circular to alert steel shareholders - jse · 2016-07-06 · table of contents page corporate...

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

The definitions and interpretation commencing on page 4 of this circular apply to this circular, including this cover page.

If you are in any doubt as to what action to take in relation to this circular, please consult your CSDP, stockbroker, banker or other professional adviserimmediately.

ACTION REQUIRED

1. This circular is important and should be read with particular attention to page 2 entitled “Action required” which sets out the action required byshareholders of Alert Steel with regard to this circular.

2 If you have disposed of all your shares in Alert Steel, please forward this circular to the purchaser of such shares or to the CSDP, broker, banker orother agent through whom the disposal was effected.

ALERT STEEL HOLDINGS LIMITED(Incorporated in the Republic of South Africa)

Registration number: 2003/005144/06JSE code: AET • ISIN: ZAE000092847

(“Alert Steel” or “the company”)

CIRCULAR TO ALERT STEEL SHAREHOLDERS

regarding

• approval of a proposed specific issue of shares for cash to a related party;

• authorisation of the issue of more than 30% of the shares currently in issue;

• increase of authorised share capital to 400 000 000 shares,

and incorporating:

• a notice convening a general meeting of the shareholders of the company; and

• a form of proxy in respect of the general meeting of shareholders (for use by certificated shareholders anddematerialised shareholders who have selected “own name” registration only).

Date of issue: 17 September 2013

This circular is available in English only and copies thereof may be obtained from the offices of the company at the address reflected on the CorporateInformation page of this circular from the date of issue to 30 September 2013. In addition, this circular is available in electronic form on the company’s website(www.alertsteel.co.za).

Designated Adviser AttorneysReporting accountants

Exchange Sponsors Gattoo AttorneysKPMG Incorporated

TABLE OF CONTENTS

Page

Corporate information 1

Action required 2

Salient dates and times 3

Definitions and interpretations 4

Circular to Alert Steel shareholders

1. Introduction 7

2. Proposed specific issue to a related party 7

3. Terms and conditions of the loans 8

4. Conditions precedent 8

5. Purpose of this circular 9

6. Share capital 9

7. Effects of the specific issue on shareholding of Cannistraro 10

8. Increase in authorised shares 11

9. Financial information 11

10. Listing of new ordinary shares 13

11. Information relating to Alert Steel 14

12. Information relating to the directors 16

13. General 18

14. General meeting and voting rights 19

15. Approval requirements at the general meeting 19

16. Documents available for inspection 20

Annexure 1 Pro forma financial information 21

Annexure 2 Independent reporting accountant’s assurance report on the compilation of

pro forma financial information included in a circular 23

Annexure 3 Trading history of Alert Steel shares on the JSE 25

Annexure 4 Corporate governance 27

Notice of general meeting of Alert Steel shareholders 32

Form of proxy – general meeting of shareholders Attached

CORPORATE INFORMATION

1

REGISTERED OFFICE OF ALERT STEELCorner of Engelbrecht and Lanham StreetsEast Lynne, Pretoria, 0186

(PO Box 29607, Sunnyside, 0132)

Telephone: (012) 800 0000Facsimile: (012) 800 0013

Date of incorporation: 3 July 2003Place: Pretoria

TRANSFER SECRETARIESComputershare Investor Services Proprietary Limited(Registration number 2004/003647/07)

Ground Floor, 70 Marshall Street, Johannesburg, 2001

(PO Box 61051, Marshalltown, 2107)


REPORTING ACCOUNTANTS KPMG Incorporated(Registration number 1999/021543/21)

KPMG Crescent, 85 Empire Road, Parktown, 2193

(Private bag X9, Parkview, 2122)


COMPANY SECRETARYM Pretorius (BCom(Law) LL. B)

Corner of Engelbrecht and Lanham StreetsEast Lynne, Pretoria, 0186

(PO Box 29607, Sunnyside, 0132)

Telephone: (012) 800 0000Facsimile: 086 696 1270

DESIGNATED ADVISERExchange Sponsors (2008) Proprietary Limited(Registration number 2008/019553/07)

44a Boundary Road, Inanda, 2196

(PO Box 411216, Craighall, 2024)


ATTORNEYSGattoo AttorneysSuite 1001, 1st Floor82 on Maude, 82 Maude Street, Sandton, 2196

Telephone: 086 11 42 88 66Facsimile: (011) 482 7372

2

ACTION REQUIRED

Please take careful note of the following provisions regarding the action required by Alert Steel shareholders.

If you are in any doubt as to what action to take, please consult your CSDP, broker, banker, attorney, accountantor other professional adviser immediately.

This circular contains information relating to the transactions. You should read this document carefully and decide how youwish to vote on the resolutions to be proposed at the general meeting.

The general meeting, convened in terms of the notice incorporated in this document, will be held at the company’s offices,corner of Engelbrecht and Lanham streets, East Lynne, Pretoria at 10:00 on Wednesday, 16 October 2013.

If you have disposed of all your shares in Alert Steel, please forward this circular to the purchaser of such shares or tothe CSDP, broker, banker or other agent through whom the disposal was effected.

DEMATERIALISED SHAREHOLDERS OTHER THAN WITH OWN-NAME REGISTRATION:

You are entitled to attend or be represented by proxy at the general meeting. You must NOT, however, complete theattached form of proxy. You must advise your CSDP or broker timeously if you wish to attend or be represented at thegeneral meeting.

If your CSDP or broker does not contact you, you are advised to contact your CSDP or broker and provide them with yourvoting instructions. If your CSDP or broker does not obtain instructions from you, they will be obliged to act in terms of themandate entered into between yourselves.

If you wish to attend, or to be represented at, the general meeting, your CSDP or broker will be required to issue thenecessary letter of representation to you to enable you to attend or to be represented at the general meeting.

CERTIFICATED SHAREHOLDERS AND SHAREHOLDERS WHO HOLD SHARES WITH OWN-NAME REGISTRATIONIN DEMATERIALISED FORM:

You are entitled to attend, or to be represented by proxy at, the general meeting. However, if your shares are held througha nominee or broker, you must inform that nominee or broker of your intention to attend the general meeting and obtainthe necessary letter of representation from that nominee or broker or provide your nominee or broker with your votinginstructions should you not be able to attend the general meeting in person.

If you are unable to attend the general meeting, but wish to be represented thereat, you must complete and return theattached form of proxy, in accordance with the instructions contained therein, to be received by the transfer secretariesby no later 10:00 on Monday, 14 October 2013, or you may hand the completed form of proxy to the chairman of thegeneral meeting at any time prior to the commencement of voting on the resolutions.

Alert Steel does not accept any responsibility and will not be held liable for any failure on the part of the brokeror CSDP (as the case may be) of a dematerialised shareholder to notify such dematerialised shareholder of thedetails of this circular.

ELECTRONIC PARTICIPATION

In terms of section 61(10) of the Companies Act, every shareholders meeting of a public company must be reasonablyaccessible within South Africa for electronic participation by shareholders. Shareholders wishing to participateelectronically in the general meeting are required to deliver written notice to the Company at corner Engelbrecht andLanham Streets, East Lynne, Pretoria (marked for the attention of Mr M Patel) by no later than 10:00 on Wednesday, 9October 2013, that they wish to participate via electronic communication at the general meeting (the “electronic notice”).In order for the electronic notice to be valid it must contain:

(a) if the shareholder is an individual, a certified copy of his identity document and/or passport;

(b) if the shareholder is not an individual, a certified copy of a resolution by the relevant entity and a certified copyof the identity documents and/or passports of the persons who passed the relevant resolution. The relevantresolution must set out who from the relevant entity is authorised to represent the relevant entity at the generalmeeting via electronic communication;

(c) a valid e-mail address and/or facsimile number (the “contact address/number”); and

(d) if the shareholder wishes to vote via electronic communication, set out that the shareholder wishes to vote viaelectronic communication. By no later than 10:00 on Friday, 11 October 2013, the company shall use itsreasonable endeavours to notify (at its contract address/number) each shareholder who has delivered a validelectronic notice of the relevant details through which such shareholder can participate in the general meetingvia electronic communication.

SALIENT DATES AND TIMES

2013

Circular posted to Alert Steel shareholders recorded in the register at the close of business on Friday, 30 August 2013 Thursday, 12 September

Last date to trade in order to be eligible to vote at the general meeting Friday, 4 October

Record date to be eligible to vote at the general meeting Friday, 11 October

Last date for receipt of forms of proxy for the general meeting by 10:00 on Monday, 14 October or they maybe handed to the chairman ofthe general meeting at any timeprior to the commencement ofvoting on the resolutions tabledat the general meeting ascontemplated by the Act

General meeting to be held at 10:00 on Wednesday, 16 October

Results of the general meeting released on SENS on Wednesday, 16 October

JSE lists the new shares issued in terms of the Specific Issue on or about Friday, 18 October

Note:

1. The above dates and times are subject to amendment and any amendment will be released on SENS.

3

DEFINITIONS AND INTERPRETATIONS

In this circular, unless the context indicates otherwise, reference to the singular shall include the plural and vice versa,words denoting one gender include the others, words and expressions denoting natural persons include juristic personsand associations of persons and the words and expressions in the first column have the meanings stated opposite themin the second column.

“Act” the Companies Act, 2008 (Act 71 of 2008), as amended and including theregulations to such Act from time to time;

“Aggregate Subscription Price” means an amount of R96 000 000 (ninety-six million Rand);

“AKM” AKM Sons Property Trust, a trust registered with the Master of the High Court,with Master’s reference number IT 1549/2008, the trustees are MohammedFerouze Moosa, Fayyaz Moosa and Asif Moosa;

“Alert Steel” or “the company” Alert Steel Holdings Limited (Registration number 2003/005144/06), a publiccompany incorporated in accordance with the laws of South Africa and theshares of which are listed on ALTx;

“ALTx” the Alternative Exchange of the JSE;

“the Build Kwik Sale Agreement” the Sale Agreement between the Build Kwik Wholesalers Proprietary Limitedand Alert Steel Proprietary Limited, dated 5 August 2013 for purchase of thebusiness of Build Kwik Wholesalers Proprietary Limited as a going concern forR58 138 809;

“Cannistraro” Cannistraro Investments 282 Proprietary Limited (Registration number2011/008136/07), a private company incorporated in accordance with the lawsof South Africa and which is 100% owned by Mr Rayhaan Hassim;

“Capital Africa Steel” Capital Africa Steel Proprietary Limited (Registration number2003/008668/07), a private company incorporated in accordance with the lawsof South Africa which is owned by WBHO Limited and Brait Private Equity;

“CAS Sale” the sale by Capital Africa Steel to Cannistraro of all of its shares in Alert Steel,comprising 47,5% of the shares in issue at such time;

“cents” South African cents;

“certificated shareholders” Alert Steel shareholders who hold certificated shares;

“certificated shares” Alert Steel shares in respect of which physical Alert Steel share certificateshave been issued;

“circular” this circular, dated 17 September 2013, including all annexures thereto, thenotice of general meeting and the form of proxy;

“Commission” or “CIPC” the Companies and Intellectual Property Commission established in terms ofsection 185 of the Act;

“CSDP” Central Securities Depository Participant accepted as a participant in terms ofthe Custody and Administration of Securities Act, 1992 (Act 85 of 1992),appointed by an individual shareholder for purposes of, and in regard to, thedematerialisation of documents of title for purposes of incorporation into theStrate system;

“dematerialised shareholder” a shareholder who holds dematerialised shares;

“dematerialised shares” shares which have been incorporated into the Strate system and which are nolonger evidenced by physical documents of title, but the evidence of ownershipof which is determined electronically and recorded in the sub-registermaintained by the CSDP;

4

“Designated Adviser” Exchange Sponsors (2008) Proprietary Limited (Registration number2008/019553/07), a private company incorporated in accordance with the lawsof South Africa, a designated adviser as contemplated in the ListingsRequirements;

“directors” or “board of directors” the board of directors of Alert Steel, further details of whom appear on page 16;

“effective date” the third business day succeeding the date on which all the conditionsprecedent relating to the Specific Issue have been fulfilled or waived, whichdate is expected to be the third business day succeeding the general meetingof shareholders to be held on 16 October 2013;

“general meeting” the general meeting of shareholders to be held at 10:00 on Wednesday, 16 October 2013, convened in terms of the notice of general meeting includedin this circular;

“Group” Alert Steel and all its subsidiaries;

“IFRS” International Financial Reporting Standards;

“JSE” the JSE Limited (Registration number 2005/022939/06), a limited liabilitypublic company incorporated in accordance with the laws of South Africawhich operates a securities exchange licensed in terms of the SecuritiesServices Act, 2004;

“last practicable date” the last practicable date prior to the finalisation of this circular, which date wasTuesday, 10 September 2013;

“Listings Requirements” the Listings Requirements of the JSE, as amended from time to time;

“the loans” collectively the 2-Year Term loan, 5-Year Term loan, the Southern Palace Loanand the overdraft facility;

“mandatory offer” the mandatory offer made by Cannistraro to all the shareholders of Alert Steel(other than Capital Africa Steel and Nedbank), to acquire all their shares inAlert Steel at a consideration of 54,58 cents per share, as referred to inparagraph 1.5 below;

“Nedbank” Nedbank Limited (Registration number 1951/000009/06), a public companyincorporated in accordance with the laws of South Africa;

“Nedbank Sale” the sale by Nedbank to Cannistraro of 19,78% of the issued shares in AlertSteel at such time;

“overdraft facility” means the overdraft facility originally advanced by Nedbank to Alert SteelProprietary Limited, which was ceded by Nedbank to Southern Palace on 1 February 2013, the amount owing by Alert Steel Proprietary Limited at 19 August 3013, was R26 015 000;

“Reporting Accountants” KPMG Incorporated (Registration number 1999/021543/21), a companyincorporated in accordance with the laws of South Africa;

“resolutions” the resolutions recorded in the notice of general meeting attached to thiscircular;

“SENS” the Stock Exchange News Service;

“Share Capital increase” the proposed increase in the authorised share capital of the company from100 000 000 shares to 400 000 000 shares, as referred to in paragraph 8 andin the resolutions;

“shares” ordinary no par value shares in Alert Steel;

“shareholders” holders of shares;

5

“South Africa” the Republic of South Africa;

“Southern Palace” Southern Palace Investments 265 Proprietary Limited (Registration number2005/005086/07), a company duly registered and incorporated with limitedliability in accordance with the laws of South Africa and which is 100% ownedby Mr Rayhaan Hassim;

“Southern Palace Loan” means the loan of R21 million advanced by Southern Palace to the company,on the terms and conditions recorded in the Southern Palace Loan Agreement;

“Southern Palace Loan Agreement” means the agreement of loan concluded between Southern Palace, thecompany and Alert Steel Proprietary Limited on 19 August 2013 recording theterms and conditions pertaining to the loan by Southern Palace to thecompany of an amount of R21 million (together with the addendum theretodated 7 September 2013);

“Specific Issue” the specific issue of 48 000 000 shares in Alert Steel at 200 cents per sharesto Cannistraro on the effective date, as recorded in the Specific IssueAgreement and referred to in this circular;

“Specific Issue Agreement” the agreement entered into on 19 August 2013 between Alert Steel, Alert SteelProprietary Limited, Southern Palace and Cannistraro in respect of theSpecific Issue;

“Strate” the settlement and clearing system used by the JSE, managed by StrateLimited (Registration number 1998/022242/06), a company duly registeredand incorporated with limited liability in accordance with the laws of SouthAfrica;

“subscription share” the subscription by Alert Steel for one share in Alert Steel Proprietary Limited;

“5-Year Term Loan Agreement” means the loan agreement concluded between Alert Steel Proprietary Limitedand Nedbank on 6 June 2011 recording the terms and conditions pertaining tothe 5-Year Term Loan;

“2-Year Term Loan Agreement” means the loan agreement concluded between Alert Steel Proprietary Limitedand Nedbank on 6 June 2011 recording the terms and conditions pertaining tothe 2-Year Term Loan;

“transactions” the Specific Issue, the Share Capital increase and the other resolutions;

“transfer secretaries” Computershare Investor Services Proprietary Limited (Registration number2004/003647/07), a private company duly registered and incorporated inaccordance with the laws of South Africa.

“2-Year Term loan” means the loan originally advanced by Nedbank to Alert Steel ProprietaryLimited in an original amount of R20 million, which was ceded by Nedbank toSouthern Palace on 1 February 2013, the amount owing by Alert SteelProprietary Limited at 19 August 3013, was R17 500 000; and

“5-Year Term loan” means the loan originally advanced by Nedbank to Alert Steel ProprietaryLimited in an original amount of R70 million, which was ceded by Nedbank toSouthern Palace on 1 February 2013 and which loan was ceded by SouthernPalace to Cannistraro on the effective date, the amount owing by Alert SteelProprietary Limited at 19 August 3013, was R74 817 167,84.

6


Registration number: 2003/005144/06

JSE code: AET • ISIN: ZAE000170395


DIRECTORS:

Non-executive: M M Patel (Independent Non-Executive Chairman), W van der Merwe (Independent Non-Executive Director),

G Mahuma (Independent Non-Executive Director), A Loonat (Independent Non-Executive Director)

Executive: P Dodson (Chief Executive Officer), MSI Gani (Chief Financial Officer)

CIRCULAR TO ALERT STEEL SHAREHOLDERS

1. INTRODUCTION

1.1 Shareholders of Alert Steel were informed on 4 February 2013 that Nedbank had assigned all of its rightsand obligations under the 5-Year Term Loan Agreement, to Southern Palace.

1.2 On 8 February 2013, Cannistraro entered into the CAS Sale with Capital Africa Steel, in terms of whichCannistraro agreed to acquire 47,5% of the shares in issue in Alert Steel from Capital Africa Steel for R6 million and also undertook to procure the release of Capital Africa Steel from a bank guarantee of R7,5 million. Therefore the aggregate purchase consideration in respect of the CAS Sale equated to a priceof 54,58 cents per share.

1.3 On 15 February 2013, Cannistraro entered into the Nedbank Sale with Nedbank in terms of whichCannistraro agreed to acquire a further 19,78% of the shares in issue in Alert Steel from Nedbank for R1 million (and therefore at a purchase price of 9,72 cents per share).

1.4 On 11 April 2013, it was announced, inter alia, that Southern Palace informed Alert Steel that it had assignedthe rights and obligations which it had acquired from Nedbank (referred to in paragraph 1.1 above) toCannistraro, with effect from 27 February 2013.

1.5 Cannistraro made an unconditional mandatory offer to all of the shareholders other than CAS and Nedbankat 54,58 cents per share on 15 July 2013. According to the circular issued on 15 July 2013, the offer closedon 30 August 2013.

2. PROPOSED SPECIFIC ISSUE TO A RELATED PARTY

2.1 On 11 April 2013, it was announced that Alert Steel had decided to change the previously announcedsubscription and clawback offer to a specific issue of shares for cash to Cannistraro. The Specific IssueAgreement was concluded on the 19 August 2013, subject to the fulfilment of certain conditions precedent.

2.2 Alert Steel will, in accordance with the provisions of the Specific Issue Agreement, subject to the fulfilmentof the conditions precedent recorded in such agreement, undertake a specific issue of 48 000 000 shares toCannistraro at 200 cents per share for cash to raise R96 million. The purpose of the Specific Issue is toredeem debt owing by Alert Steel to Cannistraro.

7

2.3 The Specific Issue is subject to the fulfilment of the conditions precedent set out in paragraph 4 below.

2.4 Cannistraro will cede and delegate to Alert Steel all of its rights and obligations against Alert SteelProprietary Limited to discharge the aggregate subscription price as follows:

2.4.1 R75 million will be set off against Alert Steel’s obligations to Cannistraro in terms of the loans whichoriginated from Nedbank (refer to paragraph 1.4 above);

2.4.2 R10 million arising from a prior loan from Cannistraro to Alert Steel Proprietary Limited; and

2.4.3 R11 million arising from an undertaking by Cannistraro to lend and advance such amount to Alert Steel Proprietary Limited by 31 August 2013.

2.5 Subject to the fulfilment or waiver of the below conditions precedent, Alert Steel will subscribe for thesubscription share in Alert Steel Proprietary Limited.

2.6 An amount of R20 million will be advanced to Alert Steel Proprietary Limited, in terms of the Southern Palaceloan agreement.

3. TERMS AND CONDITIONS OF THE LOANS

3.1 Southern Palace Loan

3.1.1 Alert Steel entered into the Southern Palace Loan Agreement with Southern Palace on 19 August 2013, in terms of which Southern Palace agreed to lend and advance an amount of R20 million to Alert Steel Proprietary Limited, with interest on such loan to accrue at the primeinterest rate, on the advance date, being 31 August 2013 or such earlier date as agreed betweenthe parties. Interest is payable on the repayment date, being 31 October 2014.

3.1.2 Alert Steel Proprietary Limited shall be entitled, prior to the repayment date of 31 October 2014,without penalty, to effect full or partial repayment to Southern Palace of all or any portion of theSouthern Palace loan.

3.1.3 The security held by Southern Palace in respects of the loans shall apply equally to all amounts lentand advanced by Southern Palace in terms of the Southern Palace Loan Agreement.

3.2 5-Year Term loan

3.2.1 On 6 June 2011, Alert Steel Proprietary Limited, a wholly owned subsidiary of Alert Steel, enteredinto the 5-Year Term Loan Agreement with Nedbank. In terms of the 5-Year Term Loan Agreement,Nedbank lent and advanced an amount of R70 million to Alert Steel Proprietary Limited, with interestaccruing thereon at the prime interest rate minus 2%, and which loan is repayable after five years.

3.2.2 Shareholders of Alert Steel were informed on 4 February 2013 that Nedbank had assigned all of therights and obligations under the 5-Year Term Loan Agreement, to Southern Palace. With effect from27 February 2013, Southern Palace assigned the rights and obligations which it had acquired fromNedbank, to Cannistraro.

3.3 2-Year Term loan

3.3.1 On 6 June 2011, Alert Steel Proprietary Limited, a wholly owned subsidiary of Alert Steel, enteredinto the 2-Year Term Loan Agreement with Nedbank. In terms of the 2-Year Term Loan Agreement,Nedbank lent and advanced an amount of R20 million to Alert Steel Proprietary Limited, with interestaccruing thereon at the prime interest rate and which loan is repayable after two years.

3.3.2 Shareholders of Alert Steel were informed on 4 February 2013 that Nedbank had assigned all of therights and obligations under the 2-Year Term Loan Agreement, to Southern Palace. With effect from27 February 2013, Southern Palace assigned the rights and obligations which it had acquired fromNedbank, to Cannistraro.

4. CONDITIONS PRECEDENT

The Specific Issue is subject, inter alia to the fulfilment of the following conditions precedent on or before 31 December 2013:

4.1. Approval in terms of Section 5.51 of the Listings Requirements

In terms of section 5.51 (g) of the Listings Requirements a specific issue of shares for cash must be approvedby a 75% majority of votes of all shareholders, excluding parties participating in the specific issue and theirassociates. Such approval is therefore required in relation to the Specific Issue, and such approval hasaccordingly been sought in the resolutions to be considered at the general meeting.

8

A fairness opinion will not be required although the Specific Issue is to a related party, as the issue price isat a 30% premium to Alert Steel’s volume weighted average trading price over the 30 days ended 11 April 2013.

4.2. Authorisation in terms of Section 41 (1) of the Act

Section 41(1) of the Act requires approval by shareholders by a special resolution if the shares are issued toa related party. In terms of section 2(c) of the Act, a juristic person is related to a company if the one controlsthe other. Pursuant to the implementation of the CAS Sale and the Nedbank Sale, Cannistraro will controlAlert Steel. A special resolution by shareholders will therefore be required in relation to the Specific Issue,and has been included in the resolutions to be considered at the general meeting.

4.3. Authorisation in terms of Section 41 (3) of the Act

Section 41(3) of the Act requires approval by shareholders by special resolution if the shares that are to beissued in terms of the Specific Issue will be equal to or exceed 30% of the shares held by shareholdersimmediately before the Specific Issue.

Alert Steel currently has 100 000 000 shares of no par value authorized and 51 999 636 shares of no parvalue in issue. 48 000 000 new shares will be issued in terms of the Specific Issue, which represent 92% ofthe shares currently in issue. A special resolution will therefore be required to authorise such issue and hasbeen included in the resolutions to be considered at the general meeting.

4.4 Authorisation in terms of Section 44 of the Act

Section 44 of the Act requires approval by shareholders by special resolution, that a general authority begiven to the Board of Directors of the Company to provide financial assistance to all related and inter-relatedcompanies within the Alert Group of companies, at such times and on such terms and conditions as theDirectors in their sole discretion deem fit, and subject to all relevant statutory and regulatory requirementsbeing met.

Specific authority to provide financial assistance is required regarding the subscription by Alert Steel for oneshare in Alert Steel Proprietary Limited, the execution by Alert Steel Proprietary Limited of a notarial bondover all stock and moveable assets held by Alert Steel Proprietary Limited, a cession of debts to SouthernPalace and the execution by Alert Steel of a guarantee in favour of Southern Palace as security for allobligations of Alert Steel Proprietary Limited to Southern Palace in relation to the 5-Year Term loan, the 2-Year Term loan and the overdraft facility.

A special resolution will therefore be required to authorise such financial assistance and has been includedin the resolutions to be considered at the general meeting.

5. PURPOSE OF THIS CIRCULAR

The purpose of this circular is to convene a general meeting of Alert Steel shareholders in order to pass, with orwithout amendment, the following resolutions:

5.1 an ordinary resolution in terms of Section 5.51 of the Listings Requirements, to approve the Specific Issuewith a 75% majority of votes of all shareholders excluding Cannistraro and its associates (see 4.1 above);

5.2. a special resolution in terms of Section 41(1) of the Act to approve the issue of shares to Cannistraro, arelated party, in terms of the Specific Issue (see 4.2 above);

5.3. a special resolution in terms of Section 41(3) of the Act to authorise the issue of more than 30% of sharesin terms of the Specific Issue (see 4.3 above);

5.4. a special resolution in terms of Section 44 of the Act to authorise financial assistance(see 4.4 above); and

5.5 a special resolution to increase the authorised share capital of Alert Steel by 300 000 000 shares of no parvalue from 100 000 000 shares of no par value to 400 000 000 shares of no par value (see 8 below),

which resolutions are fully set out in the notice of general meeting attached to and forming part of this circular.

Should the resolutions referred to in 5.1, 5.2, and 5.3 be passed, Alert Steel and Cannistraro will proceed with theSpecific Issue at 200 cents per share.

6. SHARE CAPITAL

6.1 Authorised and issued share capital before the Specific Issue and the Share Capital increase

On 10 December 2012, the authorised and issued share capital of the company was consolidated on thebasis of one share for every 100 shares held.

9

The authorised and issued share capital of Alert Steel as at the date of this circular, prior to theimplementation of the Specific Issue and the Share Capital increase, are set out below:

Rand

Authorised share capital – before

100 000 000 ordinary shares of no par value 100 000 000

Issued share capital – before

51 999 636 ordinary no par value shares 51 999 636Treasury shares (76 000)

Total issued share capital 51 923 636

All authorised but unissued shares have been placed under the control of the directors until the next annualgeneral meeting, subject to the provisions of the Act. The company did not issue any ordinary shares duringthe previous three years, save for the following:

• on 10 October 2011, a rights offer was successfully concluded with the shareholders. 1 515 515 151shares were issued at 3,3 cents per share. All shares were fully paid resulting in a cash inflow of R50 million;

• on 28 June 2012, a further rights offer was concluded with shareholders. A further 2 321 370 482shares were issued at 2,8 cents per share. All shares were fully paid resulting in a cash inflow of R65 million;

• on 28 November 2012, a further 1 108 840 297 shares were issued, of which 894 554 583 were issuedto Capital Africa Steel and 214 285 714 were issued to Nedbank, in relation to a debt to equityconversion at 2,8 cents per share;

• on 10 December 2012 the company consolidated its shares at a ratio of 100:1. As a result of suchconversion, the issued share capital was reduced by 5 149 379 648 shares.

6.2 Authorised and issued share capital after the Specific Issue and the Share Capital increase

The authorised and issued share capital of Alert Steel after the Specific Issue and the Share Capital increasewill be as set out below:

Rand

Authorised share capital – after

400 000 000 ordinary shares of no par value 400 000 000

Issued share capital – after

99 999 636 ordinary no par value shares 99 999 636Less: Treasury shares (76 000)

Total issued share capital 99 923 636

7. EFFECTS OF THE SPECIFIC ISSUE ON SHAREHOLDING OF CANNISTRARO

Changes in shareholding:

Number of Percentageshares holding

Cannistraro before Specific Issue 35 021 939 67,35

Specific Issue 48 000 000

Cannistraro after Specific Issue 83 021 939 83,02

Total shares in issue after Specific Issue 99 999 636 100,00

Percentage of authorised shares 99,9

Cannistraro has confirmed in writing to Alert Steel that it does not intend invoking section 124 of the Act and intendsremaining listed on the Altx subsequent to the Specific Issue.

10

8. INCREASE IN AUTHORISED SHARES

As set out in paragraph 7 above, the proposed Specific Issue will utilise virtually all the currently authorised butunissued shares of Alert Steel, and, subsequent to the implementation of the Specific Issue, only 364 authorisedshares will remain unissued.

The board of directors of the company has accordingly determined that the authorised share capital of the companyshould be increased for future use. A special resolution has therefore been proposed for consideration at the generalmeeting in terms of which the authorised share capital of the company will be increased by 300 000 000 shares ofno par value from 100 000 000 shares of no par value to 400 000 000 shares of no par value. A resolution in thisregard is incorporated in the notice of general meeting included in this circular.

9. FINANCIAL INFORMATION

9.1 Pro forma financial effects of the Specific Issue

The unaudited and unreviewed pro forma financial effects have been prepared for the purposes of illustratinghow the Specific Issue would have affected the financial position, changes in equity, results of operation orcash flows of Alert Steel for the historical financial period indicated. Accordingly, such effects may notnecessarily fairly represent the financial effects of the Specific Issue on Alert Steel’s financial position,changes in equity and results of operations or cash flows.

The unaudited and unreviewed pro forma financial effects have been compiled using accounting policies thatcomply with IFRS and that are consistent with those applied in the unaudited consolidated financialstatements of Alert Steel for the six months ended 31 December 2012. The pro forma figures have beengiven no greater prominence than unadjusted financial figures, and are presented in a manner consistentwith both the format and accounting policies adopted in the historical financial information and adjustmentshave been quantified on the same basis as would normally be calculated in preparing financial statements.

The directors are responsible for the preparation of the unaudited and unreviewed pro forma financial effects.

The table below sets out the unaudited and unreviewed pro forma financial effects of the Specific Issue onAlert Steel:

Before the After theSpecific Specific Percentage

Issue (1) Issue (3) (5) change

Loss per share (cents) (2) (62,8) (26,1) 58

Headline loss per share (cents) (2) (61,6) (25,6) 58

Net asset value per share (4) (0,5) 95,1 21 141

Net tangible asset value per share (4) (11,5) 89,3 880

Number of ordinary shares in issue (’000) 52 014 100 014

Weighted average number of ordinary shares in issue (’000) 44 546 92 546

Notes:

(1) The “Before the Specific Issue” column is based on Alert Steel’s published reviewed provisional resultsfor the six months ended 31 December 2012.

(2) The loss and headline loss per share was calculated as if the Specific Issue took place on 1 July 2012.

(3) The “After the Specific Issue” column assumes that the 48 000 000 shares were issued at 200 centsper share and the proceeds were received on 31 December 2012.

(4) The net asset value and net tangible asset value in the “After the Specific Issue” column was calculatedas if the Specific Issue took place on 31 December 2012.

(5) The “After the Specific Issue” net asset value and net tangible asset value per share have been adjustedto include the issue of the 48 000 000 ordinary shares at 200 cents per share less the payment of theestimated transaction costs which have been written off against share capital.

(6) The “After the Specific Issue” column loss per share and Headline Loss per share has been adjusted toinclude the issue of the 48 000 000 ordinary shares, the interest saving on interest bearing debtcalculated at the prime interest rate and the portion of transaction costs of R300 342 equating to 43%of the total transaction costs of R700 000 per paragraph 13.3 of the circular that have been expensed.

(7) All transactions with the exception of transaction costs, are expected to have a continuing effect.

11

9.2 Pro forma statement of comprehensive income and statement of financial position

The pro forma statements of financial position and comprehensive income, before and after the SpecificIssue, together with notes regarding the adjustments, are set out in Annexure 1.

The independent reporting accountant’s report on the compilation of the unaudited and unreviewed pro formafinancial information is set out in Annexure 2.

9.3 Segmental information

GroupR’000

External revenues– Branches 333 212– Containers and express stores 41 021

374 233

Reportable segment loss before tax– Branches (32 313)– Containers and express stores 3 855

(28 458)

Segment assets– Branches 277 077– Containers and express stores 20 318

297 395

Segment liabilities– Branches 297 630– Containers and express stores –

297 630

9.4 Responsibility and confirmation

The financial information set out in this document is the responsibility of the directors.

The independent reporting accountants have provided confirmation to the JSE that they have reviewed thiscircular and that they have provided the necessary advice on the applicable Listings Requirements regardingthe pro forma financial information for Alert Steel as described in this circular submitted to the JSE and haveensured that their advice has been applied.

9.5 Adequacy of capital

The tough market conditions over the past three years resulted in declining revenue and continued losses forthe Group. In May 2012, management implemented a restructuring plan in order to reduce costs and improveefficiencies. The continued losses placed the cash flows of the Group under severe pressure, resulting in areview of the Group’s financing facilities with its financiers. The Group incurred a loss for the period ended31 December 2012 of R28 million (31 December 2011: R18 million) and at that date the Group’s liabilitiesexceeded its assets by R0,2 million. Notwithstanding the loss for the period and the current value of the netasset value of the Group, there have been considerable improvements to the company’s financialperformance, cost structures and cash flow during the period and its financial position at the end ofDecember 2012.

Market conditions continued to be depressed for the first six months of the financial year; this has beenaggravated by strikes at the company and within the mining and transportation sectors. The going concernof the Group is very dependent on the successful conclusion of the debt restructuring and business plan asannounced on SENS on 11 February 2013, including but not limited to the following:

• successful implementation of the Specific Issue for cash as described in this circular;

• the finalisation of the disposal of the Aquarella investment property;

• the finalisation of the disposal of two non-core properties;

• the implementation of the new business plan including expanding the Group’s product range to includehardware and related materials.

12

Based on the restructuring plans being successfully implemented, budgets and cash flow forecasts for theensuing year (which are based on the current expected economic and market conditions changingpositively), and the continued support of the Group’s financiers, the directors believe that the company willhave adequate financial resources to continue as a going concern during the ensuing year.

9.6 Material changes

The directors report that, other than the events described in this circular, there have been no materialchanges in the financial or trading position or the assets and liabilities of Alert Steel between31 December 2012, the date of release of the unaudited financial results for the six months that ended 31 December 2012 and the last practicable date save for the acquisition by Alert Steel Proprietary Limited ofthe business of Build Kwik Wholesalers Proprietary Limited as a going concern for R58 138 809 in terms ofthe Build Kwik Sale Agreement.

9.7 Material borrowings of Alert Steel and its subsidiaries

GroupR’000

Loans and borrowingsOpening non-current liabilities 60 060Opening current liabilities 107 818

167 878

New issuesInterest capitalised on loan 1 1 176Interest capitalised on Aquarella bond 330

RepaymentsLong-term loan 2 advanced by Nedbank (1 667)Mortgage bonds (579)Instalment sale liabilities (3 493)

163 645

Non-current liabilities 63 894Current liabilites 99 751

Total 163 645

• Long term loan 1 bears interest at prime less 2% and interest is capitalised on the loan. The loan isrepayable in one instalment on the maturity date, being 1 October 2016.

• Long term loan 2 bears interest at prime less 2%. The loan is repayable in 24 equal instalmentscommencing on 1 October 2012.

• The Group was in breach of its covenants with Nedbank as at 31 December 2012. These loans havetherefore been classified as current. Subsequent to the 31 December 2012, Nedbank assigned therights and obligations under its Banking Facilities, Property Loan Agreement and Securities to AKM andSouthern Palace.

• There is no material difference between the fair value of other borrowings and their book value.

• The loans arose from the funding of assets, losses as well as for the purchase of subsidiaries.

• In terms of the Memorandum of Incorporation of the company, the borrowing powers of the directorsshall be unlimited.

9.8 Financial director

In terms of the Listings Requirements, the company has an incumbent executive financial director and the AuditCommittee has satisfied itself of the appropriateness of his experience and expertise.

10. LISTING OF NEW ORDINARY SHARES

10.1 Subject to all the resolutions to be proposed at the general meeting in respect of the Specific Issue beingpassed, the JSE has granted the listing of the 48 000 000 shares to be issued in terms of the Specific Issuefrom the commencement of trade on Friday, 18 October 2013.

10.2 The shares to be issued in terms of the Specific Issue represent 48% of Alert Steel’s issued shares after theSpecific Issue.

13

10.3 On listing all the issued shares (including the shares to be issued in terms of the Specific Issue) will be ofthe same class and will rank pari passu in all respects.

10.4 Cannistraro is a company registered in South Africa and the approval by the Exchange Control Departmentof the South African Reserve Bank of the Specific Issue is thus not required.

11. INFORMATION RELATING TO ALERT STEEL

11.1 Nature of business

The Group, through its 52 operations in Gauteng, North West, Limpopo, and Mpumalanga, is a large retailerof prime steel and steel related products. Approximately 70% of the Group’s revenue is derived from the saleof approximately 6 000 tonnes of steel per month. With an experienced team and a fleet of 200 vehicles, thegroup is well equipped to meet the needs of its growing customer base. The Group does not receive anygovernment protection and there is no investment encouragement law affecting the Group’s businesses.

The Group’s footprint is made up as follow:

• 12 Alerts Steel branches;

• 10 Alert Express stores; and

• 30 Alert Steel containers

Alert Steel deploys container depots in strategic locations to serve rural areas. The Alert Express containersstock all fast moving steel and steel-related items.

Alert Steel’s customers consist of all sectors of the market such as engineering, fabrication, manufacturing,construction, agricultural, mining and parastatals and rural markets through the Alert Steel containers. Itsproducts and services are distributed mainly through the retail, wholesale and contract sectors of theeconomy.

11.2. History

Wynand Schalekamp, an entrepreneur, established Alert Steel 31 years ago as a small one-man businessoperating from a garage providing a variety of steel products to the building industry. The Group, through itsoperating branches/subsidiaries, is currently a distributor of steel and steel related products.

The Alert Steel group listed on the JSE Altx on 1 March 2007. Thereafter several acquisitions were made thatincreased Alert’s national footprint to 16 retail branches/subsidiaries situated in Gauteng, North West,Mpumalanga and Limpopo.

11.3. Prospects

The trading for the six months from 1 July 2012 to 31 December 2012 continued to be challenging. The strikein the mining sector had a major impact on the trading for November and December 2012 and continued toimpact on the January 2013 results. The group’s split between cash business and credit continues to growand the cash business has increased to more than 60% of the group’s revenue. Alert Steel has howeverseen a slowdown in contracting and credit business during the six months to 31 December 2012. Revenuedue to the slowdown in contracting business impacted on the overall performance of the Group and the netresult was that the Group did not achieve the revenue forecast. The Group made substantial progress in theAlert Container roll out projects and now has 29 containers, which were fully operational by the end ofDecember 2012. The Group was also able to roll out five new Alert express stores during this period. Boththese projects are on-going and form part of the Group’s future strategy.

The Group also made huge strides in cutting costs, reducing the overhead cost for the period by 15,8%. Themonthly overhead cost continues to be a key focus area to ensure that Alert becomes the lowest costproducer in the industry and this will continue to be one of the main focus areas in the next six months.

Part of the Group’s restructuring plan for the six months was to reduce its inventory holding in order toimprove working capital, as well as to ensure that the Group has the correct product mix to be in line with itsstrategy of selling only steel and steel related products. This restructuring plan included an improvement inthe collections of debtors in order to increase cash resources, to settle suppliers on time. Alert Steel was alsoable to settle more creditors than in the prior years as there was more cash resources available in the currentperiod than in the prior period.

14

In addition to the above, the overdraft balance decreased due to improved collection of debtors, decreasedinventory levels and the proceeds from the disposal of branches not generating enough cash flow and finallyproceeds from the disposal of investments not in use anymore. This is in line with the restructuring plans asdiscussed above.

Alert Steel’s vision is to maximise returns for its stakeholders, who comprise shareholders, customers,colleagues, suppliers, service providers and the community. The Alert group pledges to serve its stakeholdersthrough relationships built on trust, respect, enthusiasm, loyalty and a positive attitude.

The Group continuously pursues growth opportunities where the potential for improved returns can beoptimised through its unique value proposition.

11.4 Major shareholders and controlling shareholders

At the last practical date, the shareholder holding directly or indirectly 5% or more of the company’s shareswas:

Name %

Cannistraro 67,35

The shareholding of Cannistraro will increase as a result of the implementation of the Specific Issue (as setout in paragraph 7 above).

There will not be a change in the controlling shareholder of Alert Steel resulting from the Specific Issue,which will be Cannistraro both before and after the implementation of the Specific Issue.

There have been changes in the controlling shareholders and trading objectives of Alert Steel and itssubsidiaries since incorporation.

11.5 Litigation statement

There are no legal or arbitration proceedings against the Group nor, as far as the directors are aware, arethere any legal or arbitration proceedings pending or threatened against the company, which have or mayhave had, in the 12 months preceding the last practicable date, a material effect on the Group’s financialposition.

11.6 Material changes

The directors report that no material changes in the affairs or financial position of the Group have taken placesince the publication of the unaudited financial results for the six months ended 31 December 2012, save asannounced on SENS on 6 February 2013, 11 February 2013, 26 March 2013, 27 March 2013 and 11 April2013.

11.7 Material contracts

No other material contracts have been entered into (either verbally or in writing) by Alert Steel and/or itssubsidiaries, other than in the ordinary course of business, during the two years preceding the lastpracticable date save for:

• The material contracts referred to in the circular issued to shareholders dated 29 August 2011;

• the Specific Issue Agreement;

• Build Kwik Sale Agreement; and

• Alert Steel Tshwane, a subsidiary of Alert Steel Holdings has entered into a three year supply contractwith Transnet from 1 July 2012. The contract entails the supply of Carbon steel to Transnet’sKoedoespoort and Germiston plants for a three year period. The total contract value is estimated to beat least R90 000 000 over the contract period.

No agreements have been entered into which contain an obligation or settlement that is material to thecompany.

The executive directors have standard employment contracts with the company.

At the last practicable date, the company had not entered into any agreements relating to the payment oftechnical, administration or secretarial fees nor is it a party to any material restraint of trade agreement otherthan as disclosed in the circular.

15

11.8 Corporate governance

The Group’s corporate governance policy is set out in Annexure 4.

11.9 Share price information

A table setting out the price history of the company’s shares is included in Annexure 3.

12. INFORMATION RELATING TO THE DIRECTORS

12.1 Directors

Details relating to the directors of Alert Steel are set out below:

Director Age Occupation Brief curriculum vitae

MM Patel 38 Independent CA(SA). Mitesh is an audit partner of Nkonki Inc.

Non-Executive Director Mitesh qualified as a Chartered Accountant in 2002.

He has been in the audit and advisory profession for

the past twelve years. Mitesh is also the chairperson

of the audit committees of Wearne Limited and

StratCorp Limited.

WP van der Merwe 44 Independent CA(SA). Wessel has been involved with Alert Steel

Non-Executive Director since its initial listing and brings a wealth of

experience and knowledge to the board. He has

served as a member of the Altx Advisory Committee

since 2007 and previously headed a corporate

advisory business for more than fourteen years. His

directorships include Imbalie Beauty Limited, Taste

Holdings Limited, WG Wearne Ltd and Moneyweb

Holdings Ltd.

G Mahuma 41 Independent BCom (Hons). Gwen is Chief Executive Officer of

Non-Executive Director Mahuma Investment Holdings, an investment vehicle

with interests in the steel, concrete and the

infrastructure sector. Previously, she was the

managing director of a supplier of roof bolts to the

mining industry. Her current directorships include

Capital Africa Steel, WSP Africa, CAS Enviro and

Alert Steel Tshwane.

A Loonat 34 Independent CA(SA). Afzal is an audit partner at Bismilla CA Inc

Non-Executive Director and has been actively involved in audit and related

services for the past ten years.

P Dodson 62 Chief Executive Officer Peter Dodson started in retailing in 1974 with Pick &

Pay and over the past thirty eight years has been a

director of Pick & Pay and OK Bazaars and was a

founder shareholder and director of the Pie City

Group. Mr Dodson was more recently employed as

the Chief Executive Officer of the Metro Cash & Carry

Group. He took over the reign as Chief Executive

Officer of Alert Steel in February 2013.

MSI Gani 60 Chief Financial Officer CA(SA). Mr Gani is a qualified chartered accountant

as well as a member of SAICA and IRBA. He was a

partner at PWC form 2003, until his retirement in

June 2013 and prior to that he had been a partner at

MSGM Auditors.

All directors are South African citizens and their respective business addresses are the same as that of thecompany.

16

12.2 Changes to the Board of Directors

The following changes to the board took place during the previous audited financial year and up to the lastpracticable date:

• N Cresswell (Financial Director) – Resigned with effect from 10 January 2013

• J du Toit (Chief Executive Officer) – Resigned on 6 February 2013

• MSI Gani (Chief Financial Officer) – Appointed on 30 July 2013

• P Dodson (Chief Executive Officer) – Appointed on 11 February 2013

• A Loonat (Non- Executive Director) – Appointed on 11 February 2013

• W Schalekamp (Non-Executive director) – Resigned on 18 December 2012

• W Schalekamp (Executive director: steel operations) – Appointed on 11 February 2013 and resignedon 27 June 2013.

No changes are expected to the board as a result of the Specific Issue.

12.3 Directors’ interests in securities and in transactions

None of the Directors has a direct interest in Alert Steel Shares. The table below sets out the indirectbeneficial interests of the Directors in Alert Steel Shares as at the last practicable date:

Current Directors: Beneficially Indirect

Number ofDirector shares Percentage

W van der Merwe 1 420 011 2,73G Mahuma 153 572 0,29

24 734 906 47,57

24 888 478 47,86

The interests of all persons who are Directors of the company, or were Directors of the company during thelast 18 months, in the issued ordinary share capital of the company as at the last practicable date are set outbelow:

Former Directors: Beneficially Indirect

Number ofDirector shares Percentage

M McCulloch 24 734 906 47,562 501 454 4,81

27 236 360 52,37

E Hewitt 24 734 906 47,56O Jevon 336 807 0,65WF Schalekamp 6 062 562 11,65

The company has not been advised of any changes in the above interest of the directors or former directorsbetween the year-end and the date of this circular.

No director has or had any interest, directly or indirectly, in any transaction, which is, or was, material to thebusiness of Alert Steel and which was effected by the company in the current or preceding financial year orduring an earlier financial year, which remains in any respect outstanding or underperformed.

17

12.4 Directors’ remuneration

Remuneration and benefits paid to directors, all of which were paid by Alert Steel, for the six months ended31 December 2012 were as follows:

Executive Directors

Basic Performance Retrenchmentsalary bonus package Total

Persons R’000 R’000 R’000 R’000

J du Toit 900 – – 900N Cresswell 630 – – 630

Total 1 530 – – 1 530

Non-Executive Directors

Directors andattendance

fees TotalPersons R’000 R’000

MW McCulloch 75 75MM Patel 68 68BS Mahuma 55 55W van der Merwe 80 80

Total 278 278

No options were issued to directors during the six months ended 31 December 2012 and the latestpracticable date.

No shares were awarded to or purchased by directors under the Alert Steel Share Incentive Scheme duringthe current or previous financial year.

There will be no variation in the remuneration receivable by any of the directors as a direct consequence ofthe Specific Issue.

No director has any material beneficial interest, direct or indirect, in the promotion of Alert Steel or in anyproperty acquired by Alert Steel during the three years preceding the date of this circular.

12.5 Directors’ service contracts

Each of the executive directors has entered into a service contract with Alert Steel, containing such termsthat are normal for such contracts and the terms relating to the remuneration of which are set out inparagraph 12 above. There have been no amendments to any of these contracts in the preceding six months.

13. GENERAL

13.1 Directors’ responsibility statement

The directors of Alert Steel, whose names appear on page 16 of this circular, collectively and individuallyaccept full responsibility for the accuracy of the information given and certify that, to the best of theirknowledge and belief, there are no facts that have been omitted which would make any statement false ormisleading, and that all reasonable enquiries to ascertain such facts have been made and that this circularcontains all information required by law and the Listings Requirements.

13.2 Directors’ opinion

The directors of Alert Steel have considered the proposed resolutions and are of the unanimous opinion thatthe passing of all the resolutions is in the interests of Alert Steel and its shareholders.

The directors of Alert Steel recommend that shareholders vote in favour of all the resolutions to be proposedat the general meeting of shareholders.

Those directors of Alert Steel who own shares in their own right intend to vote in favour of all the resolutionsproposed at the meeting.

18

13.3 Expenses

The estimated costs of this circular and implementing the resolutions, exclusive of Value-Added Tax, are asfollows:

AmountExpenses R

Printing, publication and distribution 50 000JSE documentation fees 12 502JSE listings fees 62 156Designated Adviser – Exchange Sponsors 250 000Reporting accountants – KPMG 40 342Attorneys – Gattoo 100 000Attorneys – Prinsloo, Tindle & Andropoulos 150 000Transfer Secretaries – Computershare Investor Services 85 000

Estimate total 700 000

No additional preliminary expenses were incurred during the past three years.

13.4 Consents

Each of the company’s advisers, namely the Designated Adviser, Reporting Accountants, attorneys and thetransfer secretaries have consented in writing to act in the capacity stated and to the inclusion of their namesand reports in this circular in the form and context in which they appear and have not withdrawn theirconsents prior to the publication of this circular.

14. GENERAL MEETING AND VOTING RIGHTS

The general meeting of Alert Steel shareholders will be held at 10:00 on Wednesday, 16 October 2013 at the officesof Alert Steel, corner of Engelbrecht and Lanham Streets, East Lynne, Pretoria in order to consider and, if deemedfit, pass with or without modification, the special and ordinary resolutions proposed to be passed at the generalmeeting.

Attached to and forming part of this circular is a notice convening the general meeting of shareholders.

A form of proxy for use by registered holders of certificated shares and holders of dematerialised shares in their ownname who are unable to attend the general meeting of shareholders and wish to be represented thereat, is includedin this circular.

Shareholders who have dematerialised their Alert Steel shares and do not have own-name registration must informtheir CSDP or stockbroker of their intention to attend the general meeting of shareholders and request their CSDPor stockbroker to issue them with the necessary letter of representation to attend or provide their CSDP orstockbroker with their voting instructions should they not wish to attend the general meeting in person but who wishto be represented thereat.

15. APPROVAL REQUIREMENTS AT THE GENERAL MEETING

The shareholders present in person, or represented by proxies, will be taken into account in determining a quorumfor the general meeting and for purposes of voting in respect of all the resolutions as per the notice of generalmeeting.

The first ordinary resolution set out in the notice of general meeting which forms part of this circular, in respectof the approval of the Specific Issue, is subject to approval by at least 50% of the votes of all the company’s ordinaryshareholders (excluding Cannistraro and its associates), present in person or represented by proxy at the generalmeeting, being cast in favour thereof.

The special resolutions, set out in the notice of general meeting which forms part of this circular, are subject toapproval by at least 75% of the votes cast by the company’s ordinary shareholders, present in person or representedby proxy at the general meeting, being cast in favour thereof.

The second ordinary resolution set out in the notice of general meeting which forms part of this circular, in respectof the approval of the Specific Issue to Cannistraro, a related party, is subject to approval by at least 50% of thevotes of the all company’s ordinary shareholders (excluding Cannistraro and its associates), present in person orrepresented by proxy at the general meeting, being cast in favour thereof.

The third ordinary resolution set out in the notice of general meeting which forms part of this circular, is subjectto approval by at least 50% of the votes cast by the company’s ordinary shareholders, present in person orrepresented by proxy at the general meeting, being cast in favour thereof.

19

16. DOCUMENTS AVAILABLE FOR INSPECTION

The following documents, or copies thereof, will be available for inspection at the registered office of Alert Steelduring normal office hours from the issue date of this circular up to and including the date of the general meeting:

• a signed copy of this circular;

• the current Memorandum of Incorporation of Alert Steel;

• the audited financial statements of Alert Steel for all the years since its incorporation until the year ended 30 June 2012;

• the reviewed consolidated interim financial results of Alert Steel for the six months ended 31 December 2012;

• the signed Reporting Accountants’ report on the compilation of the unaudited and unreviewed pro formafinancial effects of the Specific Issue on the company;

• a signed copy of the Specific Issue Agreement;

• a signed copy of the Southern Palace Loan Agreement;

• a signed copy of the supply contract with Transnet;

• a signed copy of the Build Kwik Sale Agreement;

• a signed copy of all material contracts referred to in the circular issued to shareholders dated 29 August 2011;

• written consents from each of the advisers referred to in paragraph 13.4; and

• the approval by the JSE of this circular.

Signed at Pretoria on 17 September 2013 on behalf of all the directors in terms of a directors’ resolution by:

P DodsonChief Executive Officer

20

Annexure 1

PRO FORMA FINANCIAL INFORMATION

THE SPECIFIC ISSUE

The unaudited and unreviewed pro forma consolidated Statement of Comprehensive Income and Statement of FinancialPosition, before and after the Specific Issue, are the responsibility of the directors and have been prepared for illustrativepurposes only and, because of its nature, may not fairly present Alert Steel’s financial position, changes in equity, resultsof operations or cash flows.

The independent reporting accountants’ report on the compilation of the unaudited and unreviewed pro forma financialinformation is set out in Annexure 2 to this circular.

The unaudited and unreviewed pro forma consolidated Statement of Comprehensive Income and Statement of FinancialPosition, after the disposal, are set out below and have been prepared to illustrate the effect of the Specific Issue on theassumption that for Statement of Comprehensive Income purposes, it was effective on 1 July 2012 and for Statement ofFinancial Position purposes, it was effective on 31 December 2012. The directors of Alert Steel are responsible for thepreparation of the unaudited and unreviewed pro forma financial effects.

Pro forma Statement of Financial Position

BeforeSpecific

Issue After31 December Specific Specific

2012 issue IssueR’000 R’000 R’000

ASSETS

Non-current assets 132 455 – 132 455

Property, plant and equipment 120 228 – 120 228Investment property 6 447 – 6 447Goodwill 5 720 – 5 720

Current assets 164 940 – 164 940

Inventories 107 901 – 107 901Trade and other receivables 56 796 – 56 796Cash and cash equivalents 243 – 243

Total assets 297 395 – 297 395

EQUITY AND LIABILITIES

Equity attributable to equity holders of the company (235) 95 300 95 065

Share capital (2) 269 739 95 600 365 339Reserves 1 980 – 1 980Accumulated loss (271 954) (300) (272 254)

Non-current liabilities 67 515 (63 894) 3 621

Borrowings (3) 63 894 (63 894) –Deferred tax 410 – 410Straight line lease accrual 3 211 – 3 211

Current liabilities 230 115 (31 406) 198 709

Trade and other payables (3) 109 003 700 109 703Borrowings (3) 99 751 (32 106) 67 645Straight line lease accrual 1 236 1 236Bank overdraft 20 125 – 20 125

Total equity and liabilities 297 395 – 297 395

Shares in issue at period-end (’000) (4) 52 014 48 000 100 014Net asset value per share (cents) (0,5) 95,1Net tangible asset value per share (cents) (11,5) 89,3

21

Notes

(1) The “Before the Specific Issue” column is based on Alert Steel’s published reviewed provisional results for the sixmonths ended 31 December 2012.

(2) Share capital has been adjusted for the following:

• to include the issue of the 48 million ordinary shares in terms of the Specific Issue at 200 cents per share;

• less estimated transaction costs of R399 658, which relate directly to the issue of shares, equating to 57% ofthe total transaction costs of R700 000 per paragraph 13.3 of the circular, which have been written off againstshare capital.

(3) Current and non-current liabilities have been reduced by the cash received as a result of the Specific Issue offer.Accounts payable has been adjusted to include amounts owing in respect of the total estimated transaction costsamounting to R700 000.

(4) The number of shares in issue has been adjusted to include the issue of 48 million Specific Issue shares.

(5) All the above adjustments with the exception of transaction costs, are expected to have a continuing effect.

Pro forma Statement of Comprehensice Income

BeforeSpecific

Issue After31 December Specific Specific

2012 (1) issue IssueR’000 R’000 R’000

Revenue 374 233 374 233Cost of sales (298 103) (298 103)

Gross profit 76 130 76 130Other income 1 187 1 187Operating expenses (4) (97 100) (300) (97 400)

Operating loss (19 783) (300) (20 083)Investment revenue – –Finance costs (2) (8 675) 4 080 (4 595)

Loss before taxation (28 458) 3 780 (24 678)Taxation – –

Loss from continuing operations (28 458) 3 780 (24 678)

Discontinued operationsProfit from discontinued operations 484 484

Loss for the year (27 974) 3 780 (24 194)

Reconciliation of headline lossBasic loss attributable to ordinary shareholders (27 974) 3 780 (24 194)Adjusted for loss on disposal of business 378 378Adjusted for loss on disposal of property, plant and equipment 147 147

Headline loss attributable to ordinary shareholders (27 449) 3 780 (23 669)

Weighted average shares in issue on which earnings are based (’000) (3) 44 546 48 000 92 546Fully diluted weighted average shares in issue (’000) 44 622 48 000 92 622Loss per share (cents) (62,8) (26,1)Headline loss per share (cents) (61,6) (25,6)

Notes

(1) The “Before Specific Issue” column has been extracted, without adjustment, from the reviewed provisional resultsof Alert Steel for the six months ended 31 December 2012.

(2) Finance cost has been adjusted to include the after interest saving on the reduction of the interest bearing debtcalculated at the prime interest rate of 8,5%.

(3) The weighted average number of shares has been adjusted to include the issue of 48 million Specific Issue shares.

(4) Transaction costs of R300 342 equating to 43% of the total transaction costs of R700 000 per paragraph 13.3 of thecircular, that do not relate directly to the issue of shares, has been expensed.

(5) All the above adjustments with the exception of transaction costs, are expected to have a continuing effect.

22

Annexure 2

INDEPENDENT REPORTING ACCOUNTANT’S ASSURANCE REPORTON THE COMPILATION OF PRO FORMA FINANCIAL INFORMATIONINCLUDED IN A CIRCULAR

The DirectorsAlert Steel Holdings LimitedCnr Engelbrecht & Lanham StreetEast Lynne

9 September 2013

REPORT ON THE COMPILATION OF PRO FORMA FINANCIAL INFORMATION

We have completed our assurance engagement to report (“Report”) on the compilation of the unaudited and unreviewedpro forma earnings and diluted earnings, headline and diluted headline earnings, net asset value and net tangible assetvalue per share of Alert Steel Holdings Limited (“Alert Steel” or “the Company”), pro forma statement of financial positionof Alert Steel, the pro forma statement of comprehensive income of Alert Steel and the related notes, including areconciliation showing all of the pro forma adjustments to the stated capital, reserves and other equity items relating toAlert Steel, (collectively “Pro forma Financial Information”). The Pro Forma Financial Information is set out in paragraph 9and Appendix 1 of the Circular to be issued by the Company on or about 12 September 2013 (“Circular”).

The Pro Forma Financial Information has been compiled by the directors of Alert Steel to illustrate the impact of thespecific issue of shares for cash (“Transaction”) as detailed in the Circular on the Company's financial position andchanges in equity as at 31 December 2012 and the Company's financial performance for the period ended 31 December2012.

As part of this process, the Company’s earnings, diluted earnings, headline earnings and diluted headline earnings pershare, statement of comprehensive income and statement of financial position have been extracted by the directors fromthe Company’s published interim financial results for the period ended 31 December 2012 (“Published FinancialInformation”), on which a review report has been published. In addition, the directors have calculated the net asset valueand net tangible asset value per share as at 31 December 2012 based on financial information extracted from thePublished Financial Information.

DIRECTORS’ RESPONSIBILITY FOR THE PRO FORMA FINANCIAL INFORMATION

The directors of Alert Steel are responsible for compiling the Pro Forma Financial Information on the basis of theapplicable criteria as detailed in paragraphs 8.15 to 8.33 of the Listings Requirements of the JSE Limited and the SAICAGuide on Pro Forma Financial Information, revised and issued in September 2012 (“Applicable Criteria”).

REPORTING ACCOUNTANTS’ RESPONSIBILITY

Our responsibility is to express an opinion about whether the Pro Forma Financial Information has been compiled, in allmaterial respects, by the directors on the basis of the Applicable Criteria, based on our procedures performed.

We conducted our engagement in accordance with International Standard on Assurance Engagements (ISAE) 3420,Assurance Engagements to Report on the Compilation of Pro Forma Financial Information included in a Prospectus,issued by the International Auditing and Assurance Standards Board. This standard requires that the reportingaccountants’ comply with ethical requirements and plan and perform procedures to obtain reasonable assurance aboutwhether the directors have compiled, in all material respects, the Pro Forma Financial Information on the basis of theApplicable Criteria.

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on anyPublished Financial Information used in compiling the Pro Forma Financial Information, nor have we, in the course of thisengagement, performed an audit or review of the Published Financial Information used in compiling the Pro FormaFinancial Information.

The purpose of Pro Forma Financial Information included in the Circular is solely to illustrate the impact of the Transactionon the unadjusted Published Financial Information as if the Transaction had been undertaken on 1 July 2012 for purposesof the pro forma earnings, diluted earnings, headline and diluted headline earnings per share and the pro forma statementof comprehensive income and on 31 December 2012 for purposes of the net asset value and net tangible asset value pershare and statement of financial position. Accordingly, we do not provide any assurance that the actual outcome of theTransaction, subsequent to its implementation, will be as presented in the Pro Forma Financial Information.

23

A reasonable assurance engagement to report on whether the Pro Forma Financial Information has been properlycompiled, in all material respects, on the basis of the Applicable Criteria involves performing procedures to assesswhether the Applicable Criteria used by the directors in the compilation of the Pro Forma Financial Information provide areasonable basis for presenting the significant effects directly attributable to the Transaction and to obtain sufficientappropriate evidence about whether:

• The related pro forma adjustments give appropriate effect to the Applicable Criteria; and

• The Pro Forma Financial Information reflects the proper application of those pro forma adjustments to theunadjusted Published Financial Information.

The procedures selected depend on the reporting accountant’s judgment, having regard to the reporting accountant’sunderstanding of the nature of the Company, the Transaction in respect of which the Pro Forma Financial Information hasbeen compiled and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the Pro Forma Financial Information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

OPINION

In our opinion, the Pro Forma Financial Information has been compiled, in all material respects, on the basis of theApplicable Criteria.

Yours faithfully

KPMG Inc.

Per: Pierre FourieChartered Accountants (SA)

Director

24

Annexure 3

TRADING HISTORY OF ALERT STEEL SHARES ON THE JSE

The lowest, highest and closing market prices and volumes traded of Alert Steel shares on the JSE during each of thefollowing periods were as follows:

QUARTERLY PRICE DATA

Last 2 years’ trading history as at the last practicable date

Close High Low VolumeDate (cps) (cps) (cps) (cps)

2012 June 400 800 200 29 844 706

2012 March 700 1 000 600 27 637 666

2011 December 800 1 000 400 28 164 850

2011 September 1 200 2 700 1 100 4 835 951

2011 June 2 000 2 300 1 500 2 875 576

2011 March 2 000 3 100 1 500 2 326 277

2010 December 1 700 3 600 1 500 2 349 671

2010 September 3 000 4 000 2 800 1 435 495

2010 June 5 000 6 000 3 600 1 397 812

MONTHLY PRICE DATA

Last 12 months’ trading history as at the last practicable date


2013 July 95 110 – 271 582

2013 June 110 110 – 116 711

2013 May 102 102 – 311 850

2013 April 102 140 – 205 894

2013 March 136 180 – 399 560

2013 February 175 179 – 877 294

2013 January 175 218 – 250 564

2012 December 218 249 – 390 120

2012 November 300 300 200 59 685 239

2012 October 300 300 – 32 569 704

2012 September 300 300 200 24 653 139

2012 August 200 200 100 42 616 523

2012 July 200 400 100 70 147 838

2012 June 400 600 200 12 639 662

2012 May 600 700 500 8 891 967

25

DAILY PRICE DATA

Last 30 days’ trading history as at the last practicable date


26/8/2013 125 – – –

23/8/2013 125 125 125 3 986

22/8/2013 120 120 120 1 375

21/8/2013 135 135 120 10 026

20/8/2013 130 139 130 75 001

19/8/2013 130 132 125 3 737

16/8/2013 130 130 130 36 000

15/8/2013 130 130 130 20 415

14/8/2013 135 – – –

13/8/2013 135 135 115 7 114

12/8/2013 130 130 130 15 680

8/8/2013 130 130 130 5 217

7/8/2013 130 139 125 30 480

6/8/2013 139 139 119 41 650

5/8/2013 118 118 95 67 835

2/8/2013 95 95 95 810

1/8/2013 95 95 89 5 539

31/7/2013 95 95 90 630

30/7/2013 89 – – –

29/7/2013 89 89 89 1 804

26

Annexure 4

CORPORATE GOVERNANCE

Sound corporate governance is a vital ingredient in ensuring that all dealings and decisions of the business are done withhonesty and fairness.

During a difficult trading year with major restructuring, this remained a vital element of the business. Every employeeremains committed to act in line with the company’s values which include integrity, respect, transparency andaccountability.

Statement of compliance

During the year under review, the board materially complied with King III recommendations. All areas of improvement thathave been identified are being actively dealt with. Shareholders are referred to an analysis of the application of the 75corporate governance principles as recommended in the King III Report which is published on the company’s website,www.alertsteel.co.za.

Board of directors

The board consists of four independent non-executive directors and two executive directors. All the directors are high meritobjective individuals who collectively contribute a wide range of skills and knowledge to the decision making processes ofthe board and also ensure proper deliberation of all matters requiring the board’s attention.

There are two key tasks at the top of the business namely, the running of the board and the executive responsibility forthe running of the day-to-day business. The CEO is responsible for the efficient daily operations of the business, while thechairman provides leadership to the board.

The chairman of the board is Mitesh Patel, an independent non-executive director. The chairman provides leadership andguidance to the board as a whole and encourages proper deliberation of all matters requiring the board’s attention.

CEO Peter Dodson ensures sound and efficient operation of the business as well as the implementation of all strategiesand policies adopted by the board. He conveys clear communication from the board to executive management members.CFO Mac Gani and an executive committee consisting of strategic head office employees who take responsibility for thesmooth daily running of the business assist him.

The CEO, CFO and the executive management team meet on a weekly basis collectively and more often on an individualbasis in areas where more focus is required.

In terms of the board charter, the board meets at least quarterly, and more frequently if circumstances or decisionsrequire. They furthermore confer through round robin deliberations when necessary. Meetings are conducted inaccordance with formal agendas and annual work plans, ensuring that all substantive matters are properly addressed.Any director may request that additional matters be added to the agenda. Copies of board papers are circulated to thedirectors well in advance of the meetings to ensure proper preparation to enhance constructive and informeddeliberations. A representative from the company’s Designated Advisor attends the board meetings as required in termsof the JSE Listings Requirements.

Roles and responsibilities of the board

The duties of the board are comprehensively set out in the board charter and include the following matters which arespecifically reserved for board decisions:

• Approval of the group’s strategy and annual budget.

• Review the group’s performance.

• Formulate strategy and provide direction to the business.

• Approval of significant matters relating to finance.

• Approval of major capital expenditure or disposals, material contracts, material acquisitions and developments.

• Ensure sustainable leadership.

• The approval of the annual financial statements, the approval of the interim report, the valuation of unlistedinvestments, the declaration of dividends and the forfeiture of unclaimed dividends.

27

• Monitoring of review of effectiveness of internal controls and the risk management system.

• Recommend amendments to the MOI of the company.

• Confirming the appointment, removal or replacement of the external auditor of the company.

• The approval of terms and conditions of any right issues, public offers, capital issues or issues of convertiblesecurities including share or convertible securities issued for acquisitions.

• Appointments to and removals from the board, including the appointment of the chairman, any deputy chairman,chief executive officer, executive directors, non-executive directors and the company secretary.

• Approval of nominations of alternate directors (if any).

• Determining and approval of board committee’s terms and reference.

• Monitoring activities of the executive management.

• The board ensures that there is an appropriate balance of power and authority on the board so that no one directorhas unfettered powers of decision-making.

BOARD PROCESSES

Board charter

The board charter is to set out specific responsibilities to be discharged by the board, and every member of the board, inaccordance with King III. The board charter has been reviewed during the past financial year to align the content thereofwith the recommendations of King III and the Companies Act. The objectives of the board charter are to ensure that allboard members are aware of their duties and responsibilities as board members and to ensure that the principles of goodcorporate governance are applied in all their dealings in respect, and on behalf, of the business. The board charter isreviewed on an annual basis.

KING III RECOMMENDATION ALERT STEEL APPLICATION

Interest in contracts

Directors are required to inform the board timeously of conflicts or potential conflicts of interest they may have in relationto particular items of business. Directors are obliged to recuse themselves from discussions or decisions on matters inwhich they have a conflicting interest.

Board appointments

In terms of the relevant policy, all board members are required to assist with the identification and nomination of potentialboard candidates.

Appointments to the board are formal and transparent and a matter for the board as a whole, and assisted wherenecessary by the nominations committee.

The board assesses the skills of the board from time to time to ensure that it consists of the required competency levelsto be efficient and to provide strategic guidance to the business. Should the assessment indicate a lack of competency ina certain area, the board considers the appointment of a director to fulfil this need.

Closed periods

Closed periods are exercised from the date of the financial year-end until the company’s results are published on SENS.Additional closed periods are enforced as required in terms of any corporate activity or when directors are in possessionof price sensitive information. Directors of the company and the company secretary, their associates or members orimmediate family are not allowed to deal directly or indirectly, at any time, in the securities of the company on the basisof unpublished price-sensitive information regarding the company’s business or affairs. These individuals are made awareof restricted or closed periods for dealings and the provision of insider trading legislation.

Directors’ share dealings

The board has an approved trading policy in terms of which dealing in the group’s shares by directors and employees isprohibited during closed periods.

Directors may not deal in the company’s shares without first advising and obtaining clearance from the CEO and the CFO.The CEO and CFO may not deal in the company’s shares without first advising and obtaining clearance from the chairmanof the board.

28

Board committees

Board committees currently comprise four sub-committees, namely the audit committee, risk committee, social, ethics andremuneration committee and nominations committee. The sub-committees have formally determined terms of reference,clearly agreed upon reporting procedures and written scope of authority which are reviewed on an annual basis andapproved by the board.

Audit committee

The audit committee comprises of the following three non-executive members: Wessel van der Merwe (Chairman), AfzalLoonat and Gwen Mahuma.

The board is satisfied that the members of the audit committee are highly qualified individuals who on a collective basishave sufficient qualifications and experience to fulfil its duties. The members of the committee are also permitted by theboard to consult with specialists when required.

The primary role of the audit committee is to ensure the integrity of the financial reporting, the audit process and that asound risk management and internal control system is maintained. In pursuing these objectives, the audit committeeoversees relations with the external auditors and reviews the effectiveness of the internal audit function. Although theboard has delegated certain audit and financial functions to the audit committee, it remains accountable and responsiblefor the performance and affairs of the company. The minutes of the audit committee meeting are made available to theboard. The chairman of the audit committee reports to the board at each board meeting.

The board is satisfied that the audit committee has complied with its terms and references during the year under review.

The CFO and the CEO attend all the meetings by invitation. The JSE Designated Advisor attends all audit committeemeetings in compliance with the JSE Listings Requirements. The external auditors attended the meetings and also haveunrestricted access to the chairman of the audit committee.

The audit committee has carried out its functions in terms of the JSE Listings Requirements by:

• Confirming the nomination of KPMG Inc. as the company’s auditors being satisfied that they are independent of thecompany.

• Approving the terms of engagement and fees to be paid to the external auditors.

• Determining the nature and extent of any non-audit services which the external auditors may provide to thecompany.

• Satisfying itself of the appropriateness of the expertise and experience of the company’s CFO, and the company’sfinance function.

• The audit committee has considered the adequacy of the Group’s system of internal control and recommends thefinancial statements for approval by the board.

• Review the effectiveness of the internal audit function.

Risk committee

The risk committee consists of a combination of executive and non-executive directors. The risk committee is chaired byWessel van der Merwe. Peter Dodson, Afzal Loonat, and Mac Gani are the other members.

The internal audit function has been outsourced to KPMG Services Proprietary Limited (KPMG) and the work performedby the internal audit function complies with the International Federation of Accountants (IFAC) rules.

The mission of the internal audit function is to provide independent, objective assurance and consulting services designedto add value and improve the company’s operations. It helps the company accomplish its objectives by bringing asystematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governanceprocesses.

The scope of work of the internal audit function is to determine whether the company’s network of risk management,control and governance processes, as designed and represented by management, is adequate and functioning in amanner to ensure:

• Risks are appropriately identified and managed.

• Interaction with the various governance groups occurs as needed.

• Significant financial, managerial, and operating information is accurate, reliable, and timely.

29

• Employees’ actions are in compliance with policies, standards, procedures, and applicable laws and regulations.

• Resources are acquired economically, used efficiently, and adequately protected.

• Programmes, plans, and objectives are achieved.

• Quality and continuous improvement are fostered in the organisation’s control process.

• Significant legislative or regulatory issues impacting the organisation are recognised and addressed properly.

• Reviewing the means of safeguarding assets and, as appropriate, verifying the existence of assets.

• Co-ordinating, combining and integrating the assurance provided by various parties (such as line management,internal and external assurance providers) pursuant to the combined assurance model introduced by King III.

• Opportunities for improving management control, profitability and the organisation’s image are identified duringthese audits and communicated to the appropriate level of management and the risk committee chairman.

Social, Ethics and Remuneration committee

The committee consists of Gwen Mahuma (Chairman), Wessel van der Merwe, Mitesh Patel, Peter Dodson and Mac Gani.The committee formally meets twice a year and on an ad hoc basis when necessary.

The role of the committee is to assist the board to ensure that the company remunerates directors and executives fairlyand responsibly; and the disclosure of directors and remuneration is accurate, complete and transparent.

The committee performs amongst others the following functions:

• Oversees the establishment of a remuneration policy that will promote the achievement of strategic objectives at alllevels in the company and encourages individual performance.

• Ensures that the remuneration policy is put to a non-binding advisory vote at the general meeting of shareholdersonce every year.

• Reviews the outcomes of the implementation of the remuneration policy on an annual basis.

• Ensures that the mix of fixed and variable pay, in cash, shares and other elements, meets the company’s needs andstrategic objectives.

• Satisfies itself as to the accuracy of recorded performance measures that govern the vesting of incentives.

• Ensures that all benefits, including retirement benefits and other financial arrangements, are justified and correctlyvalued.

• Considers the results of the evaluation of the performance of the CEO and other executive directors, both asdirectors and as executives in determining remuneration.

• Regularly reviews incentive schemes to ensure continued contribution to shareholder value and that these areadministered in terms of the rules.

• Advises on the remuneration of non-executive directors.

The committee also fulfil the following statutory duties in compliance with Regulation 43 of the 2008 Companies Act:

• Making recommendations on the empowerment credentials of the group.

• Monitoring the corporate social responsibilities of the group.

• Monitoring social and economic development in terms of goals including the United Nations Global, CompactPrinciples, the OECD regarding corruption, Employment Equities Act, and B-BBEE.

• Overseeing good corporate citizenship.

• Overseeing the environment, health and public safety.

• Overseeing consumer relationships including the company’s advertising, public relations, investor relations andcompliance with consumer protection laws.

• Overseeing labour and employment.

30

Nominations Committee

The committee consists of Gwen Mahuma (Chairman), Wessel van der Merwe, Mitesh Patel, Peter Dodson and Mac Gani.The committee functions as an ad hoc basis when vacancies on the board arise.

Company secretary

The company secretary is Monika Pretorius. The board is comfortable that she is sufficiently qualified and skilled to act inaccordance with and update directors in terms of the recommendations of the King III report and other relevant regulationsand legislation.

The company secretary is not a director of the company and is able to maintain an arms-length relationship with the boardof directors. The board of directors believes that there is an arms-length between itself and the company secretary basedon the fact that she is not a director of the company and her decision making is not influenced by the board of directors.

Prescribed officers

Prescribed officers are those who exercise general control over the whole or a significant portion of the business andactivities of the company or regularly participate to a material degree in the exercise of general executive control over, andmanagement of the whole or a significant portion of, the business and activities of the company. The company does nothave any prescribed officers in accordance with the above definition in the Companies Act, since all controls of thecompany resides with the executive directors.

Relations with shareholders

The company adopts a proactive stance in timely dissemination of appropriate information to shareholders through theJSE Limited’s SENS portal, electronic news releases where applicable and statutory publication of the company’s financialperformance.

The company’s website provides the latest and historical financial and other information, including the financial reports.

Fraud and illegal acts

The board and executive management do not accept any illegal acts in the conduct of the business. The directors’ policyis to actively pursue and prosecute the perpetrators of fraudulent or other illegal activities, should they become aware ofany such acts.

Insider trading

No employee may deal, directly or indirectly, in company shares on the basis of unpublished price-sensitive informationregarding the business or affairs of the business.

31





NOTICE OF GENERAL MEETING OF ALERT STEEL SHAREHOLDERS

The definitions and interpretations commencing on page 4 of the circular, to which this notice of general meeting has beenattached, apply equally to this notice of general meeting.

Notice is hereby given that a general meeting of shareholders of the company will be held at the company’s offices atcorner of Engelbrecht and Lanham Streets, East Lynne, Pretoria on Wednesday, 16 October 2013 at 10:00, for thepurposes of considering and, if deemed fit, passing, with or without modification, the ordinary and special resolutions setout below. The passing of the ordinary resolutions is, save where otherwise specifically indicated, subject to the approvalof more than 50% of the voting rights exercised on such resolutions, and the passing of the special resolutions is subjectto the approval of at least 75% of the voting rights exercised on such resolutions.

The record date in terms of section 59 of the Act for shareholders to be recorded on the shareholders register of theCompany in order to be able to attend, participate and vote at the general meeting is 11 October 2013.

ORDINARY RESOLUTION NUMBER 1

Approval of the specific issue of shares for cash to Cannistraro in terms of Section 5.51 of the ListingsRequirements

“RESOLVED that the specific issue of 48 000 000 (forty-eight million) ordinary shares in the company to Cannistraro at200 cents per share, in terms of the Specific Issue referred to in the circular accompanying this notice, comprising anaggregate subscription amount of R96 000 000 (ninety-six million Rand), is hereby approved, subject to the passing ofOrdinary Resolution number 2 and Special Resolutions number 1 and 2.”

Percentage of voting rights required to pass this resolution: Not less than 50% of the votes exercised on this resolutionby independent shareholders (in other words excluding Cannistraro and its associates). Cannistraro and its associateswill be taken into account in determining a quorum for the general meeting, but their votes, if any, will not be taken intoaccount in determining the results of the voting in respect of this ordinary resolution number 1.

Reason for and effect of ordinary resolution number 1

In terms of section 5.51(g) of the Listings Requirements a specific issue of shares for cash must be approved by a 75%majority of votes of all shareholders, excluding parties participating in the specific issue and their associates, and theresolution will have that effect.

SPECIAL RESOLUTION NUMBER 1

Authority to issue shares to a related party

“RESOLVED that, subject to the passing of Ordinary Resolution number 1 and 2 and Special Resolution number 2, asrequired by Section 41(1) of the Companies Act, 2008, shareholders hereby approve the issue of 48 000 000 (forty-eightmillion) new ordinary no par value shares in the company to Cannistraro, on the terms and conditions recorded in theSpecific Issue Agreement.”

Percentage of voting rights required to pass this resolution: Not less than 75% of the votes exercised on this resolution.

Reason for and effect of special resolution number 1

The reason for Special Resolution number 1 is to approve, as required by section 41(1) of the Act, the issue of shares interms of the Specific Issue Agreement to Cannistraro, a related party. Please refer to the circular accompanying this noticefor further details in relation to the Specific Issue.

32


Authority to issue more than 30% of shares currently in issue

“RESOLVED that, subject to the passing of Ordinary Resolution number 1 and 2 and Special Resolution number 1, asrequired by Section 41(3) of the Companies Act, 2008, shareholders herewith approve and authorise the issue toCannistraro of 48 000 000 (forty-eight million) new ordinary no par value shares in the company (which represent morethan 30% of the shares in issue prior to such issue), on the terms and conditions recorded in the Specific IssueAgreement.”



The reason for Special Resolution number 2 is to approve and authorise, as required by the Act, the issue of more than30% of the shares currently in issue, to Cannistraro in terms of the Specific Issue Agreement. Refer to the circularaccompanying this notice for further details in relation to the Specific Issue.


Authority to increase authorised share capital

“RESOLVED that shareholders hereby approve that the authorised share capital of the company be increased by 300 000000 (three hundred million) ordinary shares of no par value from 100 000 000 (one hundred million) ordinary shares of nopar value to 400 000 000 (four hundred million) ordinary shares of no par value.”



The proposed Specific Issue will utilise virtually all of the currently authorised but unissued shares of Alert Steel. Theauthorised share capital therefore has to be increased for future use. Refer to paragraph 8 of the circular accompanyingthis notice for further details.


Authority to provide financial assistance

“RESOLVED, as a special resolution, that a general authority be given to the Board of Directors of the Company to providefinancial assistance to all related and inter-related companies within the Alert Group of companies, at such times and onsuch terms and conditions as the Directors in their sole discretion deem fit, and subject to all relevant statutory andregulatory requirements being met. Such authority to remain in place until rescinded by way of a special resolution passedat a duly constituted annual general meeting of the Company.”



Is to approve the authority of Directors to provide financial assistance to all related and inter-related companies within theAlert Group of companies.


Approval of the specific issue of shares for cash to a related party in terms of Section 10.4 of the ListingRequirements

“RESOLVED that, in terms of section 10.4 of the Listings Requirements and subject to the passing of Ordinary Resolutionnumber 1 and Special Resolutions number 1 and 2 above, the directors of the company be and are hereby authorisedand empowered to allot and issue 48 000 000 (forty-eight million) ordinary shares to Cannistraro (as set out in paragraph1 of the circular accompanying this notice), at 200 cents per share (such price constituting a premium of 30% to the 30day VWAP for the period ended 11 April 2013, being the date that the directors agreed the issue price at a board meeting).

Percentage of voting rights required to pass this resolution: More than 50% of the votes exercised on this resolution byindependent shareholders. Cannistraro and its associates will be taken into account in determining a quorum for thegeneral meeting, but their votes, if any, will not be taken into account in determining the results of the voting in respect ofthis ordinary resolution number 1.

The passing of ordinary resolution 2 is conditional on the passing of ordinary resolution 1.

33


Authority

“RESOLVED that any director of the company be and is hereby authorised, instructed and empowered, on behalf of thecompany, to take all such steps, sign all such documents and procure the doing of all such things as may be necessaryor requisite to implement and give effect to the ordinary resolutions and special resolutions set out in this notice of generalmeeting to the extent that such resolutions are passed at the general meeting.”

Percentage of voting rights required to pass this resolution: More than 50% of the votes exercised on this resolution.

VOTING, PROXIES AND ELECTRONIC PARTICIPATION

Shareholders who have not dematerialised their shares or who have dematerialised their shares with “own-name”registration, and who are entitled to attend and vote at the general meeting, are entitled to attend the general meeting inperson or to appoint one or more proxies to attend, speak and vote in their stead. A proxy need not be a shareholder andshall be entitled to vote on a show of hands or a poll. It is requested that forms of proxy be forwarded so as to reach thetransfer secretaries no later than 10:00 on Monday, 14 October 2013. If forms of proxy are not delivered to the transfersecretaries by such date and time, such shareholders may nevertheless at any time prior to the commencement of thevoting on the resolutions at the general meeting, be entitled to lodge such form of proxy, in accordance with theinstructions therein with the chairman of the general meeting.

On a show of hands, every shareholder present in person or represented by proxy and entitled to vote shall have only onevote irrespective of the number of shares held by such shareholder. On a poll, every shareholder present in person orrepresented by proxy and entitled to vote shall be entitled to one vote for every share held or represented by thatshareholder. On a poll taken at any such meeting a shareholder entitled to more than one vote need not, if he votes, useall of his votes, or cast all the votes he uses in the same way.

Shareholders who have dematerialised their shares, other than those who have dematerialised their shares with “ownname” registration, should contact their CSDP or broker in the manner and time stipulated in the agreement entered intobetween them and their CSDP or broker:

• to furnish them with their voting instructions; or

• in the event that they wish to attend the general meeting, to obtain the necessary letter of representation to do so.

Shareholders wishing to participate electronically in the general meeting are required to deliver written notice to thecompany at corner Engelbrecht and Lanham Streets, East Lynne, Pretoria (marked for the attention of Mr M Patel) by nolater than 10:00 on Wednesday, 9 October 2013 that they wish to participate via electronic communication at the generalmeeting (the “electronic notice”). In order for the electronic notice to be valid it must contain: (a) if the shareholder is anindividual, a certified copy of his identity document and/or passport; (b) if the shareholder is not an individual, a certifiedcopy of a resolution by the relevant entity and a certified copy of the identity documents and/or passports of the personswho passed the relevant resolution. The relevant resolution must set out who from the relevant entity is authorised torepresent the relevant entity at the general meeting via electronic communication; (c) a valid e-mail address and/orfacsimile number (the “contact address/number”); and (d) if the shareholder wishes to vote via electronic communication,set out that the shareholder wishes to vote via electronic communication. By no later than 10:00 on Friday, 4 October 2013,the company shall use its reasonable endeavours to notify (at its contract address/number) each shareholder who hasdelivered a valid electronic notice of the relevant details through which such shareholder can participate in the generalmeeting via electronic communication.

FURTHER INFORMATION

A person attending the general meeting in person or participating in the general meeting must present reasonablysatisfactory identification to the chairman of the general meeting. The chairman of the general meeting must bereasonably satisfied that the right of a person to participate and vote (in person) at the general meeting, either as ashareholder, or as a proxy for a shareholder, has been verified.

By order of the Board

Monika PretoriusCompany Secretary

12 September 2013

34





FORM OF PROXY – GENERAL MEETING OF SHAREHOLDERS

The definitions and interpretations commencing on page 4 of the circular, to which this form of proxy has been attached, apply equally to this form of proxy.

Only for use by certificated shareholders or dematerialised shareholders of Alert Steel who have selected “own-name” registration.

For use by Alert Steel shareholders in respect of the general meeting of shareholders to be held at the office of Alert Steel, corner of Engelbrecht andLanham Streets, East Lynne, Pretoria on Wednesday, 16 October 2013 at 10:00.

If you have dematerialised your shares with a Central Securities Depository Participant (“CSDP”) or broker and have not selected “own-name” registration,you must arrange with your CSDP or broker to provide you with the necessary letter of representation to attend the general meeting or you must instructthem as to how you wish to vote in this regard. This must be done in terms of the agreement entered into between you and the CSDP or broker.

I/We (Names in full – please print)

of (address – please print)

Being the holder of ordinary shares in Alert Steel hereby appoint:

1. of or failing him/her,

2. of or failing him/her,

3. the chairman of the general meeting,

as my/our proxy to attend and vote for me/us at the general meeting of shareholders, to be held at the office of Alert Steel, corner of Engelbrecht and LanhamStreets, East Lynne, Pretoria and at any adjournment thereof, for purposes of considering and, if deemed fit, passing, with or without modification, theresolutions to be proposed thereat in accordance with the following instructions (see notes):

Number of votes (one vote per ordinary share)

In favour of Against Abstain

Ordinary resolution number 1 (approve the Specific Issue)

Special resolution number 1 (authorise issue of shares to a related party)

Special resolution number 2 (authorise issue of more than 30% of shares)

Special resolution number 3 (increase authorised share capital)

Special resolution number 4 (to provide financial assistance)

Ordinary resolution number 2 (issue shares to related party)

Ordinary resolution number 3 (authorisation to director)

Signed at on 2013

Signature

Capacity of signatory (where applicable)

(Note: Authority of signatory to be attached – see note 5)

Assisted (where applicable) by

Full name

Capacity

Signature

Please see notes on the reverse side hereof.

NOTES TO THE FORM OF PROXY1. A shareholder may insert the name(s) of one or more proxies (none of whom need be a company shareholder) in the space provided, with or without

deleting the words “the Chairperson of the general meeting of the shareholders”. The person whose name stands first on the form of proxy and hasnot been deleted and who is present at the general meeting will be entitled to act as proxy to the exclusion of those whose names follow. In the eventthat no names are indicated, the proxy shall be exercised by the Chairperson.

2. A shareholder’s instructions to the proxy must be indicated by the insertion of an “X” or the relevant number of votes exercisable by that shareholder inthe appropriate box provided. Failure to comply with the above, will be deemed to authorise the proxy to vote as he/she deems fit, where the proxy isthe Chairperson, such failure shall be deemed to authorise the Chairperson to vote in favour of the general resolution in respect of all the shareholders’votes exercisable thereat.

3. The completion and lodging of this form of proxy shall in no way preclude the shareholder from attending, speaking and voting in person at the generalmeeting to the exclusion of any proxy appointed in terms hereof.

4. Should this form of proxy not be completed and/or received in accordance with these notes, the Chairperson may accept or reject it, provided that, inrespect of its acceptance, the Chairperson is satisfied as to the manner in which the shareholder wishes to vote.

5. Documentary evidence establishing the authority of the person signing this form of proxy in a representative capacity must be attached to this form ofproxy unless previously recorded by the company’s transfer secretaries or waived by the Chairperson of the meeting.

6. Where this form of proxy is signed under power of attorney, such power of attorney must accompany this form unless it has previously been registeredwith the company.

7. Where shares are held jointly, all joint holders are required to sign.

8. A minor must be assisted by his/her parent or guardian unless the relevant documents establishing his/her legal capacity have been produced or havebeen registered by the transfer secretaries of the company.

9. Any alteration or correction made to this form of proxy must be signed in full and not initialled by the signatories.

10. This form of proxy must be lodged with, or posted to the transfer secretaries, Computershare Investor Services Proprietary Limited, 70 Marshall Street,Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107) so as to be received by no later than 10:00 on Monday, 14 October 2013.

11. The completion and lodging of this form of proxy by the shareholders holding certificated shares, nominee companies of CSDP’s or brokers and theshareholders who have dematerialised their ordinary shares and who have elected own-name registration, will not preclude the relevant shareholderfrom attending the general meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms thereof. The shareholderswho have dematerialised their ordinary shares, other than with own name registration, and who wish to attend the general meeting must instruct theirCSDP or broker to issue them with the necessary letter of representation to attend.

Summary of the rights established in terms of section 58 of the Act as required by section 58(8)(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 aproxy, to participate in, and speak and vote at, a shareholders meeting on behalf of the Shareholder, or to give or withhold written consent on behalf ofsuch Shareholder in relation to an 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 thedate upon which the proxy was signed, or any longer or shorter period expressly set out in the appointment, unless it is revoked in a mannercontemplated 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 a company may appoint two or more persons concurrently as proxies, and may appoint more than one proxy to exercise votingrights attached to different securities held by such Shareholder;

3.2 a proxy may delegate his authority to act on behalf of a Shareholder to another person, subject to any restriction set out in the instrumentappointing 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, beforethe proxy exercises any rights of the Shareholder at a shareholders’ meeting.

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

4.1 the appointment of the proxy is suspended at any time and to the extent that the Shareholder who appointed that proxy chooses to act directlyand in person in the exercise of any rights as a Shareholder of the relevant company;

4.2. unless the proxy appointment expressly states otherwise, the appointment of a proxy is revocable; and

4.3 if the appointment of a proxy is revocable, a Shareholder may revoke the proxy appointment by cancelling it in writing, or making a laterinconsistent appointment of a proxy, and delivering a copy of the revocation instrument to the proxy and to the company.

5. The revocation of a proxy appointment constitutes a complete and final cancellation of the proxy’s authority to act on behalf of that Shareholder as ofthe later of: (a) the date stated in the revocation instrument, if any; or (b) the date upon which the revocation instrument is delivered to the proxy andthe relevant company as required in section 58(4)(c)(ii) of the Act.

6. If the instrument appointing a proxy or proxies has been delivered to the relevant company, as long as that appointment remains in effect, any noticethat is required by the Act or the relevant company’s memorandum of incorporation to be delivered by such company to the Shareholder, must bedelivered 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 andpaid any reasonable fee charged by the company for doing so.

7. A proxy is entitled to exercise, or abstain from exercising, any voting right of the relevant Shareholder without direction, except to the extent that thememorandum of incorporation, or the instrument appointing the proxy provides otherwise.

8. 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 instrumentfor appointing a proxy:

8.1 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;

8.2 the invitation, or form of instrument supplied by the relevant company, must: (a) bear a reasonably prominent summary of the rights establishedin section 58 of the Act; (b) contain adequate blank space, immediately preceding the name or names of any person or persons named in it, toenable a Shareholder to write in the name and, if so desired, an alternative name of a proxy chosen by such Shareholder and (c) provide adequatespace 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 relevantmeeting, or is to abstain from voting;

8.3 the company must not require that the proxy appointment be made irrevocable; and

8.4 the proxy appointment remains valid only until the end of the relevant meeting at which it was intended to be used, unless revoked ascontemplated in section 58(4) of the Act.

GRA

PHIC

ULT

URE