David Holdgate, Chief Executive, SIS. To the BOLA AGM:

Thank you for that introduction, Mr Chairman. Ladies and Gentlemen - This is a strange time for the racing world, buffeted by change, riven by division, but with opportunities on the horizon sufficient not just to preserve, but to transform the industry in the years to come.

We all know that racing is seeking to improve the experience it offers on the track -many of us are part of that endeavour. At the same time, the industry that is so intertwined with racing; indeed, underpins it - the betting industry - must also improve the experience it offers off the track.

At SIS we see ourselves as the gateway between racing and betting. At times, though, it has felt more like Checkpoint Charlie, with armed combat troops patrolling either side.

There are three inter-linked topics that I want to address that go to the heart of the potential improvement. The first can be described as 'who controls the Betting Shop Service?' - that is, who decides what will be shown, when and how? The second is the question of what the Betting Shop Service actually is - in other words, what do you get for your money? The third is the matter of what the Betting Shop Service could be - that is, the question of modernisation.

So, who should control the Betting Shop service? Should it be those who have a significant product to sell? Those who provide the programming? Or those who take the service?

I put it to you that when the betting industry buys the rights to racing's product, it should insist that it will be responsible for choosing the supplier of services. The betting industry needs to be satisfied that the supplier can be relied on to provide both the range of product and the reliability of service.

The fact of the matter is, is that the service to Betting Shops is about far more than pictures and commentary of UK racing. And so, as a provider of only part - albeit an important part, of the overall product, the control cannot rest with the RCA or even that amorphous body called 'racing'.

It is hard to see that the RCA's interests go much beyond ensuring that Racetech is imposed on the betting industry, and extracting the highest possible price for their pictures. Although I should say that I have good reason to suspect that not all the members of the RCA necessarily back the leadership.

Of course, access to the Racetech picture output could be built into the rights negotiations for a levy replacement but, if left to a separate discussion, would be an unpredictable and probably unacceptably expensive source.

Now, you may be in the business of gambling, but the question is whether you are prepared to gamble that a change of service provider - from SIS to Racetech or A.N.Other - will improve, or even maintain the same level of service? The stake is your business and, if proposals currently on the table are allowed to become reality, as a result of apathy or the belief that it doesn't really matter who it is who provides the service, that choice will be made by the RCA, as is advocated in the BHB's plan for a Levy replacement.

Are you really going to sit back and allow the RCA to dictate who will supply your service, and on what terms, for years to come? - I cannot believe that you would. It's obvious that SIS cannot afford for that to happen, but it's every bit as clear that you cannot afford that to happen either. You must retain the right to choose your own supplier, exactly as any other purchaser of rights does, particularly when paying the kind of money that you pay for those rights.

Yes, I'm giving you our pitch. Yes, I'm talking about the SIS contract renewal in 2002. I make no apologies. It matters to us. But it also matters to you.

Let me wear my heart on my sleeve. I'm a football supporter. I know that this is just one of the products that the betting industry is flirting with, along with an entire harem of sultry new temptresses - numbers games, greyhounds, other sports, even snail racing, you name it. And we'll supply it!

But the magic is still in racing. You walk into a betting shop and on one screen three runners are coming over the final fence at Cheltenham. On the other screen are the odds for who is going to shoot Phil Mitchell. Which sets your pulse racing? [To anyone who calls out "Phil Mitchell" Well you are a strange strange person. Are you sure you are getting out enough?]

It cannot be denied that, whatever the other betting opportunities, nothing gives a betting shop the drama, the sheer tingle factor of live horse racing. But it must come at the right price if the betting industry is to be discouraged from constantly seeking alternatives to promote in its place. We've seen in the last few years the shift of the betting shop from a basic, transactional environment where you get in, place your bet, and get the heck out again, to one where you arrive and you stay because you are enjoying the experience.

Turning now from what the British horseracing industry is selling to what the British bookmaking industry is buying, let's put the negotiations in context and take a look at exactly what the Betting Shop Service actually is.

The SIS service now includes Irish racing, an unprecedented level of BAGS meetings, South African racing and the numbers betting product. In the past year, we added more Irish product in response to requests from our customers, and we have also increased the coverage of BAGS meetings by almost 30% for similar reasons. In that sense, SIS is driven by what you and your customers want.

These products have proved very popular with punters and they form the bedrock of our continuing services to the betting industry. They are the subject of long-term exclusive rights deals extending beyond April 2002. Whatever happens, those services - providing over 30% of your turnover and a significantly higher proportion of your profits - will still be coming to you after 2002. Because, make no mistake, we intend to still be around - with or without UK racing.

We have made no increase in our charges to recover the extra costs of this additional coverage, and we do not intend to do so. Nor do we expect to increase our charges for the coming year to cover any RPI increases. We are about to embark on a major programme of re-equipping the Betting Shop estate for digital transmission. You are faced with the uncertainty of the Levy replacement negotiations, the outcome of the gambling review, a possible change in the basis of taxation and doubts over the future supply of one of your key products. We believe that it would be wrong to increase our charges for this interim period of change and uncertainty.

We hope to conclude the necessary deals with UK racing to include their product in our output. Indeed, I had hopes that I would be able to make an announcement here today but UK racing has been and is still slow in coming to the table. Despite being an integral part of racing, SIS has received not a single formal response to any of the offers we have made to them over the past year. It is in the interests of both racing and betting, insofar as these can be disentangled, for negotiations to be under way and, preferably, concluded swiftly. We do not know, but can only assume, that the lack of response is due to a desire to link the betting shop supply to the replacement of the Levy. That is, and will continue to be, a long complicated process. Any deal on the Levy replacement will come too late to start negotiations.

If anyone has a better guess as to why there has been no response - answers on a postcard to me please, bottle of champagne to the winner.

Perhaps they have been waiting until the deal was concluded with Go Racing. Or until they could agree with the BHB how they would share this enormous cake they are now baking. Whatever the reason, they must get a move on if they do not wish to see their new found riches cancelled out by a loss of the vastly greater money paid by you, the traditional betting industry, for their product. It seems curious to me that so much attention should be paid to the negotiation of one deal for £40million per year, at the expense of talks about a deal which currently pays around double that figure. It also makes me more than a little suspicious about just what rights have been sold to Go Racing, and how they will affect both you and us.

So, just why is it so important that deals need to be concluded soon? These things always take a long time, I hear you say, getting consensus in the racing industry is tricky; why not just roll with the punches and it will all come out right in the end.

But that is not the case. Let's take a quick look at the form book and then walk the course that is now being laid out for the runners and riders of the future. The course that lays out what needs to be done to maintain the levels of service that you - and racing - have come to expect.

SIS has a superb history of top quality service and unbroken transmission. Since 1987, there have been 27 weeks of UK racing lost - for a variety of reasons. There has never been a day lost of the SIS service. Do you know how many times we have changed frequency on the satellites that deliver your service? Or, even more risky to continued service, how many times we've changed satellites? No? Nor should you. You pay us to manage those risks and we have done so successfully for 14 years.

Incidentally, if anyone wants to make a book on those questions, I'll supply the answers at the end of the lunch - and a bottle of champagne to the winner.

During those 14 years, we have delivered a continually improving product. There has been an increased volume of coverage, more races at more meetings, elimination of the bar price, coordination of race times computer forecasts and tricasts, uninterrupted commentaries, overseas racing, The Racing Channel, numbers betting and, yes, we dared to propose changes that improved the SP system. (I don't think everybody here was behind that one, but there you are.)

We introduced our evening service on an optional basis, allowing customers the choice of opening or not and we introduced the Sunday service on the same basis. And we did it, I may say, despite opposition from some of the major companies - including some of our own shareholders. Our commitment as a company is to ALL our customers.

And what happens next?

Well, the process of improvement and innovation will continue, as will the consultation with you - our customers. To improve the consultation process, we will shortly be instituting a regular series of consultative meetings with representatives of the betting industry. I will personally chair these meetings, which will give a forum for our customers to come forward with their priorities and concerns, and for us to respond in a way that will win their support.

On the more nuts and bolts side of things, the analogue satellite transponder that currently delivers the service to betting shops will go out of service during 2002 - next year. In addition, the technology we use to deliver our service is now 15 years old and is increasingly difficult and expensive to support and maintain. It is not as flexible as you need it to be, and puts severe limits on our ability to respond to the changing betting market requirements.

We have been very successful in getting the proverbial quart out of the pint pot, but have now reached an absolute limit. In a purely practical sense, the technology will cease to be supportable and must be replaced by a digital solution. We are about to commence a digital roll-out to re-equip the transmission and receiver equipment throughout the estate of 9,500 shops.

This will involve SIS in a capital expenditure programme of more than £30million over the next 2 years.

We will replace and upgrade production and transmission facilities at SIS to improve the range and quality of the service we supply. We will move transmission to a different, digital, satellite transponder. We will replace the dish and receiver in each shop. It is our aim to increase the choice of services available, to both the betting industry as a whole and to individual shops.

And this is where the problem arises. In order to achieve the goals I have set out, and particularly to ensure that there is a continuity of the shop service from May 2002 onwards, the replacement programme needs to be started now!

With an estimated time-scale of 18 months to complete the process, we will certainly be running a dual service past the end of the current contract period. It is hard to imagine an alternative provider being able to deliver to all shops without a break in service, even if they were to start installing equipment today. And remember, we intend to still be around - so any potential bidder who assumes that they can inherit our network can think again!

Ladies and Gentlemen, SIS is one of the vital links between the UK betting industry and the UK racing industry. We are more than just a conduit of pictures and information from one side of the equation to the other. We ARE both racing and betting - we support both racing and bookmaking. To perform the role we do, that balance is absolutely vital. But it is hard to see how any alternative would be able to offer the same understanding, the same balance. And we see that continuing for many years to come.

We sponsor many events, including the Betting Shop Manager of the Year Awards, the Lesters, Stable Lads Boxing Night, and a string of race days and individual races. We gave extensive on-air support to the Millennium Racing Appeal, in addition to raising many thousands of pounds directly for the fund. We continue to support both IBAS and Gamcare, and we are directly involved in the BHB graduate training scheme for people entering the industry.

In today's fast-moving competitive environment, it is not enough to say "steady as she goes". But it is also not enough to say "something better will be along soon". UK racing and UK betting depend upon each other. There are a great many alternatives for both sets of customers to turn to. To keep the customers the two industries have, to ensure that both industries grow and attract new customers, we must all stay at the leading edge of providing the best experience there is. That is only possible if deals are done now - with people of experience, expertise and financial commitment.

Nobody knows better than the people here today what the punter wants. He wants two things. He wants the event, the excitement, the visual stimulus. But he wants information, quality information, fast, accurate and detailed. Offer one without the other and you are offering a flawed product.

There are other companies around with experience of sports broadcasting ; even racing broadcasting. There are other businesses which are expert in information gathering and transmission. But only SIS can claim to be front rank in both.

At a time of change, uncertainty and confusion for the betting industry, or the racing industry for that matter, the one thing you cannot afford is to offer the punter an inferior product; to deliver him or her a diminished service. But that would be the very real risk if SIS were to lose the franchise.

The racecourses are close to winning a great prize in their deal with Go Racing. That should be good news for the whole industry. However, if you allow them to dictate to you how you should supply your business, they will have you by the throat and they will never let go.

You must assert your right to choose your own suppliers. We are confident that that would be SIS.

Thank you.