The year 2003 has seen Baosteel seizing historical opportunity and reaping a bumper harvest with quickened reform pace and a brand-new prospect.

The performance Baosteel made in 2003 is exciting: its consolidated sales income reached RMB 120.4 billion, 55% up over the previous year, and a consolidated profit RMB 13.17 billion, 88% up over the previous year. This is the fourth consecutive year since 1999 for Baosteel to achieve profit growth at a high speed.

In 2003, Baosteel made remarkable progress in premium steel production. In the home market, the shares of its automotive steel, hot-rolled pickled steel and pipeline steel went beyond 50%, those of appliance steel and die steel (slab) exceeded 40% and those of oil well tubing, coated steel and boiler tubes accounted for above 20%.

In 2003, Baosteel mapped out the strategy and the industrial orientation for a new round of development and implemented strategic management according to its strategic objective. It began compiling Baosteel's new development plan, pushed forward the scroll-type development by combining strategy, planning and annual operation budget to promote coordinated advances in various industries, carried out the check-up mechanism by linking industrial development plan to the operation responsibility targets for each company to make clear-cut the operation responsibility, and enhanced management innovation, by optimizing management through integrated operation, adjusting management mechanism and reengineering the management process, so as to streamline its steel-making and non-steel making businesses.

In 2003, Baosteel vigorously pushed on the construction of premium steel base and the R&D base for new process, new technology and new material. The fixed assets investment made by it totaled RMB 14,026 million, an increase of RMB 4,904 million over previous year. With great efforts made in the assets operation, it accomplished the equity transfer and major assets restructuring of Shanghai Yichang Steel Sheet Co., Ltd. and Huchang Special Steel Co., Ltd., and increased to above 25% its shares in China Pacific Insurance Co., Ltd.. It intensified the foreign exchange and cooperation, signed the cooperation agreements with Nippon Steel Corporation and Arcelor for 1800mm cold strip mill, laser tailor welding and automotive parts and components. And it concluded the general cooperation agreements with the coal and nickel suppliers and the three major home automobile groups as the upstream and downstream players of steel production, for the sake of joint development. It speeded up the revamping of conventional businesses with information technology, with 15 new key R&D projects established in the year, focusing on the research on leading technology, the development of general technology, the fostering of its proprietary intellectual properties and sustainable development. It spared no efforts to fulfill the production capacity and standards of the projects in the iron & steel plan, and successively started a series of key leading R&D projects, with initial results achieved.

After 5-year long brilliant performances since merger and restructuring, Baosteel is aiming higher. The strategic objective it sets for the new round of development is: ranking among Global 500, possessing its proprietary intellectual property rights and strong comprehensive competitiveness and building itself into a highly admired and worldwide first-rate transnational company that features tremendous power in steel making and the appropriate diversification. Targeting at the new round development, it will proactively implement the premium steel strategy, appropriate diversification strategy, assets operation strategy and international operation strategy.

The corporate strategy for the new round of development started by Baosteel since 2003 is implemented by the following stages.

Stage I aims at: completing the transitional preparation to shape the initial integrated operational system by 2005.

Stage II aims at: realizing integrated operation and directly entering the international capital market by 2010.

The year 2004 is the key year for Baosteel to accomplish the "Tenth Five Year" plan. Closely centering on the Stage I objective, we will continue the construction of premium steel base and enhance technological innovation capability; deepen the innovation in corporate system, structure and management and carry forward integrated operation in an all-round way; seize the opportunity for the development in the world iron & steel industry and expand international operation in new fields; improve the supervisory and control system for state-owned capital and achieve the preservation and appreciation of state-owned capital. The following are major tasks:

I. Speed up the construction of 3 manufacture centers for carbon steel, stainless steel and special steel respectively, vigorously popularize the modern management of Baoshan Iron & Steel Co., Ltd. and accomplish substantive breakthrough in integrated operation;

II. Improve the supervisory and control system for state-owned assets, shape up a restraining mechanism for the power structure, decision-making organ, supervisory organ and managerial personnel, to ensure the preservation and appreciation of state-owned assets;

III. Draw up the "Eleventh Five Year" plan and well dovetail the plan and budget.

IV. Enhance the management of key construction projects to achieve targeted figures and smooth production;

V. Further improve the technology innovation system, and strive for creating proprietary intellectual properties in key projects.

VI. Vigorously carry forward international operation to expand overseas business.

VII. Substantively start centralized purchases, and exercise centralized operation for purchase of bulk raw material and fuels and related logistics management;

VIII. Promote the strategy of talents for powerful enterprise, foster talent teams, speed up the reform of employment, distribution and cadre systems, and form a vigorous talent employment mechanism tailored to the rapid development of Baosteel;

IX. Continue to separate the sideline business from mainline business and restructure the former, and open up new channels for re-employment;

X. Get rid of conceptual obstacles and quicken fostering corporate culture system tailored to its new development.

Baosteel is endowed with huge potentials for development, thanks to China's sustained and steady economic development, to the ever-growing demand of customers, to the bettering allocation of resources inside, to the energetic support of its strategic partners and to the devotion of all its staff. Looking forward, we are full of confidence. Baosteel will not merely rank in Global 500, but also among the best of Global 500 and among the world top 3 steel-makers. We will develop by sharpening the edge of core competitiveness, win reputation with premium steel products, reward the society with sustainable growth and realize the strategic objective for the new round development with excellent performance, so as to accomplish the corporate mission and become a highly admired worldwide first-rate transnational company.