13020 Alert Steel AR Cover - Johannesburg Stock … 071 609 1093. ANNUAL REPORT 2013 3 North West Gauteng Mpumalanga KwaZulu- Natal Eastern Cape Western Cape Northern Cape Free State

ANNUAL REPORT 2013 2

CONTENTS

BUSINESS OVERVIEW

Values, Vision and Mission

Corporate Profile

Footprint

Board of Directors

Chairman and Chief Executive’s Report

Chief Financial Officer’s Report

Corporate Governance Statement

Remuneration Report

Risk Management

FINANCIAL STATEMENTS

Summarised Consolidated Statement of Comprehensive Income

Summarised Consolidated Statement of Financial Position

Summarised Consolidated Statement of Changes in Equity

Summarised Consolidated Statement of Cash Flows

Summarised Consolidated Segmental Analysis

Notes to the Summarised Consolidated Financial Results

Financial Results

SHAREHOLDERS’ INFORMATION

Shareholders’ Information

Shareholders’ Diary

Notice of Annual General Meeting

Annual General Meeting – Explanatory Notes

Form of Proxy

Notes to the Form of Proxy

Corporate Information

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48

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Ibc

ANNUAL REPORT 2013


OUR valUes: •Integrity

•Honesty

•Transparency

•Fairness

•Consumerism

OUR vIsION: Tobethemarketleaderintheretailingofsteelandsteel

relatedproducts.

OUR MIssION: Toensurethatthebestpossible,well-pricedproductsare

alwaysavailabletoourcustomers.

CORPORaTe PROFIle: AlertSteelHoldingsLimitedisoneofSouthAfrica’sleading

retailersofsteelandsteelrelatedproductsandservicestothe

construction,manufacturingandbuildingindustries.

Thecompanywasestablishedin1979andlistedontheJSE’s

AltXbourseon1March2007(AltXcode:AET).

aleRT sTeel HOlDINGs lIMITeD IncorporatedintheRepublicofSouthAfrica

Registrationnumber:2003/005144/06

AltXcode:AET

ISIN:ZAE000092847

who we are

2 ANNUAL REPORT 2013

OUR FOOTPRINT

9. Alert Steel Polokwane CnrNikkelandKobaltStreets, Superbia, Polokwane 0152922043/4

10. Alert Steel Shayandima (Thohoyandou) StandNo3, IndustrialArea, Shayandima, Thohoyandou 0159641707/8/9

11. Alert Steel Rustenburg 23WatervalAvenue, Rustenburg 0145928762

aleRT eXPRess BRaNCHes1. Alert Steel Zeerust Shop1, Stand59, 61ChurchStreet, Zeerust 0861125378

2. Alert Steel Mahikeng 41JamesWattCresent, 1stStreetIndustrial 0737763988

3. Alert Steel Bela Bela 26SutterRoad, BelaBela 0147364887

4. Alert Steel Modimolle 9NeptuneStreet Modimolle 0147172784

5. Alert Steel Groblersdal 3PeterStreet, Groblersdal 0132625901

aleRT sTeel aND BUIlD BRaNCHes 1. Alert Steel Pretoria CnrEngelbrechtandLanhamStreets, EastLynne, Pretoria 0128000000

2. Alert Steel Burgersfort DirkWinterbachStreet, Section8Leeuvallei, Burgersfort 0132317187

3. Alert Steel Brits 21vanDeventerStreet, Brits 0122520773

4. Alert Steel Tshwane Shop11,

LenchenCentre, CnrJakarandaandLenchenAvenues, Hennopspark,Centurion

0126535607/8

5. Alert Steel Louis Trichardt 1IndustriaStreet, LouisTrichardt 0155165736/7/8

6. Alert Steel Mokopane 33SussexStreet, Mokopane 0154918984/5/6

7. Alert Steel Tzaneen 18KoedoeStreet, IndustrialArea, Tzaneen 0153076612

8. Alert Steel Lephalale JoeSlovoDrive, Ext16,Section1, Onverwacht, Lephalale 0147636016

6. Alert Steel Mookgophong ShopNumber36, EuphorbiaParkShoppingCentre, Cnr3rdAvenueen4thStreet 0147430193

7. Alert Steel Lebowakgomo StandNo618A, Lebowakgomo, Limpopo 0721953363

8. Alert Steel Kwaggafontein Stand4, KwaggafonteinC 0716426590

9. Alert Steel Randfontein 8VolvoStreet, Aureus, Randfontein 0114122037/2025

10. Alert Steel Lichtenburg 6GerritMaritzStreet, Lichtenburg 0186325034

aleRT eXPRess CONTaINeR sTOResU-shape:1. Mangkweng SiteNo.1197, Syferkuil992LS, GaThoka, Mangkweng 0714464887

2. Ledig CrossRoadNo.2011, Ledig 0837453597

3. KwaMhlanga StandNo.904, MandelaVillage, KwaMhlanga 0716091093


North West Gauteng Mpumalanga

KwaZulu- Natal

Eastern Cape

Western Cape

Northern Cape

Free State

Limpopo

10. Bakenberg StandNo001, MotongSection, Bakenberg 0823774141

11. Tafelkop Z1D, 283UmgababaNewStand, Tafelkop, Limpopo 0823773818

12. Apel Stand6,GANchabeleng, Mashung, Apel 0783188069

13. Bochum Stand276, BochumExt3 0743048015

14. Matoks StandNo500, N1North, Botlokwa, Matoks 0839280552

15. Ekangala Stand1109, SectionF, DarkCity 0716426672

16. Siyabushwa StandNo601, SteveMahlanguStr, Siyabushwa 0722834050

single container stores:1. Ga Mashishi StandNo398, GaMashishi, Burgersfort 0824115144

2. Marite Stand63, Marite, Limpopo 0798765048

3. Acornhoek Stand58, AcornhoekView, Acornhoek 0827781519

4. Jane Furse 9MainRoad, JaneFurse 0714464887

5. Dzanani Erf121, 1289MachadoStreet, Dzanani 0823774094

6. Roerfontein StandNo111, Roerfontein, Limpopo 0716416231

7. Musina 4CHarryTownsendStreet, Musina, Limpopo 0716053430

8. Bungeni StandNo28, Bungeni 0716107143

9. Zebediela StandNo2, GaMogotlane, Zebediela 0824115223

17. Tweefontein StandNo189, Tweefontein 0727446614

18. Kwa-Guqua StandNo6678, Ext6, Kwa-Guqa 0823774611 19. Marapyane Standno2823, NeuhaleSection, Marapyane 0823774527

20. Pankop StandNo1907, PankopTrust, Mpumalanga 0749536766

21. Lerome 393ThabengSection, Lerome, Moruleng 0787145867

22. Malamulele Standno778, Shitlhelani, Malamulele 0726410985

23. Khubvi StandKhubviVillage, KhubviFillingStation, Thohoyandou 0825563965

24. Saselamani StandNo3, XimixoniVillage, SaselamaniArea 0820901197

25. Giyani StandBA65, Giyani, Limpopo 0827532782

26. Modjadi 390ModumelengVillage, Modjadi 0823774369

27. Sekororo Stand73, K.T.SekororoHeadkraal, Naphuno, Limpopo 0828237647

28. Turkey Stand1220, TurkeyVillage, Limpopo 0729956488


Board of directors

PN Dodson (62)Chief executive Officer

PeterDodsonbeganhiscareerinretailingin1974withPick‘nPayandoverthepast38yearshasbeenadirectorofPick‘nPayandOKBazaars.HewasalsoafoundingshareholderanddirectorofthePieCityGroup.Mostrecently,hewasemployedastheChiefExecutiveOfficeroftheMetroCash&CarryGroup.HetookoverthereignsasChiefExecutiveOfficerofAlertSteelinFebruary2013.

MsI Gani (60)Chief Financial Officer

MahomedGaniisaqualifiedCharteredAccountantaswellasamemberofSAICAandIRBA.HewasapartneratPricewaterhouseCoopersfrom2003,untilhisretirementinJune2013,andpriortothathadbeenapartneratMSGMAuditors.

MM Patel (38)Independent Non-executive Director (Chairman of the Board)

MiteshPatelisanauditpartnerofNkonkiInc.HequalifiedasaCharteredAccountantin2002.Hehasbeenintheauditandadvisoryprofessionforthepast12years.MiteshisalsothechairpersonoftheauditcommitteesofWearneLimitedandStratCorpLimited.

WP van der Merwe (44)Independent Non-executive Director

WesselvanderMerwehasbeeninvolvedwithAlertSteelsinceitsinitiallistingandbringsawealthofexperienceandknowledgetotheboard.HehasservedasamemberoftheAltXAdvisoryCommitteesince2007andbeforethatheadedupacorporateadvisorybusinessforover14years.HisdirectorshipsincludeSkinwellHoldingsLtd,TasteHoldingsLtd,WGWearneLtdandMoneywebHoldingsLtd.

Bs Mahuma (41)Independent Non-executive Director

GwenMahumaistheChiefExecutiveOfficerofMahumaInvestmentHoldings,aninvestmentvehiclewithinterestsinthesteel,concreteandtheinfrastructuresector.SheholdsaBCom(Hons)andwaspreviouslythemanagingdirectorofasupplierofroofboltstotheminingindustry.HercurrentdirectorshipsincludeCapitalAfricaSteel,WSPAfrica,CASEnviroandAlertSteelTshwane(Pty)Ltd.

ae loonat (34)Independent Non-executive Director

AfzalLoonatisanauditpartneratBismillaCAInc.andhasbeenactivelyinvolvedinauditingandrelatedservicesforthepast10years.


Chairman and Chief exeCutive’s report

whichhasresultedinthegovernmentcancellingmuchof

thedevelopmentinthisareabothinthelast12monthsand,

seemingly,forthedirectlyforeseeablefuture.

GROUP OPeRaTIONs RevIeWDuring2013,ashortageofcashandstockresultedinsales

notbeingoptimised.Stockshortagesarosefromtwoissuesin

particular;aninsufficientcompanycashflowandsuppliersbeing

continuouslyshortofstock.Cashdiscountswerelostasaresultof

latepaymentstosuppliers.

Saleswerenegativelyaffectedbythestocksupplypositionand

newcompetitorentriesintotheretailsteelindustryfurther

exacerbatedthecompany’slackofsalesgrowth.Furtherto

this,withtheindustrydeclining,allparticipantsbecamemore

aggressiveinattemptingtoholdontomarketshareandthis,

alongwiththenewcompetitorsenteringthemarket,resultedin

loweroverallmargins.

OurTransnetcontractsfellshortofexpectedbudgets,butour

ExpressandContainerstoredevelopmentscontinuetoflourish

andgreateremphasisisbeingplacedonopeningmoreExpress

storesinthenewfinancialyear.Aconsumerserviceindexwas

introducedintothecompanytomonitorconsumerisminthe

company.Thisismeasuredmonthlyandadefinitiveimprovement

hasbeenachievedinthelastyear.

Manychangeswereintroducedintothecompanyoverthepast

financialyear,someofwhichresultedinanetR29.8millionbeing

raisedfromtheissueofshares.

Revenueduringthisperioddecreasedby13%toR716.8million.

Gross profit decreasedby8.8%toR155million.However,the

company’sgrossprofitmarginimprovedfrom20.6%in2012

to21.6%.

Operating expensesdecreasedby11.2%toR198million.

eBITDahasimprovedfromalossofR36.5milliontoalossof

R20.7million.

Market dynamicshavebeenturbulentoverthelastyeardue

tostockshortagesandthefireatMittal’sVanderbijlparkplant,

whichresultedinalossofproductionand,futhertothis,ageneral

depressioninthebuildingindustry.Performanceacrossthe

industryhasbeenflatoverthepastyear.Itisclearthatthereistoo

muchrealestateavailableinallsectorsofthemarket(industrial,

retailandofficespace)andthishasresultedinfewernew

developmentsbeingbuilt.TheindustryisvaluedatR30billion

andproductionhasremainedthesameoverthepastyear.

Itispertinenttonotethat43%ofAlertSteel’srevenueis

generatedfromtheLimpoporegionandthisareaofthecountry

hasbeenbesetwithprovincialgovernmentalcorruption,


Chairman and Chief exeCutive’s report Continued

sOCIal ResPONsIBIlITyOurgraduateprogramiscurrentlybeingaddressedtoensure

thatitfunctionsaseffectivelyaspossible.Twenty-ninepreviously

disadvantagedblackgraduateswillstartworkingatAlertSteel

attheendofAugust2013withafurther60graduates,thatwe

haveappliedforfromWRSETA,startingwiththecompanyin

thenearfuture.Thisprogramisbeingdevelopedinpartnership

withWRSETA.Theobjectiveofthisprogramistoimproveour

competency/intellectualstandardinourgroupandtodevelop/

improveourblackmanagementratios.

CHaNGes TO THe BOaRD OF DIReCTORsPeterDodson NewlyappointedChiefExecutiveOfficer

MiteshPatel NewlyappointedChairman

AfzalLoonat NewlyappointedNon-ExecutiveDirector

MahomedGani NewlyappointedChiefFinancialOfficer

aCkNOWleDGeMeNTWewouldliketothankourAlertSteelmanagementandstafffor

theirsupport,longhoursandhardwork,especiallyduringthelast

fewmonths,whichhasbroughtsignificantchangewiththem.

Toourboardmembersbotholdandnew–thankyou.

WesayfarewelltoJohanduToit,WynandSchalekamp,Malcolm

McCullochandNeilCresswellandthankthemfortheirinvaluable

contributionsandatthesametimewelcomeournewboard

membersMiteshPatel,MacGaniandPeterDodson.Inaddition,

wewelcomeAfzalLoonatasanon-executivedirector.

Finally,andmostimportantly,wewanttothankourcustomersfor

theircontinuedsupportandweareconfidentthatourcustomers

willbedelightedthattheywillonceagainbeabletopurchase

building,hardwareandplumbingmaterialsfromouroutlets.

Peter Neill Dodson Mitesh Patel ChiefExecutiveOfficer Chairman

aCqUIsITION aND DIsPOsalsDirectlyafterthe2013financialyearend,thecompanyacquired

fiveBuildKwikStoresand,subjecttocompetitionapprovalandall

statutoryapprovalsbeinginplace,wetrustthatthisacquisition

willhaveasignificantandpositiveimpactonoursalesforthe

2013/2014financialyear.AlertSteelacquiredthesestoresaspart

ofastrategytoprovideitsconsumerswithanaugmentedproduct

offering.BuildKwikisanaturalextensionofthesteelbusinessas

itincludeshardwareandbuildingsupplies,whichcompliment

steelwellasalltheseelementsareconnectedtothe

constructionindustry.

Duringtheyear,themajorshareholdersettledallofthedebt

owingtoNedbankandon19August2013themajorshareholder

signedanagreementtosubscribeto48millionadditionalshares

atR2eachbyconvertingR75millionofthisdebtintocapitaland

theinjectionofanadditionalR21millionincash.Thenetasset

valueofthegroup,hadthespecificissueofsharestakenplaceon

30June2013,wouldhavebeenR72.5million.

lOOkING aHeaDInensuringthatthereturntohealthofthecompanyisachieved,

thefollowinginitiativeshavebeenplannedforimmediate

implementation:

• Furthercostcuttingisinprogress

• ExpansionofExpressstorestobeimplemented

• Cashflowimprovementthroughafurthercashinjection

• Restructuringofthecompany’sbalancesheet

• DebtwillbeatR67375540by30June2014

• Theintroductionofbuildingmaterialsandhardwareand

plumbingproductsintoallAlertSteelstores

• Theintroductionofsteelintoournewlyacquired

BuildKwikstores

Amajorredesignofthe10mainAlertSteelbranchesisunderway

tocaterforthenewproductcategoriesandthiswillcontributeto

bringingmorecustomersintoourstores.

Thethreemodelsthatwillbeimplementedare:

large branches(1000–3000squaremetres)

express stores(400squaremetres)

Triple container outlets(160squaremetres)


Chief finanCial OffiCer’s repOrt

Includedintheoperatingexpensesaredepreciation,amortisation

andimpairments,whichaccountedfor2.7%ofrevenue

(2012:3.4%).

Duringtheyear,investmentsheldinAquarellaInvestments454

ProprietaryLimited,AnchorParkInvestments114Proprietary

LimitedandDualIntakeInvestments24ProprietaryLimitedwere

soldtoCannistraro282InvestmentsProprietaryLimited.

CONsOlIDaTeD sTaTeMeNT OF THe GROUP’s FINaNCIal POsITIONGoodwill and intangible assetsAnadditionalamountofR0.5milliongoodwillthataroseonthe

AlertSteelNorthWestacquisitionwasimpaired.

Property, plant and equipmentCapitalexpenditureofR15.6million(2012:R14.8million)was

incurredtomaintainoperationsandexpandbusinessoperations.

TheboardhasapprovedcapitalexpenditureofR10.5millionfor

the2014financialyear,mainlyrelatedtothecompany’srural

expansionstrategy.

Trade and other receivablesTheprovisionforimpairmentdecreasedsignificantlyto

R9.5million(2012:R44.6million).

Thetradeandotherreceivablesdays’revenueoutstanding

decreasedto23days(2012:33days).

CONsOlIDaTeD sTaTeMeNT OF COMPReHeNsIve INCOMeRevenuedecreasedby13%toR716.8million(2012:R824.6million).

Themainreasonforthedecreaseinrevenuewasthedifficult

tradingconditionsthatprevailedduringtheyear,particularly

intheLimpopoProvincewherethecompanyhasasignificant

presence.Thedifficulttradingconditionsaremainlydueto

thecentralgovernmentfreezingtheawardingofpublicworks

contractsinthatprovinceandthestrikeactionat

theMedupiconstructionsite.

Thegrossprofitdecreasedby8.8%toR155million(2012:

R169.9million).However,thegrossprofitpercentageincreased

from20.6%to21.6%,mainlyasaresultofanincreaseincashsales

intheruralareasinbothourbranchesandExpressstores.

Ouroperatingexpenseswerereducedby11.2%toR198million

(2012:R223million).Thisdecreasewasaresultoftherestructuring

measuresimplementedbymanagement,includingbranch

closuresandretrenchments.Managementalsoimplemented

additionalrestructuringmeasureswhosefulleffectwillonlybe

seeninthe2014financialyear.

Asaresultoftheincreaseinthegrossprofitmarginandthe

decreaseinoperatingexpenses,thenetlossfromoperationswas

reducedfromR48.5millionin2012toR40million.


Chief finanCial OffiCer’s repOrt COntinued

Current liabilities

TradeandotherpayablesdecreasedtoR117.5million

(2012:R160million).Thecostofsalesdaysoutstandingintrade

andotherpayablesdecreasedto77days(2012:88days).

Dividends

Nodividendshavebeendeclared.

Going concern

Thegroupincurredalossfortheyearended30June2013of

R51.2million(2012:R73.0millionandatthatdatethetotal

liabilitiesexceededthetotalassetsbyR23.5million(2012:

R2.1million).

Notwithstandingthelossfortheyear,therehavebeen

considerableimprovementsinthegroup’sfinancialperformance,

cashflowsanditsfinancialposition:

• Inthecurrentyearcashutilisedinoperatingactivitiesimproved

fromR48.5milliontoR23million.

• NetcurrentassetswereR57.2millioncomparedtonetcurrent

liabilitiesofR71.1millioninthepreviousyear.

Thedirectorshaveassessedthegroup’scashflowsrequirements

forthenext12months.Atpresent,evenunderthecurrentmarket

conditions,theearningsbeforetaxanddepreciationarecovering

theinterestburden.Thecashflowsindicatethatthegrouphas

sufficientcashresourcestomeetitsobligationsastheyfalldue.

Revenuegrowthforthenextyearisbasedonthegrowthofnew

productrangesofhardwareandcementfromthecurrentbranch

infrastructureandfromthegrowthattributabletotheacquisition

oftheBuildKwikstoressubsequenttotheyearend.Expenseshave

beencalculatedbasedonavariableandfixedcostbasis.Variable

expenseswerebasedonthehistoricpercentageofrevenueand

fixedoverheadsadjustedforinflationexceptforareaswherecost

savingshavealreadybeenimplementedandverified.

Thepastduebutnotimpairedtradereceivablesimprovedby

R11.2milliontoR10.8million(2012:R22million).

Inventory

InventorydecreasedtoR119.6million(2012:R154.5million).

Inventorydaysreducedfrom85daysto79days.Management

hassubstantiallyreducedinventorylevels,withfurtherdecreases

ininventorylevelsexpectedduringtheremainderofthe2014

financialyear.Thisformspartofmanagement’sstrategytofreeup

furthercashflowtofinanceitsruralexpansion.

Theprovisionforimpairmentsofinventorydecreasedto

R4.3million(2012:R4.5million).

Cash and cash equivalents

Intermsofinvestingactivities,thecompanyusedR18.3million

oncapitalexpenditureandreceivedR11.3millionondisposal

ofproperty,plantandequipment.Thecompanyreceived

R10.3milliononthedisposalofbusinesses.

ThecashusedbyoperationswasR23million.Thiswasmainly

drivenbythelossbeforeinterest,tax,depreciationand

impairmentsofR16million,netfinancecostsofR16.1million.

share capital

On28November2012,1108840297shareswereissuedto

CapitalAfricaSteel(894554583shares)andNedbank

(214285714shares)inadebttoequityconversionat

2.8centspershare.

On10December2012thecompanyconsolidateditssharesata

ratioof100:1.Theissuessharecapitalwasreducedwith

5149379948sharesduetotheimpactoftheconsolidation.

On14January2013atotalof14279shares,whichresultedfrom

thefractionalshareholderswereboughtbackandcancelled.


Inaddition,on19August2013themajorshareholderentered

intoaspecificissueofsharesforcashagreement,subjecttothe

fulfilmentofconditionsprecedent,toissue48millionsharesat

200centspershareforcash.Thenetassetvalueofthegroup,had

thespecificissueofsharetakenplaceon30June2013,would

havebeenR72.5million.

Giventhedirectors’evaluationthatthegrouphassufficientcash

resourcestomeetitsobligationsastheyfalldue,thefinancial

statementshavebeenpreparedonthebasisofaccounting

policiesapplicabletoagoingconcern.

MsI Gani

ChiefFinancialOfficer

VIT SED QUATRE ASIN UT CONTINUED

10 ANNUAL REPORT 2013 ANNUAL REPORT 2013 11

Corporate GovernanCe Statement

ChiefExecutiveOfficerPeterDodsonensuressoundandefficient

operationofthebusinessaswellastheimplementationofall

strategiesandpoliciesadoptedbytheboard.Heisresponsiblefor

clearlyconveyingcommunicationfromtheboardtotheexecutive

management.HeisassistedbyChiefFinancialOfficerMahomed

Ganiandanexecutivecommitteeconsistingofstrategichead

officeemployeeswhotakeresponsibilityforthesmoothdaily

runningofthebusiness.

TheChiefExecutiveOfficer,ChiefFinancialOfficerandexecutive

managementteammeetcollectivelyonaweeklybasisandmore

frequentlyonanindividualbasiswhenmoreintensivefocusis

required.

Intermsoftheboardcharter,theboardmeetsnolessthanonce

eachquarter,andmorefrequentlyifcircumstancesrequire.When

necessary,theyalsoconferthroughroundrobindeliberations.

Meetingsareconductedinaccordancewithformalagendas

andannualworkplans,ensuringthatallsubstantivemattersare

properlyaddressed.Anydirectormayrequestthatadditional

mattersbeaddedtotheagenda.Copiesofboardpapersare

circulatedtothedirectorswellinadvanceofboardmeetings

toensureproperpreparationtoenhancetheconstructiveand

informednatureofdeliberations.Arepresentativefromthe

company’sdesignatedadvisorattendstheboardmeetingsas

requiredintermsoftheJSEListingsRequirements.

Attendancebydirectorsatboardmeetingsduringthereporting

periodisprovidedbelow.Owingtotherestructuringofthe

company,thenumberofmeetingsheldincreasedsubstantiallyin

thepastyear.

Role and responsibilities of the chairmanThechairmanensures,amongotherthings:

• Theoveralleffectivenessoftheboardanditscommittees

• Thattheboardprovideseffectiveleadership,maintainsethical

standardsandisresponsible,accountable,fairandtransparent

• Thatstrategiesaredevelopedandimplementedaccordingto

thecompany’sobjectiveofachievingsustainableeconomic,

socialandenvironmentalperformance

Soundcorporategovernanceisavitalingredientforensuring

thatalldealingsanddecisionsofthebusinessareconductedwith

honestyandfairness.

Duringadifficulttradingyear,whichincludedmajorinternal

restructuring,thisremainedavitalelementofAlertSteel’s

business.Everyemployeeremainscommittedtoactinginline

withthecompany’svaluesofintegrity,respect,transparencyand

accountability.

sTaTeMeNT OF COMPlIaNCeDuringtheyearunderreview,theboardmateriallycompliedwith

theKingIIIReportrecommendations,asoutlinedinthecodeof

corporatepracticesandconduct.Allareasofimprovementthat

havebeenidentifiedarebeingactivelydealtwith.Shareholders

arereferredtoananalysisoftheapplicationofthe75corporate

governanceprinciples,asrecommendedintheKingIIIReport,

whichispublishedonthecompany’swebsite.

BOaRD OF DIReCTORsTheboardconsistsoffourindependentnon-executivedirectors

andtwoexecutivedirectors.Allthedirectorsarehigh-merit

objectiveindividualswhocollectivelycontributeawiderange

ofskillsandknowledgetothedecisionmakingprocessesofthe

boardandwhoalsoensureproperdeliberationofallmatters

requiringtheboard’sattention.

Theboardsubscribestoaunitaryboardstructurewithabalance

ofexecutiveandnon-executivedirectors.Thereisaclear

divisionofresponsibilitiesbetweentheexecutiverunningof

thecompany’sbusinessandtheleadershipoftheboard,such

thatnoindividualhasunfettereddecision-makingpowers.

Thetwoprimarytasksoftherunningoftheboardandthe

executiveresponsibilityofthedaytodayrunningofthebusiness

aremanagedbythechairpersonandChiefExecutiveOfficer

respectively.

ThechairmanoftheboardisMiteshPatel,anindependent

non-executivedirector.Thechairmanprovidesleadershipand

guidancetotheboardasawholeandencouragesproper

deliberationofallmattersrequiringtheboard’sattention.


summary of changes to the board:Thefollowingchangestotheboardtookplaceduringthe

previousauditedfinancialyear:

• EHewitt(Non-ExecutiveDirector)

–Resignedon12November2012

• NCresswell(FinancialDirector)

–Resignedwitheffectfrom10January2013

• JduToit(ChiefExecutiveOfficer)

–Resignedon6February2013

• JduToit(ChiefFinancialOfficer)

–Appointedon20February2013

• JduToit(ChiefFinancialOfficer)

–Resignedon27June2013

• MWMcCulloch(Non-ExecutiveChairman)

–Resignedon9February2013

• PNDodson(ChiefExecutiveOfficer)


• ALoonat(IndependentNon-ExecutiveDirector)


• WFSchalekamp(Non-ExecutiveDirector)

–Resignedon18December2012

• WFSchalekamp(ExecutiveDirector:SteelOperations)


• WFSchalekamp(ExecutiveDirector:SteelOperations)

–Resignedon27June2013

• MSIGani(ChiefFinancialOfficer)

–Appointed30July2013

Toachievethis,thechairmanfostersacultureofopennessand

constructivechallengewithintheboard,whichallowsforthe

expressionofdiverseviewsandeffectivedebateanddiscussion.

Healsomakeshimselfavailabletoshareholdersfordiscussions

aboutkeycorporategovernancemattersandmattersofconcern

toshareholdersandotherstakeholders.

Roles and responsibilities of the boardThedutiesoftheboardarecomprehensivelysetoutintheboard

charterandincludethefollowingmattersthatarespecifically

reservedforboarddecisions:

• Approvalofthegroup’sstrategyandannualbudget

• Reviewofthegroup’sperformance

• Formulationofstrategyandtheprovisionofdirectiontothe

business

• Approvalofsignificantmattersrelatingtofinance

• Approvalofmajorcapitalexpenditureordisposals,material

contracts,materialacquisitionsanddevelopments

• Ensuringsustainableleadership

• Approvalofannualfinancialstatements,interimreports,the

valuationofunlistedinvestments,thedeclarationofdividends

andtheforfeitureofunclaimeddividends

• Monitoringofthereviewofinternalcontroleffectivenessand

theriskmanagementsystem

• Recommendationofamendmentstothecompany’s

MemorandumofIncorporation

• Confirmationoftheappointment,removalorreplacementof

thecompany’sexternalauditor

• Approvaloftermsandconditionsofanyrightissues,public

offers,capitalissuesorissuesofconvertiblesecuritiesincluding

shareorconvertiblesecuritiesissuedforacquisitions

• Appointmentstoandremovalsfromtheboard,including

theappointmentofthechairperson,chiefexecutiveofficer,

executivedirectors,non-executivedirectorsandthecompany

secretary

• Approvalofnominationsofalternatedirectors(ifany)

• Determinationandapprovalofboardcommittees’termsand

reference

• Monitoringactivitiesoftheexecutivemanagement

• Theboardensuresthatthereisanappropriatebalanceof

powerandauthorityontheboardsothatnoonedirectorhas

unfetteredpowersofdecision-making



Corporate GovernanCe Statement Continued

Board meeting attendance

30.07.12 10.10.12 23.10.12 05.02.13 27.02.13 20.03.13 30.07.13 19.09.13

MWMcCulloch(Chairman)

X X X X Resigned 9February2013

MMPatel(Chairmanfrom 11February2013)

X X X X X X X X

EHewitt X X X X Resigned 5November2012

BSMahuma X X X Apology X X X X

WPvanderMerwe X X X X X X X X

WFSchalekamp X X X Resigned 18December2012

Re-appointedon 11February2013

X Resigned 27June2013

JduToit•ResignedasChiefExecutiveOfficer6February2013

•Appointedon20February2013asChiefFinancialOfficer

•ResignedasChiefFinancialOfficer8July2013

X X X X X X X

NCresswell X X X X Resigned 10January2013

PNDodson XAppointedon 11February2013

X X X

ALoonat XAppointedon 11February2013

X X X

MSIGaniAppointedasChiefFinancialOfficeron30July2013

X X

XIndicatesmeetingattendance

objectivesoftheboardcharteraretoensurethatallboardmembersareawareoftheirdutiesandresponsibilitiesasboardmembersandtoensurethattheprinciplesofgoodcorporategovernanceareappliedinalltheirdealingsinrespect,andonbehalf,ofthebusiness.Theboardcharterisreviewedonan annualbasis.

BOaRD PROCessesBoard charterTheboardchartersetsoutspecificresponsibilitiestobedischargedbytheboard,andeverymemberoftheboard,inaccordancewithKingIII.TheboardcharterhasbeenreviewedduringthepastfinancialyeartoalignthecontentthereofwiththerecommendationsofKingIIIandtheCompaniesAct.The


BOaRD GOveRNaNCe PROCesses Process approach

Appointmentofdirectors Directorsareappointedbymeansofatransparentandformalprocedure,whichisgovernedbythemandateandtermsofreferenceoftheboardcharterandthesocial,ethicsandremunerationcommittee.Adirector’sskills,knowledge,experienceinrelevantsectors,qualifications,availability,numberofexternalboardappointmentsanddiversitycontributionareamongtheselectionconsiderations.Allappointmentsareconsideredinthecontextofthecompany’sstrategies.

Rotationofdirectors Intermsofthecompany’sMemorandumofIncorporation,atleastonethirdofthedirectorsretirebyrotationeveryyearandmayofferthemselvesforre-electionbyshareholdersattheannualgeneralmeeting.

Directors’conflictsofinterest IntermsoftheCompaniesAct,KingIIIandtheboardcharter,adirectorofacompanymustavoidasituationinwhichhe/shehas,orcanhave,adirectorindirectpersonalfinancialinterestthatconflicts,orpossiblymayconflict,withtheinterestsofthecompany.Theboardhasestablishedprocedurestoenableitsdirectorstonotifythecompanyofanyactualorpotentialconflictsituationsandtodeclareanypersonalfinancialinterests.

Ifdirectorsfindthataconflictofinterestisunavoidablethentheymustdiscloseitandrecusethemselvesfromanydecisionsregardingmatterswherethisinterestmayimpairtheirjudgement.

Thepolicygoverningthegroupdeclarationofinterestsregulatesthebehaviourofallothergroupemployees.

Inductionandtrainingofdirectors Whennewdirectorsareappointedtotheboardtheyreceiveaformalinductiontothegroup,whichincludestheirexpecteddutiesasdirectorsofAlertSteelHoldings.Theboardofdirectorsrecognisesthateventhemostseasonedprofessionalsmay,onoccasion,feeltheneedtoseekadvicefromindependentprofessionalsregardingthedischargeoftheirduties.Theboardcharterencouragesthedirectorstoseekindependentadvicefundedbythecompany.

Boardeffectiveness Boardmembersperformedself-evaluationsofourboardanditscommittees.Theseevaluationsconfirmedthatthemembersofboththeboardanditscommitteesbelievethattheyarefunctioningeffectively.Anysuggestionsthatmembersmadethattheybelievedcouldfurtherimprovetheirfunctioningwereactedon.

Dealinginsecurities Thecompanyhasapolicyinplacetoguidedirectorsanddesignatedemployeesondealinginthecompany’ssecurities.TheJSEListingsRequirementsspecificallyprohibitdirectorsorsenioremployeesfrombuyingorsellingacompany’ssharesduringaclosedperiod.

Closedperiods Closedperiodsareexercisedfromthedateofthefinancialyear-enduntilthecompany’sresultsarepublishedonSENS.Additionalclosedperiodsareenforcedasrequiredintermsofanycorporateactivityorwhendirectorsareinpossessionofprice-sensitiveinformation.Directorsofthecompanyandthecompanysecretary,theirassociatesormembersorimmediatefamilyarenotallowedtodealdirectlyorindirectly,atanytime,inthesecuritiesofthecompanyonthebasisofunpublishedprice-sensitiveinformationregardingthecompany’sbusinessoraffairs.Theseindividualsaremadeawareofrestrictedorclosedperiodsfordealingsandtheprovisionofinsidertradinglegislation.




BOaRD COMMITTeesBoardcommitteescurrentlycomprisethreesub-committees,namelytheauditcommittee,theriskcommitteeandthesocial,ethicsand

remunerationcommittee.Thesub-committeeshaveformallydeterminedtermsofreference,clearlyagreeduponreportingprocedures

andwrittenscopeofauthority,whicharereviewedonanannualbasisandapprovedbytheboard.Sincethestructureandcomposition

oftheboarddoesnotwarrantaseparatenominationscommittee,thefunctionsofthiscommitteeareincludedundertheambitofthe

social,ethicsandremunerationcommittee.

aUDIT COMMITTeeaudit committee meeting attendance

23.10.12 20.03.13 12.09.13

MMPatel(Chairman) X ResignedascommitteeChairmanon 11February2013whenappointedChairmanoftheboard

WPvdMerwe(Chairmanfrom11February2013) X X X

EHewitt X Resigned 5November2012

BSMahuma Appointed 26November2012

X X

JduToit(Asinvitee) X X Resignedon 8July2013

NCresswell(Asinvitee) X Resignedon 10January2013

PNDodson(Asinvitee) X X

ALoonat Appointed 11February2013

X X

MSIGani(Asinvitee) XAppointedas ChiefFinancialOfficeron30July2013


Theauditcommitteecomprisesofthefollowingthreeindependentnon-executivemembers:WesselvanderMerwe(Chairman),

AfzalLoonatandGwenMahuma.

Theboardissatisfiedthatthemembersoftheauditcommitteearehighlyqualifiedindividualswho,onacollectivebasis,havesufficient

qualificationsandexperiencetofulfilitsduties.Themembersofthecommitteearealsopermittedbytheboardtoconsultwithspecialists

whenrequired.

Theprimaryroleoftheauditcommitteeistoensuretheintegrityofthefinancialreporting,theauditprocessandthatasoundrisk

managementandinternalcontrolsystemismaintained.Inpursuingtheseobjectivestheauditcommitteeoverseesrelationswiththe


eXTeRNal aUDITOR• Theauditcommitteeformallyevaluatestheperformanceand

effectivenessofitsexternalauditor.Themostrecentevaluation

wasconductedinSeptember2013when,incompliancewith

KingIIIandtheJSEListingsRequirements,theauditcommittee

confirmed,amongothers,thesuitabilityandeffectivenessof

theexternalauditor.

• Thecommitteedeterminesandcarefullymonitorstheuse

oftheexternalauditorfornon-auditing-relatedservices.It

isguidedbyaformalpolicythatprecludestheauditorfrom

providingservices,whichcouldimpairauditindependence.

• AtitsSeptember2013meetingthecommitteenominated

KPMGInc.forre-appointmentasexternalauditorforthe

comingfinancialyearandsatisfieditselfthatthefirmandits

individualauditorsareproperlyaccredited.Thecommitteealso:

– Notedorratifiedthesummaryofnon-auditrelatedservices

performedduringtheperiodunderreview,ofwhichthere

werenone.

– Reviewedtheexpertise,resourcesandexperienceofthe

group’sfinancecapabilityandagreedtoanactionplanin

respectofthoseareasofthegroupwhereitsfinanceskills

and/orproceduresareinadequate.

RIsk COMMITTee Risk committee meeting attendence

20.03.13 12.09.13

WPvdMerwe X X

ALoonat X X

WFSchalekamp X Resigned 27June2013

PNDodson X X

JduToit(Asinvitee) ResignedasChiefFinancialOfficeron8July2013

MSIGani AppointedasChiefFinancialOfficeron 30July2013

X


externalauditorsandreviewstheeffectivenessoftheinternal

auditfunction.Althoughtheboardhasdelegatedcertainauditing

andfinancialfunctionstotheauditcommittee,itremains

accountableandresponsiblefortheperformanceandaffairsof

thecompany.Theminutesoftheauditcommitteemeetingsare

madeavailabletotheboard.Thechairmanoftheauditcommittee

reportstotheboardateachboardmeeting.

Theboardissatisfiedthattheauditcommitteehascompliedwith

itstermsandreferencesduringtheyearunderreview.

TheChiefFinancialOfficerandtheChiefExecutiveOfficerattend

allthemeetingsbyinvitation.TheJSE-designatedadvisorattends

allauditcommitteemeetingsincompliancewiththeJSEListings

Requirements.Theexternalauditorsattendthemeetingsandalso

haveunrestrictedaccesstothechairmanoftheauditcommittee.

Theauditcommitteehascarriedoutitsfunctionsintermsofthe

JSEListingsRequirementsby:

• ConfirmingthenominationofKPMGInc.asthecompany’s

auditors,beingsatisfiedthattheyareindependentofthe

company

• Approvingthetermsofengagementandfeestobepaidtothe

externalauditors

• Determiningthenatureandextentofanynon-auditing

serviceswhichtheexternalauditorsmayprovidetothe

company

• Satisfyingitselfastotheappropriatenessoftheexpertise

andexperienceofthecompany’sChiefFinancialOfficer,Mr

MahomedGani,andofthecompany’sfinancefunction

• Theauditcommitteehasconsideredtheadequacyofthe

group’ssystemofinternalcontrolandrecommendedthe

financialstatementsandgoingconcernpositionforapproval

bytheboard

• Reviewingtheeffectivenessoftheinternalauditfunction

• CarryingoutitsstatutorydutiessetoutinSection90ofthe

CompaniesAct,2008




sTaTeMeNT OF INTeRNal CONTROlTheboardacknowledgesoverallresponsibilityforthegroup’s

systemofinternalcontrols.Thisincludestheestablishmentof

anappropriatecontrolenvironmentandframework,aswellas

reviewingtheeffectiveness,adequacyandintegrityofthissystem.

Thecompany’sinternalcontrolpolicyisbasedonpolicies

thathavebeenimplementedtoefficiently,effectivelyand

economicallymanageriskinthecompany.Thesystemof

internalcontrolsisdesignedtomanageratherthantoeliminate

risk.Accordingly,thesystemcanonlyprovidereasonableand

notabsoluteassuranceagainsttheoccurrenceofanymaterial

misstatementorloss.

Thegrouphasanon-goingprocessforidentifying,evaluating,

monitoringandmanagingtheprincipalrisksaffectingthe

achievementofitsbusinessobjectives,whichisembeddedinthe

group’sprocessesandstructures.

sOCIal, eTHICs aND ReMUNeRaTION COMMITTeesocial, ethics and remuneration committee meeting

attendance+

20.3.2013

BSMahuma(Chairman) X

WPvdMerwe X

MNPatel X

JduToit* X

PNDodson X


*Resignedon8July2013andreplacedbyMSIGanion30July2013.

+Thesecondmeetingwilltakeplaceon14November2013.

ThecommitteeconsistsofGwenMahuma(Chairman),Wesselvan

derMerwe,MiteshPatel,PeterDodsonandMahomedGani.The

committeeformallymeetstwiceayearandonanadhocbasis

whennecessary.

Theroleofthecommitteeistoassisttheboardinensuringthat

thecompanyremuneratesdirectorsandexecutivesfairlyand

Theriskcommitteeconsistsofacombinationofexecutiveand

non-executivedirectors.TheriskcommitteeischairedbyWessel

vanderMerwe.AfzalLoonat,PeterDodson(ChiefExecutive

Officer)andMahomedGani(ChiefFinancialOfficer)arethe

othermembers.

Theinternalauditfunctionhadpreviouslybeenoutsourced

toKPMGServices(Pty)Ltd.Asaresultofthecompany’srecent

restructuring,theriskcommitteehasdecidedtosuspendthis

outsourcedfunctionfortheremainderof2013.Thedecision

willbereviewedinearly2014.Notwithstandingthis,the

companycontinuestomonitorallinternalcontrolstoensure

thatallbranchesandemployeescomplywithcompanypolicies,

standards,procedures,andapplicablelawsandregulations.

Thecommittee:

• Assiststheboardwiththedischargeofitsdutiesrelatingtothe

identificationofriskandtheassessmentoftheeffectivenessof

riskmanagementwithinthecompany

• Reviewsandconfirmsthecompany’slevelsofrisktolerance

anditsriskprofile

• Co-ordinatesthecompany’sriskmanagementefforts,reviews

theirresultsandensuresthatappropriateactionistaken

• Reviewsandassessestheintegrityoftheriskcontrolsystems

andensuresthattheriskpoliciesandstrategiesareeffectively

managed

• Monitorsexternaldevelopmentsrelatingtocorporate

accountabilityincludingemergingandprospectiveimpacts

• Reviewsanddiscussesthegroupriskregister

• Theexecutivecommitteeofthecompanyregularlytracksand

updatesthecompany’sriskregisterandgivesfeedbackinthis

regardtotheriskcommittee

IT RIskTheriskcommitteeassiststheboardwithitsresponsibilityforIT

governancebyensuringthatthegroupmanagesitsinformation

assetseffectively,thatanITgovernanceframeworkisinplace,

andthatmanagementisimplementingtheframework.The

committeealsomonitorsandevaluatessignificantITinvestments

andexpenditure.


• Theappointmentofourdirectorsistransparentandgoverned

bytheformalproceduressetoutinthecommittee’smandate,

thetermsofreferenceandtheboardcharter

• Directorsretireandarere-electedinaccordancewiththe

mandateandthecompany’sMemorandumofIncorporation

• Successionplanningisreviewed

Thecommitteealsofulfilsthefollowingstatutorydutiesin

compliancewithRegulation43ofthe2008CompaniesAct:

• Makingrecommendationsontheempowermentcredentialsof

thegroup

• Monitoringthecorporatesocialresponsibilitiesofthegroup

• Monitoringsocialandeconomicdevelopmentintermsof

goals,includingtheUnitedNationsGlobal,CompactPrinciples,

theOECDregardingcorruption,EmploymentEquitiesAct,

andB-BBEE

• Overseeinggoodcorporatecitizenship

• Overseeingenvironmental,healthandpublicsafety

• Overseeingconsumerrelationshipsincludingthecompany’s

advertising,publicrelations,investorrelationsandcompliance

withconsumerprotectionlaws

• Overseeinglabourandemployment

COMPaNy seCReTaRyThecompanysecretaryisresponsibleforadministeringthe

proceedingsandaffairsofthedirectorate,thecompanyand,

whereappropriate,ownersofsecuritiesinthecompany,in

accordancewiththerelevantlaws.Thecompanysecretary

isavailabletoassistallourdirectorswithadviceontheir

responsibilities,theirprofessionaldevelopmentandanyother

relevantassistancetheymayrequire.

MonikaPretoriusisthedulyappointedcompanysecretaryofAlert

SteelHoldings.SheisneitheradirectornorashareholderofAlert

SteelHoldingsLtd.TheboardiscomfortablethatMsPretorius

maintainsanarm’slengthrelationshipwiththeexecutiveteam,

theboardandtheindividualdirectorsintermsofSection3.84(j)

oftheJSEListingsRequirements.

responsibly;andthatthedisclosureofdirectors’remunerationsis

accurate,completeandtransparent.

Thecommitteeperforms,amongstothers,thefollowingfunctions:

Remuneration responsibilities of the committee

• Overseestheestablishmentofaremunerationpolicythatwill

promotetheachievementofstrategicobjectivesatalllevelsin

thecompanyandencouragesindividualperformance

• Ensuresthattheremunerationpolicyisputtoanon-binding

advisoryvoteatthegeneralmeetingofshareholdersonce

everyyear

• Reviewstheoutcomesoftheimplementationofthe

remunerationpolicyonanannualbasis

• Ensuresthatthemixoffixedandvariablepay,incash,shares

andotherelements,meetsthecompany’sneedsandstrategic

objectives

• Satisfiesitselfastotheaccuracyofrecordedperformance

measuresthatgovernthevestingofincentives

• Ensuresthatallbenefits,includingretirementbenefitsand

otherfinancialarrangements,arejustifiedandcorrectlyvalued

• Considerstheresultsoftheevaluationoftheperformanceof

theChiefExecutiveOfficerandotherexecutivedirectors,both

asdirectorsandasexecutives,indeterminingremuneration

• Regularlyreviewsincentiveschemestoensurecontinued

contributiontoshareholdervalueandthecorrect

administrationoftheseintermsoftherules

• Advisesontheremunerationofnon-executivedirectors

Nomination responsibilities of the committee

Inadditiontoitsremunerationresponsibilities,thecommittee’s

responsibilitiesincludesettingthecriteriaforboardnominations,

identifying,evaluatingandrecommendingsuitablecandidates

totheboardforappointmenttotheAlertSteelHoldingsboard,

aswellassuccessionplanning.Italsosetsthecriteriaforboard

nominations.

Thecommitteealsoensuresthat:

• Thecompany’sleadershipisrepresentativeofallracegroups

andisinaccordancewiththespiritandtargetssetoutinthe

DepartmentofTradeandIndustry’sCodesofGoodPractice



RelaTIONs WITH sHaReHOlDeRsThecompanyadoptsaproactivestanceintimelydisseminationof

appropriateinformationtoshareholdersthroughtheJSELimited’s

SENSportal,electronicnewsreleaseswhereapplicableand

statutorypublicationofthecompany’sfinancialperformance.

Thecompany’swebsiteprovidesthelatestandhistoricalfinancial

andotherinformation,includingfinancialreports.

Theboardencouragesshareholderstoattenditsannualgeneral

meeting,noticeofwhichiscontainedinthisannualreport,where

shareholdershavetheopportunitytoputquestionstotheboard,

includingthechairmenoftheboardcommittees.Shareholders

areabletoprovidefeedbacktoAlertSteelHoldingsviathe

websitewww.alertsteel.co.za.

FRaUD aND IlleGal aCTsTheboardandexecutivemanagementdonotacceptanyillegal

actsintheconductofthebusiness.Thedirectors’policyisto

activelypursueandprosecutetheperpetratorsoffraudulentor

otherillegalactivities,shouldtheybecomeawareofanysuchacts.

INsIDeR TRaDINGNoemployeemaydeal,directlyorindirectly,incompanyshares

onthebasisofunpublishedprice-sensitiveinformationregarding

thebusinessoraffairsofthebusiness.

Thecompanysecretaryhasprovidedtheboardwithdocumentary

evidenceofherlevelsofcompetenceintermsoffulfillingher

responsibilitiesascompanysecretary,whichincludedproofof

herqualificationsandexperience.MsPretoriushasoversixyears’

experienceasthecompanysecretaryofalistedcompanyandhas

aBComLLBqualification.ShehasneverbeencensuredbytheJSE,

penalisedorfinedforanymisconduct.Theboard,havingassessed

herabilitiesbasedonherqualifications,experienceandthelevel

ofcompetenceshehasdemonstratedasAlertSteelHoldings’

companysecretaryasrequiredintermsofSectionof3.84(i)ofthe

JSEListingsRequirements,agreedthatMsPretoriusissufficiently

qualified,competentandexperiencedtoactascompany

secretary.Thiswasendorsedandconfirmedbytheboardatits

meetingheldon19September2013.MsPretoriusrecusedherself

fromthatportionofthemeetingwhiletheboarddeliberatedon

hersuitabilitytoactandperformtheroleanddutiesofthegroup

companysecretary.

Allpoliciesandtermsofreferenceofthecompanyareavailable

fromthecompanysecretary.

PResCRIBeD OFFICeRsPrescribedofficersarethosewhoexercisegeneralcontrolover

thewholeorasignificantportionofthebusinessandactivitiesof

thecompanyorwhoregularlyparticipatetoamaterialdegreein

theexerciseofgeneralexecutivecontrolover,andmanagement

of,thewholeorasignificantportionofthebusinessandactivities

ofthecompany.Thecompanydoesnothaveanyprescribed

officersinaccordancewiththeabovedefinitionintheCompanies

Act,sinceallcontrolsofthecompanyresidewiththeexecutive

directors.


external equity AlertSteeliscommittedtopayingpackagesthatare

competitiveinrelationtothelabourmarket.

Thefollowingprincipleswillapply:

• Marketdataforallpositionswillbeweighedagainstthe

nationalmarket.

• Payscalesforeachgradearecalculatedonthebasisof

therelevantmarketdata.Thepayscalesprovideatoolto

linemanagementtoensurethattheyhavethecorrect

informationtopositionnewemployeeswithinapayrange.

Thepayscalewillalsobeusedasamanagementtool

tomanagethepaylevelsofexistingemployees,sothat

employeeswhofallbelowtheminimumoftheirgrade

canbebroughtinlinewithatleasttheminimumoftheir

gradeoveraperiodoftime.Employeeswhoexceedthe

maximumoftheirgradecanbemanagedoffthegrade

overaperiodoftime.

employee equity – pay for performance Remunerationpracticeswillrewardhigh-performing

employeesforthecontributiontheymaketotheorganisation.

Short-termandretentionincentives–allemployeesinthe

DtoFBand,AlertSteelintendstoimplementanincentive

schemeinthefutureandthepurposeofshort-termincentives

istorecognizeandencourageexceptionalperformanceand

torewarditaccordingly.

affordability InaccordancewithAlert’sbusinessplanandstrategyandin

considerationoftheannualbudgetaryscope,certainlimitsare

setwithregardstoremunerationandotherhumanresource

costs.Theseserveasaguidelineforwhatcanbespent.

TheannualadjustmentinAlert’sremunerationaccountand

thecomponentsoftheremunerationadjustmentstakeplace

withdueallowancefor:

• Thenecessityofcompetitiveremuneration

• Theavailablebudgetfunds

• Theinflationrate

• Theneedforstructuraladjustmentswithregardtothe

remunerationofindividualsandoccupationalgroups

1. ReMUNeRaTION PHIlOsOPHy Inordertoensuretheintegrityandlegitimacyofthetotal

remunerationsystem,thedevelopmentandimplementationofrelatedpolicies,programmes,practicesanddecisionsaredirectedbythemainremunerationprinciples.Thephilosophyconsistsmainlyofprinciples,valuesandpointsofdeparturerelatingtoremunerationatAlertSteel.

Theaimoftheremunerationphilosophyisto: • Communicatetheremunerationcommitmentsand

expectationstothestaffinaninteractivemanner • Strengthentheorganisationalcultureandunderlying

valuesofAlert • Guideandfacilitatetheimplementationplanfor

remuneration • DescribethemannerinwhichAlertmanagesremuneration

attheorganisationallevelsothatitisfairandconsistent

TheremunerationstrategyofAlertisbasedonthefollowingcentralprinciples:

Communication and confidentiality Allinformationthatisneededtotakewell-considered

decisionsregardingremunerationshallbecommunicatedfrankly,whiletheconfidentialityofthepersonalremunerationinformationofindividualsistoberespected.

Non-discriminatory practices Allremunerationpolicydirectivesandpracticeswillbefreeof

unfairdistinction,sinceunfairdiscriminationbasedonrace,gender,pregnancy,maritalstatus,familyresponsibility,ethnicorsocialorigin,sexualorientation,age,disability,religion,HIVstatus,conscience,convictions,politicalorientation,culture,languageandbirthisunacceptabletoAlert.However,fairdistinction,basedonperformance,scarcityfactorsandskillswillbeapplied.

2. ReMUNeRaTION PRINCIPles Inprinciple,AlertSteelsupportsthefollowingtwofactorsthat

underlineremunerationpractice:

Internal equity Remunerationdifferentiationbetweendifferentpositions

willbedrivenbythePatersonmethodologytoestablishtheinternalhierarchyofpositions.

RemuneRation RepoRt


RemuneRation RepoRt continued

Theemployerimplementedafund-owneddeathandtotal

andpermanentdisabilitybenefitpolicy.Thedetailsareas

follows:

Benefit 3timesannualfundsalary

Freecoverlimit R4000000

Insurer Momentum

Maximumcoverpage 70

Conversionoption Yes

Claimsnotificationsperiod 6monthsfromdateofdeath/3monthsfromdateofdisability

Waitingperiodondisability 6months

Reductionofdisabilitybenefit

1/60thofbenefitoverthelast5years

Rate 1.664%

Effectivedate 1July2012

Thecompanyalsoimplementedanemployer-ownedfuneralpolicy.Thepolicyproceedswillbetaxfree.

Thedetailsareasfollows:

Benefit Member,Spouse-R10000

Childaged14–21-R10000



Childaged0–11months -R1250

Stillborn-R1000

Insurer AlexanderForbesLife

Claimsnotificationperiod 6months

Rate R13.00permemberpermonth

Effectivedate 1July2012

Whennewemployeesareappointed,certainfactorsneedto

beconsideredinordertoensuretheabilitytoattractsuitable

applicantsandtoensureinternalequityforsimilarskillsand

performance.Thefactorstobeconsideredareasfollows:

• Remunerationlevelsofexistingemployees,specificallywith

regardstosimilarskillsandknowledge:

• Iftheexistingemployeesarenotconsidered,anew

appointmentatahigherremunerationlevelwillincrease

internalpressureforhigherreward.Exceptinthecase

ofequityappointments,newemployees’remuneration

shouldbeinlinewithinternalremunerationlevels.

3. ReMUNeRaTION COMPONeNTs Retirement funds – alexander Forbes Provident Fund AlertSteel(Pty)Ltdbecameaparticipatingemployerinthe

AlexanderForbesretirementfundwitheffect1July2012.

Theemployercontributionstothefundarebasedonthe

followingratesasdefinedinthefund’sspecialrules:

Contributioncategories

Membercontribution

employercontribution

Category1 5% 5%

Category2 7.5% 5%

Category3 10% 5%

Thecostofprovidingriskbenefitsandadministrationofthe

fundispaidinadditiontotheemployercontributionof5%of

pensionablesalary.Thesecostsareasfollows:

Grouplifecoverpremium 1.469%ofpensionablesalary

Totalandpermanentdisabilitycoverpremium

0.414%ofpensionablesalary

Administrationfee 0.49%

Totalcost 2.373%

Deathandlumpsumdisabilitybenefitscanbestructuredas

eitherafund-ownedpolicy,whichispayableintermsofthe

rulesofthefund,orasanemployer-ownedpolicyoutside

thefund.Thefund-ownedpolicyisgovernedbythePension

FundsAct,whiletheemployer-ownedpolicyisgovernedby

theLongTermInsuranceAct.


Fund governanceTheAlexanderForbesretirementfundismanagedbyaboardof

professionaltrusteeswhoareresponsibleforallissuesrelatingto

fundgovernance.

Amanagementcommitteemadeupofemployer-appointed

representativesandmember-electedrepresentativeswillbe

responsibleforthemanagementofissuesthatarespecifictothe

employer’sparticipationintheAlexanderForbes

retirementfund.

Investment strategyThefundoffersachoiceastowheremembers’contributionscan

beinvested.

MemberscandefaulttotheLifeStagestrategy.Thisstrategyuses

theAlexanderForbesLifeStageportfoliorangetoinvestfund

creditsandcontributionsreceivedintotheinvestmentportfolios,

accordingtoage.

Memberscanalsochoosetoinvestinarangeofotherportfolios

selectedbythefundtrustees.Memberscanswitchbetween

portfoliosatanystageandatnocost.


RISK ManageMent

• Developingandcommunicatingorganisationalpolicyand

informationabouttheriskmanagementprogramtoallstaff

and,whereappropriate,tootherstakeholders

• Definingtheorganisation’srisktolerance(theoveralllevel

ofexposureandnatureofrisksthatareacceptabletothe

organisation)

• Settingpoliciesoninternalcontrolbasedontheorganisation’s

riskprofile,itsabilitytomanagetherisksidentifiedandthe

cost/benefitofrelatedcontrols

• Seekingregularassurancethatthesystemofinternalcontrolis

effectiveinmanagingrisksinaccordancewiththeestablished

organisationalpolicies

alert steel management ManagementisaccountabletotheEXCOforimplementingand

monitoringtheprocessofriskmanagementandintegratingitinto

theday-to-dayactivitiesoftheorganisation.

Risk committee Theauditandriskcommitteewillmonitortheriskmanagement

processandwillprovidetheboardwithfeedbackeveryquarter.

Theauditandriskcommitteeperformsthefollowingrisk

managementfunctions:

• Evaluatingtheinternalprocessesforidentifying,assessing,

monitoringandmanagingkeyriskareas

• Detailingmaterialfinancialandnon-financialriskprofiles

• Advisingontheeffectivenessoftheorganisation’s

implementationoftheriskmanagementsystem,includingthat

managementhaveconfirmedtheproperoperationofagreed

riskmitigationstrategiesandcontrols

Unfortunatelyduringthecurrentfinancialyear,duetothe

significantfocusgiventothebusiness’goingconcernriskandthe

capitalraisingprocess,thisprocesswasnotstrictlyadheredto.

Thiswill,however,beaddressedinthenewfinancialyear.

Internal audit function Internalauditingisresponsibleforassistingtheorganisation

inaccomplishingitsobjectivesbybringingasystematic

anddisciplinedapproachtoevaluatingandimprovingthe

effectivenessofriskmanagement,controlandgovernance

processes.TheinternalauditfunctionceasedinMarch2013,

butwillbeimplementedagaininthisfinancialyear.

aPPROaCHAlertSteelisexposedtoanumberofrisksarisingfromitsdaily

activities.Theserisksincludechangesintheeconomicclimate,

interestratesandsteelpricevolatility.

Thecompanyhasanestablishedriskmanagementpolicy.

Theobjectiveofthispolicyistoassistmanagementinmaking

informeddecisionsthatwillimprovetheorganisation’s

performancewithregardtodecisionmakingandplanning,

promotingamoreinnovative,lessriskaversecultureinwhichthe

takingofcalculatedrisksinpursuitofopportunitiestobenefit

theorganisationisencouraged,andprovidingasoundbasisfor

integratedriskmanagementandinternalcontrolascomponents

ofgoodcorporategovernance.

Ourriskmanagementprinciplesarebasedontheprinciplesof

KingIII.Riskanalysisformspartoftheorganisation’sstrategic

planning,businessplanningandinvestment/projectappraisal

procedures.Riskmanagementisfoundedonarisk-based

approachtointernalcontrol,whichisembeddedintotheday-

to-dayoperationsoftheorganisation.Managersandstaffatall

levelsareresponsibleforidentifying,evaluatingandmanagingor

reportingrisks,andwillbeequippedtodoso.Wefosteraculture

thatassistsintheeffectiveexecutionofbestpractice,learned

experiencesandexpertiseacquiredfromourriskmanagement

activitiesacrosstheorganisation,forthebenefitoftheentire

organisation.

Ariskworkshopwasheldduringwhichtheriskregisterwas

updatedwithchangesregardingstrategicandoperationalrisks

applicabletothechangingenvironmentinwhichthebusiness

operates.

Themostnoticeablechangeintheidentifiedstrategicrisksof

thecompanyisthatthereisnolongerriskrelatedtocrossborder

marketsasthecompanydoesnottrade,orintendtotrade,

outsideofSouthAfricaintheforeseeablefuture.

ResPONsIBIlITIes executive committee (eXCO) Thetotalprocessofriskmanagement,whichincludesarelated

systemofinternalcontrols,istheresponsibilityoftheEXCO.

Amongstotherthings,theyareresponsiblefor:


key sTRaTeGIC RIskAsummaryoftheidentifiedtopstrategicrisks(thistablesetsoutthekeystrategicrisksandtheirmitigatingactions,innoparticularorder):

Risk description Mitigation strategy

key supplier dependence: Asagoingconcern,theriskthatakeysupplier’sfailuretodeliverorperformcouldseverelyimpact

thebusiness’sabilitytocontinue.Somekeysuppliersaccountfor

asignificantportiontheproductsprocuredbyAlertSteel.The

businesshasalimitedproductrangebasedonitscurrentstrategy

ofsellingonlysteelandsteelrelatedproducts.Facilityconstraints

duetocashguaranteesgiventosuppliers.

• Centralisedprocurementperformingdemandanalysis(fast

flowingitems)

• Approvedfacilitywithsupplierandcreditinsuranceallocation

• Regularmeetingswithsuppliers(atleastmonthly)

• Evaluationofalternativesuppliers

solvency: Theriskthatthebusinesshasinadequatereservestosustainitthroughthecurrentperiodofpoormarketconditions.

Poortradingresultsduetopoormarketconditions.

• Conversionofshareholderloansintoequity

• Costmanagement

• Constantcommunicationoffinancialpositionwiththeboard

andcreditinsurers

• Monthlymonitoringofbudgetvsactual

Of being listed: Theriskthatonerouslistingsrequirements

andtheinflexibilityofJSEregulationswillhamperthebusiness’

turn-aroundplan.Thebusinessisinapositionwherequick

decisionsneedtobemadeand,wherenecessary,needsquick

accesstocapitalfunding.Beinglistedreducesbusinessagility

astheseprocessestaketime,whichhampersmanagement’s

decisionmakingcapacity.TheJSEoffersverylimitedsupport

andunderstandingoftheseissues.Significantlistingcostsare

unavoidablewhencorporateactionisundertakenandthiscan

alsohamperrecovery.

• AdvisorsareutilisedtoensureJSErequirementsareidentified,

monitoredandcontrolled

• Afulltimecompanysecretaryisengagedtoinform

managementofallchangestoregulationsandtomonitor

compliance

• LimitedmeetingswiththeJSEonconcernsandissueswhere

possible

Inability to reach expansion targets of the turn-around strategy: Theriskthatthecurrentpoormarketconditionswill

leavemanagementwithoutsufficientresourcestopursuethe

expansionstrategywhichisakeypartoftheturn-aroundplan.

• Targetlocationsidentifiedandaroll-outplaninplace

• Reductionincostconstantlymonitoredandimproved

• LessprofitablebrancheshavebeenconvertedtoExpressStores

(smaller,quick-stopshops)

Inability to manage change effectively: Theriskofcustomer

dissatisfactionduetothechangesinourtradingenvironmentand

personnelstructures.

• CSIresultsmonitoredandfollowedthroughtoaddress

customersconcerns

• Proceduresreviewedtoensurethattheyareupdatedwith

changesinstructureandtoaccommodatethechanging

environment


ALERT STEEL HOLDINGS LIMITED

Propertyowningentity

BornFreeInvestments661 (Pty)Ltd10

0%

alert steel Corporate services (Pty) ltd10

0% alert steel (Pty) ltd

100%

AlertSteelTshwane(Pty)Ltd50%

Group Structure

Note: Thedormantentitiesarenotincludedinthisstructure

FINANCIAL STATEMENTS

Summarised Consolidated Statement of Comprehensive Income

Summarised Consolidated Statement of Financial Position

Summarised Consolidated Statement of Changes in Equity

Summarised Consolidated Statement of Cash Flows

Summarised Consolidated Segmental Analysis

Notes to the Summarised Consolidated Financial Results

Financial Results


Shareholders’ Information

Shareholders’ Diary

Notice of Annual General Meeting

Annual General Meeting – Explanatory Notes

Form of Proxy

Notes to the Form of Proxy

Corporate Information

26

27

28

29

30

31

39

41

42

43

48

Perf

Perf

Ibc

These summarised consolidated financial results are a summary of the audited consolidated financial statements for the year ended

30 June 2013 which were prepared by MSI Gani, Chief Financial Officer.

summarised consolidated financial results

for the year ended 30 June 2013

financial contents



SummariSed conSolidated Statement of comprehenSive income


2013 2012

R R

Continuing operations Revenue 716 780 430 824 655 746Cost of sales (561 788 858) (654 762 595)

Gross profit 154 991 572 169 893 151Other income 3 093 410 4 499 079Operating expenses (198 018 833) (222 946 331)

Loss from operations (39 933 851) (48 554 101)Finance income 2 239 718 51 703Finance costs (13 866 803) (23 902 015)

Loss before taxation (51 560 936) (72 404 413)Taxation 380 280 (139 605)

Loss from continuing operations (51 180 656) (72 544 018)Discontinued operations Loss from discontinued operations – (447 154)

Loss and total comprehensive income (51 180 656) (72 991 172)

Net loss attributable to: Loss for the year from continuing operations (51 180 656) (72 544 018)Loss for the year from discontinued operations – (447 154)

Loss for the year (51 180 656) (72 991 172)

Attributable to: Ordinary shareholders (51 180 656) (72 991 172)Non-controlling interest – –

Weighted average shares in issue on which earnings are based 48 238 204 13 435 275Fully diluted weighted average shares in issue on which earnings are based 48 238 204 13 435 275

Basic loss per share (cents) (106.1) (543.3)– continuing operations (106.1) (540.0)– discontinued operations – (3.3)Fully diluted loss per share (cents) (106.1) (543.3)– continuing operations (106.1) (540.0)– discontinued operations – (3.3)Headline loss per share (cents) (132.9) (432.0)– continuing operations (132.9) (432.0)– discontinued operations – –Fully diluted headline loss per share (cents) (132.9) (432.0)– continuing operations (132.9) (432.0)

– discontinued operations – –


SummariSed conSolidated Statement of financial poSition

at 30 June 2013

2013 2012 Notes R R

AssetsNon-current assets 60 493 806 139 553 925

Property, plant and equipment 54 773 370 126 886 822

Investment property – 6 446 667

Goodwill 5 720 436 6 220 436

Current assets 176 536 634 262 284 996

Inventories 119 572 890 154 497 457

Trade and other receivables 45 256 837 75 937 668

Amounts owing by associate 5 575 020 –

Taxation receivable 201 392 –

Cash and cash equivalents 5 636 495 17 353 341

Assets held for sale 294 000 14 496 530

Total assets 237 030 440 401 838 921

Equity and liabilities

Equity (23 461 573) (2 147 660)

Share capital 6 269 719 677 239 852 934

Share-based payment reserve 311 921 1 980 024

Accumulated loss (293 493 171) (243 980 618)

Liabilities

Non-current liabilities 141 142 962 70 597 232

Loans and borrowings 5 136 809 704 60 059 887

Provisions – 4 561 458

Straight-lining lease accrual 4 333 258 5 566 321

Deferred tax – 409 566

Current liabilities 119 349 051 333 389 349

Loans and borrowings 5 – 107 817 857

Provisions 1 223 835 1 111 593

Straight-lining lease accrual 550 324 1 475 565

Current tax payable – 30 033

Trade and other payables 117 574 892 159 959 551

Shareholders’ loans – 24 223 962

Bank overdraft – 37 052 685

Liabilities associated with assets held for sale – 1 718 103

Total equity and liabilities 237 030 440 401 838 921


SummariSed conSolidated Statement of changeS in equity


2013 2012 R R

Balance at the beginning of the year (2 147 660) (43 412 309)

Share transactions 29 866 743 112 275 797

Loss and total comprehensive income for the year (51 180 656) (72 991 172)

Additions to share based payment reserve – 1 980 024

Balance at the end of the year (23 461 573) (2 147 660)


SummariSed conSolidated Statement oF caSH FloWS


2013 2012

R R

Net cash utilised in operating activities (23 041 538) (48 576 503)

Net cash used in investing activities (2 305 053) (61 511 668)

Net cash from financing activities 50 682 430 200 723 907

Total cash movements for the year 25 335 839 90 635 736

Cash at beginning of the year (19 699 344) (110 335 080)

Total cash at end of the year 5 636 495 (19 699 344)


SummariSed conSolidated Segmental analySiS


Restated June June 2013 2012 R R

External revenues

Branches 621 727 123 796 116 437

Containers and express stores 95 053 307 28 539 309

716 780 430 824 655 746

Reportable segment (loss)/profit before tax

Branches (56 730 911) (73 775 613)


(51 560 936) (72 404 413)

June June

2013 2012

As at R R

Segment assets

Branches 210 779 012 383 242 267


237 030 440 401 838 921

Segment liabilities

Branches 260 492 013 403 986 581

Containers and express stores – –

260 492 013 403 986 581

Due to the implementation of the brand restructuring strategy, the group has two operating segments, namely branches and containers/

express stores. The group has restated the summarised segmental analysis in line with the restructuring.


Notes to the summarised coNsolidated fiNaNcial results


1. BASIS OF PREPARATION

Statement of compliance

The summarised consolidated financial results for the year ended 30 June 2013 have been prepared in accordance with

International Financial Reporting Standards (IFRS), the presentation and disclosure requirements of International Accounting

Standard 34, Interim Financial Reporting applied to year end reporting, SAICA Financial Reporting Guides as issued by the

Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council,

the JSE Listing Requirements, as well as the Companies Act of South Africa.

2. ACCOUNTING POLICIES

The accounting policies applied by the group are consistent with those applied in the previous year except for changes to reporting

segments as indicated above. Amendments to standards that became effective on 1 July 2012 had no material effect on the results

of the year. These financial statements have been prepared on the historical cost basis and all financial information is presented

in Rands.

3. GOING CONCERN

The group incurred a loss for the year ended 30 June 2013 of R51.2 million (2012: R73 million and at that date the total liabilities

exceeded the total assets by R23.5 million (2012: R2.1 million).

Notwithstanding the loss for the year, there have been considerable improvements in the group’s financial performance, cash flows

and its financial position:

• InthecurrentyearcashutilisedinoperatingactivitiesimprovedfromR48.5milliontoR23.0million.

• NetcurrentassetswereR57.2millioncomparedtonetcurrentliabilitiesofR71.1millioninthepreviousyear.

The directors have assessed the group’s cash flows requirements for the next 12 months. At present, even under the current market

conditions, the earnings before tax and depreciation are covering the interest burden. The cash flows indicate that the group has

sufficient cash resources to meet its obligations as they fall due.

Revenue growth for the next year is based on the growth of new product ranges of hardware and cement from the current branch

infrastructure and from the growth attributable to the acquisition of the Build Kwik stores subsequent to the year end. Expenses have

been calculated based on a variable and fixed cost basis. Variable expenses were based on the historic percentage of revenue and

fixed overheads adjusted for inflation except for areas where cost savings have already been implemented and verified.

In addition, on 19 August 2013 the major shareholder entered into a specific issue of shares for cash agreement, subject to the

fulfilment of conditions precedent, to issue 48 million shares at 200 cents per share for cash. The net asset value of the group, had the

specific issue of share taken place on 30 June 2013, would have been R72.5 million.

Given the directors’ evaluation that the group has sufficient cash resources to meet its obligations as they fall due, the financial

statements have been prepared on the basis of accounting policies applicable to a going concern.


4. DISCONTINUED OPERATIONS During June 2012, the following decisions were taken by the board:

• Todisposeofinvestmentpropertiesandotherpropertiesthatwerenotinuseinordertofree-upcashflowforthecompany.

This includes properties in Arrow Creek Investments 117 Proprietary Limited, Born Free Investments 661 Proprietary Limited and

Xebura Investments Proprietary Limited.

• ToclosedownitsBenrosebranchandtodisposeoftheproperty(heldbyXeburaInvestmentsProprietaryLimited).Thebranch

was not meeting the required performance targets and was not meeting the company’s rural retail strategic objectives.

• TodisposeofitsKlerksdorpbranch.Thebranchwasnotmeetingtherequiredperformancetargetsandwasnotmeetingthe

company’s rural retail strategic objectives.

As at 30 June 2013, the above mentioned assets held for sale were disposed, apart from the property held by Born Free Investments

Proprietary Limited. This property was disposed of subsequent to year end

Arrow

Creek Born Free

Investments Investments Xebura

117 661 Investments

Proprietary Proprietary Proprietary Klerksdorp

Limited Limited Limited branch Total

R R R R R

Disposal groups 2012 Assets held for sale

Investment property 2 930 000 500 000 – – 3 430 000

Property, plant and equipment – – 3 500 000 – 3 500 000

Inventories – – – 4 255 361 4 255 361

Trade and other receivables – – – 3 311 169 3 311 169

2 930 000 500 000 3 500 000 7 566 530 14 496 530

Liabilities associated with assets held for sale

Other financial liabilities 1 718 103 – – – 1 718 103

Proceeds on sale 1 064 377 – 3 325 173 5 923 861 10 313 411

Loss on disposal of business 147 520 – 174 827 1 642 669 1 965 016

2013 2012

R R

Cash effects of discontinued operationsCash flows from operating activities (7 041 702) 4 389 192

Cash flows from investing activities 6 495 429 322 999

(546 273) 4 712 191

During the year the discontinued operations generated profit after taxation of R484 000.

Notes to the summarised coNsolidated fiNaNcial results coNtiNued



2013 2012

R R

5. LOANS AND BORROwINGS

Nedbank Limited* – 1 772 606

Nedbank Limited** – 62 188 043

Instalment sale agreements*** – 10 278 320

Nedbank 5 year loan**** – 73 638 775

Nedbank 2 year loan***** – 20 000 000

Southern Palace Investments 265 Proprietary Limited 127 004 208 –

Cannistraro Investments 282 Proprietary Limited 9 805 496 –

136 809 704 167 877 744

Non-current liabilities 136 809 704 60 059 887

Current liabilities – 107 817 857

136 809 704 167 877 744

* Interest at prime rate plus 1.8% and repayable in monthly instalments of R109 751 ** Interest at 7.75% and repayable in monthly instalments of R396 129 *** Liabilities under instalment sale agreements bears interest at an average interest rate of prime less 0.5% per annum repayable in monthly instalments of R886 096

(2011: R871 622). **** This loan was advanced by Nedbank on 10 October 2011 and is repayable in one instalment at the end of five years. The loan bears interest at prime less 2% and

interest is capitalised on the loan for the first 12 months, repayable on the maturity date. This loan has been classified as short term as the Company was in breach of its covenants with Nedbank at 30 June 2012.

***** This loan was advanced by Nedbank on 10 October 2011 and is repayable in 24 equal instalments commencing on 1 October 2012. The loan bears interest at prime less 2%. This loan has been classified as short term as the Company was in breach of its covenants with Nedbank at 30 June 2012.

During February 2013, Nedbank Limited assigned the rights and obligations under its Banking Facilities, Property Loan Agreement

and Securities to Southern Palace Investments 265 Proprietary Limited.

Loans and borrowings from Cannistraro Investments 282 Proprietary Limited and Southern Place 265 Proprietary Limited bear

interest at the prime lending rate and are repayable on 31 October 2014. Loans are secured with sessions over all assets.

Southern Palace Investments 265 Proprietary Limited will continue to support Alert Steel. Should the group not be able to repay the

loan on 31 October 2014, the loan can be repaid over a period of nine months thereafter.

R96 000 000 of the loans and borrowings is to be converted to equity subsequent to year end by means of a specific issue of shares.


2013 2012

R R

6. SHARE CAPITAL

On 28 November 2012, 1 108 840 297 shares were issued to Capital

Africa Steel (894 554 583 shares) and Nedbank (214 285 714 shares) in

a debt to equity conversion at 2.8 cents per share.

On 10 December 2012 the company consolidated its shares at a ratio

of 100:1. The issued share capital was reduced with 5 149 376 948

shares due to the impact of the consolidation.

On 14 January 2013 a total of 14 279 shares, which resulted from the

fractional shareholders were bought back and cancelled.

Reconciliation of number of shares issued

Opening balance 4 092 550 566 256 028 570

Share issue 1 108 840 297 3 836 521 996

Share consolidation (5 149 376 948) –

Odd lot offer (14 279) –

Total before treasury shares 51 999 636 4 092 550 566

Treasury shares (76 000) (7 600 000)

51 923 636 4 084 950 566

7. LOSS PER SHARE

Reconciliation between loss and fully diluted loss

Attributable earnings per statement of comprehensive income (51 180 656) (72 991 172)

Fully diluted loss (51 180 656) (72 991 172)

Reconciliation of headline loss

Attributable loss per statement of comprehensive income (51 180 656) (72 991 172)

Loss on disposal of property, plant and equipment (135 600) 1 651 070

Loss arising on discontinuance of operations 1 965 016 1 427 582

Profit on sale of business (15 456 306) (4 055 518)

Losses arising from the impairment of goodwill 500 000 2 049 948

Loss arising from the impairment of property, plant and equipment – 13 784 395

Losses arising from the impairment of investment property 206 000 518 810

Bargain purchase price gain on acquisition of business – (430 100)

Headline loss / fully diluted headline loss (64 101 546) (58 044 985)




7. LOSS PER SHARE CONTINUED

Reconciliation of diluted weighted average number of shares Shares Shares

Weighted average shares in issue on which earnings are based 48 238 204 13 435 275

Fully diluted weighted average shares in issue on which earnings are based 48 238 204 13 435 275

In accordance with IAS 33.28 the number of ordinary shares outstanding has been adjusted proportionately for the share

consolidation as if this event occurred at 1 July 2011. The prior year earnings per share and diluted earnings per share figures have

been restated accordingly.

2013 2012

R R

8. CASH UTILISED IN OPERATIONS

Loss before taxation – continuing operations (51 560 936) (72 404 413)

Loss before taxation – discontinued operations – (447 154)

Loss before taxation (51 560 936) (72 851 567)

Adjusted for:

Depreciation 19 209 203 12 062 943

(Profit)/loss on disposal of property, plant and equipment (135 600) 1 651 070

Profit on disposal of subsidiaries (15 456 306) (4 055 518)

Bargain purchase price gain on acquisition of business – (430 100)

Loss on disposal of businesses 1 965 016 1 427 582

Interest received (2 239 718) (51 703)

Interest paid 13 866 803 23 902 015

Impairments 706 000 16 353 153

Goodwill 500 000 2 049 948

Property plant and equipment – 13 784 395

Investment property 206 000 518 810

Movements in provisions (4 449 216) –

Lease accrual adjustment (2 158 304) 2 136 540

Share-based payment expense – 1 980 024

Changes in working capital:

Inventories 34 924 567 (7 979 552)

Trade and other receivables 30 568 757 60 079 916

Trade and other payables (42 118 015) (50 940 152)


2013 2012

R R

8. CASH UTILISED IN OPERATIONS CONTINUEDChanges in working capital continued: Cash utilised in operations (16 877 749) (16 715 349)Interest received 2 239 718 51 703Interest paid (8 282 532) (23 902 015)Taxation paid (120 975) (8 010 842)

Net cash utilised in operating activities (23 041 538) (48 576 503)

Cash flows from investing activities

Aquisition of property, plant and equipment (18 362 226) (27 951 002)

Proceeds on disposal of property, plant and equipment 11 318 782 6 140 035

Proceeds on disposal of businesses 10 313 411 –

Loans repaid/(advanced) to associates (5 575 020) 2 434

Consideration paid on acquisition of business – (44 696 744)

Proceeds on sale of subsidiaries – 4 993 609

Net cash used in investing activities (2 305 053) (61 511 668)

Cash flows from financing activities

Repayment of other financial liabilities – (1 427 817)

Repayments of bonds on properties (932 314) (2 914 474)

Advances of bonds and loans – 1 597 955

Repayments of instalment sale agreements (6 043 037) (3 638 770)

Loans (repaid to)/received from bank (2 500 000) 93 638 775

Loans received from shareholders 54 515 000 1 192 441

Share issue cost (1 178 715) –

Proceeds from shares issued 6 821 496 112 275 797

Net cash from financing activities 50 682 430 200 723 907




9. RELATED PARTIESRelationshipsEntities controlled by directors:Mahuma Investment Holdings Proprietary LimitedCannistraro Investments 282 Proprietary LimitedDual Intake Investments 24 Proprietary LimitedBBD Steel Suppliers Proprietary Limited

Shareholders with significant influence Cannistraro Investments 282 Proprietary Limited

DirectorsMM PatelWP van der MerweBS MahumaA LoonatPN DodsonMSI Gani

The following related party transactions were identified during the year: 2013 2012 R R

Rent paid to/(received from) related parties

These transactions were done at arms-length and are settled on 30 day payment terms.

Schallies Beleggings Proprietary Limited 4 485 575 3 360 022Paul Kruger Straat Beleggings 390 Proprietary Limited 580 425 430 310Zeranza 26 Proprietary Limited 1 768 091 1 709 377Icon Suppliers Proprietary Limited – 22 800Aquarella Investments 454 Proprietary Limited 8 682 473 –Dual Intake Investments 24 Proprietary Limited 346 253 –

Purchase from/(sales to) related parties

These transactions were done at arms-length and are settled on 30 day payment terms.

Capital Africa Steel Proprietary Limited 4 210 8 249 6382Reinforcing & Mesh Solutions, a division of Capital Africa Steel Proprietary Limited 2 515 272 8 215 868Capital Star Steel Proprietary Limited – 326 684Novator Proprietary Limited 70 192 1 463 441Steel Mecca Proprietary Limited – (3 935 781)Gondwana Marketing Proprietary Limited – (82 087)Buffelskom Boerdery Proprietary Limited 258 688 (1 005 778)WG Wearne Limited 381 517 –

Business combinations transactions Consideration paid on acquisition of Alert Steel North West Proprietary Limited – 21 643 758Consideration paid on acquisition of the business of Steel Mecca Proprietary Limited – 4 265 869Consideration received on disposal of subsidiaries 1 424 965 –


2013 2012

R R

10. SALIENT FEATURES– Actual number of shares 51 999 636 40 925 506

– Net asset value per share (cents) (45.1) (5.2)

– Net tangible asset value per share (cents) (56.1) (20.4)

Net asset value per share is determined by the actual number of

shares in issue at reporting date

Net tangible asset value per share is determined by dividing the total

shareholders’ funds less goodwill by the actual number of shares in

issue at reporting date

– Write down inventory to net realisable value (4 306 660) (4 488 803)

– Settlement of onerous lease 5 553 894 –

– Significant items in loss before taxation

– Directors’ emoluments 3 929 079 6 179 102

– Employee cost 92 437 365 105 587 702

– Impairment 706 000 16 353 153

Goodwill 500 000 2 049 948

Invesment property 206 000 518 810

Property, plant and equipment – 13 784 395




Revenue decreased by 13.0% to R716.8 million (2012: R824.6 million). The main reasons for the decrease in revenue were the difficult

trading conditions that prevailed during the year, particularly in the Limpopo Province where the company has significant presence. The

difficult trading conditions are mainly due to the central government freezing the awarding of public works contracts in that Province and

the strike action at the Medupi construction site.

Accordingly gross profit decreased by 8.8% to R155 million (2012: R170 million). However, the gross profit percentage increased from

20.6% to 21.6%, mainly as a result of an increase in cash sales in the rural areas in both the branches and express stores.

Operating expenses were reduced by 11.2% to R198 million (2012: R223 million). This decrease was a result of the restructuring measures

implemented by management, including branch closures and retrenchments. Management implemented further restructuring measures

and the full impact of this will only be seen in the 2014 financial year.

As a result of the increase in the gross profit margin and the decrease in operating expenses, the net loss from operations reduced to R40

million from R48.5 million.

Included in operating expenses are depreciation, amortisation and impairments, which accounted for 2.7% of revenue (2012: 3.4%).

During the year investments held in Aquarella Investments 454 Proprietary Limited, Anchor Park Investments 114 Proprietary Limited and

Dual Intake Investments 24 Proprietary Limited were sold to Cannistraro 282 Investments Proprietary Limited.

CHANGES TO THE BOARD OF DIRECTORS

The directors of the company during the year and to the date of this report are as follows:

Name Position Changes

MW McCulloch Non-Executive Director (Chairman) Resigned 9 February 2013

J du Toit* Executive Director (CEO) Resigned 8 July 2013

N Cresswell Executive Director (CFO) Resigned 9 January 2013

WF Schalekamp** Executive Director Resigned 27 June 2013

E Hewitt Executive Director Resigned 12 November 2012

PN Dodson Executive Director (CEO) Appointed 11 February 2013

MSI Gani Executive Director (CFO) Appointed 30 July 2013

AE Loonat Non-Executive Director Appointed 11 February 2013

MM Patel Non-Executive Director (Chairman)

BS Mahuma Non-Executive Director

WP van der Merwe Non-Executive Director

* J du Toit resigned as CEO on 6 February 2013, he was reappointed as CFO on 20 February 2013 and then resigned as CFO on 8 July 2013.

** WF Schalekamp resigned as non-executive director on 18 December 2012, he was reappointed as executive director on 11 February 2013 and resigned on 27 June 2013.

Financial results



Financial results continued


EvENTS AFTER THE REPORTING PERIOD

The following events have taken place subsequent to the year-end:

• On19August2013themajorshareholderenteredintoaspecificissueofsharesforcashagreement,subjecttothefulfilmentofthe

conditions precedent, to issue 48 million shares at 200 cents per share for cash. The net asset value of the group, had the specific issue

of shares taken place on 30 June 2013, would have been R72,5 million.

• Thegrouphasenteredintoanagreementtopurchasethebusinessincludingcertainspecifiedassetsandliabilitiesasdefinedinthe

agreement, of BuildKwik Wholesalers Proprietary Limited as a going concern, from Kwik Property Holdings Proprietary Limited, subject

to certain suspensive conditions for R58,1 million.

INDEPENDENT AUDIT By THE AUDITORS

These summarised consolidated financial results for the year ended 30 June 2013 have been derived from the audited consolidated annual

financial statements of Alert Steel Holdings Limited for the year ended 30 June 2013, on which the auditors, KPMG Inc., have expressed an

unmodified audit opinion. The auditor’s report and the audited consolidated annual financial statements, which have been summarised in

this report, are available for inspection at the registered office of the company. This summarised consolidated financial results is in itself

not audited.

DIRECTORS’ RESPONSIBILITy

The directors take full responsibility for the preparation of the summarised consolidated financial results and the information has been

correctly extracted from the underlying consolidated annual financial statements.

COMPLIANCE wITH LEGISLATION

For the period under review, there were no matters of non-compliance with legislation of which the directors were aware.




SHAREHOLDER ANALySIS

Company: Alert Steel Holdings Limited

Register date: 28 June 2013

Issued Share Capital: 51 999 636

No of No of

Shareholdings % shares %

Shareholder spread

1 – 1 000 Shares 584 59,29 195 897 0,38

1 001 – 10 000 shares 284 28,83 1 086 200 2,09

10 001 – 100 000 shares 100 10,15 2 799 911 5,38

100 001 – 1 000 000 shares 13 1,32 2 911 662 5,60

1 000 001 shares and over 4 0,41 45 005 966 86,55

Totals 985 100,00 51 999 636 100,00

Distribution of shareholders

Close corporations 24 2,44 156 688 0,30

Endowment funds 2 0,20 284 0,00

Individuals 866 87,92 4 663 572 8,97

Nominees and trusts 56 5,69 6 574 734 12,64

Other corporations 5 0,51 27 918 0,05

Private companies 29 2,94 40 464 022 77,82

Public companies 2 0,20 36 418 0,07

Share trust 1 0,10 76 000 0,15

Totals 985 100,00 51 999 636 100,00

Public/non-public shareholders

Non-public shareholders 6 0,61 41 195 361 79,22

Directors and associates 2 0,20 32 860 0,06

Holding 10% or more 3 0,30 41 086 501 79,01

Share trusts 1 0,10 76 000 0,15

Public shareholders 979 99,39 10 804 275 20,78

Totals 985 100,00 51 999 636 100,00

Beneficial shareholders holding 3% or more

Cannistraro Investments 282 (Pty) Ltd 35 021 939 67,35

Schalekamp, WF 6 064 562 11,66

Carlmac Steel (Pty) Ltd 2 501 454 4,81

Totals 43 587 95 83,82


SHAREHOLDERS’ DIARY

Financial year-end 30 June 2013

Announcement of audited financial results 30 September 2013

Annual general meeting 15 November 2013

Announcement of interim financial results as at 31 December 2013 March 2014


NOTICE OF ANNUAL GENERAL MEETING


ALERT STEEL HOLDING LIMITED

(Incorporated in the Republic of South Africa)

(Registration number 2003/005144/06)

JSE code: AET

ISIN: ZAE000092847

(“Alert” or “the company”)

Notice is hereby given that the annual general meeting of

shareholders of Alert will be held at the offices of the company at

Cnr of Engelbrecht & Lanham Streets, East Lynne on 15 November

2013 at 10h00 to present the annual financial statements to

shareholders and to consider and, if deemed appropriate, pass

the ordinary and special resolutions listed below, with or without

modification.

Kindly note that in terms of section 63(1) of the Companies Act of

2008, meeting participants (including proxies) will be required to

provide reasonably satisfactory identification before being entitled

to participate in or vote at the annual general meeting. Forms

of identification that will be accepted include original and valid

identity documents, driver’s licenses and passports.

The board of directors of the company has determined that the

record date in terms of section 59(1) of the Companies Act, No

71 of 2008, (“the Companies Act”) as amended for the purpose

of determining which shareholders of the company are entitled

to participate in and vote at the annual general meeting is 8

November 2013.

Shareholders are referred to the attached explanatory notes for

additional information, including abbreviated profiles of the

directors standing for re-election.

PRESENTATION OF ANNUAL FINANCIAL STATEMENTS

The audited annual financial statements of the company for

the year ended 30 June 2013, including the directors’ report,

the auditors’ report and the report of the audit committee, are

to be presented as required in terms of section 61(8)(a) of the

Companies Act of 2008.

REPORT FROM THE SOCIAL, ETHICS AND REMUNERATION

COMMITTEE

In accordance with Companies Regulation 43(5)(c), issued in terms

of the Companies Act of 2008, the chairman of the social, ethics

and remuneration committee, or in the absence of the chairman

any member of the committee, will present the committee’s

report to shareholders at the annual general meeting.

Ordinary resolutions 1: Rotation of directors

Mr Wessel van der Merwe and Ms Gwen Mahuma retire by

rotation and, being eligible, offer themselves for re-election

as directors of the company. Messrs Peter Dodson, Mahomed

Gani and Afzal Loonat have been appointed as directors of the

company during the year under review. Accordingly, shareholders

are requested to consider and, if deemed fit, approve the separate

ordinary resolutions set out below.

Ordinary resolutions 1.1:

“It is RESOLVED that the re-appointment of Mr Wessel van

der Merwe as an independent non- executive director of the

company be and is hereby approved.”


“It is RESOLVED that the re-appointment of Ms Gwen Mahuma

as an independent non- executive director, be and is hereby

approved.”


“It is RESOLVED that the appointment of Mr Peter Dodson, who

joined the board on 11 February 2013 as Chief Executive Officer of

the company, be and is hereby ratified.”


“It is RESOLVED that the appointment of Mr Afzal Loonat, who

joined the board on 11 February 2013 as an independent non-

executive director, be and is hereby ratified.”


“It is RESOLVED that the appointment of Mr Mahomed Gani, who

joined the board on 30 July 2013 as Chief Financial Officer, be and

is hereby ratified.”

Brief biographies of the above directors are set out on page 4.


NOTICE OF ANNUAL GENERAL MEETING CONTINUEd

Ordinary resolutions 2: Appointment of the audit committee

It is proposed that the following independent non-executive

directors be appointed as members of the audit committee.


It is RESOLVED that Mr Wessel van der Merwe be and is hereby

appointed as a member and chairman of the audit committee

of the company until the conclusion of the next annual general

meeting of the company in 2014.


It is RESOLVED that Mr Afzal Loonat be and is hereby appointed

as a member of the audit committee of the company until the

conclusion of the next annual general meeting of the company

in 2014.


It is RESOLVED that Ms Gwen Mahuma be and is hereby appointed

as a member of the audit committee of the company until the

conclusion of the next annual general meeting of the company

in 2014.

Ordinary resolution 3: Re-appointment of external auditor

It is RESOLVED, on recommendation of the audit committee,

that KPMG Inc. be and is hereby reappointed as the independent

auditor of the company, the designated auditor meeting the

requirements of S90 (2) of the Companies Act.

Ordinary resolution 4: Authority to issue authorised but

unissued ordinary shares

It is RESOLVED that the directors be and are hereby authorised

to allot and issue, at their discretion, the unissued but authorised

ordinary shares in the share capital of the company and/

or to grant options to subscribe for the unissued shares, for

such purposes and on such terms and conditions as they may

determine, provided that such transaction(s) has/have been

approved by the JSE Limited (“the JSE”), as and when required,

and are subject to the JSE Listings Requirements and the

Companies Act and that shareholders hereby waive any

pre-emptive rights thereto.

Ordinary resolution 5: Authority to issue shares for cash

It is RESOLVED that, in terms of the Listings Requirements of the

JSE Limited, the mandate given to the directors of the company

in terms of a general authority to issue securities for cash, as and

when suitable opportunities arise, be renewed subject to the

following conditions:

• Thatthisauthorityshallonlybevaliduntilthenextannual

general meeting of the company, but shall not extend

beyond 15 months from the date of this meeting (whichever

period is shorter);

• Theallotmentandissueofthesharesmustbemadeto

persons qualifying as public shareholders as defined in the

Listings Requirements of the JSE;

• Theshareswhicharethesubjectoftheissueforcashmust

be of a class already in issue, or where this is not the case,

must be limited to such shares or rights that are convertible

into a class already in issue;

• Thatapaidpressannouncementgivingfulldetails,including

the impact of the issue on net asset value, net tangible

asset value, earnings and headline earnings per share and,

if applicable, diluted earnings and diluted headline earnings

per share, be published after any issue representing, on a

cumulative basis within one financial year, 5% of the number

of shares in issue prior to the issue concerned;

• Thattheissuesinaggregateinanyonefinancialyear

(including the number of any shares that may be issued in

future arising out of the issue of options) shall not exceed

50% of the number of shares of the company’s issued

ordinary share capital; and

• Thatindeterminingthepriceatwhichanissueofsharesfor

cash will be made in terms of this authority, the maximum

discount permitted shall be 10% of the weighted average

traded price of the ordinary shares on the JSE, measured

over the 30 business days prior to the date that the price

of the issue is agreed between the company and the party

subscribing to the securities.


Ordinary resolution 6: Advisory endorsement of the

remuneration policy

To approve, as a non-binding advisory vote, the company’s

remuneration policy (excluding the remuneration of the non-

executive directors for their services as directors and members

of board committees) as set out in the remuneration report

contained in the annual report on page 19.

Ordinary resolution 7: Signing authority

To authorise any one director or the secretary of the company to

do all such things and to sign all such documents as are deemed

necessary to implement the resolutions set out in the notice

convening the annual general meeting at which this ordinary

resolution will be considered and approved.

Special resolution 1: Non-Executive directors’ remuneration

It is RESOLVED, as a special resolution:

• Thatthecompanybeandisherebyauthorisedtopay

remuneration to its non-executive directors for their services

as non-executive directors, as allowed for in S66(8) and

S66(9) of the Companies Act, No 71 of 2008; and

• Thattheremunerationstructureandamountsassetout

below be and are hereby approved until such time as

rescinded or amended by shareholders by way of a special

resolution:

Actual fee in

Type of fee (annual fee) 2013*

Board

Chairman R150 000 pa

Board member R120 000 pa

Audit and Risk Committee

Chairman R7 500 per meeting

Member R7 500 per meeting

Social, Ethics and

Remuneration Committee

Chairman R5 000 per meeting

Member R5 000 per meeting

Additional consultation fee per hour R1 000 per hour

*No increase in 2014

Special resolution 2: General authority to repurchase shares

It is RESOLVED, as a special resolution, that the mandate given

to the company in terms of its MOI (or one of its wholly owned

subsidiaries) providing authorisation, by way of a general approval,

to acquire the company’s own securities, upon such terms and

conditions and in such amounts as the directors may from time

to time decide, subject to the Listings Requirements of the JSE

Limited, the Companies Act and the company’s MOI, be extended,

subject to the following:

• Thisgeneralauthoritybevaliduntilthecompany’snext

annual general meeting, provided that it shall not extend

beyond 15 months from the date of passing of this special

resolution (whichever period is shorter);

• Therepurchasebeingeffectedthroughtheorderbook

operated by the JSE trading system, without any prior

understanding or arrangement between the company and

the counterparty;

• Repurchasesmaynotbemadeatapricegreaterthan

10% above the weighted average of the market value of

the ordinary shares for the 5 business days immediately

preceding the date on which the transaction was effected;

• Anannouncementbeingpublishedassoonasthe

company has repurchased ordinary shares constituting,

on a cumulative basis, 3% of the initial number of ordinary

shares, and for each 3% in aggregate of the initial number of

ordinary shares repurchased thereafter, containing full details

of such repurchases;

• Thenumberofshareswhichmaybeacquiredpursuant

to this authority in any one financial year may not in the

aggregate exceed 10% of the company’s issued share capital

as at the date of the passing of this special resolution or

10% of the company’s issued share capital in the case of an

acquisition of shares in the company by a subsidiary of the

company;

• Thecompany’sdesignatedadvisorconfirmingthe

adequacy of the company’s working capital for purposes

of undertaking the repurchase of ordinary shares in writing

to the JSE prior to the company entering the market to

proceed with the repurchase;


ADDITIONAL INFORMATION

The following additional information, some of which may appear

elsewhere in the annual report, is provided in terms of the JSE

Listings Requirements for purposes of the general authority to

repurchase the company’s securities set out in special resolution

number 2 above:

• Directorsandmanagement–pages4;

• Majorshareholders–page41;

• Directors’interestsinordinaryshares–page41;and

• Sharecapitalofthecompany–page34.

Litigation statement

The directors in office whose names appear on page 4 of

the annual report, are not aware of any legal or arbitration

proceedings, including any proceedings that are pending or

threatened, that may have, or have had, in the recent past, being

at least the previous 12 months from the date of this annual

report, a material effect on the group’s financial position.

DIRECTORS’ RESPONSIBILITy STATEMENT

The directors in office, whose names appear on page 4 of

the annual report, collectively and individually accept full

responsibility for the accuracy of the information pertaining to

special resolution number 2 and certify that, to the best of their

knowledge and belief, there are no facts that have been omitted

which would make any statement false or misleading, and that all

reasonable enquiries to ascertain such facts have been made and

that the special resolution contains all information required by the

JSE Listings Requirements.

MATERIAL CHANGES

Other than the facts and developments reported on in the annual

report, there have been no material changes in the affairs or

financial position of the company and its subsidiaries since the

company’s financial year-end and the date of signature of the

annual report.

DIRECTORS’ INTENTION REGARDING THE GENERAL

AUTHORITy TO REPURCHASE THE COMPANy’S SHARES

The directors have no specific intention, at present, for the

company to repurchase any of its securities but consider that such

a general authority should be put in place should an opportunity

• Thecompanyand/oritssubsidiariesnotrepurchasing

securities during a prohibited period as defined in the JSE

Listings Requirements, unless it has in place a repurchase

programme where the dates and quantities of securities to

be traded during the relevant period are fixed and full details

of the programme have been disclosed in an announcement

published on the JSE’s SENS prior to the commencement of

the prohibited period;

• Atanypointintimethecompanyonlyappointingone

agent to effect any repurchases on its behalf; and

• Theboardofdirectorspassingaresolutionthatthey

authorised the repurchase and that the company passed

the solvency and liquidity test set out in section 4 of the

Companies Act and that since the test was done there have

been no material changes to the financial position of the

group.

The directors of the company and its subsidiaries will only utilise

the general authority to purchase the company’s securities to the

extent that they, having considered the effects of the maximum

repurchase permitted, are of the opinion that for a period of 12

months after the date of the notice of the annual general meeting

and at the actual date of the repurchase:

• Thecompanyandthegroupwillbeable,intheordinary

course of business, to pay its debts;

• Theworkingcapitalofthecompanyandthegroupwillbe

adequate for ordinary business purposes;

• Theassetsofthecompanyandthegroup,fairlyvaluedin

accordance with International Financial Reporting Standards,

will exceed the liabilities of the company and the group;

• Thecompany’sandthegroup’sordinarysharecapitaland

reserves will be adequate for ordinary business purposes;

and

• Thedirectorshavepassedaresolutionauthorisingthe

repurchase, resolving that the company has satisfied the

solvency and liquidity test as defined in the Companies Act

and resolving that since the solvency and liquidity test had

been applied, there have been no material changes to the

financial position of the group.

NOTICE OF ANNUAL GENERAL MEETING CONTINUEd


Proxy forms must be lodged at the offices of the transfer

secretaries, Computershare Investor Services 2004 (Proprietary)

Limited (70 Marshall Street, Corner Sauer Street, Johannesburg;

PO Box 61051, Marshalltown, 2107), by no later than 10h00 on

13 November 2013.

All beneficial owners whose shares have been dematerialised

through a Central Securities Depository Participant (“CSDP”) or

broker other than with “own name” registration, must provide

the CSDP or broker with their voting instructions in terms of

their custody agreement should they wish to vote at the annual

general meeting. Alternatively, they may request that the CSDP

or broker provide them with a letter of representation, in terms of

their custody agreements, should they wish to attend the annual

general meeting.

Shareholders and proxies of shareholders are advised that they

will be required to present reasonably satisfactory identification

in order to attend or participate in the annual general meeting as

required in terms of s63(1) of the Companies Act.

vOTING THRESHOLDSOrdinary resolutions 1 to 4 and 6 and 7 are subject to a simple

majority of votes.

In terms of the JSE Listings Requirements, the approval of a 75%

majority of votes of all shareholders, present or represented by

proxy, is required to approve ordinary resolution number 5.

The special resolutions must be supported by 75% or more of the

voting rights exercised.

vOTINGIn terms of the JSE Listings Requirements, any shares held by The

Alert Share Incentive Scheme will not have its votes at the annual

general meeting taken into account in determining the results

of voting on ordinary resolution number 5 and special resolution

number 2.

By order of the board

Monika PretoriusCompany secretary

Pretoria

30 September 2013

present itself to do so during the year which is in the best interests

of the company and its shareholders.

Special resolution 3: Financial assistance to related and inter-

related companies

It is RESOLVED, by way of a special resolution, that the directors of

the company be and are hereby authorised to provide financial

assistance to all related and inter-related companies within the

Alert group of companies, at such times and on such terms and

conditions as the directors in their sole discretion deem fit and

subject to all relevant statutory and regulatory requirements

being met, such authority to remain in place until rescinded by

way of special resolution passed at a duly constituted annual

general meeting of the company.

ELECTRONIC PARTICIPATION

Should any shareholder of the company wish to participate in

the annual general meeting by way of electronic participation,

that shareholder shall be obliged to make application in writing

(including details as to how the shareholder or its representative

can be contacted) to so participate, to the company secretary

at the applicable address set out below at least 5 business days

prior to the annual general meeting in order for the company

secretary to arrange for the shareholder (and its representative)

to provide reasonably satisfactory identification to the transfer

secretaries for the purposes of section 63(1) of the Companies

Act and for the company secretary to provide the shareholder (or

its representative) with details as to how to access any electronic

participation is to be provided. The company reserves the right

not to provide for electronic participation at the annual general

meeting in the event that it determines that it is not practical to

do so. The costs of accessing any means of electronic participation

provided by the company will be borne by the shareholder so

accessing the electronic participation.

PROXIES

Any shareholder holding shares in certificated form or recorded

on the company’s subregister in electronic dematerialised form in

“own name” and entitled to attend, speak and vote at the meeting

is entitled to appoint a proxy to attend, speak and, on a poll, vote

in their stead. A proxy need not be a member of the company.


ANNUAL GENERAL MEETING – EXPLANATORY NOTES


vOTINGA 75% majority of the votes cast by shareholders present or

represented by proxy at the annual general meeting must be cast

in favour of special resolutions for these to be approved. Ordinary

resolutions are approved by more than 50% of the votes cast by

shareholders present or represented by proxy.

PRESENTATION OF ANNUAL FINANCIAL STATEMENTSAt the annual general meeting, the directors must present the

annual financial statements for the year ended 30 June 2013 to

shareholders, together with the reports of the directors, the audit

and risk committee, and the auditors. These are contained within

the annual report.

Ordinary resolutions 1.1 to 1.3 – Rotation and appointment of directorsIn accordance with the company’s Memorandum of Incorporation

(“MOI”), one-third of the directors are required to retire at each

annual general meeting and may offer themselves for re-election.

In addition, any person appointed to the board of directors

following the previous annual general meeting is similarly

required to retire and is eligible for re-election at the next annual

general meeting.

The purpose of these resolutions is to elect, by way of separate

resolutions, directors in the place of those retiring in

accordance with the company’s MOI. The directors retiring are

Mr Wessel van der Merwe and Ms Gwen Mahuma, both of whom

being eligible to offer themselves for re-election. In addition,

Messrs Peter Dodson, Afzal Loonat and Mahomed Gani, having

been appointed as directors subsequent to the previous annual

general meeting, and being eligible, offer themselves for election

by shareholders.

Brief biographical details of each of the above directors and the

remaining members of the board are contained on pages 4 of the

annual report of which this notice forms part.

Ordinary resolutions 2.1 to 2.3 – Appointment of audit committeeIn terms of S94(2) of the Companies Act, No 71 of 2008 (“the

Act”), a public company must at each annual general meeting

elect an audit committee comprising at least three members

who are directors and who meet the criteria of S94(4) of the Act.

Regulation 42 to the Act specifies that one-third of the members

of the audit committee must have appropriate academic

qualifications or experience, as listed in the regulation.

The board of directors of the company is satisfied that the

proposed members of the audit committee meet all relevant

requirements.

The purpose of these resolutions is to appoint, by way of separate

resolutions, the following independent non-executive directors as

members of the audit committee:

• MrWesselvanderMerwe(Chairman)

• MrAfzalLoonat

• MsGwenMahuma

Ordinary resolution 3 – Appointment of auditors

KPMG South Africa Inc. has indicated its willingness to continue in

office and resolution 3 proposes the reappointment of that firm as

the company’s auditors with effect from 1 July 2013. S90(3) of the

Companies Act, No 71 of 2008 (“the Act”) requires the designated

auditor to meet the criteria as set out in S90(2) of the Act.

The board of directors of the company is satisfied that both KPMG

and the designated auditor meet the relevant requirements.

Ordinary resolutions 4 and 5 – Placement and issue of shares

for cash

In terms of the Companies Act, No 71 of 2008, directors are

authorised to allot and issue the unissued shares of the company,

unless otherwise provided in the company’s MOI or in instances

as listed in S41 of the Act. The JSE requires that the MOI allow

for shareholders in a general meeting to authorise the directors

to issue unissued securities and/or grant options to subscribe

for unissued securities as the directors in their discretion think

fit, provided that such transaction(s) has/have been approved

by the JSE and are subject to the JSE Listings Requirements. In

the absence of the MOI as contemplated in the Act, ordinary

resolution 4 has been included to confirm directors’ authority to

issue shares. Directors confirm that there is no specific intention

to issue any shares, other than as part of, and in terms of, the rules

of the company’s share incentive scheme, as at the date of

this notice.


Also, in terms of the JSE Listings Requirements, the authority to

issue shares for cash as set out in ordinary resolution 5 requires

the approval of a 75% majority of the votes cast by shareholders

present or represented by proxy at the annual general meeting for

ordinary resolution number 5 to become effective.

Ordinary resolution 6 – Remuneration policy

The 2009 King Report on Corporate Governance for South

Africa recommends that the remuneration philosophy of the

company be submitted to shareholders for consideration and

for an advisory, non-binding vote to provide shareholders with

an opportunity to indicate should they not be in support of the

material provisions of the remuneration philosophy and policy of

the company.

Ordinary resolution 7 – Signing authority

Authority is required to do all such things, to sign all documents

and to take all such action as necessary to implement the

resolutions set out in the notice and approved at the annual

general meeting. It is proposed that the company secretary and/

or director be authorised accordingly.

Special resolution 1 – Directors’ remuneration

In terms of S66(8) and S66(9) of the Companies Act, No 71 of 2008,

companies may remunerate directors for their services as directors

unless otherwise provided for by the MOI and on approval of

shareholders by way of a special resolution. Executive directors

are not specifically remunerated for their services as directors

but as employees of the company and, as such, the resolution as

included in the notice requests the approval of the remuneration

paid to non-executive directors for their services as directors of

the company.

Special resolution 2 – General authority to repurchase shares

S48 of the Companies Act, No 71 of 2008 authorises the board

of directors of a company to approve the acquisition of its own

shares, subject to the provisions of S48 and S46 having been met.

In order to ensure compliance with the requirements of the Act,

the Listing Requirements of the JSE Limited and the provisions

of the Memorandum of Incorporation of the company, a special

resolution is proposed to provide authority to the company to

repurchase its shares.

Special resolution 3 – Financial assistance to related and

inter-related companies

S45(2) of the Companies Act, No 71 of 2008 authorises the board

to provide direct or indirect financial assistance to a related or

inter-related company, subject to subsections (3) and (4) of S45

of the Act and unless otherwise provided in the company’s MOI.

In terms of S45(3) of the Act, a special resolution of shareholders

is required in these instances. The main purpose of the special

resolution as set out in the notice of the meeting is to approve the

granting of inter-company loans, a recognised and well known

practice, details of which are also set out in the notes to the

annual financial statements.

GENERAL

Shareholders and proxies attending the annual general meeting

on behalf of shareholders are reminded that S63(1) of the

Companies Act, No 71 of 2008 requires that reasonably satisfactory

identification be presented in order for such shareholder or proxy

to be allowed to attend or participate in the meeting.

SUMMARy OF THE RIGHTS ESTABLISHED IN TERMS OF

SECTION 58 OF THE ACT AS REQUIRED By SECTION 58(7)(B)

For purposes of this summary, “shareholder” shall have the

meaning ascribed thereto in the Act.

1. At any time, a shareholder of a company is entitled to appoint

any individual, including an individual who is not a shareholder

of that company, as a proxy, to participate in, speak and vote at

a shareholders’ meeting on behalf of the shareholder or to give

or withhold written consent on behalf of such shareholder in

relation to a decision contemplated in section 60 of the Act.

2. A proxy appointment must be in writing, dated and signed by

the relevant shareholder, and such proxy appointment remains

valid for one year after the date upon which the proxy was

signed or any longer or shorter period expressly set out in the

appointment, unless it is revoked in a manner contemplated in

section 58(4)(c) of the Act or expires earlier as contemplated in

section 58(8)(d) of the Act.


3. Except to the extent that the Memorandum of Incorporation of

a company provides otherwise:

3.1 A shareholder of the relevant company may appoint two

or more persons concurrently as proxies, and may appoint

more than one proxy to exercise voting rights attached to

different securities held by such shareholder;

3.2 A proxy may delegate their authority to act on behalf of a

shareholder to another person, subject to any restriction

set out in the instrument appointing the proxy; and

3.3 A copy of the instrument appointing a proxy must be

delivered to the company or to any other person on

behalf of the relevant company before the proxy exercises

any rights of the shareholder at a shareholders’ meeting.

4. Irrespective of the form of instrument used to appoint a proxy,

the appointment of the proxy is suspended at any time and

to the extent that the shareholder who appointed that proxy

chooses to act directly and in person in the exercise of any

rights as a shareholder of the relevant company.

5. Unless the proxy appointment expressly states otherwise,

the appointment of a proxy is revocable. If the appointment

of a proxy is revocable, a shareholder may revoke the proxy

appointment by cancelling it in writing or making a later

inconsistent appointment of a proxy, and delivering a copy of

the revocation instrument to the proxy and the company.

6. The revocation of a proxy appointment constitutes a complete

and final cancellation of the proxy’s authority to act on behalf

of the relevant shareholder as of the later of the date: (a)

stated in the revocation instrument, if any; or (b) upon which

the revocation instrument is delivered to the proxy and the

relevant company as required in section 58(4)(c)(ii) of the Act.

7. If the instrument appointing a proxy or proxies has

been delivered to the relevant company, as long as that

appointment remains in effect, any notice that is required

by the Act or the relevant company’s MOI to be delivered by

such company to the shareholder, must be delivered by such

company to the shareholder or to the proxy or proxies, if the

shareholder has directed the relevant company to do so in

writing and paid any reasonable fee charged by the company

for doing so.

8. A proxy is entitled to exercise or abstain from exercising any

voting right of the relevant shareholder without direction,

except to the extent that the MOI or the instrument appointing

the proxy provides otherwise.

9. If a company issues an invitation to shareholders to appoint

one or more persons named by such company as a proxy or

supplies a form of instrument for appointing a proxy:

9.1 Such invitation must be sent to every shareholder who

is entitled to notice of the meeting at which the proxy is

intended to be exercised;

9.2 The invitation or form of instrument supplied by the

relevant company must: (a) bear a reasonably prominent

summary of the rights established in section 58 of the Act;

(b) contain adequate blank space, immediately preceding

the name or names of any person or persons named

in it, to enable a shareholder to write in the name and,

if so desired, an alternative name of a proxy chosen by

such shareholder; and (c) provide adequate space for the

shareholder to indicate whether the appointed proxy is to

vote in favour or against the applicable resolution/s to be

put at the relevant meeting, or is to abstain from voting;

9.3 The company must not require that the proxy

appointment be made irrevocable; and

9.4 The proxy appointment remains valid only until the end

of the relevant meeting at which it was intended to be

used, unless revoked as contemplated in section 58(5) of

the Act.

ANNUAL GENERAL MEETING – EXPLANATORY NOTES cONTINUEd


Salient dates

Record date for determining those shareholders entitled to vote at the annual general meeting Friday, 8 November 2013

Last day to lodge forms of proxy for the annual general meeting By 10h00 on 13 November 2013


ALERT STEEL HOLDING LIMITED(Incorporated in the Republic of South Africa)(Registration number 2003/005144/06)JSE code: AETISIN: ZAE000092847(“Alert” or “the company”)

Form of proxy for the annual general meeting of the company to be held at the company’s offices at Cnr Engelbrecht & Lanham Streets on 15 November 2013 at 10h00 (“the annual general meeting”). Only for use by certificated shareholders, nominee companies of Central Securities Depository Participants (“CSDP”), brokers’ nominee companies and shareholders who have dematerialised their shares and who have elected own-name registration and who wish to vote on the special and ordinary resolutions in the notice of the annual general meeting to which this form is attached. Shareholders who have dematerialised their shares through a CSDP or broker must not complete this form of proxy and must provide their CSDP or broker with their voting instructions, except for shareholders who elected own-name registration in the subregister through a CSDP, which shareholders must complete this form of proxy and lodge it with Computershare Investor Services (Proprietary) Limited. Holders of dematerialised shares other than with own-name registration who wish to attend the annual general meeting, must inform their CSDP or broker of such intention and request their CSDP or broker to issue them with the necessary letter of representation.

I/We(name in block letters)

of (address)

telephone number/s

being the holder/s of ordinary shares in the company, do hereby appoint:

1. 2. or failing him/her

the chairperson of the annual general meeting, as my/our proxy to act for me/us and on my/our behalf at the annual general meeting of the company, or any adjournment thereof, which will be held for the purpose of considering and, if deemed fit, of passing, with or without modification, the ordinary and special resolutions as detailed in the notice of the annual general meeting, and to vote for and/or against the resolutions and/or abstain from voting in respect of the ordinary shares registered in my/our name/s, in accordance with the following instructions:

Number of votes (one vote per ordinary share)

For Against AbstainOrdinary resolution 1.1 Re-election of Mr Wessel van der Merwe as an independent non-executive directorOrdinary resolution 1.2 Re-election of Ms Gwen Mahuma as an independent non-executive directorOrdinary resolution 1.3 Appointment of Mr Peter Dodson as Chief Executive OfficerOrdinary resolution 1.4Appointment of Mr Afzal Loonat as an independent non-executive directorOrdinary resolution 1.5Appointment of Mr Mahomed Gani as an Chief Financial OfficerOrdinary resolution 2.1 Election of Mr Wessel van der Merwe as a member and chairman of the audit committeeOrdinary resolution 2.2 Election of Mr Afzal Loonat as a member of the audit committeeOrdinary resolution 2.3 Election of Ms Gwen Mahuma as a member of the audit committeeOrdinary resolution 3 Appointment of KPMG South Africa Inc. as external auditorOrdinary resolution 4 Control of authorised but unissued ordinary sharesOrdinary resolution 5 Authority to issue unissued shares for cashOrdinary resolution 6 Sanctioning of the remuneration policyOrdinary resolution 7 Authority to effect the resolutionsSpecial resolution 1 Approval of the fees payable to the non-executive directorsSpecial resolution 2 Authority for the company to repurchase its own securitiesSpecial resolution 3 Authority to provide financial assistance to related and inter-related companies

Signature

Signed at on 2013.

Assisted by (if applicable)

FORM OF PROXY


NOTES TO THE FORM OF PROXY cONTiNuEd

1. Each shareholder is entitled to appoint one or more proxies (none of whom need be a shareholder of the company) to attend, speak

and vote in place of that shareholder at the annual general meeting.

2. Shareholder(s) that are certificated or “own name” dematerialised shareholders may insert the name of a proxy or the names of two

alternative proxies of the member’s choice in the space/s provided, with or without deleting “the chairperson of the meeting”, but any

such deletion must be initialled by the shareholder(s). The person whose name stands first on the form of proxy and who is present at

the annual general meeting will be entitled to act as a proxy to the exclusion of those whose names follow. If no proxy is named on a

lodged form of proxy, the chairperson shall be deemed to be appointed as the proxy.

3. A shareholder’s instructions to the proxy must be indicated by the insertion of the relevant number of votes exercisable by the

shareholder in the appropriate box provided. Failure to comply with the above will be deemed to authorise the proxy, in the case of any

proxy other than the chairperson, to vote or abstain from voting as deemed fit and in the case of the chairperson to vote in favour of

the resolution.

4. A shareholder or his/her proxy is not obliged to use all the votes exercisable by the shareholders, but the total of the votes cast or

abstained from may not exceed the total of the votes exercisable in respect of the shares held by the shareholder.

5. Forms of proxy must be lodged at or posted to Computershare Investor Services (Pty) Limited, Ground Floor, 70 Marshall Street,

Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107), to be received no later than 10h00 on 13 November 2013.

6. The completion and lodging of this form of proxy will not preclude the relevant shareholder from attending the annual general

meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof, should such shareholder

wish to do so. Where there are joint holders of shares, the vote of the first joint holder who tenders a vote, as determined by the order

in which the names stand in the register of members, will be accepted.

7. The chairperson of the annual general meeting may reject or accept any form of proxy which is completed and/or received otherwise

than in accordance with these notes, provided that, in respect of acceptances, the chairperson is satisfied as to the manner in which

the shareholder concerned wishes to vote.

8. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached

to this form of proxy unless previously recorded by the company or Computershare Investor Services (Pty) Limited or waived by the

chairperson of the annual general meeting.

CORPORATE INFORMATION


Independent non-executive directors: M Patel (Chairman), AE Loonat, BG Mahuma, WP van der Merwe

Executive directors: PN Dodson, MSI Gani

Registration number: 2003/005144/06

Registered address: Corner Engelbrecht and Lanham Streets, East Lynne, Pretoria

Postal address: PO Box 29607, Sunnyside, 0132

Company secretary: M Pretorius

Telephone: (012) 800 0000

Facsimile: (012) 800 4661

Transfer secretaries: Computershare Investor Services Proprietary Limited

JSE sponsor: Exchange Sponsors (2008) Proprietary Limited

Auditors: KPMG Inc

rifedesigns13020

www.alertsteel.co.za

Documents

13020 Alert Steel AR Cover - Johannesburg Stock … 071 609 1093. ANNUAL REPORT 2013 3 North West Gauteng Mpumalanga KwaZulu- Natal Eastern Cape Western Cape Northern Cape Free State