09:50     FOREFRONT INT'L<00885> - Announcement (2)                           

    *   Reviewing intra-Group trading arrangements and relationships with     
    key suppliers and customers.                                              
                                                                              
    The Board is of the view that RSM's appointment has and will continue to  
     result in strengthened controls across the Group and that an ongoing     
    monitoring of the Group's activities, management and key commercial       
    relationships will benefit the Group by identifying and allowing          
    appropriate action to be taken to address strengths and weaknesses        
    across the Group.                                                         
                                                                              
    CONSIDERATION AND PAYMENT                                                 
                                                                              
    The professional fees payable to RSM throughout the term of the           
    Engagement will be calculated at RSM's standard hourly rates by           
    reference to the actual time spent by RSM in performing the agreed scope  
     of work, but subject to a fee cap of HK$500,000 per month. RSM's         
    professional fees are payable monthly in arrears, with the exception      
    that fees relating to the period 8 September 2004 to 7 December 2004 are  
     likely to be paid in early 2005. The maximum professional fees payable   
    to RSM throughout the term of the Engagement are HK$5 million.            
                                                                              
    SERVICES RENDERED AND KEY ACHIEVEMENTS DURING THE PERIOD 8 SEPTEMBER      
    2004 TO 7 DECEMBER 2004                                                   
                                                                              
    During the period 8 September 2004 to 7 December 2004, RSM has been       
    responsible for and/or overseen the implementation of a number of         
    operational and management changes across the Group, including:           
                                                                              
    *   Reconstituting the board of directors of the Company, and increasing  
     the number of independent non-executive directors from two to three;     
                                                                              
    *   Appointing two members of RSM's team to the board of directors of     
    the Company, one in an executive role, the other in a non-executive       
    role;                                                                     
                                                                              
    *   Assuming responsibility for executive management of the Company;      
                                                                              
    *   Commencing a program to reconstitute the boards of directors of the   
    Company's subsidiaries;                                                   
                                                                              
    *   Implementing changes to the authorised signatories, bank mandates     
    and other delegated authorities of the Company and certain of its key     
    operating subsidiaries;                                                   
                                                                              
    *   Improving cash management, forecasting, monitoring and reporting      
    procedures;                                                               
                                                                              
    *   Implementing improved business planning, budgeting, forecasting and   
    financial reporting procedures;                                           
                                                                              
    *   Undertaking a review of key controls;                                 
                                                                              
    *   Liaising and managing relationships with key suppliers, financiers    
    and management;                                                           
                                                                              
    *   Commencing detailed investigations into the previous management's     
    conduct;                                                                  
                                                                              
    *   Consolidating and enhancing the management of legal advisory          
    services to the Company and its subsidiaries;                             
                                                                              
    *   Successfully obtaining unconditional leave to defend an action to     
    obtain summary judgment against the Company for HK$8 million; and         
                                                                              
    *   Liaising with The Stock Exchange of Hong Kong in relation to the      
    resumption of trade in the shares of the Company.                         
                                                                              
    Notwithstanding the Board considers that the actual fees incurred by RSM  
     on a time-cost basis have in the past and are likely to continue to      
    exceed HK$500,000 per month, RSM has agreed to limit its professional     
    fees to a monthly cap of HK$500,000.                                      
                                                                              
    The fees payable under the Engagement were arrived at after arm's length  
     negotiations between the relevant parties and were deemed to be          
    acceptable after taking into account various factors including the        
    monthly fee cap of HK$500,000.                                            
                                                                              
    Having regard to RSM's achievements (as outlined above), the Board is of  
     the view that the commencement of RSM's engagement from 8 September      
    2004 (being the date when it commenced its role) is appropriate. Given a  
     number of irregularities that had occurred across the Group (as          
    outlined in the Company's announcement dated 14 September 2004),          
    following the recent reconstitution of the Board, the Board considered    
    it appropriate to have RSM commence its investigations and operational    
    and management changes immediately so as to prevent further