Your guide to Royal Mail’s Save As You Earn

scheme 2014

Contents

Who is eligible?

Examples of how SAYE may work

What happens if I leave Royal Mail?

Timeline

How to apply

Jargon buster

What is a Save As You Earn scheme?

Frequently asked questions

Terms and conditions

Page 3 Page 4 Page 5

Page 13Page 10Page 8

Page 18 Page 20 Page 22

Terms in bold are defined in the jargon buster on pages 20 and 21.

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Who is eligible?

The overwhelming majority of full-time and part-time employees of Royal Mail Group Limited are eligible to join Save As You Earn (SAYE).

The following employees are eligible to join SAYE.

✔ We have invited full-time and part-time employees who have been employed continuously by Royal Mail Group Limited from 2 June 2014 to 1 September 2014 to take part.

✔ You must still be employed when options are granted to be able to take part in the scheme.

✔ This includes employees on permanent, temporary or fixed-term contracts, and those under 18 years of age. It also includes those on paid or unpaid leave during all or part of the period between 2 June 2014 and 1 September 2014.

Employees of GLS and employees of other subsidiaries and joint ventures are not eligible to join SAYE.

How do I join?If you decide you want to join SAYE, your application needs to be received before 5pm on Thursday 18 September 2014. We will not accept late applications. There are four ways you can apply. These are shown on pages 10, 11 and 12.

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After this year’s award, we have no current plans to make other SAYE awards.

This is a voluntary scheme. Whether you decide to join is entirely up to you.

Monday 1 September 2014Application period opens. Option price announced.

Thursday 18 September 2014 (5pm)Application period closes.

Thursday 25 September 2014Options likely to be granted (grant date).

End October 2014Option certificates and welcome letters sent to those taking part in SAYE.

Week beginning 3 November 2014Saving deductions from your net pay start if you are paid weekly.

28 November 2014Saving deductions from your net pay start if you are paid monthly.

1 December 2014Savings contract starts.

Week beginning 31 July 2017Saving deductions from your net pay stop if you are paid weekly (unless you take a payment holiday).

31 October 2017Saving deductions from your net pay stop if you are paid monthly (unless you take a payment holiday).

1 December 2017Savings term ends (unless you take a payment holiday). You will then have six months to use your savings to buy shares at the option price, if you choose to.

Timeline

There are four ways you can apply. These are detailed on pages 10, 11 and 12.

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What is a Save As You Earn (SAYE) scheme?

• An SAYE scheme is a voluntary tax-efficient cash savings scheme.

• It gives you the option in the future to buy shares in the company you work for.

• Under the scheme, for a fixed period (called the savings term), you save a fixed amount direct from your net salary. Our savings term is three years.

• At the end of the savings term, you can choose to buy Royal Mail’s shares at a discounted price, using your savings. This discounted price is known as the option price.

• We have set the option price and it is shown on the invitation letter you have received with this guide. It is based on our share price at the time the SAYE scheme was launched and has been discounted by the maximum amount of 20%.

In line with current rules set by HM Revenue & Customs, there will be no interest or bonus paid at the end of our three-year savings term.

You do not have to use your savings to buy Royal Mail plc shares. You can close your SAYE account, stop saving, and get all of your money back at any point during the savings term. However, if you close your account, you will not be able to re-join SAYE and you will lose the opportunity to buy shares at the option price.

Owning shares is not for everyone. The price of shares can go down as well as up. You may want to get independent financial advice about owning shares before you decide to take part in SAYE. Royal Mail and Equiniti, the scheme administrator, cannot provide independent financial advice.

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How do I save? • You decide how much to save within the set limits.

• If you are paid weekly, you can save between £1.25 and £25 every time you are paid, in multiples of 25 pence.

• If you are paid monthly, you can save between £5 and £100 every time you are paid, in multiples of £1.

The minimum and maximum amounts you can save are the same whether you are a full-time, part-time, monthly or weekly paid employee.

If you are paid weekly, you will save for 144 weeks. If you are paid monthly, you will save for 36 months. All employees will finish the savings term at the same time, unless they take a payment holiday (see page 17).

• We will take the money automatically from your net pay every time you are paid.

• Your savings will be held with Lloyds Bank plc and paid into an SAYE account in your name which is managed by the scheme administrator, Equiniti.

• You can get your savings back at any time without paying any fees for closing the account early.

If you apply online, by text message or using the Freephone number, you can change your savings amount by reapplying before the closing date (in other words, before 5pm on 18 September 2014). If you apply using the enclosed paper application form, you cannot change your savings amount after you have posted it.

After the closing date, you cannot change the amount you have chosen to save.

You should think carefully about how much you can afford to save before making your application.

Deductions

Tax PaidEmployee NICSAYE Share Scheme 2014

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Scale backThere is a limit to the total number of shares available when we grant them. The maximum number of shares available under SAYE is 15,000,000, in other words, 1.5% of issued Royal Mail plc shares when the SAYE scheme launched.

If there is greater demand for the SAYE scheme than the number of shares available (it is oversubscribed), we will reduce everyone’s application (scale back) by the same percentage, unless this reduction takes you below the minimum savings amount. In this case, we would reduce your application to the minimum savings amount.

If you choose to only save the minimum amount every time you are paid, your application would not be scaled back.

What if I need to take a break from saving?If your circumstances change, you have the opportunity to suspend saving for up to 24 weeks or six months, depending on when you are paid. This is called taking a payment holiday. This could delay your savings term end date.

Will I receive interest or a bonus on my SAYE savings?In line with current rules set by HM Revenue & Customs, there will be no interest or bonus paid at the end of our three-year savings term.

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Examples of how SAYE may work

If you decide to save £8.50 a week or £34 a month, at the end of the three-year savings term, you will have saved £1,224.

At the end of the savings term, you will have the opportunity to buy Royal Mail plc shares at the option price.

How many shares can I buy?If, for example, the share price was £4.25 at the time the SAYE scheme launched and the maximum discount of 20% was applied, the option price would be set at £3.40.

At the end of the three-year savings term, you would be able to buy 360 shares. This is worked out by dividing your savings of £1,224 by the £3.40 option price (£1,224/£3.40 = 360).

You would then have the option to either:

• use your savings to buy shares, then either keep the shares or sell them and possibly make a profit; or

• choose not to buy any shares and instead have your savings repaid to you in full.

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Become a shareholderIn scenario 2, you could also choose to keep some or all of your shares. You can then become a shareholder in Royal Mail, or increase your shareholding, if you already own Royal Mail shares.

As a shareholder, you will then benefit from any future dividends we may pay to shareholders and any potential future growth in the share price.

If and when you come to buy shares at the end of the savings term, you can only buy whole shares. This means you may have a small amount of money left over at the end of the savings term which is not enough to buy a whole share. This money, known as a residue payment, will be returned to you. You can find more details about residue payments in the jargon buster on pages 20 and 21.

Here are two possible scenarios. These are examples only.

Scenario 1If the share price has dropped by 90p after three years, in other words, £3.35 per share

In this scenario, the shares you could buy with your SAYE savings would be worth less than the money you have saved. As a result, you would not make a profit by using your savings to buy shares and selling them immediately.

However, under SAYE schemes, you can always have your savings repaid to you in full.

Scenario 2If the share price has increased by 50p after three years, in other words, £4.75 per share

If you exercised your option and used all your SAYE savings to buy shares, and then sold them immediately, you would make a profit of £486. (Please see the note at the bottom of the page.)

360 shares x £4.75 = £1,710

£1,710 - £1,224 = £486

You would benefit from the initial 20% discount, plus the added benefit of selling your shares at a higher share price.

1 2

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Note

The figure of £486 is before any deduction of sales commission or dealing fees which you will have to pay. Equiniti can tell you about the relevant dealing fees when you sell. This figure also does not take into account any capital gains tax you may have to pay. Please see page 20 for more details.

How to apply

If you want to take part in our SAYE scheme, there are four simple ways you can apply.

By joining the SAYE scheme you acknowledge that we will transfer your personal information outside of Royal Mail. However, you will have the right to make changes to this information using the People System Portal (PSP) or by contacting HR Services if you don’t have access to PSP. HR Services will then pass these details to the scheme administrator, Equiniti.

All you need to do is decide how much you want to save every time you are paid and then choose how you want to apply.

Important: If you apply by Freephone or by text message and are paid weekly, you will need to multiply the figure you want to save every time you are paid, by four. For example, if you want to save £6.25 a week, multiply this figure by four (6.25 x 4 = 25). This will equal £25. This shows how much you want to save on a monthly basis and is the figure you should say on your call or enter on your text message.

If you join SAYE, your savings amount will be deducted every time you are paid (weekly or monthly). However, any confirmation you receive, either by email, text message or Freephone will show (or say) the amount you are saving from your net pay every month.

Your Employee Shares AccountYour option certificate, which you will receive from Equiniti at the end of October 2014, will confirm the monthly amount you are saving (even if you are paid weekly).

Once you have received your option certificate, your Employee Shares Account (www.royalmailemployeeshares.co.uk) will also show the monthly amount you are saving under SAYE (even if you are paid weekly).

You can save the following amounts:

If you are paid weekly – between £1.25 and £25 a week in multiples of 25 pence.

If you are paid monthly – between £5 and £100 a month in multiples of £1.

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Important – If you are a first-time user, we will send you an activation code after you have registered for your Employee Shares Account. However, you do not need this to apply. You will need the activation code in the future so you can fully access your account and see details of your SAYE scheme, as well as any other shareholdings you may have in Royal Mail.

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PaperFill in the enclosed SAYE application form, sign and date it and return it as soon as possible in the pre-paid envelope enclosed in this mailing. Please make sure you fill in the form correctly and use black ink only.

We will not acknowledge that we have received your application form. We and Equiniti cannot be held responsible if we do not receive your form.

OnlineTo apply online, please visit www.royalmailemployeeshares.co.uk to access your Employee Shares Account.

Already registered for your Employee Shares Account?If you have accessed your account before, please log in from the Welcome page by entering your log-in details. Once you have logged in, you can apply for the SAYE scheme by clicking on the ‘Manage my SAYE Applications’ link. You can still apply without entering an activation code, even if you are asked to do so.

New to the Employee Shares Account?If you have not registered for an account before, you will need to register as a first-time user and follow the five registration steps. To register, you will need your National Insurance number which is shown on your payslip. Once you have registered, you can then apply for SAYE using the links available.

Once you have applied, Equiniti will send you a confirmation email to the email address you used when registering for your Employee Shares Account. This confirmation will show the amount you will be saving every month (even if you are paid weekly).

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Text message To apply by text, you can send a message to 84247. In your text message, you must include the following information in this exact format, including all spaces shown below.

Step 1: Enter RM3 [SPACE] Step 2: Enter your pay number shown on your payslip including

any leading zeros, if this applies [SPACE]Step 3: Enter your date of birth in the following format,

DDMMYYYY [SPACE]Step 4: Enter the amount you want to save per month under SAYE,

not including any decimals or pound signs. If you are paid weekly, decide how much you want to save each week and multiply this figure by four.

Here is an example:You were born on 25 June 1970, with a pay number of 01234567 and you want to save £25 a month (or £6.25 a week).

You would enter the following information in the following format. RM3 01234567 25061970 25

You will receive a text message confirming your application and the total monthly amount you want to save. You should review and save this message until you receive your option certificate from Equiniti at the end of October 2014. If the format of your application text message is not correct, you will receive a message telling you what to do.

FreephoneTo apply by Freephone, call 0800 012 12 13 and follow the instructions of the automated telephone application service. Calls are free from a BT landline, but other network providers may charge.

The call should take no more than three minutes and you can make it at any time of the day. You will need your pay number, which is shown on your payslip, and your date of birth when you call. If you are paid weekly, before you call, decide how much you want to save each week and multiply this figure by four. The service will request the amount you want to save on a monthly basis (even if you are paid weekly) and you will be prompted to confirm this amount. At the end of the call you will need to take a note of your reference number. You will need this to confirm your application, if you have any questions.

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Frequently asked questions

Who can join Save As You Earn?All employees of Royal Mail Group Limited with three months’ continuous service from Monday 2 June 2014 to Monday 1 September 2014 can join the scheme. You must still be employed when options are granted to be able to take part in the scheme.

How do I save?If you decide to take part in SAYE, we will make deductions from your net pay every time you are paid during the savings term.

We transfer this money to Equiniti, the scheme administrator. Equiniti then pays this into a special SAYE account in your name, set up with Lloyds Bank plc.

How much can I save?If you are paid weekly, you can save between £1.25 and £25 a week, in multiples of 25 pence. If you are paid monthly, you can save between £5 and £100 a month, in multiples of £1. For details of how you can apply, please see pages 10, 11 and 12.

Does it make a difference if I’m a part-time employee?No, the minimum and maximum amounts you can save every time you are paid are the same whether you are a full-time or part-time employee.

What is the option price?The option price is the discounted share price set when we launched SAYE. The option price is based on the average mid-market closing prices of a Royal Mail plc share on the London Stock Exchange on 27, 28 and 29 August 2014, discounted by 20% (rounded up to the nearest pence). The option price is shown on the invitation letter enclosed in this mailing and is also available at myroyalmail.com/saye. At the end of the savings term, we will give those taking part in SAYE the opportunity to buy Royal Mail plc shares at the option price.

When will my payments start?We will take the first payment from your net salary in November 2014 with the savings contract starting on 1 December 2014. If you are paid weekly, we will take the first payment from your net pay in the week beginning 3 November 2014. If you are paid monthly, we will take the first payment from your November net salary, due to be paid to you on 28 November 2014.

Will I receive any interest or a bonus on my savings?In line with current rules set by HM Revenue & Customs, there will be no interest or bonus paid at the end of our three-year savings term.

When does the savings term start and finish?Your savings term will start on 1 December 2014 and will normally end on 1 December 2017, unless you have taken a payment holiday (see page 17 for more information on payment holidays).

If you are paid weekly, saving deductions from your net pay will start in the week beginning 3 November 2014. If you are paid monthly, saving deductions from your net pay will start on 28 November 2014.

If you are paid weekly, saving deductions from your net pay will stop in the week beginning 31 July 2017 (unless you take a payment holiday). If you are paid monthly, saving deductions from your net pay will stop on 31 October 2017 (unless you take a payment holiday).

If you are paid weekly, you will usually finish your saving deductions before those paid monthly in terms of payments made into the scheme. This is because you will pay an extra four weeks’ worth of payments every calendar year (because of five-week months).

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What happens about tax?In most circumstances you won’t have to pay income tax or National Insurance on your shares when you buy them, even though you will have been able to buy the shares for 20% less than the share price on the stock market when the scheme launched. However, you may have to pay capital gains tax (CGT) on any gain made between the option price and the market price when you sell the shares. Every person has a yearly CGT allowance. You will not have to pay CGT on any gains you make below your yearly allowance. For 2014-2015, the CGT allowance is £11,000.

How will I know how much is in my savings account?Equiniti will send you a statement every December on behalf of Lloyds Bank plc showing you how much money you have saved.

Or, you can view your savings via your Employee Shares Account at www.royalmailemployeeshares.co.uk. Or, you can call the Employee Shares Helpline using the contact details on the back page.

You should also always check the deductions section of your payslips to make sure your payments are being made.

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What happens if I’m on zero pay or my pay goes to zero (for example, extended maternity leave, unpaid absence)?If you are currently on zero pay, you can still apply and make payments by standing order until you return to work.

If you join SAYE and then your pay goes to zero, you can miss up to six monthly (or 24 weekly) payments during the three-year savings term. If you go on maternity leave or long-term absence and still want to make payments into the SAYE scheme, you can do so by standing order direct to Lloyds Bank plc. Please contact Equiniti for information, using the contact details on the back page.

If you miss any payments, it may delay the completion of the savings term. You cannot bring the account up to date by making a lump-sum payment at the end. If you miss more than six months’ payments (or the equivalent of 24 weeks if you are paid weekly), your account will be automatically closed, your savings will be returned to you in full and you will lose the opportunity to buy any shares at the option price. If you want to take a payment holiday, please call Equiniti, using the contact details on the back page.

How many shares will I be able to buy at the end of the savings term?This depends on: how much you save; whether we need to scale back applications; and the option price. However, before your savings contract starts, Equiniti will send you an option certificate which will show the date your option was granted, the number of shares that you can buy, the price at which you can buy them (option price) and when you can buy them, not including any payment holidays you may take. You will receive this at the end of October 2014.

Are my SAYE savings protected?Yes, savings held with Lloyds Bank plc are protected. You can find out how they are protected through the Financial Services Compensation Scheme. Please visit www.fscs.org.uk for more information.

Can I stop saving? You can take your savings back at any time. However, if you do, you will lose the option to buy any shares at the option price. Your savings will be repaid into the bank account your net salary is paid into. You will not be able to re-join the scheme unless we make further offers under SAYE. After this year’s award, we have no current plans to make other SAYE awards.

If you want to stop saving, you can:

• call the Employee Shares Helpline (see the back page) quoting your SAYE reference number (if available), or your pay number and National Insurance number;

• go to your Employee Shares Account at www.royalmailemployeeshares.co.uk and fill in the online cancellation form; or

• fill in the back of your option certificate and send it to Equiniti using the contact details on the back page.

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Can I change my savings amount?If you apply online, by text message or by Freephone, you can change your savings amount by reapplying before the closing date (in other words, before 5pm on 18 September 2014). If you apply using the enclosed paper application form, you cannot change the amount you have chosen to save after you have posted it.

After the closing date, you cannot change your savings amount.

You should think carefully about how much you can afford to save before making your application.

When can I buy my shares?You can buy your shares (exercise your option) within six months of the end of the savings term. The savings term will normally end on 1 December 2017, if you have not taken any payment holidays. Your opportunity to buy shares at the option price will automatically end if you do not choose to buy your shares within six months of your savings term ending. Equiniti will write to you with full details when your savings term is due to end.

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Could my application be scaled back?If there is greater demand for the SAYE scheme than the number of shares available (it is oversubscribed), we will reduce everyone’s SAYE application (scale back) by the same percentage, unless this reduction takes you below the minimum savings amount. In this case, your application would be reduced to the minimum savings amount.

If you choose to only save the minimum amount every time you are paid, we would not scale back your application.

Your option certificate will confirm the amount you will save every month (even if you are paid weekly) and the number of shares over which you have been granted an option.

How can I sell my SAYE shares?We expect that our scheme administrator, Equiniti will arrange to sell your shares if you choose to sell them straightaway using a special share-dealing service. This would usually be available for up to six months after the savings contract ends on 1 December 2017. If you decide to keep some or all of your shares and you sell them at some time in the future, you will have to make your own arrangements for selling these shares, using a stockbroker or share-dealing service. Equiniti Financial Services Limited offers a dealing service to shareholders.

You can find more information on www.shareview.co.uk. The vast majority of employees can sell their shares at any time, unless any relevant dealing restrictions apply.

Will I receive dividends?You will not receive a dividend under SAYE during the savings term. If you choose to use your savings to buy shares at the end of the savings term and keep them, you will be eligible for any dividend we may pay.

Can I take a payment holiday? Current legislation states that you can postpone up to six monthly payments. Postponing a payment into your SAYE account is known as taking a payment holiday. However, each monthly payment missed will mean your savings term is extended by a month, so your SAYE scheme will finish later.

For example, if you take four monthly payment holidays during the savings term, your savings term would finish four months later than the original finish date of 1 December 2017.

If you are paid on a weekly basis, the same legislation applies and you may only postpone up to six months’ worth of payments. This is equivalent to 24 weeks.

You can call the Employee Shares Helpline (see the back page) to find out what effect missing a payment will have on your SAYE account or to ask for a payment holiday. You will need to tell Equiniti beforehand if you want to ask for a payment holiday.

If you leave before you exercise your option, there are various outcomes depending on your reason for leaving. If you do leave, you will receive a letter explaining your choices.

What happens if I leave Royal Mail?

If you:

• are made redundant;

• retire; or

• leave work due to injury or disability.

You can:

1. exercise your option to buy shares within six months of your date of leaving, using the money that you have already saved, to which you can add up to a further six monthly payments; or

2. withdraw your savings and not use them to buy shares at the option price; or

3. carry on saving until the normal end of the savings term but lose the option to buy shares at the option price if this is beyond six months after you leave.

If you leave for any other reason:

• for example, you resign; or

• do not return from maternity leave, and so on.

You will lose the option to buy shares at the option price. However you can either:

1. withdraw your savings immediately; or

2. carry on saving until the end of the savings term.

If there is a change of control of Royal Mail, or the company or business you work for is sold.

If we are taken over or the company or business you work for is sold, special rules apply. We will tell you about the choices you will have at that point. Your savings are your own and are totally separate from our finances.

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If you:

• die while an employee (or at a time when you can buy shares under option after leaving employment).

Your savings contract will automatically stop. So:

1. if you die before the savings term finishes, your personal representatives can use the money you have saved to exercise your option to buy shares at the option price within 12 months of the date of your death; or

2. if you die in the six months after the savings term finishes, your personal representatives can use the money you have saved to exercise your option to buy shares at the option price within 12 months from the date of the savings term finishing.

Alternatively, your personal representatives can withdraw your savings.

If you:

• want to stop saving and cancel your SAYE contract.

You may cancel your SAYE contract and withdraw your savings at any time by:

1. filling in the back of your option certificate and returning it to Equiniti;

2. calling the Employee Shares Helpline to ask to cancel; or

3. going to your Employee Shares Account at www.royalmailemployeeshares.co.uk and filling in the online cancellation form.

Equiniti will tell HR Services that you have cancelled your scheme and to arrange for deductions to be stopped from your net salary. Your savings will be repaid in full to the bank account your net salary is paid into. If you leave the scheme, you will not be able to re-join it and will lose your option to buy shares at the option price.

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Jargon buster

Capital gains tax (CGT)A tax that is normally paid on any gains made when shares are bought and sold. You may have to pay CGT on any gain made between the option price and the market price when you sell the shares. Every person has a yearly CGT allowance and you will not have to pay CGT on any gains you make below your allowance. For 2014-2015, the allowance is £11,000.

DividendA dividend is a portion of a company’s profits that it pays to its shareholders. Our Board decides when and how often we will pay dividends to shareholders, and how much these will be. Those taking part in SAYE will not receive a dividend during the savings term.

EquinitiEquiniti Limited, the company we have chosen to administer the SAYE scheme.

Eligibility periodYou need to have been employed by Royal Mail Group Limited for a set period of time to be eligible to join our SAYE scheme.

Exercising your optionUsing your savings at the end of the SAYE scheme to buy shares at the option price.

Grant dateThis is the date when we set (grant) the number of shares you will have the option to buy at the end of the savings term. This is based on the amount you choose to save every time you are paid. The grant date is likely to be 25 September 2014.

Granting an option or options are granted This is the formal process where we give you a right to buy a number of shares in the business which is usually made on a set day as governed by the scheme rules. The granting of options is approved by our Board.

Market priceThe price at which Royal Mail plc shares are being traded on the stock market at any particular time. This price changes throughout a normal trading day.

Net pay or salaryThis is your pay (salary) after income tax, National Insurance and other deductions have been paid.

Option certificate This is the formal document that you will receive after we have granted options and includes information such as the number of shares over which your option has been granted, the option price, savings contract start date, maturity date (the date the scheme ends, not including any payment holidays), date of grant and monthly savings amount (even if you are paid weekly).

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Option priceThis is the discounted share price which is set at the beginning of the SAYE scheme. At the end of the savings term, you have the opportunity to buy the company’s shares at this discounted price.

Payment holidayIf you suspend making a payment into your SAYE account during the savings term, you take a payment holiday. You can take 24 weeks’ worth or six months’ worth of payment holidays during the savings term.

ProspectusThe formal rules set by HM Revenue & Customs covering all savings contracts. The prospectus which applies for SAYE 2014 is available to view once you have logged into your Employee Shares Account at www.royalmailemployeeshares.co.uk

Residue paymentIf you exercise your option, you can only buy whole shares. This may result in you having a small amount of money left over at the end of the savings term which is not enough to buy a whole share. This money will be returned to you. The amount of money left over (if any) will depend on how much you choose to save every time you are paid, the option price and when you exercise your option.

Savings contractA set period of time which employees agree to save for under SAYE. This allows them to buy shares, if they want, at the option price following the end of the savings contract.

Savings termUnder an SAYE scheme, for a fixed period, you save a fixed amount direct from your net salary. Our savings term lasts for three years.

SAYEA voluntary tax-efficient cash saving scheme that gives you an option in the future to buy shares in the company you work for. Under the scheme, for a fixed period, you save a fixed amount direct from your net salary.

Scale backIf there is greater demand for the SAYE scheme than the number of shares available (it is oversubscribed), we will reduce everyone’s application (scale back) by the same percentage, unless this reduction takes you below the minimum savings amount. In this case, we would reduce your application to the minimum savings amount. If you choose only to save the minimum amount every time you are paid, we would not scale back your application.

ShareA share is a single unit of ownership in a company.

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If there is any inconsistency between this guide and the terms and conditions of the SAYE scheme, the rules of the SAYE scheme or tax legislation shall take priority over this guide.

PLEASE NOTE THE PRICE OF SHARES AND ANY INCOME FROM THEM MAY GO DOWN AS WELL AS UP.

SCHEME TERMS AND CONDITIONS

DEFINITIONS‘We’, ‘our’ or ‘us’ refers to Equiniti Limited (‘Equiniti’) in relation to all administrative matters (including Electronic Applications) and to Lloyds Bank plc (‘the Bank’) in relation to the Scheme Account. In the sections about Data Protection and Conflicts of Interest ‘we’, ‘our’ or ‘us’ refers to both Equiniti and the Bank.

ABOUT LLOYDS BANK PLCThe Bank is incorporated in England and Wales and is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under reference 119278. The main business of the Bank is banking. Registered Office: 25 Gresham Street, London, EC2V 7HN, United Kingdom. Registered in England and Wales no. 2065.

ABOUT EQUINITI LIMITEDEquiniti is part of the Equiniti group of companies. Registered address: Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, United Kingdom. Registered in England and Wales no. 6226088.

DATA PROTECTIONIn accordance with the Data Protection Act 1998 you are entitled, on payment of a fee, to a copy of the information we hold about you. You should let Equiniti know if you think any information we hold about you is inaccurate, so that we may correct it.

The information we hold about you is confidential and will only be disclosed outside of Equiniti or the Bank in the following circumstances:

• where the law permits or it is in the public interest

• to investigate or prevent fraud

• to our agents in connection with running accounts and services for you

• at your request or with your consent

• to any party to this agreement or their delegates so that they may update their own records about you, and

• to our successors or assignees and their agents in connection with the ongoing running of accounts and services for you.

You specifically consent to the sending of data outside the European Economic Area (EEA) in connection with the running of your Scheme Account. These countries may not have the same laws to protect your information but Equiniti will ensure that the same level of protection is provided as required by English Law.

Equiniti may store, use and process your personal information in order to:

• assess your application to participate in this service

• provide you with services

• keep our records about you up to date

• check your identity

• prevent and detect fraud and/or money laundering

• recover debts, and

• carry out research and statistical analysis about our services and how we might improve them. Sometimes Equiniti may use an outside market research agency to do this, in which case Equiniti under takes to ensure that they appropriately protect any personal customer data Equiniti shares with them.

To ensure security for customers and staff and to help maintain service quality, some telephone calls may be recorded or monitored.

In accordance with the Money Laundering Regulations we may require verification of your identity, or that of the third party provider. We may conduct searches of databases and other credit data in order to do this or we may need to ask you to provide proof of your identity, or that of the third party provider. This may lead to a delay in carrying out your instruction, a delay in payment of your sale proceeds to you, or result in your instruction being rejected. We will not be liable for any loss which may result from this.

EUROPEAN UNION (EU) SAVINGS TAXATION DIRECTIVEYou understand that under the EU Savings Taxation Directive (EUSD) if you are or become resident in an EU member state (other than the United Kingdom) or another territory that is subject to the EUSD, the Bank will be obliged to pass certain information about any payment of savings income made to you, to HM Revenue and Customs (‘HMRC’). HMRC may pass this information on to the relevant tax authority in your country of residence. This information may include (but may change from time to time as prescribed by the legislation) the amount of any applicable interest/bonus paid to you, your name, address and country of residence.

You understand that the Bank may need to contact you if further information is required which may include (but may change from time to time as prescribed by the legislation) your Tax Identification Number or date and place of birth including town and country. The Bank may also require evidence of such information but will notify you in writing of any specific requirements.

You understand that the Bank may only be liable for any loss incurred as a result of incorrect determination of residency which results in the Bank making an incorrect EUSD disclosure to HMRC.

YOUR CANCELLATION RIGHTSYour right to cancel exceeds your cancellation rights under the law. You are able to cancel your participation in the Scheme at any time by giving any instructions to Equiniti.

CONFLICTS OF INTERESTWe may possibly carry out transactions with you or for you upon the exercise of your option in which we or an associate deal as principal or agent or otherwise have a material interest or a relationship with another party which might involve a conflict with our duty to you or result in a payment being received by us or an associate. We will not be able to consult you about this but will try to ensure that the terms of any transaction are as favourable to you as those carried out with a third party at arm’s length.

HOW TO COMPLAINIf you have any complaints about the service we provide under this agreement you may complain to us or, if related to a regulated service, to the Financial Ombudsman Service. Your first point of contact should be the following address: Lloyds Bank plc, c/o Equiniti, Service Quality Team, Royal Mail plc, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA United Kingdom.

The options element of the Scheme is not regulated by the Financial Conduct Authority so we believe it is outside the scope of the Financial Ombudsman Service. Therefore details of the Service will not be sent to you.

Complaints relating to the savings element of the Scheme which we cannot settle may be referred to the Financial Ombudsman Service where you are eligible. Full details of how you may complain are available in our brochure which will be forwarded to you with our acknowledgement of your complaint.

ROYAL MAIL PLC SAVINGS-RELATED SHARE OPTION SCHEME 2014 (the ‘Scheme’)IMPORTANT DOCUMENT – PLEASE RETAIN THIS IN A SAFE PLACE

PLAIN ENGLISH CAMPAIGN’S CRYSTAL MARK DOES NOT APPLY TO THE REST OF THIS DOCUMENT.

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The Bank is a member of the Financial Services Compensation Scheme (‘FSCS’) established under the Financial Services and Markets Act 2000.

You may be entitled to compensation from the FSCS if we cannot meet our obligations. This depends on the type of business and the circumstances of the claim. The FSCS covers, for example, Deposit Taking and Sharedealing.

Deposit taking limits may vary, current amounts and a leaflet with further details are available on request from the FSCS. Call their Helpline on 0207 741 4100 or 0800 678 1100, log onto their website at www.fscs.org.uk or write to the Financial Services Compensation Scheme, 10th Floor, Beaufort House, 15 St Botolph Street, London, EC3A 7QU United Kingdom. Please note only compensation related queries should be directed to the FSCS. Alternatively, log onto www.lloydsbank.com for further information about the compensation scheme.

ABOUT THESE TERMS AND CONDITIONSThese terms and conditions are governed by English Law. You agree that legal action relating to this agreement may only be dealt with by the courts of England and Wales. Any contact made by us and you in relation to these terms and conditions will be in the English language. All instructions and notices to us under the terms and conditions must be given to us in accordance with the Rules of the Scheme. The above conditions do not affect your statutory rights. For further information about your statutory rights contact your local authority Trading Standards Department or Citizens Advice Bureau.

Minor amendments to these terms and conditions may be made (e.g. in case of errors or omissions) and will be advised via the annual statement. We will give you not less than 30 days’ notice of any material change, unless it is impractical to do so.

TEXTEL/MINICOM SERVICE NUMBER 0800 011 3649(or +44 121 415 7028 if calling from outside the United Kingdom)

If you would like these terms and conditions in an alternative format, for example Braille or audio tape, please contact our free Employee Shares helpline on 0800 012 12 13.

TO ROYAL MAIL PLC (‘the Company’)1. In accordance with the Rules of the Scheme, I hereby apply to

the Company for an Option to acquire shares in the Company with the proceeds of my savings contract with the Bank including any applicable bonus payable. I declare that I agree to be bound by the Rules of the Scheme; and memorandum and articles of association of the Company.

2. I authorise my employing company or successor companies to deduct from my pay the amount of savings that I have indicated.

3. I authorise the Company to reduce the amount of contributions (and amend my instruction accordingly) under the Rules of the Scheme if there are insufficient shares available to satisfy all applications in full.

4. I agree that the administration of the Scheme will be carried out by Equiniti in conjunction with the savings carrier, the Bank, and that Equiniti, the Bank and the Company can share information collected in connection with the administration of the Scheme.

TO LLOYDS BANK PLC5. I apply to open a Scheme Account with the Bank and to save the

amount indicated. I authorise the Bank to provide the Company with information relevant to the Scheme. These instructions remain in force until cancelled by me by giving notice in writing or otherwise as detailed under the Rules of the Scheme and I agree to be bound by the terms and conditions provided.

The deductions under this contract shall not start earlier than November 2014 with a contract start date of 1 December 2014. A total of 36 monthly payments must be made under a 3 year contract to complete the relevant savings contract. I acknowledge that when my application to open a Scheme Account has been accepted, the terms and conditions provided will apply. I acknowledge that the Scheme Account may be administered by Equiniti on behalf of the Bank.

A copy of the prospectus has been made available on www.royalmailemployeeshares.co.uk or as detailed in the accompanying literature, and I accept the terms thereof. I declare:

a. that I am 16 years of age or over

b. that I am eligible to participate in the Scheme relevant to this application which has been arranged by my employer

c. that this application will not breach the monthly savings limit of £500 across all Sharesave Schemes.

ELECTRONIC APPLICATIONS (Internet, Telephone or Text Message)If I apply to participate in the Scheme using the electronic facility provided, the following provisions will apply to the application:

a. The Company and/or Equiniti have the right to withdraw the electronic application facility at any time.

b. The Company and/or the Bank may insist on a written application instead of an electronic application.

c. If I submit multiple applications, either through the same channel or by multiple channels, the most recently dated application (that is received prior to any published closing date) will be given precedence. I acknowledge that if I apply in writing, I should allow 5 days from receipt of the application before the information in it is processed and displayed. I acknowledge that if I apply by telephone or text, the application will be processed and displayed by the end of the following working day. I understand that if I apply by multiple channels then any instruction displayed in my Employee Shares Account may not be the most recent transaction.

d. The information that I provide to gain access to the service together with my acceptance of the terms and conditions will, when I confirm my application, constitute my electronic signature.

e. The Company and/or Equiniti may allow me to modify my application using the electronic application facility. If so, they may implement a cut-off date, after which I will no longer be able to modify my application.

f. Excess demand on the service and circumstances beyond the Company’s and/ or Equiniti’s reasonable control may mean it is not always possible to use the electronic application facility.

g. The Company and/or Equiniti will take reasonable steps to ensure that the electronic application facility is available but they are not responsible for systems beyond their reasonable control or any incompatibility between my systems and the electronic application facility.

h. I acknowledge that the electronic application facility enables me to give instructions to Equiniti on behalf of the Bank.

i. If I subscribe for Equiniti Shareview, portfolio creation service or ESP Portal, or any other service in connection with the Scheme, Equiniti will be entitled to use and process the information.

PROSPECTUS: 28 July 2014 BANK CERTIFIED SAYE SAVINGS ARRANGEMENT

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Contacts

AdministratorEquiniti is our SAYE scheme administrator. If you still have any questions after reading this guide, you can get more information by contacting them.

Address:Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, United Kingdom

Employee Shares Helpline:0800 012 12 13 (or +44 121 415 0268 if you are calling from outside the United Kingdom). See below for the opening hours.

Live Chat:You can also log into Live Chat at www.myroyalmail.com/employee-share-offers and speak live to a share scheme expert.

During the invitation period (1 to 18 September 2014), experts will be on hand to answer any questions from 7.30am to 10pm, Monday to Friday and 9am to 1pm on Saturdays. Once the invitation period has ended, normal opening hours of 8.30am to 5.30pm, Monday to Friday, will resume.

Textel or Minicom number:0800 011 3649 (or +44 121 415 7028 if you are calling from outside the United Kingdom). See below for the opening hours.

If you would like this guide in a different format, for example, in large print, in Braille or on audio tape, please contact the Royal Mail Employee Shares Helpline on 0800 012 12 13.

Important note: Calls to the Employee Shares Helpline are free. During the invitation period (1 to 18 September 2014), the helpline is open from 7.30am to 10pm, Monday to Friday, and 9am to 1pm on Saturdays. Calls are free from a BT landline, but other network providers may charge. Once the invitation period has ended, normal opening hours of 8.30am to 5.30pm, Monday to Friday, will resume.