Welcome Employee Engagement April 2014 Kier Early Payment Scheme

Kier Early Payment Scheme What is the Kier Early Payment Scheme? Kier has selected HSBC Bank as a scheme provider Payment is made earlier than current terms Payment of approved invoices only

Benefits Benefit to subcontractor: Access to cash earlier than current payment terms Competitive rate of interest (based on Kier’s credit rating) Does not affect existing credit facilities Benefit to Kier – more cash to self-finance developments, more work for subcontractors Benefit to HSBC – receive early payment charge

Automated vs manual payment HSBC offers two different schemes: automated and manual Automated Manual Meaning Annual rate Set up time Early Payment Charge (£1000 invoice drawn on 21 days) All eligible invoices are paid into subcontractor bank account net of early payment charge. No option to defer receipt. 3 month GBP LIBOR + 0.95% i.e. 1.55% based on Jan-16 LIBOR 5 days from return of form £3.14 Subcontractor chooses when within the period eligible invoices are paid. Similar to existing schemes with Lloyds and Santander. 3 month GBP LIBOR + 1.1% i.e. 1.70% based on Jan-16 LIBOR Typically 30 days £3.45

Timelines for payment Automated Manual Sub-contractor issues application Day -7 Kier issues payment notice Day 14 Kier uploads invoice Day 21 Automated Automated payment from HSBC to sub-contractor. Day 0 Specified date Day 15 Sub-contractor issues VAT invoice Day 95 Kier pays HSBC Sub-contractor issues application Day -7 Kier issues payment notice Day 14 Kier uploads invoice Day 21 Manual Sub-contractor manually draws down payment from HSBC. Day 0 Specified date Day 15 Sub-contractor issues VAT invoice Day 95 Kier pays HSBC

VAT invoices Switch from self-billing to VAT invoices for all payments through Kier Early Payment Scheme This is to avoid risk of change in VAT rate in the period between HSBC payment to subcontractor and Kier payment to HSBC VAT invoice required for value shown at foot of payment notice before payment is made.

VAT invoicing

Automated payments Sub-contractor 1. Subcontractor submits application to Kier, Kier issues payment notice, subcontractor issues VAT invoice 3. Bank pays subcontractor full value of invoice less discount fee 3 2. Kier sends approval details to bank 2 Bank 1 4. Bank collects full payment from Kier on maturity. 4 Kier

Manual payments 1. Subcontractor submits application to Kier, Kier issues payment notice, subcontractor issues VAT invoice Sub-contractor Bank Website 4. Subcontractor uses HSBCnet to select invoice for early payment 4 2. Kier sends approval details to bank 2 3. Bank notifies subcontractor that the payment is available for drawdown by displaying in HSBCnet (HSBC’s online banking platform) 3 5. Bank pays subcontractor full value of invoice less discount fee 5 Bank 1 6. Bank collects full payment from Kier on maturity 6 Kier

Automated payments sign up process Simple sign-up– only address and signature! Sub-contractor 2 Bank 3 2. Subcontractor emails SAF to Kier and to Bank indicating automated 2 1. Kier sends Subcontractor Administration Form (SAF) to subcontractor 1 3. HSBC completes acknowledgement email confirming subcontractor’s intentions and provides notice & terms to subcontractor. Upon acknowledgement, HSBC on-boards subcontractor. Kier

Manual payments sign up process 1. Kier sends Subcontractor Administration Form (SAF) to subcontractor 3 Sub-contractor 4 Bank 5 2. Subcontractor emails SAF to Kier and to Bank indicating manual and completes HSBCnet user registration 6 3. HSBCnet Notice and terms provided to subcontractor, HSBC awaits acknowledgement 1 2 4. Following acknowledgment HSBC completes setup and dispatches HSBCnet devices to subcontractor 5. Subcontractor receives HSBCnet devices and confirms to HSBC 6. HSBC provides HSBCnet training to subcontractor and upon completion on-boards the subcontractor. Kier

Summary Early access to cash – from day 21 Competitive finance rates –1.55% APR for automated product as at January 2016 Simple sign up – only address and signature required for automated product Support available from HSBC gtrf.implementation.uk@hsbc.com and Kier (keps@kier.co.uk)