The audit committee of the Company (the Audit Committee) has been established as a board committee in accordance with the Company’s Articles of Association.
The purposes for which the Audit Committee is established are to ensure that:
1.1 the Board presents a fair, balanced and understandable assessment of the Company’s position and prospects;
1.2 the Board maintains sound risk management and internal control systems, determining the nature and extent of the significant risks it is willing to take in achieving its strategic objectives;
1.3 the Board maintains formal and transparent arrangements for considering how it should apply the corporate reporting and risk management and internal control principles; and
1.4 the Board maintains an appropriate relationship with the Company’s auditor.
The members of the Audit Committee shall be appointed by the Board in consultation with the chair of the Audit Committee.
The Audit Committee shall have at least two members, at least one of whom has recent and relevant financial experience. Each member shall be an independent non-executive director, that is, independent of management and free from any business or other relationship which could materially interfere with the exercise of their independent judgment.
Appointments to the Audit Committee shall be for a period of up to three years, which may be extended by no more than two additional periods of up to three years each provided the member continues to meet the criteria for membership.
The chair of the Audit Committee shall be appointed by the Board. The chair of the Board may not be the chair of the Audit Committee. In the absence of the chair of the Audit Committee, the remaining members present at a meeting of the Audit Committee shall elect one of their number to chair that meeting.
If a member is unable to act for any reason the chair of the Audit Committee may appoint another non-executive director as an additional member provided always that the majority of members of the committee shall be independent as described in paragraph 2.2 above.
The secretary of the Audit Committee shall be the secretary of the Company or such other person as the Audit Committee may appoint.
The quorum for all meetings of the Audit Committee shall be two members. A duly convened meeting of the Audit Committee at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Audit Committee.
The Audit Committee shall meet at least twice each year at appropriate times in the reporting and audit cycle and otherwise as required.
Meetings of the Audit Committee shall be convened by the secretary of the Audit Committee at the request of its chair. In addition, any of the following may ask the secretary of the Audit Committee to convene a meeting if he/she considers that such a meeting is necessary or appropriate:
In addition, the external auditors and the finance director of the Company may have access to the chair of the Audit Committee or any other member of the Audit Committee as required in relation to any matter falling within the remit of the Audit Committee.
Unless otherwise agreed, notice of each meeting confirming the venue, time and date together with an agenda of the items to be discussed, shall be forwarded to each member of the Audit Committee, any other person required to attend and all other non-executive directors of the Company, no later than five working days before the date of the meeting. Any supporting papers shall be sent to members of the Audit Committee and to other attendees, as appropriate, at the same time.
6. COMMITTEE MEETINGS BY TELEPHONE
Subject to the Company’s Articles of Association in force from time to time, a meeting of the Audit Committee may consist of a conference between the members of the Audit Committee some or all of whom are in different places provided that each member of the Audit Committee may participate in the business of the meeting whether directly, by telephone or by any other electronic means which enables him:
to hear each of the other participating members of the Audit Committee, and any other person invited to attend the meeting in accordance with paragraph 7, addressing the meeting; and
if he so wishes, to address simultaneously all of the other participating members of the Audit Committee and any other person invited to attend the meeting in accordance with paragraph 7.
A quorum is deemed to be present if those members of the Audit Committee required to form a quorum as set out in paragraph 4 above may participate in the manner specified in paragraph 6.1 above in the business of the meeting.
An Audit Committee meeting held in the manner specified in paragraph 6.1 above is deemed to take place at the place where the largest group of participating members of the Audit Committee is assembled or, if no such group is readily identifiable, at the place from where the chair of the Audit Committee participates.`
7. ATTENDANCE AT MEETINGS
Only members of the Audit Committee have the right to attend meetings of the Audit Committee. However, the Audit Committee may invite any person it thinks appropriate to join the members of the Audit Committee at its meetings.
The finance director and a representative of the external auditors should normally be invited to attend meetings of the Audit Committee.
The Audit Committee shall meet with the external auditors without the finance director or any other executive director present for at least part of one of the meetings each year
8. Voting at meetings
Each member of the Audit Committee, present and voting in person at a meeting, shall have one vote which may be cast on each matter considered at that meeting.
A member shall not be permitted to vote on any matter considered at a meeting in relation to which that member is considered by the Audit Committee to have a direct or indirect personal interest.
Save where he is prevented from voting in accordance with paragraph 8.2, the chair of the Audit Committee shall have a casting vote
The Audit Committee is authorised by the Board to:
10. FUNCTION, DUTIES AND TERMS OF REFERENCE
The Audit Committee shall monitor the integrity of the financial statements of the Company, including its annual and half-yearly reports, interim management statements and any other formal announcement relating to its financial performance, reviewing significant financial reporting issues and judgements which they contain.
In particular, the Audit Committee shall review and challenge where necessary:
the consistency of, and any changes to, accounting policies both on a year on year basis and across the Company and its group;
the methods used to account for significant or unusual transactions where different approaches are possible;
whether the Company has followed appropriate accounting standards and made appropriate estimates and judgements, taking into account the views of the external auditor;
the clarity of disclosure in the Company’s financial reports and the context in which statements are made; and
all material information presented with the financial statements, such as the business review/operating and financial review and the corporate governance statement (insofar as it relates to the audit and risk management).
Where the Audit Committee is not satisfied with any aspect of the proposed financial reporting by the Company, it shall report its views to the Board.
At the request of the Board, the Audit Committee shall review the content of the annual report and accounts and advise the Board whether, taken as a whole, it is fair, balanced and understandable and provides the necessary information for shareholders to assess the Company’s performance, business model and strategy.
Internal controls and risk management systems
The Audit Committee shall
The Audit Committee shall
The Audit Committee shall:
The Audit Committee shall also:
11. Other matters
The Audit Committee shall:
12. REPORTING TO SHAREHOLDERS
The chair of the Audit Committee shall report to the Board on its proceedings after each meeting on all matters within its duties and responsibilities. The Audit Committee shall make whatever recommendations to the Board as it deems appropriate on any area within its remit where action or improvement is needed.
The Audit Committee should report annually on the Board’s behalf to the Company’s shareholders. Its report should accompany the directors’ report in the Company’s annual report and accounts and should include such information as is required to comply with the UK Corporate Governance Code or, where the Audit Committee has determined that there are good reasons for not so complying, an explanation of those reasons. Notwithstanding the above, the Audit Committee’s annual report should include:
a summary of the role of the Audit Committee;
the names and qualifications of all members of the Audit Committee during the relevant period;
the number of Audit Committee meetings;
details of the significant issues that the Audit Committee has considered in relation to the Company’s financial statements and how those issues were addressed;
an explanation of how the Audit Committee has assessed the effectiveness of the external audit process and the approach taken to the appointment or reappointment of the external auditor, information on the length of tenure of the current audit firm, when a tenure was last conducted and any contractual obligations that acted to restrict the Audit Committee’s choice of external auditor; and an explanation of how, if the external auditors provide non-audit services, auditor objectivity and independence is safeguarded.
The chair of the Audit Committee should attend the Company’s annual general meeting for the purpose of handling any questions or enquiries at the meeting about the latest audit and any other matters pertaining to the work of the Audit Committee.
The secretary of the Audit Committee shall prepare minutes of the proceedings and resolutions of committee meetings, including the names of those present and in attendance.
Drafts of such minutes shall be circulated promptly to all members of the Audit Committee and, once approved, the minutes shall be submitted to all members of the Board (unless to do so would be inappropriate).
The recommendations made in the minutes of the Audit Committee must be approved by the Board before they can be implemented.