09:30     FOREFRONT INT'L<00885> - Announcement (2)                           

    existing arrangements between FIAL Taiwan and FAI are prejudicial to      
    the                                                                       
     interests of FIAL Taiwan and the Group. The New Board is considering     
    alternative arrangements for the assembly of Scania Products in Taiwan.   
                                                                              
    CONTROL OF THE GROUP's TAIWAN OPERATIONS                                  
                                                                              
    The New Board has procured the replacement of the directors of the        
    Group's Taiwanese subsidiaries and, on 18 February 2005, Mr. Adam Lee     
    was appointed as the legal representative of FIAL Taiwan in place of      
    Mr.                                                                       
     Lee Mao Fang (an appointee of the former Board).                         
                                                                              
    The Group's attempts to work consensually with senior management in       
    Taiwan have been unsuccessful. Repeated requests by the New Board for     
    RSM Nelson Wheeler to be allowed access to the Group's premises in        
    Taiwan have been denied, and requests for information have been denied    
    or only partially met. FIAL Taiwan continues to confront obstacles in     
    taking control of the Group's Taiwan operations, examples of which        
    include:                                                                  
                                                                              
    .   The relocation by FAI of FIAL Taiwan's finance and administration     
    personnel from FIAL Taiwan's premises to FAI's premises. The Group's      
    representatives have been prevented from contacting FIAL Taiwan's         
    former                                                                    
     finance and administration personnel;                                    
                                                                              
    .  Lack of access to the books and records of the Group's Taiwanese       
    subsidiaries (as noted in the Company's 2004 Annual Report);              
                                                                              
    .  The transfer of employment contracts of all FIAL Taiwan's personnel    
    to Infinix. It is understood by the New Board that Mr. James Yang is      
    a                                                                         
    director of Infinix; and                                                  
                                                                              
    .  The cancellation of FIAL Taiwan's leases of premises used as repair    
    and maintenance centers in Taiwan. RSM Nelson Wheeler has been advised    
    by FAI and Infinix's legal advisors that on 1 October 2004 FAI entered    
    into head-lease agreements directly with the landlords of such premises   
    and sub-leased the relevant premises to FIAL Taiwan. Neither the New      
    Board nor FIAL have been provided with any supporting documentation in    
    relation to the termination or granting of such new leases and / or       
    sub-leases. The Group's Taiwanese legal advisors are liaising with the    
    landlords of the relevant premises to determine the validity of the       
    termination and granting of such new leases and/or sub-leases.            
                                                                              
    The New Board is concerned that FAI is acting beyond the scope of its     
    existing arrangements with FIAL Taiwan and instead of merely assembling   
    Scania Products and supplying them to FIAL Taiwan, FAI is also            
    distributing and servicing such vehicles directly and thereby             
    infringing                                                                
     on the exclusive right to distribute and service such vehicles granted   
    by Scania to FIAL Taiwan. The New Board is taking steps to resume         
    control of the distribution and servicing of Scania Products in Taiwan    
    and continues to keep Scania informed of all developments. The New Board  
     is currently taking legal advice in relation to the actions of FAI       
    and                                                                       
    all claims it may have in respect of such actions.                        
                                                                              
    In light of the above matters, the New Board has taken the following      
    steps:                                                                    
                                                                              
    (a)   FIAL Taiwan has issued legal proceedings in Taiwan against FIAL's   
    former directors and FIAL Taiwan's former legal representative, as well   
    as various FIAL Taiwan employees, to assert FIAL's rights over its        
    assets, books, records and trading rights;                                
                                                                              
    (b)   FIAL Taiwan's bankers and major customers have been formally        
    notified of the above developments and the appointment of Mr. Adam Lee    
    as the new legal representative of FIAL Taiwan;                           
                                                                              
    (c)   The New Board has kept Scania fully informed of the current issues  
     in Taiwan, and of the efforts being made to restore control over the     
    Taiwanese operations;                                                     
                                                                              
    (d)   The New Board has identified a new management team to take          
    management control of the Group's Taiwanese operations as part of a       
    strategic plan to restore stability to the Group's operations.            
                                                                              
    CLAIM BY FAI                                                              
                                                                              
    As shown in the Interim Report, the Company's consolidated balance sheet  
    includes an amount of approximately HK$82,315,000 due to FAI as at 30     
    June 2004. On 14 October 2004, FAI issued a demand against FIAL for an    
    amount of approximately NT$400 million (approximately HK$100 million)     
    allegedly in respect of the cost of assembled units supplied by FAI to    
    FIAL under the sub-assembly agreement. The New Board is currently         
    reviewing this demand and the possible impact on the Group's operations   
    and relationship with FAI.                                                
                                                                              
    SCANIA RELATIONSHIP