iSteelAsia Announces 2003/04 Interim Results

(November 14, 2003 - 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, 2003.

During the period under review, turnover increased 138% to approximately HK$813 million, which has already exceeded last year's total turnover. However, the Group's profitability was severely affected by the adverse business environment caused by the epidemics of SARS in China, and we have reluctantly to dispense our stockholding in the most affected cities during this period. As a result, the Group recorded a net loss attributable to shareholders of approximately HK$3.5 million. Basic loss per share was HK0.23 cent.

"The operating environment in China, in particular in Beijing and Tianjin which are two major demand centers for steel, were severely hit by the outbreak of SARS for months. Demand for steel in these cities halted due to the inter-city quarantine restrictions, and in turn adversely affected the market prices and also the customer demands of our steel products. Further, our inventory stock-up cost increased as customers were refrained from doing business and taking deliveries. To maintain the inventory turnover rate and liquidity, we have made united effort and mobilised the Group's sales office network to transport inventories from those affected areas to other less affected or non-affected areas to be sold, and that inevitably eroded our margins through increased delivery expenses, inventory costs, etc," commented Drina Yue, CEO of iSteelAsia.

On the contrary, the Group is encouraged by its efforts in raising operational efficiency. Operating cost to turnover for the period under review had decreased from 5.8% in early 2002 and stablised at around 2%, reflecting the Group's successful efforts in optimising its resources for scale economy to achieve business growth. The enhanced operation flow has long-term positive effects to the Group's future development.

Looking ahead, Drina said, "Macro situation is still favorable in China. According to the latest statistics, China's crude steel production for September 2003 has already reached approximately 160 million metric tones, 21.64% higher than the previous year. In addition, economic activities were recovering after August and this has continuously supported our view about the future of iSteelAsia as a major steel distributor in the PRC."

"The Group will undertake rationalisation of its resources to achieve the best operational efficiency and build a sound base for future growth, such as relocating inventories from Beijing and Tianjin offices to other operating offices to enhance growth. iSteelAsia will continue its path to increase the shareholders' value and operate as a fully value-added service provider through organic growth," Drina concluded.

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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