1.1 Members of the Committee shall be appointed by the Board of directors of the Company on the recommendation of the Nomination Committee in consultation with the Chair of the Audit Committee. The Committee shall be made up of at least three members, all of whom shall be independent non-executive directors, at least one of whom shall have recent and relevant financial experience and the committee as a whole shall have competence in the sector in which the company operates The chair of the board shall not be a member of the committee.
1.2 The board shall appoint the Committee Chair. In the absence of the Committee Chair and/or an appointed deputy, the remaining members present shall elect one of themselves to chair the meeting.
1.3 Only members of the Committee have the right to attend committee meetings. However, the Financial Director, the Financial Controller and typically a representative of the external auditors will be invited to attend meetings on a regular basis and other individuals may be invited to attend all or part of any meeting as and when appropriate. For the avoidance of doubt, a meeting solely of the members of the Committee shall be quorate.
1.4 Appointments to the Committee shall be for a period of up to three years, which may be extended for up to two additional three year periods, provided the director still meets the criteria for membership of the Committee.
1.5 The Committee or its Chair shall report to the Board of Directors at least twice a year to detail matters arising from the performance of its duties.
2.1 The Financial Controller or Company Secretary shall act as the secretary of the Committee.
3.1 The quorum necessary for the transaction of business shall be two members. A duly convened meeting of the 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 Committee.
4. Frequency of Meetings
4.1 The Committee shall meet prior to board meetings to consider the interim and annual results, and otherwise as required. Any member of the Committee, the external auditors or the Financial Director may request a meeting if they consider that one is necessary. At least once each year, the Committee shall meet with the external auditors without the presence of executive management.
4.2 Outside of the formal meeting programme the committee chair will maintain a dialogue with key individuals involved in the company’s governance, including the Board Chair, the Chief Executive and the Finance Director.
5. Notice of Meetings
5.1 Unless otherwise agreed, notice of each meeting confirming the venue, time and date together with an agenda of items to be discussed, shall be forwarded to each member of the Committee, any other person required to attend and all other non-executive directors, in advance of each meeting. Supporting papers shall be sent to Committee members and other attendees as appropriate, at the same time.
6. Minutes of Meetings
6.1 The Financial Controller shall minute the proceedings and resolutions of all meetings of the Committee, including recording the names of those present and in attendance.
6.2 The Financial Controller shall ascertain, at the beginning of each meeting, the existence of any conflicts of interest and minute them accordingly.
6.3 Minutes shall be circulated promptly to all members of the Committee and the Chair of the Board and, once agreed, to all other members of the Board, unless it would be inappropriate to do so
7. Engagement with shareholders
7.1 The Chair of the Committee shall make every effort to attend the Annual General Meeting and be prepared to respond to any shareholder questions on the Committee’s activities. In addition, the Committee Chair should seek engagement with shareholders where significant matters related to the Committee’s areas of responsibility arise.
8.1 Financial Reporting
8.1.1 The Committee shall monitor the integrity of the financial statements of the company, including its annual and interim reports, preliminary results’ announcements and any other formal announcement relating to its financial performance, reviewing significant financial reporting issues and judgements which they contain having regard to matters communicated to it by the auditor. The Committee shall also review summary financial statements, significant financial returns to regulators and any financial information contained in certain other documents, such as announcements of a price sensitive nature.
8.1.2 The Committee shall review and challenge where necessary:
220.127.116.11 the consistency of, and any changes to, accounting policies both on a year-on-year basis and across the Company/Group;
18.104.22.168 the methods used to account for significant or unusual transactions where different approaches are possible;
22.214.171.124 compliance with accounting standards, the making of appropriate estimates and judgements, taking into account the views of the external auditor;
126.96.36.199 the clarity and completeness of disclosures in the Company’s financial reports and the context in which statements are made;
188.8.131.52 all material information presented with the financial statements, including the strategic report and the corporate governance statement (insofar as it relates to the audit and risk management);
184.108.40.206 whether the Company has adopted appropriate accounting policies and made appropriate estimates and judgements, taking into account the views of the external auditor on the financial statements; and
8.1.3 The Committee shall review any other statements requiring board approval which contain financial information first, where to carry out a review prior to Board approval would be practicalable and consistent with any prompt reporting requirements under any law or regulation including the listing rules Prospectus Rules and Disclosure Guidance and Transparency Rules sourcebook.
8.1.4 Where the Committee is not satisfied with any aspect of the proposed financial reporting by the company, it shall report its views to the Board.
8.2 Narrative reporting
Where requested by the Board the Committee should review the contents of the Company’s annual report and accounts as a whole and advise the Board whether, in its view, it considers the report to be fair, balanced and understandable and whether it provides the information necessary for shareholders to reasonably assess the Group’s performance, business model and strategy and whether it informs the Board’s statement in the annual report on these matters that is required under the Code
8.3 Internal Controls and Risk Management Systems
The Committee shall:
8.3.1 keep under review the effectiveness of the company’s internal financial controls systems that identify, assess manage and monitor financial risks and other internal control and risk management systems;
8.3.2 review and approve the statements to be included in the annual report concerning internal controls and risk management including the assessment of principal risks and emerging risks and the viability statement.
8.3.4 Compliance, Whistleblowing and Fraud
The Committee shall
8.4.1 review the adequacy and security company’s arrangements for its employees, contractors and external parties to raise concerns, in confidence, about possible wrongdoing in financial reporting or other matters. The Committee shall ensure that these arrangements allow proportionate and independent investigation of such matters and appropriate follow up action.
8.4.2 the Committee shall review the Company’s procedures for detecting fraud and the Company’s systems and controls for the prevention of bribery and receive reports on non-compliance
8.5 Internal Audit
8.5.1 The Committee shall keep under regular review the possible need for an internal audit function.
8.6 External Audit
The Committee shall:
8.6.1 consider and make recommendations to the board, to be put to shareholders for approval at the AGM, in relation to the appointment, re-appointment and removal of the company’s external auditor;
8.6.2 oversee the selection process for the appointment of the audit firm in accordance with applicable Code and regulatory requirements ensuring that all tendering firms have access to all necessary information and individuals during the tendering process.
8.6.3 if an external auditor resigns, investigate the issues leading to this and decide whether any action is required; external auditor
8.6.4 oversee the relationship with the including (but not limited to):
220.127.116.11 consider and agree their remuneration, including both fees for audit and non-audit services and ensure that the level of fees is appropriate to enable an effective and high quality audit to be conducted;
18.104.22.168 approval of their terms of engagement, including any engagement letter issued at the start of each audit and the scope of the audit;
22.214.171.124 assessing annually their independence and objectivity taking into account relevant law, regulation the Ethical Standard and other professional requirements and the relationship with the auditor as a whole, including any threats to the auditor’s independence and the safeguards applied to mitigate those threats including the provision of any non-audit services;
126.96.36.199 satisfying itself that there are no relationships (such as family, employment, investment, financial or business) between the auditor and the company (other than in the ordinary course of business) which could adversely affect the auditor’s independence and objectivity;
8.6.5 agreeing with the board a policy on the employment of former employees of the company’s auditor, taking into account the Ethical Standard and legal requirements, and monitor the application of this policy.
188.8.131.52 monitoring the auditor’s processes for maintaining independence, its compliance with relevant law, regulation, the Ethical Standard other and professional requirements, including the guidance on the rotation of audit partners and staff. , and the level of fees paid by the company compared to the overall fee income of the firm, office and partner and other related requirements; and
8.6.7 assessing annually their qualifications, expertise and resources and independence of the external auditor and the effectiveness of the external audit process which shall include a report from the external auditor on their own internal quality procedures;
8.6.8 meet regularly with the external auditor, including once at the planning stage before the audit and once after the audit at the reporting stage. The Committee shall meet the external auditor at least once a year, without management being present, to discuss the auditor’s remit and any issues arising from the audit;
8.6.9 discuss with the external auditor the factors that could affect audit quality and review and approve the annual audit plan ensuring that it is consistent with the scope of the audit engagement having regard to the seniority expertise and experience of the audit team;
8.6.10. review the findings of the audit with the external auditor. This shall include but not be limited to, the following;
184.108.40.206 a discussion of any major issues which arose during the audit,
220.127.116.11 The auditor’s explanation of how the risks to audit quality were addressed
18.104.22.168.3key accounting and audit judgements,
22.214.171.124.6..4 levels of errors identified during the audit, and
126.96.36.199 .5 the auditor’s view of their interactions with senior management.
8.6.11review any representation letter(s) requested by the external auditor before they are signed by management;
8.6.12 review the management letter and management’s response to the auditor’s findings and recommendations; and
8.6.13 review the effectiveness of the audit process including an assessment of the quality of the audit, the handling of key judgements by the auditor and the auditors’ response to questions from the Committee.
8.6.14develop and implement a policy on the supply of non-audit services by the external auditor, including prior approval of non-audit services by the Committee and specifying the types of non-audit service to be pre-approved, and assessment of whether non-audit services have a direct or material effect on the audited financial statements taking into account any relevant ethical guidance on the matter. The policy should include consideration of the following matters:
188.8.131.52 threats to the independence and objectivity of the external auditor and any safeguards in place;
184.108.40.206 the nature of the non-audit services;
220.127.116.11 whether the external audit firm is the most suitable supplier of the non-audit service;
18.104.22.168 the fees for the non-audit services, both individually and in aggregate, relative to the audit fee;
22.214.171.124 the criteria governing compensation.
9. Reporting Responsibilities
9.1 The Committee Chair shall report and make recommendations formally to the board on its proceedings after each meeting on all matters within its duties and responsibilities and shall formally report to the Board on how it has discharged its responsibilities. This report shall include:
9.1.1. The significant issues that it considered in relation to the financial statements
9.1.2 its assessment of the effectiveness of the external audit process (required under paragraph 8.6.7, the approach taken to the appointment or reappointment of the external auditor, length of tenure of audit firm, when a tender was last conducted and advance notice of any retendering plans
9.1.3 any other issues on which the Board has requested the Committee’s opinion.
9.2 The Committee shall compile a report to shareholders on its activities to be included in the company’s annual report. The report should describe the work of the Committee including
9.3.1 the significant issues that the Committee considered in relation to the financial statements and how these issues were addressed;
9.3.2 an explanation of how the Committee has assessed the independence and 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 tender was last conducted and advance notice of any retendering plans;
9.3.3 an explanation of how auditor independence and objectivity are safeguarded if the external auditor provides non-audit services, having regard to matters communicated to it by the auditor and all other information requirements set out in the Code.
9.3.4 In compiling the reports referred to in 9.1 and 9.3, the Committee should exercise judgement in deciding which of the issues it considers in relation to the financial statements are significant, but should include at least those matters that have informed the board’s assessment of whether the company is a going concern and the inputs to the board’s viability statement. The report to shareholders need not repeat information disclosed elsewhere in the annual report and accounts but could provide cross-references to that information.
10. Other Matters
The Committee shall:
10.1 have access to sufficient resources in order to carry out its duties, including access to the Company Secretary for assistance as required;
10.2 be provided with appropriate and timely training, both in the form of an induction programme for new members and on an ongoing basis for all members;
10.3 give due consideration to laws and regulations, the provisions of the Code and the requirements of the FCA Listing Rules, Prospectus and Disclosure and Transparency Rules and any other applicable Rules as appropriate;
10.4 oversee any investigation of activities which are within its terms of reference and act as a court of the last resort; and
10.5 at least once a year, review its own performance, constitution and terms of reference to ensure it is operating at maximum effectiveness and recommend any changes it considers necessary to the board for approval.
The Committee is authorised:
11.1 to investigate any activity within its terms of reference;
11.2 to seek any information it requires from any employee of the company in order to perform its duties and to call any employee to be questioned at a meeting of the Committee as and when required;
11.3 to obtain, at the company’s expense, outside legal or other professional advice on any matter within its terms of reference;
11.4 have the right to publish in the company’s annual report, details of any issues that cannot be resolved between the Committee and the Board. If the Board has not accepted the Committee’s recommendation on the external auditor appointment, reappointment or removal, the annual report should include a statement explaining the Committee’s recommendation and the reasons why the Board has taken a different position.
Approved 17 February 2023