Wa s t e t o E n e r g y P a r t n e r s h i p

Municipal waste collection

Pyrolysis & gasification plant

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L G Y SOLD TO LO C A

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Energy output to local grid

Waste Conver ted to Electricity

Income from Electricity Doubled by Income from Waste Gate Fees

Authorised and Regulated by The Financial Services Authority

Key Points Important Notice The Team Introduction: Why Consider a Waste to Energy Project? How the Waste to Energy Process Works Financial Appraisal I - First Year of Operation Financial Appraisal II - IRR Assuming Sale after 5 Years and Holding for Life of Plant Financial Assumptions The Alternative Solutions Location Poland Waste Market and Proposed Waste Contract Electricity Market and Proposed Electricity Sales Contract Construction of the Plant Limited Investment in Early Stage Projects Bank and EU Funding Team Details Technical Summary Report Existing Pyrolysis/Gasification Plants Structure Partnership Structure Trust Structure Taxation At the Partnership and Poland Levels Taxation At the Trust Level Taxation Summary of Both Levels Risk Factors Other Information Definitions Application Procedure & Payment Instructions Money Laundering Regulations Form Partnership Application Form Trust Application Form H.M. Revenue & Customs Authority

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All the above images relate to the Principal Project: 1. Site plan of the plant. 2. Schematic cross section of plant 3. Power lines 4. Schematic cross section of plant 5. Waste lorry at work 6. Electricity substation 7. Location of site within the Industrial Zone
Site 3 Site 2
Lignite Mine

location of proposed Bogumilow Project

Site 4
Belchatow Power Plant

Site 1

A-1 Motorway towards Warsaw

A1

Kleszczw

Key Points
Please note that the definitions are set out on page 38 and that this Key Points section should be read in the context of the whole of this Memorandum from which it is derived, including particularly the sections headed Risk Factors on pages 35 and 36. Funds Key Objectives To provide high income after the development phase of the waste to energy plant at Kleszczw, Bogumilow Industrial Zone in Poland (the Principal Project) and then if Investors so wish, to consider a sale of the Principal Project after year 5, thus hopefully benefiting from significant capital growth. Waste Management Revolution Waste Management, already seen as a recession-proof industry, is currently undergoing a radical change, arising from: a) societys increasing concern about global warming and subsequential effects such as i) rocketing landfill taxes and ii) the legal requirement to reduce the dumping of biodegradable waste into landfill (in the EU, the amount of waste to be dumped in landfill is required to b e reduced by half from 2006 to 2013) and b) the consequential economic viability of the new technologies, such as that used in the subject proposed plant. As part of this revolution there is a new vogue for Waste Treatment in Europe, including Waste to Energy projects the proposed Waste to Energy project involving the conversion of waste (through heating it to a very high temperature with limited oxygen combustion) into gas which is then used for heat and power including the generation of electricity. The next main product frit can be used in the construction industry. Only about 10% of the original volume of waste goes to landfill, but as landfill cover, which attracts a minimal landfill tax. The main technologies used in the proposed plant are pyrolysis and gasification. The target profitability is in excess of 20% p.a. over 5 years. The projected profitability based on various scenarios is set out on page 9. The high profitability of such waste to energy projects comes from not just the income from the gas/electricity output but also that the municipalities/everyday rubbish collectors will pay the waste to energy company to take their rubbish (as otherwise they would have to pay for the rubbish to go to landfill incurring both gate fees and landfill tax). Thus instead of paying for its fuel, the project company will receive the waste resource together with money. Pyrolysis and gasification is not a new concept: e.g. charcoal and coke are produced by pyrolysing wood and charcoal respectively. In more recent years it has been applied to the treatment of municipal solid waste. The development of pyrolysis and gasification is in its infancy in the UK but plants have been built, particularly in Japan, where suitable land for the dumping of waste has been in short supply for much longer. A list of reference plants is provided on page 25. The proposed Waste to Energy project involving pyrolysis/gasification as shown on page 6 is a better process than some of the alternatives, e.g. landfill (this causing greenhouse emissions); bioreactor landfill (whilst not undertaken in Europe because it still involves landfill, generates usable quantities of methane although arguably the extra income does not cover the extra costs) and incineration (where the volume of exhaust is relatively greater, it is not economically viable at lower tonnages and public opinion is generally against it). Compared to Poland the UK market appears to be difficult to enter partly because the waste industry is more established with a relatively small number of big waste management companies undertaking most of the waste management activity, and partly because the awarding of waste treatment contracts is subject to complex and lengthy tendering procedures which are very costly with no guarantee of success and the planning process for a waste to energy facility remains slow, cumbersome and again costly, with no guarantee of success.
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New Vogue of Waste to Energy

High Profitability

Not a New Process

Better than the Alternatives?

Why not the UK?

Why Poland?

Poland needs waste treatment plants to replace landfill sites. Whilst Poland has the 4th largest amount of waste going to landfill in the EU(2005), it is required to comply with European regulations just like all other members. However as a recent member it benefits from a larger share of EU grants than many others. Also there are a lower number of competitors and the planning process is quicker. This helps increase potential returns and reduces some of the risks. Climate Finance, a UK entity, has been involved in this opportunity since near inception and has been instrumental in negotiating the underlying contracts. Whilst there is potentially a good bank facility and EU grants available from Poland, there are limited other equity sources available in Poland. Climate Finance will continue to act as adviser, coordinator and project manager on an ongoing basis. Net of set up costs the funds will be used as follows:

UK Expertise

Use of Investor Funds

95% on the development of the subject waste to energy plant designed by RATech at Kleszczw, Bogumilow Industrial Zone in Poland (the Principal Project). Up to 5% as the seed monies for two further waste to energy plants in Poland (the Additional Projects). (But it is anticipated that only 80% of this 5% will be expended if contingencies within the Principal Project have not been used). Based on the assumptions set out on page 10, including selling the plant after 5 years (to someone paying a price equivalent to the NPV of future cash flow discounted at 12% p.a.) the return to Investors is:
Base Case Business Case Better Case IRR p.a. 19.0% 37.1% 41.2% Total Return 189% 229% 254%

Financial Appraisal

EU Grant

The assumption of EU grant funding being available in the Business Case and Better Case dramatically increases the IRR and in these cases Investors could receive circa 80% of their original investment back within two years. 21,038,008. The final Aggregate Investor Holding figure will depend on a) the level of bank debt and b) any currency adjustments. 21,038,008 is based on a 50% loan and an exchange rate of PLN 5 : 1, and is the key assumption for the financial appraisals.

Estimated Aggregate Investor Holdings

Maximum & Minimum Minimum Aggregate Investor Holdings: 10,000,000 Aggregate Investor Maximum Aggregate Investor Holdings: 25,000,000 Holdings Investor Holdings 50,000 being 50 participations in the Partnership or 50 units in the trust (otherwise by express agreement with Merchant Place Corporate Finance Limited) 31st August 2009 for the raising of the Investor Holdings (unless such date is extended by Merchant Place Corporate Finance Limited) 8% of the Investors Holdings to FSA authorised intermediaries Scott Arnot email: scott@merchantplace.co.uk Telephone: (020) 7292 8810 Mike Sheehy email: mikes@merchantplace.co.uk Telephone: (020) 7292 8811 Both on fax: (020) 7494 0944 16th June 2009

Closing Date

Commission For assistance please contact: Date of Memorandum