Medlive Technology Co., Ltd. — AGM Information 2007

Apr 27, 2007

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 a licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in GUANGDONG KELON ELECTRICAL HOLDINGS COMPANY LIMITED , you should at once hand this circular to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer 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.

GUANGDONG KELON ELECTRICAL HOLDINGS COMPANY LIMITED

(A joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 0921)

PROPOSED CHANGE OF COMPANY NAME AND

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION AND PROPOSED AMENDMENTS TO THE RULES OF PROCEDURES FOR THE MEETINGS OF THE BOARD OF DIRECTORS AND PROPOSED AMENDMENTS TO THE RULES OF PROCEDURES FOR THE GENERAL MEETINGS AND OTHER PROPOSED RESOLUTIONS RELATING TO THE NOTICE OF THE 2006 ANNUAL GENERAL MEETING

A notice convening the 2006 annual general meeting (the “AGM”) of Guangdong Kelon Electrical Holdings Company Limited (the “Company”) to be held at the conference room of the Company’s head office, Shunde District, Foshan City, Guangdong Province, the People’s Republic (the “PRC”) on 18 June 2007 at 9:30 a.m. is set out on pages 14 to 16 of this circular. If you are not able to attend the meeting in person, you are requested to complete and return the enclosed proxy form in accordance with the instructions printed thereon and lodge the same with the Company’s Branch Share Registrar in Hong Kong, Hong Kong Registrars Limited of Rooms 1712-1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong. not less than 24 hours before the time fixed for holding the meeting or any adjournment thereof. Completion and delivery of the form of proxy will not preclude you from attending and voting at the meeting or any adjournment thereof if you so wish.

26 April 2007

CONTENTS

		Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
Letter from the Board
–	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
–	Proposed Change of Company Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
–	Proposed Amendments to the Articles of Association . . . . . . . . . . . . . . . .	4
–	Proposed Amendments to the Rules of Procedures for
	the Meeting of the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . .	9
–	Proposed Amendments to the Rules of Procedures for
	the General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
–	Proposed Resolution for the Approval of
	the Related Matters relating to Possible Suspension
	or Delisting of the A Shares of the Company . . . . . . . . . . . . . . . . . . . .	11
–	Proposed Resolution relating to Provisions for
	Impairment of Inventories, Fixed Assets,
	Construction in Progress and Provision for Bad Debts . . . . . . . . . . . . .	12
–	Proposed Resolution for the Approval of
	the Profit Distribution Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
–	Proposed Reappointment of Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
–	Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
–	Procedure to Demand a Poll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
–	Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
**Notice of **	the AGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14

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DEFINITIONS

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

“AGM”

the 2006 annual general meeting of the Company to be held at the Company’s head office, Shunde District, Foshan City, Guangdong Province, the People’s Republic of China (the “PRC”) on 18 June 2007 at 9:30 a.m., notice of which is set out on pages 14 to 16 of this circular

“Articles of Association”	the articles of association of the Company
“Board”	the board of directors of the Company
“Company”	Guangdong Kelon Electrical Holdings Company Limited,
	a company incorporated in the PRC with limited liability
	and the H shares of which are listed on the main board of
	the Stock Exchange and the A shares of which are listed
	on the Shenzhen Stock Exchange
“Director(s)”	the director(s) of the Company for the time being
“Guangdong Greencool”	Guangdong Greencool Enterprise Development Company
	Limited, the former single largest shareholder of the
	Company
“Hisense Air-Conditioning”	Qingdao Hisense Air-Conditioning Co., Ltd ( ), a subsidiary of Hisense Group
“Hisense Group”	Hisense Group Company, a limited company
	incorporated in the PRC
“Hong Kong”	the Hong Kong Special Administrative Region of the
	People’s Republic of China
“Rules of Procedures for the	Rules governing the procedures for the meetings of the
Meetings of the Board of	board of directors of the Company
Directors”
“Rules of Procedures for the	Rules governing the procedures for the general meetings
General Meeting”	of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited

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LETTER FROM THE BOARD

GUANGDONG KELON ELECTRICAL HOLDINGS COMPANY LIMITED

(A joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 0921)

Executive Directors:

Mr. Tang Ye Guo Mr. Yang Yun Duo Mr. Wang Shi Lei Ms. Yu Shu Min Mr. Lin Lan Mr. Xiao Jian Lin

Registered office: No. 8 Ronggang Road Ronggui Street Shunde District Foshan City Guangdong Province China

Independent non-executive Directors:

Mr. Zhang Sheng Ping

Mr. Lu Qing Mr. Cheung Yui Kai, Warren

Principal place of business in Hong Kong: Room 2502-2505, Harbour Centre 25 Harbour Road Wanchai Hong Kong

26 April 2007

To the Shareholders

Dear Sir or Madam,

PROPOSED CHANGE OF COMPANY NAME AND PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION AND

PROPOSED AMENDMENTS TO THE RULES OF PROCEDURES FOR THE MEETINGS OF THE BOARD OF DIRECTORS AND

PROPOSED AMENDMENTS TO THE RULES OF PROCEDURES FOR THE GENERAL MEETINGS AND OTHER PROPOSED RESOLUTIONS RELATING TO THE NOTICE OF THE 2006 ANNUAL GENERAL MEETING

INTRODUCTION

The purpose of this circular is to provide you with information regarding the resolutions to be proposed at the AGM which, upon approval, would enable the Company to:

• (a) change the name of the Company;

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LETTER FROM THE BOARD

• (b) amend the Articles of Association;

• (c) amend the Rules of Procedures for the Meetings of the Board of Directors;

• (d) amend the Rules of Procedures for the General Meetings;

• (e) approve the profit distribution budget of the Company for the year ended 31 December 2006*;

• (f) approve the reappointment of Shenzhen Dahua Tiancheng Certified Public Accountants and BDO McCable Lo Limited as the local and foreign auditors of the Company, respectively, for the year ended 31 December 2007 and the authorization of the board of directors of the Company (the “Board”) to fix their remuneration*;

• (g) approve the related matters relating to the possible suspension or delisting of the A shares of the Company*; and

• (h) apporove the proposal relating to provisions for impairment of inventories, fixed assets, construction in progress and provision for bad debts*.

• For details, please refer to the announcement of the Company relating to “Resolutions Passed at the 2007 Third Meeting of the Sixth Board of Directors” to be published in “China Securities Journal”, “Securities Times”, “Hong Kong Commercial Daily” and “China Daily” on 27 April 2007.

PROPOSED CHANGE OF COMPANY NAME

The Board proposed to change the name of the Company from “ (Guangdong Kelon Electrical Holdings Company Limited)” to “ (Hisense Kelon Electrical Holdings Company Limited)”.

Reasons for the Change of Company’s Name

The Company is principally engaged in the manufacturing and sales of air-conditioners and refrigerators. Hisense Group is a renowned company engaging in manufacturing and sales of electrical appliances. As a result of the completion of the equity transfer from Guangdong Greencool, the Company’s former substantial shareholder, to Hisnese Air-conditioning in December 2006, Hisense Air-conditioning has become the single largest shareholder of the Company.

In order to make use of the market influence of the “Hisense” brand, enhance the image of the Company and better reflect the Company’s plan for its future operations and business strategy, the Board proposed, upon approval by the shareholders at the AGM and the relevant governmental authorities in the PRC, to change the name of the Company to (Hisense Kelon Electrical Holdings Company Limited). The Company will make further announcement regarding the change of its name in compliance with the requirements of the Listing Rules once the proposal for the change of Company’s name is approved at the AGM.

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LETTER FROM THE BOARD

The proposed change of company name was preliminarily approved by the State Administration for Industry and Commerce of the PRC on 9 April 2007 and is conditional upon (i) the passing of an ordinary resolution by the shareholders approving such change at the AGM; and (ii) the further approval by the State Administration for Industry and Commerce of the PRC and other relevant authorities in the PRC.

It is not the current intention of the Company to provide any free exchange of the existing share certificates with its shareholders. The Company is still considering whether there will be any change of the stock trading name of the Company. Further announcement will be made by the Company in due course.

Share Certificates

The share certificates bearing the existing name of the Company will not affect any rights of the Shareholders. After the effective change of the new company name, all existing share certificates bearing the present name of the Company will continue to be evidence of titles to the shares and will be valid for trading, settlement, registration and delivery for the same number of shares in the new name of the Company. Upon the effective change of the company name, any new share certificates of the Company shall be issued in the new name of the Company.

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

In view of the proposed change of the name of the Company and the completion of share reform, the directors of the Company proposed a special resolution at the AGM to amend the Articles of Association as follows:

1. The original Article 1.1 to be amended as follows:

Article 1.1

These Articles of Association are formulated in accordance with “The Company Law of the People’s Republic of China” (hereinafter referred to as the “Company Law”), the “Special Regulations Promulgated by the State Council Governing Shareholding Companies Seeking Placing and Listing Overseas” (the “Special Regulations”), the “Mandatory Provisions for the Articles of Association of Companies Seeking Listing Overseas” (the “Mandatory Provisions”) and the “Guidelines for Articles of Association of Listed Companies” (the “Guidelines for Articles of Association”) and other relevant laws and provisions of the People’s Republic of China, with an aim to standardize the organization and activities of the Company, to define the rights and obligations between the Company and its shareholders and among its shareholders, and to protect the legitimate rights and interests of the Company and its shareholders and creditors.

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LETTER FROM THE BOARD

1. The original Article 1.2 to be amended as follows:

Article 1.2

Registered Chinese Name: Registered English Name: HISENSE KELON ELECTRICAL HOLDINGS COMPANY LIMITED Corporate Address: No. 8 Ronggang Road, Ronggui Street, Shunde District, Foshan City, Guangdong Province, PRC Post Code: 528303 Telephone: (757) 28362570 Facsimile: (757) 28361055

1. The original Article 1.4 to be amended as follows:

Article 1.4

The Company was established, by way of private placement, by Rongqi Town Economic Development Corporation (the “Promoter”) as the sole Promoter on 16 December 1992 under the approvals from Joint Examination Group for Pilot Joint Stock Enterprises in Guangdong Province and Guangdong Economic Reform Committee. On 3 May 1996, the Company lawfully merged with Guangdong Rongsheng Refrigerator Company Limited by absorption under the approvals from Guangdong Economic System Reform Committee, Guangdong Securities Regulatory Commission and Guangdong Foreign Economic and Trade Cooperation Commission. On 26 June 1996, the State Council Securities Commission approved the Company’s application for issuing H Shares and the State Economic System Reform Committee approved the conversion of the Company into an overseas subscription company. On 28 May 1999, China Securities Regulatory Commission approved the Company’s application for issuing A Shares.

1. The original Article 3.5 to be amended as follows:

Article 3.5

The Company has a total number of 992,006,563 issued Ordinary Shares, of which, overseas-listed foreign-invested shares amount to 459,589,808 shares, representing 46.33% of the total share capital, and domestic listed shares amount to 532,416,755 shares, representing 53.67% of the total share capital.

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LETTER FROM THE BOARD

1. The original Article 7.8 to be amended as follows:

Article 7.8

The controlling shareholder referred to in Article 7.6 and Article 7.7 of these Articles of Association means a person who meets one of the following conditions:

• (1) a shareholder who holds shares representing more than 50% of the entire share capital of the Company;

• (2) despite holding less than 50% of the shares of the entire share capital of the Company, the voting right he/she is entitled to in respect of the shares he/she holds is sufficient to pose a significant influence on the resolutions of the shareholders meetings and Shareholders’ General Meetings.

• The original Article 8.16 is to be amended as follows:

Article 8.16

To effectively protect the rights of shareholders to take part in the Shareholders’ General Meeting, any shareholder who is entitled to attend and vote at a Shareholders’ General Meeting of the Company shall be entitled to appoint one or more persons (whether a shareholder or not) as his/her proxy to attend and vote on his/her behalf. A proxy so appointed shall exercise the following rights pursuant to such authorization:

• (1) the shareholder’s right to speak at the meeting;

• (2) the right to demand for a vote by poll individually or jointly;

• (3) the right to vote by hand or by poll, provided that when a shareholder has appointed more than one proxy, such proxies may only vote by poll.

• The existing Article 8.25 is to be amended as follows:

Article 8.25

The Company shall, subject to the Shareholders’ General Meetings being legally and validly held, encourage a higher proportion of participation by shareholders in Shareholders’ General Meetings through various means, including using modern information technology to establish an online voting platform.

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LETTER FROM THE BOARD

1. The existing Article 8.33 is to be amended as follows:

Article 8.33

Where online voting is provided to shareholders in Shareholders’ General Meeting, the voting results shall be announced by the representative of the vote counter at the meeting only after the vote counter has consolidated and calculated the voting results for each resolution voted by means of on-the-spot voting, online voting and other means as specified.

Where there are many resolutions to be passed at the Shareholders’ General Meeting and if a shareholder only vote upon one or some of such resolutions, the shareholder shall be deemed as present at the meeting and therefore be taken into account in calculating the total number of shareholders present at the meeting. In other resolutions which the shareholder has not expressed any opinion, the shareholder shall be deemed as having abstained from voting.

Before the formal announcement of the results of online voting, the Company and the substantial shareholders shall be under confidentiality obligation in relation to the voting.

1. The original Article 8.37 is to be deleted.

2. The original Article 8.45 is to be amended as follows:

Article 8.45

The announcement on resolutions of a Shareholders’ General Meeting shall include the following contents:

• (1) the time, venue, manner, convener and chairman of the meeting, and descriptions on whether it is in compliance with the relevant laws, rules, regulations and the Articles of Association;

• (2) the number of attending shareholders (their proxies), the total number of shares represented in person or by proxy and its proportion to the total number of shares of the Company having voting rights;

• (3) the way of voting on each resolution;

• (4) the voting results of each resolution. Regarding the resolution proposed by the shareholder, the announcement shall state the name of the proposing shareholders, the proportion of their shareholdings and the content of such proposed resolution. When voting on related party transactions at the meeting, the announcement shall include a statement on the related shareholders who

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LETTER FROM THE BOARD

abstain from voting. If a resolution is not passed or any resolution passed at the previous Shareholders’ General Meeting is revised at the current Shareholders’ General Meeting, illustration shall be made in the announcement regarding the resolutions at the Shareholders’ General Meeting.

• (5) summarized legal opinion, or in the event that any resolution is added, voted against or amended at the Shareholders’ General Meeting, the whole text of such legal opinion shall be disclosed.

• The original Article 25.3 to be amended as follows:

Article 25.3

In the Articles of Association, unless the context otherwise requires, the following terms and expressions have the following meanings:

“Articles of Association” The articles of association of the Company “Board” The board of Directors “Chairman” The chairman of the Company “Director” Any director of the Company “Independent Non-executive Shall have the same meaning as “Independent Directors” non-executive directors” defined in the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, which have the same meanings as the “independent directors” defined in the PRC Company Law “Executive Directors” Directors other than Independent Nonexecutive Directors “Ordinary Shares” Any domestic share or overseas-listed foreign invested share of the Company “Corporate Address” The Company’s legal address as No. 8 Ronggang Road, Ronggui Street, Shunde District, Foshan City, Guangdong Province, PRC

“RMB” The lawful currency of the PRC

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LETTER FROM THE BOARD

“Board Secretary” The company secretary and board secretary appointed by the Board “China”, “PRC” or “State” The People’s Republic of China “Stock Exchange” The Stock Exchange of Hong Kong Limited “Company” Hisense Kelon Electrical Holdings Company Limited “Accounting Firm” Shall have the same meaning as the “Auditor” defined in the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited

According to the PRC legal opinions dated 18 April 2007 from Tang Law Group ( ), the proposed change of name of the Company was preliminarily approved by the State Administration for Industry and Commerce on 9 April 2007 and the share reform of the Company was approved by the Ministry of Commerce on 21 March 2007 and had been completed. It is opined by the PRC lawyer that the above proposed amendments of the articles of association of the Company as a result of the proposed change of company name of the Company and the completion of the Share Reform are in compliance with the Company Law of the PRC, the Securities Law of the PRC, the relevant requirements of the China Securities Regulatory Commission and other laws and regulations of the PRC.

PROPOSED AMENDMENTS TO THE RULES OF PROCEDURES FOR THE MEETING OF THE BOARD OF DIRECTORS

In view of the proposed change of the name of the Company, the directors of the Company proposed an ordinary resolution at the AGM to amend the Rules of Procedures for the Meeting of Board of Directors by replacing the name of “Guangdong Kelon Electrical Holdings Company Limited” as “Hisense Kelon Electrical Holdings Company Limited” as follows:

The original Article 1 to be amended as follows:

These rules are specifically formulated in accordance with the relevant requirements of the Company Law and the Articles of Association for the purpose of regulating the proceedings at the board meeting of Hisense Kelon Electrical Holdings Company Limited (the “Company”), enhancing the operating efficiency and protecting the legal rights and interests of investors.

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LETTER FROM THE BOARD

PROPOSED AMENDMENTS TO THE RULES OF PROCEDURES FOR THE GENERAL MEETING

In view of the change of the name of the Company and the completion of share reform, the directors of the Company proposed an ordinary resolution at the AGM to amend the Rules of Procedures for the General Meetings as follows:

1. The original Article 1 to be amended as follows:

These rules are specifically formulated in accordance with the relevant laws and regulations such as the Company Law of the People’s Republic of China (hereinafter referred to as the” Company Law”) and the Articles of Association of Hisense Kelon Electrical Holdings Company Limited (the “Company”) (hereinafter referred to as the “Articles of Association”) for the purpose of protecting the legal rights and interests of the shareholders of the Company, enhancing the efficiency of the proceedings at general meeting and regulating the operation of the Company.

1. The original Article 42 is to be deleted.

2. The original Article 45 is to be amended as follows:

Article 45

Where online voting is provided to shareholders in Shareholders’ General Meeting, the voting results shall be announced by the representative of the vote counter at the meeting only after the vote counter has consolidated and calculated the voting results for each resolution voted by means of on-the-spot voting, online voting and other means as specified.

Where there are many resolutions to be passed at the Shareholders’ General Meeting and if a shareholder only vote upon one or some of such resolutions, the shareholder shall be deemed as present at the meeting and therefore be taken into account in calculating the total number of shareholders present at the meeting. In other resolutions which the shareholder has not expressed any opinion, the shareholder shall be deemed as having abstained from voting.

Before the formal announcement of the results of online voting, the Company and the substantial shareholders shall be under confidentiality obligation in relation to the voting.

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LETTER FROM THE BOARD

1. The original Article 52 is to be amended as follows:

Article 52

The announcement on resolutions of a Shareholders’ General Meeting shall include the following contents:

• (1) the time, venue, manner, convener and chairman of the meeting, and descriptions on whether it is in compliance with the relevant laws, rules, regulations and the Articles of Association;

• (2) the number of attending shareholders (their proxies), the total number of shares represented in person or by proxy and its proportion to the total number of shares of the Company having voting rights. If a resolution is not passed or any resolution passed at the previous Shareholders’ General Meeting is revised at the current Shareholders’ General Meeting, illustration shall be made in the announcement regarding the resolutions at the Shareholders’ General Meeting;

• (3) the way of voting on each resolution;

• (4) the voting results of each resolution. Regarding the resolution proposed by the shareholder, the announcement shall state the name of the proposing shareholders, the proportion of their shareholdings and the content of such proposed resolution. When voting on related party transactions at the meeting, the announcement shall include a statement on the related shareholders who abstain from voting. If a resolution is not passed or any resolution passed at the previous Shareholders’ General Meeting is revised at the current Shareholders’ General Meeting, illustration shall be made in the announcement regarding the resolutions at the Shareholders’ General Meeting;

• (5) summarized legal opinion, or in the event that any resolution is added, voted against or amended at the Shareholders’ General Meeting, the whole text of such legal opinion shall be disclosed.

PROPOSED RESOLUTION FOR THE APPROVAL OF THE RELATED MATTERS RELATING TO POSSIBLE SUSPENSION OR DELISTING OF THE A SHARES OF THE COMPANY

As the auditor has issued the qualified opinions on the capitals of the Company embezzled by Greencool Enterprise Development Company Limited (the former controlling shareholder of the Company), the Company will be likely to trigger the provisions in respect of suspension or termination of listing status pursuant to Rule 14.1.3 of the Listing Rules of the Shenzhen Stock Exchange. In the opinion of the Board of the Company, the reasons for such qualified opinions are rather special as the Greencool case is still undergoing the litigation process, the Company will proactively negotiate with the regulatory authority to waive the application of such rule on the Company. The Board of the Company has made the following resolutions in the Board meeting on 26 April 2007 in respect of such case or the relevant issues:

1. In the event that the Company’s shares are suspended for listing, the Company will enter into an agreement with a securities firm qualified to act as a sponsor to resume

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LETTER FROM THE BOARD

the listing status of a company (hereinafter referred to as the “Agency”), under which the Company shall engage the Agency as the sponsor responsible for resumption of the listing of the Company. If the Company’s shares are delisted, the Company shall entrust the Agency to provide share transfers service, and authorize it to deal with the issues such as deregistration of the Company’s shares in the share registration and clearing system of the Stock Exchange, the share reconfirmation and the share registration and clearing in the share transfer system.

1. In the event that the Company’s shares are suspended for listing, the Company shall enter into an agreement with China Registrars and Clearing Limited with terms (including but not limited to): if the Company’s shares are delisted, the Company shall entrust it as the provider of custodian, registration and clearing services for all the Company’s shares.

2. In the event that the Company’s shares are delisted, the Company shall apply to transfer its shares in the share transfers system. The Board is authorized at the general meeting to proceed with the relevant issues, such as delisting of the Company’s shares and transfer of the Company’s shares in the share transfer system.

PROPOSED RESOLUTION RELATING TO PROVISIONS FOR IMPAIRMENT OF INVENTORIES, FIXED ASSETS, CONSTRUCTION IN PROGRESS AND PROVISION FOR BAD DEBTS

It is proposed by the Company to make the following provisions in the accounts of the Company:

• (i) provision for impairment of inventories in the aggregate sum of RMB42,700,140.04;

• (ii) provision for impairment of fixed assets in the aggregate sum of RMB23,888,658.43;

• (iii) provision for impairment of construction in progress in the aggregate sum of RMB1,496,239.73; and

• (iv) provision for bad debts in the aggregate sum of RMB12,175,894.87.

PROPOSED RESOLUTION FOR THE APPROVAL OF THE PROFIT DISTRIBUTION PROPOSAL

As audited by the Company’s domestic auditors, Shenzhen Dahua Tiancheng Certified Public Accountants, and the international auditors, BDO McCabe Lo Limited, the realised net profit of the Company for the year ended 2006 in accordance with PRC GAAP and International Accounting Standards was RMB24,120,000 and RMB69,220,000, respectively. In order to make up for the losses occurred in previous years, the Board proposed that there will not be any distribution of profit or capitalization of capital reserve for this year.

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LETTER FROM THE BOARD

PROPOSED REAPPOINTMENT OF AUDITORS

It is proposed by the Board to re-appoint Shenzhen Dahua Tiancheng Certified Public Accountants and BDO McCable Lo Limited as the local and international auditors of the Company, respectively, for the year ended 31 December 2007 and the authorization of the Board to fix their remuneration.

ANNUAL GENERAL MEETING

A notice of the AGM is set out on pages 14 to 16 of this circular. A form of proxy for use at the AGM is enclosed with this circular. 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 notarially certified copy of such power of attorney or other authority, must be lodged with in accordance with the instructions printed thereon and lodge the same with the Company’s Branch Share Registrar in Hong Kong, Hong Kong Registrars Limited of Rooms 1712-1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not less than 24 hours before the time fixed for holding the meeting or any adjournment thereof. Completion and delivery of the form of proxy will not preclude shareholders from attending and voting at the AGM or any adjournment thereof if they so wish.

PROCEDURE TO DEMAND A POLL

In accordance with article 8.28 of the Articles of Association, a poll may be demanded in any general meeting of the Company by:

• (A) the chairman of the meeting; or

• (B) at least two Shareholders with voting rights or their representative; or

• (C) individual or a group of Shareholders (including their representatives) holding 10% or more of the voting rights present in that general meeting.

RECOMMENDATION

The Directors consider that the proposed resolutions set out in the notice of the AGM are in the interests of the Company and its shareholders as a whole. Accordingly, the Directors recommend the shareholders to vote in favour of all the resolutions to be proposed at the AGM.

Yours faithfully,

By Order of the Board of Guangdong Kelon Electrical Holdings Company Limited Tang Ye Guo

Chairman

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NOTICE OF ANNUAL GENERAL MEETING

GUANGDONG KELON ELECTRICAL HOLDINGS COMPANY LIMITED

(A joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 0921)

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT an annual general meeting (the “AGM”) of Guangdong Kelon Electrical Holdings Company Limited (the “Company”) will be held at the conference room of the Company’s head office, Shunde District, Foshan City, Guangdong Province, the People’s Republic of China (the “PRC”) on 18 June 2007 at 9:30 a.m. to review and, if thought fit, pass the following resolutions:

ORDINARY RESOLUTIONS

1. To consider and approve the report of the directors of the Company for the year ended 31 December 2006;

2. To consider and approve the report of the supervisory committee of the Company for the year ended 31 December 2006;

3. To consider and approve the annual report of the Company and its summary for the year ended 31 December 2006;

4. To consider and approve the profit distribution budget of the Company for the year ended 31 December 2006 (Note 1) ;

5. To reappoint Shenzhen Dahua Tiancheng Certified Public Accountants and BDO McCable Lo Limited as the local and foreign auditors of the Company, respectively, for the year ended 31 December 2007 and authorize the board of directors of the Company (the “Board”) to fix their remuneration (Note 1) ;

6. To consider and approve the change of name of the Company from “ (Guangdong Kelon Electrical Holdings Company Limited)” to “ (Hisense Kelon Electrical Holdings Company Limited)” (Note 1) ;

7. To consider and approve the related matters relating to the possible suspension or delisting of the A shares of the Company (Note 1) ;

8. To consider and approve the amendments to the Rules of Procedures for the Meetings of the Board of Directors and the Rules of Procedures for the General Meetings (Note 1) ;

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NOTICE OF ANNUAL GENERAL MEETING

1. To consider and approve the proposal relating to provisions for impairment of inventories, fixed assets, construction in progress and provisions for bad debts (Note 1) ;

SPECIAL RESOLUTION

1. To consider and approved the proposed amendments to the articles of association of the Company as a result of the proposed change of name of the Company and completion of the share reform of the Company (Note 1) .

SUSPENSION OF TRADING IN THE H SHARES

At the request of the Company, trading in the H shares was suspended with effect from 10:00 a.m. on 16 June 2005 until further notice.

By Order of the Board of Guangdong Kelon Electrical Holdings Company Limited Tang Ye Guo

Chairman

Foshan City, Guangdong, the PRC, 26 April 2007

As at the date of this announcement, the Company’s executive directors are Mr. Tang Ye Guo, Mr. Yang Yun Duo, Mr. Wang Shi Lei, Ms. Yu Shu Min , Mr. Lin Lan and Mr. Xiao Jian Lin; and the Company’s independent non-executive directors are Mr. Zhang Sheng Ping, Mr. Lu Qing and Mr. Cheung Yui Kai, Warren.

Notes:

1. For details of resolution numbered (4) to (7), please refer to the announcement of the Company relating to “Resolutions Passed at the 2007 Third Meeting of the Sixth Board of Directors” to be published in “China Securities Journal”, “Securities Times”, “Hong Kong Commercial Daily” and “China Daily” on 27 April 2007. For details of resolutions numbered (10), please refer to the circular of the Company dated 26 April 2007 to be despatched to its shareholders.

2. H shares shareholders intending to attend the AGM shall give written reply slip, as attached, to the Company (which may be delivered by person, post or fax) which shall be lodged at the registered office of the Company on or before 29 May 2007. To qualify for attendance at the AGM, all H shares shareholders transfers accompanied by the relevant share certificates must be lodged with the Company’s Branch Share Registrar in Hong Kong, Hong Kong Registrars Limited of Rooms 1712-1716, 17/F Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, no later than 4:00 p.m. on 18 May 2007 for registration.

3. Shareholders entitled to attend and vote at the AGM are entitled to appoint one or more persons (whether or not a shareholder of the Company) as their proxy to attend and vote on behalf of themselves. In order to be valid, the form of proxy, together with a duly notarised power of attorney or other document of authority, if any, under which the form is signed must be deposited at the registered office of the Company not later than 24 hours before the time for holding the AGM.

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NOTICE OF ANNUAL GENERAL MEETING

1. Notice of the holders of domestic shares and H shares of the Company whose names appear on the register of members of the Company as at or before the close of business of 18 May 2007 (including holders of H Shares of the Company who have submitted verification transfer forms on or before 18 May 2007) will be entitled to attend the AGM. The register of members of the Company will be closed from 19 May 2007 to 18 June 2007 (both days inclusive).

2. The place for registration is: Securities Department, Guangdong Kelon Electrical Holdings Company Limited, No. 8 Ronggang Road, Ronggui Street, Shunde District, Foshan City, Guangdong Province. Postal code: 528303 Tel: (86) 757 2836 2570 Fax (86) 757 2836 1055

Contact person: Li Lin, Lv Yan Song, Mei Shi Liang

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