Medlive Technology Co., Ltd. — AGM Information 2009

Jun 5, 2009

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt about this circular, you should obtain independent professional advice.

If you have sold or transferred all your shares in HISENSE 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.

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

HISENSE KELON ELECTRICAL HOLDINGS COMPANY LIMITED 海信科龍電器股份有限公司

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

(Stock Code: 00921)

CONTINUING CONNECTED TRANSACTIONS

REVISED ANNUAL CAPS FOR EXISTING CONTINUING CONNECTED TRANSACTIONS

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

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A letter from the Board is set out from pages 4 to 10 of this circular.

A supplemental and further notice of the AGM to be held on 26 June 2009 at 9:30 a.m. at the conference room of the Company’s head office, Shunde District, Foshan City, Guangdong Province, the PRC is set out on pages 32 to 34 of this circular.

A supplemental proxy form for use at the AGM is enclosed with this circular. If you are not able to attend the meeting in person, you are requested to complete and return the enclosed supplemental proxy form in accordance with the instructions printed thereon and to 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 AGM or any adjournment thereof. Completion and delivery of the supplemental proxy form will not preclude you from attending and voting at the meeting or any adjournment thereof if you so wish.

8 June 2009

CONTENTS

	Page
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Letter from the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . .	11
Letter from Access Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Appendix I — General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	25
Supplemental and Further Notice of Annual General Meeting. . . . . . . . . . . . . .	32

— i —

DEFINITIONS

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

“AGM”

the annual general meeting of the Company to be held at the conference room of the Company’s head office, Shunde District, Foshan City, Guangdong Province, the PRC on 26 June 2009 at 9:30 a.m.

• “A Shares” domestic ordinary shares of the Company with a nominal value of RMB1.00 each and are listed on the Shenzhen Stock Exchange

• “Access Capital”

• Access Capital Limited, a corporation licensed under the SFO for carrying out type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the SFO, being the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Supplemental Business Cooperation Framework Agreement

• “Associates”

has the meaning ascribed to it in the Listing Rules

• “Board” the board of Directors

• “Business Co-operation Framework Agreement”

• the agreement entered into between the Company and certain Subsidiaries of Hisense Group dated 12 February 2009 in relation to the sale and purchase of refrigerators, air-conditioners, raw materials, moulds, the sale of freezers, home appliances and parts and components for refrigerators, air-conditioners and freezers and the provision of after-sale maintenance, repair, internet and consultation services, electronic communication services and property management services

• “Company”

• Hisense Kelon Electrical Holdings Company Limited, a company incorporated in the PRC with limited liability and listed on the main board of the Stock Exchange and Shenzhen Stock Exchange

— 1 —

DEFINITIONS

“Directors”	the directors of the Company
“Group”	the Company and its Subsidiaries
“H Shares”	overseas listed foreign shares of the Company with a
	nominal value of RMB1.00 each and are listed on the Stock
	Exchange
“Hisense Air-conditioning”	Qingdao Hisense Air-Conditioning Co., Ltd (青島海信空調
	有限公司), 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 PRC
“Independent Board	an independent board committee of the Company comprising
Committee”	of all the independent non-executive Directors, namely Mr.
	Zhang Sheng Ping, Mr. Lu Qing and Mr. Cheung Yui Kai,
	Warren
“Independent Shareholders”	shareholders other than those who are required under the
	Listing Rules to abstain from voting on the resolution to be
	proposed at the AGM to approve the Supplemental Business
	Co-operation Framework Agreement and the transactions
	contemplated thereunder
“Latest Practicable Date”	5 June 2009, being the latest practicable date prior to the
	printing of this circular for ascertaining certain information
	in this circular
“Listing Rules”	Rules Governing the Listing of Securities on the Stock
	Exchange
“MOFTEC”	Ministry of Foreign Trade and Economic Cooperation

— 2 —

DEFINITIONS

“OEM”	original equipment manufacturing, a type of manufacturing
	under which products are manufactured, in whole or in part,
	in accordance with specifications of the customer and are
	marketed and sold under the brand name of the customer
“PRC”	the People’s Republic of China
“RMB”	Renminbi yuan, the lawful currency of the PRC
“SFO”	Securities and Futures Ordinance (Cap. 571 of the Laws of
	Hong Kong)
“Share(s)”	share(s) of RMB1.00 each in the capital of the Company,
	comprising the A Shares and the H Shares
“Shareholder(s)”	holder(s) of the Shares
“Shenzhen Stock Exchange”	The Shenzhen Stock Exchange
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subsidiary” or	has the meaning defined in sections 2 and 2B of the
“Subsidiaries”	Companies Ordinance (Cap. 32 of the Laws of Hong Kong)
“Supplemental Business	the agreement entered into between the Company and
Co-operation Framework	certain Subsidiaries of Hisense Group dated 19 May 2009,
Agreement”	which supplements the Business Co-operation Framework
	Agreement
“%”	per cent

— 3 —

LETTER FROM THE BOARD

HISENSE KELON ELECTRICAL HOLDINGS COMPANY LIMITED 海信科龍電器股份有限公司

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

(Stock Code: 00921)

Directors:

Mr. Tang Ye Guo Mr. Zhou Xiao Tian Ms. Yu Shu Min Mr. Lin Lan Ms. Liu Chun Xin Mr. Zhang Ming

Independent non-executive Directors:

Mr. Zhang Sheng Ping Mr. Lu Qing Mr. Cheung Yui Kai, Warren

Registered Office: No. 8 Ronggang Road Ronggui Street Shunde District Foshan City Guangdong Province PRC

Principal place of business in Hong Kong: Room 3104-06 Singga Commercial Centre No. 148 Connaught Road West Hong Kong

8 June 2009

To the Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

REVISED ANNUAL CAPS FOR EXISTING CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

Reference is made to the announcements of the Company dated 12 February 2009 and 19 May 2009 and the circular of the Company dated 4 March 2009, relating to, among other things, the continuing connected transactions under the Business Co-operation Framework Agreement dated 12 February 2009 entered into between the Company and certain Subsidiaries of Hisense Group.

— 4 —

LETTER FROM THE BOARD

In view of the increase of business co-operation between the Company and some of the Subsidiaries of Hisense Group, the Board announces that on 19 May 2009, the Company entered into the Supplemental Business Co-operation Framework Agreement with certain Subsidiaries of Hisense Group to revise the annual caps for the year ending 31 December 2009 for some of the transactions under the Business Co-operation Framework Agreement.

Hisense Air-conditioning is a substantial shareholder of the Company, holding approximately 25.22% of the total issued shares capital of the Company. Each of Hisense Group, being the indirect holding company of Hisense Air-conditioning, and its Subsidiaries are Associates of Hisense Air-Conditioning and therefore connected persons of the Company. As such, the transactions contemplated under the Supplemental Business Co-operation Framework Agreement constitute continuing connected transactions of the Company under the Listing Rules and should be aggregated for the purpose of Rules 14A.25 to 14A.27 of the Listing Rules. Given that the applicable percentage ratios (other than the profit ratio) for the aggregated amount for the transactions contemplated under the Business Co-operation Framework Agreement as supplemented by the Supplemental Business Co-operation Framework Agreement is more than 2.5%, the continuing connected transactions contemplated under the Supplemental Business Co-operation Framework Agreement are subject to reporting, announcement and independent shareholders’ approval requirements under Rule 14A.35 of the Listing Rules.

The purpose of this circular is to provide you with details of the Supplemental Business Co- operation Framework Agreement, to set out the recommendation of the Independent Board Committee and to set out the letter of advice from Access Capital to the Independent Board Committee and the Independent Shareholders in respect of the terms of the Supplemental Business Co-operation Framework Agreement.

SUPPLEMENTAL BUSINESS CO-OPERATION FRAMEWORK AGREEMENT

Date

19 May 2009

Parties

• (i) The Company; and

• (ii) Certain Subsidiaries of Hisense Group.

— 5 —

LETTER FROM THE BOARD

Revision of annual caps

Under the Supplemental Business Co-operation Framework Agreement, the annual caps relating to the sale and supply of refrigerators, air-conditioners, raw materials and components, purchase of refrigerators and the provision of certain services under the Business Co-operation Framework Agreement shall be revised as follows:

		Original	Revised
		annual	annual
		caps for the	caps for the
		year ending	year ending
		31 December	31 December
No.	Transactions	2009	2009
		(RMB)	(RMB)
1.	Sale and supply of air-conditioners by the	80,000,000	100,000,000
	relevant Subsidiaries of the Company to the	(inclusive of	(inclusive of
	relevant Subsidiaries of Hisense Group	value-added	value-added
		tax)	tax)
2.	Sale and supply of refrigerators by the relevant	387,920,000	797,920,000
	Subsidiaries of the Company to the relevant	(inclusive of	(inclusive of
	Subsidiaries of Hisense Group	value-added	value-added
		tax)	tax)
3.	Sale and supply of raw materials and	227,600,000	247,600,000
	components by the relevant Subsidiaries of	(inclusive of	(inclusive of
	the Company to the relevant Subsidiaries of	value-added	value-added
	Hisense Group	tax)	tax)
4.	Purchase of refrigerators by the relevant	400,000,000	820,000,000
	Subsidiaries of the Company from the relevant	(inclusive of	(inclusive of
	Subsidiaries of Hisense Group	value-added	value-added
		tax)	tax)
5.	Provision of after-sale maintenance, repair	22,500,000	27,900,000
	and consultation services and electronic	(inclusive of	(inclusive of
	communication services by the relevant	value-added	value-added
	Subsidiaries of Hisense Group to the relevant	tax)	tax)
	Subsidiaries of the Company

— 6 —

LETTER FROM THE BOARD

The above revised annual caps were determined with reference to (i) the rapid growth of domestic demand for home appliances, such as refrigerators and air-conditioners; (ii) the sales of electrical appliances of the Company boosted by the aforesaid factor in (i); (iii) the acceleration of product turnover and the enlargement of market share through OEM; (iv) the adoption of the “Home Appliances Subsidy Policy for Rural Villages (家電下鄉政 策)” by the PRC government which resulted in the increase in demand for home appliances and (v) the original annual caps estimated at the beginning of the year not able to meet the current requirement of the business development of the Company.

The Company confirms that the transaction amounts under the Business Co-operation Framework Agreement for the period from 1 January 2009 to the Latest Practicable Date have not exceeded the original annual caps.

Save and except the revision of the annual caps as set out above, all other terms and conditions under the Business Co-operation Framework Agreement shall remain unchanged.

Condition

The Supplemental Business Co-operation Framework Agreement is subject to the approval of the Independent Shareholders at the AGM.

REASONS FOR THE REVISION OF THE ANNUAL CAPS

The original annual caps for the year ending 31 December 2009 for the sale and supply of refrigerators, air-conditioners, raw materials and components, purchase of refrigerators and the provision of certain services were determined with consideration of the possible effects of global economic downturn in the PRC. As a result of the adoption of the “Home Appliances Subsidy Policy for Rural Villages (家電下鄉政策)” by the PRC government to improve the living standard of rural population through subsidising the purchase of home appliances in certain rural areas, the sales of electrical appliances of the Company increased in the past few months. The Company expects that its sale of refrigerators, airconditioners, raw materials and components, purchase of refrigerators and the provision of certain services in 2009 will exceed the original annual caps for 2009 and therefore needs to increase the annual caps for these transactions to accommodate such expected increase in sale.

— 7 —

LETTER FROM THE BOARD

For the reasons stated above, the Company proposes to revise the original annual caps for certain transactions under the Business Co-operation Framework Agreement. In view of the above, the Board considers that the revised annual caps under the Supplemental Business Co-operation Framework Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

INFORMATION RELATING TO THE COMPANY

The Company is principally engaged in the manufacture and sales of refrigerators and airconditioners.

INFORMATION ON HISENSE GROUP

Hisense Group was incorporated in the PRC in 1979 with limited liability. It has a registered capital of RMB806,170,000. Its authorised representative is Zhou Hou Jian. Its registered address is No.17 Donghai West Road, Shinan, Qingdao. It is principally engaged in the entrusted operation of state-owned assets; the manufacture and sales of TV sets, refrigerators, freezers, washing machines, small household appliances, VCD and DVD players, audio sets, broadcasting appliances, air-conditioners, electronic computers, telephones, communication products, internet products and electronic products and the provision of related services; the development of software and the provision of internet services; the technological development and the provision of consultation services; the self-operated import and export business (with its operation subject to the list of projects as approved by the MOFTEC); the foreign economic and technical cooperation (with its operation subject to the list of projects as approved by the MOFTEC); the operation of property rights transaction, the provision of brokerage and information services; the provision of industrial travel agency services; and the provision of relevant business trainings.

LISTING RULES IMPLICATIONS

Hisense Air-conditioning is a substantial shareholder of the Company, holding approximately 25.22% of the total issued shares capital of the Company. Each of Hisense Group, being the indirect holding company of Hisense Air-conditioning, and its Subsidiaries are Associates of Hisense Air-Conditioning and therefore connected persons of the Company. As such, the transactions contemplated under the Supplemental Business Co-operation Framework Agreement constitute continuing connected transactions of the Company under the Listing Rules and should be aggregated for the purpose of Rules 14A.25 to 14A.27 of the Listing Rules. Given that the applicable percentage ratios (other than the profit ratio) for the aggregated amount for the transactions contemplated under

— 8 —

LETTER FROM THE BOARD

the Business Co-operation Framework Agreement as supplemented by the Supplemental Business Co-operation Framework Agreement is more than 2.5%, the continuing connected transactions contemplated under the Supplemental Business Co-operation Framework Agreement are subject to reporting, announcement and independent shareholders’ approval requirements under Rule 14A.35 of the Listing Rules.

AGM

The Company received a written request from Hisense Air-Conditioning on 5 June 2009. Hisense Air-conditioning, a substantial shareholder of the Company which holds 250,173,722 shares of the Company, being approximately 25.22% of the total issued shares capital of the Company, requests that additional resolutions to be tabled before the AGM for the Company’s shareholders’ consideration and approval.

A supplemental and further notice of the AGM to be held on 26 June 2009 at 9:30 a.m. at the conference room of the Company’s head office, Shunde District, Foshan City, Guangdong Province, the PRC, at which relevant resolution will be proposed to approve, among other things, the Supplemental Business Co-operation Framework Agreement and the transactions contemplated thereunder is set out on pages 32 to 34 of this circular.

In accordance with article 8.28 of the articles of association of the Company, 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 proxies; or

• (C) one or more Shareholder(s) (including their proxies) representing, individually or in aggregate, 10% or more of all shares carrying the voting rights at the general meeting.

Pursuant to Rule 13.39(4) of the Listing Rules, the votes of Independent Shareholders taken at the AGM for the approval of the Supplemental Business Co-operation Framework Agreement and the transactions contemplated thereunder must be taken on poll and it is contemplated that the chairman of the meeting will make such demand at the AGM and will announce the results of the poll in the manner prescribed under Rule 13.39(5) of the Listing Rules.

— 9 —

LETTER FROM THE BOARD

Since Hisense Air-Conditioning is a Shareholder holding approximately 25.22% of the issued shares capital of the Company, it and its Associates will abstain from voting in relation to the approval of the Supplemental Business Co-operation Framework Agreement and the transactions contemplated thereunder.

RECOMMENDATION

Your attention is drawn to the advice of the Independent Board Committee set out in its letter on pages 11 to 12 of this circular which contains its recommendation to the Independent Shareholders on the terms of the Supplemental Business Co-operation Framework Agreement.

Your attention is also drawn to the letter of advice from Access Capital, which are set out on pages 13 to 24 of this circular, to the Independent Board Committee and the Independent Shareholders in respect of the terms of and the annual caps for the continuing connected transactions contemplated under the Supplemental Business Co-operation Framework Agreement.

ADDITIONAL INFORMATION

Your attention is drawn to the general information of the Group as well as other information contained in the appendix I to this circular before considering whether to vote for or against the resolution to be proposed at the AGM for approving the Supplemental Business Co-operation Framework Agreement as set out in the supplemental and further notice of the AGM.

Yours faithfully,

By Order of the Board of

Hisense Kelon Electrical Holdings Company Limited

Tang Ye Guo

Chairman

— 10 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

HISENSE KELON ELECTRICAL HOLDINGS COMPANY LIMITED 海信科龍電器股份有限公司

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

(Stock Code: 00921)

8 June 2009

To the Independent Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

REVISED ANNUAL CAPS FOR EXISTING CONTINUING CONNECTED TRANSACTIONS

We refer to the circular issued by the Company to the Shareholders dated 8 June 2009 (the “Circular”) of which this letter forms part. Terms defined in this Circular shall have the same meanings in this letter unless the context otherwise requires.

Under the Listing Rules, the entering into of the Supplemental Business Co-operation Framework Agreement constitutes continuing connected transactions for the Company and is thus subject to the approval of the Independent Shareholders at the AGM.

We have been appointed by the Board to consider the terms of the Supplemental Business Co- operation Framework Agreement and to advise the Independent Shareholders in connection with the Supplemental Business Co-operation Framework Agreement as to whether, in our opinion, its terms and its revised annual cap are fair and reasonable so far as the Independent Shareholders are concerned. Access Capital has been appointed as the independent financial adviser to advise us in this respect.

We wish to draw your attention to the letter from the Board and the letter from Access Capital as set out in this Circular. Having considered the principal factors and reasons considered by, and the advice of Access Capital as set out in its letter of advice, we consider that the Supplemental Business Co-operation Framework Agreement are on normal commercial terms and in the interests of the Company and the Shareholders as a whole.

— 11 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

We also consider that the Supplemental Business Co-operation Framework Agreement and its revised annual cap is fair and reasonable so far as the Independent Shareholders are concerned.

Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution to approve the Supplemental Business Co-operation Framework Agreement and the continuing connected transactions contemplated thereunder at the AGM.

Yours faithfully,

For and on behalf of the Independent Board Committee

Zhang Sheng Ping Lu Qing Cheung Yui Kai, Warren

Independent non-executive Directors

Hisense Kelon Electrical Holdings Company Limited

— 12 —

LETTER FROM ACCESS CAPITAL

Set out below is the text of the letter of advice from Access Capital Limited to the Independent Board Committee and the Independent Shareholders prepared for inclusion in this Circular.

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Suite 606, 6th Floor Bank of America Tower 12 Harcourt Road Central Hong Kong

8 June 2009

To the Independent Board Committee and

the Independent Shareholders of

Hisense Kelon Electrical Holdings Company Limited

Dear Sirs,

CONTINUING CONNECTED TRANACTIONS

INTRODUCTION

We refer to our appointment as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Supplemental Business Co-operation Framework Agreement, details of which are set out in the circular to the Shareholders dated 8 June 2009 (the “Circular”), of which this letter forms part. This letter contains our advice to the Independent Board Committee and the Independent Shareholders in respect of the Supplemental Business Co-operation Framework Agreement. Unless otherwise stated, terms defined in the Circular have the same meanings in this letter.

On 19 May 2009, the Board announced that the Company entered into the Supplemental Business Co-operation Framework Agreement with certain Subsidiaries of Hisense Group to revise the annual caps for the year ending 31 December 2009 for some of the transactions under the Business Co-operation Framework Agreement. The transactions contemplated under the Business Co-operation Framework Agreement dated 12 February 2009 entered into between the Company and certain Subsidiaries of Hisense Group have

— 13 —

LETTER FROM ACCESS CAPITAL

constituted continuing connected transactions (the “Continuing Connected Transactions”) of the Company under the Listing Rules and, together with the original annual caps, were approved by the Independent Shareholders at the extraordinary general meeting of the Company held on 25 March 2009.

As in the case of the Business Co-operation Framework Agreement, the transactions contemplated under the Supplemental Business Co-operation Framework Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules and should be aggregated for the purpose of Rules 14A.25 to 14A.27 of the Listing Rules. Given that the applicable percentage ratios (other than the profit ratio) for the aggregated amount for the transactions contemplated under the Business Cooperation Framework Agreement as supplemented by the Supplemental Business Cooperation Framework Agreement is more than 2.5%, the continuing connected transactions contemplated under the Supplemental Business Co-operation Framework Agreement are subject to reporting, announcement and independent shareholders’ approval requirements under Rule 14A.35 of the Listing Rules.

The Independent Board Committee, comprising all the independent non-executive Directors, has been formed to advise the Independent Shareholders as to whether the revision of the annual caps for the Continuing Connected Transactions is in the interests of the Company and the Shareholders as a whole, and the terms of the Supplemental Business Co-operation Framework Agreement including the proposed revised annual caps are fair and reasonable. As the independent financial adviser to the Independent Board Committee and the Independent Shareholders, our role is to give an independent opinion to the Independent Board Committee and the Independent Shareholders as to (i) whether or not the revision of the annual caps under the Supplemental Business Co-operation Framework Agreement is in the interests of the Company and the Shareholders as a whole; (ii) whether or not the terms of the Supplemental Business Co-operation Framework Agreement, including the proposed revised annual caps, are fair and reasonable; and (iii) how the Independent Shareholders should vote in respect of the resolution to approve the Supplemental Business Co-operation Framework Agreement and the revised annual caps at the relevant general meeting of the Company.

BASIS OF OUR OPINION

In formulating our advice, we have relied solely on the statements, information, opinions and representations contained in the Circular and the information and representations provided to us by the Company and/or the Directors. We have assumed that all such statements, information, opinions and representations contained or referred to in the Circular or otherwise provided or made or given by the Company and/or its senior

— 14 —

LETTER FROM ACCESS CAPITAL

management staff and/or the Directors and for which it is/they are solely responsible were true and accurate and valid at the time they were made and given and continue to be true and valid as at the date of the Circular. We have assumed that all the opinions and representations made or provided by the Directors and/or the senior management staff of the Company contained in the Circular have been reasonably made after due and careful enquiry. We have also sought and obtained confirmation from the Company and/or its senior management staff and/or the Directors that no material facts have been omitted from the information provided and referred to in the Circular.

We consider that we have reviewed all information and documents which are made available to us to enable us to reach an informed view and to justify our reliance on the information provided so as to provide a reasonable basis for our advice. We have no reason to doubt the truth, accuracy and completeness of the statements, information, opinions and representations provided to us by the Company and/or its senior management staff and/or the Directors and their respective advisers or to believe that material information has been withheld or omitted from the information provided to us or referred to in the aforesaid documents. We have not, however, carried out any independent verification of the information provided, nor have we conducted any independent investigation into the business and affairs of the Group.

PRINCIPAL FACTORS CONSIDERED

In formulating our opinion regarding the Continuing Connected Transactions, we have taken into consideration the following principal factors:

I. Background information and reasons for the Supplemental Business Cooperation Framework Agreement

The principal activities of the Company and Hisense Group are similar and both include the manufacture and sales of household electrical appliances including air-conditioners and refrigerators and the provision of related services. Hisense Air-conditioning, a Subsidiary of Hisense Group, is a substantial shareholder of the Company, holding 25.22% of the issued shares of the Company. Given the keen competition in the white goods market in the PRC and in view of the substantial interest of Hisense Group in the Company, the Directors consider that there are business co-operation arrangements which can be beneficial to both the Company and Hisense Group in terms of the enhancement of the competitiveness of both sides as the respective Subsidiaries of the Company and Hisense Group are complementary to each other with respect to their geographic locations and distributions. Such co-operation arrangements can reduce the transportation time for

— 15 —

LETTER FROM ACCESS CAPITAL

product delivery and improve the market responsiveness for both sides. In addition, they can also help to reduce the idling capacity of the production facilities of the relevant parties so that there are more effective utilisations of the production fixed costs. Accordingly, in view of the anticipated benefits to be brought by the business co-operation between the Company and the relevant Subsidiaries of Hisense Group, the relevant parties entered into the Business Co-operation Framework Agreement on 12 February 2009, pursuant to which the Company conditionally agreed that it and any of its Subsidiaries might enter into certain transactions with the relevant Subsidiaries of Hisense Group in respect of the sale and supply of moulds, airconditioners, refrigerators, raw materials and components, the purchase of airconditioners, refrigerators, raw materials, components and moulds, and the provision of property management services and after-sales maintenance, repair and consultation services.

Having constituted the non-exempt continuing connected transactions under the Listing Rules which were subject to the reporting, announcement and independent shareholders’ approval requirements, the transactions contemplated under the Business Co-operation Framework Agreement and the relevant annual caps were subsequently approved by the Independent Shareholders at the extraordinary general meeting of the Company held on 25 March 2009. Since then, the Company and its Subsidiaries have conducted the Continuing Connected Transactions with Subsidiaries of Hisense Group in accordance with the terms and conditions of the Business Co-operation Framework Agreement.

As stated in the Letter from the Board, as a result of the adoption of the “Home Appliances Subsidy Policy for Rural Villages（家電下鄉政策）” by the PRC government to improve the living standard of rural population through subsidising the purchase of home appliances in certain rural areas, the sales of electrical appliances of the Company increased in the past few months. In view of the increase in demand for such products, the Company expects that its sale of air-conditioners, refrigerators, raw materials and components, purchase of refrigerators and the provision of certain services in 2009 under the Business Co-operation Framework Agreement will exceed its original expectation in the beginning of 2009 when the Business Co-operation Framework Agreement was entered into. The Company expects that there will be an increase in certain transaction amounts contemplated under the Business Co-operation Framework Agreement during the peak seasons in the second half of 2009 and anticipates that certain existing annual caps (the “Existing Annual Caps”) under the Business Co-operation Framework Agreement will not be sufficient to cover the anticipated increases.

— 16 —

LETTER FROM ACCESS CAPITAL

Accordingly, the Company proposes to revise certain Existing Annual Caps by way of the Supplemental Business Co-operation Framework Agreement. The Board considers that the revised annual caps (the “Revised Annual Caps”) under the Supplemental Business Co-operation Framework Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

We, having considered that (i) the Business Co-operation Framework Agreement and the Existing Annual Caps have already been formally approved by the Independent Shareholders pursuant to the relevant requirements of the Listing Rules; (ii) the Continuing Connected Transactions have been and will continue to be carried out by the Group in its ordinary and usual course of business and in accordance with the terms and conditions of the Business Co-operation Framework Agreement which are fair and reasonable and in the interests of the Company and the Shareholders as a whole; (iii) other than the revision of certain Existing Annual Caps as proposed under the Supplemental Business Co-operation Framework Agreement, the terms and conditions of the Business Co-operation Framework Agreement will remain unchanged; and (iv) the actual transaction value of certain Continuing Connected Transactions up to 30 April 2009 have already accounted for a substantial proportion of the relevant Existing Annual Caps (further details of the actual transaction value of the relevant continuing connected transactions from up to 30 April 2009 are set out in the section headed “Rationale for determining the Revised Annual Caps” below), are of the view that the Supplemental Business Co-operation Framework Agreement is in the interests of the Company and the Shareholders as a whole.

II. Rationale for determining the Revised Annual Caps

Under the Supplemental Business Co-operation Framework Agreement, the Existing Annual Caps relating to the sale and supply of air-conditioners, refrigerators and raw materials and components, purchase of refrigerators and the provision of aftersale maintenance, repair and consultation services and electronic communication services under the Business Co-operation Framework Agreement shall be revised as follows:

	Existing	Revised
	Annual Caps	Annual Caps
	(RMB)	(RMB)
Maximum aggregate value of sale and supply of	80,000,000	100,000,000
air-conditioners by the relevant Subsidiaries
of the Company to the relevant Subsidiaries of
Hisense Group

— 17 —

LETTER FROM ACCESS CAPITAL

	Existing	Revised
	Annual Caps	Annual Caps
	(RMB)	(RMB)
Maximum aggregate value of sale and supply of	387,920,000	797,920,000
refrigerators by the relevant Subsidiaries of
the Company to the relevant Subsidiaries of
Hisense Group
Maximum aggregate value of sale and supply of	227,600,000	247,600,000
raw materials and components by the relevant
Subsidiaries of the Company to the relevant
Subsidiaries of Hisense Group
Maximum aggregate value of purchase of	400,000,000	820,000,000
refrigerators by the relevant Subsidiaries of
the Company from the relevant Subsidiaries of
Hisense Group
Maximum aggregate value of provision of after-	22,500,000	27,900,000
sale maintenance, repair and consultation
services and electronic communication
services by the relevant Subsidiaries of
Hisense Group to the relevant Subsidiaries of
the Company

As stated in the Letter from the Board, the Revised Annual Caps were determined with reference to (i) the rapid growth of domestic demand for home appliances, such as refrigerators and air-conditioners; (ii) the sales of electrical appliances of the Company boosted by the aforesaid factor in (i); (iii) the acceleration of product turnover and the enlargement of market share through OEM; (iv) the adoption of the “Home Appliances Subsidy Policy for Rural Villages（家電下鄉政策）” by the PRC government which resulted in the increase in demand for home appliances and (v) the original annual caps estimated at the beginning of the year not able to meet the current requirement of the business development of the Company.

In view of the fact that the Revised Annual Caps were arrived at after taking into account the expected increase in sales as boosted by the adoption of the “Home Appliances Subsidy Policy for Rural Villages（家電下鄉政策）” (the “Subsidy Policy”) by the PRC government which resulted in the increase in demand for home

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LETTER FROM ACCESS CAPITAL

appliances, we have reviewed the Subsidy Policy and its effect on domestic demand for home appliances. Pursuant to the Subsidy Policy, the PRC government would provide a 13% subsidy to farmers who bought designated brands of color TV sets, refrigerators, mobile phones, motorcycles, personal computers, water heaters and air-conditioners in the rural areas in the PRC.

We have also discussed with the management of the Company about the underlying assumptions, their basis as well as the projection of the relevant variables such as market share and product market price and we are of the view that such assumptions and basis are fair and reasonable. For the purpose of ensuring the accuracy of the computation of the Revised Annual Caps, we have also carried out a review on the relevant worksheets for calculation of the relevant annual caps including the review on the quantities and the unit prices of the subject items. Based on the result of our review, we are satisfied that the calculation of the proposed Revised Annual Caps has been conducted on a fair and reasonable basis.

For comparison among the actual transaction value of the relevant Continuing Connected Transactions, the Existing Annual Caps and the Revised Annual Caps, the following table sets out the respective percentages as represented by the actual transaction value of the relevant Continuing Connected Transactions up to 30 April 2009 over the Existing Annual Caps and the Revised Annual Caps.

			Percentage		Percentage
			represented		represented
			by the		by the
			actual		actual
			transaction		transaction
			value		value
	Actual		over the		over the
	transaction		respective		respective
	value up to	Existing	Existing	Revised	Revised
	30 April	Annual	Annual	Annual	Annual
	2009	Caps	Caps	Caps	Caps
	(RMB)	(RMB)		(RMB)
Sale and supply of air-	11,102,844	80,000,000	13.9%	100,000,000	11.1%
conditioners by the
relevant Subsidiaries of the
Company to the relevant
Subsidiaries of Hisense
Group

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LETTER FROM ACCESS CAPITAL

			Percentage		Percentage
			represented		represented
			by the		by the
			actual		actual
			transaction		transaction
			value		value
	Actual		over the		over the
	transaction		respective		respective
	value up to	Existing	Existing	Revised	Revised
	30 April	Annual	Annual	Annual	Annual
	2009	Caps	Caps	Caps	Caps
	(RMB)	(RMB)		(RMB)
Sale and supply of	184,773,571	387,920,000	47.6%	797,920,000	23.2%
refrigerators by the
relevant Subsidiaries of the
Company to the relevant
Subsidiaries of Hisense
Group
Sale and supply of raw	19,164,994	227,600,000	8.4%	247,600,000	7.7%
materials and components
by the relevant Subsidiaries
of the Company to the
relevant Subsidiaries of
Hisense Group
Purchase of refrigerators by	282,697,707	400,000,000	70.7%	820,000,000	34.5%
the relevant Subsidiaries
of the Company from the
relevant Subsidiaries of
Hisense Group
Provision of after-sale	4,733,276	22,500,000	21.0%	27,900,000	17.0%
maintenance, repair and
consultation services and
electronic communication
services by the relevant
Subsidiaries of Hisense
Group to the relevant
Subsidiaries of the
Company

— 20 —

LETTER FROM ACCESS CAPITAL

The actual transaction value of approximately RMB11.1 million for the sale and supply of air-conditioners up to 30 April 2009 represents about 13.9% and 11.1% of the relevant Existing Annual Cap of RMB80,000,000 and Revised Annual Cap of RMB100,000,000, respectively. The Revised Annual Cap of RMB100,000,000 represents an increase of 25% over the Existing Annual Cap of RMB80,000,000. As advised by the Company, while the actual transaction value up to 30 April 2009 appears to be moderate and has accounted for only about 13.9% of the relevant Existing Annual Cap, such transaction value is expected to increase substantially during the peak season in the second half of 2009. Accordingly, we concur with the Directors’ view that it is necessary to revise the relevant Existing Annual Cap so as to cover for the anticipated transaction value of such Continuing Connected Transactions under the revised estimation. As the Revised Annual Cap represents an increase of 25% over the Existing Annual Cap, we are of the view that the Revised Annual Cap of RMB100,000,000 for the sale and supply of air-conditioners by the relevant Subsidiaries of the Company to the relevant Subsidiaries of Hisense Group is fair and reasonable.

The actual transaction value of approximately RMB184,773,571 for the sale and supply of refrigerators up to 30 April 2009 represents about 47.6% and 23.2% of the relevant Existing Annual Cap of RMB387,920,000 and Revised Annual Cap of RMB797,920,000, respectively. In view of the fact that such actual transaction value up to 30 April 2009 has already accounted for a substantial portion of the Existing Annual Cap for the year ending 31 December 2009, we concur with the management view that it is necessary to revise the relevant Existing Annual Cap so as to cover for the anticipated transaction value of such Continuing Connected Transactions under the revised estimation. We note that the Revised Annual Cap of RMB797,920,000 represents a significant increase over the Existing Annual Cap of RMB387,920,000. We understand from the Company that in order to save on overhead costs, in particular, transportation costs to rural towns, the relevant Subsidiaries of the Company and the relevant Subsidiaries of Hisense Group increased the cooperation in purchasing and supplying refrigerators to each other. In the anticipation of the peak season in the second half of 2009 and the existing significant amount of the relevant transaction value, we are of the view that the Revised Annual Cap of RMB797,920,000 for the sale and supply of refrigerators for the year ending 31 December 2009 is fair and reasonable.

As regards the actual transaction value for the sale and supply of raw materials and components up to 30 April 2009, such value of approximately RMB19.2 million represents about 8.4% and 7.7% of the relevant Existing Annual Cap of RMB227,600,000 and Revised Annual Cap of RMB247,600,000, respectively. In the

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LETTER FROM ACCESS CAPITAL

case of the sale and supply of raw materials and components, the Revised Annual Cap of RMB247,600,000 represents an increase of about 8.8% over the relevant Existing Annual Cap of RMB227,600,000. As advised by the Company, while the actual transaction value up to 30 April 2009 appears to be moderate and has accounted for only about 8.4% of the relevant Existing Annual Cap, such transaction value is expected to increase substantially during the peak season in the second half of 2009. Given that (i) the increased demand for home appliances which lead to the increasing demand of raw materials and components for the production of home appliances from the relevant Subsidiaries of Hisense Group and (ii) the Revised Annual Cap represents a modest increase of 8.8% over the Existing Annual Cap, we are of the view that the Revised Annual Cap of RMB247,600,000 for the sale and supply of raw materials and components for the year ending 31 December 2009 is fair and reasonable.

As regards to the purchase of refrigerators by the relevant Subsidiaries of the Company from the relevant Subsidiaries of Hisense Group up to 30 April 2009, the actual transaction value for the purchase of refrigerators of approximately RMB282.7 million represents about 70.7% and 34.5% of the relevant Existing Annual Cap of RMB400 million and Revised Annual Cap of RMB820 million, respectively. As stated above, in order to save on overhead costs, in particular, transportation costs to rural towns, the relevant Subsidiaries of the Company and the relevant Subsidiaries of Hisense Group increased the cooperation in purchasing and supplying refrigerators to each other. In view of the fact that such actual transaction value up to 30 April 2009 has already accounted for a substantial portion of the Existing Annual Cap for the year ending 31 December 2009, we concur with the Directors’ view that it is necessary to revise the relevant Existing Annual Cap so as to cover for the anticipated transaction value of such Continuing Connected Transactions under the revised estimation. Given the existing value of the relevant actual transactions up to 30 April 2009, we are of the view that the Revised Annual Cap of RMB820 million for the purchase of refrigerators by the relevant Subsidiaries of the Company from the relevant Subsidiaries of Hisense Group for the year ending 31 December 2009 is fair and reasonable.

As regards to the provision of after-sale maintenance, repair and consultation services and electronic communication services by the relevant Subsidiaries of Hisense Group to the relevant Subsidiaries of the Company, we understand that the Group presently does not have its own repair and maintenance services team to provide after-sales services to its customers. Therefore, the Group has to engage outside service providers for the provision of after-sale maintenance, repair and consultation services and electronic communication services to its customers. In

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LETTER FROM ACCESS CAPITAL

view of the fact that the actual transaction value up to 30 April 2009 has already accounted for 21% of the Existing Annual Cap, we concur with the Directors’ view that it is necessary to revise the relevant Existing Annual Cap so as to cover for the anticipated transaction value of such Continuing Connected Transactions under the revised estimation. As the demand for home appliances is expected to increase in 2009, we are of the view that the 24% increase of the Revised Annual Cap from the Existing Annual Cap is fair and reasonable.

In general, given the revenue nature of certain of the aforesaid transactions, we are of the view that it is beneficial for the Company to maximise the relevant annual caps for such Continuing Connected Transactions. While the proposed Revised Annual Caps for the year ending 2009 depend on significant extent on the estimation of sales by the relevant parties, it should be noted that (i) the proposed transactions contemplated under the Business Co-operation Framework Agreement will continue to be conducted in the ordinary and usual course of business of the Company and on normal commercial terms and on terms not less favourable to the Company than terms available to or from (as appropriate) independent third parties; (ii) the sale and supply of air-conditioners, refrigerators and raw materials and components by the relevant Subsidiaries of the Company to the relevant Subsidiaries of Hisense Group, when take place and recognised by the relevant Subsidiaries of the Company as sales, will increase the Group’s overall revenue and profitability; and (iii) the non-exclusive arrangement under the Business Cooperation Framework Agreement provides the Company with the flexibility without any commitment on the actual transaction values. As such, we are of the view that the Revised Annual Caps with respect to the sale and supply of refrigerators, airconditioners, raw materials and components and purchase of refrigerators by the relevant Subsidiaries of the Company to the relevant Subsidiaries of Hisense Group and the provision of after-sale maintenance, repair and consultation services and electronic communication services by the relevant Subsidiaries of Hisense Group to the relevant Subsidiaries of the Company are in the interests of the Company and the Shareholders as a whole.

III. Conditions of the Revised Annual Caps under the Supplemental Business Cooperation Framework Agreement

As in the case of the Existing Annul Caps under the Business Co-operation Framework Agreement, the Revised Annual Caps for the year ending 31 December 2009 will be subject to the annual review by the independent non-executive Directors, details of which must be included in the Company’s subsequent published annual report and accounts. Also, pursuant to the Listing Rules, the auditors of

— 23 —

LETTER FROM ACCESS CAPITAL

the Company must provide a letter to the Board confirming, among other things, that the transactions contemplated under the Business Co-operation Framework Agreement and the Supplemental Business Co-operation Framework Agreement are conducted in accordance with their terms and that the relevant annual caps not being exceeded. In addition, pursuant to the Listing Rules, the Company shall publish an announcement if it knows or has reason to believe that the independent non-executive Directors and/or its auditors will not be able to confirm the terms of such transactions or the relevant annual caps not being exceeded. We are of the view that there are appropriate measures in place to govern the conduct of the Continuing Connected Transactions and safeguard the interests of the Independent Shareholders.

RECOMMENDATION

Based on the above, we are of the opinion that the transactions contemplated under the Supplemental Business Co-operation Framework Agreement are on normal commercial terms and in the ordinary and usual course of business of the Company and that the terms of the Supplemental Business Co-operation Framework Agreement and the Revised Annual Caps are in the interests of the Company and the Shareholders as a whole and fair and reasonable. Accordingly, we would advise the Independent Board Committee and the Independent Shareholders that the Independent Shareholders should vote in favour of the ordinary resolution to approve the Supplemental Business Co-operation Framework Agreement and the transactions contemplated thereunder at the AGM.

Yours faithfully, For and on behalf of Access Capital Limited Alexander Tai Principal Director

— 24 —

GENERAL INFORMATION

APPENDIX I

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. All the Directors jointly and severally accept full responsibility for the accuracy of information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this circular have been arrived at after due and careful consideration and there are no other facts not contained in this circular, the omission of which would make any statement in this circular misleading.

2. DISCLOSURE OF INTERESTS

Directors, supervisors and chief executive of the Company

As at the Latest Practicable Date, none of the Directors, supervisors and chief executive of the Company had interests and short positions in the Shares, underlying Shares and/or debentures (as the case may be) of the Company or any its associated corporations (within the meaning of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which any such Director or chief executive is taken or deemed to have under such provisions of the SFO) or which were required to be entered into the register required to be kept by the Company under section 352 of the SFO or which were otherwise required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers in the Listing Rules.

As at the Latest Practicable Date, none of the Directors or supervisors of the Company had any interest, direct or indirect, in any asset which have been since 31 December 2008, being the date to which the latest published audited financial statements of the Group were made up, acquired or disposed of by or leased to any member of the Group or are proposed to be acquired or disposed of by or leased to any member of the Group.

As at the Latest Practicable Date, none of the Directors or supervisors of the Company was materially interested in any contract or arrangement entered into by any member of the Group since 31 December 2008, being the date to which the latest published audited financial statements of the Company were made up, and which was significant in relation to the business of the Group.

— 25 —

GENERAL INFORMATION

APPENDIX I

Interests of Substantial Shareholders

Interests in the Company

As at the Latest Practicable Date, so far as the Directors are aware, each of the following persons, not being a Director, supervisor or chief executive of the Company, had an interest in the Shares which falls to be disclosed to the Company and the Stock Exchange under the provisions of Division 2 and 3 of Part XV of the SFO:

			Proportion to
			the relevant	Proportion
		Number of	class of	to the total
		issued	issued share	issued share
	Class of	ordinary	capital of the	capital of the
Name	Shares	shares held	Company	Company
Hisense Air-	A Shares	250,173,722	46.99%	25.22%
conditioning
China Finance Asset	A Shares	63,923,804	21.43%	6.44%
Management
Corporate

— 26 —

GENERAL INFORMATION

APPENDIX I

Interests in other members of the Group

As at Latest Practicable Date, so far as the Directors are aware, the following persons, not being a Director, supervisor or chief executive of the Company, was directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group:

		Percentage
		shareholding of
	Shareholders holding 10%	shareholders in
Other members of	or more in other members	other members
the Group	of the Group	of the Group
Guangdong Kelon Air-Conditioner	Weishi Investments Company Limited	40%
Co., Ltd
Guangdong Kelon Mould Co., Ltd	Hua Yi Compressor Company Limited	29.89%
Foshan City Shunde District	Hua Yi Compressor Company Limited	29.95%
Rongsheng Plastic Co., Ltd
Guangdong Huaao Electrical	Foshan City Shunde District Yun Long	30%
Electronics Co., Ltd.	Enquiry Service Company Limited
Hisense Ronshen (Yingkou)	Yingkou Yingleng (Group) Bankruptcy	14.74%
Refrigerator Co., Ltd.	Liquidation Team
Xi’an Kelon Cooling Co., Ltd.	Xi’an Gaoke (Group) Company	29.05%
	Limited
Jiangxi Kelon Combine Electrical	Jiangxi Fadasi Domestic Electrical	45%
Appliances Co., Ltd.	Appliances Company Limited
	（江西發達思家電有限公司）
Hua Yi Compressor Company	Sichuan Changhong Electric Holdings	29.92%
Limited	Co., Ltd
	A-share public shareholders	9.05%

— 27 —

GENERAL INFORMATION

APPENDIX I

		Percentage
		shareholding of
	Shareholders holding 10%	shareholders in
Other members of	or more in other members	other members
the Group	of the Group	of the Group
Chongqing Kelon Rongsheng	Chongqing Shang She Group	24%
Refrigerator Sales Co., Ltd.
	Chongqing Huaqing Commerce	24%
	Company
	Chongqing Department Building	24%
Guangzhou Antaida Logistic Co.,	Guangzhou Zhongyuan International	30%
Ltd.	Freight Forwarding Company
	Limited
	China Far Ocean Network Company	25%
	Limited
	Wuxi Small Swan Holdings Company	20%
	Limited
Wuhu Yingjia Electrical	Heavenly King Incorporated	20%
Machinery Co., Ltd.
Sichuan Rongsheng Kelon	Xu Wei Ru	24%
Refrigerator Sales Co., Ltd.
Beijing Hengsheng Xin Chuang	Foshan City Shunde District Yun Long	11%
Technology Company	Enquiry Service Company Limited
Guangdong Kelon Weili Electrical	Zhongshan City Fusha Town	20%
Appliances Company Limited	Shunchang Industry Limited
	Company
	（中山市阜沙鎮順暢工業有限公司）

Save as disclosed above, as at the Latest Practicable Date and so far as is known to the Directors or chief executive of the Company, there was no other person (other than a Director, supervisor or chief executive of the Company or a member of the Group), who had an interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

— 28 —

GENERAL INFORMATION

APPENDIX I

3. SERVICE AGREEMENTS

As at the Latest Practicable Date, none of the Directors, proposed directors, supervisors or proposed supervisors of the Company had any existing or proposed service contract with any member of the Group (excluding contracts expiring or determinable by the Company within one year without payment of compensation (other than statutory compensation).

4. COMPETING BUSINESS

As at the Latest Practicable Date, the following Directors or their respective Associates have interests in the following businesses which are considered to compete or are likely to compete, either directly or indirectly, with the businesses of the Group other than those businesses where the Directors were appointed as directors to represent the interests of the Company and/or the Group pursuant to the Listing Rules:

Description of business

Name of Director

Name of entity which of the entity which is business is considered considered to compete Nature of to compete or likely or likely to compete interest of the to compete with the with the business Director in the business of the Group of the Group entity

• Mr. Tang Ye Guo Hisense Group or its Production of airDirector Subsidiaries conditioning/ electrical products

• Mr. Zhou Xiao Tian The Subsidiaries of Production of Senior Hisense Group air-conditioning/ management electrical products

• Ms. Yu Shu Min Hisense Group or its Production of Director and/ Subsidiaries air-conditioning/ or senior electrical products management

• Mr. Lin Lan Hisense Group or its Production of airDirector and/ Subsidiaries conditioning/ or senior electrical products management

— 29 —

GENERAL INFORMATION

APPENDIX I

As at the Latest Practicable Date, save as disclosed above, none of the Directors or their respective Associates has interests in the businesses which compete or are likely to compete, either directly or indirectly, with the businesses of the Group.

5. NO MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, none of the Directors was aware of any material adverse change in the financial or trading position of the Group since 31 December 2008 (being the date to which the latest published audited financial statements of the Group were made up).

6. EXPERT

• (a) The following sets out the qualifications of the expert which has given its opinion or advice as contained in this circular:

Name

Qualifications

• Access Capital a corporation licensed under the SFO to conduct types 1 (dealing in securities), 4 (advising on securities), 6 (advising on corporate finance) and 9 (asset management) regulated activities under the SFO

• (b) Access Capital does not have any shareholding, direct or indirect, in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

• (c) Access Capital does not have any interest, direct or indirect, in any assets which have been acquired or disposed of by or leased to any member of the Group, or which are proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2008, the date to which the latest published audited financial statements of the Company were made up.

• (d) Access Capital has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and references to its name in the form and context in which they are included.

• (e) The letter and recommendation given by Access Capital are given as of the date of this circular for incorporation herein.

— 30 —

GENERAL INFORMATION

APPENDIX I

7. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at the principal place of business in Hong Kong of the Company at Room 3104-06, Singga Commercial Centre, No. 148 Connaught Road West, Hong Kong during normal business hours from the date of this circular up and including 30 June 2009:

• (a) the letter from Access Capital;

• (b) the Business Co-operation Framework Agreement; and

• (c) the Supplemental Business Co-operation Framework Agreement.

— 31 —

SUPPLEMENTAL AND FURTHER NOTICE OF ANNUAL GENERAL MEETING

HISENSE KELON ELECTRICAL HOLDINGS COMPANY LIMITED 海信科龍電器股份有限公司

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

(Stock Code: 00921)

SUPPLEMENTAL AND FURTHER NOTICE OF ANNUAL GENERAL MEETING

Hisense Kelon Electrical Holdings Company Limited (the “Company”) received a written request from Qingdao Hisense Air-Conditioning Co., Ltd (“Hisense Air-Conditioning”) on 5 June 2009. Hisense Air-Conditioning, a substantial shareholder of the Company which holds 250,173,722 shares of the Company, being approximately 25.22% of the total issued shares capital of the Company, requests that additional resolutions (specified as ordinary resolutions numbered (8)(9) and (11) below) to be tabled before the forthcoming 2008 annual general meeting (the “AGM”) of the Company to be held on 26 June 2009 for the Company’s shareholders’ consideration and approval.

SUPPLEMENTAL AND FURTHER NOTICE IS HEREBY GIVEN that the AGM will be held as originally scheduled 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 26 June 2009 at 9:30 a.m. to review and, if thought fit, pass the following resolutions in addition to the resolutions set out in the previous notice of the AGM dated 8 May 2009:

ORDINARY RESOLUTIONS

• (8)(9) To consider and approve the election of Mr. Cheung Yui Kai, Warren (note 1) as an independent non-executive director of the seventh board of directors of the Company and to fix the level of his remuneration;

• (11) To consider and approve the Supplemental Business Co-operation Framework Agreement dated 19 May 2009 entered into between the Company and certain Subsidiaries of Hisense Group Company and the continuing connected transactions contemplated thereunder.

— 32 —

SUPPLEMENTAL AND FURTHER NOTICE OF ANNUAL GENERAL MEETING

Pursuant to article 8.12 of the articles of association of the Company, where the number of voting shares represented by the shareholders who intend to attend a general meeting does not exceed half of the Company’s total number of voting shares, the Company shall further notify its shareholders about the agenda, date and venue of the general meeting by publishing an announcement. As notified, the Company will hold the general meeting at the time originally scheduled. Apart from adding the above-mentioned proposed resolutions in the agenda, the date and venue of the AGM and all other matters relating to the AGM will remain the same as disclosed in the notice of AGM dated 8 May 2009. (Please refer to the announcement dated 8 May 2009 published on the websites (http:// www.hkex.com.hk and www.kelon.com) of The Stock Exchange of Hong Kong Limited and the Company, respectively.)

By Order of the Board of

Hisense Kelon Electrical Holdings Company Limited Tang Ye Guo Chairman

As at the date of this notice, the directors of the Company are Mr. Tang Ye Guo, Mr. Zhou Xiao Tian, Ms. Yu Shu Min, Mr. Lin Lan, Ms. Liu Chun Xin and Mr. Zhang Ming; and the independent non-executive directors are Mr. Zhang Sheng Ping, Mr. Lu Qing and Mr. Cheung Yui Kai, Warren.

Foshan City, Guangdong, the PRC, 8 June 2009.

Note 1:

Mr. Cheung Yui Kai, Warren, aged 42, a Hong Kong permanent resident, graduated from the University of Southern Queensland in Australia with a bachelor’s degree in business and is a certified public accountant in Hong Kong. He has over 17 years of investment banking experiences in the Asian Pacific Region. He has worked as a senior manager in 渣打（亞洲）有限公司 (Standard Chartered (Asia) Limited); a senior manager in 渣打澳洲有限公司 (Standard Chartered Australia Limited); an assistant director in 荷銀融資亞洲有限公 司 (ABN AMRO Corporate Finance (Asia) Limited); a director in 軟庫金匯（香港）有限公司 (SB1 E2-Capital (HK) Limited); a director in 凱利融資有限公司 (Hercules Capital Limited) and an independent non-executive director in Mei Ah Entertainment Group Ltd. (resigned in November 2007). From April 2005 to date, he has been working as a managing director in 寶來資本（亞洲）有限公司 (Polaris Capital (Asia) Limited). He has served as an independent non-executive director of the Company since June 2006.

— 33 —

SUPPLEMENTAL AND FURTHER NOTICE OF ANNUAL GENERAL MEETING

Save as disclosed above, Mr. Cheung has not held any directorship in any other listed companies for the past three years nor any shares of the Company or any its associated corporations within the meaning of Part XV of the Securities and Futures Ordinance. Save as disclosed above, Mr. Cheung does not have any relationship with any of the directors, senior management, or substantial or controlling shareholders of the Company or its subsidiaries. During his term of office as an independent non-executive director of the Company, Mr. Cheung is entitled to an annual emolument in an amount of RMB240,000 from the Company as the independent nonexecutive director. Such emolument shall be determined by the remuneration and appraisal committee of the Board based on his work performance and the level of remuneration offered by other listed companies in the same industry. Mr. Cheung is to stand for election as the independent non-executive director of the Company. If elected, Mr. Cheung’s term of office will commence from the date of his appointment at the AGM until the expiry of the term of the seventh Board.

Save as disclosed above, Mr. Cheung confirms that there is no other matter that needs to be disclosed pursuant to Rules 13.51(2)(h) to 13.51(2)(v) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited nor any other matter that needs to be brought to the attention of the shareholders of the Company.

— 34 —