iSteelAsia Announces 2004/05 Interim Results

(November 12, 2004 — HONG KONG) iSteelAsia Holdings Limited ("iSteelAsia" or the "Group", stock code: 8080) today announced its unaudited consolidated results for the six months ended September 30, 2004.

During the period under review, the gross margin increased 32% to approximately 3% by comparing the gross margin for the same period of last year, representing the Group's earnest efforts in achieving higher profitability. However, due to the continuous deployment of macro-entrenchment policies in China, turnover in the period under review decreased to approximately HK$508 million, representing a 38% drop over the last corresponding period. Operating profit before finance costs increased by 201% to approximately HK$1,082,000 over the same period last year. The Group has shown about 57% improvement from the results in the corresponding period last year despite reporting a loss attributable to shareholders of approximately HK$1.5 million. Basic loss per share amounted to HK0.09 cent. Its most recent results for the 3 months ended September 30, 2004 had been a turnaround from the previous loss position, with profit attributable to shareholders of approximately HK$1,036,000.

Desmond Fu, CEO of iSteelAsia, said "The implementation of the macro-entrenchment policies in China aims at limiting the excessive investments in several overheated industries including the steel, aluminum, automobile and cement industries as well as real estate development sector. The impacts on the Group's business development though were yet to be observed, the management has made substantial effort in allocating the limited resources to selected products that could have brought into greater return to shareholders."

iSteelAsia has strategically focused its sales distribution network to cover the major cities, such as Beijing, Shanghai, Guangzhou, Tianjin, Shenzhen and Chongqing, and recently expanded into the second tier cities, such as Wuxi and Shunde. This move has enabled iSteelAsia to reach the highest average annual income per capita cities in China with high demands for household appliances, real estates properties and infrastructure construction, which are the key forces driving the steel consumption. The Group is confident to tap these market opportunities in the future by fully utilising its extensive sales distribution network.

The Group has succeeded in raising operational efficiency. Operating cost to turnover for the period under review had decreased from 72.1% in early 2001 and stabilised at around 2% to 3% in the current few years. This has shown the Group's successful efforts in optimising its resources for economy of scale to achieve business growth. The Group will continue to undertake rationalisation of its resources to achieve the best operational efficiency and build a solid foundation for future growth.

Looking forward, Desmond commented, "Encouraged by the improving results of the second quarter, the management team is optimistic about the Group's future. The macro-entrenchment policies will ultimately bring in long-term benefits to the steel industry in the PRC and help to build a more stable and sustainable growth environment for the industry."

Desmond concluded, "In accordance with the latest statistics, China's crude steel production of September 2004 continued upward trend set in the past months, with total production of approximately 24 million tons or 24.1% increase from the same period of past year. Under this favourable condition, iSteelAsia will continue its path to increase the shareholders' value and operate itself as a full value-added service provider through organic growth."

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For further information, please contact:

iSteelAsia Holdings Limited
Ms. Betty Jane Leon
Senior Marketing Manager
E-mail: betty.leon@isteelasia.com