S International : SUPPLEMENTAL ANNOUNCEMENT IN RELATION TO THE ANNUAL REPORT FOR THE YEAR ENDED 31 JULY 2019

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V.S. INTERNATIONAL GROUP LIMITED

威 鋮 國 際 集 團 有 限 公 司

(incorporated in the Cayman Islands with limited liability)

(stock code: 1002)

SUPPLEMENTAL ANNOUNCEMENT

IN RELATION TO THE ANNUAL REPORT

FOR THE YEAR ENDED 31 JULY 2019

Reference is made to the annual report of V.S. International Group Limited ("Company") and its subsidiaries ("Group") for the year ended 31 July 2019 dated 8 November 2019 ("Annual Report"). Unless otherwise stated, capitalised terms used in this announcement shall have the same meanings as defined in the Annual Report.

As disclosed in the Annual Report, there was an impairment on property, plant and equipment ("PPE") of RMB36.5 million for the year ended 31 July 2019, which represented around 30% of the Company's net loss for the year. Further to such information disclosed in the Annual Report, the Company wishes to provide shareholders of the Company and potential investors with the following supplementary information.

REASONS FOR THE IMPAIRMENT ON PPE

As disclosed in the Annual Report, the trade war between the United States and China has created uncertainty in the business environment in China. The Group has been streamlining its operation and has adopted an asset-light model to improve its operational flexibility and to minimise any adverse impact on its business operation. In addition, there was a significant drop in revenue in the segment of assembling of electronic products, which was mainly due to the decrease in the amount of orders placed by three existing customers by about RMB250 million for the year ended 31 July 2019 when compared to the year ended 31 July 2018.

In light of the above reasons, the management of the Group has decided to cease operation of an assembly line for electronic products in May 2019. As identified by the management of the Group, certain leasehold improvements, moulds and machineries used in the assembly line ("Assembling Machineries") with a carrying amount of RMB34.1 million were not expected to be used in the future.

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In addition, according to the Group's policy, the management of the Group carries out physical inspection on the PPE periodically to identify idle or obsolete machineries. Based on the management's inspection performed in July 2019, certain machineries (for production of aluminium products) with a carrying amount of RMB9.2 million were identified as idle ("Idle Machineries").

ASSESSMENT ON THE CARRYING VALUE AND THE AMOUNT OF ASSETS IMPAIRMENT

The impairment loss on PPE of RMB36.5 million for the year ended 31 July 2019 was made with reference to the second-hand market value (less costs of disposal) of the Assembling Machineries and the Idle Machineries.

In accordance with HKAS 36 paragraph 6, an impairment loss is the amount by which the carrying amount of an asset or a cash-generating unit exceeds its recoverable amount. According to HKAS 36 paragraph 18, recoverable amount is defined as the higher of an asset's or cash generating unit's fair value less costs of disposal and its value in use.

Given that the relevant assembly line has been ceased, there is no future economic benefit from the Assembling Machineries and the value in use is amounted to zero. The management of the Group obtained third party quotations for second-hand market value (less costs of disposal) of these Assembling Machineries as reference of its fair value less costs of disposal in determining its recoverable amount. Given that the carrying amount of the Assembling Machineries of RMB34.1 million is higher than its recoverable amount of RMB4.2 million based on the second-hand market value (less costs of disposal), an impairment provision of RMB29.9 million was made.

The impairment provision of RMB6.6 million of the Idle Machineries with a carrying amount of RMB9.2 million was also made under the same assessment with reference to the second-hand market value (less costs of disposal) of RMB2.6 million.

The Board confirms that the above supplemental information does not affect the other information contained in the Annual Report.

By order of the Board

V.S. International Group Limited

Beh Kim Ling

Chairman

Zhuhai, the People's Republic of China, 17 August 2020

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As at the date of this announcement, the Board comprises the following members:

Executive Directors:	Independent non-executive Directors:
Mr. Beh Kim Ling	Mr. Diong Tai Pew
Mr. Gan Sem Yam	Mr. Tang Sim Cheow
Mr. Zhang Pei Yu	Ms. Fu Xiao Nan
Mr. Beh Chern Wei

Non-executive Director:

Mr. Gan Tiong Sia

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