Underlying EBIT,
adjusted for asset sales and the implementation of strategic initiatives, was
$197.7m, up 26% on the prior year). PaperlinX shareholders will receive a final
dividend of 6c per share, unfranked.

PaperlinX says benefits
have begun to accrue from previously announced strategic initiatives with above
target net benefits of $41m flowing to profit in 2007 (against 2005 base). Its
target has been to achieve over $100m in net benefits from strategic initiatives
in 2009 off the base of its 2005 EBIT. PaperlinX says its current potential is
to exceed that target by $20mi, but it says there is still much to be done
before the full benefits of these initiatives are realized.

The company says product
mix management, strong cost management and good efficiency performance helped
to mitigate higher input costs

It achieved a lift in
underlying return on average funds employed for both its merchanting and
manufacturing businesses

However its returns
remain below target levels due to a challenging external environment with
pressure continuing from high input costs, soft demand and currency impacts.

Commenting on the
result, Tom Park, CEO of PaperlinX said, "This is a good result in a difficult
environment. We have further enhanced our future prospects during the year, and
while 2008 will also be tough given the external conditions existing as we have
entered the year, we look to 2009 with enthusiasm when our internal activities
will contribute even more significantly. I believe our progress so far on the
strategic initiatives is a tribute to the idea transfer, commitment and change
management skills of our people around the globe."

He added, "It appears
that the financial market has not yet attributed significant value to the
future benefits from strategic initiatives given the focus in the short term on
the volatile macro factors such as currency and European pricing. However, as
we progress through the year and move closer to the completion of our key
projects, we will have greater certainty and see value attributed to the
benefits that will accrue to PaperlinX in 2009 and beyond. Additionally, our
earnings are highly leveraged to any improvement in external market
conditions."

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