JJB.L Regulatory News (JJB)

PRESS RELEASE

25 MAY 2011

JJB Sports plc

Results for the 52 weeks to 30 January 2011

JJB Sports plc ("JJB", "JJB Sports" or the "Company") today announces its results for the 52 weeks to 30 January 2011.

Highlights during the 52 weeks to 30 January 2011

·; Like-for-like sales during the period increased by 5.9%**** and on-going retail revenue increased by 0.5% overall;

·; Overall decline in gross margin reflected poor stock packages available to the business and the need for highly promotional sales initiatives to drive footfall and clear stock during the second half;

·; Successful investment in six transformed stores resulting in strong performance with sales 16% above the Company average and gross profit 30% above the Company average;

·; Improvement in online business, doubling sales mix and introducing Collect@Store and i-store;

·; Appointment of new Chairman, Chief Executive and Chief Financial Officer to lead turnaround; and

·; Strengthening of executive management team.

Highlights since the period end

·; Successful completion of two capital raisings with combined gross proceeds of £96.5million;

·; Completion of a successful Company Voluntary Arrangement enabling the right-sizing of the store portfolio. Closure of 18 stores already complete;

·; The Group has transferred its listing to AIM from the main list of the London Stock Exchange;

·; Successful re-negotiation of the Group's £25m banking facility with Bank of Scotland to May 2014;

·; Appointment of two new Board members:

Richard Bernstein joined as a Non-executive Director on 6 May 2011 following his nomination by Crystal Amber Fund; and

Lawrence Christensen will also join as a Non-executive Director on 1 November 2011; and

·; Commenced implementation of turnaround business plan.

\* There are no other items in the current period. In the prior period, other items represented results of retail cessations during the 53 week period to 31 January 2010 including retail stores attached to fitness clubs, OSC and Qube stores, and other non-core retail stores.** Adjusted operating loss is shown before (charging) crediting exceptional operating items of (£96.2)m of goodwill impairment and (£15.3)m of other exceptional items (2010: £0.3m - ongoing retail, £0.1m - other items) as shown in the Consolidated statement of financial performance.*** Adjusted loss per share is calculated by reference to adjusted loss before taxation, which is calculated before (charging) crediting exceptional operating items of £(96.2)m of goodwill impairment and £(15.3)m of other exceptional items (2010: £0.3m - ongoing retail, £0.1m - other items) as shown in the Consolidated statement of financial performance.****Like-for-like sales comprise sales from operating units that have been trading for over 52 weeks.

Commenting on these results, Mike McTighe, Chairman of JJB Sports, said:

"Since the period end, a great deal has taken place. We have delivered two further fundraisings and agreed a significant CVA with our landlords that gives the Company a real chance of recovery. However, this is the beginning of the hard work and not the end.

The financial restructuring was completed on schedule by the end of April and since then the operational restructuring has progressed well. Underperforming stores have closed as part of our CVA, and headcount and operating costs have been significantly reduced. Whilst the sales environment remains challenging, Management's prudent controls mean that business performance in the first quarter has met the Board's expectations.

The fundraising in April also provided us with the funds to refurbish our store portfolio, following the success of last year's trial. A further 150 stores are targeted for refresh or refit in the current year, with 50 targeted for 2012/13.

The restructuring of JJB will not be easy or quick and will most likely take three to five years. The retail environment is challenging, will remain so for some time and we face intense competition. But the work undertaken over the past six months, together with the crucial support of all our stakeholders have given JJB a chance to survive and ultimately to prosper and I look forward to working with our management team to make this happen."

For further information, please contact:

JJB Sports plc 01942 221 400Keith JonesDave WilliamsRichard Manning

Maitland 020 7379 5151Neil BennettRichard Farnsworth

A copy of this press release can also be viewed on the JJB Sports plc corporate website, www.jjbcorporate.co.uk 

Notes to editors

About JJB Sports

JJB Sports plc (JJB: LSE) is one of the UK's leading sports retailers. The Group, headquartered in Wigan and today listed on the Alternative Investment Market (AIM) of the London Stock Exchange, currently trades from over 200 JJB branded retail stores in the UK and Ireland and employs over 5,200 people. Further information about the Group can be found on the Group's corporate website, www.jjbcorporate.co.uk.  

JJB Sports plc

52 weeks to 30 January 2011

Chairman's Statement

2010 was a difficult year for the Company when longstanding, unresolved weaknesses and inefficiencies were exposed in a very challenging retail environment and the business came perilously close to entering administration.

Since becoming Chairman in December 2010, with the support of our shareholders, bankers, key suppliers, landlords and other stakeholders and our colleagues, we avoided administration and have taken a number of significant steps to stabilise the financial position of the business and commence the turnaround of its performance.

In my time as Chairman we have completed:

·; Two capital raisings through Firm Placing and Placing and Open Offers raising combined gross proceeds of £96.5million;

·; A Company Voluntary Arrangement ("CVA") with our Landlords enabling us to reduce our overhead base;

·; A Capital Reorganisation;

·; A transfer to AIM from the main list of the London Stock Exchange; and

·; A negotiation of a three year extension to our existing bank facilities.

These actions provide the management team led by Keith Jones with the opportunity to address the weaknesses in our business and effect a turnaround in its operational and financial performance.

Our strategy

The turnaround of our business will not be easy and as a consequence will take time. The focus for the remainder of 2011 is to establish a platform for future growth so we can exploit the opportunity in the UK sports retail market for an authentic multi-channel sports retailer providing footwear, apparel, sports equipment and accessories for spectators through to performance athletes nationwide. Key elements of the revised business plan include:

• Rightsizing the store portfolio through implementation of the CVA;

• Building on the success of the investment in the six stores transformed during 2010. We intend to continue to invest in the store portfolio through continued store and proposition development;

• Improving the basic retail disciplines in the Company, including stock selection, buying intake management, allocation, replenishment and clearance markdown management;

• Continuing to source new ranges including exclusive and differentiated products from all key suppliers and to develop exclusive branded products such as RUN 365 and Slazenger Golf;

• Promoting new product and service propositions as part of a co-ordinated marketing plan;

• Focusing on training by extending customer service and product knowledge training to all colleagues;

• Improving the multi-channel proposition including broadening the online range by introducing online exclusives, expanding the collect@store offer, developing a mobile version of the website and exploiting catalogue opportunities, all focused on providing customers with the easiest and most convenient ways to shop; and

• Aligning the Company's cost base and working capital investment to meet the needs of the business by exploiting opportunities for efficiencies in warehousing and distribution, stock management, store wages, sales management and the Retail Support Centre.

Progress to date and next steps

JJB's turnaround programme is now well and truly established. The Company has constructed five work streams that encompass all elements of the revised business plan and work continues on delivering measurable progress. Effective governance is also in place which feeds into both weekly reviews by the operating board and a monthly review with the Board. Achievements so far include:

• The closure of the first 18 CVA stores and planned the next round of store refits;

• Operationalising our plans to drive continuous improvement across the Company's basic retail disciplines, product sourcing, market planning, allocation and supply chain to forecast milestones;

• Rolling out training to all in-store colleagues on both extending customer service and improving product knowledge on track;

• Establishing a multi-channel programme to drive improvements in online capability, aligned to the in-store channel experience; and

• Reducing the Company's cost base, by working systematically through identified areas of opportunity, including the Company's Retail Support Centre in Wigan.

We have already begun to realise cost savings in respect of warehousing and distribution, store wages and central overhead costs.

Our Board

There have been a number of changes to the Board during the year under review and subsequently. On 1 March 2010 Keith Jones joined the business as Chief Executive Officer; in Keith the Company has an extremely able and motivated leader. Dave Williams, our Chief Financial Officer, joined the Board in that role on 17 January 2011 replacing Lawrence Coppock who had led the financial aspects of the Company's restructuring since joining in May 2009.

Colin Tranter and Sir David Jones left the Company in March and July respectively. In addition, and as noted above, I replaced John Clare and became the Chairman of the Company on 23 December 2010. I would like to record my personal thanks to John for the contribution he made to JJB's survival during the year.

As we have previously announced Richard Manning and Alan Benzie will both leave the Board at the Company's Annual General Meeting in July 2011. Richard is our Legal & Operations Director and Company Secretary and has since January 2009 played a leading role in the restructuring and refinancing of our business, as well as establishing a robust legal and governance platform. Alan Benzie is a Non-executive Director and is chairman of the Company's Audit Committee and a member of the Remuneration and Nominations Committees. Again I would personally like to thank both Richard and Alan for their contribution to the survival of our business.

More recently, Richard Bernstein joined the Board on 6 May 2011 following his nomination by Crystal Amber Fund and on 17 May 2011 we announced that Lawrence Christensen will join the Board on 1 November 2011. I look forward to working with them both to help deliver JJB's turnaround strategy.

Our employees

Without the hard work and dedication of our employees we would not have been able to deliver the changes we have seen in recent months and I would like to record my thanks to all our loyal employees, who have given their full commitment to the Company through yet another challenging time.

Outlook

Since the period end, a great deal has taken place. We have delivered two further fundraisings and agreed a significant CVA with our landlords that gives the Company a real chance of recovery. However this is the beginning of the hard work and not the end. 

The financial restructuring was completed on schedule by the end of April and since then the operational restructuring has progressed well. Underperforming stores have closed as part of our CVA, and headcount and operating costs have been significantly reduced. Whilst the sales environment remains challenging, Management's prudent controls mean that business performance in the first quarter has met the Board's expectations.

The fund-raising in April also provided us with the funds to refurbish our store portfolio, following the success of last year's trial. Over 150 stores are targeted for refresh or refit in the current period, with more than 50 targeted for 2012/13.

The restructuring of JJB will not be easy or quick and will most likely take three to five years. The retail environment is challenging, will remain so for some time and we face intense competition. But the work undertaken over the past six months, together with the crucial support of all our stakeholders have given JJB a chance to survive and ultimately to prosper and I look forward to working with our management team to make this happen.

Mike McTighe

Chairman

25 May 2011

Chief Executive's review

In May of last year I presented my initial observations on JJB Sports and what I believed was necessary to transform the business and its performance. I summarised the issues under the headings of People, Processes and Systems and concluded that this turnaround would not be quick or easy. This certainly proved to be an accurate reflection, perhaps even an understatement, of the issues and as the year progressed the sheer scale of the challenge became more apparent with running out of cash and time becoming the biggest risk.

I have never doubted the market opportunity for an authentic multi-channel sports retailer providing footwear, apparel, sports equipment and accessories for spectators through to performance athletes nationwide. It is clear from all our customer research that JJB has the potential to fill this very significant gap in the market. It is also clear however that the current offer of product, service and customer experience in the majority of our stores is far from reflecting this opportunity. We have to change to meet our customers' expectations and make a clear step change that ultimately differentiates us from our competitors. This process has now very clearly begun in earnest.

The transformation required is significant but entirely achievable. The consistently better performances from our six transformed stores provide evidence and real encouragement; this is even more so when considering the potential impact of adding new product propositions and the benefits of colleague training programmes which have not been a factor in the performance so far. However, if we are to win back old and attract new customers we have to change quickly and to invest. The level of investment required simply could not be funded in our existing shape and size. Therefore restructuring and re-capitalisation of the business has been necessary to provide the opportunity to deliver our transformation plan.

One of the first issues for me to address was to ensure we have the right senior team and capability in place to deliver the turnaround plan. In my first year I have recruited directors to lead Retail Operations, Human Resources & Training, Trading and Marketing. The departure of Debbie Robinson to become Managing Director of Spar UK, whilst disappointing, provides an opportunity to further develop the team. I have also recruited a new CFO in Dave Williams. Dave has considerable experience in business turnarounds and has made a tremendous impact in a relatively short period of time in the Company.

The weakness in retail disciplines and processes indentified during last year could only be sustainably corrected once an experienced and capable team was in place. We now have a strong senior team and will continue to infuse new talent as well as training and developing existing colleagues, in order to create a modern and effective team in all key functions.

The trading performance has been poor and consistently below expectations. Our adjusted operating loss* for the period was £73.9 million. In addition, we had exceptional items of £108.0 million which included an impairment charge for goodwill of £92.6 million resulting in an operating loss of £181.8 million. Lack of capability and the weakness in buying disciplines and processes account in part for the underperformance. Additionally the cash constraints during the second half of the period had a significant impact on our ability to bring in the stock ordered and in many cases resulted in stock arriving late and on occasion too late for our customers who had to buy from elsewhere. We have stopped the buying principles that created many of last year's problems and under the leadership of a new Trading Director we are constantly improving the allocation of stock and the availability both in store and online. We continue to receive incredible support from our supplier partners, who understand what we are trying to achieve and absolutely agree with our strategic direction. Together we will continue to improve quarter over quarter, bringing the best of branded and own branded products and improving availability and relevance for our customers.

*Adjusted operating loss is shown before (charging) crediting exceptional operating items of (£96.2)m of goodwill impairment and (£15.3)m of other exceptional items (2010: £0.3m - ongoing retail, £0.1m - other items) as shown in the Consolidated statement of financial performance.

Promotionally the World Cup and the need to clear through slow selling stock dominated the period. The World Cup was disappointing for JJB due to the England team's poor performance. The clearance activity that followed, although essential, was purely tactical and did not enhance the JJB brand. Nevertheless, we have made some good progress promoting our online business, more than doubling our sales mix in that area and introducing Collect@Store and i-store ahead of schedule and to all stores. Both are good examples of very customer focused propositions evidenced by the immediate take up and fantastic feedback. E-Commerce lies at the heart of our multi-channel strategy and provides truly nationwide penetration and the 'best of both worlds' when combined with stores. We will continue to develop extended ranges online which can be accessed either in store or at home and add further ways to purchase including a mobile version of the site.

In summary, the period has been incredibly challenging and characterised by corporate efforts to survive rather than to develop and grow. The Board and I are incredibly grateful for the extraordinary support from our bank, shareholders, colleagues, suppliers and ultimately our landlords who collectively have enabled us to recapitalise the Company and to restructure in order to provide a foundation upon which we can build.

We have a developing senior team in place that is capable, committed and confident in our ability to deliver the turnaround plan. The plan is simple and focused on constantly improving our proposition and customer experience as well as our profitability. There remains a lot to do and it will take three to five years to complete this transformation. Nevertheless, the market opportunity is clear and every day we will improve some part of our product offer, stores and customer service such that our customers start to notice the difference. There is an added incentive to act fast in order to take advantage of a 2012 Olympics that promises to bring sport to the front of the nation's mind and create an even greater opportunity for an authentic sports retailer like JJB Sports.

Keith Jones

Chief Executive Officer

25 May 2011

Business Review

Overview

The 52 week period to 30 January 2011 has once again proven to be an extremely challenging time for the Company as a result of both internal and external factors. Performance has been very disappointing resulting in the business being close to entering into administration as the initiatives put in place by previous management failed to deliver the necessary turnaround in business performance.

Review of operating results

The operating results for the 52 weeks to 30 January 2011 and the comparative figures for the 53 weeks to 31 January 2010 are summarised below:

\* There are no other items in the current period. In the prior period, other items represented results of retail cessations during the 53 week period to 31 January 2010 including retail stores attached to fitness clubs, OSC and Qube stores, and other non-core retail stores.

**Adjusted operating loss is shown before (charging) crediting exceptional operating items of (£96.2)m of goodwill impairment and (£15.3)m of other exceptional items (2010: £0.3m - ongoing retail, £0.1m - other items) as shown in the Consolidated statement of financial performance.

Ongoing retail operations

Revenue from ongoing retail operations for the 52 weeks to 30 January 2011 increased by £1.8 million (0.5 per cent) compared to the previous accounting period and reflected a like-for-like increase of 5.9 per cent (on operating units that have been trading for over 52 weeks). However, this overall improvement reflects a first half like-for-like sales increase of 14.4 per cent and a second half decline of 1.5 per cent. The first half benefitted from the re-stocking of the business following the previous fund-raising which completed on 3 November 2009 and the impact of the football World Cup; although in absolute terms with England's poor performance this was below our expectation. At the half period end our stock was £92.7 million compared to £47.8 million in the equivalent period in the prior period. However the overall re-stocking was not effective and whilst the good stock that was purchased helped to support the sales in the first half of the period, the second half proved to be a very poor trading period and the business incurred significant trading losses and as a consequence experienced a significant cash outflow. The working capital position became increasingly constrained and the business was unable to take in the stock required to support the sales forecasts. As a consequence the business was on the brink of entering administration towards the end of the financial period.

Overall gross margin from ongoing retail operations was 34.4 per cent compared to 38.4 per cent for the prior year. However, as with our sales performance there was a significant disparity between the first and second half. In the first half gross margins were 42.2 per cent compared to 34.0 per cent in the equivalent period in the prior period; in the second half margins deteriorated to 26.4 per cent compared to 42.3 per cent in the prior period. This deterioration reflected the poor stock packages available to the business and the need to offer substantial discounts to clear the stock out of the business. In addition, despite this discounting activity during the second half, at the period end we have reviewed the carrying value of our stock and strengthened our provisions by some £11 million as a consequence.

During the period the business invested in a store refurbishment programme comprising six stores. The performance of these six transformed stores has been very encouraging with sales 16 per cent above the Company average and gross profit 30 per cent above the Company average, measured in the period from 1 November 2010 (when the last of the six transformed stores opened) to the period end.

Ongoing retail net operating expenses before exceptional operating items decreased by 3.3 per cent to £177.3 million, due mainly to the reduction in store numbers through the first CVA in 2009 and disposal of 55 retail stores attached to the fitness clubs leading to decreased running costs, as well as a 33 per cent reduction in the number of full-time equivalent jobs in central services.

At the period end the Company comprised 247 trading retail stores operating from 2.7m square feet of retail space.

Operating loss

Operating loss from the ongoing retail operations was £181.8 million, compared to £64.9 million last period. However the operating loss is after charging exceptional operating items of £108.0 million compared with a credit of £0.3 million - ongoing retail and £0.1million - other items for 2010. The principal exceptional item relates to an impairment to the carrying value of goodwill in respect of Blane Leisure Limited and Sports Division (Eireann) Limited and which is included within selling expenses. Thus operating loss from ongoing retail operations before exceptional items was £73.9 million (2010: £65.2 million).

Full details are shown on the face of the Consolidated statement of financial performance.

Net loss before taxation

The net loss before taxation increased to a £181.4 million loss from a £68.6 million loss in the prior period.

Taxation

Owing to the losses incurred there is no taxation payable.

Loss per share

Basic loss per Ordinary Share for the 52 weeks to 30 January 2011 was 61.83 pence compared to 20.84 pence in the previous accounting period. The loss per share has increased due to the increase in exceptional items to £108.1 million (2010: £0.1 million). The adjusted basic loss per Ordinary Share (before deduction of exceptional items) for the 52 weeks to 30 January 2011 was 26.49 pence compared to 20.36 pence in the previous accounting period. The number of shares for the purpose of basic loss per Ordinary Share and adjusted basic loss per Ordinary Share has been adjusted retrospectively to take account of the Firm Placing and Placing and Open Offers completed during February 2011 and April 2011.

Key performance indicators

During the period under review the Board monitored its performance by reference to a number of key performance indicators ("KPIs") of which the most important were:

In order to measure and monitor the success of its turnaround plans the Board is developing a more comprehensive set of financial and non- financial KPI's aligned to each element of the plan.

Review of Statement of financial position

Goodwill

Goodwill has been subject to an impairment review as at the period end date which has resulted in a reduction in its carrying value of £92.6 million from £106.4 million as at 31 January 2010 to £13.8 million as at 30 January 2011.

Capital expenditure

Capital expenditure on property, plant and equipment for the 52 weeks to 30 January 2011 was £4.1 million compared to £1.8 million in the previous accounting period. This capital expenditure was principally spent on the refurbishment of the six trial stores and enhancement to the IT infrastructure.

Inventories

The value of inventories at 30 January 2011 was £52.7 million compared to £68.6 million at 31 January 2010. This reduction is due to the working capital constraints experienced by the business in the second half of the financial period and a reassessment of provisioning requirements as at the period end date.

Net (debt) funds

The Group's net debt, excluding Loan notes, at 30 January 2011 was £18.8 million compared to £58.8 million net funds at 31 January 2010. The principal reason for this deterioration is the net cash outflow from operations of £71.9 million.

Trade and other payables

Trade and other payables have reduced to £68.4 million at 30 January 2011 from £106.2 million at 31 January 2010 owing to the working capital constraints experienced by the business in the second half of the financial period.

Current asset investments and loan notes

The Loan note deposit represented a bank balance which acted as security for the Loan notes which were included within current liabilities in the Consolidated statement of financial position for 53 weeks to 31 January 2010. The Loan notes were repaid on the 11 June 2010.

Dividend

The Board does not recommend payment of a dividend in respect of the 52 weeks to 30 January 2011 (2010: nil).

Share capital

Details of the share capital and post period end movements, including the two Firm Placing and Placing and Open Offers referred to earlier and the Capital Reorganisation can be found in note 27 of the Notes to the full Financial statements.

The mid-market share price of the Ordinary Shares at the close of business on 28 January 2011, which was before the Capital Reorganisation, was 4.39 pence, representing an equity market capitalisation of approximately £28.6 million.

Director update

There have been a number of changes to the Board over the last 12 months as follows:

> On 1 March 2010, Keith Jones joined the Board as Chief Executive Officer;

> On 25 March 2010, Colin Tranter resigned as a Director;

> On 27 May 2010 John Clare was appointed as Chairman of the Company, having been Acting Chairman since 28 January 2010;

> On 28 July 2010 David Jones resigned as a Non-executive Director;

> On 23 December 2010 John Clare resigned as a Non-executive Director and Chairman and Mike McTighe was appointed as a Non-executive Director and Chairman; and

> On 17 January 2011, Lawrence Coppock resigned as Finance Director and David Williams was appointed as Chief Financial Officer.

After the end of the period, the following changes to the Board have occurred:

> On 6 May 2011, Richard Bernstein was appointed to the Board as a Non-executive Director appointed by Crystal Amber Fund Limited; and

> On 17 May 2011, the Company announced that Lawrence Christensen will join the Board as a Non-executive Director on 1 November 2011.

Events after the Statement of financial position

There have been a number of significant events after the Statement of financial position. Please refer to note 7.

Consolidated statement of financial performance

For the 52 weeks to 30 January 2011

\* There are no other items in the current period. In the prior period, other items represented results of retail cessations during the 53 week period to 31 January 2010 including retail stores attached to fitness clubs, OSC and Qube stores, and other non-core retail stores.

For the 52 weeks to 30 January 2011

Consolidated statement of changes in equity

For the 52 weeks to 30 January 2011

Consolidated statement of financial position

Consolidated statement of cash flow

Notes to the financial information for the 52 weeks to 30 January 2011

1. Basis of preparation

The financial information has been prepared under International Financial Reporting Standards (IFRS) issued by the IASB and as adopted by the European Commission (EC). This financial information has been prepared on the same basis as in 2010. Further information in relation to the Standards adopted by the Group is available on the Group's website, www.jjbcorporate.co.uk.

Whilst the financial information included in this announcement has been computed in accordance with International Financial Reporting Standards (IFRS's), this announcement does not itself contain sufficient information to comply with IFRS's.

The financial information set out above does not constitute the Company's statutory accounts for the 52 week period ended 30 January 2011 or the 53 week period ended 31 January 2010, but is derived from those accounts. Statutory accounts for 2010 have been delivered to the Registrar of Companies and those for 2011 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under section 498(2) or (3) Companies Act 2006 or equivalent preceding legislation.

A copy of the Group accounts for the 52 week period ended 30 January 2011 will be available www.jjbcorporate.co.uk and will be posted to shareholders this month.

Going Concern

At the time of the announcement of the Group's interim results on 27 September 2010, it was disclosed that trading conditions experienced by the Group were difficult and consequently the Group's lender, Bank of Scotland ("BoS") , had agreed to waive the Group's EBITDAR covenant test in October 2010.

The Group continued to experience very difficult trading conditions and on 23 December 2010, the Company and BoS agreed the terms of a waiver of the EBITDAR and fixed charge cover ratio tests scheduled for 31 January 2011. On this date the Group also announced that it had secured support from key investors for a capital raising totalling £31.5 million gross proceeds.

The first Firm Placing and Placing and Open Offer, full details of which are set out in the Prospectus sent to Shareholders and dated 2 February 2011, was concluded on 25 February 2011 and resulted in gross proceeds of £31.5 million which allowed the Group to settle overdue creditors and provide the Group with short term liquidity to allow the preparation of a fundable revised business plan and provide sufficient time to execute a refinancing and a restructure of the Group's store portfolio.

On 3 March 2011, as part of the Group's restructuring and refinancing, a Company Voluntary Arrangement ("CVA") proposal was launched.

The second Firm Placing and Placing and Open Offer, full details of which are set out in the Prospectus sent to Shareholders and dated 6 April 2011, was concluded on 27 April 2011 and resulted in gross proceeds of £65 million.

The CVA challenge period expired on 21 April 2011, and on 28 April 2011, following receipt of the gross proceeds from the second stage capital raise, the CVA proposal was implemented and the Company entered into new bank financing arrangements (see note 7) with BoS with an extension of its current £25 million revolving working capital facility which will now expire on 31 May 2014. This facility also includes revised covenants and concluded the Group's restructuring.

The Group has traded in line with its business plan during the first quarter of its current financial period i.e. the 52 weeks ending 29 January 2012. The turnaround programme is now established in the business and the new management team are executing the plan, notably re-balancing and re-investing in the stock packages following the period of significant working capital constraints in order to drive trading performance and also ensuring the cost base reflects the needs of the business for the future.

The Directors have reviewed trading and cash flow forecasts as part of their going concern assessment which take into consideration the uncertainties in the current operating environment and also the latest trading information. The Directors are aware that there are uncertainties facing the business, not least that future trading may not be in line with the assumptions in the Group's latest business plan, which in turn, is dependent on the current economic climate and the implementation of its business recovery programme.

The Directors have applied reasonable stress testing to their trading and cash flow forecasts and after applying reasonable sensitivities, these show that the Group would continue to have headroom within its working capital facilities and on its revised covenants.

The Directors are therefore of the opinion that the Group has adequate resources to continue in operational existence for the foreseeable future and for this reason, they continue to adopt the going concern basis in preparing the Annual Report and Financial statements. The Annual Report does not include any adjustments that would result in the going concern basis of preparation being inappropriate.

2. Exceptional items

Goodwill impairment represents the write down required following a review of goodwill that arose on the acquisition of Sports Division. This is a non-cash item. Further details are included in note 4.

Reorganisation costs relate to costs incurred from the restructuring of the Group

Details about the impairment of fixed assets regarding the CVA stores can be found in note 16 in the Notes to the full Financial statements which will be available on the Company's corporate website, www.jjbcorporate.co.uk .

Details about the property provisions can be found in note 5.

3. Loss per share

The number of shares for the purpose of basic loss per Ordinary Share and adjusted basic loss per Ordinary Share has been adjusted retrospectively to take account of the Firm Placing and Placing and Open Offers completed during February 2011 and April 2011.

4. Goodwill