Levitstown Mill showing canal intake to turbine, mill sluice, grain store and mill race

Business Plan Document

Mill House Properties Limited

For the Development of the existing

Hydro Electric Resource

at

Levitstown Mill Levitstown,

Athy, Co. Kildare

January 2011

TABLE OF CONTENTS 1.0 Site History 2.0 Executive Summary

2.1 Background 2.2 Business Proposal 2.3 Future Potential

3.0 Mill House Properties Limited

3.1 Shareholders 3.2 Accounts

4.0 Project Finance

4.1 Phase 1 Cash Flow Projection Horizontal 50Kw Siphon Turbine

4.2 Phase 2 Cash Flow Projection Refurbishment and upgrading of existing Francis 20Kw Turbine

4.3 Project Collateral

5.0 Appendix

5.1 Audited Company Accounts 5.2 Tax Clearance Certificate 5.3 Morrissey Engineering Survey 5.4 Morrissey Engineering Summary and Quotation 5.5 VA Power Ltd. Summary and Quotation 5.6 Fingleton White & Co. Ltd Survey 5.7 Ordinance Survey 5.8 ESB 5.9 Planning 5.10 Collateral data

6.0 Recommendation

6.1 Concluding Summary

1.0 Site History

T H U R S D A Y , M A R C H 1 1 , 2 0 1 0

Eye on the Past 742

As you journey on the road to Carlow and beyond you pass about four miles out from Athy the towering gaunt castellated remains of

Levitstown Mill. Idle and vacant for almost 70 years the sturdy walls of the once busy mill bear testimony to the skills of the masons who

built them nearly 200 years ago. Levitstown Mill for generations has been a landmark for those journeying on the Athy/Carlow Road, as

well as boatmen passing by on the Barrow Line.

Levitstown Mill is believed to have been built sometime in the early 19th century and was owned at different times by the Haughton

family and the Hannon family who were millers with mills in Athy and Prumplestown, Castledermot. Colonel Magan was Mill manager

up to the time it closed in the late 1920's or early 1930's and the mill lay vacant and unused for five or six years until it was taken over by

Sidney Minch. It was in the Mill that the young Christopher Fingleton got work just as the clouds of the Second World War were

sweeping over Europe. Three years later, despite the efforts of fire brigades from Athy, Carlow and The Curragh, the Mill was destroyed

by fire.

-excerpt’s from Frank Taffe’s “Eye on the Past”

Levitstown Mill was built sometime in the early 19th century and was once home to a thriving industry. This famous local landmark

is on the Athy to Carlow road and with well over 100 windows it is a very striking building. Its working life came to an end when in

1942 it was destroyed by fire but almost 200 years later the four walls and some internal walls remain in great condition, which

shows the skill of the stonemasons who built them all those years ago. It is said that the fire which gutted the mill was a spectacular

sight visible from miles around.

-excerpt from the Lewis Topographical Report N.Y. Times: And Now, An Irish Version Of Roots Take a thick slice of turbulent history, put it into the hands of the queen of American soap opera, and the result is bound to be like ''The Manions of America,'' the six-hour mini-series that ABC-TV will broadcast this Wednesday, Thursday and Friday at 9 P.M. Designed as the equivalent of ''Roots'' for Irish-Americans, the story was devised by

Agnes Nixon, creator of the daytime serials ''All My Children'' and ''One Life to Live.'' The scripts were written by Rosemary Anne Sisson, whose television credits include several episodes of Britain's ''Upstairs, Downstairs'' as well as Australia's ''A Town Called Alice,'' the next offering on public television's Masterpiece Theatre. The billing can get complicated. A novelized version of the story is being marketed in a Dell paperback as ''Agnes Nixon's 'The Manions of America' by Rosemary AnneSisson.'' The story opens in 1845, when the Great Famine was ravaging Ireland. Young Rory O'Manion (Pierce Brosnan) is understandably upset as he watches the wealthy British landowners ride arrogantly to the hounds across property that belongs to his family. Filmed entirely in Ireland, the production does look good. Near Athy, Co. Kildare in Ireland a magnificent ruined mill was used as the Philadelphia gunpowder factory and the adjoining Mill House as the Manion family’s idyllic country retreat.

-excerpt from The New York Times, September 27, 1981

An altogether fascinating place, the Mill House was not very large but was big enough with a bit of a squeeze to accommodate the family, a father and mother and five children, three indoor servants, a cook, kitchen maid and house maid and a governess for the younger children and there was a spare room for guests. There was a dining room, a drawing room, a study and a school room for the younger children. In the back of the house were the kitchen premises, kitchen, pantry, larder, dairy and maids bedrooms. There was only one bathroom in the house and two lavatories, one of them outside. Water for the house and the mill was pumped out of the canal by a mechanical ram. Water for drinking was brought daily in galvanized buckets from a well in a nearby field. We had a rose garden, flower garden and vegetable garden

The chief source of power for the manufacturing process was water. My father installed a water turbine near the canal lock, the source of its power being the difference in level between the canal and the river which gave a strong flow of water to revolve the turbine blades at high speed. The principle purpose of the turbine was to run an electric generator. We therefore had something which in those days in country districts in Ireland, albeit in a somewhat crude form, was an unusual luxury electricity ... There being no radio or television and living a long way from places of entertainment such as cinema's, we made our own amusements. Our doctor, Dr. John Kilbride who lived on the outskirts of the town of Athy, four miles to the north of us was a pianist and he would sometimes come in the evenings and play duets with my mother on her violin and there would be songs around the piano ... There were many splendid local characters.

-excerpt from William Magan’s book of reminiscences entitled “An Irish Boyhood”

An artist impression of early life at the mill

Levitstown Mill was built in the early 1800 in conjunction with a canal cut off the River Barrow to supply a consistent

source of hydro energy for the operation of the Mill. This canal has a prioritised diversionary flow from the River

Barrow. The controlling weir is located on the south side of Athy Town This ensures a consistent volumetric flow of

water to the premises. The mill supplied Guinness Brewery in Dublin up until it burned down in 1942. The original mill

wheel located in the sluice has been de-commissioned for many years. An alternative “Francis” type Gilkes turbine was

installed in the early 20th century. This turbine has been adapted and upgraded over the years and currently operates as a

17kw generator supplying electricity exclusively to the adjoining Mill House.

2.0 Executive Summary

2.1 Background

Mill House Properties Limited was incorporated in 1997 on the arrival of the Kelly Family at Mill House,

Levitstown, Athy, Co. Kildare. The initial strategy for the property was to develop the stable yard into four

holiday accommodation units with four star rating. This was completed in 1998/1999 and has been operating

successfully ever since.

The Mill Holiday Homes

In 2000, having managed the successful launch of a plush toys and toy crane business “Rainbow Crane” for

American Owners, Mill House Properties Limited negotiated the acquisition of Rainbow Crane’s Irish

interests. This business, Mill Enterprises, involves the operation and merchandising of over 40 Toy vending

machines in Ireland. An exiting development in recent years has been the ability of the company to acquire an

exclusive trade licence from Croke Park to design, manufacture and distribute GAA merchandise. Mill

Enterprises are currently in discussions with a major national retailer that has over 300 locations in Ireland.

The plan is for Mill Enterprises to stock these nationwide stores with our licensed products from May through

to September 2011 initially.

Raise Developments is the trading name of the property development aspect of Mill House Properties limited

since 2005. Raise Developments trades in the development of acquired properties and sites for re-sale, the

restoration under contract of period properties and the construction of homes and extensions to clients

specifications. During this period Raise Developments has completed over 20 one off projects and several

smaller contracts. In this time we have focussed on a high end product with innovative design and specification

details. Our ability to achieve these standards has propelled us onto a tendering shortlist with several local

architects. We currently have two projects, each starting in March/April2011 and are in the process of restoring

a period residence for a client.

A Selection of Raise Developments Projects

Clogher House Restored Georgian Interior

Victorian Restoration at Connolly House

Newtown Stone Farmhouse Rose Cottage

Geraldine Heights Cottage Restoration

Kilkea Projects Grangenolvin

2.2 Business Proposal

Hydroelectricity is one of the oldest forms of alternative energy. It was used centuries ago by the ancient Greek

and Chinese civilizations. These civilizations used the force of the river and stream to run waterwheels which

would then their turn their equipment such as the millstones. Hydroelectric plants of this day and age work in a

similar way as these ancient civilizations. The only difference is that now hydroelectric power plants use rapidly

flowing water to turn a turbine which in turn powers a generator which then produces electricity.

There are countless advantages of hydroelectric energy. The greatest of which, as mentioned earlier, is that it

doesn’t harm the earth in the way that oil or nuclear power plants do because it does not produce any toxic

wastes or emissions.

Another obvious advantage of hydroelectric power is that a hydropower plant does not have to depend on fuel

like oil, uranium or coal. Thus, completely eliminating the expense of buying a fuel source to generate power. A

hydropower plant's fuel is effectively rapidly flowing river water, which is available in abundance and free of

cost. Besides saving on the fuel expenses, a hydropower plant also saves on the people employed at the plant.

Such a plant doesn’t require many personnel to manage it, nor does it require a great number of specialists.

Therefore, this saves a great deal of capital that would have otherwise been spent on operating the plant. These

two factors help reduce the cost of generating electricity.

In the current economic climate we have examined various commercial options with a view to the long term

growth of our company. The natural resource that the Mill at Levitstown offers for commercial activity is

something that has always been in our plans. We have engaged various hydro engineers over the years to help

us realise our ambition to create a micro hydro power plant at this address. Current economic factors make it

favourable for the implementation of this plan. Electricity purchase rates have been consistent at nine cents

per kW unit whereas plant costs have greatly reduced in the last couple of years.

Phase 1 Out Flow showing location of old Mill Wheel

PHASE 1

On the exact site of the old mill wheel it is proposed to install a 50KW horizontal siphon propeller turbine.

This option has huge benefits as the site requires minimal civil engineering works and can effectively be

installed immediately, creating an instantaneous revenue stream for the project. This turbine can produce

approx. €40,000 in income per annum, €35,000 in generated electricity at 9 cent per unit and €5,000 in Carbon

Credits sold at €25* per CO2 Ton reduced. (*Carbon Credit rates are subject to validation upon project

completion. Rates per ton vary from €5 to €99 per ton sold, it is estimated that this turbine would reduce

carbon emissions of 211 tons per year). This system would have a payback of less than 5 years if all income

was focused on debt repayment.

To implement Phase 1, Mill House properties would require funding of €170,000, seeking to repay over 10

years. In partnership with the ESB we would need to extend a 3 phase supply to the site at a distance of 1.5km.

As the size of generator does not exceed 50KW, planning permission would not be required.

PHASE 2

It is then intended to upgrade the existing 17 KW Francis turbine with a modern gearbox and 50KW generator.

This will require some civil works, mainly the replacement of original timber sluice gates and the survey and

repair of the original turbine itself. The projected income and expenditure are expected to be similar to Phase

1. The installation costs per KW produced for this scheme run at €2,740. Current rates according to SEI and

energy contractors are between €5,000 and €6,000 per KW in a 50KW scheme. Our lower cost per KW

installed is due to our excellent site conditions and already in place civil engineering works.

Phase 1 sluice gate shown on left and phase 2 intake shown on right beneath steel gangway

To implement Phase 2, Mill House Properties would require funding in the region of €115,000 seeking to

repay over 7 years. As the project is being carried out in a phased nature and in this instance it is the upgrading

of an existing turbine, planning permission would not be required (conditions in relation to fish screening/

diversion and waterways requirements will apply in both cases and have been taken into account).

“Our goal is that 50% of our total energy needs will be provided from renewable energy by 2020 and that by 2050 our country will be 100% powered by cheap, clean and secure renewable energy supplies”

-Quote Eamon Ryan, Minister of State, Nov 2010

2.3 Future Potential (a) Sale of Electricity

Electricity rates currently being offered by the ESB are nine cent per kilowatt. This is the rate we have

used in our cash flow projections. Once we have a direct connection to the national power supply grid and

our plant has been commissioned, the ESB are obliged to offer us a 10 year purchase agreement and

guaranteed minimum rate (currently 9c/KW). There are moves afoot to increase this purchase rate to keep

us in line with our European partners who offer closer to 18c/unit. This move would greatly increase

revenue streams. It must be noted however that even at the minimum purchase rate, this project is

extremely viable.

(b) Carbon Trading

Carbon trading is a market mechanism intended to tackle global warming. Though it dates back to 1989 it

only took off as a market after the Kyoto Protocol was signed. Under the Kyoto treaty - which came into

force in February 2005 - industrialised countries must reduce total greenhouse gas emissions.

The most important greenhouse gas contributing to global warming is carbon dioxide, which is mainly

emitted by burning fossil fuels. Under Kyoto, each participating government has its own national target

for reducing carbon dioxide emissions. There are two main ways to exchange carbon.

The first is what is called a cap-and-trade scheme whereby emissions are limited and can then be traded.

Under Kyoto developed countries can trade between each other. The European Trading Scheme (ETS) is a

cap-and-trade scheme and the largest companies-based scheme around. It is mandatory and includes

12,000 sites across the 25 European Union member states.

The second main way of trading carbon is through credits from projects that compensate for or "offset"

emissions. This is where we intend to operate. The Phase 1 Turbine that produces 50 KW reduces carbon

released into the atmosphere by alternative fossil fuel generators by 211.7 Tonnes/annum. The carbon

trading market fluctuates between €10 and €100 per tonne. The price applicable to an individual

installation is determined by its certified accreditation. This would currently have to be carried out by the

Chicago Climate Exchange (CCX). Minister Eamon Ryan has recently announced that legislation will

soon be in place for carbon credit verification to take place in this country. Conservable estimates are that

we can trade carbon credits at €22/tonne. This would increase the annual revenue stream by

€4,658/annum. It must be noted that the project is not dependant upon the trading of these carbon credits

and its significant potential in the future can not be overlooked. Completions of Phase 2 will double the

annual Carbon Credit income.

(c) Commercial Activity

In this section we look at commerce and industry. We identify activities that require large inputs of

electricity that are essential to a production phase. And we examine facilities attracted to the production of

sustainable green energy.

(i) Pottery/Artisan We have a 100 square metre “Grain Store”, that in this instance would require an investment of 65K

to create an environment for a potter to set up shop. This facility could be rented out and the

electricity produced by the turbines could be channelled into operating the pottery wheels and kiln on

the premises. This would give a potter a unique selling point with massive ecological credentials. We

could provide electricity direct to the tenant and it can be charged in an all-inclusive rent package. In

this instance we can sell units significantly greater than what the ESB will offer (9cent/unit) but also

below what they charge their customers (16cent/unit plus standing charges).

(ii) Server hub for Companies with Green Aspirations

The previously mentioned 100 sq.m Grain Store facility could be

fitted out to house electronic servers that can be directly powered

by our sustainable energy resource. A company can rent this space

from us and purchase the generated energy to power their business.

A major company that has a set up like this in Ireland is Google.

We feel that we can approach many companies in this country that

are aspiring for green credentials and offer them a customised

facility that gives them a credible advantage in their industry.

(iii) Aquaculture

The accelerated growth of marine life can be achieved via temperate controlled breeding tanks. A

huge factor in a set up like this is the power required for heat and pumps. The production of silver

backed eels, which can be sold as high end sushi world wide, is accelerated by seven times the normal

growth times in such an environment. Such a business would have a competitive advantage with

cheaper energy costs. A similar project “Seahorse Ireland”, failed with exorbitant rent and energy cost

factors.

(iv) Industry Production

This is where we can examine the benefits of creating a facility for an essential production phase of a

product or item in which electrical input is a major component. For example the mushroom growing

industry (heat) or the heated dry roasting stage in the production of peanuts. We are aware of the

feasibility of these businesses being closely linked to scale of economy, this facility may not be able

to compete with mass market, but with ecological credentials can offer artisan/specialist products to a

discerning market.

3.0 Mill House Properties Limited

3.1 Shareholders Mill House Properties Limited was incorporated in 1998, registration number 270478. Company Directors Patrick Kelly, Mill House, Levitstown, Athy, Co. Kildare. Cindy Kelly, Mill House, Levitstown, Athy, Co. Kildare. Chairman Patrick Kelly, Mill House, Levitstown, Athy, Co. Kildare. Secretary Cindy Kelly, Mill House, Levitstown, Athy, Co. Kildare. Shareholders Patrick Kelly, Mill House, Levitstown, Athy, Co. Kildare. 5,000 shares (5%) Cindy Kelly, Mill House, Levitstown, Athy, Co. Kildare. 5,000 shares (5%) Raymond Kelly, Kilkea Bridge Cottage, Kilkea, Co. Kildare. 30,000 shares (30%) Sandra Kelly, Mill House, Levitstown, Athy, Co. Kildare. 30,000 shares (30%) Patrick Kelly Jnr., Mill House, Levitstown, Athy, Co. Kildare. 30,000 shares (30%) Share Capital 100,000 Ordinary Shares of €1.269738 each Issued 100% Registered Office

Mill House, Levitstown, Athy, Co. Kildare.

3.2 Accounts A full set of audited company accounts can be viewed in appendix 5.1.

4.0 Project Finance

4.1 Phase 1 Cash Flow Projection for Horizontal 50Kw Siphon Turbine The company’s cash flow projections are based on the following information. Our research has confirmed to us

that there is a European Fund available for this project at an interest rate of 3.035%. Phase 1 requires funding

of €170,000. Our calculations are based on a ten year repayment plan. The projected expenditure comprises of

capital plus interest repayments along with annual maintenance costs to the equipment of €4,000 (Appendix

5.4, Morrissey Engineering running costs). The income is calculated on the guaranteed and contracted

purchase price from the ESB of 9 cent per KW. We have allocated a 10% down time for maintenance and

water level fluctuations. Additional income has been added from the Carbon Credit trading markets.

4.2 Phase 2 Cash Flow Projection for the Refurbishment and upgrading of existing Francis 20Kw Turbine

We intend to add an additional generator by year three. Phase 2 generator requires funding of €115,000, which

only involves the upgrading of an existing working turbine. The capital and interest repayments are calculated

on the same basis as Phase 1 with Phase 2 repayments also ending in year 10. We have allocated an additional

€2,000 maintenance fund per annum towards generator 2. The carbon income increases in line with Phase 1.

This generator has also been allocated a 10% down time.

4.3 Project Collateral The site for the proposed hydro electric development is owned by the directors of the company. A longterm

lease agreement can be implemented between the site owners and the company. The acquisition costs of a

similar type mill in Ireland at the moment is €350,000 (Corcreggan Mill, Co. Donegal), which is included in

appendix 5.10. Corcreggan Mill only has the capability of producing 20-30 KW. The installation costs per KW

produced for our scheme run at €2,740. Current rates according to SEI and energy contractors are between

€5,000 and €6,000 per KW installed in a 50KW scheme. Our lower cost per KW installed is due to our

excellent site conditions and already in place civil engineering works.

The Mill Holiday Homes located adjacent to the proposed development, comprised of four, 4 star Holiday

Homes, wholly owned by Mill House Properties Limited and are free from any encumbrances. These Holiday

Homes have a certified evaluation of €600,000 in 2007. Even adjusting for current market conditions with a

drop in values of up to 50%, this asset is still worth at least €300,000.

5.0 Appendix

5.1 Audited Company Accounts

5.2 Tax Clearance Certificate

5.3 Morrissey Engineering Survey

5.4 Morrissey Engineering Summary and Quotation

5.5 VA Power Ltd. Summary and Quotation

5.6 Fingleton White & Co. Ltd. Survey

5.7 Ordinance Survey

5.8 ESB The proposed project is subject to a connection application to the National Grid. This form (NC5) has been submitted

and approval will be forthcoming. Our site requires a 1.5 KM, three phase connection. This cost has been included in

Appendix 5.4 Morrissey Engineering Summary & Quotation.

The ESB are obliged to offer us a ten year contract for the purchase of our generated electricity, the rate currently of

which is nine cent per kilo-watt.

5.9 Planning This project, under current legislation, does not require planning permission as Phase 1 output is of 50 KW or lower.

We do, have to however, conform to Irish and EU legislation regarding the protection and movement of marine life,

which cost considerations are included in Appendix 5.4.

Phase 2 will not require planning both as we are carrying out a phased development firstly, and secondly the upgrading

of an existing turbine does not require planning. Phase 2 is also governed by similar marine legislation.

The approach to Levitstown Mill

6.0 Recommendation We as company directors strongly endorse this project. The historical aspects of this site have not changed. The mill

was built and positioned at this extremely advantageous location and a canal cut from the River Barrow outside Athy,

and was specifically engineered to keep the mill fed with an abundant supply of water. If anything, key factors have

improved for this location. The volumetric flow rates of water have greatly increased and modern technology has

allowed us to maximise the harnessing of this natural resource. Three surveys by reputable energy operators confirm the viability of this project. International factors like the Kyoto Agreement and expensive carbon pollutant penalties have

greatly incentivised this sector, that have allowed the progression of technology and the expertise to execute such

projects.

6.1 Concluding Summary

The ability of this project to pay back loans, re-enforced with a guaranteed ESB 10 year contract are certainties. The 10

year cash flow shows adequate profit yearly with a fantastic annual income projected for year 11 of €74,262. We, as a

company, hope that this proposal will be given fair examination and that you as a potential future partner in the project

look favourably upon its merits.

5.10 Collateral Data