Benefits of Making Business in Samoa | Buy & Sell Business

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

4. Country Overview The Independent State of Samoa, known as Western Samoa until 1997, is made up of nine volcanic islands, two of which - Savai'i and Upolu - make up more than 99% of the land. It was governed by New Zealand until its people voted for independence in 1961. It has the world's second-largest Polynesian group, after the Maori. Samoa's deeply conservative and devoutly Christian society centres around the extended family, which is headed by an elected chief who directs the family's social, economic and political affairs, and the church, which is a focus of recreational and social life.The economy revolves around fishing and agriculture, which is vulnerable to cyclones and disease. Attempts at diversification have met with success. Tourism is growing, thanks to the islands' scenic attractions and fine beaches. Offshore banking spearheads an expanding services sector. Light manufacturing is expanding and has attracted foreign investment. Despite this, many younger Samoans are leaving for New Zealand, the US and American Samoa.

5. Executive Summary Samoa is a Polynesian Pacific country northeast of Fiji. The capital Apia is located on Upolu, the most populous and developed of the islands. Upolu and Savai'i, the other main island, account for 99 per cent of Samoa's 192,000 population. In 1962, Samoa became the first Pacific island country to achieve independence. Samoa has a small and developing economy that has generally performed well in recent years. Key domestic sectors are services, tourism and agriculture. Remittances from Samoans working abroad are a key part of the economy. New Zealand, Australia and the United States are the main source of remittances. Foreign development assistance in the form of loans, grants and direct aid is an important component of the economy. Approximately 60 per cent of the population is employed informally and work in subsistence agriculture or local commercial ventures. Samoa is reliant on imports and has a large trade deficit. Its indigenous exports consist mainly of fish and agriculture products, but their proportion of GDP has declined in recent decades.

6. Introduction – Doing business in Samoa Samoa has a small but growing economy that is largely dependent on a few key industries. Samoa’s major industries include agriculture, the service sector and manufacturing, and most business opportunities in Samoa still lie within these sectors. The manufacturing sector processes agricultural products for the most part. Agriculture in Samoa makes up 90% of exports, with coconut cream, copra and coconut oil dominating production. Agriculture in Samoa employs approximately two-thirds of the labour force. The flexibility of the labour market is considered a strength for future economic advances in Samoa. Samoa has a strong trade deficit with the export sector seen as a key contributor to the country’s economic growth. New Zealand is Samoa’s main trade partner, and in 2011, the New Zealand Samoa Trade & Investment Commission was launched by the Samoan Government. The main purpose of the commission is to facilitate and strengthen the flow of trade between Samoa and New Zealand, therefore leading to major economic growth for both countries.

7. Conducting business in Samoa Tourism Samoa offers natural and cultural attractions that appeal to diverse international markets. Samoa’s unique culture provides a friendly and relaxed environment for the visitors with opportunities to experience a distinctive Polynesian cultural heritage. Tourism infrastructure includes accommodation ranging from modern hotels to guest houses and beach huts (fales), an extensive range of attractions and activities, an international airport, sea ports that harbours a lot of cruise and tour ships, modern communications systems and an excellent road network. Food Processing Food processing accounts for a relatively high proportion of exports. •A large number of small enterprises produce primarily for the local market and frequently depend on imported raw materials. •Exports are dominated by processing of local commodities, primarily fish, nonu juice, nonu fruit, taro, coconut cream, coconut oil, cigarettes and beer The coconut sector is Samoan's largest renewable resource. Industrial coconut products are generally traded in commodity markets that are well established.

8. Taxation in Samoa Company Tax A resident company is charged at the rate of 27% in its global taxable income while non-resident is charged at the rate of 27% on its taxable income derived from the Samoa source. Note that company income tax rate was 29% but now reduced to 27%. Small Business Tax The taxable income of the sole trader is subject to income tax at progressive rates set out in the Income Tax Rates 1974, depending on the level of taxable income (or net profit) derived by the taxpayers. Note that there is now a reduction of the income tax top rate from 29% to 27% and the threshold amount of non taxable income has increased from SAT12,000 to SAT15,000. CUSTOMS DUTIES Advalorem duty rates are mainly 5%, 8% or 20%. For specific duty rates or tariff items you can download the tariff manual. The Personal Income Tax Rate in Samoa stands at 27 percent.

9. Trade Samoa is the 189th largest export economy in the world. In 2017, Samoa exported $65.5M and imported $399M, resulting in a negative trade balance of $334M. In 2017 the GDP of Samoa was $840M and its GDP per capita was $6.63k. The top exports of Samoa are Non-fillet Frozen Fish($12.3M), Refined Petroleum ($11.7M), Insulated Wire($11.5M), Other Processed Fruits and Nuts ($2.36M) and Sports Equipment ($1.99M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($50.2M), Poultry Meat ($19.2M), Coated Flat-Rolled Iron ($18.4M), Scrap Iron ($14M) and Cars ($10.3M). The top export destinations of Samoa are Australia ($19.3M), American Samoa ($11.8M), New Zealand($8.63M), the United States ($5.72M) and the United Kingdom ($4.12M). The top import origins are New Zealand ($81.6M), Singapore ($56.3M), the United States ($46.3M), China ($43.1M) and South Korea ($33.2M). Samoa is an island and borders American Samoa, Tokelau, Tonga and Wallis and Futuna by sea.

10. Banking in Samoa The National Bank of Samoa is a locally owned and operated commercial trading bank. From its humble beginnings as a family owned and managed business in the mid ‘90’s, nbs has grown to be a major player in the Samoan banking and commercial sectors. Over the last 20 years, nbs has undergone many changes as it grows and reinvents itself to meet the changing needs of the market. The bank continues to ask its customers what they want and keep abreast of new banking and IT technologies. nbs also aspires to be a good corporate citizen and do what it can to help its community and the Samoan economy. Today nbs provides customers with greater access to banking services via new media such as mobile phones, internet banking and smarter ATM’s. It also has goals to facilitate a positive change in Samoan's attitude and approach to saving and investment, and to lower the costs of banking in Samoa resulting in lower loan rates and a greater return on savings.

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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