SAFEROADS HOLDINGS LIMITED — AGM Information 2009

Oct 19, 2009

ABN 81 116 668 538 39 Weerong Rd Drouin Vic 3818 Phone 03 5625 6600

Saferoads Holdings Limited Annual General Meeting

10.30 am, 20 October 2009

Chairman's address, followed by Managing Director's address and powerpoint presentation

Chairman's address – Mr Gary Bertuch:

I am pleased to present this fourth Chairman's overview for Saferoads Holdings Limited.

The Company has come through a very difficult year, the first year of negative growth in its 17 year history. Whilst revenue at $57 million was only marginally below the prior year, NPAT at $1.4 million was approximately 70% down on last year's performance.

The first three quarters of the fiscal year were very challenging, but the Company's financial performance started to show a solid improvement in the June quarter.

The decline in profit reflects the volatile and challenging trading conditions brought about by several factors: the global financial crisis, the general slowdown in the Australian economy, the steep decline in the Australian dollar that took place in the early part of the financial year, the increased input cost particularly of steel and a marked change in product mix demand.

In response, the Company undertook a mid-year operational review and re-structure to improve profitability. Major outcomes included a consolidation of its branch network in Vic, NSW and Qld and a restructure of its senior management team. Benefits of the review began to emerge in the June quarter and have continued through the September quarter of the 2010 financial year. However, these initiatives

resulted in non-recurring and redundancy expenses of around $400,000 in the last financial year.

The Directors regrettably have not declared a final dividend for financial year 2009. This follows the decision not to pay an interim dividend in order to conserve cash following the disappointing result in the first half of the year. The Board is continually reviewing its dividend policy and it will re-introduce dividends as soon as it considers that market volatility has settled and that the Company is in a position to pay dividends on a sustainable basis.

Net debt rose from $8.9 million in June 2008 to $13.0 million in December 2008 but was reduced to $11.1 million by 30 June 2009. The Board considers that in the current economic climate the debt level is still too high and debt reduction will be a key objective in 2009-10.

The Company has reported a technical breach of its interest rate coverage debt covenant with its bankers. This breach was attributable to reduced NPAT percentages plus the inclusion of non-recurring items in the calculation of the interest coverage ratio. Our bankers CBA have since provided the Company with a letter of ongoing support with no change to the terms and conditions of the facility. In line with the relevant accounting standards the Company was required to re-classify all debt as a current liability on the balance sheet as at 30 June 2009.

The interest rate coverage ratio as at the end of September was more than 12 times, which is well in excess of the required 4.0 times. The Company expects approximately $7 million in long term loans to be reclassified as non-current for the purposes of the 2010 first half result.

The Directors believe that the net outcome of the volatile year and the Company's response to the decline in profitability is a more robust and sustainable business, well placed to capitalise on market conditions as they improve.

In February this year the Company received a query from the Australian Securities Exchange regarding a purported failure to disclose market sensitive information in a timely fashion. Whilst the Company believed that it had acted appropriately at the time, following subsequent discussions with ASIC, we made some changes to our

Corporate Governance Policy and increased our focus on continuous disclosure obligations.

On behalf of the Board, I would like to thank our Managing Director, Darren Hotchkin, our General Managers Hamish Webb and Tony Wyatt and our enthusiastic team around Australia.

I would like also to thank my fellow Directors for their sound counsel and generous participation during this challenging year.

Gary Bertuch

Managing Director's address – Mr Darren Hotchkin

Ladies and Gentlemen, it is my pleasure to report to you today on the performance of our Company during the financial year to 30th of June 2009, and to provide an update on our expectations for the forthcoming year.

FINANCIAL PERFORMANCE

The Company has completed its 17th year as a corporate entity, its 4th year as a listed entity, and its first year of negative profit growth.

The majority of our product portfolios performed to expectation in terms of revenue, profit and contribution. Sales in the Crash Cushions and Barriers portfolio grew by 20%. Our "Quadguard" crash barrier is now a familiar sight around the city streets and roads, easily identified by the yellow "nose" cone. Competitive pressure and the decline in the Australian dollar led to a decline in gross margin percentage, offsetting to some extent the improved revenue flows.

After two years of very strong growth, revenue from the Traffic Control portfolio declined 25% and represented 8.2% of total revenue, down from 11% the previous year. Gross margin percentage in this portfolio has traditionally been below the Company's average, but this year it was not materially different from the overall gross profit margin.

The Temporary Barrier portfolio returned the most disappointing performance in the group. Revenue fell by 40%. This portfolio includes the plastic Triton barrier sold under licence to the Quixote Corporation (USA), the T-lok portable concrete barrier manufactured and sold under licence to Rockingham (USA), and the Company's own Ironman steel portable barrier. This area is possibly the portfolio which has been most impacted by the global financial crisis and the associated shrinking in business confidence.

Particularly pleasing was the performance of the Civil Services portfolio. This is a rapidly growing segment of the Company's activities. In the previous year sales grew by almost 75%, and have grown another 43% in 2008-09. It now represents 30% of total turnover. Gross margin percentage has also shown a pleasing growth, but whilst still lower than the GM in most other product groups the portfolio has a significant drag-through effect on some of the Company's higher profit portfolios. The contribution of this portfolio to the overall performance of the Company is a pleasing vindication of the Company's purchase of the Guard Rail Installations business in the June quarter of 2007-08.

This is the second full year for the Public Lighting portfolio which was acquired in October 2006. Revenue for the year grew by a satisfactory 6% and the portfolio represents 13% of total revenue. We are gaining a foothold in the NSW market and expect to be able to consolidate on sales in that state. We are also achieving significant sales of our proprietary ""SafePole" impact light pole in Victoria and are progressing towards obtaining approvals from the relevant NSW authorities. The public lighting market is changing. Authorities are moving away from allowing selection from a wide range of decorative street lighting to a far more restricted selection. We expect the Company's growth will come from products such as our "SafePole".

This is the first full year of trading for the Traffic Signals portfolio. In April 08 we settled the acquisition of Bob Panich Consultancy Pty Ltd, a Sydney based manufacturer of traffic signals equipment that controls the movement of road vehicles and pedestrians. This equipment includes traffic lanterns (the red, amber and green traffic light sets), pedestrian lanterns and audible pedestrian systems. The audible pedestrian system was pioneered by the owner, Bob Panich, and comprises

the audible "beeps" that accompany the changing pedestrian signals. The company also manufactures a range of traffic signal accessories and other accessories. Major customers have included Roads and Traffic Authority (NSW), Telstra Corporation, and State Rail authority (NSW). This business is the Australian distributor of GE Lumination LED aspects. In the last quarter we relocated the manufacturing operation to our Drouin premises and outsourced some of the functions previously done in-house.

Revenue from the portfolio was 6.3% of total revenue.

In summary, of the eight product portfolios, six performed generally to expectation; two portfolios suffered significant decline in revenue and the decline in revenue in the Temporary Barrier portfolio was compounded by a decline in profitability.

KEY FACTORS IN THE FINANCIAL PERFORMANCE 08/09

Increased input costs due to high steel price and the unfavourable exchange rate experienced throughout much of the year have impacted profitability. The global financial crisis eroded business confidence which we believe was a significant factor in the reduced temporary barrier sales.

On the other hand, our Civil Services portfolio has been involved in significant repair and installation work following on from February's tragic Black Saturday bush fires

The growth expected in NSW did not eventuate but revenue in Qld increased by 41% over the previous year. Much of this growth was in the Civil Services portfolio as expected. Revenue in Victoria was 29% below the previous year, reflecting the reduced revenue from Temporary Barriers.

Early in the March quarter the principal contractor we used for installation of our product, particularly in the Civil Services portfolio, ceased operations. In response, we established our own installation crews, taking on many of the employees of the failed operation. Apart from some start-up costs and retrofitting work required, employing the additional personnel was reasonably cost neutral, but did contribute significantly to the increased employee expenses shown in the financial data in the annual report.

We noted at last year's AGM that margins would be under pressure and that we did not expect an improvement until the second half of the 2008-09 year. All performance indicators did indeed decline and bottomed out in the third quarter. In response to the downturn in performance we undertook a major review and rationalisation of our operations in December 08 and again in March 09 and incurred significant restructure expenses. This restructure contributed to a solid improvement in NPAT percentage in the last quarter.

THE YEAR AHEAD

We expect a slight increase in revenue in 2009/10. We expect margins will remain under pressure although we do anticipate an improvement in profitability compared with 2008/09.

The Australian dollar has appreciated against the US dollar which is contributing to some lower input costs. The price of steel has also reduced from the previous highs. However, it is unlikely that we will be able to retain all cost savings as profit in view of the increased competition that we are facing.

The announced government stimulus packages have not yet had a material effect on our business. In Victoria for example, the Frankston freeway extension will present opportunities which may have a positive influence on our business later in this financial year.

During 2008-09 we made a conscious strategic decision to restructure our operations particularly in relation to our interstate operations. We were careful to ensure that sufficient resources remained in place to capitalise on the economic upturn.

We started the year 2009-10 with a healthy order book spread across most product groups. Significant orders have been received since the start of the year. We are particularly pleased with the renewed interest in the Temporary Barrier products in the first quarter of this year. We have received an order to supply $600,000 of our

proprietary "Median Gates" to RTA in NSW, with delivery to take place late in the second quarter and into the third quarter. A positive feature of this order is the possibility of supply of additional related product which could see the total value of the order reach $1 million. We have also won a tender to supply $600,000 of light poles to Powercor in Victoria. This establishes our position as a preferred supplier.

The first quarter financial performance was better than both internal forecast and the first quarter for the previous year. We are particularly pleased to note that the improvement in profit margins that began in the June quarter of last year has been maintained through the first quarter this year.

In closing, I would like to sincerely thank all our shareholders for their continued support, and for the confidence shown in Saferoads. We look forward confidently to a year of positive growth and improved profitability.

Thank you.

Darren Hotchkin

Saferoads Holdings Limited (SRH)

Annual General Meeting

Melbourne 20 October 2009

CRASH CUSHIONS AND BARRIERS

• •Portfolio grew by 20%
• • Quadguard barrier – yellow nose cone
• • Strong competitive pressure and decline in AUD led to decline in margins

TRAFFIC CONTROL

• • Strong growth in past two years but revenue declined 25% in 08-09
• •Revenue 8.2% of Company sales
• • Profit margin improved to materially the same as company average

TEMPORARY BARRIERS

• •Most disappointing performance
• •Revenue fell by 40%
• • Portfolio products include Triton Barriers, concrete T-lok Barriers, steel Ironman Barriers
• • The portfolio most impacted by GFC and shrinking business confidence

CIVIL SERVICES

• •Pleasing performance
• • Portfolio grew by 75% in 07-08 and 43% this year
• •30% of Company sales
• • Improved profit margin but still lower than Company average
• • Has significant "drag-through" effect on other portfolios

PUBLIC LIGHTING

• •Acquired in October 2006
• •Revenue grew 6%
• •13% of Company revenue
• • Achieving significant sales of proprietary "SafePole"
• • Market is changing away from wide selection of decorative lighting to more limited

selection

TRAFFIC SIGNALS

• • First full year of Traffic Signals, acquired in April 08
• • Products include:
  • •Traffic Lights
  • •Pedestrian Lights
  • •Audible pedestrian systems
• •RTA (NSW) main customer
• • Manufacture and assembl y relocated to Drouin in April 09

SUMMARY

• • Six of the Company's portfolios performed to expectation
• • Two portfolios experienced decline in revenue
• • Temporary Barriers also experienced decline in profitability

KEY FACTORS IN FINANCIAL

PERFORMANCE 08-09

• •Increased input costs - steel
• •Unfavourable exchange rates
• GFC eroded business confidence
• Civil Services Civil – repair work following tragic Black Saturday
• Expected growth in NSW did not eventuate
• Revenue in Qld increased 41%

KEY FACTORS IN FINANCIAL

PERFORMANCE 08 -09

• • Principal Civil Services installer ceased operations
• •Established own installation crews
• • Ap p g, art from start u p and retrofittin g costs, employment of crews reasonably cost neutral
• • Employment of crews led to significant increase in employee expenses

KEY FACTORS IN FINANCIAL

PERFORMANCE 08 -09

• • Noted at last year's AGM that margins would remain under pressure until second half of year 08-09
• • All performance indicators bottomed out in third quarter.
• • Undertook major reviews and rationalisation of operations in Dec 08 and again in March 09
• • Restructure contributed to solid improvement in NPAT percentage in last quarter

LOOKING AHEAD 09-10

• •Expect slight increase in revenue
• • Margins remain under pressure but anticipate improved profitability
• • Improved exchange rate contributing to some lower input costs
• • Announced stimulus packages have not had a material impact
• • Frankston Freeway extension will present some opportunities

LOOKING AHEAD (cont'd)

• • In the restructure sufficient resources left in place to capitalise on economic upturn
• • H lth d b k Healthy or der boo
• • Pleasing renewed interest in Temporary Barriers
• •$600k order for proprietary "Median Gate"

LOOKING AHEAD (cont'd)

• • First quarter financial performance better than forecast and prior year
• • Improvement in profit margin noted in June quarter 09 maintained in first quarter this year
• • Look forward confidently to year of positive growth and improved profitability

Questions:

E l B fit Employee Benefits

Annual General Meeting General

Melbourne – 20 October 2009