Medlive Technology Co., Ltd. — Capital/Financing Update 2007

Oct 30, 2007

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

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HISENSE KELON ELECTRICAL HOLDINGS COMPANY LIMITED

海信科龙电器股份有限公司

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

ANNOUNCEMENT CONNECTED TRANSACTIONS

EQUITY TRANSFER AGREEMENT

The Board announced that on 27 August 2007, Jiangxi Kelon, a wholly-owned subsidiary of the Company, entered into an Equity Transfer Agreement with Henan Development in respect of the acquisition of 70% equity interest in Kaifeng Kelon from Jiangxi Kelon by Henan Development. Upon completion of the Equity Transfer, Kaifeng Kelon will cease to be a Subsidiary of the Group.

DEBT SETTLEMENT AGREEMENT

The Board announced that on 27 August 2007 , Kaifeng Kelon, entered into a Debt Settlement Agreement with Henan Development and other subsidiaries of the Company in relation to the Debt Settlement.

CONNECTED TRANSACTIONS

As at the date of this announcement, Jiangxi Kelon is holding 70% equity interest in Kaifeng Kelon, while Henan Development holds its remaining 30% equity interest. As such, Henan Development is a connected person of the Company under the Listing Rules and the Equity Transfer and Debt Settlement constitute connected transactions of the Company under the Listing Rules.

Since each of the relevant percentage ratio of the Equity Transfer and Debt Settlement is less than 2.5%, the Debt Settlement and the Equity Transfer are subject to the reporting and announcement requirements under the Listing Rules. Relevant details of the connected transactions will also be included in the next published annual report of the Company pursuant to Rule 14A.45 of the Listing Rules.

EQUITY TRANSFER AGREEMENT

The Board announced that on 27 August 2007, Jiangxi Kelon, a wholly-owned subsidiary of the Company, entered into an Equity Transfer Agreement with Henan Development in respect of the acquisition of 70% equity interest in Kaifeng Kelon from Jiangxi Kelon by Henan Development. Upon completion of the Equity Transfer, Kaifen Kelon will cease to be a Subsidiary of the Group.

Date

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27 August 2007

Parties

(1) Jiangxi Kelon, as the vendor; and (2) Henan Development, as the purchaser.

Interest to Be Transferred

Pursuant to the Equity Transfer Agreement, Jiangxi Kelon has agreed to sell and Henan Development has agreed to acquire 70% of the equity interest in Kaifeng Kelon.

Consideration

The Equity Transfer was made for nil monetary consideration under the Equity Transfer Agreement.

However, under the Debt Settlement Agreement (particulars are set out below), the Company and its Subsidiaries agreed to forgo their rights to a sum of debts, i.e. RMB37,363,000, owed by Kaifeng Kelon to the Company and its Subsidiaries, while Kaifeng Kelon has also agreed to forgo its rights to a sum of debts, i.e. RMB43,639,200, owed to it by the Company and its Subsidiaries. As the Debt Settlement Agreement and the Equity Transfer Agreement were entered into as a series of transactions relating to the subject matter, the Company considers that the waiver by Kaifeng Kelon of the excess of the debts in the sum of RMB6,276,200 under the Debt Settlement Agreement as the consideration of the Equity Transfer.

The above-mentioned arrangement of the consideration for the Equity Transfer, i.e. the excess of debt in the sum of RMB6,276,200 in favour of the Company and its Subsidiaries, was determined after arm ’ s length negotiation between the parties taking into account Jiangxi Kelon ’ s share, i.e. 70%, of the net assets value of Kaifeng Kelon of approximately RMB 8,400,000 as at 31 July 2007 (Jiangxi Kelon ’ s share of the net assets of Kaifeng Kelon as at 31 July 2007 is approximately RMB5,880,000) and the operating conditions of Kaifeng Kelon (as further elaborated in the subsequent section of “ REASONS FOR AND BENEFITS OF THE EQUITY TRANSFER AND DEBT SETTLEMENT ” ) .

According to the requirements of the new Interpretations on Enterprise Accounting Standards, in relation to any long-term equity investment calculated by using equity method, any amount which has previously been accounted for in the capital reserve shall be settled by transferring an amount corresponding to the disposed portion of the equity interests from the capital reserve to the profit or loss for the same period upon disposal.

In accordance with PRC GAAP, the Company generated RMB27,260,000 to its capital reserve while making investment in Kaifeng Kelon. As at the date of signing the Equity Transfer Agreement, the balance of the Company ’ s long term equity investment in Kaifeng Kelon was RMB29,370,000. Taking into account that the Company ’ s liability will decrease by RMB6,280,000 after the Debt Settlement, the consolidated net profit in the sum of RMB4,170,000 was expected to be recognized by the Company as a result of the Equity Transfer in accordance with the PRC GAAP, i.e. capital reserves (RMB27,260,000) + gain – from set-off of debts (RMB6,280,000) balance of long term investment in equity (RMB29,370,000).

In accordance with International Financial Reporting Standards, the Company will suffer a loss of RMB23,090,000 as a result of the Equity Transfer, i.e. 70% of the carrying value of Kaifeng Kelon (RMB29,370,000) - gain from set-off of debts (RMB6,280,000). Such loss of

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the Equity Transfer will be recognized in the financial results of the Group for the year ending 31 December 2007.

DEBTS SETTLEMENT AGREEMENT

Date

27 August 2007

Parties

(1) Kaifeng Kelon; (2) Henan Development; and (3) The subsidiaries of the Company.

Under the Debt Settlement Agreement (particulars are set out below), the Company and its Subsidiaries agreed to forgo their rights to a sum of debts, i.e. RMB37,363,000, owed by Kaifeng Kelon to the Company and its Subsidiaries, while Kaifeng Kelon has also agreed to forgo its rights to a sum of debts, i.e. RMB43,639,200, owed to it by the Company and its Subsidiaries.

There is nil consideration for the Debt Settlement under the Debt Settlement Agreement. The Company will realize a gain of RMB6,276,200 as a result of the Debt Settlement, i.e. RMB43,639,200 - RMB37,363,000.

CONDITIONS PRECEDENT

There is no condition precedent under the Equity Transfer Agreement.

The completion of the Debt Settlement Agreement is conditional upon the completion of the equity transfer procedures of the Equity Transfer under the Equity Transfer Agreement.

As at the date of this announcement, the equity transfer procedures of the Equity Transfer are still being processed by the relevant authorities of the PRC.

REASONS FOR AND BENEFITS OF THE EQUITY TRANSFER AND DEBT SETTLEMENT

Kaifeng Kelon is principally engaged in the production, sale and research and development of air-conditioning products in the Henan region of the PRC.

Kaifeng Kelon has suffered losses from operations and its production has ceased since about 2004. After cessation of production, the average loss incurred by Kaifeng Kelon exceeded RMB 5,000,000 per year.

The Board considered that the current production facilities, machinery, equipment, technologies and hardware of Kaifeng Kelon were out of date and non-competitive and making further investment into the same would not be beneficial to the Group and the shareholders of the Company as a whole.

Since the operating loss incurred by Kaifeng Kelon every year created heavy burden to the Company and considering that Kaifeng Kelon has ceased production for a long time and its

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conditions will not likely to be improved substantially despite making further investment, the Board (including the independent non-executive Directors) consider that the current arrangement of the Equity Transfer and the Debt Settlement in consideration of the settlement of the excess of debts in favour of the Company and its Subsidiaries is fair and reasonable and in the interest of the Company and its shareholders.

INFORMATION RELATING TO THE PARTIES TO THE EQUITY TRANSFER AGREEMENT

THE COMPANY

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

HENAN DEVELOPMENT

Henan Development is a State-owned Enterprise with a registered capital of RMB63.858 million. It is principally engaged in the development, operation, consultation and providing services in relation to infrastructure in Kaifeng Economic Technology, development and operation of properties and constructions, integrated development of agriculture, operation and management of materials required by the infrastructure in Kaifeng Economic Technology and providing consultancy services on capital introduction projects and technology. Before the Equity Transfer, it held 30% of the equity interests in Kaifeng Kelon and it is a connected person of the Company.

JIANGXI KELON

Jiangxi Kelon is a wholly-owned subsidiary of the Company. It has a registered capital of US$29.80 million. Its registered address is Changbei Economic Development Zone, Nanchang Jiangxi Province. It is principally engaged in the manufacture and sale of household air-conditioners, refrigerators, freezers and small electrical home appliances.

KAIFENG KELON

Kaifeng Kelon has a registered capital of RMB60 million (RMB48 million of which was contributed by the Company) and its registered address is Songcheng Road, Kaifeng, Henan Province. It is principally engaged in production, sale and research and development of air-conditioning products. Kaifeng Kelon has a current net assets of approximately RMB 8,400,000 as at 31 July 2007.

Kaifeng Kelon did not make any profit (both before and after taxation and extraordinary items) for the financial years ended 31 December 2005 and 31 December 2006.

Before the completion of the Equity Transfer, Kaifeng Kelon is a Subsidiary of the Company and its profit and loss, assets and liabilities are consolidated to the financial statements and balance sheet of the Company.

CONNECTED TRANSACTIONS

As at the date of this announcement, Jiangxi Kelon is holding 70% equity interest in Kaifeng Kelon, while Henan Development holds its remaining 30% equity interest. As such, Henan Development is a connected person of the Company under the Listing Rules and the Equity Transfer and the Debt Settlement constitute connected transactions of the Company under the Listing Rules.

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Since each of the relevant percentage ratio of the Equity Transfer and Debt Settlement is less than 2.5%, the Debt Settlement and the Equity Transfer are subject to the reporting and announcement requirements under the Listing Rules. Relevant details of the connected transactions will also be included in the next published annual report of the Company pursuant to Rule 14A.45 of the Listing Rules.

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

• “ Associate ” Has the meaning as prescribed to it under the Listing Rules

• "Board" The board of Directors "Company" 海信科龙电器股份有限公司 (Hisense Kelon Electrical Holdings Co., Ltd), a company incorporated in the PRC with limited liability and listed on the main board of the Stock Exchange and Shenzhen Stock Exchange

• “ Debt Settlement ” The series of debt settlement under the Debt Settlement Agreement

• "Directors" The directors of the Company “ Debt Settlement Agreement ” The debt settlement agreement dated 27 August 2007 entered between the Company and its Subsidiaries, Jiangxi Kelon, and Henan Development

• "Equity Transfer" The transfer of the 70% equity interest in Kaifeng Kelon from Jiangxi Kelon to Henan Development

• "Equity Transfer Agreement" An equity transfer agreement dated 27 August 2007 entered between Jiangxi Kelon and Henan Development in respect of the Equity Transfer

• “ 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

• "Henan Development" 河南省开封经济技术开发（集团）公司 (Henan Province Kaifeng Economic Technology Development (Group) Company)

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"Hong Kong" The Hong Kong Special Administrative Region of the PRC "Jiangxi Kelon" 江西科龙实业发展有限公司 (Jiangxi Kelon Industrial Development Co., LTD) "Kaifeng Kelon" 开封科龙空调有限公司 (Kaifeng Kelon Air-Conditioner Co.,Ltd) "Listing Rules" Rules Governing the Listing of Securities on the Stock Exchange "PRC" The People's Republic of China "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 "Subsidiaries" Has the meaning defined in sections 2 and 2B of the 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 until further notice.

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

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

Foshan City, Guangdong, the PRC, 30 October 2007

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