (2) In the course of our valuation, we have ascribed no commercial value to the property as the Certificate for the Use of State-owned Land has not been obtained yet. For reference purpose, had the Chuang’s China Group obtained a valid Certificate for the Use of State-owned Land, the market value of the property in its existing state as at 31 March 2007 would be RMB38,000,000.

• (3) The opinion of the legal adviser on PRC law states, inter alia , that:–

• (i) There should have no legal impediment to obtaining the land use rights of the property by the whollyowned subsidiary of Chuang’s China; and

• (ii) After the Certificate for the Use of State-owned Land of the property has been obtained by a whollyowned subsidiary of Chuang’s China, it is entitled to use, transfer, mortgage and lease the property with the residual term of its land use rights at no extra land premium payable to the government.

• (4) The status of title and grant of major approvals and licences in accordance with the information provided by the Chuang’s China Group are as follows:–

Certificate for the Use of State-owned Land No Grant Contract of State-owned Land Use Rights No Land Exchange Agreement Yes

– 39 –

APPENDIX II

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

2. 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 and chief executive of the Company in the shares, underlying shares (within the meaning of Part XV of the SFO) or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which were required (i) to be notified to the Company and the Stock Exchange pursuant to the provisions of Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) pursuant to section 352 of Part XV of the SFO, to be entered in the register referred to therein; or (iii) pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules, to be notified to the Company and the Stock Exchange, were as follows:

Interests in the Shares

			Approximate
	Number of		percentage of
Director	Shares	Capacity	shareholding
Mr. Abraham Shek Lai Him	10,000	Beneficial owner	0.002

As at the Latest Practicable Date, save as disclosed above, none of the Directors and chief executive of the Company had any interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required (i) to be notified to the Company and the Stock Exchange pursuant to the provisions of Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) pursuant to section 352 of Part XV of the SFO, to be entered in the register referred to therein; or (iii) pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules, to be notified to the Company and the Stock Exchange.

– 40 –

APPENDIX II

GENERAL INFORMATION

3. SERVICE CONTRACTS OF THE DIRECTORS

As at the Latest Practicable Date, none of the Directors had entered into or had proposed to enter into any service contract with any member of the Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation other than statutory compensation).

4. INTEREST IN ASSETS AND CONTRACTS

As at the Latest Practicable Date, none of the Directors was materially interested in any subsisting contract or arrangement which is significant in relation to the business of the Group.

As at the Latest Practicable Date, none of the Directors had any interest, direct or indirect, in any assets which have been, since 31 December 2006 (being the date to which the latest published audited financial statements of the Group were made up), acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

5. COMPETING BUSINESS

Mr. Richard Hung Ting Ho (the chairman of the Company and an executive Director) is a non-executive director of CNT Group Limited, a company whose issued shares are listed on the Main Board of the Stock Exchange, the principal activities of which include property investments in the PRC.

Miss Ann Li Mee Sum (an executive Director) is an executive director of Chuang’s China, the principal activities of which include property investments in the PRC.

Save as disclosed, as at the Latest Practicable Date, none of the Directors and their respective associates were considered to have interests in any business which compete or are likely to compete, either directly or indirectly, with the businesses of the Group, other than those businesses where the Directors were appointed as directors to represent the interests of the Company and/or the Group.

6. EXPERTS AND CONSENTS

The following are the qualifications of the experts who have given advice or opinion in this circular or contained in this circular:

Name	Qualification
Quam Capital Limited	a corporation licensed to conduct Type 6 (advising
	on corporate finance) regulated activities under
	the SFO
DTZ Debenham Tie Leung Limited	an independent professional property valuer

Quam and the Valuer have given and have not withdrawn their respective written consents to the issue of this circular with the inclusion of their respective letters and reports or references to their respective names in the form and context in which they respectively appear.

– 41 –

APPENDIX II

GENERAL INFORMATION

As at the Latest Practicable Date, each of Quam and the Valuer was not beneficially interested in the share capital of any member of the Group nor did they have any right or option (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group or any interest, either direct or indirect, in any assets which have been, since 31 December 2006, the date to which the latest published audited consolidated financial statements of the Group were made up, acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to, any member of the Group.

7. LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries was engaged in any litigation, arbitration or claim of material importance and no litigation, arbitration or claim of material importance was known to the Directors to be pending or threatened against the Company or any of its subsidiaries.

8. MATERIAL ADVERSE CHANGE

Save as disclosed in this circular, the Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2006, being the date to which the latest published audited consolidated financial statements of the Group were made up.

9. PROCEDURES FOR DEMANDING A POLL

Pursuant to the articles of association of the Company, a poll may be demanded in relation to any resolution put to the vote of the EGM before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll by:

• (a) the chairman of the meeting; or

• (b) at least five Shareholders present in person (or, in the case of a Shareholder being a corporation by its duly authorized representative) or by proxy and entitled to vote; or

• (c) any Shareholder or Shareholders present in person (or, in the case of a Shareholder being a corporation by its duly authorised representative) or by proxy and representing in the aggregate not less than one-tenth of the total voting rights of all Shareholders having the right to attend and vote at the meeting; or

• (d) any Shareholder or Shareholders present in person (or, in the case of a Shareholder being a corporation by its duly authorised representative) or by proxy and holding Shares conferring a right to attend and vote at the meeting on which there have been paid up sums in the aggregate equal to not less than one-tenth of the total sum paid up on all Shares conferring that right.

In compliance with the Listing Rules, the Company will procure the chairman of the EGM to demand a poll for the resolutions to be proposed at the EGM.

– 42 –

APPENDIX II

GENERAL INFORMATION

10. GENERAL

• (a) The branch share registrar of the Company in Hong Kong is Computershare Hong Kong Investor Services Limited whose registered office is situate at Room 1806-7, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (b) The secretary of the Company is Ms. Lee Wai Ching who is a fellow of both of the Institute of Chartered Secretaries and Administrators in the United Kingdom and the Hong Kong Institute of Chartered Secretaries.

• (c) The qualified accountant of the Company is Mr. Wong Chi Sing, who is an associate member of both the Association of Chartered Certified Accountants and the Hong Kong Institute of Certified Public Accountants.

• (d) The English texts of this circular and the accompanying form of proxy prevail over their respective Chinese texts.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the Transfer Agreement and the Subscription Agreement will be available for inspection during normal business hours from 9:00 a.m. to 6:00 p.m. (save for Saturdays and public holidays) at the office of Iu, Lai & Li, Solicitors at 20th Floor, Gloucester Tower, The Landmark, 11 Pedder Street, Central, Hong Kong from the date of this circular up to and including the date of the EGM.

– 43 –

NOTICE OF THE EGM

==> picture [322 x 123] intentionally omitted <==

(Stock Code: 1172)

NOTICE OF THE EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of the shareholders of Midas International Holdings Limited (the “Company”) will be held at 25th Floor, Alexandra House, 18 Chater Road, Central, Hong Kong on Thursday, 21 June 2007 at 11:00 a.m. for the purpose of considering and, if thought fit, passing the following resolutions as ordinary resolutions of the Company:–

ORDINARY RESOLUTIONS

• (1) “ THAT :–

• (a) the entering into of the conditional transfer agreement dated 11 May 2007 (the “Transfer Agreement”) between the Company and Chuang’s China Investments Limited (“Chuang’s China”), a copy of which has been produced to the meeting marked “A” and initialled by the Chairman of the meeting for the purpose of identification, whereby Chuang’s China has agreed to procure the transfer and assignment to the Company and/or its nominee(s) of all its rights, title, interest and benefit of and in (i) the entire issued share capital of Success Gain Investment Limited (“Success Gain”); and (ii) the interest free shareholder loan owing by Success Gain to a wholly-owned subsidiary of Chuang’s China, in exchange for (a) the transfer and assignment to Chuang’s China and/or its nominee(s) of all the Company’s rights, title, interest and benefit of and in (i) the entire issued share capital of Chuang’s Development (Chengdu) Limited (“CD Chengdu”); and (ii) the interest free shareholder loan owing by CD Chengdu to a wholly-owned subsidiary of the Company; and (b) the payment by the Company of RMB13 million (equivalent to approximately HK$13.3 million) in cash (subject to adjustment), upon the terms and subject to the conditions therein contained be and is hereby approved, confirmed and ratified and the performance of all transactions contemplated under the Transfer Agreement by the Company be and is hereby approved; and

* For identification purpose only

– 44 –

NOTICE OF THE EGM

• (b) any one director of the Company be and is hereby authorised for and on behalf of the Company to do all acts and things and execute and deliver all documents whether under the common seal of the Company or otherwise as may be necessary, desirable or expedient to carry out or to give effect to any or all transactions contemplated under the Transfer Agreement.”

• (2) “ THAT :–

• (a) the entering into of the conditional subscription agreement dated 11 May 2007 (the “Subscription Agreement”) between the Company and Chuang’s Consortium International Limited (“CCIL”), a copy of which has been produced to the meeting marked “B” and initialled by the Chairman of the meeting for the purpose of identification, whereby the Company has conditionally agreed to issue to CCIL and CCIL has conditionally agreed to subscribe for a 1.5% convertible note due 2011 in the principal amount of HK$49.5 million (the “Convertible Note”) upon the terms and subject to the conditions therein contained, be and is hereby approved, confirmed and ratified and the performance of all transactions contemplated under the Subscription Agreement by the Company be and is hereby approved;

• (b) the issue of the Convertible Note, the allotment and issue of the Conversion Shares (as defined in the Subscription Agreement) pursuant to the terms of the Convertible Note and the performance of the transactions contemplated under the Convertible Note by the Company be and are hereby approved; and

• (c) any one director of the Company be and is hereby authorised for and on behalf of the Company to do all acts and things and execute and deliver all documents whether under the common seal of the Company or otherwise as may be necessary, desirable or expedient to carry out or to give effect to any or all transactions contemplated under the Subscription Agreement and the Convertible Note (including but not limited to the allotment and the issue of the Conversion Shares).”

By Order of the Board of

Midas International Holdings Limited Lee Wai Ching Company Secretary

Hong Kong, 4 June 2007

– 45 –

NOTICE OF THE EGM

Principal place of business in Hong Kong: Registered office: 1st Floor Cricket Square 100 Texaco Road Hutchins Drive Tsuen Wan P O Box 2681 New Territories Grand Cayman KY1-1111 Hong Kong Cayman Islands

Notes:

1. Any shareholder of the Company 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. In the case of a recognised clearing house, it may authorise such other person(s) as it thinks fit to act as its representative(s) at the meeting and vote in its stead. A proxy need not be a shareholder of the Company.

2. A form of proxy for use at the meeting is enclosed. Whether or not you intend to attend the meeting in person, you are urged to complete and return the form of proxy in accordance with the instructions printed thereon.

3. In order to be valid, the form of proxy must be deposited at the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at Rooms 1806-7, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, 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.

4. Completion and return of the form of proxy shall not preclude a shareholder of the Company from attending and voting in person at the meeting or any adjournment thereof or on the poll concerned and, in such event, the instrument appointing a proxy shall be deemed to have been revoked.

5. Where there are joint registered holders of any share of the Company, any one of such holders may vote at the meeting either personally or by proxy, in respect of such share as if he were solely entitled thereto, but if more than one of such joint holders are present at the meeting personally or by proxy, then the holder 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. Several executors or administrators of a deceased shareholder of the Company in whose name any share stands shall for this purpose be deemed joint holders thereof.

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