Merseyside - Full Erosion Rotterdam image below

Merseyside - 20% Erosion Rotterdam image below

Merseyside - 50% Erosion Rotterdam image below

Merseyside - No Erosion Rotterdam image below

Summary of both Merseyside and Rotterdam erosion impact image below

Comparison of the Merseyside and Rotterdam projects image below

Rotterdam project image below

Rotterdam - 20% Erosion Merseyside

Rotterdam - 50% Erosion Merseyside

Question 1) Based on the crossover rates, please explain why NPV and IRR may come up with different conclusions about Merseyside versus Rotterdam projects when you do not consider erosion and consider full erosion. Which criterion should you use to make the final decision?

Question 2) Write up a one-page memo to summarize the evaluation results of Merseyside project versus Rotterdam project, which are two mutually exclusive projects, in four situations: no erosion, 20% of erosion, 50% of erosion, and full erosion. Based on the evaluation results and the nature of the two projects images above, which project will you recommend accepting?

VICTORIA CHEMICALS (A) Kevid Y Analysis of Merwyder (Ref.ct charges RILLERCESAIN of Rotterdam burnea volume) Chinancial values in meloodshed) 7.0% 073 Annual Clutput (metrictor) Cliputan Clegral Cluput Proton puheen Ination are prices and Co Margines there) ad Martin Energy Saving Selca 12.30% Taxare Investment Chulay imit) Ekpeccable Life Cycan Salvage Value War Inventory of Canada Meet Dreme Counction Preliminary Engineering Comill.) Cherement 100% 30% 12.01 15 0 3.0% 1.3 Not relevant relevant Yr 6-10 Yr 1.5 0.73% 0.0% 11 MIS 12 14 ZIRI MUS 2 15 UM 2014 10 2012 2010 MIS 2012 2016 IND 287,300 207,300 287,300 267,500 267,500 267,500 267,500 267,300 287.500 267,500 267,500 267,500 267,500 Year 1. imate of incremental Como New Clutput) Lot Cuput-Coretruction New Sales (M) Nowe Margin Now Chow Me 191.56 222.00 228.75 205.16 157.99 13. 21.72 IR. 13.1% 23.57 197.31 13.7% 27.13 203.22 13.1% 27.94 2003 13.39 27.74 215.00 13.3% 285.59 13.3% 31.22 202.66 12.596 30.35 249.94 12.5% 31.24 257. 12.5% 32.18 275.12 12.5% 54.14 26. 54 30 31 33.15 230,000 Cd Cup Cd Salica Cid Chroma 200.000 IOS 19.41 230,000 17. 19.90 230,000 170S 20.30 250 14.0 21.21 230,000 INS 21. 250,000 201.50 1956 230,000 207.54 250,000 213.77 24.5 230,000 220 IN 23.32 230,000 233.59 26. 230,000 200.00 27.67 230,000 288.25 2935 247. 2K 50 26.0 17.500 17,900 17.500 17.00 12.00 17,900 12.17 17,300 14.10 17.500 1291 17.00 17.00 17.00 17.500 13.00 1.57 13.30 1.53 17.39 1.67 13.41 1.77 412 1.RS 16. 1.94 2.57 2.30 2.75 3.11 3.95 6.76 475 4.61 0.32 -0.13 0:31 3.04 0.35 0.34 3.19 0.36 7.17 6.78 0.47 -0.0 3.51 0.39 -0.12 6.56 0.20 0.25 -0.07 0.37 0.00 0.41 -0.12 6.5% 0.26 -0.08 0.45 -0.08 -0.07 Lot Rotterdam Clutput (MT) Lot Rotterdam Revenu Lot Rotterdam Com Mat Incremental Code 2 emate of incremental Inventory Ct WIP inventory Lotterdam Winventory Incremental Inventory stimate of incremental Depreciate New patio New Depeccati,Tank can Cid Deprication, Tank can Incremental Depecciation Tetas. Incremental & Cash Flow Auments Lea Capital Espend Add back Depreciation Change of inventory 7. Free Cash Now 1.00 0.66 0.50 0.55 0.55 013 0.55 0.55 0.13 0.22 0.35 013 0.55 013 0.00 034 0.94 0.27 04 02 0.55 013 0.14 0.54 1.96 18 0.14 0.41 0.50 0.54 0.41 1.00 -0.64 0.61 3.05 0.54 204 -12.00 2.12 0.61 0.54 0.26 0.30 0.54 0.54 0.54 0.41 0.41 1.60 071 -12.00 2.70 3.54 2.RI 3.04 1.RI 1.91 1.97 1.9 T 50 NV- 1 Average annulat Payback Read 0.00 4 years Smidity Analyse 00% 11% 10 30 % 11.00 9% 4.70 10% 8.30 the 12% 13% 6.20 3.47 19% 3.KI 11% 1.76 3.08 2.30 19% 1.16 20% 0.61 VICTORIA CHEMICALS (A) Revised ICF Analysis of Merseyside Project (Reflects charge for 20% EROSION of Rouesdan business volume) (Financial values in millions of Betish Pounds) 10.0% 12.0 15 3.0% 1.5 17.500 209 Not relevant Notre 10 2017 12 2012 13 2010 15 2012 2013 20AL 2 267 500 267 500 267,500 267,500 267,500 267.500 209.32 13.39 27.74 267,500 222.07 13.3% 267,500 228.73 30 31 235.59 13.3% 31.22 242.66 12.5% 30.33 249.94 12.5% 31.24 257.44 12.5% 32.18 267,500 265.16 12.5% 33.15 273.12 12.5% 34.14 250.000 195.63 22.50 267,500 215.60 13.3% 28.57 250.000 201.50 23.12 3.500 2.82 0.32 5.07 250.000 207.54 23.87 250.000 213.77 250.000 220.18 25.32 250.000 226.79 26.08 250.000 233.59 26.86 250.000 240.60 27.67 250.000 247.82 28.50 Annual Output (metric tons) 250.000 Discount Output Gain eiginal Output 7.0% Tax Rate 10 Price ton pounds stelling) 675 11 Inflation Repeces and costs) Investment Oudlay (mille) 3.0% 12 Gross Muyinlex. Depeee) Depreciable Life 12.50% 12 M Gross Muyin Salvage Value 11.5% WIP Inventory Con of Goods 14 Savings Sales Ye 1-3 1.25% Months Downtime. Construction Full Frosion Assumption Y 6-10 0.75% Erosion of Rotterdam Y: 11-15 Preliminary Engineering Costs (ill.) Overhead/lnvestment 11 1 3 4 2005 2008 2010 2011 11. Estate of incremental Geoss Profit New Output (ons) 267,500 267,500 267 500 267,500 267,500 Lost Output-Construction 3.438) New Sales Millions) 157.99 185.98 191.56 197.31 203.22 New Goss Margin 13.8% 13.8% 13.8% New Geoss Prof 21.72 25.57 26.34 27.13 27.94 3 OM Output 250.000 250.000 250.000 250.000 250.000 Old Sales 168.75 173.1 179.03 184.40 189.93 Ou Gross Profit 19.41 19.99 20.59 21.21 21.84 Frosion Lost Recenin Ougu (MT) 3.500 3.500 3.500 3.500 3.500 Lost Ronda Revenue 2.36 2.43 2.51 2.58 2.66 35 Lost Rotterdan Gos Prof 0.27 0.28 0.29 0.30 0.31 Incremental Gross Prof 2.05 5:30 5.46 5.63 5.80 * 2. Estime of cemental WIP inventory New WIP very 4.09 4.81 4.96 5.11 5.26 10 O WIP 4.48 4.61 4.75 4.90 5.04 Lost Rotterdam WIP inventory 0.06 0.06 0.09 0.07 0.07 Incremental -0.45 0.13 0.14 0.15 43. Hatimate of hermental 44 1.60 1.39 1.20 1.04 0.90 New Deprecation, Tankcas 0.40 0.32 OM Deprcion, Tankcs 4 Incremental Depiction 1.60 1.39 1.20 1.22 Pret harmonal Prof 0.45 3.92 4.26 4.57 46. Cash Flow Adjustment 5o Les Capital Expenditure -12.00 -2.00 2.12 St Add back Depreciation 1.60 1.39 1.20 1.44 1.22 sa Change or WIP investory 045 59 0.00 0.00 0.00 sa 7. Free Cash Flow 2018 4:37 6.54 sal SS NPV- 15.12 SIRR 28.0% 250.000 255.25 29.35 3.500 2.91 3.500 2.99 3.500 3.47 3.500 2.74 0.31 4.92 3.500 3.08 0.35 5.54 3.500 3.18 0.37 3.89 3.500 3.27 0.38 4.00 3.500 3.37 0.39 4.12 3.500 3.57 0.41 5.22 5:38 5.45 5.19 0.07 0.18 5.61 5.35 0.07 0.19 5.78 S.SI 0.08 0.19 5.95 5.68 0.08 0.20 6.13 5.85 0.08 0.20 6.37 6.02 0.08 0.26 6.56 6.20 0.09 0.27 6.76 6.39 0.09 0.28 6.96 6.58 0.09 0.29 7.17 6.78 0.09 0.30 WIT Deco New Delete 0.55 0.55 0.78 0.26 0.42 061 4.31 0.68 0.20 0.34 0.54 4.53 0.59 0.16 0.27 0.55 0.13 0.22 0.46 4.92 0.55 0.13 0.17 0.30 5.04 0.55 0.13 0.14 034 3.35 0.55 0.13 0.14 0.54 3.47 0.55 0.13 0.14 0.54 3.59 0.41 3.84 0.14 0.41 3.99 4.94 0.61 3.04 3.59 0.54 31 0.48 3.79 0.46 0.50 10 4.02 0.54 106 0.54 10 2.96 0.54 3.04 0.41 10 3.09 0.41 10 3.47 0.030 S8 Average annual addition to EPS so Payback Period Sensitivity Analys 10% NPV-Full Frosion 15.12 894 18.56 99 16.76 119 13.62 Discount Rate 129 135 12.24 10.97 10% 15.12 22.69 20.53 15% 8.73 9.80 16% 7.73 17% 6.81 20% 4.42 18% 5.95 1995 5.16 1 Exhibit 2 VICTORIA CHEMICALS (A) Revised DCF Analyse af Merveyde Project (Reflects change for 50% EROSKON of Rottendan business volume) (Financial values in millions of Betish Pounds) Areps Annual Output cons) Output Guiniginal Output 10 Price bon (pounds sing 11 fion Rate (pices and ) * Goss Marginen. De O Goss Muyin 14 Energy Savings/Sales 15 250.000 7.096 675 3.0% 12.50 11.55 1.25 Discountate Tax Rate Investment Ouday nil) Depeche Lie bye) Salvage Value WIP kvety Cost of Goods 10.046 30% 12.0 15 3.0% 1.5 17.500 5096 Not relevant Not relevant Y 1.5 Ye 6-10 Yc 11-15 0.75% 0.0% Months Downtime Construction Full Frosio Assumption Erosion of Rowena Preliminary Engineering Costs (ill) Overhead Investment * 19 2008 2010 2011 2011 2009 2012 2014 2015 10 2012 11 2018 12 2019 13 20 15 2022 2016 PAL 267,500 267,500 267.500 267.500 267.500 267 500 267,500 267 500 267,500 267 500 267,500 267,500 (33,438) 157.99 13.8% 21.72 267,500 185.98 13.8% 25.57 191.56 267,500 197.31 13.8% 27.13 203.22 267,500 209.32 13.3% 27.74 215.60 222.07 13.3% 228.73 13.3% 30.31 13.3% 28.57 235.59 13.3% 31.22 242.66 12.5% 30.33 249.94 12.5% 31.24 257.44 12.5% 32.18 265.16 12.5% 33.15 273.12 12.5% 34.14 26.14 27.94 250.000 168.75 19.41 250.000 173.81 19.99 250.000 179.03 20.59 250.000 184.40 21.21 250.000 189.93 21.84 250.000 195.63 22.50 250.000 20150 23.17 250.000 207.54 23.87 250.000 213.77 24.58 250.000 220.18 25.32 250.000 226.79 26.08 250.000 233.59 26.86 250.000 240.60 27.67 250.000 247.82 28.50 250.000 255.25 29.35 8.750 8.750 8.750 8.750 8.750 5.91 0.68 1.64 8.750 6.08 0.70 4.88 8.750 6.27 0.72 5.03 8.750 6.45 0.74 5.18 8.750 6.65 0.76 5.34 8.750 6.85 0.79 7.26 8.750 7.05 0.81 4.58 8.750 7.94 0.91 3.34 8.750 8.18 0.94 3.44 8.750 8.67 1.00 8.750 493 1.03 3.76 0.86 0.89 5.01 0.99 34 4.72 4.09 4.81 4.96 4.75 5.61 5.35 1. Estimate of incremental Geass Profit New Output (ons) Lost Output-Construction New Sales (Milions) New Gen Murgin New Gos Profit O Out On Sales Ou Gross Profit Frosion Lost Rotterdam Output (MT) Lost Rouendan Revenue Lost Rouesdan Gross Profit Incremental Gross Profit x 2. Estimate of the WIP inventory New WIP inventory OM WIP invesy 1 Lost Rondan WIP inventory Incremental WIP inventory 3. Estimate of hcremental Depreciation New De.. Tinka Ou Deprion, Tank Cars Incremental Depiction Peetex hcremental Profil 6. Cash Flow Adjustments Les Capital Expenditures -12.00 Add back Depreciation Change of WIP inventory 7. Free Cash Flow -12.00 SNPV- 12.64 25.5% Se Average nudition to EPS Payback Period HD . 5.11 4.90 0.17 0.04 5.45 5.19 0.18 0.07 SSS 6.56 6.20 5.78 S.SI 0.19 0.08 5.04 0.18 0.04 6.37 6.02 0.21 0.14 016 5.95 5.68 0.20 0.08 6.76 6.39 0.22 0.15 6.96 6.58 13 7.17 6.78 0.24 0.16 0.16 0.07 0.20 0.08 0.22 0.14 0.15 . 1.39 1.20 1.04 0.40 0.55 0.55 0.90 0:32 0.55 0.78 0.26 0.42 0.61 0.68 0.20 0.34 0.54 4.04 0.55 0.13 0.59 0.16 0.27 0.48 4.24 0.55 0.13 0.22 0.55 0.13 0.14 0.54 0.55 0.13 0.14 0.17 0.50 1.60 0.04 1.39 0.14 0.41 3.24 0.14 0.41 3.35 3.50 3.83 3.74 4.40 45 230 296 3.01 2.12 0.41 1.60 055 1.39 59 3.25 1.20 0.00 1.88 0.00 0.61 002 3.27 0.54 0.00 3.37 0.00 4.06 0.54 106 0.46 0.00 3.54 0.50 0.00 3.65 000 3.45 0.54 0.00 2.56 0.00 0.54 0.00 2.64 2.90 RR 0.026 Sensitivity Acalysis: 10% NPV-Full Frosion 12.64 119 11.29 Discount Rate 12% 139 10.05 79 17.49 14% 7.86 18% 4.38 20% 169 5.98 19.42 12.64 1994 3.66 15.72 6.88 S.IS 1 1 Exhibit 2 VICTORIA CHEMICALS (A) Revised ICF Analysis of Merseyside Project (Reflects change Se FULL. EROSION of Rotterdam business volume) (Financial values in millions of Betish Pounds) Assumptions Annual Output) Output Gain/ginal Output 10 Price ton (pounds sterling) 12 fation Rate (prices and costs) 12 Goss Maxinlex. Dopo 12 OK Go Muyin 14 Energy Savings Sales 15 250.000 7.0% 675 3.0% 12.50% 11.5% 1.25% 0.75% 0.0% Discount Tax Rate Investment Oudlay (ill.) Deprecale Like you) Salvage Value WIP hvertory/Cost of Goods Months Downtime. Construction Preliminary Engineering Costs (ill.) Overhea/Investment 10.0% 30% 12.0 181 0 3.0961 1.5 Notret Netent Ye 1-5 Y 6-10 YES 17 2 1 2008 3 2010 6 2013 2011 2012 13 2010 10 2012 11 2018 Now 2015 2014 2014 12 2019 15 2017 2011 267,500 267 500 267,500 267,500 267,500 267.500 267 500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 33.438) 157.99 13.8% 21.72 185.98 13.8% 25.57 191.56 13.8% 26.34 197.31 13.8% 27.13 203.22 13.8% 209.32 13.3% 27.74 215.60 13.35 28.57 222.07 13.3% 228.73 13.39 30.31 235.59 13.3% 31.22 242.66 12.5% 30.33 249.94 12.5% 31.24 257.44 12.5% 32.18 265.16 12.5% 33.15 273.12 12.5% 34.14 27.94 29.42 250.000 250.000 168.75 19.41 2.32 250.000 173.81 19.99 5.58 250.000 179.03 20.59 5.75 250.000 189.93 21.84 6.10 250.000 195.63 22.50 5.24 250.000 201.50 23.12 5.40 250.000 207.54 23.87 5.56 250.000 213.77 24.58 5.72 250.000 220.18 25.32 5.90 21.21 5.92 250.000 226.79 26.08 4.25 250.000 233.59 26.86 4.38 250.000 240.60 27.67 4.51 250.000 247.82 28.50 4.65 250.000 255.25 29.35 4.79 4.09 Yew 10 1. Estimate of hantal Gross Prof 1 New Output (ons) Lost Output-Construction New Sales Millions) 24 New Goss Mwy in 25 New Gross Profit O Output On Sales Ou Goss Post Incremental Gross Prof 12. Estimate of increment WIP inventory New WIP inventory OM WIP inventory Incremental WIP inventory 33. Estimate of hermental proton New Depreciation New Deprecation, Tank cars Ou Deprecation, Tanks 40 Incremental pro Prix Incremental Profil 46. Cash Flow Adjustment 4 Less Capital Expenditures 41 Add back Deprem es Change of WIP investory 67. Free Cash Flow 47 NPV- 4 IRR 4.81 4.61 0.20 4.96 4.75 5.11 4.90 0.21 5.26 5.04 0.22 5.45 5.19 0.25 5.61 5.35 0.26 5.78 S.SI 0.27 5.95 5.68 6.13 5.85 0.29 6.37 6.02 0.35 6.56 6.20 0.36 6.76 6.39 0.37 6.96 6.58 0.38 7.17 6.78 0.39 028 039 1.60 1.39 1.20 0.55 0.55 1.04 0.40 0.90 0.32 0.68 0.20 0.55 0.13 0.55 0.13 0.78 0.26 0.42 0.61 4.62 0.59 0.16 0.27 0.48 5.08 0.55 0.13 0.17 0.50 5.39 0.14 0.55 0.13 0.14 0.54 3.84 0.55 0.13 0.14 0.54 3.97 0.14 0.41 1.60 0.72 1.39 4.20 1.20 4.35 1.44 4.48 1.22 4.88 0.54 4.85 0.46 5.26 0.54 3.71 0.41 4.38 -12.00 1.39 1.60 039 2.49 -2.00 1.20 10 2.38 2.12 1.22 101 6.75 101 4.57 0.61 104 3.81 0.54 101 3.93 | 0.46 4.14 0.50 101 4.27 0.54 106 3.07 0.54 3.22 0.54 10 3.31 3.36 0.41 3.85 -12.00 3.73 4.03 16.78 29.6% 0.032 sa | Avengeanual addition to EPS sa Payback Period 4 12 ye S5 S Sensitivity Analysis: 10% 16.78 694 79 24.87 22.36 88 20.45 99 18.53 10% 16.78 119 15.17 Discount Rate 129 13% 13.70 12.25 149 11.10 15% 9.95 169 8.89 1796 7.91 18% 7.00 1996 6.15 209 5:37 NPV Ne A B D E F G H 1 J K Merseyside 20 50 Rotterdam 20 50 Erosion of Opposite Plant (%) 0 100 0 100 NPV (GBP MM) E 16.78 E 15.12 12.64 E 8.50 E 15.64 E 14.82 E 13.60 E 11.56 IRR 29.56% 27.98% 25.54% 21.19% 21.77% 21.24% 20.44% 19.06% EPS Impact (GBP) 0.0322 0.0297 0.0259 E 0.0196 E 0.0431 0.0401 0.0355 E 0.0280 Payback Period (Years) 4.12 4.24 4.42 4.78 5.17 5.24 5.34 5.54 K N P a V W Comparison of Merseyside and Rotterdas Projects based on DCF Analysis Results EXY R R MM Pendarasi NPV of Projects by Discount Rate (no resen atplat 100 Merseyside Merseyside G Sunce NPV) Rotterdam, Excludes Right of Way VC Ca Revised 15.6 VC Case A Revad VC Casc A Read 16.78 29.0% 10% Rotterdam, Mercy Rotondam. Original Rotterdam Excludes Right-of-grul with Right Way. Right away and Cheral nuth Way Red No Eroon VC Can Revised VC CA VC Can VCC 11.56 10.57 15.30 23 18.0% 16.3% 10% 10% 10% 21 10% Bee Can 7.0% KO 27.0 200 2010 18 IKIZ 15 15.64 16.10 13.70 11.36 10 in 100 11.0 120 13.06 20.45 1 1. SS 10.7 15.17 13.70 12 11.10 9.70 8.30 7.41 8.06 5.05 15 15.0 16.0% 17.05 361 4.61 SKI SLO NPV of Projects by Discount Rate Tuller at the plant -- X. 7.91 4.16 19.0 20.0% 6.15 3.37 2.17 1.32 1.75 1.16 0.61 1.75 0. 0.04 -0.6 1600 Sa 00 2008 2010 2011 2013 2014 2018 2010 2001 2003 New -13 2013 3 2016 3 6 1 1 1 Comparison of Free Cash Flows, Both Projects, Full Erosion W 2 M VICTORIA CHEMICALS (1) ANALYSIS OF ROTTERDAM PROJECT (EXCLUDING RIGHT OF WAY) - No Erosis and Full Erosios of Merseyside Financial values in millions of Betish Pounds) 10.0% 15 0.044 Assumptions Annual Output actions) Output Gain Por Yew/Prior Year Maximum Possible Output Price on (pounds sterling) inflation (pices and st) Kiss Marin Geowth RateYou Maximum Pow Cose Muyin Kose Margin Tax Rag Investment Oudlay (millions) 10 11 12 13 250.000 2.09 267,500 675 3.096 0.59% 15.0% 11.5% 30.09% Discountate Depreciable) Overhead/evestment Salvage Value WIP Inventory Cost of Goods Sol Terminal Value of Right-of-Way Maths Downe. Construction 10 3.094 Not relevant 15 16 17 2008 2009 2010 2011 0 5 Now 2008 2009 2010 13 19 20 21 22 9 EI 15 2010 8 2015 2011 10 2012 2009 7 2014 2012 ETOL 2018 2012 20 TVO WOC 24 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 Yem 1. Estimate of incremental Geoss Profit New Output Lost Output-Construction New Sales Millions) New Goss Mwyn New Goss Profit 255.000 (106,250) 100.41 11.5% 11.55 260,100 (86,700) 120.56 12.0% 265,302 267,500 267,500 267,500 (66,326) 142.49 19731 203.22 209.32 12.5% 13.0% 13.59 14.04 17.81 25.65 27.44 29.30 250.000 168.75 19.41 (7.86) 250.000 173.81 19.99 (5.52) 250.000 250.000 250.000 250.000 179.03 184.40 189.93 195.63 20.59 21.21 21.84 22.50 (2.78) 4.44 5.59 6.81 215.60 222.07 228.73 235.59 242.66 249.94 257.44 265.16 273.12 14.5% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 31.26 33.31 34.31 35.34 36.40 37.49 38.62 39.77 40.97 250.000 250.000 250.000 250.000 250.000 250.000 250.000 250.000 250.000 201.50 207.54 213.77 220.18 226.79 233.59 240.60 247.82 255.25 23.12 23.87 24.5 25.32 26.08 26.86 27.62 28.50 29.35 8.09 9.44 9.73 10.02 10.32 10.63 10.95 11.28 11.61 0.67 0.58 0.14 0.28 0.07 0.08 0.43 0.23 0.05 0.05 0.33 0.23 0.05 0.05 0.33 Om Output On Sales Old Goose Profit Incremental Geos Post 2. Estimate of Incremental Depreciation Y I Oudarys Y 2 Oudarys Ye 3 Outly Total, New Depreciation 3. Overhead 4. Pretax incremental Prof 5. 6. Afestx Post 7. Cash Flow Adjustment Add back Depreciation Less added WIP inventory Capital Spending Terminal Value and 8. Free Cash Flow 67 0.33 0.08 0.09 0.50 0 6.31 1.89 0.23 0.05 0.05 0.33 0.50 0.12 0.15 0.78 0 (3.55) (1.02 (2.49) 0.23 0.05 0.06 033 0 0.72 0 (6.24) 0.43 0.10 0.13 0.67 0 3.77 1.13 2.64 0.38 0.09 0.11 0.58 0 5.02 1.51 3.51 0.24 0.06 0.07 0.37 0 9.07 2.72 6.35 0.23 0.05 0.05 0.33 0 10.30 3.09 7.21 0.23 0.05 0.05 0.33 0 10.62 3.19 7.43 0.23 0.05 0.05 0.33 0 10.95 3.28 0 0 (8.53) 2.56) (5.97) 7.66 2.30 5.36 2.82 6.58 9.69 2.91 6.78 9.99 3.00 6.99 11.29 3.39 7.90 (4.37) 766 0.67 0.50 0.72 0.38) (1.00) 0.78 (0.42) (1.00) 0.67 (1.27) 0.58 0.02 0.43 0.03 LEO EDD 0.33 (0.00) 0.33 (0.00) 0.33 (0.00) EEO (100) EEO (100) EEO (100) 0.33 0.18 (5.00) (8.49) (5.03) (3.13) 2.04 4.11 4.94 6.75 6.90 7.11 7.32 7.33 7.76 7.99 50 NPV, Rotterdam IRRL, Rotterdam Growth in EPS, Roterdam Payback Roda 15.64 21.8% 30.04 5.17 yaan 17.500 12.91 17.500 14.10 17.500 14.53 17.500 15.41 17.500 15. 1.93 17.500 16.35 17.500 14.96 1.72 1.20 17.500 17.32 205 17.500 13.30 1.53 1.02 0.35 (0.72) 1.04 0.34 (0.70) 17.500 13.69 1.57 1.10 0.36 (0.74) 1.17 0.39 (0.78) 17.500 16.84 1.94 11:36 0.45 (0.91) 17.500 17.35 1.99 1.40 0.46 (0.94) 1.32 0.43 (0.88) 0.37 (0.76) 0.49 0.41 (0.83) (0.81) (0.86) (0.96) -4.08 9. Adjustment Sareesco in Merseyside volume Lost Merseyside Output Lost Merseyside Revenue Lost Merseyside Geoss Profit Lost Geoss Profits afer Taxes Change in Merseyside Inventory Total Effect on Free Cash Flow DCF. Frosion Meseyside Cash flow afer erosion Rotterdam Adjusted for Fell Eresie at Merseyside NPV, Roterdam TRR. Rotterdam Growth in EPS, Roterdam Payback, Rotterdam (8.49) (5.03) (ELTE) 1.35 6EE 4.20 5.06 5.96 6.10 6.27 6.46 6.65 6.85 7.05 7.45 11.56 19.1% $0.03 5.54 years Frosion adjusted after tax peefis (5.97) (4.37) 1.16 1.98 3.74 4.68 4.86 105 5.17 EES 5.50 5.67 5.85 Alternative way to calculate added WIP inventory! Addol WIP (0.16) 1.81 1.81 1.01 10.42 (0.25) (1.27 (0.23) 0.02 (0.21) 0.02 (0.18) 0.03 (0.15) 0.03 (0.16) 10.00 (0.17) 10.00 (0.17) (0.01) (0.18) (0.01) (0.18) 10.01 (0.19) 0.18 (0.38) Sensitivity Analysis: 10% 694 15.64 27.49 79 24.00 89 20.89 994 18.12 109 15.64 119 13.42 Discount Rate 129 13% 9.66 14% 8.06 9551 1999 16% 5.33 20% 1796 4.16 1896 3.12 19% 2.17 NPV-No Frosion 10% 694 11.56 21.81 79 18.79 956 OLEI 10% 11.56 119 9.65 Discount Rate 12% 7.95 1394 6.42 159 3.82 16% 2.72 1794 1.73 18% 0.84 1996 0.04 2094 0.68 NPV-Fun S.OS 16.10 VICTORIA CHEMICALS (8) ANALYSIS OF ROTTERDAM PROJECT (EXCLUDING RIGHT OF WAY) -20% Erosion of Merseyside Financial values in millions of Betish Pounds) Assumptions Annual Output actions) Output Can Per Yea/Prior Yew Maximum Possible Output Price ton (pounds starling) inflation (pices wido) oss Mwyn Gowth Rate Year Maximum Possible Geoss Muyin Icess Margin Tax Rate lavestent Oudlay (millions) 250.000 2.0% 267 500 675 3.0% 0.5% 10.09 15 0.094 Discountate Depreciable Life (years) Overhea/vestment Salvage Value WIP Investory/Cost of Goods Sold Terminal Value of Right-of-Way Months Down Construction 10 11.5% 30.09 0 $ 3.094 Not relevant 2008 2009 2010 2011 Now 2008 2009 2010 1 1 Froscone Meride 209 O 4 10 2 2009 2008 3 2010 9 2016 15 2012 12 2019 TTOC ETOC STOC ZTOC 2018 20 AL 2022 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 Yew 1. Estimate of incremental Gos Prof New Output Lost Output-Construction New Sales Millions) New Goss Margin New Gross Profit 255.000 (106,250) 100.41 11.5% 11.55 260,100 (86,700) 120.56 12.09 265,302 267,500 267,500 267,500 (66,326) 142.49 197.31 203.22 209.32 12.5% 13.0% 13.5% 14.0% 17.81 25.65 27.44 29.30 222.09 215.60 14.5% 31.26 950-51 IEEE 228.73 15.04 34.31 235.59 15.04 35.34 242.66 15.04 36.40 249.94 15.0% 37.49 257.44 15.0% 38.62 265.16 15.0% 39.77 273.12 15.0% 40.97 250.000 168.75 19.41 (7.86) 250.000 173.81 19.99 (5.52) 250.000 250.000 250.000 250.000 179.03 184.40 189.93 195.63 20.59 21.21 21.84 22.50 (2.78) 5.59 6.81 250.000 250.000 250.000 250.000 250.000 250.000 250.000 250.000 250.000 201.30 207.54 213.17 220.18 226.79 233.59 240.60 247.82 255.25 23.17 23.87 24.58 25.32 26.08 26.86 27.67 28.50 29.35 8.09 9.73 10.02 10.32 10.63 10.95 11.28 11.61 0.67 0.58 0.14 0.28 0.07 0.24 0.06 0.23 0.05 0.23 0.05 0.23 0.05 0.23 0.05 0.06 0.33 0.23 0.05 0.05 0.33 0.38 0.09 0.11 0.58 0 5.02 005 0.os SDD EED 0.67 0.72 0.33 0.08 0.09 0.50 0 6.31 1.89 OM Output Old Sales Old Geoss Pool Incremental Gross Profit 2. Estimate of hcremental Depection Y I Odas YE 2 Oudley Ye 3 Outlas Total, New Depreciation 3. Overhead 4. Petar horamental Profit 5. Tas Expense 6. Afestax Profit 7. Cash Flow Adjustments Add back Depreciation Les adel WIP inventory Capital Sponding Terminal Value, and 8. Free Cash Flow LED 0.50 0.12 015 0.78 0 (3.55) (1.03 (2.49) EEO 0.43 0.10 0.13 0.67 0 3.77 1.13 2.64 0.23 0.05 005 0.33 0 9.99 3.00 6.99 0.23 0.05 0.05 0.33 0 10.30 3.09 7.21 0 D O D O 0.43 0 7.66 2.30 5.36 0 10.95 053) 2.56 (5.97) 10.62 (6.24) (1.87 (4.37) 0 9.01 2.22 6.35 SI 9.39 2.82 6.58 9.69 2.91 6.78 0 11.29 3.39 7.90 3.28 3.51 7.43 7.66 0.58 0.67 1.81 (5.00) 0.72 (0.38) (1.00) 0.78 (0.42) (1.00) 0.67 (1.27) 0.50 0.02 0.33 (0.00) 0.33 (0.00) 0.33 (0.00) (100) (100) EEO (100) 0.33 0.18 0.02 (5.03) (3.13) 2.04 4.94 5.82 6.75 6.90 7.11 7.32 7.53 7.99 8.41 NPV, Rotterdam IRRL, Rotterdam Growth in EPS, Roterdam Payback, Rotterdam 15.64 21.8% 50.04 5.17 yaan 3.500 2.58 0.30 3.500 2.74 0.31 3.500 3.08 0.35 005 E LEE 3.500 2.66 0.31 0.21 0.07 (0.14) 3.500 3.52 3.500 2.82 0.32 0.23 0.02 (0.15) 3.500 2.91 0.33 0.23 0.00 (0.16) 005 E LTE 3.500 2.99 0.34 0.24 0.08 (0.16) 3.500 3.18 0.37 0.26 0.08 (0.17) 0.39 0.27 0.09 (0.18) 3.500 3.42 0.40 0.28 0.09 (0.19) 0.02 (0.14) 0.09 (0.15) 0.08 (0.17) 0.09 (0.18) 0.29 0.09 (0.19) 40.82 9. Adjustment for cosion in Merseyside volume Lost Merseyside Output Lost Merseyside Revenue Lost Mercyside Cow Profile Lost Goss Profits afer Taxes Change in Merseyside hestery Total Effect on Free Cash Flow DCF. Frosion Merseyside Cash flow afer erosion Rotterdam Adjusted for Fell Eresie at Merseyside NPV, Rotterdam IRR,Rotterdam Growth in EPS, Roterdam Payback, Rotterdam (5.03) (3.13) 1.91 3.97 4.79 5.67 6.59 6.94 7.15 9EL 7.52 7.80 8.22 14.82 21.2% $0.04 5.24 years Frosion alusta afer tax profil (5.97) (4.37) 2.35 3.21 4.10 5.04 6.02 6.23 6.43 6.63 6.83 7.05 7.26 7.49 Alternative way to calculate added WIP inventory Added WIP hventos 1.81 1.81 1.43 (0.38) 1.01 10.41 (0.25) (1.22 (0.23) 0.02 (0.21) 0.02 (0.18) 0.03 (0.15) 0.03 (0.16) (0.001 (0.16) 10.00 (0.17) (0.00) (0.17) 10.00 (0.18) 10.01) (0.18) 10.011 (0.19) 0.18 Sensitivity Analysis: 9501 10% 15.64 8% 20.89 119 13.42 Discount Rate 129 11.44 99 18.12 13% 9.66 1496 8.06 15% 6.62 169 5.33 NPVN oson 19% 2.17 1796 4.16 2094 1.32 27.49 24.00 1896 3.12 10% 14.82 79 22.96 8% 19.93 10% 14.82 119 12.67 Discount Rate 12% 1396 10.94 9.01 149 7.46 9551 909 169 4.81 9541 189 2.66 19% 1.74 NPVF 26.36 20% 0.92 17.24 VICTORIA CHEMICALS (B) ANALYSIS OF ROTTERDAM PROJECT (EXCLUDING RIGHT OF WAY) - 50% Erosion of Merseyside Financial values in millions of Betish Pounds) 10.04 SI 0.09 Assumptions Annual Output (see bons) Output Can Per Yes Prior Yea Mexram Possible Output Price ton (pounds sing) linfation (prices and costs) oss Main Growth Reyes Maximum Powie Gros Muxin Goose Muyin Tax Rate vetent Outley (billions) 250.000 2.0% 267 500 675 3.0% 0.5% 15.0% 11.5% 30.0% 0 S Discount Depreciable Likely) Overhead/Invent Salvage Value WIP Inventory/Cost of Goods Sold Terminal Value of Right Way Month Dewi, Construction 3.09 Notit 2008 2009 2010 2011 Now 2008 2009 2010 1 Frosion of Mens side SOS 0 EI 3 2010 2009 4 2011 5 2012 8 2015 2008 10 2017 2014 12 2019 2014 2018 15 2012 2010 20AL 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 255.000 (106,250) 100.41 11.5% 11.55 260,100 (36,700) 120.56 12.0% 14.47 265,302 267,500 267,500 267,500 (66,326) 142.49 197.31 203.22 209.32 12.5% 13.0% 13.5% 14.0% 17.81 25.65 27.44 29.30 215.60 14.5% 31.26 222.07 15.0% 33.31 228.73 15.04 34.31 235.59 15.04 35.34 242.66 15.04 36.40 249.94 15.0% 37.49 257.44 15.0% 38.62 265.16 15.0% 39.77 273.12 15.0% 40.97 250.000 168.75 19.41 (7.86) 250.000 173.81 19.99 (5.52) 250.000 250.000 250.000 250.000 179.03 184.40 189.93 195.63 20.59 21.21 21.84 22.50 (2.78) 4.44 5.59 6.81 250.000 250.000 250.000 250.000 250.000 250.000 250.000 250.000 250.000 201.50 207.54 213.77 220.18 226.79 233.59 240.60 241.82 255.25 23.17 23.87 24.58 25.32 26.08 26.86 27.67 28.50 29 35 8.09 9.44 9.73 10.02 10.32 10.63 10.95 11.28 11.61 0.67 1. Estimate of incremental Geoss Profit New Output Lost Output-Construction New Sales (Millions) New Gen Murgin New Geoss Pool Om Output Os Sales Ou Goss Profit Incremental Gross Profs 2. Estimate of incremental Depreciation Ye I Odays YE 2 Outly Ye 3 Outlay Total, New Depreciation 3. Overhead 4. Protax Incremental Profil 5. Tax Expense 6. Atex Pro 7. Cash Flow Adjustment Add back Depreciation Les aldo WIP inventory Capital Spending Terminal Value, and 8. Free Cash Flow 0.58 0.14 0.50 0.12 0.33 0.08 0.23 0.05 ETO SDD 0.23 0.05 0.23 0.05 015 0.38 0.09 0.11 0.58 0.23 0.05 0.06 0.33 0.07 0.08 0.43 0.23 0.05 0.05 0.33 0.23 0.05 0.05 0.33 0.09 Oos SOO SOO 0.72 0.78 0.50 EEO 0.43 0.10 0.13 0.67 0 3.77 1.13 2.64 EEO O EEO O O 0.06 0.07 0.37 0 9.01 2.72 6.35 0.67 0 (8.53) 2.56 (5.97) O 0 11.29 (6.24) 9.69 (3.55) (1.03 (2.49) 5.02 1.SI 3.51 6.31 1.89 7.66 2.30 5.36 9.39 2.82 6.58 9.99 3.00 6.99 10.30 3.09 7.21 0 10.62 3.19 7.43 10.95 3.28 7.66 (4.37) 6.78 7.90 0.43 0.37 0.72 (0.38) (1.00) 0.78 (0.42) (1.00) 0.67 (1.27) 0.58 0.02 1.81 (5.00) 0.50 0.02 0.33 (0.00) 0.33 (0.00) 0.33 (0.00) (100) (100) (100) 810 (8.49) (5.03) (EE) 2.04 4.11 4.94 5.82 6.75 6.90 7.11 7.32 7.53 7.76 7.99 8.41 NPV, Rotterdam IRIL, Rotterdam Growth in EPS, Roterdas Payback, Rotterdam 15.64 21.8% 50.04 5.19 year 8.750 8.750 6.45 0.24 0.52 0.17 (0.35) 8.750 6.65 0.26 0.54 0.18 (0.36) 8.750 6.85 0.79 0.55 0.18 (0.37) 8.750 7.05 0.81 0.57 0.19 (0.38) 8.750 7.26 0.84 0.58 0.19 (0.39) 8.750 7.48 0.86 0.60 0.20 (0.40) 8.750 7.71 0.89 0.62 0.20 (0.42) 8.750 7.94 0.91 0.64 0.21 (0.43) 8.750 8.18 0.94 0.66 0.97 0.68 0.22 (0.45) 8.750 8.67 1.00 0.70 0.23 (0.47) 8.750 8.93 1.03 0.72 0.24 (0.48) (0.44) -2.04 9. Adjustment for crosion in Merseyside volume: Lost Merseyside Output Lost Merseyside Revenue Lost Merseyside Gross Prof Lost Goss Profits afer Taxes Change in Merseyside hvertory Total Effect on Free Cash Flow DCF, Erosion Moneyside Cash fows after sosion Rotterdam Adjusted for Full Erosion at Merseyside: NPV, Rotterdam TRR,Rotterdam Growth in EPS, Roterda Payback, Rotterdam Frosion adjusted after tax profits (5.03) (3.13) 1.70 3.75 4.57 5.44 9E9 6.50 6.69 6.89 7.09 7.30 7.52 7.93 13.60 20.4% $0.04 5:34 year (5.97) (4.37) 1.90 2.75 E9E 4.55 5.52 5.72 5.90 6.08 6.27 6.47 6.67 6.87 Alternative way to calculate added WIP inventory Addol WIP hentes 1.01 (0.18) 1.81 1.81 1.43 (0.38) (0.25) (1.27 (0.23) 0.02 (0.21) 0.02 (0.15) 0.03 (0.16) (0.00) (0.16) (0.00) (0.17) (0.00) (0.17) 10.01) (0.18) (0.01) (0.18) (0.01) (0.19) 0.18 Sensitivity Analysis: 10% 956 79 24.00 Discount Rate 119 129 13.42 11.44 8% 20.89 179 10% 15.64 15% 16% 5561 27.49 NPV-No Frosion 209 1.32 15.64 112 10% 13.60 24.65 79 21.40 995 15.91 10% 13.60 Discount Rate 11% 1296 11.54 9.69 13% 8.04 1494 6.55 15% 5.22 16% 4.02 18% 1.98 179 2.95 19% 1.11 NPV-Full Frosion 2094 0.32 18.50 VICTORIA CHEMICALS (A) Kevid Y Analysis of Merwyder (Ref.ct charges RILLERCESAIN of Rotterdam burnea volume) Chinancial values in meloodshed) 7.0% 073 Annual Clutput (metrictor) Cliputan Clegral Cluput Proton puheen Ination are prices and Co Margines there) ad Martin Energy Saving Selca 12.30% Taxare Investment Chulay imit) Ekpeccable Life Cycan Salvage Value War Inventory of Canada Meet Dreme Counction Preliminary Engineering Comill.) Cherement 100% 30% 12.01 15 0 3.0% 1.3 Not relevant relevant Yr 6-10 Yr 1.5 0.73% 0.0% 11 MIS 12 14 ZIRI MUS 2 15 UM 2014 10 2012 2010 MIS 2012 2016 IND 287,300 207,300 287,300 267,500 267,500 267,500 267,500 267,300 287.500 267,500 267,500 267,500 267,500 Year 1. imate of incremental Como New Clutput) Lot Cuput-Coretruction New Sales (M) Nowe Margin Now Chow Me 191.56 222.00 228.75 205.16 157.99 13. 21.72 IR. 13.1% 23.57 197.31 13.7% 27.13 203.22 13.1% 27.94 2003 13.39 27.74 215.00 13.3% 285.59 13.3% 31.22 202.66 12.596 30.35 249.94 12.5% 31.24 257. 12.5% 32.18 275.12 12.5% 54.14 26. 54 30 31 33.15 230,000 Cd Cup Cd Salica Cid Chroma 200.000 IOS 19.41 230,000 17. 19.90 230,000 170S 20.30 250 14.0 21.21 230,000 INS 21. 250,000 201.50 1956 230,000 207.54 250,000 213.77 24.5 230,000 220 IN 23.32 230,000 233.59 26. 230,000 200.00 27.67 230,000 288.25 2935 247. 2K 50 26.0 17.500 17,900 17.500 17.00 12.00 17,900 12.17 17,300 14.10 17.500 1291 17.00 17.00 17.00 17.500 13.00 1.57 13.30 1.53 17.39 1.67 13.41 1.77 412 1.RS 16. 1.94 2.57 2.30 2.75 3.11 3.95 6.76 475 4.61 0.32 -0.13 0:31 3.04 0.35 0.34 3.19 0.36 7.17 6.78 0.47 -0.0 3.51 0.39 -0.12 6.56 0.20 0.25 -0.07 0.37 0.00 0.41 -0.12 6.5% 0.26 -0.08 0.45 -0.08 -0.07 Lot Rotterdam Clutput (MT) Lot Rotterdam Revenu Lot Rotterdam Com Mat Incremental Code 2 emate of incremental Inventory Ct WIP inventory Lotterdam Winventory Incremental Inventory stimate of incremental Depreciate New patio New Depeccati,Tank can Cid Deprication, Tank can Incremental Depecciation Tetas. Incremental & Cash Flow Auments Lea Capital Espend Add back Depreciation Change of inventory 7. Free Cash Now 1.00 0.66 0.50 0.55 0.55 013 0.55 0.55 0.13 0.22 0.35 013 0.55 013 0.00 034 0.94 0.27 04 02 0.55 013 0.14 0.54 1.96 18 0.14 0.41 0.50 0.54 0.41 1.00 -0.64 0.61 3.05 0.54 204 -12.00 2.12 0.61 0.54 0.26 0.30 0.54 0.54 0.54 0.41 0.41 1.60 071 -12.00 2.70 3.54 2.RI 3.04 1.RI 1.91 1.97 1.9 T 50 NV- 1 Average annulat Payback Read 0.00 4 years Smidity Analyse 00% 11% 10 30 % 11.00 9% 4.70 10% 8.30 the 12% 13% 6.20 3.47 19% 3.KI 11% 1.76 3.08 2.30 19% 1.16 20% 0.61 VICTORIA CHEMICALS (A) Revised ICF Analysis of Merseyside Project (Reflects charge for 20% EROSION of Rouesdan business volume) (Financial values in millions of Betish Pounds) 10.0% 12.0 15 3.0% 1.5 17.500 209 Not relevant Notre 10 2017 12 2012 13 2010 15 2012 2013 20AL 2 267 500 267 500 267,500 267,500 267,500 267.500 209.32 13.39 27.74 267,500 222.07 13.3% 267,500 228.73 30 31 235.59 13.3% 31.22 242.66 12.5% 30.33 249.94 12.5% 31.24 257.44 12.5% 32.18 267,500 265.16 12.5% 33.15 273.12 12.5% 34.14 250.000 195.63 22.50 267,500 215.60 13.3% 28.57 250.000 201.50 23.12 3.500 2.82 0.32 5.07 250.000 207.54 23.87 250.000 213.77 250.000 220.18 25.32 250.000 226.79 26.08 250.000 233.59 26.86 250.000 240.60 27.67 250.000 247.82 28.50 Annual Output (metric tons) 250.000 Discount Output Gain eiginal Output 7.0% Tax Rate 10 Price ton pounds stelling) 675 11 Inflation Repeces and costs) Investment Oudlay (mille) 3.0% 12 Gross Muyinlex. Depeee) Depreciable Life 12.50% 12 M Gross Muyin Salvage Value 11.5% WIP Inventory Con of Goods 14 Savings Sales Ye 1-3 1.25% Months Downtime. Construction Full Frosion Assumption Y 6-10 0.75% Erosion of Rotterdam Y: 11-15 Preliminary Engineering Costs (ill.) Overhead/lnvestment 11 1 3 4 2005 2008 2010 2011 11. Estate of incremental Geoss Profit New Output (ons) 267,500 267,500 267 500 267,500 267,500 Lost Output-Construction 3.438) New Sales Millions) 157.99 185.98 191.56 197.31 203.22 New Goss Margin 13.8% 13.8% 13.8% New Geoss Prof 21.72 25.57 26.34 27.13 27.94 3 OM Output 250.000 250.000 250.000 250.000 250.000 Old Sales 168.75 173.1 179.03 184.40 189.93 Ou Gross Profit 19.41 19.99 20.59 21.21 21.84 Frosion Lost Recenin Ougu (MT) 3.500 3.500 3.500 3.500 3.500 Lost Ronda Revenue 2.36 2.43 2.51 2.58 2.66 35 Lost Rotterdan Gos Prof 0.27 0.28 0.29 0.30 0.31 Incremental Gross Prof 2.05 5:30 5.46 5.63 5.80 * 2. Estime of cemental WIP inventory New WIP very 4.09 4.81 4.96 5.11 5.26 10 O WIP 4.48 4.61 4.75 4.90 5.04 Lost Rotterdam WIP inventory 0.06 0.06 0.09 0.07 0.07 Incremental -0.45 0.13 0.14 0.15 43. Hatimate of hermental 44 1.60 1.39 1.20 1.04 0.90 New Deprecation, Tankcas 0.40 0.32 OM Deprcion, Tankcs 4 Incremental Depiction 1.60 1.39 1.20 1.22 Pret harmonal Prof 0.45 3.92 4.26 4.57 46. Cash Flow Adjustment 5o Les Capital Expenditure -12.00 -2.00 2.12 St Add back Depreciation 1.60 1.39 1.20 1.44 1.22 sa Change or WIP investory 045 59 0.00 0.00 0.00 sa 7. Free Cash Flow 2018 4:37 6.54 sal SS NPV- 15.12 SIRR 28.0% 250.000 255.25 29.35 3.500 2.91 3.500 2.99 3.500 3.47 3.500 2.74 0.31 4.92 3.500 3.08 0.35 5.54 3.500 3.18 0.37 3.89 3.500 3.27 0.38 4.00 3.500 3.37 0.39 4.12 3.500 3.57 0.41 5.22 5:38 5.45 5.19 0.07 0.18 5.61 5.35 0.07 0.19 5.78 S.SI 0.08 0.19 5.95 5.68 0.08 0.20 6.13 5.85 0.08 0.20 6.37 6.02 0.08 0.26 6.56 6.20 0.09 0.27 6.76 6.39 0.09 0.28 6.96 6.58 0.09 0.29 7.17 6.78 0.09 0.30 WIT Deco New Delete 0.55 0.55 0.78 0.26 0.42 061 4.31 0.68 0.20 0.34 0.54 4.53 0.59 0.16 0.27 0.55 0.13 0.22 0.46 4.92 0.55 0.13 0.17 0.30 5.04 0.55 0.13 0.14 034 3.35 0.55 0.13 0.14 0.54 3.47 0.55 0.13 0.14 0.54 3.59 0.41 3.84 0.14 0.41 3.99 4.94 0.61 3.04 3.59 0.54 31 0.48 3.79 0.46 0.50 10 4.02 0.54 106 0.54 10 2.96 0.54 3.04 0.41 10 3.09 0.41 10 3.47 0.030 S8 Average annual addition to EPS so Payback Period Sensitivity Analys 10% NPV-Full Frosion 15.12 894 18.56 99 16.76 119 13.62 Discount Rate 129 135 12.24 10.97 10% 15.12 22.69 20.53 15% 8.73 9.80 16% 7.73 17% 6.81 20% 4.42 18% 5.95 1995 5.16 1 Exhibit 2 VICTORIA CHEMICALS (A) Revised DCF Analyse af Merveyde Project (Reflects change for 50% EROSKON of Rottendan business volume) (Financial values in millions of Betish Pounds) Areps Annual Output cons) Output Guiniginal Output 10 Price bon (pounds sing 11 fion Rate (pices and ) * Goss Marginen. De O Goss Muyin 14 Energy Savings/Sales 15 250.000 7.096 675 3.0% 12.50 11.55 1.25 Discountate Tax Rate Investment Ouday nil) Depeche Lie bye) Salvage Value WIP kvety Cost of Goods 10.046 30% 12.0 15 3.0% 1.5 17.500 5096 Not relevant Not relevant Y 1.5 Ye 6-10 Yc 11-15 0.75% 0.0% Months Downtime Construction Full Frosio Assumption Erosion of Rowena Preliminary Engineering Costs (ill) Overhead Investment * 19 2008 2010 2011 2011 2009 2012 2014 2015 10 2012 11 2018 12 2019 13 20 15 2022 2016 PAL 267,500 267,500 267.500 267.500 267.500 267 500 267,500 267 500 267,500 267 500 267,500 267,500 (33,438) 157.99 13.8% 21.72 267,500 185.98 13.8% 25.57 191.56 267,500 197.31 13.8% 27.13 203.22 267,500 209.32 13.3% 27.74 215.60 222.07 13.3% 228.73 13.3% 30.31 13.3% 28.57 235.59 13.3% 31.22 242.66 12.5% 30.33 249.94 12.5% 31.24 257.44 12.5% 32.18 265.16 12.5% 33.15 273.12 12.5% 34.14 26.14 27.94 250.000 168.75 19.41 250.000 173.81 19.99 250.000 179.03 20.59 250.000 184.40 21.21 250.000 189.93 21.84 250.000 195.63 22.50 250.000 20150 23.17 250.000 207.54 23.87 250.000 213.77 24.58 250.000 220.18 25.32 250.000 226.79 26.08 250.000 233.59 26.86 250.000 240.60 27.67 250.000 247.82 28.50 250.000 255.25 29.35 8.750 8.750 8.750 8.750 8.750 5.91 0.68 1.64 8.750 6.08 0.70 4.88 8.750 6.27 0.72 5.03 8.750 6.45 0.74 5.18 8.750 6.65 0.76 5.34 8.750 6.85 0.79 7.26 8.750 7.05 0.81 4.58 8.750 7.94 0.91 3.34 8.750 8.18 0.94 3.44 8.750 8.67 1.00 8.750 493 1.03 3.76 0.86 0.89 5.01 0.99 34 4.72 4.09 4.81 4.96 4.75 5.61 5.35 1. Estimate of incremental Geass Profit New Output (ons) Lost Output-Construction New Sales (Milions) New Gen Murgin New Gos Profit O Out On Sales Ou Gross Profit Frosion Lost Rotterdam Output (MT) Lost Rouendan Revenue Lost Rouesdan Gross Profit Incremental Gross Profit x 2. Estimate of the WIP inventory New WIP inventory OM WIP invesy 1 Lost Rondan WIP inventory Incremental WIP inventory 3. Estimate of hcremental Depreciation New De.. Tinka Ou Deprion, Tank Cars Incremental Depiction Peetex hcremental Profil 6. Cash Flow Adjustments Les Capital Expenditures -12.00 Add back Depreciation Change of WIP inventory 7. Free Cash Flow -12.00 SNPV- 12.64 25.5% Se Average nudition to EPS Payback Period HD . 5.11 4.90 0.17 0.04 5.45 5.19 0.18 0.07 SSS 6.56 6.20 5.78 S.SI 0.19 0.08 5.04 0.18 0.04 6.37 6.02 0.21 0.14 016 5.95 5.68 0.20 0.08 6.76 6.39 0.22 0.15 6.96 6.58 13 7.17 6.78 0.24 0.16 0.16 0.07 0.20 0.08 0.22 0.14 0.15 . 1.39 1.20 1.04 0.40 0.55 0.55 0.90 0:32 0.55 0.78 0.26 0.42 0.61 0.68 0.20 0.34 0.54 4.04 0.55 0.13 0.59 0.16 0.27 0.48 4.24 0.55 0.13 0.22 0.55 0.13 0.14 0.54 0.55 0.13 0.14 0.17 0.50 1.60 0.04 1.39 0.14 0.41 3.24 0.14 0.41 3.35 3.50 3.83 3.74 4.40 45 230 296 3.01 2.12 0.41 1.60 055 1.39 59 3.25 1.20 0.00 1.88 0.00 0.61 002 3.27 0.54 0.00 3.37 0.00 4.06 0.54 106 0.46 0.00 3.54 0.50 0.00 3.65 000 3.45 0.54 0.00 2.56 0.00 0.54 0.00 2.64 2.90 RR 0.026 Sensitivity Acalysis: 10% NPV-Full Frosion 12.64 119 11.29 Discount Rate 12% 139 10.05 79 17.49 14% 7.86 18% 4.38 20% 169 5.98 19.42 12.64 1994 3.66 15.72 6.88 S.IS 1 1 Exhibit 2 VICTORIA CHEMICALS (A) Revised ICF Analysis of Merseyside Project (Reflects change Se FULL. EROSION of Rotterdam business volume) (Financial values in millions of Betish Pounds) Assumptions Annual Output) Output Gain/ginal Output 10 Price ton (pounds sterling) 12 fation Rate (prices and costs) 12 Goss Maxinlex. Dopo 12 OK Go Muyin 14 Energy Savings Sales 15 250.000 7.0% 675 3.0% 12.50% 11.5% 1.25% 0.75% 0.0% Discount Tax Rate Investment Oudlay (ill.) Deprecale Like you) Salvage Value WIP hvertory/Cost of Goods Months Downtime. Construction Preliminary Engineering Costs (ill.) Overhea/Investment 10.0% 30% 12.0 181 0 3.0961 1.5 Notret Netent Ye 1-5 Y 6-10 YES 17 2 1 2008 3 2010 6 2013 2011 2012 13 2010 10 2012 11 2018 Now 2015 2014 2014 12 2019 15 2017 2011 267,500 267 500 267,500 267,500 267,500 267.500 267 500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 33.438) 157.99 13.8% 21.72 185.98 13.8% 25.57 191.56 13.8% 26.34 197.31 13.8% 27.13 203.22 13.8% 209.32 13.3% 27.74 215.60 13.35 28.57 222.07 13.3% 228.73 13.39 30.31 235.59 13.3% 31.22 242.66 12.5% 30.33 249.94 12.5% 31.24 257.44 12.5% 32.18 265.16 12.5% 33.15 273.12 12.5% 34.14 27.94 29.42 250.000 250.000 168.75 19.41 2.32 250.000 173.81 19.99 5.58 250.000 179.03 20.59 5.75 250.000 189.93 21.84 6.10 250.000 195.63 22.50 5.24 250.000 201.50 23.12 5.40 250.000 207.54 23.87 5.56 250.000 213.77 24.58 5.72 250.000 220.18 25.32 5.90 21.21 5.92 250.000 226.79 26.08 4.25 250.000 233.59 26.86 4.38 250.000 240.60 27.67 4.51 250.000 247.82 28.50 4.65 250.000 255.25 29.35 4.79 4.09 Yew 10 1. Estimate of hantal Gross Prof 1 New Output (ons) Lost Output-Construction New Sales Millions) 24 New Goss Mwy in 25 New Gross Profit O Output On Sales Ou Goss Post Incremental Gross Prof 12. Estimate of increment WIP inventory New WIP inventory OM WIP inventory Incremental WIP inventory 33. Estimate of hermental proton New Depreciation New Deprecation, Tank cars Ou Deprecation, Tanks 40 Incremental pro Prix Incremental Profil 46. Cash Flow Adjustment 4 Less Capital Expenditures 41 Add back Deprem es Change of WIP investory 67. Free Cash Flow 47 NPV- 4 IRR 4.81 4.61 0.20 4.96 4.75 5.11 4.90 0.21 5.26 5.04 0.22 5.45 5.19 0.25 5.61 5.35 0.26 5.78 S.SI 0.27 5.95 5.68 6.13 5.85 0.29 6.37 6.02 0.35 6.56 6.20 0.36 6.76 6.39 0.37 6.96 6.58 0.38 7.17 6.78 0.39 028 039 1.60 1.39 1.20 0.55 0.55 1.04 0.40 0.90 0.32 0.68 0.20 0.55 0.13 0.55 0.13 0.78 0.26 0.42 0.61 4.62 0.59 0.16 0.27 0.48 5.08 0.55 0.13 0.17 0.50 5.39 0.14 0.55 0.13 0.14 0.54 3.84 0.55 0.13 0.14 0.54 3.97 0.14 0.41 1.60 0.72 1.39 4.20 1.20 4.35 1.44 4.48 1.22 4.88 0.54 4.85 0.46 5.26 0.54 3.71 0.41 4.38 -12.00 1.39 1.60 039 2.49 -2.00 1.20 10 2.38 2.12 1.22 101 6.75 101 4.57 0.61 104 3.81 0.54 101 3.93 | 0.46 4.14 0.50 101 4.27 0.54 106 3.07 0.54 3.22 0.54 10 3.31 3.36 0.41 3.85 -12.00 3.73 4.03 16.78 29.6% 0.032 sa | Avengeanual addition to EPS sa Payback Period 4 12 ye S5 S Sensitivity Analysis: 10% 16.78 694 79 24.87 22.36 88 20.45 99 18.53 10% 16.78 119 15.17 Discount Rate 129 13% 13.70 12.25 149 11.10 15% 9.95 169 8.89 1796 7.91 18% 7.00 1996 6.15 209 5:37 NPV Ne A B D E F G H 1 J K Merseyside 20 50 Rotterdam 20 50 Erosion of Opposite Plant (%) 0 100 0 100 NPV (GBP MM) E 16.78 E 15.12 12.64 E 8.50 E 15.64 E 14.82 E 13.60 E 11.56 IRR 29.56% 27.98% 25.54% 21.19% 21.77% 21.24% 20.44% 19.06% EPS Impact (GBP) 0.0322 0.0297 0.0259 E 0.0196 E 0.0431 0.0401 0.0355 E 0.0280 Payback Period (Years) 4.12 4.24 4.42 4.78 5.17 5.24 5.34 5.54 K N P a V W Comparison of Merseyside and Rotterdas Projects based on DCF Analysis Results EXY R R MM Pendarasi NPV of Projects by Discount Rate (no resen atplat 100 Merseyside Merseyside G Sunce NPV) Rotterdam, Excludes Right of Way VC Ca Revised 15.6 VC Case A Revad VC Casc A Read 16.78 29.0% 10% Rotterdam, Mercy Rotondam. Original Rotterdam Excludes Right-of-grul with Right Way. Right away and Cheral nuth Way Red No Eroon VC Can Revised VC CA VC Can VCC 11.56 10.57 15.30 23 18.0% 16.3% 10% 10% 10% 21 10% Bee Can 7.0% KO 27.0 200 2010 18 IKIZ 15 15.64 16.10 13.70 11.36 10 in 100 11.0 120 13.06 20.45 1 1. SS 10.7 15.17 13.70 12 11.10 9.70 8.30 7.41 8.06 5.05 15 15.0 16.0% 17.05 361 4.61 SKI SLO NPV of Projects by Discount Rate Tuller at the plant -- X. 7.91 4.16 19.0 20.0% 6.15 3.37 2.17 1.32 1.75 1.16 0.61 1.75 0. 0.04 -0.6 1600 Sa 00 2008 2010 2011 2013 2014 2018 2010 2001 2003 New -13 2013 3 2016 3 6 1 1 1 Comparison of Free Cash Flows, Both Projects, Full Erosion W 2 M VICTORIA CHEMICALS (1) ANALYSIS OF ROTTERDAM PROJECT (EXCLUDING RIGHT OF WAY) - No Erosis and Full Erosios of Merseyside Financial values in millions of Betish Pounds) 10.0% 15 0.044 Assumptions Annual Output actions) Output Gain Por Yew/Prior Year Maximum Possible Output Price on (pounds sterling) inflation (pices and st) Kiss Marin Geowth RateYou Maximum Pow Cose Muyin Kose Margin Tax Rag Investment Oudlay (millions) 10 11 12 13 250.000 2.09 267,500 675 3.096 0.59% 15.0% 11.5% 30.09% Discountate Depreciable) Overhead/evestment Salvage Value WIP Inventory Cost of Goods Sol Terminal Value of Right-of-Way Maths Downe. Construction 10 3.094 Not relevant 15 16 17 2008 2009 2010 2011 0 5 Now 2008 2009 2010 13 19 20 21 22 9 EI 15 2010 8 2015 2011 10 2012 2009 7 2014 2012 ETOL 2018 2012 20 TVO WOC 24 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 Yem 1. Estimate of incremental Geoss Profit New Output Lost Output-Construction New Sales Millions) New Goss Mwyn New Goss Profit 255.000 (106,250) 100.41 11.5% 11.55 260,100 (86,700) 120.56 12.0% 265,302 267,500 267,500 267,500 (66,326) 142.49 19731 203.22 209.32 12.5% 13.0% 13.59 14.04 17.81 25.65 27.44 29.30 250.000 168.75 19.41 (7.86) 250.000 173.81 19.99 (5.52) 250.000 250.000 250.000 250.000 179.03 184.40 189.93 195.63 20.59 21.21 21.84 22.50 (2.78) 4.44 5.59 6.81 215.60 222.07 228.73 235.59 242.66 249.94 257.44 265.16 273.12 14.5% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 31.26 33.31 34.31 35.34 36.40 37.49 38.62 39.77 40.97 250.000 250.000 250.000 250.000 250.000 250.000 250.000 250.000 250.000 201.50 207.54 213.77 220.18 226.79 233.59 240.60 247.82 255.25 23.12 23.87 24.5 25.32 26.08 26.86 27.62 28.50 29.35 8.09 9.44 9.73 10.02 10.32 10.63 10.95 11.28 11.61 0.67 0.58 0.14 0.28 0.07 0.08 0.43 0.23 0.05 0.05 0.33 0.23 0.05 0.05 0.33 Om Output On Sales Old Goose Profit Incremental Geos Post 2. Estimate of Incremental Depreciation Y I Oudarys Y 2 Oudarys Ye 3 Outly Total, New Depreciation 3. Overhead 4. Pretax incremental Prof 5. 6. Afestx Post 7. Cash Flow Adjustment Add back Depreciation Less added WIP inventory Capital Spending Terminal Value and 8. Free Cash Flow 67 0.33 0.08 0.09 0.50 0 6.31 1.89 0.23 0.05 0.05 0.33 0.50 0.12 0.15 0.78 0 (3.55) (1.02 (2.49) 0.23 0.05 0.06 033 0 0.72 0 (6.24) 0.43 0.10 0.13 0.67 0 3.77 1.13 2.64 0.38 0.09 0.11 0.58 0 5.02 1.51 3.51 0.24 0.06 0.07 0.37 0 9.07 2.72 6.35 0.23 0.05 0.05 0.33 0 10.30 3.09 7.21 0.23 0.05 0.05 0.33 0 10.62 3.19 7.43 0.23 0.05 0.05 0.33 0 10.95 3.28 0 0 (8.53) 2.56) (5.97) 7.66 2.30 5.36 2.82 6.58 9.69 2.91 6.78 9.99 3.00 6.99 11.29 3.39 7.90 (4.37) 766 0.67 0.50 0.72 0.38) (1.00) 0.78 (0.42) (1.00) 0.67 (1.27) 0.58 0.02 0.43 0.03 LEO EDD 0.33 (0.00) 0.33 (0.00) 0.33 (0.00) EEO (100) EEO (100) EEO (100) 0.33 0.18 (5.00) (8.49) (5.03) (3.13) 2.04 4.11 4.94 6.75 6.90 7.11 7.32 7.33 7.76 7.99 50 NPV, Rotterdam IRRL, Rotterdam Growth in EPS, Roterdam Payback Roda 15.64 21.8% 30.04 5.17 yaan 17.500 12.91 17.500 14.10 17.500 14.53 17.500 15.41 17.500 15. 1.93 17.500 16.35 17.500 14.96 1.72 1.20 17.500 17.32 205 17.500 13.30 1.53 1.02 0.35 (0.72) 1.04 0.34 (0.70) 17.500 13.69 1.57 1.10 0.36 (0.74) 1.17 0.39 (0.78) 17.500 16.84 1.94 11:36 0.45 (0.91) 17.500 17.35 1.99 1.40 0.46 (0.94) 1.32 0.43 (0.88) 0.37 (0.76) 0.49 0.41 (0.83) (0.81) (0.86) (0.96) -4.08 9. Adjustment Sareesco in Merseyside volume Lost Merseyside Output Lost Merseyside Revenue Lost Merseyside Geoss Profit Lost Geoss Profits afer Taxes Change in Merseyside Inventory Total Effect on Free Cash Flow DCF. Frosion Meseyside Cash flow afer erosion Rotterdam Adjusted for Fell Eresie at Merseyside NPV, Roterdam TRR. Rotterdam Growth in EPS, Roterdam Payback, Rotterdam (8.49) (5.03) (ELTE) 1.35 6EE 4.20 5.06 5.96 6.10 6.27 6.46 6.65 6.85 7.05 7.45 11.56 19.1% $0.03 5.54 years Frosion adjusted after tax peefis (5.97) (4.37) 1.16 1.98 3.74 4.68 4.86 105 5.17 EES 5.50 5.67 5.85 Alternative way to calculate added WIP inventory! Addol WIP (0.16) 1.81 1.81 1.01 10.42 (0.25) (1.27 (0.23) 0.02 (0.21) 0.02 (0.18) 0.03 (0.15) 0.03 (0.16) 10.00 (0.17) 10.00 (0.17) (0.01) (0.18) (0.01) (0.18) 10.01 (0.19) 0.18 (0.38) Sensitivity Analysis: 10% 694 15.64 27.49 79 24.00 89 20.89 994 18.12 109 15.64 119 13.42 Discount Rate 129 13% 9.66 14% 8.06 9551 1999 16% 5.33 20% 1796 4.16 1896 3.12 19% 2.17 NPV-No Frosion 10% 694 11.56 21.81 79 18.79 956 OLEI 10% 11.56 119 9.65 Discount Rate 12% 7.95 1394 6.42 159 3.82 16% 2.72 1794 1.73 18% 0.84 1996 0.04 2094 0.68 NPV-Fun S.OS 16.10 VICTORIA CHEMICALS (8) ANALYSIS OF ROTTERDAM PROJECT (EXCLUDING RIGHT OF WAY) -20% Erosion of Merseyside Financial values in millions of Betish Pounds) Assumptions Annual Output actions) Output Can Per Yea/Prior Yew Maximum Possible Output Price ton (pounds starling) inflation (pices wido) oss Mwyn Gowth Rate Year Maximum Possible Geoss Muyin Icess Margin Tax Rate lavestent Oudlay (millions) 250.000 2.0% 267 500 675 3.0% 0.5% 10.09 15 0.094 Discountate Depreciable Life (years) Overhea/vestment Salvage Value WIP Investory/Cost of Goods Sold Terminal Value of Right-of-Way Months Down Construction 10 11.5% 30.09 0 $ 3.094 Not relevant 2008 2009 2010 2011 Now 2008 2009 2010 1 1 Froscone Meride 209 O 4 10 2 2009 2008 3 2010 9 2016 15 2012 12 2019 TTOC ETOC STOC ZTOC 2018 20 AL 2022 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 Yew 1. Estimate of incremental Gos Prof New Output Lost Output-Construction New Sales Millions) New Goss Margin New Gross Profit 255.000 (106,250) 100.41 11.5% 11.55 260,100 (86,700) 120.56 12.09 265,302 267,500 267,500 267,500 (66,326) 142.49 197.31 203.22 209.32 12.5% 13.0% 13.5% 14.0% 17.81 25.65 27.44 29.30 222.09 215.60 14.5% 31.26 950-51 IEEE 228.73 15.04 34.31 235.59 15.04 35.34 242.66 15.04 36.40 249.94 15.0% 37.49 257.44 15.0% 38.62 265.16 15.0% 39.77 273.12 15.0% 40.97 250.000 168.75 19.41 (7.86) 250.000 173.81 19.99 (5.52) 250.000 250.000 250.000 250.000 179.03 184.40 189.93 195.63 20.59 21.21 21.84 22.50 (2.78) 5.59 6.81 250.000 250.000 250.000 250.000 250.000 250.000 250.000 250.000 250.000 201.30 207.54 213.17 220.18 226.79 233.59 240.60 247.82 255.25 23.17 23.87 24.58 25.32 26.08 26.86 27.67 28.50 29.35 8.09 9.73 10.02 10.32 10.63 10.95 11.28 11.61 0.67 0.58 0.14 0.28 0.07 0.24 0.06 0.23 0.05 0.23 0.05 0.23 0.05 0.23 0.05 0.06 0.33 0.23 0.05 0.05 0.33 0.38 0.09 0.11 0.58 0 5.02 005 0.os SDD EED 0.67 0.72 0.33 0.08 0.09 0.50 0 6.31 1.89 OM Output Old Sales Old Geoss Pool Incremental Gross Profit 2. Estimate of hcremental Depection Y I Odas YE 2 Oudley Ye 3 Outlas Total, New Depreciation 3. Overhead 4. Petar horamental Profit 5. Tas Expense 6. Afestax Profit 7. Cash Flow Adjustments Add back Depreciation Les adel WIP inventory Capital Sponding Terminal Value, and 8. Free Cash Flow LED 0.50 0.12 015 0.78 0 (3.55) (1.03 (2.49) EEO 0.43 0.10 0.13 0.67 0 3.77 1.13 2.64 0.23 0.05 005 0.33 0 9.99 3.00 6.99 0.23 0.05 0.05 0.33 0 10.30 3.09 7.21 0 D O D O 0.43 0 7.66 2.30 5.36 0 10.95 053) 2.56 (5.97) 10.62 (6.24) (1.87 (4.37) 0 9.01 2.22 6.35 SI 9.39 2.82 6.58 9.69 2.91 6.78 0 11.29 3.39 7.90 3.28 3.51 7.43 7.66 0.58 0.67 1.81 (5.00) 0.72 (0.38) (1.00) 0.78 (0.42) (1.00) 0.67 (1.27) 0.50 0.02 0.33 (0.00) 0.33 (0.00) 0.33 (0.00) (100) (100) EEO (100) 0.33 0.18 0.02 (5.03) (3.13) 2.04 4.94 5.82 6.75 6.90 7.11 7.32 7.53 7.99 8.41 NPV, Rotterdam IRRL, Rotterdam Growth in EPS, Roterdam Payback, Rotterdam 15.64 21.8% 50.04 5.17 yaan 3.500 2.58 0.30 3.500 2.74 0.31 3.500 3.08 0.35 005 E LEE 3.500 2.66 0.31 0.21 0.07 (0.14) 3.500 3.52 3.500 2.82 0.32 0.23 0.02 (0.15) 3.500 2.91 0.33 0.23 0.00 (0.16) 005 E LTE 3.500 2.99 0.34 0.24 0.08 (0.16) 3.500 3.18 0.37 0.26 0.08 (0.17) 0.39 0.27 0.09 (0.18) 3.500 3.42 0.40 0.28 0.09 (0.19) 0.02 (0.14) 0.09 (0.15) 0.08 (0.17) 0.09 (0.18) 0.29 0.09 (0.19) 40.82 9. Adjustment for cosion in Merseyside volume Lost Merseyside Output Lost Merseyside Revenue Lost Mercyside Cow Profile Lost Goss Profits afer Taxes Change in Merseyside hestery Total Effect on Free Cash Flow DCF. Frosion Merseyside Cash flow afer erosion Rotterdam Adjusted for Fell Eresie at Merseyside NPV, Rotterdam IRR,Rotterdam Growth in EPS, Roterdam Payback, Rotterdam (5.03) (3.13) 1.91 3.97 4.79 5.67 6.59 6.94 7.15 9EL 7.52 7.80 8.22 14.82 21.2% $0.04 5.24 years Frosion alusta afer tax profil (5.97) (4.37) 2.35 3.21 4.10 5.04 6.02 6.23 6.43 6.63 6.83 7.05 7.26 7.49 Alternative way to calculate added WIP inventory Added WIP hventos 1.81 1.81 1.43 (0.38) 1.01 10.41 (0.25) (1.22 (0.23) 0.02 (0.21) 0.02 (0.18) 0.03 (0.15) 0.03 (0.16) (0.001 (0.16) 10.00 (0.17) (0.00) (0.17) 10.00 (0.18) 10.01) (0.18) 10.011 (0.19) 0.18 Sensitivity Analysis: 9501 10% 15.64 8% 20.89 119 13.42 Discount Rate 129 11.44 99 18.12 13% 9.66 1496 8.06 15% 6.62 169 5.33 NPVN oson 19% 2.17 1796 4.16 2094 1.32 27.49 24.00 1896 3.12 10% 14.82 79 22.96 8% 19.93 10% 14.82 119 12.67 Discount Rate 12% 1396 10.94 9.01 149 7.46 9551 909 169 4.81 9541 189 2.66 19% 1.74 NPVF 26.36 20% 0.92 17.24 VICTORIA CHEMICALS (B) ANALYSIS OF ROTTERDAM PROJECT (EXCLUDING RIGHT OF WAY) - 50% Erosion of Merseyside Financial values in millions of Betish Pounds) 10.04 SI 0.09 Assumptions Annual Output (see bons) Output Can Per Yes Prior Yea Mexram Possible Output Price ton (pounds sing) linfation (prices and costs) oss Main Growth Reyes Maximum Powie Gros Muxin Goose Muyin Tax Rate vetent Outley (billions) 250.000 2.0% 267 500 675 3.0% 0.5% 15.0% 11.5% 30.0% 0 S Discount Depreciable Likely) Overhead/Invent Salvage Value WIP Inventory/Cost of Goods Sold Terminal Value of Right Way Month Dewi, Construction 3.09 Notit 2008 2009 2010 2011 Now 2008 2009 2010 1 Frosion of Mens side SOS 0 EI 3 2010 2009 4 2011 5 2012 8 2015 2008 10 2017 2014 12 2019 2014 2018 15 2012 2010 20AL 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 255.000 (106,250) 100.41 11.5% 11.55 260,100 (36,700) 120.56 12.0% 14.47 265,302 267,500 267,500 267,500 (66,326) 142.49 197.31 203.22 209.32 12.5% 13.0% 13.5% 14.0% 17.81 25.65 27.44 29.30 215.60 14.5% 31.26 222.07 15.0% 33.31 228.73 15.04 34.31 235.59 15.04 35.34 242.66 15.04 36.40 249.94 15.0% 37.49 257.44 15.0% 38.62 265.16 15.0% 39.77 273.12 15.0% 40.97 250.000 168.75 19.41 (7.86) 250.000 173.81 19.99 (5.52) 250.000 250.000 250.000 250.000 179.03 184.40 189.93 195.63 20.59 21.21 21.84 22.50 (2.78) 4.44 5.59 6.81 250.000 250.000 250.000 250.000 250.000 250.000 250.000 250.000 250.000 201.50 207.54 213.77 220.18 226.79 233.59 240.60 241.82 255.25 23.17 23.87 24.58 25.32 26.08 26.86 27.67 28.50 29 35 8.09 9.44 9.73 10.02 10.32 10.63 10.95 11.28 11.61 0.67 1. Estimate of incremental Geoss Profit New Output Lost Output-Construction New Sales (Millions) New Gen Murgin New Geoss Pool Om Output Os Sales Ou Goss Profit Incremental Gross Profs 2. Estimate of incremental Depreciation Ye I Odays YE 2 Outly Ye 3 Outlay Total, New Depreciation 3. Overhead 4. Protax Incremental Profil 5. Tax Expense 6. Atex Pro 7. Cash Flow Adjustment Add back Depreciation Les aldo WIP inventory Capital Spending Terminal Value, and 8. Free Cash Flow 0.58 0.14 0.50 0.12 0.33 0.08 0.23 0.05 ETO SDD 0.23 0.05 0.23 0.05 015 0.38 0.09 0.11 0.58 0.23 0.05 0.06 0.33 0.07 0.08 0.43 0.23 0.05 0.05 0.33 0.23 0.05 0.05 0.33 0.09 Oos SOO SOO 0.72 0.78 0.50 EEO 0.43 0.10 0.13 0.67 0 3.77 1.13 2.64 EEO O EEO O O 0.06 0.07 0.37 0 9.01 2.72 6.35 0.67 0 (8.53) 2.56 (5.97) O 0 11.29 (6.24) 9.69 (3.55) (1.03 (2.49) 5.02 1.SI 3.51 6.31 1.89 7.66 2.30 5.36 9.39 2.82 6.58 9.99 3.00 6.99 10.30 3.09 7.21 0 10.62 3.19 7.43 10.95 3.28 7.66 (4.37) 6.78 7.90 0.43 0.37 0.72 (0.38) (1.00) 0.78 (0.42) (1.00) 0.67 (1.27) 0.58 0.02 1.81 (5.00) 0.50 0.02 0.33 (0.00) 0.33 (0.00) 0.33 (0.00) (100) (100) (100) 810 (8.49) (5.03) (EE) 2.04 4.11 4.94 5.82 6.75 6.90 7.11 7.32 7.53 7.76 7.99 8.41 NPV, Rotterdam IRIL, Rotterdam Growth in EPS, Roterdas Payback, Rotterdam 15.64 21.8% 50.04 5.19 year 8.750 8.750 6.45 0.24 0.52 0.17 (0.35) 8.750 6.65 0.26 0.54 0.18 (0.36) 8.750 6.85 0.79 0.55 0.18 (0.37) 8.750 7.05 0.81 0.57 0.19 (0.38) 8.750 7.26 0.84 0.58 0.19 (0.39) 8.750 7.48 0.86 0.60 0.20 (0.40) 8.750 7.71 0.89 0.62 0.20 (0.42) 8.750 7.94 0.91 0.64 0.21 (0.43) 8.750 8.18 0.94 0.66 0.97 0.68 0.22 (0.45) 8.750 8.67 1.00 0.70 0.23 (0.47) 8.750 8.93 1.03 0.72 0.24 (0.48) (0.44) -2.04 9. Adjustment for crosion in Merseyside volume: Lost Merseyside Output Lost Merseyside Revenue Lost Merseyside Gross Prof Lost Goss Profits afer Taxes Change in Merseyside hvertory Total Effect on Free Cash Flow DCF, Erosion Moneyside Cash fows after sosion Rotterdam Adjusted for Full Erosion at Merseyside: NPV, Rotterdam TRR,Rotterdam Growth in EPS, Roterda Payback, Rotterdam Frosion adjusted after tax profits (5.03) (3.13) 1.70 3.75 4.57 5.44 9E9 6.50 6.69 6.89 7.09 7.30 7.52 7.93 13.60 20.4% $0.04 5:34 year (5.97) (4.37) 1.90 2.75 E9E 4.55 5.52 5.72 5.90 6.08 6.27 6.47 6.67 6.87 Alternative way to calculate added WIP inventory Addol WIP hentes 1.01 (0.18) 1.81 1.81 1.43 (0.38) (0.25) (1.27 (0.23) 0.02 (0.21) 0.02 (0.15) 0.03 (0.16) (0.00) (0.16) (0.00) (0.17) (0.00) (0.17) 10.01) (0.18) (0.01) (0.18) (0.01) (0.19) 0.18 Sensitivity Analysis: 10% 956 79 24.00 Discount Rate 119 129 13.42 11.44 8% 20.89 179 10% 15.64 15% 16% 5561 27.49 NPV-No Frosion 209 1.32 15.64 112 10% 13.60 24.65 79 21.40 995 15.91 10% 13.60 Discount Rate 11% 1296 11.54 9.69 13% 8.04 1494 6.55 15% 5.22 16% 4.02 18% 1.98 179 2.95 19% 1.11 NPV-Full Frosion 2094 0.32 18.50