SUPPLEMENTARY TARGET’S STATEMENT NSX LIMITED Level 2, 117 Scott Street, Newcastle NSW, 2300 PO BOX 283, Newcastle, NSW, 2300 P: +61 2 4929 6377 F: +61 2 4929 1556 www.nsxa.com.au www.simvse.com.au Incorporating NSX Limited ABN: 33 089 447 058 National Stock Exchange of Australia Limited ABN: 11 000 902 063 SIM Venture Securities Exchange Limited ABN: 41 087 708 898 This is an important document and requires your immediate attention. If you are in any doubt as For personal use only to how to act, you should consult your financial or legal adviser as soon as possible. If you have recently sold all of your NSX Shares, please disregard this document. Supplementary Target's Statement This document is a supplementary target's statement under section 644 of the Corporations Act 2001 (Cth). It is the first supplementary target's statement (Supplementary Target's Statement) to the target's statement of NSX Limited (ACN 089 447 058) (NSX) dated 22 June 2011 (Original Target's Statement) in relation to the off-market takeover bid of FEX Equity Markets Pty Limited (ACN 150 665 044) (FEX) for all of the ordinary shares in NSX (Offer). This Supplementary Target's Statement supplements, and should be read together with, the Original Target's Statement. This Supplementary Target's Statement will prevail to the extent of any inconsistency with the Original Target's Statement. Unless the context requires otherwise, capitalised terms defined in the Original Target's Statement have the same meaning where used in this Supplementary Target's Statement. This Supplementary Target's Statement is dated, and was lodged with the Australian Securities and Investments Commission (ASIC) on 18 July 2011. Neither ASIC nor any of its officers takes any responsibility for the contents of this Supplementary Target's Statement. This Supplementary Target's Statement has been approved by a resolution passed by the directors of NSX other than Ann Bowering and Thomas Price who did not attend at the Board meeting approving this Supplementary Target’s Statement. Signed for and on behalf of NSX Limited. Michael Cox Chairman 18 July 2011 For personal use only 1 Independent Expert's Report. On 28 June 2011, NSX announced that it would commission an Independent Expert's Report in relation the Offer. NSX engaged KPMG Corporate Finance (Aust) Pty Ltd (KPMG) to produce an Independent Expert's Report. KPMG has concluded that the Offer is fair and reasonable. A copy of the Independent Expert's Report is attached as Annexure A. 2 No Change to Director Recommendations. Each of the Directors (other than Ann Bowering and Thomas Price) continue to recommend that you accept the Offer in the absence of a superior proposal. Details on how to accept the Offer are set out in section 12.3 of FEX’s Bidder’s Statement. 3 Timetable. The General Meeting of NSX to consider an amendment of the NSX Constitution to remove the "unacceptable control situation" and voting limit provisions will be held at 11.00am on Thursday 28 July 2011 at the offices of NSX, Level 1, 102 Gloucester Street, The Rocks, Sydney, NSW 2000. The Offer is scheduled to close at 5pm Sydney time on 5 August 2011 (unless extended). If you have any questions in relation to the Offer, please call the NSX Shareholder Information Line on 02 4929 6377 (inside Australia) or +61 2 4929 6377 (outside Australia) between 10.00am and 4.00 pm (Sydney time) Monday to Friday. 4 Consents. KPMG Corporate Finance (Aust) Pty Ltd has given and has not withdrawn before the date of this Supplementary Target's Statement its written consent to be named as Independent Expert and to the inclusion of the Independent Expert's Report in this Supplementary Target's Statement and statements said to be based on its Independent Expert's Report in the form and context in which they are included. For personal use only Page 1 of 4 Annexure A For personal use only Page 2 of 4 ABCD KPMG Corporate Finance (Aust) Pty Ltd ABN: 43 007 363 215 Australian Financial Services Licence No. 246901 Telephone: +61 2 9335 7000 10 Shelley Street Facsimile: +61 2 9335 8021 Sydney NSW 2000 DX: 1056 Sydney www.kpmg.com.au P O Box H67 Australia Square 1213 Australia The Independent Directors NSX Limited Level 2, 117 Scott Street Newcastle NSW 2300 18 July 2011 Dear Sirs Independent expert report & Financial services guide 1 Introduction On 13 May 2011, NSX Limited (NSX) announced that it had received an off-market takeover bid from FEX Equity Markets Pty Ltd (FEX EM), a wholly owned subsidiary of Financial & Energy Exchange Limited (FEX), for all of the fully paid shares in NSX. Under the terms of the offer, FEX EM is offering cash consideration of 23.5 cents per fully paid NSX share (the Offer Price) for all of the NSX shares in which FEX EM and its associates do not already have an interest (the Offer). The Offer is subject to a number of conditions precedent including a minimum acceptance of at least 90% of the total number of NSX shares on issue. The Bidder’s Statement was lodged with the Australian Securities and Investment Commission (ASIC) and NSX on 13 May 2011. In the Bidder’s Statement, FEX EM advised that as at 13 May 2011, FEX and its associates had a relevant interest in 24,901,650 NSX shares, giving FEX 25.14% voting power in NSX. The Independent Directors of NSX have requested KPMG Corporate Finance (Aust) Pty Ltd (KPMG) prepare an Independent Expert’s Report (IER) to express an opinion as to whether the Offer is fair and reasonable to the fully paid shareholders of NSX other than FEX and its associates (Non-Associated NSX Shareholders). This IER has been prepared by KPMG for the inclusion in the amended Target’s Statement to be sent to NSX Shareholders. This report should not be used for any other purposes or by any other party. 1.1 Parties to the Offer NSX operates the National Stock Exchange of Australia (NSXA) and the SIM Venture Securities Exchange (SIM VSE), a joint venture operated by NSX and FEX. NSX also operated a market for taxi licences in the Victorian metropolitan area (Taxi Market) however on 28 March 2011 its contract with the For personal use only Victorian Government to operate this market expired. Additionally, on 31 March 2011, NSX sold its market for the trading of water entitlements (the WaterExchange) to Envex Water Pty Ltd (Envex Water). KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. ABCD NSX Limited Independent expert report & Financial services guide 18 July 2011 The NSX is listed on the Australian Stock Exchange (ASX), and as at the close of trade on 12 July 2011, had a market capitalisation of $19.3 million. FEX EM is a wholly owned subsidiary of FEX, an Australian unlisted public company. FEX was established in 2006 with the aim of offering globally competitive licensed marketplaces for both derivative and equity products with a particular focus on the development and listing of tradeable products within the commodity, energy and environmental asset classes. FEX’s main businesses are the Mercari Swap Execution Facility, SIM VSE and the Envex partnership with Macquarie Group Limited. 2 Summary of the Offer Should the Offer be accepted, NSX shareholders will receive 23.5 cents in cash for each NSX share on issue. This represents a premium of 14.6% above the last closing price prior to the announcement of the Offer. FEX EM has advised that it will make payment to accepting shareholders on or before the earlier of: • one month after the Offer is accepted, or if the Offer is subject to a defeating condition when accepted, one month after any contract resulting from acceptance becomes unconditional • provided the Offer has become unconditional, 21 days after the end of the offer period. The Offer is subject to a number of conditions precedent that are outlined in section 2.1. As previously noted, at the release of the Bidder’s Statement FEX and its associates had a relevant interest in 24,901,650 NSX shares1. The maximum amount of cash consideration that FEX EM would be required to pay under the Offer is $17,619,555 if: • acceptances are received in respect to all of the NSX shares (in which FEX EM and its associates do not already have a relevant interest) on issue at the close of the Offer • all NSX options are converted into NSX shares and accepted into the Offer. FEX EM proposes to fund the Offer using existing cash balances of FEX which were in excess of $3,000,000 as at the date of the Bidder’s Statement and an unconditional loan of $15,000,000 from Vitron Werkbund Sud Australia Pty Limited (Vitron), an associated company. Vitron owns 11.81% of the issued capital of NSX2. To the extent that the issued options are out of the money at the Offer price of 23.5 cents per share, the maximum consideration payable pursuant to the Offer would reduce to approximately $17.4 million. 1 FEX’s associates include Vitron Werkbund Sud Australia Pty Limited (Vitron) and Iron Mountain Pty Limited (Iron For personal use only Mountain). FEX holds 11,271,278 NSX shares, Vitron holds 11,700,000 NSX shares and Iron Mountain holds 1,930,372 NSX shares. 2 As at 1 July 2011.