___________________________________________________________________________

FINAL NOTICE

___________________________________________________________________________



To:
JJB Sports plc

Date:
25 January 2011

TAKE NOTICE: The Financial Services Authority of 25 The North Colonnade, Canary
Wharf, London E14 5HS ("the FSA") gives you final notice about a requirement to pay
a financial penalty.

THE PENALTY

1.
The FSA gave JJB Sports Plc (“JJB”) a Decision Notice on 15 December 2010 which
notified JJB that pursuant to section 91(1) of the Financial Services and Markets Act
2000 ("the Act"), the FSA had decided to impose a financial penalty of £455,000 on JJB
for:

(a) a breach of the Disclosure and Transparency Rules (“DTR”) 2.2.1 and
Listing Principle 4 in relation to the announcement on 18 December 2007
of the acquisition of the Original Shoe Company Limited (“OSC”) by
JJB; and

(b) a breach of DTR 2.2.1 and Listing Principle 4 in relation to the
announcement on 22 May 2008 of the acquisition of Qubefootwear
Limited (“Qube”) by JJB.

2.
JJB confirmed on 28 October 2010 that it will not be referring the matter to the Upper
Tribunal.

3.
JJB agreed to settle at an early stage of the FSA’s investigation and therefore the penalty
has been discounted by 30% pursuant to the Stage 1 early settlement discount scheme.
Were it not for this discount, the FSA would have imposed a financial penalty of
£650,000.

4.
Accordingly, for the reasons set out below, the FSA imposes a financial penalty on JJB
in the amount of £455,000.


REASONS FOR THE ACTION

Background

5.
The FSA has decided to impose a penalty as a result of JJB’s total delay of 9 months and
8 days, between 18 December 2007 and 26 September 2008, to disclose to the market
inside information concerning the full amount paid in relation to the acquisitions of OSC
and Qube, which gave a misleading impression as to the consideration for the
acquisition of both OSC and Qube. The failure to disclose the complete position
regarding the consideration for these acquisitions thereby led to the creation and
continuation of a false market in JJB’s shares.

OSC

6.
Pursuant to a Sale and Purchase Agreement signed on 17 December 2007 (“OSC SPA”),
JJB agreed to acquire the share capital of the shoe retail chain OSC from Sports Direct
International plc (“SDI”), (the “OSC Acquisition”). The OSC SPA obliged JJB to pay
£5 million (“the price”) and in addition to the price, JJB were to pay the seller a further
sum (“the Stock Amount”) which was to be calculated by reference to the actual cost
price to SDI of the in-store stock less 3% as at the close of business on 28 January 2008.
The sum payable in respect of the Stock Amount was uncapped (there being no
contractual maximum amount payable).

7.
The liability to pay and the estimated cost of the Stock Amount, together with the price,
constituted inside information within the meaning of section 118C of the Act.

8.
The acquisition of OSC was announced on 18 December 2007. The announcement
recorded that JJB had acquired OSC from SDI for a consideration of £5 million in cash
(the “OSC Announcement”).

9.
In breach of DTR 2.2.1 the OSC Announcement did not include any reference to the
liability to pay or, the estimated costs of the Stock Amount.

Qube

10. Pursuant to a Sale and Purchase Agreement signed on 15 April 2008 (the “Qube SPA”),
JJB agreed to acquire the share capital of Qube from AJT Footwear Limited (“AJT”),
(the “Qube Acquisition”). The Qube SPA provided that the consideration payable for
the Qube Acquisition was £1 and that JJB was also obliged to settle Qube’s overdraft to
a third party bank on the day before completion of the acquisition. The sum payable in
respect of Qube’s overdraft was uncapped as there was no contractual maximum sum
stated within the Qube SPA (“Qube’s Overdraft”).

11. The liability to settle and the estimated costs of settling Qube’s Overdraft, together with
the share purchase price of £1, constituted inside information within the meaning of
section 118C of the Act.

12. The acquisition of Qube was announced on 22 May 2008. The announcement recorded
that JJB had acquired Qube for £1 in cash (the “Qube Announcement”).


13. In breach of DTR 2.2.1, the Qube Announcement did not disclose that JJB was liable to
settle Qube’s Overdraft or the estimated costs of this.

The delay in announcing/a false market

14. The liability to pay the Stock Amount and the liability to settle Qube’s Overdraft were
not disclosed to the market by JJB until after 26 September 2008 following publication
of JJB’s Interim Results for the 26 weeks to 27 July 2008 (“JJB’s 2008 Interim
Results”). The true costs of the acquisition taking into account the Stock Amount and
the liability to settle Qube’s Overdraft were disclosed after JJB’s auditors had voiced
concerns that, during their earlier audit of JJB’s 2008 financial statements, they had not
been informed of the liability to pay the Stock Amount or the Qube Acquisition. The
delay in disclosure amounted to continuing breaches of DTR 2.2.1 by JJB.

15. In breach of Listing Principle 4, the failure to disclose the liability to pay the Stock
Amount and the liability to settle Qube’s Overdraft until after JJB’s 2008 Interim
Results meant that JJB did not communicate information regarding liability to pay the
Stock Amount and the liability to settle Qube’s Overdraft to holders and potential
holders of its listed equity shares in such a way as to avoid the creation or continuation
of a false market. This failure gave a false impression of the costs of OSC and Qube and
of the impact of those acquisitions on the true nature and costs of JJB’s strategy for 2008
which led to the creation of a false market for a period of 9 months and 8 days in
relation to the OSC Acquisition and 4 months and 4 days in relation to the Qube
Acquisition.

16. In addition to disclosing the true acquisition costs of OSC and Qube, JJB’s 2008 Interim
Results contained other negative news relating to JJB, including an Emphasis of Matter
regarding uncertainty over JJB’s ability to continue as a going concern (which made a
direct reference to uncertainty regarding the ongoing availability of the original banking
facilities in light of the actual and projected covenant breaches). Following the release of
JJB’s 2008 Interim Results, JJB’s share price fell by approximately 49.5% from
approximately 104p to 52p.1

17. For the reasons set out above, the FSA has decided that in all the circumstances, it is
appropriate to impose a financial penalty on JJB.

RELEVANT STATUTORY PROVISIONS

18. Pursuant to Part VI of the Act, the FSA makes the Listing, Prospectus and Disclosure
and Transparency Rules and is responsible for the official listing of securities in the UK.
Disclosure rules under Part VI require an issuer to publish specified inside information
(section 96 of the Act). Between 12 December 2007 and 26 September 2008 (the
“material time”), these rules set out the requirements for the admission of securities to
the Official List and the continuing obligations of companies whose securities are so
admitted.

19. For the purpose of DTR, “inside information” is defined in section 118C of the Act as:


1 JJB’s share price has subsequently been re-based.

“(2) … information of a precise nature which –

(a)
is not generally available,

(b)
relates, directly or indirectly, to one or more issuers of the qualifying
investments or to one or more of the qualifying investments, and

(c)
would, if generally available, be likely to have a significant effect on the price
of the qualifying investments or on the price of related investments. …

(5) Information is precise if it –

(a)
indicates circumstances that exist or may reasonably be expected to come into
existence or an event that has occurred or may reasonably be expected to
occur, and

(b)
is specific enough to enable a conclusion to be drawn as to the possible effect
of those circumstances or that event on the price of qualifying investments or
related investments.

(6) Information would be likely to have a significant effect on price if and only if it is
information of a kind which a reasonable investor would be likely to use as part of the
basis of his investment decisions.”

20. The FSA is authorised under section 91(1) of the Act to exercise its power to impose a
financial penalty where it is satisfied that an issuer has contravened any provision of the
Part VI rules.

DTR 2.2.1

21. The Disclosure and Transparency Rules for listed companies are set out in the FSA’s
Handbook (“the Handbook”). DTR 2.2.1 states that: “An issuer must notify a RIS as
soon as possible of any inside information which directly concerns the issuer unless
DTR 2.5.1 applies.”2

22. At the material time, the FSA had, pursuant to section 157 of the Act, published
guidance on DTR obligations in the Handbook which would have been available to JJB.
In deciding to take the action set out in this Notice, the FSA has had regard to specific
guidance on the identification of inside information set out in guidance DTR 2.2.3G to
DTR 2.2.9G.

Listing Principle 4

23. Chapter 7 of the Listing Rules sets out the Listing Principles which apply to every listed
company with a primary listing of equity securities. The purpose of the Listing
Principles is to ensure that listed companies pay due regard to the fundamental role they
play in maintaining market confidence and ensuring fair and orderly markets.



2 DR 2.5.1 did not apply in this case.


24. Listing Principle 4 provides that “a listed company must communicate information to
holders and potential holders of its listed equity securities in such a way as to avoid the
creation or continuation of a false market in such listed equity securities.”

25. The FSA regards the continuing obligation requirements of DTR and Listing Principles
as a fundamental protection for shareholders. These requirements are designed to
promote full disclosure to the market of all relevant information on a timely basis to
ensure that all users of the market have simultaneous access to the same information.
Observance of these continuing obligations is essential to the maintenance of an
efficient, fair and orderly market in securities and to maintaining confidence in the
financial system.


FACTS AND MATTERS RELIED ON

Background

26. JJB is a well known sportswear retailer with its headquarters in Wigan, Lancashire. JJB
was founded in 1971 and became admitted to the London Stock Exchange’s Official List
in 1998. JJB describes itself as one of the UK’s leading high street sports retailers.

The OSC Acquisition

27. On 12 December 2007, the then Commercial Director of JJB, David Madeley (“Mr
Madeley”) emailed JJB’s board of directors, including the then Chief Executive, Chris
Ronnie (“Mr Ronnie”), and certain other directors with a draft proposal for JJB to
acquire OSC from SDI for £5 million. The proposal informed the recipients that “stock
in stores currently valued at £8.4 million, is to be purchased on completion at value less
3% from SDI. Stock in warehouse currently valued at £2 million is to be purchased
simultaneously at a commercial value to be agreed”.

28. On 17 December 2007 JJB and SDI signed the OSC SPA for the purchase of the entire
issued share capital of OSC. The OSC SPA was signed by Mr Ronnie on behalf of JJB.
The material terms of the OSC SPA were as follows:
(a)
“The price for the shares shall be £5,000,000 (the Price). …In addition to the
Price, the Purchaser shall pay the Seller the Stock Amount”.

(b)
The Stock Amount was to be “calculated by reference to the actual cost price
to the Seller of the In-store Stock, less 3%”. In-store stock meant the “unsold
stock held at the Properties at the close of business on 28 January 2008”.

(c)
The sum payable for the Price and the Stock Amount was to be remitted to
SDI on 28 March 2008. The liability to pay the Stock Amount was uncapped
and not subject to any maximum.

29. On the same day that the OSC SPA was signed, JJB’s corporate broker, (being an
experienced broker on the FSA’s panel of approved sponsors) was contacted by JJB’s
financial public relations firm in relation to the OSC Acquisition. Whilst JJB’s corporate
broker had been informed that the £5 million price was exclusive of stock, they

understood that no stock was being purchased from the vendor and that the total price
payable was only £5 million.

30. At 7 am on 18 December 2007 JJB issued the OSC Announcement in the following
terms:

“JJB Sports (“JJB”) today announces that it has acquired the Original Shoe Company
(“Original Shoe Company”) from Sports Direct International PLC for a consideration
of £5m in cash”.

31. On 20 December 2007 a JJB board meeting was held. The minutes of that meeting
record that JJB’s board was informed that the acquisition of OSC would entail “a
purchase price of £5 million which will be payable at the end of March 2008” and that
“the value of inventories at the acquisition date will be approximately £8 million and
will also be payable at the end of March”. The minutes of another JJB board meeting
held on 22 January 2008 record that approximately £8 million for stock would be
payable by JJB at the end of March 2008 in connection with the OSC Acquisition.

32. On 27 January 2008, Sports World International Ltd (a company within the SDI group)
(“Sports World”) issued invoices to JJB in respect of the Stock Amount for a total of
approximately £10.04 million inclusive of VAT to the extent applicable.

33. JJB paid Sports World a total of approximately £15.069 million between 31 March and
23 April 2008 comprising £5 million for the share purchase price, £10.038 million
(inclusive of applicable VAT) in respect of the Stock Amount and approximately
£31,000 in respect of cash in tills held at OSC stores.

The Qube Acquisition

34. The minutes of the JJB board meeting of 22 January 2008 record that JJB’s board was
informed of a proposal to acquire Qube for £1 plus stock at cost.

35. On 14 March 2008, Mr Madeley had a telephone conversation with representatives of
West Coast Capital, the parent undertaking of AJT, during which the details of the Qube
Acquisition were discussed. JJB’s note of the conversation records that JJB “would
inherit £2.3M of creditors and the £5.7M overdraft…” The “£5.7M overdraft” is
understood to be a reference to Qube’s Overdraft.

36. The minutes of a JJB board meeting of 9 April 2008 record that “ CR [Mr Ronnie]
advised that himself and DM [Mr Madeley] were currently in negotiations with
[Vendor] to acquire the Qube and [another] businesses” (in the event the other business
was not acquired). The board minute does not record there having been any discussion
in respect of the likely cost of Qube.

37. On 15 April 2008, the Qube SPA was signed by Mr Ronnie and by Mr Madeley on
behalf of JJB. The Qube SPA provided that, in order to acquire Qube, JJB would be
required to pay a consideration for the entire share capital of Qube of £1 and in addition,
JJB would be liable to settle Qube’s Overdraft to a third party bank as it stood on the day
before completion. The relevant clause (clause 4.4) appeared in the SPA as follows:


“4.4 Purchaser’s obligations

At Completion the Purchaser shall, subject to compliance by the Vendor with the
obligations incumbent on it under Clauses 4.2 and 4.3:

(a) deliver to the Vendor the Consideration by cheque; and

(b) repay or procure the repayment by the Company of all sums due to [the third party
bank] by the Company in account number [account number redacted] at 5pm on the date
before the Completion Date”.

38. Following speculation in the press about JJB having potentially acquired Qube, JJB’s
corporate broker was alerted to the existence of the draft Qube Announcement in the late
afternoon of 9 May 2008 by JJB’s PR advisors. JJB’s corporate brokers then contacted
JJB to seek further information. Mr Ronnie and Mr Madeley on behalf of JJB spoke to
JJB’s corporate broker, on 9 and 10 May 2008 respectively and informed them of the
Qube Acquisition. This first contact with JJB’s corporate brokers occurred over three
weeks after the Qube SPA had been signed.

39. JJB’s corporate brokers were not provided with a copy of the Qube SPA. However, on
13 May 2008, JJB sent an email to its corporate brokers entitled, "FW: Project Square -
bank debt". The email contained no text from the sender but included a chain of 5
emails. The two most recent emails in the chain were between JJB and its solicitor and
related to a request by JJB to their solicitor to contact JJB’s corporate brokers. The
other three emails in the chain referred to the fact that JJB was intending to pay off
Qube's overdraft with a third party bank. The emails referring to the overdraft payment
were between JJB, its solicitor and the solicitors of Qube. JJB’s corporate brokers
responded to the email entitled "FW: Project Square - bank debt" and further email
exchanges occurred (between JJB, its solicitor and its corporate broker) with the entire
chain attached. None of the subsequent correspondence mentioned the payment of the
overdraft. JJB’s corporate brokers have stated that they did not read the three emails in
the email chain that referred to the payment of the Qube overdraft, focusing instead on
the most recent part of the email chain. They therefore understood that the total price
payable for the acquisition of Qube was only £1.

40. JJB’s corporate broker had a number of communications with the UK Listing Authority
(“UKLA”) concerning the Qube Acquisition. With the assistance of JJB’s solicitors,
JJB consented to its corporate brokers sending the UKLA a letter on 20 May 2008 which
stated that JJB had signed the Qube SPA on 15 April 2008 and that the consideration
payable for Qube was £1. JJB both commented on and approved the letter before
transmission. The letter did not disclose JJB’s liability to settle Qube’s Overdraft.

41. On 20 May 2008 JJB’s corporate brokers were specifically asked by a representative of
the UKLA whether JJB was discharging any third party liabilities as part of the Qube
Acquisition. JJB’s corporate brokers stated that there were no such liabilities.

42. On 22 May 2008, one month after the Qube SPA was signed, with the assistance of its
corporate brokers JJB issued the Qube Announcement in the following terms:


“JJB SPORTS PLC (“JJB”) ACQUIRES PRIVATELY HELD QUBE FOOTWEAR JJB
Sports Plc (“JJB”) announces it has acquired the fashion footwear business, Qube
Footwear Ltd (“Qube”) from private equity partnership, West Coast Capital (“WCC”)
for £1 in cash… The agreement to acquire Qube was signed on 15 April 2008”.

43. There was no reference in the Qube Announcement to the liability arising out of the
Qube SPA for JJB to settle Qube’s Overdraft.

44. On 22 May 2008, as a payment on account of JJB’s liability under the Qube SPA to
settle Qube’s Overdraft, JJB transferred the sum of £6,200,000 to Qube’s account at the
third party bank. A further sum of £273,321.95 was subsequently transferred by JJB on
27 May 2008 to settle the balance. The total paid by JJB in respect of Qube’s Overdraft
was therefore £6,473,321.95.

45. On 29 May 2008, a board meeting was held at which the minutes record that the
following information was relayed to the board:

“A brief summary of the deal completed on 28 May 2008 encompassed JJB acquiring
the business from 12 April, purchasing its shares for £1.00, inheriting its balance sheet
with net current liabilities of a maximum of £2 million together with an indemnity of £1
million in respect of stock resale below £2 million margin”.

Other Announcements

46. During the material time, JJB issued the following communications to the market
concerning its financial position, all of which provided an opportunity to disclose to the
market the liability to pay the Stock Amount and the liability to settle Qube’s Overdraft:

(a) On 16 April 2008 JJB released its Preliminary Results for the 52 weeks to 27
January 2008 (“JJB’s 2008 Preliminary Results”). JJB informed the market that
its net debt for 27 January 2008 was £42.2 million which was an increase from
£9.2m as at 28 January 2007. JJB’s 2008 Preliminary Results made no reference
to the liability to pay the Stock Amount or to JJB having signed the Qube SPA
on 15 April 2008 (thereby exposing itself to the liability to settle Qube’s
Overdraft).

(b) On 20 May 2008 JJB released an Interim Management Statement which referred
to the “challenging retail environment” within which the company was said to be
operating but did not refer to the OSC Acquisition or the Qube Acquisition.

(c) On 23 May 2008, JJB published its Annual Report and Financial Statements for
the 52 weeks to 27 January 2008 (“JJB’s 2008 Annual Report and Financial
Statements”) in which it stated that JJB’s net profit before tax and exceptional
operating items had decreased by 28.5% from £47.2 million to £33.8 million. The
document also repeated that OSC had been purchased for £5 million and did not
refer to the Qube Acquisition notwithstanding that the Qube SPA had been signed
on 15 April 2008. Neither the liability to pay the Stock Amount nor the liability
to settle Qube’s Overdraft was disclosed.


(d) On 24 July 2008, JJB issued its AGM statement which did not refer to the OSC or
Qube Acquisitions.

2008 Interim Results

47. During an independent review of JJB’s 2008 Interim Results, on 22 September 2008
JJB’s auditors wrote to JJB’s Audit Committee to record concern about the fact that,
whilst auditing JJB’s 2008 Annual Report and Financial Statements, JJB’s auditors had
not been informed of the liability to pay the Stock Amount and had not been informed at
all of the Qube Acquisition. The auditors also expressed concern that the market did not
appear to have been informed of the liability to pay the Stock Amount or the liability to
settle Qube’s Overdraft.

48. Following the auditor’s independent review, JJB published its 2008 Interim Results
which disclosed the true costs of the OSC and Qube Acquisitions, including the resulting
cash flows and post acquisition losses. This information was disclosed on 26 September
2008 in Note 9 to JJB’s 2008 Interim Results. The note recorded that:

(a) The “Total consideration” for OSC was £15.063 million and the “net cash outflow
arising on acquisition” was also £15.063 million3.

(b) The “Total consideration” for Qube was £7.142 million. The “Cash
considerations” for Qube were disclosed as £7.142 million. “Cash and cash equivalents
acquired” were disclosed as £250,000 resulting in a “Net cash outflow arising on
acquisition” of £6.892 million.4

49. JJB’s 2008 Interim Results also included details of JJB’s net debt and cash positions as
at 27 July 2008. JJB explained that its net debt was £57.6m (having increased from
£42.2 million at 27 January 2008).

50. On the day JJB’s 2008 Interim Results were published (those Interim Results including
other negative news, as referred to at paragraph 16 above), JJB’s share price fell by
approximately 49.5% from 104p to 52p and there were a series of readjustments in the
views of analysts.

THE BREACHES

51. For the reasons set out below:

(a)
in relation to OSC Announcement, JJB breached DTR 2.2.1 and Listing
Principle 4 and continued to be in breach until 26 September 2008;

(b)
in relation to the Qube Announcement, JJB breached DTR 2.2.1 and Listing
Principle 4 and continued to be in breach until 26 September 2008.

OSC


3 As set out at paragraph 48 (a) above, it appears that the amount JJB actually paid was £15.069 million.
4 As set out at paragraph 48 (b) above, it appears that the amount JJB actually paid was £6.473 million.

52. In relation to the OSC Acquisition:

(c)
The true and proper cost of the OSC Acquisition, including the costs (or, prior
to payment the estimated costs) of paying the Stock Amount, was inside
information as defined under section 118C of the Act:

(1) The information was precise. The fact of the liability to pay the Stock
Amount was known to JJB as a result of signing the OSC SPA. The cost
that JJB was obliged to pay under the OSC SPA in respect of OSC’s
stock was also capable of estimation. A close approximation of the total
cost was known to JJB from at least 12 December 2007, being around £8
million. The information was therefore certain. The impact of the
expenditure on JJB’s financial position was also capable of calculation.

(2) The information was not generally available. The market was not aware
of the liability to pay the Stock Amount or of the impact on JJB’s
finances.

(3) The information related directly to JJB.

(4) The information was information of a kind which a reasonable investor
would be likely to use as part of the basis of his or her investment
decisions, and pursuant to section 118C(6) of the Act was therefore
information that would, if generally available, be likely to have a
significant effect on the price of JJB shares. The information would have
likely affected whether the reasonable investor would buy, sell or hold,
and the terms on which he or she would be willing to buy or sell, JJB’s
shares.

53. JJB were therefore obliged, under DTR 2.2.1, to notify a RIS as soon as possible of the
OSC Acquisition and the true cost of that acquisition which included that, as part of the
acquisition, that stock would be paid for separately.

54. In breach of DTR 2.2.1, the OSC Announcement did not include details of the liability
on JJB to pay the Stock Amount as part of the OSC Acquisition. JJB engaged in
continuing breaches of DTR 2.2.1 after the OSC Announcement in that it failed to
disclose the liability until publication of JJB’s 2008 Interim Results.

55. In breach of Listing Principle 4, the failure to advise the RIS of the liability to pay the
Stock Amount created, in breach of Listing Principle 4, a false market for the period 18
December 2007 to 26 September 2008.

Qube

56. In relation to the Qube Acquisition:

(d)
The true and proper cost of the Qube Acquisition, including the costs (or, prior
to payment, the estimated costs) of settling Qube’s Overdraft was inside
information as defined under section 118C of the Act:


(1) The information was precise. The fact of the liability to settle Qube’s Overdraft
was known to JJB as a result of the signing of the OSC SPA. The costs of
Qube’s Overdraft that JJB was obliged to pay under the Qube SPA were also
capable of estimation. JJB reasonably expected that, from at least 14 March
2008, Qube’s Overdraft would be significantly higher than the £1 purchase
price announced on 22 May 2008.

(2) The information was not generally available. There is no evidence that the
market was aware of the liability to settle Qube’s Overdraft or of the impact
on JJB’s finances.

(3) The information related directly to JJB.

(4) The information was information of a kind which a reasonable investor would
be likely to use as part of the basis of his or her investment decisions, and
pursuant to section 118C(6) of the Act was therefore information that would,
if generally available, be likely to have a significant effect on the price of JJB
shares. The information would have likely affected whether the reasonable
investor would buy, sell or hold, and the terms on which he or she would be
willing to buy or sell, JJB’s shares.

57. JJB were therefore obliged, under DTR 2.2.1, to notify a RIS as soon as possible of the
Qube Acquisition and the true cost of that acquisition which included that, as part of the
acquisition, JJB would settle Qube’s Overdraft.

58. In breach of DTR 2.2.1, the Qube Announcement did not include details of the liability
on JJB to settle Qube’s Overdraft as part of the Qube Acquisition. JJB engaged in
continuing breaches of DTR 2.2.1 after the Qube Announcement in that it failed to
disclose the obligation until publication of JJB’s 2008 Interim Results.

59. In breach of Listing Principle 4, the failure to advise the RIS of the liability to settle
Qube’s Overdraft created, in breach of Listing Principle 4, a false market for the period
22 May 2008 to 26 September 2008.

SANCTION

60. The FSA’s policy on the imposition of financial penalties and public censures is set out
in Chapter 6 of the Decision Procedure and Penalties Manual (“DEPP”). The principal
purpose of financial penalties is to promote high standards of market conduct by
deterring those who have committed breaches from committing further breaches,
helping to deter others from committing similar breaches and demonstrating generally
the benefits of compliant behaviour. The FSA considers that the seriousness of JJB’s
breaches of DTR and Listing Principle 4 merits a financial penalty.



Mitigating Factors

61. The mitigating factors which have been taken into account in determining the financial
penalty to be imposed on JJB include the following:

(a) No previous disciplinary action has been taken against JJB.

(b) At the time of the Qube acquisition, JJB’s corporate brokers were included
in an email chain, the latter part of which stated that JJB was immediately
discharging Qube’s overdraft with a third party bank, and which requested
JJB’s corporate brokers to contact JJB’s solicitors.


(c) Although JJB’s solicitors were not advising on the announcements, they
were aware of the terms of the transactions having negotiated the SPAs.


(d) Subsequent to the events described in this Warning Notice the entire
Executive Board and nearly all of JJB’s non-executive directors have been
replaced.


(e) The current board of JJB has received training in respect of Listing Rules
and DTR compliance and obligations.


(f) JJB has substantially improved its systems and controls for the approval of
regulatory announcements in relation to Listing Rules and DTR compliance.

Aggravating Factors

62. The aggravating factors which have been taken into account in determining the financial
penalty to be imposed on JJB include the following:


(a) This action concerns two separate instances in which, in both cases, inside
information was not disclosed to the market. This is not therefore an
isolated incident or set of circumstances. It also appears that JJB’s internal
procedures concerning the provision of information to the market were not
widely understood or adhered to.


(b) At the material time JJB’s shares formed part of the FTSE 250 Index and
latterly (from first quarter 2008) part of the FTSE Small Cap index.


(c) The delay was extensive, from 18 December 2007 to 26 September 2008, a
period of 9 months and 8 days in total, during which time JJB failed to
disclose the liability to pay the Stock Amount and from 22 May 2008 to 26
September 2008, a period of 4 months and 4 days, during which time JJB
failed to disclose the liability to settle Qube’s Overdraft. During both
periods there was a false market in JJB’s shares.


(d) Although JJB took advice from its corporate brokers in connection with
JJB’s disclosure obligations, JJB provided incomplete information to its
corporate brokers. In respect of OSC, JJB did not disclose that it was
liable to pay the Stock Amount. In respect of Qube, JJB did not provide its
corporate brokers with a copy of the Qube SPA, and did not expressly
draw to the attention of its corporate brokers that JJB had a liability under
the Qube SPA to settle Qube’s overdraft. Whilst the FSA recognises that,
had JJB’s corporate brokers reviewed the earlier emails in the chain

forwarded to it, the reference to the overdraft may well have been
identified and the matter addressed, JJB did not clearly seek advice on
whether any disclosure obligations arose from the overdraft liability or
draw it to its corporate brokers’ attention and did not challenge its
corporate brokers regarding the omission of this information in the letter to
UKLA dated 20 May 2008.


(e) Throughout the period 18 December 2007 to 26 September 2008, JJB issued
a number of market communications concerning its financial position which
variously provided ample opportunities to disclose the liability to pay the
Stock Amount and the liability to settle Qube’s Overdraft.


(f) The liability to pay the Stock Amount and the liability to settle Qube’s
Overdraft were only disclosed to the market after JJB’s auditors raised
concerns regarding the accuracy of the Qube and OSC Announcements.


(g) When the true costs of the acquisitions (which took account of the liability
to pay the Stock Amount and the liability to settle Qube’s Overdraft) were
released to the market on 26 September 2008, JJB did not state that this
was a correction to the information contained in the OSC and Qube
Announcements.


(h) At the material time, JJB failed to show proper regard to the UKLA by
failing to ensure that JJB’s corporate broker advised the UKLA of the
obligation to discharge Qube’s overdraft.

Penalty Amount

63. In determining the financial penalty, the FSA has considered the need to deter JJB and
others from engaging in this type of activity now or in the future. The FSA has also had
regard to penalties in other similar cases. The FSA considers that a financial penalty of £
455,000 (reduced from £650,000) is appropriate.

DECISION MAKERS

64. The decision which gave rise to the obligation to give this notice was made on behalf of
the FSA by the Settlement Decision Makers, being Settlement Decision Makers for the
purposes of the FSA’s DEPP.

IMPORTANT

65. This Final Notice is given to JJB in accordance with section 390 of the Act.




Manner of and time for Payment

66. The financial penalty is to be paid in six monthly instalments. The first instalment of
£80,000 must be paid by JJB to the FSA by no later than 8 February 2011, 14 days from

the date of the Final Notice. The following five equal instalments of £75,000 each must
then be paid no later than 8 March 2011, 5 April 2011, 3 May 2011, 31 May 2011 and
28 June 2011.


If the financial penalty is not paid

67. If any instalment is not paid by the date due for that instalment then the financial penalty
becomes payable immediately in full. The FSA may recover the outstanding amount as
a debt owed by JJB and due to the FSA.

Publicity

68. Sections 391(4), 391(6) and 391(7) of the Act apply to the publication of information
about the matter to which this notice relates. Under those provisions, the FSA must
publish such information about the matter to which this notice relates as the FSA
considers appropriate. The information may be published in such manner as the FSA
considers appropriate. However, the FSA may not publish information if such
publication would, in the opinion of the FSA, be unfair to you or prejudicial to the
interests of consumers.

69. The FSA intends to publish such information about the matter to which this Final Notice
relates as it considers appropriate.

FSA contacts

70. For more information concerning this matter generally, you should contact Andrew
Speake on 020 7066 5564 or Kevin Thorpe on 0207 066 4450 of the Enforcement and
Financial Crime Division of the FSA.





Tracey McDermott

FSA Enforcement and Financial Crime Division