The Audit Committee currently comprises Steve Hannam, Chairman of the Committee, Chris Littmoden and Martin Flower. Martin Flower was appointed as a member of the Committee on 1 January 2007.

The Committee is made up entirely of independent non-executive directors. While the Committee collectively has the skills and experience required to fully discharge its duties, and has access to independent advice at the Group's expense. Chris Littmoden is considered by the Board to have recent and relevant financial experience.

The Audit Committee, which is established with formal, written terms of reference, meets at least three times a year. The Audit Committee is responsible for assisting the Board to discharge its duties with regard to the Group's financial affairs, and for reviewing with the external auditors the adequacy of the Group's accounting and financial and operating controls. The Committee is responsible for monitoring and controlling the effectiveness of the external audit process and making recommendations to the Board in relation to the appointment and re-appointment of the external auditors.

The Audit Committee is responsible for ensuring that an appropriate relationship between the Group and the external auditors is maintained, including reviewing non-audit services and fees. It has developed and implemented a policy on the supply of non-audit services by the external auditor to ensure their continued objectivity and independence. The Committee is satisfied that the provision by KPMG Audit Plc of non-audit services currently provided does not impair their independence or objectivity. The Audit Committee has approved the range of services that may be provided by KPMG Audit Plc, these include taxation compliance services, transaction due diligence and accountancy assistance on projects. Subject to approved authorisation limits, the services require prior authorisation from either the Group Finance Director, the Chairman of the Audit Committee or the full Audit Committee. The Committee is satisfied that the majority of the tax services supplied by KPMG Audit Plc during the year were compliance-related or related principally to foreign advisory work that required a detailed understanding of the Group and which did not impair their independence.