09:31 FOREFRONT INT'L<00885> - Announcement (3) Scania is the Group's principal trading partner and its main supplier. Scania is also a shareholder of the Company with an interest in approximately 4.8% of the Shares. Reference is made to the Company's announcement dated 30 December 2003 in relation to the licenses granted by Scania to the Group. Over the past several months the Board has been liaising with Scania in relation to the recent Board and management changes and the Group's continued relationship with Scania. On 19 April 2005 the Group received notice from Scania of the termination of all existing licensing arrangements by giving not less than 12 months' notice, in accordance with the various agreements between the Group and Scania, with the effect that such licences will expire and cease to apply after 26 April 2006. The Company was informed by Scania in advance of this step and understands that Scania's notice to terminate the licences is part of Scania's overall strategy to restructure the existing licences held by the Group. Based on continuing discussions with Scania, the Group is confident that it retains the support of Scania and that new arrangements will be in place prior to 26 April 2006 when the existing licences will expire. In the event that new licensing arrangements are not entered into prior to 26 April 2006, or the notices of termination are not withdrawn, the termination of the existing licences will have a material adverse impact on the operations and financial performance of the Group. CONTINUED SUSPENSION OF TRADING IN THE COMPANY'S SHARES As a result of the matters outlined herein, it is the view of the Board that trading in the shares of the Company should continue to be suspended pending resolution of these issues. Shareholders of the Company and potential investors should exercise caution when dealing in the shares of the Company. In this announcement, unless the context otherwise requires, the following terms shall have the following meanings:- "Board" the board of directors of the Company; "Circular" the circular issued by the Company dated 5 July 2004 in relation to the Disposal; "Company" Forefront International Holdings Limited, a company incorporated in the Cayman Islands on 10 September 1998 with limited liability, the shares of which are listed on the Stock Exchange; "Disposal" the disposal of FIAL of a 51% equity interest in FAI to Neo China as referred to in the announcement of the Company made on 11 June 2004, the Circular and the Interim Report; "FAI" (Forefront Automobile Industry Limited*), a company incorporated in Taiwan; "FIAL" Forefront International Automotive Limited, a company incorporated in the British Virgin Islands with limited liability and being a wholly-owned subsidiary of the Company; "FIAL Taiwan" Forefront International Automotive Limited, Taiwan Branch; "Group" the Company and its subsidiaries; "HK$" Hong Kong dollars, the lawful currency of Hong Kong; "Hong Kong" the Hong Kong Special Administrative Region of the PRC; "Infinix" Infinix International Incorporated, a company incorporated in Taiwan; "Interim Report" the Company's interim report for the six months ended 30 June 2004; "Mr. Adam Lee" Mr. Lee Ching Yan, Adam - the Group's new legal representative for FIAL Taiwan; "Mr. James Yang" Mr. Yang Chien Nan, James, former Chairman of the Group; "Neo China" Neo China Group Limited, a company incorporated in the British Virgin Islands with limited liability being, as disclosed to the Company at the time of the Disposal, wholly and beneficially owned by Mr. Chiang Chao-Nan;