Constitution

The Board has established a Committee of the Board to be known as the Audit Committee.

Membership

The Committee shall be appointed by the Board. All members of the Committee shall be independent non-executive directors of the Company. The Committee shall consist of not less than three members.

Quorum

A quorum shall be two members.

Chairman

The Chairman of the Committee shall be appointed by the Board from amongst the independent non-executive directors.

Attendance at meetings

Members of Executive Management, Head of Operational Audit and a representative of the external auditors shall attend meetings at the invitation of the Committee.

At least once a year the Committee shall meet separately with the external auditors and the Head of Operational Audit without the presence of Executive Management.

Frequency of meetings

Meetings will be held not fewer than three times a year. The meeting dates for the financial year will be agreed by the Committee prior to the commencement of the year.

The Chairman will call an additional meeting of the Committee if so requested by any member, the Chief Executive Officer, the Finance Director, the Head of Operational Audit or the external auditors.

The Secretary, in conjunction with the Chairman of the Committee, shall draw up an agenda which shall be circulated together with supporting papers, at least one week prior to each meeting to the members, the other members of the Board and the external auditors.

Authority

The Committee is authorised by the Board to investigate any activity within its Terms of Reference. The Committee is granted full access to Company information and can seek that information from any employee of the business. Employees are directed to co-operate with any request made by the Committee.

Secretary

The Committee shall appoint a Secretary to assist it in administrative matters.

Advisors

The Committee is authorised to obtain outside legal or independent professional advice and the company will make funds available to enable this.

Responsibilities

The responsibilities of the Committee shall be:

1 Controls

  • To review reports by management and the Operational Audit Department on the effectiveness of systems for internal financial and operational controls and financial reporting;
  • To review in particular the adequacy of the Group's risk control processes and report on these to the Board.
  • To monitor the integrity of the interim and annual financial statements and all trading statements before submission to the Board, paying particular attention to:
    • accounting policies and practices and any changes to them
    • decisions requiring a major element of judgement
    • the extent to which the financial statements are affected by any unusual transactions in the year and how they are disclosed
    • the clarity of disclosures
    • significant adjustments resulting from the audit
    • the going concern assumption
    • compliance with accounting standards
    • compliance with stock exchange and other legal requirements
    • the Company's statement on internal control systems
    • the Operational and Financial Review

2 External audit

  • To oversee the process for selecting the external auditor and make appropriate recommendations through the Board to the shareholders to consider at the AGM.
  • To recommend the audit fee to the Board, to approve the policy in respect of fees for non-audit services provided by the external auditor and to ensure that the provision of the non-audit services does not impair their independence or objectivity.
  • To discuss with the external auditor, before the audit commences, the nature and scope of the audit and to review the auditor's quality control procedures and steps taken by the auditor to respond to changes in regulatory and other requirements.
  • To review the external auditor's management letter and management's response.
  • To assess the independence of the external auditors, ensuring that key partners are rotated at appropriate intervals.
  • To review the performance of the external auditors annually.

3 Operational Audit

  • To review the operational audit programme, to ensure that the function is adequately resourced and has appropriate standing within the Company.
  • To consider management's response to any significant Operational Audit recommendations.
  • To review on an annual basis the performance of the Operational Audit department.
  • To approve the appointment or dismissal of the Head of Operational Audit.

4 Whistleblowing

To review the Company's arrangements by which staff can raise concerns about matters of financial reporting, control and or other topics.

Reporting procedures

The Chairman of the Committee will update the Board at the earliest reasonable opportunity to the outcomes of the Committee meetings.

The Secretary to the Committee shall circulate the minutes of the Committee meetings to all members of the Board and the external auditors.

The Committee shall conduct an annual review of their work and these Terms of Reference and make recommendations to the Board.

The Committee's duties and activities during the year shall be disclosed in the annual financial statements, subject to Board approval.

The Chairman of the Committee shall attend the AGM and shall answer questions, through the Chairman of the Board, on the Committee's activities and its responsibilities.