DIT Group Limited - Capital/Financing Update 2014

THIS PROSPECTUS IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this prospectus 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 South East Group Limited (the “ Company ”), you should at once hand the Prospectus Documents to the purchaser or the transferee or to the bank manager, licensed securities dealer or registered institution in securities or other agent through whom the sale was effected for transmission to the purchaser or the transferee.

A copy of each of the Prospectus Documents, together with the documents specified in the paragraph headed “Documents delivered to the Registrar of Companies in Hong Kong” in Appendix III to this prospectus, has been registered with the Registrar of Companies in Hong Kong pursuant to Section 342C of the Companies (Winding up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). The Securities and Futures Commission of Hong Kong and the Registrar of Companies in Hong Kong take no responsibility for the contents of any of these documents. Dealings in the securities of the Company may be settled through CCASS and you should consult a licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser for details of the settlement arrangements and how such arrangements may affect your rights and interests.

Subject to the granting of the listing of, and permission to deal in, the Rights Shares on the Stock Exchange as well as compliance with the stock admission requirements of HKSCC, the Rights Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Rights Shares in both their nil-paid and fully-paid forms or such other dates as determined by HKSCC. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited and the HKSCC take no responsibility for the contents of this prospectus, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this prospectus.

==> picture [241 x 41] intentionally omitted <==

(Incorporated in Bermuda with limited liability) (Stock Code: 726)

RIGHTS ISSUE OF 2,919,647,040 RIGHTS SHARES AT THE SUBSCRIPTION PRICE OF HK$0.1 EACH ON THE BASIS OF EIGHT (8) RIGHTS SHARES FOR EVERY ONE (1) SHARE HELD ON THE RECORD DATE

Financial Adviser to the Company

==> picture [56 x 34] intentionally omitted <==

Underwriter to the Rights Issue

Terms used in this cover page shall have the same meanings as defined in this prospectus.

The Latest Time For Acceptance is 4:00 p.m. (Hong Kong time) on Wednesday, 22 October 2014. The procedures for application of the Rights Shares and application for the excess Rights Shares are set out on pages 13 to 16 of this prospectus.

Shareholders should note that the Shares have been dealt on an ex-entitlements basis commencing from Friday, 26 September 2014 and that dealing in the Rights Shares in the nil-paid form will take place from Friday, 10 October 2014 to Friday, 17 October 2014 (both days inclusive). If the Underwriter terminates the Underwriting Agreement, or the conditions of the Rights Issue are not fulfilled, the Rights Issue will not proceed. Any Shareholders or other persons contemplating selling or purchasing Shares up to the date when the conditions of the Rights Issue are fulfilled (which is expected to be Tuesday, 28 October 2014) will accordingly bear the risk that the Rights Issue could not become unconditional and may not proceed.

The Underwriting Agreement contains provisions entitling the Underwriter by notice in writing to the Company served prior to 4:00 p.m. on Tuesday, 28 October 2014 to terminate the Underwriting Agreement on the occurrence of certain events as set out in the section headed “Termination of the Underwriting Agreement” on pages 19 to 20 of this prospectus.

Shareholders should therefore exercise caution when dealing in the Shares, and if they are in any doubt about their position, they are recommended to consult their professional advisers.

8 October 2014

* For identification purposes only

	Page
Expected Timetable......................................................................................................................	ii
Termination of the Underwriting Agreement...........................................................................	iv
Definitions......................................................................................................................................	1
Summary of the Rights Issue......................................................................................................	5
Letter from the Board..................................................................................................................	6
Appendix I — Financial Information of the Group......................................................	26
Appendix II — Unaudited pro forma financial information.........................................	28
Appendix III — General information.................................................................................	33

– i –

EXPECTED TIMETABLE

The expected timetable for the Rights Issue and change in board lot size set out below is for indicative purposes only and it has been prepared on the assumption that all the conditions of the Rights Issue will be fulfilled. The expected timetable is therefore subject to change and may varied by agreement between the Company and the Underwriter. Any consequential change will be announced by way of a separate announcement by the Company as and when appropriate.

==> picture [452 x 571] intentionally omitted <==

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

|||
|---|---|
|Event|2014 (Hong Kong time)|
|Record Date|............................................................................................................. Monday, 6 October|
|Despatch of the Prospectus Documents ............................................................ Wednesday, 8 October|
|First day of dealings in nil-paid Rights Shares ................................. 9:00 a.m. on Friday, 10 October|
|Latest time for splitting of the nil-paid Rights Shares|.................. 4:30 p.m. on Tuesday, 14 October|
|Last day of dealings in the nil-paid Rights Shares ........................... 4:00 p.m. on Friday, 17 October|
|Latest time for acceptance of and|
|payment for the Rights Shares and|
|application and payment for excess Rights Shares..................................|4:00 p.m. on Wednesday,|
|22 October|
|Rights Issue expected to become unconditional ............................ 4:00 p.m. on Tuesday, 28 October|
|Announcement of results of acceptance and|
|excess application of the Rights Issue ......................................................... Wednesday, 29 October|
|Refund cheques in respect of wholly or|
|partially unsuccessful applications for excess|
|Rights Shares expected to be posted on or before ......................................... Thursday, 30 October|
|Certificate for the Rights Shares expected|
|to be despatched on or before ......................................................................... Thursday, 30 October|
|Dealings in fully-paid Rights Shares commence .............................. 9:00 a.m. on Friday, 31 October|
|Effective date of change of board lot size|
|from 2,000 Shares to 20,000 Shares .............................................. 9:00 a.m. on Friday, 31 October|
|Designated brokers starts to stand in the market|
|to provide matching services for sale and|
|purchase of odd lots of Shares ....................................................... 9:00 a.m. on Friday, 31 October|
|Designated brokers ceases to stand in the market|
|to provide matching services for sale and|
|purchase of odd lots of shares.................................................... 4:00 p.m. on Friday, 21 November|

----- End of picture text -----

– ii –

EXPECTED TIMETABLE

EFFECT OF BAD WEATHER ON THE LATEST ACCEPTANCE DATE

The Latest Time For Acceptance of and payment for the Rights Shares will be postponed if there is:

a tropical cyclone warning signal number 8 or above, or
a “black” rainstorm warning
i. in force in Hong Kong at any local time before 12:00 noon and no longer in force after 12:00 noon on Wednesday, 22 October 2014. The latest time for acceptance of and payment for the Rights Shares and for application and payment for excess Rights Shares will be extended to 5:00 p.m. on the same Business Day; or
ii. in force in Hong Kong at any local time between 12:00 noon and 4:00 p.m. on Wednesday, 22 October 2014, the latest time for acceptance of and payment for the Rights Shares and for application and payment for excess Rights Shares will be rescheduled to 4:00 p.m. on the following Business Day which does not have either of those warnings in force in Hong Kong at any time between 9:00 a.m. and 4:00 p.m..

If the latest time for acceptance of and payment for the Rights Shares and for application and payment for excess Rights Shares is postponed in accordance with the foregoing, the dates mentioned in this section may be affected. An announcement will be made by the Company in such event as soon as possible.

– iii –

TERMINATION OF THE UNDERWRITING AGREEMENT

If, prior to 4:00 p.m. on the Settlement Date:

(i) in the absolute opinion of the Underwriter, the success of the Rights Issue would be materially and adversely affected by:
(a) the introduction of any new law or regulation or any change in existing law or regulation (or the judicial interpretation thereof) or other occurrence of any nature whatsoever which may in the absolute opinion of the Underwriter materially and adversely affect the business or the financial or trading position of the Group as a whole or is materially adverse in the context of the Rights Issue; or
(b) the occurrence of any local, national or international event or change (whether or not forming part of a series of events or changes occurring or continuing before, and/or after the date of the Underwriting Agreement) of a political, military, financial, economic or other nature, or in the nature of any local, national or international outbreak or escalation of hostilities or armed conflict, or affecting local securities markets which may, in the absolute opinion of the Underwriter materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole; or
(c) any act of God, war, riot, public disorder, civil commotion, fire, flood, explosion, epidemic, terrorism, strike or lock-out which would, in the absolute opinion of the Underwriter materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole; or
(ii) any material adverse change in market conditions (including without limitation, a change in fiscal or monetary policy, or foreign exchange or currency markets, suspension or restriction of trading in securities, and a change in currency conditions for the purpose of this clause includes a change in the system under which the value of the Hong Kong currency is pegged with that of the currency of the United States of America) occurs which in the absolute opinion of the Underwriter makes it inexpedient or in advisable to proceed with the Rights Issue; or
(iii) the Prospectus when published contains information (either as to business prospects or the condition of the Group or as to its compliance with any laws or the Listing Rules or any applicable regulations) which has not prior to the date hereof been publicly announced or published by the Company and which may in the absolute opinion of the Underwriter be material to the Group as a whole upon completion of the Rights Issue and is likely to affect materially and adversely the success of the Rights Issue.

The Underwriter shall be entitled by notice in writing to the Company, served prior to 4:00 p.m. on the Settlement Date, to terminate the Underwriting Agreement.

The Underwriter shall be entitled by notice in writing to rescind the Underwriting Agreement if prior to 4:00 p.m. on the Settlement Date any material breach of any of the representations, warranties or undertakings contained in the Underwriting Agreement comes to the knowledge of the Underwriter.

– iv –

TERMINATION OF THE UNDERWRITING AGREEMENT

Any such notice shall be served by the Underwriter prior to 4:00 p.m. on the Settlement Date.

If prior to 4:00 p.m. on the Settlement Date, any such notice as referred to above is given by any of the Underwriter, the obligations of all parties under the Underwriting Agreement shall terminate forthwith and no party shall have any claim against any other party for costs, damages, compensation or otherwise save for any antecedent breaches.

– v –

DEFINITIONS

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

“Announcement”
the announcement of the Company dated 11 August 2014 in relation to, among others, the Rights Issue and the change in board lot size
“associate(s)”
has the meaning ascribed thereto under the Listing Rules
“Board”
the board of Directors
“Business Day”
any day (other than a Saturday, Sunday or public holiday) on which licensed banks in Hong Kong are generally open for business throughout their normal business hours
“CCASS”
the Central Clearing and Settlement System established and operated by HKSCC
“Circular”
the circular of the Company dated 5 September 2014 in relation to, among other things, the Rights Issue and the change in board lot size
“Companies (Winding Up and Miscellaneous Provisions) Ordinance”
the Companies (Winding Up and Miscellaneous Provisions) Ordinance, Chapter 32 of the Laws of Hong Kong (as amended from time to time)
“Company”
South East Group Limited, a company incorporated in Bermuda with limited liability, whose issued Shares are listed on the main board of the Stock Exchange
“Complying Applications”
valid applications under the PAL(s) and EAF(s) made in accordance with the terms of the Prospectus Documents together with cheques or cashier’s orders or other remittances for the full amount payable in respect of the Rights Shares being applied for under such PAL(s) and/or EAF(s)
“Convertible Bond”
the convertible bond in the principal amount of Hong Kong dollars sixty eight million (HK$68,000,000), issued by the Company carrying an interest of three per cent. (3%) per annum with conversion price of HK$0.418 per conversion share
“Director(s)”
director(s) of the Company
“EAF(s)”
the excess application form(s) issued to the Qualifying Shareholders for application for excess Rights Shares

– 1 –

DEFINITIONS

“Earnest Money”

“Formal Agreement”
“Framework Agreement”
“Group”
“HKSCC”
“Hong Kong”
“Independent Third Party(ies)”
“Last Trading Day”
“Latest Practicable Date”
“Latest Time For Acceptance”
“Listing Rules”
“Non-Qualifying Shareholder(s)”

earnest money of HK$22 million payable by the Company to the Vendor, subject to the terms and conditions of the Framework Agreement

a formal sale and purchase agreement to be entered into in respect of the Proposed Acquisition
the framework agreement dated 26 February 2014 (as supplemented by two supplemental agreements dated 23 May 2014 and 22 August 2014 respectively) entered into between the Company and the Vendor in relation to the Proposed Acquisition

the Company and its subsidiaries

Hong Kong Securities Clearing Company Limited

the Hong Kong Special Administrative Region of the People’s Republic of China
person(s) and their respective associates or, in the case of companies, their ultimate beneficial owner(s) and their respective associates, who are independent of and not connected with the Company and its subsidiaries and their respective connected persons
11 August 2014, being the trading day of the Underwriting Agreement
30 September 2014, being the latest practicable date prior to the printing of this prospectus for the purpose of ascertaining certain information contained herein
4:00 p.m., on Wednesday, 22 October 2014, or such later time or date as may be agreed between the Company and the Underwriter in writing, being the latest time for acceptance of, and payment for, the Rights Shares as described in the Prospectus Document

Rules Governing the Listing of Securities on the Stock Exchange

those Overseas Shareholders whom the Directors, based on legal advice provided by the Company’s legal advisers, consider it necessary or expedient not to offer the Rights Issue to such Shareholders on account either of legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place

– 2 –

DEFINITIONS

“Overseas Letter” a letter from the Company to the Non-Qualifying Shareholders explaining the circumstances in which the Non-Qualifying Shareholders are not permitted to participate in the Rights Issue
“Overseas Shareholders” Shareholders whose name(s) appear(s) on the register of members of the Company at the close of business on the Record Date and whose address(es) as shown on such register is (are) outside of Hong Kong
“PAL(s)” the provisional allotment letter(s) issued to the Qualifying Shareholders to apply for their assured allotment of the Rights Shares
“Posting Date” Wednesday, 8 October 2014, being the date of despatch of the Prospectus Documents to Qualifying Shareholders and the Prospectus to Non-Qualifying Shareholders for information only
“PRC” the People’s Republic of China, which for the purpose of this prospectus, shall exclude, Hong Kong, Macau Special Administrative Region of the PRC and Taiwan
“Properties” certain properties located in Shenzhen, the PRC under the Framework Agreement
“Proposed Acquisition” the proposed acquisition of the Properties in Shenzhen, the PRC as contemplated under the Framework Agreement
“Prospectus” this prospectus containing details of the Rights Issue
“Prospectus Documents” together, the Prospectus, the PALs and EAFs
“Qualifying Shareholders” Shareholders, other than the Non-Qualifying Shareholders, whose name(s) appear on the register of members of the Company at the close of business on the Record Date
“Record Date” Monday, 6 October 2014 (or such other date as the Underwriter and the Company may be agreed) for the determination of the entitlements of the Rights Issue
“Registrar” Computershare Hong Kong Investor Services Limited, the branch share registrar of the Company in Hong Kong
“Rights Issue” the proposed issue by way of rights of the Rights Shares on the terms and subject to the conditions as set out in the Underwriting Agreement and in the Prospectus Documents

– 3 –

DEFINITIONS

“Rights Share(s)” 2,919,647,040 new Shares proposed to be offered to Qualifying Shareholders under the Rights Issue
“Settlement Date” Tuesday, 28 October 2014, being the fourth Business Day following the Latest Time For Acceptance (or such other date as the Underwriter and the Company may agree in writing)
“SFO” Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
“Share(s)” existing issued share(s) of HK$0.1 each in the capital of the Company
“Shareholder(s)” holder(s) of issued Shares
“Stock Exchange” The Stock Exchange of Hong Kong Limited
“Subscription Price” the subscription price of HK$0.1 per Rights Share under the Rights Issue
“Undertaking” the irrevocable undertaking dated 11 August 2014 given by Viva Shine in favour of the Company and the Underwriter
“Underwriter” or Kingston Securities Limited, a licensed corporation to carry out “Kingston Securities” business in type 1 (dealing in securities) regulated activity under the SFO
“Underwriting Agreement” the underwriting agreement dated 11 August 2014 entered into between the Underwriter and the Company in relation to the Rights Issue
“Underwritten Shares” 2,183,647,040 Rights Shares, being the total of Rights Shares less 736,000,000 Rights Shares undertaken to be subscribed pursuant to the Undertaking
“Untaken Shares”
those (if any) of the Underwritten Shares for which Complying Applications had not been lodged for acceptance, or received, as the case may be, on the Latest Time For Acceptance
“Viva Shine”
Viva Shine Limited, a company incorporated in the British Virgin Islands, who holds 92,000,000 Shares and the Convertible Bond as at the Latest Practicable Date
“HK$”

Hong Kong dollars, the lawful currency of Hong Kong

“%”
per cent.

– 4 –

SUMMARY OF THE RIGHTS ISSUE

The following information is derived from, and should be read in conjunction with, the full text of this prospectus:

Basis of the Rights Issue:

Eight (8) Rights Shares for every one (1) Share held on the Record Date

Number of Shares in issue as at the Latest Practicable Date:

364,955,880 Shares

Number of Rights Shares:

2,919,647,040 Rights Shares

Number of Rights Shares undertaken to be taken by Viva Shine:

Pursuant to the Undertaking, Viva Shine has irrevocably undertaken in favour of the Company and the Underwriter that, among others, it will (i) save for the existing charges over the 92,000,000 Shares and the Convertible Bond, not to sell or otherwise dispose of or convert the whole or any part of the outstanding principal amount of the Convertible Bond at any time from the date of the Undertaking and up to the close of business on the Record Date, (ii) accept to and pay for in full or procure the acceptance and payment for full by its associates or nominees for, the 736,000,000 Rights Shares provisionally allotted to Viva Shine prior to the Latest Time For Acceptance; (iii) not apply for any Rights Shares in excess of those provisionally allotted thereto as referred to paragraph (ii); and (iv) the 92,000,000 Shares will remain beneficially owned by it as at the date of the Undertaking and up to the close of business on the Record Date

Number of Underwritten Shares: 2,183,647,040 Rights Shares, being the number of the Rights Shares less the aggregate number of the Rights Shares agreed to be taken up pursuant to the Undertaking. Accordingly, the Rights Issue is fully underwritten
Aggregate nominal value of the Rights Shares:

HK$291,964,704.00

Subscription price:

HK$0.1 per Rights Share

Net subscription price:

HK$0.097 per Rights Share

The enlarged issued share capital 3,284,602,920 Shares upon completion of the Rights Issue

Amount to be raised:

approximately HK$292 million before expenses and costs

– 5 –

LETTER FROM THE BOARD

==> picture [241 x 41] intentionally omitted <==

(Incorporated in Bermuda with limited liability) (Stock Code: 726)

Executive Directors: YU Shengming (Chairman) MOCK Wai Yin (Deputy Chairman, Chief Executive Officer) CHAN Chi Yuen

Registered Office: Canon’s Court 22 Victoria Street Hamilton HM12 Bermuda

Non-executive Director: CHEN Xiaoping

Independent non-executive Directors: NG Kwok Wai LEE Chi Hwa, Joshua LING Kit Wah, Joseph

Principal place of business in Hong Kong: 12th Floor, Entertainment Building 30 Queen’s Road Central Hong Kong

8 October 2014

To the Qualifying Shareholders and,

for information only, the Non-Qualifying Shareholders

Dear Sir or Madam,

RIGHTS ISSUE OF 2,919,647,040 RIGHTS SHARES AT THE SUBSCRIPTION PRICE OF HK$0.1 EACH ON THE BASIS OF EIGHT (8) RIGHTS SHARES FOR EVERY ONE (1) SHARE HELD ON THE RECORD DATE

INTRODUCTION

Reference is made to the Announcement and the Circular in relation to, among others, the Rights Issue and the change in board lot size. The Board proposed to raise approximately HK$292 million, before expenses and costs by way of the rights issue of 2,919,647,040 Rights Shares at a subscription price of HK$0.1 per Rights Share and subject to the completion of the Rights Issue, to change the board lot six for trading on the Stock Exchange from 2,000 Shares to 20,000 Shares with effect from 9:00 a.m. on Friday, 31 October 2014.

* For identification purposes only

– 6 –

LETTER FROM THE BOARD

As at the Latest Practicable Date, the Company has 364,955,880 Shares in issue. Given that the register of the members would be closed from Tuesday, 30 September 2014 to Monday, 6 October 2014 (both days inclusive) and no Shares would be issued during the book close period, the total number of issued Shares on the Record Date would be the same as the Latest Practicable Date. As such, on the basis of eight Rights Shares for every one Share held on the Record Date, 2,919,647,040 Rights Shares will be issued and 2,183,647,040 Rights Shares will be underwritten by the Underwriter.

The purpose of this prospectus is to provide you with, among other things, further details of (i) the Rights Issue; (ii) further details of the change in board lot size (iii) financial information of the Group; and (iv) general information of the Group.

THE RIGHTS ISSUE

Issue statistics

Basis of the Rights Issue:

Eight (8) Rights Shares for every one (1) Share held on the Record Date

Number of Shares in issue as at the Latest Practicable Date:

364,955,880 Shares

Number of Rights Shares:

2,919,647,040 Rights Shares

Number of Rights Shares undertaken to be taken by Viva Shine:

Number of Underwritten Shares:

2,183,647,040 Rights Shares, being the number of the Rights Shares less the aggregate number of the Rights Shares agreed to be taken up pursuant to the Undertaking. Accordingly, the Rights Issue is fully underwritten

– 7 –

LETTER FROM THE BOARD

Aggregate nominal value HK$291,964,704.00 of the Rights Shares: Subscription price: HK$0.1 per Rights Share Net subscription price: HK$0.097 per Rights Share The enlarged issued share capital 3,284,602,920 Shares upon completion of the Rights Issue Amount to be raised: approximately HK$292 million before expenses and costs

As at the Latest Practicable Date, save for the Undertaking as disclosed above, the Board has not received any information or irrevocable undertakings from any substantial Shareholders of their intention to take up the securities of the Company to be offered to them under the Rights Issue.

As at the Latest Practicable Date, there are outstanding Convertible Bond with an aggregate principal amount of HK$68,000,000 convertible into 162,679,425 new Shares at the conversion price of HK$0.418 per conversion share (subject to adjustments). Save for the Convertible Bond, the Company does not have any other outstanding warrants, share options or convertible or exchangeable securities granted or in issue which confer any right to convert into or subscribe for Shares.

The number of Rights Shares is arrived at based on eight (8) Rights Shares for every one (1) existing Share held on the Record Date, taking into account (i) the 364,955,880 Shares in issue as at the Latest Practicable Date; (ii) assuming no new Share will be issued or repurchased by the Company on or before the Record Date; and (iii) no Convertible Bond is converted on or before the Record Date. The Rights Shares would represent 800% of the Company’s existing issued share capital and approximately 88.89% of the Company’s issued share capital as enlarged by the issue of the Rights Shares.

Subscription Price

The Subscription Price is HK$0.1 per Rights Share, payable in full by a Qualifying Shareholder upon acceptance of the provisional allotments of the Rights Shares and, where applicable, application for excess Rights Shares or when a transferee of nil-paid Rights Shares applies for the Rights Shares.

– 8 –

LETTER FROM THE BOARD

The Subscription Price represents:

(i) a discount of approximately 71.43% to the closing price of HK$0.350 per Share as quoted on the Stock Exchange on the Last Trading Day;
(ii) a discount of approximately 72.14% to the average closing prices of approximately HK$0.359 per Share for the last 5 trading days as quoted on the Stock Exchange up to and including the Last Trading Day;
(iii) a discount of approximately 21.88% to the theoretical ex-rights price of approximately HK$0.128 per Share after the Rights Issue, calculated based on the closing price of HK$0.350 per Share as quoted on the Stock Exchange on the Last Trading Day;
(iv) a discount of approximately 73.96% to the average of the closing prices of HK$0.384 per Share for the last 10 trading days as quoted on the Stock Exchange up to and including the Last Trading Day; and
(v) a discount of approximately 25.37% to the closing price of HK$0.134 per Share (ex-rights) as quoted on the Stock Exchange on the Latest Practicable Date.

The Subscription Price was a commercial decision and was arrived at after arm’s length negotiation between the Company and the Underwriter with reference to the following factors:

i) the capital needs of the Group

The Group’s business operations were principally related to the selling of completed properties and leasing of properties for rental income in the PRC. As disclosed in the announcements of the Company dated 26 February 2014, 23 May 2014 and 22 August 2014 respectively, the Company entered into the Framework Agreement in relation to the Proposed Acquisition. The Properties are located in the Luohu District of Shenzhen which is a prosperous area and one of the most well developed districts in Shenzhen. The consideration of the Proposed Acquisition will be determined after further negotiation between the vendor (the “Vendor”) and the Company with reference to the finalized market value of the Properties to be evaluated by an independent valuer engaged by the Company. The preliminary valuation of the Properties as appraised by the independent valuer is approximately RMB400 million (equivalent to approximately HK$500 million at the exchange rate of RMB1: HK$1.25). As requested by the Vendor, the consideration will be satisfied by the Company in the combination of cash, the issuance of consideration shares, promissory notes or/and convertible notes by the Company, whereas the cash portion of the consideration shall be not less than HK$300 million. If (i) the Formal Agreement is not entered into on or before the long stop date of the Framework Agreement; or (ii) the Formal Agreement is entered into but completion of the Proposed Acquisition for whatever causes does not take place; or (iii) the Framework Agreement is terminated for whatever causes, the Earnest Money (if paid) shall be refunded forthwith to the Company. If the Formal Agreement is entered into and the parties thereto proceed to completion of the Proposed Acquisition, the Earnest Money will be treated as part payment of the consideration and will be dealt with pursuant to the Formal Agreement. As at the Latest Practicable Date, negotiations and

– 9 –

LETTER FROM THE BOARD

discussions between the Company and the Vendor as regards the Proposed Acquisition were still ongoing. By entering into a second supplemental framework agreement between the Company and the Vendor on 22 August 2014, the Company’s exclusive right to the Properties was extended for three more months and hence the long stop date of the Framework Agreement will fall on 25 November 2014. As the Company does not have sufficient resources to finance the payment of the Earnest Money of HK$22 million under the Framework Agreement, it is difficult to make much progress on the negotiations on the terms and conditions in relation to the Proposed Acquisition with the Vendor. Accordingly, the Company is in imminent need for new capital to finance the Proposed Acquisition.

ii) the financial position of the Group

For the year ended 31 March 2014, turnover of approximately HK$401,000 was recorded from property sales and rental income of approximately HK$416,000. As at 31 March 2014, a gross floor area of only 7,845 square meters of completed commercial properties in Zouping, Shandong Province, the PRC was remained at the Group. As at the Latest Practicable Date, the Convertible Bond in the principal amount of HK$68 million due in May 2016 with an interest rate per annum of 3% remains outstanding and without significant improvement on the Group’s business performance, it is not expected that the Convertible Bond can be repaid in full upon the date of maturity in May 2016.

As at 31 March 2014, the Group recorded audited net assets of approximately HK$178,000 with cash and cash equivalents of approximately HK$27.15 million, which is retained for future administrative expenses of the Group as it is not expected that the existing businesses of the Group would be able to generate significant positive cash inflow to the Group. Accordingly, the Group is in need of new capital for its continual developments.

iii) the market value of the Shares

The Group recorded turnover of approximately HK$0.82 million and HK$0.73 million and net loss after taxation of approximately HK$6.99 million and HK$16.86 million respectively for the year ended 31 March 2014 and 31 March 2013. The Group’s financial performance in the past was unsatisfactory. Since December 2013, the closing prices of the Shares have demonstrated a sliding trend.

Taking into account all these factors, and the alternative financing methods the Company had considered as set out in the Announcement, the Board (including the independent non-executive Directors having consulted Gram Capital) is of the view that the terms of the Rights Issue, including the Subscription Price and the subscription ratio, are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

The deep discount to the recent closing price of the Shares represented by the Subscription Price is made with a view to encourage the Qualifying Shareholders to participate in the Rights Issue and maintain their shareholdings in the Company accordingly and take part in the future growth of the Company. In addition, as indicated to the Company during the negotiation of the Underwriting Agreement, given the abovementioned factors, a subscription price with deeper discount to the closing price of the Shares is necessary to induce the Underwriter to take up the underwriting commitment of the Underwritten Shares, which is an essential part of the Rights Issue.

– 10 –

LETTER FROM THE BOARD

Basis of provisional allotment

The basis of the provisional allotment shall be eight (8) Rights Shares for every one (1) Share held by the Qualifying Shareholders on the Record Date at the Subscription Price. Application for all or any part of a Qualifying Shareholder’s provisional allotment should be made by completing the PAL and lodging the same with remittance for the Rights Shares being applied for. On the same basis, no fractional entitlements to the Rights Shares will arise under the Rights Issue.

Qualifying Shareholders

The Rights Issue is only available to the Qualifying Shareholders and will not be extended to the Non-Qualifying Shareholders. The Company will send (i) the Prospectus Documents to the Qualifying Shareholders and (ii) the Overseas Letter together with the Prospectus to the Non-Qualifying Shareholders for information only. To qualify for the Rights Issue, a Shareholder must:

(i) be registered as a member of the Company at the close of business on the Record Date; and
(ii) not be a Non-Qualifying Shareholder.

Rights of Non-Qualifying Shareholders

This prospectus has not been registered or filed under the applicable securities legislation of any jurisdiction other than Hong Kong. Overseas Shareholders whose names appear on the register of members of the Company at the close of business on the Record Date may not be eligible to take part in the Rights Issue. Based on the register of members of the Company on the Record Date, there was one Overseas Shareholder with registered address located in the United Kingdom.

The Company has complied with all necessary requirements specified in Rule 13.36(2)(a) of the Listing Rules and has made enquiries with its legal advisers regarding the feasibility of extending the Rights Issue to the Overseas Shareholders.

The Company has been advised by its legal advisers on the English law that it is not necessary to file, register or record this prospectus in any public place or elsewhere in England, and that the PAL(s) and the EAF(s) may be sent to the Overseas Shareholder with registered address in the United Kingdom.

Based on the advice of the Company’s legal advisers on the English law, the Directors believe that the Prospectus Documents would not be required to be registered under the laws and regulations of the United Kingdom and may be despatched to the Overseas Shareholder with the registered address in the United Kingdom without any restrictions. In view of the above, the Directors have decided to extend the Rights Issue to such Overseas Shareholder with the registered address in the United Kingdom. Such Overseas Shareholder, together with the Shareholders with registered addressed in Hong Kong, are Qualifying Shareholders.

– 11 –

LETTER FROM THE BOARD

No action has been taken to permit the offering of the Rights Shares, or the distribution of this prospectus or any of the PAL or EAF, in any territory or jurisdiction outside Hong Kong. No person receiving a copy of this prospectus and/or the PAL and the EAF in any territory or jurisdiction outside Hong Kong may treat it as an offer or an invitation to apply for the Rights Shares or the excess Rights Shares, unless in the relevant jurisdiction such an offer or invitation could lawfully be made without compliance with any registration or other legal or regulatory requirements. It is the responsibility of any person (including but without limitation to nominee, agent and trustee) receiving a copy of this prospectus or any of the PAL or EAF outside Hong Kong (including the ultimate beneficial owner(s) of the Qualifying Shareholders) and wishing to take up the Rights Shares or make an application for the excess Rights Shares to satisfy himself/herself/itself as to the observance of the laws and regulations of all relevant jurisdiction, including obtaining any government or other consents for observing any other formalities which may be required in such territory or jurisdiction, and to pay any taxes, duties and other amounts required to be paid in such territory or jurisdiction in connection therewith. The Company will not be responsible for verifying the legal qualification of such Overseas Shareholder and/or resident in such territory or jurisdiction, thus, should the Company suffer any losses or damages due to non-compliance with the relevant laws of such territory or jurisdiction by any such Overseas Shareholder and/or resident, the Overseas Shareholder and/or resident shall be responsible to compensate the Company for the same. The Company shall not be obliged to issue the nil-paid Rights Shares or fully-paid Rights Shares to any such Overseas Shareholder and/or resident, if at the Company’s absolute discretion issuing the nil-paid Rights Shares or fully-paid Rights Shares to them does not comply with the relevant laws of such territory or jurisdiction. Any acceptance by any person will be deemed to constitute a representation and warranty from such person to the Company that these local laws and requirements have been complied with. If you are in any doubt as to your position, you should consult your professional advisers.

The Company will make arrangements for the Rights Shares, which would otherwise have been provisionally allotted to the Non-Qualifying Shareholders in nil-paid form, to be sold as soon as practicable after dealings in the nil-paid Rights Shares commence, if a premium (net of expenses) can be obtained. The proceeds of such sale, less expenses and stamp duty, of HK$100 or more will be paid pro rata (but rounded down to the nearest cent) to the relevant Non-Qualifying Shareholders in Hong Kong by ordinary post at their own risk to their registered addresses. The Company will retain individual amounts of less than HK$100 for its own benefit. Any unsold Rights Shares to which the Non-Qualifying Shareholders would otherwise have been entitled will be available for applications for excess Rights Shares.

Status of the Rights Shares

The Rights Shares, when fully paid, allotted and issued, will rank pari passu in all respects among themselves and with the existing Shares then in use. Holders of fully-paid Rights Shares will be entitled to receive all future dividends and distributions which are declared, made or paid after the date of the allotment of the fully-paid Rights Shares.

– 12 –

LETTER FROM THE BOARD

Certificates for the Rights Shares and refund cheques

Subject to the fulfillment of the conditions of the Rights Issue as set out in the section headed “Conditions of the Rights Issue” below, share certificates for the Rights Shares to those Qualifying Shareholders who have validly applied and fully paid for the Rights Shares and, if any, refund cheques in respect of wholly or partially unsuccessful applications for excess Rights Shares (if any) are expected to be posted on or before Thursday, 30 October 2014 by ordinary post at their own risks.

Fractions of the Rights Shares

On the basis of provisional allotment of eight (8) Rights Shares for every one (1) Share held by the Qualifying Shareholders on the Record Date, no fractional entitlements to the Rights Share will arise under the Rights Issue.

PROCEDURE FOR ACCEPTANCE AND PAYMENT FOR THE RIGHTS SHARES

If you are a Qualifying Shareholder, you will find the PAL enclosed with this prospectus which entitles you to apply for the number of Rights Shares in your assured entitlement shown thereon. If you wish to apply for such Rights Shares or any lesser number of such Rights Shares, you must complete, sign and lodge the same in accordance with the instructions printed thereon, together with the remittance for full amount payable on application with the Registrar by not later than 4:00 p.m. (Hong Kong time) on Wednesday, 22 October 2014. All remittances must be made in Hong Kong dollars. Cheques must be drawn on an account with, and banker’s cashier orders must be issued by, a licensed bank in Hong Kong and made payable to “ SOUTH EAST GROUP LIMITED — Rights Issue Account ” and crossed “ Account Payee Only ”. No receipt will be given for such remittances. It should be noted that unless the PAL, together with the appropriate remittance, has been lodged with the Registrar by the Qualifying Shareholder by the Latest Time For Acceptance, his/her/its entitlement to apply under the Rights Issue will be deemed to have been declined and will be cancelled.

Completion and return of the PAL with a cheque or a cashier’s order in payment for the Rights Shares, whether by a Qualifying Shareholder or by any nominated transferee, will constitute a warranty by the subscriber that the cheque or the cashier’s order will be honoured on first presentation. Without prejudice to the other rights of the Company in respect thereof, the Company reserves the right to reject any PAL in respect of which the accompanying cheque and/or cashier’s order is dishonoured on first presentation, and, in such event, the relevant provisional allotment and all rights and entitlements thereunder will be deemed to have been declined and will be cancelled.

The PAL contains full information regarding the procedures to be followed for acceptance and/or transfer of the whole or part of the provisionally allotment of the Rights Shares by the Qualifying Shareholders. All cheques or banker’s cashier orders accompanying completed PALs will be presented for payment immediately following receipt and all interest earned on such application monies (if any) will be retained for the benefit of the Company. Completion and return of the PAL together with a cheque or cashier order in payment for the Rights Shares applied for will constitute a warranty and representation to the Company and that all registration, legal and regulatory requirements of all relevant jurisdictions other than Hong Kong in connection with the PAL and any acceptance of it, have been, or will be, duly complied with. For the avoidance of doubt, neither HKSCC nor HKSCC Nominees Limited is subject to any of the representations and warranties.

– 13 –

LETTER FROM THE BOARD

Transfers and splitting of nil-paid Rights Shares

If you are a Qualifying Shareholder and you wish to accept only part of your provisional allotment of Rights Shares, or transfer part of your rights to subscribe for the Rights Shares provisionally allotted to you, or to transfer your rights to more than one person, the original PALs must be surrendered and lodged for cancellation by not later than 4:30 p.m. on Tuesday, 14 October 2014 with the Registrar who will cancel the original PALs and issue new PALs in the denominations required, which will be available for collection at the Registrar after 9:00 a.m. on the second Business Day after the surrender of the original PALs. It should be noted that Hong Kong stamp duty is payable in connection with the transfer of the rights to subscribe for the Rights Shares.

If the Underwriter exercises the right to terminate its obligations under the Underwriting Agreement and/or if any of the conditions to which the Rights Issue is subject are not fulfilled in accordance with the section headed “Conditions of the Rights Issue” below, the application monies will be refunded, without interest, by sending cheques made out to the applicants (or in the case of joint applicants, to the first named applicant) and crossed “Account Payee Only”, through ordinary post at the risk of the applicants to the address specified in the Registrar on or before Thursday, 30 October 2014.

Application for excess Rights Shares

Qualifying Shareholders shall be entitled to apply, by way of excess application, for any unsold entitlements to the Rights Shares of the Non-Qualifying Shareholders and for any Rights Shares provisionally allotted but not accepted.

If a Qualifying Shareholder wishes to apply for any Rights Shares in addition to his/her/its provisional allotment, he/she/it must complete and sign the enclosed EAF in accordance with the instructions printed thereon and lodge the same with a separate remittance for the amount payable on applications in respect of the excess Rights Shares being applied for with the Registrar by not later than 4:00 p.m. (Hong Kong time) on Wednesday, 22 October 2014. All remittances must be made in Hong Kong dollars and cheques must be drawn on a bank account with, or cashiers orders must be issued by, a licensed bank in Hong Kong and made payable to “ SOUTH EAST GROUP LIMITED — Excess Application Account ” and crossed “ Account Payee Only ”. No receipt will be given for such remittances.

The Directors will allocate the excess Rights Shares at their discretion on a fair and equitable basis and as far as practicable on the following principles:

subject to availability of excess Rights Shares for all such applications, preference will be given to applications for less than a board lot of Rights Shares where they appear to the Directors that such applications are made to top-up odd lots holdings to whole lot holdings and that such applications are not made with the intention to abuse this mechanism; and
subject to availability of excess Rights Shares after allocation under principle (1) above, any further remaining excess Rights Shares will be allocated to the Qualifying Shareholders based on a sliding scale with reference to the number of the excess Rights Shares applied for by them with flexibility to round up to whole board lots at the discretion of the Directors (i.e. the

– 14 –

LETTER FROM THE BOARD

Qualifying Shareholders applying for a smaller number of the Rights Shares will be allocated a higher percentage of the excess Rights Shares they have applied for; whereas the Qualifying Shareholders applying for a larger number of Rights Shares will be allocated a lower percentage of the excess Rights Shares than those applying for a smaller number).

In the event that the Company discovered that certain excess applications may have been made with the intention to abuse the mechanism under principle (1) above, the Board reserves the rights and absolute discretion to reject any excess applications which appears to them to be made with intention to abuse the top up odd lots mechanism while other applications are not affected and will be allocated according to the above principles (1) and (2).

Investors whose Shares are held by a nominee company (or which are held in CCASS) should note that the Company will regard the nominee company (including HKSCC Nominees Limited) as a single Shareholder according to the register of members of the Company. Accordingly, investors whose Shares are registered in the name of a nominee (or which are held in CCASS) should note that the aforesaid arrangement regarding allocation of excess Rights Shares will not be extended to them individually.

All cheques or cashier orders accompanying completed EAFs will be presented for payment immediately upon receipt and all interest earned on such monies (if any) will be retained for the benefit of the Company. Completion and return of the EAF together with a cheque or cashier order in payment for the excess Rights Shares applied for will constitute a warranty and representation to the Company and that all registration, legal and regulatory requirements of all relevant jurisdictions other than Hong Kong in connection with the EAF and any acceptance of it, have been, or will be, duly complied with. For the avoidance of doubt, neither HKSCC nor HKSCC Nominees Limited is subject to any of the representations and warranties.

Completion and return of the EAF with a cheque or a cashier’s order in payment for the excess Rights Shares, whether by a Qualifying Shareholder or by any nominated transferee, will constitute a warranty by the applicant that the cheque or cashier order will be honoured on first presentation. Without prejudice to the other rights of the Company in respect thereof, the Company reserves the right to reject any EAF in respect of which the accompanying cheque and/or cashier’s order is dishonoured on first presentation, and, in such event, all rights and entitlements thereunder will be deemed to have been declined and will be cancelled.

If no excess Rights Shares are allotted to the Qualifying Shareholders, the amount tendered on application (without interest) is expected to be refunded to such Qualifying Shareholders in full by ordinary post at their own risk to their registered addresses on or before Thursday, 30 October 2014. If the number of excess Rights Shares allotted to the Qualifying Shareholders is less than that applied for, the surplus application money (without interest) is also expected to be refunded to such Qualifying Shareholders by ordinary post at their own risk to their registered addresses on or before Thursday, 30 October 2014.

The EAF is for use only by the Qualifying Shareholder(s) to whom it is addressed and is not transferable. All documents, including cheques or cashier orders for amounts due, will be sent at the risk of the persons entitled thereto to their registered addresses as appeared on the Company’s register of members by the Registrar. If any of the conditions of the Rights Issue mentioned in the paragraph

– 15 –

LETTER FROM THE BOARD

headed “Conditions of the Rights Issue” (below) is not fulfilled, the Rights Issue will not proceed and the application monies received in respect of application for excess Rights Shares will be refunded to the applicants by means of cheques to be despatched by ordinary post to their registered addresses at their own risk on or before Thursday, 30 October 2014.

Application for listing

The Company has applied to the Listing Division of the Stock Exchange for the listing of, and permission to deal in, the Rights Shares. Dealings in the Rights Shares in their nil-paid form is expected to commence on Friday, 10 October 2014 to Friday, 17 October 2014 (both days inclusive).

Subject to the granting of listing of, and permission to deal in, the Rights Shares on the Stock Exchange, the Rights Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Rights Shares on the Stock Exchange or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

Taxation

Dealings in the Rights Shares in both their nil-paid and fully-paid forms will be subject to the payment of stamp duty (if any) in Hong Kong and any other applicable fees and charges in Hong Kong.

Qualifying Shareholders are recommended to consult their professional advisers if they are in any doubt as to the tax implications of the holding or disposal of, or dealings in the Rights Shares in both their nil-paid and fully-paid forms and, as regards the Non-Qualifying Shareholders (if any), their receipt of the net proceeds of sale of the Rights Shares otherwise falling to be issued to them under the Rights Issue. It is emphasised that none of the Company, the Directors or any other parties involved in the Rights Issue accepts responsibility for any tax effects or liabilities of holders of the Rights Shares resulting from the purchase, holding or disposal of, or dealing in the Rights Shares in both their nil-paid and fully-paid forms.

THE UNDERWRITING AGREEMENT

Date: 11 August 2014 Underwriter: Kingston Securities Limited To the best of the Directors’ knowledge, information and belief, Kingston Securities Limited and its associates are Independent Third Parties Total number of Rights Shares: 2,919,647,040 Rights Shares (assuming no new Share being issued and no Share being repurchased by the Company on or before the Record Date)

– 16 –

LETTER FROM THE BOARD

Total number of Underwritten Shares:
2,183,647,040 Rights Shares (having taken into account the Undertaking and on the basis that no new Share being issued, and being repurchased by the Company on or before the Record Date), being the total number of Rights Shares less 736,000,000 Rights Shares that Viva Shine has undertaken to subscribe and pay for or procure subscription and payment for pursuant to the Undertaking.

Commission:

The Company will pay the Underwriter an underwriting commission at 2.5% of the aggregate Subscription Price in respect of the Underwritten Shares for the Underwriter has agreed to subscribe or procure subscription together with all costs, fees and out-of-pocket expenses properly incurred by the Underwriter in connection with the Rights Issue. The underwriting commission mentioned above shall not be payable if the Underwriting Agreement does not become unconditional or if it is terminated by the Underwriter, but the Company shall continue to pay all pre-agreed reasonable costs, fees and outof-pocket expenses properly incurred by the Underwriter in respect of the Rights Issue, including a financial advisory and documentation fee.

The commission rates were determined after arms’ length negotiations between the Company and the Underwriter with reference to, among other things, the scale of the Rights Issue and the market rate, and the Board (including the independent non-executive Directors having consulted Gram Capital) considers that the underwriting commission rate is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Pursuant to the Underwriting Agreement, the Underwriter shall not subscribe, for its own account, for such number of Untaken Shares which will result in the shareholding of it and parties acting in concert (within the meaning of the Takeovers Code) with it in the Company to exceed 19.9% of the voting rights of the Company upon the completion of the Rights Issue. The Underwriter shall also use its best endeavours to ensure that each of the subscribers or sub-underwriter(s) of the Untaken Shares procured by it (i) shall be an Independent Third Party of, not acting in concert (within the meaning of the Takeovers Code) with and not connected with the Company, any of the Directors or chief executive of the Company or substantial Shareholders or their respective associates; and (ii) save for the Underwriter itself and its associates, shall not, together with any party acting in concert (within the meaning of the Takeovers Code) with it, hold 10.0% or more of the voting rights of the Company upon completion of the Rights Issue.

– 17 –

LETTER FROM THE BOARD

Conditions of the Rights Issue

The Rights Issue is conditional upon the following conditions being fulfilled or waived (as appropriate):

(i) the passing of all the necessary resolution(s) by the Board to approve the Underwriting Agreement (including the Rights Issue and the transactions contemplated thereunder);
(ii) the passing of the necessary resolution(s) at the SGM to approve the Underwriting Agreement and the Rights Issue and the transactions contemplated thereunder (including but not limited to the allotment and issue of the Rights Shares) by the Independent Shareholders;
(iii) the delivery to the Stock Exchange for authorisation and the registration by and filing with the Registrar of Companies in Hong Kong of one copy of each of the Prospectus Documents and otherwise in accordance with the Listing Rules and the Companies (Winding Up and Miscellaneous Provisions) Ordinance not later than the Posting Date;
(iv) the posting of copies of the Prospectus Documents to the Qualifying Shareholders;
(v) compliance with and performance by the Company of certain undertakings and obligations under the terms of the Underwriting Agreement;
(vi) the Listing Committee of the Stock Exchange granting or agreeing to grant (subject to allotment) the listing of, and permission to deal in, the Rights Shares in their nil-paid and fully-paid forms and such listings and permission to deal not having been withdrawn or revoked by no later than the first day of their dealings on the Stock Exchange;
(vii) the Shares remaining listed on the Stock Exchange at all times prior to the Settlement Date and the listing of the Shares not having been withdrawn or the trading of the Shares not having been suspended for a consecutive period of more than 5 trading days;
(viii) the Underwriting Agreement not being terminated by the Underwriter pursuant to the terms thereof; and
(ix) the compliance by Viva Shine with its undertakings and obligations under the Irrevocable Undertaking given in favour of the Company and the Underwriter from the date of the Irrevocable Undertaking up to the Latest Time for Acceptance.

As at the Latest Practicable Date, conditions (i) and (ii) above have been fulfilled.

The conditions set out above (other than conditions (v) and (vii) which can only be waived by the Underwriter) are incapable of being waived. If the event that the above conditions (i), (ii), (iii) and (iv) have not been satisfied on or before the Posting Date or in the event that the above conditions (v), (vi), (vii), (viii) and (ix) have not satisfied and/or waived by the Underwriter in whole or in part (as the case may be) on or before 4:00 p.m. on the Settlement Date or such other time and date as specified therein (or, in each case, such later date as the Underwriter and the Company may agree in writing), the Underwriting Agreement shall terminate and all liabilities of the parties to the Underwriting Agreement shall cease and determine and neither party shall have any claim against the other, save for any antecedent breaches.

– 18 –

LETTER FROM THE BOARD

Termination of the Underwriting Agreement

If, prior to 4:00 p.m. on the Settlement Date:

(i) in the absolute opinion of the Underwriter, the success of the Rights Issue would be materially and adversely affected by:
(a) the introduction of any new law or regulation or any change in existing law or regulation (or the judicial interpretation thereof) or other occurrence of any nature whatsoever which may in the absolute opinion of the Underwriter materially and adversely affect the business or the financial or trading position of the Group as a whole or is materially adverse in the context of the Rights Issue; or
(b) the occurrence of any local, national or international event or change (whether or not forming part of a series of events or changes occurring or continuing before, and/or after the date of the Underwriting Agreement) of a political, military, financial, economic or other nature, or in the nature of any local, national or international outbreak or escalation of hostilities or armed conflict, or affecting local securities markets which may, in the absolute opinion of the Underwriter materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole; or
(c) any act of God, war, riot, public disorder, civil commotion, fire, flood, explosion, epidemic, terrorism, strike or lock-out which would, in the absolute opinion of the Underwriter materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole; or
(ii) any material adverse change in market conditions (including without limitation, a change in fiscal or monetary policy, or foreign exchange or currency markets, suspension or restriction of trading in securities, and a change in currency conditions for the purpose of this clause includes a change in the system under which the value of the Hong Kong currency is pegged with that of the currency of the United States of America) occurs which in the absolute opinion of the Underwriter makes it inexpedient or in advisable to proceed with the Rights Issue; or
(iii) the Prospectus when published contains information (either as to business prospects or the condition of the Group or as to its compliance with any laws or the Listing Rules or any applicable regulations) which has not prior to the date hereof been publicly announced or published by the Company and which may in the absolute opinion of the Underwriter be material to the Group as a whole upon completion of the Rights Issue and is likely to affect materially and adversely the success of the Rights Issue.

The Underwriter shall be entitled by notice in writing to the Company, served prior to 4:00 p.m. on the Settlement Date, to terminate the Underwriting Agreement.

– 19 –

LETTER FROM THE BOARD

Any such notice shall be served by the Underwriter prior to 4:00 p.m. on the Settlement Date.

WARNING OF THE RISKS OF DEALING IN THE SHARES AND THE NIL-PAID RIGHTS SHARES

Dealings in the Rights Shares in the nil-paid form are expected to take place from Friday, 10 October 2014 to Friday, 17 October 2014 (both days inclusive). Shareholders and potential investors should note that dealing in the Shares and/or nil-paid Rights Shares will take place while the conditions to which the Underwriting Agreement is subject remain unfulfilled. If the conditions of the Underwriting Agreement are not fulfilled or the Underwriting Agreement is terminated by the Underwriter, the Rights Issue will not proceed.

Any dealings in the Shares from the date of the Announcement and up to 4:00 p.m. on Tuesday, 28 October 2014, being the time and date by which all the conditions of the Rights Issue are to be fulfilled and when the right of the Underwriter to terminate the Underwriting Agreement is to lapse, and any dealings in the Rights Shares in their nil-paid form between Friday, 10 October 2014 and Friday, 17 October 2014, both days inclusive, are accordingly subject to the risk that the Rights Issue may not proceed. Shareholders and potential investors should therefore exercise caution when dealing in the Shares or the Rights Shares in their nil-paid form and, if they are in any doubt about their position, they should consult their professional adviser(s).

REASONS FOR THE RIGHTS ISSUE AND THE USE OF PROCEEDS

The Group is principally engaged in the business of property development and investment.

Since the year ended 31 March 2010, sales of properties have been the major focus and the only source of revenue for the Group. However, due to corrections in the property market and tightened credit policy in the PRC over the past few years, it became challenging for the Group to identify suitable investment opportunities in the property market and thus the Group relied on selling existing properties on hand to derive its income. As illustrated in the 2014 annual report of the Company, as at 31 March 2014, after the Group sold all its car park units and certain developed commercial properties in the previous years, there only remained a gross floor area of approximately 7,845 square meters of completed commercial properties in Zouping, Shandong Province, the PRC, which was held by the Group. Taking into account of the above, the Board is of the view that there is imminent need for the Group to develop new business and has therefore been actively and cautiously exploring suitable investment opportunities.

– 20 –

LETTER FROM THE BOARD

As disclosed in the announcements of the Company dated 26 February 2014, 23 May 2014 and 22 August 2014 respectively, the Company entered into the Framework Agreement in relation to the Proposed Acquisition. Set out below is the information on the Properties under the Proposed Acquisition:

			Current rental
Address	Gross Floor Area	Current usage	income monthly
No. 2010-2020,	Approximately 15,000	Commercial	Approximately
Chun Feng Road,	square meters		RMB650,000
Luohu District, Shenzhen,
Guangdong, PRC
(the “First Property”)
No. 2-16, Xiang Xi Road,	Approximately 4,400	Commercial/	Approximately
Luohu District, Shenzhen,	square meters	Residential	RMB300,000
Guangdong, PRC
(the “Second Property”)

The Properties are multi-function commercial/residential properties located in the Luohu District of Shenzhen which is a prosperous area and one of the most well developed districts in Shenzhen and the Proposed Acquisition is one of the investment opportunities reviewed by the Board with prime location and enormous potentials for investment.

According to the information as provided by the Vendor, the First Property comprises an 8-storey commercial building completed in 2003 with a total gross floor area of approximately 15,000 square meters and it also includes 62 open car parking spaces on the ground floor. The Second Property comprises a 6-storey commercial/residential building completed in 1991 with a gross floor area of approximately 4,400 square meters.

Based on the latest market statistics, the average rental income in such area for building with commercial usage could reach around RMB70 per square meters on average, while for building with residential usage could reach around RMB70 to RMB90 per square meters on average. As advised by the Vendor, the current rental income received from the Properties was below the market average and this is because some of the existing tenants have a long tenancy relationship with the Vendor and some units are for self-usage.

The preliminary valuation prepared by an independent valuer indicates that the Properties are valued at a total of approximately RMB400 million (equivalent to approximately HK$500 million at the exchange rate of RMB1: HK$1.25). The Company has been conducting a feasibility study on the redevelopment plan to rebuild/refurnish the Properties into scaled multi-function commercial/ residential properties, which is expected to substantially increase the value of the Properties in the future, for rental and/or sale purpose (the proportion of which will be determined by the then market conditions).

– 21 –

LETTER FROM THE BOARD

After the Proposed Acquisition is completed, the Company expects to obtain borrowings from banks/ financial institutions for the implementation of the re-development plan as mentioned above. However, in the event that the Company is unable to obtain the said borrowings, the re-development plan will be delayed and the Properties are expected to continue to generate stable rental income to the Group. The re-development plan will be implemented immediately after sufficient funding has been obtained by the Company.

As at the Latest Practicable Date, the Company does not have sufficient resources to finance the payment of the Earnest Money of HK$22 million under the Framework Agreement and thus it is difficult to make any significant progress on the negotiations on the terms and conditions in relation to the Proposed Acquisition. Accordingly, the Company is in imminent need for new capital to carry on its business expansion and developments.

Fund raising methods comparison

Since the entering into of the Framework Agreement, the Company has attempted to seek for debt financing from both commercial banks and financial institutions. However, the Company was unable to obtain any debt financing at terms acceptable to the Company due to the facts that (i) the Group do not have any significant assets as collaterals; and (ii) the size of the Convertible Bond, which to be due in May 2016. Given that debt financing is not available to the Company, the Board has considered other fund raising methods available to the Group. Among different fund raising methods, the Directors have focused on evaluating the possibilities of carrying out fund raising through rights issue or open offer as they are relatively larger in scale as compared to placing of new shares in view of the recent market capitalization of the Company of approximately HK$104.01 million as at the Latest Practicable Date. In addition, rights issue or open offer are pre-emptive in nature, allowing Qualifying Shareholders to maintain their respective pro-rata shareholding through their participation and causes no interests burden to the Group.

In comparison between rights issue and open offer, the Rights Issue allows the Qualifying Shareholders who participate to (a) increase its interests in the shareholding of the Company by (i) acquiring additional rights entitlement in the open market (subject to the availability); and/or (ii) applying through excess applications for Rights Shares or (b) decreasing its interests in the shareholding of the Company by disposing their rights entitlements in the open market (subject to availability). As an open offer does not allow the trading of rights entitlements, the Rights Issue is preferred.

Benefits of the Rights Issue

The Rights Issue will allow the Company to strengthen its capital base and liquidity without incurring interest costs. The Rights Issue will also allow the Company to materially reduce its gearing ratio, thereby improving the financial health of the Group. Taking into account the capital needs of the Group, the benefits of the Rights Issue and the availability and comparison with other financing alternatives, the Board (including the independent non-executive Directors having consulted Gram Capital) is of the view that the Rights Issue is in the interests of the Company and the Shareholders as a whole.

– 22 –

LETTER FROM THE BOARD

Intended use of proceeds

The gross proceeds from the Rights Issue will be approximately HK$292 million before expenses. The estimated expenses in relation to the Rights Issue, including the financial, legal, and other professional advisory fees, underwriting commission, printing and translation expenses will be borne by the Company. The estimated net proceeds of the Rights Issue will be approximately HK$283 million. The Company intends to apply the net proceeds from the Rights Issue principally for future development of the Group, including but not limited to for the payment of the cash portion of the consideration of the Proposed Acquisition while the remaining proceeds (if not utilized) will be applied for other investment opportunities identified and/or the business development of the Group and/or general working capital. In the event that the Proposed Acquisition cannot be completed, the Company will continue to seek for other investment opportunities with prospect and reasonable return and apply the proceeds from the Rights Issue on these opportunities as and when necessary.

However, save for the Proposed Acquisition, as at the Latest Practicable Date, the Company has not entered into any discussions/negotiations on other potential investment opportunities which may utilize the net proceeds from the Rights Issue.

EFFECT ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

The shareholding structure of the Company immediately before and after completion of the Rights Issue is set out below:

Shareholders Viva Shine_(Note 3) Mr. Chen Xiaoping(Note 4) Public The Underwriter(Note 5)_ Other public Shareholders Total	As at the Latest Practicable Date Number of Approx. Shares % 92,000,000 25.21 314,000 0.09 — — 272,641,880 74.70 364,955,880 100.00	Immediately after completion of the Rights Issues Assuming none of the Rights Shares are subscribed by the Qualifying Shareholders Assuming all Rights Shares (except for the are subscribed by the Underwriter and Viva Qualifying Shareholders Shine) (Notes 1 & 2) Number of Approx. Number of Approx. Shares % Shares % 828,000,000 25.21 828,000,000 25.21 2,826,000 0.09 314,000 0.01 — — 2,183,647,040 66.48 2,453,776,920 74.70 272,641,880 8.30 3,284,602,920 100.00 3,284,602,920 100.00

– 23 –

LETTER FROM THE BOARD

Notes:

The above scenario is for illustrative purpose only and will unlikely occur.
The Company will ensure the compliance with the public float requirements under Rule 8.08 of the Listing Rules upon completion of the Rights Issue.
Viva Shine is owned as to 50% by Mr. Yu Shengming and 50% by Mr. Wang Guoli. Viva Shine is also interested in the Convertible Bond of principal amount of HK$68,000,000 which are convertible into a maximum of 162,679,425 Shares at the price of HK$0.418 per Shares (subject to adjustment) as at the Latest Practicable Date. Mr. Yu Shengming, being the chairman of the Company and an executive Director, and Mr. Wang Guoli are deemed to be interested in the Shares and the Convertible Bond held by Viva Shine. Both the 92,000,000 Shares and the Convertible Bond are subject to share charges.
Mr. Chen Xiaoping is a non-executive Director.
Under the Underwriting Agreement, in the event of the Underwriter being called upon to subscribe for or procure subscribers for the Underwritten Shares:
(i) the Underwriter shall not subscribe, for its own account, for such number of Underwritten Shares which will result in the shareholding of it and parties acting in concert (within the meaning of the Takeovers Code) with it in the Company to exceed 19.9% of the voting rights of the Company upon the completion of the Rights Issue; and
(ii) the Underwriter shall use its best endeavours to ensure that each of the subscribers of the Underwritten Shares procured by it (1) shall be Independent Third Party of, not acting in concert (within the meaning of the Takeovers Code) with and not connected with the Company, any of the Directors or chief executive or substantial Shareholders or their respective associates; and (2) save for the Underwriter itself and its associates, shall not, together with any party acting in concert (within the meaning of the Takeovers Code) with it, hold 10.0% or more of the voting rights of the Company upon completion of the Rights Issue.

POSSIBLE ADJUSTMENT TO THE CONVERSION PRICE OF THE CONVERTIBLE BOND

As a result of the Rights Issue, the conversion price of the Convertible Bond may be adjusted in accordance with the terms and conditions of the Convertible Bond. The Company will instruct its auditors or other firm of accountants to certify the adjustments, if any, to the Convertible Bond and will inform the holder of the Convertible Bond of the adjustments, if any, accordingly. Further announcement will be made by the Company in respect of such adjustments as and when appropriate.

FUND RAISING ACTIVITIES DURING THE PAST 12 MONTHS IMMEDIATELY PRECEDING THE LATEST PRACTICABLE DATE

The Company did not raise any fund by issue of equity securities during the 12 months immediately preceding the date of the Announcement.

CHANGE IN BOARD LOT SIZE

The Board proposed that, subject to the completion of the Rights Issue, the board lot size of the Shares for trading on the Stock Exchange will be changed from 2,000 Shares to 20,000 Shares with effect from 9:00 a.m. on Friday, 31 October 2014.

– 24 –

LETTER FROM THE BOARD

To alleviate the difficulties in trading odd lots of the Shares arising from the change in board lot size of the Shares, the Company has appointed Kingston Securities as an agent to provide matching services to the Shareholders who wish to top up or sell their holdings of odd lots of the Shares during the period from 9:00 a.m. on Friday, 31 October 2014 to 4:00 p.m. on Friday, 21 November 2014 (both days inclusive). Holders of the Shares in odd lots represented by the existing share certificates for the Shares who wish to take advantage of this facility either to dispose of their odd lots of the Shares or to top up their odd lots to a full new board lot may directly or through their broker contact Ms. Rosita Kiu of Kingston Securities at Suite 2801, 28th Floor, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong (telephone: (852) 2298 6215 and facsimile: (852) 2295 0682) during such period. Holders of the Shares in odd lots should note that successful matching of the sale and purchase of odd lots of the Shares is not guaranteed. The Shareholders are recommended to consult their professional advisers if they are in doubt about the above facility.

All existing share certificates in board lot of 2,000 Shares will continue to be evidence of entitlement to the Shares and be valid for delivery, transfer, trading and settlement purposes. No new share certificates for existing Shareholders will be issued as a result of the change in board lot size, and therefore no arrangement for free exchange of existing share certificates in board lot size of 2,000 Shares to new share certificates in board lot size of 20,000 Shares is necessary. With effective from Friday, 31 October 2014, the Shares (including the Rights Shares to be issued under the Rights Issue) will be traded in board lot of 20,000 Shares and any new certificate of the Shares will be issued in new board lot size of 20,000 Shares (except for odd lots or where the Shareholder(s) otherwise instruct(s)). Save and except for the change in the number of Shares for each board lot, new certificates of Shares will have the same format and colour as the existing certificates of Shares.

ADDITIONAL INFORMATION

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

By order of the Board South East Group Limited Yu Shengming Executive Director and Chairman

– 25 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. SUMMARY OF FINANCIAL INFORMATION OF THE GROUP

The audited financial information of the Group for each of the three years ended 31 March 2012, 2013 and 2014 are set out in the annual reports of the Company for the years ended 31 March 2012 (pages 21 to 66), 2013 (pages 24 to 70) and 2014 (pages 28 to 78) respectively.

The above-mentioned financial information has been published on both the website of the Stock Exchange (www.hkex.com.hk) and the website of the Company (http://southeastgroup.todayir.com). The auditors of the Company have not issued any qualified opinion on the Group’s financial statements for the financial years ended 31 March 2012, 2013 and 2014.

2. STATEMENT OF INDEBTEDNESS

Borrowings

As at the close of business on 31 August 2014, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this prospectus, the Group had an outstanding liability under the Convertible Bond due on 7 May 2016 with the principal amount of HK$68,000,000 carrying the interest of 3% per annum and convertible into the maximum of 162,679,425 Shares at the price of HK$0.418 per Share (subject to adjustment).

Save as set out above, the Group did not have any loan capital issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptances (other than normal trade bills) or acceptance credits, debentures, mortgages, charges, finance leases, hire purchase commitments, guarantees or other material contingent liabilities.

Contingent liabilities

The Group had no material contingent liabilities as at 31 August 2014.

Disclaimer

Save as aforesaid or as otherwise mentioned herein, and apart from intra-group liabilities, the Group did not have any outstanding borrowings, mortgages, charges, debentures, loan capital and overdraft, debt securities or other similar indebtedness, finance leases or hire purchase commitment, liabilities under acceptances or acceptance credits or any guarantees or other material contingent liabilities as at the close of business since 31 August 2014, being the latest practicable date for the purpose of this statement of indebtedness is made up to the Latest Practicable Date.

Save as aforesaid, the Directors are not aware of any material changes in the indebtedness, contingent liabilities and commitments of the Group since 31 August 2014, the date to which the indebtedness statement is made and up to the Latest Practicable Date.

– 26 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. WORKING CAPITAL

The Directors, after due and careful enquiry, are of the opinion that taking into account the financial resources presently available to the Group including the Group’s internally generated funds and the estimated net proceeds from the Rights Issue (if the Rights Issue becomes unconditional), and in the absent of unforeseen circumstances, the Group will have sufficient working capital for its normal business, that is for at least the next 12 months from the date of this prospectus.

4. FINANCIAL AND TRADING PROSPECTS

At 31 March 2014, there was a gross floor area of approximately 7,845 square metres (2013:7,985 square metres) of commercial properties held by the Group in Zouping, Shandong, the PRC. Turnover of approximately HK$401,000 was recorded from property sales attributable to the aforementioned properties during the year ended 31 March 2014 (2013: HK$732,000 generated from sale of car parking space in Shanghai Pudong, the PRC). Rental income of approximately HK$416,000 was recorded for the year ended 31 March 2014, which was generated from leasing out part of the commercial properties concerned.

During the year ended 31 March 2014, the Board has been reorganized. Under the leadership of the reorganized Board, the Group has made an effort to explore quality properties with a view to expand its property portfolio so as to enhance performance and sustain growth in this business. As disclosed in the Company’s announcements dated 26 February 2014, 23 May 2014 and 22 August 2014 respectively, the Company entered into the Framework Agreement relating to the Proposed Acquisition. Taking into consideration of the growing trend in Shenzhen commercial and residential property markets, it is believed that the Proposed Acquisition, if materialized, will generate steady income for the Group’s continuous development. The Company will strive to boost its business development and enhance financial and operating performance, so as to create better returns for shareholders in the long run. To pursue in this direction, the Group will continue looking for business opportunities and potential acquisitions actively. It will also actively seek for market opportunities in order to broaden its capital base and to enhance its income source.

5. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 March 2014, the date to which the latest published audited consolidated financial statements of the Group were made up.

– 27 –

UNAUDITED PRO FORMA INFORMATION

APPENDIX II

1. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE GROUP

The following unaudited pro forma statement of adjusted consolidated net tangible assets of the Group attributable to the equity owners of the Company prepared by the Directors in accordance with paragraph 4.29 of the Listing Rules is set out below to illustrate the effect of the Rights Issue on the consolidated net tangible assets of the Group attributable to the equity holders of the Company as at 31 March 2014 as if the Rights Issue had been taken place on that date.

The unaudited pro forma statement of adjusted consolidated net tangible assets of the Group has been prepared for illustrative purposes only and, because of its hypothetical nature, it may not give a true picture of the financial position of the Group as at 31 March 2014 or at any future date.

Audited consolidated net tangible assets of the Group attributable to the owners of the Company as at 31 March 2014 HK$’000 (Note 1) Rights Issue of 2,919,647,040 Rights Shares to be issued at subscription price of HK$0.1 per Rights Share 178 Audited consolidated net tangible assets of the Group per share attributable to the owners of the Company as at 31 March 2014 before the completion of the Rights Issue_(Note 3) Unaudited pro forma adjusted consolidated net tangible assets of the Group per share attributable to the owners of the Company as at 31 March 2014 immediately after the completion of the Rights Issue (Note 4)_	Unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to the owners of the Company Estimated net immediately after proceeds from the completion the Rights Issue Rights Issue HK$’000 HK$’000 (Note 2) 282,965 283,143 HK$0.05 cents HK$8.62 cents	Unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to the owners of the Company Estimated net immediately after proceeds from the completion the Rights Issue Rights Issue HK$’000 HK$’000 (Note 2) 282,965 283,143 HK$0.05 cents HK$8.62 cents

		HK$0.05 cents

		HK$8.62 cents

– 28 –

UNAUDITED PRO FORMA INFORMATION

APPENDIX II

Notes:

(1) The audited consolidated net tangible assets attributable to the owners of the Company as at 31 March 2014 of approximately HK$178,000 is extracted from the published audited consolidated statement of financial position of the Group as at 31 March 2014.
(2) The estimated net proceeds from the Rights Issue of approximately HK$282,965,000 are based on 2,919,647,040 Rights Shares to be issued (based on 364,955,880 shares in issue as at the latest practicable date and assuming no convertible bonds would be converted) at the subscription price of HK$0.1 per Rights Share and after deduction of estimated related expenses, including among others, financial advisory fee and other professional fees, which are directly attributable to the Rights Issue, of approximately HK$9,000,000.
(3) The audited consolidated net tangible assets of the Group per share attributable to the owners of the Company as at 31 March 2014 before the completion of the Rights Issue is determined based on the audited consolidated net tangible assets of the Group attributable to the owners of the Company as at 31 March 2014 of approximately HK$178,000 as disclosed in note (1) above, divided by 364,955,880 shares which represents Company’s shares in issue as at 31 March 2014.
(4) Unaudited pro forma adjusted consolidated net tangible assets of the Group per share attributable to the owners of the Company as at 31 March 2014 immediately after the completion of the Rights Issue is determined based on the unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to the owners of the Company immediately after the completion of Rights Issue of approximately HK$283,143,000 divided by 3,284,602,920 shares which represents 364,955,880 shares in issue as at 31 March 2014 and 2,919,647,040 Rights Shares to be issued pursuant to the Rights Issue.
(5) No adjustments have been made to the unaudited pro forma adjusted consolidated net tangible assets of the Group to reflect any trading results or other transactions of the Group entered into subsequent to 31 March 2014.

– 29 –

UNAUDITED PRO FORMA INFORMATION

APPENDIX II

2. REPORT ON THE UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE GROUP

Certified Public Accountants

22/F, Tai Yau Building 181 Johnston Road Wanchai, Hong Kong Tel : +852 2521 2328 Fax : +852 2525 9890 Email : [email protected] www.EastAsiaSentinel.com Ref: 111364

8 October 2014

The Board of Directors South East Group Limited 12/F., Entertainment Building, 30 Queen’s Road Central, Hong Kong

INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

Dear Sirs,

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of South East Group Limited (the “Company”) and its subsidiaries (collectively the “Group”) by the directors for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma statement of adjusted consolidated net tangible assets of the Group as at 31 March 2014, and related notes (the “Unaudited Pro Forma Financial Information”) as set out in Appendix II of the Company’s prospectus dated 8 October 2014 (the “Prospectus”), in connection with the proposed rights issue of shares of the Company (the “Rights Issue”). The applicable criteria on the basis of which the directors have compiled the Unaudited Pro Forma Financial Information are described in Appendix II of the Prospectus.

The Unaudited Pro Forma Financial Information has been compiled by the directors to illustrate the impact of the Rights Issue on the Group’s consolidated net tangible assets attributable to owners of the Company as at 31 March 2014 as if the Rights Issue had taken place on 31 March 2014. As part of this process, information about the Group’s financial position has been extracted by the directors from the Group’s consolidated financial statements as included in the annual report for the year ended 31 March 2014, on which an audit report has been published.

– 30 –

UNAUDITED PRO FORMA INFORMATION

APPENDIX II

Directors’ Responsibility for the Unaudited Pro Forma Financial Information

The Directors are responsible for compiling the Unaudited Pro Forma Financial Information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” (“AG 7”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”).

Reporting Accountants’ Responsibilities

Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Unaudited Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 3420 “Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus”, issued by the HKICPA. This standard requires that the reporting accountant complies with ethical requirements and plans and performs procedures to obtain reasonable assurance about whether the directors have compiled the Unaudited Pro Forma Financial Information in accordance with paragraph 4.29 of the Listing Rules and with reference to AG 7 issued by the HKICPA.

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the Unaudited Pro Forma Financial Information, nor have we, in the course of this engagement, performed an audit or review of the financial information used in compiling the Unaudited Pro Forma Financial Information.

The purpose of Unaudited Pro Forma Financial Information included in the Prospectus is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the Group as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the Rights Issue at 31 March 2014 would have been as presented.

– 31 –

UNAUDITED PRO FORMA INFORMATION

APPENDIX II

A reasonable assurance engagement to report on whether the Unaudited Pro Forma Financial Information has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the directors in the compilation of the Unaudited Pro Forma Financial Information provide a reasonable basis for presenting the significant effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence about whether:

the related pro forma adjustments give appropriate effect to those criteria; and
the Unaudited Pro Forma Financial Information reflects the proper application of those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountants’ judgment, having regard to the reporting accountants’ understanding of the nature of the Group, the event or transaction in respect of which the Unaudited Pro Forma Financial Information has been compiled, and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the Unaudited Pro Forma Financial Information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion:

(a) the Unaudited Pro Forma Financial Information has been properly compiled on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Yours faithfully,

East Asia Sentinel Limited Certified Public Accountants Yim Wing Yee

Director Practising Certificate No. P05906

– 32 –

GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENT

This prospectus, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief, the information contained in this prospectus is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this prospectus misleading.

2. SHARE CAPITAL

The authorised and issued share capital of the Company as at the Latest Practicable Date were, and immediately following the completion of the Rights Issue (assuming no new Shares will be issued or repurchased by the Company and no Convertible Bond is converted on or before Record Date) will be, as follows:

Authorised		HK$
4,000,000,000	Shares	400,000,000.00

Issued and to be issued, fully paid or credited as fully paid:

364,955,880 Shares as at the Latest Practicable Date 2,919,647,040 Rights Shares to be issued upon completion of the Rights Issue 3,284,602,920 Shares upon completion of the Rights Issue	36,495,588.00 291,964,704.00
	328,460,292.00

All the Shares in issue and the Rights Shares (when allotted and fully paid) to be issued rank pari passu with each other in all respects including as regards to dividends and voting rights.

As at the Latest Practicable Date, there are outstanding Convertible Bond with an aggregate principal amount of HK$68,000,000 convertible into 162,679,425 new Shares at the conversion price of HK$0.418 per conversion share (subject to adjustments). Save for the Convertible Bond, the Company does not have any other derivatives, options, warrants and conversion rights or other similar rights which are convertible or exchangeable into Shares.

No part of the share capital or any other securities of the Company is listed or dealt in on any stock exchange other than the Stock Exchange and no application is being made or is currently proposed or sought for the Shares or Rights Shares or any other securities of the Company to be listed or dealt in on any other stock exchange.

There is no arrangement under which future dividends are/will be waived or agreed to be waived.

– 33 –

GENERAL INFORMATION

APPENDIX III

3. DISCLOSURE OF INTERESTS

(a) Director’s and chief executive’s interests in the Company

As at the Latest Practicable Date, the interests and short positions of the Directors or chief executives of the Company and their associates 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), (i) which would have to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) which were required to be entered in the register referred to therein pursuant to section 352 of the SFO; or (iii) which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “ Model Code ”) contained in the Listing Rules, were as follows:

Long positions in the Shares

					Approximately
					percentage of
			Number of		the Company’s
	Nature of	Number of	underlying		issued
Name	interest	Shares held	Shares held	Total	share capital
Yu Shengming	Interest of	828,000,000	162,679,425	990,679,425	271.45%
	controlled	(Note 1)	(Note 2)
	corporation
Chen Xiaoping	Beneficiary	314,000	—	314,000	0.09%
	owner	(Note 3)

Notes:

Out of which, 92,000,000 are beneficially owned by Viva Shine, a company beneficially owned as to 50% by Mr. Yu Shengming (“ Mr. Yu ”), the chairman and an executive Director and 50% by Mr. Wang Guoli (“ Mr. Wang ”) and 736,000,000 Shares are the Rights Shares which Viva Shine agreed to be taken up pursuant to the Undertaking.
Through his equity interest in Viva Shine as disclosed above, Mr. Yu is deemed to be interested in 162,679,425 underlying Shares to be derived from the Convertible Bond with an outstanding principal amount of HK$68 million due in May 2016. Viva Shine is the beneficial owner of the Convertible Bond.
Mr. Chen Xiaoping is a non-executive Director.

– 34 –

GENERAL INFORMATION

APPENDIX III

Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor the chief executive of the Company had or was deemed to have any interests or short positions in the Shares, underlying Shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) (i) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code.

(b) Substantial shareholders and other persons’ interests in Shares and underlying Shares

As at the Latest Practicable Date, according to the register kept by the Company pursuant to section 336 of the SFO, the following person(s) (other than the Directors and the chief executive of the Company) has, or is deemed to have, interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, details of which are set out as follows:

					Approximately
					attributable
			Number of		percentage of
	Nature of	Number of	underlying		shareholding of
Name	interest	Shares held	Shares held	Total	the Company
Viva Shine_(Note 1)_	Beneficial	828,000,000	162,679,425	990,679,425	30.16%
	owner			(Note 2)
Wang Guoli_(Note 1)_	Interest of a	828,000,000	162,679,425	990,679,425	30.16%
	controlled			(Note 2)
	corporation
The Underwriter	Beneficial	2,183,647,040	—	2,183,647,040	66.48%
(Note 3)	owner
Galaxy Sky	Interested in	2,183,647,040	—	2,183,647,040	66.48%
Investments	controlled
Limited_(Note 3)_	corporation
Kingston Capital	Interested in	2,183,647,040	—	2,183,647,040	66.48%
Asia Limited	controlled
(Note 3)	corporation

– 35 –

GENERAL INFORMATION

APPENDIX III

Approximately attributable Number of percentage of Nature of Number of underlying shareholding of Name interest Shares held Shares held Total the Company Kingston Financial Interested in 2,183,647,040 — 2,183,647,040 66.48% Group Limited controlled (Note 3) corporation Active Dynamic Interested in 2,183,647,040 — 2,183,647,040 66.48% Limited (Note 3) controlled corporation Ms. Chu Yuet Wah Interested in 2,183,647,040 — 2,183,647,040 66.48% (Note 3) controlled corporation

Note:

Viva Shine is beneficially interested in (i) 92,000,000 Shares (ii) 736,000,000 Right Shares which Viva Shine agreed to be taken up pursuant to the undertaking and (iii) the Convertible Bond convertible into a maximum of 162,679,425 Shares at the price of HK$0.418 per Share (subject to adjustment). Viva Shine is a company owned as to 50% by Mr. Yu and 50% by Mr. Wang. Under Part XV of the SFO, each of Mr. Yu and Mr. Wang is deemed to have an interest in the same parcel of shares and in the Convertible Bond beneficially owned by Viva Shine. Both the 92,000,000 Shares and the Convertible Bond are subject to share charges.
Assuming the Rights Shares are subscribed by Viva Shine immediately after completion of the Rights Issue.
The 2,183,647,040 Shares are the Rights Shares which the Underwriter is interested under the Underwriting Agreement on the assumption of no Qualifying Shareholders take up their respective entitlements under the Rights Issue. The Underwriter is a wholly-owned subsidiary of Galaxy Sky Investments Limited, which is wholly owned by Kingston Capital Asia Limited. Kingston Capital Asia Limited is wholly owned by Kingston Financial Group Limited. Active Dynamic Limited owns 40.24% interest in Kingston Financial Group Limited. Ms. Chu Yuet Wah owns 100% interest in Active Dynamic Limited.

Save as disclosed above, as at the Latest Practicable Date, the Directors and the chief executive of the Company were not aware of any other person (other than the Directors and the chief executive of the Company) who had, or was deemed to have, interests or short positions in the Shares or underlying Shares, which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Group or, who was substantial Shareholder as recorded in the register required to be kept by the Company under Section 336 of the SFO.

– 36 –

GENERAL INFORMATION

APPENDIX III

4. DIRECTORS’ INTERESTS IN CONTRACT AND ASSETS

As at the Latest Practicable Date, none of the Directors had any interest, direct or indirect, in any assets which have been, since 31 March 2014 (being the date to which the latest published audited financial statements of the Company were made up), acquired or disposed of by or leased to any member or the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

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

5. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed 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)).

6. EXPERT AND CONSENT

The following is the qualification of the expert who has given its opinions and advice which are included in this prospectus:

Name Qualifications

East Asia Sentinel Limited Certified Public Accountants

East Asia Sentinel Limited has given and has not withdrawn its written consent to the issue of this prospectus with the inclusion herein of its letter or its name in the form and context in which it appears.

East Asia Sentinel Limited does not have any shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, East Asia Sentinel Limited did not have any interest, either directly or indirectly, in any assets which have been since 31 March 2014 (being the date to which the latest published audited accounts of the Company were made up) acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group.

7. LITIGATION

As at the Latest Practicable Date, so far as the Directors were aware of, no members of the Group was involved in any litigation or arbitration of material importance and no litigation or claim of material importance known to the Directors to be pending or threatened by or against the Group.

– 37 –

GENERAL INFORMATION

APPENDIX III

8. MATERIAL CONTRACTS

Saved as disclosed below, no other contract (not being contracts in the ordinary course of business) had been entered into by any member of the Group within two years immediately preceding the date of this prospectus and up to the Latest Practicable Date which are or may be material:

(a) the Framework Agreement; and
(b) the Underwriting Agreement.

9. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors and the controlling Shareholders or their respective associates had any interests in businesses which competed or might compete with the businesses of the Group or had any other conflict of interests with the Group.

10. EXPENSES

The expenses in connection with the Rights Issue, including underwriting commission, financial advisory fees, printing, registration, translation, legal and accountancy charges are estimated to amount approximately HK$9 million and are payable by the Company.

11. CORPORATE INFORMATION AND PARTIES INVOLVED IN THE RIGHTS ISSUE

Company secretary

Ms. Chan Sau Chee

an associate member of the Hong Kong Institute of Company Secretaries and the Institute of Chartered Secretaries and Administrators

Authorised representatives Mr. Mock Wai Yin 12th Floor, Entertainment Building 30 Queen’s Road Central Hong Kong

Ms. Chan Sau Chee 12th Floor, Entertainment Building 30 Queen’s Road Central Hong Kong

Registered Office Canon’s Court 22 Victoria Street Hamilton HM 12 Bermuda

– 38 –

GENERAL INFORMATION

APPENDIX III

Head office and principal place 12th Floor, Entertainment Building of business in Hong Kong 30 Queen’s Road Central Hong Kong Auditors East Asia Sentinel Limited Certified Public Accountants 22nd Floor, Tai Yau Building 181 Johnston Road Wanchai Hong Kong Legal adviser to the Company As to Hong Kong law: Michael Li & Co. 19/F, Prosperity Tower No. 39 Queen’s Road Central Central, Hong Kong As to Bermuda law: Conyers Dill & Pearman 2901 One Exchange Square 8 Connaught Place Central, Hong Kong Financial adviser to the Company Kingston Corporate Finance Limited Suite 2801, 28th Floor One IFC, 1 Harbour View Street Central, Hong Kong Independent Financial Adviser Gram Capital Limited Suite 1209, 12/F Nan Fung Tower 173 Des Voeux Road Central Hong Kong Principal share registrar MUFG Fund Services (Bermuda) Limited The Belvedere Building 69 Pitts Bay Road Pembroke HM08 Bermuda

– 39 –

APPENDIX III

GENERAL INFORMATION

Hong Kong branch Computershare Hong Kong Investor Services Limited share registrar 17M Floor, Hopewell Centre 183 Queen’s Road East Wanchai Hong Kong

Principal banker Industrial and Commercial Bank of China (Asia) Limited 33/F, 1CBC Tower 3 Garden Road, Central Hong Kong

12. PARTICULARS OF THE DIRECTORS

(a) Name and address of Directors

Name	Address
*Executive Directors*
Mr. Yu Shengming	12th Floor, Entertainment Building,
	30 Queen’s Road Central, Hong Kong
Mr. Mock Wai Yin	12th Floor, Entertainment Building,
	30 Queen’s Road Central, Hong Kong
Mr. Chan Chi Yuen	12th Floor, Entertainment Building,
	30 Queen’s Road Central, Hong Kong
*Non-executive Director*
Mr. Chen Xiaoping	12th Floor, Entertainment Building,
	30 Queen’s Road Central, Hong Kong
*Independent non-executive*	*Directors*
Mr. Ng Kwok Wai	12th Floor, Entertainment Building,
	30 Queen’s Road Central, Hong Kong
Mr. Lee Chi Hwa, Joshua	12th Floor, Entertainment Building,
	30 Queen’s Road Central, Hong Kong
Mr. Ling Kit Wah, Joseph	12th Floor, Entertainment Building,
	30 Queen’s Road Central, Hong Kong

– 40 –

GENERAL INFORMATION

APPENDIX III

(b) Profiles of Directors

Executive Directors

Mr. Yu, aged 48, was appointed as the chairman and an executive director of the Company on 20 December 2013. Mr. Yu is currently the chairman of 招誠集團 (Zhao Cheng Group) in Shenzhen. 招誠集團 (Zhao Cheng Group) is a leading conglomerate engaged in diversified business such as trading of construction materials, leasing of property, project investment, tourist real estate and financial services. He also dedicates himself into social and public affairs and holds a number of important positions in political and business fields, namely the delegate of the 12th session of the People’s Congress of Guangdong Municipality, the honourable chairman of the Confederacy of Hong Kong Shan Wei Clansmen Limited and the deputy chairman of the China Furniture & Decoration Chamber of Commerce. Mr. Yu is a beneficial owner of 50% equity interests in and also a director of Viva Shine Limited which in turn is the beneficial owner of (i) 92,000,000 Shares representing approximately 25.21% of the issued share capital of the Company; and (ii) the Convertible Bond. Mr. Yu is responsible for the overall strategic planning for business development and management of the Group.

Mr. Mock Wai Yin, aged 42, was appointed as the deputy chairman, chief executive officer and an executive director of the Company on 20 December 2013, and is a member of the Remuneration Committee and the Nomination Committee of the Company. He is also a director of various subsidiaries of the Company. Mr. Mock holds a Master of Philosophy in Biochemistry from The Chinese University of Hong Kong and a Master of Science in Hazard Analysis and Critical Control Point from University of Salford. He also holds a Postgraduate Diploma in Professional Accounting. Mr. Mock has 14 years of experience in research analysis and over 2 years of world-wide experience in natural resources, project investment and property development as well as project valuation and budget management. Currently, he is a director of a company which provides advisory services in relation to client’s project investments. Mr. Mock is responsible for overseeing the daily operations of the Group and in executing the corporate strategy.

The English names of the PRC entities marked with “” are for identification purposes only. In case of any inconsistency, the Chinese names shall prevail.

– 41 –

GENERAL INFORMATION

APPENDIX III

Mr. Chan Chi Yuen, aged 47, was appointed as an executive director of the Company on 20 December 2013. Mr. Chan holds a Bachelor degree with honours in Business Administration and a Master of Science degree in Corporate Governance and Directorship. He is a fellow of the Hong Kong Institute of Certified Public Accountants and The Association of Chartered Certified Accountants in the United Kingdom and an associate of The Institute of Chartered Accountants in England and Wales. Mr. Chan is a practicing certified public accountant and has extensive experience in financial management, corporate development, corporate finance and corporate governance. Mr. Chan is currently an executive director and the chief executive officer of Noble Century Investment Holdings Limited, an independent non-executive director of Asia Energy Logistics Group Limited, China Gamma Group Limited, China Sandi Holdings Limited, Jun Yang Solar Power Investments Limited, Media Asia Group Holdings Limited, New Times Energy Corporation Limited and U-RIGHT International Holdings Limited. Mr. Chan was an executive director of Kong Sun Holdings Limited from February 2007 to November 2009 and from December 2011 to September 2013, and an independent non-executive director of The Hong Kong Building and Loan Agency Limited from October 2009 to February 2011, Richly Field China Development Limited from February 2009 to August 2010 and Superb Summit International Timber Company Limited (currently known as Superb Summit International Group Limited) from April 2007 to June 2010. The issued shares of all the aforesaid companies are listed and traded on the Stock Exchange.

Non-executive Director

Mr. Chen Xiaoping, aged 62, was re-designated as a non-executive director of the Company on 20 December 2013, and is currently a member of the Audit Committee of the Company. Before his re-designation, Mr. Chen had assumed the roles of an executive director and the chief executive officer of the Company since September 2007. Mr. Chen worked at senior management positions in banking and other business fields in the past twenty five years, such as Director of Kleinwort Benson Group, Senior Adviser of Global Interactive Technology AG and Financial Adviser of CNT Group.

Independent non-executive Directors

Mr. Ng Kwok Wai, aged 37, was appointed as an independent non-executive director of the Company on 20 December 2013. He is the chairman of the Remuneration Committee and the Nomination Committee; and a member of the Audit Committee of the Company. Mr. Ng holds a bachelor degree in accounting and finance. He has over 10 years of experience in the field of accounting and finance.

– 42 –

GENERAL INFORMATION

APPENDIX III

Mr. Lee Chi Hwa, Joshua, aged 42, was appointed as an independent non-executive director of the Company on 20 December 2013. He is the chairman of the Audit Committee and a member of the Remuneration Committee and the Nomination Committee of the Company. Mr. Lee is a fellow member of the Association of Chartered Certified Accountants and a member of Hong Kong Institute of Certified Public Accountants. Mr. Lee has extensive experience in the fields of auditing, accounting and finance. Mr. Lee currently serves as an independent non-executive director of China Fortune Investments (Holding) Limited (stock code: 8116) and Code Agriculture (Holdings) Limited (stock code: 8153), both are listed on the Growth Enterprise Market (the “GEM”) of the Stock Exchange. He was an independent non-executive director of King Stone Energy Group Limited (stock code: 663) from January 2012 to April 2013.

Mr. Ling Kit Wah, Joseph, aged 57, was appointed as an independent non-executive director of the Company on 7 October 2013. Mr. Ling graduated from the University of Windsor with the Bachelor of Commerce (Hons) in business administration in June 1981. Mr. Ling has over 20 years’ experience in investment banking, direct investment and corporate finance in Hong Kong and Asia Pacific. During the period from January 1985 to September 2000, Mr. Ling worked for various banks, including, inter alia, Citigroup Australia Limited, The Hongkong and Shanghai Banking Corporation and Internationale Nederlanden Bank N.V. in private banking division. Mr. Ling was appointed as an executive director of China Seven Star Holdings Ltd (formerly known as Singapore Hong Kong Properties Investment Ltd., a company listed on the Stock Exchange from October 2001 to November 2002, and then as a senior vice president of VXL Management Services Limited from March 2005 to April 2007. Then, he was appointed as an executive vice president of Pacific Star Group, a Singapore-based property investment company during the period from January 2008 to July 2009. Mr. Ling is currently an independent director of East Asia Sports International Limited, a company listed on the stock market in Korea. He is also an independent non-executive director, the chairman of the remuneration committee and a member of the audit committee of ZMFY Automobile Glass Services Limited (a company listed on the GEM of the Stock Exchange).

13. BINDING EFFECT

The Prospectus Documents and all acceptances of any offer or application contained in such documents, are governed by and shall be construed in accordance with the laws of Hong Kong. When an acceptance or application is made in pursuance of any such documents, the relevant document(s) shall have the effect of rendering all persons concerned bound by the provisions (other than the penal provisions) of sections 44A and 44B of the Companies (Winding Up and Miscellaneous Provisions) Ordinance.

14. MISCELLANEOUS

The English text of this prospectus, the PAL and the EAF shall prevail over the Chinese text for the purpose of interpretation.

– 43 –

GENERAL INFORMATION

APPENDIX III

15. DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES IN HONG KONG

A copy of the Prospectus Documents and the consent letters referred to the paragraph headed “Experts and Consent” in this appendix have been registered with the Registrar of Companies in Hong Kong pursuant to section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance.

16. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be made available for inspection during normal business hours at the head office and principal place of business in Hong Kong of the Company at 12th Floor, Entertainment Building, 30 Queen’s Road Central, Hong Kong from the date of this prospectus up to 22 October 2014:

(a) the memorandum of association and bye-laws of the Company;
(b) the annual reports of the Company for each of the two years ended 31 March 2013 and 2014;
(c) the written consent referred to in the paragraph headed “Expert and consent” in this appendix;
(d) the accountants’ report from East Asia Sentinel Limited on the unaudited pro forma financial information following completion of the Rights Issue, the text of which is set out in Appendix II to this prospectus
(e) a copy of each of the material contracts referred to in the paragraph headed “Material contracts” in this appendix; and
(f) this prospectus.

– 44 –

AI assistant

DIT Group Limited — Capital/Financing Update 2014

49427_rns_2014-10-08_b600b856-c0fb-47e1-99f7-518c00ef3684.pdf

RIGHTS ISSUE OF 2,919,647,040 RIGHTS SHARES AT THE SUBSCRIPTION PRICE OF HK$0.1 EACH ON THE BASIS OF EIGHT (8) RIGHTS SHARES FOR EVERY ONE (1) SHARE HELD ON THE RECORD DATE

Financial Adviser to the Company

Underwriter to the Rights Issue

CONTENTS

EXPECTED TIMETABLE

EFFECT OF BAD WEATHER ON THE LATEST ACCEPTANCE DATE

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

LETTER FROM THE BOARD

RIGHTS ISSUE OF 2,919,647,040 RIGHTS SHARES AT THE SUBSCRIPTION PRICE OF HK$0.1 EACH ON THE BASIS OF EIGHT (8) RIGHTS SHARES FOR EVERY ONE (1) SHARE HELD ON THE RECORD DATE

INTRODUCTION

LETTER FROM THE BOARD

THE RIGHTS ISSUE

Issue statistics

LETTER FROM THE BOARD

Subscription Price

LETTER FROM THE BOARD

i) the capital needs of the Group

ii) the financial position of the Group

iii) the market value of the Shares

Basis of provisional allotment

Qualifying Shareholders

Rights of Non-Qualifying Shareholders

LETTER FROM THE BOARD

Status of the Rights Shares

Certificates for the Rights Shares and refund cheques

Fractions of the Rights Shares

PROCEDURE FOR ACCEPTANCE AND PAYMENT FOR THE RIGHTS SHARES

Application for excess Rights Shares

Application for listing

Taxation

THE UNDERWRITING AGREEMENT

LETTER FROM THE BOARD

Conditions of the Rights Issue

Termination of the Underwriting Agreement

WARNING OF THE RISKS OF DEALING IN THE SHARES AND THE NIL-PAID RIGHTS SHARES

REASONS FOR THE RIGHTS ISSUE AND THE USE OF PROCEEDS

LETTER FROM THE BOARD

Fund raising methods comparison

Benefits of the Rights Issue

Intended use of proceeds

EFFECT ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

LETTER FROM THE BOARD

POSSIBLE ADJUSTMENT TO THE CONVERSION PRICE OF THE CONVERTIBLE BOND

FUND RAISING ACTIVITIES DURING THE PAST 12 MONTHS IMMEDIATELY PRECEDING THE LATEST PRACTICABLE DATE

CHANGE IN BOARD LOT SIZE

LETTER FROM THE BOARD

ADDITIONAL INFORMATION

1. SUMMARY OF FINANCIAL INFORMATION OF THE GROUP

2. STATEMENT OF INDEBTEDNESS

Borrowings

Contingent liabilities

Disclaimer

3. WORKING CAPITAL

4. FINANCIAL AND TRADING PROSPECTS

5. MATERIAL ADVERSE CHANGE

1. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE GROUP

APPENDIX II

8 October 2014

INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

Directors’ Responsibility for the Unaudited Pro Forma Financial Information

Reporting Accountants’ Responsibilities

APPENDIX II

Opinion

East Asia Sentinel Limited Certified Public Accountants Yim Wing Yee

1. RESPONSIBILITY STATEMENT

2. SHARE CAPITAL

3. DISCLOSURE OF INTERESTS

(a) Director’s and chief executive’s interests in the Company

Long positions in the Shares

APPENDIX III

(b) Substantial shareholders and other persons’ interests in Shares and underlying Shares

4. DIRECTORS’ INTERESTS IN CONTRACT AND ASSETS

5. DIRECTORS’ SERVICE CONTRACTS

6. EXPERT AND CONSENT

DIT Group Limited Capital/Financing Update 2014