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Terms of Reference for the Audit Committee

Terms of Reference for the Audit Committee


Terms of Reference for the Audit Committee

1. Constitution

The board of directors of the Company (the “Board”) has resolved to establish a committee of the Board to be known as the Audit Committee.


2. Membership

2.1 The Audit Committee will be appointed by the Board from amongst the non-executive directors of the Company on the recommendation of the Nomination Committee, and will have at least two members. The Chairman will be appointed by the Board. The quorum is two members.

2.2 The majority of members will be independent of management and free of any business or other relationship (including without limitation, cross-directorships or day to day involvement in the management of the business) that could interfere with the exercise of their judgement.

2.3 Appointments shall be for a period of up to 3 years, extendable by no more than 2 additional 3-year periods, so long as members continue to be independent.

2.4 At least one member of the Audit Committee is required to have significant and relevant financial experience, preferably supported by a professional accounting qualification.

2.5 The Audit Committee will ensure that new members of the Audit Committee are subjected to a formal induction programme, and that each member is provided with such training as may be considered appropriate subject to prior formal approval of the Board


3. Attendance

3.1 Only members will have a right of attendance at Audit Committee meetings. However, unless otherwise specified for a particular meeting or meetings, the Chief Executive Officer, Chief Financial Officer, and one or more representatives of the external auditors will be automatically invited to attend and participate in meetings. Other person(s) as the Audit Committee may decide can be invited to attend and participate in specific meetings. At least once a year the Audit Committee will meet with the external auditors without executive Board members present.

3.2 Telephone meetings are permissible.

3.3 The Company Secretary will be the secretary of the Audit Committee.


4. Frequency of meetings

Meetings should be held not less than three times a year, and at such other times as may be requested by a member of the Audit Committee. The external auditors may request a meeting if they consider that one is necessary.


5. Authority

5.1 The Audit Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek any information it requires from any employee and all employees will be directed to co-operate with any request made by the Audit Committee.

5.2 The Audit 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.


6. Duties

6.1 The duties of the Audit Committee are:

6.1.1 To consider the appointment, re-appointment and removal of the external auditors, the audit fee, their terms of engagement, and the investigation of any issues giving rise to their resignation;

6.1.2 To discuss with the external auditors, before the audit commences, the nature and scope of the audit, and to ensure co-ordination where more than one audit firm is involved;

6.1.3 To review on at least an annual basis the effectiveness of the audit and the qualification, expertise, resources and independence and objectivity of the external auditor taking into consideration relevant UK professional and regulatory requirements and the internal quality control procedures of the external auditors;

6.1.4 To develop and implement policy, where needed, on the engagement of the external auditors to supply non-audit services, taking into account relevant ethical guidelines regarding the provision of non-audit services by the external auditor;

6.1.5 To monitor the integrity of the financial statements of the group and any formal announcements relating to the group’s financial performance, reviewing significant financial reporting issues and judgements contained therein;

6.1.6 To review the findings and discuss problems and reservations arising from the interim and final audits and any matters the auditors wish to discuss (in the absence of management where necessary) including major issues subsequently resolved or left unresolved, key accounting and audit judgements, and levels of errors identified during the audit;

6.1.7 To review the audit representation letter before signature by management and the management letter and management’s response;

6.1.8 To review, on behalf of the Board, the group’s system of internal control (including financial, operational compliance and risk management);

6.1.9 To review on at least an annual basis the need for an internal audit function and, where such a function exists, approve the appointment or termination of appointment of the head of internal audit, review the internal audit programme, ensure co-ordination between the internal and external auditors, ensure that the internal auditor has direct access to the Board Chairman and the Audit Committee and is accountable to the Audit Committee, periodically receive a report on the results of the internal auditor’s work, meet with the head of internal audit at least once a year without the presence of management, monitor and assess the role and effectiveness of the internal audit function in the overall context of the group’s risk management system, and ensure that the internal audit function has adequate resources and maintains an appropriate standing within the group;

6.1.10 To consider the major findings of internal investigations and management’s responsiveness to the internal auditors findings and recommendations;

6.1.11 To give consideration to dividend policy and payments;

6.1.12 To review the group’s operating, financial and accounting policies and practices;

6.1.13 To review arrangements by which staff of the group may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters, with the objective of ensuring that arrangements are in place, where required, for the proportionate and independent investigation of such matters and for appropriate follow-up action;

6.1.14 To review annually its terms of reference and its own effectiveness;

6.1.15 To consider other topics, as determined by the Board; and

6.1.16 To report on all of the above matters to the Board, identifying any matters in respect of which it considers that action or improvement is needed and making recommendations as to the steps to be taken.


7. Reporting procedures

The secretary of the Audit Committee will circulate the minutes of meetings of the Audit Committee to all members of the Board.


8. Annual General Meeting

The Chairman of the Audit Committee shall attend the Annual General Meeting to answer questions, through the Chairman of the Board, on the report on the Audit Committee's activities and matters within the scope of Audit Committee's responsibility.