DIT Group Limited — Annual Report 2007

Jul 19, 2007

(Incorporated in Bermuda with limited liability)

(Stock Code: 726)

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ANNUAL RESULTS FOR THE YEAR ENDED 31 MARCH 2007

AUDITED RESULTS

The board of directors (the “Directors”) of South East Group Limited (the “Company”) announces the audited consolidated results of the Company and its subsidiaries (the “Group”) for the year ended 31 March 2007 with comparative figures for the previous corresponding year as follows:

CONSOLIDATED INCOME STATEMENT

For the year ended 31 March 2007

Note TURNOVER 2 COST OF INVENTORIES SOLD GROSS PROFIT/(LOSS) OTHER REVENUES 2 SELLING AND DISTRIBUTION COSTS ADMINISTRATIVE EXPENSES CLAIM SETTLEMENT BAD DEBT WRITTEN OFF LOSS FROM OPERATIONS 3 FINANCE COSTS 5 LOSS BEFORE TAXATION TAXATION 6 LOSS FOR THE YEAR LOSS ATTRIBUTABLE TO: Equity holders of the Company Minority interests DIVIDENDS Proposed final 8 LOSS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY Basic and diluted_(Cents) _7	2007 HK$’000 28,624 (21,490) 7,134 9,781 (2,159) (13,965) — (3,767) (2,976) (591) (3,567) (1,279) (4,846) (3,655) (1,191) (4,846) — (0.11)	2006 HK$’000 17,778 (19,687) (1,909) 612 (4,011) (11,408) (3,108) (2,755) (22,579) (447) (23,026) (179) (23,205) (20,764) (2,441) (23,205) — (6.28)

* For identification purposes only

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At 31 March 2007

CONSOLIDATED BALANCE SHEET

Note NON-CURRENT ASSETS Property, plant and equipment — Other property, plant and equipment — Interests in leasehold land held for own use Interest in a jointly controlled entity Available-for-sale investments Held-to-maturity investment Properties under development CURRENT ASSETS Properties held for sale Non-current assets held for sale Inventories Held-to-maturity investments Trade and other receivables 9 Tax refundable Cash and cash equivalents CURRENT LIABILITIES Trade and other payables 10 Bank loan, secured Amount due to a director NET CURRENT ASSETS/(LIABILITIES) NET ASSETS CAPITAL AND RESERVES Share capital Reserves SHAREHOLDERS’ FUNDS MINORITY INTERESTS	2007 HK$’000 8,903 2,160 11,063 — 184 — — 11,247 ----------------- 25,962 5,606 2,614 38,150 4,004 444 6,860 83,640 ----------------- 22,614 4,797 2,010 29,421 ----------------- 54,219 ----------------- 65,466 33,057 32,409 65,466 — 65,466	2006 HK$’000 10,768 2,085 12,853 36,909 184 780 24,133 74,859 ----------------- — — 8,593 — 10,125 — 10,530 29,248 ----------------- 28,469 4,560 4,408 37,437 ----------------- (8,189) ----------------- 66,670 33,057 32,422 65,479 1,191 66,670

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 March 2007

HK$’000

YEAR ENDED 31 MARCH 2006 Total equity at 1 April 2005 Exchange differences arising on translation of foreign subsidiaries Loss for the year Share option expenses transfer to employee share-based payment reserve Total equity at 31 March 2006 YEAR ENDED 31 MARCH 2007 Total equity at 1 April 2006 Exchange differences arising on translation of foreign subsidiaries Loss for the year Share option expenses transfer to employee share-based payment reserve Total equity at 31 March 2007

84,600 ----------------- 1,216 (20,764) 427 65,479 65,479 ----------------- 3,492 (3,655) 150 65,466

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 March 2007

1. ADOPTION OF NEW AND AMENDED HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”)

In the current year, the Group has applied, for the first time, a number of new standards, amendments and interpretations, (hereinafter collectively referred to as “new HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) which are either effective for accounting period beginning on or after 1st January 2006 or 1st March, 2006. The adoption of the new HKFRSs had no material effect on the results and financial position of the Company for the current or prior accounting periods.

The Group has not early applied the following new standards, amendment or interpretations that have been issued but are not yet effective. The directors anticipate that the application of these new standards, amendment or interpretations will have no material impact on the results and the financial position of the Group.

HKAS 1 (Amendment)	Capital Disclosures1
HKFRS 7	Financial Instruments — Disclosures1
HKFRS 8	Operating Segments2
HK (IFRIC) — Int 7	Applying the Restatement Approach under HKAS 29 Financial Reporting in
	Hyperinflationary Economies3
HK (IFRIC) — Int 8	Scope of HKFRS 24
HK (IFRIC) — Int 9	Reassessment of Embedded Derivatives5
HK (IFRIC) — Int 10	Interim Financial Reporting and Impairment6
HK (IFRIC) — Int 11	HKFRS 2 - Group and Treasury Share Transactions7
HK (IFRIC) — Int 12	Service Concession Arrangements8

• 1 Effective for annual periods beginning on or after 1 January 2007 2 Effective for annual periods beginning on or after 1 January 2009 3 Effective for annual periods beginning on or after 1 March 2006 4 Effective for annual periods beginning on or after 1 May 2006 5 Effective for annual periods beginning on or after 1 June 2006 6 Effective for annual periods beginning on or after 1 November 2006 7 Effective for annual periods beginning on or after 1 March 2007

• 8 Effective for annual periods beginning on or after 1 January 2008

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2. TURNOVER AND REVENUES

The Group engages in the manufacturing and sales of data storage media products, property development and wine production. Revenues recognised during the year are as follows:

Turnover Sales of data storage media products Sales of properties held for sale Sales of wine Other revenues Interest income Disposal of a joint venture Disposal of property, plant and equipment Others Total revenues 3. LOSS FROM OPERATIONS Loss from operations is arrived at after charging : Auditors’ remuneration — Current year Cost of inventories sold Depreciation Operating lease payments Allowance for doubtful debts Employee benefits expenses (excluding directors’ remuneration) — Salaries and allowance — Retirement benefit scheme contributions	2007 HK$’000 3,270 15,928 9,426 28,624 ------------------ 103 8,298 149 1,231 9,781 ------------------ 38,405 2007 HK$’000 173 21,490 2,130 795 3,767 3,461 94	2006 HK$’000 5,062 8,240 4,476
		17,778 ------------------ 77 — 91 444
		612 ------------------
		18,390
		2006 HK$’000 245 19,687 2,219 648 536 3,442 62

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4. SEGMENT INFORMATION

The business activities of the Group are categorised into the manufacturing and trading of data storage media products, property development and wine production. Segment information in respect of these activities is as follows:

RESULTS

By principal activities: — Sales of data storage media products and related equipment — Sales of properties held for sale — Sales of wine Other revenues By geographical markets: — Hong Kong — The United States of America and Canada — The People’s Republic of China — Australia and New Zealand — Others Other revenues	2007 Contribution to operating Turnover profit/(loss) HK$’000 HK$’000 3,270 (870) 15,928 (3,790) 9,426 (8,097) 28,624 (12,757) 9,781 (2,976) 36 (2,102) 1,529 (1,940) 26,727 (8,294) — — 332 (421) 28,624 (12,757) 9,781 (2,976)	2006 Turnover HK$’000 5,062 8,240 4,476 17,778 16 1,128 16,283 — 351 17,778	Contribution to operating profit/(loss) HK$’000 (9,115) (9,312) (4,764) (23,191) 612 (22,579) (2,345) (1,963) (15,164) (3,108) (611) (23,191) 612 (22,579)

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FINANCIAL POSITIONS

Assets Segment assets: — Sales of data storage media products and related equipment — Sales of properties held for sale — Sales of wine — Unallocated corporate assets Liabilities Segment liabilities: — Sales of data storage media products and related equipment — Sales of properties held for sale — Sales of wine — Unallocated corporate liabilities Net assets	2007 HK$’000 3,098 37,719 13,948 39,679 94,444 ------------------ 3,177 5,437 17,598 2,766 28,978 ------------------ 65,466	2006 HK$’000 2,772 74,016 19,877 7,442
		104,107 ------------------ 2,900 10,284 18,595 5,658
		37,437 ------------------
		66,670

The financial statements do not include any disclosures of the carrying amount of segment assets and liabilities analysed by geographical area.

5. FINANCE COSTS

Interest on bank overdraft and bank loan repayable within five years Interest on other loan without fixed repayment term	2007 HK$’000 361 230 591	2006 HK$’000 349 98
		447

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6. TAXATION

• (a) Taxation in the income statement represents :

PRC income tax — Under provision for prior year — Provision for the year Total tax expenses	2007 HK$’000 — 1,279 1,279	2006 HK$’000 51 128
		179

No provision for Hong Kong profits tax has been made in the financial statements as the Group did not derive any assessable profits in Hong Kong for the year (2006 : Nil).

PRC income tax has been provided on the estimated taxable profits at the applicable rate.

• (b) At 31 March 2007, the Group had no outstanding income tax payable (2006 : Nil).

• (c) Reconciliation between total tax expenses and loss before taxation of the Group at the applicable tax rates is as follows :

Loss before taxation Tax calculated at the applicable tax rates Tax effect of non-deductible expenses Tax effect of non-taxable income Tax under-provided for prior years Tax effect on utilisation of tax losses not previously recognised Losses not recognised as deferred tax assets due to concerns as to their recoverability Total tax expenses	2007 HK$’000 (2,675) (518) 236 (746) — 2 2,305 1,279	2006 HK$’000 (23,026) (5,617) 1,700 — 50 — 4,046
		179

• (d) No provision for deferred taxation has been accounted for as the Group has net deferred tax assets at the balance sheet date.

The Group has not recognised the tax losses as deferred tax assets due to the unpredictability of future profit streams.

The Company did not have any material unprovided deferred taxation as at 31 March 2007 (2006 : Nil).

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7. LOSS PER SHARE

The calculation of loss per share is based on the consolidated loss attributable to equity holders for the year of HK$3,655,000 (2006: HK$20,764,000) and on the weighted average of 330,571,880 (2006: 330,571,880) shares in issue during the year. No diluted loss per share has been presented as the exercise of the Company’s outstanding share options would result in a decrease in loss per share for the year. The Company had no potential dilutive ordinary shares that were outstanding for the years ended 31 March 2006 and 2007.

8. DIVIDENDS

The directors do not recommend the payment of any dividend for the year (2006: Nil).

9. TRADE AND OTHER RECEIVABLES

Included in trade and other receivables are trade receivables of HK$1,499,000 (2006 : HK$505,000). The Group maintains a defined credit policy.

For sales of data storage media products and wine, the Group allows an average credit period of 30 days to 90 days to its customers. The aging analysis of trade receivables at the balance sheet date is as follows:

Less than 30 days 1 to 3 months Over 3 months	2007 HK$’000 1,129 120 250 1,499	2006 HK$’000 117 68 320
		505

10. TRADE AND OTHER PAYABLES

Included in trade and other payables are trade payables of HK$4,485,000 (2006: HK$6,707,000). The aging analysis of trade payables at the balance sheet date is as follows:

Less than 30 days 1 to 3 months Over 3 months	2007 HK$’000 — — 4,485 4,485	2006 HK$’000 184 807 5,716
		6,707

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RESULTS

For the year ended 31 March 2007, the Group recorded a turnover of approximately HK$28,624,000, an increase of approximately 61% as compared with last year of approximately HK$17,778,000. Gross profit was approximately HK$7,134,000, an improvement from the loss of approximately HK$1,909,000 of the previous year. Loss attributable to shareholders reduced by approximately 82.4% to approximately HK$3,655,000 for the year as compared to a loss of HK$20,764,000 for last year.

The remarkable reduction in loss for the year under review was primarily attributable to the growth in turnover and profit in respect of the disposal of equity interest in a jointly controlled entity, as well as no further significant provision was recognized during the year.

BUSINESS REVIEW

During the year ended 31 March 2007, the Group was principally engaged in the businesses of property development and investment, data storage media and wine products.

Property development and investment continued to be the kernel of business development of the Group. This segment contributed to approximately 55.6% of the Group’s total turnover for the year under review, as compared to past year of approximately 46.3%. Turnover of this segment increased significantly by approximately 93.3% to approximately HK$15,928,000 from the preceding year of HK$8,240,000. This segment results recorded a loss of approximately HK$3,790,000, as compared to past year of approximately HK$9,312,000. The growth in turnover and the decrease in loss were largely due to contribution from sale of commercial properties in Zouping, Shandong, the People’s Republic of China (the “PRC”). In addition, sales were recorded for the car park units at the Group’s property project in Pudong, Shanghai, the PRC during the year under review.

The Group completed the disposal of equity interest in a jointly controlled entity, which held the site at Songjiang, Shanghai, the PRC, and made a profit contribution of approximately HK$8,298,000 as included in other revenues for the year. Subsequent year-end, the Group entered into a supplementary agreement that revised certain terms of the relevant cooperation for development agreement relating to the disposal of interests in the residential development site in Zouping, Shandong, the PRC, which constituted a major transaction of the Company as disclosed in the Company’s announcement dated 4 August 2006 and its circular dated 8 September 2006. It is anticipated that revenue and profit attributed to the disposal will be recognized starting from the coming financial year. As stated in the Company’s announcement dated 10 July 2007, the supplementary agreement will not have any material adverse effect on the results of operations of the Group.

Turnover and segment loss from the data storage media products business were HK$3,270,000 (2006: HK$5,062,000) and HK$870,000 (2006: segment loss of HK$9,115,000) respectively. Despite of the decrease in turnover of 35.4% over that of the previous year, the segment results improved mainly because no further impairment loss in respect of inventory was recognized for the year ended 31 March 2007, whereas a significant one-off impairment loss for data storage media products was recognized for last year.

During the year under review, turnover and segment loss from the subsidiary in Qingdao, as represented by the wine business, were HK$9,426,000 (2006: HK$4,476,000) and HK$8,097,000 (2006: segment loss of HK$4,764,000) respectively. No further stock provision was recognized for the year ended 31 March 2007, although allowances for bad debt and other provisions were made on prudent basis.

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Geographically, the turnover derived from the PRC accounted for approximately 93.4% of the total turnover of the Group for the year ended 31 March 2007, while it was 91.6% for last year.

PROSPECTS

The Group is still holding the remaining commercial properties in Zouping together with car park units in Pudong for sale. As the economy remains strong in the PRC, the Group will capture the business opportunities available. It is believed that property development and investment in the PRC will continue to be the main drivers for the year ahead.

In view of the strong economy of the PRC, the Group will actively and cautiously pursue suitable investment opportunities with primary focus on the PRC to enhance the performance of the Group. On the other hand, it will continue to keep track of the development of its existing businesses and make appropriate adjustments if necessary with the ultimate aim to bring its business back to profitability.

LIQUIDITY AND FINANCIAL RESOURCES

The Group recorded a net cash inflow of approximately HK$2,546,000 during the year. At 31 March 2007, unrestricted cash and bank balances of the Group amounted to approximately HK$6,860,000 (2006: HK$4,314,000). Bank borrowings of the Group as at the same date amounted to approximately HK$4,797,000 (2006: HK$4,560,000), which are repayable within one year.

The Group’s bank and other borrowings were denominated as to 100% in Renminbi. The Group conducted most of its business in Renminbi and Hong Kong dollars so that it does not have any significant exposure to foreign exchange fluctuation.

Shareholders’ equity is HK$65,466,000 (2006: HK$65,479,000), representing a decrease of 0.02% over last year.

The Group’s gearing ratio, expressed as the percentage of the Group’s bank borrowings over shareholders’ equity, was approximately 7.3%.

ACQUISITION AND DISPOSAL OF SUBSIDIARIES AND ASSOCIATED COMPANIES

The Company, through its wholly owned subsidiary, Benelux Property Development (Shanghai) Limited, entered into a transfer of ownership of equity interest and shareholders’ loan agreement on 26 May 2006 to dispose of all its equity interest in, and shareholder’s loan due from, a jointly controlled entity, 上海英之倫房地產發展 有限公司(Shanghai Ying Zhi Lun Property Development Limited) (“YZL”), which constituted a very substantial disposal of the Company (the “Very Substantial Disposal”). Details of the Very Substantial Disposal are set out in the Company’s announcement dated 23 August 2006 and its circular dated 13 November 2006. The disposal was completed during the year, and after that the Group ceased to have any interests in YZL.

The Company, through its wholly owned subsidiary, 東南(山東)置業有限公司 (South East Property (Shandong) Limited) (“SEP”), entered into a new cooperation for development agreement on 31 July 2006 to disposal of a residential development site held by SEP, which constituted a major transaction of the Company (the “Major Transaction”). Details of the Major Transaction are set out in the Company’s announcement dated 4 August 2006 and its circular dated 8 September 2006. Pursuant to the aforesaid agreement, a jointly controlled entity,

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山東鄒平東南怡聯置業有限公司 (Shandong Zouping South East Yi Lian Property Company Limited) (“SEYL”) was incorporated in the PRC on 23 August 2006. As disclosed in the Company’s announcement dated 10 July 2007, the parties to the aforesaid agreement entered into a supplementary agreement dated 9 July 2007, so that SEYL will become owned as to 5% by SEP and 95% by the PRC investor. Pursuant to the supplementary agreement, SEP will ultimately transfer its 5% equity interest in SEYL to the PRC investor.

Furthermore, deregistration of a Hong Kong incorporated subsidiary, which had been dormant and had ceased operations was completed during the year.

EMPLOYEE INFORMATION

At 31 March 2007, the total number of employees of the Group was approximately 157 (2006: 265). Employees are basically remunerated based on the nature of their job and their performance as well as prevailing market trend. Year-end discretionary bonus would be granted to reward and motivate those well-performed employees. The Company also adopted a share option scheme in November 2003 to reward employees for their contributions to the Group.

CHARGES ON GROUP ASSETS

At 31 March 2007, the Group pledged certain assets including land and buildings with an aggregate net book value of HK$7,644,000 (2006: HK$7,436,000) to secure the general banking facilities and bank loans granted to the Group.

CAPITAL COMMITMENT AND CONTINGENT LIABILITIES

At 31 March 2007, the Group had no outstanding capital commitments (2006: HK$9,363,000). There has been no material change in the Group’s contingent liabilities since the publication of the last annual report.

LITIGATION

As noted in previous years’ audited financial statements, a claim was brought against a wholly owned subsidiary of the Group, Benelux Manufacturing Limited (in liquidation) (“BML”), in July 1998 by its sub-contractor (“Sub-contractor”), Shenzhen Benelux Enterprise Co., Limited (“SBEC”), alleging that BML is liable for the payment of approximately HK$38 million, comprising charges in connection with the processing and assembling work rendered by SBEC and the breach of an alleged loan agreement relating to certain alleged letters of credit. During the course of exchanging exhibits in the proceedings initiated by SBEC, the Company was first aware of SBEC’s allegation that a guarantee was purportedly granted by the Company to SBEC in respect of the alleged BML’s indebtedness to SBEC (the “Purported Guarantee”) in/around January 1999. Notwithstanding that, SBEC has not initiated any proceedings against the Company based on the Purported Guarantee.

Provisional liquidators were appointed on 25 August 1999 by the High Court following a petition by SBEC for the winding up of BML. BML was put into compulsory liquidation subsequently on 28 April 2000.

The directors, after seeking legal advice, are of the opinion that the liquidation of BML will not have a material adverse effect on the Group. The investments in BML and the amounts due from BML brought forward had been fully provided for in the previous years.

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On 9 March 2005, the Company received a writ of summons served by Shenzhen Intermediate People’s Court (the “Court”). The claimant 深圳市中朗科技發展有限公司“( SZL”) claims to have the right over the alleged BML’s indebtedness to the SBEC and the Purported Guarantee. SZL alleged that BML is liable to them in the amount of approximately HK$36 million and the Company is also liable to the joint and several liabilities thereof.

In April 2006, SZL filed claim for an additional amount of approximately RMB35 million as accrued interest on the alleged indebtedness over the years, making the total amount being claimed at approximately HK$72 million. A hearing was held in the Court on 22 June 2006 for the purpose of the litigation.

The Company has engaged a firm of lawyers in Shenzhen to respond to the claims by SZL and will defense vigorously that the Group is not responsible for the alleged indebtedness. The directors are of the opinion that no provision is required to be made for the above amounts being claimed by SZL.

The Company has incurred legal cost in the amount of HK$167,000 this year in dealing with the claims by SZL.

Save as disclosed above, there are no other material litigation or claims known to the directors pending or threatened against the Company or the Group.

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

During the year, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities.

AUDIT COMMITTEE

The Audit Committee has reviewed with the management the accounting principles and practices adopted by the Group and discussed auditing, internal control and financial reporting matters for the year ended 31 March 2007.

CODE ON CORPORATE GOVERNANCE PRACTICES

The Company has complied with the applicable code provisions of the Code on Corporate Governance Practices (the “Code”) as set out in Appendix 14 of the Rules Governing the Listing of Securities (the “Listing Rules”) on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) throughout the year ended 31 March 2007 except the deviations as disclosed in the interim report of the Company for the six months ended 30 September 2006.

Further information on the Company’s corporate governance practices and details of the Company’s deviations from certain code provisions during the year under review will be set out in the “Corporate Governance Report” to be contained in the Company’s annual report for the year ended 31 March 2007.

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DIRECTORS’ SECURITIES TRANSACTIONS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules as its code of conduct regarding securities transactions by directors of the Company (the “Code of Conduct”). The Company has made specific enquiry to all directors that they have compiled with the Model Code throughout the year ended 31 March 2007.

PUBLICATION OF FINANCIAL INFORMATION ON THE STOCK EXCHANGE’S WEBSITE

The Company’s annual report for the year ended 31 March 2007 containing all applicable information required by Paragraph 45 of Appendix 16 of the Listing Rules will be despatched to the shareholders of the Company and published on the Stock Exchange’s website and on the Company’s website (http://www.ilinkfin.net/south_east_group) in due course.

By order of the Board SOUTH EAST GROUP LIMITED Budiman Rahardja Chairman

Hong Kong, 19 July 2007

The directors of the Company as at the date of this announcement are Mr. Budiman Rahardja (Chairman) as executive director; Mr. Chen Zhi Yung as non-executive director; and Mr. Lo Yuk Lam, Mr. Wong Kam Wah and Mr. Ng Chun Hung, Lawrence as independent non-executive directors.

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