VSTECS Holdings Limited - Proxy Solicitation & Information Statement 2009

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in VST Holdings Limited, you should at once hand this circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

This circular sets out the information with respect to the waiver of assured entitlement and connected transactions and is for information only and does not constitute an intention or offer to acquire, purchase or subscribe for any securities.

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(the “Company”)
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(incorporated in the Cayman Islands with limited liability)

(Stock Code: 856)

PROPOSED SPIN-OFF AND SEPARATE LISTING OF ECS ICT BHD AND ITS SUBSIDIARIES ON MAIN BOARD OF BURSA MALAYSIA SECURITIES BERHAD PROPOSED DISCLOSEABLE TRANSACTION AND CONNECTED TRANSACTIONS IN RELATION TO THE PUBLIC OFFER OF ECSB SHARES AND

CONNECTED TRANSACTIONS RELATING TO ACQUISITION OF 20% EQUITY INTEREST IN ECS PERICOMP SDN BHD AND ISSUE OF ECSB SHARES TO CONNECTED PERSONS

Independent financial adviser

Grand Vinco Capital Limited

(A wholly-owned subsidiary of Vinco Financial Group Limited)

A letter from the board of directors of VST Holdings Limited, a letter from the Independent Board Committee and a letter from the independent financial advisers are set out on pages 5 to 18, pages 19 to 20 and pages 21 to 33 of this circular.

A notice convening the extraordinary general meeting of VST Holdings Limited to be held at 10:30 a.m. on 21 August 2009 at Bowen Room, Level 7, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong, is set out on page 37 of this circular. If you are unable to attend the extraordinary general meeting in person, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon. In order to be valid, the proxy form must be deposited by hand or post to the Company’s Hong Kong branch share registrar, Tricor Abacus Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong, not less than 48 hours before the time appointed for holding the extraordinary general meeting or adjourned meeting or not less than 24 hours before the time appointed for taking the poll (as the case may be). If the proxy form is signed by a person under a power of attorney or other authority, a notarially certified copy of that power of attorney or authority shall be deposited at the same time as mentioned in the proxy form. Completion and return of the proxy form will not preclude you from subsequently attending and voting at the extraordinary general meeting or any adjournment thereof should you so wish.

for identification purpose only

9 July 2009

	Pages
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1-4
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5-18
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . .	19-20
Letter from the Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . .	21-33
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	34-36
Notice of Extraordinary General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	37-38

– i –

DEFINITIONS

In this circular, the following expressions have the meanings set out below unless the context requires otherwise.

“%” percentage
“Board” the board of Directors
“Bursa Securities” Bursa Malaysia Securities Berhad
“Business Day” any day (excluding Saturdays, Sundays and public holidays in Hong Kong) on which licensed banks generally are open for business in Hong Kong
“Company” VST Holdings Limited, a company incorporated in Cayman Islands whose Shares are listed on the Main Board of the Stock Exchange
“Connected Person” connected person of the Company as defined in the Listing Rules
“Condition Period” a period of twelve months from the date of Pericomp Agreement or any extended period as ECSB and SIS may mutually agree
“Consideration Shares” 1,000,000 ECSB Shares to be issued to SIS as part of the consideration for the sale and purchase of the Sale Shares under the Pericomp Agreement
“Directors” directors of the Company
“Director Allocation”
the proposed allocation of 600,000 new ECSB Shares to ECSB Directors for application to subscribe in the Public Issue
“ECS”
ECS Holdings Limited, a company incorporated in Singapore and whose shares are listed on the Main Board of Singapore Exchange Limited and is a non-wholly owned subsidiary of the Company
“ECSB”
ECS ICT Bhd, a company incorporated under the laws of Malaysia and is currently a subsidiary of Kush
“ECSB Directors”
directors of ECSB
“ECSB Shares”
ordinary shares of RM0.50 each in the capital of ECSB
“EGM”
extraordinary general meeting of the Company

– 1 –

DEFINITIONS

“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 People’s Republic of China
“ICT” means information, communication and technology for the purpose of this circular
“IPO Price” the issue price of the ECSB Shares to be offered to investors for subscription and purchase in the Public Issue and the Vendor Sale
“Kush” ECS Kush Sdn Bhd, a company incorporated in Malaysia and a subsidiary of ECS
“Kush Group”
Kush and its subsidiaries prior to pre-IPO Restructuring or ECSB and its subsidiaries thereafter, as the case may be
“Independent Board Committee” an independent board committee of the Company comprising all the independent non-executive Directors
“Independent Shareholders”
Shareholders other than the controlling Shareholders and their respective associates, or where there are no controlling Shareholders, Directors (excluding independent non-executive Directors) and the chief executive of the Company and their respective associates
“Latest Practicable Date” 3 July 2009 being the last practicable date prior to the bulk printing of this circular for the purpose of ascertaining certain information herein
“Listing Rules”
the Rules Governing the Listing of Securities on the Stock Exchange
“Pericomp”
ECS Pericomp Sdn Bhd, a company incorporated in Malaysia 80% owned by Kush;
“Pericomp Acquisition”
the acquisition of the Sale Shares from SIS and the issue of the Consideration Shares pursuant to the “Pericomp Agreement”
“Pericomp Agreement”
the share sale agreement dated 18 June 2009 entered into between ECSB and SIS for ECSB to acquire the Sale Shares from SIS

– 2 –

DEFINITIONS

“pre-IPO Restructuring” the restructuring of the Kush Group in preparation for the Proposed Listing as more particularly described under the heading “pre-IPO Restructuring” in this circular
“PRC” People’s Republic of China
“Practice Note 15” the Practice Note 15 to the Listing Rules
“Proposed Spin-off” the proposed spin-off of ECSB for separate listing on Bursa Securities by the Company
“Proposed Listing” the proposed listing of and quotation for the enlarged issued and paid-up share capital of ECSB comprising 120,000,000 ECSB Shares on the Main Board of Bursa Securities
“Public Issue” the proposed issue of approximately 27 million new ECSB Shares for subscription by investors at the IPO Price in connection with the Proposed Listing as more particularly described under the heading titled “Structure of the Proposed Spin-off” in this circular
“Public Offer” the proposed Public Issue and the sale of 7.2 million ECSB Shares by ECS in the Vendor Sale in connection with the Proposed Listing as more particularly described under the heading titled “Structure of the Proposed Spin-off” in this circular
“RM”
Ringgit Malaysia, the lawful currency of Malaysia
“Sale Shares”
80,000 ordinary shares of RM1.00 each, representing 20% of the total issued and paid up share capital, of Pericomp to be sold to ECSB by SIS pursuant to the Pericomp Agreement
“SFO”
Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
“Sengin”
Sengin Sdn Bhd, a company incorporated in Malaysia and currently a shareholder holding 20% of the shares in the capital of Kush;
“Shareholder(s)” holder(s) of the Share(s)
“Shares”
the ordinary shares of HK$0.10 each in the capital of the Company

– 3 –

DEFINITIONS

“SIS” SIS Investment Holdings Ltd, a company incorporated under the laws of British Virgin Islands and wholly owned by SIS International Holdings Limited whose shares are listed on the Stock Exchange
“Stock Exchange” The Stock Exchange of Hong Kong Limited
“TSP” Teo Soo Pin Sdn. Bhd., a company incorporated in Malaysia and currently a shareholder holding 20% of the shares in the capital of Kush;
“Vendor Sale” the proposed vendor sale of approximately 20 million ECSB Shares at the IPO Price by ECS, TSP and Sengin in connection with the Proposed Listing as more particularly described under the heading titled “Structure of the Proposed Spin-off” in this circular
“Vinco Capital” Grand Vinco Capital Limited, a wholly-owned subsidiary of Vinco Financial Group Limited (stock code: 8340), a licensed corporation to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO, being the independent financial adviser to the Independent Board Committee and the Independent Shareholders
“VST Group” the Company and its subsidiaries
“Waiver” waiver of strict compliance with such assured entitlement requirements in respect of the Public Offer by the minority Shareholders in accordance with Practice Note 15

The exchange rate adopted in this circular is RM1 = HK$2.2 which is for reference only

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LETTER FROM THE BOARD

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(the “Company”) (incorporated in the Cayman Islands with limited liability) (Stock Code: 856)

Executive Directors: Mr. Li Jialin (Chairman) Mr. Tay Eng Hoe (Vice Chairman) Mr. Ong Wei Hiam, William Mr. Chan Hoi Chau

Independent Non-Executive Directors: Mr. Ni Zhenwei Dr. Chan Po Fun Peter Mr. Li Wei

Registered Office: Cricket Square, Hutchins Drive P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands

Principal Place of Business: Unit 1901, 19/F, West Tower Shun Tak Centre 168 Connaught Road Central Hong Kong

9 July 2009

To the Shareholders

Dear Sir or Madam,

PROPOSED SPIN-OFF AND SEPARATE LISTING OF ECS ICT BHD AND ITS SUBSIDIARIES ON MAIN BOARD OF BURSA MALAYSIA SECURITIES BERHAD PROPOSED DISCLOSEABLE TRANSACTION AND CONNECTED TRANSACTIONS IN RELATION TO THE PUBLIC OFFER OF ECSB SHARES AND

CONNECTED TRANSACTIONS RELATING TO ACQUISITION OF 20% EQUITY INTEREST IN ECS PERICOMP SDN BHD AND ISSUE OF ECSB SHARES TO CONNECTED PERSONS

INTRODUCTION

Reference is made to the announcement of the Company dated 18 June 2009 relating to the Proposed Spin-off, the Waiver and certain connected transactions relating to the acquisition of 20% equity interests in Pericomp and the Director Allocation. Kush, a company incorporated in 1993 in Malaysia, is currently owned as to 60% by ECS, which is itself a company listed on the Singapore Exchange Limited and, in turn, owned as to approximately 90% shares by the Company.

* for identification purpose only

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LETTER FROM THE BOARD

The Kush Group is consisted of its current holding company, Kush and four subsidiaries namely, ECS Astar Sdn Bhd, ECS Ku Sdn Bhd, Pericomp and ECSB. After the pre-IPO Restructuring, ECSB will become the holding company of the Kush Group where Kush, ECS Astar Sdn Bhd, ECS Ku Sdn Bhd, Pericomp will become its subsidiaries.

The Company intends to spin off ECSB for separate listing on Main Board of Bursa Securities in Malaysia by way of the Public Issue and Vendor Sale. For this purpose, ECSB has submitted the application for the Proposed Listing to the Securities Commission of Malaysia on 18 June 2009.

Pre-IPO Restructuring

In preparation for the Proposed Spin-off, the Kush Group will undergo a pre-IPO Restructuring whereby ECSB will become the holding company of the Kush Group and Pericomp will become a wholly-owned subsidiary of ECSB through the Pericomp Acquisition. The corporate structure before and after the pre-IPO Restructuring and Proposed Spin-off are as follows:–

Existing Corporate Structure of The Kush Group

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The Company Public
90% 10%
Sengin TSP
ECS
20% 20%
60%
Foo Sen Chin Dato’ Teo Kush SIS
Chiang Quan
2 shares 2 shares
99.9% 100% 100% 80% 20%
ECS Ku ECS Astar
ECSB Pericomp
Sdn Bhd Sdn Bhd
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LETTER FROM THE BOARD

The Kush Group immediately after completion of pre-IPO Restructuring

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The Company Public
90% 10%
Sengin TSP ECS
20% 20%
60%
ECSB
100%
100% 100% 100% 100%
ECS Astar ECS Ku
Sdn Bhd Sdn Bhd Pericomp Kush
The Kush Group immediately after Proposed Spin-Off
The Company Public
90% 10%
Public Sengin TSP ECS Directors of ECSB
39.5% 10% 10% 40% 0.5%
ECSB
100%
100% 100% 100% 100%
ECS Astar ECS Ku
Sdn Bhd Sdn Bhd Pericomp Kush
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The Kush Group’s principal activities are ICT distribution, provision of enterprise systems and ICT services. All these businesses involve ICT hardware and software sourced from ICT principals (or vendors) and distributed to large corporations and ICT resellers, which mainly comprise retailers, system integrators and corporate dealers, in Malaysia.

VST Group’s principal activities are distribution of computer components (such as hard disks and central processing unit) and distribution of computer products (such as personal computers and printers), enterprise systems and ICT services.

– 7 –

LETTER FROM THE BOARD

Structure of the Proposed Spin-off

Subject to the final decision of the board of directors of ECSB on the final structure and IPO Price, the initial public offerings of ECSB, which will be fully underwritten, is expected to comprise:

a public issue of approximately 27 million new ECSB Shares (approximately 22.50% of the issued share capital of ECSB on a fully diluted basis) at an indicative IPO Price of RM1.46 (approximately HK$3.21) per share to raise approximately RM39.4 million (approximately HK$86.7 million) before listing expenses; and
a vendor sale of 20 million ECSB Shares (approximately 16.67% of the issued share capital of ECSB on a fully diluted basis) at an indicative IPO Price of RM1.46 (approximately HK$3.21) by ECS, TSP and Sengin. ECS proposes to sell 7.2 million ECSB Shares in the Vendor Sale.

Director Allocation

Out of the Public Issue, approximately 3,600,000 new ECSB Shares (approximately 3.00% of the issued share capital of ECSB on a fully diluted basis) are proposed to be allocated to eligible ECSB Directors, employees and business associates of the Kush Group for application to subscribe including 600,000 ECSB Shares to certain ECSB Directors namely, Soong Jan Hsung, Tay Eng Hoe, Eddie Foo Toon Ee and Wong Heng Chong. Currently, the plan is to allocate 150,000 ECSB Shares to each of Soong Jan Hsung, Tay Eng Hoe, Eddie Foo Toon Ee and Wong Heng Chong and the exact allocation is subject to adjustment according to the requirements of the Securities Commission of Malaysia and the ultimate decision of the board of ECSB.

As the Director Allocation is just part of the Public Issue which is fully underwriten, in the event that the 600,000 ECSB Shares available under the Director Allocation are not taken up by all or some of the ECSB Directors, the ECSB Shares not so taken up are expected to be re-allocated for subscription by the public under the Public Issue.

The IPO Price will be arrived at after taking into consideration (i) the proforma consolidated net tangible asset value per ECSB Share as at 31 December 2008 of RM0.87(approximately HK$1.91), (ii) the net consolidated earning per shares of ECSB for the financial year ended 31 December 2008 of RM0.213(approximately HK$0.469) and (iii) the operating history, industry overview, prospects and future plans of the Kush Group. The final IPO Price shall be determined between the directors of ECSB and the underwriter(s)/placement agent(s) for the Proposed Listing subject to the then prevailing market sentiments.

Based on the proposed structure and indicative IPO Price of Public Offer as described above, the gain expected to accrue from the Public Offer to the Company are approximately HK$20.4 million on the basis of the increase of the ECS consolidated net assets value (which also consolidated the Kush Group’s net assets value) from HK$90.4 million as of 31 December 2008 to HK$110.8 million after the Proposed Spin-off.

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LETTER FROM THE BOARD

The ECSB Shares to be offered pursuant to the Public Issue will rank pari passu in all respects with other ECSB Shares then in issue.

The Shares will continue to be listed on the Main Board of the Stock Exchange after the implementation of the Proposed Spin-off.

Conditions to the Proposed Spin-off

The Proposed Spin-off is conditional upon,

(a) admission of ECSB and the listing of and quotation for the enlarged issued and paid-up share capital of ECSB comprising 120,000,000 ECSB Shares on the Main Board of Bursa Securities;
(b) the Independent Shareholders approving the Pericomp Acquisition, the issue of ECSB Shares to ECSB Directors pursuant to the Director Allocation and the Waiver;
(c) the shareholders of ECS approving the pre-IPO Restructuring, the Pericomp Acquisition and Proposed Spin-off; and
(d) the approval of other relevant authorities or regulatory bodies, where required.

If any of these conditions are not fulfilled, the Proposed Spin-off will lapse upon which the Company will issue an announcement accordingly as soon as practicable.

Non-compete Undertaking

The Kush Group conducts its business exclusively in Malaysia whereas the VST Group conducts its business outside of Malaysia. The Directors are of the view that the business of the Kush Group and that of the remaining VST Group are delineated by territory. In order to enhance such delineation, it is proposed that upon listing of ECSB, the Company and ECSB enter into a non-compete agreement pursuant to which ECSB shall not be engaged in business of distribution of or exporting computer end products (i.e. not computer component products) outside Malaysia or knowingly sell such ICT products to customers with intention of resale to places or users out of Malaysia and shall offer any such business opportunity to the remaining VST Group; and the remaining VST Group shall not be engaged in such business of distribution of or exporting such ICT products in Malaysia.

Intended use of proceeds

Based on the indicative IPO Price of RM1.46 (approximately HK$3.21) per ECSB Share, the net proceeds (after deducting all listing expenses) arising from the Public Issue of approximately RM36.4 million (approximately HK$80.1 million) (including RM876,000 (approximately HK$1.9 million) from the issue to ECSB Directors pursuant to the Director Allocation assuming subscription in full) is intended to be used in the following manner:

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LETTER FROM THE BOARD

as to RM1.66 million (approximately HK$3.65 million) for funding the settlement of the consideration among the members of the Kush Group under the pre-IPO Restructuring other than the Pericomp Acquisition;
as to RM5.44 million (approximately HK$11.97 million) for funding the Pericomp Acquisition;
as to RM5 million (approximately HK$11 million) for business expansion of the Kush Group;
as to RM24.32 million (approximately HK$53.50 million) for general working capital of the Kush Group.

Based on the indicative IPO Price of RM1.46 (approximately HK$3.21) per ECSB Share, the net proceeds (after deducting all listing expenses) arising from the sale of ECSB Shares by ECS in the Vendor Sale of approximately RM10.3 million (approximately HK$22.7 million) is intended to be used for the general working capital of ECS.

ASSURED ENTITLEMENTS AND WAIVER

According to Practice Note 15, the Company is expected to provide its Shareholders with an assured entitlement to ECSB Shares by way of preferred application in the Public Offer. ECSB is proposed to be listed outside Hong Kong, and ECSB Shares under any assured entitlement can only be made available to the Shareholders by way of a public offering in Hong Kong. The cost of conducting a public offering is relatively costly as compared with the size of the fund to be raised in the Proposed Spin-off. If assured entitlement is offered, ECSB may allocate 10% of the Public Offer i.e. approximately 3.4 million ECSB Shares to the Shareholders. Because of the substantial amount of shares of the Company in issue, the assured entitlement ratio will be 31 ECSB Shares for every board lot of 10,000 shares of the Company. As such, Shareholders holding a board lot of less than 1,000,000 are expected to be allocated with odd lots of ECSB Shares as assured entitlement. As odd lots are normally be traded below the market price, a number of Shareholders will not be able to enjoy the benefit of the assured entitlement. Strict compliance with the assured entitlement requirement would not be for the benefit of the Company or its Shareholders. The Company therefore will convene the EGM to seek its minority Shareholders’ approval of a waiver of strict compliance with such assured entitlement requirements.

– 10 –

LETTER FROM THE BOARD

FINANCIAL INFORMATION ON THE KUSH GROUP

Set out below are the total revenue and net profits before and after tax of the Kush Group for the two years ended 31 December 2008.

	Financial year ended	Financial year ended
	31 December 2007	31 December 2008
	RM’000/HK$’000	RM’000/HK$’000
Total revenue	976,990/2,149,378	1,159,534/2,550,975
Net profit before tax	18,946/41,681	27,107/59,635
Net profit after tax	13,733/30,213	19,800/43,560

FINANCIAL EFFECTS OF THE PROPOSED SPIN-OFF

Set out below are the financial effects of the Proposed Spin-off on the VST Group’s net assets value and earnings.

Net Asset Value

As at 31 March 2008 and 30 September 2008, the value of the consolidated net assets of the VST Group (including the Kush Group) were approximately HK$1,190 million (audited) and HK$1,280 million (unaudited) respectively while the value of the net assets of Kush Group attributable to the VST Group was approximately HK$71 million (or RM32.3 million) and HK$83 million (or RM37.7 million), representing approximately 5.97 % and 6.48% of the VST Group’s net asset value as of 31 March 2008 and 30 September 2008 respectively. The Proposed Spin-off will have little effect on the net asset value of VST Group.

Earnings

For the years ended 31 March 2007 and 31 March 2008 respectively, the consolidated net profits before and after tax of VST Group (including the Kush Group) are as follows:–

			Financial year ended	Financial year ended
			31 March 2007	31 March 2008
			HK$’000	HK$’000
Net	profit	before tax	195,594	329,263
Net	profit	after tax	161,333	259,553

– 11 –

LETTER FROM THE BOARD

For the years ended 31 December 2007 and 31 December 2008 respectively, the consolidated net profits before and after tax of the Kush Group are as follows:–

			Financial year ended	Financial year ended
			31 December 2007	31 December 2008
			RM’000/HK$’000	RM’000/HK$’000
Net	profit	before tax	18,946/41,681	27,107/59,635
Net	profit	after tax	13,733/30,213	19,800/43,560

As the net profit after tax of the Kush Group for its latest financial year is approximately 16.8% of the consolidated net profits after tax of the Company for its latest financial year, the Proposed Spin-off is expected to have no material adverse effect on the earnings.

Further, after the Proposed Spin-off, ECS’s shareholdings in ECSB will be reduced from 60% to 40%. ECSB will no longer be a subsidiary of ECS and the Kush Group and its results will not be consolidated into the accounts of the VST Group. Notwithstanding the above, the profit will still be equity accounted for in the accounts of VST Group according to the Hong Kong Generally Accepted Accounting Principles and Singapore Generally Accepted Accounting Principles as VST Group maintains a shareholding of 20% or more of the Kush Group after the Proposed Spin-off.

REASONS FOR THE PROPOSED SPIN-OFF AND DIRECTOR ALLOCATION

The Proposed Spin-off is expected to confer the following commercial benefits to both VST Group and the Kush Group, as follows:

allowing the Kush Group to access the capital market for funds at a lower cost for future expansion and working capital;
rewarding directors and employees of the Kush Group by allowing them to participate in the capital and future growth of the Kush Group;
enhancing the reputation and credit worthiness of the Kush Group, particularly in dealing with customers, suppliers, resellers and bankers;
enabling the VST Group to realize part of their investments in the Kush Group;
enabling the VST Group’s remaining shareholdings in the Kush Group to be reflected with full market valuation; and
enabling ECSB through the Vendor Sale to meet the minimum 25% public shareholding spread requirement under the listing requirements of Bursa Securities for the purpose of the Proposed Listing.

– 12 –

LETTER FROM THE BOARD

The Director Allocation will allow the Kush Group to further incentivize directors of the Kush Group by affording them the opportunity to hold ECSB Shares and participate in the capital and future growth of the Kush Group from the time of the Proposed Listing. The Kush Group and ultimately the VST Group will be benefited from more contributions of such directors who also have an equity interest in ECSB.

LISTING RULES IMPLICATIONS

The Directors are of the view that the Company complies with all the spin-off requirements under Practice Note 15, subject to the Independent Shareholders passing an ordinary resolution at the EGM to approve the Waiver and the issue of ECSB Shares to ECSB Directors pursuant to the Director Allocation.

The Public Offer will constitute a discloseable transaction for the Company under Chapter 14 of the Listing Rules. As such, the Public Offer is subject to disclosure requirements under Chapter 14 of the Listing Rules.

The issue of 600,000 new ECSB Shares pursuant to the Director Allocation in the Public Issue, and subscription by, the ECSB Directors, who are Connected Persons will constitute connected transactions for the Company under Chapter 14A of the Listing Rules. Therefore, such issue is subject to the approval of the Independent Shareholders at the EGM to the convened.

The Directors considered that the Waiver and such issue of ECSB Shares to ECSB Directors are fair and reasonable and in the interests of the Company and its Shareholders as a whole.

The listing of the ECSB Shares pursuant to the Proposed Spin-off is subject to, among others, the approval of the Independent Shareholders of the Waiver, issue of ECSB Shares pursuant to the Director Allocation, the admission of ECSB and the Proposed Listing on the Main Board of Bursa Securities, the shareholders of ECS approving the pre-IPO Restructuring, the Pericomp Acquisition and the Proposed Listing and the final decision of the board of ECSB Directors. As such, the Proposed Spin-off may or may not occur. Shareholders and other investors are reminded to exercise caution when dealing in the securities of the Company.

– 13 –

LETTER FROM THE BOARD

PROPOSED CONNECTED TRANSACTION INVOLVING ACQUISITION OF SHARES FROM AND ISSUE OF SHARES TO A CONNECTED PERSON

The Board are pleased to announce that as part of the pre-IPO Restructuring, on 18June 2009, ECSB entered into the Pericomp Agreement with SIS to acquire the Sale Shares for a total consideration of RM6,900,000 (approximately HK$15.2 million).

Pericomp’s principal business is distribution of ICT products.

Date: 18 June 2009 Parties: ECSB, an indirect non-wholly owned subsidiary of the Company SIS, a company incorporated in the British Virgin Islands and wholly owned by SIS International Holdings Limited whose shares are listed on the Stock Exchange

SIS is holding 20% of the shares in the capital of Pericomp, an indirect non-wholly owned subsidiary of the Company, and is therefore a Connected Person. The principal activities of SIS are investment holding.

Assets to be acquired

80,000 ordinary shares of RM1.00 each, representing 20% of, the total issued and paid-up share capital, of Pericomp which is currently a subsidiary of Kush and will become a subsidiary of ECSB after completion of the pre-IPO Restructuring.

Consideration

The consideration of RM6,900,000 (approximately HK$15.2 million) was determined on an arm’s length basis between ECSB and SIS with reference to the market conditions having regard to a number of factors including the net asset value of Pericomp of approximately RM26.6 million (approximately HK$58.5 million) as at 31 December 2008, the carrying value of Pericomp in SIS of approximately HK$11.9 million, the prospect and the expected return in the business of distributing ICT products. The consideration shall be satisfied in the following manner:–

(a) issue of 1,000,000 new ECSB Shares to SIS at an issue price equivalent to the IPO Price; and
(b) the remaining consideration shall be paid in cash within 7 days after listing and quotation of the enlarged paid up capital of ECSB on the Main Board of Bursa Securities.

The Consideration Shares will rank pari passu in all respects with all other ordinary shares in the capital of ECSB.

After the issue of the Consideration Shares alone, Pericomp will continue to be a subsidiary of the Company. However, after the issue of ECSB Shares in the Public Issue at the same time as such issue of the Consideration Shares, Pericomp (being part of the Kush Group)

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LETTER FROM THE BOARD

will cease to be a subsidiary of the Company as ECS’s shareholdings in ECSB will be reduced from 60% to 40% and its results will not be consolidated into the accounts of the VST Group. Notwithstanding the above, the profit will still be equity accounted for in the accounts of VST Group according to the Hong Kong Generally Accepted Accounting Principles and Singapore Generally Accepted Accounting Principles as VST Group maintains a shareholding of 20% or more of the Kush Group after the Proposed Spin-off.

Conditions Precedent

The sale and purchase of the Sale Shares and the issue of the Consideration Shares are subject to the conditions precedent set out below being fulfilled within the Condition Period.

the approval of the Securities Commission of Malaysia for the Proposed Listing, the sale and purchase of the Sale Shares and the issuance of the ECSB Shares;
the approval in principle of the Bursa Securities for the listing of and quotation for the ECSB Shares and the Proposed Listing;
the entire portion of the ordinary shares to be made available for the Public Issue and the Vendor Sale having been fully subscribed for and paid up by the investors and/or the underwriter(s), as the case may be;
the approval of the shareholders and directors of ECSB to the Pericomp Acquisition;
the approval of the directors of the Pericomp to the Pericomp Acquisition;
the approval of the directors of SIS for the disposal of the Sale Shares upon the terms and conditions set out in the Pericomp Agreement, if required;
the approval of the shareholders of SIS for the disposal of the Sale Shares upon the terms and conditions set out in the Pericomp Agreement, if required;
the approval of the Shareholders for the Pericomp Acquisition;
approval of the Stock Exchange and such other approvals from the relevant authorities for the disposal of the Sale Shares by SIS, if applicable;
the approval(s) of any other relevant authority(ies) if so required;

In the event these conditions precedent or any of them are not obtained by the expiration of the Condition Period, ECSB and SIS may mutually agree in writing to such extended period or periods to obtain the approvals. In the event any of these conditions precedent is not fulfilled and (other than items 7, 8 and 9 above which cannot be waived) not waived by the parties within the Condition Period or a the period extended by agreement of ECSB and SIS in writing, the Pericomp Agreement will terminate and thereafter be null and void.

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LETTER FROM THE BOARD

If the approval of any relevant authorities is obtained subject to terms and conditions which would adversely affect any of ECSB and SIS and are not acceptable to such affected party, the affected party may seek an amendment or waiver of such terms and conditions by giving notice to the other party, and submitting to the appropriate authorities an appeal for amendment or waiver or such terms and conditions, in accordance with the terms of the Pericomp Agreement.

If the terms of the Pericomp Agreement are to be varied pursuant to the conditions imposed by any of the relevant authorities, and such variations are accepted by ECSB and SIS, such variations will be made to the Pericomp Agreement accordingly, including but not limited to the adjustment of the number of the ECSB Shares to be issued by ECSB to SIS. If such variations or the decision of the relevant authority pursuant to an appeal by the affected party are not accepted by ECSB and SIS, both parties shall negotiate in good faith with a view to adjusting the terms of the Pericomp Agreement. If both parties fail to reach any agreement in respect of such variations, the Pericomp Agreement will terminate and be null and void thereafter.

The Proposed Listing is not conditional upon the completion, and will not be affected by the termination, of the Pericomp Acquisition. If the Pericomp Agreement is terminated or revised by adjusting the number of Consideration Shares as required by the relevant authorities, the structure of the Public Offer may be revised to include the Consideration Shares in the Public Issue or otherwise as may be approved by the relevant authorities.

Completion

Completion of the sale and purchase of the Sale Shares shall take place within thirty days from the date of fulfilment of the last of the conditions precedent described above or if such a day is not a business day in Kuala Lumpur, the next succeeding business day or such other extended period or periods as may be mutually agreed upon between ECSB and SIS.

Value of Assets and Net Profits

The book value of the Sale Shares is RM5.32 million (approximately HK$11.7 million) and the original purchase cost of the Sale Shares to SIS is RM80,000 (approximately HK$176,000).

The net profits before and after taxation and extraordinary items of Pericomp attributable to the Sale Shares for the financial year ended 31 December 2007 are RM1,277,976 (approximately HK$2.8 million) and RM932,652 (approximately HK$2.1 million) respectively.

The net profits before and after taxation and extraordinary items of Pericomp attributable to the Sale Shares for the financial year ended 31 December 2008 are RM1,321,117 (approximately HK$2.9 million) and RM967,354 (approximately HK$2.1 million) respectively.

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LETTER FROM THE BOARD

Reasons for and Benefits of Entering into the Pericomp Agreement

The purpose of the Pericomp Agreement is to allow ECSB to directly hold all shares in Pericomp and to streamline the shareholding structure in preparation for the Proposed Listing.

The Directors including the independent non-executive Directors believe that the terms of the Pericomp Agreement including the issue of the Consideration Shares are fair and reasonable and in the interests of the Company and its Shareholders as a whole.

Listing Rules Implications

As SIS, being a substantial shareholder holding 20% of the shares in the capital of Pericomp (a subsidiary of the Company), is a Connected Person, the Pericomp Agreement and the transactions contemplated thereunder including the issue of Consideration Shares by ECSB to SIS constituted connected transactions of the Company under Chapter 14A of the Listing Rules and are therefore subject to the approval of the Independent Shareholders.

EGM

Your attention is drawn to pages 37 and 38 of this circular where you will find a notice of the EGM to be held at Bowen Room, Level 7, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on 21 August 2009 at 10:30 a.m. Ordinary resolutions will be proposed at the EGM to approve the Waiver, the Director Allocation, the Pericomp Agreement and the transactions contemplated thereunder. Voting on the resolution will be by poll.

Any Connected Person or Shareholder and its associates with a material interest in the Waiver, the Director Allocation and/or the Pericomp Agreement will not vote in respect of the relevant resolutions proposed at the EGM. To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, as at the Latest Practicable Date, save for Mr. Li Jialin, L&L Limited and Ms. Liu Li who, together, are the controlling shareholders of the Company and will abstain from voting in respect of the Waiver, there are no other Shareholders who will be required to abstain from voting on the resolution approving the Waiver, the Director Allocation and the Pericomp Agreement.

A form of proxy for use at the EGM is enclosed with this circular. Whether or not you are able to attend the EGM in person, you are requested to complete the accompanying form of proxy and return the form of proxy in accordance with the instructions printed thereon as soon as practicable and in any event not less than 48 hours before the time appointed for holding the EGM. Completion and return of the form of proxy shall not preclude you from attending and voting in person at the EGM should you so wish.

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LETTER FROM THE BOARD

RECOMMENDATION

The Directors are of the view that Waiver, the Director Allocation and the terms of the Pericomp Agreement are fair and reasonable, on normal commercial terms and in the interests of the Company and the Shareholders as a whole. The Directors therefore recommend the Shareholders to vote in favour of the resolutions to be proposed at the EGM to approve the Waiver, the Director Allocation and the Pericomp Agreement and the transactions contemplated thereunder.

GENERAL

An Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Waiver, the Director Allocation and the Pericomp Agreement. Grand Vinco Capital Limited has been appointed the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in such regard. Your attention is drawn to the letter of advice from the Independent Board Committee set out on pages 19 to 20 of this circular, which contains its recommendation to the Independent Shareholders, and the “Letter from the Independent Financial Adviser” set out on pages 21 to 33 of this circular, which contains its advice to the Independent Board Committee and the Independent Shareholders.

Your attention is also drawn to the general information set out in the Appendix to this circular.

By order of the Board VST Holdings Limited Li Jialin Chairman

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [167 x 56] intentionally omitted <==

(the “Company”) (incorporated in the Cayman Islands with limited liability) (Stock Code: 856)

Executive Directors: Mr. Li Jialin (Chairman) Mr. Tay Eng Hoe (Vice Chairman) Mr. Ong Wei Hiam, William Mr. Chan Hoi Chau

Independent Non-Executive Directors: Mr. Ni Zhenwei Dr. Chan Po Fun Peter Mr. Li Wei

Registered Office: Cricket Square, Hutchins Drive P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands

Principal Place of Business: Unit 1901, 19/F, West Tower Shun Tak Centre 168 Connaught Road Central Hong Kong 9 July 2009

To the Independent Shareholders

Dear Sir or Madam,

PROPOSED SPIN-OFF AND SEPARATE LISTING OF ECS ICT BHD AND ITS SUBSIDIARIES ON MAIN BOARD OF BURSA MALAYSIA SECURITIES BERHAD PROPOSED DISCLOSEABLE TRANSACTION AND CONNECTED TRANSACTIONS IN RELATION TO THE PUBLIC OFFER OF ECSB SHARES AND CONNECTED TRANSACTIONS RELATING TO ACQUISITION OF 20% EQUITY INTEREST IN ECS PERICOMP SDN BHD AND ISSUE OF ECSB SHARES TO CONNECTED PERSONS

We refer to the circular to the Shareholders dated 9 July 2009 (the “Circular”) of which this letter forms part. Terms defined in the Circular shall have the same meanings when used herein unless the context otherwise requires.

The Independent Board Committee has been formed to advise the Independent Shareholders as to whether, in our opinion, Pericomp Agreement, the Waiver and the Director Allocation and the transactions contemplated thereunder are in the interests of the Company and its Shareholders as a whole and the terms of which are fair and reasonable so far as the Independent Shareholders are concerned. Vinco Capital has been appointed to advise the Independent Board Committee and the Independent Shareholders.

* for identification purpose only

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

We wish to draw your attention to the “Letter from the Independent Financial Adviser” as set out on pages 21 to 33 of the Circular. We have considered the terms and conditions of the Pericomp Agreement, the Waiver and the Director Allocation, the advice of Vinco Capital and the other factors contained in the “Letter from the Board” as set out on pages 5 to 18 of the Circular.

In our opinion, so far as the Independent Shareholders are concerned, the terms of the Pericomp Agreement, the Waiver and the Director Allocation are fair and reasonable, on normal commercial terms and in the interests of the Company and its Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the EGM to approve the Pericomp Agreement, the Waiver, the Director Allocation and the transactions contemplated thereunder.

Yours faithfully, Independent Board Committee of VST Holdings Limited Mr. Ni Zhenwei Dr. Chan Po Fun Peter Mr. Li Wei

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the text of a letter of advice from Grand Vinco Capital Limited to the Independent Board Committee and the Independent Shareholders in respect of respect of (i) the Waiver; (ii) the Director Allocation; and (iii) the Pericomp Acquisition, which has been prepared for the purpose of incorporation in this circular.

==> picture [47 x 32] intentionally omitted <==

Grand Vinco Capital Limited Units 4909-4910, 49/F., The Center 99 Queen’s Road Central, Hong Kong

9 July 2009

To the Independent Board Committee and the Independent Shareholders of VST Holdings Limited

Dear Sirs,

PROPOSED SPIN-OFF AND CONNECTED TRANSACTIONS IN RELATION TO ACQUISITION OF 20% EQUITY INTEREST IN ECS PERICOMP SDN BHD AND ISSUE OF ECSB SHARES TO CONNECTED PERSONS

INTRODUCTION

We refer to our engagement by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of (i) the Waiver; (ii) the Director Allocation; and (iii) the Pericomp Acquisition (collectively the “ Transactions ”), the particulars of which have been set out in a circular to the Shareholders dated 9 July 2009 (the “ Circular ”) and in which this letter is reproduced. Details of the reasons for the Transactions are set out in the section headed “Letter from the Board” in the Circular (the “ Board Letter ”). Unless the context requires otherwise, terms used in this letter shall have the same meanings as given to them in the Circular.

Kush is a company incorporated in 1993 in Malaysia and is currently owned as to 60% by ECS, which is itself a company listed on the Singapore Exchange Limited and, in turn, owned as to approximately 90% shares by the Company. The Kush Group is consisted of its current holding company, Kush and four subsidiaries namely, ECS Astar Sdn Bhd, ECS Ku Sdn Bhd, Pericomp and ECSB. After the pre-IPO Restructuring, ECSB will become the holding company of the Kush Group where Kush, ECS Astar Sdn Bhd, ECS Ku Sdn Bhd, Pericomp will become its subsidiaries.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

According to Practice Note 15, the Company is expected to provide its Shareholders with an assured entitlement to ECSB Shares by way of preferred application in the Public Offer. The Company will convene an EGM to seek its Independent Shareholders’ approval of a waiver of strict compliance with such assured entitlement requirements.

The issue of 600,000 new ECSB Shares pursuant to the Director Allocation in the Public Issue, and subscription by the ECSB Directors, who are Connected Persons will constitute connected transactions for the Company under Chapter 14A of the Listing Rules. Therefore, such issue is subject to the approval of the Independent Shareholders taken by way of poll at the EGM to be convened. In addition, as SIS, being a substantial shareholder holding 20% of the shares in the capital of Pericomp (an indirect non-wholly subsidiary of the Company), is a Connected Person, the Pericomp Agreement and the transactions contemplated thereunder including the issue of the Considerations Shares by ECSB to SIS will constitute connected transactions of the Company under Chapter 14A of the Listing Rules and are therefore subject to the approval of the Independent Shareholders taken by way of poll at the EGM. Accordingly, any Connected Person or Shareholder and its respective associates with a material interest in the Transactions will not vote in respect of the relevant resolutions proposed at the EGM. To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, as at the Latest Practicable Date, save for Mr. Li Jialin, L&L Limited and Ms. Liu Li who, together, are the controlling shareholders of the Company and will abstain from voting in respect of the Waiver, there are no other Shareholders who will be required to abstain from voting on the resolution approving the Waiver, the Director Allocation and the Pericomp Agreement.

The Independent Board Committee, comprising Mr. Ni Zhenwei, Dr. Chan Po Fun Peter and Mr. Li Wei who are independent non-executive Directors, has been constituted to consider the terms of the Transactions and to advise the Independent Shareholders. We have been appointed to act as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders on the fairness and reasonableness of the Transactions from the perspective of the Group and the Independent Shareholders as a whole and whether the Independent Board Committee should recommend the Independent Shareholders to vote in favour of the relevant resolutions to be proposed at the EGM to approve the Transactions.

BASIS OF OUR OPINION AND RECOMMENDATION

In forming our opinion and recommendation, we have relied on the information, facts and representations contained or referred to in the Circular and the information, facts and representations provided by, and the opinions expressed by the Directors, management of the Company and its subsidiaries. We have assumed that all information, facts, opinions and representations made or referred to in the Circular were true, accurate and complete at the time they were made and continued to be true, accurate and complete as at the date of the Circular and that all expectations and intentions of the Directors, management of the Company and its subsidiaries, will be met or carried out as the case may be. We have no reason to doubt the truth, accuracy and completeness of the information, facts, opinions and representations provided to us by the Directors, management of the Company and its subsidiaries. The Directors have confirmed to us that no material facts have been omitted from the information supplied and opinions expressed. We have no reason to doubt that any

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

relevant material facts have been withheld or omitted from the information provided and referred to in the Circular or the reasonableness of the opinions and representations provided to us by the Directors, management of the Company and its subsidiaries.

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in the Circular and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in the Circular have been arrived at after due and careful consideration and there are no other facts not contained in the Circular, the omission of which would make any statement in the Circular misleading.

We have relied on such information and opinions and have not, however, conducted any independent verification of the information provided, nor have we carried out any independent investigation into the business, financial conditions and affairs of the Group or its future prospect.

Based on the foregoing, we confirm that we have taken all reasonable steps, which are applicable to the Transactions, as referred to in Rule 13.80 of the Listing Rules (including the notes thereto).

This letter is issued for the information for the Independent Board Committee and the Independent Shareholders solely in connection with their consideration of the Transactions and, except for its inclusion in the Circular, is not to be quoted or referred to, in whole or in part, nor shall this letter be used for any other purposes, without our prior written consent.

PRINCIPAL FACTORS CONSIDERED

In arriving at our opinion in relation to the Transactions, we have taken into consideration the following factors:

1. Background information

The Company is incorporated in the Cayman Islands with limited liability whose shares are listed on the Main Board of the Stock Exchange. VST Group’s principal activities are distribution of computer components (such as hard disks and central processing unit) and distribution of computer products (such as personal computers and printers), enterprise systems and ICT services.

Summary financial information as extracted from the Company’s annual report for the year ended 31 March 2008 (the “ Annual Report ”) is set out below.

	For the year	ended
	31 March
	2008	2007
	HK$’000	HK$’000
	(audited)	(audited)
Turnover	12,350,522	4,236,829
Profit attributable to equity holders of the Company	244,743	161,333

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

	As at 31	March
	2008	2007
	HK$’000	HK$’000
	(audited)	(audited)
Total assets	5,095,669	773,901
Total liabilities	3,906,095	354,808
Net assets	1,189,574	419,093

Summary financial information as extracted from the Company’s interim report for the six months ended 30 September 2008 (the “ Interim Report ”) is set out below.

	For the six	months ended
	30 September
	2008	2007
	HK$’000	HK$’000
	(unaudited)	(unaudited)
Turnover	11,441,928	2,803,160
Profit attributable to equity holders of the Company	135,722	104,193
	As at 30	September
	2008	2007
	HK$’000	HK$’000
	(unaudited)	(unaudited)
Total assets	5,463,443	5,095,669
Total liabilities	4,183,306	3,906,095
Net assets	1,280,137	1,189,574

As stated in the Annual Report, the Group’s audited consolidated turnover for the year ended 31 March 2008 was approximately HK$12,350,522,000 (2007: approximately HK$4,236,829,000), representing an increase of approximately 191.50%. Meanwhile, the Group recorded profit attributable to equity holders of the Company of approximately HK$244,743,000 (2007: approximately HK$161,333,000), indicating an increase of approximately 51.70%.

In addition, as stated in the Interim Report, the Group’s unaudited consolidated turnover for the six months ended 30 September 2008 amounted to approximately HK$11,441,928,000 (2007: approximately HK$2,803,160,000), representing an increase of approximately 308.18% compared with that of the corresponding period in 2007. Such significant increase in the revenue was mainly attributable to the acquisition of ECS (listed in Singapore, stock code: ECS) towards the end of the prior financial year.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2. Information on the Kush Group

As shown in the Board Letter, the Kush Group’s principal activities are ICT distribution, provision of enterprise systems and ICT services. All these businesses involve ICT hardware and software sourced from ICT principals (or vendors) and distributed to large corporations and ICT resellers, which mainly comprise retailers, system integrators and corporate dealers, in Malaysia.

Selected key financial information of the Kush Group as extracted from the Board Letter is set out below.

	For the year	ended
	31 December
	2008	2007
	HK$’000	HK$’000
	(audited)	(audited)
Total revenue	2,550,975	2,149,378
Net profit before tax	59,635	41,681
Net profit after tax	43,560	30,213

*Note: For illustrative purpose, the above financial information of the Kush Group are transferred from RM at rate of RM1 = HK$2.2.

3. Reasons for the Proposed Spin-off and intended use of proceeds

As stated in the Board Letter, the Proposed Spin-off is expected to confer the following commercial benefits to both VST Group and the Kush Group, as follows:

a) allowing the Kush Group to access the capital market for funds at a lower cost for future expansion and working capital;
b) rewarding directors and employees of the Kush Group by allowing them to participate in the capital and future growth of the Kush Group;
c) enhancing the reputation and credit worthiness of the Kush Group, particularily in dealing with customers, suppliers, resellers and bankers;
d) enabling the VST Group to realize part of their investments in the Kush Group;
e) enabling the VST Group’s remaining shareholdings in the Kush Group to be reflected with full market valuation; and
f) enabling ECSB through the Vendor Sale to meet the minimum 25% public shareholding spread requirement under the listing requirements of Bursa Securities for the purpose of the Proposed Listing.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

It is stated in the Board Letter that the gain expected to accrue from the Public Offer to the Company is approximately HK$20.4 million on the basis of the increase of the ECS consolidated net assets value (which also consolidated the Kush Group’s net assets value) from HK$90.4 million as of 31 December 2008 to HK$110.8 million after the Proposed Spin-off.

The Board Letter also states that after the Proposed Spin-off, ECS’s shareholdings in ECSB will be reduced from 60% to 40%. ECSB will no longer be a subsidiary of ECS and the Kush Group and its results will not be consolidated into the accounts of the VST Group. Notwithstanding the above, the profit will still be equity accounted for in the accounts of VST Group according to the Hong Kong Generally Accepted Accounting Principles and Singapore Generally Accepted Accounting Principles as VST Group maintains a shareholding of 20% or more of the Kush Group after the Proposed Spin-off.

The Board Letter carries on to state that based on the indicative IPO Price of RM1.46 (approximately HK$3.21) per ECSB Share, the net proceeds (after deducting all listing expenses) arising from the Public Issue of approximately RM36.4 million (approximately HK$80.1 million) (including RM876,000 (approximately HK$1.9 million) from the issue to ECSB Directors pursuant to the Director Allocation assuming subscription in full) is intended to be used in the following manner:

a) as to RM1.66 million (approximately HK$3.65 million) for funding the settlement of the consideration among the members of the Kush Group under the pre-IPO Restructuring other than the Pericomp Acquisition;
b) as to RM5.44 million (approximately HK$11.97 million) for funding the Pericomp Acquisition;
c) as to RM5 million (approximately HK$11 million) for business expansion of the Kush Group; and
d) as to RM24.32 million (approximately HK$53.50 million) for general working capital of the Kush Group.

4. Assured entitlements and the Waiver

As stated in the Board Letter, according to Practice Note 15, the Company is expected to provide its Shareholders with an assured entitlement to ECSB Shares by way of preferred application in the Public Offer. ECSB is proposed to be listed outside Hong Kong, and ECSB Shares under any assured entitlement can only be made available to the Shareholders by way of a public offering in Hong Kong. The cost of conducting a

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

public offering is relatively costly as compared with the size of the fund to be raised in the Proposed Spin-off. If assured entitlement is offered, ECSB may allocate 10% of the Public Offer i.e. approximately 3.4 million ECSB Shares to the Shareholders. Because of the substantial amount of shares of the Company in issue, the assured entitlement ratio will be 31 ECSB Shares for every lot of 10,000 shares of the Company. As such, Shareholders holding less than 1,000,000 Shares are expected to be allocated with odd lots of ECSB Shares as assured entitlement. As odd lots shares are normally be traded below the market price, a number of Shareholders will not be able to enjoy the full benefit of the assured entitlement. Strict compliance with the assured entitlement requirement would not be for the benefit of the Company or its Shareholders. The Directors considered the Waiver is fair and reasonable and in the interests of the Company and its Independent Shareholders as a whole.

As advised by the Company’s management, the exact number of individual Shareholders is not available to the Company as many of the Shares are held in the Central Clearing and Settlement System (“ CCASS ”) through nominees. As per the list of Shareholders provided by the Company, there were 43 entries holding the Company’s entire issued share capital of 1,091,238,666 Shares as at 2 July 2009. Out of these 43 entries, (i) 797,604,566 Shares were held in CCASS under 1 entry and (ii) 292,400,000 Shares (not including those held in CCASS) are attributable to the controlling Shareholder and his associates under 3 entries. As such, the remaining 1,234,100 Shares were held under 39 entries with each of them holding an average of approximately 31,644 Shares. This appears to indicate that the majority of Shareholders would be allocated odd lots of ECSB Shares as assured entitlements. In addition, based on the CCASS Shareholding Search obtained from the Stock Exchange’s website, 796,480,566 Shares, representing approximately 72.99% of the Company’s entire issued share capital of 1,091,238,666 Shares, were held through 182 market intermediaries as at 30 June 2009. Furthermore, 774,598,000 Shares were held through 40 market intermediaries which held 1,000,000 Shares or more as at 30 June 2009. Accordingly, the remaining 21,882,566 Shares held in CCASS as at 30 June 2009 were held through 142 market intermediaries, with each of these market intermediaries holding less than 1,000,000 Shares and an average of approximately 154,103 Shares. On the assumptions that (i) each CCASS market participant represents 1 ultimate Shareholder which is a conservative estimation and (ii) the Shares held in CCASS represents a fair representative illustration of the Company’s entire issued share capital, it would appear that the majority of the Shareholders will be allocated odd lots of ECSB Shares as assured entitlement. In addition, the valuation of the assured entitlement calculated on the basis of 3.4 million ECSB Shares and the indicative IPO Price of RM1.46 (approximately HK$3.21) per share is approximately RM4.96 million (approximately HK$10.91 million). In our discussion with the Group’s management, we have learnt that the costs of extending the public offering to Hong Kong is estimated to be no less than HK$3 million. Also, we noted that the Main Board of Bursa Securities is a established overseas market and in the event that the Shareholders are allocated with any ECSB Shares under any assured entitlement mechanism, they would inevitably have to incur transaction costs for the holding and dealings of such shares on an oversea market which they may not have sufficient knowledge. Although no assured entitlement would be made to the Shareholders under the proposed Spin-off, we noted that the Shareholders will indirectly be able to maintain their interests in the ECSB

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Shares to be listed on the Main Board of Bursa Securities through their investments in the Company without incurring any additional transaction costs. Based on the abovemetioned reasons and the overall benefits of the proposed Spin-off to the Company, we believe the benefits of the assured entitlement does not justify the associated costs.

Having considered the above, we concur with the Directors’ view that strict compliance with the assured entitlement requirement would not be for the benefit of the Company or its Shareholders. Accordingly, we consider the Waiver is fair and reasonable and in the interest of the Company and the Independent Shareholders as a whole.

5. The Director Allocation

It is stated in the Board Letter that out of the Public Issue, approximately 3,600,000 new ECSB Shares (approximately 3.00% of the issued share capital of ECSB on a fully diluted basis) are proposed to be allocated to eligible ECSB Directors, employees and business associates of the Kush Group for application to subscribe including 600,000 ECSB Shares to certain ECSB Directors namely, Soong Jan Hsung, Tay Eng Hoe, Eddie Foo Toon Ee and Wong Heng Chong. It is noted that the current plan is to allocate 150,000 ECSB Shares to each of Soong Jan Hsung, Tay Eng Hoe, Eddie Foo Toon Ee and Wong Heng Chong and the exact allocation is subject to adjustment according to the requirement of the Securities Commission of Malaysia and the ultimate decision of the board of ECSB. The Directors considered that such issue of ECSB Shares to ECSB Directors is fair and reasonable and in the interests of the Company and its Independent Shareholders as a whole.

It is noted that the 600,000 ECSB Shares available for subscription under the Director Allocation are, if the relevant ECSB Directors elect to do so, to be subscribed by them at the IPO Price which is the same for those applying for ECSB Shares in the public tranche. We understand from the Group’s management that the Public Offer is envisaged to be fully underwritten. In the event that the 600,000 ECSB Shares available under the Director Allocation are not taken up by all or some of the ECSB Directors, the ECSB Shares not so taken up are expected to be re-allocated for subscription by the public under the Public Issue.

On the basis that (i) the terms available to the relevant ECSB Directors (i.e. the IPO Price) are the same as those available to the public and therefore no more favorable than an independent third party; (ii) the amount of fund raising by ECSB is the same regardless of whether the 600,000 ECSB Shares are available under the Director Allocation or the public tranche; and (iii) the Director Allocation allows ECSB to reward its directors by allowing them to participate in the capital and future growth of the Kush Group at no additional cost, we consider the Director Allocation is fair and reasonable and in the interest of the Company and the Independent Shareholders as a whole.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

6. The Pericomp Acquisition

As stated in the Board Letter, ECSB entered into the Pericomp Agreement with SIS to acquire the Sale Shares for a total consideration of RM6,900,000 (approximately HK$15.2 million) on 18 June 2009. SIS is holding 20% of the shares in the capital of Pericomp, an indirect non-wholly owned subsidiary of the Company, and is therefore a Connected Person. The principal activities of SIS are investment holding. The Sale Shares comprise 80,000 ordinary shares of RM1.00 each, representing 20% of, the total issued and paid-up share capital, of Pericomp which is currently a subsidiary of Kush and will become a subsidiary of ECSB after completion of the pre-IPO Restructuring. Pericomp’s principal business is distribution of ICT products.

6.1 The consideration

The consideration of RM6,900,000 (approximately HK$15.2 million) (the “ Consideration ”) was determined on an arm’s length basis between ECSB and SIS with reference to the market conditions having regard to a number of factors including (i) the net assets value of Pericomp of approximately RM26.6 million (approximately HK$58.5 million) as at 31 December 2008; (ii) the carrying value of Pericomp in SIS of approximately HK$11.9 million; and (iii) the prospect and the expected return in the business of distributing ICT products. The Consideration shall be satisfied in the following manner:

(a) the issue of 1,000,000 new ECSB Shares to SIS at an issue price equivalent to the IPO Price; and
(b) the remaining consideration shall be paid in cash within 7 days after listing and quotation of the enlarged paid up capital of ECSB on the Main Board of Bursa Securities.

Notwithstanding the potential dilution effect of the equity issue of 1,000,000 new ECSB Shares are part of the Consideration, we noted that the equity issue of 1,000,000 new ECSB Shares will be issued at an issue price equivalent to the IPO Price; which is no more favourable than the potential investors whom may wish to participate in the Proposed Spin-off. In addition, the partial settlement of Consideration through the equity issue of 1,000,000 new ECSB Shares will reduce the financial burden of the Group. As such, we concur with the Directors’ view that the terms of the Pericomp Agreement including the issue of the Consideration Shares are fair and reasonable and in the interests of the Company and its Independent Shareholders as a whole.

Based on the Consideration of RM6,900,000 (approximately HK$15.2 million) for an effective 20% interest in Pericomp, the valuation of a 100% interest in Pericomp is approximately RM34,500,000 (approximately HK$76.0 million).

To determine the fairness and the reasonableness of the Consideration and in view of Malaysia is the principal place of business operation of Pericomp, we have identified 3 companies listed in Malaysia (the “ Comparables ”) which (i) are principally engaged in businesses similar to that of the Pericomp, i.e. distribution of computer related

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

products; (ii) have made a profit as per the latest annual report and; (iii) have net assets value of not more than HK$500 million. The Comparables represent all of the relevant companies identified by us in our search on Bloomberg. On the basis that (i) the Comparables are engaged in similar businesses to that of the Pericomp and (ii) the use of the Comparables can be used as indicative references since Pericomp is not listed and has no readily available market price of its shares, we consider that the selection of the Comparables is fair and reasonable and the Comparables are a fair and representative sample. In our comparison, we have adopted an analysis on (i) the price-to-earning ratio (“ P/E ”) and (ii) the price-to-book ratio (“ P/B ”) of Pericomp and the Comparables.

	Stock		Net assets
Name	code	Principal business	value	P/E1	P/B2
			HK$’000	times	times
Formis Resources	FMRB	Distribution and	470,380	14.07	0.73
Bhd	MK	maintenance of
	Equity	computer equipment
		and software,
		development of
		application software
		and system integration
		and provision of
		hardware and software
		maintenance
CBS Technology	CBS	Provision of specialized	68,088	23.36	2.29
Bhd	MK	system integration
	Equity	solution as well as
		sales, distribution and
		development of
		software maintenance
Tecasia Group Bhd	TECA	Production and	140,928	4.33	0.38
	MK	distribution of
	Equity	Computer and IT
		Systems
Maximum				14.07	2.29
Minimum:				8.03	0.38
Average:				11.56	1.13
Pericomp		Distribution of ICT	58,500	5.22	1.30
		products

Source: Bloomberg

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Notes:

For the Comparables, the P/E was calculated with market capitalization divided by the net profit obtained from their respective latest annual report. For Pericomp, the P/E was calculated with the consideration of RM6,900,000 divided by the net profit attributable to the Sale Shares of RM1,321,117 for the year ended 31 December 2008 as stated in the Board Letter.
For the Comparables, the P/B was calculated with market capitalization divided by the net asset value obtained from their respective latest annual report. For Pericomp, the P/B was calculated with the consideration of RM6,900,000 divided by the book value of the Sale Shares of RM5.32 million as stated in the Board Letter.

As demonstrated in the table presented above, the P/E of the Comparables range from approximately 8.03 times to 14.07 times, with the average P/E being approximately 11.56 times. As for Pericomp, it’s P/E of approximately 5.22 times is significantly lower than the minimum of the Comparables. The P/B of the Comparables range from approximately 0.38 times to 2.29 times, with the average P/B being approximately 1.13 times. Pericomp’s P/B of approximately 1.30 times is within the range of the Comparables and is slightly above the average figure.

6.2 The Consideration Shares

As mentioned in section 6.1 to this letter, part of the Consideration is to be satisfied through the issue of 1,000,000 new ECSB Shares to SIS at an issue price equivalent to the IPO Price. We note that the Consideration Shares are to be issued at the IPO Price which is the same as the IPO Price available to the public and therefore SIS is treated no more favorably than an independent third party.

6.3 Conclusion regarding the Pericomp Acquisition

Based on the above analysis, we consider the Pericomp Acquisition is fair and reasonable and in the interest of the Company and the Independent Shareholders as a whole.

7. Financial effects of the Pericomp Acquisition

7.1 Net assets value

It is stated in the Board Letter that as at 31 March 2008 and 30 September 2008, the consolidated net assets value of the VST Group (including the Kush Group) were approximately HK$1,190 million (audited) and HK$1,280 million (unaudited) respectively while the net assets value of Kush Group attributable to the VST Group were approximately HK$71 million (or RM32.3 million) and HK$83 million (or RM37.7 million), representing approximately 5.97 % and 6.48% of the VST Group’s net assets value as of 31 March 2008 and 30 September 2008 respectively. The Proposed Spin-off will have no material effect on the net assets value of VST Group.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

7.2 Earnings

The Board Letter states that as the net profit after tax of the Kush Group for its latest financial year is approximately HK$43,560,000, representing approximately 16.8% of the consolidated net profit after tax of the Company of approximately HK$259,553,000 for its latest financial year, the Proposed Spin-off is expected to have no material adverse effect on the earnings.

As mentioned earlier, the Board Letter states that after the Proposed Spin-off, ECS’s shareholdings in ECSB will be reduced from 60% to 40%. ECSB will no longer be a subsidiary of ECS and the Kush Group and its results will not be consolidated into the accounts of the VST Group. Notwithstanding the above, the profit will still be equity accounted for in the accounts of VST Group according to the Hong Kong Generally Accepted Accounting Principles and Singapore Generally Accepted Accounting Principles as VST Group maintains a shareholding of 20% or more of the Kush Group after the Proposed Spin-off.

CONCLUSION

Having considered the above principal factors and in particular:

the potential benefits of the Proposed Spin-off as discussed in section 3 of this letter;
as discussed in section 4 of this letter, it would appear that the majority of the Shareholders will be allocated odd lots of ECSB Shares as assured entitlement;
the Shareholders will indirectly be able to maintain their interests in the ECSB Shares to be listed on the Main Board of Bursa Securities through their investments in the Company without incurring any additional transaction costs;
the Shareholders would inevitably have to incur transaction costs for the holding and dealings of such shares on an oversea market which they may not have sufficient knowledge in the event of the assured entitlement of the ECSB Shares and the costs of extending the public offering to Hong Kong is estimated to be no less than HK$3 million, and the benefits of the assured entitlement does not appear to justify the associated costs;
(i) the terms available to the relevant ECSB Directors (i.e. the IPO Price) is the same as those available to the public and therefore no more favorable than an independent third party; (ii) the amount of fund raised by ECSB is the same regardless of whether the 600,000 ECSB Shares are available under the Director Allocation or the public tranche; and (iii) the Director Allocation allows ECSB to reward its directors by allowing them to participate in the capital and future growth of the Kush Group at no additional cost;
Pericomp’s P/E of approximately 5.22 times is significantly lower than the minimum of the Comparables;

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Pericomp’s P/B of approximately 1.30 times is within the range of the Comparables and is slightly above the average of the Comparables; and
the Consideration Shares are to be issued at the IPO Price which is the same as the IPO Price available to the public and therefore SIS is treated no more favorably than an independent third party,

we are of the opinion that the Transactions, when taken as a whole, are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Independent Shareholders as a whole. Given the Transactions are incidental to the Proposed Spin-off, the nature of Transactions are not considered to be in the ordinary and usual course of business of the Group. We would like to draw the Independent Shareholders’ attention that given the nature of the Waiver is not a commercial transaction, there is no normal commercial terms to be considered. Having considered that the terms of the Director Allocation are no more favourable than to the independent third parties or potential investors whom may wish to participate in the Proposed Spin-off and the Consideration of Pericomp Acquisition is in line with the results P/E and P/B comparable analyses, we also consider that the Director Allocation and Pericomp Acquisition are on normal commercial terms of the Group. Accordingly, we would recommend the Independent Shareholders, as well as the Independent Board Committee to advise the Independent Shareholders, to vote in favor of the ordinary resolutions to approve the Transactions at the EGM.

Yours faithfully, For and on behalf of Grand Vinco Capital Limited Alister Chung Managing Director

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GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

2. DISCLOSURE OF INTERESTS

Directors

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executives of the Company in the Shares, underlying Shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) as required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO) or as recorded in the register required to be kept under Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code on Securities Transactions by Directors of Listed Companies were as follows:

Long Position in the issued Shares

			Percentage of
			the issued
		Number of	share capital
		Issued Shares	of the
Name of Director	Capacity	held	Company
Mr. Li Jialin	Beneficial interests,	462,646,000	42.39%
	family interests and
	interests in
	controlled
	corporation (Note 1)
Dr. Chan Po-Fun Peter	Beneficial Interests	640,000	0.06%
Ong Wei Hiam William	Beneficial Interests	88,000	0.01%

Notes:

(1) 241,500,000 Shares are held by L&L Limited and the entire issued share capital of L & L Limited is held equally by Mr. Li Jialin (the Chairman, Chief Executive Officer and an executive Director of the Company) and his spouse, Madam Liu Li. 166,000,000 Shares are held by Madam Liu Li. Mr. Li Jialin is therefore deemed to be interested in all the Shares held by L&L Limited and Madam Liu Li. Madam Liu Li is also deemed to be interested in all the Shares held by Mr. Li Jialin and L&L Limited.

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GENERAL INFORMATION

APPENDIX

Long position in underlying Shares

The Company adopted a share option scheme at the annual general meeting held on 17 April 2002 under which the Directors may, at their discretion, invite the participants of the share option scheme to take up options to subscribe for Shares subject to the terms and conditions stipulated therein. The details of share options granted to the Directors which were outstanding as at the Latest Practicable Date are as follows:

	Number of
	underlying
	Shares
Name of	subject to	Exercise
Director	the option	Price	Grant Date	Exercise Period
Tay Eng Hoe	5,000,000	HK$0.54	20 February 2009	20 February 2009 to
				19 February 2019

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and chief executives of the Company had any interests and short positions in the Shares, underlying Shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) as required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO) or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to the Listing Rules, to be notified to the Company and the Stock Exchange.

3. COMPETING INTEREST

None of the Directors and their respective associates have any interests in a business or are interested in any business which competes or may compete either directly or indirectly with, or is similar to, the business of the Group as at the date of this circular.

No Director had any interest, direct or indirect, in any assets which had been, since the date to which the latest published audited accounts of the Company were made up, acquired or disposed of by or leased to or proposed to be acquired or disposed of by or leased to any member of the Group.

There are no contracts or arrangements subsisting as at the Latest Practicable Date in which a Director is materially interested or which is significant in relation to the business of the Group.

4. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 March 2008, the date to which the latest audited financial statements of the Group were made up.

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GENERAL INFORMATION

APPENDIX

5. SERVICE CONTRACTS

None of the Directors has an unexpired service contract which is not terminable by the Company or any of its subsidiaries within one year without payment of compensation, other than statutory compensation.

6. EXPERT

The following is the qualification of the expert who has given opinions or advices which are contained in this circular:

Name Qualification Grand Vinco Capital Limited A corporation licensed to carry on business in types 1 and 6 regulated activities (dealing in securities and advising on corporate finance) under the SFO

The above expert has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its report and reference to its name in the form and context in which it appear.

As at the Latest Practicable Date, the above expert was not beneficially interested in the share capital of any member of the Group nor did it have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group or any interest, either direct or indirect, in any assets which have been, since 31 March 2008, the date to which the latest published audited consolidated financial statements of the Group were made up, acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group.

7. GENERAL

(a) As at the date of this circular, the Board comprised Mr. Li Jialin (Chairman and executive Director), Mr. Tay Eng Hoe (Vice Chairman and executive Director), Mr. Ong Wei Hiam, William (executive Director), Mr. Chan Hoi Chau (executive Director), Mr. Ni Zhenwei (independent non-executive Director), Dr. Chan Po Fun Peter (independent non-executive Director) and Mr. Li Wei (independent non-executive Director).
(b) The English text of this circular shall prevail over the Chinese text.

8. DOCUMENTS AVAILABLE FOR INSPECTION

A copy of the Pericomp Agreement will be available for inspection during normal business hours at the Company’s principal place of business in Hong Kong from the date of this circular up to and including 21 August 2009 and at the EGM:

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NOTICE OF EXTRAORDINARY GENERAL MEETING

==> picture [54 x 42] intentionally omitted <==

==> picture [219 x 49] intentionally omitted <==

----- Start of picture text -----

(the “Company”)
(incorporated in the Cayman Islands with limited liability)
(Stock Code: 856)
----- End of picture text -----*

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “EGM”) of VST Holdings Limited (the “Company”) will be held at Bowen Room, Level 7, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on 21 August 2009 at 10:30 a.m. for the purpose of considering and, if thought fit, passing (with or without amendments) the following resolutions as ordinary resolutions:

ORDINARY RESOLUTIONS

“ THAT :
(a) assured entitlement in respect of the Public Offer (as defined in the circular (“Circular”) to shareholders dated 9 July 2009) in connection with the proposed spin off (“Proposed Spin-off”) of ECS ICT Bhd (“ECSB”) for separate listing on Main Board of Bursa Malaysia Securities Berhad in accordance with Practice Note 15 of the Listing Rules be and is hereby waived by the minority shareholders of the Company;
(b) the proposed allocation of 600,000 new shares in the capital of ECSB to the directors of ECSB namely, Soong Jan Hsung, Tay Eng Hoe, Eddie Foo Toon Ee, and Wong Heng Chong, for subscription in the Public Issue at the IPO Price (both terms are as defined in the Circular) and the issue of shares of ECSB pursuant thereto (“Director Allocation”) be and is hereby approved; and
(c) the directors of the Company (the “Directors”) be and are hereby authorised to do all acts including determining the exact number of ECSB Shares to be allocated to the directors of ECSB and execute all documents they consider necessary or expedient to give effect to the waiver approved hereunder and the Proposed Spin-off without strict compliance with the assured entitlement under the said Practice Note 15 and the Director Allocation.
“ THAT :
(a) the agreement (the “Agreement”) dated 18 June 2009 entered into between ECSB and SIS Investment Holdings Limited (“SIS’) relating to the sale and purchase of 80,000 ordinary shares of RM1.00 each, representing 20% of the total issued and paid up share capital, of ECS Pericomp Sdn Bhd, and the issue of 1,000,000 shares (“Consideration Shares”) in ECSB (such number may be adjusted in

– 37 –

NOTICE OF EXTRAORDINARY GENERAL MEETING

accordance with the Agreement) to SIS to satisfy part of the consideration and the transactions contemplated thereunder be and are hereby approved, confirmed and ratified; and
(b) the Directors be and are hereby authorised to do all acts and execute all documents they consider necessary or expedient to give effect to Agreement and the transactions contemplated thereunder including issue of Consideration Shares.

By Order of the Board VST Holdings Limited LI JIALIN Chairman

Hong Kong, 9 July 2009

Notes:

(1) Any member entitled to attend and vote at the EGM of the Company shall be entitled to appoint another person as his proxy to attend and vote instead of him. A member who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his behalf at the EGM. A proxy need not be a member. A proxy or proxies representing either a member who is an individual or a member which is a corporation shall be entitled to exercise the same powers on behalf of the member which he or they represent as such member could exercise.
(2) Where there are joint holders of any share any one of such joint holder may vote, either in person or by proxy, in respect of such share as if he were solely entitled thereto, but if more than one of such joint holders be present at any meeting the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the register of members in respect of the joint holding. Several executors or administrators of a deceased member in whose name any share stands shall be deemed joint holders thereof.
(3) A form of proxy for use at the EGM is enclosed herewith.
(4) The form of proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of such power of attorney must be lodged at the Company’s Hong Kong branch share registrar, Tricor Abacus Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong, not less than 48 hours before the time appointed for holding the EGM or adjourned meeting or not less than 24 hours before the time appointed for taking the poll (as the case may be) and in default the form of proxy shall not be treated as valid. Completion and return of the form of proxy shall not preclude members from attending and voting in person at the EGM or at any adjourned meeting (as the case may be) should they so wish.

– 38 –

AI assistant

VSTECS Holdings Limited — Proxy Solicitation & Information Statement 2009

49515_rns_2009-07-08_4cacb402-efd5-4a96-b108-3347156e507b.pdf

PROPOSED SPIN-OFF AND SEPARATE LISTING OF ECS ICT BHD AND ITS SUBSIDIARIES ON MAIN BOARD OF BURSA MALAYSIA SECURITIES BERHAD PROPOSED DISCLOSEABLE TRANSACTION AND CONNECTED TRANSACTIONS IN RELATION TO THE PUBLIC OFFER OF ECSB SHARES AND

CONNECTED TRANSACTIONS RELATING TO ACQUISITION OF 20% EQUITY INTEREST IN ECS PERICOMP SDN BHD AND ISSUE OF ECSB SHARES TO CONNECTED PERSONS

Independent financial adviser

Grand Vinco Capital Limited

TABLE OF CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

CONNECTED TRANSACTIONS RELATING TO ACQUISITION OF 20% EQUITY INTEREST IN ECS PERICOMP SDN BHD AND ISSUE OF ECSB SHARES TO CONNECTED PERSONS

INTRODUCTION

Pre-IPO Restructuring

The Kush Group immediately after completion of pre-IPO Restructuring

Structure of the Proposed Spin-off

Director Allocation

Conditions to the Proposed Spin-off

Non-compete Undertaking

Intended use of proceeds

LETTER FROM THE BOARD

ASSURED ENTITLEMENTS AND WAIVER

FINANCIAL INFORMATION ON THE KUSH GROUP

FINANCIAL EFFECTS OF THE PROPOSED SPIN-OFF

Net Asset Value

Earnings

LETTER FROM THE BOARD

REASONS FOR THE PROPOSED SPIN-OFF AND DIRECTOR ALLOCATION

LISTING RULES IMPLICATIONS

PROPOSED CONNECTED TRANSACTION INVOLVING ACQUISITION OF SHARES FROM AND ISSUE OF SHARES TO A CONNECTED PERSON

Assets to be acquired

Consideration

LETTER FROM THE BOARD

Conditions Precedent

LETTER FROM THE BOARD

Completion

Value of Assets and Net Profits

Reasons for and Benefits of Entering into the Pericomp Agreement

Listing Rules Implications

EGM

RECOMMENDATION

GENERAL

PROPOSED SPIN-OFF AND CONNECTED TRANSACTIONS IN RELATION TO ACQUISITION OF 20% EQUITY INTEREST IN ECS PERICOMP SDN BHD AND ISSUE OF ECSB SHARES TO CONNECTED PERSONS

INTRODUCTION

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

BASIS OF OUR OPINION AND RECOMMENDATION

PRINCIPAL FACTORS CONSIDERED

1. Background information

2. Information on the Kush Group

3. Reasons for the Proposed Spin-off and intended use of proceeds

4. Assured entitlements and the Waiver

5. The Director Allocation

6. The Pericomp Acquisition

6.1 The consideration

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

7. Financial effects of the Pericomp Acquisition

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

7.2 Earnings

CONCLUSION

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

1. RESPONSIBILITY STATEMENT

2. DISCLOSURE OF INTERESTS

Directors

Long position in underlying Shares

3. COMPETING INTEREST

4. MATERIAL ADVERSE CHANGE

5. SERVICE CONTRACTS

6. EXPERT

7. GENERAL

8. DOCUMENTS AVAILABLE FOR INSPECTION

NOTICE OF EXTRAORDINARY GENERAL MEETING

ORDINARY RESOLUTIONS

By Order of the Board VST Holdings Limited LI JIALIN Chairman

Hong Kong, 9 July 2009

More from VSTECS Holdings Limited

VSTECS Holdings Limited Proxy Solicitation & Information Statement 2009