XYZ S Approach to Engaging the External Auditor for the Performance of Audit and Other

Appendix 20

XYZ’s approach to engaging the external auditor for the performance of audit and other services ensures that those services:

—AreapprovedbyappropriatelevelsofXYZmanagement.

—Donotimpairtheindependenceoftheexternalauditor.

—AreregularlyreportedtotheXYZauditcommittee.

Anyengagementoftheexternalauditormustsatisfyapplicablerulesandlegislation.Theexternal auditor does not have a preferred supplier status for the provision of other services and is to be appointed only when they are best suited to undertake the work and do not have a conflict of interestduetoarelationshipwithanotherentity.

Independence considerations

The directors of XYZ must satisfy themselves that the services provided by the external auditor do not compromise external auditor independence. Factors that the directors should consider include:

—Theleveloffeespaidfortheprovisionofotherservicesasaproportionoftotalfeespaidtothe externalauditor.

—Whetherthecompensationofindividualsemployedbytheexternalauditorwhoareperformingthe auditofXYZistiedtotheprovisionofotherservicesand,ifso,whetherthisimpairsorappearsto impairtheexternalauditor’sjudgementorindependence.

—Whethertheindividualsperformingtheauditwouldalsobeinvolvedinprovidingotherservices.

—Whethertheauditfeesaresufficienttoadequatelycompensatetheexternalauditorsorwhether theauditfeesareatalevelthatcouldincreasetheneedfortheexternalauditortoperformother servicestomaketheexternalauditcommerciallyviable.

—Theexternalauditor’sindependencedeclarationwhichisrequiredtoidentifywhethertherehave beenanycontraventionsofexternalauditorindependencerequirements.

Reporting

—Allnon-auditservicesprovidedbytheexternalauditormustbereportedeveryquartertotheaudit committeebytheexternalauditor.

—Detailsoffeespaidtotheexternalauditormustbedisclosedintheannualreportasspecifiedby applicablefinancialreportingstandardsandcorporategovernancecodes.

—Theannualreportshouldaddresstheapprovalframeworkandexplainhowauditorobjectivityand independence issafeguarded.

Approval process

XYZprotectstheindependenceandobjectivityoftheexternalauditorbymandatinganapproval process for engaging the external auditor. The audit committee has defined the services that maynotbeprovidedbytheexternalauditor;refertothesectionProhibitednon-auditservices. Noapprovalcanbegivenunderanyauthorityfortheprovisionofprohibitedservices.Theaudit committeehasidentifiedspecifictypesofservicesthatareconsideredtobepre-approved

(see section Pre-approved audit and other services). Whether or not pre-approved by the audit committee,allengagementsoftheexternalauditorfortheprovisionofotherservicesaresubjectto thefollowingapprovalrequirements.

Approval requirements

—Approvalmustbeobtainedbeforetheengagementoftheexternalauditorforotherservices.

—The external auditor must provide a written statement of independence for all engagements, approvedbytheappropriateauthoritywithintheauditfirm(typicallytheprincipalengagement partner,).

—AllengagementsrequiringapprovalbytheCFOortheauditcommitteemustbedescribedina writtenrecommendationsettingoutthe:

—Natureandscopeoftheproposedservices.

—Supplierselectionprocessandcriteria.

—Chosensupplierandrationaleastoselectionofthatsupplier.

—Relationshipofindividualswithinthefirmtoperformtheproposedotherserviceswiththosewithin thefirmundertakingauditwork.

—Feeestimate,identifyingthetotalcostexpectedforthecurrentfinancialyear.

—Categoryofpre-approvedservicewhererelevant.

—Whereauditcommitteeapprovalisrequired,itmustbecommunicatedtotheHeadofGroup Reportingandbenotedintheminutesofthenextauditcommitteemeeting.

Approvals

XYZ has established monetary approval thresholds as follows:

Wherethenatureorscopeofanengagementchangessuchthatthepriorapprovalobtainedis insufficient,subsequentapprovaloftherevisedengagementmustbeobtained.Forexample,if

apre-approvedservicewithafeeestimateofEUR10.000increasesinscopetoEUR50.000,the approvaloftheauditcommitteemustbeobtained.

Prohibited non-audit services

Theexternalauditormustnotprovideservicesthatimpair,orappeartoimpair,theirindependenceas externalauditor.Generally,servicesthatareprohibitedincludethosewheretheexternalauditor:

—Participatesinactivitiesthatarenormallyundertakenbymanagement.

—Isremuneratedbywayofsuccessfees,contingentfeesorcommissions.

—ActsinanadvocacyroleforXYZ.

—Mayberequiredtoaudittheirownwork.

The following services must not be provided by the external auditor:

—Totakeanymanagerialdecision,ortotakepartinanymanagerialdecision-making.

—Theprovisionofbookkeepingservices,i.e.thepreparationofclientaccountingrecordsor financialstatements.

—The design, development, implementation and management of financial information technologysystems.

—Tomakeanyvaluationsthataresubsequentlyincorporatedinthefinancialstatements.

—Participationininternalaudits.Certaintypesofinternalauditengagementsare howeverpermissible.

—Toactfortheclientintheresolutionoflitigation,includingtaxlitigation.

—Toparticipateintherecruitmentofseniormanagementforfinancial,administrativeor managementfunctions,orofmembersoflegalentitiesofthecompany(board,etc.).

Additionally, the auditor carrying out the statutory audit of a public-interest entity, or any member of the network to which the auditor belongs, shall not directly or indirectly provide to the audited entity, to its parent undertaking or to its controlled undertakings within the Union any prohibited non-audit services in:

a.theperiodbetweenthebeginningoftheperiodauditedandtheissuingoftheauditreport;and

b.thefinancialyearimmediatelyprecedingtheperiodreferredtoinpoint(a)inrelationtothe serviceslistedinpoint(e)ofthesecondsubparagraph.

For EU PIE entities, prohibited non-audit services includes:

a.tax services relatingto:

1. preparationoftaxforms;
2. payrolltax;
3. customsduties;
4. identificationofpublicsubsidiesandtaxincentivesunlesssupportfromthestatutory auditorortheauditfirminrespectofsuchservicesisrequiredbylaw;
5. supportregardingtaxinspectionsbytaxauthoritiesunlesssupportfromthestatutory auditorortheauditfirminrespectofsuchinspectionsisrequiredbylaw;
6. calculationofdirectandindirecttaxanddeferredtax;
7. provisionoftaxadvice.

b.servicesthatinvolveplayinganypartinthemanagementordecision-makingoftheaudited entity;

c.bookkeepingandpreparingaccountingrecordsandfinancialstatements;

d.payrollservices;

e.designingandimplementinginternalcontrolorriskmanagementproceduresrelatedtothe preparation and/or control of financial information or designing and implementing financial information technologysystems;

f.valuationservices,includingvaluationsperformedinconnectionwithactuarialservicesor litigation supportservices;

g.legal services, with respectto:

1. theprovisionofgeneralcounsel;
2. negotiatingonbehalfoftheauditedentity;and
3. actinginanadvocacyroleintheresolutionoflitigation;

h.services related to the audited entity’s internal auditfunction;

i.services linked to the financing, capital structure and allocation, and investment strategy of theauditedentity,exceptprovidingassuranceservicesinrelationtothefinancialstatements, such as the issuing of comfort letters in connection with prospectuses issued by the audited entity;

j.promoting, dealing in, or underwriting shares in the auditedentity;

k.human resources services with respectto:

1. management in a position to exert significant influence over the preparation of the accountingrecordsorfinancialstatementswhicharethesubjectofthestatutoryaudit,

where such services involve:

–searchingfororseekingoutcandidatesforsuchposition;or

–undertakingreferencechecksofcandidatesforsuchpositions;

1. structuringtheorganisationdesign;and
2. costcontrol.

ForEUPIEsandtheirrelatedentitiesinIreland,thepreparationoftaxforms,identificationofpublic subsidies and tax incentives, support regarding tax inspections by tax authorities, calculation of direct and indirect tax and deferred tax; provision of tax advice and valuation services, including valuationsperformedinconnectionwithactuarialservicesorlitigationsupportservicesmaybeare permitted provided that they satisfy the followingrequirements:

a.theyhavenodirectorhaveimmaterialeffect,separatelyorintheaggregateontheaudited financialstatements;

b.the estimation of the effect on the audited financial statements is comprehensively documentedandexplainedintheadditionalreporttotheauditcommitteereferredtoinArticle 11;and

c.theprinciplesofindependencelaiddowninDirective2006/43/ECarecompliedwithbythe statutory auditor or the audit firm.

Pre-approved audit and other services

Onlytheauditcommitteeispermittedtograntpre-approvalforspecifictypesofservices.All specificpre-approvedservicesareprescribedbelow.Anyproposedengagementthatisnot specificallyidentifiedinbeloworwhichcallsonjudgementtobeexercisedastowhetheritis includedbelow,mustbetreatedasnotpre-approved.Allsuchengagementsrequirespecific approvalbytheauditcommittee.

Pre-approved audit services

Pre-approved audit services is work that constitutes the agreed scope of the statutory audit (including interim reviews or audits) of the Group consolidated financial report and the financial reports of all subsidiaries and affiliates of the Group. (The audit committee monitors the audit servicesengagements,andapproves,ifnecessary,anychangesintermsandconditionsresulting fromchangesinauditscope,Groupstructureorotherrelevantevents.)

—Statutoryauditengagementsforthecompany,thegroupandeachsubsidiaryandaffiliateas required by applicablelegislation.

—Financial statement audit engagements for any group entity, incremental to the audit work requiredforthepurposeoftheconsolidatedfinancialstatements,whererequiredbyapplicable laws or regulations, or as requested to meet internal management requirements for audited financialstatements.

—Auditsofselectedfinancialinformationasrequiredbyapplicablelawsorregulationsforthe purposeofthegroupsatisfyingself-insuranceandworkerscompensationarrangements.

—Reviewsofinterimfinancialreportsofthegroupasrequiredbyapplicablecompaniesand securitieslegislation.

—Auditsofmanagementcertificationsastotheadequacyofinternalcontrolswheresuchauditsare mandatedbyapplicablecompaniesandsecuritieslegislation.

Note: The following paragraphs set out suggested pre-approved non-audit services. However, for EUPIEentitiestheFRCGuidanceonAuditCommitteesrecommendsthatsuchapprovalshouldonly beinplaceformattersthatareclearlytrivial.

Pre-approved audit related and other assurance services

Pre-approved audit related and other assurance services comprise work that is outside the required scopeofastatutoryaudit,butisconsistentwiththeroleofthestatutoryexternalauditor.Thiscategory includes work that is reasonably related to the performance of an audit or review and is a logical extension of the audit or review scope, is of an assurance or compliance nature and is work that the externalauditorsmustorarebestplacedtoundertake.

—Audits of financial statements of Group entities for the purpose of inclusion in prospectuses andotherformsofofferingdocumentsrelatingtotheissuanceorregistrationofdebtorequity securities ofGroup entities.

—Conductofagreedprocedurestopermittheissuanceofcomfortlettersinconnectionwith prospectusesandotherformsofofferingdocumentsreferredtoabove.

—Financialstatementauditsofemployeebenefitplansasrequiredbyapplicablelegislation.

—Agreed-upon procedures, extended audit procedures and regulated attest engagements applied to selected accounting financial and non-financial information or financial statements required to respondtoorcomplywithfinancial,accounting,orregulatoryreportingmatters,includingauditsof royalty,emissionsandsimilarreturns.

—AuditsofreportscontainingfinancialornonfinancialinformationpreparedtomeetGroup governanceobjectives,suchastheannualSustainabilityReport.

—TheauditofselectedfinancialinformationofGroupentitiesinsupportofdisposaland borrowingtransactions.

—Consultations on the accounting treatment or disclosure requirements of transactions or events includingdiscussions,researchconsultationsandauditingproceduresrelatingtounusualornon- recurring transactions, including assistance in responding to regulatory comment letters on the Group’s financialreports.

—Consultationsontheaccountingtreatmentordisclosurerequirementsemanatingfromnewor proposedrules,standardsorinterpretationsbyregulatoryorstandardsettingbodies.

—Assistance with financial due diligence investigations pertaining to potential business acquisitions/ dispositions and other major transactions and events (excluding valuation services, appraisals or fairnessopinions)includingthereviewoffinancialstatementsandotherfinancialdataandrecords anddiscussionswithcounterpartyfinanceandaccountingpersonnel.

—Translationofauditedfinancialreportsintoanotherlanguageforfilingwithanationalregulator,orto satisfyotherfinancialreportingrequirementsofaGroupentityoraffiliate.

Pre-approved tax services

Pre-approved tax services comprise work of a tax nature that does not compromise the independenceoftheexternalauditor.Itemsofsuchworkaretypicallyconfinedtoadvisory-and compliance-related services and must not extend to services involving tax-related investments ortransactions.Noneoftheseservicesarepre-approvedwheretheywouldcontainelementsof assistanceoradviceonmattersofastrategictaxplanningorstructuringnature.

—ActingasagentofGroupcompaniesinthelodgementofincometaxreturnspursuanttofederal, stateandlocaltaxlegislation.

—Assistanceinthepreparationoftaxreturnsbutwithnoauthorityformakingelectionsor determining amounts declaredtherein.

—Theprovisionofadviceconcerningthefilingoftaxreturnsandthehandlingofspecificitemsin thosereturnsandinconnectionwithrespondingtoqueriesinrelationtothosereturnsfromthe taxauthorities.

—Adviceandassistancewithrespecttotransferpricingmatters,includingpreparationofreports used by the Group to comply with taxing authority documentation requirements regarding royaltiesandinter-companypricingandassistancewithtaxexemptions.

—Compliancereviewsandadviceoncomplianceintheareasoftariffsandclassification,origin, pricing,anddocumentation,includingassistancewithcustomsaudits.

—The provision of independent opinions containing interpretations of taxation legislation as it appliestospecifictransactionsexecutedorproposedbyGroupentities,wherethoseopinionsare complementarytotheexternalauditor’sexaminationoftherelevantfinancialstatements.

—Theprovisionofindependentopinionscontaininginterpretationsoftaxationlegislationin connection with tax audits, negotiations with or appeals before federal, state, local and foreign taxagencies.

—Valuationservicespertainingexclusivelytotaxcompliancematters.

—Theprovisionofgeneralnewsandinformationregardingstatutory,regulatoryoradministrative taxationdevelopments.

Pre-approved other services

Pre-approved other services is work of an advisory nature that does not compromise the independenceoftheexternalauditor.Itemsofsuchworkaretypicallyconfinedtoriskmanagement, fundingorinvestigativeadvisoryservices.

—ReviewofoperationaleffectivenessofTreasuryoperationsrelatingtochequeclearingandfloat- managementpracticesandrecommendationsregardingpotentialareasofimprovement.

—Conducting internal investigations and fact finding in connection with alleged improprieties, other thanwheretheyrelatetopotentialaccountingirregularities.

—Review of actuarial reports and calculations to assist the Group in understanding the various processessurroundingactuarialvaluationsandthepotentialimpactofplanchangesorchangesin accountingstandards.

—Review of compliance by Group companies with local statutory regulations concerning incorporationofentities,constituentdocumentation(suchasconstitutionsandarticlesof association)andlodgementofstatutoryfilingswithregulatorybodies.

—Assistanceintheregistrationofpensionplansasandwhenrequiredbycountry specificregulations.

—Riskmanagementadvisoryservicesintheassessmentandtestingofsecurity infrastructurecontrols.

—Financialandlegalduediligenceservices.