CSC to develop into an industrial holding company

Taipei, April 8, 2005 (CENS)--In line with the consolidation wave seen in the global iron and steel industry, China Steel Corp. (CSC) Group is actively considering transforming into an industrial holding company by consolidating subsidiary resources to create higher operating efficiency.

But the transformation seems to be a tough job for the island's largest steel conglomerate as there is no concrete rule governing the industrial holding companies in Taiwan. In addition, the formation of the proposed industrial holding company will force the group's listed subsidiaries to withdraw from the bourse, which will affect the rights of present shareholders.

Due to the consistent rise in steel prices and transportation charges, CSC Group posted over NT$300 billion (US$9.58 billion at US$1:NT$31.3) and NT$78.7 billion (US$2.51 billion) in revenues and earnings last year, both up 40% from the previous year and hitting historical highs since its founding 32 years ago. Of the overall earnings, CSC, the parent of the group, recognized NT$7.944 billion (US$253.8 million).

Among the group's subsidiaries at home and abroad, the most profitable ones included Chung Hung Steel Corp. and Dragon Steel Corp. which focus on steel-related business scopes; Ornasteel Enterprise Corporation (Malaysia) Sdn. Bhd. And Group Steel Corporation (Malaysia) Sdn. Bhd., which are listed in Malaysia; and China Hi-ment Corp. which concentrates on steel byproducts derived from steel refining.

These subsidiaries that focus on steel-related business scopes accounted for over 90% of the total earnings created by the group's all subsidiaries last year.

A high-ranking CSC executive said his company is large enough to develop as an integrated organization so as to consolidate the massive resources of all subsidiaries. To that end, the company has mapped out several programs, but concrete actions will be halted until the regulations concerning the establishment and management of the industrial holding companies are worked out.

According to CSC, the global steel output broke the one billion metric ton mark last year and the steel prices have shot up fourfolds over the past three years. During the prosperity period, consolidation of the global steel sector has been at high gear and the situation will continue in the next few years.

Revenues and Earnings of CSC Group and Subsidiaries in 2004
Company	Revenues (NT$100 million)	Earnings (NT$100 million)	EPS (NT$)
CSC	1,682.7	650.71	6.58
Chung Hung Steel	461.97	24	2.02
Dragon Steel	111.42	13	2.98
China Steel Chemical	39.81	14	7.24
	33.17	6.99	3.62
China Steel Express	205.26	40	9.48
C.S. Aluminum	132.33	8.4	1.4
China Steel Global Trading	104.15	7.3	12.1
China Steel Security	6.39	0.28	1.5
Info-Champ Systems	4.52	1.08	2.6
China Steel Machinery	21.22	0.25	0.31
Source: CSC