DIT Group Limited — Capital/Financing Update 2003

Jan 23, 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)

CONNECTED TRANSACTION

On 21st January 2003, South Perfect and Yimin reached an agreement in respect of the Transaction involving the assigning of the Bank Loan from Yimin to Fushiwang in consideration of the transfer of Fixed Assets from Yimin to Fushiwang and the writing off of the Debt by Yimin. Fushiwang is an indirect subsidiary of the Company owned as to 55% by South Perfect (a wholly owned subsidiary of the Company) and 45% by Yimin. Accordingly, the Transaction constitutes a connected transaction of the Company under the Listing Rules.

THE TRANSACTION

Date of the Agreement:

21st January 2003

Parties:

South Perfect and Yimin

South Perfect and Yimin have equity interests of 55% and 45% in the registered capital of Fushiwang respectively. South Perfect is a wholly owned subsidiary of the Company. Fushiwang is therefore an indirect subsidiary of the Company.

Consideration of the Transaction: Yimin shall transfer ownership of the Assets (with an aggregate net book value of RMB3,110,000 per the unaudited management accounts of Yimin as at 30th November 2002) and eliminate the liability attributable to the Debt (valuing at RMB1,640,000 per the unaudited management accounts of Yimin as at 30th November 2002) as the consideration for Fushiwang shouldering the Bank Loan (in the amount of RMB4,750,000)

Terms of the Agreement:

Pursuant to the terms of the Agreement:

• (1) the Bank Loan be assigned from Yimin to Fushiwang;

• (2) in consideration of Fushiwang taking up such liability from Yimin and subject to the completion of assigning the Bank Loan from Yimin to Fushiwang (which is expected on/before 31st March 2003):

  • (a) the Assets be transferred from Yimin to Fushiwang; and

  • (b) the Debt be written off by Yimin

The setting-off referred above shall be effective with immediate effect.

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The Directors consider that the terms of the Agreement have been arrived at after arm’s length negotiation based on normal commercial terms, are fair and reasonable so far as the shareholders of the Company are concerned.

REASONS FOR PROCEEDING WITH THE TRANSACTION

Fushiwang was established in the PRC in October 1998 as a joint venture enterprise between South Perfect and Yimin for the manufacturing and trading of grape wine. The reasons for proceeding with the Transaction are that Fushiwang is in need of the Assets for its ongoing operation while the Debt can be settled accordingly. The Assets comprise of fixed assets and inventory of grape juice. The fixed assets mainly include yeasting facilities and warehouse space owned by Yimin but have been providing to Fushiwang for use free of charge since its inception in 1998. The Debt incurred as Yimin applied such equivalent amount out of the Bank Loan to meet with the working capital requirements of Fushiwang. The Bank Loan will be rolled over continuously after it is assigned to Fushiwang.

GENERAL

The Group is principally engaged in manufacturing and trading of magnetic media products, property development and investment and other strategic investment projects.

The Transaction constitutes a connected transaction under the Listing Rules. Since the Transaction falls within the de minimis level under paragraph 14.25(1) of the Listing Rules, no independent shareholders’ approval is required. The Company will include details of the transaction in its next published annual report and accounts. In the opinion of the Directors, the terms of the Transaction are on normal commercial terms which were negotiated on an arm’s length basis.

DEFINITIONS

DEFINITIONS
“Agreement”	an unconditional agreement entered into between South Perfect
	and Yimin which took effect on 21st January 2003 involving (i)
	the assignment of the Bank Loan from Yimin to Fushiwang, (ii)
	transfer of ownership of the Assets from Yimin to Fushiwang and
	(iii) writing off of the Debt owing to Yimin
“Assets”	assets in the aggregate net book value of RMB3,110,000 (per the
	unaudited management accounts of Yimin as at 30th November
	2002) beneficially owned by Yimin, comprising (i) yeasting
	facilities and warehouse space valuing at RMB998,000 currently
	provided by Yimin to Fushiwang for use free of charge and (ii)
	inventory of grape juice in good condition valuing at RMB2,112,000
	procured by Yimin using its own funds
“Bank Loan”	a secured 1-year term loan amounting to RMB4,750,000 first
	granted to Yimin by a bank in the PRC in 21st December 2000,
	the interests accrued therefrom have been fully paid when due and
	the principal amount has been rolling over since then
“Company”	South East Group Limited
“Debt”	A debt amounting to RMB1,640,000 due from Fushiwang to Yimin
	(per the unaudited management accounts of Yimin as at 30th
	November 2002)

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	23rd January 2	03

Hong Kong, 23rd January 2003

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

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