Sportech PLC 27 January 2005 Sportech PLC Pre-Close Statement Sportech PLC ("Sportech" or "the Company"), owner of Littlewoods Gaming, today issues the following pre-close statement relating to the financial year ended 31 December 2004. Preliminary results for the year will be announced on 31 March 2005. Summary Sportech's established businesses within its Soft Gaming and Betting Divisions generated expected revenues for 2004 in the region of £500m (2003: £330.4m). The company also has a strong strategic position in the emerging interactive gaming market. Sportech expects to announce profits for the 2004 financial year, before goodwill, taxation and exceptional restructuring costs, in the region of £9.0m, in line with market expectations. Soft Gaming Division Football Pools accounts for the majority of Sportech's profits and free cashflow. Performance of Football Pools and associated products is in line with market expectations. Scratchcard revenues for 2004 are expected to be in the region of £1m, in line with 2003, generating an operating loss of £0.6m. Although this loss is lower than 2003, the Board has decided to exit scratchcard operations by the end of the first half of 2005, in order to ensure focus on core activities that will deliver profits and cashflow. Betting Division Losses from the Betting Division in 2004 will be lower than 2003, broadly in line with market expectations. Our key action plans are on track and we are encouraged by improvements in the underlying trading from casino, poker and telephone betting. It is noteworthy that the Division delivered EBITDA profitability in November and December. Full year gross win will be approximately 65% ahead of 2003, driven by strong growth from casino, poker and telephone betting. Despite unfavourable sporting results, gross win in the second half of 2004 was marginally higher than in the first six months, and sports-book margins for the year will be approximately 8.5%, which is within our expected range. Approximately 50% of the total gross win was derived from non sports-book activity including casino, poker and fixed odds games. This increasing trend is expected to improve further the Betting Division's overall performance during 2005 and future resilience in the event of unfavourable sporting results. During the second half of 2004 we have also taken action to further reduce the Betting Division cost base. The telephone-betting model has been improved by the move, in late October 2004, to in-house call handling. This move is on track to deliver annualised call handling cost savings in excess of £1m, offset by non recurring exit costs in 2004 and 2005, relating to the previous outsourcing contract. The Division has benefited from strong profitable growth in on-line casino and poker products, with revenues approximately 125% higher than 2003, and the introduction of fixed odds games. Future growth prospects are enhanced by the planned launch of a Bet Direct branded casino and poker offer in the second quarter of 2005 to be supplied by BOSS media. ITVi Gaming The exclusive long-term interactive gaming and betting partnership with ITV commenced in March 2004, with the objective of enhancing future growth opportunities across our Soft Gaming and Betting Divisions. The initial Littlewoods Gaming ITVi service, including customer registration/account management, games and betting commenced in June 2004. To date the service has relied on red button interactivity only, whereas future developments are expected to encompass other interactive return paths. The service has attracted over 25,000 customer registrations via ITVi red button access points to date, however active customer numbers and average gross win levels per active customer have remained low during this initial phase of the contract. Both ITV and Sportech remain fully committed to the ITVi opportunity and the existing service will have increased red button prominence and promotion in the coming months, whilst good progress is also being made on new product developments. A stream of full screen gaming products will launch in March, and in conjunction with ITV, we are considering additional opportunities presented by the proposed dedicated ITV gaming channel and the integration of betting/ gaming propositions within prime and night time ITV programming. Whilst forward levels of customer activity and gross win levels remain difficult to quantify, we have taken actions to ensure that the cost base and overall cash requirements in 2005 are materially lower than those in 2004. Roger Withers, acting Managing Director, said: "We recognise the importance of our established Soft Gaming and Betting businesses and remain keenly focused on these core activities. The Betting Division is growing and on track to deliver profits in 2005, whilst the Soft Gaming Division is underpinned by our Football Pools business, which continues to generate significant free cashflow. "We also remain excited by the longer-term opportunities for growth and for increasing our share of the interactive gaming market. Although ITVi activity levels have been low to date, the strong growth in gross win and customer numbers across our internet and Sky based betting offer, demonstrates what we can achieve in this new market. This confidence is reinforced by our strong relationship with ITV and joint vision for the future. - ends - For further information: Suzanne Judge 0151 288 3059 Sportech PLC David Rydell/Charlotte Kirkham Bell Pottinger Corporate & Financial 020 7861 3232 This information is provided by RNS The company news service from the London Stock Exchange