08:54     401 HOLDINGS<00401> - Results Announcement (2)                      

    (D)     The Company is currently proposing to restructure its affairs     
    through a self-restructuring proposal ("Resumption Proposal"). As the     
    Resumption Proposal remains subject to, amongst other things, the approval
    of The Stock Exchange of Hong Kong Limited ("Stock Exchange"), the        
    accounts for the year ended 31 March 2004 were not prepared on a full     
    going concern basis, and in particular:                                   
                                                                              
    a.      Fixed assets are stated at the Provisional Liquidators' best      
    estimate of their net realisable value. For presentation purposes they are
    shown as non-current assets.                                              
                                                                              
    b.      Current assets are stated at the Provisional Liquidators' best    
    estimate of their respective net realisable values.                       
                                                                              
    c.      Current liabilities are based on the records of the Company and   
    the Provisional Liquidators' investigations to date. The Provisional      
    Liquidators have not yet adjudicated any notices of claim from the        
    creditors of the Company. This will need to be completed to establish the 
    creditors of the Company with certainty. In any event, if the proposed    
    restructuring can be implemented successfully, all the debts of the       
    Company will be compromised and discharged in full through the schemes of 
    arrangement being proposed between the Company and its creditors.         
                                                                              
    d.      Should the listing of the Company's shares finally be cancelled   
    and the Company be wound up, further adjustments may be required to reduce
    the value of properties for sale to their forced sale value.              
                                                                              
    2.      AUDITORS' REPORT FOR THE YEAR ENDED 31 MARCH 2004                 
                                                                              
    Basis of Opinion                                                          
                                                                              
    The evidence available to the auditors was limited as set out in detail in
    the following paragraphs.                                                 
                                                                              
    1.      The accounts for the year ended 31 March 2004 have been prepared  
    based on the management accounts prepared by the Provisional Liquidators  
    and the management accounts have been prepared on the basis of the        
    information available to them which may not be complete. In light of the  
    fact that evidence available to the auditors was possibly limited and that
    there are no practicable audit procedures to ensure the completeness of   
    evidence, they are unable to satisfy themselves as to whether the accounts
    are free from material misstatement.                                      
                                                                              
    2.      Due to missing supporting documentation and relevant accounting   
    records, the auditors are unable to perform audit work necessary to       
    ascertain the validity and completeness on the following amounts included 
    in the consolidated profit and loss account for the year ended 31 March   
    2004:                                                                     
                                                                              
    - Site management fee to a related company of approximately HK$248,000;   
    - Revenue in respect of the provision of freight forwarding services in   
    the PRC of approximately HK$425,000;                                      
    - Revenue in respect of the sales and leasing of properties of            
    approximately HK$537,000.                                                 
                                                                              
    3.      Included in the staff costs, there is HK$994,000 in respect of    
    which there was insufficient evidence available for the auditors to       
    ascertain its validity.                                                   
                                                                              
                                                                              
    4.      Regarding the disclosure of directors' and senior management's    
    emoluments, the auditors are unable to obtain direct confirmations from   
    some of the former directors in respect of the emoluments paid and payable
    to them for the year ended 31 March 2004. The auditors are also unable to 
    obtain sufficient evidence regarding the amounts disclosed for the five   
    highest paid individuals. They are, therefore, unable to satisfy          
    themselves as to whether the disclosure of directors' and senior          
    management's emoluments is accurate and/or adequate.                      
                                                                              
    5.      Regarding the disclosure of unrecognised deferred tax assets which
    is made in accordance with Statement of Standard Accounting Practice No.  
    12 (revised) issued by the Hong Kong Institute of Certified Public        
    Accountants, the auditors were not provided with sufficient information to
    enable them to ascertain whether the disclosure is accurate.              
                                                                              
    There were no other satisfactory audit procedures that the auditors could 
    adopt to satisfy themselves as to the matters set out above. Any          
    adjustment found to be necessary would affect the results and/or cash     
    flows of the Group for the year ended 31 March 2004 and/or the assets and 
    liabilities of the Company and/or the Group as at that date.