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1 29 August 2013 MARKET UPDATE PAPERLINX SPS TRUST Fair value determination for the annual financial report Fair value determined at $19.95 million ($7 per LLC preference share) as at 30 June 2013 using the market price of the PaperlinX SPS Trust at 30 June 2013 Net loss of $45.5 million for the year ended 30 June 2013 is the independent responsible entity (Responsible Entity) of the PaperlinX SPS Trust (Trust or SPS Trust). The Trust s financial report for the year ended 30 June 2013 has been released to the market today. The Responsible Entity considers it appropriate to provide further information about the results of the valuation process in determining the fair value of the Trust s investment, given unitholder feedback and the circumstances and uncertainties surrounding the Trust s investment in the PaperlinX SPS LLC (LLC) which is a controlled entity of PaperlinX Limited (PaperlinX). In preparing the financial report of the Trust for the year ended 30 June 2013, the Directors of the Responsible Entity are required to make an assessment of the fair value of the Trust s investment in the LLC preference shares. The Responsible Entity is not privy to information in relation to PaperlinX or the LLC other than that which is in the public domain. The Responsible Entity has considered the annual financial report of PaperlinX for the year ended 30 June 2013 released on 21 August 2013 and related announcements PaperlinX made in relation to its results. The Responsible Entity has also noted market commentaries, including broker commentaries and acknowledges feedback from the Trust s unitholders and their views on valuation, and has sought professional advice before determining the fair value of the Trust s investment in the LLC preference shares. Approach to determining fair value PaperlinX, in its announcements to the market on the 21 August 2013, indicated that: FY13 has been a difficult year and trading conditions remain challenging; Turnaround strategy is progressing, with significant restructuring initiatives undertaken, particularly in Europe; Funding is in place; extension of lending arrangements in Europe and New Zealand and new facilities implemented in Europe to assist liquidity and improve flexibility; Initiatives to grow diversified products are progressing; Key markets in Benelux, Germany and UK delivered unsatisfactory results, however strong performances in Canada, Australia and New Zealand; Continued focus on working capital initiatives to release cash; and

2 In order to unlock value for both ordinary shareholders and hybrid security holders, PaperlinX has been exploring the possibility of a transaction, such as a potential share swap, between PaperlinX and the SPS Trust. Valuation Methodology and Assumptions In relation to the SPS Trust s investment in the LLC preference shares ( LLC investment ) as at 30 June 2013: The Directors of the Responsible Entity determined it was appropriate to refine the valuation methodology underlying its assessment of the fair value of the LLC investment as at 30 June 2013; The fair value determination has been made for accounting purposes as at 30 June 2013 and is based on the market price of the SPS Trust at balance sheet date. The market price has been used as a proxy for the fair value of the LLC investment and is considered by the Directors of the Responsible Entity to be the best available evidence of value at balance sheet date for accounting purposes; The market price has been selected to be the most appropriate valuation basis due to the increased inherent difficulty associated with determining a valuation with a lack of information around key assumptions required to prepare a valuation using a detailed valuation technique (for example the amount and timing of future cash flows, decline in broker coverage and therefore reliability of estimates in the market); and The fair value adopted at 30 June 2013 may differ significantly from the price that may arise as a result of any corporate action. The Directors of the Responsible Entity are committed to ensuring the SPS Holders rights are appropriately recognised in any potential scrip-based merger or any other corporate action between PaperlinX and the SPS Trust. There is no certainty that such a proposal will be advanced or approved by PaperlinX shareholders or SPS Holders. The next table sets out the valuation methods used in recent periods and summarises the key assumptions used in the valuation process for the year ended 30 June 2013 and for the recent prior periods (periods ended 31 December 2012, 30 June 2012, 31 December 2011 and 30 June 2011).

3 Valuation Date Valuation Method Used Basic Assumptions 30/06/2013 Market price Market capitalisation of the SPS Trust as at 30 June 2013 is the most reliable proxy of the valuation of the LLC investment. 31/12/ /06/ /12/ /06/2011 DCF, with regard to other methods Multiple valuation techniques Multiple valuation techniques DCF, with regard to other methods Principal redemption (plus 12 months of unpaid distributions) in June 2021; No further distributions will be paid; and A risk adjusted discount rate of 22.5 to 27.5 percent. The step-up margin will apply from 1 July 2012; A change of control transaction has not been used as a valuation methodology; No further distributions will be paid (DCF model); Principal redemption (plus 12 months of unpaid distributions) in June 2021 (DCF model); A risk adjusted discount rate of 22.5 to 27.5 percent (DCF model); 1 month VWAP of the SPS Units trading price (Market based assessment model); EBITDA multiples against brokers FY14 and FY15 forecasts (Orderly realisation going concern basis model); and Net assets of PaperlinX as at 30 June 2012 (Net assets approach). The step up margin will apply from 1 July 2012; Distributions will resume from December 2015; A full redemption will be made in December 2019; A risk adjusted discount rate of 20 to 25 percent; 1 month VWAP of the SPS Units trading price; EBITDA multiples of PaperlinX; Full conversion in a change control event; and Net assets of PaperlinX as at 31 December The LLC will continue to pay half-yearly distributions into perpetuity and there will be no redemption in the foreseeable future; Distributions will be paid at the margin of 2.40% from 1 July 2011 to 31 December 2012 and thereafter at the step-up margin of 4.65%; and A risk adjusted discount rate of 27.5%. The discount rate reflects the uncertainty in future cash flows and includes an appropriate credit margin for PaperlinX Group for this type of investment. The Responsible Entity notes that there is considerable uncertainty around the future performance and outcomes of PaperlinX and hence the SPS Trust, and any assumptions made in preparing the financial statements may or may not be realised in the future. An outline of the valuation methodologies referenced in the table above is set out below: 1. Market Based Assessment This involves a review of the historical ASX trading in the SPS Trust Units assuming a degree of market efficiency, the implied discount rate/yield to maturity built into current trading, and the market s implicit assumptions regarding distributions, repayment and recoverability. The Directors of the Responsible Entity considered that there was increased inherent difficulty with determining a valuation using a DCF methodology, due to the lack of information around key assumptions required to prepare such a valuation. The Directors therefore determined that the market price of the SPS units is

4 the appropriate valuation methodology to be used to value the SPS units at 30 June DCF model The Responsible Entity does not have access to the internal cash flow projections of PaperlinX and has relied on market information and broker reports to assess assumptions underpinning a DCF model for the LLC Investment. There is uncertainty regarding future cash flows given the limited broker coverage. 3. Orderly realisation (going concern basis) This involves considerations around the theoretical break-up of PaperlinX based only on public information, considering the asset pricing environment in the current market, the inherent enterprise value of PaperlinX and the implied residual value to cover the SPS Trust after repaying secured and unsecured liabilities. 4. Net Assets Approach This involves considerations around what value is implied by PaperlinX s 31 December 2012 financial accounts (approach not used at 30 June 2013) noting the uncertainties raised in PaperlinX s accounts, and noting off-balance sheet items such as operating lease commitments that may be required to be considered under this approach. 5. Realisation via Change of Control Transaction This methodology ceased being utilised at 31 December 2012 given that the PaperlinX Change of Control transaction announced in December 2011 did not proceed. Summary of fair value Given the range of inputs and assumptions, the range of values that can be derived using different valuation methodologies, the uncertainties surrounding PaperlinX s operations and the fact that the Responsible Entity does not have access to the internal cash flow forecasts of PaperlinX, or the ability to require PaperlinX to fund distributions to the SPS Trust. Fair value estimates under such circumstances are inherently subjective in nature. The market price of the SPS Trust was considered to be the most appropriate valuation methodology proxy in order to value the LLC investment as at 30 June The Directors determined that the fair value of the LLC preference shares can be reasonably estimated to be $19.95 million ($7 per LLC preference share) as at 30 June 2013 (30 June 2012: $65.6 million; $23 per LLC preference share). The Responsible Entity is not privy to financial or operational information about PaperlinX or the LLC and the Responsible Entity has relied on publicly available information in assessing the fair value of the LLC Investment. Any assessment of fair value is inherently subjective in nature and may differ significantly from actual results that may be obtained under any sale transaction involving PaperlinX or the Trust. The Responsible Entity emphasises that its assessment of the fair value of the LLC Investment is for financial reporting purposes and does not otherwise impact on the rights of the Trust s unitholders. The Responsible Entity reiterates that there is considerable uncertainty around the future performance and outcomes of PaperlinX and the Trust, and the assumptions and assessments made in preparing the financial report may or may not be realised in the future.

5 ENDS SPS Holders with further questions, please contact: Rupert Smoker Head of Corporate and Debt Capital Markets Trustee Services Any media with further questions, please contact: Paul Cheal Honner Media