Audit Committee Terms of Reference

1. Objectives

  1. To monitor the:
    • integrity of the financial statements of the Company,
    • independent auditor's qualifications and independence,
    • performance of the Company's independent auditors,
    • appropriateness of the Company's internal data, systems, controls and risk management as related to financial reporting,
    • compliance by the Company with legal and regulatory requirements relating to audit and financial reporting functions and
    • Company's internal audit function.
  2. To report to the Board on the foregoing and to assist the Board in considering and adopting accounting policies.

2. Membership

The Committee shall be composed of such Directors as may be recommended to the Board by the Nomination Committee, consideration having been given to the requirements of the Combined Code.

3. Secretary

The Committee shall appoint a secretary who shall attend all meetings and prepare minutes.

4. Committee Responsibilities

  1. To make recommendations to the Board to appoint, dismiss, agree compensation of and oversee the work of the independent auditor in connection with conduct of the audit, issuing an audit report and related work (including liaising between management and the auditor regarding financial reporting), including:
    • Reviewing the experience and qualifications of the independent audit firm and the senior members of the independent auditor team;
    • Obtaining and reviewing a report from the independent auditor at least annually regarding (a) the auditor's internal quality-control procedures, (b) any material issue raised by the most recent quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm, (c) any steps taken to deal with any such issues, and (d) all relationships between the independent auditor and the Company;
    • Evaluating the performance of the independent auditor;
    • Presenting its conclusions on the preceding point to the Board, taking any actions deemed necessary or desirable by the Audit Committee to satisfy itself as to the qualifications, performance and independence of the independent auditor, and making any recommendations to the Board concerning such matters as the Audit Committee deems advisable;
    • Considering and adopting appropriate policies as to rotation of the lead audit partner and the reviewing audit partner to foster continuing auditor independence;
    • Meeting with the independent auditor prior to the audit to discuss the planning and staffing of the audit;
    • Receiving direct reports from the independent auditor in connection with conduct of the audit, issuing an audit report and related work;
    • Reviewing and agreeing the independent auditor's annual engagement letter (including terms of remuneration); and
    • Assessing the effectiveness of the audit process.
  2. To receive, and take any appropriate action in relation to, all reports and other communications which the independent auditor is required to make to the Audit Committee, including timely reports concerning:
    • All critical accounting policies and practices to be used;
    • All alternative treatments of financial information within generally accepted accounting principles that have been discussed with management of the Company, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor; and
    • Other material written communications between the independent auditor and the management of the Company, such as any management letter or schedule of unadjusted differences.
  3. To review and discuss with management and the independent auditor the annual audited financial statements (and where practicable any other material public or regulatory financial statements), including disclosures made in management's discussion and analysis and the audit representation letters, and recommend to the Board whether the audited financial statements should be approved.
  4. To discuss with management and the independent auditor significant financial reporting issues and judgements made in connection with the preparation of the Company's financial statements.
  5. To discuss with management and the independent auditor the effect of regulatory and accounting initiatives.
  6. To meet with management, the internal accountants / auditors and the independent auditor separately at least quarterly or at such other interval as the Committee deems reasonable.
  7. To monitor the independence of the independent auditor, including:
    • Evaluating the independence of the independent auditor, including whether the provision of non-audit services is compatible with maintaining the auditor's independence;
    • Approving or disapproving any engagement by the Company or its subsidiaries of the independent auditor to perform any non-audit services, subject to a de minimus threshold of $25,000; and
    • Recommending to the Board policies for the Company's hiring of employees or former employees of the independent auditor who were engaged on the Company's account, such policies to the extent practicable being compliant with the legislation applicable to public companies.
  8. To monitor the integrity of the Company's financial and other internal controls.
  9. To oversee the effectiveness of the processes and controls used by the Company to monitor and manage risk within the parameters adopted by the Board
  10. To review and discuss with management the Company's major risk exposures and the steps management has taken to monitor and control such exposures.
  11. To receive from management reports on the effectiveness of the internal control and risk management systems, and the conclusions of any testing carried out by internal and external auditors.
  12. To review and approve the statements included in the annual report in relation to internal control and the management of risk.
  13. To monitor and review the effectiveness of the internal audit function, and to approve the appointment or termination of the head of internal audit.
  14. To review and discuss with management the reserving methodology and process of establishing the Company's reserves, together with internal or external reports or studies.
  15. To receive reports from the Company's General Counsel on legal matters that may have a material impact on the financial statements.
  16. To receive reports from the Company's Head of Compliance on compliance related matters including any material compliance breaches.
  17. To recommend to the Board for adoption a procedure for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting, auditing or other matters.
  18. To meet at least quarterly.
  19. To make regular reports to the Board.
  20. To review and reassess the adequacy of these terms of reference and its own performance annually and recommend any proposed changes to the Board for approval.
  21. To provide a statement about its activities for the annual report.

5. Committee Authority

  1. The Committee shall have the authority reasonably required to enable it to discharge the Committee Responsibilities.
  2. The Committee shall have the authority reasonably required to enable it to discharge the Committee Responsibilities.
  3. The Committee shall have authority to require any officer or employee of the Company, of the Company's outside counsel or independent auditor to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee.
  4. The Committee may form subcommittees and delegate authority to such subcommittees or an individual member of the Committee when appropriate.
  5. The Responsibilities and Authority of the Committee do not include the obligation to plan or conduct audits or to determine that the Company's financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations. These are the responsibilities of management and the independent auditor, as applicable. It is also not the responsibility of the Audit Committee to set or determine the adequacy of the Company's reserves.

Adopted on: 6 September 2006

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