Medlive Technology Co., Ltd. — Interim / Quarterly Report 2002

Apr 26, 2002

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

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

ANNOUNCEMENT ON RESULTS FOR THE FIRST QUARTER OF 2002

The Board of Directors (the "Board") of Guangdong Guangdong Kelon Electrical Holdings Company Limited (the "Company") warrants that the information in this report is accurate and not misleading and does not contain any material omission. The Board is jointly and severally responsible for the truthfulness and completeness of the content of this report (except Ms. Yu Xiaoyang who was unable to participate in the Board meeting as she was on a business trip). These quarterly results have not been audited.

A Shares in the Company were listed on the Shenzhen Stock Exchange in 1999. Pursuant to the applicable rules, quarterly report of the Company and its subsidiaries will be published on 25 April 2002 in newspapers in the People's Republic of China ("PRC"). The financial information in this quarterly report, the full text of which is set out below, has been prepared in accordance with PRC accounting rules.

1. Company Profile

(1) Chinese Name of the Company: 廣東科龍電器股份有限公司

English Name of the Company: Guangdong Kelon Electrical Holdings Company Limited

(2) Legal representative of the Company: Mr. Gu Chu Jun

(3) Secretary of the Board: Mr Liu Cong Meng (acting at the same time as Executive

Vice President) and

Mr Zhu Chang Xu

Representative of securities

related affairs: Mr Zhong Liang

Correspondence address: Board of Directors Secretarial Department,

Guangdong Kelon Electrical Holdings Company Limited,

No. 8, Ronggang Road,

Ronggui, Shunde,

Guangdong Province,

China.

Telephone: (0765) 8362570

Fax: (0765) 8361055

Email: sec@kelon.com

(4) Company registered and office address: No. 8, Ronggang Road,

Ronggui, Shunde,

Guangdong Province,

China.

Postal Code: 528303

Website: http://www.kelon.com

(5) Designated information 「中國證券報」and「證券

disclosure media: 時報」

Website for disclosing Annual Reports: http://www.cninfo.com.cn

Annual Reports available at: Board of Directors Secretarial Department,

Guangdong Kelon Electrical Holdings Company Limited

(6) Stock Exchanges on which shares are listed: Shenzhen Stock Exchange,

The Stock Exchange of Hong Kong Limited

Stock Abbreviation: Kelon Electrical

Stock Code: 000921

2. Review of Operations and Prospects

1. Operation of the Company during the reporting period:

Guangdong Kelon Electrical Holdings Company Limited ("Kelon" or the "Group") is one of the largest household appliances manufacturers in China, mainly concentrating in the development, manufacturing and sales of refrigerators and air-conditioners both within and outside China. "Kelon" and "Rongsheng" are the two brands marketed under the refrigerator division while "Kelon" and "Huabao" are the brands marketed under the air-conditioner division. Both the refrigerator and the air-conditioner divisions are playing a leading role in the respective markets. Its refrigerator division has been the market leader for nine consecutive years.

(1) Business Overview:

During the reporting period, continuous intense competition was found in the respective electrical appliances market. Strictly following the "Technologically Led and Profitability Driven" concept, the new management team of Kelon has insisted on profit realisation as the core and top priority. Focusing on research, development and promotion of high-tech, high value-added and high profit-making products, Kelon uses the functions of its products as tools to compete with others. Because of the high value-added and energy saving features, the products can command a higher price. Kelon products are targeted to satisfy of customers who are particular with product quality and product functions. Thus, satisfactory results were obtained for the first quarter of 2002.

For the period ended 31st March 2002 (the "Reporting Period"), the turnover of the Group amounted to RMB850million while net profit amounted to RMB10.78million.

In 2002, Kelon is focusing on further developing its refrigerator and air-conditioner core businesses that reflects its "Technologically Led and Profitability Driven" approach. Forgoing the commonly adopted cut-throat price war strategy, Kelon utilizes its own technological strengths to add value to all its products. Kelon continually seeks to innovate and make changes in order to follow closely with the changing demands of the customers for the basic functions relating to refrigerators and air-conditioners such as refrigerating, air-cooling and air-warming functions. At the beginning of this year, Independent Multicycling Refrigerator (IMRC) 「分立多循環」refrigerator and Shuang Xiao Wang「雙效王」air-conditioner were invented and marketed.

Refrigerators with IMCR technology broke traditional concepts for refrigerators with individual cooling and freezing compartments. In this refrigerator, the functions of cooling and freezing are operated independently. Through independent control of the cooling and freezing operations, temperature controls in cooling and freezing can be precisely achieved, bringing the refrigerator's energy-saving level to new heights and perfecting the precise temperature control capability. This emergence of technology from Kelon will strengthen the competitiveness of the "Kelon" and "Rongsheng" brands in the domestic and overseas markets, raising the technological added value and establishing the foundation for the Group to achieve profits this year.

The "Shuang Xiao Wang" air-conditioner is a new product adopting and optimizing with the highly efficient, energy-saving, and environmentally friendly "Greencool Refrigerant", which enables high and sustained cooling and heating efficiencies. Apart from its high cooling and heating efficiencies, its most significant characteristic is its energy-savings. The current cooling efficiency of domestic air-conditioners is between 2.4-3.2, while the heating efficiency is between 2.5-3.3. "Shuang Xiao Wang" air-conditioners have now attained a cooling efficiency of 3.8 and a heating efficiency at a high level of 4.2.

2. Progress of investment items during the Reporting Period

The Company has not made any major investments during the Reporting Period.

3. Operational results and financial results for the Reporting Period

(1) Operational Results:

UNIT: RMB0'000

ITEM JANUARY-MARCH, JANUARY-MARCH, % OF INCREASE/

2002 2001 DECREASE

Revenue from core businesses 85468 111040 -23

Profit from core businesses 24745 22093 12

Net Profit 1078 -1874 157.5%

Note: Reasons for the changes:

a) The turnover from core businesses declined owing to the fact that January to March is not the peak season for the markets and that the types of products being marketed were less than those in the previous year. The volume of sales and average product prices also reduced because of this. With the marketing of new products and the coming of the peak season, the situation will soon be optimistic.

b) The increase in net profit resulte from the increase in the gross profit and the reduction in cost. The profitability of the products was thus enhanced.

UNIT: RMB0'000

ITEM JANUARY-MARCH, JANUARY-MARCH, % OF INCREASE/

2002 2001 DECREASE

Amount % of total Amount % of total

profit profit

Total Profit 1148 - -2181 - 152.6

Profit from core businesses 24745 2155.5 22093 -1013 12

Profit from other businesses 505 44 714 -32.7 -29.3

Expenditures 24274 2114.5 24586 -1127.3 -1.3

Earnings from investments -18 -1.6 -295 13.5 -93.9

Income from subsidies 0 0 0 0 0

Non-operational net balance 190 16.6 -107 4.9 -277.6

Note: Reasons for the changes:

The increase in gross profit and reduction in costs have resulted in the difference between the amount of total profit for the above two periods. Profitability of the products is thus improved. The change in the amount of profits from other businesses was also caused by the reduction in the sales of raw materials and waste materials. The increase in profit of associates has resulted in the difference in earnings from investments of the above two periods. Settlement of debts and default payments with certain suppliers with no further business relations has resulted in the difference in non-operational net balance of the two periods.

(2) Financial Results

UNIT: RMB0'000

ITEM BY START OF BY END OF %INCREASE/

THE YEAR THE PERIOD DECREASE

Total assets 652696 680460 4.3%

Accounts receivable 22090 20825 -5.7%

Other accounts receivable 92015 107084 16.4%

Inventory 122584 178958 46%

Fixed asset net value 205780 198959 -3.3%

Intangible assets 30578 30360 -1%

Note: Reasons for the changes:

There is an increase in the volume of inventory due to the preparation for product launch in the forthcoming peak season.

(3) Other events and events after the Reporting Period:

a) Material litigation and arbitration: already disclosed in the Annual Report

b) Amount and period of material guarantees given: None

c) Major events after the balance sheet date: None

1. Prospects

For sales within China, the strategy to employ state-of-the-art technologies to promote all lines of air-conditioners sales has been confirmed for the coming year. Kelon is presently promoting IMCR technology patent and marketing the Shuang Xiao Wang air-conditioners. Moreover, sales of Kelon products is facilitated by the stable and established sales and marketing network set up by Kelon in the past year.

To further facilitate the sales of refrigerators and air-conditioners, the 「龍騰II」 marketing plan has been promoted in all parts of China. With IMCR refrigerators and Shuang Xiao Wang air-conditioners as the symbols of Kelon's products, their image and goodwill have been enhanced since their launches into the market. With the market acceptance of the products, sales of these two products during the peak seasons will be further enhanced.

For sales outside China, Kelon has projected a substantial increase in sales with the new international marketing plan being set for 2002. The Group will enlarge the resources investment in international sales to speed up the development of international market for the Kelon brands. Kelon will further develop and open up more product lines in order to satisfy the needs of different types of customers. During the 91st Guangzhou Trade Conference which just ended at the end of April, the number of Memorandum of Understanding signed between Kelon and foreign companies was the highest since its participation in the conference. Its volume of transactions entered into was the third largest among all participating corporations.

Regarding cost control, comprehensive tendering procurement system has been enforced. Together with modification of procurement procedures, improvement of the teams of suppliers and strengthening of purchasing quality and efficiency, marginal cost was largely reduced. At the same time, with increased control over budgeting and execution of budget plans, expenditures were more strictly controlled.

Looking ahead, backed by the new structure, new technologies and new products, Kelon is expected to turn around the current deficit situation. This will realize the development strategy of the Board and realize the return for all shareholders.

1. Financial Report (Unaudited)

2. Financial Statements

1) Balance Sheet

Summary of Consolidated Balance Sheets

Unit: RMB0'000

ITEM BY START BY END OF ITEM BY START BY END OF

OF YEAR REPORT OF YEAR REPORT

PERIOD PERIOD

Current asset 356926 395167 Current asset 375176 403400

Long-term investment 25989 21440 Long-term investment 14645 14081

Fixed net asset value 210503 203683 Fixed net asset value 22613 22683

Intangible asset and Intangible asset and

other asset 60883 60374 other asset 240262 240296

Total asset value 652696 680460 Total asset value 652696 680460

Summary of Consolidated Profit and Loss Statement

Unit: RMB0'000

ITEM REPORTING PERIOD

Revenue from core businesses 85468

Profit from core businesses 24745

Profit from other businesses 505

Expenditure for the period 24274

Revenue from investment -18

Non-operational net balance 190

Tax rebate 0

Net profit 1078

1. Notes to Financial Statement:

(1) No substantial change has been made in accounting policy, auditor evaluation and financial report of the Company in the Reporting Period, as compared to the Annual Report.

(2) No substantial difference has occurred in accounting policy and financial report of the Company in the Reporting Period.

(3) The Company does not have any subsidiary which ought to be included in the financial statement but has been excluded.

By the order of the Board of

Guangdong Kelon Electrical Holdings Company Limited

Gu Chu Jun

Chairman

Shunde, the PRC, 24 April 2002

"Please also refer to the published version of this announcement in the Hong Kong i-mail"