Youzan Technology Limited — Capital/Financing Update 2007

Dec 18, 2007

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, 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 announcement.

This announcement appears for information only and does not constitute an invitation or offer to acquire, purchase, or subscribe for securities of the Company.

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

(Incorporated in Bermuda with limited liability)

(Stock Code: 8083)

PROPOSED RIGHTS ISSUE OF NOT LESS THAN 1,637,829,232 RIGHTS SHARES AND NOT MORE THAN 1,656,925,232 RIGHTS SHARES AT HK$0.01 PER RIGHTS SHARE IN THE PROPORTION OF FOUR RIGHTS SHARES FOR EVERY EXISTING SHARE HELD AND THE WHITEWASH WAIVER AND RESUMPTION IN TRADING

Underwriter Mr. Cheung Wai

Independent Financial adviser to the Independent Board Committee and the Independent Shareholders

South China Capital Limited

PROPOSED RIGHTS ISSUE

The Company proposes to raise not less than approximately HK$16.38 million and not more than approximately HK$16.57 million before expenses by way of the Rights Issue of not less than 1,637,829,232 Rights Shares and not more than 1,656,925,232 Rights Shares at a price of HK$0.01 per Rights Share on the basis of four Rights Shares for every existing Share held on the Record Date.

* For identification purposes only

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The net proceeds of the Rights Issue will amount to not less than approximately HK$14.63 million and not more than approximately HK$14.82 million. The Company intends to use the net proceeds from the Rights Issue as general working capital.

The Company will provisionally allot four Rights Shares in nil-paid form for every existing Share held by the Qualifying Shareholders on the Record Date. Fractional entitlements will not be allotted but will be aggregated and sold for the benefit of the Company. As at the date of this announcement, the Options are outstanding. Save for the Options, there were no outstanding options, warrants or securities convertible or exchangeable into Shares as at the date hereof.

The Rights Shares (other than the Rights Shares to be allotted in respect of the Shares beneficially owned by Mr. Cheung) will be fully underwritten by Mr. Cheung, based on the terms and conditions set out in the Underwriting Agreement. Details of the major terms and conditions of the Underwriting Agreement are set out in the section headed “Underwriting Arrangements” of this announcement.

The Rights Issue is conditional upon to the fulfillment or waiver of certain conditions as described under the section headed “Conditions of the Rights Issue”. In particular, the Rights Issue is subject to the Underwriting Agreement not being terminated in accordance with its terms (see the section headed “Termination of the Underwriting Agreement” below), and the Rights Issue is conditional upon, among other things, (i) the Executive granting the Whitewash Waiver to Mr. Cheung and the parties acting in concert with any of him; and (ii) the approval by the Independent Shareholders at the SGM on a vote taken by way of a poll of the Whitewash Waiver. Accordingly, if the Underwriting Agreement is terminated, or the conditions of the Rights Issue are not fulfilled or waived, the Rights Issue will not proceed. Investors’ attention is drawn to the section headed “Warning of the risks of dealing in Shares and the nil-paid Rights Shares” below.

WHITEWASH WAIVER

In the event that Mr. Cheung is called upon to take up his obligations under the Underwriting Agreement in full, the aggregate shareholding interests of Mr. Cheung and parties acting in concert with him will be increased from about 41.18% as at the date of this announcement to about 88.24% immediately after completion of the Rights Issue (assuming no Share Options are exercised before the Record Date). Under Rule 26 of the Takeovers Code, the fulfillment of Mr. Cheung’s proposed underwriting commitment will trigger a mandatory offer by Mr. Cheung and parties acting in concert with him for all the securities of the Company other than those already owned by Mr. Cheung and parties acting in concert with him. An application will be made by Mr. Cheung and parties acting in concert with him to the Executive for the Whitewash Waiver from the obligation to make a mandatory general offer for the Shares as a result of the Rights Issue and any Rights Shares to be taken up under the Underwriting Agreement pursuant to Note 1 of the Notes on Dispensations from Rule 26 of the Takeovers Code. The Whitewash Waiver, if granted by the Executive, will be subject to the approval of the Independent Shareholders on a vote taken by way of a poll at the SGM. If the Whitewash Waiver is not granted by the Executive, the Rights Issue will not proceed.

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GENERAL

The SGM will be convened as soon as practicable at which all necessary resolutions will be proposed to approve, inter alia , the Rights Issue and the Whitewash Waiver. In view of the interests of Mr. Cheung in the Rights Issue, the Underwriting Agreement and the Whitewash Waiver and being a controlling shareholder of the Company, he and any of his associates and parties acting in concert with any of him (i.e. Simrita Investments Limited, a company wholly and beneficially owned by Mr. Cheung) shall abstain from voting in the SGM.

An Independent Board Committee comprising the independent non-executive Directors, namely Mr. Fong Chi Wah, Mr. Jin Qingjun, Mr. Wang Ruiping, has been established to advise the Independent Shareholders on the terms of the Rights Issue and the Whitewash Waiver. In connection therewith, the independent financial adviser, South China Capital Limited, has been appointed to advise the Independent Board Committee on the terms of the Rights Issue and the Whitewash Waiver.

A circular containing, among others, details of the Rights Issue, a letter from the Independent Board Committee, a letter from South China Capital Limited to the Independent Board Committee and the Independent Shareholders and a notice convening the SGM to consider the Rights Issue and the Whitewash Waiver will be dispatched to the Qualifying Shareholders as soon as possible.

Trading in the Shares was suspended on the Stock Exchange from 9:30 a.m. on 12 December 2007 at the request of the Company pending the issue of this announcement and application has been made to the Stock Exchange for the resumption of trading in the Shares on the Stock Exchange from 9:30 a.m. on 19 December 2007.

Shareholders and potential investors should exercise caution in dealing in the securities of the Company.

THE RIGHTS ISSUE

Issue Statistics

Basis of Rights Issue: Four Rights Shares for every Share held on the Record Date Number of Shares in issue: 409,457,308 Shares as at the date of this announcement Number of Shares which may Up to 4,774,000 Shares be issued pursuant to the share option scheme(s): Number of Rights Shares: Not less than 1,637,829,232 Rights Shares and not more than 1,656,925,232 Rights Shares Subscription Price: HK$0.01 per Rights Share, payable in full upon acceptance

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The number of Rights Shares which may be issued pursuant to the Rights Issue will be increased in proportion to any additional Shares which will be issued and allotted on or before the Record Date, including Shares which may be issued and allotted to holders of Share Options pursuant to an exercise of the subscription rights attaching to the Share Options. As at the date of this announcement, there were outstanding Share Options for up to 4,774,000 Shares which may be exercised on or before the Record Date. If all of the subscription rights attaching to such Share Options are exercised and Shares are issued and allotted pursuant to such exercise on or before the Record Date, the number of issued Shares will be increased to 414,231,308 Shares and the number of Rights Shares which may be issued pursuant to the Rights Issue will be increased to 1,656,925,232 Rights Shares. Other than these Share Options, the Company has no other outstanding options, warrants or convertible securities as at the date of this announcement. No Shares shall be allotted or issued between the date of this announcement up to and including the Record Date.

The Company expects to raise not less than approximately HK$16.38 million and not more than approximately HK$16.57 million before expenses through the Rights Issue based on not less than 1,637,829,232 Rights Shares and not more than 1,656,925,232 Rights Shares at a price of HK$0.01 per Rights Share.

Qualifying Shareholders

The Company will send the Rights Issue Documents to Qualifying Shareholders only.

To qualify for the Rights Issue, a Shareholder must be registered as a member of the Company on the Record Date. In relation to holders of the Share Options (i) they must exercise their respective subscription rights attaching to the Share Options in accordance with the relevant procedures specified in the applicable rules of the Share Options Scheme(s) on or before the Record Date; and (ii) they must be registered as the holders of the Shares allotted pursuant to the exercise of the subscription rights of the Share Options on or before the Record Date.

In order to be registered as a member at the close of business on the Record Date, Shareholders must lodge any transfers of Shares (together with the relevant share certificates) with the Company’s share registrar in Hong Kong no later than 4:00 p.m. on 25 January 2008.

The share registrar of the Company in Hong Kong is:

Computershare Hong Kong Investor Services Limited Rooms 1712–1716, 17th Floor Hopewell Centre 183 Queen’s Road East Wanchai Hong Kong

Closure of Register of Members

The register of members of the Company will be closed from 28 January 2008 to 30 January 2008, both dates inclusive. No transfers of Shares will be registered during this period.

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Subscription Price

The Subscription Price for the Rights Shares is HK$0.01 per Rights Share, payable in full when a Qualifying Shareholder accepts his/her/its provisional allotment under the Rights Shares or applies for excess Rights Shares or when a transferee of nil-paid Rights Shares subscribes for the Rights Shares.

The Subscription Price represents:

1. a discount of approximately 97.22% to the closing price of HK$0.36 per Share as quoted on the Stock Exchange on the Last Trading Day;

2. a discount of approximately 87.50% to the theoretical ex-rights price of approximately HK$0.08 per Share based on the closing price of HK$0.36 per Share as quoted on the Stock Exchange on the Last Trading Day; and

3. a discount of approximately 97.30% to the average closing price of approximately HK$0.37 per Share as quoted on the Stock Exchange for the last ten Trading Days up to and including the Last Trading Day.

The Subscription Price was arrived at after arm’s length negotiations between the Company and Mr. Cheung. The Directors considers the Subscription Price is fair and reasonable as far as Shareholder’s concern, since the Rights Issue is extended to all Qualifying Shareholders on the same basis, no Qualifying Shareholders will have materials disadvantages on such. The Directors also consider that it is a general market practice to issue Rights Shares at a discount to the market price of the Shares and in order to enhance the attractiveness of the Rights Issue and to encourage the Shareholders to participate in the Rights Issue and to share the potential growth of the Company, the discount on the Subscription Price to the current market price of the Shares as proposed is appropriate and the Rights Issue is in the interest of the Company and the Shareholders as a whole.

Status of the Rights Shares

The Rights Shares, when allotted, issued and fully-paid, will rank pari passu in all respects with the then existing Shares in issue. Holders of such Rights Shares will be entitled to receive all future dividends and distributions which are declared, made or paid after the date of allotment and issue of the Rights Shares.

Nil-paid Rights Shares will be traded in board lots of 4,000 Shares. Dealing in the Rights Shares in both their nil-paid and fully-paid forms registered in the register of the Company in Hong Kong will be subject to the payment of stamp duty in Hong Kong.

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2008

Expected timetable

The expected timetable for the Rights Issue is set out below:

Dispatch of circular with notice of SGM to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . Monday, 7 January Last day of dealings in existing Shares on a cum-rights basis . . . . . . . . . . . . . . . . Wednesday, 23 January Commencement date of trading on an ex-rights basis . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 24 January Latest time for lodging transfers of Shares in order to qualify for the Rights Issue . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Friday, 25 January Register of members closes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Monday to Wednesday) 28 January to 30 January (both days inclusive) Latest time for lodging forms of proxy for the SGM . . . . . . . . . . . . . . 10:00 a.m. on Monday, 28 January SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10:00 a.m. on Wednesday, 30 January Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 30 January Announcement of results of the SGM . . . . . . . . . . . . . . . . . . . . . by 11:00 p.m. on Wednesday, 30 January Dispatch of the Rights Issue Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 31 January Register of members re-opens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 31 January First day of dealings in nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 4 February Latest time for splitting nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Tuesday, 12 February Last day of dealings in nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 15 February Latest time for acceptance of, and payment for Rights Shares and application for excess Rights Shares . . . . . . . 4:00 p.m. on Wednesday, 20 February Latest time for terminating the Underwriting Agreement . . . . . . . . . . . . 4:00 p.m. on Friday, 22 February Announcement of results of acceptance and excess applications of the Rights Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 26 February Refund cheques in respect of wholly or partially unsuccessful applications for excess Rights Shares to be dispatched on or before . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 27 February Certificates for fully-paid Rights Shares expected to be dispatched on or before . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 27 February Dealings in fully-paid Rights Shares on the Stock Exchange to commence on . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 29 February

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Dates or deadlines specified in this announcement for events in the timetable in relation to the Rights Issue refer to Hong Kong local time and are indicative only, and may be varied by agreement between the Company and Mr. Cheung. Any changes to the expected timetable will be notified to Shareholders.

Share Certificates and refund cheques for Rights Issue

Subject to the fulfillment of the conditions of the Rights Issue, share certificates for all fully-paid Rights Shares are expected to be posted on or before 27 February 2008 to those who have accepted and (where applicable) applied for, and paid for the Rights Shares, by ordinary post at their own risk. Refund cheques in respect of wholly or partially unsuccessful applications for excess Rights Shares (if any) are expected to be posted on or before 27 February 2008 by ordinary post to the applicants at their own risk.

Rights of Overseas Shareholders

The Rights Issue Documents will not be registered under the applicable securities legislation of any jurisdiction other than Hong Kong. If the registered address of any of the Shareholders as shown on the register of members of the Company as at the Record Date is in a territory other than Hong Kong, the Directors will, in compliance with Rules 17.41(1) of the GEM Listing Rules, seek legal advice as to whether or not it would be or might be unlawful or impracticable to offer the Rights Shares in such places without registration of the Rights Issue Document and/or compliance with any legal or regulatory requirements or special formalities in such places. Subject to the legal advices, the Directors will exclude the Overseas Shareholders from the Rights Issue only if they consider that it is necessary or expedient not to offer the Right Shares to the Overseas Shareholders on account either of the legal restrictions under the laws of the place of the his/her registered address or the requirements of the relevant regulatory body or stock exchange in that place. The Company will send copies of the Prospectus to the Overseas Shareholders for their information only, the Company will not send any provisional allotment letters and forms of application for excess Rights Shares to them.

Arrangements will be made for Rights Shares which would otherwise have been provisionally allotted to the Overseas Shareholders to be sold in the market in their nil-paid form as soon as practicable after dealings in the nil-paid Rights Shares commence and before dealings in nil-paid Right Shares end, if a premium (net of expenses) can be obtained. The proceeds of such sale, less expenses, of more than HK$100 will be paid to the relevant Overseas Shareholders in Hong Kong dollars pro rata to their respective shareholdings as soon as practicable. The Company will retain individual amounts of HK$100 or less for its own benefit.

Fractions of Rights Shares

The Company will not provisionally allot fractions of Rights Shares (nil-paid and fully-paid). The Company will sell in the market any such Rights Shares created from the aggregation of fractions of Rights Shares (if a premium, net of expenses, can be obtained), and will retain the proceeds for its own benefit.

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Applications for excess Rights Shares

Qualifying Shareholders shall be entitled to apply for any unsold entitlements of Overseas Shareholders, any unsold Rights Shares created by adding together fractions of Rights Shares and any Rights Shares provisionally allotted but not accepted by Qualifying Shareholders. Application may be made by completing the form of application for excess Rights Shares and lodging the same with a separate remittance for the excess Rights Shares being applied for. The Directors will allocate the excess Rights Shares at their discretion on a fair and reasonable basis on the following principles:

• (1) preference will be given to applications for less than a board lot of Rights Shares where they appear to the Directors that such applications are made to round up odd-lot holdings to whole-lot holdings;

• (2) subject to availability of excess Rights Shares after allocation under principle (1) above, the excess Rights Shares will be allotted to Qualifying Shareholders based on a sliding scale with reference to the number of the excess Rights Share applied by them (that is, Qualifying Shareholders applying for smaller number of Rights Shares are allocated with a higher percentage of successful application but will receive less number of Rights Share; whereas Qualifying Shareholders applying for large number of Rights Shares are allocated with a smaller percentage of successful application but will receive higher number of Rights Shares).

Shareholders with their Shares held by a nominee company should note that the Board will regard the nominee company as a single Shareholder according to the register of members of the Company. Accordingly, Shareholders should note that the aforesaid arrangement in relation to the application for excess Rights Shares will not be extended to beneficial owners individually. Shareholders with their Shares held by a nominee company are advised to consider whether they would like to arrange for registration of the relevant Shares in the name of the beneficial owner(s) prior to the Record Date.

Mr. Cheung, his associates and parties acting in concert with him including Simrita Investments Limited have not indicated whether they will apply for any excess Rights Shares.

The latest time for acceptance of, and payment for, Rights Shares and application for excess Rights Shares is expected to be at 4:00 p.m. on 20 February 2007, or such later date as may be agreed between the Company and Mr. Cheung.

Application for listing

The Company will apply to the GEM Listing Committee of the Stock Exchange for the listing of, and permission to deal in the Rights Shares, in both their nil-paid and fully-paid forms.

UNDERWRITING ARRANGEMENTS

Underwriting Agreement

Date:

11 December 2007 (as supplemented by a letter dated 17 December 2007 entered into by the same parties amending certain terms of the Rights Issue)

Underwriter: Mr. Cheung, the chairman and a substantial Shareholder of the Company who directly and indirectly holds approximately 41.18% existing issued share capital of the Company and 1,000,000 outstanding Share Options

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Number of Rights Shares underwritten:

• not less than 963,339,596 Rights Shares (assuming no outstanding Share Options are exercised before the Record Date and excluding the Rights Shares to be issued to and accepted by Mr. Cheung) and not more than 978,435,596 Rights Shares (assuming full exercise of the outstanding Share Options before the Record Date and excluding the Rights Shares to be issued to and accepted by Mr. Cheung and his associate)

Commission:

• 1.00% of the aggregate Subscription Price in respect of the number of Rights Shares underwritten

Pursuant to the Underwriting Agreement, Mr. Cheung has agreed to underwrite the Rights Shares which have not been taken up and fully-paid for up to 4:00 p.m. on the Final Acceptance Date. Accordingly, the Rights Issue is fully underwritten.

The commission payable to Mr. Cheung was determined after arm’s length negotiations between the Company and Mr. Cheung and based on normal commercial terms. Since Mr. Cheung is a substantial Shareholder and the chairman of the Company, the Underwriting Agreement constitutes a connected transaction of the Company under Rule 20.31(3)(c) of the GEM Listing Rules. As the Company has complied with Rule 10.31(2) of the GEM Listing Rules, the connected transaction is exempted from the reporting, announcement and independent shareholders’ approval requirements contained in Chapter 20 of the GEM Listing Rules.

Undertaking by Mr. Cheung

As at the date of this announcement, Mr. Cheung is the beneficial owner of an aggregate of 168,622,409 Shares, of which 149,882,409 Shares are registered under his own name and 18,740,000 Shares are registered under Simrita Investments Limited, a company wholly and beneficially owned by him, and the owner of Share Options to subscribe for 1,000,000 Shares.

Subject to the Underwriting Agreement becoming unconditional and not being terminated in accordance with its terms, Mr. Cheung has irrevocably undertaken to the Company that at least 168,622,409 Shares beneficially owned by him shall remain registered in his (or his nominee’s) names from the date of this announcement up to and inclusive of the Final Acceptance Date and that he shall accept or procure acceptance of his entitlement to the Rights Shares which shall be provisionally allotted to him as the holder or beneficial owner of such Shares under the Rights Issue.

Termination of the Underwriting Agreement

It should be noted that the Underwriting Agreement contains provisions entitling Mr. Cheung, by notice in writing, to terminate his obligations thereunder at any time prior to 4:00 p.m. on the second business day following the Final Acceptance Date, if:

• (a) the success of the Rights Issue would be materially and adversely affected by:

• (i) the introduction of any new law or regulation or any change in existing law or regulation (or the judicial interpretation thereof) or other occurrence of similar nature including without limitation abolition or repeal of any repeal of any existing law or regulation which may materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole; or

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• (ii) the occurrence, happening, coming into effect, change or becoming public knowledge of any event or circumstances of a local, national or international event or change, (whether or not forming part of a series of events or changes occurring or continuing before, and/or after the date of the Underwriting Agreement) of a political, military, financial, economic, or other nature (whether or not ejusdem generis (i.e. of the same kind) with any of the foregoing) or in the nature of any local, national or international outbreak or escalation of hostilities or armed conflict, or affecting local securities market which may in the reasonable opinion of Mr. Cheung materially and adversely affect the business or financial or trading position or prospects of the Group as a whole or may materially and adversely prejudice the success of the Rights Issue or otherwise makes it inexpedient or inadvisable to proceed with the Rights Issue; or

• (b) any adverse change in market conditions (including without limitation suspension or material restriction on trading in securities on the Stock Exchange) which is likely to materially and adversely affect the success of the Rights Issue or otherwise makes it inexpedient or inadvisable to proceed with Rights Issue; or

• (c) any change in the circumstances of the Company or any member of the Group which would materially and adversely affect the prospects of the Company;

• (d) the Company commits any material breach of or omits to observe any of the obligations or undertakings expressed to be assumed by it under the Underwriting Agreement; and

• (e) Mr. Chueng shall receive notification of, or shall otherwise become aware of, the fact that any of the representation or warranties contained in the Underwriting Agreement was, when given, untrue or inaccurate or would in any material respect be untrue or inaccurate if repeated and Mr. Cheung shall, in his reasonable opinion, after full consultation with the Company, determine that any such untrue representation or warranty represents or is likely to represent a material and adverse change in the financial or trading position or prospects of the Group as a whole or is otherwise likely to have an materially prejudicial effect on the Rights Issue; or

• (f) the Company shall, after any matter or event referred to in the relevant clauses of the Underwriting Agreement has occurred or come to Mr. Cheung’s attention, fail promptly to send out any announcement or circular or take any actions (after the despatch of the Rights Issue Documents), in such manner (and as appropriate with such contents) as Mr. Cheung may reasonably request for the purpose of preventing the creation of a false market in the Shares;

Mr. Cheung shall be entitled (but not bound) by notice in writing to the Company to elect to treat such matter or event as releasing and discharging him from his obligations under this Agreement.

In the event that the Underwriting Agreement shall have been terminated, the Rights Issue will not proceed.

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SHAREHOLDING STRUCTURE OF THE COMPANY AND APPLICATION FOR THE GRANTING OF THE WHITEWASH WAIVER

The changes in shareholding structure of the Company before and after completion of the Rights Issue are as follows:

• (i) Assuming no Share Option is exercised prior to the Record Date

Mr. Cheung and parties acting in concert Mr. Cheung Simrita Investments Limited Sub-total Public Total	Existing Shareholding Shares % 149,882,409 36.61% 18,740,000 4.58% 168,622,409 41.18% 240,834,899 58.82% 409,457,308 100.00%	Shareholding immediately after completion of the Rights Issue (assuming no Share Options were exercised prior to the Record Date and all Qualifying Shareholders have taken up the Rights Shares in full) Shares % 749,412,045 36.61% 93,700,000 4.58% 843,112,045 41.18% 1,204,174,495 58.82% 2,047,286,540 100.00%	Shareholding immediately after completion of the Rights Issue (assuming no Share Options were exercised prior to the Record Date and Mr. Cheung has taken up the Rights Shares in full) Shares % 1,712,751,641 83.66% 93,700,000 4.58% 1,806,451,641 88.24% 240,834,899 11.76% 2,047,286,540 100.00%	Shareholding immediately after completion of the Rights Issue (assuming no Share Options were exercised prior to the Record Date and Mr. Cheung has taken up the Rights Shares in full) Shares % 1,712,751,641 83.66% 93,700,000 4.58% 1,806,451,641 88.24% 240,834,899 11.76% 2,047,286,540 100.00%
				100.00%

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(ii) Assuming the Share Option were fully exercised prior to the Record Date

Mr. Cheung and parties acting in concert Mr. Cheung Simrita Investments Limited Sub-total Public Total	Existing Shareholding Shares % 149,882,409 36.61% 18,740,000 4.58% 168,622,409 41.18% 240,834,899 58.82% 409,457,308 100.00%	Shareholding (assuming all the Share Options were exercised before the Rights Issue) Shares % 150,882,409 36.42% 18,740,000 4.52% 169,622,409 40.95% 244,608,899 59.05% 414,231,308 100.00%	Shareholding immediately after completion of the Rights Issue (assuming all the Share Options were exercised prior to the Record Date and all Qualifying Shareholders have taken up the Rights Shares in full) Shares % 754,412,045 36.42% 93,700,000 4.52% 848,112,045 40.95% 1,223,044,495 59.05% 2,071,156,540 100.00%	Shareholding immediately after completion of the Rights Issue (assuming all the Share Options were exercised prior to the Record Date and Mr. Cheung has taken up the Rights Shares in full) Shares % 1,732,847,641 83.67% 93,700,000 4.52% 1,826,547,641 88.19% 244,608,899 11.81% 2,071,156,540 100.00%	Shareholding immediately after completion of the Rights Issue (assuming all the Share Options were exercised prior to the Record Date and Mr. Cheung has taken up the Rights Shares in full) Shares % 1,732,847,641 83.67% 93,700,000 4.52% 1,826,547,641 88.19% 244,608,899 11.81% 2,071,156,540 100.00%
					100.00%

WHITEWASH WAIVER

In the event that Mr. Cheung is called upon to take up his obligations under the Underwriting Agreement in full, the aggregate shareholding interests of Mr. Cheung and parties acting in concert with him will be increased from about 41.18% as at the date of this announcement to about 88.24% immediately after completion of the Rights Issue (assuming no Share Options are exercised before the Record Date). Under Rule 26 of the Takeovers Code, the fulfillment of Mr. Cheung’s proposed underwriting commitment will trigger a mandatory offer by Mr. Cheung and parties acting in concert with him for all the securities of the Company other than those already owned by Mr. Cheung and parties acting in concert with him. An application will be made by Mr. Cheung and parties acting in concert with him to the Executive for the Whitewash Waiver from the obligation to make a mandatory general offer for the Shares as a result of the Rights Issue and any Rights Shares to be taken up under the Underwriting Agreement pursuant to Note 1 of the Notes on Dispensations from Rule 26 of the Takeovers Code. The Whitewash Waiver, if granted by the Executive, will be subject to the approval of the Independent Shareholders on a vote taken by way of a poll at the SGM. If the Whitewash Waiver is not granted by the Executive, the Rights Issue will not proceed.

If the aggregate shareholding interests of Mr. Cheung and parties acting in concert with him after the completion of the Rights Issue are in the range of 30% to 50% of the enlarged issued share capital of the Company, they will be subject to the 2% creeper as set out in the Takeovers Code.

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If the aggregate shareholding interests of Mr. Cheung and parties acting in concert with him after the completion of the Rights Issue exceed 50% of the enlarged issued share capital of the Company, Mr. Cheung and parties acting in concert with him can acquire further Shares without triggering a mandatory offer.

Shareholders and public investors should note that the above shareholding changes are for illustration purposes only and the actual changes in the shareholding structure of the Company upon completion of the Rights Issue are subject to various factors, including the results of acceptance of the Rights Issue. The Company will take appropriate arrangement to ensure maintenance of sufficient public float (i.e. 15% public float) upon completion of the Rights Issue. In the event that the Company is failed to comply with Rule 11.23 of the GEM Listing Rules, the trading of the Shares will be suspended at the request by the Stock Exchange.

DIRECTOR’S DEALING IN SHARES

On 11 October 2007, Mr. Cheung, at a consideration of HK$0.36 per Share, disposed (i) 40,000,000 Shares (representing approximately 9.77% equity interests of the Company) personally owned by him; (ii) a company which beneficially owned by him and was interested in 19,200,000 Shares (representing approximately 4.69% equity interests of the Company); and (iii) 3,300,000 Shares (representing approximately 0.80% equity interests of the Company) held by Simrita Investments Limited. To the best of the Director’s knowledge and brief, the above disposal of Shares were made to the independent third parties of the Company and has no relationship with Mr. Cheung and his concert parties. Save as disclosed above, none of Mr. Cheung or any parties acting in concert with him has acquired any voting rights in the Company or has dealt in any Shares for the six months prior to the date of this announcement.

CONDITIONS OF THE RIGHTS ISSUE

The Rights Issue is conditional upon, among other things, the following conditions (which are not capable of being waived by any party to the Underwriting Agreement):

• (i) the passing by Independent Shareholders at the SGM to be convened, in compliance with the Takeovers Code, of an ordinary resolution to approve the Whitewash Waiver taken by way of a poll;

• (ii) the passing by Independent Shareholders at the SGM to be convened, in compliance with the GEM Listing Rules, of an ordinary resolution to approve the Rights Issues by way of a poll;

• (iii) the posting of the SGM Documents (in the form duly approved by the Stock Exchange and the SFC) to all Shareholders on the posting date of the SGM Documents;

• (iv) the SFC having granted the Whitewash Waiver to Mr. Cheung together with any party acting in concert with him, if any, to the effect that Mr. Cheung together with any party acting in concert with him, if any, the obligation to make a mandatory offer under Rule 26 of the Takeovers Code in connection with the Rights Issue on or before the Final Acceptance Date is waived;

• (v) the filing with the Registrar of Companies in Bermuda one copy of the Rights Issue Documents and all other documents to be attached thereto duly signed by either all Directors or one of the Directors (for and on behalf of all the Directors) and otherwise in compliance with the Companies Act 1981 of Bermuda (as amended);

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• (vi) the delivery to the Stock Exchange and registration with the Registrar of Companies in Hong Kong respectively one copy of each of the Rights Issue Documents duly signed by two directors of the Company (or by their agents duly authorized in writing) as having been approved by resolution of the Board (and all other documents required to be attached thereto) not later than the Record Date and otherwise in compliance with the GEM Listing Rules and the Companies Ordinance (Cap. 32);

• (vii) the posting of the Rights Issue Documents to the Qualifying Shareholders and the posting of copies of the Prospectus stamped “For Information Only” to Overseas Shareholders on the Record Date;

• (viii) the GEM Listing Committee of the Stock Exchange granting or agreeing to grant (subject to allotment), and not having revoked, listing of, and permission to deal in the Rights Shares, in nilpaid and fully-paid forms, by not later than, in the case of Rights Shares in nil-paid form, the first day of dealing of nil-paid Rights Shares and in the case of Rights Shares in fully-paid form, the first day of dealings of fully-paid Rights Shares;

• (ix) compliance with and performance of all the undertakings and obligations of the Mr. Cheung under the Underwriting Agreement;

• (x) the execution and returning of the undertakings by Mr. Cheung and his associate to undertake subscription of Rights Shares in proportion to their current shareholding in the Company, which will be not less than 674,489,636 Rights Shares and not more than 678,489,636 Rights Shares;

• (xi) the obtaining of the necessary permission of the Bermuda Monetary Authority for the issue of the Rights Shares, if so required.

In the event that the above conditions not being fulfilled on or before the respective dates aforesaid (or such later date or dates as may be agreed between the Company and Mr. Cheung), all obligations and liabilities of the parties under the Underwriting Agreement shall cease and no party shall have any claim against the others (save for any antecedent breaches thereof).

WARNING OF THE RISKS OF DEALING IN SHARES AND THE NIL-PAID RIGHTS SHARES

The last day of dealings in the Shares on a cum-rights basis is 23 January 2008. Existing Shares will be dealt with on an ex-rights basis from 24 January 2008. To qualify for the Rights Issue, a Qualifying Shareholder’s name must appear on the register of members of the Company on the Record Date, which is currently expected to be on 30 January 2008 or such other date as may be agreed between the Company and Mr. Cheung, and have an address in Hong Kong which appears on the register of members of the Company on the Record Date. In order to be registered as a member of the Company on the Record Date, any transfers of Shares must be lodged for registration by 4:00 p.m. on 25 January 2008.

The Rights Shares are expected to be dealt with in their nil-paid form from 4 February 2008 to 15 February 2008, both dates inclusive. Any dealings in the Shares or Rights from the date of this announcement up to the date on which all conditions of the Rights Issue are fulfilled, and any dealing in the Rights Shares in their nil-paid form are accordingly at the investors’ own risk. Shareholders or other persons contemplating any dealings in the Shares or Rights Shares in their nil-paid form are recommended to consult their own professional advisors.

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REASONS FOR THE RIGHTS ISSUE AND USE OF PROCEEDS

The Company is an investment holding company and its subsidiaries are principally engaged in the design, research, development, manufacturing and distribution of optical image capturing devices and related components.

The Group has suffered from making losses attributable to equity holders of approximately HK$23.0 million, HK$99.4 million and HK$11.6 million respectively for the last three years ended 31 December 2006.

Referring to the announcement and circular made by the Company dated 8 November 2007 and 30 November 2007 respectively, the Group has disposed its 55% equity interests in SYSCAN Manufacturing (a former indirect wholly-owned subsidiary of the Company) for the repayment of debts owned by SYSCAN Optoelectronics. The Directors are of the view that although the disposal of 55% equity interests in SYSCAN Manufacturing can ease its financial burden, the Group would not have sufficient working capital to enable it to operate as a going concern in the foreseeable future. In order to actively develop new products and seek for strategic partners to bring in new revenue for the Group, the Directors are exploring every opportunity to raise additional working capital including equity or debt financing to enhance its capital base. However, due to its poor results in the last few years and no further valuable assets available for banks as security, the Directors are of the view that such financing are not feasible. In view of the above, the Directors consider that it is more prudent to finance the Group’s long-term growth with long-term funding by way of Rights Issue. The Rights Issue will allow all the Qualifying Shareholders to have an equal opportunity to participate in the enlargement of the capital base of the Company, thereby also maintaining their proportionate interests in the Company and allowing them to dispose of their Rights Shares in nil-paid form in the market. Accordingly, the Directors consider that it is in the interests of the Company and its Shareholders as a whole to raise the capital through the Rights Issue.

The estimated gross proceeds from the Rights Share will not be less than approximately HK$16.38 million. The estimated amount of expenses of the Rights Issue is approximately HK$1.75 million, which include, underwriting commission, legal fees, financial advisory fees, printing fees, prospectus registration fees and related expenses, which are payable by the Company. The estimated net proceeds from the Rights Shares of not less than HK$14.63 million will be used by the Group as general working capital so as to continue to carry on the existing business activities, that is, design, research, development, manufacturing and distribution of optical image capturing devices and related components.

The Company has not conducted any fund raising activity during the past 12 months.

INFORMATION ON MR. CHEUNG

As at the date of this announcement, Mr. Cheung beneficially owns 168,622,409 Shares which constitute approximately 41.18% of the issued share capital of the Company. Being the chairman of the Company, he is responsible for the overall strategic planning for the Group’s business development, in particular that for the Group’s China business. He has over 30 years of business and management experiences in the electronics and computer industry in the PRC and overseas markets.

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ADJUSTMENT TO THE SUBSCRIPTION PRICE OF THE SHARE OPTIONS

Pursuant to 3 separates share option schemes adopted by the Company on 2 March 2000, 2 March 2000 and 26 April 2002 respectively, adjustments to the outstanding Share Options are required to be made upon the Rights Issue becoming unconditional. Further details on the adjustments will be set out in the Prospectus and an announcement will be made by the Company when appropriate.

SGM

The SGM will be convened as soon as practicable at which all necessary resolutions will be proposed to approve, inter alia , the Rights Issue and the Whitewash Waiver. In view of the interests of Mr. Cheung in the Rights Issue, the Underwriting Agreement and the Whitewash Waiver and being a controlling shareholder of the Company, he and any of his associates and parties acting in concert with any of him (i.e. Simrita Investments Limited, a company wholly and beneficially owned by Mr. Cheung) shall abstain from voting in the SGM.

GENERAL

An Independent Board Committee comprises the independent non-executive Directors, namely Mr. Fong Chi Wah, Mr. Jin Qingjun, Mr. Wang Ruiping, has been established to advise the Independent Shareholders on terms of the Rights Issue and the Whitewash Waiver. In connection therewith, the independent financial adviser, South China Capital Limited, has been appointed to advise the Independent Board Committee on terms of the Rights Issue and the Whitewash Waiver.

A circular containing, among others, details of the Rights Issue, a letter from the Independent Board Committee, a letter from South China Capital Limited to the Independent Board Committee and the Independent Shareholders and a notice convening the SGM to consider the Whitewash Waiver will be dispatched to the Shareholders as soon as possible.

Trading in the Shares on the Stock Exchange was suspended from 9:30 a.m. on 12 December 2007 at the request of the Company pending the issue of this announcement. Application has been made to the Stock Exchange for the resumption of trading in the Shares from 9:30 a.m. on 19 December 2007.

Shareholders and potential investors should exercise caution in dealing in the securities of the Company.

DEFINITIONS

“associates” has the meaning ascribed to it under the GEM Listing Rules “Board” the board of Directors “business day” any day (other than a Saturday) on which commercial banks are generally open for ordinary business in Hong Kong

“Company” SYSCAN Technology Holdings Limited, a company incorporated in Bermuda with limited liability and the shares of which are listed on the Stock Exchange

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“Director(s)” director(s) of the Company “Executive” the Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director

• “Final Acceptance Date” 22 February 2008 or such other date as Mr. Cheung and the Company may agree as the last date for acceptance and payment in respect of provisional allotments under the Rights Issue

• “GEM” the Growth Enterprise Market of the Stock Exchange

• “GEM Listing Rules” the Rules Governing the Listing of Securities on the GEM

• “Group” the Company and its subsidiaries “Hong Kong” Hong Kong Special Administrative Region of the People’s Republic of China

• “Independent Board an independent committee of the Board consisting of three independent Committee” non-executive Directors to advise the Independent Shareholders in respect of the Rights Issue and the Whitewash Waiver

• “Independent Shareholder(s)” shareholder(s) of the Company, other than Mr. Cheung and Simrita Investments Limited, any of their associates and parties acting in concert with any of them and any other persons interested or involved in the Rights Issue and the Underwriting Agreement and the Whitewash Waiver

• “Last Trading Day” 11 December 2007, being the last trading day before the suspension of the trading of the Shares on the Stock Exchange prior to the release of this announcement

• “Mr. Cheung” or Mr. Cheung Wai, the chairman and a substantial shareholder of the “Underwriter” Company through his personal and corporate interests holds 41.18% existing issued share capital of the Company

• “Options” the share options granted by the Company to subscribe for an aggregate of 4,774,000 Shares outstanding as at the date of this announcement pursuant to the share option scheme(s) adopted by the Company

• “Overseas Shareholders” Shareholders with registered address (as shown in the register of members of the Company on the Record Date) which are outside Hong Kong

• “Prospectus” the prospectus to be issued by the Company in relation to the Rights Issue

• “Qualifying Shareholder(s)” the Shareholder(s), other than the Overseas Shareholder(s), whose name(s) appear(s) on the register of members of the Company on the Record Date

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“Record Date”	30 January 2008 or such other date as may be agreed between the
	Company and Mr. Cheung, being the record date for determining
	entitlement to the Rights Issue
“Rights Issue”	the proposed issue of the Rights Shares on the basis of four Rights
	Shares for every existing Share held on the Record Date the Subscription
	Price as described in this announcement
“Rights Issue Documents”	the Prospectus, the provisional allotment letter and the form of application
	for excess Rights Shares
“Rights Share(s)”	new Share(s) to be allotted and issued in respect of the Rights Issue
“SFC”	Securities and Futures Commission of Hong Kong
“SGM”	the special general meeting of the Company to be convened to approve,
	inter alia, the Rights Issue and the Whitewash Waiver
“SGM Documents”	circular and proxy form to be despatched to Shareholders for the purpose
	of,inter alia, convening the SGM
“Share(s)”	ordinary share(s) of HK$0.01 each in the share capital of the Company
“Shareholder(s)”	holder(s) of the Share(s)
“Share Options”	options granted by the Company to subscribe for Shares pursuant to the
	Company’s share option scheme A, share option scheme B and share
	option scheme C which was adopted on 2 March 2000, 2 March 2000
	and 26 April 2002 respectively
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subscription Price”	the subscription price of HK$0.01 per Rights Share
“Takeovers Code”	The Hong Kong Code on Takeovers and Mergers
“Trading Day”	a day on which the Stock Exchange is open for trading
“Underwriting Agreement”	the conditional agreement dated 11 December 2007 entered into between
	the Company and Mr. Cheung relating to the underwriting and other
	arrangements in respect of the Rights Issue (as supplemented by a letter
	dated 17 December 2007 entered into by the same parties amending
	certain terms of the Rights Issue)

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“Whitewash Waiver”

• a waiver from the Executive pursuant to Note 1 to the Notes on dispensations from Rule 26 of the Takeovers Code in respect of the obligation of Mr. Cheung and parties acting in concert with him to make a mandatory general offer for all the Shares not already owned by Mr. Cheung or parties acting in concert with him which would otherwise arise as a result of Mr. Cheung subscribing for Rights Shares under the terms of the Underwriting Agreement

• “HK$”

Hong Kong dollars, the lawful currency of Hong Kong

“%”

per cent.

By order of the Board SYSCAN Technology Holdings Limited Cheung Wai Chairman

Hong Kong, 18 December 2007

As at the date of this announcement, the Board comprises Mr. Cheung Wai and Mr. Zhang Ming as executive directors, and Mr. Fong Chi Wah, Mr. Jin Qingjun and Mr. Wang Ruiping as independent nonexecutive directors.

This announcement for which the Directors collectively and individually accept responsibility includes particulars given in compliance with the GEM Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief (1) the information contained in this announcement is accurate and complete in all material respects and not misleading; (2) there are no matters the omission of which would make any statement in this announcement misleading; and (3) all opinions expressed in this announcement have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable.

This announcement will remain on the Company’s website at www.syscangroup.com and on the Latest Company Announcement page on the GEM website for at least 7 days from the day of its posting.

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