DIT Group Limited — Capital/Financing Update 2003

Oct 30, 2003

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, 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 announcement.

SOUTH EAST GROUP LIMITED

(Incorporated in Bermuda with limited liability)

DISCLOSEABLE TRANSACTION

The Company through its wholly owned subsidiary in the PRC entered into the Transfer of Equity Interests Agreement and the Supplemental Agreement, both dated 23 October 2003, for the purpose of procuring the acquisition of interests in a parcel of land in Shanghai for residential development. The entering into of the Agreements constitutes a discloseable transaction for the Company, is subject to the disclosure requirement of the Listing Rules.

THE AGREEMENTS

• (1) Agreement for transfer of 33% equity interests in the capital of the Invested Entity dated 23 October 2003 (the “Transfer of Equity Interests Agreement”)

• (2) Supplemental agreement in relation to the Transfer of Equity Interests Agreement dated 23 October 2003 (the “Supplemental Agreement”)

Parties

• (1) Transfer of Equity Interests Agreement

  • (a) The Investing Company as the transferor and

  • (b) BPDL as the transferee

• (2) Supplemental Agreement

  • (a) The Investing Company,

  • (b) BPDL and

  • (c) The Invested Entity

Transaction

Pursuant to the Transfer of Equity Interests Agreement, the Investing Company agreed to sell and BPDL agreed to purchase 33% of the equity interests in the capital of the Invested Entity at a consideration of RMB2,640,000 (equivalent to approximately HK$2,481,600) (the “Sale

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Equity Consideration”). The Sale Equity Consideration is pro-rated on the basis of the registered capital of the Invested Entity being RMB8,000,000.

The Supplemental Agreement was executed pursuant to the terms of the Transfer of Equity Interests Agreement.

Pursuant to the Supplemental Agreement, the Invested Entity shall submit a tender to the authorized property development company (which is municipal government owned) (the “Authorized Developer”) of a piece of land of approximately 150 acres in Song Jiang, Shanghai for residential purposes (the “Lot”). The Authorized Developer shall invite tender for the Lot in/around November/December 2003. Pursuant to the Supplemental Agreement, BPDL shall pay an additional sum of RMB26,060,000 (equivalent to approximately HK$24,496,400) in cash to the Invested Entity. This amount together with the Sale Equity Consideration in aggregate shall be applied to acquire the land use right of a parcel of land of approximately 50 acres out of the Lot, which is in proportion to the stockholding of BPDL in the Invested Entity. A certificate of the land use right for the Lot as a whole shall be issued to the Invested Entity if it is ultimately successful in the tender. Notwithstanding that, there are provisions in the Supplemental Agreement setting out that all costs and profits/losses in relation to the Property are on the account of BPDL and those in relation to the remaining portion of the Lot are on the account of the Investing Company.

The Property shall be principally developed by BPDL for residential purposes. Accordingly, BPDL shall bear all development costs incurred from the development of the Property and receive all revenues from the unit sales of the residential buildings constructed thereon. However, BPDL shall not be responsible for the development of the remaining portion of the Lot, nor be entitled to share any profits attributable to that portion of land. Subject to the occurrence of the events mentioned in the paragraph headed “Termination of the Agreement”, completion of the development of the Property and selling of all residential units provided thereon is expected to fall in/about the last quarter of 2004 and the first quarter of 2005 respectively. After completion of the development of the Property and selling of all residential units, BPDL shall be entitled to return the 33% equity interests in the Invested Entity back to the Investing Company for RMB2,640,000 in cash. Such right is only exercisable until all residential units developed by BPDL on the Property are sold, otherwise there is no specified time limit for its exercise. The reason for this arrangement is that BPDL is intended to acquire the Property for residential development as a stand-alone project. As a result, BPDL is able to sell its 33% equity interests in the Invested Entity after completion of the property development project as mentioned above.

Consideration

The total consideration (subject to certain adjustments) for procuring the acquisition of the Property amounting to RMB28,700,000 (equivalent to approximately HK$26,978,000) (including the Sale Equity Consideration) (the “Consideration”), which was determined after arm’s length negotiation based on current market conditions in Song Jiang District as a result of analysis of market intelligence. The Consideration may be so adjusted as

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to reflect the actual stated price in the accepted tender. In any event, the tender price shall not exceed the upper ceiling as defined in paragraph (1) headed “Termination of Agreements” below.

Payment Terms

• The Consideration is to be satisfied by BPDL in the following manner:

• (1) A sum of RMB27,500,000 (equivalent to approximately HK$25,850,000) in cash funded by internal resources was paid on 27 October 2003 and

• (2) The remaining sum of RMB1,200,000 (equivalent to approximately HK$1,128,000) in cash from internal resources to be paid when the Bureau of Industrial and Commercial Administration gives approval to the transfer of the 33% equity interests from the Investing Company to BPDL.

Termination of the Agreements

The Investing Company undertakes to refund the Consideration in full to BPDL and to terminate the Agreements in the occurrence of the following events:

• (1) if the tender for the Lot made by the Invested Entity is accepted but at an average price per acre that exceeds the predetermined upper limit (approximately 25% higher than the price on which computation of the Consideration is based) as specified in the Supplemental Agreement; or

• (2) if the tender for the Lot (including the Property) is rejected.

Particulars of Assets being acquired

Pursuant to the Transfer of Equity Interests Agreement, BPDL shall procure the acquisition of 33% equity interests in the capital of the Invested Entity. The Invested Entity was incorporated on 29 April 2003 in the PRC for carrying on business in property development in Shanghai. It has a registered capital of RMB8,000,000. The board of directors of the Invested Entity is composed of five members. After its acquisition of equity interests in the Invested Entity, BPDL can nominate a director to the board to represent its interests. The Invested Entity is going to make a tender for the Lot. However, it has not commenced any business at this stage.

Through investing in 33% equity interests the Invested Entity at a consideration of RMB2,640,000, BPDL shall further invest RMB26,060,000 into the Invested Entity to acquire the Property for the purpose of residential development (subject to the occurrence of the events mentioned in the paragraph headed “Termination of Agreements). Pursuant to the Supplemental Agreement, BPDL shall be entitled to the land use right for the development of the Property. As regards, it shall bear all development costs incurred from the development of the Property and receive all revenues from the unit sales of the residential buildings constructed thereon. After completion of development project in connection with the Property, BPDL shall be entitled to return the 33% equity interests in the Invested Entity back to the Investing Company for RMB2,640,000. Such right is only exercisable until all residential units developed by BPDL on

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the Property are sold, otherwise there is no specified time limit for its exercise.

Reasons for the Acquisition

It has become the Group’s strategy to focus its business development in the PRC markets, in particular, property development and investment. The property development project in Pudong, Shanghai, which is the only project currently remains in the property portfolio of the Group, is scheduled to complete by the end of this year, the management considers the Acquisition a right opportunity for the furtherance of the business of property development and investment in the PRC. It has been taken into consideration the property market in Shanghai as well as the experience of the Investing Company in the field. The Investing Company has more than ten years of experience in property development in Shanghai. The new development (including costs of acquisition of the Property and future costs of development in an estimation of RMB85,000,000) is planned to be financed as to 70% by internal resources and the remaining 30% by existing banking facilities.

General

The Company is an investment holding company with its subsidiaries are principally engaged in property development and investment, manufacturing and trading of magnetic media products, manufacturing and trading of grape wine and other strategic investment projects.

The Acquisition constitutes a discloseable transaction for the Company under the Listing Rules. A circular containing information on the Acquisition will be dispatched to the shareholders of the Company as soon as possible.

Definitions

“Acquisition” The acquisition of the Property by BPDL under the Agreements

“Agreements” The Transfer of Equity Interests and the Supplemental Agreement, the latter forms an integral part of the former

“BPDL” Benelux Property Development (Shanghai) Limited (“BPDL”), a company incorporated in the PRC and a wholly owned subsidiary of the Company “Company” South East Group Limited, a company incorporated in Bermuda with limited liability whose shares are listed on the Stock Exchange “Group” The Company and its subsidiaries “Invested Entity” A company incorporated on 29 April 2003 in the PRC, which was owned as to 100% by the Investing Company immediately before the transfer of equity interests pursuant to the Transfer of Equity Interests Agreement, and is owned as to 67% by the Investing Company and 33% by BPDL immediately thereafter.

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• “Investing Company” A company incorporated in the PRC, whose ultimate beneficial owners being two state-owned enterprises are an independent third party not connected with and independent of any of the directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates (as defined under the Listing Rules)

“Listing Rules” The Rules Governing the Listing of Securities on the Stock Exchange

“Property” Part and parcel of land of approximately 50 acres out of a piece of land of approximately 150 acres in Song Jiang, Shanghai for residential purposes “PRC” The People’s Republic of China

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

• “RMB” Renminbi, the lawful currency of the PRC

By Order of the Board South East Group Limited Kwan Kei Chor, Samuel Director

Hong Kong, 29 October 2003

**RMB1=HK$0.94

Please also refer to the published version of this announcement in The Standard.

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