Medlive Technology Co., Ltd. — Interim / Quarterly Report 2004

Oct 28, 2004

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: 00921)

ANNOUNCEMENT OF RESULTS FOR THE THIRD QUARTER ENDED 30 SEPTEMBER 2004

1. IMPORTANT NOTICE

• 1.1 The Board of Directors of Guangdong Kelon Electrical Holdings Company Limited (the “Company”) warrants that the information in this report is accurate, not misleading and no material omission and the directors are jointly and severally responsible for the truthfulness, accuracy and completeness of the contents of this report.

• 1.2 The financial statements set out in this report are unaudited ones .

• 1.3 The full version of the Company’s balance sheet, income statement and cash flow statement is published on the website designated by the Shenzhen Stock Exchange for release of information http://www.cninfo.com.cn/ default.htm .

• 1.4 Mr. Gu Chu Jun, Chairman of the Company, and Mr. Gary Li Chi Sing, Financial Controller of the Company, warrant that the contents of this report are accurate and complete.

2. COMPANY INFORMATION

2.1 Company Profile

Stock Abbreviation: Guangdong Kelon Stock Code: 00921 Secretary for the Board Representative of securities related affairs Name: Liu Cong Meng (acting at the same time Zhong Liang as Executive President) Gary Li Chi Sing Correspondence Address: No. 8, Ronggang Road, Ronggui, Shunde, No. 8, Ronggang Road, Ronggui, Shunde, Guangdong Province Guangdong Province Telephone: 0757-28362570 0757-28362570 Fax: 0757-28361055 0757-28361055 Email: sec@kelon.com zhong.liang@kelon.com

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2.2 Financial Information

2.2.1Major Accounting Data and Financial Indicators

				(Unit: RMB)
				Increase/
		End of the	End of	Decrease over End of
	Reporting Period		Last Financial Year	Last Financial Year
				(%)
Total assets	11,668,857,803		9,432,791,214	23.71
Shareholders’ equity
(excluding minority interests)		3,015,480,478	2,808,730,941	7.36
Net assets per share		3.0398	2.8314	7.36
Adjusted net assets per share		2.8460	2.6439	7.64
				Increase/
			Beginning of	Decrease over
			Financial Year to End of	Corresponding
	The Reporting Period		the Reporting Period	Period of Last Year
				(%)
Net cash flows from operating activities		674,458,344	1,200,617,216	276.89
Earnings per share		0.048	0.2085	46.99
Return on net assets		1.58%	6.86%	35.47
Return on net assets after extraordinary items		1.69%	6.85%	46.54
				(Unit: RMB)
Extraordinary profit and loss items				Amount
Other expenses				-3,795,546
Subsidy income				212,942
Interest received from related parties				332,645
Total				-3,249,959

2.2.2Income Statement (see Attachment)

2.3 Table of total number of shareholders and top ten/substantial shareholders at the end of the Period

Total number of shareholders at the end of the Period

67,149

The shareholdings of the top ten/substantial shareholders

Name of Shareholder (in full name)	Shareholdings at the end of the Period	Shareholdings at the end of the Period	Class
		(Number of shares)
Greencool Enterprise Development Company Limited		204,775,755	A shares
The Hongkong and Shanghai Banking Corporation Limited		145,951,596	H shares
Shunde Economic Consultancy Company		68,666,667	A shares
Shunde Xin Hong Enterprise Company Limited		57,436,439	A shares
Standard Chartered Bank		57,356,000	H shares
Guotai Junan Securities (Hong Kong) Limited		37,921,000	H shares
First Shanghai Securities Limited		26,999,000	H shares
Shenyin Wanguo Securities (H.K.) Limited		23,840,000	H shares
Citibank, N.A.		16,501,484	H shares
Liu Chong Hing Bank Limited		16,000,000	H shares

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3. MANAGEMENT DISCUSSION AND ANALYSIS

• 3.1 After two years’ efforts on optimizing its overall internal management, implementing steady expansion on scale, adopting strict control on costs, reorganizing and expanding its sales network and sales team as well as continuously enhancing its core technologies to improve its competitiveness, the Company entered into a fast growth period in 2004.

During the Period, the Company adhered to the management concept of “Technologically Led and Profitability Driven” and invested strong efforts in the R&D of energy saving domestic appliances. In the refrigerator operation, after last year’s remarkable achievement in which the Company’s Ronshen BCD-209S refrigerator won the “Energy Saving Grand Prix” award under the refrigerator manufacturer incentive program sponsored by a number of organizations, including United Nations Development Programme, the Company broke another energy saving world record again in the Period by launching two Ronshen refrigerator models BCD-209S/ET consuming as low as 0.33 unit of electricity per day. In the air-conditioner operation, during the Period, the Company’s “Shuang Xiao Wang” air-conditioner successfully passed the test carried out by national authorities, with cooling efficiency reaching 7.0, setting a new energy saving world record. The above-mentioned technologies guarantee the Company a leading position in the refrigerator and air-conditioner industry.

Despite all the adverse factors (including price increases in raw materials) faced by most domestic appliance makers in the PRC, however, the Company’s advantages on scale and cost control began to take shape. Adding to global warming, extensive area of electricity shortage and governmental introduction and support to environmental energy saving products, the Company’s technical advantages in energy saving domestic appliances were fully put forth. During the Period, the Company continued to achieve satisfactory results, recording a net profit of RMB48 million. The revenues from refrigerator and air-conditioner operations grew 6.01% when compared to the corresponding period in 2003. The Company’s export sales continued to grow rapidly, with the export sales revenues rose by 48.53% when compared to the corresponding period last year. In order to improve its competitiveness, the Company will keep on enhancing its effort on the technical research in domestic appliances, maintaining strict cost control and further developing its “Project of Perfection”, so as to lay a solid foundation for the Company to become a leading international manufacturer of domestic appliances.

• 3.1.1Principal business or products representing 10% or more of the income from principal operations or total profit from principal operations

? Applicable		Not Applicable	Not Applicable
Classified by				Income from	Cost of
operations or products			principal operations		principal operations	Gross profit
			(RMB	ten thousand)	(RMB ten thousand)	(%)
Refrigerators				89,682.04	67,913.81	24.3
Air-conditioners				82,024.63	66,734.28	18.6
Freezers				4,290.44	3,454.48	19.5
Others				6,082.49	4,959.82	18.5
Including: Related		party	transactions	1,886.29	1,427.92	24.3
Total				182,079.60	143,062.39	21.4

• 3.1.2Seasonal or cyclical characteristics of the Company’s operations

Applicable Not Applicable

The sales of the major products of the Company such as refrigerators and air-conditioners are subject to seasonal fluctuation. During the Reporting Period, sales of air-conditioners were in the low season.

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• 3.1.3Profit structure for the Reporting Period (Material changes in the proportions of total profit attributable to total profit attributable to profit from principal operations, profit from other operations, costs for the period, investment income, subsidy income and net non-operating income as compared with the previous reporting period and the explanation thereof)

Applicable Not Applicable

	July to September 2004	July to September 2004	January to June 2004	January to June 2004
					Change in
		Proportion of		Proportion of	proportion of
Items	Amount	total profit	Amount	total profit	total profit
	(RMB ten thousand)	(%)(RMB	ten thousand)	(%)	(%)
Profit from principal operation	39,008.59	968.23	102,801.09	661.47	46.38
Expenses for the Period	35,703.77	886.21	88,115.02	566.98	56.3

Notes:

As sales in the Period under review were in low season, the sales revenue declined when compared to that of the previous period, and proportionally higher expenses also brought the profit down, as a result, the proportion of total profit attributable to profit from principal operation increased.

• 3.1.4Material changes in the principal operations and its structure as compared with the previous reporting period and the explanation thereof

Applicable Not Applicable

• 3.1.5Material changes in the profitability (gross profit margin) of principal operations as compared with the previous reporting period and the explanation thereof

Applicable Not Applicable

• 3.2 Analysis and illustration of significant events and their implications and resolutions

Applicable Not Applicable

• 3.3 Changes in accounting policies, estimates and scope of consolidation and major accounting errors and the explanation thereof

Applicable Not Applicable

• 3.4 Explanation of the Board and the Supervisory Committee in relation to any “non-standard opinion” arising from audit

Applicable Not Applicable

• 3.5 Loss forecast or alert of significant change in the accumulated net profit for the period from the beginning of the 2004 financial year to the end of the next reporting period as compared with the corresponding period in the previous year and the explanation thereof

Applicable Not Applicable

• 3.6 On-going adjustments on the Company’s published annual business plans or budget

Applicable Not Applicable

Guangdong Kelon Electrical Holdings Company Limited Gu Chu Jun

Chairman

27th October, 2004

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STATEMENTS OF INCOME AND PROFIT APPROPRIATION (Combined)

For the period ended 30 September 2004

Prepared by Guangdong Kelon Electrical Holdings Company Limited (Unit: RMB)

Items 1. Revenue from principal operations Less: Cost of sales Sales tax and surcharge 2. Profit from principal operations Add: Other operating profit (loss) Less: Distribution costs Administrative expenses Financial Expenses 3. Operating profit Add: Investment profit (loss) Subsidy income Non-operating income Less: Non-operating expenses 4. Total profit Less: Income Tax Minority interests 5. Net profit Add: Unappropriated profits, beginning of the year Utilisation of statutory common reserve to make up losses Utilisation of capital reserve to make up losses 6. Profit available for appropriation Less: Appropriations to statutory common reserve surplus Appropriations to statutory common welfare fund 7. Profit available for appropriations to shareholders Less: Appropriations to discretionary reserve Dividends on ordinary shares 8. Unappropriated profits	July to September 2004 (Unaudited) 1,820,795,917 1,430,623,840 86,134 390,085,943 14,351,967 251,120,073 79,799,872 26,117,782 47,400,183 (3,529,218) 212,942 – 3,795,546 40,288,361 (2,661,382) (4,656,996) 47,606,739 – – – – – – – – –	January to September 2004 (Unaudited) 6,751,812,161 5,333,509,912 205,401 1,418,096,848 37,567,729 883,038,759 257,769,470 97,379,699 217,476,649 (15,862,500) 212,942 6,762,591 12,889,296 195,700,386 1,682,817 (12,781,588) 206,799,157 184,436,195 – – 391,235,352 – – 391,235,352 – – 391,235,352	July to September 2003 (Unaudited) 1,717,504,879 1,314,629,762 73,283 402,801,834 8,584,621 238,256,525 110,043,184 28,766,812 34,319,934 (4,026,860) 513 5,406,009 2,166,452 33,533,144 873,241 271,348 32,388,555 – – – – – – – – –	January to September 2003 (Unaudited) 5,032,571,326 3,822,397,129 319,886 1,209,854,311 24,293,145 705,021,848 251,622,963 82,410,634 195,092,011 (16,810,062) 18,703 10,030,105 2,966,420 185,364,337 6,807,329 1,562,348 176,994,660 (1,211,930,161) 965,024,306 229,161,802 159,250,607 – – 159,250,607 – – 159,250,607

The notes form part of the financial statements.

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Supplementary information:

–

–

–

1. Gains from sales, disposal of business – –

divisions or investee companies

1. Loss from natural disasters

– –

–

1. Total profit increased (decreased) – – – – due to change of accounting policy

2. Total profit increased (decreased) due to change of accounting estimates

– – – –

1. Loss from debt restructuring

– – – –

1. Others

– – – –

Legal Representative: Gu Chu Jun Financial Controller: Gary Li Chi Sing

Prepared by: Yan Guo Ru

STATEMENTS OF INCOME AND PROFIT APPROPRIATION (The Company) For the period ended 30 September 2004

Prepared by Guangdong Kelon Electrical Holdings Company Limited (Unit: RMB)

Items 1. Revenue from principal operations Less: Cost of sales Sales tax and surcharge 2. Profit from principal operations Add: Other operating profit (loss) Less: Distribution costs Administrative expenses Financial Expenses 3. Operating profit Add: Investment profit (loss) Subsidy income Non-operating income Less: Non-operating expenses 4. Total profit Less: Income Tax Minority interests 5. Net profit Add: Unappropriated profits, beginning of the year Utilisation of statutory common reserve to make up losses Utilisation of capital reserve to make up losses 6. Profit available for appropriation Less: Appropriations to statutory common reserve surplus Appropriations to statutory common welfare fund	July to September 2004 (Unaudited) 1,455,013,034 1,242,050,230 28,643 212,934,161 2,156,298 159,908,659 36,553,613 14,972,351 3,655,836 40,779,821 – – 615,628 43,820,029 – – 43,820,029 – – – – –	January to September 2004 (Unaudited) 4,975,445,575 4,254,005,967 96,163 721,343,445 2,138,647 667,403,973 93,017,282 44,818,554 (81,757,717) 300,396,969 – 4,814,525 8,864,563 214,589,214 – – 214,589,214 197,890,645 – – 412,479,859 – –	July to September 2003 (Unaudited) 1,249,563,744 955,376,028 62,478 294,125,238 841,254 195,767,641 58,359,099 8,103,592 32,736,160 4,005,998 – 4,629,975 1,664,172 39,707,961 – – 39,707,961 – – – – –	January to September 2003 (Unaudited) 3,578,073,731 2,879,548,422 198,629 698,326,680 2,050,602 604,427,521 67,461,910 32,385,158 (3,897,307) 172,482,325 18,190 7,136,781 2,241,993 173,497,996 – – 173,497,996 (1,194,186,108) 965,024,306 229,161,802 173,497,996 – –

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7. Profit available for appropriations to shareholders – Less: Appropriations to discretionary reserve – Dividends on ordinary shares – 8. Unappropriated profits – The notes form part of the financial statements. Supplementary information: 1. Gains from sales, disposal of business divisions or investee companies – 2. Loss from natural disasters – 3. Total profit increased (or decreased) due to change of accounting policy – 4. Total profit increased (or decreased) due to change of accounting estimates – 5. Loss from debt restructuring – 6. Others –	412,479,859 – – 412,479,859 – – – – – –	– – – – – – – – – –	173,497,996 – –
			173,497,996
			– – – – – –

Legal Representative: Gu Chu Jun

Financial Controller: Gary Li Chi Sing Prepared by: Yan Guo Ru

By order of the Board of Guangdong Kelon Electrical Holdings Company Limited Gu Chu Jun Chairman

As at the date of this announcement, the Company’s executive directors are Mr. Gu Chu Jun, Mr. Liu Cong Meng, Mr. Li Zhen Hua, Mr. Yan You Song, Mr. Zhang Hong and Mr. Fang Zhi Guo; and the independent non-executive directors are Mr. Chan Pei Cheong, Andy, Mr. Li Kung Man and Mr. Xu Xiao Lu.

Foshan City, Guangdong, the PRC, 27th October, 2004

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

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