Terms of reference of the Audit Committee

The duties and functions of the Audit Committee are as below:

(a) to be responsible for making recommendations to the Board on the appointment, reappointment and removal of the external auditor, and to approve the remuneration and

terms of engagement of the external auditor, and to deal with any questions of its resignation or dismissal;

(b) to discuss with the auditor the nature and scope of the audit and reporting obligations before the audit commences, and to review and monitor the external auditor’s independence and objectivity and the effectiveness of the audit process in accordance with applicable standards;

(c) to develop and implement policy on engaging an external auditor to provide non-audit services, and report to the Board, identifying and making recommendations on any matters where action or improvements is needed;

(d) to monitor integrity of the Company’s financial statements and annual report and accounts, half-year report and, if prepared for publication, quarterly reports, and to review significant financial reporting judgements contained in them. In reviewing these reports before submission to the Board, the Committee should focus particularly on: -

(i) any changes in accounting policies and practices;

(ii) major judgmental areas;

(iii) significant adjustments resulting from audit;

(iv) the going concern assumptions and any qualifications;

(v) compliance with accounting standards;

(vi) compliance with the Listing Rules and legal requirements in relation to financial reporting;

In order to perform the above duties:

(a) members of the Committee should liaise with the Board, senior management of the Company. The Committee must meet, at least twice a year, with the Company’s auditors;

(b) the Committee should consider any significant or unusual items that are, or may need to be, reflected in the reports and accounts, it should give due consideration to any matters that have been raised by the staff responsible for the accounting and financial matters, compliance officer or auditors of the Company.

(e) to review the Company’s financial controls, and to review the Company’s risk management and internal control systems; to discuss the risk management and internal control systems with the management to ensure that management has performed its duty to have an effective systems, and that resources, employees’ qualifications and experiences are adequate for performing the accounting and financial reporting functions, and the training courses received by employees and any budgets in relation thereto are sufficient; to consider major investigations findings on risk management and internal control matters as delegated by the Board or on its own initiative and management’s response to these findings;

(f) to ensure co-ordination between the internal and external auditors, and to ensure that the internal audit function is adequately resourced and has appropriate standing within the Company, and to review and monitor its effectiveness;

(g) to review the Company’s financial and accounting policies and practices; to review the external auditor’s management letter, any material queries raised by the auditor to

management about accounting records, financial accounts or systems of control and management’s response; to ensure that the Board will provide a timely response to the issues raised in the external auditor’s management letter;

(h) to establish and review the system for direct reporting by employees of the Company, through which they can raise concerns about possible improprieties in financial reporting, internal control or other matters in confidence. The Committee shall be entitled to take any action which it thinks appropriate and necessary for investigation of any unusual situation of the Company and to report it to the Board as and when necessary. The Committee shall be entitled to ensure that proper arrangements are in place for fair and independent investigation of these matters and for appropriate follow-up action;

(i) to act as the key representative body for overseeing the Company’s relations with the external auditor; and

(j) to report to the Board on the matters set out above, and to deal with any other matters authorized by the Board.