References t the "Bard" shall mean the full Bard f Directrs. MEMBERSHIP - The Bard has reslved t establish a cmmittee f the Bard t be knwn as the Audit and Risk Cmmittee. - The Cmmittee shall cmprise at least three members. The Cmmittee shall, where pssible, include ne member f the Nminatin and Remuneratin cmmittee. Members f the Cmmittee shall be appinted by the Bard, n the recmmendatin f the Nminatin and Remuneratin cmmittee in cnsultatin with the chairman f the Cmmittee. - The Bard intend fr the Cmmittee t include tw Independent Nn-Executive Directrs ( INED ), nce a secnd INED is appinted t the Bard. - The membership f the Cmmittee, and requirements f membership, will be revisited pst platfrm acquisitin when the cmpsitin f the Bard will be amended and at any ther time that the Nminatin and Remuneratin cmmittee cnsider it apprpriate. Cllectively the Cmmittee shall have recent and relevant financial experience, extensive business experience, knwledge f financial markets, understanding f management practices and peratinal risks, bth generally and in the Cmpany s industry, and knwledge f any relevant specialist regulatry r legal requirements. - Only members f the Cmmittee have the right t attend Cmmittee meetings. Hwever, the chief financial fficer (when ne is appinted) and external audit lead partner will be invited t attend meetings f the Cmmittee n a regular basis and ther nn-members may be invited t attend all r part f any meeting as and when apprpriate and necessary. - The Bard shall appint the chairman f the Cmmittee (the "Chairman"). In the absence f the Chairman at a Cmmittee meeting, the remaining members present shall elect ne f themselves t chair the meeting. - The Cmpany Secretary, r their nminee, shall be the Secretary f the Cmmittee ("Secretary") and will ensure that the Cmmittee receives infrmatin and papers in a timely manner t enable full and prper cnsideratin t be given t issues. ROLE OF THE COMMITTEE As set ut in the QCA Cde (the Cde ) the verarching rle f the Cmmittee is as fllws: - Review and challenge the risk identificatin and risk management prcesses acrss the business; - Manage relatins with external auditrs t ensure that the annual audit is effective, bjective, independent and f a high quality; - Ensure that the relatinship with the external auditr is apprpriate and the service is apprpriately priced; - Review the cmpany s draft crprate reprting, including the annual reprt and accunts independent f the executive directrs and the external auditrs; and - Cmmunicate effectively t sharehlders the extent f the Cmmittee s activities. MEETINGS - The qurum fr the Cmmittee meetings shall be tw. - The Cmmittee shall meet frmally at least twice a year at apprpriate intervals in the financial reprting and audit cycle and therwise as required. - Outside f the frmal meeting prgramme, the Chairman will maintain a dialgue with key individuals invlved in the Cmpany s gvernance, including the external audit lead partner. - Meetings f the Cmmittee shall be cnvened by the Secretary at the request f any f its members r at the request f the external audit lead partner r in the case f the Cmpany having an internal audit functin. Ntice f each meeting cnfirming the venue, time and date tgether with an agenda f items t be discussed and supprting papers shall be frwarded t each member f the Cmmittee and thers attending the meeting apprximately 3 wrking days prir t the date f the meeting. 1
- The Secretary shall keep apprpriate recrds f all meetings f the Cmmittee with apprpriate minutes f the prceedings and reslutins. - Draft minutes f Cmmittee meetings shall be circulated t the Chairman fr review and then t all members f the Cmmittee. Once apprved, minutes shall be circulated t all ther members f the Bard upn their request unless in the pinin f the Chairman it wuld be inapprpriate t d s. DUTIES The Cmmittee shuld have versight f the grup as a whle and, unless required therwise by regulatin, carry ut the duties belw fr the Cmpany, majr subsidiary undertakings and the Cmpany's grup (the "Grup") as a whle. Financial reprting - The Cmmittee shall mnitr the integrity f the financial statements f the Cmpany, including its annual and half-yearly reprts and any ther frmal annuncement relating t its financial perfrmance, reviewing and reprting t the Bard n any significant financial reprting issues and judgements which they cntain, having regard t matters cmmunicated t it by the auditr; - In particular, the Cmmittee shall review and challenge where necessary: cnsistency f, and any changes t, significant accunting plicies bth n a year n year basis and acrss the Grup; the methds used t accunt fr significant r unusual transactins where different appraches are pssible; any significant adjustments resulting frm the audit; the ging cncern assumptin; whether the Cmpany has adpted apprpriate accunting plicies and made apprpriate estimates and judgements, taking int accunt the views f the external auditr n the financial statements; and all material infrmatin presented with the financial statements, such as the strategic reprt, the crprate gvernance statements relating t the audit and t risk management and any separately presented Audit and Risk Cmmittee reprt included in the financial statements. - Cnsider the impact f new accunting standards, and where these are expected t have a material impact n results, discuss with management hw best t cmmunicate the impact t sharehlders; - The Cmmittee shall review any ther statements requiring Bard apprval which cntain financial infrmatin first, where t carry ut a review prir t bard apprval wuld be practicable and cnsistent with any prmpt reprting requirements under any law r regulatin including the Listing Rules r Disclsure Guidance and Transparency Rules surcebk. - Where the Cmmittee is nt satisfied with any aspect f the prpsed financial reprting by the Cmpany, it shall reprt its views t the Bard. Where requested by the Bard, the Cmmittee shuld review the cntents f the annual reprt and accunts and advise the Bard n whether, taken as a whle, they are fair, balanced and understandable and prvide the infrmatin necessary fr sharehlders t assess the Cmpany s perfrmance, business mdel and strategy. Internal cntrls and risk management systems The Cmmittee shall: - keep under review the Cmpany s internal financial cntrls systems that identify, assess, manage and mnitr financial risks, and ther internal cntrl and risk management systems; and - review and apprve the statements t be included in the annual reprt cncerning the Grup s expsure t risk, internal cntrls and risk management. 2
Cmpliance, whistleblwing and fraud The Cmmittee shall: - review the adequacy and security f the Grup s arrangements fr its emplyees and cntractrs t raise cncerns, in cnfidence, abut pssible wrngding in financial reprting r ther matters. The Cmmittee shall ensure that these arrangements allw prprtinate and independent investigatin f such matters and apprpriate fllw up actin; - review the Grup s prcedures fr detecting fraud; and - review the Grup s systems and cntrls fr the preventin f bribery and the preventin f the criminal facilitatin f tax evasin and receive reprts n nn-cmpliance Internal Audit The Cmmittee shall review the need fr a separate internal audit functin, cnsidering the nature and cmplexity f the business. External Audit The Cmmittee shall: - cnsider and make recmmendatins t the Bard, t be put t sharehlders fr apprval at the Annual General Meeting f the Cmpany, in relatin t the appintment, re-appintment and remval f the Cmpany s external auditr; - ensure that at least nce every ten years the audit services cntract is put ut t tender t enable the Cmmittee t cmpare the quality and effectiveness f the services prvided by the incumbent auditr with thse f ther audit firms; and in respect f such tender versee the selectin prcess and ensure that all tendering firms have such access as is necessary t infrmatin and individuals during the duratin f the tendering prcess; - if the external auditr resigns, investigate the issues leading t this and decide whether any actin is required; - versee the relatinship with the external auditr including (but nt limited t): apprving their remuneratin, including bth fees fr audit and nn-audit services, and ensuring that the level f fees is apprpriate t enable an effective and high quality audit t be cnducted; apprval f their terms f engagement, including any engagement letter issued at the start f each audit and the scpe f the audit; assessing annually the external auditr s independence and bjectivity taking int accunt relevant UK and Jersey law, regulatin, the Ethical Standard published by the FRC, and ther prfessinal requirements and the Grup s relatinship with the auditr as a whle, including any threats t the auditr s independence and the safeguards applied t mitigate thse threats including the prvisin f any nn-audit services; satisfy itself that there are n relatinships between the auditr and the cmpany (ther than in the rdinary curse f business) which culd adversely affect the auditr s independence and bjectivity; mnitr the auditr s prcesses fr maintaining independence, its cmpliance with relevant UK law, regulatin, ther prfessinal requirements including the guidance n the rtatin f audit partner and staff; mnitr the level f fees paid by the cmpany t the external auditr cmpared t the verall fee incme f the firm, ffice and partner and assess these in the cntext f relevant legal, prfessinal and regulatry requirements, guidance and the Ethical Standard; 3
assess annually the qualificatins, expertise and resurces, and independence f the external auditr and the effectiveness f the external audit prcess, which shall include a reprt frm the external auditr n their wn internal quality prcedures; - evaluate the risks t the quality and effectiveness f the financial reprting prcess in the light f the external auditr s cmmunicatins with the Cmmittee; - meet regularly with the external auditr (including nce at the planning stage befre the audit and nce after the audit at the reprting stage) and, at least nce a year, meet with the external auditr withut management being present, t discuss the auditr s remit and any issues arising frm the audit; - discuss with the external auditr the factrs that culd affect audit quality and review and apprve the annual audit plan, ensuring it is cnsistent with the scpe f the audit engagement, having regard t the senirity, expertise and experience f the audit team; - review the findings f the audit with the external auditr. This shall include, but nt be limited t, the fllwing: a discussin f any majr issues which arse during the audit; the auditr s explanatin f hw the risks t audit quality were addressed; the auditr s view f their interactins with senir management; key accunting and audit judgements; levels f errrs identified during the audit; and the effectiveness f the audit prcess; - review any representatin letter(s) requested by the external auditr befre they are signed by management; - review the management letter and management s respnse t the external auditr s findings and recmmendatins; and - review the effectiveness f the audit prcess, including an assessment f the quality f the audit, the handling f key judgements by the auditr, and the auditr s respnse t questins frm the Cmmittee. REPORTING RESPONSIBILITIES - The Chairman shall reprt frmally t the Bard n all matters within its duties and respnsibilities and shall als frmally reprt t the Bard n hw it has discharged its respnsibilities. This reprt shall include: the significant issues that the Cmmittee cnsidered in relatin t the financial statements and hw these were addressed; its assessment f the effectiveness f the external audit prcess, the apprach taken t the appintment r reappintment f the external auditr, length f tenure f audit firm, when a tender was last cnducted and advance ntice f any retendering plans; and any ther issues n which the Bard has requested the Cmmittee s pinin. - The Cmmittee shall make whatever recmmendatins t the Bard it deems apprpriate n any area within its remit where actin r imprvement is needed. - The Cmmittee shall cmpile a reprt n its activities t be included in the Cmpany s annual reprt. The reprt shuld include a summary f its rle, details f members and meetings held, any significant issues cnsidered in relatin t the annual reprt, and an explanatin f hw the Cmmittee has addressed the effectiveness f the external audit prcess; the significant issues that the Cmmittee cnsidered in relatin t the financial statements, and hw these issues were addressed, having regard t matters cmmunicated t the Cmmittee by the external auditr and ther infrmatin requirements set ut in the Cde. - In the cmpiling the reprts referred t abve the Cmmittee shuld exercise judgement in deciding which f the issues it cnsiders in relatin t the financial statements are significant, but shuld include at least thse matters that have infrmed the Bard s assessment f whether the Cmpany is a ging cncern. The reprt t sharehlders need nt repeat infrmatin disclsed elsewhere in the annual reprt and accunts, but culd prvide crss-references t that infrmatin. 4
OTHER MATTERS The Cmmittee shall: - have access t sufficient resurces in rder t carry ut its duties, including access t the Secretary fr assistance as required; - be prvided with apprpriate and timely training, bth in the frm f an inductin prgramme fr new members and n an nging basis fr all members; - give due cnsideratin t relevant laws and regulatins, the prvisins f the Cde and the requirements f the AIM Rules, and any ther applicable rules, as apprpriate; - versee any investigatin f activities which are within its terms f reference; - wrk and liaise as necessary with ther bard cmmittees, taking particular accunt f the impact f risk management and internal cntrls being delegated t different cmmittees; and - arrange fr peridic reviews f its wn perfrmance and, at least annually, review its cnstitutin and terms f reference t ensure it is perating at maximum effectiveness and recmmend any changes it cnsiders necessary r desirable t the Bard. AUTHORITY The Cmmittee is authrised t: - seek any infrmatin it requires frm any emplyee f the Cmpany in rder t perfrm its duties; - btain, at the Cmpany s expense, independent legal, accunting r ther prfessinal advice n any matter it believes it necessary t d s; - call any emplyee t be questined at a meeting f the Cmmittee as and when required; and - have the right t publish in the Cmpany s annual reprt details f any issues that cannt be reslved between the Cmmittee and the Bard. 5