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, Switzerland, South Africa and 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 LOCAL APPLICABLE SECURITIES LAWS OR REGULATIONS.

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 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.

2 February 2011

JJB Sports plc

Proposed Firm Placing and Placing and Open Offer to raise

£31.5 million gross proceeds

Further to the announcement made on 23 December 2010, 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 £31.5 million, through a firm placing and a placing and open offer involving the issue of 630,000,000 New Ordinary Shares at an issue price of 5 pence per New Ordinary Share.

·; The Capital Raising will be by way of a Firm Placing and Placing and Open Offer, and is being supported by Harris Associates and Crystal Amber, the Company's two largest shareholders, Invesco Perpetual, the major shareholder in Crystal Amber, and Bill & Melinda Gates Foundation Trust and GoldenPeaks Capital (together the "Firm Placees").

·; The net proceeds of approximately £30 million after expenses provide short term working capital to allow the Company's senior management time to complete the development of its revised business plan, which will address JJB's medium and long-term financing requirements. Conditional on the Capital Raising, the Board has also agreed amendments with Bank of Scotland ("BoS") to certain terms of the BoS Facility.

·; The Company intends to issue 315,000,000 New Ordinary Shares pursuant to the Placing and Open Offer (comprising 50% of the total number of New Ordinary Shares to be issued pursuant to the Capital Raising) and 315,000,000 New Ordinary Shares pursuant to the Firm Placing (comprising the remaining 50%). The issue price of 5 pence per New Ordinary Share represents a premium of 25% to the Closing Price of 4 pence per Ordinary Share on 22 December 2010 (being the last Dealing Day prior to the date of announcement of the proposed Capital Raising).

·; The Company will issue warrants on completion of the Capital Raising to the Firm Placees, equal to 19.1% of the enlarged share capital, in lieu of any placing commissions and in consideration for, and pro-rata to their binding commitments.

·; On completion of the Capital Raising, Harris Associates and Crystal Amber will be granted the right to nominate a non-executive Director to the Board. Alan Benzie has signalled his intention to step down from the Board on the announcement of the Company's results for the year ended January 2011.

·; The Company has also announced that it is in preliminary discussions with JD Sports Fashion plc in relation to a potential offer. The highly preliminary nature of these discussions is such that there can be no certainty that any offer will be made or as to the terms of any offer.

·; In addition, the Board announces that it has resolved to seek a transfer of the Company's ordinary shares from the Official List and trading on the London Stock Exchange's main market to AIM, with the current intention to seek admission to AIM by the end of April 2011.

·; The Capital Raising is conditional upon, among other things, the approval of Shareholders at a General Meeting to be held at 11:00 a.m. on 18 February 2011. Details relating to the General Meeting will be contained in the Prospectus which it is intended will be posted to Qualifying Shareholders (other than Excluded Shareholders) on 2 February 2011.

Commenting on the Capital Raising, Mike McTighe, JJB Chairman, said: "This fund-raising will provide JJB with the short-term funding it needs while we finalise plans for a further restructuring and refinancing. Trading remains challenging but we are convinced that JJB can have a successful future once it has been restructured. I would like to thank our major shareholders, both existing and new, the Bank of Scotland and our key suppliers for the support they have shown the business by backing this fund-raising and look forward to working with them over the coming months as we chart a course for the business."

Enquiries:

JJB 01942 221400

Keith Jones

Richard Manning

Lazard 020 7187 2000

Melanie Gee

Charlie Foreman

Maitland 020 7379 5151

Neil Bennett

Emma Burdett

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

A copy of the Prospectus, following expected publication on 2 February 2011, 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 Primrose Street, Exchange Square, 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, Switzerland, South Africa and 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 except in reliance on an 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 document. 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, Switzerland, South Africa and 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 or Lazard. 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, who is authorised and regulated in the UK by the Financial Services Authority, is 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, Lazard does not accept 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. Lazard 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 document 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 of the Company nor Lazard 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 document which could cause actual results to differ before making an investment decision.

This announcement should not be considered a recommendation by the Company, Lazard 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

Rule 8 Notice

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of JJB or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any paper offeror is first identified.

An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) JJB and (ii) any paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any paper offeror is first identified. Relevant persons who deal in the relevant securities of JJB or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of JJB or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of JJB or of any paper offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) JJB and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of JJB or a paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by JJB and by any offeror and Dealing Disclosures must also be made by JJB, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.

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, Switzerland, South Africa and the United Arab Emirates AND 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 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 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.

2 February 2011

JJB Sports plc

Proposed Firm Placing and Placing and Open Offer to raise

£31.5 million gross proceeds

1. Introduction

On 23 December 2010, the Board announced details of a number of measures to strengthen the short term financing of the business including an agreement in principle with each of Harris Associates and Crystal Amber, the Company's two largest shareholders, with IAML, the major shareholder in Crystal Amber, and with Bill & Melinda Gates Foundation Trust and GoldenPeaks Capital to support a proposed capital raising of at least £31.5 million by way of a firm placing and placing and open offer at 5 pence per new share, a premium of 25 per cent. to the closing price of 4 pence per share on 22 December 2010.

Further to this announcement, the Board has today finalised the terms of the proposed capital raising to raise £31.5 million (before expenses) by way of a Firm Placing of 315,000,000 New Ordinary Shares at 5 pence per new share and by way of a Placing and Open Offer of 315,000,000 New Ordinary Shares at 5 pence per new share (subject to the effect of the Capital Reorganisation). Harris Associates and Crystal Amber, the Company's two largest shareholders, with IAML, the major shareholder in Crystal Amber, and with Bill & Melinda Gates Foundation Trust and GoldenPeaks Capital have entered into binding Placing Letters 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. In consideration for their binding commitments to support the Capital Raising and ensure that the Company receives the gross proceeds and in lieu of any placing commissions, the Company will issue the Warrants to the Firm Placees on completion of the Capital Raising. The Company has also agreed the terms of a Relationship Agreement to be entered into following completion of the Capital Raising with each of Harris Associates and Crystal Amber, pursuant to which each shall be entitled (subject to a number of conditions) to nominate, for a period of approximately 3 years, a representative non-executive director to the Board.

On 23 December 2010, the Board also announced that it had reached an agreement with BoS, the Company's lender, to waive the January 2011 covenant tests in the BoS Facility and that it would be an event of default under the BoS Facility if the proposed Capital Raising did not proceed. Further to this announcement, on 1 February 2011 the Company and BoS agreed further amendments to the BoS Facility including a waiver of the April 2011 financial covenant test and a new stock cover test.

The Capital Raising, the Capital Reorganisation, the Related Party Transactions and the Crystal Amber/IAML Rule 9 Waiver 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 18 February 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, the Introduction Fee Shares and the Warrants and the disapplication of statutory pre-emption rights in relation to the same, to approve the allotment and issue of New Ordinary Shares and Warrants to Harris Associates and Crystal Amber as related parties of the Company under Chapter 11 of the Listing Rules, to approve the terms of the Capital Reorganisation and related amendments to the Articles and to approve the waiver by the Panel of the obligations of the Crystal Amber/IAML Concert Party to potentially make a mandatory offer for the Company under Rule 9 of the Code following any exercise of the Warrants and to approve the Capital Raising for the purposes of Rule 21 of the Code.

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

(a) the notice of the General Meeting and details of the Capital Raising, the Capital Reorganisation, the Related Party Transactions, the Crystal Amber/IAML Rule 9 Waiver and the Rule 21 Approval;

(b) the background to and reasons for the Capital Raising and why the Board considers that the Capital Raising, the Capital Reorganisation, the Related Party Transactions, the Crystal Amber/IAML Rule 9 Waiver, the Rule 21 Approval 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 Capital Reorganisation, the Related Party Transactions, the Crystal Amber/IAML Rule 9 Waiver and the issue of the Warrants will not proceed. If the Capital Raising does not proceed, the Company will be in default under the terms of the BoS Facility.

2. Background to and reasons for the Capital Raising

Over an 11 month period from December 2008 through to the end of October 2009, the Group's Board and senior management team led by then Executive Chairman Sir David Jones carried out a significant corporate restructuring and refinancing plan saving the Company from near-certain administration. The Group's two loss-making leisure footwear subsidiaries, OSC and Qube, were placed into administration in February 2009, the Company disposed of its Fitness Clubs Business to DW Sports for £83.4 million in March 2009 and the Group successfully implemented its company voluntary arrangements to address long term liabilities associated with closed retail stores in May 2009. In October 2009, the Group raised gross proceeds of approximately £100 million through a firm placing and placing and open offer involving the issue of 400 million new shares at an issue price of 25 pence per share. Approximately £30 million of the net proceeds from the capital raising were first used to pay down the total amount drawn under the BoS Facility in place at that time and then to quickly restock stores that had remained very poorly and thinly stocked for a significant number of months during the restructuring.

However, as a result of longstanding underlying inefficiencies in range specification and stock ordering systems, and the need to restock quickly, the Group was unable in some areas to purchase appropriate levels of in-demand seasonal stock and could not distribute and replenish sufficient levels of stock to the right stores. In some product areas, as a result of the aforementioned limitations, the Group over-bought weak ranges and over allocated stock to too broad a range of stores leading to poor stock availability. As a result of these inefficient buying procedures and inadequate stock management processes, the Group was and has been operating at a competitive disadvantage and failing to maximise sales.

Having provided a platform to secure the longer term future of the Group, with the appointment of new Chief Executive Keith Jones on 1 March 2010, the senior management team's focus switched to a review of the Group's underlying retail business. As part of this review, a significant number of areas for internal improvement - focussed on people, process, systems and infrastructure - were identified and a number of initial steps to improve these areas have been taken over the last nine months, including:

·; store portfolio and business model economics review;

·; the recruitment, completed on 1 November 2010, of a new experienced operations team (comprising the individuals to head the four most critical operational functions of retail, HR and training, marketing and trading) responsible for implementing the "Serious about Sport" strategy and providing a firm basis for continued operational and strategic improvement;

·; the development of a trial store format with improved customer navigation, product adjacencies and point of sale in 6 stores;

·; reorganisation of the field retail team including management structure and reporting lines;

·; the continued development of the Group's multi-channel offering, including launch of a new online store and Collect@Store capability;

·; the identification of a strong manufacturing partner in Asia for own-brand product;

·; the start of developing exclusive products and ranges with key suppliers, for example Livestrong with Nike; and

·; the appointment on 17 January 2010 of Dave Williams as the Group's new Chief Financial Officer.

Approximately £4 million of the net proceeds from the capital raising in October 2009 were used in the development of the Group's multichannel offering, including launch of a new online store and Collect@Store capability, and in the development and execution of the trial store formats in 6 stores.

The Company has been pursuing the turnaround of the Group's underlying retail business against the backdrop not only of the need for substantial and radical internal improvement, but also of incredibly challenging retail conditions in the UK, with volatile sales and an extremely competitive environment. In addition, these factors, together with the Company's stock imbalance and poor stock quality described above, all led the Company to launch significant promotional events from September 2010 to stimulate sales and generate cash at the inevitable expense of margin. Approximately £36 million of the net proceeds from the capital raising in October 2009 were required to cover the significant trading losses incurred by the Group in the last quarter of 2009 and in the first half of 2010 as a result of the deteriorating retail trading conditions and business systems and process issues. Although the Company continues its trials to identify the most effective new store format and is not yet ready to roll out a programme to refurbish or refresh its entire store portfolio, the quantum of the continued operating losses have eliminated the Group's cash headroom and funds that it had envisaged at the time of the capital raising in October 2009 would be available for investment in the Group's store portfolio.

The challenging trading conditions, particularly since the start of the Company's half year at the beginning of September 2010, and reduced cash headroom have also resulted in the Directors having to control and where possible reduce the Group's operating expenses and carefully monitor its compliance with financial covenants in its financing arrangements. At the time of publication of the Group's half year results at the end of September 2010, the Company and BoS agreed various immediate amendments to the financial covenants contained in the BoS Facility. In particular, BoS agreed that the EBITDAR covenant would not be tested in October 2010, but would next be tested at the end of January 2011, together with the first testing of the fixed charge cover covenant.

On 11 November 2010, the Company released its interim management statement and flagged that like-for--like sales in the period from 27 September 2010 to 7 November 2010 had only increased by 13.1 per cent., lower than anticipated after taking account of the Company's promotional initiatives and reflecting the weakening market environment. This also impacted gross margin for the same period, which was 33.8 per cent. The Board stated that it believed that current trading conditions were having and would continue to have a negative impact on its expectations for the full year, but that the full year outcome would remain heavily dependent on the Group's performance during the important pre-Christmas and New Year sale periods.

On 2 December 2010, the Company released a trading update confirming that trading conditions had remained extremely challenging and like-for-like sales below expectations. The Board also confirmed that whilst at the time of publication of the Group's half year results at the end of September 2010, the Group's forecasts had not shown any funding shortfalls or breaches of financial covenants in the following 12 months, in light of continued difficult trading conditions, the Company believed that it was likely to breach certain financial covenants in the BoS Facility when next tested at the end of January 2011. Whilst the Group did not anticipate a funding shortfall, the Directors believed that if the trading conditions that had been experienced during the preceding months were to continue without improvement or to deteriorate further the Company could experience a funding shortfall by April 2011, when the BoS Facility would be likely to be close to fully drawn as a result of payments for new stock acquisitions for Spring 2011 ranges.

Consequently, in order to provide the Company with access to additional working capital and to assist management to trade through current challenging conditions, the Board sought to implement a number of measures to strengthen the short term financing of the business including the careful management of the Group's cash flow, a waiver or deferral of the January 2011 covenant tests and additional financing for the business. On 23 December 2010, the Board announced details of a waiver of the January 2011 covenant tests and the intention of a number of the Company's largest shareholders and IAML to support a proposed capital raising of at least £31.5 million.

Further to the announcement on 23 December 2010, the Board and BoS have agreed further amendments to the BoS Facility, details of which are set out in paragraph 4 below, and the Company has finalised the terms of the Capital Raising, further details of which are set out in paragraph 5 below.

In connection with the Capital Raising, the Directors have reviewed the Group's business plan and portfolio of stores and concluded that the Group's business plan, with the current store portfolio and cost base of the Group, is unfundable. Accordingly, the Directors have been developing a revised business plan, further details of which are set out in paragraph 24 below, which they believe will be fundable. Subject to the risks described in further detail below, the Directors have a reasonable expectation that the Company will be able to complete the implementation of the restructuring and financing steps, that will be set out in the revised business plan, by the end of April 2011.

3. Use of proceeds

The net proceeds of the Capital Raising of approximately £30 million will provide the Company with access to additional short term liquidity.

The net proceeds will be credited to cash on the Company's balance sheet. Approximately £16 million of the net proceeds will be used by the Company to make immediate payments to creditors. The balance of approximately £14 million of the net proceeds will be used by the Company to continue to purchase new stock, to fund trading losses and to pay creditors as they fall due. The Group's short term cash flow forecasts indicate that these funds are likely to provide the Company with sufficient working capital until the end of April 2011 although there is very limited cash headroom from towards the end of March 2011. To the extent that trading cash flows fall below those forecast or the Group's cash management actions are less successful than has been forecast or previously achieved the Company could experience a funding shortfall as early as the last week of March 2011.

Accordingly, having regard to the current level of funds drawn under the BoS Facility and notwithstanding receipt of the net proceeds of the Capital Raising, the Company will not have sufficient working capital for its present requirements, that is for the 12 months from the date of this announcement. After taking account of the receipt of the net proceeds of the Capital Raising, the Group's short term cash flow forecasts indicate a funding shortfall towards the end of April 2011. However, these short term cash flow forecasts also indicate that the Group will operate with very limited headroom from towards the end of March 2011. Your attention is drawn to the qualified working capital statement set out in paragraph 18 below.

4. Key terms and conditions of the amendments to the BoS Facility

In addition to the waiver or deferral of the January 2011 covenant tests, on 1 February 2011 the Company and BoS agreed further amendments to the BoS Facility. The key terms of these amendments are as follows:

·; the fixed charge cover test on the April 2011 quarter date (30 April 2011) is waived;

·; the clean down test for the year ended 30 January 2011 is waived;

·; the Company must satisfy a stock cover test on the last day of each financial calendar month of January 2011 to June 2011 (inclusive);

·; the Company must deliver a finalised restructuring and financial plan for the Company by 24 February 2011 and implement the restructuring and financial plan in accordance with the timetable for implementation set out in the restructuring and financial plan;

·; the Company must discuss the progress of the restructuring and financial plan and certain other matters with BoS on a weekly basis;

·; it is an event of default if the Company fails to cooperate with certain requests of BoS (acting reasonably) to provide access to the Group to assess such matters as are agreed between the Company and BoS from time to time; and

·; each week when the Company provides its consolidated 13 week cashflow forecast of the Group to BoS, the Company must also provide certain additional information to BoS including, amongst other things, details of amounts used to calculate the stock cover test.

A fee of £100,000 is payable to BoS in respect of the amendments to the BoS Facility agreed to on 23 December 2010 and 1 February 2011.

5. Key terms and conditions of the Capital Raising

The Board proposes to raise approximately £30 million (net of expenses) through the Capital Raising by the issue of 315,000,000 New Ordinary Shares through the Firm Placing at 5 pence per share and 315,000,000 New Ordinary Shares through the Placing and Open Offer at 5 pence per share (subject to the effect of the Capital Reorganisation pursuant to which the New Ordinary Shares shall be consolidated on a 1 for 10 basis into Consolidated Ordinary Shares). The issue price of 5 pence per share represents a premium of 25 per cent. to the closing price of 4 pence per share on 22 December 2010, the day before announcement of the Company's intention to proceed with the Capital Raising.

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.

In setting the Issue Price at 5 pence per share, being the nominal value of an Existing Ordinary Share, the Directors have considered the price at which the New Ordinary Shares need to be offered to investors to ensure the success of the Capital Raising and raise significant equity compared with the current market capitalisation of the Company. The Directors believe that the Issue Price is appropriate.

The Firm Placing and the Placing and Open Offer are not underwritten. However, the Company has entered into binding Placing Letters with the Firm Placees pursuant to which they have agreed to take up the Firm Placed Shares and the Open Offer Shares (pro rata to the level of their firm commitment), subject to clawback by Qualifying Shareholders in order to satisfy valid applications made under the Open Offer, thereby effectively guaranteeing the receipt of the gross proceeds under the Capital Raising. In consideration for their binding commitments to support the Capital Raising and guarantee that the Company receives the gross proceeds and in lieu of any placing commissions, the Company will issue the Warrants to the Firm Placees on completion of the Capital Raising, further details of which are set out below.

In addition, the Company has agreed to pay Crystal Amber a fee in connection with the introduction of IAML as a Firm Placee in the Capital Raising in an amount of £580,000, equal to 5 per cent. of the gross amount firmly committed by IAML in the Capital Raising, such fee to be payable through the issue of Introduction Fee Shares, being £580,000 worth of further ordinary shares at the issue price of 5 pence (subject to the effect of the Capital Reorganisation).

Key terms of the Placing and Open Offer

The Company is proposing to issue 315,000,000 New Ordinary Shares at 5 pence per share pursuant to the Placing and Open Offer (subject to the effect of the Capital Reorganisation pursuant to which the New Ordinary Shares shall be consolidated on a 1 for 10 basis into Consolidated Ordinary Shares).

The Placing and Open Offer is expected to raise £15.75 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 Capital Raising Record Date, on the basis of:

0.483996 Open Offer Shares for every 1 Existing Ordinary Share (which, subject to implementation of the Capital Reorganisation, is 0.483996 Consolidated Ordinary Shares for every 10 Existing Ordinary Shares held)

Qualifying Shareholders (other than Excluded Shareholders) are also being given the opportunity, provided they take up their Consolidated 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 0.2 times the number of Existing Ordinary Shares held in such Qualifying Shareholder's name as at the Capital Raising 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 315,000,000 New Ordinary Shares (subject to the effect of the Capital Reorganisation pursuant to which the New Ordinary Shares shall be consolidated on a 1 for 10 basis into Consolidated Ordinary Shares).

The New Ordinary Shares will be issued in the form of Consolidated Ordinary Shares following the Capital Reorganisation. Each Existing Ordinary Share in issue on the Capital Reorganisation Record Date shall be subdivided into one New Ordinary Share of 0.1 pence each and one Deferred Share of 4.9 pence each. The New Ordinary Shares and the Deferred Shares shall be allotted and issued under the terms of the Firm Placing and Placing and Open Offer. The New Ordinary Shares will then be consolidated on a 1 for 10 basis into Consolidated Ordinary Shares of 1 pence each and all Deferred Shares will be consolidated on a 1 for 10 basis into Consolidated Deferred Shares of 49 pence each. As a result of the Capital Reorganisation, Shareholders will receive 1 Consolidated Ordinary Share for every 10 New Ordinary Shares subscribed for pursuant to the Placing and Open Offer Effectively therefore the issue price of each Consolidated Ordinary Share is 50 pence.

Qualifying Shareholders (other than Excluded Shareholders) may apply for any whole number of Open Offer Shares (on a consolidated basis in the form of Consolidated Ordinary Share) up to their maximum entitlement, which in the case of Qualifying Non-CREST Shareholders, to the number of Consolidated Ordinary Shares comprising their Consolidated Open Offer Entitlements as shown in Box 3 on their Application Form, or, in the case of Qualifying CREST Shareholders, is the number of Consolidated Ordinary Shares Comprising their Consolidated 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 2 February 2011 and Qualifying CREST Shareholders are expected to receive a credit to their appropriate stock accounts in CREST in respect of Consolidated Ordinary Shares Comprising their Consolidated Open Offer Entitlements as soon as possible after 8.00 a.m. on 3 February 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.

Pursuant to the Sponsor's Agreement, Lazard has been appointed as sponsor of the Capital Raising.

Application has been made for the Consolidated Ordinary Shares and Excess CREST Open Offer Entitlements to be admitted to CREST. It is expected that the Consolidated Open Offer Entitlements and Excess CREST Consolidated Open Offer Entitlements will be admitted to CREST at 8.00 a.m. on 3 February 2011. The Consolidated Open Offer Entitlements and Excess CREST Consolidated Open Offer Entitlements will also be enabled for settlement in CREST at 8.00 a.m. on 3 February 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 Consolidated 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 Consolidated Ordinary Shares (following consolidation of the New Ordinary Shares on a 1 for 10 basis pursuant to implementation of the Capital Reorganisation) occurring by no later than 9.00 a.m. on 21 February 2011 (or such later time and/or date as the Company, in consultation with Lazard, may determine).

If Admission does not take place on or before 9.00 a.m. on 21 February 2011 (or such later time and/or date as the Company, in consultation with Lazard, may determine), the Open Offer will lapse, any Consolidated 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 Consolidated Ordinary Shares (following consolidation of the Open Offer Shares on a 1 for 10 basis pursuant to implementation of the Capital Reorganisation)to be admitted to the premium segment of the Official List and to the London Stock Exchange for the Consolidated Ordinary Shares (following consolidation of the Open Offer Shares on a 1 for 10 basis pursuant to implementation of the Capital Reorganisation)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 21 February 2011 and that dealings for normal settlement in the Consolidated Ordinary Shares (following consolidation of the Open Offer Shares on a 1 for 10 basis pursuant to implementation of the Capital Reorganisation) will commence at 8.00 a.m. on 21 February 2011.

Any Qualifying Shareholder who has sold or transferred all or part of his or her registered holding(s) of Existing Ordinary Shares prior to 8.00 a.m. on 3 February 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.

Save as described in paragraph 7 and subject to the effect of the Capital Reorganisation, the Consolidated Ordinary 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 (on a consolidated basis in the form of Consolidated Ordinary Shares) by Qualifying Shareholders pursuant to the Open Offer.

Further information on the Open Offer and the terms and conditions on which it is made, including the procedure for application and payment, will be set out in the Prospetus and, where relevant, on the applicable Application Form.

Excess Application Facility

The Excess Application Facility will enable Qualifying Shareholders (other than Excluded Shareholders), provided they take up their Consolidated 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 0.2 times the number of Existing Ordinary Shares held in such Qualifying Shareholder's name as at the Capital Raising Record Date, subject to availability.

Qualifying Non-CREST Shareholders who wish to apply to acquire more than their Consolidated Open Offer Entitlement should complete the relevant sections on the Application Form. Qualifying CREST Shareholders will have Excess CREST Consolidated Open Offer Entitlements credited to their stock account in CREST and should refer to the Prospectus for further information on how to apply for Excess Shares pursuant to the Excess Application Facility.

If applications under the Excess Application Facility are received for more than the total number of Open Offer Shares available (on a consolidated basis in the form of Consolidated Ordinary Shares) following take up of Consolidated 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 315,000,000 New Ordinary Shares (subject to the effect of the Capital Reorganisation pursuant to which the New Shares shall be consolidated on a 1 for 10 basis into Consolidated Ordinary Shares).

Key terms of the Firm Placing

The Company is proposing to issue 315,000,000 New Ordinary Shares at 5 pence per share pursuant to the Firm Placing (subject to the effect of the Capital Reorganisation pursuant to which the New Ordinary Shares shall be consolidated on a 1 for 10 basis into Consolidated Ordinary Shares). 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 £15.75 million before expenses.

The New Ordinary Shares will be issued in the form of Consolidated Ordinary Shares following the Capital Reorganisation. As a result of the Capital Reorganisation, Firm Placees will receive 1 Consolidated Ordinary Share for every 10 New Ordinary Shares subscribed for pursuant to the Firm Placing and will pay 50 pence per Consolidated Ordinary Share.

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 Consolidated Ordinary Shares (following consolidation of the Firm Placed Shares on a 1 for 10 basis pursuant to implementation of the Capital Reorganisation to be admitted to the premium segment of the Official List and to the London Stock Exchange for the Consolidated Ordinary Shares (following consolidation of the Firm Placed Shares on a 1 for 10 basis pursuant to implementation of the Capital Reorganisation) 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 21 February 2011 and that dealings for normal settlement in the Consolidated Ordinary Shares (following consolidation of the Firm Placed Shares on a 1 for 10 basis pursuant to implementation of the Capital Reorganisation) will commence at 8.00 a.m. on 21 February 2011.

Save as described in paragraph 7 and subject to the effect of the Capital Reorganisation, 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.

Key terms of the Warrants

In consideration for their binding commitments to support the Capital Raising and guarantee that the Company receives the gross proceeds and in lieu of any placing commissions, the Company will issue the Warrants to the Firm Placees on completion of the Capital Raising. The Warrants will be allocated pro rata to the level of firm commitment given by each Firm Placee.

Assuming completion of the Capital Raising in accordance with its terms, Warrants will be issued entitling the holders, in aggregate, to subscribe at the lower of: (i) 5 pence per New Ordinary Share (50 pence per Consolidated Ordinary Share following implementation of the Capital Reorganisation); (ii) the then current market price (as determined in accordance with the terms of the Warrant Instrument); (iii) an adjusted price (as determined in accordance with the terms of the Warrant instrument, which will be lower than the price in (i) if the Company has issued further ordinary shares and the then current market price is also above the price in (i)); and (iv) the price offered per ordinary share in any takeover offer which is wholly unconditional, subject in each case to a minimum price of the nominal value of an ordinary share, representing, in aggregate, up to approximately 19.1 per cent. of the Enlarged Issued Share Capital at the date of entry into the Warrant Instrument.

The Warrants will be exercisable by the holders at any time in the period from the date of issue up to and including the Business Day immediately following the third anniversary of the date of issue.

The Warrants will not be listed on any exchange and will not be capable of being traded. Upon exercise of the Warrants, application will be made to the UK Listing Authority for the new ordinary shares to be admitted to the premium segment of the Official List and to the London Stock Exchange to be admitted to trading on the London Stock Exchange's main market for listed securities. The new ordinary shares to be issued will be issued fully paid and will rank pari passu in all respects with the ordinary shares in issue at the date of exercise of the Warrants, except that such new ordinary shares shall not rank for any dividends or other distributions declared, made or payable by reference to a record date prior to the relevant date of exercise of the Warrants.

The theoretical value of a Warrant, using the Black and Scholes method and assuming the exercise price is 5 pence per New Ordinary Share, is calculated as between 1.7 pence and 2.9 pence, depending on the assumed volatility, being 50 per cent. and 90 per cent. respectively. However, the Directors believe that ascribing a fair value to the Warrants is almost impossible due to certain material factors which are not able to be reflected by the Black and Scholes model. Specifically, any potential value of the Warrants relies crucially on the successful implementation of the Group's revised business plan and quantum of any further equity capital raising (in addition to the current Capital Raising). However, the nature and quantum of any further equity capital raising will not be known until completion of the Group's revised business plan. Given these significant uncertainties, any valuation exercise in respect of the Warrants is highly hypothetical.

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 27 January 2011 (being the last practicable date prior to publication of this announcement) and following completion of the Capital Raising, issue of the Introduction Fee Shares and exercise of the Warrants, will 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 Firm Placees (and assuming there is no further issue of Consolidated Ordinary Shares pursuant to the Share Schemes, the BoS Warrants or otherwise).

(3) Assumes exercise of the Warrants in full by only the relevant Firm Placee (and assuming there is no further issue of Consolidated 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 and the Introduction Fee Shares represent, in aggregate, approximately 98.6 per cent. of the Company's Existing Issued Share Capital. Upon completion of the Capital Raising and Capital Reorganisation, the Placing and Open Offer Shares will represent approximately 49.6 per cent. 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 Firm Placing will each account for 50 per cent., 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 25.3 per cent. 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 Offer will experience a greater dilution of approximately 49.6 per cent. 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 £30 million (net of expenses) with a corresponding increase of approximately £30 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. Capital Reorganisation

The Directors have reviewed the share capital structure of the Company in light of a number of factors including the following:

·; It is proposed that the Capital Raising will be undertaken at 5 pence per New Ordinary Share, which is equal to the nominal value of an Existing Ordinary Share. Under the Companies Act, it is not permissible for a company to issue shares at a discount to their nominal value. To give the Company the flexibility in relation to future issues of shares, the nominal value of its ordinary shares would need to be considerably lower.

·; Given the Company's current share price at or around current nominal value of 5 pence, a small movement in the actual share price results in a large percentage movement. To seek to reduce the impact of volatility in the Company's share price, the share price needs to be considerably more than nominal value.

In order to provide the Company with flexibility in relation to its capital structure in the future and to seek to reduce volatility in the Company's share price, the Capital Raising is conditional on, among other things, the completion of the Capital Reorganisation.

Under the Capital Reorganisation, it is proposed that:

·; each issued Existing Ordinary Share be subdivided and reclassified into one New Ordinary Share of 0.1 pence and one Deferred Share of 4.9 pence;

·; each Firm Placed Share and Open Offer Share will be issued as a New Ordinary Share of 0.1 pence; and

·; following the issue of the Firm Placed Shares and the Open Offer Shares, but prior to Admission, all New Ordinary Shares of 0.1 pence will be consolidated on a 1 for 10 basis into Consolidated Ordinary Shares of 1 pence each and all Deferred Shares will be consolidated on a 1 for 10 basis into Consolidated Deferred Shares of 49 pence each.

The Capital Reorganisation requires certain approvals from Shareholders at the General Meeting.

The effect of the Capital Reorganisation for Shareholders will be that for every 10 Existing Ordinary Shares held as at the Capital Reorganisation Record Date, following implementation of the Capital Reorganisation they will hold one Consolidated Ordinary Share of 1 pence and one Consolidated Deferred Share of 49 pence and so in proportion for any other number of Existing Ordinary Shares held.

The effect of the Capital Reorganisation for the Firm Placees and those Shareholders participating in theOpen Offer will be that for every 10 Firm Placed Shares or 10 Open Offer Shares subscribed, following implementation of the Capital Reorganisation they will hold one Consolidated Ordinary Share and so in proportion for any other number of Firm Placed Shares or Open Offer Shares subscribed.

The rights attaching to the New Ordinary Shares and the Consolidated Ordinary Shares will, save for the change in nominal value, be identical in all respects to those of the Existing Ordinary Shares. Without taking account of the impact of the Capital Raising, the share price of a Consolidated Ordinary Share following the Capital Reorganisation should, theoretically, be ten times that of an Existing Ordinary Share as there will be ten times fewer shares in issue as a result of the 1 for 10 share consolidation.

Where, as a result of the consolidation, fractional entitlements arise, no fractions of shares will be issued but 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 will be the case), then the net proceeds of such sale will be retained for the benefit of the Company.

In connection with the Capital Raising and the Capital Reorganisation, a request will be made to the UK Listing Authority and to the London Stock Exchange to reflect, on the Official List and the London Stock Exchange's main market for listed securities respectively, the subdivision of the Existing Ordinary Shares into New Ordinary Shares and the consolidation of the New Ordinary Shares into the Consolidated Ordinary Shares.

New share certificates in respect of the Consolidated Ordinary Shares are expected to be posted at the risk of Shareholders by no later than 25 February 2011 to those Shareholders who, at the Capital Reorganisation Record Date, hold their shares in certified form. These will replace existing certificates which should then be destroyed. Pending the receipt of new certificates, transfers of Consolidated Ordinary Shares held in certified form will be certified against the register of members of the Company. All Consolidated Ordinary Shares will be credited to stock accounts in CREST at 8.00 a.m. on 21 February 2011.

The purpose of the issue of Deferred Shares is to ensure that the reduction in the nominal value of the Existing Ordinary Shares does not result in a reduction in the capital of the Company. The Deferred Shares created on the Capital Reorganisation becoming effective will have no voting or dividend rights and, on a return of capital, will have the right to receive the amount paid up thereon only after the holders of the Consolidated Ordinary Shares have received, in aggregate, the amount paid thereon plus £10 million per Consolidated Ordinary Share. No share certificates will be issued in respect of the Deferred Shares, nor will CREST accounts of Shareholders be credited in respect of any entitlement to Deferred Shares, nor will they be listed on the Official List or admitted to trading on the London Stock Exchange or any other investment exchange. The Deferred Shares shall not be transferable at any time, other than with the prior written consent of the Directors. At the appropriate time, the Company may repurchase the Deferred Shares, make an application to the High Court for the Deferred Shares to be cancelled, or cancel, or seek the surrender of the Deferred Shares using such other lawful means as the Directors may determine.

8. Related Party Transactions

Harris Associates, which holds 130,101,200 Existing Ordinary Shares (representing approximately 20.0 per cent. of the Existing Issued Share Capital of the Company), has agreed to subscribe up to £5.95 million in aggregate for New Ordinary Shares under the Firm Placing and up to £5.95 million in aggregate for New Ordinary Shares in the Placing and Open Offer, subject to clawback to satisfy valid applications under the Open Offer (representing, assuming no clawback, in aggregate not more than 28.5 per cent. of the Enlarged Issued Share Capital).

In connection with its commitment, the Company will issue Harris Associates with Warrants to subscribe for up to 7.2 per cent. of the Enlarged Issued Share Capital at a price to be determined in accordance with the terms of the Warrant Instrument.

Crystal Amber, which holds 102,700,000 Existing Ordinary Shares (representing approximately 15.8 per cent. of the Existing Issued Share Capital of the Company), has agreed to subscribe up to £2.25 million in aggregate for New Ordinary Shares under the Firm Placing and up to £2.25 million in aggregate for New Ordinary Shares in the Placing and Open Offer, subject to clawback to satisfy valid applications under the Open Offer. In addition, the Company has agreed to pay Crystal Amber a fee in connection with the introduction of IAML as a Firm Placee in the Capital Raising in an amount of £580,000, equal to 5 per cent. of the gross amount firmly committed by IAML in the Capital Raising, such fee to be payable through the issue of Introduction Fee Shares, being £580,000 worth of further ordinary shares at the issue price of 5 pence (subject to the effect of the Capital Reorganisation). Assuming no clawback to satisfy valid applications under the Open Offer, Crystal Amber will hold, immediately following the Capital Raising, in aggregate not more than 15.8 per cent. of the Enlarged Issued Share Capital).

In connection with its commitment, the Company will issue Crystal Amber with Warrants to subscribe for up to 2.7 per cent. of the Enlarged Issued Share Capital at a price to be determined in accordance with the terms of the Warrant Instrument.

As a consequence of Harris Associates' and Crystal Amber's current interest in the Company, their proposed participation in the Firm Placing and the related issue of Introduction Fee Shares and Warrants 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 and Crystal Amber 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 continued support of the Company and the commitment by Crystal Amber, together with 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 per cent. 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 per cent. of the voting rights of such a company but does not hold shares carrying more than 50 per cent. 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 per cent. 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 per cent. 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.

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 per cent. shareholding in Crystal Amber, and are referred to in this announcement as the "Crystal Amber/IAML Concert Party".

Crystal Amber, which holds 102,700,000 Existing Ordinary Shares (representing approximately 15.8 per cent. of the Existing Issued Share Capital of the Company), has agreed to subscribe up to £2.25 million in aggregate for New Ordinary Shares under the Firm Placing and up to £2.25 million in aggregate for New Ordinary Shares in the Placing and Open Offer, subject to clawback to satisfy valid applications under the Open Offer (representing, assuming no clawback, in aggregate not more than 15.8 per cent. of the Enlarged Issued Share Capital).

In connection with its commitment, the Company will issue Crystal Amber with Warrants to subscribe for up to 2.7 per cent. of the Enlarged Issued Share Capital at a price to be determined in accordance with the terms of the Warrant Instrument.

As at 27 January 2011 (being the last practicable date before publication of this announcement), IAML did not hold any Existing Ordinary Shares in the Company but has agreed to subscribe up to £5.8 million in aggregate for New Ordinary Shares under the Firm Placing and up to £5.8 million in aggregate for New Ordinary Shares in the Placing and Open Offer subject to clawback to satisfy valid applications under the Open Offer (representing, assuming no clawback, in aggregate not more than 18.0 per cent. of the Enlarged Issued Share Capital). In connection with its commitment, the Company will issue IAML with Warrants to subscribe for up to 7.0 per cent. of the Enlarged Issued Share Capital at a price to be determined in accordance with the terms of the Warrant Instrument.

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 43,630,000 Consolidated Ordinary Shares (following implementation of the Capital Reorganisation), representing approximately 33.8 per cent. 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 Warrants issued following completion of the Capital Raising (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 56,264,611 Consolidated Ordinary Shares, representing approximately 39.66 per cent. of the Company's enlarged issued share capital. The earliest date on which the Warrants can be exercised is expected to be 21 February 2011 (being the expected date of Admission).

If the interests of the Crystal Amber/IAML Concert Party in the voting rights of the Company following the Capital Raising, the issue of the Introduction Fee Shares and/or upon the exercise of any or all of the Warrants (by either Crystal Amber or IAML) were to increase and become 30 per cent. or more, 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 the issue of the Introduction Fee Shares 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.

Following completion of the Capital Raising, the issue of the Introduction Fee Shares and the issue of Warrants, the Crystal Amber/IAML Concert Party will between them be interested in shares carrying 30 per cent. or more of the Company's voting share capital following the Capital Raising and/or the exercise of any or all of the Warrants (by either Crystal Amber or IAML) and subsequent issue of new shares to Crystal Amber or IAML, as the case may be, but will not hold shares carrying more than 50 per cent. of such voting rights, and (for so long as they continue to be treated as acting in concert) any further increase in that aggregate interest in shares will be subject to the provisions of Rule 9.

For the avoidance of doubt, this waiver, which is valid only for so long as the authority granted by Independent Shareholders remains in force, applies only in respect of increases in shareholdings of the Crystal Amber/IAML Concert Party resulting from the Capital Raising, the issue of the Introduction Fee Shares and subsequent exercise of any or all of the Warrants and not in respect of other increases in its holdings. 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.

Further details concerning Crystal Amber and IAML and their respective interests in the Company will be set out in the Prospectus.

Harris Associates

The Directors confirm that Harris Associates has not sought a waiver from the Panel in respect of the provisions of Rule 9 that would otherwise apply following the exercise of the Warrants. Therefore, if the interests of Harris Associates in the voting rights of the Company following the exercise of any or all of the Warrants (and the subsequent issue of new shares to Harris Associates) were to increase and become 30 per cent. or more, Harris Associates would be obliged to make a general offer, pursuant to Rule 9 of the Takeover Code, to all other Shareholders to acquire their shares.

10. Current trading and outlook

The Company last updated on current trading in its trading update released on 23 December 2010.

On a like-for-like (excluding VAT) basis, revenue for the period from 20 December 2010 to 23 January 2011 was 11.1 per cent. lower than for the equivalent period last year. Total Group revenue for the same period was down 12.1 per cent. Overall gross margin for the same period, which covers pre-Christmas promotional activity and the Company's sale starting on 26 December 2010, was 24.9 per cent. compared to 26.0 per cent. during the equivalent period last year.

As at 23 January 2011 (being the last practicable date prior to publication of this announcement), year-to-date like-for-like sales are up 6.2 per cent. compared to the equivalent period last year. Year-to-date gross margin is 38.5 per cent. compared with 38.4 per cent. for the equivalent period last year.

Net debt at 27 January 2011 (being the last practicable date prior to publication of this announcement) was £21.3 million.

The Company continues to carefully manage its cash and available resources. As a result of the Company's cash management actions, the Company's intake, availability and profile of stock has been lower than forecasted.

Economic conditions mean that prospects for UK retailers remain challenging with volatility making accurate forecasting difficult. The need for effective promotion to stimulate sales and generate cash, albeit at the inevitable expense of margin, continues.

The performance of the six transformed stores continues to be very encouraging, with sales 15 per cent. above the Company average and money margin 30 per cent. above the Company average, measured in the period from 1 November 2010 (when the last of the 6 stores opened) to 23 January 2011.

11. Changes to the Board

Alan Benzie has signalled an intention to stand down from the Board on completion of the full year audit and announcement of the Company's results for the year ending 30 January 2011, expected to be in May 2011. Alan is chairman of the Company's Audit Committee and a member of the Remuneration and Nominations Committees. He joined the Board in September 2007.

The Company has agreed the terms of a Relationship Agreement, to be entered into separately with each of Harris Associates and Crystal Amber following completion of the Capital Raising, pursuant to which each Relationship Agreement Counterparty will have the right to appoint one representative non-executive director to the Board for a period of approximately 3 years for so long as the relevant Relationship Agreement Counterparty holds (either itself or together with certain parties who are acting in concert with it, if applicable) not less than 10 per cent. of the issued ordinary share capital of the Company from time to time.

12. Intention to transfer the Company's listing to AIM

The Board confirms that it has resolved, subject to the prior approval of Shareholders at a general meeting, to seek a transfer of the admission of the Company's ordinary shares to AIM from the Official List and trading on the London Stock Exchange's main market for listed securities to AIM. The Board's current intention is to seek admission to AIM by the end of April 2011.

The Board has concluded that AIM is the most appropriate market for it to retain a publicly traded quote. The Board believes that a transfer to AIM will provide a market and an environment more suited to a company such as JJB and will simplify the ongoing administration requirements of the Company, with a consequential reduction in the costs associated with having its shares listed on the Official List. However, as an AIM company, JJB will continue to be subject to the regulatory and disciplinary controls of the London Stock Exchange.

In the event the Firm Placees hold in excess of 75 per cent. of the Company's issued ordinary share capital from time to time (following exercise of any or all of the Warrants) and the Company is no longer able to comply with its free float requirements under the Listing Rules, the Company would seek admission to AIM as soon as reasonably possible.

13. Possible offer for the Company

In December 2010, the Company received unsolicited expressions of interest from third parties, including JD Sports. Whilst initial discussions between the Company and the third parties ceased in late-December 2010 and early-January 2011, discussions with JD Sports recommenced later in January 2011 and remain ongoing in relation to a potential offer for the entire issued and to be issued share capital of the Company.

Whilst the Company believes that JD Sports is contemplating a bona fide offer, the highly preliminary nature of these discussions is such that there can be no certainty that any offer will be made or as to the terms of any offer.

Pursuant to Rule 21.1(b)(i) and (ii) of the Code, the Company must not issue any shares or issue or grant options in respect of any unissued shares without the approval of its Shareholders at a general meeting. In particular, the issue of the Firm Placed Shares, the Open Offer Shares, the Introduction Fee Shares and the related issue of Warrants would constitute an action which may result in an offer or possible offer being frustrated or its Shareholders being denied the opportunity to decide on its merits, so such action cannot be taken by the Company without the approval of Shareholders in a general meeting to comply with Rule 21.1.

For the purposes of compliance with Rule 21.1 of the Takeover Code, approval from Shareholders is therefore being sought for the proposed issue of the Firm Placed Shares, the Open Offer Shares, the Introduction Fee Shares and the related issue of Warrants at the General Meeting.

Given the highly preliminary nature of the discussions with JD Sports, the Board is recommending the Capital Raising and the Capital Reorganisation and related matters to the Shareholders. If and when an offer is forthcoming from JD Sports, the Board will update the Shareholders on its views on the terms of the offer in accordance with the applicable provisions of the Code.

14. Update on Regulatory investigations

As announced on 10 September 2009, the Company is assisting the OFT with an investigation it is carrying out in the sports retail market, following an approach the Company made to the OFT on 30 January 2009 for immunity pursuant to the OFT's leniency programme. On 24 August 2009, the OFT confirmed the grant of a marker for "Type A" immunity in favour of the Company in respect of the suspected cartel activity in the period from 8 June 2007 to 25 March 2009. OFT officers visited the Company's offices in Wigan on 10 and 11 September 2009 as part of this investigation. Further, if the OFT were to complete its investigation, decide that the Company has infringed UK competition law under the Competition Act 1998 and/or Enterprise Act 2002 and issue an infringement decision the grant of the marker in favour of the Company means that it would receive full immunity from any financial penalty that would otherwise be imposed by the OFT, subject to the Company complying with the OFT's standard conditions for immunity.

In addition, the SFO made public statements on 10 September 2009 that it is investigating the activities of the Company and Sports Direct in connection with suspected offences under the Fraud Act 2006 and the Enterprise Act 2002. On 19 October 2010, the Company announced that the SFO had provided confirmation to the Company that no charges would be brought against the Company or against any Company within the Group but that its investigation into the activities of certain individuals was ongoing.

On 29 October 2010, the Company announced the conclusion of an investigation by the FSA into the Company's historical compliance with the Disclosure and Transparency Rules. The investigation covered the period in the lead up to the release of the Group's interim results on 26 September 2008, more than two years ago when the Company was under an entirely different management team, and focussed on inadequacies in the disclosures made by the Company surrounding the acquisitions of the Original Shoe Company and Qube, which were announced in December 2007 and May 2008, respectively. On 26 January 2011, the FSA published a final notice giving details of the breach of the Disclosure and Transparency Rules and Listing Principle 4 and confirming the imposition of a financial penalty of £455,000, payable in six monthly instalments beginning with a payment of £80,000 by 8 February 2011 and then five payments of £75,000 by 28 June 2011. No further investigations into the Company by the FSA are ongoing. 

15. 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.

16. 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.

17. Importance of vote

The Group has prepared short term cash flow forecasts which 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 22 February 2011. However, the headroom available to the Company up to 22 February 2011 is very limited and if the Group's trading performance consistently falls below expectations or if the Group's cash management actions were to be less successful than has been forecast or previously achieved the Company could experience a funding shortfall before 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 for the Group, failing which the Group would go into receivership, liquidation or administration. Whilst no discussions have been had to date, 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 very unfavourable and onerous terms.

As stated above in paragraph 3, after taking account of the receipt of the net proceeds of the Capital Raising, the Group's short term cash flow forecasts indicate a funding shortfall towards the end of April 2011, although there is very limited cash headroom from towards the end of March 2011. To the extent that trading cash flows consistently fall below those forecast or the Group's cash management actions are less successful than has been forecast or previously achieved, the Company could experience a funding shortfall as early as the last week of March 2011.

The Capital Raising Resolutions must be passed by Shareholders at the General Meeting in order for the Capital Raising and the Capital Reorganisation to proceed and, as it is an event of default under the terms of the BoS Facility if the Capital Raising does not proceed, in order for the Company to avoid an event of default under the terms of the BoS Facility.

If the Capital Raising Resolutions are not passed and therefore the Capital Raising does not proceed, the Company will be in default under the terms of the BoS Facility. In these circumstances, the Company would seek a waiver of the event of default from BoS, who have been supportive in the context of amendments to the BoS Facility to date. However, in the absence of the receipt of the net proceeds of the Capital Raising, the Directors believe it is unlikely that the Company would be able to secure such a waiver and that the Group would go into receivership, liquidation or administration.

Accordingly, the Directors believe that the Capital Raising and the Capital Reorganisation are 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 and the Capital Reorganisation can proceed.

18. Working Capital

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.

If the Capital Raising Resolutions are passed and the Capital Raising proceeds, the Capital Raising will not address the Company's medium and longer term working capital requirements and, on the basis of the current level of the BoS Facility and notwithstanding receipt of the net proceeds of the Capital Raising, the Company will not have sufficient working capital for its present requirements, that is for the 12 months from the date of this announcement.

After taking account of the receipt of the net proceeds of the Capital Raising, the Group's short term cash flow forecasts indicate a funding shortfall towards the end of April 2011. These short term cash flow forecasts also indicate that the Group will operate with very limited headroom from towards the end of March 2011. To the extent that trading cash flows consistently fall below those forecast or the Group's cash management actions are less successful than forecast or previously achieved the Company could experience a funding shortfall as early as the end of March 2011.

The Directors have assessed the working capital resources required by the Company based on the current business plan and assuming continuation of the Group's current store portfolio and operations. This assessment is based on the Group's current cashflow projections and the Directors' assessment of the current trading environment and is subject to the risks outlined in the "Risk Factors" section of the Prospectus. On this basis, the Directors believe that the Group is likely to require additional funding (in addition to receipt of the net proceeds of the Capital Raising) of approximately £110 million in order for the Directors to be in a position to confirm that the Company would have sufficient working capital for its present requirements, that is, for at least the next 12 months from the date of this announcement. Having reviewed the Group's options and likely funding requirement, the Directors have concluded that the Group's business plan is unlikely to be fundable without revision and without a broader restructuring of the Group's portfolio of stores and cost base. Consequently, the Directors will not seek to raise any additional funds on the basis of the current business plan.

Accordingly, the Directors have been developing a revised business plan which will be concluded shortly. As part of this, the Directors are conducting a review of the Group's portfolio of stores with a view to developing a business plan that is fundable. The Board has reviewed its property portfolio on a store by store basis and is considering a number of restructuring options, including store closures, disposals and lease re-gearing, and/or a company voluntary arrangement, to deliver a solution inter-dependent on both a further equity capital raising and the continued provision of banking facilities. The Board believes that the restructuring and financing steps in its revised business plan, a copy of which must be provided to BoS by not later than 24 February 2011, can be implemented by the end of April 2011. The level of working capital required under the Group's revised business plan will need to be lower than is currently anticipated under the Group's current business plan (on the basis that the Board has concluded that the Group's current business plan is unlikely to be fundable). Whilst the revised business plan is not yet complete, it is the Directors' current belief that the quantum of additional funding required to be raised under a further equity capital raising will exceed the amount being raised under the current Capital Raising.

The Directors are therefore of the view that the Group will need to undertake a further equity capital raising (in addition to the current Capital Raising) in order to satisfy the additional funding requirements of the revised business plan. Any further equity capital raising will need to run in parallel with the proposed restructuring of the Group's property portfolio and both will be subject to formal legal and regulatory processes and timetables.

The Directors believe that the revised business plan, with a lower funding requirement than the Company's present requirements, should be fundable. Subject to the support of other key stakeholders, the Directors have no reason to believe that BoS and the Firm Placees will not provide further support to assist in its implementation. In addition, based on speculative indications of interest received by the Company, the Directors believe that there will be an opportunity to seek additional third party financing.

The Directors will implement the restructuring and seek additional financing in line with the Group's revised business plan as soon as possible, and in any event by the end of April 2011. As noted above, whilst the Group's cash flow projections show sufficient working capital until the end of April 2011, there is very limited cash headroom from towards the end of March 2011. To the extent that the Company experiences a funding shortfall from towards the end of March 2011 to the completion of the further capital raising by the end of April 2011, the Company would be required to approach BoS and the Firm Placees for immediate interim financing to enable the further capital raising to be completed. In light of the support demonstrated by BoS and the Firm Placees in the context of the Capital Raising, allowing the Directors time to complete the preparation of a fundable revised business plan, and a clear understanding on the part of the Firm Placees that further investment will be required by the Company, the Directors do not have any reason to believe that BoS and the Firm Placees would not continue to be supportive in the context of such circumstances, although no discussions have taken place between the Company and BoS or the Firm Placees in this regard and accordingly no specific assurances have been received.

The Directors are confident that a revised business plan can be established which has a reasonable expectation of successful execution. However, any restructuring will require a number of complex and interdependent steps, and is also likely to require the approval of a number of parties and formal legal and regulatory clearance. The Group's funding position, as described above, provides little latitude to accommodate any delay and the support of BoS and other key stakeholders will necessarily be dependent on their assessment of the likelihood that the Company's proposals will proceed to a successful conclusion. Implementation, funding and execution of the revised business plan will require, amongst others, the consent and confirmed support of BoS, the Shareholders and the Group's creditors through this Capital Raising and the subsequent restructuring and further capital raising.

To the extent that the Company is unable to secure further support from any relevant key stakeholders or other sources of finance in the context of a further equity capital raising and/or proposed restructuring of the Group's property portfolio, the Company will no longer be able to trade as a going concern which would result in the appointment of receivers, liquidators or administrators.

19. Further Information

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 18 February 2011 at the offices of Herbert Smith LLP, Exchange House, Primrose Street, London, EC2A 2HS.

Further details relating to the Capital Raising will be contained in the Prospectus that is expected to be published on 2 February 2011. 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, Primrose Street, Exchange Square, 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, Switzerland, South Africa and 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 except in reliance on an 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 document. 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, Switzerland, South Africa and 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 or Lazard. 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, who is authorised and regulated in the UK by the Financial Services Authority, is 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, Lazard does not accept 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. Lazard 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 of the Company nor Lazard 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 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

Rule 8 Notice

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of JJB or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any paper offeror is first identified.

An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) JJB and (ii) any paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any paper offeror is first identified. Relevant persons who deal in the relevant securities of JJB or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of JJB or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of JJB or of any paper offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) JJB and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of JJB or a paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by JJB and by any offeror and Dealing Disclosures must also be made by JJB, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.

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 0300 (calls cost 10 pence per minute to the 0871 664 0321 number 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 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.