Medlive Technology Co., Ltd. — Capital/Financing Update 2008

Jul 31, 2008

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)

ANNOUNCEMENT

CONTINUING CONNECTED TRANSACTIONS

(DEPOSIT, LOAN AND DRAFT DISCOUNT SERVICES)

AND

MAJOR TRANSACTION

(DEPOSIT SERVICE)

Financial Services Agreement

The Company announces that on 31 July 2008, the Company and Hisense Finance entered into the Financial Services Agreement, pursuant to which Hisense Finance has agreed to provide the Group, through itself and/or any of its subsidiaries, with deposit services, loan services and draft discount services subject to the terms and conditions provided therein.

Listing Rules implications

Hisense Air-conditioning is a substantial shareholder of the Company, holding approximately 23.63% of the issued share capital of the Company. Hisense Group is an indirect holding company of Hisense Air-conditioning and Hisense Finance is a subsidiary of Hisense Group and is therefore an Associate of Hisense Air-conditioning. Therefore, Hisense Finance is a connected person (as defined under the Listing Rules) of the Company. Accordingly, the transactions contemplated under the Financial Services Agreement constitute continuing connected transactions of the Company under the Listing Rules and the maximum transaction amounts for the provision of deposit and loan services by Hisense Finance to the Group should

be aggregated for the purpose of Rules 14A.25 to 14A.27 of the Listing Rules.

As each of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) applicable to the aggregated amounts of the transactions for the provision of deposit, and loan and draft discount services by Hisense Finance to the Group contemplated under the Financial Services Agreement is more than 2.5%, such transactions are subject to the reporting, announcement and independent shareholders’ approval requirements set out in Rules 14A.45 to 14A.48 of the Listing Rules.

Further, the provision of deposit services under the Financial Services Agreement also constitutes the provision of financial assistance under Rule14.04(1)(e) of the Listing Rules. Since the consideration ratio for the provision for deposit services are more than 25%, it constitutes a major transaction (as defined under Chapter 14 of the Listing Rules) and is subject to the announcement and shareholders’ approval requirements under Chapter 14 of the Listing Rules. The provision of deposit services under the Financial Services Agreement also constitutes advance to an entity and is subject to the requirements under Rule 13.13 of the Listing Rules.

A circular containing, among others, further details of the Financial Services Agreement and the related annual caps, a letter from the independent board committee of the Company, and a letter from an independent financial adviser and the notice of the EGM will be despatched to the shareholders within 21 days after the publication of this announcement under Rule 14A.49 of the Listing Rules.

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 from 28 April 2005 to 10 May 2005, and has remained suspended since 10:00 a.m. on 16 June 2005, initially following various press releases regarding the investigation by the China Securities and Regulatory Commission on Greencool Technology Holdings Limited in connection with the possible misappropriation of funds of the Company. Greencool Technology Holdings Limited was then an indirect shareholder of the Company controlled by Mr. Gu Chu Jun, who was the then executive director and chairman of the Company and the controlling shareholder of Guangdong Greencool Enterprise Development Company Limited, the then single largest shareholder of the Company.

The Company has reviewed the relevant documents in relation to the suspension of trading of

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the H Shares, the events leading to such suspension and the actions taken by the Company and has submitted a resumption proposal to the Stock Exchange for review. The Company received a letter from the Stock Exchange dated 5 June 2008 agreeing that trading in the H shares of the Company be allowed to resume subject to the fulfilment of the conditions as set out in its letter to the satisfaction of the Stock Exchange prior to the resumption of trading in the H shares of the Company. Please refer to the announcement of the Company dated 6 June 2008 for details of such conditions.

INTRODUCTION

The Company announces that on 31 July 2008, the Company and Hisense Finance entered into the Financial Services Agreement, pursuant to which Hisense Finance has agreed to provide the Group, through itself and/or any of its subsidiaries, with deposit services, loan services and draft discount services subject to the terms and conditions provided therein.

FINANCIAL SERVICES AGREEMENT

Date

31 July 2008

Parties

(i) The Company; and

• (ii) Hisense Finance

Term

The term of the Financial Services Agreement is one year as effective from obtaining the approval by the independent shareholders at the EGM.

Conditions Precedent

The transactions under the Financial Services Agreement are subject to the approval of the independent shareholders at the EGM.

Major terms

• (1) The services to be provided by Hisense Finance to the Group include deposit services, loan services and draft discount services;

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• (2) Hisense Finance shall be appointed to provide financial services to the Group, subject to compliance with the terms and conditions of the Financial Services Agreement and the subsequent agreement of the terms and conditions by the parties thereto in relation to the provision of each particular service which shall be recorded in writing. The Group may however obtain financial services, including deposit services and loan services and draft discount services, from other financial institutions in addition to or instead of Hisense Finance, as it sees fit;

• (3) The interest rate payable for the Group’s deposits with Hisense Finance shall not be lower than the rate payable by normal commercial banks in the PRC for comparable deposits and such interest shall be payable by Hisense Finance on a quarterly basis by way of crediting cash into the deposit account of the Group. The terms for the provision of the deposit services by Hisense Finance to the Group shall be no less favourable than those of other normal commercial banks and financial institutions;

• (4) The interest rate charged for the loans provided to the Group by Hisense Finance shall not be higher than the rate charged by normal commercial banks in the PRC for comparable loans and such interest shall be payable by the Group to Hisense Finance on a monthly basis payable on the 20[th] day of each month. The terms for the provision of the loans by Hisense Finance to the Group shall be no less favourable than those of other normal commercial banks and financial institutions. Security over the assets of the Company may be provided by the Company to Hisense Finance in respect of the loan services rendered, depending on the then circumstances for the provision of the loan services;

• (5) Under the Financial Services Agreement, Hisense Finance will provide draft discount services to the Group which means that the Group is entitled to present bank drafts to Hisense Finance for payment before the maturity date of the bank drafts. In return, Hisense Finance will charge service fee from the Group for “cashing” the bank drafts. After the Group has discounted the bank drafts with Hisense Finance, such bank drafts will belong to Hisense Finance which has the right to present such bank drafts to the issuing banks for payment on their respective maturity dates.

The service fee payable by the Company for the draft discount services to be provided by Hisense Finance shall not be less favourable than the service fee charged by normal commercial banks in the PRC for providing comparable draft discount services.

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• (6) The Company will make payment for such interest and fees (if any) in accordance with the payment terms of the separate agreements for the provision of loans and draft discount services as might be entered into between the parties.

PROPOSED ANNUAL CAPS

Deposit Service

The Company currently expects that the maximum daily balance of the deposits placed by the Group with Hisense Finance at any time during the life of the Financial Services Agreement shall not exceed the cap of RMB 500,000,000 on any given day.

Such proposed cap has been determined based on (i) the historical cashflow figures of the Group; and (ii) the historical transaction figures for the deposit services provided by other financial institutions to the Group that the average monthly balance of the deposits placed by the Group with other financial institutions were RMB1,229,595,000, RMB402,216,000 and RMB282,135,000 for the three years ended 31 December 2005, 31 December 2006 and 31 December 2007, respectively; and (iii) the expected financial needs of cash of the Group taking into account the business development plans on areas relating to research and development, investment, sales and supply of the Group; and (iv) the proposed loans to be provided by Hisense Finance to the Group under the Financial Services Agreement will first be transferred by Hisense Finance to the Group in its deposit account with Hisense Finance for withdrawal.

Loan Service

The Company currently expects that the maximum balance of loan to be provided by Hisense Finance to the Group shall not exceed the cap of RMB1 billion during the term of the Financial Services Agreement.

Such proposed cap has been determined based on (i) the historical cashflow figures of the Group; and (ii) the historical transaction figures for the loan services provided by other financial institutions to the Group that the average monthly balance of the loans provided by other financial institutions to the Group were RMB1,657,338,000, RMB1,407,321,000 and RMB1,052,266,000 for the three years ended 31 December 2005, 31 December 2006 and 31 December 2007, respectively; and (iii) the expected financial needs of the Group taking into account the business development plans on areas relating to research and development, investment, sales and supply of the Group; and (iv) the plan of the Group to obtain more loans from Hisense Finance instead of from other financial institutions for the year ending 31 December 2008 since the terms for the

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provision of the loans by Hisense Finance to the Group shall be no less favourable than those of other normal commercial banks and financial institutions and Hisense Finance has better knowledge about the background and financial status of the Company which will facilitate the loan application process by the Company.

Draft Discount Service

The Company currently expects that the annual service fee payable by the Company to Hisense Finance for the provision of draft discount services shall not exceed the cap of RMB25,000,000 during the term of the Financial Services Agreement.

Such proposed cap has been determined based on (i) the historical service fees paid by the Company for the draft discount services provided by other financial institutions to the Group which were RMB24,400,000 , RMB16,100,000and RMB4,200,000 for the three years ended 31 December 2005, 31 December 2006 and 31 December 2007, respectively; and (ii ) the expected financial needs of the Group taking into account the business development plans on areas relating to research and development, investment, sales and supply of the Group; and (iii ) the plan of the Group to use more draft discount services to be provided by Hisense Finance instead of from other financial institutions for the year ending 31 December 2008 since the terms for the provision of the draft discount services by Hisense Finance to the Group shall be no less favourable than those of other normal commercial banks and financial institutions and Hisense Finance has better knowledge about the background and financial status of the Company which will facilitate the draft discount application process by the Company.

The Company confirms that there is no historical cap nor transaction amount for the deposit, loan and draft discount services between the Group and Hisense Finance.

REASONS FOR AND BENEFITS OF ENTERING INTO THE FINANCIAL SERVICES AGREEMENT

The main reasons for the election by the Company to use Hisense Finance for the provision of the relevant financial services are as follows:

• q the rates on loans and deposits offered by Hisense Finance to the Group will be equal to or more favourable than those offered by PRC commercial banks;

• q the Group is expected to benefit from Hisense Finance’s better understanding of the operations of the Group which should allow more expedient and efficient service provision that those offered by PRC commercial banks; and

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• q Hisense Finance is regulated by the CBRC and engages into the provision of financial services in compliance with the regulations and operation requirements issued by the relevant regulatory authorities. Its primary customer is the companies within the Hisense Group. In general, as the risks exposed to Hisense Finance are lesser than those exposed to the financial institutions with a broad and unrestricted customer base, Hisense Finance is able to safeguard the customers' funds more effectively.

The Board (excluding the independent non-executive directors of the Company whose view will be expressed in the circular) considers that the terms of the Financial Services Agreement and the proposed caps in respect of the maximum daily balance of deposit and the maximum annual loan and draft discount amount under the Financial Services Agreement are fair and reasonable and are entered into on normal commercial terms, and on terms no less favourable than those available to independent third parties under the prevailing local market conditions, in the ordinary and usual course of business of the Company and in the interests of the Company and its shareholders as a whole.

RISKS RELATING TO THE TRANSACTION AND RISK CONTROL MEASURES

The Company considers that there are some uncertainties as to whether the Company can effectively use Hisense Finance as a financial Platform. The following risk control measures are to be taken to safeguard the credit risks that might be associated with the Group for the utilization of the financial services to be provided by Hisense Finance under the Financial Services Agreement:-

• 1) Hisense Finance shall ensure the prudent management of its business and the strict compliance with the risk control indicators for financial institutions issued by the CBRC and its monitoring indicators such as gearing ratio and liquidity ratio have also complied with the requirements of the CBRC.

• 2) Hisense Finance shall implement periodic evaluation metric and establish internal control system and risk monitoring system indicators to ensure the safe and stable operation of fund management.

• 3) The Company shall review the ratio of the Group’s deposit and loans with Hisense Finance so as to evaluate the risk of placing deposits with Hisense Finance.

Since the Board is of the view that the implementation of the above measures will enable the Company to exert adequate control by the Company over the risks involved in depositing funds with Hisnese Finance, the Board considers that the above measures and procedures can provide

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sufficient assurance to the shareholders of the Company that the transactions under the Financial Services Agreement will be appropriately monitored by the Company and the interest of the shareholders can be safeguarded.

EFFECTS OF THE USE OF THE DEPOSIT SERVICES UNDER THE FINANCIAL SERVICES AGREEMENT ON THE EARNINGS AND ASSETS AND LIABILITY OF THE COMPANY

The Company expects that the interest rate on the deposit of the Company to be placed in Hisense Finance will be higher than the interest rate to be given by other banks and financial institutions in the PRC. Therefore, the Company expects that there will be a slight increase on the interest revenues of the Company. However, since the interest revenues of the Company of past years, which are in the sums of approximately RMB5,238,000 and RMB3,753,000 for the two years ended 31 December 2006 and 31 December 2007 respectively, only represent a small proportion of its earnings, assets and liabilities, the Company therefore anticipates that its use of deposit services under the Financial Services Agreement will not have any material impact on its earnings, assets and liabilities.

INFORMATION RELATING TO THE COMPANY

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

INFORMATION ON HISENSE FINANCE

Hisense Finance is a non-bank financial institution which establishment was approved by the CBRC and is regulated by CBRC and other regulatory authorities in the PRC. Hisense Finance was established in the PRC on 12 June 2008 with a registered capital of RMB300 million. Hisense Finance is owned as to 85% by Hisense Group and 15% by China Everbright Limited (Stock Code: 00165, a company listed on the Stock Exchange). Hisense Finance is not a banking company as defined in R14A.10 of the Listing Rules.

Under the approval document relating to the establishment of Hisense Finance dated 29 May 2008 issued by the CBRC (Yin Jian Fu No. 207 of 2008), the business scopes of Hisense Finance include: the provision of financial services, including financial consultation, credit appraisal and other relevant advice and agency services to member companies; provision of assistance in receiving transaction proceeds to member companies; provision of insurance agency services, security, entrusted loans and entrusted investment services, draft acceptance and discount services,

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and planning of settlement scheme, deposit services, loans and finance leasing and intro-group transfer and settlement services to member companies.

Since Hisense Finance was only newly established on 12 June 2008, there is no credit rating in respect of Hisense Finance at present.

LISTING RULES IMPLICATIONS

Hisense Air-conditioning is a substantial shareholder of the Company, holding approximately 23.63% of the issued share capital of the Company. Hisense Group is an indirect holding company of Hisense Air-conditioning and Hisense Finance is a subsidiary of Hisense Group and is therefore an Associate of Hisense Air-conditioning. Therefore, Hisense Finance is a connected person (as defined under the Listing Rules) of the Company. Accordingly, the transactions contemplated under the Financial Services Agreement constitute continuing connected transactions of the Company under the Listing Rules and the maximum transaction amounts for the provision of deposit and loan services by Hisense Finance to the Group should be aggregated for the purpose of Rules 14A.25 to 14A.27 of the Listing Rules.

As each of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) applicable to the aggregated amounts of the transactions for the provision of deposit, loan and draft discount services by Hisense Finance to the Group contemplated under the Financial Services Agreement is more than 2.5%, such transactions are subject to the reporting, announcement and independent shareholders’ approval requirements set out in Rules 14A.45 to 14A.48 of the Listing Rules.

Further, the provision of deposit services under the Financial Services Agreement also constitutes the provision of financial assistance by the Company to Hisense Finance under Rule14.04(1)(e) of the Listing Rules. Since the consideration ratio for the provision for deposit services are more than 25%, it constitutes a major transaction (as defined under Chapter 14 of the Listing Rules) and is subject to the announcement and shareholders’ approval requirements under Chapter 14 of the Listing Rules. The provision of deposit services under the Financial Services Agreement also constitutes advance to an entity and is subject to the requirements under Rule 13.13 of the Listing Rules. The Company will comply with the general disclosure obligation when the amount of the advance to Hisense Finance increases since the previous disclosure under Rule 13.13 of the Listing Rules is 3% or more under the assets ratio as defined under Rule 14.07(1) of the Listing Rules.

A circular containing, among others, further details of the Financial Services Agreement and the related annual caps, a letter from the independent board committee of the Company, and a letter

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from an independent financial adviser and the notice of the EGM will be despatched to the shareholders within 21 days after the publication of this announcement under Rule 14A.49 of the Listing Rules.

Since Hisense Air-Conditioning is a shareholder of the Company holding approximately 23.63% of its issued share capital, it and its Associates will be abstained from voting in the general meeting in relation to the approval of the provision of deposit, loan and draft discount services under the Financial Services Agreement pursuant to the requirement of the Listing Rules.

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 from 28 April 2005 to 10 May 2005, and has remained suspended since 10:00 a.m. on 16 June 2005, initially following various press releases regarding the investigation by the China Securities and Regulatory Commission on Greencool Technology Holdings Limited in connection with the possible misappropriation of funds of the Company. Greencool Technology Holdings Limited was then an indirect shareholder of the Company controlled by Mr. Gu Chu Jun, who was the then executive director and chairman of the Company and the controlling shareholder of Guangdong Greencool Enterprise Development Company Limited, the then single largest shareholder of the Company.

The Company has reviewed the relevant documents in relation to the suspension of trading of the H Shares, the events leading to such suspension and the actions taken by the Company and has submitted a resumption proposal to the Stock Exchange for review. The Company received a letter from the Stock Exchange dated 5 June 2008 agreeing that trading in the H shares of the Company be allowed to resume subject to the fulfilment of the conditions as set out in its letter to the satisfaction of the Stock Exchange prior to the resumption of trading in the H shares of the Company. Please refer to the announcement of the Company dated 6 June 2008 for details of such conditions.

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

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• “Associate” has the meaning ascribed to it in the Listing Rules “Board” the board of directors of the Company “CBRC” 中國銀行業監督管理委員會 (China Banking Regulatory Commission)

• “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

• “EGM” the extraordinary general meeting of the Company to be held for the approval of the Financial Services Agreement

• “Financial Services an agreement dated 31 July 2008 entered into between the Agreement” Company and Hisense Finance, in respect of the provision of financial services by Hisense Finance to 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 Finance” Hisense Finance Co., Ltd (海信集團財務有限公司), a limited company incorporated in the PRC

• “Hisense Group” Hisense Group Company ( 海信 集團 有限公司 ), a limited company incorporated in the PRC

• “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,

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comprising the A Shares and the H Shares “Shareholder(s)” holders of the Shares “Stock Exchange” The Stock Exchange of Hong Kong Limited “%” per cent.

By order of the Board of

Hisense 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, Mr. Wang Shi Lei, Ms. Yu Shu Min, Mr. Lin Lan, Ms. Liu Chun Xin 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, 31 July 2008

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