RESUME OF BUSINES –PLAN:

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INTRODUCTION OF INOVATION TECHNOLOGIES ON WASTE MANAGEMENT IN KIEV AND KIEV REGION IN A PROCESS OF

PREPARATION TO THE FINAL FOTBOLL MATCHES EURO 2012

Ukraine, Kiev - 2009

Waste management status analysis:

Almost 50 billion cubic meters of solid domestic waste (SDW) annually accumulates in Ukraine which makes up almost 11 million tons of waste buried at 4.5 thousand dumps and landfills with the total area of almost 7.6 thousand hectares

There are 248 overfilled landfills (5%), while 1 133 landfills (25%) do not meet the environmental safety requirements

Only 2.5% of SDW is burnt at two out of four existing incineration plants built during the Soviet times (Kiev, Dnepropetrovsk)

Due to the lack of a waste management system, about 16 thousand unauthorized dumps with the total area of 1.1 thousand ha appear in residential areas each year

Waste management services were found to be rendered by 1 172 organizations out of which 281 (23%) are private companies, which is 5% more than in 2006. Most private companies are located in Kherson Oblast (32), Kirovograd Oblast (27) and Kharkov Oblast (23).

The average fee for waste management services is Evro4/m3 which includes Euro2.5 for collection and transport and Euro1.5 for burial. Such fees are much lower than the international fees; therefore, they do not ensure normal plant operation and make it impossible to introduce modern technologies at the plants

Over Evro50 million was allocated for development and management of sanitation plants in 2007, which is 79% more than in 2006. Most financing was provided in Kiev (Euro17 million), Donetsk Oblast (Euro11.2 million), and Kharkov Oblast (Euro2.8 million)

The average vehicle wear rate increased from 66% (2006) to 69% (2007). The least wear rate was found in Sevastopol (25%) and Kiev (47%)

As stipulated by the Law of Ukraine “On Local Self-Government in Ukraine” (Article 30), the waste management issues pertain to the competence of local executive bodies which are usually in no haste, and sometimes even too slow in introducing modern waste management techniques and technologies

The key reason of such a situation is noncompliance of the local authorities with the requirements of the Laws of Ukraine “On Housing and Utility Services” and “On Waste” as regards insufficient funding of development and management of facilities in this industry sector, establishment of economically feasible tariffs, and reasonable control over the waste management process (especially the use of dumps and landfills)

Actuality of problem solution of sanitary clearing system improvement in communities, particularly in big cities, caused by preparing of infrastructure to football matches Еuro-2012 realization.

The offered project concerns branch of municipal services which

demands considerable improvement at all levels, especially in sphere of sanitary clearing of settlements and dig cities and their agglomerations.

In structure of sanitary clearing the municipal enterprises (more than 40 %), the others – basically small private enterprises and the enterprises with the mixed pattern of ownership. The structure material bases of the enterprises where degree of deterioration of container and transport park makes more than 60-80 %.

Practically there is no infrastructure on introduction of modern innovating technologies of gathering, transportation, sorting, utilization and dumping of waste that makes the offered project actual.

In structure of consumer’s services the basic group makes the population (to 60 %), budgetary establishments (7-10 %), commercial and other organisations (to 30 %).

In the process of realization of the offered project the basic group of clients is made by the most solvent budgetary and commercial clients: office and administrative centers, hyper- and supermarkets, trading-entertaining and entertainment establishments where considerable volumes of waste essentially different on the morphological structure from the household concentrate.

For waste collection and transportation we propose technologies, nonconventional in Ukraine, but successfully used in many countries witch replacing usual containers in volume of 0,75-1,1 m in cubic volume on a press-compactor from 7 to 35 m cubic with 5-7 multiple degree of consolidation that allows to simplify considerably system of waste collection specialized lorry convoys with multilifts.

Instead of traditional container platforms on object is established one large-sized closed press container which is taken out in process of accumulation.

Installation of two-three such containers gives the chance to carry out separate waste collection on fractions – paper for recycling, polymers and other waste.

For collection of other categories of a waste – large-sized, building, medical, hazardous is used the similar approach which is based on use both open containers of great volume and a press-compactors.

Using of the above-stated technologies at service of large waste manufacturers gives essential advantages to the present project in comparison with other operators on the market.

Strong points of the Project : selection of specialised equipment for waste transportation, using of sorting waste technologies, which allow to take out a secondary

resources to use in industrial production, possibility of replenishment of a profitable part of the project at the

expense of sale of secondary resources reduction of an environmental load, landfill areas, harmful emissions in

atmosphere and ground waters. As competitors use traditional forms of servicing, to speak about their

competition in rendering of a new type of service to clients it is not necessary. Tendencies of annual growth of waste volumes on 5-7 % considerably expand volumes of rendered services and financial streams from the given kind of activity.

Weak points of the Project: absence of the legislation in sphere of environmental protection , adapted

only for the foreign. not settled questions of pricing on services of sanitary clearing, unstable political and economic situation in the country that considerably

influences level of payment of the received services

The project goal –via introduction of innovative waste management technologies:

Improve sanitary and ecological state in Kiev and Kiev region in a process of preparing to football matches Еuro-2012 realization

decrease the amount of buried domestic, construction and other industrial waste on landfills by at least 3-7 times in Kiev and Kiev region

considerable reduction in the pollution of atmosphere and underground water-bearing formations

implementation of an action plan aimed at remediation of unauthorized dumps and existing landfills, thereby considerably increasing the operation life of the existing landfills and the standard volume of waste buried at the said landfills

obtaining a considerable volume of waste energy to be reused in industrial production

making use of the sorted-out waste residue, as alternative fuel, to obtain electric and thermal energy for production and local community needs.

Proposition on goal achievement and improving of waste management system :

Creation of transport and technological complexes in Kiev and Kiev region on introduction of:

separate collection and utilization of waste produced by the network of recreation centers, crowded areas, in network of office and administration buildings, entertainment buildings in the city’s areas their agglomerations, using specialized vehicles and 12-35-m3 bulk bins with compactors

collection and utilization of construction waste, formed in process of repair and reconstruction of current and future building objects with production of secondary crushed stone for using in road construction and concrete production.

collection and utilization of outsize waste, formed in result of population municipal and operation activity

production of alternative fuel for using in industrial manufacturing (concrete industry)

gasification of the combustible fractions, sorted waste, for the purpose of production of electric and heat energy for industrial production needs

At present the given market segment are not spread by operators and has an elemental character with using unspecialized equipment and need

innovational technologies solution.

Creation in Kiev region of waste sorting and handling complexes at the existing landfills, and also waste transfer station in city regions will allow to optimize using of current park of waste collection equipment belongs to transporter-enterprises. Sorted waste (light combustible fraction) will be using as alternative fuel on energy generating station, and secondary crushed stone formed in the process of construction waste utilization – in road construction and concrete production

Realisation of the pilot project of power generating station with use steam-plazma installations for industrial production maintenance (2 blocks for 2 MVT/HOUR.), and also 30 Gkal of thermal energy for consumption by the managing objects placed in region.

Creation of regional center on ecological safety utilization of medical waste, medical product, plant-protecting agents, food and other supplements, products and other goods, with expired date

Development and implementation of state-of-the-art technology programs aimed at reclamation of unauthorized dumps and both existing and closed landfills, which will mitigate the environmental impact and will ensure sanitary and epidemiological welfare of the population.

FINANCING COSTS Total cost of the Project 13,9 mln. Euro, including: - Independent production complexes on waste collection, formed in network of

shopping and administrative centers: Mixed domestic waste – 710,5 thou. euro Separate collection of domestic waste– 1 518,4 thou. euro

- Collection of outsize waste, electronic and electro technical waste, motor transport– 381,6 thou. euro

- Collection of construction waste – 336,8 thou. euro- Mobile complex for outsize and domestic waste, producing secondary fraction and

alternative fuel for energy supplying objects– 2 289,7 thou. euro- Mobile complex for utilization of construction waste, producing secondary concrete

fraction to be used in building industry and road construction– 884,8 thou. euro- Specialized equipment for alternative fuel transportation for concrete industry

needs– 3 057,6 thou. euro- Energy generating enterprise producing synthesis gas and energy power from

alternative fuel, formed from waste– 4 690,4 thou. euro

Drawdown– 12 months, according schedule of financing Term of financing– 120 months with 6% annual rate, with

monthly interest payment Period of grace– 12 months Credit repayment– after drawdown, monthly during 9 years by

equal parts It’s possible:- attraction of strategy and financial investors, - creation and management of joint venture,- Investor’s participation in capital

Investment payback period– 50 months Profitability index– 2,4 Gross profit margins– 87% Operating profit margins– 50% Net profit margins– 18%

0

500 000

1 000 000

1 500 000

2 000 000

2 500 000

3 000 000

3 500 000

4 000 000

1 2 3 4 5 6 7 8 9 10 11 12 13

Помесячный график инвестирования проекта, Evro

Заемные (кредитные) средства - 100%Borrowed (credit) funds - 100%

Monthly schedule of project investing, Euro

Necessary equipment (transport)

№ Name Quantity, unit

Cost per unit, Euro

Total cost, Euro

1 Renault Kerax chassis 20 120 000 2 400 000

2Multilifts ( Ecopress HKS-20 )

20 31 200624 000

3 Manipulators PM8522 2 31 200 62 400

4 Trailers for container 20 31 200 624 000

5 Mobile compactors EMC МЕGA - 20 5,5 kWt 22 24 000 528 000

6 Stationary compactor EMC МЕGA - 30 5,5 kWt 40 19 600 784 000

7 Plug-in container for industrial waste EC 30 , capacity 30 m3 85 11 200 952 000

8 Container for industrial waste HL 16,4 m3 with covered roof 22 5 600 123 200

9 Container for industrial waste HL 30 m3 with covered roof 30 5 600 168 000

10

Mobile grinding complex for building waste TEREX PEGSON

METROTRAK 900-600 НА

1 461 806

461 806

11 Mobile sorting complex for building waste TEREX Powerscreen Chieftain 600 1 203 194 203 194

12 Excavating machine JS 220 LCс gydraulic hammer HM 1560 Q 1 219 819 219 819

13 Excavating machine JS 220 LC 1 175 486 175 486

14 Shredder for solid domestic waste 1 490 000 490 000

15 Bolting machine for solid domestic waste sorting 2 259 000 518 000

16 Shredder 1 630 000 630 000

17Frontlifts "MONITU"

2 120 000240 000

18 Waste gasification complex 1 4 690 383 4 690 383

Cost, total Euro 13 894 279

Principal item of income under the project and mid-market prices of rendering services and sales

Income item during project realization Price per unit, Euro

Services on waste collection, transportation and utilization, cubic meters

Solid domestic waste (SDW) using mobile compactors 4,5

Separate collection of SDW using compactors system 4,5

Outsize waste, electric engineering and motor transport waste 4,5

Construction waste 4,5

Medical, veterinary and hairdressing saloon waste 40

Other hazardous waste 250

Sales of sorted secondary materials and products, per 1 ton

Construction waste spill 6

Secondary crushed stone, fraction 0-20 mm 10



Scrap metal 220

Alternative fuel 6

Transportation services on alternative fuel delivery to the customers 30

Sales of Продажа synthetic gas, per 1000 cubic meters 115,5

Rendering services volume structure and mass of utilized row materials in 1-2 years

of project realization

in structure per 1 year in structure per 2 year

volume, mass %% volume, mass %%

Services on waste utilization, cubic meters 807 254 100,00% 1 744 603 100,00%

Solid domestic waste (SDW) using mobile compactors 187 293 23,20% 369 600 21,18%

Separate collection of SDW using compactors system 492 000 60,95% 1 080 000 61,91%

Outsize waste, electric engineering and motor transport waste 82 500 10,22% 221 400 12,70%

Construction waste 45 461 5,63% 73 603 4,21%

Products sales, tones 101 437 100,00% 188 620 100,00%

Construction waste spill 19 094 18,82% 30 913 16,39%

Secondary crushed stone, fraction 0-20 mm 15 280 15,06% 25 761 13,66%



Scrap metal 437 0,43% 736 0,39%

Alternative fuel 39 122 38,57% 84 840 44,98%

Transportation services on alternative fuel delivery to the customers 39 122 100,00% 84 840 100,00%

Synthetic gas 25 474 100,00% 54360 100,00%

Rendering services volume structure and sales of utilized row materials in 1-2 years of project realization

Income items

in structure per 1 year in structure per 2 year

funds, Euro %% funds, Euro %%

Services on waste utilization, cubic meters 3 644 794 100,00% 7 350 714 100,00%

Solid domestic waste (SDW) using mobile compactors 842 820 23,12% 1 163 200 15,82%

Separate collection of SDW using compactors system 2 214 000 60,74% 4 860 000 66,12%

Outsize waste, electric engineering and motor transport waste 383 400 10,52% 996 300 13,55%

Construction waste 204 574 5,61% 331 214 4,51%

Products sales, tones 865 561 100,00% 1 577 758 100,00%

Construction waste spill 110 015 12,71% 185 480 11,76%




Scrap metal 96 045 11,10% 161 927 10,26%

Alternative fuel 231 664 26,76% 509 040 32,26%

Transportation services on alternative fuel delivery to the customers 1 158 320 100,00% 2 545 200 100,00%

Synthetic gas 1 266 458 100,00% 6 278 580 100,00%

TOTAL 17 672 777 100,00% 52 556 101 100,00%

Pro forma statement of movement of funds 1-st year, Euro

Months of the project 1 2 3 4 5 6 7 8 9 10 11 12 TOTAL

Sales income 51

606 134 832

228 442

304 589

380 737

456 884

512 729

568 574

627 060

1 036 898

1 197 102

1 435 679

6 935 132

Variable expenses -42 512

-121 911

-175 378

-222 027

-279 720

-324 711

-335 298

-345 884

-358 675

-371 465

-393 705

-427 599

-3 398 886

Fixed expenses -51 072

-95 692

-123 375

-143 234

-168 856

-187 092

-202 067

-206 534

-209 692

-234 622

-243 900

-257 887

-2 124 023

Payments into the budget -14 735

-26 567

-34 460

-41 858

-53 283

-71 508

-78 709

-83 856

-90 655

-97 745

-159 764

-181 212

-934 353

Interests and commissions payments (credit)

-18 771

-53 667

-52 270

-56 574

-62 254

-64 896

-66 291

-68 975

-68 158

-68 654

-69 150

-69 646

-719 306

The outcome from operational activity

-75 484

-163 006

-157 042

-159 104

-183 376

-191 324

-169 635

-136 676

-100 119

264 412

330 583

499 334

-241 436

Cash flow from investment activity

Fixed assets acquisition

-1 540 964

-4 141 651

-1 509 764

-2 576 984

-1 692 164

-962 564

-536 698

-536 698

-99 198

-99 198

-99 198

-99 198

-13 894 279

The outcome from investment activity

-1 540 964

-4 141 651

-1 509 764

-2 576 984

-1 692 164

-962 564

-536 698

-536 698

-99 198

-99 198

-99 198

-99 198

-13 894 279

Cash flow from financial activity

Credit entry 1 1 443 898

3 572 917

2 091 231

2 629 251

1 695 898

966 298

536 698

536 698 99 198 99 198 99 198 99 198

13 869 679

The outcome from financial activity 1 443 898

3 572 917

2 091 231

2 629 251

1 695 898

966 298

536 698

536 698 99 198 99 198 99 198 99 198

13 869 679

Funds

At the beginning of period 0 -172 550

-904 289

-479 864

-586 701

-766 344

-953 934

-1 123 570

-1 260 245

-1 360 365

-1 095 953

-765 370 0

At the end of period -172 550

-904 289

-479 864

-586 701

-766 344

-953 934

-1 123 570

-1 260 245

-1 360 365

-1 095 953

-765 370

-266 036

-266 036

Cash flow -172 550

-731 739

424 425

-106 837

-179 643

-187 591

-169 635

-136 676

-100 119

264 412

330 583

499 334

-266 036

Pro forma statement of movement of funds, Euro

2 3 4 5 6 7 8 9 10

Months of the project 1 year year year year year year year year year year TOTAL

Sales income6 935 132

18 252 253

17 368 543 18 749 727 19 722 266

19 959 864

18 325 284

18 325 284

18 325 284

18 325 284 174 288 919

Variable expenses-3 398 886

-5 385 275

-5 628 275 -5 990 117 -6 311 200

-6 543 237

-6 528 609

-6 761 998

-7 018 726

-7 301 127 -60 867 451

Fixed expenses-2 124 023

-3 075 841

-3 053 598 -3 154 937 -3 233 604

-3 270 207

-3 196 713

-3 223 752

-3 253 495

-3 286 212 -30 872 380

Payments into the budget-934 353

-3 116 517

-3 529 696 -3 532 113 -3 937 382

-4 149 347

-3 966 927

-3 670 732

-3 628 484

-3 568 527 -34 034 079

Interests and commissions payments (credit)

-719 306

-782 096

-689 631 -597 167 -504 702 -412 238 -319 773 -227 309 -134 844 -42 380 -4 429 445

The outcome from operational activity-241 436

5 892 524

4 467 342 5 475 393 5 735 377 5 584 836 4 313 262 4 441 494 4 289 735 4 127 038 44 085 564

Fixed assets acquisition

-13 894 279 0 0 0 0 0 0 0 0 0 -13 894 279

The outcome from investment activity

-13 894 279 0 0 0 0 0 0 0 0 0 -13 894 279

Cash flow from financial activity 0

Credit entry 113 869 679 0 0 0 0 0 13 869 679

Credit repayment 1 0 -1 541 075

-1 541 075 -1 541 075 -1 541 075

-1 541 075

-1 541 075

-1 541 075

-1 541 075

-1 541 075 -13 869 679

The outcome from financial activity 13 869 679

-1 541 075

-1 541 075 -1 541 075 -1 541 075

-1 541 075

-1 541 075

-1 541 075

-1 541 075

-1 541 075 0

Funds 0

At the beginning of period 0 -266 036

4 085 413 7 011 680 10 945 997

15 140 299

19 184 060

21 956 246

24 856 664

27 605 323 0

At the end of period-266 036

4 085 413

7 011 680 10 945 997 15 140 299

19 184 060

21 956 246

24 856 664

27 605 323

30 191 286 30 191 286

Cash flow-266 036

4 351 449

2 926 267 3 934 317 4 194 302 4 043 760 2 772 186 2 900 418 2 748 659 2 585 963 30 191 286

Calculating of debt service ratio, Euro

1 2 3 4 5 6 7 8 9 10 11 12 Per 1-st year

Amortization 23

917 101 617

122 967

166 204

190 203

198 598

201 590

204 569

202 065

199 615

197 220

194 876

2 003 440

Net profit for the period -96 497

-358 414

-643 443

-971 017

-1 345 945

-1 742 709

-2 119 082

-2 467 124

-2 776 398

-2 773 621

-2 661 706

-2 389 030

-2 389 030

Credit Interests payments 18

771 53 667 52 270 56 574 62 254 64 896 66 291 68 975 68 158 68 654 69 150 69 646 719 306

Credit repayment 0 0 0 0 0 0 0 0 0 0 0 0 0

All expenses -53 810

-203 130

-468 206

-748 239

-1 093 489

-1 479 214

-1 851 200

-2 193 581

-2 506 176

-2 505 352

-2 395 336

-2 124 508

333 716

All repayments for the period 18

771 53 667 52 270 56 574 62 254 64 896 66 291 68 975 68 158 68 654 69 150 69 646 719 306

Debt service ratio 0,46

Calculating of debt service ratio, Euro

1

year2

year3

year 4 year 5 year 6 year 7 year 8 year 9 year10

year TOTAL

Amortization 2 003 440

2 092 694

1 867 104

1 485 356

1 186 594

951 901

766 817

620 271

503 762

410 747

11 888 686

Net profit for the period

-2 389 030

3 202 573

2 750 821

3 680 233

4 331 646

4 557 613

3 799 237

3 815 727

3 793 412

3 735 572

31 277 805

Credit Interests payments

719 306

782 096

689 631

597 167 504 702

412 238

319 773

227 309

134 844 42 380

4 429 445

Credit repayment 0 1 541 075

1 541 075

1 541 075

1 541 075

1 541 075

1 541 075

1 541 075

1 541 075

1 541 075

13 869 679

All expenses 333 716

6 077 363

5 307 557

5 762 756

6 022 942

5 921 752

4 885 828

4 663 307

4 432 018

4 188 699

47 595 936

All repayments for the period

719 306

2 323 171

2 230 707

2 138 242

2 045 778

1 953 313

1 860 849

1 768 384

1 675 919

1 583 455

18 299 124

Debt service ratio 0,46 2,62 2,38 2,70 2,94 3,03 2,63 2,64 2,64 2,65 2,60

NET PRESENT VALUE (NPV)

Year Net cash flow

Discount factorReal value of net cash flow

6%

(Initial cost) 13 869 679 1,0000 -13 869 679

1 -385 590 0,9434 -363 764

2 5 295 267 0,8900 4 712 769

3 4 617 926 0,8396 3 877 299

4 5 165 589 0,7921 4 091 630

5 5 518 240 0,7473 4 123 550

6 5 509 514 0,7050 3 883 990

7 4 566 055 0,6651 3 036 687

8 4 435 998 0,6274 2 783 200

9 4 297 174 0,5919 2 543 491

10 4 146 319 0,5584 2 315 283

Disposal value

4 146 319 0,5584 2 315 283

NPV 19 449 739

INTERNAL RATE OF RETURN (IRR)

Year

Net cash flow IRRReal value of net cash flow

24,3%

(Initial cost) 13 869 679 1,0000 -13 869 679

1 -385 590 0,8042 -310 106

2 5 295 267 0,6468 3 424 971

3 4 617 926 0,5202 2 402 152

4 5 165 589 0,4183 2 161 016

5 5 518 240 0,3365 1 856 620

6 5 509 514 0,2706 1 490 803

7 4 566 055 0,2176 993 648

8 4 435 998 0,1750 776 368

9 4 297 174 0,1408 604 844

10 4 146 319 0,1132 469 362

Disposal value

4 146 319 0,1132 469 362

NPV469 362

Payback period, months 50,0

Projected period of credit repayment, months 120

Net Present Value-NP 19 449 739

Profitability index of investment (PI) for discount of 6%

2,40

Rate of gross profit margins 87%

Rate of operating profit margins 50%

Rate of net profit margins 18%

Коммулятивный профиль рисков по проекту

0

500 000

1 000 000

1 500 000

2 000 000

2 500 000

3 000 000

3 500 000

4 000 000

1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000

Рис. 1 - Кумулятивный показатель вероятности наступления событий

Cu

mu

lati

ng

NP

V,

euro

Cumulative profile of project’s risks

Pic 1. Cumulative index of event probability

Чувствительность проекта к изменению переменных издержек

-20 000 000 -15 000 000 -10 000 000 -5 000 000

05 000 000

10 000 00015 000 00020 000 00025 000 00030 000 000

90% 100% 110% 120% 130% 160% 200%

Уровень переменных издержек, % к плановым

NPV

,Eur

o

0,00

0,50

1,00

1,50

2,00

2,50

3,00

Indi

cato

r PI

Project sensibility to variable expenses changing

Level of variable expenses, % to the planning

Чувствительность проекта к изменению стоимости услуг

-5 000 000

5 000 000

15 000 000

25 000 000

35 000 000

45 000 000

55 000 000

70% 80% 90% 100% 110% 120% 130%

Уровень стоимости услуг

NP

V,

Eu

ro

0,00

1,00

2,00

3,00

4,00

5,00

Ind

icat

or

PI

Project sensibility to product cost changing

Cost service level

Чувствительность проекта к изменению планого объема оказываемых услуг

-2 500 000

2 500 000

7 500 000

12 500 000

17 500 000

22 500 000

27 500 000

115% 110% 105% 100% 95% 90% 80% 70% 60%

Объем оказываемых услуг

NP

V, E

uro

0,00

0,50

1,00

1,50

2,00

2,50

3,00

Ind

icat

or

PI

Project sensibility to the planning production volume changing

Rendering service volume

Specialized transport and container with big capacity (12-35 cubic meters)

Documents

RESUME OF BUSINES –PLAN: