iSteelAsia Announces 2003/04 Annual Results

(June 23, 2004 – HONG KONG) iSteelAsia Holdings Limited (“iSteelAsia” or the “Group”, stock code: 8080) today announced its audited consolidated results for the year ended March 31, 2004.

iSteelAsia posted a 76.2% turnover growth to approximately HK$1,429 million over the financial year. Results in the fourth financial quarter also bucked the loss trend into profit and reported a profit attributable to shareholders of approximately HK$1.1 million for the quarter on revenue of HK$306 million. Nevertheless, the Group’s profitability was inevitably affected by adverse and constrained operating environment throughout the year. Together with an exceptional loss due to the reclassification of provision made on certain investment, the Group reported a net loss of approximately HK$25.7 million. Since the provision had been reflected in the Group’s financial statement last year, the Group’s net asset value was not affected. Loss from operation for the year was approximately HK$5.3 million and showing an improvement from the nine-month results of HK$6.4 million loss. Net assets value for the Group remains at approximately HK$13 million which consists mainly current assets.

“We are glad to see business picking up early this year as the majority operating environment of the Group’s core markets, namely, Guangzhou, Beijing and Tianjin, was severely affected by the unexpected epidemic of SARS in the last year. At that time, business activities and demand for steel in these cities came to a halt due to the inter-city quarantine restrictions. Business in January to March this year was doing well and reported a gain. Nevertheless, the full year result was still being affected. However, with the growing trend in the forth financial quarter means to us recovering market and business opportunities,” Desmond Fu, CEO of iSteelAsia, said.

During the year under review, iSteelAsia has further expanded its operation and market coverage by setting up two sales offices in Wuxi and Shunde (Le Chong). With the expansion into the second tier cities, which are the foundations of manufacturing plants, and its established sales network, iSteelAsia covers the majority of the highest average annual income per capita cities in China. The enhanced network enables the Group to grow business and market share, and at the same time, strengthened its revenue structure through a broader and diversified customer base. Currently, iSteelAsia operates 9 offices across the PRC.

In addition, through the Group’s restless efforts in cost control, operating cost to turnover ratio had decreased from 72.1% in fiscal year 2001 and stabilised at 2.6% in fiscal 2004. Such achievement has clearly reflected the Group’s success in optimising its resources for economies of scale, laying a good foundation for future growth.

Desmond Fu concluded, “We will continue to undertake rationalisation of the Group’s resources and corporate structure to achieve the best operational efficiency. Having diversified our geographic coverage and a retrieving business trend as shown in the forth quarter, the management is confident and optimistic towards the future of the Group as a major steel distributor in the PRC,”

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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