JJB.L Regulatory News (JJB)

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, Australia, Canada, Japan, New Zealand, THE REPUBLIC OF SOUTH AFRICA, Switzerland OR the United Arab Emirates and SHOULD NOT BE DISTRIBUTED IN, FORWARDED TO OR TRANSMITTED INTO ANY JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF APPLICABLE SECURITIES LAWS OR REGULATIONS.

This Announcement HAS NOT BEEN APPROVED BY THE FSA OR BY ANY OTHER REGULATORY AUTHORITY. THIS ANNOUNCEMENT is an advertisement. It is not a prospectus. Investors should not subscribe for or purchase any shares referred to in this Announcement except SOLELY on the basis of information in the prospectus to be published by JJB Sports plc in connection with the proposed Capital Raising. Copies of the prospectus will, following publication, be available from the company's registered office and, OTHER THAN IN CERTAIN JURISDICTIONS, on its CORPORATE website at www.jjbcorporate.co.uk.

6 April 2011

JJB Sports plc

Proposed Firm Placing and Placing and Open Offer to raise

£65 million gross proceeds

Further to the announcement made on 15 March 2011, the Board of Directors of JJB Sports plc ("JJB" or the "Company"), one of the UK's leading sports retailers, announces that it is proposing to raise gross proceeds of £65 million (approximately £60 million net of expenses), through a firm placing and a placing and open offer involving the issue of 162,500,000 New Ordinary Shares at an issue price of 40 pence per share.

·; The Capital Raising will be by way of a Firm Placing and Placing and Open Offer supported by Harris Associates, Crystal Amber, Invesco Asset Management and Bill & Melinda Gates Foundation Trust and fully underwritten by Numis.

·; The net proceeds of approximately £60 million after expenses provide management with greater operational flexibility and, in particular, will allow the Company to reduce its reliance on the availability of supplier credit and provide the necessary funds for the implementation of the Group's revised business plan.

·; The Company intends to issue 97,093,649 New Ordinary Shares pursuant to the Firm Placing (comprising 59.7% of the total number of New Ordinary Shares to be issued pursuant to the Capital Raising) and 65,406,351 New Ordinary Shares pursuant to the Placing and Open Offer (comprising the remaining 40.3%).

·; The issue price of 40 pence per New Ordinary Share represents a premium of 40.4% to the Closing Price of 28.5 pence per Ordinary Share on 5 April 2011 (being the last Dealing Day prior to the date of announcement of the Capital Raising).

·; The Capital Raising is conditional on, among other things, the approval of Shareholders at a General Meeting to be held at 11:00 a.m. on 26 April 2011. Details relating to the General Meeting are contained in the Prospectus which it is intended will be posted to Qualifying Shareholders (other than Excluded Shareholders) on 6 April 2011.

·; Lazard is acting as joint financial adviser and sponsor and Numis is acting as joint financial adviser, bookrunner and underwriter to the Company in connection with the Capital Raising.

·; In addition and as announced on 15 March 2011, the Company has reached agreement with its lender, Bank of Scotland plc ("BoS"), for the provision of a committed working capital facility of £25 million through to 31 May 2014 (the "Amended BoS Facility"), subject to the completion of certain conditions precedent including the receipt of proceeds under the Capital Raising.

·; The New Ordinary Shares are expected to be admitted to the Official List and to trading on the London Stock Exchange's main market and the proceeds of the Capital Raising received by the Company on 27 April 2011. Following receipt of the proceeds and assuming the CVA Proposal has not been challenged, the Company expects the Amended BoS Facility to become effective and to implement the CVA proposal on 27 April 2011. Following completion of the restructuring and refinancing, the Company expects to cancel its admission to the Official List and to trading on the London Stock Exchange's main market and to be admitted to listing and trading on AIM on 28 April 2011.

·; Richard Manning, Legal & Operations Director and Company Secretary, will leave the Board at the Company's 2011 AGM in July 2011. In the interim period, Richard will work with the Board to ensure a smooth handover of his responsibilities. As previously announced on 2 February 2011, Alan Benzie, non-executive director, had signalled an intention to stand down from the Board. Alan has now confirmed that he will leave the Board at the Company's 2011 AGM in July 2011.

Commenting on the Capital Raising, Mike McTighe, JJB Chairman, said:

"After the approval of our CVA proposals by creditors and shareholders in March, I am delighted that we are today confirming the details of this capital raising with the support of our four largest shareholders. Together with the implementation of the CVA and continued availability of our banking facilities with BoS, this fundraising will mark the end of our financial restructuring process. Once complete, it will allow the Company to press on with the next stage of implementing its revised business plan and allow management to focus solely on the turnaround of the group's retail business."

This summary should be read in conjunction with the full text of this announcement. Appendix I contains an expected timetable. Appendix II contains the definitions of certain terms used in this announcement.

A copy of the Prospectus, following expected publication later today, will be available from the registered office of the Company at Martland Park, Challenge Way, Wigan, Lancashire, WN5 0LD and on the Company's corporate website at www.jjbcorporate.co.uk. The Prospectus will also be available for inspection during normal business hours on any weekday (Saturdays, Sundays and public holidays excluded) at the offices of Herbert Smith LLP at Exchange House, Primrose Street, London, EC2A 2HS.

Important Notice

This Announcement is not a prospectus but an advertisement and Qualifying Shareholders should not acquire any New Ordinary Shares referred to in this Announcement except on the basis of the information contained in the Prospectus.

Neither the content of JJB's website nor any website accessible by hyperlinks to JJB's website is incorporated in, or forms part of, this Announcement. The distribution of this Announcement, the Prospectus and any other documentation associated with the Capital Raising into jurisdictions other than the United Kingdom may be restricted by law. Persons into whose possession these documents come should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. In particular, such documents should not be distributed, forwarded to or transmitted, directly or indirectly, in whole or in part, in or into the United States, Australia, Canada, Japan, New Zealand, the Republic of South Africa, Switzerland or the United Arab Emirates.

No action has been taken by JJB or any other person that would permit an offer of the New Ordinary Shares or possession or distribution of this Announcement, the Prospectus or any other documentation or publicity material or the Application Forms in any jurisdiction where action for that purpose is required, other than in the United Kingdom.

The New Ordinary Shares have not been and will not be registered under the US Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and, accordingly, may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, within the United States absent registration or an applicable exemption from the registration requirements of the US Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States.

There will be no public offer of the New Ordinary Shares in the United States. The New Ordinary Shares are being offered and sold outside the US in reliance on Regulation S under the US Securities Act. The New Ordinary Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the US or any other US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the New Ordinary Shares or the accuracy or adequacy of the Application Form or this announcement. Any representation to the contrary is a criminal offence in the US.

The New Ordinary Shares have not been and will not be registered under the relevant laws of any state, province or territory of any of the Excluded Territories and may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, within any Excluded Territory except pursuant to an applicable exemption from registration requirements. There will be no public offer of New Ordinary Shares in Australia, Canada, Japan, New Zealand, the Republic of South Africa, Switzerland or the United Arab Emirates.

This Announcement is for information purposes only and does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in any jurisdiction and should not be relied upon in connection with any decision to subscribe for or acquire any of New Ordinary Shares. In particular, this Announcement does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in the United States.

This Announcement has been issued by, and is the sole responsibility of, the Company. No person has been authorised to give any information or to make any representations other than those contained in this Announcement and, if given or made, such information or representations must not be relied on as having been authorised by JJB, Lazard or Numis. Subject to the Listing Rules, the Prospectus Rules and the Disclosure and Transparency Rules, the issue of this Announcement shall not, in any circumstances, create any implication that there has been no change in the affairs of the Group since the date of this Announcement or that the information contained in it is correct at any subsequent date.

Lazard and Numis, who are authorised and regulated in the UK by the Financial Services Authority, are acting for JJB and no one else in connection with the Capital Raising and will not regard any other person (whether or not a recipient of this Announcement) as a client in relation to the Capital Raising and will not be responsible to anyone other than JJB for providing the protections afforded to their respective clients or for providing advice in relation to the Capital Raising or any matters referred to in this Announcement.

Apart from the responsibilities and liabilities, if any, which may be imposed on Lazard by the Financial Services and Markets Act 2000, neither Lazard nor Numis accepts any responsibility whatsoever for the contents of this Announcement, and makes no representation or warranty, express or implied, for the contents of this Announcement, including its accuracy, completeness or verification, or for any other statement made or purported to be made by it, or on its behalf, in connection with JJB or the New Ordinary Shares or the Capital Raising, and nothing in this Announcement is or shall be relied upon as, a promise or representation in this respect whether as to the past or future. Each of Lazard and Numis accordingly disclaims to the fullest extent permitted by law all and any liability whether arising in tort, contract or otherwise (save as referred to above) which it might otherwise have in respect of this Announcement or any such statement.

No statement in this Announcement is intended to be a profit forecast and no statement in this Announcement should be interpreted to mean that earnings per share of JJB for the current or future financial years would necessarily match or exceed the historical published earnings per share of JJB.

This Announcement includes statements that are, or may be deemed to be, "forward looking statements". These forward looking statements can be identified by the use of forward looking terminology, including the terms "believes", "projects", "estimates", "anticipates", "expects", "intends", "plans", "goal", "target", "aim", "may", "will", "would", "could", "should" or "continue" or, in each case, their negative or other variations or comparable terminology. These forward looking statements include all matters that are not historical facts. They appear in a number of places throughout this Announcement and include statements regarding the intentions, beliefs or current expectations of the Directors, the Company or the Group concerning, among other things, the Company's financial position and projections, business plan, financial model and future covenant ratios and compliance, the results of operations, prospects, growth, strategies and dividend policy of the Group and the industry in which it operates.

By their nature, forward looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and may be beyond the Company's ability to control or predict. Forward looking statements are not guarantees of future performance. The Company's or the Group's actual financial performance, results of operations, dividend policy and the development of the industry in which it operates may differ materially from the impression created by the forward looking statements contained in this Announcement. In addition, even if the financial performance, results of operations and dividend policy of the Company or the Group (as the case may be), and the development of the industry in which it operates, are consistent with the forward looking statements contained in this Announcement, those results or developments may not be indicative of results or developments in subsequent periods. Important factors that could cause these differences include, but are not limited to: the effect of the Capital Raising on the Group; the Group's ability to generate growth or profitable growth; the Group's ability to generate sufficient cash over the longer term to service its debt; the Group's ability to control its capital expenditure and other costs; changes in the competitive framework in which the Group operates and its ability to retain market share; industry trends; general local and global economic, political, business and market conditions; significant changes in exchange rates, interest rates and tax rates; significant technological and market changes; future business combinations or dispositions; changes in government and other regulation, including in relation to the environment, health and safety and taxation; labour relations and work stoppages; and changes in business strategy or development plans. More detailed information on the potential factors which could affect the financial results of the Group is contained in the Group's public filing and reports.

The forward looking statements contained in this announcement speak only as of the date of this Announcement. Other than in accordance with their legal or regulatory obligations (including under the Listing Rules and/or the Prospectus Rules and/or the Disclosure and Transparency Rules) and as required by the FSA, the London Stock Exchange or the City Code, neither the Company nor Lazard and Numis undertakes any obligation to update or revise publicly any forward looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward looking statements attributable to the Group or individuals acting on behalf of the Group are expressly qualified in their entirety by this paragraph. Prospective investors should specifically consider the factors identified in this announcement which could cause actual results to differ before making an investment decision.

This announcement should not be considered a recommendation by the Company, Lazard, Numis or any of their respective directors, officers, employees, advisers or any of their respective affiliates, parent undertakings, subsidiary undertakings or subsidiaries of their parent undertakings in relation to any purchase of or subscription for the New Ordinary Shares. Price and volumes of, and income from, securities may go down as well as up and an investor may not get back the amount invested. It should be noted that past performance is no guide to future performance. You are advised to read this announcement and, once available, the Prospectus and the information incorporated by reference therein, in their entirety for a further discussion of the factors that could affect the Group's future performance and the industry in which it operates. Persons needing advice should consult an independent financial adviser.

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART IN OR INTO THE UNITED STATES, Australia, Canada, Japan, New Zealand, THE REPUBLIC OF SOUTH AFRICA, Switzerland OR the United Arab EmiratesAND SHOULD NOT BE DISTRIBUTED IN, FORWARDED TO OR TRANSMITTED INTO ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF LOCAL APPLICABLE SECURITIES LAWS OR REGULATIONS.

This Announcement HAS NOT BEEN APPROVED BY THE FSA OR BY ANY OTHER REGULATORY AUTHORITY. THIS ANNOUNCEMENT is an advertisement. It is not a prospectus. Investors should not subscribe for or purchase any shares referred to in this Announcement except solely on the basis of information in the prospectus to be published by JJB Sports plc in connection with the proposed Capital Raising. Copies of the prospectus will, following publication, be available from the company's registered office and, OTHER THAN IN CERTAIN JURISDICTIONS, on its CORPORATE website at www.jjbcorporate.co.uk.

6 April 2011

JJB Sports plc

Proposed Firm Placing and Placing and Open Offer to raise

£65 million gross proceeds

On 15 March 2011, the Board announced details of its revised business plan with the aim of restoring the viability of the Group's business model and returning the business to profitability in the longer term. In order to implement the revised business plan, the Company also announced its intention to raise gross proceeds of £65 million by way of a firm placing and placing and open offer and that it had reached agreement in principle with each of Harris Associates, Crystal Amber, IAML and Bill & Melinda Gates Foundation Trust, being the Company's major shareholders, to support the proposed capital raising up to an aggregate amount of £65 million.

Further to this announcement, the Board has today finalised the terms of the proposed capital raising to raise £65 million (before expenses) by way of a Firm Placing of 97,093,649 New Ordinary Shares at 40 pence per new share and by way of a Placing and Open Offer of 65,406,351 New Ordinary Shares at 40 pence per new share. Each of Harris Associates, Crystal Amber, IAML and Bill & Melinda Gates Foundation Trust have entered into binding placing letters with Numis, as the Company's agent, pursuant to which they have each committed, conditional, among other things, upon the passing of the Resolutions at the General Meeting, to subscribe for the Placing and Open Offer Shares (pro rata to the level of their firm commitment), subject to clawback by Qualifying Shareholders under the terms of the Open Offer.

On 15 March 2011, the Board also announced that it had reached an agreement with BoS, the Company's lender, with regards to confirming the provision of the Amended BoS Facility through to 31 May 2014, subject to completion of the Capital Raising and the satisfaction of certain other conditions precedent. Apart from receipt of the Capital Raising proceeds (receipt of which is dependent on the CVA proposal not being subject to a successful challenge) and other conditions which are entirely within the control of the Group, the Company has satisfied all conditions to the Amended BoS Facility.

The Capital Raising, the Related Party Transactions and the Rule 9 Waivers are conditional on, among other things, the approval of the Capital Raising Resolutions by Shareholders at a General Meeting to be held at 11:00 a.m. on 26 April 2011 at the offices of Herbert Smith LLP, Exchange House, Primrose Street, London, EC2A 2HS. The Notice of General Meeting is set out in the Prospectus.

Shareholder approval is required for the granting of authority to allot and issue the Placing and Open Offer Shares and the disapplication of statutory pre-emption rights in relation to the same, to approve the allotment and issue of New Ordinary Shares to Harris Associates, Crystal Amber and IAML as related parties of the Company under Chapter 11 of the Listing Rules and to approve the waiver by the Panel of the obligations of IAML and the Crystal Amber/IAML Concert Party to potentially make a mandatory offer for the Company under Rule 9 of the Code following completion of the Capital Raising and/or upon exercise of the Warrants.

The Prospectus, which is expected to be posted to shareholders shortly, sets out:

(a) notice of the General Meeting and details of the Capital Raising, the Related Party Transactions and the Rule 9 Waivers;

(b) the background to and reasons for the Capital Raising and why the Board considers that the Capital Raising, the Related Party Transactions and the Rule 9 Waivers and the Resolutions are fair and reasonable and are in the best interests of the Company, the Independent Shareholders and the Shareholders as a whole; and

(c) why the Board unanimously recommends that Shareholders vote in favour of the Resolutions, as they intend to do in respect of their own beneficial holdings.

In the event that the Resolutions are not passed, the Capital Raising, the Related Party Transactions and the Rule 9 Waivers will not proceed. If the Capital Raising does not proceed, the Company will be in default under the terms of the BoS Facility and the CVA Proposal can not be implemented. In these circumstances, it is likely that the Group would go into receivership, liquidation or administration.

2. Background to and reasons for the Capital Raising

As a result of deteriorating retail trading conditions and intense competition, as well as the need for improvement to its business systems and processes, the Group incurred significant trading losses and reduced its cash headroom in the second half of 2010. On 23 December 2010, in order to provide the Company with access to additional working capital and to assist management to trade through challenging conditions, the Board announced details of a number of measures to strengthen the short term financing of the business. These measures involved the support of each of its key stakeholder groups, including agreements in principle from each of the Key Shareholders to support the February 2011 Capital Raising and an agreement with BoS to waive certain financial covenants and events of default under the BoS Facility.

Consequently, in order to provide the Company with short term working capital and to allow the Company's senior management time to complete the development of its revised business plan, the Group raised gross proceeds of £31.5 million through a firm placing and placing and open offer involving the issue of 630 million new ordinary shares (equal to 63 million Ordinary Shares following the Capital Reorganisation) at an issue price of 5 pence per share (equal to 50 pence per share following the Capital Reorganisation) in February 2011. The net proceeds of approximately £30 million from the February 2011 Capital Raising were used to make immediate payments to creditors, to continue to purchase new stock, to fund trading losses and to pay creditors as they fell due. However, the February 2011 Capital Raising was not intended to address the Company's medium to long-term financing requirements. As announced by the Company on 2 February 2011, after taking account of the receipt of the net proceeds of the February 2011 Capital Raising, the Group's short term cash flow forecasts indicated a funding shortfall towards the end of April 2011.

In connection with the development of its revised business plan, the Directors conducted a review of the Group's portfolio of stores, which included the review of a number of restructuring options available to the Group (including store closures, disposals and lease re-gearing), with a view to developing a business plan that would be fundable. On 11 February 2011, the Board announced that the Group's future viability was dependent upon the successful implementation of company voluntary arrangements involving the compromise and release of certain liabilities owed by the Group to its landlords.

On 3 March 2011, the Company announced full details of the CVA Proposal to restore the viability of the Group's business model and to assist in a return to profitability. The Directors are of the view that the CVA Proposal will enable the Group to carry out a fundamental restructuring of its property portfolio that must be carried out as part of implementing the Group's revised business plan. On 22 March 2011, the CVA Proposal received the approval of the requisite majority of unsecured creditors and the requisite majority of members. However, full implementation of the CVA Proposal is conditional upon the Company receiving the net proceeds of the Capital Raising and the CVA Proposal not being the subject of any successful challenge application made during the CVA Challenge Period, or if the CVA Proposal is the subject of a challenge application, it is dismissed on or before 30 June 2011.

On 15 March 2011, in connection with the Board's decision to proceed with the CVA Proposal, the Company confirmed that it had finalised its revised business plan. Consequently, in order to provide the Group with longer term financial stability and with the ability to implement its revised business plan, the Board has agreed with BoS to amend the BoS Facility including extending the maturity of the BoS Facility through to 31 May 2014 and decided to raise additional equity capital through the Capital Raising.

3. Use of proceeds

The net proceeds of the Capital Raising of approximately £60 million will improve the Group's working capital position and substantially increase the Group's cash and undrawn committed financing facilities. The proceeds will first be used to pay down the total amount drawn under the Amended BoS Facility (such amounts which have been repaid will remain available to be redrawn in accordance with the terms of the Amended BoS Facility). As at 3 April 2011 (being the last practicable date prior to publication of this announcement), the amount drawn under the BoS Facility was £25 million. Approximately £1 million of the net proceeds will be used by the Company to make immediate payments to creditors. The remainder of the net proceeds of the Capital Raising in the amount of £34 million will be credited to cash on the Group's balance sheet and used, along with amounts available to be redrawn under the terms of the Amended BoS Facility, to fund the ongoing working capital requirements of the Group, trading losses and the Group's capital expenditure plans set out in its revised business plan.

The Directors believe that following the Capital Raising, the Group's cash and undrawn committed financing facilities will provide management with greater operational flexibility and, in particular, will allow the Company to implement the initiatives set out in its revised business plan and reduce its reliance on the availability of supplier credit. In particular, the Directors believe that the Capital Raising will provide the necessary funds of approximately £27.2 million in total required to implement the Group's capital expenditure plans set out in its revised business plan as follows:

·; Retail basics - determining the optimal floor space and space allocations for all product categories and creating clearly defined departments by repositioning existing features in approximately 133 stores in FY12 at a total cost of approximately £4.4 million.

·; Refresh refit - remixing the stores' space and improving the customer experience by implementing new external signage and redecorating stores (with a particular focus on the footwear departments) in approximately 14 stores in FY12 and approximately 27 stores in FY13 at a total cost of approximately £1.4 million in FY12 and approximately £2.7 million in FY13.

·; Full transformation - transforming stores in a manner consistent with the existing six transformed stores and comprises new fixtures and fittings, the installation and extension of a mezzanine floor where appropriate and improved navigation and point of sale in approximately 22 stores in FY12 and approximately 28 stores in FY13 at a total cost of approximately £6.1 million in FY12 and approximately £7.8 million in FY13.

·; General capital programmes - maintenance and IT, which includes website development costs, at a total cost of approximately £2.5 million in FY12 and approximately £2.3 million in FY13.

4. Key terms of the current BoS Facility and the agreed Amended BoS Facility

On 15 March 2011, the Company and BoS agreed further amendments to the current terms of the BoS Facility and also agreed the Amended BoS Facility. The current BoS Facility will remain available to the Company on such terms until the Amended BoS Facility comes into effect upon receipt of proceeds under the Capital Raising by the Company and satisfaction of certain other conditions precedent. Apart from receipt of the Capital Raising proceeds (receipt of which is dependent on the CVA Proposal not being subject to a successful challenge) and other conditions which are entirely within the control of the Group, the company has satisfied all conditions to the Amended BoS Facility.

The key amendment to the current BoS Facility made on 15 March 2011 was to include an event of default that will be triggered if proceeds of the Capital Raising are not received by the company before 6 May 2011.

The key terms of the Amended BoS Facility, are as follows:

·; The maturity date of the facility will be extended to 31 May 2014.

·; An overdraft facility is contained within the £25 million facility limit.

·; The key financial covenants will comprise: (a) a stock cover test on or around each Quarter Date from 31 July 2011 to 27 January 2013; (b) a cash flow test which requires that the Cash Flow for the 9 month period ending 31 October 2011 must not be less than negative £70 million; and (c) an EBITDA test which requires a certain minimum EBITDA (which varies between negative £31 million and negative £20 million) for the 9 month period ending on 31 January 2012 and then for each 12 month period ending on a Quarter Date from 30 April 2012 to 31 January 2013.

·; Requirements in relation to a clean down of the Amended BoS Facility and an agreement that if certain clean down requirements are not satisfied, financial advisers may be appointed by BoS to review the financial condition of the Group and/or advise BoS in relation to the business and financial performance of the Group.

·; Agreement that between 15 November 2012 and 31 January 2013, BoS and the Company will negotiate in good faith in order to agree the financial covenants that will apply from 1 February 2013 to the maturity date of the Amended BoS Facility, with failure to agree such financial covenants by 1 February 2013 comprising an event of default.

5. Key terms and conditions of the Capital Raising

The Board proposes to raise approximately £60 million (net of expenses) through the Capital Raising by the issue of 97,093,649 New Ordinary Shares through the Firm Placing at 40 pence per share and 65,406,351 New Ordinary Shares through the Placing and Open Offer at 40 pence per share.

In structuring the Capital Raising, the Directors have had regard, inter alia, to the current financial and trading position of the Group, the level of the Company's share price and the importance of pre-emption rights to Shareholders. After considering these and other factors, the Directors have concluded that the Firm Placing and Placing and Open Offer is the most suitable option available to the Company and its Shareholders. The Open Offer component of the fundraising provides an opportunity for all Qualifying Shareholders (other than Excluded Shareholders) to participate by subscribing for Open Offer Shares pro rata to their current holding of Existing Ordinary Shares.

The Directors have set the Issue Price following discussions with the Key Shareholders. Shareholders should note that the Issue price has been set at a premium of 40.4% to the closing price of 28.5 pence per Ordinary Share on 5 April 2011 (being the last dealing day prior to this announcement of the Capital Raising). The Directors believe that the Issue Price is appropriate.

Key terms of the Placing and Open Offer

The Issue Price of 40 pence per New Ordinary Share represents a premium of 11.5 pence (40.4%) to the closing price of 28.5 pence per Ordinary Share on 5 April 2011 (being the last Dealing Day prior to announcement of the Capital Raising). The Placing and Open Offer is expected to raise approximately £26.2 million before expenses.

Under the terms of the Placing and Open Offer, Qualifying Shareholders (other than Excluded Shareholders) will be given the opportunity to apply for the Open Offer Shares at the Issue Price, pro rata to their holdings of Existing Ordinary Shares on the Record Date, on the basis of:

1 Open Offer Shares for every 2 Existing Ordinary Shares

Qualifying Shareholders (other than Excluded Shareholders) are also being given the opportunity, provided they take up their Open Offer Entitlement in full, to apply for Excess Shares through the Excess Application Facility, up to a maximum number of Excess Shares equal to 0.7 times the number of Existing Ordinary Shares held in such Qualifying Shareholder's name as at the Record Date.

Fractions of Open Offer Shares will not be allotted to Qualifying Shareholders in the Open Offer and fractional entitlements in the Open Offer will be rounded down to the nearest whole number of Open Offer Shares. Any fractional entitlements will be aggregated and sold in the market on behalf of the relevant Shareholder, save that, where the net proceeds are less than £5.00 per relevant Shareholder (which is expected to be the case), then the net proceeds of such sale will be retained for the benefit of the Company). The aggregate number of Open Offer Shares available for subscription pursuant to the Open Offer will not exceed 65,406,351 New Ordinary Shares.

Qualifying Shareholders (other than Excluded Shareholders) may apply for any whole number of Open Offer Shares up to their maximum entitlement, which in the case of Qualifying Non-CREST Shareholders, to the number of Open Offer Entitlements as shown in Box 3 on their Application Form, or, in the case of Qualifying CREST Shareholders, is the number of Open Offer Entitlements standing to the credit of their stock accounts in CREST.

Application Forms are expected to be despatched to Qualifying Non-CREST Shareholders on 6 April 2011 and Qualifying CREST Shareholders are expected to receive a credit to their appropriate stock accounts in CREST in respect of their Open Offer Entitlements as soon as possible after 8:00 a.m. on 7 April 2011. Qualifying Shareholders with holdings of Existing Ordinary Shares in both certificated and uncertificated form will be treated as having separate holdings for the purpose of calculating their entitlements under the Open Offer, as will Qualifying Shareholders with holdings under different designations or in different accounts.

The Conditional Placees have agreed to subscribe for Open Offer Shares pursuant to the Placing, subject to clawback to satisfy valid applications by Qualifying Shareholders pursuant to the Open Offer.

The Placing and Open Offer is fully underwritten by Numis pursuant to the Sponsor and Placing Agreement. Pursuant to the Sponsor and Placing Agreement, Lazard has been appointed as sponsor and Numis has been appointed as bookrunner and underwriter of the Capital Raising.

Application has been made for the Open Offer Shares and Excess CREST Open Offer Shares to be admitted to CREST. It is expected that the Open Offer Entitlements and Excess CREST Open Offer Entitlements will be admitted to CREST at 8:00 a.m. on 7 April 2011. The Open Offer Entitlements and Excess CREST Open Offer Entitlements will also be enabled for settlement in CREST at 8:00 a.m. on 7 April 2011. Applications through the CREST system may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim.

Qualifying CREST Shareholders should note that, although the Open Offer Entitlements will be admitted to CREST and be enabled for settlement, applications in respect of entitlements under the Open Offer may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim. Qualifying Non-CREST Shareholders should note that their Application Form is not a negotiable document and cannot be traded.

The Placing and Open Offer is conditional, amongst other things, upon passing of the Capital Raising Resolutions at the General Meeting and Admission of the New Ordinary Shares occurring by no later than 9:00 a.m. on 27 April 2011 (or such later time and/or date as the Company, Lazard and Numis may determine).

If Admission does not take place on or before 9:00 a.m. on 27 April 2011 (or such later time and/or date as the Company, Lazard and Numis may determine), the Open Offer will lapse, any Open Offer Entitlements admitted to CREST will thereafter be disabled and application monies under the Open Offer will be refunded to the applicants, by cheque (at the applicant's risk) in the case of Qualifying Non-CREST Shareholders and by way of a CREST payment in the case of Qualifying CREST Shareholders, without interest as soon as practicable thereafter. In these circumstances, the Placing to the Conditional Placees will not proceed.

Application will be made to the UK Listing Authority for the Open Offer Shares to be admitted to the premium segment of the Official List and to the London Stock Exchange for the Open Offer Shares to be admitted to trading on the London Stock Exchange's main market for listed securities. It is expected that Admission will become effective on 27 April2011 and that dealings for normal settlement in the Open Offer Shares will commence at 8:00 a.m. on 27 April 2011.

Further to the announcement by the Company on 22 March 2011, the Company will apply to the UK Listing Authority to cancel admission of all its Ordinary Shares (including the Open Offer Shares) to listing on the premium segment of the Official List and to the London Stock Exchange to cancel the trading of all of its Ordinary Shares (including the Open Offer Shares) on the London Stock Exchange's main market for listed securities and has applied to the London Stock Exchange for admission of the Ordinary Shares (including the Open Offer Shares) to AIM. It is anticipated that the last day of dealings of the Ordinary Shares (including the Open Offer Shares) on the London Stock Exchange's main market for listed securities will be 27 April 2011. Cancellation of admission to listing of the Ordinary Shares (including the Open Offer Shares) on the premium segment of the Official List and to trading on the London Stock Exchange's main market for listed securities will take effect at 8:00 a.m. on 28 April 2011. AIM Admission is expected to take place and dealings in Ordinary Shares (including the Open Offer Shares) are expected to commence on AIM at 8:00 a.m. on 28 April 2011.

Any Qualifying Shareholder who has sold or transferred all or part of his or her registered holding(s) of Ordinary Shares prior to 8:00 a.m. on 7 April 2011 is advised to consult his or her stockbroker, bank or other agent through or to whom the sale or transfer was effected as soon as possible since the invitation to apply for Open Offer Shares may be a benefit which may be claimed from him or her by the purchasers under the rules of the London Stock Exchange.

The Open Offer Shares, when issued and fully paid, will be identical to, and rank in full with, the Existing Ordinary Shares for all dividends or other distributions declared, made or paid after Admission and will rank pari passu in all respects with the Existing Ordinary Shares. No temporary documents of title will be issued.

The commitments of the Conditional Placees are subject to clawback in respect of valid applications for Open Offer Shares by Qualifying Shareholders pursuant to the Open Offer.

Excess Application Facility

The Excess Application Facility will enable Qualifying Shareholders (other than Excluded Shareholders), provided they take up their Open Offer Entitlement in full, to apply for Excess Shares through the Excess Application Facility, up to a maximum number of Excess Shares equal to 0.7 times the number of Existing Ordinary Shares held in such Qualifying Shareholder's name as at the Record Date, subject to availability.

Qualifying Non-CREST Shareholders who wish to apply to acquire more than their Open Offer Entitlement should complete the relevant sections on the Application Form. Qualifying CREST Shareholders will have Excess CREST Open Offer Entitlements credited to their stock account in CREST.

If applications under the Excess Application Facility are received for more than the total number of Open Offer Shares available following take up of Open Offer Entitlements, such applications will be scaled back pro rata to the number of Excess Shares applied for by Qualifying Shareholders under the Excess Application Facility.

The aggregate number of Open Offer Shares available for acquisition pursuant to the Open Offer will not exceed 65,406,351 New Ordinary Shares.

Key terms of the Firm Placing

The Company is proposing to issue 97,093,649 New Ordinary Shares at 40 pence per share pursuant to the Firm Placing. The Firm Placing is fully underwritten by Numis pursuant to the Sponsor and Placing Agreement.

The Firm Placed Shares are not subject to clawback and do not form part of the Open Offer. The Firm Placing is expected to raise £38.8million before expenses.

The Firm Placing is subject to the same conditions and termination rights that apply to the Placing and Open Offer. The Firm Placing and the Placing and Open Offer are inter-conditional and conditional, among other things, on Shareholder approval, which will be sought at the General Meeting.

Application will be made to the UK Listing Authority for the Firm Placed Shares to be admitted to the premium segment of the Official List and to the London Stock Exchange for the Firm Placed Shares to be admitted to trading on the London Stock Exchange's main market for listed securities. It is expected that Admission will become effective on 27 April 2011and that dealings for normal settlement in the Firm Placed Shares will commence at 8:00 a.m. on 27 April 2011.

Further to the announcement by the Company on 22 March 2011, the Company will apply to the UK Listing Authority to cancel admission of all its Ordinary Shares (including the Firm Placed Shares) to listing on the premium segment of the Official List and to the London Stock Exchange to cancel the trading of all of its Ordinary Shares (including the Firm Placed Shares) on the London Stock Exchange's main market for listed securities and has applied to the London Stock Exchange for admission of the Ordinary Shares (including the Firm Placed Shares) to AIM. It is anticipated that the last day of dealings of the Ordinary Shares (including the Firm Placed Shares) on the London Stock Exchange's main market for listed securities will be 27 April 2011. Cancellation of admission to listing of the Ordinary Shares (including the Firm Placed Shares) on the premium segment of the Official List and to trading on the London Stock Exchange's main market for listed securities will take effect at 8:00 a.m. on 28 April 2011. AIM Admission is expected to take place and dealings in Ordinary Shares (including the Firm Placed Shares) are expected to commence on AIM at 8:00 a.m. on 28 April 2011.

The Firm Placed Shares, when issued and fully paid, will be identical to, and rank in full with, the Existing Ordinary Shares for all dividends or other distributions declared, made or paid after Admission and will rank pari passu in all respects with the Existing Ordinary Shares as at the date of issue.

Relevant Interests of the Firm Placees

The relevant interests in the Company by the Firm Placees and their maximum potential controlling position, both as at 5 April 2011 (being the last practicable date prior to publication of this announcement) and following completion of the Capital Raising and exercise of the Warrants, were and are expected to be as follows:

Notes:

(1) Assumes no Open Offer Shares are clawed back by Qualifying Shareholders in order to satisfy valid applications under the Open Offer.

(2) Assumes exercise of the Warrants in full by all Warrantholders (and assuming there is no further issue of Ordinary Shares pursuant to the Share Schemes, the BoS Warrants or otherwise).

(3) Assumes exercise of the Warrants in full by only the relevant Warrantholder (and assuming there is no further issue of Ordinary Shares pursuant to the Share Schemes, the BoS Warrants, the Warrants or otherwise).

6. Effect of the Capital Raising

The Placing and Open Offer Shares represent, in aggregate, approximately 124.2% of the Company's Existing Issued Share Capital. Upon completion of the Capital Raising, the Placing and Open Offer Shares will represent approximately 55.4% of the Company's Enlarged Issued Share Capital. New Ordinary Shares issued through the Placing and Open Offer and New Ordinary Shares issued through the Placing and Open Offer will account for approximately 40.3% and New Ordinary Shares issued through the Firm Placing will account for approximately 59.7%, respectively, of the total New Ordinary Shares to be issued pursuant to the Capital Raising. The Capital Raising Resolutions set out in the Notice of General Meeting must be passed in order for the Capital Raising to proceed.

Following the issue of the New Ordinary Shares to be allotted pursuant to the Capital Raising, Qualifying Shareholders who take up their full entitlements in respect of the Open Offer (without making any application under the Excess Application Facility) will experience a dilution of 33.1% of their interests in the Company as a result of the Firm Placing. Qualifying Shareholders who are not eligible to or do not take up any of their entitlements in respect of the Open Offerwill experience a greater dilution of approximately 55.4% of their interests in the Company as a result of the Firm Placing and the Open Offer.

The Capital Raising will result in an increase in cash and other short term funds of approximately £60 million (net of expenses) with a corresponding increase of approximately £60 million in net assets.

Qualifying Shareholders should note that the Open Offer is not a rights issue. In the Open Offer, unlike in a rights issue, any Open Offer Shares not applied for will not be sold in the market on behalf of, or placed for the benefit of, Qualifying Shareholders who are not eligible to or do not apply under the Open Offer but will be issued to Placees for the benefit of the Company.

7. Transfer to AIM

At a general meeting of the Company held on 22 March 2011, Shareholders approved a resolution to cancel admission of the Ordinary Shares to listing on the premium segment of the Official List and to trading on the London Stock Exchange's main market for listed securities and for an application to be made for admission of those Ordinary Shares to trading on AIM.

It is anticipated that the last day of dealings of the Ordinary Shares (including the New Ordinary Shares) on the London Stock Exchange's main market for listed securities will be 27 April 2011. Cancellation of admission to listing of the Ordinary Shares on the premium segment of the Official List and to trading on the London Stock Exchange's main market for listed securities will take effect at 8:00 a.m. on 28 April 2011, being not less than 20 Business Days from the passing of the resolution of shareholders at the general meeting held on 22 March 2011. AIM Admission is expected to take place and dealings in Ordinary Shares (including the New Ordinary Shares) are expected to commence on AIM at 8:00 a.m. on 28 April 2011.

Pursuant to the Nominated Adviser Agreement, Numis has been appointed as Nominated Adviser effective from AIM Admission.

8. Related Party Transactions

Harris Associates, which holds 36,505,775 Existing Ordinary Shares (representing approximately 27.9% of the Existing Issued Share Capital of the Company), has agreed to subscribe up to £8.76 million in aggregate for New Ordinary Shares under the Firm Placing and up to £5.9 million in aggregate for New Ordinary Shares in the Placing and Open Offer, subject to clawback to satisfy valid applications under the Open Offer (resulting in Harris Associates being interested in not more than 24.9% of the Enlarged Issued Share Capital, assuming no clawback).

Crystal Amber, which holds 20,265,338 Existing Ordinary Shares (representing approximately 15.5% of the Existing Issued Share Capital of the Company), has agreed to subscribe up to £0.149 million in aggregate for New Ordinary Shares under the Firm Placing and up to £0.101 million in aggregate for New Ordinary Shares in the Placing and Open Offer, subject to clawback to satisfy valid applications under the Open Offer (resulting in Crystal Amber being interested in not more than 7.1% of the Enlarged Issued Share Capital, assuming no clawback).

IAML, which holds 22,267,031 Existing Ordinary Shares (representing approximately 17.0% of the Existing Issued Share Capital of the Company), has agreed to subscribe up to £27.99 million in aggregate for New Ordinary Shares under the Firm Placing and up to £18.85 million in aggregate for New Ordinary Shares in the Placing and Open Offer, subject to clawback to satisfy valid applications under the Open Offer (resulting in IAML being interested in not more than 47.5% of the Enlarged Issued Share Capital, assuming no clawback).

As a consequence of Harris Associates', Crystal Amber's and IAML's current interest in the Company, their proposed participation in the Firm Placing are related party transactions for the purposes of Chapter 11 of the Listing Rules and each require the prior approval of Independent Shareholders. Each of Harris Associates, Crystal Amber and IAML has undertaken to abstain, and has undertaken to take all reasonable steps to ensure that its associates will abstain, from voting on the relevant Resolution approving their own related party transaction at the General Meeting.

9. The City Code on Takeovers and Mergers

The Directors believe that Crystal Amber's and IAML's continued support of the Company and the commitment by Crystal Amber and IAML to invest in the Capital Raising are necessary to ensure both the success of the Capital Raising and the future of the Company.

The commitment of Crystal Amber and IAML to invest in the Capital Raising gives rise to certain considerations and consequences under the Code. Brief details of the Panel, the Code and the protections they afford to Shareholders are described below.

The Takeover Code

The Code is issued and administered by the Panel. The Panel has been designated as the supervisory authority to carry out certain regulatory functions in relation to takeovers pursuant to the Directive. Its statutory functions are set out in and under Chapter 1 of Part 28 of the Companies Act 2006.

Under Rule 9 of the Code, any person who acquires an interest (as defined under the Code) in shares which, taken together with shares in which he is already interested and in which persons acting in concert with him are interested, carry 30% or more of the voting rights of a company which is subject to the Code, is normally required to make a general offer to all the remaining shareholders to acquire their shares.

Similarly, when any person, together with persons acting in concert with him, is interested in shares which in the aggregate carry not less than 30% of the voting rights of such a company but does not hold shares carrying more than 50% of such voting rights, a general offer will normally be required if any further interests in shares are acquired by any such person.

An offer under Rule 9 must be made in cash and at the highest price paid by the person required to make the offer, or any person acting in concert with him, for any interest in shares of the company during the 12 months prior to the announcement of the offer.

For the purposes of the Code, a concert party arises where persons acting in concert pursuant to an agreement or understanding (whether formal or informal) co-operate to obtain or consolidate control of a company or to frustrate the successful outcome of an offer for a company. Control means an interest, or interests, in shares carrying in aggregate 30% or more of the voting rights of the company, irrespective of whether such interest or interests give de facto control. In addition, a company and their associated companies (for this purpose ownership or control of 20% or more of the equity share capital of a company is regarded as the test of associated company status) are presumed to be persons acting in concert under the Code.

IAML

IAML, which holds 22,267,031 Existing Ordinary Shares (representing approximately 17.0% of the Existing Issued Share Capital of the Company), has agreed to subscribe up to £27.99 million in aggregate for New Ordinary Shares under the Firm Placing and up to £18.85 million in aggregate for New Ordinary Shares in the Placing and Open Offer, subject to clawback to satisfy valid applications under the Open Offer (resulting in IAML being interested in not more than 47.5% of the Enlarged Issued Share Capital, assuming no clawback).

In addition, IAML holds 8,899,951 Warrants to subscribe for new Ordinary Shares pursuant to the terms of the Warrant Instrument.

Following completion of the Capital Raising, IAML will hold up to 139,367,031 Ordinary Shares, representing approximately 47.5% of the Enlarged Issued Share Capital (assuming no clawback by Qualifying Shareholders to satisfy valid applications under the Open Offer). Assuming exercise in full by only IAML of the outstanding Warrants issued pursuant to the Warrant Instrument (and assuming there is no further exercise of options granted pursuant to the Share Schemes, the BoS Warrants or the Warrants), IAML would be interested in 148,266,982 Ordinary Shares, representing approximately 49.1% of the Company's enlarged issued share capital.

If the interests of IAML in the voting rights of the Company following the Capital Raising were to increase and become 30% or more, IAML would normally be obliged to make a general offer, pursuant to Rule 9 of the Takeover Code, to all other Shareholders to acquire their shares. However, in this instance, the Panel has agreed to waive the obligation to make a general offer that would otherwise arise as a result of the Capital Raising and IAML exercising any or all of the Warrants (and the subsequent issue of new shares to IAML, as the case may be) subject to the approval of the Independent Shareholders. Crystal Amber, Harris Associates, IAML and Bill & Melinda Gates Foundation Trust (who are deemed by the Panel to be interested in the outcome of the approval) will not be entitled to vote on the relevant resolution.

Following completion of the Capital Raising and/or the exercise of any or all of the Warrants by IAML, IAML will be interested in shares carrying 30% or more of the Company's voting share capital but will not hold shares carrying more than 50% of such voting rights and any further increase in that interest in shares will be subject to the provisions of Rule 9.

IAML has not taken part in any decision of the Board relating to the proposal to seek a waiver of Rule 9 from the Panel.

Crystal Amber/IAML Concert Party

Crystal Amber and IAML are deemed by the Panel for the purposes of the Code to be acting in concert in relation to the Company on the basis of IAML's 29.5% shareholding in Crystal Amber, and are referred to in this announcement as the "Crystal Amber/IAML Concert Party".

Crystal Amber, which holds 20,265,338 Existing Ordinary Shares (representing approximately 15.5% of the Existing Issued Share Capital of the Company), has agreed to subscribe up to £0.149 million in aggregate for New Ordinary Shares under the Firm Placing and up to £0.101 million in aggregate for New Ordinary Shares in the Placing and Open Offer, subject to clawback to satisfy valid applications under the Open Offer (resulting in Crystal Amber being interested in not more than 7.1% of the Enlarged Issued Share Capital, assuming no clawback).

In addition, Crystal Amber holds 3,531,413 Warrants to subscribe for new Ordinary Shares pursuant to the terms of the Warrant Instrument.

Accordingly, as at 5 April 2011 (being the last practicable date before publication of this announcement), the Crystal Amber/IAML Concert Party holds between them 42,532,369 Existing Ordinary Shares (representing approximately 32.5% of the Existing Issued Share Capital of the Company).

There is no requirement on the Company to repay to Crystal Amber and/or IAML any of the proceeds of the investment received by Crystal Amber and/or IAML.

Following completion of the Capital Raising, the Crystal Amber/IAML Concert Party will between them hold up to 160,257,369 Ordinary Shares, representing approximately 54.6% of the Enlarged Issued Share Capital (assuming no clawback by Qualifying Shareholders to satisfy valid applications under the Open Offer). Assuming exercise in full by only the Crystal Amber/IAML Concert Party of the outstanding Warrants issued pursuant to the Warrant Instrument (and assuming there is no further exercise of options granted pursuant to the Share Schemes, the BoS Warrants or the Warrants), the Crystal Amber/IAML Concert Party would between them be interested in 172,688,733 Ordinary Shares, representing approximately 56.5% of the Company's enlarged issued share capital.

As the Crystal Amber/IAML Concert Party currently holds not less than 30% of the voting rights of the Company but does not hold more than 50% of such voting rights, if the interests of the Crystal Amber/IAML Concert Party in the voting rights of the Company following the Capital Raising were to increase, the Crystal Amber/IAML Concert Party would normally be obliged to make a general offer, pursuant to Rule 9 of the Takeover Code, to all other Shareholders to acquire their shares. However, in this instance, the Panel has agreed to waive the obligation to make a general offer that would otherwise arise as a result of the Capital Raising and either Crystal Amber or IAML exercising any or all of the Warrants (and the subsequent issue of new shares to Crystal Amber or IAML, as the case may be) subject to the approval of the Independent Shareholders. Crystal Amber, Harris Associates, IAML and Bill & Melinda Gates Foundation Trust (who are deemed by the Panel to be interested in the outcome of the approval) will not be entitled to vote on the relevant resolution.

Following completion of the Capital Raising and/or the exercise of any or all of the Warrants by either Crystal Amber or IAML, the Crystal Amber/IAML Concert Party will between them hold more than 50% of the Company's voting share capital and (for so long as they continue to be treated as acting in concert) any further increase in that interest in shares will be subject to the provisions of Note 4 to Rule 9.1.

Neither Crystal Amber nor IAML have taken part in any decision of the Board relating to the proposal to seek a waiver of Rule 9 from the Panel.

10. Current trading and outlook

The Company last updated on current trading to the period to 13 March 2011 in its announcement dated 15 March 2011.

As stated in that announcement, management's expectations of trading for FY11 have remained unchanged. However, as part of its preparations for the audit of the FY11 financial accounts, management is considering the carrying value of certain assets and what provisions, write-offs or other judgemental adjustments may be required on a prudent basis. No decisions have been taken by the Board on any such issues; however, it is likely that management's expectations will need to be adjusted based on any judgments exercised by the Company's Audit Committee and the Board. The Company expects to publish its audited results for FY11 on 25 May 2011.

On a like-for-like (excluding VAT) basis, revenue for the period from 14 March 2011 to 3 April 2011 was 13.6% lower than for the equivalent period last year. Total Group revenue for the same period was down 14.4%. For the same period, overall gross margin, which was significantly affected by the discount trading strategy in stores to be closed following approval of the CVA Proposal, was 30.9% compared to 43.6% during the equivalent period last year.

Net debt at 3 April 2011 was £21.2 million.

Trading and margin over the last three weeks has also continued to be affected by management's careful control of its cash and available resources with the result that the Group's intake, availability, stock holding and profile of stock continue to be substantially lower than it should be. As an example, total stock held by the Group at 3 April 2011 was 28.9% lower than on the equivalent day last year.

Economic conditions continue to make prospects for UK retailers challenging. Notwithstanding this, and the challenges referred to above, the Company has continued to meet its internal cash and trading expectations.

Trading in the six transformed stores has continued to be strong, substantially out-performing the remainder of the estate on an upwards trend, with sales 16% above the Company average and money margin 31% above the Company average, measured in the period from 1 November 2010 (when the last of the six transformed stores opened) to 3 April 2011.

11. Changes to the Board

The Company today announces that Richard Manning, Legal & Operations Director and Company Secretary, will leave the Board at the Company's 2011 AGM in July 2011. Having started working with the Company in January 2009 as a consultant, Richard joined the Board in March 2009. In addition to leading the Company through a number of complex and significant transactions over the past two and a half years, culminating in the launch of the Capital Raising, he has introduced much needed improvements in legal and corporate governance practices as well as leading the Company's legal, HR, property, IT and supply chain functions. After completion of the Company's financial restructuring, with JJB positioned for longer term growth, he will leave the Company with the Board's thanks and good wishes. Prior to his departure in July 2011, Richard will work with the Board to ensure a smooth handover of his responsibilities and will continue to be fully engaged in the business during this time.

As announced on 2 February 2011, Alan Benzie, non-executive director, had signalled an intention to stand down from the Board on completion of the full year audit and announcement of the Company's results for FY11. Alan, who is chairman of the Company's Audit Committee and a member of the Remuneration and Nominations Committees, joined the Board in September 2007. Alan has now confirmed that he will leave the Board at the Company's 2011 AGM in July 2011.

12. Dividend policy

No interim dividend was paid during the financial year ended 31 January 2010 and the Directors did not recommend a final dividend for the period. There is an intention to return to paying a dividend when the Company has sufficient distributable reserves to enable it to do so and the Directors believe it is financially prudent to do so.

The Company will be restricted from making any dividend payments at any time during which a default under the BoS Facility is continuing or if a default would occur as a result of making a dividend distribution.

13. Effect of the Capital Raising on the Share Schemes

The Remuneration Committee will consider whether adjustments may be made to options and awards as a result of the Capital Raising and to take account of the Open Offer (subject, where appropriate, to auditor and HMRC approval) and whether any new or replacements options and awards should be made. Participants in the Share Schemes will be advised separately if any adjustment will be available.

14. Importance of the vote and working capital

Current working capital position

The Company is of the opinion that the Group does not have sufficient working capital for its present requirements, that is, for at least the next 12 months from the date of this announcement.

The Group does not have sufficient working capital because, as at the date of this announcement, the CVA Proposal remains subject to the possibility of a challenge in accordance with the relevant statutory procedure and has not yet been implemented, the proceeds of the Capital Raising have not yet been received and the Amended BoS Facility has not yet come into effect. Furthermore, as described below, the Company will operate with only very limited headroom up to the date of receipt of the proceeds of the Capital Raising.

The Directors are of the view that the Group's future viability is dependent on three inter-dependent steps occurring and that unless the proceeds of the Capital Raising are received, the Amended BoS Facility comes into effect and the CVA Proposal is successfully implemented, as currently envisaged, the Company will no longer be able to trade as a going concern which would result in the appointment of receivers, liquidators or administrators. The Group's short term cash flow forecasts show funding deficits beyond the end of April 2011 and unless the restructuring and refinancing is implemented by the end of April 2011, as currently envisaged, or the Directors have confidence that it will be implemented within a short period thereafter, the Directors do not believe the Company could continue to trade beyond the end of April 2011.

Funding of the Group prior to implementation of the restructuring and refinancing

The Group's short term cash flow forecasts show funding deficits beyond the end of April 2011, but indicate that the Group will not experience a funding shortfall before the expected date of receipt of the net proceeds of the Capital Raising on or around 27 April 2011. However, the headroom available to the Company in the period leading up to 27 April 2011 is very limited and if the Group's trading performance falls below the Directors' expectations in April or if the Group's cash management actions were to be less successful than anticipated, the Company would experience a funding shortfall before the receipt of the net proceeds of the Capital Raising. In these circumstances, the Directors would seek immediate debt finance or other financial support from stakeholders of the Group to enable the Group to continue to trade with a view to implementing the restructuring and refinancing by the end of April 2011 as currently envisaged, failing which the Group would go into receivership, liquidation or administration. Whilst no discussions have been had to date, based on the level of support provided by key stakeholders thus far during the Group's restructuring and refinancing and assuming no challenge has been made to the CVA Proposal that is likely to prevent its implementation, the Directors believe that the Company would be reasonably likely to secure an immediate short term loan to be repaid from the proceeds of the Capital Raising, but that such a loan would likely be on unfavourable and onerous terms.

Longer term funding requirements of the Group

As stated above, the Group's short term cash flow forecasts show funding deficits beyond the end of April 2011. As announced on 15 March 2011, having concluded that the Company's business plan was unfundable and having developed a revised business plan that the Directors believe is fundable, the Directors assessed the working capital resources required by the Company to implement the revised business plan on the assumption that the CVA Proposal is implemented. On this basis, the Directors concluded that the Group requires additional funding (after expenses of the Capital Raising) of approximately £60 million and the continued availability of the BoS Facility on appropriate terms in order to implement its revised business plan and in order for the Directors to be in a position to confirm that the Company has sufficient working capital for its present requirements, that is, for at least the next 12 months from the date of this announcement.

Approval of the Capital Raising

The Capital Raising Resolutions must be passed by Shareholders at the General Meeting in order for the Capital Raising to proceed and, as the implementation of the CVA Proposal and the availability of the Amended BoS Facility are dependent upon the receipt of proceeds under the Capital Raising, in order for the Amended BoS Facility to become effective and for the CVA Proposal to be implemented (absent any successful challenge).

If the Capital Raising Resolutions are not passed by Shareholders at the General Meeting and the Capital Raising does not proceed, the Company will be in default of the current BoS Facility immediately following the General Meeting, the Amended BoS Facility will not become effective and the CVA Proposal will not be implemented. In these circumstances, the Directors believe that the Company will not be able to continue to trade as a going concern which would result in the appointment of receivers, liquidators or administrators.

Accordingly, the Directors believe that the Capital Raising is in Shareholders' best interests and that it is very important that Shareholders vote in favour of the Capital Raising Resolutions so that the Capital Raising can proceed and, as a consequence, the Amended BoS Facility can come into effect and the CVA Proposal can be implemented (absent any successful challenge).

Taking account of the consequences for Shareholders if the Capital Raising Resolutions are not passed at the General Meeting and the support for the Capital Raising provided by the Key Shareholders (including the irrevocable undertakings provided by the Key Shareholders to vote in favour of certain of the Capital Raising Resolutions), the Directors have no reason to believe that the Capital Raising Resolutions will not be approved and that the Capital Raising will not proceed and accordingly the Directors are confident that the Company will receive the net proceeds, enabling the Amended BoS Facility to become effective and the CVA Proposal to be implemented (absent any successful challenge).

Implementation of the CVA Proposal

As announced by the Company on 22 March 2011, the CVA Proposal was approved by over 96% of creditors in the Company and by over 89% of creditors in Blane, and by over 75% of the total landlord vote in both the Company and Blane. Based on this level of support by creditors and the fact that no creditor proposed any modifications to the terms of the CVA Proposal at the CVA creditors' meetings held on 22 March 2011, the Directors have no reason to believe that a creditor will seek to challenge the CVA Proposal or that in the event that a challenge is made that it will be successful so as to prevent the implementation of the CVA Proposal.

As at 5 April 2011 (being the last practicable date prior to publication of this announcement), the Company had not received any notice of any challenge application. However, the CVA Challenge Period, being the period during which a challenge application may be made under the terms of the CVA Proposal Document, does not expire until 20 April 2011 and full implementation of the CVA Proposal is conditional on any challenge application made in this period being dismissed on or before 30 June 2011 (being the longstop date for implementation of the CVA Proposal).

If the CVA Proposal is the subject of a continuing challenge application at the expiry of the CVA Challenge Period, the Company and its advisers will evaluate the likely success of resolving the challenge application, enabling the implementation of the CVA Proposal.

If the Company and its advisers, in consultation with the Group's key stakeholders, believe there is a reasonable prospect of resolving the challenge application on or before 30 June 2011 (being the longstop date for implementation of the CVA Proposal), the Company would seek the consent of Lazard and Numis under the terms of the Sponsor and Placing Agreement to propose an adjournment of the General Meeting and a delay in Admission until after the challenge application has been successfully resolved. In such circumstances, the Directors would seek immediate debt finance or other financial support from stakeholders of the Group to enable the Company to continue to trade whilst seeking to resolve the challenge application. Whilst no discussions have been had to date, based on the level of support provided by key stakeholders thus far during the Group's restructuring and financing and the fact that the Company would not continue to trade if the Directors and the Company's advisers did not believe that the Company had a reasonable prospect of resolving the challenge application, the Directors believe that the Company would be reasonably likely to secure an immediate short term loan to be repaid from the proceeds of the Capital Raising, but that such a loan would likely be on unfavourable and onerous terms.

If the Company were unable to secure the consent of Lazard and Numis under the terms of the Sponsor and Placing Agreement, then the Capital Raising would not proceed, the CVA Proposal would not be implemented and the Company would no longer be able to trade as a going concern which would result in the appointment of receivers, liquidators or administrators.

Taking into account the matters set out above the Directors are confident that the Capital Raising will proceed and that the CVA Proposal will be implemented. However, in the event the CVA Proposal is the subject of a challenge application which cannot be resolved prior to the expiry of the CVA Challenge Period, the Group's funding position, as described above, would provide little latitude to accommodate any delay that may be required to successfully resolve a challenge application. To the extent that that the CVA Proposal is successfully challenged or a challenge cannot be resolved on or before 30 June 2011 (and therefore the CVA Proposal cannot be implemented in accordance with its terms) or the Company experiences a funding shortfall before a challenge application can be resolved or the Capital Raising otherwise does not proceed, the Company will no longer be able to trade as a going concern which would result in the appointment of receivers, liquidators or administrators.

Working capital on implementation of the restructuring and refinancing

Accordingly, the Directors are of the opinion that, assuming implementation of the CVA Proposal and after taking into account the net proceeds of the Capital Raising and the Amended BoS Facility, the Group will have sufficient working capital for its present requirements, that is, for at least the next 12 months from Admission, which is expected to occur on or around 27 April 2011.

AIM Admission will only occur after completion of the Capital Raising, the Amended BoS Facility having come into effect and implementation of the CVA Proposal. Accordingly and on this basis, the Directors confirm, having made due and careful enquiry, that the working capital available to the Group will be sufficient for its present requirements, that is for at least 12 months from the date of AIM Admission, which is expected to occur on or around 28 April 2011.

15. Further Information

Further details relating to the Capital Raising will be contained in the Prospectus that is expected to be published later today. After that date, copies of the Prospectus will be available for inspection at the registered office of the Company at Martland Park, Challenge Way, Wigan, Lancashire, WN5 0LD during normal business hours on any Business Day. Copies will also be available for download from the Company's corporate website, www.jjbcorporate.co.uk.

The Prospectus will also be available for inspection during normal business hours on any weekday (Saturdays, Sundays and public holidays excluded) at the offices of Herbert Smith LLP, Exchange House, Primrose Street, London, EC2A 2HS.

Copies of the Prospectus will also be submitted to the National Storage Mechanism.

Important Notice

This Announcement is not a prospectus but an advertisement and Qualifying Shareholders should not acquire any New Ordinary Shares referred to in this Announcement except on the basis of the information contained in the Prospectus.

Neither the content of JJB's website nor any website accessible by hyperlinks to JJB's website is incorporated in, or forms part of, this Announcement. The distribution of this Announcement, the Prospectus and any other documentation associated with the Capital Raising into jurisdictions other than the United Kingdom may be restricted by law. Persons into whose possession these documents come should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. In particular, such documents should not be distributed, forwarded to or transmitted, directly or indirectly, in whole or in part, in or into the United States, Australia, Canada, Japan, New Zealand, the Republic of South Africa, Switzerland or the United Arab Emirates.

No action has been taken by JJB or any other person that would permit an offer of the New Ordinary Shares or possession or distribution of this Announcement, the Prospectus or any other documentation or publicity material or the Application Forms in any jurisdiction where action for that purpose is required, other than in the United Kingdom.

The New Ordinary Shares have not been and will not be registered under the US Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and, accordingly, may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, within the United States absent registration or an applicable exemption from the registration requirements of the US Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States.

There will be no public offer of the New Ordinary Shares in the United States. The New Ordinary Shares are being offered and sold outside the US in reliance on Regulation S under the US Securities Act. The New Ordinary Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the US or any other US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the New Ordinary Shares or the accuracy or adequacy of the Application Form or this announcement. Any representation to the contrary is a criminal offence in the US.

The New Ordinary Shares have not been and will not be registered under the relevant laws of any state, province or territory of any of the Excluded Territories and may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, within any Excluded Territory except pursuant to an applicable exemption from registration requirements. There will be no public offer of New Ordinary Shares in Australia, Canada, Japan, New Zealand, the Republic of South Africa, Switzerland or the United Arab Emirates.

This Announcement is for information purposes only and does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in any jurisdiction and should not be relied upon in connection with any decision to subscribe for or acquire any of New Ordinary Shares. In particular, this Announcement does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in the United States.

This Announcement has been issued by, and is the sole responsibility of, the Company. No person has been authorised to give any information or to make any representations other than those contained in this Announcement and, if given or made, such information or representations must not be relied on as having been authorised by JJB, Lazard or Numis. Subject to the Listing Rules, the Prospectus Rules and the Disclosure and Transparency Rules, the issue of this Announcement shall not, in any circumstances, create any implication that there has been no change in the affairs of the Group since the date of this Announcement or that the information contained in it is correct at any subsequent date.

Lazard and Numis, who are authorised and regulated in the UK by the Financial Services Authority, are acting for JJB and no one else in connection with the Capital Raising and will not regard any other person (whether or not a recipient of this Announcement) as a client in relation to the Capital Raising and will not be responsible to anyone other than JJB for providing the protections afforded to their respective clients or for providing advice in relation to the Capital Raising or any matters referred to in this Announcement.

Apart from the responsibilities and liabilities, if any, which may be imposed on Lazard by the Financial Services and Markets Act 2000, neither Lazard nor Numis accepts any responsibility whatsoever for the contents of this Announcement, and makes no representation or warranty, express or implied, for the contents of this Announcement, including its accuracy, completeness or verification, or for any other statement made or purported to be made by it, or on its behalf, in connection with JJB or the New Ordinary Shares or the Capital Raising, and nothing in this Announcement is or shall be relied upon as, a promise or representation in this respect whether as to the past or future. Each of Lazard and Numis accordingly disclaims to the fullest extent permitted by law all and any liability whether arising in tort, contract or otherwise (save as referred to above) which it might otherwise have in respect of this Announcement or any such statement.

No statement in this Announcement is intended to be a profit forecast and no statement in this Announcement should be interpreted to mean that earnings per share of JJB for the current or future financial years would necessarily match or exceed the historical published earnings per share of JJB.

This Announcement includes statements that are, or may be deemed to be, "forward looking statements". These forward looking statements can be identified by the use of forward looking terminology, including the terms "believes", "projects", "estimates", "anticipates", "expects", "intends", "plans", "goal", "target", "aim", "may", "will", "would", "could", "should" or "continue" or, in each case, their negative or other variations or comparable terminology. These forward looking statements include all matters that are not historical facts. They appear in a number of places throughout this Announcement and include statements regarding the intentions, beliefs or current expectations of the Directors, the Company or the Group concerning, among other things, the Company's financial position and projections, business plan, financial model and future covenant ratios and compliance, the results of operations, prospects, growth, strategies and dividend policy of the Group and the industry in which it operates.

By their nature, forward looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and may be beyond the Company's ability to control or predict. Forward looking statements are not guarantees of future performance. The Company's or the Group's actual financial performance, results of operations, dividend policy and the development of the industry in which it operates may differ materially from the impression created by the forward looking statements contained in this Announcement. In addition, even if the financial performance, results of operations and dividend policy of the Company or the Group (as the case may be), and the development of the industry in which it operates, are consistent with the forward looking statements contained in this Announcement, those results or developments may not be indicative of results or developments in subsequent periods. Important factors that could cause these differences include, but are not limited to: the effect of the Capital Raising on the Group; the Group's ability to generate growth or profitable growth; the Group's ability to generate sufficient cash over the longer term to service its debt; the Group's ability to control its capital expenditure and other costs; changes in the competitive framework in which the Group operates and its ability to retain market share; industry trends; general local and global economic, political, business and market conditions; significant changes in exchange rates, interest rates and tax rates; significant technological and market changes; future business combinations or dispositions; changes in government and other regulation, including in relation to the environment, health and safety and taxation; labour relations and work stoppages; and changes in business strategy or development plans. More detailed information on the potential factors which could affect the financial results of the Group is contained in the Group's public filing and reports.

The forward looking statements contained in this announcement speak only as of the date of this Announcement. Other than in accordance with their legal or regulatory obligations (including under the Listing Rules and/or the Prospectus Rules and/or the Disclosure and Transparency Rules) and as required by the FSA, the London Stock Exchange or the City Code, neither the Company nor Lazard and Numis undertakes any obligation to update or revise publicly any forward looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward looking statements attributable to the Group or individuals acting on behalf of the Group are expressly qualified in their entirety by this paragraph. Prospective investors should specifically consider the factors identified in this announcement which could cause actual results to differ before making an investment decision.

This announcement should not be considered a recommendation by the Company, Lazard, Numis or any of their respective directors, officers, employees, advisers or any of their respective affiliates, parent undertakings, subsidiary undertakings or subsidiaries of their parent undertakings in relation to any purchase of or subscription for the New Ordinary Shares. Price and volumes of, and income from, securities may go down as well as up and an investor may not get back the amount invested. It should be noted that past performance is no guide to future performance. You are advised to read this announcement and, once available, the Prospectus and the information incorporated by reference therein, in their entirety for a further discussion of the factors that could affect the Group's future performance and the industry in which it operates. Persons needing advice should consult an independent financial adviser.

Appendix I: Expected Timetable of Key Events

Notes:

(1) References to times in this announcement are to London time unless otherwise stated.

(2) If you have any queries on the procedure for acceptance and payment or on the procedure for splitting Application Forms, you should contact Capita Registrars on 0871 664 0321 (calls cost 10 pence per minute to the 0871 664 0300number plus network extras) or +44 208 639 3399 if calling from overseas. Calls to the helpline from outside the UK will be charged at applicable international rates. For legal reasons, the Shareholder Helpline will not be able to provide advice on the merits of the Capital Raising or to provide financial, tax or investment advice. Calls may be recorded and monitored for security and training purposes.

(3) The times and dates set out in the expected timetable of principal events above and mentioned throughout this announcement and to be set out in any accompanying Application Form may be adjusted by the Company in consultation with Lazard and Numis in which event details of the new times and dates will be notified to the UK Listing Authority, the London Stock Exchange and, where appropriate, Qualifying Shareholders.

Appendix II: Definitions

The following principal definitions apply throughout this announcement unless the context requires otherwise:

For the purposes of this announcement, references to one gender include other genders.