09:03     SOUTH EAST GP<00726> - Announcement (1)                             

    The Stock Exchange of Hong Kong Limited takes no responsibility for       
    the contents of this announcement, makes no representation as to its      
    accuracy or completeness and expressly disclaims any liability            
    whatsoever for any loss howsoever arising from or in reliance upon        
    the whole or any part of the contents of this announcement.               
                                                                              
    SOUTH EAST GROUP LIMITED                                                  
    (Incorporated in Bermuda with limited liability)                          
                                                                              
    CONNECTED TRANSACTION                                                     
                                                                              
    On 21st January 2003, South Perfect and Yimin reached an agreement        
    in respect of the Transaction involving the assigning of the Bank         
    Loan from Yimin to Fushiwang in consideration of the transfer of          
    Fixed Assets from Yimin to Fushiwang and the writing off of the Debt      
    by Yimin. Fushiwang is an indirect subsidiary of the Company owned        
    as to 55% by South Perfect (a wholly owned subsidiary of the              
    Company) and 45% by Yimin. Accordingly, the Transaction constitutes       
    a connected transaction of the Company under the Listing Rules.           
                                                                              
    THE TRANSACTION                                                           
    Date of the Agreement:   21st January 2003                                
                                                                              
    Parties:   South Perfect and Yimin                                        
                                                                              
    South Perfect and Yimin have equity interests of 55% and 45% in the       
    registered capital of Fushiwang respectively. South Perfect is a          
    wholly owned subsidiary of the Company. Fushiwang is therefore an         
    indirect subsidiary of the Company.                                       
                                                                              
    Consideration of the Transaction: Yimin shall transfer ownership of       
    the Assets (with an aggregate net book value of RMB3,110,000 per the      
    unaudited management accounts of Yimin as at 30th November 2002) and      
    eliminate the liability attributable to the Debt (valuing at              
    RMB1,640,000 per the unaudited management accounts of Yimin as at         
    30th November 2002) as the consideration for Fushiwang shouldering        
    the Bank Loan (in the amount of RMB4,750,000)                             
                                                                              
    Terms of the Agreement:                                                   
    Pursuant to the terms of the Agreement:                                   
    (1)   the Bank Loan be assigned from Yimin to Fushiwang;                  
                                                                              
    (2)   in consideration of Fushiwang taking up such liability from         
    Yimin and subject to the completion of assigning the Bank Loan from       
    Yimin to Fushiwang (which is expected on/before 31st March 2003):         
                                                                              
    (a)   the Assets be transferred from Yimin to Fushiwang; and              
                                                                              
    (b)   the Debt be written off by Yimin                                    
                                                                              
    The setting-off referred above shall be effective with immediate          
    effect.                                                                   
                                                                              
    The Directors consider that the terms of the Agreement have been          
    arrived at after arm's length negotiation based on normal commercial      
    terms, are fair and reasonable so far as the shareholders of the          
    Company are concerned.                                                    
                                                                              
    REASONS FOR PROCEEDING WITH THE TRANSACTION                               
    Fushiwang was established in the PRC in October 1998 as a joint           
    venture enterprise between South Perfect and Yimin for the                
    manufacturing and trading of grape wine. The reasons for proceeding       
    with the Transaction are that Fushiwang is in need of the Assets for      
    its ongoing operation while the Debt can be settled accordingly. The      
    Assets comprise of fixed assets and inventory of grape juice. The         
    fixed assets mainly include yeasting facilities and warehouse space       
    owned by Yimin but have been providing to Fushiwang for use free of       
    charge since its inception in 1998. The Debt incurred as Yimin            
    applied such equivalent amount out of the Bank Loan to meet with the      
    working capital requirements of Fushiwang. The Bank Loan will be          
    rolled over continuously after it is assigned to Fushiwang.               
                                                                              
    GENERAL                                                                   
    The Group is principally engaged in manufacturing and trading of          
    magnetic media products, property development and investment and          
    other strategic investment projects.                                      
                                                                              
    The Transaction constitutes a connected transaction under the             
    Listing Rules. Since the Transaction falls within the de minimis          
    level under paragraph 14.25(1) of the Listing Rules, no independent       
    shareholders' approval is required. The Company will include details      
    of the transaction in its next published annual report and accounts.      
    In the opinion of the Directors, the terms of the Transaction are on      
    normal commercial terms which were negotiated on an arm's length          
    basis.