Macquarie Group Limited — M&A Activity 2011

May 5, 2011

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Improved Proposal from The Carlyle Group and Macquarie

6 May 2011

Please find attached a Media Release lodged on the company’s website.

For further information:

Graham Davie Chief Executive Officer Redflex Holdings Limited graham.davie@redflex.com.au +61 3 9674 1715

Richard Phillips / Jonathan Farrer Greenhill Caliburn Pty Ltd rphillips@greenhillcaliburn.com / jfarrer@greenhillcaliburn.com +61 3 9935 6806 / +61 3 9935 6809

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Redflex Holdings Limited ACN 069 306 216

MEDIA RELEASE

Improved Proposal from The Carlyle Group and Macquarie

5 May 2011

• Minimum Scheme consideration of A$2.75

• Higher headline price and eliminates the effect of the appreciation of the AUD against the USD

• Provides shareholders with upside above A$2.75 where the AUD:USD exchange rate is equal to or below 0.9604 on 30 May 2011

• Improved price only available if shareholders vote in favour of the resolutions on 9 May 2011, with no adjournment of the meeting beyond this date

• Final offer price which will not be increased

• Scheme remains unchanged in all other respects

In relation to the Scheme announced on 21 February 2011, the Board is pleased to announce that it has received an improved offer from an entity (“RoadSafety Holdings”) associated with The Carlyle Group and Macquarie Group Limited (“Macquarie”) (together the “Consortium”) which, if approved by Shareholders, would result in a minimum price on Implementation of the Scheme of A$2.75 compared to A$2.57 if the Scheme were implemented today[1] .

In early April 2011, Redflex despatched to its shareholders an Explanatory Booklet in relation to the Scheme and possible financial assistance associated with implementing the Scheme. The Explanatory Booklet included notices convening meetings to be held on Monday, 9 May 2011 to consider and vote on the Scheme and the financial assistance resolution respectively. The Explanatory Booklet also included an independent experts report from Lonergan Edwards opining that the Scheme is fair and reasonable and in the best interests of Redflex shareholders, in the absence of a superior proposal.

Details of Improved Terms

RoadSafety Holdings has today proposed to offer Redflex shareholders an increased and minimum Scheme consideration of A$2.75 cash per share if Redflex shareholders approve the resolutions at the Scheme Meeting on Monday 9 May 2011 and if all other Scheme conditions are satisfied or waived.

The Scheme remains unchanged in all respects except that shareholders will now be offered the benefit of the minimum Scheme consideration referred to above.

The minimum Scheme consideration eliminates the effect of the appreciation of the AUD against the USD. The table below outlines the Scheme Consideration to be received by Redflex shareholders under different exchange rate scenarios and the improvement compared to the Scheme consideration outlined in the Explanatory Booklet. For example, if the current exchange rate of 1.0724 applied at the exchange rate determination date of 30 May 2011, shareholders would receive A$2.57 compared to the A$2.70 when the Scheme was announced. The minimum Scheme consideration eliminates these effects and improves the

1 Based on an AUD:USD exchange rate of 1.0724 as at 5 May 2011

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Redflex Holdings Limited MEDIA RELEASE

A$2.70 price on which the Board based its original recommendation, with the minimum Scheme consideration of A$2.75 representing a 7% increase in Australian dollar terms compared to the Scheme consideration of A$2.57 per share which would have otherwise applied (assuming today’s exchange rate would apply on 30 May 2011).

Exchange Rate (AUD:USD)	0.94	0.96	0.98	1.00	1.02	1.04	1.06	1.08	1.10	1.12	1.14
Scheme Consideration (Explanatory Booklet) (A$)	2.81	2.76	2.70	2.70	2.70	2.65	2.60	2.55	2.50	2.46	2.42
Scheme Consideration (with A$2.75 minimum price) (A$)	2.81	2.76	2.75	2.75	2.75	2.75	2.75	2.75	2.75	2.75	2.75
% variance	-	-	1.9%	1.9%	1.9%	3.8%	5.8%	7.8%	10.0%	11.8%	13.6%

Furthermore, the minimum Scheme consideration allows Redflex shareholders to receive an increase in the Scheme consideration beyond that minimum amount if the AUD:USD exchange rate is equal to or below 0.9604 on 30 May 2011, consistent with the terms of the Scheme.

The minimum Scheme consideration of A$2.75 cash per share also compares favourably to previously announced indicative, non-binding proposals for Redflex when adjusted for AUD:USD exchange rate movements. In particular, based on the current exchange rate of 1.0724 it equates to an implied offer price in US dollar terms of US$2.95 per share. If this amount was converted to Australian dollars at the prevailing AUD:USD exchange rate of approximately 0.64 at the time of Redflex’s previous indicative proposal updates in October 2008 and February 2009, it would imply a comparable Australian dollar price of approximately A$4.61.

RoadSafety Holdings has confirmed to Redflex that the equity funding arrangements as disclosed in section 6.6(b) of the Explanatory Booklet have been increased and are therefore sufficient to satisfy their obligation to pay the minimum Scheme consideration of A$2.75, as well as any increase above that minimum amount if the AUD:USD exchange rate on 30 May 2011 is equal to or below 0.9604.

Under the terms of the conditional proposal by the Consortium:

• the revised and improved Scheme proposal is final and will not be further increased by the Consortium;

• if the resolutions giving effect to the minimum Scheme consideration are not passed by the requisite statutory majorities at the Scheme Meeting on Monday 9 May 2011 the Scheme will terminate; and

• if the Scheme Meeting is adjourned or delayed beyond 9 May 2011, the minimum Scheme consideration of A$2.75 per share will not be available to shareholders and the terms of the original Scheme as set out in the Explanatory Booklet will apply.

Appendix B provides a copy of the Amending Deed Poll executed by the Consortium in favour of Redflex and the Scheme Participants in relation to the proposed minimum Scheme consideration.

Board Recommendation

Redflex’s Directors continue to unanimously recommend that Redflex shareholders vote in favour of the Scheme, and intend to vote all shares they hold or control in favour of both resolutions to be put to shareholders at the Scheme Meeting on Monday 9 May 2011, in both cases, in the absence of a superior proposal.

The Redflex Board has engaged Lonergan Edwards to confirm its view that the proposal to modify the Scheme is fair and reasonable and in the best interests of Redflex shareholders in the absence of a superior proposal. The supplementary letter from Lonergan Edwards confirming its view is provided in Appendix A to this announcement.

The reasons why Redflex’s Directors continue to unanimously recommend the Scheme, in the absence of a superior proposal, are as set out in the Explanatory Booklet. In summary:

• The Independent Expert has confirmed its opinion that the Scheme is fair and reasonable and therefore in the best interests of Redflex shareholders, in the absence of a superior proposal

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Redflex Holdings Limited MEDIA RELEASE

• A comprehensive sale process has already been undertaken which included approaches to more than 40 parties

• No superior proposal has emerged

• The offer price represents a significant premium to fair and reasonable value thresholds in both Australian dollar and US dollar terms

• The offer provides a liquidity opportunity for all Redflex shareholders

• The offer provides certainty of cash and an opportunity to realise value now

• If the Scheme does not proceed, Redflex shareholders will continue to be subject to the specific risks associated with Redflex’s business and general market risks

• If the Scheme does not proceed, and no superior proposal emerges, the Redflex Share price is likely to fall

In addition to these points, Redflex’s directors note that the minimum Scheme consideration of A$2.75 cash per share represents a premium of 79% in AUD terms and 133% in USD terms to Redflex’s closing price of A$1.535 on 4 June 2010, the last trading day prior to speculation in relation to Macquarie’s indicative, nonbinding and confidential proposal of A$2.50 per Share that was announced on 9 June 2010.

Scheme Meeting Details

As previously announced, the Scheme Meeting is scheduled to be held at 10.00am on 9 May 2011 at Novotel Melbourne on Collins, 270 Collins Street, Melbourne, Victoria (Level 6, the Australia Rooms 3 and 4). The Scheme Meeting will immediately be followed by a General Meeting to approve a resolution dealing with the potential provision of financial assistance by Redflex to the Consortium's bid vehicle, as part of its acquisition of Redflex shares under the Scheme.

It is proposed that shareholders will first be asked to consider and vote on an amendment to the Scheme to provide for the minimum Scheme consideration referred to above (“Preliminary Resolution”). The terms of the proposed Preliminary Resolution appear in Appendix C. The Preliminary Resolution will need to be approved by the same statutory majorities as are required for the Scheme Resolution itself. Proxies appointed to vote on the Scheme Resolution will also be entitled to vote on the Preliminary Resolution.

In relation to the Preliminary Resolution, the Chairman intends to vote proxies of which he is appointed as proxy for the Scheme Resolution as follows:

• to vote in favour of the Preliminary Resolution, all directed proxies received in favour of the Scheme Resolution;

• to vote against the Preliminary Resolution, all directed proxies received against the Scheme Resolution; and

• to vote in favour of the Preliminary Resolution, all undirected proxies received in respect of the Scheme Resolution.

If the Preliminary Resolution is passed, shareholders will then be asked to consider and vote on the Scheme Resolution as amended by the Preliminary Resolution (see Appendix C to this announcement). If the Preliminary Resolution is not passed, shareholders will be asked to consider and vote on the Scheme resolution as set out in Appendix 2 to the Explanatory Booklet (ie. the original Scheme without the benefit of the improved offer described in this announcement).

All shareholders are strongly encouraged to vote either by attending the meetings on 9 May 2011 in person, or by lodging a proxy vote. Shareholders are reminded that proxies must be lodged by 12pm (Melbourne time) on 7 May 2011, in accordance with the instructions set out in the Explanatory Booklet. Shareholders can lodge proxy votes or change their proxy votes via Redflex’s online proxy website at www.investorvote.com.au or www.intermediaryonline.com (for custodian subscribers only). Alternatively, shareholders who have already submitted a proxy vote and who wish to change their voting instructions can revoke their proxy by attending the meetings in person on 9 May 2011 or, in the case of a company, by a corporate representative appointed under the Corporations Act (see Section 3 of the Explanatory Booklet).

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Redflex Holdings Limited MEDIA RELEASE

For further information:

Graham Davie Chief Executive Officer Redflex Holdings Limited graham.davie@redflex.com.au +61 3 9674 1715

Richard Phillips / Jonathan Farrer Greenhill Caliburn Pty Ltd rphillips@greenhillcaliburn.com / jfarrer@greenhillcaliburn.com +61 3 9935 6806 / +61 3 9935 6809

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Redflex Holdings Limited MEDIA RELEASE

Appendix A – Supplementary Letter from Lonergan Edwards

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Redflex Holdings Limited MEDIA RELEASE

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Redflex Holdings Limited MEDIA RELEASE

Appendix B – Amending Deed Poll (without certain Schedules) on Minimum Scheme Consideration of A$2.75 Per Share

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Redflex Holdings Limited MEDIA RELEASE

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Redflex Holdings Limited MEDIA RELEASE

Appendix C – Terms of Preliminary Resolution and Scheme Resolution

Preliminary Resolution

"That the scheme of arrangement ( Scheme ) proposed between Redflex and the holders of fully paid ordinary shares, the terms of which are set out in the Scheme Booklet dated 4 April 2011 is amended by changing the definition of ‘Scheme Consideration’ in the Scheme so that it reads as follows:

' Scheme Consideration means, in respect of each Scheme Share held by a Scheme Shareholder, the greater of:

• (a) A$2.75; and

• (b) the amount determined as follows:

• (i) A$2.70, where the Spot Rate is no greater than 1.0200 and no less than 0.9800; or

• (ii) the A$ amount calculated as (2.70 x (1.0200/Spot Rate)), rounded to the nearest A$0.01, if the Spot Rate is greater than 1.0200; or

• (iii) the A$ amount calculated as (2.70 x (0.9800/Spot Rate)), rounded to the nearest A$0.01, if the Spot Rate is less than 0.9800.' "

Scheme Resolution

"That pursuant to and in accordance with the provisions of section 411 of the Corporations Act, the members are in favour of the arrangement proposed between Redflex Holdings Limited and the holders of its fully paid ordinary shares, designated the 'Scheme', as contained in and more particularly described in the Explanatory Booklet accompanying the notice convening this meeting (as amended pursuant to the Preliminary Resolution, and with or without any modifications or conditions required by the Court to which Redflex Holdings Limited and RoadSafety Holdings Pty Ltd agree) and, subject to approval of the Scheme by the Court, the Board of Directors of Redflex Holdings Limited is authorised to implement the Scheme with any such modifications or conditions."

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