Benefits of Making Business in Ukraine | Buy & Sell Business

1. BENEFITS OF MAKING BUSINESS IN UKRAINE 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 UKRAINE WWW.MERGERSCORP.COM

4. Country Overview Ukraine, country located in eastern Europe, the second largest on the continent after Russia. The capital is Kyiv (Kiev), located on the Dnieper River in north-central Ukraine. Ukraine is bordered by Belarus to the north, Russia to the east, the Sea of Azov and the Black Sea to the south, Moldova and Romania to the southwest, and Hungary, Slovakia, and Poland to the west. In the far southeast, Ukraine is separated from Russia by the Kerch Strait, which connects the Sea of Azov to the Black Sea. Ukraine occupies the southwestern portion of the Russian Plain (East European Plain). The country consists almost entirely of level plains at an average elevation of 574 feet (175 metres) above sea level. Mountainous areas such as the Ukrainian Carpathians and Crimean Mountains occur only on the country’s borders and account for barely 5 percent of its area. The Ukrainian landscape nevertheless has some diversity: its plains are broken by highlands—running in a continuous belt from northwest to southeast—as well as by lowlands.

5. Executive Summary Kiev, largest city and the national capital of Ukraine. The city is located on both sides of the Dnieper River in the north central part of the country. Kiev is the industrial, scientific, educational, and cultural center of Ukraine. Kiev, largest city and the national capital of Ukraine. The city is located on both sides of the Dnieper River in the north central part of the country. Kiev is the industrial, scientific, educational, and cultural center of Ukraine. The total population in Ukraine is estimated to be 43.99 million in 2019, down from 45.55 million in 2013. This figure makes it the 33rd most populated country in the world. The population growth rate, as of 2012, is estimated to be -3.1%. Its figures show that there were 4.2 million Russians living in Ukrainian ethnographic territories within the Union of Soviet Socialist Republics, 2.7 million of them in the Ukrainian Soviet Socialist Republic. The most notable rivers of Ukraine include: Dnieper, Dniester, Southern Buh, and Siversky Donets. The longest river is Dnieper, the longest tributary is the Dnieper's tributary Desna. Two of the Danube's tributaries in Ukraine Prut and Tysa are longer than the main river within Ukraine. The Black Sea is a body of water and marginal sea of the Atlantic Ocean between Eastern Europe, the Caucasus, and Western Asia. The Black Sea is bordered by Ukraine, Romania, Bulgaria, Turkey, Georgia, and Russia.

6. Introduction – Doing business in Ukraine Ukraine is a large emerging market providing expanding businesses with strategic positioning in the heart of Europe, with good connections to Russia and the Middle East. However, starting a business or expanding operations into the country is an administrative nightmare, swamped in bureaucracy and costly procedures, which is why having local help is paramount. Starting a business in Ukraine is an arduous process, involving seven procedures and 22 days. Unlike legislation in other countries, Ukrainian law does not allow investors to set up a partnership in the country or convert a representative office into a company. This means a limited liability company is the most widely used method for foreign investors to start a business in Ukraine.

7. Conducting business in Ukraine Ukraine is a challenging and confusing place to do business. At the same time, it’s also exciting and changing. I’ve been doing business in Ukraine for fifteen years, and while Ukraine has a bad reputation for international business, it deserves a second look. Ukraine has benefited from the advice and assistance of international partners such as the EU, the IMF, the United States, Canada, and the World Bank, among others. Specialists from each of these institutions were embedded in Ukraine’s ministries and worked in cooperation with the highest levels of government on technical and financial assistance programs.

8. Taxation in Ukraine salary and other benefits under employment and civil agreements, foreign income, and other income not covered elsewhere. Individual income tax in Ukraine is proportional tax. It can be 0%, 5%, 9%, 18% and it depends on type of income. For example tax rate for employment income is 18%. In addition, on every individual's income, which is taxable by Individual Income Tax, there is also imposed military tax, whose tax rate is 1.5%. Corporate income tax (CIT) applies to taxable profits earned by resident entities in Ukraine and abroad and non-residents with a PE in Ukraine. Resident entities are taxed on their worldwide income. Non-resident entities are taxed on their Ukrainian- source income. ​​​​​​​​​​​​​The standard tax rate of 18% applies to income received as

9. Trade and petrochemical and gas, machine-building and metal- working, forest, wood-working and wood pulp and paper, construction materials, light, food and others. The EU is Ukraine's largest trading partner, accounting for more than 40% of its trade in 2016. Ukraine accounts for 0.9% of EU's total trade, with a turnover of €29.6 bn in 2016. Ukraine exports to the EU amounted to €13.1 bn in 2016. The top exports of Ukraine are Seed Oils ($3.44B), Wheat ($2.37B), Corn ($2.26B), Semi-Finished Iron ($2.1B) and Iron Ore ($1.92B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Petroleum Gas ($4.22B), Refined Petroleum ($4.14B), Coal Briquettes ($2.18B), Cars ($1.8B) and Packaged Medicaments ($1.49B). In Ukraine covering about 20 major industries, namely power generating, fuel, ferrous and non-ferrous metallurgy, chemical

10. Banking in Ukraine economy. It operates and directs all the flows of money and provides distribution of funds among all subjects of economic relations. Financial system is usually divided into 2 groups: banking and non-banking financial institutions. The first one is represented by central banks and different commercial banks. The second group consists of pension funds, insurance companies, pawn shops, credit unions another finance companies. Ukraine has two-tier bank industry which consists of the central bank – the National Bank of Ukraine and commercial banks. The National Bank of Ukraine (NBU) is responsible for ensuring of stability of the national currency Hyena (UAH) and determining monetary policy of Ukraine. The financial system is a very important sector of the world’s

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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13. MergersCorp.com The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. Member firms of the MergersCorp network of independent firms are affiliated with MergersCorp International. MergersCorp International provides no client services. No member firm has any authority to obligate or bind MergersCorp International or any other member firm vis-à-vis third parties, nor does MergersCorp International have any such authority to obligate or bind any member firm. Copyright © 2020 MergersCorp International. All rights reserved. 13 © Midaxo 2018 www.midaxo.com