Introduction
I was delighted to be appointed as Chairman of your Company on 1 February 2006. This is an exciting time to be involved with Sportech as positive change is happening at a great speed. Working clsosely with Ian Penrose, the recently appointed Chief Executive, there is a new sense of enthusiasm for the business and a passion to create a focused and more profitable Group. There are challenges ahead, but I am confident we now have the team in place to meet them.

Transforming activities, strategy and culture
The business of Sportech today is undergoing a transformation. A new Chairman, Chief Executive and a wholly restructured Board is complemented by a newly appointed managerial team who will convene fully in July 2006. We have appointed new financial advisers and brokers to work with the Board.

Immediate steps have been taken to focus the Group on its profitable business streams whilst eliminating the loss making elements. To this end, the new management team has undertaken a strategic analysis of all divisions. As part of this process, in January 2006, Sportech terminated its contract to provide betting services to ITV. In addition, we have developed a pipeline of new products and distribution channels to maximise our strong UK gaming franchise.

Financials
Stakes placed for the year of £490.8m was 1% down on last year. Profit before tax and exceptional restructuring costs increased by 3% to £9.7m (2004: £9.4m). There is an exceptional charge of £16.1m (2004: £1.2m), £0.7m of which was the cash cost directly associated with the termination of our contract with ITV, a further £12.9m being the write off of amounts paid to ITV since 2003, assets not previously expensed and redundancy costs. The loss for the year before tax is therefore £6.4m (2004: profit of £8.2m). Net debt was reduced to £108.1m (2004: £112.8m). No dividend is proposed.

Board and employees
I should like to thank David Mathewson and Roger Withers for their contributions made to the Group as Chairman and Non-executive Director (and latterly acting Managing Director) respectively.

I should also like to express my thanks to the employees at Sportech who have remained steadfast in their commitment throughout this year of change. Our streamlined focus on the business activities being implemented will ensure that the hard work and loyalty of our workforce is duly rewarded.

Outlook
Sportech owns and operates some of the strongest brands in the UK gaming industry. A new energy and enthusiasm to succeed is permeating the business. It is early days, but sport, leisure and gaming are at the heart of our culture and offer exciting opportunities in rapidly evolving sectors. Sportech is in a strong position to capitalise on these. I look forward to the future with confidence.

Piers Pottinger
Chairman
26 April 2006