Corporate Governance

Compliance with the Combined Code

As the Company is listed on the Alternative Investment Market of the London Stock Exchange ("AIM"), the Company is not required to follow the Combined Code, which applies only to fully listed companies. Nevertheless, the Company is committed to high standards of corporate governance and the Board is accountable to the Company's shareholders for good corporate governance. This statement describes how the principles of corporate governance are applied to the Company and the Company's compliance with the Code provisions. Except as noted below, the Company has been in compliance with the provisions set out in the 2008 FRC Combined Code during the year.

The Workings of the Board and its Committees

The Board

The Board currently comprises the non-executive Chairman, the Group Chief Executive, the Group Finance Director and three other nonexecutive directors and is responsible to shareholders for the proper management of the Group. Directors' biographies appear on page 24 and 25 and demonstrate a range of relevant experience bringing independent judgement to bear on issues of strategy, performance, resources, industry knowledge and standards of conduct, which is vital to the success of the Group.

All directors have access to the Company Secretary, who is responsible for all company secretarial matters and compliance with relevant statutory obligations. All directors receive adequate training to enable them to comply with their duties as a director.

To enable the Board to discharge its duties, all directors have full and timely access to all relevant information. The Board meets at least quarterly and has adopted a formal schedule of matters specifically reserved for decision by it, thus ensuring that it exercises control over appropriate strategic, financial, operational and compliance issues. At these meetings the Board reviews trading performance, ensures adequate financing, sets and monitors strategy, examines investment and acquisition opportunities and discusses reports to shareholders. The directors can also take independent professional advice as appropriate at the Company's expense.

The Board has a process for evaluating the performance of each director. The performance of the executive directors is reviewed by the non-executive directors. The performance of the Chairman and each of the non-executive directors is reviewed on an individual basis by the other directors. The overall effectiveness of the Board and its sub-committees is reviewed by the Board as a whole through completion of a formal questionnaire. The following committees have been established to deal with specific aspects of the Group's affairs.

Audit Committee

The Audit Committee is chaired by Charles Fairbairn and also comprises the Chairman (Carl Bacon), Mark Adorian and Stuart Clark, and meets at least three times annually. The Audit Committee provides a forum for reporting by the Group's external auditors. Meetings are also attended, by invitation, by the Group Finance Director.

The Audit Committee is responsible for reviewing a wide range of financial matters, as set out in written terms of reference, including the interim results and the annual report and accounts before their submission to the Board and monitoring the controls which are in force to ensure the integrity of the financial information reported to shareholders. The Audit Committee reviews the appointment of external auditors and their remuneration both for audit and non-audit work and discusses the nature and scope of the audit. The Audit Committee regularly reviews the level of non-audit work being performed by the auditors to ensure that they remain independent and the Audit Committee is satisfied that the current level of non-audit work being performed by the auditors is appropriate.

The Audit Committee needs to assess annually the qualification, expertise and resources, and independence of the external auditors and the effectiveness of the audit process. In June 2010, as previously announced, Ernst & Young LLP were appointed by the Board as Auditor to the Group following a competitive tender process. The previous auditor, PricewaterhouseCoopers LLP, had been the Group's auditors since April 2000.

Remuneration and Nominations Committees

The Remuneration Committee is responsible for determining the contract terms, remuneration and other benefits for executive directors, including performance-related bonus schemes and participation in the Group's Long Term Incentive Scheme. Mark Adorian is the chairman of the Remuneration Committee and the other members are Charles Fairbairn, Carl Bacon and Stuart Clark, who was appointed to the committee on 1 July 2010.

The Remuneration Report, which includes details of directors' remuneration, pension entitlements and directors' interests, together with information on service contracts is set out on pages 39 to 42.

Mark Adorian is the chairman of the Nominations Committee and the other members are Carl Bacon and Charles Fairbairn. The Nominations Committee undertakes the function of nominating appointments to the Board, although all such appointments are reviewed and approved by the full Board.

There were six full scheduled Board meetings held in 2010. During the year there were three audit committee meetings, two remuneration committee meetings and there were no nominations committee meetings. The number of full scheduled Board meetings and main subcommittee meetings attended by each director during the year were as follows:

	Scheduled Board meetings	Audit Committee meetings	Remuneration Committee meetings
CR Bacon	6	3	2
JMBT Wheatley	6
AM Fabian	6
MC Fairbairn	6	3	2
MC Adorian	6	3	2
SJ Clark (appointed 1 September 2009)	6	3	1

SJ Clark was appointed to Remuneration Committee on 1 July 2010.

Group Executive Board

The Group Executive Board ("GEB") is the executive committee, which comprises the executive directors together with other senior executives of the Group who meet at least ten times per annum to discuss strategic and operational matters. Regional executive boards and product focused committees have been established to deal with executive decisions, within clearly defined terms of reference established by the Board.

The following changes to the composition of the GEB have occurred. In December 2010, Mark Bramley resigned from the Group Executive Board. With effect from 1 January 2011, two senior executives (Dario Cintioli and Neil Smyth) were promoted to the Group Executive Board. At the same time the roles and responsibilities of all GEB members were reviewed and are now as follows:

Justin Wheatley, Group Chief Executive

Andrew Fabian, Group Finance Director

Simon Johns, CEO, EMEAA

Andrew Peddar, CEO, North America

Michel Lempicki, Corporate Development Director

Dario Cintioli, Product Director

Neil Smyth, Marketing and Technology Director

The Group Executive Board has the following sub-committees:

Regional Boards

EMEAA Region (Europe, South Africa and Australasia) and North American Region

Operational decisions on implementing the Group's strategy including sales and client services strategy, expenditure and recruitment plans are delegated to senior executives in the Group's regions, within clearly defined terms of reference and overall budgets established by the Board.

Product Strategy

Operational decisions on implementing the Group's product strategy including development plans together with related expenditure and recruitment plans are delegated to the Product Director who works with other senior executives on product-focused committees, within clearly defined terms of reference and overall budgets established by the Board.

Relations with shareholders

Communications with shareholders are given high priority. There is regular dialogue with institutional shareholders and market analysts including presentations after the Company's preliminary announcement of the annual and interim results and other major announcements.

Internal controls and risk management

During the year, the Board has formally reviewed the Group's risk profile and reported on the effectiveness of the Group's system of internal controls and management of Group risk in accordance with the Combined Code. This review is required to address not only internal financial controls but other risks and controls of the business. The directors acknowledge that they are responsible for the Company's system of internal control, which is designed to manage rather than eliminate business risks and which provides reasonable but not absolute assurance against material mis-statement or loss.

The Company has established risk management procedures, which the directors consider appropriate to a group of StatPro's size and complexity, and during the year, the internal controls and risk management procedures were reviewed by the directors. This is achieved through a series of reports and meetings of specific committees including the Information Security Committee. The Company has a Group Risk Manual, which sets out the key risks by region and by function and the controls in place to manage the risks and identifies actions to be taken to improve risk management processes. The risk review process was enhanced during the year by the implementation of a new risk management framework which focuses on adopting enterprise wide risk management techniques on a consistent basis and improving risk reporting and management. Given the size and nature of the business the directors consider that the Group is compliant with the requirements of The Turnbull Report.

Each senior executive is responsible for managing risks in his or her region or function and making regular reports on risk issues to both the main Board and Group Executive Board. This risk analysis covers all business risks including commercial, financial, operational, legal and environmental risks. These reports include the potential impact to the business of each key risk and its likelihood. The Board is thus able to monitor the risk profile for all significant business risks. Recommendations on internal controls and risk improvement are reviewed by the Audit Committee and the Board.

Risk awareness is further embedded within the business at a series of review meetings during the year extending to Group Executive Board and other directors and senior managers.

A statement of the directors' responsibilities in respect of the financial statements is set out on pages 30 to 31 and a statement on going concern is below.

Financial controls

The Group has established written expenditure approval, delegation of authority and authorisation levels, segregation of duties and other control procedures together with accounting policies and procedures, which are approved by the Board.

Budgetary process

Each year the Board approves the annual budget and key risk areas are identified. Performance is monitored and relevant action is taken throughout the year through regular reporting to the Board of variances from the budget, updated forecasts for the year together with information on the key risk areas.

Investment appraisal

Major capital and other project expenditure is controlled by a budgetary process and authorisation levels. For capital expenditure above specified levels, and for acquisitions and disposals, detailed written proposals have to be submitted to the Board for approval.

Internal audit

The Group currently does not have an internal audit function as the directors consider this to be inappropriate given the current size of the Group. However, this situation is reviewed by the Board annually. An element of internal audit assurance is achieved by use of internal staff working on specific projects, for example, to review the policies and procedures relating to information security, including the effectiveness of related internal controls.

Going concern

After making appropriate enquiries and for the reasons set out in the directors' report, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing these financial statements.