NB (amplifying diagram's notes)
(1) W's 1NT: 12-14
(2) N's X = single-suited hand; asks partner to bid 2♣ for Pass / Correct
(3) E's 2♦: both alerted by W and announced (without any N/S question) as "exit" transfer to ♥
(4) W's 2♥: transfer completion.
E/W are not a regular partnership, but W's explanation is what they had on their card. Please don't concern yourself with the technicalities of W's breach of Alert / Announce regulations (which of course had the effect of making E's misbid absolutely clear).