REMUNERATION REPORT

COMPLIANCE WITH BEST PRACTICE
Sportech PLC seeks to apply best practice in remuneration policy.

COMPOSITION OF THE REMUNERATION COMMITTEE
The Remuneration Committee (the ‘Committee’) is made up of the Non-executive Directors only and was in place for the whole of the year under review. None of the Committee has any personal financial interest (other than as a shareholder), conflicts of interest from cross-Directorships or day-to-day involvement in the running of the business. The Committee’s role is to set the remuneration policy for the Executive Directors and to be advised of the remuneration packages of Senior Executives. The Committee makes its proposals following consultation with the Chief Executive (on remuneration other than his own) and is entitled to seek professional advice from outside the Group from remuneration consultants.

John Barnes has been Chairman of the Committee throughout the year under review. The other members of the Remuneration Committee during the year were Jon Holmes, Kathryn Revitt and Piers Pottinger. The Chief Executive is invited to attend meetings when appropriate, although he is not present when matters affecting his own remuneration are discussed.

The Remuneration Committee retains independent remuneration consultants, Hewitt New Bridge Street (HNBS), to advise on all aspects of Executive remuneration. HNBS has no connection with Sportech other than in the provision of advice on Executive remuneration.

The fees of the Non-executive Directors are set by the Board following review against fee levels operated in companies of a comparable size and after taking into account the anticipated time commitment of each role. The Non-executive Directors do not participate in any incentive, pension or benefit schemes of the Company.

REMUNERATION POLICY FOR EXECUTIVE DIRECTORS AND SENIOR EXECUTIVES
The Committee aims to ensure that the remuneration packages offered to Executive Directors and Senior Executives are designed to:

	be competitive and to attract, retain and motivate Executives of the right calibre;
	reflect their responsibility and experience within the business;
	incorporate a significant element of performance related pay linked to the achievement of key business objectives and increased shareholder value;
	to provide a total remuneration offering at ‘target’ levels of performance that are competitive in the relevant market;
	for performance beyond ‘target’ levels, a significant proportion of remuneration should be delivered through incentive related pay;
	to take due account/full consideration of the principles set out in the Combined Code; and
	to provide the foundation for overall reward and remuneration beyond the specific roles governed by the Committee.

The Remuneration Committee aims to ensure that there is an appropriate balance between non-performance and performance related pay.

In designing an appropriate performance related pay structure for the Executive Directors and Senior Executive management team, the Committee seeks to set challenging performance criteria that are aligned with the Group’s strategy.

The Remuneration Committee ensures that performance related pay structures will not raise environmental, social or governance (ESG) risks by inadvertently motivating irresponsible behaviour. More generally, with regard to the overall remuneration structure, there is no restriction on the Committee which prevents it from taking into account corporate governance on ESG matters and it takes due account of issues of general operational risk when structuring performance related pay schemes.

The policy in relation to subsequent years will be kept under review to ensure that it reflects any changing circumstances.

The main component parts of the remuneration packages for Executive Directors and Senior Executives are as follows:

BASIC ANNUAL SALARY
An individual’s basic salary is reviewed and determined by the Committee annually, taking into account external research and his or her performance and experience. The Committee also makes use of benchmark data provided by external remuneration consultants and is aware of the level of salary increases other employees within the Group receive. The Chief Executive’s salary remained unchanged at £300,000 per annum which took full account of salary increases awarded across the Group. The Finance Director’s salary was increased from £140,000 to £175,000. The Remuneration Committee set the Finance Director’s salary at a below market level on his appointment to the PLC Board in July 2006. At the time of appointment, the Remuneration Committee set the salary level at a discount to comparable market practice to reflect the fact that the newly appointed Finance Director had no PLC Board experience. At the time of appointment, the Remuneration Committee resolved to increase salary based on increased experience in post and subject to satisfactory performance. The increase reflects what the Remuneration Committee believes to be continued excellent performance in post and has moved the Finance Director closer to an appropriate level of remuneration for a fully operating Finance Director in a Company of Sportech’s size.

While the Remuneration Committee does not target a specific market positioning when setting base salary, it takes due account of market median data in separate comparator groups based on sector, size and complexity. The current salary levels, based on the benchmark data provided by the Remuneration Committee’s advisers during the year, are below median for both Executive Director positions.

Each Executive Director is entitled to the following main benefits:

	Chief Executive – 29 working days’ holiday per annum in addition to normal bank and public holidays. Finance Director – 25 working days’ holiday per annum in addition to normal bank and public holidays;
	a car allowance; and
	private health insurance for themselves, their spouse and children.

PERFORMANCE RELATED BONUS
’performance related bonus is based on a two-part bonus structure to reflect achievement of profit targets and key business objectives with a normal maximum bonus potential of 100% of basic salary for the Chief Executive and 50% (2010: 75% following the review of remuneration noted above) of basic salary for the Finance Director. For 2010 only, an exceptional maximum bonus of up to 150% of salary may become payable (inclusive of the normal bonus of up to 100% of salary). Payment of any bonus above the normal maximum is contingent on exceptional performance relating to the delivery of synergies and cost savings above those targeted in relation to the acquisition of SGR. Should any element of exceptional bonus become payable, a summary of the performance achieved will be included in next year’s Directors’ Remuneration Report. The bonus payments for 2009 were 33% (2008: 62%) of salary for the Chief Executive and 17% (2008: 30%) of salary for the Finance Director, reflecting achievement of certain key objectives.

PENSION ARRANGEMENTS
The Company contributes at a rate of 8% into defined contribution schemes for the Executive Directors. Only basic annual salary is pensionable.

LONG TERM INCENTIVE PLANS
The Committee believes that share ownership and the granting of share-based incentives strengthens the link between Executives’ personal interests and those of the shareholders. The Company has two long term share plans in place, being a share option scheme and a performance share plan (see below). The Company’s policy has been to only grant awards under the performance share plan since its adoption in 2007.

SHARE OPTION SCHEME
A share option scheme is in place, the rules of which are designed to comply with the best practice provisions annexed to the listing rules of the UK Listing Authority and current guidelines of institutional shareholders. The details of the scheme are described in note 21.

PERFORMANCE SHARE PLAN (PSP)
The PSP was introduced in 2007 and may provide annual awards subject to the achievement of challenging performance targets.

QUANTUM
Awards may normally be granted up to 100% of salary, other than in exceptional circumstances, when they may be granted up to 200% of salary. The initial awards granted in 2007 were at 150% as was set out at the time the PSP was introduced.

No awards have been granted under the PSP, or any other share plan, to the Sportech Executive Directors since 2007.

PERFORMANCE TARGETS
The performance targets that applied to the original awards granted under the performance share plan were an equal blend of absolute share price performance and relative Total Shareholder Return (TSR) as detailed below:

Share price targets (50% of an award):

	25% of this part of an award will vest for share price growth of 18.75% over a three-year performance period; and
	100% of this part of an award will vest for share price growth of 66% over the same period.

Relative TSR (50% of an award):

	25% of this part of an award will vest for equalling a total return index comprising the other major UK betting and gaming companies (888 Holdings, Ladbrokes, Partygaming and William Hill) over a three-year performance period; and
	100% of this part of an award will vest for out-performing the index by 11% p.a. over the same period.

Reflecting the fact that no share-based incentive awards have been granted since 2007, and to ensure that the Executive Directors are fully incentivised to drive maximum long term value from the anticipated acquisition of SGR, the Remuneration Committee considers it appropriate to grant awards at 200% of salary in 2010 to Executive Directors.

As well as providing a keen incentive to drive long term value from the acquisition of SGR, the Remuneration Committee was mindful to lock-in and retain the current highly regarded management team.

In determining the quantum that should be granted, the Remuneration Committee was mindful of the lack of outstanding equity awards over the last two years.

The targets set in relation to the awards proposed for 2010 are set out below and take full account of the acquisition of SGR:

Relative TSR (1/3 of an award):

	25% of this part of an award will vest achieving median performance against constituents of the FTSE Small Cap over a three-year performance period; and
	100% of this part of an award will vest for achieving upper quartile performance against the same comparator group with straight-line vesting between median and upper quartile.

The Company’s absolute annual TSR growth (1/3 of an award):

	25% of this part of an award will vest achieving 6% p.a. total return growth; and
	100% of this part of an award will vest for achieving 15% p.a. total return growth.

In relation to the absolute TSR target, the Remuneration Committee retains the right to assess the broader financial performance of the Company to determine if the vesting result delivered based on absolute total return performance is appropriate. If it does not consider this to be the case, the Remuneration Committee retains the right to reduce the level of vesting.

The Company’s EPS growth (1/3 of an award):

	25% of this part of an award will vest achieving EPS growth of RPI + 4% p.a.; and
	100% of this part of an award will vest for achieving EPS growth of RPI +10% p.a.

In each case, no vesting takes place below the threshold level of performance and straight-line vesting takes place between performance points.

In addition to the Executive Directors, it is anticipated that other senior employees will receive awards on no more favourable terms than those set out above.

POLICY ON SHARE OWNERSHIP
Whilst the Board does not have a formal policy in place in respect of Executive share ownership, all Executives are expected to invest in the Company at an appropriate level compared to their compensation levels.

POLICY ON CONTRACTS OF SERVICE
All Directors have contracts with notice periods of no more than twelve months. Unless terminated beforehand, contracts run until the Director reaches the age of 65:

			Special
			contractual
	Contract	Notice	termination
	date	period	provisions
Piers Pottinger	3 November 2005	3 months	None
Ian Penrose	1 October 2005	12 months	None
Steve Cunliffe	3 July 2006	6 months	None
John Barnes	11 November 2005	3 months	None
Jon Holmes	16 July 2007	3 months	None

Kathryn Revitt does not have a service contract but serves the Company under a letter of appointment. This appointment may be terminated without liability for compensation.

POLICY ON EXTERNAL APPOINTMENTS
Sportech PLC recognises that its Directors are likely to be invited to become Non-executive Directors of other companies and that such exposure can broaden experience and knowledge, which will benefit the Company. Executive Directors are therefore allowed to accept Non-executive appointments with the Board’s prior permission, as long as these are not likely to lead to conflicts of interest. Ian Penrose is a Trustee of the National Football Museum, a registered charity and he receives no remuneration in respect of this appointment.

PERFORMANCE GRAPH
The following graph demonstrates how £100 invested in Sportech PLC as at 1 January 2005 has reduced compared with the same investment in a fund mirroring the make-up of the FTSE Small Cap index:

The FTSE Small Cap index has been chosen as it is the index most closely aligned to Sportech PLC.

AUDITED INFORMATION
The remainder of the Remuneration Report is audited information.

DIRECTORS’ REMUNERATION
Details of each Director’s remuneration for the year ended 31 December 2009 are given below:

			Taxable		2008	2007
	Year of	Fees/salary	Benefits⁷	Bonuses⁸	Total	Total
	appointment	£000	£000	£000	£000	£000
Executive Directors
Ian Penrose	2005	300	16	100	416	486
Steve Cunliffe	2006	158	12	30	200	178
Non-executive Directors
Piers Pottinger¹	2005	65	—	—	65	65
John Barnes²	2005	40	—	—	40	40
Kathryn Revitt³	2000	—	—	—	—	—
Jon Holmes⁴	2007	35	—	—	35	35
Aggregate emoluments		598	28	130	756	804
Fees paid to third parties					35	35

NOTES:

Piers Pottinger receives remuneration of £30,000 per annum in his role as Non-executive Chairman. He also receives remuneration of £35,000 per annum for his role as Non-executive Director.
John Barnes receives remuneration of £35,000 per annum for his role as Non-executive Director and a further £5,000 per annum for his roles as Senior Non-executive Director and Chairman of the Remuneration and Audit Committees.
The services of Kathryn Revitt are provided through a consultancy agreement between the Company and Hemway Limited. Payments to Hemway Limited amounted to £35,000 in the year (2008: £35,000).
Taxable benefits comprise various medical insurance policies and car allowances.

Two Directors (2008: two Directors) were members of defined contribution schemes. Contributions paid by the Company in respect of these Directors were as follows:

	2009	2008
	£000	£000
Ian Penrose	24	23
Steve Cunliffe	13	10
	37	33

DIRECTORS’ SHARE OPTIONS
Aggregate emoluments disclosed on page 30 of the Annual Report do not include any amounts for the value of share-based incentives to acquire ordinary shares in the Company granted to or held by the Directors. The share-based incentives held by the Directors are as follows:

SPORTECH SHARE OPTION SCHEME

	As at 1 January and 31 December
	2009
	Number
Ian Penrose	505,050

Exercise of the options is subject to the share price reaching the following closing prices:

		Date
	Exercise	from which
Ian Penrose	price	exercisable	Expiry date	Granted on
505,050	£0.817	27 September 2008	26 September 2015	27 September 2005

Exercise of the options is subject to the share price reaching the following closing prices:

Shares	Closing price
151,515	£1.237
151,515	£1.732
101,010	£2.227
101,010	£2.722
505,050

The market price of the ordinary shares at 31 December 2009 was £0.479 and the range during the year was £0.465 to £0.825.

The options were granted at no cost to the Director. The performance criteria for all of the above share options were consistent with the remuneration policy. Once awarded the exercise of the share options is unconditional.

PSP


	31 December
	2009	Expected
	Number	expiry date
Ian Penrose	428,676	December 2010
Steve Cunliffe	162,601	December 2010
	591,277

Details of the performance conditions for the PSP awards are noted above. Only one grant of awards has been made in December 2007 and in respect of the share price growth targets attaching to this award, grants have been set from an adjusted base share price of £1.141.

JOHN BARNES
CHAIRMAN OF THE REMUNERATION COMMITTEE
25 March 2010

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