Youzan Technology Limited — AGM Information 2003

Mar 28, 2003

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt about this circular or as to the action to be taken, you should consult a stockbroker, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in SYSCAN Technology Holdings Limited, you should at once hand this circular, together with the enclosed form of proxy, to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or transferee.

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

SYSCAN Technology Holdings Limited 矽感科技控股有限公司[*]

(Incorporated in Bermuda with limited liability)

GENERAL MANDATES TO REPURCHASE SHARES AND TO ISSUE NEW SHARES

This circular, for which the directors of SYSCAN Technology Holdings Limited collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to SYSCAN Technology Holdings Limited. The directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief:– (1) the information contained in this circular is accurate and complete in all material respects and not misleading; (2) there are no other matters the omission of which would make any statement in this circular misleading; and (3) all opinions expressed in this circular have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable.

A form of proxy for the annual general meeting (“AGM”) is enclosed. Whether or not you intend to attend the AGM, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return it to the Head Office of the Company c/o the Company Secretary at Unit 808, 8/F, K. Wah Centre, 191 Java Road, North Point, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the AGM or any adjournment thereof. Completion and delivery of the form of proxy will not preclude you from attending and voting at the AGM if you so wish.

28 March 2003

* for identification purposes only

DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions shall have the following meanings:

“Company”	SYSCAN Technology Holdings Limited, an exempted
	company incorporated in Bermuda with limited liability,
	the shares of which are listed on GEM;
“Director(s)”	director(s) of the Company from time to time;
“GEM”	the Growth Enterprise Market operated by the Stock
	Exchange;
“GEM Listing Rules”	the Rules Governing the Listing of Securities on GEM of
	the Stock Exchange (as amended from time to time);
“Group”	the Company and its subsidiaries (within the meaning of
	Section 2 of the Companies Ordinance (Chapter 32 of the
	laws of Hong Kong) as modified from time to time) of the
	Company, whether incorporated in Hong Kong or elsewhere;
“Latest Practicable Date”	25 March 2003, being the latest practicable date prior to
	the printing of this circular for ascertaining certain
	information in this circular;
“Share(s)”	share(s) of HK$0.10 each in the capital of the Company;
“Shareholder(s)”	holder(s) of Share(s);
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“Takeover Code”	The Hong Kong Code on Takeovers and Mergers; and
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong.

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LETTER FROM THE BOARD

SYSCAN Technology Holdings Limited 矽感科技控股有限公司[*]

(Incorporated in Bermuda with limited liability)

Executive Directors Cheung Wai, Chairman Darwin Hu, Chief Executive Officer Zhang Hongru

Non-executive Directors Joseph Liu Independent non-executive Directors Lo Wai Ming Lo Hang Fong

Registered Office Cedar House 41 Cedar Avenue Hamilton, HM12 Bermuda

Head Office and Principal Place of Business Unit 808, 8/F K. Wah Centre 191 Java Road North Point Hong Kong

28 March 2003

To the Shareholders

Dear Sir/Madam,

GENERAL MANDATES TO REPURCHASE SHARES AND TO ISSUE NEW SHARES

INTRODUCTION

The Directors of the Company had announced on 25 March 2003 the audited consolidated results of the Company and its subsidiaries for the year ended 31 December 2002. It is proposed that the forthcoming annual general meeting of the Company to be held at Function Room I, City Garden Hotel, 9 City Garden Road, North Point, Hong Kong on 23 April 2003 (“Annual General Meeting”). Resolutions to grant to the Directors general mandates to issue Shares and to repurchase Shares (“Repurchase Mandate”) will be proposed at the Annual General Meeting.

The purpose of this circular is to provide the Shareholders with details of the proposed general mandates to be dealt with at the Annual General Meeting.

* for identification purposes only

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LETTER FROM THE BOARD

GENERAL MANDATES

At the Annual General Meeting, separate ordinary resolutions will be proposed to renew the general mandates given to the Directors (i) to allot, issue and otherwise deal with Shares not exceeding the aggregate of 20% of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing of such resolution; (ii) to repurchase Shares comprising the aggregate nominal amount of which does not exceed 10% of the aggregate nominal amount of the share capital in issue of the Company as at the date of passing of such resolution; and (iii) to increase the number of shares which the Directors may issue under their general mandate by the number of shares representing the aggregate nominal amount (up to a maximum of 10% of the aggregate nominal amount of the Company’s then issued share capital) of any Shares repurchased by the Company.

Under the GEM Listing Rules, the general unconditional mandates granted on 26 April 2002 will lapse at the conclusion of the forthcoming Annual General Meeting unless renewed at the Annual General Meeting. Resolutions Nos. 4 to 6 set out in the notice of Annual General Meeting will be proposed at the Annual General Meeting to renew these mandates until whichever is the earliest of : (i) the conclusion of the next annual general meeting of the Company; (ii) the revocation or variation of the authority given under these resolutions by ordinary resolution passed by the Company’s Shareholders in general meetings; and (iii) the expiration of the period within which the next annual general meeting of the Company is required by the bye-laws of the Company or any applicable laws to be held. With reference to these resolutions, the Directors wish to state that they have no present intention to repurchase any Shares pursuant to the relevant mandates.

The explanatory statement, as required by the GEM Listing Rules to be sent to Shareholders in connection with the proposed Repurchase Mandate, is set out in the Appendix to this circular. This contains all the information reasonably necessary to enable the Shareholders to make an informed decision on whether to vote for or against the relevant resolutions.

ANNUAL GENERAL MEETING

Set out on pages 31 to 33 of the 2002 Annual Report of the Company in respect of the financial year ended 31 December 2002 is the notice convening the forthcoming Annual General Meeting. At the Annual General Meeting, in addition to the ordinary business of the Meeting, resolutions Nos. 4 to 6 will be proposed to approve the general mandates for the issue of Shares and the Repurchase Mandate as special businesses.

The 2002 Annual Report of the Company incorporating copies of the audited consolidated results of the Group for the year ended 31 December 2002 and the directors’ and auditors’ reports thereon has been despatched to all Shareholders together with this circular.

A form of proxy for use at the Annual General Meeting is enclosed. To be valid, the form of proxy must be completed in accordance with the instructions printed thereon and deposited, together with the power of attorney or other authority (if any) under which it is signed or a certified copy of that power of attorney or authority, at the Head Office of the Company c/o the Company Secretary at Unit 808, 8/F, K. Wah Centre, 191 Java Road, North Point, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for holding the Annual General Meeting or any adjournment thereof. Completion and delivery of the form of proxy will not preclude you from attending and voting at the Annual General Meeting if you so wish.

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LETTER FROM THE BOARD

RECOMMENDATION

Shareholders of the Company should draw their attention to the information as set out in the appendix to this circular.

The Directors is of the opinion that the proposals referred to above are in the best interests of the Company and therefore recommend you to vote in favour of the relevant resolutions to be proposed at the Annual General Meeting.

Yours faithfully Cheung Wai Chairman

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EXPLANATORY STATEMENT

APPENDIX

This appendix serves as an explanatory statement, as required by the GEM Listing Rules, to provide requisite information to you for your consideration of the Repurchase Mandate.

1. GEM LISTING RULES RELATING TO THE REPURCHASE OF SHARES

The GEM Listing Rules permit companies whose primary listing is on the Stock Exchange to repurchase their shares on GEM subject to certain restrictions, the more important of which are summarized below. The Company is empowered by its memorandum of association and bye-laws to repurchase its own Shares.

(a) Source of funds

Repurchases must be funded out of funds legally available for the purpose and in accordance with the memorandum of association and bye-laws of the Company and the Companies Act 1981 of Bermuda (as amended) (the “Companies Act”). A listed company may not repurchase its own securities on the Stock Exchange for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the Stock Exchange. Under the Companies Act, a company may only repurchase its shares out of capital paid up on the shares to be repurchased or out of the funds of the Company which would otherwise be available for dividend or distribution or out of the proceeds of a fresh issue of shares made for the purpose of the repurchase. Any amount of premium payable on a repurchase over the par value of the shares may only be effected out of funds of the Company which would otherwise be available for dividend or distribution or out of the Company’s share premium account.

(b) Connected parties

Under the GEM Listing Rules, a company shall not knowingly repurchasing securities from a connected person (as defined under the GEM Listing Rules) and a connected person shall not knowingly sell his shares to the company. As at the Latest Practicable Date and to the best of the knowledge of the Directors having made all reasonable enquires, no connected person of the Company has notified the Company any present intention to sell Shares to the Company or has undertaken not to do so in the event that the Buyback Mandate is approved by Shareholders.

2. SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company comprised 1,023,643,279 Shares of HK$0.10 each.

Subject to the passing of the resolution in relation to the Repurchase Mandate and on the basis that no Shares are issued or repurchased by the Company prior to the Annual General Meeting, the Company will be allowed under the Repurchase Mandate to repurchase a maximum of 102,364,327 Shares of HK$0.10 each.

3. REASONS FOR REPURCHASES

Repurchases of Shares will only be made when the Directors believe that such a repurchase will benefit the Company and its members. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net asset value of the Company and/or its earnings per Share.

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EXPLANATORY STATEMENT

APPENDIX

4. FUNDING OF REPURCHASES

In repurchasing Shares, the Company may only apply funds legally available for such purpose in accordance with the memorandum of association and bye-laws of the Company, the GEM Listing Rules and the applicable laws of Bermuda. The Company may not purchase securities on GEM for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the Stock Exchange from time to time.

5. GENERAL

There might be a material adverse impact on the working capital or gearing position of the Company in the event that the Repurchase Mandate is exercised in full. However, the Directors do not propose to exercise the Repurchase Mandate to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or its gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

6. UNDERTAKING

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the Repurchase Mandate in accordance with the GEM Listing Rules, the memorandum of association and the bye-laws of the Company and the applicable laws of Bermuda.

7. TAKEOVER CODE

If as a result of a repurchase of Shares, a shareholder’s proportionate interest in the voting rights of the Company increases, such increase may be treated as an acquisition for the purpose of the Takeover Code. Accordingly, a shareholder or group of shareholders acting in concert, depending on the level of increase in the shareholder’s interest, could obtain or consolidate control of the Company and become(s) obliged to make a mandatory offer in accordance with Rules 26 and 32 of the Takeover Code.

As at the Latest Practicable Date, other than Mr Cheung Wai, Chairman of the Company who holds approximately 10.78 per cent. of the issued Shares of the Company, no other person has notified the Company that it has an interest of 10% or more of the issued share capital of the Company pursuant to Section 16(1) of the Securities (Disclosure of Interests) Ordinance.

On the basis of the shareholding held by the substantial shareholder named above, an exercise of the Repurchase Mandate in full will not have any implications on the Takeover Code.

Notwithstanding the above, the Company may not repurchase Shares which would result in the number of Shares held by the public being reduced to less than the minimum prescribed percentage as required by the Stock Exchange.

8. SHARE REPURCHASE MADE BY THE COMPANY

No purchases of Shares have been made by the Company during the last six months, whether on GEM or otherwise.

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EXPLANATORY STATEMENT

APPENDIX

9. CONNECTED PERSON

None of the Directors nor, to the best of their knowledge and having have made all reasonable enquires, any of their associates (as defined in the GEM Listing Rules) has notified the Company of any present intention to sell Shares to the Company or has undertaken not to do so in the event that the Buyback Mandate is approved by Shareholders.

10. SHARE PRICES

The highest and lowest prices at which Shares have been traded on GEM during each of the previous twelve months before the Latest Practicable Date were as follows:

SharesHighestHK$2002March0.185April0.178May0.164June0.144July0.118August0.105September0.100October0.096November0.093December0.0932003January–February0.095	LowestHK$0.1640.1310.1310099
	.0.0950095
	.
	0.0850.0860.0770.093–0.077

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