1. RIBA / UK TI Conference ‘Working Internationally’ Getting Paid Martin Kelly, KPMG LLP Ruth Adams, KPMG LLP 23rd March 2012

2. 1 © 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Agenda Challenges to “Getting Paid” Risks of not “Getting Paid” Payment risk framework Transactional payment risks International tax tips and impact on payment

3. 2 © 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Challenges to getting paid Strategic level Prevention rather than cure Transactional level Financial instruments Taxation issues

4. 3 © 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. What are the risks of not getting paid Project risk ■Project viability ■Changing market ■Impact on viability ■Project financing Country risk ■Political ■Economic ■Currency ■Repatriation ■Culture ■Enforcement UKTI Client risk Shareholders Client Architect Delivery team and supply chain Parent Funder D & B Professional team

5. 4 © 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Payment risk framework ■Project ■Design / IP ■Client ■Supply chain ■Project accounts ■Milestones ■PCG’s ■Bonds ■Advanced payment ■Rights over IP ■Physical location of IP ■Credit risk ■Funding risk ■Programme risk When can you take some action: ■KPI or fundamental breach? What action will you take at each level of concern: ■Link payment to key deliverables? ■Be prepared to stop work? ■Be prepared to take enforcement actions? Mitigations / protections Understand payment risks Contractual / commercial levers Layered contingency planning Monitoring

6. 5 © 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Transactional payment risk Currency riskAccept riskSpot market ■Holding cash in various currencies may provide some protection Manage known riskForward exchange contract ■Need certainty over amounts and dates Manage less certain risk Currency options ■Series of instruments designed to minimise risk and maximise upward benefit Payment instruments Advance payment■Difficult for client to fund Guaranteed paymentLetter of credit ■ Risk taken on by clients bank (or joint) UK Export Finance ECGD Export Credits Guarantee Department Apply assistance – many forms: ■Supplier credit ■Export insurance ■Bond insurance

7. 6 © 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. International tax tips and impact upon payment ■What taxes will you suffer ? –Will the customer withhold tax ? –What about VAT and sales taxes? –Employee taxes –Obligation to pay local corporate taxes

8. 7 © 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Tax – why you should care ? ■What can you do about it ? –Treaty relief –Contractual protection –Understand impact of sub contracting

9. Thank you Presentation by: Martin Kelly, KPMG LLP Ruth Adams, KPMG LLP

10. © 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International.