DIT Group Limited — Interim / Quarterly Report 2012

Nov 20, 2012

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, 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 announcement.

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(Incorporated in Bermuda with limited liability)

(Stock Code: 726)

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2012

RESULTS

The Board of Directors of South East Group Limited (the “Company”) announces the unaudited condensed consolidated interim results of the Company and its subsidiaries (the “Group”) for the six months ended 30 September 2012 together with the comparative figures for the previous corresponding period. These interim financial statements have not been audited, but have been reviewed by the Company’s audit committee.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 September 2012

Note Turnover 3 Cost of properties sold Gross profit Other revenues Selling and distribution costs Administrative expenses Loss from operations 4 Finance costs 5 Loss before taxation Taxation 6(a) Loss for the period	Six months ended 30 September 2012 2011 HK$’000 HK$’000 732 710 (354) (589) 378 121 1,074 831 (14) (10) (8,095) (6,860) (6,657) (5,918) (1,580) (1,691) (8,237) (7,609) (3) (12) (8,240) (7,621)

* For identification purposes only

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UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Continued)

For the six months ended 30 September 2012

Note Other comprehensive (loss)/income: Translation difference Change in fair value of available-for-sale financial assets Other comprehensive loss for the period Total comprehensive loss for the period Loss for the period attributable to: Owners of the Company Total comprehensive loss attributable to: Owners of the Company Interim dividend per share Loss per share attributable to owners of the Company Basic and diluted (cents) 7

Six months ended 30 September 2012 2011 HK$’000 HK$’000 451 (1) (991) (2,177) (540) (2,178) (8,780) (9,799) (8,240) (7,621) (8,780) (9,799) Nil Nil (2.35) (2.19)

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UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 September 2012

30 September 2012 (unaudited) Note HK$’000 NON-CURRENT ASSETS Property, plant and equipment 60 Goodwill — Available-for-sale financial assets 3,490 Total non-current assets 3,550 ----------------- CURRENT ASSETS Held-to-maturity investments 780 Properties held for sale 22,318 Trade and other receivables 8 2,290 Tax prepayment 6(b) 209 Cash and cash equivalents 48,087 Total current assets 73,684 ----------------- CURRENT LIABILITIES Trade and other payables 9 2,146 Convertible bond 10 2,040 Total current liabilities 4,186 ----------------- NET CURRENT ASSETS 69,498 ----------------- TOTAL ASSETS LESS CURRENT LIABILITIES 73,048 ----------------- NON-CURRENT LIABILITIES Convertible bond 61,585 NET ASSETS 11,463 EQUITY Equity attributable to owners of the Company: Share capital 35,126 Reserves (23,663) TOTAL EQUITY 11,463

31 March 2012 (audited) HK$’000 238 — 4,481 4,719 ----------------- 780 22,435 1,757 210 56,597 81,779 ----------------- 3,186 2,040 5,226 ----------------- 76,553 ----------------- 81,272 ----------------- 61,029 20,243 35,126 (14,883) 20,243

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PREPARATION

The unaudited condensed consolidated interim financial statements have been prepared in accordance with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities (the “Listing Rules”) on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) and the Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”).

These unaudited condensed consolidated interim financial statements are presented in Hong Kong dollars (“HK$”) and all values are rounded to the nearest thousand unless otherwise stated.

The unaudited condensed consolidated interim financial statements should be read in conjunction with the Annual Report of the Group for the year ended 31 March 2012.

2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

The unaudited condensed consolidated interim financial statements have been prepared under the historical cost basis except for certain properties and financial instruments, which are measured at fair values, as appropriate.

The accounting policies adopted in the unaudited condensed consolidated interim financial statements are consistent with those followed in the preparation of the Group’s annual financial statements for the year ended 31 March 2012. In the current interim period, the Group has applied for the first time, a number of new and revised standards, amendments and interpretations (collectively the “new and revised HKFRSs”) issued by the HKICPA which are effective for the Group’s financial year beginning on 1 April 2012.

Significant accounting policies newly adopted by the Group

HKAS 12 (Amendments) Deferred Tax: Recovery of Underlying Assets HKFRS 7 (Amendments) Financial Instruments: Disclosures — Transfers of Financial Assets

Impact of new and revised HKFRSs

The adoption of the above new and revised HKFRSs that are effective for the current period has had no material impact on the reported results and financial position of the Group for the current or prior accounting periods. Accordingly, no prior period adjustment has been recognized.

Impact of issued but not yet effective HKFRSs

The Group has not early adopted the new and revised HKFRSs that have been issued but are not yet effective. The Group is in the process of making an assessment of the expected impact of these new and revised HKFRSs upon initial application and so far considered that these are unlikely to have a significant impact on the results and the financial position of the Group.

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. TURNOVER AND SEGMENT INFORMATION

Turnover represents the aggregate of the net amounts received and receivable for goods sold to outside customers, less trade discounts, for the six months ended 30 September 2012.

The Company’s executive directors have been identified as the chief operating decision maker. The Group’s principal activity is property development in the PRC. The executive directors categorized the Group’s existing operations into one single business division, hence no segment information is presented.

At the end of reporting period, non-current assets included property, plant and equipment with carrying amount of approximately HK$60,000 (31 March 2012: HK$80,000) located in the PRC and nil (31 March 2012: HK$158,000) in Hong Kong.

4. LOSS FROM OPERATIONS

Loss from operations was arrived at after crediting and charging the following:

Crediting: Interest income Investment income Charging: Cost of properties sold Depreciation Operating lease payments Directors’ remuneration — Fees — Salaries and allowances — Retirement benefit schemes contribution Staff costs (excluding directors’ remuneration) — Salaries and allowances — Retirement benefit schemes contribution FINANCE COSTS Interest expenses on convertible bond Others	Six months ended 30 September 2012 2011 HK$’000 HK$’000 643 411 134 113 354 589 179 179 2,479 1,580 300 300 1,260 1,260 14 12 1,930 1,536 98 82 Six months ended 30 September 2012 2011 HK$’000 HK$’000 1,578 1,689 2 2 1,580 1,691	Six months ended 30 September 2012 2011 HK$’000 HK$’000 643 411 134 113 354 589 179 179 2,479 1,580 300 300 1,260 1,260 14 12 1,930 1,536 98 82 Six months ended 30 September 2012 2011 HK$’000 HK$’000 1,578 1,689 2 2 1,580 1,691
		1,691

5. FINANCE COSTS

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

6. TAXATION

a) Taxation in the consolidated statement of comprehensive income represents:

	Six months ended	Six months ended
	30 September
	2012	2011
	HK$’000	HK$’000
The PRC Enterprise Income Tax
Provision for the period	3	12

No provision for Hong Kong Profits Tax has been made in the consolidated financial statements as the Group did not derive any assessable profits in Hong Kong during the interim period (six months ended 30 September 2011: nil).

Taxation on profits derived in the PRC for subsidiaries has been calculated at the rate of tax prevailing in the PRC, Enterprise Income Tax rate, of 25% (2011: 24%), which is based on existing legislation, interpretations and practices in respect thereof.

b) At the end of reporting period, the Group had the following income tax (payable) and prepayment:

The PRC Enterprise Income Tax Tax payable Tax prepayment	As at 30 September 2012 HK$’000 (3) 212 209	As at 31 March 2012 HK$’000 (1) 211
		210

7. LOSS PER SHARE

The calculation of basic loss per share for the period is based on the unaudited consolidated loss attributable to owners of the Company of HK$8,240,000 (six months ended 30 September 2011: loss of HK$7,621,000) and on the weighted average number of 351,258,880 (six months ended 30 September 2011: 347,953,880) shares in issue during the period. No diluted loss per share has been presented as the exercise of the Company’s outstanding share options and convertible bond would result in a decrease in net loss per share for both periods.

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

8. TRADE AND OTHER RECEIVABLES

Trade receivables Less: Provision for impairment Trade receivables, net of provision Deposits and other receivables Maximum exposure to credit risk Prepayments	As at 30 September 2012 HK$’000 1,517 (1,517) — 2,006 2,006 284 2,290	As at 31 March 2012 HK$’000 1,590 (1,590)
		— 1,367
		1,367 390
		1,757

The Group maintains a defined credit policy. The carrying amounts of trade and other receivables approximated their fair values as at 30 September 2012 and 31 March 2012.

All trade receivables before provision for impairment were aged over twelve months based on the invoice issue date.

The carrying amounts of trade and other receivables were denominated in the following currencies:

Renminbi Hong Kong dollars 9. TRADE AND OTHER PAYABLES	As at 30 September 2012 HK$’000 733 1,557 2,290	As at 31 March 2012 HK$’000 78 1,679
		1,757

Trade payables Other payables and accruals	As at 30 September 2012 HK$’000 326 1,820 2,146	As at 31 March 2012 HK$’000 323 2,863
		3,186

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

9. TRADE AND OTHER PAYABLES (Continued)

The carrying amounts of trade and other payables approximated their fair values as at 30 September 2012 and 31 March 2012 and were denominated in the following currencies:

Hong Kong dollars Renminbi	As at 30 September 2012 HK$’000 886 1,260 2,146	As at 31 March 2012 HK$’000 2,140 1,046
		3,186

All trade payables were aged over twelve months based on the invoice issue date.

10. CONVERTIBLE BOND

The convertible bond issued has been split as to the liability and equity component and movement of the convertible bond is as follows:

Nominal value of the convertible bond Equity component Liability component — Liability component — Interest expenses Total liability component Analysis into — Current liabilities — Non-current liabilities	As at 30 September 2012 HK$’000 68,000 (5,888) 62,112 1,513 63,625 2,040 61,585 63,625	As at 31 March 2012 HK$’000 68,000 (5,888)
		62,112 957
		63,069
		2,040 61,029
		63,069

11. APPROVAL OF THE INTERIM FINANCIAL REPORT

This interim financial report was approved by the Board of Directors on 20 November 2012.

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INTERIM DIVIDEND

The Directors have decided not to declare any interim dividend for the six months ended 30 September 2012 (six months ended 30 September 2011: nil).

MANAGEMENT DISCUSSION AND ANALYSIS

Financial Review

For the six months ended 30 September 2012, the Group recorded a turnover of approximately HK$732,000 (six months ended 30 September 2011: HK$710,000) which was generated from the operations of property business. During the period under review, the Group’s loss attributable to owners of the Company slightly increased to approximately HK$8,240,000 (six months ended 30 September 2011: HK$7,621,000), loss per share correspondingly increased to HK 2.35 cents (six months ended 30 September 2011: HK 2.19 cents).

At 30 September 2012, the unaudited total assets and net assets of the Group were HK$77,234,000 and HK$11,463,000 (31 March 2012: HK$86,498,000 and HK$20,243,000) respectively. The decrease in the Group’s net asset value was mainly attributable to the decrease in bank balances and cash of approximately HK$8,510,000 mainly being net cash used in the operations of the Group.

Business Review and Prospects

During the six months ended 30 September 2012, the Group continued the operations of property business in the People’s Republic of China (the “PRC”). Revenue from this single business segment maintained at similar level of approximately HK$732,000 (six months ended 30 September 2011: HK$710,000) in the period under review as the previous corresponding period. All transaction proceeds generated from the property business were attributable to sale of car parking space in Pudong, Shanghai and all car park units in the inventory were sold during the period under review. No sales were recorded for the commercial properties held in Zouping Shandong for the period (six months ended 30 September 2011: HK$406,000). At 30 September 2012, there remained a gross floor area of approximately 7,985 square metres of completed commercial properties located in Zouping, Shandong which were held by the Group for sale. Same as in previous years, the Group continued to lease part of its commercial properties and recorded rental income of approximately HK$105,000 (six months ended 30 September 2011: HK$116,000) during the period under review, which was accounted for as other revenues.

The Group has been actively seeking investment opportunities in past years, despite that efforts made in such regard are not rewarding. It will continuously identify all kinds of investment opportunities that will broaden its revenue stream and sustain its business development. Although business development is the core part of the Group’s priorities, it will exercise a prudent approach in pursuit of this goal. Currently, the Group is in initial exploration over a couple of potential acquisition transactions and is conducting preliminary assessments. The Group aims at taking a steady and enduring approach going forward.

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Liquidity and Financial Resources

At 30 September 2012, cash and bank balances of the Group amounted to approximately HK$48,087,000, as compared to approximately HK$56,597,000 at 31 March 2012. At the end of the period, the Group’s total borrowings represented the carrying amount of the convertible bond (as defined below) of approximately HK$63,625,000 (31 March 2012: HK$63,069,000).

During the period, the Group’s business operations were mainly in Hong Kong and the PRC. Hence, most of the transactions were denominated and settled in Hong Kong dollars and Renminbi. As there was no significant exposure to foreign exchange fluctuation arising from the normal course of operations, the Group did not enter into any foreign exchange hedge arrangement to reduce foreign exchange risk and exposure.

Shareholders’ equity is approximately HK$11,463,000 at 30 September 2012 (31 March 2012: HK$20,243,000).

The Group’s gearing ratio at 30 September 2012, expressed as the percentage of the Group’s total borrowings over shareholders’ equity, was approximately 555%, as compared with 312% at 31 March 2012.

Capital Structure

At 30 September 2012, the Company’s issued share capital was HK$35,125,888 (31 March 2012: HK$35,125,888) with 351,258,880 (31 March 2012: 351,258,880) ordinary shares of HK$0.10 each in issue.

At 30 September 2012, the Company had an outstanding convertible bond with a principal amount of HK$68,000,000 (“Convertible Bond”). The Convertible Bond was issued by the Company to Loyal Delight Group Limited, an independent third party; which was subsequently amended by the parties involved pursuant to a deed of amendment with the approval of the shareholders of the Company at a special general meeting held on 18 April 2011. Accordingly, the maturity date of the Convertible Bond was extended to 7 May 2016 (“Maturity Date”), the coupon interest rate became 3% per annum effective from 8 May 2011 and the conversion price was adjusted to HK$0.418 per share. The Company has no obligation to redeem the Convertible Bond prior to the Maturity Date unless an event of default as provided in the terms and conditions of the Convertible Bond has occurred prior to the Maturity Date and the bondholder serves a notice on the Company requiring the Convertible Bond to be redeemed.

Material Acquisitions and Disposals of Subsidiaries and Associated Companies

There was no material acquisition or disposal of subsidiaries and associated companies during the period.

Employees

At 30 September 2012, the total number of employees of the Group based in Hong Kong and the PRC was 23 (31 March 2012: 24).

Employees are basically remunerated based on the nature of their job and their performance as well as prevailing market trend. Year-end discretionary bonus would be granted to reward and motivate those well-performed employees. The Company also adopted a share option scheme in November 2003 to reward employees of the Group for their contributions to the Company.

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Charges on Group assets

At 30 September 2012, the Group had no significant assets pledged to banks to secure general banking facilities and bank loan granted to the Group (31 March 2012: nil).

Capital commitment and contingent liabilities

At 30 September 2012, the Group had no outstanding capital commitments (31 March 2012: nil) and no material contingent liabilities (31 March 2012: nil).

AUDIT COMMITTEE

The Audit Committee has reviewed with management the accounting principles and practices adopted by the Group and discussed internal control and financial reporting matters including a review of the unaudited interim results for the six months ended 30 September 2012. The Audit Committee currently comprises three members including two independent non-executive directors, Mr. WONG Kam Wah and Mr. LO Yuk Lam, and a non-executive director, Mr. Eduard William Rudolf Helmuth WILL.

CORPORATE GOVERNANCE CODE

The Company has complied with the applicable code provisions of the Corporate Governance Code (effective from 1 April 2012) as set out in Appendix 14 to the Listing Rules during the interim period, except the following deviations:

Under Code Provision A.4.1, non-executive directors should be appointed for a specific term, subject to re-election. Prior to 7 August 2012, none of the non-executive directors of the Company was appointed for a specific term but, in accordance with bye-law 99 of the Company’s bye-laws, at each annual general meeting, one-third of the directors of the Company for the time being (or if their number is not three or a multiple of three, the number nearest to but not less than one-third) shall retire from office by rotation. Upon the re-election of Mr. LO Yuk Lam and Mr. WONG Kam Wah, both as independent non-executive directors of the Company, in the annual general meeting of the Company held on 7 August 2012, each of them has entered into a letter of appointment with the Company in respect of their individual service term for three years commencing on 7 August 2012, subject to retirement by rotation and re-election in accordance with the Company’s byelaws. Letters of appointment setting out their specific service term will be entered into with the remaining nonexecutive directors, who are currently subject to the requirements of retirement by rotation and re-election under the Company’s bye-laws, upon their successful re-election in annual general meetings in the future.

Under Code Provision A.6.7, independent non-executive directors and other non-executive directors should attend general meetings and develop a balanced understanding of the views of shareholders. Two of the independent non-executive directors and one of the non-executive directors did not attend the annual general meeting of the Company held on 7 August 2012 because of other business commitments or were overseas.

MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the Model Code as set out in Appendix 10 to the Listing Rules as its code of conduct regarding securities transactions by directors of the Company. Based on the specific enquiry made to the Company’s directors, they have complied with the required standard set out in the Model Code throughout the accounting period under review.

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PURCHASE, SALE OR REDEMPTION OF SECURITIES

There was no purchase, sale or redemption by the Company or any of its subsidiaries of its shares during the six months ended 30 September 2012.

PUBLICATION OF FINANCIAL INFORMATION ON THE STOCK EXCHANGE’S WEBSITE

The Company’s interim report for the six months ended 30 September 2012 containing all applicable information required by the Listing Rules will be despatched to shareholders of the Company and published on the Stock Exchange’s website (http://www.hkexnews.hk) and on the Company’s website (http://southeastgroup.todayir.com) in due course.

By order of the Board SOUTH EAST GROUP LIMITED Wu Siu Chung Chairman

Hong Kong, 20 November 2012

The directors of the Company as at the date of this announcement are Mr. WU Siu Chung (Chairman) and Mr. CHEN Xiaoping as executive directors; Mr. CHEN Yuan Shou, Budiman and Mr. Eduard William Rudolf Helmuth WILL as non-executive directors; Mr. LO Yuk Lam, Mr. WONG Kam Wah and Mr. David R. PETERSON as independent non-executive directors.

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