Medlive Technology Co., Ltd. — Capital/Financing Update 2006

Nov 3, 2006

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

GUANGDONG KELON ELECTRICAL HOLDINGS COMPANY LIMITED 廣東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: 0921)

ANNOUNCEMENT DISCLOSEABLE AND CONNECTED TRANSACTION

The Board is pleased to announce that on 31 October 2006, the Company entered into an Equity Transfer Memorandum of Understanding with Chengdu Engine Group, Chengdu Xinxing and Chengdu Kelon in respect of an acquisition of 30% equity interest in Chengdu Kelon by the Company from Chengdu Engine Group. Upon completion of the Equity Transfer, the Company will directly and indirectly hold 100% of the equity interest of Chengdu Kelon and Chengdu Kelon will become a wholly-owned Subsidiary of the Company.

As at the date of this announcement, Chengdu Engine Group is holding 30% equity interest in Chengdu Kelon, while the Company directly and indirectly holds the remaining 70% equity interest therein. As such Chengdu Engine Group is a connected person of the Company under the Listing Rules. Accordingly, the Proposed Acquisition constitutes a connected transaction of the Company under the Listing Rules. As the consideration ratio (as defined in Rule 14.07 of the Listing Rules) of the connected transaction is more than 2.5% and thus it is subject to the reporting, announcement and independent shareholders’ approval requirements under the Listing Rules. Relevant details of such connected transaction will also be included in the next published annual report of the Company pursuant to Rule 14A.45 of the Listing Rules.

Since the consideration ratio of the connected transaction is more than 5% and each of the applicable percentage ratio as defined in Chapter 14 of the Listing Rules is less than 25%, the Proposed Acquisition also constitutes a discloseable transaction of the Company which is subject to the notification and announcement requirements under Rules 14.34 to 14.39 of the Listing Rules.

A circular containing, among other things, details of the Equity Transfer Memorandum of Understanding, a letter from the independent board committee of the Company to the independent shareholders and a letter of advice from an independent financial advisor, to be appointed by the Company, will be despatched to the Shareholders as soon as practicable.

EQUITY TRANSFER MEMORANDUM OF UNDERSTANDING

The Board is pleased to announce that on 31 October 2006, the Company entered into an Equity Transfer Memorandum of Understanding with Chengdu Engine Group, Chengdu Xinxing and Chengdu Kelon in respect of an acquisition of 30% equity interest in Chengdu Kelon by the Company from Chengdu Engine Group. Upon completion of the Equity Transfer, the Company will directly and indirectly hold 100% of the equity interest of Chengdu Kelon and Chengdu Kelon will become a wholly-owned Subsidiary of the Company.

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Date

31 October 2006

Parties

• (1) Chengdu Engine Group, as the vendor;

• (2) the Company, as the purchaser;

• (3) Chengdu Kelon; and

• (4) Chengdu Xinxing.

Interest to Be Transferred

Pursuant to the Equity Transfer Memorandum of Understanding, Chengdu Engine Group has agreed to sell and the Company has agreed to acquire 30% of the equity interest in Chengdu Kelon.

Consideration

The consideration for the Equity Transfer is RMB81,000,000 and has been determined by the arm’s length negotiations between the Company and Chengdu Engine Group after taking into account the current assets value of Chengdu Kelon attributable to such 30% equity interest held by Chengdu Engine Group, the current financial status of Chengdu Kelon and the significance of Chengdu Kelon to the business of the Company, details of which is set out in the subsequent section “reasons for and benefits of the Equity Transfer Memorandum of Understanding”. As Chengdu Engine Group is a PRC statedowned enterprise, the consideration is subject to further adjustment (if any) after valuation of such 30% interest in Chengdu Kelon by Chengdu Engine Group and approved by its supervising entity. In the event that the value of the said 30% interest, after making the said valuation, is higher than RMB81,000,000, the consideration for the Equity Transfer will still be RMB81,000,000. In the event that the value of the said 30% interest, after making the said valuation, is lower than RMB81,000,000, the consideration for Equity Transfer will be adjusted accordingly.

The consideration, which will be satisfied by the internal resources of the Company, will be payable by the Company in the following manners:

• (A) a refundable amount of RMB47,000,000 (the “Initial Consideration”) has been paid on 31 October 2006 upon the signing of the Equity Transfer Memorandum of Understanding; and

• (B) subject to any adjustment as a result of the valuation mentioned above, RMB34,000,000 (the “Deferred Consideration”) shall become payable after the completion of the Equity Transfer.

Other Terms

• (1) The Company and Chengdu Engine Group agree that the Equity Transfer shall be completed by the end of March 2007, failing which, Chengdu Engine Group shall return the Initial Consideration together with the Interest to the Company;

• (2) Chengdu Engine Group shall pledge its 30% equity interest in Chengdu Kelon to the Company within three business days after the payment of the Initial Consideration by the Company;

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• (3) In the event that the Equity Transfer fails to complete on or before the end of March 2007 and Chengdu Engine Group has returned the Initial Consideration to the Company as mentioned in (1) above, the Company shall release the pledge of the said 30% equity interest in Chengdu Kelon to Chengdu Engine Group;

• (4) Chengdu Xinxing, a Subsidiary of Chengdu Engine Group, was indebted to Chengdu Kelon in the sum of RMB34,000,000 (the “Chengdu Xinxing Payables”) pursuant to a borrowing agreement entered between Chengdu Kelon and Chengdu Xinxing in 1998, under which Chengdu Kelon agreed to provide Chengdu Xinxing with an operating fund of RMB34,000,000. Chengdu Xinxing has not repaid the Chengdu Xinxing Payables to Chengdu Kelon due to its poor financial situation. Chengdu Kelon and the Company did not make any provisions in respect of the Chengdu Xinxing Payables in their accounts or financial statements. . Upon obtaining the relevant approvals of the Equity Transfer, Chengdu Engine Group shall repay the Chengdu Xinxing Payables to Chengdu Kelon on behalf of Chengdu Xinxing by setting off against the Deferred Consideration to be paid by the Company.

In the event that the Deferred Consideration is less than the Chengdu Xinxing Payables as a result of the the valuation mentioned above, the Chengdu Xinxing Payables will still be used to set off the Deferred Consideration and the balance of the Chengdu Xinxing Payables will be settled by Chengdu Engine Group by means to be agreed;

• (5) The Company, Chengdu Engine Group, Chengdu Kelon and Chengdu Xinxing agree that interest on the Chengdu Xinxing Payables will only be calculated up to 30 November 2005;

• (6) All receivables, which details and amount will be set out in the circular to be despatched to the Shareholders, owing by Chengdu Kelon to Chengdu Xinxing shall be paid by Chengdu Kelon to Chengdu Xinxing on or before 31 December 2006; and

• (7) The sum of RMB5,200,000 owing by Chengdu Kelon to Chengdu Engine Group shall be repaid by Chengdu Kelon to Chengdu Engine Group on or before 31 December 2006.

REASONS FOR AND BENEFITS OF THE EQUITY TRANSFER MEMORANDUM OF UNDERSTANDING

Chengdu Kelon is principally engaged in the production and sales of refrigerators in the western region of the PRC and therefore forms an integral part of the business of the Company, especially in the western region of the PRC. Further, this region also represents a significant strategic meaning for the Company in terms of brand image and sales in the PRC refrigerators’ market.

Since Chengdu Engine Group, being one of the shareholders of Chengdu Kelon, did not want to make further investment in or carry on the business of Chengdu Kelon due to its own business concerns, Chengdu Engine Group, originally proposed to liquidate Chengdu Kelon or to sell their equity interest in Chengdu Kelon to other third parties. However, in view of the significance of Chengdu Kelon to the business of the Company in terms of its strategic meaning and in order to sustain the business of Chengdu Kelon and to work out a way for the repayment of the Chengdu Xinxing Payables and that the Company does not want part of the equity interest of Chengdu Kelon to be transferred to other third parties due to its strategy concerns, the Directors (excluding the independent non-executive directors, whose views will be contained in the circular to be despatched to the Shareholders) consider that the Proposed Acquisition is beneficial to the Company and the Shareholders as a whole and the terms and conditions in the Equity Transfer Memorandum of Understanding are fair and reasonable.

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INFORMATION RELATING TO THE COMPANY

The Company is principally engaged in the manufacture and sales of refrigerators and air-conditioners.

INFORMATION RELATING TO CHENGDU ENGINE GROUP

Chengdu Engine Group was established in the PRC in October 1958 under the PRC Aviation Ministry, which was renamed as Chengdu Engine Company in November 1986, and was further transformed into Chengdu Engine (Group) Company Limited. It is held by China Aviation Industry Corporation II as to 53.81% of its equity interest and by 中國華融資產管理公司 as to 46.19% of its equity interest. It is principally engaged in the production for products of use in the army.

INFORMATION RELATING TO CHENGDU KELON

Chengdu Kelon was incorporated in the PRC on 29 November 1996. It is principally engaged in the production and sales of household refrigerators and its spare parts and provision of after-sale service.

The net assets value of Chengdu Kelon as at 30 June 2006 was RMB136,356,866 based on the PRC GAAP. The net profit before and after taxation of Chengdu Kelon for the financial year ended 31 December 2004 were RMB522,537 and RMB522,537 respectively based on the PRC GAAP. The net loss before and after taxation of Chengdu Kelon for the financial year ended 31 December 2005 were RMB46,930,272 and RMB46,930,272 respectively based on the PRC GAAP.

Chengdu Kelon was established by the Company and Chengdu Engine Group in November 1996. So far as the Company is aware and based on the information available to the Company, Chengdu Engine Group has contributed the sum of RMB60,000,000 as the registered share capital of Chengdu Kelon.

INFORMATION RELATING TO CHENGDU XINXING

Chengdu Xinxing was incorporated in the PRC in October 1997. It is principally engaged in the production, design and sales of refrigerators, steamers for air-conditioners and household appliances.

DISCLOSEABLE AND CONNECTED TRANSACTIONS

As at the date of this announcement, Chengdu Engine Group is holding 30% equity interest in Chengdu Kelon while the Company directly and indirectly holds the remaining 70% equity interest therein. As such, Chengdu Engine Group is a connected person of the Company under the Listing Rules. Accordingly, the Proposed Acquisition constitutes a connected transaction of the Company under the Listing Rules. As the consideration ratio (as defined in Rule 14.07 of the Listing Rules) of the connected transaction is more than 2.5% and thus it is subject to the reporting, announcement and independent shareholders’ approval requirements under the Listing Rules. Relevant details of such connected transaction will also be included in the next published annual report of the Company pursuant to Rule 14A.45 of the Listing Rules.

Since the consideration ratio of the connected transaction is more than 5% and each of the applicable percentage ratio as defined in Chapter 14 of the Listing Rules is less than 25%, the Proposed Acquisition also constitutes a discloseable transaction of the Company which is subject to the notification and announcement requirements under Rules 14.34 to 14.39 of the Listing Rules.

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The Directors (excluding the independent non-executive directors, whose views will be contained in the circular to be despatched to the Shareholders) are of the view that the Proposed Acquisition was conducted in the interest of the Company and the Shareholders as a whole. In these circumstances, an extraordinary general meeting will be held to consider and, if thought fit, among other things, to approve the Proposed Acquisition and the terms and conditions of the Equity Transfer Memorandum of Understanding.

DESPATCH OF CIRCULAR

A circular containing, among other things, details of the Equity Transfer Memorandum of Understanding, a letter from the independent board committee of the Company to the independent shareholders and a letter of advice from an independent financial advisor, to be appointed by the Company, will be despatched to the Shareholders as soon as practicable.

So far as the Company is aware, no one would have to be abstained from voting in approving the connected transaction under the Equity Transfer Memorandum of Understanding.

DEFINITIONS

In this announcement, the following expressions have the meanings set out below unless the context otherwise requires:

“A Shares”	Domestic ordinary Shares of the Company with a nominal value of RMB1.00
	each and are listed on the Shenzhen Stock Exchange
“Board”	The board of Directors
“Chengdu Engine Group”	成都發動機（集團）有限公司(Chengdu Engine (Group) Co., Ltd)
“Chengdu Kelon”	成都科龍冰箱有限公司(Chengdu Kelon Refrigerator Co., Ltd), a Subsidiary
	of the Company
“Chengdu Xinxing”	成都新星電器股份有限公司(Chengdu Xinxing Electrical Appliance Co.,
	Ltd)
“Company”	Guangdong 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
“Directors”	The directors of the Company
“Equity Transfer”	The transfer of the 30% equity interest in Chengdu Kelon from Chengdu
	Engine Group to the Company
“Equity Transfer	An equity transfer memorandum of understanding dated 31
Memorandum of	October2006enteredbetweentheCompany,Chengdu
Understanding”	Engine Group, Chengdu Xinxing and Chengdu Kelon in respect of the Equity
	Transfer
“H Shares”	Overseas listed foreign shares of the Company with a nominal value of
	RMB1.00 each and are listed on the Stock Exchange

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“Interest” Interest on the said sum of RMB47,000,000 at the prevailing deposit interest rate of PRC banks “Hong Kong” The Hong Kong Special Administrative Region of the PRC “Listing Rules” Rules Governing the Listing of Securities on the Stock Exchange “PRC” The People’s Republic of China “Proposed Acqusition” The proposed acquisition of the 30% of equity interest in Chengdu Kelon by the Company from Chengdu Engine Group “RMB” Renminbi yuan, the lawful currency of the PRC

“Share(s)” Share(s) of RMB1.00 each in the capital of the Company, comprising the A Shares and the H Shares “Shareholder(s)” Holders of the Shares “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) “%” Per cent.

SUSPENSION OF TRADING IN THE H SHARES OF THE COMPANY

At the request of the Company, trading in the H shares of the Company was suspended with effect from 10:00 a.m. on 16 June 2005 pending the release of an announcement in relation to price sensitive information. Subject to the further announcements in relation to, amongst others, the financial, production and trading position of the Company, and the satisfaction by the Stock Exchange of the adequacy of the internal control measures of the Company, trading in the H shares of the Company will remain suspended until further notice.

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

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

Foshan City, Guangdong, the PRC, 2 November 2006

“Please also refer to the published version of this announcement in China Daily”

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