September 30 September ASSETS Amount % Amount % LIABILITIES AND STOCKHOLDERS EQUITY Amount % Amount %

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1 CHINA STEEL CORPORATION BALANCE SHEETS (In Thousands of New Taiwan Dollars, Except Par Value) (Reviewed, Not Audited) September 30 September 30 ASSETS Amount % Amount % LIABILITIES AND STOCKHOLDERS EQUITY Amount % Amount % CURRENT ASSETS CURRENT LIABILITIES Cash and cash equivalents $ 12,911,650 6 $ 710,444 - Short-term bank loans and overdraft $ 8,534,101 4 $ 2,034,195 1 Short-term investments 26,301, ,096, Commercial paper payable 1,999, ,998,335 1 Notes receivable 1,724, ,313 - Notes payable 10, Accounts receivable net of allowance for doubtful accounts of $134 and $1,214 Accounts payable 3,144,458-2,280,022 1 thousand as of September 30, 2004 and 2003, respectively 2,577, ,974,314 1 Income tax payable 5,558, ,573,651 2 Other receivable 270, ,630 - Accrued expenses 6,421, ,312,039 3 Inventories 24,368, ,106,516 8 Bonds payable current portion ,500,000 6 Deferred income tax assets 156,544-48,349 - Long-term bank loans current portion ,080 - Pledged time deposits 4,200, ,600,000 3 Other 2,733, ,010,286 2 Other 175, ,771 - Total current liabilities 28,401, ,553, Total current assets 72,685, ,608, LONG-TERM LIABILITIES-NET OF CURRENT PORTION LONG-TERM INVESTMENTS Bonds 15,000, ,000,000 7 Long-term stock investments Bank loans 2,145, Equity method 37,944, ,389, Cost method 9,077, ,941,945 2 Total long-term liabilities 17,145, ,000,000 7 Total long-term stock investments 47,022, ,331, Prepayments for long-term stock investments - - 1,000,000 1 RESERVE FOR LAND VALUE INCREMENT TAX 3,370, ,370,813 2 Other 185, ,311 - OTHER LIABILITIES Total long-term investments 47,207, ,477, Deferred income tax liability 3,001, ,361,256 1 Deferred credits gain on intercompany transactions 1,409, ,405,040 1 PROPERTIES Land 7,146, ,146,632 3 Total other liabilities 4,411, ,766,296 2 Land improvements 4,275, ,316,764 2 Buildings and improvements 36,207, ,356, Total liabilities 53,328, ,690, Machinery and equipment 211,762, ,959, Transportation equipment 1,548, ,518,886 1 STOCKHOLDERS EQUITY Miscellaneous equipment 2,964, ,925,153 1 Capital stock authorized 10,600,000 thousand shares at NT$10 par value Total cost 263,904, ,223, Common issued 9,883,352 and 9,452,324 thousand shares as of September 30, Appreciation 17,820, ,319, and 2003, respectively 98,833, ,523, Total cost and appreciation 281,724, ,543, Preferred issued 47,762 thousand shares 477, ,620 - Less: Accumulated depreciation 188,829, ,675, Total capital stock 99,311, ,000, ,895, ,867, Capital surplus 1,013, ,047 - Constructions in progress 6,706, ,379,302 2 Retained earnings 34,025, ,964, Current profit 36,932, ,649, Net properties 99,601, ,247, Other equity items Unrealized loss on investees long-term investments ( 467,346 ) - ( 525,595 ) - OTHER ASSETS Cumulative translation adjustments 65,444-94,416 - Rental assets 3,102, ,790,849 2 Investees unrecognized net loss on pension cost ( 21,652 ) - ( 15,647 ) - Refundable deposits 171, ,376 - Total other equity items ( 423,554 ) - ( 446,826 ) - Restricted assets-pledged time deposits 31, ,694 - Treasury stock 86,560 and 93,289 thousand shares as of September 30, 2004 Unamortized repair costs and others 248, ,529 - and 2003, respectively ( 1,140,712 ) ( 1 ) ( 1,272,242 ) ( 1 ) Total other assets 3,553, ,839,448 2 Total stockholders equity 169,719, ,481, TOTAL ASSETS $ 223,047, $ 208,171, TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 223,047, $ 208,171,

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3 CHINA STEEL CORPORATION STATEMENTS OF INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited) Amount % Amount % REVENUES $ 121,392, $ 96,228, COST OF REVENUES 75,481, ,153, GROSS PROFIT 45,910, ,074, UNREALIZED GAIN ON INTERCOMPANY TRANSACTION 2, REALIZED GROSS PROFIT 45,908, ,074, OPERATING EXPENSES Selling 1,654, ,492,099 1 General and administrative 1,826, ,689,477 2 Research and development 756, ,124 1 Total operating expenses 4,237, ,865,700 4 OPERATING INCOME 41,671, ,208, NONOPERATING INCOME Interest 111,024-89,468 - Investment income under the equity method 5,191, ,540,183 5 Gain on disposal of investments 678, ,483 - Other 874, ,738 1 Total nonoperating income 6,855, ,241,872 6 NONOPERATING EXPENSES AND LOSSES Interest 775, ,059,302 1 Impairment loss on rental assets 594, Loss on disposal of assets 326,458-26,245 - Other 323, ,695 1 Total nonoperating expenses and losses 2,019, ,525,242 2 INCOME BEFORE INCOME TAX 46,508, ,925, INCOME TAX 9,575, ,276,306 6 NET INCOME $ 36,932, $ 27,649, (Continued)

4 Before After Before After Tax Tax Tax Tax EARNINGS PER SHARE Basic $ 4.74 $ 3.76 $ 3.46 $ 2.82 Diluted $ 4.72 $ 3.75 $ 3.45 $ 2.81 PRO FORMA INFORMATION-if the Corporation s shares held by subsidiaries had been accounted for as investments rather than treasury stock Net income $ 37,226,873 $ 27,807,418 Before After Before After Tax Tax Tax Tax Basic earnings per share based on weighted-average number of outstanding common shares amounting to 9,883,324 thousand and 9,877,067 thousand as of September 30, 2004 and 2003, respectively $ 4.73 $ 3.76 $ 3.44 $ 2.81 Diluted earnings per share based on weighted-average number of outstanding common shares amounting to 9,931,086 thousand and 9,924,829 thousand as of September 30, 2004 and 2003, respectively $ 4.71 $ 3.75 $ 3.43 $ 2.80

5 CHINA STEEL CORPORATION STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited) Nine months Ended September 30 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 36,932,531 $ 27,649,252 Depreciation 7,576,831 8,349,122 Amortization 247, ,334 Deferred income tax ( 349,922 ) ( 201,515 ) Reversal of provision for loss on doubtful accounts - ( 4,346 ) Impairment loss on rental assets 594,000 - Reversal of provision for loss on inventories ( 5,000 ) - Investment income under the equity method ( 5,191,563 ) ( 4,540,183 ) Loss on disposal of properties 326,458 26,245 Cash dividends from long-term investments under the equity method 3,354,496 1,633,784 Construction dividends from long-term investments under the cost method 15,616 - Gain on disposal of short-term investments ( 466,690 ) ( 269,563 ) Gain on disposal of long-term investments ( 211,698 ) ( 3,920 ) Unrealized gain of intercompany transactions 2,090 - Effect of exchange rate changes on foreign-currency long-term debts ( 79,800 ) 33,800 Changes in operating assets and liabilities Notes receivable ( 1,236,116 ) ( 216,871 ) Accounts receivable ( 1,526,468 ) ( 327,891 ) Inventories ( 5,130,345 ) ( 638,040 ) Other receivable ( 119,705 ) ( 69,591 ) Other current assets 266,439 ( 105,068 ) Notes payable 10,006 - Accounts payable 852, ,885 Accrued expense 531, ,853 Income tax payable ( 981,218 ) 843,129 Other current liabilities 312, ,408 Net cash provided by operating activities 35,723,756 33,430,824 CASH FLOWS FROM INVESTING ACTIVITIES Decrease (increase) in short-term investments 12,994,427 ( 12,075,807 ) Acquisition of properties ( 5,620,444 ) ( 3,802,809 ) Increase in long-term investments ( 1,672,097 ) ( 2,938,166 ) Proceeds from disposal of long-term investments 1,403,797 9,641 Decrease in pledged time deposits 700,000 - Increase in other assets ( 103,681 ) ( 31,848 ) Net cash provided by (used in) investing activities 7,702,002 ( 18,838,989 ) (Continued)

6 Nine months Ended September 30 CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term bank loans and overdraft $ 3,924,631 $ 1,224,507 Increase in commercial paper payable 300,741 1,999,988 Repayment of bonds payable ( 10,000,000 ) ( 6,700,000 ) Repayment of long-term bank loans ( 50,000 ) ( 2,223,765 ) Transfer of treasury stock to employees 434 1,807,066 Cash dividends ( 28,454,108 ) ( 13,013,564 ) Compensation to directors and supervisors ( 98,526 ) ( 44,589 ) Net cash used in financing activities ( 34,376,828 ) ( 16,950,357 ) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 9,048,930 ( 2,358,522 ) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,862,720 3,068,966 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 12,911,650 $ 710,444 SUPPLEMENTAL INFORMATION Interest paid $ 840,122 $ 1,176,217 Interest expense capitalized - ( 137,456 ) Interest paid $ 840,122 $ 1,038,761 Income tax paid $ 10,906,660 $ 5,634,692 PURCHASE OF PROPERTIES Purchase of properties $ 5,389,117 $ 4,053,865 Decrease (increase) in payable on properties purchased 231,327 ( 251,056 ) $ 5,620,444 $ 3,802,809 NONCASH FINANCING ACTIVITIES Current portion of long-term bank loans $ - $ 10,050,000