Annual Report 2007 Alert Steel Holdings Limited · NATIONAL FOOTPRINT Limpopo North West ... Alert...

Annual Report 2007

Alert Steel Holdings LimitedAlert Steel Holdings Limited

1

INDEX

Page

Alert Vision & Pledge 2

Alert Corporate Branding 3

Group Structure 4

National Footprint 5

Financial Highlights 6

Segmental Analysis 7

Board of Directors 15

Joint Chief Executive Officer and Chairman Report 16

Corporate Governance Report 22

Social Responsibility Report 25

Value Created Statement 26

Consolidated Annual Financial Statements 27

Shareholders' Diary 62

JSE Share Information 62

Notice of Annual General Meeting 63

Form of Proxy 67

Corporate Information 70

Branch Details 71

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We pledge to do everything with a positive ATTITUDE.

We pledge LOYALTY.

We pledge to be ENTHUSIASTIC about what we do and how we do it.

We pledge to treat all with RESPECT.

We pledge to be trustworthy and also TRUST each other.

Positive Attitude + Loyalty + Enthusiasm + Respect + Trust = Customers, Colleagues & Community + Suppliers & Shareholders for Life

3 2(+A) L E R T C S 4L

+ + + + = +

We pledge to serve you the Alert way!

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Suppliers of Steel, Hardware, Building Material and Plumbing Supplies

To maximize the rewards for our stakeholders by becomingthe leading supplier in the construction, manufacturing,

building and home improvement industry.

2

The Vision

The Pledge

VISION & ALERT PLEDGE

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ALERT CORPORATE BRANDING

Alert Corporate

Steel, Hardware, Building Material & Plumbing Supplies

Steel & Hardware

Plumbing Supplies & Sanware

Supply, Cut, Bend & Fixing of Reinforcing Steel

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GROUP STRUCTURE

Dual IntakeInvestment 24

(Pty) Ltd

Murray & RobertsSteel (Pty) Ltd

51%100%100% 100% 50% 50%

50%

50%

100%

Alert Steel (Pty) LtdAlert Steel (Pty) LtdAlert Steel

Brits (Pty) LtdAlert Steel

Brits (Pty) LtdAlert Steel

Hazyview (Pty) LtdAlert Steel

Hazyview (Pty) LtdAlert Steel

Tshwane (Pty) LtdAlert Steel

Tshwane (Pty) LtdAlert Steel

Reinforcing (Pty) LtdAlert Steel

Reinforcing (Pty) Ltd

Alert Build PretoriaAlert Build Burgersfort

Alert Plumb Pretoria

Alert Build PretoriaAlert Build Burgersfort


1 September 2007Alert Steel Ruimsig

Alert Steel RandfonteinAlert Steel LichtenburgAlert Steel Klerksdorp

1 September 2007Alert Steel Ruimsig

Alert Steel RandfonteinAlert Steel LichtenburgAlert Steel Klerksdorp

Alert SteelPolokwane (Pty) Ltd

Alert SteelPolokwane (Pty) Ltd

Alert Build LephalaleAlert Build Polokwane

Alert Build ThohoyandouAlert Steel Louis Trichardt

Alert Steel MokopaneAlert Steel Tzaneen

RSC Polokwane

Alert Build LephalaleAlert Build Polokwane

Alert Build ThohoyandouAlert Steel Louis Trichardt

Alert Steel MokopaneAlert Steel Tzaneen

RSC Polokwane

Alert Steel HoldingsLimited

Alert Steel HoldingsLimited

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NATIONAL FOOTPRINT

Limpopo

North West

Mpumalanga

Free State

Northern Cape

Kwa Zulu- Natal

Eastern Cape

Western Cape

Gauteng

ALERT BUILD BURGERSFORT

ALERT BUILD LEPHALALEALERT BUILD THOHOYANDOU

ALERT STEEL BRITS

ALERT STEEL HAZYVIEW

ALERT STEEL LOUIS TRICHARDT

ALERT STEEL MOKOPANE

ALERT STEEL RANDFONTEINALERT STEEL RUIMSIG

ALERT STEEL TZANEEN

ALERT PLUMB PRETORIAALERT STEEL TSHWANEALERT BUILD PRETORIA

RSC TSHWANE

RSC POLOKWANEALERT BUILD POLOKWANE

ALERT STEEL KLERKSDORPALERT STEEL LICHTENBURG

6

FINANCIAL HIGHLIGHTS

AGGREGATED12 MONTHS

AGGREGATED12 MONTHS

RevenueRevenue

EBITEBIT

EBIT MarginEBIT Margin

HEPS dilutedHEPS diluted

Cash resources @ Y/ECash resources @ Y/E

42.3%

69.1%

19.0%

79.4%

R21.1 m

2007 2006

R564,2m R396,5m

R38,9m R23,0m

6,9% 5,8%

11,3c 6,3c

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Comparison based on aggregated figures for 2006 and 2007 as extracted from the SENS announcementthdated 19 September 2007.

stAlert was restructured with effect from 1 November 2006.

SEGMENTAL ANALYSIS - REVENUE

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Alert Build Pretoria

Alert Build Burgersfort


Alert Steel Hazyview

RSC Tshwane

Alert Steel Tshwane

Alert Steel Brits

Alert Steel Mokopane

Alert Build Lephalale

Alert Build Polokwane

RSC Polokwane

Alert Steel Louis Trichardt

Alert Steel Tzaneen

Alert Build Thohoyandou

Alert Steel (Pty) Ltd

Alert Steel Hazyview (Pty) Ltd

Alert Steel Tshwane (Pty) Ltd

Alert Steel Brits (Pty) Ltd

Alert Steel Polokwane (Pty) Ltd

Alert Steel Reinforcing (Pty) Ltd

2%2%3%

6%

3%

2%

2%

11%

7%

2%

2%

8% 4%

46%

REVENUE - PER COMPANY

Alert Steel Reinforcing (Pty) Ltd 2%

Alert Steel Polokwane

(Pty) Ltd

20%

Alert Steel Brits

(Pty) Ltd

11%

Alert Steel Tshwane

(Pty) Ltd 7%


(Pty) Ltd 2%Alert Steel (Pty) Ltd

58%

REVENUE - PER BRANCH

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SEGMENTAL ANALYSIS - PRODUCT GROUPSPER COMPANY

Building Material1%

Hardware8%

Plumbing1%

Steel90%

ALERT STEEL BRITS (PTY) LTD

ALERT STEEL (PTY) LTD

BuildingMaterial

18%

Hardware12%

Steel53%

Steel

Building Material

Hardware

Rebar

Plumbing

Steel

Building Material

Hardware

Rebar

Plumbing

Steel

Building Material

Hardware

Rebar

Plumbing

Steel

Building Material

Hardware

Rebar

Plumbing

Steel

Building Material

Hardware

Rebar

Plumbing

Steel

Building Material

Hardware

Rebar

Plumbing

Steel

Building Material

Hardware

Rebar

Plumbing

ALERT STEEL HOLDINGS (PTY) LTD

Building Material

10%

Hardware9%

Rebar15%

PlumbingPlumbing

17%8%

Steel58%

ALERT STEEL TSHWANE (PTY) LTD

Steel84%

Hardware16%

Building Material1%

Hardware12%

Steel87%

ALERT STEEL HAZYVIEW (PTY) LTD

Steel59%

Rebar30%

Hardware7%

Building Material4%

ALERT STEEL POLOKWANE (PTY) LTD

ALERT STEEL REINFORCING (PTY) LTD

Rebar100%

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SEGMENTAL ANALYSIS - PRODUCT GROUPPER BRANCH

Steel

87%

Hardware12%

BuildingMaterial

1%


Steel60%

Plumbing5%

Hardware17%

BuildingMaterial

18%


Building Material1%

Hardware8%

Plumbing1%

Steel90%

ALERT STEEL BRITS

Steel84%

Hardware16%

ALERT STEEL TSHWANE

Plumbing100%

ALERT PLUMB PRETORIA

BuildingMaterial

22%

Hardware14%

Steel64%

ALERT BUILD PRETORIA

Steel

Building Material

Hardware

Rebar

Plumbing

Steel

Building Material

Hardware

Rebar

Plumbing

Steel

Building Material

Hardware

Rebar

Plumbing

Steel

Building Material

Hardware

Rebar

Plumbing

Steel

Building Material

Hardware

Rebar

Plumbing

Steel

Building Material

Hardware

Rebar

Plumbing

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SEGMENTAL ANALYSIS - PRODUCT GROUPPER BRANCH (CONTINUED)

ALERT STEEL LEPHALALE ALERT BUILD POLOKWANE

RSC POLOKWANE ALERT STEEL LOUIS TRICHARDT

ALERT STEEL TZANEEN

RSC TSHWANE

ALERT BUILD THOHOYANDOU

Hardware12%

Steel88%

Steel88%

Hardware10%

Building Material2%

Building Material4%

Hardware13%

Steel83%

29%

Hardware7%

Plumbing3%

Steel61%

Rebar100%

Rebar

100%

Steel86%

Plumbing1%

Hardware10%

Building Material3%

BuildingMaterial

Steel

Building Material

Hardware

Rebar

Plumbing

Steel

Building Material

Hardware

Rebar

Plumbing

Steel

Building Material

Hardware

Rebar

Plumbing

Steel

Building Material

Hardware

Rebar

Plumbing

Steel

Building Material

Hardware

Rebar

Plumbing

Steel

Building Material

Hardware

Rebar

Plumbing

Steel

Building Material

Hardware

Rebar

Plumbing

Steel

Building Material

Hardware

Rebar

Plumbing


Steel77%

Hardware9%

Building Material14%

2BRANCH - YARD 35800 M

2100

10000

1000

800

5000

800

800

2000

1000

2000

800

1500

7000

1000

2BRANCH - TOTAL TRADING AREA 41250 M

1500

7300

1750

950

2250

1000

2400

1050

900

5000

1250

1600

11400

2900

2BRANCH - RETAIL 5450 M

500

300

250

150

250

400

250

100

450

600

1400

800Alert Build Pretoria




Alert Steel Tshwane

Alert Steel Brits





Alert Steel Tzaneen






RSC Tshwane

Alert Steel Tshwane

Alert Steel Brits




RSC Polokwane


Alert Steel Tzaneen






RSC Tshwane

Alert Steel Tshwane

Alert Steel Brits




RSC Polokwane


Alert Steel Tzaneen


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SEGMENTAL ANALYSIS - TRADING AREAPER BRANCH

12

SEGMENTAL ANALYSIS - CASH VS CREDITPER COMPANY

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Cash

Credit

Cash

Credit

ALERT STEEL HAZYVIEW (PTY) LTD

Cash

Credit

70%

30%Cash

Credit

ALERT REINFORCING (PTY) LTD

7%

93%

Cash

Credit

ALERT STEEL BRITS (PTY) LTD

29%

71%

ALERT STEEL POLOKWANE (PTY) LTD

Cash

Credit

36%

64%

ALERT STEEL TSHWANE (PTY) LTD

74%

26%

ALERT STEEL HOLDINGS LIMITED

35%

65%

Cash

Credit

30%

70%

ALERT STEEL (PTY) LTD

13

SEGMENTAL ANALYSIS - CASH VS CREDITPER BRANCH

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Cash

Credit

Cash

Credit

Cash

Credit

Cash

Credit

Cash

Credit

Cash

Credit

Cash

Credit

Cash

Credit

Cash

Credit

30%

70%

ALERT BUILD PRETORIA

30%

70%

ALERT PLUMB PRETORIA

70%

30%


7%

93%

RSC TSHWANE

74%

26%

ALERT STEEL TSHWANE

29%

71%

ALERT STEEL BRITS

48%

52%


39%

61%

ALERT BUILD LEPHALALE

45%

55%

ALERT BUILD POLOKWANE

Cash

Credit

31%

69%


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SEGMENTAL ANALYSIS - CASH VS CREDITPER BRANCH (CONTINUED)

ALERT STEEL LOUIS TRICHARDT

60%

40% Cash

Credit

RSC POLOKWANE

8%

92%

Cash

Credit

Cash

Credit

ALERT STEEL TZANEEN

33%

67%

ALERT BUILD THOHOYANDOU

Cash

Credit

61%

39%

15

BOARD OF DIRECTORS

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Owen is a very successful entrepreneur and business man in his own right. He founded his own construction business, DNO Projects CC, in 1986. Owen has more than 20 years' experience in the building and construction industries.

Wynand has always been an entrepreneur and commenced his working career at a desalination plant in Upington of which he became the owner after two years.He worked at Incledon and Silverton Engineering until 1978 when he joined Iscor in its marketing division, where he worked for 10 years. He started the business conducted by Alert Steel on a part-time basis in 1979 and resigned from Iscor in 1988 to focus on the continued growth and successes of the Group.

W ynand Schalekamp (Managing Director) B Com Marketing (58)

Willie completed his articles in 1981 at Van Zyl, Scheepers and Bruwer in Pretoria. He then worked for Sasol Limited in Secunda for three years before he started his own audit practice. Willie has been involved with Alert Steel since 1989, originally on a part-time basis and since the significant growth and expansion of the Group in 2000 on a full-time basis. Willie's sound knowledge and experience in financial related matters ensured the continued growth of the Group.

Willie Mentz (Financial Director) B Com CA (SA) (52)

Ethan has gained significant corporate finance and asset management experience over the years. He worked for Southern Asset Managers for three years as Senior Analyst and for Standard Chartered and Merchant Bank for two years in their Corporate Finance department. In 1996 Ethan founded Infinity Asset Management with three other partners and in 1998 he started Vunani Capital Holdings (Pty) Limited an investment banking company where he is the current Chief Executive Officer.

E than Dube (Chairman) MSc (Statistics) Executive MBA (Sweden) (48).

Owen Jevon (Non–executive Director) BSc Eng (53)

Executive Director

Non-Executive Director

Executive Director

Non-Executive Director

16

JOINT CHIEF EXECUTIVE OFFICER AND CHAIRMAN REPORT

Dear Stakeholder,

INTRODUCTION

As Chief Executive Officer of the Alert Group and Chairman of the Board of Directors, it is our privilege to present you with our first annual report.

It is with gratitude that we comment on this very successful business that has grown from a small family enterprise to its xcurrent dimension as an Alternative Exchange (ALT ) listed company of the Johannesburg Stock Exchange, the JSE

Limited (JSE).

The business has evolved from a steel retailer to a competitive supplier of a comprehensive range of steel products, building materials, plumbing supplies and hardware. We are confident that our business strategy has put our company in a competitive position of maximum growth.

Our strong values system is communicated throughout our organization and our employees are motivated and groomed to effect business according to these values, which are: (a Positive) Attitude, Loyalty, Enthusiasm, Respect and Trust. It is from these values that the Alert Pledge was 'born' and towards which we strive to do everything the Alert way. By living these values every day, we ensure a moral, sound, and sustainable future for our business and associates.

OVERALL FINANCIAL PERFORMANCE OF THE GROUP

The financial results for the eight months ended 30 June 2007 have been in line with the forecasts as reflected in the xprospectus, issued before our successful listing on the ALT on 1 March 2007.

Our financial results are indicative of the increased economic activity currently experienced in the industry, especially in the building and construction industries, where we are predominantly active. We are positive that this is an indication of significant opportunities in the domestic market in the period leading up to the 2010 Soccer World Cup.

Our operating profit grew by 69.1 %. (Based on aggregate figures for 2006 and 2007).

The domestic economy remained robust for the year, with recorded GDP growth of 4.3%. The construction, mineral and housing markets contributed significantly to this growth.

Although many economists predict a moderate downturn in the global and domestic economics during the year ahead, we anticipate further increases in investment in middle and low cost housing, infrastructure projects and major capacity expansion programs in the power, water and transportation sectors.

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A YEAR OF REMARKABLE RESULTS

Alert 's 2007 financial year was remarkable for the Group and our performance has exceeded expectations.

The growing market segment that we serve has enhanced our growth potential. We have embraced the opportunity and aligned ourselves to grow with it. The changes in the industry in recent years have enabled us to position ourselves as a leading market player. We have successfully managed to grow from a stable base and have expanded along with our market's requirements. We will strive to continue this achievement in future.

Although you will find a complete report on our financial results for the past year, I would like to highlight the following:

AGGREGATE COMPARATIVE FIGURES

(Comparisons based on aggregate figures for 2007 and 2006 as extracted from SENS announcement dated 19September 2007.)

• Group revenue increased 42.3%• Headline earning per share increased 82.5%• An increase of our Group's return on equity to 19.3% (13.4% - 2006)

The continued improvement and growth in the retail trading results is anticipated to impact favorably on margins.The Group continues to benefit from improved efficiencies throughout the supply chain.

ECONOMIC OVERVIEW

Internationally, steel consumption has increased by 9% to over 1.12 billion tons in 2006, driven by an increase in world economic growth from 3.8% to 3.9%. Global consumption and production of steel increased by 9%, driven by expansion in Japan and European Union as well as rapid growth in China and India.

China's steel production capacity continued to expand rapidly and now represents more than a third of total world production. China was a net exporter of 24.5 million tons of finished steel products during 2006.

In South Africa steel-consuming sectors performed exceptionally well on the back of robust economic growth and lower personal taxes, and the recovery in employment creation spurred growth in a number of sectors. Demand was further driven by the need to alleviate infrastructural bottlenecks. The construction industry saw growth of 14% as the build-up to the 2010 Soccer World Cup and the government's infrastructure development programs gained momentum.

The annual domestic steel consumption was 5.8 million tons for 2006, representing an increase of 27% over 2005.

The international Iron and Steel Institute predicts a 5% increase in global steel consumption to 1.18 billion tons in 2007. International prices are expected to be stronger, backed by a balanced supply and demand environment, high consumption and improved supply discipline.

Domestic demand is expected to increase further, ahead of the government's multibillion rand infrastructure development program. This includes new power stations, the upgrade of our rail and road infrastructure and the building of stadiums for the 2010 Soccer World Cup.

With regards to building materials, the overall growth rate in new residential housing market continued to slow down due to increased interest rates as well as the effect of the New Credit Act on consumer spending.

Activities at the luxury end of the market were lower than the previous year, while those in the lower end of the market continue to rise. The middle income market remains the driving force in the residential sector.

The commercial market continues its steady growth pattern from 2005 off-setting the slowdown in the pace of growth in the residential market to a large extent.

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Revenue

Gross Profit

EBIT

Earnings Before Tax

Earnings After Tax

Pro forma weighted average shares in issue on which earnings are based

Earnings per share

Headline Earnings per share

2007 2006

564,237,249

132,519,388

38,893,744

37,680,115

26,661,415

231,630,137

11.5

11.5

396,455,300

95,026,397

22,967,061

20,668,632

14,121,144

225,000,000

6.3

6.3

18

Inflationary pressures in the market place are beginning to show and this could be a significant factor which could slow down industry growth. Although the overall inflation figure is between 6 and 8%, our industry is experiencing inflationary increases around 15%.

Significant activities in the construction market have marked the start of an upward cycle in the industry, propelled by numerous infrastructural projects. We anticipate a positive effect from this due to our strong relationship with Murray & Roberts.

We are in the process of increasing our footprint and retail capacity in various identified growth areas including metropolitan areas, to seize the strong local demand. One of our key focus areas is to maintain higher stock levels and to import certain product categories to guarantee our clients a secure and reliable supply chain. We are also undertaking various initiatives to improve and enhance our product ranges and supply position.

NATURE OF BUSINESS

Due to the strong organic growth experienced as well as the unique market conditions present in different towns, cities and possible acquisitions, we have strategically restructured the Group into four segmented divisions namely:

This division is the fundamental core of our Group. In terms of our business model certain identified outlets will remain only steel merchants. Currently we have eight such outlets in the Gauteng, Limpopo, North West and Mpumalanga provinces. (*)

We have identified the opportunity to expand our product categories in some outlets to include building materials and 2hardware. Currently we have three outlets with a total retail and building material yard space in access of 16 000m .

The product categories consist of steel, building materials, plumbing supplies, hardware and paint. (*)

(*)Two outlets to be converted to Alert Build brand in November 2007 - Alert Build Polokwane and Alert Build Lephalale.

In terms of this concept we provide a complete range of plumbing supplies and sanware products to plumbing contractors and the DIY market. This very successful concept is currently housed in one outlet in Pretoria.

Each of these two outlets specialises in the cutting, bending and fixing of reinforcing steel to the construction and building industries. They have a joint capacity of 2 000 tons a month during a single shift. Alert Reinforcing is a joint venture between Alert Steel (Pty) Ltd and Murray and Roberts Steel (Pty) Ltd. This business segment benefits significantly from Murray & Robert's involvement in the Gautrain and other major construction projects.

These four divisions will enable Alert to offer a one-stop-shop destination concept to the market.

The Group's market can be divided as follows:30% – 35% cash paying customer base and 65% – 70% credit paying customer base. Credit guarantee covers approximately 65% of our credit sales. Our cash paying client base consists of the DIY market, small contractors, homebuilders and general builders. Larger construction companies and government related infrastructure developers represent our credit paying customers. (See page 12 of this report for segmental analysis)

Alert has built its outstanding reputation in the market by offering quality products, excellent customer service and deliveries at competitive prices to its entire customer base.

Since our listing on 1 March 2007, we have restructured the Group and appointed senior staff to strengthen and enhance our current management team. We are convinced that the Group is aligned for optimal future growth and maximized profits. The restructuring and implementation of our new company profile will continue in the new financial year.

We take pride in our management team and staff (of which many are employed from local communities) who have exceptional product knowledge and understanding of their community and market needs.

Our extensive fleet of trucks and light delivery vehicles enables us to offer further exceptional delivery service to our valued customers.

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MARKET SHARE

Alert is committed to continually increasing its sales and profit for years to come. Reviewing and implementing our business strategy on a regular basis will enable us to achieve this. Our pledge is to satisfy the needs of our customer in every facet of the business.

Our model, consisting of our four brands, is unique in the market:• Alert Steel - Steel Products and related Hardware• Alert Build - Steel, Building Materials, Plumbing Supplies and Hardware • Alert Plumb - Plumbing Supplies and Sanware • Alert Reinforcing - Supply, Cut, Bend and Fixing of Reinforcing Steel

This model as well as our new information technology system will give us the competitive edge to remain highly successful in the market.

Our stores and staff are customer orientated and we will always endeavor to supply and deliver any request from our industries.

We can provide, stock and deliver any quantity of any material within our product ranges. This “one-stop shop destination” concept at competitive prices aims to increase support and confidence from our customers. We are confident that this flexible model will continue to deliver sustainable growth throughout our current business model, planned expansions and future acquisitions.

FUTURE GROWTH AND PROSPECTS

The focus of the Group during the coming year is to create capacity within the system in anticipation of the next level of growth, which will come from organic growth and new acquisitions.

Alert has recently implemented a new information technology system, that when installed, will support and control the growth of the business.

A share incentive scheme was implemented at the time of listing which will insure the ability of the Group to retain star performers as well as to attract new management teams.

The year ahead will see the launch of the “back to basics” service program at store level. Incentive schemes will be available to staff at all levels of the Group to encourage them to deliver higher levels of customer service.

Our expansion strategy in the medium term includes the re-development of certain existing sites, to increase their product ranges as well as the acquisition and conversion of existing steel merchants. At the end of our financial year, we had 14 stores in our Group. Subsequent to our year-end an agreement was signed to acquire the highly regarded steel merchant in the North West, Steel Giant (Pty) Ltd. This Group consists of four branches and will increase our revenue in 2008 by at least 20%.

2We are also currently expanding the retail areas at two of our existing stores with a minimum of 4500m .These expansions will have a substantial effect on our 2008 revenue. Furthermore we are planning a new Distribution Centre and Head Office for the Group. This will however only be finished towards the end of the 2008 financial year and the impact of this on our revenue will only be significant in 2009.

2The Board is considering six new sites which will add an extra 25 000m of retail to our existing retail floor areas.

HUMAN CAPITAL

One of the biggest assets in our Group is our committed workforce, the heartbeat of our business. It is of great importance that we retain and develop existing talent in our organization; hence are skills development and training big focus areas of our business.

We endorse an internationally recognised performance management system that guides, motivates and develops our staff for the current and future needs of the business. Staff are consulted and guided in their development areas as well as given career guidance within the organization.

Alert strives to develop entry-level staff to fulfill higher positions in the organization, they are assisted in their career journey through study help in the form of bursaries. We are continually striving to attract dynamic and energised people to join our company, as a result, Alert's recruitment process is fully focused on a transparent and fair process.

The services of recruitment agencies are utilised, who recruit from all spheres of the economic population.The recruitment process is geared to address the previous placement inadequacies in terms of previously disadvantaged people including disabled people and all women. Alert has implemented a staff incentive scheme program in 2007, to reward and encourage performance excellence and loyalty. This scheme also allows previously disadvantaged people to take part in the growing and pulsating South African economy.

An amount of R2m has been allocated in our 2007/2008 budget for the extensive training of managers.Furthermore an amount of R1m has been allocated for training and skills development of employees.

Alert is fully committed towards providing the staff with the knowledge and skills they need to do their job.Therefore we provide continuous in-house training and National Standard Based Training to all of our staff.

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BLACK ECONOMIC EMPOWERMENT

Our aim is to transform our business into a responsible and credible Broad Based Black Economic Empowered (BBBEE) Company. Alert is proud to be following the Codes of Good Practice in terms of the BBBEE Act , Gazetted on 09-02-2007, Gazette nr 29617.

We are adamant that the economic solution is to empower our employees and to enable them to share in the wealth of the company. More than 80% of our workforce is black, and is represented throughout all levels of the organization. The company is also committed to increase the number of black managers during the next financial year through various initiatives.

Alert's supply chain management model is dedicated to strengthen black empowered companies and ensures the use of preferential procurement whenever possible. It is our intention to rate our BBBEE performance against the Department of Trade and Industry's nationally recognised Generic Scorecard as soon as official rating agents are published by the South African National Accreditation System (SANAS).

The following is a summary of the current BEE status in the Group:

Alert is fully committed to the transformation process required by BBBEE and believes that it is essential for the future of entrepreneurship and job creation in South Africa. The livelihood of more than 590 families (80% black) depend on the successful transformation of our Group into a Black Empowerment Company.

SOCIAL RESPONSIBILITY

We are fully aware of our social responsibility, especially in our operating communities, and make charitable donations to various institutions, schools and organizations in our areas.

We are also involved in a sponsorship program which identifies and develops young cricket players from previously disadvantaged backgrounds through the Digitalk Cricket Development Program in Pretoria. We are committed to identifying further opportunities on a continual basis, where we can make a sustainable contribution to our youth and communities.

CORPORATE GOVERNANCE

We consider good corporate governance as an integral part of the success of our business. Our Board of Directors is committed to the standards of good corporate governance as contained in the second King Report on Corporate Governance for South Africa 2002.

APPRECIATION

Without our stakeholders we would not have succeeded in building a competitive, sustainable business. We sincerely wish to thank the following people for their valuable contribution:

We are looking forward to another year of good sustainable growth in our Group.

It is our aim to: • build on our proven successes; • implement the required changes in our business environment and; • fully utilize the current prosperous economic climate present in our industry to benefit our valued stakeholders.

WF Schalekamp EG Dube Chief Executive Officer: Chairman of the Board of Directors:Alert Steel Holdings Ltd Alert Steel Holdings Ltd

20

BEE Ownership 10,2%

BEE Directorship 25%

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Our Shareholders

Our Clients

Our Employees

Our Suppliers and Business Associates

Our Board of Directors

For your confidence to invest in our business

For your continual loyal support

For dedication, commitment and service excellence

For your unfailing assistance

For your valuable input and guidance

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22

CORPORATE GOVERNANCE REPORT

“WE PLEDGE TO BE TRUSTWORTHY”

This pledge made to customers and shareholders, is not negotiable in our business model. To enhance this commitment further, Alert's Board of Directors (“the Board”) are, in the best interest of our company and all stakeholders, fully committed to be accountable, transparent and to always act with integrity in all aspects of our business. The Board recognizes the role of good corporate governance to support the quality of our business and to protect the interest of all stakeholders.

In support of this commitment, compliance with the JSE Listings Requirements and the Code of Good Practices and Conduct as embodied in the Second King Report (King II) on Corporate Governance is a main priority for our Board. We will continually strive to enhance compliance with King II in our business model, as well as the ongoing development of best business practices.

CORPORATE GOVERNANCE STATEMENT

Alert is incorporated in South Africa in terms of the provisions of the Companies Act, 1973, as amended and is listed on xthe Alternative Exchange ("ALT ") of the JSE.

In order to fully comply with all relevant laws and regulations, the Board is in the process of implementing various policies and procedures in the company and reviewing existing ones. A Board Charter is currently being finalized for adoption in the first quarter of the 2008 financial year. The Board will strive to continually review and improve all practices and policies for the benefit of all stakeholders.

CHIEF EXECUTIVE OFFICER (“CEO”) AND CHAIRMAN

xAlthough the separation of the CEO and Chairman function is not a requirement for ALT companies, the Board has separated this function with a clear division of responsibilities to ensure that no individual have unrestricted decision-making powers.

The Chairman provides leadership and guidance to the Board and encourages independent thinking by the Directors of the Board to enable sound decision-making.

The Chairman, Mr Ethan Dube is a Non-Executive Director. Mr Dube takes responsibility for leading the Board, and representing the Board to shareholders. He is fully independent from the management of the business and free to make independent decisions and judgments.

Mr Wynand Schalekamp is the Chief Executive Officer of the company and accepts full responsibility for the sound and efficient operation of the business as well as the implementation of all strategies and policies adopted by the Board.

BOARD OF DIRECTORS

The Board consists of two Executive and two Non-Executive Directors. The Non-Executive Directors are not independent in terms of the JSE Listings Requirements definition. However, they do not provide any professional service to the Group and do not enjoy any benefits from the company for their service as Directors, apart from Directors' fees and potential capital gains and dividends on their interest in ordinary shares.

The members of the Board come from diverse backgrounds. Their collective experience enables them to provide sound decision-making in the best interests of the Group.

The biographical details of each Director are set out in page 15 under “Board of Directors”

The Board provides an important contribution in:

• formulating the strategy and providing direction to the Group to ensure and enhance future growth;• implementation of acquisition strategy and policy;• approval of developments and significant matters relating to finance;• monitoring and measuring the company's performance;• opinions and advice regarding Group, financial, investment and risk management controls;• input with regards to succession planning;• ensuring sustainable leadership; and• advising on best practices and standards and corporate governance for the business.

The Board is ultimately accountable for Alert's performance.

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23

BOARD MEETINGS

The Board will meet at least once every quarter in 2008, and more frequently if required.xThe Board met twice since Alert's listing on the Alt on 1 March 2007.

Board attendance was as follows:

*Non-executive

Dates for the quarterly meetings in the following year:28-11-07 20-02-0828-05-08 27-08-08

CONFLICTS OF INTEREST

The Directors are required to inform the Board timeously of any conflict or potential conflict of interest which they may have in relation to particular items of the business.

Directors are obliged to excuse themselves from discussions or decisions in which they have a conflicting interest. Directors are required to disclose their shareholding in the company and all other Directorships quarterly or as changes occur. Declaration of interest statements are tabled at every Board meeting.

DIRECTORS' DEALINGS IN SECURITIES

The Security Services Act and the JSE Listings Requirements regulate transactions by Directors and the Company Secretary in securities issued by the company.

No trading in securities is allowed by Directors unless a formal clearance has been received from the Financial Director. In the case of trading by the Financial Director, clearance must be given by the Chairman of the Board.

Details of all share dealings in the company's shares by Directors and the Company Secretary are disclosed at each Board meeting. Directors of the company and its major subsidiaries, the Group Company Secretary, senior managers in the Group, their associates or members or immediate family are not allowed to deal directly or indirectly, at any time, in the securities of the company on the basis of unpublished price-sensitive information regarding the company's business or affairs.

These individuals are made aware of restricted or closed periods for dealings and the provision of insider trading legislation.

BOARD COMMITTEES

The Board currently has one committee, namely the Audit Committee. The Board will appoint a Remuneration Committee in the next financial year to conform to the recommendations in terms of King II. The Board has delegated certain audit and financial functions to the Audit Committee, but remains accountable and responsible for the holistic performance and affairs of the company. The Chairman of the Audit Committee will report to the Board at each Board meeting and will provide a report and the minutes of committee meetings held.

Audit Committee:Mr. Owen Jevon, a Non-Executive Independent Director, chairs this committee and the company's Designated Adviser is a member thereof. The Financial Director attends meetings on request.

The Audit Committee will meet prior to every Board meeting and held its first meeting on 11 September 2007.

The Audit Committee is responsible for the review and effectiveness of internal controls in the business and the activity of the internal audit function. The committee reports to the Board on matters relating to financial information. The Audit Committee is responsible for reviewing the interim and annual financial statements before approval by the Board. They maintain an objective and professional relationship with the external auditors. The audit partner of the external auditors will attend Audit Committee meetings where appropriate. A formal written "Terms of Reference" will be implemented in the next financial year.

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DIRECTOR 27-03-07 11-09-07

Mr Ethan Dube* ü

ü

ü

ü

ü

ü

ü

ü

Mr Wynand Schalekamp

Mr Willie Mentz

Mr Owen Jevon*

24

APPOINTMENTS OF DIRECTORS TO THE BOARD

Directors have a three-year fixed term, subject to their annual appointment by shareholders. Directors are invited to identify and nominate potential candidates who will provide a valuable contribution to the business and to the Board.

COMPANY SECRETARY

Mr Willie Mentz resigned as Company Secretary and remained the Financial Director due to the onerous responsibility of the role of a Company Secretary in a listed environment. Mrs Monika Pretorius was appointed with effect from 26 June 2007 to fill the company secretarial position.

The Company Secretary is responsible for ensuring that Board procedures and all relevant regulations are fully observed. She provides guidance to the Directors on their duties and obligations as Directors in terms of legislation, regulation and best practice. All Directors have unrestricted access to advise from the Company Secretary.The Company Secretary co-ordinates the induction program for newly appointed Directors. The appointment and removal of the Company Secretary is a matter reserved for the Board.

STAKEHOLDER RELATIONS

Alert acknowledges the importance of pro-active engagement with all its stakeholders. The company strives to foster sound relationships with the investment community as a whole. Timeous and relevant information are provided to investors regarding financial performance of the company. Price sensitive information is distributed via the JSE Securities Exchange News Service. The website provides general information about the company, including up-to-date financial reports.

The Board encourages shareholders to attend its annual general meeting, where they will be given the opportunity to put forward questions to the Board.

GOING CONCERN STATEMENT

The Directors are satisfied that the Group has adequate resources to continue operating for the next 12 months and into the foreseeable future. The financial statements have accordingly been prepared; and the Board is appraised of the Group's ongoing concern status.

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SOCIAL RESPONSIBILITY REPORT

SOCIAL TRANSFORMATION OF THE BUSINESS

The second decade of South Africa's democracy has been destined to be that of Social Transformation. It is with this spirit that Alert has embraced our lower income employees and introduced them to the world of markets through our share incentive scheme. It is truly our belief that once our employees are financially equipped to face today's economic challenges and build a future for their children, that true social transformation will take its form. Alert is also planning to move forward into the future with SMME ventures in rural areas to facilitate social transformation through job creation and infrastructure development in these areas.

EMPLOYMENT EQUITY (“EE”) IN THE BUSINESS

Alert is devoted to reaching the government targets for successful EE businesses within the next five years. We have embraced the national EE scorecard and planning around our targets and involvement in EE projects are already underway. The Board believes that only through total commitment and teamwork across all spheres of our nation will we truly succeed in being a sustainable business for the future.

HEALTH AND SAFETY POLICIES

Alert has established its in-house occupational health and safety policies to create an injury free environment.It is Alert's aim to create safety leaders throughout the organisation by creating a culture of safety awareness and responsibility. Alert acknowledges that a safe working environment is a productive environment and therefore strives to constantly review, update and improve our policies, procedures and practices that involve occupational health and safety.

HIV / AIDS & EMPLOYEE WELLNESS

It is the view of Alert that HIV/AIDS is a detrimental factor for the South African workforce. Alert realises that contingency measures should be put in place both for people living with HIV/AIDS as well as the families of people living with HIV/AIDS. It is therefore the intention to create an Employee Assistance program that will not only assist the employees with issues relating to the disease, but also the families of our workers. This will be in the form of counseling and emotional support when it will be required from the employee and/or his/her family. The Employee Assistance program will also assist in the handling of other wellness issues affecting the workplace such as alcohol and substance abuse, domestic violence, loss of a family member and general healthy living such as support for people who wish to stop smoking and general healthy living encouragement.

ENVIRONMENTAL ISSUES

Alert's business activities contribute to environmental change through air emissions, waste disposal, noise levels and the use of resources; however it is mostly prevalent in noise and air pollution through fume emissions of its fleet of vehicles. It is one of Alert's highest priorities to ensure a healthy living environment for our current population but also for the future generation and therefore Alert will strive to keep to the national standards for noise levels as well as to ensure that its vehicles will be in mint condition and make use of environment friendly diesel.

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25

26

VALUE CREATED STATEMENT

STATEMENT OF VALUE CREATED

FOR THE YEAR ENDED 30 JUNE 2007

Revenue

Other income

Less: Cost of materials and services

Value created

Distributed as follows: To employees

Payroll cost

To providers of finance

Net interest on loans To government

Company taxation

To maintain and expand the Group

Reserves retained Depreciation

Number of employees

2007 2006

377,307,841

3,353,766 (330,521,027)

50,140,581 -

25,371,169

723,976

6,303,301

17,742,134

15,290,438

2,451,696

50,140,581 -

593

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27

CONSOLIDATED ANNUAL FINANCIAL STATEMENTS

INDEX

The reports and statements set out below comprise the Group financial statements presented to the shareholders:

PAGE

Report of the Independent Auditors 28

Declaration by Company Secretary 28

Directors' Responsibilities and Approval 29

Director's Report 30

Balance Sheet 34

Income Statement 35

Statement of Changes in Equity 36

Cash Flow Statement 37

Accounting Policies 38

Notes to the Annual Financial Statements 45

Analysis of Shareholders 59

Schedule of Investments in Subsidiaries & Joint Ventures 60

Segmental Report 60

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REPORT OF THE INDEPENDENT AUDITORS

TO THE SHAREHOLDERS OF ALERT STEEL HOLDINGS LIMITED

We have audited the annual financial statements and group annual financial statements of Alert Steel Holdings Limited, which comprise the Director's report, the balance sheet and consolidated balance sheet at 30 June 2007, the income statement and consolidated income statement, the statement of changes in equity and the consolidated statement of changes in equity and cash flow statement and the consolidated cash flow statement for the year then ended, a summary of significant accounting policies and other explanatory notes as set out on pages 30 to 61.

DIRECTOR'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Directors are responsible for the preparation and fair presentation of these annual financial statements in accordance with International Financial Reporting Standards (IFRS) and in the manner required by the Companies Act of South Africa 1973. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of annual financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

AUDITOR'S RESPONSIBILITY

Our responsibility is to express an opinion on these annual financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the annual financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual financial statements. The procedures selected depend on the auditors' judgement, including the assessment of the risks of material misstatement of the annual financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the annual financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Directors, as well as evaluating the overall presentation of the annual financial statements.

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

OPINION

In our opinion, the annual financial statements present fairly, in all material respects, the financial position of the company and the Group as on 30 June 2007, and of their financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards, and in the manner required by the Companies Act of South Africa 1973.

11 September 2007

RSM Betty & Dickson (Tshwane) DATERegistered AuditorsPretoria

By: Paul den BoerRegistered AuditorChartered Accountant (SA)Partner

DECLARATION BY COMPANY SECRETARY

The Company Secretary certifies that the company has lodged with the Registrar of Companies all such returns as are required of a public company, in terms of the Companies Act, No 61 of 1973, as amended, and that all such returns are, to the best of my knowledge and belief, correct and up to date.

Monika PretoriusCompany Secretary

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28

29

DIRECTORS' RESPONSIBILITIES AND APPROVAL

The Directors are required by the Companies Act of South Africa, 1973, as amended, to maintain adequate accounting records and are responsible for the content and integrity of the Group financial statements and related financial information included in this report. It is their responsibility to ensure that the Group financial statements fairly present the state of affairs of the Group as at 30 June 2007 and the results of its operations and cash flows for the 8 months then ended, in conformity with International Financial Reporting Standards (IFRS). The external auditors are engaged to express an independent opinion on the Group financial statements.

The Group financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgments and estimates.

The Directors acknowledge that they are ultimately responsible for the system of internal financial control established by the Group and place considerable importance on maintaining a strong control environment. To enable the Directors to meet these responsibilities, the Board of Directors sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the Group and all employees are required to maintain the highest ethical standards in ensuring the Group's business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the Group is on identifying, assessing, managing and monitoring all known forms of risk across the Group.

While operating risk cannot be fully eliminated, the Group endeavors to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behavior are applied and managed within predetermined procedures and constraints.

The Directors are of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the Group financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss.

The Directors have reviewed the Group's cash flow forecast for the year to 30 June 2008 and, in the light of this review and the current financial position, they are satisfied that the Group has or has access to adequate resources to continue in operational existence for the foreseeable future.

The Group financial statements set out on pages 30 to 61 which have been prepared on the going concern basis, were approved by the Board of Directors at Pretoria and were signed on its behalf by:

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EG DubeChairman

W F SchalekampManaging Director

WW MentzFinancial Director

DATE

11 September 2007

DIRECTORS' REPORTThe Directors submit their report for the 8 months ended 30 June 2007.

1. REVIEW OF ACTIVITIES

MAIN BUSINESS AND OPERATIONSThe Group is engaged in the retail of prime steel, building materials, hardware and plumbing supplies to theconstruction industry. The Group is also engaged in the manufacturing of rebar steel products and operates principally in South Africa.

The operating results and state of affairs of the Group are fully set out in the Group financial statements on pages 30 to 61. The Group's business commenced on 1 November 2006 and the operating results are stated for eight months.

2. DIRECTORS' RESPONSIBILITIES

The responsibilities of the Directors are detailed on page 29 of this report.

3. CORPORATE GOVERNANCE

The Corporate Governance report is contained on pages 22 to 25 of this report.

4. FIXED ASSETS

Land and buildings to the value of R4,818,313 and plant and equipment to the value of R6,686,632 were acquired during the period to satisfy internal growth requirements. The land and buildings were financed on a 50:50 basis by the shareholders of the Joint Venture. Plant and equipment was mainly financed through installment sale agreements.

5. AUTHORISED AND ISSUED SHARE CAPITAL

The following changes were made to the authorised share capital of the Group during the period under review:• 1,000 ordinary shares of R1 each were subdivided into 10,000,000 ordinary shares of 0.01 cent each.• Creation of 490,000,000 ordinary shares of 0.01 cent each, thus increasing the authorised share capital to 500,000,000 ordinary shares of 0.01 cent each.

The following changes were made to the issued share capital of the Group during the period under review:• 100 ordinary shares of R1 each were subdivided into 1,000,000 ordinary shares of 0.01 cent each.• 224,000,000 ordinary shares of 0.01 cent each were issued on 11 December 2006 at par value thereof plus a premium of R104,977,500 to existing shareholders.• 20,000,000 ordinary shares of 0.01 cent each were issued at par value thereof plus a premium of R19,998,000 via a private placement.• 7,600,000 ordinary shares of 0.01 cent each were issued at par value thereof plus a premium of R7,599,240 to the Alert Share Incentive Scheme.

The purpose of the placement was to:• raise capital and allow the Group to accelerate its organic and acquisitive growth;• enhance investor and general public awareness of Alert, its activities and specialised skill;• broaden Alert's shareholder base;• afford selected investors the opportunity to participate directly in the income stream of Alert, as well as in the future capital growth of its assets.

SHAREHOLDER SPREAD In terms of the JSE Listings Requirements, Alert Steel Holdings Limited complies with the minimum shareholder spread requirements, with 22.13% (2006: N/A) of ordinary shares being held by the public at 30 June 2007.Details of the company's shareholder spread are as recorded on page 59.

MATERIAL SHAREHOLDERS According to information received by the Directors, besides the Directors themselves, the only shareholders beneficially holding, directly or indirectly, at 30 June 2007 in excess of 3.0% of the ordinary share capital were:• WF & JC Family Trust 65.57%• Vunani Capital (Pty) Ltd 6.93%• The Alert Share Incentive Scheme 3.01%

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30

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6. DIVIDENDS

No dividends were declared or paid to shareholders during the eight months.

7. DIRECTORS

The Directors of the Group during the eight months and to the date of this report are as follows:

Details of the company's subsidiary companies are detailed in Note 25 to the financial statements. The company had an interest in its subsidiaries' aggregate profit after taxation of R12,194,318 (2006: Nil) and in their losses after taxation of R49,388 (2006: Nil).

9. SECRETARY

The company secretary is Monika Pretorius:

Business address:12 Gompou StreetEast Lynne, 0186

Postal address:P O Box 29607Sunnyside, 0132

10. ACQUISITION OF BUSINESSES

On 1 November 2006 the company acquired the following investments:• Entire issued capital of Alert Steel (Pty) Ltd for an amount of R 75,290,000• Entire issued capital of Alert Steel Tshwane (Pty) Ltd for an amount of R 4,440,000• Entire issued capital of Alert Steel Brits (Pty) Ltd for an amount of R 5,370,000• 51% of the issued capital of Alert Steel Hazyview (Pty) Ltd for an amount of R 0 • 50% of the issued capital of Alert Steel Polokwane (Pty) Ltd for an amount of R 19,900,000 • 50% of the issued capital of Alert Steel Reinforcing (Pty) Ltd for an amount of R 50 All suspensive conditions with regard to the above acquisition have been fulfilled.

11. SPECIAL RESOLUTIONS

At a general meeting of the shareholders on 11 December 2006 it was resolved that:• Each authorised and issued share of R1 each be sub-divided into 10,000,000 ordinary shares of 0.01 cent each

and 10,000 ordinary shares of 0.01 cent each respectively;• The authorised share capital of the company be increased from R1,000 divided into 10,000,000 ordinary shares of

0.01 cent each to R50,000 divided into 500,000,000 shares of 0.01 cent each by the creation of 490,000,000 newordinary shares of 0.01 cent each, ranking pari passu in all respects with the existing ordinary shares in the capital of the company;

• The company changed its name from Alert Steel Build It (Pty) Ltd to Alert Steel Holdings (Pty) Ltd; • The articles of association be amended by substitution thereof with JSE approved articles of association;• The company be converted from a private company with limited liability to be a public company with limited liability;• The company changed its main business and object;• The company may repurchase its own shares subject to the JSE Listings Requirements.

Name Change in appointment WF Schalekamp WW Mentz Appointed 28/11/2006 EG Dube Appointed 31/01/2007 OV Jevon Appointed 31/01/2007

In terms of the company's Articles of Association, Mr. O V Jevon retire at the Annual General Meeting and being eligible, offers himself for re-election.

8. SUBSIDIARIES

33

12. POST BALANCE SHEET EVENTS

Alert has entered into an agreement on 20 August 2007 for the acquisition of the Steel Giant (Pty) Limited (“Steel Giant”) business and sale assets as a going concern (“the Steel Giant transaction”).The rationale for the Steel Giant transaction is inter alia as follows:• The business operations of Alert and Steel Giant are similar and the Steel Giant transaction will enhance the geographical footprint of Alert with its retail outlets to increase from the current 12 retail outlets to 16 retail outlets.• The Steel Giant transaction will enhance the Group's critical mass.

12.1. The purchase consideration payable in terms of the Steel Giant transaction is a maximum of R12 000 000plus the assumed liabilities, subject to adjustment as set out hereunder.

The purchase consideration will be discharged as follows:• R3 000 000 in cash on the closing date; • R3 000 000 by way of the issue and allotment of 1 714 285 Alert ordinary shares at an issue price of

175 cents per share, being a premium to the 30 day weighted average market price at the time that the Steel Giant transaction was entered into;

• a further R3 000 000 in cash within six months after the closing date; • the balance of the purchase consideration within seven days after the June 2009 profits have been

determined by way of the issue and allotment of Alert ordinary shares at an issue price of 175 cents per share, being a premium to the 30 day weighted average market price at the time that the Steel Giant transaction was entered into; and

• the purchase consideration may be reduced, depending upon the level of profits achieved by the Steel Giant business in the financial years ending June 2008 and June 2009.

12.2. The key management of Steel Giant has entered into written employment contracts and confidentiality and restraint agreements with Alert.

The Steel Giant transaction is subject, inter alia, to the following conditions precedent:• Cession and delegation of the premises leases to Alert and written consent to the cession of material

contracts; and• Approval of the transaction by the Competition Commission.

The Directors are not aware of any other significant events that have occurred between the end of the financial year and the date of this report that may materially affect the results of the company for the period under review or the financial position as at 30 June 2007.

13. AUDITORS

RSM Betty & Dickson (Tshwane) will continue in office in accordance with section 270(2) of the Companies Act.

14. BORROWING POWERS

The company has unlimited borrowing powers in terms of its Articles of Association.

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BALANCE SHEETAs at 30 June 2007

Figures in Rand

CONSOLIDATED COMPANY

2007 2006

ASSETS

NON-CURRENT ASSETSProperty, plant and equipment 26,905,151 -

Goodwill

Investments in subsidiaries

Investments in Joint Ventures

41,662,049 -

Other financial assets 228,000 -

Deferred tax 402,904 -

69,198,104 -

CURRENT ASSETS

Inventories 81,010,100 -

Loans to Joint Ventures /Group companies

- -

- -

NOTE

3

4

25

26

6

7

8

2007

-

85,100,000

19,900,050

-

-7,828,000

112,828,050

-

2006

-

-

-

-

-

-

-

3,157,086 -

Loans to managers and employees 195,758 -

Trade and other receivables 71,692,221 -

Cash and cash equivalents 22,760,975 100

178,816,140 100

TOTAL ASSETS 248,014,244 100EQUITY AND LIABILITIES

EQUITY Share capital 122,903,701 100

Retained income 15,290,439 -

138,194,140 100

LIABILITIES

NON-CURRENT LIABILITIES

Other financial liabilities 6,709,852 -

Operating lease liability 4,620 -

Deferred tax 1,115,094 -

-7,829,566

CURRENT LIABILITIES Loans from Joint Ventures /

Group companies

5

9

10

11

12

13

7

20,174,616-

-

3,970,214

24,144,830

136,972,880

130,503,701

181,284

130,684,985

--

-

-

100

-

-

-

100

100

100-

100

--

-

-

1,454,029 -

Other financial liabilities 7,602,886 -

Current tax payable 6,372,338 -

Trade and other payables 84,465,520 -

Provisions 432,077 -

Bank overdraft

5

13

14

15

11

11

1,663,688 -

101,990,538 -

TOTAL LIABILITIES 109,820,104 -

TOTAL EQUITY AND LIABILITIES 248,014,244 100

5,797,930-

74,046

415,919-

-

6,287,8956,287,895

136,972,880

-

-

-

-

-

-

-

-

100

35

INCOME STATEMENTFor the eight months ended 30 June 2007

Figures in Rand

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2006 2007 2006

Revenue - - -

Cost of Sales - - -

GROSS PROFIT - - -

Other Income - - -

Operating expenses - (1,652) -

OPERATING PROFIT - (1,652) -

Investment revenue - 863,472 -

Finance Costs - (606,490) -

PROFIT BEFORE TAXATION - 255,330 -

Taxation - (74,046) -

PROFIT FOR THE PERIOD - 181,284 -

Earnings per share – cents

Fully diluted earnings per share –

centsHeadline earnings per share –

centsFully diluted headline earnings per

share – cents

NOTE

16

17

18

19

19

20

20

2007

377,307,841(290,812,605)

86,495,236

3,353,766

(67,467,049)

22,381,953

2,014,009(2,737,985)

21,657,977

(6,367,538)

15,290,439

9.8

9.5

9.8

9.6

36

STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED

Share capital Share premium

Total share capital

Retained

income

Total equity

BALANCE AT 01 JULY 2005 100 - 100 - 100

BALANCE AT 01 JULY 2006 100 - 100 - 100Changes in equity

Profit for the year 15,290,439 15,290,439

Issue of shares 25,160 132,574,740 132,599,900 132,599,900

Treasury shares held by Alert Share Incentive Scheme (760) (7,599,240) (7,600,000) (7,600,000)

Issue costs written off (2,096,299) (2,096,299) (2,096,299)Total changes 24,400 122,879,201 122,903,601 15,290,439 138,194,040

BALANCE AT 30 JUNE 2007 24,500 122,879,201 122,903,701 15,290,439 138,194,140

COMPANY

Figures in Rand

Share capital Share premium

Total share capital

Retained income

Total equity

BALANCE AT 01 JULY 2005 100 - 100 - 100

BALANCE AT 01 JULY 2006 100 - 100 - 100Changes in equity

Profit for the year 181,284 181,284

Issue of shares 25,160 132,574,740 132,599,900 132,599,900

Issue costs written off (2,096,299) (2,096,299) (2,096,299)Total changes 25,160 130,478,441 130,503,601 181,284 130,684,885

BALANCE AT 30 JUNE 2007 25,260 130,478,441 130,503,701 181,284 130,684,985

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For the eight months ended 30 June 2007

Figures in Rand

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CASH FLOW STATEMENTFor the eight months ended 30 June 2007

Figures in Rand

CASH FLOW FROM OPERATING

ACTIVITIES

2006 2007 2006NOTE 2007


Cash generated from operations 22 24,610,151 - 414,367 -

Interest income 2,014,009 - 863,372 -

Finance costs (2,737,985) - (606,490) -

Tax paid 23

(7,449,707)

-

NET CASH FROM OPERATING

ACTIVITIES 16,436,468 - 671,249 -

- -

CASH FLOW FROM INVESTING

ACTIVITIES

Purchase of property, plant and

equipment 3 (11,504,945) - - -

Proceeds on disposal of property, plant

and equipment 331,470 - - -

Acquisition of businesses an joint ventures -

Overdrafts acquired 24 (26,591,432) - - -

Proceeds of loan repayment received 18,797,643 - - -

Loans advanced to Group companies - - (20,174,616) -

Loan advanced to Incentive trust - - (7,828,000) -

Investments in Subsidiaries - - (85,100,000) -

Investments in Joint Ventures (19,900,050) -

NET CASH FROM INVESTING

ACTIVITIES (18,967,264) - (133,002,666) -

- -

CASH FLOW FROM FINANCING

ACTIVITIES

- -

Proceeds on share issue 17,903,601 100 130,503,601 -

Net movement in borrowings 5,724,382 - - -

Proceeds from loans from Group

companies

5,797,930 -

NET CASH FROM FINANCING

ACTIVITIES 23,627,983 100 136,301,531 -

TOTAL CASH MOVEMENT FOR

THE PERIOD 21,097,187 100 3,970,114 -

Cash at the beginning of the period 100 - 100 100

TOTAL CASH AT END OF THE

PERIOD 11 21,097,287 100 3,970,214 100

38

ACCOUNTING POLICIES

1. PRESENTATION OF ANNUAL FINANCIAL STATEMENTS

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and the Companies Act of South Africa, 1973. The consolidated financial statements have been prepared on the historical cost basis, except for the measurement of certain financial instruments at fair value, and incorporate the principal accounting policies set out below. These accounting policies are consistent with the previous year. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 1.1.

1.1 CRITICAL ACCOUNTING ESTIMATES AND SIGNIFICANT JUDGEMENTS

The preparation of the consolidated financial statements requires management to make estimates and judgements and from assumptions that affect the reported amounts of the assets and liabilities, the reported revenue and costs during the periods presented therein, and the disclosure of contingent liabilities at the date of the financial statements. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.The Group makes estimates and assumptions concerning the future and the resulting accounting estimates will by definition, seldom equal the related actual results. The estimates, assumptions and judgements that have a significant risk of causing a material adjustment to the financial results or the financial position reported in future periods are discussed below:

ALLOWANCE FOR DOUBTFUL DEBTS

Management evaluates trade debtors on a continues basis and provision for doubtful debts based on the amount of the individual debtors.

ALLOWANCE FOR DAMAGED AND OBSOLETE STOCK

Any stock that is physically identified as damaged or obsolete is written off when discovered. A provision for obsolete stock is made for all slow moving stock.

IMPAIRMENT TESTING

Management uses the value in use method to determine the recoverable amount of goodwill with indefinite useful lives at each balance sheet date to asses whether there is any indication that goodwill may be impaired. Additional disclosure of these estimates are included in the accounting policy note 1.4 – Impairment of assets.

PROVISIONS

Provisions were raised and management determined an estimate based on the information available.Additional disclosure of these estimates of provisions are included in note 15 – Provisions.

PROPERTY, PLANT AND EQUIPMENT

Management has made certain estimations with regards to the determination of estimated useful lives and residual values of items of property, plant and equipment, as set out in the accounting policy note 1.2.The carrying amount of these assets are clearly set out in note 3 to the financial statements.

LEASES

Management has applied its judgement to classify all lease agreements that the company is party to as operating leases, as they do not transfer substantially all the risks and rewards of ownership to the company. Furthermore, as the operating lease in respect of premises is only for a relatively short period of time. Management has made estimations about the expected future inflation rate to determine the amount of operating lease payments that need to be straight line over the lease period. The carrying amount of any assets or liabilities at balance sheet date, resulting because of this estimation is R77,525 (Refer note 14 and non-current liabilities).

TRADE RECEIVABLES / LOANS AND RECEIVABLES

The Group assesses its trade receivables and loans and receivables for impairment at each balance sheet date.In determining whether an impairment loss should be recorded in the income statement, the Group makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset.

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1.2 PROPERTY, PLANT AND EQUIPMENT

The cost of an item of property, plant and equipment is recognised as an asset when:• it is probable that future economic benefits associated with the item will flow to the company; and• the cost of the item can be measured reliably.

Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to or, replace part thereof. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised.Day to day expenses incurred on property, plant and equipment is expensed directly in profit or loss for the period. Major maintenance that meets the recognition criteria is capitalised.

Property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses

Depreciation commences when an asset is available for use. Depreciation is charged so as to write off the depreciable amount of items [other than land] to their residual values, over their estimated useful lives, using a method that reflects the pattern in which the asset's future economic benefits are expected to be consumed by the company.

Where an item comprises major components with different useful lives, the components are accounted for as separate items of property, plant and equipment and depreciated over their estimated useful lives.

Methods of depreciation, useful lives and residual values are annually reviewed. The following methods and useful lives were applied during the year:

The depreciation charge for each period is recognised in profit or loss.

Derecognition occurs when an item of property, plant and equipment is disposed of, or when it is no longer expected to generate any further economic benefits.

The gain or loss arising from the derecognition of an item of property, plant and equipment is included in profit or loss when the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds and the carrying amount of the item.

When a decision is made by the Directors that an item of property, plant and equipment will be disposed of, and the requirements of IFRS 5, Non-Current assets Held for Sale and Discontinued Operations, are met, then those specific assets will be presented separately on the face of the balance sheet. The assets will be measured at the lower of carrying amount and fair value less costs to sell, and depreciation on such assets shall cease.

1.3 GOODWILL

The Group uses the acquisition method to account for the acquisition of businesses. Goodwill is recognised as an asset at the acquisition date of a subsidiary. Goodwill on the acquisition of a subsidiary company is included in intangible assets.

Goodwill is not amortised. Instead, an impairment test is performed annually or more frequently if circumstances indicate that it might be impaired. Any impairment is recognised immediately in profit or loss and is not subsequently reversed. For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating units expected to benefit from the synergies of the business combination. Any impairment loss of the cash-generating unit is first allocated against the goodwill and thereafter against the other assets of the cash-generating unit on a pro-rata basis.

Whenever negative goodwill arises, the identification and measurement of the acquired identifiable assets, liabilities and contingent liabilities are reassessed. If negative goodwill still remains, it is recognised in the income statement immediately.

On disposal of a subsidiary, the attributable goodwill is included in the determination of the profit or loss on disposal.

The same principle is applicable for partial disposals, in other words a portion of the goodwill is expensed as part of the cost of disposal.

Method

Straight line

Straight line

Straight line

Straight line

Straight line

Straight line

Straight line

Useful life

20 years

3 to 6 years

3 to 6 years

8 to 10 years

2 to 9 years

3 years

10 years

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Item

Buildings

Plant and equipment

Furniture and fixtures

Motor vehicles

Office equipment

IT equipment

Leasehold improvements

40

1.4 IMPAIRMENT OF ASSETS

The Group assesses at each balance sheet date whether there is any indication that an asset may be impaired.If any such indication exists, the Group estimates the recoverable amount of the asset.

Irrespective of whether there is any indication of impairment, the Group also:

• tests goodwill acquired in a business combination for impairment annually.

If there is any indication that an asset may be impaired, the recoverable amount is estimated for the individual asset.If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset belongs is determined.

The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use. The value in use is the present value of the future cash flows expected to be derived from an asset or cash-generating unit.

If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss.

An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised immediately in profit or loss. Any impairment loss of a revalued asset is treated as a revaluation decrease

Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the cash-generating units, or Groups of cash-generating units, that are expected to benefit from the synergies of the combination.

An impairment loss is recognised for cash-generating units if the recoverable amount of the unit is less than the carrying amount of the unit.

The impairment loss is allocated to reduce the carrying amount of the assets of the unit in the following order:

• first, to reduce the carrying amount of any goodwill allocated to the cash-generating unit and• then, to the other assets of the unit, pro rata on the basis of the carrying amount of each asset in the unit.

If an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount but limited to the carrying amount that would have been determined had no impairment loss been recognised in prior years. A reversal of an impairment loss is recognised in profit or loss.

The Group assesses at each reporting date whether there is any indication that an impairment loss recognised in prior periods for assets other than goodwill may no longer exist or may have decreased. If any such indication exists, the recoverable amounts of those assets are estimated.

The increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years.

A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation other than goodwill is recognised immediately in profit or loss. Any reversal of an impairment loss of a revalued asset is treated as a revaluation increase.

1.5 FINANCIAL INSTRUMENTS

INITIAL RECOGNITIONThe Group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement.

Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are recognised initially at fair value. In the case of financial assets or liabilities not classified as at fair value through profit and loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument are added to the fair value.

An asset that is subsequently measured at cost or amortised cost is recognised initially at its fair value on the trade date.

Any change in the fair value of the asset to be received during the period between the trade date and the settlement date is not recognised for assets carried at cost or amortised cost, other than impairment losses.

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SUBSEQUENT MEASUREMENTAfter initial recognition financial assets are measured as follows:• Loans and receivables and held-to-maturity investments are measured at amortised cost less any impairment

losses recognised to reflect irrecoverable amounts.• Financial assets classified as available-for-sale or at fair value through profit or loss, including derivatives, are

measured at fair values. Fair value, for this purpose, is market value if listed, or a value arrived at byusing appropriate valuation models, if unlisted.

• Investments in equity instruments that do not have a quoted market price in an active market and whose fairvalue cannot be reliably measured, are measured at cost.

After initial recognition financial liabilities are measured as follows:• Financial liabilities at fair value through profit or loss, including derivatives that are liabilities, are measured at fa i r

value.• Other financial liabilities are measured at amortised cost using the effective interest method.

GAINS AND LOSSESA gain or loss arising from a change in a financial asset or financial liability is recognised as follows:

• Where financial assets and financial liabilities are carried at amortised cost, a gain or loss is recognised in profit orloss through the amortisation process and when the financial asset or financial liability is derecognised or

impaired.• A gain or loss on a financial asset or financial liability classified as at fair value through profit or loss is

recognised in profit or loss.• A gain or loss on an available-for-sale financial asset is recognised directly in equity, through the statement of

changes in equity, until the financial asset is derecognised, at which time the cumulative gain or loss previously recognised in equity is recognised in profit or loss.

The particular recognition methods adopted are disclosed in the individual policies stated below:

TRADE AND OTHER RECEIVABLESTrade and other receivables are classified as loans and receivables and are carried at amortised cost less any impairment. Impairment is determined on a specific basis, whereby each asset is individually evaluated for impairment indicators. Write-downs of these assets are expensed in profit or loss.

CASH AND CASH EQUIVALENTSCash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash.Cash and cash equivalents are measured at fair value.

Bank overdrafts are not offset against positive bank balances unless a legally enforceable right of offset exists, and there is an intention to settle the overdraft and realise the net cash simultaneously, or to settle on a net basis.

BORROWINGSBorrowings are classified as financial liabilities and measured at amortised cost and comprise original debt less principal payments and amortisation.

DIRECTORS, MANAGERS AND EMPLOYEE LOANSThese financial instruments are classified and carried at amortised cost.

TRADE AND OTHER PAYABLESTrade and other payables are classified as other financial liabilities.

1.6 LEASES AS LESSOR

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership.A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.

OPERATING LEASESOperating lease income is recognised as an income on a straight-line basis over the lease term, after adjustments have been made for expected inflation (See also accounting policy note 1.1).

Initial direct costs incurred in negotiating and arranging operating leases are added to the carrying amount of the leased asset and recognised as an expense over the lease term on the same basis as the lease income. Income for leases is disclosed under revenue in the income statement.

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1.7 TAXATION

CURRENT TAX ASSETS AND LIABILITIESCurrent tax for current and prior periods is, to the extent unpaid, recognised as a liability. If the amount already paid in respect of current and prior periods exceeds the amount due for those periods, the excess is recognised as an asset.

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the tax authorities, using the tax rates that have been enacted or substantively enacted by the balance sheet date.

DEFERRED TAX ASSETS AND LIABILITIESDeferred taxation is provided using a balance sheet liability method on all temporary differences between the carrying amounts for financial reporting purposes and the amounts used for taxation purposes.

A deferred tax liability is recognised for all taxable temporary differences, unless specifically exempt.

A deferred tax liability is recognised for all taxable temporary differences, except to the extent that the deferred tax liability arises from:

• the initial recognition of goodwill; or• goodwill for which amortisation is not deductible for tax purposes; or• the initial recognition of an asset or liability in a transaction which:• is not a business combination; and• at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).

A deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised, unless the deferred tax asset arises from the initial recognition of an asset or liability in a transaction that is not a business combination, and at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).

A deferred tax asset is recognised for the carry forward of unused tax losses and unused credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused credits can be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted by the balance sheet date.

TAX EXPENSESCurrent and deferred taxes are recognised as income or an expense and included in profit or loss for the period, except to the extent that the tax arises from:

• a transaction or event which is recognised, in the same or a different period, directly in equity, or• a business combination.

Current tax and deferred taxes are charged or credited directly to equity if the tax relates to items that are credited or charged, in the same or a different period, directly to equity.

1.8 INVENTORIES

Inventories are measured at the lower of cost and net realisable value.

The cost of inventories comprises of all costs of purchase, costs of conversion and other costs incurred in bringingthe inventories to their present location and condition.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs ofcompletion and the estimated costs necessary to make the sale.

The cost of inventories of items that are not ordinarily interchangeable and goods or services produced andsegregated for specific projects is assigned using specific identification of the individual costs.

The cost of inventories is assigned using the weighted average cost formula. The same cost formula is used for all inventories having a similar nature and use to the company.

When inventories are sold, the carrying amount of those inventories are recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs.

The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value,are recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

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1.9 SHARE CAPITAL AND EQUITY

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deductingall of its liabilities.

1.10 LEASES AS LESSEE

Leases are classified as finance leases whenever the terms of the lease transfer substantially all of the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Any contingent rents are expensed in the period they are incurred. Operating lease payments are recognised as an expense on a straight-line basis over the lease term, after adjustments have been made for expected inflation (See also accounting policy note 1.1).

1.11 PROVISIONS

Provisions are recognised when:• the Group has a present legal or constructive obligation as a result of a past event;• it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and• a reliable estimate can be made of the obligation.

The amount of a provision is the present value of the expenditure expected to be required to settle the obligation. Provisions shall not be recognised for future operating losses. If the company has a contract that is onerous, the present obligation under the contract shall be recognised and measured as a provision. Contingent assets and contingent liabilities are not recognised.

1.12 REVENUE

Revenue from the sale of goods is recognised when all the following conditions have been satisfied:• the Group has transferred to the buyer the significant risks and rewards of ownership of the goods, normally being

the date the goods are delivered;• the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor

effective control over the goods sold;• the amount of revenue can be measured reliably;• it is probable that the economic benefits associated with the transaction will flow to the Group; and• the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Revenue is measured at the fair value of the consideration received or receivable and represents the amounts receivable for goods and services provided in the normal course of business, net of trade discounts and volume rebates, and value added taxation.

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured.

Gross revenue comprises of the invoice value of sales of goods and excludes value added taxation.

Interest is recognised, in profit or loss, using the effective interest rate method.

1.13 COST OF SALES

When inventories are sold, the carrying amount of those inventories are recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs. The related cost of providing services recognised as revenue in the current period is included in cost of sales.

1.14 EMPLOYEE BENEFITS

SHORT-TERM EMPLOYEE BENEFITSThe cost of short-term employee benefits are recognised in the period in which the service is rendered and are not discounted. The expected cost of bonus payments is recognised as an expense when there is a legal or constructive obligation to make such payments as a result of past performance.

DEFINED CONTRIBUTION PLANSThe Group is a member of a provident fund which provides benefits on a defined contribution basis. Payments to defined contribution retirement benefit plans are charged as an expense as they fall due.

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1.15 BORROWING COSTS

Borrowing costs are not capitalised but recognised as an expense in the income statement in the period incurred.

1.16 BASIS OF CONSOLIDATION

The Group consists of the consolidated financial position and the operating results and cash flow information of Alert Steel Holdings Limited (the company), its subsidiaries and its interest in joint ventures.

SUBSIDIARIESSubsidiaries are entities controlled by the Group. Control exists where the Group, directly or indirectly, has the power to govern the financial and operating policies so as to obtain benefits from its activities generally accompanying an interest of more than one-half of the voting rights. In assessing control, potential voting rights that are presently exercisable or convertible are taken into account.

Subsidiaries are never excluded from consolidation. If a subsidiary is acquired but control is expected to be temporarybecause the intention is that the subsidiary will be sold within 12 months from acquisition, the acquired subsidiary is still consolidated but is accounted for as a disposal Group or a discontinued operation.

The results of subsidiaries are included for the period during which the Group exercises control over the subsidiary.The purchase method of accounting is used to account for the acquisition of subsidiaries of the Group.

The cost of an investment in a subsidiary is the aggregate of:• the fair value, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the company; plus• any costs directly attributable to the purchase of the subsidiary.

The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the Group's share of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement. On adjustment to the cost of a business combination, contingent or future events are included in the combination if the adjustment is probable and can be measured reliably.

If a subsidiary uses accounting policies other than those adopted in these consolidated financial statements for like transactions and events in similar circumstances, appropriate adjustments are made to its financial statements in preparing the consolidated financial statements.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. JOINT VENTURESJoint ventures are contractual agreements whereby the Group and other parties undertake an economic activity that is subject to joint control, that is when the strategic financial and operating policy decisions relating to the activities require the unanimous consent of the parties sharing control. These joint ventures may take the form of jointly controlled operations such as construction contracts, jointly controlled assets, jointly controlled partnerships or companies.

Joint ventures are accounted for by means of the proportionate consolidation method whereby the Group's share of the assets, liabilities, income, expenses and cash flows of joint ventures are included on a line by line basis in the consolidated financial statements. The results of joint ventures are included for the period during which the Group exercises joint control over the joint venture. If a joint venture uses accounting policies other than those adopted in these consolidated financial statements for like transactions and events in similar circumstances, appropriate adjustments are made to its financial statements in preparing the consolidated financial statements.

Where the Group transacts with its jointly controlled entities, unrealised profits and losses are eliminated to the extent of the Group interest in the joint venture, except where unrealised losses provide evidence of an impairment of the assets.

STAND-ALONE COMPANY'S FINANCIAL STATEMENTSIn the stand-alone accounts of the company, the investment in a subsidiary company is carried at cost less accumulated impairment losses, where applicable.

1.17 RELATED PARTIES

Related parties are considered to be related if one party has the ability to control or jointly control the other party or exercise significant influence over the other party in making financial and operating decisions. Key management personnel are also regarded as related parties. Key management personnel are those persons having authority and responsibility for planning, directing, and controlling the activities of the Group, directly or indirectly, including all Executive and Non-Executive Directors.

Related party transactions are those where a transfer of resources or obligations between related parties occurs, regardless of whether or not a price is charged.

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NOTES TO THE ANNUAL FINANCIAL STATEMENTS


Figures in Rand

1. CHANGES IN ACCOUNTING POLICY AND ADOPTION OF NEW PRONOUNCEMENTS

The annual financial statements have been prepared in accordance with International Financial ReportingStandards (IFRS) on a basis consistent with the prior year, except for the adoption of the following improved,revised or new standards and interpretations:

• IAS 1 (AC101) Presentation of Financial Statements *• IAS 2 (AC108) Inventories *• IAS 8 (AC103) Accounting Policies, Changes in Accounting Estimates and Errors *• IAS 10 (AC107) Events after the Balance Sheet Date *• IAS 16 (AC123) Property, Plant and Equipment *• IAS 17 (AC105) Leases *• IAS 24 (AC126) Related Party Disclosures *• IAS 27 (AC132) Consolidated and Separate Financial Statements *• IAS 32 (AC125) Financial Instruments: Disclosure and Presentation **• IAS 39 (AC133) Financial Instruments: Recognition and Measurement **• IFRIC 4 Determining Whether an Arrangement Contains a Lease

* Improved ** Revised*** New

There has been no material effect from such adoptions on the consolidated financial statements for the 8 monthsended 30 June 2007.

The entity has not applied the following improved, revised or new standards, interpretations and amendments that have been issued but are not yet effective:

• IFRS 7 (AC144) Financial Instruments: Disclosures** 1 January 2007• IAS 1 (AC101) Amendment to IAS 1 – Capital Disclosures** 1 January 2007• IFRIC 8 Scope of IFRS 2** 1 May 2006• IFRIC 10 Interim Financial Reporting and Impairment** 1 November 2006• IFRIC 11 IFRS 2 -Group and Treasury Share Transactions** 1 March 2007• IFRIC 12 Service Concession Arrangements** 1 January 2008

* Effective for annual periods commencing on or after this date** Available for early adoption for 31 December 2006 year ends

The entity will adopt the above standards, interpretations and amendments on their effective dates. Management expects that the adoption of the standards listed above will have no material impact on the financial statements in the period of initial application.

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2007 2006 2007 2006

- - -

- - -

- - -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

PLEDGED AS SECURITYCarrying value of assets pledged as

security:

Plant and equipment 1,620,451

1,451,269Subject to noterial bond regardingbank overdraft (Refer Note 11) 169,182Furniture & fixtures and equipment 2,209,950Subject to installment saleagreements (Refer Note 13) 368,730Subject to noterial bond regardingbank overdraft (Refer Note 11) 1,841,220

Motor vehicles 16,361,482Subject to installment saleagreements (Refer Note 13) 13,585,826Subject to noterial bond regarding

bank overdraft (Refer ote 11)N 2,775,656

Subject to installment sale agreements

(Refer Note 13)

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Figures in Rand

2. PROPERTY, PLANT AND EQUIPMENT

2007 2006

Cost /

Valuation

Accumulated depreciation

Carrying Cost / Accumulated Carrying

value Valuation depreciation value

Land 980,696 - 980,696 - - -

Buildings 4,556,250 - 4,556,250 - - -

Leaseholdimprovements 1,502,270 (1,141,210) 361,060 - - -

Plant and equipment 2,925,377 (1,286,202) 1,639,175 - - -

Furniture and fixtures 637,458 (279,532) 357,926 - - -

-Motor vehicles 24,291,725 (7,920,819) 16,370,906 - -

Office equipment 5,254,975 (3,182,229) 2,072,746 - - -

IT equipment 1,419,857 (853,465) 566,392 -

-

-

-

-

-Total 41,568,608 (14,663,457) 26,905,151

NOTES TO THE ANNUAL FINANCIALSTATEMENTS

750,000

4,068,313-

614,764

234,244

4,567,888

930,553

339,183

11,504,945

230,696

487,937

600,268

1,211,061

168,176

13,581,773

1,614,697

386,539

18,281,147

-

-

(239,208)

(186,650)

(44,494)

(1,349,510)

(472,504)

(159,330)

(2,451,696)

RECONCILIATION OF PROPERTY, PLANT AND EQUIPMENT - 2007Opening

Balance

Additions Additions through

business

combinations

Depreciation Total

Land -

Buildings -

Leasehold improvements -

Plant and equipment -

Furniture and fixtures -

Motor vehicles -

Office equipment -

IT equipment -

-

Disposals

-

-

-

-

-

(429,245)-

-

(429,245)

980,696

4,556,250

361,060

1,639,175

357,926

16,370,906

2,072,746

566,392

26,905,151

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Figures in Rand


3. PROPERTY, PLANT AND EQUIPMENT

DETAILS OF PROPERTIES

PORTIONS 2 AND 3 OF ERF

12 SITUATED AT 271/273MAGGS STREET, WALTLOO, GAUTENG - Purchase price: June 2007 -- -

- Capitalised expenditure -- -

-- -

ERF 2515 LOUIS TRICHARDT,

EXTENSION ZAR - Purchase price: -- -

- Improvements -- -

- Capitalised expenditure -- -

4,800,000

18,313

4,818,313

230,696

470,937

17,000

718,633 -- -


2007 2006 2007 2006

4. GOODWILL

RECONCILIATION OF GOODWILL - 2007

Opening Balance Additions throughbusiness combinations

Total

Goodwill - 41,662,049 41,662,049

GOODWILLGoodwill additions relate to acquisition of 100% in Alert Steel (Pty) Ltd, Alert Steel Brits (Pty) Ltd, Alert Steel Tshwane (Pty) Ltd, 51% in Alert Steel Hazyview (Pty) Ltd and 50% in Alert Steel Polokwane (Pty) Ltd and Alert Steel Reinforcing (Pty) Ltd. For further detail on this acquisition refer to Note 24.

Management has assessed the useful life of the goodwill to have no determinable useful life. They have elected to classify this asset as an indefinite useful life intangible asset until such time as an accurate useful life can be determined.

IMPAIRMENT REVIEW OF GOODWILLThe recoverable amounts of goodwill which relate to the acquisitions above have been determined on the basis of value in use calculations. Value in use calculations use cash flow projections based on 2008 financial year budgets, approved by management, extrapolated at between 10% and 17% depending on the cash-generating unit for a further four years. This five year cumulative cash flow was discounted using a weighted average cost of capital of 13%.

2007 2006Cost /

Valuation

Accumulated

depreciation

Carrying Cost / Accumulated Carrying

value Valuation depreciation value

Goodwill 41,662,049 41,662,049- - - -


2007 2006 2007 2006


Figures in Rand

48

GOODWILL (CONTINUED)Key assumptions used in value in use calculations include budgeted sales margins and budgeted revenue streams. Such assumptions are based on historical results adjusted for anticipated future growth. These assumptions are a reflection of management's past experience in the market in which these units operate. Based on the above assumptions, management's calculations of recoverable amounts were greater than the carrying amounts. Management believes that any reasonable possible change in any of its key assumptions would not cause the aggregate carrying amounts to exceed aggregate recoverable amounts.

5. LOANS RECEIVABLE (PAYABLE)

Alert Steel (Pty) Ltd - - 13,215,321 -

The loan is unsecured , interest free and repayable on demand

Treasury loan to Alert Steel (Pty) Ltd - - 2,159,295 -

The loan is unsecured and bears interest@ 8,75% repayable on demand

Treasury loan from Alert Steel Brits (Pty) Ltd - - (9,897) -

Repayable on demand. The loan is un-

secured and bears interest @ 8,75%

repayable on demand

Treasury loan from


- - (2,864,259) -


LOANS TO / (FROM) SUBSIDIARIES

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2007


12,500,460

LOANS TO / (FROM) JOINT VENTURES

Alert Steel Reinforcing (Pty) Ltd 3,157,086 - 4,800,000 -

The loan is unsecured , interest free and repayable on demand

Treasury loan Alert Steel Polokwane (Pty) Ltd (1,154,892) - (2,309,784) -


Treasury loan Alert Steel Reinforcing (Pty) Ltd (299,137) - 613,990 -


1,703,057 - 1,876,226 -

Current Assets 3,157,086 - 20,174,616 -

Current Liabilities (1,454,029) - (5,797,930) -

1,703,057 - 14,376,686 -


49

6. OTHER FINANCIAL ASSETS

LOANS AND RECEIVABLES* Loans to employees

* Loans to share incentive scheme

NON-CURRENT ASSETS

Loans on receivables

* The loans are unsecured and bear interest@ 9% per annum. Settlement of the loans will occur upon the vesting dates of shares in terms of the Alert Steel Share Incentive Trust

2007

228,000-

228,000

2006

-

-

-

2007

-

7,828,000

7,828,000

2006

-

-

-

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2007


Figures in Rand


7. DEFERRED TAX

DEFERRED TAX ASSET (LIABILITY)

Accelerated capital allowances for taxpurposes

Provision for bonuses Operating lease accruals

Other temporary differences

RECONCILIATION OF DEFERRED TAX

ASSET (LIABILITY)

Additions through business combinations

Originating temporary difference on fixed

assets Originating temporary difference on

provisions

Originating temporary difference on

operating leases

Other originating temporary differences

Non-current assetNon-current liability

8. INVENTORIES

At cost, net of impairment provisions

Merchandise

Consumables

INVENTORY PLEDGED AS SECURITYInventories are subject to general

notarial bonds for the overdraft facilities(Refer Note 11)

(1,707,618)

1,153,87621,875

(180,323)

(712,190)

(647,952)

(372,023)

368,795

18,347

(79,357)

(712,190)

402,904

(1,115,094)

(712,190)

80,871,482

138,618

81,010,100

9,213,941

-

-

-

-

-

-

-

-

-

-

--

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

--

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

--

-

-

-

-

-

-


2007 2006 2007 2006


Figures in Rand

50

9. LOANS TO MANAGERS AND EMPLOYEES

LOANS TO MANAGERS AND EMPLOYEES Additions through business combinations - - -

Repayments - - -

- - -

The loans to managers and employees are

interest free, unsecured and repayable

within the next 12 months after the financial

year-end.

10. TRADE AND OTHER RECEIVABLES

Trade receivables - - -

Provision for doubtful debts - - -

Other receivables - - -

1,883,886(1,688,128)

195,758

74,504,728(3,330,589)

518,082

71,692,221 - - -

TRADE AND OTHER RECEIVABLES

PLEDGED AS SECURITY

Trade and other receivables ofR70,391,684 were ceeded as security for

the bank overdraft facilities. (Refer Note 11)

11. CASH AND CASHEQUIVALENTSCash and cash equivalents consist of:

Cash on hand 1003,970,214

3,970,214

- 100

Bank balances - -

Bank overdraft - - -

1003,970,214

3,970,214

100

Current assets 100 100

Current liabilities - - -

100 100Group's overdraft facilities - - -

The bank overdraft facility is secured by: - - -

General notarial bonds over plant and

equipment, motor vehicles and furniture,

fixture and equipment (Refer Note 3) - - -

General notarial bonds over inventories(Refer Note 8) - - -

Cession of trade debts (Refer Note10)

115,292

22,645,683

(1,663,688)

21,097,287

22,760,975

(1,663,688)

21,097,287

38,075,027

84,391,684

4,786,059

9,213,941

70,391,684 - - -

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2007 2006 2007 2006

51

12. SHARE CAPITAL

AUTHORISED

500,000,000 Ordinary shares of 0.01 cents each 50,000 50,000 1,000

1,000

RECONCILIATION OF NUMBER OF

SHARES ISSUED:

Reported as at 01 July 2006 100

1,000

1,000

---

Reported as at 01 November 2006 100 - - -

Subdivision of R1 shares into 0.01 cent shares 999,900 - 999,900 -

Issue of shares - ordinary shares 244,000,000 - 251,600,000 -

245,000,000 252,600,000

Unissued ordinary shares are under the control

of the Directors in terms of a resolution of

members passed at a general meeting on

28 November 2006. This authority remains in

force until the next annual general meeting.

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Figures in Rand


ISSUED

Ordinary shares 25,260 100 100

100

Less: Treasury shares held by Alert Share

Incentive Scheme (760) - -

Net share capital 24,500 100

25,260

25,260

-

SHARE PREMIUM

Share premium 132,574,740 - -

Less: Share issue costs written off against

share premium (2,096,299) -

132,574,740

(2,096,299) -

Less: Treasury shares held by Alert Share

Incentive Scheme (7,599,240) - - -

Net share premium 122,879,201 - 130,478,441 -

TOTAL SHARE CAPITAL AND PREMIUM 122,903,701 100 130,503,701 100

13. OTHER FINANCIALLIABILITIES

HELD AT AMORTISED COST

Schallies Beleggings (Pty) Ltd

2,400,000 - - -The loan is unsecured, interest free and re-

payable on demand.

11,912,738

14,312,738

-

-

-

-

-

-

Installment Sale Agreements

installment sale agreements bearing interest at

an average effective interest rate of 12% per

annum. The current monthly installment is

R571,464. Secured by property, plant and

equipment with a book value of R15,405,825 as

per Note 3.

Liabilities under

6,709,852

7,602,886

14,312,738

- - -

- - -

- - -

14. TRADE AND OTHERPAYABLES

NON-CURRENT LIABILITIES

At amortised cost

CURRENT LIABILITIES

At amortised cost

415,91984,465,519 - -

Trade payables 78,170,715 - - -

Accruals and other payables 6,221,899 415,919- -

Operating lease payables recognised on a

straight-line basis 72,905 - - -


2007 2006 2007 2006

52

16. REVENUE

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2007

17. OPERATING PROFIT

Operating profit for the year is stated after

accounting for the following:

OPERATING LEASE CHARGES

Premises • Contractual amounts - Straight lined

Motor vehicles 4,033,377 - - -

• Contractual amounts

Equipment

NOTES TO THE ANNUAL FINANCIALSTATEMENTSFor the eight months ended 30 June 2007

Figures in Rand

15. PROVISIONS

RECONCILIATION OF PROVISIONS - 2007

Opening Additions Utilised Provisions Total

Balance through during raised

business the year

combinations

Provision for bonuses - 682,877 (682,877) 432,077 432,077

Sale of goods 377,307,841 - - -

?

?

2,222,315 - - -

• Contractual amounts? 254,583 - - -

6,510,275 - - -

Profit / (loss) on sale of property, plant and

equipment (97,780) - - -

Depreciation on property, plant and equipment 2,451,696 - - -

Employee costs

Number of employees

- - -25,371,169593

18. TAXATION

MAJOR COMPONENTS OF THE

TAX EXPENSE (INCOME)

CURRENT Local income tax - current period 6,303,301 - 74,046 -

DEFERRED Originating and reversing temporary differences 64,237 - - -

6,367,538 - 74,046 -

RECONCILIATION OF THE TAX EXPENSEReconciliation between applicable tax rate and

average effective tax rate.

Applicable tax rate 29.00%

Tax loss Deferred taxation assets recognised

Deferred taxation liabilities recognised

Disallowable charges

29.00%

0.06%(2.08%)

1.79%

0.33%

29.10%

-%

-%

-%

-%

-%

-%

-%

-%

-%

-%

29.00%

-%

-%

-%

-%

-%

-%

53

19. EARNINGS AND FULLY DILUTED EARNINGS PER SHARE

The calculation of earnings per ordinary share is based on earnings of R15,290,438 (2006: Nil) and a weighted average number of shares in issue of 156,200,000 (2006: Nil).

The weighted average number of shares is calculated after taking into account the effect of setting off 7,600,000 (2006: Nil) treasury shares held by the Share Incentive Trust against the issued share capital. The Share Incentive Trust purchased 7,600,000 shares on 1 March 2007.

The calculation of fully diluted earnings per ordinary share is based on fully diluted earnings of R15,128,558 (2006: Nil) and a weighted average number of shares in issue of 158,740,274 (2006: Nil), after taking into account the effect of the possible issue of 7,600,000 (2006: Nil) ordinary shares in the future (Refer note 12).

RECONCILIATION BETWEEN EARNINGS AND

FULLY DILUTED EARNINGS:Attributable profit per the income statement

Adjustments for:

- InterestFully diluted earnings

20. HEADLINE EARNINGS AND FULLY DILUTED HEADLINE EARNINGS

The calculation of headline earnings per ordinary share is based on

headline earnings of R15,359,862 (2006: Nil) and a weighted average

number of shares of 156,200,000 (2006: Nil). The weighted average

number of shares is calculated after taking into account the effect of setting

off 7,600,000 (2006: Nil) treasury shares held by the Share Incentive Trust

against the issued share capital. The Share Incentive Trust purchased

7,600,000 shares on 1 March 2007. The calculation of fully diluted

headline earnings per ordinary share is based on fully diluted headline

earnings of R15,197,982 (2006: Nil) and a weighted average number of

shares in issue of 158,740,274 (2006: Nil), after taking into account the

effect of the possible issue of 7,600,000 (2006: Nil) ordinary shares in the

future (Refer note 12).

RECONCILIATION OF HEADLINE EARNINGS:Attributable profit per the income statement

Adjustments for:

- (Profit) / Loss on disposal of tangible fixed assets

Headline earnings:

- InterestFully diluted headline earnings

15,290,438

(161,880)

15,128,558

15,290,438

69,424

15,359,862(161,880)

15,197,982

NUMBER OF SHARES

DILUTIVE EFFECT ON ORDINARY SHARES 2007 2006

Share Incentive Trust 7,600,000 -

-

-

-

-

-

--

-

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2007


Figures in Rand



2007 2006 2007 2006

54

21. AUDITORS’ REMUNERATION

Fees 230,475 - - -

22. CASH GENERATED FROM

OPERATIONS

Profit before taxation 21,657,977 - 255,330 -

Adjustments for:

Depreciation and amortisation 2,451,695 - - -

Loss on sale of assets 97,780 - - -

Interest received (2,014,009) - (863,372) -

Finance costs 2,737,985 - 606,490 -

Movements in provisions (191,483) - - -

Leases straight lined (47,628) - - -

Changes in working capital:

Inventories (12,710,634) - - -

Trade and other receivables 34,726,866 - - -

Trade and other payables (22,098,398) - 415,919 -

24,610,151 - 414,367 -

23. TAX (PAID) REFUNDED

(7,518,744) - - -

Current tax for the period recognised in

income statement (6,303,301) (74,046)

74,046

- -

Balance at end of the period 6,372,338 - -

(7,449,707) - - -

24. ACQUISITION OF BUSINESSES

On 1 November 2006 the Group acquired ordinary share capital of:

• Alert Steel (Pty) Ltd 100% Alert Steel Brits (Pty) Ltd• 100% Alert Steel Tshwane (Pty) Ltd• 100% Alert Steel Hazyview (Pty) Ltd• 51% Alert Steel Polokwane (Pty) Ltd• 50% Alert Steel Reinforcing (Pty) Ltd• 50%

The acquired businesses contributed revenue of R377,3 million and attributable profit of R15,1 million during this period. If the acquisition had been completed on 1 July 2006, total Group revenue for the period would have been R565,6 million and attributable profit for the year would have been R26,7 million.

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2007


Figures in Rand


Additions through business combinations

CONSOLIDATED

CONSOLIDATED

COMPANY

2007 2006 2007 2006

24. ACQUISITION OF BUSINESSES (CONTINUED)

DETAILS OF THE NET ASSETS ACQUIRED

AND THE GOODWILL ARE AS FOLLOWS:

Cash balances in businesses - -

Inventories - -

Accounts receivable - -

Loans receivable - -

Property, plant and equipment - -

Accounts payable and provisions - -

Current and deferred taxation - -

Non-current liabilities - -

Total net assets acquired - -

Goodwill - -

Total consideration - -

Less: Cash and cash equivalents - Net overdrafts - -

Less: Payments in shares - -

Cash flow on acquisition - Net overdrafts acquired - -

PURCHASE CONSIDERATION: • Cash paid - -

• Shares issued - -

Total purchase consideration - -

Fair value of net assets acquired - -

Goodwill (Refer Note 4)

(26,591,382)

68,299,466

106,419,090

22,378,488

18,281,146(107,187,477)

(8,166,696)

(10,094,634)

63,338,001

41,662,049

105,000,050(26,591,382)

(105,000,000)

(26,591,432)

50105,000,000

105,000,050

63,338,001

41,662,049 - -

The goodwill is attributable to the high profitability of the acquired businesses and the significant synergies expected to arise after the acquisition.

25. HOLDING COMPANY INTERESTIN SUBSIDIARIES'

-

-

-

-

-

-

-

-

-

-

--

-

-

-

-

--

-

55 Ale

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2007


Figures in Rand


INTEREST IN SUBSIDIARY PROFIT & LOSSESName of company

Carrying

amount

2006

Alert Steel (Pty) Ltd -

Alert Steel Brits (Pty) Ltd -

Alert Steel Tshwane (Pty) Ltd -


%Holding

2007

%Holding

2006

100%

100%

100%

51%

-%

-%

-%

-% -

-

Profits -

Losses -

Carrying

amount

2007

9,934,389

1,453,044

806,885(49,388)

12,144,930

12,194,318(49,388)

12,144,930 -


COMPANY

2007 2006 2007 2006

56

JOINT VENTURE ARRANGEMENTSA proportion of the Group's operations

are performed through joint ventures.

The joint venture entities are in-

corporated arrangements such as

jointly controlled companies.

The Group's aggregate proportionate

share of joint ventures included in the

consolidated balance sheet is as

follows:

Name of companyINVESTMENTS OF SUBSIDIARIES

Carrying

amount

Carrying

amountAlert Steel (Pty) Ltd -

Alert Steel Brits (Pty) Ltd -

Alert Steel Tshwane (Pty) Ltd -


% Holding

100%

100%

100%

51%

% Holding

-%

-%

-%

-% -

75,290,000

5,370,000

4,440,000-

85,100,000 -

26. JOINT VENTURES

Non current assets - - -

Current assets - - -

Total assets - - -

Non-current liabilities - - -

Current liabilities - - -

Net assets - - -

The Group's aggregate proportionate

share of joint ventures included in the

consolidated income statement is as

follows:

Revenue - - -

Profit after taxation - - -

DETAILS OF SIGNIFICANT

JOINT VENTURES

INVESTMENT IN JOINT VENTURESName of company

% Holding % Holding Carryingamount

Carryingamount

6,268,253

36,670,833

42,939,086(15,327)

(29,485,263)

13,438,496

89,628,353

3,214,924

Alert Steel Polokwane (Pty) Ltd -50%

interest and voting rights

Alert Steel Reinforcing (Pty) Ltd -50%

interest and voting rights.

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Figures in Rand


Alert Steel Polokwane (Pty) Ltd 50% - 19,900,000 -

Alert Steel Reinforcing (Pty) Ltd 50% - 50 -

19,900,050 -

27. COMMITMENTS

OPERATING LEASES AS LESSEE(EXPENSE)

MINIMUM LEASE PAYMENTS DUE • within one year - - -

• in second to fifth year inclusive 3,730,070

12,182,446 -

-

-

- -

• later than five years - -16,503,260

32,415,776 - -

Operating lease payments represent rentals payable by the Group for certain of its office properties.Leases are negotiated for an average term of 3 to 5 years. No contingent rent is payable.


2007 2006 2007 2006

57

28. CONTINGENCIES

TAX CONSEQUENCES OF

UNDISTRIBUTED RESERVESTotal financial institution guarantees given to

third parties on behalf of Group companies

amounted to

* Directors do not believe that any exposure

to loss is likely

STC on remaining reserves

29. RELATED PARTIES

The Group, in the ordinary course of

business, entered into various transactions

with related parties. These transactions

occurred under terms and conditions no

more favourable to those entered into with

third parties.

RELATED PARTY TRANSACTIONSACQUISITION OF SUBSIDIARY AND

JOINT VENTURESAll the acquired interests in companieslisted in note 24 were directly or indirectlyowned by a Director of the company.

THE AGGREGATE OF THE ABOVE

TRANSACTIONS ARE AS FOLLOWS: Purchase of equity in companies in which

-

-

-

-

-

-

12,895,027

8,777,901

105,000,000

-

20,143

-

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2007

RELATIONSHIPSSubsidiaries Alert Steel (Pty) Ltd



Figures in Rand


Directors had indirect interest

Joint Ventures Alert Steel Polokwane (Pty) LtdSub-subsidiaries Dual Intake Investments (Pty) Ltd

Trust for the benefit of employees Alert Share Incentive Scheme Trust

Directors WF SchalekampWW Mentz




EG Dube

O Jevon

30. DIRECTORS' EMOLUMENTS

EXECUTIVE 2007

TOTALBONUSREMUNERATION ALLOWANCES

AND BENEFITSWF Schalekamp

WW Mentz

877,791

530,595

1,408,386

230,666

125,416

356,082

624,325

390,725

1,015,050

22,800

14,454

37,254

COMPANY

2007 2006INTEREST ON TREASURY LOANS PAID TO (RECEIVED FROM)

RELATED PARTIESAlert Steel (Pty) Ltd 40,705 -

32,485

109,784

3,856

--

-

-

-



Alert Steel Polokwane (Pty) Ltd


9,897

31. DIRECTORS' INTEREST IN SHARES

NAME OF DIRECTOR

EXECUTIVE:WF Schalekamp

WW Mentz

NON-EXECUTIVE:

EG Dube

OV Jevon

BENEFICIAL

INDIRECT165,627,940

2,000,000

17,500,000

450,000185,577,940

BENEFICIAL

DIRECT-

40,000

TOTAL

165,627,940

2,040,000

- 17,500,000- 450,000

40,000 185,617,940

No Director has any non-beneficial interest in the ordinary shares of the company. The company has not been advised of any changes in the above interests of the Directors during the period up to date of this report.

COMPANY

2007 2006

58

33. RISK MANAGEMENT

LIQUIDITY RISKThe company's risk to liquidity is a result of the funds available to cover future commitments. The company manages liquidity risk through an ongoing review of future commitments and credit facilities. Cash flow forecasts are prepared and adequate utilised borrowing facilities are monitored.

INTEREST RATE RISKFluctuating interest rates impact on the value of short-term cash investments and financing activities, giving rise to interest rate risk. In the ordinary course of business, the Group receives cash from its operations and is required to fund working capital and capital expenditure requirements. The Group's cash resources are managed so as to ensure that surplus funds are invested to maximise returns while minimising any exposure to risk.

CREDIT RISKCredit risk consists mainly of cash deposits, cash equivalents and trade debtors. The company only deposits cash with major banks with high quality credit standing and limits exposure to any one counter-party.

Trade receivables comprise a widespread customer base. Management evaluated credit risk relating to customers on an ongoing basis. Credit guarantee insurance is purchased when deemed appropriate.

34. RETIREMENT BENEFIT PLAN

The Group is a member of a provident fund that is administered by Old Mutual which provides benefits on a defined contribution basis. The fund is subject to the Pension Funds Act of 1956, as amended. All employees of the Group are eligible to be members of the fund. The Group's contribution to the provident fund for the period which has been charged to the income statement was R840,302 (2006: Rnil).

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32. SHARE INCENTIVE TRUST

A Share Incentive Scheme exists to provide employees of the Group to acquire shares in the capital of the Group as to give such employees the incentive to advance the interest of the Group for the ultimate benefit of all the stakeholders in the Group.

The maximum ordinary shares so held may not exceed 20% of the ordinary share capital of the company.

7,600,000

6,563,600-

1,036,400

-

-

-

-

Purchase offers made and accepted on 1 March 2007 at

R1.00 per share

Scheme shares released

Un-allocated scheme shares

Shares acquired by the Share Incentive Trust during the year


Figures in Rand


59

ANALYSIS OF SHAREHOLDERS

1. SIZE OF HOLDING

1 - 1,0001,001 - 10,000

10,001 - 100,000

100,001 - 1,000,000

1,000,001 and over

Number of

shareholders

3661,554

554

67

82,549

% of

Shareholders

14.36

60.97

21.73

2.63

0.31

100.00 100.00

Number of

shares227,313

6,850,387

16,814,807

21,392,311

207,315,182

252,600,000

%

0.09

2.71

6.66

8.47

82.07

2. CATEGORY

BanksClose Corporations

Endowment funds

Number of

shareholders

3

63

8

% of

Shareholders

0.12

2.47

0.31

Number of

shares1,080,068

1,800,511

100,461

%

0.43

0.71

0.04

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2007

100.00

100.00

100.00

100.00

Individuals

Mutual Funds

Nominees and TrustsOther Corporations

Private Companies

Public Companies

Share Trusts

TOTAL

2,217

10

150

28

66

3

12,549

86.98

0.39

5.88

1.10

2.59

0.12

0.40

27,024,051

17,173,054

170,945,835

433,849

25,910,751

531,420

7,600,000

252,600,000

10.70

6.80

67.67

0.17

10.26

0.21

3.01

3. MAJOR SHAREHOLDERS HOLDING 3% OR MORE OF THE COMPANY'S ORDINARY SHARES

WF & JC Family TrustVunani Capital (Pty) Ltd

Alert Share Incentive

Scheme Trust

Shares165,627,940

17,500,000

7,600,000

190,727,940

%

65.57

6.93

3.01

75.51

4. SHAREHOLDERSPREAD

Number of

shares

Non-public* 196,707,940

Public 55,892,060

Number of

shareholders

14

2,5352,549

% of

Shareholders

0.55

99.45252,600,000

%

77.87

22.13

* Include Directors and Alert Steel Share Incentive Trust

60

SCHEDULE OF INVESTMENTS IN SUBSIDIARIES ANDJOINT VENTURES

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INVESTMENTS IN SUBSIDIARIES SHARECAP

INTEREST

2007 2006

SHARES

2007 2006

AMOUNTS OWING BY/(TO) SUBSIDERIES ANDJOINT VENTURES

2007 2006

Alert Steel (Pty) Ltd 300 100% 0% 300 - 15,374,616 -

Alert Steel Brits (Pty) Ltd 100 100% 0% 100 - (9,897) -

Alert Steel Tshwane(Pty) Ltd 300 100% 0% 300 - (2,864,259) -

-

-

-

-

Alert Steel Hazyview (Pty) Ltd 100 51% 0% 51 -

Dual Intake Investments 24 (Pty) Ltd 100 50% 0% 50 -

INVESTMENTS IN JOINT VENTURES

Alert Steel Polokwane (Pty) Ltd 4 50% 0% 2 - (2,309,784) -

Alert Steel Reinforcing (Pty) Ltd 100 50% 0% 50 - 4,186,010 -

SEGMENTAL REPORT

SEGMENTAL FIGURES Reinforcing Retail Corporate* TotalManufacturing

Revenue External 44,494,065 332,813,776

332,813,776

- 377,307,841Revenue - Internal (1) 1,400,408

45,894,473

- -

-1,400,408

378,708,249Operating profit 4,132,974 18,250,634 (1,655) 22,381,953

Interest revenue 30,653 1,628,245 863,473 2,522,371

Finance cost (35,966) (2,603,893) (606,488) (3,246,347)

*Corporate segmental assets include the inter-segment eliminations of group loans and receivables.

2007

BALANCE SHEET

Reportable segment assets (1) 16,828,527 173,581,165 179,607,470Reportable segment liabilities (2) 9,159,724 97,672,722 96,814,955

(10,802,222)

(10,017,491)

OTHER INFORMATIONCapital expenditure 4,874,087 6,630,858 - 11,504,945Depreciation & amortisation 30,694 2,421,002 - 2,451,696

Profit before taxation 4,127,661 17,274,986 255,330 21,657,977Taxation expense (1,191,282) (5,102,210) (74,046) (6,367,538)

Reportable segment profit 2,936,379 12,172,776 181,284 15,290,439

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(1) RECONCILIATION OF SEGMENTAL

ASSETS

SEGMENTAL REPORT (CONT.)

Total assets 248,014,242

Other assets - Goodwill (41,662,049)

- Deferred taxation (402,904)

- Loans receivable (3,385,086)

- Loans to managers and employees (195,758)

- Cash and cash equivalents (22,760,975)

Segmental assets 179,607,470

(2) RECONCILIATION OF SEGMENTALLIABILITIES

Current liabilities 101,990,538

Bank overdrafts (1,663,688)

Current taxation liabilities (6,372,338)

Loans payable (3,854,029)

Non current liabilities 7,829,566

Deferred taxation liabilities (1,115,094)

Segmental liabilities 96,814,955

62

SHAREHOLDERS' DIARY

• Financial Year-end 30-06-07• Announcement of Audited Financial Results 14-09-07• Institutional Investors' Road Show in Johannesburg 19-09-07• Institutional Investors' Road Show in Cape Town 20-09-07• Annual Report 12-11-07• Annual General Meeting 06-12-07• Institutional Investors' Road Show in Johannesburg 20-11-07• Institutional Investors' Road Show in Cape Town 12-11-07• Interim Report for Dec 2008 To be advised

JSE SHARE INFORMATION

At 30 June 2007

• Closing price (cents) 167• High for the period (cents) 225• Low for the period (cents) 132• Volume of shares traded during the period 221 816 000• Value of shares traded during the period R131 259 996

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63

NOTICE OF ANNUAL GENERAL MEETING

NOTICE is hereby given that the annual general meeting of shareholders of Alert will be held at the offices of the company at 12 Gompou Street, East Lynne, Pretoria, 0186 on Thursday, 6 December 2007 at 11h00 for the following purposes:

ORDINARY RESOLUTION NUMBER 1:

To receive, consider and adopt the annual financial statements of the Group and the company for thefinancial year ended 30 June 2007, including the Director's report and the report of the independent auditors therein.


To re-appoint RSM Betty & Dickson (Tshwane) as independent auditors of the company for the ensuing period terminating on the conclusion of the next annual general meeting of the company and to authorise theDirectors to fix the auditor's remuneration for the past year.


To re-elect Mr Owen Jevon who, in terms of the company's articles of association, retires by rotation at theannual general meeting, but, being eligible, offers himself for re-election.


To approve the remuneration of the Directors for the financial year ended 30 June 2007 as reflected in note 30 to theAnnual Financial Statements.

To consider and, if deemed fit, to pass, with or without modification, the following special and ordinary resolutions set outbelow, in the manner required by the Companies Act, 61 of 1973, as amended:


To renew the authority that all the unissued shares in the capital of the company be placed under the control of theDirectors at their discretion until the next annual general meeting of the company as a general authority in terms ofsection 221(2) of the Companies Act 61 of 1973, as amended ("the Act"), subject to the provisions of the Act and theListings Requirements of the JSE Limited.”


To renew the authority that pursuant to the articles of association of the company and subject to the Companies Act 61 of 1973 (“Act”) and the JSE Listings Requirements, the Directors of the company be and are hereby authorized, by way of a general authority to allot and issue ordinary shares for cash on the following basis:1. that the shares must of a class already in issue;2. the shares may only be issued or sold, as the case may be, to public shareholders as defined in the

Listings Requirements of the JSE, and not to related parties;3. that the shares may not in any one financial year in the aggregate exceed 50% of the company's issued

shares, the number that may be issued or sold, as the case may be, being determined in accordance withsub-paragraph 5.52 (c) of the Listings Requirements of the JSE;

4. that the maximum discount at which such shares may be issued or sold, as the case may be, is 10% of the weighted average traded price of such shares on the JSE over the 30 business days preceding thedate of determination of the issue or selling price, as the case may be.

5. that such authorisation being valid only until the next annual general meeting or for 15 months from the date of this resolution, whichever is the earlier date;

6. that an announcement giving full details; including the impact on net asset value and earnings per share, be published at the time of any issue representing, on a cumulative basis within a financial year, 5% or more of the number of securities in issue prior to the issue. In terms of the Listings Requirements of theJSE, the approval of 75% majority of the votes cast in favour of this resolution by all shareholders present orrepresented by proxy (excluding the Designated Adviser and the controlling shareholders together with their associates) is required to approve this resolution.

7. SPECIAL RESOLUTION

SHARE REPURCHASESThat the company hereby approves, as a general approval contemplated in the Companies Act 61 of 1973 (“Act”), the repurchase of shares from time to time, either by the company itself or by its subsidiaries, of the company's issued shares, upon such terms and conditions and in such amounts as the Directors of the company may from time to time decide, subject however to the provisions of the Act and the Listings Requirements of the JSE Limited (“JSE”), it being recorded that in terms of the Listings Requirements of the JSE, general repurchases of the company's shares can only be made subject to the following:

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DISCLOSURES REQUIRED IN TERMS OF THE LISTINGS REQUIREMENTSOF THE JSE In terms of the Listings Requirements of the JSE, the following disclosures are required with reference to the repurchase of the company's shares as set out in the special resolution above:

WORKING CAPITAL STATEMENTThe Directors are of the opinion that, after considering the effect of the maximum repurchase permitted and the maximum general payments to shareholders, for a period of 12 months after the date of this notice of annual general meeting: • the company and the Group will be able, in the ordinary course of business, to pay its debts;• the assets of the company and the Group will be in excess of the liabilities of the company and the Group, recognised and measured in accordance with the accounting policies used in the latest annual financial statements;• the share capital and reserves of the company and the Group will be adequate for ordinary business purposes; and• the working capital resources of the company and the Group will be adequate for ordinary business purposes.

LITIGATION STATEMENT Other than disclosed or accounted for in this annual report, the Directors of the company, whose names are given on page 32 of this annual report, are not aware of any legal or arbitration proceedings, pending or threatened against the Group, which may have or have had, in the 12 months preceding the date of this notice of annual general meeting, a material effect on the Group's financial position.

DIRECTORS' RESPONSIBILITY STATEMENT The Directors, whose names are given on page 32 of this annual report, collectively and individually, accept full responsibility for the accuracy of the information pertaining to the above special resolution and certify that to the best of their knowledge and belief there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that the above special resolution contains all information required.

MATERIAL CHANGES Other than the facts and developments reported on in this annual report, there have been no material changes in the affairs, financial or trading position of the Group since the signature date of this annual report and the posting date thereof. The following further disclosures required in terms of the JSE Listings Requirements are set out in accordance with the reference pages in the annual report of which this notice forms part:

Directors and management (Refer to page 15)Major shareholders of the company (Refer to page 59)Directors' interests in the company's shares (Refer to page 32)Share capital (Refer to page 51)

7.1. that the company and its subsidiaries are enabled by their articles of association to repurchase suchshares;

7.2. that the repurchase of shares be effected through the order book operated by the JSE trading system and be done without any prior understanding or arrangement between the company and the counter party;

7.3. that the company and its subsidiaries are authorised by its members in terms of a special resolutiontaken at general meetings, to make such general repurchases, such authorisation being valid only until the next annual general meeting or for 15 months from the date of this special resolution, whichever is the earlier date;

7.4. that an announcement be made giving such details as may be required in terms of the Listings Requirements of the JSE when the company has cumulatively repurchased three percent of the initial number (the number of that class of share in issue at the time that the general authority is granted) of the relevant class of shares and for each three percent in aggregate of the initial number of that class acquired thereafter;

7.5. at any one time the company may only appoint one agent to effect any repurchase on the company's behalf;7.6. the repurchase of shares will not take place during a prohibited period and will not affect compliance with

the shareholders' spread requirements as laid down by the JSE;7.7. the repurchase of shares shall not, in the aggregate, in any one financial year, exceed 20% of the company's

issued share capital and a maximum of 10% in aggregate of the company's issued share capital that may be repurchased in terms of the Act, by the subsidiaries of the company, at the time this authority is given;

7.8. the repurchase of shares may not be made at a price greater than 10% above the weighted average tradedprice of the market value of the shares as determined over the five business days immediately preceding thedate on which the transaction is effected;

7.9 the company's Designated Adviser shall confirm the adequacy of the company's working capital for purposes of undertaking the repurchase of shares in writing to the JSE prior to entering the market to proceed with the repurchase.

The reason for this special resolution is to grant the company and its subsidiaries a general authority to repurchase the company's shares by way of open market transactions on the JSE, subject to the Act and the JSE Listings Requirements.

The effect of this special resolution would be that the company and its subsidiaries will have been authorised generally to repurchase the company's shares on the open market, subject to the Act and the JSE Listings Requirements.

At the present time the Directors have no specific intention with regard to the utilisation of this authority, which will only be used if the circumstances are appropriate.

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VOTING AND ATTENDANCE

CERTIFICATED SHAREHOLDERSShareholders wishing to attend the annual general meeting have to ensure beforehand with the transfer secretaries of the company that their shares are in fact registered in their name. Should this not be the case and the shares are registered in another name, or in the name of a nominee company, it is incumbent on shareholders attending the meeting to make the necessary arrangements with that party to be able to attend and vote in their capacity.

A shareholder entitled to attend and vote at the annual general meeting is entitled to appoint a proxy or proxies to attend, speak, and on a poll, vote in his/her stead. A proxy need not to be a shareholder of the company.

For the convenience of registered shareholders of the company, a form of proxy is enclosed herewith, containing detailed instructions in this regard.

UNCERTIFICATED SHAREHOLDERSBeneficial owners of dematerialised shares who wish to attend the annual general meeting have to request their Central Securities Depository Participant (“CSDP”) or broker to provide them with a letter of representation, or they must provide the CSDP or broker with their voting instructions in terms of the relevant custody agreement entered into between them and the CSDP or broker.

PROXIESThe instrument appointing a proxy and the authority (if any) under which it is signed must reach the transfer secretaries of the company at the address given below, by no later than 11h00 on Monday, 3 December 2007. On a poll, ordinary shareholders will have one vote in respect of each share held.

By order of the Board.

M PretoriusCompany Secretary12 November 2007

REGISTERED ADDRESS12 Gompou StreetEast Lynne, 0186(PO Box 29607, Sunnyside, 0132)

TRANSFER SECRETARIESComputershare Investor Services 2004 (Proprietary) Limited70 Marshall StreetJohannesburg, 2000 (PO Box 1053, Johannesburg, 2000)

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67

Alert Steel Holdings Limited(formerly Alert Steel Built It (Pty) Limited)(Incorporated in the Republic of South Africa) (Registration number 2003/005144/06)(JSE code: AET ISIN: ZAE000092847)(“the company”)

FORM OF PROXY(for use by certificated shareholders and own name dematerialised shareholders)

Form of proxy for the annual general meeting of the company to be held at 11h00 on Thursday, 6 December 2007 at the company's registered offices, 12 Gompou Street, East Lynne, Pretoria (“the annual general meeting”).

For use by certificated shareholders, nominee companies of Central Securities Depository Participants (“CSDP”), brokers' nominee companies and shareholders who have dematerialised their shares and who have elected own-name registration, who wish to vote on the ordinary and special resolutions per the notice of the annual general meeting to which this form is attached.

Shareholders who have dematerialised their shares through a CSDP or broker must not complete this form of proxy and must provide their CSDP or broker with their voting instructions, except for shareholders who elected own-name registration in the sub-register through a CSDP, which shareholders must complete this form of proxy and lodge it with Computershare Investor Services 2004 (Proprietary) Limited. Holders of dematerialised shares other than with own name registration, wishing to attend the annual general meeting must inform their CSDP or broker of such intention and request their CSDP or broker to issue them with the necessary authorisation to attend.

I/We (Name in block letters)_____________________________________________________________________________

Of (Address)________________________________________________________________________________________

Being the holder/s of____________________________ ______________________Ordinary shares in the company, do hereby appoint

1.__________________________________ or failing him/her ________________________________________________

2._________________________________ or failing him/her ________________________________________________

3.The chairperson of the annual general meeting

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

Number of votes on a poll (one vote per ordinary share)

In favour Against Abstain1. Adoption of annual financial statements _______ ______ ______2. Re-appointment of independent auditors _______ ______ ______3. Re-election of Directors _______ ______ ______

3.1. Owen Jevon _______ ______ ______4. Approval of the remuneration of the Directors _______ ______ ______5. Renewal of the authority to place the unissued share capital under the control of the Directors _______ ______ ______6. Renewal of the authority to issue shares for cash _______ ______ ______7. Special resolution:

Renewal of the authority to repurchase shares _______ ______ ______

Signed at________________________________________on__________________2007

___________________________ _______________________Signature Assisted by (if applicable)

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NOTES

1. Each shareholder is entitled to appoint one or more proxies (none of whom need to be a shareholder of thecompany to attend, speak and vote in place of that shareholder at the annual general meeting.

2. Shareholder(s) that are certificated or own-name dematerialised shareholders may insert the name of a proxy orthe names of two alternative proxies of the member's choice in the space/s provided, with or without deleting “thechairperson of the meeting”, but any such deletion must be initialed by the shareholder(s). The person whosename stands first on the form of proxy and who is present at the annual general meeting will be entitled to act asproxy to the exclusion of those whose names follow. If no proxy is named on a lodged form of proxy thechairperson shall be deemed to be appointed as the proxy.

3. A shareholder's instructions to the proxy must be indicated by the insertion of the relevant number of votesexercisable by the shareholder in the appropriate box provided. Failure to comply with the above will be deemed to authorise the proxy, in the case of any proxy other than the chairperson, to vote or abstain from voting as deemed fit and in the case of the chairperson to vote in favour of the resolution.

4. A shareholder or his/her proxy is not obliged to use all the votes exercisable by the shareholder, but the total of thevotes cast or abstained from may not exceed the total of the votes exercisable in respect of the shares held by theshareholder.

5. Forms of proxy must be lodged at or posted to Computershare Investor Services 2004 (Proprietary) Limited, GroundFloor, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107) to be received no later than11h00 on Tuesday, 4 December 2007.

6. The completion and lodging of this form of proxy will not preclude the relevant shareholder from attending the annualgeneral meeting and speaking and voting in person there at to the exclusion of any proxy appointed in terms hereof,should such shareholder wish to do so. Where there are joint holders of shares, the vote of the first joint holder whotenders a vote, as determined by the order in which the names stand in the register of members, will be accepted.

7. The chairperson of the annual general meeting may reject or accept any form of proxy which is completed and/orreceived otherwise than in accordance with these notes, provided that, in respect of acceptances, the chairperson issatisfied as to the manner in which the shareholder concerned wishes to vote.

8. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form of proxy unless previously recorded by the company or Computershare InvestorServices 2004 (Proprietary) Limited or waived by the chairperson of the annual general meeting.

9. Any alteration or correction made to this form of proxy must be initialed by the signatory/ies,

10. A minor must be assisted by his/her parent guardian unless the relevant documents establishing his/her legal capacity are produced or have been registered by Computershare Investor Services 2004 (Proprietary) Limited.

11. Where there are joint holders of any shares, only that holder whose name appears first in the register in respect of such shares need to be signed this form of proxy.

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CORPORATE INFORMATION

EXECUTIVE DIRECTORS

Wynand SchalekampWillie Mentz

NON-EXECUTIVE DIRECTORS

Ethan DubeOwen Jevon

COMPANY SECRETARY AND REGISTERED OFFICE

Monika Pretorius12 Gompou StreetEast Lynne0186(PO Box 29607, Sunnyside, 0132)

DESIGNATED ADVISER

Exchange Sponsors (Pty) Limited(Registration number 1999/024433/07)39 First RoadHyde Park, 2196(PO Box 411216, Craighall, 2024)

TRANSFER SECRETARIES

Computershare Investor Services 2004 (Pty) Limited(Registration number 2004/003647/07)Ground Floor70 Marshall StreetJohannesburg, 2001(PO Box 61051, Marshalltown, 2107)

AUDITORS

RSM Betty & Dickson (Tshwane)(Practice number 901520A )Suite 1, 267 Waterkloof RoadBrooklyn, 0181(Private Bag X22, Brooklyn Square, 0075)

ATTORNEYS

Fluxmans Inc.(Registration number 2000/024775/21)11 Biermann AvenueRosebank, 2196(Private Bag X14, Saxonwold, 2196)

CORPORATE BANKERS

Nedbank Corporate(Registration number 1951/000009/06)

st1 Floor, Block F, Sandton135 Rivonia Road, Sandown, 2196(PO Box 1144, Johannesburg, 2000)

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ALERT STEEL BRITS21 Van Deventer StreetBrits, 0250Tel: (012) 252 0773/4Fax: (012) 252 0775P. O. Box 4403Brits, 0250

ALERT STEEL HAZYVIEWTarentaal Street, HazyviewTel: (013) 737 7740 / 6121Fax: (013) 737 7737P. O. Box 780Hazyview, 1242

ALERT STEEL KLERKSDORP20 Mahogany StreetOld Industrial AreaTel: (018) 464 4611Fax: (018) 464 4612P. O. Box 75Randfontein, 1760

ALERT STEEL LICHTENBURG6 Gerrit Maritz StreetLichtenburgTel: (018) 632 5034Fax: (018) 632 1219P. O. Box 75Randfontein, 1760

ALERT STEEL LOUIS TRICHARDTIndustria Street No 1Louis Trichardt, 0920Tel: (015) 516 5737/8Fax: (015) 516 1549P. O. Box 1157Louis Trichardt, 0920

ALERT STEEL MOKOPANE33 Sussex StreetMokopane, 0600Tel: (015) 491 8984/5/6Fax: (015) 491 6082 / 2367P. O. Box 4406Mokopane, 0600

ALERT STEEL RANDFONTEIN8 Volvo Street, AureusTel: (011) 412 2037Fax: (011) 412 2113P. O. Box 75Randfontein, 1760

ALERT STEEL RUIMSIGHendrik PotgieterCnr. Vd Kloof, RuimsigTel: (011) 958 0552Fax: (011) 958 0564P. O. Box 75Randfontein

ALERT STEEL TSHWANEShop 13, Lenchen CentreC/o Jakaranda & Lenchen AvenueHennopspark, CenturionTel: (012) 653 5607/8Fax: (012) 653 0332 / 653 5608P. O. Box 11555Wierda Park South, 0057

ALERT STEEL TZANEENKoedoe Street 18Industrial AreaTel: (015) 307 6612 / 910Fax: (015) 307 6618P. O. Box 187Tzaneen, 0850

ALERT BUILD BURGERSFORTDirk Winterbach StreetSection 8, LeeuvalleiBurgersfortTel: (013) 231 7187Fax: (013) 231 7187 / 8364P. O. Box 390Burgersfort, 1150

ALERT BUILD LEPHALALEHendrik Pistorius No.4Industria, LephalaleTel: (014) 763 6016Fax: (014) 763 6020P. O. Box 6768Onverwaght, 0557

ALERT BUILD POLOKWANEC/o Nikkel & Kobalt StreetSuperbia, 0699Tel: (015) 292 2043/4Fax: (015) 292 2051P. O. Box 55930Polokwane, 0700

ALERT BUILD PRETORIA12 Gompou StreetEast Lynne, 0186Tel: (012) 800 0000Fax: (012) 800 0015 Buying

(012) 800 0009 Sales(012) 800 0068 Debtors(012) 800 1887 Plumbing(012) 800 4661 Finance

P. O. Box 29607Sunnyside, 0132

ALERT BUILD THOHOYANDOUStand No. 3, IndustrialArea ShayandimaTel: (015) 964 3513 / 1940Fax: (015) 964 1703P. O. Box 906Shayandima, 0945

ALERT PLUMB PRETORIA19 Gompou StreetEast LynneTel: (012) 800 1035/6Fax: (012) 800 1887P. O. Box 29607Sunnyside, 0132

RSC TSHWANE271 Maggs StreetWaltloo, PretoriaTel: (012) 803 7864Fax: (012) 803 5852P. O. Box 15102Lynn East, 0039

RSC POLOKWANE85 Silicon StreetLadine, 0700Tel: (015) 293 1463/4/5Fax: (015) 293 0207P. O. Box 55404Polokwane, 0700

BRANCHES

ALERT STEEL HOLDINGS LIMITED(formerly Alert Steel Built It (Pty) Limited)

(Incorporated in the Republic of South Africa) (Registration number 2003/005144/06)

(JSE code: AET ISIN: ZAE000092847)(“Alert” or “the company”)

12 Gompou StreetEast Lynne

0186P.O. Box 29607

Sunnyside, 0132

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Annual Report 2007 Alert Steel Holdings Limited · NATIONAL FOOTPRINT Limpopo North West ... Alert...

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