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

Aug 29, 2007

==> picture [228 x 38] intentionally omitted <==

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: 0921)

Announcement on Relocation and Extension and Technical Improvement of Kelon’s Western Home Appliance Production Base

This announcement is made in accordance with Rule 13.09(2) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) (the “Listing Rules”).

According to the notice from the leading team office for structural adjustment of the eastern industry zone in Chengdu city (“Chengdu Dongtiaoban”) (the “Notice on Determining the Eleventh Batch of Enterprises for Relocation and Improvement”), Chengdu Kelon Refrigerator Co., Ltd (“Chengdu Kelon”), a wholly owned subsidiary of Hisense Kelon Electrical Holdings Company Limited (the “Company”), was determined by Chengdu Dongtiaoban as one of the eleventh batch of enterprises for relocation and improvement.

The Company will dispose of the existing assets of Chengdu Kelon and deregister Chengdu Kelon, and will establish a new company of Chengdu Hisense Refrigerator Co., Ltd (“Chengdu Hisense”) and acquire a parcel of land to build a new production base. The relevant arrangements and effects are set out as follows:

I. Information on Chengdu Kelon and the deregistering arrangements

Chengdu Kelon was incorporated by Chengdu Engine (Group) Company Limited ("Chengdu Engine"), Pearl River Electric Refrigerator Company Limited ("Pearl River Refrigerator") and the Company in accordance with the Joint Venture Agreement signed on 20 November 1996. It has a registered capital of RMB200,000,000, in which Chengdu Engine, the Company and Pearl River Refrigerator hold an equity of 30%, 45% and 25%, respectively.

1

On 31 October 2006, the Company entered into an agreement with Chengdu Engine to acquire its 30% equity in Chengdu Kelon. Upon completion of the above share transfer, the Company directly holds 75% equity in Chengdu Kelon and holds another 25% equity through Pearl River Refrigerator, a wholly owned subsidiary of the Company (please refer to the announcements dated 3 November 2006 published in “China Securities Journal”, “Securities Times”, “Hong Kong Commercial Daily” and “China Daily” for details).

The primary information of Chengdu Kelon in the latest three years and a further period are set out as followed:

Unit: RMB Yuan

	30 June 2007	31 December 2006	31 December 2005	31 December 2004
Total assets	284,337,975.32	504,155,774.26	501,395,879.95	313,400,588.63
Fixed assets	77,960,327.00	85,775,044.26	100,762,643.14	115,565,467.39
Work in progress	6,514,052.71	6,664,485.71	1,916,170.26	362,236.46
Intangible assets	19,227,506.29	19,894,356.07	22,071,373.50	23,458,056.42
Net assets	117,987,574.41	125,183,410.95	135,299,816.87	190,553,215.20
	January-June 2007	2006	2005	2004
Principal operating revenue	263,209,871.08	344,818,064.09	291,389,680.30	376,701,115.00
Principal operating profit	-8,139,320.71	1,858,171.24	-13,629,262.62	30,465,600.71
Netprofit	-7,928,861.71	-10,116,405.92	-55,253,398.33	522,537.00
Production (Set)	249,250	324,449	229,917	340,826
Sale(Set)	247,590	324,449	261,957	362,046

2

	Average number of people	925	1,126	1,062	1,036

In accordance with the requirements of the policies of Chengdu Dongtiaoban and the overall plan of the Company, Chengdu Kelon will cease production by the end of August 2007 and will prepare to relocate starting from September 2007. It is expected that the relocation will be completed by the end of 2007.

As a result of the mismatch of the progress of the relocation and disposal of Chengdu Kelon with the infrastructure and commencement of operation of the new factory, in order to accelerate the re-operation progress for ensuring large scale production in the peak season, and adapting to the related requirements of the preferential policies of the Eastern reconstruction of Chengdu city, while the Company carried out its relocation and disposal work of the old factory of Chengdu Kelon, the Company also registered and established a new company, Chengdu Hisense, in order to commence the preparation of the infrastructure, land requisition and preliminary work of the new factory so that the progress of the establishment of the infrastructure can be greatly accelerated .

In order to concentrate the resources of the Company on the construction of the western home-appliances production base, after considering the consequential development of Chengdu Kelon and Chengdu Hisense, the Company decided to transfer the current useable assets and all indebtedness of Chengdu Kelon to Chengdu Hisense by means of selling and third party transfer. After completion of the assets disposal, Chengdu Hisense will cease operation. The registered capital of Chengdu Hisense will be increased to RMB200,000,000 and the existing employees of Chengdu Kelon will be re-signing their employment contracts with Chengdu Hisense based on their own will. After completion of all the abovementioned procedures, the Company will deregister Chengdu Kelon in compliance with the related rules and regulations. Since all the indebtedness of Chengdu Kelon will be transferred to Chengdu Hisense, there will not be any legal issue at present. The board of directors considers that the mode adopted by the Company will not increase the loss caused by the relocation of Chengdu Kelon.

The assets of Chengdu Kelon for the intended disposal primarily include fixed assets and land use rights, the specific details of which are set out in the following table:

Unit: RMB (Yuan)

3

Number	Category of property	Original value	Net value (30 June 2007)
I	Plant and its affiliate facilities	81,873,048.80	46,034,414.58
II	Production equipment	2,539,487.03	500,511.32
III	Electronic equipment and office fixtures	1,640,097.40	238,157.37
IV	Moulds	13,964,169.00	1,019,398.06
Sub-total		100,016,802.23	47,792,481.33
V	Land use rights	30,668,332.81	19,227,506.29
Total:		130,685,135.04	67,019,987.62

For the purpose of relocation, the plant and its ancillary facilities will be discarded and removed, the production equipment, electronic equipment and office fixtures and others will be sold by way of tender. After the change of functions of the land (from industry purpose to commercial purpose), the land will be sold by tender through Chengdu City Land Bidding Center. The land was located in the yard of Chengdu Shuangqiaozi Chengfa Group, with an area of 67,298.18 square meters(including the second category house land programmed by the government of 52,877.18 square meters, elderly house land of 5,329 square meters and greenland of 9,092 square meters).

The Company has appointed qualified related securities and futures valuation institution to conduct valuation of such land use right . On 29 August 2007, the board of directors of the Company considered and passed the “Resolution on the Relocation, Expansion and Technical Improvement of Kelon’s Western Home Appliance Production Base”,and authorised the management of the Company to implement the overall planning, assets disposal plan and investment plan in relation to the relocation, expansion and technical improvement of Kelon’s western home appliance production base . This resolution is subject to the approval of the shareholders in the general meeting of the Company.

Ⅱ The related information of Chengdu Hisense and construction of the new base

( Ⅰ ) The related information of Chengdu Hisense

4

1. Consideration of the board of directors

On 1 March 2007, the Company held the meeting of the board of directors to consider and approve the investment of the sum of RMB 3,750,000 to establish Chengdu Hisense Refrigerator Co., Ltd with its wholly owned subsidiary, Pearl River Refrigerator. Pearl River refrigerator would invest the sum of RMB 1,250,000.

2. Particulars of Chengdu Hisense’s Incorporation

Hisense (Chengdu) Refrigerator Co. was incorporated in Chengdu Economic and Technological Development Zone on 28 March 2007 with a registered capital of RMB 5,000,000 (Paid-up capital: RMB 1,994,400). Registered address: No. 18 Xing Guang Zhong Road, Chengdu Economic and Technological Development Zone. Legal Representative: Wang Shi Lei. Scope of business: manufacturing and trading of household electrical appliances and refrigeration equipment and provision of after-sales services.

3. Particulars of Chengdu Hisense's Articles of Association

As the shareholders of Chengdu Hisense, the Company and Pearl River Refrigerator prepared and signed Chengdu Hisense's articles of association on 1 March 2007, which was approved and passed by the Economic and Trade Commission of Longquanyi District Chengdu City.

Pursuant to the relevant laws and regulations, Chengdu Hisense’s articles of association regulated its mission, scope of business, total investments, registered capital, organization, finance and accounting. Save as aforesaid, Chengdu Hisense’s articles of association required the following:

(1) Chengdu Hisense’s production capacity: in accordance with it's the sales conditions in the market, Chengdu Hisense strives for the annual production capacity with 1,000,000 sets in two years.

(2) Chengdu Hisense sells its products to both the domestic and overseas markets, but its production should meet the demands for the sales of the Company and its associated companies with priority.

5

(3) Hisense Group agreed Chengdu Hisense to use “Hisense” registered trademark and issued supporting documents, but its shareholders should assure that Chengdu Hisense should meet the requirements of the rules and regulations regarding the materials, quality, managing standard of the Hisense and the Company during the course of its operation, failing which, Chengdu Hisense will not be allowed to use “Hisense” registered trademark. Since the Company ceased to be the controlling shareholder of Chengdu Hisense, the license granted by Hisense Group to Chengdu Hisense to use the “Hisnese” registered trademark should be automatically terminated, and the joint venture parties should timely perform the procedures regarding the change of the company name .

1. Particulars of the construction of the Company's western household appliance production base

The Company will invest the total sum of RMB350 million in Kelon’s Western Household Appliance Production Base ( including the relocation, expansion and technological improvement of Chengdu Kelon), among which, RMB 300 million will be used on fixed assets such as land, plant construction, equipment and RMB50 million will be used as working capital. The registered capital of the new company is RMB 200 million. The project investment will be made by two phases, namely RMB140 million on investment in fixed assets in the first phase and RMB160 million on investment in fixed assets in the second phase. It is estimated that it will have an annual capacity of 1.50 million sets of refrigerators and freezers after completion of the project. It is estimated that the annual sales revenues will exceed RMB1.2 billion and the annual tax payment will exceed RMB20 million after the project coming onto stream. It is estimated that that it will have an annual capacity of 700,000 sets of refrigerators and freezers after completion of the first phase of the project .It is estimated that the annual sales revenues will exceed RMB0.6 billion while the annual tax payment will exceed RMB10 million after the project coming onto stream. Following the completion of the above-mentioned investments, Chengdu Hisense will become the Company's important production base in Western China.

Pursuant to the Project Construction Agreement entered between the Company and the Administration Committee of Chengdu Economic & Technological Development Zone and the People's Government of Longquanyi District, Chengdu City, , the Administration Committee of Chengdu Economic & Technological Development Zone and the People's Government of Longquanyi District, Chengdu City shall provide the Company with land in net area of approximately 259 mu at a price of RMB84000 per mu. The land where

6

the Company is located is for industrial purpose and the land use right is transferred for a term of 50 year. The land for the first phase project is finally fixed at 190.697 mu (net size). Pursuant to the provisions in the Project Construction Agreement, the investment intensity shall not be less than one million Renminbi per mu, and therefore the first phase investment on fixed assets is adjusted to RMB190 million accordingly.

Chengdu Hisense has paid the consideration for the land in two installments at the price of RMB 84000 per mu on 5 December 2006 and 22 June 2007, respectively, totaling RMB16,018,548. Meanwhile, the relevant registration filing have been made to the Administration Bureau of Land and Resources for approval. Up to date, the relevant registration procedure are in the course of being handled.

III. Other arrangement in relation to this matter

Chengdu production base has an important strategic position in the production outlets of the Company. However, with the continuous improvement of the standard of market demand in recent years, the technology and technical level of the previous equipment of Chengdu Kelon were difficult in meeting the market demand, which requires technological upgrade and capacity construction to improve its production level. The Company takes the opportunity of the relocation of Chengdu Kelon to increase its cash flow and revenues through the disposal of assets in order to finance the procurement of new equipments, the technological upgrade and the expansion of capacity, and conducts technological upgrade and capacity construction while implements the relocation.

The planning of the Kelon’s Western Household Appliance Production Base is a forward-looking plan and has taken into account the requirements of the long-term development of the Company and is in the long-term interest of the Company.

The Company cannot yet ascertain whether there will be any connected transaction between Chengdu Hisense and the related parties of Hisense. In case of any connected transaction to be conducted, the Company will strictly perform the approval procedures and information disclosure responsibility in accordance with the relevant regulations. The connected transactions will be conducted on normal commercial terms and on terms not less favorable than that may be obtained or provided by any independent third party and will not damage the interest of the Company.

Chengdu Hisense is a wholly-owned subsidiary of the Company, mainly engages in the manufacturing, sales and after-sales services of the products of the Company. The use

7

of the Hisense trademark will not cause any influence on the sale of the Company’s products and the everyday operation of the Company. Chengdu Hisense was authorized by Hisnese to use the “Hisense” trademark at no costs and no fees or legal dispute will be triggered, Therefore, the board of directors considers that the interest of the Company will not be damaged without using the “Kelon” trademark.

IV. Influences regarding the matter

1. Effect of the disposal of assets on the Company

Due to relocation, the plants and ancillary facilities shall be retired and dismantled. Certain production facilities, electronic equipment and office facilities and models and others which do not match with the plant structure and the technical layout in the new plant shall also be disposed by tendering. As at 30 June 2007, the net book values of such assets pending for disposal were approximately RMB 47,792,500, representing estimated disposal losses of RMB 44,000,000 when comparing with the above net book values.

The land use rights of Chengdu Kelon will be transferred by way of auction. The Company has appointed Sichuan Huaheng Assets Appraisal Co., Ltd, which is qualified for securities appraisal, to conduct valuation on the land, the land valuation date is 30 June 2007, the appraisal value is RMB277, 686,100 (market price after deducting the land use rights premium difference for the auction and the auction fees) . The Company shall dispose of the above land use rights by auction at a price not less than the appraised market value.

Deducting the net book value of the land of RMB19,230,000 and other relevant taxation and expenses and the loss of disposing the above-mentioned plant and its affiliate facilities, production equipment, Electronic equipment and office fixtures and mould in the sum of RMB44,000,000, the overall net earnings is expected to be increase of not less than RMB190,000,000.

2. Estimated influences of company’s deregistration

In comparison, the jurisdiction under which Chengdu Hisense operates have obvious advantages in respect of taxation policies and energy cost expenses. Pursuant to the Company's plan, Chengdu Hisense will completely meet the needs of the development

8

of the western markets of the Company after its completion and commencement of production. In order to optimize the Company's resources configuration, the Company shall deregister Chengdu Kelon according to the relevant procedures stipulated by laws. Since all the indebtedness of Chengdu Kelon will be transferred to Chengdu Hisense, therefore there will not be any legal concern. It is estimated that the deregistration of Chengdu Kelon will have no adverse effect on the Company.

3. Expected effects of the construction of production base

All the funds for the construction of Kelon’s western home appliance production base will be from the gains on disposal of assets of Chengdu Kelon, which will not result in any pressure on the capital of the Company.

1. Estimated effects of production bases relocation and expansion project on the Company

The Company will make use of the relocation of Chengdu Kelon to dispose of its assets and increase its cash flow and earnings and will be as the capital resources for the acquisition of new equipment, technological reforms and expansion in production capacity. After the relocation in the Chengdu Economic and Technological Development Zone, the Company will also enjoy various preferential policies in the state-level Economic and Technological Development Zone. Therefore, the relocation of the production bases and expansion project will further optimize the Company’s resources allocation and enhance its competitiveness in the western regions.

Suspension of Trading in H Shares

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

Hisense Kelon Electrical Holdings Company Limited Tang Yeguo

Chairman

Foshan City, Guangdong, the PRC, 29 August, 2007

As at the date of this announcement, the Company’s directors 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 the Company’s independent non-executive directors are Mr. Zhang Sheng Ping, Mr. Lu Qing and Mr. Cheung Yui Kai, Warren.

9