FEASIBILITY STUDYFISH FARMING PROJECT

AQUA SUNSET FISH FARM LTD

MARCH 2018

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TABLE OF CONTENTS

1. EXECUTIVE SUMMARY.......................................................................................................... 22. DESCRIPTION OF PRODUCTS AND SERVICES .......................................................................... 33. TECHNOLOGY CONSIDERATIONS........................................................................................... 64. PRODUCT/SERVICE MARKETPLACE..................................................................................... 115. ORGANIZATION AND STAFFING........................................................................................... 156. RISKS ................................................................................................................................ 197. FINANCIAL PROJECTIONS .................................................................................................... 22

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1. EXECUTIVE SUMMARY

The Fish Farming Project aims to produce fish near Iskele, off shore to the village of Kumyalı

and market the produce. In the facility, two kinds of fish; Sea Bream (SparrusAurata) and

Sea Bass (DicentrachusLabrax) will be produced.

The production capacity is planned to be 350 tonnes per annum of Sea Bream and 150

tonnes per annum of Sea Bass that will be produced in an aquaculture facility in a 30,000

sqm off shore area with the possibility of expanding the production capacity over time. The

business will grow the fish fingerlings that are bought from a third party supplier for two

months and continue the growing until the fingerlings become of marketable size. After the

growing period of 12-14 months, the harvest will be carried out. Produced fish will be used

to meet the local market demand, and then with capacity expansion, the produce will be

marketed to Turkey and other countries. Due to the facility’s distance to the shore and

because of it’s off shore location, it is concluded that the human impact is at minimum

levels and the impact of the facility to the natural sea life is negligible. Preliminary

permission has been obtained from TRNC Livestock Department.

The activity within the scope of the project is in the East of TRNC and within the boundaries

of Iskele District. The marine space where the aquaculture will take place is the off-shore of

Kumyalı Village in Iskele District which will be established on a 23.232m2 sea floor that is

2,200 meters off the shore and 35-50 meters in depth. Total sea area is leased from the

Government.

Fingerlings, which will be provided from South Cyprus, will be brought to fish farm area with

vehicles privately equipped for fingerling transportation followed by adaptation and

placement in cage nets. Trading of products between North and South Cyprus is being

undertaken under Green Line Regulation of the EU. 500 tonnes of Sea Bream and Sea Bass

will be produced by the fingerlings that will be provided from hatchery. The average weight

of each sellable fish will be 350-400 grams. They will be placed in plastic covered tanks full

of ice and water with the help of seines and landing nets and internal temperature of fish

will be reduced to 1,5-2 ºC. These tanks will be placed in the transport vehicle with the help

of crane vessel and packed in prefabricated, hygienic and environment-friendly packaging

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unit pursuant to ISO22000 and BRC standards. Styrofoam will be used in packaging, the fish

will be coated with nylon gelatin, and liquid ice will be placed on top and closed, and will be

put on the market as fresh chilled. Based on customer satisfaction, the fish will be

transported under hygienic conditions as per EU standards (ISO 9001, ISO 22000 and BRC

standards) in this system. Feed, which will be imported for farm use, will be kept in the

Project site properly.

2. DESCRIPTION OF PRODUCTS AND SERVICES

Culture fishery is an important economic sector because it contributes to human nutrition,

provides raw material for industrial sector, employment opportunity and potential for

exportation. Therefore, it can be said that Project is an important milestone towards

contributing the sustainable development of the TRNC economy. According to the UN,

world population that grows 78 million per year in average is estimated to reach 8 billion by

2030 and it is stated that demand for animal products will be doubled in 20 years

(Anonymous, 2008) and that humans meet 20% of their animal protein need by fish (Lisa

et.al., 2007). It is indicated that 81% of total aquaculture consumption in the world is

consumed by humans as nutrients (FAO, 2010). It is indicated that 81% of total aquaculture

consumption in the world is consumed by humans as nutrients (FAO, 2010). It is also stated

that salmon fish has edible flesh of 65 kg whereas chicken has 20 kg when fed with mixed

feed of 100 kg. In other words, they produce more per feed unit (Sabaut, 2007). Such cases

have increased the importance of the sector more.

Although the average annual growth rate between 1970 and 2008 in aquaculture around

the world was 8.3%, it is stated that the annual growth rate of world population during that

period was 1.6%. As a result of this development in the sector, the amount of fish

consumption per person in 1970 was increased from 0.7 to 7.8 and it is indicated that

annual food consumption per person in 2009 was 17.2 kg in general (FAO, 2010).

Products: Sea Bream & Sea BassSea Bream and Sea Bass will be produced within the scope of the project. The capacity of

Tons/Years will consist of 300 tonnes of Sea Bream and 150 tonnes of Sea Bass.

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Sea Bass: Sea Bass can be found in the Mediterranean, north coast of England and Canary

Islands. Tolerating the temperature and salt in sandy, muddy-shallow biotopes where

marine phanerogams are found. Sea Bass is a littoral region fish that lives in river mouths

and lagoonal environment. It migrates to deep water with the coming cold weather to

spend the winter.

Color: The sides of the fish are silvery grey, back is dark grey and the belly is silvery white.

Pectoral and ventral fins are white whereas other fins are grey-black.

Descriptive Characteristics: The skin of the fish is covered with scales and the body is

laterally flat. It has wide dorsal fins. There are no scales on muzo. There is a grey-black mark

on the gill cover. There are black marks on the eye. There are teeth on top of the tongue.

While the back of adult fish has no marks and is dark, young fish may have black marks. The

fish can grow to a length of 1m, but the average length is 50cm and 12kg in weight. It can

grow in fresh water but cannot reproduce.

Habitat: They live in deep, warm and cold water. They shoal in river mouths in reproduction

periods in August and October.

Sea Bream: Sea Bream can be found in the Mediterranean, East and South East

Mediterranean countries, Canary Islands, the coast of England, Cape Verde and rarely in the

coast of Black Sea. Generally found in tropical, subtropical and temperate zones, Sea Bream

lives in sandy, muddy and muddy environment where marine phanerogams are found.

These also include river mouths and lagoonal environment (FAO, 1987).

Colour: Dorsal fins are grey and dark whereas ventral fins are silvery. There is a red-violet

mark on the dorsal of pectoral fin and operculum.

Descriptive Characteristics: Sea Bream has a laterally flattened and high-backed body. It has

a big head, hump nose, and flat mouth. The upper lip is thicker than the lower lip and ends

by the point that is parallel to the point where the eye is. The space in front of the orbit is at

least two times longer than the diameter of the eye. There is V-like star shaped tripe

between the eyes. There are 73-85 scales on lateral lines. Dorsal fin is longer than anal fin.

Caudal fin is homocercous. Sea Bream that have hermaphrodite properties become females

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with the formation of ovaries in the 8th month. All the fish are males in the first season of

reproduction in the 12th month. The fish are no longer males and become females in the

second period of production in 23rd - 24th months.

Habitat: They are generally scattered in depths between 5-25m. They prefer to live in the

deep as they grow older. Sea Bream, which live in shallow water of 0.5-9m during the

summer months, live in depths of 35-40m in winter months. Fish older than 2 years old may

live in deeper water.

Vaccinated and adapted fingerlings will be brought to the operation field (2-4 with 7 mm

eye aperture) and will be stocked in web cages as 140,000 per/cage. The fish will be fed and

after a while their length will be measured by haul seine. The ones with the same length

group will then be put in the same cage. Therefore, early harvesting will be provided

through planned production. With the feeding scaled made according to the water

temperature, production planning will be completed.

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3. TECHNOLOGY CONSIDERATIONS

Process flowchart of the business

Stage 1 Fingerlings transferStage 2 AdaptationStage 3 Fingerling cage transferStage 4 Feeding (pollutant)Stage 5 SubmersionStage 6 Transfer of breeding cagesStage 7 Feeding (pollutant)Stage 8 Harvesting

Project Properties

The fish stocking and the food unit: It consists of 20 m diameter and 12 offshore(open sea type) web cages.

Fish feeding and transfer unit: A craned boat with 14m height.The capacity of web cages

(20 m diameter): 140,000 fingerling / cage.The stocking density: 140,000 fingerling / cageThe water volume of 12

nurturing cages: 12×4396m3=52,752m3

The stocking density is 14kg/m3, therefore the amount of the fish that will be produced will

be 52,752 m3 × 14kg/m3 = 738,528 kg. The license and planned production amount is

500,000 kg and in this way the capacity will have additional 47% room to increase

production after having additional capacity license in the future. Even though there is

738,528 kg production capacity, there will be under stocking and 289,000 kg capacity will

not be used in the first place.

Tools and equipment that will be used in the operations are Diving Equipment, PVC Tank,

Oxygen Meter, PH Meter, Crane Vessel, Quick boat, Grading Seine, Landing Net and

Feeding Shovel.

Several chemicals will be used in cleaning and maintaining hygiene of tools and equipment.

Disinfectants that will be used for this purpose will be recommended by the Animal

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Husbandry Department. These chemicals will not be included in the aquatic environment.

Chemicals, which will be used with the feed or vaccinations, will be the products that are

deemed appropriate for use in food products under the control of Veterinary Department

and/or Animal Husbandry Department as the sole local authority in North Cyprus and in

accordance with EU standards. Precautions that will be taken to prevent negative effects

on the aquatic environment due to chemicals and medicine are as follows:

Disinfection will not be conducted in the sea or on the coast. It will be

conducted in a suitable environment within the municipality boundaries that

are owned by the establishment.

Neither antibiotics nor chemicals used for hygiene will be used frequently or

unconsciously. They will be used under the control of Veterinary

Department and/or Animal Husbandry Department.

Continuous monitoring and report regulation methods will be implemented

by experts to control the benthic effect of possible discharge.

Chemicals will be used in a way approved by experts on aquaculture

engineering and the Ministry of Agriculture.

Operators in the hygiene department will wear gloves and suitable work

uniforms and wear masks, if necessary.

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Project Cages and Layout

Architectural design of cages

Structure of the cage

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Structure of the cage

Design of cages

Project Illustration

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Transportation, Storing and Marketing Conditions

Fish, that weigh 350-400g will be harvested, will be placed in plastic covered tanks full of ice

and water with the help of seines and landing nets, and internal temperature of fish will be

reduced to 1,5-2 ºC. These tanks will be placed in the transport vehicle with the help of

crane vessel and packed in packaging units. Styrofoam will be used in packaging, the fish will

be coated with nylon gelatin, and liquid ice will be placed on top and closed, and will be put

on the market as fresh chilled. With such system, the fish will be transported under hygienic

conditions as per EU standards (ISO 9001, ISO 22000 and BRC standards).

Occupational Health and Safety risks of the project at each stage will be identified by

Occupational Health and Safety Expert who is authorized by the relevant ministry under

35/2008 Occupational Health and Safety Act, and OHS Risk Assessment Report will be

prepared. Necessary precautions pursuant to OHS Risk Assessment Report will be taken as

directed in the report. All staff will receive training on diseases that may occur in

aquaculture and other occupational health and safety issues.

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4. PRODUCT/SERVICE MARKETPLACE

Cyprus is an island in the Eastern Basin of the Mediterranean Sea. It is the third largest

island in the Mediterranean (after the Italian islands of Sicily and Sardinia). It is located

south of Anatolian peninsula of the Asian mainland (part of Turkey), so it may be included

in Western Asia or the Middle-East. Cyprus is close to Western Asia, Southern Europe and

Northern Africa (North of Suez Canal) and thus enjoys an extremely important strategic

location. TRNC, diplomatically recognized only by Turkey, occupies the northern one-third

of the island and has a population of approximately 300,000 (census 2011). The remaining

two-thirds of the island is the internationally recognized ‘Republic of Cyprus’ that has a

population of approximately 800,000 (census 2007). Therefore, total population of Cyprus

is in excess of 1.1 million. In addition to this, the flourishing tourist industry and higher

education sector accounts for in excess of 4 million people per year (ref: FAO Report of the

UN).

Cyprus – Market

Aquaculture in Cyprus started in 1969, with the construction of the Experimental

Freshwater Fish Culture Station at Kalopanayiotis by the DFMR for the development of

trout farming in the Troodos mountain range. The station served as a pilot one three years

later, the first private Trout farm started operation.

The first marina aquaculture attempts were made in 1972, when the construction of a

Marine Research Station was initiated by the DFMR at Gastria, situated at the east cost of

Cyprus, about 15 km northeast of the town of Mağusa. Research work in marine

aquaculture continues, from 1978 – 1979, in the Paphos harbor where the DFMR operated

successfully a small hatchery for the experimental reproduction of marine fish, mainly sea

bass, sea bream, white sea bream and rabbit fish. The initial stock of sea bass and sea

bream fry was imported from France.

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The first private commercial marine fish hatchery started production in 1986 by producing

sea bream and sea bass fry, while the first marine fish fattening unit, which used land

based coastal installations, started operations in 1988 for sea bream and sea bass.

Cyprus became one of the first Mediterranean countries to carry out commercial culture of

sea bass and sea bream in offshore cages. The first commercial open sea cage farm was

opened in Cyprus in 1990 – 1991 for the production of sea bream and sea bass and by 1997

a total of 8 open sea cage farms were in operation on the south coast of the island (ref:

Review of Aquaculture Development in Cyprus by Daphne Stephanou, 19 March 2007).

In the North of the island (i.e. in TRNC), there is only one active sea cage farm operated by

a Turkish Cypriot resident from Australia. It is reported that this investment in the amount

of $2 Million was completed by September 2005 with first harvest in September 2006. The

farm consists of 12 cages with an estimated annual production of 300 tonnes of sea bream.

Current production capacity is 300 tonnes of sea bream and 50 tonnes of sea bass (ref:

Animal Husbandry Department of the TRNC).

Overall, aquaculture in TRNC has not developed sufficiently to meet the obvious demand. It

is said that it is a pity that the sector has not developed although the island is surrounded

by sea due to lack of sustainable policy and government support to the sector. In the words

of Prof. Dr. Işık Oray, the President of Cyprus Marine Research Association in 13 January

2015:

“If sufficient investment is made in this sector, there exists a market in excess of €200

Million annual…….

While TRNC occupies 50.6% of the island’s coastline, annual production rate per person is 1

– 2 kg in comparison to 25 kg in Malta, Spanish islands, and RoC……..

In TRNC, 593 tonnes of fish was produced in 2012, in comparison to 5,993 tonnes in RoC.

Annual income generated in RoC in this sector is €74 Million.”

TRNC imports annually 700 tonnes of Sea Bass and Sea Bream mainly from Turkey and this

products reach to the consumers after 4-5 days of harvesting. In 2014, local production in

Sea Bream was 192,270 kg. and in Sea Bass was 56,037 kg; totaling 248,307 kg (ref: Animal

Husbandry Department of TRNC).

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TRNC – Market Size

This Project assumes 378,000 kg of Sea Bream and 68,000 kg of Sea Bass annual

production; totaling 444,000 kg. As 700 tonnes is imported from Turkey and elsewhere,

there is a major market in TRNC that can be fulfilled by this type of Project.

Sea Bream and Sea Bass Production by Years in TRNC

YearsSea

Breamkg.

Sea Basskg.

Totalkg.

2006 33.350 - 33.3502007 211.010 - 211.0102008 147.920 9.710 157.6302009 131.315 41.110 172.4252010 127.033 15.860 142.8932011 247.474 72.410 319.8842012 255.537 66.470 322.0072013 162.686 103.950 266.6362014 192.270 56.030 248.300

Due to insufficient production for the current demand, and/or cheaper importation of

aquaculture products, importation is around 1,600 tonnes as shown below.

Import of Aquaculture Products by TRNC

Years Freshkg.

Processed /Frozen

kg.Totalkg.

2006 537.135 517.166 1.054.3012007 440.604 788.684 1.229.2882008 451.959 917.310 1.369.2692009 611.192 573.916 1.185.1082010 736.050 628.547 1.364.5972011 675.104 615.182 1.290.2862012 737.590 734.626 1.472.2162013 886.276 728.582 1.614.858

Imported Fish Products by Year in (kg.)

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Source: TRNC Statistical YearbookThe demand for fish both in internal and foreign market is on rise due to the fact that there

is an increased population and awareness for fish consumption. In “General View on

Agricultural Sector in TRNC” study, which was carried out in 2012, it was concluded that

sea bream and sea bass demand of TRNC is at least 1100 tonnes/year. It is known that this

figure is approximately 50% higher today because of the increase in population and fish

consumption awareness.

As it can be seen from the figure above, the total importation of fresh and frozen fish &

fillet increased nearly by 300% in the past 2 years and it keeps rising. Therefore, a local

producer that will have the chance to supply fresh fish to the market will become very

advantageous.

Local target market includes residents, restaurants and hotels. Wholesale market includes

fish markets, restaurants and hotels. Today there is around 25,000 bed capacity with target

of annual 2 Million tourists, around 110,000 university students, and around 3,000

restaurants in North Cyprus. These figures have increasing trend and the average real

growth rate of economy is around 3.5-4% in TRNC.

At later stage, with the expansion of the Project, it is possible to export the produce to

Turkey and other countries. It must be noticed that recently established mutual

agreements between Turkey and TRNC allow for fish trade between these two countries

and Turkey provides full support for the economic development of TRNC. Despite, some

technical constraints in transportation, many locally produced products are being exported

to many countries from TRNC. Therefore, it should be noted that export opportunities for

this project comprises future endeavors as well.

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Target Market

Local target market includes local and foreign people, restaurants and hotels. The Project’s

target wholesale market includes:

Fish markets

Restaurants

Hotels

In addition to these, retail sales to individuals will occur. The rationale behind this approach

lays under the sale prices of the same products.

Sea Bream and Sea Bass are sold in restaurant for €11 - €15 per portion (400 gr)

Fish markets sells Sea Bream and Sea Bass at an average of €7 / kg

The only active fish farm at the moment wholesale price for Sea Bream and Sea

Bass is €4.7/kg (our recommended sales price varies between €4.65 – €4.95

conservative and upside case, respectively.)

In the first phase of operations, local market demands will be met and then with the

capacity expansion, foreign markets of Turkey and other countries will be entered.

Recently established mutual agreements between Turkey and TRNC allow fish trade.

5. ORGANIZATION AND STAFFING

Fingerling supply will be quick and easy as it will be obtained from RoC. In cases, where

fingerling is supplied from hatcheries in Turkey, these will be imported into TRNC via

Girne or Mağusa ports. The road distance between the facility and Girne port is 45

minutes. Fingerlings will be transported by vehicles that provide water exchange and

oxygen consistently. Fingerlings will be placed into cages after adapting to the conditions

of the Mediterranean climate. 990,000 Sea Bream (1.5 – 2.0 gr. on average), and 180,000

Sea Bass (2.0 -2.5 gr. on average) is required annually as the facility will have a capacity of

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500 tonnes/year. The supplier will supply the amount of fingerlings demanded bearing in

mind the 20% mortality rate.

Feed Supply

2 kg of feed is required for 1kg of fish (FCR: 2.0). Therefore, the amount of feed

required is calculated as:

450,000 kg./year of fish x 2 kg. of feed = 900 tonnes/year

The feed will be supplied from RoC or Turkey.

Vaccination, Vitamins and Antibiotics

The type of feed that is extruded type, it floats in water slowly, it is dry, cooked and has

positive effects on digestibility. The digestion rate of extruded feed is around 90%

(www.fao.org). In this regard, the fish will consume the whole feed. Suitable feeding

tables will be prepared according to the water temperature and the weight of the fish.

Sample table is below:

(Ref: EIA Report)

Advantages of extruded feed (FAO):

1. The feed is sterilized as they are cooked for 20-30 seconds at 120-150ºC

2. Cause of disease minimized

3. Digestibility of feed is increased (90%)

4. The fish can have the feed easily as it is homogenous (suitable to mouth structure of the

fish). The feed can stay in water for the desired period both for the establishment and the

marine environment, and can be consumed by the fish completely.

WeightWater Temperature

(0C) 14 – 20(gr)

20 – 40(gr)

60 – 100(gr)

100 – 200(gr)

200 – 300(gr)

16 1,60 1.10 0,70 0,60 0,5018 2,20 1.50 0,90 0,80 0,7020 2,40 1,90 1,10 1,00 0,9022 2,60 2,10 1,40 1,20 1,2024 3,00 2,30 1,70 1,30 1,3026 3,20 2,60 1,90 1,50 1,4028 3,40 3,00 2,10 1,60 1,5030 3,60 3,20 2,30 1,80 1,70

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5. It does not pollute the water quality.

6. Suitable optimum fat and protein can be supplied to the feed for the fish by extruded

feed and the weight of phosphorus and nitrogen in receiving environment is reduced.

Medicine used in production:

The immune system of the fish will be strengthened as fingerlings will be vaccinated

once they are taken from the hatchery. In this regard, necessary precautions will be taken

by vaccinations. Vaccinations will be pursuant to the regulations of Marine Resources Act

No. 27/2000 of TRNC.

If antibiotics are necessary, regulations determined in Article 21 and Article 22 of

Marine Resources Act’ No 27/2000 of TRNC should be adhered to.

Medicine that is free of use in production:

Within the scope of relevant regulations, medicine that is deemed appropriate for use

will be used based on the decisions made by Veterinary Department and Animal Husbandry

Department of TRNC.

Vitamins:

The feed contains such vitamins as C, B, K, E and D and various vitamins to increase the

resistance of fish against diseases and to digest the feed.

Vitamins Amount UnitA 15,000 IU/KGMIN

D3 1,800 IU/KGMINE 80 MG/KGMIN

B2 25 MG/KGMINB12 25 MG/KGMINK3 12 MG/KGMINC 250 MG/KGMIN

(Ref: EIA Report) Vitamins, which will be given to the fish if necessary will be given under the conditions

recommended by Marine Resources Act’ No 27/2000 and/or under the control of

Veterinary Department of the TRNC.

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Due to the nature of the business, constant attention is required to monitor the ongoing

process of operations. Therefore, labor is an important entity to ensure the smoothness of

operations. Once in full fledge, the Project, initially, will have the following workforce:

Manager

Water Engineer

Chief Accountant

Account/Administrative Clerk (3)

Licensed Driver (2)

Workers (3)

Packaging Staff (3)

Security Guard (2)

Professional Diver (2)

Cleaner / Office Messenger (2)

Natural impact can also be considered as a major risk. Therefore, high quality and latest

technology products will be used at all times (i.e. fish feed, cages, pools, etc).

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6. RISKS

Application of Risk AnalysisRisk analysis has wide applicability to aquaculture. Risks to society and the environment

posed by hazards created by or associated with aquaculture development.

An integrated approach to risk analysis will assist the aquaculture sector in reducing risks to

successful operations from both internal and external hazards and can similarly help to

protect the environment, society and other resource users from adverse and often

Environmental risks Pollution from feeds, drugs, chemicals, wastesAlteration of water currents & flow patterns

Biological risks Introduction of invasive alien species, exotic pests &pathogens

Genetic impacts on native stocksDestruction/modification of ecosystems and agricultural

lands (mangrove deforestation, salination of ricelands)

Financial risks Failure of farming operationsCollapse of local industry/sector Social risksDisplacement of artisanal fishers Human health risks

food safety issues

Environmental risks Severe weather patternsPollution (e.g. agricultural chemicals, oil spills, etc)

Biological risks Pathogen transfer from wild stocksLocal predators (e.g. sharks, etc)Toxic algal blooms, red tide

Operational risks Poor planningPoor designWorkplace injuries

Financial risks Market changesInadequate financingCurrency fluctuationsEmergence of new competitors

Social risks Negative image / pressLack of skilled manpowerCompetition for key resources from other

Sectors Theft, vandalism

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unpredicted impacts. This could lead to improved profitability and sustainability of the

sector, while at the same time improving the public’s perception of aquaculture as a

responsible, sustainable and environmentally friendly activity.

Minimized Risks

Due to the limited availability of off shore areas to carry out fish farming activities in TRNC,

it is vital to identify land and sea area that has permission from the TRNC Government and

leased on long term basis (minimum 29 years). The location of the Project facility

comparatively minimizes the required investing cost and the duration of completion of the

Project. Additionally, the sea area is solely dedicated to the Project and has the utility of

fishing harbor that is being used by local fishermen today. The plant of operations is only

1km away than the harbor and is on the main road from Karpaz to Iskele. Therefore,

location is considered as additional advantage. The acquisition of all the rights to build and

operate the farming facility essentially means that the approval/regulatory related risks of

the project have been contained and thus investors face reduced risk in the Project. At this

time, as far as we are aware, there are no further fish farming licenses to be issued by the

TRNC Government to another interested party.

In any case, it is more optimistic to acquire all the rights obtained for fish farming due to its

opportunity cost. The timeline of obtaining full licenses from scratch requires

approximately 1 year (including the Environmental Impact Assessment Report, Land

Allocation, Quota Assignment, Bureaucratic Procedures, Permissions etc.). By this

acquisition, Project startup can be completed immediately and thus, Project revenue will

be generated as soon as possible.

Licenses & Permissions Obtained

Total ownership of the licensee company (Aqua Sunset Fisheries Limited)

Preliminary permission to conduct fish farming activity obtained from the

government. (currently under application to be finalized)

Allocation of land and sea areas (to be obtained with the start of the investment

activity)

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Production rights for annual 500 tonnes which is 47% expandable with the

capacity that will already be established. Additionally, designated area of the sea is

425,000m2 for the company and additional investments with additional licenses

will always be possible for the investor.

Environmental Impact Assessment Report

The potential for excellent rates of return this type of investment is present; internal rates

of return of 20-30% over a ten year timeframe are achievable in well-managed projects and

companies (ref: Aquasol Fish Farming Consultants).

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7. FINANCIAL PROJECTIONS

INCOME STATEMENT(EUR) 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

Sales Revenue (EUR) 0 458.688 1.759.951 1.950.450 1.889.349 1.925.022 1.930.372 1.931.175 1.931.296 1.931.314 1.931.316 1.931.317 1.931.317 1.931.317 1.931.317 1.931.317

Sea Bream (Çipura) 0 384.306 1.423.863 1.626.378 1.581.979 1.612.708 1.617.317 1.618.008 1.618.112 1.618.128 1.618.130 1.618.130 1.618.130 1.618.130 1.618.130 1.618.130

Sea Bass (Lev rek) 0 74.382 336.088 324.072 307.369 312.314 313.056 313.167 313.184 313.186 313.186 313.186 313.186 313.186 313.186 313.186

Cost of Goods Sold (COGS) 0 187.390 717.733 796.631 771.839 786.434 788.623 788.952 789.001 789.008 789.009 789.009 789.009 789.009 789.009 789.009

GROSS PROFIT 0 271.298 1.042.218 1.153.818 1.117.509 1.138.588 1.141.749 1.142.224 1.142.295 1.142.305 1.142.307 1.142.307 1.142.307 1.142.307 1.142.307 1.142.307

Operating Expenses 77.510 457.418 750.645 748.545 748.545 748.545 748.545 748.545 748.545 748.545 748.545 748.545 748.545 748.545 748.545 748.545

OPERATING PROFIT -77.510 -186.120 291.573 405.274 368.965 390.043 393.204 393.679 393.750 393.761 393.762 393.762 393.762 393.762 393.762 393.762

Depreciation 0 41.503 124.510 124.510 124.510 124.510 124.510 124.510 124.510 124.510 124.510 124.510 124.510 124.510 124.510 124.510

EBITDA -77.510 -144.617 416.083 529.784 493.475 514.553 517.714 518.189 518.260 518.271 518.272 518.272 518.272 518.272 518.272 518.272

-31,53% 23,64% 27,16% 26,12% 26,73% 26,82% 26,83% 26,83% 26,84% 26,84% 26,84% 26,84% 26,84% 26,84% 26,84%

Financing Costs 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Tax 0 0 0 0 53.717 91.660 92.403 92.514 92.531 92.534 92.534 92.534 92.534 92.534 92.534 92.534

PROFIT AFTER TAX -77.510 -186.120 291.573 405.274 315.247 298.383 300.801 301.164 301.219 301.227 301.228 301.228 301.228 301.228 301.228 301.228

INVESTMENT COSTINVESTMENT 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

Working Capital Requirement -247.446 -652.751 -181.981 -7.634 -13.052 -5.643 -846 -127 -19 -3 0 0 0 0 0 0

CASH PRODUCED FROM OPERATIONS -324.956 -797.367 234.102 522.149 426.705 417.250 424.465 425.547 425.710 425.734 425.738 425.738 425.738 425.738 425.738 425.738

Capital Expenditure 1.047.537 399.655

Cost of Acquisition 300.000 0

Construction Cost 105.900 247.100

Cages and Mooring Sy stem 500.000 0

Infrastructure (Electricity , communication, etc) 0 56.000

Safety Equipment, Boat and Furniture 0 47.500

Car 30.000 30.000

Other 111.637 19.055

FREE CASHFLOW -1.372.493 -1.197.022 234.102 522.149 426.705 417.250 424.465 425.547 425.710 425.734 425.738 425.738 425.738 425.738 425.738 425.738

Equity 1.372.493 1.197.022

CASH FLOW 0 0 234.102 522.149 426.705 417.250 424.465 425.547 425.710 425.734 425.738 425.738 425.738 425.738 425.738 425.738

CUMULATIVE CASH FLOW 0 0 234.102 756.251 1.182.957 1.600.206 2.024.671 2.450.218 2.875.928 3.301.662 3.727.399 4.153.138 4.578.876 5.004.614 5.430.352 5.856.090

Investor shall ensure the transfer of required license as well as the allocated landand sea area via acquisition of the company.

Cost of acquisition of the license and all the rights pertaining to it (including land andsea) is €300,000.

Land will be leased from the Government at an annual rental of approximately€13,000 for minimum 29 years (renewable at the end of the term).

Feeding and growing time for fingerlings is between 12-14 months. Sale activity isassumed to start in September 2019. Once in full fledge the projected annualrevenue for the first full year in 2020 is estimated to be between €1.76Mn.

23

Expected return of the project is as follows (including 5% waste):

Current retail price on the market for both Sea Bass and Sea Bream is approximately

€7.00/kg (ref: telephone survey).

Current wholesale price of the local fish farm is €4.65/kg for Sea Bream and €4.95/kg

for Sea Bass (ref: DeepSea Fisheries – local fish farm).

Project’s projected revenue has been calculated within the range of €4.42 – €5.20

per kg sales price for conservative and upside case, respectively.

Annual Profit after Tax upon reaching full capacity will be 301,228EURO per annum.

Conservative Case Base Case Upside CaseProject IRR: 9% 17% 24%

Equity IRR: 9% 17% 24%

ROE: 87% 269% 456%

24

8. ANNEXINCOME STATEMENT(EUR) 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

Sales Revenue (EUR) 0 458.688 1.759.951 1.950.450 1.889.349 1.925.022 1.930.372 1.931.175 1.931.296 1.931.314 1.931.316 1.931.317 1.931.317 1.931.317 1.931.317 1.931.317

Sea Bream (Çipura) 0 384.306 1.423.863 1.626.378 1.581.979 1.612.708 1.617.317 1.618.008 1.618.112 1.618.128 1.618.130 1.618.130 1.618.130 1.618.130 1.618.130 1.618.130

Sea Bass (Lev rek) 0 74.382 336.088 324.072 307.369 312.314 313.056 313.167 313.184 313.186 313.186 313.186 313.186 313.186 313.186 313.186

Cost of Goods Sold (COGS) 0 187.390 717.733 796.631 771.839 786.434 788.623 788.952 789.001 789.008 789.009 789.009 789.009 789.009 789.009 789.009

GROSS PROFIT 0 271.298 1.042.218 1.153.818 1.117.509 1.138.588 1.141.749 1.142.224 1.142.295 1.142.305 1.142.307 1.142.307 1.142.307 1.142.307 1.142.307 1.142.307

Operating Expenses 77.510 457.418 750.645 748.545 748.545 748.545 748.545 748.545 748.545 748.545 748.545 748.545 748.545 748.545 748.545 748.545

OPERATING PROFIT -77.510 -186.120 291.573 405.274 368.965 390.043 393.204 393.679 393.750 393.761 393.762 393.762 393.762 393.762 393.762 393.762

Depreciation 0 41.503 124.510 124.510 124.510 124.510 124.510 124.510 124.510 124.510 124.510 124.510 124.510 124.510 124.510 124.510

EBITDA -77.510 -144.617 416.083 529.784 493.475 514.553 517.714 518.189 518.260 518.271 518.272 518.272 518.272 518.272 518.272 518.272

-31,53% 23,64% 27,16% 26,12% 26,73% 26,82% 26,83% 26,83% 26,84% 26,84% 26,84% 26,84% 26,84% 26,84% 26,84%

Financing Costs 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Tax 0 0 0 0 53.717 91.660 92.403 92.514 92.531 92.534 92.534 92.534 92.534 92.534 92.534 92.534

PROFIT AFTER TAX -77.510 -186.120 291.573 405.274 315.247 298.383 300.801 301.164 301.219 301.227 301.228 301.228 301.228 301.228 301.228 301.228

COGS(EUR) 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

Cost of Goods Sold (COGS) 0 187.390 717.733 796.631 771.839 786.434 788.623 788.952 789.001 789.008 789.009 789.009 789.009 789.009 789.009 789.009

Sea Bream (Çipura) 0 158560 587470 671026 652707 665385 667287 667572 667615 667622 667622 667623 667623 667623 667623 667623

Sea Bass (Lev rek) 0 28829 130263 125606 119132 121049 121336 121379 121386 121387 121387 121387 121387 121387 121387 121387

Unit Cost (EUR/kg)

Sea Bream (Çipura) 1,775 1,775 1,775 1,775 1,775 1,775 1,775 1,775 1,775 1,775 1,775 1,775 1,775 1,775 1,775 1,775

Fingerlings 0,0005 0,0005 0,0005 0,0005 0,0005 0,0005 0,0005 0,0005 0,0005 0,0005 0,0005 0,0005 0,0005 0,0005 0,0005 0,0005

Fish Feed 1,723 1,723 1,723 1,723 1,723 1,723 1,723 1,723 1,723 1,723 1,723 1,723 1,723 1,723 1,723 1,723

Import Duty (3%) 0,052 0,052 0,052 0,052 0,052 0,052 0,052 0,052 0,052 0,052 0,052 0,052 0,052 0,052 0,052 0,052

Sea Bass (Levrek) 1,775 1,775 1,775 1,775 1,775 1,775 1,775 1,775 1,775 1,775 1,775 1,775 1,775 1,775 1,775 1,775

Fingerlings 0,0005 0,0005 0,0005 0,0005 0,0005 0,0005 0,0005 0,0005 0,0005 0,0005 0,0005 0,0005 0,0005 0,0005 0,0005 0,0005

Fish Feed 1,723 1,723 1,723 1,723 1,723 1,723 1,723 1,723 1,723 1,723 1,723 1,723 1,723 1,723 1,723 1,723

Import Duty (3%) 0,052 0,052 0,052 0,052 0,052 0,052 0,052 0,052 0,052 0,052 0,052 0,052 0,052 0,052 0,052 0,052

INVESTMENT COSTINVESTMENT 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

Working Capital Requirement -247.446 -652.751 -181.981 -7.634 -13.052 -5.643 -846 -127 -19 -3 0 0 0 0 0 0

CASH PRODUCED FROM OPERATIONS -324.956 -797.367 234.102 522.149 426.705 417.250 424.465 425.547 425.710 425.734 425.738 425.738 425.738 425.738 425.738 425.738

Capital Expenditure 1.047.537 399.655

Cost of Acquisition 300.000 0

Construction Cost 105.900 247.100

Cages and Mooring Sy stem 500.000 0

Infrastructure (Electricity , communication, etc) 0 56.000

Safety Equipment, Boat and Furniture 0 47.500

Car 30.000 30.000

Other 111.637 19.055

FREE CASHFLOW -1.372.493 -1.197.022 234.102 522.149 426.705 417.250 424.465 425.547 425.710 425.734 425.738 425.738 425.738 425.738 425.738 425.738

Equity 1.372.493 1.197.022

CASH FLOW 0 0 234.102 522.149 426.705 417.250 424.465 425.547 425.710 425.734 425.738 425.738 425.738 425.738 425.738 425.738

CUMULATIVE CASH FLOW 0 0 234.102 756.251 1.182.957 1.600.206 2.024.671 2.450.218 2.875.928 3.301.662 3.727.399 4.153.138 4.578.876 5.004.614 5.430.352 5.856.090

OPERATING EXPENSES(EUR) 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

Operating Expenses 77.510 457.418 750.645 748.545 748.545 748.545 748.545 748.545 748.545 748.545 748.545 748.545 748.545 748.545 748.545 748.545

Packaging 0 15189 60755 60755 60755 60755 60755 60755 60755 60755 60755 60755 60755 60755 60755 60755

Salaries and Wages 18500 148800 302400 302400 302400 302400 302400 302400 302400 302400 302400 302400 302400 302400 302400 302400

Rent, Electricity , Water, etc 14010 19155 25500 23400 23400 23400 23400 23400 23400 23400 23400 23400 23400 23400 23400 23400

Heating and Fuel 6000 24000 24000 24000 24000 24000 24000 24000 24000 24000 24000 24000 24000 24000 24000 24000

Amortisation 0 41503 124510 124510 124510 124510 124510 124510 124510 124510 124510 124510 124510 124510 124510 124510

Legal Counsel, Insurance and Audit 17000 57427 57427 57427 57427 57427 57427 57427 57427 57427 57427 57427 57427 57427 57427 57427

Other 22000 151344 156053 156053 156053 156053 156053 156053 156053 156053 156053 156053 156053 156053 156053 156053

25

WORKING CAPITAL(EUR) 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

Working Capital Requirement -247.446 -652.751 -181.981 -7.634 -13.052 -5.643 -846 -127 -19 -3 0 0 0 0 0 0

Increase in Accounts Receivable 0 37.700 106.953 15.657 -5.022 2.932 440 66 10 1 0 0 0 0 0 0

Opening Receiv ables 0 0 37700 144654 160311 155289 158221 158661 158727 158737 158738 158738 158738 158738 158738 158738

Closing Receiv ables 0 37700 144654 160311 155289 158221 158661 158727 158737 158738 158738 158738 158738 158738 158738 158738

Increase in Account Payable 8.104 18.234 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Opening Pay ables 0 8104 26337 26337 26337 26337 26337 26337 26337 26337 26337 26337 26337 26337 26337 26337

Closing Pay ables 8104 26337 26337 26337 26337 26337 26337 26337 26337 26337 26337 26337 26337 26337 26337 26337

Increase in Stock 255.550 633.284 75.028 -8.023 18.074 2.711 407 61 9 1 0 0 0 0 0 0

Opening Stock 0 255550 888834 963861 955838 973912 976623 977030 977091 977100 977101 977102 977102 977102 977102 977102

Closing Stock 255550 888834 963861 955838 973912 976623 977030 977091 977100 977101 977102 977102 977102 977102 977102 977102

RATIOSFish Farming 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032Free Cash Flow -1.372.493 -1.197.022 234.102 522.149 426.705 417.250 424.465 425.547 425.710 425.734 425.738 425.738 425.738 425.738 425.738 425.738

Discount Rate 10,00%

Discount Factor 1,00 0,91 0,83 0,75 0,68 0,62 0,56 0,51 0,47 0,42 0,39 0,35 0,32 0,29 0,26 0,24

Grow th Rate (g) 3,00%

Discounted Free Cashflow -1372493 -1088202 193473 392298 291445 259079 239599 218373 198597 180553 164140 149219 135653 123321 112110 101918

Cumulativ e DCF 299.084

Continuing Value @ 2032 6.264.434

Continuing Value @ 2017 1.499.656

Total Enterprise Value (EV) 1.798.740

Project IRR 17,11%

Aqua Sunset Fish Farming Project

Project IRR 17,11%

Project NPV @ 10% (EUR) 1798740

Project Pay back Period 8

Equity IRR 17,10% -1372493 -1197022 234102 522149 426705 417250 424465 425547 425710 425734 425738 425738 425738 425738 425738 6671437

Equity NPV @ 10% (EUR) 1794255 -1372493 -2569515 -2335413 -1813264 -1386559 -969309 -544844 -119297 306412 732146 1157884 1583622 2009360 2435099 2860837 9532273

Equity Pay back Period 8

ROE 268,83%

STOCK and FCREUR 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032Closing Stock 360.000 1.252.125 1.357.819 1.346.516 1.371.977 1.375.797 1.376.369 1.376.455 1.376.468 1.376.470 1.376.471 1.376.471 1.376.471 1.376.471 1.376.471 1.376.471

Sea Bream (Çipura) 270000 1024875 1143731 1138685 1160803 1164120 1164618 1164693 1164704 1164706 1164706 1164706 1164706 1164706 1164706 1164706

Sea Bass (Lev rek) 90000 227250 214088 207831 211175 211676 211751 211763 211764 211765 211765 211765 211765 211765 211765 211765

Sales During Period 0 277.875 1.064.306 1.181.302 1.144.539 1.166.181 1.169.427 1.169.914 1.169.987 1.169.998 1.170.000 1.170.000 1.170.000 1.170.000 1.170.000 1.170.000

Sea Bream (Çipura) 0 235125 871144 995046 967882 986682 989502 989925 989989 989998 990000 990000 990000 990000 990000 990000

Sea Bass (Lev rek) 0 42750 193163 186256 176657 179499 179925 179989 179998 180000 180000 180000 180000 180000 180000 180000

Purchases During Period 360.000 1.170.000 1.170.000 1.170.000 1.170.000 1.170.000 1.170.000 1.170.000 1.170.000 1.170.000 1.170.000 1.170.000 1.170.000 1.170.000 1.170.000 1.170.000

Sea Bream (Çipura) 270000 990000 990000 990000 990000 990000 990000 990000 990000 990000 990000 990000 990000 990000 990000 990000

Sea Bass (Lev rek) 90000 180000 180000 180000 180000 180000 180000 180000 180000 180000 180000 180000 180000 180000 180000 180000

Opening Stock 0 360.000 1.252.125 1.357.819 1.346.516 1.371.977 1.375.797 1.376.369 1.376.455 1.376.468 1.376.470 1.376.471 1.376.471 1.376.471 1.376.471 1.376.471

Sea Bream (Çipura) 0 270000 1024875 1143731 1138685 1160803 1164120 1164618 1164693 1164704 1164706 1164706 1164706 1164706 1164706 1164706

Sea Bass (Lev rek) 0 90000 227250 214088 207831 211175 211676 211751 211763 211764 211765 211765 211765 211765 211765 211765

Waste Ratio

Sea Bream (Çipura) 0,05 0,05 0,05 0,05 0,05 0,05 0,05 0,05 0,05 0,05 0,05 0,05 0,05 0,05 0,05 0,05

Sea Bass (Lev rek) 0,05 0,05 0,05 0,05 0,05 0,05 0,05 0,05 0,05 0,05 0,05 0,05 0,05 0,05 0,05 0,05

Feed Consumption (kg/fish) 0,0607889 0,3958094 0,3958094 0,3958094 0,3958094 0,3958094 0,3958094 0,3958094 0,3958094 0,3958094 0,3958094 0,3958094 0,3958094 0,3958094 0,3958094 0,3958094

Fish Weight (kg/fish) 0,40 0,40 0,40 0,40 0,40 0,40 0,40 0,40 0,40 0,40 0,40 0,40 0,40 0,40 0,40 0,40

Fingerling Weight (kg/fish) 0,002500 0,002500 0,002500 0,002500 0,002500 0,002500 0,002500 0,002500 0,002500 0,002500 0,002500 0,002500 0,002500 0,002500 0,002500 0,002500

Increase in Weight (kg/fish) 0,397500 0,397500 0,397500 0,397500 0,397500 0,397500 0,397500 0,397500 0,397500 0,397500 0,397500 0,397500 0,397500 0,397500 0,397500 0,397500

Sea Bream (Çipura) - FCR 1,500000 1,500000 1,500000 1,500000 1,500000 1,500000 1,500000 1,500000 1,500000 1,500000 1,500000 1,500000 1,500000 1,500000 1,500000 1,500000

Sea Bass (Lev rek) - FCR 1,500000 1,500000 1,500000 1,500000 1,500000 1,500000 1,500000 1,500000 1,500000 1,500000 1,500000 1,500000 1,500000 1,500000 1,500000 1,500000

Sea Bream (Çipura) - Feed Consumption (kg/balık) 0,596250 0,596250 0,596250 0,596250 0,596250 0,596250 0,596250 0,596250 0,596250 0,596250 0,596250 0,596250 0,596250 0,596250 0,596250 0,596250

Sea Bass (Lev rek) - Feed Consumption (kg/balık) 0,596250 0,596250 0,596250 0,596250 0,596250 0,596250 0,596250 0,596250 0,596250 0,596250 0,596250 0,596250 0,596250 0,596250 0,596250 0,596250

Fish Feed Cost (EUR/kg) 1,155556 1,155556 1,155556 1,155556 1,155556 1,155556 1,155556 1,155556 1,155556 1,155556 1,155556 1,155556 1,155556 1,155556 1,155556 1,155556

Receiv ables Collection Period (day ) 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30

Creditors Pay ment Period (day ) 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30

Stock Holding Period (day ) 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365

26

INVESTMENT BREAKDOWN

Fixed Assets Bui lding / Construction Euro 353.000

Mooring and Cages Euro 500.000

Securi ty Equipment and Guard Boat Euro 37.500

Furni ture Euro 10.000

Vehicles Euro 60.000

Land Road Construction Euro 7.000

Communication Infrastructure Euro 4.000

Electrici ty Infrastructure Euro 45.000

Transportation and Insurance Cost Euro 20.000

Import and Custom Cost Euro 25.000

Assembly Cost Euro 10.000

Contingency (5%) Euro 53.600

Consultancy Euro 22.092

Total: 1.147.192