Benefits of Making Business in Srilanka | Buy & Sell Business

1. BENEFITS OF MAKING BUSINESS IN SRI LANKA WWW.MERGERSCORP.COM

2. At MergersCorp M&A International we help our clients confidentially buy and sell privately held businesses, aligning the interests of all parties for mutual success and satisfaction. It is our goal to make the process of either buying a new business or selling your current business as smooth and efficient as possible. We know how important confidentiality is to our sellers and we treat it with the utmost importance. WWW.MERGERSCORP.COM

3. BENEFITS OF MAKING BUSINESS IN SRILANKA WWW.MERGERSCORP.COM

4. Country Overview Sri Lanka, an island nation in the Indian Ocean, located between the Laccadive Sea in west and the Bay of Bengal in east. The island is situated about 30 km (19 mi) south east of the southern coast of India. Sri Lanka consists of a main island and a number of smaller islands. Until 1972 the country was known as Ceylon. The islands cover an area of 65,610 km², compared the country is about 1.5 times the size of Denmark, or slightly larger than the U.S. state West Virginia.Sri Lanka has a population of 21.2 million people (in 2016), capital is Sri Jayawardenepura Kotte, a satellite city of Sri Lanka's largest city Colombo. Spoken languages are Sinhala (official and national language) 74%, Tamil (a national language) 18%, other 8%, about 10 % of the population speak English as a second language. Along with India, Nepal, and the Maldives, Sri Lanka is considered a part of South Asia. Sri Lanka is in the Indian Ocean, almost rowboat distance from the southeast tip of India. It is located just a little southwest of the Bay of Bengal. The Gulf of Mannar and Palk Strait separate India and Sri Lanka

5. Executive Summary Lying off the southern tip of India, the tropical island of Sri Lanka has attracted visitors for centuries with its natural beauty. But it has been scarred by a long and bitter civil war arising out of ethnic tensions between the majority Sinhalese and the Tamil minority in the north and east. After more than 25 years of violence the conflict ended in May 2009, when government forces seized the last area controlled by Tamil Tiger rebels. But recriminations over abuses by both sides continue. The island fell under Portuguese and Dutch influence after the 16th century. It gained independence in 1948, after nearly 150 years of British rule. Theravada Buddhism is the official religion of Sri Lanka, with about 70.1% of the country's population as followers. Sri Lanka PEOPLE 2019, CIA World Factbook. Population: 22,576,592 .

6. Introduction – Doing business in Sri Lanka E-Commerce and Online Trading A good number of women with education in Sri Lanka have a computer in their home. Whether it is a Smartphone, tablet, a laptop or a good old fashioned desktop, women have access to a working machine along with the internet. Women use their computing devices for communication, education and for entertainment. But hardly few women realize the potential of computer as a trade mate. The world is engaged in a new generation of trading – online trading. With B2B and B2C websites, any business can rise as a global phenomenon. Gluten-free Baked Products With education and awareness, a sudden change in attitude has also been experienced. Sri Lanka, along with the rest of the world has become more gluten intolerant. This intolerance is perfect business opportunities for women entrepreneurs to provide their fellow Sri Lankans with gluten-free baked products at a decent profit margin.

7. Conducting business in Sri Lanka business in Sri Lanka. It requires one director and two shareholders. Minimum share capital isn’t required. The company secretary must be an individual who resides in Sri Lanka. Public Limited Company (PLC) A public limited company doesn’t require minimum share capital, either. This type of business is required to have two shareholders and two directors. Directors are required to file annual returns, along with audited accounts and financial statements. Shares are allowed to be issued on the stock exchange. Overseas Company An overseas company can be foreign-owned and can serve as a branch. This type of company’s operations are defined by the parent company. The company must register with the Treasury and is subject to a 10% branch tax on profits. Limited Liability Company (LLC) The limited liability company is the most common type of

8. Taxation in Sri Lanka management of business is exercised in Sri Lanka. Resident companies are taxed on worldwide income, whereas a non-resident company is taxed only on income derived from Sri Lanka.The Personal Income Tax Rate in Sri Lanka stands at 15 percent.In Sri Lanka, the Personal Income Tax Rate is a tax collected from individuals and is imposed on different sources of income like labour, pensions, interest and dividends. The benchmark we use refers to the Top Marginal Tax Rate for individuals. Revenues from the Personal Income Tax Rate are an important source of income for the government of Sri Lanka. There is no local or provincial income tax applicable to corporates in Sri Lanka. The standard tax rate is 28%. Tax rates from 10 percent to 40 percent also apply to profits from specific businesses. and

9. Trade Sri Lanka is the 79th largest export economy in the world and the 101st most complex economy according to the Economic Complexity Index (ECI). In 2017, Sri Lanka exported $12B and imported $21.1B, resulting in a negative trade balance of $9.1B. In 2017 the GDP of Sri Lanka was $87.4B and its GDP per capita was $12.8k. The top exports of Sri Lanka are Tea ($1.37B), Other Women's Undergarments ($663M), Knit Women's Undergarments ($600M), Knit Women's Suits ($561M) and Non-Knit Women's Suits ($459M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($2.06B), Gold($936M), Light Rubberized Knitted Fabric ($717M), Planes, Helicopters, and/or Spacecraft ($687M) and Cars ($553M). The top export destinations of Sri Lanka are the United States ($2.93B), the United Kingdom ($918M), Germany ($721M), India ($712M) and Italy ($474M). The top import origins are India ($4.21B), China($3.68B), Singapore ($1.66B), the United Arab Emirates ($1.47B) and Japan ($1.02B).

10. Banking in Sri Lanka Established in 1920, the Commercial Bank of Ceylon provides various banking products and services in Sri Lanka and Mumbai. It operates through five segments: Personal Banking, Corporate Banking, International Operations, Investment Banking, and Dealing and Treasury. Based out of Colombo, the bank employs around 5,000 staff. As of December 31, 2016, it operated 255 branches and 657 ATMs in Sri Lanka, and 19 branches and 20 ATMs in Bangladesh. As of 2016, total assets of the bank were US$6.4 billion and net profit was US$93.03 million. Sampath Bank Plc Based out of Colombo, Sampath Bank Plc provides various banking and financial products and services in Sri Lanka and other countries. Incorporated in 1986, it manages a network of approximately 229 branches and 381 ATMs. As of December 31, 2016, the bank operated 475 conventional banking branches, including 18 sub-branches, 10 overseas branches, 153 Islamic banking branches, and an offshore banking unit. Commercial Bank of Ceylon

11. Our M&A Process NEGOTIATION & CLOSE POST MERGER INTEGRATION (PMI) INTEGRATION (PMI) POST MERGER TARGET APPRAISAL APPROACH DUE DILIGENCE Key Areas  Target & market analysis;  Initial assessment of synergies & value drivers;  Indicative valuation;  Go or No-Go decision;  Preparation of transaction documents (NDA – Non- disclosure Agreement/LOI- Letter of Intent);  Select Transaction team;  Appoint advisors;  Consider funding ability.  Initial approach letter;  Signing of NDA;  Prepare & share initial information requests;  Formulation of LOI (Letter of Intent) & possible negotiations;  Initial meeting and Q&A;  Circulate information on the Target to the Transaction team.  Set scope of due diligence;  Set up VDR (virtual data room);  Coordinating of due diligence, further meetings and Q&A sessions;  Consider points relevant to the Post-Merger (PMI) phase;  Revisit indicative valuation & prepare detailed valuation based on due diligence findings;  SPA negotiations with the seller;  Development of final structure (share/asset deal) and final valuation;  Approvals;  Signing of SPA & Close.  Consider the extent of integration;  Development of 100 Day PMI Plan;  Consider short & long term objectives;  Estimate requirements to capture synergies;  Determine resource needs & optimal allocation. Parties Involved  CFO;  Head of M&A;  Accountants;  Corporate finance advisors;  Consultants.  Senior management;  CEO, CFO, CTO;  Strategy director;  Head of M&A;  Head of Business Development;  Consultants.  Company general counsel;  Lawyers;  Senior management.  Company general counsel;  Lawyers;  Senior management/HR. 11 © Midaxo 2018 www.midaxo.com

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