Project Delight

proposal prepared for DP World

July 2012

Fifth Floor, 35 Great St. Helens, London, EC3A 6HB, UK | T +44(0)203 206 1062 | E london@moffattnichol.com | W moffattnichol.com

Mr. Ian Malcolm Business Development Director DP World Europe & Russia

Subject: Project Delight

Dear Mr. Malcolm, Moffatt & Nichol is pleased to present to DP World the following proposal regarding the provision of independent commercial due diligence services to prospective lenders, in relation to the project financing of DP World Yarimca, Turkey. Moffatt & Nichols international reputation in the financial markets is underpinned by numerous projects in the maritime sector. Most recently we were the lenders commercial advisors on the successful financing of the Port of Iskenderun, Turkey. The lending clients for the project consisted of UniCredit Bank AG, Dekka Bank, Finansbank, Deutsche Bank, TSKB, TEB, Garanti, Turkive Banksai and RBC. We understand the process required to achieve financial closure, specifically in this economic climate. Of specific relevance is our proven ability to work with a diverse project client base and ensure absolute confidentiality in respect to the disclosure of sensitive information. We have compiled a strong team reflective of the task which has detailed working knowledge of the industry and the East Mediterranean region in particular. The teams network and value is such that it can reach opinion and comparative assessment on the scope items that can be typically vague. Moffatt & Nichol is fully aware of the ongoing support to lenders required for such projects and offers three alternative fee estimates, ranging from a fixed fee option for the full suite of services as per the scope of work, to a nominal charge for draft report with success fee upon completion of financing. All fee estimates are fully detailed in the fee schedule within the proposal. The East Mediterranean region is developing at pace and Turkey, the Sea of Marmara and the Black Sea are increasingly competitive. The inland transportation network is key to the success of ports and terminals within the region and therefore site visits are deemed necessary in order to meet with local market players. This will provide a full understanding of potential customers requirements, current restraints and future expectations, all of which will help assess the drivers of demand. In order to support fluid communication between all approved parties, Moffatt & Nichol will maintain a commercial project website interface so that information, knowledge and working reports can be accessed remotely from any location. Moffatt & Nichol can confirm that this project does not present any conflict of interest and looks forward to the prospect of working with DP World and its project lenders on this exciting assignment. Yours sincerely, MOFFATT & NICHOL

Mark Simmons Vice President

Project Appreciation
DP World has acquired the former Yarimca Porcelain factory site, located on the north side of the Gulf of Izmit in the Marmara Sea, with the aim to develop the land into a new container terminal facility. The terminal will be fully owned, developed and operated by DP World Yarimca. The facility will be built on a 46ha site and comprise two berths of 400m+ each, 16m depth alongside, with an anticipated commencement of operations in the first quarter of 2015. As DP World is the freehold owner of the land, there is no contractual obligation to adhere to the usual terms of a concession. Therefore capacity will be built according to demand. The current envisaged phasing is: Phase 1: total capacity 0.65m TEU (5 quay cranes, 20 RTGs) Phase 2: total capacity 1.2-1.3m TEU (additional 3 quay cranes, 13 RTGs).

Moffatt & Nichol understands that DP World will engage a commercial advisor who is able to provide a detailed and robust due diligence lenders market report in order to assist in raising the project financing. Positioned at the strategic juncture of Europe, the Middle East and Asia, Turkey has a population of around 75 million. The main centres of population are, in order of size: Istanbul, with an estimated 13 million people living in the province, making it one of the 20 largest metropolitan areas in the world; Ankara, with 4.3 million inhabitants in its province; Izmir, with 3.3 million; Adana with some 1.3 million; and Bursa, with 1.2 million inhabitants.

Population Density

There are three distinct container port regions in Turkey (excluding the Black Sea), with ports in each area serving respective hinterlands, and therefore it is possible to identify the share retained by these different areas. Ports situated in the Marmara region continue to account for the greatest proportion of overall container throughput in Turkey. The estimated share of 61% in 2005 has risen over more recent years to 65% by the end of 2010. This growth continues to reflect that ports in this area are serving the hinterland requirements of Istanbul and Ankara, as well as a proportion of transhipment traffic into and out of the Black Sea.

Container Throughput Volumes at Key Container Ports in Turkey (2010)

Development of Container Throughput Share by Turkish Region

Region Marmara Sea East Mediterranean Aegean Sea
Source: Moffatt & Nichol

2005 61% 19% 20%

2006 61% 18% 21%

2007 62% 19% 19%

2008 65% 18% 17%

2009 62% 20% 18%

2010 65% 20% 15%

After 30 years of recessions, crises and hyperinflation, Turkey has enjoyed macroeconomic stability since 2001. The benefits have been clear, particularly strong economic growth, a rising level of foreign direct investment and quickly improving standards of living. Turkey appears to be in a period of transition as its industry sectors build to move from low-cost, low-technology production to more value-added activities. The manufacturing and automotive industries are performing strongly with high investment and growing export markets. However, Turkeys textile and clothing sector, which has served the countrys industrialisation process well over the past two decades, now needs protection from lower-cost Chinese imports in both the local market and in its key EU markets. Seaborne modes of transport account for the majority of Turkish trade by both volume and value, although in the export sector, the road transport is a close competitor in value terms to neighbouring countries. The strong growth in the road sector has, however, not been without problems, with lengthy queues reported at the main crossing at Kapikule (Turkish/Bulgarian border), increasing both the transit time and cost of the overland route option. Moffatt & Nichol takes such factors into consideration when assessing and generating a due diligence lenders market report.

Project Approach
Moffatt & Nichols highly experienced and professional staff will adopt the following approach for this commercial due diligence project in Yarimca, Turkey: Evaluate all available data and all relevant project documentation Assess historical Turkish container market trends, focusing on the Marmara region and review trade and market developments Identify regional container shipping services Interview 5-6 key stakeholders and evaluate shipping line strategy within the region and the impact of vessel size developments Identify competing ports (operational and planned), with a specific focus on existing terminals within the Marmara Sea Produce container throughput projections for Turkey, based on historical correlation with Turkish economic growth Produce container throughput projections for the Marmara Sea, based on market share developments Produce container throughput projections for Yarimca, based on the estimated port capacity available at the Marmara Sea Create a fully functional, interactive forecast model (container volume) with various tabular and graphical outputs of results. The model will produce a Moffatt & Nichol Base Case and Low Case spanning 25 years Produce a comprehensive report including all of the elements outlined below. This will include the provision of data analysis (for all available data) and results, presentation of all findings in relation to commercial risks and opportunities, specific focus on drivers of demand and Moffatt & Nichols forecasting methodology and detailed assumptions.

Scope of Work
REPORT 1. 2. 3. 4. Executive summary Key findings and summary of volume projections Project overview Introduction to the project Political and economic overview Historical economic development Political situation International trade Regional analysis Current economic outlook and economic forecasting assumptions Turkish container port industry Analysis of historical container volumes Historical development of transhipment volumes Key trade flows Shipping line strategy and development Competitive port assessment

5. 6. 7. 8.

Marmara container port industry Marmara port market shares and historical evolution Key shipping lines serving the Marmara region Industrial activity and population density in the Marmara region Existing and new port developments in the Marmara region Regional inland transportation network and constraints Volume projections Drivers of demand Forecasting methodology and assumptions GDP and economic growth assumptions Forecast Turkish container port throughput Forecast Marmara container port throughput Forecast transhipment throughput Base Case forecast Yarimca container throughput Base Case revenue forecast for Yarimca DP World business plan volume forecast Comparison of DP World/Moffatt & Nichol volume forecasts Analysis of business plan tariff forecasts Typical tariff structures Regional tariffs and revenue components Future potential range of tariffs and sensitivities Tariff assumptions for revenue forecast Comparison of DP World/Moffatt & Nichol revenue forecasts

FURTHER DUE DILIGENCE The additional due diligence items to be covered are: Site visit and key stakeholder interviews Response to comments and changes Sensitivities and scenario analysis when requested by DP World or lenders Presentation to lenders.

Fee
Moffatt & Nichol has prepared three alternative fee proposals on the basis of its previous advisory roles on recent financing projects.

Option 1: Fixed Fee

Based on the full scope of work, we offer a fixed fee of 225,000. This price is fully inclusive of the final report and client interactive volume/revenue forecast model. The price includes all further due diligence, such as lenders Q&A, meetings, presentations and stakeholder interviews.

Option 2: Blended Fee (Fixed and T&M)

Reflective of the known efforts required to reach the completion of the draft report and to provide a client interactive volume and revenue forecast model: 45,000. Report updates, subsequent amendments and additional analysis will be charged on the time and materials (T&M) basis. Further due diligence, as outlined in the Scope of Work (previous page), will be also be charged on a T&M basis: Site visits: 1,000 per day per person Further due diligence: 149 per hour per person.

Option 3: Success Fee

Based on the full scope of work and fully inclusive of the final report, client interactive volume and revenue forecast, plus all further due diligence as outlined in the schedule: 30,000. An additional fee of 300,000 will be charged once project financing is secured.

Expenses
All fees are exclusive of travel, reimbursable expenses and VAT. Travel and expenses will be charged to the client at cost with prior approval.

Schedule
Moffatt & Nichol proposes the following schedule based on the timings presented in DP Worlds RFP. The schedule will begin upon agreement of this proposal and signature of contract. The initial draft report and forecast model will be delivered eight weeks after the sign-off of the proposal and a final report will be submitted no later than four weeks later, providing prompt and consolidated responses to the draft report are received. Table 1: Report
Week Site Visit/Local Interviews Data Assessment Draft Report Forecast Model Response to Client Comments Final Report 1 2 3 4 5 6 7 8 9 10 11 12

Moffatt & Nichol will provide due diligence support over a four-month period as shown in Table 2, pausing briefly over the UK Christmas public holidays. Table 2: Further Due Diligence
W/C November 5 Lenders Q&A Attendance at Meetings Presentations Sensitivity and Scenario Analysis UK Public Holiday 12 19 26 3 2012 December 10 17 24 31 7 January 14 21 28 4 2013 February 11 18

Experience
Moffatt & Nichol provides a comprehensive range of services to the port sector, and its clients include port authorities, terminal operators, shipping lines, investment banks and equity investors. With over 6,000 port-related projects completed globally, Moffatt & Nichol has significant relevant capabilities which meet the needs of the sector. Examples of some of our relevant commercial and technical projects are shown below. Further information in relation to any of these specific assignments is available upon request, subject to confidential project terms and conditions.

Case Study

Lenders Commercial and Technical Advisory Services for Iskenderun Port, Turkey
Client: Limak Investments and UniCredit Bank AG After initially completing a port master planning study for Turkish infrastructure investment company, Limak Investments, Moffatt & Nichol was retained by UniCredit Bank AG to act as Lenders Traffic and Technical Advisor with regards to raising capital for the construction works at Iskenderun Port. Other Lenders involved with the project were Dekka Bank, Finansbank, Deutsche Bank, TSKB, TEB, Garanti, Turkive Banksai and RBC. The project involved a full commercial analysis and market forecast, technical due diligence and assistance to the Lenders advisors with regards to the Engineering Procurement & Construction Contract, the Operations and Maintenance Contract, and the required insurance amounts. The market forecast was based on Moffatt & Nichols proprietary Hinterland Growth and Least Cost Market Analysis methodology, used for accurately assessing the extent of the ports hinterland, its growth prospects and the anticipated market share capture from competing ports. This methodology, complementary to the usual GDP-based market forecast methodology, provided an independent validation to the sponsors market forecast, and in the difficult market conditions of late 2011, played a crucial role in providing confidence to the Lenders Credit Committees to finance this emerging project. Moffatt & Nichols assessment focused on Iskenderuns ability to compete within an already well-established market and therefore analysed the ports market proposition. The overall conclusion was that Iskenderun has significant potential within the Turkish port market, with the possibility for even further development of container volumes and related port revenue streams. Factors such as growing Turkish container throughput, port location, growing demand for efficient deep-water port facilities in the Mediterranean and Iskenderuns ability to handle large container ships all contributed to this conclusion. Moffatt & Nichol worked closely and collaboratively with the banks, the sponsors, and key port personnel throughout the project to validate the borrowers market forecast, revenues, CAPEX and OPEX projections and to ensure international practices were appropriately applied to this US$242 million construction development.

Further Relevant Due Diligence Experience

Key Personnel
Moffatt & Nichol deploys highly qualifed and capable teams to work on its projects, comprising a number of key specialists and disciplines from across the company.

Mark Simmons
Project Principal Mark Simmons has a unique skill set with regard to the ports and shipping industry. After qualifying as a chartered engineer, and subsequently as a chartered accountant, he worked initially for KPMG and then within the investment banking division of Merrill Lynch. In 1999 he joined Hutchison Port Holdings (HPH), where he successfully undertook a number of key roles during a six-year stay, including the developing and monitoring of financial and operational performance standards, the coordination of investment projects and the incorporation of operational and engineering requirements (in relation to both civil and mechanical activities) into these projects. He subsequently took a front line role in the corporate finance unit, responsible for HPH projects in 24 different countries throughout Europe, North, Central and South America, Africa and the Mid-East which helped to define the companys future plans and strategies. Mark joined Moffatt & Nichol as vice president and established the companys permanent presence in the UK and Europe. He retains responsibility for initiating and developing the companys international business in the areas of financial and economic analysis, port planning, container terminal development, freight transportation, goods movement and distribution facilities. He also plays an active role in the project management of key assignments on a global basis.

Matthew Barnes-Smith
Project Finance Matthew Barnes-Smith joined Moffatt & Nichol in 2011 after completing the finance graduate programme at BTs daughter company CSD. Graduating with his bachelors degree in economics with finance in 2007 and his Masters degree in economics in 2009, Matt quickly made an impression at CSD managing a multi-faceted international team to successfully design, build and implement business intelligence for BTs flagship local government joint venture. Whilst at Moffatt & Nichol Matt has managed and collaborated on a multitude of commercial projects, specializing in the areas of financial and economic analysis. Matt is also currently working towards his CFA.

Eva-Marie Busch
Container Market Eva Busch joined H.Schuldt in Hamburg as an apprentice in 1989. After qualifying as a certified shipbroker in 1992, she initially moved to Contemaris/Eurolines, and then to Rheintainer-Linie, a division of Seawheel Ltd. As deputy manager of the Marketing and Operations Department in Hamburg she managed the daily operation of the liner service to/from Bilbao. In 1998 Eva joined Drewry Shipping Consultants Ltd. as a senior consultant. She specialised in the container shipping, reefer and multi-purpose sectors, writing regular industry reports and providing client consultancy services. Eva specialises in trade lane and ship-size forecasting and liner strategy analysis. Her extensive network of shipping line contacts, together with her commercial experience in the feeder market, adds significant value to services offered by the company.

Jill Hennessy
Ports and Shipping Jill Hennessy has almost 30 years experience in shipping market research and analysis. Prior to joining Moffatt & Nichol in 2006, Jill worked for Drewry Shipping Consultants Ltd. During her time with the company she developed an in-depth knowledge of the bulk shipping markets, specifically dry bulk, undertaking a wide range of consultancy assignments and latterly taking sole responsibility for Drewrys flagship publication The Drewry Monthly. Since joining Moffatt & Nichol Jill has contributed to bulk port projects company-wide, working with engineering teams on concept design and port development projects. She also utilises her specialist knowledge of ports and shipping in a wide range of commercial advisory projects and has project managed key assignments on a global basis.

James Caldwell
Feeder Market James Caldwell has over 15 years of experience in the container shipping industry. James worked for 10 years at APL, in a variety of roles in commercial/trade and general management, covering a wide breadth of global market remits. He relocated to Portugal for three years to establish and lead APLs offices as country manager. Prior to joining Moffatt & Nichol he managed the growth and development of APLs reefer business unit in the Northern Europe and Mediterranean regions. James areas of expertise include liner network strategic planning, yield management, commercial strategy, budget formulation, trade lane, and market analysis. He is fluent in Spanish and Portuguese.

Karen Levy
Liner Shipping Karen Levy is a highly experienced shipping line and logistics professional with more than 29 years direct industry involvement. She spent 26 years working for P&O Nedlloyd in a variety of senior roles, located in both the UK and Rotterdam. Key positions held included global procurement manager (with an annual budget of 500 million), and ports and terminals contract manager, responsible for negotiation of P&O Nedlloyds contracts for North and South America and the Caribbean regions. After subsequent promotion to general manager operations UK and Eire, which include an agency network and 107 staff, she moved to take a new and challenging position as director of feeder network for Maersk Line (following its acquisition of P&O Nedlloyd), which entailed responsibility for 140 ships and a geographic region covering North Europe, the Mediterranean, North and South America and the Caribbean. After working as a freelance consultant for GESeaco, Karen joined Moffatt & Nichol where her in-depth and highly valued experience of shipping line and logistics activities ensures contribution to a high number of advisory projects on a global basis.

Rodney Hancock
Port Engineering Rodney Hancock is a licensed professional engineer specialising in structural design, analysis and condition assessment of marine structures. He has extensive international experience conducting condition assessments of existing marine facilities, including above and underwater inspection, material sampling and testing, life cycle analysis, and repair design and implementation. Rodney also provides planning, engineering, construction support and project management for the development of new marine structures, including piers, wharves, bridges and marinas.

Moffatt & Nichol, London Fifth Floor 35 Great St. Helens London EC3A 6HB United Kingdom T +44 (0) 203 206 1062 F +44 (0) 203 206 1061 www.moffattnichol.com