Major Shareholder:

• VS Berhad - 53.28% interest
• VS Corporation ¡V 13.00% interest

Company Subsidiaries:

• VSHK (100%): Production of plastic moulded products and parts and assembling of electronic products
• VS Shenzhen (100%): Operates the Group¡¦s production facilities in Shenzhen, the PRC
• VS Zhuhai (100%): Operates the Group¡¦s production facilities in Zhuhai, the PRC
• HAIVS Qing Dao (100%): Operates the Group¡¦s production facilities in Qing Dao, the PRC
• VS Haier (80%): Operates the joint venture operation of the Group¡¦s business with Qingdao Haier

The Group is principally engaged in production and sales of plastic moulded products and parts, assembling of electronic products and mould design and fabrication businesses. All these business activities of the Group form part of the integrated manufacturing solutions provided to its customers.

The Group commenced its assembling of electronic products business in December 1998 in response to the increasing demands from its customers. With the capability of producing high quality plastic moulded products and parts and assembling of electronic products, the Group is able to provide its customers with integrated manufacturing solutions for electrical appliances, such as home audio equipment, remote control units, printed circuit boards and certain parts and components for computer printers and scanners.

The Group's expertise in plastic injection and moulding business also enables it to provide specialised mould design and fabrication services for other manufacturers in the PRC.

• The Directors believe that the Group has competitive advantage over its competitors in the production of high-quality plastic moulded products and parts as well as provision of assembling services for companies which would like to outsource their production process.

• The production facilities of the Group are located in Shenzhen, Zhuhai and Qingdao, the PRC. The Directors believe that all these cities will enjoy a high rate of economic growth following the accession of the PRC to the WTO and, in particular, their export business is expected to grow at a fast pace. The Directors also believe that this anticipated economic growth facilitates the further business development of the Group.

• Because of its expertise in producing plastic moulded products and parts, the Group has established a solid customer base with certain renowned electrical products manufacturers. Following the accession of the PRC to the WTO, the Directors consider that such customer base will provide ample business but also in the integrated manufacturing solutions provided by the Group.

• The executive Directors have, in average, approximately 20 years of practical experience in the plastic injection and moulding business as well as the business of assembling of electronic products.

• Increase in the prices of plastic resins will increase the cost of purchase for the Group. During each of the three financial years, the Group consumed approximately HK$30.06m, HK$70.13m and HK$123.02m of plastic resins respectively, representing approximately 24.35%, 33.88% and 23.17% of the cost of sales of the Group respectively.

• Reliance on certain major customer. Sales to the five largest customers of the Group accounted for approximately 73.89%, 66.54% and 73.06% of the turnover of the Group.

• Reliance on certain major suppliers. Purchases from the five major suppliers of plastic resins and electronic components accounted for approximately 21.31%, 33.69% and 27.09% respectively of the cost of sales of the Group.

The objective of the Group is to become a leading provider of integrated manufacturing solutions in the PRC for electrical and electronic products. The Directors intend to adopt the following strategies to achieve the objective:

• Expand the scope for integrated manufacturing solutions
• Expand and enhance the production facilities of the Group
• Increase co-operation with leading manufacturers of electrical appliances in the PRC
• Expand the customer base and explore the PRC domestic market
• Strengthen the promotional activities of the Group

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$58.5 million (based on the offer price HK$0.40 per share). The Group at present intends to apply the net proceeds as follows: