The Board hereby resolves to establish a committee of the Board, to be known as the Audit Committee (the "Committee"
2.1 The Committee shall be appointed by the Board taking account of any recommendations made by the Nomination Committee (if one has been constituted). All members of the Committee shall be independent non-executive directors of the Company. The Committee shall consist of no less than three members. Two members shall comprise a quorum at any meeting of the Committee.
2.2 The chairman of the Committee shall be appointed by the Board from amongst the independent non-executive directors. In the absence of the chairman of the Committee the remaining members present shall elect one of their number to chair the meeting.
3. Attendance at Meetings
3.1 The Finance Director, head of internal audit and a representative of the external auditors shall attend meetings at the invitation of the Committee.
3.2 The chairman of the Board and other Board members shall attend meetings if invited by the Committee.
3.3 There should be at least one Committee meeting, or part of a meeting, each year where the external auditors and internal auditors attend without any executive director being present.
3.4 The company secretary shall be secretary to the Committee.
4. Frequency of Meetings
4.1 Meetings shall be held not less than three times each year and. where appropriate shall coincide with key dates in the Company's financial reporting cycle.
4.2 Additional meetings shall be held as required, and any member of the Committee, the Company Secretary, the Finance Director, the external auditors or internal auditors may request a meeting if they consider that one is necessary.
5.1 The Committee is authorised by the Board to:
5.1.1 Investigate any activity within its terms of reference.
5.1.2 Seek any information that it required from any employee (and all employees are directed to co-operate with any request made by the Committee).
5.1.3 Obtain external legal and other independent professional advice and request advisers to attend meetings as necessary
6.1 The responsibilities of the Committee shall be:
6.1.1 To consider the appointment of the external auditor and assess the independence of the external auditor, ensuring that key partners are rotated at appropriate intervals.
6.1.2 To oversee the process of selecting the external auditor and make appropriate recommendations, through the Board, to the shareholders for consideration at the annual general meeting of the Company.
6.1.3 To recommend the audit fee to the Board and pre-approve any fees in the respect of non-audit services provided by the external auditor, and to ensure that the provision of non-audit services does not impair the independence or objectivity of the external auditor.
6.1.4 To develop and implement policy on the engagement
6.1.5 To discuss with the external auditor, before the audit commences, the nature and scope of the audit, and any additional assurance or reporting that may be required, and to review the auditors' quality control procedures and the steps taken to respond to changes in regulatory and other requirements.
6.1.6 To consider whether there is an appropriate liaison and coordination between the internal and external auditors
6.1.7 To review the external auditor's management's response
6.1.8 To review the internal audit programme and ensure that the internal audit or external audit recommendations
6.1.9 To approve the appointment or dismissal of the head of internal audit
6.1.10 To review the Company's procedures for handling allegations from employees concerning financial impropriety
6.1.11 To review reports from management and the internal auditors on the effectiveness of the systems for internal financial control, financial reporting and risk management.
6.1.12 To monitor the integrity, review, and challenge where necessary, the financial statements relating to the Company's financial performance, the actions and judgements of management in relation to the intern and annual financial statements before submission to the Board, paying particular attention to:
a) critical accounting policies and practices and any changes in them;
b) decisions requiring a significant element of judgement
c) the extent to which the financial statements are affected by any unusual transactions in the year, and how are they disclosed;
d) the clarity of disclosures;
e) significant adjustments resulting from the audit;
f) the going concern assumption;
g) compliance with accounting standards; and
h) compliance with UK listing authority, stock exchange and other requirements (insofar as is applicable).
6.1.13 To review the Company's statements on compliance with the Combined Code, going concern and the review of the effectiveness of the company's system of internal control prior to endorsement by the Board, and in particular to review:
a) the policies and processes for identifying and assessing business risks and the management of those risks to the Company;
b) the Company's policies for ensuring compliance with relevant legal and regulatory requirements;
c) the Company's policies for the prevention and detection of fraud; and
d) the effectiveness of such policies and procedures in practice;
6.1.14 To discuss any problems and reservations arising from the external audit and any matters that the external or internal auditors may wish to discuss (in the absence of management where necessary); and
6.1.15 To consider other topics and issues defined by the Board.
7. Reporting Procedures
7.1 The secretary shall circulate the minutes of the meeting of the committee to all members of the Board.
7.2 The chairman of the Committee, or as a minimum another member of the Committee, shall attend the Board meeting at which the annual accounts and reports are approved.
7.3 A report on the Committee's responsibilities and activities during the year shall be disclosed in the annual report and accounts.
7.4 The chairman of the Committee, or as a minimum another member of the Committee, shall attend the annual general meeting of the Company and answer questions, through the Chairman of the Board, on the Committee's responsibilities and activities.
8. Self-assessment and Appraisal
The Committee shall conduct an annual review of its work and terms of reference, and an annual assessment of its own effectiveness and make recommendations to the Board.