TOM : TERMS OF REFERENCE OF AUDIT COMMITTEE

Stock Code: 2383

("Company")

TERMS OF REFERENCE

OF

AUDIT COMMITTEE

Objective

The Audit Committee of the Company ("Audit Committee") is to assist the board of directors ("Directors") of the Company ("Board") in the following manner:

1. to review and monitor the risk management and internal control systems and the Company's compliance (include external financial reporting obligations) with the applicable laws and regulations in place and the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("Stock Exchange") ("Listing Rules");
2. to oversee the integrity of the financial statements of the Company and the objectivity and credibility of financial reporting system of the Company; and
3. to maintain an appropriate relationship with the Company's external auditor.

Membership

1. The Audit Committee shall be appointed by the Board amongst the non- executive Directors and shall consist of not less than three members
   ("Members"), a majority of whom shall be independent non-executive Directors. The Board may also remove any Member or all Members at its sole discretion. The Board may from time to time vary the composition of the Audit Committee as may be required by the Listing Rules (as modified from time to time) or the rules of any other stock exchange in respect of which the shares of the Company are listed or quoted, or other codes, rules and regulations as may be prescribed by the Hong Kong Securities and Futures Commission or any other applicable regulatory authority from time to time.
2. The Chairman of the Audit Committee shall be appointed by the Board and shall be an independent non-executive Director with appropriate professional qualifications or accounting or related financial management expertise (as required under Rules 3.10(2) and 3.21 of the Listing Rules).

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1. In the event that the Audit Committee comprises a non-executive Director who is a former partner of the Company's existing auditing firm, such non-executive Director shall be prohibited from acting as a Member for a period of two years commencing on the later of (a) the date of his/her ceasing to be a partner of the firm; or (b) the date of his/her ceasing to have any financial interest in the firm.
2. The Company Secretary shall be the secretary for the Audit Committee.

Responsibility, Powers and Discretion

The responsibility of the Audit Committee is to assist the Board in fulfilling its audit duties through the review and supervision of the Company's financial reporting process, risk management and internal control systems. The Audit Committee shall have the following powers and discretion:

Relationship with the Company's external auditor

1. to be primarily responsible for making recommendation 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 any questions of resignation or dismissal of that auditor;
2. to review and monitor the external auditor's independence and objectivity. To this end, the Audit Committee shall:
3. 1. consider all relationships between the Company and the audit firm (including the provision of non-audit services);
   2. obtain from the audit firm, on an annual basis, information about policies and processes for maintaining independence and monitoring compliance with relevant requirements, including those for rotation of audit partners and staff; and
   3. meet with the external auditor, at least annually, in the absence of management of the Company, to discuss matters relating to the audit fees, any issues arising from the audit and any other matters that the external auditor or the Audit Committee may wish to raise;
4. to review and monitor the effectiveness of the audit process in accordance with applicable standard, and to discuss with the external auditor the nature and scope of the audit and reporting obligations before the audit commences;
5. to develop and implement policy on the engagement of an external auditor to supply non-audit services. For this purpose, "external auditor" shall include any entity that is under common control, ownership or management with the audit firm or any entity that a reasonable and informed third party having knowledge of all relevant information would reasonably conclude as part of the audit firm nationally or internationally. The Audit Committee should report to the Board, identifying and making recommendations on any matters where action or improvement is needed;
6. to act as the key representative body for overseeing the relations of the Company with the external auditor;

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Review of the financial information of the Company

1. to monitor integrity of financial statements of the Company and the Company's annual report and accounts, half-year report and quarterly reports (if applicable), and to review significant financial reporting judgements contained in them. In this regard, in reviewing the Company's annual report and accounts, half-year report and quarterly reports (if applicable) before submission to the Board, the Audit Committee should focus particularly on:
2. 1. any changes in accounting policies and practices;
   2. major judgmental areas;
   3. significant adjustments resulting from audit;
   4. the going concern assumptions and any qualifications;
   5. compliance with accounting standards; and
   6. compliance with the Listing Rules and other legal requirements in relation to financial reporting;
3. In relation to paragraph 6 above:
4. 1. Members must liaise with the Board and the Company's senior management, and the Audit Committee must meet, at least twice a year, with the Company's external auditor;
   2. the Audit Committee shall consider any significant or unusual items that are, or may need to be, reflected in such reports and accounts and must give due consideration to any matters that have been raised by the
      Company's staff responsible for the accounting and financial reporting function, compliance officer or external auditor;
   3. discuss (in the absence of executive Directors if appropriate) any problems or reservations which the Company's external auditor may have arising from any audit or review or otherwise; and
   4. check and confirm that the Company's practices and procedures for compliance with the relevant legal and Stock Exchange's requirements with respect to related party transactions are followed;
5. to be primarily responsible for making recommendation to the Board for the approval of any non-audit services provided to the Company by the external auditor. The Audit Committee should ensure that the provision of such non- audit services does not impair the external auditor's independence or objectivity. When assessing the independence or objectivity of the external auditor in relation to the provision of non-audit services, the Audit Committee should consider:

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1. whether the skills and experience of the audit firm make it a suitable supplier of such non-audit services;
2. whether there are safeguards in place to ensure that there is no threat to the objectivity and independence of the external auditor notwithstanding its proposed provision of the non-audit services;
3. the nature of the non-audit services, the related fee levels and the individual and aggregate fee levels relative to the audit firm; and
4. the criteria for determining the compensation of the individuals performing the non-audit services;

9. to set policies on hiring employees or former employees of the external auditors and monitoring the application of these policies;

Oversight of the Company's financial reporting system, risk management and internal control systems

1. to review the Company's financial controls, risk management and internal control systems with particular regard to their effectiveness;
2. to review the statement of the Company on risk management and internal control systems (where one is included in the annual report) prior to endorsement by the Board;
3. to discuss with the Company's management the risk management and internal control systems to ensure that the Company's management has discharged its duty to have effective systems, and such discussion shall include:
4. 1. the adequacy of resources, qualifications and experience of staff of the
      Company's accounting and financial reporting function, and their training programmes and budget;
   2. the changes in the nature and extent of significant risks, and the Company's ability to respond to changes in its business and the external environment;
   3. the quality and scope of the Company's management's ongoing monitoring of risk management and internal control systems, as well as the work of its internal audit function;
   4. the frequency and extent of communication to the Board of the results of the monitoring so as to enable the Board to assess control of the Company and the effectiveness of risk management; and
   5. significant control failings or weaknesses that have been identified. To the extent they have resulted in unforeseen outcomes or contingencies that have had, could have had, or may in the future have, a material impact on the Company's financial performance or condition;

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1. to consider any findings of major investigations of risk management and internal control matters as delegated by the Board or on its own initiative and the Company's management's response;
2. 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 the effectiveness of the internal audit function;
3. to review the financial and accounting policies and practices of the Company and its subsidiaries (collectively, "Group");
4. to review the external auditor's management letter, any material queries raised by the external auditor to management in respect of the accounting records, financial accounts or systems of control and management's response;
5. to ensure that the Board will provide a timely response to the issues raised in the external auditor's management letter;
6. to report to the Board on the matters set out in these Terms of Reference and where the monitoring activities of the Audit Committee reveal cause for concern or scope for improvement, the Audit Committee shall make recommendations to the Board to address or to make improvements;
7. to provide to the Board such assurances as it may reasonably require regarding compliance by the Company's subsidiaries and associates for which the Company provides management services with all supervisory and other regulations to which they are subject;
8. to review arrangements for employees of the Company to raise concerns about possible improprieties in financial reporting, internal control or other matters, and to ensure that proper arrangements are in place for fair and independent investigation of these matters and for appropriate follow-up action; and
9. to consider other topics, as defined by the Board.

Corporate Governance Delegated by the Board

To ensure the upholding of good corporate governance including, but not limited to:

1. to develop and review the policies and practices of the Company on corporate governance and make recommendations to the Board;
2. to review and monitor the training and continuous professional development of the Directors and the Company's senior management;
3. to review and monitor the policies and practices of the Company on compliance with legal and regulatory requirements;
4. to develop, review and monitor the code of conduct and compliance manual (if any) applicable to the Directors and the Group's employees; and

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5. to review the compliance by the Company with the Corporate Governance Code (Appendix 14 to the Listing Rules) and the disclosure requirements for the Corporate Governance Report.

Authority

1. The Audit Committee shall report directly to the Board.
2. The Board shall authorise the Audit Committee to investigate any activity within these Terms of Reference. The Audit Committee is authorised to inspect all accounts, books and records of the Company and it shall have the right to require the Company's management to furnish information on any matter relating to the financial position of the Company, its subsidiaries or affiliates, as may be required for the purposes of discharging its duties. All the Group's employees are directed to co-operate with any request made by the Audit Committee.
3. A Director as a Member may seek independent professional advice in appropriate circumstances at the Company's expense to discharge his/her duties as a Member to the Company.
   Note: Arrangement to seek independent professional advice could be made through the Company Secretary.
4. The Audit Committee shall be provided with sufficient resources to discharge its duties.

Meetings and Minutes

1. The Audit Committee shall meet at least twice each year. The Company's external auditors may request that a meeting of the Audit Committee ("Meeting") be held if they consider it necessary.
2. The quorum of a Meeting shall be any two Members, of whom at least one should be an independent non-executive Director.
3. Resolutions of the Audit Committee shall be passed by a majority of votes which could also be passed by way of unanimous written resolutions. Meetings could be held in person, by telephone or by video conference.
4. Meetings of the Audit Committee shall be called by its Chairman or at the request of the Board. Notice of any Meetings confirming the venue, time and date, together with an agenda of items to be discussed, has to be given at least 48 hours prior to any such Meeting being held, unless all Members unanimously waive such notice. Irrespective of the length of notice being given, attendance of a Meeting by a Member shall be deemed a waiver of the requisite length of notice by the Member. Notice of any adjourned Meetings is not required if adjournment is for less than 48 hours.

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5. Full minutes of the Meetings shall be kept by the secretary of the Audit Committee. Minutes of the Meetings shall record in sufficient detail the matters considered by the Members and decisions reached, including any concerns raised by the Members and dissenting views expressed. Draft and final versions of minutes of the Meetings shall be circulated to all Members for their comment and records respectively, in both cases within a reasonable period of time after the Meeting. Such minutes shall be open for Directors' inspection at any reasonable time on reasonable notice.

Attendance

The Chief Financial Officer, the Head of Internal Audit, Company Secretary and a representative of the external auditor shall normally attend the Meetings. However, at least once a year the Audit Committee shall meet with the external and internal auditors without the executive Directors present, except by invitation of the Audit Committee. Subject to the above, other members of the Board may attend all Meetings although only Members are entitled to vote at such Meetings.

Annual General Meeting

The Chairman of the Audit Committee or in his/her absence, another Member (who must be an independent non-executive Director) of the Audit Committee, shall attend the Company's annual general meetings and be prepared to respond to the Company's shareholders' questions on the Audit Committee's activities and their responsibilities.

Publication of the Terms of Reference

The Terms of Reference will be posted on the respective websites of the Company and the Hong Kong Exchanges and Clearing Limited. A copy of the Terms of Reference will be made available to any person without charge upon written request made to the Company Secretary.

Note: "senior management" should refer to the same category of persons as referred to in the Company's annual report and is required to be disclosed under Appendix 16 to the Listing Rules.

To the extent that there is any inconsistency or discrepancy between the English version and the Chinese translation of these Terms of Reference, the English version shall prevail.

Revised and adopted on 3 December 2019 and applicable to the Company's accounting periods beginning on or after 1 January 2019.

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