Membership

1. The Committee shall be appointed by the Board from amongst the Non-Executive Directors of the Company and shall consist of not less than three members a majority of whom should be independent non-executive directors (INED). A quorum shall be two members.

2. The Chairman of the Committee shall be appointed by the Board and should be an INED.

Attendance at meeting

3. The Finance Director and a representative of the external auditors shall normally attend meetings. Other Board members shall also have the right of attendance.

4. The company secretary shall be the secretary of the Committee.

Frequency of meetings

5. Meetings shall be held not less than four times a year. The external auditors may request a meeting if they consider that one is necessary.

Authority

6. The Committee is authorised by the Board to monitor any activity within its terms of reference. It is authorised to seek any information it requires from any employee and all employees are directed to co-operate with any request made by the Committee. For the avoidance of doubt, the authority of the Committee provided herein shall be extended to the Company’s subsidiaries, and all references to “Company” and “group” in these terms of reference shall include the Company’s subsidiaries.

7. The Committee is authorised by the Board to obtain outside legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary.

Duties

8. The duties of the Committee shall be:

Relationship with the Company’s auditors

(a) to be primarily responsible for making recommendation to the Board on the appointment, reappointment and removal of the external auditor, and to approve the remuneration and terms of engagement of the external auditor, and any questions of resignation or dismissal of that auditor;

(b) to review and monitor the external auditor’s independence and objectivity and the effectiveness of the audit process in accordance with applicable standard, and to discuss with the external auditor before the audit commences, the nature and scope of the audit and reporting obligations; and ensure co-ordination where more than one audit firm is involved;

(c) to develop and implement policy on the engagement of an external auditor to supply non-audit services. For this purpose, external auditor shall include any entity that is under common control, ownership or management with the audit firm or any entity that a reasonable and informed third party having knowledge of all relevant information would reasonably conclude as part of the audit firm nationally or internationally. The Committee should report to the Board, identify any matters in respect of which it considers that action or improvement is needed and make recommendations as to the steps to be taken;

Review of financial information of the Company

(d) to monitor integrity of financial statements of the Company and the Company’s annual report and accounts, half-year report and, if prepared for publication, quarterly report and announcement and to review significant financial reporting judgements contained in them. In reviewing the quarterly, half-year and annual financial statements before submission to the Board, focusing particularly on:
(i) any changes in accounting policies and practices;
(ii) major judgmental areas;
(iii) significant adjustments resulting from the audit;
(iv) the going concern assumptions and qualifications;
(v) compliance with accounting standards; and
(vi) compliance with stock exchange and other legal requirements in relation to financial reporting;

(e) In regard to (d) above:
(i) to liaise with the Board and senior management and the Committee must meet, at least once a year, with the Company’s auditors; and
(ii) to consider any significant or unusual items, that are, or may need to be, reflected in such reports and accounts and must give due consideration to any matters that have been raised by the Company’s staff responsible for the accounting and financial reporting function, compliance officer (where applicable) or auditors;

Oversight of the Company’s financial reporting system and internal control procedures

(f) to review the Company’s financial controls, internal control and risk management systems;

(g) to discuss with the management the system of internal control and ensure that management has discharged its duty to have an effective internal control system including the adequacy of resources, qualifications and experience of staff of the Company’s accounting and financial reporting function, and their training programmes and budget;

(h) to consider any findings of major investigations of internal control matters as delegated by the Board or on its own initiative and management’s response;

(i) (where an internal audit function exists) to review the internal audit programme, ensure co-ordination between the internal and external auditors, and ensure that the internal audit function is adequately resourced and has appropriate standing within the Company, and to review and monitor the effectiveness of the internal audit function;

(j) to review the group’s financial and accounting policies and practices;

(k) to review the external auditor’s management letter, any material queries raised by the auditor to management in respect of accounting records, financial accounts or systems of control and management’s response;

(l) to ensure the Board will provide a timely response to the issues raised in the external auditor’s management letter;

(m) to report to the Board on the matters set out in the Code on Corporate Governance Practices (Appendix 14 to the Listing Rules);

(n) to discuss problems and reservations arising from the interim and final audits, and any matters the auditor may wish to discuss (in the absence of management where necessary);

(o) to review the Company’s statement on internal control systems (where one is included in the annual report) prior to endorsement by the Board; and

(p) to consider other topics, as defined by the Board.

Reporting procedures

9. The secretary shall circulate the minutes of meetings of the Committee to all members of the Board.