Earning per share contribution to net income

New Versus Old Assumption

Old
Cash Flow -12 1.85 3.33 3.86 3.81 3.77 3.08 3.07 3.05
Cumulative -12.92% 1.99% 3.59% 4.16% 4.10% 4.06% 3.31% 3.31% 3.28%
EPS 2.05%

New
Year 0 1 2 3 4 5 6 7 8
Cash Flow -12 2.02 3.36 4.09 3.79 4.19 3.68 3.83 3.94
Cumulative -12.92% 2.17% 3.62% 4.40% 4.08% 4.51% 3.96% 4.12% 4.24%
EPS 2.79%

PAYBACK PERIOD

Old
Year 0 1 2 3 4 5 6 7 8
Cash Flow -12 1.85 3.33 3.86 3.81 3.77 3.08 3.07 3.05
Cumulative -12 -10.15 -6.82 -2.95 0.86 4.63 7.71 10.78 13.82
Payback Pe3+(2.95/3.81)= 3.77 years

Year
Cash Flow -12.00 2.02 3.36 4.09 3.79 4.19 3.68 3.83 3.94
Cumulative -12 -9.98 -6.62 -2.53 1.26 5.45 9.13 12.96 16.90
Payback Pe3+(2.53/3.79)=3.66 years

Eps=cash flow-prefered dividens/ no.of common shares outstanding

(12,000,000)/92891240*100%
 3.03 3.03 2.04 2.08 2.08 2.08 2.34
3.27% 3.26% 2.20% 2.24% 2.24% 2.24% 2.52%

9 10 11 12 13 14 15
4.06 4.19 2.95 3.09 3.19 3.28 3.79
4.37% 4.50% 3.18% 3.33% 3.43% 3.53% 4.08%

9 10 11 12 13 14 15
3.03 3.03 2.04 2.08 2.08 2.08 2.34
16.86 19.89 21.93 24.02 26.1 28.19 30.53

4.06 4.19 2.95 3.09 3.19 3.28 3.79

20.96 25.15 28.10 31.19 34.38 37.66 41.45
 Exhibit 2
VICTORIA CHEMICALS (A)

new assumption

Assumptions Depreciation Calculation Assumption

Annual Output (metric tons) 250,000 Discount rate 7.0%
Output Gain/Original Output 7.0% Tax Rate 30% Initial Investmet Outlay 12000000.00
Price/ton (pounds sterling) 675 Investment Outlay (mill.) 12.0 Terminal Value 0
Inflation Rate (prices and costs) 3.0% Depreciable Life (years) 15 Useful Life 15
Gross Margin (ex. Deprec.) 12.50% Salvage Value 0 Dep for 1 year 800000
Old Gross Margin 11.5% WIP Inventory/Cost of Goods 3.0% dep rate 0.0666667
Energy Savings/Sales Yr. 1-5 1.25% Months Downtime, Construction 1.5
Yr. 6-10 0.75% Preliminary Engineering Costs 0
Yr. 11-15 0.0% Overhead/Investment 3.5%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Year Now 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
1. Estimate of Incremental Gross Profit
New Output (tons) 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500
Lost Output--Construction/Cannibalization (46,813) (13,375) (13,375) (13,375) (13,375) (13,375) (13,375) (13,375) (13,375) (13,375) (13,375) (13,375) (13,375) (13,375) (13,375)
New Sales (Millions) 153.43 181.98 187.44 193.06 198.86 204.82 210.97 217.29 223.81 230.53 237.44 244.57 251.90 259.46 267.24
New Gross Margin 13.8% 13.8% 13.8% 13.8% 13.8% 13.3% 13.3% 13.3% 13.3% 13.3% 12.5% 12.5% 12.5% 12.5% 12.5%
New Gross Profit 21.10 25.02 25.77 26.55 27.34 27.14 27.95 28.79 29.66 30.54 29.68 30.57 31.49 32.43 33.41

Old Output 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000
Old Sales 173.81 179.03 184.40 189.93 195.63 201.50 207.54 213.77 220.18 226.79 233.59 240.60 247.82 255.25 262.91
Old Gross Profit 19.99 20.59 21.21 21.84 22.50 23.17 23.87 24.58 25.32 26.08 26.86 27.67 28.50 29.35 30.23
Incremental Gross Profit 1.11 4.43 4.57 4.70 4.85 3.97 4.09 4.21 4.33 4.46 2.82 2.90 2.99 3.08 3.17

2. Estimate of Incremental WIP inventory

New WIP inventory 3.97 4.71 4.85 5.00 5.15 5.33 5.49 5.66 5.82 6.00 6.23 6.42 6.61 6.81 7.02
Old WIP inventory 4.61 4.75 4.90 5.04 5.19 5.35 5.51 5.68 5.85 6.02 6.20 6.39 6.58 6.78 6.98
Incremental WIP inventory -0.64 -0.04 -0.05 -0.05 -0.05 -0.02 -0.02 -0.02 -0.02 -0.02 0.03 0.03 0.03 0.03 0.03

3. Estimate of Incremental Depreciation

Residual Value 12.00 11.20 10.40 9.60 8.80 8.00 7.20 6.40 5.60 4.80 4.00 3.20 2.40 1.60 0,8
Dep Amount 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80
4. Overhead 0.42 0.42 0.42 0.42 0.42 0.42 0.42 0.42 0.42 0.42 0.42 0.42 0.42 0.42 0.42
5. Prelim. Engineering Costs 0.00
Pretax Incremental Profit -0.11 3.21 3.35 3.48 3.63 2.75 2.87 2.99 3.11 3.24 1.60 1.68 1.77 1.86 1.95

6. Cash Flow Adjustments

Less Capital Expenditures -12.00
Add back Depreciation 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80
Less Added WIP inventory 0.64 -0.60 0.00 0.00 0.00 -0.03 0.00 0.00 0.00 0.00 -0.05 0.00 0.00 0.00 0.03
7. Free Cash Flow -12.00 1.37 2.45 3.14 3.24 3.34 2.69 2.81 2.89 2.98 3.07 1.87 1.98 2.04 2.10 2.20

NPV = 11.47
IRR = 19.9%