New Melrose Industries PLC Rothschild Investec

THIS PROSPECTUS IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action you should take, you are recommended to seek your own personal financial advice as soon as possible from your stockbroker, bank, solicitor, accountant, fund manager or other appropriate independent financial adviser authorised under the Financial Services and Markets Act 2000 if you are in the United Kingdom or, if not, from another appropriately authorised independent financial adviser. The distribution of this Prospectus and the accompanying documents and the allotment and issue of New Melrose Ordinary Shares in jurisdictions other than the United Kingdom may be restricted by law. No action has been taken by New Melrose to obtain any approval, authorisation or exemption to permit the allotment or issue of New Melrose Ordinary Shares or the possessing or distribution of this Prospectus and the accompanying documents in any jurisdiction, other than the United Kingdom. Persons outside the United Kingdom into whose possession this Prospectus comes should inform themselves about, and observe, any applicable restrictions and legal, exchange control or regulatory requirements in relation to the distribution of this Prospectus and the Proposals. Any failure to comply with such restrictions or requirements may constitute a violation of the securities laws of any such jurisdiction. In particular, such documents should not be distributed, forwarded to or transmitted in or into any Scheme Restricted Jurisdiction. No New Melrose Ordinary Shares have been marketed to, or are available for purchase in whole or in part by, the public in the United Kingdom or elsewhere in connection with the Admission. This Prospectus does not constitute or form part of any offer or invitation to purchase, subscribe for, sell or issue, or any solicitation of any offer to purchase, subscribe for, sell or issue, New Melrose Ordinary Shares or any other securities of New Melrose. A copy of this document, which comprises a prospectus (‘‘Prospectus’’) relating to the New Melrose Ordinary Shares prepared in accordance with the Prospectus Rules made under section 73A of the Financial Services and Markets Act 2000 (as amended) (‘‘FSMA’’), has been filed with the FCA and has been approved by the FCA in accordance with section 87A of FSMA and made available to the public as required by rule 3.2 of the Prospectus Rules. Shareholders should read the whole of this Prospectus and any documents incorporated herein by reference. In particular, your attention is drawn to the factors described in the ‘‘Risk Factors’’ section of this Prospectus.

22FEB201215482577 New Melrose Industries PLC (to be renamed as Melrose Industries PLC) (incorporated under the Companies Act 2006 and registered in England and Wales with registered number 9800044) Introduction to the premium listing segment of the Official List and admission to trading on the main market of the London Stock Exchange of 995,206,966 New Melrose Ordinary Shares Rothschild Sponsor and Financial Adviser Investec Broker Applications will be made to the UKLA for the New Melrose Ordinary Shares to be admitted to the premium listing segment of the Official List and to the London Stock Exchange for the New Melrose Ordinary Shares to be admitted to trading on the main market of the London Stock Exchange (together, ‘‘Admission’’). It is expected that Admission will become effective, and that dealings in the New Melrose Ordinary Shares will commence, at 8.00 a.m. on the Effective Date which, subject to the satisfaction of certain conditions, is expected to occur on 19 November 2015. No application has been or is currently intended to be made for any other class of shares issued by New Melrose to be admitted to the Official List or to trading on the London Stock Exchange or to be admitted to listing or dealing on any other exchange. The New Melrose Ordinary Shares will be issued credited as fully paid and will rank pari passu in all respects with each other and will rank in full for all dividends and other distributions thereafter declared, made or paid in respect of the New Melrose Ordinary Shares. Shareholders should only rely on the information contained in this Prospectus and any documents incorporated herein by reference. No person has been authorised to give any information or make any representations other than those contained in this Prospectus and, if given or made, such information or representation must not be relied upon as having been so authorised. New Melrose will comply with its obligations to publish a supplementary prospectus pursuant to section 87G of FSMA and rule 3.4 of the Prospectus Rules containing further updated information required by law or by any regulatory authority, but, except as required by the Listing Rules, the Prospectus Rules, the Disclosure and Transparency Rules or any other applicable law, assumes no further obligation to publish additional information. Without prejudice to New Melrose’s legal or regulatory obligations to publish a supplementary prospectus, neither the delivery of this Prospectus nor Admission shall, under any circumstances, create any implication that there has been no change in the affairs of the Melrose Group since the date of this Prospectus or that the information is correct as of any time subsequent to the date of this Prospectus. Rothschild, which is authorised by the Prudential Regulation Authority and regulated by the FCA and the Prudential Regulation Authority in the United Kingdom, is acting solely for New Melrose and no one else in relation to the Admission and solely for New Melrose and Old Melrose and no one else in relation to the Proposals and, save for any responsibility which may arise under FSMA or the regulatory regime established thereunder, accordingly will not be responsible to anyone other than New Melrose and Old Melrose for providing the protections afforded to the respective clients of Rothschild or for providing advice in connection with the Admission and the Proposals, as applicable, the contents of this Prospectus or any transaction, arrangement or other matter referred to in this Prospectus. Investec, which is authorised by the Prudential Regulation Authority and regulated by the FCA and the Prudential Regulation Authority in the United Kingdom, is acting solely for New Melrose and no one else in relation to Admission and solely for New Melrose and Old Melrose and no one else in relation to the Proposals and, save for any responsibility which may arise under FSMA or the regulatory regime established thereunder, accordingly will not be responsible to any person other than New Melrose and Old Melrose for providing the protections afforded to the respective clients of Investec or for providing advice in connection with the Admission and the Proposals, as applicable, the contents of this Prospectus or any transaction, arrangement or other matter referred to in this Prospectus. Apart from the responsibilities and liabilities, if any, which may be imposed on Rothschild or Investec under FSMA or the regulatory regime established thereunder, neither Rothschild nor Investec accepts any responsibility whatsoever and makes no representation or warranty, express or implied, in relation to the contents of this Prospectus, including its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on its behalf, in connection with the Melrose Group, the New Melrose Ordinary Shares or the Proposals. Each of Rothschild and Investec accordingly disclaims, to the fullest extent permitted by law, all and any liability whether arising in tort, contract or otherwise (save as referred to above) which it might otherwise have in respect of this Prospectus or any such statement. The contents of this Prospectus are not to be construed as legal, financial or tax advice. Each prospective investor should consult his, her or its own legal, financial or tax adviser for legal, financial or tax advice. This Prospectus is not an offer of securities for sale in the United States or in any other country or jurisdiction. New Melrose Ordinary Shares to be issued to Shareholders in connection with the Scheme have not been, and will not be, registered with the SEC under the US Securities Act, and will be issued in reliance upon the exemption from the registration requirements of the US Securities Act provided by Section 3(a)(10) of that act. For the purpose of qualifying for the exemption from the registration requirements of the US Securities Act provided by Section 3(a)(10) of that act with respect to the New Melrose Ordinary Shares issued pursuant to the Scheme, Old Melrose will advise the Court that it will rely on the Section 3(a)(10) exemption based on the Court’s sanctioning of the Scheme, which will be relied upon by Old Melrose as an approval of the Scheme. The Court will hold a hearing on the Scheme’s fairness to Old Melrose Shareholders, at which hearing all such Shareholders will be entitled to attend in person or through counsel to support or oppose the sanctioning of the Scheme. The New Melrose Ordinary Shares have not been and will not be registered on a United States securities exchange or quoted on any inter- dealer quotation system in the United States. New Melrose does not intend to take any action to facilitate a market in New Melrose Ordinary Shares in the United States. Consequently, New Melrose believes that it is unlikely that an active trading market in the United States will develop for the New Melrose Ordinary Shares. Neither the SEC nor any other US federal or state securities commission or regulatory authority has approved or disapproved the New Melrose Ordinary Shares or passed an opinion on the adequacy of this Prospectus. Any representation to the contrary is a criminal offence in the United States. Old Melrose and New Melrose are public limited companies incorporated under the laws of England and Wales. All of the Directors of Old Melrose and New Melrose are citizens or residents of countries other than the United States. Substantially all of the assets of such persons and a significant proportion of the assets of Old Melrose and New Melrose are located outside the United States. As a result, it may not be possible to effect service of process within the United States upon such persons, Old Melrose or New Melrose, or to enforce against them judgments of US courts, including judgments predicated upon civil liabilities under the securities laws of the United States or any state or territory within the United States. The United States and the United Kingdom do not have a treaty providing for the reciprocal recognition of judgements (other than arbitral awards) in civil and commercial matters. Consequently, a final and conclusive judgement by any federal or state court of the United States based on civil liability, whether or not predicated solely upon US federal securities laws, would not automatically be enforceable in England and Wales. In addition, it is doubtful whether the courts of England and Wales would accept jurisdiction and impose civil liability if proceedings were commenced in England or Wales in an original action predicated solely upon US federal securities laws. Some financial and other numerical information in this Prospectus has been rounded and, as a result, the numerical figures shown as totals in this Prospectus may vary slightly from the exact arithmetic aggregation of the figures that precede them. The New Melrose Ordinary Shares have not been, and will not be, registered under the securities laws of any state or jurisdiction of the United States and, accordingly, will only be issued to the extent that exemptions from the registration or qualification requirements of state ‘‘blue sky’’ securities laws are available or such registration or qualification requirements have been complied with.

NOTICE TO NEW HAMPSHIRE RESIDENTS NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENCE HAS BEEN FILED UNDER RSA 421-B OF THE NEW HAMPSHIRE REVISED STATUTES (‘‘RSA 421-B’’) WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF THE STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE OF THE STATE OF NEW HAMPSHIRE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH. CONTENTS

Page Summary ...... 1 Risk Factors ...... 14 Important Information ...... 33 Expected Timetable of Principal Events ...... 34 Directors, Company Secretary, Registered Office and Advisers ...... 35 Part I Information on the Proposals ...... 36 Part II Information on Old Melrose and new Melrose ...... 44 Part III Operating and Financial Review Relating to the Melrose Group ...... 51 Part IV Capital Resources ...... 53 Part V Historical Financial Information Relating to Old Melrose ...... 58 Part VI Unaudited Pro Forma Information on the Melrose Group ...... 60 Part VII United Kingdom Taxation Considerations ...... 65 Part VIII Directors, Corporate Governance and Employees ...... 69 Part IX Additional Information ...... 82 Definitions ...... 113 Documents Incorporated by Reference ...... 120 SUMMARY Summaries are made up of disclosure requirements known as ‘Elements’. The elements are numbered in Sections A—E (A.1—E.7). This summary contains all the Elements required to be included in a summary for this type of securities and Issuer. Because some of the Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements. Even though an Element may be required to be inserted because of the type of securities and Issuer, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in the summary with the mention of ‘not applicable’.

Section A—INTRODUCTION AND WARNINGS Element Disclosure Requirement Disclosure A.1 Warning THE FOLLOWING SUMMARY SHOULD BE READ AS AN INTRODUCTION TO THIS PROSPECTUS ONLY. ANY DECISION TO INVEST IN NEW MELROSE ORDINARY SHARES SHOULD BE BASED ON A CONSIDERATION OF THIS PROSPECTUS AS A WHOLE INCLUDING THE INFORMATION INCORPORATED BY REFERENCE INTO THIS PROSPECTUS. Where a claim relating to information contained in this Prospectus is brought before a court, a plaintiff investor might, under the national legislation of the EEA States, have to bear the costs of translating this Prospectus before legal proceedings are initiated. Civil liability attaches only to those persons who have tabled this summary, including any translation of this summary but only if this summary is misleading, inaccurate or inconsistent when read together with the other parts of this Prospectus or it does not provide, when read together with the other parts of this Prospectus, key information in order to aid investors when considering whether to invest in New Melrose Ordinary Shares. A.2 Subsequent resale of Not applicable. New Melrose is not engaging any financial securities or final intermediaries for any resale of securities or final placement of placement of securities securities after publication of this Prospectus. through financial intermediaries

Section B—ISSUER Element Disclosure Requirement Disclosure

B.1 Legal and commercial New Melrose Industries PLC (to be renamed as Melrose name Industries PLC) (‘‘New Melrose’’) B.2 Domicile and legal New Melrose was incorporated in England and Wales on form, applicable 29 September 2015 under the Companies Act as a public company legislation and limited by shares with registration number 9800044 and was jurisdiction of incorporated for the purpose of implementing the Scheme. New incorporation Melrose is domiciled in the United Kingdom and the principal legislation under which it operates is the Companies Act. B.3 Current operations and As part of the Proposals, New Melrose will become the holding principal activities company of the Melrose Group on the Scheme becoming effective. New Melrose has no current operations or activities and has not traded since incorporation.

1 The principal businesses operated by Old Melrose’s trading subsidiaries are discussed below: Brush Brush Turbogenerators is the world’s largest independent manufacturer of electricity generating equipment for the power generation, industrial, oil & gas and offshore sectors. From its five plants in the UK, Czech Republic, the Netherlands, the US and the newly built generator plant in China, Brush designs, manufactures and services turbogenerators, for both gas and steam turbine applications, and supplies a globally diverse customer base. In addition, Brush designs and manufactures systems and power transformers under the brand name Brush Transformers and also produces a wide range of indoor and outdoor medium voltage AC/DC switchgear under the Hawker Siddeley Switchgear brand name. A further brand, Harrington Generators International, is a specialist UK-based small generator manufacturer supplying the construction, military, telecoms and rail sectors. Elster The Elster business is a world leader in measuring and improving the flow of natural gas, electricity and water. The Elster Group comprises three operating units: Elster Gas (the gas meters, systems, heat process units and technologies business segment), Elster Electricity (the electricity meters, communications and energy management business segment) and Elster Water (the water metering and communications systems business segment). On 28 July 2015, the Board announced that, in line with its ‘‘buy, improve, sell’’ business model, the Melrose Group had entered into an agreement with respect to the sale of the Elster Group to Honeywell International Inc. for a consideration of £3.3 billion, subject to customary adjustments, payable in cash on completion. The Disposal is expected to complete in the first quarter of 2016 and remains conditional upon, among other things, obtaining approvals from regulatory authorities in Brazil, China, the European Union, South Africa and Turkey. The Shareholders of Old Melrose approved the Disposal at a general meeting of Old Melrose, held on 21 August 2015. B.4a Significant recent trends On 28 July 2015, Old Melrose published its unaudited results for affecting the Melrose the six month period to 30 June 2015. The following text has been Group and the extracted from that statement: industries in which it ‘‘Elster has performed strongly. Headline operating profit is up operates 22%, at constant currency, at the half year and headline operating margins have increased in all three of its businesses to a combined 20.1% on sales. Revenue growth of 14%, at constant currency, has been achieved, driven by strong performances in Gas and Electricity. With order intake growth at 18%, Elster’s prospects remain exciting. Brush has experienced challenging markets in the first half of 2015. However, with actions being taken to reduce cost and enhance efficiency and with a better order phasing, a much improved performance is expected going forward.’’

2 ‘‘Current trading conditions remain challenging for Brush, but with action being taken in the business, coupled with a better order phasing, a much improved second half of 2015 is anticipated. Brush is a high quality business and your Board believes that its medium to long term prospects continue to look attractive. Your Board is optimistic about the future and believes that Melrose is very well positioned to continue to create superior value for shareholders.’’ There has been no change to the Board’s expectations since the publication of the interim results on 28 July 2015. B.5 Description of the Old Melrose is the holding company of various principal Melrose Group and subsidiaries. On the Scheme becoming effective, New Melrose will New Melrose’s position become the holding company of all of these subsidiaries. therein B.6 Interests in New So far as New Melrose is aware, as at the Latest Practicable Date, Melrose and voting the following persons hold voting rights, whether directly or rights indirectly, of (and/or holdings, whether direct or indirect, of certain financial instruments which give the holder an unconditional right or a right exercisable in his sole discretion to acquire) three per cent. or more of the ordinary issued share capital of Old Melrose: Number of Approximate Old Melrose percentage of Ordinary Old Melrose Shareholder Shares(1) issued share capital BlackRock, Inc...... 104,103,286 9.71% Aberdeen Asset Managers Limited ...... 53,456,498 4.99% Schroders plc ...... 46,308,210 4.32%

As at the Latest Practicable Date, the interests (all of which are beneficial) of the Directors, their immediate families and (so far as is known to them or could with reasonable diligence be ascertained by them) persons connected (within the meaning of section 96B of FSMA) with the Directors in the issued share capital of Old Melrose, including: (i) those arising pursuant to transactions notified to Old Melrose pursuant to Disclosure and Transparency Rule 3.1.2R; or (ii) those of the connected persons of the Directors, which would, if such connected person were a Director, be required to be disclosed under (i) above, together with such interests as are expected to subsist immediately following Admission, are set out in the following table:

3 Interests as at the Latest Practicable Date Percentage of Number of Old Melrose Old Melrose issued ordinary Ordinary Shares share capital Executive Chairman Christopher Miller(1) ...... 14,203,260 1.427% Executive Vice-Chairman David Roper ...... 7,530,783 0.757% Executive Directors: Simon Peckham ...... 7,775,196 0.781% Geoffrey Martin ...... 3,739,054 0.376% Non-Executive Directors: Perry Crosthwaite ...... 174,724 0.018% John Grant ...... 275,257 0.028% Justin Dowley ...... 451,264 0.045% Elizabeth Hewitt ...... 24,202 0.002%

Note: (1) The interest of Christopher Miller includes 5,311,426 Old Melrose Ordinary Shares held by Harris & Sheldon Investments Limited, a company which is connected with Christopher Miller within the meaning of section 252 of the Companies Act. Number of options over Old Melrose 2012 Incentive Shares held at the Latest Practicable Date Christopher Miller ...... 8,500 David Roper ...... 8,500 Simon Peckham ...... 8,500 Geoffrey Martin ...... 8,500

None of the Old Melrose Ordinary Shareholders referred to above has now, or will following the Proposals have, different voting rights from any other holder of Old Melrose Ordinary Shares or New Melrose Ordinary Shares in respect of any Old Melrose Ordinary Shares or New Melrose Ordinary Shares held by them. As at the Latest Practicable Date, New Melrose is not aware of any person or persons who directly or indirectly, acting jointly with others or acting alone, exercised or could exercise control over Old Melrose. B.7 Select historical The summary financial information set out below has been financial information extracted without material adjustment from the audited consolidated accounts of the Melrose Group for the years ended 31 December 2014, 31 December 2013 and 31 December 2012, and from the unaudited interim statements of the Melrose Group for the six month period ended 30 June 2015. Since 30 June 2015, being the date to which the last interim unaudited results of the Melrose Group were prepared, the Melrose Group has entered into the Disposal Agreement in relation to the Disposal. The illustrative financial impact of the Disposal, once completed, is set out further under element B.8 below.

4 Condensed consolidated income statement Six months ended 30 June Year ended 31 December 2015 2014(1) 2014(2) 2014 2013(3) 2013 2012(4) 2012 £m £m £m £m £m £m £m £m Unaudited Unaudited Unaudited Audited Audited Audited Audited Audited Restated Restated Restated Restated Revenue ..... 117.7 164.5 327.3 1,377.5 1,466.4 1,732.8 1051.1 1,551.4 Gross profit . . . 35.8 54.3 107.1 502.5 514.4 607.3 331.0 483.5 Operating (loss)/ profit ...... (3.2) 27.0 37.1 162.4 192.5 219.9 54.0 137.1 Headline(5) operating profit 6.1 26.0 48.1 246.0 240.0 274.9 149.3 243.1 (Loss)/Profit before tax . . . (13.4) 13.2 12.6 128.9 144.0 171.1 6.3 92.0 (Loss)/Profit for the period from continuing operations . . . (12.1) 11.5 8.3 87.1 102.4 121.9 (6.9) 42.9 Profit for the period from discontinued operations . . . 69.8 38.8 186.4 107.6 462.2 442.7 47.7 1.3 Profit for the period ..... 57.7 50.3 194.7 194.7 564.6 564.6 40.8 44.2 Earnings per share From continuing operations: Basic ...... (1.2)p 1.0p 0.8p 7.9p 7.9p 9.5p (0.9)p 4.4p Diluted ...... (1.2)p 1.0p 0.8p 7.8p 7.8p 9.3p (0.9)p 4.3p

Notes: (1) Restated to include the results of Bridon and the Elster Group within discontinued operations. (2) Restated to include the results of the Elster Group within discontinued operations. (3) Restated to include the results of Bridon within discontinued operations. (4) Restated to include the results of Truth, Marelli, Crosby, Acco and Harris within discontinued operations and for the adoption of IAS 19 (revised): ‘‘Employee Benefits’’. (5) Before exceptional costs, exceptional income and intangible asset amortisation.

Condensed consolidated balance sheet

As at 30 June As at 31 December 2015 2014 2014(1) 2014 2013 2012(2) 2012 £m £m £m £m £m £m £m Unaudited Unaudited Unaudited Audited Audited Audited Audited Restated Restated Non-current assets ..... 388.5 2,856.6 2,685.7 2,689.9 2,944.5 3,530.6 3,496.2 Current assets ...... 2,640.6 640.9 498.4 498.4 732.8 919.4 920.0 Total assets ...... 3,029.1 3,497.5 3,184.1 3,188.3 3,677.3 4,450.0 4,416.2 Current liabilities ...... 856.2 484.9 452.0 452.0 524.4 696.3 692.0 Non-current liabilities . . . . 861.2 1,518.3 1,158.4 1,162.6 965.0 2,012.0 1,982.5 Total liabilities ...... 1,717.4 2,003.2 1,610.4 1,614.6 1,489.4 2,708.3 2,674.5 Net assets ...... 1,311.7 1,494.3 1,573.7 1,573.7 2,187.9 1,741.7 1,741.7

Notes: (1) Restated to reflect the completion of the acquisition accounting of Eclipse Inc. (2) Restated to reflect the completion of the acquisition accounting for the Elster Group.

Set out below are details of significant changes in the financial condition and operating results of the Melrose Group during the period covered by the audited annual reports and accounts for the three years ended 31 December 2014 and the unaudited financial statements for the six months ended 30 June 2015 to the Latest Practicable Date. Unless otherwise indicated, the following variations in operating performance are stated on a constant currency basis. In the year ended 31 December 2012, the Melrose Group delivered a strong overall performance, achieving a 7 per cent. increase in revenue and 9 per cent. increase in headline operating profit for its

5 continuing businesses. The Energy division (Brush and Marelli Motori) performed well with revenue and headline operating profit both up 8 per cent. as the businesses benefited from strong demand in the energy and oil & gas end markets. The Lifting division (Bridon, Crosby and Acco) also performed strongly with revenue up 8 per cent. and headline profit up 15 per cent., also benefitting from robust demand in the energy, oil & gas and mining end markets. The Other Industrial division (Truth Hardware and Harris) delivered an increase in headline operating profit of 2 per cent. despite a slight decline in revenue of 5 per cent. off the back of an improving US housing market. During the year the Melrose Group acquired the Elster Group for £1.8 billion. In the four months under Melrose ownership the Elster Group achieved an 11 per cent. increase in headline operating profit despite a slight decline in revenue of 2 per cent. on a pro forma basis. In the year ended 31 December 2013, the Melrose Group achieved an increase in headline operating profit of 20 per cent. despite a slight decrease in revenue of 3 per cent. for its continuing businesses. The Elster Group performed very strongly with a headline operating profit increase of 37 per cent. despite a 3 per cent. decrease in revenue, driven by the restructuring programmes and operational improvement initiatives (including the closure of uneconomic facilities, new product launches and the rationalisation and relocation of manufacturing operations) implemented soon after it was acquired. Brush and Bridon experienced a decrease in revenue and headline operating profit of 4 per cent. and 6 per cent., respectively, as Brush suffered from delays in funding approvals and uncertainty in investment decisions from its turbine original equipment manufacturer customers as a consequence of the global financial crisis and as Bridon performance was impacted by reductions in operating expenditure in the mining industry, despite improved trading conditions in its other core sectors. In the second half of the year, the Melrose Group completed the disposals of five businesses (Truth Hardware, Marelli Motori, Crosby, Acco and Harris) for a total consideration of approximately £950 million. In the year ended 31 December 2014, the Melrose Group achieved a notable increase in headline operating profit of 11 per cent. on flat revenue for its continuing businesses. The Elster Group performed very strongly with a headline operating profit increase of 14 per cent. achieved on the back of a 1 per cent. increase in revenue. All three businesses within the Elster Group achieved large gains in headline operating profit as the Melrose Group continued with its programme of efficiency improvements. Brush experienced a small decline in revenue and headline operating profit of 3 per cent. and 7 per cent. respectively, as it continued to face a challenging market, particularly in new build generators. Overall, movements in exchange rates in 2014 caused a headwind to profits of around 8 per cent. During the year, the Melrose Group completed the disposal of Bridon for £365 million and the acquisition of Eclipse Inc. (which forms part of the Elster Group) for £98 million. During the period from 1 January to 30 June 2015, the Elster Group performed strongly with revenue increasing by 14 per cent. and headline operating profit increasing by 22 per cent., benefitting from strong order demand in Gas and Electricity. Brush experienced challenging markets in the first half of 2015. The Melrose Group’s results were affected by the announcement on

6 28 July 2015 of the disposal of the Elster Group for £3.3 billion, as a result of which the Elster Group’s results for the period were reported within discontinued operations. Save as set out above there has been no significant change in the financial condition and operating results of the Melrose Group during or after the period covered by the historical key financial information on the Melrose Group set out in this section. The Disposal, if it completes, will constitute a significant change for the Melrose Group. Since its incorporation on 29 September 2015, New Melrose has not traded and there has been no significant change in the financial or trading position of New Melrose. B.8 Select unaudited The following unaudited pro forma income statement and pro forma financial statement of net assets of the Melrose Group has been based on information the income statement of the Old Melrose Group for the year ended 31 December 2014 and the net assets of the Old Melrose Group as at 30 June 2015 and has been prepared in accordance with Annex II of the Prospectus Rules and on the basis of the notes set out below. The unaudited pro forma income statement has been prepared to illustrate the effect of the Disposal and the Proposed Return of Capital on the income statement of the Melrose Group as if completion of the Disposal and the Proposed Return of Capital had occurred on 1 January 2014. The unaudited pro forma statement of net assets has been prepared to illustrate the effect of the Disposal and the Proposed Return of Capital on the IFRS position of the Melrose Group as if completion of the Disposal and the Proposed Return of Capital had occurred on 30 June 2015. As indicated above, the unaudited pro forma income statement and statement of the net assets has been prepared for illustrative purposes only. Due to its nature, it addresses a hypothetical situation and, therefore, does not represent the Melrose Group’s actual financial position or results following completion of the Disposal or the Proposed Return of Capital.

7 Unaudited pro forma statement of net assets of the Old Melrose Group as at 30 June 2015 Adjustments for the Disposal Proposed Unaudited Return of pro forma of Melrose Group Elster Group Capital and the Melrose as at 30 June as at repayment of Group as at 2015 30 June 2015 Net proceeds borrowings 30 June 2015 £m £m £m £m £m Note 1 Note 2 Note 3 Note 4 Note 5 Non-current assets Goodwill and other intangible assets ..... 272.5 272.5 Property, plant and equipment ...... 110.6 110.6 Deferred tax assets ..... 5.4 5.4 388.5 —— —388.5 Current assets Inventories ...... 58.6 58.6 Trade and other receivables 73.2 73.2 Derivative financial assets . 7.6 7.6 Cash and cash equivalents . 45.6 3,279.0 (3,037.9) 286.7 Assets held for sale . . . . 2,455.6 (2,455.6) — 2,640.6 (2,455.6) 3,279.0 (3,037.9) 426.1 Total assets ...... 3,029.1 (2,455.6) 3,279.0 (3,037.9) 814.6 Current liabilities Trade and other payables . (93.0) (93.0) Interest-bearing loans and borrowings ...... (1.2) 1.2 — Derivative financial liabilities ...... (7.5) (7.5) Current tax liabilities . . . . (1.8) (1.8) Provisions ...... (15.4) (15.4) Liabilities held for sale . . . (737.3) 737.3 — (856.2) 737.3 — 1.2 (117.7) Net current assets ..... 1,784.4 (1,718.3) 3,279.0 (3,036.7) 308.4 Non-current liabilities Interest-bearing loans and borrowings ...... (786.7) 786.7 — Derivative financial liabilities ...... (2.2) (2.2) Deferred tax liabilities . . . (15.9) (15.9) Retirement benefit obligations ...... (34.1) (34.1) Provisions ...... (22.3) (22.3) (861.2) ——786.7 (74.5) Total liabilities ...... (1,717.4) 737.3 — 787.9 (192.2) Net assets ...... 1,311.7 (1,718.3) 3,279.0 (2,250.0) 622.4

(2) These adjustments remove the assets and liabilities relating to the Elster Group, reflecting the fact that, following the Disposal, the Melrose Group will no longer consolidate the results of the Elster Group. The financial information on the Elster Group (including the McKechnie Plan and the FKI UK DB Scheme) has been extracted, without material adjustment, from the historical information on the Elster Group set out in part IV (Financial Information Relating to the Elster Group) of the Old Melrose Elster Circular incorporated by reference into this Circular.

(3) The adjustment reflects the estimated cash proceeds of £3,300 million to be received from the Disposal, less associated costs of the Disposal of an estimated £21 million.

(4) It is intended that £2,000 million—£2,500 million of the cash proceeds from the Disposal will be returned to shareholders. For illustrative purposes only, a Proposed Return of Capital of £2,250 million is shown, which is the mid-point of the £2,000 million—£2,500 million range. The remainder of the cash proceeds will be used, in part, to repay the Melrose Group’s interest- bearing loans and borrowings. For illustrative purposes only, a repayment of £787.9 million is shown, which is the total amount of the Melrose Group’s interest-bearing loans and borrowings at 30 June 2015.

(5) No adjustments have been made to reflect the trading or other transactions of the Melrose Group since 30 June 2015. The unaudited pro forma statement of net assets does not constitute statutory accounts within the meaning of section 434 of the Companies Act.

8 Unaudited pro forma income statement of the Melrose Group for year ended 31 December 2014

Adjustments to Melrose Group Elster Group reflect disposal year to year to proceeds and Pro forma 31 December 31 December return of continuing 2014 2014 capital Group £m £m £m £m Note 1 Note 2 Note 3 Note 4 Revenue ...... 1,377.5 (1,050.2) — 327.3 Cost of sales ...... (875.0) 654.8 — (220.2) Gross profit ...... 502.5 (395.4) — 107.1 Headline(5) operating expenses ...... (259.7) 199.6 — (60.1) Share of headline results of joint ventures ...... 3.2 (2.1) — 1.1 Intangible asset amortisation ...... (54.7) 46.1 — (8.6) Exceptional operating costs (34.3) 26.5 (1.0) (8.8) Exceptional operating income ...... 5.4 ——5.4 Total net operating expenses ...... (340.1) 270.1 (1.0) (71.0) Operating profit ...... 162.4 (125.3) (1.0) 36.1 Headline(5) operating profit 246.0 (197.9) — 48.1 Finance costs ...... (48.2) 9.5 35.5 (3.2) Finance income ...... 14.7 (0.5) (13.1) 1.1 Profit before tax ...... 128.9 (116.3) 21.4 34.0 Headline(5) profit before tax 212.5 (188.9) 22.4 46.0 Headline(5) tax...... (57.4) 52.2 (4.8) (10.0) Exceptional tax ...... 15.6 (14.7) — 0.9 Total tax ...... (41.8) 37.5 (4.8) (9.1) Profit for the year from continuing operations . . . 87.1 (78.8) 16.6 24.9 Headline(5) profit for the year from continuing operations ...... 155.1 (136.7) 17.6 36.0 Profit for the year from discontinued operations . 107.6 78.8 — 186.4 Profit for the year ...... 194.7 — 16.6 211.3

Notes: (1) The income statement of the Melrose Group has been extracted without material adjustment from the Old Melrose Group’s audited 2014 financial statements for the year ended 31 December 2014 prepared in accordance with International Financial Reporting Standards. (2) These adjustments remove the income statement balances relating to the Elster Group, reflecting the fact that, following the Disposal, the Melrose Group will no longer consolidate the results of the Elster Group (including the McKechnie Plan and the FKI UK DB Scheme). The financial information extracted is based upon the disclosures made in the Old Melrose Group’s unaudited interim financial statements for the six months ended 30 June 2015 in which the 2014 income statement was restated to exclude the results of the Elster Group from continuing operations. (3) This adjustment is made based on the assumption that the proceeds from the sale of the Elster Group were received and the corresponding Proposed Return of Capital took place on 1 January 2014. An adjustment has been made to reduce the net finance costs for the year ended 31 December 2014 on the basis that part of the cash proceeds from the Disposal will be used to repay the Melrose Group’s interest-bearing loans and borrowings. For illustrative purposes only, the repayment of all debt is assumed. The adjustment reflects the illustrative subsequent reduction in net finance costs, being the net of finance costs and finance income relating to loan balances held throughout the period of £22.4 million. In addition estimated project costs of £1.0 million have

9 been recognised as an exceptional operating cost. Headline tax has also been updated to reflect these adjustments. (4) The unaudited pro forma income statement does not constitute statutory accounts within the meaning of section 434 of the Companies Act. (5) Before exceptional costs, exceptional income and intangible asset amortisation.

B.9 Profit forecast or Not applicable. No member of the Melrose Group has made any profit estimate forecasts or estimates which remain outstanding as at the date of this Prospectus. B.10 Nature of any Not applicable. No qualifications are included in any audit report on qualifications in audit the historical financial information included in this Prospectus. report on the historical financial information B.11 Explanation in respect Not applicable. New Melrose is of the opinion that, taking into of insufficient working account the bank facilities available to the Melrose Group, each of capital New Melrose and the Melrose Group has sufficient working capital for its present requirements, that is, for at least the 12 months following the date of publication of this Prospectus.

Section C—SECURITIES Element Disclosure Requirement Disclosure

C.1 Type and class of New Melrose Ordinary Shares. securities being The ISIN number of the New Melrose Ordinary Shares will be admitted to trading, GB00BYRJP462. There will be no such application for any other including the security class of shares of New Melrose to be admitted to listing or trading identification number on any exchange. C.2 Currency of the The New Melrose Ordinary Shares will be in pounds sterling. securities in issue C.3 Number of shares in The following table sets out the issued share capital of New issue and par value Melrose as at the date of this Prospectus:

Class £ Number Nominal Value Subscriber Share ...... 1 1 £1 Redeemable Preference Shares . 50,000 50,000 £1

All issued shares are fully paid. C.4 Rights of securities The New Melrose Ordinary Shares will be issued credited as fully paid and will rank pari passu in all respects with each other and will rank in full for all dividends and other distributions thereafter declared, made or paid in respect of the New Melrose Ordinary Shares. C.5 Restrictions on free There are no restrictions on the free transferability of the New transferability of the Melrose Ordinary Shares set out in the constitutional documents of securities New Melrose. However, the issue of the New Melrose Ordinary Shares to persons located or resident in, or who are citizens of, or who have a registered address in, countries other than the United Kingdom may be affected by the law or regulatory requirements of the relevant jurisdiction, which may include restrictions on the free transferability of such New Ordinary Shares. C.6 Admission to trading on Application will be made to the FCA for all of the New Melrose regulated market Ordinary Shares in issue on Admission to be admitted to the premium listing segment of the Official List and to the London

10 Stock Exchange for all of the New Melrose Ordinary Shares in issue on Admission to be admitted to trading on the London Stock Exchange’s main market for listed securities. C.7 Dividend policy Old Melrose paid a final dividend of 5.3 pence per Old Melrose Ordinary Share for the financial year ended 31 December 2014 (2013: 5.00 pence). On 3 September 2015, Old Melrose paid an interim dividend of 2.8 pence per Old Melrose Ordinary Share (2014: 2.8 pence) for the financial year ending 31 December 2015. The table below shows the amount of dividend per Old Melrose Ordinary Share for each of the financial years ended 31 December 2014, 2013 and 2012.

2014 2013 2012 Dividend per Old Melrose Ordinary Share ...... 8.1 pence 7.75 pence 7.6 pence

Section D—RISKS Element Disclosure Requirement Disclosure

D.1 Key risks that are • The Melrose Group’s ‘‘buy, improve, sell’’ strategy carries risks specific and individual including, but not limited to, the suitability of acquisition to the Melrose Group targets, costs of integration and restructuring, diversion of and the industries in management from other business operations, timing of which it operates disposals, exposure to litigation or other potential liabilities, and unanticipated and unknown liabilities • The Melrose Group is dependent on its Directors, on certain of its businesses’ management and on a responsive workforce • A significant slowdown in certain industries could have a material adverse effect on the Melrose Group’s business or financial condition • Owing to the geographical diversity of its operations, the Melrose Group is subject to the risk of exchange rate fluctuations • The Melrose Group is exposed to risks in relation to compliance with anti-corruption laws and regulations • The Melrose Group is exposed to risks in relation to compliance with economic sanction programmes • The Melrose Group is subject to pricing pressures from customers • The industries in which the Melrose Group’s businesses operate are highly competitive • The Melrose Group may be unable to develop or commercialise technological advances and introduce new products in a manner and to an extent sufficient for it to remain competitive • Behaviour of the competitors of the Melrose Group may adversely affect its business

11 D.3 Key risks related to the • Confirmation of the Scheme, the Initial Reduction of Capital ordinary shares and the Proposed Return of Capital is in each case within the discretion of the Court • The value of an investment in New Melrose may go down as well as up • Any future issues of New Melrose Ordinary Shares and sales of New Melrose Ordinary Shares by major Shareholders may have an adverse effect on the market price of the New Melrose Ordinary Shares • New Melrose’s ability to continue to pay dividends on the New Melrose Ordinary Shares will depend on the availability of distributable reserves

Section E—OFFER Element Disclosure Requirement Disclosure

E.1 Total net proceeds and Not applicable. This Prospectus does not constitute an offer or estimate of total invitation to any person to subscribe for or purchase any shares in New expenses of the issue/ Melrose. New Melrose will not receive any proceeds as a result of the offer, including Proposals. estimated expenses The total costs, charges and expenses payable by New Melrose in charged to investors connection with the Proposals and Admission are estimated to be approximately £1.0 million (excluding VAT). No commissions, fees or expenses will be charged to the Shareholders. E.2a Reasons for the offer, Not applicable. This Prospectus does not constitute an offer or use of proceeds and invitation to any person to subscribe for or purchase any shares in New estimated net amount of Melrose. New Melrose will not receive any proceeds as a result of the proceeds Proposals. Old Melrose intends to implement a corporate reorganisation in order to efficiently and promptly return the proceeds of the Disposal to Shareholders. It is envisaged that the corporate reorganisation will consist of three principal events: (a) the Scheme; (b) the Initial Reduction of Capital; and (c) the Proposed Return of Capital. The Proposals will not affect the trading operations of the Melrose Group. E.3 Terms and conditions of Not applicable. This Prospectus does not constitute an offer or the offer invitation to any person to subscribe for or purchase any shares in New Melrose. Shareholders will not have to pay anything for the New Melrose Ordinary Shares allotted to them. E.4 Interests material to the Not applicable. There is no interest, including any conflicting interest, issue/offer, including which is material to the Proposals. conflicting interests E.5 Name of person offering Not applicable. There is no security being sold and no lock up to sell the securities arrangements in place in respect of the Proposals. Lock-up agreement details including the parties involved and indication of the period of the lock-up

12 E.6 Amount and percentage Not applicable. There will be no dilution in ownership percentage of immediate dilution resulting from the Proposals. resulting from the offer E.7 Estimated expenses Not applicable. No expenses will be charged to the investor by New charged to the investor Melrose in respect of the Proposals. by the company

13 RISK FACTORS A number of factors affect the operating results, financial condition and prospects of New Melrose and the Melrose Group. This section describes the risk factors which are considered by the Directors to be material in relation to New Melrose and the Melrose Group. However, these should not be regarded as a complete and comprehensive statement of all potential risks and uncertainties. Additional risks and uncertainties that are not presently known to the Directors, or that the Board currently deems immaterial, may also have an adverse effect on New Melrose or the Melrose Group’s operating results, financial condition and prospects. If any or a combination of the following risks materialise, New Melrose or the Melrose Group’s operating results, financial condition and/or prospects could be materially adversely affected. In such circumstances, the market price of the New Melrose Ordinary Shares could decline and you could lose all or part of your investment. The information given is as of the date of this Prospectus and, except as required by the FCA, the London Stock Exchange, the Listing Rules, the Prospectus Rules, the Disclosure and Transparency Rules or any other applicable law, will not be updated. Any forward-looking statements are made subject to the reservations specified under the section titled ‘‘Cautionary Note on Forward-Looking Statements’’ of this Prospectus. An investment in New Melrose Ordinary Shares is subject to a number of risks. You should consider carefully the risks and uncertainties described below, together with all other information contained in this Prospectus and the information incorporated by reference herein, before deciding whether to vote in favour of the Proposals. The risks and uncertainties described below are not set out in any order of priority.

PART A: RISKS RELATING TO THE MELROSE GROUP 1. The Melrose Group’s ‘‘buy, improve, sell’’ strategy carries risks The acquisitions and divestments engaged in, and to be engaged in, by New Melrose as part of its ‘‘buy, improve, sell’’ business model, can involve significant risks, including: • limited availability of suitable acquisition targets; • integration and restructuring costs; • diversion of the Board’s attention from on-going business operations; • failing to achieve the anticipated benefits of, or expected trading results from, acquired businesses; • the timing of disposals; • exposure to litigation or other potential liabilities including, but not limited to, environmental liabilities related to entities that the Melrose Group acquires or divests; and • unanticipated and unknown liabilities. In addition, before an acquisition is made, the Melrose Group conducts due diligence it deems reasonable and appropriate based on the facts and circumstances applicable to each acquisition. When conducting due diligence and making an assessment regarding an acquisition, the Melrose Group will be required to rely on resources available to it, including information provided by the target of the acquisition and, in some circumstances, due diligence conducted by third parties. There can be no assurance that due diligence investigations with respect to any investment opportunity will reveal or highlight all relevant facts and circumstances that may be necessary or helpful in evaluating such opportunity. In making acquisitions, there is a risk of unforeseen liabilities being discovered which are not known at the time of the due diligence process but which arose in the business before it was acquired. Any failure by the Melrose Group to identify relevant facts and circumstances through the due diligence process could have a material adverse effect on the Melrose Group’s business, financial condition, results of operations. The success of the Melrose Group’s acquisition strategy depends on identifying targets, obtaining authorisations and having the necessary financing. Even if an acquisition is completed, the acquired products and technologies may not be successful or may require significantly greater resources and investment than anticipated. If anticipated benefits are not realised or trading by acquired businesses falls below expectations, it may be necessary to impair the carrying value of these assets. The Melrose Group’s return on capital employed may fall if acquisition hurdle rates are not met. The Melrose Group’s financial performance may suffer from goodwill or other acquisition-related impairment charges, or from the identification of additional liabilities not known at the time of the acquisition. Part of the Melrose Group’s ‘‘buy, improve, sell’’ strategy relies on the Melrose Group’s ability to time disposals of acquired businesses in line with the best market conditions for such a disposal. In line with this

14 strategy, and depending on where the Melrose Group is within its ‘‘buy, improve, sell’’ strategic cycle, the expected timing of disposals of acquired businesses is considered a significant risk, which could have a material adverse effect on the Melrose Group’s strategy. Further, due to the Melrose Group’s global operations, there may be a significant impact on timing of disposals due to political and macroeconomic factors. Depending on the timing of disposals, the terms of the disposals and the nature of the acquired businesses’ operations, there may be long-term liabilities which could be retained by the Melrose Group following a disposal. If the Melrose Group makes insufficient allowances for these retained liabilities, the Melrose Group’s financial position may be materially and adversely effected.

2. The Melrose Group is dependent on its Directors, on certain of its businesses’ management and on a responsive workforce The stated strategy of the Melrose Group of ‘‘buy, improve, sell’’ depends on the expertise of the Executive Directors, each of whom significantly contributes to the Melrose Group’s ability to identify, execute and manage acquisition and disposal opportunities. The retention of their services cannot be guaranteed. The success of the Melrose Group is also built upon strong management teams. The loss of key personnel or the failure to plan adequately for succession or develop new talent may impact the reputation of the Melrose Group or lead to a disruption in the leadership of the business and could have a significant impact on the Melrose Group’s performance. In addition, illness affecting them at critical stages in development may have a detrimental effect on the strategy and growth of the Melrose Group. Competition for personnel is intense and the Melrose Group may not be successful in attracting or retaining qualified personnel. The loss or disruption of key personnel, the Melrose Group’s inability to attract new and adequately trained employees or a delay in hiring key personnel could have a material adverse effect on the Melrose Group’s results of operations, business and financial condition. The Melrose Group is also dependent on the remainder of its workforce to respond effectively to customer requests. Industrial actions could negatively impact its ability to respond effectively, especially for larger, more complex rollouts that encompass a broad range of its products and services. Any such industrial actions could have a material adverse effect on the Melrose Group’s results of operations, business and financial condition.

3. A significant slowdown in certain industries could have a material adverse effect on the Melrose Group’s business or financial condition The Melrose Group operates, and considers future acquisitions, across a number of industries. A significant slowdown in the energy, metering, oil and gas, US retail and housing, industrial and/or consumer markets could lead to a decline in the volume or demand for the Melrose Group’s products and services and could have a material adverse effect on the Melrose Group’s business, financial condition or results of operation. In addition, the cyclical nature of those industries could affect the financial performance of the Melrose Group from time to time.

4. Owing to the geographical diversity of its operations, the Melrose Group is subject to the risk of exchange rate fluctuations The Melrose Group’s financial condition and results of operations are reported in pound sterling but a large proportion of its revenues are denominated in currencies other than pounds sterling, including the Euro and the US dollar. In particular, movements between the US dollar and pounds sterling, the Euro and pound sterling and the Czech Republic koruna and pounds sterling could have a material adverse effect on the Melrose Group’s results on a translational basis. The most significant exchange rate risk that the Melrose Group takes arises when a division that is predominantly based in a foreign currency is sold. The proceeds for those divisions may be received in a foreign currency and therefore an exchange rate risk arises if these proceeds are converted back to pounds sterling, for instance to pay a dividend to shareholders. This can lead to fluctuations in the Melrose Group’s consolidated financial statements upon translation of into pounds sterling. There are currently no advanced plans to make any material disposals, with the exception of the Disposal. Adverse currency exchange rate movements may hinder the Melrose Group’s ability to procure important materials and services from vendors and suppliers, may affect the value of its level of indebtedness, and may have a significant adverse effect on its revenues and overall financial results.

15 In the past, the Melrose Group has experienced gains and losses from exchange rate fluctuations, including foreign exchange gains and losses from transaction risks associated with assets and liabilities denominated in foreign currencies, including inter-company financings. Although it has introduced measures to improve its ability to respond to currency exchange rate risks, these measures may prove ineffective and recent exchange rate volatility, particularly between currency pairs that have traditionally been rather stable, may continue at high levels. As a result, the Melrose Group may continue to suffer exchange rate losses, which could cause operating results to fluctuate significantly and could have a material adverse effect on the Melrose Group’s business and financial condition.

5. The Melrose Group is exposed to risks in relation to compliance with anti-corruption laws and regulations Conducting business on a worldwide basis requires the Melrose Group to comply with the laws and regulations of various jurisdictions. In particular, the Melrose Group’s international operations are subject to anti-corruption laws and regulations, such as the US Foreign Corrupt Practices Act of 1977 (the ‘‘FCPA’’) and the United Kingdom Bribery Act of 2010 (the ‘‘Bribery Act’’). The FCPA prohibits providing anything of value to foreign officials for the purposes of obtaining or retaining business or securing any improper business advantage. The Melrose Group may, as part of its business, deal with state-owned business enterprises, the employees of which are considered foreign officials for purposes of the FCPA. The provisions of the Bribery Act extend beyond bribery of foreign public officials and are more onerous than the FCPA in a number of other respects, including jurisdiction, non-exemption of facilitation payments and penalties. As a result of conducting business in foreign countries, the Melrose Group is exposed to a risk of violating anti-corruption laws and sanctions regulations applicable in those countries where it, its partners or agents operate. Some of the international locations in which the Melrose Group operates lack a developed legal system and have high levels of corruption. Continued expansion and worldwide operations by the Melrose Group, including in developing countries, development of joint venture relationships worldwide and the employment by it of local agents in the countries in which it operates increase the risk of violations of anti-corruption or similar laws. Violations of anti-corruption laws and sanctions regulations are punishable by civil penalties, including fines, denial of export privileges, injunctions, asset seizures, debarment from government contracts (and termination of existing contracts) and revocations or restrictions of licences, as well as criminal fines and imprisonment. In addition, any such violations could have a significant impact on the Melrose Group’s reputation and consequently on its ability to win future business and could have material adverse consequences on its reputation, business, financial condition or results of operations. While the Melrose Group has a strong culture of compliance and has adequate systems of control, it seeks to continuously improve its systems of internal controls, to remedy any weaknesses that are identified through appropriate corrective action depending on the circumstances, including additional training, improvement of internal controls and oversight, and deployment of additional resources and to take appropriate action in case of any breach of the Melrose Group’s rules and procedures which might include disciplinary measures, suspensions of employees and ultimately termination of such employees. There can be no assurance, however, that policies and procedures of the Melrose Group will be followed at all times or will effectively detect and prevent violations of the applicable laws by one or more of its employees, consultants, agents or partners and, as a result, the Melrose Group could be subject to criminal and civil penalties and other remedial measures, which could have a material adverse effect on the Melrose Group’s business, financial condition or results of operations if any member of the Melrose Group failed to prevent any such violations.

6. The Melrose Group is exposed to risks in relation to compliance with economic sanction programmes The Melrose Group’s businesses are subject to economic sanction programmes, including those administered by the UN, EU and the US Department of the Treasury’s Office of Foreign Assets Control (‘‘OFAC’’) and regulations set forth under the Comprehensive Iran Accountability Divestment Act. These sanctions regulations, which vary depending on the jurisdiction in question, apply to EU nationals worldwide, including all EU companies. While these sanctions regulations do not apply to subsidiaries of EU companies that are organised under the laws of countries outside the EU, EU parent companies are nonetheless expected to encourage their subsidiaries to follow these regulations. Sanctions programmes restrict the Melrose Group’s business dealings with certain sanctioned countries. The Melrose Group has conducted, and continues to conduct, business with entities located in jurisdictions subject to EU sanctions

16 regulations. If the Melrose Group is found to have violated any of these restrictions, it could be subject to fines, which could have a material adverse effect on the Melrose Group’s business and reputation. OFAC and the Office of Export Enforcement of the US Department of Commerce (‘‘OEE’’) administer certain laws and regulations that impose restrictions upon US companies and persons, or US persons, and, in some contexts, foreign entities and persons, with respect to activities or transactions with certain countries, governments, entities and individuals that are the subject of US economic sanctions laws, or sanctions targets. US persons are also generally prohibited from facilitating such activities or transactions. The Melrose Group has policies and procedures designed to assist its compliance with applicable economic sanctions programmes including training of its employees to comply with such programmes. Despite the compliance procedures in place, the enhancements and Melrose Group’s other efforts designed to ensure compliance with applicable sanctions laws and embargoes, it remains possible that its products could be sold or transferred to countries, governments, entities or persons targeted by EU or US sanctions in a manner that violates such sanctions. For example, despite the procedures in place, one of the Melrose Group’s businesses may miscalculate the level of US-origin content in a product or transfer a US-origin product to a customer that it should have known was subject to US or EU sanctions. Should such sales or transfers occur, the Melrose Group would bear the costs of any necessary investigative and remedial measures that may be necessary, and could be subject to fines or criminal penalties in respect of such sales or transfers. If any such violations were to occur this may have material adverse consequences for the reputation, business and financial condition of the Melrose Group. In addition to the sanctions administered by OFAC and OEE described above, the US government may impose (and has in the past imposed from time to time) restrictions and sanctions against other countries, including ones in which the Melrose Group does business. In addition, the US government may impose new or expanded restrictions and sanctions against existing sanctions targets. Any such measures targeting countries in which the Melrose Group undertakes business could have a material adverse effect on business and reputation.

7. The Melrose Group is subject to pricing pressures from customers The Melrose Group faces pricing pressures in certain business segments from its respective larger customers. Because of their purchasing size, the Melrose Group’s larger customers can influence market participants to compete on price terms. If the Melrose Group is not able to offset pricing reductions resulting from these pressures by improved operating efficiencies and reduced expenditures, those price reductions may have an adverse impact on their respective financial results or results of operations. In an attempt to increase efficiency, some of the Melrose Group’s customers may seek to reduce the number of vendors from whom they purchase products and services, particularly as vendors, including the Melrose Group, increase the breadth of the products and solutions they offer. If the Melrose Group is not selected as a preferred provider to such vendors, it may lose access to certain sections of the markets in which it competes or wishes to compete. Failure to maintain access to important sections of the market could have a material adverse effect on results of operations, business and financial condition. Even if the Melrose Group is selected as a preferred provider, increased competition may still have an impact on the agreements customers are willing to enter into. As a result, the terms and conditions of agreements with customers may be substantially more restrictive or carry a greater risk of liability, than the terms and conditions associated with the Melrose Group’s standard products and services.

8. The industries in which the Melrose Group’s businesses operate are highly competitive The industries in which the Melrose Group’s businesses operate are highly competitive. Certain of the Melrose Group’s businesses make products that are subject to changing technologies. The costs related to the research and development necessary to develop new technologies are significant and any reduction of the Melrose Group’s research and development budget could adversely impact its competitiveness. Further, the Melrose Group may face significant competition from companies entering these industries that have greater capital resources or from companies that may develop a technological advantage over the Melrose Group either through superior production processes and/or a superior end product. The Melrose Group’s ability to compete effectively will require continuous efforts in sales and marketing, new product development and innovation, close customer relationships, understanding of customer needs and rigorous focus on cost and accountability. To ensure the products and services of the Melrose Group remain competitive, it may be required to reduce its prices for a temporary or long term period as a result

17 of price reductions or promotional activities undertaken by its competitors. If the Melrose Group fails to make these changes its results may be adversely affected. The Melrose Group may also face varying levels of price erosion due to a variety of factors, including existing competitors lowering their prices, competition from manufacturers in low-cost countries and new entrants using low-priced strategies to gain market share. In addition, the Melrose Group may have a competitive cost disadvantage with its competitors who are not subject to the same legal and compliance framework as Old Melrose which is (and New Melrose which is to be) a listed public company. In addition, there is a risk that low-cost providers will enter, or form alliances or cooperative relationships with the Melrose Group’s competitors, thereby contributing to further price erosion. The Melrose Group may be unable to reorganise its operations to make them more efficient or reduce the costs of its supplies sufficiently to maintain margins on its sales in the face of intense competition. Some of the Melrose Group’s products and services may become commoditised and the Melrose Group may have to adjust the prices of some of its products to stay competitive.

9. The Melrose Group may be unable to develop or commercialise technological advances and introduce new products in a manner and to an extent sufficient for it to remain competitive In addition to enhancing its product and solutions portfolio, the Melrose Group continually strives to offer new products and design new technologies and solutions. This requires continued investment in product and technology development to help it maintain or increase its current market position and to allow it to respond to changing customer needs. However, the Melrose Group may be unable to develop or commercialise technological advances and introduce new products in a manner and to an extent sufficient for it to remain competitive within its industry. For example, the Melrose Group may, among other things, lack capacity to invest the required level of human and financial resources necessary to develop these products, commit errors or misjudgements in its planning in these areas or experience difficulties in implementing rollouts. In addition, the Melrose Group may not be able to meet its product development and delivery schedules as a consequence of unforeseen problems during the design or development phases of new product and technology introductions. Some of the Melrose Group’s new products also require certification or regulatory approval and may not be approved in a timely manner or at all. Delays of this type, or failures to obtain regulatory approval, could negatively affect the Melrose Group’s reputation and relationship with its customers and lead to delayed or reduced revenues for its products. If the Melrose Group fails to enhance existing products, develop new products or keep pace with developing technology, growth opportunities could be lost or it may lose existing customers. In addition, the Melrose Group has made commitments within some existing contracts with customers, to develop and deliver new products. If the Melrose Group is unable to meet these commitments, it could be subject to contractual penalties or lose the orders altogether. Delays in product development may also lead to a need for greater investments in research, design and development. If the Melrose Group encounters increased costs associated with new product development and product enhancements for which it is unable to realise sufficient revenues, the costs of the related new product development may not be recoverable. Either increased costs of or decreased revenues from newly developed products, or both, could have a material adverse effect on the Melrose Group’s results of operations, business and financial condition.

10. Behaviour of the competitors of the Melrose Group may adversely affect its business Any consolidation among the competitors of the Melrose Group’s businesses could enhance their product offerings and financial resources, further strengthening their competitive position and potentially reducing market share of the relevant Melrose Group business. As a result, the Melrose Group may face declining sales volumes and prices for its products and/or may be compelled to extend warranty periods or provide other gestures of goodwill to its customers. Some of the Melrose Group’s current or future competitors have or may have substantially greater financial, marketing, technical or manufacturing resources and, in some cases, greater brand recognition, market penetration and experience than the Melrose Group. These competitors may also be able to devote greater resources to the development, promotion and sale of their products and services.

18 11. Potential liability for defective products may affect the financial condition and business of the Melrose Group Due to the nature of its operations, claims against the Melrose Group could arise from defects in material or products manufactured and/or supplied by the Melrose Group. Purchasers and third parties could make claims against Melrose Group companies, based on their delivery of defective materials or products, or for damage or loss arising from the use of these defective materials or products. If any of the Melrose Group’s products proves to be defective, it may be required to effect or participate in a recall involving those products. The Melrose Group may also be the subject of lawsuits seeking damages for products alleged to be defective, including in particular product liability claims in the event that the use of its products is alleged to have resulted in injury, a risk of injury or other adverse effects. Litigation, including litigation resulting from product liability claims, can be expensive to defend and can divert the attention of management and other personnel for long periods of time, regardless of the ultimate outcome of the litigation with respect to those claims. While the Melrose Group currently maintains product liability insurance coverage, such insurance may not provide adequate coverage against potential claims. A successful claim brought against the Melrose Group with respect to a defective product or batches of products in excess of available insurance coverage, if the Melrose Group’s coverage is applicable, or a requirement to participate in a major product recall, could have a material adverse effect on the Melrose Group’s reputation, results of operations, business and financial condition.

12. The Melrose Group will be subject to the risk of major operational problems The Melrose Group’s sales will be dependent on the continued operation of its various manufacturing facilities and those of third parties that supply it, its warehousing and logistics infrastructure and its information technology systems. In particular, because the Brush sites at Loughborough, UK and Plzen, Czech Republic and the Elster Group sites in Mainz, Germany, Osnabruck,¨ Germany and San Luis Potosi, Mexico represent a material proportion of the Melrose Group’s turnover, an operational failure at any of these sites may adversely affect the Melrose Group’s business or financial condition. Operational risks include equipment failure, failure to comply with applicable regulations and standards, raw material supply disruptions, labour force shortages or work stoppages, events impeding or increasing the cost of transporting the Melrose Group’s products, fires and natural disasters. There is no guarantee that the Melrose Group’s insurance policies and disaster recovery plans will be adequate to protect the Melrose Group against loss if any of the aforementioned occurs and the occurrence of major operational problems resulting from these or other events may have an adverse effect on the results and financial condition of the Melrose Group. Operational risks will be present in the Melrose Group’s business. These risks include the risk of failed internal and external processes and systems (including information technology systems), human error and external events such as changes in credit terms offered by suppliers. Such events could have an impact on the results of operations of the Melrose Group during the affected period. The Melrose Group will actively assess these risks through ongoing processes embedded in its business which identify, evaluate and manage the risks faced by it.

13. Any shortfall in the Melrose Group’s pension schemes may require additional funding The Melrose Group operates various pension schemes around the world with a net pension liability at 30 June 2015 of £167.9 million. The main pension scheme in the UK is the FKI UK DB Scheme, which is a defined benefit pension scheme. The FKI UK DB Scheme was closed to new members and on 28 February 2011 it closed to current members’ future service. In addition to the FKI UK DB Scheme, other pension schemes of significant size that the Melrose Group operates are the McKechnie Plan, the Brush Group (2013) Pension Scheme and the FKI US Plan. Conditional and effective upon completion of the Disposal, the Elster Purchaser has agreed to be responsible for any and all costs, expenses and liabilities relating to pension schemes and other benefit plans of the Elster Group, the McKechnie Plan and FKI UK DB Scheme. As at 30 June 2015, these schemes had a net pension liability of £133.8 million. Following completion of the Disposal, the Melrose Group will retain the Brush Group (2013) Pension Scheme as well as the FKI US Plan. As at 30 June 2015, these schemes had a net pension liability of £34.1 million. The Melrose Group monitors its pension strategy on an ongoing basis. A decline in pension asset values, different actuarial assumptions, the application of purchase accounting and/or changes in discount rates, inflation or mortality assumptions may result in an increase in pension liability. Decline in interest rates or the market value of the securities held by the plans, or certain other changes, could adversely affect the

19 status of the Melrose Group’s plans and affect the level and timing of required contributions. Any permanent shortfall in the Melrose Group retirement pension benefit scheme funding obligations would require additional cash funding. However, it is expected that any additional cash contributions required would be structured over a sensible period of time, such that there is no material impact on cash contributions in the next twelve months.

14. The Melrose Group is subject to risks from legal and regulatory proceedings and arbitrations Companies in the Melrose Group have been involved, and may be involved from time to time, in legal and arbitration proceedings including regulatory action and employee litigation. Such proceedings could involve substantial claims for damages relating to, for example, product liability, breach of warranty obligations, contractual penalties for late delivery or disputes over termination of contracts or could involve the payment of fines or other payments. Certain Melrose Group companies are subject to anti-trust and competition laws in some of the markets in which they operate and may be subject to regulatory scrutiny and/or legal proceedings in these jurisdictions. The outcomes of legal proceedings, including regulatory actions, intellectual property disputes and employee lawsuits, are inherently unpredictable, and New Melrose cannot guarantee that Melrose Group companies will succeed in defending any current or future claims, that judgments will not be rendered against them with respect to any or all current or future proceedings or that reserves set aside or to be set aside and cover taken out or to be taken out under insurance policies will be adequate to cover any such judgments. The Melrose Group could be required to pay substantial damages, fines and related costs, or could incur a charge to its earnings if its reserves prove to be inadequate in respect of any adverse judgment. The realisation of any of these risks could have a material adverse effect on the business, financial condition and results of operations of the Melrose Group. The Melrose Group is exposed to the risk that its employees or agents could engage in anti-competitive behaviour or seek to influence the awarding of contracts in other impermissible ways. The Melrose Group maintains a compliance infrastructure including ‘‘whistleblower’’ hotlines, employee education and training programmes, and due diligence on agents. Under this compliance infrastructure, the Melrose Group investigates cases of potentially non-compliant behaviour and, if necessary, takes specific steps to prevent such non-compliant conduct in the future. However, the Melrose Group’s compliance infrastructure may be insufficient to deter all misconduct. Moreover, if it becomes aware of allegations of non-compliant conduct, the Melrose Group may have difficulty investigating such conduct and gathering evidence. If such cases were to arise, and misconduct was determined to have occurred, the Melrose Group could be subject to fines, blacklisting and to litigation, which could have a material adverse effect on the Melrose Group’s results of operations, business and financial condition.

15. The Melrose Group’s operations are subject to environmental, health and safety laws and regulations and non-compliance with such laws and regulations could result in substantial costs, fines, sanctions and claims The Melrose Group operates global manufacturing, product handling and distribution facilities that are subject to a broad array of environmental laws and regulations relating to pollution, the health and safety of employees, protection of the public, protection of the environment and the storage and handling of hazardous substances and waste materials. These laws and regulations are becoming increasingly stringent. It is the policy of the Melrose Group to comply with all relevant laws and regulations. The Melrose Group actively manages these risks through regular compliance and performance improvement assessments and key performance indicators and the engagement of competent health, safety and environmental coordinators at each of its sites. However, violations of applicable laws and regulations, in particular provisions of environmental and health and safety laws, or changes in such laws and regulations (such as the imposition of more stringent standards for discharges into the environment), could result in temporary or permanent restrictions on the operations of the facilities of the Melrose Group, damages, fines, clean-up costs, or other civil or criminal sanctions and/or increased costs of compliance (including capital expenditures), as well as damage to reputation. The realisation of any of these risks could have a material adverse effect on the business, financial condition and results of operations of the Melrose Group. Furthermore, the Melrose Group’s operations and properties are subject to US, European and other foreign, state and local environmental laws and regulations governing, among other things, the generation, storage, emission, discharge, transportation, treatment and disposal of hazardous materials and the clean-up of contaminated properties. Many of these environmental laws and regulations impose a form of strict joint and several liability on the current and former owners and operators of land for the presence of any hazardous waste materials on the land and require generators of waste to take remedial actions at

20 off-site disposal locations when necessary. As such, certain parties, including the Melrose Group, may be found liable for such clean-up costs regardless of fault. In the ordinary course of its business, the Melrose Group has used and may continue to use hazardous metals such as mercury and cadmium, solvents and other materials on-site that create waste, which may expose it to liability under these regulations. Any failure to comply could result in the imposition of significant fines, suspension of production, alteration of product processes, cessation of operations or other actions detrimental to the Melrose Group’s business. These laws and regulations have complicated requirements, which are often changed or modified and could become stricter in the future. As such, the Melrose Group may incur increased costs associated with future environmental or climate change compliance, with remediation obligations or with litigation if claims are made with respect to damages resulting from its operations. These and any future costs associated with environmental or climate change issues currently unknown to the Melrose Group could have a material adverse effect on its results of operations, business and financial condition.

16. The Melrose Group is subject to a number of tax regimes The Melrose Group operates in many countries and therefore is subject to different tax regulations. Changes in tax law could result in higher tax expense and payments. Furthermore, legislative changes could materially impact tax receivables and liabilities as well as deferred tax assets and deferred tax liabilities. In addition, the uncertain tax environment in some regions could limit the Melrose Group’s ability to enforce its rights. As a globally operating organisation, the Melrose Group conducts business in countries subject to complex tax rules, which may be interpreted in different ways. Future interpretations or developments of tax regimes may affect its tax liability, return on investments and business operations. Some of the Melrose Group’s subsidiaries obtained inter-company financing and record interest expense on such financing. While interest expense is generally deductible for tax purposes, the tax laws of Germany and several other countries in which the Melrose Group has operations disallow the deduction of interest expenses for tax purposes either in full or in part.

17. The Melrose Group could be negatively impacted if it fails to adequately protect its intellectual property rights or if third parties claim it is in violation of their intellectual property rights The success of the Melrose Group depends, in part, on its ability to protect current and future branded products and processes through securing, enforcing and defending its intellectual property rights for example within the Brush and Elster brands. The Melrose Group relies on a combination of trademarks, copyright, patents, utility models, designs, know-how, trade secrets and contractual restrictions to establish and protect proprietary rights in its products, processes and technical data. The Melrose Group’s intellectual property is a valuable asset that helps to protect its investment in technology and software, and to supports its licensing efforts with third parties. There can be no assurance that these proprietary rights, rights in know-how and contractual provisions will be adequate to prevent the misappropriation, infringement or other unauthorised use of the intellectual property rights of the Melrose Group by third parties which could harm it. There can be no guarantees that patents will be granted with respect to patent applications for new products or processes. The Melrose Group depends in part on its ability to obtain and maintain ownership of and rights of use in the intellectual property related to its product and solution portfolio. Further, there is no guarantee that any patents, issued or pending, will provide the Melrose Group with any competitive advantage or will not be challenged by third parties. Competitors or others may infringe the Melrose Group’s intellectual property rights or successfully avoid them through alternative innovation. Moreover, patents covering technology substantially identical to that covered by intellectual property rights the Melrose Group owns have in the past been, and may in the future be, granted in various jurisdictions around the world, and the Melrose Group may not become immediately aware of them which, in turn, could inhibit its ability to challenge them. To combat infringement or unauthorised use, as well as to protect existing patents from the effects of intervening ones, the Melrose Group may need to litigate, which can be expensive and time-consuming. The mere existence of patent disputes can cause reputational harm among customers and market observers and participants, in particular due to a perception that the Melrose Group’s ownership of its intellectual property may not be sufficiently secure. In addition, a court may decide in an infringement proceeding that an intellectual property right of the Melrose Group is not valid or is unenforceable, or may refuse to enjoin the other party from using the technology or other intellectual property right at issue on the grounds that it is non-infringing or the legal requirements for an injunction have not been met.

21 Some of the countries in which the Melrose Group operates, such as China, offer less effective intellectual property protection than is available in Europe or the United States. In jurisdictions where effective intellectual property protection is unavailable or limited, the Melrose Group’s intellectual property may be vulnerable to disclosure or misappropriation by employees, strategic partners, suppliers, customers and other persons. Patents may not be granted on the Melrose Group’s currently pending or future applications or may not be of sufficient scope or strength to provide it with meaningful protection or commercial advantage. Policing unauthorised use of its intellectual property is difficult and expensive, and the Melrose Group may not be able, or may lack the resources, to prevent infringement of the Melrose Group’s intellectual property, particularly in countries where the laws may not protect such rights as fully as do the laws of Europe and the United States. There is no certainty that the Melrose Group does not and will not infringe third parties’ intellectual property rights. The Melrose Group may be required to defend claims of patent infringement, infringement of third party proprietary rights or breach of confidence or to take action to protect its own proprietary rights. Such proceedings could be burdensome and costly and the Melrose Group may not prevail. Any claim against the Melrose Group, even if it is without merit, may be expensive and time consuming to defend, subject the Melrose Group to damages, cause it to cease making, using or selling certain products that incorporate the disputed intellectual property, require it to redesign its products, divert management time and attention and/or require it to enter into costly licensing royalty or licensing agreements, in each case which may have an adverse effect on its business, financial condition and results of operations. Any adverse or uncertain outcome of any dispute with respect to material patents or other material proprietary rights may adversely affect the competitive position of the Melrose Group or interrupt or adversely affect the ability of the Melrose Group to carry on its business. The loss or unavailability, or threat of loss, of its intellectual property or the economic exploitation of it could have a material adverse effect on results of operations, business and financial condition. The cost of defending against or settling intellectual property claims can be material and the existence or threat of such claims can damage the Melrose Group’s reputation and business.

18. The Melrose Group relies on its own IT systems and on IT systems provided by third parties The Melrose Group relies on its own information technology, or IT, systems to manage its business data, communications, computing needs, production and supply chain effectively and efficiently. The Melrose Group’s IT systems are used to conduct, among other things, order entry, order fulfilment, inventory replenishment, e-commerce and other business processes. The Melrose Group also relies on the IT systems provided by third parties, including, in particular, for much of the Elster Group’s Wide Area Network and other IT infrastructure. The Melrose Group currently outsources, and in the future plans to continue to outsource, certain aspects of its technical and communication infrastructure to third parties. Should these systems not operate as intended or any third parties to whom the Melrose Group outsources some of its IT services fail to deliver as expected, its ability to transact business across its international company would be significantly impaired. In addition, the Melrose Group’s IT systems and those it outsources are vulnerable to damage or interruption from circumstances beyond the Melrose Group’s control, including fire, natural disasters, power loss, hacker attacks, computer systems failure and viruses. The failure of the Melrose Group’s IT systems to perform as anticipated could disrupt the Melrose Group’s business and could result in decreased sales, increased overhead costs, excess inventory and product shortages, causing the Melrose Group’s business and results of operations to suffer. In addition, unforeseen vulnerabilities in the Melrose Group’s security systems and policies could result in potential data misuse, resulting in damage to the Melrose Group’s reputation and an adverse effect on its business.

19. The Melrose Group businesses’ success and sales are dependent on the strength of their brands and reputation and are subject to customers’ perceptions of those businesses and their products Products sold by the Melrose Group may have faults or defects or may not meet a customer’s quality specification. Such faults, defects or failures to meet specification may negatively affect the market acceptance of the Melrose Group’s products and their reputation and could subsequently lead to a loss of customers. The Melrose Group’s customers increasingly demand access to a broad range of products and technologies and evaluate their suppliers on the basis of a number of factors, including product quality, reliability and timeliness of delivery, accuracy, new product innovation, price competitiveness, technical expertise and

22 development capability, product design capability, manufacturing expertise, operational flexibility, customer service and overall management and so the Melrose Group must continue to develop its expertise to design, manufacture and market its products successfully. The Melrose Group’s success therefore depends, to a significant extent, on its development of new products and technologies and its ability to continue to meet its customers’ changing requirements. If the Melrose Group’s businesses are unable to respond to changing consumer demand, those businesses’ names and reputations may be impaired and customer demand for a particular category of product offering may decrease. In addition, the public image of the Melrose Group’s existing and future product offering may become tarnished and create negative publicity for that business group and damage that business’s brands. Each of these factors could have a material adverse effect on the results of operations, business and financial condition of the Melrose Group.

20. Uncertainty in worldwide financial markets may lead customers to demand guarantees or bonds covering a larger portion of contracts with the Melrose Group or require the Melrose Group to maintain larger amounts of inventory Some of the Melrose Group’s customers and potential customers ask for credit and/or performance guarantees, including payment and advance payment guarantees and performance guarantees, or credit and/or performance bonds, from the Melrose Group in each case to cover portions of their potential contract volumes. They may also or alternatively ask the Melrose Group to maintain a certain level of inventory. The experience of uncertainty in worldwide financial markets may lead customers to demand guarantees or bonds covering a larger portion of these contracts or for the Melrose Group to maintain larger amounts of inventory, while at the same time making it more difficult for the Melrose Group to obtain favourable terms on the credit necessary to fulfil these demands. If it is unable to obtain the necessary guarantees or bonds, or maintain or finance the necessary level of inventory, the Melrose Group may fail to win these contracts, which could have a material adverse effect on the Melrose Group’s business and financial condition.

21. Any inability to obtain adequate supplies at favourable prices could decrease the Melrose Group’s profit margins and negatively impact timely deliveries to its customers The loss of, or a substantial decrease in the availability at favourable prices of, products, component parts, raw materials and energy from some of the Melrose Group’s suppliers, or the loss of key supplier relationships for products and the need to find alternative sources on potentially disadvantageous terms, could lead to a reduction in its production and sales volumes and in its profit margins. Any of these events could have a material adverse effect on the Melrose Group’s business and financial condition.

22. The third-party manufacturers with whom the Melrose Group works often require it to provide accurate forecasts, sometimes months in advance If the Melrose Group overestimates its requirements, it may be obliged to purchase quantities of products that exceed customer demand. If the Melrose Group underestimates its requirements, particularly in connection with large meter rollouts, it may have inadequate inventory from which to meet customer demand. From time to time, some of its suppliers may have difficulties keeping pace with the Melrose Group’s requirements if it increases its orders with little advance notice in response to demand for its products. While the Melrose Group is seeking to give its suppliers more advance notice of its peak requirements and holding more of the affected components in inventory where possible, it may fail to do so, or may, for reasons outside its control, not have access to sufficient supplies, which may cause even longer lead times. In any case where the Melrose Group must forecast its supply needs, its inability to forecast demand accurately may have a material adverse effect on its results of operations, business and financial condition. Lead times for the components purchased from third-party manufacturers depend on a variety of factors, including the demand for each component and supplier capacity. If the Melrose Group’s third-party manufacturers or any of their sub-suppliers fail to deliver quality products and services in a timely manner, or if the Melrose Group’s ability to source from alternative suppliers cannot be maintained or if a supplier that is dependent on the Melrose Group is unable to cope with variations in the Melrose Group’s ordering patterns, the ensuing disruptions in its chain of supply could negatively affect its product portfolio, reputation, sales and ability to meet large orders, especially in the context of large rollouts. In the past, the Melrose Group has experienced significantly extended lead times at its suppliers that provide components used in some of its products, in particular for electronic components.

23 23. Factors outside the Melrose Group’s control, such as fires, floods and other natural disasters, any epidemics or pandemics, acts of terrorism or man-made problems such as computer viruses or terrorism, protests or other harassment could have a material adverse effect on its business, results of operations and financial condition The Melrose Group’s sources for components or other supplies, as well as shipments of manufactured goods, are vulnerable to damage or interruption from fires, floods, pandemics, power losses, telecommunications failures, terrorist attacks, human errors, break-ins and similar events. A significant natural disaster, such as a fire or flood, whether at a facility owned by the Melrose Group or at a third- party facility which holds stock belonging to the Melrose Group, could have a material adverse effect on the Melrose Group’s business, results of operations and financial condition, and the Melrose Group’s insurance coverage may be insufficient to compensate it for losses that may occur. Any contractual penalties the Melrose Group negotiates for, in the event that a supplier of the Melrose Group does not meet its obligations with respect to timeliness and quality, may fail to mitigate the harm to the Melrose Group’s business caused by any such contractual breaches. In particular, shortages or interruptions in the supply of components or delays in the shipment of manufactured goods as a result of such an event could delay shipments of the Melrose Group’s products or increase its production costs. This in turn could have a material adverse effect on the Melrose Group’s results of operations, business and financial condition.

24. The Melrose Group’s future financial performance and success largely depend on its ability to implement its business strategies successfully The Melrose Group’s ability to implement its business strategies depends on, among other things, its ability to divest businesses or discontinue product lines on favourable terms and with minimal disruptions, finance its operations and product development activities, maintain high quality and efficient manufacturing operations, relocate and close certain manufacturing facilities with minimal disruption to its operations, respond to competitive and regulatory changes, access quality raw materials in a cost-effective and timely manner, and retain and attract highly-skilled technical, managerial, marketing and finance personnel. Any failure to develop, revise or implement its business strategies in a timely and effective manner could have a material adverse effect on the Melrose Group’s results of operations, business and financial condition. The Board has significant experience. However, it may not be able to successfully implement its business strategies or those to be developed by management, and implementing these strategies may not sustain or improve, and could even harm, its results of operations in targeted sectors. The Melrose Group may be unable to realise the anticipated benefits and cost reductions of its business strategies. The Melrose Group’s business strategies are based on assumptions about future demand for its current products and the new products and applications it is developing, as well as on its continuing ability to produce its products profitably.

25. The Melrose Group’s business would be affected by the uncertainties of economic conditions Over recent years, the global financial markets have experienced turbulence. Macroeconomic development is dependent upon the evolution of a number of global and local factors, such as the crisis in the credit markets and uncertainty with regard to interest rates, economic crises arising from sovereign debt overruns, government budget consolidation measures related thereto, reduced levels of capital expenditures, declining consumer and business confidence, increasing unemployment in certain countries, fluctuating commodity prices (in particular, oil and gas) and exchange rates, bankruptcies, natural disasters, political crises and other challenges affecting the speed of sustainable macroeconomic growth. The Melrose Group operates, through manufacturing and/or sales facilities, in over 50 countries and is affected by global economic conditions particularly in the US and Europe. Businesses are also affected by government spending priorities and the willingness of governments to commit substantial resources. Current global economic and financial market conditions and the potential for a significant and prolonged global recession may materially and adversely affect the Melrose Group’s operational performance, financial condition and could have significant impact on timing of acquisitions and disposals. A recession may also materially affect customers, suppliers and other parties with which the Melrose Group does business. Adverse economic and financial market conditions may cause customers to terminate existing orders, to reduce their purchases from the Melrose Group, or to be unable to meet their obligations to pay outstanding debts to the Melrose Group. These market conditions may also cause our suppliers to be unable to meet their commitments to the Melrose Group or to change the credit terms they extend to members of the Melrose Group.

24 Numerous other factors, such as fluctuations of energy and raw material prices, as well as global political conflicts, including those in the Middle East, North Africa and other regions, continue to impact macroeconomic parameters and the international capital and credit markets. The uncertainty of economic and political conditions could have a material adverse impact on the Melrose Group’s business and financial condition.

26. If the Melrose Group is not successful in adapting to conditions in the markets in which it operates, it may suffer adverse effects In light of the latest economic developments, the level of public debt in the United States, as well as in Greece and other European countries, uncertainties with respect to the stability of the Chinese economy, continued decreases in the oil price, the potential increase in interest rates set by global central banks (particularly in the United States) and the potential impact of budget consolidation measures by governments around the world, the bases for the expectations relating to the overall economic situation and specific conditions in markets relevant to the Melrose Group are subject to considerable uncertainties. If the macroeconomic environment deteriorates and the Melrose Group is not successful in adapting its production and cost structure to subsequent changes to conditions in the markets in which it operates, it may experience adverse effects that may be material to its business, financial condition, results of operations.

27. An impairment of goodwill or other intangible assets would adversely affect the Melrose Group’s financial condition and results of operation Under IFRS, goodwill and intangible assets with indefinite lives are not amortised but are tested for impairment annually or more often if an event or circumstance indicates that an impairment loss may have been incurred. Other intangible assets with a finite life are amortised on a straight-line basis over their estimated useful lives and reviewed for impairment whenever there is an indication of impairment. In particular if the combination of the businesses meets with unexpected difficulties, or if the business of the Melrose Group does not develop as expected, impairment charges may be incurred in the future which could be significant and which could have an adverse effect on the Melrose Group’s financial condition. The Melrose Group has significant intangible assets, long-lived assets, goodwill and deferred tax assets that are susceptible to valuation adjustments as a result of changes in various factors or conditions. The Melrose Group assesses impairment of amortisable intangible and long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. In addition, many asset classes are subject to impairment consideration on a periodic basis under applicable accounting rules. Factors that could trigger an impairment of such assets include the following: • a significant underperformance relative to historical or projected future operating results; • significant changes in the nature of or use of the acquired assets or the strategy for its overall business; • significant negative industry or general economic trends; • changes in the Melrose Group’s organisation or management reporting structure could result in additional reporting units, which may require alternative methods of estimating fair values or greater aggregation or disaggregation in the Melrose Group’s analysis by reporting unit; • a sustained decline in its market capitalisation below net book value; and • the harmonisation of company trademarks throughout the Melrose Group. The Proposals will create reserves within New Melrose. The Melrose Group assesses the potential impairment of goodwill and other intangible assets as of 31 December of each year. It also assesses the potential impairment of goodwill and other intangible assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Adverse changes in operations or other unforeseeable factors could result in an impairment charge to the Melrose Group’s investment assets in future periods that would impact the amount of reserves available to the Melrose Group. The realisation of the Melrose Group’s deferred tax assets related to net operating loss carry forwards is supported by projections of future profitability. The Melrose Group provides a valuation allowance based on estimates of future taxable income in the respective taxing jurisdiction and the amount of deferred taxes that are expected to be realisable. If future taxable income is different from what is expected, the Melrose

25 Group may not be able to realise some or all of the tax benefit, which may, in turn, have a material and adverse effect on the Melrose Group’s results of operations, business and financial condition.

PART B: RISKS RELATING TO THE DISPOSAL 1. The Melrose Group’s operations after the Disposal will be less diversified Following the Disposal, the Melrose Group’s business will be less diversified both commercially and geographically and will comprise only Brush. Weak performance in Brush, or in any particular part of Brush’s businesses, may have an adverse impact on the financial condition of the Melrose Group.

2. Warranties, undertakings and indemnity given by Old Melrose, Melrose PLC and the Elster Seller The Disposal Agreement contains limited title and capacity warranties and interim operating covenants in respect of the Elster Group given by Old Melrose, Melrose PLC and the Elster Seller in favour of the Elster Purchaser, which could cause the Melrose Group to incur liabilities and obligations to make payments which would not have arisen had the Disposal Agreement not been entered into or the Elster Group sold. The Elster Seller has also agreed to be responsible for any payments in relation to squeeze-out proceedings brought by former minority shareholders of Elster Group GmbH. The Elster Seller’s overall aggregate liability for all claims under the Disposal Agreement is capped at the total consideration payable to the Elster Seller. If Old Melrose, Melrose PLC or the Elster Seller should incur costs under any of these warranties, undertakings or indemnity these costs could have an adverse effect on the Melrose Group’s business, financial condition and results of operations.

3. Warranties, undertakings and indemnities given by the Elster Purchaser The Disposal Agreement contains certain warranties, undertakings and indemnities given by the Elster Purchaser in favour of the Elster Seller. The extent to which the Elster Purchaser will be required, if at all, to make payments in respect of these warranties, undertakings and indemnities is unpredictable. If, however, the Elster Purchaser suffers financial distress, any payments due to the Elster Seller in respect of such warranties, undertakings and indemnities may be put at risk.

4. The Disposal may not complete The Disposal Agreement remains conditional on various matters, including the relevant approvals having been obtained from the regulatory authorities in Brazil, China, the European Union, South Africa and Turkey and there being no material adverse effect on the Elster Group between the date of the Disposal Agreement and completion of the Disposal. In the event that such conditions are not met, the Disposal may not be completed. Should the Disposal fail to complete, the Melrose Group would be obliged to pay out-of-pocket fees incurred in relation to the transaction without being able to set these off against the Disposal proceeds and the Proposed Return of Capital would not be implemented.

5. Potentially disruptive effect on the Melrose Group The success of the Elster Group depends on the continued contribution of key personnel and on maintaining strong relationships with key customers over the long term. If the Disposal does not proceed, the Elster Group’s key management and employees may be demotivated and key management or employees may choose to leave the Elster Group. This may have a negative effect on the performance of the Elster Group under the Melrose Group’s ownership. There may also be uncertainty for customers of the Elster Group as to the Melrose Group’s future intentions for the Elster Group. To maintain shareholder value, the Melrose Group may be required to allocate additional time and resources to the ongoing supervision and development of the Elster Group.

6. Loss of Shareholder value The ability to dispose of certain businesses at the perceived right time represents an important part of the Melrose Group’s ‘‘buy, improve, sell’’ strategy. The Board believes that the Disposal is in the best interests of the Melrose Group and its Shareholders taken as a whole and that it currently provides the best opportunity to realise an attractive and certain value for the Elster Group. If the Disposal does not complete, there can be no certainty around the timing of the next suitable and available opportunity to realise this value in respect of the Elster Group for Shareholders.

26 PART C: SPECIFIC RISKS RELATING PRINCIPALLY TO THE ELSTER GROUP 1. A significant slowdown in construction or other markets could result in a slowdown in sales The Melrose Group sells and distributes a significant portion of its manual-read meters and Smart Offerings for use in new construction markets and to utilities and utility contractors, and its level of sales activity in these markets depends to a significant extent on general economic conditions. The Melrose Group defines its Smart Offerings as automated meter reading, or AMR, meters, advanced metering infrastructure, or AMI, meters, and other meters that are equipped with communications capabilities, communications networks and related software solutions, or Smart Grid Solutions, together with individual products, components and services for use in the Smart Grid. The Melrose Group defines smart meters as meters, which are AMR or AMI enabled, are equipped with communication capabilities and may be used as components in the Smart Grid. The Smart Grid is commonly used to refer to any gas, electricity or water network that allows utilities to measure and control production, transmission and distribution more efficiently through the use of communications technology. Many utilities have announced plans or intentions to replace older meters with smart meters enabled for AMR or with meters enabled for AMI on a standalone basis or as components of Smart Grid solutions. However, some utilities have delayed their investments due to economic uncertainty, a reduction in the consumption of energy resources as a result of the economic downturn, difficulty in obtaining financing, limitations on their own or public financial resources or for other reasons. Utilities that are owned by municipalities or other public authorities may also face budgetary restrictions and funding constraints. Such uncertainties and funding constraints may lead some utilities to alter their budgeting and procurement priorities to focus on capital expenditures in areas other than metering, which may result in delays in the installation of meters and Smart Grid solutions. Any such delays or reductions in level of sales activities could have a material adverse effect on the Melrose Group’s results of operations, business and financial condition.

2. The nature of the metering industry may expose the Melrose Group to greater risks of non-compliance with regulations The nature of the metering industry, which includes large contracts entered into with public or publicly- regulated utilities in many jurisdictions, presents greater risks of non-compliance with some forms of regulation than is the case in many other industries. These risks are accentuated by the global nature of the Melrose Group’s operations.

3. The metering industry depends substantially on governmental regulation Historically, a key driver in the industry in which the Elster Group operates has been the replacement cycle of existing meters, especially the length of that cycle. Local or national regulations often determine when meters are to be replaced, and manual-read meter replacement cycles have been between five and 30 years, depending on the specific geographic market and the type and usage of the meter. Likewise, much of the impetus for the growth expected in the industry arises from regulatory initiatives. Today, governments around the world are considering and, in some cases, have already begun to implement new laws and regulations to promote increased energy efficiency, slow or reverse growth in the consumption of scarce resources, reduce carbon dioxide emissions and protect the environment more generally. In particular, intensified regulatory pressure relating to energy and natural resource consumption is being driven by these and a range of additional imperatives in the United States and the EU and in other countries, including Australia, Brazil, Canada, China and Russia. The EU, for example, has provided a mandatory framework for the upgrade of all gas and electricity meters to smart meters by 2022. Many of the legislative and regulatory initiatives encourage utilities to develop Smart Grid infrastructure, and some of these initiatives provide for government subsidies, grants or other incentives to utilities and other participants in their industry to promote transition to Smart Grid technologies. If government regulations regarding the introduction of Smart Grid technologies and the related shortening of the replacement cycles for meters are delayed, revised to permit lower or different investments in metering infrastructure or terminated altogether, this could have a material adverse effect on the Melrose Group’s results of operations, business and financial condition. In many regions, Smart Grid-related legislation or regulation is being considered, drafted or negotiated, or general legislation is in place, but awaiting implementing rules or guidance. Legislatures and governmental agencies may prolong the law- and rule-making process, subject new technology to extensive reviews or fail

27 to implement Smart Grid-related legislation or regulation on a timely basis, if at all. For example, some of the current legislative and regulatory initiatives in the EU have clauses that may lead to deferral or dilution to the extent the Smart Grid initiatives are deemed economically non-viable. Some of the Melrose Group’s utility customers have been awaiting greater clarity on the scope and implementation of these laws and regulations and the timing of, and conditions related to, the receipt of related government grants, subsidies and other incentives. This effect has caused the revenues of some segments within the Melrose Group to decline as utilities in the United States have been deferring their upgrades of installed meter bases and infrastructure expansions. They have accordingly been deferring their commitments for the substantial upgrades of installed meter bases and infrastructure expansions that will be part of their response to Smart Grid related regulation. While awaiting the upgrades on Smart Grids, some customers have also been deferring investments in the existing meter base. These deferrals continued throughout 2014. If a significant number of utilities continue to delay their investments or opt not to participate altogether, this could lead to shortfalls in the Melrose Group’s sales and results of operations in the short to medium term. The Melrose Group is subject to a range of laws, regulations and ordinances in all of the jurisdictions in which it conducts business, and the Melrose Group and its customers are regulated by various bodies at the supranational, national, state and local level. For example, in many US states, public utility commissions regulate utilities in their states separately from other state regulators and federal agencies. The laws, regulations and ordinances to which the Melrose Group is subject, and the actions and attitudes of regulators, can change from time to time. Compliance with current or future laws and regulations may increase the Melrose Group’s expenses if their complexity or inconsistency increases, while failure to comply could result in the imposition of significant fines, suspension of production, alteration of production processes, cessation of operations or other actions in the jurisdictions concerned, all of which could have a material adverse effect on its results of operations, business and financial condition. The nature, scope or effect of future regulatory requirements to which the Melrose Group’s operations might be subject or the manner in which existing or future laws will be administered or interpreted cannot be predicted. In particular, governmental agencies and state public utility commissions may promulgate regulations that mandate or encourage the use of a particular type of technology that is not readily compatible with the technology employed in its products or may otherwise establish standards that are more favourable to its competitors. For example, in the United States, the National Institute of Standards and Technology is statutorily required to define uniform interoperability standards for the implementation of Smart Grid solutions, and the US Federal Energy Regulatory Commission is required to engage in a rulemaking process to consider making these interoperability standards mandatory for interstate electricity transmission and wholesale power markets. This process may favour one company’s technology over another’s. If this were to happen, particularly in the larger markets in which the Melrose Group sells its products, it could be forced to withdraw some of its products from the market, make substantial investments in a new technology or lose market share to competitors, all of which could have a material adverse effect on the Melrose Group’s results of operations, business and financial condition.

4. The Melrose Group’s future operating results will depend on its ability to develop and manufacture products in a cost-effective manner The Melrose Group outsources the manufacturing of some of its metering products and their sub-assemblies and components such as brass castings, aluminium housings, sheet metal, plastics and printed circuit board assemblies and other electronics, especially for solid state meters used by gas, electricity and water utilities to maintain focus on its core competencies and streamline its operations, as well as to minimise its manufacturing costs. Solid state meters measure gas, electricity or water using electronic devices instead of mechanical components. The outsourcing of manufacturing capabilities reduces the day-to-day control that the Melrose Group is able to exercise over the production process and could result in quality problems and increased product warranty costs. In addition, as it outsources additional production capacity, the Melrose Group will retain limited internal production capacity and will rely more on third-party manufacturers to fill orders on a timely basis. While the Melrose Group’s strategy calls for having more than one supplier for each important product and component, it relies on a single source for some key product lines, products and components that it purchases from third-party manufacturers. In some cases, the Melrose Group’s purchases account for a material portion of some of its suppliers’ respective businesses.

28 5. The Melrose Group’s communications technologies use particular radio frequencies and thus are subject to the regulation of various governmental bodies The Melrose Group’s communications technologies use particular radio frequencies and thus are subject to the regulation of various governmental bodies, such as the US Federal Communications Commission and corresponding regulatory institutions of various US states and European countries. With respect to the United States in particular, currently very few of the Melrose Group’s products operate using licensed radio frequencies, but additional AMI and AMR products may operate in the United States using licensed radio frequencies in the future. To the extent that the Melrose Group’s products and solutions use licensed frequencies, there is a risk that there may be insufficient available licensed frequencies in some markets, that neither the Melrose Group nor its customers will be able to obtain licenses where required, even if sufficient frequencies are available, and that licenses that are granted to the Melrose Group or its customers may not be renewed on acceptable terms, if at all. Also, while unlicensed frequencies may currently be available for a wide variety of uses, including the Melrose Group’s radio frequency mesh communications technology, the Melrose Group and its customers may not be entitled to protection from interference by others who operate on frequencies close to or the same as those on which its products operate. If currently unlicensed frequencies become unacceptably crowded, or subject to restrictive rules governing their use, the Melrose Group’s business could suffer a material adverse effect.

6. In Europe the Melrose Group is subject to data protection regulation that imposes a general regulatory framework for the collection, processing and use of personal data Many of the Melrose Group’s Smart Grid and other technologies rely on the transfer of data relating to individuals and are accordingly affected by these regulations. Although the European Data Protection Directive (95⁄46/EC) has been implemented across the EU, data protection laws across member states vary to a large degree, and authorities do not always apply existing laws in a consistent manner. If the Melrose Group fails to comply with such regulations it may incur costs which could have a material adverse effect on its business. While privacy issues in connection with AMR, AMI and Smart Grid solutions have been discussed within the EU, it is unclear how regulation in connection with privacy requirements will further develop and how and to what extent it may affect technology in its industry relating to Smart Grid solutions. It may also lead to delay in other regulatory initiatives supporting the implementation of Smart Grid solutions. The Melrose Group may incur additional expenditure in order to comply with such future regulations. Some of the Melrose Group’s business structures, processes or actions may infringe applicable data protection standards and as a consequence it may have to take costly and burdensome measures to change these business structures, processes or actions, and may face administrative fines or other sanctions for such infringement. The Melrose Group’s business and/or its reputation could suffer a material adverse effect as a result.

7. Some public concern exists over the potential health risks associated with the use of radio frequency communications in smart meters used in neighbourhoods The US Federal Communications Commission establishes guidelines for radio frequency emissions for equipment used in a residence or residential setting and the Melrose Group’s devices meet the guidelines. However, these guidelines may prove to be inadequate and may change, or even if the guidelines are appropriate, public concern could impact the acceptance of its products. In such a case, the Melrose Group’s projects may be delayed, interrupted or terminated as a result which may have a material adverse effect on its results of operations, business or financial condition.

8. The metering industry in which the Melrose Group operates is exposed to the risk of, and to public concern about, an increased threat of ‘‘cyber-attacks’’ on the power grid as Smart Grid infrastructure becomes more prevalent Smart Grid privacy and security risks have attracted attention recently, as media reports have highlighted the dangers of potential instability, blackouts and economic disruption that could result from a Smart Grid cyber-attack by hackers. Any cyber-attack or other security breach on any component the Melrose Group or a competitor have provided, or on other similar technologies, could lead to a reduction in public acceptance of Smart Grid technologies and have a material adverse effect on the Melrose Group’s results of operations, business and financial condition.

29 9. The competitive environment in which the Melrose Group’s Elster Group operates has been strongly impacted by the movement towards Smart Grid solutions While the Melrose Group is increasingly focusing its metering business plan on the development of Smart Grid product offerings and solutions in an attempt to maintain and expand its activities and market share in this area, current or future competitors may be able to respond more quickly to new or emerging technologies and changes in customer or regulatory requirements. They may also be able to drive technological innovation and develop products that are equal in quality and performance or superior to the Melrose Group’s products, which could reduce the Melrose Group’s overall sales, require the Melrose Group to invest additional funds in new technology development and put pressure on the Melrose Group’s market position. The Melrose Group’s competitors also have made or may make strategic acquisitions or establish alliances or cooperative relationships among themselves or with third parties that enhance their ability to address the needs of customers, potentially giving them a significant increase in market share at the Melrose Group’s expense. New entrants could include competitors from industries the Melrose Group previously viewed as distinct from its own, such as the networking, telecommunications and systems integration industries. Should the Melrose Group fail to compete successfully with current or future competitors, the Melrose Group could experience a material adverse effect on the results of the Melrose Group’s operations, business and financial condition.

10. The utility industry worldwide is often subject to long budgeting, purchasing and regulatory review processes that can take several years to complete and can result in unpredictable capital investment cycles The Melrose Group, in particular the Elster Group, derives much of its revenues from customers in the utility industry, either directly or through distributors and the utility industry worldwide is often subject to long budgeting, purchasing and regulatory review processes that can take several years to complete and can result in unpredictable capital investment cycles. Generally, larger contracts with utilities are granted through competitive tender processes that involve large volumes, require lengthy and complex competitive procurement processes and lead to long and unpredictable sales cycles. Utilities are under increasing economic, political and regulatory pressure to seek bids for their higher-volume purchases in as competitive a process as possible, which can further delay the time necessary to complete the tender process. In addition, in the face of increasing economic pressure, the Melrose Group’s customers in the utility industry may establish alliances or enter into mergers which may enhance their purchasing power and their ability to command lower prices. In some markets, utilities’ ability to recover the costs of purchasing the Melrose Group’s products and services is also subject to lengthy and uncertain regulatory proceedings. In addition, utilities’ purchasing decisions are sometimes delayed if they are considering or negotiating major transactions or changes in their businesses or operations that are unrelated to the Melrose Group’s products. The Melrose Group’s revenue development may be materially and adversely affected if these sales cycles lead to delays that it did not anticipate, for which it was unable to plan adequately or that are otherwise disadvantageous to it. This could have a material adverse effect on the Melrose Group’s results of operations, business and financial condition.

11. Economic weakness and uncertainty may slow the rate of ‘‘gasification’’ Economic weakness and uncertainty may slow the rate of ‘‘gasification’’ which the Melrose Group defines as the expansion of natural gas infrastructure and distribution to include regions and customers, particularly in the Middle East, North Africa and Asia, not previously connected to the gas grid. Similarly, economic weakness has led to and may in the future lead to a decrease in demand for meters and other products that the Melrose Group sells for transmission and distribution applications, as well as for gas utilisation products, which consists of process-heating equipment, such as burner-control systems for gas-fired industrial heat treatment processes, and heat-control systems for residential and commercial boilers. As a result of these developments, existing orders for products and services may be delayed or cancelled and new orders may not materialise, which could have a material adverse effect on the Melrose Group’s results of operations, business and financial condition.

30 12. The manufacturing processes for all of the Melrose Group’s products, especially in the gas and water metering segments, require a wide variety of components, raw materials and energy, including gas and electricity. The prices of components, raw materials and energy fluctuate and could negatively impact profitability As an industrial business, the Melrose Group is exposed to fluctuations in the price of utilised components such as brass castings, aluminium housings, sheet metal, plastics and printed circuit board assemblies and other electronics. Prices of these components, raw materials or energy may increase or become more volatile. In many cases, the Melrose Group seeks to manage its exposure to changing prices by executing procurement contracts for periods of up to one year with its suppliers of these materials or of components that include them. The Melrose Group may pay higher prices with this approach than it otherwise would have, should market prices decline during the life of the contracts.

PART D: RISKS RELATING TO AN INVESTMENT IN NEW MELROSE ORDINARY SHARES 1. Confirmation of the Scheme, the Initial Reduction of Capital and the Proposed Return of Capital is in each case within the discretion of the Court The Scheme is conditional upon, among other things, confirmation by the Court. There are risks that this will not be given and that the Scheme will not occur on a timely basis or at all. Implementation of the Initial Reduction of Capital is conditional upon, among other things, confirmation of the Scheme and the Initial Reduction of Capital by the Court. There are risks that this will not be given and that the Initial Reduction of Capital will not occur on a timely basis or at all. If this does not happen, the Initial Reduction of Capital will not be implemented and the benefits expected to result from the Initial Reduction of Capital will not be achieved. Implementation of the Proposed Return of Capital is subject to, among other things, the Scheme becoming effective, completion of the Disposal, the discretion of the Board and confirmation by the Court. There are risks that the Scheme and completion of the Disposal will not occur, the confirmation will not be given and that the circumstances may change such that the Board no longer feels that the Proposed Return of Capital is in the best interests of the Shareholders.

2. The Disposal may not complete The Disposal Agreement remains conditional on various matters, including the relevant approvals having been obtained from the regulatory authorities in Brazil, China, the European Union, South Africa and Turkey and there being no material adverse effect on the Elster Group between the date of the Disposal Agreement and completion of the Disposal. In the event that such conditions are not met, the Disposal may not be completed. Should the Disposal fail to complete, the Melrose Group would be obliged to pay out of pocket fees incurred in relation to the transaction without being able to set these off against the Disposal proceeds and the Proposed Return of Capital would not be implemented.

3. The value of an investment in New Melrose may go down as well as up The market price of New Melrose Ordinary Shares could be volatile and subject to significant fluctuations due to a variety of factors outside the control of the Melrose Group including changes in sentiment in the market regarding the New Melrose Ordinary Shares (or securities similar to them), any regulatory changes affecting the Melrose Group’s operations, variations in the Melrose Group’s operating results, business developments of the Melrose Group or its competitors, the operating and share price performance of other companies in the industries and markets in which the Melrose Group operates, speculation about the Melrose Group’s business in the press, media or the investment community, changes to the Melrose Group’s profit estimates or the publication of reports by analysts and general market conditions. Stock markets have from time to time experienced significant price and volume fluctuations that have affected the market prices for securities and which may be unrelated to the Melrose Group’s operating performance, underlying asset value or prospects. The market price of the New Melrose Ordinary Shares may be adversely affected by any of the preceding or other factors regardless of the Melrose Group’s actual results of operations and financial condition. Furthermore, the Melrose Group’s operating results and prospects from time to time may be below the expectations of market analysts and investors.

31 4. Any future issues of New Melrose Ordinary Shares and sales of New Melrose Ordinary Shares by major Shareholders may have an adverse effect on the market price of the New Melrose Ordinary Shares The Melrose Group’s stated strategy is to buy, improve and sell companies and the Directors expect that the Melrose Group will make further acquisitions which may be material in the context of the Melrose Group. Any such acquisitions in the future may require funding by debt and equity finance, including by way of an issue of a new class of shares, should any such acquisition occur prior to the Proposed Return of Capital. Any future equity financing may dilute Shareholders’ shareholdings in the Melrose Group. An additional offering or a significant sale of New Melrose Ordinary Shares by any major Shareholder could have an adverse effect on the market price of the outstanding New Melrose Ordinary Shares.

5. New Melrose’s ability to continue to pay dividends on the New Melrose Ordinary Shares will depend on the availability of distributable reserves New Melrose’s ability to pay dividends is limited under English company law, which limits a company to only paying dividends to the extent that it has distributable reserves available for this purpose. As a holding company, New Melrose’s ability to pay dividends in the future is affected by a number of factors, principally its ability to receive sufficient dividends from subsidiaries. The payment of dividends to New Melrose by its subsidiaries is, in turn, subject to restrictions, including certain regulatory requirements and the existence of sufficient distributable reserves in such subsidiaries. The ability of these subsidiaries to pay dividends and the Melrose Group’s ability to receive distributions from its investments in other entities is subject to applicable local laws and regulatory requirements and other restrictions, including, but not limited to, applicable tax laws and restrictions in some of the Melrose Group’s debt facilities. These laws and restrictions could limit the payment of future dividends and distributions to the Melrose Group by its subsidiaries, which could restrict the Melrose Group’s ability to pay a dividend to holders of the New Melrose Ordinary Shares.

6. Exchange rate fluctuations may impact the price of New Melrose Ordinary Shares or the value of any dividends paid The New Melrose Ordinary Shares, and any dividends or return of capital to be announced in respect of such shares, will be quoted in pounds sterling. An investment in New Melrose Ordinary Shares by an investor in a jurisdiction whose principal currency is not pounds sterling exposes the investor to foreign currency rate risk. Any depreciation of the pound sterling in relation to such foreign currency will reduce the value of the investment in the New Melrose Ordinary Shares in foreign currency terms and may adversely impact the value of any dividends.

7. Holders of New Melrose Ordinary Shares outside the United Kingdom may not be able to participate in future equity offerings English law provides for pre-emptive rights generally to be granted to shareholders, unless such rights are disapplied by shareholder resolution. However, Shareholders outside the United Kingdom may not be entitled to exercise these rights. For example, US holders of shares are customarily excluded from exercising any such pre-emption rights they may have unless a registration statement under the US Securities Act is effective with respect to those rights, or an exemption from the registration requirements or an exemption from similar requirements in other relevant jurisdictions thereunder is available. The Melrose Group has no current intention to file any such registration statement, and cannot assure prospective investors that any exemption from the registration requirements would be available to enable US or other overseas holders to exercise such pre-emption rights or, if available, that it will utilise any such exemption.

32 IMPORTANT INFORMATION 1. Cautionary Note on Forward Looking Statements Certain statements contained in this Prospectus, including those in the parts headed ‘‘Summary’’, ‘‘Risk Factors’’, ‘‘Information on the Proposals’’ and ‘‘Information on Old Melrose and New Melrose’’, constitute ‘‘forward-looking statements’’. In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the terms ‘‘believes’’, ‘‘continues’’, ‘‘estimates’’, ‘‘plans’’, ‘‘prepares’’, ‘‘anticipates’’, ‘‘expects’’, ‘‘intends’’, ‘‘aims’’, ‘‘may’’, ‘‘will’’ or ‘‘should’’ or, in each case, their negative or other variations or comparable terminology. Shareholders should specifically consider the factors identified in this Prospectus which could cause actual results to differ before making an investment decision. Undue reliance should not be placed on any forward-looking statements as such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of Old Melrose, New Melrose and/or the Melrose Group, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Undue reliance should not be placed on any forward-looking statements as such forward-looking statements are based on numerous assumptions regarding Old Melrose’s, New Melrose’s and/or the Melrose Group’s present and future business strategies and the environment in which Old Melrose, New Melrose and/or the Melrose Group will operate in the future. Among the factors that could cause actual results to differ materially from those described in the forward- looking statements are changes in the global political, economic and/or business sphere, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates and future business combinations or dispositions. Such risks, uncertainties and other factors are set out more fully in the section of this Prospectus headed ‘‘Risk Factors’’ and include, among others: risks relating to commodity prices, risks relating to the economic conditions of the markets in which New Melrose and the Melrose Group operates and risks relating to the possible volatility of the price of New Melrose Ordinary Shares. These forward-looking statements speak only as at the date of this Prospectus. Except as required by the FCA, the London Stock Exchange or applicable law (including as may be required by the Prospectus Rules, Listing Rules and the Disclosure and Transparency Rules), New Melrose expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this Prospectus to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Forward-looking statements contained in this Prospectus do not in any way seek to qualify the working capital statement contained in paragraph 9 of Part IX (Additional Information) of this Prospectus.

2. Market and Economic Data This Prospectus contains information regarding the Melrose Group’s business and the market in which it and certain members of the Melrose Group operates and competes. Where information has been sourced from a third party it has been accurately reproduced and, so far as New Melrose is aware and is able to ascertain from the information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. Such information has not been audited or independently verified.

33 EXPECTED TIMETABLE OF PRINCIPAL EVENTS Each of the times and dates in the table below is indicative only and subject to change without further notice. References to a time of day are to London time.

The Scheme and Initial Reduction of Capital Time and Date(5) 2015 Posting of the Old Melrose Circular to Shareholders ...... 6 October Latest time and date for receipt of Blue Form of Proxy for the Court Meeting ...... 10:00 a.m. on 27 October(1) Latest time and date for receipt of White Form of Proxy for the Old Melrose General Meeting ...... 10:15 a.m. on 27 October(2) Scheme Voting Record Time (in respect of the Old Melrose General Meeting and the Court Meeting) ...... 6:00 p.m. on 27 October(3) Court Meeting ...... 10:00 a.m. on 29 October Old Melrose General Meeting ...... 10:15 a.m. on 29 October(4) Court Hearing ...... 18 November Last day for dealings in Old Melrose Ordinary Shares ...... 18 November Scheme Record Date ...... 18 November Scheme Record Time ...... 6:00 p.m. on 18 November Effective Date of the Scheme ...... 19 November Delisting of Old Melrose Ordinary Shares, Admission of New Melrose Ordinary Shares, crediting of New Melrose Ordinary Shares to CREST accounts and dealings in New Melrose Ordinary Shares commence on the London Stock Exchange’s main market for listed securities ...... 8:00 a.m. on 19 November Name changes expected to become effective ...... 19 November Court hearing of the claim form to confirm the Initial Reduction of Capital ...... 20 November Initial Reduction of Capital becomes effective ...... 23 November Despatch of the New Melrose Ordinary Share certificates ...... By 3December

Notes: (1) Blue Forms of Proxy for the Court Meeting not returned by this time may be handed to the Chairman or the Registrars at the Court Meeting prior to the vote being taken. (2) To be valid the White Forms of Proxy for the Old Melrose General Meeting must be lodged at least 48 hours (excluding any part of a day that is not a working day) before the time appointed. (3) If either the Court Meeting or the Old Melrose General Meeting is adjourned, the Scheme Record Time for the adjourned meeting will be 6:00 p.m. on the day which is two days (excluding any part of a day that is not a working day) before the date of the adjourned meeting. (4) To commence at the time fixed or, if later, immediately following the conclusion or adjournment of the Court Meeting. (5) These dates are indicative only and will depend, among other things, on the date upon which the Court sanctions the Scheme and confirms the Initial Reduction of Capital.

The Proposed Return of Capital Following the completion of the Disposal, which is expected to occur in the first quarter of 2016, steps will be taken to effect the Proposed Return of Capital, unless the Board considers that it is no longer in the best interests of Shareholders to do so. Whilst the precise timing of the Proposed Return of Capital will depend, among other things, on the availability of Court dates, New Melrose would seek to return capital to Shareholders within 5 to 7 weeks following the completion of the Disposal. The Proposed Return of Capital will require two court hearings, but no further general meeting of the Shareholders of New Melrose.

34 DIRECTORS, COMPANY SECRETARY, REGISTERED OFFICE AND ADVISERS

DIRECTORS COMPANY SECRETARY Christopher Miller Adam Westley David Roper Simon Peckham Geoffrey Martin REGISTERED OFFICE Perry Crosthwaite John Grant 11th Floor, Colmore Plaza Justin Dowley 20 Colmore Circus Queensway Elizabeth Hewitt Birmingham B4 6AT

SPONSOR AND FINANCIAL ADVISER BROKER Rothschild Investec New Court 2 Gresham Street St. Swithin’s Lane London EC2V 7QP London EC4N 8AL

AUDITORS AND REPORTING ACCOUNTANTS LEGAL ADVISERS Deloitte LLP Simpson Thacher & Bartlett LLP 2 New Street Square CityPoint London EC4A 3BZ One Ropemaker Street London EC2Y 9HU

REGISTRARS Equiniti Limited Aspect House Spencer Road Lancing West Sussex BN99 6DA

35 PART I INFORMATION ON THE PROPOSALS 1. Description of the Scheme, the Initial Reduction of Capital and the Proposed Return of Capital Today the Board of Old Melrose announced its intention to implement a corporate reorganisation in order to enable the Melrose Group to efficiently and promptly return the proceeds of the Disposal to Shareholders. It is proposed that a new holding company be introduced for the Melrose Group by way of the Scheme. The implementation of the Scheme will have no impact on the reported historical financial statements of the Melrose Group or the way in which the Melrose Group will report its financial results on an on-going basis. The establishment of a new holding company for the Melrose Group and the Initial Reduction of Capital entail a number of steps and are a common method of creating distributable reserves. The Proposals also encompass the Proposed Return of Capital, which is expected to be effected after completion of the Disposal.

1.1 Effects of the Scheme 1.1.1 The effects of the implementation of the Scheme on Old Melrose and holders of Old Melrose Ordinary Shares will be as follows: (a) instead of having its issued share capital owned by Old Melrose Ordinary Shareholders, Old Melrose will become a wholly-owned subsidiary of New Melrose with its entire issued share capital owned by New Melrose; (b) instead of owning a given number of Old Melrose Ordinary Shares, each Old Melrose Ordinary Shareholder will become a New Melrose Ordinary Shareholder and will own the same number of New Melrose Ordinary Shares; and (c) New Melrose will be the new holding company of the Melrose Group. 1.1.2 The effect of the implementation of the Scheme on Old Melrose 2012 Incentive Optionholders is that instead of owning a given number of Old Melrose 2012 Incentive Options, they will own the same number of New Melrose 2012 Incentive Options and such options will be on substantially the same terms and economic basis as their existing options. 1.1.3 Immediately following the Scheme becoming effective, New Melrose will own no assets other than the £50 cash, the Capitalisation Shares, a Deferred A Share in the capital of Old Melrose and a receivable of £50,000 in respect of Redeemable Preference Shares in the capital of New Melrose which were issued to Shield Trust Limited shortly after New Melrose’s incorporation.

1.2 The Scheme The insertion of New Melrose will be effected through a Court-sanctioned scheme of arrangement under section 899 of the Companies Act. Under the Scheme, all Old Melrose Ordinary Shares will be cancelled on the Effective Date. In consideration for the cancellation, Old Melrose Ordinary Shareholders on the register of members of Old Melrose at the Scheme Record Time, expected to be 6:00 p.m. on 18 November 2015, will receive 1 New Melrose Ordinary Share for every 1 Old Melrose Ordinary Share held. The rights attaching to the New Melrose Ordinary Shares will be substantially the same as those attaching to the Old Melrose Ordinary Shares. Upon implementation of the Scheme, a holder of New Melrose Ordinary Shares will have the same interest in the profits, net assets and dividends of New Melrose as he or she had as a holder of Old Melrose Ordinary Shares in the profits, net assets and dividends of Old Melrose before the Scheme became effective. A summary of the rights attaching to the New Melrose Ordinary Shares is set out at paragraph 4 of Part IX (Additional Information) of this Prospectus. The nominal value of each New Melrose Ordinary Share will be set by the Board on or prior to the Effective Date of the Scheme and will be announced at that time. The difference between the aggregate nominal value of the New Melrose Ordinary Shares and the market capitalisation of Old Melrose at the Scheme Record Time will be credited to a merger reserve of New Melrose. Pursuant to the Scheme, the issued share capital of Old Melrose will be reduced by cancelling and extinguishing the Old Melrose Ordinary Shares and the credit arising in the books of Old Melrose as a

36 result of the cancellation will be applied in paying up in full the Capitalisation Shares such that the aggregate nominal value of such Capitalisation Shares equals the aggregate nominal value of the Old Melrose Ordinary Shares cancelled. The Capitalisation Shares will be issued to New Melrose which will, as a result, become the holding company of Old Melrose and the Melrose Group.

1.3 Exchange of the Old Melrose 2012 Incentive Options In accordance with the terms of the Old Melrose 2012 Incentive Options, conditional on the Scheme becoming effective, options over Old Melrose 2012 Incentive Shares will, at the direction of the New Melrose and Old Melrose Remuneration Committees, be automatically exchanged for like options over shares in New Melrose on substantially the same terms as the Old Melrose 2012 Incentive Options and upon such exchange taking effect the existing Old Melrose 2012 Incentive Options will lapse. A summary of the terms of the New Melrose 2012 Incentive Shares is set out at paragraph 4 of Part IX (Additional Information) of this Prospectus and a summary of the terms of the New Melrose 2012 Incentive Options is set out at paragraph 14 of Part IX (Additional Information) of this Prospectus.

1.4 The Initial Reduction of Capital New Melrose has not traded since incorporation and, as such, lacks distributable reserves. The Initial Reduction of Capital which will occur following, and subject to, the Scheme becoming effective will involve the reduction of the New Melrose’s ordinary share capital by reducing the nominal amount of each New Melrose Ordinary Share issued pursuant to the Scheme to 1 penny. This reduction will create distributable reserves, currently expected to be between £50—150 million, which can be used for future dividends and/or used to absorb any costs of New Melrose without hindering the ability to pay future dividends. The Initial Reduction of Capital has been approved (conditional upon the Scheme becoming effective) by a special resolution passed at a general meeting of New Melrose on 2 October 2015 and remains subject to approval by a special resolution at the general meeting of Old Melrose, to be held on 29 October 2015. The Initial Reduction of Capital will also require confirmation by the Court. This is a legal and accounting adjustment and should not have any impact on the market value of the New Melrose Ordinary Shares.

1.5 The Proposed Return of Capital Following, and subject to, the Scheme becoming effective and following, and subject to, completion of the Disposal, New Melrose currently intends to undertake a Court-confirmed return of capital in accordance with the Companies Act and the Companies (Reduction of Share Capital) Order 2008 in order to enable New Melrose to return between £2.0—2.5 billion in capital to its Shareholders. The Proposed Return of Capital has been approved (conditional, among other things, upon completion of the Disposal) by a special resolution passed at a general meeting of New Melrose on 2 October 2015 and remains subject to approval by a special resolution at the general meeting of Old Melrose, to be held on 29 October 2015. It is expected that the Proposed Return of Capital will involve: (a) the issue to the holders of New Melrose Ordinary Shares, as at a record time and date to be determined by the Board, of non-voting B shares in New Melrose credited as fully paid up with an aggregate nominal value which is equal to the aggregate amount of capital to be returned and carrying the rights and restrictions set out in paragraph 4 of Part IX (Additional Information) of this Prospectus (the ‘‘B Shares’’); (b) following a further meeting of the Board, the subsequent cancellation of each of the B Shares in return for a payment to the holder of the B Share of an amount equal to the nominal value of such B Share; and (c) the consolidation of New Melrose Ordinary Shares in order to reduce the number of New Melrose Ordinary Shares in line with a ratio to be determined by the Board prior to the date of the Proposed Return of Capital, to reflect the size of the Proposed Return of Capital relative to the market capitalisation of New Melrose immediately prior to the Share Capital Consolidation. The Share Capital Consolidation is designed to result in a reduction in the number of ordinary shares in the capital of New Melrose by reference to a ratio which, in the judgment of the Board, is the most appropriate to ensure, so far as possible and subject to normal market movements, that the market share price of one New Melrose Ordinary Share immediately after the Proposed Return of Capital is

37 approximately equal to the market share price immediately before the Proposed Return of Capital, and to maintain comparability of historical and future ‘per share data’. The B Shares will not be admitted to listing or dealing on any exchange. The amount of the Proposed Return of Capital is expected to be announced at the same time as completion of the Disposal and will be determined at the sole discretion of the Board.

2. Conditions to and Implementation of the Scheme, the Initial Reduction of Capital and the Proposed Return of Capital 2.1 The Scheme The implementation of the Scheme is conditional upon: (A) approval of the Scheme at the Court Meeting by a majority in number, representing not less than 75 per cent. in value, of those Shareholders present and voting, either in person or by proxy; (B) the passing of the special resolution set out in the notice of Old Melrose General Meeting to approve, among other things, the cancellation of the Old Melrose Ordinary Shares and the allotment of the Capitalisation Shares by the Directors of Old Melrose (pursuant to the Scheme); (C) sanction by the Court of the Scheme and confirmation by the Court of the reduction of capital of Old Melrose which occurs as a result of the cancellation of Old Melrose Ordinary Shares as part of the Scheme; and (D) the delivery of a copy of the order of the Court sanctioning the Scheme and confirming the reduction of capital of Old Melrose in relation to the Scheme to the Registrar of Companies. The Court Hearing (at which it is proposed that the Court sanction the Scheme) is expected to be held on or around 18 November 2015. Any creditors or shareholders who wish to oppose the Scheme will be informed by advertisement in a newspaper with national distribution of their right to appear in person, or be represented by counsel, at the Court Hearing. In addition, the Directors of Old Melrose will not take the necessary steps to enable the Scheme to become effective unless, at the relevant time, the conditions below have been satisfied and, at the relevant time, they consider that it continues to be in the best interests of Old Melrose and Old Melrose Ordinary Shareholders that the Scheme should be implemented: (E) the formal processes having been put in place to approve the application to admit (subject to the allotment of the New Melrose Ordinary Shares and the satisfaction of conditions (A) to (D) above, save to the extent such conditions are already satisfied) the New Melrose Ordinary Shares to be issued in connection with the Scheme to the Official List (including a listing hearing having been held); and (F) the agreement of the London Stock Exchange to admit the New Melrose Ordinary Shares to be issued in connection with the Scheme to trading on its main market for listed securities and its agreement not being withdrawn prior to the Effective Date. The Board may decide not to proceed with the Scheme at any point prior to the Effective Date. If the Scheme is sanctioned by the Court and the conditions described at (E) and (F) above are satisfied, the Scheme is expected to become effective and dealings in the New Melrose Ordinary Shares to be issued pursuant to the Scheme are expected to commence at 8:00 a.m. on 19 November 2015. If the Scheme has not become effective by 31 December 2015 (or such later date as the Court may allow), it will lapse, in which event neither the Scheme, nor the Initial Reduction of Capital, nor the Proposed Return of Capital will proceed and Old Melrose Ordinary Shareholders will remain holders of Old Melrose Ordinary Shares and the Old Melrose Ordinary Shares will continue to be listed on the Official List. The Scheme contains a provision for Old Melrose and New Melrose jointly to consent, on behalf of all persons concerned, to any modification of, or addition to, the Scheme or to any condition that the Court may think fit to approve or impose. The Court would be unlikely to approve or impose any modification of, or addition or condition to, the Scheme which might be material to the interests of Shareholders unless such persons were informed of any such modification, addition or condition. It will be a matter for the Court to decide, in its discretion, whether or not the consent of Shareholders should be sought at a further meeting. If the Court approves or imposes a modification of, or addition or condition to, the Scheme which, in the opinion of the Directors, is of such a nature or importance as to require the approval of

38 Shareholders, at a further meeting (or meetings), the Directors of Old Melrose will not take the necessary steps to enable the Scheme to become effective unless and until such approval is obtained. Shortly after Admission, pursuant to resolutions of the Boards of New Melrose and Old Melrose, respectively, New Melrose will be renamed Melrose Industries PLC and Old Melrose will be renamed and will be re-registered as a private limited company.

2.2 Exchange of the Old Melrose 2012 Incentive Options In accordance with the terms of the Old Melrose 2012 Incentive Options, conditional on the Scheme becoming effective, options over Old Melrose 2012 Incentive Shares will, at the direction of the New Melrose and Old Melrose Remuneration Committees, be automatically exchanged for like options over shares in New Melrose on substantially the same terms as the Old Melrose 2012 Incentive Options and upon such exchange taking effect the existing Old Melrose 2012 Incentive Options will lapse. If the Scheme has not become effective by 31 December 2015 (or such later date as the Court may allow), it will lapse, in which event Old Melrose 2012 Incentive Optionholders will remain holders of Old Melrose 2012 Incentive Options.

2.3 The Initial Reduction of Capital The Initial Reduction of Capital involves the following: (A) the Scheme becoming effective and being fully implemented; (B) the confirmation of the Initial Reduction of Capital by the Court; and (C) the delivery of a copy of the order of the Court confirming the Initial Reduction of Capital to the Registrar of Companies for registration. The Court hearing to confirm the Initial Reduction of Capital is expected to be held on or around 20 November 2015. Shareholders will have the right to attend the Court hearing to support or oppose the Initial Reduction of Capital and to appear in person or be represented by counsel. The Initial Reduction of Capital is expected to become effective on 23 November 2015.

2.4 The Proposed Return of Capital The Proposed Return of Capital involves the following: (A) the Scheme becoming effective and being fully implemented; (B) the Disposal completing and funds being received by New Melrose; (C) the allotment and issue of B Shares to the persons entitled to such B Shares; (D) the confirmation of the Proposed Return of Capital by the Court; and (E) the delivery of a copy of the order of the Court confirming the Proposed Return of Capital to the Registrar of Companies for registration. The Board shall not proceed with the Proposed Return of Capital if they no longer believe it to be in the best interests of the Shareholders of New Melrose as a whole to proceed. Should the Board resolve to move forward with the Proposed Return of Capital, Shareholders will have the right to attend the Court hearing to support or oppose the Proposed Return of Capital and to appear in person or be represented by counsel.

3. Admission, Dealings, Share Certificates and Settlement Application will be made to the UKLA for 995,206,966 New Melrose Ordinary Shares to be admitted to the Official List and to the London Stock Exchange for such shares to be admitted to trading on the London Stock Exchange’s main market for listed securities. The ISIN number of the New Melrose Ordinary Shares will be GB00BYRJP462. There will be no such application for any other class of shares of New Melrose to be admitted to listing or trading on any exchange. The last day of dealings in Old Melrose Ordinary Shares is expected to be 18 November 2015. The last time for registration of transfers of Old Melrose Ordinary Shares is expected to be 6:00 p.m. on 18 November 2015.

39 New Melrose Ordinary Shares can be held in certificated form or uncertificated form. With effect from and including the Effective Date, share certificates for the Old Melrose Ordinary Shares will cease to be valid and should be destroyed. With respect to the Old Melrose Ordinary Shares held in uncertificated form, Euroclear will be instructed to cancel the entitlements of the relevant Shareholders with respect to those Old Melrose Ordinary Shares. Admission of the New Melrose Ordinary Shares to the Official List will become effective and dealings in the New Melrose Ordinary Shares are expected to commence at 8:00 a.m. on 19 November 2015. These dates may be deferred if it is necessary to adjourn any meetings required to approve the Scheme or if there is any delay in obtaining the Court’s sanction of the Scheme. In the event of a delay, the application for Old Melrose Ordinary Shares to be delisted will be deferred, so that listing will not be cancelled until immediately before the Scheme takes effect. No New Melrose Ordinary Shares have been marketed to, or are available for purchase in whole or in part by, the public in the United Kingdom or elsewhere in connection with Admission. It is expected that New Melrose Ordinary Shares will be credited to CREST accounts on 19 November 2015. It is expected that certificates for New Melrose Ordinary Shares will be posted by 3 December 2015. Pending the despatch of certificates for New Melrose Ordinary Shares, transfers of New Melrose Ordinary Shares in certificated form will be certified against the share register of New Melrose. Temporary documents of title have not been, and will not be, issued in respect of the New Melrose Ordinary Shares. All documents, certificates, cheques or other communications sent by or to Shareholders will be sent at their own risk and may be sent by post. All mandates relating to payment of dividends on Old Melrose Ordinary Shares and all instructions given to Old Melrose in relation to notices and other communications in force immediately prior to the Effective Date will, unless and until revoked or varied, be deemed, as from the Effective Date, to be valid and effective mandates or instructions to New Melrose in relation to the corresponding holdings of New Melrose Ordinary Shares.

4. Shareholder Payment Policy Old Melrose paid an interim dividend of 2.8 pence per Old Melrose Ordinary Share (2014: 2.8 pence) for the financial year ending 31 December 2015. The interim dividend was paid on Thursday, 3 September 2015, to Shareholders on the register at close of business on Friday, 7 August 2015. The table below shows the amount of dividend per Old Melrose Ordinary Share for each of the financial years ended 31 December 2014, 2013 and 2012.

2014 2013 2012 Dividend per Old Melrose Ordinary Share ...... 8.1 pence 7.75 pence 7.6 pence It is the intention of the Board of New Melrose to maintain a progressive dividend policy going forward. The Melrose Group’s policy is also to return surplus cash and business disposal proceeds to Shareholders.

5. Overseas Shareholders 5.1 General No New Melrose Ordinary Shares or any other securities in New Melrose have been marketed to, or are available for purchase, in whole or in part, by, the public in the United Kingdom or elsewhere in connection with Admission or the Proposals. This Prospectus does not constitute or form part of any offer or invitation to purchase, subscribe for, sell or issue, or any solicitation of any offer to purchase, subscribe for, sell or issue, New Melrose Ordinary Shares or any other securities of New Melrose or any other entity. It is the responsibility of any Shareholder not resident in the United Kingdom or a citizen, resident or national of another country wishing to participate in the allotment and issue of New Melrose Ordinary Shares and/or into whose possession this Prospectus comes to satisfy himself as to full observance of the laws of each relevant jurisdiction in connection with the distribution of this Prospectus and/or the allotment and issue of New Melrose Ordinary Shares pursuant to the Scheme, including the obtaining of any government, exchange control or other consents which may be required, and/or the compliance with

40 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 allotment and issue of New Melrose Ordinary Shares. The distribution of this Prospectus in certain jurisdictions other than the United Kingdom may be restricted by law. Persons into whose possession this Prospectus 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 Prospectus nor any other document issued or to be issued by or on behalf of New Melrose in connection with the allotment and issue of New Melrose Ordinary Shares constitutes an invitation, offer or other action on the part of New Melrose in any jurisdiction in which such invitation, offer or other action is unlawful. 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 New Melrose in its absolute discretion. If, in respect of any Overseas Shareholders, Old Melrose or New Melrose is advised that the allotment and issue of New Melrose Ordinary Shares would or might infringe the laws of any jurisdiction outside the United Kingdom or would or might require New Melrose to obtain any governmental or other consent or effect any registration, filing or other formality with which, in the opinion of New Melrose, it would be unable to comply or which it regards as unduly onerous, the Scheme provides that: (A) in the case of such New Melrose Ordinary Shares, New Melrose may in its sole discretion determine that they shall be allotted and issued to such persons as New Melrose may procure, as nominee for such Overseas Shareholder, on terms that they shall, as soon as practicable following the Effective Date, be sold on behalf of such Overseas Shareholder at the best price which can reasonably be obtained at the time of sale and the net proceeds of such sale (after the deduction of all expenses and commissions) shall be paid to such Overseas Shareholder; or (B) where such New Melrose Ordinary Shares have already been allotted and issued (in circumstances where paragraph (A) does not apply), New Melrose may in its sole discretion determine that such New Melrose Ordinary Shares shall be sold, and New Melrose shall appoint a person who shall be authorised on behalf of such Overseas Shareholder to procure that any shares in respect of which New Melrose has made such determination shall, as soon as practicable following the Effective Date, be sold at the best price which can reasonably be obtained at the time of sale and the net proceeds of such sale (after the deduction of all expenses and commissions) shall be paid to such Overseas Shareholder. Any remittance of the net proceeds of sale or redemption referred to in this section shall be at the risk of the relevant Overseas Shareholder. Overseas Shareholders should consult their own legal and tax advisers with respect to the legal and tax consequences of the Proposals in their particular circumstances.

5.2 United States The New Melrose Ordinary Shares have not been and will not be registered with the SEC under the US Securities Act and will be issued pursuant to the Scheme in reliance on the exemption from the registration requirements of the US Securities Act provided by Section 3(a)(10) of that act. For the purpose of qualifying for the exemption from the registration requirements of the US Securities Act provided by Section 3(a)(10) of that act with respect to the New Melrose Ordinary Shares issued pursuant to the Scheme, Old Melrose will advise the Court that it will rely on the Section 3(a)(10) exemption based on the Court’s sanctioning of the Scheme, which will be relied upon by Old Melrose as an approval of the Scheme. The Court will hold a hearing on the Scheme’s fairness to Old Melrose Shareholders, at which hearing all such Shareholders will be entitled to attend in person or through counsel to support or oppose the sanctioning of the Scheme. The New Melrose Ordinary Shares have not been and will not be listed on a United States securities exchange or quoted on any inter-dealer quotation system in the United States. New Melrose does not intend to take any action to facilitate a market in New Melrose Ordinary Shares in the United States. Consequently, New Melrose believes that it is unlikely that an active trading market in the United States will develop for the New Melrose Ordinary Shares. The New Melrose Ordinary Shares have not been, and will not be, registered under the securities laws of any state or jurisdiction in the United States and, accordingly, will only be issued to the extent that

41 exemptions from the registration or qualification requirements of state ‘‘blue sky’’ securities laws are available or such registration or qualification requirements have been complied with. A person who is entitled to receive New Melrose Ordinary Shares and who is an affiliate of New Melrose following the Effective Date may not resell such securities without registration under the US Securities Act or pursuant to the applicable resale provisions of Rule 144 of the US Securities Act or another applicable exemption from registration or in a transaction not subject to registration (including a transaction that satisfies the applicable requirements of Regulation S under the US Securities Act). Whether a person is an affiliate of a company for the purposes of the US Securities Act depends on the circumstances but affiliates can include certain officers, directors and significant shareholders. Persons who believe that they may be affiliates of New Melrose should consult their own legal advisers prior to any sale of securities received pursuant to the Scheme. Shareholders who are citizens or residents of the United States are advised that any securities issued pursuant to the Scheme have not been and will not be registered under the US Exchange Act. New Melrose intends, if necessary, to rely on an exemption from the reporting requirements of Section 12(g) of the US Exchange Act pursuant to Rule 12g3-2(b) thereunder. Shareholders who are citizens or residents of the United States should consult their own legal and tax advisers with respect to the legal and tax consequences of the Scheme.

5.3 Canada This Prospectus is not, and under no circumstances is to be construed as, an offer to any person in Canada and an advertisement or a public offering of the securities described herein. No securities commission or similar regulatory authority in Canada has reviewed or in any way passed upon this Prospectus or the merits of the securities described herein and any representation to the contrary is an offence in Canada. Old Melrose prepares its financial statements in UK pounds sterling, the official currency of the United Kingdom. The New Melrose Ordinary Shares will be issued in Canada pursuant to the Scheme and the issuance of the New Melrose Ordinary Shares will be exempt from the requirement that New Melrose prepare and file a prospectus with the relevant Canadian regulatory authorities pursuant to section 2.11 of National Instrument 45-106—Prospectus Exemptions. Accordingly, any resale of the New Melrose Ordinary Shares must be made in accordance with applicable securities laws which may require resales to be made pursuant to exemptions from prospectus requirements. These resale restrictions may in some circumstances apply to resales of the New Melrose Ordinary Shares outside of Canada. Canadian investors are advised to seek legal advice prior to any resale of the New Melrose Ordinary Shares. New Melrose is not, and does not intend to become, a ‘‘reporting issuer’’, as such term is defined under applicable Canadian securities legislation, in any province or territory of Canada in which the New Melrose Ordinary Shares will be offered and there is currently no public market for the New Melrose Ordinary Shares in Canada and no such market may ever develop. Under no circumstances will New Melrose be required to file a prospectus or similar document with any securities regulatory authority in Canada qualifying the resale of the New Melrose Ordinary Shares to the public in any province or territory of Canada. Canadian investors are advised that New Melrose currently does not intend to file a prospectus or similar document with any securities regulatory authority in Canada qualifying the resale of the New Melrose Ordinary Shares to the public, or listing its securities on any stock exchange, in any province or territory of Canada. Any discussion of taxation and related matters contained in this Prospectus does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to acquire the New Melrose Ordinary Shares and, in particular, does not address Canadian tax considerations. Shareholders who are Canadian residents should consult their own legal, financial and tax advisers with respect to the tax consequences of the Scheme in their particular circumstances. New Melrose is incorporated under the laws of England and Wales. All or substantially all of New Melrose’s Directors and officers may be located outside of Canada and, as a result, it may not be possible for Canadian investors to effect service of process within Canada upon New Melrose or such persons. All or a substantial portion of the assets of New Melrose and such other persons may be located outside of Canada and, as a result, it may not be possible to satisfy a judgment against New Melrose or such persons

42 in Canada or to enforce a judgment in Canadian courts against New Melrose or persons outside of Canada. Upon receipt of this Prospectus, each Canadian investor confirms that it has expressly requested that all documents evidencing or relating in any way to the sale of the securities described herein (including for greater certainty any purchase confirmation or any notice) be drawn up in the English language only. French translation: Par la réception de ce document, chaque investisseur canadien confirme par les présentes qu’il a expressément exigé que tous les documents faisant foi ou se rapportant de quelque manière que ce soit a` la vente des valeurs mobilières décrites aux présentes (incluant, pour plus de certitude, toute confirmation d’achat ou tout avis) soient rédigés en anglais seulement.

43 PART II INFORMATION ON OLD MELROSE AND NEW MELROSE The selected historical financial information and other historical financial information in relation to Old Melrose in this Part II (Information on Old Melrose and New Melrose) has, unless otherwise stated, been extracted without material adjustment from the audited consolidated accounts of the Melrose Group for the years ended 31 December 2014, 31 December 2013 and 31 December 2012, and from the unaudited interim statements of the Melrose Group for the six month period ended 30 June 2015, as referred to in Part V (Historical Financial Information Relating to Old Melrose) of this Prospectus. Shareholders should read the whole of this Prospectus and the documents incorporated herein by reference and should not just rely on the financial information set out in this Part II (Information on Old Melrose and New Melrose).

1. Introduction and Business Overview 1.1 Old Melrose Melrose PLC was floated on AIM on 28 October 2003 with the strategy of acquiring businesses whose operational performance, in the opinion of its directors, could be improved to create greater shareholder value. During December 2005, Melrose PLC moved onto the London Stock Exchange’s main market for listed securities. Pursuant to a scheme of arrangement sanctioned by the Court in 26 November 2012, Old Melrose, a public limited company registered in England and Wales and incorporated for the purpose of implementing the scheme, became the new holding company of Melrose PLC and its subsidiaries. The Melrose Group has a track record of acquiring businesses and making the necessary changes to maximise the value inherent in those businesses to the benefit of shareholders. The Old Melrose Directors have extensive experience of identifying and evaluating acquisition opportunities, quoted and unquoted, both in the UK and overseas. In May 2005, the Melrose Group acquired two specialist engineering businesses, Dynacast and McKechnie, for an enterprise value of £429 million and in July 2008 the Melrose Group acquired FKI plc for an enterprise value of approximately £1 billion. During the period of its ownership, the Melrose Group significantly improved the operational performance of these businesses. In May 2007, the Melrose Group completed the sale of a large part of McKechnie for £428 million (with the buyer also assuming £2.8 million of indebtedness) and in July 2011 it completed the sale of Dynacast for an enterprise value of £377 million (including £11 million of pension liabilities assumed by the buyer). In August 2007, shareholders approved a return of capital of £220 million following the McKechnie disposal (which, together with dividends already paid, equalled approximately 95 per cent. of the original capital raised from shareholders and the further capital raised to buy Dynacast and McKechnie). In August 2011, the Melrose Group returned approximately £373 million to shareholders following the disposal of Dynacast. In August 2012, the Melrose Group acquired the Elster Group for an enterprise value of approximately £1.8 billion. In July 2013, the Melrose Group disposed of Truth Hardware for a total consideration of £131 million, followed by the disposal of Marelli Motori in August 2013 for a total consideration of £185 million. In November 2013, the Melrose Group completed the sale of Crosby and Acco for a total consideration of £623 million. Finally, in December of the same year, the Melrose Group disposed of Harris Waste Management Group. Following these divestments, in February 2014, the Melrose Group returned capital of approximately £600 million in cash to its shareholders. At the end of October 2014, the Elster Group acquired Eclipse, Inc., a US-based specialist in the field of low-temperature combustion technology, for a total consideration of US $158 million. Upon completion, Eclipse, Inc. formed part of the gas division of the Elster Group. In November 2014, the Melrose Group disposed of the Bridon Group for a total consideration of £365 million, with the Melrose Group contributing £6.7 million into the Bridon Group (2013) Pension Scheme, which was transferred to the buyer. Following this disposal, in February 2015, Old Melrose returned capital of approximately £200 million in cash to shareholders. On 28 July 2015, Old Melrose announced that it had entered into the Disposal Agreement with Honeywell International Inc. for the sale of the Elster Group, for a cash consideration of £3.3 billion, subject to customary adjustments. The Disposal is expected to complete in the first quarter of 2016 and remains conditional upon, among other things, obtaining approvals from regulatory authorities in Brazil, China, the

44 European Union, South Africa and Turkey. The shareholders of Old Melrose approved the Disposal at a general meeting of Old Melrose, held on 21 August 2015.

1.2 New Melrose New Melrose is a public limited company registered in England and Wales and was incorporated for the purpose of implementing the Scheme. It has not traded since its incorporation. As part of the Proposals, New Melrose will become the holding company of the Melrose Group on the Scheme becoming effective.

2. The Melrose Group’s Strategy The Melrose Group’s strategy is to acquire good industrial businesses underperforming their potential, improve them through a mixture of investment, operational improvements and changed management focus, then commercially choose the right time to sell, often within a 3 to 5 year time frame (but this is flexible). The value from significant disposals is then returned to shareholders. The Melrose Group is not a passive investor and its senior executives work closely with business management to support the development of its subsidiaries. This includes long term strategic planning. The Melrose Group looks for the following characteristics in an investment, among other things: (a) a manufacturing company with a strong market position and high quality products; and (b) a business that needs change to improve its performance through investment, refocusing or other company-specific issues. The Melrose Group expects to challenge and be challenged as it works in tandem with management teams to improve the growth prospects of its businesses. Management teams are given incentive arrangements that align their interests with shareholders so that they will benefit in any post-acquisition value creation. The Melrose Group finances its acquisitions in such a way as to give it flexibility to improve its businesses. It does not saddle its businesses with high levels of debt. The Melrose Group’s focus since its inception has always been to make good businesses better and to generate superior returns for its shareholders. Over the years, the Melrose Group has acquired and improved businesses in which it saw significant potential and later sold them at the appropriate time. As a result the market capitalisation of Old Melrose, and its predecessor, Melrose PLC, have increased as it raised capital and decreased as capital was returned to shareholders. Following the Scheme, completion of the Disposal and the Proposed Return of Capital, New Melrose will become substantially smaller in size. The Board wishes to make clear to Shareholders that there is no change to the ‘‘buy, improve, sell’’ business model nor will the Disposal influence the size of the acquisition opportunities that the Melrose Group are able to pursue. The search for the Melrose Group’s next acquisition continues and the Board believes that New Melrose will, if anything, benefit from a greater level of flexibility for the next acquisition. The Board is excited to begin another successful chapter in the Melrose Group’s history and looks forward in due course to inviting Shareholders to invest in the next project.

3. Organisational Structure and Businesses Old Melrose is the holding company of various principal subsidiaries listed in paragraph 7 of Part IX (Additional Information) of this Prospectus and its business is conducted at the locations set out at paragraph 6 of Part IX (Additional Information) of this Prospectus. The principal businesses operated by those trading subsidiaries are discussed below. On the Scheme becoming effective, New Melrose will become the holding company of all of these subsidiaries.

3.1 Brush Brush Turbogenerators is the world’s largest independent manufacturer of electricity generating equipment for the power generation, industrial, oil & gas and offshore sectors. From its five plants in the UK, Czech Republic, the Netherlands, the US and the newly built generator plant in China, Brush designs, manufactures and services turbogenerators, for both gas and steam turbine applications, and supplies a globally diverse customer base.

45 In addition, Brush designs and manufactures systems and power transformers under the brand name Brush Transformers and also produces a wide range of indoor and outdoor medium voltage AC/DC switchgear under the Hawker Siddeley Switchgear brand name. A further brand, Harrington Generators International, is a specialist UK-based small generator manufacturer supplying the construction, military, telecoms and rail sectors.

3.2 Elster The Elster business is a world leader in measuring and improving the flow of natural gas, electricity and water. The Elster Group comprises three operating units: Elster Gas (the gas meters, systems, heat process units and technologies business segment), Elster Electricity (the electricity meters, communications and energy management business segment) and Elster Water (the water metering and communications systems business segment). On 28 July 2015, the Melrose Board announced that, in line with its ‘‘buy, improve, sell’’ business model, Old Melrose had entered into an agreement with respect to the sale of the Elster Group to Honeywell International Inc., for a consideration of £3.3 billion, subject to customary adjustments, payable in cash on completion. The Disposal is expected to complete in the first quarter of 2016 and remains conditional upon, among other things, obtaining approvals from regulatory authorities in Brazil, China, the European Union, South Africa and Turkey. The shareholders of Old Melrose approved the Disposal at a general meeting of Old Melrose, held on 21 August 2015.

4. Selected Financial Information The summary financial information set out below has been extracted without material adjustment from the audited consolidated accounts of the Melrose Group for the years ended 31 December 2014, 31 December 2013 and 31 December 2012, and from the unaudited interim statements of the Melrose Group for the six month period ended 30 June 2015. Shareholders should read the whole of this Prospectus and the documents incorporated herein by reference and should not just rely on the financial information set out in this paragraph 4 of this Part II (Information on Old Melrose and New Melrose). The auditors of Old Melrose, Deloitte LLP, issued unqualified audit opinions on Old Melrose’s consolidated financial statements for each of the three years ended 31 December 2014, 31 December 2013 and 31 December 2012.

46 CONDENSED CONSOLIDATED INCOME STATEMENT UNDER IFRS (AS REPORTED)

Six months ended 30 June Year ended 31 December 2015 2014(1) 2014(2) 2014 2013(3) 2013 2012(4) 2012 £m £m £m £m £m £m £m £m Unaudited Unaudited Unaudited Audited Audited Audited Audited Audited Restated Restated Restated Restated Continuing operations Revenue ...... 117.7 164.5 327.3 1,377.5 1,466.4 1,732.8 1,051.1 1,551.4 Cost of sales ...... (81.9) (110.2) (220.2) (875.0) (952.0) (1,125.5) (720.1) (1,067.9) Gross profit ...... 35.8 54.3 107.1 502.5 514.4 607.3 331.0 483.5 Headline(5) operating expenses . (30.0) (29.4) (60.1) (259.7) (277.2) (335.2) (182.5) (241.2) Share of headline(5) results of joint ventures ...... 0.3 1.1 1.1 3.2 2.8 2.8 0.8 0.8 Intangible asset amortisation . . (4.1) (4.2) (8.6) (54.7) (57.1) (64.6) (31.5) (39.1) Exceptional operating costs . . . (5.2) (0.2) (7.8) (34.3) (19.3) (19.3) (70.8) (73.9) Exceptional operating income . . — 5.4 5.4 5.4 28.9 28.9 7.0 7.0 Total net operating expenses . . (39.0) (27.3) (70.0) (340.1) (321.9) (387.4) (277.0) (346.4) Operating (loss)/profit ...... (3.2) 27.0 37.1 162.4 192.5 219.9 54.0 137.1 Headline(5) operating profit ... 6.1 26.0 48.1 246.0 240.0 274.9 149.3 243.1 Finance costs ...... (15.6) (21.3) (38.7) (48.2) (70.2) (70.5) (58.6) (56.1) Finance income ...... 5.4 7.5 14.2 14.7 21.7 21.7 10.9 11.0 (Loss)/Profit before tax ...... (13.4) 13.2 12.6 128.9 144.0 171.1 6.3 92.0 Total tax ...... 1.3 (1.7) (4.3) (41.8) (41.6) (49.2) (13.2) (49.1) (Loss)/Profit for the period from continuing operations . . (12.1) 11.5 8.3 87.1 102.4 121.9 (6.9) 42.9 Profit for the period from discontinued operations .... 69.8 38.8 186.4 107.6 462.2 442.7 47.7 1.3 Profit for the period ...... 57.7 50.3 194.7 194.7 564.6 564.6 40.8 44.2 Attributable to: Owners of the parent ...... 57.2 50.0 193.9 193.9 562.7 562.7 39.1 42.5 Non-controlling interests ..... 0.5 0.3 0.8 0.8 1.9 1.9 1.7 1.7 Earnings per share From continuing operations —Basic ...... (1.2)p 1.0p 0.8p 7.9p 7.9p 9.5p (0.9)p 4.4p —Diluted ...... (1.2)p 1.0p 0.8p 7.8p 7.8p 9.3p (0.9)p 4.3p From continuing and discontinued operations —Basic ...... 5.6p 4.5p 17.8p 17.8p 44.4p 44.4p 4.1p 4.5p —Diluted ...... 5.5p 4.4p 17.5p 17.5p 43.7p 43.7p 4.1p 4.4p

47 SUMMARY CONDENSED CONSOLIDATED BALANCE SHEET UNDER IFRS (AS REPORTED)

As at 30 June As at 31 December 2015 2014 2014(1) 2014 2013 2012(2) 2012 £m £m £m £m £m £m £m Unaudited Unaudited Unaudited Audited Audited Audited Audited Restated Restated Non-current assets ...... 388.5 2,856.6 2,685.7 2,689.9 2,944.5 3,530.6 3,496.2 Current assets ...... 2,640.6 640.9 498.4 498.4 732.8 919.4 920.0 Total assets ...... 3,029.1 3,497.5 3,184.1 3,188.3 3,677.3 4,450.0 4,416.2 Current liabilities ...... 856.2 484.9 452.0 452.0 524.4 696.3 692.0 Non-current liabilities ...... 861.2 1,518.3 1,158.4 1,162.6 965.0 2,012.0 1,982.5 Total liabilities ...... 1,717.4 2,003.2 1,610.4 1,614.6 1,489.4 2,708.3 2,674.5 Net assets ...... 1,311.7 1,494.3 1,573.7 1,573.7 2,187.9 1,741.7 1,741.7 Equity attributable to owners of the parent ...... 1,310.2 1,492.3 1,571.1 1,571.1 2,186.0 1,734.6 1,734.6 Non-controlling interests ...... 1.5 2.0 2.6 2.6 1.9 7.1 7.1 Total equity ...... 1,311.7 1,494.3 1,573.7 1,573.7 2,187.9 1,741.7 1,741.7

Notes: (1) Restated to reflect the completion of the acquisition accounting of Eclipse. (2) Restated to reflect the completion of the acquisition accounting for the Elster Group.

SUMMARY CONDENSED CONSOLIDATED CASH FLOW STATEMENT UNDER IFRS (AS REPORTED)

Six months ended 30 June Year ended 31 December 2015 2014(1) 2014(2) 2014 2013(3) 2013 2012(4) 2012 £m £m £m £m £m £m £m £m Unaudited Unaudited Unaudited Audited Audited Audited Audited Audited Restated Restated Restated Restated Net cash from operating activities ...... 28.3 50.4 116.5 116.5 136.0 136.0 17.3 42.5 Net cash (used in)/from investing activities ...... (26.9) (18.9) 210.8 210.8 837.3 837.3 (1,411.2) (1,436.4) Net cash (used in)/from financing activities ..... (19.6) (116.0) (456.4) (456.4) (932.1) (932.1) 1,358.4 1,358.4 Net (decrease)/increase in cash and cash equivalents ...... (18.2) (84.5) (129.1) (129.1) 41.2 41.2 (35.5) (35.5)

Notes: (1) Restated to include the cash flows of Bridon and the Elster Group within discontinued operations. (2) Restated to include the cash flows of the Elster Group within discontinued operations. (3) Restated to include the cash flows of Bridon within discontinued operations. (4) Restated to include the cash flows of Truth, Marelli, Crosby, Acco and Harris within discontinued operations.

5. Recent Developments On 28 July 2015, the Melrose Board announced that, in line with its ‘‘buy, improve, sell’’ business model, Old Melrose had entered into an agreement with respect to the sale of the Elster Group to Honeywell International Inc., for a consideration of £3.3 billion, subject to customary adjustments, payable in cash on completion. The Disposal is expected to complete in the first quarter of 2016 and remains conditional upon, among other things, obtaining approvals from regulatory authorities in Brazil, China, the European Union, South Africa and Turkey. The shareholders of Old Melrose approved the Disposal at a general meeting of Old Melrose, held on 21 August 2015.

48 6. Current Trading, Trends and Prospects On 28 July 2015, Old Melrose published its unaudited results for the six month period to 30 June 2015. The following text has been extracted from that statement: ‘‘Elster has performed strongly. Headline operating profit is up 22%, at constant currency, at the half year and headline operating margins have increased in all three of its businesses to a combined 20.1% on sales. Revenue growth of 14%, at constant currency, has been achieved, driven by strong performances in Gas and Electricity. With order intake growth at 18%, Elster’s prospects remain exciting. Brush has experienced challenging markets in the first half of 2015. However, with actions being taken to reduce cost and enhance efficiency and with a better order phasing, a much improved performance is expected going forward.’’ ‘‘Current trading conditions remain challenging for Brush, but with action being taken in the business, coupled with a better order phasing, a much improved second half of 2015 is anticipated. Brush is a high quality business and your Board believes that its medium to long term prospects continue to look attractive. Your Board is optimistic about the future and believes that Melrose is very well positioned to continue to create superior value for shareholders.’’ There has been no change to the Board’s expectations since the publication of the interim results on 28 July 2015.

7. Old Melrose Breakdown of Revenue The summary financial information set out below has been extracted without material adjustment from the audited consolidated accounts of the Melrose Group for the years ended 31 December 2014, 31 December 2013 and 31 December 2012, and from the unaudited interim statements of the Melrose Group for the six month period ended 30 June 2015. A split of Old Melrose’s continuing revenue by geographical area is set out below.

Six months ended 30 June Year ended 31 December 2015 2014(1) 2014(2) 2014 2013(3) 2013 2012(4) 2012 £m £m £m £m £m £m £m £m Unaudited Unaudited Unaudited Audited Audited Audited Audited Audited Restated Restated Restated Restated UK...... 44.4 43.5 83.6 159.2 189.9 213.5 126.2 143.4 Europe ...... 28.7 42.4 87.5 507.9 509.8 574.4 332.9 445.8 North America ...... 22.1 41.8 91.7 408.4 461.7 540.5 348.2 651.4 Other ...... 22.5 36.8 64.5 302.0 305.0 404.4 243.8 310.8 Total ...... 117.7 164.5 327.3 1,377.5 1,466.4 1,732.8 1,051.1 1,551.4

49 A split of Old Melrose’s continuing revenue by division is set out below.

Six months ended 30 June Year ended 31 December 2015 2014(1) 2014(2) 2014 2013(3) 2013 2012(4) 2012 £m £m £m £m £m £m £m £m Unaudited Unaudited Unaudited Audited Audited Audited Audited Audited Restated Restated Restated Restated Energy ...... 117.7 164.5 327.3 327.3 350.1 350.1 371.6 486.8 Lifting ...... — — — — — 266.4 268.4 524.4 Other Industrial ..... — — — ————129.1 Gas...... — — — 687.0 688.9 688.9 236.9 236.9 Electricity ...... — — — 215.7 247.5 247.5 106.8 106.8 Water ...... — — — 147.5 179.9 179.9 67.4 67.4 Total for the Elster Group ...... — — — 1,050.2 1,116.3 1,116.3 411.1 411.1 Total ...... 117.7 164.5 327.3 1,377.5 1,466.4 1,732.8 1,051.1 1,551.4

8. Pensions Upon completion of the Disposal, the Elster Purchaser has agreed to be responsible for any and all costs, expenses and liabilities relating to pension schemes and other benefit plans of the Elster Group, the McKechnie Plan and FKI UK DB Scheme. As at 30 June 2015, these schemes had a net pension liability of £133.8 million. Following completion of the Disposal, the Melrose Group will retain the Brush Group (2013) Pension Scheme with respect of its business as well as the FKI US Plan. As at 30 June 2015, these schemes had a net pension liability of £34.1 million. The Melrose Group monitors its pension strategy on an ongoing basis.

50 PART III OPERATING AND FINANCIAL REVIEW RELATING TO THE MELROSE GROUP The operating and financial review for each of the three years ended 31 December 2014, 31 December 2013, 31 December 2012 and the period ended 30 June 2015 as set out in the annual report and accounts and the half yearly results of Old Melrose for each of the relevant periods are incorporated by reference into this Prospectus. The audit reports for each of the financial years ended 31 December 2014, 31 December 2013 and 31 December 2012 were unqualified. Reference should also be made to the 30 June 2015, 31 December 2014, 31 December 2013, and 31 December 2012 financial information incorporated by reference into this Prospectus: see Part V (Historical Financial Information Relating to Old Melrose) of this Prospectus, the Risk Factors on pages 14 to 32 of this Prospectus and the strategy section in paragraph 2 of Part II (Information on Old Melrose and New Melrose) of this Prospectus. Shareholders should read the whole of this Prospectus and the documents incorporated herein by reference and should not just rely on the financial information set out in this Part III (Operating and Financial Review Relating to the Melrose Group).

1. Cross Reference List The following list is intended to enable Shareholders to identify easily specific items of information which have been incorporated by reference into this Prospectus.

1.1 Operating and Financial Review for the year ended 31 December 2012 The page numbers below refer to the relevant pages of the Old Melrose 2012 Annual Report and Accounts: • pages 1 to 36; • page 40; • page 45 to 54; • pages 65 to 66; • pages 71 to 75; and • pages 86 to 89.

1.2 Operating and Financial Review for the year ended 31 December 2013 The page numbers below refer to the relevant pages of Old Melrose 2013 Annual Report and Accounts: • pages 1 to 33; • pages 40 to 47; • pages 60 to 61; • pages 74 to 75; • pages 92 to 96; and • pages 106 to 111.

1.3 Operating and Financial Review for the year ended 31 December 2014 The page numbers below refer to the relevant pages of the Old Melrose 2014 Annual Report and Accounts: • pages 3 to 14; • pages 24 to 25; • pages 28 to 35 • pages 42 to 49; • pages 51 to 57;

51 • pages 64 to 67; • page 85; • pages 102 to 106; and • pages 116 to 121.

1.4 Operating and Financial Review for the half year ended 30 June 2015 The sections below refer to the relevant sections of Old Melrose 2015 Half Year Results: • Chief Executive’s Review; and • Finance Director’s Review.

52 PART IV CAPITAL RESOURCES 1. Capitalisation and Indebtedness 1.1 Capitalisation and indebtedness of Old Melrose The following tables show: (i) the capitalisation of the Melrose Group as at 30 June 2015 and (ii) the total indebtedness and net debt of the Melrose Group as at 30 August 2015. There have been no material changes to the capitalisation figures since 30 June 2015. The figures for capitalisation have been extracted without material adjustment from Old Melrose’s consolidated unaudited interim financial statements for the period ended 30 June 2015. The statement of indebtedness has been prepared under IFRS using policies which are consistent with those used in preparing the Melrose Group’s historical financial information referred to in Part V (Historical Financial Information Relating to Old Melrose) of this Prospectus.

As at 30 June 2015 £m Total capitalisation and indebtedness Total current debt ...... 1.2 —secured ...... 0 —unsecured ...... 1.2 Total non-current debt (excluding current portion of long-term debt) ...... 786.7 —secured ...... 0 —unsecured ...... 786.7 Shareholders’ equity Share capital ...... 1.3 Share premium ...... 0 Other reserves ...... 1,308.9 Total capitalisation ...... 1,310.2

The following table details the net debt of the Melrose Group as at 30 August 2015:

As at 30 August 2015 £m Cash ...... 75.2 Cash equivalents (bank deposits) ...... 0 Liquidity ...... 75.2 Current financial receivable Current bank debt (secured and unsecured) ...... (0.8) Other current financial debt (unsecured) ...... 0 Current financial debt ...... (0.8) Net current cash ...... 74.4 Non-current bank loans (secured and unsecured) ...... (856.3) Other non-current financial indebtedness ...... 0 Non-current financial indebtedness ...... (856.3) Net debt ...... (781.9)

1.2 Capitalisation and indebtedness of New Melrose As at the Latest Practicable Date, New Melrose has one Subscriber Share, fully paid, with a £1 nominal value and issued at a premium of £49, and 50,000 Redeemable Preference Shares, fully paid up (pursuant to an undertaking to pay) and with a £1 nominal value each, in issue. Accordingly New Melrose’s capitalisation as the Latest Practicable Date was £50,001 and its cash was £50. As at the Latest Practicable Date, New Melrose had indebtedness of £50,000 representing the Redeemable Preference Shares and a receivable asset of £50,000 representing the undertaking to pay up the Redeemable Preference Shares. The Redeemable Preference Shares carry a right to receive, out of the profits of New Melrose available for

53 distribution and resolved to be distributed, a fixed non-cumulative preferential dividend of 2 per cent. per annum, accruing with effect from their date of issue and are accounted for in accordance with IAS 32 ‘‘Financial Instruments: Disclosure and Presentation’’ and IAS 39 ‘‘Financial Instruments: Recognition and Measurement’’ and are presented as a financial liability. As at the Latest Practicable Date, New Melrose had no banking facilities in place nor did it have any indirect indebtedness or contingent liabilities or guarantees. New Melrose has not traded since it was incorporated.

2. Funding—Old Melrose and the Melrose Group Old Melrose is, and (on the Scheme becoming effective) New Melrose will be, a holding company whose principal assets are its investments in the shares of its subsidiaries. The liquidity and capital resource requirements of each subsidiary vary in the light of their own financial position and activity. The Melrose Group’s principal source of funds is funds raised from time to time from the issue of ordinary shares and bank and other borrowings, as well as cash dividends received, and money borrowed, from its subsidiaries. On 29 June 2012, Melrose PLC entered into a multi-currency term and revolving credit facilities agreement, as amended and/or amended and restated from time to time including by way of an amendment and restatement agreement dated 11 July 2014 (the ‘‘Restatement Date’’) (the ‘‘Facilities Agreement’’) pursuant to which a £180 million multi-currency term facility, a US $500 million revolving credit facility, EUR 300 million revolving credit facility and a £70 million multi-currency revolving credit facility were provided to the Melrose Group by a group of lenders. The term facility is fully utilised. The aggregate outstanding amount under the term facility is required to be reduced to: (i) on the third anniversary of the Restatement Date, 95 per cent. of the total term loans drawn as of 23 December 2012; (ii) on the fourth anniversary of the Restatement Date, 90 per cent. of the total term loans drawn as of 23 December 2012; and (iii) on the date falling six months after the fourth anniversary of the Restatement Date, 85 per cent. of the total term loans drawn as of 23 December 2012. The balance of the aggregate outstanding amount under the term facility is required to be repaid on the date that is five years after the Restatement Date. The revolving credit facilities under the Facilities Agreement are available until the date that is one month before the date that is five years after the Restatement Date. The revolving credit facilities can be used by Old Melrose and any other borrowers to finance the Melrose Group’s working capital requirements and for general corporate purposes (including financing acquisitions by the Melrose Group). The Facilities Agreement contains representations and warranties, financial covenants, undertakings and events of default customary for a facilities agreement of this nature. The undertakings include: (i) an undertaking to not acquire interests in companies, businesses or undertakings if (A) the aggregate consideration for all such acquisitions during the life of the Facilities Agreement would exceed £300 million (this limit will not apply if the leverage ratio at the time of a proposed acquisition (pro forma for such acquisition) is 1.50:1 or less); or (B) such acquisition would constitute a ‘‘Class 1’’ transaction under the Listing Rules; and (ii) an undertaking to ensure that financial indebtedness of members of the Melrose Group who are not obligors under the Facilities Agreement, subject to certain exceptions, does not exceed £75 million (or its equivalent in other currencies) in aggregate at any time. The financial covenants require that interest cover for the Melrose Group remains equal to or greater than 4.0:1 and that debt cover for the Melrose Group remains equal to or less than 3.50:1. New Melrose will become a guarantor in relation to the Facilities Agreement within five business days after the Scheme becomes effective. By an amendment and restatement agreement dated on 30 September 2015 between, among others, Melrose PLC and Lloyds Bank PLC, as agent, the multi-currency term and revolving credit facilities agreement will, subject to satisfaction of customary conditions precedent, be amended so that shortly after completion of the Disposal, each of the facilities will be prepaid and cancelled, except for £200 million of the multi-currency revolving credit facility. Such revolving credit facility will remain on substantially the same terms as previously save for a reduction in various baskets to reflect the smaller size of the remaining group. Old Melrose and various other entities in the Melrose Group (including certain members of the Elster Group) have, subject to applicable local law limitations, guaranteed all amounts due under the Facilities Agreement. In accordance with the terms of the Disposal Agreement, the Elster Seller shall ensure that

54 those members of the Elster Group who are guarantors under the Facilities Agreement shall be released as guarantors upon completion of the Disposal.

3. Borrowing Requirements and Funding Structure The revolving credit facilities under the Facilities Agreement are used (when required) by the Melrose Group to finance short-term working capital requirements. The Melrose Group’s businesses display no significant seasonality in their borrowing requirements. Old Melrose draws down under these revolving credit facilities and on-lends to subsidiaries as required. Overseas subsidiaries can directly avail of overdraft facilities in their jurisdictions as required.

4. Restrictions on use of Capital Resources There are no notable restrictions on the use of the Melrose Group’s capital resources.

5. Treasury Policies The Melrose Group has a centralised treasury function whose primary role is to manage funding, liquidity and financial risks. Treasury is not a profit centre and does not enter into speculative transactions. The treasury policies of the Melrose Group are controlled by the Old Melrose Board (prior to the Scheme becoming effective) and the New Melrose Board (on the Scheme becoming effective) and are subject to discussion on a regular basis, on the recommendation of the Global Finance Director. Whenever appropriate, the Melrose Group’s treasury policy is to remit surplus cash resources to the UK companies in the Melrose Group.

6. Cash Flow Analysis The selected cash flow information set out below has been extracted without material adjustment from the audited consolidated accounts of the Melrose Group for the years ended 31 December 2014, 31 December

55 2013 and 31 December 2012, and from the unaudited interim statements of the Melrose Group for the six month period ended 30 June 2015. Six month period ended 30 June Year ended 31 December 2015 2014(1) 2014(2) 2014 2013(3) 2013 2012(4) 2012 £m £m £m £m £m £m £m £m Unaudited Unaudited Unaudited Audited Audited Audited Audited Audited Restated Restated Restated Restated Net cash (used in)/from operating activities from continuing operations ..... (30.5) (4.9) (10.3) 111.4 53.6 91.2 (40.6) 40.8 Net cash from operating activities from discontinued operations ...... 58.8 55.3 126.8 5.1 82.4 44.8 57.9 1.7 Net cash from operating activities ...... 28.3 50.4 116.5 116.5 136.0 136.0 17.3 42.5 Investing activities Disposal of businesses ...... — — 374.8 374.8 950.4 950.4 30.7 30.7 Net cash disposed ...... — — (14.6) (14.6) (37.2) (37.2) (1.2) (1.2) Acquisition and disposal costs . (2.4) (1.0) (8.5) (8.5) (25.0) (25.0) (2.4) (27.6) Purchase of property, plant and equipment ...... (12.9) (14.4) (29.8) (54.3) (38.5) (47.0) (36.5) (52.1) Proceeds from disposal of property, plant and equipment ...... — 0.2 — 3.9 6.2 6.2 1.1 1.4 Purchase of computer software and development costs ..... (0.2) (0.4) (0.5) (7.9) (3.7) (3.8) (1.9) (2.2) Dividends received from joint ventures ...... 0.3 1.2 1.2 3.3 2.7 2.7 0.3 0.3 Dividends paid to non-controlling interests .... — — — (0.4) (6.3) (6.3) (0.1) (0.1) Interest received ...... 5.4 7.5 14.2 14.7 21.7 21.7 10.9 11.0 Acquisition of businesses and non-controlling interests .... — — — (97.6) (12.8) (12.8) (1,500.4) (1,500.4) Cash acquired on acquisition of businesses ...... — — — 1.5 — — 105.6 105.6 Net cash (used in)/from investing activities operations from continuing operations . . (9.8) (6.9) 336.8 214.9 857.5 848.9 (1,393.9) (1,434.6) Net cash (used in)/from investing activities operations from discontinued operations (17.1) (12.0) (126.0) (4.1) (20.2) (11.6) (17.3) (1.8) Net cash (used in)/from investing activities ...... (26.9) (18.9) 210.8 210.8 837.3 837.3 (1,411.2) (1,436.4) Financing activities Dividends paid ...... (52.7) (53.6) (83.6) (83.6) (98.1) (98.1) (65.7) (65.7) Return of capital ...... (200.4) (595.3) (595.3) (595.3) — — (1.1) (1.1) Movements in borrowings .... 233.5 532.9 226.1 226.1 (834.0) (834.0) 290.2 290.2 Net proceeds from Rights Issue — — — — — — 1,168.1 1,168.1 Costs of raising and settling finance ...... — — — — — — (33.1) (33.1) Costs of amending borrowing facilities ...... — — (3.6) (3.6) — — — — Net cash from/(used in) financing activities from continuing operations ..... (19.6) (116.0) (456.4) (456.4) (932.1) (932.1) 1,358.4 1,358.4 Net cash used in financing activities from discontinued operations ...... — — — — — — — — Net cash (used in)/from financing activities ...... (19.6) (116.0) (456.4) (456.4) (932.1) (932.1) 1,358.4 1,358.4

56 Six month period ended 30 June Year ended 31 December 2015 2014(1) 2014(2) 2014 2013(3) 2013 2012(4) 2012 £m £m £m £m £m £m £m £m Unaudited Unaudited Unaudited Audited Audited Audited Audited Audited Restated Restated Restated Restated Net (decrease)/increase in cash and cash equivalents ...... (18.2) (84.5) (129.1) (129.1) 41.2 41.2 (35.5) (35.5) Cash and cash equivalents at beginning of period ...... 70.5 200.4 200.4 200.4 156.5 156.5 195.6 195.6 Effect of foreign exchange rate changes ...... (6.7) (0.6) (0.8) (0.8) 2.7 2.7 (3.6) (3.6) Cash and cash equivalents at end of period ...... 45.6 115.3 70.5 70.5 200.4 200.4 156.5 156.5

7. Principal Investments and Acquisitions Save as set out in paragraph 1.1 of Part II (Information on Old Melrose and New Melrose) of this Prospectus, in the six-month period ended 30 June 2015 and the financial years ended 31 December 2014, 31 December 2013 and 31 December 2012 the Melrose Group did not, and as at the Latest Practicable Date the Melrose Group does not, have any principal investments in progress.

8. Plant, Property and Equipment A description of the Melrose Group’s investments in property, plant and equipment is given on pages 132 and 149 of the Old Melrose 2014 Annual Report and Accounts, which is incorporated into this Prospectus by reference. The Melrose Group currently has no planned material capital expenditure.

57 PART V HISTORICAL FINANCIAL INFORMATION RELATING TO OLD MELROSE 1. Background The unaudited consolidated financial statements of Old Melrose for the period ended 30 June 2015, as set out in the Old Melrose 2015 Half Year Results, the audited consolidated financial statements of Old Melrose for the year ended 31 December 2014, as set out in the Old Melrose 2014 Annual Report and Accounts, the audited consolidated financial statements of Old Melrose for the year ended 31 December 2013, as set out in the Old Melrose 2013 Annual Report and Accounts, and the audited financial statements of Old Melrose for the financial year ended 31 December 2012, as set out in the Old Melrose 2012 Annual Report and Accounts, are incorporated by reference into this Prospectus. The audit reports for each of the financial years ended 31 December 2014, 31 December 2013 and 31 December 2012 were unqualified. The financial statements of Old Melrose for the financial years ended 31 December 2014, 31 December 2013 and 31 December 2012 were prepared in accordance with IFRS.

2. Cross Reference List The following list is intended to enable Shareholders to identify easily specific items of information which have been incorporated by reference into this Prospectus.

2.1 IFRS financial statements for the year ended 31 December 2012 and the audit report thereon for Old Melrose The page numbers below refer to the relevant pages of the Old Melrose 2012 Annual Report and Accounts: • independent auditors’ report—page 70 • consolidated income statement—page 71; • consolidated statement of comprehensive income—page 72; • consolidated statement of cash flows—page 73; • consolidated balance sheet—page 74; • consolidated statement of changes in equity—page 75; • notes to the consolidated financial statements—pages 76 to 118; and • accounting policies—pages 77 to 85.

2.2 IFRS financial statements for the year ended 31 December 2013 and the audit report thereon for Old Melrose The page numbers below refer to the relevant pages of the Old Melrose 2013 Annual Report and Accounts: • independent auditors’ report—pages 87 to 91; • consolidated income statement—page 92; • consolidated statement of comprehensive income—page 93; • consolidated statement of cash flows—page 94; • consolidated balance sheet—page 95; • consolidated statement of changes in equity—page 96; • notes to the consolidated financial statements—pages 97 to 140; and • accounting policies—pages 98 to 106.

58 2.3 IFRS financial statements for the year ended 31 December 2014 and the audit report thereon for Old Melrose The page numbers below refer to the relevant pages of the Old Melrose 2014 Annual Report and Accounts: • independent auditors’ report—pages 98 to 101; • consolidated income statement—page 102; • consolidated statement of comprehensive income—page 103; • consolidated statement of cash flows—page 104; • consolidated balance sheet—page 105; • consolidated statement of changes in equity—page 106; • notes to the consolidated financial statements—pages 107 to 108; and • accounting policies—pages 108 to 150.

2.4 Half yearly results for the period ended 30 June 2015 and 30 June 2014 for Old Melrose The Old Melrose 2015 Half Year Results (which have been reviewed) are incorporated by reference into this Prospectus in their entirety.

59 PART VI UNAUDITED PRO FORMA INFORMATION ON THE MELROSE GROUP The following unaudited pro forma income statement and statement of net assets of the Melrose Group has been based on the income statement of the Old Melrose Group for the year ended 31 December 2014 and the net assets of the Old Melrose Group as at 30 June 2015 and has been prepared in accordance with Annex II of the Prospectus Rules and on the basis of the notes set out below. The unaudited pro forma income statement has been prepared to illustrate the effect of the Disposal and the Proposed Return of Capital on the income statement of the Melrose Group as if completion of the Disposal and the Proposed Return of Capital had occurred on 1 January 2014. The unaudited pro forma statement of net assets has been prepared to illustrate the effect of the Disposal and the Proposed Return of Capital on the IFRS position of the Melrose Group as if completion of the Disposal and the Proposed Return of Capital had occurred on 30 June 2015. As indicated above, the unaudited pro forma income statement and statement of the net assets has been prepared for illustrative purposes only. Due to its nature, it addresses a hypothetical situation and, therefore, does not represent the Melrose Group’s actual financial position or results following completion of the Disposal or the Proposed Return of Capital. The unaudited pro forma financial information set out below is compiled on the basis set out above and in accordance with the accounting policies applied in preparing the Melrose Group’s consolidated historical financial information which has been incorporated by reference into this Prospectus as described in Part V (Historical Financial Information Relating to Old Melrose). Deloitte LLP’s report on the unaudited pro forma information is set out in this Part VI (Unaudited Pro Forma Information on the Melrose Group) of this Prospectus.

60 Unaudited pro forma income statement of the Melrose Group for year ended 31 December 2014

Adjustments to Melrose Group Elster Group reflect disposal year to year to proceeds and Pro forma 31 December 31 December Proposed Return continuing 2014 2014 of Capital group £m £m £m £m Note 1 Note 2 Note 3 Note 4 Revenue ...... 1,377.5 (1,050.2) — 327.3 Cost of sales ...... (875.0) 654.8 — (220.2) Gross profit ...... 502.5 (395.4) — 107.1 Headline(5) operating expenses ...... (259.7) 199.6 — (60.1) Share of headline(5) results of joint ventures . . . 3.2 (2.1) — 1.1 Intangible asset amortisation ...... (54.7) 46.1 — (8.6) Exceptional operating costs ...... (34.3) 26.5 (1.0) (8.8) Exceptional operating income ...... 5.4 5.4 Total net operating expenses ...... (340.1) 270.1 (1.0) (71.0) Operating profit ...... 162.4 (125.3) (1.0) 36.1 Headline(5) operating profit ...... 246.0 (197.9) — 48.1 Finance costs ...... (48.2) 9.5 35.5 (3.2) Finance income ...... 14.7 (0.5) (13.1) 1.1 Profit before tax ...... 128.9 (116.3) 21.4 34.0 Headline(5) profit before tax ...... 212.5 (188.9) 22.4 46.0 Headline(5) tax...... (57.4) 52.2 (4.8) (10.0) Exceptional tax ...... 15.6 (14.7) — 0.9 Total tax ...... (41.8) 37.5 (4.8) (9.1) Profit for the year from continuing operations . 87.1 (78.8) 16.6 24.9 Headline(5) profit for the year from continuing operations ...... 155.1 (136.7) 17.6 36.0 Profit for the year from discontinued operations ...... 107.6 78.8 — 186.4 Profit for the year ...... 194.7 — 16.6 211.3

61 Unaudited pro forma statement of net assets of the Melrose Group as at 30 June 2015

Adjustments for the Unaudited Disposal pro forma Melrose Group Elster Group Proposed Return of the as at as at of Capital and Melrose Group 30 June 30 June Net repayment of as at 30 June 2015 2015 proceeds borrowings 2015 £m £m £m £m £m Note 1 Note 2 Note 3 Note 4 Note 5 Non-current assets Goodwill and other intangible assets . . 272.5 272.5 Property, plant and equipment ...... 110.6 110.6 Deferred tax assets ...... 5.4 5.4 388.5 —— — 388.5 Current assets Inventories ...... 58.6 58.6 Trade and other receivables ...... 73.2 73.2 Derivative financial assets ...... 7.6 7.6 Cash and cash equivalents ...... 45.6 3,279.0 (3,037.9) 286.7 Assets held for sale ...... 2,455.6 (2,455.6) — 2,640.6 (2,455.6) 3,279.0 (3,037.9) 426.1 Total assets ...... 3,029.1 (2,455.6) 3,279.0 (3,037.9) 814.6 Current liabilities Trade and other payables ...... (93.0) (93.0) Interest-bearing loans and borrowings . (1.2) 1.2 — Derivative financial liabilities ...... (7.5) (7.5) Current tax liabilities ...... (1.8) (1.8) Provisions ...... (15.4) (15.4) Liabilities held for sale ...... (737.3) 737.3 — (856.2) 737.3 — 1.2 (117.7) Net current assets ...... 1,784.4 (1,718.3) 3,279.0 (3,036.7) 308.4 Non-current liabilities Interest-bearing loans and borrowings . (786.7) 786.7 — Derivative financial liabilities ...... (2.2) (2.2) Deferred tax liabilities ...... (15.9) (15.9) Retirement benefit obligations ...... (34.1) (34.1) Provisions ...... (22.3) (22.3) (861.2) ——786.7 (74.5) Total liabilities ...... (1,717.4) 737.3 — 787.9 (192.2) Net assets ...... 1,311.7 (1,718.3) 3,279.0 (2,250.0) 622.4

Notes: The unaudited pro forma statement of net assets as at 30 June 2015 has been compiled on the following basis: (1) The net assets of the Melrose Group have been extracted without material adjustment from the Old Melrose Group’s unaudited interim financial statements for the six months ended 30 June 2015 prepared in accordance with IAS 34: ‘‘Interim Financial Reporting’’ as adopted by the European Union. (2) These adjustments remove the assets and liabilities relating to the Elster Group, reflecting the fact that, following the Disposal, the Melrose Group will no longer consolidate the results of the Elster Group. The financial information on the Elster Group (including the McKechnie Plan and the FKI UK DB Scheme) has been extracted, without material adjustment, from the historical information on the Elster Group set out in part IV (Financial Information Relating to the Elster Group) of the Old Melrose Elster Circular incorporated by reference into this Prospectus. (3) The adjustment reflects the estimated cash proceeds of £3,300 million to be received from the Disposal, less associated costs of the Disposal of an estimated £21 million. (4) It is intended that £2,000 million—£2,500 million of the cash proceeds from the Disposal will be returned to shareholders. For illustrative purposes only, a Proposed Return of Capital of £2,250 million is shown, which is the mid-point of the £2,000 million—£2,500 million range. The remainder of the cash proceeds will be used, in part, to repay the Melrose Group’s interest-bearing loans and borrowings. For illustrative purposes only, a repayment of £787.9 million is shown, which is the total amount of the Melrose Group’s interest-bearing loans and borrowings at 30 June 2015. (5) No adjustments have been made to reflect the trading or other transactions of the Melrose Group since 30 June 2015. The unaudited pro forma statement of net assets does not constitute statutory accounts within the meaning of section 434 of the Companies Act.

62 Report on Pro Forma Financial Information

25FEB201409561415 Deloitte LLP 2 New Street Square London EC4A 3BZ The Board of Directors on behalf of New Melrose Industries PLC 11th Floor Colmore Plaza 20 Colmore Circus Queensway Birmingham B4 6AT N M Rothschild & Sons Limited New Court St Swithin’s Lane London EC4N 8AL

6 October 2015

Dear Sirs,

New Melrose Industries PLC (‘‘New Melrose’’) We report on the unaudited pro forma financial information (the ‘‘Pro Forma Financial Information’’) set out in Part VI of the prospectus dated 6 October 2015 (the ‘‘Prospectus’’), which has been prepared on the basis described in that Part VI, for illustrative purposes only, to provide information about how the disposal of the Elster Group and the subsequent Proposed Return of Capital might have affected the financial information presented on the basis of the accounting policies adopted by Old Melrose in preparing the financial statements for the period ended 30 June 2015. This report is required by Commission Regulation (EC) No 809/2004 (the ‘‘Prospectus Directive Regulation’’) and is given for the purpose of complying with that requirement and for no other purpose.

Responsibilities It is the responsibility of the directors of New Melrose (the ‘‘Directors’’) to prepare the Pro Forma Financial Information in accordance with Annex II items 1 to 6 of the Prospectus Directive Regulation. It is our responsibility to form an opinion as to the proper compilation of the Pro Forma Financial Information and to report that opinion to you in accordance with Annex II, item 7 of the Prospectus Directive Regulation. Save for any responsibility arising under Prospectus Rule 5.5.3R (2)(f) to any person as and to the extent there provided, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report or our statement, required by and given solely for the purposes of complying with Annex I, item 23.1 of the Prospectus Directive Regulation, consenting to its inclusion in the Prospectus. In providing this opinion we are not updating or refreshing any reports or opinions previously made by us on any financial information used in the compilation of the Pro Forma Financial Information, nor do we accept responsibility for such reports or opinions beyond that owed to those to whom those reports or opinions were addressed by us at the dates of their issue.

63 Basis of Opinion We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. The work that we performed for the purpose of making this report, which involved no independent examination of any of the underlying financial information, consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments and discussing the Pro Forma Financial Information with the Directors. We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with reasonable assurance that the Pro Forma Financial Information has been properly compiled on the basis stated and that such basis is consistent with the accounting policies of the Old Melrose Group. Our work has not been carried out in accordance with auditing or other standards and practices generally accepted in jurisdictions outside the United Kingdom, including the United States of America, and accordingly should not be relied upon as if it had been carried out in accordance with those standards or practices.

Opinion In our opinion: (a) the Pro Forma Financial Information has been properly compiled on the basis stated; and (b) such basis is consistent with the accounting policies of the Old Melrose Group.

Declaration For the purposes of Prospectus Rule 5.5.3R(2)(f) we are responsible for this report as part of the Prospectus and declare that we have taken all reasonable care to ensure that the information contained in this report is, to the best of our knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration is included in the Prospectus in compliance with Annex I, item 1.2 of the Prospectus Directive Regulation.

Yours faithfully Deloitte LLP Chartered Accountants

Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its registered office at 2 New Street Square, London EC4A 3BZ, United Kingdom. Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (‘‘DTTL’’), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

64 PART VII UNITED KINGDOM TAXATION CONSIDERATIONS 1. General The following summary is intended as a general guide only and relates only to certain UK tax consequences of holding the New Melrose Ordinary Shares following the implementation of the Scheme. It is based on current UK tax law and published HMRC practice (which may not be binding on HMRC), as at the date of this Prospectus, both of which are subject to change, possibly with retrospective effect. The summary is intended to apply only to Shareholders who are resident, and in the case of an individual, domiciled, in (and only in) the UK for UK tax purposes, who hold the New Melrose Ordinary Shares as investments and not on trading account and who are the absolute beneficial owners of the New Melrose Ordinary Shares and any dividends paid on them. The discussion does not address all possible tax consequences relating to an investment in the New Melrose Ordinary Shares. The summary is not intended to apply to certain classes of Shareholders such as dealers in securities, insurance companies, those holding shares by reason of their employment or collective investment schemes. Any Shareholders who are in any doubt as to their tax position regarding the acquisition, ownership and/or disposal of the New Melrose Ordinary Shares and/or who are subject to tax in a jurisdiction other than the UK should consult their professional advisers without delay.

2. The Proposals 2.1 The Scheme For the purposes of the UK taxation of chargeable gains, the cancellation of the Old Melrose Ordinary Shares and the issue of New Melrose Ordinary Shares should be treated as a reorganisation of share capital. Accordingly, Shareholders will not be treated as making a disposal in respect of the cancellation of Old Melrose Ordinary Shares or an acquisition in respect of the issue to them of the New Melrose Ordinary Shares. The New Melrose Ordinary Shares will be treated as having been acquired at the same time and for the same consideration as the Old Melrose Ordinary Shares for the purposes of UK taxation of chargeable gains. Shareholders who alone, or together with connected persons, hold more than five per cent. of the Old Melrose Ordinary Shares are advised that Old Melrose has not sought clearance under section 138 of the Taxation of Chargeable Gains Act 1992. A Shareholder’s original base cost in his Old Melrose Ordinary Shares will be attributed to the New Melrose Ordinary Shares.

2.2 The Initial Reduction of Capital For the purposes of the UK taxation of chargeable gains, the Initial Reduction of Capital, which will be effected by decreasing the nominal value of each New Melrose Ordinary Share should be treated as another reorganisation of share capital. Accordingly, Shareholders should not be treated as making a disposal of the New Melrose Ordinary Shares for the purposes of the UK taxation of chargeable gains as a result of that reduction of capital.

2.3 The Proposed Return of Capital For the purposes of UK taxation of chargeable gains, the Proposed Return of Capital should be treated as a further reorganisation of share capital, followed by a disposal of the B Shares. The receipt of a B Share, issued out of New Melrose’s merger reserve, should be treated as a reorganisation of share capital. The combined holding of New Melrose Ordinary Shares and B Shares will be treated as the same holding as the original New Melrose Ordinary Shares (and, therefore, where applicable, as described above, the same holding as the Old Melrose Ordinary Shares). A Shareholder’s base cost in his New Melrose Ordinary Shares will be apportioned between the B Shares and the New Melrose Ordinary Shares by reference to the market value of the New Melrose Ordinary Shares on the first day following the issue of the B Shares on which the market value for the New Melrose Ordinary Shares is quoted or published. The apportionment ratio between the B Shares and the New Melrose Ordinary Shares will be published on New Melrose’s website at the earliest practicable time following the Proposed Return of Capital.

65 On the basis that the B Shares are treated, for UK tax purposes, as being paid up as to an amount equal to the nominal value of the B Shares for ‘‘new consideration’’ received by New Melrose, neither the issue of B Shares nor their cancellation for payment equal to or less than that nominal value should give rise to any income distribution and therefore should not be subject to UK income tax or corporation tax on income in the Shareholder’s hands. Upon cancellation of the B Shares, an individual Shareholder may, depending on his or her individual circumstances, be subject to UK capital gains tax on the amount of any chargeable gains realised. Any gain will be measured by reference to the excess of the cancellation payment received above the Shareholder’s allowable expenditure for the B Shares cancelled, apportioned in accordance with the above paragraph. The amount of UK capital gains tax, if any, payable by an individual Shareholder in relation to the chargeable gain described above will depend on his or her personal tax position. No tax will be payable on any gain realised on the cancellation 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 for the relevant tax year. 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 (also taking into account the gain on the cancellation) 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, the net gain will be taxable at 28 per cent. A corporate Shareholder is taxable on all of its chargeable gains. Corporate Shareholders are entitled to indexation allowance up to the date on which the chargeable gain is realised. On any subsequent disposal of the whole or part of a Shareholder’s holding of New Melrose Ordinary Shares, a Shareholder may, depending on his or her circumstances, be subject to UK capital gains tax on the amount of any chargeable gain realised. Please refer to the paragraphs above for details of the manner in which a Shareholder’s allowable expenditure is allocated between the New Melrose Ordinary Shares and the B Shares and for details of how a gain will be taxed.

3. Disposal of New Melrose Ordinary Shares by Shareholders A disposal or deemed disposal of New Melrose Ordinary Shares by a Shareholder who is resident in the United Kingdom for tax purposes may, depending on the particular circumstances of the Shareholder and subject to any available exemptions or reliefs (including, in the case of an individual, the annual exemption, which is £11,100 for the tax year ending April 2016), give rise to a chargeable gain or an allowable loss for UK capital gains tax purposes.

3.1 Individuals For an individual Shareholder who is resident in the United Kingdom for tax purposes, to the extent his or her total taxable gains and income in a given tax year, including any gains made on the disposal or deemed disposal of his or her New Melrose Ordinary Shares, are less than or equal to the upper limit of the income tax basic rate band applicable in respect of that tax year (currently £31,785) (the ‘‘Upper Limit’’) any such gain arising on a disposal or deemed disposal of his or her New Melrose Ordinary Shares will generally be subject to capital gains tax at a flat rate of 18 per cent. An individual Shareholder who is resident in the United Kingdom for tax purposes and whose total taxable gains and income in a given tax year, including any gains made on the disposal or deemed disposal of his or her New Melrose Ordinary Shares, are greater than the Upper Limit will generally be subject to capital gains tax at a flat rate of 28 per cent. in respect of the gain arising on a disposal or deemed disposal of his or her New Melrose Ordinary Shares on the amount in excess of the Upper Limit.

3.2 Corporation tax payers A gain on the disposal or deemed disposal of New Melrose Ordinary Shares by a Shareholder within the charge to UK corporation tax will form part of the Shareholder’s profits chargeable to corporation tax (the rate of which is currently 20 per cent.). For such Shareholders, tax indexation allowance may be available in respect of the full period of ownership of the New Melrose Ordinary Shares to reduce any chargeable gain arising (but not to create or increase any allowable loss).

66 3.3 Overseas Shareholders and Temporary Non-residents Subject to the paragraph below which deals with temporary non-residents, Shareholders who are not resident in the UK for UK tax purposes will not generally be subject to UK tax on chargeable gains, unless they carry on a trade, profession or vocation in the UK through a branch or agency or, in the case of a company, permanent establishment and the New Melrose Ordinary Shares disposed of are used or held for the purposes of that branch, agency or permanent establishment. A Shareholder who is an individual, who has ceased to be resident for tax purposes in the UK for a period of less than five years and who disposes of New Melrose Ordinary Shares during that period may be liable to UK taxation on capital gains (subject to any available exemption or relief). If applicable, the tax charge will arise in the tax year that the individual returns to the UK. For overseas taxes that may apply to the disposal of New Melrose Ordinary Shares, Shareholders should consult their professional advisers in the relevant jurisdictions.

4. Dividends Under current UK tax law, New Melrose is not required to withhold amounts on account of UK tax at source from dividend payments it makes.

4.1 Individuals prior to 6 April 2016 An individual resident for tax purposes in the UK who receives a dividend from New Melrose will generally be entitled to a tax credit which may be set against that individual’s total income tax liability on the dividend. Such a liability to income tax is calculated on the aggregate of the net dividend and the related tax credit (the ‘‘gross dividend’’). The tax credit will be equal to one-ninth of the cash dividend paid, or ten per cent. of the gross dividend. An individual who is liable to income tax at the basic rate will be subject to income tax on dividends paid by New Melrose at the rate of ten per cent. of the gross dividend. As such, the tax credit will satisfy in full the individual’s liability to income tax on the dividend. An individual who is liable to income tax at the higher rate will be subject to income tax on the gross dividend at 32.5 per cent. After taking into account the tax credit, the individual will have to account for tax at an effective rate of 25 per cent. of the net cash dividend received. In the case of a dividend received by an individual shareholder liable to income tax at the additional rate, the rate of income tax will be 37.5 per cent. After taking into account the tax credit, a higher rate taxpayer will have to account for tax at an effective rate of 25 per cent. of the net cash dividend received and an additional rate taxpayer will have to account for tax at an effective rate of approximately 30.6% of the net cash dividend. An individual who is not liable to UK income tax in respect of the gross dividend will not be entitled to any payment in respect of any part of the tax credit associated with the dividend. In all circumstances, the dividend tax credit is notional only and non-refundable.

4.2 Individuals—Post 6 April 2016 The UK Government announced in its Summer Budget 2015 that the taxation of dividends received by individuals will change from 6 April 2016 onwards. The legislation enacting this change has not yet been made available and may differ from the details announced thus far. The summary set out below is based on information published as part of the Summer Budget 2015. The UK government announced that, from 6 April 2016, the dividend tax credit referred to in paragraph 4.1 above will be replaced by a new £5,000 tax-free dividend allowance. As a result: (i) a Shareholder who is an individual, resident in the UK for tax purposes and who receives a dividend from New Melrose on or after 6 April 2016 will not pay any income tax on the first £5,000 of dividend income they receive; (ii) a Shareholder who is not liable to UK income tax at either the higher or the additional rate will be subject to UK income tax on any dividend income in excess of £5,000 at the rate of 7.5 per cent.;

67 (iii) a Shareholder who is liable to UK income tax at the higher rate will be subject to UK income tax on any dividend income in excess of £5,000 at the rate of 32.5 per cent. to the extent that the dividend income in excess of £5,000 falls above the threshold for the higher rate of UK income tax but below the threshold for the additional rate of UK income tax, when it is treated as the top slice of the Shareholder’s income; and (iv) a Shareholder who is liable to UK income tax at the additional rate will be subject to UK income tax on any dividend income in excess of £5,000, at the rate of 38.1 per cent. to the extent that the dividend income in excess of £5,000 falls above the threshold for the additional rate of UK income tax, when it is treated as the top slice of the Shareholder’s income.

4.3 Companies Subject to certain exceptions for traders in securities and insurance companies, a corporate Shareholder resident in the UK for tax purposes will normally be exempt from corporation tax on any dividend received from New Melrose (unless certain conditions are not met) and will not be able to claim a tax credit in respect of any such dividend. If the conditions for exemption are not or cease to be satisfied, or if a Shareholder elects for an otherwise exempt dividend to be taxable, the Sshareholder will be subject to UK corporation tax on dividends received from New Melrose. UK corporation tax would be charged on such dividends at the rate applicable to that corporate Shareholder.

5. Stamp Duty and Stamp Duty Reserve Tax Except in relation to arrangements for depositary receipts or clearance services to which special rules apply: (i) No stamp duty or stamp duty reserve tax (‘‘SDRT’’) should be payable on the issue of the New Melrose Ordinary Shares, nor on the cancellation of the Old Melrose Ordinary Shares. (ii) An unconditional agreement to sell New Melrose Ordinary Shares would normally give rise to liability on the purchaser to SDRT at the rate of 0.5 per cent. of the amount or value of the consideration paid or provided. If an instrument of transfer of the New Melrose Ordinary Shares were subsequently produced it would generally be subject to stamp duty at the rate of 0.5 per cent. of the amount or value of the consideration paid or provided (rounded up to the nearest £5), subject to an exemption for low-value transactions (£1,000 or less). When such stamp duty is paid, provided it is paid within six years of the agreement 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. The above statements are intended as a general guide to the current position. Certain categories of person, including market makers, brokers, dealers and persons connected with depositary arrangements and clearance services are not liable to stamp duty or SDRT and others may be liable at a higher rate or may, although not primarily liable for tax, be required to notify and account for it.

6. ISAs If existing Shareholders of Old Melrose currently hold their Old Melrose Ordinary Shares in the stocks and shares component of an ISA, the New Melrose Ordinary Shares should qualify for inclusion in the same way.

68 PART VIII DIRECTORS, CORPORATE GOVERNANCE AND EMPLOYEES 1. Directors The following table sets out information relating to the Directors of New Melrose, each of whom is also currently a Director of Old Melrose:

Name Function Christopher Miller ...... Executive Chairman David Roper ...... Executive Vice-Chairman Simon Peckham ...... Chief Executive Geoffrey Martin ...... Group Finance Director Perry Crosthwaite ...... Senior Non-Executive Director John Grant ...... Non-Executive Director Justin Dowley ...... Non-Executive Director Elizabeth Hewitt ...... Non-Executive Director The business address of each of the Directors is 11th Floor, Colmore Plaza, 20 Colmore Circus Queensway, Birmingham, West Midlands B4 6AT, United Kingdom.

1.1 Profiles of the Directors The names, business experience and principal business activities outside the Melrose Group of the Directors, as well as the dates of their initial appointment as Directors, are set out below.

Christopher Miller Executive Chairman Mr. Miller qualified as a chartered accountant with Coopers & Lybrand, following which he was an associate director of Hanson plc. In September 1988 he joined the board of Wassall PLC as its chief executive. Between October 2000 and May 2003 he was involved in private investment activities. Mr. Miller was appointed as an Executive Director of Melrose PLC on 29 May 2003, of Old Melrose on 8 October 2012 and of New Melrose on 30 September 2015.

David Roper Executive Vice-Chairman Mr. Roper qualified as a chartered accountant with Peat Marwick Mitchell, following which he worked in the corporate finance divisions of S.G. Warburg & Co. Limited, BZW and Dillon Read. In September 1988 he was appointed to the board of Wassall PLC and became its deputy chief executive in 1993. Between October 2000 and May 2003 he was involved in private investment activities and served as a non-executive director on the boards of two companies. Mr. Roper was appointed as an Executive Director of Melrose PLC on 29 May 2003, of Old Melrose on 8 October 2012 and of New Melrose on 30 September 2015.

Simon Peckham Chief Executive Mr. Peckham qualified as a solicitor in 1986. In 1990 he joined Wassall PLC and became an executive director of Wassall PLC in 1999. From October 2000 until May 2003 he worked for the equity finance division of The Royal Bank of Scotland and was involved in several high profile transactions. Mr. Peckham was appointed as an Executive Director of Melrose PLC on 29 May 2003, of Old Melrose on 8 October 2012 and of New Melrose on 29 September 2015.

Geoffrey Martin Group Finance Director Mr. Martin qualified as a chartered accountant with Coopers & Lybrand, where he worked within the corporate finance and audit departments. In 1996 he joined Royal Doulton PLC and was group finance director from October 2000 until June 2005. During this time, he was involved in projects including raising

69 public equity, debt refinancings and the restructuring and outsourcing of the manufacturing and supply chain. Mr. Martin was appointed as an Executive Director of Melrose PLC on 7 July 2005, of Old Melrose on 8 October 2012 and of New Melrose on 29 September 2015.

Perry Crosthwaite Senior Non-Executive Director Mr. Crosthwaite has over 30 years’ experience as a director in the City of London. He was a founding director of Henderson Crosthwaite Institutional Brokers Limited, serving on the board until its acquisition by Investec Bank in 1998. He became a director of Investec Bank (UK) Limited and chairman of the Investment Banking division until his retirement in 2004. Mr. Crosthwaite was appointed as a non-executive Director of Melrose PLC on 26 July 2005, of Old Melrose on 8 October 2012 and of New Melrose on 30 September 2015. He is currently a non-executive director of Investec Limited and Investec Plc.

John Grant Non-Executive Director Mr. Grant spent his executive career in a variety of senior international roles within the automotive industry and other engineering businesses. He was chief executive of Ascot Plc between 1997 and 2000. Prior to that, Mr. Grant was group finance director of Lucas Industries Plc (subsequently LucasVarity Plc) between 1992 and 1996. He previously held several senior strategy and finance positions with Ford Motor Company in Europe and the USA. Mr. Grant was appointed as a non-executive Director of Melrose PLC on 1 August 2006, of Old Melrose on 8 October 2012 and of New Melrose on 30 September 2015. He is currently a non-executive director of MHP S.A., Pace Plc and Augean PLC.

Justin Dowley Non-Executive Director Mr. Dowley has extensive experience within the banking, investment and asset management sector and was latterly vice chairman of EMEA Investment Banking, a division of Nomura International plc; he was also a founder partner of Tricorn Partners, Head of Investment Banking at Merrill Lynch Europe and a director at Morgan Grenfell. Mr. Dowley was appointed as a non-executive Director of Melrose PLC on 1 September 2011, of Old Melrose on 8 October 2012 and of New Melrose on 30 September 2015. He is also currently chairman of Intermediate Capital Group plc, a specialist investment and asset management company, a non-executive director of each of Scottish Mortgage Investment Trust PLC and Novae plc and is also a director of a number of private companies.

Elizabeth Hewitt Non-Executive Director Ms. Hewitt qualified as a chartered accountant with Arthur Anderson & Co., following which she held a variety of positions within Gartmore Investment Management, CVC and 3i Group plc. Between 2004 and 2011, Ms. Hewitt was the group director of corporate affairs for Smith & Nephew plc, following a secondment to the Department for Business, Innovation and Skills and the HM Treasury, where she worked to establish The Enterprise Capital Fund. Ms. Hewitt was a trustee of Cancer Research from 2005 to 2011. Ms. Hewitt was appointed as a non-executive Director of Old Melrose on 8 October 2013 and as a non-executive Director of New Melrose on 30 September 2015. Ms. Hewitt is also currently a non-executive director of Savills plc and Novo Nordisk A/S.

1.2 Interests of the Directors As at the Latest Practicable Date, the interests (all of which are beneficial) of the Directors, their immediate families and (so far as is known to them or could with reasonable diligence be ascertained by them) persons connected (within the meaning of section 96B of FSMA) with the Directors in the issued share capital of Old Melrose, including: (i) those arising pursuant to transactions notified to Old Melrose pursuant to Disclosure and Transparency Rule 3.1.2R; or (ii) those of the connected persons of the Directors, which would, if such connected person were a Director, be required to be disclosed under

70 (i) above, together with such interests in New Melrose as are expected to subsist immediately following Admission, are set out in the following table:

Number of Old Melrose Number of New Melrose Percentage of issued ordinary Ordinary Shares Ordinary Shares share capital Executive Chairman Christopher Miller(1) ...... 14,203,260 14,203,260 1.427% Executive Vice-Chairman David Roper ...... 7,530,783 7,530,783 0.757% Executive Directors: Simon Peckham ...... 7,775,196 7,775,196 0.781% Geoffrey Martin ...... 3,739,054 3,739,054 0.376% Non-Executive Directors: Perry Crosthwaite ...... 174,724 174,724 0.018% John Grant ...... 275,257 275,257 0.028% Justin Dowley ...... 451,264 451,264 0.045% Elizabeth Hewitt ...... 24,202 24,202 0.002%

(1) The interest of Christopher Miller includes 5,311,426 Old Melrose Ordinary Shares held by Harris & Sheldon Investments Limited, a company which is connected with Christopher Miller within the meaning of section 252 of the Companies Act. Taken together, the combined percentage interest of the Directors in the issued ordinary share capital of Old Melrose as at the Latest Practicable Date was approximately 3.43 per cent. The percentage holding of New Melrose Ordinary Shares is expected to be the same as the percentage of Old Melrose Ordinary Shares. Details of options over a new class of incentive shares in Old Melrose (the ‘‘Old Melrose 2012 Incentive Shares’’) held by the Directors as at the Latest Practicable Date are set out below. Those options are not included in the interests of the Directors shown in the table above.

1.3 Directors’ interests in share-based long-term incentive plans On 27 November 2012, certain directors and employees of the Melrose Group were granted options over a new class of incentive shares in Old Melrose (‘‘Old Melrose 2012 Incentive Options’’) (the ‘‘Old Melrose 2012 Incentive Scheme’’). Details of the number of options held by Directors under the Old Melrose 2012 Incentive Scheme are set out below. The rights and restrictions attaching to the Old Melrose 2012 Incentive Options are set out at paragraph 13 (Options over New Melrose 2012 Incentive Shares) of Part XIII (Additional Information) of the Old Melrose Prospectus, which is incorporated into this Prospectus by reference. The rights attaching to the Old Melrose 2012 Incentive Shares (including a description of the conversion rights) are set out at paragraph 4.4 (Further rights attaching to New Melrose 2012 Incentive Shares) of Part XIII (Additional Information) of the Old Melrose Prospectus, which is incorporated into this Prospectus by reference. In accordance with the terms of the Old Melrose 2012 Incentive Options, conditional on the Scheme becoming effective, options over Old Melrose 2012 Incentive Shares will, at the direction of the New Melrose and Old Melrose Remuneration Committees, be automatically exchanged for like options over shares in New Melrose on substantially the same terms as the Old Melrose 2012 Incentive Options and upon such exchange taking effect the existing Old Melrose 2012 Incentive Options will lapse. A summary

71 of the terms of the New Melrose 2012 Incentive Options is set out in paragraph 14 of Part IX (Additional Information) of this Prospectus. Number of Old Melrose 2012 Incentive Options held at the Latest Practicable Date Christopher Miller ...... 8,500 David Roper ...... 8,500 Simon Peckham ...... 8,500 Geoffrey Martin ...... 8,500 Perry Crosthwaite ...... Nil John Grant ...... Nil Justin Dowley ...... Nil Elizabeth Hewitt ...... Nil

1.4 General Save as set out above, no Director, nor any member of their respective immediate families, nor any person connected with any Director within the meaning of section 252 of the Companies Act, has any interests (beneficial or non-beneficial) in the share capital of New Melrose or Old Melrose or any member of the Melrose Group. Except as set out in paragraph 13.2 of Part IX (Additional Information) of this Prospectus, no Director has, or has had, any interest in any transaction which is or was unusual in its nature or conditions or which is or was significant to the business of New Melrose or Old Melrose and which was effected by New Melrose or Old Melrose during the current or immediately preceding financial year or which remains in any respect outstanding or unperformed. There are no outstanding loans granted by New Melrose, Old Melrose or any member of the Melrose Group to any of the Directors, nor has any guarantee been provided by Melrose or any of its subsidiaries for their benefit save that qualifying third party indemnity provisions are in place for the benefit of Directors in relation to certain losses and liabilities which they may potentially incur to third parties in the course of their duties.

2. Remuneration of the Directors Set out below is information on the current employment and remuneration arrangements for the Directors of Old Melrose and the arrangements in place during the year ended 31 December 2014.

2.1 Directors’ Service Agreements and Letters of Appointment

Details of the terms of each of the Old Melrose Executive Directors’ service agreements are set out below. Upon the Scheme becoming effective, the existing Executive Director service agreements will be novated from Old Melrose to New Melrose and all the Executive Directors except Simon Peckham and

72 Geoffrey Martin will resign as Executive Directors of Old Melrose. The service agreements with New Melrose will be on similar terms to the Directors’ existing service agreements with Old Melrose.

Date of Expiry Salary per Date of Initial of annum Leave Notice Confidentiality Name Appointment Current Office (£’000) (days)(1) Benefits on Termination Period Obligations Christopher Miller ...... 8 October 2012 End of 435 25 None other than payment in 12 months During and after 2016 AGM lieu of untaken holiday employment entitlement

David Roper ...... 8 October 2012 End of 435 25 None other than payment in 12 months During and after 2016 AGM lieu of untaken holiday employment entitlement

Simon Peckham ...... 8 October 2012 End of 435 25 None other than payment in 12 months During and after 2016 AGM lieu of untaken holiday employment entitlement

Geoffrey Martin ...... 8 October 2012 End of 348 25 None other than payment in 12 months During and after 2016 AGM lieu of untaken holiday employment entitlement

Note: (1) In addition to bank and public holidays. Details of the terms of each non-executive Director’s appointment with Old Melrose are set out below. The non-executive Directors of Old Melrose have been appointed as Directors of New Melrose and will enter into new letters of appointment with New Melrose on similar terms to their existing letters of appointment with Old Melrose on or before the Scheme becoming effective. Such new letters of appointment will take effect upon the Scheme becoming effective and all the non-executive Directors will resign as Directors of Old Melrose.

Date of Date of Non- Expiry of Expiry of executive fee Date of initial Current New Melrose per annum Confidentiality Termination Name appointment Office Office(1) (£’000) Expenses Obligations Provisions(2) Perry Crosthwaite . 8 October 2012 End of 2016 End of 2016 67 Reimbursement of Confidentiality Without notice AGM of AGM of travel, hotel and undertaking without and/or Old Melrose New Melrose other incidental limitation in time compensation if expenses incurred removed from in the course of office by duties shareholders in general meeting

John Grant ..... 8 October 2012 End of 2016 End of 2016 70 Reimbursement of Confidentiality Without notice AGM of AGM of travel, hotel and undertaking without and/or Old Melrose New Melrose other incidental limitation in time compensation if expenses incurred removed from in the course of office by duties shareholders in general meeting

Justin Dowley .... 8 October 2012 End of 2016 End of 2016 68 Reimbursement of Confidentiality Without notice AGM of AGM of travel, hotel and undertaking without and/or Old Melrose New Melrose other incidental limitation in time compensation if expenses incurred removed from in the course of office by duties shareholders in general meeting

Elizabeth Hewitt . . 8 October 2013 End of 2016 End of 2016 64 Reimbursement of Confidentiality Without notice AGM of AGM of travel, hotel and undertaking without and/or Old Melrose New Melrose other incidental limitation in time compensation if expenses incurred removed from in the course of office by duties shareholders in general meeting

Notes: (1) Subject to re-appointment at the annual general meeting in each relevant year.

(2) In addition, for New Melrose, at the end of any annual general meeting if not re-elected. Save as set out above, there are no existing or proposed service agreements between any Director and any member of the Melrose Group providing for benefits upon termination of employment.

73 In the financial year ended 31 December 2014, the amount of remuneration paid (including any contingent or deferred compensation) and benefits in kind granted to each of the Directors by the Melrose Group for services in all capacities to the Melrose Group were as follows:

Total salary Taxable Long-term Pension related and fees benefits Annual bonus incentives(1) benefits(2) Total (£’000) (£’000) (£’000) (£’000) (£’000) (£’000) Christopher Miller ...... 435 9 — — 65 509 David Roper ...... 435 19 — — 65 519 Simon Peckham ...... 435 21 252 — 65 773 Geoffrey Martin ...... 348 46 202 — 52 648 Miles Templeman(3) ...... 23 — — — — 23 Perry Crosthwaite(4) ...... 67 — — — — 67 John Grant(5) ...... 70 — — — — 70 Justin Dowley(6) ...... 68 — — — — 68 Elizabeth Hewitt(7) ...... 64 — — — — 64

Notes: (1) Old Melrose’s long-term incentive arrangement for Directors is the Old Melrose 2012 Incentive Scheme. This five year plan was scheduled to crystallise in 2017 and, accordingly, no value vested to participants in respect of the year to 31 December 2014. (2) Of the £247,836 attributable to pension contributions, £195,660 was paid as a supplement to base salary in lieu of pension arrangements. The balance of £52,176 was paid into the individual Directors’ nominated private pension plans. (3) Miles Templeman stood down as a non-executive Director of Old Melrose with effect from the annual general meeting on 13 May 2014 and the fees referred to above reflect his fees for the period from 1 January 2014 to 13 May 2014. (4) Perry Crosthwaite was chairman of the Remuneration Committee up to the close of the annual general meeting on 13 May 2014 but was then replaced by Justin Dowley. Perry Crosthwaite received an amount of £1,822 in recognition of his Chairmanship of the Remuneration Committee from 1 January 2014 to 13 May 2014. Perry Crosthwaite was senior non-executive Director from 13 May 2014 and received an amount of £3,178 in recognition of his holding that position. (5) Includes £8,181 in recognition of chairmanship of the Audit Committee. (6) Justin Dowley became chairman of the Remuneration Committee following the close of the annual general meeting on 13 May 2014, in place of Perry Crosthwaite. In recognition of Justin Dowley’s chairmanship of this Committee from 13 May 2014 to 31 December 2014 an amount of £6,365 was paid. (7) Includes £1,586 in recognition of chairmanship of the Nomination Committee from the close of the annual general meeting on 13 May 2014 to 31 December 2014.

2.2 Pension arrangements of the Executive Directors of Old Melrose No Director is a member of any Melrose Group pension arrangement. The Old Melrose Executive Directors may elect to receive a contribution by Old Melrose to their individual pension arrangements, or a supplement to basic salary in lieu of a pension arrangement. Contributions by Old Melrose are calculated on base salary only.

3. Corporate Governance The Old Melrose Board is accountable to the Shareholders for good governance. With the exception set out immediately below, Old Melrose complies with all the provisions of the UK Corporate Governance Code published in September 2014 (the ‘‘Code’’) and with all the requirements of the Disclosure and Transparency Rules on audit committees and corporate governance statements. On the Scheme becoming effective, it is intended that, with the exception set out immediately below, New Melrose will comply with the provisions of the Code and with the requirements of the Disclosure and Transparency Rules. Schedule A of the Code recommends that grants under executive share option and the long term incentive schemes should normally be phased rather than awarded in one block. Under the Old Melrose 2012 Incentive Scheme, further details of which are set out in paragraph 1.3 of this Part VIII, entitlements were awarded in one block. The proposals relating to the Old Melrose 2012 Incentive Scheme were approved by Shareholders at a general meeting held on 11 April 2012. Similarly, under the New Melrose 2012 Incentive Scheme, further details of which are set out in paragraph 1.3 of this Part VIII, entitlements will be awarded in one block, rather than being phased. The proposals relating to the New Melrose 2012 Incentive Scheme were approved by the shareholder of New Melrose at a general meeting held on 2 October 2015.

74 The statements below describe how Old Melrose has applied the principles identified in the Code and Disclosure and Transparency Rules. It is intended that, on the Scheme becoming effective, the corporate governance structure of New Melrose will be substantially the same as that of Old Melrose.

3.1 The Old Melrose Board The Old Melrose Board meets regularly during the year as well as on an ad-hoc basis as required by time critical business needs. The Old Melrose Board is responsible to shareholders for the effective and proper management and control of Old Melrose and has a formal schedule of matters reserved for its decisions. Its primary roles are to determine and review Old Melrose’s strategy and policy, consider acquisitions and disposals, assess requests for major capital expenditure, review trading performance, ensure that adequate funding and personnel are in place, maintain sound internal control systems and to report to shareholders and give consideration to all other significant financial matters. Board responsibilities are undertaken in conjunction with senior management, who in turn are responsible for the day-to-day conduct of the Melrose Group’s operations and for reporting to the Old Melrose Board on items of significance and progress against objectives. There were four formally scheduled Board meetings held during 2014. In addition, there were a number of unscheduled Board meetings held in connection with corporate transactions, for example, for particular business acquisitions and divestments. As at 31 December 2014, the Old Melrose Board comprised eight members being the Executive Chairman, Mr. Christopher Miller, three other Executive Directors and four non-executive Directors. The four Executive Directors, Mr. Christopher Miller, Executive Chairman, Mr. David Roper, Executive Vice-Chairman, Mr. Simon Peckham, Chief Executive and Mr. Geoffrey Martin, Group Finance Director, and the four non-executive Directors, Mr. Perry Crosthwaite, Mr. John Grant, Mr. Justin Dowley and Ms. Elizabeth Hewitt, served throughout the year. A further non-executive Director of Old Melrose, Miles Templeman, stood down as non-executive Director with effect from the annual general meeting of Old Melrose held on 13 May 2014. The terms and conditions of the non-executive Directors’ appointments and the Executive Directors’ service contracts are set out in paragraph 2.1 (Directors’ Service Agreements and Letters of Appointment) of this Part VIII. The Old Melrose Board believes that the Directors possess diverse business experience in areas complementary to the activities of Old Melrose. Biographies of the Directors are set out in paragraph 1.1 (Profiles of the Directors) of this Part VIII. These biographies, together with the table set out in paragraph 7 (Directorships and partnerships), below, identify any other appointments held by the Directors. In accordance with the provisions of the Code, consideration has been given to the independence of all the non-executive Directors and the Old Melrose Board considers all the non-executive Directors to be independent. The Board notes that Mr. Perry Crosthwaite, who was appointed as a non-executive Director to Melrose PLC in July 2005 and first elected at the annual general meeting of Melrose PLC in 2006, has served three terms with the Melrose Group, totalling nine years. However, the Board is of the opinion that, due to his invaluable experience in financial and other corporate matters, Mr. Perry Crosthwaite continues to maintain both his effectiveness and his independence. The Board of New Melrose will continue to monitor this position but feels at the present time that Mr. Perry Crosthwaite continues to make an important contribution to the Melrose Group. The non-executive Directors are not entitled to any bonus or shares under the Old Melrose 2012 Incentive Scheme. Performance of the Board and each Committee is evaluated annually. In accordance with the provisions of the Code, all of the Directors stood for re-election at the annual general meeting of Old Melrose held on 14 May 2015. Following the Scheme, the articles of New Melrose will require the Directors to stand for annual re-election and as such, all Directors will offer themselves for re-election at the first annual general meeting of New Melrose. The Board and the Nomination Committee have carefully considered the time commitments required and the contribution made by each Director and both the Board and the Nomination Committee are of the belief that the performance of each executive and non-executive Director continues to be effective and that each Director demonstrates commitment to their role. The Board engaged Linstock Limited to undertake an independent review of the Old Melrose Board and each Committee. Linstock Limited is a specialist corporate governance consultancy and, other than

75 supporting the Audit Committee in its assessment of the effectiveness of the external auditor, has no commercial dealings or other connection with the Melrose Group. In addition, the Chairman has held meetings with the Directors, including the senior independent non-executive Director, Mr. Perry Crosthwaite, to discuss the performance of individual Executive Directors and the Old Melrose Board as a whole. The non-executive Directors, led by Mr. Perry Crosthwaite, the senior non-executive Director, are responsible for the performance evaluation of the Chairman and as part of this process also take into account the views of the Executive Directors. Directors determine whether there are any training requirements by completing an evaluation questionnaire during the year that is designed to identify any failures in the performance of the Board and each of its Committees. The findings of the 2014 evaluations were reviewed by the Company Secretary and feedback was provided to the Old Melrose Board. Overall, the evaluations demonstrated that the composition of the Board and each of the Committees and the performance of the Chairman and the senior independent non-executive Director continued to be very effective. In accordance with the provisions of the Code, it is anticipated that New Melrose will carry out externally facilitated evaluations of the Board every three years. In those years in which external evaluations are not carried out, the Board will continue to complete internal performance-based questionnaires, with the process managed by the Company Secretary. The Nominations Committee currently takes into account a variety of factors before recommending any new appointments to the Board, including relevant skills to perform in the role, experience, knowledge, ethnicity and gender. The most important priority of the Nominations Committee, however, has been, and will continue to be, ensuring that the best candidate is selected to join the Board and this approach will remain in place going forward. All Directors receive a formal and tailored induction shortly after their appointment. Directors are advised that they have access to the advice and services of the Company Secretary, who is responsible for ensuring that Board procedures are followed and that applicable rules and regulations are complied with. The Board may seek independent legal and financial advice in the furtherance of their duties, at Old Melrose’s expense. A pack of briefing papers and an agenda are provided to each Director in advance of each scheduled Board or standing Committee meeting. The Directors are able to seek further clarification and information on any matter from any other Director or employee of the Melrose Group whenever necessary. Decisions are taken by the Old Melrose Board in conjunction with the recommendations of its Committees and advice from external consultants, advisors and senior management.

3.2 Chairman and Chief Executive The roles of the Chairman and Chief Executive of New Melrose are, and will remain, separate and distinct from one another in accordance with best practice and Board policy. The Chairman alone is responsible for the leadership of the Board and for ensuring effective communication with shareholders together with the other Executive Directors. The Chief Executive is responsible for strategic direction and decisions involving the day-to-day management of Old Melrose. These respective responsibilities are set out in writing and have been approved by the Old Melrose Board, who consider that the respective roles and responsibilities are clearly understood by both individuals and by the Old Melrose Board as a whole.

3.3 Committees of the Old Melrose Board In accordance with the provisions of the Code, the Old Melrose Board has three standing committees: the Audit, Nomination and Remuneration Committees (the ‘‘Committees’’), each of which include the four independent non-executive Directors. The duties of the Committees are set out in formal terms of reference. These are available from the Company Secretary and on the Melrose Group’s website: (www.melroseplc.net). Membership of the Committees is shown below. The Company Secretary acts as secretary to each of the Committees. Prior to the Effective Date, New Melrose will establish audit, nomination and remuneration committees, each of which will be operated with terms of reference that have been approved by the New Melrose Board and which are substantially in the form of the equivalent terms of reference in place for Old Melrose.

76 3.4 Audit Committee The Audit Committee currently comprises the four independent non-executive Directors, Mr. Perry Crosthwaite, Mr. John Grant, Mr. Justin Dowley and Ms. Elizabeth Hewitt. Mr. John Grant chairs the Audit Committee. Each member of the Audit Committee brings relevant financial experience from senior executive and non-executive positions as described in their biographies at paragraph 1.1 (Profiles of the Directors) of this Part VIII. The Audit Committee reviews and monitors the integrity of the financial statements of the Melrose Group, including its interim accounts, the annual report and any other formal announcements relating to the financial performance of the Melrose Group; keeps under review the effectiveness of the Melrose Group’s financial reporting, internal audit and controls, risk management systems and compliance controls; focuses and challenges the consistency of accounting policies, methods used to account for significant or unusual transactions and compliance with accounting standards; reviews the Melrose Group’s arrangements for its employees to raise concerns in confidence about possible wrongdoing in financial reporting, in accordance with the Melrose Group’s whistleblowing policy; develops, implements and monitors the Melrose Group’s policy on external audit and for overseeing the objectivity and effectiveness of the auditor; and reviews and considers the annual report and financial statements of the Melrose Group, to ensure that they are fair, balanced and understandable, and advises the Board as to whether it can state that this is the case. The Audit Committee invites the Group Finance Director, the Head of Financial reporting and senior representatives of the external and internal auditors to attend meetings as appropriate to the business being considered. The Audit Committee has the right to invite any Directors and/or other employees to attend meetings where this is considered appropriate. In addition, the Audit Committee meets at least once per year with both the external and internal auditors, without management present. The Audit Committee is expected to meet not less than three times a year and the Audit Committee met three times during 2014.

External Auditor The Melrose Group’s external auditor is recommended for reappointment by the Audit Committee, who also assess the appropriateness of the scope of audit work performed and provide recommendations in respect of their remuneration and terms of engagement. The Audit Committee receives regular reports from the Melrose Group’s external auditor. The Audit Committee has a policy on the engagement of the external auditor for the supply of non-audit services. In accordance with best practice Financial Reporting Council guidelines, the Melrose Group’s policy in relation to non-audit services is kept under regular review; the policy outlines which non-audit services are pre-approved, which services require the prior approval of the Audit Committee and which services the auditor is excluded from providing. During 2014, the main non-audit services provided by Deloitte LLP were in relation to taxation advisory, compliance and planning services. The Audit Committee carries out regular reviews to ensure that auditor objectivity and independence is maintained at all times. A different senior partner oversees the taxation audit of Old Melrose compared to those working on the non-audit taxation services. In addition, during 2014, Old Melrose engaged the services of Linstock Limited to support the assessment of Deloitte LLP’s effectiveness and performance. Based on this review, the Audit Committee concluded that the quality of the external audit team remains very high, the external audit process is operating effectively and Deloitte LLP continues to prove effective in its role as external auditor. Deloitte LLP was appointed in 2003 when Melrose PLC commenced trading, and the external audit has not been formally tendered since then. A resolution to re-appoint Deloitte LLP as auditor of Old Melrose was passed by Shareholders at the annual general meeting of Old Melrose on 14 May 2015, for Deloitte LLP to hold office from the conclusion of the meeting until the conclusion of the next annual general meeting of Old Melrose at which accounts are laid. The Audit Committee are satisfied that the effectiveness and independence of the external auditor is not impaired in any way. There are no contractual obligations that restrict the Melrose Group’s capacity to recommend a particular firm for appointment as auditor. The external auditor is required to rotate the audit signing partner every five years. The Melrose Group’s audit signing partner changed as part of that

77 rotation process in 2010 and again following the annual general meeting of Old Melrose held on 14 May 2015. The Audit Committee are mindful of the recommendations of the Code that the external audit should be put out to tender every ten years. The Board intend to comply with the order issued by the Competition & Markets Authority relating to the statutory audit market for FTSE 350 companies, which came into effect on 1 January 2015, and will apply to financial years commencing on or after 1 January 2015. It is the Committee’s understanding that under the EU rules, a formal tender process will be required to be held no later than two years from the end of the previous partner rotation and that a rotation of external audit firm will be required by 2023. This matter will be kept under review.

Internal Audit Due to the size and complexity of the Melrose Group, it is appropriate for an internal audit programme to be used within the business. BM Howarth, an external firm, provides internal audit services to the Melrose Group. A rotation programme is in place, such that every business unit will have an internal audit at least once every three years, with the largest sites reviewed at least once every two years. The rotation programme allows divisional management’s actions and responses to be followed up on a timely basis. The internal auditors’ remit includes assessment of the effectiveness of internal control systems, compliance with the Melrose Group’s Policies and Procedures Manual and a review of the businesses’ balance sheets. A report of key findings and recommendations is presented to the Group Finance Director, Head of Financial Reporting and, where considered necessary, the Group Operations Controller, followed by a meeting to discuss key findings and resulting action points. Review of the internal audit process and scope of work covered by the internal auditor is the responsibility of the Audit Committee, to ensure their objectives, level of authority and resources are appropriate for the nature of the businesses under review. A report of significant findings is presented by the internal auditor to the Audit Committee at each meeting and implementation of recommendations by the Board is followed up at the subsequent Audit Committee meeting.

3.5 Remuneration Committee The Remuneration Committee currently comprises the four independent non-executive Directors, Mr. Perry Crosthwaite, Mr. John Grant, Mr. Justin Dowley and Ms. Elizabeth Hewitt. Mr. Justin Dowley chairs the Committee. The function of the Remuneration Committee is to annually review remuneration trends across the Melrose Group and obtain reliable and up to date information about the remuneration of directors and senior employees in other companies; consider and make recommendations to the Board on the framework for the remuneration of the Executive Directors, the Company Secretary and other senior employees; ensure that the Executive Directors and senior employees are provided with appropriate annual incentives to encourage enhanced performance and that they are rewarded for their individual contributions to the success of Old Melrose; and approve the structure of, and determine targets for any long term incentive plans operated by Old Melrose. In developing its recommendations, the Remuneration Committee gives due consideration to Schedule 8 of Part 15 of the Companies Act. The Remuneration Committee is expected to meet not less than twice a year and during 2014 the Remuneration Committee met three times.

3.6 Nomination Committee The Nomination Committee currently comprises Mr. Christopher Miller and the four independent non-executive Directors, Mr. Perry Crosthwaite, Mr. John Grant, Mr. Justin Dowley and Ms. Elizabeth Hewitt. Ms. Elizabeth Hewitt chairs the Nomination Committee. The Nomination Committee keeps the size, structure and composition of the Board under regular review and recommends to the Board any adjustments as may be necessary from time to time; gives full consideration to succession planning to ensure an optimum balance of executive and non-executive Directors in terms of skills, experience and diversity; keeps under review the leadership needs of the business; and keeps up-to-date and fully informed about strategic issues and commercial changes affecting the Melrose Group and the markets in which it operates. The Nomination Committee uses external search consultants as appropriate.

78 The Nomination Committee is expected to meet not less than twice a year and during 2014 the Nomination Committee met twice.

4. Employees The number of persons employed by the Melrose Group as at 31 December 2014 was 8,762, across all its divisions. The average monthly number of persons employed by the Melrose Group for the years ended 31 December 2014, 31 December 2013 and 31 December 2012 are set out below:

Year ended 31 December 2014(1) 2014 2013(2) 2013 2012(3) 2012 £m £m £m £m £m £m Restated Restated Restated Energy ...... 2,594 2,594 2,691 2,691 2,724 3,320 Lifting ...... — — — 1,696 1,706 3,220 Other Industrial ...... — — — — — 1,001 Central ...... 34 34 35 35 33 33 Gas...... — 3,699 3,827 3,827 4,017 4,017 Electricity ...... — 1,395 1,391 1,391 1,530 1,530 Water ...... — 985 1,104 1,104 1,310 1,310 Total Elster ...... — 6,079 6,322 6,322 6,857 6,857 Total ...... 2,628 8,707 9,048 10,744 11,320 14,431

Notes: (1) Restated to include the employees of the Elster Group within discontinued operations. (2) Restated to include the employees of Bridon within discontinued operations. (3) Restated to include the employees of Truth, Marelli, Crosby, Acco and Harris within discontinued operations. As at 30 August 2015, the Melrose Group employed 9,115 persons (excluding the Directors), of these 6,662 were employed in relation to the Elster Group. In addition to the employee totals above, the Melrose Group uses a number of temporary external employees in connection with manufacturing activities and also occasionally uses temporary employees to assist it in ordinary course office functions. The Melrose Group had 466 temporary external employees on average, monthly, for the year ended 31 December 2014. In a number of the Melrose Group’s facilities, its employees are represented in works councils or labour unions. Between 16 October 2014 and 17 October 2014, employees of the Elster Group in Essen, Belgium held a two-day strike in relation to the closure of that plant. The Elster Group also experienced a work stoppage between 1 July 2014 and 28 July 2014 at its site in South Africa, as a result of a national wage negotiation which occurs once every three years and which affected 69 employees.

5. Directors’ Confirmations 5.1 During the last five years, no Director has: (a) been convicted in relation to a fraudulent offence; (b) been associated with any bankruptcy, receivership or liquidation while acting in the capacity of a member of the administrative, management or supervisory body or senior management of any company; (c) been subject to any official public incrimination and/or sanction by statutory or regulatory authorities (including designated professional bodies); (d) been disqualified by a court from acting as a member of the administrative, management or supervisory bodies of any issuer or from acting in the management or conduct of the affairs of any issuer; (e) been a partner in a partnership which, while he was a partner or within 12 months of his ceasing to be a partner, was put into compulsory liquidation or administration or which entered into any partnership or voluntary arrangement, or had a receiver appointed over any partnership asset;

79 (f) had a receiver appointed with respect to any assets belonging to him; or (g) has been a director of a company which has been placed in receivership, compulsory liquidation, creditors’ voluntary liquidation or administration or which entered into any company voluntary arrangement or any composition or arrangement with its creditors generally or any class of creditors, at any time during which he was a director of that company or within 12 months after his ceasing to be a director.

6. Conflicts of Interest In respect of any Director, there are no actual or potential conflicts of interests between any duties he has to New Melrose or the Melrose Group, either in respect of the Proposals or otherwise, and the private interests and/or other duties they may also have. No Director has or has had any interest in the Proposal which is or was unusual in its nature or conditions or which is or was significant to the business of the Melrose Group and which was effected by the Melrose Group during the current or immediately preceding financial year or during an earlier financial year and which remains in any respect outstanding or unperformed. No Director has, or had during the year ended 31 December 2014, a material interest in any significant contract with New Melrose, Old Melrose or any member of the Melrose Group. None of the Directors was selected to be a Director pursuant to any arrangement or understanding with any major customer, supplier or other person having a business connection with the Melrose Group. There are no family relationships between any of the Directors.

7. Directorships and Partnerships Save as set out below, no Director has held any directorships of any company, other than in relation to companies in the Melrose Group, or been a partner in a partnership at any time in the five years prior to the date of this Prospectus.

Director Current appointments Former appointments Christopher Miller ...... — Gordon House Investor LLP TMO Renewables Limited David Roper ...... — — Simon Peckham ...... Eland Homes Limited — Geoffrey Martin ...... — — Perry Crosthwaite ...... Investec Plc Toluna Group Limited Investec Limited Jupiter Green Investment Investec Bank Plc Trust PLC Investec Capital and Investments (Ireland) Limited Investec Holdings (Ireland) Limited Nordoff-Robbins Music Therapy 606 Club LLP

80 Director Current appointments Former appointments John Grant ...... Augean PLC Cirrus Logic International (UK) BRDC Race Limited Limited British Racing Drivers Club Gas Turbine Efficiency Limited Limited MCT Mitchell Cotts Limited Eclipse Film Partners No. 5 LLP Silverstone Racing Limited Francis Packaging Limited Surion Energy Limited MHP S.A Torotrak Plc Pace Plc WDS Components Limited Second Northern Film Touch Bionics Limited Partnership Wolfson Microelectronics plc Shemtec Packaging Limited Silverstone Circuits Limited Silverstone Club Limited Silverstone College of Motorsport Limited Silverstone Estates Limited Silverstone Grand Prix Limited Silverstone Heritage Limited Silverstone Holdings Limited Silverstone Innovation Centre Limited Silverstone Leisurewear Limited Silverstone Racing School Limited The Magenta Film Partnership Touch Bionics Limited Justin Dowley ...... Callerheugh Limited Ascot Authority (Holdings) Claridge Partners Limited Limited Independent Port Handling Burnham Overy Boathouse Limited Limited Intermediate Capital Group plc Greenhouse Sports Limited L.J and E.L Dowley Farming Tricorn Corporate Member Partnership Limited MCC Overseas Limited National Crime Agency New Schools Network Novae Group plc Old Bailey 2005 LLP Reform Topco Limited Scottish Mortgage Investment Trust plc Tillmouth & Tweed Salmon Fishings LLP Elizabeth Hewitt ...... Novo Nordisk A/S Cancer Research UK Savills PLC Synergy Health PLC Silverwood Property Limited

81 PART IX ADDITIONAL INFORMATION 1. Responsibility 1.1 New Melrose and the Directors, whose names appear at paragraph 1 of Part VIII (Directors, Corporate Governance and Employees) of this Prospectus, accept responsibility for the information contained in this Prospectus. To the best of the knowledge of New Melrose and the Directors (having taken all reasonable care to ensure that such is the case), the information contained in this Prospectus is in accordance with the facts and contains no omission that is likely to affect its import. 1.2 Deloitte LLP, whose registered address is at 2 New Street Square, London EC4A 3BZ and who is a member of the Institute of Chartered Accountants in England and Wales, accepts responsibility for its report on pro forma financial information set out in Part VI (Unaudited Pro Forma Information on the Melrose Group) of this Prospectus. To the best of the knowledge of Deloitte LLP (having taken all reasonable care to ensure that such is the case), the information contained in that report is in accordance with the facts and contains no omissions likely to affect its import.

2. Corporate History 2.1 New Melrose was incorporated in England and Wales on 29 September 2015 under the Companies Act as a public company limited by shares with registration number 9800044 and with the name New Melrose Industries PLC. 2.2 The liability of the members of New Melrose is limited. 2.3 New Melrose is domiciled in the United Kingdom and its registered office is at 11th Floor, Colmore Plaza, 20 Colmore Circus Queensway, Birmingham, B4 6AT. New Melrose’s principal place of business is at Leconfield House, Curzon Street, London W1J 5JA (tel. no. +44 (0)20 7647 4500). 2.4 On 1 October 2015, New Melrose was granted a certificate under section 761 of the Companies Act entitling it to commence business. New Melrose has not traded since incorporation. 2.5 The principal legislation under which New Melrose operates, and pursuant to which the share capital of New Melrose has been created, is the Companies Act and regulations made thereunder.

3. Share Capital

3.1 The share capital history of New Melrose is as follows: 3.1.1 on incorporation the share capital of New Melrose was £1 comprising 1 Subscriber Share of £1, held by the Initial Subscriber and with the following rights: (a) the Subscriber Share is a separate and distinct class of share in the capital of New Melrose to any other shares subsequently issued and allotted by New Melrose (including, for the avoidance of doubt, any other ordinary shares and/or any preference shares); (b) the Subscriber Share has a nominal value of £1 and was issued at a premium of £49; (c) the holder of the Subscriber Share is entitled to receive notice of and to attend and vote at any general meeting of New Melrose; and (d) for as long as the Subscriber Share is the only ordinary share of New Melrose in issue, the Subscriber Share shall carry a right to: (i) participate in a return of capital on a liquidation or otherwise of the assets of New Melrose available for distribution among New Melrose’s members; and (ii) receive, out of the profits of New Melrose available for distribution and resolved to be distributed, a dividend, apportioned and paid proportionately to the amounts paid up on the Subscriber Share. If there are any other ordinary shares of New Melrose in issue, the Subscriber Share shall not carry a right to be paid a dividend and, on a winding up, after the distribution of the first £10,000,000,000 of the assets of New Melrose to the holders of the other ordinary shares, the Subscriber Share shall carry a right to receive an amount equal to the nominal value of the Subscriber Share; and

82 3.1.2 on 1 October 2015, New Melrose issued 50,000 Redeemable Preference Shares of £1 each, paid up in full, to Shield Trust Limited with the following rights: (a) the Redeemable Preference Shares have a nominal value of £1 per Redeemable Preference Share; (b) on a return of capital on a liquidation or otherwise, the assets of New Melrose available for distribution among the members will be applied first in repaying to the holders of Redeemable Preference Shares the amounts paid up on such Redeemable Preference Shares together with all accrued but unpaid dividends. Save as aforesaid, the Redeemable Preference Shares do not carry any other right to participate in profits or assets of New Melrose; (c) the holders of Redeemable Preference Shares are not entitled to receive notice of or to attend or vote at any general meeting of New Melrose unless a resolution to wind up New Melrose or to vary, modify or abrogate the rights attaching to the Redeemable Preference Shares proposed; (d) the Redeemable Preference Shares carry a right to receive, out of the profits of New Melrose available for distribution and resolved to be distributed, a fixed non-cumulative preferential (that is, in priority to the other shares of New Melrose in issue from time to time) dividend per cent. per annum on the amounts paid up, accruing with effect from the date of issue; (e) New Melrose may redeem the Redeemable Preference Shares at any time at the discretion of the Directors or, at the request of the holders of the Redeemable Preference Shares, following any reduction of capital of New Melrose becoming effective. Upon any such redemption, New Melrose shall pay to the holder the nominal amount paid up on such shares together with, in the case of any such redemption occurring on or after 1 January 2016, accrued but unpaid dividends; and (f) the Redeemable Preference Shares may only be transferred with the consent of the Board. 3.2 As at the date of this Prospectus, the Initial Subscriber holds the Subscriber Share. It is expected that the Subscriber Share will be cancelled as part of the Initial Reduction of Capital. 3.3 As at the date of this Prospectus, Shield Trust Limited holds 50,000 Redeemable Preference Shares of £1 each. It is expected that the Redeemable Preference Shares will be redeemed for the amount paid up shortly after the Initial Reduction of Capital. 3.4 As at the Latest Practicable Date, the issued share capital of New Melrose is, and immediately prior to the implementation of the Scheme will be, as follows:

Nominal value Class £ Number per share Subscriber Share ...... 1 1 £1 Redeemable Preference Shares ...... 50,000 50,000 £1 3.5 The Old Melrose Board has granted 47,375 options in respect of Old Melrose 2012 Incentive Shares (including 34,000 to Directors as set out at paragraph 1.2 to Part VIII (Directors, Corporate Governance and Employees) of this Prospectus). The rights and restrictions attaching to the Old Melrose 2012 Incentive Options are set out at paragraph 13 (Options over New Melrose 2012 Incentive Shares) of Part XIII (Additional Information) of the Old Melrose Prospectus, which is incorporated into this Prospectus by reference. Options over Old Melrose 2012 Incentive Shares will, in accordance with their terms, be automatically exchanged for options over New Melrose 2012 Incentive Shares on a one-for-one basis upon the Scheme becoming effective on substantially the same terms and economic basis as the existing options and upon such exchange taking effect the existing options will lapse. The terms of the New Melrose 2012 Incentive Options are set out in paragraph 14 (Options over New Melrose 2012 Incentive Shares) of this Part IX.

83 3.6 On 2 October 2015, resolutions were passed at a general meeting of New Melrose to the effect that: 3.6.1 in accordance with section 551 of the Companies Act, the Directors of New Melrose be and are generally and unconditionally authorised to allot shares in New Melrose, or to grant rights to subscribe for or to convert any security into shares in New Melrose (‘‘Rights’’): (a) up to an aggregate nominal amount of £1,000,000,000, provided that this authority is limited to the allotment of shares in New Melrose in connection with the Scheme (and is in addition to the authorities described in sub-paragraph (b), (c) and (d) of this paragraph 3.6.1)); (b) up to an aggregate nominal amount of £2,500,000,000, provided that this authority is limited to the allotment of B Shares in connection with the Proposed Return of Capital (and is in addition to the authorities described in sub-paragraph (a), (c) and (d) of this paragraph 3.6.1); (c) up to an aggregate nominal amount of £3,317,356.55 (such amount representing approximately one-third of the total issued ordinary share capital of New Melrose immediately after the Initial Reduction of Capital); and (d) comprising equity securities (as defined in section 560 of the Companies Act) up to an aggregate nominal amount of £6,634,713.10 (such nominal amount representing approximately two-thirds of the total issued ordinary share capital of New Melrose immediately after the Initial Reduction of Capital, such amount to be reduced by the aggregate nominal amount of any allotments or grants made under the authority described in sub-paragraph (c) of this paragraph 3.6.1) in connection with an offer by way of a rights issue: (i) to holders of New Melrose Ordinary Shares in proportion (as nearly as may be practicable) to their existing holdings; and (ii) to holders of other equity securities as required by the rights of those securities or, subject to such rights, as the Directors of New Melrose otherwise consider necessary, and so that the Directors of New Melrose may impose any limits or restrictions and make any arrangements which they consider necessary or appropriate to deal with treasury shares, fractional entitlements, record dates, legal, regulatory or practical problems in, or under the laws of, any territory or any other matter, such authorities granted pursuant to paragraphs (a), (c) and (d) to expire at the conclusion of New Melrose’s first annual general meeting after this resolution is passed or, if earlier, at the close of business on 30 June 2016 and the authority granted pursuant to paragraph (b) to expire (unless previously revoked, varied or renewed) at the close of business on 1 September 2016, but, in each case, so that New Melrose may make offers or agreements before the authority expires which would or might require shares to be allotted or rights to be granted after the authority expires, and so that the Directors of New Melrose may allot shares or grant Rights in pursuance of any such offer or agreement notwithstanding that the authority conferred by this resolution has expired; 3.6.2 the Directors of New Melrose: (a) be and are generally and unconditionally authorised in accordance with section 551 of the Companies Act to allot shares in New Melrose or grant Rights up to an aggregate nominal amount of £50,000, provided that the authority conferred is limited to the allotment of or grant of rights to subscribe for, or convert into, New Melrose 2012 Incentive Shares and shall expire at the close of business on the date which is five years from the date this resolution is passed (or if such day is not a Business Day, the preceding Business Day), but so that New Melrose may make offers or agreements before the authority expires which would or might require New Melrose 2012 Incentive Shares to be allotted or rights to subscribe for, or convert into, New Melrose 2012 Incentive Shares to be granted after the authority expires, and so that the Directors of New Melrose may allot New Melrose 2012 Incentive Shares or grant rights under any such offer or agreement notwithstanding that the authority conferred by this resolution has expired; and

84 (b) be and are generally empowered pursuant to section 571 of the Companies Act to allot equity securities (as defined in section 560 of the Companies Act) for cash pursuant to the authority described in sub-paragraph (a) of this paragraph 3.6.2 as if section 561 of the Companies Act did not apply to any such allotment, provided that this power: (i) shall be limited to allotments of equity securities in connection with the New Melrose 2012 Incentive Shares up to an aggregate amount of £50,000; and (ii) shall expire at the close of business on the date which is five years from the date this resolution is passed (or if such day is not a Business Day, the preceding Business Day), but so that New Melrose may make offers or agreements before the authority expires which would or might require New Melrose 2012 Incentive Shares to be allotted or rights to subscribe for, or convert into, New Melrose 2012 Incentive Shares to be granted after the authority expires, and so that the Directors of New Melrose may allot New Melrose 2012 Incentive Shares or grant rights under any such offer or agreement notwithstanding that the authority conferred by this resolution has expired; 3.6.3 subject to and conditional upon: (i) the resolution in paragraph 3.6.1 having been passed; (ii) the New Melrose Ordinary Shares required to be allotted and issued by New Melrose pursuant to the Scheme having been allotted and issued to the persons entitled to such New Melrose Ordinary Shares; and (iii) the Scheme becoming effective, (a) the nominal value of each New Melrose Ordinary Share be reduced to 1 penny; and (b) the Subscriber Share be cancelled and extinguished; 3.6.4 subject to and conditional upon: (i) the resolution in paragraph 3.6.1 having been passed; (ii) the New Melrose Ordinary Shares required to be allotted and issued by New Melrose pursuant to the Scheme having been allotted and issued to the persons entitled to such New Melrose Ordinary Shares; (iii) the Scheme becoming effective; and (iv) the Disposal having completed, the Directors of New Melrose be and are authorised to capitalise a sum not exceeding £2,500,000,000 standing to the credit of New Melrose’s merger reserve, and to apply such sum in paying up in full B Shares in New Melrose and to allot such B Shares credited as fully paid up to the holders of New Melrose Ordinary Shares pro rata to their holdings, as at a record time and date to be determined by the Board (or a duly appointed committee thereof), provided that this authority shall expire (unless previously revoked, varied or renewed) at the close of business on 30 September 2016); 3.6.5 subject to and conditional upon: (i) the resolution in paragraph 3.6.1 having been passed; (ii) the New Melrose Ordinary Shares required to be allotted and issued by New Melrose pursuant to the Scheme having been allotted and issued to the persons entitled to such New Melrose Ordinary Shares; (iii) the Scheme becoming effective; (iv) the Disposal having completed; (v) the B Shares having been allotted and issued to the persons entitled to such B Shares in accordance with the resolution described in 3.6.4; and (vi) Directors having so resolved, the B Shares be and are cancelled and extinguished in return for a payment by New Melrose to each holder of a B Share, as shown in the register of members of New Melrose at a record date and time to be determined by the Board (or a duly appointed committee thereof), of an amount equal to the nominal value of such B Share; 3.6.6 subject to and conditional upon the cancellation of the B Shares pursuant to the authority granted in paragraph 3.6.5 having taken place, in respect of each holding of New Melrose Ordinary Shares as shown in the register of members of New Melrose at a record date and time to be determined by the Board (or a duly appointed committee thereof), each New Melrose Ordinary Share be either, at the discretion of the Board (or a duly appointed committee thereof): (i) consolidated into such number of ordinary shares in the capital of New Melrose of such nominal value as is determined by the Board (or a duly appointed committee thereof), prior to the date of the Proposed Return of Capital; or (ii) sub-divided into such number of ordinary shares in the capital of New Melrose of such nominal value as is determined by the Board (or a duly appointed committee thereof), prior to the date of the Proposed Return of Capital and forthwith upon such sub-division the ordinary shares in the capital of New Melrose be consolidated into such number of ordinary shares in the capital of New Melrose of such nominal value as is determined by the Board (or a duly appointed committee thereof), prior to

85 the date of the Proposed Return of Capital, provided that no Shareholder shall be entitled to a fraction of an ordinary share in the capital of New Melrose and all fractional entitlements arising out of the consolidation shall be aggregated into new ordinary shares in the capital of New Melrose and the new ordinary shares so arising sold and the net proceeds of sale be donated to charities chosen by the Board (or a duly appointed committee thereof); 3.6.7 subject to and conditional upon the resolution described in paragraph 3.6.1 having been passed, the Directors of New Melrose be and are generally empowered to allot equity securities (as defined in section 560 of the Companies Act) pursuant to the authorities granted by the resolution described in paragraph 3.6.1 above as if section 561 of the Companies Act did not apply to any such allotment, provided that this power shall be limited: (a) to the allotment of equity securities in connection with an offer of equity securities (but in the case of an allotment pursuant to the authority described in sub-paragraph (d) of the resolution described in paragraph 3.6.1 above, such power shall be limited to the allotment of equity securities in connection with an offer by way of a rights issue only): (i) to New Melrose Ordinary Shareholders in proportion (as nearly as may be practicable) to their existing holdings; and (ii) to holders of other equity securities, as required by the rights of those securities or, subject to such rights, as the Directors of New Melrose otherwise consider necessary, and so that the Directors of New Melrose may impose any limits or restrictions and make any arrangements which they consider necessary or appropriate to deal with treasury shares, fractional entitlements, record dates, legal, regulatory or practical problems in, or under the laws of, any territory or any other matter; and (b) to the allotment (otherwise than in the circumstances set out in paragraph (a) above) of equity securities pursuant to the authority granted by sub-paragraph (c) of the resolution described in paragraph 3.6.1 above up to a nominal amount of £995,206.96 such amount representing approximately ten per cent. of the total issued ordinary share capital of New Melrose immediately after the Initial Reduction of Capital), such power to expire at the conclusion of New Melrose’s first annual general meeting after this resolution is passed or, if earlier, at the close of business on 30 June 2016, but, in each case, so that New Melrose may make offers or agreements before the power expires which would or might require equity securities to be allotted after the power expires, and so that the Directors of New Melrose may allot equity securities in pursuance of any such offer or agreement notwithstanding that the authority conferred by this resolution has expired. 3.6.8 New Melrose be and is generally and unconditionally authorised to make one or more market purchases (within the meaning of section 693 of the Companies Act) of New Melrose Ordinary Shares provided that: (a) the maximum aggregate number of New Melrose Ordinary Shares authorised to be purchased is 99,520,696 (representing approximately 10 per cent. of the expected issued ordinary share capital of New Melrose upon the Effective Date); (b) the minimum price which may be paid for a New Melrose Ordinary Share shall not be less than the nominal value of a New Melrose Ordinary Share at the time of such purchase; (c) the maximum price which may be paid for a New Melrose Ordinary Share is not more than the higher of: (i) 105 per cent. of the average of the middle market quotation for a New Melrose Ordinary Share as derived from the Daily Official List of the London Stock Exchange for the five Business Days immediately preceding the day on which the New Melrose Ordinary Share is purchased; and (ii) the higher of the price of the last independent trade and the highest current independent bid on the trading venue where the purchase is carried out, in each case, exclusive of expenses;

86 (d) this authority shall expire at the conclusion of New Melrose’s first annual general meeting after this resolution is passed or, if earlier, at the close of business on 30 June 2016; (e) New Melrose may make a contract to purchase New Melrose Ordinary Shares under this authority which would or might be executed wholly or partly after the expiry of this authority, and may make a purchase of New Melrose Ordinary Shares in pursuance of any such contract; and (f) any New Melrose Ordinary Shares purchased pursuant to this authority may either be held as treasury shares or cancelled by New Melrose, depending on which course of action is considered by the New Directors to be in the best interests of Shareholders at the time; and 3.6.9 that a general meeting, other than an annual general meeting, of New Melrose may be called on not less than 14 clear days’ notice. 3.7 Save as disclosed in this paragraph 3, as at the date of this Prospectus: 3.7.1 there has been no issue of shares or loan capital of New Melrose since its incorporation; and 3.7.2 no share or loan capital of New Melrose is under option or agreed to be put under option. 3.8 As at the date of this Prospectus, New Melrose has no subsidiaries and, accordingly, there has been no material issue of share or loan capital by any subsidiary undertaking of New Melrose for cash or other consideration. 3.9 As at the date of this Prospectus, New Melrose does not hold any New Melrose Ordinary Shares in treasury. 3.10 The Directors of New Melrose have no present intention to make any allotments pursuant to the authority contemplated in the resolutions described in paragraph 3.6.1(c) or (d) above. 3.11 The Board shall not proceed with the Proposed Return of Capital pursuant to the resolutions described in paragraphs 3.6.4 and 3.6.5 above if they no longer believe it to be in the best interests of the Shareholders of New Melrose as a whole to proceed. 3.12 The Directors intend to adhere to the guidelines set out in the Pre-Emption Group’s Statement of Principles (as updated in March 2015) and not to allot shares for cash on a non-pre-emptive basis pursuant to the authority in the resolutions described in paragraph 3.6.7: 3.12.1 in excess of an amount equal to 5 per cent. of the issued ordinary share capital of New Melrose; or 3.12.2 in excess of an amount equal to 7.5 per cent. of the issued ordinary share capital of New Melrose in a rolling three-year period, in each case other than in connection with an acquisition or specified capital investment which is announced contemporaneously with the allotment or which has taken place in the preceding six-month period and is disclosed in the announcement of the allotment. 3.13 Following the Proposed Return of Capital (including the Share Capital Consolidation), the Directors shall only exercise the authority described in paragraph 3.6.8 in relation to a maximum aggregate number of ordinary shares in New Melrose representing 10 per cent. of the issued ordinary share capital of New Melrose following such Share Capital Consolidation. 3.14 The New Melrose Ordinary Shares will, when issued, be in registered form and will be capable of being held in uncertificated form and title to such shares may be transferred by means of a relevant system (as defined in the Regulations). No temporary documents of title have been or will be issued in respect of the New Melrose Ordinary Shares. 3.15 The New Melrose Ordinary Shares have not been marketed and are not available in whole or in part to the public otherwise than pursuant to the Scheme. 3.16 No commissions, discounts, brokerages or other special terms have been granted in respect of the issue of any share capital of New Melrose.

87 3.17 The Redeemable Preference Shares and the Subscriber Share are, and the B Shares will, when issued, be, in registered form but are not and will not be listed or traded. The Redeemable Preference Shares and B Shares carry limited rights to vote. 3.18 Under the Scheme, New Melrose will issue New Melrose Ordinary Shares, credited as fully paid, to persons who are, at the Scheme Record Time, Old Melrose Ordinary Shareholders on the basis of 1 New Melrose Ordinary Share for every 1 Old Melrose Ordinary Share held at the Scheme Record Time. 3.19 Application will be made for the New Melrose 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 19 November 2015. New Melrose will apply for the New Melrose Ordinary Shares to be admitted to CREST with effect from Admission so that general market transactions in the New Melrose Ordinary Shares may be settled within the CREST system. 3.20 The legislation under which the New Melrose Ordinary Shares, the New Melrose 2012 Incentive Shares and the B Shares will be created is the Companies Act and regulations made under the Companies Act. When issued, the New Melrose Ordinary Shares, the New Melrose 2012 Incentive Shares and the B Shares will be denominated in pounds sterling. The ISIN of the New Melrose Ordinary Shares is GB00BYRJP462.

4. Articles of Association The rights attaching to the New Melrose Ordinary Shares will be substantially the same as those attaching to the Old Melrose Ordinary Shares. The rights relating to the New Melrose 2012 Incentive Shares have been amended to ensure that such shares are on the same economic basis as the Old Melrose 2012 Incentive Shares and therefore apply to Melrose PLC prior to 27 November 2012, Old Melrose on and after 27 November 2012 and prior to the Effective Date, and New Melrose on and after the Effective Date. The New Melrose Articles have also been amended to: (a) include a description of the rights of the B Shares; and (b) ensure the rights attaching to the New Melrose 2012 Incentive Shares take account of both the Old Scheme and the Scheme. The following is a summary of the rights and restrictions attaching to the New Melrose Ordinary Shares, and the New Melrose 2012 Incentive Shares, which are more fully set out in the New Melrose Articles.

4.1 Voting rights 4.1.1 Subject to any special rights or restrictions as to voting attached to any class of shares by or in accordance with the New Melrose Articles, at a general meeting every New Melrose Ordinary Shareholder present in person or by proxy has on a show of hands one vote and every New Melrose Ordinary Shareholder present in person or by proxy has on a poll one vote for every share of which he is the holder. In the case of joint holders, the vote of the person whose name stands first in the register of members and who tenders a vote is accepted to the exclusion of any votes tendered by any other joint holders. 4.1.2 The holders of New Melrose 2012 Incentive Shares have the right to receive notice of and to attend general meetings of New Melrose, but do not have the right to vote thereat. 4.1.3 The holders of B Shares do not have the right to receive notice of, attend or vote at general meetings for New Melrose, other than in the circumstances described in paragraph 4.9.

4.2 Dividends 4.2.1 Subject to the New Melrose Articles and the Companies Act, New Melrose may by ordinary resolution declare a dividend to be paid to the New Melrose Ordinary Shareholders according to their respective rights and interests, but no dividend may exceed the amount recommended by the New Melrose Board. The New Melrose Board may declare and pay such interim dividends as appear to it to be justified by the profits of New Melrose available for distribution. 4.2.2 The New Melrose 2012 Incentive Shares and B Shares do not confer a right to be paid a dividend save (in the case of the New Melrose 2012 Incentive Shares) as set out in paragraph 4.4 below.

88 4.2.3 Except as otherwise provided by the rights attached to shares, a dividend shall be declared and paid according to the amounts paid up on the shares in respect of which the dividend is declared and paid, but no amount paid up on a share in advance of a call may be treated for these purposes as paid up on the share. Dividends shall be apportioned and paid proportionately to the amounts paid up on the shares during any portion or portions of the period in respect of which the dividend is paid. 4.2.4 Except as otherwise provided by the rights attached to shares, dividends may be declared or paid in any currency and, with the prior authority of an ordinary resolution of New Melrose, payment of a dividend may be satisfied wholly or in part by the distribution of assets in specie. 4.2.5 A dividend unclaimed for a period of 12 years from the date it was declared or became due for payment is forfeited and ceases to remain owing by New Melrose.

4.3 Return of Capital 4.3.1 On a voluntary winding up of New Melrose the liquidator may, on obtaining any sanction required by law, divide among the members in kind the whole or any part of the assets of New Melrose, whether or not the assets consist of property of one kind or of different kinds and vest the whole or any part of the assets in trustees upon such trusts for the benefit of the members. For such purpose the liquidator may set the value he deems fair on a class or classes of property, and may determine on the basis of that valuation and in accordance with the then existing rights of members how the division is to be carried out between members or classes of members. The liquidator may not, however, distribute to a member without his consent an asset to which there is attached a liability or potential liability for the owner. 4.3.2 On a return of capital on winding up (but not otherwise), the holders of New Melrose 2012 Incentive Shares shall be entitled to participate in New Melrose’s assets available for distribution in accordance with paragraph 4.4.14 below and the holders of B Shares shall be entitled to participate in New Melrose’s assets available for distribution in accordance with paragraph 4.9 below.

4.4 Further rights attaching to New Melrose 2012 Incentive Shares 4.4.1 (a) The holders of the New Melrose 2012 Incentive Shares shall, not later than 20 Business Days after the trigger date, be paid a dividend which shall be equal to such amount per New Melrose 2012 Incentive Share (the ‘‘Dividend Amount’’) as equals the Conversion Number (as determined in accordance with paragraph 4.4.3 for the trigger date, except that if the Conversion Number is a fraction it shall not be rounded up) multiplied by SP (as determined in accordance with paragraph 4.4.3). To the extent that a dividend is paid in respect of New Melrose 2012 Incentive Shares in accordance with this paragraph 4.4.1(a), those shares shall, with effect from the payment date, be re-designated, and in any event shall have the same rights (and no other rights), as non-voting deferred shares, having the rights set out in paragraph 4.4.11. (b) Prior to the trigger date, the Remuneration Committee of the New Melrose Board may in its absolute discretion determine that the Dividend Amount to be paid on the New Melrose 2012 Incentive Shares should be reduced in whole or in part. If the Dividend Amount is reduced in whole, the New Melrose 2012 Incentive Shares shall be converted in accordance with the remaining provisions of this paragraph 4.4. If the Dividend Amount is reduced in part the New Melrose 2012 Incentive Shares shall be converted in accordance with the remaining provisions of this paragraph 4.4 save that the Conversion Number shall be reduced to reflect the amount of the dividend per share to be paid. New Melrose shall serve a notice on the holders of such New Melrose 2012 Incentive Shares (a ‘‘conversion notice’’) informing such holders of the determination by the Remuneration Committee of the New Melrose Board and such notice shall be served within five Business Days of such determination. (c) If New Melrose is unable (for whatever reason) to pay the full amount of the dividend which is due as provided for in paragraph 4.4.1(a) or paragraph 4.4.1(b) or if New Melrose decides not to pay such a dividend or if the Remuneration Committee of the New Melrose Board determines in accordance with paragraph 4.4.1(b) that the New Melrose 2012

89 Incentive Shares should be converted but New Melrose fails to convert the New Melrose 2012 Incentive Shares in accordance with paragraph 4.4.1(b) and the remaining provisions of this paragraph 4.4, then New Melrose shall procure that such New Melrose 2012 Incentive Shares shall be purchased, not later than 25 Business Days after the trigger date, by an employee benefit trust nominated by New Melrose for a consideration per New Melrose 2012 Incentive Share equal to the Dividend Amount (as defined in paragraph 4.4.1(a)), failing which New Melrose shall redeem such New Melrose 2012 Incentive Shares, not later than 25 Business Days after the trigger date, for a redemption payment per New Melrose 2012 Incentive Share equal to the Dividend Amount (the Dividend Amount, in each case, to be reduced by the amount of any dividend actually paid on the New Melrose 2012 Incentive Shares in accordance with paragraph 4.4.1(b)). 4.4.2 If a conversion notice is served in accordance with paragraph 4.4.1(b), or pursuant to paragraph 4.4.13 or paragraph 4.4.14, on conversion each New Melrose 2012 Incentive Share shall convert into such number of fully paid ordinary shares as equals the Conversion Number (save where a dividend has been paid on the New Melrose 2012 Incentive Shares in accordance with paragraph 4.4.1(b) in which case the Conversion Number shall be reduced to reflect the amount of any dividend per share actually paid). 4.4.3 Subject to paragraph 4.4.7 and paragraph 4.4.13 and subject always to adjustment in accordance with paragraph 4.4.15 and/or paragraph 4.4.16, the ‘‘Conversion Number’’ equals:

7.5 1 [(SP N)IC] 100 SP NBS Where: N = the number of ordinary shares in issue on the relevant trigger date. NBS = 50,000. SP = the price certified by Investec (or other brokers for the time being of New Melrose) to be the average closing middle market quotation (in pounds sterling) of an ordinary share in the capital of New Melrose as derived from the Daily Official List for the 40 Business Days prior to the trigger date. IC = the invested capital (in pounds sterling), relating to the ordinary shares of Melrose PLC, Old Melrose or New Melrose, as the case may be, being the sum of the Indexed Capital for each month in which there is either an Ordinary Share Cost or a return from (and including) March 2012 (and for these purposes the Ordinary Share Cost for March 2012 shall be £1,518,492,691, being the deemed market capitalisation of Melrose PLC as at 21 March 2012 based on the average closing middle market quotation (in pounds sterling) of an ordinary share in the capital of Melrose PLC as derived from the Daily Official List for the 40 Business Days up to an including 21 March 2012). and where: (i) the ‘‘Indexed Capital’’ for a month means the Net Capital for that month multiplied by the relevant Index Adjustment for the period from the commencement of that month until the commencement of the month in which the trigger date falls. (ii) the ‘‘Net Capital’’ for a month means the Ordinary Share Cost in that month or the Returns in that month or, in the event that there are both, the net amount of Ordinary Share Cost minus Returns, and which for the avoidance of doubt may be zero or a negative number. (iii) ‘‘Ordinary Share Cost’’ means the total amount (in pounds sterling) paid up (as to nominal value and any premium) on any allotment of ordinary shares of Melrose PLC (prior to 27 November 2012), Old Melrose (on or after 27 November 2012 and prior to the Effective Date) or of New Melrose (on or after the Effective Date) in the period (excluding the ordinary shares of, Melrose PLC, Old Melrose or New Melrose issued or to be issued pursuant to the Old Scheme or the Scheme), provided that (I) if any part of such amount

90 paid up on any ordinary share in Melrose PLC, Old Melrose or New Melrose, as the case may be, is paid up otherwise than in cash the amount paid up on that share shall be deemed to be the price certified by Investec (or other broker for the time being of New Melrose) to be the average closing middle market quotation (in pounds sterling) of an ordinary share in Old Melrose or New Melrose, as the case may be, as derived from the Daily Official List for the 10 Business Days from and including the date on which the new ordinary shares are admitted to trading, and (II) if any ordinary shares in Melrose PLC, Old Melrose or New Melrose, as the case may be, shall be allotted credited as fully paid by way of capitalisation of profits or reserves, the amount paid up on such shares shall be excluded from the calculation of Ordinary Share Cost. (iv) ‘‘Returns’’ means the sum of any dividends or distributions of any kind paid or made on or in respect of the ordinary shares of Melrose PLC (prior to 27 November 2012), Old Melrose (on or after 27 November 2012 and prior to the Effective Date) or of New Melrose (on or after the Effective Date), including (I) a purchase of any of Melrose PLC’s (prior to 27 November 2012), Old Melrose’s (on or after 27 November 2012 and prior to the Effective Date) or of New Melrose’s (on or after the Effective Date) own shares (whether or not out of the proceeds of any fresh issue of shares or out of unrealised profits), (II) a reduction of share capital by repaying paid up share capital, and (III) any other returns of capital in the period, whether in cash or otherwise and however described, excluding: (a) any issue of shares credited as fully paid to shareholders by way of capitalisation of profits or reserves which is to be, or may at the election of the shareholders be, issued instead of the whole or any part of a cash dividend which the shareholders concerned would or could otherwise have received; and (b) any issue of shares credited as fully paid to the shareholders (or as they may direct) by way of capitalisation of profits or reserves (including any share premium account or capital redemption reserve). (v) ‘‘Index Adjustment’’ = t 12 12 RPI t 2 + 0.02 RPI1 23SEP201519331441 Where:

RPI1 is the RPI for the month immediately preceding the start of the period referred to in (i) above (rounded to one decimal place).

RPI2 is the RPI for the month immediately preceding the end of the period referred to in (i) above (or, if that has not been published by the close of business on the trigger date, then the RPI for the latest month for which the RPI has been published) (rounded to one decimal place).

‘‘t’’ is the number of months between the two months used to determine RPI1 and RPI2 (and for the avoidance of doubt, there are 12 months between the same months in consecutive years). ‘‘RPI’’ means the UK Retail Prices Index (all items) published by the Office for National Statistics (or any successor Government department) (January 1987 = 100) or any index which may replace the RPI, as selected by the Remuneration Committee. References to a month are to a calendar month. For the avoidance of doubt, where ‘‘IC’’ is a negative number, the formula in this paragraph 4.4.3 shall continue to be applicable. In the event that the calculation in this paragraph 4.4.3 results in a Conversion Number being less than one, the Conversion Number for the purposes of these paragraphs shall be one.

91 The Conversion Number multiplied by NBS shall not exceed the sum of (i) 5 per cent. of the aggregate number of ordinary shares in Melrose PLC in issue on 22 March 2012, being 390,961,043, plus (ii) 5 per cent. of any additional ordinary shares issued or created by Melrose PLC or Old Melrose after 22 March 2012 and prior to the Effective Date or by New Melrose on or after the Effective Date (but in each case excluding the ordinary shares in Melrose PLC, Old Melrose or New Melrose to be issued pursuant to the Old Scheme or the Scheme) (the ‘‘Cap’’). 4.4.4 In this paragraph 4.4, the ‘‘trigger date’’ is (except where paragraph 4.4.13 or paragraph 4.4.14 applies) 31 May 2017. If, however, New Melrose’s annual accounts for its preceding financial period (or where applicable a summary financial statement derived from the annual accounts) have (or has) not been published by 31 March 2017, the trigger date is two months after the date on which the annual accounts (or where applicable the summary financial statement) are (or is) so published. If New Melrose shall change its accounting reference date from 31 December, there shall be substituted for the said 31 May 2017 the date which is five months after the new accounting date. Other than pursuant to paragraph 4.4.13 and paragraph 4.4.14 the trigger date as calculated in accordance with this paragraph 4.4.4 shall not be prior to 31 May 2017. 4.4.5 The ordinary shares to which a holder is entitled on conversion shall not rank for any dividends or other distributions paid or made on ordinary shares prior to the relevant trigger date but shall rank for any paid or made thereafter, and subject thereto they shall rank pari passu in all respects and form one class with the ordinary shares then in issue. 4.4.6 If a conversion notice is served in accordance with paragraph 4.4.1(b), within 20 Business Days after the trigger date (the ‘‘conversion date’’), the New Melrose Board shall convert the New Melrose 2012 Incentive Shares into the ordinary shares and deferred shares (if any) arising on conversion and, as soon as reasonably practicable thereafter, shall issue to the holders of such ordinary shares without charge certificates for the ordinary shares and deferred shares (if any). In the meantime, transfers of ordinary shares shall be certified against the register. 4.4.7 Except for the purposes of paragraph 4.4.1(a), where the Conversion Number is a fraction, the Conversion Number shall be rounded up to the nearest whole number provided that where a holder of New Melrose 2012 Incentive Shares converts more than one New Melrose 2012 Incentive Share at the same time, then for the purposes of determining the number of ordinary shares to which a holder is entitled and whether (and if so what) fraction of an ordinary share arises, the number of ordinary shares arising on the conversion of New Melrose 2012 Incentive Shares by any one holder shall first be aggregated. 4.4.8 Where a block admission arrangement is in place with a relevant investment exchange, New Melrose will use its best endeavours to procure that the aggregate Conversion Number of ordinary shares shall, upon conversion, be admitted to the relevant investment exchange. Where a block admission arrangement is not in place or is insufficient to deal with the aggregate Conversion Number, New Melrose will apply for admission to the relevant investment exchange for that number of ordinary shares for which there are insufficient ordinary shares available under a block admission arrangement to satisfy the aggregate Conversion Number. New Melrose shall prepare and use its best endeavours to issue any listing particulars and other documents that may be required to be issued in respect of any ordinary shares arising on conversion pursuant to the rules of any relevant investment exchange. 4.4.9 The New Melrose Board may in its absolute discretion from time to time decide the manner in which New Melrose 2012 Incentive Shares are to be converted, subject to the provisions of the New Melrose Articles and the Companies Act, and for the avoidance of doubt may decide to effect conversion of New Melrose 2012 Incentive Shares partly in one manner and partly in another. 4.4.10 Without prejudice to paragraph 4.4.9, the New Melrose Board may, pursuant to the authority given by the adoption of the New Melrose Articles and without the requirement for any further resolution of New Melrose or of the holders of any class of shares, elect to effect conversion, in whole or in part, by sub-division, in which case each New Melrose 2012 Incentive Share to be

92 converted shall, pursuant to the authority granted by the adoption of the New Melrose Articles, be sub-divided and re-designated into: (i) such number of ordinary shares of the same nominal amount as the ordinary shares of New Melrose at such time as the New Melrose Board determines, equal to (or no greater than) the Conversion Number; and (ii) a non-voting Deferred Share with a nominal value equal to the balance of such share, having the rights set out in paragraph 4.4.11 (a ‘‘Deferred Share’’ and, together, the ‘‘Deferred Shares’’). 4.4.11 The Deferred Shares shall not confer the right to be paid a dividend or to receive notice of or to attend or vote at a general meeting. On a winding-up, after the distribution of the first £10 billion of the assets in accordance with paragraph 4.3.2, the holders of the Deferred Shares (if any) shall be entitled to receive an amount equal to the nominal value of such Deferred Shares pro rata to their respective holdings. The Deferred Shares shall not, save as referred to in this paragraph 4.4.11, be transferable. Conversion of a New Melrose 2012 Incentive Share is deemed to confer irrevocable authority on the New Melrose Board at any time to do all or any of the following without obtaining the sanction of the holder of any or all of the Deferred Shares: (i) to appoint a person to execute on behalf of each holder of Deferred Shares an instrument of transfer for or an agreement to transfer (or both) all or some of the Deferred Shares, without making a payment to the holder, to such person as the New Melrose Board may decide, as custodian; (ii) to purchase all or some of the Deferred Shares (subject to the provisions of the Companies Act) for a price of 1 penny for all the Deferred Shares purchased, without obtaining the sanction of the holder; (iii) for the purposes of any such purchase, to appoint any person to execute on behalf of the holder of Deferred Shares a contract for the sale to New Melrose of any such Deferred Shares by him or her; and (iv) to cancel all or any of the same so purchased in accordance with the Companies Act. Pending the transfer or purchase New Melrose may retain the certificates for the Deferred Shares. 4.4.12 Without prejudice to paragraph 4.4.9, and notwithstanding the provisions of the New Melrose Articles, the New Melrose Board may without the requirement for any further resolution of New Melrose or of the holders of any class of shares, (I) elect to effect conversion, in whole or in part, by way of the capitalisation of profits or reserves (including a share premium account, capital redemption reserve and profit and loss account), whether or not available for distribution, and/or (II) appropriate the sum to be capitalised to any one or more holders of New Melrose 2012 Incentive Shares and whether or not in proportion to the nominal amounts of shares held by them, and apply that sum on such holders’ behalf in or towards paying up in full unissued ordinary shares of a nominal amount equal to that sum, and to allot the shares to such holders or as they may direct. Immediately upon such allotment, the New Melrose 2012 Incentive Shares to be converted at any one time and held by such holder shall, if conversion is effected in whole pursuant to this paragraph 4.4.12, pursuant to the authority given by the adoption of the New Melrose Articles and without the requirement for any further resolution of New Melrose, be re-designated as non-voting Deferred Shares having the rights set out in paragraph 4.4.11. 4.4.13 If, prior to the payment of the dividend provided for in paragraph 4.4.1(a) and paragraph 4.4.1(b), the conversion of the New Melrose 2012 Incentive Shares into ordinary shares pursuant to paragraph 4.4.1(b) or the purchase or redemption of the New Melrose 2012 Incentive Shares pursuant to paragraph 4.4.1(c), as the case may be, New Melrose becomes aware that, as a result of an offer made to all holders of ordinary shares (or all holders of ordinary shares other than the offeror and any associates of the offeror, as defined in section 988 of the Companies Act) to acquire all or some of the ordinary shares (including any such offer implemented by way of a court approved scheme of arrangement under Part 26 of the Companies Act) the right to cast more than 50 per cent. of the votes that may ordinarily be cast on a poll at a general meeting has or will become vested in the offeror and those associates,

93 New Melrose shall give notice to all holders of New Melrose 2012 Incentive Shares forthwith upon it becoming so aware. Subject to paragraph 4.6.3, the New Melrose 2012 Incentive Shares shall convert on the third day following the date of the notice in accordance with this paragraph 4.4 except that for such purposes the ‘‘trigger date’’ shall be the date of, but immediately prior to, the change of control of New Melrose (the ‘‘Change of Control’’) and ‘‘SP’’ shall be the offer price as calculated on the date of the Change of Control. In the event that part or all of the offer price is not in cash, the Remuneration Committee shall determine the value of the non-cash element, having been advised by an investment bank of repute that such valuation is fair and reasonable. For the avoidance of doubt, any offer so made (including any offer implemented by way of a court-approved scheme of arrangement under Part 26 of the Companies Act) which results in New Melrose being controlled by a new company (‘‘New Company’’) in which at least 90 per cent. of the shares in the New Company are held by substantially the same persons who immediately before the offer was made were shareholders in New Melrose shall not constitute a Change of Control of New Melrose and no ‘‘trigger date’’ shall be deemed to have occurred provided that the New Melrose 2012 Incentive Shares have been exchanged or are exchangeable for new incentive shares in the New Company on substantially the same terms as the New Melrose 2012 Incentive Shares. 4.4.14 If, prior to the payment of the dividend provided for in paragraph 4.4.1(a) and paragraph 4.4.1(b), the conversion of the New Melrose 2012 Incentive Shares into ordinary shares pursuant to paragraph 4.4.1(b) or the purchase or redemption of the New Melrose 2012 Incentive Shares pursuant to paragraph 4.4.1(c), as the case may be, either (I) a resolution for voluntary winding-up of New Melrose is passed or (II) a winding-up order is made by the court in relation to New Melrose, subject to paragraph 4.6.3, the New Melrose 2012 Incentive Shares shall be treated as if they had converted in accordance with this paragraph 4.4 on the date of, and with effect immediately prior to, the resolution for the voluntary winding-up of New Melrose being passed or the date of the winding-up order being made, as the case may be (in either case, the ‘‘operative date’’) except that for such purposes the ‘‘trigger date’’ shall be the operative date. In that event, the holder thereof shall be entitled to be paid, in satisfaction of the amount due in respect of his New Melrose 2012 Incentive Shares, a sum equal to the amount to which he would have been entitled on a return of capital on a winding-up if he had been the holder of the ordinary shares to which he would have become entitled on such conversion. 4.4.15 If a doubt or dispute arises concerning the calculation of the Conversion Number or any component part of the formulae for calculating the Conversion Number, the New Melrose Board shall refer the matter to the auditors and their certificate as to such calculation shall be conclusive and binding on all concerned. 4.4.16 In the event that any provision (or combination of provisions) in this paragraph 4.4 or any future change to the capital structure of New Melrose produces, or is likely to produce, a Conversion Number which appears to the Remuneration Committee to be an anomalous result or there shall be quantified material information known to the Remuneration Committee in relation to the current financial position of New Melrose that is not in the public domain that would, in the reasonable opinion of the Remuneration Committee, produce an anomalous result if such information were in the public domain, the Remuneration Committee may make such adjustments to the method of calculating the Conversion Number as it considers appropriate to ensure that conversion is fair and reasonable, and as an investment bank of repute shall have confirmed in writing to be fair and reasonable so far as the ordinary shareholders are concerned.

4.5 Permitted Transfer of New Melrose 2012 Incentive Shares 4.5.1 Subject to paragraph 4.5.2, the holders of New Melrose 2012 Incentive Shares may not transfer, charge, encumber, grant any option over or otherwise dispose of any New Melrose 2012 Incentive Share or any interest therein. 4.5.2 A holder of a New Melrose 2012 Incentive Share may at any time transfer a New Melrose 2012 Incentive Share: (a) with the prior written consent of the New Melrose Board (and where such consent is given in relation to a transfer to the trustees of a trust of which the only beneficiaries (and the

94 only people capable of being beneficiaries) are the holder of the New Melrose 2012 Incentive Shares who established the trust and who is transferring the relevant shares; and/or his spouse; and/or his lineal descendants by blood or adoption, such transferees being ‘‘permitted transferees’’); or (b) when required by paragraph 4.5.3 or paragraph 4.6.2. 4.5.3 If a transferee of any shares under paragraph 4.5.2 shall at any time cease to be a permitted transferee in relation to the original holder of the relevant New Melrose 2012 Incentive Shares (the ‘‘relevant shares’’), it shall be the duty of the trustees and/or the person holding the relevant shares to notify the New Melrose Board in writing that such event has occurred and the trustees and/or the person shall be bound to execute a stock transfer form and to do such other things as may be necessary to transfer the relevant shares at the price per relevant share (if any) for which they were acquired, to the original holder (who shall be bound to acquire the relevant shares) and, if they or he fails to do so, the Directors may authorise any Director to execute any stock transfer form and to do such other things as may be necessary or desirable to transfer the relevant shares on behalf of the trustees and/or the person holding the relevant shares pursuant to this paragraph 4.5.3. 4.5.4 The New Melrose Board may require from any person lodging a share transfer such information and evidence as the New Melrose Board thinks fit regarding any matter which they may reasonably deem relevant for the purposes of paragraph 4.5.2 and may refuse to register the relevant transfer until they have received information and evidence satisfactory to them. 4.6 Compulsory transfer or conversion If the holder of any New Melrose 2012 Incentive Shares or the original holder of any New Melrose 2012 Incentive Shares transferred pursuant to paragraph 4.5, if an employee of New Melrose or any of its subsidiary undertakings, ceases to be an employee, if a Director of New Melrose, ceases to be a Director, and if an employee and Director, ceases to be both, in each case other than by reason of death, permanent ill health, permanent disability, his resignation in connection with a Change of Control, or the termination of his employment or directorship without cause, he shall be deemed to be a ‘‘bad leaver’’. If the holder of any New Melrose 2012 Incentive Shares or the original holder of any New Melrose 2012 Incentive Shares transferred pursuant to paragraph 4.5, if an employee of New Melrose or any of its subsidiary undertakings, ceases to be an employee, if a Director of New Melrose, ceases to be a Director, and if an employee and Director, ceases to be both, and such person is not a bad leaver, he shall be deemed to be a ‘‘good leaver’’. 4.6.1 Unless the Remuneration Committee of the New Melrose Board shall in its absolute discretion determine otherwise, if the holder of any New Melrose 2012 Incentive Shares or the original holder of any New Melrose 2012 Incentive Shares transferred pursuant to paragraph 4.5 becomes a bad leaver then the provisions of paragraph 4.6.1 to paragraph 4.6.3 shall apply in respect of: (a) the bad leaver; and (b) any permitted transferee of such bad leaver and any subsequent transferee of such shares (together the ‘‘compulsory transferors’’). 4.6.2 Each New Melrose 2012 Incentive Share held by the compulsory transferors shall within the period of 20 Business Days following the bad leaver ceasing to be an employee or Director, be transferred to the trustees of an employee share ownership plan trust, or such person as the New Melrose Board may direct, at a price per share equal to the lower of the nominal value per New Melrose 2012 Incentive Share and the closing middle market quotation of an ordinary share in the capital of New Melrose as derived from the Daily Official List on the Business Day prior to the transfer, and the compulsory transferors shall be bound to execute a stock transfer form and to do such other things as may be necessary to transfer the relevant shares and if they fail to do so, the Directors may authorise any Director to execute any stock transfer form and to do such other things as may be necessary or desirable to transfer the relevant shares on behalf of the compulsory transferors.

95 4.6.3 Following a cessation of employment or directorship causing this paragraph 4.6 to apply to particular New Melrose 2012 Incentive Shares, those New Melrose 2012 Incentive Shares may not be transferred pursuant to paragraph 4.5.2(a). In the event of a Change of Control between the date of cessation of employment or Directorship and the relevant transfer date in paragraph 4.6.2, those New Melrose 2012 Incentive Shares shall convert in accordance with paragraph 4.4.13 except that each such New Melrose 2012 Incentive Share shall convert into one fully paid ordinary share and one fully paid deferred share with a nominal value equal to the balance of the nominal value of the New Melrose 2012 Incentive Share (the ‘‘bad leaver conversion rate’’). In the event of either (I) a resolution for a voluntary winding-up of New Melrose being passed or (II) a winding-up order being made by the court in relation to New Melrose, in either case between the date of cessation of employment or Directorship and the relevant transfer date in paragraph 4.6.2, those New Melrose 2012 Incentive Shares shall convert in accordance with paragraph 4.4.14 except that each such New Melrose 2012 Incentive Share will convert in accordance with the bad leaver conversion rate. 4.6.4 Save in circumstances where a holder of New Melrose 2012 Incentive Shares becomes a good leaver as a result of his resignation in connection with a Change of Control, the Remuneration Committee of the New Melrose Board may, in its absolute discretion, require that a good leaver and any person to whom such good leaver has transferred New Melrose 2012 Incentive Shares pursuant to paragraph 4.5 and any subsequent transferee of such shares shall be deemed to be a compulsory transferor and that the provisions of paragraph 4.6.2 shall apply to such good leaver or transferee as the case may be, in respect of some or all of the Unvested Portion of the New Melrose 2012 Incentive Shares held by such good leaver, as they apply to a bad leaver. Any determination by the Remuneration Committee of the New Melrose Board in accordance with paragraph 4.6.4 shall be notified to such good leaver within three months of such person becoming a good leaver. For the purposes of this paragraph 4.6.4, ‘‘Unvested Portion’’ shall mean the product of (i) the number of full calendar months remaining from the date on which a holder of New Melrose 2012 Incentive Shares becomes a good leaver up to 31 May 2017 divided by 62 and (ii) the total number of New Melrose 2012 Incentive Shares held by such good leaver; rounded up to the nearest whole number of New Melrose 2012 Incentive Shares; save that, in the case of a good leaver who first became, or becomes, entitled to become a holder of 2012 incentive shares of £1 each in the capital of Melrose PLC (‘‘Melrose PLC 2012 Incentive Shares’’) or Old Melrose 2012 Incentive Shares or New Melrose 2012 Incentive Shares more than six weeks after 11 April 2012 (other than pursuant to the exchange of options over Melrose PLC 2012 Incentive Shares for options over Old Melrose 2012 Incentive Shares as a result of the Old Scheme or pursuant to the exchange of options over Old Melrose 2012 Incentive Shares for options over New Melrose 2012 Incentive Shares as a result of the Scheme) the Unvested Portion shall be the total number of New Melrose 2012 Incentive Shares held by such good leaver. 4.7 Restrictions If New Melrose 2012 Incentive Shares remain capable of being converted into ordinary shares, New Melrose shall not, except with the consent in writing of the holders of at least three-fourths of the nominal amount of the New Melrose 2012 Incentive Shares then in issue or with the sanction of a special resolution passed at a separate meeting of the holders of New Melrose 2012 Incentive Shares then in issue validly held in accordance with the provisions of the New Melrose Articles (i) create, allot or issue any further New Melrose 2012 Incentive Shares in the capital of New Melrose; or (ii) pass a resolution varying any of the special rights attached to the New Melrose 2012 Incentive Shares. 4.8 Rights attaching to B Shares The B Shares shall confer no right to participate in the profits of New Melrose. On a return of capital on winding up (but not otherwise), the holders of the B Shares shall be entitled, in priority to any payment to the holders of New Melrose Ordinary Shares, to an amount per B Share held by them equal to the nominal capital paid up or credited as paid up on such B Share. The holders of

96 the B Shares shall not be entitled to any further right of participation in the assets of New Melrose. The holders of the B Shares do not have the right to receive notice of, attend or vote at a general meeting of New Melrose unless the business of the meeting includes the consideration of a resolution for the winding up of New Melrose, in which case the holders of the B Shares have the right to attend such meeting and vote only on such resolution. 4.9 Transfer of Shares 4.9.1 Shares issued by New Melrose in certificated form may be transferred by an instrument of transfer in writing in any usual form, or in such other form as the New Melrose Board may approve. The instrument of transfer shall be executed by or on behalf of the transferor and, in the case of a transfer of a share that is not fully paid, by or on behalf of the transferee. 4.9.2 In exceptional circumstances, approved by any relevant investment exchange, the New Melrose Board may refuse to register the transfer of certificated shares provided that such refusal would not disturb the market in those shares. Subject to the requirements of any relevant investment exchange, the New Melrose Board may, in its absolute discretion refuse to register any transfer of a certificated share which is not fully paid or the transfer of a certificated share on which New Melrose has a lien. Subject to the requirements of any relevant investment exchange, the New Melrose Board may also, in its absolute discretion, refuse to register the transfer of a certificated share or a renunciation of a renounceable letter of allotment unless: (a) it is only in respect of one class of shares; (b) it is in favour of a single transferee or renouncee or not more than four joint transferees or renouncees; (c) it is duly stamped (if required); and (d) it is delivered for registration to the registered office or such other place as the New Melrose Board may decide, accompanied by the certificate for the shares to which it relates (except where the shares are transferred by a recognised financial institution and no certificates have been issued for them or in the case of a renunciation) and such other evidence as the New Melrose Board may reasonably require to prove title of the transferor or the person renouncing and due execution by him of the transfer or renunciation. If the New Melrose Board refuses to register the transfer of a certificated share it shall, as soon as reasonably practicable, send notice of such refusal to the transferee together with its reasons for the refusal. 4.9.3 Shares issued by New Melrose in uncertificated form may be transferred in accordance with the CREST Regulations. The Directors may refuse to register a transfer of a share in uncertificated form in any case where New Melrose is entitled to refuse (or is expected from the requirement) under the CREST Regulations to register the transfer. 4.10 Changes in Capital and Purchase of Own Shares 4.10.1 New Melrose may at any time by way of ordinary resolution: (a) consolidate and divide all or any of its share capital into shares of a larger amount; (b) subject to the Companies Act, subdivide all or part of its share capital into shares of a smaller amount and may determine that the shares resulting from the sub-division have among themselves such preferred, deferred or other special rights or advantages or be subject to any such restrictions as New Melrose has power to attach to unissued or new shares; (c) cancel any shares which, at the date of the ordinary resolution, have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled; and (d) increase its share capital.

97 4.10.2 Subject to the Companies Act and to the rights attached to existing shares, New Melrose may: (a) subject to the requirements of any relevant investment exchange, purchase, or agree to purchase in the future, its own shares; and (b) by special resolution, reduce its share capital, capital redemption reserve, share premium account or other undistributable reserve in any way. 4.11 Variation of Rights Subject to the Companies Act, all or any of the rights for the time being attached to any class of shares may be varied or abrogated either with the consent in writing of the holders of at least three- fourths in nominal amount of the issued shares of that class or with the sanction of a special resolution passed at a separate meeting of the holders of the issued shares of that class validly held in accordance with the New Melrose Articles. The rights attached to a class of shares are not, unless otherwise expressly provided for in the rights attaching to those shares, deemed to be varied by the creation, allotment or issue of further shares ranking in priority to, pari passu with or subsequent to them or by the purchase or redemption by New Melrose of its own shares in accordance with the Companies Act and the New Melrose Articles. 4.12 Constitution of the New Melrose Board There is no age limit for Directors of New Melrose. The Directors of New Melrose must not, unless otherwise determined by an ordinary resolution of New Melrose, be less than two. A Director of New Melrose need not be a member of New Melrose. 4.13 Directors’ remuneration, pensions and benefits 4.13.1 The Directors of New Melrose shall be paid such aggregate amount of fees for their services as Directors as the New Melrose Board decides (or such other aggregate amount as New Melrose may by ordinary resolution decide). The aggregate fees shall be divided among the Directors in such proportions as the New Melrose Board decides or, if no decision is made, equally. Subject to the Companies Act, the requirements of any relevant investment exchange and the New Melrose Articles, the New Melrose Board may arrange for part of a fee payable to a Director to be provided in the form of fully-paid shares in the capital of New Melrose. 4.13.2 The Directors are entitled to be repaid all reasonable travelling, hotel and other expenses properly incurred by them in the performance of their duties as directors including expenses incurred in attending meetings of the New Melrose Board or of Committees of the New Melrose Board or general meetings or separate meetings of the holders of a class of shares of New Melrose. 4.13.3 In addition, the New Melrose Board may decide to pay a Director who, at the request of the New Melrose Board, goes or resides abroad, makes a special journey or performs a special service on behalf of New Melrose, such reasonable additional remuneration (whether by way of salary or otherwise) and expenses as the New Melrose Board may decide. 4.13.4 The salary or other remuneration of a Director appointed to hold employment or executive office in accordance with the New Melrose Articles may be a fixed sum of money, or wholly or in part governed by business done or profits made, or as otherwise decided by the New Melrose Board, and may be in addition to or instead of a fee payable to him for his services as director pursuant to the New Melrose Articles. 4.13.5 The New Melrose Board may exercise all the powers of New Melrose to provide pensions or other retirement or superannuation benefits and to provide death or disability benefits or other allowances or gratuities to a person who is or has at any time been a director of: (a) New Melrose or any company which is or was a subsidiary undertaking of New Melrose; (b) any company allied to or associated with New Melrose or a subsidiary undertaking of New Melrose; or

98 (c) a predecessor in business of New Melrose or of a subsidiary undertaking of New Melrose, or any member of his family or his dependants. For this purpose the New Melrose Board may establish, maintain, subscribe and contribute to any scheme, trust or fund and pay premiums. 4.14 Directors’ retirement At each annual general meeting of New Melrose each director then in office shall retire from office with effect from the conclusion of the meeting. A retiring director shall be eligible for re-election, and a director who is re-elected will be treated as continuing in office without a break. A retiring director who is not re-elected shall retain office until the close of the meeting at which he retires. 4.15 Directors’ interests in contracts Subject to the Companies Act and provided he has disclosed to the New Melrose Board the nature and extent of any direct or indirect interest of his, a Director of New Melrose, notwithstanding his office: 4.15.1 may enter into or otherwise be interested in a contract, arrangement, transaction or proposal with New Melrose or in which New Melrose is otherwise interested either in connection with his tenure of an office or place of profit or as seller, buyer or otherwise; 4.15.2 may hold another office with New Melrose (except that of auditor or auditor of a subsidiary of New Melrose) in conjunction with the office of Director and may act by himself or through his firm in a professional capacity to New Melrose, and in that case on such terms as to remuneration and otherwise as the New Melrose Board may decide either in addition to or instead of the remuneration described in paragraph 4.9 above; 4.15.3 may be a Director or other officer of, or employed by, or a party to a contract, transaction, arrangement or proposal with or otherwise interested in, a company promoted by New Melrose or in which New Melrose is otherwise interested or as regards which New Melrose has a power of appointment; and 4.15.4 is not liable to account to New Melrose for a profit, remuneration or other benefit realised by such contract, arrangement, transaction, proposal, office or employment and no such contract, arrangement, transaction or proposal is avoided on the grounds of any such interest or benefit. 4.16 Restrictions on voting by Directors 4.16.1 A Director of New Melrose may not vote or be counted in the quorum in respect of any contract, arrangement, transaction or proposal to which New Melrose is or is to be a party and in which he has an interest which is, to his knowledge, a material interest (otherwise than by virtue of his interest in shares or debentures or other securities of or otherwise in or through New Melrose). Notwithstanding the above, a Director shall be entitled to vote on: (a) the giving of a guarantee, security or indemnity in respect of money lent or obligations incurred by him or by any other person at the request of, or for the benefit of, New Melrose or any of its subsidiary undertakings; (b) the giving of a guarantee, security or indemnity in respect of a debt or obligation of New Melrose or any of its subsidiary undertakings for which he himself has assumed responsibility under a guarantee or indemnity or by the giving of security; (c) any contract, arrangement, transaction or proposal concerning an offer of shares, debentures or other securities of New Melrose or any of its subsidiary undertakings for subscription or purchase in respect of which he is or may be entitled to participate as a holder of any such securities or in the underwriting or sub-underwriting of which he is to participate; (d) any contract, an arrangement, transaction or proposal to which New Melrose is or is to be a party concerning another company (including a subsidiary undertaking of New Melrose) in which he is interested (directly or indirectly) if he does not to his knowledge hold an interest in shares (within the meaning of sections 820 to 825 of the Companies Act) representing one per cent. or more of any class of the equity share capital of such company or of the voting rights of that company;

99 (e) any contract, arrangement, transaction or proposal for the benefit of employees of New Melrose or any of its subsidiary undertakings which does not award him a privilege or benefit not generally awarded to the employees to whom it relates; and (f) any contract, arrangement, transaction or proposal concerning the purchase or maintenance of an insurance policy under which he may benefit. 4.16.2 A Director shall not vote or be counted in the quorum at a meeting of the Directors or Committee meeting in respect of any resolution concerning his own appointment (including fixing and varying the terms of his appointment or its termination), as the holder of any office or place of profit with New Melrose or any other company in which New Melrose is interested. 4.17 Borrowing powers The New Melrose Board may exercise all the powers of New Melrose to borrow money and to mortgage or charge all or part of the undertaking, property and assets (present or future) and uncalled capital of New Melrose and, subject to the Companies Act and all other relevant legislation, to issue debentures and other securities whether outright or as collateral security for a debt, liability or obligation of New Melrose or a third party. There is no limit on the amount of borrowings. 4.18 Disclosure Where there is a default in supplying information required by a notice served under section 793 of the Companies Act, the New Melrose Articles provide for voting and related rights to be restricted in relation to the relevant shares and, where the relevant shares represent 0.25 per cent. or more in nominal value of the issued shares of the relevant class, the right to receive dividends to be withheld. 4.19 General Meetings The New Melrose Board may call general meetings whenever it thinks fit and immediately on receipt of a requisition of members pursuant to the Companies Act. Unless consent to short notice is obtained in accordance with the provisions of the Companies Act, an annual general meeting shall be called by at least 21 clear days’ notice. All other general meetings shall be called by at least 14 clear days’ notice. A notice of meeting shall be given to each member of New Melrose (other than any who, under the New Melrose Articles or the terms of an allotment or issue of shares, is not entitled to receive notice), to the Directors and to New Melrose’s auditors. Holders of New Melrose 2012 Incentive Shares shall have a right to receive notice of, and to attend, general meetings of New Melrose, but shall have no right to vote thereat. No business shall be transacted at any general meeting unless a quorum is present. Two ‘‘qualifying persons’’ present and entitled to vote shall be a quorum, where ‘‘qualifying persons’’ includes proxies and corporate representatives. The absence of a quorum does not prevent appointment of a chairman in accordance with the New Melrose Articles, which shall not be treated as part of the business of the meeting. The New Melrose Board may make any arrangement and impose any restriction it considers appropriate to ensure the security of a meeting of New Melrose including, without limitation, the searching of a person attending the meeting and the restriction of the items of personal property that may be taken into a meeting. A Director or the secretary of New Melrose may refuse entry to a meeting to any person who refuses to comply with any such arrangements and eject from a meeting any person who causes the proceedings to become disorderly. Each Director shall be entitled to attend and speak at a general meeting and at a separate meeting of the holders of a class of shares or debentures in New Melrose, whether or not he is a member. The chairman may invite any person to attend and speak at any general meeting of New Melrose where he considers that this will assist in the deliberations of the meeting. The Directors may decide in advance of any general meeting that some or all of the resolutions to be put to the vote at a general meeting will be decided on a poll.

100 At a general meeting, a resolution put to the vote of the meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands), a poll is demanded by the chairman of the meeting; or not less than five members present in person or by proxy and entitled to vote at the meeting; or a member or members present in person or by proxy and representing in aggregate not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or a member or members present in person or by proxy holding shares conferring a right to vote at the meeting, being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right. Members present by proxy shall have the right to speak and to vote on a show of hands. On a poll votes may be given in person or by proxy and a member entitled to more than one vote need not, if he votes, use all his votes or cast all the votes he uses in the same way. A person appointed to act as a proxy need not be a member of New Melrose. Members may appoint more than one proxy, provided that each proxy is appointed to exercise the rights attached to different shares. A company which is a member of New Melrose may, by resolution of its directors or other governing body, authorise one or more persons to act as its representative at a meeting of New Melrose or at a separate meeting of the holders of a class of shares. The person so authorised is entitled to exercise on behalf of the company which he represents (in respect of that part of the company’s holding of shares to which the authorisation relates) those powers that the company could exercise if it were an individual member. The company is for the purposes of the New Melrose Articles deemed to be present in person at a meeting if a representative is present. Such representative may be required to produce a certified copy of the resolution of authorisation before permitting him to exercise his powers. The above is a summary only of certain provisions of the New Melrose Articles. Copies of the New Melrose Articles are available for inspection in the manner specified in paragraph 18 below.

5. Major Interests in Shares 5.1 So far as New Melrose is aware, as at the Latest Practicable Date, the following persons (other than the Directors) hold voting rights, whether directly or indirectly of (and/or holdings, whether direct or indirect, of certain financial instruments which give the holder an unconditional right or a right exercisable in his sole discretion to acquire) three per cent. or more of the ordinary issued share capital of Old Melrose:

Approximate Number of percentage of Old Melrose Old Melrose Ordinary issued share Shareholder Shares(1) capital BlackRock, Inc...... 104,103,286 9.71% Aberdeen Asset Managers Limited ...... 53,456,498 4.99% Schroders plc ...... 46,308,210 4.32%

Note: (1) Where the holding of Old Melrose Ordinary Shares has not been re-notified to Old Melrose since the share capital consolidation became effective on 20 February 2015, the number of Old Melrose Ordinary Shares is as notified to Old Melrose prior to this consolidation. 5.2 Save as set out in paragraph 5.1, above, New Melrose is not aware of any person who holds, voting rights, whether directly or indirectly (and/or holdings, whether direct or indirect, of certain financial instruments which give the holder an unconditional right or a right exercisable in his sole discretion to acquire), three per cent. or more of the ordinary issued share capital of Old Melrose. 5.3 None of the persons referred to in paragraphs 5.1 above has or will have different voting rights from any other holder of Old Melrose Ordinary Shares or New Melrose Ordinary Shares. 5.4 As at the Latest Practicable Date, New Melrose is not aware of any person who, directly or indirectly could exercise control over Old Melrose (prior to the Scheme becoming effective) or, immediately following Admission, over New Melrose.

101 6. Property The following properties are the principal properties occupied by the Melrose Group:

UK Location Division Tenure Use Leconfield House, Curzon Street, Group Leasehold Offices London W1J 5JA 11th Floor, Colmore Plaza, 20 Group Leasehold Offices Colmore Circus Queensway, Birmingham B4 6AT Falcon Works, Nottingham Road, Brush Turbogenerators Freehold Manufacturing Loughborough, Leicestershire LE11 1EX Newport Road, Blackwood, Gwent Switchgear Leasehold Manufacturing NP12 2XH 121 and 130 Camford Way, Luton, Elster Group Leasehold Research, Design & Development, Bedfordshire, LU3 3AN(1) Production, Administration

Europe Location Division Tenure Use Edvarda Beneˇse 39/564, Plzen, Brush Turbogenerators Freehold Manufacturing Czech Republic, 301 00. Ringdijk, 390B, Ridderkerk, Brush Turbogenerators Freehold Manufacturing Netherland, 2983GS, The Netherlands 194 Nam.´ Dr. A. Schweitzera, Stara´ Elster Group Freehold Production, Storage, Office Space, Tu ra,´ 91601, Slovakia(1) Research, Design & Development Strotheweg 1, Lotte-Buren,¨ 49504, Elster Group Freehold Research, Design & Development, Germany(1) Production, Distribution, Administration Steinern Strasse 19-21, Mainz- Elster Group Freehold Research, Design & Development, Kastel, 55252, Germany(1) Production, Distribution, Administration Timi¸soara Airport Park, Timi¸s Elster Group Leasehold Manufacturing, Design, Sales County, Romania(1)

Asia Location Division Tenure Use No. 8, Changhong Road, Changshu Brush Turbogenerators Leasehold Manufacturing Economic Development Zone, Jiangsu Province, Peoples Republic of China, 215500

North America Location Division Tenure Use 601 Braddock Ave, Turtle Creek, Brush Turbogenerators Leasehold Manufacturing PA 15145, USA 201, 208 & 409 South Rogers Lane, Elster Group Leasehold Engineering Raleigh, North Carolina, 27610, USA(1) 2221 Industrial Road, Nebraska Elster Group Freehold and Manufacturing City, Nebraska, 68410, USA(1) Leasehold 436 North Eagle Street, Geneva, Elster Group Freehold Manufacturing Ohio, 44041, USA(1) 1665 Elmwood Road, Rockford, Elster Group Freehold Manufacturing Illinois, 61103, USA(1)

102 South America Location Division Tenure Use 944 Av. Lincoln dos Santos, Elster Group Freehold Production & Foundry, Distrito Industrial, Montes Claros, Administration 39.404-005, Brazil(1) 477 Rua Marcos Wainstein, Elster Group Leasehold Production & Administration Cachoerinha RS, 94.930-360, Brazil(1) 125 and 145 Parque Industrial Tres Elster Group Leasehold Manufacturing Naciones Zona Industrial Del Potosi, Circuito Mexico, San Luis Potosi, Mexico, 78395(1)

Note: (1) Elster Group properties all owned by companies included within the Disposal. 6.1 New Melrose is not aware of any material environmental issues which may affect the Melrose Group’s utilisation of its major real estate holdings and leases.

7. Subsidiaries 7.1 Old Melrose currently acts as the holding company of the Melrose Group. Upon the Scheme becoming effective, New Melrose will become the holding company of the Melrose Group (including Old Melrose). The Melrose Group’s stated strategy is to acquire companies and businesses whose operational performance the Directors believe can be improved to create shareholder value. Further details are set out in paragraph 2 of Part II (Information on Old Melrose and New Melrose) of this Prospectus. 7.2 The significant subsidiary undertakings of the Melrose Group following the implementation of the Scheme (other than Old Melrose) are set out in the table below. The proportion of share capital indicated in each of these companies is directly or indirectly owned by Old Melrose (and will on the

103 Scheme becoming effective be directly or indirectly owned by New Melrose). The issued share capital of each company is fully paid.

Proportion of share capital owned by Incorporated and the Melrose Group Name of subsidiary registered in (per cent.) Energy Brush Electrical Machines Limited ...... Great Britain 100 Brush HMA B.V...... Netherlands 100 Brush SEM s.r.o...... Czech Republic 100 Brush Transformers Limited ...... Great Britain 100 Harrington Generators International Limited ...... Great Britain 100 Hawker Siddeley Switchgear Limited ...... Great Britain 100 Generator & Motor Services of Pennsylvania LLC ...... USA 100 Group Melrose PLC ...... Great Britain 100 FKI Limited ...... Great Britain 100 FKI Engineering Limited ...... Great Britain 100 Precision House Management Services Limited ...... Great Britain 100 Elster Group(1) Elster American Meter Company, LLC ...... USA 100(1) Elster Perfection Corporation ...... USA 100(1) Elster N.V./S.A...... Belgium 100(1) Elster GmbH ...... Germany 100(1) Elster S.A.S ...... France 100(1) OOO Elster Gaselectronica ...... Russia 100(1) Elster Metering Limited ...... Great Britain 100(1) Hauck Manufacturing Company Inc...... USA 100(1) Eclipse, Inc...... USA 100(1) Elster Solutions LLC ...... USA 100(1) Elster Solutions GmbH ...... Germany 100(1) Elster Medi¸cao˜ de Energ´ıa Ltda...... Brazil 100(1) Elster AMCO Water LLC ...... USA 100(1) Elster Metering Pty Ltd ...... Australia 100(1) Elster Messtechnik GmbH ...... Germany 100(1) Elster s.r.o...... Slovakia 100(1) Elster Group GmbH ...... Germany 100(1) Elster Holdings Netherlands B.V...... Netherlands 100(1) Elster Holdings US, Inc...... USA 100(1) Elster Solutions Limited...... Great Britain 100(1) Elster Water Metering Holdings Limited ...... Great Britain 100(1)

Note: (1) Elster Group subsidiaries to be transferred to Honeywell International Inc. conditional and effective upon completion of the Disposal.

104 7.3 Set out below are details of undertakings in which Old Melrose has a direct or indirect participating interest and where that participating interest generates at least 10 per cent. of the consolidated headline operating profit of the Melrose Group.

Proportion of share capital owned by Incorporated and the Melrose Group Name of subsidiary registered in Principal activity (per cent.) Elster s.r.o. Slovakia Gas measurement and 100(1) control/Electricity company Elster American Meter USA Gas measurement and 100(1) Company LLC control/Electricity company Elster GmbH Germany Gas measurement and 100(1) control/Electricity company

Note: (1) Elster subsidiaries to be transferred to Honeywell International Inc. conditional and effective upon completion of the Disposal. 7.4 There are no undertakings in the Melrose Group that individually own net assets that exceed 10 per cent. of the net assets of the Melrose Group.

8. Takeover Bids The City Code on Takeovers and Mergers (the ‘‘City Code’’) is issued and administered by The Panel on Takeovers and Mergers (the ‘‘Takeover Panel’’). Following the Effective Date, New Melrose will be subject to the City Code and therefore its Shareholders are entitled to the protections afforded by the City Code. 8.1 Mandatory bids Rule 9 of the City Code provides that, except with the consent of the Takeover Panel, when: (a) any person acquires, whether by a series of transactions over a period of time or not, an interest in shares which (taken together with shares in which persons acting in concert with him are interested) carry 30 per cent. or more of the voting rights of a company; or (b) any person, together with persons acting in concert with him, is interested in shares which in the aggregate carry not less than 30 per cent. of the voting rights of a company but does not hold shares carrying more than 50 per cent. of such voting rights and such person, or any person acting in concert with him, acquires an interest in any other shares of that company which increases the percentage of shares carrying voting rights in which he is interested, then, in either case, that person (and possibly each of the principal members of a group of persons acting in concert with him) is normally required to extend offers in cash, or accompanied by a cash alternative, at the highest price paid by him (or any persons acting in concert with him) for shares of that company within the preceding 12 months, to the holders of any class of equity share capital whether voting or non-voting and also to the holders of any other class of transferable securities carrying voting rights. If any person, together with persons acting in concert with him, is interested in shares which in the aggregate carry more than 50 per cent. of the voting rights of a company, such person, or any person acting in concert with him, may acquire further interests in shares of that company without incurring any obligation under Rule 9 of the City Code to extend any offers. 8.2 Squeeze out Under the Companies Act, if a ‘‘takeover offer’’ (as defined in section 974 of the Companies Act) is made for the New Melrose Ordinary Shares and the offeror were to acquire, or unconditionally contract to acquire, not less than 90 per cent. in value of the shares to which the takeover offer relates (the ‘‘Takeover Offer Shares’’) and not less than 90 per cent. of the voting rights attached to the Takeover Offer Shares within three months of the last day on which its offer can be accepted, it could acquire compulsorily the remaining 10 per cent. It would do so by sending a notice to outstanding shareholders telling them that it will acquire compulsorily their Takeover Offer Shares and then, six weeks later, it would execute a transfer of the outstanding Takeover Offer Shares in its favour and pay the consideration to New Melrose, which would hold the consideration on trust for outstanding shareholders. The consideration offered to the shareholders whose Takeover Offer Shares are acquired compulsorily under the Companies Act must, in general, be the same as the consideration that was available under the takeover offer.

105 8.3 Sell out The Companies Act also gives minority shareholders a right to be bought out in certain circumstances by an offeror who has made a takeover offer. If a takeover offer related to all the New Melrose Ordinary Shares and at any time before the end of the period within which the offer could be accepted the offeror held or had agreed to acquire not less than 90 per cent. of the New Melrose Ordinary Shares to which the offer relates, any holder of New Melrose Ordinary Shares to which the offer related who had not accepted the offer could by a written communication to the offeror require it to acquire those New Melrose Ordinary Shares. The offeror is required to give any shareholder notice of his right to be bought out within one month of that right arising. The offeror may impose a time limit on the rights of the minority shareholders to be bought out, but that period cannot end less than three months after the end of the acceptance period. If a shareholder exercises his or her rights, the offeror is bound to acquire those Shares on the terms of the offer or on such other terms as may be agreed.

9. Working Capital New Melrose is of the opinion that, taking into account the bank facilities available to the Melrose Group, each of New Melrose and the Melrose Group has sufficient working capital for its present requirements, that is, for at least the 12 months following the date of publication of this Prospectus.

10. Significant Change Save for the signing of the Disposal Agreement (as described below), there has been no significant change in the financial or trading position of the Melrose Group since 30 June 2015, being the date to which the last unaudited interim results of the Melrose Group were prepared. On 28 July 2015, Old Melrose announced that it had entered into the Disposal Agreement with Honeywell International Inc. for the sale of the Elster Group, for a cash consideration of £3.3 billion, subject to customary adjustments. The Disposal is expected to complete in the first quarter of 2016 and remains conditional upon, among other things, obtaining approvals from regulatory authorities in Brazil, China, the European Union, South Africa and Turkey. The shareholders of Old Melrose approved the Disposal at a general meeting of Old Melrose, held on 21 August 2015. Since its incorporation on 29 September 2015, New Melrose has not traded and there has been no significant change in the financial or trading position of New Melrose.

11. Litigation There are no, nor have there been any, governmental, legal or arbitration proceedings (nor is New Melrose aware of any such proceedings which are pending or threatened) during the last twelve months prior to the date of this Prospectus which may have, or during the last twelve months prior the date of this Prospectus have had, a significant effect on New Melrose and/or any member of the Melrose Group’s financial position or profitability.

12. Material Contracts No contracts have been entered into (other than contracts entered into in the ordinary course of business) by New Melrose and/or any member of Melrose Group either (i) within the period of two years immediately preceding the date of this Prospectus which are or may be material to New Melrose and/or any member of the Melrose Group; or (ii) which, regardless of when entered into, contain any provisions under which New Melrose and/or any member of the Melrose Group has any obligation or entitlement which is, or may be, material to New Melrose and/or the Melrose Group as at the date of this Prospectus, save as disclosed below:

12.1 Disposal Agreement Overview The Disposal Agreement was entered into on 28 July 2015 between: (i) Old Melrose; (ii) Melrose PLC; (iii) the Elster Seller (an indirect, wholly-owned subsidiary of Old Melrose); and (iv) the Elster Purchaser. Under the terms of the Disposal Agreement, the Elster Seller has agreed, subject to the satisfaction of certain conditions, to sell the entire issued share capital of the Teaford GmbH.

106 Consideration The consideration for the Disposal is £3.3 billion, subject to customary adjustments, and is payable in cash on completion.

Locked box and pre-completion undertakings The Elster Seller has provided certain covenants and undertakings to the Elster Purchaser that in the period commencing on 1 July 2015 and ending on and including the date of completion of the Disposal, there has been no transfer of value from the Elster Group to or for the benefit of the Melrose Group, other than pursuant to certain agreed actions. In the event of any breach of such covenants or undertakings, the Elster Seller has agreed to pay to the Elster Purchaser a sum equal to the aggregate of: (i) the amount which would be necessary to put the relevant member of the Elster Group into the financial position which would have existed had there been no breach; and (ii) any liabilities, costs and expenses incurred by the Elster Purchaser or a member of its group as a result of the breach. The Elster Seller has also undertaken to cause the Elster Group to operate in the ordinary course of business during the period from the date of the Disposal Agreement to completion of the Disposal, and has given a number of specific undertakings to the Elster Purchaser regarding the conduct of the business and affairs of the Elster Group during such period.

Conditions to completion Completion of the Disposal is conditional upon: (a) the passing of a shareholders resolution approving the Disposal at the general meeting of Old Melrose, held on 21 August 2015 (the ‘‘Shareholder Consent Condition’’); (b) the relevant approvals having been obtained from the relevant regulatory authorities, including each of Brazil, China, the European Union, Russia, South Africa, Turkey and the United States (the ‘‘Regulatory Conditions’’); and (c) no material adverse effect on the Elster Group having occurred on or prior to completion which is continuing. The Elster Seller and the Elster Purchaser have each agreed to use their reasonable best endeavours to achieve satisfaction of their respective Regulatory Conditions. The Shareholder Consent Condition was satisfied on 21 August 2015, following the general meeting of Old Melrose. As at the Latest Practicable Date, the relevant approvals for the Disposal had been obtained from the relevant regulatory authorities in the United States and Russia.

Warranties, indemnities and limitations on liability Old Melrose, Melrose PLC and the Elster Seller have provided certain warranties to the Elster Purchaser with respect to themselves and the Elster Group. These warranties relate to, among other things, title, capacity and authority. The Elster Seller has also agreed to be responsible for any payments in relation to squeeze-out proceedings brought by former minority shareholders of Elster Group GmbH. The Elster Seller’s liability for all claims under the interim operating covenants is subject to a £40,000,000 threshold and a £500,000,000 cap. The Elster Seller’s overall aggregate liability for all claims (including a claim for a breach of an interim operating covenant and in relation to the squeeze out proceedings) under the Disposal Agreement is capped at the total consideration payable to the Elster Seller.

Termination The Disposal Agreement may be terminated by written notice from either party to the other party in the event that: (a) any of the Regulatory Conditions have not been satisfied by 3.00 p.m. on 30 June 2016; or (b) completion of the Disposal does not take place on the date set for completion because the other party has failed to comply with any of its completion obligations under the Disposal Agreement and, following postponement of completion by the non-defaulting party, completion fails to take place on the postponed date of completion due to failure by the defaulting party to comply with any of its completion obligations under the Disposal Agreement.

107 The Disposal Agreement may be terminated by written notice from the Elster Purchaser in the event that there is a material adverse effect on the Elster Group prior to completion of the Disposal.

Melrose PLC guarantee Melrose PLC, a wholly-owned subsidiary of Old Melrose, has given an irrevocable and unconditional guarantee to the Elster Purchaser of the Elster Seller’s obligations and liabilities pursuant to the Disposal Agreement.

‘No shop’ undertaking Old Melrose has undertaken not to solicit or enter into any discussions in relation to any proposal or transaction relating to any of the material businesses and/or material assets of the Elster Group including any securities of any member of the Elster Group, Melrose PLC or the Elster Seller from the date of the Disposal Agreement until the date of completion of the Disposal, or the termination of the Disposal Agreement, if earlier.

12.2 Warranty Agreement Pursuant to the terms of the Disposal Agreement, the Warranty Agreement was entered into on 28 July 2015 between the Elster Seller and the Elster Purchaser. Pursuant to the Warranty Agreement, the Elster Seller has provided certain warranties to the Elster Purchaser with respect to the business of the Elster Group. The Warranty Agreement also contains a covenant in respect of certain tax matters relating to the Elster Group arising on or before completion of the Disposal. However, other than in the event of fraud, the Elster Purchaser’s sole recourse for any breach of such business warranties and/or under the tax covenant shall be to an insurance policy taken out by the Elster Purchaser and the Elster Purchaser will not be able to recover against the Melrose Group for any claims in respect of the business warranties or the tax covenant. The Warranty Agreement shall automatically terminate in the event that the Disposal Agreement is terminated prior to completion of the Disposal.

12.3 FKI UK DB Scheme Agreement On 28 July 2015, Melrose PLC and the Elster Purchaser entered into an agreement with the trustees of the FKI UK DB Scheme providing for the replacement of certain Melrose PLC guarantees in relation to the liabilities of the FKI UK DB Scheme with the Elster Purchaser guarantees with effect from and conditional on completion of the Disposal.

12.4 McKechnie Plan Agreement On 28 July 2015, Melrose PLC and the Elster Purchaser entered into an agreement with the trustees of the McKechnie Plan providing for the replacement of certain Melrose PLC guarantees in relation to the liabilities of the McKechnie Plan with the Elster Purchaser guarantees with effect from and conditional on completion of the Disposal.

12.5 Bridon Group Disposal Agreement On 11 October 2014, Melrose PLC and FKI Limited entered into an agreement with Bridge Bidco Limited, an affiliate of the Ontario Teachers’ Pension Plan, in respect of the sale and purchase of the Bridon Group for an enterprise value of £365 million payable in cash on completion of the transaction, subject to limited adjustments. As part of the transaction, the Melrose Group contributed £6.7 million into the Bridon Group (2013) Pension Scheme, which remains with the Bridon Group following completion. The disposal completed on 12 November 2014.

12.6 Crosby and Acco Disposal Agreement On 10 October 2013, Old Melrose and Crosby Overseas Holdings Limited entered into an agreement (as amended on 21 November 2013) with Crosby Worldwide Limited (formerly known as Oliver Bidco Limited, a newly incorporated company controlled by affiliates of Kohlberg Kravis Roberts & Co L.P.) for the sale of Certex France S.a` r.l., Crosby Premier Stampings Limited, Crosby Industria e Comercio de Ferramentas Ltda, FKI Industries Inc., Inter Product B.V., Parson Chaine Europe SAS and Rhombus

108 Rollen Verwaltungsgesellschaft for total consideration of $1,010 million (£627.3 million). The disposal completed on 22 November 2013.

12.7 Facilities Agreement On 29 June 2012, Melrose PLC entered into a multi-currency term and revolving credit facilities agreement, as amended and/or amended and restated from time to time including by way of an amendment and restatement agreement dated 11 July 2014, pursuant to which a £180 million multi- currency term facility, a USD 500 million revolving credit facility, a £690 million multi-currency revolving credit facility, a EUR 300 million revolving credit facility and a £70 million multi-currency revolving credit facility were provided to the Melrose Group by a group of lenders. Further information about the Facilities Agreement can be found in paragraph 2 of Part IV (Capital Resources). By an amendment and restatement agreement dated 30 September 2015 between, among others, Melrose PLC and Lloyds Bank PLC, as agent, the multi-currency term and revolving credit facilities agreement will, subject to satisfaction of customary conditions precedent, be amended so that shortly after completion of the Disposal, each of the facilities will be prepaid and cancelled, except for £200 million of the multi-currency revolving credit facility. Such revolving credit facility will remain on substantially the same terms as previously save for a reduction in various baskets to reflect the smaller size of the remaining group.

13. Related Party Transactions 13.1 Save as disclosed below and in the financial information set out in the related party transactions in notes 28 to each of the financial statements of Old Melrose for the financial years ended 31 December 2014, 31 December 2013 and 31 December 2012, which are incorporated by reference into this Prospectus, neither Old Melrose nor the Melrose Group entered into any related party transactions (which for these purposes are those set out in the standards adopted according to the Regulation (EC) No 1606/2002) during the period covered by the historical financial information and up to the date of this Prospectus. 13.2 Old Melrose has entered into agreements with each of the Old Melrose 2012 Incentive Optionholders, whereby each Old Melrose 2012 Incentive Optionholder has undertaken not to exercise their options between the Latest Practicable Date and the Effective Date (inclusive) or, if the Scheme lapses, 31 December 2015.

14. Options over New Melrose 2012 Incentive Shares 14.1 Grant of options over New Melrose 2012 Incentive Shares In accordance with the terms of the Old Melrose 2012 Incentive Options, conditional on the Scheme becoming effective, options over Old Melrose 2012 Incentive Shares will, at the direction of the New Melrose and Old Melrose Remuneration Committees, be automatically exchanged for like options over shares in New Melrose on substantially the same terms as the Old Melrose 2012 Incentive Options and upon such exchange taking effect the existing Old Melrose 2012 Incentive Options will lapse.

14.2 Terms of options over New Melrose 2012 Incentive Shares 14.2.1 Each New Melrose 2012 Incentive Option entitles its holder to subscribe for one New Melrose 2012 Incentive Share at a nominal value of £1 per share. 14.2.2 The Board may, from time to time at the recommendation of the Remuneration Committee, grant options to subscribe for an aggregate of up to 50,000 New Melrose 2012 Incentive Shares. If an option over a New Melrose 2012 Incentive Share lapses the Board may, on the recommendation of the Remuneration Committee, grant further New Melrose 2012 Incentive Options provided that the aggregate number of New Melrose 2012 Incentive Options when added to the number of New Melrose 2012 Incentive Shares in issue does not exceed 50,000. If, immediately prior to the ‘‘trigger date’’ (as defined in article 6(D) of the New Melrose Articles), the full exercise of options over New Melrose 2012 Incentive Shares would result in there being fewer than 50,000 New Melrose 2012 Incentive Shares in issue, the Board shall grant (prior to any automatic exercise of the New Melrose 2012 Incentive Options pursuant to paragraph 14.2.3) additional New

109 Melrose 2012 Incentive Options to the employee benefit trust such that the full exercise of New Melrose 2012 Incentive Options will result in 50,000 New Melrose 2012 Incentive Shares being in issue immediately prior to the ‘‘trigger date’’. 14.2.3 New Melrose 2012 Incentive Options may be exercised at any time up to and including the ‘‘trigger date’’ and, if not exercised within such time, will be automatically exercised immediately prior to the ‘‘trigger date’’. On exercise, a New Melrose 2012 Incentive Share certificate will be issued to the holder of the New Melrose 2012 Incentive Shares. 14.2.4 A New Melrose 2012 Incentive Option may be exercised by notification in writing (which may include email) to the secretary to the Remuneration Committee by the holder of such New Melrose 2012 Incentive Option of such holder’s exercise of the New Melrose 2012 Incentive Option and delivery by such holder of payment in full for the share to be subscribed and, if available, the holder’s option certificate in respect of such New Melrose 2012 Incentive Option. If any such exercise is for less than such holder’s total holding of New Melrose 2012 Incentive Options, the Remuneration Committee will determine which New Melrose 2012 Incentive Options have been exercised and a new certificate will be issued to reflect the balance of any remaining New Melrose 2012 Incentive Options held by such holder. 14.2.5 If any New Melrose 2012 Incentive Option is automatically exercised pursuant to paragraphs 14.2.3, 14.2.6 or 14.2.7, to the extent that the consideration payable on such exercise is not immediately paid and in order to enable the New Melrose 2012 Incentive Share to be issued fully paid, an amount of £1 will become due to New Melrose by the holder of such New Melrose 2012 Incentive Option and it is a term of the grant of each New Melrose 2012 Incentive Option that each holder undertakes to pay, cash to New Melrose, in satisfaction of such amount, on demand and in any event within one month of the automatic exercise of the New Melrose 2012 Incentive Option. 14.2.6 If New Melrose becomes aware, in accordance with article 6(M) of the New Melrose Articles, of a potential Change of Control and notwithstanding the requirements in paragraph 14.2.4 above, it will: (a) as soon as possible on becoming so aware, provide notice thereof to holders of New Melrose 2012 Incentive Options; and (b) at the same time as such notice is required to be given to holders of New Melrose 2012 Incentive Shares, provide to all holders of New Melrose 2012 Incentive Options a copy of the notice required to be given to holders of New Melrose 2012 Incentive Shares in accordance with such article 6(M) of the New Melrose Articles, whether or not any New Melrose 2012 Incentive Shares are in issue at that time. If, for any reason, New Melrose is not able to or does not comply with sub-paragraphs (a) and (b) of this paragraph, the New Melrose 2012 Incentive Options will be automatically exercised immediately prior to the ‘‘trigger date’’ in accordance with paragraph 14.2.3. 14.2.7 If, in accordance with article 6(N) of New Melrose Articles, a resolution for voluntary winding up of New Melrose is passed or a winding up order is made by the court, notwithstanding the requirements in paragraph 14.2.4 above, the New Melrose 2012 Incentive Options then outstanding will be deemed to have been exercised immediately prior to the conversion of the New Melrose 2012 Incentive Shares in accordance with such article 6(N). 14.2.8 Except as set out in paragraph 14.2.9, holders of New Melrose 2012 Incentive Options may not transfer, charge, encumber or grant any options over or otherwise dispose of any New Melrose 2012 Incentive Options or interest therein. 14.2.9 A holder of a New Melrose 2012 Incentive Option may at any time transfer an option: (a) with the prior written consent of the Board (and where such consent is given in relation to a transfer to the trustees of a trust of which the only beneficiaries (and the only people capable of being beneficiaries) are the holder of the New Melrose 2012 Incentive Option who established the trust and who is transferring

110 the relevant New Melrose 2012 Incentive Option; and/or his spouse; and/or his lineal descendants by blood or adoption, such transferees being ‘‘permitted New Melrose 2012 Incentive Option transferees’’); and (b) if a transferee ceases to be a permitted New Melrose 2012 Incentive Option transferee in relation to the original holder of the option, to such original holder of the option. 14.2.10 Unless the Remuneration Committee determines otherwise, if a holder of New Melrose 2012 Incentive Options or an original holder of New Melrose 2012 Incentive Options transferred pursuant to paragraph 14.2.9 becomes a ‘‘bad leaver’’ (as defined in article 8 of the New Melrose Articles), any unexercised New Melrose 2012 Incentive Options shall lapse. 14.2.11 If a holder of New Melrose 2012 Incentive Options or an original holder of New Melrose 2012 Incentive Options transferred pursuant to paragraph 14.2.9 becomes a ‘‘good leaver’’ (as defined in article 8 of the New Melrose Articles), at the Remuneration Committee’s discretion, some or all of such good leaver’s unexercised New Melrose 2012 Incentive Options shall lapse, such number to be no more than that number of options over New Melrose 2012 Incentive Shares as would be equal to the Unvested Portion (as such term is defined in paragraph 4.6.4 of this Part IX (Additional Information) of New Melrose 2012 Incentive Shares had such holder’s New Melrose 2012 Incentive Options been exercised in full prior to the holder becoming a ‘‘good leaver’’ and a new certificate will be issued to reflect the balance of New Melrose 2012 Incentive Options held by such good leaver (if any) following such lapse. 14.2.12 New Melrose 2012 Incentive Shares allotted on exercise of New Melrose 2012 Incentive Options will have the rights set out in the New Melrose Articles. 14.2.13 If any offer is made and is implemented (including any offer implemented by way of a court approved scheme of arrangement under Part 26 of the Companies Act) which results in New Melrose being controlled by a new company in which at least 90 per cent. of the shares in the new company are held by substantially the same persons who immediately before the offer was made were shareholders in New Melrose, the New Melrose 2012 Incentive Options will, at the direction of the Remuneration Committee, be automatically exchanged for like options over shares in the new company on substantially the same terms as the New Melrose 2012 Incentive Options and upon such exchange taking effect the existing New Melrose 2012 Incentive Options will lapse; 14.2.14 The Remuneration Committee may amend the terms of the New Melrose 2012 Incentive Options at any time with the consent of the holders of New Melrose 2012 Incentive Options holding not less than three-quarters of the New Melrose 2012 Incentive Options then in issue. Prior approval will not be required for any minor alteration made to benefit the administration of the New Melrose 2012 Incentive Options, to take account of a change in legislation or to obtain or maintain favourable tax, exchange or regulatory treatment for holders of New Melrose 2012 Incentive Options or for any company in the Melrose Group provided that an investment bank of repute shall have confirmed in writing that such alterations are fair and reasonable so far as holders of New Melrose 2012 Incentive Shares are concerned. 14.2.15 If any amendment is made to the terms of the New Melrose 2012 Incentive Shares, the terms of the New Melrose 2012 Incentive Options will be amended in such manner as the Remuneration Committee determines to be fair and reasonable to reflect such amendments.

15. Consents 15.1 Deloitte LLP, whose registered office is at 2 New Street Square, London EC4A 3BZ and who is a member of the Institute of Chartered Accountants in England and Wales, has given and has not withdrawn its written consent to the inclusion of its report on pro forma financial information set out in Part VI (Unaudited Pro Forma Information on the Melrose Group) of this Prospectus and the references to its reports in the form and context in which they are included and has authorised the

111 contents of the part of this Prospectus which comprises its reports for the purposes of Prospectus Rule 5.5.3(2)(f). 15.2 Rothschild has given and has not withdrawn its written consent to the inclusion in this Prospectus of the references to its name in the form and context in which they are included. 15.3 Investec has given and has not withdrawn its written consent to the inclusion in this Prospectus of the references to its name in the form and context in which they are included.

16. Sources and Bases of Selected Financial Information 16.1 Unless otherwise stated below financial information relating to Old Melrose has been extracted (without material adjustment) from the audited annual report and accounts for Old Melrose for the years ended 31 December 2014, 31 December 2013 and 31 December 2012 and the six month period ended 30 June 2015. 16.2 As at the close of business on the Latest Practicable Date, Old Melrose had in issue 995,206,966 ordinary shares of 7⁄55 pence each. The ISIN for Old Melrose Ordinary Shares is GB00BV9FYX34.

17. General 17.1 The financial information concerning New Melrose and the Melrose Group contained in this Prospectus does not constitute statutory accounts within the meaning of section 434 of the Companies Act. Full individual accounts of Old Melrose and each of its subsidiary undertakings for each financial year to which the financial information relates and on which the auditors gave unqualified reports have been delivered to the Registrar of Companies. The consolidated financial statements of Old Melrose in respect of the three years ended 31 December 2014, 31 December 2013 and 31 December 2012 were reported on by Deloitte LLP, a member of the Institute of Chartered Accountants for England and Wales, the auditors of Old Melrose within the meaning of section 434 of the Companies Act. No statutory accounts have been prepared for New Melrose. 17.2 The total costs, charges and expenses payable by New Melrose in connection with the Proposals and Admission are estimated to be approximately £1.0 million (exclusive of VAT).

18. Documents for Inspection Copies of the following documents will be available for inspection during normal business hours on any weekday (Saturday, Sundays and public holidays excepted) at (i) the registered office of Old Melrose and New Melrose (being 11th Floor, Colmore Plaza, 20 Colmore Circus Queensway, Birmingham, B4 6AT) and (ii) the offices of Simpson Thacher & Bartlett LLP (being CityPoint, One Ropemaker Street, London EC2Y 9HU) from the date of this Prospectus up to and including the date of Admission: (a) the Old Melrose Articles; (b) the New Melrose Articles; (c) the Old Melrose 2012 Annual Report and Accounts, the Old Melrose 2013 Annual Report and Accounts and the Old Melrose 2014 Annual Report and Accounts; (d) the Old Melrose 2015 Half Year Results; (e) the Old Melrose Elster Circular; (f) the Old Melrose Prospectus; (g) the Old Melrose Circular; (h) the report on the unaudited pro forma financial information of the Melrose Group from Deloitte LLP as set out in Part VI (Unaudited pro forma information on the Melrose Group) of this Prospectus; (i) the consent letters referred to in paragraph 15 above; and (j) this Prospectus. The Old Melrose Circular and this Prospectus and the information incorporated by reference into this Prospectus (as set out on page 112 under the heading ‘‘Documents incorporated by reference’’) may also be viewed via the National Storage Mechanism. Dated: 6 October 2015

112 DEFINITIONS The following definitions apply throughout this Prospectus unless the context otherwise requires: 2016 AGM ...... the annual general meeting of Old Melrose or New Melrose, as applicable, to be held in 2016 Admission ...... admission of the New Melrose Ordinary Shares to listing on the premium segment of the Official List and to trading on the main market of the London Stock Exchange becoming effective AIM ...... AIM, a market operated by the London Stock Exchange Audit Committee ...... the audit committee of the Board B Shares ...... has the meaning given to such term at paragraph 1.5 (The Proposed Return of Capital) of Part I (Information on the Proposals) of this Prospectus Blue Form of Proxy ...... the blue form of proxy for use at the Court Meeting as provided to Shareholders with the Old Melrose Circular Board(s) ...... the board of Directors of Old Melrose and/or the board of Directors of New Melrose (as the context shall indicate) Bribery Act ...... has the meaning given to such term at paragraph 5 of Part A of the section of this Prospectus headed ‘‘Risk Factors’’ Bridon or Bridon Group ...... the Bridon business which comprised, as at 12 November 2014, Bridon Limited, together with each of its direct and indirect subsidiaries and subsidiary undertakings Brush Group (2013) Pension Scheme . the occupational pension scheme known as the ‘Brush Group (2013) Pension Scheme’, established by a definitive deed dated 4 April 2013 Brush or Brush Group ...... the Brush business which comprised, as at the date hereof, Brush Electrical Machines Ltd and FKI Switchgear (Hong Kong) Ltd together with each of their direct and indirect subsidiaries and subsidiary undertakings Business Day ...... a day (other than a Saturday or Sunday or public holiday) on which banks are open for business in London, other than solely for trading and settlement in Euro Canada ...... Canada, its provinces and territories and all areas subject to its jurisdiction or any political subdivision thereof

Capitalisation Shares ...... the ordinary shares of 7⁄55 pence nominal value each in the capital of Old Melrose to be allotted and issued to New Melrose following the cancellation of the Old Melrose Ordinary Shares pursuant to the operation of the Scheme certificated or in certificated form . . . in relation to a share or other security, a share or other security title to which is recorded in the relevant register of the share or other security as being held in certificated form (that is, not in CREST) Code ...... the combined code on corporate governance dated September 2014 and issued by the Financial Reporting Council in the United Kingdom Committees ...... the Audit, Nomination and Remuneration Committees of the Board as described at paragraph 3.3 of Part VIII (Directors, Corporate Governance and Employees) of this Prospectus Companies Act ...... the Companies Act 2006, as amended

113 conversion notice ...... has the meaning given to such term at paragraph 4.4.1(b) of Part IX (Additional Information) of this Prospectus Court ...... the High Court of Justice of England and Wales Court Hearing ...... the hearing of the claim form to sanction the Scheme and confirm the reduction of capital of Old Melrose involved in the Scheme Court Meeting ...... the meeting of holders of Old Melrose Ordinary Shares convened for 10:00 a.m. on 29 October 2015 at the offices of Investec at 2 Gresham Street, London EC2V 7QP by order of the Court pursuant to section 896 of the Companies Act to consider and, if thought fit, approve the Scheme, and any adjournment of that meeting CREST ...... the electronic transfer and settlement system for the paperless settlement of trades in listed securities operated by Euroclear CREST Regulations ...... the Uncertificated Securities Regulations 2001 (SI 2001 No. 01/378), as amended Deferred A Share ...... the deferred share intended to be issued by Old Melrose to New Melrose in the period after the Old Melrose General Meeting and before the Court Hearing (being a separate class from the Old Melrose Ordinary Shares and, therefore, not forming part of the shares in the capital of Old Melrose that are subject to the effects of the Scheme) Deferred Share ...... has the meaning given to such term at paragraph 4.4.10(ii) of Part IX (Additional Information) of this Prospectus Director(s) ...... the directors of Old Melrose, or the directors of New Melrose, as the context may require, and whose names are set out on page 64 of this Prospectus Disclosure and Transparency Rules . . the disclosure and transparency rules produced by the FCA pursuant to FSMA (as set out in the FCA Handbook), as amended Disposal ...... the proposed disposal of the Elster Group by the Elster Seller pursuant to the terms of the Disposal Agreement Disposal Agreement ...... the sale and purchase agreement dated 28 July 2015 between Old Melrose, Melrose PLC, the Elster Seller and the Elster Purchaser Dividend Amount ...... has the meaning given to such term at paragraph 4.4.1(a) of Part IX (Additional Information) of this Prospectus EBITDA ...... earnings before interest, tax, depreciation and amortisation EEA ...... the European Economic Area EEA States ...... the member states of the EEA Effective Date ...... the date on which the Scheme becomes effective in accordance with its terms, expected to be 19 November 2015 Elster Group ...... Teaford GmbH, its subsidiaries and subsidiary undertakings from time to time, including, in the context of the Disposal, the McKechnie Plan and the FKI UK DB Scheme Elster Purchaser ...... Honeywell International Inc., in its capacity as purchaser pursuant to the Disposal Agreement Elster Seller ...... Sageford UK Limited, in its capacity as seller pursuant to the Disposal Agreement

114 EU ...... the member states of the European Union EUR, E and euro ...... the lawful currency of the member states of the EU that have adopted the euro as their common currency and sole legal tender Euroclear ...... Euroclear UK & Ireland Limited, the operator of CREST Executive Director(s) ...... the executive directors of Old Melrose or New Melrose as the context shall indicate Facilities Agreement ...... has the meaning given to such term at paragraph 2 of Part V (Capital Resources) of this Prospectus FCA ...... the United Kingdom Financial Conduct Authority FCPA ...... has the meaning given to such term at paragraph 5 of Part A of the section of this Prospectus headed ‘‘Risk Factors’’ FKI UK DB Scheme ...... the occupational pension scheme known as the FKI Group Pension Scheme established by a definitive deed dated 29 September 1989 FKI US Plan ...... the defined benefit plan known as the ‘Melrose North America, Inc. Group Pension’ and the defined contribution benefit plan known as the ‘Melrose North America, Inc. 401(k) Retirement Savings Plan for Non Union Employees’ Form(s) of Proxy ...... the Blue Form of Proxy and the White Form of Proxy FSMA ...... the Financial Services and Markets Act 2000, as amended from time to time gross dividend ...... has the meaning so given in paragraph 4.1 of Part VII (United Kingdom Taxation Considerations) of this Prospectus HMRC ...... HM Revenue & Customs, the UK tax authority IFRS ...... International Financial Reporting Standards, as issued by the International Accounting Standards Board and endorsed by the EU Initial Reduction of Capital ...... the proposed reduction of capital of New Melrose under Part 17 Chapter 10 of the Companies Act as described in paragraph 1.4 (The Initial Reduction of Capital) of Part I (Information on the Proposals) of this Prospectus Initial Subscriber ...... Adam Westley Investec ...... Investec Investment Banking, a division of Investec Bank plc, broker to Old Melrose and New Melrose ISIN ...... the international code for a listed security Latest Practicable Date ...... 1 October 2015 (being the latest practicable date prior to the publication of this Prospectus) Listing Rules ...... the listing rules produced by the FCA pursuant to FSMA (as set out in the FCA Handbook), as amended London Stock Exchange ...... the London Stock Exchange plc or its successor McKechnie Plan ...... the occupational pension scheme known as the McKechnie Pension Plan established by a deed dated 10 April 1963 Melrose Group or Melrose ...... (i) before the Effective Date, Old Melrose, its subsidiaries and subsidiary undertakings from time to time including the Elster Group (which for the avoidance of doubt, does not include New Melrose); (ii) from the Effective Date, New Melrose, its subsidiaries and subsidiary undertakings including the Elster

115 Group (which will include Old Melrose, its subsidiaries and subsidiary undertakings) and (iii) from the date of completion of the Disposal, New Melrose, its subsidiaries and subsidiary undertakings (which will include Old Melrose, its subsidiaries and subsidiary undertakings, but shall no longer include the Elster Group) National Storage Mechanism ...... the document publication facility made available by the FCA at www.Morningstar.co.uk/uk/nsm New Melrose ...... New Melrose Industries PLC, a public limited company incorporated in England and Wales with registered number 9800044, to be renamed Melrose Industries PLC shortly after the Scheme becomes effective New Melrose 2012 Incentive Optionholders ...... holders of the New Melrose 2012 Incentive Shares Options New Melrose 2012 Incentive Options . options over the New Melrose 2012 Incentive Shares New Melrose 2012 Incentive Shareholders ...... holders of New Melrose 2012 Incentive Shares New Melrose 2012 Incentive Shares . . the 2012 incentive shares of £1 each of New Melrose having the rights and restrictions attaching to them as more specifically set out in paragraph 4 of Part IX (Additional Information) of this Prospectus New Melrose Articles ...... the articles of association of New Melrose summarised at paragraph 4 of Part IX (Additional Information), as amended from time to time New Melrose Ordinary Shareholders . holders of New Melrose Ordinary Shares; New Melrose Ordinary Shares ...... the ordinary shares in the capital of New Melrose to be allotted and issued pursuant to the Scheme, including any ordinary shares arising from the Share Capital Consolidation (ISIN: GB00BYRJP462) Nomination Committee ...... the nomination committee of the Board OFAC ...... the US Department of the Treasury’s Office of Foreign Assets Control Official List ...... the official list maintained by the UKLA for the purposes of Part V of FSMA Old Melrose ...... Melrose Industries PLC, a public limited company incorporated in England and Wales with registered number 8243706, to be renamed shortly after the Scheme becomes effective Old Melrose 2012 Annual Report and Accounts ...... the annual report and accounts prepared by the Melrose Group for the financial year ended 31 December 2012 and published by Old Melrose on 6 March 2013 Old Melrose 2012 Incentive Optionholders ...... holders of Old Melrose 2012 Incentive Options Old Melrose 2012 Incentive Options . has the meaning given to such term at paragraph 1.3 of Part VIII (Directors, Corporate Governance and Employees) of this Prospectus Old Melrose 2012 Incentive Scheme . has the meaning given to such term at paragraph 1.3 of Part VIII (Directors, Corporate Governance and Employees) of this Prospectus

116 Old Melrose 2012 Incentive Shares . . has the meaning given to such term at paragraph 1.2 of Part VIII (Directors, Corporate Governance and Employees) of this Prospectus Old Melrose 2013 Annual Report and Accounts ...... the annual report and accounts prepared by the Melrose Group for the financial year ended 31 December 2013 and published by Old Melrose on 5 March 2014 Old Melrose 2014 Annual Report and Accounts ...... the annual report and accounts prepared by the Melrose Group for the financial year ended 31 December 2014 and published by Old Melrose on 4 March 2015 Old Melrose 2015 Half Year Results . the half year results prepared by the Melrose Group for the six month period ended 30 June 2015 and published by Old Melrose on 28 July 2015 Old Melrose Articles ...... the articles of association of Old Melrose as adopted or amended from time to time Old Melrose Circular ...... the circular to be sent to Old Melrose Ordinary Shareholders on or about the date hereof containing details of the Proposals (and of which the Scheme Document forms a part) Old Melrose Elster Circular ...... the circular sent to Old Melrose Ordinary Shareholders on 29 July 2015 containing details of the Disposal Old Melrose General Meeting ...... the general meeting of Old Melrose to be held at 10:15 a.m. on 29 October 2015 at the offices of Investec at 2 Gresham Street, London EC2V 7QP to vote on the resolutions set out in the notice of the Old Melrose General Meeting contained in the Old Melrose Circular Old Melrose Group ...... Old Melrose, its subsidiaries and subsidiary undertakings but excluding the Elster Group (and which for the avoidance of doubt, does not include New Melrose) Old Melrose Ordinary Shareholders . holders of Old Melrose Ordinary Shares

Old Melrose Ordinary Shares ...... ordinary shares with a nominal value of 7⁄55 pence each in the capital of Old Melrose (ISIN: GB00BV9FYX34) Old Melrose Prospectus ...... the prospectus published by Old Melrose on 12 October 2012 in relation to the listing of the ordinary share capital of Old Melrose Ordinary Shares on the Official List Old Scheme ...... means the scheme of arrangement under section 899 of the Companies Act between Melrose PLC, Old Melrose and the holders of ordinary shares in Melrose PLC which was effective on 27 November 2012, pursuant to which Old Melrose became the holding company of Melrose PLC Overseas Shareholders ...... Shareholders who are resident in, ordinarily resident in, or citizens of, jurisdictions outside the United Kingdom pence, £, GBP and pounds sterling . . the lawful currency of the United Kingdom Proposals ...... the proposed reorganisation of the Melrose Group involving the Scheme, the Initial Reduction of Capital and the Proposed Return of Capital Proposed Return of Capital ...... the proposed return of capital of New Melrose under Part 17 Chapter 10 of the Companies Act as described in paragraph 1.5 (The Proposed Return of Capital) of Part I (Information on the Proposals) of this Prospectus

117 Prospectus ...... this document dated 6 October 2015, comprising a prospectus relating to New Melrose and the listing of the New Melrose Ordinary Shares on the Official List (together with any supplements or amendments thereto) Prospectus Directive Regulation .... Directive 2003/71/EC (as amended from time to time, including by Directive 2010/73/EC (the ‘‘PD Amending Directive’’) to the extent implemented in the relevant EEA State) and includes any relevant implementing measures in each EEA State that has implemented Directive 2003/71/EC Prospectus Rules ...... the prospectus rules produced by the FCA pursuant to FSMA (as set out in the FCA Handbook), as amended Redeemable Preference Shares ..... the redeemable non-voting preference shares of £1 each in the capital of New Melrose which will be redeemed by New Melrose shortly after the Initial Reduction of Capital Registrar of Companies ...... the Registrar of Companies in England and Wales Remuneration Committee ...... the remuneration committee of the Board Restatement Date ...... has the meaning given to such term at paragraph 2 of Part IV (Capital Resources) of this Prospectus Rothschild ...... N M Rothschild & Sons Limited, sponsor and financial adviser to New Melrose and financial adviser to Old Melrose Scheme ...... the proposed scheme of arrangement under section 899 of the Companies Act between Old Melrose, New Melrose and Old Melrose Ordinary Shareholders including any modification, addition or condition approved or imposed by the Court Scheme Document ...... the document in relation to the implementation of the Scheme, which is set out in Part VI (Scheme of Arrangement) of the Old Melrose Circular Scheme Record Date ...... the Business Day immediately preceding the Effective Date Scheme Record Time ...... the time and date specified as such in the Scheme Document, expected to be 6.00 p.m. on the Scheme Record Date Scheme Restricted Jurisdiction ..... any jurisdiction where sending in the Scheme Document would breach any applicable law Scheme Voting Record Time ...... 6.00 p.m. on 27 October 2015 or, if either the Court Meeting or the Old Melrose General Meeting is adjourned, 6.00 p.m. on the second day before the date of such adjourned meeting SDRT ...... stamp duty reserve tax SEC ...... the US Securities and Exchange Commission Share Capital Consolidation ...... the consolidation or sub-division and subsequent consolidation of the New Melrose Ordinary Shares in such manner as is determined by the Board, pursuant to the resolution described in paragraph 3.6.6 of Part IX (Additional Information) of this Prospectus Shareholder(s) ...... registered holder(s) of Old Melrose Ordinary Shares and/or of New Melrose Ordinary Shares, as the context may require Sponsor ...... Rothschild Subscriber Share ...... the ordinary share of £1 in the capital of New Melrose subsidiary and subsidiary undertaking ...... have the meaning given to them in sections 1159 and 1162 of the Companies Act respectively

118 Summer Budget 2015 ...... the summer budget delivered by the UK government on 8 July 2015 UK or United Kingdom ...... the United Kingdom of Great Britain and Northern Ireland UKLA ...... the FCA acting in its capacity as the competent authority for the purposes of Part VI of FSMA and in the exercise of its functions in respect of admission to the Official List uncertificated or in uncertificated form ...... a share or other security title to which is recorded in the relevant register of the share or security as being held in uncertificated form, in CREST, and title to which, by virtue of the CREST Regulations may be transferred by means of CREST US Exchange Act ...... the US Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder US or United States or United States of America ...... the United States of America (including the states of the United States and the District of Columbia), its possessions and territories and all areas subject to its jurisdiction US Securities Act ...... the US Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder US GAAP ...... generally accepted accounting principles in the United States US$, US dollars, USD or $ ...... the lawful currency of the United States VAT ...... (i) within the EU, any tax imposed by any member state in conformity with the directive of the council of the EU on the common system of value added tax (2006/112/EC), and (ii) outside the EU, any tax corresponding to, or substantially similar to, the common system of value added tax referred to in paragraph (i) of this definition Warranty Agreement ...... the warranty agreement dated 28 July 2015 between the Elster Seller and the Elster Purchaser White Form of Proxy ...... the white form of proxy for use at the Old Melrose General Meeting as provided to Shareholders with the Old Melrose Circular All times referred to are London times unless otherwise stated. All references to legislation in this Prospectus are to the legislation of England and Wales unless the contrary is indicated. Any reference to any provision of any legislation shall include any amendment, modification, re-enactment or extension thereof. Words importing the singular shall include the plural and vice versa, and words importing the masculine gender shall include the feminine or neutral gender.

119 DOCUMENTS INCORPORATED BY REFERENCE The following documentation, which was sent to Shareholders at the relevant time and/or is available for inspection in accordance with paragraph 18 of Part IX (Additional Information) of this Prospectus, contains information which is relevant to the Proposals:

1. Old Melrose’s 2015 Half Year Results and Annual Report and Accounts for the financial years ended 31 December 2014, 2013 and 2012 The Old Melrose 2014 Annual Report and Accounts, the Old Melrose 2013 Annual Report and Accounts and the Old Melrose 2012 Annual Report and Accounts contain the audited consolidated historical financial statements of Old Melrose for the financial years ended 31 December 2014, 31 December 2013 and 31 December 2012 and the audit reports in respect of each year. The Old Melrose 2015 Half Year Results contain the unaudited consolidated interim statements of Old Melrose for the six month period ended 30 June 2015.

2. Information incorporated by reference The table below sets out the documents which are incorporated by reference into this Prospectus, to ensure that Shareholders and others are aware of all information which, according to the particular nature of New Melrose and of the New Melrose Ordinary Shares, is necessary to enable Shareholders and others to make an informed assessment of the assets and liabilities, financial position, profit and losses and prospects of the Melrose Group and of the rights attaching to the New Melrose Ordinary Shares:

Page number(s) Information incorporated by reference into this in this Prospectus Location of incorporation in this Prospectus Prospectus Old Melrose 2015 Half Year Results Part V (Historical Financial Information Relating to Old Melrose)59 Old Melrose 2014 Annual Report and Part V (Historical Financial Information Accounts Relating to Old Melrose)58 Old Melrose 2013 Annual Report and Part V (Historical Financial Information Accounts Relating to Old Melrose)58 Old Melrose 2012 Annual Report and Part V (Historical Financial Information Accounts Relating to Old Melrose)58 Old Melrose’s operating and financial Part III (Operating and Financial Review review for the period ended 30 June Relating to the Melrose Group)52 2015 Old Melrose’s operating and financial Part III (Operating and Financial Review review for the year ended 31 December Relating to the Melrose Group)51 2014 Old Melrose’s operating and financial Part III (Operating and Financial Review review for the year ended 31 December Relating to the Melrose Group)51 2013 Old Melrose’s operating and financial Part III (Operating and Financial Review review for the year ended 31 December Relating to the Melrose Group)51 2012 Part IV (Financial Information related to Part VI (Unaudited Pro Forma Information the Elster Group) of the Old Melrose on the Melrose Group)60 Elster Circular Paragraphs 4.4 (Further rights attaching to Part VIII (Directors, Corporate Governance New Melrose 2012 Incentive Shares) and and Employees)71 13 (Options over New Melrose 2012 Incentive Shares) of Part XIII (Additional Information) of the Old Melrose Prospectus

120 To the extent that any document or information incorporated by reference or attached to this Prospectus itself incorporates any information by reference, either expressly or impliedly, such information will not form part of this Prospectus for the purposes of the Prospectus Rules, except where such information or documents are stated within this Prospectus as specifically being incorporated by reference or where this Prospectus is specifically defined as including such information. Any statement contained in a document which is deemed to be incorporated by reference into this Prospectus shall be deemed to be modified or superseded for the purpose of this Prospectus to the extent that a statement contained in this Prospectus (or in a later document which is incorporated by reference into this Prospectus) modifies or supersedes such earlier statement (whether expressly, by implication or otherwise). Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. Where certain parts only of a document have been incorporated by reference into this Prospectus, the other parts of those documents which have not been expressly stated to be incorporated are either not relevant to Shareholders or are covered elsewhere in this Prospectus. The information incorporated by reference is available for inspection (in respect of (i) and (ii) during normal business hours on any weekday (Saturday, Sundays and public holidays excepted)) up to and including the date of Admission (i) at the registered offices of Old Melrose and New Melrose (being 11th Floor, Colmore Plaza, 20 Colmore Circus Queensway, Birmingham, West Midlands B4 6AT), (ii) at the offices of Simpson Thacher LLP (being CityPoint, One Ropemaker Street, London EC2Y 9HU), (iii) except in the case of the Old Melrose Prospectus, at the Melrose Group’s website (www.melroseplc.net) and (iv) via the National Storage Mechanism.

121 Merrill Corporation Ltd, London 15ZCL74801