08:55     401 HOLDINGS<00401> - Results Announcement (3)                      

    In forming their opinion the auditors also evaluated the overall adequacy 
    of the presentation of information in the accounts. The auditors believe  
    that their audit provides a reasonable basis for their opinion.           
                                                                              
    Fundamental uncertainty                                                   
                                                                              
    Trading of the Company's shares has been suspended since 28 March 2003. On
    19 May 2004, the Stock Exchange announced that the Company had been placed
    into the third stage of the de-listing procedure. The Stock Exchange      
    imposed a six-month period to 18 November 2004 for the Company to submit a
    viable resumption proposal.                                               
                                                                              
    On 25 October 2004, the Company submitted the Resumption Proposal to the  
    Listing Division of Stock Exchange ("Listing Division"). The Resumption   
    Proposal set out a proposed self-restructuring proposal of the Company,   
    under which, amongst other things, the full amount of the liabilities of  
    the Company will be discharged and compromised through the schemes of     
    arrangement with the creditors and the entire interests of the Company in 
    its dormant or insolvent subsidiaries will be transferred to a nominee of 
    the scheme administrators. However, the Listing Division did not consider 
    the Resumption Proposal represents a viable proposal and has advised that 
    it will apply to the Listing Committee of the Stock Exchange ("Listing    
    Committee") for the cancellation of listing of the Company's shares. The  
    Company has requested a review of the Listing Division's decision by the  
    Listing Committee. This notwithstanding, in light of, inter alia, the     
    petitioning creditor's support for the proposed self-restructuring, the   
    High Court of Hong Kong Special Administrative Region on 10 January 2005  
    further adjourned the hearing of the petition to wind up the Company to 14
    March 2005.                                                               
                                                                              
    Should the listing of the Company's shares be cancelled, the petitioning  
    creditor may proceed with the winding-up petition and the Company may be  
    wound up. In these circumstances, adjustments might have to be made       
    further to reduce the value of properties for sales to their forced sales 
    value.                                                                    
                                                                              
    The auditors consider that the fundamental uncertainty has been adequately
    disclosed in the accounts and their opinion is not qualified in this      
    respect.                                                                  
                                                                              
    Qualified opinion: Disclaimer on view given by the accounts               
                                                                              
    Because of the significance of the possible effects of the limitation in  
    evidence available to the auditors referred to in the "Basis of opinion"  
    section, the auditors are unable to form an opinion as to whether the     
    accounts give a true and fair view of the state of affairs of the Company 
    and of the Group as at 31 March 2004 and of the Group's loss and cash     
    flows for the year then ended and as to whether the accounts have been    
    properly prepared in accordance with the disclosure requirements of the   
    Hong Kong Companies Ordinance.                                            
                                                                              
    As set out in the section "Basis of Opinion" :                            
                                                                              
    (i)     the auditors have not obtained all the information and            
    explanations that they considered necessary for their audit; and          
                                                                              
    (ii)    the auditors were unable to determine whether proper books of     
    account had been kept.