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

May 25, 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.

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 TRANSACTION

The Board is pleased to announce that on 13 May 2007, the Company entered into i) the Land Use Rights Transfer Agreement I and the Supplemental Land Use Rights Transfer Agreement with Purchaser I to dispose of the land use rights of the Land and the factories erected thereon for a consideration of RMB91,200,000; and ii) the Land Use Rights Transfer Agreement II with Purchaser II to dispose of the land use rights of the Home Appliance Company Zone and the factories erected thereon for a consideration of RMB29,000,000.

The Board is pleased to announce that on 14 May 2007, the Company or Kelon Air-Conditioning (as the case may be) entered into iii) the Land Use Rights Transfer Agreement III with Purchaser III to dispose of the land use rights of the Beach Warehouse Zone for a consideration of RMB17,338,300; and iv) the Land Use Rights Transfer Agreement IV with Purchaser IV to dispose of the land use rights of the Marketing Building and the building erected thereon for a consideration of RMB5,438,000.

Taking into account the similarities of land use and that the disposals were all carried out in May 2007, the land disposals of the Company under the Land Use Rights Transfer Agreements are aggregated for the purpose of Rules 14.22 and 14.23 of the Listing Rules. Since the consideration ratio of the aggregated land disposals is more than 5% but less than 25% and each of the other applicable percentage ratios as defined in Chapter 14 of the Listing Rules is less than 25%, the land disposals constitute 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 Land Use Rights Transfer Agreements will be despatched to the Shareholders of the Company in accordance with the requirements under the Listing Rules as soon as practicable.

LAND USE RIGHTS TRANSFER AGREEMENT I

The Board is pleased to announce that on 13 May 2007, the Company entered into Land Use Rights Transfer Agreement I with Purchaser I to dispose of the land use rights of the Land and the factories erected thereon for a consideration of RMB91,200,000.

Date

13 May 2007

1

Parties

• (1) The Company, as the vendor; and

• (2) Purchaser I, as the purchaser.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, Purchaser I and the ultimate beneficial owner of Purchaser I are third parties independent of the Company and connected parties (as defined in the Listing Rules) of the Company.

Subject of Disposal

Pursuant to the Land Use Rights Transfer Agreement I, the Company has agreed to sell and Purchaser I has agreed to acquire the land use rights of the Land and the factories erected thereon.

Consideration

The consideration for the Land Disposal is RMB91,200,000 and was paid/is payable by Purchaser I in the following manners:

• (1) The sum of RMB9,120,000 was paid by Purchaser I to the Company on the date of signing the Land Use Rights Transfer Agreement I, i.e. 13 May 2007;

• (2) The sum of RMB36,480,000 to be paid by Purchaser I to the Company within 30 days from the date of signing of the Land Use Rights Transfer Agreement I, i.e. on or before11 June 2007;

• (3) The sum of RMB22,800,000 to be paid by Purchaser I to the Company within 3 days of the completion of the transfer procedures of the Land Disposal; and

• (4) The sum of RMB22,800,000 to be paid by Purchaser I to the Company on the date of the hand over of the Land and the factories erected thereon.

The Land Disposal was carried out by way of public auction conducted by the Company on 13 May 2007 at a floor price of RMB88,801,000, being the appraised value of the Land and the factories erected thereon as at 3 August 2006 appraised by Zhong Yi Land and Real Estate Appraisal Co., Ltd of Shungde District, Foshan City, which is a third party independent of the Company and its connected person as defined in the Listing Rules. Purchaser I was the highest bidder in the public auction.

A public auction was held by the Company with an intention to ensure that the Land Disposal was carried out in a fair manner and the land use rights of the Land and the factories thereon would be sold to the highest bidder.

As approved by the Board in November 2006 (please refer to the announcement of the Company dated 10 November 2006 for details), the Land Disposal will be made at a price not less than the appraised value of the Land and the factories erected thereon as at 3 August 2006. Therefore, the floor price for the public auction for the Land Disposal was set by the Company as RMB88,801,000.

Major Terms

• (1) In the event that Purchaser I fails to pay the consideration in accordance with the Land Use Rights Transfer Agreement I or propose to terminate the Land Use Rights Transfer Agreement I after the signing of the Land Use Rights Transfer Agreement I, the Company will treat the

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payments made by Purchaser I as compensation and will not return any payments already made by Purchaser I. In the event that the Company breaches any terms of the Land Use Rights Transfer Agreement I, it should give written notice to Purchaser I and shall repay to Purchaser I twice the amount of the payments already made by Purchaser I (excluding interests) within 10 days of the breach.

• (2) The hand over of the Land and the factories erected thereon shall be made by the Company to Purchaser I on or before 15 December 2007.

SUPPLEMENTAL LAND USE RIGHTS TRANSFER AGREEMENT

Date

13 May 2007

Parties

• (1) The Company; and

• (2) Purchaser I.

Major Terms

• (1) The Supplemental Land Use Rights Transfer Agreement is supplemental to the Land Use Rights Transfer Agreement I.

• (2) Purchaser I agreed to pay the Moving Fees to the Company as moving fees for moving the machinery, equipment, tools, raw materials and stock in the factories erected on the Land to other areas. The Moving Fees was paid/payable by Purchaser I to the Company in the following manners:

• (i) the sum of RMB5,000,000 was paid by Purchaser I to the Company on the date of signing the Supplemental Land Use Rights Transfer Agreement, i.e. on 13 May 2007;

• (ii) the sum of RMB20,000,000 to be paid by Purchaser I to the Company within 3 days after the change of land use of the Land from industrial use to commercial and residential use; and

• (iii) The sum of RMB25,000,000 to be paid by Purchaser I to the Company on the date of the hand over of the Land and the factories erected thereon.

• (3) In the event that the government makes any compensation or payment to the Company to move the factories erected on the Land to other areas after payment of the Moving Fees by Purchaser I, the Company shall repay the Moving Fees to Purchaser I. If the compensation or payment made by the government to the Company is less than RMB50,000,000, the Company only have to repay the sum equivalent to the amount of the said compensation or payment to Purchaser I.

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INFORMATION OF THE LAND

The Land comprises six parcels of land located at Shunde District, Foshan City, the PRC, details of which are as follows:

				Area of
				the factory
				erected		Remaining
No.	Location	Document No.	Area	thereon	Use	term of use
			(m2)	(m2)
1.	22 & 24, Rongxin Road,	Yue Fang Di Chan	19,234.1	22,474.5	Industrial	37 years
	Zhenhua Residents’ Committee,	Zheng Zi No. C1570584
	Ronggui Street Office,
	Shunde District, Foshan City
2.	71 Zhenhua Road,	Yue Fang Di Chan	25,760	13,198.6	Industrial	37 years
	Zhenhua Residents’ Committee,	Zheng Zi No. C1150996
	Ronggui District, Shunde City
3.	120 Ronggui Road North,	Yue Fang Di Chan	11,419.1	29,157.6	Industrial	37 years
	Weihong Residents’ Committee,	Zheng Zi No. C1485751
	Ronggui Street Office,
	Shunde District, Foshan City
4.	6 Huanxin Road,	Yue Fang Di Chan	2,713.7	6,807.6	Industrial	37 years
	Weihong Residents’ Committee,	Zheng Zi No. C1485750
	Ronggui Street Office,
	Shunde District, Foshan City
5.	129 Ronggui Road North,	Yue Fang Di Chan	5,575.6	11,043.6	Industrial	37 years
	Weihong Residents’ Committee,	Zheng Zi No. C1159414
	Ronggui Street Office,
	Shunde District, Foshan City
6.	1 & 2 Huanxin Road,	Yue Fang Di Chan	5,021.1	11,007.8	Industrial	37 years
	Chaoyang Residents’ Committee,	Zheng Zi No. C1113583
	Ronggui District, Shunde City

The above six parcels of land had been mortgaged. The mortgagee of land nos. 4 and 6 was Shunde Ronggui Rural Credit Cooperative. The mortgagees of land nos. 1 to 3 and 5 were Bank of China Foshan Branch and Bank of China Foshan Shunde Ronggui Sub-branch. The Land Disposal is subject to the consent of the mortgagees of the Land. The Company is in the course of obtaining consent from the mortgagees. It is the current intention of the Company that the mortgage will be fully paid up by the Company by using its internal resources or the proceeds from the disposal or by charging other assets of the Company to the mortgagee on or before completion of the disposal, depending on the negotiations between the mortgagees and the Company.

The Land was used as factories and staff quarters by the Company. After the Land Disposal, the factories erected thereon will be relocated to other areas of the Company. Since the Company has made sufficient preparation before such relocation, such as choosing a suitable new location for the factories, it is therefore estimated by the Company that the relocation of the factories to other areas will not cause any material impact to the operation of the Company.

No net profit (both before and after taxation and extraordinary items) was attributable to the Land and the factories erected thereon in the 2005 and 2006 financial years.

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The audited value of the Land and the factories erected thereon in the financial statements of the Group as at 31 December 2006 was RMB25,283,560.55. The net book value of the Land and the factories erected thereon as at 31 March 2007 was RMB24,179,728.49. When comparing the total consideration for the Land Disposal, i.e. RMB141,200,000, with the net book value of the Land and the factories erected thereon as at 31 December 2006, i.e. RMB25,283,560.55, there is a premium of value of RMB115,916,439.45.

After the payment of relevant taxes and expenses of the Land Disposal (including business tax, land appreciation tax and dyke levy) by the Company in the approximate total sum of RMB8,712,040, the Company is expected to obtain a gain for the Land Disposal in the approximate sum of RMB107,204,399.

LAND USE RIGHTS TRANSFER AGREEMENT II

The Board is pleased to announce that on 13 May 2007, the Company entered into the Land Use Rights Transfer Agreement II with Purchaser II to dispose of the land use rights of the Home Appliance Company Zone and the factories erected thereon for a consideration of RMB29,000,000.

Date

13 May 2007

Parties

• (1) The Company, as the vendor; and

• (2) Purchaser II, as the purchaser.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, Purchaser II and the ultimate beneficial owner of Purchaser II are third parties independent of the Company and connected parties (as defined in the Listing Rules) of the Company.

Subject of Disposal

Pursuant to the Land Use Rights Transfer Agreement II, the Company has agreed to sell and Purchaser II has agreed to acquire the land use rights of the Home Appliance Company Zone and the factories erected thereon.

Consideration

The consideration for the disposal under the Land Use Rights Transfer Agreement II is RMB29,000,000 and was paid/is payable by Purchaser II in the following manners:

• (1) The sum of RMB2,900,000 was paid by Purchaser II to the Company on the date of signing the Land Use Rights Transfer Agreement II, i.e. 13 May 2007;

• (2) The sum of RMB11,600,000 to be paid by Purchaser II to the Company within 30 days from the date of signing of the Land Use Rights Transfer Agreement II, i.e. on or before 11 June 2007; and

• (3) The sum of RMB14,500,000 to be paid by Purchaser II to the Company on the day of the completion of the transfer procedures of the land disposal.

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The land disposal was carried out by way of public auction conducted by the Company on 13 May 2007 at a floor price of RMB26,119,000, being the appraised value of the Home Appliance Company Zone and the factories erected thereon as at 11 May 2007 appraised by Guangdong Zhongguangxin Assets Appraisal Co., Ltd, which is a third party independent of the Company and its connected person as defined in the Listing Rules. The Company considers that such latest appraisal value represents the estimated fair market value of the land and therefore apply it as the floor price for the purpose of the auction. Purchaser II was the highest bidder in the public auction.

A public auction was held by the Company with an intention to ensure that the land disposal was carried out in a fair manner and the land use rights of the Home Appliance Company Zone and the factories thereon would be sold to the highest bidder.

Major Terms

• (1) In the event that Purchaser II fails to pay the consideration in accordance with the Land Use Rights Transfer Agreement II or propose to terminate the Land Use Rights Transfer Agreement II after the signing of the Land Use Rights Transfer Agreement II, the Company will treat the payments made by Purchaser II as compensation and will not return any payments already made by Purchaser II. In the event that the Company breaches any terms of the Land Use Rights Transfer Agreement II, it should give written notice to Purchaser II and shall repay to Purchaser II twice the amount of the payments already made by Purchaser II (excluding interests) within 10 days of the breach.

• (2) The Company has entered into tenancy agreements with a term from 18 December 2006 to 17 December 2011 for leasing part of the buildings on the Home Appliance Company Zone. After transferring the land use rights of Home Appliance Company Zone and the factories thereon, Purchaser II shall continue to perform such tenancy agreements. Before making full payment of the consideration by Purchaser II, the rental incomes under the tenancy agreements will be received and owned by the Company. Such rental incomes will be received and owned by Purchaser II after its full payment of the consideration. In the event that the Company has to compensate the existing tenants due to Purchaser II’s request to terminate the agreement, Purchaser II shall indemnify the Company in the same amount of its loss.

• (3) The Company has maintained a chemical warehouse on the Home Appliance Company Zone with a site area of approximately 1,000 sq.m. and a gross floor area of approximately 898 sq.m.. The Company shall take sole full responsibility for the production safety and day-today management of the chemical warehouse as well as the compliance with the relevant requirements of the state environmental regulations of the PRC. Purchaser II shall not responsible for the safety and liability relating to chemical warehouse. The Company undertakes that, in the event of any liability issue occurring in the chemical warehouse, the Company shall solely be liable for all damages to the Company and Purchaser II shall take no responsibility.

LAND USE RIGHTS TRANSFER AGREEMENT III

The Board is pleased to announce that on 14 May 2007, Kelon Air-Conditioning entered into the Land Use Rights Transfer Agreement III with Purchaser III to dispose of the land use rights of the Beach Warehouse Zone for a consideration of RMB17,338,300.

Date

14 May 2007

6

Parties

• (1) Kelon Air-Conditioning, as the vendor; and

• (2) Purchaser III, as the purchaser.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, Purchaser III and the ultimate beneficial owner of Purchaser III are third parties independent of Kelon Air-Conditioning and connected parties (as defined in the Listing Rules) of the Company.

Subject of Disposal

Pursuant to Land Use Rights Transfer Agreement III, Kelon Air-Conditioning has agreed to sell and Purchaser III has agreed to acquire the land use rights of the Beach Warehouse Zone.

Consideration

The consideration for the disposal under the Land Use Rights Transfer Agreement III is RMB17,338,300and was paid/is payable by Purchaser III in the following manners:

• (1) The sum of RMB1,733,830 was paid by Purchaser III to Kelon Air-Conditioning on the date of signing the Land Use Rights Transfer Agreement III, i.e. 14 May 2007;

• (2) The sum of RMB6,935,320 to be paid by Purchaser III to Kelon Air-Conditioning within 40 days from the date of signing of the Land Use Rights Transfer Agreement III, i.e. on or before 22 June 2007;

• (3) The sum of RMB4,334,575 to be paid by Purchaser III to Kelon Air-Conditioning within three days of the completion of the transfer procedures of the Beach Warehouse Zone; and

• (4) The sum of RMB4,334,575 to be paid by Purchaser III to Kelon Air-Conditioning on the date of the hand over of the Beach Warehouse Zone.

The land disposal was carried out by way of public auction conducted by Kelon Air-Conditioning on 14 May 2007 at a floor price of RMB14,610,000, being the appraised value of the Beach Warehouse Zone as at 11 May 2007 appraised by Guangdong Zhongguangxin Assets Appraisal Co., Ltd, which is a third party independent of Kelon Air-Conditioning and its connected person as defined in the Listing Rules. The Company considers that such latest appraisal value represents the estimated fair market value of the land and therefore apply it as the floor price for the purpose of the auction. Purchaser III was the highest bidder in the public auction.

A public auction was held by Kelon Air-Conditioning with an intention to ensure that the land disposal was carried out in a fair manner and the land use rights of the Beach Warehouse Zone would be sold to the highest bidder.

Major Term

In the event that Purchaser III fails to pay the consideration in accordance with the Land Use Rights Transfer Agreement III or propose to terminate the Land Use Rights Transfer Agreement III after the signing of the Land Use Rights Transfer Agreement III, Kelon Air-Conditioning will treat the payments made by Purchaser III as compensation and will not return any payments already made by Purchaser III. In the event that the Kelon Air-Conditioning breaches any terms of the Land Use Rights Transfer Agreement III, it should give written notice to Purchaser III and shall repay to Purchaser III twice the amount of the payments already made by Purchaser III (excluding interests) within 10 days of the breach.

7

LAND USE RIGHTS TRANSFER AGREEMENT IV

The Board is pleased to announce that on 14 May 2007, the Company entered into the Land Use Rights Transfer Agreement IV with Purchaser IV to dispose of the land use rights of the Marketing Building and the buildings erected thereon for a consideration of RMB5,438,000.

Date

14 May 2007

Parties

• (1) The Company, as the vendor; and

• (2) Purchaser IV, as the purchaser.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, Purchaser IV and the ultimate beneficial owner of Purchaser IV are third parties independent of the Company and connected parties (as defined in the Listing Rules) of the Company.

Subject of Disposal

Pursuant to the Land Use Rights Transfer Agreement IV, the Company has agreed to sell and Purchaser IV has agreed to acquire the land use rights of the Marketing Building and the buildings erected thereon.

Consideration

The consideration for the disposal under the Land Use Rights Transfer Agreement IV is RMB5,438,000 and was paid/is payable by Purchaser IV in the following manners:

• (1) The sum of RMB538,800 was paid by Purchaser IV to the Company on the date of signing the Land Use Rights Transfer Agreement IV, i.e. 14 May 2007;

• (2) The sum of RMB2,744,000 to be paid by Purchaser IV to the Company within 30 days from the date of signing of the Land Use Rights Transfer Agreement IV, i.e. on or before 12 June 2007; and

• (3) The sum of RMB2,155,200 to be paid by Purchaser IV to the Company on the day of the completion of the transfer procedures of the land disposal.

The land disposal was carried out by way of public auction conducted by the Company on 14 May 2007 at a floor price of RMB5,407,000, being the appraised value of the Marketing Building and the buildings erected thereon as at 11 May 2007 appraised by Guangdong Zhongguangxin Assets Appraisal Co., Ltd, which is a third party independent of the Company and its connected person as defined in the Listing Rules. The Company considers that such latest appraisal value represents the estimated fair market value of the land and therefore apply it as the floor price for the purpose of the auction. Purchaser IV was the highest bidder in the public auction.

A public auction was held by the Company with an intention to ensure that the land disposal was carried out in a fair manner and the land use rights of the Marketing Building and the buildings thereon would be sold to the highest bidder.

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Major Terms

• (1) In the event that Purchaser IV fails to pay the consideration in accordance with the Land Use Rights Transfer Agreement IV or propose to terminate the Land Use Rights Transfer Agreement IV after the signing of the Land Use Rights Transfer Agreement IV, the Company will treat the payments made by Purchaser IV as compensation and will not return any payments already made by Purchaser IV. In the event that the Company breaches any terms of the Land Use Rights Transfer Agreement IV, it should give written notice to Purchaser IV and shall repay to Purchaser IV twice the amount of the payments already made by Purchaser IV (excluding interests) within 10 days of the breach.

• (2) The Company has entered into 13 tenancy agreements with 13 parties for leasing part of the buildings on the Marketing Building. After transferring the land use rights of the Marketing Building and the buildings thereon, Purchaser IV shall continue to perform such tenancy agreements. Before making full payment of the consideration by Purchaser IV, the rental incomes under the tenancy agreements will be received and owned by the Company. Such rental incomes will be received and owned by Purchaser IV after its full payment of the consideration. In the event that the Company has to compensate the existing tenants due to Purchaser IV’s request to terminate the agreement, Purchaser IV shall indemnify the Company in the same amount of its loss.

• (3) The Company shall continue to use the outdoor billboard on the roof of the building on the Marketing Building until 31 December 2007. In the event that the Company intends to lease the same area from Party IV for outdoor advertisement, the Company shall be entitled to the preferential rights to lease such area at a favorable price not higher than 80% of the prevailing regular market price.

INFORMATION OF HOME APPLIANCE COMPANY ZONE, BEACH WAREHOUSE ZONE AND MARKETING BUILDING

Home Appliance Company Zone Beach Warehouse Zone Marketing Building Title document number Yue Fang Di Zheng Zi Yue Fang Di Zheng Zi Yue Fang Di Zheng Zi No.C0232640 No.C0005412 No.C1150997 Expiry date of 9 September 2046 15 July 2047 22 September 2047 land use rights Use Industrial Industrial Industrial Location No.27 Rongqi Avenue, Nanchong Industrial Park, No.2 Fengye Road, Desheng Residents’ Committee, Nanjiang Village’s Committee, Desheng Residents’ Committee, Ronggui Street Office, Daliang Street Office, Ronggui Street Office, Shunde District Shunde District Shunde District Mortgagee Foshan City, Shunde branch of Foshan Branch and Ronggui Agricultural Cooperative Industrial and Commercial Bank Foshan Shunde Ronggui Branch Community of Shunde of China Limited of Bank of China Site area (square metre) 21,956.76 14,570 700.00 Floor area (square metre) 24,335.58 8,496.7 5,013.00

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Audited book value	23,725,487.00	6,948,784.9	3,828,685.39
(as at 31 December 2006)
(RMB)
Net profit before taxation	Nil	Nil	Nil
and extraordinary items
for the year ended
31 December 2005_(RMB)_
Net profit before taxation	Nil	Nil	43,420.03
and extraordinary items
for the year ended
31 December 2006_(RMB)_
Net profit after taxation	Nil	Nil	Nil
and extraordinary items
for the year ended
31 December 2005_(RMB)_
Net profit after taxation	Nil	Nil	27,889.35
and extraordinary items
for the year ended
31 December 2006_(RMB)_
Premium of value	5,274,513	10,389,515.1	1,609,314.61
of the disposal_(RMB)_	(when comparing the	(when comparing the	(when comparing the
	consideration, i.e. RMB29,000,000	consideration, i.e. RMB17,338,300	consideration, i.e. RMB5,438,000
	with its audited book value	with its audited book value	with its audited book value
	as at 31 December 2006,	as at 31 December 2006,	as at 31 December 2006,
	i.e. 23,725,487)	i.e. 6,948,784.9)	i.e. 3,828,685.39)
Relevant taxes and	1,789,300	1,069,773	335,524.61
expenses of the disposal
(including business tax,
land appreciation tax and
dyke levy)(RMB)
Gain for the disposal	3,485,213	9,319,742	1,273,790
(RMB)	(deducting the relevant	(deducting the relevant	(deducting the relevant
	expenses and taxes,	expenses and taxes,	expenses and taxes,
	i.e. 1,789,300, from the premium	i.e. 1,069,773, from the premium	i.e. 335,524.61, from the premium
	of value of the disposal,	of value of the disposal,	of value of the disposal,
	i.e. 5,274,513)	i.e. 10,389,515.1)	i.e. 1,609,314.61)

The Board approved to put the Home Appliance Company Zone, Beach Warehouse and the Marketing Building and the buildings or factories thereon for public auction on 13 May 2007.

The disposal of the Home Appliance Company Zone, Beach Warehouse and the Marketing Building and the buildings or factories thereon is subject to the consent of their respective mortgagees. The Company is in the course of obtaining consent from such mortgagees. It is the current intention of the Company that the mortgage of the Home Appliance Company Zone, Beach Warehouse and the Marketing Building and the buildings or factories thereon will be fully paid up by the Company by using its internal resources or the proceeds from the disposal or by charging other assets of the Company to the mortgagees on or before completion of the disposal, depending on the negotiations between the mortgagees and the Company.

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The Company is of the view that the disposal of the Home Appliance Company Zone, Beach Warehouse and the Marketing Building and the buildings or factories thereon will not have any material impact to the operation of the Company since such lands are non-core assets of the Company and the Company did not have much operation thereon. Furthermore, the purchasers have agreed to honour the tenancy agreements regarding such lands after the disposal.

REASONS FOR AND BENEFITS OF THE LAND USE RIGHTS TRANSFER AGREEMENTS

The Company is principally engaged in the manufacture and sales of refrigerators and air-conditioners. The Land, the Home Appliance Company Zone, the Beach Warehouse Zone, the Marketing Building and the factories and buildings erected thereon are non-core assets of the Company. The disposals under the Land Transfer Rights Agreements are an initiative by the Company to dispose of its noncore assets so that the maintenance costs to be incurred by the Company in maintaining its non-core assets can be reduced and thus enhancing its assets structure, which will facilitate the optimal utilization of the assets of the Company.

All of the net proceeds from the disposals under the Land Transfer Rights Agreements are (after payment of the relevant taxes and expenses for the Land Disposal), which is in the approximate total sum of RMB121,283,144, will be used for the repayment of part of the bank loans of the Company. This will help to lower the gearing ratio of the Company and further improve the operating conditions of the Company since the liabilities of the Company will be reduced. The credit and image of the Company will also be enhanced.

The Directors (including the independent non-executive Directors) consider that the disposals under the Land Transfer Rights Agreements are beneficial to the Company and the Shareholders as a whole and the terms and conditions in the Land Use Rights Transfer Agreements are fair and reasonable.

INFORMATION RELATING TO THE COMPANY

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

INFORMATION RELATING TO PURCHASER I

Purchaser I was incorporated in the PRC on 23 December 2002 and is principally engaged in real estate management, leasing of properties and provision of environmental greening engineering services.

INFORMATION RELATING TO PURCHASER II

Purchaser II was incorporated on 14 July 2006 and is principally engaged in investment in industrial property industry and tourism development industry.

INFORMATION RELATING TO PURCHASER III

Purchaser III consists of two natural persons or the registered company owned by them.

INFORMATION RELATING TO PURCHASER IV

Purchaser IV was incorporated on 9 August 2002 and is principally engaged in supply and marketing of goods and materials in the PRC (excluding restricted items and franchised, state controlled and monopolized merchandises), operating and acting as an agency of import and export business of various kinds of commodities and technologies (excluding commodities and technologies restricted by the PRC in operation or prohibited in import and export, and those involving licensing shall be operated under a valid license certificate).

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DISCLOSEABLE TRANSACTION

Taking into account the similarities of land use and that the disposals were all carried out in May 2007, the land disposals of the Company under the Land Use Rights Transfer Agreements are aggregated for the purpose of Rules 14.22 and 14.23 of the Listing Rules. Since the consideration ratio of the aggregated land disposal is more than 5% but less than 25% and each of the other applicable percentage ratios as defined in Chapter 14 of the Listing Rules is less than 25%, the land disposals constitute 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 Land Use Rights Transfer Agreements will be despatched to the shareholders of the Company in accordance with the requirements under the Listing Rules as soon as practicable.

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
“Beach Warehouse Zone”	A piece of land located at Nanchong Industrial Park, Nanjiang
	Village’s Committee, Daliang Street Office, Shunde District, the
	PRC
“Board”	The board of Directors
“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 current 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
“Home Appliance Company	A piece of land located at No.27 Rongqi Avenue, Desheng Residents’
Zone”	Committee, Ronggui City Office, Shunde District, the PRC
“Hong Kong”	The Hong Kong Special Administrative Region of the PRC
“Kelon Air-Conditioning”	Guangdong Kelon Air-conditioning Company Limited, a company
	incorporated in the PRC and is a Subsidiary of the Company
“Land”	The land located in Shunde District, Foshan City, the PRC,
	comprising six parcels of land set out in the section headed
	“INFORMATION OF THE LAND” in this announcement
“Land Disposal”	The disposal of the land use rights of the Land and the factories
	erected thereon from the Company to Purchaser I pursuant to the
	Land Use Rights Transfer Agreement I and the Supplemental Land
	Use Rights Transfer Agreement

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• “Land Use Rights Transfer Agreements”

• Land Use Rights Transfer Agreement I, Supplemental Land Use Rights Transfer Agreement, Land Use Rights Transfer Agreement II, Land Use Rights Transfer Agreement III and Land Use Rights Transfer Agreement IV

• “Land Use Rights Transfer Agreement I”

• The land use rights transfer agreement dated 13 May 2007 entered between the Company and Purchaser I to dispose of the land use rights of the Land and the factories erected thereon

• “Land Use Rights Transfer Agreement II”

• The land use rights transfer Agreement II dated 13 May 2007 entered between the Company and Purchaser II to dispose of the land use rights of the Home Appliance Company Zone and the factories erected thereon

• “Land Use Rights Transfer Agreement III”

• The land use rights transfer agreement III dated 14 May 2007 entered between Kelon Air-Conditioning and Purchaser III to dispose of the land use rights of the Beach Warehouse Zone

• “Land Use Rights Transfer Agreement IV”

• The land use rights transfer agreement III dated 14 May 2007 entered between the Company and Purchaser IV to dispose of the land use of Marketing Building and building thereon

• “Listing Rules”

Rules Governing the Listing of Securities on the Stock Exchange

• “Marketing Building”

• A piece of land located at No. 2 Fengye Road, Desheng Residents’ Committee, Ronggui City Office, Shunde District, the PRC

• “Moving Fees”

• The moving fees in the sum of RMB50,000,000 paid/ payable by the Purchaser I to the Company in accordance with the Supplemental Land Use Rights Transfer Agreement

• “PRC”

• The People’s Republic of China

• “Purchaser I” 佛山市順德區新振華房地產有限公司 (Foshan Shunde Xinzhenhua Property Investment Company), a company incorporated in the PRC

• “Purchaser II” 佛山市順德區泓科投資有限公司 (Hongke Investments Co., Ltd), a company incorporated in the PRC

• “Purchaser III” Two natural persons, comprising Zhou Dichang and Lv Zhihua or the registered company owned by them

• “Purchaser IV” 佛山市順德區濠鋼商貿有限公司 (Haogang Business & Trade Co., Ltd, a company incorporated in the PRC

• “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)

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“Supplemental Land Use Rights Transfer Agreement”

The Supplemental Land Use Rights Transfer Agreement dated 13 May 2007 entered between the Company and Purchaser I to dispose of the land use rights of the Land and the factories erected thereon

“%”

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 Guangdong Kelon Electrical Holdings Company Limited Tang Ye Guo Chairman

As at the date of this announcement, the Company’s directors are Mr. Tang Ye Guo, Ms. Yu Shu Min, Mr. Xiao Jian Lin and Mr. Lin Lan; 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, 23 May 2007

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

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