DIT Group Limited — Share Issue/Capital Change 2001

Sep 19, 2001

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

SOUTH EAST GROUP LIMITED

(Incorporated in Bermuda with limited liability)

PROPOSED CAPITAL REORGANISATION

AND SHARE CONSOLIDATION

Financial Adviser

The Directors announce that they intend to put forward the Proposal to the Shareholders, involving a reduction of the nominal value of the issued Shares, a subdivision of the authorised but unissued share capital, a reduction of the amount standing to the credit of the share premium account and applying the surplus arising from such reduction against accumulated losses of the Group and a consolidation of the resulting Adjusted Shares.

The Proposal is conditional upon, amongst other things, approval by the Shareholders by way of requisite resolutions at the SGM (please refer to the section headed "Conditions of the Proposal" below).

Reference is made to the press announcements of the Company dated 18th August, 2000 and 5th September, 2000 in relation to the proposed capital reorganisation and share consolidation. As stated in the announcement of the Company dated 5th September, 2000, implementation of such proposal was postponed in view of possible revisions of terms and conditions. The Directors announce that they intend to put forward a new proposal, in substitution for the previous proposal, involving a reduction of the nominal value of the issued Shares, a subdivision of the authorised but unissued share capital, a reduction of the amount standing to the credit of the share premium account and applying the surplus arising from such reduction against accumulated losses of the Company and a consolidation of the resulting Adjusted Shares as follows.

THE PROPOSAL

The Proposal includes the Capital Reorganisation Proposal and the Share Consolidation Proposal.

The Capital Reorganisation Proposal

The Capital Reorganisation Proposal will be effected in the following manner:

(a) the nominal value of each of the existing issued Shares will be reduced by HK$0.09 from HK$0.10 to HK$0.01 and the nominal value of each of the authorised but unissued Shares will be subdivided into 10 unissued Adjusted Shares of HK$0.01 each. As at the date of this announcement, the authorised share capital of the Company is HK$400,000,000 comprising 4,000,000,000 Shares, of which 3,305,718,800 Shares are in issue and credited as fully paid. On the basis of 3,305,718,800 Shares in issue, a credit of HK$297,514,692 will arise as a result of the reduction of capital pursuant to the Capital Reorganisation Proposal and the issued share capital of the Company will be reduced from HK$330,571,880 to HK$33,057,188.

Upon the reduction of capital pursuant to the Capital Reorganisation Proposal becoming effective and on the basis of 3,305,718,800 Shares in issue, the authorised share capital of the Company will remain at HK$400,000,000, to be divided into 40,000,000,000 Adjusted Shares, of which 3,305,718,800 Adjusted Shares will be in issue and credited as fully paid with 36,694,281,200 as unissued Adjusted Shares.

(b) the credit of HK$297,514,692 arising as a result from the Capital Reorganisation Proposal shall be applied towards eliminating part of the accumulated losses of the Group as at 31st March, 2001 as detailed below; and

(c) the balance of the share premium account of HK$233,973,000 will be reduced by HK$223,973,000 to HK$10,000,000 and the credit arising therefrom will be further applied towards eliminating the remaining part of the accumulated losses of the Group as at 31st March, 2001 and the balance of such credit shall be credited to the contributed surplus account of the Company.

The Share Consolidation Proposal

The Directors also intend to put forward to the Shareholders the Share Consolidation Proposal to effect, subject to the completion of the Capital Reorganisation Proposal, a consolidation of the Adjusted Shares pursuant to which every 10 issued and unissued Adjusted Shares will be consolidated into 1 New Share. Immediately following the implementation of the Share Consolidation Proposal, the authorised share capital of the Company will remain at HK$400,000,000 comprising 4,000,000,000 New Shares of which 330,571,880 New Shares will be in issue and credited as fully-paid.

REASONS FOR THE PROPOSAL

The nominal value of the Shares is HK$0.10 each. The closing price for the Share on 17th September, 2001 was HK$0.019. Under Bermuda law, a company may not issue shares at a discount to the nominal value of such shares. With a view to facilitating any capital raising when circumstances arise in the future, the Directors have proposed the Proposal which will allow flexibility for the issue of new Shares in the future if the Directors consider appropriate. However, as at the date hereof, the Company has not entered into any agreement or negotiation in relation to any equity fund raising exercises by way of equity.

The latest audited accounts of the Group recorded accumulated losses attributable to Shareholders of approximately HK$390,322,000 up to 31st March, 2001.

Given the accumulated losses of the Group as referred to above, the implementation of the Capital Reorganisation Proposal together with the reduction of the balance of the share premium account would enable the Company to create a credit of HK$521,487,692 and to apply this credit towards the elimination of the accumulated losses as mentioned above. The balance of credit in the amount of HK$131,165,692 will be transferred to the contributed surplus account of the Group. Under Section 54 of the Companies Act 1981 of Bermuda (as amended) and the bye-laws of the Company, the contributed surplus account is distributable to Shareholders, provided that the Company shall not declare or pay dividends or make a distribution out of contributed surplus, if there are reasonable grounds for believing that the realisable value of the Group's assets would thereby be less than the aggregate of its liabilities and its issued share capital and share premium account; or the Group is, or would after the payment be, unable to pay its liabilities as they become due.

With a view to facilitating the elimination of accumulated losses of the Group and any capital raising when suitable opportunities arise in the future, the Directors consider the Proposal to be in the interests of the Company and the Shareholders as a whole.

Other than the expenses to be incurred by the Company in relation to the Proposal, the Proposal will not in itself, alter the net asset value, the underlying assets, business operations, management or financial position of the Group or the interests of the Shareholders in the Company.

The Directors believe that the Proposal would not have any adverse effect on the financial position of the Group. No shareholders equity will be lost as a result of the Proposal. Upon the Proposal becoming effective, the board lot size for trading of the New Shares on the Stock Exchange will remain at 2,000 per board lot.

CONDITIONS OF THE PROPOSAL

The Proposal is conditional upon, inter alia:

(i) the passing of the requisite ordinary and special resolutions by Shareholders to approve the Capital Reorganisation Proposal and the Share Consolidation Proposal at the SGM;

(ii) the publication of a notice in an appointed newspaper in Bermuda as required by Section 46 of the Companies Act 1981 of Bermuda (as amended); and

(iii) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the New Shares in issue following the Proposal.

Subject to the above conditions being fulfilled, it is expected that the Proposal will become effective immediately after close of business on the date of the SGM. A further announcement will be made to inform Shareholders of the detailed timetable of the Proposal including, inter alia, the effective date of the Proposal.

GENERAL

Taiwan Securities (HK) Company Limited has been appointed as the financial adviser to the Company. Application will be made by the Company to the Listing Division of the Stock Exchange for the granting of the listing of, and permission to deal in, the New Shares.

Arrangement will be made for any fractions or odd lots which arise upon the Proposal becoming effective, details of which will be set out in the circular of the Company. An announcement setting out the details of the trading arrangements for the New Shares and odd lots of New Shares arising from the Share Consolidation Proposal, exchange of share certificates, other arrangements and the timetable for the Proposal will be made by the Company in due course. A circular containing, among other things, details of the Proposal together with a notice convening the SGM to approve the Proposal will be despatched to the Shareholders as soon as practicable. All the existing share certificates and transfer forms shall remain as valid proof of ownership in the shareholdings of the Company and shall continue to be used for trading and settlement purposes.

Terms used in this announcement

"Adjusted Share(s)" share(s) of HK$0.01 each in the share capital of the Company upon completion of the reduction of capital pursuant to the Capital Reorganisation Proposal

"Capital Reorganisation the proposed reorganisation of the capital of the Company as set

Proposal" out in the section headed "The Capital Reorganisation Proposal"

"Company" South East Group Limited, an exempted company incorporated in Bermuda with limited liability, the shares of which are listed on the Stock Exchange

"Director(s)" director(s) of the Company

"New Share(s)" new share(s) of HK$0.10 each in the share capital of the Company after completion of the Proposal

"Proposal" the Capital Reorganisation Proposal and the Share Consolidation Proposal

"SGM" the special general meeting of the Company to be held to consider and, if thought fit, approve the Proposal

"Share(s)" existing share(s) of HK$0.10 each in the share capital of the Company

"Share Consolidation" the proposed consolidation of Adjusted Shares as set out

Proposal" in the section headed "The Share Consolidation Proposal"

"Shareholders" holders of Shares, Adjusted Shares and New Shares, as the case may be

"Stock Exchange" The Stock Exchange of Hong Kong Limited

By Order of the Board

South East Group Limited

Martin Liu

Director

Hong Kong, 18th September, 2001

Please also refer to the published version of this announcement in the Hong Kong iMail.