Substantial Shareholder:

IRICO Group Corporation - 56.86% Interest

The Group is the largest CRT manufacturer in China and one of the world's major CPT and CPT (color picture tube) component manufacturer. The CPT is the core component of a CRT television set, accounting for about 50% of the aggregate cost of all of the components of a CRT television set. The Group manufactures small, medium and large sized CPTs 14" to 29" in size and a majority of CPT components, including glass bulbs, electron guns, deflection yokes shadow masks and their frames as well as phosphor and frit.

Their CPT production lines and most of the CPT component production lines are located in Xianyang Shannxi Province. Their major customers included TCL, Skyworth, Konka, Changhong and Hisense, which are major television set manufacturers in China.

The Group is in the course of constructing two new CPT production lines, one is H Lines, which is under trial operation and the K Line, Which is capable of producing super large screen high definition CPTS. The two new CPT production lines are expected to commence mass production in 2005 and 2006, receptively.

The Group considers it has the following competitive strengths:

• Leading position in the CPT industry in China
• Cost advantage based on mass production and vertical integration;
• Experience management team with in-depth industry knowledge;
• Large pool of technical talent;
• Long and stable custoemrs relationships;
• Superior product quality and comprehensive customer service.

• There is no assurance that the group will be able to maintain the competitive edge in the research and development of new products. As a result, the business development and operating result may be affected.
• The construction of production lines involves certain risks and, as a result, the group may not be able to realize the expected production capacity in a timely manner.
• If the group fails to adjusted the existing product mix in a timely manner in light of changes in market demand, the operations may have an adverse effect on the production and operations.
• Absence of land use right certificate and property title certificate in connection with a factory used of the operations and profitability may be adversely affected.
• The operations may be adversely affected if the landlord of a property leased by the group could not establish vested legal title to the property.
• The Group use leased land and buildings to construct a substantial part of the operations.
• The operation depend on stability of the core personnel; f the Group lose the services of or fail to retain any of the core team members or to recruit well-qualified and experienced new team members, the normal business operations may be adversely affected.
• The intellectual property rights may be infringed upon and the group may also become a party to litigation as a result of alleged infringement of other parties, intellectual property rights, either of which will adversely affect the business.
• Preferential tax treatment enjoyed by the Group will expire and may be reduced or revoked
• The Group may be subject to unexpected risk relating to the PDP (Plasma Display Panel) project.
• The sales rely on major customers in the PRC, and any substantial decrease in sales to any of them could not adversely affect the operating results.
• If the Group fails to strengthen and expand the business in overseas markets, the overall operating results could be adversely affected.
• Customers in the overseas market may need some time to familiarize themselves with the newly established import and export department. In short term, this could affect the normal operation of the overseas business.
• The procurement of certain raw materials and CPT components is dependent upon certain major suppliers; any substantial disruption of supply from any of such suppliers or any substantial changes in terms of such supply may adversely affect the operating results.
• The group may be required invest more capital for environmental protection purposes due to changes in the PRC environmental laws and regulations, thereby increasing the operating cost.
• Increase competition and market fluctuations may have an adverse impact on the inventory, creditors, and debtors, turnover periods.
• As the interests of A share Company's minority shareholders may, in certain circumstances, be inconsistent with its and its shareholders', such minority shareholders may withhold their approvals of the Shanghai Stock Exchange may not grant necessary waivers in respect of certain connected transactions between A Share Company and the Company (or the other subsidiaries) and, as a results, such transactions may not be consummated, which may adversely affect the overall operational efficiency.
• Certain of the production resources are provided by the IRICO Group Corporation. If the IRICO Group Corporation fails to continue to provide the production resources on the existing terms, the business operations may be adversely affected.
• The interests of the IRICO Group Corporation as the controlling shareholder may, in certain circumstances conflict wit those of the other shareholders, and the IRICO Group Corporation could cause it to make decisions that may not be in the best interests of the other shareholders.
• The Group may not be able to obtain external financing in time or on terms acceptable to the group.
• The group cannot guarantee that the Growth of the revenues and/or profits will be sustained.
• The payment of dividends depends on certain factors there is no assurance that dividends will distributed or in any particular form.
• The historical financial information may not be an accurate indication of the future operating results
• The interests in the subsidiaries may be diluted
• There may be changes to the use of proceeds and the group may not be able to carry out the future plans.
• The insurance coverage may not be sufficient to cover all the risks related to the operations.

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The goal is to maintain the leading position in the CPT industry in China. At the same time, the Group will make efforts to develop new display devices with an aim to becoming a leading display devices and components providers in the world. The key strategies are as follows:

• Strengthen the CPT operations and optimise the product mix;
• Strengthen the production capacity in key CPT components, enhance the cost advantage and explore new and profitable lines of business;
• Actively pursue the research and development of new display devices with a view to commencing mass production as soon as practicable; and
• Strengthen the cost control system and continue to improve the quality of the products.

The Directors intends to use the net proceeds from the Global Offering to implement the Group's future plans. Assuming that the Over-allotment Option is not exercised, based on Offer Price of HK$1.62 per H share, which is the mid-point of the estimate range of the Offer Price, the net proceeds from the Global Offering, after deduction of underwriting commission and estimated expense payable by the Group, are estimated to be approximately HK$651 million. The Group currently plans to use such net proceeds as follows: