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Constitution

1. The Board has resolved to establish a Committee of the Board to be known as the Audit Committee.

Membership

2. The Committee shall be appointed by the Board from amongst the independent Non-Executive Directors of the Company (as defined by the UK Combined Code, NYSE and the SEC) and shall consist of not less than 3 members. In order to assist the committee at least one member shall be a financial expert as defined by S.407 of the Sarbanes-Oxley Act. A quorum shall be 2 members and normally one of these should be a financial expert.

3. The Chairman of the Committee shall be appointed by the Board.
   Attendance at Meetings

4. The Chief Executive, Finance Director, the Head of Internal Audit, and a representative of the external auditors will be invited to attend meetings as and when appropriate. However at least once a year the Committee shall meet with the external auditors without any executive board member present.

5. The Company Secretary shall be the Secretary of the Committee.
   Frequency of Meetings

6. Meetings shall be held not less than three times a year with telephone attendances accepted. The external auditors may request a meeting if they consider that one is necessary.

Authority

7. The Committee is authorised by the Board to appoint, re-appoint, remove, compensate and oversee the work of the external auditors, subject to shareholder approval at the Annual General Meeting.

8. The Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek any information it requires from any employee and employees are directed to co-operate with any request made by the Committee.

9. The Committee is authorised by the Board to obtain outside legal or other independent professional advice, to seek appropriate and timely training and to secure the attendance of outsiders with relevant experience if it considers this necessary.

10. The Committee is authorised by the Board to approve the appointment of the external auditors for non-prohibited non-audit services (as defined in Appendix 1) taking into account any relevant ethical guidance on the matter. For the avoidance of doubt prohibited services are defined in Appendix 2.
    Duties

11. The duties of the Committee shall be:

• To agree with the external auditor before the audit commences the nature and scope of the audit, and ensure co-ordination where more than one audit firm is involved.
• To review and monitor the external auditor's independence, objectivity and effectiveness; and monitor the external auditor's compliance with relevant ethical and professional guidance.
• To review the integrity of the financial statements of the company including the quarterly, half-year and full year announcements, Annual Accounts (including Form 20-F) and Summary Financial Statements before submission to the Board, focusing particularly on:
  • significant judgemental and financial reporting issues
  • compliance with accounting standards
  • appropriate accounting policies and practices and any changes therein
  • relevant communications between external auditors and management including that relating to audit adjustments and items not adjusted
  • the going concern assumption
  • compliance with associate regulatory and legal requirements

• To discuss problems and reservations arising from the quarterly and interim reviews, final audit and 20-F audit and any other matters the auditor may wish to discuss (in the absence of management where necessary);
• To monitor and review the effectiveness of the Internal Audit Department's activities by reviewing the internal audit programme receiving copies of internal audit investigations and management's response, and ensuring co-ordination with the external auditors;
• To review the effectiveness of the internal financial controls and review and approve the Board's statement in the Annual Report of its responsibility for the maintenance of the group's system of internal financial control and for reviewing its effectiveness;
• To review arrangements by which staff may raise complaints against the company regarding financial reporting or other matters;
• To review the statements to be made in the Annual Report on compliance with the corporate governance requirements of the Combined Code, the NYSE listing rules and of the SEC, along with the verification undertaken including that of the auditors.
• To consider other topics, as defined.
• To review the Terms of Reference and the Committee's performance against those Terms on an annual basis.

Reporting Procedures

12.  The Chairman of the Committee shall report orally to the Board the outcome of its meetings including any recommendation arising there from and the Secretary shall circulate the minutes of the meetings of the Committee to all members of the Board.