Saferoads Holdings Limited ABN 81 116 668 538

Prospectus

A nominal offer of 100 Shares at $1.40 each relating to a placement of 2.44 million Shares at $1.40 each

Important Information

This Prospectus is dated 27 September 2006 and was lodged with ASIC on that date. ASIC, the ASX and their respective officers take no responsibility for the contents of this Prospectus. The expiry date of this Prospectus is 27 October 2007.

Investment decisions

This Prospectus is an important document and you are advised to read it carefully. It should be read in its entirety. Any investment decision regarding Saferoads should be based upon both the information contained in this Prospectus and other documents lodged by the Company with ASIC. In particular, in considering the prospects for the Company, Investors should consider carefully the risk factors that could affect the Company's performance. Some of the risk factors that Investors should consider are outlined in Section 7. Investors should carefully consider these factors in light of their personal circumstances (including financial and taxation issues). If you do not understand any part of this Prospectus, you should consult your accountant, stockbroker, solicitor or other professional adviser.

Purpose of this Prospectus

Only a nominal offer is being made under this Prospectus. This Prospectus is being issued to satisfy the requirements of Part 6D.2 of the Corporations Act in relation to an Institutional Placement announced on 21 September 2006. This Prospectus has been prepared so that an offer for sale of Shares issued pursuant to the Institutional Placement within 12 months after their issue does not need disclosure under section 707(3) of the Corporations Act.

Disclaimer

No person is authorised to give any information or to make any representation in connection with this Prospectus that is not contained in this Prospectus. Any information or representation not contained in this Prospectus may not be relied upon as having been authorised by the Company.

IPO prospectus and FY 2006 Annual Report

Under an IPO Prospectus dated 4 November 2005 and lodged with ASIC on that day, the Company conducted a fully underwritten initial public offering of 11.5 million Shares at an issue price of $1.00.

On 4 September 2006, the Company lodged its FY2006 Annual Report with ASIC.

As is permitted by the Corporations Act, this Prospectus refers to information contained in the IPO Prospectus and the FY2006 Annual Report.

This information is taken to be included in this Prospectus

The IPO Prospectus contains information about the initial public offer, Saferoads' business, the directors and management of Saferoads, financial information about Saferoads and certain additional information relating to Saferoads. The FY2006 Annual Report contains the financial statements of Saferoads for the year ended 30 June 2006.

Any reader wishing to obtain a copy of the IPO Prospectus or the FY2006 Annual Report, or any other material lodged with ASIC, free of charge during the currency of this Prospectus may either view an electronic copy on the Company's website www.saferoads.com.au and print a copy from that website or obtain a paper copy from the Company by telephoning the Company Secretary on 1800 060 072.

The information lodged with ASIC and relied upon for the purpose of this Prospectus is primarily of interest to investors and their professional advisers or analysts.

Privacy

The Company may disclose your personal information, for purposes related to your investment, to its agents or service providers, including the Lead Manager and Broker to the Placement and the Company's Share Registry. You can obtain access to personal information that the Company holds about you. To make a request for access or to obtain further information about the Company's privacy policy, please contact the Company Secretary on 1800 060 072.

$\overline{1}$

Glossary

Certain words and phrases used in this Prospectus have defined meanings set out in the Glossary in Section 10 of this Prospectus.

	Chairman's Letter
1.	INVESTMENT HIGHLIGHTS
2.	DETAILS OF THE NOMINAL OFFER
3.	THE INSTITUTIONAL PLACEMENT 8
4.	SAFEROADS
5.	ACOUISITION OF THE BUSINESS OF SWIFT-TECH.11
6.	FINANCIAL INFORMATION
Ĩ.	RISKS
8.	BOARD AND MANAGEMENT
9.	ADDITIONAL INFORMATION
10.	GLOSSARY
Corporate Directory

A number of terms and abbreviations used in this Prospectus have defined meanings, which are explained in the Glossary.

Money as expressed in this Prospectus is in Australian dollars or else as indicated.

All dates are subject to change and accordingly are indicative only.

Summary of Key Dates

Date of Prospectus: 27 September 2006

Allotment of Institutional Placement Shares: 27 September 2006

Expected commencement of trading of Institutional Placement Shares on ASX: 30 September 2006

Key Details

Existing Shares on issue prior to Institutional Placement: 23,000,000

Shares Issued under the Institutional Placement : 2,440,000

Shares to be issued for the acquisition of the assets and business of Swift-Tech: 560,000

Issue Price for Institutional Placement Shares: $1.40 per Share

Issue Price for Shares to be issued from the acquisition of the assets and business Swift-Tech: $1.25 per Share

Proceeds of Institutional Placement: $3,416,000

Ordinary Shares on issue following Completion of the Institutional Placement and issue of Shares from the acquisition of the assets and business Swift-Tech: 26,000,000

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Chairman's Letter

27 September, 2006

Dear Fellow Investor.

On Thursday 21 September 2006, Saferoads announced that it had placed 2.44 million Shares with sophisticated and professional investors by way of an Institutional Placement at $1.40 per Share.

Generally, investors who acquire securities other than under a "disclosure document" (as defined by the Corporations Act) may not trade those securities within the 12 months following their issue.

This Prospectus has been lodged with ASIC so that investors who acquired Shares under the Institutional Placement may take advantage of an exception to the general rule and trade their securities without restriction.

Only a nominal number of Shares are being offered under this Prospectus. The Shares described as forming part of the Institutional Placement were allotted on 27 September 2006.

The funds raised under the institutional Placement will be used to pay the cash component of the purchase price payable for the acquisition of the business and assets of Swift-Tech Solutions Pty Ltd and Swift Cartage Pty Ltd and for working capital.

I would like to place on record my thanks to both:

those investors who participated in the Institutional Placement; and
our existing shareholders for their continued support.

Yours sincerely,

Berduel

Gary Bertuch Chairman

Investment Highlights

The information set out in this section is not intended to be comprehensive and should be read in conjunction with the full text of this Prospectus and information contained in the IPO Prospectus and FY2006 Annual Report lodged by the Company with ASIC.

$1.1$ Nominal Offer under this Prospectus

This Prospectus provides a nominal offer for subscription of 100 Shares at an issue price of $1.40 per Share. The Company does not seek to raise capital from the offer under this Prospectus. The offer is included only to comply with the Corporations Act.

$12$ The Institutional Placement

The Company has entered into a Placement Agreement with Cartesian Capital to raise $3.416 million from the issue of 2.44 million Shares at an issue price of $1.40 per Share. Lonsec Limited acted as Broker to the issue of the Institutional Placement. Commitments have been received for the full amount of the Institutional Placement from sophisticated and professional investors pursuant to section 708 of the Corporations Act.

The issue of the Shares pursuant to the Institutional Placement will raise approximately $3.4 million (before the costs of the Institutional Placement). After deducting estimated costs of $0.2 million, the Company expects to raise net proceeds of approximately $3.2 million from the Institutional Placement.

The Institutional Placement Shares were allotted on 27 September 2006.

$13$ Purpose of the Equity Raisings

The purpose of the Institutional Placement was to fund the acquisition of the business and assets of Swift-Tech Solutions Pty Ltd and Swift Cartage Pty Ltd and provide additional working capital.

$14$ Activities since the IPO

Since the IPO on 15 December 2005. Saferoads has:

completed a new 580m2 Ironman manufacturing facility in December 2005 to enable increased production of $\blacksquare$ Ironman to meet the increasing demand;
won and supplied in excess of $6 million in tenders in Queensland, New South Wales, Victoria and South Australia in relation to the supply and installation of guardrall and wire rope safety barriers;
successfully achieved accreditation of its Occupational Health and Safety Management system against ISO 18001:1999, adding to accreditation previously achieved against ISO 9001:2000 Quality Management System and ISO 14001:2004 Environmental Management System; and
$\blacksquare$ entered into a new 4 year International Distributor and Licence agreement with Ouixote Corporation of USA.

15 Prospects for the Company's operations

Saferoads consider that:

Increased road spending initiatives announced by both the Federal and Victorian State Government budgets will continue to have a positive effect;

Major road construction projects such as the Pakenham Bypass (Vic), the North South Bypass Tunnel (Old), the duplication of the Gateway Bridge (Old) and the continuing upgrade of the Pacific Highway (NSW) will generate demand for Saferoads' products;
Recent legislative changes in Queensland and New South Wales mandating the mounting of attenuators to vehicles such as line-marking trucks will have a positive effect on Saferoads;
the strengthening of Saferoads personnel in Queensland, New South Wales and South Australia will assist Saferoads in increasing market penetration in these markets in a relatively short period of time;
licence agreements recently entered into with two overseas companies in relation to portable concrete barrier will enable it to enter the market of providing such barriers; and
Saferoads are devoting significant energy to the process of finding suitable strategic acquisitions. Such potential acquisitions will need to be consistent with Saferoads' core business and will need to be able to demonstrate that it will add sustainable long term value for the benefit of Saferoads' Shareholders.

1.6 Dividends

The Board's current dividend policy is to pay dividends within a payout ratio range of 50-70% of NPAT for any one year.

No assurance can be provided about future dividend policy, the extent of future dividends or the franking of dividends. Any future determination on the payment of dividends by the Company will be at the discretion of the Directors and will be dependent on a number of factors, including the level of future profits, and the financial and taxation position of the Company.

$17$ Risks

Saferoads is subject to various risks which may adversely impact its profitability and the value of its Shares. These include, but are not limited to, fluctuations in exchange rates, competitors' prices and new products, operations not performing according to plan and the loss of a major supplier. Investors should read Section 7 (Risk Factors) below, carefully prior to making any decisions to invest in the Company.

Details of the Nominal Offer 2.

$2.1$ Nominal Offer only

This Prospectus nominally offers for subscription a total of 100 Shares at an issue price of $1.40 per Share, payable in full on application. Following the Institutional Placement, the Company does not intend to raise additional capital . The offer made under this Prospectus is therefore nominal and only included to comply with the Corporations Act.

$2.2$ Purpose of this Prospectus and the Nominal Offer

The Institutional Placement was made to sophisticated and professional investors under section 708 of the Corporations Act and not as part of a public offer of securities under a prospectus. Generally section 707(3) of the Corporations Act requires a prospectus to be issued if securities are offered for sale within 12 months after their issue and the issue of securities was without disclosure to investors under Part 6D.2 of the Corporations Act. Section 708A(11) provides an exemption from this general requirement where a prospectus is lodged on or after the day on which the relevant securities were issued but before the day on which a sale offer is made and the prospectus is for an offer of securities issued by the body that are in the same class of securities as the relevant securities.

The main purpose of this Prospectus is therefore to comply with Section 708A(11) and relieve those investors who were issued Institutional Placement Shares under the Institutional Placement of the obligation to issue a prospectus if they wish to sell those securities within the next 12 months.

The Company does not seek to raise significant funds under this Prospectus and the nominal offer of 100 Shares is to ensure that the Prospectus complies with section 708A(11) of the Corporations Act 2001.

2.3 Application Form

To accept the offer for the Nominal Shares, the Application Form attached to the Prospectus must be completed. The application must be for 100 Shares and only one duly completed application received by the Company after the Opening Date will be accepted. To the extent permitted by law, the Directors will have absolute discretion over which Application to accept and intend to close the offer for the Nominal Shares on 5 October 2006.

$2.4$ Indicative Timetable for Nominal Offer

Date of Prospectus	27 September 2006
Opening Date	3 October 2006
Closing Date	4 October 2006
Ouotation of Nominal Shares on ASX expected	7 October 2006

These dates are indicative only and may vary. To the extent permitted by law, the Company reserves the right to vary the Closing Date of the Nominal Offer without prior notice. This may impact on subsequent dates.

$2.5$ Allocation

The Nominal Shares will be issued and a holding statement despatched to the one successful applicant as soon as reasonably practical after the close of the offer for the Nominal Shares. Application money will be refunded to unsuccessful applicants without interest as soon as reasonably practical after the close of the offer for the

Nominal Shares. No securities will be issued on the basis of this Prospectus after 27 October 2007, which is the expiry date of this Prospectus.

The Company will not accept any applications during the Exposure Period.

$2.6$ Ouotation of Nominal Shares

The Company will apply to the ASX for quotation of the Nominal Shares offered under this Prospectus. If permission is not granted for the official quotation of the Nominal Shares offered under this Prospectus within 3 months after the date of this Prospectus or such longer period as approved by ASIC, then all application monies received under this Prospectus will be refunded without interest in accordance with the Corporations Act.

$2.7$ Rights Attaching to the Nominal Shares

The Nominal Shares once issued will rank equally in all respects with the existing Shares on issue at the date of this Prospectus. The rights attaching to the Nominal Shares are set out in the IPO Prospectus.

$2.8$ Applicants Outside of Australia

This Prospectus does not constitute an offer of securities in any jurisdiction where, or to any person to whom, it would not be lawful to issue the Prospectus or make the offer for the Nominal Shares. It is the responsibility of any applicant outside Australia to ensure that their application for Nominal Shares complies with the laws of their country of residence.

The Company has not taken any action to register or qualify the Nominal Shares or the offer for the Nominal Shares or otherwise permit an offer of the Nominal Shares in any jurisdiction outside Australia.

2.9 Taxation

Investors should seek and rely on their own taxation advice regarding an investment in the Company.

3. The Institutional Placement

$31$ The Institutional Placement

The Company has entered into a Placement Agreement with Cartesian Capital to place 2.44 million Shares at a Price of $1.40 per Share to sophisticated and professional investors to raise a total of $3,416,000. Institutional Placement Shares issued pursuant to the Institutional Placement will rank equally with all other Shares except that the Institutional Placement Shares will not confer on the holders the right to receive a final dividend for the financial year ended 30 June 2006.

Commitments were received for the entire amount of the Institutional Placement.

Lonsec Limited acted as broker to the issue of the Institutional Placement.

$3.2$ No Shareholders' approval

Under ASX Listing Rule 7.1, the Company was not required to obtain the approval of Shareholders for the proposed issue of the Institutional Placement Shares.

3.3 Rankino

The Institutional Placement Shares have been issued fully paid and will rank equally in all respects with Shares already on issue except that the Institutional Placement Shares will not confer on the holders the right to receive a final dividend for the financial year ended 30 June 2006. Details of the rights attaching to the Institutional Placement Shares are set out in the IPO Prospectus.

$3.4$ ASX quotation

The Company has applied to the ASX for the Institutional Placement Shares to be quoted on the ASX. If permission is given for official quotation, the Shares will trade under the Company's existing Ordinary Share ASX Code of SRH.

$3.5$ Allotment and issue of Institutional Placement Shares and dispatch of shareholding statements

The allotment or issue of the Institutional Placement Shares is to occur on 27 September 2006.

4. Saferoads

4.1 Introduction

The business of Saferoads was started in 1992 by Darren Hotchkin, Saferoads' Managing Director; his father Harold Hotchkin; and Duncan Smith, a Saferoads' non-executive Director. Saferoads develops and markets a range of road safety products and services, including:

Guide Posts:
Crash Cushions & Barriers;
Workzone Products;
Traffic Calming Products;
Traffic Control Products; and
Installation Services.

4.2 IPO Prosnectus

In December 2005, Saferoads offered 11.5 million Shares at $1.00 per Share under the IPO Prospectus.

No new capital was raised. The Shares offered for sale under the IPO Prospectus were owned by Existing Shareholders

The purpose of the IPO was to:

allow the Existing Shareholders to realise part of their investment in Saferoads;
facilitate future access by the Company to public capital markets to pursue future growth opportunities;
provide the Company with increased flexibility to fund acquisitions through the offer of Shares;
provide an opportunity for employees to invest in the Company:
increase the flexibility of management to offer employee incentive schemes which will assist Saferoads in attracting and retaining quality employees;
achieve Listing and thereby provide a more liquid market for the Company's Shares; and
broaden the Company's shareholder base.

43 Activities since IPO

In the period since the IPO, Saferoads has:

commenced the strengthening of its personnel resources and market presence in Queensland, New South Wales and South Australia. Saferoads has appointed new state managers in New South Wales and Queensland, and have replaced a distributorship in South Australia with a Saferoads regional sales manager. Saferoads is confident that these changes will increase Saferoads' market penetration in these markets in a relatively short period of time;
entered into licence agreements with two overseas companies which will enable it to enter the portable concrete barrier market, and to supply a very competitive wire rope safety barrier. Saferoads are confident that additional sales will be generated as market awareness of these products develops; and
sought suitable strategic acquisitions. Any potential acquisition will need to be consistent with our core business and will need to be able to demonstrate that it will add sustainable long term value for the benefit of Saferoads' Shareholders.

4.4 Other information

Investors are referred to the information about Saferoads contained in the IPO Prospectus (including details of Saferoads' business, the directors and management of Saferoads, financial information about Saferoads and certain additional information relating to Saferoads) and the FY2006 Annual Report which contains the financial statements of Saferoads for the year ended 30 June 2006.

The IPO Prospectus and the FY2006 Annual Report are taken to be included in this Prospectus.

The information in the IPO Prospectus and the FY2006 Annual Report are of primary interest to investors and their professional advisers or analysts.

Acquisition of the business of Swift-Tech 5.

$5.1$ Introduction

This section provides a summary of:

why Saferoads undertook the Institutional Placement; and
$\bullet$ how the proceeds of the Institutional Placement are proposed to be applied.

$5.2$ Rationale for Placement

Saferoads undertook the Institutional Placement in order to:

$\mathbb{R}^2$

$\bullet$ raise the funds required to allow Saferoads to complete the acquisition of the business and assets of Swift-Tech Solutions Pty Ltd and Swift Cartage Pty Ltd (collectively Swift-Tech); and
$\bullet$ provide additional working capital.

5.3 Swift-Tech Acquisition

On 31 August 2006, Saferoads announced that it had entered into an agreement to acquire the business and assets of Swift-Tech. Swift-Tech is a manufacturer and supplier of decorative street light poles based in Drouin, Victoria. The key terms of the acquisition were:

Completion of the acquisition is due to take place on 2 October 2006;
* The purchase price payable to Swift-Tech is $3,000,000, payable as to $2,300,000 in cash and the issue of 560,000 Shares at an issue price of $1.25; and
the Shares proposed to be issued to Swift-Tech are to be held in escrow for a period of two years from the date of completion of the acquisition.

Financial Information ĥ.

$6.1$ Introduction

Saferoads' Preliminary Final Results for FY2006 were lodged with ASX on 11 August 2006 and its FY2006 Annual Report was lodged with ASX on 4 September 2006. Saferoads' FY2006 Annual Report was lodged with ASIC on 7 September 2006. This section includes an updated Proforma Statement of Financial Position of the Company as at 30 June 2006 as if the Institutional Placement had occurred on that date.

$6.2$ Statement of Financial Position

The following table details the consolidated audited balance sheet of Saferoads as at 30 June 2006 and the consolidated pro-forma balance sheet of Saferoads as at 30 June 2006 taking into account the issue and allotment of the Placement Shares:

SAFEROADS HOLDINGS LIMITED

Balance Sheet as at 30 June 2006

	CONSOLIDATED	CONSOLIDATED
	as at 30th June 2006	as at 30th June 2006
	(Audited)**	(Pro Forma)##
ASSETS
Current Assets
Cash and cash equivalents	15,121	3,431,121
Trade and other receivables	4,432,788	4,432,788
Inventories	2,134,709	2,134,709
Prepayments	74,350	74.350
Total Current Assets	6,656,968	10,072,968
Non-current Assets
Deferred tax assets	68,617	68,617
Property, plant and equipment	1,500.288	1.500.288
Intangible assets	55,335	55,335
Total Non-current Assets	1,624,240	1,624,240
TOTAL ASSETS	8,281,208	11,697,208
LIABILITIES
Current Liabilities
Trade and other payables	2,481,706	2,731,706
Interest-bearing loans and borrowings	103,252	103,252
Income tax payable	430.289	430.289
Provisions	171,031	171,031
Total Current Liabilities	3,186,278	3,436,278
Non-current Liabilities
Interest-bearing loans and borrowings	80,327	80,327
Provisions	26,639	26,639
Total Non-current Liabilities	106,966	106,966
TOTAL LIABILITIES	3.293.244	3,543,244

NET ASSETS	4.987.964	8,153,964
EOUITY
Contributed equity	100.000	3,266,000
Retained earnings	4,887,964	4,887,964
TOTAL EQUITY	4.987.964	8.153.964

** the Notes to the audited reports contained in Saferoads' Balance Sheet lodged with the FY2006 Accounts as at 30 June 2006 are taken to be included in this Prospectus by this reference.

the pro-form Consolidated balance sheet of Saferoads as at 30 June 2006 has not been audited.

6.3 Capital Structure

Following completion of the Institutional Placement, Saferoads' capital structure will be as follows:

Shares	Number	%
Shares currently on issue	23,000,000	88.5
Shares issued pursuant to the Institutional Placement	2,440,000	9.4
Shares to be issued for the acquisition of the assets andbusiness of Swift-Tech	560,000	2.1.
Total Shares to be on issue following the InstitutionalPlacement and for the acquisition of the assets andbusiness of Swift-Tech	26,000,000	100.0

Risks 7.

$7.1$ Introduction

An investment in Saferoads involves a degree of risk. There are a number of factors that may have a material adverse effect on Saferoads' future operating and financial performance.

Saferoads' business activities are subject to risk factors both specific to its business activities and those of a general nature. If any of the risks associated with Saferoads materialised, Saferoads' business, results of operations, financial condition and prospects could be materially and adversely affected, which could result in the loss of all or part of your investment. The principal risk factors are described below. While some of these risks can be mitigated by the use of appropriate safeguards and systems, many are outside the control of Saferoads and cannot be mitigated.

In addition, potential investors should be aware that the value of Saferoads' securities on ASX may rise and fall depending on a range of factors that affect the market price of securities. These include local, regional, and global economic conditions and sentiment towards equity markets in general. The Nominal Shares offered under this Prospectus carry no guarantee with respect to profitability, payment of dividends, return of capital or the price at which the Shares may trade on the ASX.

You should carefully consider the risks and uncertainties set out below and the information contained elsewhere in this Prospectus before you decide whether to apply for the Nominal Shares. You should also seek your own professional advice in relation to the risks associated with an investment in Saferoads and should make your own assessment as to whether to invest in Saferoads.

$7.2$ General Market Risk

The trading price of Shares at any given time may be higher or lower than the price paid to acquire Nominal Shares under this offer for Nominal Shares. Further, there can be no assurance that an active trading market will develop in the Shares.

The market for shares in small capitalisation companies has typically been more volatile than other share investments. Such shares have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. A significant decline in the stock market performance of small capitalisation companies businesses is likely to have a material adverse effect on the price and liquidity of the Shares.

Many other factors will also affect the price of the Shares, including general fluctuations in the performance of local and international stock markets, movements in interest rates and exchange rates, general economic conditions and investor sentiment.

7.3 Swift-Tech

Investors should be aware of the additional risks that Saferoads may be subject to arising from its acquisition of the business and assets of Swift-Tech Solutions Pty Ltd and Swift Cartage Pty Ltd (collectively Swift-Tech). While there are potential synergies between the business of Swift-Tech and Saferoads' own operations, the achievements of such synergies may not occur or if they do, the timing of the synergies may not be immediate. In addition Saferoads can provide no guarantee that the costs of combining the two businesses are greater than the benefits.

74 Onerating History

Saferoads was formed and commenced operations in 1992. Investors should consider Saferoads' prospects for revenue growth in light of the risks, expenses and difficulties typically encountered by companies that have only recently become listed. While Saferoads has experienced considerable growth in revenues since commencing operations, there can be no assurance that this revenue growth will continue or that Saferoads will operate profitably in the future.

7.5 Prices

The behaviour of competitors combined with the price and supply terms of substitute products may influence the outcome of price negotiations. No assurance can be given regarding future prices for Saferoads' products.

76 Management of Growth

Implementation of Saferoads' growth strategy, especially the Swift-Tech acquisition, is likely to require additional staffing, management, operations and systems resources. In addition, Saferoads' expansion into new road safety products or businesses may detract from management's attention to Saferoads' existing operations. There is also a risk that Saferoads may not be able to deploy suitable resources (including staff) to take advantage of the growth opportunities.

$77$ Industry Risk

There is a risk that industry sales may decline should either the State or Local Governments or hire companies reduce their spending on road safety products.

$7.8$ Comnetition

Saferoads expects that the road safety sector market will become increasingly competitive having regard to, among other things, the low barriers to entry into the market.

Saferoads is likely to face increasing and intense competition from national or international companies with greater capital and technological resources and other strategic advantages. The industry is currently undergoing a period of consolidation, which may accelerate this trend.

Saferoads can provide no assurance that it will be able to compete effectively with existing or new competitors or that increased competition will not have a material and adverse effect on Saferoads' future operating and financial performance. In particular, increased competition may have an adverse effect on Saferoads' margins.

7.9 Product Development

An important element of Saferoads' business is an ability to identify, assess and develop products that appeal to Saferoads' target market. Saferoads has been successful to date in this regard. However, continued product development by competitors and the inability of Saferoads to compete on both price and functionality may result in customers using substitute products. This may adversely affect the Company's financial performance.

Further, management may underestimate production costs in manufacturing a new product. The realised margin may be either less than expected or Saferoads may incur a loss on the manufacture and sale of the product.

$710$ Product Reliability

Saferoads maintains an internal risk management process and also follows quality assurance procedures in relation to the manufacture and distribution of its products. Saferoads also provides a five year warranty on a variety of products or parts manufactured by it. It is possible that claims against Saferoads could arise from defects in products manufactured and distributed by Saferoads or from customers abusing or using Saferoads' products contrary to instructions. Should any claims against Saferoads arise that are successful, and there is not sufficient insurance coverage, this is likely to have an adverse effect on the financial performance of Saferoads.

$7.11$ Disruption of Business Operations

As a manufacturer and distributor, Saferoads is exposed to a range of operational risks relating to both current and future operations. Such operational risks include equipment failures, external services failure, industrial action or disputes and natural disasters. If one or more of such operational risks materialise, they may have an adverse impact on the operating and financial performance of Saferoads.

7.12 Occupational Health and Safety

In common with many industrial companies, Saferoads faces the risk of work place injuries which may result in workers' compensation claims, related common law claims and potential occupational health and safety prosecutions. Further, the production processes used in conducting Saferoads business can be dangerous. Saferoads has in place a range of practices and policies which seek to provide a safe and healthy working environment for its employees, customers, visitors and community.

While the Company believes that appropriate safeguards have been put in place by Saferoads, its production processes could result in serious injury to employees or other persons and give rise to liability under occupational health and safety laws and regulations and also under the general law.

7.13 Insurance

Insurance of risks associated with industrial manufacturing companies is sometimes unavailable and may attract large premiums. Accordingly, no assurance can be given that Saferoads will be able to obtain such insurance coverage at reasonable rates or at all, or that any coverage it arranges will be adequate and able to cover any such claims. If Saferoads incurs uninsured losses or liabilities, this could have a material adverse affect on the financial performance and position of Saferoads.

7.14 Capital Expenditure

The Company's growth is based on certain assumptions in relation to the level of capital expenditure required to maintain its operations. If the level of capital expenditure required is higher than expected, or if capital expenditure must be undertaken earlier than anticipated, or if there is a significant operational failure requiring capital expenditure, the financial performance of the Company may be affected.

7.15 Intellectual Property

The Company's own manufactured products are largely supported by various intellectual property rights in the form of registered and pending patents in Australia, New Zealand, Canada, South Africa and the United States of America. The laws of some foreign jurisdictions may provide less protection than the intellectual property laws of Australia. Unlicensed use of the Company's intellectual property may have an adverse effect on the Company and there is no assurance that the Company's legal remedies arising from its intellectual property rights would

adequately compensate the Company for damages arising from infringing use. Conversely, whilst the Company is not aware of any of its products infringing the intellectual property rights of third parties, there is no assurances that a third party will not make a claim against the Company for infringement. Regardless of the merit of any claim made by third parties asserting infringement of intellectual property rights the Company could incur substantial costs in defending its use of products and its own intellectual property rights.

$7.16$ Reliance on Certain Customers

A significant proportion of Saferoads' revenues is currently derived from a relatively small number of its customers. It is expected that a small number of its customers will continue to provide a relatively large proportion of Saferoads' revenue for the foreseeable future.

Saferoads cannot be certain that the customers that have provided the basis for significant revenues in the past will continue to generate revenue for Saferoads in the future or that they will remain customers of Saferoads. having regard, among other things, to the short term nature of most of Saferoads' agreements.

7.17 Reliance on Ouixote

A significant proportion of Saferoads' revenue is derived from the distribution of products supplied by Ouixote Corporation and its related entities. It is expected that this will continue for the foreseeable future.

7.18 Reliance on Key Personnel

Saferoads' business development has been, and is likely to continue to be, largely dependent upon the commitment and expertise of its founding shareholder and Managing Director, Darren Hotchkin. The Company has entered into a service agreement with Mr Hotchkin.

The loss of, or significant interruption to, the continued full-time services of Mr Hotchkin would be likely to have a material adverse effect on Saferoads' future operating and financial performance.

7.19 Dependence on Infrastructure Spending

infrastructure spending has experienced, and is expected to continue to experience, growth in terms of the number of road users and the volume of traffic. Saferoads' business prospects depend on the growth of road infrastructure to support growth in the use of the road usage as a medium for transport. There can be no assurance that the road infrastructure growth will continue.

7.20 Regulation of Road Safety Products

While minimal regulation currently applies to Saferoads' activities (other than laws applicable to businesses generally), it is possible that specific laws will be introduced in Australia or overseas with respect to road safety products which may have a material adverse effect on Saferoads' business. For example, laws may be established to address concerns relating to the liability of road safety product suppliers arising from motor vehicle accidents.

7.21 Uncertainty of Future Capital Needs and Additional Funding

The future capital requirements of Saferoads will depend on many factors, including the pace and magnitude of development of its business. The Company believes that its available cash will be adequate to satisfy its anticipated current working capital and other capital requirements. Should the Company require additional funding, there can be no assurance that additional financing will be available on acceptable terms or at all.

7.22 Other Business Risks

The Directors of Saferoads have attempted to address relevant risks. However, there are other factors which are not specific to Saferoads, which may impact on Saferoads including:

$\epsilon$

· government economic policies;
foreign exchange rates; $\bullet$
interest rate charges;
- taxation policies;
inflation rate changes;
business confidence and consumer sentiment;
changes in investors' attitudes towards industrial supply businesses;
the state of the world stock markets; and
the state of the Australian economy and global economies.

Board and Management R.

8.1 Board

Saferoads' Board of Directors comprises:

Gary Bertuch, Non-Executive Chairman;
Darren Hotchkin, Managing Director;
Gerard Keegan, Non-Executive Director; and
Duncan Smith, Non-Executive Director. $\bullet$

Further details of the qualifications and experience of the Directors are contained in section 4 of the IPO Prospectus.

$8.2$ Management

Saferoads' management team comprises;

Bill Cruickshank, Company Secretary;
Darrell Beange, Production Manager;
Kylie Johnson, Corporate Accountant; and $\bullet$
Mark Andrew, National Sales Manager. $\bullet$

Further details of the qualifications and experience of the management team are contained in section 4 of the IPO Prospectus. Since the IPO Prospectus, Jeff Herdman (formerly the General Manager) has ceased to be an employee of Saferoads and his responsibilities have been assumed by Darren Hotchkin and Wayne Portelli.

Wayne Portelli joined the management team of Saferoads in the position of Operations Manager in January 2006.

Wayne has established, owned and managed several successful enterprises, the most recent being Drypac, based in Warragul, Victoria. As Operations Manager, Wayne is responsible for all manufacturing processes and logistics.

9. Additional Information

$9.1$ Company History

Saferoads Holdings Limited was incorporated on 14 October 2005.

Saferoads Pty Ltd, the Company's only subsidiary, was incorporated on 2 September 1992 under the name DJH Developments Pty Ltd and changed its name to Saferoads Pty Ltd on 3 December 2001.

$9.2$ Litiuation

The Company is not involved in any actual or threatened litigation or administrative action which could have a material effect on the Company.

9.3 Constitution

Investors should refer to section 8.3 of the IPO Prospectus for a description of the Constitution, including the rights attaching to Shares and the rights and obligations of Directors.

$9.4$ Dividend Re-investment Plan

Investors should refer to section 8.4 of the IPO Prospectus for a description of the terms of the Company's Dividend Re-investment Plan.

9.5 Employee Share Option Plan

Investors should refer to section 8.5 of the IPO Prospectus for a description of the terms of the Company's Employee Share Option Plan.

9.6 Share Purchase Plan

Investors should refer to section 8.6 of the IPO Prospectus for a description of the terms of the Company's Share Purchase Plan.

9.7 Material Contracts

$9.7.1$ Placement Agreement

Saferoads has entered into an agreement with Cartesian Capital Pty Ltd (Lead Manager) dated 21 September 2006 in relation to the placement of 2.44 million Institutional Placement Shares in Saferoads (Placement Agreement).

Under the terms of the Placement Agreement, the Lead Manager agreed to use its best endeavours to place a minimum of 2.44 million Institutional Placement Shares in Saferoads with sophisticated and professional investors (Institutional Placement). Saferoads must pay to the Lead Manager a placement fee equal to 5.25% of the placement amount.

The placement amount is the application monies received pursuant to the Institutional Placement.

Nothing in the Placement Agreement requires the Lead Manager to underwrite the placement or subscribe for placement in Institutional Placement Shares.

Saferoads has given standard form representations and warranties, and the Placement Agreement imposes various obligations on Saferoads which are typical in agreements of this type. Saferoads has indemnified the Lead Manager against all claims, demands, damages, losses, costs, expenses and liabilities suffered or incurred directly or indirectly as a result of:

a breach of the Placement Agreement; $\bullet$
any misleading or deceptive statement or any material omission from any information announcement advertisement in relation to the placement made or distributed by Saferoads;
any conduct by Saferoads in connection with the placement which is misleading or deceptive or alleged $\bullet$ to be deceptive or likely to mislead or deceive;
any non-compliance by Saferoads with the Corporations Act, the Listing Rules or any other legal obligation in relation to the placement; and
any breach by Saferoads of its representations, warranties and undertakings in the Placement Agreement.

The indemnity is subject to usual limitations in cases of fraud, negligence, default, dishonesty or breach of the Placement Agreement by the indemnified parties.

The Placement Agreement is conditional upon:

Cartesian receiving a legal opinion from Saferoads' legal advisors;
Cartesian receiving a no default certificate from Saferoads; and
Cartesian receiving a continuous disclosure certificate from Saferoads.

The Placement Agreement can be terminated by the Lead Manager at any time before the allotment of the placement shares if any one or more of the following occur:

Saferoads breaches any of its warranties or undertakings under the Agreement which in the reasonable opinion of the Lead Manager has a material adverse impact on either the prospects of Saferoads or its share price;
if for two consecutive days at any time after the date of the Placement Agreement the ASX's small ordinary index is 10% or more below the index immediately before the signing of the Placement Agreement;
after the date of the Placement Agreement there is, in the Lead Manager's reasonable opinion, any:
- o material adverse change; or
- o any act, omission or thing which could reasonably be expected to result in material adverse change, in the financial position or prospects (including profitability) of Saferoads or the likelihood of investors to subscribe for securities under the Placement Agreement.

9.7.2 Service Agreements

Investors should refer to section 8.7.2 of the IPO Prospectus for a description of the terms of Saferoads' Service Agreement with Darren Hotchkin.

$9.7.3$ Restricted Securities Agreement

Investors should refer to section 8.7.3 of the IPO Prospectus for a description of the terms of the Restricted Securities Agreement with Existing Shareholders

974 Deeds of Access and Indemnity

Investors should refer to section 8.7.4 of the IPO Prospectus for a description of the terms of the Directors' Deeds of Access and Indemnity. $9.7.5$ Ouixote Agreement

Saferoads Pty Ltd is a party to an international distributor and licence agreement with Quixote Corporation (Quixote), a corporation in the State of Delaware, United States of America.

The Agreement gives Saferoads an exclusive right to manufacture Quixote products under licence in Australia, and to a limited extent in New Zealand and South Africa, and distribute Quixote products in Australia and to a limited extent in New Zealand and South Africa. The Agreement also gives Quixote the right to manufacture Saferoads products under licence anywhere in the world except the territory granted to Saferoads and distribute Saferoads products anywhere in the world except the territory granted to Saferoads.

The Agreement has a four year initial term, with an option to extend, with the consent of both parties, for a further period to be agreed between the parties.

9.7.6 Sale of Business Agreement - Acquisition of business and assets of Swift-tech

Saferoads Pty Ltd, being a wholly owned subsidiary of Saferoads agreed to purchase the business of Swift-Tech Solutions Pty Ltd and Swift Cartage Pty Ltd (collective Swift-Tech) which carries on the business of manufacturing and selling of street light pole and street flag pole assemblies.

Completion of the acquisition is scheduled for 2 October 2006 subject to the satisfaction of various conditions precedent relating to due diligence investigations, entry into a new lease for the premises at 68 Weerong Drive, Drouin, Victoria and board approval by Saferoads.

The purchase price for the business carried on by Swift-Tech is $3,000,000 payable as to $2,300,000 in cash and the issue of 560,000 at an issue price of $1.25 each in Saferoads. The Saferoads shares proposed to be issued to the vendor of the Swift-Tech business are to be held in escrow for a period of two years from the completion date of the business acquisition.

Saferoads contracted to offer employment to:

a key manager of the Swift-Tech business for a period of 2 years following completion of the acquisition; and
such other staff of Swift-Tech that accept an offer of employment from Saferoads Pty Ltd.

Swift-Tech and the key manager have entered into restraint obligations not to compete against the business previously conducted by Swift-Tech (prior to the sale) for a period of 5 years from the completion date of the sale.

Saferoads Pty Ltd is not assuming any debt, liability or obligation of Swift-Tech whether known or unknown, fixed or contingent unless otherwise provided for in the sale agreement.

Saferoads Pty Ltd obtained usual warranties associated with the acquisition of a business.

The new lease entered into for the purpose of the business acquisition is for a 5 year period with 2 further option period of 5 years. The lease contains terms and conditions that are standard for the lease of commercial premises.

9.8 Interests of Directors

	Name
Darren Hotchkin	6.037.500*
Duncan Smith	1.437.500
Gary Bertuch	$20.000**$

*Includes shares held by Jennifer Ann Hotchkin but not Harold Gordon Hotchkin

** Shares held by Marcway Nominees Pty Ltd as trustee for the Gary Charles Bertuch Superannuation Fund.

$9.9$ Interest of Experts

This section applies to persons named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus, promoters of the Company and stockbroker or underwriter (but not a sub-underwriter) to the Offer (collectively Prescribed Persons).

Other than that as set out below or elsewhere in this Prospectus, no benefit has been given or agreed to be given to any Prescribed Person for services provided by a Prescribed Person in connection with the:

formation or promotion of the Company;
offer of Shares under this Prospectus.

Lead Manager

Cartesian Capital is entitled to receive a placing fee of 5.25% of the capital raised from the placement of 2.44 million Shares to sophisticated and professional investors.

Lawyers

Maddocks has acted as legal adviser to the Company in relation to the offer. Maddocks has been paid or is entitled to be paid fees of approximately $20,000 to the date of this Prospectus, in connection with the preparation of this Prospectus and the Offer. Maddocks may become entitled to further fees for this work based on its usual hourly charge out rates.

$9.10$ Expenses of the Offer

All expenses connected with the offer are being borne by the Company.

$9.11$ Consents and Disclaimers

Written consents to the issue of this Prospectus have been given and at the time of this Prospectus have not been withdrawn by the following parties:

Lead Manager of Institutional Placement

Cartesian Capital Pty Limited has given, and has not before the lodgement of this Prospectus with ASIC withdrawn, its consent to the issue of the Prospectus which includes the reference to Cartesian Capital Pty Limited in the form and context in which it is included. Cartesian Capital Pty Limited does not make, or purport to make, any statement that is included in the Prospectus which is based on any statement by Cartesian Capital Pty Limited. To the maximum extent permitted by law, Cartesian Capital Pty Limited expressly disclaims and takes no responsibility for any part of the Prospectus other than the reference to its name.

Broker to the Institutional Placement

Lonsec Limited has given, and has not before lodgement of this Prospectus with ASIC withdrawn, its consent to be named as Broker to the Institutional Placement in the form and context in which it is named. Lonsec Limited has made no statement included in this Prospectus or on which a statement in this Prospectus is based. Lonsec Limited expressly disclaims and takes no responsibility for any statements in or omissions from this Prospectus other than the reference to its name.

Legal Adviser

Maddocks has given, and has not before the lodgement of this Prospectus with ASIC withdrawn, its consent to being named as legal adviser to the Company and the Offer in this Prospectus in the form and context in which it is named. Maddocks has not made any statement that is included in this Prospectus or any statement on which a statement made in the Prospectus is based, other than as specified above. Maddocks disclaims and takes no responsibility for any statements in or omissions from this Prospectus other than the reference to its name.

$9.12$ Documents lodged with ASIC

Saferoads has lodged the following documents with ASIC.

IPO Prospectus
FY2006 Annual Report

Investors should refer to these documents prior to making any investment decision. The information is primarily of interest to investors and their professional advisers or analysts.

$9.13$ Prospectus Authorisation

The Directors have consented to the lodgement of this Prospectus with ASIC.

Signed by each Director of the Company:

CBerduce.

10. Glossary

Terms and abbreviations used in this Prospectus have the following meaning:

ASIC	Australian Securities and Investments Commission
ASX	Australian Stock Exchange Limited
Broker	Lonsec Limited (ACN 061 751 102)
Cartesian Capital	Cartesian Capital Pty Ltd (ACN 107 411 174)
CHESS	Clearing House Electronic Sub-register System
Closing Date	the date by which valid applications must be received by the ShareRegistrar being 5 October 2006 or such other date determined by theBoard and Cartesian Capital
Company	Saferoads Holdings Limited (ABN 81 116 668 538)
Constitution	the constitution of the Company
Directors or Board	the board of directors of Saferoads for the time being
Existing Shareholders	Darren John Hotchkin, Harold Gordon Hotchkin, Jennifer Ann Hotchkin,Duncan Francis Smith, Wayne Phillip Portelli, Jeffrey Stewart Herdmanand Jennifer Elizabeth Herdman
Exposure Period	the period commencing on the date of lodgement of this Prospectus withASIC and ending 7 days after that date or, if that period is extended byASIC, the period as extended
FY2006	financial year ended 30 June 2006
Institutional Placement	the Saferoads institutional placement announced on 21 September 2006of 2.44 million Shares.
Institutional Placement Shares	the 2.44 million Shares offered under the Institutional Placement.
IPO	Initial Public Offering
IPO Prospectus	the Prospectus dated 4 November 2006 relating to the IPO of 11.5million Shares.
▓▁C A R T E S I A N☞ ⊂ ← F T く[5257962: 4674666v2]

Scretcodds

Lead Manager	Cartesian Capital Pty Limited (ACN 107 44 174)
Listing	admission of the Company to the official list of ASX
Listing Rules	the listing rules of ASX
Nominal Shares	means the offer of 100 Shares under this Prospectus
NPAT	net profit after tax
Opening Date	the first date day on which applications will be accepted, which isexpected to be 5 October 2006.
Prospectus	this prospectus dated 27 September 2006.
Quixote	Quixote Corporation
Saferoads or Group	the Company and, unless the context requires otherwise, includes itssubsidiary, Saferoads Pty Ltd (ABN 69 057 357 801)
Share	a fully paid ordinary share in the Company
Shareholder	a holder of Shares

Corporate Directory

Directors

Gary Bertuch non-executive Chairman

Mr Darren Hotchkin Managing Director

Gerard Keegan non-executive Director

Duncan Smith non-executive Director

Company Secretary

Bill Cruickshank

Registered Office Saferoads Holdings Limited Lot 8 Weerong Rd Drouin VIC 3818