DIT Group Limited — Proxy Solicitation & Information Statement 2006

Sep 8, 2006

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular, you should consult your stockbroker or other registered dealer 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, you should at once hand this circular together with the enclosed form of proxy to the purchaser or the transferee or to the bank or stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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

MAJOR TRANSACTION

INVOLVING THE ENTERING INTO OF THE NEW COOPERATION FOR DEVELOPMENT AGREEMENT

A notice convening a special general meeting of South East Group Limited to be held at Rooms 02-03, 9th Floor, Wyndham Place, 44 Wyndham Street, Central, Hong Kong on 25 September 2006 at 10:00 a.m. is set out on pages 21 to 22 of this circular. A form of proxy for use in the special general meeting is enclosed. Whether or not you are able to attend and vote at the special general meeting, you are requested to complete and return the enclosed proxy form in accordance with the instructions printed thereon and return it to the Company at its principal place of business at Rooms 02-03, 9th Floor, Wyndham Place, 44 Wyndham Street, Central, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the special general meeting or any adjourned meeting thereof. Completion and return of the proxy form shall not preclude you from attending and voting in person at the special general meeting or any adjourned meeting thereof should you so wish.

8 September 2006

* For identification purposes only

CONTENTS

	Page
Definitions......................................................................................................................................	1
Letter from the Board
Introduction ..........................................................................................................................	3
The New Cooperation for Development Agreement ..........................................................	4
Information on the Property ................................................................................................	7
Reasons for the New Cooperation for Development Agreement ......................................	8
Use of proceeds ....................................................................................................................	8
Effects of the transaction on the earnings and assets
and liabilities of the Company.........................................................................................	8
Financial and trading prospects of the Group.....................................................................	8
Information on the Group ....................................................................................................	9
The SGM...............................................................................................................................	9
Procedures to demand a poll................................................................................................	10
Recommendation ..................................................................................................................	10
Further information ..............................................................................................................	10
Appendix I — Property Valuation .............................................................................................	11
Appendix II — General information .........................................................................................	15
Notice of SGM...............................................................................................................................	21

– i –

DEFINITIONS

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

“Board”	the board of Directors
“Company”	South East Group Limited, a company incorporated in Bermuda
	with limited liability whose shares are listed on the Stock
	Exchange
“Cooperation for Development	the cooperation for development agreement entered into between
Agreement”	South East Property (Shandong) and the Investor on 26 June
	2006, which was terminated on 31 July 2006 by the parties
	involved
“Directors”	the directors of the Company
“Group”	the Company and its subsidiaries
“Investor”	Mr. Wang Bing Rong (���), an individual who is a PRC
	citizen and, to the best of the Directors’ knowledge, information
	and belief having made all reasonable enquiry, is a third party
	independent of the Company and connected persons (as defined
	under the Listing Rules) of the Company
“Latest Practicable Date”	7 September 2006, being the latest practicable date prior to the
	printing of this circular for the purpose of ascertaining certain
	information contained herein.
“Listing Rules”	the Rules Governing the Listing of Securities on The Stock
	Exchange
“New Cooperation for	the cooperation for development agreement entered into between
Development Agreement”	South East Property (Shandong) and the New Investor on 31
	July 2006
“New Investor”	Mr. Huang Jian Rong (���), an individual who is a PRC
	citizen and, to the best of the Directors’ knowledge, information
	and belief having made all reasonable enquiry, is a third party
	independent of the Company and connected persons (as defined
	under the Listing Rules) of the Company, and is not related to
	the Investor.
“PRC”	the People’s Republic of China

– 1 –

DEFINITIONS

“PRC JV Company”	a joint venture to be incorporated in Zouping County, Shandong
	Province, the PRC, to be equally owned by South East Property
	(Shandong) and the New Investor, for developing the Property
	for residential purpose
“Property”	a vacant site of a gross land area of approximately 34,116.96
	square metres situated at Zouping Economic Development Zone
	(�������), Zouping County, Shandong Province, the
	PRC for residential development purpose
“SGM”	the special general meeting of the Company to be convened to
	approve the New Cooperation for Development Agreement and
	the transactions contemplated thereunder
“Share(s)”	ordinary share(s) of HK$0.10 each in the share capital of the
	Company
“Shareholder(s)”	registered holder(s) of the shares of the Company
“South East Property (Shandong)”	South East Property (Shandong) Limited (��(��)���
	���), a company incorporated in the PRC and a wholly
	owned subsidiary of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“RMB”	Renminbi, the lawful currency of the PRC
“%”	per cent.

If there are any inconsistency between the Chinese names of the PRC entities and their English translations, the Chinese version shall prevail.

– 2 –

LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability)

(Stock Code: 726)

Executive Director: Budiman Rahardja (Chairman)

Non-executive Directors

Chen Zhi Yung Lo Yuk Lam Wong Kam Wah Ng Chun Hung, Lawrence*

* Independent non-executive director

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

Principal Place of Business: Rooms 02-03, 9th Floor Wyndham Place 44 Wyndham Street Central, Hong Kong

8 September 2006

To the shareholders for information only

Dear Sir or Madam,

MAJOR TRANSACTION

INVOLVING THE ENTERING INTO OF THE NEW COOPERATION FOR DEVELOPMENT AGREEMENT

INTRODUCTION

The Company announced on 30 June 2006 that South East Property (Shandong), a wholly owned subsidiary of the Company, entered into the Cooperation for Development Agreement with the Investor on 26 June 2006.

The Company further announced on 21 July 2006 that the Investor proposed to revise certain terms of the Cooperation for Development Agreement subsequent to its execution. Accordingly, the Investor withheld payment of the deposit of RMB300,000 as stipulated in the Cooperation for Development Agreement.

* For identification purposes only

– 3 –

LETTER FROM THE BOARD

As stated in the Company’s announcement dated 4 August 2006, no agreement could be reached between the Investor and South East Property (Shandong) to revise the terms of the Cooperation for Development Agreement before the close of business on 31 July 2006 (as determined by the parties involved); therefore, the parties thereto mutually agreed verbally to terminate the Cooperation for Development Agreement on 31 July 2006. Pursuant to the Cooperation for Development Agreement, South East Property (Shandong) served a written notice to the Investor on 5 August 2006 for the termination of the Cooperation for Development Agreement. At the present stage, the Directors are not aware of any liability arising from the termination of the Cooperation for Development Agreement and hence do not anticipate that there will be any claim against any parties to the Cooperation for Development Agreement. On 31 July 2006, subsequent to the termination of the Cooperation for Development Agreement and after the trading hours, the New Cooperation for Development Agreement (the terms and conditions of which are principally based on the Cooperation for Development Agreement) was entered into between South East Property (Shandong) and the New Investor.

The purpose of this circular is to provide the Shareholders with further information relating to the New Cooperation for Development Agreement and the Group, the valuation report on the Property and the financial information of the Group. This circular also sets out a notice of the SGM to be convened to consider and, if thought fit, to approve the New Cooperation for Development Agreement and the transactions contemplated thereunder.

THE NEW COOPERATION FOR DEVELOPMENT AGREEMENT

Date of agreement: 31 July 2006

The Parties:

1. South East Property (Shandong) Limited (��(��)������), a company incorporated in the PRC and is a wholly owned subsidiary of the Company. Its principal business activity is property development and investment in the PRC.

2. Mr. Huang Jian Rong (���), an individual who is a PRC citizen and, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, is a third party independent of the Company and its subsidiaries and connected persons (as defined under the Listing Rules) of the Company, and is not related to the Investor.

General Nature of the Transaction:

Pursuant to the New Cooperation for Development Agreement, the PRC JV Company (to be equally owned by South East Property (Shandong) and the New Investor) shall be established for the purpose of developing the Property for residential purpose. As consulted with the local governmental authorities, the formation of the PRC JV Company will facilitate the transfer of title to the Property from South East Property (Shandong) to the PRC JV Company. The proposed registered capital of the PRC JV Company will be approximately RMB10 million and the proposed total investment will be approximately RMB40 million. Under the New Cooperation for Development Agreement, the New Investor will be fully responsible for providing working capital to meet with the requirements of

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LETTER FROM THE BOARD

the PRC JV Company, while South East Property (Shandong) is only required to inject the Property into the PRC JV Company. The PRC JV Company will be equally owned by South East Property (Shandong) and the New Investor, notwithstanding that the contribution to be made by the respective partners are not in proportion to their shareholdings. As detailed below, South East Property (Shandong) will consequently transfer its 50% equity interest in the PRC JV Company to a transferee (the “Transferee”) as specified by the New Investor and will not bear any risk of the PRC JV Company for the development of the Property. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, the Transferee and its beneficial owner(s), if any, are not or will not be a connected person of the Company or a party who is connected with the connected persons of the Company. In the opinion of the Directors, the arrangement of capital injection and shareholding structure will facilitate the implementation of the New Cooperation for Development Agreement and the transactions contemplated thereunder.

After the formation of the PRC JV Company, title to the Property shall be transferred from South East Property (Shandong) to the PRC JV Company. The development of the Property will be carried out by the PRC JV Company. It is proposed that the New Investor will arrange for the required funds for the development of the Property under the New Cooperation for Development Agreement. Save as mentioned above, South East Property (Shandong) does not have any commitment to provide any funding to the PRC JV Company under the New Cooperation for Development Agreement. By satisfying South East Property (Shandong) with a cash consideration of RMB14,100,000 by the New Investor according to the payment terms as set out in the New Cooperation for Development Agreement, and upon completion of transferring the title to the Property from South East Property (Shandong) to the PRC JV Company, the PRC JV Company shall have the right to develop the Property and shall be entitled to all the profits attributable to the Property thereafter. After the New Investor has satisfied the consideration of RMB14,100,000 in full, South East Property (Shandong) shall transfer its 50% equity interest in the PRC JV Company to the Transferee. As confirmed by the local governmental authorities with South East Property (Shandong), the transfer of 50% equity interest in the PRC JV Company from South East Property (Shandong) to the Transferee will be legally valid and the New Cooperation for Development Agreement and the transactions contemplated thereunder comply with the regulations of the governing authorities. Before the New Investor has satisfied the consideration of RMB14,100,000 in full, each of South East Property (Shandong) and the New Investor will nominate a representative to the PRC JV Company and the assets (including the company stamp and the finance stamp) of the PRC JV Company will be placed in the custody of these representatives. Such arrangement is to protect the interest of South East Property (Shandong) before the consideration is fully satisfied.

Consideration:

The consideration is RMB14,100,000, which was arrived at after arm’s length negotiations between the parties on normal commercial terms by reference to the prevailing market conditions. In arriving at the consideration, the Directors have taken into account market prices of similar properties in the proximity, with reference to the market value of the Property of approximately RMB13,000,000 as at 31 July 2006 as valued by an independent property valuer, Colliers International (Hong Kong) Limited (the valuation report is set out in Appendix I to this circular), and the Cooperation for Development Agreement.

– 5 –

LETTER FROM THE BOARD

Payment terms:

The consideration has been or shall be paid by the New Investor to South East Property (Shandong) in cash in the following manner:

• (i) RMB300,000 has been paid by banker’s draft upon signing of the New Cooperation for Development Agreement as deposit;

• (ii) RMB6,000,000 shall be paid upon transferring the title to the Property from South East Property (Shandong) to the PRC JV Company; and

• (iii) the balance of RMB7,800,000 shall be paid in 10 days upon obtaining of financing by the New Investor (after pledging the Property by the PRC JV Company, which will require approval of the shareholders of the PRC JV Company) or in 10 months upon completion of transferring the title to the Property from South East Property (Shandong) to the PRC JV Company, whichever is earlier.

Conditions precedent:

The New Cooperation for Development Agreement is conditional upon fulfillment of the following conditions:

• (a) the approval of the Shareholders at the SGM, which is expected to be held as soon as practicable pursuant to the Listing Rules to approve the New Cooperation for Development Agreement and transactions contemplated thereunder; and

• (b) all necessary consents and approvals being obtained from Zouping Administration for Industry and Commerce (����������) for approving the formation of the PRC JV Company and from Zouping Bureau of Land and Resources (��������) for transferring title to the Property from South East Property (Shandong) to the PRC JV Company. Whereas the transfer of 50% equity interest in the PRC JV Company from South East Property (Shandong) to the Transferee will be legally valid as confirmed by the local governmental authorities with South East Property (Shandong).

Pursuant to the New Cooperation for Development Agreement, if the above conditions are not fulfilled in the course of implementing the New Cooperation for Development Agreement, the New Cooperation for Development Agreement shall terminate and neither party shall have any claim against the other and South East Property (Shandong) shall refund all deposits paid by the New Investor without accruing interest, notwithstanding that no long stop date is specified. South East Property (Shandong) will have duly fulfilled its liability under the New Cooperation for Development Agreement after the transfer of title to the Property from South East Property (Shandong) to the PRC JV Company. South East Property (Shandong) will assist in applying to Zouping Administration for Industry and Commerce (����������) for transferring its 50% equity interest in the PRC JV Company

– 6 –

LETTER FROM THE BOARD

to the Transferee. However, there is not any term in the New Cooperation for Development Agreement that entitles the New Investor to claim against South East Property (Shandong) if the former may encounter any problems in transferring 50% equity interest at nil consideration in the PRC JV Company from South East Property (Shandong) to the Transferee pursuant to the New Cooperation for Development Agreement and the transactions contemplated thereunder.

The PRC JV Company was incorporated on 23 August 2006. Transfer of title to the Property from South East Property (Shandong) to the PRC JV Company will commence after the New Cooperation for Development Agreement and the transactions contemplated thereunder are approved by the Shareholders in the SGM, subject to the necessary consents and approval of Zouping Bureau of Land and Resources (��������) to be obtained for transferring title to the Property from South East Property (Shandong) to the PRC JV Company.

Termination:

Except for the conditions precedent stated above, the New Cooperation for Development Agreement once entered into could not be cancelled without the mutual agreement of the parties thereto. The party who defaults shall compensate the other party for the loss incurred (any disputes may be referred to Jinan Intermediate People’s Court) and an additional 10% on the loss incurred as penalty.

INFORMATION ON THE PROPERTY

The Property is a vacant site of a gross land area of approximately 34,116.96 square metres situated at Zouping Economic Development Zone (�������), Zouping County, Shandong Province, the PRC for residential development purpose. The Property forms part of a piece of land with a gross area of approximately 44,408.96 square metres which was acquired by the Group on 23 February 2005 at a consideration of approximately RMB15,292,700 for real estate development, whereas it was contemplated that the property transactions under such development project would be of a revenue nature in the ordinary and usual course of business of the Group. The Company made disclosure of such acquisition by its announcements dated 6 January 2005 and 24 February 2005 respectively. Title to the acquired land was subdivided into two according to its different usage. Accordingly, certificates of Land Use Right were duly issued by Zouping Bureau of Land and Resources (��������) to South East Property (Shandong) on 23 May 2005 respectively for the Property for residential use and its adjacent land of 10,292 square metres for commercial use. Certain commercial properties are under construction on this adjacent land. The development of the commercial properties has been carrying out by South East Property (Shandong). Because of the change in the operating environment resulted from the measures introduced by the central government of the PRC for regulating the property market, the Directors consider that the completion of the commercial project will improve the municipal facilities and the traffic network in the area, therefore will be beneficial to the residential project. Hence, development of the Property has been delayed. No construction has been started on the Property yet, so no revenue or profit has been derived from the Property since its acquisition.

– 7 –

LETTER FROM THE BOARD

The audited net book value of the Property as at 31 March 2006 was approximately RMB11,970,000.

Based on the consideration under the New Cooperation for Development Agreement, the Directors estimate that the transaction will result in a gain of approximately RMB2,130,000 before expenses.

REASONS FOR THE NEW COOPERATION FOR DEVELOPMENT AGREEMENT

The Directors believe that it is to the benefit of the Group to enter into the New Cooperation for Development Agreement to realize the value of its investment in the Property and to create additional liquidity to meet with the Group’s future business needs. Having regard to the terms and consideration offered by the New Investor and the expected gain arising therefrom, the Directors (including the independent non-executive directors) believe that the terms of the New Cooperation for Development Agreement and the transactions contemplated thereunder are on normal commercial terms, and are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

USE OF PROCEEDS

The net proceeds from the proposed transaction relating to the New Cooperation for Development Agreement will be used as the Group’s general working capital.

EFFECTS OF THE TRANSACTION ON THE EARNINGS AND ASSETS AND LIABILITIES OF THE COMPANY

No construction has been started on the Property yet, so no revenue or profit has been derived from the Property since its acquisition. The audited net book value of the Property was RMB11,970,000 as at 31 March 2006. The excess of the consideration for the Company’s interests in the Property of RMB14,100,000 over the net book value of the Property as at 31 March 2006 amounts to RMB2,130,000. It is estimated that the Group will record a gain of approximately RMB1,930,000 after deducting expenses for realizing its 50% interest in the PRC JV Company upon transfer of the 50% interest to the Transferee. Such gain, which is subject to review by the Company’s auditors, will be recognized in the consolidated profit and loss account of the Group for the year ending 31 March 2008. After completion of the proposed transaction relating to the New Cooperation for Development Agreement, the bank balance of the Group will be increased by approximately RMB13,900,000 and the non-current assets (properties under development) will be reduced by RMB11,970,000. There will be no effect on the liabilities of the Group.

FINANCIAL AND TRADING PROSPECT OF THE GROUP

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

– 8 –

LETTER FROM THE BOARD

The Group’s main business area will continue to be property development and investment with branches in trading of data storage media products and manufacturing and trading of wine. The entering into of the New Cooperation for Development Agreement will create additional liquidity to the Group to meet with its working capital requirements as well as future business needs. After the realization of the Property, the Group will still carry on the development of commercial properties in Zouping County, Shandong Province, the PRC. It is expected that sales of the commercial properties in the second half of the current financial year will bring steady income to the Group in the future.

The Group will concentrate on the property development and trading business, while maintaining a flexible outlook and be receptive to the changing market environment.

INFORMATION ON THE GROUP

The Company is an investment holding company with its subsidiaries are principally engaged in property development and investment, manufacturing and trading of data storage media products, manufacturing and trading of grape wine and other strategic investments projects. South East Property (Shandong) is a wholly owned subsidiary of the Company incorporated in the PRC and is principally engaged in property development and investment in the PRC.

THE SGM

The entering into of the New Cooperation for Development Agreement and the transactions contemplated thereunder constitute a major transaction of the Company pursuant to Rule 14.06(3) of the Listing Rules and are therefore subject to approval by the Shareholders in the SGM on a show of hands unless a poll is demanded. So far as is known to the Directors, no Shareholder has a material interest in the proposed transaction and accordingly no Shareholder is required to abstain from voting at the SGM to approve the entering into of the New Cooperation for Development Agreement and the transactions contemplated thereunder. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, the New Investor and any of his associates are not interested in any Shares of the Company.

A notice convening the SGM is set out on pages 21 to 22 of this circular for the purpose of considering and, if thought fit, passing the resolution(s) set out therein.

A form of proxy is enclosed for use at the SGM. Whether or not you are able to attend and vote at the special general meeting, you are requested to complete and return the enclosed proxy form in accordance with the instructions printed thereon and return it to the Company’s principal place of business at Rooms 02-03, 9/F., Wyndham Place, 44 Wyndham Street, Central, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the special general meeting or any adjourned meeting thereof. Completion and return of the proxy form shall not preclude you from attending and voting in person at the special general meeting or any adjourned meeting thereof should you so wish.

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LETTER FROM THE BOARD

PROCEDURES TO DEMAND POLL

Pursuant to Bye-law 70 of the Company’s Bye-laws, every resolution put to the vote of a general meeting shall be decided on a show of hands in the first instance, but a poll may be demanded (before or on the declaration of the result of the show of hands) by:

• (1) the chairman of the meeting; or

• (2) at least three members present in person or by proxy having the right to vote at the meeting; or

• (3) a member or members present in person or by proxy representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or

• (4) a member or members present in person or by proxy holding Shares conferring a right to vote at the meeting being Shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the Shares conferring that right.

RECOMMENDATION

Taking into consideration of the reasons set out in the section headed “Reasons for the New Cooperation for Development Agreement” above, the Directors consider that the terms of the New Cooperation for Development Agreement and the transactions contemplated thereunder are fair and reasonable and are in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the resolution(s) as set out in the notice of the SGM.

FURTHER INFORMATION

Your attention is drawn to the valuation report on the Property and the additional information set out in the appendices to this circular.

Yours faithfully, For and on behalf of the Board South East Group Limited Budiman Rahardja Chairman

– 10 –

PROPERTY VALUATION

APPENDIX I

The following is the text of the letter and valuation certificate, prepared for the purpose of incorporation in this circular, received from Colliers International (Hong Kong) Limited, an independent valuer, in connection with their valuation of the Property as at 31 July 2006.

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Colliers International (Hong Kong) Ltd Company Licence No: C-006052 Suite 5701 Central Plaza 18 Harbour Road Wanchai Hong Kong ���������������� ������� 18 ����� 5701 � Tel 852 2828 9888 Fax 852 2107 6015 www.colliers.com

8 September 2006

The Board of Directors South East Group Limited Rooms 02-03, 9th Floor Wyndham Place 44 Wyndham Street Central Hong Kong

Dear Sirs,

Re: A parcel of land in Zouping Economic Development Zone, Zouping County, Binzhou City, Shandong Province, The PRC (the “Property”)

In accordance with your instructions to value the property interest held by South East Group Limited (hereinafter referred to as the “Company”) and its subsidiaries (hereinafter together referred to as the “Group”) has interest in the People’s Republic of China (the “PRC”), we confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of such property interest as at 31 July 2006 (the “date of valuation”).

In our valuations, we have complied with all the requirements contained in Chapter 5 and Practice Note 12 to the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited and the HKIS Valuation Standard Standards on Properties (First Edition 2005) published by the Hong Kong Institute of Surveyors.

– 11 –

PROPERTY VALUATION

APPENDIX I

BASIS OF VALUATION

Our valuations of the property interests represent the market value which we would define as “The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.”

VALUATION RATIONALE

In valuing the property interest, we have valued the property interest by Sales Comparison Approach assuming sale of the property interest in its existing state with the benefit of immediate vacant possession and by making reference to comparable sale transactions as available in the relevant market.

CURRENCY

Unless otherwise stated, all money amounts stated are in Renminbi (RMB).

ASSUMPTIONS AND CAVEATS

Our valuations have been made on the assumption that the owners sell the relevant property interest on the open market without the benefit of deferred terms contracts, leasebacks, joint ventures, management agreements or any similar arrangements which would serve to affect the value of property interest. In addition, no forced sale situation in any manner is assumed in our valuations.

No allowance has been made in our valuations for any charges, mortgages or amounts owing on the property interest nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the property interest is free from encumbrances, restrictions and outgoings of an onerous nature which could affect its value.

We have relied to a very considerable extent on the information provided by the Group and have accepted advice given to us on such matters as planning approvals, statutory notices, easements, tenure, particulars of occupancy, development plan, site and floor areas, the identification of the property interest in which the Group has valid interest and all other relevant matters. Dimensions, measurements and areas included in the valuation certificate are based on information contained in copies of documents provided to us.

We have been provided with extracts from title documents relating to the property interest and have made relevant enquiries where possible. Due to the nature of the land registration system in the PRC, we have not examined the original documents to verify the existing title to the property interest in the PRC or any material encumbrances that might be attached to the property interest or any lease amendments. We have relied on the PRC legal opinion provided by Jingtian and Gongcheng Attorneys at law to verify the title ownership of the property interest.

– 12 –

PROPERTY VALUATION

APPENDIX I

We have not carried out detailed site measurements to verify the correctness of the site area in respect of the property interest but have assumed that the site area shown on the document and site plan handed to us are correct. Based on our experience of valuation of similar properties in the PRC, we consider the assumptions so made to be reasonable. All documents and contracts have been used as reference only and all dimensions, measurements and areas are approximations.

We have inspected the property interests. However, no structural survey has been made, but in the course of our inspection, we did not note any serious defects. We are not, however, able to report that the property interest is free from rot, infestation or any other structural defects. No tests were carried out on any of the services of the property interest.

We have had no reason to doubt the truth and accuracy of the information provided to us by the Group. We were also confirmed by the Group that no material factors have been omitted from the information supplied. We consider that we have been provided with sufficient information to reach an informed view, and have no reason to suspect that any material information has been withheld.

Our valuation certificate is attached.

Yours faithfully, for and on behalf of

Colliers International (Hong Kong) Ltd David Faulkner BSc. (Hon), FRICS, FHKIS, RPS, MAE Regional Director

Note: David Faulkner is a Chartered Surveyor who has 17 years’ experience in the valuation of properties in the PRC and 21 years of property valuation experience in Hong Kong and the Asia-Pacific region.

– 13 –

PROPERTY VALUATION

APPENDIX I

VALUATION CERTIFICATE

Property Interest held by the Group for Future Development

			Market Value
			in existing state
		Particulars of	as at
Property	Description and tenure	occupancy	31 July 2006
			RMB
A parcel of land in	The property comprises a	The property is a	13,000,000
Zouping Economic	parcel of land with a site area	vacant and
Development Zone	of 34,116.96 sq.m.	undeveloped site.
Zouping County
Binzhou City	The property is a piece of
Shandong Province	regular-shaped site and
The PRC	located in Zouping Economic
	Development Zone. The
	surrounding area is mainly
	industrial plants and
	residential developments.
	Upon the site inspection, the
	property currently is vacant
	and the site clearance has
	been completed.
	The land use rights of the
	property were granted for a
	term expiring on 22
	December 2074 for residential
	uses.

Notes:

• i) Pursuant to a State-owned Land Use Rights Certificate, Zou Guo Yong (2005) Di No. 0104164 dated 23 May 2005, issued by the State-owned Land and Resources Administrative Bureau of Zouping County, the land use rights of the property with a site area of approximately 34,116.96 sq.m. is held by South East Property (Shandong) Limited (��(��)������), a wholly-owned subsidiary of the Company, for a term expiring on 22 December 2074 for residential uses. A parcel of land with a site area of 44,408.96 sq.m. was acquired by South East Property (Shandong) Limited in February 2005 in the consideration of RMB15,292,700. The subject site with an area of 34,116.96 sq.m. is a portion of the above land. In our valuation, we have only valued the subject site.

• ii) We have prepared our valuations on the following assumptions:

• a) The property is in its existing state;

• b) The property can be freely transferred, mortgaged and let in the market and all proper title certificates and land premiums have been obtained and fully settled; and

• c) The property may be disposed of freely to both local and overseas purchasers.

• iii) We have been provided with the legal opinion to the property interests by the Group’s PRC legal adviser, which contains, inter alia, the following:

• a) South East Property (Shandong) Limited is the legal and beneficial owner of the land;

• b) The land grant fees of the land have been fully settled and the land use rights of the land can be freely transferred, mortgaged and let by South East Property (Shandong) Limited and;

• c) The land use rights of the land were granted to South East Property (Shandong) Limited for a term expiring on 22 December 2074 for residential uses.

• iv) As advised by the Company, we are not aware of any total construction costs incurred as at the date of valuation.

– 14 –

GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

2. DISCLOSURE OF INTERESTS

(a) Directors

As at the Latest Practicable Date, details of the interests of the Directors’ and chief executive of the Company in the equity and debt securities of the Company or any associated corporation (within the meaning of the Securities and Futures Ordinance (the “SFO”) which (a) 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 and short positions which the Director is taken or deemed to have under such provisions of the SFO); or (b) were required pursuant to section 352 of the SFO to be entered in the register referred to therein; or (c) were required pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (“Model Code”) to be notified to the Company and the Stock Exchange as follows:

• (i) Long positions in Shares of the Company

			Percentage
		Number of	of issued
Name of Director	Capacity	Shares	share capital
Budiman RAHARDJA	Beneficially owned	137,364,131	41.55%
	and through a
	controlled corporation
	(Note)

• (ii) Long positions in underlying Shares — share options

					Number of		Percentage
					underlying Shares	Total	of issued
		Exercise price	Exercisable	Exercisable	comprised in	Interests	share
Name of Directors	Date of grant	per Share	from	until	the options	(Shares)	capital
		(HK$)
Budiman RAHARDJA	18 Dec 2003	0.106	18 Dec 2003	17 Dec 2013	3,305,000
	18 Dec 2003	0.106	18 Dec 2004	17 Dec 2014	3,305,000
	18 Dec 2003	0.106	18 Dec 2005	17 Dec 2015	3,305,000	9,915,000	3.00%
LO Yuk Lam	18 Dec 2003	0.106	18 Dec 2003	17 Dec 2013	330,000
	18 Dec 2003	0.106	18 Dec 2004	17 Dec 2014	330,000
	18 Dec 2003	0.106	18 Dec 2005	17 Dec 2015	330,000	990,000	0.30%
WONG Kam Wah	18 Dec 2003	0.106	18 Dec 2003	17 Dec 2013	330,000
	18 Dec 2003	0.106	18 Dec 2004	17 Dec 2014	330,000
	18 Dec 2003	0.106	18 Dec 2005	17 Dec 2015	330,000	990,000	0.30%

– 15 –

GENERAL INFORMATION

APPENDIX II

Note: Of 137,364,131 Shares, 21,382,001 Shares were beneficially owned by Mr. Budiman RAHARDJA. He was deemed to be interested in 115,982,130 Shares by virtue of the fact that he was interested in the Company’s Share through his beneficial shareholding interests in Easy Lead Corporation Limited, which was owned as to 50% by Mr. Budiman RAHARDJA and 50% by his mother, Madam Wasi Hastuti SRI.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and chief executive of the Company was interested in the equity and debt securities of the Company or any associated corporations (within the meaning of the SFO) which (a) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 & 8 of Part XV of the SFO (including interests and short positions which the Director is taken or deemed to have under such provisions of the SFO); or (b) were required pursuant to section 352 of the SFO to be entered in the register referred to therein; or (c) were required pursuant to the Model Code to be notified to the Company and the Stock Exchange.

• (b) Persons who have an interest or short position which is discloseable under Divisions 2 and 3 of Part XV of the SFO and substantial shareholders

As at the Latest Practicable Date, so far as is known to the Directors and the chief executive of the Company, the following parties (not being Directors or chief executive of the Company) had an interest or short position in the shares and underlying shares of the Company, which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who were directly and indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in al circumstances at general meetings of any member of the Group:

			Percentage of
		Number of	issued share
Name	Capacity	Shares	capital
Easy Lead Corporation	Directly beneficially	115,982,130	35.09%
Limited	owned	(Note)
Madam Wasi	Through a controlled	115,982,130	35.09%
Hastuti SRI	corporation	(Note)

Note: These shareholdings are duplicated and refer to the same parcel of shares held by Easy Lead Corporation Limited as set out in the note in respect of directors’ interests above.

Save as disclosed above, as at the Latest Practicable Date, as far as the Directors are aware, no other person had an interest or short position in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of the Divisions 2 and 3 of Part XV of the SFO, or who was directly and 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.

– 16 –

GENERAL INFORMATION

APPENDIX II

There is no Directors or proposed directors of the Company who is an employee of a company which has interest or short position in the Shares and underlying Shares of the Company which would fall to be disclosed under the provisions of Divisions 2 and 3 of Part XV of the SFO.

• (c) As at the Latest Practicable Date, none of the Directors or expert (as named in this circular) had any interest, either direct or indirect, in any assets which have been, since 31 March 2006, being the date to which the latest published audited accounts of the Group were made up, acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

• (d) As at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement entered into by any member of the Group which is subsisting as at the date of this circular and is significant in relation to the business of the Group.

3. DIRECTORS’ SERVICE CONTRACTS

Mr. Budiman RAHARDJA has entered into a service agreement with the Company for a period of four years from 1 April 2003 and will continue thereafter unless and until terminated by either party by two months’ prior notice. Pursuant to the service agreement, Mr. Rahardja is entitled to salary which is determined with reference to his duties and responsibilities within the Group, discretionary bonus to be determined by the Board from time to time with reference to his services and contribution to the Company, contribution to retirement scheme and other fringe benefits such as company car and medical insurance. For the year ended 31 March 2006, Mr. Rahardja has received directors’ emoluments in a total sum of HK$1,430,992.

Save as disclosed above, 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 within one year without payment of compensation other than statutory compensation).

4. COMPETING BUSINESS

As at the Latest Practicable Date, so far as the Directors are aware, none of the Directors or their respective associates have interest in business which competes or is likely to compete, either directly or indirectly, with the business of any member of the Group.

5. STATEMENT OF INDEBTEDNESS

As at 30 June 2006, being the latest practicable date prior to the printing of this circular for ascertaining information for inclusion in this statement of indebtedness, the Group had an outstanding secured bank loan of approximately HK$4,560,000 and an interest bearing, unsecured loan of approximately HK$2,908,000.

As at 30 June 2006, the Group and the Company had a guarantee in respect of indebtedness of a subsidiary and a guarantee for securities trading of a subsidiary amounting to approximately HK$38,000,000 and HK$1,000,000 respectively.

– 17 –

GENERAL INFORMATION

APPENDIX II

Saved as disclosed above and apart from intra-group liabilities and normal trade debts payable, none of the companies of the Group had any outstanding loan capital issued and outstanding or agreed to be issued, bank overdrafts, term loans, loans or other similar indebtedness, liabilities under acceptances or acceptable credits, debentures, mortgages, charges, finance lease and hire purchase commitments, guarantees or other material contingent liabilities as at 30 June 2006, being the latest practicable date.

The guarantee mentioned above in respect of indebtedness of a subsidiary refers to the Purported Guarantee disclosed as under the section headed “Litigation” in this appendix.

6. WORKING CAPITAL

The Directors of the Company are of the opinion that, after taking into account the internal resources available to the Group, the net estimated proceeds from the proposed transaction relating to the New Cooperation for Development Agreement, the Group will have sufficient working capital for its present requirements and for the next twelve months from the date of this circular.

7. LITIGATION

As noted in the Company’s audited financial statements since the financial year ended 31 March 1999, a claim was brought against a wholly owned subsidiary of the Group, Benelux Manufacturing Limited (in liquidation) (“BML”), in July 1998 by its sub-contractor (“Sub-contractor”), Shenzhen Benelux Enterprise Co., Limited (“SBEC”), alleging that BML is liable for the payment of approximately HK$38 million, comprising charges in connection with the processing and assembling work rendered by the SBEC and the breach of alleged loan agreement relating to certain alleged letters of credit. During the course of exchanging exhibits in the proceedings initiated by SBEC, the Company was first aware of SBECs allegation that a guarantee was purportedly granted by the Company to SBEC in respect of the alleged BML’s indebtedness to SBEC (the “Purported Guarantee”) in/around January 1999. Notwithstanding that, SBEC has not initiated any proceedings against the Company based on the Purported Guarantee.

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

On 9 March 2005, the Company received a writ of summons served by Shenzhen Intermediate People’s Court. The claimant �������������(“SZL”) claims to have the right over the alleged BML’s indebtedness to the SBEC and the Purported Guarantee. SZL alleged that BML is liable to them in the amount of around HK$36 million and the Company for acceptance of joint and several liabilities thereof. SZL subsequently filed a claim against BML and the Company for an additional amount of RMB35 million as accrued interest on the alleged indebtedness over the years. Save as disclosed above, SZL did not and does not have any relationship with the Group.

A hearing of the case was held in the Court on 22 June 2006. According to the lawyers engaged by the Company in the court hearing, it is not expected that any court judgment will be handed down by the end of 2006.

– 18 –

GENERAL INFORMATION

APPENDIX II

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

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

8. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business) have been entered into by the Company or its subsidiaries within the two years immediately preceding the Latest Practicable Date, which are or may be considered to be material:

• (a) The Transfer of Ownership of Equity Interest and Shareholders’ Loan Agreement dated 26 May 2006 entered into between (i) �������������(Shanghai Pudong Heng Fa Property Development Company), (ii) Benelux Property Development (Shanghai) Limited (a wholly owned subsidiary of the Company) and (iii) ���������� ��� (Shanghai Jin Yun Property Development Limited) of the part of transferors and (i) ������������ (Zhejiang Zhong Cheng Jian Gong Group Limited) and ������������(Shanghai Fung Dao Investment Management Limited) of the part of transferees in relation to, among others, the realization of the investments in a jointly controlled entity, ��������������(Shanghai Ying Zhi Lun Property Development Limited), in which Benelux Property Development (Shanghai) Limited has a 33% equity interest. Benelux Property Development (Shanghai) Limited will be entitled to RMB46,822,105 from such realization if the aforesaid agreement becomes unconditional;

• (b) the Cooperation for Development Agreement dated 26 June 2006 entered into between South East Property (Shandong) and the Investor in relation to, among others, the formation of a joint venture in the PRC (to be equally owned by South East Property (Shandong) and the Investor), the transfer of title to the Property from South East Property (Shandong) to the joint venture in the PRC and the transfer of 50% equity interest in the joint venture in the PRC to the Investor for an aggregate consideration of RMB14,100,000, which was terminated on 31 July 2006 by the parties involved; and

• (c) the New Cooperation for Development Agreement as referred to in this Circular.

9. EXPERT’S CONSENT AND QUALIFICATION

Colliers International (Hong Kong) Limited has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and report and the reference to its name in the form and context in which it appears.

The following is the qualification of the expert who has given opinion or advice which is contained in this circular:

Name Qualification

Colliers International (Hong Kong) Limited qualified surveyors

– 19 –

APPENDIX II

GENERAL INFORMATION

As at the Latest Practicable Date, Colliers International (Hong Kong) Limited was not beneficially interested in the share capital of any member of the Group nor did it have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group or any interest, either director or indirect, in any assets which have been, since 31 March 2006, being the date to which the latest published audited accounts of the Group were made up, acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

10. GENERAL

• (a) The Company’s registered office is situated at Canon’s Court,, 22 Victoria Street, Hamilton HM 12, Bermuda and its principal place of business is situated at Rooms 02-03, 9th Floor, Wyndham Place, 44 Wyndham Street, Central, Hong Kong. The Company’s Hong Kong share registrar and transfer office is Computershare Hong Kong Investor Services Limited at Rooms 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (b) The qualified accountant of the Company is Mr. Leung Woon Che who is a fellow member of The Association of Chartered Certified Accountants and an associate member of Hong Kong Institute of Certified Public Accountants. The secretary of the Company is Ms. Chan Sau Chee who is an associate member of the Hong Kong Institute of Company Secretaries and the Institute of Chartered Secretaries and Administrators.

• (c) The English text of this circular shall prevail over the Chinese text.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the Company’s head office and principal place of business in Hong Kong at Rooms 02-03, 9th Floor, Wyndham Place, 44 Wyndham Street, Central, Hong Kong during normal business hours on any week day (except public holidays) from 8 September 2006 up to and including 25 September 2006 and will also be available for inspection at the SGM:

• (a) the bye-laws of the Company;

• (b) the annual report of the Company for each of the two years ended 31 March 2005 and 2006;

• (c) the service agreement referred to in the section headed “Directors’ Service Contracts” in this appendix;

• (d) the contracts referred to in the section headed “Material Contracts” in this appendix;

• (e) the valuation report prepared by Colliers International (Hong Kong) Limited dated 8 September 2006;

• (f) the New Cooperation for Development Agreement; and

• (g) this circular.

– 20 –

NOTICE OF SPECIAL GENERAL MEETING

==> picture [242 x 41] intentionally omitted <==

(Incorporated in Bermuda with limited liability)

(Stock Code: 726)

NOTICE IS HEREBY GIVEN that a special general meeting of South East Group Limited (the “Company”) will be held at Rooms 02-03, 9th Floor, Wyndham Place, 44 Wyndham Street, Central, Hong Kong on 25 September 2006 at 10:00 a.m. for the purpose of considering and, if thought fit, passing, with or without modifications, the following resolution which will be proposed as ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT the cooperation for development agreement dated 31 July 2006 (the “New Cooperation for Development Agreement”) (a copy of which has been produced to this meeting marked “A” and signed by the chairman of this meeting for the purpose of identification) entered into between South East Property (Shandong) Limited (��(��)������), which is a wholly owned subsidiary of the Company, and Mr. Huang Jian Rong (���), in respect of the vacant site of a gross land area of approximately 34,116.96 square metres situated at Zouping Economic Development Zone (�� �����), Zouping County, Shandong Province, the People’s Republic of China for residential development purpose, and the transactions contemplated thereunder be and are hereby approved, confirmed and ratified;

AND THAT the board of directors of the Company be and is hereby authorised to do all such acts and to enter into all such transactions, arrangements and agreements in its absolute discretion as it deems fit or appropriate to give effect to the New Cooperation for Development Agreement, for and on behalf of the Company, and the implementation of all transactions contemplated thereunder.”

By order of the Board South East Group Limited Budiman Rahardja Chairman

Hong Kong, 8 September 2006

* For identification purpose only.

– 21 –

NOTICE OF SPECIAL GENERAL MEETING

Notes:

1. A member entitled to attend and vote at the meeting convened by the above notice is entitled to appoint a proxy to attend and, in the event of a poll, vote in his stead. A proxy need not be a member of the Company.

2. In order to be valid, the form of proxy together with the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of such power of attorney or authority must be deposited at the Company at its principal place of business at Rooms 02-03, 9th Floor, Wyndham Place, 44 Wyndham Street, Central, Hong Kong not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.

3. Completion and return of the form of proxy will not preclude a member of the Company from attending and voting in person at the meeting convened and any adjournment thereof and in such event, the authority of the proxy shall be deemed to be revoked.

4. For joint registered holders of any share attending the meeting on the same occasion, the vote of the holder whose name stands first on the register who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders.

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

If there are any inconsistency between the Chinese names of the PRC entities and their English translations, the Chinese version shall prevail.

– 22 –