THIS DOCUMENT AND THE ACCOMPANYING FORM OF PROXY AND ELECTION FORM ARE IMPORTANT AND REQUIRE YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this document or as to the action you should take, you should consult immediately your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000 if you are resident in the United Kingdom or, if not, another appropriately authorised independent financial adviser.

If you have sold or otherwise transferred or sell or otherwise transfer your entire holding of Existing Ordinary Shares, please forward this document and the accompanying Form of Proxy and Election Form as soon as possible to the purchaser or transferee or to the agent through whom the sale or transfer was effected for transmission to the purchaser or transferee. However, such documents should not be forwarded or transmitted in or into any jurisdiction in which such act would constitute a violation of the relevant laws of such jurisdiction. If you have sold or transferred only part of your holding of Existing Ordinary Shares please consult the agent through whom the sale or transfer was affected.

Application will be made to the UKLA and the London Stock Exchange respectively for the New Ordinary Shares resulting from the proposed Capital Reorganisation to be admitted to the Official List and to trading on the market for listed securities of the London Stock Exchange in place of the Existing Ordinary Shares. It is expected that dealings in the Existing Ordinary Shares will continue until 4.30 p.m. on 8 August 2011 and that Admission of the New Ordinary Shares will become effective and dealings in them will commence on the London Stock Exchange at 8.00 a.m. on 9 August 2011.

The New Ordinary Shares and the C Shares have not been marketed and are not available to the public, in whole or in part, in connection with the Return of Capital and, in respect of the New Ordinary Shares only, in connection with Admission. The attention of those Shareholders who are not resident in the United Kingdom or who are citizens, residents or nationals of other countries is drawn to the information set out in paragraph 7 of Part II of this document.

Melrose PLC

(Incorporated and registered in England and Wales with registered number 4763064)

Proposed Return of Capital to Shareholders of 75 pence per Existing Ordinary Share by way of one C Share for each Existing Ordinary Share, and an 11 for 14 Share Capital Consolidation

and

Notice of General Meeting

This document should be read as a whole and in conjunction with the accompanying Form of Proxy and Election Form. Your attention is drawn to the letter from the Chairman of Melrose which is set out in Part I of this document and which contains a recommendation that you vote in favour of the Resolution to be proposed at the General Meeting.

The Proposals are conditional on the approval of Shareholders at the General Meeting.

Notice of a General Meeting of Melrose to be held at the offices of Investec at 2 Gresham Street, London EC2V 7QP at 10.00 a.m. on 8 August 2011 is set out on page 43 of this document.

A Form of Proxy for use in connection with the Resolution to be proposed at the General Meeting is enclosed. Whether or not you intend to be at the General Meeting in person, you are requested to complete the Form of Proxy in accordance with the instructions printed on it, and return it as soon as possible, but in any event so as to be received by Equiniti, by hand or by post, at Corporate Actions, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, not later than 10.00 a.m. on 6 August 2011.

A summary of the action to be taken by Shareholders is set out on page 9 of this document and in the accompanying notice of the General Meeting. The return of a completed Form of Proxy will not prevent you from attending the General Meeting and voting in person if you so wish and are so entitled.

Rothschild, which is authorised and regulated by the Financial Services Authority in the United Kingdom, is acting only for Melrose and no-one else in connection with the Proposals and will not be responsible to anyone other than Melrose for providing the protections afforded to clients of Rothschild nor for providing advice in relation to the Proposals, the contents of this document or any transaction, arrangement or other matter referred to in this document.

Investec, which is regulated and authorised in the United Kingdom by the Financial Services Authority, is acting only for Melrose and no-one else in connection with the Proposals and will not be responsible to anyone other than Melrose for providing the protections afforded to clients of Investec, nor for providing advice in relation to the Proposals.

Certain terms used in this document, including certain capitalised terms and certain technical and other terms, are defined in Part IX. Part III contains a number of frequently asked questions with answers in relation to the Return of Capital.

		Page
	Expected Timetable of Events	3
Part I	Letter from the Chairman of Melrose	5
Part II	Details of the Return of Capital	10
Part III	Frequently asked questions with answers relating to the Return of Capital	17
Part IV	Completing your Election Form	24
Part V	Rights and restrictions attached to the C Shares	27
Part VI	Rights and restrictions attached to the C Deferred Shares	30
Part VII	United Kingdom taxation in relation to the Return of Capital	32
Part VIII	Additional Information	35
Part IX	Definitions	40
Notice of General Meeting		43

EXPECTED TIMETABLE OF EVENTS

	2011
Latest time and date for receipt of Form of Proxy for General Meeting	10.00 a.m. on 6 August
General Meeting	10.00 a.m. on 8 August
Latest time and date for dealings in Existing Ordinary Shares	4.30 p.m. on 8 August
Ordinary Share Record Date for the creation of C Shares	6.00 p.m. on 8 August
Share Capital Consolidation Record Date Existing Ordinary Share register closed and Existing Ordinary Shares disabled in CREST	6.15 p.m. on 8 August
New Ordinary Shares admitted to the Official List and admitted to trading on the London Stock Exchange's market for listed securities	8.00 a.m. on 9 August
Dealings in the New Ordinary Shares commence and enablement in CREST. New Ordinary Shares and C Shares entered into CREST	8.00 a.m. on 9 August
Latest time for receipt of Election Forms and TTE Instructions from CREST holders in relation to the C Share Alternatives	4.30 p.m. on 15 August
C Share Record Date for participation in the Return of Capital	6.00 p.m. on 15 August
Initial Redemption Date and Single C Share Dividend Date. C Shares in respect of which the Single C Share Dividend is payable will convert into C Deferred Shares	16 August
Despatch of cheques or CREST accounts credited (as appropriate) in respect of the C Shares redeemed on the Initial Redemption Date (Alternative 1)	19 August
Despatch of cheques or bank accounts credited (as appropriate) in respect of the Single C Share Dividend (Alternative 2)	19 August
Despatch of the C Share certificates in respect of the C Shares to be redeemed on the Final Redemption Date (Alternative 3)	19 August
Despatch of the New Ordinary Share certificates and cheques for fractional entitlements	19 August
	2012
Final Redemption Date	30 April
Automatic redemption of all C Deferred Shares	30 April
Despatch of cheques or CREST accounts credited, as appropriate, in respect of C Shares redeemed on the Final Redemption Date (Alternative 3)	7 May

N.B. All dates are subject to change.

References to times in this document are to London time. If any of the above times or dates should change, the revised times and/or dates will be notified to Shareholders by an announcement on an RIS.

All events in the above timetable following Admission of the New Ordinary Shares are conditional upon Admission of the New Ordinary Shares.

Shareholders holding their Existing Ordinary Shares in uncertificated form should refer to paragraph 6 of Part VIII of this document for information on electing and settling through CREST for the purposes of the Return of Capital.

[THIS PAGE IS INTENTIONALLY LEFT BLANK]

PART I

LETTER FROM THE CHAIRMAN OF MELROSE

Registered in England and Wales, Registration No. 4763064

Christopher Miller (Executive Chairman) Precision House David Roper (Chief Executive) Arden Road Simon Peckham (Chief Operating Officer) Alcester Geoffrey Martin (Group Finance Director) Warwickshire Miles Templeman (Non-Executive Director) B49 6HN Perry Crosthwaite (Non-Executive Director) John Grant (Non-Executive Director)

Directors: Registered office:

22 July 2011

Dear Shareholder,

£373.2 MILLION RETURN OF CAPITAL TO SHAREHOLDERS

1. Introduction

The Board of Melrose announced on 20 July 2011 that the Company had completed the disposal of its Dynacast division to companies controlled by Dynacast International, Inc. (formerly known as KDI Holdings Inc.), a company formed by a consortium of financial investors and managed by Kenner & Company, Inc., for a cash consideration of £366.5 million1 (US\$590 million). In accordance with our strategy the Board intends to utilise the net proceeds of the Disposal together with the net proceeds of the disposal of the Brush Traction business in February 2011 to return approximately £373.2 million in cash to Shareholders. This is equivalent to 75 pence per Existing Ordinary Share.

Your Board has considered carefully whether to delay the Return of Capital in light of the proposal made to the board of Charter International plc, but believes that, in the current circumstances, it is still appropriate to maintain its strategy and proceed with the Return of Capital.

The Return of Capital is being made using a redeemable share scheme (in this case involving C Shares), giving Shareholders a choice as to how they receive their proceeds from the Return of Capital and the timing of such return. This document describes these choices and how to make them.

Your approval of the Proposals is being sought at a General Meeting to be held at 10.00 a.m. on 8 August 2011. The notice of the General Meeting is set out at the end of this document.

Shareholders should read the whole of this document and not just rely on the summarised information set out in this letter.

¹ Based on an exchange rate of £1:\$1.61.

2. Summary of the Proposals

The Board will be putting the Resolution to effect the Proposals before Shareholders at the General Meeting, to be held on 8 August 2011. The Resolution provides for the creation and issue to Shareholders of the C Shares, the consolidation of the Company's Existing Ordinary Shares into New Ordinary Shares and appropriate amendments to the Company's Articles to implement the Return of Capital. Further explanations of the Resolution are set out in Part II of this document.

The purpose of the Proposals is to:

(a) return approximately £373.2 million in cash to Shareholders;
(b) give Shareholders a choice of receiving this cash by way of capital or dividend income; and
(c) reduce the number of Ordinary Shares in issue so that, subject to normal market movements, the share price of one New Ordinary Share immediately after Admission should be approximately equal to the closing middle-market share price of one Existing Ordinary Share on 19 July 2011 (the latest practicable date before the announcement of the Proposals).

The Melrose Board believes that the Proposals are the most suitable method of returning capital to Shareholders, giving them the choice to receive their cash in the form of capital or dividend income or a combination of both and providing some flexibility as to the timing of any capital that they elect to receive. The Return of Capital will amount to 75 pence per Existing Ordinary Share and approximately £373.2 million in aggregate.

3. Return of Capital

3.1 Capital Reorganisation

Under the Capital Reorganisation, Shareholders will receive:

One C Share for every one Existing Ordinary Share held on the Ordinary Share Record Date; and eleven New Ordinary Shares for every fourteen Existing Ordinary Shares held on the Share Capital Consolidation Record Date.

At the closing middle-market price of 352.60 pence per Existing Ordinary Share on 19 July 2011, the proposed Return of Capital to Shareholders represents approximately 21.3 per cent. of Melrose's market capitalisation at that date and 75 pence per Existing Ordinary Share.

The main features of the C Shares, and the choices available to Shareholders, are summarised in paragraph 3.2 below.

Associated with and conditional upon the passing of the Resolution and Admission, there will be a one-off Ordinary Share Capital Consolidation in the ratio of 11:14. As a result of the Share Capital Consolidation, the Existing Ordinary Shares will be replaced by the New Ordinary Shares so as to reduce the number of shares in issue to reflect the cash to be returned to Shareholders by way of the C Share Scheme. The aim of this is to help, so far as possible, the market price of an Ordinary Share remain approximately the same before and after the Return of Capital and to maintain comparability of historical and future per share data. The ratio used for the Share Capital Consolidation has been set by reference to the closing middle-market price of 352.60 pence per Existing Ordinary Share on 19 July 2011 (the latest practicable date before the announcement of the Proposals).

The New Ordinary Shares will be admitted to listing and trading in the same way as the Existing Ordinary Shares and will be equivalent in all material respects to the Existing Ordinary Shares, including their dividend, voting and other rights. The C Shares will not be admitted to the Official List or to trading. Please refer to Part II of this document for further information.

3.2 The C Share Alternatives

You will have the following alternatives in relation to the C Shares you hold on the C Share Record Date. Shareholders should read Part VII "United Kingdom Taxation in relation to the Return of Capital" since the three alternatives will each have different United Kingdom tax consequences.

Shareholders who are in any doubt as to their tax position should consult an appropriate professional adviser.

Alternative 1: Initial Redemption

If you choose this alternative in respect of some or all of your C Shares, you will have those C Shares for which you have elected under this alternative redeemed by Melrose on 16 August 2011 at 75 pence per C Share, free of all dealing expenses and commissions.

It is expected that the proceeds from this redemption will generally be treated as capital for United Kingdom tax purposes. It is also expected that Shareholders who choose this alternative will have their cheques despatched or CREST accounts credited (as appropriate) on 19 August 2011.

Alternative 2: Single C Share Dividend

If you choose this alternative in respect of some or all of your C Shares, you will receive a single dividend of 75 pence per C Share in respect of those C Shares. This will become payable to you on 16 August 2011, following which those C Shares will be automatically converted into C Deferred Shares and then redeemed by the Company on 30 April 2012 (or such other date as the Directors may determine). The C Deferred Shares will not be listed, will carry extremely limited rights and will have negligible value as Shareholders will have already received a cash pay-out in relation to those shares.

It is expected that the Single C Share Dividend will generally be treated as dividend income for United Kingdom tax purposes. It is also expected that Shareholders who choose this alternative will have their cheques despatched or bank accounts credited on 19 August 2011.

Alternative 3: Final Redemption

If you choose this alternative in respect of some or all of your C Shares, those C Shares for which you have chosen under this alternative will be held by you until they are redeemed by Melrose on 30 April 2012 at 75 pence per C Share, free of all dealing expenses and commissions.

Holding some or all of your C Shares until 30 April 2012 may be of some value to you from a tax planning perspective. It is expected that the proceeds from this redemption will generally be treated as capital for United Kingdom tax purposes. It is also expected that Shareholders who choose this alternative will have their cheques despatched or CREST accounts credited (as appropriate) on 7 May 2012.

You may elect to receive any one of, or a combination of, the C Share Alternatives listed above. Please see Part IV of this document for details on how to do this.

Details of how to complete and return your Election Form are set out in Part IV of this document. Details of how to make your election through CREST are set out in paragraph 6 of Part VIII of this document. Properly completed and returned Election Forms and elections made through CREST will not become effective until 4.30 p.m. on 15 August 2011, after which they will become irrevocable.

If you do not properly complete and return your Election Form or if you are a CREST holder and you do not send a valid TTE Instruction, you will be deemed to have elected for Alternative 1: Initial Redemption.

Further information on each of the C Share Alternatives is set out in Part II of this document.

The rights and restrictions attaching to the C Shares and the C Deferred Shares are set out in Part V and Part VI respectively of this document.

3.3 Key dates

A detailed expected timetable in respect of the C Share Scheme and the General Meeting is set out on page 3 of this document. The following are the key expected dates in respect of the Return of Capital:

Latest time and date for receipt of Form of Proxy for General Meeting	10.00 a.m. on 6 August 2011
General Meeting	10.00 a.m. on 8 August 2011
Latest time and date for dealings in Existing Ordinary Shares	4.30 p.m. on 8 August 2011
Ordinary Share Record Date (for creation of C Shares)	6.00 p.m. on 8 August 2011
Share Capital Consolidation Record Date	6.15 p.m. on 8 August 2011
Latest time for receipt of Election Forms and TTE Instructions from CREST holders in relation to the C Share Alternatives	4.30 p.m. on 15 August 2011
C Share Record Date (for participation in the Return of Capital)	6.00 p.m. on 15 August 2011
Despatch of cheques or CREST accounts credited (as appropriate) in respect of the C Shares redeemed on the Initial Redemption Date (Alternative 1) and despatch of cheques or bank accounts credited (as appropriate) in respect of the Single C Share Dividend (Alternative 2)	19 August 2011
Despatch of cheques or CREST accounts credited (as appropriate) in respect of C Shares redeemed on the Final Redemption Date (Alternative 3)	7 May 2012

These dates are indicative only and are subject to change.

3.4 Shareholder helpline

If you have any queries in relation to the Election Form, or Form of Proxy, you may call the Equiniti Shareholder helpline on 0871 384 2971 (or +44 (0)121 415 0208 if calling from outside the United Kingdom) between 8.30 a.m. and 5.30 p.m. (London time) on any Business Day.1

Please note that the Shareholder helpline is not able to provide advice on the merits of the C Share Alternatives or give any financial or tax advice.

4. General Meeting

Your approval is being sought for the proposed Return of Capital.

A General Meeting, notice of which is set out at the end of this document, has been convened for 10.00 a.m. on 8 August 2011 for this purpose. A Form of Proxy to be used in connection with the General Meeting is enclosed with this document.

At the General Meeting a special resolution will be proposed in connection with the proposed Return of Capital to:

(i) authorise the Directors to allot 497,586,779 C Shares;
(ii) provide for the mechanics of the Return of Capital; and
(iii) amend the Articles of Association to reflect the proposed rights and restrictions attaching to the C Shares and the C Deferred Shares.

A summary explanation of the Resolution is set out in paragraph 12 of Part II of this document.

¹ Calls to 0871 384 2971 are charged at 8 pence per minute from a BT landline (excluding VAT). Other service providers' costs may vary. Calls to +44 121 415 0208 from outside the UK are chargeable at applicable international rates.

5. Further information

Your attention is drawn to the remaining parts of this document which contain further information on Melrose and the Return of Capital.

6. United Kingdom taxation in relation to the Return of Capital

A guide to the general tax position of United Kingdom Shareholders as at the date of this document is set out in Part VII of this document.

You are strongly advised to read Part VII of this document and to seek professional advice tailored to your specific circumstances.

7. Overseas Shareholders

The attention of those Shareholders who are not resident in the United Kingdom or who are citizens, residents or nationals of other countries is drawn to the information set out in paragraph 7 of Part II of this document.

Shareholders should note that the Company has not applied for any tax clearances with respect to the Return of Capital in the United Kingdom or in any other jurisdiction.

8. Action to be taken

A Form of Proxy for use at the General Meeting is enclosed. Whether or not you intend to be present at the meeting, you are requested to complete, sign and return the Form of Proxy to Equiniti, by hand or by post, at Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, as soon as possible but in any event so as to be received no later than 10.00 a.m. on 6 August 2011.

The completion and return of a Form of Proxy will not prevent you from attending the meeting and voting in person if you wish to do so.

An Election Form is enclosed with this document. Shareholders electing through CREST should not complete an Election Form but instead should refer to paragraph 6 of Part VIII of this document. Shareholders wishing to elect for Alternative 1: Initial Redemption of ALL of their C Shares DO NOT need to complete or return the Election Form. Shareholders wishing to elect Alternative 2: Single C Share Dividend or Alternative 3: Final Redemption should refer to Part IV for instructions on how to complete the Election Form.

9. Recommendation

The Board, which has received financial advice from Rothschild, considers the Return of Capital to be in the best interests of Shareholders as a whole and recommends that you vote in favour of the Resolution at the General Meeting, as the Melrose Directors intend to do in respect of their own holdings. In providing its advice, Rothschild has placed reliance on the Board's commercial assessment of the Return of Capital.

Yours faithfully

Christopher Miller Executive Chairman

PART II

DETAILS OF THE RETURN OF CAPITAL

1. Return of Capital

The Return of Capital consists of the Capital Reorganisation (see paragraph 2 below) and the C Share Alternatives (see paragraphs 3, 4 and 5 below).

Conditions to the implementation of the Return of Capital

The Return of Capital is conditional on:

(a) the approval by Shareholders of the Resolution to be proposed at the General Meeting; and
(b) Admission.

If these conditions are not satisfied by 8.00 a.m. on 9 August 2011 or such later time and/or date as the Directors may determine, no New Ordinary Shares or C Shares will be created and the Return of Capital will not take effect.

2. Capital Reorganisation

2.1 Allotment of C Shares

It is proposed to capitalise a sum of £220,061,595.75 standing to the credit of the Company's capital redemption reserve and a sum of £153,128,488.50 standing to the credit of the Company's share premium account and apply the aggregate amount in paying up in full 497,586,779 C Shares, to be allotted to Shareholders on the basis of one C Share for each Existing Ordinary Share held at the Ordinary Share Record Date.

The C Shares will carry limited voting rights as more fully set out in Part V of this document.

Holders of Existing Ordinary Shares whose holdings are registered in CREST will automatically have any C Shares credited to their CREST account. The Company will apply for the C Shares to be admitted to CREST with effect from 9 August 2011 so that transfers of the C Shares may be settled within the CREST system. No share certificates will be issued for any C Shares which are redeemed by the Company on the Initial Redemption Date (Alternative 1) or in respect of which the Single C Share Dividend is paid (Alternative 2). Share certificates will only be issued in respect of such C Shares that are to be redeemed by the Company on the Final Redemption Date (Alternative 3).

The C Shares will neither be admitted to the Official List nor to trading on the market for listed securities of the London Stock Exchange.

2.2 Share Capital Consolidation

The Existing Ordinary Shares will be consolidated so that Shareholders will receive eleven New Ordinary Shares for every fourteen Existing Ordinary Shares they own at 6.15 p.m. on 8 August 2011. The intention of the Share Capital Consolidation is that, subject to normal market movements, the share price of one New Ordinary Share immediately after Admission should be approximately equal to the share price of one Existing Ordinary Share immediately before the Share Capital Consolidation. The ratio used for the Share Capital Consolidation has been set by reference to the closing middle market price of 352.60 pence per Existing Ordinary Share on 19 July 2011 (the latest practicable date prior to the announcement of the Proposals). The effect of the Share Capital Consolidation will be to reduce the number of issued Ordinary Shares to reflect the return of 75 pence per C Share to Shareholders, but Shareholders will own the same proportion of Melrose as they did before the Share Capital Consolidation, subject to fractional entitlements.

The Share Capital Consolidation will take place shortly after the allotment of the C Shares. Holders of Existing Ordinary Shares whose holdings are registered in CREST will automatically have any New Ordinary Shares credited to their CREST account.

New Ordinary Shares will be traded on the London Stock Exchange in the same way as Existing Ordinary Shares and will be equivalent in all material respects to the Existing Ordinary Shares, including their dividend, voting and other rights. New Ordinary Share certificates will be issued to Shareholders who hold their Ordinary Shares in certificated form following the Capital Reorganisation.

Application will be made for the New Ordinary Shares to be admitted to the Official List and to trading on the London Stock Exchange's market for listed securities, with dealings expected to commence on 9 August 2011. The Company will apply for the New Ordinary Shares to be admitted to CREST with effect from Admission so that general market transactions in the New Ordinary Shares maybe settled within the CREST system.

2.3 Fractional entitlements to New Ordinary Shares

Unless a holding of Existing Ordinary Shares is exactly divisible by fourteen, a Shareholder will have a fractional entitlement to a New Ordinary Share following the Share Capital Consolidation. So, for example, a Shareholder having 100 Existing Ordinary Shares would, after the Share Capital Consolidation, be entitled to 78 New Ordinary Shares and to a fractional entitlement of ⁴ ⁄7 of a New Ordinary Share.

These fractional entitlements of all Shareholders will be aggregated and sold in the market on their behalf. The proceeds of sale, net of commission, will be distributed pro rata to the relevant Shareholders. Cheques in respect of the proceeds of sale are expected to be despatched to relevant Shareholders or CREST accounts credited with the proceeds, as appropriate on 19 August 2011 (or such other date as the Directors may determine).

Should the cash consideration for your fractional entitlement be less than £1, you will not receive a cheque in respect of that entitlement; rather, the proceeds will be retained by the Company and donated to charities chosen by the Board.

3. Alternative 2: Single C Share Dividend

Shareholders may elect to receive a Single C Share Dividend of 75 pence per C Share in respect of all or some of their C Shares held on the C Share Record Date. Elections in respect of the Single C Share Dividend will not become effective until the end of the Election Period, after which they will become irrevocable.

To elect for the Single C Share Dividend in respect of some or all of your C Shares you should follow the instructions in Part IV of this document unless you hold your C shares through CREST. Shareholders electing through CREST should refer to paragraph 6 of Part VIII of this document. The Dividend Reinvestment Plan ("DRIP") cannot be used in relation to the Single C Share Dividend. Any DRIP elections in relation to the Single C Share Dividend will not be accepted and any standing DRIP mandates will not apply to the Single C Share Dividend.

Following payment of the Single C Share Dividend, those C Shares on which the Single C Share Dividend has been paid will be converted into C Deferred Shares, with the Shareholder automatically receiving one C Deferred Share for each such C Share but no share certificates will be issued to represent the C Deferred Shares. The C Deferred Shares will not be listed and will carry extremely limited rights as more fully described in Part VI of this document. When redeemed by the Company, the C Deferred Shares will have negligible value as Shareholders will have already received a cash pay-out in relation to those shares. C Deferred Shares cannot be held in CREST, so any C Deferred Shares to which Shareholders are entitled following declaration of the Single C Share Dividend will not be credited to Shareholders' CREST accounts.

The Company may redeem all C Deferred Shares then in issue at any time for an aggregate consideration of one penny. If the Company redeems the C Deferred Shares, this will be treated as a disposal of the C Deferred Shares by Shareholders. It is expected that the C Deferred Shares will be redeemed on 30 April 2012 (or such other date as the Directors may determine).

Shareholders should read carefully Part VII of this document before deciding whether to elect for the Single C Share Dividend.

It is expected that Shareholders receiving the Single C Share Dividend will be sent cheques or have their bank accounts credited in respect of such Single C Share Dividend on 19 August 2011 (or such later date as the Directors may determine). No share certificates will be issued for C Shares which are redeemed by the Company on the Initial Redemption Date (Alternative 1) or on which the Single C Share Dividend is paid (Alternative 2). Share certificates will only be issued in respect of such C Shares that are to be redeemed by the Company on the Final Redemption Date (Alternative 3). Such share certificates will be despatched on 19 August 2011 (or such other date as the Directors may determine).

4. Alternatives 1 and 3: Redemption

Shareholders may elect to have all or some of their C Shares held on the C Share Record Date redeemed under the Initial Redemption or to hold all or some of their C Shares for redemption until the Final Redemption Date (expected to be on 30 April 2012). Elections in respect of the Initial Redemption and the Final Redemption will not become effective until the end of the Election Period, after which they will become irrevocable.

Any C Shares redeemed by the Company by way of the Initial Redemption or the Final Redemption will be cancelled and will not be reissued.

4.1 Alternative 1: Initial Redemption

Under the Initial Redemption, Shareholders may elect to have all or some of their C Shares held on the C Share Record Date redeemed by the Company, on the Initial Redemption Date, at 75 pence per C Share, free of all dealing expenses and commissions.

To elect for the Initial Redemption in respect of all of your C Shares you need take no further action and do not need to return your Election Form. You are, however, encouraged to vote on the Return of Capital by completing and returning your Form of Proxy for the General Meeting as no C Shares or New Ordinary Shares will be created and the Return of Capital will not take effect unless the Resolution to be considered at the General Meeting is passed (and Admission takes place).

To elect for the Initial Redemption in respect of some of your C Shares only you should follow the instructions in Part IV of this document.

Shareholders should read carefully Part VII of this document before deciding whether to elect for the Initial Redemption.

It is expected that Shareholders whose C Shares are redeemed on the Initial Redemption Date will be sent cheques or have their CREST accounts credited with the proceeds, as appropriate, in respect of such redemption on 19 August 2011 (or such other date as the Directors may determine).

4.2 Alternative 3: Final Redemption

Shareholders may elect to retain all or some of their C Shares held on the C Share Record Date.

It is expected that Shareholders who have elected for the Final Redemption in respect of all or some of their C Shares will have such C Shares redeemed on the Final Redemption Date. Cheques will be despatched or CREST accounts credited with the proceeds, as appropriate, in respect of such outstanding C shares on 7 May 2012 (or such other date as the Directors may determine).

Shareholders should read carefully Part VII of this document before deciding whether to elect for the Final Redemption.

To elect to hold all or some of your C Shares until the Final Redemption Date you should follow the instructions in Part IV of this document.

5. Additional terms of the C Share Alternatives

The following terms will apply to the Single C Share Dividend, the Initial Redemption and the Final Redemption:

(a) the Election Form, any TTE Instruction of a Shareholder electing through CREST and all resulting contracts will be governed by, and construed in accordance with, English law. Execution by, or on behalf of, a Shareholder of an Election Form, or any TTE Instruction submitted by a Shareholder electing through CREST, constitutes their submission, in relation to all matters arising out of or in connection with such form, to the exclusive jurisdiction of the English courts; and
(b) no authority conferred by, or agreed to by, execution of the Election Form or any TTE Instruction submitted by a Shareholder electing through CREST shall be affected by, and all such authority shall survive, the death or incapacity of the Shareholder executing such form. All obligations of such Shareholder shall be binding upon the heirs, personal representatives, successors and assigns of such Shareholder.

6. Withdrawal rights

Shareholders should note that any election, whether their C Shares are held in CREST or otherwise, relating to the C Share Alternatives may be withdrawn at any time before the end of the Election Period. After the end of the Election Period, any election is irrevocable.

Shareholders wishing to withdraw their election before the end of the Election Period, whether their C Shares are held in CREST or otherwise, MUST first telephone the Equiniti Shareholder helpline for further information on 0871 384 2971 (or +44 (0)121 415 0208 if calling from outside the United Kingdom) between 8.30 a.m. and 5.30 p.m. (London time) on any Business Day1 and, if wishing to re-elect in respect of C Share Alternatives, request a Replacement Election Form or receive instructions on how to re-elect through CREST.

For a withdrawal of an election in respect of any C Shares to be effective, whether those C Shares are held in CREST or otherwise, a written instruction signed by the person(s) who signed the Election Form or, in the case of shares held in uncertificated form, made the relevant election must:

(a) be received by Equiniti, by hand or by post, at Corporate Actions, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA; and
(b) specify the name(s) and address(es) of the person(s) who is/are tendering the election to be withdrawn and the exact number of C Shares to be withdrawn.

Telex, facsimile, electronic mail or other electronic means of transmission or any form of copy of written notice will not constitute a written instruction of withdrawal. Melrose will determine all questions as to the form and validity (including time of receipt) of any instruction of withdrawal, in their absolute discretion, which determination shall be final and binding. Melrose also reserves the absolute right to waive any defect or irregularity in the withdrawal by any Shareholder, and such determination will be binding on such Shareholder. None of Melrose or Equiniti or any other person will be under any duty to give notification of any defect or irregularity in any instruction of withdrawal or incur any liability for failure to give any such notification or for any reason with regard to withdrawal and re-election.

Withdrawals may not be rescinded after the end of the Election Period and any re-elections in respect of withdrawn C Shares that are received by Equiniti after the end of the Election Period will be deemed invalid for the purposes of the C Share Alternatives. Any Shareholder who withdraws their election before the end of the Election Period and does not re-elect those C Shares will receive Alternative 1: Initial Redemption in respect of those C Shares.

If a written instruction of withdrawal of an election in respect of certain C Shares is received by Equiniti before the end of the Election Period it is possible to re-elect for any of the C Share Alternatives in respect of those withdrawn C Shares. Shareholders wishing to re-elect in respect of Alternative 2: Single C Share Dividend or Alternative 3: Final Redemption should request a Replacement Election Form or receive instructions on how to re-elect through CREST from the Equiniti Shareholder helpline.

Shareholders who do not hold their C Shares in CREST and wish to re-elect for Alternative 2: Single C Share Dividend or Alternative 3: Final Redemption should complete and return a Replacement Election Form by following the instructions in Part IV of this document. In addition, such Shareholders must tick the box on the bottom of the Replacement Election Form indicating that the form is a Replacement Election Form. Once completed and signed, the withdrawal instruction and the Replacement Election Form should be returned in the reply-paid envelope (which will be provided) to Equiniti and no stamps will be needed if the envelope is posted in the United Kingdom. If, however, you do not use the envelope provided, the Replacement Election Form and withdrawal instruction should be returned to Equiniti, by hand or by post, at Corporate Actions, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA.

Before the end of the Election Period, Shareholders who hold their C Shares through CREST are able to withdraw any TTE Instruction already authenticated and submitted once a written instruction of withdrawal of an election in respect of C Shares held as interim C Shares through CREST has been received by Equiniti, in accordance with sub-paragraphs (a) and (b) above. Such Shareholders may then submit a further authenticated TTE Instruction in accordance with paragraph 6 of Part VIII of this document in order to re-elect for Alternative 2: Single C Share Dividend or Alternative 3: Final Redemption, or may take no further action to benefit from Alternative 1: Initial Redemption. If settlement has already taken place in respect of the TTE Instruction to be withdrawn, the withdrawing Shareholder will need to include all the details contained within the settled TTE Instruction in their withdrawal instruction (completed in accordance with sub-paragraphs (a) and (b) above) to enable Equiniti to transmit in CREST a receiving agent accept (AEAN) message. A further properly authenticated TTE Instruction should then be submitted in accordance with paragraph 6 of Part VIII of this document.

To be valid, Replacement Election Forms, withdrawal instructions and re-elections through CREST must be returned or submitted by 4.30 p.m. on 15 August 2011.

Shareholders wishing to withdraw their election MUST first telephone the Equiniti Shareholder helpline on 0871 384 2971 (or +44 (0)121 415 0208 if calling from outside the United Kingdom) between 8.30 a.m. and 5.30 p.m. (London time) on any Business Day.1

7. Non-United Kingdom Shareholders

Shareholders who are not resident in the United Kingdom or who are citizens, residents or nationals of other countries should consult their professional advisers to ascertain whether the Return of Capital will be subject to any restrictions or require compliance with any formalities imposed by the laws or regulations of, or any body or authority located in, the jurisdiction in which they are resident or to which they are subject. In particular, it is the responsibility of any Shareholder not resident in the United Kingdom or a citizen, resident or national of another country wishing to receive the Return of Capital, including receiving the Single C Share Dividend or having C Shares redeemed or otherwise disposing of any shares in the Company, to satisfy himself as to full observance of the laws of each relevant jurisdiction in connection with the Return of Capital, including the obtaining of any government, exchange control or other consents which may be required, or the compliance with other necessary formalities needing to be observed and the payment of any issue, transfer or other taxes or duties in such jurisdiction as may be required in the context of the Return of Capital.

The distribution of this document in certain jurisdictions other than the United Kingdom may be restricted by law. Persons into whose possession this document comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. Neither this document nor any other document issued or to be issued by or on behalf of the Company in connection with the Return of Capital constitutes an invitation, offer or other action on the part of the Company in any jurisdiction in which such invitation, offer or other action is unlawful.

In the event that the Company is advised that it would or might be in breach of legal or regulatory requirements in any jurisdiction, or the Company would or might be required to make filings or take any other action in any jurisdiction as a result of the Return of Capital (or any part of it) to Shareholders who

have registered addresses in any overseas jurisdiction or who are citizens, residents or nationals of other countries, it is proposed that the C Shares to which such Shareholders are entitled will nevertheless be allotted to such Shareholders but may be issued to a nominee and then sold with the net proceeds of sale being remitted to such Shareholders.

The above provisions of this paragraph relating to overseas Shareholders may be waived, varied or modified as regards specific Shareholders or on a general basis by the Company in its absolute discretion.

Neither the New Ordinary Shares nor the C Shares will be registered under the US Securities Act or under the securities laws of any state of the United States or under any applicable securities laws of the Republic of Ireland, Canada, Australia, South Africa or Japan.

8. General Meeting

A General Meeting will be held at 10.00 a.m. on 8 August 2011. The notice of General Meeting is set out at the end of this document.

You will find enclosed with this document a Form of Proxy for use in respect of the General Meeting.

Whether or not you intend to be present at the General Meeting, you are requested to complete and sign the Form of Proxy and return it, in accordance with the instructions printed thereon.

To be valid, your completed Form of Proxy should be returned to Equiniti, by hand or by post, at Corporate Actions, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA to arrive as soon as possible and, in any event, no later than 10.00 a.m. on 6 August 2011. The completion and return of the Form of Proxy will not prevent you from attending the General Meeting and voting in person should you wish to do so.

9. Share certificates

From Admission your Existing Ordinary Share certificate will no longer be valid. New Ordinary Share certificates will only be issued following the Share Capital Consolidation. It is therefore important that, if you hold certificates in respect of your Existing Ordinary Shares, you retain them for the time being until New Ordinary Share certificates are despatched, which is expected to be on 19 August 2011. Following this date, the certificates in respect of the Existing Ordinary Shares can be destroyed. Share certificates are despatched to Shareholders at their own risk.

For Shareholders wishing to hold any New Ordinary Shares and C Shares through the CREST system, the relevant CREST accounts are expected to be credited at 8.00 a.m. on 9 August 2011. Shareholders holding New Ordinary Shares and C Shares through the CREST system will not receive any share certificates.

No share certificates will be issued by the Company to holders of C Shares unless they have elected for Alternative 3: Final Redemption in respect of some or all of their holding. Such Shareholders will be issued with share certificates for such C Shares on 19 August 2011 (or such other date as the Directors may determine). Share certificates are despatched to Shareholders at their own risk.

10. Amendments to the Articles

A number of consequential amendments to the Articles are required in order to implement the Return of Capital. These amendments are set out in Part V and Part VI of this document.

11. Dealings and despatch of documents

The issue of C Shares and the Share Capital Consolidation will be made by reference to holdings of Existing Ordinary Shares on the register of members as at the Ordinary Share Record Date and the Share Capital Consolidation Record Date, respectively.

It is expected that dealings and settlement within the CREST system of the Existing Ordinary Shares will continue until the Ordinary Share Record Date when, in the case of Existing Ordinary Shares held in certificated form, the register of members will be closed for transfers and no further transfers of Existing Ordinary Shares will be able to be made. The registration of uncertificated holdings in respect of the Existing Ordinary Shares will be "disabled" in CREST on the Ordinary Share Record Date.

On 19 August 2011 (or such other date as the Directors may determine) the Company expects to despatch definitive share certificates in respect of those New Ordinary Shares held in certificated form. The Company also expects to despatch cheques or credit CREST accounts in respect of the sale of fractional entitlements to New Ordinary Shares on 19 August 2011 (or such other date as the Directors may determine). From Admission, certificates in respect of the Existing Ordinary Shares will no longer be valid. Both cheques and share certificates for New Ordinary Shares are despatched to Shareholders at their own risk.

No share certificates will be issued by the Company for any C Shares which are to be redeemed by the Company on the Initial Redemption Date (Alternative 1) or on which the Single C Share Dividend is paid (Alternative 2). Share certificates will only be issued in respect of those C Shares which are to be redeemed by the Company on the Final Redemption Date (Alternative 3). These share certificates will be despatched on 19 August 2011 (or such other date as the Directors may determine). No share certificates will be issued by the Company in respect of any C Deferred Shares.

It is expected that Shareholders who hold their Existing Ordinary Shares through the CREST system will, upon Admission, have their CREST accounts credited with the New Ordinary Shares and C Shares.

Temporary documents of title will not be issued and, pending despatch of definitive share certificates, transfers of New Ordinary Shares held in certificated form will be certified against the register held by Equiniti.

It is expected that cheques in respect of C Shares redeemed under the Initial Redemption, will be despatched to relevant Shareholders or CREST accounts will be credited, as appropriate, on 19 August 2011 (or such other date as the Directors may determine). It is also expected that cheques in respect of the Single C Share Dividend will be despatched to the relevant Shareholders or bank accounts credited on 19 August 2011 (or such other date as the Directors may determine). Cheques are despatched to Shareholders at their own risk.

12. Summary explanation of the Resolution to be put to the General Meeting

This special resolution is conditional on Admission taking place and sets out the formal mechanics for the implementation of the Return of Capital:

(a) Paragraph (a) provides for the amendments to the Articles to reflect the proposed rights and restrictions attaching to the C Shares and the C Deferred Shares as proposed to be adopted. These rights and restrictions are summarised respectively in Part V and Part VI of this document.
(b) Paragraph (b) proposes to authorise the Directors to:
(i) capitalise a sum of £220,061,595.75 million standing to the credit of the Company's capital redemption reserve and a sum of £153,128,488.50 million standing to the credit of the Company's share premium account to pay up in full the C Shares; and
(ii) allot and issue the C Shares in an aggregate amount of £373,190,084.25 to Shareholders on the basis of one C Share for each Existing Ordinary Share held on the Ordinary Share Record Date. The authority granted to the Directors will expire on the earlier to occur of the conclusion of the Annual General Meeting of the Company to be held in 2012 or on the date falling 15 months from the date of the passing of the resolution.
(c) Paragraphs (c) to (d) provide for the mechanics of the Return of Capital including the sub-division and consolidation of the Existing Ordinary Shares into the New Ordinary Shares which will replace them, the sale of fractional entitlements to the New Ordinary Shares following the share capital consolidation and the distribution of the proceeds of sale of such fractional entitlements to shareholders entitled to them and/or their donation to charities chosen by the Board.

PART III

FREQUENTLY ASKED QUESTIONS WITH ANSWERS RELATING TO THE RETURN OF CAPITAL

This part of the document sets out some commonly asked questions relating to the Return of Capital and provides brief responses. Some of these questions are aimed particularly at Melrose's individual Shareholders who hold share certificates for their Melrose Ordinary Shares. Please read both the questions and answers below and the rest of this document carefully. If you still have any questions, you may call the Equiniti Shareholder helpline on 0871 384 2971 (or +44 (0)121 415 0208 if calling from outside the United Kingdom) between 8.30 a.m. and 5.30 p.m. (London time) on any Business Day.1 All dates are subject to change. If you hold your Ordinary Shares through CREST and would like some further information, please also contact the Equiniti Shareholder helpline.

The helpline is not able to provide advice on the merits of the Return of Capital or give any financial or tax advice. For financial and tax advice you will need to consult your own financial and/or tax adviser.

You should be aware that the Return of Capital is conditional upon approval by Shareholders of the Resolution to be proposed at the General Meeting and upon Admission.

1. What is being proposed?

For each Melrose Ordinary Share that they hold at 6.00 p.m. on 8 August 2011, we intend to return 75 pence in cash to Shareholders. Associated with this will be a share capital consolidation in the ratio of eleven New Ordinary Shares for every fourteen Existing Ordinary Shares held (the "Return of Capital").

2. Why is Melrose returning this cash now?

We have completed the sale of our Dynacast division and we now intend to return approximately £373.2 million in cash to Shareholders. Your Board has considered carefully whether to delay the Return of Capital in light of the proposal made to the board of Charter International plc, but believes that, in the current circumstances, it is still appropriate to maintain its strategy and proceed with the Return of Capital.

3. How is this being done?

We have chosen a method of returning the cash which enables Shareholders to choose whether to receive it as capital or dividend income. This is known as a "C Share Scheme". Full details are set out in this document.

For every Melrose Ordinary Share that you hold at 6.00 p.m. on 8 August 2011, you will receive one C Share. Each C Share entitles you to receive 75 pence in cash.

4. What happens to my Melrose shares?

As part of the Return of Capital, there will also be a consolidation of Existing Ordinary Shares in Melrose. This will reduce the number of Ordinary Shares that you and all Shareholders hold, but these Ordinary Shares will have a higher nominal value (14⁄55 pence instead of 0.2 pence). If we were to do nothing more than repay the cash, Melrose's share price would probably fall by about 75 pence per share (being the amount of cash per Ordinary Share) reflecting the value being returned to Shareholders. Therefore, to help the share price stay approximately the same immediately before and after the Return of Capital (subject to normal market movements), we intend to reduce the total number of shares owned by all Shareholders. The change in the nominal value of the Ordinary Shares is also designed to maintain the share price. This is known as the "Share Capital Consolidation".

As a result of the Share Capital Consolidation, for every fourteen Existing Ordinary Shares in Melrose that you own at 6.15 p.m. on 8 August 2011, you will receive eleven New Ordinary Shares in Melrose.

5. What does all this mean to me?

You will continue to own the same proportion of Melrose immediately after the Share Capital Consolidation as you did immediately before, subject to fractional entitlements arising on the Share Capital Consolidation.

6. Will the Return of Capital affect the dividends per share that I receive on my Melrose Ordinary Shares in the future?

The Return of Capital will not affect Melrose's future dividend policy.

7. What if the number of Melrose Ordinary Shares I hold on 8 August 2011 does not divide exactly by 14?

If, immediately before the Share Capital Consolidation, your holding of Melrose Ordinary Shares does not divide exactly by 14, you will be left with a fractional entitlement to a New Ordinary Share. So, for example, a Shareholder with 100 Existing Ordinary Shares in Melrose would, after the Share Capital Consolidation, be entitled to 78 New Ordinary Shares and to a fractional entitlement of ⁴ ⁄7 of a New Ordinary Share. We will combine all the fractions and arrange to have them sold in the market. You will be sent a cheque for your proportion of the proceeds of the sale of such fractional entitlements, net of commission, on 19 August 2011 unless that proportion is less than £1. If your proportion is less than £1, it will be donated to charities chosen by the Board.

The total value of your holding of New Ordinary Shares in Melrose immediately following the Share Capital Consolidation, plus 75 pence for every C Share that you hold, plus the value of any fractional entitlements for which you will receive cash (or for which the Company will make a donation to charity depending on the amount in question) should be equal to the value of your original holding immediately before the Share Capital Consolidation (subject to normal market movements).

8. What happens to my current share certificate?

If you currently hold your existing Ordinary Shares in certificated form, the share certificate that you currently hold will not be valid after the New Ordinary Shares have been listed on the London Stock Exchange (expected to happen on 9 August 2011). When you receive your New Ordinary Share certificate you should destroy the one that you currently hold as it will be worthless.

9. When will I get my New Ordinary Share certificate?

If you currently hold your existing Ordinary Shares in certificated form, your New Ordinary Share certificate will be sent to you on 19 August 2011 (or such other date as the Directors may determine).

10. What if I want to sell my New Ordinary Shares before I have received my New Share Certificate?

If you currently hold your existing Ordinary Shares in certificated form, even though you won't receive your new share certificate until after 19 August 2011, you will be able to sell your New Ordinary Shares from 9 August 2011. The New Ordinary Shares will be certified against the register held by the Company's registrars, Equiniti. You should call the Equiniti Shareholder helpline on 0871 384 2971 (or +44 (0)121 415 0208 if calling from outside the United Kingdom) between 8.30 a.m. and 5.30 p.m. (London time) on any Business Day1 or speak to your broker for further information on how to do this.

11. What choices do I have for my C Shares?

We are giving you the opportunity to choose the most tax efficient way for you to receive your cash. You can choose to receive a dividend (which it is expected will generally be treated as dividend income for United Kingdom tax purposes) by choosing Alternative 2 or you can choose to have your C Shares redeemed by Melrose (which it is expected will generally be treated as a capital payment for United Kingdom tax purposes) by choosing either Alternative 1 or Alternative 3.

These three alternative choices for your C Shares are set out in more detail below. Please note you can choose to split your choice in respect of your C Shares between two or more of the alternatives.

Alternative 1: Initial Redemption

You can choose to have some or all of your C Shares redeemed by Melrose on the Initial Redemption Date (expected to be 16 August 2011) for 75 pence per C Share. If you choose to do this, it is expected that you will be sent a cheque for the amount of the proceeds on 19 August 2011 (or such other date as the Directors may determine).

It is expected that the redemption of C Shares for 75 pence for each C Share under the Initial Redemption will be treated as a capital payment for United Kingdom tax purposes.

Alternative 2: Single C Share Dividend

You can choose to receive a single dividend payment of 75 pence per C Share for some or all of your C Shares. If you choose to do this, it is expected that you will be sent a cheque for your dividend amount or have your bank account credited on 19 August 2011 (or such other date as the Directors may determine).

It is expected that the Single C Share Dividend will be treated as dividend income for United Kingdom tax purposes. Note that the DRIP cannot be used in relation to the Single C Share Dividend. Any DRIP elections in relation to the Single C Share Dividend will not be accepted and any standing DRIP mandates will not apply to the Single C Share Dividend.

Alternative 3: Final Redemption

You can choose to keep some or all of your C Shares and have them redeemed by Melrose on 30 April 2012 for 75 pence per C Share. If you choose to do this, it is expected that you will be sent a cheque for the amount of proceeds on 7 May 2012 (or such other date as the Directors may determine).

It is expected that the redemption of the C Shares for 75 pence for each C Share under the Final Redemption will also be treated as a capital payment for United Kingdom tax purposes.

Default: Alternative 1

It is important to note that IF YOU DO NOT fill in your blue Election Form correctly, do not sign it or do not return it to Melrose's registrars to arrive by 4.30 p.m. on 15 August 2011, you will be treated as if you have chosen Alternative 1: Initial Redemption for all of your C Shares.

12. Example of how this works in practice?

The example below illustrates the number of shares and the cash payment you will receive under the three alternatives if you elect all your C shares for a single alternative:

Number of				Alternative 1	Alternative 2	Alternative 3
Melrose				If you elect	If you elect	If you elect
Existing		Number		ALL your	ALL your	ALL your
Ordinary Shares Number of		of New			C Shares you C Shares you C Shares you
owned on the	C Shares	Ordinary			will be sent on will be sent on will be sent on
C Share Record	you will	Shares you	Fractional	19 August	19 August	7 May
Date	receive	will receive	entitlement*	2011	2011	2012
5	5	3	13⁄14	£3.75	£3.75	£3.75
11	11	8	⁄14 9	£8.25	£8.25	£8.25
50	50	39	2 ⁄7	£37.50	£37.50	£37.50
100	100	78	4 ⁄7	£75.00	£75.00	£75.00
280	280	220	0	£210.00	£210.00	£210.00
1,000	1,000	785	⁄7 5	£750.00	£750.00	£750.00

* You will be sent your proportion of the net proceeds of sale of fractional entitlements on 19 August 2011 if your proportion is £1 or more.

13. How do I make my choice?

If you hold your Existing Ordinary Shares in certificated form, you make your choice by completing and signing the blue Election Form sent to you with the circular and sending it back to Melrose's registrars, Equiniti, by hand or by post, at Corporate Actions, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA so that it is received by no later than 4.30 p.m. on 15 August 2011. A reply paid envelope has been enclosed for your use.

If you hold your Existing Ordinary Shares in uncertificated form through CREST, you make your choice by submitting a valid TTE Instruction by 4.30 p.m. on 15 August 2011. Please refer to paragraph 6 of Part VIII for further details.

14. Can I choose to have my C Shares redeemed on a different date?

You may choose to have your C Shares redeemed only on 16 August 2011 (if you elect Alternative 1: Initial Redemption) or 30 April 2012 (if you elect Alternative 3: Final Redemption). You may not choose to have your C Shares redeemed on any other date.

15. Will I get a C Share certificate?

You will only be sent a C Share certificate in respect of those C Shares that you have chosen to have redeemed by the Company on 30 April 2012 (Alternative 3). No C Share certificates will be issued in respect of C Shares for which you have chosen to have redeemed by the Company on 16 August 2011 (Alternative 1) or be paid the Single C Share Dividend (Alternative 2). If applicable, your C Share certificate will be sent to you on 19 August 2011.

If you hold your Existing Ordinary Shares in uncertificated form, in order to facilitate the C Share Alternative elections, the C Shares will, for the purposes of settlement in CREST only, be designated as "interim C Shares" under the ISIN GB00B4QQG566 from the period from the Admission of the New Ordinary Shares (expected to be 9 August 2011) until the Single C Share Dividend Date/Initial Redemption Date (expected to be 16 August 2011). During this period CREST holders will have their accounts credited with "interim C Shares" to allow them to elect electronically through the CREST system. From 16 August 2011 (or such other date as the Directors may determine), the C Shares will, for the purposes of dealings and settlement in CREST, be designated as "C Shares" under the ISIN GB00B45CJK12. Accordingly, on 16 August 2011 those CREST holders who have elected to hold C Shares until the Final Redemption will have their CREST accounts credited with the "C Shares".

16. What is a "C Deferred Share"?

The C Shares in respect of which you receive the Single C Share Dividend (Alternative 2) will automatically become C Deferred Shares when this dividend becomes payable. You do not need to do anything in relation to any C Deferred Shares that you hold. The C Deferred Shares have very limited rights and will all automatically be redeemed by the Company for the total aggregate price of one penny on 30 April 2012. Further details of the rights attaching to the C Deferred Shares are set out in Part VI of this document.

17. Will I get a C Deferred Share certificate?

No. No share certificates will be issued in respect of the C Deferred Shares.

18. What if I don't get my blue Election Form or TTE Instruction back in time?

If you do not return your blue Election Form by 4.30 p.m. on 15 August 2011, you will be treated as having chosen to accept Alternative 1: Initial Redemption in respect of all of your C Shares. This will also happen if you fail to fill in the form, fill in the form incorrectly or fail to sign it.

CREST holders who do not return a valid TTE Instruction by 4.30 p.m. on 15 August 2011 will automatically receive Alternative 1: Initial Redemption on all of their C Shares.

19. What if I change my mind after I have returned my blue Election Form TTE Instruction?

You can change or withdraw your choice, whether you hold your Existing Ordinary Shares in certificated or uncertificated form, anytime before 4.30 p.m. on 15 August 2011 by calling the Equiniti Shareholder helpline on 0871 384 2971 (or +44 (0)121 415 0208 if calling from outside the United Kingdom) between 8.30 a.m. and 5.30 p.m. (London time) on any Business Day1 and following their instructions (which will need to be completed before 4.30 p.m. on 15 August 2011). If you want to change your choice you should phone the Shareholder helpline on the number above and ask to be sent a "Replacement Election Form" or receive instructions on how to re-elect through CREST. If you change your choice you must ensure that a written instruction signed by the person(s) who signed the Election Form or, in the case of shares held in uncertificated form, relevant election, is received by Melrose's registrars no later than 4.30 p.m. on 15 August 2011 in order for the re-election to be valid. If you withdraw your choice and do not make another choice you will be treated automatically as having chosen Alternative 1: Initial Redemption.

20. What is my tax position?

If you are an individual Shareholder who is ordinarily resident in the United Kingdom for tax purposes then, depending on your circumstances, if you elect for:

• Alternative 1: Initial Redemption

the proceeds of redemption of your C Shares on 16 August 2011 should generally be treated as a capital disposal for tax purposes in the tax year ending 5 April 2012; or

• Alternative 2: Single C Share Dividend

the dividend should generally be treated as dividend income for tax purposes in the tax year ending 5 April 2012; or

• Alternative 3: Final Redemption

the proceeds of redemption of your C Shares on 30 April 2012 should generally be treated as a capital disposal for tax purposes in the tax year ending 5 April 2013.

Income tax

If you choose Alternative 2: Single C Share Dividend and you are a basic rate tax payer, you should have no further income tax to pay as you will receive the dividend net of basic rate tax. If you are a higher rate tax payer, you may have further tax to pay. Generally, you will be a basic rate tax payer if your total income is less than £35,000, after deducting your relevant personal allowances, in this tax year.

Capital Gains tax

If you choose Alternative 1 or Alternative 3 involving redemption, you may be subject to capital gains tax.

For the purposes of calculating any capital gain on the redemption of your C Shares under Alternative 1 or Alternative 3, the price that you originally paid for your Melrose Existing Ordinary Shares must be apportioned between your New Ordinary Shares and your C Shares to establish the new base cost of each for capital gains tax purposes. The apportionment ratio will be calculated by the Company and published on its website as soon as practicable after the New Ordinary Shares have started trading.

You will be liable to pay capital gains tax if your net capital gains for the relevant tax year exceed £10,600. When we say "capital gains" we mean net capital gains for the year including any gain which would arise if you disposed of your C Shares under Alternative 1: Initial Redemption or Alternative 3: Final Redemption. If you choose Alternative 3: Final Redemption, we would expect the capital gain to be treated as arising in the tax year ending 5 April 2013.

If you want to calculate the capital gains made on your C Shares, you can make a cautious estimate by assuming that the redemption proceeds per C Share will all be gain. If that gives you gains of under £10,600 for the coming tax year (the year ending 5 April 2013) and you have no other gains for this tax year then you should be able to safely assume that you will not be expected to pay capital gains tax on the redemption of your C Shares.

The above is only a basic guide. We have set out a general guide to United Kingdom taxation in Part VII of this document and you should read it carefully. If you have a complicated tax position, or are otherwise in any doubt about your tax circumstances, or if you are subject to tax in a jurisdiction other than the United Kingdom, you should consult your professional adviser.

21. Dividends on my Melrose Existing Ordinary Shares are paid directly into my bank account. Do I need to change the existing instruction in respect of my New Ordinary Shares?

No, not unless you would like to. Your present instructions will automatically be deemed to be valid for any dividends from Melrose in respect of New Ordinary Shares.

22. What if I hold my Melrose Existing Ordinary Shares in an ISA?

If you hold your Existing Ordinary Shares in an ISA, you should be able to hold the New Ordinary Shares which you receive in place of your Existing Ordinary Shares in an ISA (subject to the terms and conditions of your ISA). You should contact your plan manager who will be able to advise you of the procedure for voting on the Return of Capital at the General Meeting and making an election in respect of the C Shares that you receive.

23. What if I am resident outside the United Kingdom?

If you live outside the United Kingdom or are a national or citizen of a country outside the United Kingdom, you should read the additional information set out in paragraph 3 of Part VIII of this document.

24. Should I vote at the General Meeting?

Yes. The Return of Capital needs Shareholder approval before it can take place. The Directors recommend that you vote in favour of the Resolution putting into effect the Proposals. Whether or not you intend to be present at the General Meeting, you should complete and sign your Form of Proxy (the white form sent to you with this document) in accordance with the instructions printed on it and return it to Equiniti who are Melrose's registrars to arrive as soon as possible. For your convenience, the address of Equiniti is printed on the back of the Form of Proxy and postage is pre-paid from within the United Kingdom. To be valid, the completed Form of Proxy must be sent as soon as possible and in any event to be received by Equiniti by no later than 10.00 a.m. on 6 August 2011.

25. What are the conditions to the Return of Capital?

The Return of Capital is conditional upon the approval by Shareholders of the Resolution to be proposed at the General Meeting and upon Admission. If these conditions are not satisfied by 8.00 a.m. on 9 August 2011 or such later time and/or date as the Directors may decide, no New Ordinary Shares or C Shares will be created and the Return of Capital will not take effect.

26. Under what circumstances may the Return of Capital be withdrawn or terminated or the Election Period extended?

The Return of Capital may be withdrawn or terminated if the Resolution is not passed and Admission does not take place by 8.00 a.m. on 9 August 2011 or such later time and/or date as the Directors may determine. The Directors also have the ability to extend the Election Period to such later time and/or date as they may determine.

27. How will I know if the Election Period is extended or the Return of Capital is withdrawn or terminated?

If the Election Period is extended, or the Return of Capital is withdrawn or terminated, a public announcement will be made no later than 9.00 a.m. on the Business Day after the event giving rise to the change occurs.

28. Why have I been sent so much paperwork?

We are required by law to provide all Shareholders with full details of the Return of Capital. This document contains important information and we recommend that you read it carefully as you have a right to vote on the Return of Capital and make elections in respect of the C Share Alternatives.

29. Who do I call if I still have questions?

We have set up an Equiniti Shareholder helpline on 0871 384 2971 (or +44 (0)121 415 0208 if calling from outside the United Kingdom) between 8.30 a.m. and 5.30 p.m. (London time) on any Business Day.1 This helpline will not provide advice on the merits of the Return of Capital or the C Share Alternatives or give any financial advice. For financial advice, including taxation advice, you will need to consult your own financial and/or tax adviser.

PART IV

COMPLETING YOUR ELECTION FORM

Your Election Form is enclosed with this document. Shareholders electing through CREST should not complete an Election Form but instead should refer to paragraph 6 of Part VIII of this document.

It is important to note that if you do nothing you will automatically receive Alternative 1: Initial Redemption in respect of ALL of your C Shares. Therefore Shareholders wishing to elect for Alternative 1: Initial Redemption of ALL of their C Shares DO NOT need to complete or return the Election Form. It is expected that, on redemption pursuant to the Initial Redemption, the proceeds will generally be treated as a capital payment for United Kingdom tax purposes.

The following instructions set out what you should do when completing your Election Form. Any decisions you reach should be based on the information contained in this document.

References to Boxes refer to the boxes indicated on the Election Form.

Name(s) of Shareholder(s):

The Election Form shows the name of the Shareholder, or names of joint Shareholders, of C Shares for which an election can be made. When the Election Form is completed the Shareholder, or all joint Shareholders, need to sign Part 2 of the Election Form and these signatures need to be witnessed (the witness must be over 18 years of age and cannot be the Shareholder or one of the joint Shareholders, although one person could separately witness the signature of all joint Shareholders).

Number of shares held:

Box A shows the number of Existing Ordinary Shares held as at close of business on 20 July 2011 (being the latest practicable time prior to the publication of the Election Form). If you do not buy, sell or transfer any Existing Ordinary Shares between 20 July 2011 and 8 August 2011 or buy, sell or transfer any C Shares between 9 August 2011 and 15 August 2011, then this number will also be the number of C Shares which you will hold at the C Share Record Date and may make an election (assuming the expected timetable outlined on page 3 of this document applies). If you do buy, sell or transfer any Existing Ordinary Shares or C Shares you should take care to ensure that your election is in respect of the number of C Shares that will be registered in your name(s) on 15 August 2011 (assuming that the expected timetable applies).

Shareholders should note that, as the C Shares will not be listed on any exchange, any sales, purchases or other transfers of C Shares may only be undertaken privately.

TO CHOOSE ONE ALTERNATIVE FOR ALL OF YOUR C SHARES:

To choose Alternative 1: Initial Redemption for ALL of your C Shares you DO NOT need to complete or return the Election Form (or you may mark an "X" in Box 1). If you wish to choose Alternative 1: Initial Redemption in respect of ALL your C Shares and do not complete and return your blue Election Form (as you are encouraged not to do), you are still encouraged to vote on the Proposals by completing and returning your white Form of Proxy for the General Meeting in accordance with the instructions printed on it. Please note that no C Shares or New Ordinary Shares will be created and the Return of Capital will not take effect unless the Resolution to be considered at the General Meeting is passed.

To choose Alternative 2: Single C Share Dividend for ALL of your C Shares you should mark an "X" in Box 2.

To choose Alternative 3: Final Redemption for ALL of your C Shares you should mark an "X" in Box 3.

TO SPLIT YOUR C SHARES BETWEEN MORE THAN ONE ALTERNATIVE:

Enter, in numbers, the number of C Shares you wish to be subject to Alternative 1: Initial Redemption in Box 1, the number of C Shares you wish to be subject to Alternative 2: Single C Share Dividend in Box 2 and the number of C Shares you wish to elect for Alternative 3: Final Redemption in Box 3.

The following instructions set out default positions where Election Forms are incorrectly completed:

Alternative 1: Initial Redemption will be elected for automatically on all C Shares in respect of which the Shareholder has not elected for any other C Share Alternatives or where a Shareholder has not signed the Election Form or has signed or filled it in incorrectly.

If you mark more than one box with an "X", Alternative 1 will automatically be elected for all of your C Shares.

If you leave Boxes 2 and 3 blank and enter a number in Box 1 that is greater than your shareholding on 15 August 2011, your election in respect of Alternative 1: Initial Redemption will be reduced to your actual holding.

If you leave Boxes 1 and 3 blank and enter a number in Box 2 that is greater than your shareholding on 15 August 2011, your election in respect of Alternative 2: Single C Share Dividend will be reduced to your actual holding.

If you leave Boxes 1 and 2 blank and enter a number in Box 3 that is greater than your shareholding on 15 August 2011, your election in respect of Alternative 3: Final Redemption will be reduced to your actual holding.

If you have chosen to split your election between Alternatives 1, 2 and 3 and the total number of C Shares entered in Boxes 1, 2 and 3 is greater than your shareholding on 15 August 2011 (being the C Share Record Date), your election in respect of Alternative 1: Initial Redemption will be fulfilled first, and, if this does not exceed your actual holding, the balance of your holding will receive Alternative 2: Single C Share Dividend. Any balance thereafter will receive Alternative 3: Final Redemption.

If the total number of C Shares entered in Boxes 1, 2 and 3 is less than your shareholding on 15 August 2011 (being the C Share Record Date), the balance of your holding for which you have made no election will receive Alternative 1: Initial Redemption.

If you choose Alternative 1: Initial Redemption for your entire holding by marking an "X" in Box 1, anything entered in Boxes 2 and 3 will be disregarded.

If you choose Alternative 2: Single C Share Dividend for your entire holding by marking an "X" in Box 2, anything entered in Boxes 1 and 3 will be disregarded.

If you choose Alternative 3: Final Redemption for your entire holding by marking an "X" in Box 3, anything entered in Boxes 1 and 2 will be disregarded.

Notwithstanding the instructions set out above, Melrose reserves the right, in its sole discretion, to accept completed Election Forms received after the relevant due date for receipt of such form by Equiniti and to accept incomplete or incorrectly completed Election Forms. Melrose further reserves the right in its sole discretion to reject any Election Forms if to act on the election would be illegal.

A guide to the general tax position of Shareholders resident in the United Kingdom for tax purposes as at the date of this document is set out in Part VII of this document. You are strongly advised to read that part of this document before completing and returning your Election Form.

Final instruction on completing your Election Form:

Once completed and signed, the Election Form should be returned in the reply-paid envelope provided. No stamps will be needed if posted in the United Kingdom. To be valid, Election Forms must be received by Equiniti by 4.30 p.m. on 15 August 2011. If you do not use the envelope provided, the Election Form should be returned by hand or by post to Equiniti, Corporate Actions, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA.

If you need assistance in completing the Election Form or have any queries relating to it, you should telephone the Equiniti Shareholder helpline on 0871 384 2971 (or +44 (0)121 415 0208 if calling from outside the United Kingdom) between 8.30 a.m. and 5.30 p.m. (London time) on any Business Day.1 Please note that the Shareholder helpline will not be able to provide advice on the merits of the C Share Alternatives or give any financial or tax advice.

Melrose will determine all questions as to the form and validity (including time of receipt) of any Election Form, in its absolute discretion, which determination shall be final and binding. Melrose also reserves the absolute right to waive any defect or irregularity in relation to, or the receipt of, an Election Form completed by or on behalf of any Shareholder, and such determination will be binding on such Shareholder. None of Melrose, Equiniti or any other person will be under any duty to give notification of any defect or irregularity in any Election Form or incur any liability for failure to give any such notification.

PART V

RIGHTS AND RESTRICTIONS ATTACHED TO THE C SHARES

The following sets out the amendments which are proposed to be made to the Articles of the Company under the Resolution to be proposed at the General Meeting and summarises the rights and restrictions to which they are subject.

Article 9A Rights and restrictions attaching to the C Shares

Notwithstanding the provisions in these articles which relate to shares, the following articles 9(A) to 9(H) comprise all the rights and restrictions relating to the non-cumulative redeemable preference shares of the Company of 75 pence nominal value ("C Shares").

(A) Election Form

(i) Together with a circular to Shareholders dated 22 July 2011 (the "Circular") holders of ordinary shares were sent an election form or, if they held their ordinary shares in CREST, they were notified of their entitlement to submit a transfer to escrow instruction relating to the C Shares (each an "Election Form") under which they could elect in relation to any C Shares to be issued to them to:
(a) receive the Single C Share Dividend (as defined below) in respect of all or some of their C Shares; and/or
(b) to have some or all of their C Shares redeemed by the Company on 16 August 2011 or such other date as the directors may determine (the "Initial Redemption Date"); and/or
(c) hold some or all of their C Shares to be redeemed subsequently on 30 April 2012 or such other date as the directors may determine (the "Final Redemption Date").

Elections made by Shareholders on their Election Forms in respect of the C Share alternatives will not take effect until 4.30 p.m. on 15 August 2011 or such other time and/or date as the directors may determine.

(ii) Holders of C Shares who have not returned a duly completed Election Form by 4.30 p.m. on 15 August 2011 (or such later time and/or date as the directors may determine) electing (revocably until that time and irrevocable thereafter) to accept the Single C Share Dividend or to retain such shares and have their C Shares redeemed by the Company on the Final Redemption Date will be deemed instead to have elected to have their C Shares redeemed by the Company on the Initial Redemption Date.
(iii) The directors may, if they so determine in their absolute discretion, accept an Election Form which is received after the relevant time or which is not correctly completed. The directors may, in addition, if they so determine in their absolute discretion, treat any other document or action as a valid Election Form or as the completion or delivery of a valid Election Form, as the case may be.

(B) Income

(i) Out of the profits available for distribution, a single dividend of 75 pence per C Share (the "Single C Share Dividend") shall be payable (without having to be declared) to those holders of C Shares who have elected to receive the Single C Share Dividend in respect of the C Shares for which they have made such election.
(ii) The Single C Share Dividend shall become payable on 16 August 2011 or such later date as the directors may determine. Each C Share in respect of which such Single C Share Dividend becomes payable shall, on such date (or such other date as the directors may determine), be automatically converted, without any further action or consent being required from the shareholder, into a deferred share of 75 pence nominal value with the rights and restrictions described in Article 9B (a "C Deferred Share").

(iii) The holders of the C Shares shall not be entitled to any further right of participation in the profits of the Company other than as described in articles 9A(B) (i) and (ii) above.

(C) Capital

(i) Except as provided in article 9A(F) below, on a return of capital on winding-up (excluding any intra-group reorganisation on a solvent basis) but not otherwise, the holders of the C Shares shall be entitled, in priority to any payment to the holders of ordinary shares, 2009 Incentive Shares or C Deferred Shares, to 75 pence per C Share (which shall be the nominal capital paid up or credited as paid up on the C Shares) held by them.
(ii) The holders of the C Shares shall not be entitled to any further right of participation in the assets of the Company in excess of that specified in article 9A(C)(i) above. If on such a winding-up the amounts available for payment are insufficient to cover in full the amounts payable on the C Shares, the holders of such shares will share rateably in the distribution of assets (if any) in proportion to the full preferential amounts to which they are entitled.

(D) Redemption

Subject to the Act and to the provisions of these articles, the C Shares will be redeemed in accordance with the following provisions:

(i) holders of C Shares who do not complete and return an Election Form, or invalidly complete and return an Election Form, or complete and return an Election Form making a positive election to have some or all of their C Shares redeemed on the Initial Redemption Date, will have those C Shares redeemed (without the Company providing any notice) at 9.00 a.m. on the Initial Redemption Date (unless determined otherwise by the directors);
(ii) holders of C Shares who elect that only some of their C Shares will be redeemed on the Final Redemption Date, will have such C Shares redeemed (without the Company providing any notice) at 9.00 a.m. on the Final Redemption Date (unless determined otherwise by the directors) with the balance being redeemed (without the Company providing any notice) at 9.00 a.m. on the Initial Redemption Date save for any C Shares in respect of which the holder is entitled to the Single C Share Dividend and subsequent conversion to C Deferred Shares as described in article 9A(B)(i) and (ii) above;
(iii) holders of C Shares who elect to have all of their C Shares redeemed on the Final Redemption Date will have all of their C Shares redeemed (without the Company providing any notice) at 9.00 a.m. on that date (unless determined otherwise by the directors);
(iv) unless redeemed earlier, all C Shares in issue on the Final Redemption Date will be redeemed (without the Company providing any notice) at 9.00 a.m. on the Final Redemption Date (unless determined otherwise by the directors);
(v) on each C Share that is redeemed, there will be paid to the holder thereof a sum equal to the nominal value of that C Share;
(vi) all C Shares which are redeemed will immediately and automatically following such redemption be cancelled and will not be reissued; and
(vii) payment in respect of C Shares being redeemed may be made by cheque or by the crediting of accounts in a relevant system, (e.g. CREST) (or otherwise as the directors may determine).

(E) Attendance and voting at general meetings

(i) The holders of the C Shares shall not be entitled, in their capacity as holders of such shares, to receive notice of any general meeting of the Company nor to attend, speak or vote at any such general meeting unless the business of the meeting includes the consideration of a resolution for the winding-up (excluding any intra-group reorganisation on a solvent basis) of the Company, in which case the holders of the C Shares shall have the right to attend the general meeting and shall be entitled to speak and vote only on any such resolution.

(ii) Whenever the holders of the C Shares are entitled to vote at a general meeting of the Company, on a show of hands every holder thereof who (being an individual) is present in person or (being a corporation) by a duly authorised representative not being himself a member shall have one vote, and on a poll every such holder shall have one vote for every C Share which he holds.

(F) Class rights

(i) The Company may from time to time create, allot and issue further shares, whether ranking pari passu with, or in priority to, the C Shares. The creation, allotment or issue of any such further shares (whether or not ranking in any respect in priority to the C Shares) shall be treated as being in accordance with the rights attaching to the C Shares and shall not involve a variation of such rights for any purpose or require the consent of the holders of C Shares.
(ii) A reduction by the Company of the capital paid up or credited as paid up on the C Shares and the cancellation of such shares shall be treated as being in accordance with the rights attaching to the C Shares and shall not involve a variation of such rights for any purpose. The Company will be authorised to reduce its capital at any time (subject to the confirmation of the Court in accordance with the Act) and without obtaining the consent of the holders of the C Shares including by paying to the holders of the C Shares the preferential amounts to which they are entitled as set out above.

(G) Form, transferability and listing

(i) No share certificates or other documents of title shall be issued in relation to any C Shares in respect of which a Single C Share Dividend is paid or which are redeemed by the Company on the Initial Redemption Date. The C Shares are not renounceable and all transfers of C Shares shall be effected in writing in usual or common form or in any other form which the directors may approve. Every transfer of uncertificated C Shares must be carried out using a relevant system (e.g. CREST). For the avoidance of doubt C Shares will be redeemed in accordance with article 9A(D) above.
(ii) No application has been, or will be, made to the UK Listing Authority (being the relevant competent authority for the purposes of the official listing of the Company's securities ("UKLA"), or the London Stock Exchange plc (the "London Stock Exchange")), respectively, for the C Shares to be admitted to the official list maintained by the UKLA for the purposes of Part V of the Financial Services and Markets Act 2000 and to trading on the market for listed securities of the London Stock Exchange.
(iii) The C Shares may be settled through a relevant system (e.g. CREST).

(H) Deletion of Articles when no C Shares in existence

Articles 9A(A) to 9A(H) shall remain in force until there are no longer any C Shares in existence whether by way of conversion into C Deferred Shares, redemption, cancellation or reclassification, whichever is earlier, notwithstanding any provision in these articles to the contrary. Thereafter articles 9A(A) to 9A(H) shall be deemed to be of no effect and shall be deleted and the separate register for the holders of C Shares shall no longer be required to be maintained by the Company; but the validity of anything done under articles 9A(A) to 9A(H) before that date shall not otherwise be affected and any actions taken under articles 9A(A) to 9A(H) before that date shall be conclusive and shall not be open to challenge on any grounds whatsoever.

PART VI

RIGHTS AND RESTRICTIONS ATTACHED TO THE C DEFERRED SHARES

The following summarises the rights of the C Deferred Shares (which will be automatically redeemed on 30 April 2012, or such other date as the Directors may determine) and the restrictions to which they are subject. These are reflected in the proposed amendments to Melrose's Articles under the Resolution to be proposed at the General Meeting.

9B Rights and restrictions attaching to the C Deferred Shares

Notwithstanding the provisions in these articles which relate to shares, the following articles 9B(A) to 9B(G) comprise all the rights and restrictions relating to the redeemable deferred shares of the Company of 75 pence nominal value (the "C Deferred Shares").

(A) Income

The C Deferred Shares shall confer no right to participate in the profits of the Company.

(B) Capital

On a return of capital on a winding-up (excluding any intra-group re-organisation on a solvent basis) but not otherwise, there shall be paid to the holders of the C Deferred Shares the nominal capital paid up or credited as paid up on such C Deferred Shares after (i) firstly, paying to the holders of the C Shares 75 pence per C Share held by them together; and (ii) secondly, paying to the holders of the Ordinary Shares the nominal capital paid up or credited as paid up on the Ordinary Shares held by them respectively, together with the sum of £100,000 on each Ordinary Share.

The holders of the C Deferred Shares shall not be entitled to any further right of participation in the assets of the Company.

(C) Attendance and voting at general meetings

The holders of the C Deferred Shares shall not be entitled, in their capacity as holders of such shares, to receive notice of any general meeting of the Company nor to attend, speak or vote at any such meeting.

(D) Class rights

The Company may from time to time create, allot and issue further shares, whether ranking pari passu with, or in priority to, the C Deferred Shares. The creation, allotment or issue of any such further shares (whether or not ranking in any respect in priority to the C Deferred Shares) shall be treated as being in accordance with the rights attaching to the C Deferred Shares and shall not involve a variation of such rights for any purpose or require the consent of the holders of the C Deferred Shares.

The reduction by the Company of the capital paid up or credited as paid up on the C Deferred Shares and the cancellation of such shares shall be in accordance with the rights attaching to the C Deferred Shares and shall not involve a variation of such rights for any purpose. The Company will be authorised to reduce its capital at any time (subject to the confirmation of the Court in accordance with the Act) and without obtaining the consent of the holders of the C Deferred Shares.

(E) Form and transferability

The C Deferred Shares will not be listed on any stock exchange nor shall any share certificates be issued in respect of such shares. The C Deferred Shares shall be neither renounceable nor transferable.

(F) Redemption

Subject to the provisions of the Act and to the provisions of these articles, the Company may, at any time, without prior notice, redeem all C Deferred Shares then in issue but all such C Deferred Shares shall be automatically redeemed on 30 April 2012 (unless determined otherwise by the Directors) for a total aggregate price not exceeding one penny for all such C Deferred Shares redeemed. This payment may be made over, if the directors so determine, to charity.

(G) Deletion of Articles 9B(A) to 9B(G) when no C Deferred Shares in existence

Articles 9B(A) to 9B(G) shall remain in force until there are no longer any C Deferred Shares in existence, notwithstanding any provision in these articles to the contrary. Thereafter articles 9B(A) to 9B(G) shall be, and shall be deemed to be, of no effect and shall be deleted and the separate register for the holders of C Deferred Shares shall no longer be required to be maintained by the Company; but the validity of anything done under articles 9B(A) to 9B(G) before that date shall not otherwise be affected and any actions taken under articles 9B(A) to 9B(G) before that date shall be conclusive and shall not be open to challenge on any grounds whatsoever.

PART VII

UNITED KINGDOM TAXATION IN RELATION TO THE RETURN OF CAPITAL

The comments below are intended as a general guide only and are based on current United Kingdom tax law and HM Revenue and Customs published practice. The comments below apply only to Shareholders who are resident in the United Kingdom for tax purposes and who hold their Existing Ordinary Shares, and who will hold their New Ordinary Shares and C Shares, beneficially as investments and not on trading account. The tax consequences may be different for any future disposal and may alter between the date of this document and the implementation of the Return of Capital.

Shareholders who are in any doubt as to their tax position or who are subject to tax in a jurisdiction other than the United Kingdom should consult an appropriate professional adviser without delay.

1. Capital Reorganisation

For the purposes of United Kingdom taxation of capital gains and corporation tax on chargeable gains ("CGT"):

(i) the receipt of the C Shares and New Ordinary Shares arising from the Capital Reorganisation will be a reorganisation of the share capital of the Company. Accordingly, the C Shares and New Ordinary Shares replacing a Shareholder's holding of Existing Ordinary Shares as a result of the Capital Reorganisation will be treated as the same asset as the Shareholder's holding of Existing Ordinary Shares, and as having been acquired at the same time as the Shareholder's holding of Existing Ordinary Shares was acquired. As a result of the Capital Reorganisation, a Shareholder's original base cost in his Existing Ordinary Shares will be apportioned between the C Shares and the New Ordinary Shares by reference to the market value of the New Ordinary Shares on the first day on which the market value or price is quoted or published for the New Ordinary Shares. The apportionment ratio between the C Shares and the New Ordinary Shares will be printed on the Company's website at the earliest practicable time following a quotation or publication of a price or market valuation in respect of the New Ordinary Shares; and
(ii) in most circumstances, the sale, on behalf of relevant Shareholders, of fractional entitlements to New Ordinary Shares resulting from the Capital Reorganisation should not constitute a part disposal of his pool of Existing Ordinary Shares. Instead the amount of any payment received by the Shareholder should be deducted from the base cost of the C Shares and any New Ordinary Shares received.

2. Single C Share Dividend

Income tax

A United Kingdom resident individual Shareholder who is liable to income tax at the starting or basic rate will pay no tax on the Single C Share Dividend unless it takes that Shareholder's income into the higher rate tax band.

A United Kingdom resident individual Shareholder who is liable to income tax at the higher rate will be liable to pay tax equal to 25 per cent. of the cash dividend received to the extent that the gross dividend, when treated as the top slice of that Shareholder's income, falls above the threshold for higher rate income tax being £35,000, after deducting that Shareholder's relevant personal allowances. Individuals liable to income tax at the additional rate will be liable to pay tax equal to 36.1 per cent. of any part of the cash dividend received falling above the additional rate threshold of £150,000.

United Kingdom resident taxpayers who are not liable to United Kingdom tax on dividends, including pension funds and charities, will not be liable to pay tax on the Single C Share Dividend.

United Kingdom resident corporate Shareholders will generally not be subject to corporation tax on the Single C Share Dividend.

Non-United Kingdom resident Shareholders will not generally be able to claim repayment of any tax from HM Revenue and Customs under any double tax treaty in respect of the Single C Share Dividend.

A Shareholder resident outside the United Kingdom may be subject to taxation on dividend income under local law.

Shareholders who are not resident in the United Kingdom (for tax purposes) should consult their own tax adviser concerning their tax liabilities on dividends received from the Company.

Taxation of chargeable gains

For CGT purposes, the Single C Share Dividend (and the consequent conversion of the C Shares into C Deferred Shares) will not be treated as giving rise to a disposal or part disposal of the C Shares.

Shareholders who receive the Single C Share Dividend should note that, consequent to the Capital Reorganisation, a proportion of the base cost, for CGT purposes, of their Existing Ordinary Shares will be attributed to the C Shares and this amount will continue to be attributed to those C Shares following their conversion into C Deferred Shares (notwithstanding that the C Deferred Shares have limited rights or value). Correspondingly, only a proportion of the base cost of the original holding of Existing Ordinary Shares will be available on a disposal of New Ordinary Shares.

A redemption of the C Deferred Shares will be treated as described in paragraph 3 below and may result in a Shareholder realising a capital loss. Corporate Shareholders should note that it is possible that section 30 of the Taxation of Chargeable Gains Act 1992 could be regarded as being applicable to such a Shareholder who elects for the Single C Share Dividend. If that provision applies, the consideration on a subsequent disposal of C Deferred Shares could be increased on a just and reasonable basis to reflect the Single C Share Dividend.

3. Redemption of C Shares

(i) On redemption of all or any of the C Shares, a Shareholder may, depending on his individual circumstances, be subject to CGT on the amount of any chargeable gain realised. Any gain will be measured by reference to the excess of the redemption price above the Shareholder's allowable expenditure for the C Shares redeemed. The Shareholder's allowable expenditure in relation to his Existing Ordinary Shares will be apportioned between the New Ordinary Shares and the C Shares by reference to the market value of the New Ordinary Shares on the first day on which the market value or price is quoted or published for the New Ordinary Shares.
(ii) The amount of CGT, if any, payable by an individual Shareholder in relation to the chargeable gain described in paragraph 3(i) above will depend on his personal tax position. No tax will be payable on any gain realised on the redemption if the amount of the chargeable gain, when aggregated with other chargeable gains realised by the Shareholder in the year of assessment in question, does not exceed the annual allowance of tax-free gains (£10,600 for the tax year ending 5 April 2012). Broadly, any gains in excess of this amount will be taxed at the individual's relevant capital gains tax rate (18 or 28 per cent). The net gain is taxable at 18 per cent. if the individual is only a basic rate income taxpayer. If the gain exceeds the unused part of an individual's basic rate band for income tax the gain will be taxed at 18 per cent. to the extent of the unused element and 28 per cent. for the excess. If an individual is subject to income tax at a rate in excess of the basic rate then the net gain will be taxable at 28 per cent.
(iii) A corporate Shareholder is taxable on all of its chargeable gains. Corporate Shareholders are entitled to indexation allowance up to the date the chargeable gain is realised.
(iv) Generally, the proceeds received by a Shareholder on Initial Redemption and Final Redemption will not be an income distribution in the Shareholder's hands and will not constitute investment income in the hands of a corporate Shareholder.

(v) On any subsequent disposal otherwise than by way of redemption of the whole or part of a Shareholder's holding of New Ordinary Shares or C Shares, a Shareholder may, depending on his circumstances, be subject to CGT on the amount of any chargeable gain realised. Please refer to paragraph 3(i) above for details of the manner in which a Shareholder's allowable expenditure is allocated between the New Ordinary Shares and the C Shares and to paragraphs 3(ii) and (iii) above for details of how a gain will be taxed.

4. Stamp Duty and Stamp Duty Reserve Tax

Except in relation to depositary receipt arrangements or clearance services to which special rules apply:

(i) No stamp duty or stamp duty reserve tax ("SDRT") will be payable on the issue of the C Shares or the New Ordinary Shares.
(ii) An agreement to sell C Shares or New Ordinary Shares will normally give rise to liability on the purchaser to SDRT at the rate of 0.5 per cent. of the actual consideration paid. If an instrument of transfer of the C Shares or New Ordinary Shares is subsequently produced it will generally be subject to stamp duty at the rate of 0.5 per cent. of the actual consideration paid (rounded up to the nearest £5). When such stamp duty is paid, the SDRT charge will be cancelled and any SDRT already paid will be refunded. Stamp duty and SDRT are generally the liability of the purchaser.
(iii) For the avoidance of doubt, a redemption of C Shares under the Initial Redemption or the Final Redemption will not give rise to any liability to stamp duty or SDRT for the Shareholder.
(iv) There will be no stamp duty or SDRT charge if the C Shares are converted into C Deferred Shares.

PART VIII

ADDITIONAL INFORMATION

1. Company Details

1.1 The Company was incorporated and registered in England and Wales on 13 May 2003 under the Companies Act 1985 with registered number 4763064.
1.2 The registered office of the Company is Precision House, Arden Road, Alcester, Warwickshire B49 6HN. The Company's principal place of business is at Leconfield House, Curzon Street, London W1J 5JA.

2. Melrose Directors

The Melrose Directors and their principal functions are as follows:

Christopher Miller	Executive Chairman
David Roper	Chief Executive
Simon Peckham	Chief Operating Officer
Geoffrey Martin	Group Finance Director
Miles Templeman	Non-Executive Director
Perry Crosthwaite	Non-Executive Director
John Grant	Non-Executive Director

3. Overseas Shareholders

Shareholders who are not resident in the United Kingdom or who are citizens, residents or nationals of other countries should consult their professional advisers to ascertain whether the Proposals (including the receipt of the Single C Share Dividend, the Initial Redemption or the Final Redemption) will be subject to any restrictions or require compliance with any formalities imposed by the laws or regulations of, or any body or authority located in, the jurisdiction in which they are resident or to which they are subject. In particular, it is the responsibility of any Shareholder not resident in the United Kingdom or a citizen, resident or national of another country wishing to receive the Single C Share Dividend, redeem C Shares or otherwise dispose of any shares in Melrose to satisfy themselves as to full observance of the laws of each relevant jurisdiction in connection with the Return of Capital or redemption or subsequent disposal of any shares in Melrose, including the obtaining of any government, exchange control or other consents which may be required, or the compliance with other necessary formalities needing to be observed and the payment of any issue, transfer or other taxes or duties in such jurisdiction.

The distribution of this document in certain jurisdictions may be restricted by law. Persons into whose possession this document comes should inform themselves about and observe any such restrictions. Neither this document nor any other document issued or to be issued by or on behalf of Melrose in connection with the issue or redemption of C Shares or the Single C Share Dividend constitutes an invitation, offer or other action on the part of Melrose in any jurisdiction in which such invitation, offer or other action is unlawful.

In the event that the Directors are advised that it would or might be in breach of legal or regulatory requirements in any jurisdiction, or Melrose would or might be required to make filings or take any other action in any jurisdiction as a result of its issuing C Shares to Shareholders who have registered addresses in any overseas jurisdiction or who are citizens, residents or nationals of other countries, it is proposed that the C Shares to which such Shareholders are entitled may be issued to a nominee and then sold with the net proceeds of sale being remitted to such Shareholders.

The above provisions of this paragraph 3 and/or any other terms of the Proposals, including the Single C Share Dividend and the redemption of the C Shares, relating to overseas Shareholders may be waived, varied or modified as regards specific Shareholders or on a general basis by Melrose in its absolute discretion.

4. Summary of the rights and restrictions attaching to the New Ordinary Shares

The rights and restrictions attaching to the New Ordinary Shares are as set out in the Articles of Association of the Company in relation to the Existing Ordinary Shares.

The New Ordinary Shares are not renounceable and will be transferable by an instrument of transfer in usual or common form. The New Ordinary Shares will be in registered form. The Company will apply for the New Ordinary Shares to be admitted to CREST with effect from Admission. Accordingly, settlement of transactions in the New Ordinary Shares may take place within the CREST system in respect of general market transactions.

5. CREST

In order to facilitate the C Share Alternative elections, the C Shares will, for the purposes of settlement in CREST only, be designated as "interim C Shares" under the ISIN GB00B4QQG566 from the period from the Admission of the New Ordinary Shares (expected to be 9 August 2011) until the Single C Share Dividend Date/Initial Redemption Date (expected to be 16 August 2011). During this period CREST holders will have their accounts credited with "interim C Shares" to allow them to elect electronically through the CREST system. From 16 August 2011 (or such other date as the Directors may determine), the C Shares will, for the purposes of dealings and settlement in CREST, be designated as "C Shares" under the ISIN GB00B45CJK12. Accordingly, on 16 August 2011 those CREST holders who have elected to hold C Shares until the Final Redemption will have their CREST accounts credited with the "C Shares".

If Existing Ordinary Shares held in certificated form to which any election made on the enclosed Election Form relates are dematerialised into CREST after such an election has been made and before 6.00 p.m. on 15 August 2011 (or such other time and/or date as the Directors may determine), any instruction given by the submission of an Election Form will be ineffective. Such Shareholders who subsequently hold their C Shares in CREST will need to submit a valid TTE Instruction in place of the submitted Election Form by 4.30 p.m. on 15 August 2011 (or such other time and/or date as the Directors may determine).

If Existing Ordinary Shares held in CREST are rematerialised into certificated form between 8 August 2011 and 6.00 p.m. on 15 August 2011 (or such other time and/or date as the Directors may determine), holders of such shares who hold their C Shares in certificated form will need to submit a valid Election Form bearing details of the new shareholding account by 4.30 p.m. on 15 August 2011 (or such other time and/or date as the Directors may determine). Election Forms can be obtained by telephoning the Equiniti Shareholder helpline on 0871 384 2971 (or +44 (0)121 415 0208 if calling from outside the United Kingdom) between 8.30 a.m. and 5.30 p.m. (London time) on any Business Day.1

6. Electing in CREST

Electing for Alternative 1

Shareholders who hold interim C Shares in CREST who wish to elect for Alternative 1: Initial Redemption need take no action. CREST holders who do not return a TTE Instruction will automatically receive Initial Redemption on all of their C Shares.

However, Shareholders who hold interim C Shares in CREST who wish to make a positive election for Alternative 1: Initial Redemption in respect of some or all of their C Shares should use the following procedure after their CREST accounts have been credited with interim C Shares on 9 August 2011 (or such other date as the Directors may determine). The prescribed Election Form is a TTE Instruction. If you are a CREST sponsored member, you should refer to your CREST sponsor before taking any action. Your CREST sponsor will be able to confirm details of your participant ID and the member account ID under which your

C Shares are held. In addition, only your CREST sponsor will be able to send the TTE Instruction to Euroclear in relation to your C Shares.

The TTE Instruction must be properly authenticated in accordance with Euroclear's specifications and must contain, in addition to the other information that is required for settlement in CREST, the following details:

(i) the number of interim C Shares to which the election for the Single C Share Dividend relates;
(ii) the participant ID of the holder of the interim C Shares;
(iii) the member account ID of the holder of the interim C Shares from which interim C Shares are to be debited;
(iv) the participant ID of Equiniti. This is 6RA44;
(v) the member account ID of Equiniti. This is MELROS01;
(vi) the ISIN of the interim C Shares. This is GB00B4QQG566;
(vii) the Intended Settlement Date. This must be by 4.30 p.m. on 15 August 20111 ;
(viii) the corporate action number. This is allocated by Euroclear and can be found by viewing the relevant corporate action details in CREST; and
(ix) input with standard delivery instruction priority of 80.

In order for an uncertificated election to be valid, the TTE Instruction must comply with the requirements as to authentication and contents set out above and must settle by 4.30 p.m. on 15 August 20111 .

CREST members and (where applicable) their CREST sponsors should note that the last time at which a TTE Instruction may settle is 4.30 p.m. on 15 August 20111 .

Electing for Alternative 2

Shareholders who hold interim C Shares in CREST who wish to elect for Alternative 2: Single C Share Dividend for some or all of their interim C Shares should use the following procedure after their CREST accounts have been credited on 9 August 2011 (or such other date as the Directors may determine). The prescribed Election Form is a TTE Instruction. If you are a CREST sponsored member, you should refer to your CREST sponsor before taking any action. Your CREST sponsor will be able to confirm details of your participant ID and the member account ID under which your C Shares are held. In addition, only your CREST sponsor will be able to send the TTE Instruction to Euroclear in relation to your C Shares.

(i) the number of interim C Shares to which the election for Initial Redemption relates;
(ii) the participant ID of the holder of the interim C Shares;
(iii) the member account ID of the holder of the interim C Shares from which interim C Shares are to be debited;
(iv) the participant ID of Equiniti. This is 6RA44;
(v) the member account ID of Equiniti. This is MELROS02;
(vi) the ISIN of the interim C Shares. This is GB00B4QQG566;
(vii) the Intended Settlement Date. This must be by 4.30 p.m. on 15 August 20111 ;
(viii) the corporate action number. This is allocated by Euroclear and can be found by viewing the relevant corporate action details in CREST; and
(ix) input with standard delivery instruction priority of 80.

¹ Or such other time and/or date as the Directors may determine.

CREST members and (where applicable) their CREST sponsors should note that the last time at which a TTE Instruction may settle is 4.30 p.m. on 15 August 20111 .

Electing for Alternative 3

Shareholders who hold interim C Shares in CREST who wish to elect for Alternative 3: the Final Redemption in respect of some or all of their C Shares should use the following procedure after their CREST accounts have been credited with interim C Shares on 9 August 2011 (or such other date as the Directors may determine). The prescribed form of redemption is a TTE Instruction. If you are a CREST sponsored member, you should refer to your CREST sponsor before taking any action. Your CREST sponsor will be able to confirm details of your participant ID and the member account ID under which your C Shares are held. In addition, only your CREST sponsor will be able to send the TTE Instruction to Euroclear in relation to your C Shares.

(i) the number of interim C Shares to which the election for Final Redemption relates;
(ii) the participant ID of the holder of the interim C Shares;
(iii) the member account ID of the holder of the interim C Shares from which interim C Shares are to be debited;
(iv) the participant ID of Equiniti. This is 6RA44;
(v) the member account ID of Equiniti. This is MELROS03;
(vi) the ISIN of the interim C Shares. This is GB00B4QQG566;
(vii) the Intended Settlement Date. This must be by 4.30 p.m. on 15 August 20111 ;
(viii) the corporate action number. This is allocated by Euroclear and can be found by viewing the relevant corporate action details in CREST; and
(ix) input with standard delivery instruction priority of 80.

CREST members and (where applicable) their CREST sponsors should note that the last time at which a TTE Instruction may settle is 4.30 p.m. on 15 August 20111 .

7. Consent

Rothschild has given and has not withdrawn its written consent to the issue of this document with the references to its name in the form and context in which they appear.

Investec has given and has not withdrawn its consent to the issue of this document with the references to its name in the form and context in which they appear.

¹ Or such other time and/or date as the Directors may determine.

8. Documents Available for Inspection

Copies of the following documents may be physically inspected at the offices of Simpson Thacher & Bartlett LLP, CityPoint, One Ropemaker Street London EC2Y 9HU during usual business hours on any weekday (Saturdays, Sundays and public holidays excepted) from the date of this document up to and including the date of the General Meeting and at the registered office of the Company from the date of this document up to and including the date of the General Meeting and will also be available for inspection for at least 15 minutes before and during the General Meeting:

(a) the Articles of the Company;
(b) the consent letters referred to in paragraph 7 above;
(c) the Articles showing the proposed amendments to the Articles as a consequence of the Capital Reorganisation; and
(d) this document.

Dated: 22 July 2011

PART IX

DEFINITIONS

In this document, the following expressions have the following meanings, unless the context requires otherwise:

"Act"	the Companies Act 2006 (as amended)
"Admission"	admission of the New Ordinary Shares to the Official List and to trading on the main market of the London Stock Exchange becoming effective in accordance with Listing Rules and the rules of the London Stock Exchange respectively
"Articles"	the articles of association of the Company
"Board" or "Directors"	the directors of the Company at the date of this document
"Business Day"	any day on which banks are generally open in England and Wales for the transaction of normal banking business other than a Saturday or Sunday or public holiday
"Capital Reorganisation"	the reorganisation of the Company's share capital comprising the issuance of C Shares and the Share Capital Consolidation
"C Deferred Shares"	the unlisted deferred shares of 75 pence each in the capital of the Company, the rights and restrictions of which are set out in Part VI of this document
"C Share Alternatives"	the alternatives of the Single C Share Dividend, the Initial Redemption or the Final Redemption
"C Share Record Date"	6.00 p.m. on 15 August 2011 (or such other time and/or date as the Directors may determine)
"C Share Scheme"	the transaction comprising the C Share Alternatives
"C Shares"	the unlisted non-cumulative redeemable preference shares of 75 pence each in the capital of the Company, the rights and restrictions of which are set out in Part V of this document
"CREST Manual"	the current version of the CREST Manual which at the date of this document is available on www.euroclear.com
"Disposal"	the disposal by Melrose of Dynacast
"DRIP"	the Melrose Dividend Reinvestment Plan
"Dynacast"	Dynacast Beteiligungs und Verwaltungs GmbH; Dynacast Parent Spanish Holding Company, S.L.; Dynacast US 1 LLC; Dynacast Singapore Holdings Pte Ltd; Dynacast Holdings Limited; and Dynacast (UK) Limited and each of their respective subsidiaries and/or subsidiary undertakings.
"Election Form"	the blue form enclosed with this document by which an Ordinary Shareholder may choose one or more of the C Share Alternatives
"Election Period"	the period from 22 July 2011 until 4.30 p.m. on 15 August 2011, during which time Shareholders may make elections pursuant to the C Share Alternatives

"Equiniti"	Equiniti Limited, the registrars of the Company
"Euroclear"	Euroclear UK & Ireland Limited, the operator of CREST
"Existing Ordinary Shares"	ordinary shares of 0.2 pence each in the capital of the Company existing prior to the Share Capital Consolidation
"Final Redemption"	the redemption by Melrose of C Shares on the Final Redemption Date
"Final Redemption Date"	30 April 2012 (or such other date as the Directors may determine)
"Form of Proxy"	the white form enclosed with this document for use by Shareholders in connection with the General Meeting
"FSA"	the Financial Services Authority
"FSMA"	the Financial Services and Markets Act 2000
"General Meeting"	the general meeting of Melrose convened for 10.00 a.m. on 8 August 2011 to vote on the Resolution and any adjournment thereof
"Group"	the Company and its subsidiaries
"Initial Redemption"	the redemption by Melrose of C Shares on the Initial Redemption Date
"Initial Redemption Date"	16 August 2011 (or such other date as the Directors may determine)
"Investec"	Investec Investment Banking, a division of Investec Bank plc
"ISIN"	International Security Identification Number
"Listing Rules"	the listing rules made by the FSA in exercise of its functions as competent authority pursuant to Part V of FSMA
"London Stock Exchange"	London Stock Exchange plc or its successor
"Melrose" or the "Company"	Melrose PLC
"Melrose Board" or "Melrose Directors"	the board of directors of Melrose
"New Ordinary Shares"	following the Share Capital Consolidation, the new ordinary shares of 14⁄55 pence each in the capital of the Company
"Official List"	the official list maintained by the UK Listing Authority for the purposes of Part V of FSMA
"Ordinary Share Record Date"	6.00 p.m. on 8 August 2011 (or such other time and/or date as the Directors may determine)
"Ordinary Shares"	Existing Ordinary Shares or New Ordinary Shares, as the context may require
"Proposals"	the proposed Return of Capital
"Replacement Election Form"	the election form provided to a Shareholder wishing to re-elect for the C Share Alternatives following a withdrawal of an election

"Resolution"	the special resolution to approve, inter alia, the Return of Capital to be proposed at the General Meeting (as set out in the notice of General Meeting at the end of this document)
"Return of Capital"	the transaction comprising the Capital Reorganisation and the C Share Scheme
"Rothschild"	N M Rothschild & Sons Limited
"Share Capital Consolidation"	the consolidation of the Existing Ordinary Shares in the manner set out in paragraph (c) of the Resolution in the notice convening the General Meeting set out at the end of this document
"Share Capital Consolidation Record Date"	6.15 p.m. on 8 August 2011 (or such other time and/or date as the Directors may determine)
"Shareholder(s)" or "Ordinary Shareholder(s)"	(a) holder(s) of Ordinary Shares
"Single C Share Dividend"	the dividend of 75 pence per C Share
"Single C Share Dividend Date"	16 August 2011 (or such other date as the Directors may determine)
"subsidiary" and "subsidiary undertaking"	has the meaning given to it in section 1162 of the Act
"TTE Instruction"	a transfer to escrow instruction (as defined in the CREST Manual)
"UK Listing Authority" or "UKLA"	the FSA acting in its capacity as the competent authority for listing under Part V of FSMA and in the exercise of its functions in respect of admission to the Official List
"United Kingdom" or "UK"	the United Kingdom of Great Britain and Northern Ireland
"US" or "United States"	the United States of America (including the states of the United States and the District of Colombia), its possession and territories and all areas subject to its jurisdiction
"US Securities Act"	United States Securities Act of 1933 (as amended)

All times referred to are London times unless otherwise stated.

Melrose PLC

(Incorporated in England and Wales with registered number 4763064)

NOTICE OF GENERAL MEETING

NOTICE IS HEREBY GIVEN that a General Meeting of Melrose PLC (the "Company") will be held at the offices of Investec at 2 Gresham Street, London EC2V 7QP at 10.00 a.m. on 8 August 2011, for the purpose of considering and, if thought fit, passing the following Resolution, which will be proposed as a special resolution:

THAT, conditional on the admission of the New Ordinary Shares (as defined below) to the Official List of the Financial Services Authority and to trading on the London Stock Exchange plc's main market for listed securities becoming effective by 8.00 a.m. on 9 August 2011 (or such other time and/or date as the directors of the Company may determine):

(a) the Articles of Association of the Company be and are amended by the creation of new articles 9A and 9B setting out the rights and restrictions of the C Shares and the C Deferred Shares in the manner set out in Parts V and VI of the Circular and produced to the meeting and by the amendment of article 40(A) by inserting "consolidation;" before the word "consolidation" in the first line;
(b) the Directors be and are hereby authorised to capitalise a sum of £220,061,595.75 standing to the credit of the Company's capital redemption reserve and a sum of £153,128,488.50 standing to the credit of the Company's share premium account and to apply the aggregate of such sums in paying up in full 497,586,779 C Shares and are hereby authorised pursuant to section 551 of the Act to allot and issue such C Shares credited as fully paid up, in an aggregate nominal amount of £373,190,084.25, to the holders of the existing ordinary shares of 0.2 pence each in the capital of the Company (the "Existing Ordinary Shares") on the basis of one C Share for each Existing Ordinary Share held and recorded on the register of members of the Company at 6.00 p.m. on 8 August 2011 (or such other time and/or date as the Directors may determine), PROVIDED THAT the authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company to be held in 2012 or the date that is 15 months from the date of the passing of this resolution, whichever is the earlier;
(c) In respect of each holding of Existing Ordinary Shares as shown in the register of members of the Company at 6.15 p.m. on 8 August 2011 (or such other time and/or date as the Directors may determine) each issued Existing Ordinary Share be and is hereby sub-divided into eleven shares of 1 ⁄55 pence and forthwith upon such sub-division every fourteen shares of ¹ ⁄55 pence resulting from such sub-division be and are consolidated into one new ordinary share of 14⁄55 pence in the capital of the Company (the "New Ordinary Shares"), PROVIDED THAT no member shall be entitled to a fraction of a New Ordinary Share and all fractional entitlements arising out of the consolidation shall be aggregated into New Ordinary Shares (up to such number as will result in a whole number of New Ordinary Shares) and the whole number of New Ordinary Shares so arising sold and the net proceeds of sale be paid in due proportion (rounded down to the nearest penny) to those shareholders who would otherwise be entitled to such fractional entitlements save that individual amounts not exceeding £1 and any such rounding shall be retained by the Company and donated to charities chosen by the Board;
(d) the rights and restrictions attaching to the New Ordinary Shares resulting from the sub-division and consolidation provided for in paragraph (c) above shall be as set out in the Articles of Association of the Company as proposed to be amended pursuant to paragraph (a) above.

Registered office: By order of the Board: Precision House Garry Barnes Arden Road Company Secretary Alcester Warwickshire B49 6HN 22 July 2011

Notes:

1. A member entitled to attend and vote at the meeting is also entitled to appoint one or more proxies to attend and, on a poll, vote instead of him. The proxy need not be a member of the Company.
1. A form of proxy is enclosed with this notice. To be effective, a form of proxy must be completed and returned, together with any power of attorney or authority under which it is completed or a certified copy of such power or authority, so that it is received by the Company's registrars at the address specified on the form of proxy not less than 48 hours (excluding any part of a day that is not a working day) before the time for holding the meeting. Returning a completed form of proxy will not preclude a member from attending the meeting and voting in person.
1. Any person to whom this notice is sent who is a person nominated under section 146 of the Companies Act 2006 (the "Act") to enjoy information rights (a "Nominated Person") may, under an agreement between him and the shareholder by whom he was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights. The statement of the rights of shareholders in relation to the appointment of proxies in paragraphs 1 and 2 above does not apply to Nominated Persons. The rights described in paragraphs 1 and 2 can only be exercised by shareholders of the Company.
1. To be entitled to attend and vote at the General Meeting (and for the purposes of the determination by the Company of the number of votes they may cast), members must be entered on the Company's register of members by 6.00 p.m. on 5 August 2011 (or, in the event of an adjournment, on the date which is two days before the time of the adjourned meeting). Changes to entries on the register of members after this time shall be disregarded in determining the rights of any person to attend or vote at the meeting.
1. As at 21 July 2011 (being the last business day prior to the publication of this notice) the Company's issued share capital consists of 497,586,779 Ordinary Shares, carrying one vote each. Therefore, the total voting rights in the Company as at 21 July 2011 are 497,586,779.
1. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so by using the procedures described in the CREST Manual. CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.
1. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a "CREST Proxy Instruction") must be properly authenticated in accordance with Euroclear UK & Ireland Limited's specifications, and must contain the information required for such instruction, as described in the CREST Manual (available via www.euroclear.com/CREST). The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer's agent (ID RA19) by 10.00 a.m. on 6 August 2011. For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp applied to the message by the CREST Application Host) from which the issuer's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.
1. CREST members and, where applicable, their CREST sponsors, or voting service providers should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member, or sponsored member, or has appointed a voting service provider, to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting system providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
1. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5) (a) of the Uncertificated Securities Regulations 2001.
1. Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a member provided that they do not do so in relation to the same shares.
1. Any member attending the meeting has the right to ask questions. The Company must cause to be answered any such question relating to the business being dealt with at the meeting but no such answer need be given if (a) to do so would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information, (b) the answer has already been given on a website in the form of an answer to a question, or (c) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered.
1. A copy of this notice, and other information required by section 311A of the Act, can be found at www.melroseplc.net.
1. You may not use an electronic address provided in either this Notice of General Meeting or any related documents (including the Proxy Form) to communicate with the Company for any purposes other than those expressly stated.
1. You may register your vote online by visiting Equiniti's website at www.sharevote.co.uk. In order to register your vote online, you will need to enter the Voting ID, Task ID and your Shareholder Reference Number which are set out on the enclosed Form of Proxy. The return of the Form of Proxy by post or registering your vote online will not prevent you from attending the General Meeting and voting in person, should you so wish.

AI assistant

Melrose Industries PLC — Share Issue/Capital Change 2011

5335_rns_2011-07-22_22bac422-5ebe-4345-97ff-d7fe58997e20.pdf

Melrose PLC

Proposed Return of Capital to Shareholders of 75 pence per Existing Ordinary Share by way of one C Share for each Existing Ordinary Share, and an 11 for 14 Share Capital Consolidation

Notice of General Meeting

CONTENTS

EXPECTED TIMETABLE OF EVENTS

PART I

LETTER FROM THE CHAIRMAN OF MELROSE

Registered in England and Wales, Registration No. 4763064

£373.2 MILLION RETURN OF CAPITAL TO SHAREHOLDERS

1. Introduction

2. Summary of the Proposals

3. Return of Capital

One C Share for every one Existing Ordinary Share held on the Ordinary Share Record Date; and eleven New Ordinary Shares for every fourteen Existing Ordinary Shares held on the Share Capital Consolidation Record Date.

3.2 The C Share Alternatives

Shareholders who are in any doubt as to their tax position should consult an appropriate professional adviser.

Alternative 1: Initial Redemption

Alternative 2: Single C Share Dividend

Alternative 3: Final Redemption

If you do not properly complete and return your Election Form or if you are a CREST holder and you do not send a valid TTE Instruction, you will be deemed to have elected for Alternative 1: Initial Redemption.

3.3 Key dates

3.4 Shareholder helpline

Please note that the Shareholder helpline is not able to provide advice on the merits of the C Share Alternatives or give any financial or tax advice.

4. General Meeting

5. Further information

6. United Kingdom taxation in relation to the Return of Capital

You are strongly advised to read Part VII of this document and to seek professional advice tailored to your specific circumstances.

7. Overseas Shareholders

8. Action to be taken

9. Recommendation

PART II

DETAILS OF THE RETURN OF CAPITAL

1. Return of Capital

Conditions to the implementation of the Return of Capital

2. Capital Reorganisation

2.1 Allotment of C Shares

2.2 Share Capital Consolidation

2.3 Fractional entitlements to New Ordinary Shares

3. Alternative 2: Single C Share Dividend

Shareholders should read carefully Part VII of this document before deciding whether to elect for the Single C Share Dividend.

4. Alternatives 1 and 3: Redemption

4.1 Alternative 1: Initial Redemption

Shareholders should read carefully Part VII of this document before deciding whether to elect for the Initial Redemption.

4.2 Alternative 3: Final Redemption

Shareholders should read carefully Part VII of this document before deciding whether to elect for the Final Redemption.

5. Additional terms of the C Share Alternatives

6. Withdrawal rights

7. Non-United Kingdom Shareholders

8. General Meeting

9. Share certificates

10. Amendments to the Articles

11. Dealings and despatch of documents

12. Summary explanation of the Resolution to be put to the General Meeting

PART III

FREQUENTLY ASKED QUESTIONS WITH ANSWERS RELATING TO THE RETURN OF CAPITAL

You should be aware that the Return of Capital is conditional upon approval by Shareholders of the Resolution to be proposed at the General Meeting and upon Admission.

1. What is being proposed?

2. Why is Melrose returning this cash now?

3. How is this being done?

4. What happens to my Melrose shares?

5. What does all this mean to me?

6. Will the Return of Capital affect the dividends per share that I receive on my Melrose Ordinary Shares in the future?

7. What if the number of Melrose Ordinary Shares I hold on 8 August 2011 does not divide exactly by 14?

8. What happens to my current share certificate?

9. When will I get my New Ordinary Share certificate?

10. What if I want to sell my New Ordinary Shares before I have received my New Share Certificate?

11. What choices do I have for my C Shares?

Alternative 1: Initial Redemption

Alternative 2: Single C Share Dividend

Alternative 3: Final Redemption

Default: Alternative 1

12. Example of how this works in practice?

13. How do I make my choice?

14. Can I choose to have my C Shares redeemed on a different date?

15. Will I get a C Share certificate?

16. What is a "C Deferred Share"?

17. Will I get a C Deferred Share certificate?

18. What if I don't get my blue Election Form or TTE Instruction back in time?

Melrose Industries PLC Share Issue/Capital Change 2011