08:57 401 HOLDINGS<00401> - Results Announcement (2) 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 Self-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 THE INDEPENDENT ACCOUNTANTS' REVIEW REPORT The interim financial report has been reviewed by the Company's independent accountants, Graham H. Y. Chan & Co (the "Independent Accountants") in accordance with Statement of Auditing Standards No. 700 "Engagements to review interim financial reports" issued by the HKICPA, except that the scope of their review was limited as explained below. A review consists principally of making enquiries of the Directors and the Provisional Liquidators and applying analytical procedures to the interim financial report and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit and therefore provides a lower level of assurance than an audit. Accordingly the Independent Accountants do not express an audit opinion on the interim financial report. The scope of the Independent Accountants' review was limited because as stated in Note 1 above, the accounts for the six months ended 30 September 2004 have been prepared based on the management accounts prepared by the Provisional Liquidators on the basis of the information available to them which may not be complete for the period up to 3 August 2004, the date when the Provisional Liquidators of the Company were appointed. In these circumstances, save and except for the period after the appointment of the Provisional Liquidators, the Independent Accountants were unable to carry out all the review procedures, or obtain all the information and explanations they considered necessary. Fundamental uncertainty The 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 a resumption proposal (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 schemes of arrangement with the creditors and the entire interest 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 represented 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 by the Listing Committee. Notwithstanding this, 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. Details of the circumstances relating to this fundamental uncertainty are described in note 1(D) above. Inability to reach a review conclusion Because of the possible significance of the effects of the limitation in evidence available to them prior to the appointment of the Provisional Liquidators on 3 August 2004, the Independent Accountants are unable to reach a review conclusion as to whether material modifications should be made to the interim financial report for the six months ended 30 September 2004.