ALERT STEEL HOLDINGS LIMITED - Alert Steel's restructuring starts showing results

Alert Steel's restructuring starts showing results

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


ALERT STEEL’S RESTRUCTURING STARTS SHOWING RESULTS

Pretoria, 12 December 2012 – The turnaround interventions initiated at AltX-listed steel retailer Alert
Steel have resulted in a marked improvement in the company’s performance but supply constraints
and a deteriorating operating environment are hampering the company’s return to profitability.

In the company’s annual report, published today, chairman Malcolm McCulloch and chief executive
Johan du Toit say the effectiveness of the remedial measures is evident in Alert Steel’s results for the
year ended 30 June 2012. Loss and headline loss per share dropped sharply by 90% and 91%
respectively to -5.4 cents and -4.3 cents (2011: -54.5 cents and -47.3 cents).

They noted that in addition to the successful implementation of the restructuring strategy, aimed at
returning Alert Steel to long-term profitability by returning to its core business of steel retailing, Alert
Steel’s fortunes were also dependent on the health of the industry, which had continued to deteriorate
in the year under review.

“Total steel production in South Africa decreased 22% from May last year to May this year, principally
because of disruptions at the country’s major steel mills, while demand for steel and steel related
products has declined sharply owing to the lack of new developments in the construction sector,
which accounts for around 60% of the total demand for steel,” they say.

“As a result of these mill disruptions, stock supply was intermittent and this impacted on the year’s
trading. We also had to contend with two industry strike actions during the year and cash flow
constraints impacted our ability to pay suppliers within terms.” They noted that cash flow and stock
supply problems were resolved once the funds from the rights offer underwriters were advanced and
that the company had returned to normal trading terms from May this year.

The biggest area of growth for the company has been in the company’s Alert Express containers and
by the end of the year 27 of these converted shipping containers had been deployed. These mobile
retail units, strategically located in the growing rural sectors, are quick to deploy, cheap to operate
and generate attractive profit margins. “We expect these containers to be major revenue-generators
for the company going forward,” they say.

Looking ahead, they said that the first three months of trading continued to be challenging and that
they did not expect conditions to improve for the rest of the year. “In light of these conditions, we
reviewed Alert Steel’s business plan and based our forecast of the company’s results to June 2013 on
the assumption that there will be no improvement in the operating environment. However, even under
this worst-case scenario, we expect to see an improvement on the 2012 year’s results,” they say.


For further information call Johan du Toit, CEO Alert Steel, on 082 416 8888

Issued by du Plessis Associates on behalf of Alert Steel Holdings Limited.
dPA contact Helen McKane Tel : +27 11 728 4701, Fax: +27 11 728 2547, Mobile: 082 330 2034 or
e-mail: alertsteel@dpapr.com
website: www.alertsteel.co.za

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