Audit Committee : Terms of Reference

To ensure that the Company applies consistent financial reporting and internal control procedures and maintains an appropriate relationship with the company's auditors.

Constitution:

The members of the Committee will be Independent Non-Executive Directors appointed by the board on the recommendation of the Nomination Committee. Committee membership will initially be for 3 years and can be subsequently extended by up to 2 additional 3 year periods, as long as members continue to remain independent. The committee shall consist of at least three members and the quorum shall be two. The Chairman of the Board shall not be a member of the Committee.

At least one member of the committee should have recent and relevant financial experience.

The Company Secretary will act as Secretary to the Committee, ensuring papers are distributed and minutes of decisions are maintained.

The Committee shall invite members of management, external auditors and internal auditors to attend its meetings as it thinks fit.

Duties:

With the exception of the quarterly trading statements, which are approved by a subcommittee of the board, examine all formal announcements relating to financial performance including annual and half yearly financial statements and preliminary announcements before submission to the Board including:

Considering the appropriateness and application of accounting policies, compliance with accounting standards, stock exchange, legal and regulatory requirements, including any changes in accounting standards in the period
Considering any significant adjustments proposed by the auditors during their review and any matters of significant disagreement between auditors and management
Considering and concluding on the treatment of any other major judgmental items
Considering the appropriateness of the going concern assumption
Reviewing the disclosure of the principal risks in the business and the associated corporate governance statement regarding internal controls and compliance with the Combined Code
Reviewing the clarity and completeness of disclosures in the financial statements and considering whether the disclosures made are set properly in context
Considering whether the financial statements provide a true and fair view

Recommend to the board for approval by the shareholders the appointment of the external auditor and monitoring thereafter the relationship including:

Considering the audit fee, fees for non-audit work and any questions of resignation, dismissal and independence
Approving their engagement letter, including any issued at the start of an audit
Considering the nature, scope and materiality of the audit, ensuring that there are no restrictions on the audit scope
Reviewing the external auditor's management letter and management's response
Agreeing with the Board a policy on the employment of former employees of the Auditor
Monitoring the Auditors compliance with relevant ethical and professional guidance on the rotation of partners
Reviewing any representation letters requested by the Auditors before they are signed by management
Defining a formal policy specifying the types of non-audit work that the auditors are excluded from; can be engaged without referral to the Committee; and for which a case by case decision is necessary
Reviewing the effectiveness and objectivity of the audit process on an annual basis, the quality control procedures and consider the expertise and resources of the auditor
Meeting at least annually with the external auditor, without management being present, to discuss their remit and any issues arising from the audit
Considering communications from the external auditor on audit planning and findings and on any material weaknesses in accounting and internal control systems that came to the auditors attention

Monitoring and reviewing the company's internal controls and risk management including:

Reviewing the internal control and risk management systems
Considering reports from management on the effectiveness of the systems they have established and the conclusion of any testing carried out by internal or external auditors

Monitoring and reviewing the effectiveness of the company's internal audit function including:

At least annually reviewing and approving the internal audit programme
Approval of the appointment or dismissal of the head of Internal Audit
Considering the terms reference for internal audit
Reviewing internal audit reports and procedures to ensure the implementation of recommendations including management responses thereto
Assessing the adequacy of resourcing of the internal audit function
Considering the terms of the outsourcing arrangements for the conduct of the internal audit programme
Meeting at least annually with the head of internal audit without management being present to discuss their remit and any issues arising from audits carried out. In addition the head of internal audit will have direct access to the Chairmen of both the Board and the Committee

Ensuring compliance with laws, regulations, ethical and other issues including:

Evaluating the effectiveness of processes for determining risks and exposures to litigation and claims and from non-compliance with laws and regulations
Considering the appropriateness and treatment of any non-standard financing structures
Reviewing with the group's lawyer and others any legal, tax or regulatory matter that may have a material impact on the group's operations or financial statements
Ensuring that the Company maintains suitable arrangements for its employees to raise concerns, in confidence, about possible wrongdoings in financial reporting or other matters, and reviewing reports of such occurrences.
Considering fraud or ethical issues
In areas where the Audit Committee has responsibility for monitoring compliance with internal policies and procedures they will review the relevant policies annually or when there is a significant change and will annually assess compliance with those policies
Considering other topics as defined by the Board

Monitoring and evaluating the performance of the Audit Committee and making recommendations to the Board with regard to any necessary adjustments

Reporting its activities to the Board on a regular basis and annually reviewing these Terms of reference

Preparing a report for inclusion in the Annual Report detailing:

a summary of the role of the audit committee
the names and qualifications of all members of the audit committee during the period
the number of audit committee meetings
the way the audit committee has discharged its responsibilities
how the policy for non-audit services was applied to safeguard the auditor objectivity and independence

Adopted 23 July 2008

Audit Committee : Terms of Reference

Our Business

Our Markets