Penrice Soda Holdings Limited
ACN 109 193 419

1. Purpose

1.1. To assist the Board in discharging its duties in relation to internal controls, reported financial information and corporate standards of behaviour.

2. Membership

2.1. The Committee shall consist of a minimum of three (3) non-executive Directors, the majority of whom shall be independent;

2.2. The Board of Directors shall appoint and remove the members of the Committee and the Committee's Chairman.

2.3. A quorum shall be two (2) members or a minimum of two thirds of the Committee members.

2.4. The Chief Executive Officer, Chief Financial Officer, representatives from External Audit and Internal Audit, as well as specialist external consultants (as required) attend by invitation.

3. Chairman

3.1. The Chairman of the Committee will be an independent Director and shall not be the Chairman of the Board.

3.2. Should the Chairman of the Committee be absent from a meeting, the members of the Committee present at the meeting shall choose one of the other members of the Committee to chair that particular meeting.

4. Meetings

4.1. The Chairman will call a meeting of the Committee if so requested by any member of the Committee.

4.2. The Committee meets as required but a minimum of three times per year.

4.3. Special meetings should be authorised at the request of any Committee member or of the external or other auditors.

4.4. Committee meetings are to be held at times that ensure:

• the scope of the audit plan is reviewed prior to commencement of the annual external audit;
• an assessment is made of accounting issues impacting the half-year and year-end results;
• consideration is given to major issues that have arisen out of the annual audit and half-year review process and that they have been resolved;
• the draft financial statements are reviewed before being recommended to the Board for adoption;
• the performance of the external auditors is reviewed;

5. Conduct of Meetings

5.1. The Chairman of the Committee is to meet annually, outside of normal meeting times, with management to:

• clearly agree on mutual expectations;
• agree on an annual detailed plan of Committee activities; and
• agree on the nature, extent and timing of Committee information needs.

5.2. Committee meetings should be formally structured and a written agenda established for each meeting. The Chairman is to review and agree upon the meeting agenda in advance of its distribution to Committee members and others. The responsibility for preparing the draft agenda and papers lies with management in consultation with the members of the Committee and the internal and external auditors. The agenda and discussion papers should be distributed to the members one week prior to each meeting.

5.3. The meeting agenda must be managed to ensure:

• significant time for member questions and dialogue;
• discussion of important business and financial risks and related controls, qualitative aspects of financial reporting and potential future issues; and
• adequate time for regular, private, Committee-only discussions with internal and external auditors.

6. Secretary

6.1. The Company Secretary for Penrice shall act as Secretary of the Committee

7. Voting

7.1. Matters arising for determination at Committee meetings shall be decided by a majority of votes of Directors present and voting and any such decision shall for all purposes be deemed a decision of the Committee.

7.2. In the case of equality of votes, the Chairman of the meeting, in addition to his deliberate vote, has the casting vote.

8. Reporting

8.1. Proceedings of all meetings are minuted and signed by the Chairman or Chair of the Committee. Minutes of all Committee meetings will be provided to the next Committee meeting.

8.2. The draft minutes are to be distributed to the full Board in order to keep it informed on the Committee's activities. The Committee should report to the Board on all matters relevant to the Committee's role and responsibilities.

9. Relationship with Management, and External Auditors

9.1. Guidelines for the Committee's relationships with members of the management team and the external auditors assist in defining the responsibilities in relation to the financial statements and maintenance of appropriate internal controls.

9.2. The Chairman should have regular liaison with the management team to ensure that:

• all accounting matters and issues are appropriately communicated; and
• management have a clear understanding as to the roles of the external audit functions.

9.3. The Committee is also to liaise with the external auditors on behalf of the Board. The Committee should establish:

• a detailed understanding of the external audit process;
• whether the external auditors have any difficulties with the management team; and
• management's views on the efficiency and effectiveness of the external audit process.

9.4. The Committee should conduct separate discussions with management and the auditors to facilitate this process.

9.5. The primary focus of the external auditors is to express an opinion on the financial statements. The external auditors should also report to management any risks identified, together with suggestions for managing those risks, highlighted during their analysis and other testing.

10. Powers of the Audit and Risk Management Committee

10.1. The Audit and Risk Management Committee has the ability to direct any special investigations deemed necessary and to obtain information from, and consult with, management or independent auditors or experts (without management present) where considered necessary to carry out its duties. Costs of such consultations are borne by Penrice.

11. Duties of the Audit and Risk Management Committee

11.1. The following duties are structured in accordance with the Audit and Risk Management Committee purposes:

11.1.1. Provide advice to the Board and report on the status of the business risk to Penrice through its risk management processes aimed at ensuring risk are identified, assessed and properly managed;

11.1.2. Use risk assessment as an integral part of decision making.

11.1.3. Ensure that all material risks are identified and objectively assessed against accepted criteria and that appropriate controls measures implemented.

11.1.4. Require management to provide quarterly reports regarding internal compliance and controls

11.1.5. Agree the criteria against which the risk management and internal control framework is benchmarked.

11.1.6. Agree the process underlying CEO / CFO certification.

11.1.7. Receive and validate as appropriate the certification received from management.

11.1.8. Ensure the implementation of crisis management and business continuity plans.

11.1.9. Implement insurance strategies for transfer of residual risk.

11.1.10. Comply with all applicable laws, regulations, internal policies and contractual obligations as a minimum standard.

11.1.11. Review all published financial statements, which require approval by the Board, prior to the Board approval. Financial statements include half-yearly reviewed and year-end audited statements, statements in prospectuses and other offering memoranda and statements required by regulatory authorities;

11.1.12. Ensure that a comprehensive process is established to capture issues for the purposes of continuous reporting;

11.1.13. Review any report of management which accompanies published financial statements for consistency of disclosure with the financial statements before approval from the Board is sought;

11.1.14. Recommend to the Board the appointment of the external auditor;

11.1.15. Discuss with the external audit the plans in place to ensure the successful rotation of the lead audit partner.

11.1.16. Review the audit plans of the external auditors to ensure that the extent of the planned scope addresses weaknesses in internal control, fraud or other illegal acts;

11.1.17. Review the results of the external audits;

11.1.18. Assess the performance and independence of the external auditor and review non-audit services provided by the external auditor to confirm they are consistent with maintaining external audit independence;

11.1.19. Assess management's programs and policies which deal with the adequacy and effectiveness of internal controls over the Company's business processes;

11.1.20. Exercise the right of veto of management's selection or de-selection of the internal auditor;

11.1.21. Approve changes to the Company's formal accounting policies;

11.1.22. Review jointly with management, the external auditors and if necessary, legal counsel, any litigation, claim or other contingency, including tax assessments, which could have a material effect on the financial position or operating results of the Company;

11.1.23. Review and assess compliance monitoring programs in place within the Company;

11.1.24. Assess the adequacy of the Company's insurance program and its risk management strategies; and

11.1.25. Assess the overall performance of the Committee by:

• obtaining feedback from the Board, CEO, and external auditors;
• completing a self-assessment process at least every two years; and
• the Chairman assessing the contribution and performance of individual Committee members.
  

12. Delegation to Subcommittee

12.1. The Audit and Risk Management Committee may, in its discretion, delegate all or a portion of its duties and responsibilities to a subcommittee of the Committee.

13. Review of Charter

This Charter is to be reviewed by the Committee to ensure it remains consistent with the Board's objectives and responsibilities.

14. Committee Performance Review

14.1. The Committee shall conduct a formal review of its effectiveness, on an annual basis.

15. Publication of Charter

15.1. This Charter is to be made available to shareholders of Penrice upon request.