Letter to Bracell independent board committee dated June 23, 2016 in response to privatisation offer by BHL Limited announced on June 17, 2016. Follow updates and commentary on Twitter: @bracellfairness https://twitter.com/bracellfairness

1. 1
June 23, 2016
To: Bracell independent committee of the board (“Bracell IBC”) comprised of:
Mr. John Jeffrey Ying, Chairman
Mr. Jeffrey Lam Kin Fung
Mr. David Yu Hon To
Mr. Lim Ah Doo
Mr. Low Weng Keong
Mr. Armin Meyer
Cc: Bracell Independent Shareholders
Bracell IBC independent financial adviser (to be appointed)
Bracell Limited
From: Andrew Peng, Bracell Independent Shareholder
Re: Premium Take-Private Valuation Required for a Premium Asset;
Cancellation Consideration to Independent Shareholders Not Sufficient
Dear Sirs:
The proposed privatisation of Bracell Limited (1768.HK) (“Bracell” or the “Company”) by
BHL Limited (“BHL”) significantly undervalues the Company. I call upon the
independent board committee (“IBC”) to exercise your fiduciary responsibility to
Independent Shareholders (as defined in the proposed privatisation announcement
issued on June 17, 2016) and ensure that the process and outcome of the evaluation of
the privatisation offer is entirely fair and considers the facts about the business and its
appropriate valuation in light of multiple, objective methods to determine the Company’s
worth. Given the nature of the offer by the Company’s large controlling shareholder, it is
paramount that you exercise your authority to conduct an entirely fair process on behalf
of Independent Shareholders.
In this letter, I present ample evidence and analyses demonstrating that the proposed
consideration to Independent Shareholders of HK$1.78 per share is insufficient
compensation in exchange for the cancellation of independent shares. Independent
Shareholders of Bracell, owning the same shares as the controlling shareholder,
deserve to be treated fairly and receive the appropriate value for their shares in the
Company.
Over the last 14 months, I have authored three public, in-depth research reports
discussing the merits of the business and examining its markets and competitors. It
continues to be abundantly clear that Bracell is one of the best-positioned companies in
the growing dissolving wood pulp (“DWP”) industry, owing to its best-in-class production
costs, state-of-the-art, modern production facility, owned forestry assets, high quality
products, access to growing end markets, and essentially unleveraged capital structure.
Follow @bracellfairness on Twitter for further updates and commentary

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Bracell is a unique, premium asset in the growing DWP industry and as such, a
premium valuation considerably higher than the current offer is the only
conscionable path to be considered for the IBC to advise acceptance of a
privatisation offer.
SUMMARY
• Premiums analysis as disclosed in the privatisation offer is weak substantiation for
the adequacy of the offer price, as the share price increase prior to the take-private
offer announcement was driven by the “Positive Profit Alert” issued on June 8, 2016;
the premium to the unaffected price was only 13%.
• A thorough examination of the privatisation offer must take into account Company
performance through June 30, 2016, considering the magnitude of the forecasted
increase to profits during this period as disclosed in the positive profit alert.
• A more thorough examination of comparable company valuation and precedent
transactions reveals that Bracell should be valued much higher than the currently
proposed offer.
• Discounted cash flow analysis using conservative assumptions also leads to a
present value per share meaningfully higher than BHL’s proposed takeover price.
• Bracell possesses a number of “intangible” assets that are not fully captured in its
historical financial performance, including its integrated wood plantation, potential to
gain share of cellulose specialties, and “capital cycle” considerations in the DWP
industry.
• Bracell will likely generate HK$0.25-0.30/share of annual free cash flow in each
of the next two years and sustained annual free cash flow of HK$0.23/share on
a completely unleveraged capital structure. Based on these highly achievable
estimates, consideration to Independent Shareholders of HK$1.78 per share
cannot be supported.

3. 3
1) PREMIUMS ANALYSIS
The premiums analysis detailed in the proposed privatisation letter dated June 17, 2016
is flawed, in that it implies that the take private premium is adequate, given the
premiums to certain trading periods prior to the announcement date:
The premiums analysis above fails to account for the fact that the “Positive Profit Alert”
issued by the Company on June 8, 2016 occurred prior to the announcement of the
privatisation offer and thus, the acquisition premium must be based on the last trading
price on the day prior to the announcement (June 15, 2016), which was $1.57 per
share. Using this price, the proposed consideration of $1.78 is only a 13% premium
to the last unaffected trading price of Bracell shares. The timeline below depicts
the progression of events leading up to the privatisation offer:

4. 4
• Wednesday, June 8th
: Positive Profit Alert issued post-trading day, discussing
“The Group’s profit attributable to shareholders for the six months ending 30
June 2016 may increase by 100% to 150% as compared to the profit
attributable to shareholders of $32.1 million for the corresponding period in
2015.”
• Thursday, June 9th
: HK Stock Exchange holiday (Tuen Ng) – no trading.
• Friday, June 10th
: First trading day following positive profit alert; shares close at
$1.08, +20% vs. close price on June 8th
.
• Wednesday, June 15th
: Last day of trading unaffected by privatisation offer;
shares close at $1.57, +74% vs. pre-profit alert trading price.
• Thursday, June 16th
: Trading halt issued “pending the publication of an
announcement pursuant to the HK Code on Takeovers and Mergers”.
• Friday, June 17th
, a.m.: First day of trading following trading halt,
“Announcement Pursuant to Rule 3.7 of the Takeovers Code” issued prior to the
beginning of the trading day; shares reach a high of $2.00 during the trading
day and close at $1.74.
• Friday, June 17th
, p.m.: Privatisation offer announced with proposed cancellation
consideration of $1.78, premium of 13% to last unaffected trading price.
Based on this timeline, the share price increase occurred in two stages; first, from $0.90
to $1.57 as a result of the positive profit alert issued after trading hours on June 8th
, and
second, following the resumption of trading after the announcement of a pending
takeover proposal. Due to the nature and sequence of events preceding the
announcement of the privatisation offer, the calculation of acquisition premium
cannot be based on a typical “7/30/60/90-day” trading period analysis; rather, the
acquisition premium must take into account that the positive profit alert drove the

5. 5
Company’s share price higher before shares further increased due to the privatisation
offer that was announced just days later.
2) COMPANY COMPARABLES ANALYSIS
Please refer to the attached Exhibit 2.
An appropriate valuation for Bracell should be based, in part, on the fair market
valuation of publicly-listed peers operating in the DWP industry. The following publicly-
listed companies are comparable businesses to Bracell, due to their focus on supplying
specialty and rayon-grade DWP products:
• Rayonier Advanced Materials (NYSE: RYAM)
• Sappi Limited (JSE: SAP)
• Tembec (TSE: TMB)
• Lenzing AG (VIE: LNZ)
These companies represent Bracell’s largest competitors in the DWP industry. While
several of them generate revenue from other business segments (e.g. paper), all of
them rely on the production of specialty and commodity grades of cellulose pulp as a
primary business segment.
The valuation analysis of Bracell comparables (based on reported LTM historical
financials) illustrates the degree to which BHL’s offer undervalues the Company.
Bracell’s superior margins and cash generation potential should be reflected in the take-
private valuation, and yet the offer values the business at a lower multiple than its
peers, all of which have inferior margins and more leveraged capital structures.
Note: the implied valuation range below applies median valuation multiples from the
comps analysis to Bracell’s estimated LTM June 30, 2016 results, in part based on the
directional guidance provided in the positive profit alert issued June 8, 2016. A more
accurate implied valuation would clearly benefit from the use of actual reported LTM
June 30, 2016 results, adjusted for non-recurring and non-cash items.
• Bracell valuation range implied by comparables analysis: HK$2.68 –
3.04/share.
3) PRECEDENT TRANSACTIONS ANALYSIS
Please refer to the attached Exhibit 3.
Several recent acquisition transactions in the DWP industry should also serve as
valuation benchmarks in the assessment of fair value of Bracell in a privatisation offer.
These transactions include the following:

6. 6
• Georgia Pacific acquisition of Buckeye Technologies, Inc. (completed August 23,
2013)
• International Paper acquisition of Weyerhaeuser Cellulose Fibers assets
(announced May 2, 2016)
These acquisitions were made (or announced) at significantly higher multiples,
particularly on an EBITDA-Maintenance CapEx basis. It is also worth noting that none
of the acquisition targets have margins as attractive as those of Bracell (by any
standard measure of profits or cash flow).
• Bracell valuation range implied by comparables analysis: HK$2.46 –
3.56/share.
4) DCF ANALYSIS INCLUDING BENEFIT OF TAX ASSETS
Please refer to the attached Exhibit 4.
A discounted cash flow analysis using a reasonably conservative, long-term model of
Bracell cash flows further suggests that the business should be valued significantly
higher than BHL’s current offer. Incorporated in this model is an estimate for the
benefits of unused tax losses stemming from Sateri’s initial acquisition of the Brazilian
DWP assets in 2003, in addition to benefits arising from a 75% reduction in Brazilian
Corporate Tax (“BCT”) as described in the Company’s 2015 annual report.
Note the following key underlying assumptions:
• No volume growth assumed beyond 2017 (first full year following 2016
debottlenecking to achieve design production capacity)
• Nominal revenue growth driven by extremely modest ASP increases
• EBITDA margin compression due to rising cash costs relative to ASP increases
• Restoration of full taxes paid following the exhaustion of unused tax losses and
expiration of BCT reductions discussed above
• Depreciation expense normalizes over time to $35m, consistent with
maintenance (i.e. no volume output growth) levels of CapEx (that are supported
by multiple years of historical reported data)
• Changes in working capital do not represent a meaningful source or use of cash
going forward (despite being a positive driver of cash flow in 2015)
• 10% WACC based on an entirely fair (if not conservative) assessment of required
rate of return for an unleveraged, premium asset selling into growing end
markets
• 1% terminal growth rate, in-line with the above assumptions
• Bracell valuation implied by DCF using assumptions above: HK$2.26/share.

7. 7
OTHER VALUE DRIVERS
• In its FY2015 investor presentation (slide 38), Bracell competitor Lenzing AG
expressed a strategic intent to control more of its “own pulp supply” through
“backward integration”. It is clear that having a captive wood plantation makes
DWP producers more cost competitive, another reason why Bracell is such a
valuable asset in a highly competitive global DWP market; it is one of the very
few producers that controls 100% of its own supply of wood pulp.
• Bracell’s supply of a limited volume of cellulose specialties (118k ADMTs in
2015, up from 92k ADMTs in 2011) is another important value driver for the
Company, because it demonstrates that Bracell has managed to qualify its
products into the ultra-high specification segment of the DWP industry (e.g.
acetate tow, electronics, MCCs, filtration, tire cord, etc.), which brings higher
margins due to its less commoditized nature. While the Company has not
meaningfully grown share in this attractive market segment during the last
several years, it has increasingly made inroads and is well-positioned to win
future business. It must be emphasized that this type of qualification with the
largest, most discerning global customers is an important asset; in the words of a
direct competitor during an earnings call, Bracell’s ability to manufacture acetate
from eucalyptus pulp is a “relatively big breakthrough”. While the selling cycles
to win such attractive business are long, the fact that Bracell has qualified with
major customers for this type of product is a significant intangible asset.
• In the most recent write-up on the Company, I described the “capital cycle”
dynamics of commodity industries in reference to the industry dynamics playing
out in DWP, which is still working off excess capacity built in the 2011-2014
timeframe in response to high ASPs at the turn of the decade. I wrote,
“Bracell’s competitive position is highly enviable; near the trough of the
capital cycle it remains profitable, almost debt-free, and has the ability to
both invest in incremental capacity and pay its shareholders a meaningful
dividend.”
• DWP is a growth market (estimated at +5-6% per annum), fueled by developing
world demand for more sustainable, efficient sources of fiber used in everyday
consumer goods. Please refer to the attached Exhibit 5. As one of the lowest-
cost, large-scale, vertically integrated producers of cellulose pulp, Bracell has a
commanding position to supply into these growth markets on an extremely
competitive basis. This is an extraordinarily important consideration in the
context of the “capital cycle”, as DWP overcapacity present today will rapidly be
worked off as demand volumes continue to grow.
• Given the current point near the trough of the DWP capital cycle, it is
understandable that the controlling shareholder prefers to own 100% of the
Company; if capital cycle dynamics play out as contemplated, Bracell will be in a
coveted position to generate even higher profits as the industry exits its
oversupplied state, well above those modeled in the conservative DCF analysis
above.

8. 8
CONCLUSION
The privatisation offer of $1.78 per share as proposed by BHL Limited is simply not
adequate when viewed in conjunction with the preponderance of valuation data and the
Company’s own strong performance to date.
While it is up to the Bracell IBC to recommend a course of action that takes into account
the above facts and ensures that Independent Shareholders are treated fairly, it is
ultimately up to individual shareholders to decide whether to vote shares in favor of the
transaction. I believe that BHL’s offer is completely inadequate to reward Independent
Shareholders for the actual performance of the business and the superior quality of the
assets, particularly considering its ability to generate large amounts of cash flow going
forward (as it has in the past). Even under conservatively-modeled scenarios, the
business is worth significantly more than the current price offered by BHL.
“In the end, what counts in investing is what you pay for a business – through the
purchase of a small piece of it in the stock market – and what that business earns in the
succeeding decade or two.” – Warren Buffett
In your capacity as the independent board committee evaluating the privatisation offer, I
urge you not to evaluate the offer solely based on a premiums analysis or an
opportunity to achieve liquidity in an otherwise low-volume stock; Bracell is an attractive
business with a number of solid “moats” that now, and in the future, generate significant
cash flow for owners. Recommending a sale of shares to BHL at HK$1.78/share
when the business has the potential to sustainably generate HK$0.23/share or
higher in annual free cash flow cannot be justified.
I invite any members of the Bracell IBC or other Independent Shareholders of the
Company to contact me with questions or comments about any of the contents of this
letter.
Sincerely,
Andrew Peng
A Bracell Independent Shareholder
drew_peng@yahoo.com

9. 9
Q&A
Q. What is the purpose of this letter?
A. To ensure that Independent Shareholders get a fair deal in the privatisation
transaction being contemplated and to remind the Bracell independent board
committee of their fiduciary duty to all shareholders, particularly those other than the
controlling shareholder/offeror and any interested parties connected to the
controlling shareholder.
Q. What if the Controlling Shareholder rescinds the offer? Will the share price
decline and why aren’t you afraid of that?
A. The establishment of fair value sought in this letter means that Independent
Shareholders are indifferent to exchanging their shares for a fair price or continuing
to hold them. Despite a history of illiquidity in the trading of Bracell shares, the cash
flow generated by the business and ensuing dividend growth support a higher share
price; for instance, in each of 2017 and 2018, the business will be able to generate
HK$0.25-0.30/share in free cash flow alone (refer to attached DCF model). Board
and management have thus far demonstrated strong alignment with all
shareholders, exhibited by the large increase in the combined annual dividend over
the last year (+60% growth). Should the Company remain public, dividends should
increase precipitously as net debt is reduced to zero within the next year, and the
Company will generate significant amounts of free cash flow available for return to
shareholders. As per Warren Buffett: “If a business does well, the stock eventually
goes up.”
Q. What about Brazil? Do the risks of owning assets in Brazil merit a discount?
A. If Bracell were a business heavily exposed to the Brazilian economy, there could be
a case for a valuation discount; however, Bracell is 100% export-based and not
exposed to the Brazilian economy other than through a portion of its production
costs. Furthermore, export-focused, resource-intensive industries generally have an
advantage in being located in Brazil given its well-developed infrastructure,
abundance of natural resources, and stable business environment.
Q. Is Bracell’s competitive advantage predicated on a weak Brazilian Real?
A. No, even when the Real was much stronger against the US Dollar (2011-14), the
business earned industry-leading margins in spite of average selling price pressures.
The Company’s advantages are based on its high quality product, integrated wood
supply, and best-in-class production costs.
Q. The Controlling Shareholder’s business entity, Sateri, is responsible for nearly
2/3 of Bracell’s revenue through a pulp supply agreement (“PSA”, currently
expires at the end of 2017). Is this a concern?
A. No. Bracell produces extremely high quality product and the PSA is based on spot
market pricing (there is no pricing advantage to Bracell whatsoever). The
arrangement with Sateri is mutually beneficial, in that both companies achieve
certainty and consistency of supply and demand, respectively. Moreover, Bracell’s

10. 10
controlling shareholder already owns both companies and will make rational
decisions that consider their best interests. While the original intent of separating
Sateri was to enable Bracell to pursue higher margin business, it would be self-
defeating for Sateri to shift business away from Bracell before Bracell has had the
opportunity to gain market share in cellulose specialties.

11. Exhibit 2
LTM 3/31/16 Operating Metrics Market Stats as of June 23, 2016 Valuation Metrics
TEV /
Reporting Adj EBITDA - Trading MRQ Diluted TEV / TEV / Adj EBITDA -
Company Currency Revenue Adj EBITDA Adj EBIT Mtce CapEx Mtce CapEx Currency Exch Rate Share Price Shares Out Market Cap Net Debt TEV Adj EBITDA Adj EBIT Mtce CapEx
Rayonier Advanced Materials USD $927 $246 $157 $74 $172 USD $13.60 42.3 $575 $705 $1,280 5.2x 8.2x 7.4x
Sappi USD $5,253 $680 $424 $219 $461 ZAR 0.0693 69.00 541.4 $2,589 $1,652 $4,241 6.2x 10.0x 9.2x
Tembec(1)
CAD 1,472 108 59 38 70 CAD 1.09 100 109 758 867 8.0x 14.8x 12.4x
Lenzing AG EUR 2,015 323 184 76 247 EUR 82.99 26.6 2,203 242 2,446 7.6x 13.3x 9.9x
Min 5.2x 8.2x 7.4x
Max 8.0x 14.8x 12.4x
Median 6.9x 11.7x 9.6x
Average 6.8x 11.6x 9.7x
Bracell(2)
@ Proposed Offer Price USD $450 $205 $108 $67 $138 HKD 7.75 1.78 3,421.9 $786 $77 $863 4.2x 8.0x 6.2x
% above/below Median Multiples -> (39%) (32%) (35%)
% above/below Average Multiples -> (38%) (31%) (36%)
Bracell Implied Valuation Based on Comparables Analysis
Bracell % Premium to
Median Comparables Multiples TEV Mkt Cap Share Price Offer
TEV / Adj EBITDA 6.9x $1,419 $1,342 $3.04 70.7%
TEV / Adj EBIT 11.7x $1,259 $1,183 $2.68 50.5%
TEV / Adj EBITDA-Mtce CapEx 9.6x $1,321 $1,244 $2.82 58.3%
Exhibit 3
LTM Operating Metrics prior to acquisition Acquisition Valuation Metrics
TEV /
Adj EBITDA - Acquisition TEV / TEV / Adj EBITDA -
Target - Acquirer Closed Revenue Adj EBITDA Adj EBIT Mtce CapEx Mtce CapEx TEV Adj EBITDA Adj EBIT Mtce CapEx
Buckeye - GP(3)
Aug 2013 $812 $179 $133 $80 $99 $1,456 8.1x 11.0x 14.7x
Wayerhaeuser CF - IP(4)
[TBD] $1,545 $308 $180 $100 $208 $1,900 6.2x 10.6x 9.1x
Average 7.1x 10.8x 11.9x
Bracell % above/below -> (41%) (26%) (48%)
Bracell Implied Valuation Based on Precedent Transactions Analysis
Precedent Transactions Avg Multiples
TEV / Adj EBITDA 7.1x $1,468 $1,391 $3.15 77.0%
TEV / Adj EBIT 10.8x $1,163 $1,086 $2.46 38.2%
TEV / Adj EBITDA-Mtce CapEx 11.9x $1,648 $1,572 $3.56 100.0%
Notes:
(1) LTM operating metrics pro forma for benefit of Temiscaming boiler project.
(2) Bracell operating metrics are estimated for LTM period ending 6/30/16. Maintenance CapEx estimate excludes spend for further de-bottlenecking.
(3) LTM operating metrics for FYE 6/30/13. Buckeye maintenance CapEx is estimated based on prior years.
(4) LTM operating metrics as of 3/31/16. For Wayerhaeuser Cellulose Fibers segment excluding liquid packaging board sub-segment. Maintenance CapEx estimated based on prior years; acquisition TEV of $1.9 billion is net of $300m NPV of anticipated tax benefits.
Comparable Companies
Precedent Transactions

12. Exhibit 4: Bracell Discounted Cash Flow Analysis
Financial amounts in US$ millions, unless otherwise noted
0 1 2 3 4 5 6 7 8 9 10
FYE 12/31, 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
OPERATING MODEL Comments
Price per ADMT
Rayon-grade $844 827 852 869 886 904 922 940 959 978 998
% change (2.0%) 3.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
CS 1,312 1,273 1,273 1,286 1,299 1,312 1,325 1,338 1,351 1,365 1,379
% change (3.0%) 0.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0%
Blended Average Selling Price per ADMT $964 $939 $954 $970 $987 $1,003 $1,020 $1,037 $1,055 $1,073 $1,091
% change (2.6%) 1.6% 1.7% 1.7% 1.7% 1.7% 1.7% 1.7% 1.7% 1.7%
Volume (000s of ADMTs)
Rayon-grade 342 352 367 367 367 367 367 367 367 367 367
% growth 3% 4% 0% 0% 0% 0% 0% 0% 0% 0%
CS 118 118 118 118 118 118 118 118 118 118 118 - Assumes no CS volume gains
% growth 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Total 460 470 485 485 485 485 485 485 485 485 485 - Production reaches theoretical capacity in 2017 and stays flat thereafter
% growth 2% 3% 0% 0% 0% 0% 0% 0% 0% 0%
Revenue
Rayon-grade $289 $291 $312 $319 $325 $331 $338 $345 $352 $359 $366
CS 155 151 151 152 154 155 157 158 160 161 163
Total Revenue $444 $441 $463 $471 $479 $487 $495 $503 $512 $520 $529
% growth (1%) 5% 2% 2% 2% 2% 2% 2% 2% 2%
CoGS (incl depreciation expense) ($274) ($258) ($266) ($266) ($266) ($267) ($267) ($268) ($268) ($274) ($280)
Cash CoGS (excl depreciation expense) ($206) ($190) ($201) ($206) ($211) ($217) ($222) ($228) ($233) ($239) ($245) - Cash production costs excluding depreciation
Cash cost of production / ADMT ($447) ($405) ($415) ($425) ($436) ($447) ($458) ($469) ($481) ($493) ($505)
% growth (10%) 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% - Assumes rate of growth above ASP growth
Gross Margin $170 $183 $197 $205 $212 $220 $228 $236 $243 $246 $249
% of sales 38.3% 41.5% 42.5% 43.5% 44.4% 45.2% 46.0% 46.8% 47.6% 47.3% 47.1%
% contribution margin (553%) 63% 100% 98% 96% 95% 93% 92% 32% 32%
Operating Expenses
Selling & Distribution ($41) ($41) ($41) ($42) ($43) ($44) ($45) ($45) ($46) ($47) ($48)
% of sales (9.3%) (9.3%) (8.9%) (8.9%) (8.9%) (9.0%) (9.0%) (9.0%) (9.1%) (9.1%) (9.1%)
General & Administrative (39) ($36) ($40) ($41) ($42) ($43) ($44) ($44) ($45) ($46) ($47)
% of sales (8.7%) (8.2%) (8.7%) (8.7%) (8.8%) (8.8%) (8.8%) (8.8%) (8.9%) (8.9%) (8.9%)
Total OpEx ($80) ($78) ($81) ($83) ($85) ($86) ($88) ($90) ($92) ($94) ($95)
% of sales (18.0%) (17.6%) (17.6%) (17.6%) (17.7%) (17.8%) (17.8%) (17.9%) (17.9%) (18.0%) (18.0%)
% growth (3.0%) 5.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Depreciation ($68) ($68) ($65) ($60) ($55) ($50) ($45) ($40) ($35) ($35) ($35) - Eventually normalizes to maintenance capex level
% of sales (15.3%) (15.4%) (14.0%) (12.7%) (11.5%) (10.3%) (9.1%) (8.0%) (6.8%) (6.7%) (6.6%)
Decrease due to harvest charges (29) (29) (31) (31) (32) (32) (33) (33) (34) (34) (35) - Grow based on total revenue growth rate
% of sales (6.6%) (6.6%) (6.6%) (6.6%) (6.6%) (6.6%) (6.6%) (6.6%) (6.6%) (6.6%) (6.6%)
Calculated Adj EBITDA $187 $203 $211 $213 $214 $216 $217 $219 $220 $222 $224
Other Income (Expense) ($4) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 - Assume no incremental income from sales of surplus electricity going forward
Adjusted EBITDA $184 $203 $211 $213 $214 $216 $217 $219 $220 $222 $224
% of sales 41.4% 46.0% 45.6% 45.2% 44.8% 44.3% 43.9% 43.5% 43.1% 42.7% 42.3%
% growth 10.4% 4.0% 0.8% 0.8% 0.7% 0.7% 0.7% 0.7% 0.7% 0.7%
Adjusted EBIT $87 $106 $115 $122 $128 $134 $140 $146 $152 $153 $154
% of sales 19.5% 24.0% 24.9% 25.8% 26.7% 27.5% 28.2% 29.0% 29.7% 29.3% 29.0%
% growth 22.2% 9.1% 5.3% 5.0% 4.7% 4.5% 4.3% 4.1% 0.6% 0.6%
CapEx ($51) ($70) ($70) ($70) ($70) ($70) ($70) ($70) ($70) ($70) ($70)
Additions of forestation assets ($31) ($35) ($35) ($35) ($35) ($35) ($35) ($35) ($35) ($35) ($35)
Additions to PP&E (20) (35) (35) (35) (35) (35) (35) (35) (35) (35) (35)
% of sales (4.5%) (7.9%) (7.6%) (7.4%) (7.3%) (7.2%) (7.1%) (7.0%) (6.8%) (6.7%) (6.6%)
Interest & financing expense ($19) ($11) ($4) $0 $0 $0 $0 $0 $0 $0 $0 - Stops incurring interest expense following total debt paydown
Effective interest rate on average gross debt (6.2%) (6.2%) (6.2%) N/A N/A N/A N/A N/A N/A N/A N/A
TAX MODEL
Adjusted EBT $68 $95 $112 $122 $128 $134 $140 $146 $152 $153 $154
% growth 40.2% 17.6% 8.9% 5.0% 4.7% 4.5% 4.3% 4.1% 0.6% 0.6%
% Portion of EBT against which unused tax losses can be used 30% 30% 30% 30% 30% 30% 30% 30% 30% 30% 30% - Unused tax losses can only be applied to 30% of EBT per 2015 annual report
$ Portion of EBT against which unused tax losses can be used ($20) ($28) ($33) ($34) $0 $0 $0 $0 $0 $0 $0
Earnings Before Tax after effect of unused tax losses $47 $66 $78 $88 $128 $134 $140 $146 $152 $153 $154
Standard BCT tax rate 34% 34% 34% 34% 34% 34% 34% 34% 34% 34% 34%
$ Taxes at standard BCT rate $16 $23 $27 $30 $43 $45 $47 $50 $52 $52 $52
75% reduction in BCT (through 2018) (12) (17) (20) (22) 0 0 0 0 0 0 0 - Reduction in BCT only through 2018 per 2015 annual report
Net BCT paid $4 $6 $7 $7 $43 $45 $47 $50 $52 $52 $52
Effective tax rate 6% 6% 6% 6% 34% 34% 34% 34% 34% 34% 34%
Delta between Standard BCT owed vs. BCT Paid (Overall tax benefit) $19 $27 $31 $34 $0 $0 $0 $0 $0 $0 $0
Balance of unused tax losses
Opening balance $95.8 $67.4 $33.9 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
Used (28) (33) (34) 0 0 0 0 0 0 0
Ending balance $95.8 $67.4 $33.9 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 - 2015 year-end balance disclosed in 2015 annual report

13. Exhibit 4: Bracell Discounted Cash Flow Analysis
Financial amounts in US$ millions, unless otherwise noted
0 1 2 3 4 5 6 7 8 9 10
FYE 12/31, 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
TAX MODEL
Adjusted EBT $68 $95 $112 $122 $128 $134 $140 $146 $152 $153 $154
% growth 40.2% 17.6% 8.9% 5.0% 4.7% 4.5% 4.3% 4.1% 0.6% 0.6%
% Portion of EBT against which unused tax losses can be used 30% 30% 30% 30% 30% 30% 30% 30% 30% 30% 30% - Unused tax losses can only be applied to 30% of EBT per 2015 annual report
$ Portion of EBT against which unused tax losses can be used ($20) ($28) ($33) ($34) $0 $0 $0 $0 $0 $0 $0
Earnings Before Tax after effect of unused tax losses $47 $66 $78 $88 $128 $134 $140 $146 $152 $153 $154
Standard BCT tax rate 34% 34% 34% 34% 34% 34% 34% 34% 34% 34% 34%
$ Taxes at standard BCT rate $16 $23 $27 $30 $43 $45 $47 $50 $52 $52 $52
75% reduction in BCT (through 2018) (12) (17) (20) (22) 0 0 0 0 0 0 0 - Reduction in BCT only through 2018 per 2015 annual report
Net BCT paid $4 $6 $7 $7 $43 $45 $47 $50 $52 $52 $52
Effective tax rate 6% 6% 6% 6% 34% 34% 34% 34% 34% 34% 34%
Delta between Standard BCT owed vs. BCT Paid (Overall tax benefit) $19 $27 $31 $34 $0 $0 $0 $0 $0 $0 $0
Balance of unused tax losses
Opening balance $95.8 $67.4 $33.9 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
Used (28) (33) (34) 0 0 0 0 0 0 0
Ending balance $95.8 $67.4 $33.9 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 - 2015 year-end balance disclosed in 2015 annual report
CASH FLOW MODEL
CFFO (net of interest expense and taxes paid) $206 $203 $200 $205 $171 $170 $170 $169 $169 $170 $171
% of Adj EBITDA 112% 100% 95% 96% 80% 79% 78% 77% 77% 77% 77%
CapEx ($51) ($70) ($70) ($70) ($70) ($70) ($70) ($70) ($70) ($70) ($70)
FCF $155 $133 $130 $135 $101 $100 $100 $99 $99 $100 $101
% growth (14%) (2%) 4% (25%) (0%) (0%) (0%) (0%) 1% 1%
FCF per share $0.35 $0.30 $0.30 $0.31 $0.23 $0.23 $0.23 $0.23 $0.22 $0.23 $0.23
BALANCE SHEET MODEL (if FCF was not distributed via dividend)
Bank balances and cash ($101) ($96) ($96) ($96) ($96) ($96) ($96) ($96) ($96) ($96) ($96) ($96)
Bank borrowings (current + long-term) 376 233 $118 $5 ($112) ($196) ($278) ($360) ($442) ($523) ($606) ($689)
Net debt $275 $137 $22 ($91) ($208) ($292) ($374) ($456) ($538) ($619) ($702) ($785)
As Multiple of Adj EBITDA 0.7x 0.1x (0.4x) (1.0x) (1.4x) (1.7x) (2.1x) (2.5x) (2.8x) (3.2x) (3.5x)
VALUATION MODEL
Terminal growth rate 1.0%
WACC 10%
PV of Modeled Cash Flows (2016-2025) $696
PV of Terminal Cash Flow (2026+) 438 TV CHECK:
Total PV $1,134 Undiscounted TV $1,137
Multiple of Adjusted EBITDA 5.6x Multiple of Adjusted EBITDA 5.1x
Multiple of Adjusted EBIT 10.7x Multiple of Adjusted EBIT 7.4x
Multiple of Adjusted EBITDA - CapEx 8.5x Multiple of Adjusted EBITDA - CapEx 7.4x
Less: Net debt at 12/31/15 ($137) - Use net debt at 12/31/15 because DCF already incorporates cash flow in 2016E
Net Present Value of Equity $997
Shares outstanding 3,421.9
HK$ Exchange Rate 7.75
HK$ NPV per share $2.26
% premium to proposed privatisation offer 26.9%
Memo: NPV of Tax Benefits at above WACC rate $75.5
Value per share (HK$) $0.17

14. Exhibit 5: DWP is a global growth market
Excerpted from Lenzing AG Q1 2016 Investor Presentation