Audit committee

Constitution

1. The members of the Audit Committee and the Chairman of the Audit Committee will be appointed or removed by the Board of the Company from time to time.

2. The Audit Committee shall be constituted as a sub-committee of the Board of the Company. It shall consist of a minimum of 3 members, membership being confined to independent non-executive Directors at least one of whom will have recent and relevant financial experience.

3. The quorum for decisions of the Audit Committee shall be any 2 members.

Purpose

4. The overall purpose of the Committee shall be:-

4.1 to ensure that the Company’s accounting and financial policies and controls are proper and effective;

4.2 to ensure that internal and external auditing processes are properly co-ordinated and work effectively; and

4.3 to ensure the integrity and clarity of the financial statements and information published by the Company.

Procedure

5. The Finance Director will normally attend all of or part of meetings of the Audit Committee. Other members of the Board may be invited to attend by the Committee. At least twice a year representatives of the Company’s External Auditors shall meet the Audit Committee without any executive Directors being present.

6. The Audit Committee shall meet at least three times a year, including at least two meetings a year with the Company’s External Auditors and at least one meeting a year with the Company’s Internal Auditors. The Company’s External Auditors or Internal Auditors may request a meeting if they consider it necessary. At least twenty-one days notice of any meeting of the Audit Committee shall be given, although such notice period may be waived or shortened with the consent of all the members of the Audit Committee for the time being.

7. The Audit Committee will formally record minutes and submit them to the Board. The Group Company Secretary shall act as secretary of the Committee.

Role

8. The Audit Committee shall exercise the following powers and discretions:

8.1 the tendering of the Company's audit services contract and recommending to the Board the approval of the appointment and remuneration of the Company’s External Auditors and any question of their resignation or dismissal;

8.2 discussion with the Company’s External Auditors before the start of each annual audit regarding the nature and scope of the audit, steps taken by the auditor to respond to changes in regulatory and other requirements, and where more than one audit firm is involved monitoring co-ordination between them;

8.3 review of the half-year and annual accounts before their approval by the full Board, focusing in particular on :-

8.3.1 any changes in accounting policies and practices;

8.3.2 major judgmental and risk areas;

8.3.3 significant adjustments arising from the audit and why certain errors identified during the audit might remain unadjusted;

8.3.4 the “going concern” assumption;

8.3.5 compliance with accounting standards;

8.3.6 compliance with legal and London Stock Exchange requirements;

8.3.7 the extent to which the financial statements are affected by any significant or unusual transactions in the period and how they are disclosed;

8.3.8 clarity and completeness of disclosures; and

8.3.9 the Company’s strategic report and corporate governance statements;

8.4 review the findings of the Company’s External Auditors in relation to final audits, interim audits and any interim reviews or otherwise taking into account (but not limited to): a discussion of any major issues which arose during the audit; key accounting and audit judgements; levels of errors; and the effectiveness of the audit process;

8.5 approve the appointment or termination of appointment of the Internal Auditor and to monitor and review the effectiveness of the Internal Auditor ;

8.6 review of the statement on the Board’s review of the effectiveness of its internal control and risk management systems prior to endorsement by the Board;

8.7 review and approval if appropriate of any representation letters required by the Company’s External Auditors;

8.8 to review the internal audit programme and ensure that the internal audit function is adequately resourced and has appropriate standing within the Company;

8.9 to consider the Internal Auditor’s findings and management’s response to their recommendations and findings;

8.10 to prepare and maintain a policy to ensure that the provision of non-audit services by the External Auditors do not impair the External Auditors' independence or objectivity;

8.11 to assess periodically the risks associated with the possible withdrawal of the External Auditors from the market and consider whether any mitigating action is appropriate;

8.12 consideration of any other matter specifically referred to the Audit Committee by the full Board;

8.13 to ensure that procedures are in place for the receipt of and dealing with any complaints or concerns received by the Company about its accounting or auditing matters and for the confidential, anonymous submission by employees of the Company and its subsidiaries of accounting, regulatory and or auditing concerns; and

8.14 to give due consideration to applicable laws and regulations including the provisions of the UK Corporate Governance Code and the requirements of the UK Listing Authority’s Listing Rules.

9. The Board authorises the Committee:-

9.1 to investigate any activity within its terms of reference and seek directly any information it requires from any employee, (all employees being directed to co-operate with any such request by the Committee); and

9.2 to obtain outside legal or other independent professional advice as is reasonably necessary at the cost of the Company and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary.

10. The Board shall review these terms of reference every year and recommend any changes to them as they deem necessary to the Audit Committee.

11. The Audit Committee’s duties and activities during the year shall be disclosed in the Company’s Annual Report to shareholders.

12. The Chairman of the Audit Committee shall attend the Company’s Annual General Meeting and shall assist in answering questions put to the Board on the Audit Committee’s activities and its responsibilities.