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TERMS OF REFERENCE OF THE AUDIT & RISK COMMITTEE
Reference to "the Board" shall mean the Board of Directors of the Company
Reference to "the Company" shall mean Aga Rangemaster Group plc
1. Constitution
It is resolved that a committee of the Board be established, to be known as the Audit and Risk Committee (the "Committee").
2. Membership
(a) The membership shall be appointed by the Board, on the recommendation of the Nomination Committee, from amongst the independent non-executive directors of the Company. The Committee shall consist of not less than three members. At least one member of the Committee shall have recent relevant financial knowledge. The Chairman of the Board shall not be an Audit & Risk Committee member. Membership of the Committee shall be reviewed whenever a member ceases to be a director of the Company and in any event at not less frequent intervals than every three years.
(b) The chairman of the Committee shall be appointed by the Board from amongst the independent non-executive directors. In the absence of the Chairman and/or appointed deputy, the remaining members shall elect one of themselves to chair the meeting and approve the minutes of meeting
(c) Care should be taken to minimise the risk of conflict of any interest that might be seen to give rise to an unacceptable influence.
3. Secretary
(a) The Company secretary or their nominee shall act as secretary to the Committee.
(b) The secretary shall keep an appropriate record of attendance at the Committee, its proceedings and resolutions. The secretary shall ascertain the existence of any conflicts of interest and minute them.
(c) Minutes shall be circulated promptly to all members of the Committee and to the Chairman of the Board and all members of the Board.
4. Quorum
The quorum for meetings 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 discretion vested in or exercisable by the Committee.
5. Attendance at meetings
(a) Only members of the Committee have the right to attend Committee meetings. However, other individuals such as the Chairman of the Board, Chief Executive, Finance Director, other directors, the heads of risk, compliance and internal audit and representatives from the finance function may be invited to attend all or part of any meeting as and when appropriate.
(b) The external auditors will be invited to attend meetings of the Committee on a regular basis.
(c) The Committee shall, of its own volition or at the request of the external auditors, determine to meet with the external auditors without executive Board members present at least once per annum.
(d) Attendance at meetings shall carry with it the right to participate in the discussions thereat.
6. Frequency of meetings
(a) Meetings shall be held not less than three times a year, at appropriate times in the Company`s financial reporting cycle.
(b) The Committee shall meet at least 3 working days prior to a Board meeting where accounts or financial statements are to be approved. If the time lapse is less than three days, this must be agreed by the members of the Committee and they must confirm that they have had sufficient information and time to consider the accounts/financial statements before reporting to the Board.
(c) The external or internal auditors may request the Chairman to convene a meeting if they consider that one is necessary.
7. Notice of Meetings
(a) Meetings of the Committee shall be summoned by the secretary of the Committee at the request of a member thereof.
(b) Unless otherwise agreed, notice of each meeting confirming the venue, time and date together with any 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, no fewer than 3 working days prior to the meeting.
8. Authority
The Committee is authorised by the Board to:-
(a) investigate any activitywithin its terms of reference;
(b) seek anyinformation it requires from any employee and all employees are directed to co-operate with any request made by the Committee; and
(c) obtain outside legal or other independent professional advice at the Company`s expense and to secure the attendance of other advisers with relevant experience and expertise if it considers this necessary.
9. Responsibilities
The Committee shall:
9.1 Relations with External Auditors
(a) consider the appointment/re-appointment of the external auditor; assess independence and objectivity of the external auditor and ensure that key partners are rotated at appropriate intervals;
(b) consider any questions of possible resignation or dismissal of the external auditors and make appropriate recommendations to the Board;
(c) recommend the audit fee to the Board, and approve proposals for non-audit services provided by the external auditor and ensure that the provision of non-audit services does not impair the external auditors independence or objectivity;
(d) oversee the process for selecting the external auditor and make appropriate recommendations through the Board to the shareholders to consider at the Annual General Meeting;
(e) discuss with the external auditors before the audit commences, the nature and scope of the audit, ensure co-ordination where more than one audit firm is involved;
(f) review the auditors` quality control procedures and steps taken by the auditor to respond to changes in regulatory and other requirements;
(g) review the external auditors` management letter and management`s response;
(h) consider any problems, reservations or recommendations arising from the interim and final audits and any matters the auditors may wish to discuss (in the absence of management where appropriate).
9.2 Internal Auditors
(a) eview the internal audit programme, ensure co-ordination between the internal and external auditors;
(b) ensure that the internal audit function is adequately resourced and has appropriate standing within the Group;
(c) consider management`s response to any major internal audit recommendations;
(d) approve the appointment and dismissal of the head of internal audit;
9.3 Whistleblowing
(a) review the Company`s procedures for handling allegations from whistleblowers;
9.4 Financial Reporting
to review and challenge where necessary, the actions and judgements of management, in relation to the half-year and annual financial statements before submission to the Board, focusing particularly on:
(i) critical accounting policies and practices and any changes in them;
(ii) decisions requiring a major element of judgement ;
(iii) the extent to which the financial statements are affected by any unusual transactions in the year and how they are disclosed;
(iv) the clarity of disclosures;
(v) significant adjustments resulting from the audit;
(vi) the going concern assumption;
(vii) compliance with accounting standards;
(viii) compliance with stock exchange and legal requirements.
9.5 Risk Management
(a) review the policies and process for identifying and assessing business risks and the management of those risks by the Company;
(b) review the Company`s statement on internal control systems prior to consideration by the Board.
9.6 General
(a) ensure the Committee`s terms of reference are made publicly available.
10. Reporting procedures
(a) The Chairman shall attend the Annual General Meeting prepared to respond to any shareholder answer questions through the Chairman of the Board, on the Committee`s activities and their responsibilities.
(b) The Committee members shall conduct an annual review of their work and these terms of reference and make recommendations to the Board.
(c) The Committee`s duties and activities during the year shall be disclosed in the annual financial statements.
Issue No. 4 - Approved by the Board
Last Reviewed : 6th December 2007.
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